-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, S0UenxgH0cGhVnUrGt9p3hwqTZwL5r2rQNM/1wHFcBx0A1ZBpCOY5Lq0GwDtTjAo uJKSj92b5mAskl1K5m544A== 0000004457-96-000006.txt : 19960124 0000004457-96-000006.hdr.sgml : 19960124 ACCESSION NUMBER: 0000004457-96-000006 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19960123 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/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-11255 FILM NUMBER: 96506062 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/A 1 AMERCO 09/30/95 10-Q/A 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________________ to __________________ Commission Registrant, State of Incorporation I.R.S. Employer File Number Address and Telephone Number Identification No. _______________________________________________________________________ 0-7862 AMERCO 88-0106815 (A Nevada Corporation) 1325 Airmotive Way, Ste. 100 Reno, Nevada 89502-3239 Telephone (702) 688-6300 2-38498 U-Haul International, Inc. 86-0663060 (A Nevada Corporation) 2727 N. Central Avenue Phoenix, Arizona 85004 Telephone (602) 263-6645 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]. 29,513,492 shares of AMERCO Common Stock, $0.25 par value and 5,762,495 shares of AMERCO Series A common stock, $0.25 par value were outstanding at January 22, 1996. 5,385 shares of U-Haul International, Inc. Common Stock, $0.01 par value, were outstanding at January 22, 1996. U-Haul International, Inc. meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format. 2 TABLE OF CONTENTS PART I. FINANCIAL INFORMATION Item 1. Financial Statements. a) Consolidated Balance Sheets as of September 30, 1995, March 31, 1995 and September 30,1994..................... 4 b) Consolidated Statements of Earnings for the Six Months ended September 30, 1995 and1994.............. 6 c) Consolidated Statements of Changes in Stockholders' Equity for the Six Months ended September 30, 1995 and 1994................................................. 7 d) Consolidated Statements of Earnings for the Quarters ended September 30, 1995 and 1994............... 9 e) Consolidated Statements of Cash Flows for the Six Months ended September 30, 1995 and 1994............. 10 f) Notes to Consolidated Financial Statements - September 30, 1995, March 31, 1995 and September 30, 1994....................................... 11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.......................... 18 3 THIS PAGE LEFT INTENTIONALLY BLANK 4 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. AMERCO AND CONSOLIDATED SUBSIDIARIES Consolidated Balance Sheets September 30, March 31, September 30, ASSETS 1995 1995 1994 ------------------------------------- (unaudited) (audited) (unaudited) (in thousands) Cash and cash equivalents $ 33,283 35,286 41,882 Receivables 338,489 300,238 260,727 Inventories 51,402 50,337 47,691 Prepaid expenses 12,693 25,933 21,029 Investments, fixed maturities 800,481 705,428 701,220 Investments, other 139,681 135,220 97,727 Deferred policy acquisition costs 51,304 49,244 49,940 Other assets 18,757 30,057 18,192 Property, plant and equipment, at cost: Land 210,928 214,033 202,987 Buildings and improvements 738,535 735,624 710,680 Furniture and equipment 184,189 179,016 174,139 Rental trailers and other rental equipment 258,264 245,892 225,498 Rental trucks 933,013 913,641 905,669 General rental items 49,581 51,890 54,131 --------- --------- --------- 2,374,510 2,340,096 2,273,104 Less accumulated depreciation 1,131,339 1,065,850 1,005,433 --------- --------- --------- Total property, plant and equipment 1,243,171 1,274,246 1,267,671 $ 2,689,261 2,605,989 2,506,079 ========= ========= ========= The accompanying notes are an integral part of these consolidated financial statements. 5 September 30, March 31, September 30, LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1995 1994 ------------------------------------- (unaudited) (audited) (unaudited) (in thousands) Liabilities: Accounts payable and accrued liabilities $ 150,198 127,613 149,940 Notes and loans 796,738 881,222 752,529 Policy benefits and losses, claims 475,220 475,187 464,883 and loss expenses payable Liabilities from premium deposits 374,407 304,979 300,069 Cash overdraft 23,450 31,363 27,013 Other policyholders' funds and liabilities 25,843 20,378 8,805 Deferred income 9,533 7,426 8,652 Deferred income taxes 92,008 71,037 85,404 --------- ------ ------ Stockholders' equity: Serial preferred stock, with or without par value, 50,000,000 shares authorized; 6,100,000 issued without par value and outstanding as of September 30, 1995, March 31, 1995 and September 30, 1994 - - - Serial common stock, with or with- out par value, 150,000,000 shares authorized - - - Series A common stock of $0.25 par value, authorized 10,000,000 shares, issued 5,762,495 shares as of September 30, 1995 and March 31, 1995, and 9,238,015 shares as of September 30, 1994 1,441 1,441 2,309 Common stock of $0.25 par value, authorized 150,000,000 shares, issued 34,237,505 shares as of September 30, 1995 and March 31, 1995, and 30,761,985 shares as of September 30, 1994 8,559 8,559 7,691 Additional paid-in capital 165,675 165,675 165,651 Foreign currency translation (10,609) (12,435) (10,027) Unrealized gain(loss) on investments 6,771 (6,483) (3,615) Retained earnings 605,616 561,589 577,523 --------- ------- ------- 777,453 718,346 739,532 Less: Cost of common shares in treasury, (1,380,937 shares as of September 30, 1995 and 1,335,937 shares as of March 31, 1995 and September 30, 1994) 11,457 10,461 10,461 Unearned employee stock ownership plan shares 24,132 21,101 20,287 --------- ------- ------- Total stockholders' equity 741,864 686,784 708,784 Contingent liabilities and commitments --------- ------- ------- $ 2,689,261 2,605,989 2,506,079 ========= ========= ========= 6 AMERCO AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Earnings Six Months ended September 30, (Unaudited) 1995 1994 ------------------------- (in thousands except per share data) Revenues Rental and other revenue $ 504,429 494,145 Net sales 102,675 97,688 Premiums 71,385 67,597 Net investment income 23,287 22,423 ----------- ----------- Total revenues 701,776 681,853 Costs and expenses Operating expense 353,185 325,364 Advertising expense (see note 7) 24,061 14,356 Cost of sales 58,001 53,288 Benefits and losses 68,099 66,279 Amortization of deferred acquisition costs 7,799 5,676 Depreciation 76,275 74,755 Interest expense 35,554 33,297 ----------- ---------- Total costs and expenses 622,974 573,015 Pretax earnings from operations 78,802 108,838 Income tax expense (28,293) (39,354) ----------- ---------- Net earnings $ 50,509 69,484 =========== ========== Earnings per common share: Net earnings $ 1.16 1.70 =========== ========== Weighted average common shares outstanding 37,931,825 37,053,707 =========== ========== The accompanying notes are an integral part of these consolidated financial statements. 7 AMERCO AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Changes in Stockholders' Equity Six Months ended September 30, (Unaudited) 1995 1994 --------------------- (in thousands) Series A common stock of $0.25 par value: Authorized 10,000,000 shares, issued 5,762,495 as of September 30, 1995 and 5,762,495 as of March 31, 1995 and 9,238,015 as of September 30, 1994 Beginning of period $ 1,441 1,438 Exchange for common stock - 871 ------- ------- End of period 1,441 2,309 ------- ------- Common stock of $0.25 par value: Authorized 150,000,000 shares, issued 34,237,505 as of September 30, 1995, and March 31, 1995 and 30,761,985 as of September 30, 1994 Beginning of period 8,559 8,562 Exchange for common stock - (871) ------- ------- End of period 8,559 7,691 ------- ------- Additional paid-in capital: Beginning and end of period 165,675 165,651 ------- ------- Foreign currency translation: Beginning of period (12,435) (11,152) Change during period 1,826 1,125 ------- ------- End of period (10,609) (10,027) ------- ------- Unrealized gain (loss) on investments: Beginning of period (6,483) 679 Change during period 13,254 (4,294) ------- ------- End of period 6,771 (3,615) ------- ------- Retained earnings: Beginning of period 561,589 514,521 Net earnings 50,509 69,484 Dividends paid to stockholders: Preferred stock: ($1.06 per share for 1995 and 1994, respectively) (6,482) (6,482) ------- ------- End of period 605,616 577,523 ------- ------- The accompanying notes are an integral part of these consolidated financial statements. 8 AMERCO AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Changes in Stockholders' Equity Six Months ended September 30, (Unaudited) 1995 1994 -------------------- (in thousands) Less: Treasury stock: Beginning of period 10,461 10,461 Net increase (45,000 shares in 1995) 996 - ------- ------ End of period 11,457 10,461 ------- ------ Unearned employee stock ownership plan shares: Beginning of period 21,101 17,451 Increase in loan 3,168 2,955 Proceeds from loan (137) (119) ------- ------ End of period 24,132 20,287 ------- ------- Total stockholders' equity $ 741,864 708,784 ======= ======= The accompanying notes are an integral part of these consolidated financial statements. 9 AMERCO AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Earnings Quarters ended September 30, (Unaudited) 1995 1994 ---------------------- (in thousands except per share data) Revenues Rental and other revenue $ 269,118 265,183 Net sales 49,559 46,386 Premiums 40,683 36,038 Net investment income 11,907 11,913 ---------- ---------- Total revenues 371,267 359,520 Costs and expenses Operating expense 178,939 166,822 Advertising expense (see note 7) 7,192 7,357 Cost of sales 29,042 25,738 Benefits and losses 40,858 39,867 Amortization of deferred acquisition costs 4,871 2,592 Depreciation 38,582 37,473 Interest expense 16,722 16,659 ---------- ---------- Total costs and expenses 316,206 296,508 Pretax earnings from operations 55,061 63,012 Income tax expense (19,729) (22,941) ---------- ---------- Net earnings $ 35,332 40,071 ========== ========== Earnings per common share: Net earnings $ 0.85 1.00 ========== ========== Weighted average common shares outstanding 37,905,225 36,999,879 ========== ========== The accompanying notes are an integral part of these consolidated financial statements. 10 AMERCO AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Cash Flows Six Months ended September 30, (Unaudited) 1995 1994 -------------------- (in thousands) Cash flows from operating activities: Net earnings $ 50,509 69,484 Depreciation and amortization 84,339 82,684 Provision for losses on accounts receivable 2,819 1,868 Net gain on sale of real and personal property 581 132 Gain on sale of investments (2,970) (1,066) Changes in policy liabilities and accruals (3,334) 26,568 Additions to deferred policy acquisition costs (11,954) (7,770) Net change in other operating assets and liabilities 23,954 27,705 -------- --------- Net cash provided by operating activities 143,944 199,605 -------- --------- Cash flows from investing activities: Purchases of investments: Property, plant and equipment (143,082) (255,231) Fixed maturities (162,081) (86,291) Real estate (5,629) (8) Mortgage loans (7,384) (36,087) Proceeds from sale of investments: Property, plant and equipment 97,030 88,669 Fixed maturities 89,348 100,522 Real estate 570 459 Mortgage loans 17,573 5,374 Changes in other investments 1,186 (834) -------- --------- Net cash used by investing activities (112,469) (183,427) -------- --------- Cash flows from financing activities: Net change in short-term borrowings (163,500) 16,250 Proceeds from notes 140,184 66,000 Loan to leveraged employee stock ownership plan (3,168) (2,955) Proceeds from leveraged employee stock ownership plan 137 119 Principal payments on notes (61,168) (53,485) Net change in cash overdraft (7,913) 454 Dividends paid (6,482) (6,482) Purchase of treasury shares (996) - Investment contract deposits 101,667 13,661 Investment contract withdrawals (32,239) (26,300) -------- --------- Net cash provided (used) by financing activities (33,478) 7,262 -------- --------- Increase (decrease) in cash and cash equivalents (2,003) 23,440 Cash and cash equivalents at beginning of period 35,286 18,442 -------- --------- Cash and cash equivalents at end of period $ 33,283 41,882 ======== ========= The accompanying notes are an integral part of these consolidated financial statements. 11 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Consolidated Financial Statements September 30, 1995, March 31, 1995 and September 30, 1994 (Unaudited) 1. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the parent corporation, AMERCO, and its subsidiaries, all of which are wholly-owned. All material intercompany accounts and transactions of AMERCO and its subsidiaries (herein called the "Company" or the "consolidated group") have been eliminated. The consolidated balance sheets as of September 30, 1995 and 1994, and the related consolidated statements of earnings, changes in stockholders' equity and cash flows for the six months ended September 30, 1995 and 1994 are unaudited; in the opinion of management, all adjustments necessary for a fair presentation of such financial statements have been included. Such adjustments consisted only of normal recurring items. Interim results are not necessarily indicative of results for a full year. The operating results and financial position of AMERCO's consolidated insurance operations are determined on a quarter lag. There were no effects related to intervening events which would significantly affect consolidated position or results of operations for the financial statements presented herein. The financial statements and notes are presented as permitted by Form 10-Q and do not contain certain information included in the Company's annual financial statements and notes. Earnings per share are computed based on the weighted average number of shares outstanding, excluding shares of the employee stock ownership plan that have not been committed to be released. Net income is reduced for preferred dividends. Certain reclassifications have been made to the financial statements for the six months ended September 30, 1994 to conform with the current year's presentation. 12 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (Unaudited) 2. INVESTMENTS A comparison of amortized cost to market for fixed maturities is as follows (in thousands, except for par value): June 30, 1995 - ------------------- Par Value Gross Gross Estimated Consolidated or number Amortized unrealized unrealized market Held-to-Maturity of shares cost gains losses value ------------------------------------------------------ U.S. treasury securities and government obligations $ 20,355 $ 20,280 1,784 (5) 22,059 U.S. government agency mortgage backed securities $ 62,793 62,251 875 (2,444) 60,682 Obligations of states and political subdivisions $ 32,035 31,560 1,931 (143) 33,348 Corporate securities $ 186,613 191,434 4,005 (1,881) 193,558 Mortgage-backed securities $ 126,457 124,776 2,616 (1,935) 125,457 Redeemable preferred stocks 33 1,973 363 (7) 2,329 ---------------------------------------- 432,274 11,574 (6,415) 437,433 ---------------------------------------- June 30, 1995 - -------------------- Gross Gross Estimated Consolidated Amortized unrealized unrealized market Available-for-Sale Par Value cost gains losses value ------------------------------------------------------ U.S. treasury securities and government obligations $ 9,685 9,794 1,234 - 11,028 U.S. government agency mortgage backed securities $ 9,410 9,230 189 (118) 9,301 States, municipalities and political subdivisions $ 2,385 2,353 36 (18) 2,371 Corporate securities $ 263,727 264,511 10,477 (1,573) 273,415 Mortgage-backed securities $ 70,044 70,315 2,863 (1,086) 72,092 ----------------------------------------- 356,203 14,799 (2,795) 368,207 ----------------------------------------- Total $ 788,477 26,373 (9,210) 805,640 ========================================= 13 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (Unaudited) 3. SUMMARIZED CONSOLIDATED FINANCIAL INFORMATION OF PONDEROSA HOLDINGS, INC. AND ITS SUBSIDIARIES A summary consolidated balance sheet (unaudited) for Ponderosa Holdings, Inc. and its subsidiaries is presented below: September 30, 1995 1994 ---------------------- (in thousands) Investments - fixed maturities $ 800,481 701,220 Other investments 117,940 97,727 Receivables 151,546 150,841 Deferred policy acquisition costs 51,304 49,940 Due from affiliate 22,603 (1,531) Deferred federal income taxes 4,671 7,957 Other assets 8,099 18,600 -------------------- Total assets $ 1,156,644 1,024,754 ==================== Policy liabilities and accruals $ 409,521 398,602 Unearned premiums 65,699 66,111 Premium deposits 374,407 300,069 Other policyholders' funds and liabilities 28,263 14,613 -------------------- Total liabilities 877,890 779,395 Stockholder's equity 278,754 245,359 -------------------- Total liabilities and stockholder's equity $ 1,156,644 1,024,754 ==================== 14 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (Unaudited) 3. SUMMARIZED CONSOLIDATED FINANCIAL INFORMATION OF PONDEROSA HOLDINGS, INC. AND ITS SUBSIDIARIES, continued A summarized consolidated income statement (unaudited) for Ponderosa Holdings, Inc. and its subsidiaries is presented below: Six months ended September 30, 1995 1994 --------------------- (in thousands) Premiums $ 76,442 76,865 Net investment income 23,516 22,498 Other income 4,471 3,245 --------------------- Total revenue 104,429 102,608 Benefits and losses 68,099 66,279 Amortization of deferred policy acquisition costs 7,799 5,676 Other expenses 12,121 12,756 --------------------- Income from operations 16,410 17,897 Federal income tax expense (4,617) (5,675) --------------------- Net income $ 11,793 12,222 ===================== 4. CONTINGENT LIABILITIES AND COMMITMENTS During the six months ended September 30, 1995, U-Haul Leasing & Sales Co., a wholly-owned subsidiary of U-Haul International, Inc., entered into eight transactions, whereby the Company sold rental trucks and subsequently leased them back. AMERCO has guaranteed $6,406,000 of residual values at September 30, 1995 on these assets at the end of the lease term. Following are the lease commitments for the leases executed during the six months ended September 30, 1995, which have a term of more than one year (in thousands): Year ended Lease March 31, Commitments ------------------------ 1996 $ 5,426 1997 9,297 1998 9,297 1999 9,297 2000 9,297 Thereafter 22,467 ------- $ 65,081 ======= See discussion related to the Shoen Litigation under Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources and under Part II, Item 1. Legal Proceedings. 15 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (Unaudited) 4. CONTINGENT LIABILITIES AND COMMITMENTS, continued The Company is a defendant in a number of suits and claims incident to the type of business conducted and several administrative proceedings arising from state and local provisions that regulate the removal and/or clean-up of underground fuel storage tanks. The Company owns property within two state hazardous waste sites in the State of Washington. At this time, the remedial clean-up costs or range of costs for such sites cannot be estimated. Management's opinion is that none of these suits or claims involving AMERCO and/or its subsidiaries is expected to result in any material loss. 5. SUPPLEMENTAL CASH FLOWS INFORMATION The (increase) decrease in receivables, inventories and accounts payable and accrued liabilities net of other operating and investing activities follows: Six months ended September 30, 1995 1994 --------------------- (in thousands) Receivables $ (35,299) (41,291) ===================== Inventories $ (1,065) 1,321 ===================== Accounts payable and accrued liabilities $ 22,585 23,758 ===================== Income taxes paid in cash amounted to $143,000 and $5,566,000 for 1995 and 1994, respectively. Interest paid in cash amounted to $36,755,000 and $30,878,000 for 1995 and 1994, respectively. 6. RELATED PARTIES Subsequent to March 31, 1995, the Company continued to loan TWO SAC Self-Storage Corporation (TWO SAC) funds for the purchase of an additional 33 self-storage properties. Twenty-six of such self-storage properties were purchased from the Company at a price equal to the Company's acquisition cost plus capitalized costs. As of September 30, 1995, the outstanding balance of TWO SAC's loans from the Company, including interest, was $46,723,000. During the six months ended September 30, 1995, principal payments of $218,000 and interest of $961,000 have been received from TWO SAC. Mark V. Shoen, a major stockholder, director and officer of the Company owns all of the issued and outstanding voting common stock of TWO SAC. The TWO SAC notes will be secured by senior and junior mortgages and are expected to mature in 2004 or 2005, or on demand. The Company anticipates that it will sell to TWO SAC approximately 4 more properties that have been acquired by the Company since June 1993. 16 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (Unaudited) 6. RELATED PARTIES, continued During the six months ended September 30, 1995, the Company received principal payments of $757,000, interest payments of $3,975,000, and management fees of $527,000 from SAC Self-Storage Corporation (SAC). As of September 30, 1995, the outstanding balance SAC's loans from the Company, including interest was $54,055,000. Mark V. Shoen, a major stockholder, director and officer of the Company owns all of the issued and outstanding voting common stock of SAC. 7. NEW ACCOUNTING STANDARDS Statement of Financial Accounting Standards No. 114 - Accounting by Creditors for Impairment of a Loan. Effective for years beginning after December 15, 1994, the standard requires that an impaired loan's fair value be measured and compared to the recorded investment in the loan. If the fair value of the loan is less than the recorded investment in the loan, a valuation allowance is established. The Company adopted this statement during the first quarter of fiscal 1996, with no material impact on its financial condition or results of operations. Statement of Financial Accounting Standards No. 121 - Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of. Effective for fiscal years beginning after December 15, 1995, the standard establishes accounting standards for the impairment of long- lived assets, certain identifiable intangibles, and goodwill related to those assets to be held and used and for long-lived assets and certain identifiable intangibles to be disposed of. This Statement requires that long-lived assets and certain identifiable intangibles to be held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In performing the review for recoverability, the entity should estimate the future cash flows expected to result from the use of the asset and its eventual disposition. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount of the asset, an impairment loss is recognized. Otherwise, an impairment loss is not recognized. Measurement of an impairment loss for long-lived assets and identifiable intangibles that an entity expects to hold and use should be based on the fair value of the asset. The Company has not completed an evaluation of the effect of this standard. Statement of Position 93-7, Reporting on Advertising Costs - as issued by the Accounting Standards Executive Committee in December 1993. This statement of position provides guidance on financial reporting on advertising costs in annual financial statements. The statement of position requires reporting advertising costs as expenses when incurred or when the advertising takes place, reporting the costs of direct- response advertising, and amortizing the amount of direct- response advertising reported as assets. 17 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (Unaudited) 7. NEW ACCOUNTING STANDARDS, continued The Company had been recording deferred yellow page directory costs and amortizing the costs over the duration of each listing. The majority of listings last one year. The Company adopted this statement effective April 1, 1995 recognizing additional advertising expense of $8,647,000 upon implementation. Other pronouncements issued by the Financial Standards Board with future effective dates are either not applicable or not material to the consolidated financial statements of the Company. 8. SUBSEQUENT EVENTS On October 18, 1995, the Company redeemed 3,343,076 shares of Common Stock held by Maran, Inc. in exchange for approximately $22,733,000 and paid approximately $41,352,000 to Mary Anna Shoen Eaton in exchange for a full release of all claims against the Company and the Director-Defendants, including all claims asserted by her in the Shoen Litigation. See discussion of the Shoen Litigation under Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources and under Part II, Item 1. Legal Proceedings. On November 7, 1995, the Company declared a cash dividend of $3,241,000 ($0.53125 per preferred share) to preferred stockholders of record as of November 17, 1995. 18 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS The following table shows industry segment data from the Company's three industry segments, rental operations, life insurance, and property and casualty insurance, for the six months ended September 30, 1995 and 1994. Rental operations is composed of the operations of U-Haul and Amerco Real Estate Company. Life insurance is composed of the operations of Oxford Life Insurance Company (Oxford). Property and casualty insurance is composed of the operations of Republic Western Insurance Company (RWIC). The Company's results of operations have historically fluctuated from quarter to quarter. In particular, the Company's U-Haul rental operations are seasonal and a majority of the Company's revenues and substantially all of its earnings from its U-Haul rental operations are generated in the first and second quarters each fiscal year (April through September).
Property/ Adjustments Rental Life Casualty and Operations Insurance Insurance Eliminations Consolidated ----------------------------------------------------------------- (in thousands) Six months ended September 30, 1995 Revenues: Outside $ 602,687 24,265 74,824 - 701,776 $ Intersegment (270) 708 4,662 (5,100) - --------- ------- ------- -------- --------- Total revenues 602,417 24,973 79,486 (5,100) 701,776 ========= ======= ======= ======== ========= Operating profit 97,676 6,838 9,572 270 114,356 ========= ======= ======= ======== Interest expense 35,554 --------- Pretax earnings from operations 78,802 ========= Identifiable assets at September 30 1,845,370 563,138 593,506 (312,753) 2,689,261 ========= ======= ======= ======== ========= Six months ended September 30, 1994 Revenues: Outside $ 588,897 19,682 73,274 - 681,853 Intersegment (41) 744 8,939 (9,642) - --------- ------- ------- --------- --------- Total revenues 588,856 20,426 82,213 (9,642) 681,853 ========= ======= ======= ======== ========= Operating profit 124,197 6,295 11,602 41 142,135 ========= ======= ======= ======== Interest expense 33,297 Pretax earnings --------- from operations 108,838 ========= Identifiable assets at September 30 1,733,767 462,229 577,127 (267,044) 2,506,079 ========= ======= ======= ======== =========
19 SIX MONTHS ENDED SEPTEMBER 30, 1995 VERSUS SIX MONTHS ENDED SEPTEMBER 30, 1994 U-Haul U-Haul revenues consist of (i) total rental and other revenue and (ii) net sales. Total rental and other revenue increased by $9.0 million, approximately 1.8%, to $500.2 million in the first six months of fiscal 1996. The increase in the first six months of fiscal 1996 is primarily attributable to an increase in net revenues from the rental of moving related equipment and self-storage facilities which increased in the aggregate by $13.3 million to $512.1 million, as compared to $498.8 million in the first six months of fiscal 1995. Moving related rental revenues benefited from transactional growth (volume) within the truck fleet. Revenues from the rental of self-storage facilities were positively impacted by additional rentable square footage. Other revenues decreased in the aggregate by $4.3 million. Net sales revenues were $102.7 million in the first six months of fiscal 1996, which represents an increase of approximately 5.1% from the first six months of fiscal 1995 net sales of $97.7 million. Revenue growth from the sale of moving support items (i.e. boxes, etc.), hitches, and propane resulted in a $5.3 million increase during the six month period, which was offset by a $0.6 million decrease in revenue from gasoline sales consistent with the Company's ongoing efforts to remove underground storage tanks and gradually discontinue gasoline sales. Cost of sales was $58.0 million in the first six months of fiscal 1996, which represents an increase of approximately 8.8% from $53.3 million for the same period in fiscal 1995. This increase in cost of sales reflects a $3.8 million increase in material costs from the sale of moving support items, hitches, and propane reflecting higher sales levels and a $1.0 million increase in allowances for inventory shrinkage and other inventory adjustments. Operating expenses increased to $346.4 million in the first six months of fiscal 1996 from $322.3 million in the first six months of fiscal 1995, an increase of approximately 7.5%. The change from the prior year primarily reflects a $19.7 million increase in rental equipment maintenance costs which reflects rental fleet expansion and transactional growth and a $6.2 million increase in personnel costs due to the increase in rental and sales activity. All other operating expense categories decreased in the aggregate by $4.4 million, approximately 6.5%, to $62.5 million. Advertising expense increased to $24.1 million in the first six months of fiscal 1996 from $14.4 million in the first six months of fiscal 1995. The increase primarily reflects a one-time expense of $8.7 million recognized during the first quarter of fiscal 1996, due to the adoption of Statement of Position 93-7 which requires immediate recognition of advertising costs not qualifying as direct- response. Depreciation expense for the six month period was $76.3 million, as compared to $74.8 million during the same period of the prior year. Oxford - Life Insurance Premiums from Oxford's reinsurance lines before intercompany eliminations were $8.9 million for the six months ended June 30, 1995, or 69.1% of total premiums for that period. This represents an increase of $0.7 million, or 8.5% over the same period in 1994. Reinsurance premiums are primarily from term life insurance, matured deferred annuity contracts, and credit insurance business. This increase in premiums is primarily attributable to the recent (fourth quarter 1994) reinsurance agreement of credit insurance business. 20 Premiums from Oxford's direct lines before intercompany eliminations were $4.0 million for the six months ended June 30, 1995, an increase of $1.7 million from 1994. This increase in direct premium is primarily attributable to the credit insurance business ($3.0 million in premiums). Oxford's direct business related to group life and disability coverage issued to employees of the Company for the six months ended June 30, 1995 accounted for approximately 7.4% of premiums. Other direct lines, including the credit insurance business, accounted for approximately 23.5% of Oxford's premiums for the six months ended June 30, 1995. Net investment income before intercompany eliminations was $8.0 million and $7.7 million for the six months June 30, 1995 and 1994, respectively. This increase is primarily due to increasing margins on the interest sensitive business. Gains on the disposition of fixed maturity investments were $2.9 million and $1.2 million for the six months ended June 30, 1995 and 1994, respectively. Oxford had $1.0 million of other income for both of the six month periods ended June 30, 1995 and 1994, respectively. Benefits and expenses incurred were $18.1 million for the six months ended June 30, 1995, an increase of 28.3% over 1994. Comparable benefits and expenses incurred for 1994 were $14.1 million. This increase is primarily due to death and disability benefits incurred and an increase in the amortization of deferred acquisition costs. Operating profit before intercompany eliminations increased by $0.5 million, or approximately 7.9%, in 1995 to $6.8 million, primarily due to an increase in gains on the disposition of fixed maturity investments that was partially offset by the amortization of deferred acquisitions costs. RWIC - Property and Casualty RWIC gross premium writings for the six months ended June 30, 1995 were $81.4 million as compared to $93.6 million in the first six months of 1994. The rental industry market accounts for a significant share of total premiums, approximately 41.5% and 40.5% in the first six months of 1995 and 1994, respectively. These writings include U-Haul customers, fleetowners and U-Haul as well as other rental industry insureds with similar characteristics. RWIC continues underwriting professional reinsurance via broker markets. Premiums in this area decreased during the first six months of 1995 to $27.9 million, or 34.3% of total gross premiums, from comparable 1994 figures of $38.7 million, or 41.4% of total premiums. This decrease can be primarily attributed to RWIC electing not to renew several treaties because of inadequate pricing and market conditions. Premium writings in selected general agency lines were 16.9% of total gross written premiums in 1995 as compared to 13.9% in 1994. RWIC expanded its direct business in 1995 to include multiple peril coverage for a variety of commercial properties and businesses. These premiums accounted for 6.3% of the total gross written premium during the first six months of 1995. Net earned premiums decreased $2.9 million, or 4.4%, to $63.5 million for the six months ended June 30, 1995, compared with premiums of $66.4 million for the six months ended June 30, 1994. The premium decrease was primarily due to one time changes in premium earning methodology and timing differences related to run- off and start up programs. 21 Underwriting expenses incurred were $69.9 million for the six months ended June 30, 1995, a decrease of $0.7 million or 1.0% over 1994. Comparable underwriting expenses incurred for the first six months of 1994 were $70.6 million. The decrease is due to a reduction in acquisition expenses, which is the result of lower commission rates on start up programs, offset by an increase in administrative expenses and taxes related to increased concentration in states with higher premium tax rates. Net investment income was $15.3 million for the six months ended June 30, 1995, an increase of 3.4% over the 1994 level of net investment income of $14.8 million. The marginal increase is the result of the shift in types of securities held in the portfolio. RWIC completed the first six months of 1995 with income before tax expense of $9.6 million as compared to $11.6 million for the comparable period ended June 30, 1994. This represents a decrease of $2.0 million, or 17.2% over 1994. Deterioration in the level of anticipated underwriting results in the Company's assumed reinsurance and rental industry liability lines were offset by improved results in its general agency lines. Interest Expense Interest expense increased by $2.3 million to $35.6 million for the six months ended September 30, 1995, as compared to $33.3 million for the six months ended September 30, 1994. The increase was attributable to higher average debt levels outstanding. Consolidated Group As a result of the foregoing, pretax earnings of $78.8 million were realized in the six months ended September 30, 1995, as compared to $108.8 million for the same period in 1994. After providing for income taxes, net earnings for the six months ended September 30, 1995 were $50.5 million, as compared to $69.5 million for the same period of the prior year. 22 QUARTERLY RESULTS The following table presents unaudited quarterly results for the ten quarters in the period beginning April 1, 1993 and ending September 30, 1995. The Company believes that all necessary adjustments have been included in the amounts stated below, when read in conjunction with the consolidated financial statements included herein, to present fairly and in accordance with generally accepted accounting principles, the selected quarterly information. The Company's results of operations have historically fluctuated from period to period, including on a quarterly basis. In particular, the Company's U-Haul business is seasonal and a majority of the Company's revenues and substantially all of its net earnings from its U-Haul business are generated in the first and second quarters of each fiscal year (April through September). The operating results for the periods presented are not necessarily indicative of results for any future period. Quarter Ended ----------------------------------------------- Sep 30, Dec 31, Mar 31, Jun 30 Sep 30, 1994 1994 1995 1995 1995 ----------------------------------------------- (in thousands, except per share data) Total revenues $359,520 295,888 260,282 330,509 371,267 Net earnings (loss) 40,071 1,907 (11,359) 15,177 35,332 Net earnings (loss) per common share 1.00 (.04) (.44) .31 .85 , Quarter Ended ----------------------------------------------- Jun 30, Sep 30, Dec 31, Mar 31, Jun 30, 1993 1993 1993 1994 1994 ----------------------------------------------- (in thousands, except per share data) Total revenues $291,348 324,968 267,448 251,091 322,333 Net earnings (loss) 17,359 30,601 1,799 (9,575) 29,413 Net earnings (loss) per common share .45 .79 (.02) (.33) .71 , ________________ For the quarters ended December 31, 1993, March 31, June 30, September 30, December 31, 1994, March 31, June 30, and September 30, 1995, net earnings (loss) per common share amounts were computed after giving effect to the dividend on the Company's Series A 8 1/2% Preferred Stock. Reflects the adoption of Statement of Position 93-6, "Employers' Accounting for Employee Stock Ownership Plans." Reflects the adoption of Statement of Position 93-7, "Reporting on Advertising Costs." 23 QUARTER ENDED SEPTEMBER 30, 1995 VERSUS QUARTER ENDED SEPTEMBER 30, 1994 U-Haul U-Haul revenues consist of (i) total rental and other revenue and (ii) net sales. Total rental and other revenue increased by $3.0 million, approximately 1.1%, to $266.3 million in the second quarter of fiscal 1996. This increase reflects a $7.3 million increase in net revenues from the rental of moving related equipment and self-storage facilities primarily reflecting growth in truck rental transactions and additional rentable square footage. Net sales revenues were $49.6 million in the second quarter of fiscal 1996, which represents an increase of approximately 6.8% from the second quarter of fiscal 1995 net sales of $46.4 million. Revenue growth from the sale of moving support items (i.e. boxes, etc.), hitches, and propane resulted in a $3.1 million increase during the quarter, which was offset by a $0.3 million decrease in gasoline sales consistent with the Company's ongoing efforts to remove underground storage tanks and gradually discontinue gasoline sales. Cost of sales totaled $29.0 million in the second quarter of fiscal 1996, which represents an increase of 12.8% from $25.7 million for the same period in fiscal 1995. This increase in cost of sales reflects a $2.0 million rise in material costs from the sale of moving support items and propane which can be primarily attributed to higher sales levels and a $1.0 million increase in allowances for inventory shrinkage and other inventory adjustments. Operating expenses increased to $177.9 million in the second quarter of fiscal 1996 from $168.5 million in the second quarter of fiscal 1995, an increase of approximately 5.6%. The change from the prior year is almost entirely due to higher rental equipment maintenance costs reflecting an increase in fleet size and transaction levels. In the aggregate, all other operating expense categories decreased by $4.3 million in the second quarter of fiscal 1996 reflecting efforts to contain expense growth during this period. Depreciation expense for the three month period was $38.6 million, as compared to $37.5 million during the same period of the prior year. Oxford - Life Insurance Premiums from Oxford's reinsurance lines before intercompany eliminations were $4.9 million for the quarter ended June 30, 1995, or 70.9% of total premiums for that period. This represents an increase of $0.5 million over the same period in 1994 or an increase of 11.4%. Reinsurance premiums are primarily from term life insurance, matured deferred annuity contracts, and credit insurance business. This increase is primarily attributable to the recent (4th quarter 1994) reinsurance agreement of credit insurance business. Premiums from Oxford's direct lines before intercompany elimination's were $2.0 million for the quarter ended June 30, 1995, an increase of $0.1 million. This increase in direct premium is primarily attributable to the credit insurance business. Oxford's direct business related to group life and disability coverage issued to employees of the Company for the quarter ended June 30, 1995 accounted for approximately 6.8% of premiums. Other direct lines, including the credit business, 24 accounted for approximately 22.3% of Oxford's premiums for the quarter ended June 30, 1995. Net investment income before intercompany eliminations was $4.2 million and $4.1 million for the quarter ended June 30, 1995 and 1994, respectively. This increase is primarily due to increasing margins on the interest sensitive business. Gains on the disposition of fixed maturity investments were $2.8 million and $1.0 million for the quarters ended June 30, 1995 and 1994, respectively. Oxford had $0.5 million of other income, for both of the quarters ended June 30, 1995 and 1994, respectively. Benefits and expenses incurred were $10.1 million for the quarter ended June 30, 1995, an increase of 34.7% over 1994. Comparable benefits and expenses incurred for 1994 were $7.5 million. This increase is primarily due to disability benefits incurred and an increase in the amortization of deferred acquisition costs, primarily as a result of the increase in realized capital gains on fixed maturity investments. Operating profit before intercompany eliminations decreased by $0.2 million, or approximately 4.6% as compared to $4.2 million for the quarters ended June 30, 1995 and 1994, respectively. RWIC - Property and Casualty RWIC gross premium writings for the quarter ended June 30, 1995 were $45.2 million as compared to $48.0 million in the second quarter of 1994. The rental industry market accounts for a significant share of total premiums, approximately 60.1% and 59.5% in the second quarters of 1995 and 1994, respectively. These writings include U-Haul customers, fleetowners and U-Haul as well as other rental industry insureds with similar characteristics. RWIC continues underwriting professional reinsurance via broker markets. Premiums in this area decreased during the second quarter of 1995 to $7.7 million, or 17.1% of total gross premiums, from comparable 1994 figures of $11.7 million, or 24.4% of total premiums. This decrease can be primarily attributed to RWIC electing not to renew several treaties because of inadequate pricing and market conditions. Premium writings in selected general agency lines were 16.5% of total gross written premiums in 1995 as compared to 12.2% in 1994. RWIC expanded its direct business in 1995 to include multiple peril coverage for a variety of commercial properties and businesses. These premiums accounted for 6.3% of the total gross written premium during second quarter 1995. Net earned premiums increased $3.2 million, or 8.8% to $39.5 million for the quarter ended June 30, 1995, compared with premiums of $36.3 million for the quarter ended June 30, 1994. The premium increase was primarily due to timing differences related to run-off and start up programs. Underwriting expenses incurred were $42.4 million for the quarter ended June 30, 1995, an increase of $2.5 million, or 6.3% over 1994. Comparable underwriting expenses incurred for the first quarter of 1994 were $39.9 million. The increase is commensurate with the increase in premiums. Net investment income was $7.7 million for the quarter ended June 30, 1995, a decrease of 2.5% over 1994 net investment income of $7.9 million. 25 RWIC completed the second quarter of 1995 with income before tax expense of $4.5 million as compared to $4.6 million for the comparable period ended June 30, 1994. This represents a decrease of $0.1 million, or 2.2% over 1994. Interest Expense Interest expense was unchanged at $16.7 million for the quarter ended September 30, 1995. Higher average debt levels were offset by a reduction in the average cost of borrowed funds. Consolidated Group As a result of the foregoing, pretax earnings of $55.1 million were realized in the quarter ended September 30, 1995, as compared to $63.0 million for the same period in 1994. After providing for income taxes, net earnings for the quarter ended September 30, 1995 were $35.3 million, as compared to $40.1 million for the same period of the prior year. LIQUIDITY AND CAPITAL RESOURCES U-Haul To meet the needs of its customers, U-Haul must maintain a large inventory of fixed asset rental items. At September 30, 1995, net property, plant and equipment represented approximately 67.3% of total U-Haul assets and approximately 46.1% of consolidated assets. In the first six months of fiscal 1996, capital expenditures were $143.1 million, as compared to $255.2 million in the first six months of fiscal 1995. The decrease in capital expenditures from the prior year is due to a decrease in new rental truck acquisitions. These acquisitions were funded with internally generated funds from operations and debt financings. Cash flows from operations were $145.9 million in the first six months of fiscal 1996, as compared to $162.6 million in the first six months of fiscal 1995. The decrease of $16.7 million is primarily due to a decrease in net change of operating assets and liabilities, specifically an increase in receivables and accounts payable and accrued liabilities and with a decrease in deferred income taxes. Oxford - Life Insurance Oxford's primary sources of cash are premiums, receipts from interest-sensitive products and investment income. The primary uses of cash are operating costs and benefit payments to policyholders. Matching the investment portfolio to the cash flow demands of the types of insurance being written is an important consideration. Benefit and claim statistics are continually monitored to provide projections of future cash requirements. Cash provided (used) by operating activities were ($2.2) million and $9.8 million for the six months ended June 30, 1995 and 1994, respectively. Cash flows from new annuity reinsurance agreements increased investment contract deposits as well as the purchase of fixed maturities. Cash flows from financing activities 26 of new annuity reinsurance agreements were approximately $90.0 million for the six months ended June 30, 1995. In addition to cash flow from operating and financing activities, a substantial amount of liquid funds is available through Oxford's short-term portfolio. At June 30, 1995 and 1994, short-term investments amounted to $15.1 million and $9.1 million, respectively. Management believes that the overall sources of liquidity will continue to meet foreseeable cash needs. Stockholder's equity of Oxford, increased to $99.6 million in 1995 from $91.0 million in 1994. Ponderosa holds all of the common stock of RWIC. Applicable laws and regulations of the State of Arizona require the Company's insurance subsidiaries to maintain minimum capital determined in accordance with statutory accounting practices in the amount of $400,000. In addition, the amount of dividends that can be paid to stockholders by insurance companies domiciled in the State of Arizona is limited. Any dividend in excess of the limit requires prior regulatory approval. These restrictions are not expected to have a material adverse effect on the ability of the Company to meet its cash obligations. RWIC - Property and Casualty Cash flows from operating activities were $0.6 million and $12.4 million for the six months ended June 30, 1995 and June 30, 1994, respectively. The change is due to decreased net income and reinsurance losses payable, offset by a decrease in accounts receivable as compared to a large increase during the first half of 1994. RWIC's short-term investment portfolio was $5.4 million at June 30, 1995. This level of liquid assets, combined with budgeted cash flow, is adequate to meet periodic needs. This balance also reflects funds in transition from maturity proceeds to long-term investments. The structure of the long-term portfolio is designed to match future cash needs. Capital and operating budgets allow RWIC to accurately schedule cash needs. RWIC maintains a diversified investment portfolio, primarily in bonds at varying maturity levels. Approximately 96.7% of the portfolio consists of investment grade securities. The maturity distribution is designed to provide sufficient liquidity to meet future cash needs. Current liquidity is adequate, with current invested assets equal to 96.3% of total liabilities. Stockholder's equity increased 6.5% from $168.1 million at December 31, 1994 to $179.1 million at June 30, 1995. RWIC considers current stockholder's equity to be adequate to support future growth and absorb unforeseen risk events. RWIC does not use debt or equity issues to increase capital and therefore has no exposure to capital market conditions. RWIC paid no stockholder's dividends during the six months ended June 30, 1995. 27 Consolidated Group At September 30, 1995, total notes and loans payable outstanding was $796.7 million as compared to $881.2 million at March 31, 1995, and $752.5 million at September 30, 1994. During each of the fiscal years ending March 31, 1996, 1997, and 1998, U-Haul estimates gross capital expenditures will average approximately $350 million as a result of the expansion of the rental fleet and self-storage operation. This level of capital expenditures, combined with an average of approximately $100 million in annual long-term debt maturities during this same period, are expected to create annual average funding needs of approximately $450 million. Management estimates that U-Haul will fund approximately 60% of these requirements with internally generated funds, including proceeds from the disposition of older trucks and other asset sales. The remainder of the anticipated capital expenditures are expected to be financed through existing credit facilities, new debt placements and equity offerings. Credit Agreements The Company's operations are funded by various credit and financing arrangements, including unsecured long-term borrowings, unsecured medium-term notes, and revolving lines of credit with domestic and foreign banks. Principally to finance its fleet of trucks and trailers, the Company routinely enters into sale and leaseback transactions. As of September 30, 1995, the Company had $796.7 million in total notes and loans payable outstanding and unutilized committed lines of credit of approximately $405.0 million. Certain of the Company's credit agreements contain restrictive financial and other covenants, including, among others, covenants with respect to incurring additional indebtedness, maintaining certain financial ratios, and placing certain additional liens on its properties and assets. In addition, these credit agreements contain provisions that could result in a required prepayment upon a "change in control" of the Company. At September 30, 1995 the Company was in compliance with these covenants. The Company is further restricted in the type and amount of dividends and distributions that it may issue or pay, and in the issuance of certain types of preferred stock. The Company is prohibited from issuing shares of preferred stock that provide for any mandatory redemption, sinking fund payment, or mandatory prepayment, or that allow the holders thereof to require the Company or a subsidiary of the Company to repurchase such preferred stock at the option of such holders or upon the occurrence of any event or events without the consent of its lenders. Shoen Litigation As disclosed in Part II, Item 1. Legal Proceedings, a judgment has been entered in the Shoen Litigation against five of the Company's current directors and one former director. The five current directors filed for protection under Chapter 11 of the federal bankruptcy laws, resulting in the issuance of an order automatically staying the execution of the judgment against those defendants. Those defendants, in cooperation with the Company, filed plans of reorganization (collectively, the Plan) in the United States Bankruptcy Court for the District of Arizona all of which proposed the same funding and treatment of the plaintiffs' 28 claims resulting from the judgment in the Shoen Litigation. Under the Plan, on October 18, 1995, the Company redeemed 3,343,076 shares of Common Stock held by Maran, Inc., a Nevada corporation, in exchange for approximately $22.7 million and entered into a Settlement Agreement with Mary Anna Shoen Eaton (Shoen Eaton) whereby in exchange for approximately $41.4 million, Shoen Eaton released the current directors and the Company from any liability relating to the Shoen Litigation. As a result of the foregoing, the judgment in the amount of approximately $461.8 million has been reduced to approximately $377.2 million. Under the Plan, the Company will transfer to a settlement trust (the Trust), property having a stipulated or adjudicated value of approximately $276.6 million. Certain of the plaintiffs will receive a trust certificate representing an undivided, fractional beneficial interest in the Trust. The property transferred to the Trust under the Plan will consist of (i) $193.0 million in the Company's Series D Floating Rate Preferred Stock; (ii) a 1993 REMIC certificate held by the Company with a face value of approximately $12.5 million evidencing a pool of 61 commercial mortgage loans which are secured by mortgages or deeds of trust on 60 self-storage properties; (iii) mortgage notes held by the Company or one or more of its subsidiaries with an aggregate principal balance of approximately $13.8 million; (iv) real property held free and clear by the Company or its subsidiaries having a total fair value of approximately $47.2 million; and (v) approximately $10.1 million in cash. In addition, under the Plan, the plaintiffs that are record holders of Common Stock will receive approximately $101.4 million in the Company's Series B 8.25% Preferred Stock in exchange for 14,911,900 shares of Common Stock held by such plaintiffs. Upon the funding of the Trust, and the exchange of the plaintiffs' Common Stock for the Series B 8.25% Preferred Stock, the judgment will be satisfied. The bankruptcy court commenced consideration of the Plan during November of 1995. There is no assurance that the Plan will be confirmed by the bankruptcy court or that the Plan, as confirmed, will operate as described above. Because of the Plan's complexity, because the Plan has not yet been confirmed, and because the Company has not finalized the accounting and tax treatment of the Plan, the Company is unable to determine with certainty the Plan's impact on the Company's financial condition, results of operations, cash flows, or capital expenditure plans. However, as a result of funding the Plan, the Company is likely to incur additional costs in the future in the form of dividends on preferred stock and/or interest on borrowed funds. For example, if the Plan, as confirmed, operates as described above, dividends on the Series B 8.25% Preferred Stock and on the Series D Floating Rate Preferred Stock (at current interest rates), will aggregate approximately $22.6 million per year. In addition, the Company's outstanding Common Stock would be reduced by an additional 14,911,900 shares. While the Plan, if confirmed, could reduce the Company's net income, the Company does not expect earnings per common share to be adversely affected by the Plan. However, many uncertainties remain about the Plan, including the tax and accounting treatments of the payments to be made by the Company under the Plan. Accordingly, the Plan, as confirmed, could result in material changes in stockholders' equity and earnings per share. No provision has been made in the Company's financial statements for any payments to be made to the plaintiffs or to the Trust pursuant to the Plan. See Part II, Item 1. Legal Proceedings. 29 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AMERCO ___________________________________ (Registrant) Dated: January 22, 1996 By: /S/ GARY B. HORTON ___________________________________ Gary B. Horton, Treasurer (Principal Financial Officer) -----END PRIVACY-ENHANCED MESSAGE-----