-----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, ReDimgkpiEnsOez8YU1kREDRiiZvTbyek5kfkQEJgfh1VxURhSZE89zKAqeznov7 lDerOiZ02ZYjFmtgQ60xfg== 0000004457-95-000002.txt : 19950515 0000004457-95-000002.hdr.sgml : 19950515 ACCESSION NUMBER: 0000004457-95-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950210 SROS: NASD SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERCO /NV/ CENTRAL INDEX KEY: 0000004457 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLES & PASSENGER CAR BODIES [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: 95508963 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 AMERCO 12/94 10-Q 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 December 31, 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 [ ]. 32,901,568 shares of AMERCO Common Stock, $0.25 par value and 5,762,495 shares of AMERCO Series A common stock, $0.25 par value were outstanding at February 10, 1995. 5,385 shares of U-Haul International, Inc. Common Stock, $0.01 par value, were outstanding at February 10, 1995. 2 TABLE OF CONTENTS PART I. FINANCIAL INFORMATION Item 1. Financial Statements. a) Consolidated Balance Sheets as of December 31, 1994, March 31, 1994 and December 31, 1993............... 4 b) Consolidated Statements of Earnings for the Nine Months ended December 31, 1994 and 1993............ 6 c) Consolidated Statements of Changes in Stockholders' Equity for the Nine Months ended December 31, 1994 and 1993........................................... 7 d) Consolidated Statements of Earnings for the Quarters ended December 31, 1994 and 1993.......... 8 e) Consolidated Statements of Cash Flows for the Nine Months ended December 31, 1994 and 1993............ 9 f) Notes to Consolidated Financial Statements - December 31, 1994, March 31, 1994 and December 31, 1993.................................. 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................... 18 PART II. OTHER INFORMATION Item 1. Legal Proceedings...................................... 29 Item 2. Changes in Securities.................................. 32 Item 6. Exhibits and Reports on Form 8-K....................... 33 3 THIS PAGE LEFT INTENTIONALLY BLANK 4 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. AMERCO AND CONSOLIDATED SUBSIDIARIES Consolidated Balance Sheets
December 31, March 31, December 31, ASSETS 1994 1994 1993 ------ --------------------------------------- (unaudited) (audited) (unaudited) (in thousands) Cash $ 38,015 18,442 81,850 Receivables 299,662 204,814 98,722 Inventories 50,552 49,012 50,057 Prepaid expenses 25,236 24,503 25,971 Investments, fixed maturities 697,728 719,605 681,142 Investments, other 97,337 84,738 98,244 Deferred policy acquisition costs 48,296 47,846 50,100 Other assets 17,743 21,246 23,940 --------- --------- --------- Property, plant and equipment, at cost: Land 205,622 186,210 184,584 Buildings and improvements 730,928 676,297 654,978 Furniture and equipment 175,268 163,495 161,539 Rental trailers and other rental equipment 235,945 212,187 208,028 Rental trucks 899,958 820,395 756,836 General rental items 52,701 57,421 59,107 --------- --------- --------- 2,300,422 2,116,005 2,025,072 Less accumulated depreciation 1,037,569 941,769 911,582 --------- --------- --------- Total property, plant and equipment 1,262,853 1,174,236 1,113,490 --------- --------- --------- $ 2,537,422 2,344,442 2,223,516 ========== ========= ========= The accompanying notes are an integral part of these consolidated financial statements.
5
December 31, March 31, December 31, LIABILITIES AND STOCKHOLDERS' EQUITY 1994 1994 1993 ------------------------------------ --------------------------------------- (unaudited) (audited) (unaudited) (in thousands) Liabilities: Accounts payable and accrued liabilities $ 118,881 124,062 133,682 Notes and loans 827,592 723,764 666,063 Policy liabilities and accruals 467,051 439,266 348,004 Liabilities from premium deposits 290,529 312,708 316,067 Cash overdraft 23,948 26,559 21,125 Other policyholders' funds and liabilities 9,071 9,592 13,413 Deferred income 12,676 5,913 4,778 Deferred income taxes 82,097 50,791 54,173 --------- --------- --------- 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 December 31, 1994, March 31, 1994, and December 31,1993 - - - 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 5,762,495 shares as of December 31, 1994 and 5,754,334 shares as of March 31, 1994, none as of December 31, 1993 1,441 1,438 - Common stock of $.25 par value, authorized 150,000,000 shares, issued 34,237,505 shares as of December 31, 1994 and 34,245,666 shares as of March 31, 1994 and 40,000,000 as of December 31, 1993 8,559 8,562 10,000 Additional paid-in capital 165,677 165,651 165,789 Foreign currency translation (12,307) (11,152) (9,003) Retained earnings 572,475 515,200 527,337 ---------- ---------- --------- 735,845 679,699 694,123 Less: Cost of common shares in treasury, (1,335,937 shares as of December 31, 1994 and March 31, 1994 and December 31, 1993) 10,461 10,461 10,461 Loan to leveraged employee stock ownership plan 19,807 17,451 17,451 --------- --------- --------- Total stockholders' equity 705,577 651,787 666,211 Contingent liabilities and commitments --------- --------- --------- $ 2,537,422 2,344,442 2,223,516 ========= ========= ========= The accompanying notes are an integral part of these consolidated financial statements.
6 AMERCO AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Earnings Nine Months ended December 31, (Unaudited)
1994 1993 ------------------------ (in thousands except per share data) Revenues Rental and other revenue $ 707,896 639,277 Net sales 131,098 123,567 Premiums 108,659 91,922 Net investment income 32,928 28,998 ---------- ---------- Total revenues 980,581 883,764 Costs and expenses Operating expense 516,568 479,288 Cost of sales 72,634 74,065 Benefits and losses 108,363 94,654 Amortization of deferred acquisition costs 8,521 6,508 Depreciation 112,631 96,580 Interest expense 50,871 52,530 ---------- ---------- Total costs and expenses 869,588 803,625 Pretax earnings from operations 110,993 80,139 Income tax expense (39,602) (25,211) ----------- ---------- Earnings from operations before extraordinary loss on early extinguishment of debt and cumulative effect of change in accounting principle 71,391 54,928 Extraordinary loss on early extinguishment of debt - (1,897) Cumulative effect of change in accounting principle - (3,272) ---------- ---------- Net earnings $ 71,391 49,759 ========== ========== Earnings per common share: Earnings from operations before extraordinary loss on early extinguishment of debt and cumulative effect of change in accounting principle $ 1.67 1.41 Extraordinary loss on early extinguishment of debt - (.05) Cumulative effect of change in accounting principle - (.09) ---------- ---------- Net earnings $ 1.67 1.27 ========== ========== Weighted average common shares outstanding 37,025,575 37,070,925 ========== ========== The accompanying notes are an integral part of these consolidated financial statements.
7 AMERCO AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Changes in Stockholders' Equity Nine Months ended December 31, (Unaudited) 1994 1993 ------------------- (in thousands) Series A common stock of $.25 par value: Authorized 10,000,000 shares, issued 5,762,495 as of December 31, 1994 and 5,754,334 as of March 31, 1994 and none in 1993 Beginning of period $ 1,438 - Exchange for Series A common stock 871 - Exchange for common stock (868) - -------- ------- End of period 1,441 - -------- ------- Common stock of $.25 par value: Authorized 150,000,000 shares, issued 34,237,505 as of December 31, 1994, 34,245,666 as of March 31, 1994 and 40,000,000 as of December 31, 1993 Beginning of period 8,562 10,000 Exchange of Series A common stock (871) - Exchange for common stock 868 - -------- ------- End of period 8,559 10,000 -------- ------- Additional paid-in capital: Beginning of period 165,651 19,331 Issuance of preferred stock - 146,458 Issuance of common shares under ESOP 26 - ------- ------- End of period 165,677 165,789 ------- ------- Foreign currency translation: Beginning of period (11,152) (6,122) Change during period (1,155) (2,881) -------- -------- End of period (12,307) (9,003) -------- -------- Retained earnings: Beginning of period 515,200 482,163 Net earnings 71,391 49,759 Dividends paid to stockholders: Preferred stock: ($1.59 and $.25 per share for 1994 and 1993, respectively) (9,723) (1,512) Common stock: ($.08 per share 1993) - (3,147) Tax benefits related to ESOP dividends - 74 Change in net unrealized gain on investments (4,393) - -------- --------- End of period 572,475 527,337 ------- ------- Treasury stock: Beginning and end of period 10,461 10,461 ------- ------- Loan to leveraged employee stock ownership plan: Beginning of period 17,451 14,953 Increase in loan 4,378 4,335 Proceeds from loan (2,022) (1,837) -------- ------- End of period 19,807 17,451 ------- ------- Total stockholders' equity $ 705,577 666,211 ======= ======= The accompanying notes are an integral part of these consolidated financial statements.
8 AMERCO AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Earnings Quarters ended December 31, (Unaudited)
1994 1993 ----------------------- (in thousands except per share data) Revenues Rental and other revenue $ 210,911 192,051 Net sales 33,410 30,788 Premiums 41,062 35,261 Net investment income 10,505 9,348 ----------- ---------- Total revenues 295,888 267,448 Costs and expenses Operating expense 174,008 155,422 Cost of sales 19,346 18,967 Benefits and losses 42,084 34,744 Amortization of deferred acquisition costs 2,845 2,176 Depreciation 37,876 34,314 Interest expense 17,574 17,262 ----------- ---------- Total costs and expenses 293,733 262,885 Pretax earnings from operations 2,155 4,563 Income tax expense (248) (867) ----------- ---------- Earnings from operations before extraordinary loss on early extinguishment of debt and cumulative effect of change in accounting principle 1,907 3,696 Extraordinary loss on early extinguishment of debt - (1,897) ----------- ---------- Net earnings $ 1,907 1,799 =========== ========== Earnings per common share: Earnings from operations before extraordinary loss on early extinguishment of debt and cumulative effect of change in accounting principle $ (.04) .03 Extraordinary loss on early extinguishment of debt - (.05) ----------- ---------- Net earnings $ (.04) (.02) =========== ========== Weighted average common shares outstanding 36,969,310 36,974,310 =========== ========== The accompanying notes are an integral part of these consolidated financial statements.
9 AMERCO AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Cash Flows Nine Months ended December 31, (Unaudited) 1994 1993 -------------------- (in thousands) Cash flows from operating activities: Net earnings $ 71,391 49,759 Depreciation and amortization 124,409 106,525 Provision for losses on accounts receivable 2,855 1,009 Net gain on sale of real and personal property (1,159) (3,650) Gain on sale of investments (798) (2,970) Cumulative effect of change in accounting principle - 3,272 Changes in policy liabilities and accruals 25,076 10,748 Additions to deferred policy acquisition costs (8,971) (6,859) Net change in other operating assets and liabilities (13,218) 39,644 --------- --------- Net cash provided by operating activities 199,585 197,478 --------- --------- Cash flows from investing activities: Purchases of investments: Property, plant and equipment (322,130) (395,247) Fixed maturities (112,067) (184,368) Real estate (8) (176) Mortgage loans (77,194) (41,920) Proceeds from sale of investments: Property, plant and equipment 123,653 180,228 Fixed maturities 132,854 152,401 Real estate 564 1,404 Mortgage loans 8,632 58,875 Changes in other investments (1,275) (5,842) --------- --------- Net cash used by investing activities (246,971) (234,645) --------- --------- Cash flows from financing activities: Net change in short-term borrowings 121,250 (126,000) Proceeds from notes 66,000 186,000 Loan to leveraged employee stock ownership plan (4,378) (4,335) Proceeds from leveraged employee stock ownership plan 2,022 1,837 Principal payments on notes (83,422) (91,058) Issuance of preferred stock - 146,458 Extraordinary loss on early extinguishment of debt - (1,897) Net change in cash overdraft (2,611) (3,726) Dividends paid (9,723) (4,659) Investment contract deposits 19,561 24,552 Investment contract withdrawals (41,740) (29,446) --------- --------- Net cash provided by financing activities 66,959 97,726 --------- --------- Increase in cash 19,573 60,559 Cash at beginning of period 18,442 21,291 --------- --------- Cash at end of period $ 38,015 81,850 ======= ========= The accompanying notes are an integral part of these consolidated financial statements.
10 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 1994, March 31, 1994 and December 31, 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 December 31, 1994 and 1993, and the related consolidated statements of earnings, changes in stockholders' equity and cash flows for the quarters ended December 31, 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 operating results and financial position of AMERCO's consolidated insurance operations are determined at a quarter lag. There were no effects related to intervening events which would significantly affect consolidated position or results of operations for the financial statements presented herein. The financial statements and notes are presented as permitted by Form 10-Q and do not contain certain information included in the Company's annual financial statements and notes. Earnings per share are computed based on the weighted average number of shares outstanding, 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 December 31, 1993 to conform with the current year's presentation. 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):
Gross Gross Estimated Carrying Unrealized Unrealized Market September 30, 1994 Par Value Value Gains Losses Value ----------------- ---------- ------ ------ ------ ------ U.S. Treasury securities and government obligations 106,807,186 104,904 1,201 (3,664) 102,441 States, municipal- ities and political subdivisions 35,965,000 35,861 2,390 (220) 38,031 Corporate Securities 417,040,737 424,042 4,354 (20,873) 407,523 Public utility securities 45,650,000 45,112 425 (1,112) 44,425 Mortgage-backed securities 87,052,371 85,644 360 (6,268) 79,736 Redeemable pre- ferred stock 36,051 2,165 346 - 2,511 ------- ------ -------- ------- 697,728 9,076 (32,137) 674,667 ======= ====== ======== =======
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:
December 31, 1994 1993 --------------------- (in thousands) Investments - fixed maturities $ 697,728 681,142 Other investments 93,633 98,244 Receivables 148,167 47,960 Deferred policy acquisition costs 48,296 50,100 Due from affiliate 16,342 10,072 Deferred federal income taxes 8,157 7,216 Other assets 7,306 25,023 --------- ------- Total assets $ 1,019,629 919,757 ========= ======= Policy liabilities and accruals $ 408,903 307,410 Unearned premiums 57,949 40,594 Premium deposits 290,529 316,067 Other policyholders' funds and liabilities 13,008 13,514 --------- ------- Total liabilities 770,389 677,585 Stockholder's equity 249,240 242,172 --------- ------- Total liabilities and stockholder's equity $ 1,019,629 919,757 ========= =======
12 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:
Nine Months ended December 31, 1994 1993 --------------------- (in thousands) Premiums $ 124,047 107,306 Net investment income 33,039 30,165 Other income 3,879 6,075 --------- ------- Total revenue 160,965 143,546 Benefits and losses 108,363 94,654 Amortization of deferred policy acquisition costs 8,521 6,508 Other expenses 21,299 19,239 --------- ------- Income from operations 22,782 23,145 Federal income tax expense (6,580) (6,084) ---------- -------- Earnings from operations before change in accounting principle 16,202 17,061 Cumulative effect of change in accounting principle - (101) ---------- -------- Net income $ 16,202 16,960 ========= =======
Effective June 30, 1994, the Board of Directors of Oxford declared a dividend of its stock in Republic Western Insurance Company to Ponderosa. Effective July 1994, the Board of Directors of Ponderosa Holdings, Inc. declared and paid a dividend of $14,603,000 to AMERCO. 4. CONTINGENT LIABILITIES AND COMMITMENTS During the nine months ended December 31, 1994, U-Haul Leasing & Sales Co., a wholly-owned subsidiary of U-Haul International, Inc., entered into eleven transactions, whereby they sold rental trucks and subsequently leased them back. AMERCO has guaranteed $9,609,000 of residual values at December 31, 1994 on these assets at the end of the lease terms. Following are the lease commitments for those leases executed during the nine months ended December 31, 1994, which have a term of more than one year (in thousands): Year ended Lease March 31, Commitments ---------------------------- 1995 $ 10,108 1996 16 805 1997 16,805 1998 16,805 1999 16,805 Thereafter 40,305 ------- $ 117,633 ======== 13 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (Unaudited) 4. CONTINGENT LIABILITIES AND COMMITMENTS, continued The Company is a defendant in a number of suits and claims incident to the type of business conducted and several administrative proceedings arising from state and local provisions that regulate the removal and/or clean-up of underground fuel storage tanks. The Company owns property within two state hazardous waste sites in the State of Washington. At this time, the remedial clean-up cost or range of costs for such sites cannot be estimated. Management's opinion is that none of these suits or claims involving AMERCO and/or its subsidiaries is expected to result in any material loss. Certain of the Company's credit agreements contain provisions that could result in a required prepayment upon a "change in control" of the Company. A "change in control" is deemed to occur if (a) any transfer of any shares of any class of capital stock results in the Company's ESOP and members of the Shoen family owning in the aggregate less than the amount of capital stock as may be necessary to enable them to cast in excess of 50% of the votes for the election of directors of the Company, or (b) during any period for two consecutive years, persons who at the beginning of such period constituted the Board of Directors of the Company (including any director approved by a vote of not less than 66 2/3% of such board) cease for any reason to constitute greater than 50% of the then acting Board. The Company does not currently have available sources of financing to fund such prepayments if they become payable in full. In addition, upon such a "change in control," the Company might lose the ability to draw on certain unutilized lines of credit otherwise available. As disclosed in the Form 10-K for the year ended March 31, 1994, certain members of the Company's Board of Directors are defendants in an action in the Superior Court of the State of Arizona entitled Samuel W. Shoen, M.D., et al v. Edward J. Shoen, ------------------------------------------------ et al., No. CV88-20139, instituted August 2, 1988. The plantiffs, ------ certain shareholders of the Company, have alleged that certain of the individual plaintiffs were wrongfully excluded from sitting on the Company's Board of Directors in 1988 through the sale of the Company's common stock to certain key employees, various breaches of fiduciary duty and other unlawful conduct by the individual defendants. The plaintiffs seek equitable relief, compensatory damages, and punitive damages. All claims for various breaches of fiduciary duty and other unlawful conduct by the individual defendants that would have allowed the plaintiffs to sit on the Board of Directors have been dismissed, subject only to the right of the plaintiffs to appeal such dismissal. The Company was also a defendant in the action as originally filed, but was dismissed from the action on August 15, 1994, subject only to the right, to the extent that any exists, of the plaintiffs to appeal such dismissal. See also Note 8 to Consolidated Financial Statements (Unaudited). 14 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (Unaudited) 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: Nine Months ended December 31, 1994 1993 --------------------- (in thousands) Receivables $ (39,347) (51) ===================== Inventories $ 1,540 1,380 ===================== Accounts payable and accrued liabilities $ (7,272) 20,237 ===================== Income tax paid in cash amounted to $4,089,000 and $2,161,000 for 1994 and 1993, respectively. Interest paid in cash amounted to $52,363,000 and $62,403,000 for 1994 and 1993, respectively. 6. RELATED PARTIES Subsequent to March 31, 1994, a subsidiary of the Company loaned SAC Self-Storage Corporation(SAC)a total of $35,553,000 for the purchase of 24 self-storage properties by SAC. Such properties are presently being operated by the Company pursuant to management agreements. SAC's current sole owner is Mark V. Shoen, a shareholder and director of the Company. The underlying notes bear interest at a rate of 9% and are secured by real property and operating cash flows. Accrued interest in the aggregate was $1,345,000 as of December 31, 1994. The notes mature in 2001. The loan is secured by mortgages on all of the SAC properties. On November 28, 1994, the Company entered into an Exchange Agreement with Mark V. Shoen, a director and major stockholder of the Company. Pursuant to the Exchange Agreement, in exchange for 3,475,520 shares of Series A Common Stock owned by Mark V. Shoen, Mark V. Shoen received 3,475,520 shares of Common Stock. On January 17, 1995, Paul F. Shoen sold 50,632 shares of Common Stock to the ESOP Trust pursuant to a Share Repurchase and Registration Rights Agreement at the most recent closing price for the Common Stock trading on Nasdaq of $19.75 per share for an aggregate sales price of approximately $1,000,000. As disclosed in Part II, Item 1 - Legal Proceedings, on February 9, 1995, Paul F. Shoen executed a settlement agreement with the Company whereby Paul F. Shoen agreed to the dismissal of certain claims he had asserted in an arbitration proceeding and in an action in the United States District Court for the District of Nevada. In exchange for Paul F. Shoen's agreement to dismiss such claims, the Company agreed to work in good faith toward appointing 15 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (Unaudited) 6. RELATED PARTIES, continued independent trustees for the ESOP and to place Paul F. Shoen on the management's slate of directors for the 1994 Annual Meeting of Stockholders. In addition, the settlement agreement provides for the Company to pay Paul F. Shoen $925,000 and for the Company to receive a full release of all claims by Paul F. Shoen through the settlement date, including but not limited to, claims for reimbursement of attorneys fees related to all matters to which Paul F. Shoen is or was a party. The terms of the settlement will not result in a material adverse effect of the Company's financial condition or results of operations. 7. 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 is immaterial. Statement of Financial Accounting Standards No. 114, "Accounting by Creditors for Impairment of a Loan", was issued by the Financial Accounting Standards Board in May 1993. This standard is effective for years beginning after December 15, 1994. The standard requires that an impaired loan's fair value be measured and compared to the recorded investment in the loan. If the fair value of the loan is less than the recorded investment in the loan, a valuation allowance is established. The Company has not completed an evaluation of the effect of this standard. Statement of Financial Accounting Standards No. 115 - Accounting for Certain Investments in Debt and Equity Securities. 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. The effect of adopting this statement on the Company's financial statements is immaterial. 16 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (Unaudited) 7. NEW ACCOUNTING STANDARDS, continued 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 December 31, 1994, $9.4 million in advertising costs are deferred and included in prepaid expenses. The Company has completed an evaluation of the effect of this statement of position but has not determined the timing of adoption. However, the Company must adopt this statement of position in fiscal 1996. 8. SUBSEQUENT EVENTS On February 7, 1995, the Company declared a cash dividend of $3,241,000 ($.53 per preferred share) to preferred stockholders of record as of February 17, 1995. As disclosed in Note 4, certain of the Company's current and former directors are defendants in an action initiated by certain of the Company's shareholders. Based on the plaintiff's theory of damages, the Court ruled that the plaintiffs elected that their remedy in the litigation would be the sale of their stock to the defendants at a price determined by the Court based on the value of their stock in 1988. On October 7, 1994, the jury determined that such value was $81.12 per share or approximately $1.48 billion. On February 2, 1995, the judge in this case granted the defendants' motion for remittitur or a new trial on the issue of damages. The judge determined that the value of the plaintiffs' stock in 1988 was $25.30 per share or $461,838,000. The plaintiffs have until March 2, 1995 to file a statement accepting the remittitur or the defendants' motion for a new trial on the issue of damages will be deemed granted. The jury also awarded the plaintiffs $70,000,000 in punitive damages against Edward J. Shoen. The judge ruled that this punitive damage award is excessive and granted Edward J. Shoen's motion for remittitur or a new trial on the issue of punitive damages. The judge reduced the award of punitive damages against Edward J. Shoen to $7,000,000. The plaintiffs have until March 2, 1995 to file a statement accepting the remittitur. If no such statement is filed by the plaintiffs by that time, Edward J. Shoen's motion for a new trial on the issue of punitive damages will be deemed granted. 17 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (Unaudited) 8. SUBSEQUENT EVENTS, continued The Company has agreed to indemnify the defendants to the fullest extent permitted by law or the Company's Articles of Incorporation or Bylaws, for all expenses and damages, if any, incurred by the defendants in this proceeding, subject to certain exceptions. At this time, the extent of the Company's indemnification obligations, if any, cannot be reasonably estimated. No provision has been made in the Company's financial statements for any possible indemnification claims. Before the Company will have any indemnification obligations, a final judgment must be entered against the defendants, the defendants must request indemnification from the Company, and a determination must be made under Nevada law as to the validity of the indemnification claims. If valid indemnification claims are made, the Company believes that it has various means of financing any such indemnification obligations consistent with its existing credit agreements. In the alternative, the Company may seek the waiver or amendment of certain of the provisions of one or more of its credit agreements when the indemnification obligations are determined. The Company believes, but no assurances can be given, that it can obtain any necessary waivers or amendments. The Company believes that it can satisfy its indemnification obligations, if any, unless the amount to be paid to the plaintiffs for their stock is increased following the completion of any appeals or any new trial on the issue of damages. The Company does not believe that there will be a material adverse effect on its earnings, financial position, or cash flows unless the amount to be paid to the plaintiffs for their stock is increased. The Company is unable to predict the likelihood, outcome, or consequences of any appeal or any new trial on the issue of damages. As disclosed in Part II, Item 1 - Legal Proceedings, on February 9, 1995, Paul F. Shoen executed a settlement agreement with the Company whereby Paul F. Shoen agreed to the dismissal of certain claims he had asserted in an arbitration proceeding and in an action in the United States District Court for the District of Nevada. In exchange for Paul F. Shoen's agreement to dismiss such claims, the Company agreed, among other things, to work in good faith toward appointing independent trustees for the ESOP and to place Paul F. Shoen on the management's slate of directors for the 1994 Annual Meeting of Stockholders. In addition, the settlement agreement provides for the Company to pay Paul F. Shoen $925,000 and for the Company to receive a full release of all claims by Paul F. Shoen through the settlement date, including but not limited to, claims for reimbursement of attorneys fees related to all matters to which Paul F. Shoen is or was a party. The terms of the settlement will not result in a material adverse effect of the Company's financial condition or results of operations. 18 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS: The following table shows industry segment data from the Company's three industry segments, rental operations, life insurance, and property and casualty insurance, for the nine months ended December 31, 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). The Company's results of operations have historically fluctuated from quarter to quarter. In particular, the Company's U-Haul rental operations are seasonal and a majority of the Company's revenues and substantially all of it's earnings from its U-Haul rental operations 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) Nine months ended December 31, 1994 Revenues: Outside $ 835,593 29,972 115,016 - 980,581 Intersegment (41) 1,134 14,899 (15,992) - --------- ------- ------- -------- --------- Total Revenue 835,552 31,106 129,915 (15,992) 980,581 ========= ======= ======= ======== ========= Operating profit 139,041 8,016 14,766 41 161,864 ======== ======= ======= ======== Interest expense 50,871 --------- Pretax earnings from operations 110,993 ========= Identifiable Assets at December 31 1,792,189 452,699 566,930 (274,396) 2,537,422 ========= ======= ======= ======== =========
Nine months ended December 31, 1993 Revenues: Outside $ 755,809 25,400 102,555 - 883,764 Intersegment 1,055 224 15,404 (16,683) - --------- ------- ------- --------- ---------- Total Revenue 756,864 25,624 117,959 (16,683) 883,764 ========= ======= ======= ========= ========== Operating profit 110,222 8,531 14,614 (698) 132,669 ========= ======= ======= ========= Interest expense 52,530 --------- Pretax earnings from operations 80,139 ========= Identifiable Assets at December 31 1,563,917 460,558 459,199 (260,158) 2,223,516 ========= ======= ======= ======== =========
19 NINE MONTHS ENDED DECEMBER 31, 1994 VERSUS NINE MONTHS ENDED DECEMBER 31, 1993 U-Haul U-Haul revenues consist of (i) total rental and other revenue and (ii) net sales. Total rental and other revenue increased by $71.2 million, approximately 11.2%, to $704.5 million in the first nine months of fiscal 1995. The increase in the first nine months of fiscal 1995 is primarily attributable to a $64.6 million increase in net revenues from the rental of moving related equipment, which rose to $645.5 million as compared to $580.9 million in the first nine months of fiscal 1994. Moving related revenues benefited from transactional (volume) growth within the truck and trailer fleets reflecting higher utilization and rental fleet expansion. Revenues from the rental of self-storage facilities increased by $8.3 million to $60.5 million in the first nine months of fiscal 1995, an increase of approximately 15.9%. Storage revenues were positively impacted by additional rentable square footage and higher average rental rates. Other revenues declined by $1.7 million which primarily reflects a reduction in gains realized from the disposition of property, plant and equipment. Net sales revenues were $131.1 million in the first nine months of fiscal 1995, which represents an increase of approximately 6.1% from the first nine months of fiscal 1994 net sales of $123.6 million. Revenue growth from the sale of moving support items (i.e. boxes, etc.), hitches, and propane resulted in a $9.0 million increase during the first nine month period, which was offset by a $1.4 million decrease in revenue from gasoline sales. Cost of sales was $72.6 million in the first nine months of fiscal 1995, which represents a decrease of approximately 1.9% from $74.1 million for the same period in fiscal 1994. The decrease in cost of sales primarily reflects improved margins on hitch sales, and the liquidation of RV parts in the first quarter of fiscal 1994. Increased material costs from the sale of moving support items and propane, which can be primarily attributed to higher sales levels, partially offset these decreases. Operating expenses increased to $511.2 million in the first nine months of fiscal 1995 from $476.0 million in the first nine months of fiscal 1994, an increase of approximately 7.4%. The change from the prior year primarily reflects a $25.7 million increase in rental equipment maintenance costs. An increase in fleet size, higher transaction levels, and efforts to minimize downtime are primarily responsible for the increase. Lease expense declined by $18.1 million to $48.7 million reflecting lease terminations, lease restructuring, and lower finance costs on new leases originated during the past 18 months. All other operating expense categories increased in the aggregate of $27.6 million, approximately 9.9%, to $305.4 million. The increase in operating expense relates to the growth in number of rented transactions. Depreciation expense for the nine month period was $112.6 million, as compared to $96.6 million in the same period of the prior year, reflecting the increase in fleet size, the acquisition of trucks that were previously leased and real property acquisitions. 20 Oxford - Life Insurance Premiums from Oxford's reinsurance lines before intercompany eliminations were $13.2 million for the nine months ended September 30, 1994, an increase of $1.4 million, approximately 11.9% over 1993 and accounted for 75.9% of Oxford's premiums in 1994. These premiums are primarily from term life insurance and single and flexible premium deferred annuities. Increases in premiums are primarily from the anticipated increase in annuitizations as a result of the maturing of deferred annuities. Premiums from Oxford's direct lines before intercompany eliminations were $4.2 million for the nine months ended September 30, 1994, an increase of $2.6 million over the prior year. The increase in direct premium is primarily due to Oxford's entrance into the credit life and accident and health business. Oxford's direct lines are principally related to the underwriting of group life and disability income and credit life and accident and health. Insurance on the lives of the employees of AMERCO and its subsidiary companies accounted for approximately 7.4% of Oxford's premiums in 1994. Other direct lines accounted for approximately 16.7% of Oxford's premiums in 1994. Net investment income before intercompany eliminations was $11.1 million and $9.4 million for the nine months ended September 30, 1994 and 1993, respectively. This increase is primarily due to increasing margins on the interest sensitive business. Gains on the disposition of fixed maturity investments were $1.2 million and $1.5 million for the nine months ended September 30, 1994 and 1993, respectively. Oxford had $1.4 million and $1.3 million of other income for the nine months ended September 30, 1994 and 1993, respectively. Benefits and expenses incurred were $23.1 million for the nine months ended September 30, 1994, an increase of 35.1% over 1993. Comparable benefits and expenses incurred for 1993 were $17.1 million. This increase is primarily due to the increase in reserve caused by the increase in annuitizations and the credit life and accident and health business discussed above. In addition, Oxford increased its amortization of deferred acquisition costs. Operating profit before intercompany eliminations decreased by $.5 million, or approximately 5.9%, in 1994 to $8.0 million, primarily due to the decrease in gain on sale of investments and increased amortization of deferred acquisition costs. These decreases in operating profit were partially offset by the increasing margins on the interest sensitive business. RWIC - Property and Casualty RWIC gross premium writings continued to grow in the first nine months of 1994, to $141.4 million as compared to $131.5 million in the first nine months of 1993. This represents an increase of $9.9 million, or 7.5%. RWIC continues underwriting professional reinsurance via broker markets, and premiums in this area increased in the first nine months of 1994 to $54.1 million, or 38.3% of total premium, from comparable 1993 figures of $44.6 million, or 33.9% of total premium. Growth is also occurring in selected general agency 21 lines. These premiums accounted for approximately 15.2% of gross written premium for 1994, compared to 14.0% in 1993. As in prior years, the rental industry market also accounts for a significant share of total premiums, approximately 43.3% and 40.1% in the first nine months of 1994 and the first nine months of 1993, respectively. These writings include U-Haul customers, fleetowners and U-Haul as well as other rental industry insureds with similar characteristics. Net earned premiums increased $12.8 million, or 13.6%, to $106.7 million for the nine months ended September 30, 1994, compared with premiums of $93.9 million for the nine months ended September 30, 1993. The premium increase was primarily due to planned increased writings in the assumed reinsurance and general agency lines. Underwriting expenses incurred were $115.1 million for the nine months ended September 30, 1994, an increase of $11.8 million, or 11.4% over 1993. Comparable underwriting expenses incurred for 1993 were $103.3 million. The increase in underwriting expenses is due to the larger premium volume being written in 1994, which increased acquisition costs and commensurate reserves. The ratio of underwriting expenses to net earned premiums decreased from 1.10 in the first nine months of 1993 to 1.08 in the first nine months of 1994. This improvement is primarily attributable to improved loss experience combined with continued market rate strength in the Company's assumed reinsurance area. Also contributing to the improvement was better than expected loss ratios on the Company's general agency lines. Net investment income was $21.9 million for the nine months ended September 30, 1994, an increase of 5.8% over the nine months ended September 30, 1993 net investment income of $20.7 million. The increase is due to an increased asset base generated from larger premium volume. RWIC completed the nine months ended September 30, 1994 with income before tax expense of $14.8 million as compared to $14.6 million for the comparable period ended September 30, 1993. This represents a decrease of $.2 million, or 1.1% over 1993. Improved underwriting results in the Company's assumed reinsurance and general agency area were offset by declines in its worker's compensation and rental industry liability lines. Interest Expense Interest expense decreased by $1.6 million to $50.9 million for the nine months ended December 31, 1994, as compared to $52.5 million for the nine months ended December 31, 1993. This decrease reflects a reduction in the costs of funds. Extraordinary Loss on Extinguishment of Debt During fiscal 1994, the Company extinguished $25.2 million of its medium term notes originally due in fiscal 1995 through 2000. The weighted average rate of the notes purchased is 9.34%. The purchase resulted in an extraordinary charge of $1.9 million net of $1.0 million of tax benefit. 22 Consolidated Group As a result of the foregoing, pretax earnings of $111.0 million were realized in the nine months ended December 31, 1994, as compared to $80.1 million for the same period in 1993. After providing for income taxes, net earnings for the nine months ended December 31, 1994 were $71.4 million, as compared to $49.8 million for the same period of the prior year. The consolidated results for the prior year reflect a cumulative effect adjustment resulting from the adoption of Statement of Accounting Standards No. 106 "Accounting for Post-Retirement Benefits Other Than Pensions" and extraordinary costs associated with the early retirement of debt. THREE MONTHS ENDED DECEMBER 31, 1994 VERSUS THREE MONTHS ENDED DECEMBER 31, 1993 U-Haul U-Haul revenues consist of (i) total rental and other revenue and (ii) net sales. Total rental and other revenue increased by $22.6 million, approximately 12.0%, to $210.5 million in the three months ended December 1994. The increase is primarily attributable to a $18.4 million increase in net revenues from the rental of moving related equipment, which rose to $186.1 million, as compared to $167.7 million for the three months ended December 31, 1994 and December 31, 1993, respectively. Moving related revenues benefited from transactional (volume) growth within the truck and trailer fleets. Revenues from the rental of self-storage facilities increased by $3.6 million to $21.1 million for the three months ended December 1994, an increase of approximately 20.6%. Storage revenues were positively impacted by additional rentable square footage and higher average rental rates. Other revenues increased by $.6 million which primarily reflects changes in gains realized from the disposition of property, plant and equipment. Net sales were $33.4 million for the three months ended December 31, 1994, which represents an increase of approximately 8.4% from the three months ended December 31, 1993 net sales of $30.8 million. Revenue growth from the sale of hitches, moving support items (i.e. boxes, etc.), and propane resulted in a $2.7 million increase during the three month period. Cost of sales was $19.3 million for the three months ended December 31, 1994 compared to $19.0 million for the same period ended December 1993. Increased material costs corresponding to higher sales levels of moving support items, propane and hitches were primarily responsible. Operating expenses increased to $171.7 million for the three months ended December 31, 1994 compared to $154.0 million for the three months ended December 1993, an increase of approximately 11.5%. The change from the prior year primarily reflects increases in virtually all operating expense categories reflecting higher transaction levels, an increase in fleet size and continuing efforts to minimize rental equipment downtime. Lease expense declined by $.8 23 million to $17.2 million reflecting the full benefits of last year's lease termination in both the current and prior year. Depreciation expense for the three month period was $37.8 million, as compared to $34.3 million in the same period of the prior year, reflecting the increase in fleet size, the acquisition of trucks that were previously leased and real property acquisitions. Oxford - Life Insurance Premiums from Oxford's reinsurance lines before intercompany eliminations were $5.0 million for the quarter ended September 30, 1994, an increase of $.8 million, approximately 19.0% over 1993 and accounted for 75.9% of Oxford's premiums in 1994. These premiums are primarily from term life insurance and single and flexible premium deferred annuities. Increases in premiums are primarily from the anticipated increase in annuitizations as a result of the maturing of deferred annuities. Premiums from Oxford's direct lines before intercompany eliminations were $1.9 million for the quarter ended September 30, 1994, an increase of $1.5 million (375%) over the prior year. 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. Other direct lines include the underwriting of credit life and accident and health business and individual life insurance acquired from other insurers. The increase in direct premium is primarily due to Oxfords entrance into the credit life and accident and health business. Net investment income before intercompany eliminations was $3.4 million and $3.0 million for the quarters ended September 30, 1994 and 1993, respectively. This increase is primarily due to increasing margins on the interest sensitive business. Gains on the disposition of fixed maturity investments were $1.0 million during the quarter ended September 30, 1993. There were no gains on sale of investments during the quarter ended September 30, 1994. Oxford had $.4 million and $.3 million of other income for the quarters ended September 30, 1994 and 1993, respectively. Benefits and expenses incurred were $9.0 million for the quarter ended September 30, 1994, an increase of 73.1% over 1993. Comparable benefits and expenses incurred for 1993 were $5.2 million. This increase is primarily due to the increase in reserve caused by the increase in annuitizations and Oxford's entrance into credit life and accident and health business. In addition, Oxford increased its amortization of deferred acquisition costs. Operating income before intercompany eliminations decreased by $2.1 million, or approximately 55.3%, in 1994 to $1.7 million, primarily due to the decrease on sale of investments and Oxford's increased amortization of deferred acquisition costs. These decreases in operating income were partially offset by the increasing margins on the interest sensitive business. 24 RWIC - Property and Casualty RWIC gross premium writings for the quarter ended September 1994 were $47.8 million as compared to $50.2 million for the quarter ended September 1993. This represents a decrease of $2.4 million, or 4.6%. As in prior years, the rental industry market accounts for a significant share of total premiums, approximately 48.8% and 42.0% for the quarter ended September 1994 and the quarter ended September 1993, respectively. These writings include U-Haul customers, fleetowners and U-Haul as well as other rental industry insureds with similar characteristics. Net earned premiums increased $3.9 million, or 10.7%, to $40.3 million for the three months ended September 30, 1994, compared with premiums of $36.4 million for the three months ended September 30, 1993. The premium increase was primarily due to increased writings in the general agency lines. Underwriting expenses incurred were $44.5 million for the three months ended September 30, 1994, an increase of $5.5 million, or 14.1% over 1993. Comparable underwriting expenses incurred for 1993 were $39.0 million. The increase in underwriting expenses is due to the larger premium volume being written in 1994, which increased acquisition costs and commensurate reserves. The ratio of underwriting expenses to net earned premiums increased from 1.07 for the three months ended September 30, 1993 to 1.10 for the three months ended September 30, 1994. Net investment income was $7.1 million during the quarters ended September 30, 1994 and 1993, respectively. RWIC completed the three months ended September 30, 1994 with pretax earnings of $3.2 million as compared to $6.3 million for the comparable period ended September 1993. This represents a decrease of $3.1 million, or 49.2% over 1993. The decrease is due to poor underwriting results in the rental industry liability lines. Interest Expense Interest expense increased by $.3 million to $17.6 million for the three months ended December 31, 1994, as compared to $17.2 million for the three months ended December 31, 1993. This increase reflects increases in average debt outstanding which was partially offset by a reduction in the average cost of funds. Consolidated Group As a result of the foregoing, pretax earnings of $2.3 million were realized in the three months ended December 31, 1994, as compared to $4.5 million for the same period in 1993. After providing for income taxes, net earnings for the three months ended December 31, 1994 were $1.9 million, as compared to $1.8 million for the same period of the prior year. 25 LIQUIDITY AND CAPITAL RESOURCES U-Haul To meet the needs of its customers, U-Haul must maintain a large inventory of fixed asset rental items. At December 31, 1994, net property, plant and equipment represented approximately 70.5% of total U-Haul assets and approximately 49.8% of consolidated assets. In the first nine months of fiscal 1995, capital expenditures were $322.1 million, as compared to $395.2 million in the first nine months of fiscal 1994, reflecting expansion of the rental fleet in both periods, purchase of trucks previously leased, and increases in the available square footage in the self-storage segment. The capital required to fund these acquisitions were funded with internally generated funds from operations, debt, equity and lease financings. Cash flows from operations were $170.7 million in the first nine months of fiscal 1995, as compared to $171.2 million in the first nine months of fiscal 1994. The decrease of $.5 million is due to an increase in net earnings and depreciation and amortization with a decrease in net change of operating assets and liabilities, specifically receivables and deferred income taxes. Oxford - Life Insurance Oxford's primary sources of cash are premiums, receipts from interest-sensitive products and investment income. The primary uses of cash are operating costs and benefit payments to policyholders. Matching the investment portfolio to the cash flow demands of the types of insurance being written is an important consideration. Benefit and claim statistics are continually monitored to provide projections of future cash requirements. Cash flows from operations were $14.4 million and $18.7 million for the nine months ended September 30, 1994 and 1993, respectively. In addition to cash flow from operations and financing activities, a substantial amount of liquid funds is available through Oxford's short-term portfolio. At September 30, 1994 and 1993, short- term investments amounted to $9.5 million and $22.8 million, respectively. Management believes that the overall sources of liquidity will continue to meet foreseeable cash needs. Stockholder's equity of Oxford, on September 30, 1994 was $87.9 million. Stockholder's equity excluding investment in RWIC, was $86.3 million in 1993. On June 30, 1994 Oxford dividended 100% of the common stock of RWIC to Ponderosa. During 1994 and 1993, Oxford paid cash dividends of $4.9 million and $10.0 million, respectively, to Ponderosa. Applicable laws and regulations of the State of Arizona require the Company's insurance subsidiaries to maintain minimum capital determined in accordance with statutory accounting practices in the amount of $600,000. In addition, the amount of dividends that can be paid to shareholders by insurance companies domiciled in the State of Arizona is limited. Any dividend in excess of the limit requires prior regulatory approval. As a result of the dividend of 26 RWIC stock on June 30, 1994, the state of Arizona must approve future dividends made through June 30, 1995. These restrictions are not expected to have a material adverse effect on the ability of the Company to meet its cash obligations. RWIC - Property and Casualty Cash flows from operations were $14.3 million and $7.5 million for the nine months ended September 30, 1994 and 1993, respectively. The increase is primarily attributed to increased premium writings and decreased reinsurance receivable balances due to the timing of collection proceedures. In addition to cash flows from operations, a substantial amount of liquid assets and budgeted cash flows is available to meet periodic needs. RWIC's short-term investment portfolio was $6.3 million at September 30, 1994. This level of liquid assets, combined with budgeted cash flow, is adequate to meet periodic needs. This balance also reflects funds in transition from maturity proceeds to long-term investments. The structure of the long-term portfolio is designed to match future cash needs. Capital and operating budgets allow RWIC to schedule cash needs. RWIC maintains a diversified investment portfolio, primarily in bonds at varying maturity levels. Approximately 96.8% of the portfolio consists of investment grade securities. The maturity distribution is designed to provide sufficient liquidity to meet future cash needs. Current liquidity is adequate, with current invested assets equal to 94.4% of total liabilities. Shareholder equity increased .2% from $161.0 million at December 31, 1993 to $161.4 million at September 30, 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. RWIC paid shareholder dividends of $9.7 million during the nine months ended September 30, 1994. Consolidated Group At December 31, 1994, total notes and loans payable outstanding was $827.6 million as compared to $723.8 million at March 31, 1994, $666.1 million at December 31, 1993. The increase from 1993 reflects the expansion in the rental fleet and self-storage segment. During each of the fiscal years ending March 31, 1995, 1996, and 1997, U-Haul estimates gross capital expenditures will average approximately $360 million as a result of the expansion of the rental fleet and self-storage segment. This level of capital expenditures, combined with an average of approximately $100 million in annual long- term debt maturities during this same period, are expected to create annual average funding needs of approximately $460 million. Management estimates that U-Haul will fund approximately 55% of these requirements with internally generated funds, including proceeds from the disposition of older trucks and other asset sales. The remainder 27 of the required capital expenditures are expected to be financed through existing credit facilities, new debt placements, lease fundings, and equity offerings. Credit Agreements The Company's operations are funded by various credit and financing arrangements, including unsecured long-term borrowings, unsecured medium-term notes, and revolving lines of credit with domestic and foreign banks. Principally to finance its fleet of trucks and trailers, the Company routinely enters into sale and leaseback transactions. As of December 31, 1994, the Company had $827.6 million in total notes and loans payable outstanding and unutilized lines of credit of approximately $310.0 million. Certain of the Company's credit agreements contain restrictive financial and other covenants, including, among others, covenants with respect to incurring additional indebtedness, maintaining certain financial ratios, and placing certain additional liens on its properties and assets. At December 31, 1994, the Company was in compliance with these covenants. In addition, 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. The Company is further restricted in the type and amount of dividends and distributions that it may issue or pay, and in the issuance of certain types of preferred stock. The Company is prohibited from issuing shares of preferred stock that provide for any mandatory redemption, sinking fund payment, or mandatory prepayment, or that allow the holders thereof to require the Company or an subsidiary of the Company to repurchase such preferred stock at the option of such holders or upon the occurrence of any event or events without the consent of its lenders. Shareholder Litigation Certain current and former members of the Company's Board of Directors are defendants in an action initiated by certain of the Company's shareholders. The Company has agreed to indemnify the defendants to the fullest extent permitted by law or the Company's Articles of Incorporation or Bylaws for all expenses and damages, if any, incurred by the defendants in this proceeding, subject to certain exceptions. The extent of the Company's indemnification obligation, if any, cannot be reasonably estimated. Based on the plaintiff's 28 theory of damages, the Court ruled that the plaintiffs elected that their remedy in this litigation would be the sale of their stock to the defendants at a price determined by the Court based on the value of their stock in 1988. The jury has determined that such value was $81.12 per share or approximately $1.48 billion. On February 2, 1995, the judge in this case granted the defendants' motion for remittitur or a new trial on the issue of damages. The judge determined that the value of the plaintiffs' stock in 1988 was $25.30 per share or $461,838,000. The plaintiffs have until March 2, 1995 to file a statement accepting the remittitur or the defendants' motion for a new trial on the issue of damages will be deemed granted. The jury also awarded the plaintiffs $70 million in punitive damages against Edward J. Shoen. The judge ruled that this punitive damage award is excessive and granted Edward J. Shoen's motion for remittitur or a new trial on the issue of punitive damages. The judge reduced the award of punitive damages against Edward J. Shoen to $7,000,000. The plaintiffs have until March 2, 1995 to file a statement accepting the remittitur. If no such statement is filed by the plaintiffs by that time, Edward J. Shoen's motion for a new trial on the issue of punitive damages will be deemed granted. No provision has been made in the Company's financial statements for any possible indemnification claims. Before the Company will have any indemnification obligations, a final judgment must be entered against the defendants, the defendants must request indemnification from the Company, and a determination must be made under Nevada law as to the validity of the indemnification claims. If valid indemnification claims are made, the Company believes that various means of financing the purchase of the plaintiffs' stock would exist, including, but not limited to, the public sale of common stock by the Company or by certain of the defendants. The Company believes, but no assurance can be given, that it can obtain any necessary waivers or amendments of any provisions of its credit agreements to permit the Company to finance the purchase of the plaintiffs' stock. The Company believes that it can satisfy its indemnification obligations, if any, unless the amount to be paid to the plaintiffs for their stock is increased following the completion of any appeals or any new trial on the issue of damages. The Company does not believe that there will be a material adverse effect on its earnings, financial position, or cash flows unless the amount to be paid to the plaintiffs for their stock is increased. The Company is unable to predict the likelihood, outcome, or consequences of any appeal or any new trial on the issue of damages. 29 PART II. OTHER INFORMATION ITEM 1. Legal Proceedings As disclosed in the Company's Annual Report on Form 10-K for the year ended March 31, 1994 and the Company's Quarterly Reports for the quarters ended June 30, 1994 and September 30, 1994, certain members of the Company's Board of Directors are defendants in an action in the Superior Court of the State of Arizona in and for the County of Maricopa entitled Samuel W. Shoen, M.D., et al. v. Edward J. Shoen, et ---------------------------------------------------- al., No. CV88-20139, instituted August 2, 1988 (the "Shoen - --- Litigation"). The Company was also a defendant in the action as originally filed, but the Company was dismissed from the action on August 15, 1994, subject only to the right, to the extent that any exists, of the plaintiffs to appeal such dismissal. The plaintiffs, who are all members of a stockholder group that is currently opposed to existing Company management have alleged, among other things, that certain of the individual plaintiffs were wrongfully excluded from sitting on the Company's Board of Directors in 1988 through the sale of Company common stock to certain key employees. That sale allegedly prevented the plaintiffs from gaining a majority position in the Company's voting stock and control of the Company's Board of Directors. The plaintiffs alleged various breaches of fiduciary duty and other unlawful conduct by the individual defendants and sought equitable relief, compensatory damages, and punitive damages. The Court dismissed all claims for equitable relief that would have allowed the plaintiffs to sit on the Board of Directors, subject only to the right, to the extent that any exists, of the plaintiffs to appeal such dismissal. Based on the plaintiffs' theory of damages, the Court ruled that the plaintiffs elected as their remedy in this lawsuit to sell their shares of stock to the defendants. The price was to be determined based on the value of the plaintiffs' stock in 1988. On October 7, 1994, the jury determined that (i) the defendants breached their fiduciary duties, and (ii) such breach diminished the value of the plaintiffs' stock. The jury also determined the value of the plaintiffs' stock in 1988 to be $81.12 per share or approximately $1.48 billion. On February 2, 1995, the judge in this case granted the defendants' motion for remittitur or a new trial on the issue of damages. The judge determined that the value of the plaintiffs' stock in 1988 was $25.30 per share or $461,838,000. The plaintiffs have until March 2, 1995 to file a statement accepting the remittitur or the defendants' motion for a new trial on the issue of damages will be deemed granted. The jury also awarded the plaintiffs $70 million in punitive damages against Edward J. Shoen. The judge ruled that this punitive damage award is excessive and granted Edward J. Shoen's motion for remittitur or a new trial on the issue of punitive damages. The judge reduced the award of punitive damages against Edward J. Shoen to $7 million. The plaintiffs have until March 2, 1995 to file a statement accepting the remittitur. If no such statement is filed by the plaintiffs by that time, Edward J. Shoen's motion for a new trial on the issue of punitive damages will be deemed granted. The Company is unable to predict the likelihood, outcome, or consequences of any appeal or any new trial on the issue of damages. Pursuant to separate indemnification agreements, the Company has agreed to advance litigation expenses to the defendants and has agreed to indemnify the defendants to the fullest extent permitted by law or the Company's Articles of Incorporation or Bylaws, for all expenses 30 and damages, if any, incurred by the defendants in this proceeding, subject to certain exceptions. The Company has no indemnification obligation, other than to advance litigation expenses, until a final judgment is entered or a settlement is reached. At this time, the extent of the Company's indemnification obligation, if any, cannot be reasonably estimated. No provision has been made in the Company's financial statements for any possible indemnification claims. Before the Company will have any indemnification obligations, a final judgment must be entered against the defendants, the defendants must request indemnification from the Company, and a determination must be made under Nevada law as to the validity of the indemnification claims. If valid indemnification claims are made, the Company believes that it has various means of financing any such indemnification obligations consistent with its existing credit agreements, or, in the alternative, the Company may seek the waiver or amendment of certain of the provisions of one or more of its credit agreements when the indemnification obligations are determined. The Company believes, but no assurance can be given, that it can obtain any necessary waivers or amendments. The Company believes that it can satisfy its indemnification obligations, if any, unless the amount to be paid to the plaintiffs for their stock is increased following the completion of any appeals or any new trial on the issue of damages. The Company does not believe that there will be a material adverse effect on its earnings, financial position, or cash flows unless the amount to be paid to the plaintiffs for their stock is increased. The Company's By-Laws provide for a right of first refusal in favor of the Company on the Company's Common Stock except for bona fide sales pursuant to Rule 144 under the Securities Act of 1933, as amended (the "Securities Act"), and sales pursuant to bona fide underwritten public offerings. No determination has been made by the Company as to whether the Company will exercise its right of first refusal upon any attempted transfer of Common Stock from the plaintiffs to the defendants. Sophia M. Shoen, Paul F. Shoen and the Company are parties to separate Share Repurchase and Registration Rights Agreements which require all disputes relating thereto to be resolved by arbitration. On April 8, 1994, Sophia M. Shoen and Paul F. Shoen commenced the dispute resolution process. As disclosed in the Company's Annual Report on Form 10-K for the year ended March 31, 1994, private arbitration proceedings pursuant to these agreements were convened on June 19,1994. In the arbitration, Sophia M. Shoen asserts that the Company has breached its obligations to her by failing to timely register the sale of her shares which were sold to the public in November of 1994 and by failing to remove the right of first refusal on all Company common stock. Paul F. Shoen asserts that the Company has breached its obligations to him by failing to timely consummate the purchase from him of 58,823 shares of Company common stock for an aggregate purchase price of $1,000,000 and, on an anticipatory basis, by failing to remove the right of first refusal on all of the Company's outstanding common stock. The Trust under the AMERCO Employee Savings, Profit Sharing and Employee Stock Ownership Plan (the "ESOP Trust") purchased 58,823 shares from Paul F. Shoen on June 30, 1994. The Company has released the right of first refusal with respect to sales pursuant to bona fide underwritten public offerings or pursuant to bona fide public distributions pursuant to Rule 144 under the Securities Act. Sophia M. Shoen and Paul F. Shoen have asserted that, as a consequence of these alleged breaches, they are entitled to give notice of termination of a stockholder agreement pursuant to which the shares of common stock held by Edward J. Shoen, Mark V. Shoen, Paul F. Shoen, Sophia M. Shoen, and others are voted. The Company disagrees with the above assertions. Sophia M. Shoen gave 31 such notice of termination on July 11, 1994. The arbitration hearings concluded on August 21, 1994 and the arbitration panel is expected to render a decision at any time. The Company, the Company's Board of Directors, the ESOP, and the ESOP Trustee are defendants in an action currently pending in United States District Court for the District of Nevada entitled Paul F. ------- Shoen v. AMERCO, et al., No. CV-N-94-475-DWH, instituted July 19, - ------------------------ 1994. Paul F. Shoen alleges among other things that the defendants have solicited proxies in connection with the Company's annual meeting by means of false and misleading proxy materials, that the Company has violated the proxy rules, and that the ESOP Trustee has prevented him from communicating with participants in the ESOP. The Court on July 20, 1994 issued a temporary restraining order enjoining the Company's Annual Meeting of Stockholders, scheduled for July 21, 1994. On October 6, 1994, the Court issued a Memorandum and Order entering a preliminary injunction in this case. In the Order entering the preliminary injunction, the Court stated that it found it overwhelmingly likely that Paul F. Shoen would prevail on the merits of the case since it appeared likely to the Court that the Company's Board of Directors had breached its fiduciary duties by advancing the annual meeting date, the Company and the ESOP Trustee had violated certain Commission Proxy Rules, and the ESOP Trustee had breached its fiduciary duties under ERISA. The Court ordered that the current ESOP Trustee be replaced with three neutral trustees and that the new trustees immediately send a "curative" letter to all ESOP participants telling them to disregard any materials sent to them thus far, that any voting directions they may have given to the former trustee are void, and that the election process will begin anew. The Court enjoined the Company's Annual Meeting of Stockholders for a period of at least 45 days from the date neutral trustees are appointed and enjoined the Company, the Board of Directors, the ESOP, and the ESOP Trustee from committing further violations of the federal securities laws. Additionally, the Court ordered the Company to comply with the Commission's filing requirements, to re-solicit proxies, to re-start the annual meeting process, and to appoint an independent firm to tabulate proxies. The Company has joined in motions filed by be ESOP Trustee to appeal the Court's order to the Ninth Circuit. On October 24, 1994, the Court amended its Memorandum and Order to provide that the new trustees shall act as trustees only until the 1994 Annual Meeting of Stockholders is held and only with respect to pass-through voting and discretionary voting of shares held by the ESOP Trust. On February 9, 1995, Paul F. Shoen executed a settlement agreement with the Company and the other defendants resolving all of his claims described in the two preceding paragraphs. As part of the settlement, the Company agreed, among other things, to work in good faith toward appointing independent trustees for the ESOP and to place Paul F. Shoen on the management's slate of directors for the 1994 Annual Meeting of Stockholders which has been delayed as described in the immediately preceding paragraph. In addition, the settlement agreement provides for the Company to pay Paul F. Shoen $925,000 and for the Company to receive a full release of all claims by Paul F. Shoen through the settlement date, including but not limited to, claims for reimbursement of attorneys fees related to all matters to which Paul F. Shoen is or was a party. The terms of the settlement will not result in a material adverse effect of the Company's financial condition or results of operations. 32 The Company, certain officers of the Company, certain members of the Company's Board of Directors, and others are defendants in actions currently pending in United States District Court for the District of Nevada entitled Sidney Wisotzky and Dorothy Wisotzky, et al. v. Edward ------------------------------------------------------ J. Shoen, et al., No. CV-N-94-771-HDM (filed October 28, 1994 and - ---------------- served on the Company on November 7, 1994), Evan Julber v. Edward J. ------------------------ Shoen, et al., No. CV-N-94-00811-HDM (filed November 16, 1994), and - ------------- Anne Markin v. Edward J. Shoen, et al., No. CV-N-94-00821-ECR (filed - -------------------------------------- November 18, 1994). The plaintiffs in these cases, who claim to have purchased the Company's Series A 8 1/2% Preferred Stock, are seeking class action certification and are defining the class as all persons who purchased or otherwise acquired the Series A 8 1/2% Preferred Stock of the Company from October 14, 1993 through October 18, 1994, inclusive, and who sustained damage as a result of such purchases. The plaintiffs allege among other things, that the defendants violated the federal securities laws by inflating the price of the Series A 8 1/2% Preferred Stock via false and misleading statements, concealing material adverse information, and taking other manipulative actions, and that the Prospectus for the Series A 8 1/2% Preferred Stock, certain Form 10-K and Form 10-Q filings made by the Company, and the Company's Notice and Proxy Statement dated July 8, 1994 contained false and misleading statements and omissions regarding the Shoen Litigation. In addition, certain officers of the Company, certain members of the Company's Board of Directors, and an employee of the Company are defendants in an action currently pending in United States District Court for the District of Nevada entitled Bernard L. and Frieda --------------------- Goldwasser, et al. v. Edward J. Shoen, et al., No. CV-N-94-00810-ECR - ------------------ (filed November 16, 1994). The plaintiffs in this case allege derivatively on behalf of the Company, that the defendants breached their fiduciary duties to the Company and its shareholders by causing the Company to violate the federal securities laws, by concealing the financial responsibility of the Company for the claims asserted in the Shoen Litigation, by subjecting the Company to adverse publicity, and by misusing their corporate control for personal benefit. In addition to unspecified damages, the plaintiffs are seeking equitable and/or injunctive relief to prevent the defendants in this case from causing the Company to indemnify the defendants in the Shoen Litigation against their liability in that case. The plaintiffs in these cases are requesting unspecified compensatory damages as well as attorneys' fees and costs. The Company and the individual defendants deny plaintiffs' allegations of wrongdoing and intend to vigorously defend themselves in these actions. ITEM 2. Changes in Securities On January 10, 1995, the Company amended its By-Laws to provide that the right of first refusal in favor of the Company on the Company's Common Stock shall not apply to any of the Company's Common Stock sold in a bona fide underwritten public offering or in a bona fide public distribution pursuant to Rule 144 under the Securities Act of 1933, as amended, provided that if the distribution is pursuant to Rule 144(k), then such distribution must comply with the manner of sale requirements of Rule 144. 33 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. a. Exhibits 4 By-Laws 10 Exchange Agreement with Mark V. Shoen (November 28, 1994) 27 Financial Data Schedule b. Reports on Form 8-K. A current report on Form 8-K was filed on October 13, 1994 reporting the jury verdict in the case entitled Samuel W. --------- Shoen, M.D., et al. v. Edward J. Shoen, et al., No. CV88- ---------------------------------------------- 20139 34 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: February 10, 1995 By: /S/ GARY B. HORTON ___________________________________ Gary B. Horton, Treasurer (Principal Financial Officer) EX-27 2 AMERCO FDS 12/94
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10Q DECEMBER 1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS MAR-31-1995 DEC-31-1994 38,015 697,728 299,662 0 50,552 0 2,300,422 1,037,569 2,537,422 0 827,592 10,000 0 0 695,577 2,537,422 131,098 980,581 72,634 697,565 121,152 0 50,871 110,993 39,602 71,391 0 0 0 71,391 1.67 0 THE VALUE FOR RECEIVABLES REPRESENTS THEIR NET AMOUNTS.
EX-99 3 EXCHANGE AGREEMENT 56 EXCHANGE AGREEMENT ------------------ THIS EXCHANGE AGREEMENT (the "Agreement") is entered into by and between AMERCO, a Nevada corporation (the "Company") and Mark V. Shoen ("the Shareholder"). RECITALS -------- WHEREAS, the Shareholder is the record owner of an aggregate of 3,475,520 shares (the "Existing Shares") of the Company's Series A Common Stock, par value $0.25 per share; and WHEREAS, the Company has determined that it is in its best interests that the Existing Stock be exchanged, on a one for one basis, for shares of the Company's common stock, $0.25 par value (the "Common Stock"). NOW THEREFORE, for and in consideration of the respective agreements, representations, and warranties contained herein, the parties hereto agree as follows. ARTICLE I EXCHANGE OF STOCK 1.1 Exchange. Subject to the terms and conditions set -------- forth herein, the Shareholder hereby sells, transfers, conveys, assigns, and delivers all of his respective shares of Existing Stock in exchange for shares of Common Stock on a one share for one share basis. ARTICLE II REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER The Shareholder hereby represents, warrants, and agrees as follows: 2.1 Authority of Shareholder. The Shareholder has full ------------------------ power and legal right to transfer the Existing Stock to the Company in exchange for Common Stock as provided in Section 1.1 hereof and such transfer and exchange will vest title to the Existing Stock in the Company free and clear of any lien, pledge, charge, security interest, adverse claim, or other encumbrance of any nature whatsoever. 2.2 No Breach or Violation. The execution and delivery ---------------------- by the Shareholder of this Agreement and of any other instrument contemplated hereby to which the Company or the Shareholder will be a party, and the consummation and performance of the transactions contemplated hereby and thereby, have not resulted in, and will not result in, and do not constitute a conflict with, a breach or 57 violation of, or a default or an event that, with notice or lapse of time or both, would be a default, breach, or violation of, or an event that would permit any party to terminate or to accelerate the maturity of or any payment pursuant to (i) any term or provision of any lease, bond, promissory note, conditional sales contract, commitment, indenture, mortgage, deed of trust, or other agreement, instrument, indebtedness, or obligation to which the Shareholder is a party or by which he or any of his assets or properties is, or may be, bound, (ii) any license, franchise, permit, or other authorization, governmental or otherwise, held by the Shareholder, and (iii) any law, judgment, order, writ, injunction, decree, award, rule, or regulation of any court, arbitrator, or other agency or body, governmental or otherwise. 2.3 Consents. The execution and delivery of this -------- Agreement and the consummation and performance of the transactions contemplated hereby do not require the approval, consent, or authorization of, or any filing with or notice to, any federal, state, local, or other agency or body, governmental or otherwise, or any other third party. 2.4 Investment. The Shareholder is acquiring the Common ---------- Stock for his own account for investment purposes and not with a view toward the public distribution thereof within the meaning of the Securities Act of 1933, as amended. 2.5 First Right of Refusal. The Shareholder ---------------------- acknowledges and agrees that the Common Stock will be subject to the first right of refusal contained in Article VII, Section 2 of the Company's By-Laws. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company hereby represents, warrants, and agrees as follows: 3.1 Organization and Existence. The Company is a -------------------------- corporation duly organized, validly existing, and in good standing under the laws of the state of Nevada, and has all requisite corporate power to enter into and perform this Agreement and the transactions contemplated hereby in the manner provided herein. 3.2 Authority of the Company. The execution, delivery, ------------------------ and performance by the Company of this Agreement has been duly authorized by the Board of Directors of the Company, and no further corporate action is necessary on the part of the Company to make this Agreement the legal, valid, and binding obligation of Purchaser enforceable against it in accordance with its terms. 58 ARTICLE IV MISCELLANEOUS 4.1 By-Law Compliance. The Company hereby waives ----------------- compliance by the Shareholder with Article VII, Section 2 of the Company's By-Laws to the extent such provision relates to the exchange of Common Stock for Existing Stock contemplated hereby. 4.2 Application of Nevada Revised Statutes Sections ----------------------------------------------- 78.378 to 78.3793, Inclusive. As provided by the Company's By- - ---------------------------- Laws, the provisions of Sections 78.378 to 78.3793, inclusive, of the Nevada Revised Statutes shall not apply to the exchange of Common Stock for Existing Stock contemplated hereby. 4.3 Application of Nevada Revised Statutes Sections ----------------------------------------------- 78.439.1. The transaction contemplated hereby has been approved by - -------- the Company's Board of Directors in a resolution duly adopted by the Company's Board of Directors prior to the exchange, and is therefore permissible under Nevada Revised Statutes 78.439.1. 4.4 Legends. The Common Stock will bear the following ------- legends: "The shares of stock represented by this certificate have been issued based upon a representation that they have been acquired for investment and not with a view to the public distribution thereof within the meaning of the Securities Act of 1933, as amended. No sale or transfer of the shares represented hereby may be made unless, in the opinion of counsel satisfactory to the issuer, the contemplated transaction will not result in a violation of said Act or of any state securities law, rules, or regulation." "The transfer of the shares represented by this certificate is subject to a right of first refusal by the Corporation as provided in its By-Laws, and no transfer of this certificate or the shares represented hereby shall be valid or effective unless and until such provision of the By-Laws shall have been met. A copy of the By-Laws of the Corporation is available for inspection at the principal office of the Corporation." 4.5 Survival of Representations and Warranties. ------------------------------------------ Regardless of any investigation at any time made by or on behalf of any party hereto, or of any information any party may have in 59 respect thereof, all covenants, agreements, representations, and warranties made hereunder or pursuant hereto or in connection with the transactions contemplated hereby shall survive the execution and delivery of this Agreement. 4.6 Assignment. This Agreement may not be assigned by ---------- any party hereto without the prior written consent of the other parties hereto. Subject to the foregoing, this Agreement is binding upon the successors and assigns of the parties hereto. 4.7 Section and Paragraph Headings. The Article and ------------------------------ Section headings in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 4.8 Changes, Waivers, etc. Neither this Agreement nor --------------------- any provision hereof may be changed, waived, discharged, or terminated orally, but only by a statement in writing signed by the party against which enforcement of the change, waiver, discharge, or termination is sought. 4.9 Entire Agreement. This Agreement and the ---------------- certificates and documents referred to herein constitute the entire agreement of the parties hereto, and supersede all prior understandings with respect to the subject matter hereof. 4.10 Counterparts. This Agreement may be executed in one ------------ or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. 4.11 Governing Law. This Agreement shall be construed in ------------- accordance with, and governed by, the laws of the State of Nevada. IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the 28th day of November, 1994. COMPANY: ------- AMERCO, a Nevada corporation By: /S/ EDWARD J. SHOEN ----------------------------- Its: President SHAREHOLDER: ----------- By: /S/ MARK V. SHOEN ---------------------------------- Mark V. Shoen EX-3.(II) 4 AMERCO BY-LAWS 35 RESTATED BY-LAWS OF AMERCO A NEVADA CORPORATION Date: As of January 10, 1995 ARTICLE I SECTION 1. Offices: ------- The principal office and registered office of the corporation shall be located in the State of Nevada at such locations as the Board of Directors may from time to time authorize by resolutions. The corporation may have such other offices either within or without the State of Nevada as the Board of Directors may designate or as the business of the corporation may require from time to time. SECTION 2. References: ---------- Any reference herein made to law will be deemed to refer to the law of the State of Nevada, including any applicable provisions of Chapter 78 of Title 7, Nevada Revised Statutes (or its successor), as at any given time in effect. Any reference herein made to the Articles will be deemed to refer to the applicable provision or provisions of the Articles of Incorporation of the corporation, and all amendments thereto, as at any given time on file with the office of the clerk of Washoe County, Nevada. SECTION 3. Shareholders of Record: ---------------------- The word "shareholder" as used herein shall mean one who is a holder of record of shares in the corporation. 36 ARTICLE II SHAREHOLDERS SECTION 1. Annual Meeting: -------------- An annual meeting of the shareholders for the election of directors to succeed those whose terms expire and for the transaction of such other business as may properly come before the meeting shall be held, within a reasonable interval after the close of the fiscal year so that the information in the annual report is relatively timely, on a date and at a time of day and place as determined by the Board of Directors. SECTION 2. Special Meetings: ---------------- a. Special meetings of the shareholders may be held whenever and wherever called by the Chairman of the Board, a majority of the Board of Directors, or upon the delivery of proper written request of the holders of not less than fifty percent (50%) of all the shares outstanding and entitled to vote at such meeting. The business which may be conducted at any such special meeting will be confined to the purpose stated in the notice thereof, and to such additional matters as the Chairman of such meeting may rule to be germane to such purposes. b. For purposes of this Section, proper written request for the call of a special meeting shall be made by a written request specifying the purposes for any special meeting requested and providing the information required by Section 5 hereof. Such written request must be delivered either in person or by registered or certified mail, return receipt requested, to the Chairman of the Board, or such other person as may be specifically authorized by law to receive such request. Within thirty (30) days after receipt of proper written request, a special meeting shall be called and notice given in the manner required by these By-Laws and the meeting shall be held at a time and place selected by the Board of Directors, but not later than ninety (90) days after receipt of such proper written request. The shareholder(s) who request a special meeting of shareholders must pay the corporation the corporation's reasonably estimated cost of preparing and mailing a 37 notice of a meeting of shareholders before such notice is prepared and mailed. SECTION 3. Notice: ------ Notice of any meeting of the shareholders will be given by the corporation as provided by law to each shareholder entitled to vote at such meeting. Any such notice may be waived as provided by law. SECTION 4. Right to Vote: ------------- For each meeting of the shareholders, the Board of Directors will fix in advance a record date as contemplated by law, and the shares of stock and the shareholders "entitled to vote" (as that or any similar term is herein used) at any meeting of the shareholders will be determined as of the applicable record date. The Secretary (or in his or her absence an Assistant Secretary) will see to the making and production of any record of shareholders entitled to vote that is required by law. Any such entitlement may be exercised through proxy, or in such other manner as is specifically provided by law. No proxy shall be valid after eleven (11) months from the date of its execution unless otherwise provided by the proxy. In the event of contest, the burden of proving the validity of any undated, irrevocable, or otherwise contested proxy will rest with the person seeking to exercise the same. A telegram, cablegram, or facsimile appearing to have been transmitted by a shareholder (or by his duly authorized attorney-in-fact) may, in the discretion of the tellers, if any, be accepted as a sufficiently written and executed proxy. SECTION 5. Manner of Bringing Business Before the Meeting: ---------------------------------------------- At any annual or special meeting of shareholders only such business (including nomination as a director) shall be conducted as shall have been properly brought before the meeting. In order to be properly brought before the meeting, such business must be a proper subject for stockholder action under Nevada law and must have either been (A) specified in the written notice of the meeting (or any supplement thereto) given to shareholders on the record date for such meeting by or at the direction of the Board of Directors, (B) brought before the meeting at the direction of the Board of Directors or the Chairman of the meeting, selected as provided in Section 9 of this Article II, or (C) specified in a written notice given by or on behalf of a shareholder on the record date for such meeting entitled to vote thereat or a duly authorized proxy for such shareholder, in accordance with the following requirements. A notice referred to in clause (C) hereof must be delivered personally to, or mailed to and received at, the principal executive office of the corporation, addressed to the attention of the Secretary, not more than ten (10) days after the date of the initial notice referred to in clause (A) hereof, in the case of business to be brought before a special meeting of shareholders, and not less than one hundred and twenty (120) days prior to the anniversary date of the initial notice referred to in clause (A) hereof with respect to the previous year's annual meeting, in the case of business to be brought before an annual meeting of shareholders. Such notice referred to in clause (C) hereof shall set forth (i) a full description of each such item of business proposed to be brought before the meeting and the reasons for conducting such business at such meeting, (ii) the name and address of the person proposing to bring such business before the meeting, (iii) the class and number of shares held of record, held beneficially, and represented by proxy by such person as of the record date for the meeting, if such date has been made publicly available, or as of a date not later than thirty (30) days prior to the delivery of the initial notice referred to in clause (A) hereof, if the record date has not been made publicly available, (iv) if any item of such business involves a nomination for director, all information regarding each such nominee that would be required to be set forth in a definitive proxy statement filed with the Securities and Exchange Commission pursuant to Section 14 of the Securities Exchange Act of 1934, as amended, or any successor thereto, and the written consent of each such nominee to serve if elected, (v) any material interest of such shareholder in the specified business, (vi) whether or not such shareholder is a member of any partnership, limited partnership, syndicate, or other group pursuant to any agreement, arrangement, relationship, understanding, or otherwise, whether or not in writing, organized in whole or in part for the purpose of acquiring, owning, or voting shares of the corporation, and (vii) all other information that would be required to be filed with the Securities and Exchange Commission if, with respect to the business proposed to be brought before the meeting, the person proposing such business was a participant in a solicitation subject to Section 14 of the Securities Exchange Act of 1934, as amended, or any successor thereto. No business shall be brought before any meeting of the shareholders of the corporation otherwise than as provided in this Section. Notwithstanding compliance with the foregoing provisions, the Board of Directors shall not be obligated to include information as to any shareholder nominee for director or any other shareholder 38 proposal in any proxy statements or other communication sent to shareholders. The Chairman of the meeting may, if the facts warrant, determine that any proposed item of business or nomination as director was not brought before the meeting in accordance with the foregoing procedure, and if he should so determine, he shall so declare to the meeting and the improper item of business or nomination shall be disregarded. SECTION 6. Right to Attend: --------------- Except only to the extent of persons designated by the Board of Directors or the Chairman of the meeting to assist in the conduct of the meeting, and except as otherwise permitted by the Board or such Chairman, the persons entitled to attend any meeting of shareholders may be confined to (i) shareholders entitled to vote thereat and (ii) the persons upon whom proxies valid for purposes of the meeting have been conferred or their duly appointed substitutes (if the related proxies confer a power of substitution); provided, however, that the Board of Directors or the Chairman of the meeting may establish rules limiting the number of persons referred to in clause (ii) as being entitled to attend on behalf of any shareholder so as to preclude such an excessively large representation of such shareholder at the meeting as, in the judgment of the Board or such Chairman, would be unfair to other shareholders represented at the meeting or be unduly disruptive to the orderly conduct of business at such meeting (whether such representation would result from fragmentation of the aggregate number of shares held by such shareholder for the purpose of conferring proxies, from the naming of an excessively large proxy delegation by such shareholder, or from employment of any other device). A person otherwise entitled to attend any such meeting will cease to be so entitled if, in the judgment of the Chairman of the meeting, such person engages thereat in disorderly conduct impeding the proper conduct of the meeting in the interests of all shareholders as a group. SECTION 7. Quorum Requirements: ------------------- One-third of the outstanding shares of the corporation entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of the shareholders. If less than one-third of the outstanding shares are represented at a meeting, the majority of the shares so represented may adjourn the meeting without further notice. At such adjourned meeting at which a quorum shall be 39 present or represented, any business may be transacted which might have been transacted at the meeting originally called. SECTION 8. Tellers: ------- The Board of Directors, in advance of any shareholders meeting may appoint one or more tellers to act at such meeting (and any adjournment thereof), and may appoint one or more alternate tellers to serve (in the order designated) in the absence of any teller or tellers so appointed. If any person appointed as a teller or alternate teller fails to appear or to act, a substitute may be appointed by the Chairman of the meeting. The tellers (acting through a majority of them on any disputed matter) will determine the number of shares outstanding, the authenticity, validity and effect of proxies, the credentials of persons purporting to be shareholders or persons named or referred to in proxies, and the number of shares represented at the meeting in person and by proxy; they will receive and count votes, ballots, and consents and announce the results thereof; they will hear and determine all challenges and questions pertaining to proxies and voting; and, in general, they will perform such acts as may be proper to conduct elections and voting with complete fairness to all shareholders. No such teller need be a shareholder of the corporation. Unless otherwise provided in the Articles of Incorporation or other governing instrument, each shareholder shall be entitled to one vote for each share of stock held by him or her, and, in the event a shareholder holds a fraction of a share or a full share plus a fraction, any such fractional share shall be entitled to a proportionate fraction of one vote or such other votes, if any, as is provided in the Articles of Incorporation or other governing instrument. SECTION 9. Organization and Conduct of Business: ------------------------------------ Each shareholders meeting will be called to order and thereafter chaired by the Chairman of the Board if there then is one; or, if not, or if the Chairman of the Board is absent or so requests, then by the President; or if both the Chairman of the Board and the President are unavailable, then by such other officer of the corporation or such shareholder as may be appointed by the Board of Directors. The Secretary (or in his or her absence an Assistant Secretary) of the corporation will act as secretary of each shareholders meeting; if neither the Secretary nor an Assistant Secretary is in attendance, the Chairman of the meeting may appoint any person (whether a shareholder or not) to act as secretary thereat. After calling a meeting to order, the 40 Chairman thereof may require the registration of all shareholders intending to vote in person, and the filing of all proxies, with the teller or tellers, if one or more have been appointed (or, if not, with the secretary of the meeting). After the announced time for such filing of proxies has ended, no further proxies or changes, substitutions, or revocations of proxies will be accepted. The Chairman of a meeting will, among other things, have absolute authority to determine the order of business to be conducted at such meeting and to establish rules for, and appoint personnel to assist in, preserving the orderly conduct of the business of the meeting (including any informal, or question and answer, portions thereof). Any informational or other informal session of shareholders conducted under the auspices of the corporation after the conclusion of or otherwise in conjunction with any formal business meeting of the shareholders will be chaired by the same person who chairs the formal meeting, and the foregoing authority on his or her part will extend to the conduct of such informal session. SECTION 10. Voting: ------ The number of shares voted on any matter submitted to the shareholders which is required to constitute their action thereon or approval thereof will be determined in accordance with applicable law, the Articles, and these By-Laws, if applicable. Voting will be by ballot on any matter as to which a ballot vote is demanded, prior to the time the voting begins, by any person entitled to vote on such matter; otherwise, a voice vote will suffice. No ballot or change of vote will be accepted after the polls have been declared closed following the ending of the announced time for voting. SECTION 11. Shareholder Approval or Ratification: ------------------------------------ The Board of Directors may submit any contract or act for approval or ratification at any duly constituted meeting of the shareholders, the notice of which either includes mention of the proposed submittal or is waived as provided by law. If any contract or act so submitted is approved or ratified by a majority of the votes cast thereon at such meeting, the same will be valid and as binding upon the corporation and all of its shareholders as it would be if approved and ratified by each and every shareholder of the corporation. 41 SECTION 12. Informalities and Irregularities: -------------------------------- All informalities or irregularities in any call or notice of a meeting, or in the areas of credentials, proxies, quorums, voting, and similar matters, will be deemed waived if no objection is made at the meeting. SECTION 13. Action Without a Meeting: ------------------------ Shareholder action by written consent is prohibited. SECTION 14. Application of Nevada Revised Statutes Sections 78.378 ------------------------------------------------------ to 78.3793, inclusive: --------------------- The provisions of Sections 78.378 to 78.3793, inclusive, of the Nevada Revised Statutes shall not apply to the exchange of shares of the corporation's Series A Common Stock, 0.25 par value, for shares of the corporation's common stock, $0.25 par value, held by Mark V. Shoen, James P. Shoen and Edward J. Shoen or to any exchange of shares of the corporation's Common Stock, $0.25 par value for shares of the corporation's Series A Common Stock, $0.25 par value held by Mark V. Shoen, James P. Shoen and Edward J. Shoen. ARTICLE III BOARD OF DIRECTORS SECTION 1. Number and Term of Directors: ---------------------------- The Board of Directors shall consist of not less than 4 nor more than 8 directors, the exact number of directors to be determined from time to time solely by a resolution adopted by an affirmative vote of a majority of the entire Board of Directors. The directors shall be divided into four classes, designated Class I, Class II, Class III and Class IV. Subject to applicable law, each class shall consist, as nearly as may be possible, of one-fourth of the total number of directors constituting the entire Board of Directors. At the 1990 Annual Meeting of Shareholders, Class I directors shall be elected for a one-year term, Class II directors 42 for a two-year term, Class III directors for a three-year term, and Class IV directors for a four-year term. At each succeeding annual meeting of shareholders, commencing in 1991, successors to the class of directors whose term expires at the annual meeting shall be elected or reelected for a four-year term. If the number of directors is changed, any increase or decrease shall be apportioned among the classes of directors so as to maintain the number of directors in each class as nearly equal as possible, but in no case will a decrease in the number of directors shorten the term of any incumbent director. When the number of directors is increased by the Board of Directors and any newly created directorships are filled by the Board, there shall be no classification of the additional directors until the next annual meeting of shareholders. A director shall hold office until the meeting for the year in which his or her term expires and until his or her successor shall be elected and shall qualify, subject, however, to prior death, resignation, retirement, disqualification or removal from office. SECTION 2. Vacancies: --------- Newly created directorships resulting from an increase in the number of the directors and any vacancy on the Board of Directors shall be filled by an affirmative vote of a majority of the Board of Directors then in office. A director elected by the Board of Directors to fill a vacancy shall hold office until the next meeting of shareholders called for the election of directors and until his or her successor shall be elected and shall qualify; provided, however, that if a vacancy on the Board of Directors occurs or is filled after the date by which a shareholder, acting in accordance with Article II, Section 5(C) of these By-Laws, may present a director nomination before the next meeting of shareholders called for the election of directors, the director elected by the Board of Directors to fill such vacancy shall hold office until the next meeting of shareholders called for the election of directors at which a shareholder, acting in accordance with Article II, Section 5(C) of these By-Laws, may present a director nomination. This Section shall not apply to any vacancies in the office of any "Preferred Stock Director," as defined in section (e)(ii) of the Certificate of Designation, Preference, and Rights of Series A Preferred Stock of AMERCO dated October 14, 1993, such vacancies shall be filled pursuant to the terms of said section (e)(ii). 43 SECTION 3. Regular Meetings: ---------------- After the adjournment of the annual meeting of the shareholders of the corporation, the newly elected Directors shall meet for the purpose of organization, the election of officers, and the transaction of such other business as may come before said meeting. No notice shall be required for such meeting. The meeting may be held within or without the State of Nevada. Regular meetings, other than the annual ones, may be held at regular intervals at such times and places as the Board of Directors may provide. SECTION 4. Special Meetings: ---------------- Special meetings of the Board of Directors may be called at any time by the President or by any one member of the Board giving written notice thereof to the President of said corporation, or said special meeting may be called without notice by unanimous consent of all the members by the presence of all the members of said board at any such meeting. The special meetings of the Board of Directors may be held within or without the State of Nevada. SECTION 5. Notice: ------ No notice need be given of regular meetings of the Board of Directors. Notice of the time and place (but not necessarily the purpose or all of the purposes) of any special meeting will be given to each director in person or by telephone, or via mail or telegram addressed in the manner then appearing on the corporation's records. Notice to any director of any such special meeting will be deemed given sufficiently in advance when (i), if given by mail, the same is deposited in the United States mail at least four days before the meeting date, with postage thereon prepaid, (ii) if given by telegram, the same is delivered to the telegraph office for fast transmittal at least 48 hours prior to the convening of the meeting, (iii) if given by facsimile transmission, the same is received by the director or an adult member of his or her office staff or household, at least 24 hours prior to the convening of the meeting, or (iv) if personally delivered or given by telephone, the same is handed, or the substance thereof is communicated over the telephone, to the director or to an adult member of his or her office staff or household, at least 24 hours prior to the convening of the meeting. Any such notice may be waived as provided by law. No call or notice of a meeting of directors will be necessary if each of them waives the same in writing or by attendance. Any meeting, once properly called and noticed (or as to which call and notice have been waived as aforesaid) and at which a quorum is formed, may be 44 adjourned to another time and place by a majority of those in attendance. SECTION 6. Quorum: ------ A majority of the Board of Directors shall constitute a quorum for the transaction of business, except where otherwise provided by law or by these By-Laws, but if at any meeting of the Board less than a quorum is present, a majority of those present may adjourn the meeting from time to time until a quorum is obtained. SECTION 7. Action by Telephone or Consent: ------------------------------ Any meeting of the Board or any committee thereof may be held by conference telephone or similar communications equipment as permitted by law in which case any required notice of such meeting may generally describe the arrangements (rather than the place) for the holding thereof, and all other provisions herein contained or referred to will apply to such meeting as though it were physically held at a single place. Action may also be taken by the Board or any committee thereof without a meeting if the members thereof consent in writing thereto as contemplated by law. SECTION 8. Order of Business: ----------------- The Board of Directors may, from time to time, determine the order of business at their meeting. The usual order of business at such meetings shall be as follows: 1st Roll Call; a quorum being present. 2nd. Reading of minutes of the preceding meeting and action thereon. 3rd. Consideration of communications of the Board of Directors. 4th. Reports of officials and committees. 5th. Unfinished business. 6th. Miscellaneous business. 45 7th. New business. 8th. Adjournment. SECTION 9. Voting: ------ Any matter submitted to a vote of the directors will be resolved by a majority of the votes cast thereon. If during the course of any annual, regular or special meeting of the Board of Directors, at which all the members of said board are present and vote, there is a vote taken and the vote is evenly divided between equal numbers of directors, then, and only then, the Chairman of the Board of Directors shall break the deadlock by casting a second and deciding vote. This power may be exercised by the Chairman of the Board as to any and every issue that properly comes to the board for a vote, including, but not limited to the election of officers. ARTICLE IV POWER OF DIRECTORS SECTION 1. Generally: --------- The Government in control of the corporation shall be vested in the Board of Directors. SECTION 2. Special Powers: -------------- The Board of Directors shall have, in addition to its other powers, the express right to exercise the following powers: 1. To purchase, lease, and acquire, in any lawful manner any and all real or personal property including franchises, stocks, bonds and debentures of other companies, business and goodwill, patents, trademarks in contracts, and interests thereunder, and other rights and properties which in their judgment may beneficial for the purpose of this corporation, and to issue shares of stock of this corporation in payment of such property, and in payment for services rendered to this corporation when they deem it advisable. 2. To fix and determine and to vary, from time to time, the amount or amounts to be set aside or retained as 46 reserve funds or as working capital of this corporation. 3. To issue notes and other obligations or evidence of the debt of this corporation, and to secure the same, if deemed advisable, and endorse and guarantee the notes, bonds, stocks, and other obligations of other corporations with or without compensation for so doing, and from time to time to sell, assign, transfer or otherwise dispose of any of the property of this corporation, subject, however, to the laws of the State of Nevada, governing the disposition of the entire assets and business of the corporation as a going concern. 4. To declare and pay dividends, both in the form of money and stock, but only from the surplus or from the net profit arising from the business of this corporation, after deducting therefrom the amounts, at the time when any dividend is declared which shall have been set aside by the Directors as a reserve fund or as a working fund. 5. To adopt, modify and amend the By-Laws of this corporation. 6. To periodically determine by Resolution of the Board the amount of compensation to be paid to members of the Board of Directors in accordance with Article 6, Section B, Sub-section viii of the Articles of Incorporation. ARTICLE V SECTION 1. Committees: ---------- From time to time the Board of Directors, by affirmative vote of a majority of the whole Board may appoint any committee or committees for any purpose or purposes, and such committee or committees shall have and may exercise such powers as shall be conferred or authorized by the resolution of appointment. Provided, however, that such committee or committees shall at no time have more power than that authorized by law. 47 ARTICLE VI OFFICERS SECTION 1. Officers: -------- The officers of the corporation shall consist of the Chairman of the Board, a President, one or more Vice-Presidents, Secretary, Assistant Secretaries, Treasurer, Assistant Treasurer, a resident agent and such other officers as shall from time to time be provided for by the Board of Directors. Such officers shall be elected by ballot or unanimous acclamation at the meeting of the Board of Directors after the annual election of Directors. In order to hold any election there must be quorum present, and any officer receiving a majority vote shall be declared elected and shall hold office for one year and until his or her respective successor shall have been duly elected and qualified; provided, however, that all officers, agents and employees of the corporation shall be subject to removal from office pre-emptorily by vote of the Board of Directors at any meeting. SECTION 2. Powers and Duties of Chairman of the Board: ------------------------------------------ The Chairman of the Board of Directors will serve as a general executive officer, but not necessarily as a full-time employee, of the corporation. He or she shall preside at all meetings of the shareholders and of the Board of Directors, shall have the powers and duties set forth in these By-Laws, and shall do and perform such other duties as from time to time may be assigned by the Board of Directors. SECTION 3. Powers and Duties of President: ------------------------------ The President shall at all times be subject to the control of the Board of Directors. He shall have general charge of the affairs of the corporation. He shall supervise over and direct all officers and employees of the corporation and see that their duties are properly performed. The President, in conjunction with the Secretary, shall sign and execute all contracts, notes, mortgages, and all other obligations in the name of the corporation, and with the Secretary or Assistant Secretary shall sign all certificates of the shares of the capital stock of the corporation. The President shall each year present an annual report of the preceding year's business to the Board of Directors at a meeting to be held immediately preceding the annual meeting of the 48 shareholders, which report shall be read at the annual meeting of the shareholders. The President shall do and perform such other duties as from time to time may be assigned by the Board of Directors to him. Notwithstanding any provision to the contrary contained in the By-Laws of the corporation, the Board may at any time and from time to time direct the manner in which any person or persons by whom any particular contract, document, note or instrument in writing of the corporation may or shall be signed by and may authorize any officer or officers of the corporation to sign such contracts, documents, notes or instruments. SECTION 4. Powers and Duties of Vice-President: ----------------------------------- The Vice-President shall have such powers and perform such duties as may be assigned to him by the Board of Directors of the corporation and in the absence or inability of the President, the Vice-President shall perform the duties of the President. SECTION 5. Powers and Duties of the Secretary and Assistant ------------------------------------------------ Secretary: --------- The Secretary of said corporation shall keep the minutes of all meetings of the Board of Directors and the minutes of all meetings of the shareholders, and also when requested by a committee, the minutes of such committee, in books provided for the purpose. He shall attend to the giving and serving of notice of the corporation. It shall be the duty of the Secretary to sign with the President, in the name of the corporation, all contracts, notes, mortgages, and other instruments and other obligations authorized by the Board of Directors, and when so ordered by the Board of Directors, he shall affix the Seal of corporation thereto. The Secretary shall have charge of all books, documents, and papers properly belonging to his office, and of such other books and papers as the Board of Directors may direct. In the absence or inability of the Secretary, the Assistant Secretary shall perform the duties of the Secretary. Execution of Instruments: - ------------------------ In addition to the provisions of any previous By-Laws respecting the execution of instruments of the corporation, the Board of 49 Directors may from time to time direct the manner in which any officer or officers or by whom any particular deed, transfer, assignment, contract, obligation, certificate, promissory note, guarantee and other instrument or instruments may be signed on behalf of the corporation and any acts of the Board of Directors subsequent to the 1st day of December, 1978 in accordance with the provision of this By-Law are hereby adopted, ratified and confirmed as actions binding upon and enforceable against the corporation. SECTION 6. Powers and Duties of Treasurer and Assistant Treasurer: ------------------------------------------------------ The Treasurer shall have the care and custody of all funds and securities of the corporation, and deposit the same in the name of the corporation in such bank or banks or other depository as the Directors may select. He shall sign checks, drafts, notices, and orders for the payment of money, and he shall pay out and dispose of the same under the direction of the Board of Directors, but checks may be signed as directed by the Board by resolution. The Treasurer shall generally perform the duties of and act as the financial agent for the corporation for the receipts and disbursements of its funds. He shall give such bond for the faithful performance of his duties as the Board of Directors may determine. The office of the Treasurer of said corporation may be held by the same person holding the President, Vice-President or Secretary's office, provided the Board of Directors indicates the combination of these offices. In the absence or inability of the Treasurer, the Assistant Treasurer shall perform the duties of the Treasurer. SECTION 7. Indemnification: --------------- The corporation shall indemnify, to the fullest extent authorized or permitted by law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the corporation to provide broader indemnification rights than such law permitted the corporation to provide prior to such amendment), any person made, or threatened to be made, a defendant or witness to any threatened, pending or completed action, suit, or proceeding (whether civil, criminal, administrative, investigative or otherwise) by reason of the fact that he or she, or his or her testator or intestate, is or was a director or officer of the corporation or by reason of the fact that such director or officer, at the request of the corporation, is or was serving any other corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise. Nothing contained herein shall diminish any rights to 50 indemnification to which employees or agents other than directors or officers may be entitled by law, and the corporation may indemnify such employees and agents to the fullest extent and in the manner permitted by law. The rights to indemnification set forth in this Article VI, Section 7 shall not be exclusive of any other rights to which any person may be entitled under any statute, provision of the Articles of Incorporation, bylaw, agreement, contract, vote of shareholders or disinterested directors, or otherwise. In furtherance and not in limitation of the powers conferred by statute: 1. The corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is serving in any capacity, at the request of the corporation, any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against any liability or expense incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the corporation would have the power to indemnify him or her against such liability or expense under the provisions of law; and 2. The corporation may create a trust fund, grant a security interest or lien on any assets of the corporation and/or use other means (including, without limitation, letters of credit, guaranties, surety bonds and/or other similar arrangements), and enter into contracts providing indemnification to the full extent authorized or permitted by law and including as part thereof provisions with respect to any or all of the foregoing to ensure the payment of such amounts as may become necessary to effect indemnification as provided therein, or elsewhere. ARTICLE VII STOCK AND CERTIFICATES AND TRANSFERS SECTION 1. Stock and Certificates and Transfers: ------------------------------------ All certificates for the shares of the capital stock of the corporation shall be signed by the President or Vice-President, and 51 Secretary or Assistant Secretary. Each certificate shall show upon its face that the corporation is organized under the laws of Nevada, the number and par value, if any, of each share represented by it, and the name of the person owning the shares represented thereby, with the number of each share and the date of issue. The transfer of any share or shares of stock in the corporation may be made by surrender of the certificate issued therefor, and the written assignment thereof by the owner or his duly authorized Attorney in Fact. Upon such surrender and assignment, a new certificate shall be issued to the Assignee as he may be entitled, but without such surrender and assignment no transfer of stock shall be recognized by the corporation. The Board of Directors shall have the power concerning the issue, transfer and registration of certificates for agents and registrars of transfer, and may require all stock certificates to bear signatures of either or both. The stock transfer books shall be closed ten days before each meeting of the shareholders and during such period no stock shall be transferred. SECTION 2. Right of First Refusal on Its Common Stock, $0.25 par ------------------------------------------------------ value: ----- a. In case any holder of shares of the corporation's common stock, $0.25 par value, and Series A Common Stock, $0.25 par value (collectively, the "Common Stock") shall wish to make any sale, transfer or other disposition of all or any part of the Common Stock held by him, he shall first notify the Secretary of the corporation in writing designating the number of shares of Common Stock which he desires to dispose of, the name(s) of the person(s) to whom such shares are to be disposed of, and the bona fide cash price at which such shares are to be disposed of. b. The corporation shall have a period of 30 calendar days following the date of its receipt of such notice to determine whether it wishes to purchase such shares at the price stated therein. Such determination shall be made by the corporation by its delivery to such holder of a written acceptance of such offer within such 30-day period. Such written acceptance shall specify the date (to be not later than the tenth calendar day following the date on which such 30-day period expired), time and place at which such holder shall deliver to the corporation the certificate(s) for the shares of Common 52 Stock to be so sold against the delivery by the corporation of a certified or bank cashier's check in the amount of the purchase price therefor. c. If the corporation shall not so accept such offer within such 30-day period, then such holder shall be entitled, for a period of 90 days commencing on the first day after the date on which such 30-day period expires, to dispose of all or any part of the shares of Common Stock designated in such notice to the corporation at the price set forth therein to the prospective named transferee(s) and such transferee(s) shall be entitled to have such shares transferred upon the books of the corporation upon its acquisition thereof at such price. If such holder shall not dispose of all or any part of such shares within such 90-day period (or, in the event of a sale of part thereof, the shares remaining untransferred), such shares shall continue to be subject in all respects to the provision of this Article VII, Sec. 2. d. All certificates for shares of Common Stock shall, so long as the provisions of this Article VII, Sec. 2 shall be in effect, bear the following legend: "The transfer of the shares represented by this certificate is subject to a right of first refusal by the corporation as provided in its By-Laws, and no transfer of this certificate or the shares represented hereby shall be valid or effective unless and until such provision of the By-Laws shall have been met. A copy of the By-Laws of the corporation is available for inspection at the principal office of the corporation." e. The provisions of this Article VII, Sec. 2 may be terminated or modified at any time by the affirmative vote of not less than a majority of the then number of directors of the corporation. Each holder of shares of Common Stock shall be notified of any such termination and shall have the right to exchange his outstanding certificate for such shares for a certificate without the aforesaid legend. 53 f. The provisions of this Article VII, Sec. 2 may be extended to other classes or series of the corporation's stock prior to the issuance thereof upon the affirmative vote of not less than a majority of the then number of directors of the corporation. g. The provisions of Section 2 of Article VII shall not apply to shares of the corporation's Common Stock (i) sold, transferred, or otherwise disposed of by the Trust under the AMERCO Employee Savings, Profit Sharing and Employee Stock Ownership Plan, (ii) sold in a bona fide underwritten public offering or in a bona fide public distribution pursuant to Rule 144 under the Securities Act of 1933 (provided however that if such public distribution is pursuant to Rule 144(k) then, notwithstanding the provisions of Rule 144(k), such distribution shall comply with the "manner of sale" requirements of Rule 144(f) and (g)), or (iii) sold, transferred, or otherwise disposed of by a member of the public who acquired such Common Stock in a transaction permitted by this Paragraph g. SECTION 3. Lost Certificates: ----------------- In the event of the loss, theft or destruction of any certificate representing shares of stock of this corporation, the corporation may issue (or, in the case of any such stock as to which a transfer agent and/or registrar have been appointed, may direct such transfer agent and/or register to countersign, register and issue) a replacement certificate in lieu of that alleged to be lost, stolen or destroyed, and cause the same to be delivered to the owner of the stock represented thereby, provided that the owner shall have submitted such evidence showing the circumstances of the alleged loss, theft or destruction, and his or her ownership of the certificate as the corporation considers satisfactory, together with any other facts which the corporation considers pertinent, and further provided that an indemnity agreement and/or indemnity bond shall have been provided in form and amount satisfactory to the corporation and to its transfer agents and/or registrars, if applicable. 54 ARTICLE VIII FISCAL YEAR SECTION 1. Fiscal Year: ----------- The fiscal year of the corporation shall be fixed by resolution of the Board of Directors. ARTICLE IX AMENDMENT OF BY-LAWS SECTION 1. Amendment of By-Laws by the Board of Directors: ---------------------------------------------- The By-Laws may be amended by a majority vote of the Board of Directors of this corporation at any meeting of the Board of Directors. SECTION 2. Shareholder Amendment of By-Laws: -------------------------------- The By-Laws may be amended by an affirmative vote of shares possessing two-thirds or more of the votes that are generally (not just as the result of the occurrence of a contingency) entitled to vote for the election of the members of the Board of Directors of this corporation. Such vote must be by ballot at a duly constituted meeting of the shareholders, the notice of which meeting must include the proposed amendment. 55 CERTIFICATE I, Gary V. Klinefelter, Secretary of AMERCO, a Nevada corporation, do hereby certify that the foregoing is a true and correct copy of the corporation's Restated By-Laws, and that such Restated By-Laws are in full force and effect as of the date hereof. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the corporation this 10th day of January, 1995. By: /S/ GARY V. KLINEFELTER ------------------------------ Gary V. Klinefelter, Secretary -----END PRIVACY-ENHANCED MESSAGE-----