-----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, Mf6mk9PWp5vAJX7ppCXnesSttpWY2BF15QHLPtGtABsvSXCHIUCE/5YBqg8HLTpP IvSK2UHbE2ekXZ0bur2T2g== 0000004457-96-000036.txt : 19960425 0000004457-96-000036.hdr.sgml : 19960425 ACCESSION NUMBER: 0000004457-96-000036 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19960424 SROS: NASD SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERCO /NV/ CENTRAL INDEX KEY: 0000004457 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLES & PASSENGER CAR BODIES [3711] IRS NUMBER: 880106815 STATE OF INCORPORATION: NV FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-11255 FILM NUMBER: 96549958 BUSINESS ADDRESS: STREET 1: 1325 AIRMOTIVE WY STE 100 CITY: RENO STATE: NV ZIP: 89502 BUSINESS PHONE: 7027860488 MAIL ADDRESS: STREET 1: 1325 AIRMOTIVE WAY STREET 2: SUITE 100 CITY: RENO STATE: NV ZIP: 89502 FORMER COMPANY: FORMER CONFORMED NAME: AMERCO DATE OF NAME CHANGE: 19770926 10-Q/A 1 AMERCO 10-QA/2 - JUN 95 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q/A2 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 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 April 23, 1996. 5,385 shares of U-Haul International, Inc. Common Stock, $0.01 par value, were outstanding at April 23, 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 June 30, 1995, March 31, 1995 and June 30, 1994............... 4 b) Consolidated Statements of Earnings for the Quarters ended June 30, 1995 and 1994............ 6 c) Consolidated Statements of Changes in Stockholders' Equity for the Quarters ended June 30, 1995 and 1994........................................... 7 d) Consolidated Statements of Cash Flows for the Quarters ended June 30, 1995 and 1994............ 9 f) Notes to Consolidated Financial Statements - June 30, 1995, March 31, 1995 and June 30, 1994.................................. 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................... 17 Item 6. Exhibits and Reports on Form 8-K....................... 25 3 THIS PAGE LEFT INTENTIONALLY BLANK 4 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. AMERCO AND CONSOLIDATED SUBSIDIARIES Consolidated Balance Sheets
June 30, March 31, June 30, ASSETS 1995 1995 1994 ---------- --------- ------------------ (unaudited) (audited) (unaudited) (in thousands) Cash and cash equivalents $ 29,604 35,286 19,617 Receivables 322,859 300,238 208,833 Inventories 52,422 50,337 41,920 Prepaid expenses 15,383 25,933 24,307 Investments, fixed maturities 761,115 705,428 718,438 Investments, other 146,618 135,220 94,392 Deferred policy acquisition costs 52,622 49,244 48,917 Other assets 29,684 30,057 30,283 --------- --------- --------- Property, plant and equipment, at cost: Land 217,611 214,033 200,720 Buildings and improvements 734,061 735,624 693,041 Furniture and equipment 182,158 179,016 166,268 Rental trailers and other rental equipment 256,730 245,892 218,445 Rental trucks 925,671 913,641 863,982 General rental items 51,058 51,890 55,186 --------- --------- --------- 2,367,289 2,340,096 2,197,642 Less accumulated depreciation 1,098,666 1,065,850 972,968 --------- --------- --------- Total property, plant and equipment 1,268,623 1,274,246 1,224,674 --------- --------- --------- $ 2,678,930 2,605,989 2,411,381 ========= ========= ========= The accompanying notes are an integral part of these consolidated financial statements.
5
June 30, March 31, June 30, LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1995 1994 --------- --------- -------- (unaudited) (audited) (unaudited) (in thousands) Liabilities: Accounts payable and accrued liabilities $ 145,011 127,613 158,920 Notes and loans 866,132 881,222 725,565 Policy benefits and losses, claims 474,277 475,187 449,986 and loss expenses payable Liabilities from premium deposits 347,718 304,979 308,408 Cash overdraft 23,291 31,363 14,569 Other policyholders' funds and liabilities 34,320 20,378 6,617 Deferred income 9,521 7,426 8,714 Deferred income taxes 77,711 71,037 64,799 --------- --------- --------- Stockholders' equity: Serial preferred stock, with or without par value, 50,000,000 shares authorized; 6,100,000 issued without par value and outstanding as of June 30, 1995 March 31, 1995 and June 30, 1994 - - - Serial common stock, with or with- out par value, 150,000,000 shares authorized - - - Series A common stock of $.25 par value, authorized 10,000,000 shares, issued 5,762,495 shares as of June 30, 1995 and March 31, 1995, and 5,754,334 shares as of June 30, 1994 1,441 1,441 1,438 Common stock of $.25 par value, authorized 150,000,000 shares, issued 34,237,505 shares as of June 30, 1995 and March 31, 1995 and 34,245,666 shares as of June 30, 1994 8,559 8,559 8,562 Additional paid-in capital 165,675 165,675 165,651 Foreign currency translation (11,737) (12,435) (11,461) Unrealized gain(loss) on investments (1,569) (6,483) (368) Retained earnings 573,525 561,589 540,693 --------- --------- --------- 735,894 718,346 704,515 Less: Cost of common shares in treasury, (1,380,937 shares as of June 30, 1995 and 1,335,937 shares as of March 31, 1995 and June 30, 1994) 11,457 10,461 10,461 Unearned employee stock ownership plan shares 23,488 21,101 20,251 --------- --------- --------- Total stockholders' equity 700,949 686,784 673,803 --------- --------- --------- Contingent liabilities and commitments --------- --------- --------- $ 2,678,930 2,605,989 2,411,381 ========= ========= =========
6 AMERCO AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Earnings Quarters ended June 30, (Unaudited)
1995 1994 ----------- ---------- (in thousands except per share data) Revenues Rental and other revenue $ 235,311 228,962 Net sales 53,116 51,302 Premiums 30,702 31,559 Net investment income 11,380 10,510 ---------- ---------- Total revenues 330,509 322,333 Costs and expenses Operating expense 174,246 158,542 Advertising expense (see note 7) 16,869 6,999 Cost of sales 28,959 27,550 Benefits and losses 27,241 26,412 Amortization of deferred acquisition costs 2,928 3,084 Depreciation 37,693 37,282 Interest expense 18,832 16,638 ---------- ---------- Total costs and expenses 306,768 276,507 Pretax earnings from operations 23,741 45,826 Income tax expense (8,564) (16,413) ---------- ---------- Net earnings $ 15,177 29,413 ========== ========== Earnings per common share: Net earnings $ 0.31 0.71 ========== ========== Weighted average common shares outstanding 37,958,426 37,107,536 ========== ========== The accompanying notes are an integral part of these consolidated financial statements.
7 AMERCO AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Changes in Stockholders' Equity Quarters ended June 30, (Unaudited)
1995 1994 --------- ------- (in thousands) Series A common stock of $.25 par value: Authorized 10,000,000 shares, issued 5,762,495 as of June 30, 1995 and 5,762,495 as of March 31, 1995 and 5,754,334 as of June 30, 1994 Beginning and end of period $ 1,441 1,438 ------- ------- Common stock of $.25 par value: Authorized 150,000,000 shares, issued 34,237,505 as of June 30, 1995, and as of March 31, 1995 and 34,245,666 as of June 30, 1994 Beginning and end of period 8,559 8,562 ------- ------- Additional paid-in capital: Beginning and end of period 165,675 165,651 ------- ------- Foreign currency translation: Beginning of period (12,435) (11,152) Change during period 698 (309) ------- ------- End of period (11,737) (11,461) ------- ------- Unrealized gain (loss) on investments: Beginning of period (6,483) 679 Change during period 4,914 (1,047) ------- ------- End of period (1,569) (368) ------- ------- Retained earnings: Beginning of period 561,589 514,521 Net earnings 15,177 29,413 Dividends paid to stockholders: Preferred stock: ($.53 per share for 1995 and 1994, respectively) (3,241) (3,241) ------- ------- End of period 573,525 540,693 ------- ------- The accompanying notes are an integral part of these consolidated financial statements.
8 AMERCO AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Changes in Stockholders' Equity Quarters ended June 30, (Unaudited)
1995 1994 -------- ------- (in thousands) Treasury stock: Beginning of period 10,461 10,461 Net increase (45,000 shares in 1995) 996 - ------- ------- End of period 11,457 10,461 ------- ------- Unearned employee stock ownership plan shares: Beginning of period 21,101 17,451 Increase in loan 2,523 2,919 Proceeds from loan (136) (119) ------- ------- End of period 23,488 20,251 ------- ------- Total stockholders' equity $ 700,949 673,803 ======= ======= The accompanying notes are an integral part of these consolidated financial statements.
9 AMERCO AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Cash Flows Quarters ended June 30, (Unaudited)
1995 1994 -------- -------- (in thousands) Cash flows from operating activities: Net earnings $ 15,177 29,413 Depreciation and amortization 40,565 41,489 Provision for losses on accounts receivable 1,568 736 Net gain on sale of real and personal property (16) (131) Gain on sale of investments (337) 30 Changes in policy liabilities and accruals (4,960) 11,766 Additions to deferred policy acquisition costs (7,109) (4,155) Net change in other operating assets and liabilities 24,326 43,182 -------- --------- Net cash provided by operating activities 69,214 122,330 -------- --------- Cash flows from investing activities: Purchases of investments: Property, plant and equipment (70,149) (144,794) Fixed maturities (86,329) (31,098) Real estate (653) (8) Mortgage loans (4,662) (5,504) Proceeds from sale of investments: Property, plant and equipment 38,015 58,868 Fixed maturities 37,863 30,756 Real estate 691 220 Mortgage loans 6,177 1,442 Changes in other investments (8,802) (10,507) -------- -------- Net cash used by investing activities (87,849) (100,625) -------- -------- Cash flows from financing activities: Net change in short-term borrowings 2,000 46,250 Loan to leveraged employee stock ownership plan (2,523) (2,919) Proceeds from leveraged employee stock ownership plan 136 119 Principal payments on notes (17,090) (44,449) Net change in cash overdraft (8,072) (11,990) Dividends paid (3,241) (3,241) Purchase of treasury shares (996) - Investment contract deposits 60,383 6,966 Investment contract withdrawals (17,644) (11,266) -------- --------- Net cash provided (used) by financing activities 12,953 (20,530) -------- --------- increase in cash and cash equivalents (5,682) 1,175 Cash and cash equivalents at beginning of period 35,286 18,442 -------- --------- Cash and cash equivalents at end of period $ 29,604 19,617 ======== ========= The accompanying notes are an integral part of these consolidated financial statements.
10 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Consolidated Financial Statements June 30, 1995, March 31, 1995 and June 30, 1994 (Unaudited) 1. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the parent corporation, AMERCO, and its subsidiaries, all of which are wholly-owned. All material intercompany accounts and transactions of AMERCO and its subsidiaries (herein called the "Company" or the "consolidated group") have been eliminated. The consolidated balance sheets as of June 30, 1995 and 1994, and the related consolidated statements of earnings, changes in stockholders' equity and cash flows for the quarters ended June 30, 1995 and 1994 are unaudited; in the opinion of management, all adjustments necessary for a fair presentation of such financial statements have been included. Such adjustments consisted only of normal recurring items. Interim results are not necessarily indicative of results for a full year. The operating results and financial position of AMERCO's consolidated insurance operations are determined on a quarter lag. There were no effects related to intervening events which would significantly affect consolidated position or results of operations for the financial statements presented herein. The financial statements and notes are presented as permitted by Form 10-Q and do not contain certain information included in the Company's annual financial statements and notes. Earnings per share are computed based on the weighted average number of shares outstanding, excluding shares of the employee stock ownership plan that have not been committed to be released. Net income is reduced for preferred dividends. Certain reclassifications have been made to the financial statements for the quarter ended June 30, 1994 to conform with the current year's presentation. 11 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (Unaudited) 2. INVESTMENTS A comparison of amortized cost to market for fixed maturities is as follows (in thousands, except for par value):
March 31, 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 $ 20,400 $ 20,284 918 (23) 21,179 U.S. government agency mortgage backed securities $ 65,381 64,797 321 (5,354) 59,764 Obligations of states and political subdivisions $ 30,105 29,804 1,932 (425) 31,311 Corporate securities $ 191,263 196,517 1,465 (5,671) 192,311 Mortgage-backed securities $ 128,413 126,685 903 (8,042) 119,546 Redeemable preferred stocks 33 1,966 303 (11) 2,258 ------- ----- -------- ------- 440,053 5,842 (19,526) 426,369 ------- ----- -------- ------- March 31, 1995 -------------- Gross Gross Estimated Consolidated Amortized unrealized unrealized market Available-for-Sale Par Value cost gains losses value U.S. treasury securities and government obligations $ 9,685 9,797 714 - 10,512 U.S. government agency mortgage backed securities $ 3,410 3,232 68 (206) 3,094 States, municipalities and political subdivisions $ 5,825 6,098 109 (12) 6,195 Corporate securities $ 262,874 262,628 4,157 (4,967) 261,818 Mortgage-backed securities $ 41,699 41,431 358 (2,345) 39,443 ------- ------ -------- ------- 323,186 5,406 (7,530) 321,062 ------- ------ -------- ------- Total $ 763,239 11,248 (27,056) 747,431 ======= ====== ======== =======
12 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (Unaudited) 3. SUMMARIZED CONSOLIDATED FINANCIAL INFORMATION OF PONDEROSA HOLDINGS, INC. AND ITS SUBSIDIARIES A summary consolidated balance sheet (unaudited) for Ponderosa Holdings, Inc. and its subsidiaries is presented below: June 30, 1995 1994 --------- --------- (in thousands) Investments - fixed maturities $ 761,115 718,438 Other investments 126,747 94,392 Receivables 142,643 132,944 Deferred policy acquisition costs 52,622 48,917 Due from affiliate 12,999 9,125 Deferred federal income taxes 8,720 8,195 Other assets 15,518 14,892 --------- --------- Total assets $ 1,120,364 1,026,903 ========= ========= Policy liabilities and accruals $ 407,632 385,539 Unearned premiums 66,645 64,292 Premium deposits 347,718 308,408 Other policyholders' funds and liabilities 33,891 11,543 --------- --------- Total liabilities 855,886 769,782 Stockholder's equity 264,478 257,121 --------- --------- Total liabilities and stockholder's equity $ 1,120,364 1,026,903 ========= ========= 13 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (Unaudited) 3. SUMMARIZED CONSOLIDATED FINANCIAL INFORMATION OF PONDEROSA HOLDINGS, INC. AND ITS SUBSIDIARIES, continued A summarized consolidated income statement (unaudited) for Ponderosa Holdings, Inc. and its subsidiaries is presented below: Quarters ended June 30, 1995 1994 ------ ------ (in thousands) Premiums $ 30,097 34,352 Net investment income 11,531 10,554 Other income 1,601 1,267 ------ ------ Total revenue 43,229 46,173 Benefits and losses 27,241 26,412 Amortization of deferred policy acquisition costs 2,928 3,084 Other expenses 5,313 7,801 ------ ------ Income from operations 7,747 8,876 Federal income tax expense (1,890) (2,742) ------ ------ Net income $ 5,857 6,134 ======= ====== 4. CONTINGENT LIABILITIES AND COMMITMENTS During the three months ended June 30, 1995, U-Haul Leasing & Sales Co., a wholly-owned subsidiary of U-Haul International, Inc., entered into one transaction, whereby they sold rental trucks and subsequently leased them back. AMERCO has guaranteed $991,000 of residual values at June 30, 1995 on these assets at the end of the lease term. Following are the lease commitments for the lease executed during the three months ended June 30, 1995, which have a term of more than one year (in thousands): Year ended Lease March 31, Commitments ----------- ----------- 1996 $ 1,164 1997 1,553 1998 1,553 1999 1,553 2000 1,553 Thereafter 3,493 ------- $ 10,869 ======= See discussion related to Stockholder Litigation under Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources. 14 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (Unaudited) 4. CONTINGENT LIABILITIES AND COMMITMENTS, continued The Company is a defendant in a number of suits and claims incident to the type of business conducted and several administrative proceedings arising from state and local provisions that regulate the removal and/or clean-up of underground fuel storage tanks. The Company owns property within two state hazardous waste sites in the State of Washington. At this time, the remedial clean-up cost or range of costs for such sites cannot be estimated. Management's opinion is that none of these suits or claims involving AMERCO and/or its subsidiaries is expected to result in any material loss. 5. SUPPLEMENTAL CASH FLOWS INFORMATION The (increase) decrease in receivables, inventories and accounts payable and accrued liabilities net of other operating and investing activities follows: Quarters ended June 30, 1995 1994 ---- ---- (in thousands) Receivables $ (23,625) (14,042) ======== ======== Inventories $ (2,085) 7,092 ======== ======== Accounts payable and accrued liabilities $ 20,933 39,141 ======= ======== Income taxes paid in cash amounted to none and $224,000 for 1995 and 1994, respectively. Interest paid in cash amounted to $20,906,000 and $20,569,000 for 1995 and 1994, respectively. 6. RELATED PARTIES Subsequent to March 31, 1995, a subsidiary of the Company continued to loan TWO SAC Self-Storage Corporation (TWO SAC) funds for the purchase of an additional 18 self-storage properties. As of June 30, 1995, $28,597,000 in principal was due from TWO SAC, while interest of $797,000 has been accrued. No payment of principal or interest will be made until the notes are finalized. 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. TWO SAC anticipates acquiring approximately 28 properties from the Company that had been acquired by the Company or its subsidiaries since June 1993. On May 31, 1995, the Company purchased 45,000 shares of the Company's Common Stock from Paul F. Shoen, a major stockholder of the Company, for $996,000 or $22.125 per share. The transaction was effected on Nasdaq. 15 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (Unaudited) 7. NEW ACCOUNTING STANDARDS Statement of Financial Accounting Standards No. 114 - Accounting by Creditors for Impairment of a Loan. Effective for years beginning after December 15, 1994, the standard requires that an impaired loan's fair value be measured and compared to the recorded investment in the loan. If the fair value of the loan is less than the recorded investment in the loan, a valuation allowance is established. The Company adopted this statement during the first quarter of fiscal 1996, with no material impact on its financial condition or results of operations. Statement of Financial Accounting Standards No. 121 - Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of. Effective for fiscal years beginning after December 15, 1995, the standard establishes accounting standards for the impairment of long-lived assets, certain identifiable intangibles, and goodwill related to those assets to be held and used and for long-lived assets and certain identifiable intangibles to be disposed of. This Statement requires that long-lived assets and certain identifiable intangibles to be held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In performing the review for recoverability, the entity should estimate the future cash flows expected to result from the use of the asset and its eventual disposition. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount of the asset, an impairment loss is recognized. Otherwise, an impairment loss is not recognized. Measurement of an impairment loss for long-lived assets and identifiable intangibles that an entity expects to hold and use should be based on the fair value of the asset. The Company has not completed an evaluation of the effect of this standard. Statement of Position 93-7, Reporting on Advertising Costs - as issued by the Accounting Standards Executive Committee in December 1993. This statement of position provides guidance on financial reporting on advertising costs in financial statements. The statement of position requires reporting advertising costs as expenses when incurred or when the advertising first takes place, reporting the costs of direct-response advertising, and amortizing (over the estimated period of benefit) the costs of direct-response advertising reported as assets. The Company originally adopted this statement effective April 1, 1995 and continued to record yellow page directory costs as deferred assets and continued to amortize the costs over the duration of each listing. The majority of listings last one year. 16 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (Unaudited) 7. NEW ACCOUNTING STANDARDS, continued Subsequently, the Company adjusted amounts previously reported relating to adoption of this statement effective April 1, 1995 and recognized additional advertising expense of $8,647,000 relating to yellow page directory costs capitalized at March 31, 1995. This adoption had the effect of reducing net income by $5,474,000 ($0.14 per share). The following is the effect on net income and earnings per share for the quarter ended June 30, 1995 reflecting the April 1, 1995 adoption (described above) and the additional expense for yellow page directory costs capitalized as assets during the period described below: For the quarter ended June 30, 1995: As Originally Reported Adjustment As Amended ---------------------------------------------- (in thousands) Net income $ 20,862 (5,685) 15,177 ====================================== Earnings per share $ 0.46 (0.15) 0.31 ====================================== 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. 17 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS The following table shows industry segment data from the Company's three industry segments, rental operations, life insurance, and property and casualty insurance, for the quarters ended June 30, 1995 and 1994. Rental operations is composed of the operations of U-Haul and Amerco Real Estate Company. Life insurance is composed of the operations of Oxford Life Insurance Company. Property and casualty insurance is composed of the operations of Republic Western Insurance Company (RWIC). The Company's results of operations have historically fluctuated from quarter to quarter. In particular, the Company's U-Haul rental operations are seasonal and a majority of the Company's revenues and substantially all of its earnings from its U-Haul rental operations are generated in the first and second quarters each fiscal year (April through September).
Property/ Adjustments Rental Life Casualty And Operations Insurance Insurance Eliminations Consolidated ---------- --------- --------- ------------ ------------ (in thousands) Quarter ended June 30, 1995 Revenues: Outside $ 286,835 10,238 33,436 - 330,509 Intersegment - 367 (793) 426 - --------- ------- ------- -------- --------- Total revenues 286,835 10,605 32,643 426 330,509 ========= ======= ======= ======== ========= Operating profit 34,826 2,622 5,125 - 42,573 ========= ======= ======= ======== Interest expense 18,832 --------- Pretax earnings from operations 23,741 ========= Identifiable assets 1,845,419 530,918 589,446 (286,853) 2,678,930 at June 30 ========= ======= ======= ======== ========= Quarter ended June 30, 1994 Revenues: Outside $ 279,144 8,112 35,077 - 322,333 Intersegment - 372 2,627 (2,999) - --------- ------- ------- -------- --------- Total revenues 279,144 8,484 37,704 (2,999) 322,333 ========= ======= ======= ======== ========= Operating profit 53,588 1,875 7,001 - 62,464 ========= ======= ======= ======== Interest expense 16,638 --------- Pretax earnings from operations 45,826 ========= Identifiable assets 1,659,617 461,407 565,496 (275,139) 2,411,381 at June 30 ========= ======= ======= ======== =========
18 QUARTER ENDED JUNE 30, 1995 VERSUS QUARTER ENDED JUNE 30, 1994 U-Haul U-Haul revenues consist of (i) total rental and other revenue and (ii) net sales. Total rental and other revenue increased by $6.1 million, approximately 2.7%, to $233.9 million in the first quarter of fiscal 1996. The increase reflects higher net revenues from the rental of moving related equipment and self-storage facilities which increased in the aggregate by $6.0 million due to growth (volume) in truck rental transactions, additional rentable square footage, and improved self-storage pricing. Net sales revenues were $53.1 million in the first quarter of fiscal 1996, which represents an increase of approximately 3.5% from the first quarter of fiscal 1995 net sales of $51.3 million. Revenue growth from the sale of moving support items (i.e. boxes, etc.), hitches, and propane resulted in a $2.2 million increase during the quarter, which was offset by a $0.3 million decrease in gasoline sales consistent with the Company's ongoing efforts to remove underground storage tanks and gradually discontinue gasoline sales. Cost of sales was $29.0 million in the first quarter of fiscal 1996, which represents an increase of approximately 5.1% from $27.6 million for the same period in fiscal 1995. This increase in cost of sales primarily reflects higher material costs from the sale of moving support items and propane which can be primarily attributed to higher sales levels. Operating expenses increased to $168.5 million in the first quarter of fiscal 1996 from $153.7 million in the first quarter of fiscal 1995, an increase of $14.8 million (approximately 9.6%). The change from the prior year primarily reflects higher rental equipment maintenance costs due to an increase in fleet size and transaction levels ($6.0 million), an increase in lease expense due to new leases originated during the last twelve months ($2.2 million), and increased personnel expense due to higher levels of business activity ($4.0 million). All other operating expense categories increased in the aggregate by $2.5 million compared to the prior year. Advertising expense increased to $16.9 million in the first quarter of fiscal 1996 from $7.0 million in the first quarter of fiscal 1995. The increase primarily reflects a one-time expense of $8.7 million recognized during the first quarter of fiscal 1996, due to the adoption of Statement of Position 93-7 which requires immediate recognition of advertising costs not qualifying as direct-response. Depreciation expense for the quarter was $37.7 million, as compared to $37.3 million during the same period of the prior year, reflecting storage acquisitions and construction in the past twelve months. Oxford - Life Insurance Premiums from Oxford's reinsurance lines before intercompany eliminations were $4.1 million for the quarter ended March 31, 1995, an increase of $0.3 million, approximately 7.9% over 1994 and accounted for 66.9% of Oxford's premiums for the period. 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. 19 Premiums from Oxford's direct lines before intercompany eliminations were $2.0 million for the quarter ended March 31, 1995, an increase of $1.6 million from 1994. This increase in direct premium is primarily attributable to the credit insurance business ($1.5 million in premiums). Oxford's direct business related to group life and disability coverage issued to employees of the Company for the quarter ended March 31, 1995 accounted for approximately 8.1% of premiums. Other direct lines, including the credit insurance business, accounted for approximately 25.0% of Oxford's premiums for the quarter ended March 31, 1995. Net investment income before intercompany eliminations was $3.9 million and $3.6 million for the quarters ended March 31, 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 $0.2 million for both 1995 and 1994. Oxford had $0.5 million of other income for both of the quarters ended March 31, 1995 and 1994. Benefits and expenses incurred were $8.0 million for the quarter ended March 31, 1995, an increase of 21.2% over 1994. Comparable benefits and expenses incurred for 1994 were $6.6 million. This increase is primarily due to death benefits incurred and Oxford's recent entrance into the credit insurance business, partially offset by a decrease in the amortization of deferred acquisition costs. Operating profit before intercompany eliminations increased by $0.7 million, or approximately 36.8%, in 1995 to $2.6 million, primarily due to increased margins on the interest sensitive business. RWIC - Property and Casualty RWIC gross premium writings for the quarter ended March 31, 1995 were $36.2 million as compared to $47.7 million in the first quarter of 1994. The rental industry market accounts for a significant share of total premiums, approximately 18.3% and 19.7% in the first 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 first quarter of 1995 to $20.2 million, or 55.8% of total gross premiums, from comparable 1994 figures of $29.1 million, or 61.0% 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 are expected to remain consistent with prior years as evidenced by 17.4% share of written premiums in 1995 as compared to 14.9% share in 1994. RWIC expanded its direct business in 1995 to include multiple peril coverage for a variety of commercial properties and businesses. These premiums accounted for 6.4% of the total gross written premium during first quarter 1995. Net earned premiums decreased $6.1 million, or 20.3%, to $24.0 million for the quarter ended March 31, 1995, compared with premiums of $30.1 million for the quarter ended March 31, 1994. The premium decrease was primarily due to one time changes in premium earning methodology and timing differences related to runoff and start up programs. 20 Underwriting expenses incurred were $27.5 million for the quarter ended March 31, 1995, a decrease of $3.2 million, or 10.4% over1994. Comparable underwriting expenses incurred for the first quarter of 1994 were $30.7 million. The decrease is due to a reduction in acquisition expenses, which decreased proportionately with written premiums. Net investment income was $7.6 million for the quarter ended March 31, 1995, an increase of 10.1% over 1994 net investment income of $6.9 million. The marginal increase is the result of the shift in types of securities held in the portfolio. RWIC completed the first quarter of 1995 with income before tax expense of $5.1 million as compared to $7.0 million for the comparable period ended March 31, 1994. This represents a decrease of $1.9 million, or 27.1% over 1994. Worse than expected underwriting results in the Company's assumed reinsurance and rental industry liability lines were offset by improved results in its general agency lines. Interest Expense Interest expense increased by $2.2 million to $18.8 million for the quarter ended June 30, 1995, as compared to $16.6 million for the quarter ended June 30, 1994. Higher average debt levels outstanding caused the increase. Consolidated Group As a result of the foregoing, pretax earnings of $23.7 million were realized in the quarter ended June 30, 1995, as compared to $45.8 million for the same period in 1994. After providing for income taxes, net earnings for the quarter ended June 30, 1995 were $15.2 million, as compared to $29.4 million for the same period of the prior year. 21 QUARTERLY RESULTS The following table presents unaudited quarterly results for the nine quarters in the period beginning April 1, 1993 and ending June 30, 1995. The Company believes that all necessary adjustments have been included in the amounts stated below to present fairly, and when read in conjunction with the consolidated financial statements incorporated herein by accordance with generally accepted accounting principles, the selected quarterly information. The Company's results of operations have historically fluctuated from period to period, including on a quarterly basis. In particular, the Company's U-Haul business is seasonal and a majority of the Company's revenues and substantially all of its net earnings from its U-Haul business are generated in the first and second quarters of each fiscal year (April through September). The operating results for the periods presented are not necessarily indicative of results for any future period. Quarter Ended ----------------------------------------------- Jun 30, Sep 30, Dec 31, Mar 31, Jun 30, 1994 1994 1994 1995 1995 (3) ----------------------------------------------- (in thousands, except per share data) Total revenues $322,333 361,115 295,888 260,282 330,509 Net earnings (loss) 29,413 40,071 1,907 (11,359) 15,177 Net earnings (loss) per common share .71 1.00 (.04) (.44) .31 (1), (2) Quarter Ended ------------------------------------- Jun 30, Sep 30, Dec 31, Mar 31, 1993 1993 1993 1994 ------------------------------------- (in thousands, except per share data) Total revenues $291,348 324,968 267,448 251,091 Net earnings (loss) 17,359 30,601 1,799 (9,575) Net earnings (loss) per common share .45 .79 (.02) (.33) (1) ________________ (1)For the quarters ended December 31, 1993, March 31, June 30, September 30, December 31, 1994 , March 31, 1995, and June 30, 1995, net earnings (loss) per common share amounts were computed after giving effect to the dividend on the Company's Series A 8 1/2% Preferred Stock. (2)Reflects the adoption of Statement of Position 93-6, "Employers' Accounting for Employee Stock Ownership Plan." (3)Reflects the adoption of Statement of Position 93-7, "Reporting on Advertising Costs." 22 LIQUIDITY AND CAPITAL RESOURCES U-Haul To meet the needs of its customers, U-Haul must maintain a large inventory of fixed asset rental items. At June 30, 1995, net property, plant and equipment represented approximately 68.4% of total U-Haul assets and approximately 47.2% of consolidated assets. In the first quarter of fiscal 1996, capital expenditures were $70.1 million, as compared to $144.8 million in the first quarter of fiscal 1995, reflecting new rental truck acquisitions, purchase of trucks previously leased, and real property acquisitions. The decrease in capital expenditures from the prior year is due to a decrease in new rental truck acquisitions. These acquisitions were funded with internally generated funds from operations, and debt financings. Cash flows from operations were $61.9 million in the first quarter of fiscal 1996, as compared to $113.2 million in the first quarter of fiscal 1995. The decrease of $51.3 million is primarily due to a decrease in net change of operating assets and liabilities, specifically an increase in receivables, and decreases in accounts payable and accrued liabilities and deferred income taxes. Oxford - Life Insurance Oxford's primary sources of cash are premiums, receipts from interest-sensitive products and investment income. The primary uses of cash are operating costs and benefit payments to policyholders. Matching the investment portfolio to the cash flow demands of the types of insurance being written is an important consideration. Benefit and claim statistics are continually monitored to provide projections of future cash requirements. Cash provided by operating activities were $3.7 million and $0.8 million for the quarters ended March 31, 1995 and 1994, respectively. Cash flows from new annuity reinsurance agreements increase investment contract deposits as well as the purchase of fixed maturities. Cash flows from financing activities of new annuity reinsurance agreements were approximately $55.0 million for the quarter ended March 31, 1995. In addition to cash flow from operating and financing activities, a substantial amount of liquid funds is available through Oxford's short-term portfolio. At March 31, 1995 and 1994, short-term investments amounted to $10.8 million and $18.5 million, respectively. Management believes that the overall sources of liquidity will continue to meet foreseeable cash needs. Stockholder's equity of Oxford, excluding investment of RWIC (in prior years), increased to $90.4 million in 1995 from $88.2 million in 1994. Ponderosa now holds 100% of the common stock of RWIC as a result of a property dividend made by Oxford on June 30, 1994. 23 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. As a result of the dividend of RWIC stock on June 30, 1994, the state of Arizona must approve future dividends made through June 30, 1995. These restrictions are not expected to have a material adverse effect on the ability of the Company to meet its cash obligations. RWIC - Property and Casualty Cash flows from operating activities were $3.4 million and $8.2 million for the quarters ended March 31, 1995 and March 31, 1994, respectively. The change is due to decreased net income and increased reserves related to premium writings, offset by a small change in accounts receivable as compared to a large increase during the first quarter of 1994. RWIC's short-term investment portfolio was $17.1 million at March 31, 1995. This level of liquid assets, combined with budgeted cash flow, is adequate to meet periodic needs. This balance also reflects funds in transition from maturity proceeds to long-term investments. The structure of the long-term portfolio is designed to match future cash needs. Capital and operating budgets allow RWIC to accurately schedule cash needs. RWIC maintains a diversified investment portfolio, primarily in bonds at varying maturity levels. Approximately 95.7% of the portfolio consists of investment grade securities. The maturity distribution is designed to provide sufficient liquidity to meet future cash needs. Current liquidity is adequate, with current invested assets equal to 96.7% of total liabilities. Stockholder's equity increased 3.6% from $168.1 million at December 31, 1994 to $174.1 million at March 31, 1995. RWIC considers current stockholder's equity to be adequate to support future growth and absorb unforeseen risk events. RWIC does not use debt or equity issues to increase capital and therefore has no exposure to capital market conditions. RWIC paid no stockholder's dividends during the quarter ended March 31, 1995. Consolidated Group At June 30, 1995, total notes and loans payable outstanding was $866.1 million as compared to $881.2 million at March 31, 1995, and $725.6 million at June 30, 1994. The increase from 1994 reflects the expansion in the rental fleet and self-storage operation. 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. 24 Credit Agreements The Company's operations are funded by various credit and financing arrangements, including unsecured long-term borrowings, unsecured medium-term notes, and revolving lines of credit with domestic and foreign banks. Principally to finance its fleet of trucks and trailers, the Company routinely enters into sale and leaseback transactions. As of June 30, 1995, the Company had $866.1 million in total notes and loans payable outstanding and unutilized committed credit of approximately $252.0 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. The Company is further restricted in the type and amount of dividends and distributions that it may issue or pay, and in the issuance of certain types of preferred stock. The Company is prohibited from issuing shares of preferred stock that provide for any mandatory redemption, sinking fund payment, or mandatory prepayment, or that allow the holders thereof to require the Company or a subsidiary of the Company to repurchase such preferred stock at the option of such holders or upon the occurrence of any event or events without the consent of its lenders. Stockholder Litigation As disclosed in the Company's Form 10-K for the year ended March 31, 1995, a judgment has been entered in the Shoen Litigation against five of the Company's current directors and one former director. 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, if any, incurred by the defendants in this proceeding, subject to certain exceptions. The five director- defendants have filed for protection under Chapter 11 of the federal bankruptcy laws and have filed, in cooperation with the Company, amended plans of reorganization (collectively, the Plan), all of which propose the same funding and treatment of the plaintiffs' claims resulting from the judgment in the Shoen Litigation. Under the Plan, the Company will transfer to the stockholder plaintiffs $124.1 million of Series B 8.25% Preferred Stock issued by the Company in exchange for their AMERCO stock and will transfer to a trust (the Trust), property having a stipulated or adjudicated value in excess of $338.7 million for the benefit of the non-stockholder plaintiffs. Each of the non-stockholder plaintiffs will receive a trust certificate representing an undivided, fractional beneficial interest in the Trust. The property transferred to the Trust is expected to consist of (i) $170.1 million in Series D Floating Rate Preferred Stock issued by the Company; (ii) a 1993 REMIC certificate held by the Company with a value of approximately $12.5 million evidencing a pool of 61 commercial mortgage loans which are secured by mortgages or deeds of trust on 60 self-storage properties; (iii) mortgage notes with an aggregate principal balance of approximately $100.9 million on property held by the Company, 25 one or more of its subsidiaries, or two corporations; and (iv) real property held free and clear of approximately $55.3 million. The Company will establish a Contingency Fund consisting of Company Common Stock or the proceeds therefrom to pay post-petition interest to the plaintiffs if the court requires the payment of such interest. The Company expects the court to consider the Plan during 1995. However, there is no assurance that the Plan will be confirmed by the federal bankruptcy court or that the Plan as confirmed will operate as described above. The Company's participation in the Plan is subject to the approval of the Board of Directors. Because of the Plan's complexity and the alternatives provided to the plaintiffs under the Plan, and because the Plan has not yet been confirmed, the Company is unable to determine the Plan's impact on the Company's financial condition, results of operations, or capital expenditure plans. However, as a result of funding the Plan, the Company is likely to incur additional costs in the future in the form of dividends on preferred stock and/or interest on borrowed funds. For example, dividends payable on the Series B 8.25% Preferred Stock and on the Series D Floating Rate Preferred Stock would equal approximately $22.6 million per year at current interest rates. In addition, the Company's outstanding Common Stock would be reduced by 18,254,596 shares. These and other features of the Plan as ultimately confirmed could result in material changes in reported earnings and stockholder's equity per share of Common Stock. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. a. Exhibits 27 Financial Data Schedule 26 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: April 23, 1996 By: /S/ GARY B. HORTON ___________________________________ Gary B. Horton, Treasurer (Principal Financial Officer) EX-27 2 FDS JUN 95 10-Q/A2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10Q JUNE 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS MAR-31-1996 JUN-30-1995 0 0 322,859 0 52,422 0 2,367,289 1,098,666 2,678,930 0 866,132 10,000 0 0 690,949 2,678,930 53,116 330,509 28,959 257,409 0 1,568 18,832 23,741 8,564 15,177 0 0 0 20,862 .31 .31 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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