U-Haul Holding Co /NV/ - Annual Report: 2008 (Form 10-K)
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
(Mark
One)
R
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ANNUAL
REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
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For the
fiscal year ended March 31, 2008
or
£
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TRANSITION
REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
|
For the
transition period from __________________ to __________________
Commission
File Number
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Registrant,
State of Incorporation
Address and Telephone
Number
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I.R.S.
Employer
Identification No.
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![]() |
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1-11255
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AMERCO
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88-0106815
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(A
Nevada Corporation)
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1325
Airmotive Way, Ste. 100
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Reno,
Nevada 89502-3239
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Telephone
(775) 688-6300
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Securities
registered pursuant to Section 12(b) of the Act:
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Registrant
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Title of Class
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Name
of Each Exchange on Which
Registered
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AMERCO
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Series
A 8 ½% Preferred Stock
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New
York Stock Exchange
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AMERCO
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Common
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NASDAQ
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Securities
registered pursuant to Section 12(g) of the Act:
None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes £ No
R
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Securities Act. Yes £ No
R
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 R No
£
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of the registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. £
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
definition of a “large accelerated filer”, “accelerated filer” ,
“non-accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):
Large
Accelerated filer £ Accelerated
filer R Non-accelerated
filer £ Smaller
reporting company £
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes £ No
R
The
aggregate market value of AMERCO common stock held by non-affiliates on
September 30, 2007 was $284,291,154. The aggregate market value was computed
using the closing price for the common stock trading on NASDAQ on such date.
Shares held by executive officers, directors and persons owning directly or
indirectly more than 5% of the outstanding common stock have been excluded from
the preceding number because such persons may be deemed to be affiliates of the
registrant. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.
Indicate
by check mark whether the registrant has filed all documents and reports
required to be filed by Section 12, 13, or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court. Yes R No
£
19,631,314
shares of AMERCO Common Stock, $0.25 par value were outstanding at June 1,
2008.
Documents
incorporated by reference: Portions of AMERCO’s definitive Proxy Statement for
the 2008 Annual Meeting of Stockholders, to be filed within 120 days after
AMERCO’s fiscal year ended March 31, 2008, are incorporated by reference into
Part III of this report.
TABLE
OF CONTENTS
Page No.
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PART
I
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Item
1.
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2 –
7
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Item
1A.
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7 –
10
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Item
1B.
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10
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Item
2.
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10
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Item
3.
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11
- 12
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Item
4.
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12
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PART
II
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Item
5.
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12
– 14
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Item
6.
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15
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Item
7.
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16
– 37
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Item
7A.
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38
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38
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Item
9.
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38
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Item
9A.
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39
– 40
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Item
9B.
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40
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PART
III
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Item
10.
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42
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Item
11.
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42
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Item
12.
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42
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Item
13.
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42
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Item
14.
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42
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PART
IV
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Item
15.
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43
– 52
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Company
Overview
We are
North America’s largest “do-it-yourself” moving and storage operator through our
subsidiary U-Haul International, Inc. (“U-Haul”). U-Haul is synonymous with
“do-it-yourself” moving and storage and is a leader in supplying products and
services to help people move and store their household and commercial goods. Our
primary service objective is to provide the best product and service to the most
people at the lowest cost.
We rent
our distinctive orange and white U-Haul trucks and trailers as well as offer
self-storage rooms through a network of nearly 1,450 Company operated retail
moving centers and approximately 14,200 independent U-Haul
dealers. In addition, we have an independent storage facility network
with over 3,300 active affiliates. We also sell U-Haul brand boxes,
tape and other moving and self-storage products and services to “do-it-yourself”
moving and storage customers at all of our distribution outlets and through our
eMove web site.
U-Haul is
the most convenient supplier of products and services meeting the needs of North
America’s “do-it-yourself” moving and storage market. Our broad geographic
coverage throughout the United States and Canada and our extensive selection of
U-Haul brand moving equipment rentals, self-storage rooms and related moving and
storage products and services provide our customers with convenient “one-stop”
shopping.
For more
than sixty years, U-Haul has incorporated sustainable practices into its
everyday operations. Our basic business premise of truck-sharing helps reduce
greenhouse gas emissions and reduces the need for total large-capacity vehicles.
Today, we remain focused on reducing waste and are dedicated to manufacturing
reusable components and recyclable products. The commitment to sustainability,
through our products and services, has helped us to reduce our impact on the
environment.
Through
Republic Western Insurance Company (“RepWest”), our property and casualty
insurance subsidiary, we manage the property, liability and related insurance
claims processing for U-Haul. Oxford Life Insurance Company
(“Oxford”), our life insurance subsidiary, sells Medicare supplement, life
insurance, annuities and other related products to non U-Haul customers and also
administers the self-insured employee health and dental plans
for Arizona employees of the Company.
We were
founded in 1945 under the name “U-Haul Trailer Rental Company.” Since 1945, we
have rented trailers. Starting in 1959, we rented trucks on a one-way and
in-town basis exclusively through independent U-Haul dealers. Since 1974, we
have developed a network of U-Haul managed retail centers, through which we rent
our trucks and trailers and sell moving and self-storage products and services
to complement our independent dealer network.
Available
Information
AMERCO
and U-Haul are each incorporated in Nevada. U-Haul’s internet address is
www.uhaul.com. On AMERCO’s investor relations web site, www.amerco.com, we post
the following filings as soon as practicable after they are electronically filed
with or furnished to the United States Securities and Exchange Commission
(“SEC”): our annual report on Form 10-K, our quarterly reports on Form 10-Q, our
current reports on Form 8-K, our proxy statement related to our annual meeting
of stockholders, and any amendments to those reports or statements filed or
furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934. All such filings on our web site are available free of charge.
Additionally, you will find these materials on the SEC’s website at
www.sec.gov.
Products
and Rental Equipment
Our
customers are primarily “do-it-yourself” household movers. U-Haul moving
equipment is specifically designed, engineered and manufactured for the
“do-it-yourself” household mover. These “do-it-yourself” movers
include individuals and families moving their belongings from one home to
another, college students moving their belongings, vacationers and sports
enthusiasts needing extra space or having special towing needs, people trying to
save on home furniture and home appliance delivery costs, and “do-it-yourself”
home remodeling and gardening enthusiasts who need to transport
materials.
As of
March 31, 2008, our rental fleet consisted of approximately 96,000 trucks,
75,000 trailers and 35,000 towing devices. This equipment and our U-Haul brand
of self-moving products and services are available through our network of
managed retail moving centers and independent U-Haul dealers. Independent U-Haul
dealers receive rental equipment from the Company, act as a rental agent and are
paid a commission based on gross revenues generated from their U-Haul
rentals.
2
Our
rental truck chassis are manufactured by domestic and foreign truck
manufacturers. These chassis are joined with the U-Haul designed and
manufactured van boxes primarily at U-Haul operated manufacturing and assembly
facilities strategically located throughout the United States. U-Haul rental
trucks feature our proprietary Lowest DeckSM, which
provides our customers with extra ease of loading. The loading ramps on our
trucks are the widest in the industry, which reduce the effort needed to move
belongings. Our trucks are fitted with convenient, padded rub rails with tie
downs on every interior wall. Our Gentle Ride SuspensionSM helps
our customers safely move delicate and prized possessions. Also, the engineers
at our U-Haul Technical Center determined that the softest ride in our trucks
was at the front of the van box. Consequently, they designed the part of the van
box that hangs over the front cab of the truck to be the location for our
customers to place their most fragile items during their move. We call this area
Mom’s AtticSM.
Our
distinctive orange trailers are also manufactured at these same U-Haul operated
manufacturing and assembly facilities. These trailers are well suited to the low
profile of many of today’s newly manufactured automobiles. Our engineering staff
is committed to making our trailers easy to tow, aerodynamic and fuel
efficient.
To
provide our self-move customers with added value, our rental trucks and trailers
are designed with fuel efficiency in mind. Many of our newer trucks are fitted
with fuel economy gauges, another tool that assists our customers in conserving
fuel. To help make our rental equipment more trouble free, we perform extensive
preventive maintenance and repairs.
We also
provide customers with equipment to transport their vehicle. We provide three
towing options, including: auto transport, in which all four wheels are off the
ground, tow dolly, in which the front wheels of the towed vehicle are off the
ground, and tow bar, where all four wheels are on the ground.
To help
our customers load their boxes and larger household appliances and furniture, we
offer several accessory rental items. Our utility dolly has a lightweight design
and is easy to maneuver. Another rental accessory is our four wheel dolly, which
provides a large, flat surface for moving dressers, wall units, pianos and other
large household items. U-Haul appliance dollies provide the leverage needed to
move refrigerators, freezers, washers and dryers easily and safely. These
utility, furniture and appliance dollies, along with the low decks and the wide
loading ramps on U-Haul trucks and trailers, are designed for easy loading and
unloading of our customers’ belongings.
The total
package U-Haul offers the “do-it-yourself” household mover doesn’t end with
trucks, trailers and accessory rental items. Our moving supplies include a wide
array of affordably priced U-Haul brand boxes, tape and packing materials. We
also provide specialty boxes for dishes, computers and sensitive electronic
equipment, carton sealing tape, security locks, and packing supplies, like
wrapping paper and cushioning foam. U-Haul brand boxes are specifically sized to
make loading easier.
U-Haul is
North America’s largest seller and installer of hitches and towing systems. In
addition to towing U-Haul equipment, these hitching and towing systems can tow
jet skis, motorcycles, boats, campers and horse trailers. Our hitches, ball
mounts, and hitch balls undergo stringent testing requirements. Each
year, more than one million customers visit our locations for expertise on
complete towing systems, trailer rentals and the latest in towing
accessories.
U-Haul
has one of North America’s largest propane barbeque-refilling networks, with
over 1,000 locations providing this convenient service. We employ trained,
certified personnel to refill all propane cylinders. Our network of propane
dispensing locations is the largest automobile alternative refueling network in
North America.
Self-storage
is a natural outgrowth of the self-moving industry. Conveniently located U-Haul
self-storage rental facilities provide clean, dry and secure space for storage
of household and commercial goods, with storage units ranging in size from 6
square feet to 845 square feet. We operate nearly 1,075 self-storage locations
in North America, with more than 387,000 rentable rooms comprising approximately
34.2 million square feet of rentable storage space. Our self-storage centers
feature a wide array of security measures, ranging from electronic property
access control gates to individually alarmed storage units. At many centers, we
offer climate controlled storage rooms to protect temperature sensitive goods
such as video tapes, albums, photographs and precious wood
furniture.
Additionally,
we offer moving and storage protection packages such as Safemove and Safetow,
protecting moving and towing customers with a damage waiver, cargo protection
and medical and life coverage, and Safestor, protecting storage customers from
loss on their goods in storage. For our customers who desire additional coverage
over and above the standard Safemove protection, we also offer our Super
Safemove product. This package provides the rental customer with a layer of
primary liability protection.
3
Our eMove
web site, www.eMove.com, is the largest network of customers and independent
businesses in the self-moving and self-storage industry. The eMove network
consists of channels where customers, businesses and service providers transact
business. The eMove Moving Help marketplace connects “do-it-yourself” movers
with independent service providers to assist movers pack, load, unload, clean,
drive and other services. Thousands of independent service providers already
participate in the eMove network.
Through
the eMove Storage Affiliate Program, independent storage businesses can join the
world’s largest storage reservation system. Self-storage customers making a
reservation through eMove can access all of the U-Haul self-storage centers and
all of our independent storage affiliate partners for even greater convenience
to meet their self-storage needs.
Description
of Operating Segments
AMERCO
has four reportable segments. They are Moving and Storage (AMERCO, U-Haul and
Amerco Real Estate Company (“Real Estate”)), Property and Casualty Insurance,
Life Insurance and SAC Holding II Corporation and its subsidiaries (“SAC Holding
II”). Refer to Note 2 Principles of Consolidation of the Notes to Consolidated
Financial Statements.
Financial
information for each of our Operating Segments is included in the Notes to
Consolidated Financial Statements as part of “Item 8: Financial Statements and
Supplementary Data” of this report.
Moving
and Storage Operating Segment
Our
“do-it-yourself” moving business consists of U-Haul truck and trailer rentals
and U-Haul moving supply and service sales. Our Moving and Storage Operating
Segment consists of the rental of trucks, trailers, specialty rental items and
self-storage spaces primarily to the household mover as well as sales of moving
supplies, towing accessories and propane. Operations are conducted under the
registered trade name U-Haul® throughout the United States and
Canada.
Net
revenue from our Moving and Storage operating segment was approximately 90.6%,
89.9% and 90.3% of consolidated net revenue in fiscal 2008, 2007 and 2006,
respectively.
During
fiscal 2008, the Company placed over 21,000 new trucks in service. These
replacements were a combination of U-Haul manufactured vehicles and purchases.
As new trucks were added to the fleet, the Company rotated out of the fleet
older trucks. The size of the total rental truck fleet decreased from the end of
fiscal 2007 primarily due to an increased focus on sales of older
trucks.
Within
our truck and trailer rental operation we are focused on expanding our
independent dealer network to provide added convenience for our
customers. U-Haul has approximately 14,200 dealers which are
independent businesses, and are exclusive to U-Haul International, Inc. U-Haul
maximizes vehicle utilization by effective distribution of the truck and trailer
fleets among the nearly 1,450 Company operated centers and approximately 14,200
independent dealers. Utilizing its sophisticated reservations management system,
the Company’s centers and dealers electronically report their inventory in
real-time, which facilitates matching equipment to customer demand.
Approximately 55% of all U-Move rental revenue originates from the Company
operated centers.
At our
owned and operated retail centers we have implemented several customer service
initiatives. These initiatives include improving management of our rental
equipment to provide our retail centers with the right type of rental equipment,
at the right time and at the most convenient location for our customers,
effective marketing of our broad line of self-moving related products and
services, maintaining longer hours of operation to provide more convenience to
our customers, and increasing staff by attracting and retaining “moonlighters”
(part-time U-Haul employees with full-time jobs elsewhere) during our peak hours
of operation.
Effective
marketing of our self-moving related products and services, such as boxes, pads
and insurance, helps our customers have a better moving experience and helps
them protect their belongings from potential damage during the moving process.
We are committed to providing a complete line of products selected with the
“do-it-yourself” moving and storage customer in mind.
4
Our
self-storage business consists of the rental of self-storage rooms,
sales of self-storage related products, the facilitation of sales of services,
and the management of self-storage facilities owned by others.
U-Haul is one of the largest
North American operators of self-storage and has been a leader in the
self-storage industry since 1974. U-Haul operates over 387,000
storage rooms, comprising approximately 34.2 million square feet of storage
space with locations in 49 states and 10 Canadian provinces. U-Haul’s owned and
managed self-storage facility locations range in size up to 171,500 square feet
of storage space, with individual storage units in sizes ranging from 6 square
feet to 845 square feet.
The
primary market for storage rooms is the storage of household goods. We believe
that our self-storage services provide a competitive advantage through such
things as Maximum Security (“MAX”), an electronic system that monitors the
storage facility 24 hours a day; climate control; individually alarmed rooms;
extended hour access; and an internet-based customer reservation and account
management system.
eMove is
an online marketplace that connects consumers to over 3,700 independent Moving
Help™ service providers and over 3,300 independent Self-Storage Affiliates. Our
network of customer-rated affiliates provides pack and load help, cleaning help,
self-storage and similar services, all over North America.
An
individual or a company can connect to the eMove network by becoming an eMove
Moving Help® Affiliate or an eMove Storage Affiliate™. Moving Helpers
assist customers with packing, loading, cleaning and unloading their truck or
storage unit. The Storage Affiliate program enables independent self-storage
facilities to expand their reach by connecting into a centralized 1-800 and
internet reservation system and for a fee, receive an array of services
including web-based management software, Secured Online Affiliated Rentals
(S.O.A.R®), co-branded rental trucks, savings on insurance, credit card
processing and more.
The
marketplace includes unedited reviews of independent affiliates, and has
facilitated thousands of Moving Help® and Self-Storage transactions all over
North America. We believe that acting as an intermediary, with little added
investment, serves the customer in a cost effective manner. Our goal is to
further utilize our web-based technology platform to increase service to
consumers and businesses in the moving and storage market.
Property
and Casualty Insurance Operating Segment
RepWest
provides loss adjusting and claims handling for U-Haul through regional offices
across North America. Through the Company’s affiliation with RepWest, U-Haul
offers its customers moving and storage contents insurance products, branded
Safemove and Safestor, respectively. The Safemove policy provides moving
customers with a damage waiver, cargo protection and medical and life coverage.
Management believes that its Safemove product is competitive, as competing
policies contain deductibles, higher premiums and more confusing layers of
coverage. We continue to focus on increasing the penetration of these products.
The business plan for RepWest includes offering property and casualty products
for other U-Haul related programs.
Net
revenue from our Property and Casualty Insurance operating segment was
approximately 1.9%, 1.8% and 1.6% of consolidated net revenue in fiscal 2008,
2007 and 2006, respectively.
Life
Insurance Operating Segment
Oxford
provides life and health insurance products primarily to the senior market
through the direct writing or reinsuring of life insurance, Medicare supplement
and annuity policies. Additionally, Oxford administers the self-insured employee
health and dental plans for Arizona employees of the Company.
Net
revenue from our Life Insurance operating segment was approximately 6.7%, 7.0%
and 6.8% of consolidated net revenue in fiscal 2008, 2007 and 2006,
respectively.
SAC
Holding II Operating Segment
SAC
Holding Corporation and its subsidiaries, and SAC Holding II Corporation and its
subsidiaries, collectively referred to as “SAC Holdings”, own self-storage
properties that are managed by U-Haul under property management agreements and
act as independent U-Haul rental equipment dealers. AMERCO, through its
subsidiaries, has contractual interests in certain of SAC Holdings’ properties
entitling AMERCO to potential future income based on the financial performance
of these properties. With respect to SAC Holding II, AMERCO was considered the
primary beneficiary of these contractual interests prior to November 2007.
Consequently, for those reporting periods prior to November 2007, we included
the results of SAC Holding II in the consolidated financial statements of
AMERCO, as required by Financial Accounting Standards Board Interpretation No.
46(R) (“FIN 46(R)”). While the deconsolidation affects AMERCO’s financial
reporting, it has no operational or financial impact on the Company’s
relationship with SAC Holding II.
5
Substantially
all of the equity interest of SAC Holdings is controlled by Blackwater
Investments Inc. (“Blackwater”), wholly-owned by Mark V. Shoen, a significant
shareholder and executive officer of AMERCO. In November 2007, Blackwater
contributed additional capital to its wholly-owned subsidiary, SAC Holding II.
This contribution was determined by us to be material with respect to the
capitalization of SAC Holding II; therefore, triggering a requirement under FIN
46(R) for us to reassess the Company’s involvement with those subsidiaries. This
required reassessment led to the conclusion that the Company was no longer the
primary beneficiary of SAC Holding II as of the date of Blackwater’s
contribution. Accordingly, the Company deconsolidated this entity. The
deconsolidation, effective October 31, 2007 was accounted for as a distribution
of the Company’s interests to Blackwater, the sole shareholder of SAC Holding
II. Because of the Company’s continuing involvement with SAC Holding II, the
distributions do not qualify as discontinued operations as defined by Statement
of Financial Accounting Standards (“SFAS”) 144. It is possible that SAC Holdings
could take future actions that would require us to re-determine whether SAC
Holdings has become a variable interest entity (“VIE”) or whether we have become
the primary beneficiary of SAC Holdings. Should this occur, we could be required
to consolidate some or all of SAC Holdings with our financial
statements.
Net
revenue from our SAC Holding II operating segment was approximately 0.8%, 1.3%
and 1.3% of consolidated net revenue in fiscal 2008, 2007 and 2006,
respectively.
Employees
As of
March 31, 2008, we employed approximately 18,500 people throughout North America
with approximately 98% of these employees working within our Moving and Storage
operating segment. Approximately 40% of these employees work on a part-time
status.
Sales
and Marketing
We
promote U-Haul brand awareness through direct and co-marketing arrangements. Our
direct marketing activities consist of yellow pages, print and web based
advertising as well as trade events, movie cameos of our rental fleet and boxes,
and industry and consumer communications. Our rental equipment is our best form
of advertisement. We support our independent U-Haul dealers through
advertising of U-Haul moving and self-storage rentals, products and
services.
Our
marketing plan includes maintaining our leadership position with U-Haul being
synonymous with “do-it-yourself” moving and storage. We accomplish this by
continually improving the ease of use and efficiency of our rental equipment, by
providing added convenience to our retail centers through independent U-Haul
dealers, and by expanding the capabilities of our eMove web sites.
A
significant driver of U-Haul’s rental transaction volume is our utilization of
an online reservation and sales system, through www.uhaul.com, www.eMove.com and
our 24-hour 1-800-GO-U-HAUL telephone reservations system. The Company’s
1-800-GO-U-HAUL telephone reservation line is prominently featured on nationwide
yellow page advertising, its websites and on the outside of its vehicles, and is
a major driver of customer lead sources. Of our customers who made reservations
in advance of their U-Move rental, nearly 30% of these reservations were
completed through the Company’s websites.
Competition
Moving
and Storage Operating Segment
The
moving truck and trailer rental industry is large and highly competitive.
Generally speaking, we consider there to be two distinct users of rental trucks:
commercial and “do-it-yourself” residential users. We focus primarily on the
“do-it-yourself” residential user. Within this segment, we believe the principal
competitive factors are convenience of rental locations, availability of quality
rental moving equipment, breadth of essential products and services, and total
cost. Our major competitors in the moving equipment rental market are Avis
Budget Group, Inc. and Penske Truck Leasing.
The
self-storage market is large and highly fragmented. We believe the principal
competitive factors in this industry are convenience of storage rental
locations, cleanliness, security and price. Our primary competitors in the
self-storage market are Public Storage Inc., Extra Space Storage, Inc., and
Sovran Self-Storage Inc.
6
Insurance
Operating Segments
The
highly competitive insurance industry includes a large number of life insurance
companies and property and casualty insurance companies. In addition, the
marketplace includes financial services firms offering both insurance and
financial products. Some of the insurance companies are owned by stockholders
and others are owned by policyholders. Many competitors have been in business
for a longer period of time or possess substantially greater financial resources
and broader product portfolios than our insurance companies. We compete in the
insurance business based upon price, product design, and services rendered to
agents and policyholders.
Recent
Developments
Preferred
Stock Dividends
On May 2,
2008, the Board of Directors of AMERCO (the “Board”) declared a regular
quarterly cash dividend of $0.53125 per share on the Company’s Series A 8½ %
Preferred Stock. The dividend was paid on June 2, 2008 to holders of record on
May 15, 2008.
Cautionary
Statement Regarding Forward-Looking Statements
This
Annual Report on Form 10-K, contains “forward-looking statements” regarding
future events and our future results. We may make additional written or oral
forward-looking statements from time to time in filings with the SEC or
otherwise. We believe such forward-looking statements are within the meaning of
the safe-harbor provisions of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Such statements may include, but are not limited to, projections of revenues,
earnings or loss; estimates of capital expenditures, plans for future
operations, products or services; financing needs and plans; our perceptions of
our legal positions and anticipated outcomes of government investigations and
pending litigation against us; liquidity; goals and strategies; plans for new
business; growth rate assumptions, pricing, costs, and access to capital and
leasing markets as well as assumptions relating to the foregoing. The words
“believe,” “expect,” “anticipate,” “estimate,” “project” and similar expressions
identify forward-looking statements, which speak only as of the date the
statement was made.
Forward-looking
statements are inherently subject to risks and uncertainties, some of which
cannot be predicted or quantified. Factors that could significantly affect
results include, without limitation, the risk factors enumerated at the end of
this section, as well as the following: the Company’s ability to operate
pursuant to the terms of its credit facilities; the Company’s ability to
maintain contracts that are critical to its operations; the costs and
availability of financing; the Company’s ability to execute its business plan;
the Company’s ability to attract, motivate and retain key employees; general
economic conditions; fluctuations in our costs to maintain and update our fleet
and facilities; our ability to refinance our debt; changes in government
regulations, particularly environmental regulations; our credit ratings; the
availability of credit; changes in demand for our products; changes in the
general domestic economy; the degree and nature of our competition; the
resolution of pending litigation against the Company; changes in accounting
standards and other factors described in this report or the other documents we
file with the SEC. The above factors, the following disclosures, as well as
other statements in this report and in the Notes to Consolidated Financial
Statements, could contribute to or cause such risks or uncertainties, or could
cause our stock price to fluctuate dramatically. Consequently, the
forward-looking statements should not be regarded as representations or
warranties by the Company that such matters will be realized. The Company
assumes no obligation to update or revise any of the forward-looking statements,
whether in response to new information, unforeseen events, changed circumstances
or otherwise.
The
following discussion of risk factors should be read in conjunction with
Management’s Discussion and Analysis of Financial Condition and Results of
Operations (“MD&A”), the Consolidated Financial Statements and related
notes. These risk factors may be important in understanding this
Annual Report on Form 10-K or elsewhere.
We
operate in a highly competitive industry.
The truck
rental industry is highly competitive and includes a number of significant
national, regional and local competitors. Competition is generally based on
convenience of rental locations, availability of quality rental moving
equipment, breadth of essential services and price. Financial results for the
Company can be adversely impacted by aggressive pricing from our competitors.
Some of our competitors may have greater financial resources than we have. We
can not assure you that we will be able to maintain existing rental prices or
implement price increases. Moreover, if our competitors reduce prices and we are
not able or willing to do so as well, we may lose rental volume, which would
likely have a materially adverse affect on our results of
operations.
7
The
self-storage industry is large and highly fragmented. We believe the principle
competitive factors in this industry are convenience of storage rental
locations, cleanliness, security and price. Competition in the market areas in
which we operate is significant and affects the occupancy levels, rental sales
and operating expenses of our facilities. Competition might cause us to
experience a decrease in occupancy levels, limit our ability to raise rental
sales and require us to offer discounted rates that would have a material affect
on operating results.
Entry
into the self-storage business through acquisition of existing facilities is
possible for persons or institutions with the required initial capital.
Development of new self-storage facilities is more difficult however, due to
land use, environmental and other regulatory requirements. The self-storage
industry has in the past experienced overbuilding in response to perceived
increases in demand. We cannot assure you that we will be able to successfully
compete in existing markets or expand into new markets.
We
are controlled by a small contingent of stockholders.
As of
March 31, 2008, Edward J. Shoen, Chairman of the Board of Directors and
President of AMERCO, James P. Shoen, a director of AMERCO, and Mark V. Shoen, an
executive officer of AMERCO, collectively are the owners of 8,968,079 shares
(approximately 45.7%) of the outstanding common shares of AMERCO. In addition,
on June 30, 2006, Edward J. Shoen, James P. Shoen, Mark V. Shoen, Rosmarie T.
Donovan (Trustee of the Shoen Irrevocable Trusts) and Southwest Fiduciary, Inc.
(Trustee of the Irrevocable “C” Trusts) (collectively, the “Reporting Persons”)
entered into a Stockholder Agreement in which the Reporting Persons agreed to
vote as one as provided in the Stockholder Agreement. As of March 1, 2007,
Adagio Trust Company replaced Southwest Fiduciary, Inc. as the trustee of the
Irrevocable “C” Trusts, and became a signatory to the Stockholder Agreement.
Pursuant to the Stockholder Agreement, the Reporting Persons appointed James P.
Shoen as proxy to vote their collective 10,642,802 shares (approximately 54.2%)
of the Company’s common stock as provided for in the agreement. For
additional information, refer to the Schedule 13D’s filed on July 13, 2006 and
on March 9, 2007 with the SEC. In addition, 1,802,702 shares (approximately
9.2%) of the outstanding common shares of AMERCO are held by our Employee
Savings and Employee Stock Ownership Trust.
As a
result of their stock ownership and the Stockholder Agreement, Edward J. Shoen,
Mark V. Shoen and James P. Shoen are in a position to significantly influence
the business affairs and policies of the Company, including the approval of
significant transactions, the election of the members of the Board and other
matters submitted to our stockholders. There can be no assurance that
the interests of the Reporting Persons will not conflict with the interest of
our other stockholders. Furthermore, as a result of the Reporting
Persons’ voting power, the Company is a “controlled company” as defined in the
Nasdaq listing rules and, therefore, may avail itself of certain exemptions
under Nasdaq Marketplace Rules, including rules that require the Company to have
(i) a majority of independent directors on the Board; (ii) a compensation
committee composed solely of independent directors; (iii) a nominating committee
composed solely of independent directors; (iv) compensation of our executive
officers determined by a majority of the independent directors or a compensation
committee composed solely of independent directors; and (v) director nominees
selected, or recommended for the Board’s selection, either by a majority of the
independent directors or a nominating committee composed solely of independent
directors. The Company currently exercises its right to an exemption from the
Nasdaq rule requiring compensation of other executive officers, aside from the
President, be determined by a majority of the independent directors or the
compensation committee.
Our
operations subject us to numerous environmental regulations and the possibility
that environmental liability in the future could adversely affect our
operations.
Compliance
with environmental requirements of federal, state and local governments
significantly affects our business. Among other things, these requirements
regulate the discharge of materials into the water, air and land and govern the
use and disposal of hazardous substances. Under environmental laws or common law
principles, we can be held liable for hazardous substances that are found on
real property we have owned or operated. We are aware of issues regarding
hazardous substances on some of our real estate and we have put in place a
remedial plan at each site where we believe such a plan is necessary, refer to
Note 17 Contingencies of the Notes to Consolidated Financial Statements. We
regularly make capital and operating expenditures to stay in compliance with
environmental laws. In particular, we have managed a testing and removal program
since 1988 for our underground storage tanks. Despite these
compliance efforts, we believe that risk of environmental liability is part of
the nature of our business.
8
Environmental
laws and regulations are complex, change frequently and could become more
stringent in the future. We cannot assure you that future compliance with these
regulations, future environmental liabilities, the cost of defending
environmental claims, conducting any environmental remediation or generally
resolving liabilities caused by us or related third parties will not have a
material adverse effect on our business, financial condition or results of
operations.
Our
quarterly results of operations fluctuate due to seasonality and other factors
associated with our industry.
Our
business is seasonal and our results of operations and cash flows fluctuate
significantly from quarter to quarter. Historically, revenues have been stronger
in the first and second fiscal quarters due to the overall increase in moving
activity during the spring and summer months. The fourth fiscal quarter is
generally weakest, due to a greater potential for adverse weather conditions and
other factors that are not necessarily seasonal. As a result, our operating
results for a given quarterly period are not necessarily indicative of operating
results for an entire year.
We
obtain our rental trucks from a limited number of manufacturers.
In the
last ten years, we purchased most of our rental trucks from Ford Motor Company
and General Motors Corporation. Although we believe that we could obtain
alternative sources of supply for our rental trucks, termination of one or both
of our relationships with these suppliers could have a material adverse effect
on our business, financial condition or results of operations for an indefinite
period of time or we may not be able to obtain rental trucks under similar
terms, if at all. Additionally, our fleet rotation can be negatively affected by
issues our manufacturers face within their own supply chain. Such issues may
impair their ability to fulfill our orders in a timely fashion.
A.M
Best financial strength ratings are crucial to our life insurance
business.
A.M. Best
downgraded Oxford and its subsidiaries during AMERCO’s restructuring to C+. Upon
AMERCO’s emergence from bankruptcy in March 2004, Oxford and its subsidiaries
were upgraded to B-. The ratings were again upgraded in October 2004 to B, in
October 2005 to B+, and in November 2006 Oxford and Christian Fidelity Life
Insurance Company (“CFLIC”), a subsidiary of Oxford, were upgraded to B++ with a
stable outlook. In January 2008, A.M. Best affirmed the financial strength
rating for Oxford and CFLIC of B++ with a stable outlook and assigned Dallas
General Life Insurance Company (“DGLIC”), a subsidiary of CFLIC, with the same
rating. Prior to AMERCO’s restructuring, Oxford was rated B++. Financial
strength ratings are important external factors that can affect the success of
Oxford’s business plans. Accordingly, if Oxford’s ratings, relative to its
competitors, are not maintained or do not continue to improve, Oxford may not be
able to retain and attract business as currently planned.
We
bear certain risks related to our notes receivable from SAC
Holdings.
At March
31, 2008, we held approximately $198.1 million of notes receivable from SAC
Holdings, which consist of junior unsecured notes. SAC Holdings is highly
leveraged with significant indebtedness to others. If SAC Holdings is unable to
meet its obligations to its senior lenders, it could trigger a default of its
obligations to us. In such an event of default, we could suffer a loss to the
extent the value of the underlying collateral of SAC Holdings is inadequate to
repay SAC Holding’s senior lenders and our junior unsecured notes. We
cannot assure you that SAC Holdings will not default on its loans to its senior
lenders or that the value of SAC Holdings assets upon liquidation would be
sufficient to repay us in full.
We
are highly leveraged.
As of
March 31, 2008, we had total debt outstanding of $1,504.7 million and total
undiscounted lease commitments of $490.8 million. Although we believe that
additional leverage can be supported by the Company’s operations, our existing
debt could impact us in the following ways:
·
|
require
us to allocate a considerable portion of cash flows from operations to
debt service payments;
|
·
|
limit
our ability to obtain additional financing;
and
|
·
|
place
us at a disadvantage compared to our competitors who may have less
debt.
|
Our
ability to make payments on our debt depends upon our ability to maintain and
improve our operating performance and generate cash flow. To some extent, this
is subject to prevailing economic and competitive conditions and to certain
financial, business and other factors, some of which are beyond our control. If
we are unable to generate sufficient cash flow from operations to service our
debt and meet our other cash needs, we may be forced to reduce or delay capital
expenditures, sell assets, seek additional capital or restructure or refinance
our indebtedness. If we must sell our assets, it may negatively affect our
ability to generate revenue. In addition, we may incur additional debt that
would exacerbate the risks associated with our indebtedness.
9
In
certain instances the Company seeks to manage its exposure to interest rate risk
through the use of hedging instruments including interest rate swap agreements,
interest rate cap agreements and forward swaps. The Company enters into these
arrangements with counterparties that are significant financial institutions
with whom we generally have other financial arrangements. We are exposed to
credit risk should these counterparties not be able to perform on their
obligations. Additionally, a failure on our part to effectively hedge against
interest rate changes may adversely affect our financial condition and results
of operations.
Our
fleet rotation program can be adversely affected by financial market
conditions.
To meet
the needs of our customers, U-Haul maintains a large fleet of rental equipment.
Our rental truck fleet rotation program is funded internally through operations
and externally from debt and lease financing. Our ability to fund our routine
fleet rotation program could be adversely affected if financial market
conditions limit the general availability of external financing. This could lead
to the Company operating trucks longer than initially planned and reducing the
size of the fleet, either of which could materially and negatively affect our
results of operations.
We
operate in a highly regulated industry and changes in existing regulations or
violations of existing or future regulations could have a material adverse
effect on our operations and profitability.
Our truck
and trailer rental business is subject to regulation by various federal, state
and foreign governmental entities. Specifically, the U.S. Department of
Transportation and various state and federal agencies exercise broad powers over
our motor carrier operations, safety, and the generation, handling, storage,
treatment and disposal of waste materials. In addition, our storage business is
also subject to federal, state and local laws and regulations relating to
environmental protection and human health and safety. The failure to adhere to
these laws and regulations may adversely affect our ability to sell or rent such
property or to use the property as collateral for future borrowings. Compliance
with changing regulations could substantially impair real property and equipment
productivity and increase our costs.
Item 1B.
Unresolved Staff
Comments
We have
no unresolved staff comments at March 31, 2008.
Item 2. Properties
The
Company, through its legal subsidiaries, owns property, plant and equipment that
are utilized in the manufacture, repair and rental of U-Haul equipment and storage
space, as well as providing office space for the Company. Such facilities exist
throughout the United States and Canada. The Company also manages storage
facilities owned by others. The Company operates nearly 1,450 U-Haul retail centers of which
495 are managed for other owners, and operates 13 manufacturing and assembly
facilities. We also operate over 250 fixed-site repair facilities located
throughout the United States and Canada. These facilities are used primarily for
the benefit of our Moving and Storage segment.
SAC
Holdings owns property, plant and equipment that are utilized in the sale of
moving supplies, rental of self-storage rooms and U-Haul equipment. Such
facilities exist throughout the United States and Canada. We manage the storage
facilities under property management agreements whereby the management fees are
consistent with management fees received by U-Haul for other properties owned by
unrelated parties and previously managed by us.
10
Shoen
In
September 2002, Paul F. Shoen filed a shareholder derivative lawsuit in the
Second Judicial District Court of the State of Nevada, Washoe County, captioned
Paul F. Shoen vs. SAC
Holding Corporation et al., CV02-05602, seeking damages and equitable
relief on behalf of AMERCO from SAC Holdings and certain current and former
members of the AMERCO Board of Directors, including Edward J. Shoen, Mark V.
Shoen and James P. Shoen as Defendants. AMERCO is named as a nominal Defendant
in the case. The complaint alleges breach of fiduciary duty, self-dealing,
usurpation of corporate opportunities, wrongful interference with prospective
economic advantage and unjust enrichment and seeks the unwinding of sales of
self-storage properties by subsidiaries of AMERCO to SAC prior to the filing of
the complaint. The complaint seeks a declaration that such transfers are void as
well as unspecified damages. In October 2002, the Defendants filed motions to
dismiss the complaint. In October 2002, Ron Belec filed a derivative action in
the Second Judicial District Court of the State of Nevada, Washoe County,
captioned Ron Belec
vs. William E. Carty, et al., CV 02-06331 and in January 2003, M.S.
Management Company, Inc. filed a derivative action in the Second Judicial
District Court of the State of Nevada, Washoe County, captioned M.S. Management Company,
Inc. vs. William E. Carty, et al., CV 03-00386. Two additional derivative
suits were also filed against these parties. Each of these suits is
substantially similar to the Paul F. Shoen case. The Court consolidated the five
cases and thereafter dismissed these actions in May 2003, concluding that the
AMERCO Board of Directors had the requisite level of independence required in
order to have these claims resolved by the Board. Plaintiffs appealed this
decision and, in July 2006, the Nevada Supreme Court reviewed and remanded the
case to the trial court for proceedings consistent with its ruling, allowing the
Plaintiffs to file an amended complaint and plead in addition to substantive
claims, demand futility.
In
November 2006, the Plaintiffs filed an amended complaint. In December 2006, the
Defendants filed motions to dismiss, based on various legal theories. In March
2007, the Court denied AMERCO’s motion to dismiss regarding the issue of demand
futility, stating that “Plaintiffs have satisfied the heightened pleading
requirements of demand futility by showing a majority of the members of the
AMERCO Board of Directors were interested parties in the SAC transactions.” The
Court heard oral argument on the remainder of the Defendants’ motions to
dismiss, including the motion (“Goldwasser Motion”) based on the fact that the
subject matter of the lawsuit had been settled and dismissed in earlier
litigation known as Goldwasser v. Shoen,
CV 0205602, Washoe County, Nevada. In addition, in September and October 2007,
the Defendants filed Motions for Judgment on the Pleadings or in the Alternative
Summary Judgment, based on the fact that the stockholders of the Company had
ratified the underlying transactions at the 2007 annual meeting of stockholders
of AMERCO. In December 2007, the Court denied this motion. This ruling does not
preclude a renewed motion for summary judgment after discovery and further
proceedings on these issues. On April 7, 2008, the litigation was dismissed, on
the basis of the Goldwasser Motion. On May 8, 2008, the Plaintiffs filed a
notice of appeal of such dismissal to the Nevada Supreme Court. On May 20, 2008,
AMERCO filed a cross appeal relating to the denial of its Motion to Dismiss in
regards to Demand Futility. The appeals are currently pending.
Environmental
In the
normal course of business, AMERCO is a defendant in a number of suits and
claims. AMERCO is also a party to several administrative proceedings arising
from state and local provisions that regulate the removal and/or cleanup of
underground fuel storage tanks. It is the opinion of management, that none of
these suits, claims or proceedings involving AMERCO, individually or in the
aggregate, are expected to result in a material adverse effect on AMERCO’s
financial position or results of operations.
Compliance
with environmental requirements of federal, state and local governments
significantly affects Real Estate’s business operations. Among other things,
these requirements regulate the discharge of materials into the water, air and
land and govern the use and disposal of hazardous substances. Real Estate is
aware of issues regarding hazardous substances on some of its properties. Real
Estate regularly makes capital and operating expenditures to stay in compliance
with environmental laws and has put in place a remedial plan at each site where
it believes such a plan is necessary. Since 1988, Real Estate has managed a
testing and removal program for underground storage tanks.
Based
upon the information currently available to Real Estate, compliance with the
environmental laws and its share of the costs of investigation and cleanup of
known hazardous waste sites are not expected to result in a material adverse
effect on AMERCO’s financial position or results of operations. Real Estate
expects to spend approximately $5.7 million in total through 2011 to remediate
these properties.
11
Other
The
Company is named as a defendant in various other litigation and claims arising
out of the normal course of business. In management’s opinion, none of these
other matters will have a material effect on the Company’s financial position
and results of operations.
Item 4. Submission of Matters to a Vote of
Security Holders
No matter
was submitted to a vote of the security holders of AMERCO during the fourth
quarter of the fiscal year covered by this report, through the solicitation of
proxies or otherwise.
PART
II
Item 5. Market for the Registrant’s Common
Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
As of
March 31, 2008, there were approximately 3,600 holders of record of the common
stock. AMERCO’s common stock is listed on NASDAQ Global Select Market under the
trading symbol “UHAL”. The number of shareholders is derived using internal
stock ledgers and utilizing Mellon Investor Services Stockholder
listings.
The
following table sets forth the high and the low sales price of the common stock
of AMERCO for the periods indicated:
Year Ended March
31,
|
||||||||||||||||
2008
|
2007
|
|||||||||||||||
High
|
Low
|
High
|
Low
|
|||||||||||||
First
quarter
|
$ | 83.87 | $ | 67.29 | $ | 106.95 | $ | 79.71 | ||||||||
Second
quarter
|
$ | 78.78 | $ | 57.03 | $ | 105.35 | $ | 66.22 | ||||||||
Third
quarter
|
$ | 79.86 | $ | 58.82 | $ | 96.89 | $ | 71.81 | ||||||||
Fourth
quarter
|
$ | 71.98 | $ | 47.53 | $ | 89.96 | $ | 59.83 |
Dividends
AMERCO
does not have a formal dividend policy. The Board periodically considers the
advisability of declaring and paying dividends to common stockholders in light
of existing circumstances.
Refer to
Note 20 Statutory Financial Information of Insurance Subsidiaries of the Notes
to Consolidated Financial Statements for a discussion of certain statutory
restrictions on the ability of the insurance subsidiaries to pay dividends to
AMERCO.
Refer to
Note 11 Stockholders Equity of the Notes to Consolidated Financial Statements
for a discussion of AMERCO’s preferred stock.
12
Performance
Graph
The
following graph compares the cumulative total stockholder return on the
Company’s Common Stock for the period March 31, 2003 through March 31, 2008 with
the cumulative total return on the Dow Jones US Equity Market and the Dow Jones
US Transportation Average. The comparison assumes that $100 was
invested on March 31, 2003 in the Company’s Common Stock and in each of
comparison indices. The graph reflects the closing price of the
Common stock trading on NASDAQ on March 31, 2004, 2005, 2006, 2007, and
2008.
![5 Year Graph](https://www.sec.gov/Archives/edgar/data/0000004457/000000445708000010/graphic2.jpg)
Fiscal
year ending March 31:
|
||||||||||||||||||||||||
2003
|
2004
|
2005
|
2006
|
2007
|
2008
|
|||||||||||||||||||
AMERCO
|
$ | 100 | $ | 584 | $ | 1,146 | $ | 2,449 | $ | 1,732 | $ | 1,413 | ||||||||||||
Dow
Jones US Total Market
|
100 | 138 | 148 | 169 | 188 | 178 | ||||||||||||||||||
Dow
Jones US Transportation Average
|
100 | 137 | 178 | 222 | 236 | 238 | ||||||||||||||||||
*
$100 invested on 3/31/03 in stock or index-including reinvestment of
dividends.
|
13
Issuer
Purchases of Equity Securities
On
September 13, 2006, we announced that our Board of Directors (the “Board”) had
authorized us to repurchase up to $50.0 million of our common stock from time to
time on the open market between September 13, 2006 and October 31, 2007. On
March 9, 2007, the Board authorized an increase in the Company’s common stock
repurchase program to a total aggregate amount, net of brokerage commissions, of
$115.0 million (which amount is inclusive of the $50.0 million common stock
repurchase program approved by the Board in 2006). During the first quarter of
fiscal 2008, we repurchased 485,999 shares at the cost of $34.0 million. This
program terminated on October 31, 2007.
The
repurchases made by the Company under this plan were as follows:
Period
|
Total
# of Shares Repurchased
|
Average
Price Paid per Share (1)
|
Total
# of Shares Repurchased as Part of Publicly Announced Plan
|
Total
$ of Shares Repurchased as Part of Publicly Announced Plan
|
Maximum
$ of Shares That May Yet be Repurchased Under the Plan
|
|||||||||||||||
April
1 - 30, 2007
|
196,232 | $ | 69.94 | 196,232 | $ | 13,723,504 | $ | 52,170,394 | ||||||||||||
May
1 - 31, 2007
|
218,090 | 69.85 | 218,090 | 15,234,536 | 36,935,858 | |||||||||||||||
June
1 - 30, 2007
|
71,677 | 69.87 | 71,677 | 5,008,018 | 31,927,840 | |||||||||||||||
First
Quarter Total
|
485,999 | $ | 69.89 | 485,999 | $ | 33,966,058 | ||||||||||||||
Cumulative
Plan Total
|
1,225,290 | $ | 67.80 | 1,225,290 | $ | 83,072,160 | ||||||||||||||
(1)
Represents weighted average purchase price for the periods
presented.
|
On
December 5, 2007, we announced that the Board had authorized us to repurchase up
to $50.0 million of our common stock. The stock may be repurchased by the
Company from time to time on the open market between December 5, 2007 and
December 31, 2008. The extent to which the Company repurchases its shares and
the timing of such purchases will depend upon market conditions and other
corporate considerations. The purchases will be funded from available working
capital. During the fourth quarter of fiscal 2008, the Company repurchased
428,000 shares at a cost of $23.5 million.
The
repurchases made by the Company under this plan were as follows:
Period
|
Total
# of Shares Repurchased
|
Average
Price Paid per Share (1)
|
Total
# of Shares Repurchased as Part of Publicly Announced Plan
|
Total
$ of Shares Repurchased as Part of Publicly Announced Plan
|
Maximum
$ of Shares That May Yet be Repurchased Under the Plan
|
|||||||||||||||
January
1 - 31, 2008
|
- | $ | - | - | $ | - | $ | 50,000,000 | ||||||||||||
February
1 - 29, 2008
|
428,000 | $ | 54.94 | 428,000 | $ | 23,512,380 | $ | 26,487,620 | ||||||||||||
March
1 - 31, 2008
|
- | $ | - | - | $ | - | $ | 26,487,620 | ||||||||||||
Fourth
Quarter Total
|
428,000 | $ | 54.94 | 428,000 | $ | 23,512,380 | ||||||||||||||
(1)
Represents weighted average purchase price for the periods
presented.
|
14
The
following selected financial data should be read in conjunction with the
MD&A, and the Consolidated Financial Statements and related notes in this
Annual Report on Form 10-K.
Listed
below is selected financial data for AMERCO and consolidated entities for each
of the last five years ended March 31:
Year
Ended March 31,
|
||||||||||||||||||||
2008(b), (c) |
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
(In
thousands, except share and per share data)
|
||||||||||||||||||||
Summary
of Operations:
|
||||||||||||||||||||
Self-moving
equipment rentals
|
$ | 1,451,292 | $ | 1,462,470 | $ | 1,489,429 | $ | 1,424,841 | $ | 1,368,814 | ||||||||||
Self-storage
revenues
|
122,248 | 126,424 | 119,742 | 114,155 | 247,640 | |||||||||||||||
Self-moving
and self-storage products and service sales
|
217,798 | 224,722 | 223,721 | 206,098 | 232,965 | |||||||||||||||
Property
management fees
|
22,820 | 21,154 | 21,195 | 11,839 | 259 | |||||||||||||||
Life
insurance premiums
|
111,996 | 120,399 | 118,833 | 126,236 | 145,082 | |||||||||||||||
Property
and casualty insurance premiums
|
28,388 | 24,335 | 26,001 | 24,987 | 92,036 | |||||||||||||||
Net
investment and interest income
|
62,110 | 59,696 | 48,279 | 49,171 | 31,992 | |||||||||||||||
Other
revenue
|
32,522 | 30,098 | 40,325 | 30,172 | 38,523 | |||||||||||||||
Total
revenues
|
2,049,174 | 2,069,298 | 2,087,525 | 1,987,499 | 2,157,311 | |||||||||||||||
Operating
expenses
|
1,077,108 | 1,080,412 | 1,082,158 | 1,123,975 | 1,181,313 | |||||||||||||||
Commission
expenses
|
167,945 | 162,899 | 165,961 | 159,253 | 134,616 | |||||||||||||||
Cost
of sales
|
120,210 | 117,648 | 113,135 | 105,309 | 111,906 | |||||||||||||||
Benefits
and losses
|
111,195 | 118,725 | 117,160 | 140,343 | 217,447 | |||||||||||||||
Amortization
of deferred policy acquisition costs
|
13,181 | 17,138 | 24,261 | 28,512 | 39,083 | |||||||||||||||
Lease
expense
|
133,931 | 147,659 | 136,652 | 142,008 | 153,121 | |||||||||||||||
Depreciation,
net of (gains) losses on disposal
|
221,882 | 189,589 | 142,817 | 121,103 | 148,813 | |||||||||||||||
Restructuring
expense
|
- | - | - | - | 44,097 | |||||||||||||||
Total
costs and expenses
|
1,845,452 | 1,834,070 | 1,782,144 | 1,820,503 | 2,030,396 | |||||||||||||||
Earnings
from operations
|
203,722 | 235,228 | 305,381 | 166,996 | 126,915 | |||||||||||||||
Interest
expense
|
(101,420 | ) | (82,436 | ) | (69,481 | ) | (73,205 | ) | (121,690 | ) | ||||||||||
Fees
and amortization on early extinguishment of debt (a)
|
- | (6,969 | ) | (35,627 | ) | - | - | |||||||||||||
Litigation
settlement, net of costs, fees and expenses
|
- | - | - | 51,341 | - | |||||||||||||||
Pretax
earnings
|
102,302 | 145,823 | 200,273 | 145,132 | 5,225 | |||||||||||||||
Income
tax expense
|
(34,518 | ) | (55,270 | ) | (79,119 | ) | (55,708 | ) | (8,077 | ) | ||||||||||
Net
earnings (loss)
|
67,784 | 90,553 | 121,154 | 89,424 | (2,852 | ) | ||||||||||||||
Less: Preferred
stock dividends
|
(12,963 | ) | (12,963 | ) | (12,963 | ) | (12,963 | ) | (12,963 | ) | ||||||||||
Earnings
(loss) available to common shareholders
|
$ | 54,821 | $ | 77,590 | $ | 108,191 | $ | 76,461 | $ | (15,815 | ) | |||||||||
Net
earnings (loss) per common share basic and diluted
|
$ | 2.78 | $ | 3.72 | $ | 5.19 | $ | 3.68 | $ | (0.76 | ) | |||||||||
Weighted
average common shares outstanding: Basic and diluted
|
19,740,571 | 20,838,570 | 20,857,108 | 20,804,773 | 20,749,998 | |||||||||||||||
Cash
dividends declared and accrued
|
||||||||||||||||||||
Preferred
stock
|
$ | 12,963 | $ | 12,963 | $ | 12,963 | $ | 12,963 | $ | 12,963 | ||||||||||
Balance
Sheet Data:
|
||||||||||||||||||||
Property,
plant and equipment, net
|
2,011,176 | 1,897,071 | 1,535,165 | 1,354,468 | 1,451,805 | |||||||||||||||
Total
assets
|
3,832,487 | 3,523,048 | 3,367,218 | 3,116,173 | 3,394,748 | |||||||||||||||
Capital
leases
|
- | - | - | - | 99,607 | |||||||||||||||
AMERCO's
notes and loans payable
|
1,504,677 | 1,181,165 | 965,634 | 780,008 | 862,703 | |||||||||||||||
SAC
Holdings II notes and loans payable, non re-course to
AMERCO
|
- | 74,887 | 76,232 | 77,474 | 78,637 | |||||||||||||||
Stockholders'
equity
|
758,431 | 718,098 | 695,604 | 572,839 | 503,846 | |||||||||||||||
(a)
Includes the write-off of debt issuance costs of $7.0 million in fiscal
2007 and $14.4 million in fiscal 2006.
|
||||||||||||||||||||
(b)
Fiscal 2008 summary of operations includes 7 months of activity for SAC
Holding II which was deconsolidated effective October 31,
2007.
|
||||||||||||||||||||
(c)
Fiscal 2008 balance sheet data does not include SAC Holding II which was
deconsolidated effective October 31, 2007
|
15
Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
General
We begin
this MD&A with the overall strategy of AMERCO, followed by a description of
our operating segments and the strategy of our operating segments to give the
reader an overview of the goals of our business and the direction in which our
businesses and products are moving. This is followed by a section entitled
“Critical Accounting Policies and Estimates” that we believe is important to
understanding the assumptions and judgments incorporated in our reported
financial results. In the next section, we discuss our results of operations for
fiscal 2008 compared with fiscal 2007, and for fiscal 2007 compared with fiscal
2006 beginning with an overview. We then provide an analysis of changes in our
balance sheet and cash flows and discuss our financial commitments in the
sections entitled “Liquidity and Capital Resources” and “Disclosures about
Contractual Obligations and Commercial Commitments.” We conclude this MD&A
by discussing our outlook for fiscal 2009.
This
MD&A should be read in conjunction with the other sections of this Annual
Report on Form 10-K, including “Item 1: Business”, “Item 6: Selected Financial
Data” and “Item 8: Financial Statements and Supplementary Data.” The various
sections of this MD&A contain a number of forward-looking statements, as
discussed under the caption “Cautionary Statements Regarding Forward-Looking
Statements,” all of which are based on our current expectations and could be
affected by the uncertainties and risk factors described throughout this filing
and particularly under the section “Item 1A: Risk Factors.” Our actual results
may differ materially from these forward-looking statements.
AMERCO
has a fiscal year that ends on the 31st of
March for each year that is referenced. Our insurance company subsidiaries have
fiscal years that end on the 31st of
December for each year that is referenced. They have been consolidated on that
basis. Our insurance companies’ financial reporting processes conform to
calendar year reporting as required by state insurance departments. Management
believes that consolidating their calendar year into our fiscal year financial
statements does not materially affect the financial position or results of
operations. The Company discloses any material events occurring during the
intervening period. Consequently, all references to our insurance subsidiaries’
years 2007, 2006 and 2005 correspond to fiscal 2008, 2007 and 2006 for
AMERCO.
Overall
Strategy
Our
overall strategy is to maintain our leadership position in the North American
“do-it-yourself” moving and storage industry. We accomplish this by providing a
seamless and integrated supply chain to the “do-it-yourself” moving and storage
market. As part of executing this strategy, we leverage the brand recognition of
U-Haul with our
full line of moving and self-storage related products and services and the
convenience of our broad geographic presence.
Our
primary focus is to provide our customers with a wide selection of moving rental
equipment, convenient self-storage rental facilities and related moving and
self-storage products and services. We are able to expand our distribution and
improve customer service by increasing the amount of moving equipment and
storage rooms available for rent, expanding the number of independent dealers in
our network and expanding and taking advantage of our growing eMove
capabilities.
RepWest
is focused on providing and administering property and casualty insurance to
U-Haul, its customers, its independent dealers and affiliates.
Oxford is
focused on long-term capital growth through direct writing and reinsuring of
life, Medicare supplement and annuity products in the senior
marketplace.
16
Description
of Operating Segments
AMERCO’s
four reportable segments are:
(a)
|
Moving
and Storage, comprised of AMERCO, U-Haul and Real Estate and the
subsidiaries of U-Haul and Real
Estate
|
(b)
|
Property
and Casualty Insurance, comprised of RepWest and its wholly-owned
subsidiaries
|
(c)
|
Life
Insurance, comprised of Oxford and its wholly-owned
subsidiaries
|
(d)
|
SAC
Holding II and its subsidiaries (through October
2007)
|
Refer to
Note 1 Basis of Presentation, Note 21 Financial Information by Geographic Area
and Note 21A Consolidating Financial Information by Industry Segment of the
Notes to Consolidated Financial Statements included in this Form
10-K.
Moving
and Storage Operating Segment
Our
Moving and Storage Operating Segment consists of the rental of trucks, trailers,
specialty rental items and self-storage spaces primarily to the household mover
as well as sales of moving supplies, towing accessories and propane. Operations
are conducted under the registered trade name U-Haul®
throughout the United States and Canada.
With
respect to our truck, trailer, specialty rental items and self-storage rental
business, we are focused on expanding our dealer network, which provides added
convenience for our customers and expanding the selection and availability of
rental equipment to satisfy the needs of our customers.
U-Haul
brand self-moving related products and services, such as boxes, pads and tape
allow our customers to, among other things, protect their belongings from
potential damage during the moving process. We are committed to providing a
complete line of products selected with the “do-it-yourself” moving and storage
customer in mind.
eMove is
an online marketplace that connects consumers to over 3,700 independent Moving
Help™ service providers and over 3,300 independent Self-Storage Affiliates. Our
network of customer-rated affiliates provides pack and load help, cleaning help,
self-storage and similar services, all over North America. Our goal is to
further utilize our web-based technology platform to increase service to
consumers and businesses in the moving and storage market.
Property
and Casualty Insurance Operating Segment
RepWest
provides loss adjusting and claims handling for U-Haul through regional offices
across North America. RepWest also underwrites components of the Safemove,
Safetow and Safestor protection packages to
U-Haul customers. We continue to focus on increasing the penetration of these
products. The business plan for RepWest includes offering property and casualty
products in other U-Haul related
programs.
Life
Insurance Operating Segment
Oxford
provides life and health insurance products primarily to the senior market
through the direct writing or reinsuring of life insurance, Medicare supplement
and annuity policies. Additionally, Oxford administers the self-insured employee
health and dental plans for Arizona employees of the Company.
SAC
Holding II Operating Segment
SAC
Holding Corporation and its subsidiaries, and SAC Holding II Corporation and its
subsidiaries, collectively referred to as “SAC Holdings”, own self-storage
properties that are managed by U-Haul under property management agreements and
act as independent U-Haul rental equipment dealers. AMERCO, through its
subsidiaries, has contractual interests in certain SAC Holdings’ properties
entitling AMERCO to potential future income based on the financial performance
of these properties. With respect to SAC Holding II, AMERCO was considered the
primary beneficiary of these contractual interests prior to November 2007.
Consequently, for those reporting periods prior to November 2007 we included the
results of SAC Holding II in the consolidated financial statements of AMERCO, as
required by FIN 46(R).
17
Substantially
all of the equity interest of SAC Holdings is controlled by Blackwater. In
November 2007, Blackwater contributed additional capital to its wholly-owned
subsidiary, SAC Holding II. This contribution was determined by us to be
material with respect to the capitalization of SAC Holding II; therefore,
triggering a requirement under FIN 46(R) for us to reassess the Company’s
involvement with those subsidiaries. This required reassessment led to the
conclusion that the Company was no longer the primary beneficiary of SAC Holding
II as of the date of Blackwater’s contribution. Accordingly, the Company
deconsolidated this entity. While the deconsolidation affects AMERCO’s financial
reporting, it has no operational or financial impact on the Company’s
relationship with SAC Holding II. The deconsolidation, effective October 31,
2007 was accounted for as a distribution of SAC Holding II interests to
Blackwater, the sole shareholder of SAC Holding II. Because of the Company’s
continuing involvement with SAC Holding II, the distributions do not qualify as
discontinued operations as defined by SFAS 144.
Critical
Accounting Policies and Estimates
The
Company’s financial statements have been prepared in accordance with the
generally accepted accounting principles (“GAAP”) in the United States. The
methods, estimates and judgments we use in applying our accounting policies can
have a significant impact on the results we report in our financial statements.
Note 3 Accounting Policies of the Notes to Consolidated Financial Statements in
“Item 8: Financial Statements and Supplementary Data” of this Form 10-K
summarizes the significant accounting policies and methods used in the
preparation of our consolidated financial statements and related disclosures.
Certain accounting policies require us to make difficult and subjective
judgments and assumptions, often as a result of the need to make estimates of
matters that are inherently uncertain.
Below we
have set forth, with a detailed description, the accounting policies that we
deem most critical to us and that require management’s most difficult and
subjective judgments. These estimates are based on historical experience,
observance of trends in particular areas, information and valuations available
from outside sources and on various other assumptions that are believed to be
reasonable under the circumstances and which form the basis for making judgments
about the carrying values of assets and liabilities that are not readily
apparent from other sources. Actual amounts may differ from these
estimates under different assumptions and conditions; such differences may be
material.
We also
have other policies that we consider key accounting policies, such as revenue
recognition; however, these policies do not meet the definition of critical
accounting estimates, because they do not generally require us to make estimates
or judgments that are difficult or subjective. The accounting policies that we
deem most critical to us, and involve the most difficult, subjective or complex
judgments include the following:
Principles
of Consolidation
The
Company applies FIN 46(R), “Consolidation of Variable Interest
Entities” and ARB 51, “Consolidated Financial
Statements” in its principles of consolidation. FIN 46(R) addresses
arrangements where a company does not hold a majority of the voting or similar
interests of a VIE. A company is required to consolidate a VIE if it
has determined it is the primary beneficiary. ARB 51 addresses the policy when a
company owns a majority of the voting or similar rights and exercises effective
control.
As
promulgated by FIN 46(R), a VIE is not self-supportive due to having one or both
of the following conditions: a) it has an insufficient amount of equity for it
to finance its activities without receiving additional subordinated financial
support or b) its owners do not hold the typical risks and rights of equity
owners. This determination is made upon the creation of a variable
interest and can be re-assessed should certain changes in the operations of a
VIE, or its relationship with the primary beneficiary trigger a reconsideration
under the provisions of FIN 46(R). After a triggering event occurs
the most recent facts and circumstances are utilized in determining whether or
not a company is a VIE, which other company(s) have a variable interest in the
entity, and whether or not the company’s interest is such that it is the primary
beneficiary.
In fiscal
2003 and fiscal 2002, SAC Holdings were considered special purpose entities and
were consolidated based on the provisions of Emerging Issues Task Force (“EITF”)
Issue No. 90-15. In fiscal 2004 the Company evaluated its interests in SAC
Holdings utilizing the guidance promulgated in FIN 46(R). The Company concluded
that SAC Holdings were VIE’s and that the Company was the primary beneficiary.
Accordingly, the Company continued to include SAC Holdings in its consolidated
financial statements.
18
In
February and March 2004 SAC Holding Corporation triggered a requirement to
reassess AMERCO’s involvement in it, which led to the conclusion SAC Holding
Corporation was not a VIE and AMERCO ceased to be the primary
beneficiary.
In
November 2007, Blackwater contributed additional capital to its wholly-owned
subsidiary, SAC Holding II. This contribution was determined by us to be
material with respect to the capitalization of SAC Holding II; therefore,
triggering a requirement under FIN 46(R) for us to reassess the Company’s
involvement with those subsidiaries. This required reassessment led to the
conclusion that SAC Holding II has the ability to fund its own operations and
execute its business plan without any future subordinated financial support;
therefore, the Company was no longer the primary beneficiary of SAC Holding II
as of the date of Blackwater’s contribution.
Accordingly,
at the date AMERCO ceased to have a variable interest and ceased to be the
primary beneficiary of SAC Holding II and its current subsidiaries, it
deconsolidated these entities. The deconsolidation was accounted for as a
distribution of SAC Holding II’s interests to the sole shareholder of the SAC
entities. Because of AMERCO’s continuing involvement with SAC Holding II and its
subsidiaries, the distribution does not qualify as discontinued operations as
defined by SFAS 144.
It is
possible that SAC Holdings could take actions that would require us to
re-determine whether SAC Holdings has become a VIE or whether we have become the
primary beneficiary of SAC Holdings. Should this occur, we could be required to
consolidate some or all of SAC Holdings with our financial
statements.
The
consolidated balance sheet as of March 31, 2008 includes the accounts of AMERCO
and its wholly-owned subsidiaries. The consolidated balance sheet as of March
31, 2007 includes the accounts of AMERCO and its wholly-owned subsidiaries and
SAC Holding II and its subsidiaries. The March 31, 2008 statements of operations
and cash flows include AMERCO and its wholly-owned subsidiaries for the entire
year, and reflect SAC Holding II and its subsidiaries for the seven months ended
October 31, 2007. The March 31, 2007 and 2006 statements of operations and cash
flows include the accounts of AMERCO and its wholly-owned subsidiaries and SAC
Holding II and its subsidiaries.
Recoverability
of Property, Plant and Equipment
Property,
plant and equipment are stated at cost. Interest expense incurred during the
initial construction of buildings and rental equipment is considered part of
cost. Depreciation is computed for financial reporting purposes using the
straight-line or an accelerated method based on a declining balance formula over
the following estimated useful lives: rental equipment 2-20 years and buildings
and non-rental equipment 3-55 years. The Company follows the deferral method of
accounting based in the AICPA’s Airline Guide for major overhauls in which
engine overhauls are capitalized and amortized over five years and transmission
overhauls are capitalized and amortized over three years. Routine maintenance
costs are charged to operating expense as they are incurred. Gains and losses on
dispositions of property, plant and equipment are netted against depreciation
expense when realized. Equipment depreciation is recognized in amounts expected
to result in the recovery of estimated residual values upon disposal, i.e.,
minimize gains or losses. In determining the depreciation rate, historical
disposal experience, holding periods and trends in the market for vehicles are
reviewed.
19
We
regularly perform reviews to determine whether facts and circumstances exist
which indicate that the carrying amount of assets, including estimates of
residual value, may not be recoverable or that the useful life of assets are
shorter or longer than originally estimated. Reductions in residual values
(i.e., the price at which we ultimately expect to dispose of revenue earning
equipment) or useful lives will result in an increase in depreciation expense
over the life of the equipment. Reviews are performed based on vehicle class,
generally subcategories of trucks and trailers. We assess the recoverability of
our assets by comparing the projected undiscounted net cash flows associated
with the related asset or group of assets over their estimated remaining lives
against their respective carrying amounts. We consider factors such as current
and expected future market price trends on used vehicles and the expected life
of vehicles included in the fleet. Impairment, if any, is based on the excess of
the carrying amount over the fair value of those assets. If asset residual
values are determined to be recoverable, but the useful lives are shorter or
longer than originally estimated, the net book value of the assets is
depreciated over the newly determined remaining useful lives.
Since
fiscal 2006, the Company has been acquiring a significant number of moving
trucks via purchase rather than lease. Management performed an analysis of the
expected economic value of new rental trucks and determined that additions to
the fleet resulting from purchase should be depreciated on an accelerated method
based upon a declining formula. The salvage value and useful life assumptions of
the rental truck fleet remain unchanged. Under the declining balances
method (2.4 times declining balance) the book value of a rental truck is reduced
16%, 13%, 11%, 9%, 8%, 7%, and 6% during years one through seven, respectively
and then reduced on a straight line basis an additional 10% by the end of year
fifteen. Whereas, a standard straight line approach would reduce the book value
by approximately 5.3% per year over the life of the truck. For the affected
equipment, the accelerated depreciation was $56.7 million, $33.2 million and
$4.0 million greater than what it would have been if calculated under a straight
line approach for fiscal 2008, 2007 and 2006, respectively.
We typically sell our used vehicles at
our sales centers throughout North America, on our web site at
trucksales.uhaul.com or by phone at 1-866-404-0355. Although we intend to sell
our used vehicles for prices approximating book value, the extent to which we
realize a gain or loss on the sale of used vehicles is dependent upon various
factors including the general state of the used vehicle market, the age and
condition of the vehicle at the time of its disposal and depreciation rates with
respect to the vehicle.
Insurance
Reserves
Liabilities
for life insurance and certain annuity and health policies are established to
meet the estimated future obligations of policies in force, and are based on
mortality, morbidity and withdrawal assumptions from recognized actuarial tables
which contain margins for adverse deviation. In addition, liabilities for
health, disability and other policies include estimates of payments to be made
on insurance claims for reported losses and estimates of losses incurred, but
not yet reported. Liabilities for annuity contracts consist of contract account
balances that accrue to the benefit of the policyholders.
Insurance
reserves for RepWest and U-Haul take into account losses incurred based upon
actuarial estimates. These estimates are based on past claims experience and
current claim trends as well as social and economic conditions such as changes
in legal theories and inflation. Due to the nature of underlying risks and the
high degree of uncertainty associated with the determination of the liability
for future policy benefits and claims, the amounts to be ultimately paid to
settle liabilities cannot be precisely determined and may vary significantly
from the estimated liability.
Due to
the long tailed nature of the assumed reinsurance and the excess workers
compensation lines of insurance written by RepWest it may take a number of years
for claims to be fully developed and finally settled.
Impairment
of Investments
For
investments accounted for under SFAS 115, in determining if and when a decline
in market value below amortized cost is other-than-temporary, management makes
certain assumptions or judgments in its assessment including but not limited to:
ability and intent to hold the security, quoted market prices, dealer quotes or
discounted cash flows, industry factors, financial factors, and issuer specific
information such as credit strength. Other-than-temporary impairment in value is
recognized in the current period operating results. The Company’s insurance
subsidiaries recognized $0.5 million in other-than-temporary impairments for
fiscal 2008, $1.4 million for fiscal 2007 and $5.3 million for fiscal
2006.
20
Income
Taxes
The
Company’s tax returns are periodically reviewed by various taxing authorities.
The final outcome of these audits may cause changes that could materially impact
our financial results.
AMERCO
files a consolidated tax return with all of its legal subsidiaries, except for
DGLIC, a subsidiary of Oxford, which will file on a stand alone basis until
2012. SAC Holding Corporation and its legal subsidiaries and SAC Holding II
Corporation and its legal subsidiaries file separate consolidated tax returns,
which are in no way associated with AMERCO’s consolidated returns.
Recent
Accounting Pronouncements
In
September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS
157, Fair Value
Measurements which establishes how companies should measure fair value
when they are required to use a fair value measure for recognition or disclosure
purposes under GAAP. This statement is effective for financial statements issued
for fiscal years beginning after November 15, 2007 and interim periods
within those years. The provisions of SFAS 157 which have not been deferred by
the FASB are effective for us in April 2008. The Company does not believe that
the adoption of this statement will have a material impact on our financial
statements.
In
February 2007, the FASB issued SFAS 159, The Fair Value Option for Financial
Assets and Liabilities, including an amendment of SFAS 115. This
statement allows for a company to irrevocably elect fair value as the
measurement attribute for certain financial assets and financial liabilities.
Changes in the fair value of such assets are recognized in earnings. SFAS 159 is
effective for fiscal years beginning after November 15, 2007. The provisions of
SFAS 159 are effective for us in April 2008. The Company does not believe that
the adoption of this statement will have a material impact on our financial
statements.
In
December 2007, the FASB issued SFAS 141(R), Business Combinations. SFAS
141(R) provides companies with principles and requirements on how an acquirer
recognizes and measures in its financial statements the identifiable assets
acquired, liabilities assumed, and any noncontrolling interest in the acquiree
as well as the recognition and measurement of goodwill acquired in a business
combination. SFAS 141(R) also requires certain disclosures to enable users of
the financial statements to evaluate the nature and financial effects of the
business combination. Acquisition costs associated with the business combination
will generally be expensed as incurred. SFAS 141(R) is effective for business
combinations occurring in fiscal years beginning after December 15, 2008,
which will require us to adopt these provisions for business combinations
occurring in fiscal 2010 and thereafter. Early adoption of SFAS 141(R) is not
permitted.
In
December 2007, the FASB issued SFAS 160, Noncontrolling Interests in
Consolidated Financial Statements — an amendment of ARB No. 51.
This Statement clarifies that a noncontrolling interest in a subsidiary is an
ownership interest in the consolidated entity that should be reported as equity
in the consolidated financial statements. This Statement changes the way the
consolidated income statement is presented by requiring net income to be
reported at amounts that include the amounts attributable to both the parent and
the noncontrolling interest and to disclose those amounts on the face of the
income statement. SFAS 160 is effective for fiscal years beginning after
December 15, 2008. Early adoption of SFAS 160 is not permitted. The Company does
not believe that the adoption of this statement will have a material impact on
our financial statements.
In March
2008, the FASB issued SFAS 161, Disclosures about Derivative
Instruments and Hedging Activities which amends SFAS 133 to require expanded disclosures about derivative
instruments and hedging activities regarding (1) the ways in which an entity
uses derivatives, (2) the accounting for derivatives and hedging activities, and
(3) the impact that derivatives have (or could have) on an entity's financial
position, financial performance, and cash flows. SFAS 161 is effective for
financial statements of fiscal years and interim periods beginning after
November 15, 2008, with early application encouraged. While disclosures for
earlier comparative periods presented at initial adoption are not required, they
are encouraged; following initial adoption, comparative disclosures are required
only for periods after
such adoption. The Company is currently evaluating the impact that SFAS 161 will
have on our financial statements and disclosures.
21
Results
of Operations
AMERCO
and Consolidated Entities
Fiscal
2008 Compared with Fiscal 2007
Listed
below on a consolidated basis are revenues for our major product lines for
fiscal 2008 and fiscal 2007:
Year
Ended March 31,
|
||||||||
2008
|
2007
|
|||||||
(In
thousands)
|
||||||||
Self-moving
equipment rentals
|
$ | 1,451,292 | $ | 1,462,470 | ||||
Self-storage
revenues
|
122,248 | 126,424 | ||||||
Self-moving
and self-storage product and service sales
|
217,798 | 224,722 | ||||||
Property
management fees
|
22,820 | 21,154 | ||||||
Life
insurance premiums
|
111,996 | 120,399 | ||||||
Property
and casualty insurance premiums
|
28,388 | 24,335 | ||||||
Net
investment and interest income
|
62,110 | 59,696 | ||||||
Other
revenue
|
32,522 | 30,098 | ||||||
Consolidated
revenue
|
$ | 2,049,174 | $ | 2,069,298 |
Self-moving
equipment rental revenues decreased $11.2 million in fiscal 2008 compared with
fiscal 2007. The majority of the year over year decline occurred during the
first half of fiscal 2008 driven primarily by negative trends in average one-way
revenue per transaction. During the second half of fiscal 2008 we experienced
incremental improvements in pricing; however, we still finished the full year
behind fiscal 2007 as it relates to average revenue per transaction. Partially
offsetting the negative pricing environment was the extra business day in
February 2008 and a marginal increase in total moving transactions compared with
fiscal 2007.
Self-storage
revenues decreased $4.2 million in fiscal 2008, compared with fiscal 2007 due to
the deconsolidation of SAC Holding II which was effective as of October 31, 2007
and which accounted for an $8.5 million decrease in reported self-storage
revenues in fiscal 2008 as compared with fiscal 2007. Self-storage revenues for
AMERCO owned locations increased $4.3 million in fiscal 2008 as compared with
fiscal 2007 driven primarily by favorable pricing. While average room occupancy
rates at AMERCO owned locations for fiscal 2008 declined 2.6% from fiscal 2007
to 84.0%, the Company increased the total number of rooms rented, rooms
available and square footage available in the same time period. The
deconsolidation of SAC Holding II for GAAP reporting purposes reduces
consolidated self-storage revenues; however, there has been no change in the
economics of our operational or financial relationship with SAC Holding
II.
Sales of
self-moving and self-storage products and services decreased $6.9 million in
fiscal 2008 as compared with fiscal 2007 with $6.0 million of the decrease
related to the deconsolidation of SAC Holding II. The remainder of
the decline is related primarily to lower sales of hitch and towing accessories
during the second half of fiscal 2008.
Premiums
at Oxford decreased $8.4 million driven by the termination of the credit life
and disability program and declining Medicare supplement premiums. During fiscal
2008, Oxford increased sales of its new life insurance products.
Premiums
at RepWest increased $4.1 million due to U-Haul related business.
Net
investment and interest income increased $2.4 million in fiscal 2008 as compared
with fiscal 2007. The Company receives interest income from SAC Holdings for
junior notes the Company holds. Prior to the deconsolidation of SAC Holding II
in October 2007, the amounts earned from junior notes related to SAC Holding II
were eliminated. After October 2007, this interest income is no longer
eliminated resulting in an increase of $2.9 million. This was offset by
decreases of the insurance companies’ investment income due to lower investment
yields and a smaller invested asset base.
As a
result of the items mentioned above, revenues for AMERCO and its consolidated
entities were $2,049.2 million for fiscal 2008, compared with $2,069.3 million
for fiscal 2007.
22
Listed
below are revenues and earnings from operations at each of our four operating
segments for fiscal 2008 and fiscal 2007, the insurance companies years ended
are December 31, 2007 and 2006.
Year
Ended March 31,
|
||||||||
2008
|
2007
|
|||||||
(In
thousands)
|
||||||||
Moving
and storage
|
||||||||
Revenues
|
$ | 1,858,230 | $ | 1,861,751 | ||||
Earnings
from operations
|
192,970 | 217,937 | ||||||
Property
and casualty insurance
|
||||||||
Revenues
|
40,478 | 38,486 | ||||||
Earnings
from operations
|
9,244 | 5,741 | ||||||
Life
insurance
|
||||||||
Revenues
|
137,448 | 148,820 | ||||||
Earnings
from operations
|
17,202 | 14,521 | ||||||
SAC
Holding II (a)
|
||||||||
Revenues
|
28,102 | 46,603 | ||||||
Earnings
from operations
|
7,926 | 13,854 | ||||||
Eliminations
|
||||||||
Revenues
|
(15,084 | ) | (26,362 | ) | ||||
Earnings
from operations
|
(23,620 | ) | (16,825 | ) | ||||
Consolidated
Results
|
||||||||
Revenues
|
2,049,174 | 2,069,298 | ||||||
Earnings
from operations
|
203,722 | 235,228 | ||||||
(a)
Fiscal 2008 includes 7 months of activity for SAC Holding II which was
deconsolidated effective October 31, 2007.
|
Total
costs and expenses increased $11.4 million in fiscal 2008 as compared with
fiscal 2007. The largest increase was in depreciation expense associated with
the rotation of our fleet. Conversely, with the shift in focus from operating
leases to purchases of new rental trucks, lease expense decreased in fiscal 2008
as compared with fiscal 2007. The Company nets gains and losses from the
disposal of property and equipment against depreciation. Included in
depreciation are gains on the sale of real estate of $12.7 million and $4.4
million in fiscal 2008 and fiscal 2007, respectively. Repair and maintenance
costs included in operating expenses declined for the year due to the rotation
of older trucks out of the active rental fleet. Benefits and operating expenses
decreased at each of the insurance companies as business volumes decline. Other
operating costs including personnel, property tax and certain legal-related
expenses increased in fiscal 2008 as compared with fiscal 2007.
As a
result of the aforementioned changes in revenues and expenses, earnings from
operations decreased to $203.7 million for fiscal 2008, compared with $235.2
million for fiscal 2007.
Interest
expense for fiscal 2008 was $101.4 million, compared with $89.4 million in
fiscal 2007. Fiscal 2007 results included a one-time, non-recurring charge of
$7.0 million, before taxes, of deferred debt issuance costs related to a loan
that was amended. The refinancing costs had the effect of decreasing on a
non-recurring basis, earnings for the year ended March 31, 2007 by $0.33 per
share before taxes, in which the tax effect was approximately $0.13 per share.
Absent this charge, the increase in interest expense in fiscal 2008 is related
to increased debt associated with the fleet rotation.
Income
tax expense was $34.5 million in fiscal 2008, compared with $55.3 million in
fiscal 2007.
Dividends
accrued on our Series A preferred stock were $13.0 million in both fiscal 2008
and 2007, respectively.
As a
result of the above mentioned items, net earnings available to common
shareholders were $54.8 million in fiscal 2008, compared with $77.6 million in
fiscal 2007.
The
weighted average common shares outstanding: basic and diluted were 19,740,571 in
fiscal 2008 and 20,838,570 in fiscal 2007.
Basic and
diluted earnings per share in fiscal 2008 were $2.78, compared with $3.72 in
fiscal 2007.
23
Fiscal
2007 Compared with Fiscal 2006
Listed
below on a consolidated basis are revenues for our major product lines for
fiscal 2007 and fiscal 2006:
Year
Ended March 31,
|
||||||||
2007
|
2006
|
|||||||
(In
thousands)
|
||||||||
Self-moving
equipment rentals
|
$ | 1,462,470 | $ | 1,489,429 | ||||
Self-storage
revenues
|
126,424 | 119,742 | ||||||
Self-moving
and self-storage product and service sales
|
224,722 | 223,721 | ||||||
Property
management fees
|
21,154 | 21,195 | ||||||
Life
insurance premiums
|
120,399 | 118,833 | ||||||
Property
and casualty insurance premiums
|
24,335 | 26,001 | ||||||
Net
investment and interest income
|
59,696 | 48,279 | ||||||
Other
revenue
|
30,098 | 40,325 | ||||||
Consolidated
revenue
|
$ | 2,069,298 | $ | 2,087,525 |
During
fiscal 2007, self-moving equipment rental revenues decreased $27.0 million,
compared with fiscal 2006 with the majority of the variance occurring during the
second half of the year. The Company finished fiscal 2007 with increases in
one-way transactions along with increases in the average inventory of the truck
fleet. However, offsetting these factors were a decrease in average revenue per
transaction primarily due to one-way pricing, the lack of certain mid-size
trucks during the spring and summer months of fiscal 2007 and decreased fleet
utilization. The Company’s response to competitive pricing issues further
lowered self-moving rental revenues.
Self-storage
revenues increased $6.7 million in fiscal 2007, compared with fiscal 2006
largely due to improved pricing. During fiscal 2007, the Company increased rooms
and square footage available primarily through build-outs at existing
facilities.
Sales of
self-moving and self-storage products and services revenues increased $1.0
million in fiscal 2007, compared with fiscal 2006. The Company continues to
improve its visibility as a leading provider of propane, moving supplies and
towing accessories and offer new products and services in an effort to increase
sales results.
Other
revenues decreased $10.2 million in fiscal 2007, compared with fiscal 2006.
Fiscal 2006 included several non-recurring items.
Premiums
at RepWest decreased $1.7 million with increases in U-Haul related premiums
offset by reductions in other lines.
Oxford’s
premium revenues increased approximately $1.6 million primarily due to an
increase in Medicare supplement premiums resulting from the acquisition of
DGLIC.
As a
result of the items mentioned above, revenues for AMERCO and its consolidated
entities were $2,069.3 million for fiscal 2007, compared with $2,087.5 million
for fiscal 2006.
24
Listed
below are revenues and earnings from operations at each of our four operating
segments for fiscal 2007 and fiscal 2006; for the insurance companies years
ended are December 31, 2006 and 2005:
Year
Ended March 31,
|
||||||||
2007
|
2006
|
|||||||
(In
thousands)
|
||||||||
Moving
and storage
|
||||||||
Revenues
|
$ | 1,861,751 | $ | 1,886,328 | ||||
Earnings
from operations
|
217,937 | 292,774 | ||||||
Property
and casualty insurance
|
||||||||
Revenues
|
38,486 | 37,358 | ||||||
Earnings
from operations
|
5,741 | 1,144 | ||||||
Life
insurance
|
||||||||
Revenues
|
148,820 | 148,080 | ||||||
Earnings
from operations
|
14,521 | 13,933 | ||||||
SAC
Holding II
|
||||||||
Revenues
|
46,603 | 46,239 | ||||||
Earnings
from operations
|
13,854 | 13,643 | ||||||
Eliminations
|
||||||||
Revenues
|
(26,362 | ) | (30,480 | ) | ||||
Earnings
from operations
|
(16,825 | ) | (16,113 | ) | ||||
Consolidated
Results
|
||||||||
Revenues
|
2,069,298 | 2,087,525 | ||||||
Earnings
from operations
|
235,228 | 305,381 |
Total
costs and expenses increased $51.9 million in fiscal 2007, compared with fiscal
2006. This is due primarily to increases in depreciation expense associated with
the acquisition of new trucks and the fleet rotation. Beginning in the second
half of fiscal 2006, the Company began utilizing debt to finance the majority of
new truck purchases rather than operating lease arrangements which were used
primarily during the previous ten years. While the Company generates a cash flow
benefit from utilizing the depreciation deduction for income taxes, as compared
to what the lease expense would have been, the consolidated statement of
operations reflects an increase in depreciation expense greater than what the
corresponding lease expense would have been had we leased this equipment
instead. For additional information on the Company’s depreciation policy refer
to “Critical Accounting Policies and Estimates”.
As a
result of the aforementioned changes in revenues and expenses, earnings from
operations decreased to $235.2 million for fiscal 2007, compared with $305.4
million for fiscal 2006.
Interest
expense for fiscal 2007 was $89.4 million, compared with $105.1 million in
fiscal 2006. The interest expense related to the increase in average borrowings
was partially offset by a reduction in the average borrowing rate resulting from
the refinancing activities in fiscal 2006. Fiscal 2007 results included a
one-time, non-recurring charge of $7.0 million before taxes related to the full
amortization of deferred debt issuance costs related to a loan that was
amended. The refinancing related charge had the effect of decreasing
on a non-recurring basis, earnings for the year ended March 31, 2007 by $0.33
per share before taxes, in which the tax effect was approximately $0.13 per
share. Fiscal 2006 results included a one-time, non-recurring charge of $35.6
million before taxes which includes fees for early extinguishment of debt of
$21.2 million and the write-off of $14.4 million of debt issuance
costs. The refinancing costs had the effect of decreasing, on a
non-recurring basis, earnings for the year ended March 31, 2006 by $1.71 per
share before taxes, in which the tax effect was approximately $0.63 per
share.
Income
tax expense was $55.3 million in fiscal 2007, compared with $79.1 million in
fiscal 2006.
Dividends
accrued on our Series A preferred stock were $13.0 million in both fiscal 2007
and 2006, respectively.
As a
result of the above mentioned items, net earnings available to common
shareholders were $77.6 million in fiscal 2007, compared with $108.2 million in
fiscal 2006.
25
The
weighted average common shares outstanding: basic and diluted were 20,838,570 in
fiscal 2007 and 20,857,108 in fiscal 2006.
Basic and
diluted earnings per share in fiscal 2007 were $3.72, compared with $5.19 in
fiscal 2006.
Moving
and Storage
Fiscal
2008 Compared with Fiscal 2007
Listed
below are revenues for the major product lines at our Moving and Storage
Operating Segment for fiscal 2008 and fiscal 2007:
Year
Ended March 31,
|
||||||||
2008
|
2007
|
|||||||
(In
thousands)
|
||||||||
Self-moving
equipment rentals
|
$ | 1,451,292 | $ | 1,462,470 | ||||
Self-storage
revenues
|
110,779 | 106,498 | ||||||
Self-moving
and self-storage product and service sales
|
207,759 | 208,677 | ||||||
Property
management fees
|
24,520 | 23,951 | ||||||
Net
investment and interest income
|
34,906 | 34,161 | ||||||
Other
revenue
|
28,974 | 25,994 | ||||||
Moving
and Storage revenue
|
$ | 1,858,230 | $ | 1,861,751 |
Self-moving
equipment rental revenues decreased $11.2 million in fiscal 2008 compared with
fiscal 2007. The majority of the year over year decline occurred during the
first half of fiscal 2008 driven primarily by negative trends in average one-way
revenue per transaction. During the second half of fiscal 2008 we experienced
incremental improvements in pricing; however, we still finished the full year
behind fiscal 2007 as it relates to revenue per transaction. Partially
offsetting the negative pricing environment was the extra business day in
February 2008 and a marginal increase in total moving transactions compared to
fiscal 2007.
Self-storage
revenues increased $4.3 million in fiscal 2008 compared with fiscal 2007
primarily due to favorable pricing. While average room occupancy rates for
fiscal 2008 declined 2.6% from fiscal 2007 to 84.0%, the Company increased the
total number of rooms rented, rooms available and square footage available in
the same time period.
Sales of
self-moving and self-storage products and services decreased $0.9 million in
fiscal 2008 as compared with fiscal 2007 primarily due to lower sales of hitch
and towing accessories during the second half of fiscal 2008.
Other
revenue increased $3.0 million for fiscal 2008, compared with fiscal 2007. Other
revenue includes new programs that have not yet achieved a significant volume of
reportable revenues and other revenues not directly related to any other
reported line item.
The
Company owns and manages self-storage facilities. Self-storage revenues reported
in the consolidated financial statements for Moving and Storage represent
Company-owned locations only. Self-storage data for our owned storage locations
was as follows:
Year
Ended March 31,
|
||||||||
2008
|
2007
|
|||||||
(In
thousands, except occupancy rate)
|
||||||||
Room
count as of March 31
|
131 | 127 | ||||||
Square
footage as of March 31
|
10,533 | 10,062 | ||||||
Average
number of rooms occupied
|
109 | 108 | ||||||
Average
occupancy rate based on room count
|
84.0 | % | 86.6 | % | ||||
Average
square footage occupied
|
8,767 | 8,653 |
26
Total
costs and expenses increased $31.2 million in fiscal 2008 as compared with
fiscal 2007. The largest increase is in depreciation expense associated with the
rotation of our fleet. Conversely, with the shift in focus from operating leases
to purchases of new rental trucks lease expense decreased in fiscal 2008 as
compared with fiscal 2007. The Company nets gains and losses from the disposal
of property and equipment against depreciation. Included in depreciation are
gains on the sale of real estate of $12.7 million and $4.4 million in fiscal
2008 and fiscal 2007, respectively. Repair and maintenance costs included in
operating expenses declined for the year due to the rotation of older trucks out
of the active rental fleet. These declines were offset by other operating costs
including personnel, property tax and certain legal-related
expenses.
Equity in
the earnings of AMERCO’s insurance subsidiaries increased $10.0 million in
fiscal 2008 as compared with fiscal 2007 primarily due to reduced operating
expenses and benefits and losses.
As a
result of the above mentioned changes in revenues and expenses, earnings from
operations decreased to $193.0 million in fiscal 2008, compared with $217.9
million for fiscal 2007.
Fiscal
2007 Compared with Fiscal 2006
Listed
below are revenues for our major product lines at our Moving and Storage
Operating Segment for fiscal 2007 and fiscal 2006:
Year
Ended March 31,
|
||||||||
2007
|
2006
|
|||||||
(In
thousands)
|
||||||||
Self-moving
equipment rentals
|
$ | 1,462,470 | $ | 1,489,429 | ||||
Self-storage
revenues
|
106,498 | 100,873 | ||||||
Self-moving
and self-storage product and service sales
|
208,677 | 207,119 | ||||||
Property
management fees
|
23,951 | 23,988 | ||||||
Net
investment and interest income
|
34,161 | 30,025 | ||||||
Other
revenue
|
25,994 | 34,894 | ||||||
Moving
and Storage revenue
|
$ | 1,861,751 | $ | 1,886,328 |
During
fiscal 2007, self-moving equipment rental revenues decreased $27.0 million,
compared with fiscal 2006 with the majority of the variance occurring during the
second half of the year. The Company finished fiscal 2007 with increases in
one-way transactions along with increases in the average inventory of the entire
fleet. However, offsetting these factors were a decrease in average revenue per
transaction primarily due to one-way pricing, the lack of certain mid-size
trucks during the spring and summer months of fiscal 2007 and decreased fleet
utilization. The Company’s response to competitive pricing issues further
lowered self-moving rental revenues.
Self-storage
revenues increased $5.6 million for fiscal 2007, compared with fiscal 2006
primarily due to improved pricing. The Company has increased the
number of rooms and square footage available period over period through the
expansion of existing facilities and the acquisition of new
facilities.
Net
investment and interest income increased $4.1 million primarily due to larger
average invested cash balances combined with higher interest rates.
Other
revenues decreased $8.9 million for fiscal 2007, compared with fiscal
2006. Fiscal 2006 included several non-recurring items.
The
Company owns and manages self-storage facilities. Self-storage revenues reported
in the consolidated financial statements for Moving and Storage represent
Company-owned locations only. Self-storage data for our owned storage
locations was as follows:
Year
Ended March 31,
|
||||||||
2007
|
2006
|
|||||||
(In
thousands, except occupancy rate)
|
||||||||
Room
count as of March 31
|
127 | 123 | ||||||
Square
footage as of March 31
|
10,062 | 9,592 | ||||||
Average
number of rooms occupied
|
108 | 107 | ||||||
Average
occupancy rate based on room count
|
86.6 | % | 87.9 | % | ||||
Average
square footage occupied
|
8,653 | 8,516 |
27
Total
costs and expenses increased $50.3 million for fiscal 2007, compared with fiscal
2006. Increases in depreciation, lease, licensing and freight costs
resulting from the acquisition of new trucks and the rotation of the fleet were
partially offset by reductions in maintenance and repair.
As a
result of the above mentioned changes in revenues and expenses, earnings from
operations decreased to $217.9 million in fiscal 2007, compared with $292.8
million for fiscal 2006.
Republic
Western Insurance Company
2007
Compared with 2006
Net
premiums were $28.4 million and $24.3 million for the years ended December 31,
2007 and 2006, respectively. U-Haul related premiums were $26.4 million and
$22.0 million for the years ended December 31, 2007 and 2006, respectively.
Other lines of business were $2.0 million and $2.3 million for the years ended
December 31, 2007 and 2006, respectively.
Net
investment income was $12.1 million and $14.2 million for the years ended
December 31, 2007 and 2006, respectively. The decrease is due to the sale of
real estate in 2006, which resulted in gains in 2006.
Net
operating expenses were $12.0 million and $8.8 million for the years ended
December 31, 2007 and 2006, respectively. The increase is due to a $2.7 million
increase in commissions on the additional liability program.
Benefits
and losses incurred were $19.0 million and $21.9 million for the years ended
December 31, 2007 and 2006, respectively.
Amortization
of deferred acquisition costs were $0.2 million and $2.1 million for the years
ended December 31, 2007 and 2006, respectively. The decrease is due to the
termination of credit property business in March of 2006.
Earnings
from operations were $9.2 million and $5.7 million for the years ended December
31, 2007 and 2006, respectively.
2006
Compared with 2005
Net
premiums were $24.3 million and $26.0 million for the years ended December 31,
2006 and 2005, respectively. U-Haul related premiums were $22.0 million and
$20.2 million for the years ended December 31, 2006 and 2005, respectively.
Other lines of business were $2.3 million and $5.8 million for the years ended
December 31, 2006 and 2005, respectively.
Net
investment income was $14.2 million and $11.4 million for the years ended
December 31, 2006 and 2005, respectively. The increase is due to an increase in
short-term rates and sale of real estate.
Net
operating expenses were $8.8 million and $10.8 million for years ended December
31, 2006 and 2005, respectively. The decrease is due to a reduction of general
administrative expenses due to the exit of the non U-Haul lines of
business.
Benefits
and losses incurred were $21.9 million and $22.6 million for the years ended
December 31, 2006 and 2005, respectively.
Amortization
of deferred acquisition costs were $2.1 million and $2.9 million for the years
ended December 31, 2006 and 2005, respectively. The decrease is due to decreased
premium writings.
Earnings
from operations were $5.7 million and $1.1 million for years ended December 31,
2006 and 2005, respectively.
28
The
following table illustrates the change in unpaid loss and loss adjustment
expenses on a gross basis. The first line represents gross reserves (reserves
prior to the effects of reinsurance) as originally reported at the end of the
stated year. The second section, reading down, represents cumulative amounts
paid as of the end of successive years with respect to that reserve. The third
section, reading down, represents revised estimates of the original recorded
gross reserve as of the end of successive years. The last section compares the
latest revised estimate of gross reserves to the reserve amount as originally
established for that year-end. The last section is cumulative and should not be
totaled.
Unpaid
Loss and Loss Adjustment Expenses
|
||||||||||||||||||||||||||||||||||||||||||||
December
31,
|
||||||||||||||||||||||||||||||||||||||||||||
1997
|
1998
|
1999
|
2000
|
2001
|
2002
|
2003
|
2004
|
2005
|
2006
|
2007
|
||||||||||||||||||||||||||||||||||
(In
thousands)
|
||||||||||||||||||||||||||||||||||||||||||||
Unpaid
Loss and Loss Adjustment Expenses
|
$ | 384,816 | $ | 344,748 | $ | 334,858 | $ | 382,651 | $ | 448,987 | $ | 399,447 | $ | 416,259 | $ | 380,875 | $ | 346,928 | $ | 288,783 | $ | 288,410 | ||||||||||||||||||||||
Paid
(Cumulative) as of:
|
||||||||||||||||||||||||||||||||||||||||||||
One
year later
|
103,752 | 82,936 | 117,025 | 130,471 | 130,070 | 100,851 | 73,384 | 44,677 | 40,116 | 35,297 | - | |||||||||||||||||||||||||||||||||
Two
years later
|
174,867 | 164,318 | 186,193 | 203,605 | 209,525 | 164,255 | 114,246 | 83,230 | 73,235 | - | - | |||||||||||||||||||||||||||||||||
Three
years later
|
216,966 | 218,819 | 232,883 | 255,996 | 266,483 | 201,346 | 151,840 | 115,955 | - | - | - | |||||||||||||||||||||||||||||||||
Four
years later
|
246,819 | 255,134 | 264,517 | 299,681 | 295,268 | 233,898 | 184,219 | - | - | - | - | |||||||||||||||||||||||||||||||||
Five
years later
|
269,425 | 274,819 | 295,997 | 320,629 | 322,191 | 263,654 | - | - | - | - | - | |||||||||||||||||||||||||||||||||
Six
years later
|
282,598 | 297,354 | 314,281 | 341,543 | 346,733 | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||
Seven
years later
|
300,814 | 311,963 | 331,385 | 358,882 | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||
Eight
years later
|
314,322 | 327,141 | 346,270 | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||
Nine
years later
|
326,805 | 340,190 | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||
Ten
years later
|
337,163 | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||
Reserved
Re-estimated as of:
|
||||||||||||||||||||||||||||||||||||||||||||
One
year later
|
357,733 | 339,602 | 383,264 | 433,222 | 454,510 | 471,029 | 447,524 | 388,859 | 326,386 | 319,951 | ||||||||||||||||||||||||||||||||||
Two
years later
|
361,306 | 371,431 | 432,714 | 454,926 | 523,624 | 480,713 | 456,171 | 368,756 | 357,135 | - | ||||||||||||||||||||||||||||||||||
Three
years later
|
369,598 | 429,160 | 437,712 | 517,361 | 500,566 | 521,319 | 435,549 | 399,693 | - | - | ||||||||||||||||||||||||||||||||||
Four
years later
|
398,899 | 413,476 | 480,200 | 543,554 | 571,045 | 502,922 | 466,709 | - | - | - | ||||||||||||||||||||||||||||||||||
Five
years later
|
398,184 | 443,696 | 524,548 | 558,765 | 569,104 | 537,610 | - | - | - | - | ||||||||||||||||||||||||||||||||||
Six
years later
|
428,031 | 477,975 | 520,675 | 559,873 | 608,159 | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
Seven
years later
|
450,728 | 485,228 | 527,187 | 583,904 | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
Eight
years later
|
461,082 | 496,484 | 550,333 | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
Nine
years later
|
469,869 | 521,403 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
Ten
years later
|
497,251 | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
Cumulative
Redundancy (Deficiency)
|
$ | (112,435 | ) | $ | (176,655 | ) | $ | (215,475 | ) | $ | (201,253 | ) | $ | (159,172 | ) | $ | (138,163 | ) | $ | (50,450 | ) | $ | (18,818 | ) | $ | (10,207 | ) | $ | (31,168 | ) | ||||||||||||||
Retro
Premium Recoverable
|
3,037 | (1,879 | ) | 6,797 | 5,613 | 21,756 | 7,036 | 374 | 2,233 | - | - | |||||||||||||||||||||||||||||||||
Re-estimated
Reserve: Amount (Cumulative)
|
$ | (109,398 | ) | $ | (178,534 | ) | $ | (208,678 | ) | $ | (195,640 | ) | $ | (137,416 | ) | $ | (131,127 | ) | $ | (50,076 | ) | $ | (16,585 | ) | $ | (10,207 | ) | $ | (31,168 | ) |
29
Activity
in the liability for unpaid losses and loss adjustment expenses for RepWest is
summarized as follows:
Year
Ended December 31,
|
||||||||||||
2007
|
2006
|
2005
|
||||||||||
(In
thousands)
|
||||||||||||
Balance
at January 1
|
$ | 288,783 | $ | 346,928 | $ | 380,875 | ||||||
Less:
reinsurance recoverable
|
144,950 | 181,388 | 189,472 | |||||||||
Net
balance at January 1
|
143,833 | 165,540 | 191,403 | |||||||||
Incurred
related to:
|
||||||||||||
Current
year
|
7,094 | 6,006 | 6,429 | |||||||||
Prior
years
|
11,894 | 15,895 | 16,161 | |||||||||
Total
incurred
|
18,988 | 21,901 | 22,590 | |||||||||
Paid
related to:
|
||||||||||||
Current
year
|
3,289 | 3,492 | 3,774 | |||||||||
Prior
years
|
35,303 | 40,116 | 44,679 | |||||||||
Total
paid
|
38,592 | 43,608 | 48,453 | |||||||||
Net
balance at December 31
|
124,229 | 143,833 | 165,540 | |||||||||
Plus:
reinsurance recoverable
|
164,181 | 144,950 | 181,388 | |||||||||
Balance
at December 31
|
$ | 288,410 | $ | 288,783 | $ | 346,928 |
The
liability for incurred losses and loss adjustment expenses (net of reinsurance
recoverable of $164.2 million) decreased by $19.6 million in 2007. The decrease
is a result of resolving claims associated with terminated unprofitable
programs.
Oxford
Life Insurance Company
2007
Compared with 2006
Net
premiums were $112.0 million and $121.6 million for the years ended December 31,
2007 and 2006, respectively. Medicare supplement premiums decreased by $4.1
million due to policy lapses and lower first year sales offset by an increase in
life insurance premiums of $2.9 million due to increased sales. Oxford stopped
writing new credit insurance business in 2006 and as a result, credit insurance
premiums decreased by $5.9 million.
Net
investment income was $20.9 million and $22.5 million for the years ended
December 31, 2007 and 2006, respectively. The decrease was due to a net
reduction in invested assets and lower investment yields.
Net
operating expenses were $23.8 million and $30.9 million for the years ended
December 31, 2007 and 2006, respectively. The decrease was primarily
attributable to the reduction of expenses on credit insurance due to business
discontinuance and additional costs in 2006 related to the acquisition of
DGLIC.
Benefits
incurred were $83.4 million and $88.3 million, for the years ended December 31,
2007 and 2006, respectively. This decrease was the result of a $2.0 million
decrease in Medicare supplement due to policy decrements and a decrease of $1.7
million in credit insurance due to decreased exposure, offset by life insurance
benefits of $1.5 million due to increased sales.
Amortization
of deferred acquisition costs (“DAC”) and the value of business acquired
(“VOBA”) was $13.0 million and $15.1 million for the years ended December 31,
2007 and 2006, respectively. The credit business had a decrease of amortization
of $3.9 million due to decreased business, offset by an increase of $2.3 million
in annuities due to an update of DAC assumptions.
Earnings
from operations were $17.2 million and $14.5 million for the years ended
December 31, 2007 and 2006, respectively.
30
2006
Compared with 2005
Net
premiums were $121.6 million and $120.4 million for the years ended December 31,
2006 and 2005, respectively. Medicare supplement premiums increased by $10.6
million primarily due to the acquisition of DGLIC. The Company stopped writing
new credit insurance business in 2006 and as a result, credit insurance premiums
decreased by $9.1 million.
Net
investment income was $22.5 million and $22.0 million for the years ended
December 31, 2006 and 2005, respectively. The increase was primarily due to a
reduction in realized losses on disposals from 2005, offset by a net reduction
in invested assets. Investment yields were consistent between the two
years.
Other
income was $4.7 million and $5.8 million for the years ended December 31, 2006
and 2005, respectively. This decrease was the result of decreased surrender
charge income of $0.5 million and a decrease in administrative income of $0.6
million.
Net
operating expenses were $30.9 million and $27.0 million for the years ended
December 31, 2006 and 2005, respectively. The increase is primarily due to the
acquisition of DGLIC.
Benefits
incurred were $88.3 million and $85.7 million, for the years ended December 31,
2006 and 2005, respectively. This increase was primarily a result of a $3.8
million increase in Medicare supplement benefits due to the acquisition of
DGLIC, partially offset by a slightly improved loss ratio. Credit insurance
benefits decreased $4.4 million due to decreased exposure. Other health benefits
increased $1.1 million during the current period due to an adjustment for
current claim trends. Life insurance benefits increased $1.4 million due to
increased sales.
Amortization
of DAC and VOBA was $15.1 million and $21.4 million for the years ended December
31, 2006 and 2005, respectively. During the fourth quarter of 2005 and 2006, the
Company made adjustments to the assumptions for expected future profits for the
annuity business. These included changes to the assumptions for lapse rates,
interest crediting and investment returns. Amortization expense was reduced by
$4.7 million during 2006 as a result of these changes, including $1.3 million in
the fourth quarter of 2006. The credit business had a decrease of amortization
of $3.2 million due to decreased business. VOBA amortization increased $0.7
million due to the acquisition of DGLIC. DAC amortization in the life segment
increased due to increased new business.
Earnings
from operations were $14.5 million and $13.9 million for the years ended
December 31, 2006 and 2005, respectively.
SAC
Holding II
Fiscal
2008 Compared with Fiscal 2007
Listed
below are revenues for the major product lines at SAC Holding II for fiscal 2008
and fiscal 2007:
Year
Ended March 31,
|
||||||||
2008
(a)
|
2007
|
|||||||
(In
thousands)
|
||||||||
Self-moving
equipment rentals
|
$ | 5,846 | $ | 9,225 | ||||
Self-storage
revenues
|
11,469 | 19,926 | ||||||
Self-moving
and self-storage product and service sales
|
10,039 | 16,045 | ||||||
Other
revenue
|
748 | 1,407 | ||||||
Segment
revenue
|
$ | 28,102 | $ | 46,603 | ||||
(a) Activity for the
seven months ended October 2007, prior to
deconsolidation.
|
Revenues
in fiscal 2008 decreased $18.5 million, compared with fiscal 2007. Total costs
and expenses were $20.2 million in fiscal 2008, compared with $32.7 million in
fiscal 2007. Earnings from operations were $7.9 million in fiscal 2008, compared
with $13.9 million in fiscal 2007. Each of these decreases was due to the
deconsolidation of SAC Holding II effective October 31, 2007.
31
Fiscal
2007 Compared with Fiscal 2006
Listed
below are revenues for the major product lines at SAC Holding II for fiscal 2007
and fiscal 2006:
Year
Ended March 31,
|
||||||||
2007
|
2006
|
|||||||
(In
thousands)
|
||||||||
Self-moving
equipment rentals
|
$ | 9,225 | $ | 9,498 | ||||
Self-storage
revenues
|
19,926 | 18,869 | ||||||
Self-moving
and self-storage product and service sales
|
16,045 | 16,602 | ||||||
Other
revenue
|
1,407 | 1,270 | ||||||
Segment
revenue
|
$ | 46,603 | $ | 46,239 |
Total
revenues were $46.6 million in fiscal 2007, compared with $46.2 million in
fiscal 2006 due primarily to increases in self-storage revenues.
Total
costs and expenses were $32.7 million in fiscal 2007, compared with $32.6
million in fiscal 2006.
Earnings
from operations were $13.9 million in fiscal 2007, compared with $13.6 million
in fiscal 2006.
Liquidity and Capital Resources
We
believe our current capital structure is a positive factor that will enable us
to pursue our operational plans and goals, and provide us with sufficient
liquidity for the next three to five years. The majority of our obligations
currently in place mature at the end of fiscal years 2014, 2015 or 2018. As a
result, we believe that our liquidity is sufficient for our current and
foreseeable needs. However, there is no assurance that future cash flows will be
sufficient to meet our outstanding debt obligations and our other future capital
needs.
At March
31, 2008, cash and cash equivalents totaled $206.6 million, compared with $75.3
million on March 31, 2007. The assets of our insurance subsidiaries are
generally unavailable to fulfill the obligations of non-insurance operations
(AMERCO, U-Haul and Real Estate). As of March 31, 2008 (or as otherwise
indicated), cash and cash equivalents, other financial assets (receivables,
short-term investments, other investments, fixed maturities, and related party
assets) and obligations of each operating segment were:
Moving
& Storage
|
RepWest
(a)
|
Oxford
(a)
|
||||||||||
(In
thousands)
|
||||||||||||
Cash
& cash equivalents
|
$ | 191,250 | $ | 6,848 | $ | 8,524 | ||||||
Other
financial assets
|
343,358 | 402,329 | 590,320 | |||||||||
Debt
obligations
|
1,504,677 | - | - | |||||||||
(a)
As of December 31, 2007
|
At March
31, 2008, our Moving and Storage operations (AMERCO, U-Haul and Real Estate) had
cash available under existing credit facilities of $164.2 million and were
comprised of:
March
31, 2008
|
||||
(In
millions)
|
||||
Real
estate loan (revolving credit)
|
$ | 100.0 | ||
Construction
loan (revolving credit)
|
9.2 | |||
Working
capital loan (revolving credit)
|
35.0 | |||
Fleet
loan (amortizing loan)
|
20.0 | |||
$ | 164.2 |
32
A summary
of our consolidated cash flows for fiscal 2008, 2007 and 2006 is shown in the
table below:
Year
Ended March 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
(In
thousands)
|
||||||||||||
Net
cash provided by operating activities
|
$ | 329,287 | $ | 350,721 | $ | 270,508 | ||||||
Net
cash used by investing activities
|
(357,962 | ) | (517,619 | ) | (258,836 | ) | ||||||
Net
cash provided by financing activities
|
159,929 | 87,685 | 88,018 | |||||||||
Effects
of exchange rate on cash
|
96 | (974 | ) | (186 | ) | |||||||
Net
cash flow
|
131,350 | (80,187 | ) | 99,504 | ||||||||
Cash
at the beginning of the period
|
75,272 | 155,459 | 55,955 | |||||||||
Cash
at the end of the period
|
$ | 206,622 | $ | 75,272 | $ | 155,459 |
Cash
provided by operating activities decreased $21.4 million in fiscal 2008,
compared with fiscal 2007. Operating cash flows for the Moving and Storage
segment decreased $7.3 million primarily from the decrease in operating income.
The insurance companies had a $13.7 million decrease in operating cash flow
primarily due to RepWest; fiscal 2007 included funds received from the exchange
of related party assets and the collection of outstanding reinsurance
recoverables.
Net cash
used in investing activities decreased $159.7 million in fiscal 2008, compared
with fiscal 2007. The decrease is due to a reduction in new capital spending on
both trucks and real estate combined with increased sales of used trucks and
real estate.
Cash
provided by financing activities increased $72.2 million in fiscal 2008, as
compared to fiscal 2007. The increase is due primarily to increased fleet
borrowings combined with a decline in annuity deposit withdrawals at Oxford.
These were offset by a $99.8 million increase in debt repayments, $8.9 million
in additional debt issuance costs and $8.4 million in additional stock
repurchases over the amount repurchased in fiscal 2007.
Liquidity
and Capital Resources and Requirements of Our Operating Segments
Moving
and Self-Storage
To meet
the needs of our customers, U-Haul maintains a large fleet of rental equipment.
Capital expenditures have primarily reflected new rental equipment acquisitions
and the buyouts of existing fleet from TRAC leases. The capital to fund these
expenditures has historically been obtained internally from operations and the
sale of used equipment, and externally from debt and lease financing. In the
future we anticipate that our internally generated funds will be used to service
the existing debt and support operations. U-Haul estimates that during fiscal
2009 the Company will reinvest in its truck and trailer rental fleet up to
approximately $350.0 million, net of equipment sales. Future fleet investments
beyond fiscal 2009 will be dependent upon several factors including availability
of capital, the truck rental environment and the used-truck sales market. We
anticipate that the fiscal 2009 investment will be funded largely through
external lease financing, along with debt financing and internally from
operations. Management considers several factors including cost and tax
consequences when selecting a method to fund capital expenditures. Financial
market conditions can lead to changes in our allocation between debt and lease
financing from year to year.
Real
Estate has traditionally financed the acquisition of self-storage properties to
support U-Haul's growth through debt financing and funds from operations and
sales. The Company’s plan for the physical expansion of owned storage properties
includes the acquisition of existing self-storage locations from third parties,
the acquisition and development of bare land, and the acquisition and
redevelopment of existing buildings not currently used for self-storage. The
Company is funding these development projects through construction loans and
internally generated funds and expects to invest approximately $140.0 million in
these new storage projects. The timing of these projects is dependent upon
several factors including the entitlement process, availability of capital,
weather, and the identification and/or successful acquisition of target
properties. U-Haul's growth plan in self-storage also includes eMove, which does
not require significant capital.
Net
capital expenditures (purchases of property, plant and equipment less proceeds
from the sale of property, plant and equipment) were $402.8 million, $557.5
million and $322.2 million for fiscal 2008, 2007 and 2006, respectively. During
fiscal 2008, 2007 and 2006, the Company entered into $129.1 million, $120.6
million and $350.2 million, respectively, of new equipment operating
leases.
33
Moving
and Storage continues to hold significant cash and has access to additional
liquidity. Management may invest these funds in our existing operations, expand
our product lines or pursue external opportunities in the self-moving and
storage market place.
Property
and Casualty Insurance
State
insurance regulations restrict the amount of dividends that can be paid to
stockholders of insurance companies. As a result, RepWest’s assets are generally
not available to satisfy the claims of AMERCO or its legal
subsidiaries.
Stockholder’s
equity was $148.6 million, $142.4 million, and $137.4 million at December 31,
2007, 2006, and 2005, respectively. The increase resulted from earnings of $5.9
million and an increase in other comprehensive income of $0.2 million. RepWest
paid $27.0 million in dividends to its parent during 2005; payment was effected
by a reduction in intercompany accounts. RepWest does not use debt or equity
issues to increase capital and therefore has no direct exposure to capital
market conditions other than through its investment portfolio.
Life
Insurance
Oxford
manages its financial assets to meet policyholder and other obligations
including investment contract withdrawals. Oxford’s net withdrawals for the year
ending December 31, 2007 were $47.4 million. State insurance regulations
restrict the amount of dividends that can be paid to stockholders of insurance
companies. As a result, Oxford’s funds are generally not available to satisfy
the claims of AMERCO or its legal subsidiaries.
Oxford’s
stockholder’s equity was $150.7 million, $136.4 million, and $127.3 million at
December 31, 2007, 2006 and 2005, respectively. The increase resulted from
earnings of $13.6 million, a $1.7 million increase in other comprehensive income
and a decrease of $1.0 million in beginning retained earnings related to the
application of FIN 48. Oxford does not use debt or equity issues to increase
capital and therefore has no direct exposure to capital market conditions other
than through its investment portfolio.
Cash
Provided from Operating Activities by Operating Segments
Moving
and Self-Storage
Cash
provided by operating activities was $324.4 million, $331.7 million and $276.1
million in fiscal 2008, 2007 and 2006, respectively. Operating cash flows for
the Moving and Storage segment decreased $7.3 million primarily from the
decrease in operating income.
Property
and Casualty Insurance
Cash
provided (used) by operating activities was ($4.0) million, $5.4 million, and
($28.9) million for the years ending December 31, 2007, 2006, and 2005,
respectively. The decrease in cash used by operating activities was the result
of RepWest’s increasing its gross insurance reserves by $15.0 million, which was
offset by $6.0 million increase in net earnings.
RepWest’s
cash and cash equivalents and short-term investment portfolios amounted to $79.3
million, $71.9 million, and $106.2 million at December 31, 2007, 2006, and 2005,
respectively. This balance reflects funds in transition from maturity proceeds
to long term investments. This level of liquid assets, combined with budgeted
cash flow, is adequate to meet periodic needs. Capital and operating budgets
allow RepWest to schedule cash needs in accordance with investment and
underwriting proceeds.
Life
Insurance
Cash
provided (used) by operating activities from Oxford were $7.1 million, $11.4
million and ($0.7) million for the years ending December 31, 2007, 2006 and
2005, respectively. The decrease from 2007 compared with 2006 was the result of
a $5.0 million principal payment in July 2007 to AMERCO on an intercompany
surplus note issued in 1998, as well as $0.7 million in interest. In 2005, the
decrease includes the $10.6 million settlement payment related to a
lawsuit.
In
addition to cash flows from operating activities and financing activities, a
substantial amount of liquid funds are available through Oxford’s short-term
portfolio. At December 31, 2007, 2006 and 2005, cash and cash equivalents and
short-term investments amounted to $37.7 million, $41.4 million and $37.0
million, respectively. Management believes that the overall sources of liquidity
will continue to meet foreseeable cash needs.
34
Liquidity
and Capital Resources - Summary
We
believe we have the financial resources needed to meet our business plans and to
meet our business requirements including capital expenditures for the
investment in and expansion of our rental fleet, rental equipment and storage
space, working capital requirements, stock repurchase plans and our preferred
stock dividend program.
Our
borrowing strategy is primarily focused on asset-backed financing and rental
equipment operating leases. As part of this strategy, we seek to ladder
maturities and hedge floating rate loans through the use of interest rate swaps.
While each of these loans typically contains provisions governing the amount
that can be borrowed in relation to specific assets, the overall structure is
flexible with no limits on overall Company borrowings. Management
feels it has adequate liquidity between cash and cash equivalents and unused
borrowing capacity in existing facilities to meet the current and expected needs
of the Company over the next several years. At March 31, 2008, we had cash
availability under existing credit facilities of $164.2 million. In addition, we
believe that there are additional opportunities for leverage in our existing
capital structure. For a more detailed discussion of our long-term debt and
borrowing capacity, please refer to Note 9 Borrowings of the Notes to
Consolidated Financial Statements.
Disclosures
about Contractual Obligations and Commercial Commitments
The
following table provides contractual commitments and contingencies as of March
31, 2008:
Payment
due by Period (as of March 31, 2008)
|
||||||||||||||||||||
Contractual Obligations
|
Total
|
Prior
to
03/31/09
|
04/01/09
03/31/11
|
04/01/11
03/31/13
|
April
1, 2013
and
Thereafter
|
|||||||||||||||
(In
thousands)
|
||||||||||||||||||||
Notes
and loans payable - Principal
|
$ | 1,373,894 | $ | 108,753 | $ | 239,626 | $ | 210,705 | $ | 814,810 | ||||||||||
Notes
and loans payable - Interest
|
384,828 | 68,305 | 118,125 | 96,100 | 102,298 | |||||||||||||||
Revolving
credit agreements - Principal
|
130,783 | - | 30,783 | - | 100,000 | |||||||||||||||
Revolving
credit agreements - Interest
|
52,295 | 6,277 | 9,987 | 9,716 | 26,315 | |||||||||||||||
AMERCO's
operating leases
|
411,744 | 106,341 | 169,187 | 103,405 | 32,811 | |||||||||||||||
Post
retirement benefit liability
|
7,770 | 530 | 1,330 | 1,631 | 4,279 | |||||||||||||||
Total
contractual obligations
|
$ | 2,361,314 | $ | 290,206 | $ | 569,038 | $ | 421,557 | $ | 1,080,513 |
As
presented above, contractual obligations on debt and guarantees represent
principal payments while contractual obligations for operating leases represent
the notional payments under the lease arrangements. Interest on variable rate
debt is based on the applicable rate at March 31, 2008 without regard to
associated interest rate swaps.
FIN 48
liabilities and interest of $9.8 million is not included above due to
uncertainty.
The
Company holds insurance liabilities at each of the insurance subsidiaries as
well as self-insurance reserves at U-Haul representing expected estimated future
obligations. At December 31, 2007, Oxford held $137.7 million of estimated
policy benefits and losses, claims and loss expenses payable and $339.2 million
of investment contract deposits. At December 31, 2007, RepWest held $291.3
million of estimated policy benefits and losses, claims and loss expenses
payable. At March 31, 2008, U-Haul held $365.4 million of estimated
self-insurance reserves. These are estimated general obligations of each company
and are expected to be funded from future operations and general account
investments. The nature of these estimates can lead to variations in the
ultimate amount of final settlement.
Off
Balance Sheet Arrangements
The
Company uses off-balance sheet arrangements where the economics and sound
business principles warrant their use.
AMERCO
utilizes operating leases for certain rental equipment and facilities with terms
expiring substantially through 2014, with the exception of one land lease
expiring in 2034. In the event of a shortfall in proceeds from the sales of the
underlying rental equipment assets, AMERCO has guaranteed approximately $165.5
million of residual values at March 31, 2008 for these assets at the end of
their respective lease terms. AMERCO has been leasing rental equipment since
1987. To date, we have not experienced residual value shortfalls related to
these leasing arrangements. Using the average cost of fleet related debt as the
discount rate, the present value of AMERCO’s minimum lease payments and residual
value guarantees was $491.9 million at March 31, 2008.
35
Historically,
AMERCO used off-balance sheet arrangements in connection with the expansion of
our self-storage business. Refer to Note 19 Related Party Transactions of the
Notes to Consolidated Financial Statements. These arrangements were primarily
used when the Company’s overall borrowing structure was more limited. The
Company does not face similar limitations currently and off-balance sheet
arrangements have not been utilized in our self-storage expansion in recent
years. In the future, the Company will continue to identify and consider
off-balance sheet opportunities to the extent such arrangements would be
economically advantageous to the Company and its stockholders.
The
Company currently manages the self-storage properties owned or leased by SAC
Holdings, Mercury Partners, LP (“Mercury”), Four SAC Self-Storage Corporation
(“4 SAC”), Five SAC Self-Storage Corporation (“5 SAC”), Galaxy Investments, L.P.
(“Galaxy”), and Private Mini Storage Realty (“Private Mini”) pursuant to a
standard form of management agreement, under which the Company receives a
management fee of between 4% and 10% of the gross receipts plus reimbursement
for certain expenses. The Company received management fees, exclusive of
reimbursed expenses, of $23.7 million, $23.5 million and $22.5 million from the
above mentioned entities during fiscal 2008, 2007 and 2006, respectively. This
management fee is consistent with the fee received for other properties the
Company previously managed for third parties. SAC Holdings, 4 SAC, 5 SAC, Galaxy
and Private Mini are substantially controlled by Blackwater. Mercury is
substantially controlled by Mark V. Shoen. James P. Shoen, a significant
shareholder and director of AMERCO, has an interest in Mercury.
The
Company leases space for marketing company offices, vehicle repair shops and
hitch installation centers from subsidiaries of SAC Holdings, 5 SAC and Galaxy.
Total lease payments pursuant to such leases were $2.1 million, $2.7 million and
$2.7 million in fiscal 2008, 2007 and 2006, respectively. The terms of the
leases are similar to the terms of leases for other properties owned by
unrelated parties that are leased to the Company.
At March
31, 2008, subsidiaries of SAC Holdings, 4 SAC, 5 SAC, Galaxy and Private Mini
acted as U-Haul independent dealers. The financial and other terms of the
dealership contracts with the aforementioned companies and their subsidiaries
are substantially identical to the terms of those with the Company’s other
independent dealers whereby commissions are paid by the Company based on
equipment rental revenues. During fiscal 2008, 2007 and 2006, the Company paid
the above mentioned entities $36.0 million, $36.6 million and $36.8 million,
respectively in commissions pursuant to such dealership contracts.
These
agreements along with notes with subsidiaries of SAC Holdings, 4 SAC, 5 SAC,
Galaxy and Private Mini, excluding Dealer Agreements, provided revenues of $43.6
million, expenses of $2.1 million and cash flows of $68.8 million during fiscal
2008. Revenues and commission expenses related to the Dealer Agreements were
$170.0 million and $36.0 million, respectively.
During
fiscal 2008, subsidiaries of the Company held various junior unsecured notes of
SAC Holdings. The Company does not have an equity ownership interest in SAC
Holdings. The Company recorded interest income of $18.6 million, $19.2 million
and $19.4 million and received cash interest payments of $19.2 million, $44.5
million and $11.2 million from SAC Holdings during fiscal 2008, 2007 and 2006,
respectively. The cash interest payments for fiscal 2007 included a payment to
significantly reduce the outstanding interest receivable from SAC Holdings. The
largest aggregate amount of notes receivable outstanding during fiscal 2008 was
$203.7 million and the aggregate notes receivable balance at March 31, 2008 was
$198.1 million. In accordance with the terms of these notes, SAC Holdings may
repay the notes without penalty or premium.
Fiscal
2009 Outlook
In fiscal
2009, we are focused on increasing transaction volume and improving pricing,
product mix and utilization for self-moving equipment rentals. Investing in our
truck fleet is a key initiative to reach this goal. During fiscal
2008, the Company acquired over 21,000 new trucks. Our plans include
manufacturing additional box trucks and maintaining our pick-up and cargo van
fleet, resulting in a similar amount of new trucks in fiscal 2009. This
investment is expected to increase the number of rentable equipment days
available to meet our customer demands and to reduce future spending on repair
costs and equipment downtime. Revenue growth in the U-Move program could
continue to be adversely impacted should we fail to execute in any of these
areas.
We are
also working towards increasing our storage occupancy at existing sites, adding
new eMove Storage Affiliates and building new locations. We believe that
additional occupancy gains in our current portfolio of locations can be realized
in fiscal 2009. While the Company saw increased storage revenue in fiscal 2008
due to pricing, this trend may not continue. The Company continues to evaluate
new moving and storage opportunities in the market place including portable
storage.
36
RepWest
will continue to provide loss adjusting and claims handling for U-Haul and
underwrite components of the Safemove, Safetow and Safestor protection packages
to U-Haul customers.
Oxford is
pursuing its goals of expanding its presence in the senior market through the
sales of its Medicare supplement, life and annuity policies. As part of this
strategy, Oxford is attempting to grow its agency force and develop new product
offerings.
Quarterly
Results (unaudited)
The
quarterly results shown below are derived from unaudited financial statements
for the eight quarters beginning April 1, 2006 and ending March 31, 2008. The
Company believes that all necessary adjustments have been included in the
amounts stated below to present fairly, and in accordance with generally
accepted accounting principles, such results. Moving and Storage operations are
seasonal and proportionally more of the Company’s revenues and net earnings from
its Moving and Storage operations are generated in the first and second quarters
of each fiscal year (April through September). The operating results for the
periods presented are not necessarily indicative of results for any future
period.
Quarter
Ended
|
||||||||||||||||
March
31,
2008
|
December
31,
2007
|
September
30,
2007
|
June
30,
2007
|
|||||||||||||
(In
thousands, except for share and per share data)
|
||||||||||||||||
Total
revenues
|
$ | 432,960 | $ | 465,496 | $ | 596,388 | $ | 554,330 | ||||||||
Earnings
(loss) from operations
|
(5,822 | ) | 8,359 | 109,126 | 92,059 | |||||||||||
Net
earnings (loss)
|
(14,048 | ) | (10,394 | ) | 50,474 | 41,752 | ||||||||||
Earnings
(loss) available to common shareholders
|
(17,288 | ) | (13,635 | ) | 47,233 | 38,511 | ||||||||||
Weighted
average common shares outstanding:
basic and diluted
|
19,544,707 | 19,746,237 | 19,733,755 | 19,937,152 | ||||||||||||
Earnings
(loss) per common share: Basic
and diluted
|
$ | (0.85 | ) | $ | (0.69 | ) | $ | 2.39 | $ | 1.93 |
Quarter
Ended
|
||||||||||||||||
March
31,
2007
|
December
31,
2006
(a)
|
September
30,
2006
(a), (b)
|
June
30,
2006
(a)
|
|||||||||||||
(In
thousands, except for share and per share data)
|
||||||||||||||||
Total
revenues
|
$ | 441,846 | $ | 463,329 | $ | 601,682 | $ | 562,441 | ||||||||
Earnings
(loss) from operations
|
(9,094 | ) | 8,146 | 126,133 | 110,043 | |||||||||||
Net
earnings (loss)
|
(15,660 | ) | (9,551 | ) | 60,418 | 55,346 | ||||||||||
Earnings
(loss) available to common shareholders
|
(18,900 | ) | (12,792 | ) | 57,177 | 52,105 | ||||||||||
Weighted
average common shares outstanding:
basic and diluted
|
20,682,087 | 20,922,433 | 20,910,204 | 20,897,688 | ||||||||||||
Earnings
(loss) per common share: Basic
and diluted
|
$ | (0.89 | ) | $ | (0.61 | ) | $ | 2.73 | $ | 2.49 |
(a) The
retroactive adoption of SAB 108 had the effect of decreasing operating and net
earnings from amounts previously reported by $0.1 million for each of the first
three quarters of fiscal 2007. The Company determined that the adjustment would
not be material in any specific period and therefore did not restate historical
financial statements.
(b) The
second quarter fiscal 2007 included a non-recurring amortization of $7.0
million, pre-tax on deferred charges related to a refinancing.
37
Item
7A. Quantitative and Qualitative
Disclosures about Market Risk
We are
exposed to financial market risks, including changes in interest rates and
currency exchange rates. To mitigate these risks, we may utilize derivative
financial instruments, among other strategies. We do not use derivative
financial instruments for speculative purposes.
Interest
Rate Risk
The
exposure to market risk for changes in interest rates relates primarily to our
variable rate debt obligations. We have used interest rate swap
agreements, interest rate cap agreements and forward swaps to reduce our
exposure to changes in interest rates. The Company enters into these
arrangements with counterparties that are significant financial institutions
with whom we generally have other financial arrangements. We are exposed to
credit risk should these counterparties not be able to perform on their
obligations.
Notional
Amount
|
Fair
Value
|
Effective
Date
|
Expiration
Date
|
Fixed
Rate
|
Floating
Rate
|
||||||||||
$ | 95,447,770 |
(a),
(b)
|
(5,502,082 | ) |
5/10/2006
|
4/10/2012
|
5.06 | % |
1
Month LIBOR
|
||||||
105,719,349 |
(a),
(b)
|
(7,415,913 | ) |
10/10/2006
|
10/10/2012
|
5.57 | % |
1
Month LIBOR
|
|||||||
34,981,772 |
(a)
|
(2,749,898 | ) |
7/10/2006
|
7/10/2013
|
5.67 | % |
1
Month LIBOR
|
|||||||
284,166,667 |
(a)
|
(31,700,119 | ) |
8/18/2006
|
8/10/2018
|
5.43 | % |
1
Month LIBOR
|
|||||||
23,625,000 |
(a)
|
(1,626,030 | ) |
2/12/2007
|
2/10/2014
|
5.24 | % |
1
Month LIBOR
|
|||||||
16,000,000 |
(a)
|
(959,438 | ) |
3/12/2007
|
3/10/2014
|
4.99 | % |
1
Month LIBOR
|
|||||||
16,000,000 |
(a)
|
(1,083,397 | ) |
3/12/2007
|
3/10/2014
|
4.99 | % |
1
Month LIBOR
|
|||||||
(a)
interest rate swap agreement
|
|||||||||||||||
(b)
forward swap
|
As of
March 31, 2008, the Company had approximately $704.6 million of variable rate
debt obligations. If LIBOR were to increase 100 basis points, the
increase in interest expense on the variable rate debt would decrease future
earnings and cash flows by approximately $1.3 million annually (after
consideration of the effect of the above derivative contracts).
Additionally,
our insurance subsidiaries’ fixed income investment portfolios expose the
Company to interest rate risk. This interest rate risk is the price sensitivity
of a fixed income security to changes in interest rates. As part of our
insurance companies’ asset and liability management, actuaries estimate the cash
flow patterns of our existing liabilities to determine their duration. These
outcomes are compared to the characteristics of the assets that are currently
supporting these liabilities assisting management in determining an asset
allocation strategy for future investments that management believes will
mitigate the overall effect of interest rates.
Foreign
Currency Exchange Rate Risk
The
exposure to market risk for changes in foreign currency exchange rates relates
primarily to our Canadian business. Approximately 5.4%, 4.4% and 4.0% of our
revenue in fiscal 2008, 2007 and 2006, respectively were generated in Canada.
The result of a 10.0% change in the value of the U.S. dollar relative to the
Canadian dollar would not be material. We typically do not hedge any foreign
currency risk since the exposure is not considered material.
Item 8. Financial Statements and
Supplementary Data
The
Report of Independent Registered Public Accounting and Consolidated Financial
Statements of AMERCO and its consolidated subsidiaries including the notes to
such statements and the related schedules are set forth on pages F-3 through
F-59 and are incorporated herein.
Item 9. Changes in and Disagreements with
Accountants on Accounting and Financial Disclosure
Not
applicable.
38
Attached
as exhibits to this Form 10-K are certifications of the registrants’ Chief
Executive Officer (“CEO”) and Chief Accounting Officer (“CAO”), which are
required in accordance with Rule 13a-14 of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”). This "Controls and Procedures" section includes
information concerning the controls and controls evaluation referred to in the
certifications.
Following
this discussion is the report of BDO Seidman, LLP, our independent registered
public accounting firm, regarding its audit of AMERCO’s internal control over
financial reporting as set forth below in this section. This section should be
read in conjunction with the certifications and the BDO Seidman, LLP report for
a more complete understanding of the topics presented.
Evaluation
of Disclosure Controls and Procedures
The
Company’s management, with the participation of the CEO and CAO, conducted an
evaluation of the effectiveness of the design and operation of the Company’s
"disclosure controls and procedures" (as such term is defined in the Exchange
Act Rules 13a-15(e) and 15d-15(e)) (“Disclosure Controls”) as of the end of the
period covered by this Form 10-K. Our Disclosure Controls are designed to
reasonably assure that information required to be disclosed in our reports filed
under the Exchange Act, such as this Form 10-K, is recorded, processed,
summarized and reported within the time periods specified in the SEC's rules and
forms. Our Disclosure Controls are also designed to reasonably assure that such
information is accumulated and communicated to our management, including the CEO
and CAO, as appropriate to allow timely decisions regarding required disclosure.
Based upon the controls evaluation, our CEO and CAO have concluded that as of
the end of the period covered by this Form 10-K, our Disclosure Controls were
effective related to the above stated design purposes.
Inherent
Limitations on Effectiveness of Controls
The
Company's management, including the CEO and CAO, does not expect that our
Disclosure Controls or our internal control over financial reporting will
prevent or detect all error and all fraud. A control system, no matter how well
designed and operated, can provide only reasonable, not absolute, assurance that
the control system's objectives will be met. The design of a control system must
reflect the fact that there are resource constraints, and the benefits of
controls must be considered relative to their costs. Further, because of the
inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that misstatements due to error or fraud will not
occur or that all control issues and instances of fraud, if any, within the
Company have been detected. These inherent limitations include the realities
that judgments in decision-making can be faulty and that breakdowns can occur
because of simple error or mistake. Controls can also be circumvented by the
individual acts of some persons, by collusion of two or more people, or by
management override of the controls. The design of any system of controls is
based in part on certain assumptions about the likelihood of future events, and
there can be no assurance that any design will succeed in achieving its stated
goals under all potential future conditions. Projections of any evaluation of
controls effectiveness to future periods are subject to risks. Over time,
controls may become inadequate because of changes in conditions or deterioration
in the degree of compliance with policies or procedures.
Changes
in Internal Control over Financial Reporting
There
have not been any changes in the Company’s internal control over financial
reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) during the most recent fiscal quarter that have materially
affected, or are reasonably likely to materially affect, the Company’s internal
control over financial reporting.
39
Management
Report on Internal Control Over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f) to provide reasonable assurance regarding the reliability of our
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. Internal
control over financial reporting includes those policies and procedures that (i)
pertain to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of the assets of the Company;
(ii) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the Company are
being made only in accordance with authorizations of management and directors of
the Company; and (iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use or disposition of the
Company's assets that could have a material effect on the financial
statements.
Management
assessed our internal control over financial reporting as of March 31, 2008, the
end of our fiscal year. Management based its assessment on criteria established
in Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Management's assessment included
evaluation of such elements as the design and operating effectiveness of key
financial reporting controls, process documentation, accounting policies, and
our overall control environment. This assessment is supported by testing and
monitoring performed both by our Internal Audit organization and our Finance
organization.
Based on
our assessment, management has concluded that our internal control over
financial reporting was effective as of the end of the fiscal year. We reviewed
the results of management's assessment with the Audit Committee of our Board of
Directors.
Our
independent registered public accounting firm, BDO Seidman, LLP, has audited the
Company's internal control over financial reporting and has issued their report,
which is included below.
On April
10, 2008, U-Haul International, Inc. and two of its subsidiaries entered into an
amortizing term loan for the purchase of new rental trucks of up to $20.0
million in fiscal 2009.
40
Report
of Independent Registered Public Accounting Firm
Board of
Directors and Shareholders
AMERCO
Reno,
Nevada
We have
audited AMERCO and consolidated subsidiaries’ (the
“Company”) internal control over financial reporting as of March 31,
2008, based on criteria established in Internal Control – Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission
(the COSO criteria). The Company’s management is responsible for
maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting,
included in the accompanying “Item 9A, Management’s Report on Internal Control
Over Financial Reporting”. Our responsibility is to express an opinion on the
Company’s internal control over financial reporting based on our
audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk. Our audit also included performing such
other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.
A
company’s internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company’s internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial
statements.
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
In our
opinion, the Company maintained, in all material respects, effective internal
control over financial reporting as of March 31, 2008, based on the COSO
criteria.
We also
have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated balance sheets of the Company
as of March 31, 2008 and 2007, and the related consolidated statements of
operations, changes in stockholders’ equity, other comprehensive income (loss),
and cash flows for each of the three years in the period ended March 31, 2008
and our report dated June 2, 2008 expressed an unqualified opinion
thereon.
/s/ BDO
Seidman, LLP
Phoenix,
Arizona
June 2,
2008
41
The
information required to be disclosed under this Item 10 is incorporated herein
by reference to AMERCO’s definitive proxy statement, which will be filed with
the SEC within 120 days after the close of the 2008 fiscal year.
The
Company has adopted a code of ethics that applies to all directors, officers and
employees of the Company, including the Company’s principal executive officer
and principal accounting officer. A copy of our Code of Ethics is posted on the
AMERCO home page at www.amerco.com. We intend to satisfy the
disclosure requirements of Form 8-K regarding any amendment to, or waiver from,
a provision of this code of ethics by posting such information on the Company’s
website, at the web address and location specified above, unless otherwise
required to file a Form 8-K by Nasdaq rules and regulations.
Item 11. Executive Compensation
The
information required to be disclosed under this Item 11 is incorporated herein
by reference to AMERCO’s definitive proxy statement, which will be filed with
the commission within 120 days after the close of the 2008 fiscal
year.
The
information required to be disclosed under this Item 12 is incorporated herein
by reference to AMERCO’s definitive proxy statement, which will be filed with
the commission within 120 days after the close of the 2008 fiscal
year.
Item 13. Certain Relationships and Related
Transactions, and Director Independence
The
information required to be disclosed under this Item 13 is incorporated herein
by reference to AMERCO’s definitive proxy statement, which will be filed with
the commission within 120 days after the close of the 2008 fiscal
year.
Item 14. Principal Accounting Fees and
Services
The
information required to be disclosed under this Item 14 is incorporated herein
by reference to AMERCO’s definitive proxy statement, which will be filed with
the commission within 120 days after the close of the 2008 fiscal
year.
42
PART
IV
Item 15. Exhibits, Financial Statement
Schedules
(a) The
following documents are filed as part of this Report:
Page No.
|
||
1.
|
Financial
Statements:
|
|
Report
of Independent Registered Public Accounting Firm
|
F-1
|
|
Independent
Auditors' Report
|
F-2
|
|
Consolidated
Balance Sheets - March 31, 2008 and 2007
|
F-3
|
|
Consolidated
Statements of Operations - Years Ended March 31, 2008, 2007, and
2006
|
F-4
|
|
Consolidated
Statements of Changes in Stockholders' Equity - Years Ended March 31,
2008, 2007, and 2006
|
F-5
|
|
Consolidated
Statement of Comprehensive Income (Loss) - Years Ended March 31, 2008,
2007 and 2006
|
F-6
|
|
Consolidated
Statement of Cash Flows - Years Ended March 31, 2008, 2007 and
2006
|
F-7
|
|
Notes
to Consolidated Financial Statements
|
F-8
- F-53
|
|
2.
|
Financial
Statement Schedules required to be filed by Item 8 and Paragraph (d) of
this Item 15:
|
|
Condensed
Financial Information of AMERCO - Schedule 1
|
F-54
- F-57
|
|
Valuation
and Qualifying Accounts - Schedule II
|
F-58
|
|
Supplemental
Information (For Property-Casualty Insurance Underwriters) - Schedule
V
|
F-59
|
All other
schedules are omitted as the required information is not applicable or the
information is presented in the financial statements or related notes
thereto.
(b)
Exhibits:
Exhibit Number
|
Description
|
Page or Method of Filing
|
2.1
|
Joint
Plan of Reorganization of AMERCO and AMERCO Real Estate
Company
|
Incorporated
by reference to AMERCO’s Current Report on Form 8-K filed October 20,
2003, file no. 1-11255
|
2.2
|
Disclosure
Statement Concerning the Debtors’ Joint Plan of
Reorganization
|
Incorporated
by reference to AMERCO’s Current Report on Form 8-K filed October 20,
2003, file no. 1-11255
|
2.3
|
Amended
Joint Plan of Reorganization of AMERCO and AMERCO Real Estate
Company
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended December 31, 2003, file no. 1-11255
|
3.1
|
Restated
Articles of Incorporation of AMERCO
|
Incorporated
by reference to AMERCO’s Registration Statement on form S-4 filed March
30, 2004, file no. 1-11255
|
3.2
|
Restated
By-Laws of AMERCO
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 1996, file no. 1-11255
|
3.3
|
Amendment
to Restated By-Laws of AMERCO
|
Incorporated
by reference to AMERCO’s Current Report on Form 8-K filed on December 5,
2007, file no. 1-11255
|
4.3
|
Indenture
dated as of March 15, 2004, among SAC Holding Corporation and SAC Holding
II Corporation and Law Debenture Trust Company of New York
|
Incorporated
by reference to AMERCO’s Current Report on Form 8-K filed on March 26,
2004, file no. 1-11255
|
43
Exhibit Number | Description | Page or Method of Filing |
4.4
|
Rights
Agreement, dated as of August 7, 1998
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended June 30, 1998, file no. 1-11255
|
4.5
|
Termination
of Rights Agreement, dated as of March 5, 2008
|
Incorporated
by reference to AMERCO’s Current Report on Form 8-K, filed on March 11,
2008, file no. 1-11255
|
10.1*
|
AMERCO
Employee Savings, Profit Sharing and Employee Stock Ownership
Plan
|
Incorporated
by reference to AMERCO’s Annual Report on Form 10-K for the year ended
March 31, 1993, file no. 1-11255
|
10.1A*
|
First
Amendment to the AMERCO Employee Savings, Profit Sharing and Employee
Stock Ownership Plan
|
Incorporated
by reference to AMERCO’s Annual Report on Form 10-K for the year ended
March 31, 2000, file no. 1-11255
|
10.3
|
SAC
Participation and Subordination Agreement, dated as of March 15, 2004
among SAC Holding Corporation, SAC Holding II Corporation, AMERCO, U-Haul
International, Inc., and Law Debenture Trust Company of New
York
|
Incorporated
by reference to AMERCO’s Current Report on Form 8-K filed on March 26,
2004, file no. 1-11255
|
10.5
|
U-Haul
Dealership Contract
|
Incorporated
by reference to AMERCO’s Annual Report on Form 10-K for the year end March
31, 1993, file no. 1-11255
|
10.6
|
Share
Repurchase and Registration Rights Agreement with Paul F.
Shoen
|
Incorporated
by reference to AMERCO’s Annual Report on Form 10-K for the year ended
March 31, 1993, file no. 1-11255
|
10.7
|
ESOP
Loan Credit Agreement
|
Incorporated
by reference to AMERCO’s Annual Report on Form 10-K for the year ended
March 31, 1990, file no. 1-11255
|
10.8
|
ESOP
Loan Agreement
|
Incorporated
by reference to AMERCO’s Annual Report on Form 10-K for the year ended
March 31, 1990, file no. 1-11255
|
10.9
|
Trust
Agreement for the AMERCO Employee Savings, Profit Sharing and Employee
Stock Ownership Plan
|
Incorporated
by reference to AMERCO’s Annual Report on Form 10-K for the year ended
March 31, 1990, file no. 1-11255
|
10.10
|
Amended
Indemnification Agreement
|
Incorporated
by reference to AMERCO’s Annual Report on Form 10-K for the year ended
March 31, 1990, file no. 1-11255
|
10.11
|
Indemnification
Trust Agreement
|
Incorporated
by reference to AMERCO’s Annual Report on Form 10-K for the year ended
March 31, 1990, file no. 1-11255
|
10.13
|
Management
Agreement between Four SAC Self-Storage Corporation and subsidiaries of
AMERCO
|
Incorporated
by reference to AMERCO’s Annual Report on Form 10-K for the year ended
March 31, 1997, file no. 1-11255
|
10.17
|
Management
Agreement between Five SAC Self-Storage Corporation and subsidiaries of
AMERCO
|
Incorporated
by reference to AMERCO’s Annual Report on Form 10-K for the year ended
March 31, 1999, file no. 1-11255
|
10.31
|
Management
Agreement between Eighteen SAC Self-Storage Corporation and
U-Haul
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2002, file no. 1-11255
|
10.32
|
Management
Agreement between Nineteen SAC Self-Storage Limited Partnership and
U-Haul
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2002, file no.
1-11255
|
44
Exhibit Number | Description | Page or Method of Filing |
10.33
|
Management
Agreement between Twenty SAC Self-Storage Corporation and
U-Haul
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2002, file no. 1-11255
|
10.34
|
Management
Agreement between Twenty-One SAC Self-Storage Corporation and
U-Haul
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2002, file no. 1-11255
|
10.35
|
Management
Agreement between Twenty-Two SAC Self-Storage Corporation and
U-Haul
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2002, file no. 1-11255
|
10.36
|
Management
Agreement between Twenty-Three SAC Self-Storage Corporation and
U-Haul
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2002, file no. 1-11255
|
10.37
|
Management
Agreement between Twenty-Four SAC Self-Storage Limited Partnership and
U-Haul
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2002, file no. 1-11255
|
10.38
|
Management
Agreement between Twenty-Five SAC Self-Storage Limited Partnership and
U-Haul
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2002, file no. 1-11255
|
10.39
|
Management
Agreement between Twenty-Six SAC Self-Storage Limited Partnership and
U-Haul
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2002, file no. 1-11255
|
10.40
|
Management
Agreement between Twenty-Seven SAC Self-Storage Limited Partnership and
U-Haul
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2002, file no. 1-11255
|
10.48
|
Amended
and Restated Promissory Note between SAC Holding Corporation and U-Haul
International, Inc. (in an aggregate principal amount up to
$47,500,000)
|
Incorporated
by reference to AMERCO’s Form S-4 Registration Statement, no.
333-114042
|
10.49
|
Amended
and Restated Promissory Note between SAC Holding Corporation and U-Haul
International, Inc. (in an aggregate principal amount up to
$76,000,000)
|
Incorporated
by reference to AMERCO’s Form S-4 Registration Statement, no.
333-114042
|
10.50
|
Property
Management Agreement
|
Incorporated
by reference to AMERCO’s Annual Report on Form 10-K for the year ended
March 31, 2004, file no. 1-11255
|
10.51
|
Property
Management Agreements among Three-A through Three-D SAC Self-Storage
Limited Partnership and the subsidiaries of U-Haul International,
Inc.
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended June 30, 2004, file no. 1-11255
|
10.52
|
U-Haul
Dealership Contract between U-Haul Leasing & Sales Co., and U-Haul
Moving Partners, Inc.
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended June 30, 2004, file no. 1-11255
|
10.53
|
Property
Management Agreement between Mercury Partners, LP, Mercury 99, LLC and
U-Haul Self-Storage Management (WPC), Inc.
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended June 30, 2004, file no. 1-11255
|
10.54
|
Property
Management Agreement between Three-SAC Self-Storage Corporation and U-Haul
Co. (Canada), Ltd.
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended June 30, 2004, file no.
1-11255
|
45
Exhibit Number | Description | Page or Method of Filing |
10.56
|
Property
Management Agreement among subsidiaries of U-Haul International and Galaxy
Storage Two, L.P.
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended December 31, 2004, file no. 1-11255
|
10.58
|
Merrill
Lynch Commitment Letter (re first mortgage loan)
|
Incorporated
by reference to AMERCO’s Current Report on Form 8-K, filed on May 13,
2005, file no. 1-11255
|
10.61
|
Morgan
Stanley Commitment Letter
|
Incorporated
by reference to AMERCO’s Current Report on Form 8-K, filed on May 13,
2005, file no. 1-11255
|
10.62
|
Merrill
Lynch Commitment Letter (re loan to Amerco Real Estate
Company)
|
Incorporated
by reference to AMERCO’s Current Report on Form 8-K, filed on May 13,
2005, file no. 1-11255
|
10.64
|
Refinance
Closing Docs
|
Incorporated
by reference to AMERCO’s Current Report
on
Form 8-K, filed June 14, 2005, file no. 1-11255
|
10.65
|
Amended
and Restated Credit Agreement, dated June 8, 2005, among Amerco Real
Estate Company, Amerco Real Estate Company of Texas, Inc., Amerco Real
Estate Company of Alabama Inc., U-Haul Co. of Florida, Inc., U-Haul
International, Inc. and Merrill Lynch Commercial Finance
Corp.
|
Incorporated
by reference to AMERCO’s Current Report on Form 8-K, filed June 14, 2005,
file no. 1-11255
|
10.66
|
Security
Agreement dated June 8, 2005, by Amerco Real Estate Company, Amerco Real
Estate Company of Texas, Inc., Amerco Real Estate Company of Alabama,
Inc., U-Haul Co. of Florida, Inc., U-Haul International, Inc. and the
Marketing Grantors named therein in favor of Merrill Lynch Commercial
Finance Corp.
|
Incorporated
by reference to AMERCO’s Current Report on Form 8-K, filed June 14, 2005,
file no. 1-11255
|
10.67
|
Guarantee,
dated June 8, 2005, by U-Haul International, Inc. in favor of Merrill
Lynch Commercial Finance Corp.
|
Incorporated
by reference to AMERCO’s Current Report on Form 8-K, filed June 14, 2005,
file no. 1-11255
|
10.68
|
Promissory
Note, dated June 8, 2005 by Amerco Real Estate Company, Amerco Real Estate
Company of Texas, Inc., Amerco Real Estate Company of Alabama, Inc.,
U-Haul Co. of Florida, Inc. and U-Haul International, Inc.
|
Incorporated
by reference to AMERCO’s Current Report on Form 8-K, filed June 14, 2005,
file no. 1-11255
|
10.69
|
Form
of Mortgage, Security Agreement, Assignment of Rents and Fixture Filing,
dated June 8, 2005 in favor of Morgan Stanley Mortgage Capital
Inc.
|
Incorporated
by reference to AMERCO’s Current Report on Form 8-K, filed June 14, 2005,
file no. 1-11255
|
10.70
|
Form
of Promissory Note, dated June 8, 2005, in favor of Morgan Stanley
Mortgage Capital Inc.
|
Incorporated
by reference to AMERCO’s Current Report on Form 8-K, filed June 14, 2005,
file no. 1-11255
|
10.71
|
Form
of Mortgage, Security Agreement, Assignment of Rents and Fixture Filing,
dated June 8, 2005, in favor of Merrill Lynch Mortgage Lending,
Inc.
|
Incorporated
by reference to AMERCO’s Current Report on Form 8-K, filed June 14, 2005,
file no. 1-11255
|
10.72
|
Form
of Promissory Note, dated June 8, 2005, in favor of Merrill Lynch Mortgage
Lending, Inc.
|
Incorporated
by reference to AMERCO’s Current Report on Form 8-K, filed June 14, 2005,
file no. 1-11255
|
10.78
|
Property
Management Agreement between Subsidiaries of U-Haul and Five SAC RW MS,
LLC., dated August 17, 2005.
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2005, file no.
1-11255
|
46
Exhibit Number | Description | Page or Method of Filing |
10.79
|
Credit
agreement, dated November 10, 2005, among U-Haul Leasing & Sales Co.,
U-Haul Company of Arizona and U-Haul International, Inc. and Merrill Lynch
Commercial Finance Corporation.
|
Incorporated
by reference to AMERCO’s Current Report on Form 8-K, filed November 17,
2005, file no. 1-11255
|
10.80
|
Property
Management Agreement between Subsidiaries of U-Haul and Five SAC 905,
LLC., dated September 23, 2005.
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended December 31, 2005, file no. 1-11255
|
10.81
|
Property
Management Agreements between Subsidiaries of U-Haul and subsidiaries of
PM Partners, LP, dated June 25, 2005.
|
Incorporated
by reference to AMERCO’s Annual Report on Form 10-K for the
year ended March 31, 2006, file no. 1-11255
|
10.82
|
Promissory
note, dated December 1, 2005, by Private Mini Storage Realty, LP in favor
of AMERCO.
|
Incorporated
by reference to AMERCO’s Annual Report on Form 10-K for the
year ended March 31, 2006, file no. 1-11255
|
10.83
|
Promissory
note dated December 1, 2005 by PMSI Investments, LP in favor of U-Haul
International, Inc.
|
Incorporated
by reference to AMERCO’s Annual Report on Form 10-K for the
year ended March 31, 2006, file no. 1-11255
|
10.84
|
Property
Management Agreements between Subsidiaries of U-Haul and subsidiaries of
PM Preferred Properties, LP., dated June 25, 2005
|
Incorporated
by reference to AMERCO’s Annual Report on Form 10-K for the
year ended March 31, 2006, file no. 1-11255
|
10.85
|
Credit
Agreement executed June 7, 2006, among U-Haul Leasing & Sales Co.,
U-Haul Co. of Arizona and U-Haul International, Inc. and BTMU Capital
Corporation.
|
Incorporated
by reference to AMERCO’s Annual Report on Form 10-K for the
year ended March 31, 2006, file no. 1-11255
|
10.86
|
Security
and Collateral Agreement executed June 7, 2006, by U-Haul International,
Inc., U-Haul Leasing and Sales Co., U-Haul Co. of Arizona, BTMU Capital
Corporation, and Orange Truck Trust 2006
|
Incorporated
by reference to AMERCO’s Annual Report on Form 10-K for the
year ended March 31, 2006, file no. 1-11255
|
10.87
|
Guarantee
executed June 7, 2006, made by U-Haul International, Inc. and AMERCO in
favor of BTMU Capital Corp. and Orange Truck Trust 2006.
|
Incorporated
by reference to AMERCO’s Annual Report on Form 10-K for the
year ended March 31, 2006, file no. 1-11255
|
10.89
|
First
Amendment to Security Agreement (New Truck Term Loan Facility) executed
June 7, 2006, among U-Haul Leasing and Sales Co., U-Haul Co. of Arizona,
and U-Haul International, Inc., in favor of Merrill Lynch Commercial
Finance Corp.
|
Incorporated
by reference to AMERCO’s Annual Report on Form 10-K for the
year ended March 31, 2006, file no. 1-11255
|
10.90
|
Credit
Agreement dated June 6, 2006, among U-Haul Leasing and Sales Co., U-Haul
Co. of Arizona, and U-Haul International, Inc., and HVB
|
Incorporated
by reference to AMERCO’s Annual Report on Form 10-K for the
year ended March 31, 2006, file no. 1-11255
|
10.91
|
Security
Agreement dated June 6, 2006, among U-Haul Leasing and Sales Co., U-Haul
Co. of Arizona, and U-Haul International, Inc. in favor of
HVB
|
Incorporated
by reference to AMERCO’s Annual Report on Form 10-K for the
year ended March 31, 2006, file no. 1-11255
|
10.92
|
Guarantee
dated June 6, 2006, made by U-Haul International, Inc. in favor of
HVB
|
Incorporated
by reference to AMERCO’s Annual Report on Form 10-K for the
year ended March 31, 2006, file no.
1-11255
|
47
Exhibit Number | Description | Page or Method of Filing |
10.93
|
Stockholder
Agreement dated June 30, 2006 between Edward J. Shoen, James P. Shoen,
Mark V. Shoen, Rosmarie T. Donovan, as Trustee, and Southwest Fiduciary,
Inc., as Trustee
|
Incorporated
by reference to Exhibit 99.2, filed with the Schedule 13-D, filed on July
13, 2006, file number 5-39669
|
10.94
|
Amendment
No. 1 to the Amended and Restated Credit Agreement and Security Agreement,
dated as of August 18, 2006, to the Amended and Restated Credit Agreement,
dated as of June 8, 2005, among Amerco Real Estate Company of Texas, Inc.,
Amerco Real Estate Company of Alabama, Inc., U-Haul Co. of Florida, Inc.,
U-Haul International, Inc. and the Marketing Grantors named therein in
favor of Merrill Lynch Commercial Financial Corp.
|
Incorporated
by reference to AMERCO’s Current Report on Form 8-K filed August 23, 2006,
file no. 1-11255
|
10.95
|
Stockholder
Agreement dated March 9, 2007 between Edward J. Shoen, James P. Shoen,
Mark V. Shoen, Rosmarie T. Donovan, as Trustee, and Adagio Trust Company,
as Trustee
|
Incorporated
by reference to Exhibit 99.2, filed with the Schedule 13-D, filed on March
9, 2007, file number 5-39669
|
10.96
|
Amended
and Restated Credit Agreement, dated as of March 12, 2007, to the Credit
Agreement, dated as of June 28, 2005, among U-Haul Leasing & Sales
Co., U-Haul Company of Arizona and U-Haul International, Inc. and Merrill
Lynch Commercial Finance Corporation.
|
Incorporated
by reference to AMERCO’s Annual Report on Form 10-K for the
year ended March 31, 2007, file no. 1-11255
|
10.97
|
Amended
and Restated Security Agreement, dated as of March 12, 2007, to the
Security Agreement, dated June 28, 2005, among U-Haul Leasing & Sales
Co., U-Haul Company of Arizona and U-Haul International, Inc. in favor of
Merrill Lynch Commercial Finance Corporation.
|
Incorporated
by reference to AMERCO’s Annual Report on Form 10-K for the
year ended March 31, 2007, file no. 1-11255
|
10.98
|
2007-1
BOX TRUCK BASE INDENTURE, dated as of June 1, 2007, among U-HAUL S FLEET,
LLC, a special purpose limited liability company established under the
laws of Nevada, 2007 TM-1, LLC, a special purpose limited liability
company established under the laws of Nevada, 2007 DC-1, LLC, a special
purpose limited liability company established under the laws of Nevada,
and 2007 EL-1, LLC, a special purpose limited liability company
established under the laws of Nevada, as co-issuers (each an “Issuer” and collectively, the “Issuers”), and U.S. BANK NATIONAL
ASSOCIATION, a national banking association, as trustee (in such capacity,
the “Trustee”).
|
Incorporated
by reference to AMERCO’s Annual Report on Form 10-K for the
year ended March 31, 2007, file no. 1-11255
|
10.99
|
SCHEDULE
I TO 2007-1 BOX TRUCK BASE INDENTURE, dated as of June 1,
2007.
|
Incorporated
by reference to AMERCO’s Annual Report on Form 10-K for the
year ended March 31, 2007, file no.
1-11255
|
48
Exhibit Number | Description | Page or Method of Filing |
10.100
|
SERIES
2007-1 SUPPLEMENT, dated as of June 1, 2007 (this “Series Supplement”), among U-HAUL S FLEET,
LLC, a special purpose limited liability company established under the
laws of Nevada, 2007 TM-1, LLC, a special purpose limited liability
company established under the laws of Nevada, 2007 DC-1, LLC, a special
purpose limited liability company established under the laws of Nevada,
and 2007 EL-1, LLC, a special purpose limited liability company
established under the laws of Nevada, as co-issuers (each an “Issuer” and collectively, the “Issuers”), and U.S. BANK NATIONAL
ASSOCIATION, a national banking association, as trustee (in such capacity,
and together with its successors in trust thereunder as provided in the
2007-1 Base Indenture referred to below, the “Trustee”) and as securities intermediary,
to the 2007-1 Box Truck Base Indenture, dated as of the date hereof, among
the Issuers and the Trustee (as amended, modified, restated or
supplemented from time to time, exclusive of Series Supplements creating a
new Series of Notes, the “2007-1 Base
Indenture”).
|
Incorporated
by reference to AMERCO’s Annual Report on Form 10-K for the
year ended March 31, 2007, file no. 1-11255
|
10.101
|
CARGO
VAN/PICK-UP TRUCK BASE INDENTURE, dated as of June 1, 2007, among U-HAUL S
FLEET, LLC, a special purpose limited liability company established under
the laws of Nevada, 2007 BE-1, LLC, a special purpose limited liability
company established under the laws of Nevada, and 2007 BP-1, LLC, a
special purpose limited liability company established under the laws of
Nevada, as co-issuers (each an “Issuer” and collectively, the “Issuers”), and U.S. BANK NATIONAL
ASSOCIATION, a national banking association, as trustee (in such capacity,
the “Trustee”).
|
Incorporated
by reference to AMERCO’s Annual Report on Form 10-K for the
year ended March 31, 2007, file no. 1-11255
|
10.102
|
SCHEDULE
I TO CARGO VAN/PICK-UP TRUCK BASE INDENTURE, dated as of June 1,
2007.
|
Incorporated
by reference to AMERCO’s Annual Report on Form 10-K for the
year ended March 31, 2007, file no.
1-11255
|
49
Exhibit Number | Description | Page or Method of Filing |
10.103
|
SERIES
2007-1 SUPPLEMENT, dated as of June 1, 2007 (this “Series Supplement”), among U-HAUL S FLEET,
LLC, a special purpose limited liability company established under the
laws of Nevada, 2007 BE-1, LLC, a special purpose limited liability
company established under the laws of Nevada, and 2007 BP-1, LLC, a
special purpose limited liability company established under the laws of
Nevada, as co-issuers (each an “Issuer” and collectively, the “Issuers”), and U.S. BANK NATIONAL
ASSOCIATION, a national banking association, as trustee (in such capacity,
and together with its successors in trust thereunder as provided in the
Base Indenture referred to below, the “Trustee”) and securities intermediary, to
the Cargo Van/Pick-Up Truck Base Indenture, dated as of the date hereof,
among the Issuers and the Trustee (as amended, modified, restated or
supplemented from time to time, exclusive of Series Supplements creating a
new Series of Notes, the “Base
Indenture”).
|
Incorporated
by reference to AMERCO’s Annual Report on Form 10-K for the
year ended March 31, 2007, file no. 1-11255
|
10.104
|
Amended
and restated Property Management Agreement among Six-A SAC Self-Storage
Corporation and subsidiaries of U-Haul International, Inc.
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2007, file no. 1-11255
|
10.105
|
Amended
and restated Property Management Agreement among Six-B SAC Self-Storage
Corporation and subsidiaries of U-Haul International, Inc.
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2007, file no. 1-11255
|
10.106
|
Amended
and restated Property Management Agreement among Six-C SAC Self-Storage
Corporation and subsidiaries of U-Haul International, Inc.
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2007, file no. 1-11255
|
10.107
|
Amended
and restated Property Management Agreement among Eight SAC Self-Storage
Corporation and subsidiaries of U-Haul International, Inc.
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2007, file no. 1-11255
|
10.108
|
Amended
and restated Property Management Agreement among Nine SAC Self-Storage
Corporation and subsidiaries of U-Haul International, Inc.
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2007, file no. 1-11255
|
10.109
|
Amended
and restated Property Management Agreement among Ten SAC Self-Storage
Corporation and subsidiaries of U-Haul International, Inc.
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2007, file no. 1-11255
|
10.110
|
Amended
and restated Property Management Agreement among Eleven SAC Self-Storage
Corporation and Eleven SAC Self-Storage Odenton, Inc. and subsidiaries of
U-Haul International, Inc.
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2007, file no.
1-11255
|
50
Exhibit Number | Description | Page or Method of Filing |
10.111
|
Amended
and restated Property Management Agreement among Twelve SAC Self-Storage
Corporation and subsidiaries of U-Haul International, Inc.
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2007, file no. 1-11255
|
10.112
|
Amended
and restated Property Management Agreement among Thirteen SAC Self-Storage
Corporation and subsidiaries of U-Haul International, Inc.
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2007, file no. 1-11255
|
10.113
|
Amended
and restated Property Management Agreement among Fourteen SAC Self-Storage
Corporation and subsidiaries of U-Haul International, Inc.
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2007, file no. 1-11255
|
10.114
|
Amended
and restated Property Management Agreement among Fifteen SAC Self-Storage
Corporation and subsidiaries of U-Haul International, Inc.
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2007, file no. 1-11255
|
10.115
|
Amended
and restated Property Management Agreement among Sixteen SAC Self-Storage
Corporation and subsidiaries of U-Haul International, Inc.
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2007, file no. 1-11255
|
10.116
|
Amended
and restated Property Management Agreement among Seventeen SAC
Self-Storage Corporation and subsidiaries of U-Haul International,
Inc.
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2007, file no. 1-11255
|
10.117
|
Promissory
Note. SAC Holding Corporation, a Nevada corporation ("Borrower"), pay to
U-Haul International, Inc., a Nevada corporation
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2007, file no. 1-11255
|
10.118
|
Omnibus
Termination and Release (Aged Truck Revolving Loan Facility), dated
February 8, 2008 among U-Haul Leasing & Sales Co., U-Haul Co. of
Arizona and U-Haul International, Inc. and Merrill Lynch Commercial
Finance Corporation
|
Incorporated
by reference to AMERCO’s Current Report on Form 8-K filed February 13,
2008, file no. 1-11255
|
14
|
Code
of Ethics
|
Incorporated
by reference to AMERCO’s Current Report on Form 8-K, filed on May 5, 2004,
file no. 1-11255
|
21
|
Subsidiaries
of AMERCO
|
Filed
herewith
|
23.1
|
Consent
of BDO Seidman, LLP
|
Filed
herewith
|
23.2
|
Consent
of Semple, Marchal and Cooper, LLP
|
Filed
herewith
|
24
|
Power
of Attorney
|
Refer
to signature page
|
31.1
|
Rule
13a-14(a)/15d-14(a) Certificate of Edward J. Shoen, President and Chairman
of the Board of AMERCO
|
Filed
herewith
|
31.2
|
Rule
13a-14(a)/15d-14(a) Certificate of Jason A. Berg, Chief Accounting Officer
of AMERCO
|
Filed
herewith
|
32.1
|
Certificate
of Edward J. Shoen, President and Chairman of the Board of AMERCO pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
|
Furnished
herewith
|
51
Exhibit Number | Description | Page or Method of Filing |
32.2
|
Certificate
of Jason A. Berg, Chief Accounting Officer of AMERCO pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
|
Furnished
herewith
|
*
Indicates compensatory plan arrangement.
52
Report
of Independent Registered Public Accounting Firm
Board of
Directors and Stockholders
AMERCO
Reno,
Nevada
We have
audited the accompanying consolidated balance sheets of AMERCO and consolidated
subsidiaries (the “Company”) as of March 31, 2008 and 2007 and the related
consolidated statements of operations, changes in stockholders’ equity, other
comprehensive income (loss), and cash flows for each of the three years in the
period ended March 31, 2008. In connection with our audits of the financial
statements, we have also audited the financial statement schedules listed in the
accompanying index. These financial statements and schedules are the
responsibility of the Company’s management. Our responsibility is to
express an opinion on these financial statements and schedules based on our
audits. We did not audit the financial statements of SAC Holding II
Corporation, which statements reflect total assets of $148.1 million as of March
31, 2007, and total revenues of $28.1 million for the seven month period ended
October 31, 2007, and $46.6 million, and $46.2 for each of the two years in the
period ended March 31, 2007, respectively. Those statements were
audited by other auditors whose reports have been furnished to us, and our
opinion, insofar as it relates to the amounts included for such consolidated
entity, is based solely on the reports of other auditors.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall presentation of the financial statements and schedules. We
believe that our audits provide a reasonable basis for our opinion.
In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of the Company at March 31,
2008 and 2007, and the results of its operations and its cash flows for each of
the three years in the period ended March 31, 2008, in conformity with
accounting principles generally accepted in the United States of
America.
Also, in
our opinion, the financial statement schedules, when considered in relation to
the basic consolidated financial statements taken as a whole, present fairly, in
all material respects, the information set forth therein.
As
discussed in the notes to the consolidated financial statements, the Company:
(1) effective April 1, 2007 adopted the recognition and measurement provisions
of FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes – an interpretation of FASB Statement No. 109, (2) effective March
31, 2007, began to recognize the funded status of its defined benefit plan in
its consolidated balance sheets and changed the measurement date for defined
benefit plan assets and liabilities to coincide with its year end to conform to
Standard of Financial Accounting Standards No. 158, Employers’ Accounting for Defined
Benefit Pension and Other Postretirement Plans – an amendment of FASB Statements
No. 87, 88, 106 and 132(R), and (3) effective March 31, 2007, changed
their method for quantifying errors based on SEC Staff Accounting Bulletin No.
108, Considering the Effects
of Prior Year Misstatements when Quantifying Misstatements in Current Year
Financial Statements.
As
discussed in note 2 to the consolidated financial statements, the Company
deconsolidated SAC Holding II Corporation in November 2007, which was accounted
for as a distribution to the sole shareholder of SAC Holding II
Corporation.
We also
have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the Company's internal control over financial
reporting as of March 31, 2008, based on criteria established in Internal Control – Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) and our report dated June 2, 2008 expressed an
unqualified opinion thereon.
/s/ BDO
Seidman, LLP
Phoenix,
Arizona
June 2,
2008
F-1
Independent
Auditors’ Report
Board of
Directors and Stockholder
SAC
Holding II Corporation
(A
Wholly-Owned Subsidiary of Blackwater Investments, Inc.)
We have
audited the accompanying consolidated balance sheets of SAC Holding II
Corporation (A Wholly-Owned Subsidiary of Blackwater Investments, Inc.) as of
October 31, 2007 and March 31, 2007 and the related consolidated statements of
operations, stockholder’s deficit, and cash flows for the seven months ended
October 31, 2007 and the years ended March 31, 2007 and 2006. These financial
statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We
conducted our audits in accordance with auditing standards generally accepted in
the United States of America. 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 consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, 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 consolidated financial statements referred to above present fairly,
in all material respects, the financial position of SAC Holding II Corporation
(A Wholly-Owned Subsidiary of Blackwater Investments, Inc.) as of October 31,
2007 and March 31, 2007 and the results of its operations, stockholder’s deficit
and its cash flows for the seven months ended October 31, 2007 and the years
ended March 31, 2007 and 2006 in conformity with accounting principles generally
accepted in the United States of America.
/s/
Semple, Marchal & Cooper, LLP
Phoenix,
Arizona
May 29,
2008
F-2
AMERCO
AND CONSOLIDATED ENTITIES
CONSOLIDATED
BALANCE SHEETS
March
31,
|
||||||||
2008
|
2007
|
|||||||
(In
thousands)
|
||||||||
ASSETS
|
||||||||
Cash
and cash equivalents
|
$ | 206,622 | $ | 75,272 | ||||
Reinsurance
recoverables and trade receivables, net
|
201,116 | 184,617 | ||||||
Notes
and mortgage receivables, net
|
2,088 | 1,669 | ||||||
Inventories,
net
|
65,349 | 67,023 | ||||||
Prepaid
expenses
|
56,159 | 52,080 | ||||||
Investments,
fixed maturities and marketable equities
|
633,784 | 681,801 | ||||||
Investments,
other
|
185,591 | 178,699 | ||||||
Deferred
policy acquisition costs, net
|
35,578 | 44,514 | ||||||
Other
assets
|
131,138 | 95,123 | ||||||
Related
party assets
|
303,886 | 245,179 | ||||||
1,821,311 | 1,625,977 | |||||||
Property,
plant and equipment, at cost:
|
||||||||
Land
|
208,164 | 202,917 | ||||||
Buildings
and improvements
|
859,882 | 802,289 | ||||||
Furniture
and equipment
|
309,960 | 301,751 | ||||||
Rental
trailers and other rental equipment
|
205,572 | 200,208 | ||||||
Rental
trucks
|
1,734,425 | 1,604,123 | ||||||
SAC
Holding II - property, plant and equipment
|
- | 80,349 | ||||||
3,318,003 | 3,191,637 | |||||||
Less:
Accumulated depreciation
|
(1,306,827 | ) | (1,294,566 | ) | ||||
Total
property, plant and equipment
|
2,011,176 | 1,897,071 | ||||||
Total
assets
|
$ | 3,832,487 | $ | 3,523,048 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Liabilities:
|
||||||||
Accounts
payable and accrued expenses
|
$ | 292,526 | $ | 251,197 | ||||
AMERCO's
notes and loans payable
|
1,504,677 | 1,181,165 | ||||||
SAC
Holding II notes and loans payable, non-recourse to AMERCO
|
- | 74,887 | ||||||
Policy
benefits and losses, claims and loss expenses payable
|
789,374 | 768,751 | ||||||
Liabilities
from investment contracts
|
339,198 | 386,640 | ||||||
Other
policyholders' funds and liabilities
|
10,467 | 10,563 | ||||||
Deferred
income
|
11,781 | 16,478 | ||||||
Deferred
income taxes
|
126,033 | 113,170 | ||||||
Related
party liabilities
|
- | 2,099 | ||||||
Total
liabilities
|
3,074,056 | 2,804,950 | ||||||
Commitments
and contingencies (notes 9, 15,16, 17 and 19)
|
||||||||
Stockholders'
equity:
|
||||||||
Series
preferred stock, with or without par value, 50,000,000 shares
authorized:
|
||||||||
Series
A preferred stock, with no par value, 6,100,000 shares
authorized;
|
||||||||
6,100,000
shares issued and outstanding as of March 31, 2008 and
2007
|
- | - | ||||||
Series
B preferred stock, with no par value, 100,000 shares authorized;
none
|
||||||||
issued
and outstanding as of March 31, 2008 and 2007
|
- | - | ||||||
Series
common stock, with or without par value, 150,000,000 shares
authorized:
|
||||||||
Series
A common stock of $0.25 par value, 10,000,000 shares
authorized;
|
||||||||
none
issued as of March 31, 2008 and March 31, 2007
|
- | - | ||||||
Common
stock of $0.25 par value, 150,000,000 shares authorized;
41,985,700
|
||||||||
issued
as of March 31, 2008 and March 31, 2007
|
10,497 | 10,497 | ||||||
Additional
paid-in capital
|
419,370 | 375,412 | ||||||
Accumulated
other comprehensive loss
|
(55,279 | ) | (41,779 | ) | ||||
Retained
earnings
|
915,415 | 849,300 | ||||||
Cost
of common shares in treasury, net (22,354,386 and 21,440,387 shares as
of
|
||||||||
March
31, 2008 and 2007)
|
(524,677 | ) | (467,198 | ) | ||||
Unearned
employee stock ownership plan shares
|
(6,895 | ) | (8,134 | ) | ||||
Total
stockholders' equity
|
758,431 | 718,098 | ||||||
Total
liabilities and stockholders' equity
|
$ | 3,832,487 | $ | 3,523,048 |
The
accompanying notes are an integral part of these consolidated financial
statements.
F-3
CONSOLIDATED
STATEMENTS OF OPERATIONS
Years
Ended March 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
(In
thousands, except share and per share data)
|
||||||||||||
Revenues:
|
||||||||||||
Self-moving
equipment rentals
|
$ | 1,451,292 | $ | 1,462,470 | $ | 1,489,429 | ||||||
Self-storage
revenues
|
122,248 | 126,424 | 119,742 | |||||||||
Self-moving
and self-storage products and service sales
|
217,798 | 224,722 | 223,721 | |||||||||
Property
management fees
|
22,820 | 21,154 | 21,195 | |||||||||
Life
insurance premiums
|
111,996 | 120,399 | 118,833 | |||||||||
Property
and casualty insurance premiums
|
28,388 | 24,335 | 26,001 | |||||||||
Net
investment and interest income
|
62,110 | 59,696 | 48,279 | |||||||||
Other
revenue
|
32,522 | 30,098 | 40,325 | |||||||||
Total
revenues
|
2,049,174 | 2,069,298 | 2,087,525 | |||||||||
Costs
and expenses:
|
||||||||||||
Operating
expenses
|
1,077,108 | 1,080,412 | 1,082,158 | |||||||||
Commission
expenses
|
167,945 | 162,899 | 165,961 | |||||||||
Cost
of sales
|
120,210 | 117,648 | 113,135 | |||||||||
Benefits
and losses
|
111,195 | 118,725 | 117,160 | |||||||||
Amortization
of deferred policy acquisition costs
|
13,181 | 17,138 | 24,261 | |||||||||
Lease
expense
|
133,931 | 147,659 | 136,652 | |||||||||
Depreciation,
net of (gains) losses on disposals
|
221,882 | 189,589 | 142,817 | |||||||||
Total
costs and expenses
|
1,845,452 | 1,834,070 | 1,782,144 | |||||||||
Earnings
from operations
|
203,722 | 235,228 | 305,381 | |||||||||
Interest
expense
|
(101,420 | ) | (82,436 | ) | (69,481 | ) | ||||||
Fees
and amortization on early extinguishment of debt
|
- | (6,969 | ) | (35,627 | ) | |||||||
Pretax
earnings
|
102,302 | 145,823 | 200,273 | |||||||||
Income
tax expense
|
(34,518 | ) | (55,270 | ) | (79,119 | ) | ||||||
Net
earnings
|
67,784 | 90,553 | 121,154 | |||||||||
Less:
Preferred stock dividends
|
(12,963 | ) | (12,963 | ) | (12,963 | ) | ||||||
Earnings
available to common shareholders
|
$ | 54,821 | $ | 77,590 | $ | 108,191 | ||||||
Basic
and diluted earnings per common share
|
$ | 2.78 | $ | 3.72 | $ | 5.19 | ||||||
Weighted
average common shares outstanding: Basic and diluted
|
19,740,571 | 20,838,570 | 20,857,108 |
Related
party revenues for fiscal 2008, 2007 and 2006, net of eliminations, were $42.5
million, $33.5 million and $32.6 million, respectively.
Related
party costs and expenses for fiscal 2008, 2007 and 2006, net of eliminations,
were $31.8 million, $28.0 million and $29.2 million, respectively.
The accompanying notes are an integral
part of these consolidated financial statements.
F-4
CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
Description
|
Series
A Common Stock, $0.25 Par Value
|
Common
Stock, $0.25 Par Value
|
Additional
Paid-In Capital
|
Accumulated
Other Comprehensive
Income
(Loss)
|
Retained
Earnings
|
Less:
Treasury Stock
|
Less:
Unearned Employee Stock Ownership Plan Shares
|
Total
Stockholders' Equity
|
||||||||||||||||||||||||
(In
thousands)
|
||||||||||||||||||||||||||||||||
Balance
as of March 31, 2005
|
$ | 929 | $ | 9,568 | $ | 350,344 | $ | (24,612 | ) | $ | 665,593 | $ | (418,092 | ) | $ | (10,891 | ) | $ | 572,839 | |||||||||||||
Increase
in market value of released ESOP shares and release of unearned ESOP
shares
|
- | - | 2,955 | - | - | - | 1,553 | 4,508 | ||||||||||||||||||||||||
Foreign
currency translation, net of tax
|
- | - | - | (903 | ) | - | - | - | (903 | ) | ||||||||||||||||||||||
Unrealized
loss on investments, net of tax
|
- | - | - | (7,968 | ) | - | - | - | (7,968 | ) | ||||||||||||||||||||||
Fair
market value of cash flow hedges, net of tax
|
- | - | - | 4,581 | - | - | - | 4,581 | ||||||||||||||||||||||||
Net
earnings
|
- | - | - | - | 121,154 | - | - | 121,154 | ||||||||||||||||||||||||
Preferred
stock dividends: Series A ($2.13 per share for fiscal
2006)
|
- | - | - | - | (12,963 | ) | - | - | (12,963 | ) | ||||||||||||||||||||||
Contribution
from related party
|
- | - | 14,356 | - | - | - | - | 14,356 | ||||||||||||||||||||||||
Net
activity
|
- | - | 17,311 | (4,290 | ) | 108,191 | - | 1,553 | 122,765 | |||||||||||||||||||||||
Balance
as of March 31, 2006
|
$ | 929 | $ | 9,568 | $ | 367,655 | $ | (28,902 | ) | $ | 773,784 | $ | (418,092 | ) | $ | (9,338 | ) | $ | 695,604 | |||||||||||||
Adjustment
to initially apply SAB 108, net of tax
|
- | - | - | - | (1,926 | ) | - | - | (1,926 | ) | ||||||||||||||||||||||
Adjustment
to initially apply FASB Statement No. 158, net of tax
|
- | - | - | (153 | ) | (148 | ) | - | - | (301 | ) | |||||||||||||||||||||
Increase
in market value of released ESOP shares and release of unearned ESOP
shares
|
- | - | 3,265 | - | - | - | 1,204 | 4,469 | ||||||||||||||||||||||||
Foreign
currency translation, net of tax
|
- | - | - | (1,919 | ) | - | - | - | (1,919 | ) | ||||||||||||||||||||||
Unrealized
loss on investments, net of tax
|
- | - | - | (1,072 | ) | - | - | - | (1,072 | ) | ||||||||||||||||||||||
Fair
market value of cash flow hedges, net of tax
|
- | - | - | (9,733 | ) | - | - | - | (9,733 | ) | ||||||||||||||||||||||
Net
earnings
|
- | - | - | - | 90,553 | - | - | 90,553 | ||||||||||||||||||||||||
Preferred
stock dividends: Series A ($2.13 per share for fiscal
2007)
|
- | - | - | - | (12,963 | ) | - | - | (12,963 | ) | ||||||||||||||||||||||
Exchange
of shares
|
(929 | ) | 929 | - | - | - | - | - | - | |||||||||||||||||||||||
Treasury
stock
|
- | - | - | - | - | (49,106 | ) | - | (49,106 | ) | ||||||||||||||||||||||
Contribution
from related party
|
- | - | 4,492 | - | - | - | - | 4,492 | ||||||||||||||||||||||||
Net
activity
|
(929 | ) | 929 | 7,757 | (12,877 | ) | 75,516 | (49,106 | ) | 1,204 | 22,494 | |||||||||||||||||||||
Balance
as of March 31, 2007
|
$ | - | $ | 10,497 | $ | 375,412 | $ | (41,779 | ) | $ | 849,300 | $ | (467,198 | ) | $ | (8,134 | ) | $ | 718,098 | |||||||||||||
Adjustment
to initially apply FIN 48
|
- | - | - | - | 6,826 | - | - | 6,826 | ||||||||||||||||||||||||
Increase
in market value of released ESOP shares and release of unearned ESOP
shares
|
- | - | 2,379 | - | - | - | 1,239 | 3,618 | ||||||||||||||||||||||||
Foreign
currency translation, net of tax
|
- | - | - | 8,583 | - | - | - | 8,583 | ||||||||||||||||||||||||
Unrealized
gain on investments, net of tax
|
- | - | - | 1,946 | - | - | - | 1,946 | ||||||||||||||||||||||||
Fair
market value of cash flow hedges, net of tax
|
- | - | - | (25,473 | ) | - | - | - | (25,473 | ) | ||||||||||||||||||||||
Adjustment
to post retirement benefit obligation
|
- | - | - | 1,444 | - | - | - | 1,444 | ||||||||||||||||||||||||
Net
earnings
|
- | - | - | - | 67,784 | - | - | 67,784 | ||||||||||||||||||||||||
Preferred
stock dividends: Series A ($2.13 per share for fiscal
2008)
|
- | - | - | - | (12,963 | ) | - | - | (12,963 | ) | ||||||||||||||||||||||
Treasury
stock
|
- | - | - | - | - | (57,479 | ) | - | (57,479 | ) | ||||||||||||||||||||||
Contribution
from related party
|
- | - | 46,071 | - | - | - | - | 46,071 | ||||||||||||||||||||||||
SAC
Holding II Corporation distribution
|
- | - | (4,492 | ) | - | 4,468 | - | - | (24 | ) | ||||||||||||||||||||||
Net
activity
|
- | - | 43,958 | (13,500 | ) | 66,115 | (57,479 | ) | 1,239 | 40,333 | ||||||||||||||||||||||
Balance
as of March 31, 2008
|
$ | - | $ | 10,497 | $ | 419,370 | $ | (55,279 | ) | $ | 915,415 | $ | (524,677 | ) | $ | (6,895 | ) | $ | 758,431 |
The
accompanying notes are an integral part of these consolidated financial
statements.
F-5
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Years
Ended March 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
(In
thousands)
|
||||||||||||
Comprehensive
income (loss):
|
||||||||||||
Net
earnings
|
$ | 67,784 | $ | 90,553 | $ | 121,154 | ||||||
Other
comprehensive income (loss), net of tax:
|
||||||||||||
Foreign
currency translation
|
8,583 | (1,919 | ) | (903 | ) | |||||||
Unrealized
gain (loss) on investments, net
|
1,946 | (1,072 | ) | (7,986 | ) | |||||||
Fair
market value of cash flow hedges
|
(25,473 | ) | (9,733 | ) | 4,581 | |||||||
Postretirement
benefit obligation gain (loss)
|
1,444 | (153 | ) | - | ||||||||
Total
comprehensive income
|
$ | 54,284 | $ | 77,676 | $ | 116,846 |
The
accompanying notes are an integral part of these consolidated financial
statements.
F-6
AMERCO
AND CONSOLIDATED ENTITIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
Years
Ended March 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
(In
thousands)
|
||||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
earnings
|
$ | 67,784 | $ | 90,553 | $ | 121,154 | ||||||
Adjustments
to reconcile net earnings to cash provided by operations:
|
||||||||||||
Depreciation
|
227,798 | 186,106 | 133,572 | |||||||||
Amortization
of deferred policy acquisition costs
|
13,181 | 17,138 | 24,261 | |||||||||
Change
in allowance for losses on trade receivables
|
76 | 49 | (183 | ) | ||||||||
Change
in allowance for losses on mortgage notes
|
(39 | ) | (40 | ) | (2,230 | ) | ||||||
Provision
for inventory reserves
|
2,746 | 2,679 | 2,458 | |||||||||
Net
(gain) loss on sale of real and personal property
|
(5,916 | ) | 3,483 | 9,245 | ||||||||
Net
loss on sale of investments
|
292 | 622 | 2,408 | |||||||||
Write-off
of unamortized debt issuance costs
|
- | 6,969 | 13,629 | |||||||||
Deferred
income taxes
|
(10,031 | ) | 6,972 | 28,429 | ||||||||
Net
change in other operating assets and liabilities:
|
||||||||||||
Reinsurance
recoverables and trade receivables
|
(16,576 | ) | 48,907 | 10,661 | ||||||||
Inventories
|
(2,445 | ) | (4,761 | ) | (3,596 | ) | ||||||
Prepaid
expenses
|
(4,338 | ) | (8,205 | ) | (28,809 | ) | ||||||
Capitalization
of deferred policy acquisition costs
|
(7,479 | ) | (8,168 | ) | (12,110 | ) | ||||||
Other
assets
|
3,293 | 2,929 | (1,457 | ) | ||||||||
Related
party assets
|
33,032 | 8,616 | (8,090 | ) | ||||||||
Accounts
payable and accrued expenses
|
22,904 | 22,658 | 36,596 | |||||||||
Policy
benefits and losses, claims and loss expenses payable
|
20,664 | (40,169 | ) | (4,918 | ) | |||||||
Other
policyholders' funds and liabilities
|
(96 | ) | 2,709 | (3,908 | ) | |||||||
Deferred
income
|
(3,996 | ) | 1,266 | (2,588 | ) | |||||||
Related
party liabilities
|
(11,567 | ) | 10,408 | (44,016 | ) | |||||||
Net
cash provided by operating activities
|
329,287 | 350,721 | 270,508 | |||||||||
Cash
flow from investment activities:
|
||||||||||||
Purchase
of:
|
||||||||||||
Property,
plant and equipment
|
(570,210 | ) | (648,344 | ) | (344,382 | ) | ||||||
Short
term investments
|
(245,345 | ) | (249,392 | ) | (534,106 | ) | ||||||
Fixed
maturity investments
|
(83,651 | ) | (109,672 | ) | (260,138 | ) | ||||||
Equity
securities
|
(31 | ) | - | - | ||||||||
Preferred
stock
|
(770 | ) | - | - | ||||||||
Real
estate
|
(3,098 | ) | - | - | ||||||||
Mortgage
loans
|
(14,057 | ) | (10,725 | ) | (8,868 | ) | ||||||
Proceeds
from sales of:
|
||||||||||||
Property,
plant and equipment
|
166,386 | 89,672 | 59,960 | |||||||||
Short
term investments
|
246,175 | 276,690 | 600,850 | |||||||||
Fixed
maturity investments
|
131,793 | 116,858 | 159,616 | |||||||||
Equity
securities
|
46 | - | 6,769 | |||||||||
Cash
received in excess of purchase of company acquired
|
- | 1,235 | - | |||||||||
Preferred
stock
|
5,625 | 1,225 | 11,650 | |||||||||
Real
estate
|
912 | 6,870 | 36,388 | |||||||||
Mortgage
loans
|
8,146 | 7,062 | 11,762 | |||||||||
Payments
from notes and mortgage receivables
|
117 | 902 | 1,663 | |||||||||
Net
cash used by investing activities
|
(357,962 | ) | (517,619 | ) | (258,836 | ) | ||||||
Cash
flow from financing activities:
|
||||||||||||
Borrowings
from credit facilities
|
616,710 | 410,189 | 1,277,047 | |||||||||
Principal
repayments on credit facilties
|
(295,387 | ) | (196,072 | ) | (1,093,342 | ) | ||||||
Debt
issuance costs
|
(11,976 | ) | (3,058 | ) | (29,588 | ) | ||||||
Leveraged
Employee Stock Ownership Plan - Repayment from loan
|
1,239 | 1,204 | 1,553 | |||||||||
Treasury
stock repurchases
|
(57,478 | ) | (49,106 | ) | - | |||||||
Securitization
deposits
|
(32,775 | ) | - | - | ||||||||
Preferred
stock dividends paid
|
(12,963 | ) | (12,963 | ) | (12,963 | ) | ||||||
Investment
contract deposits
|
18,077 | 16,695 | 20,322 | |||||||||
Investment
contract withdrawals
|
(65,518 | ) | (79,204 | ) | (75,011 | ) | ||||||
Net
cash provided by financing activities
|
159,929 | 87,685 | 88,018 | |||||||||
Effects
of exchange rate on cash
|
96 | (974 | ) | (186 | ) | |||||||
Increase
(decrease) in cash and cash equivalents
|
131,350 | (80,187 | ) | 99,504 | ||||||||
Cash
and cash equivalents at the beginning of period
|
75,272 | 155,459 | 55,955 | |||||||||
Cash
and cash equivalents at the end of period
|
206,622 | $ | 75,272 | $ | 155,459 |
The
accompanying notes are an integral part of these consolidated financial
statements.
F-7
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Note
1: Basis of Presentation
AMERCO
has a fiscal year that ends on the 31st of
March for each year that is referenced. Our insurance company subsidiaries have
fiscal years that end on the 31st of
December for each year that is referenced. They have been consolidated on that
basis. Our insurance companies’ financial reporting processes conform to
calendar year reporting as required by state insurance departments. Management
believes that consolidating their calendar year into our fiscal year financial
statements does not materially affect the financial position or results of
operations. The Company discloses any material events occurring
during the intervening period. Consequently, all references to our insurance
subsidiaries’ years 2007, 2006 and 2005 correspond to fiscal 2008, 2007 and 2006
for AMERCO.
Accounts
denominated in non-U.S. currencies have been translated into U.S. dollars.
Certain amounts reported in previous years have been reclassified to conform to
the current presentation.
Note
2: Principles of Consolidation
The
consolidated balance sheet as of March 31, 2008 includes the accounts of AMERCO
and its wholly-owned subsidiaries. The consolidated balance sheet as of March
31, 2007 includes the accounts of AMERCO and its wholly-owned subsidiaries and
SAC Holding II and its subsidiaries (“SAC Holding II”). The March 31, 2008
statements of operations and cash flows include AMERCO and its wholly-owned
subsidiaries for the entire year, and reflect SAC Holding II and its
subsidiaries for the seven months ended October 31, 2007. The March 31, 2007 and
2006 statements of operations and cash flows include the accounts of AMERCO and
its wholly-owned subsidiaries and SAC Holding II and its
subsidiaries.
In fiscal
2003 and fiscal 2002, SAC Holding Corporation and its subsidiaries, and SAC
Holding II Corporation and its subsidiaries, collectively referred to as “SAC
Holdings” were considered special purpose entities and were consolidated based
on the provisions of Emerging Issues Task Force (“EITF”) Issue No. 90-15. In
fiscal 2004, the Company applied Financial Accounting Standards Board
Interpretation No. 46(R) (“FIN 46(R)”) to its interests in SAC Holdings.
Initially, the Company concluded that SAC Holdings were variable interest
entities (“VIE”) and that the Company was the primary beneficiary. Accordingly,
the Company continued to include SAC Holdings in its Consolidated Financial
Statements.
In
February and March 2004 SAC Holding Corporation triggered a requirement to
reassess AMERCO’s involvement in it, which led to the conclusion SAC Holding
Corporation was not a VIE and AMERCO ceased to be the primary
beneficiary.
In
November 2007, Blackwater Investments Inc. (“Blackwater”), wholly-owned by Mark
V. Shoen, a significant shareholder and executive officer of AMERCO contributed
additional capital to its wholly-owned subsidiary, SAC Holding II. This
contribution was determined by us to be material with respect to the
capitalization of SAC Holding II; thereby, triggering a requirement under FIN
46(R) for us to reassess the Company’s involvement with those subsidiaries. This
required reassessment led to the conclusion that SAC Holding II attained the
ability to fund its own operations and execute its business plan without any
future subordinated financial support; therefore, the Company was no longer
considered to be the primary beneficiary of SAC Holding II as of the date of
Blackwater’s contribution.
Accordingly,
at the dates AMERCO ceased to have a variable interest and ceased to be the
primary beneficiary of SAC Holding II and its current subsidiaries, it
deconsolidated these entities. The deconsolidation was accounted for as a
distribution of SAC Holding II’s interests to the sole shareholder of the SAC
entities. Because of AMERCO’s continuing involvement with SAC Holding II and its
subsidiaries, the distribution does not qualify as discontinued operations as
defined by SFAS 144.
It is
possible that SAC Holdings could take future actions that would require us to
re-determine whether SAC Holdings has become a VIE or whether we have become the
primary beneficiary of SAC Holdings. Should this occur, we could be required to
consolidate some or all of SAC Holdings with our financial
statements.
F-8
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Intercompany
accounts and transactions have been eliminated.
Description
of Legal Entities
AMERCO, a
Nevada corporation (“AMERCO”), is the holding company for:
U-Haul
International, Inc. (“U-Haul”),
Amerco
Real Estate Company (“Real Estate”),
Republic
Western Insurance Company (“RepWest”),
Oxford
Life Insurance Company (“Oxford”).
Unless
the context otherwise requires, the term “Company,” “we,” “us” or “our” refers
to AMERCO and all of its legal subsidiaries.
Description
of Operating Segments
AMERCO
has four reportable segments. They are Moving and Storage, Property and Casualty
Insurance, Life Insurance and SAC Holding II (through October
2007).
Moving
and Storage operations include AMERCO, U-Haul, and Real Estate and the
wholly-owned subsidiaries of U-Haul and Real Estate and consist of the rental of
trucks and trailers, sales of moving supplies, sales of towing accessories,
sales of propane, the rental of self-storage spaces to the “do-it-yourself”
mover and management of self-storage properties owned by others. Operations are
conducted under the registered trade name U-Haul®
throughout the United States and Canada.
Property
and Casualty Insurance includes RepWest and its wholly-owned subsidiaries.
RepWest provides loss adjusting and claims handling for U-Haul through regional
offices across North America. RepWest also underwrites components of the
Safemove, Safetow and Safestor protection packages to U-Haul
customers.
Life
Insurance includes Oxford and its wholly-owned subsidiaries. Oxford provides
life and health insurance products primarily to the senior market through the
direct writing or reinsuring of life insurance, Medicare supplement and annuity
policies. Additionally, Oxford administers the self-insured employee health and
dental plans for Arizona employees of the Company.
SAC
Holding Corporation and its subsidiaries, and SAC Holding II Corporation and its
subsidiaries, collectively referred to as “SAC Holdings”, own self-storage
properties that are managed by U-Haul under property management agreements and
act as independent U-Haul rental equipment dealers. AMERCO, through its
subsidiaries, has contractual interests in certain of SAC Holdings’ properties
entitling AMERCO to potential future income based on the financial performance
of these properties. With respect to SAC Holding II, AMERCO was considered the
primary beneficiary of these contractual interests prior to November 2007.
Consequently, for those reporting periods prior to November 2007, we included
the results of SAC Holding II in the consolidated financial statements of
AMERCO, as required by FIN 46(R).
Note
3: Accounting Policies
Use
of Estimates
The
preparation of financial statements in conformity with the generally accepted
accounting principles (“GAAP”) in the United States requires management to make
estimates and judgments that affect the amounts reported in the financial
statements and accompanying notes. The accounting policies that we deem most
critical to us and that require management’s most difficult and subjective
judgments include the principles of consolidation, the recoverability of
property, plant and equipment, the adequacy of insurance reserves, the
recognition and measurement of impairments for investments accounted for under
SFAS 115, and the recognition and measurement of income tax assets and
liabilities. The actual results experienced by the Company may differ from
management’s estimates.
F-9
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Cash
and Cash Equivalents
The
Company considers cash equivalents to be highly liquid debt securities with
insignificant interest rate risk with original maturities from the date of
purchase of three months or less.
Financial
Instruments that potentially subject the Company to concentrations of credit
risk consist principally of cash deposits. Accounts at each United States
financial institution are insured by the Federal Deposit Insurance Corporation
(“FDIC”) up to $100,000. Accounts at each Canadian financial institution are
insured by the Canada Deposit Insurance Corporation (“CDIC”) up to $100,000 CAD
per account. At March 31, 2008 and March 31, 2007, the Company had approximately
$190.6 million and $58.5 million, respectively, in excess of FDIC and CDIC
insured limits. To mitigate this risk, the Company selects financial
institutions based on their credit ratings and financial strength.
Investments
Fixed Maturities. Fixed
maturity investments consist of either marketable debt or redeemable preferred
stocks. As of the balance sheet dates, all of the Company’s investments in fixed
maturities are classified as available-for-sale. Available-for-sale investments
are reported at fair value, with unrealized gains or losses recorded net of
taxes and applicable adjustments to deferred policy acquisition costs in
stockholders’ equity. Fair value for these investments is based on quoted market
prices, dealer quotes or discounted cash flows. The cost of investments sold is
based on the specific identification method.
In
determining if and when a decline in market value below carrying value is an
other-than-temporary impairment, management makes certain assumptions or
judgments in its assessment including but not limited to: ability to hold the
security, quoted market prices, dealer quotes, discounted cash flows, industry
factors, financial factors, and issuer specific information.
Other-than-temporary impairments, to the extent of the decline, as well as
realized gains or losses on the sale or exchange of investments are recognized
in the current period operating results.
Mortgage Loans and Notes on Real
Estate. Mortgage loans and notes on real estate are reported at their
unpaid balance, net of any allowance for possible losses and any unamortized
premium or discount.
Recognition of Investment
Income. Interest income from bonds and mortgage notes is recognized when
it becomes earned. Dividends on common and preferred stocks are recognized on
the ex-dividend dates. Realized gains and losses on the sale or exchange of
investments are recognized at the trade date.
Fair
Values
Fair
values of cash equivalents approximate carrying value due to the short period of
time to maturity. Fair values of short-term investments, investments
available-for-sale, long-term investments, mortgage loans and notes on real
estate, and interest rate cap and swap contracts are based on quoted market
prices, dealer quotes or discounted cash flows. Fair values of trade receivables
approximate their recorded value.
Limited
credit risk exists on trade receivables due to the diversity of our customer
base and their dispersion across broad geographic markets. The Company’s
financial instruments that are exposed to concentrations of credit risk consist
primarily of temporary cash investments, trade receivables, reinsurance
recoverables and notes receivable. The Company places its temporary cash
investments with financial institutions and limits the amount of credit exposure
to any one financial institution.
The
Company has mortgage receivables, which potentially expose the Company to credit
risk. The portfolio of notes is principally collateralized by mini-warehouse
storage facilities and other residential and commercial properties. The Company
has not experienced losses related to the notes from individual notes or groups
of notes in any particular industry or geographic area. The estimated fair
values were determined using the discounted cash flow method and using interest
rates currently offered for similar loans to borrowers with similar credit
ratings.
The
carrying amount of long-term debt and short-term borrowings are estimated to
approximate fair value as the actual interest rate is consistent with the rate
estimated to be currently available for debt of similar term and remaining
maturity.
Other
investments including short-term investments are substantially current or bear
reasonable interest rates. As a result, the carrying values of these financial
instruments approximate fair value.
F-10
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Derivative
Financial Instruments
The
Company’s objective for holding derivative financial instruments is to manage
interest rate risk exposure primarily through entering interest rate swap
agreements. An interest rate swap is a contractual exchange of interest payments
between two parties. A standard interest rate swap involves the payment of a
fixed rate times a notional amount by one party in exchange for a floating rate
times the same notional amount from another party. As interest rates change, the
difference to be paid or received is accrued and recognized as interest expense
or income over the life of the agreement. The Company does not enter
into these instruments for trading purposes. Counterparties to the Company’s
interest rate swap agreements are major financial institutions. In accordance
with SFAS 133, Accounting for
Derivative Instruments and Hedging Activities (As Amended), the Company
recognizes interest rate swap agreements on the balance sheet at fair value,
which are classified as prepaid expenses or accrued expenses. Derivatives that
are not designated as cash flow hedges for accounting purposes must be adjusted
to fair value through income. If the derivative qualifies and is designated as a
cash flow hedge, changes in its fair value will either be offset against the
change in fair value of the hedged item through earnings or recognized in other
comprehensive income (loss) until the hedged item is recognized in
earnings.
Inventories,
net
Inventories,
net were as follows:
March
31,
|
||||||||
2008
|
2007
|
|||||||
(In
thousands)
|
||||||||
Truck
and trailer parts and accessories (a)
|
$ | 56,959 | $ | 56,113 | ||||
Hitches
and towing components (b)
|
13,538 | 14,169 | ||||||
Moving
supplies and propane (b)
|
7,470 | 6,613 | ||||||
Subtotal
|
77,967 | 76,895 | ||||||
Less:
LIFO reserves
|
(11,076 | ) | (8,372 | ) | ||||
Less:
excess and obsolete reserves
|
(1,542 | ) | (1,500 | ) | ||||
Total
|
$ | 65,349 | $ | 67,023 | ||||
(a)
Primarily held for internal usage, including equipment manufacturing and
repair
|
||||||||
(b)
Primarily held for retail sales
|
Inventories
consist primarily of truck and trailer parts and accessories used to manufacture
and repair rental equipment as well as products and accessories available for
retail sale. Inventory is held at Company-owned locations; our independent
dealers do not hold any of the Company’s inventory.
Inventory
cost is primarily determined using the last-in, first-out method (“LIFO”).
Inventories valued using LIFO consisted of approximately 95% and 96% of the
total inventories for March 31, 2008 and 2007, respectively. Had the Company
utilized the first-in, first-out method (“FIFO”), stated inventory balances
would have been $11.1 million and $8.4 million higher at March 31, 2008 and
2007, respectively. In fiscal 2008, the effect on income due to liquidation of a
portion of the LIFO inventory was $1.1 million.
F-11
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Property,
Plant and Equipment
Property,
plant and equipment are stated at cost. Interest expense incurred during the
initial construction of buildings and rental equipment is considered part of
cost. Depreciation is computed for financial reporting purposes using the
straight-line or an accelerated method based on a declining balances formula
over the following estimated useful lives: rental equipment 2-20 years and
buildings and non-rental equipment 3-55 years. The Company follows the deferral
method of accounting based in the AICPA’s Airline Audit Guide for major
overhauls in which engine overhauls are capitalized and amortized over five
years and transmission overhauls are capitalized and amortized over three years.
Routine maintenance costs are charged to operating expense as they are incurred.
Gains and losses on dispositions of property, plant and equipment are netted
against depreciation expense when realized. The amount of (gains) or losses
netted against depreciation expense were ($5.9) million, $3.5 million and $9.2
million during fiscal 2008, 2007 and 2006, respectively. Equipment depreciation
is recognized in amounts expected to result in the recovery of estimated
residual values upon disposal, i.e., minimize gains or losses.
We
regularly perform reviews to determine whether facts and circumstances exist
which indicate that the carrying amount of assets, including estimates of
residual value, may not be recoverable or that the useful life of assets is
shorter or longer than originally estimated. Reductions in residual values
(i.e., the price at which we ultimately expect to dispose of revenue earning
equipment) or useful lives will result in an increase in depreciation expense
over the life of the equipment. Reviews are performed based on
vehicle class, generally subcategories of trucks and trailers. We
assess the recoverability of our assets by comparing the projected undiscounted
net cash flows associated with the related asset or group of assets over their
estimated remaining lives against their respective carrying amounts. We consider
factors such as current and expected future market price trends on used vehicles
and the expected life of vehicles included in the fleet. Impairment,
if any, is based on the excess of the carrying amount over the fair value of
those assets. If asset residual values are determined to be recoverable, but the
useful lives are shorter or longer than originally estimated, the net book value
of the assets is depreciated over the newly determined remaining useful
lives.
Since
fiscal 2006, the Company has been acquiring a significant number of moving
trucks via purchase rather than lease. Management performed an analysis of the
expected economic value of new rental trucks and determined that additions to
the fleet resulting from purchase should be depreciated on an accelerated method
based upon a declining formula. The salvage value and useful life assumptions of
the rental truck fleet remain unchanged. Under the declining balances method
(2.4 times declining balance) the book value of a rental truck is reduced 16%,
13%, 11%, 9%, 8%, 7%, and 6% during years one through seven, respectively and
then reduced on a straight line basis an additional 10% by the end of year
fifteen. Whereas, a standard straight line approach would reduce the book value
by approximately 5.3% per year over the life of the truck. For the affected
equipment, the accelerated depreciation was $56.7 million, $33.2 million and
$4.0 million greater than what it would have been if calculated under a straight
line approach for fiscal 2008, 2007 and 2006, respectively.
We typically sell our used vehicles at
our sales centers throughout North America, on our web site at
trucksales.uhaul.com or by phone at 1-866-404-0355. Although we intend to sell
our used vehicles for prices approximating book value, the extent to which we
realize a gain or loss on the sale of used vehicles is dependent upon various
factors including the general state of the used vehicle market, the age and
condition of the vehicle at the time of its disposal and depreciation rates with
respect to the vehicle.
The
carrying value of surplus real estate, which is lower than market value at the
balance sheet date, was $10.3 million and $10.8 million for fiscal 2008 and
2007, respectively, and is included in Investments, other.
Receivables
Accounts
receivable include trade accounts from moving and self-storage customers and
dealers, insurance premiums and amounts due from ceding re-insurers, less
management’s estimate of uncollectible accounts.
Insurance
premiums receivable for policies that are billed through contracted agents are
recorded net of commission’s payable. A commission payable is recorded as a
separate liability for those premiums that are billed direct.
F-12
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Reinsurance
recoverables include case reserves and actuarial estimates of claims incurred
but not reported (“IBNR”). These receivables are not expected to be collected
until after the associated claim has been adjudicated and billed to the
re-insurer. The reinsurance recoverables may have little or no allowance for
doubtful accounts due to the fact that reinsurance is typically procured from
carriers with strong credit ratings. Furthermore, the Company does not cede
losses to a re-insurer if the carrier is deemed financially unable to perform on
the contract. Also, reinsurance recoverables includes insurance ceded to other
insurance companies.
Notes and
mortgage receivables include accrued interest and are reduced by discounts and
amounts considered by management to be uncollectible.
Policy
Benefits and Losses, Claims and Loss Expenses Payable
Oxford’s
liabilities for life insurance and certain annuity and health policies are
established to meet the estimated future obligations of policies in force, and
are based on mortality, morbidity and withdrawal assumptions from recognized
actuarial tables which contain margins for adverse deviation. Liabilities for
health, disability and other policies include estimates of payments to be made
on insurance claims for reported losses and estimates of losses incurred, but
not yet reported. Oxford’s liabilities for deferred annuity contracts consist of
contract account balances that accrue to the benefit of the
policyholders.
RepWest’s
liability for reported and unreported losses is based on RepWest’s historical
data along with industry averages. The liability for unpaid loss adjustment
expenses is based on historical ratios of loss adjustment expenses paid to
losses paid. Amounts recoverable from re-insurers on unpaid losses are estimated
in a manner consistent with the claim liability associated with the re-insured
policy. Adjustments to the liability for unpaid losses and loss expenses as well
as amounts recoverable from re-insurers on unpaid losses are charged or credited
to expense in the periods in which they are made.
Self-Insurance
Reserves
U-Haul
retains the risk for certain public liability and property damage programs
related to the rental equipment. The consolidated balance sheets include $360.3
million and $330.6 million of liabilities related to these programs as of March
31, 2008 and 2007, respectively. Such liabilities are recorded within
policy benefits and losses payable. Management takes into account
losses incurred based upon actuarial estimates, past experience, current claim
trends, as well as social and economic conditions. This liability is subject to
change in the future based upon changes in the underlying assumptions including
claims experience, frequency of incidents, and severity of
incidents.
Additionally,
as of March 31, 2008 and 2007, the consolidated balance sheets include
liabilities of $5.1 million and $3.9 million, respectively, related to Company
provided medical plan benefits for eligible employees. The Company estimates
this liability based on actual claims outstanding as of the balance sheet date
as well as an actuarial estimate of claims incurred but not
reported. This liability is reported net of estimated recoveries from
excess loss reinsurance policies with unaffiliated insurers of $0.2 million and
$0.8 million in fiscal 2008 and 2007, respectively. These amounts are recorded
in accounts payable on the consolidated balance sheets.
Revenue
Recognition
Self-moving
rentals are recognized for the period that trucks and moving equipment are
rented. Self-storage revenues, based upon the number of paid storage contract
days, are recognized as earned during the period. Sales of
self-moving and self-storage related products are recognized at the time that
title passes and the customer accepts delivery. Insurance premiums are
recognized over the policy periods. Interest and investment income are
recognized as earned.
Amounts
collected from customers for sales tax are recorded on a net basis.
Advertising
All
advertising costs are expensed as incurred. Advertising expense was $31.3
million, $31.5 million and $31.3 million in fiscal 2008, 2007 and 2006,
respectively.
F-13
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Deferred
Policy Acquisition Costs
Commissions
and other costs that fluctuate with, and are primarily related to the
acquisition or renewal of certain insurance premiums, are deferred. For Oxford,
these costs are amortized in relation to revenue such that costs are realized as
a constant percentage of revenue. For RepWest, these costs are amortized over
the related contract periods, which generally do not exceed one
year.
Environmental
Costs
Liabilities
are recorded when environmental assessments and remedial efforts, if applicable,
are probable and the costs can be reasonably estimated. The amount of the
liability is based on management’s best estimate of undiscounted future costs.
Certain recoverable environmental costs related to the removal of underground
storage tanks or related contamination are capitalized and amortized over the
estimated useful lives of the properties. These costs improve the safety or
efficiency of the property or are incurred in preparing the property for
sale.
Income
Taxes
AMERCO
files a consolidated tax return with all of its legal subsidiaries, except for
Dallas General Life Insurance Company (“DGLIC”), a subsidiary of Oxford, which
will file on a stand alone basis until 2012. SAC Holding Corporation and its
legal subsidiaries and SAC Holding II Corporation and its legal subsidiaries
file consolidated tax returns, which are in no way associated with AMERCO’s
consolidated returns. In accordance with SFAS 109, the provision for income
taxes reflects deferred income taxes resulting from changes in temporary
differences between the tax basis of assets and liabilities and their reported
amounts in the financial statements. Effective April 1, 2007, the Company
adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 48
(“FIN 48”) Accounting for
Uncertainty in Income Taxes, an interpretation of FAS 109.
Comprehensive
Income (Loss)
Comprehensive
income (loss) consists of net earnings, foreign currency translation
adjustments, unrealized gains and losses on investments, the change in fair
value of cash flow hedges and the change in postretirement benefit
obligation.
Recent
Accounting Pronouncements
In
September 2006, the FASB issued SFAS 157, Fair Value Measurements which
establishes how companies should measure fair value when they are required to
use a fair value measure for recognition or disclosure purposes under GAAP. This
statement is effective for financial statements issued for fiscal years
beginning after November 15, 2007, and interim periods within those years.
The provisions of SFAS 157 which have not been deferred by the FASB are
effective for us in April 2008. The Company does not believe that the adoption
of this statement will have a material impact on our financial
statements.
In
February 2007, the FASB issued SFAS 159, The Fair Value Option for Financial
Assets and Liabilities, including an amendment of SFAS 115. This
statement allows for a company to irrevocably elect fair value as the
measurement attribute for certain financial assets and financial liabilities.
Changes in the fair value of such assets are recognized in earnings. SFAS 159 is
effective for fiscal years beginning after November 15, 2007. The provisions of
SFAS 159 are effective for us in April 2008. The Company does not believe that
the adoption of this statement will have a material impact on our financial
statements.
In
December 2007, the FASB issued SFAS 141(R), Business Combinations. SFAS
141(R) provides companies with principles and requirements on how an acquirer
recognizes and measures in its financial statements the identifiable assets
acquired, liabilities assumed, and any noncontrolling interest in the acquiree
as well as the recognition and measurement of goodwill acquired in a business
combination. SFAS 141(R) also requires certain disclosures to enable users of
the financial statements to evaluate the nature and financial effects of the
business combination. Acquisition costs associated with the business combination
will generally be expensed as incurred. SFAS 141(R) is effective for business
combinations occurring in fiscal years beginning after December 15, 2008,
which will require us to adopt these provisions for business combinations
occurring in fiscal 2010 and thereafter. Early adoption of SFAS 141(R) is not
permitted.
F-14
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In
December 2007, the FASB issued SFAS 160, Noncontrolling Interests in
Consolidated Financial Statements — an amendment of ARB No. 51.
This Statement clarifies that a noncontrolling interest in a subsidiary is an
ownership interest in the consolidated entity that should be reported as equity
in the consolidated financial statements. This Statement changes the way the
consolidated income statement is presented by requiring net income to be
reported at amounts that include the amounts attributable to both the parent and
the noncontrolling interest and to disclose those amounts on the face of the
income statement. SFAS 160 is effective for fiscal years beginning after
December 15, 2008. Early adoption of SFAS 160 is not permitted. The Company does
not believe that the adoption of this statement will have a material impact on
our financial statements.
In March
2008, the FASB issued SFAS 161, Disclosures about Derivative
Instruments and Hedging Activities which amends SFAS No. 133 to require expanded disclosures about derivative
instruments and hedging activities regarding (1) the ways in which an entity
uses derivatives, (2) the accounting for derivatives and hedging activities, and
(3) the impact that derivatives have (or could have) on an entity's financial
position, financial performance, and cash flows. SFAS 161 is effective for
financial statements of fiscal years and interim periods beginning after
November 15, 2008, with early application encouraged. While disclosures for
earlier comparative periods presented at initial adoption are not required, they
are encouraged; following initial adoption, comparative disclosures are required
only for periods after
such adoption. The Company is currently evaluating the impact that SFAS 161 will
have on our financial statements and disclosures.
Note
4: Earnings Per Share
Net
earnings for purposes of computing earnings per common share are net earnings
less preferred stock dividends. Preferred stock dividends include accrued
dividends of AMERCO.
The
weighted average common shares outstanding exclude post-1992 shares of the
employee stock ownership plan that have not been committed to be released. The
unreleased shares net of shares committed to be released were 294,369, 344,288,
and 393,174 as of March 31, 2008, 2007, and 2006, respectively.
6,100,000
shares of preferred stock have been excluded from the weighted average shares
outstanding calculation because they are not common stock and they are not
convertible into common stock.
Note
5: Reinsurance Recoverables and Trade Receivables, Net
Reinsurance
recoverables and trade receivables, net were as follows:
March
31,
|
||||||||
2008
|
2007
|
|||||||
(In
thousands)
|
||||||||
Reinsurance
recoverable
|
$ | 164,695 | $ | 145,643 | ||||
Paid
losses recoverable
|
4,177 | 8,394 | ||||||
Trade
accounts receivable
|
21,324 | 19,123 | ||||||
Accrued
investment income
|
6,158 | 6,810 | ||||||
Premiums
and agents' balances
|
2,098 | 1,623 | ||||||
Independent
dealer receivable
|
720 | 659 | ||||||
Other
receivable
|
3,432 | 3,777 | ||||||
202,604 | 186,029 | |||||||
Less:
Allowance for doubtful accounts
|
(1,488 | ) | (1,412 | ) | ||||
$ | 201,116 | $ | 184,617 |
F-15
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Note
6: Notes and Mortgage Receivables, Net
Notes and
mortgage receivables, net were as follows:
March
31,
|
||||||||
2008
|
2007
|
|||||||
(In
thousands)
|
||||||||
Notes,
mortgage receivables and other, net of discount
|
$ | 2,403 | $ | 2,023 | ||||
Less:
Allowance for doubtful accounts
|
(315 | ) | (354 | ) | ||||
$ | 2,088 | $ | 1,669 |
Note
7: Investments
Expected
maturities may differ from contractual maturities as borrowers may have the
right to call or prepay obligations with or without call or prepayment
penalties.
The
Company deposits bonds with insurance regulatory authorities to meet statutory
requirements. The adjusted cost of bonds on deposit with insurance regulatory
authorities was $14.9 million at December 31, 2007 and $19.7 million at December
31, 2006.
Available-for-Sale
Investments
Available-for-sale
investments at December 31, 2007 were as follows:
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
More than 12 Months
|
Gross
Unrealized
Losses
Less than 12 Months
|
Estimated
Market
Value
|
||||||||||||||||
(In
thousands)
|
||||||||||||||||||||
U.S.
treasury securities and government obligations
|
$ | 143,969 | $ | 2,571 | $ | (5 | ) | $ | - | $ | 146,535 | |||||||||
U.S.
government agency mortgage-backed securities
|
125,569 | 1,331 | (398 | ) | (282 | ) | 126,220 | |||||||||||||
Obligations
of states and political subdivisions
|
5,281 | 20 | (5 | ) | (2 | ) | 5,294 | |||||||||||||
Corporate
securities
|
324,890 | 6,516 | (1,889 | ) | (721 | ) | 328,796 | |||||||||||||
Mortgage-backed
securities
|
15,618 | 93 | (199 | ) | - | 15,512 | ||||||||||||||
Redeemable
preferred stocks
|
12,509 | 34 | - | (1,169 | ) | 11,374 | ||||||||||||||
Common
stocks
|
106 | - | (43 | ) | (10 | ) | 53 | |||||||||||||
$ | 627,942 | $ | 10,565 | $ | (2,539 | ) | $ | (2,184 | ) | $ | 633,784 |
F-16
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Available-for-sale
investments at December 31, 2006 were as follows:
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
More than 12 Months
|
Gross
Unrealized
Losses
Less than 12 Months
|
Estimated
Market
Value
|
||||||||||||||||
(In
thousands)
|
||||||||||||||||||||
U.S.
treasury securities and government obligations
|
$ | 159,490 | $ | 975 | $ | (2,353 | ) | $ | (81 | ) | $ | 158,031 | ||||||||
U.S.
government agency mortgage-backed securities
|
101,354 | 442 | (578 | ) | (207 | ) | 101,011 | |||||||||||||
Obligations
of states and political subdivisions
|
2,027 | 11 | (33 | ) | - | 2,005 | ||||||||||||||
Corporate
securities
|
385,723 | 5,588 | (3,464 | ) | (732 | ) | 387,115 | |||||||||||||
Mortgage-backed
securities
|
16,149 | 50 | (233 | ) | (13 | ) | 15,953 | |||||||||||||
Redeemable
preferred stocks
|
17,331 | 272 | - | (2 | ) | 17,601 | ||||||||||||||
Common
stocks
|
112 | - | (27 | ) | - | 85 | ||||||||||||||
$ | 682,186 | $ | 7,338 | $ | (6,688 | ) | $ | (1,035 | ) | $ | 681,801 |
The above
tables include gross unrealized losses that are not deemed to be
other-than-temporarily impaired, aggregated by investment category and length of
time that individual securities have been in a continuous unrealized loss
position.
The
Company sold available-for-sale securities with a fair value of $134.6 million
in 2007, $113.4 million in 2006, and $170.6 million in 2005. The gross realized
gains on these sales totaled $0.4 million in 2007, $1.6 million in 2006 and $5.1
million in 2005. The Company realized gross losses on these sales of $0.4
million in 2007, $1.9 million in 2006 and $3.3 million in 2005.
The
unrealized losses of more than twelve months in the above table are considered
temporary declines. The Company tracks each investment with an unrealized loss
and evaluates them on an individual basis for other-than-temporary impairments
including obtaining corroborating opinions from third party sources, performing
trend analysis and reviewing management’s future plans. Certain of these
investments had declines determined by management to be other-than-temporary and
the Company recognized these write-downs through earnings in the amounts of
approximately $0.5 million in 2007, $1.4 million in 2006 and $5.3 million in
2005.
The
adjusted cost and estimated market value of available-for-sale investments at
December 31, 2007 and December 31, 2006, by contractual maturity, were as
follows:
December
31, 2007
|
December
31, 2006
|
|||||||||||||||
Amortized
Cost
|
Estimated
Market
Value
|
Amortized
Cost
|
Estimated
Market
Value
|
|||||||||||||
(In
thousands)
|
||||||||||||||||
Due
in one year or less
|
$ | 74,500 | $ | 74,615 | $ | 57,304 | $ | 57,183 | ||||||||
Due
after one year through five years
|
189,321 | 191,073 | 227,023 | 225,926 | ||||||||||||
Due
after five years through ten years
|
117,726 | 118,815 | 166,473 | 165,477 | ||||||||||||
After
ten years
|
218,162 | 222,342 | 197,794 | 199,576 | ||||||||||||
599,709 | 606,845 | 648,594 | 648,162 | |||||||||||||
Mortgage
backed securities
|
15,618 | 15,512 | 16,149 | 15,953 | ||||||||||||
Redeemable
preferred stocks
|
12,509 | 11,374 | 17,331 | 17,601 | ||||||||||||
Equity
securities
|
106 | 53 | 112 | 85 | ||||||||||||
$ | 627,942 | $ | 633,784 | $ | 682,186 | $ | 681,801 |
F-17
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Investments,
other
The
carrying value of other investments was as follows:
March
31,
|
||||||||
2008
|
2007
|
|||||||
(In
thousands)
|
||||||||
Short-term
investments
|
$ | 101,638 | $ | 102,304 | ||||
Real
estate
|
17,289 | 18,107 | ||||||
Mortgage
loans, net
|
58,015 | 52,463 | ||||||
Policy
loans
|
4,585 | 4,749 | ||||||
Other
equity investments
|
4,064 | 1,076 | ||||||
$ | 185,591 | $ | 178,699 |
Short-term
investments primarily consist of securities with fixed maturities of three
months to one year from acquisition date.
Mortgage
loans are carried at the unpaid balance, less an allowance for probable losses
and any unamortized premium or discount. The allowance for probable losses was
$0.7 million and $0.8 million as of March 31, 2008 and 2007, respectively. The
estimated fair value of these loans as of March 31, 2008 and 2007, respectively
approximated the carrying value. These loans represent first lien mortgages held
by the Company’s insurance subsidiaries.
Real
estate obtained through foreclosure and held for sale is carried at the lower of
fair value at time of foreclosure or current estimated fair value less cost to
sell. Equity investments are carried at cost and assessed for
impairment.
Insurance
policy loans are carried at their unpaid balance.
Note
8: Net Investment and Interest Income
Net
investment and interest income, were as follows:
Year
Ended March 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
(In
thousands)
|
||||||||||||
Fixed
maturities
|
$ | 46,996 | $ | 47,304 | $ | 38,934 | ||||||
Real
estate
|
(63 | ) | (95 | ) | 203 | |||||||
Insurance
policy loans
|
269 | 280 | 309 | |||||||||
Mortgage
loans
|
4,276 | 4,570 | 4,327 | |||||||||
Short-term,
amounts held by ceding reinsurers, net and other
investments
|
5,521 | 5,690 | 5,252 | |||||||||
Investment
income
|
56,999 | 57,749 | 49,025 | |||||||||
Less:
investment expenses
|
(1,074 | ) | (894 | ) | (2,421 | ) | ||||||
Less:
interest credited on annuity policies
|
(13,509 | ) | (15,060 | ) | (16,888 | ) | ||||||
Investment
income - Related party
|
19,694 | 17,901 | 18,563 | |||||||||
Net
investment and interest income
|
$ | 62,110 | $ | 59,696 | $ | 48,279 |
F-18
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Note
9: Borrowings
Long-Term
Debt
Long-term
debt was as follows:
March
31,
|
||||||||||||||||
2008
Rate (a)
|
Maturities
|
2008
|
2007
|
|||||||||||||
(In
thousands)
|
||||||||||||||||
Real
estate loan (amortizing term)
|
6.93 | % |
2018
|
$ | 285,000 | $ | 295,000 | |||||||||
Real
estate loan (revolving credit)
|
4.86 | % |
2018
|
100,000 | - | |||||||||||
Senior
mortgages
|
5.19% - 5.75 | % | 2009-2015 | 511,818 | 521,332 | |||||||||||
Construction
loan (revolving credit)
|
4.61 | % |
2009
|
30,783 | - | |||||||||||
Working
capital loan (revolving credit)
|
- |
2009
|
- | - | ||||||||||||
Fleet
loans (amortizing term)
|
6.11% - 7.42 | % | 2012-2014 | 288,806 | 364,833 | |||||||||||
Fleet
loan (securitization)
|
5.40% - 5.56 | % | 2010-2014 | 288,270 | - | |||||||||||
Total
AMERCO notes and loans payable
|
$ | 1,504,677 | $ | 1,181,165 | ||||||||||||
(a)
Interest rate as of March 31, 2008, including the effect of applicable
hedging instruments
|
Real
Estate Backed Loans
Real
Estate Loan
Amerco
Real Estate Company and certain of its subsidiaries and U-Haul Company of
Florida are borrowers under a Real Estate Loan. The loan has a final maturity
date of August 2018 and the loan is comprised of a term loan facility with
initial availability of $300.0 million and a revolving credit facility with an
availability of $200.0 million. As of March 31, 2008, the outstanding balance on
the Real Estate Loan was $285.0 million and $100.0 million drawn down on the
revolving credit facility. U-Haul International, Inc. is a guarantor of this
loan.
The
amortizing term portion of the Real Estate Loan requires monthly principal and
interest payments, with the unpaid loan balance and accrued and unpaid interest
due at maturity. The revolving credit portion of the Real Estate Loan requires
monthly interest payments when drawn, with the unpaid loan balance and any
accrued and unpaid interest due at maturity. The Real Estate Loan is
secured by various properties owned by the borrowers.
The
interest rate for the amortizing term portion, per the provisions of the amended
Loan Agreement, is the applicable London Inter-Bank Offer Rate (“LIBOR”) plus
the applicable margin. At March 31, 2008, the applicable LIBOR was 3.06% and the
applicable margin was 1.50%, the sum of which was 4.56%. The applicable margin
ranges from 1.50% to 2.00%. The rate on the term facility portion of the loan is
hedged with an interest rate swap fixing the rate at 6.93% based on current
margin.
The
interest rate for the revolving credit facility, per the provisions of the
amended Loan agreement, is the applicable LIBOR plus the applicable margin. At
March 31, 2008, the applicable LIBOR was 3.06% and the applicable margin was
1.80%, the sum of which was 4.86%.
The
default provisions of the Real Estate Loan include non-payment of principal or
interest and other standard reporting and change-in-control covenants. There are
limited restrictions regarding our use of the funds.
F-19
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Senior
Mortgages
Various
subsidiaries of Amerco Real Estate Company and U-Haul International, Inc. are
borrowers under certain senior mortgages. These senior mortgages loan balances
as of March 31, 2008 were in the aggregate amount of $453.4 million and are due
July 2015. The Senior Mortgages require average monthly principal and interest
payments of $3.0 million with the unpaid loan balance and accrued and unpaid
interest due at maturity. These senior mortgages are secured by certain
properties owned by the borrowers. The interest rates, per the provisions of
these senior mortgages, are 5.68% and 5.52% per annum. Amerco Real Estate
Company and U-Haul International, Inc. have provided limited guarantees of these
senior mortgages. The default provisions of these senior mortgages include
non-payment of principal or interest and other standard reporting and
change-in-control covenants. There are limited restrictions regarding our use of
the funds.
Various
subsidiaries of the Company are borrowers under the mortgage backed loans that
we also classify as senior mortgages. These loans are secured by certain
properties owned by the borrowers. The loan balance of these notes totals $58.4
million as of March 31, 2008. Maturity dates begin in 2009 with the majority
maturing in 2015. Rates for these loans range from 5.19% to 5.75%. The loans
require monthly principal and interest payments with the balances due upon
maturity. The default provisions of the loans include non-payment of principal
or interest and other standard reporting and change-in-control covenants. There
are limited restrictions regarding our use of the funds.
Construction
/ Working Capital Loans
Amerco
Real Estate Company and a subsidiary of U-Haul International, Inc. entered into
a revolving credit construction loan effective June 29, 2006. The maximum amount
that can be drawn at any one time is $40.0 million. The final
maturity is June 2009. As of March 31, 2008, the outstanding balance was $30.8
million.
The
Construction Loan requires monthly interest only payments with the principal and
any accrued and unpaid interest due at maturity. The loan can be used to develop
new or existing storage properties. The loan is secured by the properties being
constructed. The interest rate, per the provision of the Loan Agreement, is the
applicable LIBOR plus a margin of 1.50%. At March 31, 2008, the applicable LIBOR
was 3.11% and the margin was 1.50%, the sum of which was 4.61%. U-Haul
International, Inc. is a guarantor of this loan. The default provisions of the
loan include non-payment of principal or interest and other standard reporting
and change-in-control covenants.
Amerco
Real Estate Company is a borrower under an asset backed working capital loan.
The facility was originally in the amount of $20.0 million. The loan is secured
by certain properties owned by the borrower. On September 5, 2007, the loan was
amended to increase the availability to $35.0 million. The interest rate, per
the provision of the Loan Agreement, is the applicable LIBOR plus a margin of
1.50%. The loan agreement provides for revolving loans, subject to the terms of
the loan agreement with final maturity in November 2009. The loan requires
monthly interest payments with the unpaid loan balance and accrued and unpaid
interest due at maturity. U-Haul International, Inc. and AMERCO are the
guarantors of this loan. The default provisions of the loan include non-payment
of principal or interest and other standard reporting and change-in-control
covenants. At March 31, 2008, the facility was fully available.
Fleet
Loans
Rental
Truck Amortizing Loans
U-Haul
International, Inc. and several of its subsidiaries are borrowers under
amortizing term loans. The loan balances as of March 31, 2008 were in the
aggregate amount of $288.8 million with final maturities between April 2012 and
March 2014.
The
Amortizing Loans require monthly principal and interest payments, with the
unpaid loan balance and accrued and unpaid interest due at maturity. These loans
were used to purchase new trucks. The interest rates, per the provision of the
Loan Agreements, are the applicable LIBOR plus a margin between 0.90% and 1.75%.
At March 31, 2008, the applicable LIBOR was 3.06% and applicable margins were
between 1.125% and 1.75%, the sum of which was between 4.185% and 4.81%. The
interest rates are hedged with interest rate swaps fixing the rates between
6.11% and 7.42% based on current margins.
F-20
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
AMERCO
and U-Haul International, Inc. are guarantors for certain of these loans. The
default provisions of these loans include non-payment of principal or interest
and other standard reporting and change-in-control covenants.
Rental
Truck Securitizations
U-Haul S
Fleet and its subsidiaries (collectively, “USF”) issued a $217.0 million
asset-backed note (“Box-Truck Note”) and an $86.6 million asset-backed note
(“Cargo Van/Pickup Note”) on June 1, 2007. USF is a bankruptcy-remote special
purpose entity wholly-owned by U-Haul International, Inc. The net proceeds from
these securitized transactions were used to finance new box truck, cargo van and
pickup truck purchases throughout fiscal 2008. U.S. Bank, NA acts as the trustee
for this securitization.
The Box
Truck Note has a fixed interest rate of 5.56% with an estimated final maturity
of February 2014. At March 31, 2008 the outstanding balance was $201.7 million.
The note is secured by the box trucks that were purchased and operating cash
flows associated with their operation.
The Cargo
Van/Pickup Note has a fixed interest rate of 5.40% with an estimated final
maturity of May 2010. At March 31, 2008 the outstanding balance was $86.6
million. The note is secured by the cargo vans and pickup trucks that were
purchased and the operating cash flows associated with their
operation.
The Box
Truck Note and Cargo Van/Pickup Note have the benefit of financial guaranty
insurance policies through Ambac Assurance Corporation. These policies guarantee
the timely payment of interest on and the ultimate payment of the principal of
the notes.
The Box
Truck Note and the Cargo Van/Pickup Note are subject to certain covenants with
respect to liens, additional indebtedness of the special purpose entities, the
disposition of assets and other customary covenants of bankruptcy-remote special
purpose entities. The default provisions of the notes include non-payment of
principal or interest and other standard reporting and change in control
covenants.
Annual
Maturities of AMERCO Consolidated Notes and Loans Payable
The
annual maturities of AMERCO consolidated long-term debt as of March 31, 2008 for
the next five years and thereafter is as follows:
March
31,
|
||||||||||||||||||||||||
2009
|
2010
|
2011
|
2012
|
2013
|
Thereafter
|
|||||||||||||||||||
(In
thousands)
|
||||||||||||||||||||||||
Notes
payable, secured
|
$ | 108,753 | $ | 117,098 | $ | 153,311 | $ | 90,662 | $ | 120,043 | $ | 914,810 |
F-21
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Note
10: Interest on Borrowings
Interest
Expense
Expense’s
associated with loans outstanding was as follows:
Year
Ended March 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
(In
thousands)
|
||||||||||||
Interest
expense
|
$ | 92,997 | $ | 75,714 | $ | 61,285 | ||||||
Capitalized
interest
|
(996 | ) | (596 | ) | (151 | ) | ||||||
Amortization
of transaction costs
|
5,287 | 3,960 | 3,871 | |||||||||
Interest
expense (income) resulting from derivatives
|
645 | (2,669 | ) | (1,655 | ) | |||||||
Write-off
of transactions costs related to early
extinguishment of debt
|
- | 6,969 | 14,384 | |||||||||
Fees
on early extinguishment of debt
|
- | - | 21,243 | |||||||||
Total
AMERCO interest expense
|
97,933 | 83,378 | 98,977 | |||||||||
SAC
Holding II interest expense
|
7,537 | 13,062 | 12,840 | |||||||||
Less:
Intercompany transactions
|
(4,050 | ) | (7,035 | ) | (6,709 | ) | ||||||
Total
SAC Holding II interest expense
|
3,487 | 6,027 | 6,131 | |||||||||
Total
|
$ | 101,420 | $ | 89,405 | $ | 105,108 |
Interest
paid in cash by AMERCO amounted to $89.8 million, $72.9 million and $59.8
million for fiscal 2008, 2007 and 2006, respectively. Early
extinguishment fees paid in cash by AMERCO was $21.2 million in fiscal
2006.
The
Company manages exposure to changes in market interest rates. The Company’s use
of derivative instruments is limited to highly effective interest rate swaps to
hedge the risk of changes in cash flows (future interest payments) attributable
to changes in LIBOR swap rates, the designated benchmark interest rate being
hedged on certain of our LIBOR-indexed variable-rate debt. The interest rate
swaps effectively fix the Company’s interest payments on certain LIBOR-indexed
variable-rate debt. The Company monitors its positions and the credit ratings of
its counterparties and does not anticipate non-performance by the
counterparties. Interest rate swap agreements are not entered into for trading
purposes.
On June
8, 2005, the Company entered into separate interest rate swap agreements for
$100.0 million of our variable-rate debt over a three year term and for $100.0
million of our variable-rate debt over a five-year term, that were designated as
cash flow hedges effective July 1, 2005. These swap agreements were cancelled on
August 18, 2006 in conjunction with our amendment of the Real Estate Loan and we
entered into a new interest rate swap agreement for $300.0 million of our
variable-rate debt over a twelve-year term effective on August 18, 2006. As of
August 18, 2006, a net gain of approximately $6.0 million related to the two
cancelled swaps was included in other comprehensive income (loss). As the
variable-rate debt was replaced, it is probable that the original forecasted
transaction (future interest payments) will continue to occur. Therefore the net
derivative gain related to the two cancelled swaps shall continue to be reported
in other comprehensive income and be reclassified into earnings when the
original forecasted transaction affects earnings consistent with the term of the
original designated hedging relationship. For the year ended March 31, 2008, the
Company reclassified $2.1 million of the net derivative gain to interest income.
The Company estimates that $1.3 million of the existing net gains will be
reclassified into earnings within the next 12 months.
On
November 15, 2005, the Company entered into a forward starting interest rate
swap agreement for $142.3 million of our variable-rate debt over a six-year term
that became effective on May 10, 2006. This swap was designated as a cash flow
hedge effective May 31, 2006.
F-22
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
On June
21, 2006, the Company entered into a forward starting interest rate swap
agreement for $50.0 million of our variable-rate debt over a seven-year term
that became effective on July 10, 2006. On June 9, 2006, the Company entered
into a forward starting interest rate swap agreement for $144.9 million of a
variable-rate debt over a six-year term that became effective on October 10,
2006. On February 9, 2007, the Company entered into an interest rate swap
agreement for $30.0 million of our variable-rate debt over a seven-year term
that became effective on February 12, 2007. On March 8, 2007, the Company
entered into two separate interest rate swap agreements each for $20.0 million
of our variable-rate debt over seven-year terms that became effective on March
10, 2007. These interest rate swap agreements were designated as cash flow
hedges on their effective dates.
On
May 13, 2004, the Company entered into separate interest rate cap
agreements for $200.0 million of our variable-rate debt over a
two year term and for $50.0 million of our variable rate debt over a
three year term; however, these agreements were dedesignated as cash flow hedges
effective July 11, 2005 when the Real Estate Loan was paid down by $222.4
million. The $200.0 million interest rate cap agreement expired on May 17, 2006
and the $50.0 million interest rate cap agreement expired on May 17,
2007. Subsequent to July 11, 2005, all changes in the interest rate
caps fair value (including changes in the option’s time value), were charged to
earnings as the original forecasted transaction was cancelled. Prior to July 11,
2005 the change in each caplets’ respective allocated fair value amount was
reclassified out of accumulated other comprehensive income into earnings when
each of the hedged forecasted transactions (the quarterly interest payments)
impact earnings and when interest payments are either made or
received.
For the
year ended March 31, 2008, the Company recognized net losses of $2.5 million
from highly effective cash flow hedges, which are attributable to the portion of
the change in the fair value of the hedges’ excluded from the assessment of the
effectiveness of the hedges. The hedging relationship of certain interest rate
swap agreements is not considered to be perfectly effective in which an
effectiveness test is performed for each reporting period. The net
losses attributable to the portion of the change in the fair value representing
the amount of the hedges’ ineffectiveness recognized in earnings during the
reporting period was $0.3 million included in interest expense. All forecasted
transactions currently being hedged are expected to occur by 2018.
Interest
Rates
Interest
rates and Company borrowings were as follows:
Revolving
Credit Activity
|
||||||||||||
Year
Ended March 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
(In
thousands, except interest rates)
|
||||||||||||
Weighted
average interest rate during the year
|
6.25 | % | 6.76 | % | 5.95 | % | ||||||
Interest
rate at year end
|
4.80 | % | - | 6.45 | % | |||||||
Maximum
amount outstanding during the year
|
$ | 150,783 | $ | 90,000 | $ | 158,011 | ||||||
Average
amount outstanding during the year
|
$ | 85,522 | $ | 70,027 | $ | 96,710 | ||||||
Facility
fees
|
$ | 419 | $ | 300 | $ | - |
Note
11: Stockholders’ Equity
The
Serial common stock may be issued in such series and on such terms as the Board
of Directors (the “Board”) shall determine. The Serial preferred stock may be
issued with or without par value. The 6,100,000 shares of Series A, no par,
non-voting, 8½% cumulative preferred stock that are issued and outstanding are
not convertible into, or exchangeable for, shares of any other class or classes
of stock of AMERCO. Dividends on the Series A preferred stock are payable
quarterly in arrears and have priority as to dividends over the common stock of
AMERCO.
F-23
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
On
September 13, 2006, we announced that our Board of Directors (the “Board”) had
authorized us to repurchase up to $50.0 million of our common stock from time to
time on the open market between September 13, 2006 and October 31, 2007. On
March 9, 2007, the Board authorized an increase in the Company’s common stock
repurchase program to a total aggregate amount, net of brokerage commissions, of
$115.0 million (which amount is inclusive of the $50.0 million common stock
repurchase program approved by the Board in 2006). During the first quarter of
fiscal 2008, we repurchased 485,999 shares at the cost of $34.0 million. This
program terminated on October 31, 2007.
The
repurchases made by the Company under this plan were as follows:
Period
|
Total
# of Shares Repurchased
|
Average
Price Paid per Share (1)
|
Total
# of Shares Repurchased as Part of Publicly Announced Plan
|
Total
$ of Shares Repurchased as Part of Publicly Announced Plan
|
Maximum
$ of Shares That May Yet be Repurchased Under the Plan
|
|||||||||||||||
April
1 - 30, 2007
|
196,232 | $ | 69.94 | 196,232 | $ | 13,723,504 | $ | 52,170,394 | ||||||||||||
May
1 - 31, 2007
|
218,090 | 69.85 | 218,090 | 15,234,536 | 36,935,858 | |||||||||||||||
June
1 - 30, 2007
|
71,677 | 69.87 | 71,677 | 5,008,018 | 31,927,840 | |||||||||||||||
First
Quarter Total
|
485,999 | $ | 69.89 | 485,999 | $ | 33,966,058 | ||||||||||||||
Cumulative
Plan Total
|
1,225,290 | $ | 67.80 | 1,225,290 | $ | 83,072,160 | ||||||||||||||
(1)
Represents weighted average purchase price for the periods
presented.
|
On
December 5, 2007, we announced that the Board had authorized us to repurchase up
to $50.0 million of our common stock. The stock may be repurchased by the
Company from time to time on the open market between December 5, 2007 and
December 31, 2008. The extent to which the Company repurchases its shares and
the timing of such purchases will depend upon market conditions and other
corporate considerations. The purchases will be funded from available working
capital. During the fourth quarter of fiscal 2008, the Company repurchased
428,000 shares at a cost of $23.5 million.
The
repurchases made by the Company under this plan were as follows:
Period
|
Total
# of Shares Repurchased
|
Average
Price Paid per Share (1)
|
Total
# of Shares Repurchased as Part of Publicly Announced Plan
|
Total
$ of Shares Repurchased as Part of Publicly Announced Plan
|
Maximum
$ of Shares That May Yet be Repurchased Under the Plan
|
|||||||||||||||
January
1 - 31, 2008
|
- | $ | - | - | $ | - | $ | 50,000,000 | ||||||||||||
February
1 - 29, 2008
|
428,000 | $ | 54.94 | 428,000 | $ | 23,512,380 | $ | 26,487,620 | ||||||||||||
March
1 - 31, 2008
|
- | $ | - | - | $ | - | $ | 26,487,620 | ||||||||||||
Fourth
Quarter Total
|
428,000 | $ | 54.94 | 428,000 | $ | 23,512,380 | ||||||||||||||
(1)
Represents weighted average purchase price for the periods
presented.
|
F-24
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Note
12: Comprehensive Income (Loss)
A summary
of accumulated other comprehensive income (loss) components were as follows, net
of tax:
Foreign
Currency
Translation
|
Unrealized
Gain
(Loss)
on
Investments
|
Fair
Market
Value
of
Cash
Flow
Hedge
|
Postretirement
Benefit Obligation Gain (Loss)
|
Accumulated
Other
Comprehensive
Income
(Loss)
|
||||||||||||||||
(In
thousands)
|
||||||||||||||||||||
Balance
at March 31, 2005
|
$ | (33,344 | ) | $ | 8,685 | $ | 47 | $ | - | $ | (24,612 | ) | ||||||||
Foreign
currency translation
|
(903 | ) | - | - | - | (903 | ) | |||||||||||||
Unrealized
loss on investments
|
- | (7,968 | ) | - | - | (7,968 | ) | |||||||||||||
Change
in fair value of cash flow hedge
|
- | - | 4,581 | - | 4,581 | |||||||||||||||
Balance
at March 31, 2006
|
(34,247 | ) | 717 | 4,628 | - | (28,902 | ) | |||||||||||||
Foreign
currency translation
|
(1,919 | ) | - | - | - | (1,919 | ) | |||||||||||||
Unrealized
loss on investments
|
- | (1,072 | ) | - | - | (1,072 | ) | |||||||||||||
Change
in fair value of cash flow hedge
|
- | - | (9,733 | ) | - | (9,733 | ) | |||||||||||||
FASB
statement No. 158 adjustment
|
- | - | - | (153 | ) | (153 | ) | |||||||||||||
Balance
at March 31, 2007
|
(36,166 | ) | (355 | ) | (5,105 | ) | (153 | ) | (41,779 | ) | ||||||||||
Foreign
currency translation
|
8,583 | - | - | - | 8,583 | |||||||||||||||
Unrealized
gain on investments
|
- | 1,946 | - | - | 1,946 | |||||||||||||||
Change
in fair value of cash flow hedge
|
- | - | (25,473 | ) | - | (25,473 | ) | |||||||||||||
Change
in postretirement benefit obligation
|
- | - | - | 1,444 | 1,444 | |||||||||||||||
Balance
at March 31, 2008
|
$ | (27,583 | ) | $ | 1,591 | $ | (30,578 | ) | $ | 1,291 | $ | (55,279 | ) |
Note
13: Provision for Taxes
Earnings
(losses) before taxes and the provision for taxes consisted of the
following:
Year
Ended March 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
(In
thousands)
|
||||||||||||
Pretax
earnings (losses):
|
||||||||||||
U.S.
|
$ | 100,151 | $ | 149,169 | $ | 199,847 | ||||||
Non-U.S.
|
2,151 | (3,346 | ) | 426 | ||||||||
Total
pretax earnings
|
$ | 102,302 | $ | 145,823 | $ | 200,273 | ||||||
Provision
for taxes:
|
||||||||||||
Federal:
|
||||||||||||
Current
|
$ | 15,441 | $ | 47,758 | $ | 49,652 | ||||||
Deferred
|
15,286 | 900 | 16,239 | |||||||||
State:
|
||||||||||||
Current
|
415 | 2,251 | 6,115 | |||||||||
Deferred
|
1,713 | 5,128 | 6,329 | |||||||||
Non-U.S.:
|
||||||||||||
Current
|
873 | 338 | 439 | |||||||||
Deferred
|
790 | (1,105 | ) | 345 | ||||||||
Total
income tax expense
|
$ | 34,518 | $ | 55,270 | $ | 79,119 |
Income
taxes paid in cash amounted to $10.1 million, $74.8 million, and $43.3 million
for fiscal 2008, 2007, and 2006, respectively.
F-25
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The
difference between the tax provision at the statutory federal income tax rate
and the tax provision attributable to income before taxes was as
follows:
Year
Ended March 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
(In
percentages)
|
||||||||||||
Statutory
federal income tax rate
|
35.00 | % | 35.00 | % | 35.00 | % | ||||||
Increase
(reduction) in rate resulting from:
|
||||||||||||
State
and foreign taxes, net of federal benefit
|
2.99 | % | 2.78 | % | 4.41 | % | ||||||
Canadian
subsidiary loss (income)
|
(0.74 | )% | 0.80 | % | (0.07 | )% | ||||||
Interest
on deferred taxes
|
0.88 | % | 0.69 | % | 0.44 | % | ||||||
Dividend
received deduction
|
- | % | (0.03 | )% | - | % | ||||||
Other
|
(4.39 | )% | (1.34 | )% | (0.27 | )% | ||||||
Effective
tax rate
|
33.74 | % | 37.90 | % | 39.51 | % |
Significant
components of the Company’s deferred tax assets and liabilities were as
follows:
March
31,
|
||||||||
2008
|
2007
|
|||||||
(In
thousands)
|
||||||||
Deferred
tax assets:
|
||||||||
Net
operating loss and credit carry forwards
|
$ | 5,576 | $ | 11,342 | ||||
Accrued
expenses
|
119,458 | 116,989 | ||||||
Policy
benefit and losses, claims and loss expenses payable, net
|
13,744 | 13,527 | ||||||
Unrealized
gains
|
13,828 | - | ||||||
Other
|
4,975 | - | ||||||
Total
deferred tax assets
|
157,581 | 141,858 | ||||||
Deferred
tax liabilities:
|
||||||||
Property,
plant and equipment
|
279,563 | 246,992 | ||||||
Deferred
policy acquisition costs
|
4,051 | 5,330 | ||||||
Other
|
- | 625 | ||||||
Unrealized
losses
|
- | 2,081 | ||||||
Total
deferred tax liabilities
|
283,614 | 255,028 | ||||||
Net
deferred tax liability
|
$ | 126,033 | $ | 113,170 |
Deferred
tax assets and liabilities shown above are stated net of a valuation allowance
of $4.1 million at March 31, 2008 and $4.2 million at March 31,
2007.
Major
items that affected the balance of deferred tax assets and liabilities as of
March 31, 2008 and March 31, 2007 but did not flow through deferred tax expense
during the fiscal year ended March 31, 2008, were as follows: an increase in the
amount of net deferred tax liability of $28.2 million resulting from the
deconsolidation of SAC Holding II, a decrease in net deferred tax liability in
the amount of $13.6 million resulting from FAS 115 and FAS 158 items, and a
decrease in net deferred tax liability in the amount of $19.1 million with the
adoption of FIN 48.
Effective
April 1, 2007, the Company adopted FIN 48. FIN 48 prescribes a minimum
recognition threshold and measurement methodology that a tax position is
required to meet before being recognized in the financial statements. As a
result of the adoption of FIN 48, the Company recognized a $6.8 million decrease
to its previous reserves for uncertain tax positions. This decrease is presented
as an increase in the beginning balance of retained earnings.
F-26
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The total
amount of unrecognized tax benefits at April 1, 2007 was $6.3 million. During
the current fiscal year we recorded tax expense resulting from uncertain tax
positions in the amount of $0.8 million. The total amount of unrecognized tax
benefits as of March 31, 2008 was $7.1 million. This entire amount of
unrecognized tax benefits, if resolved in our favor, would favorably impact our
effective tax rate.
The
Company recognizes interest related to unrecognized tax benefits as interest
expense, and penalties as operating expenses. At April 1, 2007, the amount of
interest accrued on unrecognized tax benefits was $2.3 million, net of tax.
During the current fiscal year we recorded interest expense on uncertain tax
positions in the amount of $0.4 million, net of tax. At March 31, 2008, the
amount of interest accrued on unrecognized tax benefits was $2.7 million, net of
tax.
The
Company files income tax returns in the U.S. federal jurisdiction, and various
states and foreign jurisdictions. With some exceptions, the Company is no longer
subject to audit for years prior to the fiscal year ended March 31,
2005.
A
reconciliation of beginning and ending amount of unrecognized tax benefits are
as follows:
Amount
|
||||
(In
thousands)
|
||||
Unrecognized
tax benefits as of April 1, 2007
|
$ | 6,305 | ||
Additions
based on tax positions related to the current year
|
865 | |||
Reductions
for tax positions of prior years
|
(28 | ) | ||
Unrecognized
tax benefits as of March 31, 2008
|
$ | 7,142 |
At March
31, 2008 and March 31, 2007, AMERCO has alternative minimum tax credit
carryforwards of $2.1 million and $0.0 million, respectively, which do not have
an expiration date, and may only be utilized in years in which regular tax
exceeds alternative minimum tax.
Note
14: Employee Benefit Plans
Profit
Sharing Plans
The
Company provides tax-qualified profit sharing retirement plans for the benefit
of eligible employees, former employees and retirees in the U.S. and Canada. The
plans are designed to provide employees with an accumulation of funds for
retirement on a tax-deferred basis and provide for annual discretionary employer
contributions. Amounts to be contributed are determined by the Chief Executive
Officer (“CEO”) of the Company under the delegation of authority from the Board,
pursuant to the terms of the Profit Sharing Plan. No contributions were made to
the profit sharing plan during fiscal 2008, 2007 or 2006.
The
Company also provides an employee savings plan which allows participants to
defer income under Section 401(k) of the Internal Revenue Code of
1986.
ESOP
Plan
The
Company sponsors a leveraged employee stock ownership plan (“ESOP”) that
generally covers all employees with one year or more of service. The ESOP shares
initially were pledged as collateral for its debt which was originally funded by
U-Haul. As the debt is repaid, shares are released from collateral and allocated
to active employees, based on the proportion of debt service paid in the year.
When shares are scheduled to be released from collateral, prorated over the
year, the Company reports compensation expense equal to the current market price
of the shares scheduled to be released, and the shares become outstanding for
earnings per share computations. ESOP compensation expense was $3.8 million,
$4.7 million and $3.3 million for fiscal 2008, 2007 and 2006, respectively.
Listed below is a summary of these financing arrangements as of fiscal
year-end:
F-27
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Interest
Payments
|
||||||||||||||||
Financing Date
|
Outstanding
as of March 31,
2008
|
2008
|
2007
|
2006
|
||||||||||||
(In
thousands)
|
||||||||||||||||
June,
1991
|
$ | 9,214 | $ | 675 | $ | 694 | $ | 1,070 | ||||||||
March,
1999
|
40 | 4 | 5 | 9 | ||||||||||||
February,
2000
|
314 | 27 | 31 | 53 | ||||||||||||
April,
2001
|
117 | 7 | 6 | 10 |
Shares
are released from collateral and allocated to active employees based on the
proportion of debt service paid in the plan year. Contributions to the Plan
Trust (“ESOT”) during fiscal 2008, 2007 and 2006 were $2.1 million, $2.0 million
and $2.3 million, respectively.
Shares
held by the Plan were as follows:
Year
Ended March 31,
|
||||||||
2008
|
2007
|
|||||||
(In
thousands)
|
||||||||
Allocated
shares
|
1,418 | 1,416 | ||||||
Unreleased
shares
|
417 | 494 | ||||||
Fair
value of unreleased shares
|
$ | 18,576 | $ | 26,288 |
For
purposes of the above schedule, the fair value of unreleased shares issued prior
to 1992 is defined as the historical cost of such shares. The fair value of
unreleased shares issued subsequent to December 31, 1992 is defined as the
trading value of such shares as of March 31, 2008 and March 31, 2007,
respectively.
Insurance
Plans
Oxford
insured various group life and group disability insurance plans covering
employees of the Company. Premiums earned by Oxford on these policies were $3.3
million and $3.5 million for the years ended December 31, 2006, and 2005,
respectively. The group life premiums were paid by the Company and those amounts
were eliminated from the Company’s financial statements in consolidation. Oxford
discontinued its participation in this program effective October 2006. The
employee group life coverage is now provided by an unrelated insurer. Oxford was
the insurance carrier for the employee disability plan through April 30, 2007.
This program is now provided to employees by an unrelated insurer. The group
disability premiums are paid by the covered employees.
Post
Retirement and Post Employment Benefits
The
Company provides medical and life insurance benefits to its eligible employees
and their dependents upon retirement from the Company. The retirees must have
attained age sixty-five and earned twenty years of full-time service upon
retirement for coverage under the medical plan. The medical benefits are capped
at a $20,000 lifetime maximum per covered person. The benefits are coordinated
with Medicare and any other medical policies in force. Retirees who have
attained age sixty-five and earned at least ten years of full-time service upon
retirement from the Company are entitled to group term life insurance benefits.
The life insurance benefit is $2,000 plus $100 for each year of employment over
ten years. The plan is not funded and claims are paid as they are incurred. For
fiscal 2006 and prior years the Company elected to use a December 31 measurement
date for its post retirement benefit disclosures as of March 31.
Effective
March 31, 2007, the Company adopted SFAS 158, which requires that the
Consolidated Balance Sheet reflect the unfunded status of the Company’s
postretirement benefit plan and measure these benefits as of the end of the
fiscal year. Previously, the Company had measured these benefits on a three
month lag, as allowed by SFAS 106. SFAS 158 requires the valuation be
performed as of the balance sheet date. The provisions of SFAS 158 do not permit
retrospective application. The portion of the net periodic cost associated with
the elimination of the timing gap was $0.1 million, net of taxes, and was
recorded as an adjustment to retained earnings in fiscal 2007. Additionally,
SFAS 158 requires the unrecognized net gain or loss now be reclassified to
accumulated other comprehensive income. As of March 31, 2007 this resulted in a
reduction of accumulated other comprehensive income in the amount of $0.2
million, net of tax.
F-28
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The
components of net periodic post retirement benefit cost were as
follows:
Year
Ended March 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
(In
thousands)
|
||||||||||||
Service
cost for benefits earned during the period
|
$ | 672 | $ | 572 | $ | 373 | ||||||
Interest
cost on accumulated postretirement benefit
|
609 | 464 | 306 | |||||||||
Other
components
|
- | (63 | ) | (299 | ) | |||||||
Net
periodic postretirement benefit cost
|
$ | 1,281 | $ | 973 | $ | 380 |
The
fiscal 2008 and fiscal 2007 post retirement benefit liability included the
following components:
Year
Ended March 31,
|
||||||||
2008
|
2007
|
|||||||
(In
thousands)
|
||||||||
Beginning
of year
|
$ | 10,784 | $ | 8,183 | ||||
Service
cost for benefits earned during the period
|
672 | 715 | ||||||
Interest
cost on accumulated post retirement benefit
|
609 | 580 | ||||||
Net
benefit payments and expense
|
(485 | ) | (429 | ) | ||||
Actuarial
(gain) loss
|
(2,367 | ) | 1,735 | |||||
Accumulated
postretirement benefit obligation
|
9,213 | 10,784 | ||||||
Current
liabilities
|
530 | 387 | ||||||
Non-current
liabilities
|
8,683 | 10,397 | ||||||
Total
post retirement benefit liability recognized in statement of financial
position
|
9,213 | 10,784 | ||||||
Components
included in accumulated other comprehensive income:
|
||||||||
Unrecognized
net gain (loss)
|
2,116 | (251 | ) | |||||
Cumulative
net periodic benefit cost (in excess of employer
contribution)
|
$ | 11,329 | $ | 10,533 |
The
discount rate assumptions in computing the information above were as
follows:
Year
Ended March 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
(In
percentages)
|
||||||||||||
Accumulated
postretirement benefit obligation
|
6.00 | % | 5.75 | % | 5.75 | % |
In
December 2003, the Medicare Prescription Drug Improvement and Modernization Act
of 2003 became law. Amounts shown above include the effect of the subsidy. The
discount rate represents the expected yield on a portfolio of high grade (AA to
AAA rated or equivalent) fixed income investments with cash flow streams
sufficient to satisfy benefit obligations under the plan when due. Fluctuations
in the discount rate assumptions primarily reflect changes in U.S. interest
rates. The assumed health care cost trend rate used to measure the accumulated
postretirement benefit obligation as of the end of fiscal 2008 was 10.0% in the
initial year and was projected to decline annually to an ultimate rate of 5.0%
in fiscal 2014. The assumed health care cost trend rate used to measure the
accumulated postretirement benefit obligation as of the end of fiscal 2007 (and
used to measure the fiscal 2008 net periodic benefit cost) was 6.5% in the
initial year and was projected to decline annually to an ultimate rate of 4.5%
in fiscal 2014.
F-29
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
If the
estimated health care cost trend rate assumptions were increased by one percent,
the accumulated post retirement benefit obligation as of fiscal year-end would
increase by approximately $111,880 and the total of the service cost and
interest cost components would increase by $30,579. A decrease in the estimated
health care cost trend rate assumption of one percent would decrease the
accumulated post retirement benefit obligation as of fiscal year-end by $124,443
and the total of the service cost and interest cost components would decrease by
$34,906.
Post
employment benefits provided by the Company, other than retirement, are not
material.
Future
net benefit payments are expected as follows:
Amount
|
||||
(In
thousands)
|
||||
Year-ended:
|
||||
2009
|
$ | 530 | ||
2010
|
626 | |||
2011
|
704 | |||
2012
|
785 | |||
2013
|
846 | |||
2014
through 2018
|
4,279 | |||
Total
|
$ | 7,770 |
F-30
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Note
15: Reinsurance and Policy Benefits and Losses, Claims and Loss
Expenses Payable
During
their normal course of business, our insurance subsidiaries assume and cede
reinsurance on both a coinsurance and a risk premium basis. They also obtain
reinsurance for that portion of risks exceeding their retention limits. The
maximum amount of life insurance retained on any one life is
$150,000.
Direct
Amount
(a)
|
Ceded
to
Other
Companies
|
Assumed
from
Other
Companies
|
Net
Amount
(a)
|
Percentage
of
Amount
Assumed
to Net
|
||||||||||||||||
(In
thousands)
|
||||||||||||||||||||
Year
ended December 31, 2007
|
||||||||||||||||||||
Life
insurance in force
|
$ | 328,384 | $ | 4,682 | $ | 1,428,242 | $ | 1,751,944 | 82 | % | ||||||||||
Premiums
earned:
|
||||||||||||||||||||
Life
|
$ | 10,669 | $ | 35 | $ | 4,823 | $ | 15,457 | 31 | % | ||||||||||
Accident
and health
|
88,658 | 1,230 | 5,155 | 92,583 | 6 | % | ||||||||||||||
Annuity
|
545 | - | 3,411 | 3,956 | 86 | % | ||||||||||||||
Property
and casualty
|
19,373 | 39 | 9,054 | 28,388 | 32 | % | ||||||||||||||
Total
|
$ | 119,245 | $ | 1,304 | $ | 22,443 | $ | 140,384 | ||||||||||||
Year
ended December 31, 2006
|
||||||||||||||||||||
Life
insurance in force
|
$ | 393,400 | $ | 5,662 | $ | 1,483,250 | $ | 1,870,988 | 79 | % | ||||||||||
Premiums
earned:
|
||||||||||||||||||||
Life
|
$ | 9,569 | $ | 315 | $ | 4,980 | $ | 14,234 | 35 | % | ||||||||||
Accident
and health
|
96,285 | 1,390 | 6,234 | 101,129 | 6 | % | ||||||||||||||
Annuity
|
2,558 | - | 2,478 | 5,036 | 49 | % | ||||||||||||||
Property
and casualty
|
18,710 | 2,220 | 7,845 | 24,335 | 32 | % | ||||||||||||||
Total
|
$ | 127,122 | $ | 3,925 | $ | 21,537 | $ | 144,734 | ||||||||||||
Year
ended December 31, 2005
|
||||||||||||||||||||
Life
insurance in force
|
$ | 586,835 | $ | 120,220 | $ | 1,642,876 | $ | 2,109,491 | 78 | % | ||||||||||
Premiums
earned:
|
||||||||||||||||||||
Life
|
$ | 8,708 | $ | 1,862 | $ | 7,211 | $ | 14,057 | 51 | % | ||||||||||
Accident
and health
|
91,986 | 1,887 | 10,071 | 100,170 | 10 | % | ||||||||||||||
Annuity
|
2,174 | - | 2,432 | 4,606 | 53 | % | ||||||||||||||
Property
and casualty
|
22,559 | 3,288 | 6,730 | 26,001 | 26 | % | ||||||||||||||
Total
|
$ | 125,427 | $ | 7,037 | $ | 26,444 | $ | 144,834 |
(a) Balances
are reported net of inter-segment transactions.
F-31
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Premiums
eliminated in consolidation with Oxford were $1.2 million and $1.5 million for
2006 and 2005, respectively:
To the
extent that a re-insurer is unable to meet its obligation under the related
reinsurance agreements, RepWest would remain liable for the unpaid losses and
loss expenses. Pursuant to certain of these agreements, RepWest holds letters of
credit at years-end in the amount of $3.8 million from re-insurers and has
issued letters of credit in the amount of $14.7 million in favor of certain
ceding companies.
Policy
benefits and losses, claims and loss expenses payable for RepWest were as
follows:
Year
Ended December 31,
|
||||||||
2007
|
2006
|
|||||||
(In
thousands)
|
||||||||
Unpaid
losses and loss adjustment expense
|
$ | 288,410 | $ | 288,783 | ||||
Reinsurance
losses payable
|
2,708 | 1,999 | ||||||
Unearned
premiums
|
200 | 459 | ||||||
Total
|
$ | 291,318 | $ | 291,241 |
Activity
in the liability for unpaid losses and loss adjustment expenses for RepWest is
summarized as follows:
Year
Ended December 31,
|
||||||||||||
2007
|
2006
|
2005
|
||||||||||
(In
thousands)
|
||||||||||||
Balance
at January 1
|
$ | 288,783 | $ | 346,928 | $ | 380,875 | ||||||
Less:
reinsurance recoverable
|
144,950 | 181,388 | 189,472 | |||||||||
Net
balance at January 1
|
143,833 | 165,540 | 191,403 | |||||||||
Incurred
related to:
|
||||||||||||
Current
year
|
7,094 | 6,006 | 6,429 | |||||||||
Prior
years
|
11,894 | 15,895 | 16,161 | |||||||||
Total
incurred
|
18,988 | 21,901 | 22,590 | |||||||||
Paid
related to:
|
||||||||||||
Current
year
|
3,289 | 3,492 | 3,774 | |||||||||
Prior
years
|
35,303 | 40,116 | 44,679 | |||||||||
Total
paid
|
38,592 | 43,608 | 48,453 | |||||||||
Net
balance at December 31
|
124,229 | 143,833 | 165,540 | |||||||||
Plus:
reinsurance recoverable
|
164,181 | 144,950 | 181,388 | |||||||||
Balance
at December 31
|
$ | 288,410 | $ | 288,783 | $ | 346,928 |
F-32
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Note
16: Contingent Liabilities and Commitments
The
Company leases a portion of its rental equipment and certain of its facilities
under operating leases with terms that expire at various dates substantially
through 2014, with the exception of one land lease expiring in 2034. At March
31, 2008, AMERCO has guaranteed $165.5 million of residual values for these
rental equipment assets at the end of the respective lease terms. Certain leases
contain renewal and fair market value purchase options as well as mileage and
other restrictions. At the expiration of the lease, the Company has the option
to renew the lease, purchase the asset for fair market value, or sell the asset
to a third party on behalf of the lessor. AMERCO has been leasing equipment
since 1987 and has experienced no material losses relating to these types of
residual value guarantees.
Lease
expenses were as follows:
Year
Ended March 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
(In
thousands)
|
||||||||||||
Lease
expense
|
$ | 133,931 | $ | 147,659 | $ | 136,652 |
Lease
commitments for leases having terms of more than one year were as
follows:
Property,
Plant
and
Equipment
|
Rental
Equipment
|
Total
|
||||||||||
(In
thousands)
|
||||||||||||
Year-ended
March 31:
|
||||||||||||
2009
|
$ | 12,849 | $ | 106,341 | $ | 119,190 | ||||||
2010
|
12,484 | 95,047 | 107,531 | |||||||||
2011
|
12,230 | 74,140 | 86,370 | |||||||||
2012
|
12,016 | 58,049 | 70,065 | |||||||||
2013
|
11,454 | 45,356 | 56,810 | |||||||||
Thereafter
|
17,996 | 32,811 | 50,807 | |||||||||
Total
|
$ | 79,029 | $ | 411,744 | $ | 490,773 |
F-33
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Note
17: Contingencies
Shoen
In
September 2002, Paul F. Shoen filed a shareholder derivative lawsuit in the
Second Judicial District Court of the State of Nevada, Washoe County, captioned
Paul F. Shoen vs. SAC
Holding Corporation et al., CV02-05602, seeking damages and equitable
relief on behalf of AMERCO from SAC Holdings and certain current and former
members of the AMERCO Board of Directors, including Edward J. Shoen, Mark V.
Shoen and James P. Shoen as Defendants. AMERCO is named as a nominal Defendant
in the case. The complaint alleges breach of fiduciary duty, self-dealing,
usurpation of corporate opportunities, wrongful interference with prospective
economic advantage and unjust enrichment and seeks the unwinding of sales of
self-storage properties by subsidiaries of AMERCO to SAC prior to the filing of
the complaint. The complaint seeks a declaration that such transfers are void as
well as unspecified damages. In October 2002, the Defendants filed motions to
dismiss the complaint. Also in October 2002, Ron Belec filed a derivative action
in the Second Judicial District Court of the State of Nevada, Washoe County,
captioned Ron Belec
vs. William E. Carty, et al., CV 02-06331 and in January 2003, M.S.
Management Company, Inc. filed a derivative action in the Second Judicial
District Court of the State of Nevada, Washoe County, captioned M.S. Management Company,
Inc. vs. William E. Carty, et al., CV 03-00386. Two additional derivative
suits were also filed against these parties. Each of these suits is
substantially similar to the Paul F. Shoen case. The Court consolidated the five
cases and thereafter dismissed these actions in May 2003, concluding that the
AMERCO Board of Directors had the requisite level of independence required in
order to have these claims resolved by the Board. Plaintiffs appealed this
decision and, in July 2006, the Nevada Supreme Court reviewed and remanded the
case to the trial court for proceedings consistent with its ruling, allowing the
Plaintiffs to file an amended complaint and plead in addition to substantive
claims, demand futility.
In
November 2006, the Plaintiffs filed an amended complaint. In December 2006, the
Defendants filed motions to dismiss, based on various legal theories. In March
2007, the Court denied AMERCO’s motion to dismiss regarding the issue of demand
futility, stating that “Plaintiffs have satisfied the heightened pleading
requirements of demand futility by showing a majority of the members of the
AMERCO Board of Directors were interested parties in the SAC transactions.” The
Court heard oral argument on the remainder of the Defendants’ motions to
dismiss, including the motion (“Goldwasser Motion”) based on the fact that the
subject matter of the lawsuit had been settled and dismissed in earlier
litigation known as Goldwasser v. Shoen,
CV 0205602, Washoe County, Nevada. In addition, in September and October 2007,
the Defendants filed Motions for Judgment on the Pleadings or in the Alternative
Summary Judgment, based on the fact that the stockholders of the Company had
ratified the underlying transactions at the 2007 annual meeting of stockholders
of AMERCO. In December 2007, the Court denied this motion. This ruling does not
preclude a renewed motion for summary judgment after discovery and further
proceedings on these issues. On April 7, 2008, the litigation was dismissed, on
the basis of the Goldwasser Motion. On May 8, 2008, the Plaintiffs filed a
notice of appeal of such dismissal to the Nevada Supreme Court. On May 20, 2008,
AMERCO filed a cross appeal relating to the denial of its Motion to Dismiss in
regards to Demand Futility. The appeals are currently pending.
Environmental
In the
normal course of business, AMERCO is a defendant in a number of suits and
claims. AMERCO is also a party to several administrative proceedings arising
from state and local provisions that regulate the removal and/or cleanup of
underground fuel storage tanks. It is the opinion of management, that none of
these suits, claims or proceedings involving AMERCO, individually or in the
aggregate, are expected to result in a material adverse effect on AMERCO’s
financial position or results of operations.
Compliance
with environmental requirements of federal, state and local governments
significantly affects Real Estate’s business operations. Among other things,
these requirements regulate the discharge of materials into the water, air and
land and govern the use and disposal of hazardous substances. Real Estate is
aware of issues regarding hazardous substances on some of its properties. Real
Estate regularly makes capital and operating expenditures to stay in compliance
with environmental laws and has put in place a remedial plan at each site where
it believes such a plan is necessary. Since 1988, Real Estate has managed a
testing and removal program for underground storage tanks.
Based
upon the information currently available to Real Estate, compliance with the
environmental laws and its share of the costs of investigation and cleanup of
known hazardous waste sites are not expected to result in a material adverse
effect on AMERCO’s financial position or results of operations. Real Estate
expects to spend approximately $5.7 million in total through 2011 to remediate
these properties.
F-34
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Other
The
Company is named as a defendant in various other litigation and claims arising
out of the normal course of business. In management’s opinion, none of these
other matters will have a material effect on the Company’s financial position
and results of operations.
Note
18: Preferred Stock Purchase Rights
The Board
of AMERCO adopted a stockholder-rights agreement (also known as a “poison pill”)
in July 1998. On March 5, 2008, in accordance with the provision of the Rights
Agreement, the Board directed the termination of all Rights outstanding under
the Rights Agreement and the termination of the Rights Agreement.
Note
19: Related Party Transactions
AMERCO
has engaged in related party transactions and has continuing related party
interests with certain major stockholders, directors and officers of the
consolidated group as disclosed below. Management believes that the transactions
described below and in the related notes were consummated on terms equivalent to
those that would prevail in arm’s-length transactions.
SAC
Holdings was established in order to acquire self-storage properties. These
properties are being managed by the Company pursuant to management agreements.
The sale of self-storage properties by the Company to SAC Holdings has in the
past provided significant cash flows to the Company.
Management
believes that its sales of self-storage properties to SAC Holdings has provided
a unique structure for the Company to earn moving equipment rental revenues and
property management fee revenues from the SAC Holdings self-storage properties
that the Company manages.
During
fiscal 2008, subsidiaries of the Company held various junior unsecured notes of
SAC Holdings. Substantially all of the equity interest of SAC Holdings is
controlled by Blackwater. Blackwater is wholly-owned by Mark V. Shoen, a
significant shareholder and executive officer of AMERCO. The Company does not
have an equity ownership interest in SAC Holdings. The Company recorded interest
income of $18.6 million, $19.2 million and $19.4 million, and received cash
interest payments of $19.2 million, $44.5 million and $11.2 million, from SAC
Holdings during fiscal 2008, 2007 and 2006, respectively. The cash interest
payments for fiscal 2007 included a payment to significantly reduce the
outstanding interest receivable from SAC Holdings. The largest aggregate amount
of notes receivable outstanding during fiscal 2008 was $203.7 million and the
aggregate notes receivable balance at March 31, 2008 was $198.1 million. In
accordance with the terms of these notes, SAC Holdings may repay the notes
without penalty or premium.
Interest
accrues on the outstanding principal balance of junior notes of SAC Holdings
that the Company holds at a 9.0% rate per annum. A fixed portion of that basic
interest is paid on a monthly basis. Additional interest can be earned on notes
totaling $122.2 million of principal depending upon the amount of remaining
basic interest and the cash flow generated by the underlying property. This
amount is referred to as the “cash flow-based calculation.”
To the
extent that this cash flow-based calculation exceeds the amount of remaining
basic interest, contingent interest would be paid on the same monthly date as
the fixed portion of basic interest. To the extent that the cash flow-based
calculation is less than the amount of remaining basic interest, the additional
interest payable on the applicable monthly date is limited to the amount of that
cash flow-based calculation. In such a case, the excess of the remaining basic
interest over the cash flow-based calculation is deferred. In addition, subject
to certain contingencies, the junior notes provide that the holder of the note
is entitled to receive a portion of the appreciation realized upon, among other
things, the sale of such property by SAC Holdings. To date, no excess cash flows
related to these arrangements have been earned or paid.
F-35
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
During
fiscal 2008, AMERCO and U-Haul held various junior notes with Private Mini
Realty L.P. (“Private Mini”). The equity interests of Private Mini
are ultimately controlled by Blackwater. The Company recorded interest income of
$5.1 million and $5.0 million, and received cash interest payments of $5.1
million and $5.0 million, from Private Mini during fiscal 2008 and 2007,
respectively. The balance of notes receivable from Private Mini at
March 31, 2008 was $69.1 million. The largest aggregate amount outstanding
during fiscal 2008 was $70.1 million.
The
Company currently manages the self-storage properties owned or leased by SAC
Holdings, Mercury Partners, L.P. (“Mercury”), Four SAC Self-Storage Corporation
(“4 SAC”), Five SAC Self-Storage Corporation (“5 SAC”), Galaxy Investments, L.P.
(“Galaxy”) and Private Mini pursuant to a standard form of management agreement,
under which the Company receives a management fee of between 4% and 10% of the
gross receipts plus reimbursement for certain expenses. The Company received
management fees, exclusive of reimbursed expenses, of $23.7 million, $23.5
million and $22.5 million from the above mentioned entities during fiscal 2008,
2007 and 2006, respectively. This management fee is consistent with the fee
received for other properties the Company previously managed for third parties.
SAC Holdings, 4 SAC, 5 SAC, Galaxy and Private Mini are substantially controlled
by Blackwater. Mercury is substantially controlled by Mark V.
Shoen. James P. Shoen, a significant shareholder and director of
AMERCO, has an interest in Mercury.
The
Company leases space for marketing company offices, vehicle repair shops and
hitch installation centers from subsidiaries of SAC Holdings, 5 SAC and Galaxy.
Total lease payments pursuant to such leases were $2.1 million, $2.7 million and
$2.7 million for fiscal 2008, 2007 and 2006, respectively. The terms of the
leases are similar to the terms of leases for other properties owned by
unrelated parties that are leased to the Company.
At March
31, 2008, subsidiaries of SAC Holdings, 4 SAC, 5 SAC, Galaxy and Private Mini
acted as U-Haul independent dealers. The financial and other terms of the
dealership contracts with the aforementioned companies and their subsidiaries
are substantially identical to the terms of those with the Company’s other
independent dealers whereby commissions are paid by the Company based upon
equipment rental revenue. During fiscal 2008, 2007 and 2006 the Company paid the
above mentioned entities $36.0 million, $36.6 million and $36.8 million,
respectively in commissions pursuant to such dealership contracts.
These
agreements and notes with subsidiaries of SAC Holdings, 4 SAC, 5 SAC, Galaxy and
Private Mini, excluding Dealer Agreements, provided revenues of $43.6 million,
expenses of $2.1 million and cash flows of $68.8 million during fiscal 2008.
Revenues and commission expenses related to the Dealer Agreements were $170.0
million and $36.0 million, respectively.
In prior
years, U-Haul sold various properties to SAC Holdings at prices in excess of
U-Haul’s carrying values resulting in gains which U-Haul deferred and treated as
additional paid-in capital. The transferred properties have historically been
stated at the original cost basis as the gains were eliminated in consolidation.
In March 2004, a portion of these deferred gains were recognized and treated as
contributions from a related party in the amount of $111.0 million as a result
of the deconsolidation of SAC Holding Corporation. In November 2007, the
remaining portion of these deferred gains were recognized and treated as
contributions from a related party in the amount of $46.1 million as a result of
the deconsolidation of SAC Holding II Corporation.
On
September 1, 2007, SAC Holding Corporation issued a promissory note to U-Haul.
As part of the note, the Company reclassified $20.0 million of deferred interest
due from SAC Holding Corporation to a note receivable. The note accrues interest
at 9.0% per annum with interest payments due monthly and a final maturity in
2019.
During
the second quarter of fiscal 2008, the Company received $20.1 million from SAC
Holding Corporation as full repayment for one of its junior notes.
In
December 2007, Real Estate paid cash for the purchase of a parcel of land from 5
SAC for $0.5 million.
F-36
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Related
Party Assets
March
31,
|
||||||||
2008
|
2007
|
|||||||
(In
thousands)
|
||||||||
Private
Mini notes, receivables and interest
|
$ | 71,038 | $ | 71,785 | ||||
Oxford
note receivable from SAC Holdings
|
- | 5,040 | ||||||
U-Haul
notes receivable from SAC Holdings (a)
|
198,144 | 123,578 | ||||||
U-Haul
interest receivable from SAC Holdings (a)
|
4,498 | 23,361 | ||||||
U-Haul
receivable from SAC Holdings (a)
|
20,617 | 16,596 | ||||||
U-Haul
receivable from Mercury
|
6,791 | 4,278 | ||||||
Other
|
2,798 | 541 | ||||||
$ | 303,886 | $ | 245,179 | |||||
(a)
Fiscal 2008 includes both SAC Holding I and SAC Holding II, whereas fiscal
2007 includes SAC Holding I. This is due to the deconsolidation of SAC
Holding II effective October 31, 2007.
|
Note
20: Statutory Financial Information of Insurance Subsidiaries
Applicable
laws and regulations of the State of Arizona require RepWest and Oxford to
maintain minimum capital and surplus determined in accordance with statutory
accounting principles. Audited statutory net income (loss) and statutory capital
and surplus for the years-ended are listed below:
Year
Ended December 31,
|
||||||||||||
2007
|
2006
|
2005
|
||||||||||
(In
thousands)
|
||||||||||||
RepWest:
|
||||||||||||
Audited
statutory net income
|
$ | 11,000 | $ | 8,980 | $ | 1,825 | ||||||
Audited
statutory capital and surplus
|
110,197 | 101,236 | 89,824 | |||||||||
NAFCIC:
|
||||||||||||
Audited
statutory net income (loss)
|
(95 | ) | 517 | (82 | ) | |||||||
Audited
statutory capital and surplus
|
3,013 | 4,512 | 3,681 | |||||||||
Oxford:
|
||||||||||||
Audited
statutory net income
|
13,038 | 14,869 | 10,237 | |||||||||
Audited
statutory capital and surplus
|
124,015 | 112,998 | 101,466 | |||||||||
CFLIC:
|
||||||||||||
Audited
statutory net income
|
4,066 | 2,652 | 1,470 | |||||||||
Audited
statutory capital and surplus
|
25,075 | 21,040 | 22,455 | |||||||||
NAI:
|
||||||||||||
Audited
statutory net income
|
6,374 | 6,198 | 3,076 | |||||||||
Audited
statutory capital and surplus
|
15,824 | 17,432 | 16,150 | |||||||||
DGLIC*:
|
||||||||||||
Audited
statutory net income (loss)
|
337 | (700 | ) | - | ||||||||
Audited
statutory capital and surplus
|
4,199 | 4,354 | - | |||||||||
*
Acquired by CFLIC February 28, 2006.
|
The
amount of dividends that can be paid to shareholders by insurance companies
domiciled in the State of Arizona is limited. Any dividend in excess of the
limit requires prior regulatory approval. The statutory surplus for Oxford at
December 31, 2007 that could be distributed as ordinary dividends was $12.2
million. RepWest paid $27.0 million in non-cash dividends to its parent during
2005; payment was effected by a reduction in intercompany accounts. The
statutory surplus for RepWest at December 31, 2007 that could be distributed as
ordinary dividends was $11.0 million.
F-37
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Note
21: Financial Information by Geographic Area
Financial
information by geographic area for fiscal 2008 is as follows:
Year Ended
|
United
States
|
Canada
|
Consolidated
|
|||||||||
(All
amounts are in thousands U.S. $'s)
|
||||||||||||
March
31, 2008
|
||||||||||||
Total
revenues
|
$ | 1,938,505 | $ | 110,669 | $ | 2,049,174 | ||||||
Depreciation
and amortization, net of (gains) losses on disposal
|
225,774 | 9,289 | 235,063 | |||||||||
Interest
expense
|
100,685 | 735 | 101,420 | |||||||||
Pretax
earnings
|
100,151 | 2,151 | 102,302 | |||||||||
Income
tax expense
|
32,855 | 1,663 | 34,518 | |||||||||
Identifiable
assets
|
3,724,542 | 107,945 | 3,832,487 |
Financial
information by geographic area for fiscal 2007 is as follows:
Year Ended
|
United
States
|
Canada
|
Consolidated
|
|||||||||
(All
amounts are in thousands U.S. $'s)
|
||||||||||||
March
31, 2007
|
||||||||||||
Total
revenues
|
$ | 1,977,818 | $ | 91,480 | $ | 2,069,298 | ||||||
Depreciation
and amortization, net of (gains) losses on disposal
|
199,485 | 7,242 | 206,727 | |||||||||
Interest
expense
|
81,882 | 554 | 82,436 | |||||||||
Pretax
earnings (losses)
|
149,169 | (3,346 | ) | 145,823 | ||||||||
Income
tax expense (benefit)
|
56,037 | (767 | ) | 55,270 | ||||||||
Identifiable
assets
|
3,434,353 | 88,695 | 3,523,048 |
Financial
information by geographic area for fiscal 2006 is as follows:
Year Ended
|
United
States
|
Canada
|
Consolidated
|
|||||||||
(All
amounts are in thousands U.S. $'s)
|
||||||||||||
March
31, 2006
|
||||||||||||
Total
revenues
|
$ | 2,003,192 | $ | 84,333 | $ | 2,087,525 | ||||||
Depreciation
and amortization, net of (gains) losses on disposal
|
160,297 | 6,781 | 167,078 | |||||||||
Interest
expense
|
68,722 | 759 | 69,481 | |||||||||
Pretax
earnings
|
199,847 | 426 | 200,273 | |||||||||
Income
tax expense
|
78,335 | 784 | 79,119 | |||||||||
Identifiable
assets
|
3,298,572 | 68,646 | 3,367,218 |
F-38
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Note
21A: Consolidating Financial Information by Industry
Segment
AMERCO
has four reportable segments. They are Moving and Storage, Property and Casualty
Insurance, Life Insurance and SAC Holding II. Management tracks revenues
separately, but does not report any separate measure of the profitability for
rental vehicles, rentals of self-storage spaces and sales of products that are
required to be classified as a separate operating segment and accordingly does
not present these as separate reportable segments. Deferred income taxes are
shown as liabilities on the condensed consolidating statements.
The
consolidated balance sheet as of March 31, 2008 includes the accounts of AMERCO
and its wholly-owned subsidiaries. The consolidated balance sheet as of March
31, 2007 includes the accounts of AMERCO and its wholly-owned subsidiaries and
SAC Holding II and its subsidiaries. The March 31, 2008 statements of operations
and cash flows include AMERCO and its wholly-owned subsidiaries for the entire
year, and reflect SAC Holding II and its subsidiaries for the seven months ended
October 31, 2007. The March 31, 2007 and 2006 statements of operations and cash
flows include the accounts of AMERCO and its wholly-owned subsidiaries and SAC
Holding II and its subsidiaries.
|
AMERCO’s
four reportable segments are:
|
|
(a)
|
Moving
and Storage, comprised of AMERCO, U-Haul, and Real Estate and the
subsidiaries of U-Haul and Real
Estate
|
|
(b)
|
Property
and Casualty Insurance, comprised of RepWest and its wholly-owned
subsidiaries
|
|
(c)
|
Life
Insurance, comprised of Oxford and its wholly-owned
subsidiaries
|
|
(d)
|
SAC
Holding II and its subsidiaries (through October
2007)
|
The
information includes elimination entries necessary to consolidate AMERCO, the
parent, with its subsidiaries and SAC Holding II and its subsidiaries through
October 2007.
Investments
in subsidiaries are accounted for by the parent using the equity method of
accounting.
F-39
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Note
21A: Financial Information by Consolidating Industry Segment:
Consolidating
balance sheets by industry segment as of March 31, 2008 are as
follows:
Moving
& Storage
|
AMERCO
Legal Group
|
|||||||||||||||||||||||||||||||||||||
AMERCO
|
U-Haul
|
Real
Estate
|
Eliminations
|
Moving
& Storage
Consolidated
|
Property
& Casualty Insurance (a)
|
Life
Insurance
(a)
|
Eliminations
|
AMERCO
Consolidated
|
||||||||||||||||||||||||||||||
(In
thousands)
|
||||||||||||||||||||||||||||||||||||||
Assets:
|
||||||||||||||||||||||||||||||||||||||
Cash
and cash equivalents
|
$ | 30 | $ | 191,220 | $ | - | $ | - | $ | 191,250 | $ | 6,848 | $ | 8,524 | $ | - | $ | 206,622 | ||||||||||||||||||||
Reinsurance
recoverables and trade receivables, net
|
- | 20,529 | 27 | - | 20,556 | 170,305 | 10,255 | - | 201,116 | |||||||||||||||||||||||||||||
Notes
and mortgage receivables, net
|
- | 1,158 | 930 | - | 2,088 | - | - | - | 2,088 | |||||||||||||||||||||||||||||
Inventories,
net
|
- | 65,349 | - | - | 65,349 | - | - | - | 65,349 | |||||||||||||||||||||||||||||
Prepaid
expenses
|
4,508 | 51,418 | 233 | - | 56,159 | - | - | - | 56,159 | |||||||||||||||||||||||||||||
Investments,
fixed maturities and marketable equities
|
- | - | - | - | - | 144,171 | 489,613 | - | 633,784 | |||||||||||||||||||||||||||||
Investments,
other
|
- | 838 | 13,515 | - | 14,353 | 80,786 | 90,452 | - | 185,591 | |||||||||||||||||||||||||||||
Deferred
policy acquisition costs, net
|
- | - | - | - | - | 30 | 35,548 | - | 35,578 | |||||||||||||||||||||||||||||
Other
assets
|
8 | 97,285 | 30,494 | - | 127,787 | 2,808 | 543 | - | 131,138 | |||||||||||||||||||||||||||||
Related
party assets
|
1,164,092 | 244,801 | 29,198 | (1,131,730 | ) |
(c)
|
306,361 | 7,067 | - | (9,542 | ) |
(c)
|
303,886 | |||||||||||||||||||||||||
1,168,638 | 672,598 | 74,397 | (1,131,730 | ) | 783,903 | 412,015 | 634,935 | (9,542 | ) | 1,821,311 | ||||||||||||||||||||||||||||
Investment
in subsidiaries
|
(234,927 | ) | - | - | 534,247 |
(b)
|
299,320 | - | - | (299,320 | ) |
(b)
|
- | |||||||||||||||||||||||||
Property,
plant and equipment, at cost:
|
||||||||||||||||||||||||||||||||||||||
Land
|
- | 44,224 | 163,940 | - | 208,164 | - | - | - | 208,164 | |||||||||||||||||||||||||||||
Buildings
and improvements
|
- | 109,826 | 750,056 | - | 859,882 | - | - | - | 859,882 | |||||||||||||||||||||||||||||
Furniture
and equipment
|
304 | 291,561 | 18,095 | - | 309,960 | - | - | - | 309,960 | |||||||||||||||||||||||||||||
Rental
trailers and other rental equipment
|
- | 205,572 | - | - | 205,572 | - | - | - | 205,572 | |||||||||||||||||||||||||||||
Rental
trucks
|
- | 1,734,425 | - | - | 1,734,425 | - | - | - | 1,734,425 | |||||||||||||||||||||||||||||
304 | 2,385,608 | 932,091 | - | 3,318,003 | - | - | - | 3,318,003 | ||||||||||||||||||||||||||||||
Less: Accumulated
depreciation
|
(242 | ) | (999,040 | ) | (307,545 | ) | - | (1,306,827 | ) | - | - | - | (1,306,827 | ) | ||||||||||||||||||||||||
Total
property, plant and equipment
|
62 | 1,386,568 | 624,546 | - | 2,011,176 | - | - | - | 2,011,176 | |||||||||||||||||||||||||||||
Total
assets
|
$ | 933,773 | $ | 2,059,166 | $ | 698,943 | $ | (597,483 | ) | $ | 3,094,399 | $ | 412,015 | $ | 634,935 | $ | (308,862 | ) | $ | 3,832,487 | ||||||||||||||||||
(a) Balances
as of December 31, 2007
|
||||||||||||||||||||||||||||||||||||||
(b)
Eliminate investment in subsidiaries
|
||||||||||||||||||||||||||||||||||||||
(c)
Eliminate intercompany receivables and payables
|
F-40
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Consolidating
balance sheets by industry segment as of March 31, 2008 are as
follows:
Moving
& Storage
|
AMERCO
Legal Group
|
|||||||||||||||||||||||||||||||||||||
AMERCO
|
U-Haul
|
Real
Estate
|
Eliminations
|
Moving
& Storage
Consolidated
|
Property
& Casualty Insurance (a)
|
Life
Insurance
(a)
|
Eliminations
|
AMERCO
Consolidated
|
||||||||||||||||||||||||||||||
(In
thousands)
|
||||||||||||||||||||||||||||||||||||||
Liabilities:
|
||||||||||||||||||||||||||||||||||||||
Accounts
payable and accrued expenses
|
$ | 924 | $ | 281,666 | $ | 4,903 | $ | - | $ | 287,493 | $ | - | $ | 5,033 | $ | - | $ | 292,526 | ||||||||||||||||||||
AMERCO's
notes and loans payable
|
- | 630,533 | 874,144 | - | 1,504,677 | - | - | - | 1,504,677 | |||||||||||||||||||||||||||||
Policy
benefits and losses, claims and loss expenses payable
|
- | 360,308 | - | - | 360,308 | 291,318 | 137,748 | - | 789,374 | |||||||||||||||||||||||||||||
Liabilities
from investment contracts
|
- | - | - | - | - | - | 339,198 | - | 339,198 | |||||||||||||||||||||||||||||
Other
policyholders' funds and liabilities
|
- | - | - | - | - | 6,854 | 3,613 | - | 10,467 | |||||||||||||||||||||||||||||
Deferred
income
|
- | 11,781 | - | - | 11,781 | - | - | - | 11,781 | |||||||||||||||||||||||||||||
Deferred
income taxes
|
167,523 | - | - | - | 167,523 | (36,783 | ) | (4,707 | ) | - | 126,033 | |||||||||||||||||||||||||||
Related
party liabilities
|
- | 1,135,916 | - | (1,131,730 | ) |
(c)
|
4,186 | 2,048 | 3,308 | (9,542 | ) |
(c)
|
- | |||||||||||||||||||||||||
Total
liabilities
|
168,447 | 2,420,204 | 879,047 | (1,131,730 | ) | 2,335,968 | 263,437 | 484,193 | (9,542 | ) | 3,074,056 | |||||||||||||||||||||||||||
Stockholders'
equity :
|
||||||||||||||||||||||||||||||||||||||
Series
preferred stock:
|
||||||||||||||||||||||||||||||||||||||
Series
A preferred stock
|
- | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||
Series
B preferred stock
|
- | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||
Series
A common stock
|
- | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||
Common
stock
|
10,497 | 540 | 1 | (541 | ) |
(b)
|
10,497 | 3,300 | 2,500 | (5,800 | ) |
(b)
|
10,497 | |||||||||||||||||||||||||
Additional
paid-in capital
|
419,370 | 121,230 | 147,481 | (268,711 | ) |
(b)
|
419,370 | 86,121 | 26,271 | (112,392 | ) |
(b)
|
419,370 | |||||||||||||||||||||||||
Accumulated
other comprehensive income (loss)
|
(55,279 | ) | (56,870 | ) | - | 56,870 |
(b)
|
(55,279 | ) | 63 | 1,528 | (1,591 | ) |
(b)
|
(55,279 | ) | ||||||||||||||||||||||
Retained
earnings (deficit)
|
915,415 | (419,043 | ) | (327,586 | ) | 746,629 |
(b)
|
915,415 | 59,094 | 120,443 | (179,537 | ) |
(b)
|
915,415 | ||||||||||||||||||||||||
Cost
of common shares in treasury, net
|
(524,677 | ) | - | - | - | (524,677 | ) | - | - | - | (524,677 | ) | ||||||||||||||||||||||||||
Unearned
employee stock ownership plan shares
|
- | (6,895 | ) | - | - | (6,895 | ) | - | - | - | (6,895 | ) | ||||||||||||||||||||||||||
Total
stockholders' equity (deficit)
|
765,326 | (361,038 | ) | (180,104 | ) | 534,247 | 758,431 | 148,578 | 150,742 | (299,320 | ) | 758,431 | ||||||||||||||||||||||||||
Total
liabilities and stockholders' equity
|
$ | 933,773 | $ | 2,059,166 | $ | 698,943 | $ | (597,483 | ) | $ | 3,094,399 | $ | 412,015 | $ | 634,935 | $ | (308,862 | ) | $ | 3,832,487 | ||||||||||||||||||
(a) Balances
as of December 31, 2007
|
||||||||||||||||||||||||||||||||||||||
(b)
Eliminate investment in subsidiaries
|
||||||||||||||||||||||||||||||||||||||
(c)
Eliminate intercompany receivables and payables
|
F-41
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Consolidating
balance sheets by industry segment as of March 31, 2007 are as
follows:
Moving
& Storage
|
AMERCO
Legal Group
|
AMERCO
as Consolidated
|
|||||||||||||||||||||||||||||||||||||||||||||||||
AMERCO
|
U-Haul
|
Real
Estate
|
Eliminations
|
Moving
& Storage
Consolidated
|
Property
& Casualty Insurance (a)
|
Life
Insurance
(a)
|
Eliminations
|
AMERCO
Consolidated
|
SAC
Holding II
|
Eliminations
|
Total
Consolidated
|
||||||||||||||||||||||||||||||||||||||||
(In
thousands)
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
Assets:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
Cash
and cash equivalents
|
$ | 9 | $ | 63,490 | $ | 807 | $ | - | $ | 64,306 | $ | 4,228 | $ | 6,738 | $ | - | $ | 75,272 | $ | - | $ | - | $ | 75,272 | |||||||||||||||||||||||||||
Reinsurance
recoverables and trade receivables, net
|
- | 18,343 | 27 | - | 18,370 | 155,172 | 11,075 | - | 184,617 | - | - | 184,617 | |||||||||||||||||||||||||||||||||||||||
Notes
and mortgage receivables, net
|
- | 1,236 | 433 | - | 1,669 | - | - | - | 1,669 | - | - | 1,669 | |||||||||||||||||||||||||||||||||||||||
Inventories,
net
|
- | 65,646 | - | - | 65,646 | - | - | - | 65,646 | 1,377 | - | 67,023 | |||||||||||||||||||||||||||||||||||||||
Prepaid
expenses
|
11,173 | 40,586 | 30 | - | 51,789 | - | - | - | 51,789 | 291 | - | 52,080 | |||||||||||||||||||||||||||||||||||||||
Investments,
fixed maturities and marketable equities
|
- | - | - | - | - | 156,540 | 525,261 | - | 681,801 | - | - | 681,801 | |||||||||||||||||||||||||||||||||||||||
Investments,
other
|
- | 1,119 | 10,714 | - | 11,833 | 74,716 | 92,150 | - | 178,699 | - | - | 178,699 | |||||||||||||||||||||||||||||||||||||||
Deferred
policy acquisition costs, net
|
- | - | - | - | - | 196 | 44,318 | - | 44,514 | - | - | 44,514 | |||||||||||||||||||||||||||||||||||||||
Other
assets
|
12 | 56,264 | 31,794 | - | 88,070 | 1,744 | 833 | - | 90,647 | 4,476 | - | 95,123 | |||||||||||||||||||||||||||||||||||||||
Related
party assets
|
1,180,929 | 251,288 | 12,663 | (1,113,379 | ) |
(d)
|
331,501 | 9,909 | 5,040 | (20,840 | ) |
(d)
|
325,610 | 5 | (80,436 | ) |
(d)
|
245,179 | |||||||||||||||||||||||||||||||||
1,192,123 | 497,972 | 56,468 | (1,113,379 | ) | 633,184 | 402,505 | 685,415 | (20,840 | ) | 1,700,264 | 6,149 | (80,436 | ) | 1,625,977 | |||||||||||||||||||||||||||||||||||||
Investment
in subsidiaries
|
(235,860 | ) | - | - | 514,745 |
(c)
|
278,885 | - | - | (278,885 | ) |
(c)
|
- | - | - | - | |||||||||||||||||||||||||||||||||||
Investment
in SAC Holding II
|
(9,256 | ) | - | - | - | (9,256 | ) | - | - | - | (9,256 | ) | - | 9,256 |
(c)
|
- | |||||||||||||||||||||||||||||||||||
Total
investment in subsidiaries and SAC Holding II
|
(245,116 | ) | - | - | 514,745 | 269,629 | - | - | (278,885 | ) | (9,256 | ) | - | 9,256 | - | ||||||||||||||||||||||||||||||||||||
Property,
plant and equipment, at cost:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
Land
|
- | 39,868 | 163,049 | - | 202,917 | - | - | - | 202,917 | - | - | 202,917 | |||||||||||||||||||||||||||||||||||||||
Buildings
and improvements
|
- | 103,542 | 698,747 | - | 802,289 | - | - | - | 802,289 | - | - | 802,289 | |||||||||||||||||||||||||||||||||||||||
Furniture
and equipment
|
4,588 | 279,219 | 17,944 | - | 301,751 | - | - | - | 301,751 | - | - | 301,751 | |||||||||||||||||||||||||||||||||||||||
Rental
trailers and other rental equipment
|
- | 200,208 | - | - | 200,208 | - | - | - | 200,208 | - | - | 200,208 | |||||||||||||||||||||||||||||||||||||||
Rental
trucks
|
- | 1,604,123 | - | - | 1,604,123 | - | - | - | 1,604,123 | - | - | 1,604,123 | |||||||||||||||||||||||||||||||||||||||
SAC
Holding II - property, plant and equipment (b)
|
- | - | - | - | - | - | - | - | - | 154,561 | (74,212 | ) |
(e)
|
80,349 | |||||||||||||||||||||||||||||||||||||
4,588 | 2,226,960 | 879,740 | - | 3,111,288 | - | - | - | 3,111,288 | 154,561 | (74,212 | ) | 3,191,637 | |||||||||||||||||||||||||||||||||||||||
Less: Accumulated
depreciation
|
(627 | ) | (995,028 | ) | (296,563 | ) | - | (1,292,218 | ) | - | - | - | (1,292,218 | ) | (12,573 | ) | 10,225 |
(e)
|
(1,294,566 | ) | |||||||||||||||||||||||||||||||
Total
property, plant and equipment
|
3,961 | 1,231,932 | 583,177 | - | 1,819,070 | - | - | - | 1,819,070 | 141,988 | (63,987 | ) | 1,897,071 | ||||||||||||||||||||||||||||||||||||||
Total
assets
|
$ | 950,968 | $ | 1,729,904 | $ | 639,645 | $ | (598,634 | ) | $ | 2,721,883 | $ | 402,505 | $ | 685,415 | $ | (299,725 | ) | $ | 3,510,078 | $ | 148,137 | $ | (135,167 | ) | $ | 3,523,048 | ||||||||||||||||||||||||
(a) Balances
as of December 31, 2006
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
(b)
Included in this caption is land of $57,169, buildings and improvements of
$96,879, and furniture and equipment of $513
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
(c)
Eliminate investment in subsidiaries and SAC Holding II
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
(d)
Eliminate intercompany receivables and payables
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
(e)
Eliminate gain on sale of property from U-Haul to SAC Holding
II
|
F-42
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Consolidating
balance sheets by industry segment as of March 31, 2007 are as
follows:
Moving
& Storage
|
AMERCO
Legal Group
|
AMERCO
as Consolidated
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
AMERCO
|
U-Haul
|
Real
Estate
|
Eliminations
|
Moving
& Storage
Consolidated
|
Property
& Casualty Insurance (a)
|
Life
Insurance
(a)
|
Eliminations
|
AMERCO
Consolidated
|
SAC
Holding II
|
Eliminations
|
Total
Consolidated
|
|||||||||||||||||||||||||||||||||||||||||||
(In
thousands)
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts
payable and accrued expenses
|
$ | 926 | $ | 236,830 | $ | 4,973 | $ | - | $ | 242,729 | $ | - | $ | 7,083 | $ | - | $ | 249,812 | $ | 1,385 | $ | - | $ | 251,197 | ||||||||||||||||||||||||||||||
AMERCO's
notes and loans payable
|
- | 406,458 | 774,707 | - | 1,181,165 | - | - | - | 1,181,165 | - | - | 1,181,165 | ||||||||||||||||||||||||||||||||||||||||||
SAC
Holding II Corporation notes and loans
payable,
non-recourse to AMERCO
|
- | - | - | - | - | - | - | - | - | 74,887 | - | 74,887 | ||||||||||||||||||||||||||||||||||||||||||
Policy
benefits and losses,
claims
and loss expenses payable
|
- | 330,602 | - | - | 330,602 | 291,241 | 146,908 | - | 768,751 | - | - | 768,751 | ||||||||||||||||||||||||||||||||||||||||||
Liabilities
from investment contracts
|
- | - | - | - | - | - | 386,640 | - | 386,640 | - | - | 386,640 | ||||||||||||||||||||||||||||||||||||||||||
Other
policyholders' funds and liabilities
|
- | - | - | - | - | 7,633 | 2,930 | - | 10,563 | - | - | 10,563 | ||||||||||||||||||||||||||||||||||||||||||
Deferred
income
|
- | 15,629 | - | - | 15,629 | - | - | - | 15,629 | 849 | - | 16,478 | ||||||||||||||||||||||||||||||||||||||||||
Deferred
income taxes
|
186,594 | - | - | - | 186,594 | (41,223 | ) | (3,167 | ) | - | 142,204 | (2,263 | ) | (26,771 | ) |
(d)
|
113,170 | |||||||||||||||||||||||||||||||||||||
Related
party liabilities
|
- | 1,077,090 | 46,139 | (1,113,379 | ) |
(c)
|
9,850 | 2,411 | 8,579 | (20,840 | ) |
(c)
|
- | 82,535 | (80,436 | ) |
(c)
|
2,099 | ||||||||||||||||||||||||||||||||||||
Total
liabilities
|
187,520 | 2,066,609 | 825,819 | (1,113,379 | ) | 1,966,569 | 260,062 | 548,973 | (20,840 | ) | 2,754,764 | 157,393 | (107,207 | ) | 2,804,950 | |||||||||||||||||||||||||||||||||||||||
Stockholders'
equity:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Series
preferred stock:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Series
A preferred stock
|
- | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||
Series
B preferred stock
|
- | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||
Series
A common stock
|
- | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||
Common
stock
|
10,497 | 540 | 1 | (541 | ) |
(b)
|
10,497 | 3,300 | 2,500 | (5,800 | ) |
(b)
|
10,497 | - | - | 10,497 | ||||||||||||||||||||||||||||||||||||||
Additional
paid-in capital
|
421,483 | 121,230 | 147,481 | (268,711 | ) |
(b)
|
421,483 | 86,121 | 26,271 | (112,392 | ) |
(b)
|
421,483 | - | (46,071 | ) |
(d)
|
375,412 | ||||||||||||||||||||||||||||||||||||
Additional
paid-in capital - SAC Holding II
|
- | - | - | - | - | - | - | - | - | 4,492 | (4,492 | ) | - | |||||||||||||||||||||||||||||||||||||||||
Accumulated
other comprehensive loss
|
(41,779 | ) | (41,454 | ) | - | 41,454 |
(b)
|
(41,779 | ) | (163 | ) | (192 | ) | 355 |
(b)
|
(41,779 | ) | - | - | (41,779 | ) | |||||||||||||||||||||||||||||||||
Retained
earnings (deficit)
|
840,445 | (408,887 | ) | (333,656 | ) | 742,543 |
(b)
|
840,445 | 53,185 | 107,863 | (161,048 | ) |
(b)
|
840,445 | (13,748 | ) | 22,603 | (b,d | ) | 849,300 | ||||||||||||||||||||||||||||||||||
Cost
of common shares in treasury, net
|
(467,198 | ) | - | - | - | (467,198 | ) | - | - | - | (467,198 | ) | - | - | (467,198 | ) | ||||||||||||||||||||||||||||||||||||||
Unearned
employee stock ownership plan shares
|
- | (8,134 | ) | - | - | (8,134 | ) | - | - | - | (8,134 | ) | - | - | (8,134 | ) | ||||||||||||||||||||||||||||||||||||||
Total
stockholders' equity (deficit)
|
763,448 | (336,705 | ) | (186,174 | ) | 514,745 | 755,314 | 142,443 | 136,442 | (278,885 | ) | 755,314 | (9,256 | ) | (27,960 | ) | 718,098 | |||||||||||||||||||||||||||||||||||||
Total
liabilities and stockholders' equity
|
$ | 950,968 | $ | 1,729,904 | $ | 639,645 | $ | (598,634 | ) | $ | 2,721,883 | $ | 402,505 | $ | 685,415 | $ | (299,725 | ) | $ | 3,510,078 | $ | 148,137 | $ | (135,167 | ) | $ | 3,523,048 | |||||||||||||||||||||||||||
(a) Balances
as of December 31, 2006
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
(b)
Eliminate investment in subsidiaries and SAC Holding II
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
(c)
Eliminate intercompany receivables and payables
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
(d)
Eliminate gain on sale of property from U-Haul to SAC Holding
II
|
F-43
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Consolidating
statements of operations by industry segment for period ending March 31, 2008
are as follows:
Moving
& Storage
|
AMERCO
Legal Group
|
AMERCO
as Consolidated
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
AMERCO
|
U-Haul
|
Real
Estate
|
Eliminations
|
Moving
& Storage
Consolidated
|
Property
& Casualty Insurance (a)
|
Life
Insurance
(a)
|
Eliminations
|
AMERCO
Consolidated
|
SAC
Holding II (h)
|
Eliminations
|
Total
Consolidated
|
|||||||||||||||||||||||||||||||||||||||||||
(In
thousands)
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Self-moving
equipment rentals
|
$ | - | $ | 1,451,292 | $ | - | $ | - | $ | 1,451,292 | $ | - | $ | - | $ | - | $ | 1,451,292 | $ | 5,846 | $ | (5,846 | ) |
(b)
|
$ | 1,451,292 | ||||||||||||||||||||||||||||
Self-storage
revenues
|
- | 108,965 | 1,814 | - | 110,779 | - | - | - | 110,779 | 11,469 | - | 122,248 | ||||||||||||||||||||||||||||||||||||||||||
Self-moving
& self-storage products & service sales
|
- | 207,759 | - | - | 207,759 | - | - | - | 207,759 | 10,039 | - | 217,798 | ||||||||||||||||||||||||||||||||||||||||||
Property
management fees
|
- | 24,520 | - | - | 24,520 | - | - | - | 24,520 | - | (1,700 | ) |
(g)
|
22,820 | ||||||||||||||||||||||||||||||||||||||||
Life
insurance premiums
|
- | - | - | - | - | - | 111,996 | - | 111,996 | - | - | 111,996 | ||||||||||||||||||||||||||||||||||||||||||
Property
and casualty insurance premiums
|
- | - | - | - | - | 28,388 | - | - | 28,388 | - | - | 28,388 | ||||||||||||||||||||||||||||||||||||||||||
Net
investment and interest income
|
4,498 | 30,250 | 158 | - | 34,906 | 12,090 | 20,935 | (1,771 | ) | (b,d | ) | 66,160 | - | (4,050 | ) |
(d)
|
62,110 | |||||||||||||||||||||||||||||||||||||
Other
revenue
|
- | 33,645 | 70,163 | (74,834 | ) |
(b)
|
28,974 | - | 4,517 | (1,303 | ) |
(b)
|
32,188 | 748 | (414 | ) |
(b)
|
32,522 | ||||||||||||||||||||||||||||||||||||
Total
revenues
|
4,498 | 1,856,431 | 72,135 | (74,834 | ) | 1,858,230 | 40,478 | 137,448 | (3,074 | ) | 2,033,082 | 28,102 | (12,010 | ) | 2,049,174 | |||||||||||||||||||||||||||||||||||||||
Costs
and expenses:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating
expenses
|
10,071 | 1,094,806 | 9,862 | (74,834 | ) |
(b)
|
1,039,905 | 11,999 | 23,847 | (10,453 | ) | (b,c,d | ) | 1,065,298 | 13,510 | (1,700 | ) |
(g)
|
1,077,108 | |||||||||||||||||||||||||||||||||||
Commission
expenses
|
- | 173,791 | - | - | 173,791 | - | - | - | 173,791 | - | (5,846 | ) |
(b)
|
167,945 | ||||||||||||||||||||||||||||||||||||||||
Cost
of sales
|
- | 115,018 | - | - | 115,018 | - | - | - | 115,018 | 5,192 | - | 120,210 | ||||||||||||||||||||||||||||||||||||||||||
Benefits
and losses
|
- | - | - | - | - | 19,045 | 83,408 | 8,742 |
(c)
|
111,195 | - | - | 111,195 | |||||||||||||||||||||||||||||||||||||||||
Amortization
of deferred policy acquisition costs
|
- | - | - | - | - | 190 | 12,991 | - | 13,181 | - | - | 13,181 | ||||||||||||||||||||||||||||||||||||||||||
Lease
expense
|
94 | 135,401 | 50 | - | 135,545 | - | - | (1,200 | ) |
(b)
|
134,345 | - | (414 | ) |
(b)
|
133,931 | ||||||||||||||||||||||||||||||||||||||
Depreciation,
net of (gains) losses on disposals
|
515 | 220,696 | (476 | ) | - | 220,735 | - | - | - | 220,735 | 1,474 | (327 | ) |
(e)
|
221,882 | |||||||||||||||||||||||||||||||||||||||
Total
costs and expenses
|
10,680 | 1,739,712 | 9,436 | (74,834 | ) | 1,684,994 | 31,234 | 120,246 | (2,911 | ) | 1,833,563 | 20,176 | (8,287 | ) | 1,845,452 | |||||||||||||||||||||||||||||||||||||||
Equity
in earnings of subsidiaries
|
15,426 | - | - | 4,086 |
(f)
|
19,512 | - | - | (19,512 | ) |
(f)
|
- | - | - | - | |||||||||||||||||||||||||||||||||||||||
Equity
in earnings of SAC Holding II
|
222 | - | - | - | 222 | - | - | - | 222 | - | (222 | ) |
(f)
|
- | ||||||||||||||||||||||||||||||||||||||||
Total
- equity in earnings of subsidiaries and SAC Holding II
|
15,648 | - | - | 4,086 | 19,734 | - | - | (19,512 | ) | 222 | - | (222 | ) | - | ||||||||||||||||||||||||||||||||||||||||
Earnings
from operations
|
9,466 | 116,719 | 62,699 | 4,086 | 192,970 | 9,244 | 17,202 | (19,675 | ) | 199,741 | 7,926 | (3,945 | ) | 203,722 | ||||||||||||||||||||||||||||||||||||||||
Interest
income (expense)
|
88,613 | (136,041 | ) | (50,668 | ) | - | (98,096 | ) | - | - | 163 |
(d)
|
(97,933 | ) | (7,537 | ) | 4,050 |
(d)
|
(101,420 | ) | ||||||||||||||||||||||||||||||||||
Pretax
earnings (loss)
|
98,079 | (19,322 | ) | 12,031 | 4,086 | 94,874 | 9,244 | 17,202 | (19,512 | ) | 101,808 | 389 | 105 | 102,302 | ||||||||||||||||||||||||||||||||||||||||
Income
tax benefit (expense)
|
(30,498 | ) | 9,166 | (5,961 | ) | - | (27,293 | ) | (3,335 | ) | (3,599 | ) | - | (34,227 | ) | (167 | ) | (124 | ) |
(e)
|
(34,518 | ) | ||||||||||||||||||||||||||||||||
Net
earnings (loss)
|
67,581 | (10,156 | ) | 6,070 | 4,086 | 67,581 | 5,909 | 13,603 | (19,512 | ) | 67,581 | 222 | (19 | ) | 67,784 | |||||||||||||||||||||||||||||||||||||||
Less: Preferred
stock dividends
|
(12,963 | ) | - | - | - | (12,963 | ) | - | - | - | (12,963 | ) | - | - | (12,963 | ) | ||||||||||||||||||||||||||||||||||||||
Earnings
(loss) available to common shareholders
|
$ | 54,618 | $ | (10,156 | ) | $ | 6,070 | $ | 4,086 | $ | 54,618 | $ | 5,909 | $ | 13,603 | $ | (19,512 | ) | $ | 54,618 | $ | 222 | $ | (19 | ) | $ | 54,821 | |||||||||||||||||||||||||||
(a) Balances
for the year ended December 31, 2007
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
(b)
Eliminate intercompany lease income and commission income
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
(c )
Eliminate intercompany expenses
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
(d)
Eliminate intercompany interest on debt
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
(e)
Eliminate gain on sale of surplus property from U-Haul to SAC Holding
II
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
(f)
Eliminate equity in earnings of subsidiaries and equity in earnings of SAC
Holding II
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
(g)
Eliminate management fees charged to SAC Holding II and other intercompany
operating expenses
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
(h)
Activity for the seven months ended October 2007, prior to
deconsolidation
|
F-44
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Consolidating
statements of operations by industry segment for period ending March 31, 2007
are as follows:
Moving
& Storage
|
AMERCO
Legal Group
|
AMERCO
as Consolidated
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
AMERCO
|
U-Haul
|
Real
Estate
|
Eliminations
|
Moving
& Storage
Consolidated
|
Property
& Casualty Insurance (a)
|
Life
Insurance
(a)
|
Eliminations
|
AMERCO
Consolidated
|
SAC
Holding II
|
Eliminations
|
Total
Consolidated
|
|||||||||||||||||||||||||||||||||||||||||||
(In
thousands)
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Self-moving
equipment rentals
|
$ | - | $ | 1,462,470 | $ | - | $ | - | $ | 1,462,470 | $ | - | $ | - | $ | - | $ | 1,462,470 | $ | 9,225 | $ | (9,225 | ) |
(b)
|
$ | 1,462,470 | ||||||||||||||||||||||||||||
Self-storage
revenues
|
- | 104,725 | 1,773 | - | 106,498 | - | - | - | 106,498 | 19,926 | - | 126,424 | ||||||||||||||||||||||||||||||||||||||||||
Self-moving
& self-storage products & service sales
|
- | 208,677 | - | - | 208,677 | - | - | - | 208,677 | 16,045 | - | 224,722 | ||||||||||||||||||||||||||||||||||||||||||
Property
management fees
|
- | 23,951 | - | - | 23,951 | - | - | - | 23,951 | - | (2,797 | ) |
(g)
|
21,154 | ||||||||||||||||||||||||||||||||||||||||
Life
insurance premiums
|
- | - | - | - | - | - | 121,590 | (1,191 | ) |
(c)
|
120,399 | - | - | 120,399 | ||||||||||||||||||||||||||||||||||||||||
Property
and casualty insurance premiums
|
- | - | - | - | - | 24,335 | - | - | 24,335 | - | - | 24,335 | ||||||||||||||||||||||||||||||||||||||||||
Net
investment and interest income
|
4,867 | 29,294 | - | - | 34,161 | 14,151 | 22,490 | (4,071 | ) | (b,d | ) | 66,731 | - | (7,035 | ) |
(d)
|
59,696 | |||||||||||||||||||||||||||||||||||||
Other
revenue
|
204 | 31,403 | 67,436 | (73,049 | ) |
(b)
|
25,994 | - | 4,740 | (1,333 | ) |
(b)
|
29,401 | 1,407 | (710 | ) |
(b)
|
30,098 | ||||||||||||||||||||||||||||||||||||
Total
revenues
|
5,071 | 1,860,520 | 69,209 | (73,049 | ) | 1,861,751 | 38,486 | 148,820 | (6,595 | ) | 2,042,462 | 46,603 | (19,767 | ) | 2,069,298 | |||||||||||||||||||||||||||||||||||||||
Costs
and expenses:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating
expenses
|
12,096 | 1,085,619 | 8,843 | (73,049 | ) |
(b)
|
1,033,509 | 8,787 | 30,871 | (12,531 | ) | (b,c,d | ) | 1,060,636 | 22,573 | (2,797 | ) |
(g)
|
1,080,412 | |||||||||||||||||||||||||||||||||||
Commission
expenses
|
- | 172,124 | - | - | 172,124 | - | - | - | 172,124 | - | (9,225 | ) |
(b)
|
162,899 | ||||||||||||||||||||||||||||||||||||||||
Cost
of sales
|
- | 110,163 | - | - | 110,163 | - | - | - | 110,163 | 7,485 | - | 117,648 | ||||||||||||||||||||||||||||||||||||||||||
Benefits
and losses
|
- | - | - | - | - | 21,901 | 88,347 | 8,477 |
(c)
|
118,725 | - | - | 118,725 | |||||||||||||||||||||||||||||||||||||||||
Amortization
of deferred policy acquisition costs
|
- | - | - | - | - | 2,057 | 15,081 | - | 17,138 | - | - | 17,138 | ||||||||||||||||||||||||||||||||||||||||||
Lease
expense
|
88 | 149,649 | 853 | - | 150,590 | - | - | (2,221 | ) |
(b)
|
148,369 | - | (710 | ) |
(b)
|
147,659 | ||||||||||||||||||||||||||||||||||||||
Depreciation,
net of (gains) losses on disposals
|
293 | 180,560 | 6,605 | - | 187,458 | - | - | - | 187,458 | 2,691 | (560 | ) |
(e)
|
189,589 | ||||||||||||||||||||||||||||||||||||||||
Total
costs and expenses
|
12,477 | 1,698,115 | 16,301 | (73,049 | ) | 1,653,844 | 32,745 | 134,299 | (6,275 | ) | 1,814,613 | 32,749 | (13,292 | ) | 1,834,070 | |||||||||||||||||||||||||||||||||||||||
Equity
in earnings of subsidiaries
|
35,269 | - | - | (25,766 | ) |
(f)
|
9,503 | - | - | (9,503 | ) |
(f)
|
- | - | - | - | ||||||||||||||||||||||||||||||||||||||
Equity
in earnings of SAC Holding II
|
527 | - | - | - | 527 | - | - | - | 527 | - | (527 | ) |
(f)
|
- | ||||||||||||||||||||||||||||||||||||||||
Total
- equity in earnings of subsidiaries and SAC Holding II
|
35,796 | - | - | (25,766 | ) | 10,030 | - | - | (9,503 | ) | 527 | - | (527 | ) | - | |||||||||||||||||||||||||||||||||||||||
Earnings
from operations
|
28,390 | 162,405 | 52,908 | (25,766 | ) | 217,937 | 5,741 | 14,521 | (9,823 | ) | 228,376 | 13,854 | (7,002 | ) | 235,228 | |||||||||||||||||||||||||||||||||||||||
Interest
income (expense)
|
89,026 | (114,051 | ) | (51,704 | ) | - | (76,729 | ) | - | - | 320 |
(d)
|
(76,409 | ) | (13,062 | ) | 7,035 |
(d)
|
(82,436 | ) | ||||||||||||||||||||||||||||||||||
Fees
and amortization on early extinguishment of debt
|
- | (302 | ) | (6,667 | ) | - | (6,969 | ) | - | - | - | (6,969 | ) | - | - | (6,969 | ) | |||||||||||||||||||||||||||||||||||||
Pretax
earnings (loss)
|
117,416 | 48,052 | (5,463 | ) | (25,766 | ) | 134,239 | 5,741 | 14,521 | (9,503 | ) | 144,998 | 792 | 33 | 145,823 | |||||||||||||||||||||||||||||||||||||||
Income
tax benefit (expense)
|
(27,211 | ) | (17,948 | ) | 1,125 | - | (44,034 | ) | (5,896 | ) | (4,863 | ) | - | (54,793 | ) | (265 | ) | (212 | ) |
(e)
|
(55,270 | ) | ||||||||||||||||||||||||||||||||
Net
earnings (loss)
|
90,205 | 30,104 | (4,338 | ) | (25,766 | ) | 90,205 | (155 | ) | 9,658 | (9,503 | ) | 90,205 | 527 | (179 | ) | 90,553 | |||||||||||||||||||||||||||||||||||||
Less: Preferred
stock dividends
|
(12,963 | ) | - | - | - | (12,963 | ) | - | - | - | (12,963 | ) | - | - | (12,963 | ) | ||||||||||||||||||||||||||||||||||||||
Earnings
(loss) available to common shareholders
|
$ | 77,242 | $ | 30,104 | $ | (4,338 | ) | $ | (25,766 | ) | $ | 77,242 | $ | (155 | ) | $ | 9,658 | $ | (9,503 | ) | $ | 77,242 | $ | 527 | $ | (179 | ) | $ | 77,590 | |||||||||||||||||||||||||
(a) Balances
for the year ended December 31, 2006
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
(b)
Eliminate intercompany lease income and commission income
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
(c )
Eliminate intercompany premiums and expenses
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
(d)
Eliminate intercompany interest on debt
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
(e)
Eliminate gain on sale of surplus property from U-Haul to SAC Holding
II
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
(f)
Eliminate equity in earnings of subsidiaries and equity in earnings of SAC
Holding II
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
(g)
Eliminate management fees charged to SAC Holding II and other intercompany
operating expenses
|
F-45
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Consolidating
statements of operations by industry segment for period ending March 31, 2006
are as follows:
Moving
& Storage
|
AMERCO
Legal Group
|
AMERCO
as Consolidated
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
AMERCO
|
U-Haul
|
Real
Estate
|
Eliminations
|
Moving
& Storage
Consolidated
|
Property
& Casualty Insurance (a)
|
Life
Insurance
(a)
|
Eliminations
|
AMERCO
Consolidated
|
SAC
Holding II
|
Eliminations
|
Total
Consolidated
|
|||||||||||||||||||||||||||||||||||||||||||
(In
thousands)
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Self-moving
equipment rentals
|
$ | - | $ | 1,489,429 | $ | - | $ | - | $ | 1,489,429 | $ | - | $ | - | $ | - | $ | 1,489,429 | $ | 9,498 | $ | (9,498 | ) |
(b)
|
$ | 1,489,429 | ||||||||||||||||||||||||||||
Self-storage
revenues
|
- | 99,060 | 1,813 | - | 100,873 | - | - | - | 100,873 | 18,869 | - | 119,742 | ||||||||||||||||||||||||||||||||||||||||||
Self-moving
& self-storage products & service sales
|
- | 207,119 | - | - | 207,119 | - | - | - | 207,119 | 16,602 | - | 223,721 | ||||||||||||||||||||||||||||||||||||||||||
Property
management fees
|
- | 23,988 | - | - | 23,988 | - | - | - | 23,988 | - | (2,793 | ) |
(g)
|
21,195 | ||||||||||||||||||||||||||||||||||||||||
Life
insurance premiums
|
- | - | - | - | - | - | 120,352 | (1,519 | ) |
(c)
|
118,833 | - | - | 118,833 | ||||||||||||||||||||||||||||||||||||||||
Property
and casualty insurance premiums
|
- | - | - | - | - | 26,001 | - | - | 26,001 | - | - | 26,001 | ||||||||||||||||||||||||||||||||||||||||||
Net
investment and interest income
|
5,108 | 24,894 | 23 | - | 30,025 | 11,357 | 21,964 | (8,358 | ) | (b,d | ) | 54,988 | - | (6,709 | ) |
(d)
|
48,279 | |||||||||||||||||||||||||||||||||||||
Other
revenue
|
459 | 39,303 | 61,910 | (66,778 | ) |
(b)
|
34,894 | - | 5,764 | (893 | ) |
(b)
|
39,765 | 1,270 | (710 | ) |
(b)
|
40,325 | ||||||||||||||||||||||||||||||||||||
Total
revenues
|
5,567 | 1,883,793 | 63,746 | (66,778 | ) | 1,886,328 | 37,358 | 148,080 | (10,770 | ) | 2,060,996 | 46,239 | (19,710 | ) | 2,087,525 | |||||||||||||||||||||||||||||||||||||||
Costs
and expenses:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating
expenses
|
12,722 | 1,085,602 | 6,197 | (66,778 | ) |
(b)
|
1,037,743 | 10,769 | 27,009 | (13,479 | ) | (b, c, d | ) | 1,062,042 | 22,909 | (2,793 | ) |
(g)
|
1,082,158 | |||||||||||||||||||||||||||||||||||
Commission
expenses
|
- | 175,459 | - | - | 175,459 | - | - | - | 175,459 | - | (9,498 | ) |
(b)
|
165,961 | ||||||||||||||||||||||||||||||||||||||||
Cost
of sales
|
- | 105,872 | - | - | 105,872 | - | - | - | 105,872 | 7,263 | - | 113,135 | ||||||||||||||||||||||||||||||||||||||||||
Benefits
and losses
|
- | - | - | - | - | 22,590 | 85,732 | 8,838 |
(c)
|
117,160 | - | - | 117,160 | |||||||||||||||||||||||||||||||||||||||||
Amortization
of deferred policy acquisition costs
|
- | - | - | - | - | 2,855 | 21,406 | - | 24,261 | - | - | 24,261 | ||||||||||||||||||||||||||||||||||||||||||
Lease
expense
|
81 | 143,344 | 66 | - | 143,491 | - | - | (6,129 | ) |
(b)
|
137,362 | - | (710 | ) |
(b)
|
136,652 | ||||||||||||||||||||||||||||||||||||||
Depreciation,
net of (gains) losses on disposals
|
79 | 131,803 | 9,071 | - | 140,953 | - | - | - | 140,953 | 2,424 | (560 | ) |
(e)
|
142,817 | ||||||||||||||||||||||||||||||||||||||||
Total
costs and expenses
|
12,882 | 1,642,080 | 15,334 | (66,778 | ) | 1,603,518 | 36,214 | 134,147 | (10,770 | ) | 1,763,109 | 32,596 | (13,561 | ) | 1,782,144 | |||||||||||||||||||||||||||||||||||||||
Equity
in earnings of subsidiaries
|
163,004 | - | - | (153,424 | ) |
(f)
|
9,580 | - | - | (9,580 | ) |
(f)
|
- | - | - | - | ||||||||||||||||||||||||||||||||||||||
Equity
in earnings of SAC Holding II
|
384 | - | - | - | 384 | - | - | - | 384 | - | (384 | ) |
(f)
|
- | ||||||||||||||||||||||||||||||||||||||||
Total
- equity in earnings of subsidiaries and SAC Holding II
|
163,388 | - | - | (153,424 | ) | 9,964 | - | - | (9,580 | ) | 384 | - | (384 | ) | - | |||||||||||||||||||||||||||||||||||||||
Earnings
from operations
|
156,073 | 241,713 | 48,412 | (153,424 | ) | 292,774 | 1,144 | 13,933 | (9,580 | ) | 298,271 | 13,643 | (6,533 | ) | 305,381 | |||||||||||||||||||||||||||||||||||||||
Interest
expense
|
(24,636 | ) | (14,383 | ) | (24,331 | ) | - | (63,350 | ) | - | - | - | (63,350 | ) | (12,840 | ) | 6,709 |
(d)
|
(69,481 | ) | ||||||||||||||||||||||||||||||||||
Fees
and amortization on early extinguishment of debt
|
(35,627 | ) | - | - | - | (35,627 | ) | - | - | - | (35,627 | ) | - | - | (35,627 | ) | ||||||||||||||||||||||||||||||||||||||
Pretax
earnings
|
95,810 | 227,330 | 24,081 | (153,424 | ) | 193,797 | 1,144 | 13,933 | (9,580 | ) | 199,294 | 803 | 176 | 200,273 | ||||||||||||||||||||||||||||||||||||||||
Income
tax benefit (expense)
|
24,996 | (87,910 | ) | (10,077 | ) | - | (72,991 | ) | (513 | ) | (4,984 | ) | - | (78,488 | ) | (419 | ) | (212 | ) |
(e)
|
(79,119 | ) | ||||||||||||||||||||||||||||||||
Net
earnings
|
120,806 | 139,420 | 14,004 | (153,424 | ) | 120,806 | 631 | 8,949 | (9,580 | ) | 120,806 | 384 | (36 | ) | 121,154 | |||||||||||||||||||||||||||||||||||||||
Less: Preferred
stock dividends
|
(12,963 | ) | - | - | - | (12,963 | ) | - | - | - | (12,963 | ) | - | - | (12,963 | ) | ||||||||||||||||||||||||||||||||||||||
Earnings
available to common shareholders
|
$ | 107,843 | $ | 139,420 | $ | 14,004 | $ | (153,424 | ) | $ | 107,843 | $ | 631 | $ | 8,949 | $ | (9,580 | ) | $ | 107,843 | $ | 384 | $ | (36 | ) | $ | 108,191 | |||||||||||||||||||||||||||
(a) Balances
for the year ended December 31, 2005
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
(b)
Eliminate intercompany lease income and commission income
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
(c )
Eliminate intercompany premiums and expenses
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
(d)
Eliminate intercompany interest on debt
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
(e)
Eliminate gain on sale of surplus property from U-Haul to SAC Holding
II
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
(f)
Eliminate equity in earnings of subsidiaries and equity in earnings of SAC
Holding II
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
(g)
Eliminate management fees charged to SAC Holding II and other intercompany
operating expenses
|
F-46
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Consolidating
cash flow statements by industry segment for the year ended March 31, 2008, are
as follows:
Moving
& Storage
|
AMERCO
Legal Group
|
AMERCO
as Consolidated
|
||||||||||||||||||||||||||||||||||||||||||||||
AMERCO
|
U-Haul
|
Real
Estate
|
Elimination
|
Moving
& Storage
Consolidated
|
Property
&
Casualty
Insurance
(a)
|
Life
Insurance
(a)
|
Elimination
|
AMERCO
Consolidated
|
SAC
Holding II (b)
|
Elimination
|
Total
Consolidated
|
|||||||||||||||||||||||||||||||||||||
Cash
flows from operating activities:
|
(In
thousands)
|
|||||||||||||||||||||||||||||||||||||||||||||||
Net
earnings (loss)
|
$ | 67,581 | $ | (10,156 | ) | $ | 6,070 | $ | 4,086 | $ | 67,581 | $ | 5,909 | $ | 13,603 | $ | (19,512 | ) | $ | 67,581 | $ | 222 | $ | (19 | ) | $ | 67,784 | |||||||||||||||||||||
Earnings
from consolidated entities
|
(15,648 | ) | - | - | (4,086 | ) | (19,734 | ) | - | - | 19,512 | (222 | ) | - | 222 | - | ||||||||||||||||||||||||||||||||
Adjustments
to reconcile net earnings to cash provided by operations:
|
||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation
|
515 | 214,246 | 11,730 | - | 226,491 | - | - | - | 226,491 | 1,634 | (327 | ) | 227,798 | |||||||||||||||||||||||||||||||||||
Amortization
of deferred policy acquisition costs
|
- | - | - | - | - | 190 | 12,991 | - | 13,181 | - | - | 13,181 | ||||||||||||||||||||||||||||||||||||
Change
in allowance for losses on trade receivables
|
- | 23 | - | - | 23 | - | 53 | - | 76 | - | - | 76 | ||||||||||||||||||||||||||||||||||||
Change
in allowance for losses on mortgage notes
|
- | (39 | ) | - | - | (39 | ) | - | - | - | (39 | ) | - | - | (39 | ) | ||||||||||||||||||||||||||||||||
Provision
for inventory reserve
|
- | 2,746 | - | - | 2,746 | - | - | - | 2,746 | - | - | 2,746 | ||||||||||||||||||||||||||||||||||||
Net
(gain) loss on sale of real and personal property
|
- | 6,450 | (12,206 | ) | - | (5,756 | ) | - | - | - | (5,756 | ) | (160 | ) | - | (5,916 | ) | |||||||||||||||||||||||||||||||
Net
loss on sale of investments
|
- | - | - | - | - | 51 | 241 | - | 292 | - | - | 292 | ||||||||||||||||||||||||||||||||||||
Write-off
of unamortized debt issuance costs
|
- | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||
Deferred
income taxes
|
(11,222 | ) | 91 | - | - | (11,131 | ) | 4,318 | (3,488 | ) | - | (10,301 | ) | 146 | 124 | (10,031 | ) | |||||||||||||||||||||||||||||||
Net
change in other operating assets and liabilities:
|
||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance
recoverables and trade receivables
|
- | (2,209 | ) | - | - | (2,209 | ) | (15,133 | ) | 766 | - | (16,576 | ) | - | - | (16,576 | ) | |||||||||||||||||||||||||||||||
Inventories
|
- | (2,449 | ) | - | - | (2,449 | ) | - | - | - | (2,449 | ) | 4 | - | (2,445 | ) | ||||||||||||||||||||||||||||||||
Prepaid
expenses
|
6,665 | (10,847 | ) | (203 | ) | - | (4,385 | ) | - | - | - | (4,385 | ) | 47 | - | (4,338 | ) | |||||||||||||||||||||||||||||||
Capitalization
of deferred policy acquisition costs
|
- | - | - | - | - | (24 | ) | (7,455 | ) | - | (7,479 | ) | - | - | (7,479 | ) | ||||||||||||||||||||||||||||||||
Other
assets
|
4 | 3,602 | 1,470 | - | 5,076 | (1,065 | ) | 290 | - | 4,301 | (1,008 | ) | - | 3,293 | ||||||||||||||||||||||||||||||||||
Related
party assets
|
6,007 | 6,493 | 12,645 | - | 25,145 | 2,842 | 5,040 | - | 33,027 | 5 | - | 33,032 | ||||||||||||||||||||||||||||||||||||
Accounts
payable and accrued expenses
|
7,571 | 20,200 | (4,316 | ) | - | 23,455 | - | (1,231 | ) | - | 22,224 | 680 | - | 22,904 | ||||||||||||||||||||||||||||||||||
Policy
benefits and losses, claims and loss expenses payable
|
- | 29,747 | - | - | 29,747 | 77 | (9,160 | ) | - | 20,664 | - | - | 20,664 | |||||||||||||||||||||||||||||||||||
Other
policyholders' funds and liabilities
|
- | - | - | - | - | (779 | ) | 683 | - | (96 | ) | - | - | (96 | ) | |||||||||||||||||||||||||||||||||
Deferred
income
|
- | (3,948 | ) | - | - | (3,948 | ) | - | - | - | (3,948 | ) | (48 | ) | - | (3,996 | ) | |||||||||||||||||||||||||||||||
Related
party liabilities
|
- | (6,220 | ) | - | - | (6,220 | ) | (363 | ) | (5,271 | ) | - | (11,854 | ) | 287 | - | (11,567 | ) | ||||||||||||||||||||||||||||||
Net
cash provided (used) by operating activities
|
61,473 | 247,730 | 15,190 | - | 324,393 | (3,977 | ) | 7,062 | - | 327,478 | 1,809 | - | 329,287 | |||||||||||||||||||||||||||||||||||
Cash
flows from investing activities:
|
||||||||||||||||||||||||||||||||||||||||||||||||
Purchases
of:
|
||||||||||||||||||||||||||||||||||||||||||||||||
Property,
plant and equipment
|
(1,841 | ) | (507,883 | ) | (59,105 | ) | - | (568,829 | ) | - | - | - | (568,829 | ) | (1,381 | ) | - | (570,210 | ) | |||||||||||||||||||||||||||||
Short
term investments
|
- | - | - | - | - | (82,179 | ) | (163,166 | ) | - | (245,345 | ) | - | - | (245,345 | ) | ||||||||||||||||||||||||||||||||
Fixed
maturities investments
|
- | - | - | - | - | (29,692 | ) | (53,959 | ) | - | (83,651 | ) | - | - | (83,651 | ) | ||||||||||||||||||||||||||||||||
Equity
securities
|
- | - | - | - | - | - | (31 | ) | - | (31 | ) | - | - | (31 | ) | |||||||||||||||||||||||||||||||||
Preferred
stock
|
- | - | - | - | - | - | (770 | ) | - | (770 | ) | - | - | (770 | ) | |||||||||||||||||||||||||||||||||
Real
estate
|
- | - | (2,801 | ) | - | (2,801 | ) | (297 | ) | - | - | (3,098 | ) | - | - | (3,098 | ) | |||||||||||||||||||||||||||||||
Mortgage
loans
|
- | - | (497 | ) | - | (497 | ) | (1,650 | ) | (11,910 | ) | - | (14,057 | ) | - | - | (14,057 | ) | ||||||||||||||||||||||||||||||
Proceeds
from sales of:
|
||||||||||||||||||||||||||||||||||||||||||||||||
Property,
plant and equipment
|
- | 143,537 | 22,458 | - | 165,995 | - | - | - | 165,995 | 391 | - | 166,386 | ||||||||||||||||||||||||||||||||||||
Short
term investments
|
- | - | - | - | - | 77,417 | 168,758 | - | 246,175 | - | - | 246,175 | ||||||||||||||||||||||||||||||||||||
Fixed
maturities investments
|
- | - | - | - | - | 37,359 | 94,434 | - | 131,793 | - | - | 131,793 | ||||||||||||||||||||||||||||||||||||
Equity
securities
|
- | - | - | - | - | - | 46 | - | 46 | - | - | 46 | ||||||||||||||||||||||||||||||||||||
Preferred
stock
|
- | - | - | - | - | 5,000 | 625 | - | 5,625 | - | - | 5,625 | ||||||||||||||||||||||||||||||||||||
Real
estate
|
- | 281 | - | - | 281 | 631 | - | - | 912 | - | - | 912 | ||||||||||||||||||||||||||||||||||||
Mortgage
loans
|
- | - | - | - | - | 8 | 8,138 | - | 8,146 | - | - | 8,146 | ||||||||||||||||||||||||||||||||||||
Payments
from notes and mortgage receivables
|
- | 117 | - | - | 117 | - | - | - | 117 | - | - | 117 | ||||||||||||||||||||||||||||||||||||
Net
cash provided (used) by investing activities
|
(1,841 | ) | (363,948 | ) | (39,945 | ) | - | (405,734 | ) | 6,597 | 42,165 | - | (356,972 | ) | (990 | ) | - | (357,962 | ) | |||||||||||||||||||||||||||||
(page
1 of 2)
|
||||||||||||||||||||||||||||||||||||||||||||||||
(a)
Balance for the period ended December 31, 2007
|
||||||||||||||||||||||||||||||||||||||||||||||||
(b)
Activity for the seven months ending October 31, 2007, prior to
deconsolidation
|
F-47
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Continuation
of consolidating cash flow statements by industry segment for the year ended
March 31, 2008, are as follows:
Moving
& Storage
|
AMERCO
Legal Group
|
AMERCO
as Consolidated
|
||||||||||||||||||||||||||||||||||||||||||||||
AMERCO
|
U-Haul
|
Real
Estate
|
Elimination
|
Moving
& Storage
Consolidated
|
Property
&
Casualty
Insurance
(a)
|
Life
Insurance
(a)
|
Elimination
|
AMERCO
Consolidated
|
SAC
Holding II (b)
|
Elimination
|
Total
Consolidated
|
|||||||||||||||||||||||||||||||||||||
Cash
flows from financing activities:
|
(In
thousands)
|
|||||||||||||||||||||||||||||||||||||||||||||||
Borrowings
from credit facilities
|
- | 415,308 | 201,402 | - | 616,710 | - | - | - | 616,710 | - | - | 616,710 | ||||||||||||||||||||||||||||||||||||
Principal
repayments on credit facilities
|
- | (192,603 | ) | (101,965 | ) | - | (294,568 | ) | - | - | - | (294,568 | ) | (819 | ) | - | (295,387 | ) | ||||||||||||||||||||||||||||||
Debt
issuance costs
|
- | (11,806 | ) | (170 | ) | - | (11,976 | ) | - | - | - | (11,976 | ) | - | - | (11,976 | ) | |||||||||||||||||||||||||||||||
Leveraged
Employee Stock Ownership Plan - repayments from loan
|
- | 1,239 | - | - | 1,239 | - | - | - | 1,239 | - | - | 1,239 | ||||||||||||||||||||||||||||||||||||
Treasury
stock repurchases
|
(57,478 | ) | - | - | - | (57,478 | ) | - | - | - | (57,478 | ) | - | - | (57,478 | ) | ||||||||||||||||||||||||||||||||
Securitization
deposits
|
- | (32,775 | ) | - | - | (32,775 | ) | - | - | - | (32,775 | ) | - | - | (32,775 | ) | ||||||||||||||||||||||||||||||||
Proceeds
from (repayment of) intercompany loans
|
10,830 | 64,489 | (75,319 | ) | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||
Preferred
stock dividends paid
|
(12,963 | ) | - | - | - | (12,963 | ) | - | - | - | (12,963 | ) | - | - | (12,963 | ) | ||||||||||||||||||||||||||||||||
Investment
contract deposits
|
- | - | - | - | - | - | 18,077 | - | 18,077 | - | - | 18,077 | ||||||||||||||||||||||||||||||||||||
Investment
contract withdrawals
|
- | - | - | - | - | - | (65,518 | ) | - | (65,518 | ) | - | - | (65,518 | ) | |||||||||||||||||||||||||||||||||
Net
cash provided (used) by financing activities
|
(59,611 | ) | 243,852 | 23,948 | - | 208,189 | - | (47,441 | ) | - | 160,748 | (819 | ) | - | 159,929 | |||||||||||||||||||||||||||||||||
Effects
of exchange rate on cash
|
- | 96 | - | - | 96 | - | - | - | 96 | - | - | 96 | ||||||||||||||||||||||||||||||||||||
Increase
(decrease) in cash and cash equivalents
|
21 | 127,730 | (807 | ) | - | 126,944 | 2,620 | 1,786 | - | 131,350 | - | - | 131,350 | |||||||||||||||||||||||||||||||||||
Cash
and cash equivalents at beginning of period
|
9 | 63,490 | 807 | - | 64,306 | 4,228 | 6,738 | - | 75,272 | - | - | 75,272 | ||||||||||||||||||||||||||||||||||||
Cash
and cash equivalents at end of period
|
$ | 30 | $ | 191,220 | $ | - | $ | - | $ | 191,250 | $ | 6,848 | $ | 8,524 | $ | - | $ | 206,622 | $ | - | $ | - | $ | 206,622 | ||||||||||||||||||||||||
(page
2 of 2)
|
||||||||||||||||||||||||||||||||||||||||||||||||
(a)
Balance for the period ended December 31, 2007
|
||||||||||||||||||||||||||||||||||||||||||||||||
(b)
Activity for the seven months ending October 31, 2007, prior to
deconsolidation
|
F-48
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Consolidating
cash flow statements by industry segment for the year ended March 31, 2007, are
as follows:
Moving
& Storage
|
AMERCO
Legal Group
|
AMERCO as Consolidated | ||||||||||||||||||||||||||||||||||||||||||||||
AMERCO
|
U-Haul
|
Real
Estate
|
Elimination
|
Moving
& Storage
Consolidated
|
Property
&
Casualty
Insurance
(a)
|
Life
Insurance
(a)
|
Elimination
|
AMERCO
Consolidated
|
SAC
Holding II
|
Elimination
|
Total
Consolidated
|
|||||||||||||||||||||||||||||||||||||
Cash
flows from operating activities:
|
(In
thousands)
|
|||||||||||||||||||||||||||||||||||||||||||||||
Net
earnings (loss)
|
$ | 90,205 | $ | 30,104 | $ | (4,338 | ) | $ | (25,766 | ) | $ | 90,205 | $ | (155 | ) | $ | 9,658 | $ | (9,503 | ) | $ | 90,205 | $ | 527 | $ | (179 | ) | $ | 90,553 | |||||||||||||||||||
Earnings
from consolidated entities
|
(35,796 | ) | - | - | 25,766 | (10,030 | ) | - | - | 9,503 | (527 | ) | - | 527 | - | |||||||||||||||||||||||||||||||||
Adjustments
to reconcile net earnings to cash provided by operations:
|
||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation
|
293 | 172,698 | 10,984 | - | 183,975 | - | - | - | 183,975 | 2,691 | (560 | ) | 186,106 | |||||||||||||||||||||||||||||||||||
Amortization
of deferred policy acquisition costs
|
- | - | - | - | - | 2,057 | 15,081 | - | 17,138 | - | - | 17,138 | ||||||||||||||||||||||||||||||||||||
Changes
in allowance for losses on trade receivables
|
- | (145 | ) | - | - | (145 | ) | - | 194 | - | 49 | - | - | 49 | ||||||||||||||||||||||||||||||||||
Changes
in allowance for losses on mortgage notes
|
- | (40 | ) | - | - | (40 | ) | - | - | - | (40 | ) | - | - | (40 | ) | ||||||||||||||||||||||||||||||||
Provision
for inventory reserves
|
- | 2,679 | - | - | 2,679 | - | - | - | 2,679 | - | - | 2,679 | ||||||||||||||||||||||||||||||||||||
Net
(gain) loss on sale of real and personal property
|
- | 7,862 | (4,379 | ) | - | 3,483 | - | - | - | 3,483 | - | - | 3,483 | |||||||||||||||||||||||||||||||||||
Net
loss on sale of investments
|
- | - | - | - | - | 559 | 63 | - | 622 | - | - | 622 | ||||||||||||||||||||||||||||||||||||
Write-off
of unamortized debt issuance costs
|
- | 302 | 6,667 | - | 6,969 | - | - | - | 6,969 | - | - | 6,969 | ||||||||||||||||||||||||||||||||||||
Deferred
income taxes
|
5,239 | (19 | ) | - | - | 5,220 | 5,292 | (4,456 | ) | - | 6,056 | 704 | 212 | 6,972 | ||||||||||||||||||||||||||||||||||
Net
change in other operating assets and liabilities:
|
||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance
recoverables and trade receivables
|
- | (859 | ) | (2 | ) | - | (861 | ) | 44,736 | 5,032 | - | 48,907 | - | - | 48,907 | |||||||||||||||||||||||||||||||||
Inventories
|
- | (4,718 | ) | - | - | (4,718 | ) | - | - | - | (4,718 | ) | (43 | ) | - | (4,761 | ) | |||||||||||||||||||||||||||||||
Prepaid
expenses
|
(9,122 | ) | 1,193 | (30 | ) | - | (7,959 | ) | - | - | - | (7,959 | ) | (246 | ) | - | (8,205 | ) | ||||||||||||||||||||||||||||||
Capitalization
of deferred policy acquisition costs
|
- | - | - | - | - | (1,093 | ) | (7,075 | ) | - | (8,168 | ) | - | - | (8,168 | ) | ||||||||||||||||||||||||||||||||
Other
assets
|
(10 | ) | 1,111 | 2,182 | - | 3,283 | 284 | (395 | ) | - | 3,172 | (243 | ) | - | 2,929 | |||||||||||||||||||||||||||||||||
Related
party assets
|
(1,479 | ) | (12,973 | ) | 8 | - | (14,444 | ) | 14,384 | 5,781 | - | 5,721 | 2,895 | - | 8,616 | |||||||||||||||||||||||||||||||||
Accounts
payable and accrued expenses
|
(19,561 | ) | 33,125 | 4,312 | - | 17,876 | - | 4,451 | - | 22,327 | 331 | - | 22,658 | |||||||||||||||||||||||||||||||||||
Policy
benefits and losses, claims and loss expenses payable
|
- | 35,298 | - | - | 35,298 | (61,719 | ) | (13,748 | ) | - | (40,169 | ) | - | - | (40,169 | ) | ||||||||||||||||||||||||||||||||
Other
policyholders' funds and liabilities
|
- | - | - | - | - | 2,411 | 298 | - | 2,709 | - | - | 2,709 | ||||||||||||||||||||||||||||||||||||
Deferred
income
|
- | 1,215 | - | - | 1,215 | - | - | - | 1,215 | 51 | - | 1,266 | ||||||||||||||||||||||||||||||||||||
Related
party liabilities
|
(201 | ) | 19,878 | - | - | 19,677 | (1,317 | ) | (3,507 | ) | - | 14,853 | (4,445 | ) | - | 10,408 | ||||||||||||||||||||||||||||||||
Net
cash provided (used) by operating activities
|
29,568 | 286,711 | 15,404 | - | 331,683 | 5,439 | 11,377 | - | 348,499 | 2,222 | - | 350,721 | ||||||||||||||||||||||||||||||||||||
Cash
flows from investing activities:
|
||||||||||||||||||||||||||||||||||||||||||||||||
Purchases
of:
|
||||||||||||||||||||||||||||||||||||||||||||||||
Property,
plant and equipment
|
(1,998 | ) | (586,737 | ) | (58,477 | ) | - | (647,212 | ) | - | - | - | (647,212 | ) | (1,132 | ) | - | (648,344 | ) | |||||||||||||||||||||||||||||
Short
term investments
|
- | - | - | - | - | (83,277 | ) | (166,115 | ) | - | (249,392 | ) | - | - | (249,392 | ) | ||||||||||||||||||||||||||||||||
Fixed
maturity investments
|
- | - | - | - | - | (71,630 | ) | (38,042 | ) | - | (109,672 | ) | - | - | (109,672 | ) | ||||||||||||||||||||||||||||||||
Mortgage
loans
|
- | - | - | - | - | - | (10,725 | ) | - | (10,725 | ) | - | - | (10,725 | ) | |||||||||||||||||||||||||||||||||
Proceeds
from sales of:
|
||||||||||||||||||||||||||||||||||||||||||||||||
Property,
plant and equipment
|
- | 85,134 | 4,538 | - | 89,672 | - | - | - | 89,672 | - | - | 89,672 | ||||||||||||||||||||||||||||||||||||
Short
term investments
|
- | - | - | - | - | 111,936 | 164,754 | - | 276,690 | - | - | 276,690 | ||||||||||||||||||||||||||||||||||||
Fixed
maturity investments
|
- | - | - | - | - | 22,409 | 94,449 | - | 116,858 | - | - | 116,858 | ||||||||||||||||||||||||||||||||||||
Cash
received in excess of purchase of company acquired
|
- | - | - | - | - | - | 1,235 | - | 1,235 | - | - | 1,235 | ||||||||||||||||||||||||||||||||||||
Preferred
stock
|
- | - | - | - | - | - | 1,225 | - | 1,225 | - | - | 1,225 | ||||||||||||||||||||||||||||||||||||
Real
estate
|
- | 195 | (2,861 | ) | - | (2,666 | ) | 9,536 | - | - | 6,870 | - | - | 6,870 | ||||||||||||||||||||||||||||||||||
Mortgage
loans
|
- | - | - | - | - | - | 7,062 | - | 7,062 | - | - | 7,062 | ||||||||||||||||||||||||||||||||||||
Payments
from notes and mortgage receivables
|
- | 136 | 766 | - | 902 | - | - | - | 902 | - | - | 902 | ||||||||||||||||||||||||||||||||||||
Net
cash provided (used) by investing activities
|
(1,998 | ) | (501,272 | ) | (56,034 | ) | - | (559,304 | ) | (11,026 | ) | 53,843 | - | (516,487 | ) | (1,132 | ) | - | (517,619 | ) | ||||||||||||||||||||||||||||
(page
1 of 2)
|
||||||||||||||||||||||||||||||||||||||||||||||||
(a)
Balance for the year ended December 31, 2006
|
F-49
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Continuation
of consolidating cash flow statements by industry segment for the year ended
March 31, 2007, are as follows:
Moving
& Storage
|
AMERCO
Legal Group
|
AMERCO as Consolidated | ||||||||||||||||||||||||||||||||||||||||||||||
AMERCO
|
U-Haul
|
Real
Estate
|
Elimination
|
Moving
& Storage
Consolidated
|
Property
&
Casualty
Insurance
(a)
|
Life
Insurance
(a)
|
Elimination
|
AMERCO
Consolidated
|
SAC
Holding II
|
Elimination
|
Total
Consolidated
|
|||||||||||||||||||||||||||||||||||||
Cash
flows from financing activities:
|
(In
thousands)
|
|||||||||||||||||||||||||||||||||||||||||||||||
Borrowings
from credit facilities
|
- | 345,760 | 64,429 | - | 410,189 | - | - | - | 410,189 | - | - | 410,189 | ||||||||||||||||||||||||||||||||||||
Principal
repayments on credit facilities
|
- | (151,511 | ) | (43,216 | ) | - | (194,727 | ) | - | - | - | (194,727 | ) | (1,345 | ) | - | (196,072 | ) | ||||||||||||||||||||||||||||||
Debt
issuance costs
|
- | (3,281 | ) | 223 | - | (3,058 | ) | - | - | - | (3,058 | ) | - | - | (3,058 | ) | ||||||||||||||||||||||||||||||||
Leveraged
Employee Stock Ownership Plan - repayments from loan
|
- | 1,204 | - | - | 1,204 | - | - | - | 1,204 | - | - | 1,204 | ||||||||||||||||||||||||||||||||||||
Treasury
stock repurchases
|
(49,106 | ) | - | - | - | (49,106 | ) | - | - | - | (49,106 | ) | - | - | (49,106 | ) | ||||||||||||||||||||||||||||||||
Proceeds
from (repayment of) intercompany loans
|
34,501 | (53,646 | ) | 19,145 | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||
Preferred
stock dividends paid
|
(12,963 | ) | - | - | - | (12,963 | ) | - | - | - | (12,963 | ) | - | - | (12,963 | ) | ||||||||||||||||||||||||||||||||
Investment
contract deposits
|
- | - | - | - | - | - | 16,695 | - | 16,695 | - | - | 16,695 | ||||||||||||||||||||||||||||||||||||
Investment
contract withdrawals
|
- | - | - | - | - | - | (79,204 | ) | - | (79,204 | ) | - | - | (79,204 | ) | |||||||||||||||||||||||||||||||||
Net
cash provided (used) by financing activities
|
(27,568 | ) | 138,526 | 40,581 | - | 151,539 | - | (62,509 | ) | - | 89,030 | (1,345 | ) | - | 87,685 | |||||||||||||||||||||||||||||||||
Effects
of exchange rate on cash
|
- | (974 | ) | - | - | (974 | ) | - | - | - | (974 | ) | - | - | (974 | ) | ||||||||||||||||||||||||||||||||
Increase
(decrease) in cash and cash equivalents
|
2 | (77,009 | ) | (49 | ) | - | (77,056 | ) | (5,587 | ) | 2,711 | - | (79,932 | ) | (255 | ) | - | (80,187 | ) | |||||||||||||||||||||||||||||
Cash
and cash equivalents at beginning of period
|
7 | 140,499 | 856 | - | 141,362 | 9,815 | 4,027 | - | 155,204 | 255 | - | 155,459 | ||||||||||||||||||||||||||||||||||||
Cash
and cash equivalents at end of period
|
$ | 9 | $ | 63,490 | $ | 807 | $ | - | $ | 64,306 | $ | 4,228 | $ | 6,738 | $ | - | $ | 75,272 | $ | - | $ | - | $ | 75,272 | ||||||||||||||||||||||||
(page
2 of 2)
|
||||||||||||||||||||||||||||||||||||||||||||||||
(a)
Balance for the year ended December 31, 2006
|
F-50
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Consolidating
cash flow statements by industry segment for the year ended March 31, 2006 are
as follows:
Moving
& Storage
|
AMERCO
Legal Group
|
AMERCO as Consolidated | ||||||||||||||||||||||||||||||||||||||||||||||
AMERCO
|
U-Haul
|
Real
Estate
|
Elimination
|
Moving
& Storage
Consolidated
|
Property
&
Casualty
Insurance
(a)
|
Life
Insurance
(a)
|
Elimination
|
AMERCO
Consolidated
|
SAC
Holding II
|
Elimination
|
Total
Consolidated
|
|||||||||||||||||||||||||||||||||||||
Cash
flows from operating activities:
|
(In
thousands)
|
|||||||||||||||||||||||||||||||||||||||||||||||
Net
earnings (loss)
|
$ | 120,806 | $ | 139,420 | $ | 14,004 | $ | (153,424 | ) | $ | 120,806 | $ | 631 | $ | 8,949 | $ | (9,580 | ) | $ | 120,806 | $ | 384 | $ | (36 | ) | $ | 121,154 | |||||||||||||||||||||
Earnings
from consolidated entities
|
(163,388 | ) | - | - | 153,424 | (9,964 | ) | - | - | 9,580 | (384 | ) | - | 384 | - | |||||||||||||||||||||||||||||||||
Adjustments
to reconcile net earnings to cash provided by operations:
|
||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation
|
79 | 121,942 | 9,687 | - | 131,708 | - | - | - | 131,708 | 2,424 | (560 | ) | 133,572 | |||||||||||||||||||||||||||||||||||
Amortization
of deferred policy acquisition costs
|
- | - | - | - | - | 2,855 | 21,406 | - | 24,261 | - | - | 24,261 | ||||||||||||||||||||||||||||||||||||
Change
in allowance for losses on trade receivables
|
- | (188 | ) | - | - | (188 | ) | - | 5 | - | (183 | ) | - | - | (183 | ) | ||||||||||||||||||||||||||||||||
Change
in allowance for losses on mortgage notes
|
- | (2,230 | ) | - | - | (2,230 | ) | - | - | - | (2,230 | ) | - | - | (2,230 | ) | ||||||||||||||||||||||||||||||||
Provision
for inventory reserve
|
- | 2,458 | - | - | 2,458 | - | - | - | 2,458 | - | - | 2,458 | ||||||||||||||||||||||||||||||||||||
Net
(gain) loss on sale of real and personal property
|
- | 9,861 | (616 | ) | - | 9,245 | - | - | - | 9,245 | - | - | 9,245 | |||||||||||||||||||||||||||||||||||
Net
loss on sale of investments
|
- | - | - | - | - | 1,377 | 1,031 | - | 2,408 | - | - | 2,408 | ||||||||||||||||||||||||||||||||||||
Write-off
of unamortized debt issuance costs
|
13,629 | - | - | - | 13,629 | - | - | - | 13,629 | - | - | 13,629 | ||||||||||||||||||||||||||||||||||||
Deferred
income taxes
|
22,940 | (8 | ) | - | - | 22,932 | 3,526 | (300 | ) | - | 26,158 | 2,006 | 265 | 28,429 | ||||||||||||||||||||||||||||||||||
Net
change in other operating assets and liabilities:
|
||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance
recoverables and trade receivables
|
- | (3,999 | ) | 1 | - | (3,998 | ) | 11,913 | 2,746 | - | 10,661 | - | - | 10,661 | ||||||||||||||||||||||||||||||||||
Inventories
|
- | (3,431 | ) | - | - | (3,431 | ) | - | - | - | (3,431 | ) | (165 | ) | - | (3,596 | ) | |||||||||||||||||||||||||||||||
Prepaid
expenses
|
3,142 | (32,052 | ) | - | - | (28,910 | ) | - | - | - | (28,910 | ) | 101 | - | (28,809 | ) | ||||||||||||||||||||||||||||||||
Capitalization
of deferred policy acquisition costs
|
- | - | - | - | - | (2,742 | ) | (9,368 | ) | - | (12,110 | ) | - | - | (12,110 | ) | ||||||||||||||||||||||||||||||||
Other
assets
|
576 | 10,345 | (14,684 | ) | - | (3,763 | ) | 1,661 | 777 | - | (1,325 | ) | (132 | ) | - | (1,457 | ) | |||||||||||||||||||||||||||||||
Related
party assets
|
(218 | ) | (14,223 | ) | (79 | ) | - | (14,520 | ) | 4,932 | (181 | ) | - | (9,769 | ) | (698 | ) | 2,377 | (8,090 | ) | ||||||||||||||||||||||||||||
Accounts
payable and accrued expenses
|
30,128 | 23,089 | (4,009 | ) | - | 49,208 | - | (12,735 | ) | - | 36,473 | 123 | - | 36,596 | ||||||||||||||||||||||||||||||||||
Policy
benefits and losses, claims and loss expenses payable
|
- | 46,514 | - | - | 46,514 | (38,423 | ) | (13,009 | ) | - | (4,918 | ) | - | - | (4,918 | ) | ||||||||||||||||||||||||||||||||
Other
policyholders' funds and liabilities
|
- | - | - | - | - | (3,447 | ) | (461 | ) | - | (3,908 | ) | - | - | (3,908 | ) | ||||||||||||||||||||||||||||||||
Deferred
income
|
- | 2,672 | (2 | ) | - | 2,670 | (6,007 | ) | 554 | - | (2,783 | ) | 195 | - | (2,588 | ) | ||||||||||||||||||||||||||||||||
Related
party liabilities
|
(447 | ) | (55,594 | ) | - | - | (56,041 | ) | (5,182 | ) | (140 | ) | 21,252 | (40,111 | ) | (1,475 | ) | (2,430 | ) | (44,016 | ) | |||||||||||||||||||||||||||
Net
cash provided (used) by operating activities
|
27,247 | 244,576 | 4,302 | - | 276,125 | (28,906 | ) | (726 | ) | 21,252 | 267,745 | 2,763 | - | 270,508 | ||||||||||||||||||||||||||||||||||
Cash
flows from investing activities:
|
||||||||||||||||||||||||||||||||||||||||||||||||
Purchases
of:
|
||||||||||||||||||||||||||||||||||||||||||||||||
Property,
plant and equipment
|
(2,298 | ) | (314,793 | ) | (65,025 | ) | - | (382,116 | ) | - | - | 39,358 | (342,758 | ) | (1,624 | ) | - | (344,382 | ) | |||||||||||||||||||||||||||||
Short
term investments
|
- | - | - | - | - | (245,950 | ) | (288,156 | ) | - | (534,106 | ) | - | - | (534,106 | ) | ||||||||||||||||||||||||||||||||
Fixed
maturity investments
|
- | - | - | - | - | (51,021 | ) | (209,117 | ) | - | (260,138 | ) | - | - | (260,138 | ) | ||||||||||||||||||||||||||||||||
Mortgage
loans
|
- | - | - | - | - | - | (8,868 | ) | - | (8,868 | ) | - | - | (8,868 | ) | |||||||||||||||||||||||||||||||||
Proceeds
from sales of:
|
||||||||||||||||||||||||||||||||||||||||||||||||
Property,
plant and equipment
|
- | 59,301 | 659 | - | 59,960 | - | - | - | 59,960 | - | - | 59,960 | ||||||||||||||||||||||||||||||||||||
Short
term investments
|
- | - | - | - | - | 229,590 | 371,260 | - | 600,850 | - | - | 600,850 | ||||||||||||||||||||||||||||||||||||
Fixed
maturity investments
|
- | - | - | - | - | 28,863 | 130,753 | - | 159,616 | - | - | 159,616 | ||||||||||||||||||||||||||||||||||||
Equity
securities
|
- | - | - | - | - | - | 6,769 | - | 6,769 | - | - | 6,769 | ||||||||||||||||||||||||||||||||||||
Preferred
stock
|
- | - | - | - | - | 10,030 | 1,620 | - | 11,650 | - | - | 11,650 | ||||||||||||||||||||||||||||||||||||
Real
estate
|
- | - | - | - | - | 56,571 | 19,175 | (39,358 | ) | 36,388 | - | - | 36,388 | |||||||||||||||||||||||||||||||||||
Mortgage
loans
|
- | - | - | - | - | - | 33,014 | (21,252 | ) | 11,762 | - | - | 11,762 | |||||||||||||||||||||||||||||||||||
Payments
from notes and mortgage receivables
|
- | 1,917 | (254 | ) | - | 1,663 | - | - | - | 1,663 | - | - | 1,663 | |||||||||||||||||||||||||||||||||||
Net
cash provided (used) by investing activities
|
(2,298 | ) | (253,575 | ) | (64,620 | ) | - | (320,493 | ) | 28,083 | 56,450 | (21,252 | ) | (257,212 | ) | (1,624 | ) | - | (258,836 | ) | ||||||||||||||||||||||||||||
(page
1 of 2)
|
||||||||||||||||||||||||||||||||||||||||||||||||
(a)
Balance for the year ended December 31, 2005
|
F-51
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Continuation
of consolidating cash flow statements by industry segment for the year ended
March 31, 2006 are as follows:
Moving
& Storage
|
AMERCO
Legal Group
|
AMERCO
as Consolidated
|
||||||||||||||||||||||||||||||||||||||||||||||
AMERCO
|
U-Haul
|
Real
Estate
|
Elimination
|
Moving
& Storage
Consolidated
|
Property
&
Casualty
Insurance
(a)
|
Life
Insurance
(a)
|
Elimination
|
AMERCO
Consolidated
|
SAC
Holding II
|
Elimination
|
Total
Consolidated
|
|||||||||||||||||||||||||||||||||||||
Cash
flows from financing activities:
|
(In
thousands)
|
|||||||||||||||||||||||||||||||||||||||||||||||
Borrowings
from credit facilities
|
80,266 | 244,447 | 952,334 | - | 1,277,047 | - | - | - | 1,277,047 | - | - | 1,277,047 | ||||||||||||||||||||||||||||||||||||
Principal
repayments on credit facilities
|
(860,274 | ) | (12,970 | ) | (218,856 | ) | - | (1,092,100 | ) | - | - | - | (1,092,100 | ) | (1,242 | ) | - | (1,093,342 | ) | |||||||||||||||||||||||||||||
Debt
issuance costs
|
- | (5,143 | ) | (24,445 | ) | - | (29,588 | ) | - | - | - | (29,588 | ) | - | - | (29,588 | ) | |||||||||||||||||||||||||||||||
Leveraged
Employee Stock Ownership Plan - repayments from loan
|
- | 1,553 | - | - | 1,553 | - | - | - | 1,553 | - | - | 1,553 | ||||||||||||||||||||||||||||||||||||
Proceeds
from (repayment of) intercompany loans
|
768,015 | (115,829 | ) | (652,186 | ) | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
Preferred
stock dividends paid
|
(12,963 | ) | - | - | - | (12,963 | ) | - | - | - | (12,963 | ) | - | - | (12,963 | ) | ||||||||||||||||||||||||||||||||
Investment
contract deposits
|
- | - | - | - | - | - | 20,322 | - | 20,322 | - | - | 20,322 | ||||||||||||||||||||||||||||||||||||
Investment
contract withdrawals
|
- | - | - | - | - | - | (75,011 | ) | - | (75,011 | ) | - | - | (75,011 | ) | |||||||||||||||||||||||||||||||||
Net
cash provided (used) by financing activities
|
(24,956 | ) | 112,058 | 56,847 | - | 143,949 | - | (54,689 | ) | - | 89,260 | (1,242 | ) | - | 88,018 | |||||||||||||||||||||||||||||||||
Effects
of exchange rate on cash
|
- | (186 | ) | - | - | (186 | ) | - | - | - | (186 | ) | - | - | (186 | ) | ||||||||||||||||||||||||||||||||
Increase
(decrease) in cash and cash equivalents
|
(7 | ) | 102,873 | (3,471 | ) | - | 99,395 | (823 | ) | 1,035 | - | 99,607 | (103 | ) | - | 99,504 | ||||||||||||||||||||||||||||||||
Cash
and cash equivalents at beginning of period
|
14 | 37,626 | 4,327 | - | 41,967 | 10,638 | 2,992 | - | 55,597 | 358 | - | 55,955 | ||||||||||||||||||||||||||||||||||||
Cash
and cash equivalents at end of period
|
$ | 7 | $ | 140,499 | $ | 856 | $ | - | $ | 141,362 | $ | 9,815 | $ | 4,027 | $ | - | $ | 155,204 | $ | 255 | $ | - | $ | 155,459 | ||||||||||||||||||||||||
(page
2 of 2)
|
||||||||||||||||||||||||||||||||||||||||||||||||
(a)
Balance for the year ended December 31, 2005
|
F-52
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Note
22: Subsequent Events
Preferred
Stock Dividends
On May 2,
2008, the Board of Directors of AMERCO, the holding Company for U-Haul
International, Inc., and other companies, declared a regular quarterly cash
dividend of $0.53125 per share on the Company’s Series A, 8 1/2 percent
Preferred Stock. The dividend was paid June 2, 2008 to holders of record on May
15, 2008.
F-53
CONDENSED
FINANCIAL INFORMATION OF AMERCO
|
BALANCE
SHEETS
|
March
31,
|
||||||||
2008
|
2007
|
|||||||
(In
thousands)
|
||||||||
ASSETS
|
||||||||
Cash
and cash equivalents
|
$ | 30 | $ | 9 | ||||
Investment
in subsidiaries
|
(234,927 | ) | (235,860 | ) | ||||
Investment
in SAC Holding II
|
- | (9,256 | ) | |||||
Related
party assets
|
1,164,092 | 1,180,929 | ||||||
Other
assets
|
4,578 | 15,146 | ||||||
Total
assets
|
$ | 933,773 | $ | 950,968 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Liabilities:
|
||||||||
Other
liabilities
|
$ | 168,447 | $ | 187,520 | ||||
168,447 | 187,520 | |||||||
Stockholders'
equity:
|
||||||||
Preferred
stock
|
- | - | ||||||
Common
stock
|
10,497 | 10,497 | ||||||
Additional
paid-in capital
|
419,370 | 421,483 | ||||||
Accumulated
other comprehensive loss
|
(55,279 | ) | (41,779 | ) | ||||
Retained
earnings:
|
||||||||
Beginning
of period
|
847,271 | 763,203 | ||||||
Net
earnings
|
67,581 | 90,205 | ||||||
Dividends
|
563 | (12,963 | ) | |||||
1,290,003 | 1,230,646 | |||||||
Less:
Cost of common shares in treasury
|
(524,677 | ) | (467,198 | ) | ||||
Total
stockholders' equity
|
765,326 | 763,448 | ||||||
Total
liabilities and stockholders' equity
|
$ | 933,773 | $ | 950,968 | ||||
The
accompanying notes are an integral part of these condensed consolidated
financial statements.
F-54
STATEMENTS
OF OPERATIONS
Year
Ended March 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
(In
thousands, except share and per share data)
|
||||||||||||
Revenues:
|
||||||||||||
Net
interest income from subsidiaries
|
$ | 4,498 | $ | 5,071 | $ | 5,567 | ||||||
Expenses:
|
||||||||||||
Operating
expenses
|
10,071 | 12,096 | 12,722 | |||||||||
Other
expenses
|
609 | 381 | 160 | |||||||||
Total
expenses
|
10,680 | 12,477 | 12,882 | |||||||||
Equity
in earnings of subsidiaries and SAC Holding II
|
15,648 | 35,796 | 163,388 | |||||||||
Interest
income (expense)
|
88,613 | 89,026 | (24,636 | ) | ||||||||
Fees
on early extinguishment of debt
|
- | - | (35,627 | ) | ||||||||
Pretax
earnings
|
98,079 | 117,416 | 95,810 | |||||||||
Income
tax benefit (expense)
|
(30,498 | ) | (27,211 | ) | 24,996 | |||||||
Net
earnings
|
67,581 | 90,205 | 120,806 | |||||||||
Less:
Preferred stock dividends
|
(12,963 | ) | (12,963 | ) | (12,963 | ) | ||||||
Earnings
available to common shareholders
|
$ | 54,618 | $ | 77,242 | $ | 107,843 | ||||||
Basic
and diluted earnings per common share
|
$ | 2.77 | $ | 3.71 | $ | 5.17 | ||||||
Weighted
average common shares outstanding: Basic and diluted
|
19,740,571 | 20,838,570 | 20,857,108 |
F-55
CONDENSED
FINANCIAL INFORMATION OF AMERCO
STATEMENTS
OF CASH FLOW
Year
Ended March 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
(In
thousands)
|
||||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
earnings
|
$ | 67,581 | $ | 90,205 | $ | 120,806 | ||||||
Change
in investments in subsidiaries and SAC Holding II
|
(15,648 | ) | (35,796 | ) | (163,388 | ) | ||||||
Adjustments
to reconcile net earnings to cash provided by operations:
|
||||||||||||
Depreciation
|
515 | 293 | 79 | |||||||||
Write-off
of unamortized debt issuance costs
|
- | - | 13,629 | |||||||||
Deferred
income taxes
|
(11,222 | ) | 5,239 | 22,940 | ||||||||
Net
change in other operating assets and liabilities:
|
||||||||||||
Prepaid
expenses
|
6,665 | (9,122 | ) | 3,142 | ||||||||
Other
assets
|
4 | (10 | ) | 576 | ||||||||
Related
party assets
|
6,007 | (1,479 | ) | (218 | ) | |||||||
Accounts
payable and accrued expenses
|
7,571 | (19,561 | ) | 30,128 | ||||||||
Related
party liabilities
|
- | (201 | ) | (447 | ) | |||||||
Net
cash provided by operating activities
|
61,473 | 29,568 | 27,247 | |||||||||
Cash
flows from investment activities:
|
||||||||||||
Purchase
of property, plant and equipment
|
(1,841 | ) | (1,998 | ) | (2,298 | ) | ||||||
Net
cash used by investing activities
|
(1,841 | ) | (1,998 | ) | (2,298 | ) | ||||||
Cash
flows from financing activities:
|
||||||||||||
Borrowings
from credit facilities
|
- | - | 80,266 | |||||||||
Principal
repayments on credit facilities
|
- | - | (860,274 | ) | ||||||||
Treasury
stock repurchases
|
(57,478 | ) | (49,106 | ) | - | |||||||
Proceeds
from intercompany loans
|
10,830 | 34,501 | 768,015 | |||||||||
Preferred
stock dividends paid
|
(12,963 | ) | (12,963 | ) | (12,963 | ) | ||||||
Net
cash used by financing activities
|
(59,611 | ) | (27,568 | ) | (24,956 | ) | ||||||
Increase
(decrease) in cash and cash equivalents
|
21 | 2 | (7 | ) | ||||||||
Cash
and cash equivalents at beginning of period
|
9 | 7 | 14 | |||||||||
Cash
and cash equivalents at end of period
|
$ | 30 | $ | 9 | $ | 7 |
Income
taxes paid in cash amounted to $10.1 million, $74.8 million and
$43.3 million for fiscal 2008, 2007 and 2006, respectively. AMERCO had no
outstanding debt in fiscal 2007 or 2008 and thus there were no cash interest
payments. Interest paid in cash in fiscal 2006 was $59.8 million.
The
accompanying notes are an integral part of these condensed consolidated
financial statements.
F-56
CONDENSED
FINANCIAL INFORMATION OF AMERCO
NOTES
TO CONDENSED FINANCIAL INFORMATION
MARCH
31, 2008, 2007, AND 2006
1. Summary
of Significant Accounting Policies
AMERCO, a
Nevada corporation, was incorporated in April, 1969, and is the holding Company
for U-Haul International, Inc., Amerco Real Estate Company, Republic Western
Insurance Company and Oxford Life Insurance Company. The financial statements of
the Registrant should be read in conjunction with the Consolidated Financial
Statements and notes thereto included in this Form 10-K.
AMERCO is
included in a consolidated Federal income tax return with all of its U.S.
subsidiaries excluding Dallas General Life Insurance Company, a subsidiary of
Oxford. Accordingly, the provision for income taxes has been calculated for
Federal income taxes of AMERCO and subsidiaries included in the consolidated
return of the Registrant. State taxes for all subsidiaries are allocated to the
respective subsidiaries.
The
financial statements include only the accounts of AMERCO, which include certain
of the corporate operations of AMERCO (excluding SAC Holding II). The interest
in AMERCO’s majority owned subsidiaries is accounted for on the equity method.
The intercompany interest income and expenses are eliminated in the Consolidated
Financial Statements.
2. Guarantees
AMERCO
has guaranteed performance of certain long-term leases and other obligations.
Refer to Note 16 Contingent Liabilities and Commitments and Note 19 Related
Party Transactions of the Notes to Consolidated Financial
Statements.
F-57
AMERCO
AND CONSOLIDATED SUBSIDIARIES
VALUATION
AND QUALIFYING ACCOUNTS
Years
Ended March 31, 2008, 2007 and 2006
Balance
at Beginning of Year
|
Additions
Charged to Costs and Expenses
|
Additions
Charged to Other Accounts
|
Deductions
|
Balance
at Year End
|
||||||||||||||||
Year
ended March 31, 2008
|
(In
thousands)
|
|||||||||||||||||||
Allowance
for doubtful accounts
|
||||||||||||||||||||
(deducted
from trade receivable)
|
$ | 1,412 | $ | 2,300 | $ | - | $ | (2,224 | ) | $ | 1,488 | |||||||||
Allowance
for doubtful accounts
|
||||||||||||||||||||
(deducted
from notes and mortgage receivable)
|
$ | 354 | $ | - | $ | - | $ | (39 | ) | $ | 315 | |||||||||
Allowance
for LIFO
|
||||||||||||||||||||
(deducted
from inventory)
|
$ | 8,372 | $ | 2,704 | $ | - | $ | - | $ | 11,076 | ||||||||||
Allowance
for obsolescence
|
||||||||||||||||||||
(deducted
from inventory)
|
$ | 1,500 | $ | 42 | $ | - | $ | - | $ | 1,542 | ||||||||||
Allowance
for probable losses
|
||||||||||||||||||||
(deducted
from mortgage loans)
|
$ | 803 | $ | - | $ | - | $ | (128 | ) | $ | 675 | |||||||||
Year
ended March 31, 2007
|
||||||||||||||||||||
Allowance
for doubtful accounts
|
||||||||||||||||||||
(deducted
from trade receivable)
|
$ | 1,363 | $ | 3,122 | $ | - | $ | (3,073 | ) | $ | 1,412 | |||||||||
Allowance
for doubtful accounts
|
||||||||||||||||||||
(deducted
from notes and mortgage receivable)
|
$ | 394 | $ | - | $ | - | $ | (40 | ) | $ | 354 | |||||||||
Allowance
for LIFO
|
||||||||||||||||||||
(deducted
from inventory)
|
$ | 5,693 | $ | 2,679 | $ | - | $ | - | $ | 8,372 | ||||||||||
Allowance
for obsolescence
|
||||||||||||||||||||
(deducted
from inventory)
|
$ | 1,500 | $ | - | $ | - | $ | - | $ | 1,500 | ||||||||||
Allowance
for probable losses
|
||||||||||||||||||||
(deducted
from mortgage loans)
|
$ | 1,200 | $ | - | $ | - | $ | (397 | ) | $ | 803 | |||||||||
Year
ended March 31, 2006
|
||||||||||||||||||||
Allowance
for doubtful accounts
|
||||||||||||||||||||
(deducted
from trade receivable)
|
$ | 1,546 | $ | 1,994 | $ | - | $ | (2,177 | ) | $ | 1,363 | |||||||||
Allowance
for doubtful accounts
|
||||||||||||||||||||
(deducted
from notes and mortgage receivable)
|
$ | 2,624 | $ | - | $ | - | $ | (2,230 | ) | $ | 394 | |||||||||
Allowance
for LIFO
|
||||||||||||||||||||
(deducted
from inventory)
|
$ | 3,234 | $ | 2,570 | $ | - | $ | (111 | ) | $ | 5,693 | |||||||||
Allowance
for obsolescence
|
||||||||||||||||||||
(deducted
from inventory)
|
$ | 1,500 | $ | - | $ | - | $ | - | $ | 1,500 | ||||||||||
Allowance
for probable losses
|
||||||||||||||||||||
(deducted
from mortgage loans)
|
$ | 1,200 | $ | - | $ | - | $ | - | $ | 1,200 |
F-58
SCHEDULE
V
AMERCO
AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL
INFORMATION (FOR PROPERTY-CASUALTY INSURANCE UNDERWRITERS)
Years
Ended December 31, 2007, 2006 AND 2005
Year
|
Affiliation
with Registrant
|
Deferred
Policy Acquisition Cost
|
Reserves
for Unpaid Claims and Adjustment Expenses
|
Discount
if any, Deducted
|
Unearned
Premiums
|
Net
Earned Premiums (1)
|
Net
Investment Income (2)
|
Claim
and Claim Adjustment Expenses Incurred Related to Current
Year
|
Claim
and Claim Adjustment Expenses Incurred Related to Prior
Year
|
Amortization
of Deferred Policy Acquisition Costs
|
Paid
Claims and Claim Adjustment Expense
|
Net
Premiums Written (1)
|
|||||||||||||||||||||||||||||||||
(In
thousands)
|
|||||||||||||||||||||||||||||||||||||||||||||
2008
|
Consolidated
property casualty entity
|
$ | 30 | $ | 288,410 | N/A | $ | 200 | $ | 28,388 | $ | 12,141 | $ | 7,094 | $ | 11,894 | $ | 190 | $ | 38,592 | $ | 28,334 | |||||||||||||||||||||||
2007
|
Consolidated
property casualty entity
|
196 | 288,783 | N/A | 459 | 24,335 | 14,440 | 6,006 | 15,895 | 2,057 | 43,608 | 23,232 | |||||||||||||||||||||||||||||||||
2006
|
Consolidated
property casualty entity
|
1,160 | 346,928 | N/A | 2,557 | 26,001 | 12,639 | 6,429 | 16,161 | 2,855 | 48,453 | 25,771 |
(1)
|
The
earned and written premiums are reported net of intersegment transactions.
There were no earned premiums eliminated for the year ended 2008, 2007 and
2006, respectively.
|
(2)
|
Net
Investment Income excludes net realized losses on investments of $0.1
million, $0.3 million and $1.3 million for the years ended 2008, 2007 and
2006, respectively.
|
F-59
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.
AMERCO
|
||||||
By:
|
/s/
Edward J. Shoen
|
|||||
Edward
J. Shoen
|
||||||
Chairman
of the Board and President
|
||||||
Dated:
June 4, 2008
|
POWER
OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS,
that each person whose signature appears below constitutes and appoints
Edward J. Shoen his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this Form 10-K
Annual Report, and to file the same, with all exhibits thereto and other
documents in connection therewith with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent, full power and authority to do
and perform each and every act or things requisite and necessary to be done in
and about the premises, as fully and to all intents and purposes as he might or
could do in person hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities 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.
Signature
|
Title
|
Date
|
|
/s/
|
EDWARD
J. SHOEN
|
Chairman
of the Board and President
(Principal
Executive Officer)
|
June
4, 2008
|
Edward
J. Shoen
|
|||
/s/
|
JASON
A. BERG
|
Chief
Accounting Officer
(Principal
Accounting Officer)
|
June
4, 2008
|
Jason
A. Berg
|
|||
/s/
|
CHARLES
J. BAYER
|
Director
|
June
4, 2008
|
Charles
J. Bayear
|
|||
/s/
|
JOHN
P. BROGAN
|
Director
|
June
4, 2008
|
John
P. Brogan
|
|||
/s/
|
JOHN
M. DODDS
|
Director
|
June
4, 2008
|
John
M. Dodds
|
|||
/s/
|
MICHAEL
L. GALLAGHER
|
Director
|
June
4, 2008
|
Michael
L. Gallagher
|
|||
/s/
|
M.
FRANK LYONS
|
Director
|
June
4, 2008
|
M.
Frank Lyons
|
|||
/s/
|
DANIEL
R. MULLEN
|
Director
|
June
4, 2008
|
Daniel
R. Mullen
|
Signature |
Title
|
Date
|
|
/s/
|
JAMES
P. SHOEN
|
Director
|
June
4, 2008
|
James
P. Shoen
|