<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 27, 1995
REGISTRATION NO. 33-57125
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
PRE-EFFECTIVE
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
AMERCO
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
NEVADA 88-0106815
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
</TABLE>
------------------------
1325 AIRMOTIVE WAY, SUITE 100
RENO, NEVADA 89502-3239
(702) 688-6300
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
JON S. COHEN, ESQ.
SNELL & WILMER
ONE ARIZONA CENTER
PHOENIX, ARIZONA 85004-0001
(602) 382-6247
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
MICHAEL M. FLEMING, ESQ. DEBRA K. WEINER, ESQ.
RYAN, SWANSON & CLEVELAND GROVER WICKERSHAM, P.C.
1201 THIRD AVENUE, SUITE 3400 430 CAMBRIDGE AVENUE, SUITE 100
SEATTLE, WASHINGTON 98101 PALO ALTO, CALIFORNIA 94306
(206) 464-4224 (415) 323-6400
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SECTION 8(A) MAY
DETERMINE.
================================================================================
<PAGE> 2
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
SUBJECT TO COMPLETION, DATED FEBRUARY 27, 1995
PROSPECTUS
500,000 SHARES
A M E R C O
[ LOGOS ]
COMMON STOCK
Paul F. Shoen ("Selling Stockholder") hereby offers 500,000 shares of
Common Stock (the "Securities") of AMERCO (the "Company"), a holding company for
U-Haul International, Inc., Ponderosa Holdings, Inc., and Amerco Real Estate
Company. The Company will not receive any portion of the proceeds from the sale
of the Securities offered hereby. The Company's Common Stock is quoted on Nasdaq
National Market ("Nasdaq") under the symbol "AMOO."
On February 24, 1995, the last reported sale price of the Common Stock
through Nasdaq was $20.625 per share.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
=========================================================================================
<S> <C> <C> <C>
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND SELLING
PUBLIC COMMISSIONS(1) STOCKHOLDER(2)
- -----------------------------------------------------------------------------------------
Per Share................................ $ $ $
- -----------------------------------------------------------------------------------------
Total............................... $ $ $
=========================================================================================
</TABLE>
(1) Excludes a nonaccountable expense allowance payable by Selling Stockholder
to Van Kasper & Company, the representative (the "Representative") of the
several Underwriters. The Company and the Selling Stockholder have agreed to
indemnify the Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended (the "Securities
Act"). See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $123,125.
The Securities offered by this Prospectus are offered by the Underwriters
subject to prior sale when, as and if delivered to and accepted by the
Underwriters, and subject to their right to withdraw, cancel, or modify such
offer and to reject orders in whole or in part and to certain other conditions.
It is expected that delivery of the Securities will be made at the offices of
Van Kasper & Company, San Francisco, California on or about March , 1995.
VAN KASPER & COMPANY
MARCH , 1995
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements, and other information
filed by the Company may be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and at its regional offices located at 75 Park Place,
14th Floor, New York, New York 10007, and Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material may
be obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates.
The Company has filed with the Commission a registration statement (the
"Registration Statement") with respect to the Securities offered hereby. This
Prospectus, which constitutes part of the Registration Statement, does not
contain all of the information contained in the Registration Statement and the
exhibits thereto. For further information with respect to the Company and the
Securities offered hereby, reference is made to the Registration Statement,
including the exhibits thereto, which may be examined without charge at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and copies of all or any part thereof may be
obtained from the Public Reference Section of the Commission at prescribed
rates. Statements contained in this Prospectus as to the contents of any
contract or any other document are not necessarily complete and, in each
instance, reference is made to the copy of such contract or document filed as an
exhibit to the Registration Statement, each statement being qualified in all
respects by such reference.
The Company's Series A 8 1/2% Preferred Stock is listed on the New York
Stock Exchange and the Company's Common Stock is listed on Nasdaq. Reports,
proxy statements, and other information filed by the Company may be inspected at
the New York Stock Exchange, 20 Broad Street, New York, New York 10005 and at
the National Association of Securities Dealers, 1735 K Street, N.W., Washington,
D.C. 20007.
INFORMATION INCORPORATED BY REFERENCE
The Annual Report of the Company on Form 10-K for the fiscal year ended
March 31, 1994, the Company's audited consolidated financial statements included
in the Company's Registration Statement on Form S-2, No. 33-54289 filed with the
Commission, which was effective November 3, 1994 (the "S-2 Registration
Statement"), the Quarterly Reports of the Company on Form 10-Q for the quarters
ended June 30, September 30, and December 31, 1994, and the Current Report on
Form 8-K filed with the Commission on October 13, 1994 are incorporated herein
by reference.
All reports filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of this offering shall be deemed to be
incorporated by reference in this Prospectus and to be made a part hereof from
their respective dates of filing.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document that is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will cause to be furnished without charge to each person,
including any beneficial owner, to whom this Prospectus is delivered, upon the
written or oral request of such person, a copy of any documents described above,
other than certain exhibits to such documents. Requests should be addressed to:
AMERCO, Investor Relations, 1325 Airmotive Way, Suite 100, Reno, Nevada 89502;
telephone: (702) 688-6300.
2
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the detailed
information and financial statements, including the notes thereto, appearing
elsewhere or incorporated by reference in this Prospectus. Investors should
carefully consider the information set forth under the heading "Risk Factors."
THE COMPANY
AMERCO, a Nevada corporation (the "Company"), is the holding company for
U-Haul International, Inc. ("U-Haul"), Ponderosa Holdings, Inc. ("Ponderosa"),
and Amerco Real Estate Company ("AREC"). Throughout this Prospectus, unless the
context otherwise requires, the term "Company" includes all of the Company's
subsidiaries.
Founded in 1945, U-Haul is primarily engaged, through subsidiaries, in the
rental of trucks, automobile-type trailers, and support rental items to the
do-it-yourself moving customer. The Company's do-it-yourself moving business
operates under the U-Haul name through an extensive and geographically diverse
distribution network of approximately 1,100 Company-owned U-Haul Centers and
approximately 12,400 independent dealers throughout the United States and
Canada. U-Haul's rental equipment fleet consists of approximately 79,000 trucks
and approximately 91,000 trailers. Additionally, U-Haul sells related products
and services and rents self-storage facilities and various kinds of equipment.
U-Haul entered the self-storage business in 1974 and offers for rent more than
13.0 million square feet of self-storage space through the management of
approximately 650 locations. AREC owns a majority of the real estate used in
connection with the foregoing businesses.
Ponderosa serves as the holding company for the Company's insurance
businesses. Ponderosa's two principal subsidiaries are Oxford Life Insurance
Company ("Oxford") and Republic Western Insurance Company ("RWIC"). Oxford
primarily reinsures life, health, and annuity type insurance products and
administers the Company's self-insured employee health plan. RWIC originates and
reinsures property and casualty type insurance products for various market
participants, including independent third parties, the Company's customers, and
the Company.
The Company's principal executive offices are located at 1325 Airmotive
Way, Suite 100, Reno, Nevada 89502, and the telephone number of the Company is
(702) 688-6300.
THE OFFERING
Securities Offered by the Selling
Stockholder......................... 500,000 shares of Common Stock
Securities Outstanding.............. 6,100,000 shares of Series A 8 1/2%
Preferred Stock, 32,901,568 shares of
Common Stock, and 5,762,495 shares of
Series A Common Stock
Use of Proceeds..................... The Company will receive no proceeds
from the sale of the Securities offered
hereby
Nasdaq Symbol....................... "AMOO"
3
<PAGE> 5
SUMMARY CONSOLIDATED FINANCIAL DATA
The following summary financial information, insofar as it relates to each
of the fiscal years ended March 31, 1992, 1993 and 1994, has been derived from
the Company's consolidated financial statements, audited by Price Waterhouse
LLP, independent accountants, included in the Company's S-2 Registration
Statement. The report of Price Waterhouse LLP included therein contains an
explanatory paragraph related to the uncertainty surrounding certain litigation
described in Notes 14 and 21 to such consolidated financial statements. The
summary financial information related to each of the fiscal years ended March
31, 1990 and 1991 has been derived from the Company's audited financial
statements. The summary financial information related to the nine months ended
December 31, 1993 and 1994 has been derived from the Company's unaudited
quarterly report on Form 10-Q for the quarter ended December 31, 1994, which is
incorporated by reference herein. Oxford and RWIC have been consolidated on the
basis of fiscal years ended December 31. To give effect to Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes," the
Company has restated its financial statements to April 1, 1988. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Other." The summaries for the nine months ended December 31 are
unaudited; however, in the opinion of management, all adjustments necessary for
a fair presentation of such financial information have been included. The
results of operations for the nine months ended December 31, 1994 may not be
indicative of the results to be expected for fiscal 1995 because, among other
reasons, the Company's U-Haul business is seasonal, with a majority of its
revenue and substantially all of its net earnings being generated in the first
and second quarters of each fiscal year.
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
FOR THE FISCAL YEAR ENDED MARCH 31, ENDED DECEMBER 31,
-------------------------------------------------------------- -----------------------
1990 1991 1992 1993 1994 1993 1994
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS DATA:(1)
Rental, net sales, and other
revenues............................ $ 830,998 $ 860,044 $ 845,128 $ 901,446 $ 972,704 $ 762,844 $ 838,994
Premiums and net investment income.... 119,641 126,620 126,756 139,465 162,151 120,920 141,587
---------- ---------- ---------- ---------- ---------- ---------- ----------
950,639 986,664 971,884 1,040,911 1,134,855 883,764 980,581
---------- ---------- ---------- ---------- ---------- ---------- ----------
Operating expenses and cost of
sales............................... 627,396 668,149 661,229 697,700 735,841 553,353 589,202
Benefits, losses, and amortization of
deferred acquisition costs.......... 121,602 126,626 99,091 115,969 130,168 101,162 116,884
Depreciation.......................... 105,437 114,589 109,641 110,105 133,485 96,580 112,631
Interest expense...................... 74,657 80,815 76,189 67,958 68,859 52,530 50,871
---------- ---------- ---------- ---------- ---------- ---------- ----------
929,092 990,179 946,150 991,732 1,068,353 803,625 869,588
---------- ---------- ---------- ---------- ---------- ---------- ----------
Pretax earnings (loss) from
operations.......................... 21,547 (3,515) 25,734 49,179 66,502 80,139 110,993
Income tax expense.................... (3,516) (6,354) (4,940) (17,270) (19,853) (25,211) (39,602)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Earnings (loss) before cumulative
effect of change in accounting
principle and extraordinary item.... 18,031 (9,869) 20,794 31,909 46,649 54,928 71,391
Extraordinary loss on early
extinguishment of debt, net(2)...... -- -- -- -- (3,370) (1,897) --
Cumulative effect of change in
accounting principle, net(3)........ -- -- -- -- (3,095) (3,272) --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net earnings (loss)................... $ 18,031 $ (9,869) $ 20,794 $ 31,909 $ 40,184 $ 49,759 $ 71,391
========= ========= ========= ========= ========= ========= =========
Earnings (loss) from operations before
extraordinary loss on early
extinguishment of debt and
cumulative effect of change in
accounting principle per common
share............................... $ .46 $ (.25) $ .53 $ .83 $ 1.06 $ 1.41 $ 1.67
Net earnings (loss) per common
share(4)............................ .46 (.25) .53 .83 .89 1.27 1.67
Weighted average common shares
outstanding......................... 39,483,960 39,312,080 38,880,069 38,664,063 38,664,063 37,070,925 37,025,575
Cash dividends declared --
common shares... $ 2,575 $ 1,176 $ -- $ 1,994 $ 3,147 $ 3,147 $ --
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
-------------------------------------------------------------- -----------------------
1990 1991 1992 1993 1994 1993 1994
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:(1)
Total property, plant, and equipment,
net................................. $ 975,675 $1,040,342 $ 987,095 $ 989,603 $1,174,236 $1,113,490 $1,262,853
Total assets.......................... 1,725,660 1,822,977 1,979,324 2,024,023 2,344,442 2,223,516 2,537,422
Notes and loans payable............... 749,113 804,826 733,322 697,121 723,764 666,063 827,592
Stockholders' equity.................. 446,294 435,180 451,888 479,958 651,787 666,211 705,577
</TABLE>
- ---------------
(1) See "Business -- Litigation" for a discussion of material uncertainties
relating to stockholder litigation. See also "Business -- Environmental
Matters."
(2) See "Management's Discussion and Analysis of Financial Condition and Results
of Operations -- Fiscal Year Ended March 31, 1994 versus Fiscal Year Ended
March 31, 1993 -- Extraordinary Loss on Extinguishment of Debt."
(3) See "Management's Discussion and Analysis of Financial Condition and Results
of Operations -- Other."
(4) For the fiscal year ended March 31, 1994, and the nine months ended December
31, 1993 and 1994, net earnings per common share amounts were computed after
giving effect to the dividend on the Company's Series A 8 1/2% Preferred
Stock. See "Description of Securities -- Dividends."
4
<PAGE> 6
RECENT DEVELOPMENTS
As more fully set forth in "Risk Factors -- Stockholder Litigation" and
"Business -- Litigation," significant litigation matters affect the Company.
Recent litigation developments include the following matters. On February 2,
1995, the trial judge in the Shoen v. Shoen case granted the defendants' motion
for a remittitur (reduction) in damages (a) from $1.48 billion to approximately
$461.8 million to be paid to the plaintiffs in exchange for their stock in the
Company and (b) from $70 million to $7 million as punitive damages against
Edward J. Shoen. On February 13, 1995, the plaintiffs consented to these reduced
damage amounts. On February 21, 1995, judgment was entered against the
defendants. The Company is unable to predict the likelihood of any appeal. Also
on February 21, 1995, the defendants, other than Selling Stockholder, filed for
protection under Chapter 11 of the federal bankruptcy laws, resulting in the
issuance of an order automatically staying the execution of the judgment against
those defendants. The Paul F. Shoen v. AMERCO case was settled on February 9,
1995 and dismissed with prejudice on February 10, 1995. As part of the
settlement, the Company agreed, among other things, to place Selling Stockholder
on management's slate of directors for the 1994 (delayed) Annual Meeting of
Stockholders (the "1994 Deferred Annual Meeting of Stockholders").
RISK FACTORS
THE PURCHASE OF THE SECURITIES OFFERED HEREBY INVOLVES SUBSTANTIAL RISK.
THE FOLLOWING MATTERS, INCLUDING THOSE MENTIONED ELSEWHERE, SHOULD BE CONSIDERED
CAREFULLY BY A PROSPECTIVE INVESTOR IN EVALUATING A PURCHASE OF THE SECURITIES.
EXISTING MANAGEMENT -- POTENTIAL CHANGE IN CONTROL
For the reasons set forth below, there can be no assurance that the
Company's current management or its current operating strategy will remain in
place.
At the date of this Prospectus, members of a stockholder group (the "Inside
Stockholder Group"), which includes the Trust (the "ESOP Trust") under the
AMERCO Employee Savings, Profit Sharing and Employee Stock Ownership Plan (the
"ESOP"), Oxford (acting as a trustee), Edward J. Shoen, Mark V. Shoen, and James
P. Shoen who are members of the Company's management, and Selling Stockholder
and Sophia M. Shoen vote approximately 45.7% of the Company's common stock
pursuant to a stockholder agreement. The ESOP Trust holds approximately 7.9% of
the Company's voting stock. Approximately 3.2% of the Company's outstanding
voting stock is allocated to participants' ESOP Trust accounts and voted by the
ESOP Trustees in accordance with the participants' direction ("pass-through
voting"), subject to the provisions of the Employee Retirement Income and
Security Act of 1974 ("ERISA") and the provisions of the Internal Revenue Code
of 1986, as amended (the "IRC"). The ESOP Trust votes approximately 4.7% of the
Company's voting stock in its discretion as part of the Inside Stockholder Group
("discretionary voting"). Oxford acts as trustee for various trusts that own
approximately 4.2% of the Company's voting stock. At the completion of the
offering of the Securities, the Inside Stockholder Group will vote approximately
44.4% of the Company's common stock. There exists a second stockholder group
(the "Outside Stockholder Group") controlling approximately 48.2% of the
Company's common stock that is currently opposed to existing Company management.
See "Principal Stockholders -- Outside Stockholder Group." The members of the
Outside Stockholder Group may be required to sell their shares to certain of the
Company's current and former directors pursuant to litigation described in
"Business -- Litigation."
Arbitration Proceedings. Sophia M. Shoen has claimed that the Company has
defaulted in its obligation to register her common stock under a Share
Repurchase and Registration Rights Agreement. The matter is the subject of an
arbitration proceeding described in "Business -- Litigation." The arbitration
panel concluded hearings in the matter on August 21, 1994 and is expected to
render a decision at any time. Sophia M. Shoen claims that as a result of such
alleged default, she has the right to give notice of termination of the Inside
Stockholder Group. The Company disagrees with those assertions. Sophia M. Shoen
gave such notice of termination on July 11, 1994. See "Principal
Stockholders -- Inside Stockholder Group."
Annual Meeting of Stockholders. The current members of the Inside
Stockholder Group control approximately 45.7% of the Company's common stock. The
terms of the following existing directors will
5
<PAGE> 7
expire at the 1994 Deferred Annual Meeting of Stockholders: Edward J. Shoen, the
Company's Chairman and President, Mark V. Shoen, Executive Vice President of
Product for U-Haul International, Inc., both of whom have been instrumental in
the Company's performance since 1987, and Aubrey K. Johnson, one of three
independent directors and the only director without a current or past employment
history with the Company. The Company's 1994 Deferred Annual Meeting of
Stockholders was delayed as a result of litigation initiated by the Selling
Stockholder. Such litigation was dismissed on February 10, 1995. Selling
Stockholder will be nominated on management's slate of candidates to replace
Edward J. Shoen or Mark V. Shoen. Sophia M. Shoen has nominated herself in
opposition to management's slate of candidates. The Outside Stockholder Group,
controlling 48.2% of the voting stock, also has competing candidates. As a
result of the foregoing, unless the Outside Stockholder Group ceases to exist or
to oppose current management before the 1994 Deferred Annual Meeting of
Stockholders, the management nominees may not be elected, particularly if Sophia
M. Shoen is successful in leaving the Inside Stockholder Group. Accordingly,
there can be no assurance that the Company's current management or its current
operating strategy will remain in place. In addition, the entire Board of
Directors can be removed without cause by stockholders holding two-thirds of the
Company's voting stock.
Credit Agreements. The Company's credit agreements contain provisions that
could result in a required prepayment upon a "change in control" of the Company.
There can be no assurance that a change in control will not occur, particularly
if Sophia M. Shoen is successful in leaving the Inside Stockholder Group. The
Company does not currently have available sources of financing to fund such
prepayments if they became payable in full. In addition, upon such a "change in
control," the Company might lose the ability to draw on approximately $310
million under unutilized lines of credit otherwise available at December 31,
1994. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources -- Credit Agreements."
STOCKHOLDER LITIGATION
As disclosed in "Business -- Litigation," certain members of the Company's
Board of Directors and Selling Stockholder, are defendants in an action in the
Superior Court of the State of Arizona in and for the County of Maricopa
initiated by certain members of the Outside Stockholder Group in 1988. Based on
the plaintiffs' theory of damages, the Court ruled that the plaintiffs elected
that their remedy in this case would be the sale of their stock to the
defendants at a price determined by the Court based on the value of their stock
in 1988. On October 7, 1994, the jury determined that such value was $81.12 per
share or approximately $1.48 billion. On February 2, 1995, the judge in this
case granted the defendants' motion for remittitur or a new trial on the issue
of damages. The judge determined that the value of the plaintiffs' stock in 1988
was $25.30 per share or approximately $461.8 million. On February 13, 1995, the
plaintiffs filed a statement accepting the remittitur. The jury also awarded the
plaintiffs $70 million in punitive damages against Edward J. Shoen. The judge
ruled that this punitive damage award is excessive and granted Edward J. Shoen's
motion for remittitur or a new trial on the issue of punitive damages. The judge
reduced the award of punitive damages against Edward J. Shoen to $7 million. On
February 13, 1995, the plaintiffs filed a statement accepting the remittitur
reducing the punitive damages to $7 million. On February 21, 1995, judgment was
entered against the defendants. Also on February 21, 1995, the defendants, other
than Selling Stockholder, filed for protection under Chapter 11 of the federal
bankruptcy laws, resulting in the issuance of an order automatically staying the
execution of the judgment against those defendants. Upon completion of this
litigation, including any appeals, the Company believes that the Outside
Stockholder Group will cease to exist. The Company is unable to predict the
likelihood, outcome, or consequences of any appeal. The Company has agreed to
indemnify the defendants to the fullest extent permitted by law or the Company's
Articles of Incorporation or By-Laws, for all expenses and damages, if any,
incurred by the defendants in this proceeding, subject to certain exceptions. As
of the date of this Prospectus, the extent of the Company's indemnification
obligations, if any, cannot be reasonably estimated. With respect to the
defendants who have filed for protection under the federal bankruptcy laws, the
extent of the Company's indemnification obligations may be an issue in the
bankruptcy proceedings. No provision has been made in the Company's financial
statements for any possible indemnification claims. Before the Company will have
any indemnification obligations, the defendants must request indemnification
from the Company and a determination must be made under Nevada law as to the
validity of the indemnification claims. The Company reserves the right to
contest the validity of such indemnification claims if such claims are made. If
valid indemnification claims are made, the Company
6
<PAGE> 8
believes that it has various means of financing any such indemnification
obligations consistent with its existing credit agreements, or, in the
alternative, the Company may seek the waiver or amendment of certain of the
provisions of one or more of its credit agreements when the indemnification
obligations are determined. The Company believes, but no assurance can be given,
that it can obtain any necessary waivers or amendments. The Company believes
that it will be able to satisfy its valid indemnification obligations, if any,
unless the amount to be paid to the plaintiffs for their stock is increased
following the completion of any appeals. The Company's By-Laws provide for a
right of first refusal in favor of the Company on the Company's common stock
except for Common Stock sold in bona fide sales pursuant to Rule 144 under the
Securities Act and Common Stock sold pursuant to bona fide underwritten public
offerings. No determination has been made by the Company as to whether the
Company will exercise its right of first refusal upon any attempted transfer of
Common Stock from the plaintiffs to the defendants. In the event any cash paid
by the Company for the plaintiffs' stock is in excess of the fair value of the
stock received by the Company, the Company will be required to record an expense
equal to that difference. See "Business -- Litigation."
The Company, certain officers of the Company, certain members of the
Company's Board of Directors, and others are defendants in actions currently
pending in United States District Court for the District of Nevada entitled
Sidney Wisotzky and Dorothy Wisotzky, et al. v. Edward J. Shoen, et al., No.
CV-N-94-771-HDM (filed October 28, 1994), Evan Julber v. Edward J. Shoen, et
al., No. CV-N-94-00811-HDM (filed November 16, 1994), and Anne Markin v. Edward
J. Shoen, et al., No. CV-N-94-00821-ECR (filed November 18, 1994). The
plaintiffs in these cases, who claim to have purchased the Company's Series A
8 1/2% Preferred Stock, are seeking class action certification and are defining
the class as all persons who purchased or otherwise acquired the Series A 8 1/2%
Preferred Stock of the Company from October 14, 1993 through October 18, 1994,
inclusive, and who sustained damage as a result of such purchases. The
plaintiffs allege, among other things, that the defendants violated the federal
securities laws by inflating the price of the Series A 8 1/2% Preferred Stock
via false and misleading statements, concealing material adverse information,
and taking other manipulative actions, and that the Prospectus for the Series A
8 1/2% Preferred Stock, certain Form 10-K and Form 10-Q filings made by the
Company, and the Company's Notice and Proxy Statement dated July 8, 1994
contained false and misleading statements and omissions regarding the action
currently pending in the Superior Court of the State of Arizona in and for the
County of Maricopa entitled Samuel W. Shoen, M.D., et al. v. Edward J. Shoen, et
al., No. CV88-20139, instituted August 2, 1988 (the "Shoen Litigation")
discussed in the immediately preceding paragraph. In addition, certain officers
of the Company, certain members of the Company's Board of Directors, and an
employee of the Company are defendants in an action currently pending in United
States District Court for the District of Nevada entitled Bernard L. and Frieda
Goldwasser, et al. v. Edward J. Shoen, et al., No. CV-N-94-00810-ECR (filed
November 16, 1994). The plaintiffs in this case allege, derivatively on behalf
of the Company, that the defendants breached their fiduciary duties to the
Company and its stockholders by causing the Company to violate the federal
securities laws, by concealing the financial responsibility of the Company for
the claims asserted in the Shoen Litigation, by subjecting the Company to
adverse publicity, and by misusing their corporate control for personal benefit.
In addition to unspecified damages, the plaintiffs are seeking equitable and/or
injunctive relief to prevent the defendants in this case from causing the
Company to indemnify the defendants in the Shoen Litigation against their
liability in that case. See "Business -- Litigation." The plaintiffs in these
cases are requesting unspecified compensatory damages as well as attorneys' fees
and costs. The Company and the individual defendants deny plaintiffs'
allegations of wrongdoing and intend to vigorously defend themselves in these
actions.
DEPENDENCE UPON KEY PERSONNEL
The success and growth of the Company since 1987 has been dependent upon
the performance of its senior management team, the loss of whose services could
have an adverse effect on the Company. There is no assurance that the senior
management will remain employed by the Company. The Company has not entered into
employment contracts with anyone on the senior management team and has not
granted restricted stock or stock option awards to any employee pursuant to the
Company's Stock Option and Incentive Plan. However, Edward J., Mark V., and
James P. Shoen are members of the Company's senior management and have
substantial common stock holdings in the Company. See "Risk Factors -- Existing
Management -- Potential Change in Control" and "Principal Stockholders."
7
<PAGE> 9
OTHER SHARES OF COMMON STOCK -- MARKET OVERHANG
In addition to the Securities and the up to 665,000 shares of the Company's
Common Stock trading on Nasdaq, which includes up to 90,000 shares approved for
trading on Nasdaq pursuant to Rule 144 sales, the Company has 37,499,063 other
shares of common stock outstanding. Those shares and shares issued by the
Company in the future could potentially be sold, which could adversely affect
the market price of the Securities.
In addition, (i) the Company plans to register 1,700,000 shares of Common
Stock for public sale from time to time by Mark V. Shoen, and (ii) the Company
plans to register approximately 40,000,000 unissued shares of Common Stock for
public sale by the Company from time to time to finance the expansion of its
core businesses and for other corporate purposes. Each of the above offerings
will be made pursuant to a prospectus.
ENVIRONMENTAL MATTERS
The Company owns properties that contained approximately 1,200 underground
storage tanks as of December 31, 1994 and has been named a "potentially
responsible party" with respect to the disposal of hazardous wastes at fifteen
federal or state superfund sites. See "Business -- Environmental Matters."
QUARTERLY FLUCTUATIONS -- SEASONALITY
The Company's results of operations have historically fluctuated from
period to period, including on a quarterly basis. In particular, the Company's
U-Haul business is seasonal and a majority of the Company's revenues and
substantially all of its net earnings from its U-Haul business are generated in
the first and second quarters of each fiscal year (April through September). In
addition, the Company's results of operations have in the past been, and will
continue to be, affected by a wide variety of factors, including natural
disasters and other events that are beyond the control of the Company. For
example, the results of operations of RWIC in fiscal 1992 and 1993 were
adversely affected due to losses related to Hurricane Andrew. Results of
operations in any period should not be considered indicative of the results to
be expected for any future periods, and fluctuations in operating results may
also result in fluctuations in the price of the Company's common stock. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
REGULATED INDUSTRIES
The Company's insurance operations are subject to regulation. See
"Business -- Insurance Operations -- Regulation."
ABILITY TO ISSUE SERIAL COMMON STOCK AND PREFERRED STOCK
The Board of Directors has the authority to issue up to 50,000,000 shares
of preferred stock and up to 150,000,000 shares of serial common stock and to
fix the rights, preferences, privileges, and restrictions, including voting
rights, of those shares without any further vote or action by the stockholders.
The rights of the holders of the Securities will be subject to, and may be
adversely affected by, the rights of the holders of any serial common stock and
preferred stock that may be issued in the future. The issuance of serial common
stock and preferred stock, while providing desired flexibility in connection
with possible acquisitions and other corporate purposes, could have the effect
of making it more difficult for a third party to acquire a majority of the
outstanding voting stock of the Company, thereby delaying, deferring, or
preventing a change in control of the Company. Furthermore, holders of such
serial common stock or preferred stock may have other rights, including economic
rights senior to the Securities, and, as a result, the issuance thereof could
have a material adverse effect on the market value of the Securities. The
Company has in the past issued, and may from time to time in the future issue,
preferred stock for financing purposes with rights, preferences, or privileges
senior to the Securities offered hereby. Although, as of the date of this
Prospectus, the Company's Board of Directors has no present intention to issue
shares of either serial common stock or preferred stock with rights,
preferences, or privileges senior to the Securities, no assurance can be given
as to the Company's future plans in this regard. See "Description of
Securities."
8
<PAGE> 10
THE COMPANY
The following chart represents the corporate structure of the major
operating subsidiaries of the Company.
[CHART]
9
<PAGE> 11
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company at December 31, 1994:
<TABLE>
<CAPTION>
DECEMBER 31, 1994
-----------------
(IN THOUSANDS)
<S> <C>
Long-term debt, less current maturities.............................. $ 690,233
=============
Stockholders' equity:
Serial preferred stock with or without par value, 50,000,000 shares
authorized; 6,100,000 shares issued without par value and
outstanding........................................................ --
Serial common stock, with or without par value, 150,000,000 shares
authorized......................................................... --
Series A Common Stock of $0.25 par value, authorized 10,000,000
shares, 5,762,495 shares issued and outstanding.................... 1,441
Common Stock of $0.25 par value, authorized 150,000,000 shares,
34,237,505 shares issued........................................... 8,559
Additional paid-in capital........................................... 165,677
Foreign currency translation......................................... (12,307)
Retained earnings.................................................... 572,475
Less:
Cost of common shares in treasury, 1,335,937 shares................ 10,461
Loan to leveraged employee stock ownership plan.................... 19,807
-----------------
Total stockholders' equity................................. $ 705,577
=============
</TABLE>
DIVIDENDS
The most recent cash dividends declared on the Company's common stock are
as follows:
<TABLE>
<CAPTION>
RECORD DATE CASH DIVIDEND PER COMMON SHARE
---------------------------------------------------------- ------------------------------
<S> <C>
August 4, 1992............................................ $ 0.0258
October 6, 1992........................................... $ 0.0258
August 3, 1993............................................ $ 0.0814
</TABLE>
The Company does not have a dividend policy with respect to the common
stock. The Company's Board of Directors periodically considers the advisability
of declaring and paying dividends in light of the existing circumstances. The
above dividends on common stock are not indicative of future dividends on common
stock. As of the date of this Prospectus no dividends on common stock are
currently declared and unpaid and there can be no assurance that dividends on
common stock will be declared in the future. The holders of the Series A 8 1/2%
Preferred Stock are entitled to receive cumulative dividends prior to and in
preference to the holders of common stock at a fixed annual rate. For a
description of restrictions on the Company's ability to pay dividends, see
"Description of Securities -- Dividends."
10
<PAGE> 12
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected financial information, insofar as it relates to each
of the fiscal years ended March 31, 1992, 1993 and 1994, has been derived from
the Company's consolidated financial statements, audited by Price Waterhouse
LLP, independent accountants, included in the Company's S-2 Registration
Statement. The report of Price Waterhouse LLP included therein contains an
explanatory paragraph related to the uncertainty surrounding certain litigation
described in Notes 14 and 21 to such consolidated financial statements. The
selected financial information related to each of the fiscal years ended March
31, 1990 and 1991 has been derived from the Company's audited financial
statements. The selected financial information related to the nine months ended
December 31, 1993 and 1994 has been derived from the Company's unaudited
quarterly report on Form 10-Q for the quarter ended December 31, 1994, which is
incorporated by reference herein. Oxford and RWIC have been consolidated on the
basis of fiscal years ended December 31. To give effect to Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes," the
Company has restated its financial statements to April 1, 1988. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Other." The summaries for the nine months ended December 31, 1993
and 1994 are unaudited; however, in the opinion of management, all adjustments
necessary for a fair presentation of such financial information have been
included. The results of operations for the nine months ended December 31, 1994
may not be indicative of the results to be expected for fiscal 1995 because,
among other reasons, the Company's U-Haul business is seasonal, with a majority
of its revenue and substantially all of its net earnings being generated in the
first and second quarters of each fiscal year.
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
FOR THE FISCAL YEAR ENDED MARCH 31, ENDED DECEMBER 31,
-------------------------------------------------------------- -----------------------
1990 1991 1992 1993 1994 1993 1994
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS DATA:(1)
Rental, net sales, and other
revenues........................... $ 830,998 $ 860,044 $ 845,128 $ 901,446 $ 972,704 $ 762,844 $ 838,994
Premiums and net investment income... 119,641 126,620 126,756 139,465 162,151 120,920 141,587
---------- ---------- ---------- ---------- ---------- ---------- ----------
950,639 986,664 971,884 1,040,911 1,134,855 883,764 980,581
---------- ---------- ---------- ---------- ---------- ---------- ----------
Operating expenses and cost of
sales.............................. 627,396 668,149 661,229 697,700 735,841 553,353 589,202
Benefits, losses, and amortization of
deferred acquisition costs......... 121,602 126,626 99,091 115,969 130,168 101,162 116,884
Depreciation......................... 105,437 114,589 109,641 110,105 133,485 96,580 112,631
Interest expense..................... 74,657 80,815 76,189 67,958 68,859 52,530 50,871
---------- ---------- ---------- ---------- ---------- ---------- ----------
929,092 990,179 946,150 991,732 1,068,353 803,625 869,588
---------- ---------- ---------- ---------- ---------- ---------- ----------
Pretax earnings (loss) from
operations......................... 21,547 (3,515) 25,734 49,179 66,502 80,139 110,993
Income tax expense................... (3,516) (6,354) (4,940) (17,270) (19,853) (25,211) (39,602)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Earnings (loss) before cumulative
effect of change in accounting
principle and extraordinary item... 18,031 (9,869) 20,794 31,909 46,649 54,928 71,391
Extraordinary loss on early
extinguishment of debt, net(2)..... -- -- -- -- (3,370) (1,897) --
Cumulative effect of change in
accounting principle, net(3)....... -- -- -- -- (3,095) (3,272) --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net earnings (loss).................. $ 18,031 $ (9,869) $ 20,794 $ 31,909 $ 40,184 $ 49,759 $ 71,391
========= ========= ========= ========= ========= ========= =========
Earnings (loss) from operations
before extraordinary loss on early
extinguishment of debt and
cumulative effect of change in
accounting principle per common
share.............................. $ .46 $ (.25) $ .53 $ .83 $ 1.06 $ 1.41 $ 1.67
Net earnings (loss) per common
share(4)........................... .46 (.25) .53 .83 .89 1.27 1.67
Weighted average common shares
outstanding........................ 39,483,960 39,312,080 38,880,069 38,664,063 38,664,063 37,070,925 37,025,575
Cash dividends declared -- common
shares............................. $ 2,575 $ 1,176 $ -- $ 1,994 $ 3,147 $ 3,147 $ --
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
-------------------------------------------------------------- -----------------------
1990 1991 1992 1993 1994 1993 1994
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:(1)
Total property, plant, and equipment,
net................................ $ 975,675 $1,040,342 $ 987,095 $ 989,603 $1,174,236 $1,113,490 $1,262,853
Total assets......................... 1,725,660 1,822,977 1,979,324 2,024,023 2,344,442 2,223,516 2,537,422
Notes and loans payable.............. 749,113 804,826 733,322 697,121 723,764 666,063 827,592
Stockholders' equity................. 446,294 435,180 451,888 479,958 651,787 666,211 705,577
</TABLE>
- ---------------
(1) See "Business -- Litigation" for a discussion of material uncertainties
relating to stockholder litigation. See also "Business -- Environmental
Matters."
(2) See "Management's Discussion and Analysis of Financial Condition and Results
of Operations -- Fiscal Year Ended March 31, 1994 versus Fiscal Year Ended
March 31, 1993 -- Extraordinary Loss on Extinguishment of Debt."
(3) See "Management's Discussion and Analysis of Financial Condition and Results
of Operations -- Other."
(4) For the fiscal year ended March 31, 1994, and the nine months ended December
31, 1993 and 1994, net earnings per common share amounts were computed after
giving effect to the dividend on the Company's Series A 8 1/2% Preferred
Stock. See "Description of Securities -- Dividends."
11
<PAGE> 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
For financial statement preparation, the Company's insurance subsidiaries
report on a calendar year basis, while the Company reports on a fiscal year
basis ending March 31. Accordingly, with respect to the Company's insurance
subsidiaries, any reference to the years 1994, 1993, 1992, and 1991 corresponds
to the Company's fiscal years 1995, 1994, 1993, and 1992, respectively. There
have been no events as to such subsidiaries between January 1 and March 31 of
each of 1994, 1993, and 1992 that would materially affect the Company's
consolidated financial position or results of operations as of and for the
fiscal years ended March 31, 1994, 1993, and 1992, respectively.
The following discussion should be read in conjunction with Notes 1, 19,
and 20 of the Notes to Consolidated Financial Statements contained in the
Company's audited consolidated financial statements incorporated herein by
reference to the Company's Registration Statement, No. 33-54289 filed with the
Commission, which was effective November 3, 1994, which discuss the principles
of consolidation, condensed consolidated financial information, and industry
segment and geographic data, respectively. In consolidation, all intersegment
premiums are eliminated, and the benefits, losses, and expenses are retained by
the insurance companies.
RESULTS OF OPERATIONS (UNAUDITED)
Nine Months Ended December 31, 1994 and 1993
The following table shows industry segment data from the Company's three
industry segments, rental operations, life insurance, and property and casualty
insurance, for the nine months ended December 31, 1994 and 1993. Rental
operations is composed of the operations of U-Haul and AREC. Life insurance is
composed of the operations of Oxford. Property and casualty insurance is
composed of the operations of RWIC. The Company's results of operations have
historically fluctuated from quarter to quarter. In particular, the Company's
U-Haul rental operations are seasonal and a majority of the Company's revenues
and substantially all of its earnings from its U-Haul rental operations are
generated in the first and second quarters of each fiscal year (April through
September).
<TABLE>
<CAPTION>
PROPERTY/ ADJUSTMENTS
RENTAL LIFE CASUALTY AND
OPERATIONS INSURANCE INSURANCE ELIMINATIONS CONSOLIDATED
---------- -------- -------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
NINE MONTHS ENDED DECEMBER 31, 1994
Revenues:
Outside............................ $ 835,593 $ 29,972 $115,016 $ -- $ 980,581
Intersegment....................... (41) 1,134 14,899 (15,992) --
---------- -------- -------- ------------ ------------
Total revenues................ $ 835,552 $ 31,106 $129,915 $ (15,992) $ 980,581
========= ======== ======== ========= =========
Operating profit................... $ 139,041 $ 8,016 $ 14,766 $ 41 $ 161,864
========= ======== ======== =========
Interest expense................... 50,871
------------
Pretax earnings from operations.... $ 110,993
=========
Identifiable assets at December 31.. $1,792,189 $452,699 $566,930 $ (274,396) $ 2,537,422
========= ======== ======== ========= =========
NINE MONTHS ENDED DECEMBER 31, 1993
Revenues:
Outside............................ $ 755,809 $ 25,400 $102,555 $ -- $ 883,764
Intersegment....................... 1,055 224 15,404 (16,683) --
---------- -------- -------- ------------ ------------
Total revenues................ $ 756,864 $ 25,624 $117,959 $ (16,683) $ 883,764
========= ======== ======== ========= =========
Operating profit................... $ 110,222 $ 8,531 $ 14,614 $ (698) $ 132,669
========= ======== ======== =========
Interest expense................... 52,530
------------
Pretax earnings from operations.... $ 80,139
=========
Identifiable assets at December 31.. $1,563,917 $460,558 $459,199 $ (260,158) $ 2,223,516
========= ======== ======== ========= =========
</TABLE>
12
<PAGE> 14
RESULTS OF OPERATIONS
Years Ended March 31, 1994, 1993, and 1992
The following table shows industry segment data from the Company's three
industry segments, rental operations, life insurance, and property and casualty
insurance, for the fiscal years ended March 31, 1994, 1993, and 1992. Rental
operations is composed of the operations of U-Haul and AREC. Life insurance is
composed of the operations of Oxford. Property and casualty insurance is
composed of the operations of RWIC.
<TABLE>
<CAPTION>
PROPERTY/ ADJUSTMENTS
RENTAL LIFE CASUALTY AND
OPERATIONS INSURANCE INSURANCE ELIMINATIONS CONSOLIDATED
---------- -------- -------- ------------ ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
1994
Revenues:
Outside....................... $ 965,839 $ 31,357 $137,659 $ -- $1,134,855
Intersegment.................. (357) 2,834 18,862 (21,339) --
---------- -------- -------- ------------ ----------
Total revenues........ $ 965,482 $ 34,191 $156,521 $ (21,339) $1,134,855
========= ======== ======== ========= =========
Operating profit................ $ 106,248 $ 9,106 $ 20,705 $ (698) $ 135,361
========= ======== ======== =========
Interest expense................ 68,859
----------
Pretax earnings from
operations.................... $ 66,502
=========
Identifiable assets............. $1,593,044 $461,464 $550,795 $ (260,861) $2,344,442
========= ======== ======== ========= =========
1993
Revenues:
Outside....................... $ 891,599 $ 33,619 $115,693 $ -- $1,040,911
Intersegment.................. -- 2,630 18,402 (21,032) --
---------- -------- -------- ------------ ----------
Total revenues........ $ 891,599 $ 36,249 $134,095 $ (21,032) $1,040,911
========= ======== ======== ========= =========
Operating profit................ $ 88,581 $ 12,325 $ 16,231 $ -- $ 117,137
========= ======== ======== =========
Interest expense................ 67,958
----------
Pretax earnings from
operations.................... $ 49,179
=========
Identifiable assets............. $1,377,386 $472,669 $422,079 $ (248,111) $2,024,023
========= ======== ======== ========= =========
1992
Revenues:
Outside....................... $ 844,492 $ 31,391 $ 96,001 $ -- $ 971,884
Intersegment.................. -- 1,158 21,991 (23,149) --
---------- -------- -------- ------------ ----------
Total revenues........ $ 844,492 $ 32,549 $117,992 $ (23,149) $ 971,884
========= ======== ======== ========= =========
Operating profit................ $ 69,628 $ 11,056 $ 21,239 $ -- $ 101,923
========= ======== ======== =========
Interest expense................ 76,189
----------
Pretax earnings from
operations.................... $ 25,734
=========
Identifiable assets............. $1,354,758 $457,324 $402,190 $ (234,948) $1,979,324
========= ======== ======== ========= =========
</TABLE>
13
<PAGE> 15
NINE MONTHS ENDED DECEMBER 31, 1994 VERSUS NINE MONTHS ENDED DECEMBER 31, 1993
U-Haul Operations
U-Haul revenues consist of (i) total rental and other revenue and (ii) net
sales. Total rental and other revenue increased by $71.2 million, approximately
11.2%, to $704.5 million in the first nine months of fiscal 1995. The increase
in the first nine months of fiscal 1995 is primarily attributable to a $64.6
million increase in net revenues from the rental of moving related equipment,
which rose to $645.5 million as compared to $580.9 million in the first nine
months of fiscal 1994. Moving related revenues benefited from transactional
(volume) growth within the truck and trailer fleets reflecting both rental fleet
expansion and higher utilization. Revenues from the rental of self-storage
facilities increased by $8.3 million to $60.5 million in the first nine months
of fiscal 1995, an increase of approximately 15.9%. Storage revenues were
positively impacted by additional rentable square footage and higher average
rental rates.
Net sales revenues were $131.1 million in the first nine months of fiscal
1995, which represents an increase of approximately 6.1% from the first nine
months of fiscal 1994 net sales of $123.6 million. Revenue growth from the sale
of moving support items (i.e., boxes, etc.), hitches, and propane resulted in a
$9.0 million increase during the first nine month period, which was offset by a
$1.4 million decrease in revenue from gasoline sales consistent with the
Company's plan to remove underground storage tanks and gradually discontinue
gasoline sales.
Cost of sales was $72.6 million in the first nine months of fiscal 1995,
which represents a decrease of approximately 1.9% from $74.1 million for the
same period in fiscal 1994. The decrease in cost of sales primarily reflects a
reduction in the provision for obsolete inventory between the two periods due to
management's continued emphasis on disposing of such inventory, including the
complete liquidation of RV parts inventory during fiscal 1994. The decrease is
also reflective of improved margins on hitch sales. Increased material costs
from the sale of moving support items and propane, which can be primarily
attributed to higher sales levels, partially offset these decreases.
Operating expenses increased to $511.2 million in the first nine months of
fiscal 1995 from $476.0 million in the first nine months of fiscal 1994, an
increase of approximately 7.4%. The change from the prior year primarily
reflects a $25.7 million increase in rental equipment maintenance costs. An
increase in fleet size, higher transaction levels, and efforts to minimize
downtime are primarily responsible for the increase. Lease expense declined by
$18.1 million to $48.7 million reflecting lease terminations, lease
restructuring, and lower finance costs on new leases originated during the past
18 months. All other operating expense categories increased in the aggregate of
$27.6 million, approximately 9.9%, to $305.4 million. The increase in operating
expenses is consistent with the growth in rental revenue.
Depreciation expense for the nine month period was $112.6 million, as
compared to $96.6 million in the same period of the prior year, reflecting the
increase in fleet size, the acquisition of trucks that were previously leased
and real property acquisitions.
Oxford -- Life Insurance
Premiums from Oxford's reinsurance lines before intercompany eliminations
were $13.2 million for the nine months ended September 30, 1994, an increase of
$1.4 million, approximately 11.9% over 1993 and accounted for 75.9% of Oxford's
premiums in 1994. These premiums are primarily from term life insurance and
single and flexible premium deferred annuities. Increases in premiums are
primarily from the anticipated increase in annuitizations as a result of the
maturing of deferred annuities.
Premiums from Oxford's direct lines before intercompany eliminations were
$4.2 million for the nine months ended September 30, 1994, an increase of $2.6
million over the prior year. The increase in direct premium is primarily due to
Oxford's entrance into the credit life and credit accident and health business.
Oxford's direct lines are principally related to the underwriting of group life
and disability income and credit life and accident and health. Insurance on the
lives of the employees of AMERCO and its subsidiary companies accounted for
approximately 7.4% of Oxford's premiums in 1994. Other direct lines accounted
for approximately 16.7% of Oxford's premiums in 1994.
14
<PAGE> 16
Net investment income before intercompany eliminations was $11.1 million
and $9.4 million for the nine months ended September 30, 1994 and 1993,
respectively. This increase is primarily due to increasing margins on the
interest sensitive business. Gains on the disposition of fixed maturity
investments were $1.2 million and $1.5 million for the nine months ended
September 30, 1994 and 1993, respectively. Oxford had $1.4 million and $1.3
million of other income for the nine months ended September 30, 1994 and 1993,
respectively.
Benefits and expenses incurred were $23.1 million for the nine months ended
September 30, 1994, an increase of 35.1% over 1993. Comparable benefits and
expenses incurred for 1993 were $17.1 million. This increase is primarily due to
the increase in reserve caused by the increase in annuitizations and the credit
life and accident and health business discussed above. In addition, Oxford
increased its amortization of deferred acquisition costs.
Operating profit before intercompany eliminations decreased by $0.5
million, or approximately 5.9%, in 1994 to $8.0 million, primarily due to the
decrease in gain on sale of investments and increased amortization of deferred
acquisition costs. These decreases in operating profit were partially offset by
the increasing margins on the interest sensitive business.
RWIC -- Property and Casualty
RWIC gross premium writings continued to grow in the first nine months of
1994, to $141.4 million as compared to $131.5 million in the first nine months
of 1993. This represents an increase of $9.9 million, or 7.5%. RWIC continues
underwriting professional reinsurance via broker markets, and premiums in this
area increased in the first nine months of 1994 to $54.1 million, or 38.3% of
total premiums, from comparable 1993 figures of $44.6 million, or 33.9% of total
premiums. Growth is also occurring in selected general agency lines. These
premiums accounted for approximately 15.2% of gross written premiums for 1994,
compared to 14.0% in 1993. As in prior years, the rental industry market also
accounts for a significant share of total premiums, approximately 43.3% and
40.1% in the first nine months of 1994 and the first nine months of 1993,
respectively. These writings include U-Haul customers, fleetowners and U-Haul as
well as other rental industry insureds with similar characteristics.
Net earned premiums increased $12.8 million, or 13.6%, to $106.7 million
for the nine months ended September 30, 1994, compared with premiums of $93.9
million for the nine months ended September 30, 1993. The premium increase was
primarily due to planned increased writings in the assumed reinsurance and
general agency lines.
Underwriting expenses incurred were $115.1 million for the nine months
ended September 30, 1994, an increase of $11.8 million, or 11.4% over 1993.
Comparable underwriting expenses incurred for 1993 were $103.3 million. The
increase in underwriting expenses is due to the larger premium volume being
written in 1994, which increased acquisition costs and commensurate reserves.
The ratio of underwriting expenses to net earned premiums decreased from 1.10 in
the first nine months of 1993 to 1.08 in the first nine months of 1994. This
improvement is primarily attributable to improved loss experience combined with
continued market rate strength in the Company's assumed reinsurance area. Also
contributing to the improvement was better than expected loss ratios on the
Company's general agency lines.
Net investment income was $21.9 million for the nine months ended September
30, 1994, an increase of 5.8% over the nine months ended September 30, 1993 net
investment income of $20.7 million. The increase is due to an increased asset
base generated from larger premium volume.
RWIC completed the nine months ended September 30, 1994 with income before
tax expense of $14.8 million as compared to $14.6 million for the comparable
period ended September 30, 1993. This represents an increase of $0.2 million, or
1.1% over 1993. Improved underwriting results in the Company's assumed
reinsurance and general agency area were offset by declines in its worker's
compensation and rental industry liability lines.
Interest Expense
Interest expense decreased by $1.6 million to $50.9 million for the nine
months ended December 31, 1994, as compared to $52.5 million for the nine months
ended December 31, 1993. This decrease reflects a reduction in the costs of
funds.
15
<PAGE> 17
Extraordinary Loss on Extinguishment of Debt
During fiscal 1994, the Company extinguished $25.2 million of its medium
term notes originally due in fiscal 1995 through 2000. The weighted average rate
of the notes purchased is 9.34%. The purchase resulted in an extraordinary
charge of $1.9 million net of $1.0 million of tax benefit.
Consolidated Group
As a result of the foregoing, pretax earnings of $111.0 million were
realized in the nine months ended December 31, 1994, as compared to $80.1
million for the same period in 1993. After providing for income taxes, net
earnings for the nine months ended December 31, 1994 were $71.4 million, as
compared to $49.8 million for the same period of the prior year. The
consolidated results for the prior year reflect a cumulative effect adjustment
resulting from the adoption of Statement of Accounting Standards No. 106
"Accounting for Post-Retirement Benefits Other Than Pensions" and extraordinary
costs associated with the early retirement of debt.
THREE MONTHS ENDED DECEMBER 31, 1994 VERSUS THREE MONTHS ENDED DECEMBER 31, 1993
U-Haul
U-Haul revenues consist of (i) total rental and other revenue and (ii) net
sales. Total rental and other revenue increased by $22.6 million, approximately
12.0%, to $210.5 million in the three months ended December 1994. The increase
is primarily attributable to a $18.4 million increase in net revenues from the
rental of moving related equipment, which rose to $186.1 million, as compared to
$167.7 million for the three months ended December 31, 1994 and December 31,
1993, respectively. Moving related revenues benefited from transactional
(volume) growth within the truck and trailer fleets. Revenues from the rental of
self-storage facilities increased by $3.6 million to $21.1 million for the three
months ended December 1994, an increase of approximately 20.6%. Storage revenues
were positively impacted by additional rentable square footage and higher
average rental rates.
Net sales were $33.4 million for the three months ended December 31, 1994,
which represents an increase of approximately 8.4% from the three months ended
December 31, 1993 net sales of $30.8 million. Revenue growth from the sale of
hitches, moving support items (i.e., boxes, etc.), and propane resulted in a
$2.7 million increase during the three month period.
Cost of sales was $19.3 million for the three months ended December 31,
1994 compared to $19.0 million for the same period ended December 31, 1993.
Increased material costs corresponding to higher sales levels of moving support
items, propane and hitches were primarily responsible.
Operating expenses increased to $171.7 million for the three months ended
December 31, 1994 compared to $154.0 million for the three months ended December
1993, an increase of approximately 11.5%. The change from the prior year
primarily reflects increases in virtually all operating expense categories
reflecting higher transaction levels, an increase in fleet size and continuing
efforts to minimize rental equipment downtime, offset by a decline in lease
expense of $0.8 million to $17.2 million. The decline in lease expense reflects
the full benefits of last year's lease terminations.
Depreciation expense for the three month period was $37.8 million, as
compared to $34.3 million in the same period of the prior year, reflecting the
increase in fleet size, the acquisition of trucks that were previously leased
and real property acquisitions.
Oxford -- Life Insurance
Premiums from Oxford's reinsurance lines before intercompany eliminations
were $5.0 million for the quarter ended September 30, 1994, an increase of $0.8
million, approximately 19.0% over 1993 and accounted for 75.9% of Oxford's
premiums in 1994. These premiums are primarily from term life insurance and
single and flexible premium deferred annuities. Increases in premiums are
primarily from the anticipated increase in annuitizations as a result of the
maturing of deferred annuities.
Premiums from Oxford's direct lines before intercompany eliminations were
$1.9 million for the quarter ended September 30, 1994, an increase of $1.5
million over the prior year. Oxford's direct lines are principally
16
<PAGE> 18
related to the underwriting of group life and disability income insurance on the
lives of the employees of AMERCO and its subsidiary companies. Other direct
lines include the underwriting of credit life and credit accident and health
business and individual life insurance acquired from other insurers. The
increase in direct premium is primarily due to Oxford's entrance into the credit
life and accident and health business.
Net investment income before intercompany eliminations was $3.4 million and
$3.0 million for the quarters ended September 30, 1994 and 1993, respectively.
This increase is primarily due to increasing margins on the interest sensitive
business. Gains on the disposition of fixed maturity investments were $1.0
million during the quarter ended September 30, 1993. There were no gains on sale
of investments during the quarter ended September 30, 1994. Oxford had $0.4
million and $0.3 million of other income for the quarters ended September 30,
1994 and 1993, respectively.
Benefits and expenses incurred were $9.0 million for the quarter ended
September 30, 1994, an increase of 73.1% over 1993. Comparable benefits and
expenses incurred for 1993 were $5.2 million. This increase is primarily due to
the increase in reserve caused by the increase in annuitizations and Oxford's
entrance into credit life and credit accident and health business. In addition,
Oxford increased its amortization of deferred acquisition costs.
Operating income before intercompany eliminations decreased by $2.1
million, or approximately 55.3%, in 1994 to $1.7 million, primarily due to the
decrease in gains on sales of investments due to decreased trading activity.
These decreases in operating income were partially offset by the increasing
margins on the interest sensitive business.
RWIC -- Property and Casualty
RWIC gross premium writings for the quarter ended September 1994 were $47.8
million as compared to $50.2 million for the quarter ended September 1993. This
represents a decrease of $2.4 million, or 4.6%. As in prior years, the rental
industry market accounts for a significant share of total premiums,
approximately 48.8% and 42.0% for the quarter ended September 1994 and the
quarter ended September 1993, respectively. These writings include U-Haul
customers, fleetowners and U-Haul as well as other rental industry insureds with
similar characteristics.
Net earned premiums increased $3.9 million, or 10.7%, to $40.3 million for
the three months ended September 30, 1994, compared with premiums of $36.4
million for the three months ended September 30, 1993. The premium increase was
primarily due to increased writings in the general agency lines.
Underwriting expenses incurred were $44.5 million for the three months
ended September 30, 1994, an increase of $5.5 million, or 14.1% over 1993.
Comparable underwriting expenses incurred for 1993 were $39.0 million. The
increase in underwriting expenses is due to the larger premium volume being
written in 1994, which increased acquisition costs and commensurate reserves.
The ratio of underwriting expenses to net earned premiums increased from 1.07
for the three months ended September 30, 1993 to 1.10 for the three months ended
September 30, 1994.
Net investment income was $7.1 million during the quarters ended September
30, 1994 and 1993, respectively.
RWIC completed the three months ended September 30, 1994 with pretax
earnings of $3.2 million as compared to $6.3 million for the comparable period
ended September 1993. This represents a decrease of $3.1 million, or 49.2% over
1993. The decrease is due to poor underwriting results in the rental industry
liability lines.
Interest Expense
Interest expense increased by $0.3 million to $17.6 million for the three
months ended December 31, 1994, as compared to $17.2 million for the three
months ended December 31, 1993. This increase reflects increases in average debt
outstanding which was partially offset by a reduction in the average cost of
funds.
17
<PAGE> 19
Consolidated Group
As a result of the foregoing, pretax earnings of $2.3 million were realized
in the three months ended December 31, 1994, as compared to $4.5 million for the
same period in 1993. After providing for income taxes, net earnings for the
three months ended December 31, 1994 were $1.9 million, as compared to $1.8
million for the same period of the prior year.
FISCAL YEAR ENDED MARCH 31, 1994 VERSUS FISCAL YEAR ENDED MARCH 31, 1993
U-Haul Operations
U-Haul revenues consist of (i) total rental and other revenue and (ii) net
sales. Total rental and other revenue increased by $63.3 million, approximately
8.5%, to $809.4 million in fiscal 1994. The increase from fiscal 1993 is
primarily attributable to a $52.2 million increase in net revenues from the
rental of moving related equipment, which benefited from transactional growth
reflecting higher utilization and rental fleet expansion. Revenues from the
rental of self-storage facilities increased by $6.6 million to $70.5 million in
fiscal 1994, an increase of approximately 10.3%. Storage revenues were
positively impacted by additional rentable square footage, higher average
occupancy levels, and higher average rental rates. All other revenue categories
increased in the aggregate by $8.7 million during the current year, which
primarily reflects increases in gains on note sales of approximately $5.0
million and interest income.
Net Sales were $156.0 million in fiscal 1994, which represented an increase
of approximately 7.2% from fiscal 1993 net sales of $145.5 million. Revenue
growth from the sale of hitches, moving support items (i.e., boxes, etc.), and
propane net sales increased $10.7 million during fiscal 1994.
Cost of sales was $92.2 million in fiscal 1994, which represented a
decrease of approximately 1.0% from fiscal 1993. The reduction in fiscal 1994
reflects a combination of the absence of recreational vehicle sales, reduced
levels of outside repair and a reduction in inventory adjustments which fully
offset increased material costs corresponding to the increase in hitch, moving
support and propane sales.
Operating expenses increased to $633.6 million in fiscal 1994 from $599.8
million in fiscal 1993, an increase of approximately 5.6%. The change from the
prior year reflects increases in almost all major expense categories with the
exception of lease expense for equipment. Rental equipment maintenance costs
increased by $27.4 million reflecting fleet expansion, higher utilization, a
marginal increase in the age of the fleet and increased emphasis on maximizing
rental equipment available to rent by reducing downtime. Lease expense for
equipment declined from $117.6 million in fiscal 1993 to $82.9 million in fiscal
1994, a decrease of approximately 29.5%, reflecting lease terminations, lease
restructuring and lower finance costs on new leases originated during fiscal
1994. All other operating expense categories increased in the aggregate by $41.1
million, approximately 12.4%, to $373.0 million which is primarily attributable
to higher levels of rental and sales activity.
Depreciation expense during fiscal 1994 was $133.5 million as compared to
$110.1 million in the prior year, reflecting the addition of new trucks and
trailers and the acquisition of trucks that were previously leased.
Oxford -- Life Insurance
Premiums from Oxford's reinsurance lines before intercompany eliminations
were $15.8 million for the year ended December 31, 1993, an increase of $0.9
million, approximately 6.0% over 1992 and accounted for 88.7% of Oxford's
premiums in 1993. These premiums are primarily from term life insurance and
single and flexible premium deferred annuities. Increases in premiums are
primarily from the anticipated increase in annuitizations as a result of the
maturing of deferred annuities.
Premiums from Oxford's direct lines before intercompany eliminations were
$2.0 million in 1993, a decrease of $1.0 million (33%) from the prior year. The
decrease is primarily attributable to an experience refund incurred on the
Company's group life insurance business. Oxford's direct lines are principally
related to the underwriting of group life and disability income. Insurance on
the lives of the employees of AMERCO and its subsidiary companies accounted for
approximately 6.3% of Oxford's premiums in 1993. Other direct lines accounted
for approximately 5.0% of Oxford's premiums in 1993.
18
<PAGE> 20
Net investment income before intercompany eliminations was $12.6 million
and $11.5 million for the years ended December 31, 1993 and 1992, respectively.
The increase was primarily due to a decrease in interest credited to
policyholders because of the increase in annuitizations. Gains on the
disposition of fixed maturity investments were $2.1 million and $4.7 million for
the years ended December 31, 1993 and 1992, respectively. Oxford had $1.8
million and $2.2 million of other income, for 1993 and 1992, respectively.
Benefits and expenses incurred were $24.4 million for the year ended
December 31, 1993, an increase of 5.2% over 1992. Comparable benefits and
expenses incurred for 1992 were $23.2 million. This increase is primarily due to
the increase in annuitizations discussed above.
Operating profit after intercompany eliminations decreased by $3.4 million,
approximately 27.6%, in 1993 to $8.9 million, primarily due to the decrease in
gains on fixed maturity investments.
RWIC -- Property and Casualty
RWIC gross premium writings for the year ended December 31, 1993 were
$175.1 million, compared to $155.2 million in 1992, an increase of approximately
12.8%. The rental industry market accounted for a significant share of these
premiums, approximately 37% and 40% in 1993 and 1992, respectively. These
writings include U-Haul customers, fleetowners and U-Haul as well as other
rental industry insureds with similar characteristics. Selected general agency
lines, principally commercial multiple peril, surety and excess workers'
compensation and casualty accounted for 8.1%, 3.2% and 5.4%, respectively, of
gross premium writings in 1993, compared to approximately 15.4%, 2.8% and 11.9%,
respectively, in 1992. RWIC also underwrites reinsurance via broker markets, and
premiums in this area increased from $47.1 million in 1992 to $59.5 million in
1993 due to favorable market conditions.
Net earned premiums increased $24.3 million, approximately 24%, to $125.4
million for the year ended December 31, 1993. This compares with net earned
premiums of $101.1 million for the year ended December 31, 1992. The premium
increase was primarily due to increased writings in the reinsurance area, along
with growth in the excess workers' compensation line of RWIC's general agency
business. These planned increases are due to strong rates and reduced capacity
in the reinsurance market and increased marketing emphasis on the long standing
presence in the excess workers' compensation market.
Underwriting expenses incurred were $135.6 million for the year ended
December 31, 1993, an increase of $17.8 million, approximately 15.1% over 1992.
Comparable underwriting expenses incurred for 1992 were $117.8 million. Higher
underwriting expenses are due to larger premium volumes being written in 1993
which increased acquisition costs and commensurate reserves. The ratio of
underwriting expenses to net premiums improved from 1.17 in 1992 to 1.08 in
1993. This improvement was primarily attributable to improved loss experience in
the Company's assumed reinsurance area including the lack of catastrophic losses
such as those related to Hurricane Andrew in 1992, as well as the previously
mentioned strength in rates.
Net investment income was $27.4 million in 1993, a decrease of
approximately 6.5%, as compared to 1992 net investment income of $29.3 million.
This decrease is due primarily to lower rates available in the high quality
fixed income market. RWIC's net realized gain on the sale of investments was
$2.1 million and $0.7 million in 1993 and 1992, respectively, while other income
totaled $1.4 million and $2.9 million.
RWIC completed 1993 with net after tax income of $14.8 million as compared
to $11.8 million for the comparable period ended December 1992. This represents
an increase of $3.0 million, or 25.4% over 1992. The increase is due to a
combination of better underwriting results and unplanned gains on bond calls.
Net income at December 31, 1992 of $11.8 million includes the effect of adopting
SFAS 109 ("Accounting for Income Taxes"), previously reported December 31, 1992
net income was $12.8 million.
Interest Expense
Interest expense was $68.8 million in fiscal 1994, as compared to $68.0
million in fiscal 1993. The increase reflects higher average levels of debt
outstanding (see "Liquidity and Capital Resources"), a higher proportion of
fixed rate debt, and a lengthening of maturities offset by lower cost of funds.
19
<PAGE> 21
Extraordinary Loss on Extinguishment of Debt
During the first and third quarters of fiscal 1994, the Company
extinguished $25.2 million of its medium-term notes originally due in fiscal
1995 through 2000. The weighted average rate of the notes purchased is 9.34%.
The purchase resulted in an extraordinary charge of $1,897,000 net of $1,021,000
of tax benefit.
During the fourth quarter of fiscal 1994, the Company terminated swaps with
a notional value of $77 million originally due in fiscal 1995. The terminations
resulted in an extraordinary charge of $1,473,000 net of $793,000 of tax
benefit.
FISCAL YEAR ENDED MARCH 31, 1993 VERSUS FISCAL YEAR ENDED MARCH 31, 1992
U-Haul Operations
U-Haul revenues consist of (i) total rental and other revenue and (ii) net
sales. Total rental and other revenue increased by $57.6 million, approximately
8.4%, to $746.1 million in fiscal 1993. The increase from fiscal 1992 is
primarily attributable to a $54.7 million increase in net revenues from the
rental of moving related equipment, which rose to $684.1 million, as compared to
$629.4 million, in fiscal 1992. Improved utilization within the truck rental
fleet accounted for the majority of the revenue growth, with one-way rental
transactions increasing by 6.1% and in-town rental transactions increasing by
16.5%. Also contributing to the increased revenues was an increase in the number
of available rental trailers and trucks. Revenues from the rental of
self-storage facilities increased $5.3 million to $63.9 million in fiscal 1993,
an increase of approximately 9.2%. Storage revenues were positively impacted by
additional rentable square footage, higher average occupancy levels, and higher
average rental rates. The increases in revenues from the rental of
moving-related equipment and self-storage facilities were partially offset by an
aggregate decrease of $2.4 million in general rental item revenues, gains on the
sale of property, plant, and equipment, and other miscellaneous revenues.
Net sales were $145.5 million in fiscal 1993, which represented a decrease
of approximately 6.7% from fiscal 1992 net sales of $156.0 million. Moderate
revenue growth from the sale of hitches, moving support items (i.e., boxes,
etc.), and propane was offset by reduced sales of recreational vehicles due to
the liquidation of inventory as well as a reduction in outside repair income due
to a reduction in rental trucks owned by a third party, which were previously
under a managed equipment agreement.
Cost of sales was $93.1 million in fiscal 1993, which represented a
decrease of approximately 9.5% from fiscal 1992. The reduction in fiscal 1993
reflects reductions in recreational vehicle sales and outside repair income.
Operating expenses increased to $599.8 million in fiscal 1993 from $562.3
million in fiscal 1992, an increase of approximately 6.7%. The change from the
prior year primarily reflects increased rental equipment maintenance costs and
higher personnel costs. The higher maintenance costs reflect a slight increase
in the age of the truck fleet due to no new units being added in fiscal 1992 and
a relatively small number of new units being added in fiscal 1993. Also
contributing to higher maintenance costs were U-Haul's repurchase of rental
trucks owned by a third party, which were previously under a managed equipment
agreement, and higher utilization. Lease expense for the fleet replacement cycle
initiated in 1987 peaked in fiscal 1992 at $121.9 million and subsequently
declined to $117.6 million in fiscal 1993, a decrease of approximately 3.5%.
Oxford -- Life Insurance
Premiums from Oxford's reinsurance lines before intercompany eliminations
were $14.9 million for the year ended December 31, 1992, a decrease of $4.1
million, approximately 21.6% from 1991 and accounted for 83.3% of Oxford's
premiums in 1992. These premiums are primarily from term life insurance and
single and flexible premium deferred annuities. Reductions in premiums reflect
the anticipated decrease in renewal premiums as a result of normal attrition and
mortality, combined with the fact that during 1992 Oxford reduced its activities
in the reinsurance market compared to 1991 because of unfavorable market
conditions.
Premiums from Oxford's direct lines before intercompany eliminations were
$3.0 million in 1992, an increase of $1.5 million (100%) over the prior year.
The increase is primarily due to the issuance of a single premium immediate
annuity of $0.8 million. Oxford's other direct lines are principally related to
the
20
<PAGE> 22
underwriting of group life and disability income. Insurance on the lives of the
employees of AMERCO and its subsidiary companies accounted for approximately
10.8% of Oxford's premiums in 1992. Other direct lines accounted for
approximately 5.9% of Oxford's premiums in 1992.
Net investment income before intercompany eliminations was $11.5 million
and $10.2 million for the years ended December 31, 1992 and 1991, respectively.
The increase is due to increased margins on interest-sensitive business. Gains
on the disposition of fixed maturity investments were $4.7 million and $0.1
million. Oxford had $2.2 million and $1.6 million of other income, for 1992 and
1991, respectively. Other income consists of administration fees and income on
the surrender of annuities.
Benefits and expenses incurred were $23.2 million for the year ended
December 31, 1992, an increase of 7.9% over 1991. Comparable benefits and
expenses incurred for 1991 were $21.5 million. This increase is primarily due to
the increase in deferred acquisition cost amortization discussed below.
Operating profit increased by $1.3 million, approximately 11.5%, in 1992 to
$12.3 million, primarily due to increased margins on interest-sensitive business
and gains on disposition or prepayments of fixed maturity investments. As
required by generally accepted accounting principles, the amortization of
deferred policy acquisition costs was accelerated due to gains on the fixed
maturity investments associated with interest-sensitive products, resulting in a
charge of approximately $2.0 million.
RWIC -- Property and Casualty
RWIC gross premium writings for the year ended December 31, 1992 were
$155.2 million, compared to $133.7 million in 1991, an increase of approximately
16.1%. The rental industry market accounted for a significant share of these
premiums, approximately 40% and 53% in 1992 and 1991, respectively. These
writings include U-Haul customers, fleetowners, and U-Haul, as well as other
rental industry insureds with similar characteristics. Selected general agency
lines, principally commercial multiple peril, surety and excess workers
compensation and casualty accounted for approximately 15.4%, 2.8%, and 11.9%
respectively, of gross premium writings in 1992, compared to approximately
12.8%, 1.8%, and 14.8% respectively, in 1991. RWIC also underwrites reinsurance
via broker markets, and premiums in this area increased from $23.1 million in
1991 to $47.1 million in 1992 due to favorable market conditions.
Net earned premiums increased $12.3 million, approximately 13.9%, to $101.1
million for the year ended December 31, 1992. This compares with net earned
premiums of $88.8 million for the year ended December 31, 1991. The premium
increase was primarily due to increased writings in the reinsurance area, along
with growth in the commercial multiple peril lines of RWIC's general agency
business.
Underwriting expenses incurred were $117.8 million for the year ended
December 31, 1992, an increase of $21.1 million, approximately 21.8%, over 1991.
Comparable underwriting expenses incurred for 1991 were $96.7 million. The ratio
of underwriting expenses to net earned premiums increased from 1.09 in 1991 to
1.17 in 1992. This increase was primarily attributable to losses related to
Hurricane Andrew (approximately $12 million on a pre-tax basis). The majority of
these losses were experienced in the Company's assumed reinsurance area.
Net investment income was $29.3 million in 1992, a decrease of
approximately 0.7%, as compared to 1991 net investment income of $29.5 million.
The slight decrease in net investment income is due largely to the lower rates
available in the high quality fixed income market. RWIC's gain on the sale of
investments was $0.7 million and $0.6 million, and RWIC had $2.9 million of
other income for 1992 and other expense of $0.9 million for 1991.
RWIC's operating profit in 1992 decreased $5.0 million, approximately
23.6%, to $16.2 million from $21.2 million for the year ended December 31, 1991.
Interest Expense
Interest expense was $68.0 million in fiscal 1993, as compared to $76.2
million in fiscal 1992. The decline in interest expense reflects lower average
debt levels outstanding and favorable refinance costs on maturing debt.
21
<PAGE> 23
Result of Operations -- Consolidated Group
As a result of the foregoing, pre-tax earnings of $66.5 million were
realized in fiscal 1994 as compared to $49.2 million in fiscal 1993 and $25.7
million in fiscal 1992. After providing for income taxes, extraordinary costs
associated with the early retirement of debt and the cumulative effect of a
change in accounting principle, net earnings for fiscal 1994 were $40.2 million
as compared to $31.9 million in fiscal 1993 and $20.8 million in fiscal 1992.
Income tax as a percentage of pretax earnings from operations was 35.1% in 1993
compared to 19.2% in 1992, due to the Company's increased taxable earnings and
the relative impact of tax-exempt interest.
QUARTERLY RESULTS
The following table presents unaudited quarterly results for the ten
quarters in the period beginning July 1, 1992 and ending December 31, 1994. 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, the selected quarterly information when read in
conjunction with the consolidated financial statements incorporated herein by
reference. The Company's results of operations have historically fluctuated from
period to period, including on a quarterly basis. In particular, the Company's
U-Haul business is seasonal and a majority of the Company's revenues and
substantially all of its net earnings from its U-Haul business 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.
<TABLE>
<CAPTION>
QUARTER ENDED
----------------------------------------------------------------------------------------------------------------
SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31,
1992 1992 1993 1993 1993 1993 1994 1994 1994 1994
--------- -------- --------- -------- --------- -------- --------- -------- --------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total
revenues..... $303,871 $242,921 $219,375 $291,348 $324,968 $267,448 $251,091 $323,578 $361,115 $295,888
Net earnings
(loss)....... 26,736 (6,843) (12,966 ) 17,359 30,601 1,799 (9,575 ) 29,413 40,071 1,907
Net earnings
(loss) per
common
share(1)..... .69 (.18) (.34 ) .47 .83 (.02) (.33 ) .71 1.00 (.04)
</TABLE>
- ---------------
(1) For the quarters ended December 31, 1993, March 31, June 30, September 30,
and December 31, 1994 net earnings per common share amounts were computed
after giving effect to the dividend on the Company's Series A 8 1/2%
Preferred Stock. See "Description of Capital Stock -- Dividends."
LIQUIDITY AND CAPITAL RESOURCES
U-Haul
To meet the needs of its customers, U-Haul must maintain a large inventory
of fixed asset rental items. At December 31, 1994, net property, plant and
equipment represented approximately 70.5% of total U-Haul assets and
approximately 49.8% of consolidated assets. In the first nine months of fiscal
1995, capital expenditures were $322.1 million, as compared to $395.2 million in
the first nine months of fiscal 1994, reflecting expansion of the rental fleet
in both periods, purchase of trucks previously leased, and increases in the
available square footage in the self-storage segment. The capital required to
fund these acquisitions were funded with internally generated funds from
operations and debt financings.
Cash flows from operations were $170.7 million in the first nine months of
fiscal 1995, as compared to $171.2 million in the first nine months of fiscal
1994. The decrease of $0.5 million is primarily due to an increase in net
earnings and depreciation and amortization, offset by a decrease in net change
of operating assets and liabilities, including receivables and deferred income
taxes.
Oxford -- Life Insurance
Oxford's primary sources of cash are premiums, receipts from
interest-sensitive products and investment income. The primary uses of cash are
operating costs and benefit payments to policyholders. Matching the investment
portfolio to the cash flow demands of the types of insurance being written is an
important consideration. Benefit and claim statistics are continually monitored
to provide projections of future cash requirements.
22
<PAGE> 24
Cash flows from operations were $14.4 million and $18.7 million for the
nine months ended September 30, 1994 and 1993, respectively. In addition to cash
flow from operations and financing activities, a substantial amount of liquid
funds is available through Oxford's short-term portfolio. At September 30, 1994
and 1993, short-term investments amounted to $9.5 million and $22.8 million,
respectively. Management believes that the overall sources of liquidity will
continue to meet foreseeable cash needs.
Stockholder's equity of Oxford, on September 30, 1994 was $87.9 million.
Stockholder's equity excluding investment in RWIC, was $86.3 million in 1993. On
June 30, 1994, Oxford dividended 100% of the common stock of RWIC to Ponderosa.
During 1994 and 1993, Oxford paid cash dividends of $4.9 million and $10.0
million, respectively, to Ponderosa. The decrease in dividends is primarily due
to the dividend of RWIC discussed above.
Applicable laws and regulations of the State of Arizona require the
Company's insurance subsidiaries to maintain minimum capital determined in
accordance with statutory accounting practices in the amount of $600,000. In
addition, 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. As a result of the dividend of
RWIC stock on June 30, 1994, the State of Arizona must approve future dividends
made through June 30, 1995. These restrictions are not expected to have a
material adverse effect on the ability of the Company to meet its cash
obligations.
RWIC -- Property and Casualty
Cash flows from operations were $14.3 million and $7.5 million for the nine
months ended September 30, 1994 and 1993, respectively. The increase is
primarily attributed to increased premium writings and decreased reinsurance
receivable balances due to the timing of collection procedures. In addition to
cash flows from operations, a substantial amount of liquid assets and budgeted
cash flows is available to meet periodic needs.
RWIC's short-term investment portfolio was $6.3 million at September 30,
1994. The Company believes that this level of liquid assets, combined with
budgeted cash flow, is adequate to meet periodic needs. This balance also
reflects funds in transition from maturity proceeds to long-term investments.
The structure of the long-term portfolio is designed to match future cash needs.
Capital and operating budgets allow RWIC to schedule cash needs.
RWIC maintains a diversified investment portfolio, primarily in bonds at
varying maturity levels. Approximately 96.8% of the portfolio consists of
investment grade securities. The maturity distribution is designed to provide
sufficient liquidity to meet future cash needs. Current liquidity is adequate,
with current invested assets equal to 94.4% of total liabilities.
Shareholder equity increased 0.2% from $161.0 million at December 31, 1993
to $161.4 million at September 30, 1994. RWIC considers current shareholder's
equity to be adequate to support future growth and absorb unforseen risk events.
RWIC does not use debt or equity issues to increase capital and therefore has no
exposure to capital market conditions. RWIC paid shareholder dividends of $9.7
million during the nine months ended September 30, 1994.
Consolidated Group
At December 31, 1994, total notes and loans payable outstanding was $827.6
million as compared to $723.8 million at March 31, 1994 and $666.1 million at
December 31, 1993. The increase from 1993 reflects the expansion in the rental
fleet and self-storage segment.
During each of the fiscal years ending March 31, 1995, 1996, and 1997,
U-Haul estimates gross capital expenditures will average approximately $360
million as a result of the expansion of the rental fleet and self-storage
segment. This level of capital expenditures, combined with an average of
approximately $100 million in annual long-term debt maturities during this same
period, are expected to create annual average funding needs of approximately
$460 million. Management estimates that U-Haul will fund approximately 55% of
these requirements with internally generated funds, including proceeds from the
disposition of older trucks and other asset sales. The remainder of the required
capital expenditures are expected to be financed through existing credit
facilities, new debt placements, lease fundings, and/or equity offerings.
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Credit Agreements
The Company's subsidiary operations are funded by various credit and
financing arrangements, including unsecured long-term borrowings, unsecured
medium-term notes, and revolving lines of credit with domestic and foreign
banks. Principally to finance its fleet of trucks and trailers, the Company
routinely guarantees sale and leaseback transactions entered into by U-Haul. As
of December 31, 1994, the Company had $827.6 million in total notes and loans
payable outstanding and unutilized lines of credit of approximately $310.0
million.
Certain of the Company's credit agreements contain restrictive financial
and other covenants, including, among others, covenants with respect to
incurring additional indebtedness, maintaining certain financial ratios, and
placing certain additional liens on its properties and assets. At December 31,
1994, the Company was in compliance with these covenants. In addition, the
Company's credit agreements contain provisions that could result in a required
prepayment upon a "change in control" of the Company.
Under certain of the Company's credit agreements, a "change in control" is
deemed to occur if (a) any transfer of any shares of any class of capital stock
results in the Company's ESOP and members of the Shoen family owning in the
aggregate less than the amount of capital stock as may be necessary to enable
them to cast in excess of 50% of the votes for the election of directors of the
Company or (b) during any period for two consecutive years, persons who at the
beginning of such period constituted the Board of Directors of the Company
(including any director approved by a vote of not less than 66 2/3% of such
board) cease for any reason to constitute greater than 50% of the then acting
Board.
The Company is further restricted in the type and amount of dividends and
distributions that it may issue or pay, and in the issuance of certain types of
preferred stock. The Company is prohibited from issuing shares of preferred
stock that provide for any mandatory redemption, sinking fund payment, or
mandatory prepayment, or that allow the holders thereof to require the Company
or an subsidiary of the Company to repurchase such preferred stock at the option
of such holders or upon the occurrence of any event or events without the
consent of its lenders.
Stockholder Litigation
As disclosed in "Business -- Litigation," certain members of the Company's
Board of Directors and Selling Stockholder are defendants in an action initiated
by the Outside Stockholder Group. The Company has agreed to indemnify the
defendants to the fullest extent permitted by law or the Company's Articles of
Incorporation or By-Laws for all expenses and damages, if any, incurred by the
defendants in this proceeding, subject to certain exceptions. The extent of the
Company's indemnification obligation, if any, cannot be reasonably estimated.
Based on the plaintiffs' theory of damages, the Court ruled that the plaintiffs
elected that their remedy in this litigation would be the sale of their stock to
the defendants at a price determined by the Court based on the value of their
stock in 1988. The jury has determined that such value was $81.12 per share or
approximately $1.48 billion. On February 2, 1995, the judge in this case granted
the defendants' motion for remittitur or a new trial on the issue of damages.
The judge determined that the value of the plaintiffs' stock in 1988 was $25.30
per share or approximately $461.8 million. On February 13, 1995, the plaintiffs
filed a statement accepting the remittitur. The jury also awarded the plaintiffs
$70 million in punitive damages against Edward J. Shoen. The judge ruled that
this punitive damage award is excessive and granted Edward J. Shoen's motion for
remittitur or a new trial on the issue of punitive damages. The judge reduced
the award of punitive damages against Edward J. Shoen to $7 million. On February
13, 1995, the plaintiffs filed a statement accepting the remittitur reducing the
punitive damages to $7 million. On February 21, 1995, judgment was entered
against the defendants. Also on February 21, 1995, the defendants, other than
Selling Stockholder, filed for protection under Chapter 11 of the federal
bankruptcy laws, resulting in the issuance of an order automatically staying the
execution of the judgment against those defendants. The extent of the Company's
indemnification obligations may be an issue in the bankruptcy proceedings. No
provision has been made in the Company's financial statements for any possible
indemnification claims. Before the Company will have any indemnification
obligations, the defendants must request indemnification from the Company and a
determination must be made under Nevada law as to the validity of the
indemnification claims. The Company reserves the right to contest the validity
of such indemnification claims if such claims are made. If valid
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indemnification claims are made, the Company believes that various means of
financing the purchase of the plaintiffs' stock would exist, including, but not
limited to, the public sale of common stock by the Company or by certain of the
defendants. The Company believes, but no assurance can be given, that it can
obtain any necessary waivers or amendments of any provisions of its credit
agreements to permit the Company to finance the purchase of the plaintiffs'
stock. The Company believes, but no assurance can be given, that it will be able
to satisfy its valid indemnification obligations, if any, unless the amount to
be paid to the plaintiffs for their stock is increased following the completion
of any appeals. The Company is unable to predict the likelihood, outcome, or
consequences of any appeal. In the event any cash paid by the Company for the
plaintiffs' stock is in excess of the fair value of the stock received by the
Company, the Company will be required to record an expense equal to that
difference.
OTHER
Statement of Financial Accounting Standards No. 106, "Employers Accounting
for Postretirement Benefits Other Than Pensions," was issued by the Financial
Accounting Standards Board in December 1990. The statement requires that the
expected costs of health care and life insurance provided to retired employees
be recognized as expense during the years employees render service. The Company
adopted the provisions of this statement effective April 1, 1993. The
accumulated postretirement benefit obligation recognized by the Company at April
1, 1993 was $5.0 million. Net of income taxes, the cumulative effect of adoption
at April 1, 1993 was $3.1 million.
Further, during the first quarter of fiscal 1994 the Company adopted the
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes." This statement requires a change from the deferred to the liability
method of computing deferred income taxes. The adoption of the provisions of
this statement resulted in a $11.1 million net increase in deferred income taxes
payable. The Company adopted this change retroactively to April 1, 1988. For
additional information, see Note 7 of Notes to Consolidated Financial
Statements.
In November 1992, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 112, "Employers Accounting for
Postemployment Benefits." The statement applies to employers who provide certain
benefits to former or inactive employees after employment but before retirement.
It requires that the cost of such benefits be recognized over the service period
of employees as these benefits vest or accumulate. The provisions of this
statement must be adopted for fiscal years beginning after December 15, 1993.
The impact of adoption of this statement is immaterial.
In December 1992, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 113, "Accounting and Reporting for
Reinsurance of Short-Duration and Long-Duration Contracts." Effective January 1,
1993, the Company adopted the standard. The primary impact on the Company's
financial statements is the requirement to report assets and liabilities
relating to reinsured contracts gross of the effects of reinsurance. Previously,
such effects were reported on a net basis. As a result of adoption of the
standard, unpaid losses and loss expenses as of March 31, 1994 have been
increased by approximately $76 million to reflect the Company's policy
liabilities without regard to reinsurance. A corresponding amount due from
reinsurers on unpaid losses, including amounts related to claims incurred but
not reported, has also been reflected. Additionally, unearned premiums have been
increased by approximately $12 million for policy premiums ceded to reinsurers
for which the coverage period has not yet expired. Prepaid insurance premiums of
a corresponding amount have also been reflected in the consolidated balance
sheet. The consolidated balance sheet as of March 31, 1993 has not been restated
to reflect the adoption of the standard.
Statement of Financial Accounting Standards No. 114, "Accounting by
Creditors for Impairment of a Loan," was issued by the Financial Accounting
Standards Board in May 1993. This standard is effective for years beginning
after December 15, 1994. The standard requires that an impaired loan's fair
value be measured and compared to the recorded investment in the loan. If the
fair value of the loan is less than the recorded investment in the loan, a
valuation allowance is established. The Company has not completed an evaluation
of the effect of this standard.
Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," was issued by the Financial
Accounting Standards Board in May 1993. This standard
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requires classification of debt securities into one of the following three
categories based on management's intention with regard to such securities:
held-to-maturity, available-for-sale and trading. Securities classified as
held-to-maturity are recorded at cost adjusted for the amortization of premiums
or accretion of discounts while those classified as available-for-sale are
recorded at fair value with unrealized gains or losses reported on a net basis
in a separate component of stockholders' equity. Securities classified as
trading are recorded at fair value with unrealized gains or losses reported on a
net basis in income. Effective December 31, 1993, RWIC adopted the standard.
RWIC does not currently maintain a trading portfolio. U-Haul and Oxford have
adopted this statement in fiscal 1995. The effect of adopting this statement on
the Company's results of operations is immaterial.
Statement of Position 93-7, "Reporting on Advertising Costs," was issued by
the Accounting Standards Executive Committee in December 1993. This statement of
position provides guidance on financial reporting on advertising costs in annual
financial statements. The statement of position requires reporting advertising
costs as expenses when incurred or when the advertising takes place, reporting
the costs of direct-response advertising, and amortizing the amount of
direct-response advertising reported as assets. This statement of position is
effective for financial statements for years beginning after June 15, 1994. The
Company currently matches certain advertising costs with revenue generated in
future periods, and at March 31, 1994, $8.2 million in advertising costs are
deferred and included in prepaid expenses. The Company has completed an
evaluation of the effect of this statement of position but has not determined
the timing of adoption. However, the Company must adopt this statement of
position no later than fiscal 1996.
In December 1994, the Accounting Standards Executive Committee issued
Statement of Position 94-6, "Disclosure of Certain Significant Risks and
Uncertainties." This statement requires companies to disclose in their financial
statements information regarding the nature of their operations, the use of
estimates in the preparation of the financial statements and, in certain
instances, variability due to certain considerations. Adoption is required for
fiscal years ending after December 15, 1995. The Company is currently evaluating
the effects of this pronouncement.
In October 1994, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 119, "Disclosure about Derivative
Financial Instruments and Fair Value of Financial Instruments." This statement
requires companies to include in their financial statements disclosures about
the amounts, nature and terms of derivative financial instruments. Adoption is
required for fiscal years ending after December 15, 1994. The Company is
currently evaluating the effects of this pronouncement.
IMPACT OF INFLATION
Inflation has had no material financial effect on the Company's results of
operations in the years discussed.
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BUSINESS
HISTORY
The Company was founded in 1945 under the name "U-Haul Trailer Rental
Company." From 1945 to 1975, the Company rented trailers and trucks on a one-way
and in-town round-trip basis through independent dealers (at that time
principally independent gasoline service stations). Since 1974, the Company has
developed a network of Company-owned rental centers ("U-Haul Centers") (through
which U-Haul rents its trucks and trailers and provides a number of other
related products and services) and has expanded the number and geographic
diversity of its independent dealers. At December 31, 1994, the Company's
distribution network included approximately 1,100 U-Haul Centers and
approximately 12,400 independent dealers.
In March 1974, in conjunction with the acquisition and construction of
U-Haul Centers, the Company entered the self-storage business. As of December
31, 1994, such self-storage facilities were located at or near approximately 67%
of the Company's U-Haul Centers. Beginning in 1974, the Company introduced the
sale and installation of hitches and towing systems, as well as the sale of
support items such as packing and moving aids. During 1983, the Company expanded
its range of do-it-yourself rental products to include tools and equipment for
the homeowner and small contractor and other general rental items.
In 1969, the Company acquired Oxford to provide employee health and life
insurance for the Company in a cost-effective manner. In 1973, the Company
formed RWIC to provide automobile liability insurance for the U-Haul truck and
trailer rental customers.
Commencing in 1987, the Company began the implementation of a strategic
plan designed to emphasize reinvestment in its core do-it-yourself rental,
moving, and storage business. The plan included a fleet renewal program (see
"Business -- U-Haul Operations -- Rental Equipment Fleet") and provided for the
discontinuation of certain unprofitable and unrelated operations. As part of its
plan, the Company discontinued the operation of its full-service moving van
lines, initiated the phase out of its recreational vehicle rental operations,
and began the disposition of its recreational vehicle rental fleet. The
disposition of the moving van lines' assets and the recreational vehicle rental
fleet were completed in 1988 and 1992, respectively. The Company also eliminated
various types of rental equipment and closed certain warehouses and repair
facilities. The Company believes that its refocused business strategy enabled
U-Haul to generate higher revenues and to achieve significant cost savings. This
plan has been and continues to be vigorously opposed by the Outside Stockholder
Group and would in all likelihood not be pursued in the event of a change in
control. See "Risk Factors -- Existing Management -- Potential Change in
Control."
Since 1987, the Company has sold surplus real estate assets with a book
value of approximately $39.2 million for total proceeds of approximately $79.2
million. At December 31, 1994, the book value of the Company's real estate
assets deemed to be surplus was approximately $16.9 million.
In 1990, the Company reorganized its operations into separate legal
entities, each with its own operating, financial, and investment strategies. The
reorganization separated the Company into three parts: U-Haul rental operations,
insurance, and real estate. The purpose of the reorganization was to increase
management accountability and to allow the allocation of capital based on
defined performance measurements.
BUSINESS STRATEGY
U-HAUL OPERATIONS
The Company's present business strategy remains focused on the
do-it-yourself moving customer. The objective of this strategy is to offer, in
an integrated manner over a diverse geographical area, a wide range of products
and services to the do-it-yourself moving customer.
Through its "Moving Made Easier(R)" program, the Company strives to offer
its customers a high quality, reliable, and convenient fleet of trucks and
trailers at reasonable prices while simultaneously offering other related
products and services, including moving accessories, self-storage facilities,
and other items often
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desired by the do-it-yourself mover. The rental trucks purchased in the fleet
renewal program have been designed with the do-it-yourself customer in mind to
include features such as low decks, air conditioning, power steering, automatic
transmissions, soft suspensions, AM/FM cassette stereo systems, and over-the-cab
storage. The Company has introduced certain insurance products, including
"Safemove(R)" and "Safestor(R)," to provide the do-it-yourself mover with
certain moving-related insurance coverage. In addition, the Company provides
rental customers the option of storing their possessions at either their points
of departure or destination.
The Company believes that customer access, in terms of truck or trailer
availability and proximity of rental location, is critical to its success. Since
1987, the Company has more than doubled the number of U-Haul rental locations,
with a net addition of approximately 6,900 independent dealers.
To effectively service the U-Haul customer at these additional rental
locations with equipment commensurate with the Company's commitment to product
excellence, the Company, as part of the fleet renewal program, purchased
approximately 71,000 new trucks between March 1987 and December 1994 and reduced
the overall average age of its truck fleet from approximately 11 years at March
1987 to approximately five years at December 1994. During this period,
approximately 62,000 trucks were retired or sold.
Since 1990, U-Haul has replaced approximately 52% of its trailer fleet with
new, more aerodynamically designed trailers better suited to the low height
profile of many newly manufactured automobiles. Given the mechanical simplicity
of a trailer relative to a truck and a trailer's longer useful life, the Company
expects to replace trailers only as necessary.
Beginning in 1983, the Company implemented a point-of-sale computer system
for all of its Company-owned locations. The system was designed primarily to
handle the Company's reservations, traffic, and reporting of rental
transactions. The Company believes that the implementation of the system has
been a significant factor in allowing the Company to increase its fleet
utilization. Since the initial implementation, the Company has added several
additional enhancements to the system, including full budgeting and financial
reporting systems.
INSURANCE OPERATIONS
Oxford's business strategy emphasizes long-term capital growth funded
through earnings from reinsurance and investment activities. In the past, Oxford
has selectively reinsured life, health, and annuity-type insurance products.
Oxford anticipates pursuing its growth strategy by providing reinsurance
facilities to well-managed insurance or reinsurance companies offering similar
type products who are desirous of additional capital either as a result of rapid
growth or regulatory demands or who are divesting non-core business lines.
RWIC's principal business strategy is to capitalize on its knowledge of
insurance products aimed at the moving and rental markets. RWIC believes that
providing U-Haul and U-Haul customers with property and casualty insurance
coverage has enabled it to develop expertise in the areas of rental vehicle
lessee insurance, self-storage property coverage, motor home insurance coverage,
and general rental equipment coverage. RWIC has used and plans to continue to
use this knowledge to expand its customer base by offering similar products to
customers other than U-Haul. In addition, RWIC plans to expand its involvement
in specialized areas by offering commercial multi-peril and surety coverage and
by assuming reinsurance business.
U-HAUL OPERATIONS
GENERAL
The Company's do-it-yourself moving business operates under the U-Haul name
through an extensive and geographically diverse distribution network of
Company-owned U-Haul Centers and independent dealers throughout the United
States and Canada.
Substantially all of the Company's rental revenue is derived from
do-it-yourself moving customers. The remaining business comes from
commercial/industrial customers. Moving rentals include: (i) in-town
(round-trip) rentals, where the equipment is returned to the originating U-Haul
Center or independent dealer
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and (ii) one-way rentals, where the equipment is returned to a U-Haul Center or
independent dealer in another city. Typically, the number of in-town rental
transactions in any given year is substantially greater than the number of
one-way rental transactions. However, total revenues generated by one-way
transactions in any given year typically exceed total revenues from in-town
rental transactions.
As part of the Company's integrated approach to the do-it-yourself moving
market, U-Haul has a variety of product offerings. U-Haul's "Moving Made
Easier(R)" program is designed to offer safe, well-equipped rental trucks and
trailers at a reasonable price and to provide support items such as furniture
pads, hand trucks, appliance and utility dollies, mirrors, tow bars, tow
dollies, and bumper hitches. The Company also sells boxes, tape, and packaging
materials and rents additional items such as floor polishers and carpet cleaning
equipment at its U-Haul Center locations. U-Haul Centers also install hitches
and sell propane, and some of them sell gasoline. U-Haul sells insurance
packages such as (i) "Safemove(R)," which provides moving customers with a
damage waiver, cargo protection, and medical and life coverage, and (ii)
"Safestor(R)," which provides self-storage rental customers with various
insurance coverages.
The U-Haul truck and trailer rental business tends to be seasonal with more
transactions and revenues generated in the spring and summer months than during
the balance of the year. The Company attributes this seasonality to the
preference of do-it-yourself movers to move during this time. Also, consistent
with do-it-yourself mover preferences, the number of rental transactions tends
to be higher on weekends than on weekdays.
RENTAL EQUIPMENT FLEET
As of December 31, 1994, U-Haul's rental equipment fleet consisted of
approximately 79,000 trucks and approximately 91,000 trailers. Rental trucks are
offered in five sizes and range in size from the ten-foot "Mini-Mover(R)" to the
twenty-six-foot "Super-Mover(R)." In addition, U-Haul offers pick-up trucks and
cargo vans at many of its locations. Trailers range between six feet and twelve
feet in length and are offered in both open and closed box configurations.
DISTRIBUTION NETWORK
The Company's U-Haul products and services are marketed across the United
States and Canada through, as of December 31, 1994, approximately 1,100
Company-owned U-Haul Centers and approximately 12,400 independent dealers. The
independent dealers, which include gasoline station operators, general equipment
rental operators, and others, rent U-Haul trucks and trailers in addition to
carrying on their principal lines of business. U-Haul Centers, however, are
dedicated to the U-Haul line of products and services and offer those and
related products and services. Independent dealers are commonly located in
suburban and rural markets, while U-Haul Centers are concentrated in urban and
suburban markets.
Independent dealers receive U-Haul equipment on a consignment basis and are
paid a commission on gross revenues generated from their rentals. Independent
dealers also may earn referral commissions on U-Haul products and services
provided at other U-Haul locations. The Company maintains contracts with its
independent dealers that can be cancelled upon thirty days' written notice by
either party.
In addition, the Company has sought to improve the productivity of its
rental locations by installing computerized reservations and network management
systems in each U-Haul Center and a limited number of independent dealers. The
Company believes that these systems have been a major factor in enabling the
Company to deploy equipment more effectively throughout its network of locations
and anticipates expanding these systems to cover additional independent dealers.
The Company's U-Haul Center and independent dealer network in the United
States and Canada is divided into 11 districts, each supervised by an area
district vice president. Within the districts, the Company has established local
marketing companies, each of which, guided by a marketing company president, is
responsible for retail marketing at all U-Haul Centers and independent dealers
within its respective geographic area.
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Although rental dealers are independent, U-Haul area field managers oversee
the dealer network by inspecting each independent dealer's facilities and
auditing their activities on a regular basis. In addition, the area field
managers recruit new independent dealers for expansion or replacement purposes.
U-Haul has instituted performance compensation programs that focus on
accomplishment and reward strong performers.
SELF-STORAGE BUSINESS
U-Haul entered the self-storage business in 1974 and since that time has
increased the rentable square footage of its storage locations through the
acquisition of existing facilities and new construction. In addition, the
Company has entered into management agreements to manage self-storage properties
owned by other companies and is expanding this type of operation as well as
expanding its ownership of self-storage facilities. The Company also provides
financing and management services for independent self-storage businesses.
Through approximately 650 Company-owned or Company-managed locations in the
United States and Canada, the Company offers for rent more than 13.0 million
square feet of self-storage space. The Company's self-storage facility locations
have an average of 20,000 square feet of storage space, with individual storage
spaces ranging in size from 16 square feet to 200 square feet.
Units are rented to individuals and businesses for temporary storage on a
monthly basis. In fiscal 1994, occupancy rates increased to approximately 91%
from approximately 85% in the prior year. During fiscal 1994 and fiscal 1993,
delinquent rentals as a percentage of total storage rentals were approximately
5% in each year, which rate the Company considers to be satisfactory.
EQUIPMENT DESIGN, MANUFACTURE AND MAINTENANCE
The Company designs and manufactures its truck van boxes, trailers, and
various other support rental equipment items. With the needs of the
do-it-yourself moving customer in mind, the Company's equipment is designed to
achieve high safety standards, simplicity of operation, reliability,
convenience, durability, and fuel economy. Truck chassis are manufactured to
Company specifications by both foreign and domestic truck manufacturers. These
chassis receive certain post-delivery modifications and are joined with van
boxes at seven Company-owned manufacturing and assembly facilities in the United
States.
The Company services and maintains its trucks and trailers through a
periodic maintenance program. Regular vehicle maintenance is generally performed
at Company-owned facilities located throughout the United States and Canada.
Major repairs are performed either by the chassis manufacturers' dealers or by
Company-owned repair shops. To the extent available, the Company takes advantage
of manufacturers' warranties.
Since the fleet renewal program began in fiscal 1987, the number of repair
locations has been reduced significantly. Maintenance costs declined from a high
of $163.0 million in fiscal 1987 to a low of $80.5 million in fiscal 1989.
However, due to a reduction both in new truck purchases and older truck
retirements in fiscal 1992 and fiscal 1993, maintenance expense increased to
$150.3 million in fiscal 1993 and $177.7 million in fiscal 1994. During fiscal
1994, the Company, as part of its fleet renewal program, resumed the purchase
and manufacture of new trucks with the objective of increasing the size of the
truck fleet.
COMPETITION
The do-it-yourself moving truck and trailer rental market is highly
competitive and dominated by national operators in both the in-town and one-way
markets. These competitors include the truck rental divisions of Ryder System,
Penske Truck Leasing, and Budget Rent-A-Car. Management believes that there are
two distinct users of rental trucks: commercial users and do-it-yourself users.
As noted above, the Company focuses on the do-it-yourself mover. The Company
believes that the principal competitive factors are price, convenience of rental
locations, and availability of quality rental equipment.
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The self-storage industry is also highly competitive. In addition to the
Company, there are two other national firms, Public Storage and Shurgard, and
numerous regional and local operators. Efficient management of occupancy and
delinquency rates, as well as price and convenience, are key competitive
factors.
EMPLOYEES
For the period ending March 31, 1994, the Company's non-seasonal workforce
consisted of approximately 12,000 employees comprised of approximately 41%
part-time and 59% full-time employees. During the summer months, the Company
increases its workforce by approximately 400 employees. The percentage of
part-time employees was approximately 41% of the total workforce on December 31,
1994. The Company's employees are non-unionized, and management believes that
its relations with its employees are satisfactory.
INSURANCE OPERATIONS
OXFORD -- LIFE INSURANCE
Oxford underwrites life, health and annuity insurance, both as a direct
writer and as an assuming reinsurer. Oxford's direct lines are primarily related
to group life and disability coverage issued to employees of AMERCO and its
subsidiaries. For the year ended December 31, 1993, approximately 6.3% of
Oxford's premium revenues resulted from business with AMERCO and its
subsidiaries. Oxford's other direct writings include individual life insurance
acquired from other insurers and a small volume of individual annuity products
written through independent agents, which together accounted for approximately
5.0% of Oxford's premium revenues for the year ended December 31, 1993. Oxford
administers AMERCO's self-insured group health and dental plans.
Oxford's reinsurance assumed lines, which accounted for approximately 88.7%
of Oxford's premium revenues for the year ended December 31, 1993, include
individual life insurance coverage, annuity coverages, excess loss health
insurance coverage, and short-term travel accident coverage. These reinsurance
arrangements are entered into with unaffiliated insurers, except for travel
accident products reinsured from RWIC.
RWIC -- PROPERTY AND CASUALTY
RWIC's underwriting activities consist of three basic areas: U-Haul and
U-Haul-affiliated underwriting; direct underwriting; and assumed reinsurance
underwriting. U-Haul underwritings include coverage for U-Haul and U-Haul
employees, and U-Haul-affiliated underwritings consist primarily of coverage for
U-Haul customers. For the year ended December 31, 1993, approximately 38% of
RWIC's written premiums resulted from U-Haul and U-Haul-affiliated underwriting
activities. RWIC's direct underwriting is done through home office underwriters
and selected general agents. The products provided include liability coverage
for rental vehicle lessees and storage rental properties, and coverage for
commercial multiple peril, surety, and excess workers' compensation. RWIC's
assumed reinsurance underwriting is done via broker markets and includes, among
other things, reinsurance of municipal bond insurance written through MBIA, Inc.
RWIC provides a liability for unpaid losses that is based on the estimated
ultimate cost of settling claims reported prior to the end of the accounting
period, estimates received from ceding reinsurers and estimates for incurred but
unreported losses based on RWIC's historical experience supplemented by
insurance industry historical experience. Unpaid loss adjustment expenses are
based on historical ratios of loss adjustment expense paid to losses paid.
The liabilities are estimates necessary to settle all claims as of the date
of the stated reserves and all incurred but not reported claims. RWIC updates
the reserves as additional facts regarding claims become apparent. In addition,
court decisions, economic conditions and public attitudes impact the estimation
of reserves and also the ultimate cost of claims. In estimating reserves, no
attempt is made to isolate inflation from the combined effect of numerous
factors including inflation. Unpaid losses and unpaid loss expenses are not
discounted.
RWIC's unpaid loss and loss expenses are certified annually by an
independent actuarial consulting firm as required by state regulation.
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<PAGE> 33
The following table is a reconciliation in summary form, for each of the
last three years, of the beginning and end of year unpaid loss and loss
expenses:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------
1993 1992 1991
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Unpaid loss and loss expenses, beginning of year........... $238,762 $236,019 $226,324
-------- -------- --------
Losses and loss adjustment expenses:
attributable to the current year......................... 91,044 96,451 74,510
Increase (Decrease) attributable to prior years.......... 12,688 (4,241) 3,124
-------- -------- --------
Total............................................ 103,732 92,210 77,634
-------- -------- --------
Payments:
Loss and loss adjustment expenses attributable to current
year.................................................. 20,200 23,936 12,810
Payments attributable to prior years..................... 83,923 65,531 55,129
-------- -------- --------
Total............................................ 104,123 89,467 67,939
-------- -------- --------
Increase due to adoption of SFAS 113....................... 76,111 -- --
-------- -------- --------
Unpaid loss and loss expenses, end of year................. $314,482 $238,762 $236,019
======== ======== ========
</TABLE>
Effective December 31, 1993, RWIC adopted Statement of Financial Accounting
Standards (SFAS) No. 113, "Accounting and Reporting for Reinsurance of
Short-Duration and Long-Duration Contracts." The primary impact of SFAS No. 113
is the requirement to report assets and liabilities relating to reinsured
contracts gross of the effects of reinsurance. Previously, RWIC reported such
effects on a net basis. As a result of adoption of SFAS No. 113, the liability
for unpaid losses and loss adjustment expenses as of December 31, 1993 has been
increased approximately $76 million to reflect policy liabilities without regard
to reinsurance. A corresponding amount due from reinsurers on unpaid losses,
including amounts related to claims incurred but not reported, has also been
reflected.
The operating results of the property and casualty insurance industry,
including RWIC, are subject to significant fluctuations due to numerous factors,
including premium rate competition, catastrophic and unpredictable events
(including man-made and natural disasters), general economic and social
conditions, interest rates, investment returns, changes in tax laws, regulatory
developments, and the ability to accurately estimate liabilities for unpaid
losses and loss expenses.
INVESTMENTS
Oxford's and RWIC's investments must comply with the insurance laws of the
State of Arizona where the companies are domiciled. These laws prescribe the
type, quality, and concentration of investments that may be made. In general,
these laws permit investments in federal, state, and municipal obligations,
corporate bonds, preferred and common stocks, real estate mortgages, and real
estate, within specified limits and subject to certain qualifications. Moreover,
in order to be considered an acceptable reinsurer by cedents and intermediaries,
a reinsurer must offer financial security. The quality and liquidity of invested
assets are important considerations in determining such security.
The investment philosophies of Oxford and RWIC emphasize protection of
principal through the purchase of investment grade fixed income securities.
Approximately 99% of their respective portfolios consist of investment grade
securities. The maturity distributions are designed to provide sufficient
liquidity to meet future cash needs.
REINSURANCE
The Company's insurance operations assume and cede insurance from and to
other insurers and members of various reinsurance pools and associations.
Reinsurance arrangements are utilized to provide greater
32
<PAGE> 34
diversification of risk and to minimize exposure on large risks. However, the
original insurer remains liable should the assuming insurer not be able to meet
its obligations under the reinsurance agreements.
REGULATION
The Company's insurance subsidiaries are subject to considerable regulation
and supervision in the states in which they transact business. The purpose of
such regulation and supervision is primarily to provide safeguards for
policyholders. As a result of federal legislation, the primary regulation of the
insurance industry is performed by the states. State regulation extends to such
matters as licensing companies; restricting the types or quality of investments;
regulating capital and surplus and actuarial reserve maintenance; setting
solvency standards; requiring triennial financial examinations, market conduct
surveys, and the filing of reports on financial condition; licensing agents;
regulating aspects of the insurance companies' relationship with their agents;
restricting expenses, commissions, and new business issued; imposing
requirements relating to policy contents; restricting use of some underwriting
criteria; regulating rates, forms, and advertising; limiting the grounds for
cancellations or non-renewal of policies; regulating solicitation and
replacement practices; and specifying what might constitute unfair practices.
State laws also regulate transactions and dividends between an insurance company
and its parent or affiliates, and generally require prior approval or
notification for any change in control of the insurance subsidiary.
In the past few years, the insurance and reinsurance regulatory framework
has been subjected to increased scrutiny by the National Association of
Insurance Commissioners (the "NAIC"), state legislatures, insurance regulators,
and the United States Congress. State legislatures have considered or enacted
legislative proposals that alter, and in many cases increase, state authority to
regulate insurance companies and holding company systems. The NAIC and state
insurance regulators have been examining existing laws and regulations with an
emphasis on insurance company investment and solvency issues. Legislation has
been introduced in Congress that could result in the federal government assuming
some role in the regulation of the insurance industry. It is not possible to
predict the future impact of changing state and federal regulation on the
operations of Oxford and RWIC.
Beginning in 1993, the NAIC adopted and implemented minimum risk-based
capitalization requirements for life insurance companies, including Oxford. As
of the date of this Prospectus, Oxford is in compliance with these requirements.
The NAIC has adopted a model for establishing minimum risk-based capitalization
requirements for property and casualty insurance and reinsurance companies. The
NAIC's stated objective in developing such risk-based capital standards is to
improve solvency monitoring. RWIC will adopt the minimum risk-based
capitalization requirements in fiscal 1995. Adoption will have no material
effect on RWIC.
COMPETITION
The insurance industry is competitive. Competitors include a large number
of life insurance companies and property and casualty insurance companies, some
of which are owned by stockholders and others of which are owned by
policyholders (mutual). Many companies in competition with Oxford and RWIC have
been in business for a longer period of time or possess substantially greater
financial resources. Competition in the insurance business is based upon price,
product design, and services rendered to producers and policyholders.
AMERCO REAL ESTATE COMPANY
AREC owns and manages most of the Company's real estate assets, including
the Company's U-Haul Center locations. AREC has responsibility for acquiring and
developing properties suitable for new U-Haul Centers and self-storage locations
and managing environmental risks. In addition to the U-Haul operations, AREC
actively seeks to lease or dispose of surplus properties. See
"Business -- History."
LITIGATION
Certain members of the Company's Board of Directors and the Selling
Stockholder, are defendants in an action in the Superior Court of the State of
Arizona in and for the County of Maricopa entitled Samuel W. Shoen, M.D., et al.
v. Edward J. Shoen, et al., No. CV88-20139, instituted August 2, 1988. The
Company was also a defendant in the action as originally filed, but the Company
was dismissed from the action on
33
<PAGE> 35
August 15, 1994, subject only to the right, to the extent that any exists, of
the plaintiffs to appeal such dismissal. The plaintiffs, who are all members of
the Outside Stockholder Group that is currently opposed to existing Company
management (see "Principal Stockholders"), have alleged, among other things,
that certain of the individual plaintiffs were wrongfully excluded from sitting
on the Company's Board of Directors in 1988 through the sale of Company common
stock to certain key employees. That sale allegedly prevented the Outside
Stockholder Group from gaining a majority position in the Company's voting stock
and control of the Company's Board of Directors. The plaintiffs alleged various
breaches of fiduciary duty and other unlawful conduct by the individual
defendants and sought equitable relief, compensatory damages, and punitive
damages. The Court dismissed all claims for equitable relief that would have
allowed the plaintiffs to sit on the Board of Directors, subject only to the
right, to the extent that any exists, of the plaintiffs to appeal such
dismissal. Based on the plaintiffs' theory of damages, the Court ruled that the
plaintiffs elected as their remedy in this lawsuit to sell their shares of stock
to the defendants. The price was to be determined based on the value of the
plaintiffs' stock in 1988. On October 7, 1994, the jury determined that (i) the
defendants breached their fiduciary duties, and (ii) such breach diminished the
value of the plaintiffs' stock. The jury also determined the value of the
plaintiffs' stock in 1988 to be $81.12 per share or approximately $1.48 billion.
On February 2, 1995, the judge in this case granted the defendants' motion for
remittitur or a new trial on the issue of damages. The judge determined that the
value of the plaintiffs' stock in 1988 was $25.30 per share or approximately
$461.8 million. On February 13, 1995, the plaintiffs filed a statement accepting
the remittitur. The jury also awarded the plaintiffs $70 million in punitive
damages against Edward J. Shoen. The judge ruled that this punitive damage award
is excessive and granted Edward J. Shoen's motion for remittitur or a new trial
on the issue of punitive damages. The judge reduced the award of punitive
damages against Edward J. Shoen to $7 million. On February 13, 1995, the
plaintiffs filed a statement accepting the remittitur reducing the punitive
damages to $7 million. On February 21, 1995, judgment was entered against the
defendants. Also on February 21, 1995, the defendants, other than Selling
Stockholder, filed for protection under Chapter 11 of the federal bankruptcy
laws, resulting in the issuance of an order automatically staying the execution
of the judgment against those defendants. The Company's By-Laws provide for a
right of first refusal in favor of the Company on the Company's Common Stock
except for bona fide sales pursuant to Rule 144 under the Securities Act and
sales pursuant to a bona fide underwritten public offering. No determination has
been made by the Company as to whether the Company will exercise its right of
first refusal upon any attempted transfer of Common Stock from the plaintiffs to
the defendants. The Company is unable to predict the likelihood, outcome, or
consequences of any appeal. In the event any cash paid by the Company for the
plaintiffs' stock is in excess of the fair value of the stock received by the
Company, the Company will be required to record an expense equal to that
difference.
Pursuant to separate indemnification agreements, the Company has agreed to
advance litigation expenses to the defendants and has agreed to indemnify the
defendants to the fullest extent permitted by law or the Company's Articles of
Incorporation or By-Laws, for all expenses and damages, if any, incurred by the
defendants in this proceeding, subject to certain exceptions. At this time, the
extent of the Company's indemnification obligation, if any, cannot be reasonably
estimated. With respect to the defendants who have filed for protection under
the federal bankruptcy laws, the extent of the Company's indemnification
obligations may be an issue in the bankruptcy proceedings. No provision has been
made in the Company's financial statements for any possible indemnification
claims. Before the Company will have any indemnification obligations, the
defendants must request indemnification from the Company and a determination
must be made under Nevada law as to the validity of the indemnification claims.
The Company reserves the right to contest the validity of such indemnification
claims if such claims are made. If valid indemnification claims are made, the
Company believes that it has various means of financing any such indemnification
obligations consistent with its existing credit agreements, or, in the
alternative, the Company may seek the waiver or amendment of certain of the
provisions of one or more of its credit agreements when the indemnification
obligations are determined. The Company believes, but no assurance can be given,
that it can obtain any necessary waivers or amendments. The Company believes,
but no assurance can be given, that it will be able to satisfy its valid
indemnification obligations, if any, unless the amount to be paid to the
plaintiffs for their stock is increased following the completion of any appeals.
Sophia M. Shoen, Selling Stockholder and the Company are parties to
separate Share Repurchase and Registration Rights Agreements which require all
disputes relating thereto to be resolved by arbitration. On April 8, 1994,
Sophia M. Shoen and Selling Stockholder commenced the dispute resolution
process. Private
34
<PAGE> 36
arbitration proceedings pursuant to these agreements were convened on June 19,
1994. All of the claims asserted by Selling Stockholder in the arbitration have
been dismissed pursuant to a settlement agreement described in the following
paragraph. In the arbitration, Sophia M. Shoen asserts that the Company has
breached its obligations to her by failing to timely register the sale of her
shares which were sold to the public in November 1994 and by failing to remove
the right of first refusal on all of the Company's common stock. Sophia M. Shoen
asserted that, as a consequence of this alleged breach, she was entitled to give
notice of termination of the Stockholder Agreement described under "Principal
Stockholders." The Company disagrees with the above assertions. Sophia M. Shoen
gave such notice of termination on July 11, 1994. The arbitration hearings
concluded on August 21, 1994 and the arbitration panel is expected to render a
decision at any time. See "Risk Factors -- Existing Management -- Potential
Change in Control." Mark V. Shoen, as a party to the Stockholder Agreement, has
filed a lawsuit against Sophia M. Shoen to which the Company is not a party,
seeking a declaratory judgment that the Stockholder Agreement has not been
terminated and remains in full force and effect.
The Company, the Company's Board of Directors, the ESOP, and the ESOP
Trustee were defendants in an action in United States District Court for the
District of Nevada entitled Paul F. Shoen v. AMERCO, et al., No.
CV-N-94-475-DWH, instituted July 19, 1994 and dismissed February 10, 1995. On
February 9, 1995, Selling Stockholder executed a settlement agreement with the
Company and the other defendants resolving all of his claims in this case and in
the arbitration described in the preceding paragraph. As part of the settlement,
the Company agreed, among other things, to work in good faith toward appointing
independent trustees for the ESOP and to place Selling Stockholder on
management's slate of directors for the 1994 Deferred Annual Meeting of
Stockholders which was delayed by judicial order at the request of Selling
Stockholder. In addition, under the terms of the settlement agreement, the
Company paid Selling Stockholder $925,000 and all defendants, including the
Company, received a full release of all claims by Selling Stockholder through
the settlement date, including but not limited to, claims for reimbursement of
attorneys' fees related to all matters to which Selling Stockholder is or was a
party. The terms of the settlement will not result in a material adverse effect
on the Company's financial condition or results of operations.
The Company, certain officers of the Company, certain members of the
Company's Board of Directors, and others are defendants in actions currently
pending in United States District Court for the District of Nevada entitled
Sidney Wisotzky and Dorothy Wisotzky, et al. v. Edward J. Shoen, et al., No.
CV-N-94-771-HDM (filed October 28, 1994), Evan Julber v. Edward J. Shoen, et
al., No. CV-N-94-00811-HDM (filed November 16, 1994), and Anne Markin v. Edward
J. Shoen, et al., No. CV-N-94-00821-ECR (filed November 18, 1994). The
plaintiffs in these cases, who claim to have purchased the Company's Series A
8 1/2% Preferred Stock, are seeking class action certification and are defining
the class as all persons who purchased or otherwise acquired the Series A 8 1/2%
Preferred Stock of the Company from October 14, 1993 through October 18, 1994,
inclusive, and who sustained damage as a result of such purchases. The
plaintiffs allege among other things, that the defendants violated the federal
securities laws by inflating the price of the Series A 8 1/2% Preferred Stock
via false and misleading statements, concealing material adverse information,
and taking other manipulative actions, and that the Prospectus for the Series A
8 1/2% Preferred Stock, certain Form 10-K and Form 10-Q filings made by the
Company, and the Company's Notice and Proxy Statement dated July 8, 1994
contained false and misleading statements and omissions regarding the Shoen
Litigation. In addition, certain officers of the Company, certain members of the
Company's Board of Directors, and an employee of the Company are defendants in
an action currently pending in United States District Court for the District of
Nevada entitled Bernard L. and Frieda Goldwasser, et al. v. Edward J. Shoen, et
al., No. CV-N-94-00810-ECR (filed November 16, 1994). The plaintiffs in this
case allege, derivatively on behalf of the Company, that the defendants breached
their fiduciary duties to the Company and its stockholders by causing the
Company to violate the federal securities laws, by concealing the financial
responsibility of the Company for the claims asserted in the Shoen Litigation,
by subjecting the Company to adverse publicity, and by misusing their corporate
control for personal benefit. In addition to unspecified damages, the plaintiffs
are seeking equitable and/or injunctive relief to prevent the defendants in this
case from causing the Company to indemnify the defendants in the Shoen
Litigation against their liability in that case. The plaintiffs in these cases
are requesting unspecified compensatory damages as well as attorneys' fees and
costs. The Company and the individual defendants deny plaintiffs' allegations of
wrongdoing and intend to vigorously defend themselves in these actions.
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<PAGE> 37
The Company and its subsidiaries are defendants in a number of other suits
and claims incident to the type of business conducted and several administrative
proceedings arising from state and local provisions that regulate the removal
and/or clean up of underground fuel storage tanks. It is the opinion of
management that none of such suits, claims or proceedings involving the Company,
individually or in the aggregate, are expected to result in any material loss
and, accordingly, no provision has been made in the Company's financial
statements.
ENVIRONMENTAL MATTERS
UNDERGROUND STORAGE TANKS
The Company owns properties that, as of December 31, 1994, contained a
total of approximately 1,200 underground storage tanks ("USTs"). The USTs are
used to store various petroleum products, including gasoline, fuel oil, and
waste oil. The USTs are subject to various federal, state, and local laws and
regulations that require testing and removal of leaking USTs and remediation of
polluted soils and groundwater under certain circumstances. In addition, if
leakage from USTs has migrated, the Company may be subject to civil liability to
third parties. In fiscal years 1990 through December 31, 1994, the Company
incurred expenditures totaling approximately $19.5 million for removal and
remediation of approximately 1,527 USTs, a portion of which may be recovered
from insurance and certain states' funds for the removal of USTs. Expenditures
incurred through the end of fiscal 1994 may not be representative of future
experience. Although the Company believes that compliance with laws and
regulations, and cleanup and liability costs related to USTs will not have a
material adverse effect on the Company's financial condition or operating
results, there can be no assurance that this will be the case.
In fiscal 1989, the Company instituted a program to test its USTs for
leakage and to remove all but approximately 100 of the approximately 2,755 USTs
then existing by the year 2000. The approximately 100 USTs expected to remain at
the conclusion of the Company's testing and removal program are currently
anticipated to consist primarily of waste oil tanks not required to be removed
under current laws and regulations and gasoline tanks located at its remote
rental locations where their use is deemed necessary to service the Company's
moving customers. The Company currently budgets $3 million annually for UST
testing, removal, and remediation. The Company treats these costs as capital
costs to the extent that they improve the safety or efficiency of the associated
properties as compared to when the properties were originally acquired or if the
costs are incurred in preparing the properties for sale.
FEDERAL SUPERFUND SITES
The Company has been named as a "potentially responsible party" ("PRP")
with respect to the disposal of hazardous wastes at fifteen federal or state
superfund hazardous waste sites located in twelve states. Under applicable laws
and regulations the Company could be held jointly and severally liable for the
costs to clean-up these sites. Currently, the Company has entered into buyout
agreement settlements for seven of the sites and one site is under negotiation
for settlement. Four of the sites have been inactive for more than two years and
two of the sites have been disputed by the Company with no response for more
than two years. One site is under state clean-up direction. Based upon the
information currently available to the Company regarding these fifteen sites,
the current anticipated magnitude of the clean-up, the number of PRPs, and the
volumes of hazardous waste currently anticipated to be attributed to the Company
and other PRPs, the Company believes its share of the cost of investigation and
clean-up at the fifteen superfund sites will not have a material adverse effect
on the Company's financial condition or operating results. In addition, the
Company believes that insurance coverage may be available to cover all or some
of the cost with respect to these sites.
WASHINGTON STATE HAZARDOUS WASTE SITES
The Company owns property within two state hazardous waste sites in the
State of Washington. The Company owns a parcel of property in Yakima, Washington
that is believed to contain elevated levels of pesticide and other contaminant
residue as a result of onsite operations conducted by one or more former owners.
The State of Washington has designated the property as a state hazardous waste
site known as the "Yakima Valley Spray Site." The Company has been named by the
State of Washington as a "potentially liable party" ("PLP") under state law with
respect to this site. The Company, together with eight other
36
<PAGE> 38
companies and persons, has formed a committee that has retained an environmental
consultant. The process of site assessment on the Yakima Valley Spray Site is in
its early stages and, based upon the information currently available to the
Company regarding the volume and nature of wastes present, the Company is unable
to reasonably assess the potential investigation and clean-up costs, but the
costs could be substantial. Although the Company has entered into an agreement
with such other companies and persons under which the Company has assumed
responsibility for 20% of the costs to investigate the site, no agreement among
the parties with respect to clean-up costs has been entered into at the date of
this Prospectus.
In addition, the Company has been named by the State of Washington as a PLP
along with 12 other PLPs with respect to another state-listed hazardous waste
site known as the "Yakima Railroad Site." The Yakima Valley Spray Site is
located within the Yakima Railroad Site. The Company has been notified that the
Yakima Railroad Site involves potential groundwater contamination in an area of
approximately two square miles. The Company has contested its designation as a
PLP at this site, but, at the date of this Prospectus, no formal ruling has been
issued in this matter.
In February 1992, the State of Washington issued an enforcement order to
the Company and eight other parties requiring conduct of an interim remedial
action involving the provision of bottled water to households that obtain
drinking water from wells within the Yakima Railroad Site. Without conceding any
liability, the Company and several of the other PLPs have implemented the
bottled water program. The State of Washington has stated its intention to
expand the existing municipal water system to supply municipal water to those
households currently receiving bottled water, and it is estimated that the cost
thereof will be approximately $6 million, with such cost being allocated among
the PLPs.
In addition, there will be costs associated with remedial measures to
address the regional groundwater contamination issue. The process of site
assessment on the Yakima Railroad Site is in its early stages and, based upon
the information currently available to the Company regarding the volume and
nature of wastes present, the Company is unable to reasonably assess the
potential investigation and clean-up costs, but the costs could be substantial.
Moreover, the investigative and remedial costs incurred by the State can be
imposed upon the Company and any other PLP as a joint and several liability. At
the date of this Prospectus, other than the indication of the expansion of the
municipal water system, there has been no formal indication from the State of
Washington of its intentions regarding future cost recoveries at the Yakima
Railroad Site.
OTHER
The Company owns seven facilities that manufacture and assemble various
components of the Company's equipment. In addition, the Company owns various
facilities engaged in the maintenance and servicing of its equipment. Various
individual properties owned and operated by the Company are subject to various
state and local laws and regulations relating to the methods of disposal of
solvents, tires, batteries, antifreeze, waste oils and other materials.
Compliance with these requirements is monitored and enforced at the local level.
Based upon information currently available to the Company, compliance with these
local laws and regulations has not had, and is not expected to have, a material
adverse effect on the Company's financial condition or operating results.
The Company currently leases approximately 203 properties to various
businesses. The Company has a policy of leasing properties subject to an
environmental indemnification from the lessee for operations conducted by the
lessee. It should be recognized, however, that such indemnifications do not
cover pre-existing conditions and may be limited by the lessee's financial
capabilities. In any event, to the extent that any lessee does not perform any
of its obligations under applicable environmental laws and regulations, the
Company may remain potentially liable to governmental authorities and other
third parties for environmental conditions at the leased properties.
Furthermore, as between the Company and its lessees, disputes may arise as to
allocations of liability with respect to environmental conditions at the leased
properties.
Finally, it should be recognized that the Company's present and past
facilities have been in operation for many years and, over that time in the
course of those operations, some of the Company's facilities have generated,
used, stored, or disposed of substances or wastes that are or might be
considered hazardous. Therefore, it is possible that additional environmental
issues may arise in the future, the precise nature of which the Company cannot
now predict.
37
<PAGE> 39
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information about the current
directors and executive officers of the Company effective February 15, 1995.
<TABLE>
<CAPTION>
NAME AGE OFFICE
---- --- ------
<S> <C> <C>
Edward J. Shoen (1)(2) 45 Chairman of the Board and President
Mark V. Shoen 44 Director
James P. Shoen 35 Director and Vice President
William E. Carty (1)(3) 67 Director
John M. Dodds 58 Director
Charles J. Bayer (2)(3) 54 Director
Richard J. Herrera 41 Director
Aubrey K. Johnson (1)(2)(3) 72 Director
Gary B. Horton 51 Treasurer
Gary V. Klinefelter 46 Secretary
John A. Lorentz 68 Assistant Secretary
Rocky D. Wardrip 37 Assistant Treasurer
George R. Olds 52 Assistant Secretary
</TABLE>
- ---------------
(1) Member of the Audit Committee
(2) Member of Executive Finance Committee
(3) Member of the Compensation Committee
As more fully set forth in "Risk Factors -- Stockholder Litigation" and
"Business -- Litigation," on February 21, 1995, a judgment was entered against
Edward J. Shoen, James P. Shoen, William E. Carty, John M. Dodds, and Aubrey K.
Johnson who are directors of the Company and against Selling Stockholder
awarding members of the Outside Stockholder Group approximately $461.8 million
in exchange for their common stock. After the entry of this judgment, the
defendants, other than Selling Stockholder, filed for protection under Chapter
11 of the federal bankruptcy laws on February 21, 1995.
Edward J. Shoen has served as a Director and Chairman of the Board of the
Company since December 1986, as President since June 1987, as a Director of
U-Haul since June 1990, and as the President of U-Haul since March 1991. Mr.
Shoen has been associated with the Company since May 1971.
Mark V. Shoen has served as a Director of the Company since April 1990. He
is a Director of U-Haul, and served as President of U-Haul from June 1990 to
March 1991. From June to August 1987, he was Assistant to the President of the
Company with responsibilities relating to product. He served from August 1987 to
December 1990 as President of A&M Associates, Inc., a wholly-owned subsidiary of
U-Haul. He served from December 1990 to the present as Executive Vice President
of Product for U-Haul.
James P. Shoen, a Director of the Company since December 1986, Vice
President of the Company since May 1989, and a Director of U-Haul since June
1990, has been associated with the Company since July 1976. He was employed as a
Center General Manager with U-Haul Co. of San Francisco from 1981 to 1989. From
March 1989 to March 1990, he served as the Director of the U-Haul Technical
Center. He has served from April 1990 to the present as Executive Vice President
of U-Haul.
William E. Carty, a Director of the Company since May 1987 and a Director
of U-Haul since June 1990, has been associated with the Company since 1946. He
has served in various executive positions in all areas of the Company. He served
most recently as product director. Mr. Carty retired from the Company in
December 1987.
John M. Dodds, a Director of the Company since September 1987, Vice
President of U-Haul from June 1990 until July 1994, and Director of U-Haul since
June 1990, has been associated with the Company since
38
<PAGE> 40
1963. He served in regional field operations until December 1986. Mr. Dodds
retired from the Company in May 1994.
Charles J. Bayer has been associated with the Company since 1967. He has
served in various executive positions and has served as President of Amerco Real
Estate since September 1990. He also served as a Director of U-Haul from July
1988 until June 1990, Product Director for U-Haul from January 1988 to August
1990, the Director of Finance and Administration for the U-Haul Technical Center
from 1986 to 1988, and the Manager of Repair and Maintenance of the Company from
1984 to 1986.
Richard J. Herrera, a Director of the Company since September 1991 and a
Director of U-Haul since June 1990, has been associated with the Company since
April 1988. He is presently the Vice President of Marketing, Retail Sales for
U-Haul.
Aubrey K. Johnson was a Director of the Company from 1987 until 1991. From
1991 until his re-election to the Board in August 1993, he served as a
consultant and advisor to various organizations and individuals.
Gary B. Horton has served as Treasurer since 1982. His previous positions
include Treasurer of U-Haul. He has been associated with the Company since
October 1969.
Gary V. Klinefelter, Secretary of the Company since July 1988, and
Secretary of U-Haul since June 1990, is licensed as an attorney in Arizona and
has served as General Counsel for the Company since June 1988.
John A. Lorentz, Assistant Secretary of the Company since July 1988, and
Assistant Secretary of U-Haul since June 1990, is licensed as an attorney in
Oregon and has been associated with the Company since September 1953. His
previous positions include Secretary of the Company and of U-Haul.
Rocky D. Wardrip, Assistant Treasurer of the Company since September 1990,
has been associated with the Company since 1978 in various capacities within
accounting and treasury operations. Mr. Wardrip was previously Assistant
Treasurer of U-Haul from 1988 to 1990.
George R. Olds, Assistant Secretary of the Company and U-Haul since
February 1993, has been associated with the Company since 1975 as a member of
the U-Haul legal department, specializing in taxation.
OTHER KEY EMPLOYEES
Donald W. Murney has been Treasurer of U-Haul since June 1990. He was
previously employed as the Senior Vice President and Chief Financial Officer of
Conry Financial Services.
Henry E. Martin joined the Company in 1973 and has served in various
capacities in the insurance subsidiaries since 1975. He is currently President
of Ponderosa.
The Audit Committee makes recommendations to the Board of Directors
regarding the selection of independent auditors, reviews the Company's financial
statements for each interim period and reviews and evaluates the Company's
internal audit and control functions. The Executive Finance Committee supervises
the financial affairs of the Company and, among other things, has the power to
give final approval for the borrowing of funds on behalf of the Company without
further action or approval of the Board of Directors. The Compensation Committee
makes recommendations to the Board of Directors regarding executive
compensation.
39
<PAGE> 41
PRINCIPAL STOCKHOLDERS
INSIDE STOCKHOLDER GROUP
Three of the Company's eight directors, Edward J. Shoen, Mark V. Shoen, and
James P. Shoen, as well as Sophia M. Shoen, Selling Stockholder, Oxford (as
trustee) and the ESOP Trustee, are members of the Inside Stockholder Group that
on the date of this Prospectus votes approximately 45.7% of the Company's
outstanding voting stock. If Sophia M. Shoen is successful in leaving the Inside
Stockholder Group, then the other current members of the Inside Stockholder
Group would control approximately 41.4% of the Company's outstanding voting
stock. See "Risk Factors -- Existing Management -- Potential Change in Control."
The number of shares controlled by the Inside Stockholder Group includes
shares beneficially owned by Edward J. Shoen (3,483,681); Mark V. Shoen
(3,475,520); James P. Shoen (2,278,814); Selling Stockholder (3,369,058); Sophia
M. Shoen (1,638,472); certain Irrevocable Trusts for which Oxford Life Insurance
Company acts as trustee (1,605,340); and The ESOP Trust (1,805,110).
Term
The members of the Inside Stockholder Group are parties to a stockholder
agreement, dated as of May 1, 1992, as amended (the "Stockholder Agreement"),
that restricts the disposition of the parties' shares of common stock to certain
types of permitted dispositions. The Stockholder Agreement will expire on March
5, 1999, unless earlier terminated.
Voting of Shares
All of the shares subject to the Stockholder Agreement are voted as agreed
upon by the members holding a majority of the shares subject to the Stockholder
Agreement. As of the date of this Prospectus, Edward J. Shoen, Mark V. Shoen,
and James P. Shoen, each of whom is a director of the Company, collectively hold
a majority of the shares subject to the Stockholder Agreement and, therefore,
have the ability, if they so agree, to control the vote of the Company's common
stock that is subject to the Stockholder Agreement. However, one member of the
Inside Stockholder Group, the ESOP Trustee, is required to act as a member of
the Inside Stockholder Group only if the other members of the Inside Stockholder
Group provide the ESOP Trustee with an opinion of counsel satisfactory to the
ESOP Trustee that such act shall not result in a violation of ERISA or the IRC.
If the other members of the Inside Stockholder Group are unable to furnish such
an opinion, it is unclear whether or not the ESOP Trustee could vote other than
as part of the Inside Stockholder Group. The Inside Stockholder Group currently
controls approximately 41.0% of the Company's voting stock without counting
shares held by the ESOP Trustee. See "Risk Factors -- Existing
Management -- Potential Change in Control -- Replacement of ESOP Trustee" and
"Business -- Litigation."
ESOP
On March 16, 1973, the Company established the AMERCO Profit Sharing
Retirement Trust (the "Profit Sharing Plan") for certain of its employees. The
Profit Sharing Plan was subsequently amended from time to time. Effective April
1, 1984, the Company established the AMERCO Employee Savings and Protection Plan
(the "Savings Plan") to permit employee contributions to be made on a favorable
tax basis through utilization of the provisions of Section 401(k) of the
Internal Revenue Code. The Savings Plan was subsequently amended from time to
time. Effective January 1, 1988, the Profit Sharing Plan and the Savings Plan
were merged to form a single plan called the AMERCO Retirement Savings and
Profit Sharing Plan.
The AMERCO Retirement Savings and Profit Sharing Plan was amended and
restated in its entirety to form the ESOP, effective as of July 24, 1988, by
adding an "employee stock ownership plan" (as defined in Section 407(d)(6) of
ERISA and Section 4975(e)(7) of the IRC component, which component is designed
to invest primarily in "qualifying employer securities" of the Company. The ESOP
Trust holds shares of the Company's common stock. As of February 15, 1995,
shares of the Company's common stock held by the ESOP Trust were allocated to
6,350 Company employees and as of such date 6,708 Company employees were
eligible to participate in the ESOP. The Company makes periodic contributions to
the ESOP Trust, which
40
<PAGE> 42
contributions are used to purchase Company common stock. Under the terms of the
ESOP, the Company's common stock is appraised annually. The most recent such
appraisal, dated as of December 31, 1993, was conducted by American Appraisal
Associates. As of December 31, 1993, the Company's common stock was valued at
$20 per share and was discounted 15% because of a lack of marketability for a
value of $17 per share.
ESOP Trust; Release of Shares from Stockholder Agreement
Prior to the issuance of the Series A 8 1/2% Preferred Stock in October
1993, the ESOP Trustee had the power to vote all common stock held in the ESOP
Trust in its discretion (other than with respect to certain significant
corporate transactions such as mergers or consolidations, recapitalizations, and
sales of all or substantially all of the assets of the Company). Under the ESOP,
since the Company has outstanding a "registration-type class of securities,"
each participant (or such participant's beneficiary) in the ESOP may direct the
ESOP Trustee with respect to the voting of all common stock allocated to the
participant's account. All shares in the ESOP Trust not allocated to
participants continue to be voted by the ESOP Trustee in accordance with the
Stockholder Agreement. See "Principal Stockholders -- Inside Stockholders
Group -- Voting of Shares." As of January 31, 1995, of the 3,050,887 shares of
Company common stock held by the ESOP Trust, 1,245,777 shares were allocated to
participants and 1,805,110 shares remained unallocated. Of the 1,245,777
allocated shares, approximately 7,379 shares are allocated to members of the
Inside Stockholder Group, which shares shall be voted together with the
unallocated shares and the other shares held by the members of the Inside
Stockholder Group in accordance with the terms of the Stockholder Agreement.
Therefore, as of the date of this Prospectus, the Inside Stockholder Group
controls approximately 45.7% of the Company's outstanding common stock.
Additional shares of common stock not presently allocated to participants'
accounts in the ESOP Trust will be allocated as certain debt obligations of the
ESOP Trust are repaid, resulting in a further reduction in the number of common
shares subject to the Stockholder Agreement. As a result of the foregoing, there
can be no assurance that the Inside Stockholder Group will be able to continue
to elect directors acceptable to it to the Company's Board of Directors or that
the Company's current management will remain in place; however, the Company's
four-class Board of Directors may delay the effectiveness of any change in
management. See "Certain Provisions That May Limit Changes in Control."
Registration Rights; Release of Shares from Stockholder Agreement
Subject to certain limitations and restrictions, Selling Stockholder and
Sophia M. Shoen, who are currently members of the Inside Stockholder Group, may
elect to cause the Company to effect a registration under the Securities Act and
applicable state securities laws of all or a part (but not less than 100,000
shares) of the shares of common stock held by each of them pursuant to separate
Share Repurchase and Registration Rights Agreements. Sophia M. Shoen has sold
575,000 shares of the Company's common stock to the public pursuant to such an
agreement. On September 1, 1994, Selling Stockholder demanded registration of
500,000 of his shares. Subject to certain limitations, the Company is required
to effect registration of those shares pursuant to this prospectus on or before
April 1, 1995, unless certain conditions specified in the Share Repurchase and
Registration Rights Agreement occur. No more than two such registrations may be
demanded by either Selling Stockholder or Sophia M. Shoen. The Stockholder
Agreement permits the disposition of any shares pursuant to a registered public
offering under the Securities Act. All registered shares, when sold, will be
released from the Stockholder Agreement. As of the date of this Prospectus, the
Inside Stockholder Group controls the vote of approximately 45.7% of the
Company's common stock. Assuming that Selling Stockholder and Sophia M. Shoen
sold all of their respective shares pursuant to this and future registration
requests, the Inside Stockholder Group would control the vote of approximately
32.7% of the Company's common stock. As a result, there can be no assurance that
the shares of common stock held by Selling Stockholder and Sophia M. Shoen will
remain subject to the Stockholder Agreement. For this reason, there can be no
assurance that the Company's current management will remain in place. See
"Business -- Litigation" for a description of arbitration proceedings whereby
Sophia M. Shoen has asserted claims, which are disputed by the Company, that the
Stockholder Agreement is terminated because of the Company's alleged failure to
timely register her shares of common stock.
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<PAGE> 43
OUTSIDE STOCKHOLDER GROUP
Certain other stockholders are members of the Outside Stockholder Group
that votes approximately 48.2% of the Company's outstanding voting stock. The
following information is based upon certain Commission filings by the Outside
Stockholder Group and on other information furnished to the Company.
Members
The Outside Stockholder Group controls 18,254,596 shares of the Company's
common stock pursuant to the stockholder agreement described below and 367,188
shares of the Company's common stock pursuant to several trusts described below.
The number of shares controlled by the Outside Stockholder Group includes shares
beneficially owned by Samuel W. Shoen (4,041,924); Michael L. Shoen (4,035,924);
Mary Anna Shoen-Eaton (3,343,076); Cecilia M. Shoen-Hanlon (2,331,984); Katrina
M. Carlson (2,016,624); Theresa M. Shoen (1,651,644); and Leonard S. Shoen
(833,420).
Term
The members of the Outside Stockholder Group are parties to a fourth
amended stockholder agreement, dated June 20, 1994, that provides for the voting
of the subject shares. The original agreement was dated July 17, 1988. Unless
earlier terminated by a majority of the stockholders, the agreement will
terminate on January 1, 2001.
Voting of Shares
All of the shares subject to the agreement are voted at the direction of a
majority of the stockholders (on the basis of one vote per stockholder) party to
the agreement. Leonard S. Shoen, Michael L. Shoen, and Theresa M. Shoen have
each been granted a proxy to vote the shares as agreed upon by a majority of the
stockholders.
Control of Trust for Minor Child
The Company has been advised that four trusts for the benefit of Scott R.
Shoen are the record owners of an aggregate of 367,188 shares of the Company's
voting stock representing 0.9% of the Company's voting stock. Samuel W. Shoen
and Michael L. Shoen, who are members of the Outside Stockholder Group, are co-
trustees for the trusts and vote such shares in their discretion.
Director Nominations
The Outside Stockholder Group has nominated Samuel W. Shoen, Theresa M.
Shoen, and Ronald Belec to the Company's Board of Directors. The following
information about the director nominees is based upon information furnished to
the Company by such nominees.
Samuel W. Shoen, age 49, has been engaged in the occupation of private
investor since March 1, 1993 and served in the capacities of employee, officer,
and director of the Company at various times from 1973 to 1987.
Theresa M. Shoen, age 31, has been employed for the past five years as
manager, waitress, and general help at Baby Kay's restaurant in Scottsdale,
Arizona and served as a director of the Company from 1982 to 1984.
Ronald Belec, age 47, is currently employed by ABC, Inc., a courier service
in Seattle, Washington.
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<PAGE> 44
CERTAIN PROVISIONS THAT MAY LIMIT CHANGES IN CONTROL
Certain provisions summarized below may have the effect of delaying,
deferring, or preventing a change in control of the Company.
The Articles of Incorporation of the Company (the "Articles") provide for
the Board of Directors to be divided into four classes of directors serving
staggered four-year terms. As a result, approximately one-fourth of the Board of
Directors will be elected each year. Moreover, under the Nevada General
Corporation Law, an affirmative vote of holders of two-thirds of the then
outstanding stock entitled to vote is required to remove a director. This
provision, when coupled with the provision of the Articles authorizing only the
Board of Directors to fill vacant directorships, may hinder the removal of
incumbent directors by stockholders entitled to vote and the simultaneous
election of new directors by such stockholders to fill the vacancies created by
such removal.
Moreover, (i) the Company's By-Laws grant the Company a right of first
refusal exercisable in connection with any sale of outstanding shares of the
Company's common stock, except any common stock sold, transferred, or otherwise
disposed of by the ESOP Trust or any common stock sold in a bona fide
underwritten public offering or in a bona fide public distribution pursuant to
Rule 144 under the Securities Act, (ii) the Articles require holders of
two-thirds of the then outstanding shares of common stock to amend certain
provisions of the Articles, including the classified board provision, to amend
the By-Laws, and to approve certain transactions with, among others, holders of
five percent of any class of voting stock of the Company, (iii) the Articles
prohibit stockholder action by written consent, and (iv) certain of the
Company's credit agreements contain provisions that could require the prepayment
of all monies outstanding thereunder upon a "change in control." See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources -- Credit Agreements."
See "Risk Factors -- Ability to Issue Serial Common Stock and Preferred
Stock" regarding the potential anti-takeover effects of the Board of Directors'
ability to issue serial common stock and preferred stock and to fix the rights,
preferences, privileges and restrictions, including voting rights, of those
shares without any further vote or action by the stockholders.
The Board of Directors has adopted a stockholder rights plan. Pursuant to
the plan, rights have been distributed to the holders of the common stock of the
Company that entitle such holders to purchase from the Company one one-hundredth
of a share of the Company's Series C Preferred Stock at an exercise price of
$15,000 per share (the price per share and the exercise price are subject to
adjustment). The rights become exercisable if any person or group of affiliated
or associated persons becomes the beneficial owner of fifty percent or more of
the Company's common stock without approval of a majority of the disinterested
members of the Board of Directors (as defined in the plan); such person being
defined as an "acquiring person." Upon the occurrence of an Affiliate Merger or
Triggering Event (certain transactions defined in the plan involving an
acquiring person), each right entitles its holder to purchase, for the exercise
price, that number of shares of common stock of the Company having a value equal
to twice the exercise price. Upon the occurrence of a Business Combination (as
defined in the plan), each right entitles its holder to purchase, for the
exercise price, that number of shares of common stock of the acquiring or
surviving company having a value equal to twice the exercise price. The rights
will expire on July 29, 1998, unless earlier redeemed by the Company pursuant to
authorization by a majority of the disinterested Board.
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<PAGE> 45
SELLING SECURITY HOLDER
The common stock offered hereunder is held by Selling Stockholder. Selling
Stockholder currently owns 3,369,058 shares of common stock directly, 71,976
shares of common stock indirectly through Oxford Life Insurance Company, Trustee
under that certain Irrevocable Trust dated December 20, 1982 (Paul F. Shoen,
Grantor) (the "Irrevocable Trust"), and 779 shares of Common Stock which are
allocated to the Selling Stockholder's ESOP Trust account. Five hundred thousand
shares of common stock are offered hereunder. After the sale of the Securities,
Selling Stockholder will own 2,869,058 shares directly (7.42%), 71,976 shares
indirectly (0.19%), and 779 shares in the ESOP Trust.
In recent years, Selling Stockholder has been involved in several
transactions with the Company, both individually and through affiliates. A tow
dolly fleet owned by Samlo, a partnership in which Selling Stockholder is a
partner, generated net operating revenues from the Company of $65,000, $78,000,
and $109,000 for the years ended March 31, 1994, 1993, and 1992, respectively.
On April 2, 1993, the Company, Pafran, Inc., a corporation then-controlled
by Selling Stockholder, and P.F. Acquisition, Inc., a subsidiary of the Company
("P.A."), entered into an Agreement and Plan of Merger pursuant to which P.A.
merged into Pafran, Inc., and Pafran, Inc. became a wholly-owned subsidiary of
the Company. In exchange for Pafran, Inc.'s capital stock, the stockholders of
Pafran, Inc. (Selling Stockholder and the Irrevocable Trust) collectively
received 3,598,876 shares of common stock, the same number of shares of common
stock held by Pafran, Inc. Selling Stockholder received 3,526,900 of these
shares and the Irrevocable Trust received 71,976 of the shares.
The merger described in the preceding paragraph was effected in accordance
with the terms of a Merger Option Agreement, dated as of May 1, 1992, among
Selling Stockholder, Pafran, Inc., and the Company (the "Pafran Merger Option
Agreement"). The Pafran Merger Option Agreement required the Company to cause a
subsidiary of the Company to be merged with or into Pafran, Inc. at its request.
The Company, Selling Stockholder, and Pafran, Inc. also entered into an
agreement that, among other things, prohibits Selling Stockholder and Pafran,
Inc. directly or indirectly from offering, selling, pledging, or otherwise
disposing of any shares of common stock or securities convertible into or
exchangeable for common stock prior to March 1, 1999. This prohibition does not
apply, however, to sales of securities pursuant to a registered offering and
limited sales of securities that are designed not to disrupt a public offering
of securities by the Company, including sales pursuant to Rule 144.
Pursuant to a Share Repurchase and Registration Rights Agreement, dated as
of March 1, 1992 (the "Registration Rights Agreement"), among Selling
Stockholder, Pafran, Inc., and the Company, Selling Stockholder was given the
right to require the Company to repurchase, with certain limitations, up to
$3,000,000 of common stock owned by him. The Registration Rights Agreement
provides that the Company's obligations to repurchase any shares from Selling
Stockholder shall be satisfied if such shares are purchased by the ESOP Trust.
The Registration Rights Agreement restricts the disposition of common stock held
by Selling Stockholder. Pursuant to the Registration Rights Agreement (i) on May
15, 1992 Pafran, Inc. sold 23,148 shares of common stock to the ESOP Trust at
the then appraised value of $10.80 per share for an aggregate sales price of
approximately $250,000, (ii) on April 30, 1993, Selling Stockholder sold 48,387
shares of common stock to the ESOP Trust at the then appraised value of $15.50
per share for an aggregate sales price of approximately $750,000, (iii) on June
30, 1994, Selling Stockholder sold 58,825 shares of common stock to the ESOP
Trust at the most recent (December 31, 1993) appraised value of $17.00 per share
for an aggregate sales price of approximately $1,000,000, and (iv) on January
17, 1995, Selling Stockholder sold 50,632 shares of Common Stock to the ESOP
Trust at the most recent closing price for the Common Stock trading on Nasdaq of
$19.75 per share for an aggregate sales price of approximately $1,000,000.
Selling Stockholder, subject to certain limitations and restrictions, may elect
to cause the Company to effect a registration under the Securities Act and
applicable state securities laws of shares of common stock held by him. Selling
Stockholder gave notice of exercise of his registration right to register
500,000 of the shares of common stock registered hereunder in September 1994.
Pursuant to a Management Consulting Agreement, dated as of March 5, 1992,
Selling Stockholder agreed to provide management consulting services to the
Company on matters relating to the Company's
44
<PAGE> 46
business and the organization and management of the Company. In consideration
for these services, the Company has agreed to pay Selling Stockholder a yearly
fee of $200,000. The Management Consulting Agreement terminates on March 1,
1995.
On February 9, 1995, Selling Stockholder executed a settlement agreement
with the Company and others resolving all of his claims in the matters described
in "Business -- Litigation." As part of the settlement, the Company agreed,
among other things, to place Selling Stockholder on management's slate of
directors for the 1994 Deferred Annual Meeting of Stockholders. In addition,
under the terms of the settlement agreement, the Company paid Selling
Stockholder $925,000 and all defendants, including the Company received a full
release of all claims by Selling Stockholder through the settlement date
including, but not limited to, claims for reimbursement of attorneys' fees
related to all matters to which Selling Stockholder is or was a party. The terms
of the settlement will not result in a material adverse effect on the Company's
financial condition or results of operation.
In connection with the Shoen Litigation, the Company has paid or advanced
certain legal expenses of Selling Stockholder. See "Business -- Litigation."
DESCRIPTION OF SECURITIES
The Company's Restated Articles of Incorporation authorize the issuance of
150,000,000 shares of Common Stock with a par value of $0.25 per share,
150,000,000 shares of serial common stock, and 50,000,000 shares of preferred
stock. The Company's Board of Directors has the authority to fix the voting
powers, designations, preferences, privileges, limitations, restrictions, and
relative rights of the serial common stock and the preferred stock without any
further vote or action by the stockholders. The rights of the holders of the
Common Stock are subject to, and may be adversely affected by, the rights of the
holders of any serial common stock or preferred stock that is currently
outstanding or that may be issued in the future. The issuance of serial common
stock or preferred stock could have the effect of making it more difficult for a
third party to acquire a majority of the outstanding voting stock of the
Company, thereby delaying, deferring, or preventing a change in control of the
Company. Furthermore, holders of such serial common stock or preferred stock may
have other rights, including economic rights senior to the Common Stock. See
"Risk Factors -- Ability to Issue Serial Common Stock and Preferred Stock" for a
further discussion of the potential anti-takeover effects of the Board's ability
to issue serial common stock and preferred stock.
As of the date of this Prospectus, there are 32,901,568 issued and
outstanding shares of the Company's Common Stock and 5,762,495 issued and
outstanding shares of Series A Common Stock. All of the Series A Common Stock is
held by James P. Shoen, a Vice-President and director of the Company, and Edward
J. Shoen, Chairman of the Board and President of the Company. The Series A
Common Stock is not convertible into Common Stock but votes together as a single
class with the Common Stock on all matters.
Dividends
Holders of shares of the common stock are entitled to receive dividends
payable when, if, and as declared by the Board of Directors out of funds legally
available therefor. The Company does not have a formal dividend policy. The
Company's Board of Directors periodically considers the advisability of
declaring and paying dividends in light of existing circumstances. The holders
of the Series A 8 1/2% Preferred Stock are entitled to receive cumulative
dividends prior to and in preference to the holders of common stock at a fixed
annual rate. See "Dividends."
The Company is restricted in the amount of dividends that it may issue or
pay pursuant to covenants contained in its credit agreements. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources -- Credit Agreements." At the date
of this Prospectus, the most restrictive of such covenants provides that the
Company may pay cash dividends on its capital stock only in an amount not
exceeding, in the aggregate, computed on a cumulative basis, the sum of (i) $15
million and (ii) 50% of consolidated net income computed on a cumulative basis
for the entire period subsequent to March 31, 1993 (or if such consolidated net
income is a deficit figure, then minus 100% of such
45
<PAGE> 47
deficit); provided such dividend is paid within 60 days of being declared. At
December 31, 1994, the aggregate amount available for dividends on common stock
after providing for dividends on the Series A 8 1/2% Preferred Stock was
approximately $53.2 million.
Voting
Each share of common stock entitles the holder to one vote in the election
of directors and other corporate matters. The Company's Board of Directors is
classified into four classes. Voting rights are non-cumulative. For a
description of articles of incorporation and bylaw provisions that would have
the effect of delaying, deferring or preventing a change in control of the
Company see "Certain Provisions that May Limit Changes in Control."
Right of First Refusal
The Company's By-Laws provide for a right of first refusal in favor of the
Company with respect to all of the Company's common stock except for any common
stock sold, transferred, or otherwise disposed of by the ESOP Trust or any
common stock sold in a bona fide underwritten public offering or in a bona fide
public distribution pursuant to Rule 144 under the Securities Act.
Transfer Agent
The transfer agent and registrar for the Securities is Chemical Trust
Company of California.
46
<PAGE> 48
UNDERWRITING
The Underwriters named below (the "Underwriters"), represented by Van
Kasper & Company (the "Representative"), have severally agreed, subject to the
terms and conditions contained in the Underwriting Agreement, to purchase from
the Selling Stockholder the number of shares of common stock indicated below
opposite their respective names at the offering price less the underwriting
discounts and commissions set forth on the cover of this Prospectus. The
Underwriting Agreement provides that the obligations of the Underwriters are
subject to certain conditions precedent and that the Underwriters shall purchase
the total number of shares of common stock shown above if any such shares are
purchased.
<TABLE>
<CAPTION>
NUMBER
UNDERWRITER OF SHARES
--------------------------------------------------------------------------- ---------
<S> <C>
Van Kasper & Company.......................................................
---------
Total............................................................ 500,000
=======
</TABLE>
The Underwriting Agreement contains covenants of indemnity and contribution
among the Underwriters, the Company and the Selling Stockholder with respect to
certain civil liabilities, including liabilities under the Securities Act.
The Company and the Selling Stockholder have been advised by the
Representative that the Underwriters propose to offer the Securities directly to
the public at the offering price set forth on the cover of this Prospectus and
to certain dealers at such price, less a concession not in excess of $ per
share, and that the Underwriters such dealers, including any Underwriter, may
reallow a discount not in excess of $ per share. After the initial offering,
the public offering price, concessions, and reallowance to dealers may be
changed by the Representative as a result of market conditions or other factors.
The Representative has advised the Company that less than 1% of the Securities
will be sold on a discretionary basis.
The Underwriters will purchase the Securities from the Selling Stockholder
at a price per share representing a discount of % of the public offering
price. In addition, the Selling Stockholder has agreed to pay the Representative
a nonaccountable expense allowance of 2 3/8% of the aggregate public offering
price of the Securities. To the extent that the expenses of the Representative
are less than the nonaccountable expense allowance, the excess shall be deemed
to be compensation to the Representative.
Up to shares of the Common Stock offered hereby may be offered
and sold to non-U.S. persons in compliance with applicable foreign and U.S.
securities laws. In connection with such sales, Bailey & Company Inc. will be
paid a $ investment banking fee payable out of the total underwriting
discounts and commissions listed on the cover of this Prospectus.
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<PAGE> 49
LEGAL OPINIONS
The validity of the Securities offered hereunder will be passed upon for
the Company by Lionel, Sawyer & Collins, 300 S. 4th Street, Suite 1700, Las
Vegas, Nevada 89101 in reliance with respect to matters of law of the State of
Arizona upon Snell & Wilmer, One Arizona Center, Phoenix, Arizona 85004. Certain
legal matters in connection with this offering will be passed upon for the
Underwriters by Grover Wickersham, P.C., 430 Cambridge Avenue, Suite 100, Palo
Alto, California 94306 and for Selling Stockholders by Ryan, Swanson &
Cleveland, 1201 Third Avenue, Suite 3400, Seattle, Washington 98101. Attorneys
in the firm of Grover Wickersham, P.C. own 2,300 shares of the Company's Common
Stock and 1,000 shares of the Company's Series A Preferred Stock.
EXPERTS
The consolidated financial statements of the Company as of March 31, 1994
and 1993 and for each of the years in the three-year period ended March 31, 1994
incorporated herein by reference to the Company's Registration Statement No.
33-54289, filed with the Commission, have been so incorporated in reliance on
the report (which contains an explanatory paragraph relating to certain
litigation described in Notes 14 and 21 to the consolidated financial
statements) of Price Waterhouse LLP, independent accountants, given upon the
authority of said firm as experts in auditing and accounting.
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<PAGE> 50
======================================================
NO DEALER, SALESMAN, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDER, ANY OF THE
UNDERWRITERS, OR ANY OTHER PERSON. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION WHERE SUCH AN
OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
PROSPECTUS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Information Incorporated by
Reference........................... 2
Prospectus Summary.................... 3
Recent Developments................... 5
Risk Factors.......................... 5
The Company........................... 9
Capitalization........................ 10
Dividends............................. 10
Selected Consolidated Financial
Data................................ 11
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 12
Business.............................. 27
Management............................ 38
Principal Stockholders................ 40
Certain Provisions that May Limit
Changes in Control.................. 43
Selling Security Holder............... 44
Description of Securities............. 45
Underwriting.......................... 47
Legal Opinions........................ 48
Experts............................... 48
</TABLE>
======================================================
======================================================
500,000 SHARES
AMERCO
[ LOGOS ]
COMMON STOCK
------------------------
PROSPECTUS
------------------------
VAN KASPER & COMPANY
March , 1995
======================================================
<PAGE> 51
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee....................... $ 3,018
NASD Filing Fee........................................................... $ 1,750
Printing and Engraving Expenses........................................... $ 20,000
Listing Fees.............................................................. $ 10,000
Legal Fees and Expenses................................................... $ 50,000
Accounting Fees and Expenses.............................................. $ 25,000
Blue Sky Fees and Expenses................................................ $ 5,000
Transfer Agent Fees....................................................... $ 3,000
Underwriters' Nonaccountable Expense Allowance +.......................... $296,875
Other Expenses............................................................ $ 5,357
--------
Total Expenses.................................................. $420,000
========
</TABLE>
- ---------------
* Estimated.
+ To be paid by Selling Stockholder.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Nevada General Corporation Law requires the Company to indemnify
officers and directors for any expenses incurred by any officer or director in
connection with any actions or proceedings, whether civil, criminal,
administrative, or investigative, brought against such officer or director
because of his or her status as an officer or director, to the extent that the
director or officer has been successful on the merits or otherwise in defense of
the action or proceeding. The Nevada General Corporation Law permits a
corporation to indemnify an officer or director, even in the absence of an
agreement to do so, for expenses incurred in connection with any action or
proceeding if such officer or director acted in good faith and in a manner in
which he or she reasonably believed to be in or not opposed to the best
interests of the corporation and such indemnification is authorized by the
stockholders, by a quorum of disinterested directors, by independent legal
counsel in a written opinion authorized by a majority vote of a quorum of
directors consisting of disinterested directors, or by independent legal counsel
in a written opinion if a quorum of disinterested directors cannot be obtained.
The Company's Restated Articles of Incorporation eliminate personal liability of
directors and officers, to the Company or its stockholders, for damages for
breach of their fiduciary duties as directors or officers, except for liability
(i) for acts or omissions that involve intentional misconduct, fraud, or a
knowing violation of law, or (ii) for the unlawful payment of dividends. In
addition, the Company's By-Laws provide that the Company shall indemnify, to the
fullest extent authorized or permitted by law, any person made, or threatened to
be made, a defendant in any threatened, pending, or completed action, suit, or
proceeding by reason of the fact that he or she was a director or officer of the
Company. The Company has also executed Indemnification Agreements that provide
that certain of the Company's directors and officers shall be indemnified and
held harmless by the Company to the fullest extent permitted by applicable law
or the Restated Articles of Incorporation or By-Laws of the Company. The Company
has established a trust fund with Harris Trust and Savings Bank as trustee in
order to fund its obligations under the Indemnification Agreements. The Company
has agreed to maintain a minimum balance in the trust fund of $1,000,000. The
Nevada General Corporation Law prohibits indemnification of a director or
officer if a final adjudication establishes that the officer's or director's
acts or omissions involved intentional misconduct, fraud, or a knowing violation
of the law and were material to the cause of action. Despite the foregoing
limitations on indemnification, the Nevada General Corporation Law may permit an
officer or director to apply to the court for approval of indemnification even
if the officer or director is adjudged to have committed intentional misconduct,
fraud, or a knowing violation of the law. The Nevada General Corporation Law
also provides that indemnification of directors is not permitted for the
unlawful payment of distributions, except for those directors registering their
dissent to the payment of the distribution.
II-1
<PAGE> 52
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<S> <C>
1 Proposed Form of Underwriting Agreement+
4(a) Restated Articles of Incorporation(1)
4(b) Form of Stock Certificate+
4(c) Restated By-Laws+
5 Opinion re Legality+
23(a) Consent of Independent Accountants
23(b) Consent of Lionel, Sawyer & Collins (included in Exhibit 5)
23(c) Consent of Snell & Wilmer (included in Exhibit 5)
24 Power of Attorney (included on signature page of Registration Statement, as filed
on December 29, 1994)
28 Information from Reports Furnished to State Insurance Regulatory Authorities(2)
</TABLE>
- ---------------
+ Previously filed.
(1) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1993, File No. 0-7862.
(2) Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended March 31, 1994, File No. 0-7862.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
(2) That, for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared
effective.
(3) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to section 13(a) or section 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 15 above, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-2
<PAGE> 53
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Phoenix, State of Arizona, on the 22nd day of
February, 1995.
AMERCO
By: /s/ EDWARD J. SHOEN
--------------------------------------
Edward J. Shoen
Chairman of the Board and
President
Pursuant to the requirements of the Securities Act of 1933, this
Pre-Effective Amendment No. 2 to this registration statement has been signed by
the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME AND SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------- ------------------
<C> <S> <C>
/s/ EDWARD J. President and Chairman of February 22, 1995
SHOEN the Board (Principal
- ------------------------------------------ executive officer
Edward J. Shoen
* Treasurer (Principal February 22, 1995
- ------------------------------------------ financial and accounting
Gary B. Horton officer)
* Director February 22, 1995
- ------------------------------------------
Mark V. Shoen
* Director February 22, 1995
- ------------------------------------------
James P. Shoen
Director
- ------------------------------------------
William E. Carty
Director
- ------------------------------------------
John M. Dodds
* Director February 22, 1995
- ------------------------------------------
Charles J. Bayer
Director
- ------------------------------------------
Richard J. Herrera
* Director February 22, 1995
- ------------------------------------------
Aubrey K. Johnson
By: /s/ EDWARD J.
SHOEN
- ------------------------------------------
*Edward J. Shoen
(Attorney-in-fact)
</TABLE>
II-3
<PAGE> 54
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER TITLE
------ -----
<S> <C>
1 -- Proposed Form of Underwriting Agreement+
4(a) -- Restated Articles of Incorporation(1)
4(b) -- Form of Stock Certificate+
4(c) -- Restated By-Laws+
5 -- Opinion re Legality+
23(a) -- Consent of Independent Accountants
23(b) -- Consent of Lionel, Sawyer & Collins (included in Exhibit 5)
23(c) -- Consent of Snell & Wilmer (included in Exhibit 5)
24 -- Power of Attorney (included on signature page of Registration
Statement, as filed on December 29, 1994)
28 -- Information from Reports Furnished to State Insurance Regulatory
Authorities(2)
</TABLE>
- ---------------
+ Previously filed.
(1) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1993, File No. 0-7862.
(2) Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended March 31, 1994, File No. 0-7862.
<PAGE> 55
APPENDIX A
DESCRIPTION OF GRAPHIC MATERIAL
<TABLE>
<S> <C>
1. Location: Outside Front Cover and Outside Back Cover Pages of Prospectus
Item:
Logos
Description:
Logos of the three principal subsidiaries of Amerco; Ponderosa Holdings,
Inc., U-Haul International, Inc., and Amerco Real Estate Company situated
horizontally beside one another directly under the heading of the
Prospectus containing the name of the Company.
2. Location:
Page 10 of the Prospectus
Item:
Corporate Structure
Description:
A chart showing the corporate structure of the Company and its major
subsidiaries. The chart shows the Company on top, above its three
principal subsidiaries; Ponderosa Holdings, Inc., U-Haul International,
Inc., and Amerco Real Estate Company situated horizontally beside one
another. Directly below Ponderosa Holdings, Inc. are its subsidiaries,
Oxford Life Insurance Company and Republic Western Insurance Company,
situated horizontally beside one another.
</TABLE>
<PAGE> 1
EXHIBIT 23(A)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
June 24, 1994, except as to Notes 14 and 21, which are as of August 15, 1994 and
October 13, 1994, respectively, appearing on page F-2 of AMERCO's Registration
Statement No. 33-54289, filed with the Securities and Exchange Commission, for
the year ended March 31, 1994. Such report includes an explanatory paragraph
related to the uncertainty surrounding certain litigation. We also consent to
the references to us under the headings "Summary Consolidated Financial Data",
"Selected Consolidated Financial Data" and "Experts" in such Prospectus.
However, it should be noted that Price Waterhouse LLP has not prepared or
certified such "Summary Consolidated Financial Data" or "Selected Consolidated
Financial Data."
PRICE WATERHOUSE LLP
February 24, 1995
Phoenix, Arizona
