-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, o0wnNO3NcdmXPpmTJKiRGqDvYjPrPGdfHzJkl7gaAQCMt2OxLmP2L5xW3YHaK2rR /oWh3Mbj3zG0XydJ2XA8Aw== 0000004457-94-000029.txt : 19940815 0000004457-94-000029.hdr.sgml : 19940815 ACCESSION NUMBER: 0000004457-94-000029 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940812 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERCO /NV/ CENTRAL INDEX KEY: 0000004457 STANDARD INDUSTRIAL CLASSIFICATION: 3711 IRS NUMBER: 880106815 STATE OF INCORPORATION: NV FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11255 FILM NUMBER: 94543553 BUSINESS ADDRESS: STREET 1: 1325 AIRMOTIVE WY STE 100 CITY: RENO STATE: NV ZIP: 89502 BUSINESS PHONE: 7027860488 MAIL ADDRESS: STREET 1: 1325 AIRMOTIVE WAY STREET 2: SUITE 100 CITY: RENO STATE: NV ZIP: 89502 FORMER COMPANY: FORMER CONFORMED NAME: AMERCO DATE OF NAME CHANGE: 19770926 10-Q 1 FORM 10-Q--AMERCO--06/30/94 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, 1994 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 [ ]. 32,909,729 shares of AMERCO Common Stock, $0.25 par value and 5,754,334 shares of AMERCO Series A common stock, $0.25 par value were outstanding at August 12, 1994. 5,385 shares of U-Haul International, Inc. Common Stock, $0.01 par value, were outstanding at August 12, 1994. 2 TABLE OF CONTENTS PART I. FINANCIAL INFORMATION Item 1. Financial Statements. a) Consolidated Balance Sheets as of June 30, 1994, March 31, 1994 and June 30, 1993................... 4 b) Consolidated Statements of Earnings for the Quarters Ended June 30, 1994 and 1993.............. 6 c) Consolidated Statements of Changes in Stockholders' Equity for the Quarters ended June 30, 1994 and 1993........................................... 7 d) Consolidated Statements of Cash Flows for the Quarters Ended June 30, 1994 and 1993.............. 8 e) Notes to Consolidated Financial Statements - June 30, 1994, March 31, 1994 and June 30, 1993.... 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................... 14 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K....................... 20 3 THIS PAGE LEFT INTENTIONALLY BLANK 4 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. AMERCO AND CONSOLIDATED SUBSIDIARIES Consolidated Balance Sheets
June 30, March 31, June 30, ASSETS 1994 1994 1993 ------ ----------- ----------- ----------- (unaudited) (audited) (unaudited) (in thousands) Cash $ 19,617 18,442 15,459 Receivables 208,833 204,814 92,735 Inventories 41,920 49,012 48,240 Prepaid expenses 24,307 24,503 25,093 Investments, fixed maturities 718,438 719,605 667,013 Investments, other 94,392 84,738 121,479 Deferred policy acquisition costs 48,917 47,846 49,353 Other assets 30,283 21,246 26,127 --------- --------- --------- Property, plant and equipment, at cost: Land 200,720 186,210 180,074 Buildings and improvements 693,041 676,297 621,747 Furniture and equipment 166,268 163,495 159,711 Rental trailers and other rental equipment 218,445 212,187 207,848 Rental trucks 863,982 820,395 753,522 General rental items 55,186 57,421 59,580 --------- --------- --------- 2,197,642 2,116,005 1,982,482 Less accumulated depreciation 972,968 941,769 858,941 --------- --------- --------- Total property, plant and equipment 1,224,674 1,174,236 1,123,541 --------- --------- --------- $ 2,411,381 2,344,442 2,169,040 ========== ========== ========== The accompanying notes are an integral part of these consolidated financial statements.
5
June 30, March 31, June 30, LIABILITIES AND STOCKHOLDERS' EQUITY 1994 1994 1993 ------------------------------------ ----------- ----------- ----------- (unaudited) (audited) (unaudited) (in thousands) Liabilities: Accounts payable and accrued liabilities $ 158,920 124,062 138,003 Notes and loans 725,565 723,764 766,946 Policy liabilities and accruals 449,986 439,266 330,019 Liabilities from premium deposits 308,408 312,708 321,025 Cash overdraft 14,569 26,559 59,976 Other policyholders' funds and liabilities 6,617 9,592 13,429 Deferred income 8,714 5,913 5,524 Deferred income taxes 64,799 50,791 38,660 --------- --------- --------- Stockholders' equity: Serial preferred stock, with or without par value, 50,000,000 shares authorized; 6,100,000 issued without par value and outstanding as of June 30, 1994 and March 31, 1994, none issued or outstanding as of June 30, 1993 - - - Serial common stock, with or with- out par value, 150,000,000 shares authorized - - - Series A common stock of $.25 par value, authorized 10,000,000 shares, issued 5,754,334 shares as of June 30, 1994 and March 31, 1994, none as of June 30, 1993 1,438 1,438 - Common stock of $.25 par value, authorized 150,000,000 shares, issued 34,245,666 shares as of June 30, 1994 and March 31, 1994 and 40,000,000 as of June 30, 1993 8,562 8,562 10,000 Additional paid-in capital 165,651 165,651 19,331 Foreign currency translation (11,461) (11,152) (7,102) Retained earnings 540,325 515,200 499,522 --------- --------- --------- 704,515 679,699 521,751 Less: Cost of common shares in treasury, (1,335,937 shares as of June 30, 1994 and March 31, 1994 and June 30, 1993) 10,461 10,461 10,461 Loan to leveraged employee stock ownership plan 20,251 17,451 15,832 --------- --------- --------- Total stockholders' equity 673,803 651,787 495,458 Contingent liabilities and commitments --------- --------- --------- $ 2,411,381 2,344,442 2,169,040 ========== ========== ========== The accompanying notes are an integral part of these consolidated financial statements.
6 AMERCO AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Earnings Quarters ended June 30, (Unaudited)
1994 1993 ---------- ---------- (in thousands except per share data) Revenues Rental and other revenue $ 230,207 208,042 Net sales 51,302 47,642 Premiums 31,559 24,640 Net investment income 10,510 11,024 ---------- ---------- Total revenues 323,578 291,348 Costs and expenses Operating expense 166,786 158,865 Cost of sales 27,550 29,273 Benefits and losses 26,412 23,941 Amortization of deferred acquisition costs 3,084 2,153 Depreciation 37,282 30,140 Interest expense 16,638 17,338 ---------- ---------- Total costs and expenses 277,752 261,710 Pretax earnings from operations 45,826 29,638 Income tax expense (16,413) (8,775) ---------- ---------- Earnings from operations before cumulative effect of change in accounting principle 29,413 20,863 Cumulative effect of a change in accounting principle - (3,504) --------- ---------- Net earnings $ 29,413 17,359 ========== ========== Earnings per common share: Earnings from operations before cumulative effect of change in accounting principle $ .71 .56 Cumulative effect of a change in accounting principle - (.09) ---------- ---------- Net earnings $ .71 .47 ========== ========== Weighted average common shares outstanding 37,107,536 37,158,211 ========== ========== The accompanying notes are an integral part of these consolidated financial statements.
7 AMERCO AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Changes in Stockholders' Equity Quarters ended June 30, (Unaudited)
1994 1993 ------- ------- (in thousands) Series A common stock of $.25 par value: Authorized 10,000,000 shares, issued 5,754,334 in 1994, none in 1993 Beginning and end of quarter $ 1,438 - ------- ------- Common stock of $.25 par value: Authorized 150,000,000 shares in 1994 and 1993, 34,245,666 issued in 1994, 40,000,000 issued in 1993 Beginning and end of quarter 8,562 10,000 ------- ------- Additional paid-in capital: Beginning and end of quarter 165,651 19,331 ------- ------- Foreign currency translation: Beginning of quarter (11,152) (6,122) Change during quarter (309) (980) ------- ------- End of quarter (11,461) (7,102) ------- ------- Retained earnings: Beginning of quarter 515,200 482,163 Net earnings 29,413 17,359 Dividends paid to stockholders: Preferred stock: ($.53 per share 1994) (3,241) - Change in net unrealized gain on investments (1,047) - ------- ------- End of quarter 540,325 499,522 ------- ------- Treasury stock: Beginning and end of quarter 10,461 10,461 ------- ------- Loan to leveraged employee stock ownership plan: Beginning of quarter 17,451 14,953 Increase in loan 2,919 1,000 Proceeds from loan (119) (121) ------- ------- End of quarter 20,251 15,832 ------- ------- Total stockholders' equity $ 673,803 495,458 ======= ======= The accompanying notes are an integral part of these consolidated financial statements.
8 AMERCO AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Cash Flows Quarters ended June 30, (Unaudited)
1994 1993 ------- ------- (in thousands) Cash flows from operating activities: Net earnings $ 29,413 17,359 Depreciation and amortization 41,489 32,622 Provision for losses on accounts receivable 736 108 Net gain on sale of real and personal property (131) (1,324) (Gain) loss on sale of investments 30 (411) Cumulative effect of a change in accounting principle - 5,006 Changes in policy liabilities and accruals 11,766 (6,819) Additions to deferred policy acquisition costs (4,155) (5,790) Net change in other operating assets and liabilities 43,182 22,333 ------- ------- Net cash provided by operating activities 122,330 63,084 ------- ------- Cash flows from investing activities: Purchases of investments: Property, plant and equipment (144,794) (226,844) Fixed maturities (31,098) (70,438) Real estate (8) - Mortgage loans (5,504) - Proceeds from sale of investments: Property, plant and equipment 58,868 64,657 Fixed maturities 30,756 51,305 Real estate 220 324 Mortgage loans 1,442 2,600 Changes in other investments (10,507) 5,345 ------- ------- Net cash used by investing activities (100,625) (173,051) ------- ------- Cash flows from financing activities: Net change in short-term borrowings 46,250 (4,000) Proceeds from notes - 95,000 Loan to leveraged employee stock ownership plan (2,919) (1,000) Proceeds from leveraged employee stock ownership plan 119 121 Principal payments on notes (44,449) (21,175) Net change in cash overdraft (11,990) 35,125 Dividends paid (3,241) - Investment contract deposits 6,966 8,758 Investment contract withdrawals (11,266) (8,694) ------- ------- Net cash provided (used) by financing activities (20,530) 104,135 ------- ------- Increase (decrease) in cash 1,175 (5,832) Cash at beginning of quarter 18,442 21,291 ------- ------- Cash at end of quarter $ 19,617 15,459 ======= ======= The accompanying notes are an integral part of these consolidated financial statements.
9 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Consolidated Financial Statements June 30, 1994, March 31, 1994 and June 30, 1993 (Unaudited) 1. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the parent corporation, AMERCO, and its subsidiaries, all of which are wholly-owned. All material intercompany accounts and transactions of AMERCO and its subsidiaries (herein called the "Company" or the "consolidated group") have been eliminated. The consolidated balance sheets as of June 30, 1994 and 1993, and the related consolidated statements of earnings, changes in stockholders' equity and cash flows for the quarters ended June 30, 1994 and 1993 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 financial statements and notes are presented as permitted by Form 10-Q and do not contain 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, not including ESOP shares that have not been committed to release. Net income is reduced for preferred dividends. Certain reclassifications have been made to the financial statements for the quarter ended June 30, 1993 to conform with the current year's presentation. 10 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Consolidated Financial Statements June 30, 1994, March 31, 1994 and June 30, 1993 (Unaudited) 2. 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:
March 31, 1994 1993 --------- ------- (in thousands) Investments - fixed maturities $ 718,438 667,013 Other investments 94,392 121,479 Receivables 132,944 37,409 Deferred policy acquisition costs 48,917 49,353 Due from affiliate 9,125 1,083 Deferred federal income taxes 8,195 8,123 Other assets 14,892 11,050 --------- ------- Total assets $ 1,026,903 895,510 ========= ======= Policy liabilities and accruals $ 385,539 292,801 Unearned premiums 64,292 37,636 Premium deposits 308,408 321,025 Other policyholders' funds and liabilities 11,543 13,266 --------- ------- Total liabilities 769,782 664,728 Stockholder's equity 257,121 230,782 --------- ------- Total liabilities and stockholder's equity $ 1,026,903 895,510 ========= =======
11 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Financial Statements, Continued (Unaudited) 2. 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:
Three Months ended March 31, 1994 1993 ------ ------ (in thousands) Premiums $ 34,352 26,875 Net investment income 10,554 11,067 Other income 1,267 1,745 ------ ------ Total revenue 46,173 39,687 Benefits and losses 26,412 23,941 Amortization of deferred policy acquisition costs 3,084 2,153 Other expenses 7,801 5,671 ------ ------ Income from operations 8,876 7,922 Federal income tax expense (2,742) (2,267) ------ ------ Earnings from operations before change in accounting principle 6,134 5,655 Cumulative effect of a change in accounting principle - (85) ------ ------ Net income $ 6,134 5,570 ====== ======
3. CONTINGENT LIABILITIES AND COMMITMENTS AMERCO and/or its subsidiaries are defendants in a number of suits and claims incident to the type of business conducted. It is the opinion of management that none of the suits or claims involving AMERCO and/or its subsidiaries is expected to result in any material loss and, accordingly, no provision has been made in the accompanying financial statements. 12 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Financial Statements, Continued (Unaudited) 4. SUPPLEMENTAL CASH FLOWS INFORMATION The (increase) decrease in receivables, inventories and accounts payable and accrued liabilities net of other operating and investing activities follows:
Three Months ended June 30, 1994 1993 ------ ------ (in thousands) Receivables $ (14,042) (28,320) ====== ====== Inventories $ 7,092 3,197 ====== ====== Accounts payable and accrued liabilities $ 39,141 24,350 ====== ======
Cash paid for income taxes amounted to $224,000 and $200,000 for 1994 and 1993, respectively. Interest paid in cash amounted to $20,569,000 and $23,466,000 for 1994 and 1993, respectively. 5. NEW ACCOUNTING STANDARDS Statement of Financial Accounting Standards No. 112 - Employers' Accounting for Postemployment Benefits. Issued in November 1992, this statement applies to employers who provide certain benefits to former or inactive employees after employment but before retirement. It requires that the cost of such benefits be recognized over the service period of employees as these benefits vest or accumulate. The provisions of this statement must be adopted for fiscal years beginning after December 15, 1993. The impact of adoption of this statement will not be material. Statement of Financial Accounting Standards No. 114, "Accounting by Creditors for Impairment of a Loan", was issued by the Financial Accounting Standards Board in May 1993. This standard is effective for years beginning after December 15, 1994. The standard requires that an impaired loan's fair value be measured and compared to the recorded investment in the loan. If the fair value of the loan is less than the recorded investment in the loan, a valuation allowance is established. The Company has not completed an evaluation of the effect of this standard. 13 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Financial Statements, Continued (Unaudited) 5. NEW ACCOUNTING STANDARDS, continued Statement of Financial Accounting Standards No. 115 - Accounting for Certain Investments in Debt and Equity Securities. Effective December 31, 1993, RWIC adopted SFAS 115. This statement requires classification of debt securities into one of the following three categories based on management's intention with regard to such securities: held-to-maturity, available-for-sale and trading. Securities classified as held-to-maturity are recorded at cost adjusted for the amortization of premiums or accretion of discounts while those classified as available-for- sale are recorded at fair value with unrealized gains or losses reported on a net basis as a separate component of stockholders' equity. Securities classified as trading, if any, are recorded at fair value with unrealized gains or losses reported on a net basis in income. RWIC does not currently maintain a trading portfolio. U-Haul and Oxford will adopt this statement in fiscal 1995. An evaluation of this statement has not been completed by U-Haul or Oxford. Statement of Position 93-7, "Reporting on Advertising Costs", was issued by the Accounting Standards Executive Committee in December 1993. This statement of position provides guidance on financial reporting on advertising costs in annual financial statements. The statement of position requires reporting advertising costs as expenses when incurred or when the advertising takes place, reporting the costs of direct-response advertising, and amortizing the amount of direct-response advertising reported as assets. This statement of position is effective for financial statements for years beginning after June 15, 1994. The Company currently matches certain advertising costs with revenue generated in future periods, and at June 30, 1994, $9.1 million in advertising costs are deferred and included in prepaid expenses. The Company has completed an evaluation of the effect of this statement of position but has not determined the timing of adoption. 14 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, 1994 and 1993. Rental operations is composed of the operations of U-Haul and AMERCO Real Estate Company. Life insurance is composed of the operations of Oxford. Property and casualty insurance is composed of the operations of Republic Western Insurance Company (RWIC).
Adjust- Rental Life Property/ ments and Opera- Insur- Casualty Elimina- Consoli- tions ance Insurance tions dated ------ ------ --------- --------- -------- (in thousands) 1994 Revenues: Outside $ 280,389 8,112 35,077 - 323,578 Inter- segment - 372 2,627 (2,999) - ------- ----- ------ ----- ------- Total revenue 280,389 8,484 37,704 (2,999) 323,578 ======= ===== ====== ===== ======= Operating profit 53,588 1,875 7,001 - 62,464 ======= ===== ====== ===== Interest expense 16,638 ------- Pretax earnings from operations 45,826 ======= 1993 Revenues: Outside $ 254,099 7,523 29,726 - 291,348 Inter- segment - (114) 2,564 (2,450) - ------- ----- ------ ----- ------- Total revenue 254,099 7,409 32,290 (2,450) 291,348 ======= ===== ====== ===== ======= Operating profit 39,054 2,550 5,372 - 46,976 ======= ===== ====== ===== Interest expense 17,338 ------- Pretax earnings from operations 29,638 =======
15 U-Haul U-Haul revenues consist of (i) total rental and other revenue and (ii) net sales. Total rental and other revenue increased by $22.6 million, approximately 11.0%, to $229.1 million in the first quarter of fiscal 1995. The increase in fiscal 1995 is primarily attributable to a $23.4 million increase in net revenues from the rental of moving related equipment, which benefited from transactional growth reflecting higher utilization and rental fleet expansion. Revenues from the rental of self-storage facilities increased by $2.1 million to $18.8 million in fiscal 1995, an increase of approximately 12.6%. Storage revenues were positively impacted by additional rentable square footage, higher average occupancy levels, and higher average rental rates. Net sales were $51.3 million in the first quarter of fiscal 1995, which represented an increase of approximately 7.8% from fiscal 1994 net sales of $47.6 million. Revenue growth from the sale of hitches, moving support items (i.e. boxes, etc.), and propane resulted in a $4.2 million increase during the quarter, which was offset by a $.4 million decrease in gasoline sales. Cost of sales was $27.6 million in the first quarter of fiscal 1995, which represented a decrease of approximately 5.8% from $29.3 million in fiscal 1994. The reduction in fiscal 1994 reflects a combination of the absence of recreational vehicle sales, reduced levels of outside repair and a reduction in inventory adjustments which fully offset increased material costs corresponding to the increase in hitch, moving support and propane sales. Operating expenses increased to $162.0 million in the first quarter of fiscal 1995 from $155.6 million in the first quarter of fiscal 1994, an increase of approximately 4.1%. The change from the prior year primarily reflects higher rental equipment maintenance costs. Efforts to reduce downtime, an increase in fleet size and higher transaction levels are primarily responsible for the increase. Lease expense declined by $12.5 million to $15.2 million reflecting lease terminations, lease restructuring, and lower finance costs on new leases originated during the past 15 months. All other operating expense categories increased in the aggregate by $8.9 million to $96.3 million. Depreciation expense for the three month period was $37.3 million, as compared to $30.1 million in the same period of the prior year, reflecting an increase in fleet size, the acquisition of trucks that were previously leased and real property acquisitions. Oxford Life Insurance Company Premiums from Oxford's reinsurance lines before intercompany eliminations were $3.8 million for the quarter ended March 31, 1994, an increase of $.5 million, approximately 15.2% over 1993 and accounted for 89.5% of Oxford's premiums in 1994. These premiums are primarily from term life insurance and single and flexible premium deferred annuities. Increases in premiums are primarily from the anticipated increase in annuitizations as a result of the maturing of deferred annuities. 16 Premiums from Oxford's direct lines before intercompany eliminations were $.4 million in 1994, an increase of $.5 million from 1993. Oxford's direct lines are principally related to the underwriting of group life and disability income. Insurance on the lives of the employees of AMERCO and its subsidiary companies accounted for approximately 10.4% of Oxford's premiums in 1994. Other direct lines accounted for approximately .1% of Oxford's premiums in 1994. Net investment income before intercompany eliminations was $3.6 million and $3.4 million for the period ended March 31, 1994 and 1993, respectively. Gains on the disposition of fixed maturity investments were $.2 million and $.3 million. Oxford had $.5 million of other income for both quarters ended March 31, 1994 and 1993. Benefits and expenses incurred were $6.6 million for the quarter ended March 31, 1994, an increase of 34.7% over 1993. Comparable benefits and expenses incurred for 1993 were $4.9 million. This increase is primarily due to the increase in reserve caused by the increase in annuitizations discussed above and an increase in the amortization of deferred acquisition costs. Operating profit after intercompany eliminations decreased by $.6 million, or approximately 24%, in 1994 to $1.9 million, primarily due to an increase in the amortization of deferred acquisition costs. RWIC - Property and Casualty RWIC gross premium writings continues to grow in the first quarter of 1994 to $47.7 million, compared to $34.1 million in 1993, an increase of approximately 39.9%. The rental industry market accounted for a significant share of these premiums, approximately 19.7% and 22.6% in 1994 and 1993, respectively. These writings include U-Haul customers, fleetowners and U-Haul, as well as other rental industry insureds with similar characteristics. RWIC continues underwriting reinsurance via broker markets, and premiums in this area increased to $29.1 million or 61.0% of the total premium in fiscal 1994 from $10.8 million or 31.6% of the total premium in fiscal 1993. Net earned premiums increased $6.4 million, approximately 27%, to $30.1 million for the first quarter of fiscal 1994. This compares with net earned premiums of $23.7 million for fiscal 1993. The premium increase was primarily due to increased writings in the reinsurance area. Underwriting expenses incurred were $30.7 million for the first quarter of 1994, an increase of $3.8 million, approximately 14.1% over fiscal 1993. Comparable underwriting expenses incurred for 1993 were $26.9 million. Higher underwriting expenses are due to larger premium volumes being written in 1994 which increased acquisition costs and commensurate reserves. Net investment income was $6.9 million for the first quarter of fiscal 1994, a decrease of approximately 10.4%, as compared to 1993 net investment income of $7.7 million. The decrease is attributable to a combination of funds invested at lower rates and maturities and calls on bonds during 1993. 17 RWIC completed the first quarter of 1994 with net after tax income of $4.9 million as compared to $4.3 million for the comparable period ended March 1993. This represents an increase of $.6 million, or 14.0% over first quarter 1993. The increase is due to better underwriting results. Interest Expense Interest expense declined by $.7 million to $16.6 million for the quarter ended June 30, 1994, as compared to $17.3 million for the quarter ended June 30, 1993. This decrease primarily reflects a reduction in the costs of funds. Consolidated Group As a result of the foregoing, pretax earnings of $45.8 million were realized in the three months ended June 30, 1994, as compared to $29.9 million for the same period in 1993. After providing for income taxes and cumulative effect of change in accounting principle, net earnings for the three months ended June 30, 1994 were $29.4 million, as compared to $17.4 million for the same period of the prior year. LIQUIDITY AND CAPITAL RESOURCES: U-Haul To meet the needs of its customers, U-Haul must maintain a large inventory of fixed asset rental items. At June 30, 1994, net property, plant and equipment represented approximately 73.8% of total U-Haul assets and approximately 50.8% of consolidated assets. In the first quarter of fiscal 1995, capital expenditures were $144.8 million, as compared to $226.8 million in the first quarter of fiscal 1994, these expenditures 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 was $113.2 million in the first quarter of fiscal 1995, as compared to $61.6 million in the first quarter of fiscal 1994. The increase results from an increase in net earnings, depreciation and amortization and net change in other operating assets and liabilities, specifically receivables, accounts payable and accrued liabilities, and deferred credits. At June 30, 1994, total notes and loans payable outstanding was $725.6 million as compared to $723.8 million at March 31, 1994, $766.9 million at June 30, 1993. During each of the fiscal years ending March 31, 1995, 1996, and 1997, U-Haul estimates gross capital expenditures will average approximately $360 million as a result of the expansion of the rental truck fleet and self-storage segment. This level of capital expenditures, combined with an average of approximately $100 million in annual long-term debt maturities during this same 18 period, are expected to create annual average funding needs of approximately $460 million. Management estimates that U-Haul will fund approximately 55% of these requirements with internally generated funds, including proceeds from the disposition of older trucks and other asset sales. The remainder of the required capital expenditures are expected to be financed through existing credit facilities, new debt placements, lease fundings, and equity offerings. Oxford Life Insurance Company 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 (used) provided by operations and financing was ($3.5) million and $3.0 million for the three month period ended March 31, 1994. Cash provided by operations and financing for the same period ended March 31, 1993 was $3.0 million. During 1994 and 1993 there were no cash flows from new reinsurance agreements. In addition to cash flow from operations and financing activities, a substantial amount of liquid funds is available through Oxford's short-term portfolio. At March 31, 1994 and 1993, short-term investments amounted to $18.5 million and $9.8 million, respectively. Management believes that the overall sources of liquidity will continue to meet foreseeable cash needs. Stockholder's equity of Oxford, excluding investment in RWIC, decreased to $88.2 million in 1994 from $92.5 million in 1993. In May 1993, Oxford paid dividends of $10.0 million to Ponderosa. Applicable laws and regulations of the State of Arizona require the Company's insurance subsidiaries to maintain minimum capital determined in accordance with statutory accounting practices in the amount of $600,000. In addition, the amount of dividends that can be paid to shareholders by insurance companies domiciled in the State of Arizona is limited. Any dividend in excess of the limit requires prior approval of the Insurance Commissioner. Statutory surplus that can be distributed as dividends is $17,076,000 at March 31, 1993. 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 RWIC's short-term investment portfolio was $6.6 million at March 31, 1994. This level of liquid assets, combined with budgeted cash flow, is believed by management to be adequate to meet periodic needs. The structure of the long-term portfolio is designed to match future cash needs. Through capital and operating budgets, RWIC seeks to schedule cash needs in accordance with investment and underwriting proceeds. RWIC does not have plans for any near- term large capital outlays. 19 RWIC maintains a diversified investment portfolio, primarily in bonds at varying maturity levels. Approximately 98.2% 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 98.7% of total liabilities. The liability for unpaid losses is based on the estimated ultimate cost of settling claims reported prior to the end of the accounting period, estimates received from ceding reinsurers and estimates for unreported losses based on the historical experience of RWIC, supplemented by insurance industry historical experience. Unpaid loss adjustment expenses are based on historical ratios of loss adjustment expenses paid to losses paid. Unpaid loss and loss expenses are not discounted. Shareholder equity increased 2.3% from $165.1 million at December 31, 1993 to $168.9 million at March 31, 1994. RWIC considers current shareholders' equity to be adequate to support future growth and absorb unforseen risk events. RWIC does not use debt or equity issues to increase capital and therefore has no exposure to capital market conditions. During the first quarter of 1994, RWIC paid no shareholder dividends. 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, 1994, the Company had $725.5 million in total notes and loans payable outstanding and unutilized lines of credit of approximately $37.5 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 June 30, 1994, the Company was in compliance with these covenants. In addition, these credit agreements contain provisions that could result in a required prepayment upon a "change in control" of the Company. Under certain of the Company's credit agreements, a "change in control" is deemed to occur if (a) any transfer of any shares of any class of capital stock results in the Company's ESOP and members of the Shoen family owning in the aggregate less than the amount of capital stock as may be necessary to enable them to cast in excess of 50% of the votes for the election of directors of the Company or (b) during any period for two consecutive years, persons who at the beginning of such period constituted the Board of Directors of the Company (including any director approved by a vote of not less than 66 2/3% of such board) cease for any reason to constitute greater than 50% of the then acting Board. 20 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. a. Exhibits None b. Reports on Form 8-K. No reports on Form 8-K were filed for the three months ended June 30, 1994. 21 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: August 12, 1994 By: /S/ GARY B. HORTON ___________________________________ Gary B. Horton, Treasurer (Principal Financial Officer) -----END PRIVACY-ENHANCED MESSAGE-----