<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(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, 1997
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 [ ].
22,614,087 shares of AMERCO Common Stock, $0.25 par value, were
outstanding at November 13, 1997.
5,385 shares of U-Haul International, Inc. Common Stock, $0.01 par
value, were outstanding at November 13, 1997. 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, 1997,
March 31, 1997 and September 30, 1996................... 4
b) Consolidated Statements of Earnings for the Six
months ended September 30, 1997 and 1996................ 6
c) Consolidated Statements of Changes in Stockholders'
Equity for the Six months ended September 30, 1997
and 1996................................................ 7
d) Consolidated Statements of Earnings for the
Quarters ended September 30, 1997 and 1996.............. 8
e) Consolidated Statements of Cash Flows for the Six
months ended September 30, 1997 and 1996................ 9
f) Notes to Consolidated Financial Statements -
September 30, 1997, March 31, 1997 and
September 30, 1996...................................... 10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations......................... 17
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders......... 26
Item 6. Exhibits and Reports on Form 8-K............................ 26
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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 1997 1997 1996
------------------------------------
(unaudited) (audited) (unaudited)
(in thousands)
Cash and cash equivalents $ 33,831 41,752 32,380
Receivables 249,992 238,523 311,480
Inventories 72,273 65,794 54,718
Prepaid expenses 23,927 17,264 11,060
Investments, fixed maturities 856,383 859,694 879,699
Investments, other 149,757 127,306 162,661
Deferred policy acquisition costs 47,505 48,598 56,171
Other assets 71,948 72,997 61,428
---------------------------------
Property, plant and equipment, at
cost:
Land 209,944 209,803 214,853
Buildings and improvements 822,767 814,744 800,760
Furniture and equipment 205,045 199,126 191,826
Rental trailers and other rental
equipment 181,337 170,407 172,678
Rental trucks 1,053,326 947,911 950,209
---------------------------------
2,472,419 2,341,991 2,330,326
Less accumulated depreciation 1,116,032 1,094,925 1,077,193
---------------------------------
Total property, plant and
equipment 1,356,387 1,247,066 1,253,133
---------------------------------
$ 2,862,003 2,718,994 2,822,730
=================================
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE> 5
September 30, March 31, September 30,
LIABILITIES AND STOCKHOLDERS' EQUITY 1997 1997 1996
--------------------------------------
(unaudited) (audited) (unaudited)
(in thousands)
Liabilities:
Accounts payable and accrued
liabilities $ 106,471 131,099 153,732
Notes and loans 1,059,044 983,550 940,282
Policy benefits and losses, claims
and loss expenses payable 485,415 469,134 485,932
Liabilities from premium deposits 427,556 433,397 435,789
Cash overdraft 21,113 23,606 22,740
Other policyholders' funds and
liabilities 26,073 30,966 31,711
Deferred income 35,202 35,247 36,694
Deferred income taxes 46,785 9,675 62,820
---------------------------------
Stockholders' equity:
Serial preferred stock, with or
without par value, 50,000,000
shares authorized -
Series A preferred stock, with no
par value, 6,100,000 shares issued
and outstanding as of September 30, 1997,
March 31, 1997 and September 30, 1996 - - -
Series B preferred stock, with no
par value, 100,000 shares issued
and outstanding as of September 30, 1997,
March 31, 1997 and September 30, 1996 - - -
Serial common stock, with or
without par value, 150,000,000
shares authorized -
Series A common stock of $0.25 par
value, 10,000,000 shares authorized,
5,762,495 shares issued as of
September 30, 1997, March 31, 1997,
and September 30, 1996 1,441 1,441 1,441
Common stock of $0.25 par value,
150,000,000 shares authorized,
36,487,505 shares issued as of
September 30, 1997 and March 31, 1997,
and 34,237,505 shares issued as of
September 30, 1996 9,122 9,122 8,559
Additional paid-in capital 336,933 337,933 264,378
Foreign currency translation adjustment (14,653) (14,133) (12,451)
Unrealized gain(loss) on investments 4,229 4,411 315
Retained earnings 697,569 644,009 680,279
---------------------------------
1,034,641 982,783 942,521
Less:
Cost of common shares in treasury,
(19,635,913 shares as of September 30,
1997 and March 31, 1997, 15,599,609
shares as of September 30, 1996) 359,723 359,723 266,315
Unearned employee stock
ownership plan shares 20,574 20,740 23,176
---------------------------------
Total stockholders' equity 654,344 602,320 653,030
Contingent liabilities and commitments
---------------------------------
$ 2,862,003 2,718,994 2,822,730
=================================
<PAGE> 6
AMERCO AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Earnings
Six months ended September 30,
(Unaudited)
1997 1996
-----------------------
(in thousands except
per share data)
Revenues
Rental revenue $ 576,846 554,421
Net sales 108,465 107,192
Premiums 79,845 72,749
Net investment income 23,636 25,140
-----------------------
Total revenues 788,792 759,502
Costs and expenses
Operating expense 461,830 446,058
Cost of sales 61,654 62,639
Benefits and losses 82,033 66,716
Amortization of deferred acquisition
costs 7,123 8,057
Depreciation, net 39,273 31,739
-----------------------
Total costs and expenses 651,913 615,209
Earnings from operations 136,879 144,293
Interest expense, net of interest
income of $7,064 and $18,637 in
1997 and 1996, respectively 33,644 17,714
-----------------------
Pretax earnings from operations 103,235 126,579
Income tax expense (35,005) (46,833)
-----------------------
Earnings from operations before
extraordinary loss on early
extinguishment of debt 68,230 79,746
Extraordinary loss on early
extinguishment of debt, net (4,138) (2,004)
-----------------------
Net earnings $ 64,092 77,742
=======================
Earnings per common share:
Earnings from operations before
extraordinary loss on early
extinguishment of debt $ 2.63 2.43
Extraordinary loss on early
extinguishment of debt, net (.19) (.07)
-----------------------
Net earnings $ 2.44 2.36
=======================
Weighted average common shares outstanding 21,884,614 29,845,247
=======================
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)
1997 1996
-------------------
(in thousands)
Series A common stock of $0.25 par value:
10,000,000 shares authorized, 5,762,495
shares issued as of September 30, 1997,
March 31, 1997 and September 30, 1996
Beginning and end of period $ 1,441 1,441
-------------------
Common stock of $0.25 par value:
150,000,000 shares authorized, 36,487,505
shares issued as of September 30, 1997 and
March 31, 1997, and 34,237,505 shares
issued as of September 30, 1996
Beginning and end of period 9,122 8,559
-------------------
Additional paid-in capital:
Beginning of period 337,933 165,756
Issuance of preferred stock (1,000) 98,622
-------------------
End of period 336,933 264,378
-------------------
Foreign currency translation:
Beginning of period (14,133) (11,877)
Change during period (520) (574)
-------------------
End of period (14,653) (12,451)
-------------------
Unrealized gain (loss) on investments:
Beginning of period 4,411 11,097
Change during period (182) (10,782)
-------------------
End of period 4,229 315
-------------------
Retained earnings:
Beginning of period 644,009 609,019
Net earnings 64,092 77,742
Dividends paid to stockholders:
Preferred stock Series A ($1.06 per share) (6,482) (6,482)
Preferred stock Series B($40.50 per share) (4,050) -
-------------------
End of period 697,569 680,279
-------------------
Less Treasury stock:
Beginning of period 359,723 111,118
Net increase (8,390,532 shares in 1996) - 155,197
-------------------
End of period 359,723 266,315
-------------------
Less Unearned employee stock ownership
plan shares:
Beginning of period 20,740 23,329
Increase in loan 3 -
Proceeds from loan (169) (153)
-------------------
End of period 20,574 23,176
-------------------
Total stockholders' equity $ 654,344 653,030
===================
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE> 8
AMERCO AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Earnings
Quarters ended September 30,
(Unaudited)
1997 1996
-----------------------
(in thousands except
per share data)
Revenues
Rental revenue $ 308,597 293,504
Net sales 51,746 51,213
Premiums 44,380 41,594
Net investment income 12,048 12,138
-----------------------
Total revenues 416,771 398,449
Costs and expenses
Operating expense 241,152 235,403
Cost of sales 30,257 31,058
Benefits and losses 46,934 43,458
Amortization of deferred acquisition
costs 3,663 4,035
Depreciation, net 18,694 12,460
-----------------------
Total costs and expenses 340,700 326,414
Earnings from operations 76,071 72,035
Interest expense, net of interest
income of $3,586 and $7,754 in
1997 and 1996, respectively 16,956 9,743
-----------------------
Pretax earnings from operations 59,115 62,292
Income tax expense (20,083) (22,551)
-----------------------
Earnings from operations before
extraordinary loss on early
extinguishment of debt 39,032 39,741
Extraordinary loss on early
extinguishment of debt, net (4,138) (2,004)
-----------------------
Net earnings $ 34,894 37,737
=======================
Earnings per common share:
Earnings from operations before
extraordinary loss on early
extinguishment of debt $ 1.54 1.29
Extraordinary loss on early
extinguishment of debt, net (.19) (.07)
-----------------------
Net earnings $ 1.35 1.22
=======================
Weighted average common shares outstanding 21,890,072 27,675,192
=======================
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE> 9
AMERCO AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Cash Flows
Six months ended September 30,
(Unaudited)
1997 1996
--------------------
(in thousands)
Cash flows from operating activities:
Net earnings $ 64,092 77,742
Depreciation and amortization 53,334 48,582
Provision for losses on accounts
receivable 2,350 1,841
Net (gain) loss on sale of real and
personal property (465) (6,980)
Gain (loss) on sale of investments 25 50
Changes in policy liabilities and
accruals 29,244 17,688
Additions to deferred policy
acquisition costs (5,709) (10,469)
Net change in other operating assets
and liabilities (19,808) (13,530)
--------------------
Net cash provided by operating activities 123,063 114,924
--------------------
Cash flows from investing activities:
Purchases of investments:
Property, plant and equipment (284,035) (134,247)
Fixed maturities (66,883) (88,295)
Equity investments (24,500) (2,596)
Mortgage loans (11,858) (8,944)
Real estate - (767)
Proceeds from sale of investments:
Property, plant and equipment 134,320 200,785
Fixed maturities 68,693 68,895
Real estate 194 389
Mortgage loans 10,623 12,943
Changes in other investments 3,083 (40,510)
--------------------
Net cash provided (used) by investing
activities (170,363) 7,653
--------------------
Cash flows from financing activities:
Net change in short-term borrowings 176,000 (177,500)
Proceeds from notes - 337,500
Debt issuance costs (506) (4,125)
Loan to leveraged Employee Stock
Ownership Plan (3) -
Proceeds from leveraged Employee Stock
Ownership Plan 169 153
Extraordinary loss on early
extinguishment of debt, net (4,138) (2,004)
Principal payments on notes (100,506) (217,938)
Issuance of preferred stock (1,000) 98,622
Net change in cash overdraft (2,493) (9,419)
Dividends paid (10,532) (6,482)
Treasury stock acquisitions - (155,197)
Investment contract deposits 11,726 42,950
Investment contract withdrawals (29,338) (27,925)
--------------------
Net cash provided (used) by
financing activities 39,379 (121,365)
--------------------
Increase (decrease)in cash and
cash equivalents (7,921) 1,212
Cash and cash equivalents at
beginning of period 41,752 31,168
--------------------
Cash and cash equivalents at
end of period $ 33,831 32,380
====================
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE> 10
AMERCO AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 1997, March 31, 1997 and September 30, 1996
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
AMERCO, a Nevada corporation (the Company), is the holding
company for U-Haul International, Inc. (U-Haul), Amerco Real Estate
Company (AREC), Republic Western Insurance Company (RWIC) and
Oxford Life Insurance Company (Oxford).
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 have been eliminated.
The consolidated balance sheets as of September 30, 1997 and
1996, and the related consolidated statements of earnings, changes
in stockholders' equity and cash flows for the quarters ended
September 30, 1997 and 1996 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 one quarter
lag. There were no effects related to intervening events which
would significantly affect consolidated financial 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.
Property, plant and equipment are carried at cost and are
depreciated on the straight-line and accelerated methods over the
estimated useful lives of the assets. Maintenance is charged to
operating expenses as incurred, while renewals and betterments are
capitalized. Major overhaul costs are amortized over the estimated
period benefited. Gains and losses on dispositions are netted
against depreciation expense when realized.
Earnings per share are computed by dividing net earnings after
deduction of preferred stock dividends by the weighted average
number of common shares outstanding, excluding shares of the
employee stock ownership plan that have not been committed to be
released. Preferred dividends include undeclared or unpaid
dividends of the Company.
Certain reclassifications have been made to the financial
statements for the six months ended September 30, 1996 to conform
with the current year's presentation.
<PAGE> 11
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:
June 30, 1997
------------- Par Value Gross Gross Estimated
Consolidated or number Amortized unrealized unrealized market
Held-to-Maturity of shares cost gains losses value
------------------------------------------------------
(in thousands)
U.S. treasury
securities
and government
obligations $ 16,630 $ 16,506 1,015 (25) 17,496
U.S. government
agency mortgage-
backed securities $ 47,372 47,112 384 (1,719) 45,777
Obligations of
states and
political
subdivisions $ 29,220 29,031 1,106 (12) 30,125
Corporate
securities $ 166,440 170,250 2,870 (1,646) 171,474
Mortgage-backed
securities $ 110,431 109,008 1,390 (1,537) 108,861
Redeemable preferred
stocks 1,207 33,636 433 (180) 33,889
----------------------------------------
405,543 7,198 (5,119) 407,622
----------------------------------------
June 30, 1997
------------- Par Value Gross Gross Estimated
Consolidated or number Amortized unrealized unrealized market
Available-for-Sale of shares cost gains losses value
------------------------------------------------------
U.S. treasury
securities and
government
obligations $ 11,685 11,762 816 - 12,578
U.S. government
agency mortgage-
backed securities $ 28,350 27,863 460 (60) 28,263
States,
municipalities
and political
subdivisions $ 12,400 12,573 510 (84) 12,999
Corporate
securities $ 298,957 302,139 6,092 (2,309) 305,922
Mortgage-backed
securities $ 75,635 75,061 1,573 (470) 76,164
Redeemable preferred
stocks 561 14,620 331 (37) 14,914
----------------------------------------
444,018 9,782 (2,960) 450,840
----------------------------------------
Total $ 849,561 16,980 (8,079) 858,462
========================================
In February 1997, the Company, through its insurance
subsidiaries, invested in the equity of a limited partnership in a
Texas-based self-storage corporation. RWIC invested $13,500,000 in
exchange for a 27.3% limited partnership and Oxford invested
$11,000,000 in exchange for a 22.2% limited partnership. U-Haul is
a 50% owner of a corporation which is a general partner in the
Texas-based self-storage corporation. The Company has a
$10,000,000 note receivable from the corporation.
<PAGE> 12
AMERCO AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Unaudited)
3. SUMMARIZED CONSOLIDATED FINANCIAL INFORMATION OF INSURANCE
SUBSIDIARIES
A summary consolidated balance sheet for RWIC is presented
below:
June 30,
---------------------
1997 1996
---------------------
(in thousands)
Investments - fixed maturities $ 412,140 394,750
Other investments 24,014 13,678
Receivables 117,613 135,339
Deferred policy acquisition costs 9,217 11,833
Due from affiliate 32,521 36,696
Deferred federal income taxes 16,851 17,320
Other assets 9,867 13,369
-------------------
Total assets $ 622,223 622,985
===================
Policy liabilities and accruals $ 348,252 335,130
Unearned premiums 55,235 74,266
Other policyholders' funds and liabilities 22,166 20,896
-------------------
Total liabilities 425,653 430,292
Stockholder's equity 196,570 192,693
-------------------
Total liabilities and
stockholder's equity $ 622,223 622,985
===================
A summarized consolidated income statement for RWIC is
presented below:
Six months ended June 30,
-------------------------
1997 1996
-------------------------
(in thousands)
Premiums $ 78,996 64,754
Net investment income 15,280 15,157
---------------------
Total revenue 94,276 79,911
Benefits and losses 69,918 55,283
Amortization of deferred policy
acquisition costs 4,311 4,929
Other expenses 14,224 9,998
---------------------
Income from operations 5,823 9,701
Federal income tax expense (1,645) (2,957)
---------------------
Net income $ 4,178 6,744
=====================
<PAGE> 13
AMERCO AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Unaudited)
3. SUMMARIZED CONSOLIDATED FINANCIAL INFORMATION OF INSURANCE
SUBSIDIARIES, continued
A summary consolidated balance sheet for Oxford is presented
below:
June 30,
---------------------
1997 1996
---------------------
(in thousands)
Investments - fixed maturities $ 444,243 484,949
Other investments 102,894 85,196
Receivables 14,527 14,761
Deferred policy acquisition costs 38,288 44,338
Due from affiliate 121 307
Other assets 2,402 1,585
-------------------
Total assets $ 602,475 631,136
===================
Policy liabilities and accruals $ 81,928 76,735
Premium deposits 427,556 435,789
Other policyholders' funds and liabilities 5,108 11,810
Deferred taxes 10,033 9,455
-------------------
Total liabilities 524,625 533,789
Stockholder's equity 77,850 97,347
-------------------
Total liabilities and
stockholder's equity $ 602,475 631,136
===================
A summarized consolidated income statement for Oxford is
presented below:
Six months ended June 30,
-------------------------
1997 1996
-------------------------
(in thousands)
Premiums $ 12,700 14,302
Net investment income 8,909 9,385
--------------------
Total revenue 21,609 23,687
Benefits and losses 12,115 11,433
Amortization of deferred policy
acquisition costs 2,812 3,128
Other expenses 2,776 3,538
--------------------
Income from operations 3,906 5,588
Federal income tax expense (1,085) (1,977)
--------------------
Net income $ 2,821 3,611
====================
<PAGE> 14
AMERCO AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Unaudited)
4. CONTINGENT LIABILITIES AND COMMITMENTS
During the six months ended September 30, 1997, a subsidiary
of U-Haul entered into sixteen transactions, whereby the Company
sold rental trucks and subsequently leased back. The Company has
guaranteed $22,202,000 of residual values for these assets at the
end of the respective lease terms. U-Haul also entered into one
transaction, whereby the Company sold and subsequently leased back
computer equipment. Following are the lease commitments for the
leases executed during the six months ended September 30, 1997,
which have a term of more than one year (in thousands):
Year ended Lease
March 31, Commitments
------------------------------
1998 $ (5,900)
1999 (7,977)
2000 (7,977)
2001 2,020
2002 9,562
Thereafter 33,149
-------
$ 22,877
=======
During the six months ended September 30, 1997, the Company
has reduced future lease commitments by $83,713,000 through early
termination of certain leases. Residual value guarantees were also
reduced by $14,301,000 in connection with the terminations.
In the normal course of business, the Company is a defendant
in a number of suits and claims. The Company is also a party to
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 a
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,
1997 1996
---------------------
(in thousands)
Receivables $ (14,736) 22,396
=====================
Inventories $ (6,479) (8,827)
=====================
Accounts payable and
accrued liabilities $ (24,420) 1,921
=====================
Income taxes paid in cash amounted to $1,159,000 and
$1,694,000 for the six months ended September 30, 1997 and 1996,
respectively.
Interest paid in cash amounted to $44,609,000 and $36,173,000
for the six months ended September 30, 1997 and 1996, respectively.
<PAGE> 15
AMERCO AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Unaudited)
6. EARNINGS PER SHARE
Earnings per share are computed based on the weighted average
number of shares outstanding for the year and quarterly periods,
excluding shares of the employee stock ownership plan that have not
been committed to be released. Preferred dividends include
undeclared or unpaid dividends of the Company. Net income is
reduced for preferred dividends for purposes of the calculation.
The following table reflects the calculation of the earnings
per share (in thousands except per share data):
Six months ended
September 30, Quarter ended
1997 1996 1997 1996
---------------------- ---------------------
Earnings from operations
before extraordinary
loss on early extinguishment
of debt $ 68,230 79,746 39,032 39,741
Less dividends
on preferred shares 10,571 7,137 5,316 3,897
---------------------- ----------------------
57,659 72,609 33,716 35,844
Extraordinary loss on early
extinguishment of debt (4,138) (2,004) (4,138) (2,004)
---------------------- ----------------------
Net earnings for per
share calculation $ 53,521 70,605 29,578 33,840
====================== ======================
Net earnings for per share:
Earnings from operations
before extraordinary loss
on early extinguishment
of debt $ 2.63 2.43 1.54 1.29
Extraordinary loss on early
extinguishment of debt, net (.19) (.07) (.19) (.07)
---------------------- ----------------------
Net earnings $ 2.44 2.36 1.35 1.22
====================== ======================
Weighted average common
shares outstanding 21,884,614 29,845,247 21,890,072 27,675,192
====================== ======================
7. RELATED PARTIES
During the six months ended September 30, 1997, a subsidiary
held various senior and junior notes with SAC Holding Corporation
and its subsidiaries (SAC Holdings). The voting common stock of
SAC Holdings is held by Mark V. Shoen, a major stockholder of the
Company.
The Company's subsidiary received principal payments of
$911,000 and interest payments of $3,513,000 from SAC Holdings
during the period.
The Company currently manages the properties owned by SAC
Holdings pursuant to a management agreement, under which the
Company receives a management fee equal to 6% of the gross receipts
from the properties. The Company received management fees of
$916,000 during the six months ended September 30, 1997. The
management fee percentage is consistent with the fees received by
the Company for other properties managed by the Company.
<PAGE> 16
AMERCO AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Unaudited)
8. NEW ACCOUNTING STANDARDS
On April 1, 1995, the Company implemented Statement of
Position 93-7, "Reporting on Advertising Costs", 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 Company is
currently reviewing its implementation procedures.
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.
9. SUBSEQUENT EVENTS
In October 1997, the Company issued $300,000,000 of Bond
Backed Asset Trust Certificates. The net proceeds will be used to
prepay floating rate indebtedness of the Company under revolving
credit agreements.
On November 4, 1997, the Company declared a cash dividend of
$3,241,000 ($0.53125 per preferred share) to preferred stockholders
of record as of November 14, 1997.
On September 11, 1997, Oxford entered into an agreement to purchase
all of the issued and outstanding shares of Encore Financial, Inc. and
its subsidiaries (Encore) for $5,760,000. Encore's primary subsidiary
is North American Insurance Company (NAI). NAI is an insurance company
domiciled in the state of Wisconsin whose premium volume is primarily
derived from the sale of credit life and disability products, as well
as health insurance. This purchase is subject to approval by regulatory
authorities in Wisconsin and Louisiana.
<PAGE> 17
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 primary industry segments: Moving and
Storage Operations, Property and Casualty Insurance and Life
Insurance. Moving and Storage Operations is composed of the
operations of U-Haul, which consists of the rental of
trucks, automobile-type trailers and self-storage space and
sales of related products and services and AREC. Property
and Casualty Insurance is composed of the operations of
RWIC, which operates in various property and casualty lines.
Life Insurance is composed of the operations of Oxford,
which operates in various life, accident and health and
annuity lines. The Company's U-Haul Moving and Storage
Operations are seasonal and proportionately more of the
Company's revenues and net earnings are generated in the
first and second quarters of each fiscal year (April through
September).
Moving and Property and Adjustments
Storage Casualty Life and
Operations Insurance Insurance Eliminations Consolidated
------------------------------------------------------------
(in thousands)
Six months ended
September 30, 1997
Revenues:
Outside $ 684,828 83,031 20,933 - 788,792
Intersegment - 11,245 676 (11,921) -
-----------------------------------------------------------
Total revenues 684,828 94,276 21,609 (11,921) 788,792
===========================================================
Operating profit $ 127,150 5,823 3,906 - 136,879
===========================================
Interest expense 33,644
Pretax earnings -------
from operations $ 103,235
=======
Identifiable assets $1,961,218 622,223 602,475 (323,913) 2,862,003
===========================================================
Moving and Property and Adjustments
Storage Casualty Life and
Operations Insurance Insurance Eliminations Consolidated
------------------------------------------------------------
(in thousands)
Six months ended
September 30, 1996
Revenues:
Outside $ 662,149 74,095 23,258 - 759,502
Intersegment - 5,816 429 (6,245) -
-----------------------------------------------------------
Total revenues 662,149 79,911 23,687 (6,245) 759,502
===========================================================
Operating profit $ 129,004 9,701 5,588 - 144,293
===========================================
Interest expense 17,714
Pretax earnings -------
from operations $ 126,579
=======
Identifiable assets $1,903,461 622,985 631,136 (334,852) 2,822,730
===========================================================
<PAGE> 18
SIX MONTHS ENDED SEPTEMBER 30, 1997 VERSUS SIX MONTHS ENDED
SEPTEMBER 30, 1996
Moving and Storage Operations
Revenues consist of rental revenue and net sales.
Rental revenue increased by $22.4 million,
approximately 4.0%, to $576.8 million in the first six
months of fiscal 1998. Transactional growth and improved
pricing within the truck fleet contributed toward the
increase in rental revenue.
Net sales revenues were $108.5 million in the first six
months of fiscal 1998, which represents an increase of
approximately 1.2% from the first six months of fiscal 1997
net sales of $107.2 million. Revenue growth from the sale
of moving support items (i.e. boxes, etc.) and propane
resulted in a $3.5 million increase during the six month
period, which was partially offset by a $0.9 million
decrease in revenue from gasoline sales.
Cost of sales was $61.7 million in the first six months
of fiscal 1998, which represents a decrease of approximately
1.4% from $62.6 million for the same period in fiscal 1997.
Cost of sales related to material costs from the sale of
hitches and moving support items remained consistent during
the first six months of fiscal 1998 and 1997 even though
sales increased.
Operating expense increased to $456.8 million in the
first six months of fiscal 1998 from $438.8 million in the
first six months of fiscal 1997, an increase of
approximately 4.1%. The change from the prior year
primarily reflects a $5.9 million increase in lease expense
reflecting increased leasing activity and a $6.7 million
increase in insurance costs due to increased cost of risk
and increased rental activity. All other operating
expense categories increased in the aggregate by $5.4
million, approximately 1.5% in conjunction with higher
rental and sales costs.
Depreciation expense for the first six months of fiscal
1998 was $39.7 million, as compared to $38.7 million in the
same period of the prior year. Fiscal 1997 net gain (loss)
on disposition of real and personal property was $7.0
million compared to $0.4 million for the same period of fiscal
1998.
Property and Casualty
RWIC's gross premium writings for the six months ended
June 30, 1997 were $89.1 million, as compared to $89.4
million in the six months ended June 30, 1996. This
represents a decrease of $0.3 million, or 0.3%. As in
prior periods, the rental industry market accounts for a
significant share of total premiums, approximately 51.4% and
45.6% in the first six months of 1997 and 1996,
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 increased during the first six months
of 1997 to $30.6 million or 34.4% of total gross premiums,
from comparable 1996 figures of $28.9 million or 32.3% of
total gross premiums. This increase can be attributed to an
increase in new business written. Premium writings in
selected general agency lines were 2.3% of total gross
written premiums for the period ended June 30, 1997 as
compared to 13.8% in the same period of 1996. This decrease
resulted from the cancellation of a general agency agreement
in November 1996. RWIC continues its direct multiple peril
coverage of various commercial properties and businesses in
1997. These premiums accounted for 11.9% of the total gross
written premiums for the six months ended June 30, 1997 as
compared to 8.2% for the same period in 1996. The increase
is the result of planned business expansion.
Net earned premiums increased $14.2 million, or 22.0%,
to $79.0 million for the six months ended June 30, 1997,
compared with premiums of $64.8 million for the same period
ended June 30, 1996. The premium increase was primarily due
to planned business expansion in the rental industry and
direct multiple peril markets, offset by a decrease in
general agency lines. As mentioned previously, the decrease
in general agency lines resulted from the cancellation of a
general agency agreement.
Underwriting expenses incurred were $88.8 million for
the six months ended June 30, 1997, an increase of $18.3
million, or 25.9% over 1996. Comparable underwriting
expenses incurred for the first six months of 1996 were
$70.6 million. The increase is attributed to increased
commission expense and losses incurred. Losses incurred
increased in the rental industry, general agency lines, and
assumed treaty reinsurance segments, offset by a decrease in
the direct multiple peril markets.
Net investment income was $15.3 million for the period
ended June 30, 1997, an increase of 0.7% over 1996 net
investment income of $15.2 million. The marginal increase
resulted from a shift in investment type to preferred stock.
<PAGE> 19
RWIC completed the six months ended June 30, 1997 with
income before tax expense of $5.8 million as compared to
$9.7 million for the same period ended June 30, 1996. This
represents a decrease of $3.9 million, or 40.2% under 1996.
Life Insurance
Premiums from Oxford's reinsurance lines before
intercompany eliminations were $8.7 million for the six
months ended June 30, 1997, a decrease of $1.9 million or
approximately 17.9% under 1996 and accounted for 68.5% of
Oxford's premiums in 1997. These premiums are primarily from
term life insurance and deferred annuity contracts that have
matured. Decreases in premiums are primarily from these matured
reinsurance contracts.
Premiums from Oxford's direct lines before intercompany
eliminations were $4.0 million for the six months ended June
30, 1997, an increase of $0.3 million or 8.1% from the prior
year. This increase in direct premium is primarily
attributable to the Company's disability and group life
business. Oxford's direct business related to group life
and disability coverage issued to employees of the Company
for the six months ended June 30, 1997 accounted for
approximately 10.0% of premiums. Other direct lines,
including credit life and health business, accounted for
approximately 21.5% of Oxford's premiums in 1997.
Net investment income before intercompany eliminations
was $8.9 million and $9.4 million for the six months ended
June 30, 1997 and 1996, respectively. This decrease is due
to a lower asset base resulting from a dividend paid to
Oxford's parent.
Benefits and expenses incurred were $17.6 million for
the six months ended June 30, 1997 as compared to $17.7
million for the six months ended June 30, 1996.
Operating profit before tax and before intercompany
elimination decreased by $1.7 million or approximately 30.4%
in 1997 to $3.9 million.
On September 11, 1997, Oxford entered into an agreement
to purchase all of the issued and outstanding shares of
Encore Financial, Inc. and its subsidiaries (Encore) for
$5,760,000. Encore's primary subsidiary is North American
Insurance Company (NAI). NAI is an insurance company
domiciled in the state of Wisconsin whose premium volume is
primarily derived from the sale of credit life and
disability products, as well as health insurance. The
purchase will provide Oxford with additional marketing and
administrative tools to substantially increase direct
written premium in these markets. This purchase is subject
to approval by regulatory authorities in Wisconsin and
Louisiana.
Interest Expense, net
Interest expense increased by $4.3 million to $40.7
million for the six months ended September 30, 1997, as
compared to $36.4 million for the six months ended September
30, 1996. The increase can be attributed to higher average
debt levels outstanding during the current year.
The decline in interest income reflects a reduced level
in interest income for mortgage notes on storage properties
sold at the end of the first quarter of fiscal 1997.
Extraordinary Loss on Extinguishment of Debt
During the second quarter of fiscal 1998, the Company
extinguished $76.0 million of 10.27% interest-bearing notes
originally due in fiscal 1999 through fiscal 2002. This
resulted in an extraordinary loss of $4.1 million, net of
tax of $2.3 million ($0.19 per share).
During the second quarter of fiscal 1997, the Company
extinguished $76.3 million of debt and $86.2 million of long-
term notes originally due in fiscal 1997 through fiscal
1999. This resulted in an extraordinary loss of $2.3
million, net of tax of $1.4 million ($0.09 per share).
Consolidated Group
As a result of the foregoing, pretax earnings of $103.2
million were realized in the six months ended September 30,
1997, as compared to $126.6 million for the same period in
1996. After providing for income taxes and an extraordinary
loss from the extinguishment of debt, net earnings for the
six months ended September 30, 1997 were $64.1 million, as
compared to $77.7 million for the same period of the prior
year.
<PAGE> 20
QUARTERLY RESULTS
The following table presents unaudited quarterly results for the
ten quarters in the period beginning April 1, 1995 and ending
September 30, 1997. 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
of the Company. The Company's U-Haul rental operations are
seasonal and proportionally more of the Company's revenues and net
earnings from its U-Haul rental operations are generated in the first
and second quarters of each fiscal year (April through September).
The operating results for the periods presented are not necessarily
indicative of results for any future period (in thousands except for
per share data).
Quarter Ended
------------------------
Jun 30 Sep 30
1997 1997
------------------------
Total revenues $ 372,021 416,771
Earnings from operations
before extraordinary loss
on early extinguishment
of debt (4) 29,198 39,032
Net earnings 29,198 34,894
Weighted average common
shares outstanding 21,879,156 21,890,072
Earnings from operations
before extraordinary loss
on early extinguishment
of debt per common share 1.09 1.54
Net earnings per
common share (1)(4) 1.09 1.35
Quarter Ended
----------------------------------------------
Jun 30 Sep 30 Dec 31 Mar 31
1996 1996 1996 1997
----------------------------------------------
Total revenues $ 361,053 398,449 320,583 308,105
Earnings from operations
before extraordinary loss
on early extinguishment
of debt (3) 40,005 39,741 (9,538) (16,024)
Net earnings (loss) 40,005 37,737 (9,853) (16,024)
Weighted average common
shares outstanding (2) 32,015,301 27,675,192 20,359,873 21,868,241
Earnings from operations
before extraordinary loss
on early extinguishment
of debt per common share (3) 1.15 1.29 (0.72) (0.97)
Net earnings (loss) per
common share (1) (2) (3) 1.15 1.22 (0.74) (0.97)
Quarter Ended
----------------------------------------------
Jun 30 Sep 30 Dec 31 Mar 31
1995 1995 1995 1996
----------------------------------------------
Total revenues $ 340,331 381,746 313,063 298,656
Net earnings (loss) 15,177 35,332 7,701 2,184
Weighted average common
shares outstanding (2) 37,958,426 37,931,825 36,796,961 32,554,458
Net earnings (loss) per
common share (1) (2) 0.31 0.85 0.13 (0.04)
________________
(1)Net earnings (loss) per common share amounts were computed after giving
effect to the dividends on the Company's Preferred Stock.
(2)Reflects the acquisition of treasury shares acquired pursuant to the Shoen
Litigation as discussed in Note 14 of Notes to Consolidated Financial
Statements in Item 8 of the Company's Form 10-K for the year ended March 31,
1997.
<PAGE> 21
(3)During the second quarter of fiscal 1997, the Company extinguished $76.3
million of debt and $86.2 million of long-term notes originally due in fiscal
1997 through fiscal 1999. This resulted in an extraordinary loss of $2.3
million, net of tax of $1.4 million ($0.09 per share).
(4)During the second quarter of fiscal 1998, the Company extinguished $76.0
million of 10.27% interest-bearing notes originally due in fiscal 1999
through fiscal 2002. This resulted in an extraordinary loss of $4.1 million,
net of tax of $2.3 million ($0.19 per share).
<PAGE> 22
QUARTER ENDED SEPTEMBER 30, 1997 VERSUS QUARTER ENDED
SEPTEMBER 30, 1996
Moving and Storage Operations
Revenues consist of rental revenue and net sales.
Rental revenue increased by $15.1 million,
approximately 5.1%, to $308.6 million in the second quarter
of fiscal 1998. This increase reflects higher in-town
utilization and improved one-way pricing from the rental of
moving-related equipment.
Net sales were $51.7 million in the second quarter of
fiscal 1998, which represents an increase of 1.0% from the
second quarter of fiscal 1997 net sales of $51.2 million.
Revenue growth from the sale of moving support items (i.e.
boxes, etc.) and propane resulted in a $1.7 million
increase during the quarter, which was offset by a $0.5
million decrease in gasoline sales.
Cost of sales was $30.3 million in the second quarter
of fiscal 1998, which represents a decrease of 2.6% from
$31.1 million for the same period in fiscal 1997.
Operating expense increased to $237.6 million in the
second quarter of fiscal 1998 from $227.5 million in the
second quarter of fiscal 1997, an increase of approximately
4.4%. Marginal increases in most operating expense
categories were offset by reduced personnel expense.
Depreciation expense for the second quarter of fiscal
1998 was $19.2 million, as compared to $19.9 million in the
same period of the prior year. Net gain (loss) on disposition
of real and personal property was $7.5 million for the second
quarter of fiscal 1997 compared to $0.5 million for the same
period of fiscal 1998.
Property and Casualty
RWIC's gross premium writings for the quarter ended
June 30, 1997 were $54.9 million as compared to $41.4
million in the second quarter of 1996. The rental industry
market accounts for a significant share of total premiums,
approximately 58.6% and 66.9% in the second quarters of 1997
and 1996, respectively. These writings include U-Haul, U-
Haul customers and fleetowners as well as other rental
industry insureds with similar characteristics. RWIC
continues underwriting professional reinsurance via broker
markets. Premiums in this area increased during the second
quarter of 1997 to $15.8 million, or 28.8% of total gross
premiums, from comparable 1996 figures of $4.7 million, or
11.4% of total gross premiums. Premiums in selected general
agency lines accounted for a 1.1% share of written premiums
in 1997 as compared to a 12.1% share in 1996. This decrease
resulted from the cancellation of a general agency agreement
in November 1996. RWIC continued its direct multiple peril
coverage of various commercial properties and businesses in
1997. These premiums accounted for 11.4% of total gross
written premium during the second quarter 1997, as compared
to 9.5% in 1996. This increase is the result of planned
business expansion.
Net earned premiums increased to $44.5 million for the
quarter ended June 30, 1997, compared with $39.5 million for
the quarter ended June 30, 1996. The premium increase was
primarily due to planned business expansion in the rental
industry and direct multiple peril markets, offset by a
decrease in general agency lines. As mentioned previously,
the decrease in general agency lines resulted from the
cancellation of a general agency agreement.
Underwriting expenses incurred were $51.2 million for
the quarter ended June 30, 1997, an increase of $7.6
million, or 17.4% over 1996. The increase is attributed to
increased commission expense and losses incurred. Losses
incurred increased in the rental industry and direct
multiple peril markets, offset by a decrease in the assumed
treaty reinsurance segment. The increased commission
expense resulted from the increases for the direct multiple
peril and assumed treaty reinsurance lines.
Net investment income was $8.0 million for the quarter
ended June 30, 1997, an increase of 8.1% over 1996 net
investment income of $7.4 million. The increase over 1996
resulted from increased cash flow from operations.
RWIC completed the second quarter of 1997 with income
before tax expense of $0.8 million as compared to $3.7
million for the comparable period ended June 30, 1996. This
represents a decrease of $2.9 million, or 78.4% under 1996.
Increased premium earnings and investment income were offset
by increased underwriting expenses, as discussed above.
<PAGE> 23
Life Insurance
Premiums from Oxford's reinsurance lines before
intercompany eliminations were $4.8 million for the quarter
ended June 30, 1997, a decrease of $0.6 million or
approximately 11.1% under 1996 and accounted for 70.5% of
Oxford's premiums in the quarter ended June 30, 1997. These
premiums are primarily from term life insurance and deferred
annuity contracts that have matured. Decreases in premiums
are primarily from these matured reinsurance agreements.
Premiums from Oxford's direct lines before intercompany
eliminations were $2.0 million in the quarter ended June 30,
1997, an increase of $0.2 million or 11.1% from the same
period of the prior year. This increase in direct premium
is primarily attributable to the Company's disability and
group life business. Oxford's direct business related to
group life and disability coverage issued to employees of
the Company accounted for approximately 9.3% of premiums.
Other direct lines, including credit life and health
business, accounted for approximately 20.2% of Oxford's
premium in the quarter ended June 30, 1997.
Net investment income before intercompany eliminations
was $4.5 million for the quarters ended June 30, 1997 and
1996.
Benefits and expenses incurred were $9.2 million for
the quarter ended June 30, 1997, a decrease of 7.1% over
1996. Comparable benefits and expenses incurred for the
quarter ended June 30, 1996 were $9.9 million. This
decrease is primarily due to decreases in accident and
health benefits, commissions and general expenses partially
offset by increases in death and annuity benefits.
Operating profit before tax and intercompany
eliminations decreased by $0.7 million or approximately
26.9% in the quarter ended June 30, 1997 to $1.9 million,
primarily due to a decrease in premium income and increase
in death and annuity benefits.
Interest Expense, net
Net interest expense was $17.0 million for the quarter
ended September 30, 1997 versus $9.7 million in the prior
year's second quarter. Higher average debt levels and a
decrease in interest income contributed to higher net
interest expense.
Extraordinary Loss on Extinguishment of Debt
During the second quarter of fiscal 1998, the Company
extinguished $76.0 million of 10.27% interest-bearing notes
originally due in fiscal 1999 through fiscal 2002. This
resulted in an extraordinary loss of $4.1 million, net of
tax of $2.3 million ($0.19 per share).
During the second quarter of fiscal 1997, the Company
extinguished $76.3 million of debt and $86.2 million of long-
term notes originally due in fiscal 1997 through fiscal
1999. This resulted in an extraordinary loss of $2.3
million, net of tax of $1.4 million ($0.09 per share).
Consolidated Group
As a result of the foregoing, pretax earnings of $59.1
million were realized during the quarter ended September 30, 1997,
as compared to $62.3 million for the same period in 1996. After
providing for income taxes and extraordinary losses from the
extinguishment of debt, net earnings for the quarter ended
September 30, 1997 were $34.9 million, as compared to $37.7 million
for the same period of the prior year.
<PAGE> 24
LIQUIDITY AND CAPITAL RESOURCES
Moving and Storage Operations
To meet the needs of its customers, U-Haul must
maintain a large inventory of fixed asset rental items. At
September 30, 1997, net property, plant and equipment
represented approximately 69.2% of total U-Haul assets and
approximately 47.4% of consolidated assets. In the first
two quarters of fiscal 1998, capital expenditures were
$284.0 million, as compared to $134.2 million in the first
two quarters of fiscal 1997. These expenditures primarily
reflect expansion of the rental truck fleet, purchase of
trucks previously leased and real property acquisitions.
The capital needs required to fund these acquisitions were
funded with internally generated funds from operations, debt
and lease financings.
Cash flows from operations were $106.9 million in the
first two quarters of fiscal 1998, as compared to $104.5
million in the first two quarters of fiscal 1997. For
fiscal 1998, increased revenues were offset by an increase
in receivables and prepaid expenses, and a decrease in
accounts payable and accrued liabilities. In fiscal 1997,
cash flow from operations was impacted by the sale of
mortgage notes receivable and an increase in other assets.
At September 30, 1997, total notes and loans payable
outstanding were $1,059.1 million as compared to $983.6
million at March 31, 1997 and $940.3 million at September
30, 1996. This increase was primarily due to early
termination of $104.5 million of truck lease terminations.
Property and Casualty
Cash flows provided (used) by operating activities were
$1.7 million and $(12.5) million for the six months ended
June 30, 1997 and June 30, 1996, respectively. This change
is due to decreased due from affiliates offset by an
increase in accounts receivable, paid losses recoverable and
other liabilities, as well as an increase in loss and
expense reserve and a smaller unearned premium decrease than
that for the six months ended June 30, 1996.
The short-term investment portfolio was $1.5 million at
June 30, 1997. This balance reflects funds in transition
from maturity proceeds to long-term investments. The
structure of the long-term portfolio is designed to match
future liability cash needs. Capital and operating budgets
allow RWIC to schedule cash needs in accordance with
investment and underwriting proceeds.
RWIC maintains a diversified securities investment
portfolio, primarily in bonds at varying maturity levels.
Approximately 94.9% of the portfolio consists of investment
grade securities. The maturity distribution is designed to
provide sufficient liquidity to meet future cash needs.
Current liquidity remains strong, with RWIC having 2.5% more
invested assets than total liabilities.
Stockholder's equity increased 2.4% from $192.3 million
at December 31, 1996 to $196.6 at June 30, 1997. 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.
Life Insurance
Oxford's primary sources of cash are premiums, deferred
annuity sales 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 flows provided by operating activities were $14.5
million and $20.9 million for the six months ended June 30,
1997 and 1996, respectively. In 1997, cash flows
provided (used) by financing activities were approximately
$(17.6) million. During 1996 cash flows provided by
financing activities were $11.1 million. Cash flows from
deferred annuity sales are a component of financing
activities and result in the purchase of fixed maturities,
which are a component of investing activities. In addition
to cash flows from operating and financing activities, a
substantial amount of liquid funds is available through
Oxford's short-term portfolio. At June 30, 1997 and 1996,
short-term investments amounted to $4.5 million and $9.5
million, respectively. Management believes that the overall
sources of liquidity will continue to meet foreseeable cash
needs.
<PAGE> 25
Stockholder's equity of Oxford decreased to $77.9
million in 1997 from $97.3 million in 1996 as the result of
a dividend of $30.0 million paid to Oxford's parent on
December 31, 1996.
Applicable laws and regulations of the State of Arizona
require the Company's insurance subsidiaries to maintain
minimum capital and surplus determined in accordance with
statutory accounting practices in the amount of $600,000.
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. Statutory surplus which
can be distributed as dividends without regulatory approval
is zero at June 30, 1997. These restrictions are not
expected to have a material adverse effect on the ability of
the Company to meet its cash obligations.
Consolidated Group
During each of the fiscal years ending March 31, 1998,
1999 and 2000, U-Haul estimates gross capital expenditures
will average approximately $250-$300 million as a result of
the expansion of the rental truck fleet and self-storage
locations. This level of capital expenditures, combined
with an average of approximately $75 million in annual long-
term debt maturities during this same period, are expected
to create annual average funding needs of approximately $325-
$375 million. Management estimates that U-Haul will fund
virtually all of these capital expenditure requirements with
internally generated funds. The remainder, if any, of the
anticipated capital expenditures and maturing debt will be
funded through existing credit facilities, new debt
placements, lease fundings 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, 1997, the Company had $1,059.1 million in
total notes and loans payable outstanding and unutilized
lines of credit of approximately $180.0 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 September 30, 1997, the Company was in
compliance with these covenants.
The Company is further restricted 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 any 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.
<PAGE> 26
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The 1997 Annual Meeting of Stockholders was held August 22, 1997.
At the 1997 Annual Meeting of Stockholders, John M. Dodds and James P.
Shoen were elected to serve until the 2001 Annual Meeting of
Stockholders; Richard J. Herrera was elected to fill a vacated seat
until the 2000 Annual Meeting of Stockholders. Aubrey K. Johnson and
Paul F. Shoen continue as directors with terms that expire at the 1998
Annual Meeting of Stockholders; William E. Carty and Charles J. Bayer
continue to serve as directors until the 1999 Annual Meeting of
Stockholders; and Edward J. Shoen continues to serve as a director
until the 2000 Annual Meeting of Stockholders.
The following table sets forth the votes cast for, against or
withheld, as well as the number of abstentions and broker non-votes
with respect to each matter voted on at the Combined Annual Meeting of
Stockholders:
Matters Submitted Votes cast Votes cast Votes Broker
To a Vote For Against Withheld Abstentions Non-Votes
- -------------------------------------------------------------------------------
1. Election of Directors
James P. Shoen 19,707,227 49,040 97,971 9,110 -
John M. Dodds 19,710,148 34,016 112,686 6,497 -
Richard J. Herrera 19,711,886 46,071 95,824 9,567 -
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits
3.1 Restated Articles of Incorporation (1)
3.2 Restated By-Laws of AMERCO as of August 27, 1996 (2)
27 Financial Data Schedule
b. Reports on Form 8-K.
No report on Form 8-K was filed for the quarter ended
September 30, 1997.
_____________________________________
(1) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ended December 31, 1992, file no. 0-7862.
(2) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1996, file no. 0-7862.
<PAGE> 27
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: November 13, 1997 By: /S/ GARY B. HORTON
___________________________________
Gary B. Horton, Treasurer
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FORM 10-Q SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> SEP-30-1997
<CASH> 33,831
<SECURITIES> 0
<RECEIVABLES> 249,992<F1>
<ALLOWANCES> 0
<INVENTORY> 72,273
<CURRENT-ASSETS> 0<F2>
<PP&E> 2,472,419
<DEPRECIATION> 1,116,032
<TOTAL-ASSETS> 2,862,003
<CURRENT-LIABILITIES> 0
<BONDS> 1,059,044
0
0
<COMMON> 10,563
<OTHER-SE> 643,781
<TOTAL-LIABILITY-AND-EQUITY> 2,862,003
<SALES> 108,465
<TOTAL-REVENUES> 788,792
<CGS> 61,654
<TOTAL-COSTS> 580,842
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,350
<INTEREST-EXPENSE> 40,708
<INCOME-PRETAX> 103,235
<INCOME-TAX> 35,005
<INCOME-CONTINUING> 68,230
<DISCONTINUED> 0
<EXTRAORDINARY> (4,138)
<CHANGES> 0
<NET-INCOME> 64,092
<EPS-PRIMARY> 2.44
<EPS-DILUTED> 2.44
<FN>
<F1>THE VALUE FOR RECEIVABLES REPRESENTS THEIR AMOUNT NET OF THEIR ALLOWANCES.
<F2>AN UNCLASSIFIED BALANCE SHEET EXISTS IN THE REGISTRANT'S FINANCIAL STATEMENTS.
</FN>
</TABLE>
