-----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, VeomwolJuc3AJxr8wcdeSRoxQRCr/0XDgcsfngLF7/W93DZMxzm4NfwX73DQevGp HuTR7vq93k+fWA7Ih2QBuw== 0000004457-96-000015.txt : 19960216 0000004457-96-000015.hdr.sgml : 19960216 ACCESSION NUMBER: 0000004457-96-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960215 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: 96520540 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 12/95 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, 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 [ ]. 27,028,428 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 14, 1996. 5,385 shares of U-Haul International, Inc. Common Stock, $0.01 par value, were outstanding at February 14, 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 December 31, 1995, March 31, 1995 and December 31, 1994..................... 4 b) Consolidated Statements of Earnings for the Nine Months ended December 31, 1995 and 1994.............. 6 c) Consolidated Statements of Changes in Stockholders' Equity for the Nine Months ended December 31, 1995 and 1994.................................................. 7 d) Consolidated Statements of Earnings for the Quarters ended December 31, 1995 and 1994................ 9 e) Consolidated Statements of Cash Flows for the Nine Months ended December 31, 1995 and 1994.............. 10 f) Notes to Consolidated Financial Statements - December 31, 1995, March 31, 1995 and December 31, 1994........................................ 11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations........................... 18 PART II. OTHER INFORMATION Item 1. Legal Proceedings............................................. 30 Item 6. Exhibits and Reports on Form 8-K.............................. 34 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 1995 1995 1994 ----------------------------------- (unaudited) (audited) (unaudited) (in thousands) Cash and cash equivalents $ 39,043 35,286 38,015 Receivables 336,358 300,238 299,662 Inventories 49,645 50,337 50,552 Prepaid expenses 17,824 25,933 25,236 Investments, fixed maturities 830,594 705,428 697,728 Investments, other 141,325 135,220 97,337 Deferred policy acquisition costs 53,162 49,244 48,296 Other assets 19,911 30,057 17,743 ---------- --------- --------- Property, plant and equipment, at cost: Land 214,384 214,033 205,622 Buildings and improvements 752,704 735,624 730,928 Furniture and equipment 185,504 179,016 175,268 Rental trailers and other rental equipment 256,139 245,892 235,945 Rental trucks 933,727 913,641 899,958 General rental items 47,345 51,890 52,701 --------- --------- --------- 2,389,803 2,340,096 2,300,422 Less accumulated depreciation 1,128,870 1,065,850 1,037,569 --------- --------- --------- Total property, plant and equipment 1,260,933 1,274,246 1,262,853 --------- --------- --------- $ 2,748,795 2,605,989 2,537,422 ========= ========= ========= The accompanying notes are an integral part of these consolidated financial statements.
5
December 31, March 31, December 31, LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1995 1994 ------------ ---------- ---------------- (unaudited) (audited) (unaudited) (in thousands) Liabilities: Accounts payable and accrued liabilities $ 132,043 127,613 118,881 Notes and loans 890,633 881,222 827,592 Policy benefits and losses, claims 487,652 475,187 467,051 and loss expenses payable Liabilities from premium deposits 393,572 304,979 290,529 Cash overdraft 28,847 31,363 23,948 Other policyholders' funds and liabilities 23,015 20,378 9,071 Deferred income 9,613 7,426 12,676 Deferred income taxes 88,246 71,037 82,097 -------- ------- ------- Stockholders' equity: Serial preferred stock, with or without par value, authorized 50,000,000 shares ; 6,100,000 issued without par value and outstanding as of December 31, 1995, March 31, 1995 and December 31, 1994 - - - Serial common stock, with or with- out par value, authorized 150,000,000 shares - - - Series A common stock of $0.25 par value, authorized 10,000,000 shares, issued 5,762,495 shares as of December 31, 1995, March 31, 1995 and December 31, 1994 1,441 1,441 1,441 Common stock of $0.25 par value, authorized 150,000,000 shares, issued 34,237,505 shares as of December 31, 1995, March 31, 1995 and December 31, 1994 8,559 8,559 8,559 Additional paid-in capital 165,756 165,675 165,677 Foreign currency translation (11,895) (12,435) (12,307) Unrealized gain(loss) on investments 5,635 (6,483) (3,714) Retained earnings 610,076 561,589 576,189 779,572 718,346 735,845 -------- -------- ------- Less: Cost of common shares in treasury, (4,724,013 shares as of December 31, 1995 and 1,335,937 shares as of March 31, 1995 and December 31, 1994) 61,069 10,461 10,461 Unearned employee stock ownership plan shares 23,329 21,101 19,807 -------- --------- -------- Total stockholders' equity 695,174 686,784 705,577 Contingent liabilities and commitments $ 2,748,795 2,605,989 2,537,422 ========= ========= =========
6 AMERCO AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Earnings Nine Months ended December 31, (Unaudited)
1995 1994 -------------------- (in thousands except per share data) Revenues Rental and other revenue $ 722,228 704,026 Net sales 136,666 131,098 Premiums 116,256 108,659 Net investment income 34,078 32,928 --------- -------- Total revenues 1,009,228 976,711 Costs and expenses Operating expense 545,940 491,010 Advertising expense 31,759 21,688 Cost of sales 81,917 72,634 Benefits and losses 113,435 108,363 Amortization of deferred acquisition costs 12,114 8,521 Depreciation 79,049 112,631 Interest expense 52,684 50,871 --------- -------- Total costs and expenses 916,898 865,718 Pretax earnings from operations 92,330 110,993 Income tax expense (34,120) (39,602) --------- -------- Net earnings $ 58,210 71,391 ========= ======== Earnings per common share: Net earnings $ 1.32 1.67 ========= ======== Weighted average common shares outstanding 36,796,961 37,025,575 ========== ========== 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)
1995 1994 ------ ------ (in thousands) Series A common stock of $0.25 par value: Authorized 10,000,000 shares, issued 5,762,495 as of December 31, 1995, March 31, 1995 and December 31, 1994 Beginning of period $ 1,441 1,438 Exchange for Series A common stock - 871 Exchange for common stock - (868) ------- ------- End of period 1,441 1,441 ------- ------- Common stock of $0.25 par value: Authorized 150,000,000 shares, issued 34,237,505 as of December 31, 1995, March 31, 1995 and December 31, 1994 Beginning of period 8,559 8,562 Exchange for Series A common stock - (871) Exchange for common stock - 868 ------- ------- End of period 8,559 8,559 ------- ------- Additional paid-in capital: Beginning of period 165,675 165,651 Issuance of common shares under ESOP 81 26 ------- ------- End of Period 165,756 165,677 ------- ------- Foreign currency translation: Beginning of period (12,435) (11,152) Change during period 540 (1,155) ------- ------- End of period (11,895) (12,307) ------- ------- Unrealized gain (loss) on investments: Beginning of period (6,483) 679 Change during period 12,118 (4,393) ------- ------- End of period 5,635 (3,714) ------- ------- Retained earnings: Beginning of period 561,589 514,521 Net earnings 58,210 71,391 Dividends paid to stockholders: Preferred stock: ($1.59 per share for 1995 and 1994, respectively) (9,723) (9,723) ------- ------- End of period 610,076 576,189 ------- ------- The accompanying notes are an integral part of these consolidated financial statements.
8 AMERCO AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Changes in Stockholders' Equity Nine Months ended December 31, (Unaudited)
1995 1994 ------ ------ (in thousands) Less: Treasury stock: Beginning of period 10,461 10,461 Net increase (3,388,076 shares in 1996) 50,608 - ------- ------- End of period 61,069 10,461 ------- ------- Unearned employee stock ownership plan shares: Beginning of period 21,101 17,451 Increase in loan 4,576 4,378 Proceeds from loan (2,348) (2,022) ------- ------- End of period 23,329 19,807 ------- ------- Total stockholders' equity $ 695,174 705,577 ======= ======= The accompanying notes are an integral part of these consolidated financial statements.
9 AMERCO AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Earnings Quarters ended December 31, (Unaudited) 1995 1994 ------- -------- (in thousands except per share data) Revenues Rental and other revenue $ 217,799 209,881 Net sales 33,991 33,410 Premiums 44,871 41,062 Net investment income 10,791 10,505 --------- --------- Total revenues 307,452 294,858 Costs and expenses Operating expense 192,755 165,646 Advertising expense 7,698 7,332 Cost of sales 23,916 19,346 Benefits and losses 45,336 42,084 Amortization of deferred acquisition costs 4,315 2,845 Depreciation 2,774 37,876 Interest expense 17,130 17,574 --------- --------- Total costs and expenses 293,924 292,703 Pretax earnings from operations 13,528 2,155 Income tax expense (5,827) (248) --------- --------- Net earnings $ 7,701 1,907 ========= ========= Earnings per common share: Net earnings $ 0.13 (0.04) ========= ========= Weighted average common shares outstanding 34,527,233 36,969,310 ========== ========== The accompanying notes are an integral part of these consolidated financial statements. 10 AMERCO AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Cash Flows Nine Months ended December 31, (Unaudited) 1995 1994 -------- ------- (in thousands) Cash flows from operating activities: Net earnings $ 58,210 71,391 Depreciation and amortization 92,525 124,409 Provision for losses on accounts receivable 3,734 2,855 Net gain on sale of real and personal property 2,692 (1,159) Gain on sale of investments (4,525) (798) Changes in policy liabilities and accruals 11,479 25,076 Additions to deferred policy acquisition costs (18,599) (8,971) Net change in other operating assets and liabilities 4,564 (12,414) -------- -------- Net cash provided by operating activities 150,080 200,389 -------- -------- Cash flows from investing activities: Purchases of investments: Property, plant and equipment (207,465) (322,130) Fixed maturities (247,166) (112,067) Real estate (7,151) (8) Mortgage loans (7,384) (77,194) Proceeds from sale of investments: Property, plant and equipment 139,881 123,653 Fixed maturities 145,068 132,854 Real estate 614 564 Mortgage loans 21,918 8,632 Changes in other investments (1,466) (1,275) -------- -------- Net cash used by investing activities (163,151) (246,971) -------- -------- Cash flows from financing activities: Net change in short-term borrowings (28,500) 121,250 Proceeds from notes 140,141 66,000 Loan to leveraged employee stock ownership plan (4,576) (4,378) Proceeds from leveraged employee stock ownership plan 2,348 2,022 Principal payments on notes (102,230) (83,422) Debt issuance costs (1,628) (804) Net change in cash overdraft (2,516) (2,611) Dividends paid (9,723) (9,723) Purchase of treasury shares (65,081) - Investment contract deposits 133,096 19,561 Investment contract withdrawals (44,503) (41,740) -------- -------- Net cash provided by financing activities 16,828 66,155 -------- -------- Increase in cash and cash equivalents 3,757 19,573 Cash and cash equivalents at beginning of period 35,286 18,442 -------- -------- Cash and cash equivalents at end of period $ 39,043 38,015 ======== ======== The accompanying notes are an integral part of these consolidated financial statements. 11 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 1995, March 31, 1995 and December 31, 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 December 31, 1995 and 1994, and the related consolidated statements of earnings, changes in stockholders' equity and cash flows for the nine months ended December 31, 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. Based on experience, the Company increased the estimated salvage value of certain rental trucks. The effect of the change increased net income for the nine months ended December 31, 1995 by $21,959,000 ($0.60 per share). 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 nine months ended December 31, 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):
September 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 $ 20,277 1,725 (4) 21,998 U.S. government agency mortgage backed securities $ 62,317 61,801 891 (2,865) 59,827 Obligations of states and political subdivisions $ 35,200 34,763 1,813 (78) 36,498 Corporate securities $ 194,360 198,867 4,475 (1,416) 201,926 Mortgage-backed securities $ 126,399 124,697 2,541 (2,112) 125,126 Redeemable preferred stocks 91 3,282 329 (3) 3,608 ------- ------ ------- ------- 443,687 11,774 (6,478) 448,983 ------- ------ ------- ------- September 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 $ 9,685 9,790 1,211 - 11,001 U.S. government agency mortgage backed securities $ 11,009 10,821 321 (96) 11,046 States, municipalities and political subdivisions $ 3,385 3,372 61 (16) 3,417 Corporate securities $ 256,397 258,728 9,418 (1,315) 266,831 Mortgage-backed securities $ 93,323 92,717 3,027 (1,132) 94,612 ------- ------ ------- ------- 375,428 14,038 (2,559) 386,907 ------- ------ ------- ------- Total $ 819,115 25,812 (9,037) 835,890 ======= ====== ======= =======
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: December 31, 1995 1994 -------- -------- (in thousands) Investments - fixed maturities $ 830,594 697,728 Other investments 114,147 93,633 Receivables 150,889 148,167 Deferred policy acquisition costs 53,162 48,296 Due from affiliate 21,984 16,342 Deferred federal income taxes 3,621 8,157 Other assets 16,182 7,306 --------- --------- Total assets $ 1,190,579 1,019,629 ========= ========= Policy liabilities and accruals $ 417,583 408,903 Unearned premiums 70,074 57,949 Premium deposits 393,572 290,529 Other policyholders' funds and liabilities 25,848 13,008 --------- --------- Total liabilities 907,077 770,389 Stockholder's equity 283,502 249,240 --------- --------- Total liabilities and stockholder's equity $ 1,190,579 1,019,629 ========= ========= 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: Nine months ended December 31, 1995 1994 (in thousands) Premiums $ 126,420 124,047 Net investment income 34,234 33,039 Other income 6,884 3,879 -------- -------- Total revenue 167,538 160,965 Benefits and losses 113,435 108,363 Amortization of deferred policy acquisition costs 12,114 8,521 Other expenses 15,597 21,299 -------- -------- Income from operations 26,392 22,782 Federal income tax expense (8,715) (6,580) -------- -------- Net income $ 17,677 16,202 ======== ======== 4. CONTINGENT LIABILITIES AND COMMITMENTS During the nine months ended December 31, 1995, U-Haul Leasing & Sales Co., a wholly-owned subsidiary of U-Haul International, Inc., entered into twelve transactions, whereby the Company sold rental trucks and subsequently leased them back. AMERCO has guaranteed $9,040,000 of residual values at December 31, 1995 on these assets at the end of the lease term. Following are the lease commitments for the leases executed during the nine months ended December 31, 1995, which have a term of more than one year (in thousands): Year ended Lease March 31, Commitments --------- ----------- 1996 $ 6,497 1997 12,622 1998 12,622 1999 12,622 2000 12,622 Thereafter 31,371 -------- $ 88,356 ======== 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: Nine months ended December 31, 1995 1994 ---- ---- (in thousands) Receivables $ (38,947) (39,347) ======== ======== Inventories $ 692 1,540 ======== ======== Accounts payable and accrued liabilities $ 4,425 (7,272) ======== ======== Income taxes paid amounted to $368,000 and $4,089,000 for 1995 and 1994, respectively. Interest paid amounted to $53,361,000 and $52,363,000 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 34 self-storage properties. Twenty-seven of such self-storage properties were purchased directly from the Company at a price equal to the Company's acquisition cost plus capitalized costs. During the nine months ended December 31, 1995, principal payments of $394,000, interest payments of $1,719,000 and management fees of $36,000 have been received from TWO SAC. As of December 31, 1995, the outstanding balance of TWO SAC's loans from the Company, including interest, was $48,109,000. 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. 16 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (Unaudited) 6. RELATED PARTIES, continued During the nine months ended December 31, 1995, the Company received principal payments of $983,000, interest payments of $4,942,000, and management fees of $739,000 from SAC Self- Storage Corporation (SAC). As of December 31, 1995, the outstanding balance of SAC's loans from the Company, including interest, was $54,082,000. Mark V. Shoen, a major stockholder, director and officer of the Company owns all of the issued and outstanding voting common stock of SAC. 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. 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. 17 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 - 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. 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. This adoption had the effect of reducing net income by $5,685,000 million ($0.15 per share). The Company had extensive discussions with the SEC. The Company adopted SOP 93-7 based upon the SEC's interpretation. The Company may ask for reconsideration at some point in the future. 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 February 6, 1996, the Company declared a cash dividend of $3,241,000 ($0.53125 per preferred share) to preferred stockholders of record as of February 16, 1996. On January 30, 1996, the Company redeemed 833,420 shares of Common Stock held by L.S.S., Inc., a Nevada corporation, in exchange for approximately $5,667,000 and paid damages to Leonard S. Shoen of approximately $15,433,000. In addition, the Company paid a total of approximately $2,019,000 of interest on the above amounts. On February 7, 1996, the Company redeemed 1,651,644 shares of Common Stock held by Thermar, Inc. (Thermar) in exchange for approximately $41,785,000. The Company also paid Thermar approximately $4,110,000 of interest on such amount. 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. 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, 1995 and 1994. Rental operations is composed of the operations of U-Haul International, Inc. (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 proportionally more of the Company's revenues and its net 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, 1995 Revenues: Outside $ 852,303 36,319 120,606 - 1,009,228 Intersegment (656) 1,074 9,580 (9,998) - --------- ------- ------- -------- --------- Total revenues 851,647 37,393 130,186 (9,998) 1,009,228 ========= ======= ======= ======== ========= Operating profit 117,966 10,069 16,323 656 145,014 ========= ======= ======= ======== Interest expense 52,684 Pretax earnings --------- from operations 92,330 ========= Identifiable assets at December 31 1,867,323 582,043 608,536 (309,107) 2,748,795 ========= ======= ======= ======== ========= Nine months ended December 31, 1994 Revenues: Outside $ 831,723 29,972 115,016 - 976,711 Intersegment (41) 1,134 14,899 (15,992) - --------- ------- ------- -------- --------- Total revenues 831,682 31,106 129,915 (15,992) 976,711 ========= ======= ======= ======== ========= 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 ========= ======= ======= ========= =========
19 NINE MONTHS ENDED DECEMBER 31, 1995 VERSUS NINE MONTHS ENDED DECEMBER 31, 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 $14.8 million, approximately 2.1%, to $715.5 million in the first nine months of fiscal 1996. The increase in the first nine 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 $15.8 million to $721.8 million, as compared to $706.0 million in the first nine months of fiscal 1995. Moving related rental revenues benefited from transactional growth (volume) within the rental fleet. Revenues from the rental of self-storage facilities were positively impacted by additional rentable square footage. Other revenues decreased in the aggregate by $1.0 million. Net sales revenues were $136.7 million in the first nine months of fiscal 1996, which represents an increase of approximately 4.2% from the first nine months of fiscal 1995 net sales of $131.1 million. Revenue growth from the sale of moving support items (i.e. boxes, etc.), hitches, and propane resulted in a $6.6 million increase during the nine month period, which was offset by a $1.0 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 $81.9 million in the first nine months of fiscal 1996, which represents an increase of approximately 12.8% from $72.6 million for the same period in fiscal 1995. This increase in cost of sales reflects a $5.0 million increase in material costs from the sale of moving support items, hitches, and propane reflecting higher sales levels and a $4.4 million increase in allowances for inventory shrinkage and other inventory adjustments. Operating expenses increased to $541.0 million in the first nine months of fiscal 1996 from $485.7 million in the first nine months of fiscal 1995, an increase of approximately 11.4%. The change from the prior year primarily reflects a $37.3 million increase in rental equipment maintenance costs which reflects rental fleet expansion and transactional growth and an $11.6 million increase in personnel costs due to the increase in rental, sales and repair activity. All other operating expense categories increased in the aggregate by $6.4 million, approximately 4.1%, to $162.2 million. Advertising expense increased to $31.8 million in the first nine months of fiscal 1996 from $21.7 million in the first nine 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. 20 Depreciation expense for the first nine months of fiscal 1996 was $79.0 million, as compared to $112.6 million during the same period of the prior year. During the third quarter of fiscal 1996, based on experience the Company increased the estimated value of certain rental trucks. The effect of the change in estimate reduced depreciation expense for the nine months ended December 31, 1995 by $35.7 million. Oxford - Life Insurance Premiums from Oxford's reinsurance lines before intercompany eliminations were $13.8 million for the nine months ended September 30, 1995, or 71.5% of total premiums for that period. This represents an increase of $0.6 million, or 4.5% 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. Premiums from Oxford's direct lines before intercompany eliminations were $5.5 million for the nine months ended September 30, 1995, an increase of $1.3 million from 1994. 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 nine months ended September 30, 1995 accounted for approximately 7.5% of premiums. Other direct lines, including the credit insurance business, accounted for approximately 21.0% of Oxford's premiums for the nine months ended September 30, 1995. Net investment income before intercompany eliminations was $12.1 million and $11.1 million for the nine months September 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 $4.4 million and $1.2 million for the nine months ended September 30, 1995 and 1994, respectively. Oxford had $1.5 million and $1.4 million of other income for the nine month period ended September 30, 1995 and 1994, respectively. Benefits and expenses incurred were $27.3 million for the nine months ended September 30, 1995, an increase of 18.2% over 1994. Comparable benefits and expenses incurred for 1994 were $23.1 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 $2.1 million, or approximately 26.3%, in 1995 to $10.1 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. 21 RWIC - Property and Casualty RWIC gross premium writings for the nine months ended September 30, 1995 were $138.7 million as compared to $141.4 million in the first nine months of 1994. The rental industry market accounts for a significant share of total premiums, approximately 44.4% and 43.3% in the first nine 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 nine months of 1995 to $42.7 million, or 30.8% of total gross premiums, from comparable 1994 figures of $54.1 million, or 38.3% 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 16.1% of total gross written premiums in the first nine months of 1995 compared to 15.2% in the first nine months of 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 8.0% of the total gross written premium during the first nine months of 1995. Net earned premiums increased $0.4 million, or 0.4%, to $107.1 million for the nine months ended September 30, 1995, compared with premiums of $106.7 million for the nine months ended September 30, 1994. The slight increase is due to the direct business expansion discussed above. Underwriting expenses incurred were $113.9 million for the nine months ended September 30, 1995, a decrease of $1.2 million or 1.0% over 1994. Comparable underwriting expenses incurred for the same period in 1994 were $115.1 million. The decrease is due to a reduction in acquisition expenses, which is the result of lower commission rates on start up programs. This decrease was partially offset by an increase in administrative expenses and taxes related to higher concentration in states with higher premium tax rates. Net investment income was $22.1 million for the nine months ended September 30, 1995, an increase of 0.9% over 1994 net investment income of $21.9 million. The marginal increase is the result of the shift in types of securities held in the portfolio. RWIC completed the first nine months ended September 30, 1995 with income before tax expense of $16.3 million as compared to $14.8 million for the comparable period ended September 30, 1994. This represents an increase of $1.5 million, or 10.1% over 1994. This increase is due mainly to timing differences related to run- off and start up programs. Interest Expense Interest expense increased by $1.8 million to $52.7 million for the nine months ended December 31, 1995, as compared to $50.9 million for the nine months ended December 31, 1994. The increase was attributable to higher average debt levels outstanding. 22 Consolidated Group As a result of the foregoing, pretax earnings of $92.3 million were realized in the nine months ended December 31, 1995, as compared to $111.0 million for the same period in 1994. After providing for income taxes, net earnings for the nine months ended December 31, 1995 were $58.2 million, as compared to $71.4 million for the same period of the prior year. QUARTERLY RESULTS The following table presents unaudited quarterly results for the eleven quarters in the period beginning April 1, 1993 and ending December 31, 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 rental operations are seasonal and proportionally more of the Company's revenues and its net earnings from its U-Haul rental operations are generated in the first and second quarters of each fiscal year (April through September). The operating results for the periods presented are not necessarily indicative of results for any future period.
Quarter Ended -------------------------------------------------------- Sep 30, Dec 31, Mar 31, Jun 30 Sep 30, Dec 31, 1994 1994 1995 1995 1995 1995 -------------------------------------------------------- (in thousands, except per share data) Total revenues $ 359,520 294,858 260,282 330,509 371,267 307,452 Net earnings (loss) 40,071 1,907 (11,359) 15,177 35,332 7,701 Net earnings (loss) per common share 1.00 (.04) (.44) .31 .85 .13 , 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, September 30 and December 31, 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 DECEMBER 31, 1995 VERSUS QUARTER ENDED DECEMBER 31, 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 $5.8 million, approximately 2.8%, to $215.3 million in the third quarter of fiscal 1996. This increase reflects a $2.0 million increase in net revenues from the rental of moving related equipment reflecting growth in rental fleet transactions. Net sales revenues were $34.0 million in the third quarter of fiscal 1996, which represents an increase of approximately 1.7% from the third quarter of fiscal 1995 net sales of $33.4 million. Revenue growth from the sale of moving support items (i.e. boxes, etc.), hitches, and propane resulted in a $1.2 million increase during the quarter, which was offset by a $0.4 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 $23.9 million in the third quarter of fiscal 1996, which represents an increase of 23.6% from $19.3 million for the same period in fiscal 1995. This increase in cost of sales reflects a $1.2 million rise in material costs from the sale of moving support items, hitches, and propane and a $3.0 million increase in allowances for inventory shrinkage and other inventory adjustments. Operating expenses increased to $194.6 million in the third quarter of fiscal 1996 from $163.4 million in the third quarter of fiscal 1995, an increase of approximately 19.0%. The change from the prior year reflects a $17.6 million increase in rental equipment maintenance costs reflecting an increase in fleet size and transactions levels, a $5.4 million increase in personnel costs due to the increase in rental, sales and repair activity and a $1.9 million increase in professional services. In the aggregate, all other operating expense categories increased by $6.3 million in the third quarter of fiscal 1996. Depreciation expense in the third quarter of fiscal 1996 was $2.8 million, as compared to $37.9 million during the same period of the prior year. During the third quarter of fiscal 1996, based on experience the Company increased the estimated salvage value of certain rental trucks. The effect of the change in estimate reduced depreciation expense for the quarter ended December 31, 1995 by $35.7 million. Oxford - Life Insurance Premiums from Oxford's reinsurance lines before intercompany eliminations were $4.9 million for the quarter ended September 30, 1995, or 76.3% of total premiums for that period. This represents a decrease of $0.1 million over the same period in 1994 or a decrease of 2.0%. Reinsurance premiums are primarily from term life insurance, matured deferred annuity contracts, and credit insurance business. 24 Premiums from Oxford's direct lines before intercompany eliminations were $1.5 million for the quarter ended September 30, 1995, a decrease of $0.4 million. This decrease 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 September 30, 1995 accounted for approximately 7.7% of premiums. Other direct lines, including the credit business, accounted for approximately 16.0% of Oxford's premiums for the quarter ended September 30, 1995. Net investment income before intercompany eliminations was $4.0 million and $3.4 million for the quarter ended September 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 $1.4 million for the quarter ended September 30, 1995. There were no gains on sale of investments during the quarter ended September 30 1994. Oxford had $0.5 million of other income, and $0.4 million of other income, for the quarters ended September 30, 1995 and 1994, respectively. Benefits and expenses incurred were $9.2 million for the quarter ended September 30, 1995, an increase of 2.2% over 1994. Comparable benefits and expenses incurred for 1994 were $9.0 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 the disposition of fixed maturity investments. Operating profit before intercompany eliminations increased by $1.5 million, or approximately 88.2% to $3.2 million for the quarter ended September 30, 1995. RWIC - Property and Casualty RWIC gross premium writings for the quarter ended September 30, 1995 were $57.3 million as compared to $47.8 million in the third quarter of 1994. The rental industry market accounts for a significant share of total premiums, approximately 48.4% and 48.8% in the third 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 third quarter of 1995 to $14.8 million, or 25.9% of total gross premiums, from comparable 1994 figures of $15.4 million, or 32.2% 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 15.0% of total gross written premiums in third quarter 1995 as compared to 17.8% in third quarter 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 10.4% of the total gross written premium during third quarter 1995. Net earned premiums increased $3.3 million, or 8.2% to $43.6 million for the quarter ended September 30, 1995, compared with premiums of $40.3 million for the quarter ended September 30, 1994. The premium increase was primarily due to the direct business expansion discussed above. 25 Underwriting expenses incurred were $44.0 million for the quarter ended September 30, 1995, a decrease of $0.5 million, or 1.1% over 1994. Comparable underwriting expenses incurred for the third quarter of 1994 were $44.5 million. The decrease is due to a reduction in acquisition expenses, which is the result of lower commission rates on start up programs. Net investment income was $6.8 million for the quarter ended September 30, 1995, a decrease of 4.2% over 1994 net investment income of $7.1 million. This slight decrease is the result of adjusted recognition of mortgage interest rates. RWIC completed the third quarter of 1995 with income before tax expense of $6.7 million as compared to $3.2 million for the comparable period ended September 30, 1994. This represents an increase of $3.5 million over 1994. This increase is mainly due to timing differences relating to start up programs. Interest Expense Interest expense declined by $0.4 million to $17.1 million for the quarter ended December 31, 1995. A reduction in the average cost of borrowed funds led to the decrease which more than fully offset an increase in average debt outstanding. Consolidated Group As a result of the foregoing, pretax earnings of $13.5 million were realized in the quarter ended December 31, 1995, as compared to $2.2 million for the same period in 1994. After providing for income taxes, net earnings for the quarter ended December 31, 1995 were $7.7 million, as compared to $1.9 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 December 31, 1995, net property, plant and equipment represented approximately 67.5% of total U-Haul assets and approximately 45.9% of consolidated assets. In the first nine months of fiscal 1996, capital expenditures were $207.5 million, as compared to $322.1 million in the first nine 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 financing. Cash flows from operations were $135.6 million in the first nine months of fiscal 1996, as compared to $170.7 million in the first nine months of fiscal 1995. The decrease of $35.1 million is primarily due to a decrease in depreciation and amortization as discussed in the Results of Operations for the nine months ended December 31, 1995. 26 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 ($2.6) million and $14.4 million for the nine months ended September 30, 1995 and 1994, respectively. Cash flows from financing activities of new annuity reinsurance agreements were approximately $116.0 million for the nine months ended September 30, 1995. Cash flows from new annuity reinsurance agreements increase investment contract deposits as well as the purchase of fixed maturities. 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 September 30, 1995 and 1994, short-term investments amounted to $12.3 million and $9.5 million, respectively. Management believes that the overall sources of liquidity will continue to meet foreseeable cash needs. Stockholder's equity of Oxford, increased to $101.1 million in 1995 from $87.9 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. Statutory surplus that can be distributed as dividends without prior regulatory approval is $6,825,701. 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 $16.9 million and $14.2 million for the nine months ended September 30, 1995 and September 30, 1994, respectively. The change is due to increased unearned premium reserves, funds withheld and net income, offset by a decrease in other receivables and a smaller increase in loss reserves than that of the comparable period in 1994. RWIC's short-term investment portfolio was $7.4 million at September 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. 27 RWIC maintains a diversified investment portfolio, primarily in bonds at varying maturity levels. Approximately 95.9% of the portfolio consists of investment grade securities. The maturity distribution is designed to provide sufficient liquidity to meet future cash needs. Current liquidity is adequate, with current invested assets equal to 97.0% of total liabilities. Stockholder's equity increased 8.5% from $168.1 million at December 31, 1994 to $182.4 million at September 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 dividends during the nine months ended September 30, 1995. Consolidated Group At December 31, 1995, total notes and loans payable outstanding was $890.6 million as compared to $881.2 million at March 31, 1995, and $827.6 million at December 31, 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 December 31, 1995, the Company had $890.6 million in total notes and loans payable outstanding and unutilized committed lines of credit of approximately $292.0 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 December 31, 1995 the Company was in compliance with these covenants. 28 The Company is further restricted in the 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 in the amount of approximately $461.8 million plus statutory post-judgment interest. Pursuant to separate indemnification agreements, the Company has agreed to indemnify the defendants to the fullest extent permitted by law or the Company's Articles of Incorporation or By-Laws, for all expenses and damages incurred by the defendants in this proceeding, subject to certain exceptions. The 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 in the United States Bankruptcy Court for the District of Arizona all of which proposed the same funding and treatment of the plaintiffs' claims resulting from the judgment in the Shoen Litigation. The plans of reorganization, as amended, shall collectively be referred as the "Plan". Under the Plan, on October 18, 1995, the Company redeemed 3,343,076 shares of Common Stock held by Maran, Inc., a Nevada corporation (Maran), in exchange for approximately $22.7 million and entered into a Settlement Agreement with Mary Anna Shoen Eaton (Shoen Eaton) whereby in exchange for approximately $41.4 million, Shoen Eaton released the current directors and the Company from any liability relating to Shoen Litigation. As a result of the foregoing, and after giving effect to the discount achieved through settlement, approximately $84.6 million of the judgment in the Shoen Litigation was satisfied. With respect to the other plaintiffs in the Shoen Litigation, the Plan provided, prior to January 29, 1996, for the exchange of approximately $101.4 million of the Company's Series B 8.25% Preferred Stock for all of the Company's Common Stock held by the plaintiffs, and provided for the transfer of property by the Company to certain of the plaintiffs (including $193.0 million of the Company's Series D Floating Rate Preferred Stock) having an aggregate value of approximately $275.2 million. However, on January 26, 1996, the bankruptcy court issued an interlocutory Memorandum Decision Re: Plan Confirmation (the Memorandum Decision) which provided that the Plan as proposed by the Director-Defendants could not be confirmed because it proposed consideration to be paid to the plaintiffs other than cash. In response to the bankruptcy court's Memorandum Decision, the Director-Defendants, filed an amendment to the Plan and a Motion for Rehearing on the Memorandum Decision. The Plan, as amended, provides for the payment to the plaintiffs of $286.0 million in cash and to transfer to the plaintiffs other property having an indisputable value, as determined by the bankruptcy court, of $91.2 million. The bankruptcy court will commence consideration of the Plan, as amended, on March 7, 1996. 29 The Memorandum Decision also provided that the plaintiffs are entitled to statutory post-judgment interest on the judgment at the rate of 10% per year. The Motion for Rehearing on this issue and on the issue of whether consideration other than cash is appropriate has been scheduled for February 23, 1996. As of February 9, 1996, total accrued interest on the outstanding balance of the judgment is approximately $30.8 million. Pursuant to the judgment in the Shoen Litigation, on January 30, 1996, the Company acquired 833,420 shares of Common Stock held by L.S.S., Inc. (L.S.S.) in exchange for approximately $5.7 million and funded damages to L.S. Shoen of approximately $15.4 million. The Company also funded a total of approximately $2.1 million of statutory post-judgment interest on the above amounts. In addition, on February 7, 1996, the Company acquired 1,651,644 shares of Common Stock held by Thermar, Inc. (Thermar) by tendering approximately $41.8 million. The Company also tendered to Thermar approximately $4.1 million of statutory post-judgment interest on such amount. As a result of the foregoing transactions, the balance of the judgment has been reduced to approximately $313.8 million, plus interest. There is no assurance that the Plan will be confirmed by the bankruptcy court. Because the Plan has not yet been confirmed by the bankruptcy court and because the Company and the Director- Defendants may enter into settlement agreements with one or more of the plaintiffs on terms different from those provided in the Plan, the Company is unable to determine with certainty the impact the Plan and/or any such settlements will have on the Company's prospective financial condition, results of operations, cash flows, or capital expenditure plans. However, as a result of funding the Plan and/or any such settlements, the Company will incur additional costs in the future in the form of dividends on any stock issued to fund the Plan or any settlement and/or interest on borrowed funds. Furthermore, the Company's outstanding Common Stock would be reduced by 12,426,836 shares, in addition to the 3,343,076 shares redeemed from Maran on October 18, 1995, the 833,420 shares redeemed from L.S.S. on January 30, 1996, and the 1,651,644 shares redeemed from Thermar on February 7, 1996. Other uncertainties remain about the Plan, including the tax treatment of the payments to be made by the Company pursuant to the Plan or any settlement. Specifically, the Company plans to deduct for income tax purposes a substantial portion of the payments made by the Company to the plaintiffs, which will reduce the Company's income tax liability. While the Company believes that such income tax deductions are appropriate, there can be no assurance that any such deductions ultimately will be allowed in full. Accordingly, for tax and other reasons, the consummation of the Plan and/or any settlement with the plaintiffs could result in material changes in stockholders' equity and earnings per common share. The Plan and/or any settlement could have the effect of reducing the Company's net income. Furthermore, in the event the fair value of the consideration paid by the Company to the plaintiffs is in excess of the fair value of the stock redeemed by the Company, the Company will be required to record an expense equal to that difference. No such expense was recorded for the Maran transaction which occurred in the period covered by this report. The Company has not yet determined the accounting treatment for any transaction other than the Maran/Shoen Eaton transaction. Furthermore, no provision has been made in the Company's financial statements for any payments to be made to the plaintiffs, other than the payments discussed above made to Maran and Shoen Eaton. See Part II, Item 1. Legal Proceedings. 30 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Shoen Litigation As disclosed in the Company's Form 10-K for the year ended March 31, 1995, Edward J. Shoen, James P. Shoen, Aubrey K. Johnson, John M. Dodds, and William E. Carty, who are current members of the Board of Directors of the Company and Paul F. Shoen, who is a former director are defendants in an action in the Superior Court of the State of Arizona, Maricopa County, entitled Samuel W. Shoen, M.D., et al. v. Edward J. Shoen, et al., No. CV88- - -------------------------------------------------------- 20139, instituted August 2, 1988 (the Shoen Litigation). The Company was also a defendant in the action as originally filed, but was dismissed from the action on August 15, 1994. The plaintiffs 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 Common 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, punitive damages, and statutory post judgment interest. Based on the plaintiffs' theory of damages (that their stock has little or no current value), the court ruled that the plaintiffs elected as their remedy in this lawsuit to transfer their shares of stock to the defendants upon the satisfaction of the judgment. On October 7, 1994, the jury determined that the defendants breached their fiduciary duties and such breach diminished the value of the plaintiffs' stock. On February 21, 1995, judgment was entered against the defendants in the amount of approximately $461.8 million plus interest and taxable costs. In addition, on February 21, 1995, judgment was entered against Edward J. Shoen in the amount of $7 million as punitive damages. On March 23, 1995, Edward J. Shoen filed a notice of appeal with respect to the award of punitive damages. Pursuant to separate indemnification agreements, the Company has agreed to indemnify the defendants to the fullest extent permitted by law or the Company's Articles of Incorporation or By-Laws, for all expenses and damages incurred by the defendants in this proceeding, subject to certain exceptions. In addition, the transfer of Common Stock from the plaintiffs to the defendants would implicate rights held by the Company. For example, pursuant to the Company's By-Laws, the Company has certain rights of first refusal with respect to the transfer of the plaintiffs' stock. Furthermore, the defendants' rights to acquire the plaintiffs' stock may present a corporate opportunity which the Company is entitled to exercise. On February 21, 1995, Edward J. Shoen, James P. Shoen, Aubrey K. Johnson, John M. Dodds, and William E. Carty (the Director-Defendants) 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. In late April 1995, the Director-Defendants, in cooperation with the Company, filed plans of reorganization in the United States Bankruptcy Court for the District of Arizona, all of which propose the same funding and treatment of the plaintiffs' claims resulting from the judgment in the Shoen Litigation. The plans of reorganization, as amended, shall collectively be referred to as the "Plan". 31 In early October 1995, the Director-Defendants made written demand upon the Company to make them whole for losses resulting from the judgment in the Shoen Litigation. The Director- Defendants have also asserted substantial claims against the Company related to or arising from the Shoen Litigation, including, but not limited to, claims for financial losses, emotional distress, loss of business and/or professional reputation, loss of credit standing and breach of contract. The Director-Defendants claim that their actions that form the basis for the judgment in the Shoen Litigation were actions within the scope of the Director- Defendants' duties and that such actions were undertaken in good faith and for the benefit of the Company. In addition, the Director-Defendants retain unexpired appeal rights with respect to the Shoen Litigation. If the Director-Defendants exercise such appeal rights, the damage award may be sustained and/or increased and the Company may be exposed to increased liability to the Director-Defendants under existing indemnity agreements, which liability includes the obligation to pay the legal fees and expenses of prosecuting appeals. In recognition of the foregoing and of the substantial risks associated with an appeal of the Shoen Litigation, on October 17, 1995, the Company entered into an agreement (the Agreement) with the Director-Defendants resolving the foregoing issues. Under the Agreement, the Company agreed, among other things, to fund the Plan and to release the Director-Defendants from all claims the Company may have against them arising from the Shoen Litigation. In addition, the Director-Defendants agreed, (i) to release, subject to certain exceptions, the Company from any claim they may have against it pursuant to any indemnification agreements, (ii) to assign all rights they have under the Shoen Litigation to the Company, (iii) to waive all appeal rights related to the Shoen Litigation (not including Edward J. Shoen's appeal of the punitive damage award), and (iv) not to oppose the Company should it elect to exercise its right of first refusal on any Common Stock to be transferred by the plaintiffs upon satisfaction of the judgment in the Shoen Litigation. Under the Plan, on September 19, 1995, the Director- Defendants entered into a Stock Purchase Agreement with one of the plaintiffs in the Shoen Litigation, Maran, Inc., a Nevada corporation (Maran), contingent upon the approval of the bankruptcy court. All of Maran's voting stock is held by Mary Anna Shoen Eaton (Shoen Eaton), who is also a plaintiff in the Shoen Litigation. Under the Stock Purchase Agreement, the Director- Defendants agreed to purchase 3,343,076 shares of Common Stock held by Maran in exchange for approximately $22.7 million. The Stock Purchase Agreement was approved by the bankruptcy court on October 10, 1995. On October 18, 1995, the Company exercised its right of first refusal and redeemed the Common Stock that was the subject of the Stock Purchase Agreement for the price set forth therein. In addition, on September 19, 1995, the Director-Defendants, Shoen Eaton, Maran, and the Company entered into a Settlement Agreement, contingent upon the approval of the bankruptcy court, providing for the payment to Shoen Eaton of approximately $41.4 million 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. The Settlement Agreement was approved by the bankruptcy court on October 10, 1995, and the payment was made on October 18, 1995. As a result of the foregoing, and after giving effect to the discount achieved through settlement, approximately $84.6 million of the judgment in the Shoen Litigation was satisfied. With respect to the other plaintiffs in the Shoen Litigation, the Plan provided, prior to January 29, 1996, for the exchange of approximately $101.4 million 32 of the Company's Series B 8.25% Preferred Stock for all of the Company's Common Stock held by the plaintiffs, and provided for the transfer of property by the Company to certain of the plaintiffs (including $193.0 million of the Company's Series D Floating Rate Preferred Stock) having an aggregate value of approximately $275.2 million. However, on January 26, 1996, the bankruptcy court issued an interlocutory Memorandum Decision Re: Plan Confirmation (the Memorandum Decision) which provided that the Plan as proposed by the Director-Defendants could not be confirmed because it proposed consideration to be paid to the plaintiffs other than cash. In response to the bankruptcy court's Memorandum Decision, the Director-Defendants, filed an amendment to the Plan and a Motion for Rehearing on the Memorandum Decision. The Plan, as amended, provides for payment to the plaintiffs of $286.0 million in cash and to transfer to the plaintiffs other property having an indisputable value, as determined by the bankruptcy court, of $91.2 million. The bankruptcy court will commence consideration of the Plan, as amended, on March 7, 1996. The Memorandum Decision also provided that the plaintiffs are entitled to statutory post-judgment interest on the judgment at the rate of 10% per year. The Motion for Rehearing on this issue and on the issue of whether consideration other than cash is appropriate has been scheduled for February 23, 1996. As of February 9, 1996, total accrued interest on the outstanding balance of the judgment is approximately $30.8 million. Pursuant to the judgment in the Shoen Litigation, on January 30, 1996, the Company acquired 833,420 shares of Common Stock held by L.S.S., Inc. (L.S.S.) in exchange for approximately $5.7 million and funded damages to L.S. Shoen of approximately $15.4 million. The Company also funded a total of approximately $2.1 million of statutory post-judgment interest on the above amounts. In addition, on February 7, 1996, the Company acquired 1,651,644 shares of Common Stock held by Thermar, Inc. (Thermar) by tendering approximately $41.8 million. The Company also tendered to Thermar approximately $4.1 million of statutory post-judgment interest on such amount. As a result of the foregoing transactions, the balance of the judgment has been reduced to approximately $313.8 million, plus interest. There is no assurance that the Plan will be confirmed by the bankruptcy court. Because the Plan has not yet been confirmed by the bankruptcy court and because the Company and the Director- Defendants may enter into settlement agreements with one or more of the plaintiffs on terms different from those provided in the Plan, the Company is unable to determine with certainty the impact the Plan and/or any such settlements will have on the Company's prospective financial condition, results of operations, cash flows, or capital expenditure plans. However, as a result of funding the Plan and/or any such settlements, the Company will incur additional costs in the future in the form of dividends on any stock issued to fund the Plan or any settlement and/or interest on borrowed funds. Furthermore, the Company's outstanding Common Stock would be reduced by 12,426,836 shares, in addition to the 3,343,076 shares redeemed from Maran on October 18, 1995, the 833,420 shares redeemed from L.S.S. on January 30, 1996, and the 1,651,644 shares redeemed from Thermar on February 7, 1996. Other uncertainties remain about the Plan, including the tax treatment of the payments to be made by the Company pursuant to the Plan or any settlement. Specifically, the Company plans to deduct for income tax purposes a substantial portion of the payments made by the Company to the plaintiffs, which will reduce the Company's income tax liability. While the Company believes that such income tax deductions 33 are appropriate, there can be no assurance that any such deductions ultimately will be allowed in full. Accordingly, for tax and other reasons, the consummation of the Plan and/or any settlement with the plaintiffs could result in material changes in stockholders' equity and earnings per common share. The Plan and/or any settlement could have the effect of reducing the Company's net income. Furthermore, in the event the fair value of the consideration paid by the Company to the plaintiffs is in excess of the fair value of the stock redeemed by the Company, the Company will be required to record an expense equal to that difference. No such expense was recorded for the Maran transaction which occurred in the period covered by this report. The Company has not yet determined the accounting treatment for any transaction other than the Maran/Shoen Eaton transaction. Furthermore, no provision has been made in the Company's financial statements for any payments to be made to the plaintiffs, other than the payments discussed above made to Maran and Shoen Eaton. 34 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. a. Exhibits 2.1 Debtor's Second Amendment Modifying the Amended and Restated Plans of Reorganization Proposed by the Debtors 2.2 Debtor's Third Amendment Modifying the Amended and Restated Plans of Reorganization Proposed by the Debtors 2.3 Debtor's Fourth Amendment Modifying the Amended and Restated Plans of Reorganization Proposed by the Debtors 3.1 Restated Articles of Incorporation (1) 3.2 Restated By-Laws of AMERCO as of August 15, 1995(2) 27 Financial Data Schedule b. Reports on Form 8-K. No reports on Form 8-K were filed for the quarter ended December 31, 1995. _____________________________________ (1) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 1992, file no. 0-7862. (2) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1995, file no. 0-7862. 35 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 14, 1995 By: /S/ GARY B. HORTON ___________________________________ Gary B. Horton, Treasurer (Principal Financial Officer) EX-2.1 2 2ND AMENDMENT MODIFYING PLAN OF REORGANIZATION EXHIBIT 2.1 John J. Dawson, Esq. (002786) Susan G. Boswell, Esq. (004791) Ronald E. Reinsel, Esq. (011059) STREICH LANG, P.A. Renaissance One Two North Central Avenue Phoenix, Arizona 85004-2391 (602) 229-5200 Attorneys for EDWARD J. SHOEN, JAMES P. SHOEN, JOHN M. DODDS, and AUBREY K. JOHNSON, Debtors and Debtors-In-Possession Lowell E. Rothschild, Esq. (000635) MESCH, CLARK & ROTHSCHILD, P.C. 259 North Meyer Avenue Tucson, Arizona 85701-1090 (602) 624-8886 Attorneys for WILLIAM E. CARTY, Debtor and Debtor-In-Possession IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF ARIZONA In re: ) In Proceedings Under ) Chapter 11 EDWARD J. SHOEN, ) ) Case No. 95-1430-PHX-JMM Debtor. ) - ----------------------------------- In re: ) ) JAMES P. SHOEN, ) Case No. 95-1431-PHX-JMM ) Debtor. ) - ----------------------------------- In re: ) ) AUBREY K. JOHNSON, ) Case No. 95-1432-PHX-JMM ) Debtor. ) - ----------------------------------- In re: ) ) JOHN M. DODDS, ) Case No. 95-1433-PHX-JMM ) Debtor. ) - ----------------------------------- In re: ) ) WILLIAM E. CARTY, ) Case No. 95-1434-PHX-JMM ) Debtor. ) - ----------------------------------- DEBTORS' SECOND AMENDMENT MODIFYING THE AMENDED AND RESTATED PLANS OF REORGANIZATION PROPOSED BY THE DEBTORS This Second Amendment (the "Second Amendment") is proposed by each of the Debtors(1) in the above-captioned jointly administered Chapter 11 cases. Pursuant to Bankruptcy Code Section 1127, 11 U.S.C. Section 1127, the Debtors hereby modify their respective Plans(2) as stated below: 1. Acceptance Of Aubrey K. Johnson's Plan By Creditor Holding Secured Claim. In Aubrey K. Johnson's Reorganization Case, the Secured Creditor identified as Ryland (Class 4 under the Plan) did not vote to accept or reject the Plan. Ryland's Secured Claim is being purchased by Chemical Bank. The Plan in Mr. Johnson's Reorganization Case continues to impair the Secured Claim as originally stated. Chemical Bank is agreeing, nevertheless, to vote to accept the Plan. An AMERCO subsidiary is agreeing to acquire the restructured loan from Chemical Bank on December 1, 1996 (or in the event of any earlier default under the restructured loan) if Chemical Bank notifies the AMERCO subsidiary in writing that it wants that entity to purchase the loan. The purchase price, in that event, will be the outstanding loan balance. The option belongs exclusively to Chemical Bank. If Chemical Bank - ---------------- (1) Unless otherwise expressly stated herein, all capitalized defined terms will have the same meanings as in the Amended and Restated Plans of Reorganization and the First Amendment which the Debtors have filed. The Second Amendment is a modification of each of those Plans; and, henceforth, the defined term "Plan" appearing therein will be deemed to incorporate and include the Second Amendment. (2) See note 1, supra, regarding the defined term "Plan" and the incorporation, henceforth, of the Second Amendment in the Debtors' Plans. -2- decides to retain the restructured loan, the AMERCO subsidiary's purchase obligation will terminate; and Chemical Bank will be entitled to own the restructured loan and to be paid according to the terms of the Plan. 2. Settlement With The Creditors Holding The Securities Litigation Claims. The Creditors holding the Securities Litigation Claims voted, on October 2, 1995, to accept the Plans in the Reorganization Cases of Edward J. Shoen, James P. Shoen, John M. Dodds, and William E. Carty. Those Creditors did not sue Aubrey K. Johnson or file a Claim in Mr. Johnson's Reorganization Case. The Plans filed by Messrs. Shoen, Dodds, and Carty impair the Securities Litigation Claims and provide for the incorporation of any settlement made of the Securities Litigation Claims. See Section 14.5 of Edward J. Shoen's Plan and corresponding provisions of the other Plans. Appendix "1" attached to this Second Amendment and incorporated by reference herein consists of copies of the recently executed settlement papers agreed upon with the Creditors holding the Securities Litigation Claims. See Class 6 in Edward J. Shoen's Plan, Class 5 in James P. Shoen's Plan, Class 6 in John M. Dodds' Plan, and Class 6 in William E. Carty's Plan. 3. Tax Considerations. In their objections to confirmation of the Plans, the Share Case Plaintiffs have alleged that they will suffer adverse tax consequences from the structure of the transactions whereby AMERCO has agreed to fund the Plans. While the Debtors vigorously dispute any such contentions, they want to make clear that the Plans do not bind any of the Share Case -3- Plaintiffs to the funding structure, and do not require any of the Share Case Plaintiffs to report the transactions to taxing authorities in the same way as AMERCO, or in any particular way. See also Section 2.5 appearing in both the Settlement Agreement and the Stock Purchase Agreement with Mary Anna (Shoen) Eaton and MARAN, Inc. (as described in the First Amendment). Furthermore, the Plans do not prohibit the Share Case Plaintiffs from assigning rights to receive distributions under the Plans. 4. Michael L. Shoen Added To Stock Exchange Distributees. Because it appears that Michael L. Shoen individually owns 380 shares of AMERCO common stock covered by the Share Case Judgment, Mr. Shoen will be added (to the extent of that interest) to the list of the Stock Exchange Distributees under the Plans. 5. Updated Mortgage Loan List And Recovery Of Interim Payments. Attached Schedule "3" is an updated list, as of October 1, 1995, of the Mortgage Loans which are the Restructured Mortgage Loans and the Existing Mortgage Loans. See the First Amendment at subparagraph 2(c), pp.5:15-6:2. If and to the extent that the balances of the Mortgage Loans are reduced by payments received on or before the Plans' Effective Date, the cash paid under the Plans (see the First Amendment at subparagraph 2(e), p.6:8-10) will be increased by the amount of those payments. 6. Certain Real Property Adjustments. As shown in amended Schedule "4" presented pursuant to the First Amendment, the real property proposed to be transferred under the Plans has a -4- total appraised value of $47,187,000. It is likely that the real property will be the subject of adjustments and reconciliations which may cause minor changes in the total appraised value. Also, some of the real property may be sold before the Plans' Effective Date. Any necessary adjustments will be made in the cash paid under the Plans (see the First Amendment at subparagraph 2(e), p. 6:8-10) in the same manner as provided in paragraph 5 above with respect to the Mortgage Loans. 7. Incorporation By Reference. The Second Amendment will be, and hereby is, incorporated by reference in the Debtors' Plans. At or before the date of entry of the Confirmation Order (and in accordance with any other modification(s) of the Plans which may be made as a result of further settlement(s) or other events in the confirmation process), the Debtors may meld the modifications made by the Second Amendment into the language of the Plans in order to make the final iteration of the Plans more precise. -5- 8. Plans Continue In Effect. Except as expressly modified by the Second Amendment, the Debtors' Plans continue in full force and effect. DATED: November 1, 1995 /s/ Edward J. Shoen ---------------------------------- EDWARD J. SHOEN, Debtor and Debtor-In-Possession /s/ James P. Shoen ---------------------------------- JAMES P. SHOEN, Debtor and Debtor-In-Possession /s/ John M. Dodds ---------------------------------- JOHN M. DODDS, Debtor and Debtor-In-Possession /s/ Aubrey K. Johnson ---------------------------------- AUBREY K. JOHNSON, Debtor and Debtor-In-Possession /s/ William E. Carty ---------------------------------- WILLIAM E. CARTY, Debtor and Debtor-In-Possession -6- PREPARED AND SUBMITTED BY: STREICH LANG A Professional Association Renaissance One Two North Central Avenue Phoenix, Arizona 85004-2391 By /s/ John J. Dawson ------------------------------ John J. Dawson Susan G. Boswell Ronald E. Reinsel Attorneys for EDWARD J. SHOEN, JAMES P. SHOEN, JOHN M. DODDS, and AUBREY K. JOHNSON, Debtors and Debtors-In-Possession MESCH, CLARK & ROTHSCHILD, P.C. 259 North Meyer Avenue Tucson, Arizona 85701-1090 By /s/ Lowell E. Rothschild ----------------------------- Lowell E. Rothschild Attorneys for WILLIAM E. CARTY, Debtor and Debtor-In-Possession -7- APPENDIX "1" SECURITIES LITIGATION CLAIMS SETTLEMENT MATERIALS SCHEDULE "3" MORTGAGE LOANS (AMENDS/REPLACES DISCLOSURE STATEMENT EXHIBIT "A", SCHEDULE "3") -9- EX-2.2 3 3RD AMENDMENT MODIFYING PLAN OF REORGANIZATION EXHIBIT 2.2 John J. Dawson, Esq. (002786) Susan G. Boswell, Esq. (004791) Ronald E. Reinsel, Esq. (011059) STREICH LANG, P.A. Renaissance One Two North Central Avenue Phoenix, Arizona 85004-2391 (602) 229-5200 Attorneys for EDWARD J. SHOEN, JAMES P. SHOEN, JOHN M. DODDS, and AUBREY K. JOHNSON, Debtors and Debtors-In-Possession Lowell E. Rothschild, Esq. (000635) MESCH, CLARK & ROTHSCHILD, P.C. 259 North Meyer Avenue Tucson, Arizona 85701-1090 (520) 624-8886 Attorneys for WILLIAM E. CARTY, Debtor and Debtor-In-Possession IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF ARIZONA In re: ) In Proceedings Under ) Chapter 11 EDWARD J. SHOEN, ) ) Case No. 95-1430-PHX-JMM Debtor. ) - ----------------------------------- In re: ) ) JAMES P. SHOEN, ) Case No. 95-1431-PHX-JMM ) Debtor. ) - ----------------------------------- In re: ) ) AUBREY K. JOHNSON, ) Case No. 95-1432-PHX-JMM ) Debtor. ) - ----------------------------------- In re: ) ) JOHN M. DODDS, ) Case No. 95-1433-PHX-JMM ) Debtor. ) - ----------------------------------- In re: ) ) WILLIAM E. CARTY, ) Case No. 95-1434-PHX-JMM ) Debtor. ) (Jointly Administered As Case - ----------------------------------- No. 95-1430-PHX-JMM) DEBTORS' THIRD AMENDMENT MODIFYING THE AMENDED AND RESTATED PLANS OF REORGANIZATION PROPOSED BY THE DEBTORS This Third Amendment (the "Third Amendment") is proposed by each of the Debtors(1) in the above-captioned jointly administered Chapter 11 cases. Pursuant to Bankruptcy Code Section 1127, 11 U.S.C. Section 1127, the Debtors hereby propose the modifications of their respective Plans(2) which are stated below: 1. Preliminary Statement. As of the filing date of the Third Amendment, the Bankruptcy Court has conducted eleven (11) days of evidentiary hearings in the Confirmation Hearing. Both the Plan Supporters and the Plan Objectors(3) have completed their respective cases-in-chief regarding confirmation; and the Plan Supporters' rebuttal case is scheduled for December 7-8, 1995. The Debtors propose the Third Amendment as part of the Plan Supporters' rebuttal case, and solely for the purpose of addressing various objections asserted by witnesses called by the Plan Objectors during their case-in-chief. The Third Amendment does not present any new and different species of property to be valued and - ---------------------------- (1) Unless otherwise expressly stated herein, all capitalized defined terms will have the same meanings as in the Amended and Restated Plans of Reorganization, the First Amendment, and the Second Amendment which the Debtors have filed. The Third Amendment is a modification of each of those Plans; and, henceforth, the defined term "Plan" appearing therein will be deemed to incorporate and include the Third Amendment. (2) See note 1, supra, regarding the defined term "Plan" and the incorporation, henceforth, of the Third Amendment in the Debtors' Plans. (3) The "Plan Supporters" are the Debtors (who are the proponents of the Plans) and AMERCO (which has agreed to provide certain funding support for the Plans). The "Plan Objectors" are the Share Case Plaintiffs and Paul Shoen (subject to the Plan Supporters' objections that Paul Shoen does not have standing). -2- transferred under the Debtors' Plans; and it is the Debtors' belief that the adjustments made by the Third Amendment are the kinds of changes which ordinarily would be made by negotiations and stipulations in the usual confirmation environment. However, the Debtors have not had the benefit of such consensual dealings with the Plan Objectors and, therefore, the Debtors (together with AMERCO) have not been able to address certain objections and deal with them until the objections have been asserted by the Plan Objectors and certain of their witnesses during the Confirmation Hearing. 2. AMERCO Certification. The Debtors are the proponents of their respective Plans. AMERCO is a supporter and the proposed funder of the Debtors' payment of the Share Case Claim under their Plans. Wherever the Third Amendment provides for an act or approval by AMERCO, the attached AMERCO Certification confirms that AMERCO agrees to do such act and to give such approval. The Debtors are satisfied that everything now and heretofore requested of AMERCO in support of the Debtors' Plans has been approved by the AMERCO Funding Resolution, a copy of which is Exhibit PS-18 received in evidence in the Confirmation Hearing. 3. Incorporation Of October 17, 1995 Agreement. The Debtors incorporate in their Plans the Agreement dated October 17, 1995 which the Debtors have made and executed with AMERCO. A conformed copy of the Agreement has been received in evidence in the Confirmation Hearing as Exhibit B-127. Also, the Debtors have filed a motion asking the Bankruptcy Court to approve their -3- participation in the Agreement (if and to the extent that such approval is needed); and a copy of the motion (including copies of the Agreement and related correspondence) has been received in evidence in the Confirmation Hearing as Exhibit PS-66. The Agreement is subject to confirmation of the Debtors' Plans and the occurrence of the Effective Date. 4. Computation/Payment Sources Of The Share Case Claim. Attached Schedule "1-SCC" shows the Debtors' computation of the face amount of the Share Case Claim and the sources of payment thereof under the Debtors' Plans (exclusive of the Contingency Fund which remains in effect). Schedule 1-SCC includes the following adjustments: (a) Computation Of The Share Case Claim. As stated in the First Amendment, the face amount of the Share Case Claim has been reduced by $84,576,312 as a result of the Settlement Agreement and the Stock Purchase Agreement with Mary Anna (Shoen) Eaton and MARAN, Inc., respectively. Furthermore, and pursuant to (i) Samuel Shoen's testimony that the Share Case Plaintiffs received a $1,500,000 payment from Paul Shoen and (ii) the Agreement between Paul Shoen and the Share Case Plaintiffs (see Exhibit B-1-A in evidence), which provides that the above-referenced payment reduces the "principal" of the Share Case Judgment, Schedule 1-SCC shows an additional $1,500,000 reduction of the Share Case Claim payable to the Share Case Plaintiffs. Paul Shoen has demanded reimbursement of his $1,500,000 payment from AMERCO. At the request of the Debtors, AMERCO agrees that, at or before the time when AMERCO -4- funds the Debtors' Plans on the Effective Date, AMERCO will pay Paul Shoen $1,500,000 cash to reimburse him for that payment. This agreement by AMERCO is without prejudice to its right to examine, approve, or disapprove any other or further demand which may be made, or which has been made, by Paul Shoen or by anyone else (if anyone) who claims to be similarly situated. (b) Payment Sources. Schedule 1-SCC shows that the sources of payment of the Share Case Claim remain the Series B AMERCO Preferred Stock, the Series D AMERCO Preferred Stock, certain Mortgage Loans, the Class C REMIC Certificate, certain Real Property, and cash. As shown on Schedule 1-SCC: (i) the amounts of the Series B and Series D AMERCO Preferred Stock are unchanged; and (ii) all adjustments (if any) by AMERCO in any other species of property being transferred under the Plans are, and will be, made dollar for dollar in the cash paid under the Plans. The latter adjustments already have been contemplated and provided for in the Debtors' Plans (see, e.g., the Second Amendment at paragraphs 5 and 6); and Schedule 1-SCC essentially provides updated calculations pursuant to the Third Amendment. (c) Cash Support Of Arithmetical Calculations. If any shortfall arises from any inaccuracy of the Debtors' arithmetical calculations, the shortfall will be paid in cash on the Effective Date. 5. Issues Regarding Preferred Stock. At the request of the Debtors, and in response to objections asserted during the testimony of certain of the witnesses called by the Plan Objectors -5- (primarily Curtis Kimball but also Samuel Shoen), AMERCO agrees to make the changes in its preferred stock documents which are stated in attached Schedule "2-Preferred." As shown in Schedule 2-Preferred, AMERCO also expressly confirms that the "shelf registration" with respect to its Series A Preferred Stock has been terminated and cannot be renewed. See AMERCO's "Post-Effective Amendment No. 1," a true and correct copy of which is attached to Schedule 2 - Preferred. The matters described above and in Schedule 2-Preferred do not change the amount and composition of the preferred stock being transferred under the Plans. 6. Issues Regarding Mortgage Loans. At the request of the Debtors, and in response to objections asserted during the testimony of the Plan Objectors' witness Mitchell Clarfield, AMERCO agrees to provide certain representations and warranties, which are stated in attached Schedule "3-ML," in conjunction with the transfer of the Mortgage Loans under the Plans. The representations and warranties will inure to the benefit of both the applicable Share Case Plaintiffs (including any Settlement Trust of which they are beneficiaries) and any transferee(s) from those Share Case Plaintiffs. Schedule 3-ML also reflects that the Mortgage Loans will be transferred with the underlying loan files, assignments of the rights of AMERCO and its affiliates under all applicable reports and opinions, and ALTA Lender's Title Insurance Policies insuring priority of the liens. If and to the extent that the balances of the Mortgage Loans are reduced by payments received on or before the Plans' Effective Date, the cash paid under the -6- Plans will be increased by the amount of those payments. Furthermore, Loan No. 1 listed on Exhibit PS-32 received in evidence in the Confirmation Hearing has been withdrawn by AMERCO; and the cash paid under the Plans will be increased by the balance of that loan. See also Schedule 1-SCC. 7. Issues Regarding Class C REMIC Certificate. The Plan Objectors did not present any expert testimony controverting the value of the Class C REMIC Certificate (since the Plan Objectors withdrew Dennis Lavin as a witness). If and to the extent that there is any reduction of the balance of the Class C Certificate owing to AMERCO as of the Plans' Effective Date, the cash paid under the Plans will be increased by the amount of any such reduction of the balance of the Class C Certificate. See also Schedule 1-SCC. 8. Certain Real Property Adjustments. As shown in attached Schedule "4-RP," and as contemplated and provided for in paragraph 6 of the Second Amendment, several of the parcels of real property proposed to be transferred under the Plans are being withdrawn and replaced with cash in the full amounts of the Cushman & Wakefield appraisals. Any other or further adjustments before the Plans' Effective Date will be made in the same way. See also Schedule 1-SCC. 9. Settlement Trust Issues. The Settlement Trust is defined in the Debtors' Plans. It is intended as a vehicle which the applicable Share Case Plaintiffs (i.e., the beneficiaries) can choose to keep or to dissolve as soon as it is funded on the -7- Effective Date or at any time thereafter. While the beneficiaries are deciding, AMERCO agrees to pay the trustee's fees and expenses from the Effective Date to the three (3) month anniversary of the Effective Date. The form of Settlement Trust Agreement which comprises Schedule "5" attached to the Disclosure Statement is a draft document which has been available for review by the Share Case Plaintiffs and their counsel since approximately July 28, 1995. No comments have been received by counsel for the Plan Supporters. Notwithstanding the funding of the Settlement Trust on the Effective Date, and if the applicable Share Case Plaintiffs (i.e., the beneficiaries) want to keep the Settlement Trust wholly or in part thereafter, the Debtors and AMERCO are willing to amend the Settlement Trust nunc pro tunc as of the Effective Date and as reasonably requested by the beneficiaries within thirty (30) days thereafter, so long as any requested amendment: (i) retains the Effective Date as the funding date of the Settlement Trust; and (ii) does not create or increase any financial obligation of the Debtors (including the Reorganized Debtors) and AMERCO beyond what is proposed in the Plans. Without thereby delaying the occurrence of the Effective Date and the funding of the Settlement Trust at that time, the Debtors and AMERCO also are prepared to work immediately with the Share Case Plaintiffs and their counsel in an effort to finalize the Settlement Trust Agreement to their reasonable satisfaction before the Settlement Trust is funded. -8- 10. Offer To Settle Disputes. Subject to confirmation of the Plans, and as of the Effective Date, the Debtors (including the Reorganized Debtors) and AMERCO offer to exchange mutual releases with the Plan Objectors, including stipulations for dismissal with prejudice of all pending litigation of any kind. The mutual releases proposed will be substantially similar to the releases which were executed in connection with the Agreements by and among the Debtors, AMERCO, Mary Anna (Shoen) Eaton and her husband, and MARAN, Inc. See Exhibits PS-15 and PS-16 in evidence in the Confirmation Hearing. The offer is made to each of the Plan Objectors (but must be accepted by both the individual and his/her related corporation in the case of the respective Share Case Plaintiffs); and the offer will expire if it is not accepted in writing by the Confirmation Date. The Debtors and AMERCO cannot bind, and are not trying to bind, any unwilling Plan Objector to this offer. Instead, this offer is made unilaterally in response to assertions during the Plan Objectors' case-in-chief (primarily Samuel Shoen's testimony) that confirmation and performance of the Plans will not end Shoen family disputes. The Debtors and AMERCO believe that such assertions are wrong at least to the extent of disputes which are struggles for control of AMERCO and adversely affect AMERCO. The Debtors and AMERCO are willing to agree to a more global settlement if the Plan Objectors are so inclined, so that (along with the further assurances and the retention of the Bankruptcy Court's jurisdiction provided below) there can be a comprehensive resolution of disputes. -9- 11. Further Assurances. Without creating or increasing any financial obligation of the Debtors (including the Reorganized Debtors) and AMERCO beyond what is proposed in the Plans, the Debtors and AMERCO agree that they will provide reasonable cooperation and assistance to the Share Case Plaintiffs with respect to the property transferred pursuant to the Plans. 12. Retention Of Bankruptcy Court's Jurisdiction. Unless the Bankruptcy Court orders otherwise in the Confirmation Order, the Bankruptcy Court's retention of jurisdiction provided in the Plans will include retained jurisdiction to enforce the further assurances provision stated above. The Debtors (also binding the Reorganized Debtors) and AMERCO expressly consent to such retention of jurisdiction by the Bankruptcy Court. 13. Incorporation By Reference. The Third Amendment will be, and hereby is, incorporated by reference in the Debtors' Plans. When and if requested or permitted by the Bankruptcy Court, the Debtors are willing to meld the modifications made by the Third Amendment (as well as the First Amendment and the Second Amendment) into the language of the Plans in order to make the final iteration of the Plans more precise. -10- 14. Plans Continue In Effect. Except as expressly modified by the Third Amendment, the Debtors' Plans continue in full force and effect. DATED: December 5, 1995 /s/ Edward J. Shoen ---------------------------------- EDWARD J. SHOEN, Debtor and Debtor-In-Possession /s/ James P. Shoen ---------------------------------- JAMES P. SHOEN, Debtor and Debtor-In-Possession /s/ John M. Dodds ---------------------------------- JOHN M. DODDS, Debtor and Debtor-In-Possession /s/ Aubrey K. Johnson ---------------------------------- AUBREY K. JOHNSON, Debtor and Debtor-In-Possession /s/ William E. Carty ---------------------------------- WILLIAM E. CARTY, Debtor and Debtor-In-Possession PREPARED AND SUBMITTED BY: STREICH LANG A Professional Association Renaissance One Two North Central Avenue Phoenix, Arizona 85004-2391 By /s/ John J. Dawson ------------------------------ John J. Dawson Susan G. Boswell Ronald E. Reinsel Attorneys for EDWARD J. SHOEN, JAMES P. SHOEN, JOHN M. DODDS, and AUBREY K. JOHNSON, Debtors and Debtors-In-Possession -11- Lowell E. Rothschild, Esq. Scott Gan, Esq. MESCH, CLARK & ROTHSCHILD, P.C. 259 North Meyer Avenue Tucson, Arizona 85701-1090 Attorneys for WILLIAM E. CARTY, Debtor and Debtor-In-Possession -12- AMERCO CERTIFICATION AMERCO CERTIFICATION Acting by and through its duly authorized Corporate Secretary undersigned, AMERCO hereby certifies as follows: 1. AMERCO is familiar with the Debtors' Plans, including the Third Amendment to which this Certification is attached. 2. AMERCO expressly approves the Debtors' Plans, including the Third Amendment, and further expressly confirms that wherever the Third Amendment provides for an act or approval by AMERCO, AMERCO agrees to do such act and to give such approval. DATED: December 5, 1995 AMERCO, a Nevada corporation By /s/ Gary V. Klinefelter --------------------------------- Gary V. Klinefelter Its Corporate Secretary SCHEDULE 1-SCC (PERTAINS TO COMPUTATION/ PAYMENT SOURCES OF THE SHARE CASE CLAIM) Schedule 1 - SCC A. Computation Of The Share Case Claim. Balance on the Petition Date $461,838,000 plus judgment interest of ten percent (10%) per year from February 14, 1995 to and including February 21, 1995) $ 462,723,716 (1) Less: Reduction pursuant to Paul Shoen's Agreement with the Share Case Plaintiffs (1,500,000)(2) Reduction pursuant to the Settlement Agreement and the Stock Purchase Agreement with Mary Anna (Shoen) Eaton and MARAN, Inc. (84,576,312)(3) ------------- Total Remaining Share Case Claim $ 376,647,404 (4) =============
B. Share Case Claim Sources Of Payment.
Property Amounts/Values(5) -------- -------------- Series B AMERCO Preferred Stock $101,398,336 Series D AMERCO preferred Stock 193,000,000 Real Property (Adjusted as shown in Schedule 4-RP)(6) 42,682,000(7) Mortgage Loans (Balances adjusted as of December 15, 1995) 13,343,147(7) Class C REMIC Certificate (Balance as of November 1, 1995) 12,519,638(7) Cash 13,704,283(7) ------------ Total of Payments $376,647,404 ============
C. Notes To Schedule 1 - SCC. 1. This balance does not include any taxable costs (if there are any) awarded to the Share Case Plaintiffs under the Share Case Judgment. If and when any such costs are awarded, they will be paid in cash. 2. As stated in subparagraph 4(a) of the Third Amendment, AMERCO has agreed to reimburse Paul Shoen for his $1,500,000 payment. 3. This reduction resulted from total cash payments of $64,085,000 which AMERCO paid to Mary Anna (Shoen) Eaton and to MARAN, Inc. under the respective provisions of a Settlement Agreement and a Stock Purchase Agreement in which the Bankruptcy Court allowed the Debtors to participate. 4. This amount does not include any post-Petition Date interest under the Share Case Judgment. If the Bankruptcy Court determines that the Debtors are obligated to pay any such interest, the payment will be made from the Contingency Fund. 5. The Plan Supporters believe that the listed assets have, or may have, greater actual values than the amounts listed and that the listed amounts are "at least" the values of those assets. For purposes of the confirmation standards, and in light of the testimony of their experts, the Plan Supporters are using the listed amounts as the values. 6. See note 5, supra. The values of the real property assets are based on Cushman & Wakefield appraisals which have been received in evidence. 7. Any further adjustments in the Real Property, the balances of the Mortgage Loans, and/or the balance of the Class C REMIC Certificate on or before the Effective Date will be covered by dollar-for-dollar increases in the cash paid under the Plans. Any shortfalls resulting from arithmetical miscalculations (if any) by the Plan Supporters and/or the need to round off certain fractional interests (e.g., fractional shares of preferred stock) also will be paid in cash. SCHEDULE 2 - PREFERRED (ADDRESSES CERTAIN CHANGES IN AMERCO'S PREFERRED STOCK DOCUMENTS) SCHEDULE 2 - PREFERRED A. SERIES B PREFERRED STOCK. The following changes and clarifications are being (or will be) made to the Form S-2, Registration Statement dated October 31, 1995, and the Prospectus related thereto with respect to the Series B Fixed Rate Preferred Stock (collectively, the "Series B Prospectus") under the general heading "Description of Securities": 1. Special Call Provision. This provision will be clarified to provide that the only Securities (as defined in the Series B Prospectus) which are subject to the Special Call Provision are those that have not been sold in either a public offering or in a private sale (other than the offering to which the Series B Prospectus relates, i.e., the Share Case Plaintiffs or any related parties thereto). 2. Right of Redemption. This provision will be changed and clarified to provide that the Securities (as defined in the Series B Prospectus) may not be sold in a public offering or in a private sale unless such Securities are first offered to the Company (as defined in the Series B Prospectus) by written notice from the holder(s) of the Securities to the Company. The Company will then have twenty-one (21) days(1) from receipt of the notice to decide whether or not to exercise its right of redemption. If the Company decides within that twenty-one (21) day period to exercise its right of redemption, it will notify in writing the holder(s) seeking to sell the Securities. The Company will then have one hundred twenty (120) days from the date of giving such written notice in which to perform. The blank which currently appears in the Series B Prospectus as to the time period within which the holder(s) of any Securities must sell (assuming the Company's failure to exercise its right of redemption) will provide for a two hundred seventy (270) day period - ------------------- (1) Pursuant to the testimony of Robert Redmond, the notice period was changed from 180 days as provided in the Series B Prospectus to 30 days. The Debtors (with the approval of AMERCO) are further shortening the notice period from 30 days to 21 days. for the holder(s) of such Securities to sell before a holder must again comply with the right of redemption provision. 3. Voting. This provision will be changed to delete the term "consecutive" so that whenever dividends payable on any of the Securities are in arrears for six calendar quarters, the holders of such shares (voting separately as a class with any holders of any other cumulative preferred stock upon which like voting rights have been conferred, i.e., the Series D and Series A Preferred Stock) will be able to nominate and vote for the election of two additional directors of the Company in accordance with the procedures more fully set forth in the Series B Prospectus. B. SERIES D PREFERRED STOCK. The following changes and clarifications are being (or will be) made to the Form S-2, Registration Statement dated October 31, 1995, and the Prospectus related thereto with respect to the Series D Floating Rate Preferred Stock (collectively, the "Series D Prospectus") under the general heading " Description of Securities": 1. Special Call Provision. This provision will be clarified in the same manner as set forth above in Paragraph 1 above for the Series B Preferred Stock. 2. Right of Redemption. This provision will be changed and clarified in the same manner as set forth in Paragraph 2 above for the Series B Preferred Stock. 3. Voting. This provision will be changed in the same manner as set forth in Paragraph 3 above for the Series B Preferred Stock. C. THE SHELF REGISTRATION (TERMINATION). The Registration Statement and Prospectus related thereto, dated October 6, 1993, for Preferred Stock and Debt Securities of AMERCO (referred to as the "Shelf Registration") was -2- terminated on December 5, 1995 by the filing of "Post-Effective Amendment No. 1" by AMERCO, a copy of which is attached. Therefore, there is no currently effective registration statement pursuant to which AMERCO could issue additional Preferred Stock or Debt Securities. -3- SCHEDULE 3-ML (PERTAINS TO THE MORTGAGE LOANS BEING TRANSFERRED UNDER THE PLANS) SCHEDULE 3-ML A. STANDARD LENDER'S TITLE INSURANCE POLICIES. AMERCO(1) will obtain, in the name of the Settlement Trust Trustee as the insured lender, an ALTA lender's title insurance policy with respect to each Mortgage Loan transferred under the Plans. B. DOCUMENTS TO BE TRANSFERRED. In conjunction with the transfer of the Mortgage Loans under the Plans, AMERCO will transfer the following: 1. All of the loan and security documents evidencing and securing the Mortgage Loans; 2. The underlying loan files; and 3. Assignments of all rights of AMERCO under all applicable reports and opinions, including, but not limited to, environmental reports and opinions of borrowers' counsel. C. REPRESENTATIONS AND WARRANTIES. AMERCO will give the following representations and warranties in conjunction with the transfer of the Mortgage Loans as provided under the Plans: 1. Seller(2) has the power and authority to execute the transfer documents, including authority to sell, assign, and transfer. 2. Execution, delivery, and compliance with the transfer of the Mortgage Loans will not conflict with any law or regulation or constitute a default under existing agreements to which Seller is a party. 3. All action has been taken by Seller to authorize execution, delivery and performance of the transfer of the Mortgage Loans. - -------------------------- (1) As used herein, AMERCO will mean AMERCO or the appropriate subsidiary. (2) In this context, Seller will mean AMERCO or the appropriate subsidiary. 4. Seller has obtained any consent, approval, authorization or order from any body required for execution, delivery and performance of the transfer of the Mortgage Loans. 5. Seller is the sole owner and holder of each Mortgage Loan. 6. Seller is transferring the Mortgage Loans free and clear of any and all liens, pledges, charges or security interests of any nature except any interest of Seller in any encumbrances and obligations which are junior to the Mortgage Loans being transferred or in any property management agreement(s) to which Seller is a party. 7. The Mortgage Loan(s) has not been modified in any material respect or satisfied, canceled or subordinated. 8. The proceeds of the Mortgage Loan(s) have been fully disbursed and there is no requirement for future advances. 9. Each Mortgage Loan is covered by an ALTA lender's title insurance policy. 10. To Seller's knowledge, there is no default, breach, violation or event of acceleration existing in any of the Mortgage Loans. 11. No payment required under any Mortgage Loan is more than 30 days past due. D. KOLB ROAD SELF STORAGE(3). In response to the concerns of the Share Case Plaintiffs about the existence of current evidence of indebtedness, attached hereto and by this reference incorporated herein is the "Amended Order Confirming Plan" dated April 12, 1993 (the "Amended Order"). In June 1993, after entry of the Amended Order, U-Haul International, Inc. purchased from General Financial Services, Inc. the obligation of Kolb Road Self Storage to General Financial Services, Inc. (as set forth in the Amended Order). - -------------------------- (3) This loan is listed as Loan No. 2 in Exhibit PS-32 which has been received in evidence in the Confirmation Hearing. -2- SCHEDULE 4-RP (PERTAINS TO THE REAL PROPERTY, INCLUDING ADJUSTMENTS THEREOF, BEING TRANSFERRED UNDER THE PLANS) SCHEDULE 4-RP Part A: CASH SUBSTITUTIONS FOR REAL PROPERTY PREVIOUSLY PROPOSED TO BE TRANSFERRED UNDER DEBTORS' PLANS
Cushman & Wakefield Property Cushman & Wakefield Property No. Location Appraised Value - ------------------- -------- ------------------- 15 Kansas City, KS 460,000.00 22 Houston, TX 265,000.00 FM 1960 & Woodcreek 27 Mesquite, TX 110,000.00 41 Manassas Park, VA 185,000.00 47 Port Orange, FL 525,000.00 58 Fontana, CA 290,000.00 Boyle Avenue 60 Long Beach, CA 1,350,000.00 66 Palm Springs, CA 570,000.00 ------------- Total Cash Replacing Withdrawn Property: $3,755,000.00 =============
EX-2.3 4 4TH AMENDMENT MODIFYING PLAN OF REORGANIZATION John J. Dawson, Esq. (002786) Susan G. Boswell, Esq. (004791) Ronald E. Reinsel, Esq. (011059) STREICH LANG, P.A. Renaissance One Two North Central Avenue Phoenix, Arizona 85004-2391 (602) 229-5200 Attorneys for EDWARD J. SHOEN, JAMES P. SHOEN, JOHN M. DODDS, and AUBREY K. JOHNSON, Debtors and Debtors-In-Possession Lowell E. Rothschild, Esq. (000635) MESCH, CLARK & ROTHSCHILD, P.C. 259 North Meyer Avenue Tucson, Arizona 85701-1090 (520) 624-8886 Attorneys for WILLIAM E. CARTY, Debtor and Debtor-In-Possession IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF ARIZONA In re: ) In Proceedings Under ) Chapter 11 EDWARD J. SHOEN, ) ) Case No. 95-1430-PHX-JMM Debtor. ) - ------------------------------ In re: ) ) Case No. 95-1431-PHX-JMM JAMES P. SHOEN, ) ) Debtor. ) - ------------------------------ In re: ) ) Case No. 95-1432-PHX-JMM AUBREY K. JOHNSON, ) ) Debtor. ) - ------------------------------ In re: ) ) Case No. 95-1433-PHX-JMM JOHN M. DODDS, ) ) Debtor. ) - ------------------------------ In re: ) ) Case No. 95-1434-PHX-JMM WILLIAM E. CARTY, ) ) (Jointly Administered As Debtor. ) Case No. 95-1430-PHX-JMM) - ------------------------------ DEBTORS' FOURTH AMENDMENT MODIFYING THE AMENDED AND RESTATED PLANS OF REORGANIZATION PROPOSED BY THE DEBTORS ----------------------------------------------- This Fourth Amendment (the "Fourth Amendment") is proposed by each of the Debtors in the above-captioned jointly administered Chapter 11 cases. Pursuant to Bankruptcy Code 1127, 11 U.S.C. 1127, the Debtors hereby propose the modifications of their respective Plans which are stated below: 1. Preliminary Statement. On January 26, 1996, the --------------------- Bankruptcy Court issued a "Memorandum Decision Re: Plan --------------------------------- Confirmation" (the "Memorandum Decision"). As the Debtors will - ------------ state more fully with respect to other relief which they are requesting regarding the Bankruptcy Court's rulings in the Memorandum Decision, the Debtors strongly disagree with certain of those rulings. Nevertheless, and with full reservation of their legal rights, the Debtors intend to present, and hereby present, modifications of their Plans which they believe will enable them to confirm their Plans as a matter of law even if they do not succeed in obtaining relief from the disputed rulings in the Memorandum Decision. The Debtors continue to propose full payment Plans. The Debtors believe that the Memorandum Decision is interlocutory; and that, as of the filing date of this Fourth Amendment modifying the Debtors' Plans, the Bankruptcy Court has - ------------------------- Unless otherwise expressly stated herein, all capitalized defined terms will have the same meanings as in the Amended and Restated Plans of Reorganization, the First Amendment, the Second Amendment, and the Third Amendment which the Debtors have filed. The Fourth Amendment is a modification of each of those Plans; and, henceforth, the defined term "Plan" appearing therein will be deemed to incorporate and include the Fourth Amendment. See note 1, supra, regarding the defined term "Plan" and --- ----- the incorporation, henceforth, of the Fourth Amendement in the Debtors' Plans. not entered (and should not enter) any Order denying confirmation of the Debtors' Plans. The Debtors further believe that additional solicitation of acceptances of their Plans (as modified by the Fourth Amendment) is not necessary; and that adequate information has been provided to all affected parties (i.e., the Share Case Plaintiffs) pursuant to the Debtors' ---- existing Disclosure Statements and twelve (12) days of evidentiary hearings already conducted before the Bankruptcy Court during the Confirmation Hearing. Accordingly, the Debtors believe that it is appropriate to schedule further proceedings regarding confirmation of their Plans. 2. Modified Treatment Of Classes 3A, 3B, 3C, 3E, 3F, And ----------------------------------------------------- 3G. Pursuant to the Fourth Amendment, each of the respective - -- Share Case Claims in each of the respective Classes listed above will be treated and paid as follows: (a) Full Payment. On or before the Effective Date, each ------------ Share Case Claim, if and to the extent that it is an Allowed Claim, will be paid in full, including, but not limited to, the payment of all interest on such Allowed Claim which is necessary to pay the Allowed Share Case Claim in full and to obtain each Shareholder Plaintiff's AMERCO common stock. Unless otherwise agreed between the Debtors and the respective Share Case Plaintiffs, the payments of the Allowed Share Case Claims will consist of up to $286 million additional cash and such other property (such as publicly traded securities or additional cash if required to confirm the Plans) which the Bankruptcy Court determines to be of indisputable value sufficient to pay the respective Allowed Share Case Claims in full. The Debtors believe that they have unexpired rights to appeal the Share Case Judgment; and that they are entitled to relief from certain rulings made by the Bankruptcy Court in the Memorandum Decision. Furthermore, the Debtors are prepared to participate in settlement negotiations under the supervision of a settlement judge as suggested in the Bankruptcy Court's Memorandum Decision. Any or all of these matters may affect the amounts ultimately payable on account of the respective Share Case Claims. The Debtors will not be precluded from exercising any of these rights and remedies so long as they satisfy the Bankruptcy Court that their Plans are confirmable and sufficient to pay the Disputed Share Case Claims in full when and if they are allowed, and when and if the Debtors must pay those Allowed Claims as described in the Memorandum Decision. (b) Source Of Funds. The Debtors intend to obtain from --------------- AMERCO the funding necessary to accomplish their payment of the Allowed Share Case Claims. The Debtors believe that AMERCO will be able to provide the cash needed to fund the Plans by making use of financial resources which now will include some or all of - ------------------ This amount is in addition to the approximately $64 million paid to Mary Anna (Shoen) Eaton and MARAN, Inc. in the transactions approved by the Court in October 1995. the assets previously identified as the property to be transferred to the Share Case Plaintiffs (i.e., the Series "B" and "D" preferred stock, the Mortgage Notes, the REMIC Certificate, and/or the Real Property), as well as other resources of AMERCO. (c) AMERCO As Debtors' Designee. The Debtors designate --------------------------- AMERCO as the recipient of the AMERCO common stock which they are entitled to obtain from each of the Shareholder Plaintiffs. Such stock will be retired to AMERCO's treasury. (d) Distributions. Unless otherwise stipulated by and ------------- among the Debtors, AMERCO, and the respective Share Case Plaintiffs, the distributions on account of the respective Allowed Share Case Claims will be made to the respective Shareholder Plaintiffs which are the record owners of AMERCO common stock as of the filing date of the Fourth Amendment. (e) Incorporation Of Settlement(s). Any settlement(s) ------------------------------ reached on or before the Confirmation Date by and between the Debtors and any of the respective Share Case Plaintiffs will be deemed incorporated by reference in the Plans, unless otherwise agreed in writing by the settling parties and approved by the Bankruptcy Court. 3. Modification Of Effective Date. The Debtors make the ------------------------------ following modifications in the definition of the Effective Date in their Plans: (a) the reference to one hundred twenty (120) days is changed to one hundred eighty (180) days; and (b) the reference to January 1, 1996 is changed to August 1, 1996. Neither of these changes will delay the payment of any Allowed Claim previously voting to accept the Debtors' respective Plans. 4. Offer To Settle Disputes. Paragraph 10 of the Third ------------------------ Amendment will be deemed withdrawn and superseded in favor of settlement proceedings which may be conducted before a settlement judge. The Debtors intend that the spirit of that provision of the Third Amendment will be included in their negotiations before a settlement judge. 5. Deletion of Class. The Class in each of the Debtors' ----------------- Plans identified as "Share Case Judgment Codebtor Claims" is ----------------------------------- hereby deleted from each of the Plans. 6. Incorporation By Reference. The Fourth Amendment will -------------------------- be, and hereby is, incorporated by reference in the Debtors' Plans. The Debtors intend to meld the modifications made by the Fourth Amendment (as well as the First, Second, and Third Amendments) into the language of the Plans in order to make the final iteration of the Plans more precise. Except as modified by the Fourth Amendment (either expressly or where the context requires such a modification), the Debtors' Plans continue in full force and effect. In particular, and without limitation, the treatment of all other Classes under the Debtors' Plans . . . . . . (i.e., all remaining Classes other than Classes 3A, 3B, 3C, 3E, 3F, and 3G) remains the same. DATED: January 29, 1996 /s/ Edward J. Shoen JPS ----------------------------- EDWARD J. SHOEN, Debtor and Debtor-In-Possession /s/ James P. Shoen ------------------------------ JAMES P. SHOEN, Debtor and Debtor-In-Possession /s/ John M. Dodds JPS ------------------------------ JOHN M. DODDS, Debtor and Debtor-In-Possession /s/ Aubrey K. Johnson JPS ------------------------------ AUBREY K. JOHNSON, Debtor and Debtor-In-Possession /s/ William E. Carty JPS ------------------------------ WILLIAM E. CARTY, Debtor and Debtor-In-Possession - ------------------------- The Fourth Amendment has been reviewed by each of these Debtors who are in geographically diverse locations. Each of them has authorized James P. Shoen to sign their names (and his initials) to the Fourth Amendment in order to expedite the filing of the Fourth Amendment. PREPARED AND SUBMITTED BY: STREICH LANG A Professional Association Renaissance One Two North Central Avenue Phoenix, Arizona 85004-2391 By /s/ John J. Dawson ---------------------- John J. Dawson Susan G. Boswell Ronald E. Reinsel Attorneys for EDWARD J. SHOEN, JAMES P. SHOEN, JOHN M. DODDS, and AUBREY K. JOHNSON, Debtors and Debtors-In-Possession Lowell E. Rothschild, Esq. Scott Gan, Esq. MESCH, CLARK & ROTHSCHILD, P.C. 259 North Meyer Avenue Tucson, Arizona 85701-1090 Attorneys for WILLIAM E. CARTY, Debtor and Debtor-In-Possession EX-27 5 FINANCIAL DATA SCHEDULE 12/95
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10Q DECEMBER 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMEMTS. 1,000 9-MOS MAR-31-1996 DEC-31-1995 39,043 0 336,358 0 49,645 0 2,389,803 1,128,870 2,748,795 0 890,633 10,000 0 0 685,174 2,748,795 136,666 1,009,228 81,917 778,563 0 3,734 52,684 92,330 34,120 58,210 0 0 0 58,210 1.32 1.32 THE VALUE FOR RECEIVABLES REPRESENTS THEIR AMOUNTS NET OF THEIR ALLOWANCES. AN UNCLASSIFIED BALANCE SHEET EXISTS IN THE REGISTRANT'S FINANCIAL STATEMENTS.
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