UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
(Mark
One)
R ANNUAL
REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
For
the
fiscal year ended March 31, 2007
or
£ 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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||
 |
||
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2-38498
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U-Haul
International, Inc.
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86-0663060
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(A
Nevada Corporation)
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2727
N. Central Avenue
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Phoenix,
Arizona 85004
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Telephone
(602) 263-6645
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Securities
registered pursuant to Section 12(b) of the Act:
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||
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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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U-Haul
International, Inc.
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None
|
|
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, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
one):
Large
Accelerated filer £ Accelerated
filer R Non-accelerated
filer £
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, 2006 was $453,787,990. 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
£
20,130,991
shares of AMERCO Common Stock, $0.25 par value were outstanding at June 1,
2007.
5,385
shares of U-Haul International, Inc. Common Stock, $0.01 par value, were
outstanding at June 1, 2007. None of these shares were held by
non-affiliates.
Documents
incorporated by reference: Portions of AMERCO’s definitive Proxy Statement for
the 2007 Annual Meeting of Stockholders, to be filed within 120 days after
AMERCO’s year ended March 31, 2007, are incorporated by reference into Part III
of this report.
TABLE
OF CONTENTS
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Page
No.
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PART
I
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Item
1.
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Business
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2
-
7
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Item
1A.
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Risk
Factors
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7
-
10
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Item
1B.
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Unresolved
Staff Comments
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10
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Item
2.
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Properties
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10
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Item
3.
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Legal
Proceedings
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11
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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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Selected
Financial Data
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15
- 16
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Item
7.
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
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17
- 44
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Item
7A.
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45
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45
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Item
9.
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45
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Item
9A.
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Controls
and Procedures
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46
- 47
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Item
9B.
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Other
information
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47
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PART
III
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Item
10.
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49
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Item
11.
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49
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Item
12.
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49
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Item
13.
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49
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Item
14.
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49
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PART
IV
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Item
15.
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50
-59
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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 14,500 independent U-Haul dealers. In addition,
we have an independent storage facility network with over 2,900 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.
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, 2007, our rental fleet consisted of approximately 100,000 trucks,
78,500 trailers and 31,100 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 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 time needed to move
belongings. 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 for fuel efficiency. 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 all 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 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, and 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 1,055 self-storage locations
in North America, with more than 383,000 rentable rooms comprising approximately
33.7 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, in fiscal 2007 we began
offering our new 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 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
Real Estate), Property and Casualty Insurance, Life Insurance and SAC Holding
II
Corporation and its subsidiaries (“SAC Holding II”) (see Note 2 “Principles of
Consolidation” to 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 were approximately 89.9%,
90.2% and 89.2% of consolidated net revenue in fiscal 2007, 2006 and 2005,
respectively.
During
fiscal 2007, the Company added over 22,500 new trucks and nearly 2,000 new
trailers to our existing rental fleet. These additions 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 total rental
truck
fleet size increased incrementally from last fiscal year. The continued
expansion and replacement of our rental fleet will allow us to enter new markets
and to achieve better utilization in existing markets.
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 14,500 dealers which are independent contractors,
and
are exclusive to U-Haul International, Inc. An independent dealer must maintain
a singular fleet of U-Haul vehicles. U-Haul maximizes vehicle utilization by
effective distribution of the truck and trailer fleets among the nearly 1,450
Company operated centers and approximately 14,500 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 U-Haul self-storage
room rentals, self-storage related products and service sales and management
of
self-storage facilities not owned by the Company.
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 383,000 storage rooms, comprising approximately 33.7 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 3,900 independent sellers
of Moving Help™ and over 2,900 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.
With
over
100,000 unedited reviews of independent Affiliates, the marketplace 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 highly 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 were
approximately 1.9%, 1.8% and 2.1% of consolidated net revenue in fiscal 2007,
2006 and 2005, respectively.
Life
Insurance Operating Segment
Oxford
originates and reinsures annuities, ordinary life and Medicare supplement
insurance. Oxford also 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 6.9%, 6.7%
and 7.6% of consolidated net revenue in fiscal 2007, 2006 and 2005,
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 is considered the
primary beneficiary of these contractual interests. Consequently, we include
the
results of SAC Holding II in the consolidated financial statements of AMERCO,
as
required by FIN 46(R).
5
Net
revenue from our SAC Holding II operating segment was approximately 1.3%, 1.3%
and 1.1% of consolidated net revenue in fiscal 2007, 2006 and 2005,
respectively.
Employees
As
of
March 31, 2007, we employed approximately 18,000 people throughout North America
with approximately 98% of these employees working within our Moving and Storage
operating segment.
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 site.
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. Nearly 30% of the reservations made
for
U-Move rentals were completed through the Company’s website.
Competition
Moving
and Storage Operating Segment
The
moving truck and trailer rental industry is large and highly competitive. There
are 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 price. Our major
competitors in the moving equipment rental market are AvisBudget Group 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.
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.
6
Recent
Developments
Preferred
Stock Dividends
On
May 4,
2007, 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 1, 2007 to holders of record
on
May 15, 2007.
Fleet
Securitization Transaction
The
Company has entered into a securitized financing, as of June 1, 2007, through
an
offer by certain new special-purpose entities of up to $217.0 million of Fixed
Rate Series 2007-1-BT Notes and $86.6 million of Fixed Rate Series 2007-1-CP
Notes in a private placement transaction exempt from registration under the
Securities Act of 1933, as amended. The new special-purpose entities that will
issue the notes will be indirect subsidiaries of AMERCO. These new
special-purpose subsidiaries will use the net proceeds from the sale of the
notes to, among other things, acquire box trucks, cargo vans and pickup trucks
from the manufacturers as well as from other subsidiaries of AMERCO. The new
special-purpose subsidiaries will generate income from truck and trailer rentals
to be used to service and repay the notes. The notes will not be obligations
of
AMERCO or any of its subsidiaries other than the new special-purpose
subsidiaries. These special-purpose subsidiaries will be consolidated into
U-Haul’s financial statements.
RepWest
was upgraded
On
May
30, 2007, A.M. Best Co. upgraded the financial strength ratings of RepWest
to B
(Fair) and set the outlook as stable.
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.
7
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.
In
our truck rental business, our primary competitors are AvisBudget Group and
Penske Truck Leasing. 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.
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. Some of our primary competitors
in
the self-storage market are Public Storage, Inc., Extra Space Storage, Inc.,
and
Sovran Self-Storage Inc. 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 asmall
contingent of stockholders.
As
of
March 31, 2007, 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 8,967,863 shares
(approximately 43.6%) 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 block in a manner consistent with the Stockholder Agreement and
in
furtherance of their interests. 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 that was entered into by
the
other Reporting Persons on June 30, 2006. Pursuant to the Stockholder Agreement,
the Reporting Persons appointed James P. Shoen as proxy to vote their collective
10,642,588 shares (approximately 51.8%) of the Company’s common stock as
provided for in the agreement. For additional information, see the Schedule
13D’s filed on July 13, 2006 and on March 9, 2007 with the SEC. In addition,
1,897,670 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 will be 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
of Directors 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.
8
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 strictly 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
(see 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, risk of environmental liability is part of the nature of
our
business.
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 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.
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 were
upgraded to B++ with a stable outlook. 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, 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, 2007, we held approximately $203.7 million of notes receivable from SAC
Holdings, of which $75.1 million is with SAC Holding II and has been eliminated
in our Consolidated Financial Statements. SAC Holdings is highly leveraged
with
significant indebtedness to others. We hold various junior unsecured notes
of
SAC Holdings. 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.
9
We
are highly leveraged.
As
of
March 31, 2007 we had total debt outstanding of $1,181.2 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
|
| · |
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 or operations, 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.
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
There
were no unresolved staff comments at March 31, 2007.
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 498 are managed for other owners, and operates 13 manufacturing
and assembly facilities. We also operate over 245 fixed site-repair facilities
located throughout the United States and Canada.
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
On
September 24, 2002, Paul F. Shoen filed a derivative action 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 a nominal defendant
for purposes of the derivative action. 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
Holdings prior to the filing of the complaint. The complaint seeks a declaration
that such transfers are void as well as unspecified damages. On October 28,
2002, AMERCO, the Shoen directors, the non-Shoen directors and SAC Holdings
filed Motions to Dismiss the complaint. In addition, on October 28, 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 on January 16, 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. These additional suits are substantially similar to the Paul F. Shoen
derivative action. The five suits assert virtually identical claims. In fact,
three of the five plaintiffs are parties who are working closely together and
chose to file the same claims multiple times. These lawsuits alleged that the
AMERCO Board lacked independence. In reaching its decision to dismiss these
claims, the court determined that the AMERCO Board of Directors had the
requisite level of independence required in order to have these claims resolved
by the Board. The court consolidated all five complaints before dismissing
them
on May 28, 2003. Plaintiffs appealed and, on July 13, 2006, the Nevada Supreme
Court reviewed and remanded the claim 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. On November 8,
2006, the nominal plaintiffs filed an Amended Complaint. On December 22, 2006,
the defendants filed Motions to Dismiss. Briefing was concluded on February
21,
2007. On March 30, 2007, the Court heard oral argument on Defendants’ Motions to
Dismiss and requested supplemental briefing. The supplemental briefs were filed
on May 14, 2007.
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 loss.
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 have a material adverse effect
on AMERCO’s financial position or operating results. Real Estate expects to
spend approximately $7.6 million in total through 2011 to remediate these
properties.
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.
11
Item
4. Submission
of Matters to a Vote of Security Holders
No
matter
was submitted to a vote of the security holders of AMERCO or U-Haul 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, 2007 there were approximately 3,300 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,
|
||||||||||||||||
|
2007
|
2006
|
|||||||||||||||
|
|
High
|
Low
|
High
|
Low
|
||||||||||||
|
First
quarter
|
$
|
106.95
|
$
|
79.71
|
$
|
56.10
|
$
|
42.75
|
||||||||
|
Second
quarter
|
$
|
105.35
|
$
|
66.22
|
$
|
63.61
|
$
|
52.80
|
||||||||
|
Third
quarter
|
$
|
96.89
|
$
|
71.81
|
$
|
73.68
|
$
|
54.60
|
||||||||
|
Fourth
quarter
|
$
|
89.96
|
$
|
59.83
|
$
|
101.24
|
$
|
65.45
|
||||||||
The
common stock of U-Haul is wholly-owned by AMERCO. As a result, no active trading
market exists for the purchase and sale of such common stock.
Dividends
AMERCO
does not have a formal dividend policy. The Board of Directors of AMERCO
periodically considers the advisability of declaring and paying dividends in
light of existing circumstances.
U-Haul
has not declared cash dividends to AMERCO during the three most recent fiscal
years. On January 1, 2006, U-Haul paid a non-cash dividend to AMERCO in the
form
of a reduction in an intercompany payable.
See
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.
See
Note
11 “Stockholders Equity” of the “Notes to Consolidated Financial Statements” for
a discussion of AMERCO’s preferred stock.
Performance
Graph
The
following graph compares the cumulative total stockholder return on the
Company’s Common Stock for the period March 31, 2002 through March 31, 2007 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, 2002 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, 2003, 2004, 2005, 2006, and 2007.
12
13
Issuer
Purchases of Equity Securities
On
September 13, 2006, the Company announced that its Board had authorized the
Company to repurchase up to $50.0 million of its Common Stock. The stock may
be
repurchased by the Company 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). As with the original program, the Company may repurchase
stock from time to time on the open market until October 31, 2007. 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 2007, the Company repurchased 739,291 shares.
The
repurchases made by the Company 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, 2007
|
-
|
-
|
-
|
-
|
$ |
50,000,000
|
||||||||||
|
February
1 - 28, 2007
|
268,653
|
$
|
68.37
|
268,653
|
$
|
18,368,840
|
$ |
31,631,160
|
||||||||
|
March
1 - 31, 2007 (2)
|
470,638
|
$
|
65.31
|
470,638
|
$
|
30,737,262
|
$ |
65,893,898
|
||||||||
|
Fourth
Quarter Total
|
739,291
|
$
|
66.42
|
739,291
|
$
|
49,106,102
|
||||||||||
(1)
Represents weighted average purchase price for the periods
represented.
(2)
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).
14
Item
6. Selected
Financial Data
The
following selected financial data should be read in conjunction with
Management’s Discussion and Analysis of Financial Condition and Results of
Operations, 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,
|
||||||||||||||||
|
2007
|
2006
|
2005
|
2004
|
2003
|
||||||||||||
|
(In
thousands, except share and per share data)
|
||||||||||||||||
|
Summary
of Operations:
|
||||||||||||||||
|
Self-moving
equipment rentals
|
$
|
1,476,579
|
$
|
1,503,569
|
$
|
1,437,895
|
$
|
1,381,208
|
$
|
1,293,732
|
||||||
|
Self-storage
revenues
|
126,424
|
119,742
|
114,155
|
247,640
|
238,938
|
|||||||||||
|
Self-moving
and self-storage products and service sales
|
224,722
|
223,721
|
206,098
|
232,965
|
223,677
|
|||||||||||
|
Property
management fees
|
21,154
|
21,195
|
11,839
|
259
|
89
|
|||||||||||
|
Life
insurance premiums
|
120,399
|
118,833
|
126,236
|
145,082
|
158,719
|
|||||||||||
|
Property
and casualty insurance premiums
|
24,335
|
26,001
|
24,987
|
92,036
|
149,206
|
|||||||||||
|
Net
investment and interest income
|
61,093
|
53,094
|
56,739
|
38,281
|
40,731
|
|||||||||||
|
Other
revenue
|
30,891
|
40,471
|
30,172
|
38,523
|
36,252
|
|||||||||||
|
Total
revenues
|
2,085,597
|
2,106,626
|
2,008,121
|
2,175,994
|
2,141,344
|
|||||||||||
|
Operating
expenses
|
1,080,897
|
1,080,990
|
1,122,197
|
1,179,996
|
1,182,222
|
|||||||||||
|
Commission
expenses
|
177,008
|
180,101
|
172,307
|
147,010
|
138,652
|
|||||||||||
|
Cost
of sales
|
117,648
|
113,135
|
105,309
|
111,906
|
115,115
|
|||||||||||
|
Benefits
and losses
|
118,725
|
117,160
|
140,343
|
217,447
|
248,349
|
|||||||||||
|
Amortization
of deferred policy acquisition costs
|
17,138
|
24,261
|
28,512
|
39,083
|
37,681
|
|||||||||||
|
Lease
expense
|
149,044
|
142,781
|
151,354
|
160,727
|
166,101
|
|||||||||||
|
Depreciation,
net of (gains) losses on disposal
|
189,589
|
142,817
|
121,103
|
148,813
|
137,446
|
|||||||||||
|
Restructuring
expense
|
-
|
-
|
-
|
44,097
|
6,568
|
|||||||||||
|
Total
costs and expenses
|
1,850,049
|
1,801,245
|
1,841,125
|
2,049,079
|
2,032,134
|
|||||||||||
|
Earnings
from operations
|
235,548
|
305,381
|
166,996
|
126,915
|
109,210
|
|||||||||||
|
Interest
expense
|
(82,756
|
)
|
(69,481
|
)
|
(73,205
|
)
|
(121,690
|
)
|
(148,131
|
)
|
||||||
|
Fees
and amortization on early extinguishment of debt (b)
|
(6,969
|
)
|
(35,627
|
)
|
-
|
-
|
-
|
|||||||||
|
Litigation
settlement, net of costs, fees and expenses
|
-
|
-
|
51,341
|
-
|
-
|
|||||||||||
|
Pretax
earnings (loss)
|
145,823
|
200,273
|
145,132
|
5,225
|
(38,921
|
)
|
||||||||||
|
Income
tax benefit (expense)
|
(55,270
|
)
|
(79,119
|
)
|
(55,708
|
)
|
(8,077
|
)
|
13,935
|
|||||||
|
Net
earnings (loss)
|
90,553
|
121,154
|
89,424
|
(2,852
|
)
|
(24,986
|
)
|
|||||||||
|
Less:
Preferred stock dividends
|
(12,963
|
)
|
(12,963
|
)
|
(12,963
|
)
|
(12,963
|
)
|
(12,963
|
)
|
||||||
|
Earnings
(loss) available to common shareholders
|
$
|
77,590
|
$
|
108,191
|
$
|
76,461
|
$
|
(15,815
|
)
|
$
|
(37,949
|
)
|
||||
|
Net
earnings (loss) per common share basic and diluted
|
$
|
3.72
|
$
|
5.19
|
$
|
3.68
|
$
|
(0.76
|
)
|
$
|
(1.82
|
)
|
||||
|
Weighted
average common shares outstanding: Basic and diluted
|
20,838,570
|
20,857,108
|
20,804,773
|
20,749,998
|
20,824,618
|
|||||||||||
|
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
|
1,897,071
|
1,535,165
|
1,354,468
|
1,451,805
|
1,946,317
|
|||||||||||
|
Total
assets
|
3,523,048
|
3,367,218
|
3,116,173
|
3,394,748
|
3,832,372
|
|||||||||||
|
Capital
leases
|
-
|
-
|
-
|
99,607
|
137,031
|
|||||||||||
|
AMERCO's
notes and loans payable
|
1,181,165
|
965,634
|
780,008
|
862,703
|
940,063
|
|||||||||||
|
SAC
Holdings II notes and loans payable, non-recourse to AMERCO
(a)
|
74,887
|
76,232
|
77,474
|
78,637
|
466,781
|
|||||||||||
|
Stockholders'
equity
|
718,098
|
695,604
|
572,839
|
503,846
|
327,448
|
|||||||||||
|
(a)
The amount for fiscal 2003 includes SAC Holding and SAC Holding
II.
|
||||||||||||||||
|
(b)
Includes the write-off of debt issuance costs of $7.0 million in
fiscal
2007 and $14.4 million in fiscal 2006.
|
||||||||||||||||
15
Listed
below is selected financial data for U-Haul International, Inc. for each of
the
last five years ended March 31:
|
Year
Ended March 31,
|
||||||||||||||||
|
2007
|
2006
|
2005
|
2004
|
2003
|
||||||||||||
|
(In
thousands)
|
||||||||||||||||
|
Summary
of Operations:
|
||||||||||||||||
|
Self-moving
equipment rentals
|
$
|
1,476,579
|
$
|
1,503,569
|
$
|
1,437,895
|
$
|
1,380,991
|
$
|
1,293,686
|
||||||
|
Self-storage
revenues
|
104,725
|
99,060
|
94,431
|
118,335
|
109,985
|
|||||||||||
|
Self-moving
and self-storage products and service sales
|
208,677
|
207,119
|
191,078
|
182,327
|
174,853
|
|||||||||||
|
Property
management fees
|
23,951
|
23,988
|
14,434
|
12,974
|
12,431
|
|||||||||||
|
Net
investment and interest income
|
29,294
|
24,894
|
22,030
|
21,504
|
29,358
|
|||||||||||
|
Other
revenue
|
31,403
|
39,303
|
27,489
|
35,580
|
18,378
|
|||||||||||
|
Total
revenues
|
1,874,629
|
1,897,933
|
1,787,357
|
1,751,711
|
1,638,691
|
|||||||||||
|
Operating
expenses
|
1,085,619
|
1,085,602
|
1,100,737
|
1,062,695
|
1,029,774
|
|||||||||||
|
Commission
expenses
|
186,233
|
189,599
|
181,315
|
176,165
|
166,334
|
|||||||||||
|
Cost
of sales
|
110,163
|
105,872
|
98,877
|
87,430
|
93,735
|
|||||||||||
|
Lease
expense
|
149,649
|
143,344
|
151,937
|
159,869
|
165,020
|
|||||||||||
|
Depreciation,
net of (gains) losses on disposal
|
180,560
|
131,803
|
114,038
|
125,093
|
112,815
|
|||||||||||
|
Total
costs and expenses
|
1,712,224
|
1,656,220
|
1,646,904
|
1,611,252
|
1,567,678
|
|||||||||||
|
Earnings
from operations
|
162,405
|
241,713
|
140,453
|
140,459
|
71,013
|
|||||||||||
|
Interest
income (expense)
|
(114,051
|
)
|
(14,383
|
)
|
15,687
|
8,560
|
(9,991
|
)
|
||||||||
|
Fees
and amortization on early extinguishment of debt
|
(302
|
)
|
-
|
-
|
-
|
-
|
||||||||||
|
Pretax
earnings
|
48,052
|
227,330
|
156,140
|
149,019
|
61,022
|
|||||||||||
|
Income
tax expense
|
(17,948
|
)
|
(87,910
|
)
|
(59,160
|
)
|
(52,992
|
)
|
(21,211
|
)
|
||||||
|
Net
earnings
|
$
|
30,104
|
$
|
139,420
|
$
|
96,980
|
$
|
96,027
|
$
|
39,811
|
||||||
|
Balance
Sheet Data:
|
||||||||||||||||
|
Property,
plant and equipment, net
|
$
|
1,231,932
|
$
|
913,871
|
$
|
796,361
|
$
|
875,729
|
$
|
736,499
|
||||||
|
Total
assets
|
1,729,904
|
1,505,813
|
1,516,286
|
1,452,361
|
1,235,497
|
|||||||||||
|
Capital
leases
|
-
|
-
|
-
|
99,607
|
14,793
|
|||||||||||
|
Notes
and loans payable
|
406,458
|
212,133
|
-
|
-
|
-
|
|||||||||||
|
Stockholders'
equity (deficit) (a)
|
(336,705
|
)
|
(354,481
|
)
|
701,198
|
601,514
|
499,380
|
|||||||||
|
(a)
Fiscal 2006 includes a non-cash dividend to AMERCO in the amount
of
$1,200,000,000.
|
||||||||||||||||
16
General
We
begin
Management’s Discussion and Analysis of Financial Condition and Results of
Operations 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
the
“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 2007 compared with fiscal 2006, and for fiscal 2006 compared with fiscal
2005 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 2008.
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 2006, 2005 and 2004 correspond to fiscal 2007, 2006 and 2005 for AMERCO.
The operating results and financial position of AMERCO’s consolidated insurance
operations are determined as of December 31st
of each
year.
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
annuity, life and Medicare supplement products primarily in the senior
marketplace. Oxford is pursuing increased direct writing through acquisitions
of
insurance companies, expanded distribution channels and product development.
In
2005, Oxford determined that it would no longer pursue growth in the credit
life
and disability market. We believe this will enable Oxford to focus more on
its
core senior population demographic.
17
Description
of Operating Segments
AMERCO
has four reportable segments. They are Moving and Storage (AMERCO, U-Haul and
Real Estate), Property and Casualty Insurance, Life Insurance and SAC Holding
II
(see Note 1 “Basis of Presentation”, Note 21 “Financial Information by
Geographic Area” and Note 21A “Consolidating Financial Information by Industry
Segment” to 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.
AMERCO
is
committed to be being a responsible corporate citizen and is furthering its
program to Reduce, Replenish and Sustain. Our truck and trailer rental business
is the means by which our customers can reduce their environmental footprint
through the sharing of equipment with other like-minded consumers. Additionally,
the Company is launching new programs to advance our Sustainability initiative
including U-Car Share, partnerships for the planting of trees, and our Box
Exchange program.
eMove
is
an online marketplace that connects consumers to over 3,900 independent Moving
Help™ and over 2,900 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.
With
over
100,000 unedited reviews of independent Affiliates, the marketplace has
facilitated thousand 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. 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 annuities, life insurance, and
Medicare supplement policies. Additionally, Oxford administers the self-insured
employee health and dental plans for Arizona employees of the
Company.
18
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 is considered the
primary beneficiary of these contractual interests. Consequently, we include
the
results of SAC Holding II in the consolidated financial statements of AMERCO,
as
required by FIN 46(R).
Critical
Accounting Policies and Estimates
The
Company’s financial statements have been prepared in accordance with the
accounting principles generally accepted 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” to 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 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
variable interest entity (VIE). A company is required to consolidate a VIE
if it
is 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
variable interest entity, 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.
The
consolidated financial statements for fiscal 2007, 2006 and 2005 include the
accounts of AMERCO, its wholly-owned subsidiaries and SAC Holding
II.
In
fiscal
2003 and fiscal 2002, SAC Holding Corporation and SAC Holding II (together,
“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 FIN 46(R) to its interests in SAC Holdings.
Initially, the Company concluded that SAC Holdings were variable interest
entities (VIE’s) and that the Company was the primary beneficiary. Accordingly,
the Company continued to include SAC Holdings in its consolidated financial
statements.
19
In
February 2004, SAC Holding Corporation restructured the indebtedness of three
subsidiaries and then distributed its interest in those subsidiaries to its
sole
shareholder. This triggered a requirement to reassess AMERCO’s involvement with
those subsidiaries, which led to the conclusion that based on current
contractual and ownership interests between AMERCO and this entity, AMERCO
ceased to have a variable interest in those three subsidiaries at that date.
Separately,
in March 2004, SAC Holding Corporation restructured its indebtedness, triggering
a similar reassessment of SAC Holding Corporation that led to the conclusion
that SAC Holding Corporation was not a VIE and that AMERCO ceased to be the
primary beneficiary of SAC Holding Corporation and its remaining subsidiaries.
This conclusion was based on SAC Holding Corporation’s ability to fund its own
operations and execute its business plan without any future subordinated
financial support.
Accordingly,
at the dates AMERCO ceased to have a variable interest and ceased to be the
primary beneficiary of SAC Holding Corporation and its current or former
subsidiaries, it deconsolidated those entities. The deconsolidation was
accounted for as a distribution of SAC Holding Corporations interests to the
sole shareholder of the SAC entities. Because of AMERCO’s continuing involvement
with SAC Holding Corporation and its current and former subsidiaries, the
distributions do not qualify as discontinued operations as defined by SFAS
No.
144.
It
is
possible that SAC Holding Corporation could take actions that would require
us
to re-determine whether SAC Holding Corporation has become a VIE or whether
we
have become the primary beneficiary of SAC Holding Corporation. Should this
occur, we could be required to consolidate some or all of SAC Holding
Corporation with our financial statements.
Similarly,
SAC Holding II could take actions that would require us to re-determine whether
it is a VIE or whether we continue to be the primary beneficiary of our variable
interest in SAC Holding II. Should we cease to be the primary beneficiary,
we
would be required to deconsolidate some or all of our variable interest in
SAC
Holding II from our financial statements.
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.,
no
gains or losses. In determining the depreciation rate, historical disposal
experience, holding periods and trends in the market for vehicles are
reviewed.
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.
During
the fourth quarter of fiscal 2007, based on economic market analysis, the
Company decreased the estimated residual value of certain rental trucks. The
effect of the change decreased pre-tax earnings for fiscal 2007 by $2.0 million.
The in-house analysis of truck sales compared such factors as the truck model,
size, age and average residual value of units sold. Based on the analysis,
the
estimated residual values of these vehicles were decreased to approximately
20%
of historic cost. The adjustment reflects management’s best estimate of the
estimated residual value of the rental trucks.
20
Starting
in fiscal 2006 the Company acquired 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 $33.2 million greater than what
it
would have been if calculated under a straight line approach for fiscal 2007
and
$4.0 million for fiscal 2006.
We
typically sell our used vehicles at one of 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.
A
consequence of the long tail nature of the assumed reinsurance and the excess
workers compensation lines of insurance that were written by RepWest is that
it
takes a number of years for claims to be fully reported and finally settled.
Impairment
of Investments
For
investments accounted for under SFAS No. 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 $1.4 million in other-than-temporary
impairments for fiscal 2007, $5.3 million for fiscal 2006 and $4.3 million
for
fiscal 2005.
Income
Taxes
The
Company’s tax returns are periodically reviewed by various taxing authorities.
Despite our belief that all of our tax treatments are supportable, the final
outcome of these audits may cause changes that could materially impact our
financial results. Our current effective tax rate is approximately
37.9%.
21
AMERCO
files a consolidated tax return with all of its legal subsidiaries, except
for
Dallas General Life Insurance Company (“DGLIC”) which will file on a stand alone
basis. 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.
Adoption
of New Accounting Pronouncements
In
September 2006, the Financial Accounting Standards Board (FASB) issued SFAS
158,
Employers’
Accounting for Defined Benefit Pension and Other Post Retirement Plans - an
amendment of SFAS 87, 88, 106 and 132(R),
which
requires companies to recognize a net liability or asset to report the
over-funded or under-funded status of their defined benefit pension and other
postretirement benefit plans on their balance sheets and recognize changes
in
funded status in the year in which the changes occur through other comprehensive
income. The funded status to be measured is the difference between plan assets
at fair value and the benefit obligation. This Statement requires that gains
and
losses and prior service costs or credits, net of tax, that arise during the
period be recognized as a component of other comprehensive income and not as
components of net periodic benefit cost.
We
adopted the balance sheet provisions of SFAS 158, as required, at March 31,
2007. As a result the Company recorded after tax unrecognized losses of $0.2
million to accumulated other comprehensive income in fiscal 2007. As discussed
in Note 14 “Employee Benefit Plans” to the Consolidated Financial Statements,
the Company previously used December 31 as the measurement date to measure
the
assets and obligations of its post retirement and post employment benefits
plans. SFAS 158 requires the Company to perform the measurements at year end.
The portion of the net periodic cost associated with the three month measurement
lag was $0.1 million, after tax. This was recorded as an adjustment to retained
earnings in fiscal 2007.
In
September 2006, the SEC issued Staff Accounting Bulletin (SAB) 108 “Considering
the Effects of Prior Year Misstatements in Current Year Financial
Statements”,
which
provides interpretive guidance on how the effects of prior year uncorrected
misstatements should be considered when quantifying misstatements in current
year financial statements. There was diversity in practice, with the two
commonly used methods to quantify misstatements being the “rollover” method
(which primarily focuses on the income statement impact of misstatements) and
the “iron curtain” method (which focuses on the cumulative amount by which the
current year balance sheet is misstated and may not prevent significant
misstatements in the income statement). SAB 108 requires registrants to use
a
dual approach whereby both of these methods are considered in evaluating the
materiality of financial statement errors. Prior materiality assessments were
reconsidered using both the rollover and iron curtain methods.
Effective
March 31, 2007 the Company adopted SAB 108 and recorded a correction in the
fourth quarter of fiscal 2007 related to prepaid expenses on leased equipment.
In analyzing this error we determined that it was not material to our statement
of earnings in any single quarter or annual period; however, the cumulative
adjustment necessary would have been material in the current period. In
accordance with SAB 108, the Company adjusted its beginning retained earnings
balance for fiscal 2007 and its financial results for the first three quarters
of fiscal 2007 for this adjustment. The Company determined that the adjustment
would not be material in any specific period and therefore did not restate
historical financial statements.
The
error
was related to rental equipment originally leased during periods between fiscal
2000 and fiscal 2002. The rental equipment was sold to the lessor at less than
its book value and then subsequently leased back to the Company via an operating
lease. The difference between the sales price to the lessor and the book value
prior to the sale was deferred and amortized over the life of the equipment.
Per
SFAS 28 the amortization period should have been over the term of the lease.
The
Company quantified the error and in fiscal 2007 changed its accounting treatment
for prepaid expenses on sales - leaseback vehicle transactions to ensure that
all new instances would be accounted for properly.
22
Recent
Accounting Pronouncements
In
June
2006, the FASB issued a standard that addresses accounting for income taxes:
FIN
48, Accounting
for Uncertainty in Income Taxes.
Among
other things, FIN 48 requires applying an audit sustainability standard of
“more
likely than not” related to the recognition and de-recognition of tax positions.
FIN 48 is effective for fiscal years beginning after December 15, 2006. The
Company is currently evaluating the effect that the adoption will have on its
Consolidated Financial Statements. The cumulative effect of applying the
provisions of FIN 48, if any, will be reported as an adjustment to the opening
balance of the Companies retained earnings at April 1, 2007.
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 are effective for us in April 2008. The Company
is
currently evaluating the impact of this statement on our Consolidated 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 provision of SFAS 159 is effective for us in April 2008.
The Company is currently evaluating the impact of this statement on our
Consolidated Financial Statements.
23
Results
of Operations
AMERCO
and Consolidated Entities
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
|
$
|
1,476,579
|
$
|
1,503,569
|
|||
|
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
|
61,093
|
53,094
|
|||||
|
Other
revenue
|
30,891
|
40,471
|
|||||
|
Consolidated
revenue
|
$
|
2,085,597
|
$
|
2,106,626
|
|||
During
fiscal 2007, self-moving equipment rentals 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 has further
lowered self-moving rental revenues. The Company now has a better inventory
of
certain mid-size trucks and is attempting to improve revenue per transaction;
however, if these issues continue our revenues may continue to be negatively
impacted in the future.
Self-storage
revenues increased $6.7 million in fiscal 2007, compared with fiscal 2006
largely due to improved pricing. During fiscal 2007, the Company has increased
rooms and square footage available primarily through build-outs at existing
facilities.
Sales
of
self-moving and self-storage products and service sales 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 $9.6 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 $2,085.6 million for fiscal 2007, compared with $2,106.6 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, the insurance companies years ended
are December 31, 2006 and 2005.
|
Year
Ended March 31,
|
|||||||
|
2007
|
2006
|
||||||
|
(In
thousands)
|
|||||||
|
Moving
and storage
|
|||||||
|
Revenues
|
$
|
1,875,860
|
$
|
1,900,468
|
|||
|
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
|
(24,172
|
)
|
(25,519
|
)
|
|||
|
Earnings
(loss) from operations
|
(16,505
|
)
|
(16,113
|
)
|
|||
|
Consolidated
Results
|
|||||||
|
Revenues
|
2,085,597
|
2,106,626
|
|||||
|
Earnings
from operations
|
235,548
|
305,381
|
|||||
Total
costs and expenses increased $48.8 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 $235.5 million for fiscal 2007, compared with $305.4
million for fiscal 2006.
Interest
expense for fiscal 2007 was $89.7 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. The second quarter of fiscal 2007
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 the Real
Estate 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.
25
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.
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.
Fiscal
2006 Compared with Fiscal 2005
Listed
below on a consolidated basis are revenues for our major product lines for
fiscal 2006 and fiscal 2005:
|
Year
Ended March 31,
|
|||||||
|
2006
|
2005
|
||||||
|
(In
thousands)
|
|||||||
|
Self-moving
equipment rentals
|
$
|
1,503,569
|
$
|
1,437,895
|
|||
|
Self-storage
revenues
|
119,742
|
114,155
|
|||||
|
Self-moving
and self-storage product and service sales
|
223,721
|
206,098
|
|||||
|
Property
management fees
|
21,195
|
11,839
|
|||||
|
Life
insurance premiums
|
118,833
|
126,236
|
|||||
|
Property
and casualty insurance premiums
|
26,001
|
24,987
|
|||||
|
Net
investment and interest income
|
53,094
|
56,739
|
|||||
|
Other
revenue
|
40,471
|
30,172
|
|||||
|
Consolidated
revenue
|
$
|
2,106,626
|
$
|
2,008,121
|
|||
During
fiscal 2006, self-moving equipment rentals increased $65.7 million with
increases in truck, trailer, and support rental items. The increases are due
to
improved equipment utilization, pricing, and product mix that included the
introduction of approximately 15,500 new trucks in fiscal 2006. In most cases,
these trucks replaced older trucks rotated out of the fleet.
Self-storage
revenues increased $5.6 million for fiscal 2006, compared with fiscal 2005
as
occupancy rates increased period over period.
Sales
of
self-moving and self-storage products and service sales increased $17.6 million
for fiscal 2006, compared with fiscal 2005 generally following the growth in
self-moving equipment rentals. Support sales items, hitches, and propane all
had
increases for the year.
RepWest
continued to exit from non U-Haul related lines of business. However, premium
revenues increased $1.0 million for fiscal 2006, compared with fiscal 2005
due
to increases in retrospective premiums related to U-Haul business in fiscal
2006. Additionally, fiscal 2005 included the commutation of a non U-Haul related
reinsurance contract reducing premium revenues.
Oxford’s
premium revenues declined $7.4 million primarily as a result of decreased credit
and Medicare supplement business, offset by growth in life insurance
premiums.
Net
investment and interest income decreased $3.6 million for fiscal 2006, compared
with fiscal 2005 due primarily to declining invested asset balances at the
insurance companies.
As
a
result of the items mentioned above, revenues for AMERCO and its consolidated
entities were $2,106.6 million for fiscal 2006, compared with $2,008.1 million
for fiscal 2005.
26
Listed
below are revenues and earnings (loss) from operations at each of our four
operating segments for fiscal 2006 and fiscal 2005; for the insurance companies
years ended are December 31, 2005 and 2004:
|
Year
Ended March 31,
|
|||||||
|
2006
|
2005
|
||||||
|
(In
thousands)
|
|||||||
|
Moving
and storage
|
|||||||
|
Revenues
|
$
|
1,900,468
|
$
|
1,791,667
|
|||
|
Earnings
from operations
|
292,774
|
165,985
|
|||||
|
Property
and casualty insurance
|
|||||||
|
Revenues
|
37,358
|
41,417
|
|||||
|
Earnings
(loss) from operations
|
1,144
|
(14,814
|
)
|
||||
|
Life
insurance
|
|||||||
|
Revenues
|
148,080
|
159,484
|
|||||
|
Earnings
from operations
|
13,933
|
2,065
|
|||||
|
SAC
Holding II
|
|||||||
|
Revenues
|
46,239
|
43,172
|
|||||
|
Earnings
from operations
|
13,643
|
10,466
|
|||||
|
Eliminations
|
|||||||
|
Revenues
|
(25,519
|
)
|
(27,619
|
)
|
|||
|
Earnings
(loss) from operations
|
(16,113
|
)
|
3,294
|
||||
|
Consolidated
Results
|
|||||||
|
Revenues
|
2,106,626
|
2,008,121
|
|||||
|
Earnings
from operations
|
305,381
|
166,996
|
|||||
Total
costs and expenses decreased $39.9 million for fiscal 2006, compared with fiscal
2005. Total costs and expenses for both insurance companies decreased $43.3
million due primarily to reductions in benefits and losses. Fiscal 2005 included
a $10.6 million charge for litigation at Oxford not present in fiscal 2006.
Increases in operating costs associated with the improved business volume at
Moving and Storage were offset by reductions in repair and maintenance expenses
related to rotating the fleet. Trucks with higher maintenance costs are being
replaced by new trucks with lower initial maintenance costs.
In
our
second quarter of fiscal 2006, hurricanes Katrina and Rita struck the Gulf
Coast
of the United States causing business interruption to a number of our operating
facilities. We identified customers impacted by the hurricanes and our rapid
response teams provided a variety of solutions to divert operations to alternate
facilities and restore operations where possible. We lost approximately 150
trucks and 150 trailers during and after the devastation caused by these
hurricanes. We maintain property and business interruption insurance coverage
to
mitigate the financial impact of these types of catastrophic events. Our
insurance deductible is $500,000 and was recorded in our second quarter of
fiscal 2006.
During
fiscal 2006, the Company received insurance proceeds of $4.8 million, of this
amount $4.5 million was applied to the losses incurred on trucks and trailers
and $0.3 million was applied to the losses sustained at operating facilities.
The net book value of the trucks and trailers lost during the 2005 hurricanes
approximates $1.1 million. Additional insurance recoveries are expected as
facilities are fully restored and claims are filed.
As
a
result of the aforementioned changes in revenues and expenses, earnings from
operations improved to $305.4 million for fiscal 2006, compared with $167.0
million for fiscal 2005.
Interest
expense for fiscal 2006 was $105.1 million, compared with $73.2 million in
fiscal 2005. 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
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. 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.
27
During
the third quarter of fiscal 2005, the Company settled our litigation against
our
former auditor and received a settlement (net of attorneys’ fees and costs) of
$51.3 million before taxes. The settlement had the effect of increasing, on
a
non-recurring basis, earnings for the year ended March 31, 2005 by $2.47 per
share before taxes, in which the tax effect was approximately $0.91 per
share.
Income
tax expense was $79.1 million in fiscal 2006, compared with $55.7 million in
fiscal 2005.
Dividends
accrued on our Series A preferred stock were $13.0 million in both fiscal 2006
and 2005, respectively.
As
a
result of the above mentioned items, net earnings available to common
shareholders were $108.2 million in fiscal 2006, compared with $76.5 million
in
fiscal 2005.
The
weighted average common shares outstanding: basic and diluted were 20,857,108
in
fiscal 2006 and 20,804,773 in fiscal 2005.
Basic
and
diluted earnings per share in fiscal 2006 were $5.19, compared with $3.68 in
fiscal 2005.
28
Moving
and Storage
Fiscal
2007 Compared with Fiscal 2006
Listed
below are revenues for the 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
|
$
|
1,476,579
|
$
|
1,503,569
|
|||
|
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
|
$
|
1,875,860
|
$
|
1,900,468
|
|||
During
fiscal 2007, self-moving equipment rentals 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 has further
lowered self-moving rental revenues. The Company now has a better inventory
of
certain mid-size trucks and is attempting to improve revenue per transaction;
however, if these issues continue our revenues may continue to be negatively
impacted in the future.
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.
Other
revenues decreased $8.9 million for fiscal 2007, compared with fiscal 2006.
Fiscal 2006 included several non-recurring items. Net investment and interest
income increased $4.1 million primarily due to increases in interest on invested
cash and higher interest rates.
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
is 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
|
|||||
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.
29
Fiscal
2006 Compared with Fiscal 2005
Listed
below are revenues for our major product lines at our Moving and Storage
Operating Segment for fiscal 2006 and fiscal 2005:
|
Year
Ended March 31,
|
|||||||
|
2006
|
2005
|
||||||
|
(In
thousands)
|
|||||||
|
Self-moving
equipment rentals
|
$
|
1,503,569
|
$
|
1,437,895
|
|||
|
Self-storage
revenues
|
100,873
|
96,202
|
|||||
|
Self-moving
and self-storage product and service sales
|
207,119
|
191,078
|
|||||
|
Property
management fees
|
23,988
|
14,434
|
|||||
|
Net
investment and interest income
|
30,025
|
29,902
|
|||||
|
Other
revenue
|
34,894
|
22,156
|
|||||
|
Moving
and Storage revenue
|
$
|
1,900,468
|
$
|
1,791,667
|
|||
During
fiscal 2006, self-moving equipment rentals increased $65.7 million with
increases in truck, trailer, and support rental items. The increases are due
to
improved equipment utilization, pricing, and product mix that included the
introduction of approximately 15,500 new trucks in fiscal 2006. In most cases,
these trucks replaced older trucks rotated out of the fleet.
Self-storage
revenues increased $4.7 million for fiscal 2006, compared with fiscal 2005
generally in line with the increases in occupancy rates. Average occupancy
based
on room count has increased 5.5% in fiscal 2006, compared with fiscal
2005.
Sales
of
self-moving and self-storage products and service increased $16.0 million for
fiscal 2006, compared with fiscal 2005. Retail sales generally increase in
line
with moving equipment rentals. In fiscal 2006 we have seen increases beyond
this
trend due to improved customer demand for towing accessories and propane. U-Haul
is the largest single retail provider of towing accessories in the United States
through our Company owned and managed locations. The Company continues to
improve its visibility as a provider of propane and towing
accessories.
The
Company owns and manages self-storage facilities. Self-storage revenues reported
in the consolidating financial statements for Moving and Storage represent
Company-owned locations only. Self-storage data for our owned storage locations
is as follows:
|
Year
Ended March 31,
|
|||||||
|
2006
|
2005
|
||||||
|
(In
thousands, except occupancy rate)
|
|||||||
|
Room
count as of March 31
|
123
|
127
|
|||||
|
Square
footage as of March 31
|
9,592
|
10,003
|
|||||
|
Average
number of rooms occupied
|
107
|
108
|
|||||
|
Average
occupancy rate based on room count
|
87.9
|
%
|
82.4
|
%
|
|||
|
Average
square footage occupied
|
8,516
|
8,514
|
|||||
Total
costs and expenses increased $2.7 million for fiscal 2006, compared with fiscal
2005. Commissions on self-moving equipment rentals and cost of sales increased
in proportion to the related revenues. Operating expenses decreased $26.1
million for fiscal 2006, compared with fiscal 2005. Increases in operating
costs
associated with the improved business volume were more than offset by reductions
in repair and maintenance expenses related to rotating the fleet. Trucks with
higher maintenance costs are being replaced by new trucks with lower initial
maintenance costs. Overall total cost and expense increases were less than
revenue increases for fiscal 2006.
30
During
fiscal 2006, the Company received insurance proceeds of $4.8 million, of this
amount $4.5 million was applied to the losses incurred on trucks and trailers
and $0.3 million was applied to the losses sustained at operating facilities.
The net book value of the trucks and trailers lost during the 2005 hurricanes
approximates $1.1 million. Additional insurance recoveries are expected as
facilities are restored and claims are filed.
As
a
result of the above mentioned changes in revenues and expenses, earnings from
operations increased to $292.8 million in fiscal 2006, compared with $166.0
million for fiscal 2005.
U-Haul
International, Inc.
Fiscal
2007 Compared with Fiscal 2006
Listed
below are revenues for the major product lines at U-Haul International, Inc.
for
fiscal 2007 and fiscal 2006:
|
Year
Ended March 31,
|
|||||||
|
2007
|
2006
|
||||||
|
(In
thousands)
|
|||||||
|
Self-moving
equipment rentals
|
$
|
1,476,579
|
$
|
1,503,569
|
|||
|
Self-storage
revenues
|
104,725
|
99,060
|
|||||
|
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
|
29,294
|
24,894
|
|||||
|
Other
revenue
|
31,403
|
39,303
|
|||||
|
U-Haul
International, Inc. revenue
|
$
|
1,874,629
|
$
|
1,897,933
|
|||
During
fiscal 2007, self-moving equipment rentals 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 has further
lowered self-moving rental revenues. The Company now has a better inventory
of
certain mid-size trucks and is attempting to improve revenue per transaction;
however, if these issues continue our revenues may continue to be negatively
impacted in the future.
Self-storage
revenues increased $5.7 million for fiscal 2007, compared with fiscal 2006
due
largely 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.
Sales
of
self-moving and self-storage products and service sales increased by $1.6
million for fiscal 2007, compared with fiscal 2006.
Total
costs and expenses increased $56.0 million for fiscal 2007, compared with fiscal
2006. This is primarily due to increases in lease and depreciation expenses
related to the rotation of the rental fleet. Reductions in maintenance and
repair expense were partially offset by the cost of re-imaging portions of
the
existing rental fleet along with freight and licensing costs.
As
a
result of the above mentioned changes in revenues and expenses, earnings from
operations decreased to $162.4 million in fiscal 2007, compared with $241.7
million for fiscal 2006.
31
Fiscal
2006 Compared with Fiscal 2005
Listed
below are revenues for the major product lines at U-Haul International, Inc.
for
fiscal 2006 and fiscal 2005:
|
Year
Ended March 31,
|
|||||||
|
2006
|
2005
|
||||||
|
(In
thousands)
|
|||||||
|
Self-moving
equipment rentals
|
$
|
1,503,569
|
$
|
1,437,895
|
|||
|
Self-storage
revenues
|
99,060
|
94,431
|
|||||
|
Self-moving
and self-storage product and service sales
|
207,119
|
191,078
|
|||||
|
Property
management fees
|
23,988
|
14,434
|
|||||
|
Net
investment and interest income
|
24,894
|
22,030
|
|||||
|
Other
revenue
|
39,303
|
27,489
|
|||||
|
U-Haul
International, Inc. revenue
|
$
|
1,897,933
|
$
|
1,787,357
|
|||
During
fiscal 2006, self-moving equipment rentals increased $65.7 million with
increases in truck, trailer, and support rental items. The increases are due
to
improved equipment utilization, pricing, and product mix that included the
introduction of approximately 15,500 new trucks in fiscal 2006. In most cases,
these trucks replaced older trucks rotated out of the fleet.
Self-storage
revenues increased $4.6 million for fiscal 2006, compared with fiscal 2005
generally in line with the increases in occupancy rates. Average occupancy
based
on room count has increased 5.5% in fiscal 2006, compared with fiscal
2005.
Sales
of
self-moving and self-storage products and service sales increased $16.0 million
for fiscal 2006, compared with fiscal 2005. Retail sales generally increase
in
line with moving equipment rentals. In fiscal 2006 we have seen increases beyond
this trend due to improved customer demand for towing accessories and propane.
U-Haul is the largest single retail provider of towing accessories in the United
States through our Company owned and managed locations. The Company continues
to
improve its visibility as a provider of propane and towing accessories.
Self-moving and storage related retail products continue to improve as we have
increased our product offerings.
Total
costs and expenses increased $9.3 million for fiscal 2006, compared with fiscal
2005. Commissions on self-moving equipment rentals and cost of sales increased
in proportion to the related revenues. Operating expenses decreased $15.1
million for fiscal 2006, compared with fiscal 2005. Increases in operating
costs
associated with the improved business volume were more than offset by reductions
in repair and maintenance expenses related to rotating the fleet. Trucks with
higher maintenance costs are being replaced by new trucks with lower initial
maintenance costs. Depreciation expense increased $17.8 million for fiscal
2006,
compared with fiscal 2005 primarily due to buy-outs of leases, new truck
purchases and certain residual value adjustments on the rental trucks. The
buy-outs of the leases are the primary reason for the $8.6 million decrease
in
lease expense for fiscal 2006, compared with fiscal 2005. Overall total cost
and
expense increases were less than revenue increases for fiscal 2006.
During
fiscal 2006, the Company received insurance proceeds of $4.8 million, of this
amount $4.5 million was applied to the losses incurred on trucks and trailers
and $0.3 million was applied to the losses sustained at operating facilities.
The net book value of the trucks and trailers lost during the 2005 hurricanes
approximates $1.1 million. Additional insurance recoveries are expected as
facilities are fully restored as claims are filed.
As
a
result of the above mentioned changes in revenues and expenses, earnings from
operations increased to $241.7 million in fiscal 2006, compared with $140.5
million for fiscal 2005.
32
Republic
Western Insurance Company
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.
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.
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.
Earnings
from operations were $5.7 million and $1.1 million for years ended December
31,
2006 and 2005, respectively.
2005
Compared with 2004
Net
premiums were $26.0 million and $25.0 million for the years ended December
31,
2005 and 2004, respectively. U-Haul related premiums were $20.2 million and
$18.9 million for the years ended December 31, 2005 and 2004, respectively.
Other lines of business were $5.8 million and $6.1 million for the years ended
December 31, 2005 and 2004, respectively.
Net
investment income was $11.4 million and $16.4 million for the years ended
December 31, 2005 and 2004, respectively. The reduction was due to a decrease
in
RepWest’s invested asset base and gains on capital assets sold in
2004.
Benefits
and losses incurred were $22.6 million and $39.7 million for the years ended
December 31, 2005 and 2004, respectively. The decrease resulted from reduced
exposure to non U-Haul policies combined with the absence of approximately
$8.5
million of incurred losses in 2004 due to hurricane claims.
Amortization
of deferred acquisition costs were $2.9 million and $4.7 million for the years
ended December 31, 2005 and 2004, respectively. The decreases are due to a
reduction of in-force business related to the exit of non U-Haul lines of
business.
Operating
expenses were $10.8 million and $11.8 million for the years ended December
31,
2005 and 2004, respectively. The decrease was due to a reduction of general
administrative expenses resulting from the exit of the non U-Haul lines of
business.
Earnings
(loss) from operations were $1.1 million and ($14.8) million for the years
ended
December 31, 2005 and 2004, respectively.
33
The
following table illustrates the change in unpaid loss and loss adjustment
expenses. The first line represents reserves 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 reserve as of the end of successive years. The last section compares
the latest revised estimated reserve amount to the reserve amount as originally
established. This last section is cumulative and should not be
totaled.
|
Unpaid
Loss and Loss Adjustment Expenses
|
||||||||||||||||||||||||||||||||||
|
December
31,
|
||||||||||||||||||||||||||||||||||
|
1996
|
1997
|
1998
|
1999
|
2000
|
2001
|
2002
|
2003
|
2004
|
2005
|
2006
|
||||||||||||||||||||||||
|
(In
thousands)
|
||||||||||||||||||||||||||||||||||
|
Unpaid
Loss and Loss Adjustment Expenses
|
$
|
332,674
|
$
|
384,816
|
$
|
344,748
|
$
|
334,858
|
$
|
382,651
|
$
|
448,987
|
$
|
399,447
|
$
|
416,259
|
$
|
380,875
|
$
|
346,928
|
$
|
288,783
|
||||||||||||
|
Paid
(Cumulative) as of:
|
||||||||||||||||||||||||||||||||||
|
One
year later
|
89,336
|
103,752
|
82,936
|
117,025
|
130,471
|
130,070
|
100,851
|
73,384
|
44,677
|
40,116
|
-
|
|||||||||||||||||||||||
|
Two
years later
|
161,613
|
174,867
|
164,318
|
186,193
|
203,605
|
209,525
|
164,255
|
114,246
|
83,230
|
-
|
-
|
|||||||||||||||||||||||
|
Three
years later
|
208,168
|
216,966
|
218,819
|
232,883
|
255,996
|
266,483
|
201,346
|
151,840
|
-
|
-
|
-
|
|||||||||||||||||||||||
|
Four
years later
|
232,726
|
246,819
|
255,134
|
264,517
|
299,681
|
295,268
|
233,898
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
|
Five
years later
|
250,312
|
269,425
|
274,819
|
295,997
|
320,629
|
322,191
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
|
Six
years later
|
263,645
|
282,598
|
297,354
|
314,281
|
341,543
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
|
Seven
years later
|
274,249
|
300,814
|
311,963
|
331,385
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
|
Eight
years later
|
289,614
|
314,322
|
327,141
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
|
Nine
years later
|
298,449
|
326,805
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
|
Ten
years later
|
309,945
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
|
Reserved
Re-estimated as of:
|
||||||||||||||||||||||||||||||||||
|
One
year later
|
354,776
|
357,733
|
339,602
|
383,264
|
433,222
|
454,510
|
471,029
|
447,524
|
388,859
|
326,386
|
||||||||||||||||||||||||
|
Two
years later
|
342,164
|
361,306
|
371,431
|
432,714
|
454,926
|
523,624
|
480,713
|
456,171
|
368,756
|
-
|
||||||||||||||||||||||||
|
Three
years later
|
346,578
|
369,598
|
429,160
|
437,712
|
517,361
|
500,566
|
521,319
|
435,549
|
-
|
-
|
||||||||||||||||||||||||
|
Four
years later
|
349,810
|
398,899
|
413,476
|
480,200
|
543,554
|
571,045
|
502,922
|
-
|
-
|
-
|
||||||||||||||||||||||||
|
Five
years later
|
376,142
|
398,184
|
443,696
|
524,548
|
558,765
|
569,104
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
|
Six
years later
|
369,320
|
428,031
|
477,975
|
520,675
|
559,873
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
|
Seven
years later
|
396,197
|
450,728
|
485,228
|
527,187
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
|
Eight
years later
|
423,928
|
461,082
|
496,484
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
|
Nine
years later
|
418,177
|
469,869
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
|
Ten
years later
|
417,435
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
|
Cumulative
Redundancy (Deficiency)
|
$
|
(84,761
|
)
|
$
|
(85,053
|
)
|
$
|
(151,736
|
)
|
$
|
(192,329
|
)
|
$
|
(177,222
|
)
|
$
|
(120,117
|
)
|
$
|
(103,475
|
)
|
$
|
(19,290
|
)
|
$
|
12,119
|
$
|
20,542
|
||||||
|
Retro
Premium Recoverable
|
1,582
|
3,037
|
(1,879
|
)
|
6,797
|
5,613
|
21,756
|
7,036
|
374
|
2,233
|
-
|
|||||||||||||||||||||||
|
Re-estimated
Reserve: Amount (Cumulative)
|
$
|
(83,179
|
)
|
$
|
(82,016
|
)
|
$
|
(153,615
|
)
|
$
|
(185,532
|
)
|
$
|
(171,609
|
)
|
$
|
(98,361
|
)
|
$
|
(96,439
|
)
|
$
|
(18,916
|
)
|
$
|
14,352
|
$
|
20,542
|
||||||
34
Activity
in the liability for unpaid losses and loss adjustment expenses for RepWest
is
summarized as follows:
|
Year
Ended December 31,
|
||||||||||
|
2006
|
2005
|
2004
|
||||||||
|
(In
thousands)
|
||||||||||
|
Balance
at January 1
|
$
|
346,928
|
$
|
380,875
|
$
|
416,259
|
||||
|
Less:
reinsurance recoverable
|
181,388
|
189,472
|
177,635
|
|||||||
|
Net
balance at January 1
|
165,540
|
191,403
|
238,624
|
|||||||
|
Incurred
related to:
|
||||||||||
|
Current
year
|
6,006
|
6,429
|
17,960
|
|||||||
|
Prior
years
|
15,895
|
16,161
|
21,773
|
|||||||
|
Total
incurred
|
21,901
|
22,590
|
39,733
|
|||||||
|
Paid
related to:
|
||||||||||
|
Current
year
|
3,492
|
3,774
|
13,570
|
|||||||
|
Prior
years
|
40,116
|
44,679
|
73,384
|
|||||||
|
Total
paid
|
43,608
|
48,453
|
86,954
|
|||||||
|
Net
balance at December 31
|
143,833
|
165,540
|
191,403
|
|||||||
|
Plus:
reinsurance recoverable
|
144,950
|
181,388
|
189,472
|
|||||||
|
Balance
at December 31
|
$
|
288,783
|
$
|
346,928
|
$
|
380,875
|
||||
The
liability for incurred losses and loss adjustment expenses (net of reinsurance
recoverable of $145.0 million) decreased by $21.7 million in 2006. The decrease
is a result of eliminating unprofitable programs.
35
Oxford
Life Insurance Company
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. 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
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.
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 deferred acquisition costs (DAC) and the value of business acquired (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.
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.
Earnings
from operations were $14.5 million and $13.9 million for the years ended
December 31, 2006 and 2005, respectively.
2005
Compared with 2004
Net
premiums were $120.4 million and $127.7 million for the years ended December
31,
2005 and 2004, respectively. Medicare supplement premiums decreased by $5.7
million due to lapses on closed lines being greater than new business written
on
active lines. Credit insurance premiums decreased $3.8 million. Oxford is no
longer writing credit insurance. Oxford expects the majority of the existing
credit policies to earn out over the next three years. Life premiums increased
$1.6 million primarily due to increased sales from the final expense product.
Annuitizations increased $0.4 million, while other health premiums increased
slightly. Other revenue decreased $2.5 million in the current year, compared
to
the prior year primarily due to decreased surrender charge income.
Net
investment income was $22.0 million and $23.5 million for the years ended
December 31, 2005 and 2004, respectively. The decrease was primarily due to
realized losses on the sale of investments in the current year. Investment
yields were consistent between the two years.
Benefits
and losses incurred were $85.7 million and $91.5 million for the years ended
December 31, 2005 and 2004, respectively. This decrease was primarily a result
of a $5.4 million decrease in Medicare supplement benefits due to reduced
exposure and a slightly improved loss ratio. All other lines combined for a
$0.4
million decrease.
Amortization
of deferred acquisition costs (DAC) and the value of business acquired (VOBA)
was $21.4 million and $23.8 million for the years ended December 31, 2005 and
2004, respectively. These costs are amortized for life and health policies
as
the premium is earned over the term of the policy; and for deferred annuities
in
relation to interest spreads. Annuity amortization decreased $1.9 million from
2004 primarily due to reduced surrender activity. Other segments combined for
a
$0.5 million decrease primarily due to a decline in new business
volume.
36
Operating
expenses were $27.0 million and $42.2 million for the years ended December
31,
2005 and 2004, respectively. The decrease is primarily due to a $10.6 million
accrual in the prior year for the Kocher settlement as well as reduced legal
and
overhead expenses in the current year. Included in operating expenses for the
current year is $0.7 million of expense related to the write-off of goodwill
associated with a subsidiary engaged in selling credit insurance. Non-deferrable
commissions decreased $2.3 million due to decreased sales of Medicare supplement
and credit products.
Earnings
from operations were $13.9 million and $2.1 million for the years ended December
31, 2005 and 2004, respectively. The increase is due primarily to the prior
year
accrual of $10.6 million related to the Kocher settlement as well as improved
loss ratios in the Medicare supplement and other health lines of
business.
SAC
Holding II
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.
Fiscal
2006 Compared with Fiscal 2005
Listed
below are revenues for the major product lines at SAC Holding II for fiscal
2006
and fiscal 2005:
|
Year
Ended March 31,
|
|||||||
|
2006
|
2005
|
||||||
|
(In
thousands)
|
|||||||
|
Self-moving
equipment rentals
|
$
|
9,498
|
$
|
9,008
|
|||
|
Self-storage
revenues
|
18,869
|
17,953
|
|||||
|
Self-moving
and self-storage product and service sales
|
16,602
|
15,020
|
|||||
|
Other
revenue
|
1,270
|
1,191
|
|||||
|
Segment
revenue
|
$
|
46,239
|
$
|
43,172
|
|||
Total
revenues were $46.2 million in fiscal 2006, compared with $43.2 million in
fiscal 2005. The increase was driven by self-moving and self-storage product
and
service sales. This increase grew in conjunction with increases in self-storage
revenues due to improved occupancy and pricing.
Total
costs and expenses were $32.6 million in fiscal 2006, compared with $32.7
million in fiscal 2005.
Earnings
from operations were $13.6 million in fiscal 2006, compared with $10.5 million
in fiscal 2005.
37
Liquidity
and Capital Resources
We
believe our current capital structure will allow us to achieve our operational
plans and goals, and provide us with sufficient liquidity for the next three
to
five years. The majority of the obligations currently in place mature at the
end
of fiscal years 2015 or 2018. As a result, we believe that our liquidity is
sufficient. We believe these improvements will enhance our access to capital
markets. However, there is no assurance that future cash flows will be
sufficient to meet our outstanding obligations or our future capital
needs.
At
March
31, 2007, cash and cash equivalents totaled $75.3 million, compared with $155.5
million on March 31, 2006. The assets of our insurance subsidiaries are
generally unavailable to fulfill the obligations of non-insurance operations
(AMERCO, U-Haul and Real Estate). The assets of SAC Holding II are completely
unavailable to satisfy any of the Company’s obligations. As of March 31, 2007,
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)
|
SAC
Holding II
|
||||||||||
|
Cash
& cash equivalents
|
$
|
64,306
|
$
|
4,228
|
$
|
6,738
|
$
|
-
|
|||||
|
Other
financial assets
|
363,373
|
396,337
|
633,526
|
5
|
|||||||||
|
Debt
obligations (b)
|
1,181,165
|
-
|
-
|
74,887
|
|||||||||
|
(a)
As of December 31, 2006
|
|||||||||||||
|
(b)
Payable to third parties
|
|||||||||||||
At
March
31, 2007, our Moving and Storage operations (AMERCO, U-Haul and Real Estate)
had
cash available under existing credit facilities of $360.0 million and were
comprised of:
|
Real
estate loan (revolving credit)
|
$
|
200.0
|
||
|
Construction
loan (revolving credit)
|
40.0
|
|||
|
Working
capital loan (revolving credit)
|
20.0
|
|||
|
Fleet
loan (revolving credit)
|
100.0
|
|||
|
$
|
360.0
|
A
summary
of our consolidated cash flows for fiscal 2007, 2006 and 2005 is shown in the
table below:
|
Year
Ended March 31,
|
||||||||||
|
2007
|
2006
|
2005
|
||||||||
|
(In
thousands)
|
||||||||||
|
Net
cash provided by operating activities
|
$
|
350,721
|
$
|
270,508
|
$
|
220,697
|
||||
|
Net
cash provided (used) by investing activities
|
(517,619
|
)
|
(258,836
|
)
|
36,176
|
|||||
|
Net
cash provided (used) by financing activities
|
87,685
|
88,018
|
(282,497
|
)
|
||||||
|
Effects
of exchange rate on cash
|
(974
|
)
|
(186
|
)
|
22
|
|||||
|
Net
cash flow
|
(80,187
|
)
|
99,504
|
(25,602
|
)
|
|||||
|
Cash
at the beginning of the period
|
155,459
|
55,955
|
81,557
|
|||||||
|
Cash
at the end of the period
|
$
|
75,272
|
$
|
155,459
|
$
|
55,955
|
||||
Cash
provided by operating activities increased $80.2 million in fiscal 2007,
compared with fiscal 2006. Operating cash flows for the Moving and Storage
segment included a $44.5 million interest repayment from SAC Holdings in fiscal
2007, offset by an additional $31.5 million in federal income tax payments,
while fiscal 2006 included payments related to the debt refinancing. The
insurance companies operating cash flows increased $46.4 million. The increase
at Oxford was due primarily to a $10.6 million lawsuit settlement in fiscal
2006. RepWest increased due primarily to $14.0 million received from the
exchange of related party assets combined with the collection of outstanding
reinsurance recoverable.
38
Net
cash
used in investing activities increased $258.8 million in fiscal 2007, compared
with fiscal 2006 due primarily to higher capital expenditures in the Moving
and
Storage segment. Capital expenditures increased in fiscal 2007 due to planned
manufacturing of rental vehicles to replace our older rental fleet;
additionally, the Company continued to buyout trucks and trailers at the
expiration of their TRAC lease.
Cash
provided by financing activities decreased $0.3 million in fiscal 2007, as
compared to fiscal 2006. Cash provided by borrowings for new rental equipment
were offset by funds used for the repayment of the aged truck revolver and
the
real estate mezzanine loan. Additionally, the Company used $49.1 million for
the
repurchase of common stock.
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 each
of
the next three fiscal years the Company will reinvest in its truck and trailer
rental fleet at least $400.0 million, net of equipment sales. This investment
will be funded through external lease financing, debt financing and internally
from operations. Management considers several factors including cost and tax
consequences when selecting a method to fund capital expenditures. Because
the
Company has utilized all of its Federal net operating loss carry forwards,
there
will be more of a focus on financing the fleet through asset-backed debt. The
amount of reinvestment in the rental fleet could change based upon several
factors including availability of capital and market conditions.
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 is developing several existing locations for use as storage
centers. The Company is funding these development projects through construction
loans and internally generated funds and expects to invest approximately $80.0
million in new storage development over the next twelve to eighteen months.
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 $557.5 million and $322.2
million for fiscal 2007 and 2006, respectively. During fiscal 2007 the Company
entered into $120.6 million of new equipment operating leases.
Moving
and Storage continues to hold significant cash and has access to additional
liquidity. Management may invest these funds in our existing operations 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 $142.4 million, $137.4 million, and $154.8 million at December 31,
2006, 2005, and 2004 respectively. RepWest paid $27.0 million in dividends
to
its parent during 2005; payment was effected by a reduction in intercompany
accounts. The decrease was offset by increases from earnings and gains from
the
sale of real estate to affiliated entities recorded directly to additional
paid
in capital. RepWest does not use debt or equity issues to increase capital
and
therefore has no 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 investment contract
withdrawals for the year ending December 31, 2006 were $62.5 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.
39
Oxford’s
stockholder’s equity was $136.4 million, $127.3 million, and $115.0 million at
December 31, 2006, 2005 and 2004, respectively. The increase resulted from
earnings of $9.6 million offset by a $0.5 million decrease in other
comprehensive income. Oxford does not use debt or equity issues to increase
capital and therefore has no exposure to capital market conditions other than
through its investment portfolio.
SAC
Holding II
SAC
Holding II operations are funded by various mortgage loans, and secured and
unsecured notes. SAC Holding II does not utilize revolving lines of credit
to
finance its operations or acquisitions. Certain of SAC Holding II loan
agreements contain covenants and restrictions on incurring additional subsidiary
indebtedness.
Cash
Provided from Operating Activities by Operating Segments
Moving
and Self-Storage
Cash
provided by operating activities was $331.7 million, $276.1 million and $226.5
million in fiscal 2007, 2006 and 2005, respectively. Operating cash flows for
the Moving and Storage segment included a $40.7 million interest repayment
from
SAC Holdings in fiscal 2007, offset by an additional $31.5 million in federal
income tax payments, while fiscal 2006 included payments related to the debt
refinancing.
Propertyand
Casualty Insurance
Cash
provided (used) by operating activities was $5.4 million, ($28.9) million,
and
($31.6) million for the years ending December 31, 2006, 2005, and 2004,
respectively. The decrease in cash used by operating activities was the result
of RepWest’s exiting its non U-Haul lines of business and the associated
reduction of reserves in the lines exited.
RepWest’s
cash and cash equivalents and short-term investment portfolios was $71.9
million, $106.2 million, and $90.3 million at December 31, 2006, 2005, and
2004,
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 $11.4 million, ($0.7)
million and $24.8 million for the years ending December 31, 2006, 2005 and
2004,
respectively. The year ending December 31, 2005 includes the $10.6 million
settlement payment related to the Kocher lawsuit.
In
addition to cash flows from operating activities, a substantial amount of liquid
funds are available through Oxford’s short-term portfolio. At December 31, 2006,
2005 and 2004, cash and cash equivalents and short-term investments amounted
to
$41.4 million, $37.0 million and $116.8 million, respectively. Management
believes that the overall sources of liquidity will continue to meet foreseeable
cash needs.
SAC
Holding II
Cash
provided by operating activities at SAC Holding II was $2.2 million, $2.8
million and $1.1 million for fiscal 2007, 2006 and 2005, respectively.
40
Liquidity
and Capital Resources - Summary
We
believe we have the financial resources needed 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 and
our
preferred stock dividend program.
The
Company’s borrowing strategy is primarily focused on asset-backed financing. As
part of this strategy, the Company seeks to ladder maturities and for loans
with
floating rates, fix these rates 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. At March 31, 2007 the Company had cash availability under
existing credit facilities of $360.0 million. 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
see Note 9 “Borrowings” to 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, 2007:
|
Payment
due by Period (as of March 31, 2007)
|
||||||||||||||||
|
Contractual
Obligations
|
Total
|
Prior
to
03/31/08
|
04/01/08
03/31/10
|
04/01/10
03/31/12
|
April
1, 2012
and
Thereafter
|
|||||||||||
|
(In
thousands)
|
||||||||||||||||
|
Notes
and loans payable - Principal
|
$
|
1,181,165
|
$
|
92,335
|
$
|
146,477
|
$
|
118,175
|
$
|
824,178
|
||||||
|
Notes
and loans payable - Interest
|
473,513
|
71,259
|
125,812
|
110,624
|
165,818
|
|||||||||||
|
Revolving
credit agreement - Principal
|
-
|
-
|
-
|
-
|
-
|
|||||||||||
|
Revolving
credit agreement - Interest
|
-
|
-
|
-
|
-
|
-
|
|||||||||||
|
AMERCO's
operating leases
|
413,199
|
108,614
|
170,701
|
97,080
|
36,804
|
|||||||||||
|
SAC
Holding II Corporation notes and loans*
|
149,975
|
1,440
|
3,282
|
3,833
|
141,420
|
|||||||||||
|
Elimination
of SAC Holding II obligations to AMERCO
|
(75,088
|
)
|
-
|
-
|
-
|
(75,088
|
)
|
|||||||||
|
Total
contractual obligations
|
$
|
2,142,764
|
$
|
273,648
|
$
|
446,272
|
$
|
329,712
|
$
|
1,093,132
|
||||||
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.
*
These
notes and loans represent obligations of SAC Holding II issued to third party
lenders and AMERCO through its subsidiaries.
41
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 2012, 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 $172.3
million of residual values at March 31, 2007 for these assets at the end of
their respective lease terms. AMERCO has been leasing rental equipment since
1987. Thus far, we have experienced no residual value shortfalls. 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 is $490.6 million
at March 31, 2007.
Historically,
AMERCO used off-balance sheet arrangements in connection with the expansion
of
our self-storage business (see 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”), 4 SAC, 5 SAC, 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 $23.5 million,
$22.5 million and $14.4 million from the above mentioned entities during fiscal
2007, 2006 and 2005, 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 Investments, Inc. (“Blackwater”), wholly-owned by Mark
V. Shoen, a significant shareholder and executive officer of AMERCO. 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 $2.7 million in fiscal 2007,
2006 and 2005, 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, 2007, 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 2007, 2006 and 2005 the Company paid
the above mentioned entities $36.6 million, $36.8 million and $33.1 million,
respectively in commissions pursuant to such dealership contracts.
During
fiscal 2007, 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 $19.2 million, $19.4 million
and $22.0 million and received cash interest payments of $44.5 million, $11.2
million and $11.7 million from SAC Holdings during fiscal 2007, 2006 and 2005,
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 2007
and
the aggregate notes receivable balance at March 31, 2007 was $203.7 million,
of
which $75.1 million is with SAC Holding II and has been eliminated in the
consolidating financial statements.
These
agreements and notes with subsidiaries of SAC Holdings, 4 SAC, 5 SAC, Galaxy
and
Private Mini, excluding Dealer Agreements, provided revenue of $39.7 million,
expenses of $2.7 million and cash flows of $63.5 million during fiscal 2007.
Revenues and commission expenses related to the Dealer Agreements were $168.6
million and $36.6 million, respectively.
42
Fiscal
2008 Outlook
In
fiscal
2008, we are working towards 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 2007, the Company added over 22,500 new trucks and nearly 2,000 new
trailers to our existing rental fleet. Our plans include manufacturing all
sizes
of our boxed trucks and adding to our pickup and cargo van fleet. Our current
expectation is to continue adding new trucks to the fleet at a similar rate
for
fiscal 2008. 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.
In
fiscal
2008, 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 2008. The Company continues to evaluate new moving
and
storage opportunities in the market place.
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.
43
Quarterly
Results (unaudited)
The
quarterly results shown below are derived from unaudited financial statements
for the eight quarters beginning April 1, 2005 and ending March 31, 2007. 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,
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
|
$
|
445,197
|
$
|
466,838
|
$
|
606,535
|
$
|
567,027
|
|||||
|
Earnings
(loss) from operations
|
(8,774
|
)
|
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. See discussion under “Adoption of New Accounting
Pronouncements”.
(b)
The
second quarter fiscal 2007 included a non-recurring amortization of $7.0
million, pre-tax on deferred charges related to a refinancing.
|
Quarter
Ended
|
|||||||||||||
|
March
31,
2006
|
December
31,
2005
|
September
30,
2005
|
June
30,
2005
(c)
|
||||||||||
|
(In
thousands, except for share and per share data)
|
|||||||||||||
|
Total
revenues
|
$
|
445,982
|
$
|
495,670
|
$
|
605,516
|
$
|
559,458
|
|||||
|
Earnings
from operations
|
19,164
|
45,419
|
128,238
|
112,560
|
|||||||||
|
Net
earnings
|
1,800
|
15,170
|
69,122
|
35,062
|
|||||||||
|
Earnings
(loss) available to common shareholders
|
(1,440
|
)
|
11,929
|
65,881
|
31,821
|
||||||||
|
Weighted
average common shares outstanding:
basic and diluted
|
20,887,258
|
20,865,684
|
20,848,620
|
20,836,458
|
|||||||||
|
Earnings
(loss) per common share Basic
and diluted
|
$
|
(0.07
|
)
|
$
|
0.57
|
$
|
3.16
|
$
|
1.53
|
||||
(c)
The
first quarter fiscal 2006 results included a non-recurring fee of $21.2 million
on early extinguishment of debt and a write-off of $14.4 million of debt
issuance costs.
44
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.
|
Notional
Amount
|
|
Effective
Date
|
Expiration
Date
|
Fixed
Rate
|
Floating
Rate
|
|||||||||||||
|
$
|
118,218,369
|
(a),
(c)
|
|
5/10/2006
|
4/10/2012
|
5.06
|
%
|
1
Month LIBOR
|
||||||||||
|
132,498,584
|
(a),
(c)
|
|
10/10/2006
|
10/10/2012
|
5.57
|
%
|
1
Month LIBOR
|
|||||||||||
|
43,312,431
|
(a)
|
|
7/10/2006
|
7/10/2013
|
5.67
|
%
|
1
Month LIBOR
|
|||||||||||
|
294,166,667
|
(a)
|
|
8/18/2006
|
8/10/2018
|
5.43
|
%
|
1
Month LIBOR
|
|||||||||||
|
29,500,000
|
(a)
|
|
2/12/2007
|
2/10/2014
|
5.24
|
%
|
1
Month LIBOR
|
|||||||||||
|
20,000,000
|
(a)
|
|
3/12/2007
|
3/10/2014
|
4.99
|
%
|
1
Month LIBOR
|
|||||||||||
|
20,000,000
|
(a)
|
|
3/12/2007
|
3/10/2014
|
4.99
|
%
|
1
Month LIBOR
|
|||||||||||
|
50,000,000
|
(b)
|
|
5/17/2004
|
5/17/2007
|
3.00
|
%
|
3
Month LIBOR
|
|||||||||||
|
(a)
interest rate swap agreement
|
||||||||||||||||||
|
(b)
interest rate cap agreement
|
||||||||||||||||||
|
(c)
forward swap
|
||||||||||||||||||
As
of
March 31, 2007, the Company had approximately $659.8 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 increase future earnings and
cash flows by approximately $0.8 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 change 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 4.4%, 4.0% and 3.6% of our
revenue in fiscal 2007, 2006 and 2005, respectively was 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-66 and are incorporated herein.
Item
9. Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
Not
applicable.
45
Attached
as exhibits to this Form 10-K are certifications of the registrants’ Chief
Executive Officer (CEO), Chief Accounting Officer (CAO) and U-Haul’s Chief
Financial Officer (CFO), 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 and of management's assessment of internal control over financial
reporting 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, CAO, and U-Haul’s CFO,
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, CAO and U-Haul’s CFO, as appropriate to allow timely
decisions regarding required disclosure. Based upon the controls evaluation,
our
CEO, CAO and U-Haul’s CFO have concluded that as of the end of the period
covered by this Form 10-K, our Disclosure Controls were effective.
Inherent
Limitations on Effectiveness of Controls
The
Company's management, including the CEO, CAO and U-Haul’s CFO, 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.
46
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, 2007,
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
management's assessment of the Company's internal control over financial
reporting and has issued their report, which is included below.
Fleet
Securitization Transaction
The
Company has entered into a securitized financing, as of June 1, 2007, through
an
offer by certain new special-purpose entities of up to $217.0 million of Fixed
Rate Series 2007-1-BT Notes and $86.6 million of Fixed Rate Series 2007-1-CP
Notes in a private placement transaction exempt from registration under the
Securities Act of 1933, as amended. The new special-purpose entities that will
issue the notes will be indirect subsidiaries of AMERCO. These new
special-purpose subsidiaries will use the net proceeds from the sale of the
notes to, among other things, acquire box trucks, cargo vans and pickup trucks
from the manufacturers as well as from other subsidiaries of AMERCO. The new
special-purpose subsidiaries will generate income from truck and trailer rentals
to be used to service and repay the notes. The notes will not be obligations
of
AMERCO or any of its subsidiaries other than the new special-purpose
subsidiaries. These special-purpose subsidiaries will be consolidated into
U-Haul’s financial statements.
47
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER
FINANCIAL REPORTING
Board
of
Directors and Stockholders
AMERCO
Reno,
Nevada
We
have
audited management’s assessment, included in the accompanying “Item 9A,
Management Report on Internal Control Over Financial Reporting”, that AMERCO and
consolidated entities (the “Company”) maintained effective internal control over
financial reporting as of March 31, 2007, 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. Our
responsibility is to express an opinion on management’s assessment and an
opinion on the effectiveness of 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, evaluating management’s assessment, testing and evaluating
the design and operating effectiveness of internal control, and 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
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, management’s assessment that the Company maintained effective internal
control over financial reporting as of March 31, 2007, is fairly stated,
in all
material respects, based on the COSO criteria. Also in our opinion, the Company
maintained, in all material respects, effective internal control over financial
reporting as of March 31, 2007, based on the COSO criteria.
We
have
also audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated balance sheets of the Company
and consolidated entities as of March 31, 2007 and 2006 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, 2007, and our report dated June 6, 2007 expressed
an
unqualified opinion thereon.
/s/
BDO
Seidman, LLP
Phoenix,
Arizona
June 6, 2007
48
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 2007 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,
principal financial 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 2007 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 2007 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 2007 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 2007 fiscal
year.
49
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, 2007 and 2006
|
F-3
|
|
|
Consolidated
Statements of Operations - Years Ended March 31, 2007, 2006, and
2005
|
F-4
|
|
|
Consolidated
Statements of Changes in Stockholders' Equity - Years Ended March
31,
2007, 2006, and 2005
|
F-5
|
|
|
Consolidated
Statements of Comprehensive Income (Loss) - Years Ended March 31,
2007,
2006 and 2005
|
F-6
|
|
|
Consolidated
Statement of Cash Flows - Years Ended March 31, 2007, 2006 and
2005
|
F-7
|
|
|
Notes
to Consolidated Financial Statements
|
F-8
- F-58
|
|
|
2.
|
Additional
Information:
|
|
|
Notes
to Summary of Earnings of Independent Rental Fleets
|
F-59
- F-60
|
|
|
3.
|
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-61
- F-64
|
|
|
Valuation
and Qualifying Accounts - Schedule II
|
F-65
|
|
|
Supplemental
Information (For Property-Casualty Insurance Underwriters) - Schedule
V
|
F-66
|
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
|
Restated
Articles of Incorporation of U-Haul International, Inc.
|
Incorporated
by reference to AMERCO’s Annual Report on Form 10-K for the year ended
March 31, 2003, file no. 1-11255
|
50
|
3.4
|
Bylaws
of U-Haul International, Inc.
|
Incorporated
by reference to AMERCO’s Annual Report on Form 10-K for the year ended
March 31, 2003, 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
|
|
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
|
|
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
|
51
|
10.18
|
Management
Agreement between Eight 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
|
|
10.19
|
Management
Agreement between Nine 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
|
|
10.20
|
Management
Agreement between Ten 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
|
|
10.21
|
Management
Agreement between Six-A 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, 2000, file no. 1-11255
|
|
10.22
|
Management
Agreement between Six-B 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, 2000, file no. 1-11255
|
|
10.23
|
Management
Agreement between Six-C 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, 2000, file no. 1-11255
|
|
10.24
|
Management
Agreement between Eleven 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, 2000, file no. 1-11255
|
|
10.25
|
Management
Agreement between Twelve SAC Self-Storage Corporation and subsidiaries
of
AMERCO
|
Incorporated
by reference to AMERCO’s Form S-4 Registration Statement, no.
333-114042
|
|
10.26
|
Management
Agreement between Thirteen SAC Self-Storage Corporation and subsidiaries
of AMERCO
|
Incorporated
by reference to AMERCO’s Form S-4 Registration Statement, no.
333-114042
|
|
10.27
|
Management
Agreement between Fourteen SAC Self-Storage Corporation and subsidiaries
of AMERCO
|
Incorporated
by reference to AMERCO’s Form S-4 Registration Statement, no.
333-114042
|
|
10.28
|
Management
Agreement between Fifteen SAC Self-Storage Corporation and subsidiaries
of
AMERCO
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended December 31, 2000, file no. 1-11255
|
|
10.29
|
Management
Agreement between Sixteen SAC Self-Storage Corporation and subsidiaries
of
AMERCO
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended December 31, 2000, file no. 1-11255
|
|
10.30
|
Management
Agreement between Seventeen 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, 2001, 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
|
52
|
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
|
|
10.42
|
Promissory
Note between SAC Holding Corporation and Oxford Life Insurance
Company
|
Incorporated
by reference to AMERCO’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2002, file no. 1-11255
|
|
10.42A
|
Amendment
and Addendum to Promissory Note between SAC Holding Corporation and
Oxford
Life Insurance Company
|
Incorporated
by reference to AMERCO’s Form S-4 Registration Statement, no.
373-114042
|
|
10.45
|
Fixed
Rate Note between SAC Holding Corporation and U-Haul International,
Inc.
|
Incorporated
by reference to AMERCO’s Form S-4 Registration Statement, no.
333-114042
|
|
10.46
|
Promissory
Note between SAC Holding Corporation and U-Haul International,
Inc.
|
Incorporated
by reference to AMERCO’s Form S-4 Registration Statement, no.
333-114042
|
|
10.47
|
Amended
and Restated Promissory Note between SAC Holding Corporation and
U-Haul
International, Inc. (in an aggregate principal amount up to
$21,000,000)
|
Incorporated
by reference to AMERCO’s Form S-4 Registration Statement, no.
333-114042
|
|
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
|
53
|
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
|
|
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
|
|
10.59
|
Notice
of Early Termination (re Wells Fargo Loan and Security
Agreement)
|
Incorporated
by reference to AMERCO’s Current Report on Form 8-K, filed on May 13,
2005, file no. 1-11255
|
|
10.60
|
Notice
of Redemption (re 9% Senior Secured Notes due 2009)
|
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
|
|
10.63
|
Notice
of Redemption (re 12% Senior Subordinated Notes due 2011)
|
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
|
54
|
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
|
|
10.75
|
Credit
Agreement, dated 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 Current Report on Form 8-K, filed July 6, 2005,
file no. 1-11255
|
|
10.76
|
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 Current Report on Form 8-K, filed July 6, 2005,
file no. 1-11255
|
|
10.77
|
Guarantee,
dated June 28, 2005, made by U-Haul International, Inc. in favor
of
Merrill Lynch Commercial Finance Corporation.
|
Incorporated
by reference to AMERCO’s Current Report on Form 8-K, filed July 6, 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
|
|
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
|
55
|
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
|
|
10.88
|
First
Amendment to Security Agreement (Aged Truck Revolving 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
|
|
10.89
|
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
|
|
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
|
56
|
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.
|
Filed
herewith
|
|
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.
|
Filed
herewith
|
|
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”).
|
Filed
herewith
|
|
10.99
|
SCHEDULE
I TO 2007-1 BOX TRUCK BASE INDENTURE, dated as of June 1,
2007.
|
Filed
herewith
|
57
|
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”).
|
Filed
herewith
|
|
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”).
|
Filed
herewith
|
|
10.102
|
SCHEDULE
I TO CARGO VAN/PICK-UP TRUCK BASE INDENTURE, dated as of June
1,
2007.
|
Filed
herewith
|
58
|
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”).
|
Filed
herewith
|
|
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 & Cooper (re: SAC Holding II)
|
Filed
herewith
|
|
24
|
Power
of Attorney
|
See
signature page
|
|
31.1
|
Rule
13a-14(a)/15d-14(a) Certification of Edward J. Shoen, President
and
Chairman of the Board of AMERCO and U-Haul International,
Inc.
|
Filed
herewith
|
|
31.2
|
Rule
13a-14(a)/15d-14(a) Certification of Jason A. Berg, Chief Accounting
Officer of AMERCO
|
Filed
herewith
|
|
31.3
|
Rule
13a-14(a)/15d-14(a) Certification of Robert T. Peterson, Chief
Financial
Officer of U-Haul International, Inc.
|
Filed
herewith
|
|
32.1
|
Certification
of Edward J. Shoen, President and Chairman of the Board of AMERCO
and
U-Haul International, Inc. pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
|
Furnished
herewith
|
|
32.2
|
Certification
of Jason A. Berg, Chief Accounting Officer of AMERCO pursuant
to Section
906 of the Sarbanes-Oxley Act of 2002
|
Furnished
herewith
|
|
32.3
|
Certification
of Robert T. Peterson, Chief Financial Officer of U-Haul International,
Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
Furnished
herewith
|
*
Indicates compensatory plan arrangement.
59
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
entities (the “Company”) as of March 31, 2007 and 2006 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, 2007. We have also audited the 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 and $152.3 million as of
March
31, 2007 and 2006, respectively, and total revenues of $46.6 million, $46.2
million, and $43.2 million for each of the three 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
the 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 and schedules are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in
the financial statements and schedules, 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,
2007 and 2006, and the results of its operations and its cash flows for each
of
the three years in the period ended March 31, 2007, in conformity with
accounting principles generally accepted in the United States of
America.
Also,
in
our opinion, the schedules present fairly, in all material respects, the
information set forth therein.
Our
audits were conducted for the purpose of forming an opinion on the consolidated
financial statements and schedules taken as a whole. The summary of earnings
of
independent rental fleet information included on pages F-59 through pages F-60
is presented for purposes of additional analysis of the consolidated financial
statements rather than to present the earnings of the independent trailer
fleets. Accordingly, we do not express an opinion on the earnings of the
independent trailer fleets. However, such information has been subjected to
the
auditing procedures applied in the audit of the consolidated financial
statements and schedules and, in our opinion, is fairly presented in all
material respects in relation to the consolidated financial statements and
schedules taken as a whole.
As
discussed in the notes to the consolidated financial statements, the Company
adopted Statement of Financial Accounting Standards No. 158, “Employers’
Accounting for Defined Benefit Pension and Other Post Retirement Plans — An
Amendment of FASB Statements No. 87, 88, 106, and 132(R),” as well as 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.”
We
also
have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the effectiveness of the Company's internal
control over financial reporting as of March 31, 2007, 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 6, 2007 expressed an unqualified opinion
thereon.
/s/
BDO
Seidman, LLP
Phoenix,
Arizona
June
6,
2007
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
March 31, 2007 and 2006 and the related consolidated statements of operations,
stockholder’s deficit, and cash flows for the years ended March 31, 2007, 2006
and 2005. 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 March 31,
2007
and 2006, and the results of its operations, stockholder’s deficit and its cash
flows for the years ended March 31, 2007, 2006 and 2005 in conformity with
accounting principles generally accepted in the United States of
America.
Semple,
Marchal & Cooper, LLP
Phoenix,
Arizona
June
6,
2007
F-2
AMERCO
AND CONSOLIDATED ENTITIES
CONSOLIDATED
BALANCE SHEETS
|
March
31,
|
|||||||
|
2007
|
2006
|
||||||
|
(In
thousands)
|
|||||||
|
ASSETS
|
|||||||
|
Cash
and cash equivalents
|
$
|
75,272
|
$
|
155,459
|
|||
|
Reinsurance
recoverables and trade receivables, net
|
184,617
|
230,179
|
|||||
|
Notes
and mortgage receivables, net
|
1,669
|
2,532
|
|||||
|
Inventories,
net
|
67,023
|
64,919
|
|||||
|
Prepaid
expenses
|
52,080
|
53,262
|
|||||
|
Investments,
fixed maturities and marketable equities
|
681,801
|
695,958
|
|||||
|
Investments,
other
|
178,699
|
209,361
|
|||||
|
Deferred
policy acquisition costs, net
|
44,514
|
47,821
|
|||||
|
Other
assets
|
95,123
|
102,094
|
|||||
|
Related
party assets
|
245,179
|
270,468
|
|||||
|
1,625,977
|
1,832,053
|
||||||
|
Property,
plant and equipment, at cost:
|
|||||||
|
Land
|
202,917
|
175,785
|
|||||
|
Buildings
and improvements
|
802,289
|
739,603
|
|||||
|
Furniture
and equipment
|
301,751
|
281,371
|
|||||
|
Rental
trailers and other rental equipment
|
200,208
|
201,273
|
|||||
|
Rental
trucks
|
1,604,123
|
1,331,891
|
|||||
|
SAC
Holding II - property, plant and equipment
|
80,349
|
79,217
|
|||||
|
3,191,637
|
2,809,140
|
||||||
|
Less:
Accumulated depreciation
|
(1,294,566
|
)
|
(1,273,975
|
)
|
|||
|
Total
property, plant and equipment
|
1,897,071
|
1,535,165
|
|||||
|
Total
assets
|
$
|
3,523,048
|
$
|
3,367,218
|
|||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
|
Liabilities:
|
|||||||
|
Accounts
payable and accrued expenses
|
$
|
251,197
|
$
|
235,878
|
|||
|
AMERCO's
notes and loans payable
|
1,181,165
|
965,634
|
|||||
|
SAC
Holding II notes and loans payable, non-recourse to AMERCO
|
74,887
|
76,232
|
|||||
|
Policy
benefits and losses, claims and loss expenses payable
|
768,751
|
800,413
|
|||||
|
Liabilities
from investment contracts
|
386,640
|
449,149
|
|||||
|
Other
policyholders' funds and liabilities
|
10,563
|
7,705
|
|||||
|
Deferred
income
|
16,478
|
21,346
|
|||||
|
Deferred
income taxes
|
113,170
|
108,092
|
|||||
|
Related
party liabilities
|
2,099
|
7,165
|
|||||
|
Total
liabilities
|
2,804,950
|
2,671,614
|
|||||
|
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, 2007 and
2006
|
-
|
-
|
|||||
|
Series
B preferred stock, with no par value, 100,000 shares authorized;
none
|
|||||||
|
issued
and outstanding as of March 31, 2007 and 2006
|
-
|
-
|
|||||
|
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, 2007 and 3,716,181 shares issued as of March
31,
2006
|
-
|
929
|
|||||
|
Common
stock of $0.25 par value, 150,000,000 shares authorized;
41,985,700
|
|||||||
|
issued
as of March 31, 2007 and 38,269,519 issued as of March 31,
2006
|
10,497
|
9,568
|
|||||
|
Additional
paid-in capital
|
375,412
|
367,655
|
|||||
|
Accumulated
other comprehensive loss
|
(41,779
|
)
|
(28,902
|
)
|
|||
|
Retained
earnings
|
849,300
|
773,784
|
|||||
|
Cost
of common shares in treasury, net (21,440,387 and 20,701,096 shares
as
of
|
|||||||
|
March
31, 2007 and 2006)
|
(467,198
|
)
|
(418,092
|
)
|
|||
|
Unearned
employee stock ownership plan shares
|
(8,134
|
)
|
(9,338
|
)
|
|||
|
Total
stockholders' equity
|
718,098
|
695,604
|
|||||
|
Total
liabilities and stockholders' equity
|
$
|
3,523,048
|
$
|
3,367,218
|
|||
The
accompanying notes are an integral part of these consolidated financial
statements.
F-3
AMERCO
AND CONSOLIDATED ENTITIES
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
Years
Ended March 31,
|
||||||||||
|
2007
|
2006
|
2005
|
||||||||
|
(In
thousands, except share and per share data)
|
||||||||||
|
Revenues:
|
||||||||||
|
Self-moving
equipment rentals
|
$
|
1,476,579
|
$
|
1,503,569
|
$
|
1,437,895
|
||||
|
Self-storage
revenues
|
126,424
|
119,742
|
114,155
|
|||||||
|
Self-moving
and self-storage products and service sales
|
224,722
|
223,721
|
206,098
|
|||||||
|
Property
management fees
|
21,154
|
21,195
|
11,839
|
|||||||
|
Life
insurance premiums
|
120,399
|
118,833
|
126,236
|
|||||||
|
Property
and casualty insurance premiums
|
24,335
|
26,001
|
24,987
|
|||||||
|
Net
investment and interest income
|
61,093
|
53,094
|
56,739
|
|||||||
|
Other
revenue
|
30,891
|
40,471
|
30,172
|
|||||||
|
Total
revenues
|
2,085,597
|
2,106,626
|
2,008,121
|
|||||||
|
Costs
and expenses:
|
||||||||||
|
Operating
expenses
|
1,080,897
|
1,080,990
|
1,122,197
|
|||||||
|
Commission
expenses
|
177,008
|
180,101
|
172,307
|
|||||||
|
Cost
of sales
|
117,648
|
113,135
|
105,309
|
|||||||
|
Benefits
and losses
|
118,725
|
117,160
|
140,343
|
|||||||
|
Amortization
of deferred policy acquisition costs
|
17,138
|
24,261
|
28,512
|
|||||||
|
Lease
expense
|
149,044
|
142,781
|
151,354
|
|||||||
|
Depreciation,
net of (gains) losses on disposals
|
189,589
|
142,817
|
121,103
|
|||||||
|
Total
costs and expenses
|
1,850,049
|
1,801,245
|
1,841,125
|
|||||||
|
Earnings
from operations
|
235,548
|
305,381
|
166,996
|
|||||||
|
Interest
expense
|
(82,756
|
)
|
(69,481
|
)
|
(73,205
|
)
|
||||
|
Fees
and amortization on early extinguishment of debt
|
(6,969
|
)
|
(35,627
|
)
|
-
|
|||||
|
Litigation
settlement, net of costs, fees and expenses
|
-
|
-
|
51,341
|
|||||||
|
Pretax
earnings
|
145,823
|
200,273
|
145,132
|
|||||||
|
Income
tax expense
|
(55,270
|
)
|
(79,119
|
)
|
(55,708
|
)
|
||||
|
Net
earnings
|
90,553
|
121,154
|
89,424
|
|||||||
|
Less:
Preferred stock dividends
|
(12,963
|
)
|
(12,963
|
)
|
(12,963
|
)
|
||||
|
Earnings
available to common shareholders
|
$
|
77,590
|
$
|
108,191
|
$
|
76,461
|
||||
|
Basic
and diluted earnings per common share
|
$
|
3.72
|
$
|
5.19
|
$
|
3.68
|
||||
|
Weighted
average common shares outstanding: Basic
and diluted
|
20,838,570
|
20,857,108
|
20,804,773
|
|||||||
Related
party revenues for fiscal 2007, 2006 and 2005, net of eliminations, were $33.5
million, $32.6 million and $25.8 million, respectively.
Related
party costs and expenses for fiscal 2007, 2006 and 2005, net of eliminations,
were $28.0 million, $29.2 million and $26.1 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, 2004
|
$
|
1,416
|
$
|
9,081
|
$
|
349,732
|
$
|
(15,397
|
)
|
$
|
589,132
|
$
|
(418,092
|
)
|
$
|
(12,026
|
)
|
$
|
503,846
|
||||||
|
Increase
in market value of released ESOP shares and release of unearned ESOP
shares
|
-
|
-
|
612
|
-
|
-
|
-
|
1,135
|
1,747
|
|||||||||||||||||
|
Foreign
currency translation
|
-
|
-
|
-
|
1,569
|
-
|
-
|
-
|
1,569
|
|||||||||||||||||
|
Unrealized
loss on investments
|
-
|
-
|
-
|
(10,831
|
)
|
-
|
-
|
-
|
(10,831
|
)
|
|||||||||||||||
|
Fair
market value of cash flow hedge
|
-
|
-
|
-
|
47
|
-
|
-
|
-
|
47
|
|||||||||||||||||
|
Net
earnings
|
-
|
-
|
-
|
-
|
89,424
|
-
|
-
|
89,424
|
|||||||||||||||||
|
Preferred
stock dividends: Series A ($2.13 per share for fiscal
2005)
|
-
|
-
|
-
|
-
|
(12,963
|
)
|
-
|
-
|
(12,963
|
)
|
|||||||||||||||
|
Exchange
of shares
|
(487
|
)
|
487
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||
|
Net
activity
|
(487
|
)
|
487
|
612
|
(9,215
|
)
|
76,461
|
-
|
1,135
|
68,993
|
|||||||||||||||
|
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
|
-
|
-
|
-
|
(903
|
)
|
-
|
-
|
-
|
(903
|
)
|
|||||||||||||||
|
Unrealized
loss on investments
|
-
|
-
|
-
|
(7,968
|
)
|
-
|
-
|
-
|
(7,968
|
)
|
|||||||||||||||
|
Fair
market value of cash flow hedge
|
-
|
-
|
-
|
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
|
||||||
|
Adoption
of SAB 108
|
-
|
-
|
-
|
-
|
(1,926
|
)
|
-
|
-
|
(1,926
|
)
|
|||||||||||||||
|
Adjustment
to initially apply FASB Statement No. 158
|
-
|
-
|
-
|
(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
|
-
|
-
|
-
|
(1,919
|
)
|
-
|
-
|
-
|
(1,919
|
)
|
|||||||||||||||
|
Unrealized
loss on investments
|
-
|
-
|
-
|
(1,072
|
)
|
-
|
-
|
-
|
(1,072
|
)
|
|||||||||||||||
|
Fair
market value of cash flow hedge
|
-
|
-
|
-
|
(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
|
||||||
The
accompanying notes are an integral part of these consolidated financial
statements.
F-5
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
|
Years
Ended March 31,
|
||||||||||
|
2007
|
2006
|
2005
|
||||||||
|
(In
thousands)
|
||||||||||
|
Comprehensive
income (loss):
|
||||||||||
|
Net
earnings
|
$
|
90,553
|
$
|
121,154
|
$
|
89,424
|
||||
|
Other
comprehensive income (loss) net of tax:
|
||||||||||
|
Foreign
currency translation
|
(1,919
|
)
|
(903
|
)
|
1,569
|
|||||
|
Unrealized
gain (loss) on investments, net
|
(1,072
|
)
|
(7,968
|
)
|
(10,831
|
)
|
||||
|
Fair
market value of cash flow hedges
|
(9,733
|
)
|
4,581
|
47
|
||||||
|
Total
comprehensive income
|
$
|
77,829
|
$
|
116,864
|
$
|
80,209
|
||||
The
accompanying notes are an integral part of these consolidated financial
statements.
F-6
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
Years
Ended March 31,
|
||||||||||
|
2007
|
2006
|
2005
|
||||||||
|
(In
thousands)
|
||||||||||
|
Cash
flows from operating activities:
|
||||||||||
|
Net
earnings
|
$
|
90,553
|
$
|
121,154
|
$
|
89,424
|
||||
|
Depreciation
|
186,106
|
133,572
|
118,091
|
|||||||
|
Amortization
of deferred policy acquisition costs
|
17,138
|
24,261
|
28,512
|
|||||||
|
Change
in provision for losses on trade receivables
|
49
|
(183
|
)
|
(506
|
)
|
|||||
|
Change
in provision for losses on mortgage notes
|
(40
|
)
|
(2,230
|
)
|
-
|
|||||
|
Provision
(reduction) for inventory reserves
|
2,679
|
2,458
|
(1,000
|
)
|
||||||
|
Net
loss on sale of real and personal property
|
3,483
|
9,245
|
3,012
|
|||||||
|
Net
loss on sale of investments
|
622
|
2,408
|
616
|
|||||||
|
Write-off
of unamortized debt issuance costs
|
6,969
|
13,629
|
-
|
|||||||
|
Deferred
income taxes
|
6,972
|
28,429
|
61,113
|
|||||||
|
Net
change in other operating assets and liabilities:
|
||||||||||
|
Reinsurance
recoverables and trade receivables
|
48,907
|
10,661
|
32,189
|
|||||||
|
Inventories
|
(4,761
|
)
|
(3,596
|
)
|
(9,856
|
)
|
||||
|
Prepaid
expenses
|
(8,205
|
)
|
(28,809
|
)
|
(6,702
|
)
|
||||
|
Capitalization
of deferred policy acquisition costs
|
(8,168
|
)
|
(12,110
|
)
|
(8,873
|
)
|
||||
|
Other
assets
|
2,929
|
(1,457
|
)
|
(23,887
|
)
|
|||||
|
Related
party assets
|
8,616
|
(8,090
|
)
|
74,780
|
||||||
|
Accounts
payable and accrued expenses
|
22,658
|
36,596
|
(96,022
|
)
|
||||||
|
Policy
benefits and losses, claims and loss expenses payable
|
(40,169
|
)
|
(4,918
|
)
|
(15,618
|
)
|
||||
|
Other
policyholders' funds and liabilities
|
2,709
|
(3,908
|
)
|
7,910
|
||||||
|
Deferred
income
|
1,266
|
(2,588
|
)
|
(14,407
|
)
|
|||||
|
Related
party liabilities
|
10,408
|
(44,016
|
)
|
(18,079
|
)
|
|||||
|
Net
cash provided by operating activities
|
350,721
|
270,508
|
220,697
|
|||||||
|
Cash
flow from investment activities:
|
||||||||||
|
Purchase
of:
|
||||||||||
|
Property,
plant and equipment
|
(648,344
|
)
|
(344,382
|
)
|
(284,966
|
)
|
||||
|
Short
term investments
|
(249,392
|
)
|
(534,106
|
)
|
(16,830
|
)
|
||||
|
Fixed
maturity investments
|
(109,672
|
)
|
(260,138
|
)
|
(98,211
|
)
|
||||
|
Equity
securities
|
-
|
-
|
(6,349
|
)
|
||||||
|
Real
estate
|
-
|
-
|
(63
|
)
|
||||||
|
Mortgage
loans
|
(10,725
|
)
|
(8,868
|
)
|
(2,750
|
)
|
||||
|
Proceeds
from sales of:
|
||||||||||
|
Property,
plant and equipment
|
89,672
|
59,960
|
243,707
|
|||||||
|
Short
term investments
|
276,690
|
600,850
|
10,866
|
|||||||
|
Fixed
maturity investments
|
116,858
|
159,616
|
152,024
|
|||||||
|
Equity
securities
|
-
|
6,769
|
56
|
|||||||
|
Cash
received in excess of purchase of company acquired
|
1,235
|
-
|
-
|
|||||||
|
Preferred
stock
|
1,225
|
11,650
|
15,803
|
|||||||
|
Real
estate
|
6,870
|
36,388
|
16,185
|
|||||||
|
Mortgage
loans
|
7,062
|
11,762
|
5,368
|
|||||||
|
Payments
from notes and mortgage receivables
|
902
|
1,663
|
1,336
|
|||||||
|
Net
cash provided (used) by investing activities
|
(517,619
|
)
|
(258,836
|
)
|
36,176
|
|||||
|
Cash
flow from financing activities:
|
||||||||||
|
Borrowings
from credit facilities
|
410,189
|
1,277,047
|
129,355
|
|||||||
|
Principal
repayments on credit facilties
|
(196,072
|
)
|
(1,093,342
|
)
|
(213,405
|
)
|
||||
|
Debt
issuance costs
|
(3,058
|
)
|
(29,588
|
)
|
-
|
|||||
|
Leveraged
Employee Stock Ownership Plan - Repayment from loan
|
1,204
|
1,553
|
1,135
|
|||||||
|
Payoff
of capital leases
|
-
|
-
|
(99,609
|
)
|
||||||
|
Treasury
stock repurchases
|
(49,106
|
)
|
-
|
-
|
||||||
|
Preferred
stock dividends paid
|
(12,963
|
)
|
(12,963
|
)
|
(29,167
|
)
|
||||
|
Investment
contract deposits
|
16,695
|
20,322
|
26,331
|
|||||||
|
Investment
contract withdrawals
|
(79,204
|
)
|
(75,011
|
)
|
(97,137
|
)
|
||||
|
Net
cash provided (used) by financing activities
|
87,685
|
88,018
|
(282,497
|
)
|
||||||
|
Effects
of exchange rate on cash
|
(974
|
)
|
(186
|
)
|
22
|
|||||
|
Increase
(decrease) in cash and cash equivalents
|
(80,187
|
)
|
99,504
|
(25,602
|
)
|
|||||
|
Cash
and cash equivalents at the beginning of period
|
155,459
|
55,955
|
81,557
|
|||||||
|
Cash
and cash equivalents at the end of period
|
$
|
75,272
|
$
|
155,459
|
$
|
55,955
|
||||
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 2006, 2005 and 2004 correspond to fiscal 2007, 2006 and 2005 for AMERCO.
The operating results and financial position of AMERCO’s consolidated insurance
operations are determined as of December 31st
of each
year.
Accounts
denominated in non-U.S. currencies have been re-measured 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 financial statements include the accounts of AMERCO, its
wholly-owned subsidiaries and SAC Holding II Corporation and its subsidiaries
(“SAC Holding II”).
In
fiscal
2003 and 2002, SAC Holding Corporation and SAC Holding II Corporation
(collectively referred to as “SAC Holdings”) were considered special purpose
entities and were consolidated based on the provision of Emerging Issues Task
Force (EITF) Issue No. 90-15.
In
fiscal
2004, the Company applied FIN 46(R) to its interests in SAC Holdings. In
February 2004, SAC Holding Corporation restructured the indebtedness of three
subsidiaries and then distributed its interest in those subsidiaries to its
sole
shareholder. This triggered a requirement to reassess AMERCO’s involvement with
those subsidiaries, which led to the conclusion that based on the current
contractual and ownership interests between AMERCO and this entity, AMERCO
ceased to have a variable interest in those three subsidiaries at that date.
In
March
2004, SAC Holding Corporation restructured its indebtedness, triggering a
similar reassessment of SAC Holding Corporation that led to the conclusion
that
SAC Holding Corporation was not a VIE and that AMERCO ceased to be the primary
beneficiary of SAC Holding Corporation and its remaining subsidiaries. This
conclusion was based on SAC Holding Corporation’s ability to fund its own
operations and execute its business plan without any future subordinated
financial support.
Accordingly,
at the dates AMERCO ceased to have a variable interest in or ceased to be the
primary beneficiary of SAC Holding Corporation and its current or former
subsidiaries, it deconsolidated those entities. The deconsolidation was
accounted for as a distribution of SAC Holding Corporations interests to the
sole shareholder of the SAC entities. Because of AMERCO’s continuing involvement
with SAC Holding Corporation and its current and former subsidiaries, the
distributions do not qualify as discontinued operations as defined by SFAS
No.
144.
It
is
possible that SAC Holding Corporation could take actions that would require
us
to re-determine whether SAC Holding Corporation has become a VIE or whether
we
have become the primary beneficiary of SAC Holding Corporation. Should this
occur, we could be required to consolidate some or all of SAC Holding
Corporation with our financial statements.
Similarly,
SAC Holding II could take actions that would require us to re-determine whether
it is a VIE or whether we continue to be the primary beneficiary of our variable
interest in SAC Holding II. Should we cease to be the primary beneficiary,
we
would be required to deconsolidate some or all of our variable interest in
SAC
Holding II from our financial statements.
Intercompany
accounts and transactions have been eliminated.
F-8
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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”) and its wholly-owned subsidiary
North
American Fire & Casualty Insurance Company (“NAFCIC”),
Oxford
Life Insurance Company (“Oxford”) and its wholly-owned subsidiaries
North
American Insurance Company (“NAI”)
Christian
Fidelity Life Insurance Company (“CFLIC”) and its wholly-owned
subsidiary
Dallas
General Life Insurance Company (“DGLIC”)
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.
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 subsidiary. 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 originates
and reinsures annuities, ordinary life and Medicare supplement insurance. Oxford
also 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 SAC Holdings’ properties
entitling AMERCO to potential future income based on the financial performance
of these properties. With respect to SAC Holding II, AMERCO is considered the
primary beneficiary of these contractual interests. Consequently, we include
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 accounting principles
generally accepted 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 No. 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, 2007, and March 31, 2006, the Company had
approximately $58.5 million and $143.8 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, these investments are classified as
available-for-sale or held-to-maturity. Held-to-maturity investments are
recorded at cost, as adjusted for the amortization of premiums or the accretion
of discounts. 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 amortized cost 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 cost 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 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.
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. The fair value of long-term debt is based
on
current rates at which the Company could borrow funds with similar remaining
maturities and approximates the carrying amount due to its recent
issuance.
F-10
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Derivative
Financial Instruments
The
Company’s primary objective for holding derivative financial instruments is to
manage interest rate risk. The Company’s derivative instruments are recorded at
fair value under SFAS No. 133 and are included in either prepaid expenses or
accrued expenses.
The
exposure to market risk for changes in interest rates relates primarily to
our
variable rate debt obligations. We have used interest rate swap and interest
rate cap agreements to provide for matching the gain or loss recognition on
the
hedging instrument with the recognition of the changes in the cash flows
associated with the hedged asset or liability attributable to the hedged risk
or
the earnings effect of the hedged forecasted transaction.
F-11
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Inventories,
net
Inventories,
net were as follows:
|
March
31,
|
|||||||
|
2007
|
2006
|
||||||
|
(In
thousands)
|
|||||||
|
Truck
and trailer parts and accessories (a)
|
$
|
56,113
|
$
|
52,089
|
|||
|
Hitches
and towing components (b)
|
14,169
|
13,766
|
|||||
|
Moving
supplies and propane (b)
|
6,613
|
6,257
|
|||||
|
Subtotal
|
76,895
|
72,112
|
|||||
|
Less:
LIFO reserves
|
(8,372
|
)
|
(5,693
|
)
|
|||
|
Less:
excess and obsolete reserves
|
(1,500
|
)
|
(1,500
|
)
|
|||
|
Total
|
$
|
67,023
|
$
|
64,919
|
|||
|
(a)
Primary held for internal usage, including equipment manufacturing
and
repair
|
|||||||
|
(b)
Primary 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 96% and 95% of the
total inventories for March 31, 2007 and 2006, respectively. Had the Company
utilized the first-in, first-out method (“FIFO”), stated inventory balances
would have been $8.4 million and $5.7 million higher at March 31, 2007 and
2006,
respectively. In fiscal 2007, the effect on income due to liquidation of a
portion of the LIFO inventory was $0.2 million.
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 loss netted against
depreciation expense amounts to $3.5 million, $9.2 million and $3.0 million
during fiscal 2007, 2006 and 2005, respectively. Equipment depreciation is
recognized in amounts expected to result in the recovery of estimated residual
values upon disposal, i.e., no 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.
F-12
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
During
the fourth quarter of fiscal 2007, based on economic market analysis, the
Company decreased the estimated residual value of certain rental trucks. The
effect of the change decreased pre-tax earnings for fiscal 2007 by $2.0 million
or $0.10 per share before taxes in which the tax effect was approximately $0.04
per share. The in-house analysis of truck sales compared such factors as the
truck model, size, age and average residual value of units sold. Based on the
analysis, the estimated residual values of these units were decreased to
approximately 20% of historic cost. The adjustment reflects management’s best
estimate of the estimated residual value of the rental trucks.
During
the fourth quarter of fiscal 2005, based on an economic market analysis, the
Company decreased the estimated residual value of certain rental trucks which
related to different classes of trucks compared to the changes made in the
fourth quarter of fiscal 2007. The effect of the change decreased earnings
from
operations for fiscal 2005 by $2.1 million or $0.10 per share before taxes,
in
which the tax effect was approximately $0.04 per share. The in-house analysis
of
truck sales compared such factors as the truck model, size, age and average
residual value of units sold. Based on the analysis, the estimated residual
values were decreased to approximately 20% of historic cost. The adjustment
reflects management’s best estimate of the estimated residual value of these
rental trucks.
Starting
in fiscal 2006 the Company acquired 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 $33.2 million greater than what
it
would have been if calculated under a straight line approach for fiscal 2007
and
$4.0 million for fiscal 2006.
We
typically sell our used vehicles at one of our sales centers throughout North
America, on our web site or by phone. 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 $10.8 million and $7.9 million for fiscal 2007 and
2006,
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.
Reinsurance
recoverables includes 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.
F-13
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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 $330.6
million and $295.6 million of liabilities related to these programs as of March
31, 2007 and 2006, 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, 2007 and 2006 the consolidated balance sheets include
liabilities of $3.9 million and $4.9 million for fiscal 2007 and 2006,
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
$0.8 million and $0.0 million in fiscal 2007 and 2006, respectively. These
amounts are recorded in accounts payable on the consolidated balance
sheet.
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.
Advertising
All
advertising costs are expensed as incurred. Advertising expense was $31.5
million in fiscal 2007, $31.3 million in fiscal 2006 and $32.9 million in fiscal
2005.
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
DGLIC, which will file on a stand alone basis. 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 No. 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.
Comprehensive
Income (Loss)
Comprehensive
income (loss) consists of net earnings, foreign currency translation
adjustments, unrealized gains and losses on investments and the change in fair
value of cash flow hedges.
F-14
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Adoption
of New Accounting Pronouncements
In
September 2006, the Financial Accounting Standards Board (FASB) issued SFAS
158,
Employers’
Accounting for Defined Benefit Pension and Other Post Retirement Plans - an
amendment of SFAS 87, 88, 106 and 132(R),
which
requires companies to recognize a net liability or asset to report the
over-funded or under-funded status of their defined benefit pension and other
postretirement benefit plans on their balance sheets and recognize changes
in
funded status in the year in which the changes occur through other comprehensive
income. The funded status to be measured is the difference between plan assets
at fair value and the benefit obligation. This Statement requires that gains
and
losses and prior service costs or credits, net of tax, that arise during the
period be recognized as a component of other comprehensive income and not as
components of net periodic benefit cost.
We
adopted the balance sheet provisions of SFAS 158, as required, at March 31,
2007. As a result the Company recorded after tax unrecognized losses of $0.2
million to accumulated other comprehensive income in fiscal 2007. As discussed
in Note 14 “Employee Benefit Plans” to the “Notes to Consolidated Financial
Statements”, the Company previously used December 31 as the measurement date to
measure the assets and obligations of its post retirement and post employment
benefits plans. SFAS 158 requires the Company to perform the measurements at
year end. The portion of the net periodic cost associated with the three month
measurement lag was $0.1 million, after tax. This was recorded as an adjustment
to retained earnings in fiscal 2007.
In
September 2006, the SEC issued Staff Accounting Bulletin (SAB) 108 “Considering
the Effects of Prior Year Misstatements in Current Year Financial
Statements”,
which
provides interpretive guidance on how the effects of prior year uncorrected
misstatements should be considered when quantifying misstatements in current
year financial statements. There was diversity in practice, with the two
commonly used methods to quantify misstatements being the “rollover” method
(which primarily focuses on the income statement impact of misstatements) and
the “iron curtain” method (which focuses on the cumulative amount by which the
current year balance sheet is misstated and may not prevent significant
misstatements in the income statement). SAB 108 requires registrants to use
a
dual approach whereby both of these methods are considered in evaluating the
materiality of financial statement errors. Prior materiality assessments will
need to be reconsidered using both the rollover and iron curtain methods.
Effective
March 31, 2007 the Company adopted SAB 108 and recorded a correction in the
fourth quarter of fiscal 2007 related to prepaid expenses on leased equipment.
In analyzing this error we determined that it was not material to our statement
of earnings in any single quarter or annual period; however, the cumulative
adjustment necessary would have been material in the current period. In
accordance with SAB 108, the Company adjusted its beginning retained earnings
balance for fiscal 2007 and its financial results for the first three quarters
of fiscal 2007 for this adjustment. The Company determined that the adjustment
would not be material in any specific period and therefore did not restate
historical financial statements.
The
error
was related to rental equipment originally leased during periods between fiscal
2000 and fiscal 2002. The rental equipment was sold to the lessor at less than
its book value and then subsequently leased back to the Company via an operating
lease. The difference between the sales price to the lessor and the book value
prior to the sale was deferred and amortized over the life of the equipment.
Per
SFAS 28 the amortization period should have been over the term of the lease.
The
Company quantified the error and in fiscal 2007 changed its accounting treatment
for prepaid expenses on sales - leaseback vehicle transactions to ensure that
all new instances would be accounted for properly.
F-15
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Recent
Accounting Pronouncements
In
June
2006, the FASB issued a standard that addresses accounting for income taxes:
FIN
48, Accounting
for Uncertainty in Income Taxes.
Among
other things, FIN 48 requires applying an audit sustainability standard of
“more
likely than not” related to the recognition and de-recognition of tax positions.
FIN 48 is effective for fiscal years beginning after December 15, 2006. The
Company is currently evaluating the effect that the adoption will have on its
Consolidated Financial Statements. The cumulative effect of applying the
provisions of FIN 48, if any, will be reported as an adjustment to the opening
balance of the Companies retained earnings at April 1, 2007.
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 are effective for us in April 2008. The Company
is
currently evaluating the impact of this statement on our Consolidated 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 provision of SFAS 159 is effective for us in April 2008.
The Company is currently evaluating the impact of this statement on our
Consolidated Financial Statements.
F-16
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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
shares used in the computation of the Company’s basic and diluted earnings per
common share were as follows:
|
Year
Ended March 31,
|
||||||||||
|
2007
|
2006
|
2005
|
||||||||
|
Basic
and diluted earnings per common share
|
$
|
3.72
|
$
|
5.19
|
$
|
3.68
|
||||
|
Weighted
average common shares outstanding:
|
||||||||||
|
Basic
and diluted
|
20,838,570
|
20,857,108
|
20,804,773
|
|||||||
The
weighted average common shares outstanding listed above 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
344,288, 393,174 and 456,254 as of March 31, 2007, 2006, and 2005, 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,
|
|||||||
|
2007
|
2006
|
||||||
|
(In
thousands)
|
|||||||
|
Reinsurance
recoverable
|
$
|
145,643
|
$
|
182,382
|
|||
|
Paid
losses recoverable
|
8,394
|
15,366
|
|||||
|
Trade
accounts receivable
|
18,768
|
17,789
|
|||||
|
Accrued
investment income
|
6,810
|
7,654
|
|||||
|
Premiums
and agents' balances
|
1,623
|
1,962
|
|||||
|
Independent
dealer receivable
|
659
|
763
|
|||||
|
Other
receivable
|
3,777
|
5,465
|
|||||
|
185,674
|
231,381
|
||||||
|
Less:
Allowance for doubtful accounts
|
(1,057
|
)
|
(1,202
|
)
|
|||
|
$
|
184,617
|
$
|
230,179
|
||||
Note
6: Notes and Mortgage Receivables, Net
Notes
and
mortgage receivables, net were as follows:
|
March
31,
|
|||||||
|
2007
|
2006
|
||||||
|
(In
thousands)
|
|||||||
|
Notes,
mortgage receivables and other, net of discount
|
$
|
2,023
|
$
|
2,926
|
|||
|
Less:
Allowance for doubtful accounts
|
(354
|
)
|
(394
|
)
|
|||
|
$
|
1,669
|
$
|
2,532
|
||||
F-17
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Note
7: Investments
Held-to
Maturity Investments
There
were no held-to maturity investments at December 31, 2006.
Held-to
maturity investments at December 31, 2005 were as follows:
|
Amortized
Cost
|
Gross
Unrealized Gains
|
Gross
Unrealized
Losses
|
Estimated
Market
Value
|
||||||||||
|
U.S.
treasury securities and government obligations
|
$
|
613
|
$
|
107
|
$
|
-
|
$
|
720
|
|||||
|
Mortgage-backed
securities
|
409
|
6
|
-
|
415
|
|||||||||
|
$
|
1,022
|
$
|
113
|
$
|
-
|
$
|
1,135
|
||||||
The
adjusted cost and estimated market value of held-to maturity investments in
debt
securities at December 31, 2005, by contractual maturity, were as
follows:
|
December
31, 2005
|
|||||||
|
Amortized
Cost
|
Estimated
Market
Value
|
||||||
|
(In
thousands)
|
|||||||
|
Due
in one year or less
|
$
|
169
|
$
|
172
|
|||
|
Due
after one year through five years
|
203
|
228
|
|||||
|
Due
after five years through ten years
|
167
|
210
|
|||||
|
After
ten years
|
74
|
110
|
|||||
|
613
|
720
|
||||||
|
Mortgage
backed securities
|
409
|
415
|
|||||
|
$
|
1,022
|
$
|
1,135
|
||||
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 $19.7 million at December 31, 2006 and $21.0 million at December
31, 2005.
F-18
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Available-for-Sale
Investments
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
|
|||||
Available-for-sale
investments at December 31, 2005 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
|
$
|
55,075
|
$
|
1,385
|
$
|
(126
|
)
|
$
|
(391
|
)
|
$
|
55,943
|
||||
|
U.S.
government agency mortgage-backed securities
|
45,480
|
573
|
(47
|
)
|
(219
|
)
|
45,787
|
|||||||||
|
Obligations
of states and political subdivisions
|
1,568
|
1
|
(24
|
)
|
(3
|
)
|
1,542
|
|||||||||
|
Corporate
securities
|
458,658
|
9,672
|
(3,538
|
)
|
(3,843
|
)
|
460,949
|
|||||||||
|
Mortgage-backed
securities
|
112,432
|
670
|
(641
|
)
|
(879
|
)
|
111,582
|
|||||||||
|
Redeemable
preferred stocks
|
18,531
|
517
|
-
|
-
|
19,048
|
|||||||||||
|
Common
stocks
|
184
|
-
|
(70
|
)
|
(29
|
)
|
85
|
|||||||||
|
$
|
691,928
|
$
|
12,818
|
$
|
(4,446
|
)
|
$
|
(5,364
|
)
|
$
|
694,936
|
|||||
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.
F-19
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The
Company sold available-for-sale securities with a fair value of $113.4 million
in 2006, $170.6 million in 2005, and $167.5 million in 2004. The gross realized
gains on these sales totaled $1.6 million in 2006, $5.1 million in 2005 and
$2.3
million in 2004. The Company realized gross losses on these sales of $1.9
million in 2006, $3.3 million in 2005 and $1.7 million in 2004.
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 underlying 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 $1.4 million in 2006, $5.3 million in 2005 and
$4.3
million in 2004.
The
adjusted cost and estimated market value of available-for-sale investments
in
debt securities at December 31, 2006 and December 31, 2005, by contractual
maturity, were as follows:
|
December
31, 2006
|
December
31, 2005
|
||||||||||||
|
Amortized
Cost
|
Estimated
Market
Value
|
Amortized
Cost
|
Estimated
Market
Value
|
||||||||||
|
(In
thousands)
|
|||||||||||||
|
Due
in one year or less
|
$
|
57,304
|
$
|
57,183
|
$
|
58,593
|
$
|
58,466
|
|||||
|
Due
after one year through five years
|
227,023
|
225,926
|
216,188
|
216,119
|
|||||||||
|
Due
after five years through ten years
|
166,473
|
165,477
|
154,656
|
154,490
|
|||||||||
|
After
ten years
|
197,794
|
199,576
|
131,344
|
135,147
|
|||||||||
|
648,594
|
648,162
|
560,781
|
564,222
|
||||||||||
|
Mortgage
backed securities
|
16,149
|
15,953
|
112,432
|
111,581
|
|||||||||
|
Redeemable
preferred stocks
|
17,331
|
17,601
|
18,531
|
19,048
|
|||||||||
|
Equity
securities
|
112
|
85
|
184
|
85
|
|||||||||
|
$
|
682,186
|
$
|
681,801
|
$
|
691,928
|
$
|
694,936
|
||||||
Investments,
other
The
carrying value of other investments was as follows:
|
March
31,
|
|||||||
|
2007
|
2006
|
||||||
|
(In
thousands)
|
|||||||
|
Short-term
investments
|
$
|
102,304
|
$
|
129,325
|
|||
|
Real
estate
|
18,107
|
25,344
|
|||||
|
Mortgage
loans, net
|
52,463
|
48,392
|
|||||
|
Policy
loans
|
4,749
|
5,027
|
|||||
|
Other
equity investments
|
1,076
|
1,273
|
|||||
|
$
|
178,699
|
$
|
209,361
|
||||
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
$0.8 million and $1.2 million as of March 31, 2007 and 2006, respectively.
The
estimated fair value of these loans as of March 31, 2007 and 2006, 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. Equity
investments are carried at cost and assessed for impairment.
Insurance
policy loans are carried at their unpaid balance.
F-20
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Note
8: Net
Investment and Interest Income
Net
investment and interest income, were as follows:
|
Year
Ended March 31,
|
||||||||||
|
2007
|
2006
|
2005
|
||||||||
|
(In
thousands)
|
||||||||||
|
Fixed
maturities
|
$
|
52,714
|
$
|
39,918
|
$
|
41,594
|
||||
|
Real
estate
|
609
|
6,593
|
12,836
|
|||||||
|
Insurance
policy loans
|
280
|
309
|
160
|
|||||||
|
Mortgage
loans
|
4,570
|
5,788
|
6,312
|
|||||||
|
Short-term,
amounts held by ceding reinsurers, net
and other investments
|
6,616
|
5,253
|
(2,442
|
)
|
||||||
|
Investment
income
|
64,789
|
57,861
|
58,460
|
|||||||
|
Less:
investment expenses
|
(894
|
)
|
(2,422
|
)
|
(3,154
|
)
|
||||
|
Less:
interest credited on annuity policies
|
(15,060
|
)
|
(16,888
|
)
|
(20,509
|
)
|
||||
|
Investment
income - Related party
|
12,258
|
14,543
|
21,942
|
|||||||
|
Net
investment and interest income
|
$
|
61,093
|
$
|
53,094
|
$
|
56,739
|
||||
Note
9: Borrowings
Long-Term
Debt
Long-term
debt was as follows:
|
March
31,
|
|||||||||||||
|
2007
Rate (a)
|
Maturities
|
2007
|
2006
|
||||||||||
|
(In
thousands)
|
|||||||||||||
|
Real
estate loan (amortizing term)
|
6.93
|
%
|
2018
|
$
|
295,000
|
$
|
242,585
|
||||||
|
Real
estate loan (revolving credit)
|
-
|
2018
|
-
|
-
|
|||||||||
|
Senior
mortgages
|
5.47%
- 5.75
|
%
|
2015
|
521,332
|
531,309
|
||||||||
|
Mezzanine
loan (floating) (b)
|
-
|
-
|
-
|
19,393
|
|||||||||
|
Construction
loan (revolving credit)
|
-
|
2009
|
-
|
-
|
|||||||||
|
Working
capital loan (revolving credit)
|
-
|
2008
|
-
|
-
|
|||||||||
|
Fleet
loans (amortizing term)
|
6.11%
- 7.42
|
%
|
2012-2014
|
364,833
|
82,347
|
||||||||
|
Fleet
loan (revolving credit)
|
-
|
2011
|
-
|
90,000
|
|||||||||
|
Total
AMERCO notes and loans payable
|
$
|
1,181,165
|
$
|
965,634
|
|||||||||
|
(a)
Interest rate as of March 31, 2007, including the effect of applicable
hedging instruments
|
|||||||||||||
|
(b)
Paid in full on August 30, 2006
|
|||||||||||||
F-21
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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 lender is Merrill Lynch
Commercial Finance Corp. The original amount of the Real Estate Loan was $465.0
million with an original maturity date of June 10, 2010. On August 18, 2006,
the
loan was amended to increase the availability to $500.0 million and extend
the
final maturity date to August 2018. 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, 2007 the
outstanding balance on the Real Estate Loan was $295.0 million, with no portion
of the revolver drawn down. On the date of the amendment, the Company expensed
$7.0 million of deferred charges associated with the initial loan. 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, per the provisions of the amended Loan Agreement, is the
applicable London Inter-Bank Offer Rate (“LIBOR”) plus the applicable margin. At
March 31, 2007 the applicable LIBOR was 5.32% and the applicable margin was
1.50%, the sum of which was 6.82%. 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
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.
Senior
Mortgages
Various
subsidiaries of Amerco Real Estate Company and U-Haul International, Inc. are
borrowers under the Senior Mortgages. The lenders for the Senior Mortgages
are
Merrill Lynch Mortgage Lending, Inc. and Morgan Stanley Mortgage Capital, Inc.
The Senior Mortgages loan balances as of March 31, 2007 are in the aggregate
amount of $465.2 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. The Senior
Mortgages are secured by certain properties owned by the borrowers. The interest
rates, per the provisions of the Senior Mortgages, are 5.68% per annum for
the
Merrill Lynch Mortgage Lending Agreement and 5.52% per annum for the Morgan
Stanley Mortgage Capital Agreement. The default provisions of the 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.
U-Haul
Company of Canada is the borrower under a mortgage backed loan. The loan was
arranged by Merrill Lynch Canada and the loan balance as of March 31, 2007
is
$9.6 million ($11.0 million Canadian currency). The loan is secured by certain
properties owned by the borrower. The loan was entered into on June 29, 2005
at
a rate of 5.75%. The loan requires monthly principal and interest payments
with
the unpaid loan balance and accrued and unpaid interest due at maturity. It
has
a twenty-five year amortization with a maturity of July 1, 2015. The default
provisions of the 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.
A
subsidiary of Amerco Real Estate Company is a borrower under a mortgage backed
loan. The lender is Morgan Stanley Mortgage Capital, Inc. and the loan balance
as of March 31, 2007 is $23.4 million. The loan was entered into on August
17,
2005 at a rate of 5.47%. The loan is secured by certain properties owned by
the
borrower. The loan requires monthly principal and interest payments with the
unpaid loan balance and accrued and unpaid interest due at maturity. It has
a
twenty-five year amortization with a maturity of September 17, 2015. The default
provisions of the 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-22
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Various
subsidiaries of Amerco Real Estate Company and U-Haul International, Inc. are
borrowers under a mortgage backed loan. The lender is Lehman Brothers Bank, FSB
and the loan balance as of March 31, 2007 is $23.1 million. The loan was entered
into on October 6, 2005 at a rate of 5.72%. The loan is secured by certain
properties owned by the borrower. The loan requires monthly principal and
interest payments with the unpaid loan balance and accrued and unpaid interest
due at maturity. It has a twenty-five year amortization with a maturity of
October 11, 2015. The default provisions of the 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.
Construction
/
Working Capital Loans
Amerco
Real Estate Company and a subsidiary of U-Haul International, Inc. entered
into
a revolving credit facility with MidFirst Bank 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, 2007 the Company had not drawn on this
line.
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 will be 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%. 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 facility. The lender
is
JP Morgan Chase Bank, and the facility is in the amount of $20.0 million. The
loan was entered into on November 27, 2006 and is secured by certain properties
owned by the borrower. 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 2008, subject to a one year extension. The loan
requires monthly interest payments with the unpaid loan balance and accrued
and
unpaid interest due at maturity. 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, 2007 the facility was fully
available.
Fleet
Loans
Rental
Truck Amortizing Loans
U-Haul
International, Inc. and several of its subsidiaries are borrowers under an
amortizing term loan. The lender is Merrill Lynch Commercial Finance Corp.
The
Company’s outstanding balance at March 31, 2007 was $118.2 million and the final
maturity is April 2012.
The
Merrill Lynch Rental Truck Amortizing Loan requires monthly principal and
interest payments, with the unpaid loan balance and accrued and unpaid interest
due at maturity. The Merrill Lynch Rental Truck Amortizing Loan was used to
purchase new trucks. The interest rate, per the provision of the Loan Agreement,
is the applicable LIBOR plus a margin between 1.50% and 1.75%. At March 31,
2007
the applicable LIBOR was 5.32% and the applicable margin was 1.75%, the sum
of
which was 7.07%. The interest rate is hedged with an interest rate swap fixing
the rate at 6.81% based on the current margin. The default provisions of the
loan include non-payment of principal or interest and other standard reporting
and change-in-control covenants.
U-Haul
International, Inc. and several of its subsidiaries are borrowers under an
amortizing term loan. The lender is BTMU Capital Corporation (“BTMU”). The
Company’s outstanding balance at March 31, 2007 was $133.8 million, and the
final maturity is November 2012.
The
BTMU
Rental Truck Amortizing Loan requires monthly principal and interest payments,
with the unpaid loan balance and accrued and unpaid interest due at maturity.
The BTMU Rental Truck Amortizing Loan was used to purchase new trucks. The
interest rate, per the provision of the Loan Agreement, is the applicable LIBOR
plus a margin between 1.25% and 1.75%. At March 31, 2007 the applicable LIBOR
was 5.32% and the applicable margin was 1.75%, the sum of which was 7.07%.
The
interest rate is hedged with an interest rate swap fixing the rate at 7.32%
based on the current margin. AMERCO and U-Haul International, Inc. are
guarantors of the loan. The default provisions of the loan include non-payment
of principal or interest and other standard reporting and change-in-control
covenants.
F-23
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
U-Haul
International, Inc. and several of its subsidiaries are borrowers under an
amortizing term loan. The lender is Bayerische Hypo-und Vereinsbank AG (“HVB”).
The Company’s outstanding balance at March 31, 2007 was $43.3 million and its
final maturity is July 2013.
The
HVB
Rental Truck Amortizing Loan requires monthly principal and interest payments,
with the unpaid loan balance and accrued and unpaid interest due at maturity.
The HVB Rental Truck Amortizing Loan was used to purchase new trucks. The
interest rate, per the provision of the Loan Agreement, is the applicable LIBOR
plus a margin between 1.25% and 1.75%. At March 31, 2007 the applicable LIBOR
was 5.32% and the applicable margin was 1.75%, the sum of which was 7.07%.
The
interest rate is hedged with an interest rate swap fixing the rate at 7.42%
based on the current margin. 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.
U-Haul
International, Inc. and several of its subsidiaries are borrowers under an
amortizing term loan. The lender is U.S. Bancorp Equipment Finance, Inc. (“U.S.
Bank”). The Company’s outstanding balance at March 31, 2007 was $29.5 million
and its final maturity is February 2014.
The
U.S.
Bank Rental Truck Amortizing Loan requires monthly principal and interest
payments, with the unpaid loan balance and accrued and unpaid interest due
at
maturity. The U.S. Bank Rental Truck Amortizing Loan was used to purchase new
trucks. The interest rate, per the provision of the Loan Agreement, is the
applicable LIBOR plus a margin between 0.900% and 1.125%. At March 31, 2007
the
applicable LIBOR was 5.32% and the applicable margin was 1.125%, the sum of
which was 6.45%. The interest rate is hedged with an interest rate swap fixing
the rate at 6.37% based on the current margin. AMERCO and U-Haul International,
Inc. are 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.
U-Haul
International, Inc. and several of its subsidiaries are borrowers under an
amortizing term loan. The lenders are HSBC Bank US, NA and KBC Bank, NV
(“HSBC/KBC”). The Company’s outstanding balance at March 31, 2007 was $40.0
million and its final maturity is March 2014.
The
HSBC/KBC Rental Truck Amortizing Loan requires monthly principal and interest
payments, with the unpaid loan balance and accrued and unpaid interest due
at
maturity. The HSBC/KBC Rental Truck Amortizing Loan was used to purchase new
trucks. The interest rate, per the provision of the Loan Agreement, is the
applicable LIBOR plus a margin between 0.900% and 1.125%. At March 31, 2007
the
applicable LIBOR was 5.32% and the applicable margin was 1.125%, the sum of
which was 6.45%. The interest rate is hedged with an interest rate swap fixing
the rate at 6.11% based on the current margin. AMERCO 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.
Revolving
Credit Agreement
U-Haul
International, Inc. and several of its subsidiaries are borrowers under a
revolving credit facility. The lender is Merrill Lynch Commercial Finance Corp.
The original amount that could be drawn was $150.0 million with an original
maturity date of July 2010. On March 12, 2007, the revolving credit agreement
was amended to limit the maximum amount that can be drawn to $100.0 million
and
extended the final maturity to March 2011. As of March 31, 2007, there was
no
balance outstanding on this revolving credit agreement.
The
revolving credit agreement requires monthly interest payments, with the unpaid
loan balance and accrued and unpaid interest due at maturity. The revolving
credit agreement is secured by various older rental trucks. The interest rate,
per the provision of the Loan Agreement, is the applicable LIBOR plus a margin
of 1.37%.
F-24
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Annual
Maturities of AMERCO Consolidated
Notes and Loans Payable
The
annual maturities of AMERCO consolidated long-term debt as of March 31, 2007
for
the next five years and thereafter is as follows:
|
March
31,
|
|||||||||||||||||||
|
2008
|
2009
|
2010
|
2011
|
2012
|
Thereafter
|
||||||||||||||
|
(In
thousands)
|
|||||||||||||||||||
|
Notes
payable, secured
|
$
|
92,335
|
$
|
83,444
|
$
|
63,033
|
$
|
45,890
|
$
|
72,285
|
$
|
824,178
|
|||||||
SAC
Holding II Notes and Loans Payable to Third Parties
SAC
Holding II notes and loans payable to third parties, other than AMERCO, were
as
follows:
|
March
31,
|
|||||||
|
2007
|
2006
|
||||||
|
(In
thousands)
|
|||||||
|
Notes
payable, secured, 7.87% interest rate, due 2027
|
$
|
74,887
|
$
|
76,232
|
|||
Secured
notes payable are secured by deeds of trusts on the collateralized land and
buildings. Principal and interest payments on notes payable to third party
lenders are due monthly in the amount of $0.6 million. Certain notes payable
contain provisions whereby the loans may not be prepaid at any time prior to
the
maturity date without payment to the lender of a Yield Maintenance Premium,
as
defined in the loan agreements.
On
March
15, 2004, the SAC entities issued $200.0 million aggregate principal amount
of
8.5% senior notes due 2014 (the “new SAC Notes”). SAC Holding Corporation and
SAC Holding II Corporation are jointly and severally liable for these
obligations. The proceeds from this issuance flowed exclusively to SAC Holding
Corporation and as such SAC Holding II has recorded no liability for this.
On
August 30, 2004, SAC Holdings paid down $43.2 million on this note. On May
16,
2007, SAC Holdings gave notice it intends to pay off the remaining balance
of
the new SAC Notes and terminate the related indenture effective June 21, 2007.
No funds from SAC Holding II are expected to be used as part of this
transaction.
Annual
Maturities of SAC Holding II Notes and Loans
Payable to Third Parties
The
annual maturities of SAC Holding II long-term debt as of March 31, 2007 for
the
next five years and thereafter is as follows:
|
March
31,
|
|||||||||||||||||||
|
2008
|
2009
|
2010
|
2011
|
2012
|
Thereafter
|
||||||||||||||
|
(In
thousands)
|
|||||||||||||||||||
|
Notes
payable, secured
|
$
|
1,440
|
$
|
1,576
|
$
|
1,706
|
$
|
1,847
|
$
|
1,986
|
$
|
66,332
|
|||||||
F-25
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
W.P.
Carey Transactions
In
1999,
AMERCO, U-Haul and Real Estate entered into financing agreements for the
purchase and construction of self-storage facilities with the Bank of Montreal
and Citibank (the “leases” or the “synthetic leases”). Title to the real
property subject to these leases was held by non-affiliated entities.
These
leases were amended and restated on March 15, 2004. In connection with such
amendment and restatement, we paid down approximately $31.0 million of lease
obligations and entered into leases with a three year term, with four one year
renewal options. After such pay down, our lease obligation under the amended
and
restated synthetic leases was approximately $218.5 million.
On
April
30, 2004, the amended and restated leases were terminated and the properties
underlying these leases were sold to UH Storage (DE) Limited Partnership, an
affiliate of W. P. Carey. U-Haul entered into a ten year operating lease with
W.
P. Carey (UH Storage DE) for a portion of each property (the portion of the
property that relates to U-Haul’s truck and trailer rental and moving supply
sales businesses). The remainder of each property (the portion of the property
that relates to self-storage) was leased by W. P. Carey (UH Storage DE) to
Mercury Partners, LP (“Mercury”) pursuant to a twenty year lease. These events
are referred to as the “W. P. Carey Transactions.” As a result of the W. P.
Carey Transactions, we no longer have a capital lease related to these
properties.
The
sales
price for these transactions was $298.4 million and cash proceeds were $298.9
million. The Company realized a gain on the transaction of $2.7 million, which
is being amortized over the life of the lease term.
As
part
of the W. P. Carey Transactions, U-Haul entered into agreements to manage these
properties (including the portion of the properties leased by Mercury). These
management agreements allow us to continue to operate the properties as part
of
the U-Haul moving and self-storage system.
U-Haul’s
annual lease payments under the new lease are approximately $10.0 million per
year, with Consumer Price Index (“CPI”) inflation adjustments beginning in the
sixth year of the lease. The lease term is ten years, with a renewal option
for
an additional ten years. Upon closing of the W. P. Carey Transactions, we made
a
$22.9 million earn-out deposit, providing us with the opportunity to be
reimbursed for certain capital improvements we previously made to the
properties, and a $5.0 million security deposit. U-Haul met the requirements
under the lease regarding the return of the earn-out deposit which was refunded
in fiscal 2006.
The
property management agreement we entered into with Mercury provides that Mercury
will pay U-Haul a management fee based on gross self-storage rental revenues
generated by the properties. During fiscal 2007 and 2006, U-Haul received cash
payments of $1.8 million and $3.4 million, respectively in management fees
from
Mercury.
F-26
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,
|
||||||||||
|
2007
|
2006
|
2005
|
||||||||
|
(In
thousands)
|
||||||||||
|
Interest
expense
|
$
|
76,034
|
$
|
61,285
|
$
|
62,706
|
||||
|
Capitalized
interest
|
(596
|
)
|
(151
|
)
|
(186
|
)
|
||||
|
Amortization
of transaction costs
|
3,960
|
3,871
|
3,321
|
|||||||
|
Interest
(income) expense resulting from derivatives
|
(2,669
|
)
|
(1,655
|
)
|
1,137
|
|||||
|
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
|
83,698
|
98,977
|
66,978
|
|||||||
|
SAC
Holding II interest expense
|
13,062
|
12,840
|
14,187
|
|||||||
|
Less:
Intercompany transactions
|
(7,035
|
)
|
(6,709
|
)
|
(7,960
|
)
|
||||
|
Total
SAC Holding II interest expense
|
6,027
|
6,131
|
6,227
|
|||||||
|
Total
|
$
|
89,725
|
$
|
105,108
|
$
|
73,205
|
||||
Interest
paid in cash by AMERCO amounted to $72.9 million, $59.8 million and $57.6
million for fiscal 2007, 2006 and 2005, respectively. Early extinguishment
fees
paid in cash by AMERCO was $21.2 million in fiscal 2006.
The
exposure to market risk for changes in interest rates relates primarily to
our
variable rate debt obligations. We have used interest rate swap and interest
rate cap agreements to provide for matching the gain or loss recognition on
the
hedging instrument with the recognition of the changes in the cash flows
associated with the hedged asset or liability attributable to the hedged risk
or
the earnings effect of the hedged forecasted transaction. On June 8, 2005,
the
Company entered into separate interest rate swap contracts 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, which were designated as cash flow
hedges effective July 1, 2005. These swap contracts were cancelled on August
16,
2006 in conjunction with our amendment of the Real Estate Loan and we entered
into a new interest rate swap contract for $300.0 million of our variable rate
debt over a twelve year term effective on August 18, 2006. On May 13, 2004,
the Company entered into separate interest rate cap contracts 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 contracts 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 contract expired on May 17, 2006 and the $50.0 million
interest rate cap contract expired on May 17, 2007. On November 15, 2005, the
Company entered into a forward starting interest rate swap contract for $142.3
million of a variable rate debt over a six year term that started on May 10,
2006. On June 21, 2006, the Company entered into a forward starting interest
rate swap contract for $50.0 million of our variable rate debt over a seven
year
term that started on July 10, 2006. On June 9, 2006, the Company entered into
a
forward starting interest rate swap contract for $144.9 million of a variable
rate debt over a six year term that started on October 10, 2006. On February
9,
2007, the Company entered into an interest rate swap contract for $30.0 million
of our variable rate debt over a seven year term that started on February 12,
2007. On March 8, 2007, the Company entered into two separate interest rate
swap
contracts each for $20.0 million of our variable rate debt over a seven year
term that started on March 10, 2007. These interest rate swap agreements were
designated cash flow hedges on their effective dates.
The
interest rate cap agreement is no longer designated as a hedge as it was
replaced with an interest rate swap agreement when the associated debt was
replaced in fiscal 2007. Therefore all changes in the interest rate caps fair
value (including changes in the option’s time value), are charged to earnings.
Previously 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, 2007, the Company recorded $0.2 million
to interest income related to these cap agreements which consists of $1.8
million of interest expense representing the portion of the caps in excess
of
the balance of related debt that impacted earnings during the period net of
cash
received of $2.0 million.
F-27
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The
hedging relationship of the interest rate swap agreements is not considered
to
be perfectly effective. Therefore, for each reporting period an effectiveness
test is performed. For the portion of the change in the interest rate swaps
fair
value deemed effective, this is charged to accumulated other comprehensive
income. The remaining ineffective portion is charged to interest expense for
the
period. For the year ended March 31, 2007, the Company recorded $2.4 million
to
interest income related to these swap agreements, all of which represented
the
ineffective component of the swap that impacted earnings during the
period.
Interest
Rates
Interest
rates and Company borrowings were as follows:
|
Revolving
Credit Activity
|
||||||||||
|
Year
Ended March 31,
|
||||||||||
|
2007
|
2006
|
2005
|
||||||||
|
(In
thousands, except interest rates)
|
||||||||||
|
Weighted
average interest rate during the year
|
6.76%
|
5.95%
|
5.69%
|
|||||||
|
Interest
rate at year end
|
-
|
6.45%
|
6.43%
|
|||||||
|
Maximum
amount outstanding during the year
|
$
|
90,000
|
$
|
158,011
|
$
|
164,051
|
||||
|
Average
amount outstanding during the year
|
$
|
70,027
|
$
|
96,710
|
$
|
46,771
|
||||
|
Facility
fees
|
$
|
300
|
$
|
-
|
$
|
-
|
||||
Note
11: Stockholders’ Equity
The
Serial common stock may be issued in such series and on such terms as 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.
On
September 13, 2006, the Company announced that its Board had authorized the
Company to repurchase up to $50.0 million of its Common Stock. The stock may
be
repurchased by the Company 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). As with the original program, the Company may repurchase
stock from time to time on the open market until October 31, 2007. 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 2007, the Company repurchased 739,291 shares.
The
repurchases made by the Company 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, 2007
|
-
|
-
|
-
|
-
|
$ |
50,000,000
|
||||||||||
|
February
1 - 28, 2007
|
268,653
|
$
|
68.37
|
268,653
|
$
|
18,368,840
|
$ |
31,631,160
|
||||||||
|
March
1 - 31, 2007 (2)
|
470,638
|
$
|
65.31
|
470,638
|
$
|
30,737,262
|
$ |
65,893,898
|
||||||||
|
Fourth
Quarter Total
|
739,291
|
$
|
66.42
|
739,291
|
$
|
49,106,102
|
||||||||||
(1)
Represents weighted average purchase price for the periods
represented.
(2)
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).
F-28
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:
|
Foreign
Currency
Translation
|
Unrealized
Gain
(Loss)
on
Investments
|
Fair
Market
Value
of
Cash
Flow
Hedge
|
Adjustment
to initially apply FASB Statement No. 158
|
Accumulated
Other
Comprehensive
Income
(Loss)
|
||||||||||||
|
(In
thousands)
|
||||||||||||||||
|
Balance
at March 31, 2004
|
$
|
(34,913
|
)
|
$
|
19,516
|
$
|
-
|
$
|
-
|
$
|
(15,397
|
)
|
||||
|
Foreign
currency translation - U-Haul
|
1,569
|
-
|
-
|
-
|
1,569
|
|||||||||||
|
Unrealized
loss on investments
|
-
|
(10,831
|
)
|
-
|
-
|
(10,831
|
)
|
|||||||||
|
Change
in fair value of cash flow hedge
|
-
|
-
|
47
|
-
|
47
|
|||||||||||
|
Balance
at March 31, 2005
|
(33,344
|
)
|
8,685
|
47
|
-
|
(24,612
|
)
|
|||||||||
|
Foreign
currency translation - U-Haul
|
(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 - U-Haul
|
(1,919
|
)
|
-
|
-
|
-
|
(1,919
|
)
|
|||||||||
|
Unrealized
loss on investments
|
-
|
(1,072
|
)
|
-
|
-
|
(1,072
|
)
|
|||||||||
|
Change
in fair value of cash flow hedge
|
-
|
-
|
(9,733
|
)
|
-
|
(9,733
|
)
|
|||||||||
|
Adjustment
to initially apply FASB Statement No. 158
|
-
|
-
|
-
|
(153
|
)
|
(153
|
)
|
|||||||||
|
Balance
at March 31, 2007
|
$
|
(36,166
|
)
|
$
|
(355
|
)
|
$
|
(5,105
|
)
|
$
|
(153
|
)
|
$
|
(41,779
|
)
|
|
F-29
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Note
13: Provision for Taxes
Income
before taxes and the provision for taxes consisted of the
following:
|
Year
Ended March 31,
|
||||||||||
|
2007
|
2006
|
2005
|
||||||||
|
(In
thousands)
|
||||||||||
|
Pretax
earnings:
|
|
|
|
|||||||
|
U.S.
|
$
|
149,169
|
$
|
199,847
|
$
|
143,840
|
||||
|
Non-U.S.
|
(3,346
|
)
|
426
|
1,292
|
||||||
|
Total
pretax earnings
|
$
|
145,823
|
$
|
200,273
|
$
|
145,132
|
||||
|
Provision
for taxes:
|
||||||||||
|
Federal:
|
||||||||||
|
Current
|
$
|
47,758
|
$
|
49,652
|
$
|
30,539
|
||||
|
Deferred
|
900
|
16,239
|
17,801
|
|||||||
|
State:
|
||||||||||
|
Current
|
2,251
|
6,115
|
5,752
|
|||||||
|
Deferred
|
5,128
|
6,329
|
1,616
|
|||||||
|
Non-U.S.:
|
||||||||||
|
Current
|
338
|
439
|
-
|
|||||||
|
Deferred
|
(1,105
|
)
|
345
|
-
|
||||||
|
Total
income tax expense
|
$
|
55,270
|
$
|
79,119
|
$
|
55,708
|
||||
Income
taxes paid in cash amounted to $74.8 million, $43.3 million, and $30.0 million
for fiscal 2007, 2006, and 2005, respectively.
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,
|
||||||||||
|
2007
|
2006
|
2005
|
||||||||
|
(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
|
2.78
|
%
|
4.41
|
%
|
3.16
|
%
|
||||
|
Canadian
subsidiary loss
|
0.80
|
%
|
(0.07
|
)%
|
(0.31
|
)%
|
||||
|
Interest
on deferred taxes
|
0.69
|
%
|
0.44
|
%
|
0.43
|
%
|
||||
|
Dividend
received deduction
|
(0.03
|
)%
|
0.00
|
%
|
0.00
|
%
|
||||
|
Other
|
(1.34
|
)%
|
(0.27
|
)%
|
0.10
|
%
|
||||
|
Effective
tax rate
|
37.90
|
%
|
39.51
|
%
|
38.38
|
%
|
||||
F-30
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Significant
components of the Company’s deferred tax assets and liabilities were as
follows:
|
March
31,
|
|||||||
|
2007
|
2006
|
||||||
|
(In
thousands)
|
|||||||
|
Deferred
tax assets:
|
|||||||
|
Net
operating loss and credit carry forwards
|
$
|
11,342
|
$
|
7,906
|
|||
|
Accrued
expenses
|
116,989
|
102,159
|
|||||
|
Policy
benefit and losses, claims and loss expenses payable, net
|
13,527
|
17,476
|
|||||
|
Unrealized
gains
|
-
|
677
|
|||||
|
Total
deferred tax assets
|
141,858
|
128,218
|
|||||
|
Deferred
tax liabilities:
|
|||||||
|
Property,
plant and equipment
|
246,992
|
221,578
|
|||||
|
Deferred
policy acquisition costs
|
5,330
|
7,608
|
|||||
|
Other
|
625
|
7,124
|
|||||
|
Unrealized
losses
|
2,081
|
-
|
|||||
|
Total
deferred tax liabilities
|
255,028
|
236,310
|
|||||
|
Net
deferred tax liability
|
$
|
113,170
|
$
|
108,092
|
|||
Under
the
provisions of the Tax Reform Act of 1984, the balance in Oxford’s account
designated “Policyholders’ Surplus Account” is frozen at its December 31, 1983
balance of $19.3 million. Federal income taxes (Phase III) will be payable
thereon at applicable current rates if amounts in this account are distributed
to the stockholder or to the extent the account exceeds a prescribed maximum.
Oxford did not incur a Phase III liability for the years ended December 31,
2006, 2005 and 2004.
The
SAC
Holding II affiliated group, which began to file tax returns in the fiscal
year
ending March 31, 2003, and has net operating losses of $18.9 million and $18.2
million in fiscal years ending March 31, 2007 and March 31, 2006, respectively,
to offset taxable income in future years. These carry forwards expire in 2023
through 2027.
Under
certain circumstances and sections of the Internal Revenue Code, a change in
ownership for tax purposes could limit the amount of net operating loss carry
forwards that can be used to offset future taxable income.
F-31
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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 2007, 2006 or 2005.
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 $4.7 million
and
$3.3 million for fiscal 2007 and 2006, respectively. Listed below is a summary
of these financing arrangements as of fiscal year-end:
|
Interest
Payments
|
|||||||||||||
|
Financing
Date
|
Outstanding
as of March 31,
2007
|
2007
|
2006
|
2005
|
|||||||||
|
(In
thousands)
|
|||||||||||||
|
June,
1991
|
$
|
10,433
|
$
|
694
|
$
|
1,070
|
$
|
1,008
|
|||||
|
March,
1999
|
60
|
5
|
9
|
8
|
|||||||||
|
February,
2000
|
419
|
31
|
53
|
54
|
|||||||||
|
April,
2001
|
117
|
6
|
10
|
9
|
|||||||||
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 2007, 2006 and 2005 were $2.0 million, $2.3 million
and $2.1 million, respectively.
Shares
held by the Plan were as follows:
|
Year
Ended March 31,
|
|||||||
|
2007
|
2006
|
||||||
|
(In
thousands)
|
|||||||
|
Allocated
shares
|
1,416
|
1,474
|
|||||
|
Unreleased
shares
|
494
|
569
|
|||||
|
Fair
value of unreleased shares
|
$
|
26,288
|
$
|
41,726
|
|||
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, 2007 and March 31, 2006,
respectively.
F-32
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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, $3.5 million and $3.3 million for the years ended December 31, 2006,
2005, and 2004, 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
third party 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 third party 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.
In
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 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
other comprehensive income in the amount of $0.2 million, net of
tax.
The
components of net periodic post retirement benefit cost were as
follows:
|
Year
Ended March 31,
|
||||||||||
|
2007
|
2006
|
2005
|
||||||||
|
(In
thousands)
|
||||||||||
|
Service
cost for benefits earned during the period
|
$
|
572
|
$
|
373
|
$
|
316
|
||||
|
Interest
cost on accumulated postretirement benefit
|
464
|
306
|
313
|
|||||||
|
Other
components
|
(63
|
)
|
(299
|
)
|
(317
|
)
|
||||
|
Net
periodic postretirement benefit cost
|
$
|
973
|
$
|
380
|
$
|
312
|
||||
The
fiscal 2007 and fiscal 2006 post retirement benefit liability included the
following components:
|
Year
Ended March 31,
|
|||||||
|
2007
|
2006
|
||||||
|
(In
thousands)
|
|||||||
|
Beginning
of year
|
$
|
8,183
|
$
|
5,376
|
|||
|
Service
cost for benefits earned during the period
|
715
|
373
|
|||||
|
Interest
cost on accumulated post retirement benefit
|
580
|
306
|
|||||
|
Net
benefit payments and expense
|
(429
|
)
|
(417
|
)
|
|||
|
Actuarial
(gain) loss
|
1,735
|
2,545
|
|||||
|
Accumulated
postretirement benefit obligation
|
10,784
|
8,183
|
|||||
|
Unrecognized
net gain
|
-
|
1,563
|
|||||
|
Total
post retirement benefit liability recognized in statement of financial
position
|
10,784
|
9,746
|
|||||
|
Components
included in accumulated other comprehensive income:
|
|||||||
|
Unrecognized
net gain (loss)
|
(251
|
)
|
-
|
||||
|
Cumulative
net periodic benefit cost (in excess of employer
contribution)
|
$
|
10,533
|
$
|
9,746
|
|||
F-33
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The
discount rate assumptions in computing the information above were as
follows:
|
Year
Ended March 31,
|
||||||||||
|
2007
|
2006
|
2005
|
||||||||
|
(In
percentages)
|
||||||||||
|
Accumulated
postretirement benefit obligation
|
5.75
|
%
|
5.75
|
%
|
5.75
|
%
|
||||
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 estimated health care cost inflation rates used to measure the
accumulated post retirement benefit obligation was 6.50% in fiscal 2007, which
was projected to decline annually to an ultimate rate of 4.50% in fiscal
2014.
If
the
estimated health care cost inflation rate assumptions were increased by one
percent, the accumulated post retirement benefit obligation as of fiscal
year-end would increase by approximately $209,127 and the total of the service
cost and interest cost components would increase by $41,789. A decrease in
the
estimated health care cost inflation rate assumption of one percent would
decrease the accumulated post retirement benefit obligation as of fiscal
year-end by $235,499 and the total of the service cost and interest cost
components would decrease by $47,631.
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:
|
||||
|
2008
|
$
|
387
|
||
|
2009
|
443
|
|||
|
2010
|
517
|
|||
|
2011
|
586
|
|||
|
2012
|
668
|
|||
|
2013
through 2017
|
4,810
|
|||
|
Total
|
$
|
7,411
|
||
F-34
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, 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
|
||||||||
|
Year
ended December 31, 2004
|
||||||||||||||||
|
Life
insurance in force
|
$
|
1,147,380
|
$
|
336,575
|
$
|
1,785,441
|
$
|
2,596,246
|
69
|
%
|
||||||
|
Premiums
earned:
|
||||||||||||||||
|
Life
|
$
|
9,372
|
$
|
6,106
|
$
|
8,365
|
$
|
11,631
|
72
|
%
|
||||||
|
Accident
and health
|
99,402
|
6,715
|
17,726
|
110,413
|
16
|
%
|
||||||||||
|
Annuity
|
1,901
|
-
|
2,291
|
4,192
|
55
|
%
|
||||||||||
|
Property
and casualty
|
29,965
|
10,235
|
5,257
|
24,987
|
21
|
%
|
||||||||||
|
Total
|
$
|
140,640
|
$
|
23,056
|
$
|
33,639
|
$
|
151,223
|
||||||||
(a)
Balances
are reported net of inter-segment transactions.
F-35
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Premiums
eliminated in consolidation were as follows:
|
RepWest
|
Oxford
|
||||||
|
(In
thousands)
|
|||||||
|
2006
|
$
|
-
|
$
|
1,191
|
|||
|
2005
|
-
|
1,519
|
|||||
|
2004
|
-
|
1,474
|
|||||
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 $9.1 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,
|
|||||||
|
2006
|
2005
|
||||||
|
(In
thousands)
|
|||||||
|
Unpaid
losses and loss adjustment expense
|
$
|
288,783
|
$
|
346,928
|
|||
|
Reinsurance
losses payable
|
1,999
|
3,475
|
|||||
|
Unearned
premiums
|
459
|
2,557
|
|||||
|
Total
|
$
|
291,241
|
$
|
352,960
|
|||
Activity
in the liability for unpaid losses and loss adjustment expenses for RepWest
is
summarized as follows:
|
Year
Ended December 31,
|
||||||||||
|
2006
|
2005
|
2004
|
||||||||
|
(In
thousands)
|
||||||||||
|
Balance
at January 1
|
$
|
346,928
|
$
|
380,875
|
$
|
416,259
|
||||
|
Less
reinsurance recoverable
|
181,388
|
189,472
|
177,635
|
|||||||
|
Net
balance at January 1
|
165,540
|
191,403
|
238,624
|
|||||||
|
Incurred
related to:
|
||||||||||
|
Current
year
|
6,006
|
6,429
|
17,960
|
|||||||
|
Prior
years
|
15,895
|
16,161
|
21,773
|
|||||||
|
Total
incurred
|
21,901
|
22,590
|
39,733
|
|||||||
|
Paid
related to:
|
||||||||||
|
Current
year
|
3,492
|
3,774
|
13,570
|
|||||||
|
Prior
years
|
40,116
|
44,679
|
73,384
|
|||||||
|
Total
paid
|
43,608
|
48,453
|
86,954
|
|||||||
|
Net
balance at December 31
|
143,833
|
165,540
|
191,403
|
|||||||
|
Plus
reinsurance recoverable
|
144,950
|
181,388
|
189,472
|
|||||||
|
Balance
at December 31
|
$
|
288,783
|
$
|
346,928
|
$
|
380,875
|
||||
F-36
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 2012, with the exception of one land lease expiring in 2034. At March
31, 2007, AMERCO has guaranteed $172.3 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,
|
||||||||||
|
2007
|
2006
|
2005
|
||||||||
|
(In
thousands)
|
||||||||||
|
Lease
expense
|
$
|
149,044
|
$
|
142,781
|
$
|
151,354
|
||||
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:
|
||||||||||
|
2008
|
$
|
12,414
|
$
|
108,614
|
$
|
121,028
|
||||
|
2009
|
12,204
|
91,355
|
103,559
|
|||||||
|
2010
|
11,790
|
79,346
|
91,136
|
|||||||
|
2011
|
11,567
|
57,233
|
68,800
|
|||||||
|
2012
|
11,325
|
39,847
|
51,172
|
|||||||
|
Thereafter
|
27,879
|
36,804
|
64,683
|
|||||||
|
Total
|
$
|
87,179
|
$
|
413,199
|
$
|
500,378
|
||||
F-37
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Note
17: Contingencies
Shoen
On
September 24, 2002, Paul F. Shoen filed a derivative action 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 a nominal defendant
for purposes of the derivative action. 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
Holdings prior to the filing of the complaint. The complaint seeks a declaration
that such transfers are void as well as unspecified damages. On October 28,
2002, AMERCO, the Shoen directors, the non-Shoen directors and SAC Holdings
filed Motions to Dismiss the complaint. In addition, on October 28, 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 on January 16, 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. These additional suits are substantially similar to the Paul F. Shoen
derivative action. The five suits assert virtually identical claims. In fact,
three of the five plaintiffs are parties who are working closely together and
chose to file the same claims multiple times. These lawsuits alleged that the
AMERCO Board lacked independence. In reaching its decision to dismiss these
claims, the court determined that the AMERCO Board of Directors had the
requisite level of independence required in order to have these claims resolved
by the Board. The court consolidated all five complaints before dismissing
them
on May 28, 2003. Plaintiffs appealed and, on July 13, 2006, the Nevada Supreme
Court reviewed and remanded the claim 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. On November 8,
2006, the nominal plaintiffs filed an Amended Complaint. On December 22, 2006,
the defendants filed Motions to Dismiss. Briefing was concluded on February
21,
2007. On March 30, 2007, the Court heard oral argument on Defendants’ Motions to
Dismiss and requested supplemental briefing. The supplemental briefs were filed
on May 14, 2007.
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 loss.
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 have a material adverse effect
on AMERCO’s financial position or operating results. Real Estate expects to
spend approximately $7.6 million in total through 2011 to remediate these
properties.
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.
F-38
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Note
18: Preferred Stock Purchase Rights
The
Board
of Directors of AMERCO adopted a stockholder-rights plan in July 1998. The
rights were declared as a dividend of one preferred share purchase right for
each outstanding share of the common stock of AMERCO. The dividend distribution
was payable on August 17, 1998 to stockholders of record on that date. When
exercisable, each right will entitle its holder to purchase from AMERCO one
one-hundredth of a share of AMERCO Series C Junior Participating Preferred
Stock
(Series C), no par value, at a price of $132.00 per one one-hundredth of a
share
of Series C, subject to adjustment. AMERCO has created a series of 3,000,000
shares of authorized but not issued preferred stock for the Series C stock
authorized in this stockholder-rights plan.
The
rights will become exercisable if a person or group of affiliated or associated
persons acquire or obtain the right to acquire beneficial ownership of 10%
or
more of the common stock without approval of a majority of the Board of
Directors of AMERCO. The rights expire on August 7, 2008 unless earlier redeemed
or exchanged by AMERCO.
In
the
event AMERCO is acquired in a merger or other business combination transaction
after the rights become exercisable, each holder of a right would be entitled
to
receive that number of shares of the acquiring company’s common stock equal to
the result obtained by multiplying the then current purchase price by the number
one one-hundredths of a share of Series C for which a right is then exercisable
and dividing that product by 50% of the then current market price per share
of
the acquiring company.
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 and certain of the Company’s
outstanding loans to SAC Holdings entitle the Company to participate in SAC
Holdings’ excess cash flows (after senior debt service).
Management
believes that its sales of self-storage properties to SAC Holdings in the past
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 and to participate in SAC Holdings’ excess
cash flows as described above. To date, no excess cash flows relative to these
arrangements have been earned or paid.
During
fiscal 2007, 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, 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
$19.2 million, $19.4 million and $22.0 million, and received cash interest
payments of $44.5 million, $11.2 million and $11.7 million, from SAC Holdings
during fiscal 2007, 2006 and 2005, 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 2007 and the aggregate notes receivable balance at
March 31, 2007 and March 31, 2006 was $203.7 million, of which $75.1 million
is
with SAC Holding II and has been eliminated in the consolidated financial
statements.
Interest
accrues on the outstanding principal balance of junior notes of SAC Holdings
that the Company holds at a stated rate of basic interest. A fixed portion
of
that basic interest is paid on a monthly basis.
Additional
interest can be earned on notes totaling $142.3 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 is 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.
F-39
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
During
fiscal 2007, AMERCO and U-Haul held various junior notes with Private Mini.
The
equity interests of Private Mini are ultimately controlled by Blackwater. The
Company recorded interest income of $5.0 million and $5.1 million, and received
cash interest payments of $5.0 million and $1.4 million, from Private Mini
during fiscal 2007 and 2006, respectively. The balance of notes receivable
from
Private Mini at March 31, 2007 and 2006 was $70.1 million and $71.0 million,
respectively. The largest aggregate amount outstanding during fiscal 2007 was
$70.8 million.
The
Company currently manages the self-storage properties owned or leased by SAC
Holdings, Mercury, 4 SAC, 5 SAC, 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 $23.5 million, $22.5 million and $14.4 million from the above
mentioned entities during fiscal 2007, 2006 and 2005, 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.
RepWest
and Oxford held a 46% limited partnership interest in Securespace Limited
Partnership (“Securespace”), a Nevada limited partnership. A SAC Holdings
subsidiary serves as the general partner of Securespace and owns a 1% interest.
Another SAC Holdings subsidiary owned the remaining 53% limited partnership
interest in Securespace. Securespace was formed by SAC Holdings to be the owner
of various Canadian self-storage properties. RepWest and Oxford’s investment in
Securespace was included in Related Party Assets and was accounted for using
the
equity method of accounting. On September 29, 2006, a subsidiary of SAC Holding
Corporation exercised its right under the partnership agreement to purchase
all
of the partnership interests held by RepWest and Oxford for a combined amount
of
$11.9 million.
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 $2.7 million for fiscal 2007,
2006 and 2005, 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, 2007, 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 2007, 2006 and 2005 the Company paid
the
above mentioned entities $36.6 million, $36.8 million and $33.1 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 revenue of $39.7 million,
expenses of $2.7 million and cash flows of $63.5 million during fiscal 2007.
Revenues and commission expenses related to the Dealer Agreements were $168.6
million and $36.6 million, respectively.
On
March
9, 2007, an exchange occurred between the Company and Edward J. Shoen. Mr.
Shoen, transferred 3,483,681 shares of AMERCO Series A Common Stock, $0.25
par
value, in exchange for 3,483,681 shares of AMERCO Common Stock, $0.25 par value.
Mr. Shoen is President and Chairman of the Board and a significant shareholder
of AMERCO. No gain or loss was recognized as a result of this
transaction.
On
March
9, 2007, an exchange occurred between the Company and James P. Shoen. Mr. Shoen,
transferred 232,500 shares of AMERCO Series A Common Stock, $0.25 par value,
in
exchange for 232,500 shares of AMERCO Common Stock, $0.25 par value. Mr. Shoen
is a director and a significant shareholder of AMERCO. No gain or loss was
recognized as a result of this transaction.
In
prior
years, U-Haul sold various properties to SAC Holding Corporation 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, 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
July
2006, RepWest completed the sale of two properties to 5 SAC, for approximately
$0.9 million. RepWest received cash from these sales. These
sales resulted from 5 SAC exercising contractual purchase options they
previously held with RepWest.
F-40
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Independent
fleet owners own approximately 1.9% of all U-Haul rental trailers. There are
approximately 451 independent fleet owners, including certain officers,
directors, employees and stockholders of AMERCO. Such AMERCO officers,
directors, employees and stockholders owned less than 1.0% of all U-Haul rental
trailers during fiscal 2007, 2006 and 2005, respectively. Payments to these
individuals under this program are de minimis (less than one thousand dollars
per quarter, per person). All rental equipment is operated under contract with
U-Haul whereby U-Haul administers the operations and marketing of such equipment
and in return receives a percentage of rental fees paid by customers. Based
on
the terms of various contracts, rental fees are distributed to U-Haul (for
services as operators), to the fleet owners (including certain subsidiaries
and
related parties of U-Haul) and to rental dealers (including Company-operated
U-Haul Centers).
Related
Party Assets
|
March
31,
|
|||||||
|
2007
|
2006
|
||||||
|
(In
thousands)
|
|||||||
|
Private
Mini notes, receivables and interest
|
$
|
71,785
|
$
|
74,427
|
|||
|
Oxford
note receivable from SAC Holding Corporation (a)
|
5,040
|
5,040
|
|||||
|
U-Haul
notes receivable from SAC Holding Corporation
|
123,578
|
123,578
|
|||||
|
U-Haul
interest receivable from SAC Holding Corporation
|
23,361
|
42,189
|
|||||
|
U-Haul
receivable from SAC Holding Corporation
|
16,596
|
5,688
|
|||||
|
SAC
Holding II receivable from parent
|
-
|
2,900
|
|||||
|
U-Haul
receivable from Mercury
|
4,278
|
2,342
|
|||||
|
Oxford
and RepWest investment in Securespace (b)
|
-
|
11,585
|
|||||
|
Other
|
541
|
2,719
|
|||||
|
$
|
245,179
|
$
|
270,468
|
||||
(a)
SAC
Holding Corporation repaid this note in full April 13, 2007.
(b)
On
September 29, 2006, a subsidiary of SAC Holding Corporation exercised its right
under the partnership agreement to purchase all of the partnership interests
held by RepWest and Oxford for a combined amount of $11.9 million.
Related
Party Liabilities
|
March
31,
|
|||||||
|
2007
|
2006
|
||||||
|
(In
thousands)
|
|||||||
|
SAC
Holding II payable to affiliate
|
$
|
2,099
|
$
|
7,165
|
|||
F-41
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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,
|
||||||||||
|
2006
|
2005
|
2004
|
||||||||
|
(In
thousands)
|
||||||||||
|
RepWest:
|
||||||||||
|
Audited
statutory net income (loss)
|
$
|
8,980
|
$
|
1,825
|
$
|
(5,262
|
)
|
|||
|
Audited
statutory capital and surplus
|
101,236
|
89,824
|
64,789
|
|||||||
|
NAFCIC:
|
||||||||||
|
Audited
statutory net income (loss)
|
517
|
(82
|
)
|
(494
|
)
|
|||||
|
Audited
statutory capital and surplus
|
4,512
|
3,681
|
3,759
|
|||||||
|
Oxford:
|
||||||||||
|
Audited
statutory net income
|
14,869
|
10,237
|
10,736
|
|||||||
|
Audited
statutory capital and surplus
|
112,998
|
101,466
|
83,396
|
|||||||
|
CFLIC:
|
||||||||||
|
Audited
statutory net income
|
2,652
|
1,470
|
2,410
|
|||||||
|
Audited
statutory capital and surplus
|
21,040
|
22,455
|
20,981
|
|||||||
|
NAI:
|
||||||||||
|
Audited
statutory net income
|
6,198
|
3,076
|
1,718
|
|||||||
|
Audited
statutory capital and surplus
|
17,432
|
16,150
|
14,442
|
|||||||
|
DGLIC*:
|
||||||||||
|
Audited
statutory net loss
|
(700
|
)
|
-
|
-
|
||||||
|
Audited
statutory capital and surplus
|
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, 2006 that could be distributed as ordinary dividends was $11.0
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, 2006 that could be distributed
as
ordinary dividends was $10.1 million.
On
May
20, 2003, RepWest consented to an Order for Supervision issued by the State
of
Arizona Department of Insurance (“DOI”). The DOI determined that RepWest’s level
of risk based capital (“RBC”) allowed for regulatory control. Pursuant to this
order and Arizona law, during the period of supervision, RepWest could not
engage in certain activities without the prior approval of the DOI. The order
was abated on June 9, 2005.
F-42
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Note
21: Financial Information by Geographic Area
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
|
$
|
1,994,464
|
$
|
91,133
|
$
|
2,085,597
|
||||
|
Depreciation
and amortization, net of (gains) losses on disposal
|
199,486
|
7,241
|
206,727
|
|||||||
|
Interest
expense
|
82,202
|
554
|
82,756
|
|||||||
|
Pretax
earnings (loss)
|
149,169
|
(3,346
|
)
|
145,823
|
||||||
|
Income
tax expense (benefit)
|
56,037
|
(767
|
)
|
55,270
|
||||||
|
Identifiable
assets
|
3,433,891
|
89,157
|
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
|
$
|
2,022,587
|
$
|
84,039
|
$
|
2,106,626
|
||||
|
Depreciation
and amortization, net of (gains) losses on disposal
|
160,295
|
6,783
|
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
|
3,298,083
|
69,135
|
3,367,218
|
|||||||
Financial
information by geographic area for fiscal 2005 is as follows:
|
Year
Ended
|
United
States
|
Canada
|
Consolidated
|
|||||||
|
(All
amounts are in thousands U.S. $'s)
|
||||||||||
|
March
31, 2005
|
||||||||||
|
Total
revenues
|
$
|
1,935,199
|
$
|
72,922
|
$
|
2,008,121
|
||||
|
Depreciation
and amortization, net of (gains) losses on disposal
|
144,653
|
4,962
|
149,615
|
|||||||
|
Interest
expense
|
73,179
|
26
|
73,205
|
|||||||
|
Pretax
earnings
|
143,840
|
1,292
|
145,132
|
|||||||
|
Income
tax expense
|
55,708
|
-
|
55,708
|
|||||||
|
Identifiable
assets
|
3,045,591
|
70,582
|
3,116,173
|
|||||||
F-43
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 consolidating statements.
This
section includes condensed consolidating financial information which presents
the condensed consolidating balance sheets as of March 31, 2007 and 2006,
respectively and the related condensed consolidating statements of operations
and condensed consolidating cash flow statements for the years ended March
31,
2007, 2006, and 2005, respectively for:
(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
subsidiary
(c)
Life
Insurance, comprised of Oxford and its wholly-owned subsidiaries
(d)
SAC
Holding II and its subsidiaries
The
information includes elimination entries necessary to consolidate AMERCO, the
parent with its subsidiaries and SAC Holding II and its
subsidiaries.
Investments
in subsidiaries are accounted for by the parent using the equity method of
accounting.
F-44
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, 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-45
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-46
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Consolidating
balance sheets by industry segment as of 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)
|
||||||||||||||||||||||||||||||||||||||||||||||
|
Assets:
|
||||||||||||||||||||||||||||||||||||||||||||||
|
Cash
and cash equivalents
|
$
|
7
|
$
|
140,499
|
$
|
856
|
$
|
-
|
$
|
141,362
|
$
|
9,815
|
$
|
4,027
|
$
|
-
|
$
|
155,204
|
$
|
255
|
$
|
-
|
$
|
155,459
|
||||||||||||||||||||||
|
Reinsurance
recoverables and trade receivables, net
|
-
|
17,325
|
25
|
-
|
17,350
|
199,908
|
12,921
|
-
|
230,179
|
-
|
-
|
230,179
|
||||||||||||||||||||||||||||||||||
|
Notes
and mortgage receivables, net
|
-
|
1,333
|
1,199
|
-
|
2,532
|
-
|
-
|
-
|
2,532
|
-
|
-
|
2,532
|
||||||||||||||||||||||||||||||||||
|
Inventories,
net
|
-
|
63,585
|
-
|
-
|
63,585
|
-
|
-
|
-
|
63,585
|
1,334
|
-
|
64,919
|
||||||||||||||||||||||||||||||||||
|
Prepaid
expenses
|
2,051
|
51,166
|
-
|
-
|
53,217
|
-
|
-
|
-
|
53,217
|
45
|
-
|
53,262
|
||||||||||||||||||||||||||||||||||
|
Investments,
fixed maturities and marketable equities
|
-
|
-
|
-
|
-
|
-
|
108,563
|
587,395
|
-
|
695,958
|
-
|
-
|
695,958
|
||||||||||||||||||||||||||||||||||
|
Investments,
other
|
-
|
1,314
|
7,853
|
-
|
9,167
|
113,456
|
86,738
|
-
|
209,361
|
-
|
-
|
209,361
|
||||||||||||||||||||||||||||||||||
|
Deferred
policy acquisition costs, net
|
-
|
-
|
-
|
-
|
-
|
1,160
|
46,661
|
-
|
47,821
|
-
|
-
|
47,821
|
||||||||||||||||||||||||||||||||||
|
Other
assets
|
2
|
54,390
|
40,866
|
-
|
95,258
|
2,027
|
438
|
-
|
97,723
|
4,371
|
-
|
102,094
|
||||||||||||||||||||||||||||||||||
|
Related
party assets
|
1,219,703
|
262,330
|
12,671
|
(1,147,881
|
)
|
(d
|
)
|
346,823
|
24,293
|
10,915
|
(30,156
|
)
|
(d
|
)
|
351,875
|
2,900
|
(84,307
|
)
|
(d
|
)
|
270,468
|
|||||||||||||||||||||||||
|
1,221,763
|
591,942
|
63,470
|
(1,147,881
|
)
|
729,294
|
459,222
|
749,095
|
(30,156
|
)
|
1,907,455
|
8,905
|
(84,307
|
)
|
1,832,053
|
||||||||||||||||||||||||||||||||
|
Investment
in subsidiaries
|
(262,277
|
)
|
-
|
-
|
526,979
|
(c
|
)
|
264,702
|
-
|
-
|
(264,702
|
)
|
(c
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||
|
Investment
in SAC Holding II
|
(14,275
|
)
|
-
|
-
|
-
|
(14,275
|
)
|
-
|
-
|
-
|
(14,275
|
)
|
-
|
14,275
|
(c
|
)
|
-
|
|||||||||||||||||||||||||||||
|
Total
investment in subsidiaries and SAC Holding II
|
(276,552
|
)
|
-
|
-
|
526,979
|
250,427
|
-
|
-
|
(264,702
|
)
|
(14,275
|
)
|
-
|
14,275
|
-
|
|||||||||||||||||||||||||||||||
|
Property,
plant and equipment, at cost:
|
||||||||||||||||||||||||||||||||||||||||||||||
|
Land
|
-
|
29,159
|
146,626
|
-
|
175,785
|
-
|
-
|
-
|
175,785
|
-
|
-
|
175,785
|
||||||||||||||||||||||||||||||||||
|
Buildings
and improvements
|
-
|
78,244
|
661,359
|
-
|
739,603
|
-
|
-
|
-
|
739,603
|
-
|
-
|
739,603
|
||||||||||||||||||||||||||||||||||
|
Furniture
and equipment
|
2,590
|
260,902
|
17,879
|
-
|
281,371
|
-
|
-
|
-
|
281,371
|
-
|
-
|
281,371
|
||||||||||||||||||||||||||||||||||
|
Rental
trailers and other rental equipment
|
-
|
201,273
|
-
|
-
|
201,273
|
-
|
-
|
-
|
201,273
|
-
|
-
|
201,273
|
||||||||||||||||||||||||||||||||||
|
Rental
trucks
|
-
|
1,331,891
|
-
|
-
|
1,331,891
|
-
|
-
|
-
|
1,331,891
|
-
|
-
|
1,331,891
|
||||||||||||||||||||||||||||||||||
|
SAC
Holding II - property, plant and equipment (b)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
153,429
|
(74,212
|
)
|
(e
|
)
|
79,217
|
|||||||||||||||||||||||||||||||
|
2,590
|
1,901,469
|
825,864
|
-
|
2,729,923
|
-
|
-
|
-
|
2,729,923
|
153,429
|
(74,212
|
)
|
2,809,140
|
||||||||||||||||||||||||||||||||||
|
Less:
Accumulated depreciation
|
(334
|
)
|
(987,598
|
)
|
(285,687
|
)
|
-
|
(1,273,619
|
)
|
-
|
-
|
-
|
(1,273,619
|
)
|
(10,020
|
)
|
9,664
|
(e
|
)
|
(1,273,975
|
)
|
|||||||||||||||||||||||||
|
Total
property, plant and equipment
|
2,256
|
913,871
|
540,177
|
-
|
1,456,304
|
-
|
-
|
-
|
1,456,304
|
143,409
|
(64,548
|
)
|
1,535,165
|
|||||||||||||||||||||||||||||||||
|
Total
assets
|
$
|
947,467
|
$
|
1,505,813
|
$
|
603,647
|
$
|
(620,902
|
)
|
$
|
2,436,025
|
$
|
459,222
|
$
|
749,095
|
$
|
(294,858
|
)
|
$
|
3,349,484
|
$
|
152,314
|
$
|
(134,580
|
)
|
$
|
3,367,218
|
|||||||||||||||||||
|
(a)
Balances as of December 31, 2005
|
||||||||||||||||||||||||||||||||||||||||||||||
|
(b)
Included in this caption is land of $57,169, buildings and improvements
of
$95,876, and furniture and equipment of $384
|
||||||||||||||||||||||||||||||||||||||||||||||
|
(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-47
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Consolidating
balance sheets by industry segment as of 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)
|
||||||||||||||||||||||||||||||||||||||||||||||
|
Liabilities:
|
||||||||||||||||||||||||||||||||||||||||||||||
|
Accounts
payable and accrued expenses
|
$
|
23,405
|
$
|
203,243
|
$
|
4,988
|
$
|
-
|
$
|
231,636
|
$
|
-
|
$
|
3,188
|
$
|
-
|
$
|
234,824
|
$
|
1,054
|
$
|
-
|
$
|
235,878
|
||||||||||||||||||||||
|
AMERCO's
notes and loans payable
|
-
|
212,133
|
753,501
|
-
|
965,634
|
-
|
-
|
-
|
965,634
|
-
|
-
|
965,634
|
||||||||||||||||||||||||||||||||||
|
SAC
Holding II Corporation notes and loans payable,
non-recourse to AMERCO
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
76,232
|
-
|
76,232
|
||||||||||||||||||||||||||||||||||
|
Policy
benefits and losses, claims
and loss expenses payable
|
-
|
295,567
|
-
|
-
|
295,567
|
352,960
|
151,886
|
-
|
800,413
|
-
|
-
|
800,413
|
||||||||||||||||||||||||||||||||||
|
Liabilities
from investment contracts
|
-
|
-
|
-
|
-
|
-
|
-
|
449,149
|
-
|
449,149
|
-
|
-
|
449,149
|
||||||||||||||||||||||||||||||||||
|
Other
policyholders' funds and liabilities
|
-
|
-
|
-
|
-
|
-
|
5,222
|
2,483
|
-
|
7,705
|
-
|
-
|
7,705
|
||||||||||||||||||||||||||||||||||
|
Deferred
income
|
-
|
14,412
|
-
|
-
|
14,412
|
6,136
|
-
|
-
|
20,548
|
798
|
-
|
21,346
|
||||||||||||||||||||||||||||||||||
|
Deferred
income taxes
|
181,355
|
-
|
-
|
-
|
181,355
|
(46,219
|
)
|
2,907
|
-
|
138,043
|
(2,967
|
)
|
(26,984
|
)
|
(d
|
)
|
108,092
|
|||||||||||||||||||||||||||||
|
Related
party liabilities
|
201
|
1,134,939
|
26,994
|
(1,147,881
|
)
|
(c
|
)
|
14,253
|
3,728
|
12,175
|
(30,156
|
)
|
(c
|
)
|
-
|
91,472
|
(84,307
|
)
|
(c
|
)
|
7,165
|
|||||||||||||||||||||||||
|
Total
liabilities
|
204,961
|
1,860,294
|
785,483
|
(1,147,881
|
)
|
1,702,857
|
321,827
|
621,788
|
(30,156
|
)
|
2,616,316
|
166,589
|
(111,291
|
)
|
2,671,614
|
|||||||||||||||||||||||||||||||
|
Stockholders'
equity:
|
||||||||||||||||||||||||||||||||||||||||||||||
|
Series
preferred stock:
|
||||||||||||||||||||||||||||||||||||||||||||||
|
Series
A preferred stock
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||||||
|
Series
B preferred stock
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||||||
|
Series
A common stock
|
929
|
-
|
-
|
-
|
929
|
-
|
-
|
-
|
929
|
-
|
-
|
929
|
||||||||||||||||||||||||||||||||||
|
Common
stock
|
9,568
|
540
|
1
|
(541
|
)
|
(b
|
)
|
9,568
|
3,300
|
2,500
|
(5,800
|
)
|
(b
|
)
|
9,568
|
-
|
-
|
9,568
|
||||||||||||||||||||||||||||
|
Additional
paid-in capital
|
413,726
|
121,230
|
147,481
|
(268,711
|
)
|
(b
|
)
|
413,726
|
80,369
|
26,271
|
(106,640
|
)
|
(b
|
)
|
413,726
|
-
|
(46,071
|
)
|
(b
|
)
|
367,655
|
|||||||||||||||||||||||||
|
Accumulated
other comprehensive income (loss)
|
(28,902
|
)
|
(29,996
|
)
|
-
|
29,996
|
(b
|
)
|
(28,902
|
)
|
386
|
331
|
(717
|
)
|
(b
|
)
|
(28,902
|
)
|
-
|
-
|
(28,902
|
)
|
||||||||||||||||||||||||
|
Retained
earnings (deficit)
|
765,277
|
(436,917
|
)
|
(329,318
|
)
|
766,235
|
(b
|
)
|
765,277
|
53,340
|
98,205
|
(151,545
|
)
|
(b
|
)
|
765,277
|
(14,275
|
)
|
22,782
|
(b,d
|
)
|
773,784
|
||||||||||||||||||||||||
|
Cost
of common shares in treasury, net
|
(418,092
|
)
|
-
|
-
|
-
|
(418,092
|
)
|
-
|
-
|
-
|
(418,092
|
)
|
-
|
-
|
(418,092
|
)
|
||||||||||||||||||||||||||||||
|
Unearned
employee stock ownership
plan shares
|
-
|
(9,338
|
)
|
-
|
-
|
(9,338
|
)
|
-
|
-
|
-
|
(9,338
|
)
|
-
|
-
|
-
|
(9,338
|
)
|
|||||||||||||||||||||||||||||
|
Total
stockholders' equity (deficit)
|
742,506
|
(354,481
|
)
|
(181,836
|
)
|
526,979
|
733,168
|
137,395
|
127,307
|
(264,702
|
)
|
733,168
|
(14,275
|
)
|
(23,289
|
)
|
695,604
|
|||||||||||||||||||||||||||||
|
Total
liabilities and stockholders' equity
|
$
|
947,467
|
$
|
1,505,813
|
$
|
603,647
|
$
|
(620,902
|
)
|
$
|
2,436,025
|
$
|
459,222
|
$
|
749,095
|
$
|
(294,858
|
)
|
$
|
3,349,484
|
$
|
152,314
|
$
|
(134,580
|
)
|
$
|
3,367,218
|
|||||||||||||||||||
|
(a)
Balances as of December 31, 2005
|
||||||||||||||||||||||||||||||||||||||||||||||
|
(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-48
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
|
$
|
-
|
$
|
1,476,579
|
$
|
-
|
$
|
-
|
$
|
1,476,579
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
1,476,579
|
$
|
9,225
|
$
|
(9,225
|
)
|
(b
|
)
|
$
|
1,476,579
|
|||||||||||||||||||
|
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
|
(2,674
|
)
|
(d
|
)
|
68,128
|
-
|
(7,035
|
)
|
(d
|
)
|
61,093
|
||||||||||||||||||||||||||||
|
Other
revenue
|
204
|
31,403
|
67,436
|
(73,049
|
)
|
(b
|
)
|
25,994
|
-
|
4,740
|
(540
|
)
|
(b
|
)
|
30,194
|
1,407
|
(710
|
)
|
(b
|
)
|
30,891
|
|||||||||||||||||||||||||
|
Total
revenues
|
5,071
|
1,874,629
|
69,209
|
(73,049
|
)
|
1,875,860
|
38,486
|
148,820
|
(4,405
|
)
|
2,058,761
|
46,603
|
(19,767
|
)
|
2,085,597
|
|||||||||||||||||||||||||||||||
|
Costs
and expenses:
|
||||||||||||||||||||||||||||||||||||||||||||||
|
Operating
expenses
|
12,096
|
1,085,619
|
8,843
|
(73,049
|
)
|
(b
|
)
|
1,033,509
|
8,787
|
30,871
|
(12,046
|
)
|
(b,c
|
)
|
1,061,121
|
22,573
|
(2,797
|
)
|
(g
|
)
|
1,080,897
|
|||||||||||||||||||||||||
|
Commission
expenses
|
-
|
186,233
|
-
|
-
|
186,233
|
-
|
-
|
-
|
186,233
|
-
|
(9,225
|
)
|
(b
|
)
|
177,008
|
|||||||||||||||||||||||||||||||
|
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
|
-
|
-
|
(836
|
)
|
(b
|
)
|
149,754
|
-
|
(710
|
)
|
(b
|
)
|
149,044
|
||||||||||||||||||||||||||||
|
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
|
1,712,224
|
16,301
|
(73,049
|
)
|
1,667,953
|
32,745
|
134,299
|
(4,405
|
)
|
1,830,592
|
32,749
|
(13,292
|
)
|
1,850,049
|
|||||||||||||||||||||||||||||||
|
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
(loss) from operations
|
28,390
|
162,405
|
52,908
|
(25,766
|
)
|
217,937
|
5,741
|
14,521
|
(9,503
|
)
|
228,696
|
13,854
|
(7,002
|
)
|
235,548
|
|||||||||||||||||||||||||||||||
|
Interest
income (expense)
|
89,026
|
(114,051
|
)
|
(51,704
|
)
|
-
|
(76,729
|
)
|
-
|
-
|
-
|
(76,729
|
)
|
(13,062
|
)
|
7,035
|
(d
|
)
|
(82,756
|
)
|
||||||||||||||||||||||||||
|
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
|
||||||||||||||||||||||||||||||||||||||||||||||
|
(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-49
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
|
$
|
-
|
$
|
1,503,569
|
$
|
-
|
$
|
-
|
$
|
1,503,569
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
1,503,569
|
$
|
9,498
|
$
|
(9,498
|
)
|
(b
|
)
|
$
|
1,503,569
|
|||||||||||||||||||
|
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
|
(3,543
|
)
|
(d
|
)
|
59,803
|
-
|
(6,709
|
)
|
(d
|
)
|
53,094
|
||||||||||||||||||||||||||||
|
Other
revenue
|
459
|
39,303
|
61,910
|
(66,778
|
)
|
(b
|
)
|
34,894
|
-
|
5,764
|
(747
|
)
|
(b
|
)
|
39,911
|
1,270
|
(710
|
)
|
(b
|
)
|
40,471
|
|||||||||||||||||||||||||
|
Total
revenues
|
5,567
|
1,897,933
|
63,746
|
(66,778
|
)
|
1,900,468
|
37,358
|
148,080
|
(5,809
|
)
|
2,080,097
|
46,239
|
(19,710
|
)
|
2,106,626
|
|||||||||||||||||||||||||||||||
|
Costs
and expenses:
|
||||||||||||||||||||||||||||||||||||||||||||||
|
Operating
expenses
|
12,722
|
1,085,602
|
6,197
|
(66,778
|
)
|
(b
|
)
|
1,037,743
|
10,769
|
27,009
|
(14,647
|
)
|
(b,c
|
)
|
1,060,874
|
22,909
|
(2,793
|
)
|
(g
|
)
|
1,080,990
|
|||||||||||||||||||||||||
|
Commission
expenses
|
-
|
189,599
|
-
|
-
|
189,599
|
-
|
-
|
-
|
189,599
|
-
|
(9,498
|
)
|
(b
|
)
|
180,101
|
|||||||||||||||||||||||||||||||
|
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
|
-
|
-
|
-
|
143,491
|
-
|
(710
|
)
|
(b
|
)
|
142,781
|
|||||||||||||||||||||||||||||||
|
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
|
1,656,220
|
15,334
|
(66,778
|
)
|
1,617,658
|
36,214
|
134,147
|
(5,809
|
)
|
1,782,210
|
32,596
|
(13,561
|
)
|
1,801,245
|
|||||||||||||||||||||||||||||||
|
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
|
||||||||||||||||||||||||||||||||||||||||||||||
|
(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-50
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Consolidating
statements of operations by industry segment for period ending March 31, 2005
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
|
$
|
-
|
$
|
1,437,895
|
$
|
-
|
$
|
-
|
$
|
1,437,895
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
1,437,895
|
$
|
9,008
|
$
|
(9,008
|
)
|
(b
|
)
|
$
|
1,437,895
|
|||||||||||||||||||
|
Self-storage
revenues
|
-
|
94,431
|
1,771
|
-
|
96,202
|
-
|
-
|
-
|
96,202
|
17,953
|
-
|
114,155
|
||||||||||||||||||||||||||||||||||
|
Self-moving
& self-storage products & service sales
|
-
|
191,078
|
-
|
-
|
191,078
|
-
|
-
|
-
|
191,078
|
15,020
|
-
|
206,098
|
||||||||||||||||||||||||||||||||||
|
Property
management fees
|
-
|
14,434
|
-
|
-
|
14,434
|
-
|
-
|
-
|
14,434
|
-
|
(2,595
|
)
|
(g
|
)
|
11,839
|
|||||||||||||||||||||||||||||||
|
Life
insurance premiums
|
-
|
-
|
-
|
-
|
-
|
-
|
127,710
|
(1,474
|
)
|
(c
|
)
|
126,236
|
-
|
-
|
126,236
|
|||||||||||||||||||||||||||||||
|
Property
and casualty insurance premiums
|
-
|
-
|
-
|
-
|
-
|
24,987
|
-
|
-
|
24,987
|
-
|
-
|
24,987
|
||||||||||||||||||||||||||||||||||
|
Net
investment and interest income
|
7,796
|
22,030
|
76
|
-
|
29,902
|
16,430
|
23,476
|
(5,109
|
)
|
(d
|
)
|
64,699
|
-
|
(7,960
|
)
|
(d
|
)
|
56,739
|
||||||||||||||||||||||||||||
|
Other
revenue
|
552
|
27,489
|
56,116
|
(62,001
|
)
|
(b
|
)
|
22,156
|
-
|
8,298
|
(763
|
)
|
(b
|
)
|
29,691
|
1,191
|
(710
|
)
|
(b
|
)
|
30,172
|
|||||||||||||||||||||||||
|
Total
revenues
|
8,348
|
1,787,357
|
57,963
|
(62,001
|
)
|
1,791,667
|
41,417
|
159,484
|
(7,346
|
)
|
1,985,222
|
43,172
|
(20,273
|
)
|
2,008,121
|
|||||||||||||||||||||||||||||||
|
Costs
and expenses:
|
||||||||||||||||||||||||||||||||||||||||||||||
|
Operating
expenses
|
18,065
|
1,100,737
|
7,051
|
(62,001
|
)
|
(b
|
)
|
1,063,852
|
11,787
|
42,166
|
(16,504
|
)
|
(b,c
|
)
|
1,101,301
|
23,491
|
(2,595
|
)
|
(g
|
)
|
1,122,197
|
|||||||||||||||||||||||||
|
Commission
expenses
|
-
|
181,315
|
-
|
-
|
181,315
|
-
|
-
|
-
|
181,315
|
-
|
(9,008
|
)
|
(b
|
)
|
172,307
|
|||||||||||||||||||||||||||||||
|
Cost
of sales
|
-
|
98,877
|
-
|
-
|
98,877
|
-
|
-
|
-
|
98,877
|
6,432
|
-
|
105,309
|
||||||||||||||||||||||||||||||||||
|
Benefits
and losses
|
-
|
-
|
-
|
-
|
-
|
39,733
|
91,452
|
9,158
|
(c
|
)
|
140,343
|
-
|
-
|
140,343
|
||||||||||||||||||||||||||||||||
|
Amortization
of deferred policy acquisition costs
|
-
|
-
|
-
|
-
|
-
|
4,711
|
23,801
|
-
|
28,512
|
-
|
-
|
28,512
|
||||||||||||||||||||||||||||||||||
|
Lease
expense
|
90
|
151,937
|
37
|
-
|
152,064
|
-
|
-
|
-
|
152,064
|
-
|
(710
|
)
|
(b
|
)
|
151,354
|
|||||||||||||||||||||||||||||||
|
Depreciation,
net of (gains) losses on disposals
|
31
|
114,038
|
4,811
|
-
|
118,880
|
-
|
-
|
-
|
118,880
|
2,783
|
(560
|
)
|
(e
|
)
|
121,103
|
|||||||||||||||||||||||||||||||
|
Total
costs and expenses
|
18,186
|
1,646,904
|
11,899
|
(62,001
|
)
|
1,614,988
|
56,231
|
157,419
|
(7,346
|
)
|
1,821,292
|
32,706
|
(12,873
|
)
|
1,841,125
|
|||||||||||||||||||||||||||||||
|
Equity
in earnings of subsidiaries
|
108,673
|
-
|
-
|
(117,135
|
)
|
(f
|
)
|
(8,462
|
)
|
-
|
-
|
8,462
|
(f
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||
|
Equity
in earnings of SAC Holding II
|
(2,232
|
)
|
-
|
-
|
-
|
(2,232
|
)
|
-
|
-
|
-
|
(2,232
|
)
|
-
|
2,232
|
(f
|
)
|
-
|
|||||||||||||||||||||||||||||
|
Total
- equity in earnings of subsidiaries and SAC Holding II
|
106,441
|
-
|
-
|
(117,135
|
)
|
(10,694
|
)
|
-
|
-
|
8,462
|
(2,232
|
)
|
-
|
2,232
|
-
|
|||||||||||||||||||||||||||||||
|
Earnings
(loss) from operations
|
96,603
|
140,453
|
46,064
|
(117,135
|
)
|
165,985
|
(14,814
|
)
|
2,065
|
8,462
|
161,698
|
10,466
|
(5,168
|
)
|
166,996
|
|||||||||||||||||||||||||||||||
|
Interest
income (expense)
|
(70,235
|
)
|
15,687
|
(12,430
|
)
|
-
|
(66,978
|
)
|
-
|
-
|
-
|
(66,978
|
)
|
(14,187
|
)
|
7,960
|
(d
|
)
|
(73,205
|
)
|
||||||||||||||||||||||||||
|
Litigation
settlement, net of costs, fees and expenses
|
51,341
|
-
|
-
|
-
|
51,341
|
-
|
-
|
-
|
51,341
|
-
|
-
|
51,341
|
||||||||||||||||||||||||||||||||||
|
Pretax
earnings (loss)
|
77,709
|
156,140
|
33,634
|
(117,135
|
)
|
150,348
|
(14,814
|
)
|
2,065
|
8,462
|
146,061
|
(3,721
|
)
|
2,792
|
145,132
|
|||||||||||||||||||||||||||||||
|
Income
tax benefit (expense)
|
11,367
|
(59,160
|
)
|
(13,479
|
)
|
-
|
(61,272
|
)
|
5,104
|
(817
|
)
|
-
|
(56,985
|
)
|
1,489
|
(212
|
)
|
(e
|
)
|
(55,708
|
)
|
|||||||||||||||||||||||||
|
Net
earnings (loss)
|
89,076
|
96,980
|
20,155
|
(117,135
|
)
|
89,076
|
(9,710
|
)
|
1,248
|
8,462
|
89,076
|
(2,232
|
)
|
2,580
|
89,424
|
|||||||||||||||||||||||||||||||
|
Less:
Preferred stock dividends
|
(12,963
|
)
|
-
|
-
|
-
|
(12,963
|
)
|
-
|
-
|
-
|
(12,963
|
)
|
-
|
-
|
(12,963
|
)
|
||||||||||||||||||||||||||||||
|
Earnings
(loss) available to common shareholders
|
$
|
76,113
|
$
|
96,980
|
$
|
20,155
|
$
|
(117,135
|
)
|
$
|
76,113
|
$
|
(9,710
|
)
|
$
|
1,248
|
$
|
8,462
|
$
|
76,113
|
$
|
(2,232
|
)
|
$
|
2,580
|
$
|
76,461
|
|||||||||||||||||||
|
(a)
Balances for the year ended December 31, 2004
|
||||||||||||||||||||||||||||||||||||||||||||||
|
(b)
Eliminate intercompany lease income and commission income
|
||||||||||||||||||||||||||||||||||||||||||||||
|
(c
)
Eliminate intercompany premiums
|
||||||||||||||||||||||||||||||||||||||||||||||
|
(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-51
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
|
-
|
||||||||||||||||||||||
|
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 provision for losses on trade receivables
|
-
|
(145
|
)
|
-
|
-
|
(145
|
)
|
-
|
194
|
-
|
49
|
-
|
-
|
49
|
|||||||||||||||||||||||
|
Changes
in provision for losses on mortgage notes
|
(40
|
)
|
-
|
(40
|
)
|
-
|
-
|
-
|
(40
|
)
|
-
|
-
|
(40
|
)
|
|||||||||||||||||||||||
|
Provision
(reduction) 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
(gain) 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-52
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-53
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
|
-
|
||||||||||||||||||||||
|
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 provision for losses on trade receivables
|
-
|
(188
|
)
|
-
|
-
|
(188
|
)
|
-
|
5
|
-
|
(183
|
)
|
-
|
-
|
(183
|
)
|
|||||||||||||||||||||
|
Change
in provision 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-54
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-55
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Consolidating
cash flow statements by industry segment for the year ended March 31, 2005
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)
|
$
|
89,076
|
$
|
96,980
|
$
|
20,155
|
$
|
(117,135
|
)
|
$
|
89,076
|
$
|
(9,710
|
)
|
$
|
1,248
|
$
|
8,462
|
$
|
89,076
|
$
|
(2,232
|
)
|
$
|
2,580
|
$
|
89,424
|
||||||||||
|
Earnings
from consolidated entities
|
(106,441
|
)
|
-
|
-
|
117,135
|
10,694
|
-
|
-
|
(8,462
|
)
|
2,232
|
-
|
(2,232
|
)
|
-
|
||||||||||||||||||||||
|
Depreciation
|
31
|
107,234
|
8,603
|
-
|
115,868
|
-
|
-
|
-
|
115,868
|
2,783
|
(560
|
)
|
118,091
|
||||||||||||||||||||||||
|
Amortization
of deferred policy acquisition costs
|
-
|
-
|
-
|
-
|
-
|
4,711
|
23,801
|
-
|
28,512
|
-
|
-
|
28,512
|
|||||||||||||||||||||||||
|
Change
in provision for losses on trade receivables
|
-
|
(620
|
)
|
-
|
-
|
(620
|
)
|
-
|
-
|
-
|
(620
|
)
|
114
|
-
|
(506
|
)
|
|||||||||||||||||||||
|
Reduction
for inventory reserves
|
-
|
(1,000
|
)
|
-
|
-
|
(1,000
|
)
|
-
|
-
|
-
|
(1,000
|
)
|
-
|
-
|
(1,000
|
)
|
|||||||||||||||||||||
|
Net
(gain) loss on sale of real and personal property
|
-
|
6,804
|
(3,792
|
)
|
-
|
3,012
|
-
|
-
|
-
|
3,012
|
-
|
-
|
3,012
|
||||||||||||||||||||||||
|
Net
loss on sale of investments
|
-
|
-
|
-
|
-
|
-
|
577
|
39
|
-
|
616
|
-
|
-
|
616
|
|||||||||||||||||||||||||
|
Deferred
income taxes
|
33,060
|
-
|
-
|
-
|
33,060
|
(3,740
|
)
|
(13,649
|
)
|
46,947
|
62,618
|
(1,505
|
)
|
-
|
61,113
|
||||||||||||||||||||||
|
Net
change in other operating assets and liabilities:
|
|||||||||||||||||||||||||||||||||||||
|
Reinsurance
recoverables and trade receivables
|
-
|
4,730
|
14,830
|
-
|
19,560
|
11,926
|
703
|
-
|
32,189
|
-
|
-
|
32,189
|
|||||||||||||||||||||||||
|
Inventories
|
-
|
(9,567
|
)
|
-
|
-
|
(9,567
|
)
|
-
|
-
|
-
|
(9,567
|
)
|
(289
|
)
|
-
|
(9,856
|
)
|
||||||||||||||||||||
|
Prepaid
expenses
|
(4,782
|
)
|
(1,918
|
)
|
2
|
-
|
(6,698
|
)
|
-
|
-
|
-
|
(6,698
|
)
|
(4
|
)
|
-
|
(6,702
|
)
|
|||||||||||||||||||
|
Capitalization
of deferred policy acquisition costs
|
-
|
-
|
-
|
-
|
-
|
(2,141
|
)
|
(6,732
|
)
|
-
|
(8,873
|
)
|
-
|
-
|
(8,873
|
)
|
|||||||||||||||||||||
|
Other
assets
|
5,388
|
(28,134
|
)
|
(1,727
|
)
|
-
|
(24,473
|
)
|
(250
|
)
|
442
|
-
|
(24,281
|
)
|
394
|
-
|
(23,887
|
)
|
|||||||||||||||||||
|
Related
party assets
|
23,123
|
(6,069
|
)
|
701
|
41,674
|
59,429
|
18,377
|
17,955
|
(15,610
|
)
|
80,151
|
(2,204
|
)
|
(3,167
|
)
|
74,780
|
|||||||||||||||||||||
|
Accounts
payable and accrued expenses
|
(61,640
|
)
|
(13,864
|
)
|
(413
|
)
|
-
|
(75,917
|
)
|
(734
|
)
|
(19,846
|
)
|
-
|
(96,497
|
)
|
475
|
-
|
(96,022
|
)
|
|||||||||||||||||
|
Policy
benefits and losses, claims and loss expenses payable
|
-
|
42,458
|
-
|
-
|
42,458
|
(45,211
|
)
|
(12,865
|
)
|
-
|
(15,618
|
)
|
-
|
-
|
(15,618
|
)
|
|||||||||||||||||||||
|
Other
policyholders' funds and liabilities
|
-
|
-
|
-
|
-
|
-
|
(2,700
|
)
|
10,610
|
-
|
7,910
|
-
|
-
|
7,910
|
||||||||||||||||||||||||
|
Deferred
income
|
-
|
(11,329
|
)
|
(34
|
)
|
-
|
(11,363
|
)
|
(3,086
|
)
|
-
|
-
|
(14,449
|
)
|
42
|
-
|
(14,407
|
)
|
|||||||||||||||||||
|
Related
party liabilities
|
(21,652
|
)
|
47,024
|
(754
|
)
|
(41,674
|
)
|
(17,056
|
)
|
377
|
23,067
|
(31,337
|
)
|
(24,949
|
)
|
3,491
|
3,379
|
(18,079
|
)
|
||||||||||||||||||
|
Net
cash provided (used) by operating activities
|
(43,837
|
)
|
232,729
|
37,571
|
-
|
226,463
|
(31,604
|
)
|
24,773
|
-
|
219,632
|
1,065
|
-
|
220,697
|
|||||||||||||||||||||||
|
Cash
flows from investing activities:
|
|||||||||||||||||||||||||||||||||||||
|
Purchases
of:
|
|||||||||||||||||||||||||||||||||||||
|
Property,
plant and equipment
|
(3
|
)
|
(280,141
|
)
|
(4,267
|
)
|
-
|
(284,411
|
)
|
-
|
-
|
-
|
(284,411
|
)
|
(555
|
)
|
-
|
(284,966
|
)
|
||||||||||||||||||
|
Short
term investments
|
-
|
-
|
-
|
-
|
-
|
(16,830
|
)
|
-
|
-
|
(16,830
|
)
|
-
|
-
|
(16,830
|
)
|
||||||||||||||||||||||
|
Fixed
maturity investments
|
-
|
-
|
-
|
-
|
-
|
(4,992
|
)
|
(93,219
|
)
|
-
|
(98,211
|
)
|
-
|
-
|
(98,211
|
)
|
|||||||||||||||||||||
|
Equity
securities
|
-
|
-
|
-
|
-
|
-
|
-
|
(6,349
|
)
|
-
|
(6,349
|
)
|
-
|
-
|
(6,349
|
)
|
||||||||||||||||||||||
|
Real
estate
|
-
|
-
|
-
|
-
|
-
|
-
|
(63
|
)
|
-
|
(63
|
)
|
-
|
-
|
(63
|
)
|
||||||||||||||||||||||
|
Mortgage
loans
|
-
|
-
|
-
|
-
|
-
|
-
|
(2,750
|
)
|
-
|
(2,750
|
)
|
-
|
-
|
(2,750
|
)
|
||||||||||||||||||||||
|
Proceeds
from sales of:
|
|||||||||||||||||||||||||||||||||||||
|
Property,
plant and equipment
|
-
|
232,691
|
11,016
|
-
|
243,707
|
-
|
-
|
-
|
243,707
|
-
|
-
|
243,707
|
|||||||||||||||||||||||||
|
Short
term investments
|
-
|
-
|
-
|
-
|
-
|
-
|
10,866
|
-
|
10,866
|
-
|
-
|
10,866
|
|||||||||||||||||||||||||
|
Fixed
maturity investments
|
-
|
-
|
-
|
-
|
-
|
36,336
|
115,688
|
-
|
152,024
|
-
|
-
|
152,024
|
|||||||||||||||||||||||||
|
Equity
securities
|
-
|
-
|
-
|
-
|
-
|
56
|
-
|
-
|
56
|
-
|
-
|
56
|
|||||||||||||||||||||||||
|
Preferred
stock
|
-
|
-
|
-
|
-
|
-
|
12,000
|
3,803
|
-
|
15,803
|
-
|
-
|
15,803
|
|||||||||||||||||||||||||
|
Real
estate
|
-
|
-
|
-
|
-
|
-
|
15,672
|
513
|
-
|
16,185
|
-
|
-
|
16,185
|
|||||||||||||||||||||||||
|
Mortgage
loans
|
-
|
-
|
-
|
-
|
-
|
-
|
5,368
|
-
|
5,368
|
-
|
-
|
5,368
|
|||||||||||||||||||||||||
|
Payments
from notes and mortgage receivables
|
-
|
717
|
619
|
-
|
1,336
|
-
|
-
|
-
|
1,336
|
-
|
-
|
1,336
|
|||||||||||||||||||||||||
|
Net
cash provided (used) by investing activities
|
(3
|
)
|
(46,733
|
)
|
7,368
|
-
|
(39,368
|
)
|
42,242
|
33,857
|
-
|
36,731
|
(555
|
)
|
-
|
36,176
|
|||||||||||||||||||||
|
|
(page
1 of 2)
|
||||||||||||||||||||||||||||||||||||
|
(a)
Balance for the year ended December 31, 2004
|
|||||||||||||||||||||||||||||||||||||
F-56
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, 2005
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
|
129,355
|
-
|
-
|
-
|
129,355
|
-
|
-
|
-
|
129,355
|
-
|
-
|
129,355
|
|||||||||||||||||||||||||
|
Principal
repayments on credit facilities
|
(212,242
|
)
|
-
|
-
|
-
|
(212,242
|
)
|
-
|
-
|
-
|
(212,242
|
)
|
(1,163
|
)
|
-
|
(213,405
|
)
|
||||||||||||||||||||
|
Leveraged
Employee Stock Ownership Plan - repayments from loan
|
-
|
1,135
|
-
|
-
|
1,135
|
-
|
-
|
-
|
1,135
|
-
|
-
|
1,135
|
|||||||||||||||||||||||||
|
Payoff
of capital leases
|
-
|
(99,609
|
)
|
-
|
-
|
(99,609
|
)
|
-
|
-
|
-
|
(99,609
|
)
|
-
|
-
|
(99,609
|
)
|
|||||||||||||||||||||
|
Proceeds
from (repayment of) intercompany loans
|
155,908
|
(114,635
|
)
|
(41,273
|
)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
|
Preferred
stock dividends paid
|
(29,167
|
)
|
-
|
-
|
-
|
(29,167
|
)
|
-
|
-
|
-
|
(29,167
|
)
|
-
|
-
|
(29,167
|
)
|
|||||||||||||||||||||
|
Investment
contract deposits
|
-
|
-
|
-
|
-
|
-
|
-
|
26,331
|
-
|
26,331
|
-
|
-
|
26,331
|
|||||||||||||||||||||||||
|
Investment
contract withdrawals
|
-
|
-
|
-
|
-
|
-
|
-
|
(97,137
|
)
|
-
|
(97,137
|
)
|
-
|
-
|
(97,137
|
)
|
||||||||||||||||||||||
|
Net
cash provided (used) by financing activities
|
43,854
|
(213,109
|
)
|
(41,273
|
)
|
-
|
(210,528
|
)
|
-
|
(70,806
|
)
|
-
|
(281,334
|
)
|
(1,163
|
)
|
-
|
(282,497
|
)
|
||||||||||||||||||
|
Effects
of exchange rate on cash
|
-
|
22
|
-
|
-
|
22
|
-
|
-
|
-
|
22
|
-
|
-
|
22
|
|||||||||||||||||||||||||
|
Increase
(decrease) in cash and cash equivalents
|
14
|
(27,091
|
)
|
3,666
|
-
|
(23,411
|
)
|
10,638
|
(12,176
|
)
|
-
|
(24,949
|
)
|
(653
|
)
|
-
|
(25,602
|
)
|
|||||||||||||||||||
|
Cash
and cash equivalents at beginning of period
|
-
|
64,717
|
661
|
-
|
65,378
|
-
|
15,168
|
-
|
80,546
|
1,011
|
-
|
81,557
|
|||||||||||||||||||||||||
|
Cash
and cash equivalents at end of period
|
$
|
14
|
$
|
37,626
|
$
|
4,327
|
$
|
-
|
$
|
41,967
|
$
|
10,638
|
$
|
2,992
|
$
|
-
|
$
|
55,597
|
$
|
358
|
$
|
-
|
$
|
55,955
|
|||||||||||||
|
|
(page
2 of 2)
|
||||||||||||||||||||||||||||||||||||
|
(a)
Balance for the year ended December 31, 2004
|
|||||||||||||||||||||||||||||||||||||
F-57
AMERCO
AND CONSOLIDATED ENTITIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
-- (CONTINUED)
Note
22: Subsequent Events
Preferred
Stock Dividends
On
May 4,
2007, 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 1, 2007 to holders of record on
May
15, 2007.
Note
Receivable
Oxford’s
note receivable and accrued interest from SAC Holding was paid in full on April
13, 2007 in the amount of $5.1 million.
Fleet
Securitization Transaction
The
Company has entered into a securitized financing, as of June 1, 2007, through
an
offer by certain new special-purpose entities of up to $217.0 million of Fixed
Rate Series 2007-1-BT Notes and $86.6 million of Fixed Rate Series 2007-1-CP
Notes in a private placement transaction exempt from registration under the
Securities Act of 1933, as amended. The new special-purpose entities that will
issue the notes will be indirect subsidiaries of AMERCO. These new
special-purpose subsidiaries will use the net proceeds from the sale of the
notes to, among other things, acquire box trucks, cargo vans and pickup trucks
from the manufacturers as well as from other subsidiaries of AMERCO. The new
special-purpose subsidiaries will generate income from truck and trailer rentals
to be used to service and repay the notes. The notes will not be obligations
of
AMERCO or any of its subsidiaries other than the new special-purpose
subsidiaries. These special-purpose subsidiaries will be consolidated into
U-Haul’s financial statements.
F-58
ADDITIONAL
INFORMATION
NOTES
TO
SUMMARY OF EARNINGS OF INDEPENDENT RENTAL FLEETS
The
following Summary of Earnings of Independent Rental Fleets is presented for
purposes of analysis and is not a required part of the basic financial
statements.
|
Year
Ended March 31,
|
||||||||||||||||
|
2007
|
2006
|
2005
|
2004
|
2003
|
||||||||||||
|
(In
thousands, except earnings per $100 of
average Investment)
|
||||||||||||||||
|
Earnings
data (Note A):
|
||||||||||||||||
|
Fleet
owner income:
|
||||||||||||||||
|
Credited
to fleet owner gross rental income
|
$
|
278
|
$
|
430
|
$
|
560
|
$
|
739
|
$
|
823
|
||||||
|
Credited
to trailer accident fund (Notes D and E)
|
15
|
27
|
34
|
46
|
49
|
|||||||||||
|
Total
fleet owner income
|
293
|
457
|
594
|
785
|
872
|
|||||||||||
|
Fleet
owner operation expenses:
|
||||||||||||||||
|
Charged
to fleet owner (Note C)
|
193
|
301
|
383
|
437
|
422
|
|||||||||||
|
Charged
to trailer accident fund (Note F)
|
3
|
6
|
7
|
8
|
9
|
|||||||||||
|
Total
fleet owner operation expenses
|
196
|
307
|
390
|
445
|
431
|
|||||||||||
|
Fleet
owner earnings before trailer accident fund credit, depreciation
and income taxes
|
85
|
130
|
177
|
304
|
402
|
|||||||||||
|
Trailer
accident fund credit (Note D)
|
12
|
20
|
27
|
36
|
39
|
|||||||||||
|
Net
fleet owner earnings before depreciation and income
taxes
|
97
|
150
|
204
|
340
|
441
|
|||||||||||
|
Investment
data (Note A):
|
||||||||||||||||
|
Amount
at end of year
|
489
|
717
|
967
|
1,202
|
1,389
|
|||||||||||
|
Average
amount during year
|
603
|
842
|
1,085
|
1,296
|
1,526
|
|||||||||||
|
Net
fleet owner earnings before depreciation and income taxes per $100
of
average investment (Note B) (unaudited)
|
$
|
10.07
|
$
|
12.48
|
$
|
14.01
|
$
|
18.84
|
$
|
19.95
|
||||||
The
accompanying notes are an integral part of this Summary of Earnings of
Independent Rental Fleets.
(A)
The
accompanying Summary of Earnings of Independent Rental Fleets includes the
operations of rental equipment under the brand name of “U-Haul” owned by
independent fleet owners. Earnings data represent the aggregate results of
operations before depreciation and taxes. Investment data represent the cost
of
the rental equipment and investments before accumulated depreciation. Fleet
owner income is based on Independent Rental Dealer reports of rentals transacted
through the day preceding the last Monday of each month and received by U-Haul
International, Inc. by the end of the month and U-Haul Center reports of rentals
transacted through the last day of each month. Payments to fleet owners for
trailers lost or retired from rental service as a result of damage by accident
have not been reflected in this summary because such payments do not relate
to
earnings before depreciation and income taxes but, rather, investment
(depreciation).
The
investment data is based upon the cost of the rental equipment to the fleet
owners as reflected by sales records of the U-Haul manufacturing facilities.
(B)
The
summary of earnings data stated in terms of an amount per $100 of average
investment represents the aggregate results of operations (earnings data)
divided by the average amount of investment during the periods. The average
amount of investment is based upon a simple average of the month-end investment
during each period. Average earnings data is not necessarily representative
of
an individual fleet owner’s earnings.
F-59
(C)
A
summary of operations expenses charged directly to independent fleet owners
follows:
|
Year
Ended March 31,
|
||||||||||||||||
|
2007
|
2006
|
2005
|
2004
|
2003
|
||||||||||||
|
(In
thousands)
|
||||||||||||||||
|
Licenses
|
$
|
18
|
$
|
24
|
$
|
31
|
$
|
41
|
$
|
52
|
||||||
|
Public
liability insurance
|
17
|
33
|
37
|
48
|
53
|
|||||||||||
|
Repairs
and maintenance
|
158
|
244
|
315
|
348
|
317
|
|||||||||||
|
$
|
193
|
$
|
301
|
$
|
383
|
$
|
437
|
$
|
422
|
|||||||
(D)
The
fleet owners and subsidiary U-Haul rental companies forego normal commissions
on
a portion of gross rental fees designated for transfer to the Trailer Accident
Fund (the “Fund”). Trailer accident repair expenses otherwise chargeable to
fleet owner, are paid from this Fund to the extent of the financial resources
of
the Fund. The amounts designated “Trailer Accident Fund credit” in the
accompanying summary of earnings represents independent fleet owner commissions
foregone, which exceed expenses borne by the Fund.
(E)
Commissions foregone for transfer to the Trailer Accident Fund
follow:
|
Fleet
Owners
|
|||||||||||||
|
Subsidiary
U-Haul
Companies
|
Subsidiary
Companies
|
Independent
|
Total
|
||||||||||
|
(In
thousands)
|
|||||||||||||
|
Year
ended:
|
|||||||||||||
|
March
31, 2007
|
$
|
9,357
|
$
|
5,024
|
$
|
15
|
$
|
14,396
|
|||||
|
March
31, 2006
|
9,285
|
4,972
|
27
|
14,284
|
|||||||||
|
March
31, 2005
|
8,450
|
4,516
|
34
|
13,000
|
|||||||||
|
March
31, 2004
|
7,704
|
4,102
|
46
|
11,852
|
|||||||||
|
March
31, 2003
|
6,845
|
3,637
|
49
|
10,531
|
|||||||||
(F)
A
summary of independent fleet owner expenses borne by the Trailer Accident Fund
follows:
|
Fleet
Owners
|
|
||||||||||||||||||
|
Subsidiary
U-Haul
Companies
|
Subsidiary
Companies
|
Independent
|
Sub
Total
|
Trailer
Accident
Retirements
|
Total
Trailer
Accident
Repair
Expenses
|
||||||||||||||
|
(In
thousands)
|
|||||||||||||||||||
|
Year
ended:
|
|||||||||||||||||||
|
March
31, 2007
|
$
|
1,804
|
$
|
968
|
$
|
3
|
$
|
2,775
|
$
|
317
|
$
|
3,092
|
|||||||
|
March
31, 2006
|
2,170
|
1,162
|
6
|
3,338
|
443
|
3,781
|
|||||||||||||
|
March
31, 2005
|
1,717
|
917
|
7
|
2,641
|
388
|
3,029
|
|||||||||||||
|
March
31, 2004
|
1,366
|
727
|
8
|
2,101
|
466
|
2,567
|
|||||||||||||
|
March
31, 2003
|
1,095
|
582
|
8
|
1,685
|
394
|
2,079
|
|||||||||||||
F-60
CONDENSED
FINANCIAL INFORMATION OF AMERCO
BALANCE
SHEETS
|
March
31,
|
|||||||
|
2007
|
2006
|
||||||
|
(In
thousands)
|
|||||||
|
ASSETS
|
|||||||
|
Cash
and cash equivalents
|
$
|
9
|
$
|
7
|
|||
|
Investment
in subsidiaries and SAC Holding II
|
(245,116
|
)
|
(276,552
|
)
|
|||
|
Related
party assets
|
1,180,929
|
1,219,703
|
|||||
|
Other
assets
|
15,146
|
4,309
|
|||||
|
Total
assets
|
950,968
|
947,467
|
|||||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
|
Liabilities:
|
|||||||
|
Related
party liabilities
|
$
|
-
|
$
|
201
|
|||
|
Other
liabilities
|
187,520
|
204,760
|
|||||
|
187,520
|
204,961
|
||||||
|
Stockholders'
equity:
|
|||||||
|
Preferred
stock
|
-
|
-
|
|||||
|
Common
stock
|
10,497
|
10,497
|
|||||
|
Additional
paid-in capital
|
421,483
|
413,726
|
|||||
|
Accumulated
other comprehensive loss
|
(41,779
|
)
|
(28,902
|
)
|
|||
|
Retained
earnings:
|
|||||||
|
Beginning
of period
|
763,203
|
657,434
|
|||||
|
Net
earnings
|
90,205
|
120,806
|
|||||
|
Dividends
|
(12,963
|
)
|
(12,963
|
)
|
|||
|
1,230,646
|
1,160,598
|
||||||
|
Less:
Cost of common shares in treasury
|
(467,198
|
)
|
(418,092
|
)
|
|||
|
Total
stockholders' equity
|
763,448
|
742,506
|
|||||
|
Total
liabilities and stockholders' equity
|
$
|
950,968
|
$
|
947,467
|
|||
The
accompanying notes are an integral part of these consolidated financial
statements.
F-61
CONDENSED
FINANCIAL INFORMATION OF AMERCO
STATEMENTS
OF OPERATIONS
|
Years
Ended March 31,
|
||||||||||
|
2007
|
2006
|
2005
|
||||||||
|
(In
thousands, except share and per share data)
|
||||||||||
|
Revenues:
|
||||||||||
|
Net
interest income from subsidiaries
|
$
|
5,071
|
$
|
5,567
|
$
|
8,348
|
||||
|
Expenses:
|
||||||||||
|
Operating
expenses
|
12,096
|
12,722
|
18,065
|
|||||||
|
Other
expenses
|
381
|
160
|
121
|
|||||||
|
Total
expenses
|
12,477
|
12,882
|
18,186
|
|||||||
|
Equity
in earnings of subsidiaries and SAC Holding II
|
35,796
|
163,388
|
106,441
|
|||||||
|
Interest
income (expense)
|
89,026
|
(24,636
|
)
|
(70,235
|
)
|
|||||
|
Fees
on early extinguishment of debt
|
-
|
(35,627
|
)
|
-
|
||||||
|
Litigation
settlement income, net of costs, fees and expenses
|
-
|
-
|
51,341
|
|||||||
|
Pretax
earnings
|
117,416
|
95,810
|
77,709
|
|||||||
|
Income
tax benefit
|
(27,211
|
)
|
24,996
|
11,367
|
||||||
|
Net
earnings
|
90,205
|
120,806
|
89,076
|
|||||||
|
Less:
Preferred stock dividends
|
(12,963
|
)
|
(12,963
|
)
|
(12,963
|
)
|
||||
|
Earnings
available to common shareholders
|
$
|
77,242
|
$
|
107,843
|
$
|
76,113
|
||||
|
Basic
and diluted earnings per common share
|
$
|
3.71
|
$
|
5.17
|
$
|
3.66
|
||||
|
Weighted
average common shares outstanding: Basic and diluted
|
20,838,570
|
20,857,108
|
20,804,773
|
|||||||
F-62
CONDENSED FINANCIAL INFORMATION OF AMERCO
STATEMENTS
OF CASH FLOWS
|
Year
Ended March 31,
|
||||||||||
|
2007
|
2006
|
2005
|
||||||||
|
(In
thousands)
|
||||||||||
|
Cash
flows from operating activities:
|
||||||||||
|
Net
earnings
|
$
|
90,205
|
$
|
120,806
|
$
|
89,076
|
||||
|
Change
in investments in subsidiaries and SAC Holding II
|
(35,796
|
)
|
(163,388
|
)
|
(106,441
|
)
|
||||
|
Depreciation
|
293
|
79
|
31
|
|||||||
|
Write-off
of unamortized debt issuance costs
|
-
|
13,629
|
-
|
|||||||
|
Deferred
income taxes
|
5,239
|
22,940
|
33,060
|
|||||||
|
Net
change in other operating assets and liabilities:
|
||||||||||
|
Prepaid
expenses
|
(9,122
|
)
|
3,142
|
(4,782
|
)
|
|||||
|
Other
assets
|
(10
|
)
|
576
|
5,388
|
||||||
|
Related
party assets
|
(1,479
|
)
|
(218
|
)
|
23,123
|
|||||
|
Accounts
payable and accrued expenses
|
(19,561
|
)
|
30,128
|
(61,640
|
)
|
|||||
|
Related
party liabilities
|
(201
|
)
|
(447
|
)
|
(21,652
|
)
|
||||
|
Net
cash provided (used) by operating activities
|
29,568
|
27,247
|
(43,837
|
)
|
||||||
|
Cash
flows from investment activities:
|
||||||||||
|
Purchase
of property, plant and equipment
|
(1,998
|
)
|
(2,298
|
)
|
(3
|
)
|
||||
|
Net
cash used by investing activities
|
(1,998
|
)
|
(2,298
|
)
|
(3
|
)
|
||||
|
Cash
flows from financing activities:
|
||||||||||
|
Borrowings
from credit facilities
|
-
|
80,266
|
129,355
|
|||||||
|
Principal
repayments on credit facilities
|
-
|
(860,274
|
)
|
(212,242
|
)
|
|||||
|
Treasury
stock repurchases
|
(49,106
|
)
|
-
|
-
|
||||||
|
Proceeds
from intercompany loans
|
34,501
|
768,015
|
155,908
|
|||||||
|
Preferred
stock dividends paid
|
(12,963
|
)
|
(12,963
|
)
|
(29,167
|
)
|
||||
|
Net
cash provided (used) by financing activities
|
(27,568
|
)
|
(24,956
|
)
|
43,854
|
|||||
|
Increase
(decrease) in cash and cash equivalents
|
2
|
(7
|
)
|
14
|
||||||
|
Cash
and cash equivalents at beginning of period
|
7
|
14
|
-
|
|||||||
|
Cash
and cash equivalents at end of period
|
$
|
9
|
$
|
7
|
$
|
14
|
||||
Income
taxes paid in cash amounted to $74.8 million, $43.3 million and
$30.0 million for 2007, 2006 and 2005, respectively. Interest paid in cash
amounted to $72.9 million, $59.8 million and $57.6 million for 2007,
2006 and 2005, respectively.
The
accompanying notes are an integral part of these consolidated financial
statements.
F-63
CONDENSED
FINANCIAL INFORMATION OF AMERCO
NOTES
TO CONDENSED FINANCIAL INFORMATION
March
31, 2007, 2006, and 2005
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.
See Note 16 “Contingent Liabilities and Commitments” and Note 19 “Related Party
Transactions” of the “Notes to Consolidated Financial Statements”.
F-64
AMERCO
AND CONSOLIDATED SUBSIDIARIES
VALUATION
AND QUALIFYING ACCOUNTS
Years
Ended March 31, 2007, 2006 and 2005
|
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, 2007
|
(In
thousands)
|
|||||||||||||||
|
Allowance
for doubtful accounts
|
||||||||||||||||
|
(deducted
from trade receivable)
|
$
|
1,202
|
$
|
2,928
|
$
|
-
|
$
|
(3,073
|
)
|
$
|
1,057
|
|||||
|
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
|
||||||
|
Year
ended March 31, 2006
|
||||||||||||||||
|
Allowance
for doubtful accounts
|
||||||||||||||||
|
(deducted
from trade receivable)
|
$
|
1,391
|
$
|
1,988
|
$
|
-
|
$
|
(2,177
|
)
|
$
|
1,202
|
|||||
|
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
|
||||||
|
Year
ended March 31, 2005
|
||||||||||||||||
|
Allowance
for doubtful accounts
|
||||||||||||||||
|
(deducted
from trade receivable)
|
$
|
2,011
|
$
|
2,689
|
$
|
-
|
$
|
(3,309
|
)
|
$
|
1,391
|
|||||
|
Allowance
for doubtful accounts
|
||||||||||||||||
|
(deducted
from notes and mortgage receivable)
|
$
|
2,643
|
$
|
-
|
$
|
-
|
$
|
(19
|
)
|
$
|
2,624
|
|||||
|
Allowance
for LIFO
|
||||||||||||||||
|
(deducted
from inventory)
|
$
|
3,234
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
3,234
|
||||||
|
Allowance
for obsolescence
|
||||||||||||||||
|
(deducted
from inventory)
|
$
|
2,500
|
$
|
-
|
$
|
-
|
$
|
(1,000
|
)
|
$
|
1,500
|
|||||
F-65
SCHEDULE
V
AMERCO
AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTAL
INFORMATION (FOR PROPERTY-CASUALTY INSURANCE UNDERWRITERS)
Years
Ended December 31, 2006, 2005 AND 2004
|
Year
|
Affiliation
with Registrant
|
Deferred
Policy Acquisiton 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)
|
|||||||||||||||||||||||||||||||||||||
|
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
|
|||||||||||||||||||||||||
|
2005
|
Consolidated
property casualty
entity
|
1,273
|
380,875
|
N/A
|
2,992
|
24,987
|
15,825
|
17,960
|
21,773
|
4,711
|
86,955
|
17,901
|
|||||||||||||||||||||||||
(1) The
earned and written premiums are reported net of intersegment transactions.
There
were no earned premiums eliminated for the year ended 2007, 2006 and 2005,
respectively.
(2) Net
Investment Income excludes net realized gains (losses) on investments of
($0.3) million, ($1.3) million and $0.6 million for the years ended
2007, 2006 and 2005, respectively.
F-66
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 6, 2007
|
||||
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
6, 2007
|
|
|
Edward
J. Shoen
|
|||
|
/s/JASON
A. BERG
|
Chief
Accounting Officer (Principal
Accounting Officer)
|
June
6, 2007
|
|
|
Jason
A. Berg
|
|||
|
s/JAMES
P. SHOEN
|
Director
|
June
6, 2007
|
|
|
James
P. Shoen
|
|||
|
/s/CHARLES
J. BAYER
|
Director
|
June
6, 2007
|
|
|
Charles
J. Bayer
|
|||
|
/s/JOHN
M. DODDS
|
Director
|
June
6, 2007
|
|
|
John
M. Dodds
|
|||
|
/s/DANIEL
R. MULLEN
|
Director
|
June
6, 2007
|
|
|
Daniel
R. Mullen
|
|||
|
/s/JOHN
P.
BROGAN
|
Director
|
June
6, 2007
|
|
|
John
P. Brogan
|
|||
|
/s/M.
FRANK LYONS
|
Director
|
June
6, 2007
|
|
|
M.
Frank Lyons
|
|||
|
/s/MICHAEL
L. GALLAGHER
|
Director
|
June
6, 2007
|
|
|
Michael
L. Gallagher
|
|||
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.
|
U-Haul International, Inc.
|
||||
|
By:
|
/s/
Edward J. Shoen
|
|||
|
Edward
J. Shoen
|
||||
|
Chief
Executive Officer and Chairman of the Board
|
||||
|
Dated:
June 6, 2007
|
||||
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
|
Chief
Executive Officer and Chairman of the
Board (Principal
Executive Officer)
|
June
6, 2007
|
|
|
Edward
J. Shoen
|
|||
|
/s/JASON
A. BERG
|
Chief Accounting
Officer (Principal Accounting
Officer)
|
June
6, 2007
|
|
|
Robert
T. Peterson
|
|||
|
/s/SAMUEL
J. SHOEN
|
Director
|
June
6, 2007
|
|
|
Samuel
J. Shoen
|
|||
|
/s/ROBERT
A. DOLAN
|
Director
|
June
6, 2007
|
|
|
Robert
A. Dolan
|
|||
|
/s/DANIEL
R. MULLEN
|
Director
|
June
6, 2007
|
|
|
Daniel
R. Mullen
|
|||
|
/s/JOHN
M. DODDS
|
Director
|
June
6, 2007
|
|
|
John
M. Dodds
|
|||
|
/s/JOHN
C. TAYLOR
|
Director
|
June
6, 2007
|
|
|
John
C. Taylor
|
|||
| /s/ROBERT T. PETERSON |
Chief Financial
Officer (U-Haul
International, Inc.)
|
June
6, 2007
|
|
| Robert T. Peterson | |||