<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 June 30, 1996
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 [ ].
30,458,939 shares of AMERCO Common Stock, $0.25 par value were
outstanding at August 8, 1996.
5,385 shares of U-Haul International, Inc. Common Stock, $0.01 par
value, were outstanding at August 8, 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 June 30, 1996,
March 31, 1996 and June 30, 1995............... 4
b) Consolidated Statements of Earnings for the
Quarters ended June 30, 1996 and 1995............ 6
c) Consolidated Statements of Changes in Stockholders'
Equity for the Quarters ended June 30, 1996
and 1995........................................... 7
d) Consolidated Statements of Cash Flows for the
Quarters ended June 30, 1996 and 1995............ 9
f) Notes to Consolidated Financial Statements -
June 30, 1996, March 31, 1996 and
June 30, 1995.................................. 10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................... 16
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K....................... 24
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INTENTIONALLY BLANK
<PAGE> 4
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
AMERCO AND CONSOLIDATED SUBSIDIARIES
Consolidated Balance Sheets
June 30, March 31, June 30,
ASSETS 1996 1996 1995
----------------------------------
(unaudited) (audited) (unaudited)
(in thousands)
Cash and cash equivalents $ 39,972 31,168 29,604
Receivables 267,287 340,564 333,996
Inventories 51,447 45,891 52,422
Prepaid expenses 14,591 16,415 15,383
Investments, fixed maturities 884,049 879,702 761,115
Investments, other 128,469 126,587 146,650
Deferred policy acquisition costs 54,726 49,995 52,622
Other assets 24,086 20,941 18,515
--------------------------------
Property, plant and equipment, at
cost:
Land 213,936 212,593 215,039
Buildings and improvements 784,478 769,380 736,633
Furniture and equipment 190,182 188,734 182,158
Rental trailers and other rental
equipment 145,811 256,411 256,730
Rental trucks 965,133 968,131 925,671
General rental items 22,574 24,197 51,058
--------------------------------
2,322,114 2,419,446 2,367,289
Less accumulated depreciation 1,072,298 1,102,731 1,098,666
--------------------------------
Total property, plant and
equipment 1,249,816 1,316,715 1,268,623
--------------------------------
$ 2,714,443 2,827,978 2,678,930
================================
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE> 5
June 30, March 31, June 30,
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1996 1995
-----------------------------------
(unaudited) (audited) (unaudited)
(in thousands)
Liabilities:
Accounts payable and accrued
liabilities $ 179,378 151,754 145,011
Notes and loans 756,098 998,220 866,132
Policy benefits and losses, claims
and loss expenses payable 497,461 483,561 474,277
Liabilities from premium deposits 422,514 410,787 347,718
Cash overdraft 22,709 32,159 23,291
Other policyholders' funds and
liabilities 30,510 25,713 34,320
Deferred income 33,262 2,926 9,521
Deferred income taxes 94,554 73,310 77,711
---------------------------------
Stockholders' equity:
Serial preferred stock, with or
without par value, 50,000,000
shares authorized; 6,100,000 shares
issued without par value and
outstanding as of June 30, 1996,
March 31, 1996 and June 30, 1995 - - -
Serial common stock, with or
without par value, 150,000,000
shares authorized, none issued
and outstanding - - -
Series A common stock of $0.25 par
value, 10,000,000 shares authorized,
5,762,495 shares issued as of
June 30, 1996, March 31, 1996,
and June 30, 1995 1,441 1,441 1,441
Common stock of $0.25 par value,
150,000,000 shares authorized,
34,237,505 shares issued as of
June 30, 1996, March 31, 1996,
and June 30, 1995 8,559 8,559 8,559
Additional paid-in capital 165,756 165,756 165,675
Foreign currency translation (12,372) (11,877) (11,737)
Unrealized gain(loss) on investments 3,084 11,097 (1,569)
Retained earnings 645,78 609,019 573,525
---------------------------------
812,251 783,995 735,894
Less:
Cost of common shares in treasury,
(7,209,077 shares as of June 30,
1996 and March 31, 1996, 1,380,937
shares as of June 30, 1995) 111,118 111,118 11,457
Unearned employee stock
ownership plan shares 23,176 23,329 23,488
---------------------------------
Total stockholders' equity 677,957 649,548 700,949
Contingent liabilities and commitments
---------------------------------
$ 2,714,443 2,827,978 2,678,930
=================================
<PAGE> 6
AMERCO AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Earnings
Quarters ended June 30,
(Unaudited)
1996 1995
------------------------
(in thousands except
per share data)
Revenues
Rental and other revenue $ 259,572 235,311
Net sales 55,979 53,116
Premiums 31,155 30,702
Net investment income 13,002 11,380
-----------------------
Total revenues 359,708 330,509
Costs and expenses
Operating expense 190,779 174,246
Advertising expense (see note 7) 8,146 16,869
Cost of sales 31,581 28,959
Benefits and losses 23,258 27,241
Amortization of deferred acquisition
costs 4,022 2,928
Depreciation 18,779 37,693
Interest expense 18,856 18,832
-----------------------
Total costs and expenses 295,421 306,768
Pretax earnings from operations 64,287 23,741
Income tax expense (24,282) (8,564)
-----------------------
Net earnings $ 40,005 15,177
=======================
Earnings per common share:
Net earnings $ 1.15 0.31
=======================
Weighted average common shares outstanding 32,015,301 37,958,426
=======================
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
Quarters ended June 30,
(Unaudited)
1996 1995
-------------------
(in thousands)
Series A common stock of $0.25 par value:
10,000,000 shares authorized, 5,762,495
shares issued as of June 30, 1996,
March 31, 1996 and June 30, 1995
Beginning and end of period $ 1,441 1,441
-----------------
Common stock of $0.25 par value:
150,000,000 shares authorized, 34,237,505
shares issued as of June 30, 1996,
March 31, 1996 and June 30, 1995
Beginning and end of period 8,559 8,559
------------------
Additional paid-in capital:
Beginning and end of period 165,756 165,675
-------------------
Foreign currency translation:
Beginning of period (11,877) (12,435)
Change during period (495) 698
------------------
End of period (12,372) (11,737)
------------------
Unrealized gain (loss) on investments:
Beginning of period 11,097 (6,483)
Change during period (8,013) 4,914
------------------
End of period 3,084 (1,569)
------------------
Retained earnings:
Beginning of period 609,019 561,589
Net earnings 40,005 15,177
Dividends paid to stockholders:
Preferred stock: ($0.53 per share
for 1996 and 1995, respectively) (3,241) (3,241)
------------------
End of period 645,783 573,525
------------------
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
Quarters ended June 30,
(Unaudited)
1996 1995
-------------------
(in thousands)
Less Treasury stock:
Beginning of period 111,118 10,461
Net increase (45,000 shares in 1995) - 996
------------------
End of period 111,118 11,457
------------------
Less Unearned employee stock ownership
plan shares:
Beginning of period 23,329 21,101
Increase in loan - 2,523
Proceeds from loan (153) (136)
-----------------
End of period 23,176 23,488
-----------------
Total stockholders' equity $ 677,957 700,949
=================
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE> 9
AMERCO AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Cash Flows
Quarters ended June 30,
(Unaudited)
1996 1995
-------------------
(in thousands)
Cash flows from operating activities:
Net earnings $ 40,005 15,177
Depreciation and amortization 25,180 40,565
Provision for losses on accounts
receivable 869 1,568
Net (gain) loss on sale of real and
personal property 500 (16)
Gain on sale of investments (207) (337)
Changes in policy liabilities and
accruals 10,976 (4,960)
Additions to deferred policy
acquisition costs (6,385) (7,109)
Net change in other operating assets
and liabilities 126,755 24,953
-------------------
Net cash provided by operating activities 197,693 69,841
-------------------
Cash flows from investing activities:
Purchases of investments:
Property, plant and equipment (61,686) (70,149)
Fixed maturities (51,483) (86,329)
Real estate 353 (653)
Mortgage loans (1,800) (4,662)
Proceeds from sale of investments:
Property, plant and equipment 137,031 38,015
Fixed maturities 31,955 37,863
Real estate 335 691
Mortgage loans 5,366 6,177
Changes in other investments (4,634) (8,802)
-------------------
Net cash provided (used) by investing
activities 55,437 (87,849)
-------------------
Cash flows from financing activities:
Net change in short-term borrowings (391,000) 2,000
Proceeds from notes 175,000 -
Debt issuance costs (2,146) (627)
Loan to leveraged Employee Stock
Ownership Plan - (2,523)
Proceeds from leveraged Employee Stock
Ownership Plan 153 136
Principal payments on notes (26,122) (17,090)
Net change in cash overdraft (9,450) (8,072)
Dividends paid (3,241) (3,241)
Treasury stock acquisitions - (996)
Investment contract deposits 25,891 60,383
Investment contract withdrawals (13,411) (17,644)
-------------------
Net cash provided (used) by
financing activities (244,326) 12,326
-------------------
Increase (decrease)in cash and
cash equivalents 8,804 (5,682)
Cash and cash equivalents at
beginning of period 31,168 35,286
-------------------
Cash and cash equivalents at
end of period $ 39,972 29,604
===================
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE> 10
AMERCO AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1996, March 31, 1996 and June 30, 1995
(Unaudited)
1. PRINCIPLES OF CONSOLIDATION
AMERCO, a Nevada corporation (the Company), is the holding
company for U-Haul International, Inc. (U-Haul), Ponderosa
Holdings, Inc. (Ponderosa), and Amerco Real Estate Company (AREC).
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 June 30, 1996 and 1995,
and the related consolidated statements of earnings, changes in
stockholders' equity and cash flows for the quarters ended June 30,
1996 and 1995 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.
Based on an in-depth market analysis, the Company increased
the estimated salvage value of certain rental trucks during the
third and fourth quarters of fiscal year ended March 31, 1996.
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 quarter ended June 30, 1995 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 (in thousands, except for par value):
March 31, 1996 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 $ 18,305 $ 18,217 1,446 (1) 19,662
U.S. government
agency mortgage
backed securities $ 60,527 60,086 726 (2,777) 58,035
Obligations of
states and
political
subdivisions $ 33,935 33,641 1,270 (78) 34,833
Corporate
securities $ 184,715 189,459 2,956 (2,681) 189,734
Mortgage-backed
securities $ 111,687 109,935 1,900 (2,264) 109,571
Redeemable preferred
stocks 221 6,475 306 (18) 6,763
----------------------------------------
417,813 8,604 (7,819) 418,598
----------------------------------------
March 31, 1996 Gross Gross Estimated
- ----------------
Consolidated Amortized unrealized unrealized market
Available-for-Sale Par Value cost gains losses value
-----------------------------------------------------
U.S. treasury
securities and
government
obligations $ 11,685 11,785 1,106 - 12,891
U.S. government
agency mortgage
backed securities $ 24,419 24,123 248 (345) 24,026
States,
municipalities
and political
subdivisions $ 10,400 10,577 545 (184) 10,938
Corporate
securities $ 328,879 335,263 7,415 (3,744) 338,934
Mortgage-backed
securities $ 79,965 79,337 1,368 (1,258) 79,447
----------------------------------------
461,085 10,682 (5,531) 466,236
----------------------------------------
Total $ 878,898 19,286 (13,350) 884,834
========================================
<PAGE> 12
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:
June 30,
1996 1995
--------------------
(in thousands)
Investments - fixed maturities $ 884,049 761,115
Other investments 104,044 126,779
Receivables 170,344 153,780
Deferred policy acquisition costs 54,726 52,622
Due from affiliate 8,713 12,999
Deferred federal income taxes 6,531 8,720
Other assets 10,396 4,349
--------------------
Total assets $ 1,238,803 1,120,364
====================
Policy liabilities and accruals $ 418,248 407,632
Unearned premiums 79,218 66,645
Premium deposits 422,514 347,718
Other policyholders' funds and
liabilities 30,331 33,891
--------------------
Total liabilities 950,311 855,886
Stockholder's equity 288,492 264,478
--------------------
Total liabilities and
stockholder's equity $ 1,238,803 1,120,364
====================
<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, continued
A summarized consolidated income statement (unaudited) for
Ponderosa Holdings, Inc. and its subsidiaries is presented below:
Quarters ended June 30,
1996 1995
---------------------
(in thousands)
Premiums $ 32,327 30,097
Net investment income 12,619 11,531
Other income 38 1,601
---------------------
Total revenue 44,984 43,229
Benefits and losses 23,258 27,241
Amortization of deferred policy
acquisition costs 4,022 2,928
Other expenses 8,753 5,313
---------------------
Income from operations 8,951 7,747
Federal income tax expense (2,914) (1,890)
---------------------
Net income $ 6,037 5,857
=====================
4. CONTINGENT LIABILITIES AND COMMITMENTS
During the three months ended June 30, 1996, U-Haul Leasing &
Sales Co., a wholly-owned subsidiary of U-Haul International, Inc.,
entered into four transactions, whereby the Company sold rental
trucks and subsequently leased them back. AMERCO has guaranteed
$4,673,000 of residual values at June 30, 1996 on the rental trucks
at the end of the lease term. U-Haul entered into one transaction,
whereby the Company sold rental trailers and subsequently leased
them back. Also, U-Haul 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 three months ended June 30, 1996, which have a term of more
than one year (in thousands):
Year ended Lease
March 31, Commitments
------------------------
1997 $ 13,691
1998 17,848
1999 17,848
2000 17,848
2001 17,197
Thereafter 96,454
-------
$ 180,886
=======
<PAGE> 14
AMERCO AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Unaudited)
4. CONTINGENT LIABILITIES AND COMMITMENTS, continued
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:
Quarters ended June 30,
1996 1995
--------------------
(in thousands)
Receivables $ 74,020 (23,625)
=====================
Inventories $ (5,556) (2,085)
=====================
Accounts payable and
accrued liabilities $ 27,624 20,933
=====================
Income taxes paid in cash amounted to $53,000 and none for the
quarters ended June 30, 1996 and 1995, respectively.
Interest paid in cash amounted to $18,080,000 and $20,906,000
for the quarters ended June 30, 1996 and 1995, respectively.
6. RELATED PARTIES
During the quarter ended June 30, 1996, a subsidiary of the
Company received principal payments of $84,001,000, interest
payments of $3,794,000 and management fees of $492,000 from Three
SAC Self-Storage Corporation (Three SAC). Three SAC's voting common
stock is owned by SAC Holding Corporation (SAC Holding) and the non-
voting preferred stock is owned by SAC Non-Business Trust. The
voting common stock of SAC Holding is held by Mark V. Shoen, a
major stockholder, director and officer of the Company. Three SAC
properties are currently managed by the Company pursuant to a
management agreement, under which the Company receives a management
fee equal to 6% of the gross receipts from the properties. The
management fee percentage is consistent with the fee received by
the Company for other properties managed by the Company.
On June 27, 1996, a subsidiary of the Company sold Three SAC
notes of $86,000,000 to an outside party.
As of June 30, 1996, a subsidiary of the Company funded the
purchase of six properties, with an additional four properties
funded subsequent to the quarter end, by Four SAC Self-Storage
Corporation (Four SAC) for an amount of approximately $8,260,000.
Four SAC is owned by SAC Holding. The voting common stock of SAC
Holding is held by Mark V. Shoen, a major stockholder, director,
and officer of the Company. Four SAC acquired three of the
properties from a subsidiary of the Company at a purchase price
equal to the Company's acquisition cost plus capitalized costs.
Such properties are currently managed by the Company for which the
Company will receive a management fee equal to 6% of the gross
receipts from the properties. The management fee percentage is
consistent with the fee received by the Company for other
properties managed by the Company.
<PAGE> 15
AMERCO AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Unaudited)
7. NEW ACCOUNTING STANDARDS
On April 1, 1996, the Company adopted 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. No
adjustments were required in the carrying value of the Company's
long-lived assets upon adoption of this statement.
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. Upon
implementation, the Company recognized additional advertising
expense of $8,647,000 for advertising costs not qualifying as
direct-response. The adoption had the effect of reducing net
income by $5,474,000 ($0.15 per share) for the quarter ended June
30, 1995.
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 July 18, 1996, the Company extinguished debt of
approximately $76,250,000 by irrevocably placing cash into a trust
of U.S. Treasury securities to be used to satisfy scheduled
payments of principal and interest.
As disclosed in the Company's Form 10-K for the year ended
March 31, 1996, judgment was entered on February 21, 1995, in an
action in the Superior Court of the State of Arizona, Maricopa
County, entitled Samuel W. Shoen, M.D., et al. v. Edward J. Shoen,
--------------------------------------------------
et al., No. CV88-20139, instituted August 2, 1988 (the Shoen
- ------
Litigation) against Edward J. Shoen, James P. Shoen, Aubrey K. Johnson,
John M. Dodds and William
E. Carty, who are current members of the board of Directors of the
Company and against Paul F. Shoen, who is a former director. On
July 19, 1996, pursuant to the judgment in the Shoen Litigation,
the Company paid CEMAR, Inc. (Cemar) approximately $15,857,000 to
repurchase 2,331,984 shares of Common Stock held by Cemar. On the
same date the Company paid damages to Cecilia M. Hanlon of
approximately $43,139,000 and statutory post-judgment pre-petition
interest on the above amounts of approximately $129,000. On August
6, 1996, the Company funded approximately $8,283,000 of post-
petition date interest by depositing the same into an escrow
account pending the outcome of a dispute involving the entitlement
of the plaintiffs in the Shoen Litigation to post-petition date
interest. Upon the funding of the above-mentioned escrow account
the Common Stock held by Cemar was transferred into the Company
treasury. Cecilia M. Hanlon, the sole voting stockholder of Cemar,
is the sister of Edward J., Mark V., and James P. Shoen, who are
major stockholders and directors of the Company.
On August 6, 1996, the Company declared a cash dividend of
$3,241,000 ($0.53125 per preferred share) to preferred stockholders
of record as of August 17, 1996.
<PAGE> 16
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 quarters ended June 30, 1996
and 1995. 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 proportionately more
of the Company's revenues and net earnings are generated in the first and
second quarters each fiscal year (April through September).
Property/ Adjustments
Rental Life Casualty and
Operations Insurance Insurance Eliminations Consolidated
------------------------------------------------------------
(in thousands)
Quarter ended
June 30, 1996
Revenues:
Outside $ 316,045 11,639 32,024 - 359,708
Intersegment - 391 940 (1,331) -
-------------------------------------------------------
Total revenues 316,045 12,030 32,964 (1,331) 359,708
=======================================================
Operating profit $ 74,192 2,957 5,994 - 83,143
===========================================
Interest expense 18,856
--------
Pretax earnings
from operations $ 64,287
========
Identifiable assets $1,779,376 609,886 632,814 (307,633) 2,714,443
=======================================================
Property/ Adjustments
Rental Life Casualty and
Operations Insurance Insurance Eliminations Consolidated
------------------------------------------------------------
(in thousands)
Quarter ended
June 30, 1995
Revenues:
Outside $ 286,835 10,238 33,436 - 330,509
Intersegment - 367 (793) 426 -
-------------------------------------------------------
Total revenues 286,835 10,605 32,643 426 330 509
=======================================================
Operating profit $ 34,826 2,622 5,125 - 42,573
===========================================
Interest expense 18,832
--------
Pretax earnings
from operations $ 23,741
========
Identifiable assets $1,845,419 530,918 589,446 (286,853) 2,678,930
=======================================================
<PAGE> 17
QUARTER ENDED JUNE 30, 1996 VERSUS QUARTER ENDED JUNE 30, 1995
U-Haul
U-Haul revenues consist of (i) total rental and other revenue
and (ii) net sales. Total rental and other revenue increased by
$25.8 million, approximately 11.0%, to $259.7 million in the first
quarter of fiscal 1997. The increase reflects higher net revenues
from the rental of moving related equipment and self-storage
facilities which increased in the aggregate by $15.4 million due to
growth (volume) in truck rental transactions, additional rentable
square footage, and an increase in management fees from storage
facilities managed for others. Other revenue increased in the
aggregate by $10.4 million. This increase is due to increased
interest income and miscellaneous non-recurring revenues.
Net sales revenues were $56.0 million in the first quarter of
fiscal 1997, which represents an increase of approximately 5.4%
from the first quarter of fiscal 1996 net sales of $53.1 million.
Revenue growth from the sale of moving support items (i.e. boxes,
etc.), hitches, and propane resulted in a $2.9 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 was $31.6 million in the first quarter of fiscal
1997, which represents an increase of approximately 9.1% from $29.0
million for the same period in fiscal 1996. This increase in cost
of sales primarily reflects higher material costs from the sale of
moving support items and propane which can be primarily attributed
to higher sales levels.
Operating expenses increased to $183.3 million in the first
quarter of fiscal 1997 from $168.5 million in the first quarter
of fiscal 1996, an increase of approximately 8.8%. Higher
rental equipment maintenance costs ($13.7 million increase) due to
an increase in fleet size and transaction levels and increased
personnel expense due to higher levels of business activity ($4.4
million increase) primarily account for the change from the prior
year. All other operating expense categories decreased in the
aggregate by $3.2 million compared to the prior year.
Advertising expense decreased to $8.1 million in the first
quarter of fiscal 1997 from $16.9 million in the first quarter of
fiscal 1996. The decrease 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 quarter was $18.8 million, as
compared to $37.7 million during the same period of the prior year.
During the third and fourth quarters of fiscal 1996, based on the
Company's in-depth market analysis, the Company increased the
estimated salvage value of certain rental trucks. The effect of
the change in estimate reduced depreciation expense between the two
quarters by $18.1 million.
Oxford - Life Insurance
Premiums from Oxford's reinsurance lines before intercompany
eliminations were $5.2 million for the quarter ended March 31,
1996, an increase of $1.1 million, approximately 26.8% over the
same period in 1995 and accounted for 73.2% of Oxford's premiums
for the period. These premiums are primarily from term life
insurance and deferred annuity contracts that have matured. This
increase in premiums is primarily from the anticipated increase in
annuitizations as a result of the maturing of deferred annuities
and from additional production in the credit life and credit
accident and health business.
Premiums from Oxford's direct lines before intercompany
eliminations were $1.9 million for the quarter ended March 31,
1996, a decrease of $0.1 million (5.0%) from the same period during
1995. This decrease in direct premium is primarily attributable to
the credit life and credit accident and health business. Oxford's
direct business related to group life and disability coverage
issued to employees of the Company for the quarter ended March 31,
1996 accounted for approximately 7.7% of premiums. Other direct
lines, including the credit insurance business, accounted for
approximately 19.1% of Oxford's premiums for the quarter ended
March 31, 1996.
<PAGE> 18
Net investment income before intercompany eliminations was
$4.9 million and $3.9 million for the quarters ended March 31, 1996
and 1995, respectively. This increase is primarily due to
increases in deposit funds from additional production and
increasing margins on the interest sensitive business.
Gains/(losses) on the disposition of fixed maturity investments
were ($0.5) million and $0.5 million for the quarters ended March
31, 1996 and 1995, respectively. Oxford had $0.6 million and $0.5
million of other income for the quarters ended March 31, 1996 and
1995, respectively.
Benefits and expenses incurred were $9.1 million for the
quarter ended March 31, 1996, an increase of 13.8% over 1995.
Comparable benefits and expenses incurred for 1995 were $8.0
million. This increase is primarily due to the increase in
annuitizations discussed above and an increase in the amortization
of deferred acquisition costs.
Operating profit before intercompany eliminations increased by
$0.4 million, or approximately 15.4%, in 1996 to $3.0 million for
the quarter ended March 31, 1996.
RWIC - Property and Casualty
RWIC gross premium writings for the quarter ended March 31,
1996 were $48.1 million as compared to $36.2 million in the first
quarter of 1995. This represents an increase of $11.9 million, or
32.9%. As in prior years, the rental industry market accounts for
a significant share of total premiums, approximately 27.7% and
18.3% in the first quarters of 1996 and 1995, 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 quarter
of 1996 to $24.1 million, or 50.2% of total gross premiums, from
comparable 1995 figures of $20.2 million, or 55.8% of total
premiums. Premium writings in selected general agency lines are
expected to remain consistent with prior years. Premiums from
selected general agency lines accounted for 14.7% of written
premiums in the first quarter of 1996 as compared to 17.4% in the
first quarter of 1995. RWIC continued its direct multiple peril
coverage of various commercial properties and businesses in 1996.
These premiums accounted for 7.1% of the total gross written
premium during first quarter 1996, as compared to 6.4% in 1995.
Net earned premiums increased $1.2 million, or 5.0%, to $25.2
million for the quarter ended March 31, 1996, compared with
premiums of $24.0 million for the quarter ended March 31, 1995.
The premium increase was primarily due to improved processing.
Underwriting expenses incurred were $27.0 million for the
quarter ended March 31, 1996, a decrease of $0.5 million, or 1.8%
over 1995. Comparable underwriting expenses incurred for the first
quarter of 1995 were $27.5 million. The decrease is attributed to
decreased loss and loss adjusting expenses offset by increased
commission expense. The reduction in loss and loss adjusting
expenses occurred in the rental industry liability and assumed
treaty reinsurance, while the increased commission expense resulted
from a smaller adjustment to realize a margin on a canceled general
agency program.
Net investment income was $7.7 million for the quarter ended
March 31, 1996, an increase of 1.3% over 1995 net investment income
of $7.6 million.
RWIC completed the first quarter of 1996 with income before
tax expense of $6.0 million as compared to $5.1 million for the
comparable period ended March 31, 1995. This represents an
increase of $0.9 million, or 17.7% over 1995. Increased premium
earnings and decreased underwritings expenses combined to produce
this increase.
Interest Expense
Interest expense was virtually unchanged at $18.9 million for
the quarter ended June 30, 1996, as compared to $18.8 million for
the quarter ended June 30, 1995.
Consolidated Group
As a result of the foregoing, pretax earnings of $64.3
million were realized in the quarter ended June 30, 1996, as
compared to $23.7 million for the same period in 1995. After
providing for income taxes, net earnings for the quarter ended June
30, 1996 were $40.0 million, as compared to $15.2 million for
the same period of the prior year.
<PAGE> 19
QUARTERLY RESULTS
The following table presents unaudited quarterly results for
the nine quarters in the period beginning April 1, 1994 and ending
June 30, 1996. The Company believes that all necessary adjustments
have been included in the amounts stated below to present fairly,
and in accordance with generally accepted accounting principles,
the selected quarterly information when read in conjunction with
the consolidated financial statements incorporated herein by
reference. The Company's 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,
1996
---------------
Total revenues $ 359,708
Net earnings (loss) <F2> 40,005
Weighted average common
shares outstanding <F4> 32,015,301
Net earnings (loss)
per common share <F1> 1.15
Quarter Ended
------------------------------------------------
Jun 30, Sep 30, Dec 31, Mar 31,
1995 1995 1995 1996
------------------------------------------------
Total revenues $ 330,509 371,267 307,452 285,195
Net earnings (loss) <F2> <F3> 15,177 35,332 7,701 2,184
Weighted average common
shares outstanding <F4> 37,958,426 37,931,825 36,796,961 32,554,458
Net earnings (loss)
per common share <F1> 0.31 0.85 0.13 (0.04)
Quarter Ended
------------------------------------------------
Jun 30, Sep 30, Dec 31, Mar 31,
1994 1994 1994 1995
------------------------------------------------
Total revenues $ 322,333 359,520 294,858 259,521
Net earnings (loss) 29,413 40,071 1,907 (11,359)
Weighted average common
shares outstanding 37,107,536 37,053,707 37,025,575 38,072,543
Net earnings (loss)
per common share <F1> 0.71 1.00 (0.04) (0.44)
- ----------------
<F1> 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 93-7,
"Reporting on Advertising Costs."
<F3> Reflects the change in estimated salvage value during the
third and fourth quarters of fiscal 1996.
<F4> Reflects the acquisition of treasury shares acquired
pursuant to the Shoen Litigation as discussed in the Company's
Form 10-K for the year ended March 31, 1996, "Item 3 - Legal
Proceedings".
<PAGE> 20
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 June 30, 1996, net
property, plant and equipment represented approximately 70.2% of
total U-Haul assets and approximately 46.0% of consolidated assets.
In the first quarter of fiscal 1997, capital expenditures were
$61.7 million, as compared to $70.1 million in the first quarter of
fiscal 1996, reflecting expansion of the rental truck fleet, and
real property acquisitions. These acquisitions were funded with
internally generated funds from operations, and debt financings.
Cash flows from operations were $193.7 million in the first
quarter of fiscal 1997, as compared to $61.9 million in the first
quarter of fiscal 1996. The increase of $131.8 million is
primarily due to increased earnings and sale of mortgage note
receivables for proceeds of $83.5 million. Cash flows from
investing activities were affected by the sale and subsequent lease
back of rental trailers for net proceeds of $97.4 million.
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 by operating activities were $4.1 million and
$3.7 million for the quarters ended March 31, 1996 and 1995,
respectively. Cash flows from financing activities were
approximately $12.5 million and $42.7 million for the quarters
ended March 31, 1996 and 1995, respectively. Cash flows from
deferred annuity sales increase investment contract deposits, which
are a component of financing activities, and increased purchases of
fixed maturities, which are a component of investing activities.
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 March 31, 1996 and 1995, short-term
investments amounted to $12.0 million and $10.8 million,
respectively. Management believes that the overall sources of
liquidity will continue to meet foreseeable cash needs.
Stockholder's equity of Oxford increased to $98.1 million in
1996 from $90.4 million in 1995. During the quarter ended March
31, 1996, Oxford declared a dividend payable to Ponderosa of $3.9
million.
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. Statutory
surplus that can be distributed as dividends without prior
regulatory approval is $7,080,000. 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 decreased $0.2 million
during the first quarter of 1996, as compared to an increase of
$3.4 million for the comparable period of 1995. The change is due
to temporary increases in accounts receivable and paid losses
recoverable, and decreased federal income tax payable. This
decrease is partially offset by an increase in unearned premium.
RWIC's short-term investment portfolio was $4.8 million at
March 31, 1996. This level of liquid assets, combined with
budgeted cash flow, is adequate to meet periodic needs as well as
any near term shortfall. 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 98.0% 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 96.7% of total liabilities.
Stockholder's equity increased 1.2% from $188.2 million at
December 31, 1995 to $190.4 million at March 31, 1996. RWIC
considers current stockholder's equity to be
<PAGE> 21
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 quarter ended March
31, 1996, however it did declare a $6.7 million dividend to
Ponderosa.
Consolidated Group
At June 30, 1996, total notes and loans payable outstanding
was $756.1 million as compared to $998.2 million at March 31, 1996,
and $866.1 million at June 30, 1995.
During each of the fiscal years ending March 31, 1997, 1998,
and 1999, U-Haul estimates gross capital expenditures will average
approximately $290 million as a result of the expansion of the
rental truck 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 $390 million. Management estimates that U-Haul will
fund approximately 75% 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, lease fundings, and equity
offerings.
See "Stockholder Litigation" for a discussion of additional
funding requirements pursuant to the Shoen Litigation.
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 June 30, 1996, the Company had
$756.1 million in total notes and loans payable outstanding and
unutilized committed lines of credit of approximately $530.0
million.
In May 1996, the Company issued $175.0 million of 7.85% Senior
Notes Due May 15, 2003. The Company intends to apply the net
proceeds from the sale of the notes to pay down, at maturity, a
portion of the Company's long-term debt.
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 June 30, 1996, the Company was in
compliance with these covenants.
The Company is also restricted in the amount of dividends that
it may pay pursuant to covenants contained in its credit
agreements. As of the date hereof, the most restrictive of such
covenants provides that the Company may pay cash dividends on its
capital stock only in an amount not exceeding, in the aggregate,
computed on a cumulative basis, the sum of (i) $15.0 million and
(ii) 50% of consolidated net income computed on a cumulative basis
for the entire period subsequent to March 31, 1993 (or if such
consolidated net income is a deficit figure, then minus 100% of
such deficit), less dividends paid after such date. As of June 30,
1996, the amount available for the payment of cash dividends, as
calculated above, was $78.2 million.
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 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.
<PAGE> 22
Stockholder Litigation
As disclosed in the Company's Form 10-K for the year ended
March 31, 1996, a judgment has been entered in the Shoen Litigation
against five of the Company's current directors (the Director-
Defendants) and one former director in the amount of approximately
$461.8 million, plus statutory post-judgment interest.
Pursuant to separate indemnification agreements, the Company has
agreed to indemnify the defendants to the fullest extent permitted
by law or the Company's Articles of Incorporation or By-Laws, for
all expenses and damages incurred by the defendants in this
proceeding, subject to certain exceptions. The Director-Defendants
have 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 in the United States bankruptcy court for the
District of Arizona all of which propose the same funding and
treatment of the plaintiffs' claims resulting from the judgment in
the Shoen Litigation. The plans of reorganization, as amended and
restated on February 29, 1996, were confirmed by the bankruptcy
court on March 15, 1996. The plans, as confirmed, shall
collectively be referred to as the "Plan".
On October 18, 1995, the Company repurchased 3,343,076 shares
of Common Stock held by Maran, Inc., a Nevada corporation (Maran),
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 Director-Defendants and the Company from any liability
relating to Shoen Litigation. As a result of the foregoing, and
after giving effect to the discount achieved through settlement,
approximately $84.6 million of the judgment in the Shoen Litigation
was satisfied.
Pursuant to the judgment in the Shoen Litigation, on January
30, 1996, the Company acquired 833,420 shares of Common Stock held
by L.S.S., Inc. (L.S.S.) in exchange for approximately $5.7 million
and paid damages to L.S. Shoen of approximately $15.4 million. The
Company also funded a total of approximately $2.1 million of
statutory post-judgment interest on the above amounts. In
addition, on February 7, 1996, the Company acquired 1,651,644
shares of Common Stock held by Thermar, Inc. (Thermar) by paying
Thermar approximately $41.8 million, including damages of
approximately $30.6 million. The Company also paid to Thermar
approximately $4.1 million of statutory post-judgment interest on
such amount. Finally, on July 19, 1996, the Company paid
CEMAR, Inc. (Cemar) approximately $15.9 million to repurchase 2,331,984
shares of Common Stock held by Cemar. On the same date, the Company paid
damages to Cecilia M. Hanlon of approximately $43.1 million and statutory
post-judgment pre-petition date interest of $129,000, the Company
funded approximately $8.3 million of post-petition date interest by depositing
the same into an escrow account pending the outcome of a dispute
involving the entitlement of the plaintiffs in the Shoen Litigation
to post-petition date interest. Upon the funding of the above-mentioned
escrow account, the Common Stock held by Cemar was transferred into the
Company treasury. As a result of the foregoing transactions, the balance
of the judgment has been reduced to approximately $256.0 million,
plus interest claimed by the plaintiffs.
With respect to the remaining plaintiffs in the Shoen
Litigation, the Plan provides for the payment by the Company of
approximately $68.6 million in exchange for 10,094,852 shares of
Common Stock held by five of the plaintiffs and for the payment by
the Company of approximately $187.4 million to three of the
plaintiffs as damages.
As of the date hereof, an issue remains regarding whether or
not the remaining plaintiffs and Cecilia M. Hanlon are entitled to
statutory post-judgment interest at the rate of 10% per year. As
of August 8, 1996, total accrued interest on the outstanding
balance of the judgment is approximately $46.1 million and is
accruing at the rate of approximately $86,000 per day. The
dispute regarding post-petition date interest was decided adversely
to the Director-Defendants and the Company at the bankruptcy court level
and they intend to appeal this decision following the entry of a final
order by the bankruptcy court. Pending the final resolution of the post-
petition date interest dispute (including all appeals by either
side), the Company intends, if necessary, to deposit either cash
or, in appropriate circumstances, an irrevocable letter of credit
into an escrow account to secure payment of the post-petition date
interest. The amount of the escrow deposit would be in such case
equal to the accrued interest to the date funds are deposited into
escrow. As provided in the Plan, the escrow deposit, plus interest
thereon, will remain until all aspects of the post-petition date
interest dispute have been finally decided, including
dischargeability litigation which the plaintiffs filed against the
Director-Defendants in the bankruptcy court as an alternative means
of trying to collect post-petition date interest. The
dischargeability litigation has not been set for trial and is
likely to await the outcome of the other aspects of the post-
petition date interest dispute.
<PAGE> 23
On March 15, 1996, the bankruptcy court issued a Confirmation
Order in each Director-Defendant's Chapter 11 case. This order
provided that the effective date for the Plan (i.e., the date on
which the Company will pay the plaintiffs an aggregate of
approximately $256.0 million and the plaintiffs will surrender
their Common Stock) will be no later than October 1, 1996 (absent
compelling circumstances justifying an extension of that date).
As of the date hereof, the Company has not yet determined all
of the sources of cash which will be used to fund the Plan. The
Company has sold mortgage notes for proceeds of $83.5 million and
completed a $97.4 million sale and subsequent lease back of rental
trailers to partially fund the Plan. In order to comply with
certain covenants in the Company's current credit agreements
following the repurchase of the remaining plaintiffs' stock, it may
be necessary to increase stockholders' equity by issuing capital
stock. Such capital stock may consist of dividend paying preferred
stock, Series B Common Stock, Common Stock, or a combination of the
foregoing.
Because the Company has not determined all of the sources of
cash to fund the Plan, the Company is unable to determine with
certainty the impact the Plan will have on the Company's
prospective financial condition, results of operations, cash flows,
or capital expenditure plans. However, as a result of funding the
Plan, the Company may incur additional costs in the future in the
form of dividends on any dividend paying stock issued to fund the
Plan and/or interest on borrowed funds. Furthermore, following
consummation of the Plan, and without giving effect to any capital
stock which may be issued as part of the Plan funding, the
Company's outstanding Common Stock would be reduced by 10,094,852
shares, in addition to the 3,343,076 shares repurchased from Maran
on October 18, 1995, the 833,420 shares repurchased from L.S.S. on
January 30, 1996, 1,651,644 shares repurchased from Thermar on
February 7, 1996 and the 2,331,984 shares repurchased from Cemar on
August 6, 1996.
Other uncertainties remain about the Plan, including the tax
treatment of the payments made and to be made by the Company
pursuant to the Plan. Specifically, the Company plans to deduct
for income tax purposes approximately $324.3 million of the
payments made or to be made by the Company to the plaintiffs, which
will reduce the Company's income tax liability. While the Company
believes that such income tax deductions are appropriate, there can
be no assurance that any such deductions ultimately will be allowed
in full. Accordingly, for tax and other reasons, the Plan could
result in material changes in the Company's financial condition,
results of operations, and earnings per common share.
Furthermore, in the event the fair value of the consideration
paid by the Company to the plaintiffs is in excess of the fair
value of the stock repurchased by the Company, the Company will be
required to record an expense equal to that difference. Based upon
the uncertainties surrounding the funding of the Plan, the amount
of such expense, if any, is not estimable as of the date hereof.
No such expense was recorded for book purposes related to the
Maran, L.S.S., Thermar, and Cemar transactions. No
provision has been made in the Company's financial statements for
any payments to be made to the plaintiffs in the future. For the
reasons set forth above, the Plan could have the effect of reducing
the Company's net income.
<PAGE> 24
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits
3.1 Restated Articles of Incorporation <F1>
3.2 Restated By-Laws of AMERCO as of August 15, 1995, <F2>
4.1 Debt Securities Indenture <F3>
4.2 First Supplemental indenture, Dated as of May 6, 1996 <F4>
27 Financial Data Schedule
b. Reports on Form 8-K.
A report on Form 8-K was filed on May 6, 1996 in connection
with the Company's issuance of $175.0 million of 7.85%
Senior Notes due 2003.
_____________________________________
<F1> Incorporated by reference to the Company's Quarterly Report
on Form 10-Q for the quarter ended December 31, 1992, file no. 0-7862.
<F2> Incorporated by reference to the Company's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1995, file no. 0-7862.
<F3> Incorporated by reference to the Company's Registration
Statement on Form S-3, Registration no. 333-1195.
for the quarter ended December 31, 1992, file no. 0-7862.
<F4> Incorporated by reference to the Company's Report on Form 8-K,
dated May 6, 1996.
<PAGE> 25
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.
U-Haul International, Inc.
--------------------------------
(Registrant)
Dated: August 8, 1996 By: /S/ DONALD W. MURNEY
----------------------------------
Donald W. Murney, Treasurer
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FORM 10-Q JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> JUN-30-1996
<CASH> 39,972
<SECURITIES> 0
<RECEIVABLES> 267,287<F1>
<ALLOWANCES> 0
<INVENTORY> 51,447
<CURRENT-ASSETS> 0<F2>
<PP&E> 2,322,114
<DEPRECIATION> 1,072,298
<TOTAL-ASSETS> 2,714,443
<CURRENT-LIABILITIES> 0<F2>
<BONDS> 756,098
0
0
<COMMON> 10,000
<OTHER-SE> 667,957
<TOTAL-LIABILITY-AND-EQUITY> 2,714,443
<SALES> 55,979
<TOTAL-REVENUES> 359,708
<CGS> 31,581
<TOTAL-COSTS> 244,115
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 869
<INTEREST-EXPENSE> 18,856
<INCOME-PRETAX> 64,287
<INCOME-TAX> 24,282
<INCOME-CONTINUING> 40,005
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 40,005
<EPS-PRIMARY> 1.15
<EPS-DILUTED> 1.15
<FN>
<F1>THE VALUE FOR RECEIVABLES REPRESENTS THEIR AMOUNTS NET OF THEIR ALLOWANCES.
<F2>AN UNCLASSIFIED BALANCE SHEET EXISTS IN THE REGISTRANT'S FINANCIAL STATEMENTS.
</FN>
</TABLE>
