<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to __________________
Commission Registrant, State of Incorporation I.R.S. Employer
File Number Address and Telephone Number Identification No.
_______________________________________________________________________
0-7862 AMERCO 88-0106815
(A Nevada Corporation)
1325 Airmotive Way, Ste. 100
Reno, Nevada 89502-3239
Telephone (702) 688-6300
2-38498 U-Haul International, Inc. 86-0663060
(A Nevada Corporation)
2727 N. Central Avenue
Phoenix, Arizona 85004
Telephone (602) 263-6645
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [X] No [ ].
29,513,492 shares of AMERCO Common Stock, $0.25 par value and 5,762,495
shares of AMERCO Series A common stock, $0.25 par value were
outstanding at January 22, 1996.
5,385 shares of U-Haul International, Inc. Common Stock, $0.01 par
value, were outstanding at January 22, 1996. U-Haul International,
Inc. meets the conditions set forth in General Instruction H(1)(a) and
(b) of Form 10-Q and is therefore filing this form with the reduced
disclosure format.
<PAGE> 2
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
a) Consolidated Balance Sheets as of September 30, 1995,
March 31, 1995 and September 30,1994..................... 4
b) Consolidated Statements of Earnings for the
Six Months ended September 30, 1995 and1994.............. 6
c) Consolidated Statements of Changes in Stockholders'
Equity for the Six Months ended September 30, 1995
and 1994................................................. 7
d) Consolidated Statements of Earnings for the
Quarters ended September 30, 1995 and 1994............... 9
e) Consolidated Statements of Cash Flows for the
Six Months ended September 30, 1995 and 1994............. 10
f) Notes to Consolidated Financial Statements -
September 30, 1995, March 31, 1995 and
September 30, 1994....................................... 11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................... 18
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INTENTIONALLY BLANK
<PAGE> 4
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
AMERCO AND CONSOLIDATED SUBSIDIARIES
Consolidated Balance Sheets
September 30, March 31, September 30,
ASSETS 1995 1995 1994
-------------------------------------
(unaudited) (audited) (unaudited)
(in thousands)
Cash and cash equivalents $ 33,283 35,286 41,882
Receivables 338,489 300,238 260,727
Inventories 51,402 50,337 47,691
Prepaid expenses 12,693 25,933 21,029
Investments, fixed maturities 800,481 705,428 701,220
Investments, other 139,681 135,220 97,727
Deferred policy acquisition costs 51,304 49,244 49,940
Other assets 18,757 30,057 18,192
Property, plant and equipment, at
cost:
Land 210,928 214,033 202,987
Buildings and improvements 738,535 735,624 710,680
Furniture and equipment 184,189 179,016 174,139
Rental trailers and other rental
equipment 258,264 245,892 225,498
Rental trucks 933,013 913,641 905,669
General rental items 49,581 51,890 54,131
--------- --------- ---------
2,374,510 2,340,096 2,273,104
Less accumulated depreciation 1,131,339 1,065,850 1,005,433
--------- --------- ---------
Total property, plant and
equipment 1,243,171 1,274,246 1,267,671
$ 2,689,261 2,605,989 2,506,079
========= ========= =========
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE> 5
September 30, March 31, September 30,
LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1995 1994
-------------------------------------
(unaudited) (audited) (unaudited)
(in thousands)
Liabilities:
Accounts payable and accrued
liabilities $ 150,198 127,613 149,940
Notes and loans 796,738 881,222 752,529
Policy benefits and losses, claims 475,220 475,187 464,883
and loss expenses payable
Liabilities from premium deposits 374,407 304,979 300,069
Cash overdraft 23,450 31,363 27,013
Other policyholders' funds and
liabilities 25,843 20,378 8,805
Deferred income 9,533 7,426 8,652
Deferred income taxes 92,008 71,037 85,404
--------- ------ ------
Stockholders' equity:
Serial preferred stock, with or
without par value, 50,000,000
shares authorized; 6,100,000
issued without par value and
outstanding as of September 30, 1995,
March 31, 1995 and September 30, 1994 - - -
Serial common stock, with or with-
out par value, 150,000,000 shares
authorized - - -
Series A common stock of $0.25 par
value, authorized 10,000,000 shares,
issued 5,762,495 shares as of
September 30, 1995 and March 31, 1995,
and 9,238,015 shares as of
September 30, 1994 1,441 1,441 2,309
Common stock of $0.25 par value,
authorized 150,000,000 shares, issued
34,237,505 shares as of September 30,
1995 and March 31, 1995, and 30,761,985
shares as of September 30, 1994 8,559 8,559 7,691
Additional paid-in capital 165,675 165,675 165,651
Foreign currency translation (10,609) (12,435) (10,027)
Unrealized gain(loss) on investments 6,771 (6,483) (3,615)
Retained earnings 605,616 561,589 577,523
--------- ------- -------
777,453 718,346 739,532
Less:
Cost of common shares in treasury,
(1,380,937 shares as of September 30,
1995 and 1,335,937 shares as of
March 31, 1995 and September 30, 1994) 11,457 10,461 10,461
Unearned employee stock
ownership plan shares 24,132 21,101 20,287
--------- ------- -------
Total stockholders' equity 741,864 686,784 708,784
Contingent liabilities and commitments
--------- ------- -------
$ 2,689,261 2,605,989 2,506,079
========= ========= =========
<PAGE> 6
AMERCO AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Earnings
Six Months ended September 30,
(Unaudited)
1995 1994
-------------------------
(in thousands except
per share data)
Revenues
Rental and other revenue $ 504,429 494,145
Net sales 102,675 97,688
Premiums 71,385 67,597
Net investment income 23,287 22,423
----------- -----------
Total revenues 701,776 681,853
Costs and expenses
Operating expense 353,185 325,364
Advertising expense (see note 7) 24,061 14,356
Cost of sales 58,001 53,288
Benefits and losses 68,099 66,279
Amortization of deferred acquisition
costs 7,799 5,676
Depreciation 76,275 74,755
Interest expense 35,554 33,297
----------- ----------
Total costs and expenses 622,974 573,015
Pretax earnings from operations 78,802 108,838
Income tax expense (28,293) (39,354)
----------- ----------
Net earnings $ 50,509 69,484
=========== ==========
Earnings per common share:
Net earnings $ 1.16 1.70
=========== ==========
Weighted average common shares outstanding 37,931,825 37,053,707
=========== ==========
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE> 7
AMERCO AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
Six Months ended September 30,
(Unaudited)
1995 1994
---------------------
(in thousands)
Series A common stock of $0.25 par
value: Authorized 10,000,000 shares,
issued 5,762,495 as of September 30, 1995
and 5,762,495 as of March 31, 1995 and
9,238,015 as of September 30, 1994
Beginning of period $ 1,441 1,438
Exchange for common stock - 871
------- -------
End of period 1,441 2,309
------- -------
Common stock of $0.25 par value:
Authorized 150,000,000 shares, issued
34,237,505 as of September 30, 1995,
and March 31, 1995 and 30,761,985
as of September 30, 1994
Beginning of period 8,559 8,562
Exchange for common stock - (871)
------- -------
End of period 8,559 7,691
------- -------
Additional paid-in capital:
Beginning and end of period 165,675 165,651
------- -------
Foreign currency translation:
Beginning of period (12,435) (11,152)
Change during period 1,826 1,125
------- -------
End of period (10,609) (10,027)
------- -------
Unrealized gain (loss) on investments:
Beginning of period (6,483) 679
Change during period 13,254 (4,294)
------- -------
End of period 6,771 (3,615)
------- -------
Retained earnings:
Beginning of period 561,589 514,521
Net earnings 50,509 69,484
Dividends paid to stockholders:
Preferred stock: ($1.06 per share
for 1995 and 1994, respectively) (6,482) (6,482)
------- -------
End of period 605,616 577,523
------- -------
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE> 8
AMERCO AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
Six Months ended September 30,
(Unaudited)
1995 1994
--------------------
(in thousands)
Less:
Treasury stock:
Beginning of period 10,461 10,461
Net increase (45,000 shares in 1995) 996 -
------- ------
End of period 11,457 10,461
------- ------
Unearned employee stock ownership
plan shares:
Beginning of period 21,101 17,451
Increase in loan 3,168 2,955
Proceeds from loan (137) (119)
------- ------
End of period 24,132 20,287
------- -------
Total stockholders' equity $ 741,864 708,784
======= =======
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE> 9
AMERCO AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Earnings
Quarters ended September 30,
(Unaudited)
1995 1994
----------------------
(in thousands except
per share data)
Revenues
Rental and other revenue $ 269,118 265,183
Net sales 49,559 46,386
Premiums 40,683 36,038
Net investment income 11,907 11,913
---------- ----------
Total revenues 371,267 359,520
Costs and expenses
Operating expense 178,939 166,822
Advertising expense (see note 7) 7,192 7,357
Cost of sales 29,042 25,738
Benefits and losses 40,858 39,867
Amortization of deferred acquisition
costs 4,871 2,592
Depreciation 38,582 37,473
Interest expense 16,722 16,659
---------- ----------
Total costs and expenses 316,206 296,508
Pretax earnings from operations 55,061 63,012
Income tax expense (19,729) (22,941)
---------- ----------
Net earnings $ 35,332 40,071
========== ==========
Earnings per common share:
Net earnings $ 0.85 1.00
========== ==========
Weighted average common shares outstanding 37,905,225 36,999,879
========== ==========
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE> 10
AMERCO AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Cash Flows
Six Months ended September 30,
(Unaudited)
1995 1994
--------------------
(in thousands)
Cash flows from operating activities:
Net earnings $ 50,509 69,484
Depreciation and amortization 84,339 82,684
Provision for losses on accounts
receivable 2,819 1,868
Net gain on sale of real and personal
property 581 132
Gain on sale of investments (2,970) (1,066)
Changes in policy liabilities and
accruals (3,334) 26,568
Additions to deferred policy
acquisition costs (11,954) (7,770)
Net change in other operating assets
and liabilities 23,954 27,705
-------- ---------
Net cash provided by operating activities 143,944 199,605
-------- ---------
Cash flows from investing activities:
Purchases of investments:
Property, plant and equipment (143,082) (255,231)
Fixed maturities (162,081) (86,291)
Real estate (5,629) (8)
Mortgage loans (7,384) (36,087)
Proceeds from sale of investments:
Property, plant and equipment 97,030 88,669
Fixed maturities 89,348 100,522
Real estate 570 459
Mortgage loans 17,573 5,374
Changes in other investments 1,186 (834)
-------- ---------
Net cash used by investing activities (112,469) (183,427)
-------- ---------
Cash flows from financing activities:
Net change in short-term borrowings (163,500) 16,250
Proceeds from notes 140,184 66,000
Loan to leveraged employee stock
ownership plan (3,168) (2,955)
Proceeds from leveraged employee stock
ownership plan 137 119
Principal payments on notes (61,168) (53,485)
Net change in cash overdraft (7,913) 454
Dividends paid (6,482) (6,482)
Purchase of treasury shares (996) -
Investment contract deposits 101,667 13,661
Investment contract withdrawals (32,239) (26,300)
-------- ---------
Net cash provided (used) by
financing activities (33,478) 7,262
-------- ---------
Increase (decrease) in cash and
cash equivalents (2,003) 23,440
Cash and cash equivalents at
beginning of period 35,286 18,442
-------- ---------
Cash and cash equivalents at
end of period $ 33,283 41,882
======== =========
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE> 11
AMERCO AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 1995, March 31, 1995 and September 30, 1994
(Unaudited)
1. PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the
parent corporation, AMERCO, and its subsidiaries, all of which
are wholly-owned. All material intercompany accounts and
transactions of AMERCO and its subsidiaries (herein called the
"Company" or the "consolidated group") have been eliminated.
The consolidated balance sheets as of September 30, 1995 and
1994, and the related consolidated statements of earnings,
changes in stockholders' equity and cash flows for the six
months ended September 30, 1995 and 1994 are unaudited; in the
opinion of management, all adjustments necessary for a fair
presentation of such financial statements have been included.
Such adjustments consisted only of normal recurring items.
Interim results are not necessarily indicative of results for
a full year.
The operating results and financial position of AMERCO's
consolidated insurance operations are determined on a quarter
lag. There were no effects related to intervening events
which would significantly affect consolidated position or
results of operations for the financial statements presented
herein.
The financial statements and notes are presented as permitted by
Form 10-Q and do not contain certain information included in
the Company's annual financial statements and notes.
Earnings per share are computed based on the weighted average
number of shares outstanding, excluding shares of the employee
stock ownership plan that have not been committed to be
released. Net income is reduced for preferred dividends.
Certain reclassifications have been made to the financial
statements for the six months ended September 30, 1994 to
conform with the current year's presentation.
<PAGE> 12
AMERCO AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Unaudited)
2. INVESTMENTS
A comparison of amortized cost to market for fixed maturities is
as follows (in thousands, except for par value):
June 30, 1995
- ------------------- Par Value Gross Gross Estimated
Consolidated or number Amortized unrealized unrealized market
Held-to-Maturity of shares cost gains losses value
------------------------------------------------------
U.S. treasury
securities
and government
obligations $ 20,355 $ 20,280 1,784 (5) 22,059
U.S. government
agency mortgage
backed securities $ 62,793 62,251 875 (2,444) 60,682
Obligations of
states and
political
subdivisions $ 32,035 31,560 1,931 (143) 33,348
Corporate
securities $ 186,613 191,434 4,005 (1,881) 193,558
Mortgage-backed
securities $ 126,457 124,776 2,616 (1,935) 125,457
Redeemable preferred
stocks 33 1,973 363 (7) 2,329
----------------------------------------
432,274 11,574 (6,415) 437,433
----------------------------------------
June 30, 1995
- -------------------- Gross Gross Estimated
Consolidated Amortized unrealized unrealized market
Available-for-Sale Par Value cost gains losses value
------------------------------------------------------
U.S. treasury
securities and
government
obligations $ 9,685 9,794 1,234 - 11,028
U.S. government
agency mortgage
backed securities $ 9,410 9,230 189 (118) 9,301
States,
municipalities
and political
subdivisions $ 2,385 2,353 36 (18) 2,371
Corporate
securities $ 263,727 264,511 10,477 (1,573) 273,415
Mortgage-backed
securities $ 70,044 70,315 2,863 (1,086) 72,092
-----------------------------------------
356,203 14,799 (2,795) 368,207
-----------------------------------------
Total $ 788,477 26,373 (9,210) 805,640
=========================================
<PAGE> 13
AMERCO AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Unaudited)
3. SUMMARIZED CONSOLIDATED FINANCIAL INFORMATION OF PONDEROSA
HOLDINGS, INC. AND ITS SUBSIDIARIES
A summary consolidated balance sheet (unaudited) for Ponderosa
Holdings, Inc. and its subsidiaries is presented below:
September 30,
1995 1994
----------------------
(in thousands)
Investments - fixed maturities $ 800,481 701,220
Other investments 117,940 97,727
Receivables 151,546 150,841
Deferred policy acquisition costs 51,304 49,940
Due from affiliate 22,603 (1,531)
Deferred federal income taxes 4,671 7,957
Other assets 8,099 18,600
--------------------
Total assets $ 1,156,644 1,024,754
====================
Policy liabilities and accruals $ 409,521 398,602
Unearned premiums 65,699 66,111
Premium deposits 374,407 300,069
Other policyholders' funds and
liabilities 28,263 14,613
--------------------
Total liabilities 877,890 779,395
Stockholder's equity 278,754 245,359
--------------------
Total liabilities and
stockholder's equity $ 1,156,644 1,024,754
====================
<PAGE> 14
AMERCO AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Unaudited)
3. SUMMARIZED CONSOLIDATED FINANCIAL INFORMATION OF PONDEROSA
HOLDINGS, INC. AND ITS SUBSIDIARIES, continued
A summarized consolidated income statement (unaudited) for
Ponderosa Holdings, Inc. and its subsidiaries is presented
below:
Six months ended September 30,
1995 1994
---------------------
(in thousands)
Premiums $ 76,442 76,865
Net investment income 23,516 22,498
Other income 4,471 3,245
---------------------
Total revenue 104,429 102,608
Benefits and losses 68,099 66,279
Amortization of deferred policy
acquisition costs 7,799 5,676
Other expenses 12,121 12,756
---------------------
Income from operations 16,410 17,897
Federal income tax expense (4,617) (5,675)
---------------------
Net income $ 11,793 12,222
=====================
4. CONTINGENT LIABILITIES AND COMMITMENTS
During the six months ended September 30, 1995, U-Haul Leasing &
Sales Co., a wholly-owned subsidiary of U-Haul International,
Inc., entered into eight transactions, whereby the Company
sold rental trucks and subsequently leased them back. AMERCO
has guaranteed $6,406,000 of residual values at September 30,
1995 on these assets at the end of the lease term. Following
are the lease commitments for the leases executed during the
six months ended September 30, 1995, which have a term of more
than one year (in thousands):
Year ended Lease
March 31, Commitments
------------------------
1996 $ 5,426
1997 9,297
1998 9,297
1999 9,297
2000 9,297
Thereafter 22,467
-------
$ 65,081
=======
See discussion related to the Shoen Litigation under Item 2.
Management's Discussion and Analysis of Financial Condition
and Results of Operations - Liquidity and Capital Resources and
under Part II, Item 1. Legal Proceedings.
<PAGE> 15
AMERCO AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Unaudited)
4. CONTINGENT LIABILITIES AND COMMITMENTS, continued
The Company is a defendant in a number of 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. The Company owns property
within two state hazardous waste sites in the State of
Washington. At this time, the remedial clean-up costs or
range of costs for such sites cannot be estimated.
Management's opinion is that none of these suits or claims
involving AMERCO and/or its subsidiaries is expected to result
in any material loss.
5. SUPPLEMENTAL CASH FLOWS INFORMATION
The (increase) decrease in receivables, inventories and accounts
payable and accrued liabilities net of other operating and
investing activities follows:
Six months ended September 30,
1995 1994
---------------------
(in thousands)
Receivables $ (35,299) (41,291)
=====================
Inventories $ (1,065) 1,321
=====================
Accounts payable and
accrued liabilities $ 22,585 23,758
=====================
Income taxes paid in cash amounted to $143,000 and $5,566,000 for
1995 and 1994, respectively.
Interest paid in cash amounted to $36,755,000 and $30,878,000 for
1995 and 1994, respectively.
6. RELATED PARTIES
Subsequent to March 31, 1995, the Company continued to loan
TWO SAC Self-Storage Corporation (TWO SAC) funds for the
purchase of an additional 33 self-storage properties.
Twenty-six of such self-storage properties were purchased from
the Company at a price equal to the Company's acquisition cost
plus capitalized costs. As of September 30, 1995, the outstanding
balance of TWO SAC's loans from the Company, including interest,
was $46,723,000. During the six months ended September 30, 1995,
principal payments of $218,000 and interest of $961,000 have been
received from TWO SAC. Mark V. Shoen, a major stockholder,
director and officer of the Company owns all of
the issued and outstanding voting common stock of TWO SAC.
The TWO SAC notes will be secured by senior and junior
mortgages and are expected to mature in 2004 or 2005, or on
demand. The Company anticipates that it will sell to TWO SAC
approximately 4 more properties that have been acquired by the
Company since June 1993.
<PAGE> 16
AMERCO AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Unaudited)
6. RELATED PARTIES, continued
During the six months ended September 30, 1995, the Company received
principal payments of $757,000, interest payments of $3,975,000,
and management fees of $527,000 from SAC Self-Storage
Corporation (SAC). As of September 30, 1995, the outstanding
balance SAC's loans from the Company, including interest was
$54,055,000. Mark V. Shoen, a major stockholder, director
and officer of the Company owns all of the issued and
outstanding voting common stock of SAC.
7. NEW ACCOUNTING STANDARDS
Statement of Financial Accounting Standards No. 114 - Accounting
by Creditors for Impairment of a Loan. 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 adopted this
statement during the first quarter of fiscal 1996, with no
material impact on its financial condition or results of
operations.
Statement of Financial Accounting Standards No. 121 -
Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of. Effective for fiscal
years beginning after December 15, 1995, the standard
establishes accounting standards for the impairment of long-
lived assets, certain identifiable intangibles, and goodwill
related to those assets to be held and used and for long-lived
assets and certain identifiable intangibles to be disposed of.
This Statement requires that long-lived assets and certain
identifiable intangibles to be held and used by an entity be
reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset
may not be recoverable. In performing the review for
recoverability, the entity should estimate the future cash
flows expected to result from the use of the asset and its
eventual disposition. If the sum of the expected future cash
flows (undiscounted and without interest charges) is less than
the carrying amount of the asset, an impairment loss is
recognized. Otherwise, an impairment loss is not recognized.
Measurement of an impairment loss for long-lived assets and
identifiable intangibles that an entity expects to hold and
use should be based on the fair value of the asset. The
Company has not completed an evaluation of the effect of this
standard.
Statement of Position 93-7, Reporting on Advertising Costs - as
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.
<PAGE> 17
AMERCO AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Unaudited)
7. NEW ACCOUNTING STANDARDS, continued
The Company had been recording deferred yellow page directory
costs and amortizing the costs over the duration of each listing.
The majority of listings last one year. The Company adopted this
statement effective April 1, 1995 recognizing additional
advertising expense of $8,647,000 upon implementation.
Other pronouncements issued by the Financial Standards Board with
future effective dates are either not applicable or not
material to the consolidated financial statements of the
Company.
8. SUBSEQUENT EVENTS
On October 18, 1995, the Company redeemed 3,343,076 shares of Common
Stock held by Maran, Inc. in exchange for approximately
$22,733,000 and paid approximately $41,352,000 to Mary Anna
Shoen Eaton in exchange for a full release of all claims
against the Company and the Director-Defendants, including all
claims asserted by her in the Shoen Litigation. See discussion
of the Shoen Litigation under Item 2. Management's Discussion
and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources and under Part II, Item 1. Legal
Proceedings.
On November 7, 1995, the Company declared a cash dividend of
$3,241,000 ($0.53125 per preferred share) to preferred
stockholders of record as of November 17, 1995.
<PAGE> 18
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
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 six months ended September
30, 1995 and 1994. Rental operations is composed of the operations of
U-Haul and Amerco Real Estate Company. Life insurance is composed of
the operations of Oxford Life Insurance Company (Oxford). Property
and casualty insurance is composed of the operations of Republic
Western Insurance Company (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 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>
Six months ended
September 30, 1995
Revenues:
Outside $ 602,687 24,265 74,824 - 701,776
$
Intersegment (270) 708 4,662 (5,100) -
--------- ------- ------- -------- ---------
Total revenues 602,417 24,973 79,486 (5,100) 701,776
========= ======= ======= ======== =========
Operating profit 97,676 6,838 9,572 270 114,356
========= ======= ======= ========
Interest expense 35,554
---------
Pretax earnings
from operations 78,802
=========
Identifiable assets
at September 30 1,845,370 563,138 593,506 (312,753) 2,689,261
========= ======= ======= ======== =========
Six months ended
September 30, 1994
Revenues:
Outside $ 588,897 19,682 73,274 - 681,853
Intersegment (41) 744 8,939 (9,642) -
--------- ------- ------- --------- ---------
Total revenues 588,856 20,426 82,213 (9,642) 681,853
========= ======= ======= ======== =========
Operating profit 124,197 6,295 11,602 41 142,135
========= ======= ======= ========
Interest expense 33,297
Pretax earnings ---------
from operations 108,838
=========
Identifiable assets
at September 30 1,733,767 462,229 577,127 (267,044) 2,506,079
========= ======= ======= ======== =========
</TABLE>
<PAGE> 19
SIX MONTHS ENDED SEPTEMBER 30, 1995 VERSUS SIX MONTHS ENDED
SEPTEMBER 30, 1994
U-Haul
U-Haul revenues consist of (i) total rental and other
revenue and (ii) net sales. Total rental and other revenue
increased by $9.0 million, approximately 1.8%, to $500.2 million in
the first six months of fiscal 1996. The increase in the first six
months of fiscal 1996 is primarily attributable to an increase in
net revenues from the rental of moving related equipment and
self-storage facilities which increased in the aggregate by $13.3
million to $512.1 million, as compared to $498.8 million in the
first six months of fiscal 1995. Moving related rental revenues
benefited from transactional growth (volume) within the truck
fleet. Revenues from the rental of self-storage facilities were
positively impacted by additional rentable square footage. Other
revenues decreased in the aggregate by $4.3 million.
Net sales revenues were $102.7 million in the first six
months of fiscal 1996, which represents an increase of
approximately 5.1% from the first six months of fiscal 1995 net
sales of $97.7 million. Revenue growth from the sale of moving
support items (i.e. boxes, etc.), hitches, and propane resulted in
a $5.3 million increase during the six month period, which was
offset by a $0.6 million decrease in revenue from gasoline sales
consistent with the Company's ongoing efforts to remove underground
storage tanks and gradually discontinue gasoline sales.
Cost of sales was $58.0 million in the first six months
of fiscal 1996, which represents an increase of approximately 8.8%
from $53.3 million for the same period in fiscal 1995. This
increase in cost of sales reflects a $3.8 million increase in
material costs from the sale of moving support items, hitches, and
propane reflecting higher sales levels and a $1.0 million increase
in allowances for inventory shrinkage and other inventory
adjustments.
Operating expenses increased to $346.4 million in the
first six months of fiscal 1996 from $322.3 million in the first
six months of fiscal 1995, an increase of approximately 7.5%. The
change from the prior year primarily reflects a $19.7 million
increase in rental equipment maintenance costs which reflects
rental fleet expansion and transactional growth and a $6.2 million
increase in personnel costs due to the increase in rental and
sales activity. All other operating expense categories decreased in
the aggregate by $4.4 million, approximately 6.5%, to $62.5
million.
Advertising expense increased to $24.1 million in the first
six months of fiscal 1996 from $14.4 million in the first six months
of fiscal 1995. The increase primarily reflects a one-time expense
of $8.7 million recognized during the first quarter of fiscal 1996,
due to the adoption of Statement of Position 93-7 which requires
immediate recognition of advertising costs not qualifying as direct-
response.
Depreciation expense for the six month period was $76.3
million, as compared to $74.8 million during the same period of the
prior year.
Oxford - Life Insurance
Premiums from Oxford's reinsurance lines before
intercompany eliminations were $8.9 million for the six months
ended June 30, 1995, or 69.1% of total premiums for that period.
This represents an increase of $0.7 million, or 8.5% over the same
period in 1994. Reinsurance premiums are primarily from term life
insurance, matured deferred annuity contracts, and credit insurance
business. This increase in premiums is primarily attributable to
the recent (fourth quarter 1994) reinsurance agreement of credit
insurance business.
<PAGE> 20
Premiums from Oxford's direct lines before intercompany
eliminations were $4.0 million for the six months ended June 30,
1995, an increase of $1.7 million from 1994. This increase in
direct premium is primarily attributable to the credit insurance
business ($3.0 million in premiums). Oxford's direct business
related to group life and disability coverage issued to employees
of the Company for the six months ended June 30, 1995 accounted for
approximately 7.4% of premiums. Other direct lines, including the
credit insurance business, accounted for approximately 23.5% of
Oxford's premiums for the six months ended June 30, 1995.
Net investment income before intercompany eliminations
was $8.0 million and $7.7 million for the six months June 30, 1995
and 1994, respectively. This increase is primarily due to
increasing margins on the interest sensitive business. Gains on
the disposition of fixed maturity investments were $2.9 million and
$1.2 million for the six months ended June 30, 1995 and 1994,
respectively. Oxford had $1.0 million of other income for both of
the six month periods ended June 30, 1995 and 1994, respectively.
Benefits and expenses incurred were $18.1 million for the
six months ended June 30, 1995, an increase of 28.3% over 1994.
Comparable benefits and expenses incurred for 1994 were $14.1
million. This increase is primarily due to death and disability
benefits incurred and an increase in the amortization of deferred
acquisition costs.
Operating profit before intercompany eliminations
increased by $0.5 million, or approximately 7.9%, in 1995 to $6.8
million, primarily due to an increase in gains on the disposition
of fixed maturity investments that was partially offset by the
amortization of deferred acquisitions costs.
RWIC - Property and Casualty
RWIC gross premium writings for the six months ended June
30, 1995 were $81.4 million as compared to $93.6 million in the
first six months of 1994. The rental industry market accounts for
a significant share of total premiums, approximately 41.5% and
40.5% in the first six months of 1995 and 1994, respectively.
These writings include U-Haul customers, fleetowners and U-Haul as
well as other rental industry insureds with similar
characteristics. RWIC continues underwriting professional
reinsurance via broker markets. Premiums in this area decreased
during the first six months of 1995 to $27.9 million, or 34.3% of
total gross premiums, from comparable 1994 figures of $38.7
million, or 41.4% of total premiums. This decrease can be
primarily attributed to RWIC electing not to renew several treaties
because of inadequate pricing and market conditions. Premium
writings in selected general agency lines were 16.9% of total gross
written premiums in 1995 as compared to 13.9% in 1994. RWIC
expanded its direct business in 1995 to include multiple peril
coverage for a variety of commercial properties and businesses.
These premiums accounted for 6.3% of the total gross written
premium during the first six months of 1995.
Net earned premiums decreased $2.9 million, or 4.4%, to
$63.5 million for the six months ended June 30, 1995, compared with
premiums of $66.4 million for the six months ended June 30, 1994.
The premium decrease was primarily due to one time changes in
premium earning methodology and timing differences related to run-
off and start up programs.
<PAGE> 21
Underwriting expenses incurred were $69.9 million for the
six months ended June 30, 1995, a decrease of $0.7 million or 1.0%
over 1994. Comparable underwriting expenses incurred for the first
six months of 1994 were $70.6 million. The decrease is due to a
reduction in acquisition expenses, which is the result of lower
commission rates on start up programs, offset by an increase in
administrative expenses and taxes related to increased
concentration in states with higher premium tax rates.
Net investment income was $15.3 million for the six
months ended June 30, 1995, an increase of 3.4% over the 1994 level
of net investment income of $14.8 million. The marginal increase
is the result of the shift in types of securities held in the
portfolio.
RWIC completed the first six months of 1995 with income
before tax expense of $9.6 million as compared to $11.6 million for
the comparable period ended June 30, 1994. This represents a
decrease of $2.0 million, or 17.2% over 1994. Deterioration in the
level of anticipated underwriting results in the Company's assumed
reinsurance and rental industry liability lines were offset by
improved results in its general agency lines.
Interest Expense
Interest expense increased by $2.3 million to $35.6
million for the six months ended September 30, 1995, as compared to
$33.3 million for the six months ended September 30, 1994. The
increase was attributable to higher average debt levels
outstanding.
Consolidated Group
As a result of the foregoing, pretax earnings of $78.8
million were realized in the six months ended September 30, 1995,
as compared to $108.8 million for the same period in 1994. After
providing for income taxes, net earnings for the six months ended
September 30, 1995 were $50.5 million, as compared to $69.5 million
for the same period of the prior year.
<PAGE> 22
QUARTERLY RESULTS
The following table presents unaudited quarterly results
for the ten quarters in the period beginning April 1, 1993 and
ending September 30, 1995. The Company believes that all necessary
adjustments have been included in the amounts stated below, when
read in conjunction with the consolidated financial statements
included herein, to present fairly and in accordance with generally
accepted accounting principles, the selected quarterly information.
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.
Quarter Ended
-----------------------------------------------
Sep 30, Dec 31, Mar 31, Jun 30 Sep 30,
1994 1994 1995 1995 <F3> 1995 <F3>
-----------------------------------------------
(in thousands, except per share data)
Total revenues $359,520 295,888 260,282 330,509 371,267
Net earnings (loss) 40,071 1,907 (11,359) 15,177 35,332
Net earnings (loss)
per common share 1.00 (.04) (.44) .31 .85
<F1>, <F2>
Quarter Ended
-----------------------------------------------
Jun 30, Sep 30, Dec 31, Mar 31, Jun 30,
1993 1993 1993 1994 1994
-----------------------------------------------
(in thousands, except per share data)
Total revenues $291,348 324,968 267,448 251,091 322,333
Net earnings (loss) 17,359 30,601 1,799 (9,575) 29,413
Net earnings (loss)
per common share .45 .79 (.02) (.33) .71
<F1>,<F2>
________________
<F1>For the quarters ended December 31, 1993, March 31, June 30,
September 30, December 31, 1994, March 31, June 30, and
September 30, 1995, net earnings (loss) per common share
amounts were computed after giving effect to the dividend on
the Company's Series A 8 1/2% Preferred Stock.
<F2>Reflects the adoption of Statement of Position 93-6,
"Employers' Accounting for Employee Stock Ownership Plans."
<F3>Reflects the adoption of Statement of Position 93-7,
"Reporting on Advertising Costs."
<PAGE> 23
QUARTER ENDED SEPTEMBER 30, 1995 VERSUS QUARTER ENDED SEPTEMBER 30,
1994
U-Haul
U-Haul revenues consist of (i) total rental and other
revenue and (ii) net sales. Total rental and other revenue
increased by $3.0 million, approximately 1.1%, to $266.3 million in
the second quarter of fiscal 1996. This increase reflects a $7.3
million increase in net revenues from the rental of moving related
equipment and self-storage facilities primarily reflecting growth
in truck rental transactions and additional rentable square
footage.
Net sales revenues were $49.6 million in the second
quarter of fiscal 1996, which represents an increase of
approximately 6.8% from the second quarter of fiscal 1995 net sales
of $46.4 million. Revenue growth from the sale of moving support
items (i.e. boxes, etc.), hitches, and propane resulted in a $3.1
million increase during the quarter, which was offset by a $0.3
million decrease in gasoline sales consistent with the Company's
ongoing efforts to remove underground storage tanks and gradually
discontinue gasoline sales.
Cost of sales totaled $29.0 million in the second quarter
of fiscal 1996, which represents an increase of 12.8% from $25.7
million for the same period in fiscal 1995. This increase in cost
of sales reflects a $2.0 million rise in material costs from the
sale of moving support items and propane which can be primarily
attributed to higher sales levels and a $1.0 million increase in
allowances for inventory shrinkage and other inventory adjustments.
Operating expenses increased to $177.9 million in the
second quarter of fiscal 1996 from $168.5 million in the second
quarter of fiscal 1995, an increase of approximately 5.6%. The
change from the prior year is almost entirely due to higher rental
equipment maintenance costs reflecting an increase in fleet size
and transaction levels. In the aggregate, all other operating
expense categories decreased by $4.3 million in the second quarter
of fiscal 1996 reflecting efforts to contain expense growth during
this period.
Depreciation expense for the three month period was $38.6
million, as compared to $37.5 million during the same period of the
prior year.
Oxford - Life Insurance
Premiums from Oxford's reinsurance lines before
intercompany eliminations were $4.9 million for the quarter ended
June 30, 1995, or 70.9% of total premiums for that period. This
represents an increase of $0.5 million over the same period in 1994
or an increase of 11.4%. Reinsurance premiums are primarily from
term life insurance, matured deferred annuity contracts, and credit
insurance business. This increase is primarily attributable to the
recent (4th quarter 1994) reinsurance agreement of credit insurance
business.
Premiums from Oxford's direct lines before intercompany
elimination's were $2.0 million for the quarter ended June 30,
1995, an increase of $0.1 million. This increase in direct premium
is primarily attributable to the credit insurance business.
Oxford's direct business related to group life and disability
coverage issued to employees of the Company for the
quarter ended June 30, 1995 accounted for approximately 6.8% of
premiums. Other direct lines, including the credit business,
<PAGE> 24
accounted for approximately 22.3% of Oxford's premiums for the
quarter ended June 30, 1995.
Net investment income before intercompany eliminations
was $4.2 million and $4.1 million for the quarter ended June 30,
1995 and 1994, respectively. This increase is primarily due to
increasing margins on the interest sensitive business. Gains on
the disposition of fixed maturity investments were $2.8 million and
$1.0 million for the quarters ended June 30, 1995 and 1994,
respectively. Oxford had $0.5 million of other income, for both of
the quarters ended June 30, 1995 and 1994, respectively.
Benefits and expenses incurred were $10.1 million for the
quarter ended June 30, 1995, an increase of 34.7% over 1994.
Comparable benefits and expenses incurred for 1994 were $7.5
million. This increase is primarily due to disability benefits
incurred and an increase in the amortization of deferred
acquisition costs, primarily as a result of the increase in
realized capital gains on fixed maturity investments.
Operating profit before intercompany eliminations
decreased by $0.2 million, or approximately 4.6% as compared to
$4.2 million for the quarters ended June 30, 1995 and 1994,
respectively.
RWIC - Property and Casualty
RWIC gross premium writings for the quarter ended June
30, 1995 were $45.2 million as compared to $48.0 million in the
second quarter of 1994. The rental industry market accounts for a
significant share of total premiums, approximately 60.1% and 59.5%
in the second quarters of 1995 and 1994, respectively. These
writings include U-Haul customers, fleetowners and U-Haul as well
as other rental industry insureds with similar characteristics.
RWIC continues underwriting professional reinsurance via broker
markets. Premiums in this area decreased during the second quarter
of 1995 to $7.7 million, or 17.1% of total gross premiums, from
comparable 1994 figures of $11.7 million, or 24.4% of total
premiums. This decrease can be primarily attributed to RWIC
electing not to renew several treaties because of inadequate
pricing and market conditions. Premium writings in selected
general agency lines were 16.5% of total gross written premiums in
1995 as compared to 12.2% in 1994. RWIC expanded its direct
business in 1995 to include multiple peril coverage for a variety
of commercial properties and businesses. These premiums accounted
for 6.3% of the total gross written premium during second quarter
1995.
Net earned premiums increased $3.2 million, or 8.8% to
$39.5 million for the quarter ended June 30, 1995, compared with
premiums of $36.3 million for the quarter ended June 30, 1994. The
premium increase was primarily due to timing differences related to
run-off and start up programs.
Underwriting expenses incurred were $42.4 million for the
quarter ended June 30, 1995, an increase of $2.5 million, or 6.3%
over 1994. Comparable underwriting expenses incurred for the first
quarter of 1994 were $39.9 million. The increase is commensurate
with the increase in premiums.
Net investment income was $7.7 million for the quarter
ended June 30, 1995, a decrease of 2.5% over 1994 net investment
income of $7.9 million.
<PAGE> 25
RWIC completed the second quarter of 1995 with income
before tax expense of $4.5 million as compared to $4.6 million for
the comparable period ended June 30, 1994. This represents a
decrease of $0.1 million, or 2.2% over 1994.
Interest Expense
Interest expense was unchanged at $16.7 million for the
quarter ended September 30, 1995. Higher average debt levels were
offset by a reduction in the average cost of borrowed funds.
Consolidated Group
As a result of the foregoing, pretax earnings of $55.1
million were realized in the quarter ended September 30, 1995, as
compared to $63.0 million for the same period in 1994. After
providing for income taxes, net earnings for the quarter ended
September 30, 1995 were $35.3 million, as compared to $40.1 million
for the same period of the prior year.
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 September 30,
1995, net property, plant and equipment represented approximately
67.3% of total U-Haul assets and approximately 46.1% of
consolidated assets. In the first six months of fiscal 1996,
capital expenditures were $143.1 million, as compared to $255.2
million in the first six months of fiscal 1995. The decrease in
capital expenditures from the prior year is due to a decrease in
new rental truck acquisitions. These acquisitions were funded with
internally generated funds from operations and debt financings.
Cash flows from operations were $145.9 million in the
first six months of fiscal 1996, as compared to $162.6 million in
the first six months of fiscal 1995. The decrease of $16.7 million
is primarily due to a decrease in net change of operating assets
and liabilities, specifically an increase in receivables and
accounts payable and accrued liabilities and with a decrease in
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.
Cash provided (used) by operating activities were ($2.2)
million and $9.8 million for the six months ended June 30, 1995 and
1994, respectively. Cash flows from new annuity reinsurance
agreements increased investment contract deposits as well as the
purchase of fixed maturities. Cash flows from financing activities
<PAGE> 26
of new annuity reinsurance agreements were approximately $90.0
million for the six months ended June 30, 1995. In addition to
cash flow from operating and financing activities, a substantial
amount of liquid funds is available through Oxford's short-term
portfolio. At June 30, 1995 and 1994, short-term investments
amounted to $15.1 million and $9.1 million, respectively.
Management believes that the overall sources of liquidity will
continue to meet foreseeable cash needs.
Stockholder's equity of Oxford, increased to $99.6
million in 1995 from $91.0 million in 1994. Ponderosa holds all of
the common stock of RWIC.
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 $400,000. In addition, the amount of
dividends that can be paid to stockholders by insurance companies
domiciled in the State of Arizona is limited. Any dividend in
excess of the limit requires prior regulatory approval. 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 operating activities were $0.6 million
and $12.4 million for the six months ended June 30, 1995 and June
30, 1994, respectively. The change is due to decreased net income
and reinsurance losses payable, offset by a decrease in accounts
receivable as compared to a large increase during the first half of
1994.
RWIC's short-term investment portfolio was $5.4 million
at June 30, 1995. 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 accurately schedule cash needs.
RWIC maintains a diversified investment portfolio,
primarily in bonds at varying maturity levels. Approximately 96.7%
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 96.3% of total liabilities.
Stockholder's equity increased 6.5% from $168.1 million
at December 31, 1994 to $179.1 million at June 30, 1995. RWIC
considers current stockholder's equity to be adequate to support
future growth and absorb unforeseen risk events. RWIC does not use
debt or equity issues to increase capital and therefore has no
exposure to capital market conditions. RWIC paid no stockholder's
dividends during the six months ended June 30, 1995.
<PAGE> 27
Consolidated Group
At September 30, 1995, total notes and loans payable
outstanding was $796.7 million as compared to $881.2 million at
March 31, 1995, and $752.5 million at September 30, 1994.
During each of the fiscal years ending March 31, 1996,
1997, and 1998, U-Haul estimates gross capital expenditures will
average approximately $350 million as a result of the expansion of
the rental fleet and self-storage operation. 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 $450 million. Management estimates that U-Haul will
fund approximately 60% of these requirements with internally
generated funds, including proceeds from the disposition of older
trucks and other asset sales. The remainder of the anticipated
capital expenditures are expected to be financed through existing
credit facilities, new debt placements and equity offerings.
Credit Agreements
The Company's 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 enters into sale and
leaseback transactions. As of September 30, 1995, the Company had
$796.7 million in total notes and loans payable outstanding and
unutilized committed lines of credit of approximately $405.0
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. In addition, these
credit agreements contain provisions that could result in a
required prepayment upon a "change in control" of the Company. At
September 30, 1995 the Company was in compliance with these
covenants.
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 a 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.
Shoen Litigation
As disclosed in Part II, Item 1. Legal Proceedings, a
judgment has been entered in the Shoen Litigation against five of
the Company's current directors and one former director. The five
current directors 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. Those defendants, in cooperation with the Company,
filed plans of reorganization (collectively, the Plan) in the
United States Bankruptcy Court for the District of Arizona all of
which proposed the same funding and treatment of the plaintiffs'
<PAGE> 28
claims resulting from the judgment in the Shoen Litigation. Under
the Plan, on October 18, 1995, the Company redeemed 3,343,076 shares
of Common Stock held by Maran, Inc., a Nevada corporation, in exchange
for approximately $22.7 million and entered into a Settlement
Agreement with Mary Anna Shoen Eaton (Shoen Eaton) whereby in exchange
for approximately $41.4 million, Shoen Eaton released the current
directors and the Company from any liability relating to the
Shoen Litigation. As a result of the foregoing, the judgment in the
amount of approximately $461.8 million has been reduced to
approximately $377.2 million.
Under the Plan, the Company will transfer to a settlement
trust (the Trust), property having a stipulated or adjudicated
value of approximately $276.6 million. Certain of the plaintiffs
will receive a trust certificate representing an undivided,
fractional beneficial interest in the Trust. The property
transferred to the Trust under the Plan will consist of (i) $193.0
million in the Company's Series D Floating Rate Preferred Stock;
(ii) a 1993 REMIC certificate held by the Company with a face value
of approximately $12.5 million evidencing a pool of 61 commercial
mortgage loans which are secured by mortgages or deeds of trust on
60 self-storage properties; (iii) mortgage notes held by the
Company or one or more of its subsidiaries with an aggregate
principal balance of approximately $13.8 million; (iv) real
property held free and clear by the Company or its subsidiaries
having a total fair value of approximately $47.2 million; and (v)
approximately $10.1 million in cash. In addition, under the Plan,
the plaintiffs that are record holders of Common Stock will receive
approximately $101.4 million in the Company's Series B 8.25%
Preferred Stock in exchange for 14,911,900 shares of Common Stock
held by such plaintiffs. Upon the funding of the Trust, and the
exchange of the plaintiffs' Common Stock for the Series B 8.25%
Preferred Stock, the judgment will be satisfied.
The bankruptcy court commenced consideration of the Plan
during November of 1995. There is no assurance that the Plan will
be confirmed by the bankruptcy court or that the Plan, as confirmed,
will operate as described above. Because of the Plan's complexity,
because the Plan has not yet been confirmed, and because the Company
has not finalized the accounting and tax treatment of the Plan, the
Company is unable to determine with certainty the Plan's impact
on the Company's financial condition, results of operations, cash
flows, or capital expenditure plans. However, as a
result of funding the Plan, the Company is likely to incur
additional costs in the future in the form of dividends on
preferred stock and/or interest on borrowed funds. For example, if
the Plan, as confirmed, operates as described above, dividends on
the Series B 8.25% Preferred Stock and on the Series D Floating
Rate Preferred Stock (at current interest rates), will aggregate
approximately $22.6 million per year. In addition, the Company's
outstanding Common Stock would be reduced by an additional
14,911,900 shares. While the Plan, if confirmed, could reduce the
Company's net income, the Company does not expect earnings per
common share to be adversely affected by the Plan. However, many
uncertainties remain about the Plan, including the tax and
accounting treatments of the payments to be made by the Company
under the Plan. Accordingly, the Plan, as confirmed, could result
in material changes in stockholders' equity and earnings per share.
No provision has been made in the Company's financial statements for
any payments to be made to the plaintiffs or to the Trust pursuant
to the Plan. See Part II, Item 1. Legal Proceedings.
<PAGE> 29
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
AMERCO
___________________________________
(Registrant)
Dated: January 22, 1996 By: /S/ GARY B. HORTON
___________________________________
Gary B. Horton, Treasurer
(Principal Financial Officer)
