UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended September 30, 20222023
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from __________________ to __________________
Commission File Number 001-11255
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State or other jurisdiction of incorporation or organization | Registrant, State of Incorporation, Address and Telephone Number | I.R.S. Employer Identification No. |
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Nevada |
| 88-0106815 |
| U-Haul Holding Company (A Nevada Corporation) |
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| 5555 Kietzke Lane Suite 100 |
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| Reno, |
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| Telephone |
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| N/A |
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(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol | Name of each exchange on which registered |
Common Stock, | UHAL |
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Series N Non-Voting Common Stock, $0.001 par value | UHAL.B | New York Stock Exchange |
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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer ☒ Accelerated filerFiler ☐
Non-accelerated filerFiler ☐ Smaller reporting companyReporting Company ☐
Emerging growth companyGrowth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
19,607,788 shares of AMERCO Common Stock, $0.25 par value, were outstanding atas of November 4, 2022.3, 2023.
176,470,092 shares of Series N Non-Voting Common Stock, $0.001 par value, were outstanding as of November 3, 2023.
TABLE OF CONTENTS
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| Page |
| PART I FINANCIAL INFORMATION |
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Item 1. | Financial Statements |
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| a)
| 1
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| b)
| 2
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| c)
| 3
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| d)
| 4
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| e)
| 5
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| f)
| 6
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| g)
| 7
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| h) Notes to
| 8
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Item 2
| Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
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Item 4. | Controls and Procedures |
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| PART II OTHER INFORMATION |
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Item 1. | Legal Proceedings |
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Item 1A. | Risk Factors |
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Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
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Item 3. | Defaults Upon Senior Securities |
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Item 4. | Mine Safety Disclosures |
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Item 5. | Other Information |
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Item 6. | Exhibits |
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Part i Financial information
Item 1. Financial Statements
AMERCOU-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED balance sheets
|
| September 30, |
| March 31, |
| September 30, |
| March 31, |
|
| 2022 |
| 2022 |
| 2023 |
| 2023 |
|
| (Unaudited) |
|
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| (Unaudited) | ||
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| (In thousands, except share data) |
| (In thousands, except share data) | ||||
ASSETS |
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Cash and cash equivalents | $ | 3,065,115 | $ | 2,704,137 | $ | 2,145,131 | $ | 2,060,524 |
Reinsurance recoverables and trade receivables, net |
| 203,202 |
| 229,343 |
| 212,565 |
| 189,498 |
Inventories and parts, net |
| 166,136 |
| 158,888 | ||||
Inventories and parts |
| 161,535 |
| 151,474 | ||||
Prepaid expenses |
| 236,035 |
| 236,915 |
| 263,541 |
| 241,711 |
Investments, fixed maturities and marketable equities |
| 2,615,758 |
| 2,893,399 |
| 2,534,164 |
| 2,770,394 |
Investments, other |
| 548,198 |
| 543,755 |
| 650,151 |
| 575,540 |
Deferred policy acquisition costs, net |
| 146,778 |
| 103,828 |
| 121,365 |
| 128,463 |
Other assets |
| 47,900 |
| 60,409 |
| 52,769 |
| 51,052 |
Right of use assets - financing, net |
| 529,000 |
| 620,824 |
| 377,733 |
| 474,765 |
Right of use assets - operating, net |
| 68,208 |
| 74,382 |
| 65,316 |
| 58,917 |
Related party assets |
| 48,337 |
| 47,851 |
| 40,140 |
| 48,308 |
|
| 7,674,667 |
| 7,673,731 |
| 6,624,410 |
| 6,750,646 |
Property, plant and equipment, at cost: |
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Land |
| 1,427,781 |
| 1,283,142 |
| 1,613,871 |
| 1,537,206 |
Buildings and improvements |
| 6,390,317 |
| 5,974,639 |
| 7,649,849 |
| 7,088,810 |
Furniture and equipment |
| 876,515 |
| 846,132 |
| 966,211 |
| 928,241 |
Rental trailers and other rental equipment |
| 727,953 |
| 615,679 |
| 912,046 |
| 827,696 |
Rental trucks |
| 5,087,235 |
| 4,638,814 |
| 5,921,507 |
| 5,278,340 |
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| 14,509,801 |
| 13,358,406 |
| 17,063,484 |
| 15,660,293 |
Less: Accumulated depreciation |
| (4,041,125) |
| (3,732,556) |
| (4,666,444) |
| (4,310,205) |
Total property, plant and equipment, net |
| 10,468,676 |
| 9,625,850 |
| 12,397,040 |
| 11,350,088 |
Total assets | $ | 18,143,343 | $ | 17,299,581 | $ | 19,021,450 | $ | 18,100,734 |
LIABILITIES AND STOCKHOLDERS' EQUITY |
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Liabilities: |
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Accounts payable and accrued expenses | $ | 706,402 | $ | 677,785 | $ | 757,988 | $ | 761,039 |
Notes, loans and finance leases payable, net |
| 6,298,831 |
| 6,022,497 |
| 6,400,899 |
| 6,108,042 |
Operating lease liabilities |
| 67,858 |
| 74,197 |
| 64,580 |
| 58,373 |
Policy benefits and losses, claims and loss expenses payable |
| 990,233 |
| 978,254 |
| 865,397 |
| 880,202 |
Liabilities from investment contracts |
| 2,390,028 |
| 2,336,238 |
| 2,393,590 |
| 2,398,884 |
Other policyholders' funds and liabilities |
| 12,126 |
| 10,812 |
| 7,677 |
| 8,232 |
Deferred income |
| 56,871 |
| 49,157 |
| 56,821 |
| 52,282 |
Deferred income taxes, net |
| 1,307,807 |
| 1,265,358 |
| 1,444,120 |
| 1,329,489 |
Total liabilities |
| 11,830,156 |
| 11,414,298 |
| 11,991,072 |
| 11,596,543 |
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Commitments and contingencies (notes 3, 7, 8 and 9) |
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Commitments and contingencies (notes 4 and 9) |
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Stockholders' equity: |
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Series preferred stock, with or without par value, 50,000,000 shares authorized: |
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Series A preferred stock, with no par value, 6,100,000 shares authorized; |
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6,100,000 shares issued and none outstanding as of September 30 and March 31, 2022 |
| – |
| – | ||||
6,100,000 shares issued and none outstanding |
| – |
| – | ||||
Series B preferred stock, with no par value, 100,000 shares authorized; none |
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issued and outstanding as of September 30 and March 31, 2022 |
| – |
| – | ||||
issued and outstanding |
| – |
| – | ||||
Serial common stock, with or without par value, 250,000,000 shares authorized: |
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Serial common stock of $0.25 par value, 10,000,000 shares authorized; |
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none issued and outstanding as of September 30 and March 31, 2021 |
| – |
| – | ||||
none issued and outstanding |
| – |
| – | ||||
Common stock, with $0.25 par value, 250,000,000 shares authorized: |
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Common stock of $0.25 par value, 250,000,000 shares authorized; 41,985,700 |
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issued and 19,607,788 outstanding as of September 30 and March 31, 2022 |
| 10,497 |
| 10,497 | ||||
issued and 19,607,788 outstanding |
| 10,497 |
| 10,497 | ||||
Series N Non-Voting Common Stock with $0.001 par value, 250,000,000 shares authorized |
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Series N Non-Voting Common Stock, with $0.001 par value, 250,000,000 shares authorized; |
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176,470,092 shares issued and outstanding |
| 176 |
| 176 | ||||
Additional paid-in capital |
| 453,819 |
| 453,819 |
| 453,643 |
| 453,643 |
Accumulated other comprehensive income (loss) |
| (192,121) |
| 46,384 | ||||
Accumulated other comprehensive loss |
| (275,664) |
| (285,623) | ||||
Retained earnings |
| 6,718,642 |
| 6,052,233 |
| 7,519,376 |
| 7,003,148 |
Cost of common stock in treasury, net (22,377,912 shares as of September 30 and March 31, 2022) |
| (525,653) |
| (525,653) | ||||
Cost of preferred stock in treasury, net (6,100,000 shares as of September 30 and March 31, 2022) |
| (151,997) |
| (151,997) | ||||
Cost of common stock in treasury, net (22,377,912 shares) |
| (525,653) |
| (525,653) | ||||
Cost of preferred stock in treasury, net (6,100,000 shares) |
| (151,997) |
| (151,997) | ||||
Total stockholders' equity |
| 6,313,187 |
| 5,885,283 |
| 7,030,378 |
| 6,504,191 |
Total liabilities and stockholders' equity | $ | 18,143,343 | $ | 17,299,581 | $ | 19,021,450 | $ | 18,100,734 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
AMERCOU-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED Statements of operations
|
| Quarter Ended September 30, |
| Quarter Ended September 30, | ||||
|
| 2022 |
| 2021 |
| 2023 |
| 2022 |
|
| (Unaudited) |
| (Unaudited) | ||||
|
| (In thousands, except share and per share amounts) |
| (In thousands, except share and per share amounts) | ||||
Revenues: |
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Self-moving equipment rentals | $ | 1,162,025 | $ | 1,179,061 | $ | 1,069,405 | $ | 1,162,025 |
Self-storage revenues |
| 185,586 |
| 153,485 |
| 208,890 |
| 185,586 |
Self-moving and self-storage products and service sales |
| 96,864 |
| 92,191 |
| 91,571 |
| 96,864 |
Property management fees |
| 9,277 |
| 8,747 |
| 9,267 |
| 9,277 |
Life insurance premiums |
| 25,456 |
| 28,913 |
| 22,498 |
| 25,456 |
Property and casualty insurance premiums |
| 25,718 |
| 22,499 |
| 25,571 |
| 25,718 |
Net investment and interest income |
| 30,509 |
| 36,780 |
| 64,738 |
| 30,509 |
Other revenue |
| 167,429 |
| 142,578 |
| 157,920 |
| 167,429 |
Total revenues |
| 1,702,864 |
| 1,664,254 |
| 1,649,860 |
| 1,702,864 |
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Costs and expenses: |
|
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Operating expenses |
| 811,594 |
| 696,074 |
| 835,258 |
| 811,594 |
Commission expenses |
| 125,341 |
| 127,896 |
| 111,961 |
| 125,341 |
Cost of sales |
| 72,625 |
| 66,491 |
| 66,620 |
| 72,625 |
Benefits and losses |
| 37,363 |
| 44,630 |
| 42,553 |
| 39,512 |
Amortization of deferred policy acquisition costs |
| 6,972 |
| 6,750 |
| 6,826 |
| 6,972 |
Lease expense |
| 7,684 |
| 7,441 |
| 8,450 |
| 7,684 |
Depreciation, net of gains on disposal of $64,342 and $36,075, respectively |
| 117,318 |
| 135,748 | ||||
Depreciation, net of gains on disposal ($46,803 and $64,342 respectively) |
| 154,122 |
| 117,318 | ||||
Net losses on disposal of real estate |
| 1,872 |
| 523 |
| 1,715 |
| 1,872 |
Total costs and expenses |
| 1,180,769 |
| 1,085,553 |
| 1,227,505 |
| 1,182,918 |
|
|
|
|
|
|
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|
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Earnings from operations |
| 522,095 |
| 578,701 |
| 422,355 |
| 519,946 |
Other components of net periodic benefit costs |
| (304) |
| (280) |
| (364) |
| (304) |
Interest expense |
| (57,193) |
| (39,545) |
| (63,943) |
| (57,193) |
Fees on early extinguishment of debt |
| (959) |
| – |
| – |
| (959) |
Pretax earnings |
| 463,639 |
| 538,876 |
| 358,048 |
| 461,490 |
Income tax expense |
| (111,624) |
| (128,978) |
| (84,540) |
| (111,624) |
Earnings available to common stockholders | $ | 352,015 | $ | 409,898 | ||||
Basic and diluted earnings per common share | $ | 17.95 | $ | 20.90 | ||||
Weighted average common shares outstanding: Basic and diluted |
| 19,607,788 |
| 19,607,788 | ||||
Net earnings available to common stockholders | $ | 273,508 | $ | 349,866 | ||||
Basic and diluted earnings per share of Common Stock | $ | 1.36 | $ | 2.23 | ||||
Weighted average shares outstanding of Common Stock: Basic and diluted |
| 19,607,788 |
| 19,607,788 | ||||
Basic and diluted earnings per share of Series N Non-Voting Common Stock | $ | 1.40 | $ | 1.73 | ||||
Weighted average shares outstanding of Series N Non-Voting Common Stock: Basic and diluted |
| 176,470,092 |
| 176,470,092 |
Related party revenues for the second quarter of fiscal 20232024 and 2022,2023, net of eliminations, were $9.3 million and $8.7$9.3 million, respectively.
Related party costs and expenses for the second quarter of fiscal 20232024 and 2022,2023, net of eliminations, were $27.0$25.6 million and $27.1$27.0 million, respectively.
Please see Note 9,10, Related Party Transactions, of the Notes to Condensed Consolidated Financial Statements for more information on the related party revenues and costs and expenses.
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
AMERCOU-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED Statements of operations
|
| Six Months Ended September 30, |
| Six Months Ended September 30, | ||||
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| 2022 |
| 2021 |
| 2023 |
| 2022 |
|
| (Unaudited) |
| (Unaudited) | ||||
|
| (In thousands, except share and per share amounts) |
| (In thousands, except share and per share amounts) | ||||
Revenues: |
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Self-moving equipment rentals | $ | 2,252,800 | $ | 2,214,438 | $ | 2,068,611 | $ | 2,252,800 |
Self-storage revenues |
| 358,763 |
| 290,878 |
| 407,851 |
| 358,763 |
Self-moving and self-storage products and service sales |
| 206,215 |
| 197,076 |
| 192,443 |
| 206,215 |
Property management fees |
| 18,416 |
| 17,196 |
| 18,444 |
| 18,416 |
Life insurance premiums |
| 51,237 |
| 57,618 |
| 45,629 |
| 51,237 |
Property and casualty insurance premiums |
| 45,690 |
| 39,368 |
| 45,893 |
| 45,690 |
Net investment and interest income |
| 64,082 |
| 71,779 |
| 129,330 |
| 64,082 |
Other revenue |
| 303,501 |
| 248,757 |
| 281,967 |
| 303,501 |
Total revenues |
| 3,300,704 |
| 3,137,110 |
| 3,190,168 |
| 3,300,704 |
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Costs and expenses: |
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Operating expenses |
| 1,544,761 |
| 1,310,603 |
| 1,598,499 |
| 1,544,761 |
Commission expenses |
| 243,834 |
| 241,045 |
| 218,888 |
| 243,834 |
Cost of sales |
| 152,296 |
| 136,406 |
| 137,295 |
| 152,296 |
Benefits and losses |
| 81,463 |
| 91,928 |
| 87,897 |
| 79,269 |
Amortization of deferred policy acquisition costs |
| 14,644 |
| 15,573 |
| 14,871 |
| 14,644 |
Lease expense |
| 15,159 |
| 15,088 |
| 16,033 |
| 15,159 |
Depreciation, net of gains on disposal of $128,690 and $86,398 respectively |
| 231,114 |
| 257,465 | ||||
Net (gains) losses on disposal of real estate |
| 4,179 |
| (3,907) | ||||
Depreciation, net of gains on disposal ($102,464 and $128,690 respectively) |
| 291,936 |
| 231,114 | ||||
Net losses on disposal of real estate |
| 2,736 |
| 4,179 | ||||
Total costs and expenses |
| 2,287,450 |
| 2,064,201 |
| 2,368,155 |
| 2,285,256 |
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|
|
|
|
|
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|
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Earnings from operations |
| 1,013,254 |
| 1,072,909 |
| 822,013 |
| 1,015,448 |
Other components of net periodic benefit costs |
| (608) |
| (560) |
| (729) |
| (608) |
Interest expense |
| (106,992) |
| (78,723) |
| (124,541) |
| (106,992) |
Fees on early extinguishment of debt |
| (959) |
| – |
| – |
| (959) |
Pretax earnings |
| 904,695 |
| 993,626 |
| 696,743 |
| 906,889 |
Income tax expense |
| (218,678) |
| (238,553) |
| (166,397) |
| (218,678) |
Earnings available to common stockholders | $ | 686,017 | $ | 755,073 | ||||
Net earnings available to common stockholders | $ | 530,346 | $ | 688,211 | ||||
Basic and diluted earnings per common share | $ | 34.99 | $ | 38.51 | $ | 2.63 | $ | 4.41 |
Weighted average common shares outstanding: Basic and diluted |
| 19,607,788 |
| 19,607,788 |
| 19,607,788 |
| 19,607,788 |
Basic and diluted earnings per share of Series N Non-Voting Common Stock | $ | 2.71 | $ | 3.41 | ||||
Weighted average shares outstanding of Series N Non-Voting Common Stock: Basic and diluted |
| 176,470,092 |
| 176,470,092 |
Related party revenues for the first six months of fiscal 20232024 and 2022,2023, net of eliminations, were $18.4 million and $17.2$18.4 million, respectively.
Related party costs and expenses for the first six months of fiscal 20232024 and 2022,2023, net of eliminations, were $52.5$49.3 million and $50.7$52.5 million, respectively.
Please see Note 9,10, Related Party Transactions, of the Notes to Condensed Consolidated Financial Statements for more information on the related party revenues and costs and expenses.
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
AMERCOU-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
Condensed consolidatED statements of COMPREHENSIVE INCOME (loss)
Quarter Ended September 30, 2023 |
| Pre-tax |
| Tax |
| Net | ||||||
|
| (Unaudited) | ||||||||||
|
| (In thousands) | ||||||||||
Comprehensive income: |
|
|
|
|
|
| ||||||
Net earnings | $ | 358,048 | $ | (84,540) | $ | 273,508 | ||||||
Other comprehensive income (loss): |
|
|
|
|
|
| ||||||
Foreign currency translation |
| (2,849) |
| – |
| (2,849) | ||||||
Unrealized net loss on investments and impact of LFPB discount rates |
| (16,867) |
| 3,570 |
| (13,297) | ||||||
Change in fair value of cash flow hedges |
| 4,418 |
| (1,085) |
| 3,333 | ||||||
Amounts reclassified into earnings on hedging activities |
| (1,345) |
| 330 |
| (1,015) | ||||||
Total other comprehensive income (loss) |
| (16,643) |
| 2,815 |
| (13,828) | ||||||
|
|
|
|
|
|
| ||||||
Total comprehensive income | $ | 341,405 | $ | (81,725) | $ | 259,680 | ||||||
|
|
|
|
|
|
| ||||||
Quarter Ended September 30, 2022 |
| Pre-tax |
| Tax |
| Net |
| Pre-tax |
| Tax |
| Net |
|
| (Unaudited) |
| (Unaudited) | ||||||||
|
| (In thousands) |
| (In thousands) | ||||||||
Comprehensive income: |
|
|
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|
|
|
|
|
|
|
|
Net earnings | $ | 463,639 | $ | (111,624) | $ | 352,015 | $ | 461,490 | $ | (111,624) | $ | 349,866 |
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation |
| (739) |
| – |
| (739) |
| (739) |
| – |
| (739) |
Unrealized net loss on investments |
| (137,836) |
| 29,392 |
| (108,444) | ||||||
Unrealized net loss on investments and impact of LFPB discount rates |
| (137,836) |
| 29,392 |
| (108,444) | ||||||
Change in fair value of cash flow hedges |
| 8,336 |
| (2,047) |
| 6,289 |
| 8,336 |
| (2,047) |
| 6,289 |
Amounts reclassified into earnings on hedging activities |
| 24 |
| (5) |
| 19 |
| 24 |
| (5) |
| 19 |
Total other comprehensive income (loss) |
| (130,215) |
| 27,340 |
| (102,875) |
| (130,215) |
| 27,340 |
| (102,875) |
|
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|
|
Total comprehensive income | $ | 333,424 | $ | (84,284) | $ | 249,140 | $ | 331,275 | $ | (84,284) | $ | 246,991 |
|
|
|
|
|
|
| ||||||
Quarter Ended September 30, 2021 |
| Pre-tax |
| Tax |
| Net | ||||||
|
| (Unaudited) | ||||||||||
|
| (In thousands) | ||||||||||
Comprehensive income: |
|
|
|
|
|
| ||||||
Net earnings | $ | 538,876 | $ | (128,978) | $ | 409,898 | ||||||
Other comprehensive income (loss): |
|
|
|
|
|
| ||||||
Foreign currency translation |
| 992 |
| – |
| 992 | ||||||
Unrealized net gain on investments |
| 52,525 |
| (11,143) |
| 41,382 | ||||||
Change in fair value of cash flow hedges |
| (74) |
| 18 |
| (56) | ||||||
Amounts reclassified into earnings on hedging activities |
| 1,003 |
| (246) |
| 757 | ||||||
Total other comprehensive income (loss) |
| 54,446 |
| (11,371) |
| 43,075 | ||||||
|
|
|
|
|
|
| ||||||
Total comprehensive income | $ | 593,322 | $ | (140,349) | $ | 452,973 |
Six Months Ended September 30, 2023 |
| Pre-tax |
| Tax |
| Net | ||||||
|
| (Unaudited) | ||||||||||
|
| (In thousands) | ||||||||||
Comprehensive income: |
|
|
|
|
|
| ||||||
Net earnings | $ | 696,743 | $ | (166,397) | $ | 530,346 | ||||||
Other comprehensive income (loss): |
|
|
|
|
|
| ||||||
Foreign currency translation |
| (2,380) |
| – |
| (2,380) | ||||||
Unrealized net gain on investments and impact of LFPB discount rates |
| 8,676 |
| (1,629) |
| 7,047 | ||||||
Change in fair value of cash flow hedges |
| 9,511 |
| (2,336) |
| 7,175 | ||||||
Amounts reclassified into earnings on hedging activities |
| (2,495) |
| 612 |
| (1,883) | ||||||
Total other comprehensive income (loss) |
| 13,312 |
| (3,353) |
| 9,959 | ||||||
|
|
|
|
|
|
| ||||||
Total comprehensive income | $ | 710,055 | $ | (169,750) | $ | 540,305 | ||||||
|
|
|
|
|
|
| ||||||
Six Months Ended September 30, 2022 |
| Pre-tax |
| Tax |
| Net |
| Pre-tax |
| Tax |
| Net |
|
| (Unaudited) |
| (Unaudited) | ||||||||
|
| (In thousands) |
| (In thousands) | ||||||||
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings | $ | 904,695 | $ | (218,678) | $ | 686,017 | $ | 906,889 | $ | (218,678) | $ | 688,211 |
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation |
| (542) |
| – |
| (542) |
| (542) |
| – |
| (542) |
Unrealized net loss on investments |
| (310,882) |
| 66,056 |
| (244,826) | ||||||
Unrealized net loss on investments and impact of LFPB discount rates |
| (310,882) |
| 66,056 |
| (244,826) | ||||||
Change in fair value of cash flow hedges |
| 8,506 |
| (2,089) |
| 6,417 |
| 8,506 |
| (2,089) |
| 6,417 |
Amounts reclassified into earnings on hedging activities |
| 590 |
| (144) |
| 446 |
| 590 |
| (144) |
| 446 |
Total other comprehensive income (loss) |
| (302,328) |
| 63,823 |
| (238,505) |
| (302,328) |
| 63,823 |
| (238,505) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income | $ | 602,367 | $ | (154,855) | $ | 447,512 | $ | 604,561 | $ | (154,855) | $ | 449,706 |
|
|
|
|
|
|
| ||||||
Six Months Ended September 30, 2021 |
| Pre-tax |
| Tax |
| Net | ||||||
|
| (Unaudited) | ||||||||||
|
| (In thousands) | ||||||||||
Comprehensive income: |
|
|
|
|
|
| ||||||
Net earnings | $ | 993,626 | $ | (238,553) | $ | 755,073 | ||||||
Other comprehensive income (loss): |
|
|
|
|
|
| ||||||
Foreign currency translation |
| (2,400) |
| – |
| (2,400) | ||||||
Unrealized net loss on investments |
| (39,926) |
| 8,281 |
| (31,645) | ||||||
Change in fair value of cash flow hedges |
| (142) |
| 35 |
| (107) | ||||||
Amounts reclassified into earnings on hedging activities |
| 1,990 |
| (488) |
| 1,502 | ||||||
Total other comprehensive income (loss) |
| (40,478) |
| 7,828 |
| (32,650) | ||||||
|
|
|
|
|
|
| ||||||
Total comprehensive income | $ | 953,148 | $ | (230,725) | $ | 722,423 |
The accompanying notes are an integral part of these consolidated financial statements.
4
U-Haul Holding Company and consolidated subsidiaries
consolidated statements of changes in stockholders’ equity
|
| Common Stock |
| Series N Non-Voting Common Stock |
| Additional Paid-In Capital |
| Accumulated Other Comprehensive Income (Loss) |
| Retained Earnings |
| Less: Treasury Common Stock |
| Less: Treasury Preferred Stock |
| Total Stockholders' Equity |
| (Unaudited) | |||||||||||||||
| (In thousands) | |||||||||||||||
Balance as of June 30, 2023 | $ | 10,497 | $ | 176 | $ | 453,643 | $ | (261,836) | $ | 7,252,927 | $ | (525,653) | $ | (151,997) | $ | 6,777,757 |
Foreign currency translation |
| – |
| – |
| – |
| (2,849) |
| – |
| – |
| – |
| (2,849) |
Unrealized net loss on investments and impact of LFPB discount rates, net of tax |
| – |
| – |
| – |
| (13,297) |
| – |
| – |
| – |
| (13,297) |
Change in fair value of cash flow hedges, net of tax |
| – |
| – |
| – |
| 3,333 |
| – |
| – |
| – |
| 3,333 |
Amounts reclassified into earnings on hedging activities |
| – |
| – |
| – |
| (1,015) |
| – |
| – |
| – |
| (1,015) |
Net earnings |
| – |
| – |
| – |
| – |
| 273,508 |
| – |
| – |
| 273,508 |
Series N Non-Voting Common Stock dividends: ($0.04 per share) |
| – |
| – |
| – |
| – |
| (7,059) |
| – |
| – |
| (7,059) |
Net activity |
| – |
| – |
| – |
| (13,828) |
| 266,449 |
| – |
| – |
| 252,621 |
Balance as of September 30, 2023 | $ | 10,497 | $ | 176 | $ | 453,643 | $ | (275,664) | $ | 7,519,376 | $ | (525,653) |
| (151,997) | $ | 7,030,378 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2022 | $ | 10,497 | $ | – | $ | 453,819 | $ | (140,622) | $ | 6,440,942 | $ | (525,653) | $ | (151,997) | $ | 6,086,986 |
Foreign currency translation |
| – |
| – |
| – |
| (739) |
| – |
| – |
| – |
| (739) |
Unrealized net loss on investments and impact of LFPB discount rates, net of tax |
| – |
| – |
| – |
| (108,444) |
| – |
| – |
| – |
| (108,444) |
Change in fair value of cash flow hedges, net of tax |
| – |
| – |
| – |
| 6,289 |
| – |
| – |
| – |
| 6,289 |
Amounts reclassified into earnings on hedging activities |
| – |
| – |
| – |
| 19 |
| – |
| – |
| – |
| 19 |
Net earnings |
| – |
| – |
| – |
| – |
| 349,866 |
| – |
| – |
| 349,866 |
Common stock dividends: ($0.50 per share) |
| – |
| – |
| – |
| – |
| (9,804) |
| – |
| – |
| (9,804) |
Net activity |
| – |
| – |
| – |
| (102,875) |
| 340,062 |
| – |
| – |
| 237,187 |
Balance as of September 30, 2022 | $ | 10,497 | $ | – | $ | 453,819 | $ | (243,497) | $ | 6,781,004 | $ | (525,653) | $ | (151,997) | $ | 6,324,173 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Amerco and consolidated subsidiaries
condensed consolidated statements of changes in stockholders’ equity
|
| Common Stock |
| Additional Paid-In Capital |
| Accumulated Other Comprehensive Income (Loss) |
| Retained Earnings |
| Less: Treasury Common Stock |
| Less: Treasury Preferred Stock |
| Total Stockholders' Equity |
| (Unaudited) | |||||||||||||
| (In thousands) | |||||||||||||
Balance as of June 30, 2022 | $ | 10,497 | $ | 453,819 | $ | (89,246) | $ | 6,376,431 | $ | (525,653) | $ | (151,997) | $ | 6,073,851 |
Foreign currency translation |
| – |
| – |
| (739) |
| – |
| – |
| – |
| (739) |
Unrealized net loss on investments, net of tax |
| – |
| – |
| (108,444) |
| – |
| – |
| – |
| (108,444) |
Change in fair value of cash flow hedges, net of tax |
| – |
| – |
| 6,289 |
| – |
| – |
| – |
| 6,289 |
Amounts reclassified into earnings on hedging activities |
| – |
| – |
| 19 |
| – |
| – |
| – |
| 19 |
Net earnings |
| – |
| – |
| – |
| 352,015 |
| – |
| – |
| 352,015 |
Common stock dividends: ($0.50 per share) |
| – |
| – |
| – |
| (9,804) |
| – |
| – |
| (9,804) |
Net activity |
| – |
| – |
| (102,875) |
| 342,211 |
| – |
| – |
| 239,336 |
Balance as of September 30, 2022 | $ | 10,497 | $ | 453,819 | $ | (192,121) | $ | 6,718,642 | $ | (525,653) |
| (151,997) | $ | 6,313,187 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2021 | $ | 10,497 | $ | 453,819 | $ | 31,132 | $ | 5,293,730 | $ | (525,653) | $ | (151,997) | $ | 5,111,528 |
Foreign currency translation |
| – |
| – |
| 992 |
| – |
| – |
| – |
| 992 |
Unrealized net gain on investments, net of tax |
| – |
| – |
| 41,382 |
| – |
| – |
| – |
| 41,382 |
Change in fair value of cash flow hedges, net of tax |
| – |
| – |
| (56) |
| – |
| – |
| – |
| (56) |
Amounts reclassified into earnings on hedging activities |
| – |
| – |
| 757 |
| – |
| – |
| – |
| 757 |
Net earnings |
| – |
| – |
| – |
| 409,898 |
| – |
| – |
| 409,898 |
Common stock dividends: ($0.50 per share) |
| – |
| – |
| – |
| (9,804) |
| – |
| – |
| (9,804) |
Net activity |
| – |
| – |
| 43,075 |
| 400,094 |
| – |
| – |
| 443,169 |
Balance as of September 30, 2021 | $ | 10,497 | $ | 453,819 | $ | 74,207 | $ | 5,693,824 | $ | (525,653) | $ | (151,997) | $ | 5,554,697 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
AmercoU-Haul Holding Company and consolidated subsidiaries
condensed consolidated statements of changes in stockholders’ equity
|
| Common Stock |
| Additional Paid-In Capital |
| Accumulated Other Comprehensive Income (Loss) |
| Retained Earnings |
| Less: Treasury Common Stock |
| Less: Treasury Preferred Stock |
| Total Stockholders' Equity |
| Common Stock |
| Series N Non-Voting Common Stock |
| Additional Paid-In Capital |
| Accumulated Other Comprehensive Income (Loss) |
| Retained Earnings |
| Less: Treasury Common Stock |
| Less: Treasury Preferred Stock |
| Total Stockholders' Equity |
| (Unaudited) | (Unaudited) | ||||||||||||||||||||||||||||
| (In thousands) | (In thousands) | ||||||||||||||||||||||||||||
Balance as of March 31, 2023 | $ | 10,497 | $ | 176 | $ | 453,643 | $ | (285,623) | $ | 7,003,148 | $ | (525,653) | $ | (151,997) | $ | 6,504,191 | ||||||||||||||
Foreign currency translation |
| – |
| – |
| – |
| (2,380) |
| – |
| – |
| – |
| (2,380) | ||||||||||||||
Unrealized net gain on investments and impact of LFPB discount rates, net of tax |
| – |
| – |
| – |
| 7,047 |
| – |
| – |
| – |
| 7,047 | ||||||||||||||
Change in fair value of cash flow hedges, net of tax |
| – |
| – |
| – |
| 7,175 |
| – |
| – |
| – |
| 7,175 | ||||||||||||||
Amounts reclassified into earnings on hedging activities |
| – |
| – |
| – |
| (1,883) |
| – |
| – |
| – |
| (1,883) | ||||||||||||||
Net earnings |
| – |
| – |
| – |
| – |
| 530,346 |
| – |
| – |
| 530,346 | ||||||||||||||
Series N Non-Voting Common Stock dividends: ($0.08) |
| – |
| – |
| – |
| – |
| (14,118) |
| – |
| – |
| (14,118) | ||||||||||||||
Net activity |
| – |
| – |
| – |
| 9,959 |
| 516,228 |
| – |
| – |
| 526,187 | ||||||||||||||
Balance as of September 30, 2023 | $ | 10,497 | $ | 176 |
| 453,643 | $ | (275,664) | $ | 7,519,376 | $ | (525,653) |
| (151,997) | $ | 7,030,378 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||
Balance as of March 31, 2022 | $ | 10,497 | $ | 453,819 | $ | 46,384 | $ | 6,052,233 | $ | (525,653) | $ | (151,997) | $ | 5,885,283 | $ | 10,497 | $ | – | $ | 453,819 | $ | (4,992) | $ | 6,112,401 | $ | (525,653) | $ | (151,997) | $ | 5,894,075 |
Foreign currency translation |
| – |
| – |
| (542) |
| – |
| – |
| – |
| (542) |
| – |
| – |
| – |
| (542) |
| – |
| – |
| – |
| (542) |
Unrealized net loss on investments, net of tax |
| – |
| – |
| (244,826) |
| – |
| – |
| – |
| (244,826) | ||||||||||||||||
Unrealized net loss on investments and impact of LFPB discount rates, net of tax |
| – |
| – |
| – |
| (244,826) |
| – |
| – |
| – |
| (244,826) | ||||||||||||||
Change in fair value of cash flow hedges, net of tax |
| – |
| – |
| 6,417 |
| – |
| – |
| – |
| 6,417 |
| – |
| – |
| – |
| 6,417 |
| – |
| – |
| – |
| 6,417 |
Amounts reclassified into earnings on hedging activities |
| – |
| – |
| 446 |
| – |
| – |
| – |
| 446 |
| – |
| – |
| – |
| 446 |
| – |
| – |
| – |
| 446 |
Net earnings |
| – |
| – |
| – |
| 686,017 |
| – |
| – |
| 686,017 |
| – |
| – |
| – |
| – |
| 688,211 |
| – |
| – |
| 688,211 |
Common stock dividends: ($1.00 per share) |
| – |
| – |
| – |
| (19,608) |
| – |
| – |
| (19,608) |
| – |
| – |
| – |
| – |
| (19,608) |
| – |
| – |
| (19,608) |
Net activity |
| – |
| – |
| (238,505) |
| 666,409 |
| – |
| – |
| 427,904 |
| – |
| – |
| – |
| (238,505) |
| 668,603 |
| – |
| – |
| 430,098 |
Balance as of September 30, 2022 | $ | 10,497 | $ | 453,819 | $ | (192,121) | $ | 6,718,642 | $ | (525,653) |
| (151,997) | $ | 6,313,187 | $ | 10,497 | $ | – | $ | 453,819 | $ | (243,497) | $ | 6,781,004 | $ | (525,653) | $ | (151,997) | $ | 6,324,173 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Balance as of March 31, 2021 | $ | 10,497 | $ | 453,819 | $ | 106,857 | $ | 4,958,359 | $ | (525,653) | $ | (151,997) | $ | 4,851,882 | ||||||||||||||||
Foreign currency translation |
| – |
| – |
| (2,400) |
| – |
| – |
| – |
| (2,400) | ||||||||||||||||
Unrealized net loss on investments, net of tax |
| – |
| – |
| (31,645) |
| – |
| – |
| – |
| (31,645) | ||||||||||||||||
Change in fair value of cash flow hedges, net of tax |
| – |
| – |
| (107) |
| – |
| – |
| – |
| (107) | ||||||||||||||||
Amounts reclassified into earnings on hedging activities |
| – |
| – |
| 1,502 |
| – |
| – |
| – |
| 1,502 | ||||||||||||||||
Net earnings |
| – |
| – |
| – |
| 755,073 |
| – |
| – |
| 755,073 | ||||||||||||||||
Common stock dividends: ($1.00 per share) |
| – |
| – |
| – |
| (19,608) |
| – |
| – |
| (19,608) | ||||||||||||||||
Net activity |
| – |
| – |
| (32,650) |
| 735,465 |
| – |
| – |
| 702,815 | ||||||||||||||||
Balance as of September 30, 2021 | $ | 10,497 | $ | 453,819 | $ | 74,207 | $ | 5,693,824 | $ | (525,653) | $ | (151,997) | $ | 5,554,697 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
AMERCOU-Haul holding company AND CONSOLIDATED subsidiaries
Condensed consolidatED statements of cash flows
|
| Six Months Ended September 30, |
| Six Months Ended September 30, | ||||
|
| 2022 |
| 2021 |
| 2023 |
| 2022 |
|
| (Unaudited) |
| (Unaudited) | ||||
|
| (In thousands) |
| (In thousands) | ||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net earnings | $ | 686,017 | $ | 755,073 | $ | 530,346 | $ | 688,211 |
Adjustments to reconcile net earnings to cash provided by operations: |
|
|
|
|
|
|
|
|
Depreciation |
| 359,804 |
| 343,863 |
| 394,400 |
| 359,804 |
Amortization of deferred policy acquisition costs |
| 14,644 |
| 15,573 |
| 14,871 |
| 14,644 |
Amortization of premiums and accretion of discounts related to investments, net |
| 10,249 |
| 9,151 |
| 8,441 |
| 10,249 |
Amortization of debt issuance costs |
| 3,356 |
| 2,791 |
| 3,427 |
| 3,356 |
Interest credited to policyholders |
| 24,690 |
| 31,894 |
| 36,329 |
| 24,690 |
Provision for allowance for losses on trade receivables |
| (5,494) |
| 222 | ||||
Provision for allowance (recoveries) for losses on trade receivables, net |
| 578 |
| (5,494) | ||||
Provision for allowance for inventories and parts reserves |
| 7,125 |
| 8,352 |
| 3,461 |
| 7,125 |
Net gains on disposal of personal property |
| (128,690) |
| (86,398) |
| (102,464) |
| (128,690) |
Net (gains) losses on disposal of real estate |
| 4,179 |
| (3,907) | ||||
Net losses on disposal of real estate |
| 2,736 |
| 4,179 | ||||
Net (gains) losses on sales of investments |
| 7,207 |
| (3,432) |
| (917) |
| 7,207 |
Net (gains) losses on equity investments |
| 7,963 |
| (4,342) | ||||
Deferred income taxes, net |
| 103,828 |
| 138,916 | ||||
Net (gains) losses on equity securities |
| (2,745) |
| 7,963 | ||||
Deferred income taxes |
| 107,751 |
| 103,828 | ||||
Net change in other operating assets and liabilities: |
|
|
|
|
|
|
|
|
Reinsurance recoverables and trade receivables |
| 32,342 |
| (3,771) |
| (23,402) |
| 32,342 |
Inventories and parts |
| (14,416) |
| (45,718) |
| (13,520) |
| (14,416) |
Prepaid expenses |
| 3 |
| 266,780 |
| (21,824) |
| 3 |
Capitalization of deferred policy acquisition costs |
| (14,900) |
| (17,807) |
| (7,773) |
| (14,900) |
Other assets |
| 2,432 |
| (1,327) | ||||
Other assets and right-of-use assets operating, net |
| (8,751) |
| 2,432 | ||||
Related party assets |
| (1,640) |
| (2,724) |
| 7,403 |
| (1,640) |
Accounts payable and accrued expenses |
| 64,297 |
| 91,548 |
| 23,248 |
| 64,297 |
Policy benefits and losses, claims and loss expenses payable |
| 13,654 |
| 18,968 | ||||
Policy benefits and losses, claims and loss expenses payable and operating lease liabilities |
| (18,553) |
| 11,460 | ||||
Other policyholders' funds and liabilities |
| 1,314 |
| (1,477) |
| (554) |
| 1,314 |
Deferred income |
| 9,458 |
| 7,592 |
| 4,115 |
| 9,458 |
Related party liabilities |
| 742 |
| (700) |
| 828 |
| 742 |
Net cash provided by operating activities |
| 1,188,164 |
| 1,519,120 |
| 937,431 |
| 1,188,164 |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Escrow deposits |
| 9,688 |
| (2,341) |
| 573 |
| 9,688 |
Purchases of: |
|
|
|
|
|
|
|
|
Property, plant and equipment |
| (1,335,528) |
| (1,039,688) |
| (1,664,387) |
| (1,335,528) |
Short term investments |
| (36,173) |
| (21,669) |
| (44,903) |
| (36,173) |
Fixed maturities investments |
| (202,265) |
| (415,640) |
| (106,777) |
| (202,265) |
Equity securities |
| (4,356) |
| (36) |
| (309) |
| (4,356) |
Preferred stock |
| – |
| (8,000) | ||||
Real estate |
| (4,931) |
| (124) | ||||
Real estate investments |
| (537) |
| (4,931) | ||||
Mortgage loans |
| (75,635) |
| (106,963) |
| (97,702) |
| (75,635) |
Proceeds from sales and paydowns of: |
|
|
|
|
|
|
|
|
Property, plant and equipment |
| 329,611 |
| 306,946 |
| 408,279 |
| 329,611 |
Short term investments |
| 33,373 |
| 16,673 |
| 15,959 |
| 33,373 |
Fixed maturities investments |
| 106,527 |
| 230,043 |
| 389,216 |
| 106,527 |
Equity securities |
| 717 |
| 1,894 |
| 300 |
| 717 |
Preferred stock |
| 913 |
| – | ||||
Mortgage loans |
| 74,165 |
| 26,612 |
| 13,049 |
| 74,165 |
Net cash used by investing activities |
| (1,104,807) |
| (1,012,293) |
| (1,086,326) |
| (1,104,807) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Borrowings from credit facilities |
| 792,654 |
| 987,048 |
| 704,960 |
| 792,654 |
Principal repayments on credit facilities |
| (441,019) |
| (227,072) |
| (351,893) |
| (441,019) |
Payment of debt issuance costs |
| (3,942) |
| (2,092) |
| (4,018) |
| (3,942) |
Finance lease payments |
| (65,831) |
| (87,500) |
| (59,752) |
| (65,831) |
Securitization deposits |
| 49 |
| – |
| 151 |
| 49 |
Common stock dividends paid |
| (19,608) |
| (19,608) |
| – |
| (19,608) |
Series N Non-Voting Common Stock dividends paid |
| (14,118) |
| – | ||||
Investment contract deposits |
| 169,017 |
| 199,426 |
| 132,630 |
| 169,017 |
Investment contract withdrawals |
| (139,917) |
| (116,021) |
| (174,256) |
| (139,917) |
Net cash provided by financing activities |
| 291,403 |
| 734,181 |
| 233,704 |
| 291,403 |
|
|
|
|
|
|
|
|
|
Effects of exchange rate on cash |
| (13,782) |
| (4,787) |
| (202) |
| (13,782) |
|
|
|
|
|
|
|
|
|
Increase in cash and cash equivalents |
| 360,978 |
| 1,236,221 |
| 84,607 |
| 360,978 |
Cash and cash equivalents at the beginning of period |
| 2,704,137 |
| 1,194,012 |
| 2,060,524 |
| 2,704,137 |
Cash and cash equivalents at the end of period | $ | 3,065,115 | $ | 2,430,233 | $ | 2,145,131 | $ | 3,065,115 |
The accompanying notes are an integral part of these condensed consolidated financial statementsstatements.
7
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.Basis of Presentation
AMERCO,U-Haul Holding Company, a Nevada corporation (“AMERCO” or the “Company”U-Haul Holding Company”), has a second fiscal quarter that ends on the 30thof September for each year that is referenced. Our insurance company subsidiaries have a second quarter that ends on the 30thof June for each year that is referenced. They have been consolidated on that basis. Our insurance companies’ financial reporting processes conform to calendar year reporting as required by state insurance departments. Management believes that consolidating their calendar year into our fiscal year financial statements does not materially affect the presentation of consolidated financial position or consolidated results of operations. We disclose material events, if any, occurring during the intervening period. Consequently, all references to our insurance subsidiaries’ years 20222023 and 20212022 correspond to fiscal 2024 and 2023 and 2022 for AMERCO.U-Haul Holding Company.
Accounts denominated in non-U.S. currencies have been translated into U.S. dollars.
The condensedaccompanying interim consolidated balance sheet asfinancial statements are unaudited and reflect all adjustments (including normal recurring adjustments) necessary to present fairly the financial position, results of September 30, 2022 and the related condensed consolidated statements of operations comprehensive income (loss), stockholders’ equity for the second quarter and first six months of fiscal 2023 and 2022 and cash flows for the first six monthsinterim periods presented in conformity with the accounting principles generally accepted in the United States of fiscal 2023 and 2022 are unaudited.
In our opinion, all adjustments necessary for the fair presentation of such condensed consolidated financial statements have been included. Such adjustments consist only of normal recurring items.America (“GAAP”). Interim results are not necessarily indicative of resultsfull year performance. Except for a full year. The information in this Quarterly Report on Form 10-Qbalances affected by the adoption of Accounting Standards Update (“Quarterly Report”ASU”) should be read in conjunction with2018-12, Financial Services - Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts (“ASU 2018-12”) noted below, the year-end consolidated balance sheet data was derived from audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2022.2023, which include all disclosures required by GAAP. Therefore, these interim consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2023.
In our opinion, all adjustments necessary for the fair presentation of such consolidated financial statements have been included. Such adjustments consist only of normal recurring items.
Intercompany accounts and transactions have been eliminated.
Tax regulations may require items to be included in our tax return at different times than when those items are reflected in our financial statements. Some of the differences are permanent, such as expenses that are not deductible on our tax return, and some are temporary differences, such as the timing of depreciation expense. Temporary differences create deferred tax assets and liabilities. Deferred tax assets generally represent items that will be used as a tax deduction or credit in our tax return in future years which we have already recorded in our financial statements. Deferred tax liabilities generally represent deductions taken on our tax return that have not yet been recognized as an expense in our financial statements. We establish valuation allowances for our deferred tax assets if the amount of expected future taxable income is more likely than not to allow for the use of the deduction credit. Our effective tax rates for the six months ended September 30, 2023 and 2022 was a provision of 23.9% and 24.17%, respectively. Such rates differed from the Federal Statutory rate of 21.0% primarily due to state and local income taxes for both periods.
Description of Legal Entities
AMERCOU-Haul Holding Company is the holding company for:
U-Haul International, Inc. (“U-Haul”);
Amerco Real Estate Company (“Real Estate”);
Repwest Insurance Company (“Repwest”); and
Oxford Life Insurance Company (“Oxford”).
Unless the context otherwise requires, the terms “Company,” “we,” “us” or “our” refer to AMERCOU-Haul Holding Company and all of its legal subsidiaries.
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Description of Operating Segments
AMERCOU-Haul Holding Company has three ( 3 )(3) reportable segments. They are Moving and Storage, Property and Casualty Insurance and Life Insurance.
The Moving and Storage operating segment (“Moving and Storage”) includes AMERCO,U-Haul Holding Company, U-Haul and Real Estate and the wholly owned subsidiaries of U-Haul and Real Estate. Operations consist of the rental of trucks and trailers, sales of moving supplies, sales of towing accessories, sales of propane, and the rental of fixed and portable moving and storage units to the “do-it-yourself” mover and management of self-storage properties owned by others. Operations are conducted under the registered trade name U-Haul®throughout the United States and Canada.
The Property and Casualty Insurance operating segment (“Property and Casualty Insurance”) includes Repwest and its wholly owned subsidiaries and ARCOA Risk Retention Group (“ARCOA”). Property and Casualty Insurance provides loss adjusting and claims handling for U-Haul® through regional offices in the United States and Canada. Property and Casualty Insurance also underwrites components of the Safemove®, Safetow®, Safemove Plus®, Safestor® and Safestor Mobile® protection packages to U-Haul customers. The business plan for Property and Casualty Insurance includes offering property and casualty insurance products in other U-Haul-related programs. ARCOA is a group captive insurer owned
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
by us and our wholly owned subsidiaries whose purpose is to provide insurance products related to our moving and storage business.
The Life Insurance operating segment (“Life Insurance”) includes Oxford and its wholly owned subsidiaries. Life Insurance provides life and health insurance products primarily to the senior market through the direct writing and reinsuring of life insurance, Medicare supplement and annuity policies.
2. InvestmentsAccounting Policy Updates:
Expected maturities may differThe following accounting policies were updated since the filing of our Annual Report on Form 10-K for the fiscal year ended March 31, 2023 due to the adoption of ASU 2018-12. Please refer to Note 17, Accounting Pronouncements for additional information on the financial statement impacts related to the adoption of this standard.
Deferred Policy Acquisition Costs
Certain costs of acquiring new insurance business are deferred and recorded as an asset. These costs are capitalized on a grouped contract basis and amortized over the expected term of the related contracts and are essential for the acquisition of new insurance business. Deferred acquisition costs (“DAC“) are directly related to the successful issuance of an insurance contract, and primarily include sales commissions, policy issue costs, direct to consumer advertising costs, and underwriting costs. Additionally, DAC includes the value of business acquired (“VOBA“), which are the costs of acquiring blocks of insurance from other companies or through the acquisition of other companies. These costs represent the difference between the fair value of the contractual maturitiesinsurance assets acquired and liabilities assumed, compared against the assets and liabilities for insurance contracts that the Company issues or holds measured in accordance with GAAP.
DAC is amortized on a constant-level basis over the expected term of the grouped contracts, with the related expense included in amortization of deferred acquisition costs. The in-force metric used to compute the DAC amortization rate is premium deposit in-force for deferred annuities, policy count in-force for health insurance, and face amount in-force for life insurance. The assumptions used to amortize acquisition costs include mortality, morbidity, and persistency. These assumptions are reviewed at least annually and revised in conjunction with any change in the future policy benefit assumptions. The effect of changes in the assumptions are recognized over the remaining expected contract term as borrowers may havea revision of future amortization amounts.
Policy Benefits and Losses, Claims and Loss Expenses Payable
The liability for future policy benefits for traditional and limited-payment long duration life and health products comprises approximately 83% of the righttotal liability for future policy benefits. The liability is determined each reporting period based on the net level premium method. This method requires the liability
9
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
for future policy benefits be calculated as the present value of estimated future policyholder benefits and the related termination expenses, less the present value of estimated future net premiums to callbe collected from policyholders. Net level premiums reflect a recomputed net premium ratio using actual experience since the issue date or prepay obligationsthe Transition Date of April 1, 2021 and expected future experience. The liability is accrued as premium revenue and is recognized and adjusted for differences between actual and expected experience. Long-duration insurance contracts issued by the Company are grouped into cohorts based on the contract issue year, distribution channel, legal entity and product type.
Both the present value of expected future benefit payments and the present value of expected future net premiums are based primarily on assumptions of discount rates, mortality, morbidity, lapse, and persistency. Each quarter, the Company remeasures its liability for future policy benefits using current discount rates with the effect of the change recognized in Other Comprehensive Income, a component of stockholders’ equity. In addition, the Company recognizes a liability remeasurement gain or without callusing original discount rates, and relating to actual experience under the net premium calculation, as compared to the prior reporting period expected cash flows.
The Company reviews, and updates as necessary, its cash flow assumptions (mortality, morbidity, lapses and persistency) used to calculate the change in the liability for future policy benefits at least annually. These cash flow assumptions are reviewed at the same time every year, or prepayment penalties.more frequently, if suggested by experience. If cash flow assumptions are changed, the net premium ratio is recalculated from the original issue date, or the Transition Date, using actual experience and projected future cash flows. When the expected future net premiums exceed the expected future gross premiums, or the present value of future policyholder benefits exceeds the present value of expected future gross premiums, the liability for future policy benefits is adjusted with changes recognized in policyholder benefits. The cash flow assumptions do not include an adjustment for adverse deviation. Mortality tables used for individual life insurance include various industry tables and reflect modifications based on Company experience. Morbidity assumptions for individual health are based on Company experience and industry data. Lapse and persistency assumptions are based on Company experience.
The liability for future policy benefits is discounted as noted above, using a current upper-medium grade fixed-income instrument yield that reflects the duration characteristics of the liability for future policy benefits. The methodology for determining current discount rates consists of constructing a discount rate curve intended to be reflective of the currency and tenor of the insurance liability cash flows. The methodology is designed to prioritize observable inputs based on market data available in the local debt markets denominated in the same currency as the policies. For the discount rates applicable to tenors for which the single-A debt market is not liquid or there is little or no observable market data, the Company will use estimation techniques consistent with the fair value guidance in Accounting Standards Codification (“ASC“) 820, Fair Value Measurement. We further accrete interest as a component of policyholder benefits using the original discount rate that is locked-in during the year of contract issuance. The original discount rates (or the locked-in discount rates) are used for interest accretion purposes and for the determination of net premiums, whereas the current discount rates are used for purposes of valuing the liability.
The liability for future policy benefits for annuity and interest sensitive life-type products is represented by policy account value. For limited-payment contracts, a deferred profit liability is also recorded, with changes recognized in income over the life of the contract in proportion to the amount of insurance in-force.
2. Earnings per Share
We calculate earnings per share using the two-class method in accordance with ASC Topic 260, Earnings Per Share. The two-class method allocates the undistributed earnings available to common stockholders to the Company’s outstanding common stock, $0.25 par value (the “Voting Common Stock”) and the Series N Non-Voting Common Stock, $0.001 par value (the “Non-Voting Common Stock”) based on each share’s percentage of total weighted average shares outstanding. The Voting Common Stock and Non-Voting Common Stock are allocated 10% and 90%, respectively, of our undistributed earnings
10
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
available to common stockholders. This represents earnings available to common stockholders less the dividends declared for both the Voting Common Stock and Non-Voting Common Stock.
Our undistributed earnings per share is calculated by taking the undistributed earnings available to common stockholders and dividing this number by the weighted average shares outstanding for the respective stock. If there was a dividend declared for that period, the dividend per share is added to the undistributed earnings per share to calculate the basic and diluted earnings per share. The process is used for both Voting Common Stock and Non-Voting Common Stock.
The calculation of basic and diluted earnings per share for the quarters ended September 30, 2023 and 2022 for our Voting Common Stock and Non-Voting Common Stock were as follows:
|
| For the Quarters Ended | ||
|
| September 30, | ||
|
| 2023 | 2022 | |
|
| (Unaudited) | ||
|
| (In thousands, except share and per share amounts) | ||
|
|
|
|
|
Weighted average shares outstanding of Voting Common Stock |
| 19,607,788 |
| 19,607,788 |
Total weighted average shares outstanding for Voting Common Stock and Non-Voting Common Stock |
| 196,077,880 |
| 196,077,880 |
Percent of weighted average shares outstanding of Voting Common Stock |
| 10% |
| 10% |
|
|
|
|
|
Net earnings available to common stockholders | $ | 273,508 | $ | 349,866 |
Voting Common Stock dividends declared and paid |
| – |
| (9,804) |
Non-Voting Common Stock dividends declared and paid |
| (7,059) |
| – |
Undistributed earnings available to common stockholders | $ | 266,449 | $ | 340,062 |
Undistributed earnings available to common stockholders allocated to Voting Common Stock | $ | 26,645 | $ | 34,006 |
|
|
|
|
|
Undistributed earnings per share of Voting Common Stock | $ | 1.36 | $ | 1.73 |
Dividends declared per share of Voting Common Stock | $ | – | $ | 0.50 |
Basic and diluted earnings per share of Voting Common Stock | $ | 1.36 | $ | 2.23 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding of Non-Voting Common Stock |
| 176,470,092 |
| 176,470,092 |
Total weighted average shares outstanding for Voting Common Stock and Non-Voting Common Stock |
| 196,077,880 |
| 196,077,880 |
Percent of weighted average shares outstanding of Non-Voting Common Stock |
| 90% |
| 90% |
|
|
|
|
|
Net earnings available to common stockholders | $ | 273,508 | $ | 349,866 |
Voting Common Stock dividends declared and paid |
| – |
| (9,804) |
Non-Voting Common Stock dividends declared and paid |
| (7,059) |
| – |
Undistributed earnings available to common stockholders | $ | 266,449 | $ | 340,062 |
Undistributed earnings available to common stockholders allocated to Non-Voting Common Stock | $ | 239,804 | $ | 306,056 |
|
|
|
|
|
Undistributed earnings per share of Non-Voting Common Stock | $ | 1.36 | $ | 1.73 |
Dividends declared per share of Non-Voting Common Stock | $ | 0.04 | $ | – |
Basic and diluted earnings per share of Non-Voting Common Stock | $ | 1.40 | $ | 1.73 |
11
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The calculation of basic and diluted earnings per share for the six months ended September 30, 2023 and 2022 for our Voting Common Stock and Non-Voting Common Stock were as follows:
|
| For Six Months Ended | ||
|
| September 30, | ||
|
| 2023 | 2022 | |
|
| (Unaudited) | ||
|
| (In thousands, except share and per share amounts) | ||
|
|
|
|
|
Weighted average shares outstanding of Voting Common Stock |
| 19,607,788 |
| 19,607,788 |
Total weighted average shares outstanding for Voting Common Stock and Non-Voting Common Stock |
| 196,077,880 |
| 196,077,880 |
Percent of weighted average shares outstanding of Voting Common Stock |
| 10% |
| 10% |
|
|
|
|
|
Net earnings available to common stockholders | $ | 530,346 | $ | 688,211 |
Voting Common Stock dividends declared and paid |
| – |
| (19,608) |
Non-Voting Common Stock dividends declared and paid |
| (14,118) |
| – |
Undistributed earnings available to common stockholders | $ | 516,228 | $ | 668,603 |
Undistributed earnings available to common stockholders allocated to Voting Common Stock | $ | 51,623 | $ | 66,860 |
|
|
|
|
|
Undistributed earnings per share of Voting Common Stock | $ | 2.63 | $ | 3.41 |
Dividends declared per share of Voting Common Stock | $ | – | $ | 1.00 |
Basic and diluted earnings per share of Voting Common Stock | $ | 2.63 | $ | 4.41 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding of Non-Voting Common Stock |
| 176,470,092 |
| 176,470,092 |
Total weighted average shares outstanding for Voting Common Stock and Non-Voting Common Stock |
| 196,077,880 |
| 196,077,880 |
Percent of weighted average shares outstanding of Non-Voting Common Stock |
| 90% |
| 90% |
|
|
|
|
|
Net earnings available to common stockholders | $ | 530,346 | $ | 688,211 |
Voting Common Stock dividends declared and paid |
| – |
| (19,608) |
Non-Voting Common Stock dividends declared and paid |
| (14,118) |
| – |
Undistributed earnings available to common stockholders | $ | 516,228 | $ | 668,603 |
Undistributed earnings available to common stockholders allocated to Non-Voting Common Stock | $ | 464,605 | $ | 601,743 |
|
|
|
|
|
Undistributed earnings per share of Non-Voting Common Stock | $ | 2.63 | $ | 3.41 |
Dividends declared per share of Non-Voting Common Stock | $ | 0.08 | $ | – |
Basic and diluted earnings per share of Non-Voting Common Stock | $ | 2.71 | $ | 3.41 |
3. Investments
We deposit bonds with insurance regulatory authorities to meet statutory requirements. The adjusted cost of bonds on deposit with insurance regulatory authorities was $ 22.4$21.2 million and $ 27.1$23.4 million as of September 30, 20222023 and March 31, 2022,2023, respectively.
12
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Available-for-Sale Investments
Available-for-sale investments as of September 30, 20222023 were as follows:
|
| Amortized Cost |
| Gross Unrealized Gains |
| Gross Unrealized Losses More than 12 Months |
| Gross Unrealized Losses Less than 12 Months |
| Allowance for Expected Credit Losses |
| Estimated Market Value |
|
| (Unaudited) | ||||||||||
|
| (In thousands) | ||||||||||
U.S. treasury securities and government obligations | $ | 127,788 | $ | 735 | $ | (2,289) | $ | (4,121) | $ | – | $ | 122,113 |
U.S. government agency mortgage-backed securities |
| 36,023 |
| 102 |
| (3,440) |
| (1,897) |
| – |
| 30,788 |
Obligations of states and political subdivisions |
| 165,048 |
| 1,853 |
| (1,759) |
| (5,521) |
| – |
| 159,621 |
Corporate securities |
| 2,054,320 |
| 5,535 |
| (17,759) |
| (134,689) |
| (2,008) |
| 1,905,399 |
Mortgage-backed securities |
| 364,654 |
| 394 |
| – |
| (30,658) |
| – |
| 334,390 |
| $ | 2,747,833 | $ | 8,619 | $ | (25,247) | $ | (176,886) | $ | (2,008) | $ | 2,552,311 |
|
| Amortized Cost |
| Gross Unrealized Gains |
| Gross Unrealized Losses More than 12 Months |
| Gross Unrealized Losses Less than 12 Months |
| Allowance for Expected Credit Losses |
| Fair Market Value |
|
| (Unaudited) | ||||||||||
|
| (In thousands) | ||||||||||
U.S. treasury securities and government obligations | $ | 172,987 | $ | 335 | $ | (2,315) | $ | (116) | $ | – | $ | 170,891 |
U.S. government agency mortgage-backed securities |
| 99,230 |
| 1 |
| (3,703) |
| (5,009) |
| – |
| 90,519 |
Obligations of states and political subdivisions |
| 154,547 |
| 441 |
| (4,261) |
| (5,064) |
| – |
| 145,663 |
Corporate securities |
| 1,817,003 |
| 983 |
| (154,177) |
| (47,305) |
| (1,697) |
| 1,614,807 |
Mortgage-backed securities |
| 514,679 |
| 206 |
| (40,394) |
| (24,243) |
| – |
| 450,248 |
| $ | 2,758,446 | $ | 1,966 | $ | (204,850) | $ | (81,737) | $ | (1,697) | $ | 2,472,128 |
Available-for-sale investments as of March 31, 20222023 were as follows:
|
| Amortized Cost |
| Gross Unrealized Gains |
| Gross Unrealized Losses More than 12 Months |
| Gross Unrealized Losses Less than 12 Months |
| Allowance for Expected Credit Losses |
| Estimated Market Value |
|
|
| ||||||||||
|
| (In thousands) | ||||||||||
U.S. treasury securities and government obligations | $ | 128,078 | $ | 7,984 | $ | – | $ | (969) | $ | – | $ | 135,093 |
U.S. government agency mortgage-backed securities |
| 44,678 |
| 280 |
| (42) |
| (3,111) |
| – |
| 41,805 |
Obligations of states and political subdivisions |
| 178,040 |
| 15,450 |
| – |
| (508) |
| – |
| 192,982 |
Corporate securities |
| 1,989,212 |
| 138,909 |
| (402) |
| (6,604) |
| (60) |
| 2,121,055 |
Mortgage-backed securities |
| 324,029 |
| 7,671 |
| (1) |
| (1,542) |
| – |
| 330,157 |
| $ | 2,664,037 | $ | 170,294 | $ | (445) | $ | (12,734) | $ | (60) | $ | 2,821,092 |
|
| Amortized Cost |
| Gross Unrealized Gains |
| Gross Unrealized Losses More than 12 Months |
| Gross Unrealized Losses Less than 12 Months |
| Allowance for Expected Credit Losses |
| Fair Market Value |
|
|
| ||||||||||
|
| (In thousands) | ||||||||||
U.S. treasury securities and government obligations | $ | 353,189 | $ | 3,061 | $ | (7,639) | $ | (3,935) | $ | – | $ | 344,676 |
U.S. government agency mortgage-backed securities |
| 34,126 |
| 40 |
| (6,707) |
| (228) |
| – |
| 27,231 |
Obligations of states and political subdivisions |
| 161,960 |
| 649 |
| (4,014) |
| (8,090) |
| – |
| 150,505 |
Corporate securities |
| 2,086,432 |
| 1,491 |
| (60,224) |
| (156,365) |
| (2,101) |
| 1,869,233 |
Mortgage-backed securities |
| 370,880 |
| 78 |
| (40,359) |
| (13,207) |
| – |
| 317,392 |
| $ | 3,006,587 | $ | 5,319 | $ | (118,943) | $ | (181,825) | $ | (2,101) | $ | 2,709,037 |
We sold available-for-sale securities with a fair value of $165.4 million and $105.5 million during the first six months of fiscal 2024 and 2023, and $352.3 million for the full year of fiscal 2022.respectively. The gross realized gains on these sales totaled $1.5 million and $0.8 million during the first six months of fiscal 2024 and 2023, and $9.5 million for the full year of fiscal 2022.respectively. The gross realized losses on these sales totaled $1.1 million and $0.3 million during the first six months of fiscal 2024 and 2023, and $1.4 million forrespectively. In the full yearfirst six months of fiscal 2022.2024, we received $225.0 million from the Moving and Storage Treasuries that matured.
9
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
For available-for-sale debt securities in an unrealized loss position, we first assess whether the security is below investment grade. For securities that are below investment grade, we evaluate whether the decline in fair value has resulted from credit losses or other factors such as the interest rate environment. Declines in value due to credit are recognized as an allowance. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse market conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, cumulative default rates based on ratings are used to determine the potential cost of default, by year. The present value of these potential costs is then compared to the amortized cost of thesecurity to determine the credit loss, limited by the amount that the fair value is less than the amortized cost basis.
Declines in fair value that have not been recorded through an allowance for credit losses, such as declines due to changes in market interest rates, are recorded through accumulated other comprehensive income, net of applicable taxes. If we intend to sell a security, or it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis, the security is written down to its fair value and the write down is charged against the allowance for credit losses, with any incremental
13
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
impairment reported in earnings. Reversals of the allowance for credit losses are permitted and should not exceed the allowance amount initially recognized.
Changes in the allowance for credit losses are recorded as provision for (or reversal of) credit loss expense. There was a $ 1.9($0.4) million and $1.9 million net impairment charge recorded in the first six months ended September 30, 2022.2023 and 2022, respectively.
Expected maturities may differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
The adjusted cost and estimated market value of available-for-sale investments by contractual maturity were as follows:
|
| September 30, 2022 |
| March 31, 2022 | ||||
|
| Amortized Cost |
| Estimated Market Value |
| Amortized Cost |
| Estimated Market Value |
|
| (Unaudited) |
|
| ||||
|
| (In thousands) | ||||||
Due in one year or less | $ | 114,799 | $ | 114,987 | $ | 97,969 | $ | 99,432 |
Due after one year through five years |
| 589,259 |
| 580,364 |
| 541,840 |
| 570,135 |
Due after five years through ten years |
| 754,434 |
| 709,509 |
| 704,295 |
| 765,073 |
Due after ten years |
| 924,687 |
| 813,061 |
| 995,904 |
| 1,056,295 |
|
| 2,383,179 |
| 2,217,921 |
| 2,340,008 |
| 2,490,935 |
|
|
|
|
|
|
|
|
|
Mortgage-backed securities |
| 364,654 |
| 334,390 |
| 324,029 |
| 330,157 |
| $ | 2,747,833 | $ | 2,552,311 | $ | 2,664,037 | $ | 2,821,092 |
As of September 30, 2022 and March 31, 2022, our common stock and non-redeemable preferred stock that are included in Investments, fixed maturities and marketable equities on our balance sheet are stated in the table below. The changes in the fair value of these equity investments are recognized through Net investment and interest income.
10
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
|
| September 30, 2023 |
| March 31, 2023 | ||||
|
| Amortized Cost |
| Fair Market Value |
| Amortized Cost |
| Fair Market Value |
|
| (Unaudited) |
|
| ||||
|
| (In thousands) | ||||||
Due in one year or less | $ | 251,106 | $ | 249,366 | $ | 354,875 | $ | 354,184 |
Due after one year through five years |
| 599,626 |
| 569,012 |
| 754,175 |
| 717,552 |
Due after five years through ten years |
| 659,400 |
| 590,567 |
| 736,089 |
| 665,708 |
Due after ten years |
| 733,486 |
| 612,788 |
| 790,568 |
| 654,201 |
|
| 2,243,618 |
| 2,021,733 |
| 2,635,707 |
| 2,391,645 |
|
|
|
|
|
|
|
|
|
Mortgage-backed securities |
| 514,828 |
| 450,395 |
| 370,880 |
| 317,392 |
| $ | 2,758,446 | $ | 2,472,128 | $ | 3,006,587 | $ | 2,709,037 |
Equity investments of common stock and non-redeemable preferred stock were as follows:
|
| September 30, 2022 |
| March 31, 2022 |
| September 30, 2023 |
| March 31, 2023 | ||||||||
|
| Amortized Cost |
| Estimated Market Value |
| Amortized Cost |
| Estimated Market Value |
| Amortized Cost |
| Fair Market Value |
| Amortized Cost |
| Fair Market Value |
|
| (Unaudited) |
|
|
|
|
| (Unaudited) |
|
|
|
| ||||
|
| (In thousands) |
| (In thousands) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stocks | $ | 29,680 | $ | 40,526 | $ | 27,674 | $ | 46,212 | $ | 29,602 | $ | 42,045 | $ | 29,577 | $ | 39,375 |
Non-redeemable preferred stocks |
| 26,054 |
| 22,921 |
| 26,054 |
| 26,095 |
| 25,144 |
| 19,991 |
| 26,054 |
| 21,982 |
| $ | 55,734 | $ | 63,447 | $ | 53,728 | $ | 72,307 | $ | 54,746 | $ | 62,036 | $ | 55,631 | $ | 61,357 |
Investments, other
The carrying value of the other investments was as follows:
|
| September 30, |
| March 31, |
| September 30, |
| March 31, |
|
| 2022 |
| 2022 |
| 2023 |
| 2023 |
|
| (Unaudited) |
|
|
| (Unaudited) |
|
|
|
| (In thousands) |
| (In thousands) | ||||
|
|
|
|
|
|
|
|
|
Mortgage loans, net | $ | 424,633 | $ | 423,163 | $ | 550,913 | $ | 466,531 |
Short-term investments |
| 33,540 |
| 30,916 |
| – |
| 15,921 |
Real estate |
| 72,165 |
| 67,824 |
| 72,036 |
| 72,178 |
Policy loans |
| 10,506 |
| 10,309 |
| 10,986 |
| 10,921 |
Other equity investments |
| 7,354 |
| 11,543 |
| 16,216 |
| 9,989 |
| $ | 548,198 | $ | 543,755 | $ | 650,151 | $ | 575,540 |
14
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
3. BorrowingsNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Notes, Loans and Finance Leases Payable, net
Long Term Debt
Long term debt was as follows:
|
|
|
|
|
|
|
|
|
|
| September 30, |
| March 31, |
| 2023 Rates |
|
| Maturities |
| 2022 |
| 2022 | |||||
|
|
|
|
|
|
|
| (Unaudited) |
|
| |||
|
|
|
|
|
|
|
| (In thousands) | |||||
Real estate loan (amortizing term) (a) | 3.06 | % | - | 4.29 | % |
| 2027 | - | 2037 | $ | 294,737 | $ | 50,259 |
Senior mortgages | 2.70 | % | - | 5.50 | % |
| 2024 | - | 2042 |
| 2,416,027 |
| 2,206,268 |
Real estate loans (revolving credit) | 3.76 | % | - | 4.02 | % |
| 2024 | - | 2025 |
| 150,000 |
| 535,000 |
Fleet loans (amortizing term) | 1.61 | % | - | 4.99 | % |
| 2023 | - | 2029 |
| 113,518 |
| 124,651 |
Fleet loans (revolving credit) | 3.53 | % | - | 3.95 | % |
| 2025 | - | 2027 |
| 615,000 |
| 560,000 |
Finance leases (rental equipment) | 2.16 | % | - | 5.04 | % |
| 2022 | - | 2026 |
| 281,562 |
| 347,393 |
Finance liabilities (rental equipment) | 1.60 | % | - | 5.55 | % |
| 2024 | - | 2030 |
| 1,186,855 |
| 949,936 |
Private placements | 2.43 | % | - | 2.88 | % |
| 2029 | - | 2035 |
| 1,200,000 |
| 1,200,000 |
Other obligations | 1.50 | % | - | 8.00 | % |
| 2022 | - | 2049 |
| 78,871 |
| 86,206 |
Notes, loans and finance leases payable |
|
|
|
|
|
|
|
|
| 6,336,570 |
| 6,059,713 | |
Less: Debt issuance costs |
|
|
|
|
|
|
|
|
|
| (37,739) |
| (37,216) |
Total notes, loans and finance leases payable, net |
|
|
|
| $ | 6,298,831 | $ | 6,022,497 | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Certain loans have interest rate swaps fixing the rates between 2.72% and 2.86% based on current margins. |
|
|
|
|
11
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
| Fiscal Year 2024 Interest Rates |
|
| Maturities |
| Weighted Avg Interest Rates (c) |
| September 30, 2023 |
| March 31, 2023 | ||||||
|
|
|
|
|
|
|
|
|
|
| (Unaudited) |
|
| |||
|
|
|
|
|
|
|
|
|
|
| (In thousands) | |||||
Real estate loans (amortizing term) (a) | 4.30 | % | - | 6.80 | % |
| 2027 | - | 2037 |
| 5.89 | % | $ | 283,707 | $ | 289,647 |
Senior mortgages | 2.70 | % | - | 5.66 | % |
| 2024 | - | 2042 |
| 4.18 | % |
| 2,487,320 |
| 2,371,231 |
Real estate loans (revolving credit) | - | % | - | - | % |
| - | - | 2027 |
| - | % |
| – |
| – |
Fleet loans (amortizing term) | 1.61 | % | - | 5.68 | % |
| 2024 | - | 2029 |
| 3.76 | % |
| 90,071 |
| 111,856 |
Fleet loans (revolving credit) (b) | 2.36 | % | - | 6.68 | % |
| 2026 | - | 2028 |
| 5.97 | % |
| 593,889 |
| 615,000 |
Finance leases (rental equipment) | 2.39 | % | - | 5.01 | % |
| 2023 | - | 2026 |
| 4.00 | % |
| 163,453 |
| 223,205 |
Finance liabilities (rental equipment) | 1.60 | % | - | 6.48 | % |
| 2024 | - | 2031 |
| 4.38 | % |
| 1,544,608 |
| 1,255,763 |
Private placements | 2.43 | % | - | 2.88 | % |
| 2029 | - | 2035 |
| 2.65 | % |
| 1,200,000 |
| 1,200,000 |
Other obligations | 1.50 | % | - | 8.00 | % |
| 2023 | - | 2049 |
| 6.10 | % |
| 73,752 |
| 76,648 |
Notes, loans and finance leases payable |
|
|
|
|
|
|
|
|
|
|
|
| 6,436,800 |
| 6,143,350 | |
Less: Debt issuance costs |
|
|
|
|
|
|
|
|
|
|
|
|
| (35,901) |
| (35,308) |
Total notes, loans and finance leases payable, net |
|
|
|
|
|
|
| $ | 6,400,899 | $ | 6,108,042 | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Certain loans have interest rate swaps fixing the rate for the relevant loans between 2.72% and 2.86% based on current margin. The weighted average interest rate calculation for these loans was 4.10% using the swap adjusted interest rate. |
| |||||||||||||||
(b) A loan has an interest rate swap fixing the rate $100 million of the relevant loan at 4.71% based on current margin. The weighted average interest rate calculation for these loans was 5.87% using the swap adjusted interest rate. |
| |||||||||||||||
(c) Weighted average rates as of September 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate Backed Loans
Real Estate Loans (Amortizing Term)
Certain subsidiaries of Real Estate and U-Haul Company of Florida are borrowers under real estate loans. These loans require monthly or quarterly principal and interest payments, with the unpaid loan balance and accrued and unpaid interest due at maturity. These loans are secured by various properties owned by the borrowers. The interest rates, per the provisions of $ 210.6$202.1 million of these loans, are the applicable Secured Overnight Funding Rate (“SOFR”) plus the applicable margins and a credit spread adjustment of 0.10 %.0.10%. As of September 30, 2022,2023, the applicable SOFR was between 2.31 % and 2.51 %5.33% and applicable margin was between 0.65 %0.65% and 1.38 %,1.38%, the sum of which, including the credit spread, was between 3.06 %6.08% and 3.99 %.6.80%. The remaining $ 84.2$81.6 million of these loans was fixed with an interest rate of 4.29 %.4.30%. The default provisions of these real estate loans include non-payment of principal or interest and other standard reporting and change-in-control covenants. We are in compliance with the covenants as of September 30, 2023.
Senior Mortgages
Various subsidiaries of Real Estate and U-Haul are borrowers under certain senior mortgages. The senior mortgages require monthly principal and interest payments. The senior mortgages are secured by certain properties owned by the borrowers. The fixed interest rates, per the provisions of the senior mortgages, range between 2.70 % and 5.50 %. The weighted average interest rate of these loans as of September 30, 2022 was 4.09 %.Certain senior mortgages have an anticipated repayment date and a maturity date. If these senior mortgages are not repaid by the anticipated repayment date, the interest rate on these mortgages would increase from the current fixed rate. We are using the anticipated repayment date for our maturity schedule. Real Estate and U-Haul have provided limited guarantees of the senior mortgages. The default provisions of the senior mortgages include non-payment of principal or interest and other standard reporting and change-in-control covenants. We are in compliance with the covenants as of September 30, 2023. There are limited restrictions regarding our use
15
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
of the funds.
Real Estate Loans (Revolving Credit)
Various subsidiaries of Real Estate are borrowers under asset-backed real estate loans with an aggregate borrowing capacity of $ 150.0 million. As of September 30, 2022, the outstanding balance was $ 150.0 million. These loans are secured by certain properties owned by the borrowers. The loans require monthly interest payments with the unpaid loan balance and accrued and unpaid interest due at maturity. The interest rate, per the provision of the loan agreements, is the applicable LIBOR plus the applicable margin. As of September 30, 2022, the applicable LIBOR was between 2.26 % and 2.52 % and the margin was between 1.40 % and 1.50 %, the sum of which was between 3.76 % and 4.02 %. AMERCO is the guarantor of these loans. The default provisions of the loan include non-payment of principal or interest and other standard reporting and change-in-control covenants. These loan agreements contain fallback language for the replacement of LIBOR.
AMERCOU-Haul Holding Company is a borrower under a multi-bank syndicated real estate loan. As of September 30, 2022,2023, the maximum credit commitment is $150.0$465.0 million. As of September 30, 2022,2023, the full capacity was available to borrow. This loan agreement provides for revolving loans, subject to the terms of the loan agreement. If there was a loan outstanding as of September 30, 2023, the applicable SOFR would be 5.33% and applicable margin would be 1.55% the sum of which would be 6.88% This loan requires monthly interest payments with the unpaid loan balance and accrued and unpaid interest due at maturity. The default provisions of the loan include non-payment of principal or interest and other standard reporting and change-in-control covenants. We are in compliance with the covenants as of September 30, 2023. There is a 0.30% fee charged for unused capacity. This loan was amended in October 2022 and the maximum credit limit was increased to $465 million, the maturity extended to October 2027 and LIBOR based rates were replaced with SOFR based rates.
12
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
Fleet Loans
Rental Truck Amortizing Loans
The amortizing loans require monthly principal and interest payments, with the unpaid loan balance and accrued and unpaid interest due at maturity. These loans were used to purchase new trucks. The interest rates per the provision of the loan agreements, are carried at fixed rates ranging between 1.61 % and 4.99 %.rates. All of our rental truck amortizing loans are collateralized by the rental equipment purchased. The majority of these loans are funded at 70%, but some may be funded at 100%.
AMERCO, U-Haul Holding Company, and in some cases U-Haul, is guarantor of these loans. The default provisions of these loans include non-payment of principal or interest and other standard reporting and change-in-control covenants. We are in compliance with the covenants as of September 30, 2023. The net book value of the corresponding rental equipment was $202.6 million and $213.1 million as of September 30, 2023 and March 31, 2023, respectively.
Rental Truck Revolvers
Various subsidiaries of U-Haul entered into three revolving fleet loans with an aggregate borrowing capacity of $ 615.0 million. The aggregate outstanding balance for these revolvers as of September 30, 2022 was $ 615.0$615.0 million. The interest rates per the provision of the loan agreements, are SOFR plus the applicable margin.margin and a credit spread adjustment of 0.10%. As of September 30, 2022,2023, SOFR was between 2.28 %5.31% and 2.60 %5.33% and the margin was between 1.15 %1.15% and 1.25 %,1.25%, the sum of which, including the credit spread, was between 3.53 %6.56% and 3.95 %.6.68%. Of the $ 615.0$593.9 million outstanding, $ 100.0$88.9 million was fixed with an interest rate of 2.36 %.2.36%. Only interest is paid on the loans until the last nine months of the respective loan terms when principal becomes due monthly. The default provisions of the loan include non-payment of principal or interest and other standard reporting and change-in-control covenants. We are in compliance with the covenants as of September 30, 2023. These fleet loans are collateralized by the rental equipment purchased. The net book value of the corresponding rental equipment was $772.3 million and $822.0 million as of September 30, 2023 and March 31, 2023, respectively.
Finance Leases
The Finance Lease balance represents our sale-leaseback transactions of rental equipment. The agreements are generally seven (7) year terms with interest rates ranging from 2.16 % to 5.04 %.terms. All of our finance leases are collateralized by our rental fleet. The net book value of the corresponding rental equipment was $ 529.0$377.7 million and $ 620.8$474.8 million as of September 30, 20222023 and March 31, 2022,2023, respectively. There were no new financing leases as assessed under the new leasing guidance, entered into during the first six months of fiscal 2024. The default provisions of the loan include non-payment of principal or interest and other standard reporting and change-in-control covenants. We are in compliance with the covenants as of September 30, 2023.
16
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Finance Liabilities
Finance liabilities represent our rental equipment financing transactions, and we assess if these sale-leaseback transactions qualify as a sale at initiation by determining if a transfer of ownership occurs. We have determined that our equipment sale-leasebacks do not qualify as a sale, as the buyer-lessors do not obtain control of the assets in our ongoing sale-leaseback arrangements. As a result, these sale-leasebacks are accounted for as a financial liability and the leased assets are capitalized at cost. Our finance liabilities have an average term of seven (7) years and interest rates ranging from 1.60 % to 5.55 %.years. These finance liabilities are collateralized by the related assets of our rental fleet. The net book value of the corresponding rental equipment was $ 1,369.8$1,815.2 million and $ 1,068.3$1,499.1 million as of September 30, 20222023 and March 31, 2022,2023, respectively. The default provisions of these loans include non-payment of principal or interest and other standard reporting and change-in-control covenants. We are in compliance with the covenants as of September 30, 2023.
Private Placements
In September 2021, AMERCO entered into a note purchase agreement to issue $ 600.0 million of fixed rate senior unsecured notes in a private placement offering.These notes consist of four tranches each totaling $ 150.0 million and funded in September 2021.The fixed interest rates range between 2.43 % and 2.78 % with maturities between 2029 and 2033.Interest is payable semiannually.
In December 2021, AMERCOU-Haul Holding Company entered into a note purchase agreement to issue $600.0 million of fixed rate senior unsecured notes in a private placement offering.These notes consist of four tranches each totaling $150.0 million and funded in January 2022.September 2021.The fixed interest rates range between 2.43% and 2.78% with maturities between 2029 and 2033.Interest is payable semiannually. The default provisions of the loan include non-payment of principal or interest and other standard reporting and change-in-control covenants. We are in compliance with the covenants as of September 30, 2023.
In December 2021, U-Haul Holding Company entered into a note purchase agreement to issue $600.0 million of fixed rate senior unsecured notes in a private placement offering. These notes consist of three tranches each totaling $100.0 million and two tranches each totaling $150.0 million. The fixed interest rates range between 2.55% and 2.88% with maturities between 2030 and 2035. Interest is payable semiannually. The default provisions of the loan include non-payment of principal or interest and other standard reporting and change-in-control covenants. We are in compliance with the covenants as of September 30, 2023.
13
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
Other Obligations
In February 2011, AMERCOU-Haul Holding Company and U.S. Bank Trust Company, NA, as successor in interest to U.S. Bank National Association (the “Trustee”), entered into the U-Haul Investors Club®Indenture. AMERCOU-Haul Holding Company and the Trustee entered into this indenture to provide for the issuance of notes by us directly to investors over our proprietary website, uhaulinvestorsclub.com (“U-Notes®”). The U-Notes®are secured by various types of collateral, including, but not limited to, certain rental equipment and real estate. U-Notes®are issued in smaller series that vary as to principal amount, interest rate and maturity. U-Notes®are obligations of the Company and secured by the associated collateral; they are not guaranteed by any of the Company’s affiliates or subsidiaries.
As of September 30, 2022,2023, the aggregate outstanding principal balance of the U-Notes®issued was $ 80.7$75.4 million, of which $ 1.8$1.7 million is held by our insurance subsidiaries and eliminated in consolidation. Interest rates range between 1.50 % and 8.00 % and maturity dates range between 2022 and 2049 .
Oxford is a member of the Federal Home Loan Bank (“FHLB”) and, as such, the FHLB has made deposits with Oxford. As of June 30, 2022, the deposits had an aggregate balance of $ 60.0 million, for which Oxford pays fixed interest rates between 0.49 % and 1.72 % with maturities between September 30, 2022 and September 29, 2025. As of June 30, 2022, available-for-sale investments held with the FHLB totaled $ 94.0 million, of which $ 62.8 million were pledged as collateral to secure the outstanding advances. The balances of these advances are included within Liabilities from investment contracts on the condensed consolidated balance sheets.
Annual Maturities of Notes, Loans and Finance Leases Payable
The annual maturities of our notes, loans and finance leases payable, before debt issuance costs, as of September 30, 20222023 for the next five years and thereafter are as follows:
|
| Year Ending September 30, | ||||||||||||
|
| 2023 |
| 2024 |
| 2025 |
| 2026 |
| 2027 |
| Thereafter |
| Total |
|
| (Unaudited) |
|
| ||||||||||
|
| (In thousands) |
|
| ||||||||||
Notes, loans and finance leases payable, secured | $ | 505,734 | $ | 712,067 | $ | 659,201 | $ | 747,211 | $ | 928,575 | $ | 2,783,782 | $ | 6,336,570 |
|
| Year Ending September 30, | ||||||||||||
|
| 2024 |
| 2025 |
| 2026 |
| 2027 |
| 2028 |
| Thereafter |
| Total |
|
| (Unaudited) |
|
| ||||||||||
|
| (In thousands) |
|
| ||||||||||
Notes, loans and finance leases payable | $ | 657,998 | $ | 487,551 | $ | 829,219 | $ | 1,023,289 | $ | 513,160 | $ | 2,925,583 | $ | 6,436,800 |
17
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Interest on Borrowings
Interest Expense
Components of interest expense includeincluded the following:
|
| Quarter Ended September 30, | ||
|
| 2022 |
| 2021 |
|
| (Unaudited) | ||
|
| (In thousands) | ||
Interest expense | $ | 57,604 | $ | 39,804 |
Capitalized interest |
| (2,248) |
| (2,722) |
Amortization of transaction costs |
| 1,814 |
| 1,460 |
Interest expense resulting from cash flow hedges |
| 23 |
| 1,003 |
Total interest expense | $ | 57,193 | $ | 39,545 |
|
| Quarter Ended September 30, | ||
|
| 2023 |
| 2022 |
|
| (Unaudited) | ||
|
| (In thousands) | ||
Interest expense | $ | 67,524 | $ | 57,604 |
Capitalized interest |
| (3,669) |
| (2,248) |
Amortization of transaction costs |
| 1,432 |
| 1,814 |
Interest expense resulting from cash flow hedges |
| (1,344) |
| 23 |
Total interest expense | $ | 63,943 | $ | 57,193 |
14
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
|
| Six Months Ended September 30, |
| Six Months Ended September 30, | ||||
|
| 2022 |
| 2021 |
| 2023 |
| 2022 |
|
| (Unaudited) |
| (Unaudited) | ||||
|
| (In thousands) |
| (In thousands) | ||||
Interest expense | $ | 108,009 | $ | 78,739 | $ | 131,924 | $ | 108,009 |
Capitalized interest |
| (4,866) |
| (4,752) |
| (7,732) |
| (4,866) |
Amortization of transaction costs |
| 3,260 |
| 2,746 |
| 2,843 |
| 3,260 |
Interest expense resulting from cash flow hedges |
| 589 |
| 1,990 |
| (2,494) |
| 589 |
Total interest expense | $ | 106,992 | $ | 78,723 | $ | 124,541 | $ | 106,992 |
Interest paid in cash including payments related to derivative contracts, amounted to $ 63.1was $74.2 million and $ 40.8$63.1 million for the second quarter of fiscal 20232024 and 2022,2023, respectively, and $ 105.4$129.7 million and $ 81.7$104.8 million for the first six months of fiscal 2024 and 2023, respectively. Interest paid (received) in cash on derivative contracts was ($1.3) million and 2022,$0.0 million for the second quarter of fiscal 2024 and 2023, respectively.Interest paid (received) in cash on derivative contracts was ($2.3) million and $0.6 million for the first six months of fiscal 2024 and 2023, respectively.
Interest Rates
Interest rates and Company borrowings related to our revolving credit facilities were as follows:
|
| Revolving Credit Activity |
| ||
|
| Quarter Ended September 30, |
| ||
|
| 2022 |
| 2021 |
|
|
| (Unaudited) |
| ||
|
| (In thousands, except interest rates) |
| ||
Weighted average interest rate during the quarter |
| 3.32 | % | 1.39 | % |
Interest rate at the end of the quarter |
| 3.80 | % | 1.38 | % |
Maximum amount outstanding during the quarter | $ | 1,102,000 | $ | 1,093,000 |
|
Average amount outstanding during the quarter | $ | 877,522 | $ | 1,090,283 |
|
Facility fees | $ | 111 | $ | 61 |
|
|
| Revolving Credit Activity |
| ||
|
| Six Months Ended September 30, |
| ||
|
| 2022 |
| 2021 |
|
|
| (Unaudited) |
| ||
|
| (In thousands, except interest rates) |
| ||
Weighted average interest rate during the period |
| 2.66 | % | 1.38 | % |
Interest rate at the end of the period |
| 3.80 | % | 1.38 | % |
Maximum amount outstanding during the period | $ | 1,105,000 | $ | 1,093,000 |
|
Average amount outstanding during the period | $ | 984,464 | $ | 1,081,716 |
|
Facility fees | $ | 169 | $ | 131 |
|
|
| Revolving Credit Activity |
| ||
|
| Quarter Ended September 30, |
| ||
|
| 2023 |
| 2022 |
|
|
| (Unaudited) |
| ||
|
| (In thousands, except interest rates) |
| ||
Weighted average interest rate during the quarter |
| 6.51 | % | 3.32 | % |
Interest rate at the end of the quarter |
| 6.61 | % | 3.80 | % |
Maximum amount outstanding during the quarter | $ | 605,000 | $ | 1,102,000 |
|
Average amount outstanding during the quarter | $ | 596,322 | $ | 877,522 |
|
Facility fees | $ | 306 | $ | 111 |
|
4.18
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
| Revolving Credit Activity |
| ||
|
| Six Months Ended September 30, |
| ||
|
| 2023 |
| 2022 |
|
|
| (Unaudited) |
| ||
|
| (In thousands, except interest rates) |
| ||
Weighted average interest rate during the period |
| 6.38 | % | 2.66 | % |
Interest rate at the end of the period |
| 6.61 | % | 3.80 | % |
Maximum amount outstanding during the period | $ | 715,000 | $ | 1,105,000 |
|
Average amount outstanding during the period | $ | 628,151 | $ | 984,464 |
|
Facility fees | $ | 571 | $ | 169 |
|
5. Derivatives
We manage exposure to changes in market interest rates. We have used interest rate swap agreements and forward swaps to reduce our exposure to changes in interest rates. Our use of derivative instruments is limited to highly effective interest rate swaps to hedge the risk of changes in cash flows (future interest payments) attributable to changes in SOFR swap rates with the designated benchmark interest rate being hedged on certain of our SOFR indexed variable rate debt. The interest rate swaps effectively fix our interest payments on certain SOFR indexed variable rate debt through July 2032. We monitor our positions and the credit ratings of our counterparties and do not currently anticipate non-performance by the counterparties. Interest rate swap agreements are not entered into for trading purposes. These fair values are determined using pricing valuation models which include broker quotes for which significant inputs are observable. They include adjustments for counterparty credit quality and other deal-specific factors, where appropriate and are classified as Level 2 in the fair value hierarchy.
15
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
The derivative fair values reflected in prepaid expense and accounts payable and accrued expenses in the condensed consolidated balance sheet were as follows:
|
| Derivatives Fair Values as of |
| Derivatives Fair Values as of | ||||
|
| September 30, 2022 |
| March 31, 2022 |
| September 30, 2023 |
| March 31, 2023 |
|
| (Unaudited) |
|
|
| (Unaudited) |
|
|
|
| (In thousands) |
| (In thousands) | ||||
Interest rate contracts designated as cash flow hedging instruments: | ||||||||
Interest rate swaps designated as cash flow hedges: | Interest rate swaps designated as cash flow hedges: | |||||||
Assets | $ | 8,508 | $ | – | $ | 12,328 | $ | 5,311 |
Liabilities | $ | – | $ | 587 | ||||
Notional amount | $ | 210,587 | $ | 235,000 | $ | 302,107 | $ | 206,347 |
|
| The Effect of Interest Rate Contracts on the Statements of Operations for the Quarters Ended |
| The Effect of Interest Rate Contracts on the Statements of Operations for the Quarters Ended | ||||
|
|
| ||||||
|
| September 30, 2022 |
| September 30, 2021 |
| September 30, 2023 |
| September 30, 2022 |
|
| (Unaudited) |
| (Unaudited) | ||||
|
| (In thousands) |
| (In thousands) | ||||
Gain recognized in AOCI on interest rate contracts | $ | (8,360) | $ | (929) | $ | (3,073) | $ | (8,360) |
Gain loss reclassified from AOCI into income | $ | (24) | $ | (1,003) | ||||
(Gain) loss reclassified from AOCI into income | $ | 1,345 | $ | (24) |
Gains(Gains) or losses recognized in income on interest rate derivatives are recorded as interest expense in the condensed consolidated statements of operations. During the first six months of fiscal 20232024 and 2022,2023, we recognized an increase in the fair value of our cash flow hedges of $ 6.4$7.2 million and $ 0.1$6.4 million, respectively, net of taxes. During the first six months of fiscal 20232024 and 2022,2023, we reclassified $ 0.4$1.9 million and $ 105$0.4 million, respectively, from accumulated other comprehensive income (loss) (“AOCI”) to interest expense, net of tax. As of September 30, 2022,2023, we expect to reclassify $ 0.4$5.7 million of net gains on interest rate contracts from AOCI to earnings as interest expense over the next twelve months.
19
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
We use derivatives to economically hedge our equity market exposure to indexed annuity products sold by our Life Insurance company. These contracts earn a return for the contractholdercontract holder based on the change in the value of the S&P 500 index between annual index point dates. We buy and sell listed equity and index call options and call option spreads. The credit risk is with the party in which the options are written. The net option price is paid up front and there are no additional cash requirements or additional contingent liabilities. These contracts are held at fair value on our balance sheet. These derivative instruments are included in Investments, other on the condensed consolidated balance sheets. Net losses of $7.8 million were recognized in Net investment and interest income for the first six months of fiscal 2023 and a net gain of $1.9 million for the first six months of fiscal 2022. The fair values of these call options are determined based on quoted market prices from the relevant exchange and are classified as Level 1 in the fair value hierarchy. Net (gains) losses recognized in net investment and interest income for the first six months of June 30, 2023 and 2022 were ($4.7) million and $7.8 million, respectively.
|
| Derivatives Fair Values as of |
| Derivatives Fair Values as of | ||||
|
| September 30, 2022 |
| March 31, 2022 |
| September 30, 2023 |
| March 31, 2023 |
|
| (Unaudited) |
|
|
| (Unaudited) |
|
|
|
| (In thousands) |
| (In thousands) | ||||
Equity market contracts as hedging instruments: |
|
|
|
| ||||
Equity market contracts as economic hedging instruments: |
|
|
|
| ||||
Assets | $ | 1,659 | $ | 7,474 | $ | 10,526 | $ | 4,295 |
Liabilities | $ | – | $ | – | ||||
Notional amount | $ | 502,457 | $ | 416,739 | $ | 509,519 | $ | 465,701 |
Although the call options are employed to be effective hedges against our policyholder obligations from an economic standpoint, they do not meet the requirements for hedge accounting under generally accepted accounting principles (“GAAP”).GAAP. Accordingly, the changes in fair value of the call options are recognized each reporting date as a component of net investment and interest income. The change in fair value of the call options include the gains or losses recognized at the expiration of the option term and the changes in fair value for open contracts.
16
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
5.6. Accumulated Other Comprehensive Income (Loss)Loss
A summary of AOCI components, net of tax, were as follows:
|
| Foreign Currency Translation |
| Unrealized Net Gains (Losses) on Investments |
| Fair Market Value of Cash Flow Hedges |
| Postretirement Benefit Obligation Net Loss |
| Accumulated Other Comprehensive Income (Loss) |
| Foreign Currency Translation |
| Unrealized Net Gains (Losses) on Investments and Impact of LFPB Discount Rates |
| Fair Market Value of Cash Flow Hedges |
| Postretirement Benefit Obligation Net Loss |
| Accumulated Other Comprehensive Loss |
|
| (Unaudited) |
| (Unaudited) | ||||||||||||||||
|
| (In thousands) |
| (In thousands) | ||||||||||||||||
Balance as of March 31, 2022 | $ | (55,757) | $ | 105,027 | $ | (444) | $ | (2,442) | $ | 46,384 | ||||||||||
Balance as of March 31, 2023 | $ | (56,539) | $ | (232,740) | $ | 4,007 | $ | (351) | $ | (285,623) | ||||||||||
Foreign currency translation |
| (542) |
| – |
| – |
| – |
| (542) |
| (2,380) |
| – |
| – |
| – |
| (2,380) |
Unrealized net loss on investments |
| – |
| (244,826) |
| – |
| – |
| (244,826) | ||||||||||
Unrealized net gain on investments |
| – |
| 7,047 |
| – |
| – |
| 7,047 | ||||||||||
Change in fair value of cash flow hedges |
| – |
| – |
| 6,417 |
| – |
| 6,417 |
| – |
| – |
| 7,175 |
| – |
| 7,175 |
Amounts reclassified into earnings on hedging activities |
| – |
| – |
| 446 |
| – |
| 446 |
| – |
| – |
| (1,883) |
| – |
| (1,883) |
Other comprehensive income (loss) |
| (542) |
| (244,826) |
| 6,863 |
| – |
| (238,505) |
| (2,380) |
| 7,047 |
| 5,292 |
| – |
| 9,959 |
Balance as of September 30, 2022 | $ | (56,299) | $ | (139,799) | $ | 6,419 | $ | (2,442) | $ | (192,121) | ||||||||||
Balance as of September 30, 2023 | $ | (58,919) | $ | (225,693) | $ | 9,299 | $ | (351) | $ | (275,664) |
20
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
6.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. Stockholders’ Equity
The following table lists the dividends that have been declared and issued duringfor the first six months of fiscal yearyears 2024 and 2023:
Common Stock Dividends | ||||||
Declared Date |
| Per Share Amount |
| Record Date |
| Dividend Date |
|
|
|
|
|
|
|
April 6, 2022 | $ | 0.50 |
| April 18, 2022 |
| April 29, 2022 |
August 18, 2022 |
| 0.50 |
| September 6, 2022 |
| September 20, 2022 |
Non-Voting Common Stock Dividends | ||||||
Declared Date |
| Per Share Amount |
| Record Date |
| Dividend Date |
|
|
|
|
|
|
|
August 17, 2023 | $ | 0.04 |
| September 19, 2023 |
| September 29, 2023 |
June 7, 2023 |
| 0.04 |
| June 20, 2023 |
| June 30, 2023 |
Common Stock Dividends | ||||||
Declared Date |
| Per Share Amount |
| Record Date |
| Dividend Date |
|
|
|
|
|
|
|
August 18, 2022 | $ | 0.50 |
| September 6, 2022 |
| September 20, 2022 |
April 6, 2022 |
| 0.50 |
| April 18, 2022 |
| April 29, 2022 |
As of September 30, 2022,2023, no awards had been issued under the 2016 AMERCO Stock Option Plan.
7.8. Leases
The following tables show the components of our right-of-use (“ROU“) assets, net:
|
| As of September 30, 2022 | ||||
|
| Finance |
| Operating |
| Total |
|
| (Unaudited) | ||||
|
| (In thousands) | ||||
|
|
|
|
|
|
|
Buildings and improvements | $ | – | $ | 141,302 | $ | 141,302 |
Furniture and equipment |
| 14,731 |
| – |
| 14,731 |
Rental trailers and other rental equipment |
| 153,020 |
| – |
| 153,020 |
Rental trucks |
| 996,946 |
| – |
| 996,946 |
Right-of-use assets, gross |
| 1,164,697 |
| 141,302 |
| 1,305,999 |
Less: Accumulated depreciation |
| (635,697) |
| (73,094) |
| (708,791) |
Right-of-use assets, net | $ | 529,000 | $ | 68,208 | $ | 597,208 |
|
| As of September 30, 2023 | ||||
|
| Finance |
| Operating |
| Total |
|
| (Unaudited) | ||||
|
| (In thousands) | ||||
|
|
|
|
|
|
|
Buildings and improvements | $ | – | $ | 142,467 | $ | 142,467 |
Furniture and equipment |
| 7,109 |
| – |
| 7,109 |
Rental trailers and other rental equipment |
| 115,072 |
| – |
| 115,072 |
Rental trucks |
| 816,075 |
| – |
| 816,075 |
Right-of-use assets, gross |
| 938,256 |
| 142,467 |
| 1,080,723 |
Less: Accumulated depreciation |
| (560,523) |
| (77,151) |
| (637,674) |
Right-of-use assets, net | $ | 377,733 | $ | 65,316 | $ | 443,049 |
|
| As of March 31, 2023 | ||||
|
| Finance |
| Operating |
| Total |
|
|
|
| (In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buildings and improvements | $ | – | $ | 128,221 | $ | 128,221 |
Furniture and equipment |
| 9,687 |
| – |
| 9,687 |
Rental trailers and other rental equipment |
| 152,294 |
| – |
| 152,294 |
Rental trucks |
| 949,838 |
| – |
| 949,838 |
Right-of-use assets, gross |
| 1,111,819 |
| 128,221 |
| 1,240,040 |
Less: Accumulated depreciation |
| (637,054) |
| (69,304) |
| (706,358) |
Right-of-use assets, net | $ | 474,765 | $ | 58,917 | $ | 533,682 |
17
amerco and consolidated subsidiaries21
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
notes to condensed consolidated financial statements – (continued)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
| As of March 31, 2022 | ||||
|
| Finance |
| Operating |
| Total |
|
|
|
| (In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buildings and improvements | $ | – | $ | 136,444 | $ | 136,444 |
Furniture and equipment |
| 14,731 |
| – |
| 14,731 |
Rental trailers and other rental equipment |
| 169,514 |
| – |
| 169,514 |
Rental trucks |
| 1,114,248 |
| – |
| 1,114,248 |
Right-of-use assets, gross |
| 1,298,493 |
| 136,444 |
| 1,434,937 |
Less: Accumulated depreciation |
| (677,669) |
| (62,062) |
| (739,731) |
Right-of-use assets, net | $ | 620,824 |
| 74,382 |
| 695,206 |
As of September 30, 20222023 and March 31, 2022,2023, we had finance lease liabilities for the ROU assets, net of $ 281.6$163.5 million and $ 347.4$223.2 million, respectively and operating lease liabilities of $ 67.9$64.6 million and $ 74.2$58.4 million, respectively.
|
| Finance leases |
|
| Finance leases |
| ||||
|
| September 30, |
| March 31, |
|
| September 30, |
| March 31, |
|
|
| 2022 |
| 2022 |
|
| 2023 |
| 2023 |
|
|
| (Unaudited) |
|
|
|
| (Unaudited) |
|
|
|
Weighted average remaining lease term (years) |
| 2 |
| 3 |
|
| 2 |
| 2 |
|
Weighted average discount rate |
| 3.8 | % | 3.7 | % |
| 4.0 | % | 3.8 | % |
|
| Operating leases |
|
| Operating leases |
| ||||
|
| September 30, |
| March 31, |
|
| September 30, |
| March 31, |
|
|
| 2022 |
| 2022 |
|
| 2023 |
| 2023 |
|
|
| (Unaudited) |
|
|
|
| (Unaudited) |
|
|
|
Weighted average remaining lease term (years) |
| 17.2 |
| 16.5 |
|
| 18.9 |
| 19.2 |
|
Weighted average discount rate |
| 4.6 | % | 4.6 | % |
| 4.6 | % | 4.7 | % |
For the six months ended September 30, 20222023 and 2021,2022, cash paid for leases included in our operating cash flow activities were $ 16.0$17.4 million and $ 15.2$16.0 million, respectively, and our financing cash flow activities were $ 65.8$59.8 million and $ 87.5$65.8 million, respectively. Non-cash activities of ROU assets in exchange for lease liabilities were $ 3.6$14.4 million and $ 3.8$3.6 million for the first six months of fiscal 2024 and 2023, and 2022, respectively.
The components of lease costs, including leases of less than 12 months, were as follows:
|
| Six Months Ended | ||
|
| September 30, 2022 |
| September 30, 2021 |
|
| (Unaudited) | ||
|
| (In thousands) | ||
|
|
|
|
|
Operating lease costs | $ | 16,181 | $ | 16,101 |
|
|
|
|
|
Finance lease cost: |
|
|
|
|
Amortization of right-of-use assets | $ | 43,173 | $ | 62,243 |
Interest on lease liabilities |
| 6,142 |
| 8,780 |
Total finance lease cost | $ | 49,315 | $ | 71,023 |
|
| Six Months Ended | ||
|
| September 30, 2023 |
| September 30, 2022 |
|
| (Unaudited) | ||
|
| (In thousands) | ||
|
|
|
|
|
Operating lease costs | $ | 16,033 | $ | 16,181 |
|
|
|
|
|
Finance lease cost: |
|
|
|
|
Amortization of right-of-use assets | $ | 31,465 | $ | 43,173 |
Interest on lease liabilities |
| 4,002 |
| 6,142 |
Total finance lease cost | $ | 35,467 | $ | 49,315 |
18
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
The short-term lease costs for the first six mothsmonths of fiscal 20232024 and 20222023 were not material.
22
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Maturities of lease liabilities were as follows:
|
| Finance leases |
| Operating leases |
| Finance leases |
| Operating leases |
|
| (Unaudited) |
| (Unaudited) | ||||
Year ending September 30, |
| (In thousands) | ||||||
Year ending March 31, |
| (In thousands) | ||||||
|
|
|
|
|
|
|
|
|
2023 | $ | 128,721 | $ | 24,635 | ||||
2024 |
| 86,959 |
| 18,692 | ||||
2024 (6 months) | $ | 85,789 | $ | 22,913 | ||||
2025 |
| 62,221 |
| 6,647 |
| 61,189 |
| 10,059 |
2026 |
| 20,767 |
| 3,599 |
| 24,371 |
| 6,879 |
2027 |
| – |
| 3,172 |
| – |
| 6,265 |
2028 |
| – |
| 5,708 | ||||
Thereafter |
| – |
| 57,924 |
| – |
| 60,853 |
Total lease payments |
| 298,668 |
| 114,669 |
| 171,349 |
| 112,677 |
Less: imputed interest |
| (17,106) |
| (46,811) |
| (7,896) |
| (48,097) |
Present value of lease liabilities | $ | 281,562 | $ | 67,858 | $ | 163,453 | $ | 64,580 |
8.9. Contingencies
Cybersecurity Incident
On September 9, 2022, we announced that the Company was made aware of a data security incident involving U-Haul‘s information technology network. U-Haul detected a compromise of two unique passwords used to access U-Haul customers‘ information. U-Haul took immediate steps to contain the incident and promptly enhanced its security measures to prevent any further unauthorized access. U-Haul retained cybersecurity experts and incident response counsel to investigate the incident and implement additional security safeguards. The investigation determined that between November 5, 2021 and April 8, 2022, the threat actor accessed customer contracts containing customers’ names, dates of birth, and driver’s license or state identification numbers. None of U-Haul’s financial, payment processing or email systems were involved. U-Haul has notified impacted customers and relevant governmental authorities.
Several class action lawsuits related to the incident have been filed against U-Haul. The lawsuits arehave been consolidated into one action in their early consolidation phasethe U.S. District Court for the District of Arizona and will be vigorously defended by the Company; however, the outcome of such lawsuits cannot be predicted or guaranteed with any certainty.
Environmental
Compliance with environmental requirements of federal, state, provincial and local governments may significantly affect Real Estate’s business operations. Among other things, these requirements regulate the discharge of materials into the air, land and water and govern the use and disposal of hazardous substances. Real Estate is aware of issues regarding hazardous substances on some of its properties. Real Estate regularly makes capital and operating expenditures to stay in compliance with environmental laws and has put in place a remedial plan at each site where it believes such a plan is necessary.
Based upon the information currently available to Real Estate, compliance with the environmental laws and its share of the costs of investigation and cleanup of known hazardous waste sites are not expected to result in a material adverse effect on AMERCO’sthe Company’s financial position, or results of operations.operations or cash flows.
Other
We are named as a defendant in various other litigation and claims arising out of the normal course of business, including various class actions related to AMERCO’s cybersecurity incident described above.business. In management’s opinion, none of these other matters will have a material effect on our financial position and results of operations.
1923
amerco and consolidated subsidiariesU-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
notes to condensed consolidated financial statements – (continued)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9.10. Related Party Transactions
As set forth in the Company’s Audit Committee Charter and consistent with NASDAQ Listing Rules,the NYSE Listed Company Manual, our Audit Committee (the “Audit Committee”) reviews and maintains oversight over related party transactions, which are required to be disclosed under the Securities and Exchange Commission (“SEC”) rules and regulations and in accordance with GAAP. Accordingly, all such related party transactions are submitted to the Audit Committee for ongoing review and oversight. Our internal processes are designed to ensure that our legal and finance departments identify and monitor potential related party transactions that may require disclosure and Audit Committee oversight.
AMERCOU-Haul Holding Company has engaged in related party transactions and has continuing related party interests with certain major stockholders, directors and officers of the consolidated group as disclosed below.
SAC Holding Corporation and SAC Holding II Corporation (collectively “SAC Holdings”) were established in order to acquire and develop self-storage properties. These properties are being managed by us pursuant to management agreements. SAC Holdings, Four SAC Self-Storage Corporation, Five SAC Self-Storage Corporation, Galaxy Investments, L.P. and 2015 SAC-Self-Storage, LLC are substantially controlled by Blackwater Investments, Inc. (“Blackwater”). Blackwater is wholly owned by Willow Grove Holdings LP, which is owned by Mark V. Shoen (a significant stockholder), and various trusts associated with Edward J. Shoen (our Chairman of the Board, President and a significant stockholder) and Mark V. Shoen.
Related Party Revenue
|
| Quarter Ended September 30, |
| Quarter Ended September 30, | ||||
|
| 2022 |
| 2021 |
| 2023 |
| 2022 |
|
| (Unaudited) |
| (Unaudited) | ||||
|
| (In thousands) |
| (In thousands) | ||||
U-Haul management fee revenue from Blackwater | $ | 7,827 | $ | 7,428 | $ | 7,754 | $ | 7,827 |
U-Haul management fee revenue from Mercury |
| 1,450 |
| 1,319 |
| 1,513 |
| 1,450 |
| $ | 9,277 | $ | 8,747 | $ | 9,267 | $ | 9,277 |
|
| Six Months Ended September 30, |
| Six Months Ended September 30, | ||||
|
| 2022 |
| 2021 |
| 2023 |
| 2022 |
|
| (Unaudited) |
| (Unaudited) | ||||
|
| (In thousands) |
| (In thousands) | ||||
U-Haul management fee revenue from Blackwater | $ | 15,556 | $ | 14,608 | $ | 15,450 | $ | 15,556 |
U-Haul management fee revenue from Mercury |
| 2,860 |
| 2,588 |
| 2,994 |
| 2,860 |
| $ | 18,416 | $ | 17,196 | $ | 18,444 | $ | 18,416 |
We currently manage the self-storage properties owned or leased by Blackwater and Mercury Partners, L.P. (“Mercury”), pursuant to a standard form of management agreement, under which we receive a management fee of between 4% and 10% of the gross receipts plus reimbursement for certain expenses. We received management fees, exclusive of reimbursed expenses, of $16.9$17.0 million and $19.4$16.9 million from the above-mentioned entities during the first six months of fiscal 2024 and 2023, and 2022, respectively. The decrease in management fees received in the first six months of fiscal 2023 compared with the first six months of fiscal 2022 was due to a timing difference of the incentive fee of $4.0 million being paid in March of fiscal 2022. This management fee is consistent with the fee received for other properties we previously managed for third parties. Mark V. Shoen controls the general partner of Mercury. The limited partner interests of Mercury are owned indirectly by James P. Shoen and various trusts benefittingbenefiting Edward J. Shoen and James P. Shoen or their descendants. Mercury holds the option to purchase a portfolio of properties currently leased by Mercury and a U-Haul subsidiary, which option is exercisable in 2024.subsidiary; Mercury has notified W.P. Carey, the lessor, of its intent to purchase the properties.
20
amerco and consolidated subsidiaries24
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
notes to condensed consolidated financial statements – (continued)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Related Party Costs and Expenses
|
| Quarter Ended September 30, |
| Quarter Ended September 30, | ||||
|
| 2022 |
| 2021 |
| 2023 |
| 2022 |
|
| (Unaudited) |
| (Unaudited) | ||||
|
| (In thousands) |
| (In thousands) | ||||
U-Haul lease expenses to Blackwater | $ | 604 | $ | 611 | $ | 604 | $ | 604 |
U-Haul printing expenses to Blackwater |
| 968 |
| – | ||||
U-Haul commission expenses to Blackwater |
| 26,385 |
| 26,536 |
| 24,035 |
| 26,385 |
| $ | 26,989 | $ | 27,147 | $ | 25,607 | $ | 26,989 |
|
| Six Months Ended September 30, |
| Six Months Ended September 30, | ||||
|
| 2022 |
| 2021 |
| 2023 |
| 2022 |
|
| (Unaudited) |
| (Unaudited) | ||||
|
| (In thousands) |
| (In thousands) | ||||
U-Haul lease expenses to Blackwater | $ | 1,208 | $ | 1,237 | $ | 1,208 | $ | 1,208 |
U-Haul printing expenses to Blackwater |
| 1,317 |
| – | ||||
U-Haul commission expenses to Blackwater |
| 51,267 |
| 49,416 |
| 46,738 |
| 51,267 |
| $ | 52,475 | $ | 50,653 | $ | 49,263 | $ | 52,475 |
We lease space for marketing company offices, vehicle repair shops and hitch installation centers from subsidiaries of Blackwater. The terms of the leases are similar to the terms of leases for other properties owned by unrelated parties that are leased to us.
On May 15, 2023, SAC Holdings began providing ancillary and specialty printing services to us. The financial and other terms of the transactions are substantially identical to the terms of additional specialty printing vendors.
As of September 30, 2022,2023, subsidiaries of Blackwater acted as independent dealers. The financial and other terms of the dealership contracts are substantially identical to the terms of those with our other independent dealers whereby commissions are paid by us based upon equipment rental revenues.
These agreements with subsidiaries of Blackwater, excluding Dealer Agreements, provided revenues of $ 15.6$15.4 million and $ 14.6$15.6 million, expenses of $ 1.2$1.2 million and $ 1.2$1.2 million and cash flows of $ 14.3$14.3 million and $ 13.3$14.3 million, respectively, during the first six months of fiscal 20232024 and 2022.2023. Revenues were $ 245.0$214.5 million and $ 234.6$245.0 million and commission expenses were $ 51.3$46.7 million $ 49.4and $51.3 million, respectively, related to the Dealer Agreements, during the first six months of fiscal 20232024 and 2022.2023.
Management determined that we do not have a variable interest pursuant to the variable interest entity model under Accounting Standards Codification (“ASC”)ASC 810, – Consolidationin the holding entities of Blackwater.
Related Party Assets
|
| September 30, |
| March 31, |
| September 30, |
| March 31, |
|
| 2022 |
| 2022 |
| 2023 |
| 2023 |
|
| (Unaudited) |
|
|
| (Unaudited) |
|
|
|
| (In thousands) |
| (In thousands) | ||||
U-Haul receivable from Blackwater | $ | 44,109 | $ | 41,364 | $ | 37,791 | $ | 42,141 |
U-Haul receivable from Mercury |
| 5,399 |
| 5,708 |
| 6,654 |
| 8,402 |
Other (a) |
| (1,171) |
| 779 |
| (4,305) |
| (2,235) |
| $ | 48,337 | $ | 47,851 | $ | 40,140 | $ | 48,308 |
(a) Timing differences for intercompany balances with insurance subsidiaries resulting from the three-month difference in reporting periods.
21
amerco and consolidated subsidiaries25
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
notes to condensed consolidated financial statements – (continued)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10.11. Consolidating Financial Information by IndustryOperating Segment:
AMERCO’sU-Haul Holding Company’s three reportable segments are:
Management tracks revenues separately, but does not report any separate measure of the profitability for rental vehicles, rentals of self-storage spaces and sales of products that are required to be classified as a separate operating segment and accordingly does not present these as separate reportable segments. Deferred income taxes are shown as liabilities on the condensed consolidating statements. The information includes elimination entries necessary to consolidate AMERCO,U-Haul Holding Company, the parent, with its subsidiaries. Investments in subsidiaries are accounted for by the parent using the equity method of accounting.
2226
amerco and consolidated subsidiariesU-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
notes to condensed consolidated financial statements – (continued)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidating balance sheets by industryoperating segment as of September 30, 20222023 are as follows:
|
| Moving & Storage Consolidated |
| Property & Casualty Insurance (a) |
| Life Insurance (a) |
| Eliminations |
|
| AMERCO Consolidated |
|
| (Unaudited) | |||||||||
|
| (In thousands) | |||||||||
Assets: |
| ||||||||||
Cash and cash equivalents | $ | 3,025,390 | $ | 11,196 | $ | 28,529 | $ | – |
| $ | 3,065,115 |
Reinsurance recoverables and trade receivables, net |
| 117,336 |
| 51,720 |
| 34,146 |
| – |
|
| 203,202 |
Inventories and parts, net |
| 166,136 |
| – |
| – |
| – |
|
| 166,136 |
Prepaid expenses |
| 236,035 |
| – |
| – |
| – |
|
| 236,035 |
Investments, fixed maturities and marketable equities |
| – |
| 267,482 |
| 2,348,276 |
| – |
|
| 2,615,758 |
Investments, other |
| 20,653 |
| 119,926 |
| 407,619 |
| – |
|
| 548,198 |
Deferred policy acquisition costs, net |
| – |
| – |
| 146,778 |
| – |
|
| 146,778 |
Other assets |
| 44,194 |
| 698 |
| 3,008 |
| – |
|
| 47,900 |
Right of use assets - financing, net |
| 529,000 |
| – |
| – |
| – |
|
| 529,000 |
Right of use assets - operating, net |
| 67,107 |
| 1,039 |
| 62 |
| – |
|
| 68,208 |
Related party assets |
| 66,682 |
| 5,862 |
| 13,234 |
| (37,441) | (c) |
| 48,337 |
|
| 4,272,533 |
| 457,923 |
| 2,981,652 |
| (37,441) |
|
| 7,674,667 |
|
|
|
|
|
|
|
|
|
|
|
|
Investment in subsidiaries |
| 502,299 |
| – |
| – |
| (502,299) | (b) |
| – |
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, at cost: |
|
|
|
|
|
|
|
|
|
|
|
Land |
| 1,427,781 |
| – |
| – |
| – |
|
| 1,427,781 |
Buildings and improvements |
| 6,390,317 |
| – |
| – |
| – |
|
| 6,390,317 |
Furniture and equipment |
| 876,515 |
| – |
| – |
| – |
|
| 876,515 |
Rental trailers and other rental equipment |
| 727,953 |
| – |
| – |
| – |
|
| 727,953 |
Rental trucks |
| 5,087,235 |
| – |
| – |
| – |
|
| 5,087,235 |
|
| 14,509,801 |
| – |
| – |
| – |
|
| 14,509,801 |
Less: Accumulated depreciation |
| (4,041,125) |
| – |
| – |
| – |
|
| (4,041,125) |
Total property, plant and equipment, net |
| 10,468,676 |
| – |
| – |
| – |
|
| 10,468,676 |
Total assets | $ | 15,243,508 | $ | 457,923 | $ | 2,981,652 | $ | (539,740) |
| $ | 18,143,343 |
|
|
|
|
|
|
|
|
|
|
|
|
(a) Balances as of June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
(b) Eliminate investment in subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
(c) Eliminate intercompany receivables and payables |
|
|
|
|
|
|
|
|
|
|
|
|
| Moving & Storage Consolidated |
| Property & Casualty Insurance (a) |
| Life Insurance (a) |
| Eliminations |
|
| U-Haul Holding Company Consolidated |
|
| (Unaudited) | |||||||||
|
| (In thousands) | |||||||||
Assets: |
| ||||||||||
Cash and cash equivalents | $ | 2,068,790 | $ | 44,272 | $ | 32,069 | $ | – |
| $ | 2,145,131 |
Reinsurance recoverables and trade receivables, net |
| 130,372 |
| 50,525 |
| 31,668 |
| – |
|
| 212,565 |
Inventories and parts |
| 161,535 |
| – |
| – |
| – |
|
| 161,535 |
Prepaid expenses |
| 263,541 |
| – |
| – |
| – |
|
| 263,541 |
Investments, fixed maturities and marketable equities |
| 97,372 |
| 268,769 |
| 2,168,023 |
| – |
|
| 2,534,164 |
Investments, other |
| 23,330 |
| 115,583 |
| 511,238 |
| – |
|
| 650,151 |
Deferred policy acquisition costs, net |
| – |
| – |
| 121,365 |
| – |
|
| 121,365 |
Other assets |
| 46,667 |
| 800 |
| 5,302 |
| – |
|
| 52,769 |
Right of use assets - financing, net |
| 377,733 |
| – |
| – |
| – |
|
| 377,733 |
Right of use assets - operating, net |
| 64,378 |
| 785 |
| 153 |
| – |
|
| 65,316 |
Related party assets |
| 62,931 |
| 1,223 |
| 11,808 |
| (35,822) | (c) |
| 40,140 |
|
| 3,296,649 |
| 481,957 |
| 2,881,626 |
| (35,822) |
|
| 6,624,410 |
|
|
|
|
|
|
|
|
|
|
|
|
Investment in subsidiaries |
| 462,493 |
| – |
| – |
| (462,493) | (b) |
| – |
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, at cost: |
|
|
|
|
|
|
|
|
|
|
|
Land |
| 1,613,871 |
| – |
| – |
| – |
|
| 1,613,871 |
Buildings and improvements |
| 7,649,849 |
| – |
| – |
| – |
|
| 7,649,849 |
Furniture and equipment |
| 966,211 |
| – |
| – |
| – |
|
| 966,211 |
Rental trailers and other rental equipment |
| 912,046 |
| – |
| – |
| – |
|
| 912,046 |
Rental trucks |
| 5,921,507 |
| – |
| – |
| – |
|
| 5,921,507 |
|
| 17,063,484 |
| – |
| – |
| – |
|
| 17,063,484 |
Less: Accumulated depreciation |
| (4,666,444) |
| – |
| – |
| – |
|
| (4,666,444) |
Total property, plant and equipment, net |
| 12,397,040 |
| – |
| – |
| – |
|
| 12,397,040 |
Total assets | $ | 16,156,182 | $ | 481,957 | $ | 2,881,626 | $ | (498,315) |
| $ | 19,021,450 |
|
|
|
|
|
|
|
|
|
|
|
|
(a) Balances as of June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
(b) Eliminate investment in subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
(c) Eliminate intercompany receivables and payables |
|
|
|
|
|
|
|
|
|
|
|
23
amerco and consolidated subsidiaries27
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
notes to condensed consolidated financial statements – (continued)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidating balance sheets by industryoperating segment as of September 30, 2022,2023, continued:
|
| Moving & Storage Consolidated |
| Property & Casualty Insurance (a) |
| Life Insurance (a) |
| Eliminations |
|
| AMERCO Consolidated |
| Moving & Storage Consolidated |
| Property & Casualty Insurance (a) |
| Life Insurance (a) |
| Eliminations |
|
| U-Haul Holding Company Consolidated |
|
| (Unaudited) |
| (Unaudited) | ||||||||||||||||||
|
| (In thousands) |
| (In thousands) | ||||||||||||||||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses | $ | 695,610 | $ | 5,245 | $ | 5,547 | $ | – |
| $ | 706,402 | $ | 745,606 | $ | 4,472 | $ | 7,910 | $ | – |
| $ | 757,988 |
Notes, loans and finance leases payable, net |
| 6,298,831 |
| – |
| – |
| – |
|
| 6,298,831 |
| 6,400,899 |
| – |
| – |
| – |
|
| 6,400,899 |
Operating lease liabilities |
| 66,743 |
| 1,048 |
| 67 |
| – |
|
| 67,858 |
| 63,627 |
| 800 |
| 153 |
| – |
|
| 64,580 |
Policy benefits and losses, claims and loss expenses payable |
| 436,854 |
| 156,998 |
| 396,381 |
| – |
|
| 990,233 |
| 324,642 |
| 150,148 |
| 390,607 |
| – |
|
| 865,397 |
Liabilities from investment contracts |
| – |
| – |
| 2,390,028 |
| – |
|
| 2,390,028 |
| – |
| – |
| 2,393,590 |
| – |
|
| 2,393,590 |
Other policyholders' funds and liabilities |
| – |
| 3,633 |
| 8,493 |
| – |
|
| 12,126 |
| – |
| 2,126 |
| 5,551 |
| – |
|
| 7,677 |
Deferred income |
| 56,871 |
| – |
| – |
| – |
|
| 56,871 |
| 56,821 |
| – |
| – |
| – |
|
| 56,821 |
Deferred income taxes, net |
| 1,354,154 |
| 5,189 |
| (51,536) |
| – |
|
| 1,307,807 |
| 1,514,732 |
| 3,973 |
| (74,585) |
| – |
|
| 1,444,120 |
Related party liabilities |
| 26,124 |
| 3,001 |
| 13,182 |
| (42,307) | (c) |
| – |
| 25,754 |
| 2,969 |
| 13,376 |
| (42,099) | (c) |
| – |
Total liabilities |
| 8,935,187 |
| 175,114 |
| 2,762,162 |
| (42,307) |
|
| 11,830,156 |
| 9,132,081 |
| 164,488 |
| 2,736,602 |
| (42,099) |
|
| 11,991,072 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series preferred stock: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A preferred stock |
| – |
| – |
| – |
| – |
|
| – |
| – |
| – |
| – |
| – |
|
| – |
Series B preferred stock |
| – |
| – |
| – |
| – |
|
| – |
| – |
| – |
| – |
| – |
|
| – |
Series A common stock |
| – |
| – |
| – |
| – |
|
| – |
| – |
| – |
| – |
| – |
|
| – |
Common stock |
| 10,497 |
| 3,301 |
| 2,500 |
| (5,801) | (b) |
| 10,497 | |||||||||||
Voting Common stock |
| 10,497 |
| 3,301 |
| 2,500 |
| (5,801) | (b) |
| 10,497 | |||||||||||
Non-Voting Common stock |
| 176 |
| – |
| – |
| – |
|
| 176 | |||||||||||
Additional paid-in capital |
| 454,029 |
| 91,120 |
| 26,271 |
| (117,601) | (b) |
| 453,819 |
| 453,853 |
| 91,120 |
| 26,271 |
| (117,601) | (b) |
| 453,643 |
Accumulated other comprehensive income (loss) |
| (196,987) |
| (7,804) |
| (136,861) |
| 149,531 | (b) |
| (192,121) |
| (281,941) |
| (13,532) |
| (218,470) |
| 238,279 | (b) |
| (275,664) |
Retained earnings |
| 6,718,432 |
| 196,192 |
| 327,580 |
| (523,562) | (b) |
| 6,718,642 |
| 7,519,166 |
| 236,580 |
| 334,723 |
| (571,093) | (b) |
| 7,519,376 |
Cost of common shares in treasury, net |
| (525,653) |
| – |
| – |
| – |
|
| (525,653) | |||||||||||
Cost of preferred shares in treasury, net |
| (151,997) |
| – |
| – |
| – |
|
| (151,997) | |||||||||||
Cost of common stock in treasury, net |
| (525,653) |
| – |
| – |
| – |
|
| (525,653) | |||||||||||
Cost of preferred stock in treasury, net |
| (151,997) |
| – |
| – |
| – |
|
| (151,997) | |||||||||||
Total stockholders' equity |
| 6,308,321 |
| 282,809 |
| 219,490 |
| (497,433) |
|
| 6,313,187 |
| 7,024,101 |
| 317,469 |
| 145,024 |
| (456,216) |
|
| 7,030,378 |
Total liabilities and stockholders' equity | $ | 15,243,508 | $ | 457,923 | $ | 2,981,652 | $ | (539,740) |
| $ | 18,143,343 | $ | 16,156,182 | $ | 481,957 | $ | 2,881,626 | $ | (498,315) |
| $ | 19,021,450 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Balances as of June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
| |||||||||||
(a) Balances as of June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
| |||||||||||
(b) Eliminate investment in subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) Eliminate intercompany receivables and payables |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2428
amerco and consolidated subsidiariesU-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
notes to condensed consolidated financial statements – (continued)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidating balance sheets by industryoperating segment as of March 31, 20222023 are as follows:
|
| Moving & Storage Consolidated |
| Property & Casualty Insurance (a) |
| Life Insurance (a) |
| Eliminations |
|
| AMERCO Consolidated |
|
|
| |||||||||
Assets: |
| (In thousands) | |||||||||
Cash and cash equivalents | $ | 2,643,213 | $ | 10,800 | $ | 50,124 | $ | – |
| $ | 2,704,137 |
Reinsurance recoverables and trade receivables, net |
| 142,895 |
| 50,235 |
| 36,213 |
| – |
|
| 229,343 |
Inventories and parts, net |
| 158,888 |
| – |
| – |
| – |
|
| 158,888 |
Prepaid expenses |
| 236,915 |
| – |
| – |
| – |
|
| 236,915 |
Investments, fixed maturities and marketable equities |
| – |
| 297,488 |
| 2,595,911 |
| – |
|
| 2,893,399 |
Investments, other |
| 20,653 |
| 114,269 |
| 408,833 |
| – |
|
| 543,755 |
Deferred policy acquisition costs, net |
| – |
| – |
| 103,828 |
| – |
|
| 103,828 |
Other assets |
| 57,305 |
| 371 |
| 2,733 |
| – |
|
| 60,409 |
Right of use assets - financing, net |
| 620,824 |
| – |
| – |
| – |
|
| 620,824 |
Right of use assets - operating, net |
| 74,190 |
| 93 |
| 99 |
| – |
|
| 74,382 |
Related party assets |
| 64,611 |
| 6,713 |
| 16,911 |
| (40,384) | (c) |
| 47,851 |
|
| 4,019,494 |
| 479,969 |
| 3,214,652 |
| (40,384) |
|
| 7,673,731 |
|
|
|
|
|
|
|
|
|
|
|
|
Investment in subsidiaries |
| 737,073 |
| – |
| – |
| (737,073) | (b) |
| – |
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, at cost: |
|
|
|
|
|
|
|
|
|
|
|
Land |
| 1,283,142 |
| – |
| – |
| – |
|
| 1,283,142 |
Buildings and improvements |
| 5,974,639 |
| – |
| – |
| – |
|
| 5,974,639 |
Furniture and equipment |
| 846,132 |
| – |
| – |
| – |
|
| 846,132 |
Rental trailers and other rental equipment |
| 615,679 |
| – |
| – |
| – |
|
| 615,679 |
Rental trucks |
| 4,638,814 |
| – |
| – |
| – |
|
| 4,638,814 |
|
| 13,358,406 |
| – |
| – |
| – |
|
| 13,358,406 |
Less: Accumulated depreciation |
| (3,732,556) |
| – |
| – |
| – |
|
| (3,732,556) |
Total property, plant and equipment, net |
| 9,625,850 |
| – |
| – |
| – |
|
| 9,625,850 |
Total assets | $ | 14,382,417 | $ | 479,969 | $ | 3,214,652 | $ | (777,457) |
| $ | 17,299,581 |
|
|
|
|
|
|
|
|
|
|
|
|
(a) Balances as of December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
(b) Eliminate investment in subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
(c) Eliminate intercompany receivables and payables |
|
|
|
|
|
|
|
|
|
|
|
|
| Moving & Storage Consolidated |
| Property & Casualty Insurance (a) |
| Life Insurance (a) |
| Eliminations |
|
| U-Haul Holding Company Consolidated |
|
|
| |||||||||
Assets: |
| (In thousands) | |||||||||
Cash and cash equivalents | $ | 2,034,242 | $ | 11,276 | $ | 15,006 | $ | – |
| $ | 2,060,524 |
Reinsurance recoverables and trade receivables, net |
| 107,823 |
| 48,344 |
| 33,331 |
| – |
|
| 189,498 |
Inventories and parts |
| 151,474 |
| – |
| – |
| – |
|
| 151,474 |
Prepaid expenses |
| 241,711 |
| – |
| – |
| – |
|
| 241,711 |
Investments, fixed maturities and marketable equities |
| 227,737 |
| 271,156 |
| 2,271,501 |
| – |
|
| 2,770,394 |
Investments, other |
| 23,314 |
| 125,130 |
| 427,096 |
| – |
|
| 575,540 |
Deferred policy acquisition costs, net |
| – |
| – |
| 128,463 |
| – |
|
| 128,463 |
Other assets |
| 46,438 |
| 730 |
| 3,884 |
| – |
|
| 51,052 |
Right of use assets - financing, net |
| 474,765 |
| – |
| – |
| – |
|
| 474,765 |
Right of use assets - operating, net |
| 57,978 |
| 914 |
| 25 |
| – |
|
| 58,917 |
Related party assets |
| 69,144 |
| 2,347 |
| 12,268 |
| (35,451) | (c) |
| 48,308 |
|
| 3,434,626 |
| 459,897 |
| 2,891,574 |
| (35,451) |
|
| 6,750,646 |
|
|
|
|
|
|
|
|
|
|
|
|
Investment in subsidiaries |
| 426,779 |
| – |
| – |
| (426,779) | (b) |
| – |
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, at cost: |
|
|
|
|
|
|
|
|
|
|
|
Land |
| 1,537,206 |
| – |
| – |
| – |
|
| 1,537,206 |
Buildings and improvements |
| 7,088,810 |
| – |
| – |
| – |
|
| 7,088,810 |
Furniture and equipment |
| 928,241 |
| – |
| – |
| – |
|
| 928,241 |
Rental trailers and other rental equipment |
| 827,696 |
| – |
| – |
| – |
|
| 827,696 |
Rental trucks |
| 5,278,340 |
| – |
| – |
| – |
|
| 5,278,340 |
|
| 15,660,293 |
| – |
| – |
| – |
|
| 15,660,293 |
Less: Accumulated depreciation |
| (4,310,205) |
| – |
| – |
| – |
|
| (4,310,205) |
Total property, plant and equipment, net |
| 11,350,088 |
| – |
| – |
| – |
|
| 11,350,088 |
Total assets | $ | 15,211,493 | $ | 459,897 | $ | 2,891,574 | $ | (462,230) |
| $ | 18,100,734 |
|
|
|
|
|
|
|
|
|
|
|
|
(a) Balances as of December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
(b) Eliminate investment in subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
(c) Eliminate intercompany receivables and payables |
|
|
|
|
|
|
|
|
|
|
|
25
amerco and consolidated subsidiaries29
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
notes to condensed consolidated financial statements – (continued)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidating balance sheets by industryoperating segment as of March 31, 2022,2023, continued:
|
| Moving & Storage Consolidated |
| Property & Casualty Insurance (a) |
| Life Insurance (a) |
| Eliminations |
|
| AMERCO Consolidated |
| Moving & Storage Consolidated |
| Property & Casualty Insurance (a) |
| Life Insurance (a) |
| Eliminations |
|
| U-Haul Holding Company Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (In thousands) |
| (In thousands) | ||||||||||||||||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses | $ | 663,482 | $ | 3,849 | $ | 10,454 | $ | – |
| $ | 677,785 | $ | 729,679 | $ | 4,470 | $ | 26,890 | $ | – |
| $ | 761,039 |
Notes, loans and finance leases payable, net |
| 6,022,497 |
| – |
| – |
| – |
|
| 6,022,497 |
| 6,108,042 |
| – |
| – |
| – |
|
| 6,108,042 |
Operating lease liabilities |
| 73,998 |
| 93 |
| 106 |
| – |
|
| 74,197 |
| 57,418 |
| 928 |
| 27 |
| – |
|
| 58,373 |
Policy benefits and losses, claims and loss expenses payable |
| 418,890 |
| 160,379 |
| 398,985 |
| – |
|
| 978,254 |
| 335,227 |
| 153,007 |
| 391,968 |
| – |
|
| 880,202 |
Liabilities from investment contracts |
| – |
| – |
| 2,336,238 |
| – |
|
| 2,336,238 |
| – |
| – |
| 2,398,884 |
| – |
|
| 2,398,884 |
Other policyholders' funds and liabilities |
| – |
| 3,521 |
| 7,291 |
| – |
|
| 10,812 |
| – |
| 2,702 |
| 5,530 |
| – |
|
| 8,232 |
Deferred income |
| 49,157 |
| – |
| – |
| – |
|
| 49,157 |
| 52,282 |
| – |
| – |
| – |
|
| 52,282 |
Deferred income taxes, net |
| 1,244,639 |
| 12,803 |
| 7,916 |
| – |
|
| 1,265,358 |
| 1,405,391 |
| 1,713 |
| (77,615) |
| – |
|
| 1,329,489 |
Related party liabilities |
| 25,668 |
| 3,196 |
| 12,717 |
| (41,581) | (c) |
| – |
| 25,082 |
| 2,544 |
| 13,644 |
| (41,270) | (c) |
| – |
Total liabilities |
| 8,498,331 |
| 183,841 |
| 2,773,707 |
| (41,581) |
|
| 11,414,298 |
| 8,713,121 |
| 165,364 |
| 2,759,328 |
| (41,270) |
|
| 11,596,543 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series preferred stock: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A preferred stock |
| – |
| – |
| – |
| – |
|
| – |
| – |
| – |
| – |
| – |
|
| – |
Series B preferred stock |
| – |
| – |
| – |
| – |
|
| – |
| – |
| – |
| – |
| – |
|
| – |
Series A common stock |
| – |
| – |
| – |
| – |
|
| – |
| – |
| – |
| – |
| – |
|
| – |
Common stock |
| 10,497 |
| 3,301 |
| 2,500 |
| (5,801) | (b) |
| 10,497 | |||||||||||
Voting Common stock |
| 10,497 |
| 3,301 |
| 2,500 |
| (5,801) | (b) |
| 10,497 | |||||||||||
Non-Voting Common Stock |
| 176 |
| – |
| – |
| – |
|
| 176 | |||||||||||
Additional paid-in capital |
| 454,029 |
| 91,120 |
| 26,271 |
| (117,601) | (b) |
| 453,819 |
| 453,853 |
| 91,120 |
| 26,271 |
| (117,601) | (b) |
| 453,643 |
Accumulated other comprehensive income (loss) |
| 45,187 |
| 16,630 |
| 87,200 |
| (102,633) | (b) |
| 46,384 |
| (291,442) |
| (14,720) |
| (225,904) |
| 246,443 | (b) |
| (285,623) |
Retained earnings |
| 6,052,023 |
| 185,077 |
| 324,974 |
| (509,841) | (b) |
| 6,052,233 |
| 7,002,938 |
| 214,832 |
| 329,379 |
| (544,001) | (b) |
| 7,003,148 |
Cost of common shares in treasury, net |
| (525,653) |
| – |
| – |
| – |
|
| (525,653) |
| (525,653) |
| – |
| – |
| – |
|
| (525,653) |
Cost of preferred shares in treasury, net |
| (151,997) |
| – |
| – |
| – |
|
| (151,997) |
| (151,997) |
| – |
| – |
| – |
|
| (151,997) |
Total stockholders' equity |
| 5,884,086 |
| 296,128 |
| 440,945 |
| (735,876) |
|
| 5,885,283 |
| 6,498,372 |
| 294,533 |
| 132,246 |
| (420,960) |
|
| 6,504,191 |
Total liabilities and stockholders' equity | $ | 14,382,417 | $ | 479,969 | $ | 3,214,652 | $ | (777,457) |
| $ | 17,299,581 | $ | 15,211,493 | $ | 459,897 | $ | 2,891,574 | $ | (462,230) |
| $ | 18,100,734 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Balances as of December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
| |||||||||||
(a) Balances as of December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
| |||||||||||
(b) Eliminate investment in subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) Eliminate intercompany receivables and payables |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2630
amerco and consolidated subsidiariesU-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
notes to condensed consolidated financial statements – (continued)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidating statement of operations by industryoperating segment for the quarter ended September 30, 2023 are as follows:
|
| Moving & Storage Consolidated |
| Property & Casualty Insurance (a) |
| Life Insurance (a) |
| Eliminations |
|
| U-Haul Holding Company Consolidated |
|
| (Unaudited) | |||||||||
|
| (In thousands) | |||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
Self-moving equipment rentals | $ | 1,070,688 | $ | – | $ | – | $ | (1,283) | (c) | $ | 1,069,405 |
Self-storage revenues |
| 208,890 |
| – |
| – |
| – |
|
| 208,890 |
Self-moving and self-storage products and service sales |
| 91,571 |
| – |
| – |
| – |
|
| 91,571 |
Property management fees |
| 9,267 |
| – |
| – |
| – |
|
| 9,267 |
Life insurance premiums |
| – |
| – |
| 22,498 |
| – |
|
| 22,498 |
Property and casualty insurance premiums |
| – |
| 26,371 |
| – |
| (800) | (c) |
| 25,571 |
Net investment and interest income |
| 28,520 |
| 5,481 |
| 31,621 |
| (884) | (b) |
| 64,738 |
Other revenue |
| 156,642 |
| – |
| 1,403 |
| (125) | (b) |
| 157,920 |
Total revenues |
| 1,565,578 |
| 31,852 |
| 55,522 |
| (3,092) |
|
| 1,649,860 |
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
| 820,617 |
| 12,113 |
| 4,731 |
| (2,203) | (b,c) |
| 835,258 |
Commission expenses |
| 111,961 |
| – |
| – |
| – |
|
| 111,961 |
Cost of sales |
| 66,620 |
| – |
| – |
| – |
|
| 66,620 |
Benefits and losses |
| – |
| 4,229 |
| 38,324 |
| – |
|
| 42,553 |
Amortization of deferred policy acquisition costs |
| – |
| – |
| 6,826 |
| – |
|
| 6,826 |
Lease expense |
| 8,839 |
| 91 |
| 33 |
| (513) | (b) |
| 8,450 |
Depreciation, net of gains on disposals |
| 154,122 |
| – |
| – |
| – |
|
| 154,122 |
Net losses on disposal of real estate |
| 1,715 |
| – |
| – |
| – |
|
| 1,715 |
Total costs and expenses |
| 1,163,874 |
| 16,433 |
| 49,914 |
| (2,716) |
|
| 1,227,505 |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from operations before equity in earnings of subsidiaries |
| 401,704 |
| 15,419 |
| 5,608 |
| (376) |
|
| 422,355 |
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of subsidiaries |
| 16,862 |
| – |
| – |
| (16,862) | (d) |
| – |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from operations |
| 418,566 |
| 15,419 |
| 5,608 |
| (17,238) |
|
| 422,355 |
Other components of net periodic benefit costs |
| (364) |
| – |
| – |
| – |
|
| (364) |
Interest expense |
| (64,199) |
| – |
| (120) |
| 376 | (b) |
| (63,943) |
Pretax earnings |
| 354,003 |
| 15,419 |
| 5,488 |
| (16,862) |
|
| 358,048 |
Income tax expense |
| (80,495) |
| (3,181) |
| (864) |
| – |
|
| (84,540) |
Net earnings available to common stockholders | $ | 273,508 | $ | 12,238 | $ | 4,624 | $ | (16,862) |
| $ | 273,508 |
|
|
|
|
|
|
|
|
|
|
|
|
(a) Balances for the quarter ended June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
(b) Eliminate intercompany lease / interest income |
|
|
|
|
|
|
|
|
|
|
|
(c) Eliminate intercompany premiums |
|
|
|
|
|
|
|
|
|
|
|
(d) Eliminate equity in earnings of subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
31
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidating statements of operations by operating segment for the quarter ended September 30, 2022 are as follows:
|
| Moving & Storage Consolidated |
| Property & Casualty Insurance (a) |
| Life Insurance (a) |
| Eliminations |
|
| AMERCO Consolidated |
| Moving & Storage Consolidated |
| Property & Casualty Insurance (a) |
| Life Insurance (a) |
| Eliminations |
|
| U-Haul Holding Company Consolidated |
|
| (Unaudited) |
| (Unaudited) | ||||||||||||||||||
|
| (In thousands) |
| (In thousands) | ||||||||||||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Self-moving equipment rentals | $ | 1,163,376 | $ | – | $ | – | $ | (1,351) | (c) | $ | 1,162,025 | $ | 1,163,376 | $ | – | $ | – | $ | (1,351) | (c) | $ | 1,162,025 |
Self-storage revenues |
| 185,586 |
| – |
| – |
| – |
|
| 185,586 |
| 185,586 |
| – |
| – |
| – |
|
| 185,586 |
Self-moving and self-storage products and service sales |
| 96,864 |
| – |
| – |
| – |
|
| 96,864 |
| 96,864 |
| – |
| – |
| – |
|
| 96,864 |
Property management fees |
| 9,277 |
| – |
| – |
| – |
|
| 9,277 |
| 9,277 |
| – |
| – |
| – |
|
| 9,277 |
Life insurance premiums |
| – |
| – |
| 25,456 |
| – |
|
| 25,456 |
| – |
| – |
| 25,456 |
| – |
|
| 25,456 |
Property and casualty insurance premiums |
| – |
| 25,960 |
| – |
| (242) | (c) |
| 25,718 |
| – |
| 25,960 |
| – |
| (242) | (c) |
| 25,718 |
Net investment and interest income (loss) |
| 15,077 |
| (2,597) |
| 19,041 |
| (1,012) | (b) |
| 30,509 |
| 15,077 |
| (2,597) |
| 19,041 |
| (1,012) | (b) |
| 30,509 |
Other revenue |
| 166,678 |
| – |
| 1,199 |
| (448) | (b) |
| 167,429 |
| 166,678 |
| – |
| 1,199 |
| (448) | (b) |
| 167,429 |
Total revenues |
| 1,636,858 |
| 23,363 |
| 45,696 |
| (3,053) |
|
| 1,702,864 |
| 1,636,858 |
| 23,363 |
| 45,696 |
| (3,053) |
|
| 1,702,864 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
| 796,498 |
| 11,576 |
| 5,558 |
| (2,038) | (b,c) |
| 811,594 |
| 796,498 |
| 11,576 |
| 5,558 |
| (2,038) | (b,c) |
| 811,594 |
Commission expenses |
| 125,341 |
| – |
| – |
| – |
|
| 125,341 |
| 125,341 |
| – |
| – |
| – |
|
| 125,341 |
Cost of sales |
| 72,625 |
| – |
| – |
| – |
|
| 72,625 |
| 72,625 |
| – |
| – |
| – |
|
| 72,625 |
Benefits and losses |
| – |
| 6,075 |
| 31,288 |
| – |
|
| 37,363 |
| – |
| 6,075 |
| 33,437 |
| – |
|
| 39,512 |
Amortization of deferred policy acquisition costs |
| – |
| – |
| 6,972 |
| – |
|
| 6,972 |
| – |
| – |
| 6,972 |
| – |
|
| 6,972 |
Lease expense |
| 8,261 |
| 26 |
| 26 |
| (629) | (b) |
| 7,684 |
| 8,261 |
| 26 |
| 26 |
| (629) | (b) |
| 7,684 |
Depreciation, net of gains on disposal |
| 117,318 |
| – |
| – |
| – |
|
| 117,318 | |||||||||||
Depreciation, net of gains on disposals |
| 117,318 |
| – |
| – |
| – |
|
| 117,318 | |||||||||||
Net losses on disposal of real estate |
| 1,872 |
| – |
| – |
| – |
|
| 1,872 |
| 1,872 |
| – |
| – |
| – |
|
| 1,872 |
Total costs and expenses |
| 1,121,915 |
| 17,677 |
| 43,844 |
| (2,667) |
|
| 1,180,769 |
| 1,121,915 |
| 17,677 |
| 45,993 |
| (2,667) |
|
| 1,182,918 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from operations before equity in earnings of subsidiaries |
| 514,943 |
| 5,686 |
| 1,852 |
| (386) |
|
| 522,095 |
| 514,943 |
| 5,686 |
| (297) |
| (386) |
|
| 519,946 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of subsidiaries |
| 6,055 |
| – |
| – |
| (6,055) | (d) |
| – |
| 3,906 |
| – |
| – |
| (3,906) | (d) |
| – |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from operations |
| 520,998 |
| 5,686 |
| 1,852 |
| (6,441) |
|
| 522,095 | |||||||||||
Earnings (losses) from operations |
| 518,849 |
| 5,686 |
| (297) |
| (4,292) |
|
| 519,946 | |||||||||||
Other components of net periodic benefit costs |
| (304) |
| – |
| – |
| – |
|
| (304) |
| (304) |
| – |
| – |
| – |
|
| (304) |
Interest expense |
| (57,459) |
| – |
| (120) |
| 386 | (b) |
| (57,193) |
| (57,459) |
| – |
| (120) |
| 386 | (b) |
| (57,193) |
Fees on early extinguishment of debt |
| (959) |
| – |
| – |
| – |
|
| (959) |
| (959) |
| – |
| – |
| – |
|
| (959) |
Pretax earnings |
| 462,276 |
| 5,686 |
| 1,732 |
| (6,055) |
|
| 463,639 | |||||||||||
Pretax earnings (losses) |
| 460,127 |
| 5,686 |
| (417) |
| (3,906) |
|
| 461,490 | |||||||||||
Income tax expense |
| (110,261) |
| (1,167) |
| (196) |
| – |
|
| (111,624) |
| (110,261) |
| (1,167) |
| (196) |
| – |
|
| (111,624) |
Earnings available to common stockholders | $ | 352,015 | $ | 4,519 | $ | 1,536 | $ | (6,055) |
| $ | 352,015 | |||||||||||
Net earnings (losses) available to common stockholders | $ | 349,866 | $ | 4,519 | $ | (613) | $ | (3,906) |
| $ | 349,866 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Balances for the quarter ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) Eliminate intercompany lease / interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) Eliminate intercompany premiums |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d) Eliminate equity in earnings of subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
Consolidating statements of operations by industry segment for the quarter ended September 30, 2021 are as follows:
|
| Moving & Storage Consolidated |
| Property & Casualty Insurance (a) |
| Life Insurance (a) |
| Eliminations |
|
| AMERCO Consolidated |
|
| (Unaudited) | |||||||||
|
| (In thousands) | |||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
Self-moving equipment rentals | $ | 1,180,329 | $ | – | $ | – | $ | (1,268) | (c) | $ | 1,179,061 |
Self-storage revenues |
| 153,485 |
| – |
| – |
| – |
|
| 153,485 |
Self-moving and self-storage products and service sales |
| 92,191 |
| – |
| – |
| – |
|
| 92,191 |
Property management fees |
| 8,747 |
| – |
| – |
| – |
|
| 8,747 |
Life insurance premiums |
| – |
| – |
| 28,913 |
| – |
|
| 28,913 |
Property and casualty insurance premiums |
| – |
| 23,357 |
| – |
| (858) | (c) |
| 22,499 |
Net investment and interest income |
| 675 |
| 6,182 |
| 30,942 |
| (1,019) | (b) |
| 36,780 |
Other revenue |
| 141,572 |
| – |
| 1,130 |
| (124) | (b) |
| 142,578 |
Total revenues |
| 1,576,999 |
| 29,539 |
| 60,985 |
| (3,269) |
|
| 1,664,254 |
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
| 682,329 |
| 10,768 |
| 5,223 |
| (2,246) | (b,c) |
| 696,074 |
Commission expenses |
| 127,896 |
| – |
| – |
| – |
|
| 127,896 |
Cost of sales |
| 66,491 |
| – |
| – |
| – |
|
| 66,491 |
Benefits and losses |
| – |
| 3,560 |
| 41,070 |
| – |
|
| 44,630 |
Amortization of deferred policy acquisition costs |
| – |
| – |
| 6,750 |
| – |
|
| 6,750 |
Lease expense |
| 8,024 |
| 22 |
| 29 |
| (634) | (b) |
| 7,441 |
Depreciation, net of gains on disposal |
| 135,748 |
| – |
| – |
| – |
|
| 135,748 |
Net losses on disposal of real estate |
| 523 |
| – |
| – |
| – |
|
| 523 |
Total costs and expenses |
| 1,021,011 |
| 14,350 |
| 53,072 |
| (2,880) |
|
| 1,085,553 |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from operations before equity in earnings of subsidiaries |
| 555,988 |
| 15,189 |
| 7,913 |
| (389) |
|
| 578,701 |
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of subsidiaries |
| 18,289 |
| – |
| – |
| (18,289) | (d) |
| – |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from operations |
| 574,277 |
| 15,189 |
| 7,913 |
| (18,678) |
|
| 578,701 |
Other components of net periodic benefit costs |
| (280) |
| – |
| – |
| – |
|
| (280) |
Interest expense |
| (39,814) |
| – |
| (120) |
| 389 | (b) |
| (39,545) |
Pretax earnings |
| 534,183 |
| 15,189 |
| 7,793 |
| (18,289) |
|
| 538,876 |
Income tax expense |
| (124,285) |
| (3,176) |
| (1,517) |
| – |
|
| (128,978) |
Earnings available to common stockholders | $ | 409,898 | $ | 12,013 | $ | 6,276 | $ | (18,289) |
| $ | 409,898 |
|
|
|
|
|
|
|
|
|
|
|
|
(a) Balances for the quarter ended June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
(b) Eliminate intercompany lease / interest income |
|
|
|
|
|
|
|
|
|
|
|
(c) Eliminate intercompany premiums |
|
|
|
|
|
|
|
|
|
|
|
(d) Eliminate equity in earnings of subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
2832
amerco and consolidated subsidiariesU-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
notes to condensed consolidated financial statements – (continued)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidating statements of operations by industryoperating segment for the six months ended September 30, 2023 are as follows:
|
| Moving & Storage Consolidated |
| Property & Casualty Insurance (a) |
| Life Insurance (a) |
| Eliminations |
|
| U-Haul Holding Company Consolidated |
|
| (Unaudited) | |||||||||
|
| (In thousands) | |||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
Self-moving equipment rentals | $ | 2,070,767 | $ | – | $ | – | $ | (2,156) | (c) | $ | 2,068,611 |
Self-storage revenues |
| 407,851 |
| – |
| – |
| – |
|
| 407,851 |
Self-moving and self-storage products and service sales |
| 192,443 |
| – |
| – |
| – |
|
| 192,443 |
Property management fees |
| 18,444 |
| – |
| – |
| – |
|
| 18,444 |
Life insurance premiums |
| – |
| – |
| 45,629 |
| – |
|
| 45,629 |
Property and casualty insurance premiums |
| – |
| 47,418 |
| – |
| (1,525) | (c) |
| 45,893 |
Net investment and interest income |
| 55,815 |
| 12,273 |
| 63,132 |
| (1,890) | (b) |
| 129,330 |
Other revenue |
| 279,771 |
| – |
| 2,442 |
| (246) | (b) |
| 281,967 |
Total revenues |
| 3,025,091 |
| 59,691 |
| 111,203 |
| (5,817) |
|
| 3,190,168 |
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
| 1,568,900 |
| 23,420 |
| 10,097 |
| (3,918) | (b,c) |
| 1,598,499 |
Commission expenses |
| 218,888 |
| – |
| – |
| – |
|
| 218,888 |
Cost of sales |
| 137,295 |
| – |
| – |
| – |
|
| 137,295 |
Benefits and losses |
| – |
| 8,687 |
| 79,210 |
| – |
|
| 87,897 |
Amortization of deferred policy acquisition costs |
| – |
| – |
| 14,871 |
| – |
|
| 14,871 |
Lease expense |
| 16,941 |
| 183 |
| 61 |
| (1,152) | (b) |
| 16,033 |
Depreciation, net of gains on disposals |
| 291,936 |
| – |
| – |
| – |
|
| 291,936 |
Net losses on disposal of real estate |
| 2,736 |
| – |
| – |
| – |
|
| 2,736 |
Total costs and expenses |
| 2,236,696 |
| 32,290 |
| 104,239 |
| (5,070) |
|
| 2,368,155 |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from operations before equity in earnings of subsidiaries |
| 788,395 |
| 27,401 |
| 6,964 |
| (747) |
|
| 822,013 |
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of subsidiaries |
| 27,092 |
| – |
| – |
| (27,092) | (d) |
| – |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from operations |
| 815,487 |
| 27,401 |
| 6,964 |
| (27,839) |
|
| 822,013 |
Other components of net periodic benefit costs |
| (729) |
| – |
| – |
| – |
|
| (729) |
Interest expense |
| (125,048) |
| – |
| (240) |
| 747 | (b) |
| (124,541) |
Pretax earnings |
| 689,710 |
| 27,401 |
| 6,724 |
| (27,092) |
|
| 696,743 |
Income tax expense |
| (159,364) |
| (5,653) |
| (1,380) |
| – |
|
| (166,397) |
Net earnings available to common stockholders | $ | 530,346 | $ | 21,748 | $ | 5,344 | $ | (27,092) |
| $ | 530,346 |
|
|
|
|
|
|
|
|
|
|
|
|
(a) Balances for the six months ended June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
(b) Eliminate intercompany lease / interest income |
|
|
|
|
|
|
|
|
|
|
|
(c) Eliminate intercompany premiums |
|
|
|
|
|
|
|
|
|
|
|
(d) Eliminate equity in earnings of subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
33
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidating statements of operations by operating segment for the six months ended September 30, 2022 are as follows:
|
| Moving & Storage Consolidated |
| Property & Casualty Insurance (a) |
| Life Insurance (a) |
| Eliminations |
|
| AMERCO Consolidated |
| Moving & Storage Consolidated |
| Property & Casualty Insurance (a) |
| Life Insurance (a) |
| Eliminations |
|
| U-Haul Holding Company Consolidated |
|
| (Unaudited) |
| (Unaudited) | ||||||||||||||||||
|
| (In thousands) |
| (In thousands) | ||||||||||||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Self-moving equipment rentals | $ | 2,255,086 | $ | – | $ | – | $ | (2,286) | (c) | $ | 2,252,800 | $ | 2,255,086 | $ | – | $ | – | $ | (2,286) | (c) | $ | 2,252,800 |
Self-storage revenues |
| 358,763 |
| – |
| – |
| – |
|
| 358,763 |
| 358,763 |
| – |
| – |
| – |
|
| 358,763 |
Self-moving and self-storage products and service sales |
| 206,215 |
| – |
| – |
| – |
|
| 206,215 |
| 206,215 |
| – |
| – |
| – |
|
| 206,215 |
Property management fees |
| 18,416 |
| – |
| – |
| – |
|
| 18,416 |
| 18,416 |
| – |
| – |
| – |
|
| 18,416 |
Life insurance premiums |
| – |
| – |
| 51,237 |
| – |
|
| 51,237 |
| – |
| – |
| 51,237 |
| – |
|
| 51,237 |
Property and casualty insurance premiums |
| – |
| 46,790 |
| – |
| (1,100) | (c) |
| 45,690 |
| – |
| 46,790 |
| – |
| (1,100) | (c) |
| 45,690 |
Net investment and interest income (loss) |
| 20,017 |
| (345) |
| 46,429 |
| (2,019) | (b) |
| 64,082 |
| 20,017 |
| (345) |
| 46,429 |
| (2,019) | (b) |
| 64,082 |
Other revenue |
| 301,959 |
| – |
| 2,133 |
| (591) | (b) |
| 303,501 |
| 301,959 |
| – |
| 2,133 |
| (591) | (b) |
| 303,501 |
Total revenues |
| 3,160,456 |
| 46,445 |
| 99,799 |
| (5,996) |
|
| 3,300,704 |
| 3,160,456 |
| 46,445 |
| 99,799 |
| (5,996) |
|
| 3,300,704 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
| 1,516,292 |
| 21,770 |
| 10,667 |
| (3,968) | (b,c) |
| 1,544,761 |
| 1,516,292 |
| 21,770 |
| 10,667 |
| (3,968) | (b,c) |
| 1,544,761 |
Commission expenses |
| 243,834 |
| – |
| – |
| – |
|
| 243,834 |
| 243,834 |
| – |
| – |
| – |
|
| 243,834 |
Cost of sales |
| 152,296 |
| – |
| – |
| – |
|
| 152,296 |
| 152,296 |
| – |
| – |
| – |
|
| 152,296 |
Benefits and losses |
| – |
| 10,454 |
| 71,009 |
| – |
|
| 81,463 |
| – |
| 10,454 |
| 68,815 |
| – |
|
| 79,269 |
Amortization of deferred policy acquisition costs |
| – |
| – |
| 14,644 |
| – |
|
| 14,644 |
| – |
| – |
| 14,644 |
| – |
|
| 14,644 |
Lease expense |
| 16,181 |
| 184 |
| 54 |
| (1,260) | (b) |
| 15,159 |
| 16,181 |
| 184 |
| 54 |
| (1,260) | (b) |
| 15,159 |
Depreciation, net of gains on disposal |
| 231,114 |
| – |
| – |
| – |
|
| 231,114 | |||||||||||
Net losses on disposal of real estate |
| 4,179 |
| – |
| – |
| – |
|
| 4,179 | |||||||||||
Depreciation, net of gains on disposals |
| 231,114 |
| – |
| – |
| – |
|
| 231,114 | |||||||||||
Net gains on disposal of real estate |
| 4,179 |
| – |
| – |
| – |
|
| 4,179 | |||||||||||
Total costs and expenses |
| 2,163,896 |
| 32,408 |
| 96,374 |
| (5,228) |
|
| 2,287,450 |
| 2,163,896 |
| 32,408 |
| 94,180 |
| (5,228) |
|
| 2,285,256 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from operations before equity in earnings of subsidiaries |
| 996,560 |
| 14,037 |
| 3,425 |
| (768) |
|
| 1,013,254 |
| 996,560 |
| 14,037 |
| 5,619 |
| (768) |
|
| 1,015,448 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of subsidiaries |
| 13,721 |
| – |
| – |
| (13,721) | (d) |
| – |
| 15,915 |
| – |
| – |
| (15,915) | (d) |
| – |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from operations |
| 1,010,281 |
| 14,037 |
| 3,425 |
| (14,489) |
|
| 1,013,254 |
| 1,012,475 |
| 14,037 |
| 5,619 |
| (16,683) |
|
| 1,015,448 |
Other components of net periodic benefit costs |
| (608) |
| – |
| – |
| – |
|
| (608) |
| (608) |
| – |
| – |
| – |
|
| (608) |
Interest expense |
| (107,520) |
| – |
| (240) |
| 768 | (b) |
| (106,992) |
| (107,520) |
| – |
| (240) |
| 768 | (b) |
| (106,992) |
Fees on early extinguishment of debt |
| (959) |
| – |
| – |
| – |
|
| (959) |
| (959) |
| – |
| – |
| – |
|
| (959) |
Pretax earnings |
| 901,194 |
| 14,037 |
| 3,185 |
| (13,721) |
|
| 904,695 |
| 903,388 |
| 14,037 |
| 5,379 |
| (15,915) |
|
| 906,889 |
Income tax expense |
| (215,177) |
| (2,922) |
| (579) |
| – |
|
| (218,678) |
| (215,177) |
| (2,922) |
| (579) |
| – |
|
| (218,678) |
Earnings available to common stockholders | $ | 686,017 | $ | 11,115 | $ | 2,606 | $ | (13,721) |
| $ | 686,017 | |||||||||||
Net earnings available to common stockholders | $ | 688,211 | $ | 11,115 | $ | 4,800 | $ | (15,915) |
| $ | 688,211 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Balances for the six months ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) Eliminate intercompany lease / interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) Eliminate intercompany premiums |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d) Eliminate equity in earnings of subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29
amerco and consolidated subsidiaries34
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
notes to condensed consolidated financial statements – (continued)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidating cash flow statements of operations by industryoperating segment for the six months ended September 30, 20212023 are as follows:
|
| Moving & Storage Consolidated |
| Property & Casualty Insurance (a) |
| Life Insurance (a) |
| Eliminations |
|
| AMERCO Consolidated |
|
| (Unaudited) | |||||||||
|
| (In thousands) | |||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
Self-moving equipment rentals | $ | 2,216,542 | $ | – | $ | – | $ | (2,104) | (c) | $ | 2,214,438 |
Self-storage revenues |
| 290,878 |
| – |
| – |
| – |
|
| 290,878 |
Self-moving and self-storage products and service sales |
| 197,076 |
| – |
| – |
| – |
|
| 197,076 |
Property management fees |
| 17,196 |
| – |
| – |
| – |
|
| 17,196 |
Life insurance premiums |
| – |
| – |
| 57,618 |
| – |
|
| 57,618 |
Property and casualty insurance premiums |
| – |
| 40,800 |
| – |
| (1,432) | (c) |
| 39,368 |
Net investment and interest income |
| 1,355 |
| 12,195 |
| 60,266 |
| (2,037) | (b) |
| 71,779 |
Other revenue |
| 247,206 |
| – |
| 1,760 |
| (209) | (b) |
| 248,757 |
Total revenues |
| 2,970,253 |
| 52,995 |
| 119,644 |
| (5,782) |
|
| 3,137,110 |
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
| 1,284,160 |
| 19,581 |
| 10,598 |
| (3,736) | (b,c) |
| 1,310,603 |
Commission expenses |
| 241,045 |
| – |
| – |
| – |
|
| 241,045 |
Cost of sales |
| 136,406 |
| – |
| – |
| – |
|
| 136,406 |
Benefits and losses |
| – |
| 8,787 |
| 83,141 |
| – |
|
| 91,928 |
Amortization of deferred policy acquisition costs |
| – |
| – |
| 15,573 |
| – |
|
| 15,573 |
Lease expense |
| 16,101 |
| 206 |
| 53 |
| (1,272) | (b) |
| 15,088 |
Depreciation, net of gains on disposal |
| 257,465 |
| – |
| – |
| – |
|
| 257,465 |
Net gains on disposal of real estate |
| (3,907) |
| – |
| – |
| – |
|
| (3,907) |
Total costs and expenses |
| 1,931,270 |
| 28,574 |
| 109,365 |
| (5,008) |
|
| 2,064,201 |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from operations before equity in earnings of subsidiaries |
| 1,038,983 |
| 24,421 |
| 10,279 |
| (774) |
|
| 1,072,909 |
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of subsidiaries |
| 27,408 |
| – |
| – |
| (27,408) | (d) |
| – |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from operations |
| 1,066,391 |
| 24,421 |
| 10,279 |
| (28,182) |
|
| 1,072,909 |
Other components of net periodic benefit costs |
| (560) |
| – |
| – |
| – |
|
| (560) |
Interest expense |
| (79,257) |
| – |
| (240) |
| 774 | (b) |
| (78,723) |
Pretax earnings |
| 986,574 |
| 24,421 |
| 10,039 |
| (27,408) |
|
| 993,626 |
Income tax expense |
| (231,501) |
| (5,106) |
| (1,946) |
| – |
|
| (238,553) |
Earnings available to common stockholders | $ | 755,073 | $ | 19,315 | $ | 8,093 | $ | (27,408) |
| $ | 755,073 |
|
|
|
|
|
|
|
|
|
|
|
|
(a) Balances for the six months ended June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
(b) Eliminate intercompany lease / interest income |
|
|
|
|
|
|
|
|
|
|
|
(c) Eliminate intercompany premiums |
|
|
|
|
|
|
|
|
|
|
|
(d) Eliminate equity in earnings of subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
|
| Moving & Storage Consolidated |
| Property & Casualty Insurance (a) |
| Life Insurance (a) |
| Elimination |
|
| U-Haul Holding Company Consolidated |
|
| (Unaudited) | |||||||||
Cash flows from operating activities: |
| (In thousands) | |||||||||
Net earnings | $ | 530,346 | $ | 21,748 | $ | 5,344 | $ | (27,092) |
| $ | 530,346 |
Earnings from consolidated entities |
| (27,092) |
| – |
| – |
| 27,092 |
|
| – |
Adjustments to reconcile net earnings to the cash provided by operations: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
| 394,400 |
| – |
| – |
| – |
|
| 394,400 |
Amortization of deferred policy acquisition costs |
| – |
| – |
| 14,871 |
| – |
|
| 14,871 |
Amortization of premiums and accretion of discounts related to investments, net |
| – |
| 794 |
| 7,647 |
| – |
|
| 8,441 |
Amortization of debt issuance costs |
| 3,427 |
| – |
| – |
| – |
|
| 3,427 |
Interest credited to policyholders |
| – |
| – |
| 36,329 |
| – |
|
| 36,329 |
Provision for allowance (recoveries) for losses on trade receivables, net |
| 646 |
| (68) |
| – |
| – |
|
| 578 |
Provision for allowance for inventories and parts reserve |
| 3,461 |
| – |
| – |
| – |
|
| 3,461 |
Net gains on disposal of personal property |
| (102,464) |
| – |
| – |
| – |
|
| (102,464) |
Net losses on disposal of real estate |
| 2,736 |
| – |
| – |
| – |
|
| 2,736 |
Net gains on sales of investments |
| – |
| (9) |
| (908) |
| – |
|
| (917) |
Net gains on equity securities |
| – |
| (2,745) |
| – |
| – |
|
| (2,745) |
Deferred income taxes |
| 108,291 |
| 501 |
| (1,041) |
| – |
|
| 107,751 |
Net change in other operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Reinsurance recoverables and trade receivables |
| (23,200) |
| (1,865) |
| 1,663 |
| – |
|
| (23,402) |
Inventories and parts |
| (13,520) |
| – |
| – |
| – |
|
| (13,520) |
Prepaid expenses |
| (21,824) |
| – |
| – |
| – |
|
| (21,824) |
Capitalization of deferred policy acquisition costs |
| – |
| – |
| (7,773) |
| – |
|
| (7,773) |
Other assets and right of use assets - operating, net |
| (7,339) |
| 134 |
| (1,546) |
| – |
|
| (8,751) |
Related party assets |
| 6,279 |
| 1,124 |
| – |
| – |
|
| 7,403 |
Accounts payable and accrued expenses and operating lease liabilities |
| 38,562 |
| 1,446 |
| (16,760) |
| – |
|
| 23,248 |
Policy benefits and losses, claims and loss expenses payable |
| (10,609) |
| (2,859) |
| (5,085) |
| – |
|
| (18,553) |
Other policyholders' funds and liabilities |
| – |
| (576) |
| 22 |
| – |
|
| (554) |
Deferred income |
| 4,532 |
| – |
| (417) |
| – |
|
| 4,115 |
Related party liabilities |
| 671 |
| 425 |
| (268) |
| – |
|
| 828 |
Net cash provided by operating activities |
| 887,303 |
| 18,050 |
| 32,078 |
| – |
|
| 937,431 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
Escrow deposits |
| 573 |
| – |
| – |
| – |
|
| 573 |
Purchases of: |
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
| (1,664,387) |
| – |
| – |
| – |
|
| (1,664,387) |
Short term investments |
| – |
| – |
| (44,903) |
| – |
|
| (44,903) |
Fixed maturities investments |
| (97,331) |
| (2,216) |
| (7,230) |
| – |
|
| (106,777) |
Equity securities |
| – |
| (308) |
| (1) |
| – |
|
| (309) |
Real estate investments |
| (16) |
| – |
| (521) |
| – |
|
| (537) |
Mortgage loans |
| – |
| (7,300) |
| (90,402) |
| – |
|
| (97,702) |
Proceeds from sales and paydowns of: |
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
| 408,279 |
| – |
| – |
| – |
|
| 408,279 |
Short term investments |
| – |
| 15,959 |
| – |
| – |
|
| 15,959 |
Fixed maturities investments |
| 224,999 |
| 7,180 |
| 157,037 |
| – |
|
| 389,216 |
Equity securities |
| – |
| 296 |
| 4 |
| – |
|
| 300 |
Preferred stock |
| – |
| 913 |
| – |
| – |
|
| 913 |
Mortgage loans |
| – |
| 422 |
| 12,627 |
| – |
|
| 13,049 |
Net cash used by investing activities |
| (1,127,883) |
| 14,946 |
| 26,611 |
| – |
|
| (1,086,326) |
|
| (page 1 of 2) | |||||||||
(a) Balance for the period ended June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
30
amerco and consolidated subsidiaries35
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
notes to condensed consolidated financial statements – (continued)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidating cash flow statements by industryoperating segment for the six months ended September 30, 2023 are as follows:
|
| Moving & Storage Consolidated |
| Property & Casualty Insurance (a) |
| Life Insurance (a) |
| Elimination |
|
| U-Haul Holding Company Consolidated |
|
| (Unaudited) | |||||||||
Cash flows from financing activities: |
| (In thousands) | |||||||||
Borrowings from credit facilities |
| 704,960 |
| – |
| – |
| – |
|
| 704,960 |
Principal repayments on credit facilities |
| (351,893) |
| – |
| – |
| – |
|
| (351,893) |
Payments of debt issuance costs |
| (4,018) |
| – |
| – |
| – |
|
| (4,018) |
Finance lease payments |
| (59,752) |
| – |
| – |
| – |
|
| (59,752) |
Securitization deposits |
| 151 |
| – |
| – |
| – |
|
| 151 |
Series N Non-Voting Common Stock dividends paid |
| (14,118) |
| – |
| – |
| – |
|
| (14,118) |
Investment contract deposits |
| – |
| – |
| 132,630 |
| – |
|
| 132,630 |
Investment contract withdrawals |
| – |
| – |
| (174,256) |
| – |
|
| (174,256) |
Net cash provided by financing activities |
| 275,330 |
| – |
| (41,626) |
| – |
|
| 233,704 |
|
|
|
|
|
|
|
|
|
|
|
|
Effects of exchange rate on cash |
| (202) |
| – |
| – |
| – |
|
| (202) |
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents |
| 34,548 |
| 32,996 |
| 17,063 |
| – |
|
| 84,607 |
Cash and cash equivalents at beginning of period |
| 2,034,242 |
| 11,276 |
| 15,006 |
| – |
|
| 2,060,524 |
Cash and cash equivalents at end of period | $ | 2,068,790 | $ | 44,272 | $ | 32,069 | $ | – |
| $ | 2,145,131 |
|
| (page 2 of 2) | |||||||||
(a) Balance for the period ended June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
36
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidating cash flow statements by operating segment for the six months ended September 30, 2022 are as follows:
|
| Moving & Storage Consolidated |
| Property & Casualty Insurance (a) |
| Life Insurance (a) |
| Elimination |
|
| AMERCO Consolidated |
|
| (Unaudited) | |||||||||
Cash flows from operating activities: |
| (In thousands) | |||||||||
Net earnings | $ | 686,017 | $ | 11,115 | $ | 2,606 | $ | (13,721) |
| $ | 686,017 |
Earnings from consolidated entities |
| (13,721) |
| – |
| – |
| 13,721 |
|
| – |
Adjustments to reconcile net earnings to the cash provided by operations: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
| 359,804 |
| – |
| – |
| – |
|
| 359,804 |
Amortization of deferred policy acquisition costs |
| – |
| – |
| 14,644 |
| – |
|
| 14,644 |
Amortization of premiums and accretion of discounts related to investments, net |
| – |
| 857 |
| 9,392 |
| – |
|
| 10,249 |
Amortization of debt issuance costs |
| 3,356 |
| – |
| – |
| – |
|
| 3,356 |
Interest credited to policyholders |
| – |
| – |
| 24,690 |
| – |
|
| 24,690 |
Provision for allowance for losses on trade receivables |
| (5,404) |
| (90) |
| – |
| – |
|
| (5,494) |
Provision for allowance for inventories and parts reserve |
| 7,125 |
| – |
| – |
| – |
|
| 7,125 |
Net gains on disposal of personal property |
| (128,690) |
| – |
| – |
| – |
|
| (128,690) |
Net losses on disposal of real estate |
| 4,179 |
| – |
| – |
| – |
|
| 4,179 |
Net (gains) losses on sales of investments |
| – |
| (58) |
| 7,265 |
| – |
|
| 7,207 |
Net losses on equity investments |
| – |
| 7,963 |
| – |
| – |
|
| 7,963 |
Deferred income taxes, net |
| 107,281 |
| (1,119) |
| (2,334) |
| – |
|
| 103,828 |
Net change in other operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Reinsurance recoverables and trade receivables |
| 30,678 |
| (1,088) |
| 2,752 |
| – |
|
| 32,342 |
Inventories and parts |
| (14,416) |
| – |
| – |
| – |
|
| (14,416) |
Prepaid expenses |
| 3 |
| – |
| – |
| – |
|
| 3 |
Capitalization of deferred policy acquisition costs |
| – |
| – |
| (14,900) |
| – |
|
| (14,900) |
Other assets |
| 2,877 |
| (169) |
| (276) |
| – |
|
| 2,432 |
Related party assets |
| (2,479) |
| 839 |
| – |
| – |
|
| (1,640) |
Accounts payable and accrued expenses |
| 65,366 |
| 1,396 |
| (2,465) |
| – |
|
| 64,297 |
Policy benefits and losses, claims and loss expenses payable |
| 19,640 |
| (3,381) |
| (2,605) |
| – |
|
| 13,654 |
Other policyholders' funds and liabilities |
| – |
| 112 |
| 1,202 |
| – |
|
| 1,314 |
Deferred income |
| 7,809 |
| – |
| 1,649 |
| – |
|
| 9,458 |
Related party liabilities |
| 460 |
| (183) |
| 465 |
| – |
|
| 742 |
Net cash provided by operating activities |
| 1,129,885 |
| 16,194 |
| 42,085 |
| – |
|
| 1,188,164 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
Escrow deposits |
| 9,688 |
| – |
| – |
| – |
|
| 9,688 |
Purchases of: |
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
| (1,335,528) |
| – |
| – |
| – |
|
| (1,335,528) |
Short term investments |
| – |
| (35,975) |
| (198) |
| – |
|
| (36,173) |
Fixed maturities investments |
| – |
| (18,573) |
| (183,692) |
| – |
|
| (202,265) |
Equity securities |
| – |
| (2,705) |
| (1,651) |
| – |
|
| (4,356) |
Preferred stock |
| – |
| – |
| – |
| – |
|
| – |
Real estate |
| – |
| (4,920) |
| (11) |
| – |
|
| (4,931) |
Mortgage loans |
| – |
| (12,715) |
| (62,920) |
| – |
|
| (75,635) |
Proceeds from sales and paydowns of: |
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
| 329,611 |
| – |
| – |
| – |
|
| 329,611 |
Short term investments |
| – |
| 33,373 |
| – |
| – |
|
| 33,373 |
Fixed maturities investments |
| – |
| 10,587 |
| 95,940 |
| – |
|
| 106,527 |
Equity securities |
| – |
| 711 |
| 6 |
| – |
|
| 717 |
Mortgage loans |
| – |
| 14,419 |
| 59,746 |
| – |
|
| 74,165 |
Net cash used by investing activities |
| (996,229) |
| (15,798) |
| (92,780) |
| – |
|
| (1,104,807) |
|
| (page 1 of 2) | |||||||||
(a) Balance for the period ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
| Moving & Storage Consolidated |
| Property & Casualty Insurance (a) |
| Life Insurance (a) |
| Elimination |
|
| U-Haul Holding Company Consolidated |
|
| (Unaudited) | |||||||||
Cash flows from operating activities: |
| (In thousands) | |||||||||
Net earnings | $ | 688,211 | $ | 11,115 | $ | 4,800 | $ | (15,915) |
| $ | 688,211 |
Earnings from consolidated entities |
| (15,915) |
| – |
| – |
| 15,915 |
|
| – |
Adjustments to reconcile net earnings to cash provided by operations: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
| 359,804 |
| – |
| – |
| – |
|
| 359,804 |
Amortization of deferred policy acquisition costs |
| – |
| – |
| 14,644 |
| – |
|
| 14,644 |
Amortization of premiums and accretion of discounts related to investments, net |
| – |
| 857 |
| 9,392 |
| – |
|
| 10,249 |
Amortization of debt issuance costs |
| 3,356 |
| – |
| – |
| – |
|
| 3,356 |
Interest credited to policyholders |
| – |
| – |
| 24,690 |
| – |
|
| 24,690 |
Provision for allowance (recoveries) for losses on trade receivables, net |
| (5,404) |
| (90) |
| – |
| – |
|
| (5,494) |
Provision for allowance for inventories and parts reserve |
| 7,125 |
| – |
| – |
| – |
|
| 7,125 |
Net gains on disposal of personal property |
| (128,690) |
| – |
| – |
| – |
|
| (128,690) |
Net losses on disposal of real estate |
| 4,179 |
| – |
| – |
| – |
|
| 4,179 |
Net (gains) losses on sales of investments |
| – |
| (58) |
| 7,265 |
| – |
|
| 7,207 |
Net gains on equity securities |
| – |
| 7,963 |
| – |
| – |
|
| 7,963 |
Deferred income taxes |
| 107,281 |
| (1,119) |
| (2,334) |
| – |
|
| 103,828 |
Net change in other operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Reinsurance recoverables and trade receivables |
| 30,678 |
| (1,088) |
| 2,752 |
| – |
|
| 32,342 |
Inventories and parts |
| (14,416) |
| – |
| – |
| – |
|
| (14,416) |
Prepaid expenses |
| 3 |
| – |
| – |
| – |
|
| 3 |
Capitalization of deferred policy acquisition costs |
| – |
| – |
| (14,900) |
| – |
|
| (14,900) |
Other assets |
| 2,877 |
| (169) |
| (276) |
| – |
|
| 2,432 |
Related party assets |
| (2,479) |
| 839 |
| – |
| – |
|
| (1,640) |
Accounts payable and accrued expenses |
| 65,366 |
| 1,396 |
| (2,465) |
| – |
|
| 64,297 |
Policy benefits and losses, claims and loss expenses payable |
| 19,640 |
| (3,381) |
| (4,799) |
| – |
|
| 11,460 |
Other policyholders' funds and liabilities |
| – |
| 112 |
| 1,202 |
| – |
|
| 1,314 |
Deferred income |
| 7,809 |
| – |
| 1,649 |
| – |
|
| 9,458 |
Related party liabilities |
| 460 |
| (183) |
| 465 |
| – |
|
| 742 |
Net cash provided by operating activities |
| 1,129,885 |
| 16,194 |
| 42,085 |
| – |
|
| 1,188,164 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
Escrow deposits |
| 9,688 |
| – |
| – |
| – |
|
| 9,688 |
Purchases of: |
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
| (1,335,528) |
| – |
| – |
| – |
|
| (1,335,528) |
Short term investments |
| – |
| (35,975) |
| (198) |
| – |
|
| (36,173) |
Fixed maturities investments |
| – |
| (18,573) |
| (183,692) |
| – |
|
| (202,265) |
Equity securities |
| – |
| (2,705) |
| (1,651) |
| – |
|
| (4,356) |
Real estate investments |
| – |
| (4,920) |
| (11) |
| – |
|
| (4,931) |
Mortgage loans |
| – |
| (12,715) |
| (62,920) |
| – |
|
| (75,635) |
Proceeds from sales and paydowns of: |
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
| 329,611 |
| – |
| – |
| – |
|
| 329,611 |
Short term investments |
| – |
| 33,373 |
| – |
| – |
|
| 33,373 |
Fixed maturities investments |
| – |
| 10,587 |
| 95,940 |
| – |
|
| 106,527 |
Equity securities |
| – |
| 711 |
| 6 |
| – |
|
| 717 |
Mortgage loans |
| – |
| 14,419 |
| 59,746 |
| – |
|
| 74,165 |
Net cash used by investing activities |
| (996,229) |
| (15,798) |
| (92,780) |
| – |
|
| (1,104,807) |
|
| (page 1 of 2) | |||||||||
(a) Balance for the period ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
31
amerco and consolidated subsidiaries37
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
notes to condensed consolidated financial statements – (continued)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidating cash flow statements by industryoperating segment for the six months ended September 30, 2022 are as follows:
|
| Moving & Storage Consolidated |
| Property & Casualty Insurance (a) |
| Life Insurance (a) |
| Elimination |
|
| AMERCO Consolidated |
|
| (Unaudited) | |||||||||
Cash flows from financing activities: |
| (In thousands) | |||||||||
Borrowings from credit facilities |
| 792,654 |
| – |
| – |
| – |
|
| 792,654 |
Principal repayments on credit facilities |
| (441,019) |
| – |
| – |
| – |
|
| (441,019) |
Payments of debt issuance costs |
| (3,942) |
| – |
| – |
| – |
|
| (3,942) |
Finance lease payments |
| (65,831) |
| – |
| – |
| – |
|
| (65,831) |
Securitization deposits |
| 49 |
| – |
| – |
| – |
|
| 49 |
Common stock dividends paid |
| (19,608) |
| – |
| – |
| – |
|
| (19,608) |
Investment contract deposits |
| – |
| – |
| 169,017 |
| – |
|
| 169,017 |
Investment contract withdrawals |
| – |
| – |
| (139,917) |
| – |
|
| (139,917) |
Net cash provided by financing activities |
| 262,303 |
| – |
| 29,100 |
| – |
|
| 291,403 |
|
|
|
|
|
|
|
|
|
|
|
|
Effects of exchange rate on cash |
| (13,782) |
| – |
| – |
| – |
|
| (13,782) |
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents |
| 382,177 |
| 396 |
| (21,595) |
| – |
|
| 360,978 |
Cash and cash equivalents at beginning of period |
| 2,643,213 |
| 10,800 |
| 50,124 |
| – |
|
| 2,704,137 |
Cash and cash equivalents at end of period | $ | 3,025,390 | $ | 11,196 | $ | 28,529 | $ | – |
| $ | 3,065,115 |
|
| (page 2 of 2) | |||||||||
(a) Balance for the period ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
32
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
Consolidating cash flow statements by industry segment for the six months ended September 30, 2021 are as follows:
|
| Moving & Storage Consolidated |
| Property & Casualty Insurance (a) |
| Life Insurance (a) |
| Elimination |
|
| AMERCO Consolidated |
|
| (Unaudited) | |||||||||
Cash flows from operating activities: |
| (In thousands) | |||||||||
Net earnings | $ | 755,073 | $ | 19,315 | $ | 8,093 | $ | (27,408) |
| $ | 755,073 |
Earnings from consolidated entities |
| (27,408) |
| – |
| – |
| 27,408 |
|
| – |
Adjustments to reconcile net earnings to cash provided by operations: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
| 343,863 |
| – |
| – |
| – |
|
| 343,863 |
Amortization of deferred policy acquisition costs |
| – |
| – |
| 15,573 |
| – |
|
| 15,573 |
Amortization of premiums and accretion of discounts related to investments, net |
| – |
| 754 |
| 8,397 |
| – |
|
| 9,151 |
Amortization of debt issuance costs |
| 2,791 |
| – |
| – |
| – |
|
| 2,791 |
Interest credited to policyholders |
| – |
| – |
| 31,894 |
| – |
|
| 31,894 |
Provision for allowance for losses on trade receivables |
| 253 |
| (30) |
| (1) |
| – |
|
| 222 |
Provision for allowance for inventories and parts reserve |
| 8,352 |
| – |
| – |
| – |
|
| 8,352 |
Net gains on disposal of personal property |
| (86,398) |
| – |
| – |
| – |
|
| (86,398) |
Net gains on disposal of real estate |
| (3,907) |
| – |
| – |
| – |
|
| (3,907) |
Net gains on sales of investments |
| – |
| (207) |
| (3,225) |
| – |
|
| (3,432) |
Net gains on equity investments |
| – |
| (4,342) |
| – |
| – |
|
| (4,342) |
Deferred income taxes, net |
| 140,780 |
| 865 |
| (2,729) |
| – |
|
| 138,916 |
Net change in other operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Reinsurance recoverables and trade receivables |
| 6,159 |
| (148) |
| (9,782) |
| – |
|
| (3,771) |
Inventories and parts |
| (45,718) |
| – |
| – |
| – |
|
| (45,718) |
Prepaid expenses |
| 266,780 |
| – |
| – |
| – |
|
| 266,780 |
Capitalization of deferred policy acquisition costs |
| – |
| – |
| (17,807) |
| – |
|
| (17,807) |
Other assets |
| (1,033) |
| (179) |
| (115) |
| – |
|
| (1,327) |
Related party assets |
| (1,161) |
| (1,563) |
| – |
| – |
|
| (2,724) |
Accounts payable and accrued expenses |
| 89,479 |
| 1,547 |
| 522 |
| – |
|
| 91,548 |
Policy benefits and losses, claims and loss expenses payable |
| 15,250 |
| 174 |
| 3,544 |
| – |
|
| 18,968 |
Other policyholders' funds and liabilities |
| – |
| (222) |
| (1,255) |
| – |
|
| (1,477) |
Deferred income |
| 8,626 |
| – |
| (1,034) |
| – |
|
| 7,592 |
Related party liabilities |
| 543 |
| (2,098) |
| 855 |
| – |
|
| (700) |
Net cash provided by operating activities |
| 1,472,324 |
| 13,866 |
| 32,930 |
| – |
|
| 1,519,120 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
Escrow deposits |
| (2,341) |
| – |
| – |
| – |
|
| (2,341) |
Purchases of: |
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
| (1,039,688) |
| – |
| – |
| – |
|
| (1,039,688) |
Short term investments |
| – |
| (21,669) |
| – |
| – |
|
| (21,669) |
Fixed maturities investments |
| – |
| (7,749) |
| (407,891) |
| – |
|
| (415,640) |
Equity securities |
| – |
| – |
| (36) |
| – |
|
| (36) |
Preferred stock |
| – |
| – |
| (8,000) |
| – |
|
| (8,000) |
Real estate |
| (12) |
| – |
| (112) |
| – |
|
| (124) |
Mortgage loans |
| (12) |
| (10,700) |
| (96,251) |
| – |
|
| (106,963) |
Proceeds from sales and paydowns of: |
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
| 306,946 |
| – |
| – |
| – |
|
| 306,946 |
Short term investments |
| – |
| 16,594 |
| 79 |
| – |
|
| 16,673 |
Fixed maturities investments |
| – |
| 10,728 |
| 219,315 |
| – |
|
| 230,043 |
Equity securities |
| – |
| – |
| 1,894 |
| – |
|
| 1,894 |
Mortgage loans |
| – |
| 565 |
| 26,047 |
| – |
|
| 26,612 |
Net cash used by investing activities |
| (735,107) |
| (12,231) |
| (264,955) |
| – |
|
| (1,012,293) |
|
| (page 1 of 2) | |||||||||
(a) Balance for the period ended June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
33
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
Consolidating cash flow statements by industry segment for the six months ended September 30, 2021 are as follows:
|
| Moving & Storage Consolidated |
| Property & Casualty Insurance (a) |
| Life Insurance (a) |
| Elimination |
|
| AMERCO Consolidated |
| Moving & Storage Consolidated |
| Property & Casualty Insurance (a) |
| Life Insurance (a) |
| Elimination |
|
| U-Haul Holding Company Consolidated |
|
| (Unaudited) |
| (Unaudited) | ||||||||||||||||||
Cash flows from financing activities: |
| (In thousands) |
| (In thousands) | ||||||||||||||||||
Borrowings from credit facilities |
| 987,048 |
| – |
| – |
| – |
|
| 987,048 |
| 792,654 |
| – |
| – |
| – |
|
| 792,654 |
Principal repayments on credit facilities |
| (226,791) |
| – |
| (281) |
| – |
|
| (227,072) |
| (441,019) |
| – |
| – |
| – |
|
| (441,019) |
Payment of debt issuance costs |
| (2,092) |
| – |
| – |
| – |
|
| (2,092) |
| (3,942) |
| – |
| – |
| – |
|
| (3,942) |
Finance lease payments |
| (87,500) |
| – |
| – |
| – |
|
| (87,500) |
| (65,831) |
| – |
| – |
| – |
|
| (65,831) |
Securitization deposits |
| 49 |
| – |
| – |
| – |
|
| 49 | |||||||||||
Common stock dividends paid |
| (19,608) |
| – |
| – |
| – |
|
| (19,608) |
| (19,608) |
| – |
| – |
| – |
|
| (19,608) |
Investment contract deposits |
| – |
| – |
| 199,426 |
| – |
|
| 199,426 |
| – |
| – |
| 169,017 |
| – |
|
| 169,017 |
Investment contract withdrawals |
| – |
| – |
| (116,021) |
| – |
|
| (116,021) |
| – |
| – |
| (139,917) |
| – |
|
| (139,917) |
Net cash provided (used) by financing activities |
| 651,057 |
| – |
| 83,124 |
| – |
|
| 734,181 | |||||||||||
Net cash provided by financing activities |
| 262,303 |
| – |
| 29,100 |
| – |
|
| 291,403 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effects of exchange rate on cash |
| (4,787) |
| – |
| – |
| – |
|
| (4,787) |
| (13,782) |
| – |
| – |
| – |
|
| (13,782) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents |
| 1,383,487 |
| 1,635 |
| (148,901) |
| – |
|
| 1,236,221 |
| 382,177 |
| 396 |
| (21,595) |
| – |
|
| 360,978 |
Cash and cash equivalents at beginning of period |
| 1,010,275 |
| 5,658 |
| 178,079 |
| – |
|
| 1,194,012 |
| 2,643,213 |
| 10,800 |
| 50,124 |
| – |
|
| 2,704,137 |
Cash and cash equivalents at end of period | $ | 2,393,762 | $ | 7,293 | $ | 29,178 | $ | – |
| $ | 2,430,233 | $ | 3,025,390 | $ | 11,196 | $ | 28,529 | $ | – |
| $ | 3,065,115 |
|
| (page 2 of 2) |
| (page 2 of 2) | ||||||||||||||||||
(a) Balance for the period ended June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
| |||||||||||
(a) Balance for the period ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
3438
amerco and consolidated subsidiariesU-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
notes to condensed consolidated financial statements – (continued)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. Industry Segment and12. Geographic Area Data
|
| United States |
| Canada |
| Consolidated |
|
| (Unaudited) | ||||
|
| (All amounts are in thousands of U.S. $'s) | ||||
Quarter Ended September 30, 2022 |
|
|
|
|
|
|
Total revenues | $ | 1,610,067 | $ | 92,797 | $ | 1,702,864 |
Depreciation and amortization, net of (gains) on disposal |
| 124,735 |
| 1,427 |
| 126,162 |
Interest expense |
| 56,477 |
| 716 |
| 57,193 |
Pretax earnings |
| 446,369 |
| 17,270 |
| 463,639 |
Income tax expense |
| 107,254 |
| 4,370 |
| 111,624 |
Identifiable assets |
| 17,515,009 |
| 628,334 |
| 18,143,343 |
|
|
|
|
|
|
|
Quarter Ended September 30, 2021 |
|
|
|
|
|
|
Total revenues | $ | 1,576,830 | $ | 87,424 | $ | 1,664,254 |
Depreciation and amortization, net of (gains) on disposal |
| 141,956 |
| 1,065 |
| 143,021 |
Interest expense |
| 38,588 |
| 957 |
| 39,545 |
Pretax earnings |
| 521,658 |
| 17,218 |
| 538,876 |
Income tax expense |
| 124,620 |
| 4,358 |
| 128,978 |
Identifiable assets |
| 15,849,380 |
| 487,848 |
| 16,337,228 |
|
| United States |
| Canada |
| Consolidated |
| United States |
| Canada |
| Consolidated | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| (Unaudited) |
| (Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| (All amounts are in thousands of U.S. United States Canada Consolidated (Unaudited) (All amounts are in thousands of U.S. $'s) Six Months Ended September 30, 2023 Total revenues $ 3,020,489 $ 169,679 $ 3,190,168 Depreciation and amortization, net of (gains) on disposals 309,398 145 309,543 Interest expense 123,128 1,413 124,541 Pretax earnings 675,514 21,229 696,743 Income tax expense 160,630 5,767 166,397 Identifiable assets 18,279,234 742,216 19,021,450 Six Months Ended September 30, 2022 Total revenues $ 3,120,453 $ 180,251 $ 3,300,704 Depreciation and amortization, net of (gains) on disposals 245,721 4,216 249,937 Interest expense 105,425 1,567 106,992 Pretax earnings 876,101 30,788 906,889 Income tax expense 210,867 7,811 218,678 Identifiable assets 17,515,009 628,334 18,143,343 The components of the net periodic benefit costs with respect to postretirement benefits were as follows: Quarter Ended September 30, 2022 2021 (Unaudited) (In thousands) Service cost for benefits earned during the period $ 331 $ 351 Other components of net periodic benefit costs: Interest cost on accumulated postretirement benefit 287 227 Other components 17 53 Total other components of net periodic benefit costs 304 280 Net periodic postretirement benefit cost $ 635 $ 631 Six Months Ended September 30, Quarter Ended September 30, 2022 2021 2023 2022 (Unaudited) (Unaudited) (In thousands) (In thousands) Service cost for benefits earned during the period $ 663 $ 701 $ 297 $ 331 Other components of net periodic benefit costs: Interest cost on accumulated postretirement benefit 574 454 368 287 Other components 34 106 (4) 17 Total other components of net periodic benefit costs 608 560 364 304 Net periodic postretirement benefit cost $ 1,271 $ 1,261 $ 661 $ 635 Six Months Ended September 30, 2023 2022 (Unaudited) (In thousands) Service cost for benefits earned during the period $ 594 $ 663 Other components of net periodic benefit costs: Interest cost on accumulated postretirement benefit 735 574 Other components (6) 34 Total other components of net periodic benefit costs 729 608 Net periodic postretirement benefit cost $ 1,323 $ 1,271 14. Fair Value Measurements Certain assets and liabilities are recorded at fair value on the Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2 – Quoted prices for identical or similar financial instruments in markets that are not considered to be active, or similar financial instruments for which all significant inputs are observable, either directly or indirectly, or inputs other than quoted prices that are observable, or inputs that are derived principally from or corroborated by observable market data through correlation or other means; and Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and are unobservable. These reflect management’s assumptions about the assumptions a market participant would use in pricing the asset or liability. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Fair values of cash equivalents approximate carrying value due to the short period of time to maturity. Fair values of short-term investments are based on quoted market prices. 40 U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Fair values of investments available-for-sale Fair values on interest rate swap contracts are based on using pricing valuation models which include broker quotes. Fair values of long-term investment and mortgage loans and notes on real estate are based on quoted market prices, dealer quotes or discounted cash flows.Fair values of reinsurance recoverables and trade receivables approximate their recorded value. Our financial instruments that are exposed to concentrations of credit risk consist primarily of temporary cash investments, trade receivables, reinsurance recoverables and notes receivable. Limited credit risk exists on trade receivables due to the diversity of our customer base and their dispersion across broad geographic markets. We place our temporary cash investments with financial institutions and limit the amount of credit exposure to any one financial institution. We have mortgage Other The carrying values and estimated fair values for the financial instruments stated above and their placement in the fair value hierarchy are as follows: Fair Value Hierarchy Fair Value Hierarchy Carrying Total Estimated Carrying Total Estimated As of September 30, 2022 Value Level 1 Level 2 Level 3 Fair Value As of September 30, 2023 Value Level 1 Level 2 Level 3 Fair Value (Unaudited) (Unaudited) Assets (In thousands) (In thousands) Reinsurance recoverables and trade receivables, net $ 203,202 $ – $ – $ 203,202 $ 203,202 $ 212,565 $ – $ – $ 212,565 $ 212,565 Mortgage loans, net 424,633 – – 424,633 417,894 550,913 – – 521,831 521,831 Other investments 123,565 – – 123,565 123,565 88,712 – – 88,712 88,712 Total $ 751,400 $ – $ – $ 751,400 $ 744,661 $ 852,190 $ – $ – $ 823,108 $ 823,108 Liabilities Notes, loans and finance leases payable 6,336,570 – 6,336,570 – 5,930,507 $ 6,436,800 $ – $ 5,961,511 $ – $ 5,961,511 Total $ 6,336,570 $ – $ 6,336,570 $ – $ 5,930,507 $ 6,436,800 $ – $ 5,961,511 $ – $ 5,961,511 41 U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Fair Value Hierarchy Carrying Total Estimated As of March 31, 2022 Value Level 1 Level 2 Level 3 Fair Value (In thousands) Assets Reinsurance recoverables and trade receivables, net $ 229,343 $ – $ – $ 229,343 $ 229,343 Mortgage loans, net 423,163 – – 423,163 450,347 Other investments 120,592 – – 120,592 120,592 Total $ 773,098 $ – $ – $ 773,098 $ 800,282 Liabilities Notes, loans and finance leases payable 6,059,713 – 6,059,713 – 5,875,781 Total $ 6,059,713 $ – $ 6,059,713 $ – $ 5,875,781 Fair Value Hierarchy Carrying Total Estimated As of March 31, 2023 Value Level 1 Level 2 Level 3 Fair Value (In thousands) Assets Reinsurance recoverables and trade receivables, net $ 189,498 $ – $ – $ 189,498 $ 189,498 Mortgage loans, net 466,531 – – 444,957 444,957 Other investments 109,009 – – 109,009 109,009 Total $ 765,038 $ – $ – $ 743,464 $ 743,464 Liabilities Notes, loans and finance leases payable 6,143,350 – 5,710,735 – 5,710,735 Total $ 6,143,350 $ – $ 5,710,735 $ – $ 5,710,735 The following tables represent the financial assets and liabilities on the As of September 30, 2022 Total Level 1 Level 2 Level 3 (Unaudited) Assets (In thousands) Short-term investments $ 2,823,208 $ 2,821,751 $ 1,457 $ – Fixed maturities - available for sale 2,552,311 24,803 2,527,416 92 Preferred stock 22,921 22,921 – – Common stock 40,526 40,526 – – Derivatives 10,167 1,659 8,508 – Total $ 5,449,133 $ 2,911,660 $ 2,537,381 $ 92 Liabilities Derivatives – – – – Total $ – $ – $ – $ – As of March 31, 2022 Total Level 1 Level 2 Level 3 As of September 30, 2023 Total Level 1 Level 2 Level 3 (In thousands) (Unaudited) Assets (In thousands) Short-term investments $ 2,482,154 $ 2,482,154 $ – $ – $ 1,808,130 $ 1,807,142 $ 988 $ – Fixed maturities - available for sale 2,821,092 26,914 2,794,086 92 2,472,128 168,287 2,303,782 59 Preferred stock 26,095 26,095 – – 19,991 19,991 – – Common stock 46,212 46,212 – – 42,045 42,045 – – Derivatives 7,474 7,474 – – 22,854 10,526 12,328 – Total $ 5,383,027 $ 2,588,849 $ 2,794,086 $ 92 $ 4,365,148 $ 2,047,991 $ 2,317,098 $ 59 Liabilities Derivatives 587 – 587 – Embedded derivatives $ 9,630 $ – $ – $ 9,630 Total $ 587 $ – $ 587 $ – $ 9,630 $ – $ – $ 9,630 As of March 31, 2023 Total Level 1 Level 2 Level 3 (In thousands) Assets Short-term investments $ 1,809,441 $ 1,808,797 $ 644 $ – Fixed maturities - available for sale 2,709,037 251,832 2,457,146 59 Preferred stock 21,982 21,982 – – Common stock 39,375 39,375 – – Derivatives 9,606 4,295 5,311 – Total $ 4,589,441 $ 2,126,281 $ 2,463,101 $ 59 U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES 15. Revenue Recognition Revenue Recognized in Accordance with Topic 606 ASC Topic 606, Revenue from Contracts with Customers (Topic 606), outlines a five-step model for entities to use in accounting for revenue arising from contracts with customers. The standard applies to all contracts with customers except for leases, insurance contracts, financial instruments, certain nonmonetary exchanges and certain guarantees. The standard also requires disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. We enter into contracts that may include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of amounts collected from customers for taxes, such as sales tax, and remitted to the applicable taxing authorities. We account for a contract under Topic 606 when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. For contracts scoped into this standard, revenue is recognized when (or as) the performance obligations are satisfied by means of transferring goods or services to the customer as applicable to each revenue stream as discussed below. There were no material contract assets or liabilities as of September 30, Sales of self-moving and self-storage related products are recognized at the time that title passes and the customer accepts delivery. The performance obligations identified for this portfolio of contracts include moving and storage product sales, installation services and/or propane sales. Each of these performance obligations has an observable stand-alone selling price. We concluded that the performance obligations identified are satisfied at a point in time. The basis for this conclusion is that the customer does not receive the product/propane or benefit from the installation services until the related performance obligation is satisfied. These products/services being provided have an alternative use as they are not customized and can be sold/provided to any customer. In addition, we only have the right to receive payment once the products have been transferred to the customer or the installation services have been completed. Although product sales have a right of return policy, our estimated obligation for future product returns is not material to the financial statements at this time. Property management fees are recognized over the period that agreed-upon services are provided. The performance obligation for this portfolio of contracts is property management services, which represents a series of distinct days of service, each of which is comprised of activities that may vary from day to day. However, those tasks are activities to fulfill the property management services and are not separate promises in the contract. We determined that each increment of the promised service is distinct. This is because the customer can benefit from each increment of service on its own and each increment of service is separately identifiable because no day of service significantly modifies or customizes another and no day of service significantly affects either the entity’s ability to fulfill another day of service or the benefit to the customer of another day of service. As such, we concluded that the performance obligation is satisfied over time. Additionally, in certain contracts the Company has the ability to earn an incentive fee based on operational results. We measure and recognize the progress toward completion of the performance obligation on a quarterly basis using the most likely amount method to determine an accrual for the incentive fee portion of the compensation received in exchange for the property management service. The variable consideration recognized is subject to constraints due to a range of possible consideration amounts based on actual operational results. The amount accrued in the second quarter of fiscal Other revenue consists of numerous services or rentals, of which U-Box contracts and service fees from Moving Help are the main components. The performance obligations identified for U-Box contracts are fees for rental, storage and shipping of U-Box containers to a specified location, each of which are distinct. A contract may be partially within the scope of Topic 606 and partially within the scope of other topics. The rental and storage obligations in U-Box contracts meet the definition of a lease in Topic 842, while the shipping obligation represents a contract with a customer accounted for under Topic 606. Therefore, we allocate the total transaction price between the performance obligations of storage fees and rental fees and the shipping fees on a standalone selling price basis. U-Box shipping fees are collected once the shipment 43 U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS is in transit. Shipping fees in U-Box contracts are set at the initiation of the contract based on the shipping origin and destination, and the performance obligation is satisfied over time. U-Box shipping contracts span over a relatively short period of time, and the majority of these contracts begin and end within the same fiscal year. Moving Revenue Recognized in Accordance with Topic 842 Self-moving equipment rentals are recognized over the contract period that trucks and moving equipment are rented. We offer two types of self-moving rental contracts, one-way rentals and in-town rentals, which have varying payment terms. Customer payment is received at the initiation of the contract for one-way rentals which covers an allowable limit for equipment usage. An estimated fee in the form of a deposit is received at the initiation of the contract for in-town rentals, and final payment is received upon the return of the equipment based on actual fees incurred. The contract price is estimated at the initiation of the contract, as there is variable consideration associated with ratable fees incurred based on the number of days the equipment is rented and the number of miles driven. Variable consideration is estimated using the most likely amount method which is based on the intended use of the rental equipment by the customer at the initiation of the contract. Historically, the variability in estimated transaction pricing compared to actual is not significant due to the relatively short duration of rental contracts. Each performance obligation has an observable stand-alone selling price. The input method of passage of time is appropriate as there is a direct relationship between our inputs and the transfer of benefit to the customer over the life of the contract. Self-moving rental contracts span a relatively short period of time, and the majority of these contracts began and ended within the same fiscal year. Self-storage revenues are recognized as earned over the contract period based upon the number of paid storage contract days. We lease portions of our operating properties to tenants under agreements that are classified as operating leases. We recognize the total minimum lease payments provided for under the leases on a straight-line basis over the lease term. Generally, under the terms of our leases, the majority of our rental expenses, including common area maintenance, real estate taxes and insurance, are recovered from our customers. The following table summarizes the minimum lease payments due from our customers and operating property tenants on leases for the next five years and thereafter: Years Ending March 31, 2023 2024 2025 2026 2027 Thereafter (Unaudited) (In thousands) Self-moving equipment rentals $ 6,605 $ – $ – $ – $ – $ – Property lease revenues 17,916 11,354 8,694 6,937 4,884 39,491 Total $ 24,521 $ 11,354 $ 8,694 $ 6,937 $ 4,884 $ 39,491 Years Ending September 30, 2024 2025 2026 2027 2028 Thereafter (Unaudited) (In thousands) Self-moving equipment rentals $ 7,139 $ – $ – $ – $ – $ – Property lease revenues 20,722 14,491 11,509 8,275 5,678 37,972 Total $ 27,861 $ 14,491 $ 11,509 $ 8,275 $ 5,678 $ 37,972 The amounts above do not reflect future rental revenue from the renewal or replacement of existing leases. 44 U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Revenue Recognized in Accordance with Other Topics Traditional life and Medicare supplement insurance premiums are recognized as revenue over the premium-paying periods of the contracts when due from the policyholders. For products where premiums are due over a significantly shorter duration than the period over which benefits are provided, such as our single premium whole life product, premiums are recognized when received and excess profits are deferred and recognized in relation to the insurance Property and casualty insurance premiums are recognized as revenue over the policy periods. Interest and investment income are recognized as earned. Net investment and interest income has multiple components. Interest income from bonds and mortgage notes are recognized when earned. Dividends on common and preferred stocks are recognized on the ex-dividend dates. Realized gains and losses on the sale or exchange of investments are recognized at the trade date. In the following tables, revenue is disaggregated by timing of revenue recognition: Quarter Ended September 30, Quarter Ended September 30, 2022 2021 2023 2022 (Unaudited) (Unaudited) (In thousands) (In thousands) Revenues recognized over time: $ 127,091 $ 108,038 $ 118,368 $ 127,091 Revenues recognized at a point in time: 118,966 110,924 111,759 118,966 Total revenues recognized under ASC 606 246,057 218,962 230,127 246,057 Revenues recognized under ASC 842 1,373,925 1,355,934 1,305,523 1,373,925 Revenues recognized under ASC 944 52,373 52,578 49,472 52,373 Revenues recognized under ASC 320 30,509 36,780 64,738 30,509 Total revenues $ 1,702,864 $ 1,664,254 $ 1,649,860 $ 1,702,864 Six Months Ended September 30, Six Months Ended September 30, 2022 2021 2023 2022 (Unaudited) (Unaudited) (In thousands) (In thousands) Revenues recognized over time: $ 230,285 $ 187,853 $ 209,683 $ 230,285 Revenues recognized at a point in time: 245,321 231,642 229,352 245,321 Total revenues recognized under ASC 606 475,606 419,495 439,035 475,606 Revenues recognized under ASC 842 2,661,956 2,546,944 2,527,839 2,661,956 Revenues recognized under ASC 944 99,060 98,892 93,964 99,060 Revenues recognized under ASC 320 64,082 71,779 129,330 64,082 Total revenues $ 3,300,704 $ 3,137,110 $ 3,190,168 $ 3,300,704 In the above tables, the revenues recognized over time include property management fees, the shipping fees associated with U-Box container rentals and a portion of other revenues. Revenues recognized at a point in time include self-moving equipment rentals, self-moving and self-storage products and service sales and a portion of other revenues. 45 U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS We recognized liabilities resulting from contracts with customers for self-moving equipment rentals, self-storage revenues, U-Box revenues and tenant revenues, in which the length of the contract goes beyond the reported period end, although rental periods of the equipment, storage and U-Box contract are generally short-term in nature. The timing of revenue recognition results in liabilities that are reflected in deferred income on the balance sheet. Trade Receivables Moving and Storage has two The Company performs ongoing credit evaluations of its customers and assesses each customer’s credit worthiness. In addition, the Company monitors collections and payments from its customers and maintains an allowance based upon applying an expected credit loss rate to receivables based on the historical loss rate from similar high-risk customers adjusted for current conditions, including any specific customer collection issues identified, and forecasts of economic conditions. Delinquent account balances are written off after management has determined that the likelihood of collection is remote. Management believes that the historical loss information it has compiled is a reasonable base on which to determine expected credit losses for trade receivables because the composition of trade receivables as of that date is consistent with that used in developing the historical credit loss percentages (i.e., the similar risk characteristics of its customers and its lending practices have not changed significantly over time). To adjust the historical loss rates to reflect the effects of these differences in current conditions and forecasted changes, management assigns a rating to each Accrued Interest Receivable Accrued interest receivables on available for sale securities totaled Mortgage Loans that management has the intent and ability to hold for the foreseeable future, or until maturity or payoff, are reported at amortized cost. Modeling for the Company’s mortgage loans is based on inputs most highly correlated to defaults, including loan-to-value, occupancy, and payment history. Historical credit loss experience provides additional support for the estimation of expected credit losses. In assessing the credit losses, the portfolio is reviewed on a collective basis, using loan-specific cash flows to determine the fair value of the collateral in the event of default. Adjustments to this analysis are made to assess loans with a loan-to-value of 65% or greater. These loans are evaluated on an individual basis and loan specific risk characteristics such as occupancy levels, expense, income growth and other relevant available information from internal and external sources relating to past events, current conditions, and reasonable and supportable forecasts. 46 U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS When management determines that credit losses are expected to occur, an allowance for expected credit losses based on the fair value of the collateral is recorded. Reinsurance Reinsurance recoverables on paid and unpaid benefits was less than 1% of the total assets as of June 30, Premium Premium receivables were The following details the changes in the Company’s reserve allowance for credit losses for trade receivables, fixed maturities and investments, other: Allowance for Credit Losses Allowance for Credit Losses Trade Receivables Investments, Fixed Maturities Investments, other Total Trade Receivables Investments, Fixed Maturities Investments, other Total (Unaudited) (Unaudited) (in thousands) (in thousands) Balance as of March 31, 2021 $ 4,421 $ 1,320 $ 501 $ 6,242 Provision for (reversal of) credit losses 4,228 (1,260) – 2,968 Write-offs against allowance – – – – Recoveries – – – – Balance as of March 31, 2022 $ 8,649 $ 60 $ 501 $ 9,210 $ 8,649 $ 60 $ 501 $ 9,210 Provision for (reversal of) credit losses (5,506) 1,948 4 (3,554) (4,860) 2,041 16 (2,803) Write-offs against allowance – – – – – – – – Recoveries – – – – – – – – Balance as of September 30, 2022 $ 3,143 $ 2,008 $ 505 $ 5,656 Balance as of March 31, 2023 $ 3,789 $ 2,101 $ 517 $ 6,407 Provision for (reversal of) credit losses 578 (429) 300 449 Write-offs against allowance – – – – Recoveries – – – – Balance as of September 30, 2023 $ 4,367 $ 1,672 $ 817 $ 6,856 17. Accounting Pronouncements Adoption of new Accounting Pronouncements On April 1, 2023, the Company adopted ASU 2018-12 which is applicable to Oxford. The Company adopted ASU 2018-12 effective April 1, 2023 and used the modified retrospective method with a transition date of April 1, 2021. The updated accounting guidance required changes to the measurement and disclosure of long-duration contracts. For the Company, this includes all life insurance products, annuities, Medicare supplement products and our long-term care business. Entities will be required to review, and update if there is a change to cash flow assumptions (including morbidity and persistency) at least annually, and to update discount rate assumptions quarterly using an upper-medium grade fixed-income instrument yield. The effect of changes in cash flow assumptions will be recorded in the Company's results of operations and the effect of changes in discount rate assumptions will be recorded in other comprehensive income. The most significant impact will be the effect of updating the discount rate assumption quarterly to reflect an upper-medium grade fixed-income instrument yield, rather than Oxford Life’s expected investment portfolio yield. This will be partially offset by the de-recognition of cumulative adjustments to DAC associated with unrealized gains and losses associated with long-duration contracts. The Company uses a published spot rate curve constructed from “A”-rated U.S. dollar denominated corporate bonds matched to the duration of the corresponding insurance liabilities, to calculate discount rates. The Company groups its long-duration contracts into calendar year cohorts based on the contract issue date. 47 U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DAC and other capitalized costs such as unearned revenue are amortized on a constant level or straight-line basis over the expected term of the contracts. Under ASU 2018-12, the annual amortization of DAC in our Consolidated Statements of Operations will differ from previous trends due to: (1) the requirement to no longer defer renewal commissions until such year as the commissions are actually incurred, (2) the requirement to no longer accrue and amortize interest on our DAC balances, and (3) the modification of the method for amortizing DAC including the updating of assumptions. For business with deferrals of renewal commissions, as is the case with our final expense life insurance policies, the expected amortization rate, as a percentage of premium, for certain blocks of business will no longer be level but will increase over the period of time during which commissions are deferred. The decrease in amortization in the near term will primarily impact our life insurance line of business. Upon adoption, the Company made adjustments to AOCI for the removal of cumulative adjustments to DAC associated with unrealized gains and losses previously recorded in AOCI. In total, we expect the impact on net earnings, largely from the decrease in amortization, to be immaterial during fiscal 2024, but could become material with a large increase in sales. Market risk benefits, which are contracts or contract features that provide protection to the policyholder from capital market risk and expose the Company to other-than-nominal capital market risk, are measured at fair value.Market risk benefits are contracts or contract features that guarantee benefits, such as guaranteed life withdrawal benefits, in addition to an account balance which expose insurance companies to other than nominal capital market risk and protect the contract holder from the same risk. Certain contracts or contract features to be identified as market risk benefits were accounted for as embedded derivatives and measured at fair value, while others transitioned to fair value measurement upon the adoption of ASU 2018-12. Also in consideration of market risk benefits, upon adoption, there were impacts to (1) AOCI for the cumulative effect of changes in the instrument-specific credit risk between contract issue date and transition date and (2) retained earnings for the difference between fair value and carrying value at the transition date, excluding the changes in the instrument-specific credit risk. The requirement to review, and update if there is a change, cash flow assumptions at least annually is expected to change the pattern of earnings being recognized. Adoption significantly expanded the Company’s disclosures, and will impact systems, processes, and controls. While the requirements of the new guidance represent a material change from existing GAAP, the accounting adoption had no economic impact on the cash flows of our business nor influence on our business model of providing basic mortality and longevity protection-oriented products to the underserved senior market. In addition, it did not impact our statutory earnings, statutory capital, or capital management philosophies. The following tables present the effect of the adoption of ASU 2018-12 on selected consolidated balance sheet data for the fiscal years ended March 31, 2023 and 2022. Year Ended March 31, 2023 2022 (Unaudited) (In thousands) Total Assets Prior to adoption $ 18,124,648 $ 17,299,581 Effect of adoption: Derecognition of shadow DAC (25,141) 26,131 Re-measurement due to discount rate – – Other adjustments 1,227 1,471 Subtotal $ (23,914) $ 27,602 After adoption $ 18,100,734 $ 17,327,183 48 U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Year Ended March 31, 2023 2022 (Unaudited) (In thousands) Total Liabilities Prior to adoption $ 11,596,313 $ 11,347,089 Effect of adoption: Deferred income tax adjustment on Shadow removal (5,280) 5,488 Re-measurement due to discount rate (1,626) 87,258 Deferred income tax adjustment on discount rate 342 (18,324) Other adjustments 6,794 8,511 Subtotal $ 230 $ 82,933 After adoption $ 11,596,543 $ 11,430,022 Year Ended March 31, 2023 2022 (Unaudited) (In thousands) Accumulated other comprehensive income (loss) Prior to adoption $ (267,046) $ 46,384 Effect of adoption: Derecognition on shadow DAC (tax effect) (19,861) 20,644 Re-measurement due to discount rate 1,626 (87,258) Re-measurement due to discount rate (tax effect) (342) 18,324 Other adjustments – – Subtotal $ (18,577) $ (48,290) After adoption $ (285,623) $ (1,906) Year Ended March 31, 2023 2022 (Unaudited) (In thousands) Total Stockholders' equity Prior to adoption $ 6,528,335 $ 5,952,492 Effect of adoption: Derecognition on shadow DAC (tax effect) (19,861) 20,644 Re-measurement due to discount rate (tax effect) 1,284 (68,934) Other adjustments (5,567) (7,042) Subtotal $ (24,144) $ (55,332) After adoption $ 6,504,191 $ 5,897,160 49 U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Year Ended March 31, 2023 As previously reported Adoption impact As adjusted (Unaudited) (In thousands) Deferred policy acquisition costs, net $ 152,377 (23,914) $ 128,463 Total assets 18,124,648 (23,914) 18,100,734 Policy benefits and losses, claims and loss expenses payable 875,034 5,168 880,202 Deferred income taxes, net 1,334,427 (4,938) 1,329,489 Total liabilities 11,596,313 230 11,596,543 Accumulated other comprehensive loss (267,046) (18,577) (285,623) Retained earnings 7,008,715 (5,567) 7,003,148 Total stockholders' equity 6,528,335 (24,144) 6,504,191 Total liabilities and stockholders' equity 18,124,648 (23,914) 18,100,734 April 1, 2021 March 31, 2021 (Unaudited) (In thousands) Deferred policy acquisition costs, net $ 131,187 $ 89,749 Total assets 14,693,044 14,651,606 Policy benefits and losses, claims and loss expenses payable 1,040,951 909,701 Deferred income taxes, net 1,182,123 1,199,280 Total liabilities 9,846,608 9,732,515 Accumulated other comprehensive income 42,319 106,857 Retained earnings 5,017,451 5,025,568 Total stockholders' equity 4,846,436 4,919,091 Total liabilities and stockholders' equity 14,693,044 14,651,606 The following tables present the balances of and changes in deferred acquisition costs, future policy benefits and market risk benefits and balances amortized on a basis consistent with DAC on April 1, 2021 due to the adoption of ASU 2018-12 by Oxford. Deferred Policy Acquisition Costs Payout Annuities Life Insurance Health Insurance Total (Unaudited) (In thousands) Balance, end of year March 31, 2021 $ 15,654 $ 64,552 $ 9,543 $ 89,749 Adjustments for removal of related balances in accumulated other comprehensive income 41,438 – – 41,438 Adjusted balance, beginning of year April 1, 2021 $ 57,092 $ 64,552 $ 9,543 $ 131,187 50 U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Future Policy Benefit Payout Annuities Life Insurance Health Insurance Total (Unaudited) (In thousands) Balance, end of year March 31, 2021 $ 8,370 $ 310,311 $ 18,341 $ 337,022 Change in discount rate assumptions 2,307 115,978 4,847 123,132 Change in cash flow assumptions, effect of net premiums exceeding gross premiums – 1,747 – 1,747 Change in cash flow assumptions, effect of decrease of the deferred profit liability – 2,580 – 2,580 Adjusted balance, beginning of year April 1, 2021 $ 10,677 $ 430,616 $ 23,188 $ 464,481 Market Risk Benefits Deferred Annuities (Unaudited) (In thousands) Balance, end of year March 31, 2021 $ 7,339 Adjustment for the difference between carrying amount and fair value, except for the difference due to instrument-specific credit risk 3,791 Adjusted balance, beginning of year April 1, 2021 $ 11,130 Retained Earnings Accumulated Other Comprehensive Loss (Unaudited) (In thousands) Liability for future policy benefits $ (4,327) $ (123,132) Market risk benefits (3,791) – Deferred acquisition costs and related asset balances – 41,438 Tax effect – 17,156 Total $ (8,118) $ (64,538) Recent Accounting Pronouncements In 51 U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS on our financial 18. Deferred Policy Acquisition Costs, Net The following tables present a rollforward of deferred policy acquisition costs related to long-duration contracts for the Six Months Ended September 30, 2023 Payout Annuities Life Insurance Health Insurance Total (Unaudited) (In thousands) Balance, beginning of year $ 55,396 $ 66,954 $ 6,113 $ 128,463 Capitalization 5,441 2,212 120 7,773 Amortization expense (9,631) (4,515) (725) (14,871) Balance, end of period $ 51,206 $ 64,651 $ 5,508 $ 121,365 Six Months Ended September 30, 2022 Payout Annuities Life Insurance Health Insurance Total (Unaudited) (In thousands) Balance, beginning of year $ 56,175 $ 68,676 $ 8,718 $ 133,569 Capitalization 10,468 4,212 220 14,900 Amortization expense (9,457) (3,872) (1,315) (14,644) Balance, end of period $ 57,186 $ 69,016 $ 7,623 $ 133,825 52 U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 19. Policy Benefits and Losses, Claims and Loss Expenses Payable The following tables present the balances and changes in the policy benefitsand a reconciliation of Six Months Ended September 30, 2023 Life Insurance Health Insurance Total (Unaudited) (In thousands) Present value of expected net premiums Balance, beginning of year $ 223,118 $ 196,569 $ 419,687 Beginning balance at original discount rate $ 225,071 $ 212,454 $ 437,525 Effect of changes in cash flow assumptions – – – Effect of actual variances from expected experience (187) (5,644) (5,831) Adjusted beginning of year balance $ 224,884 $ 206,810 $ 431,694 Issuances 5,072 77 5,149 Interest accrual 5,554 4,096 9,650 Net premium collected (19,833) (13,357) (33,190) Other – – – Ending balance at original discount rate $ 215,677 $ 197,626 $ 413,303 Effect of changes in discount rate assumptions (AOCI) (1,650) (14,337) (15,987) Balance, end of period $ 214,027 $ 183,289 $ 397,316 Present value of expected future policy benefits Balance, beginning of year $ 530,938 $ 210,054 $ 740,992 Beginning balance at original discount rate $ 533,688 $ 226,510 $ 760,198 Effect of changes in cash flow assumptions – – – Effect of actual variances from expected experiences (565) (4,215) (4,780) Adjusted beginning of year balance $ 533,123 $ 222,295 $ 755,418 Issuances 5,211 77 5,288 Interest accrual 13,166 4,402 17,568 Benefit payments (27,720) (16,162) (43,882) Other – – – Ending balance at original discount rate $ 523,780 $ 210,612 $ 734,392 Effect of changes in discount rate assumptions (AOCI) 949 (14,760) (13,811) Balance, end of period $ 524,729 $ 195,852 $ 720,581 End of period, LFPB net 323,265 Payout annuities and market risk benefits 30,685 Life and annuity ICOS and IBNR / Reinsurance losses payable 10,101 Life DPL / Other life and health 26,556 Oxford end of period balance 390,607 Moving and Storage balance 324,642 Property and Casualty balance 150,148 Policy benefit and losses, claims and loss expense balance, end of period $ 865,397 53 U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES Six Months Ended September 30, 2022 Life Insurance Health Insurance Total (Unaudited) (In thousands) Present value of expected net premiums Balance, beginning of year $ 280,371 $ 280,732 $ 561,103 Beginning balance at original discount rate $ 242,741 $ 253,307 $ 496,048 Effect of changes in cash flow assumptions – – – Effect of actual variances from expected experience 748 1,026 1,774 Adjusted beginning of year balance $ 243,489 $ 254,333 $ 497,822 Issuances 14,083 2,453 16,536 Interest accrual 6,037 5,062 11,099 Net premium collected (21,946) (15,041) (36,987) Other – – – Ending balance at original discount rate $ 241,663 $ 246,807 $ 488,470 Effect of changes in discount rate assumptions (AOCI) 7,814 (7,959) (145) Balance, end of period $ 249,477 $ 238,848 $ 488,325 Present value of expected future policy benefits Balance, beginning of year $ 672,254 $ 299,628 $ 971,882 Beginning balance at original discount rate $ 552,109 $ 269,177 $ 821,286 Effect of changes in cash flow assumptions – – – Effect of actual variances from expected experiences 1,031 1,713 2,744 Adjusted beginning of year balance $ 553,140 $ 270,890 $ 824,030 Issuances 14,083 2,453 16,536 Interest accrual 13,714 5,391 19,105 Benefit payments (29,783) (17,653) (47,436) Other – – – Ending balance at original discount rate $ 551,154 $ 261,081 $ 812,235 Effect of changes in discount rate assumptions (AOCI) 25,907 (7,779) 18,128 Balance, end of period $ 577,061 $ 253,302 $ 830,363 End of period, LFPB net 342,038 Payout annuities and market risk benefits 33,157 Life and annuity ICOS and IBNR / Reinsurance losses payable 11,226 Life DPL / Other life and health 37,130 Oxford end of period balance 423,551 Moving and Storage balance 348,854 Property and Casualty balance 156,998 Policy benefit and losses, claims and loss expense balance, end of period $ 929,403 54 U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Six Months Ended September 30, 2023 Life Insurance Health Insurance Total (Unaudited) (In thousands, except for percentages and weighted average information) Expected gross premiums Undiscounted balance $ 387,141 $ 331,852 $ 718,993 Discounted balance at original discount rate $ 299,161 $ 256,658 $ 555,819 Discounted balance at current discount rate $ 296,505 $ 239,939 $ 536,444 Expected policy benefits Undiscounted balance $ 761,261 $ 273,079 $ 1,034,340 Discounted balance at original discount rate $ 523,777 $ 210,612 $ 734,389 Discounted balance at current discount rate $ 524,726 $ 195,852 $ 720,578 Mortality, lapses and morbidity Mortality actual experience 5.02 % – % Mortality expected experience 5.06 % – % Lapses actual experience 1.87 % – % Lapses expected experience 2.65 % – % Morbidity actual experience – % 85.53 % Morbidity expected experience – % 73.50 % Premiums and interest expense Gross premiums $ 26,667 $ 18,432 $ 45,099 Other premiums – Total premiums $ 45,099 Interest expense $ 7,612 $ 306 $ 7,918 Expected duration (persistency) of policies in-force (years) 6.9 6.5 Weighted average original interest rate of the liability for future policy benefits 5.00 % 4.00 % Weighted average current interest rate of the liability for future policy benefits 5.00 % 5.00 % 55 U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Six Months Ended September 30, 2022 Life Insurance Health Insurance Total (Unaudited) (In thousands, except for percentages and weighted average information) Expected gross premiums Undiscounted balance $ 427,457 $ 434,063 $ 861,520 Discounted balance at original discount rate $ 329,233 $ 333,001 $ 662,234 Discounted balance at current discount rate $ 339,434 $ 325,323 $ 664,757 Expected policy benefits Undiscounted balance $ 807,725 $ 342,371 $ 1,150,096 Discounted balance at original discount rate $ 551,153 $ 261,081 $ 812,234 Discounted balance at current discount rate $ 577,060 $ 253,302 $ 830,362 Mortality, lapses and morbidity Mortality actual experience 5.07 % – % Mortality expected experience 4.78 % – % Lapses actual experience 2.04 % – % Lapses expected experience 2.53 % – % Morbidity actual experience – % 79.25 % Morbidity expected experience – % 71.30 % Premiums and interest expense Gross premiums $ 29,158 $ 21,703 $ 50,861 Other premiums – Total premiums $ 50,861 Interest expense $ 7,677 $ 329 $ 8,006 Expected duration (persistency) of policies in-force (years) 7.1 6.8 Weighted average original interest rate of the liability for future policy benefits 5.00 % 4.00 % Weighted average current interest rate of the liability for future policy benefits 1.00 % 1.00 % 56 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following tables present the balances and changes in Liabilities from investment contracts account balances: Six Months Ended September 30, 2023 Deferred Annuities (Unaudited) (In thousands, except for the average credited rate) Policyholder contract deposits account balance Beginning of year $ 2,398,884 Deposits received 125,122 Surrenders and withdrawals (146,647) Benefit payments (20,761) Interest credited 36,992 Other – End of period $ 2,393,590 Weighted average credited rate 3.09 Cash surrender value $ 2,062,233 Six Months Ended September 30, 2022 Deferred Annuities (Unaudited) (In thousands, except for the average credited rate) Policyholder contract deposits account balance Beginning of year $ 2,336,238 Deposits received 169,008 Surrenders and withdrawals (122,450) Benefit payments (18,334) Interest credited 25,566 Other – End of period $ 2,390,028 Weighted average credited rate 2.16 Cash surrender value $ 2,082,936 57 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations General We begin Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) with the overall strategy of This MD&A should be read in conjunction with the other sections of this Quarterly Report, including the Notes to Overall Strategy Our overall strategy is to maintain our leadership position in the United States and Canada “do-it-yourself” moving and storage industry. We accomplish this by providing a seamless and integrated supply chain to the “do-it-yourself” moving and storage market. As part of executing this strategy, we leverage the brand recognition of U-Haul®with our full line of moving and self-storage related products and services and the convenience of our broad geographic presence. Our primary focus is to provide our customers with a wide selection of moving rental equipment, convenient self-storage rental facilities, portable moving and storage units and related moving and self-storage products and services. We are able to expand our distribution and improve customer service by increasing the amount of moving equipment and storage units and portable moving and storage units available for rent, expanding the number of independent dealers and company operated locations in our Property and Casualty Insurance is focused on providing and administering property and casualty insurance to U-Haul and its customers, its independent dealers and affiliates. Life Insurance is focused on long term capital growth through direct writing and reinsuring of life insurance, Medicare supplement and annuity products in the senior marketplace. Description of Operating Segments Moving and Storage Moving and Storage consists of the rental of trucks, trailers, portable moving and storage units, specialty rental items and self-storage spaces primarily to the household mover as well as sales of moving supplies, towing accessories and propane. Operations are conducted under the registered trade name U-Haul®throughout the United States and Canada. With respect to our truck, trailer, specialty rental items and self-storage rental business, we are focused on expanding our dealer and center network, which provides added convenience for our customers, and expands the selection and availability of rental equipment to satisfy the needs of our customers. U-Haul®branded self-moving related products and services, such as boxes, pads and tape, allow our customers to, among other things, protect their belongings from potential damage during the moving process. We are committed to providing a complete line of products selected with the “do-it-yourself” moving and storage customer in mind. uhaul.com®is an online marketplace that connects consumers to our operations as well as independent Moving Help®service providers and thousands of independent Self-Storage Affiliates. Our network of customer-rated affiliates and service providers furnish pack and load help, cleaning help, self-storage and similar services throughout the United States and Canada. Our goal is to further utilize our web-based technology platform to increase service to consumers and businesses in the moving and storage market. U-Haul’s mobile app, Truck Share 24/7, Skip-the-Counter Self-Storage rentals and Self-checkout for moving supplies provide our customers methods for conducting business with us directly via their mobile devices and also limiting physical exposure. Since 1945, U-Haul has incorporated sustainable practices into its everyday operations. We believe that our basic business premise of equipment sharing helps reduce greenhouse gas emissions and reduces the inventory of total large capacity vehicles. We continue to look for ways to reduce waste within our business and are dedicated to manufacturing reusable components and recyclable products. We believe that our commitment to sustainability, through our products and services and everyday operations has helped us to reduce our impact on the environment. Property and Casualty Insurance Property and Casualty Insurance provides loss adjusting and claims handling for U-Haul through regional offices across the United States and Canada. Property and Casualty Insurance also underwrites components of the Safemove®, Safetow®, Safemove Plus®, Safestor®andSafestor Mobile®protection packages to U-Haul customers. We continue to focus on increasing the penetration of these products into the moving and storage market. The business plan for Property and Casualty Insurance includes offering property and casualty insurance products in other U-Haulrelated programs. Life Insurance Life Insurance provides life and health insurance products primarily to the senior market through the direct writing and reinsuring of life insurance, Medicare supplement and annuity policies. Cybersecurity Incident On September 9, 2022, we announced that the Company was made aware of a data security incident involving U-Haul‘s information technology network. U-Haul detected a compromise of two unique passwords used to access U-Haul customers‘ information. U-Haul took immediate steps to contain the incident and promptly enhanced its security measures to prevent any further unauthorized access. U-Haul retained cybersecurity experts and incident response counsel to investigate the incident and implement additional security safeguards. The investigation determined that between November 5, 2021 and April 8, 2022, the threat actor accessed customer contracts containing customers’ names, dates of birth, and driver’s license or state identification numbers. None of U-Haul’s financial, payment processing or email systems were involved. U-Haul has notified impacted customers and relevant governmental authorities. Several class action lawsuits related to the incident have been filed against U-Haul. The lawsuits Critical Accounting Policies and Estimates Please refer to our Annual Report on Form 10-K for the fiscal year ended March 31, Results of Operations Quarter Ended September 30, Listed below, on a consolidated basis, are revenues for our major product lines for the second quarter of fiscal Quarter Ended September 30, Quarter Ended September 30, 2022 2021 2023 2022 (Unaudited) (Unaudited) (In thousands) (In thousands) Self-moving equipment rentals $ 1,162,025 $ 1,179,061 $ 1,069,405 $ 1,162,025 Self-storage revenues 185,586 153,485 208,890 185,586 Self-moving and self-storage products and service sales 96,864 92,191 91,571 96,864 Property management fees 9,277 8,747 9,267 9,277 Life insurance premiums 25,456 28,913 22,498 25,456 Property and casualty insurance premiums 25,718 22,499 25,571 25,718 Net investment and interest income 30,509 36,780 64,738 30,509 Other revenue 167,429 142,578 157,920 167,429 Consolidated revenue $ 1,702,864 $ 1,664,254 $ 1,649,860 $ 1,702,864 Self-moving equipment rental revenues decreased Self-storage revenues increased Sales of self-moving and self-storage products and services Life insurance premiums decreased Property and casualty insurance premiums Net investment and interest income Other revenue 60 Listed below are revenues and earnings from operations at each of our operating segments for the second quarter of fiscal Quarter Ended September 30, Quarter Ended September 30, 2022 2021 2023 2022 (Unaudited) (Unaudited) (In thousands) (In thousands) Moving and storage Revenues $ 1,636,858 $ 1,576,999 $ 1,565,578 $ 1,636,858 Earnings from operations before equity in earnings of subsidiaries 514,943 555,988 401,704 514,943 Property and casualty insurance Revenues 23,363 29,539 31,852 23,363 Earnings from operations 5,686 15,189 15,419 5,686 Life insurance Revenues 45,696 60,985 55,522 45,696 Earnings from operations 1,852 7,913 Earnings (losses) from operations 5,608 (297) Eliminations Revenues (3,053) (3,269) (3,092) (3,053) Earnings from operations before equity in earnings of subsidiaries (386) (389) (376) (386) Consolidated results Revenues 1,702,864 1,664,254 1,649,860 1,702,864 Earnings from operations 522,095 578,701 422,355 519,946 Total costs and expenses increased Depreciation expense associated with As a result of the above-mentioned changes in revenues and expenses, earnings from operations decreased Interest expense for the second quarter of fiscal Income tax expense was $85.2 million As a result of the above-mentioned items, earnings available to common stockholders were Moving and Storage Quarter Ended September 30, Listed below are revenues for our major product lines at Moving and Storage for the second quarter of fiscal Quarter Ended September 30, Quarter Ended September 30, 2022 2021 2023 2022 (Unaudited) (Unaudited) (In thousands) (In thousands) Self-moving equipment rentals $ 1,163,376 $ 1,180,329 $ 1,070,688 $ 1,163,376 Self-storage revenues 185,586 153,485 208,890 185,586 Self-moving and self-storage products and service sales 96,864 92,191 91,571 96,864 Property management fees 9,277 8,747 9,267 9,277 Net investment and interest income 15,077 675 28,520 15,077 Other revenue 166,678 141,572 156,642 166,678 Moving and Storage revenue $ 1,636,858 $ 1,576,999 $ 1,565,578 $ 1,636,858 Self-moving equipment rental revenues decreased Self-storage revenues increased We own and manage self-storage facilities. Self-storage revenues reported in the consolidated financial statements represent Company-owned locations only. Self-storage data for our owned storage locations follows: Quarter Ended September 30, 2022 2021 (Unaudited) (In thousands, except occupancy rate) Unit count as of September 30 638 568 Square footage as of September 30 53,303 47,903 Average monthly number of units occupied 540 476 Average monthly occupancy rate based on unit count 85.4% 84.3% Average monthly square footage occupied 46,538 41,743 Quarter Ended September 30, 2023 2022 (Unaudited) (In thousands, except occupancy rate) Unit count as of September 30 691 638 Square footage as of September 30 58,402 53,303 Average monthly number of units occupied 578 540 Average monthly occupancy rate based on unit count 84.2% 85.4% End of September occupancy rate based on unit count 83.5% 84.8% Average monthly square footage occupied 49,931 46,538 Over the last twelve months we added approximately Sales of self-moving and self-storage products and services Net investment and interest income increased Other revenue 62 Total costs and expenses increased Depreciation expense associated with The components of depreciation, net of gains on disposals are as follows: Quarter Ended September 30 2023 2022 (Unaudited) (In thousands) Depreciation expense - rental equipment $ 140,341 $ 129,220 Depreciation expense - non rental equipment 23,392 21,546 Depreciation expense - real estate 37,192 30,895 Total depreciation expense $ 200,925 $ 181,661 Gains on disposals of rental equipment (46,928) $ (64,312) (Gain) loss on disposals of non-rental equipment 125 (31) Total gains on disposals equipment $ (46,803) $ (64,343) Depreciation, net of gains on disposals $ 154,122 $ 117,318 Losses on disposals of real estate $ 1,715 $ 1,872 As a result of the above-mentioned changes in revenues and expenses, earnings from operations for Moving and Storage, before consolidation of the equity in the earnings of the insurance subsidiaries, decreased Equity in the earnings of U-Haul Holding Company’s insurance subsidiaries was $16.9 million for the second quarter of fiscal As a result of the above-mentioned changes in revenues and expenses, consolidated earnings from operations for Moving and Storage decreased to Property and Casualty Insurance Quarter Ended June 30, Net premiums were Net investment and interest income (loss) was 63 Benefits and losses incurred were As a result of the above-mentioned changes in revenues and expenses, pretax earnings from operations were Life Insurance Quarter Ended June 30, Net premiums were Net investment income was Benefits and losses incurred were As a result of the above-mentioned changes in revenues and expenses, pretax earnings (losses) from operations were Six Months Ended September 30, Listed below on a consolidated basis are revenues for our major product lines for the first six months of fiscal Six Months Ended September 30, Six Months Ended September 30, 2022 2021 2023 2022 (Unaudited) (Unaudited) (In thousands) (In thousands) Self-moving equipment rentals $ 2,252,800 $ 2,214,438 $ 2,068,611 $ 2,252,800 Self-storage revenues 358,763 290,878 407,851 358,763 Self-moving and self-storage products and service sales 206,215 197,076 192,443 206,215 Property management fees 18,416 17,196 18,444 18,416 Life insurance premiums 51,237 57,618 45,629 51,237 Property and casualty insurance premiums 45,690 39,368 45,893 45,690 Net investment and interest income 64,082 71,779 129,330 64,082 Other revenue 303,501 248,757 281,967 303,501 Consolidated revenue $ 3,300,704 $ 3,137,110 $ 3,190,168 $ 3,300,704 Self-moving equipment rental revenues Self-storage revenues increased Sales of self-moving and self-storage products and services Life insurance premiums decreased Property and casualty insurance premiums increased Net investment and interest income Other revenue Listed below are revenues and earnings from operations at each of our operating segments for the first six months of fiscal Six Months Ended September 30 2022 2021 (Unaudited) (In thousands) Moving and storage Revenues $ 3,160,456 $ 2,970,253 Earnings from operations before equity in earnings of subsidiaries 996,560 1,038,983 Property and casualty insurance Revenues 46,445 52,995 Earnings from operations 14,037 24,421 Life insurance Revenues 99,799 119,644 Earnings from operations 3,425 10,279 Eliminations Revenues (5,996) (5,782) Earnings from operations before equity in earnings of subsidiaries (768) (774) Consolidated results Revenues 3,300,704 3,137,110 Earnings from operations 1,013,254 1,072,909 Six Months Ended September 30 2023 2022 (Unaudited) (In thousands) Moving and storage Revenues $ 3,025,091 $ 3,160,456 Earnings from operations before equity in earnings of subsidiaries 788,395 996,560 Property and casualty insurance Revenues 59,691 46,445 Earnings from operations 27,401 14,037 Life insurance Revenues 111,203 99,799 Earnings from operations 6,964 5,619 Eliminations Revenues (5,817) (5,996) Earnings from operations before equity in earnings of subsidiaries (747) (768) Consolidated results Revenues 3,190,168 3,300,704 Earnings from operations 822,013 1,015,448 Total costs and expenses increased 65 Depreciation expense associated with As a result of the above-mentioned changes in revenues and expenses, earnings from operations decreased Interest expense for the first six months of fiscal Income tax expense was $167.0 million As a result of the above-mentioned items, earnings available to common Moving and Storage Six Months Ended September 30, Listed below are revenues for the major product lines at our Moving and Storage operating segment for the first six months of fiscal Six Months Ended September 30 Six Months Ended September 30 2022 2021 2023 2022 (Unaudited) (Unaudited) (In thousands) (In thousands) Self-moving equipment rentals $ 2,255,086 $ 2,216,542 $ 2,070,767 $ 2,255,086 Self-storage revenues 358,763 290,878 407,851 358,763 Self-moving and self-storage products and service sales 206,215 197,076 192,443 206,215 Property management fees 18,416 17,196 18,444 18,416 Net investment and interest income 20,017 1,355 55,815 20,017 Other revenue 301,959 247,206 279,771 301,959 Moving and Storage revenue $ 3,160,456 $ 2,970,253 $ 3,025,091 $ 3,160,456 Self-moving equipment rental revenues Self-storage revenues increased 66 We own and manage self-storage facilities. Self-storage revenues reported in the consolidated financial statements represent Company-owned locations only. Self-storage data for our owned storage locations follows: Six Months Ended September 30 Six Months Ended September 30 2022 2021 2023 2022 (Unaudited) (Unaudited) (In thousands, except occupancy rate) (In thousands, except occupancy rate) Unit count as of September 30 638 568 691 638 Square footage as of September 30 53,303 47,903 58,402 53,303 Average monthly number of units occupied 529 456 529 529 Average monthly occupancy rate based on unit count 85.0% 82.1% 83.5% 85.0% End of September occupancy rate based on unit count 83.5% 84.8% Average monthly square footage occupied 45,692 40,207 49,279 45,692 Over the last twelve months we added approximately Sales of self-moving and self-storage products and services Net investment and interest income increased Other revenue Total costs and expenses increased Depreciation expense associated with 67 The components of depreciation, net of gains on disposals for the first six months of fiscal Six Months Ended September 30 2023 2022 (Unaudited) (In thousands) Depreciation expense - rental equipment $ 275,533 $ 255,741 Depreciation expense - non rental equipment 45,694 43,167 Depreciation expense - real estate 73,173 60,897 Total depreciation expense $ 394,400 $ 359,805 Gains on disposals of rental equipment $ (102,735) $ (128,313) (Gain) loss on disposals of non-rental equipment 271 (378) Total gains on disposals equipment $ (102,464) $ (128,691) Depreciation, net of gains on disposals $ 291,936 $ 231,114 Losses on disposals of real estate $ 2,736 $ 4,179 As a result of the above-mentioned changes in revenues and expenses, earnings from operations for Moving and Storage before consolidation of the equity in the earnings of the insurance subsidiaries decreased to $788.4 million for the first six months of fiscal 2024, compared with $996.6 million for the first six months of fiscal Equity in the earnings of U-Haul Holding Company’s insurance subsidiaries was $27.1 million for the first six months of fiscal As a result of the above-mentioned changes in revenues and expenses, earnings from operations decreased to Property and Casualty Insurance Six Months Ended June 30, Net premiums were Net investment and interest income (loss) was Benefits and losses incurred were As a result of the above-mentioned changes in revenues and expenses, pretax earnings from operations were Life Insurance Six Months Ended June 30, Net premiums were 68 Net investment income was Benefits and Amortization of DAC, SIA and VOBA were As a result of the above-mentioned changes in revenues and expenses, pretax earnings from operations were Liquidity and Capital Resources We believe our current capital structure is a positive factor that will enable us to pursue our operational plans and goals and provide us with sufficient liquidity for the foreseeable future. There are many factors that could affect our liquidity, including some As of September 30, Moving & Storage Property & Casualty Insurance (a) Life Insurance (a) Moving & Storage Property & Casualty Insurance (a) Life Insurance (a) (Unaudited) (Unaudited) (In thousands) (In thousands) Cash and cash equivalents $ 3,025,390 $ 11,196 $ 28,529 $ 2,068,790 $ 44,272 $ 32,069 Other financial assets 204,671 444,990 2,803,275 314,005 436,100 2,722,737 Debt obligations 6,298,831 – – 6,436,800 – – (a) As of June 30, 2022 (a) As of June 30, 2023 (b) Excludes ($35,901) of debt issuance costs As of September 30, Net cash provided by operating activities decreased Net cash used in investing activities 69 Net cash provided by financing activities decreased Liquidity and Capital Resources and Requirements of Our Operating Segments Moving and Storage To meet the needs of our customers, U-Haul maintains a large fleet of rental equipment. Capital expenditures have primarily consisted of new rental equipment acquisitions and the buyouts of existing fleet from leases. The capital to fund these expenditures has historically been obtained internally from operations and the sale of used equipment and externally from debt and lease financing. U-Haul estimates that during fiscal The Company has traditionally Net capital expenditures (purchases of property, plant and equipment less proceeds from the sale of property, plant and equipment and lease proceeds) at Moving and Storage were Six Months Ended September 30 Six Months Ended September 30 2022 2021 2023 2022 (Unaudited) (Unaudited) (In thousands) (In thousands) Purchases of rental equipment $ 718,231 $ 564,331 $ 974,436 $ 718,231 Purchases of real estate, construction and renovations 583,889 444,334 632,902 583,889 Other capital expenditures 33,408 31,023 57,049 33,408 Gross capital expenditures 1,335,528 1,039,688 1,664,387 1,335,528 Less: Sales of property, plant and equipment (329,611) (306,946) (408,279) (329,611) Net capital expenditures $ 1,005,917 $ 732,742 $ 1,256,108 $ 1,005,917 Moving and Storage continues to hold significant cash and we believe has access to additional liquidity. Management may invest these funds in our existing operations, expand our product lines or pursue external opportunities in the self-moving and storage marketplace, pay dividends, repurchase shares of common stock or reduce existing indebtedness where possible. 70 Property and Casualty Insurance State insurance regulations restrict the amount of dividends that can be paid to stockholders of insurance companies. As a result, Property and Casualty Insurance’s assets are generally not available to satisfy the claims of Property and Casualty Insurance’s stockholder’s equity was Life Insurance Life Insurance manages its financial assets to meet policyholder and other obligations, including investment contract withdrawals and deposits. Life Insurance’s net Life Insurance’s stockholder’s equity was Cash Provided from Operating Activities by Operating Segments Moving and Storage Net cash provided from operating activities were Property and Casualty Insurance Net cash provided by operating activities were Property and Casualty Insurance’s cash and cash equivalents and short-term investment portfolios amounted to Life Insurance Net cash provided by operating activities were 71 In addition to cash flows from operating activities and financing activities, a substantial amount of liquid funds are available through Life Insurance’s short-term portfolio and its membership in the FHLB. As of June 30, Liquidity and Capital Resources - Summary We believe we have the financial resources needed to meet our business plans, including our working capital needs. We continue to hold significant cash and have access to existing credit facilities and additional liquidity to meet our anticipated capital expenditure requirements for investment in our rental fleet, rental equipment and storage acquisitions and build outs. As a result of the federal income tax provisions of the Coronavirus Aid, Relief and Economic Security Act, we have filed applicable forms with the Internal Revenue Service to carryback net operating losses. These refund claims total approximately $366 million, of which we have received approximately $243 million Our borrowing strategy has primarily focused on asset-backed financing, rental equipment leases and private placement borrowings limited by the amount of unencumbered assets available. As part of this strategy, we seek to ladder maturities and fix interest rates. While each of these loans typically contains provisions governing the amount that can be borrowed in relation to specific assets, the overall structure is flexible with no limits on overall Company borrowings. Management believes it has adequate liquidity between cash and cash equivalents and unused borrowing capacity in existing credit facilities to meet the current and expected needs of the Company over the next several years. As of September 30, Disclosures about Contractual Obligations and Commercial Commitments Our estimates as to future contractual obligations have not materially changed from the disclosure included under the subheading Disclosures about Contractual Obligations and Commercial Commitments in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the fiscal year ended March 31, Fiscal We will continue to focus our attention on increasing transaction volume and improving pricing, product and utilization for self-moving equipment rentals. Maintaining an adequate level of new investment in our truck fleet is an important component of our plan to meet our operational goals and is likely to increase in fiscal With respect to our storage business, we have added new locations and expanded existing locations. In fiscal Inflationary pressures may challenge our ability to maintain or improve upon our operating margin. Property and Casualty Insurance will continue to provide loss adjusting and claims handling for U-Haul and underwrite components of the Safemove®, Safetow®, Safemove Plus®, Safestor®and Safestor Mobile®protection packages to U-Haul customers. 72 Life Insurance is pursuing its goal of expanding its presence in the senior market through the sales of its Medicare supplement, life and annuity policies. This strategy includes growing its agency force, expanding its new product offerings, and pursuing business acquisition opportunities. Item 3. Quantitative and Qualitative Disclosures About Market Risk We are exposed to financial market risks, including changes in interest rates and currency exchange rates. To mitigate these risks, we may utilize derivative financial instruments, among other strategies. We do not use derivative financial instruments for speculative purposes. Interest Rate Risk The exposure to market risk for changes in interest rates relates primarily to our variable rate debt obligations and one variable rate operating lease. We have used interest rate swap agreements and forward swaps to reduce our exposure to changes in interest rates. We enter into these arrangements with counterparties that are significant financial institutions with whom we generally have other financial arrangements. We are exposed to credit risk should these counterparties not be able to perform Notional Amount Fair Value Effective Date Expiration Date Fixed Rate Floating Rate (Unaudited) (In thousands) $ 61,587 $ 2,957 7/15/2022 7/15/2032 2.86% 1 Month SOFR 74,750 2,806 8/1/2022 8/1/2026 2.72% 1 Month SOFR 74,250 2,745 8/1/2022 8/31/2026 2.75% 1 Month SOFR Notional Amount Fair Value Effective Date Expiration Date Fixed Rate Floating Rate (Unaudited) (In thousands) $ 59,107 $ 5,083 7/15/2022 7/15/2032 2.86% 1 Month SOFR 71,750 3,468 8/1/2022 8/1/2026 2.72% 1 Month SOFR 71,250 3,399 8/1/2022 8/31/2026 2.75% 1 Month SOFR 100,000 378 8/31/2023 8/31/2025 4.71% 1 Month SOFR As of September 30, Additionally, our insurance subsidiaries’ fixed income investment portfolios expose us to interest rate risk. This interest rate risk is the price sensitivity of a fixed income security to changes in interest rates. As part of our insurance companies’ asset and liability management, actuaries estimate the cash flow patterns of our existing liabilities to determine their duration. These outcomes are compared to the characteristics of the assets that are currently supporting these liabilities assisting management in determining an asset allocation strategy for future investments that management believes will mitigate the overall effect of interest rates. We use derivatives to hedge our equity market exposure to indexed annuity products sold by our Life Insurance company. These contracts earn a return for the Although the call options are employed to be effective hedges against our policyholder obligations from an economic standpoint, they do not meet the requirements for hedge accounting under GAAP. Accordingly, the call options are marked to fair value on each reporting date with the change in fair value, plus or minus, included as a component of net investment and interest income. The change in fair value of the call options includes the gains or losses recognized at the expiration of the option term and the changes in fair value for open contracts. 73 Foreign Currency Exchange Rate Risk The exposure to market risk for changes in foreign currency exchange rates relates primarily to our Canadian business. Approximately Cautionary Statements Regarding Forward-Looking Statements This Quarterly Report contains “forward-looking statements” regarding future events and our future results of operations. We may make additional written or oral forward-looking statements from time to time in filings with the SEC or otherwise. We believe such forward-looking statements are within the meaning of the safe-harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such statements may include, but are not limited to, the risk associated with COVID-19 or similar events on Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Factors that could significantly affect results include, without limitation, the degree and nature of our competition; our leverage; general economic conditions; fluctuations in our costs to maintain and update our fleet and facilities; the limited number of manufacturers that supply our rental trucks; our ability to effectively hedge our variable interest rate debt; that we are controlled by a small contingent of stockholders; fluctuations in quarterly results and seasonality; changes in, and our compliance with, government regulations, particularly environmental regulations and regulations relating to motor carrier operations; outcomes of litigation; our reliance on our third party dealer network; liability claims relating to our rental vehicles and equipment; our ability to attract, motivate and retain key employees; reliance on our automated systems and the internet; our credit ratings; our ability to recover under reinsurance arrangements and other factors described in our Annual Report on Form 10-K in Item 1A, Risk Factors, and in this Quarterly Report or the other documents we file with the SEC. The above factors, as well as other statements in this Quarterly Report and in the Notes to 74 Item 4. Controls and Procedures Evaluation of Disclosure Controls and Procedures Our management, with the participation of the CEO and CFO, conducted an evaluation of the effectiveness of Previously Disclosed Material Weaknesses and Remediation Plan Two-Class Method of Earnings per Share. As previously disclosed in Part II, Item 9A of our Annual Report on Form 10-K for the These actions were completed in advance of our year end close process as of March 31, 2023, and the redesigned control operated as planned as part of our March 31, 2023, year-end close process. In conjunction with our interim period close process as of June 30, 2023, the redesigned control again operated as designed. Therefore, based upon our testing of the redesigned control over these instances, we have concluded that the material weakness related to the calculation of earnings per share using the two-class method associated with the recently issued UHAL.B common stock, has been remediated. General Information Technology Controls. As previously disclosed in Part II, Item 9A of our Annual Report on Form 10-K for the fiscal year ended March 31, 2023, we determined a material weakness existed as management did not fully design, implement and monitor general information technology controls in the areas of program change management, user access, segregation of duties, and cyber security for systems supporting substantially all of the Company’s internal control processes. A substantial portion of the Company’s controls are dependent upon the information derived from the information technology systems and therefore the dependent controls were concluded to be ineffective. Our management, We are committed to maintaining a strong internal control environment, and believe that these remediation actions represent significant improvements in our 75 period of Changes in Internal Control Over Financial Reporting Other than the material weakness described above, there have not been any changes in our internal control over financial reporting as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f) during the PART II Other information Item 1. Legal Proceedings The information regarding our legal proceedings in Note Item 1A. Risk Factors We In addition, the provision of service to our customers and the operation of our Any of these occurrences could result in disruptions in our operations, the loss of existing or potential customers, damage to our brand and reputation, and litigation and potential liability for the Company. In addition, the cost and operational consequences of implementing further data or system protection measures could be significant, and our efforts to deter, identify, mitigate and/or eliminate any security breaches may not be successful. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Not applicable. Item 3. Defaults Upon Senior Securities Not applicable. Item 4. Mine Safety Disclosures Not applicable. Item 5. Other Information Item 6. Exhibits The following documents are filed as part of this report: Exhibit Number Description Page or Method of Filing Amended and Restated Articles of Incorporation of Incorporated by reference to Incorporated by reference to Incorporated by reference to Articles of Conversion/Exchange/Merger Incorporated by reference to 31.1 Rule 13a-14(a)/15d-14(a) Certificate of Edward J. Shoen, President and Chairman of the Board of Filed herewith 31.2 Rule 13a-14(a)/15d-14(a) Certificate of Jason A. Berg, Chief Financial Officer of Filed herewith 32.1 Certificate of Edward J. Shoen, President and Chairman of the Board of Furnished herewith 32.2 Certificate of Jason A. Berg, Chief Financial Officer of Furnished herewith 101.INS Inline XBRL Instance Document Filed herewith 101.SCH Inline XBRL Taxonomy Extension Schema Filed herewith 77 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Filed herewith 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Filed herewith 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Filed herewith 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Filed herewith 104 Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit 101) Filed herewith 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. Date: November /s/ Edward J. Shoen Edward J. Shoen President and Chairman of the Board (Principal Executive Officer) Date: November /s/ Jason A. Berg Jason A. Berg Chief Financial Officer (Principal Financial Officer) Date: November /s/ Maria L. Bell Maria L. Bell Chief Accounting Officer (Principal Accounting Officer) 79 |
| (All amounts are in thousands of U.S. United States Canada Consolidated (Unaudited) (All amounts are in thousands of U.S. $'s) Six Months Ended September 30, 2023 Total revenues $ 3,020,489 $ 169,679 $ 3,190,168 Depreciation and amortization, net of (gains) on disposals 309,398 145 309,543 Interest expense 123,128 1,413 124,541 Pretax earnings 675,514 21,229 696,743 Income tax expense 160,630 5,767 166,397 Identifiable assets 18,279,234 742,216 19,021,450 Six Months Ended September 30, 2022 Total revenues $ 3,120,453 $ 180,251 $ 3,300,704 Depreciation and amortization, net of (gains) on disposals 245,721 4,216 249,937 Interest expense 105,425 1,567 106,992 Pretax earnings 876,101 30,788 906,889 Income tax expense 210,867 7,811 218,678 Identifiable assets 17,515,009 628,334 18,143,343 The components of the net periodic benefit costs with respect to postretirement benefits were as follows: Quarter Ended September 30, 2022 2021 (Unaudited) (In thousands) Service cost for benefits earned during the period $ 331 $ 351 Other components of net periodic benefit costs: Interest cost on accumulated postretirement benefit 287 227 Other components 17 53 Total other components of net periodic benefit costs 304 280 Net periodic postretirement benefit cost $ 635 $ 631 Six Months Ended September 30, 2022 2021 (Unaudited) (In thousands) Service cost for benefits earned during the period $ 663 $ 701 Other components of net periodic benefit costs: Interest cost on accumulated postretirement benefit 574 454 Other components 34 106 Total other components of net periodic benefit costs 608 560 Net periodic postretirement benefit cost $ 1,271 $ 1,261 Quarter Ended September 30, 2023 2022 (Unaudited) (In thousands) Service cost for benefits earned during the period $ 297 $ 331 Other components of net periodic benefit costs: Interest cost on accumulated postretirement benefit 368 287 Other components (4) 17 Total other components of net periodic benefit costs 364 304 Net periodic postretirement benefit cost $ 661 $ 635 Six Months Ended September 30, 2023 2022 (Unaudited) (In thousands) Service cost for benefits earned during the period $ 594 $ 663 Other components of net periodic benefit costs: Interest cost on accumulated postretirement benefit 735 574 Other components (6) 34 Total other components of net periodic benefit costs 729 608 Net periodic postretirement benefit cost $ 1,323 $ 1,271 14. Fair Value Measurements Certain assets and liabilities are recorded at fair value on the Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2 – Quoted prices for identical or similar financial instruments in markets that are not considered to be active, or similar financial instruments for which all significant inputs are observable, either directly or indirectly, or inputs other than quoted prices that are observable, or inputs that are derived principally from or corroborated by observable market data through correlation or other means; and Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and are unobservable. These reflect management’s assumptions about the assumptions a market participant would use in pricing the asset or liability. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Fair values of cash equivalents approximate carrying value due to the short period of time to maturity. Fair values of short-term investments are based on quoted market prices. 40 U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Fair values of investments available-for-sale Fair values on interest rate swap contracts are based on using pricing valuation models which include broker quotes. Fair values of long-term investment and mortgage loans and notes on real estate are based on quoted market prices, dealer quotes or discounted cash flows.Fair values of reinsurance recoverables and trade receivables approximate their recorded value. Our financial instruments that are exposed to concentrations of credit risk consist primarily of temporary cash investments, trade receivables, reinsurance recoverables and notes receivable. Limited credit risk exists on trade receivables due to the diversity of our customer base and their dispersion across broad geographic markets. We place our temporary cash investments with financial institutions and limit the amount of credit exposure to any one financial institution. We have mortgage Other The carrying values and estimated fair values for the financial instruments stated above and their placement in the fair value hierarchy are as follows: Fair Value Hierarchy Carrying Total Estimated As of September 30, 2022 Value Level 1 Level 2 Level 3 Fair Value (Unaudited) Assets (In thousands) Reinsurance recoverables and trade receivables, net $ 203,202 $ – $ – $ 203,202 $ 203,202 Mortgage loans, net 424,633 – – 424,633 417,894 Other investments 123,565 – – 123,565 123,565 Total $ 751,400 $ – $ – $ 751,400 $ 744,661 Liabilities Notes, loans and finance leases payable 6,336,570 – 6,336,570 – 5,930,507 Total $ 6,336,570 $ – $ 6,336,570 $ – $ 5,930,507 Fair Value Hierarchy Carrying Total Estimated As of September 30, 2023 Value Level 1 Level 2 Level 3 Fair Value (Unaudited) Assets (In thousands) Reinsurance recoverables and trade receivables, net $ 212,565 $ – $ – $ 212,565 $ 212,565 Mortgage loans, net 550,913 – – 521,831 521,831 Other investments 88,712 – – 88,712 88,712 Total $ 852,190 $ – $ – $ 823,108 $ 823,108 Liabilities Notes, loans and finance leases payable $ 6,436,800 $ – $ 5,961,511 $ – $ 5,961,511 Total $ 6,436,800 $ – $ 5,961,511 $ – $ 5,961,511 41 U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Fair Value Hierarchy Carrying Total Estimated As of March 31, 2022 Value Level 1 Level 2 Level 3 Fair Value (In thousands) Assets Reinsurance recoverables and trade receivables, net $ 229,343 $ – $ – $ 229,343 $ 229,343 Mortgage loans, net 423,163 – – 423,163 450,347 Other investments 120,592 – – 120,592 120,592 Total $ 773,098 $ – $ – $ 773,098 $ 800,282 Liabilities Notes, loans and finance leases payable 6,059,713 – 6,059,713 – 5,875,781 Total $ 6,059,713 $ – $ 6,059,713 $ – $ 5,875,781 Fair Value Hierarchy Carrying Total Estimated As of March 31, 2023 Value Level 1 Level 2 Level 3 Fair Value (In thousands) Assets Reinsurance recoverables and trade receivables, net $ 189,498 $ – $ – $ 189,498 $ 189,498 Mortgage loans, net 466,531 – – 444,957 444,957 Other investments 109,009 – – 109,009 109,009 Total $ 765,038 $ – $ – $ 743,464 $ 743,464 Liabilities Notes, loans and finance leases payable 6,143,350 – 5,710,735 – 5,710,735 Total $ 6,143,350 $ – $ 5,710,735 $ – $ 5,710,735 The following tables represent the financial assets and liabilities on the As of September 30, 2022 Total Level 1 Level 2 Level 3 (Unaudited) Assets (In thousands) Short-term investments $ 2,823,208 $ 2,821,751 $ 1,457 $ – Fixed maturities - available for sale 2,552,311 24,803 2,527,416 92 Preferred stock 22,921 22,921 – – Common stock 40,526 40,526 – – Derivatives 10,167 1,659 8,508 – Total $ 5,449,133 $ 2,911,660 $ 2,537,381 $ 92 Liabilities Derivatives – – – – Total $ – $ – $ – $ – As of March 31, 2022 Total Level 1 Level 2 Level 3 (In thousands) Assets Short-term investments $ 2,482,154 $ 2,482,154 $ – $ – Fixed maturities - available for sale 2,821,092 26,914 2,794,086 92 Preferred stock 26,095 26,095 – – Common stock 46,212 46,212 – – Derivatives 7,474 7,474 – – Total $ 5,383,027 $ 2,588,849 $ 2,794,086 $ 92 Liabilities Derivatives 587 – 587 – Total $ 587 $ – $ 587 $ – As of September 30, 2023 Total Level 1 Level 2 Level 3 (Unaudited) Assets (In thousands) Short-term investments $ 1,808,130 $ 1,807,142 $ 988 $ – Fixed maturities - available for sale 2,472,128 168,287 2,303,782 59 Preferred stock 19,991 19,991 – – Common stock 42,045 42,045 – – Derivatives 22,854 10,526 12,328 – Total $ 4,365,148 $ 2,047,991 $ 2,317,098 $ 59 Liabilities Embedded derivatives $ 9,630 $ – $ – $ 9,630 Total $ 9,630 $ – $ – $ 9,630 As of March 31, 2023 Total Level 1 Level 2 Level 3 (In thousands) Assets Short-term investments $ 1,809,441 $ 1,808,797 $ 644 $ – Fixed maturities - available for sale 2,709,037 251,832 2,457,146 59 Preferred stock 21,982 21,982 – – Common stock 39,375 39,375 – – Derivatives 9,606 4,295 5,311 – Total $ 4,589,441 $ 2,126,281 $ 2,463,101 $ 59 U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES 15. Revenue Recognition Revenue Recognized in Accordance with Topic 606 ASC Topic 606, Revenue from Contracts with Customers (Topic 606), outlines a five-step model for entities to use in accounting for revenue arising from contracts with customers. The standard applies to all contracts with customers except for leases, insurance contracts, financial instruments, certain nonmonetary exchanges and certain guarantees. The standard also requires disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. We enter into contracts that may include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of amounts collected from customers for taxes, such as sales tax, and remitted to the applicable taxing authorities. We account for a contract under Topic 606 when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. For contracts scoped into this standard, revenue is recognized when (or as) the performance obligations are satisfied by means of transferring goods or services to the customer as applicable to each revenue stream as discussed below. There were no material contract assets or liabilities as of September 30, Sales of self-moving and self-storage related products are recognized at the time that title passes and the customer accepts delivery. The performance obligations identified for this portfolio of contracts include moving and storage product sales, installation services and/or propane sales. Each of these performance obligations has an observable stand-alone selling price. We concluded that the performance obligations identified are satisfied at a point in time. The basis for this conclusion is that the customer does not receive the product/propane or benefit from the installation services until the related performance obligation is satisfied. These products/services being provided have an alternative use as they are not customized and can be sold/provided to any customer. In addition, we only have the right to receive payment once the products have been transferred to the customer or the installation services have been completed. Although product sales have a right of return policy, our estimated obligation for future product returns is not material to the financial statements at this time. Property management fees are recognized over the period that agreed-upon services are provided. The performance obligation for this portfolio of contracts is property management services, which represents a series of distinct days of service, each of which is comprised of activities that may vary from day to day. However, those tasks are activities to fulfill the property management services and are not separate promises in the contract. We determined that each increment of the promised service is distinct. This is because the customer can benefit from each increment of service on its own and each increment of service is separately identifiable because no day of service significantly modifies or customizes another and no day of service significantly affects either the entity’s ability to fulfill another day of service or the benefit to the customer of another day of service. As such, we concluded that the performance obligation is satisfied over time. Additionally, in certain contracts the Company has the ability to earn an incentive fee based on operational results. We measure and recognize the progress toward completion of the performance obligation on a quarterly basis using the most likely amount method to determine an accrual for the incentive fee portion of the compensation received in exchange for the property management service. The variable consideration recognized is subject to constraints due to a range of possible consideration amounts based on actual operational results. The amount accrued in the second quarter of fiscal Other revenue consists of numerous services or rentals, of which U-Box contracts and service fees from Moving Help are the main components. The performance obligations identified for U-Box contracts are fees for rental, storage and shipping of U-Box containers to a specified location, each of which are distinct. A contract may be partially within the scope of Topic 606 and partially within the scope of other topics. The rental and storage obligations in U-Box contracts meet the definition of a lease in Topic 842, while the shipping obligation represents a contract with a customer accounted for under Topic 606. Therefore, we allocate the total transaction price between the performance obligations of storage fees and rental fees and the shipping fees on a standalone selling price basis. U-Box shipping fees are collected once the shipment 43 U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS is in transit. Shipping fees in U-Box contracts are set at the initiation of the contract based on the shipping origin and destination, and the performance obligation is satisfied over time. U-Box shipping contracts span over a relatively short period of time, and the majority of these contracts begin and end within the same fiscal year. Moving Revenue Recognized in Accordance with Topic 842 Self-moving equipment rentals are recognized over the contract period that trucks and moving equipment are rented. We offer two types of self-moving rental contracts, one-way rentals and in-town rentals, which have varying payment terms. Customer payment is received at the initiation of the contract for one-way rentals which covers an allowable limit for equipment usage. An estimated fee in the form of a deposit is received at the initiation of the contract for in-town rentals, and final payment is received upon the return of the equipment based on actual fees incurred. The contract price is estimated at the initiation of the contract, as there is variable consideration associated with ratable fees incurred based on the number of days the equipment is rented and the number of miles driven. Variable consideration is estimated using the most likely amount method which is based on the intended use of the rental equipment by the customer at the initiation of the contract. Historically, the variability in estimated transaction pricing compared to actual is not significant due to the relatively short duration of rental contracts. Each performance obligation has an observable stand-alone selling price. The input method of passage of time is appropriate as there is a direct relationship between our inputs and the transfer of benefit to the customer over the life of the contract. Self-moving rental contracts span a relatively short period of time, and the majority of these contracts began and ended within the same fiscal year. Self-storage revenues are recognized as earned over the contract period based upon the number of paid storage contract days. We lease portions of our operating properties to tenants under agreements that are classified as operating leases. We recognize the total minimum lease payments provided for under the leases on a straight-line basis over the lease term. Generally, under the terms of our leases, the majority of our rental expenses, including common area maintenance, real estate taxes and insurance, are recovered from our customers. The following table summarizes the minimum lease payments due from our customers and operating property tenants on leases for the next five years and thereafter: Years Ending March 31, 2023 2024 2025 2026 2027 Thereafter (Unaudited) (In thousands) Self-moving equipment rentals $ 6,605 $ – $ – $ – $ – $ – Property lease revenues 17,916 11,354 8,694 6,937 4,884 39,491 Total $ 24,521 $ 11,354 $ 8,694 $ 6,937 $ 4,884 $ 39,491 Years Ending September 30, 2024 2025 2026 2027 2028 Thereafter (Unaudited) (In thousands) Self-moving equipment rentals $ 7,139 $ – $ – $ – $ – $ – Property lease revenues 20,722 14,491 11,509 8,275 5,678 37,972 Total $ 27,861 $ 14,491 $ 11,509 $ 8,275 $ 5,678 $ 37,972 The amounts above do not reflect future rental revenue from the renewal or replacement of existing leases. 44 U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Revenue Recognized in Accordance with Other Topics Traditional life and Medicare supplement insurance premiums are recognized as revenue over the premium-paying periods of the contracts when due from the policyholders. For products where premiums are due over a significantly shorter duration than the period over which benefits are provided, such as our single premium whole life product, premiums are recognized when received and excess profits are deferred and recognized in relation to the insurance Property and casualty insurance premiums are recognized as revenue over the policy periods. Interest and investment income are recognized as earned. Net investment and interest income has multiple components. Interest income from bonds and mortgage notes are recognized when earned. Dividends on common and preferred stocks are recognized on the ex-dividend dates. Realized gains and losses on the sale or exchange of investments are recognized at the trade date. In the following tables, revenue is disaggregated by timing of revenue recognition: Quarter Ended September 30, 2022 2021 (Unaudited) (In thousands) Revenues recognized over time: $ 127,091 $ 108,038 Revenues recognized at a point in time: 118,966 110,924 Total revenues recognized under ASC 606 246,057 218,962 Revenues recognized under ASC 842 1,373,925 1,355,934 Revenues recognized under ASC 944 52,373 52,578 Revenues recognized under ASC 320 30,509 36,780 Total revenues $ 1,702,864 $ 1,664,254 Quarter Ended September 30, 2023 2022 (Unaudited) (In thousands) Revenues recognized over time: $ 118,368 $ 127,091 Revenues recognized at a point in time: 111,759 118,966 Total revenues recognized under ASC 606 230,127 246,057 Revenues recognized under ASC 842 1,305,523 1,373,925 Revenues recognized under ASC 944 49,472 52,373 Revenues recognized under ASC 320 64,738 30,509 Total revenues $ 1,649,860 $ 1,702,864 Six Months Ended September 30, 2022 2021 (Unaudited) (In thousands) Revenues recognized over time: $ 230,285 $ 187,853 Revenues recognized at a point in time: 245,321 231,642 Total revenues recognized under ASC 606 475,606 419,495 Revenues recognized under ASC 842 2,661,956 2,546,944 Revenues recognized under ASC 944 99,060 98,892 Revenues recognized under ASC 320 64,082 71,779 Total revenues $ 3,300,704 $ 3,137,110 Six Months Ended September 30, 2023 2022 (Unaudited) (In thousands) Revenues recognized over time: $ 209,683 $ 230,285 Revenues recognized at a point in time: 229,352 245,321 Total revenues recognized under ASC 606 439,035 475,606 Revenues recognized under ASC 842 2,527,839 2,661,956 Revenues recognized under ASC 944 93,964 99,060 Revenues recognized under ASC 320 129,330 64,082 Total revenues $ 3,190,168 $ 3,300,704 In the above tables, the revenues recognized over time include property management fees, the shipping fees associated with U-Box container rentals and a portion of other revenues. Revenues recognized at a point in time include self-moving equipment rentals, self-moving and self-storage products and service sales and a portion of other revenues. 45 U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS We recognized liabilities resulting from contracts with customers for self-moving equipment rentals, self-storage revenues, U-Box revenues and tenant revenues, in which the length of the contract goes beyond the reported period end, although rental periods of the equipment, storage and U-Box contract are generally short-term in nature. The timing of revenue recognition results in liabilities that are reflected in deferred income on the balance sheet. Trade Receivables Moving and Storage has two The Company performs ongoing credit evaluations of its customers and assesses each customer’s credit worthiness. In addition, the Company monitors collections and payments from its customers and maintains an allowance based upon applying an expected credit loss rate to receivables based on the historical loss rate from similar high-risk customers adjusted for current conditions, including any specific customer collection issues identified, and forecasts of economic conditions. Delinquent account balances are written off after management has determined that the likelihood of collection is remote. Management believes that the historical loss information it has compiled is a reasonable base on which to determine expected credit losses for trade receivables because the composition of trade receivables as of that date is consistent with that used in developing the historical credit loss percentages (i.e., the similar risk characteristics of its customers and its lending practices have not changed significantly over time). To adjust the historical loss rates to reflect the effects of these differences in current conditions and forecasted changes, management assigns a rating to each Accrued Interest Receivable Accrued interest receivables on available for sale securities totaled Mortgage Loans that management has the intent and ability to hold for the foreseeable future, or until maturity or payoff, are reported at amortized cost. Modeling for the Company’s mortgage loans is based on inputs most highly correlated to defaults, including loan-to-value, occupancy, and payment history. Historical credit loss experience provides additional support for the estimation of expected credit losses. In assessing the credit losses, the portfolio is reviewed on a collective basis, using loan-specific cash flows to determine the fair value of the collateral in the event of default. Adjustments to this analysis are made to assess loans with a loan-to-value of 65% or greater. These loans are evaluated on an individual basis and loan specific risk characteristics such as occupancy levels, expense, income growth and other relevant available information from internal and external sources relating to past events, current conditions, and reasonable and supportable forecasts. 46 U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS When management determines that credit losses are expected to occur, an allowance for expected credit losses based on the fair value of the collateral is recorded. Reinsurance Reinsurance recoverables on paid and unpaid benefits was less than 1% of the total assets as of June 30, Premium Premium receivables were The following details the changes in the Company’s reserve allowance for credit losses for trade receivables, fixed maturities and investments, other: Allowance for Credit Losses Trade Receivables Investments, Fixed Maturities Investments, other Total (Unaudited) (in thousands) Balance as of March 31, 2021 $ 4,421 $ 1,320 $ 501 $ 6,242 Provision for (reversal of) credit losses 4,228 (1,260) – 2,968 Write-offs against allowance – – – – Recoveries – – – – Balance as of March 31, 2022 $ 8,649 $ 60 $ 501 $ 9,210 Provision for (reversal of) credit losses (5,506) 1,948 4 (3,554) Write-offs against allowance – – – – Recoveries – – – – Balance as of September 30, 2022 $ 3,143 $ 2,008 $ 505 $ 5,656 Allowance for Credit Losses Trade Receivables Investments, Fixed Maturities Investments, other Total (Unaudited) (in thousands) Balance as of March 31, 2022 $ 8,649 $ 60 $ 501 $ 9,210 Provision for (reversal of) credit losses (4,860) 2,041 16 (2,803) Write-offs against allowance – – – – Recoveries – – – – Balance as of March 31, 2023 $ 3,789 $ 2,101 $ 517 $ 6,407 Provision for (reversal of) credit losses 578 (429) 300 449 Write-offs against allowance – – – – Recoveries – – – – Balance as of September 30, 2023 $ 4,367 $ 1,672 $ 817 $ 6,856 17. Accounting Pronouncements Adoption of new Accounting Pronouncements On April 1, 2023, the Company adopted ASU 2018-12 which is applicable to Oxford. The Company adopted ASU 2018-12 effective April 1, 2023 and used the modified retrospective method with a transition date of April 1, 2021. The updated accounting guidance required changes to the measurement and disclosure of long-duration contracts. For the Company, this includes all life insurance products, annuities, Medicare supplement products and our long-term care business. Entities will be required to review, and update if there is a change to cash flow assumptions (including morbidity and persistency) at least annually, and to update discount rate assumptions quarterly using an upper-medium grade fixed-income instrument yield. The effect of changes in cash flow assumptions will be recorded in the Company's results of operations and the effect of changes in discount rate assumptions will be recorded in other comprehensive income. The most significant impact will be the effect of updating the discount rate assumption quarterly to reflect an upper-medium grade fixed-income instrument yield, rather than Oxford Life’s expected investment portfolio yield. This will be partially offset by the de-recognition of cumulative adjustments to DAC associated with unrealized gains and losses associated with long-duration contracts. The Company uses a published spot rate curve constructed from “A”-rated U.S. dollar denominated corporate bonds matched to the duration of the corresponding insurance liabilities, to calculate discount rates. The Company groups its long-duration contracts into calendar year cohorts based on the contract issue date. 47 U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DAC and other capitalized costs such as unearned revenue are amortized on a constant level or straight-line basis over the expected term of the contracts. Under ASU 2018-12, the annual amortization of DAC in our Consolidated Statements of Operations will differ from previous trends due to: (1) the requirement to no longer defer renewal commissions until such year as the commissions are actually incurred, (2) the requirement to no longer accrue and amortize interest on our DAC balances, and (3) the modification of the method for amortizing DAC including the updating of assumptions. For business with deferrals of renewal commissions, as is the case with our final expense life insurance policies, the expected amortization rate, as a percentage of premium, for certain blocks of business will no longer be level but will increase over the period of time during which commissions are deferred. The decrease in amortization in the near term will primarily impact our life insurance line of business. Upon adoption, the Company made adjustments to AOCI for the removal of cumulative adjustments to DAC associated with unrealized gains and losses previously recorded in AOCI. In total, we expect the impact on net earnings, largely from the decrease in amortization, to be immaterial during fiscal 2024, but could become material with a large increase in sales. Market risk benefits, which are contracts or contract features that provide protection to the policyholder from capital market risk and expose the Company to other-than-nominal capital market risk, are measured at fair value.Market risk benefits are contracts or contract features that guarantee benefits, such as guaranteed life withdrawal benefits, in addition to an account balance which expose insurance companies to other than nominal capital market risk and protect the contract holder from the same risk. Certain contracts or contract features to be identified as market risk benefits were accounted for as embedded derivatives and measured at fair value, while others transitioned to fair value measurement upon the adoption of ASU 2018-12. Also in consideration of market risk benefits, upon adoption, there were impacts to (1) AOCI for the cumulative effect of changes in the instrument-specific credit risk between contract issue date and transition date and (2) retained earnings for the difference between fair value and carrying value at the transition date, excluding the changes in the instrument-specific credit risk. The requirement to review, and update if there is a change, cash flow assumptions at least annually is expected to change the pattern of earnings being recognized. Adoption significantly expanded the Company’s disclosures, and will impact systems, processes, and controls. While the requirements of the new guidance represent a material change from existing GAAP, the accounting adoption had no economic impact on the cash flows of our business nor influence on our business model of providing basic mortality and longevity protection-oriented products to the underserved senior market. In addition, it did not impact our statutory earnings, statutory capital, or capital management philosophies. The following tables present the effect of the adoption of ASU 2018-12 on selected consolidated balance sheet data for the fiscal years ended March 31, 2023 and 2022. Year Ended March 31, 2023 2022 (Unaudited) (In thousands) Total Assets Prior to adoption $ 18,124,648 $ 17,299,581 Effect of adoption: Derecognition of shadow DAC (25,141) 26,131 Re-measurement due to discount rate – – Other adjustments 1,227 1,471 Subtotal $ (23,914) $ 27,602 After adoption $ 18,100,734 $ 17,327,183 48 U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Year Ended March 31, 2023 2022 (Unaudited) (In thousands) Total Liabilities Prior to adoption $ 11,596,313 $ 11,347,089 Effect of adoption: Deferred income tax adjustment on Shadow removal (5,280) 5,488 Re-measurement due to discount rate (1,626) 87,258 Deferred income tax adjustment on discount rate 342 (18,324) Other adjustments 6,794 8,511 Subtotal $ 230 $ 82,933 After adoption $ 11,596,543 $ 11,430,022 Year Ended March 31, 2023 2022 (Unaudited) (In thousands) Accumulated other comprehensive income (loss) Prior to adoption $ (267,046) $ 46,384 Effect of adoption: Derecognition on shadow DAC (tax effect) (19,861) 20,644 Re-measurement due to discount rate 1,626 (87,258) Re-measurement due to discount rate (tax effect) (342) 18,324 Other adjustments – – Subtotal $ (18,577) $ (48,290) After adoption $ (285,623) $ (1,906) Year Ended March 31, 2023 2022 (Unaudited) (In thousands) Total Stockholders' equity Prior to adoption $ 6,528,335 $ 5,952,492 Effect of adoption: Derecognition on shadow DAC (tax effect) (19,861) 20,644 Re-measurement due to discount rate (tax effect) 1,284 (68,934) Other adjustments (5,567) (7,042) Subtotal $ (24,144) $ (55,332) After adoption $ 6,504,191 $ 5,897,160 49 U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Year Ended March 31, 2023 As previously reported Adoption impact As adjusted (Unaudited) (In thousands) Deferred policy acquisition costs, net $ 152,377 (23,914) $ 128,463 Total assets 18,124,648 (23,914) 18,100,734 Policy benefits and losses, claims and loss expenses payable 875,034 5,168 880,202 Deferred income taxes, net 1,334,427 (4,938) 1,329,489 Total liabilities 11,596,313 230 11,596,543 Accumulated other comprehensive loss (267,046) (18,577) (285,623) Retained earnings 7,008,715 (5,567) 7,003,148 Total stockholders' equity 6,528,335 (24,144) 6,504,191 Total liabilities and stockholders' equity 18,124,648 (23,914) 18,100,734 April 1, 2021 March 31, 2021 (Unaudited) (In thousands) Deferred policy acquisition costs, net $ 131,187 $ 89,749 Total assets 14,693,044 14,651,606 Policy benefits and losses, claims and loss expenses payable 1,040,951 909,701 Deferred income taxes, net 1,182,123 1,199,280 Total liabilities 9,846,608 9,732,515 Accumulated other comprehensive income 42,319 106,857 Retained earnings 5,017,451 5,025,568 Total stockholders' equity 4,846,436 4,919,091 Total liabilities and stockholders' equity 14,693,044 14,651,606 The following tables present the balances of and changes in deferred acquisition costs, future policy benefits and market risk benefits and balances amortized on a basis consistent with DAC on April 1, 2021 due to the adoption of ASU 2018-12 by Oxford. Deferred Policy Acquisition Costs Payout Annuities Life Insurance Health Insurance Total (Unaudited) (In thousands) Balance, end of year March 31, 2021 $ 15,654 $ 64,552 $ 9,543 $ 89,749 Adjustments for removal of related balances in accumulated other comprehensive income 41,438 – – 41,438 Adjusted balance, beginning of year April 1, 2021 $ 57,092 $ 64,552 $ 9,543 $ 131,187 50 U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Future Policy Benefit Payout Annuities Life Insurance Health Insurance Total (Unaudited) (In thousands) Balance, end of year March 31, 2021 $ 8,370 $ 310,311 $ 18,341 $ 337,022 Change in discount rate assumptions 2,307 115,978 4,847 123,132 Change in cash flow assumptions, effect of net premiums exceeding gross premiums – 1,747 – 1,747 Change in cash flow assumptions, effect of decrease of the deferred profit liability – 2,580 – 2,580 Adjusted balance, beginning of year April 1, 2021 $ 10,677 $ 430,616 $ 23,188 $ 464,481 Market Risk Benefits Deferred Annuities (Unaudited) (In thousands) Balance, end of year March 31, 2021 $ 7,339 Adjustment for the difference between carrying amount and fair value, except for the difference due to instrument-specific credit risk 3,791 Adjusted balance, beginning of year April 1, 2021 $ 11,130 Retained Earnings Accumulated Other Comprehensive Loss (Unaudited) (In thousands) Liability for future policy benefits $ (4,327) $ (123,132) Market risk benefits (3,791) – Deferred acquisition costs and related asset balances – 41,438 Tax effect – 17,156 Total $ (8,118) $ (64,538) Recent Accounting Pronouncements In 51 U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS on our financial 18. Deferred Policy Acquisition Costs, Net The following tables present a rollforward of deferred policy acquisition costs related to long-duration contracts for the Six Months Ended September 30, 2023 Payout Annuities Life Insurance Health Insurance Total (Unaudited) (In thousands) Balance, beginning of year $ 55,396 $ 66,954 $ 6,113 $ 128,463 Capitalization 5,441 2,212 120 7,773 Amortization expense (9,631) (4,515) (725) (14,871) Balance, end of period $ 51,206 $ 64,651 $ 5,508 $ 121,365 Six Months Ended September 30, 2022 Payout Annuities Life Insurance Health Insurance Total (Unaudited) (In thousands) Balance, beginning of year $ 56,175 $ 68,676 $ 8,718 $ 133,569 Capitalization 10,468 4,212 220 14,900 Amortization expense (9,457) (3,872) (1,315) (14,644) Balance, end of period $ 57,186 $ 69,016 $ 7,623 $ 133,825 52 U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 19. Policy Benefits and Losses, Claims and Loss Expenses Payable The following tables present the balances and changes in the policy benefitsand a reconciliation of Six Months Ended September 30, 2023 Life Insurance Health Insurance Total (Unaudited) (In thousands) Present value of expected net premiums Balance, beginning of year $ 223,118 $ 196,569 $ 419,687 Beginning balance at original discount rate $ 225,071 $ 212,454 $ 437,525 Effect of changes in cash flow assumptions – – – Effect of actual variances from expected experience (187) (5,644) (5,831) Adjusted beginning of year balance $ 224,884 $ 206,810 $ 431,694 Issuances 5,072 77 5,149 Interest accrual 5,554 4,096 9,650 Net premium collected (19,833) (13,357) (33,190) Other – – – Ending balance at original discount rate $ 215,677 $ 197,626 $ 413,303 Effect of changes in discount rate assumptions (AOCI) (1,650) (14,337) (15,987) Balance, end of period $ 214,027 $ 183,289 $ 397,316 Present value of expected future policy benefits Balance, beginning of year $ 530,938 $ 210,054 $ 740,992 Beginning balance at original discount rate $ 533,688 $ 226,510 $ 760,198 Effect of changes in cash flow assumptions – – – Effect of actual variances from expected experiences (565) (4,215) (4,780) Adjusted beginning of year balance $ 533,123 $ 222,295 $ 755,418 Issuances 5,211 77 5,288 Interest accrual 13,166 4,402 17,568 Benefit payments (27,720) (16,162) (43,882) Other – – – Ending balance at original discount rate $ 523,780 $ 210,612 $ 734,392 Effect of changes in discount rate assumptions (AOCI) 949 (14,760) (13,811) Balance, end of period $ 524,729 $ 195,852 $ 720,581 End of period, LFPB net 323,265 Payout annuities and market risk benefits 30,685 Life and annuity ICOS and IBNR / Reinsurance losses payable 10,101 Life DPL / Other life and health 26,556 Oxford end of period balance 390,607 Moving and Storage balance 324,642 Property and Casualty balance 150,148 Policy benefit and losses, claims and loss expense balance, end of period $ 865,397 53 U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES Six Months Ended September 30, 2022 Life Insurance Health Insurance Total (Unaudited) (In thousands) Present value of expected net premiums Balance, beginning of year $ 280,371 $ 280,732 $ 561,103 Beginning balance at original discount rate $ 242,741 $ 253,307 $ 496,048 Effect of changes in cash flow assumptions – – – Effect of actual variances from expected experience 748 1,026 1,774 Adjusted beginning of year balance $ 243,489 $ 254,333 $ 497,822 Issuances 14,083 2,453 16,536 Interest accrual 6,037 5,062 11,099 Net premium collected (21,946) (15,041) (36,987) Other – – – Ending balance at original discount rate $ 241,663 $ 246,807 $ 488,470 Effect of changes in discount rate assumptions (AOCI) 7,814 (7,959) (145) Balance, end of period $ 249,477 $ 238,848 $ 488,325 Present value of expected future policy benefits Balance, beginning of year $ 672,254 $ 299,628 $ 971,882 Beginning balance at original discount rate $ 552,109 $ 269,177 $ 821,286 Effect of changes in cash flow assumptions – – – Effect of actual variances from expected experiences 1,031 1,713 2,744 Adjusted beginning of year balance $ 553,140 $ 270,890 $ 824,030 Issuances 14,083 2,453 16,536 Interest accrual 13,714 5,391 19,105 Benefit payments (29,783) (17,653) (47,436) Other – – – Ending balance at original discount rate $ 551,154 $ 261,081 $ 812,235 Effect of changes in discount rate assumptions (AOCI) 25,907 (7,779) 18,128 Balance, end of period $ 577,061 $ 253,302 $ 830,363 End of period, LFPB net 342,038 Payout annuities and market risk benefits 33,157 Life and annuity ICOS and IBNR / Reinsurance losses payable 11,226 Life DPL / Other life and health 37,130 Oxford end of period balance 423,551 Moving and Storage balance 348,854 Property and Casualty balance 156,998 Policy benefit and losses, claims and loss expense balance, end of period $ 929,403 54 U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Six Months Ended September 30, 2023 Life Insurance Health Insurance Total (Unaudited) (In thousands, except for percentages and weighted average information) Expected gross premiums Undiscounted balance $ 387,141 $ 331,852 $ 718,993 Discounted balance at original discount rate $ 299,161 $ 256,658 $ 555,819 Discounted balance at current discount rate $ 296,505 $ 239,939 $ 536,444 Expected policy benefits Undiscounted balance $ 761,261 $ 273,079 $ 1,034,340 Discounted balance at original discount rate $ 523,777 $ 210,612 $ 734,389 Discounted balance at current discount rate $ 524,726 $ 195,852 $ 720,578 Mortality, lapses and morbidity Mortality actual experience 5.02 % – % Mortality expected experience 5.06 % – % Lapses actual experience 1.87 % – % Lapses expected experience 2.65 % – % Morbidity actual experience – % 85.53 % Morbidity expected experience – % 73.50 % Premiums and interest expense Gross premiums $ 26,667 $ 18,432 $ 45,099 Other premiums – Total premiums $ 45,099 Interest expense $ 7,612 $ 306 $ 7,918 Expected duration (persistency) of policies in-force (years) 6.9 6.5 Weighted average original interest rate of the liability for future policy benefits 5.00 % 4.00 % Weighted average current interest rate of the liability for future policy benefits 5.00 % 5.00 % 55 U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Six Months Ended September 30, 2022 Life Insurance Health Insurance Total (Unaudited) (In thousands, except for percentages and weighted average information) Expected gross premiums Undiscounted balance $ 427,457 $ 434,063 $ 861,520 Discounted balance at original discount rate $ 329,233 $ 333,001 $ 662,234 Discounted balance at current discount rate $ 339,434 $ 325,323 $ 664,757 Expected policy benefits Undiscounted balance $ 807,725 $ 342,371 $ 1,150,096 Discounted balance at original discount rate $ 551,153 $ 261,081 $ 812,234 Discounted balance at current discount rate $ 577,060 $ 253,302 $ 830,362 Mortality, lapses and morbidity Mortality actual experience 5.07 % – % Mortality expected experience 4.78 % – % Lapses actual experience 2.04 % – % Lapses expected experience 2.53 % – % Morbidity actual experience – % 79.25 % Morbidity expected experience – % 71.30 % Premiums and interest expense Gross premiums $ 29,158 $ 21,703 $ 50,861 Other premiums – Total premiums $ 50,861 Interest expense $ 7,677 $ 329 $ 8,006 Expected duration (persistency) of policies in-force (years) 7.1 6.8 Weighted average original interest rate of the liability for future policy benefits 5.00 % 4.00 % Weighted average current interest rate of the liability for future policy benefits 1.00 % 1.00 % 56 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following tables present the balances and changes in Liabilities from investment contracts account balances: Six Months Ended September 30, 2023 Deferred Annuities (Unaudited) (In thousands, except for the average credited rate) Policyholder contract deposits account balance Beginning of year $ 2,398,884 Deposits received 125,122 Surrenders and withdrawals (146,647) Benefit payments (20,761) Interest credited 36,992 Other – End of period $ 2,393,590 Weighted average credited rate 3.09 Cash surrender value $ 2,062,233 Six Months Ended September 30, 2022 Deferred Annuities (Unaudited) (In thousands, except for the average credited rate) Policyholder contract deposits account balance Beginning of year $ 2,336,238 Deposits received 169,008 Surrenders and withdrawals (122,450) Benefit payments (18,334) Interest credited 25,566 Other – End of period $ 2,390,028 Weighted average credited rate 2.16 Cash surrender value $ 2,082,936 57 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations General We begin Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) with the overall strategy of This MD&A should be read in conjunction with the other sections of this Quarterly Report, including the Notes to Overall Strategy Our overall strategy is to maintain our leadership position in the United States and Canada “do-it-yourself” moving and storage industry. We accomplish this by providing a seamless and integrated supply chain to the “do-it-yourself” moving and storage market. As part of executing this strategy, we leverage the brand recognition of U-Haul®with our full line of moving and self-storage related products and services and the convenience of our broad geographic presence. Our primary focus is to provide our customers with a wide selection of moving rental equipment, convenient self-storage rental facilities, portable moving and storage units and related moving and self-storage products and services. We are able to expand our distribution and improve customer service by increasing the amount of moving equipment and storage units and portable moving and storage units available for rent, expanding the number of independent dealers and company operated locations in our Property and Casualty Insurance is focused on providing and administering property and casualty insurance to U-Haul and its customers, its independent dealers and affiliates. Life Insurance is focused on long term capital growth through direct writing and reinsuring of life insurance, Medicare supplement and annuity products in the senior marketplace. Description of Operating Segments Moving and Storage Moving and Storage consists of the rental of trucks, trailers, portable moving and storage units, specialty rental items and self-storage spaces primarily to the household mover as well as sales of moving supplies, towing accessories and propane. Operations are conducted under the registered trade name U-Haul®throughout the United States and Canada. With respect to our truck, trailer, specialty rental items and self-storage rental business, we are focused on expanding our dealer and center network, which provides added convenience for our customers, and expands the selection and availability of rental equipment to satisfy the needs of our customers. U-Haul®branded self-moving related products and services, such as boxes, pads and tape, allow our customers to, among other things, protect their belongings from potential damage during the moving process. We are committed to providing a complete line of products selected with the “do-it-yourself” moving and storage customer in mind. uhaul.com®is an online marketplace that connects consumers to our operations as well as independent Moving Help®service providers and thousands of independent Self-Storage Affiliates. Our network of customer-rated affiliates and service providers furnish pack and load help, cleaning help, self-storage and similar services throughout the United States and Canada. Our goal is to further utilize our web-based technology platform to increase service to consumers and businesses in the moving and storage market. U-Haul’s mobile app, Truck Share 24/7, Skip-the-Counter Self-Storage rentals and Self-checkout for moving supplies provide our customers methods for conducting business with us directly via their mobile devices and also limiting physical exposure. Since 1945, U-Haul has incorporated sustainable practices into its everyday operations. We believe that our basic business premise of equipment sharing helps reduce greenhouse gas emissions and reduces the inventory of total large capacity vehicles. We continue to look for ways to reduce waste within our business and are dedicated to manufacturing reusable components and recyclable products. We believe that our commitment to sustainability, through our products and services and everyday operations has helped us to reduce our impact on the environment. Property and Casualty Insurance Property and Casualty Insurance provides loss adjusting and claims handling for U-Haul through regional offices across the United States and Canada. Property and Casualty Insurance also underwrites components of the Safemove®, Safetow®, Safemove Plus®, Safestor®andSafestor Mobile®protection packages to U-Haul customers. We continue to focus on increasing the penetration of these products into the moving and storage market. The business plan for Property and Casualty Insurance includes offering property and casualty insurance products in other U-Haulrelated programs. Life Insurance Life Insurance provides life and health insurance products primarily to the senior market through the direct writing and reinsuring of life insurance, Medicare supplement and annuity policies. Cybersecurity Incident On September 9, 2022, we announced that the Company was made aware of a data security incident involving U-Haul‘s information technology network. U-Haul detected a compromise of two unique passwords used to access U-Haul customers‘ information. U-Haul took immediate steps to contain the incident and promptly enhanced its security measures to prevent any further unauthorized access. U-Haul retained cybersecurity experts and incident response counsel to investigate the incident and implement additional security safeguards. The investigation determined that between November 5, 2021 and April 8, 2022, the threat actor accessed customer contracts containing customers’ names, dates of birth, and driver’s license or state identification numbers. None of U-Haul’s financial, payment processing or email systems were involved. U-Haul has notified impacted customers and relevant governmental authorities. Several class action lawsuits related to the incident have been filed against U-Haul. The lawsuits Critical Accounting Policies and Estimates Please refer to our Annual Report on Form 10-K for the fiscal year ended March 31, Results of Operations Quarter Ended September 30, Listed below, on a consolidated basis, are revenues for our major product lines for the second quarter of fiscal Quarter Ended September 30, 2022 2021 (Unaudited) (In thousands) Self-moving equipment rentals $ 1,162,025 $ 1,179,061 Self-storage revenues 185,586 153,485 Self-moving and self-storage products and service sales 96,864 92,191 Property management fees 9,277 8,747 Life insurance premiums 25,456 28,913 Property and casualty insurance premiums 25,718 22,499 Net investment and interest income 30,509 36,780 Other revenue 167,429 142,578 Consolidated revenue $ 1,702,864 $ 1,664,254 Quarter Ended September 30, 2023 2022 (Unaudited) (In thousands) Self-moving equipment rentals $ 1,069,405 $ 1,162,025 Self-storage revenues 208,890 185,586 Self-moving and self-storage products and service sales 91,571 96,864 Property management fees 9,267 9,277 Life insurance premiums 22,498 25,456 Property and casualty insurance premiums 25,571 25,718 Net investment and interest income 64,738 30,509 Other revenue 157,920 167,429 Consolidated revenue $ 1,649,860 $ 1,702,864 Self-moving equipment rental revenues decreased Self-storage revenues increased Sales of self-moving and self-storage products and services Life insurance premiums decreased Property and casualty insurance premiums Net investment and interest income Other revenue 60 Listed below are revenues and earnings from operations at each of our operating segments for the second quarter of fiscal Quarter Ended September 30, 2022 2021 (Unaudited) (In thousands) Moving and storage Revenues $ 1,636,858 $ 1,576,999 Earnings from operations before equity in earnings of subsidiaries 514,943 555,988 Property and casualty insurance Revenues 23,363 29,539 Earnings from operations 5,686 15,189 Life insurance Revenues 45,696 60,985 Earnings from operations 1,852 7,913 Eliminations Revenues (3,053) (3,269) Earnings from operations before equity in earnings of subsidiaries (386) (389) Consolidated results Revenues 1,702,864 1,664,254 Earnings from operations 522,095 578,701 Quarter Ended September 30, 2023 2022 (Unaudited) (In thousands) Moving and storage Revenues $ 1,565,578 $ 1,636,858 Earnings from operations before equity in earnings of subsidiaries 401,704 514,943 Property and casualty insurance Revenues 31,852 23,363 Earnings from operations 15,419 5,686 Life insurance Revenues 55,522 45,696 Earnings (losses) from operations 5,608 (297) Eliminations Revenues (3,092) (3,053) Earnings from operations before equity in earnings of subsidiaries (376) (386) Consolidated results Revenues 1,649,860 1,702,864 Earnings from operations 422,355 519,946 Total costs and expenses increased Depreciation expense associated with As a result of the above-mentioned changes in revenues and expenses, earnings from operations decreased Interest expense for the second quarter of fiscal Income tax expense was $85.2 million As a result of the above-mentioned items, earnings available to common stockholders were Moving and Storage Quarter Ended September 30, Listed below are revenues for our major product lines at Moving and Storage for the second quarter of fiscal Quarter Ended September 30, 2022 2021 (Unaudited) (In thousands) Self-moving equipment rentals $ 1,163,376 $ 1,180,329 Self-storage revenues 185,586 153,485 Self-moving and self-storage products and service sales 96,864 92,191 Property management fees 9,277 8,747 Net investment and interest income 15,077 675 Other revenue 166,678 141,572 Moving and Storage revenue $ 1,636,858 $ 1,576,999 Quarter Ended September 30, 2023 2022 (Unaudited) (In thousands) Self-moving equipment rentals $ 1,070,688 $ 1,163,376 Self-storage revenues 208,890 185,586 Self-moving and self-storage products and service sales 91,571 96,864 Property management fees 9,267 9,277 Net investment and interest income 28,520 15,077 Other revenue 156,642 166,678 Moving and Storage revenue $ 1,565,578 $ 1,636,858 Self-moving equipment rental revenues decreased Self-storage revenues increased We own and manage self-storage facilities. Self-storage revenues reported in the consolidated financial statements represent Company-owned locations only. Self-storage data for our owned storage locations follows: Quarter Ended September 30, 2022 2021 (Unaudited) (In thousands, except occupancy rate) Unit count as of September 30 638 568 Square footage as of September 30 53,303 47,903 Average monthly number of units occupied 540 476 Average monthly occupancy rate based on unit count 85.4% 84.3% Average monthly square footage occupied 46,538 41,743 Quarter Ended September 30, 2023 2022 (Unaudited) (In thousands, except occupancy rate) Unit count as of September 30 691 638 Square footage as of September 30 58,402 53,303 Average monthly number of units occupied 578 540 Average monthly occupancy rate based on unit count 84.2% 85.4% End of September occupancy rate based on unit count 83.5% 84.8% Average monthly square footage occupied 49,931 46,538 Over the last twelve months we added approximately Sales of self-moving and self-storage products and services Net investment and interest income increased Other revenue 62 Total costs and expenses increased Depreciation expense associated with The components of depreciation, net of gains on disposals are as follows: Quarter Ended September 30 2023 2022 (Unaudited) (In thousands) Depreciation expense - rental equipment $ 140,341 $ 129,220 Depreciation expense - non rental equipment 23,392 21,546 Depreciation expense - real estate 37,192 30,895 Total depreciation expense $ 200,925 $ 181,661 Gains on disposals of rental equipment (46,928) $ (64,312) (Gain) loss on disposals of non-rental equipment 125 (31) Total gains on disposals equipment $ (46,803) $ (64,343) Depreciation, net of gains on disposals $ 154,122 $ 117,318 Losses on disposals of real estate $ 1,715 $ 1,872 As a result of the above-mentioned changes in revenues and expenses, earnings from operations for Moving and Storage, before consolidation of the equity in the earnings of the insurance subsidiaries, decreased Equity in the earnings of U-Haul Holding Company’s insurance subsidiaries was $16.9 million for the second quarter of fiscal As a result of the above-mentioned changes in revenues and expenses, consolidated earnings from operations for Moving and Storage decreased to Property and Casualty Insurance Quarter Ended June 30, Net premiums were Net investment and interest income (loss) was 63 Benefits and losses incurred were As a result of the above-mentioned changes in revenues and expenses, pretax earnings from operations were Life Insurance Quarter Ended June 30, Net premiums were Net investment income was Benefits and losses incurred were As a result of the above-mentioned changes in revenues and expenses, pretax earnings (losses) from operations were Six Months Ended September 30, Listed below on a consolidated basis are revenues for our major product lines for the first six months of fiscal Six Months Ended September 30, 2022 2021 (Unaudited) (In thousands) Self-moving equipment rentals $ 2,252,800 $ 2,214,438 Self-storage revenues 358,763 290,878 Self-moving and self-storage products and service sales 206,215 197,076 Property management fees 18,416 17,196 Life insurance premiums 51,237 57,618 Property and casualty insurance premiums 45,690 39,368 Net investment and interest income 64,082 71,779 Other revenue 303,501 248,757 Consolidated revenue $ 3,300,704 $ 3,137,110 Six Months Ended September 30, 2023 2022 (Unaudited) (In thousands) Self-moving equipment rentals $ 2,068,611 $ 2,252,800 Self-storage revenues 407,851 358,763 Self-moving and self-storage products and service sales 192,443 206,215 Property management fees 18,444 18,416 Life insurance premiums 45,629 51,237 Property and casualty insurance premiums 45,893 45,690 Net investment and interest income 129,330 64,082 Other revenue 281,967 303,501 Consolidated revenue $ 3,190,168 $ 3,300,704 Self-moving equipment rental revenues Self-storage revenues increased Sales of self-moving and self-storage products and services Life insurance premiums decreased Property and casualty insurance premiums increased Net investment and interest income Other revenue Listed below are revenues and earnings from operations at each of our operating segments for the first six months of fiscal Six Months Ended September 30 2022 2021 (Unaudited) (In thousands) Moving and storage Revenues $ 3,160,456 $ 2,970,253 Earnings from operations before equity in earnings of subsidiaries 996,560 1,038,983 Property and casualty insurance Revenues 46,445 52,995 Earnings from operations 14,037 24,421 Life insurance Revenues 99,799 119,644 Earnings from operations 3,425 10,279 Eliminations Revenues (5,996) (5,782) Earnings from operations before equity in earnings of subsidiaries (768) (774) Consolidated results Revenues 3,300,704 3,137,110 Earnings from operations 1,013,254 1,072,909 Six Months Ended September 30 2023 2022 (Unaudited) (In thousands) Moving and storage Revenues $ 3,025,091 $ 3,160,456 Earnings from operations before equity in earnings of subsidiaries 788,395 996,560 Property and casualty insurance Revenues 59,691 46,445 Earnings from operations 27,401 14,037 Life insurance Revenues 111,203 99,799 Earnings from operations 6,964 5,619 Eliminations Revenues (5,817) (5,996) Earnings from operations before equity in earnings of subsidiaries (747) (768) Consolidated results Revenues 3,190,168 3,300,704 Earnings from operations 822,013 1,015,448 Total costs and expenses increased 65 Depreciation expense associated with As a result of the above-mentioned changes in revenues and expenses, earnings from operations decreased Interest expense for the first six months of fiscal Income tax expense was $167.0 million As a result of the above-mentioned items, earnings available to common Moving and Storage Six Months Ended September 30, Listed below are revenues for the major product lines at our Moving and Storage operating segment for the first six months of fiscal Six Months Ended September 30 2022 2021 (Unaudited) (In thousands) Self-moving equipment rentals $ 2,255,086 $ 2,216,542 Self-storage revenues 358,763 290,878 Self-moving and self-storage products and service sales 206,215 197,076 Property management fees 18,416 17,196 Net investment and interest income 20,017 1,355 Other revenue 301,959 247,206 Moving and Storage revenue $ 3,160,456 $ 2,970,253 Six Months Ended September 30 2023 2022 (Unaudited) (In thousands) Self-moving equipment rentals $ 2,070,767 $ 2,255,086 Self-storage revenues 407,851 358,763 Self-moving and self-storage products and service sales 192,443 206,215 Property management fees 18,444 18,416 Net investment and interest income 55,815 20,017 Other revenue 279,771 301,959 Moving and Storage revenue $ 3,025,091 $ 3,160,456 Self-moving equipment rental revenues Self-storage revenues increased 66 We own and manage self-storage facilities. Self-storage revenues reported in the consolidated financial statements represent Company-owned locations only. Self-storage data for our owned storage locations follows: Six Months Ended September 30 2022 2021 (Unaudited) (In thousands, except occupancy rate) Unit count as of September 30 638 568 Square footage as of September 30 53,303 47,903 Average monthly number of units occupied 529 456 Average monthly occupancy rate based on unit count 85.0% 82.1% Average monthly square footage occupied 45,692 40,207 Six Months Ended September 30 2023 2022 (Unaudited) (In thousands, except occupancy rate) Unit count as of September 30 691 638 Square footage as of September 30 58,402 53,303 Average monthly number of units occupied 529 529 Average monthly occupancy rate based on unit count 83.5% 85.0% End of September occupancy rate based on unit count 83.5% 84.8% Average monthly square footage occupied 49,279 45,692 Over the last twelve months we added approximately Sales of self-moving and self-storage products and services Net investment and interest income increased Other revenue Total costs and expenses increased Depreciation expense associated with 67 The components of depreciation, net of gains on disposals for the first six months of fiscal Six Months Ended September 30 2023 2022 (Unaudited) (In thousands) Depreciation expense - rental equipment $ 275,533 $ 255,741 Depreciation expense - non rental equipment 45,694 43,167 Depreciation expense - real estate 73,173 60,897 Total depreciation expense $ 394,400 $ 359,805 Gains on disposals of rental equipment $ (102,735) $ (128,313) (Gain) loss on disposals of non-rental equipment 271 (378) Total gains on disposals equipment $ (102,464) $ (128,691) Depreciation, net of gains on disposals $ 291,936 $ 231,114 Losses on disposals of real estate $ 2,736 $ 4,179 As a result of the above-mentioned changes in revenues and expenses, earnings from operations for Moving and Storage before consolidation of the equity in the earnings of the insurance subsidiaries decreased to $788.4 million for the first six months of fiscal 2024, compared with $996.6 million for the first six months of fiscal Equity in the earnings of U-Haul Holding Company’s insurance subsidiaries was $27.1 million for the first six months of fiscal As a result of the above-mentioned changes in revenues and expenses, earnings from operations decreased to Property and Casualty Insurance Six Months Ended June 30, Net premiums were Net investment and interest income (loss) was Benefits and losses incurred were As a result of the above-mentioned changes in revenues and expenses, pretax earnings from operations were Life Insurance Six Months Ended June 30, Net premiums were 68 Net investment income was Benefits and Amortization of DAC, SIA and VOBA were As a result of the above-mentioned changes in revenues and expenses, pretax earnings from operations were Liquidity and Capital Resources We believe our current capital structure is a positive factor that will enable us to pursue our operational plans and goals and provide us with sufficient liquidity for the foreseeable future. There are many factors that could affect our liquidity, including some As of September 30, Moving & Storage Property & Casualty Insurance (a) Life Insurance (a) (Unaudited) (In thousands) Cash and cash equivalents $ 3,025,390 $ 11,196 $ 28,529 Other financial assets 204,671 444,990 2,803,275 Debt obligations 6,298,831 – – (a) As of June 30, 2022 Moving & Storage Property & Casualty Insurance (a) Life Insurance (a) (Unaudited) (In thousands) Cash and cash equivalents $ 2,068,790 $ 44,272 $ 32,069 Other financial assets 314,005 436,100 2,722,737 Debt obligations (b) 6,436,800 – – (a) As of June 30, 2023 (b) Excludes ($35,901) of debt issuance costs As of September 30, Net cash provided by operating activities decreased Net cash used in investing activities 69 Net cash provided by financing activities decreased Liquidity and Capital Resources and Requirements of Our Operating Segments Moving and Storage To meet the needs of our customers, U-Haul maintains a large fleet of rental equipment. Capital expenditures have primarily consisted of new rental equipment acquisitions and the buyouts of existing fleet from leases. The capital to fund these expenditures has historically been obtained internally from operations and the sale of used equipment and externally from debt and lease financing. U-Haul estimates that during fiscal The Company has traditionally Net capital expenditures (purchases of property, plant and equipment less proceeds from the sale of property, plant and equipment and lease proceeds) at Moving and Storage were Six Months Ended September 30 2022 2021 (Unaudited) (In thousands) Purchases of rental equipment $ 718,231 $ 564,331 Purchases of real estate, construction and renovations 583,889 444,334 Other capital expenditures 33,408 31,023 Gross capital expenditures 1,335,528 1,039,688 Less: Sales of property, plant and equipment (329,611) (306,946) Net capital expenditures $ 1,005,917 $ 732,742 Six Months Ended September 30 2023 2022 (Unaudited) (In thousands) Purchases of rental equipment $ 974,436 $ 718,231 Purchases of real estate, construction and renovations 632,902 583,889 Other capital expenditures 57,049 33,408 Gross capital expenditures 1,664,387 1,335,528 Less: Sales of property, plant and equipment (408,279) (329,611) Net capital expenditures $ 1,256,108 $ 1,005,917 Moving and Storage continues to hold significant cash and we believe has access to additional liquidity. Management may invest these funds in our existing operations, expand our product lines or pursue external opportunities in the self-moving and storage marketplace, pay dividends, repurchase shares of common stock or reduce existing indebtedness where possible. 70 Property and Casualty Insurance State insurance regulations restrict the amount of dividends that can be paid to stockholders of insurance companies. As a result, Property and Casualty Insurance’s assets are generally not available to satisfy the claims of Property and Casualty Insurance’s stockholder’s equity was Life Insurance Life Insurance manages its financial assets to meet policyholder and other obligations, including investment contract withdrawals and deposits. Life Insurance’s net Life Insurance’s stockholder’s equity was Cash Provided from Operating Activities by Operating Segments Moving and Storage Net cash provided from operating activities were Property and Casualty Insurance Net cash provided by operating activities were Property and Casualty Insurance’s cash and cash equivalents and short-term investment portfolios amounted to Life Insurance Net cash provided by operating activities were 71 In addition to cash flows from operating activities and financing activities, a substantial amount of liquid funds are available through Life Insurance’s short-term portfolio and its membership in the FHLB. As of June 30, Liquidity and Capital Resources - Summary We believe we have the financial resources needed to meet our business plans, including our working capital needs. We continue to hold significant cash and have access to existing credit facilities and additional liquidity to meet our anticipated capital expenditure requirements for investment in our rental fleet, rental equipment and storage acquisitions and build outs. As a result of the federal income tax provisions of the Coronavirus Aid, Relief and Economic Security Act, we have filed applicable forms with the Internal Revenue Service to carryback net operating losses. These refund claims total approximately $366 million, of which we have received approximately $243 million Our borrowing strategy has primarily focused on asset-backed financing, rental equipment leases and private placement borrowings limited by the amount of unencumbered assets available. As part of this strategy, we seek to ladder maturities and fix interest rates. While each of these loans typically contains provisions governing the amount that can be borrowed in relation to specific assets, the overall structure is flexible with no limits on overall Company borrowings. Management believes it has adequate liquidity between cash and cash equivalents and unused borrowing capacity in existing credit facilities to meet the current and expected needs of the Company over the next several years. As of September 30, Disclosures about Contractual Obligations and Commercial Commitments Our estimates as to future contractual obligations have not materially changed from the disclosure included under the subheading Disclosures about Contractual Obligations and Commercial Commitments in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the fiscal year ended March 31, Fiscal We will continue to focus our attention on increasing transaction volume and improving pricing, product and utilization for self-moving equipment rentals. Maintaining an adequate level of new investment in our truck fleet is an important component of our plan to meet our operational goals and is likely to increase in fiscal With respect to our storage business, we have added new locations and expanded existing locations. In fiscal Inflationary pressures may challenge our ability to maintain or improve upon our operating margin. Property and Casualty Insurance will continue to provide loss adjusting and claims handling for U-Haul and underwrite components of the Safemove®, Safetow®, Safemove Plus®, Safestor®and Safestor Mobile®protection packages to U-Haul customers. 72 Life Insurance is pursuing its goal of expanding its presence in the senior market through the sales of its Medicare supplement, life and annuity policies. This strategy includes growing its agency force, expanding its new product offerings, and pursuing business acquisition opportunities. Item 3. Quantitative and Qualitative Disclosures About Market Risk We are exposed to financial market risks, including changes in interest rates and currency exchange rates. To mitigate these risks, we may utilize derivative financial instruments, among other strategies. We do not use derivative financial instruments for speculative purposes. Interest Rate Risk The exposure to market risk for changes in interest rates relates primarily to our variable rate debt obligations and one variable rate operating lease. We have used interest rate swap agreements and forward swaps to reduce our exposure to changes in interest rates. We enter into these arrangements with counterparties that are significant financial institutions with whom we generally have other financial arrangements. We are exposed to credit risk should these counterparties not be able to perform Notional Amount Fair Value Effective Date Expiration Date Fixed Rate Floating Rate (Unaudited) (In thousands) $ 61,587 $ 2,957 7/15/2022 7/15/2032 2.86% 1 Month SOFR 74,750 2,806 8/1/2022 8/1/2026 2.72% 1 Month SOFR 74,250 2,745 8/1/2022 8/31/2026 2.75% 1 Month SOFR Notional Amount Fair Value Effective Date Expiration Date Fixed Rate Floating Rate (Unaudited) (In thousands) $ 59,107 $ 5,083 7/15/2022 7/15/2032 2.86% 1 Month SOFR 71,750 3,468 8/1/2022 8/1/2026 2.72% 1 Month SOFR 71,250 3,399 8/1/2022 8/31/2026 2.75% 1 Month SOFR 100,000 378 8/31/2023 8/31/2025 4.71% 1 Month SOFR As of September 30, Additionally, our insurance subsidiaries’ fixed income investment portfolios expose us to interest rate risk. This interest rate risk is the price sensitivity of a fixed income security to changes in interest rates. As part of our insurance companies’ asset and liability management, actuaries estimate the cash flow patterns of our existing liabilities to determine their duration. These outcomes are compared to the characteristics of the assets that are currently supporting these liabilities assisting management in determining an asset allocation strategy for future investments that management believes will mitigate the overall effect of interest rates. We use derivatives to hedge our equity market exposure to indexed annuity products sold by our Life Insurance company. These contracts earn a return for the Although the call options are employed to be effective hedges against our policyholder obligations from an economic standpoint, they do not meet the requirements for hedge accounting under GAAP. Accordingly, the call options are marked to fair value on each reporting date with the change in fair value, plus or minus, included as a component of net investment and interest income. The change in fair value of the call options includes the gains or losses recognized at the expiration of the option term and the changes in fair value for open contracts. 73 Foreign Currency Exchange Rate Risk The exposure to market risk for changes in foreign currency exchange rates relates primarily to our Canadian business. Approximately Cautionary Statements Regarding Forward-Looking Statements This Quarterly Report contains “forward-looking statements” regarding future events and our future results of operations. We may make additional written or oral forward-looking statements from time to time in filings with the SEC or otherwise. We believe such forward-looking statements are within the meaning of the safe-harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such statements may include, but are not limited to, the risk associated with COVID-19 or similar events on Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Factors that could significantly affect results include, without limitation, the degree and nature of our competition; our leverage; general economic conditions; fluctuations in our costs to maintain and update our fleet and facilities; the limited number of manufacturers that supply our rental trucks; our ability to effectively hedge our variable interest rate debt; that we are controlled by a small contingent of stockholders; fluctuations in quarterly results and seasonality; changes in, and our compliance with, government regulations, particularly environmental regulations and regulations relating to motor carrier operations; outcomes of litigation; our reliance on our third party dealer network; liability claims relating to our rental vehicles and equipment; our ability to attract, motivate and retain key employees; reliance on our automated systems and the internet; our credit ratings; our ability to recover under reinsurance arrangements and other factors described in our Annual Report on Form 10-K in Item 1A, Risk Factors, and in this Quarterly Report or the other documents we file with the SEC. The above factors, as well as other statements in this Quarterly Report and in the Notes to 74 Item 4. Controls and Procedures Evaluation of Disclosure Controls and Procedures Our management, with the participation of the CEO and CFO, conducted an evaluation of the effectiveness of Previously Disclosed Material Weaknesses and Remediation Plan Two-Class Method of Earnings per Share. As previously disclosed in Part II, Item 9A of our Annual Report on Form 10-K for the These actions were completed in advance of our year end close process as of March 31, 2023, and the redesigned control operated as planned as part of our March 31, 2023, year-end close process. In conjunction with our interim period close process as of June 30, 2023, the redesigned control again operated as designed. Therefore, based upon our testing of the redesigned control over these instances, we have concluded that the material weakness related to the calculation of earnings per share using the two-class method associated with the recently issued UHAL.B common stock, has been remediated. General Information Technology Controls. As previously disclosed in Part II, Item 9A of our Annual Report on Form 10-K for the fiscal year ended March 31, 2023, we determined a material weakness existed as management did not fully design, implement and monitor general information technology controls in the areas of program change management, user access, segregation of duties, and cyber security for systems supporting substantially all of the Company’s internal control processes. A substantial portion of the Company’s controls are dependent upon the information derived from the information technology systems and therefore the dependent controls were concluded to be ineffective. Our management, We are committed to maintaining a strong internal control environment, and believe that these remediation actions represent significant improvements in our 75 period of Changes in Internal Control Over Financial Reporting Other than the material weakness described above, there have not been any changes in our internal control over financial reporting as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f) during the PART II Other information Item 1. Legal Proceedings The information regarding our legal proceedings in Note Item 1A. Risk Factors We In addition, the provision of service to our customers and the operation of our Any of these occurrences could result in disruptions in our operations, the loss of existing or potential customers, damage to our brand and reputation, and litigation and potential liability for the Company. In addition, the cost and operational consequences of implementing further data or system protection measures could be significant, and our efforts to deter, identify, mitigate and/or eliminate any security breaches may not be successful. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Not applicable. Item 3. Defaults Upon Senior Securities Not applicable. Item 4. Mine Safety Disclosures Not applicable. Item 5. Other Information Item 6. Exhibits The following documents are filed as part of this report: Exhibit Number Description Page or Method of Filing Amended and Restated Articles of Incorporation of Incorporated by reference to Incorporated by reference to Incorporated by reference to Articles of Conversion/Exchange/Merger Incorporated by reference to 31.1 Rule 13a-14(a)/15d-14(a) Certificate of Edward J. Shoen, President and Chairman of the Board of Filed herewith 31.2 Rule 13a-14(a)/15d-14(a) Certificate of Jason A. Berg, Chief Financial Officer of Filed herewith 32.1 Certificate of Edward J. Shoen, President and Chairman of the Board of Furnished herewith 32.2 Certificate of Jason A. Berg, Chief Financial Officer of Furnished herewith 101.INS Inline XBRL Instance Document Filed herewith 101.SCH Inline XBRL Taxonomy Extension Schema Filed herewith 77 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Filed herewith 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Filed herewith 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Filed herewith 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Filed herewith 104 Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit 101) Filed herewith 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. Date: November /s/ Edward J. Shoen Edward J. Shoen President and Chairman of the Board (Principal Executive Officer) Date: November /s/ Jason A. Berg Jason A. Berg Chief Financial Officer (Principal Financial Officer) Date: November /s/ Maria L. Bell Maria L. Bell Chief Accounting Officer (Principal Accounting Officer) 79 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total revenues | $ | 3,120,453 | $ | 180,251 | $ | 3,300,704 | $ | 1,559,205 | $ | 90,655 | $ | 1,649,860 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization, net of (gains) on disposal |
| 245,721 |
| 4,216 |
| 249,937 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization, net of (gains) on disposals |
| 161,085 |
| 1,578 |
| 162,663 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense |
| 105,425 |
| 1,567 |
| 106,992 |
| 63,182 |
| 761 |
| 63,943 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pretax earnings |
| 873,907 |
| 30,788 |
| 904,695 |
| 348,442 |
| 9,606 |
| 358,048 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income tax expense |
| 210,867 |
| 7,811 |
| 218,678 |
| 82,035 |
| 2,505 |
| 84,540 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Identifiable assets |
| 17,515,009 |
| 628,334 |
| 18,143,343 |
| 18,279,234 |
| 742,216 |
| 19,021,450 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Six Months Ended September 30, 2021 |
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Quarter Ended September 30, 2022 |
|
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Total revenues | $ | 2,973,191 | $ | 163,919 | $ | 3,137,110 | $ | 1,610,067 | $ | 92,797 | $ | 1,702,864 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization, net of (gains) on disposal |
| 269,606 |
| (475) |
| 269,131 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization, net of (gains) on disposals |
| 124,735 |
| 1,427 |
| 126,162 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense |
| 76,716 |
| 2,007 |
| 78,723 |
| 56,477 |
| 716 |
| 57,193 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pretax earnings |
| 959,607 |
| 34,019 |
| 993,626 |
| 444,220 |
| 17,270 |
| 461,490 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income tax expense |
| 229,922 |
| 8,631 |
| 238,553 |
| 107,254 |
| 4,370 |
| 111,624 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Identifiable assets |
| 15,849,380 |
| 487,848 |
| 16,337,228 |
| 17,515,009 |
| 628,334 |
| 18,143,343 |
|
| United States |
| Canada |
| Consolidated |
|
| (Unaudited) | ||||
|
| (All amounts are in thousands of U.S. $'s) | ||||
Six Months Ended September 30, 2023 |
|
|
|
|
|
|
Total revenues | $ | 3,020,489 | $ | 169,679 | $ | 3,190,168 |
Depreciation and amortization, net of (gains) on disposals |
| 309,398 |
| 145 |
| 309,543 |
Interest expense |
| 123,128 |
| 1,413 |
| 124,541 |
Pretax earnings |
| 675,514 |
| 21,229 |
| 696,743 |
Income tax expense |
| 160,630 |
| 5,767 |
| 166,397 |
Identifiable assets |
| 18,279,234 |
| 742,216 |
| 19,021,450 |
|
|
|
|
|
|
|
Six Months Ended September 30, 2022 |
|
|
|
|
|
|
Total revenues | $ | 3,120,453 | $ | 180,251 | $ | 3,300,704 |
Depreciation and amortization, net of (gains) on disposals |
| 245,721 |
| 4,216 |
| 249,937 |
Interest expense |
| 105,425 |
| 1,567 |
| 106,992 |
Pretax earnings |
| 876,101 |
| 30,788 |
| 906,889 |
Income tax expense |
| 210,867 |
| 7,811 |
| 218,678 |
Identifiable assets |
| 17,515,009 |
| 628,334 |
| 18,143,343 |
3539
amerco and consolidated subsidiariesU-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
notes to condensed consolidated financial statements – (continued)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12.13. Employee Benefit Plans
The components of the net periodic benefit costs with respect to postretirement benefits were as follows:
|
| Quarter Ended September 30, | ||
|
| 2022 |
| 2021 |
|
| (Unaudited) | ||
|
| (In thousands) | ||
|
|
|
|
|
Service cost for benefits earned during the period | $ | 331 | $ | 351 |
Other components of net periodic benefit costs: |
|
|
|
|
Interest cost on accumulated postretirement benefit |
| 287 |
| 227 |
Other components |
| 17 |
| 53 |
Total other components of net periodic benefit costs |
| 304 |
| 280 |
Net periodic postretirement benefit cost | $ | 635 | $ | 631 |
|
| Six Months Ended September 30, | ||
|
| 2022 |
| 2021 |
|
| (Unaudited) | ||
|
| (In thousands) | ||
|
|
|
|
|
Service cost for benefits earned during the period | $ | 663 | $ | 701 |
Other components of net periodic benefit costs: |
|
|
|
|
Interest cost on accumulated postretirement benefit |
| 574 |
| 454 |
Other components |
| 34 |
| 106 |
Total other components of net periodic benefit costs |
| 608 |
| 560 |
Net periodic postretirement benefit cost | $ | 1,271 | $ | 1,261 |
|
| Quarter Ended September 30, | ||
|
| 2023 |
| 2022 |
|
| (Unaudited) | ||
|
| (In thousands) | ||
|
|
|
|
|
Service cost for benefits earned during the period | $ | 297 | $ | 331 |
Other components of net periodic benefit costs: |
|
|
|
|
Interest cost on accumulated postretirement benefit |
| 368 |
| 287 |
Other components |
| (4) |
| 17 |
Total other components of net periodic benefit costs |
| 364 |
| 304 |
Net periodic postretirement benefit cost | $ | 661 | $ | 635 |
13.
|
| Six Months Ended September 30, | ||
|
| 2023 |
| 2022 |
|
| (Unaudited) | ||
|
| (In thousands) | ||
|
|
|
|
|
Service cost for benefits earned during the period | $ | 594 | $ | 663 |
Other components of net periodic benefit costs: |
|
|
|
|
Interest cost on accumulated postretirement benefit |
| 735 |
| 574 |
Other components |
| (6) |
| 34 |
Total other components of net periodic benefit costs |
| 729 |
| 608 |
Net periodic postretirement benefit cost | $ | 1,323 | $ | 1,271 |
14. Fair Value Measurements
Certain assets and liabilities are recorded at fair value on the condensed consolidated balance sheets and are measured and classified based upon a three-tiered approach to valuation. Financial assets and liabilities are recorded at fair value and are classified and disclosed in one of the following three categories:
Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2 – Quoted prices for identical or similar financial instruments in markets that are not considered to be active, or similar financial instruments for which all significant inputs are observable, either directly or indirectly, or inputs other than quoted prices that are observable, or inputs that are derived principally from or corroborated by observable market data through correlation or other means; and
Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and are unobservable. These reflect management’s assumptions about the assumptions a market participant would use in pricing the asset or liability.
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
Fair values of cash equivalents approximate carrying value due to the short period of time to maturity.
Fair values of short-term investments are based on quoted market prices.
40
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fair values of investments available-for-sale long-term investments, mortgage loans and notes on real estate, and interest rate swap contracts are based on quoted market prices, dealer quotes or discounted cash flows.
Fair values on interest rate swap contracts are based on using pricing valuation models which include broker quotes.
Fair values of long-term investment and mortgage loans and notes on real estate are based on quoted market prices, dealer quotes or discounted cash flows.Fair values of reinsurance recoverables and trade receivables approximate their recorded value.
36
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
Our financial instruments that are exposed to concentrations of credit risk consist primarily of temporary cash investments, trade receivables, reinsurance recoverables and notes receivable. Limited credit risk exists on trade receivables due to the diversity of our customer base and their dispersion across broad geographic markets. We place our temporary cash investments with financial institutions and limit the amount of credit exposure to any one financial institution.
We have mortgage receivables,loans, which potentially expose us to credit risk. The portfolio of notesloans is principally collateralized by self-storage facilities and commercial properties. We have not experienced any material losses related to the notesloans from individual or groups of notesloans in any particular industry or geographic area. The estimated fair values were determined using the discounted cash flow method and using interest rates currently offered for similar loans to borrowers with similar credit ratings.
Other investments, including short-term investments are substantially current or bear reasonable interest rates. As a result, the carrying values of these financial instruments approximate fair value.
The carrying values and estimated fair values for the financial instruments stated above and their placement in the fair value hierarchy are as follows:
|
| Fair Value Hierarchy | ||||||||
|
| Carrying |
|
|
|
|
|
|
| Total Estimated |
As of September 30, 2022 |
| Value |
| Level 1 |
| Level 2 |
| Level 3 |
| Fair Value |
|
| (Unaudited) | ||||||||
Assets |
| (In thousands) | ||||||||
Reinsurance recoverables and trade receivables, net | $ | 203,202 | $ | – | $ | – | $ | 203,202 | $ | 203,202 |
Mortgage loans, net |
| 424,633 |
| – |
| – |
| 424,633 |
| 417,894 |
Other investments |
| 123,565 |
| – |
| – |
| 123,565 |
| 123,565 |
Total | $ | 751,400 | $ | – | $ | – | $ | 751,400 | $ | 744,661 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
Notes, loans and finance leases payable |
| 6,336,570 |
| – |
| 6,336,570 |
| – |
| 5,930,507 |
Total | $ | 6,336,570 | $ | – | $ | 6,336,570 | $ | – | $ | 5,930,507 |
|
| Fair Value Hierarchy | ||||||||
|
| Carrying |
|
|
|
|
|
|
| Total Estimated |
As of September 30, 2023 |
| Value |
| Level 1 |
| Level 2 |
| Level 3 |
| Fair Value |
|
| (Unaudited) | ||||||||
Assets |
| (In thousands) | ||||||||
Reinsurance recoverables and trade receivables, net | $ | 212,565 | $ | – | $ | – | $ | 212,565 | $ | 212,565 |
Mortgage loans, net |
| 550,913 |
| – |
| – |
| 521,831 |
| 521,831 |
Other investments |
| 88,712 |
| – |
| – |
| 88,712 |
| 88,712 |
Total | $ | 852,190 | $ | – | $ | – | $ | 823,108 | $ | 823,108 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
Notes, loans and finance leases payable | $ | 6,436,800 | $ | – | $ | 5,961,511 | $ | – | $ | 5,961,511 |
Total | $ | 6,436,800 | $ | – | $ | 5,961,511 | $ | – | $ | 5,961,511 |
41
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
| Fair Value Hierarchy | ||||||||
|
| Carrying |
|
|
|
|
|
|
| Total Estimated |
As of March 31, 2022 |
| Value |
| Level 1 |
| Level 2 |
| Level 3 |
| Fair Value |
|
| (In thousands) | ||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
Reinsurance recoverables and trade receivables, net | $ | 229,343 | $ | – | $ | – | $ | 229,343 | $ | 229,343 |
Mortgage loans, net |
| 423,163 |
| – |
| – |
| 423,163 |
| 450,347 |
Other investments |
| 120,592 |
| – |
| – |
| 120,592 |
| 120,592 |
Total | $ | 773,098 | $ | – | $ | – | $ | 773,098 | $ | 800,282 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
Notes, loans and finance leases payable |
| 6,059,713 |
| – |
| 6,059,713 |
| – |
| 5,875,781 |
Total | $ | 6,059,713 | $ | – | $ | 6,059,713 | $ | – | $ | 5,875,781 |
|
| Fair Value Hierarchy | ||||||||
|
| Carrying |
|
|
|
|
|
|
| Total Estimated |
As of March 31, 2023 |
| Value |
| Level 1 |
| Level 2 |
| Level 3 |
| Fair Value |
|
| (In thousands) | ||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
Reinsurance recoverables and trade receivables, net | $ | 189,498 | $ | – | $ | – | $ | 189,498 | $ | 189,498 |
Mortgage loans, net |
| 466,531 |
| – |
| – |
| 444,957 |
| 444,957 |
Other investments |
| 109,009 |
| – |
| – |
| 109,009 |
| 109,009 |
Total | $ | 765,038 | $ | – | $ | – | $ | 743,464 | $ | 743,464 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
Notes, loans and finance leases payable |
| 6,143,350 |
| – |
| 5,710,735 |
| – |
| 5,710,735 |
Total | $ | 6,143,350 | $ | – | $ | 5,710,735 | $ | – | $ | 5,710,735 |
37
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
The following tables represent the financial assets and liabilities on the condensed consolidated balance sheets as of September 30, 20222023 and March 31, 20222023 that are measured at fair value on a recurring basis and the level within the fair value hierarchy.
As of September 30, 2022 |
| Total |
| Level 1 |
| Level 2 |
| Level 3 |
|
| (Unaudited) | ||||||
Assets |
| (In thousands) | ||||||
Short-term investments | $ | 2,823,208 | $ | 2,821,751 | $ | 1,457 | $ | – |
Fixed maturities - available for sale |
| 2,552,311 |
| 24,803 |
| 2,527,416 |
| 92 |
Preferred stock |
| 22,921 |
| 22,921 |
| – |
| – |
Common stock |
| 40,526 |
| 40,526 |
| – |
| – |
Derivatives |
| 10,167 |
| 1,659 |
| 8,508 |
| – |
Total | $ | 5,449,133 | $ | 2,911,660 | $ | 2,537,381 | $ | 92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
Derivatives |
| – |
| – |
| – |
| – |
Total | $ | – | $ | – | $ | – | $ | – |
As of March 31, 2022 |
| Total |
| Level 1 |
| Level 2 |
| Level 3 |
|
| (In thousands) | ||||||
Assets |
|
|
|
|
|
|
|
|
Short-term investments | $ | 2,482,154 | $ | 2,482,154 | $ | – | $ | – |
Fixed maturities - available for sale |
| 2,821,092 |
| 26,914 |
| 2,794,086 |
| 92 |
Preferred stock |
| 26,095 |
| 26,095 |
| – |
| – |
Common stock |
| 46,212 |
| 46,212 |
| – |
| – |
Derivatives |
| 7,474 |
| 7,474 |
| – |
| – |
Total | $ | 5,383,027 | $ | 2,588,849 | $ | 2,794,086 | $ | 92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
Derivatives |
| 587 |
| – |
| 587 |
| – |
Total | $ | 587 | $ | – | $ | 587 | $ | – |
As of September 30, 2023 |
| Total |
| Level 1 |
| Level 2 |
| Level 3 |
|
| (Unaudited) | ||||||
Assets |
| (In thousands) | ||||||
Short-term investments | $ | 1,808,130 | $ | 1,807,142 | $ | 988 | $ | – |
Fixed maturities - available for sale |
| 2,472,128 |
| 168,287 |
| 2,303,782 |
| 59 |
Preferred stock |
| 19,991 |
| 19,991 |
| – |
| – |
Common stock |
| 42,045 |
| 42,045 |
| – |
| – |
Derivatives |
| 22,854 |
| 10,526 |
| 12,328 |
| – |
Total | $ | 4,365,148 | $ | 2,047,991 | $ | 2,317,098 | $ | 59 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
Embedded derivatives | $ | 9,630 | $ | – | $ | – | $ | 9,630 |
Total | $ | 9,630 | $ | – | $ | – | $ | 9,630 |
As of March 31, 2023 |
| Total |
| Level 1 |
| Level 2 |
| Level 3 |
|
| (In thousands) | ||||||
Assets |
|
|
|
|
|
|
|
|
Short-term investments | $ | 1,809,441 | $ | 1,808,797 | $ | 644 | $ | – |
Fixed maturities - available for sale |
| 2,709,037 |
| 251,832 |
| 2,457,146 |
| 59 |
Preferred stock |
| 21,982 |
| 21,982 |
| – |
| – |
Common stock |
| 39,375 |
| 39,375 |
| – |
| – |
Derivatives |
| 9,606 |
| 4,295 |
| 5,311 |
| – |
Total | $ | 4,589,441 | $ | 2,126,281 | $ | 2,463,101 | $ | 59 |
The fair value measurements for our assets using significant unobservable inputs (Level 3) were $0.1 million for both September 30, 2022 and March 31, 2022.42
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
14.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. Revenue Recognition
Revenue Recognized in Accordance with Topic 606
ASC Topic 606, Revenue from Contracts with Customers (Topic 606), outlines a five-step model for entities to use in accounting for revenue arising from contracts with customers. The standard applies to all contracts with customers except for leases, insurance contracts, financial instruments, certain nonmonetary exchanges and certain guarantees. The standard also requires disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments.
38
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
We enter into contracts that may include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of amounts collected from customers for taxes, such as sales tax, and remitted to the applicable taxing authorities. We account for a contract under Topic 606 when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. For contracts scoped into this standard, revenue is recognized when (or as) the performance obligations are satisfied by means of transferring goods or services to the customer as applicable to each revenue stream as discussed below. There were no material contract assets or liabilities as of September 30, 20222023 and March 31, 2022.2023.
Sales of self-moving and self-storage related products are recognized at the time that title passes and the customer accepts delivery. The performance obligations identified for this portfolio of contracts include moving and storage product sales, installation services and/or propane sales. Each of these performance obligations has an observable stand-alone selling price. We concluded that the performance obligations identified are satisfied at a point in time. The basis for this conclusion is that the customer does not receive the product/propane or benefit from the installation services until the related performance obligation is satisfied. These products/services being provided have an alternative use as they are not customized and can be sold/provided to any customer. In addition, we only have the right to receive payment once the products have been transferred to the customer or the installation services have been completed. Although product sales have a right of return policy, our estimated obligation for future product returns is not material to the financial statements at this time.
Property management fees are recognized over the period that agreed-upon services are provided. The performance obligation for this portfolio of contracts is property management services, which represents a series of distinct days of service, each of which is comprised of activities that may vary from day to day. However, those tasks are activities to fulfill the property management services and are not separate promises in the contract. We determined that each increment of the promised service is distinct. This is because the customer can benefit from each increment of service on its own and each increment of service is separately identifiable because no day of service significantly modifies or customizes another and no day of service significantly affects either the entity’s ability to fulfill another day of service or the benefit to the customer of another day of service. As such, we concluded that the performance obligation is satisfied over time. Additionally, in certain contracts the Company has the ability to earn an incentive fee based on operational results. We measure and recognize the progress toward completion of the performance obligation on a quarterly basis using the most likely amount method to determine an accrual for the incentive fee portion of the compensation received in exchange for the property management service. The variable consideration recognized is subject to constraints due to a range of possible consideration amounts based on actual operational results. The amount accrued in the second quarter of fiscal 20232024 did not have a material effect on our financial statements.
Other revenue consists of numerous services or rentals, of which U-Box contracts and service fees from Moving Help are the main components. The performance obligations identified for U-Box contracts are fees for rental, storage and shipping of U-Box containers to a specified location, each of which are distinct. A contract may be partially within the scope of Topic 606 and partially within the scope of other topics. The rental and storage obligations in U-Box contracts meet the definition of a lease in Topic 842, while the shipping obligation represents a contract with a customer accounted for under Topic 606. Therefore, we allocate the total transaction price between the performance obligations of storage fees and rental fees and the shipping fees on a standalone selling price basis. U-Box shipping fees are collected once the shipment
43
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
is in transit. Shipping fees in U-Box contracts are set at the initiation of the contract based on the shipping origin and destination, and the performance obligation is satisfied over time. U-Box shipping contracts span over a relatively short period of time, and the majority of these contracts begin and end within the same fiscal year. Moving HelpHelp® services fees are recognized in accordance with Topic 606. Moving HelpHelp® services are generated as we provide a neutral venue for the connection between the service provider and the customer for agreed upon services. We do not control the specified services provided by the service provider before that service is transferred to the customer.
39
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
Revenue Recognized in Accordance with Topic 842
TheASC Topic 842, Leases (Topic 842), the Company’s self-moving rental revenues meet the definition of a lease pursuant to the guidance in Topic 842 because those substitution rights do not provide an economic benefit to the Company that would exceed the cost of exercising the right. Please see Note 7,8, Leases, of the Notes to the Condensed Consolidated Financial Statements.
Self-moving equipment rentals are recognized over the contract period that trucks and moving equipment are rented. We offer two types of self-moving rental contracts, one-way rentals and in-town rentals, which have varying payment terms. Customer payment is received at the initiation of the contract for one-way rentals which covers an allowable limit for equipment usage. An estimated fee in the form of a deposit is received at the initiation of the contract for in-town rentals, and final payment is received upon the return of the equipment based on actual fees incurred. The contract price is estimated at the initiation of the contract, as there is variable consideration associated with ratable fees incurred based on the number of days the equipment is rented and the number of miles driven. Variable consideration is estimated using the most likely amount method which is based on the intended use of the rental equipment by the customer at the initiation of the contract. Historically, the variability in estimated transaction pricing compared to actual is not significant due to the relatively short duration of rental contracts. Each performance obligation has an observable stand-alone selling price. The input method of passage of time is appropriate as there is a direct relationship between our inputs and the transfer of benefit to the customer over the life of the contract. Self-moving rental contracts span a relatively short period of time, and the majority of these contracts began and ended within the same fiscal year.
Self-storage revenues are recognized as earned over the contract period based upon the number of paid storage contract days.
We lease portions of our operating properties to tenants under agreements that are classified as operating leases. We recognize the total minimum lease payments provided for under the leases on a straight-line basis over the lease term. Generally, under the terms of our leases, the majority of our rental expenses, including common area maintenance, real estate taxes and insurance, are recovered from our customers.
The following table summarizes the minimum lease payments due from our customers and operating property tenants on leases for the next five years and thereafter:
|
| Years Ending March 31, | ||||||||||
|
| 2023 |
| 2024 |
| 2025 |
| 2026 |
| 2027 |
| Thereafter |
|
| (Unaudited) | ||||||||||
|
| (In thousands) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Self-moving equipment rentals | $ | 6,605 | $ | – | $ | – | $ | – | $ | – | $ | – |
Property lease revenues |
| 17,916 |
| 11,354 |
| 8,694 |
| 6,937 |
| 4,884 |
| 39,491 |
Total | $ | 24,521 | $ | 11,354 | $ | 8,694 | $ | 6,937 | $ | 4,884 | $ | 39,491 |
|
| Years Ending September 30, | ||||||||||
|
| 2024 |
| 2025 |
| 2026 |
| 2027 |
| 2028 |
| Thereafter |
|
| (Unaudited) | ||||||||||
|
| (In thousands) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Self-moving equipment rentals | $ | 7,139 | $ | – | $ | – | $ | – | $ | – | $ | – |
Property lease revenues |
| 20,722 |
| 14,491 |
| 11,509 |
| 8,275 |
| 5,678 |
| 37,972 |
Total | $ | 27,861 | $ | 14,491 | $ | 11,509 | $ | 8,275 | $ | 5,678 | $ | 37,972 |
The amounts above do not reflect future rental revenue from the renewal or replacement of existing leases.
44
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Revenue Recognized in Accordance with Other Topics
Traditional life and Medicare supplement insurance premiums are recognized as revenue over the premium-paying periods of the contracts when due from the policyholders. For products where premiums are due over a significantly shorter duration than the period over which benefits are provided, such as our single premium whole life product, premiums are recognized when received and excess profits are deferred and recognized in relation to the insurance in force.in-force.
Property and casualty insurance premiums are recognized as revenue over the policy periods. Interest and investment income are recognized as earned.
40
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
Net investment and interest income has multiple components. Interest income from bonds and mortgage notes are recognized when earned. Dividends on common and preferred stocks are recognized on the ex-dividend dates. Realized gains and losses on the sale or exchange of investments are recognized at the trade date.
In the following tables, revenue is disaggregated by timing of revenue recognition:
|
| Quarter Ended September 30, | ||
|
| 2022 |
| 2021 |
|
| (Unaudited) | ||
|
| (In thousands) | ||
|
|
|
|
|
Revenues recognized over time: | $ | 127,091 | $ | 108,038 |
Revenues recognized at a point in time: |
| 118,966 |
| 110,924 |
Total revenues recognized under ASC 606 |
| 246,057 |
| 218,962 |
|
|
|
|
|
Revenues recognized under ASC 842 |
| 1,373,925 |
| 1,355,934 |
Revenues recognized under ASC 944 |
| 52,373 |
| 52,578 |
Revenues recognized under ASC 320 |
| 30,509 |
| 36,780 |
Total revenues | $ | 1,702,864 | $ | 1,664,254 |
|
| Quarter Ended September 30, | ||
|
| 2023 |
| 2022 |
|
| (Unaudited) | ||
|
| (In thousands) | ||
|
|
|
|
|
Revenues recognized over time: | $ | 118,368 | $ | 127,091 |
Revenues recognized at a point in time: |
| 111,759 |
| 118,966 |
Total revenues recognized under ASC 606 |
| 230,127 |
| 246,057 |
|
|
|
|
|
Revenues recognized under ASC 842 |
| 1,305,523 |
| 1,373,925 |
Revenues recognized under ASC 944 |
| 49,472 |
| 52,373 |
Revenues recognized under ASC 320 |
| 64,738 |
| 30,509 |
Total revenues | $ | 1,649,860 | $ | 1,702,864 |
|
| Six Months Ended September 30, | ||
|
| 2022 |
| 2021 |
|
| (Unaudited) | ||
|
| (In thousands) | ||
|
|
|
|
|
Revenues recognized over time: | $ | 230,285 | $ | 187,853 |
Revenues recognized at a point in time: |
| 245,321 |
| 231,642 |
Total revenues recognized under ASC 606 |
| 475,606 |
| 419,495 |
|
|
|
|
|
Revenues recognized under ASC 842 |
| 2,661,956 |
| 2,546,944 |
Revenues recognized under ASC 944 |
| 99,060 |
| 98,892 |
Revenues recognized under ASC 320 |
| 64,082 |
| 71,779 |
Total revenues | $ | 3,300,704 | $ | 3,137,110 |
|
| Six Months Ended September 30, | ||
|
| 2023 |
| 2022 |
|
| (Unaudited) | ||
|
| (In thousands) | ||
|
|
|
|
|
Revenues recognized over time: | $ | 209,683 | $ | 230,285 |
Revenues recognized at a point in time: |
| 229,352 |
| 245,321 |
Total revenues recognized under ASC 606 |
| 439,035 |
| 475,606 |
|
|
|
|
|
Revenues recognized under ASC 842 |
| 2,527,839 |
| 2,661,956 |
Revenues recognized under ASC 944 |
| 93,964 |
| 99,060 |
Revenues recognized under ASC 320 |
| 129,330 |
| 64,082 |
Total revenues | $ | 3,190,168 | $ | 3,300,704 |
In the above tables, the revenues recognized over time include property management fees, the shipping fees associated with U-Box container rentals and a portion of other revenues. Revenues recognized at a point in time include self-moving equipment rentals, self-moving and self-storage products and service sales and a portion of other revenues.
45
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
We recognized liabilities resulting from contracts with customers for self-moving equipment rentals, self-storage revenues, U-Box revenues and tenant revenues, in which the length of the contract goes beyond the reported period end, although rental periods of the equipment, storage and U-Box contract are generally short-term in nature. The timing of revenue recognition results in liabilities that are reflected in deferred income on the balance sheet.
41
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
15.16. Allowance for Credit Losses
Trade Receivables
Moving and Storage has two ( 2 )(2) primary components of trade receivables, receivables from corporate customers and credit card receivables from customer sales and rental of equipment. For credit card receivables, the Company uses a trailing 13 monthsmonth average historical chargeback percentage of total credit card receivables to estimate a credit loss reserve. The Company rents equipment to corporate customers in which payment terms are 30 days.
The Company performs ongoing credit evaluations of its customers and assesses each customer’s credit worthiness. In addition, the Company monitors collections and payments from its customers and maintains an allowance based upon applying an expected credit loss rate to receivables based on the historical loss rate from similar high-risk customers adjusted for current conditions, including any specific customer collection issues identified, and forecasts of economic conditions. Delinquent account balances are written off after management has determined that the likelihood of collection is remote.
Management believes that the historical loss information it has compiled is a reasonable base on which to determine expected credit losses for trade receivables because the composition of trade receivables as of that date is consistent with that used in developing the historical credit loss percentages (i.e., the similar risk characteristics of its customers and its lending practices have not changed significantly over time). To adjust the historical loss rates to reflect the effects of these differences in current conditions and forecasted changes, management assigns a rating to each corporate customer which varies depending on the assessment of risk. Management estimated the loss rate at approximately 2.5% and 6%4% as of September 30, 20222023 and March 31, 2022,2023, respectively. Management developed this estimate based on its knowledge of past experience for which there were similar improvements in the economy. As a result, management applied the applicable credit loss rates to determine the expected credit loss estimate for each aging category. Accordingly, the allowance for expected credit losses as of September 30, 2022,2023 and March 31, 2023 was $ 3.1 million.$4.4 million and $3.8 million, respectively.
Accrued Interest Receivable
Accrued interest receivables on available for sale securities totaled $ 28.5$28.7 million, and $29.6 million as of June 30, 2023 and December 31, 2022, respectively and are excluded from the estimate of credit losses.
As outlined in subtopic 326-20-30-5A, weWe have elected not to measure an allowance on accrued interest receivables as our practice is to write off the uncollectible balance in a timely manner. Furthermore, we have elected to write off accrued interest receivables by reversing interest income (in accordance with subtopic 326-20-35-8A).income.
Mortgage loans, netLoans, Net
Loans that management has the intent and ability to hold for the foreseeable future, or until maturity or payoff, are reported at amortized cost. Modeling for the Company’s mortgage loans is based on inputs most highly correlated to defaults, including loan-to-value, occupancy, and payment history. Historical credit loss experience provides additional support for the estimation of expected credit losses. In assessing the credit losses, the portfolio is reviewed on a collective basis, using loan-specific cash flows to determine the fair value of the collateral in the event of default. Adjustments to this analysis are made to assess loans with a loan-to-value of 65% or greater. These loans are evaluated on an individual basis and loan specific risk characteristics such as occupancy levels, expense, income growth and other relevant available information from internal and external sources relating to past events, current conditions, and reasonable and supportable forecasts.
46
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
When management determines that credit losses are expected to occur, an allowance for expected credit losses based on the fair value of the collateral is recorded.
Reinsurance recoverablesRecoverables
Reinsurance recoverables on paid and unpaid benefits was less than 1% of the total assets as of June 30, 20222023 which is immaterial based on historical loss experience and high credit rating of the reinsurers.
42
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
Premium receivablesReceivables
Premium receivables were $ 4.3$7.0 million and $4.1 million as of June 30, 2023 and December 31, 2022, respectively, in which the credit loss allowance is immaterial based on our ability to cancel the policy if the policyholder does not pay premiums.
The following details the changes in the Company’s reserve allowance for credit losses for trade receivables, fixed maturities and investments, other:
|
| Allowance for Credit Losses | ||||||
|
| Trade Receivables |
| Investments, Fixed Maturities |
| Investments, other |
| Total |
|
| (Unaudited) | ||||||
|
| (in thousands) | ||||||
Balance as of March 31, 2021 | $ | 4,421 | $ | 1,320 | $ | 501 | $ | 6,242 |
Provision for (reversal of) credit losses |
| 4,228 |
| (1,260) |
| – |
| 2,968 |
Write-offs against allowance |
| – |
| – |
| – |
| – |
Recoveries |
| – |
| – |
| – |
| – |
Balance as of March 31, 2022 | $ | 8,649 | $ | 60 | $ | 501 | $ | 9,210 |
Provision for (reversal of) credit losses |
| (5,506) |
| 1,948 |
| 4 |
| (3,554) |
Write-offs against allowance |
| – |
| – |
| – |
| – |
Recoveries |
| – |
| – |
| – |
| – |
Balance as of September 30, 2022 | $ | 3,143 | $ | 2,008 | $ | 505 | $ | 5,656 |
|
| Allowance for Credit Losses | ||||||
|
| Trade Receivables |
| Investments, Fixed Maturities |
| Investments, other |
| Total |
|
| (Unaudited) | ||||||
|
| (in thousands) | ||||||
Balance as of March 31, 2022 | $ | 8,649 | $ | 60 | $ | 501 | $ | 9,210 |
Provision for (reversal of) credit losses |
| (4,860) |
| 2,041 |
| 16 |
| (2,803) |
Write-offs against allowance |
| – |
| – |
| – |
| – |
Recoveries |
| – |
| – |
| – |
| – |
Balance as of March 31, 2023 | $ | 3,789 | $ | 2,101 | $ | 517 | $ | 6,407 |
Provision for (reversal of) credit losses |
| 578 |
| (429) |
| 300 |
| 449 |
Write-offs against allowance |
| – |
| – |
| – |
| – |
Recoveries |
| – |
| – |
| – |
| – |
Balance as of September 30, 2023 | $ | 4,367 | $ | 1,672 | $ | 817 | $ | 6,856 |
16. Subsequent Events
Background of the Independent Special Committee
The Board of Directors (the “Board”) created an Independent Special Committee (the “Committee”) to consider various matters and actions. The Committee retained outside advisors to help examine multiple options aimed at enhancing the marketability and liquidity of the Company’s stock. The Committee paid particular attention to actions intended to make stock ownership more inclusive and accessible for retail investors, including team members and customers of the Company. The Committee approved the following actions.
Creation of the Series N Non-Voting Common Stock
The Committee authorized the creation of a new series of Common Stock, designated as Series N Non-Voting Common Stock (the “Series N Common Stock”). The Series N Common Stock will have a par value of $ 0.001 per share. Application to the Nasdaq Global Select Market has been made to list the new Series N Common Stock under the ticker symbol “Nasdaq: UHALB”.Shares of the Company’s outstanding common stock, $ 0.25 par value (the “Voting Common Stock”) will continue to trade under the symbol “Nasdaq: UHAL.”
9-for-1 Stock Dividend Involving Non-Voting Common Stock
The Committee approved issuance of shares of the Non-Voting Common Stock through a stock dividend, on a 9-for-1 basis , to all existing holders of the Company’s Voting Common Stock. The stock dividend is intended to have the same general effects as a 10-for-1 stock split.
The shares of Non-Voting Common Stock will be distributed after the close of trading on, or about, November 9, 2022 to stockholders of record of Voting Common Stock at the close of business on November 3, 2022. We anticipate trading of the 176,470,092 shares of Non-Voting Common Stock to begin on November 10, 2022.
43
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
Name Change
The Committee approved changing the company name of AMERCO to U-Haul Holding Company to help alleviate any perceived disconnect by institutional or retail investors alike. We intend to make this name change by the end of the calendar year 2022.
Dividend Policy
In response to the Committee’s recommendation to consider a dividend policy, the Board adopted a dividend policy for the new Series N Common Stock.
Series N Non-Voting Common Stock: Unless the Board in its sole discretion determines otherwise, it shall be the policy of the Company to declare and pay a quarterly cash dividend on each share of the Company’s Series N Non-Voting Common Stock, in the amount of $ 0.04 per share, commencing with the third quarter of fiscal year 2023.
17. Accounting Pronouncements
Adoption of new Accounting Pronouncements
On April 1, 2023, the Company adopted ASU 2018-12 which is applicable to Oxford. The Company adopted ASU 2018-12 effective April 1, 2023 and used the modified retrospective method with a transition date of April 1, 2021.
The updated accounting guidance required changes to the measurement and disclosure of long-duration contracts. For the Company, this includes all life insurance products, annuities, Medicare supplement products and our long-term care business. Entities will be required to review, and update if there is a change to cash flow assumptions (including morbidity and persistency) at least annually, and to update discount rate assumptions quarterly using an upper-medium grade fixed-income instrument yield. The effect of changes in cash flow assumptions will be recorded in the Company's results of operations and the effect of changes in discount rate assumptions will be recorded in other comprehensive income.
The most significant impact will be the effect of updating the discount rate assumption quarterly to reflect an upper-medium grade fixed-income instrument yield, rather than Oxford Life’s expected investment portfolio yield. This will be partially offset by the de-recognition of cumulative adjustments to DAC associated with unrealized gains and losses associated with long-duration contracts. The Company uses a published spot rate curve constructed from “A”-rated U.S. dollar denominated corporate bonds matched to the duration of the corresponding insurance liabilities, to calculate discount rates. The Company groups its long-duration contracts into calendar year cohorts based on the contract issue date.
47
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DAC and other capitalized costs such as unearned revenue are amortized on a constant level or straight-line basis over the expected term of the contracts. Under ASU 2018-12, the annual amortization of DAC in our Consolidated Statements of Operations will differ from previous trends due to: (1) the requirement to no longer defer renewal commissions until such year as the commissions are actually incurred, (2) the requirement to no longer accrue and amortize interest on our DAC balances, and (3) the modification of the method for amortizing DAC including the updating of assumptions. For business with deferrals of renewal commissions, as is the case with our final expense life insurance policies, the expected amortization rate, as a percentage of premium, for certain blocks of business will no longer be level but will increase over the period of time during which commissions are deferred. The decrease in amortization in the near term will primarily impact our life insurance line of business.
Upon adoption, the Company made adjustments to AOCI for the removal of cumulative adjustments to DAC associated with unrealized gains and losses previously recorded in AOCI. In total, we expect the impact on net earnings, largely from the decrease in amortization, to be immaterial during fiscal 2024, but could become material with a large increase in sales.
Market risk benefits, which are contracts or contract features that provide protection to the policyholder from capital market risk and expose the Company to other-than-nominal capital market risk, are measured at fair value.Market risk benefits are contracts or contract features that guarantee benefits, such as guaranteed life withdrawal benefits, in addition to an account balance which expose insurance companies to other than nominal capital market risk and protect the contract holder from the same risk. Certain contracts or contract features to be identified as market risk benefits were accounted for as embedded derivatives and measured at fair value, while others transitioned to fair value measurement upon the adoption of ASU 2018-12.
Also in consideration of market risk benefits, upon adoption, there were impacts to (1) AOCI for the cumulative effect of changes in the instrument-specific credit risk between contract issue date and transition date and (2) retained earnings for the difference between fair value and carrying value at the transition date, excluding the changes in the instrument-specific credit risk. The requirement to review, and update if there is a change, cash flow assumptions at least annually is expected to change the pattern of earnings being recognized. Adoption significantly expanded the Company’s disclosures, and will impact systems, processes, and controls. While the requirements of the new guidance represent a material change from existing GAAP, the accounting adoption had no economic impact on the cash flows of our business nor influence on our business model of providing basic mortality and longevity protection-oriented products to the underserved senior market. In addition, it did not impact our statutory earnings, statutory capital, or capital management philosophies.
The following tables present the effect of the adoption of ASU 2018-12 on selected consolidated balance sheet data for the fiscal years ended March 31, 2023 and 2022.
|
| Year Ended March 31, | ||
|
| 2023 |
| 2022 |
|
| (Unaudited) | ||
|
| (In thousands) | ||
Total Assets |
|
|
|
|
Prior to adoption | $ | 18,124,648 | $ | 17,299,581 |
Effect of adoption: |
|
|
|
|
Derecognition of shadow DAC |
| (25,141) |
| 26,131 |
Re-measurement due to discount rate |
| – |
| – |
Other adjustments |
| 1,227 |
| 1,471 |
Subtotal | $ | (23,914) | $ | 27,602 |
|
|
|
|
|
After adoption | $ | 18,100,734 | $ | 17,327,183 |
48
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
| Year Ended March 31, | ||
|
| 2023 |
| 2022 |
|
| (Unaudited) | ||
|
| (In thousands) | ||
Total Liabilities |
|
|
|
|
Prior to adoption | $ | 11,596,313 | $ | 11,347,089 |
Effect of adoption: |
|
|
|
|
Deferred income tax adjustment on Shadow removal |
| (5,280) |
| 5,488 |
Re-measurement due to discount rate |
| (1,626) |
| 87,258 |
Deferred income tax adjustment on discount rate |
| 342 |
| (18,324) |
Other adjustments |
| 6,794 |
| 8,511 |
Subtotal | $ | 230 | $ | 82,933 |
|
|
|
|
|
After adoption | $ | 11,596,543 | $ | 11,430,022 |
|
| Year Ended March 31, | ||
|
| 2023 |
| 2022 |
|
| (Unaudited) | ||
|
| (In thousands) | ||
Accumulated other comprehensive income (loss) |
|
|
|
|
Prior to adoption | $ | (267,046) | $ | 46,384 |
Effect of adoption: |
|
|
|
|
Derecognition on shadow DAC (tax effect) |
| (19,861) |
| 20,644 |
Re-measurement due to discount rate |
| 1,626 |
| (87,258) |
Re-measurement due to discount rate (tax effect) |
| (342) |
| 18,324 |
Other adjustments |
| – |
| – |
Subtotal | $ | (18,577) | $ | (48,290) |
|
|
|
|
|
After adoption | $ | (285,623) | $ | (1,906) |
|
| Year Ended March 31, | ||
|
| 2023 |
| 2022 |
|
| (Unaudited) | ||
|
| (In thousands) | ||
Total Stockholders' equity |
|
|
|
|
Prior to adoption | $ | 6,528,335 | $ | 5,952,492 |
Effect of adoption: |
|
|
|
|
Derecognition on shadow DAC (tax effect) |
| (19,861) |
| 20,644 |
Re-measurement due to discount rate (tax effect) |
| 1,284 |
| (68,934) |
Other adjustments |
| (5,567) |
| (7,042) |
Subtotal | $ | (24,144) | $ | (55,332) |
|
|
|
|
|
After adoption | $ | 6,504,191 | $ | 5,897,160 |
49
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
| Year Ended March 31, 2023 | ||||
|
| As previously reported |
| Adoption impact |
| As adjusted |
|
| (Unaudited) | ||||
|
| (In thousands) | ||||
|
|
|
|
|
|
|
Deferred policy acquisition costs, net | $ | 152,377 |
| (23,914) | $ | 128,463 |
Total assets |
| 18,124,648 |
| (23,914) |
| 18,100,734 |
Policy benefits and losses, claims and loss expenses payable |
| 875,034 |
| 5,168 |
| 880,202 |
Deferred income taxes, net |
| 1,334,427 |
| (4,938) |
| 1,329,489 |
Total liabilities |
| 11,596,313 |
| 230 |
| 11,596,543 |
Accumulated other comprehensive loss |
| (267,046) |
| (18,577) |
| (285,623) |
Retained earnings |
| 7,008,715 |
| (5,567) |
| 7,003,148 |
Total stockholders' equity |
| 6,528,335 |
| (24,144) |
| 6,504,191 |
Total liabilities and stockholders' equity |
| 18,124,648 |
| (23,914) |
| 18,100,734 |
|
| April 1, 2021 |
| March 31, 2021 |
|
| (Unaudited) | ||
|
| (In thousands) | ||
|
|
|
|
|
Deferred policy acquisition costs, net | $ | 131,187 | $ | 89,749 |
Total assets |
| 14,693,044 |
| 14,651,606 |
Policy benefits and losses, claims and loss expenses payable |
| 1,040,951 |
| 909,701 |
Deferred income taxes, net |
| 1,182,123 |
| 1,199,280 |
Total liabilities |
| 9,846,608 |
| 9,732,515 |
Accumulated other comprehensive income |
| 42,319 |
| 106,857 |
Retained earnings |
| 5,017,451 |
| 5,025,568 |
Total stockholders' equity |
| 4,846,436 |
| 4,919,091 |
Total liabilities and stockholders' equity |
| 14,693,044 |
| 14,651,606 |
The following tables present the balances of and changes in deferred acquisition costs, future policy benefits and market risk benefits and balances amortized on a basis consistent with DAC on April 1, 2021 due to the adoption of ASU 2018-12 by Oxford.
Deferred Policy Acquisition Costs |
| Payout Annuities |
| Life Insurance |
| Health Insurance |
| Total |
|
| (Unaudited) | ||||||
|
| (In thousands) | ||||||
|
|
|
|
|
|
|
|
|
Balance, end of year March 31, 2021 | $ | 15,654 | $ | 64,552 | $ | 9,543 | $ | 89,749 |
Adjustments for removal of related balances in accumulated other comprehensive income |
| 41,438 |
| – |
| – |
| 41,438 |
Adjusted balance, beginning of year April 1, 2021 | $ | 57,092 | $ | 64,552 | $ | 9,543 | $ | 131,187 |
50
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Future Policy Benefit |
| Payout Annuities |
| Life Insurance |
| Health Insurance |
| Total |
|
| (Unaudited) | ||||||
|
| (In thousands) | ||||||
|
|
|
|
|
|
|
|
|
Balance, end of year March 31, 2021 | $ | 8,370 | $ | 310,311 | $ | 18,341 | $ | 337,022 |
Change in discount rate assumptions |
| 2,307 |
| 115,978 |
| 4,847 |
| 123,132 |
Change in cash flow assumptions, effect of net premiums exceeding gross premiums |
| – |
| 1,747 |
| – |
| 1,747 |
Change in cash flow assumptions, effect of decrease of the deferred profit liability |
| – |
| 2,580 |
| – |
| 2,580 |
Adjusted balance, beginning of year April 1, 2021 | $ | 10,677 | $ | 430,616 | $ | 23,188 | $ | 464,481 |
Market Risk Benefits |
|
|
|
|
|
|
| Deferred Annuities |
|
|
|
|
|
|
|
| (Unaudited) |
|
|
|
|
|
|
|
| (In thousands) |
|
|
|
|
|
|
|
|
|
Balance, end of year March 31, 2021 |
|
|
|
|
|
| $ | 7,339 |
Adjustment for the difference between carrying amount and fair value, except for the difference due to instrument-specific credit risk |
|
|
|
|
|
|
| 3,791 |
Adjusted balance, beginning of year April 1, 2021 |
|
|
|
|
|
| $ | 11,130 |
|
|
|
|
|
| Retained Earnings |
| Accumulated Other Comprehensive Loss |
|
|
|
|
|
| (Unaudited) | ||
|
|
|
|
|
| (In thousands) | ||
|
|
|
|
|
|
|
|
|
Liability for future policy benefits |
|
|
|
| $ | (4,327) | $ | (123,132) |
Market risk benefits |
|
|
|
|
| (3,791) |
| – |
Deferred acquisition costs and related asset balances |
|
|
|
|
| – |
| 41,438 |
Tax effect |
|
|
|
|
| – |
| 17,156 |
Total |
|
|
|
| $ | (8,118) | $ | (64,538) |
Recent Accounting Pronouncements
In August 2018,March 2023, the Financial Accounting Standards Board (“FASB”)FASB issued ASU 2018-12,2023-01, Targeted Improvements to the Accounting for Long-Duration ContractsLeases (Topic 842 – Common Control Arrangements (“ASU 2018-12”2023-01”). The amendmentsASU 2023-01, accounting for leasehold improvements, requires a lessee in this update require insurance companiesa common-control lease arrangement to annually review and updateamortize leasehold improvements that it owns over the assumptions used for measuringimprovements’ useful life to the liability under long-duration contracts, such as life insurance, disability income, and annuities. common control group, regardless of the lease term, if the lessee continues to control the use of the underlying asset through a lease. The amendment prescribes standardized liability discount rate, consistency in measurement of market risk benefits, simplified amortization of deferred acquisition costs and enhanced disclosures. The amendments areis effective for fiscal years, and interim periods within those fiscal years beginning after December 31, 2020. In November 2020, FASB issued ASU 2020-11, Financial Services – Insurance (Topic 944), which deferred the effective date of ASU 2018-12 to years beginning after December 15, 2022.2023. We are currently in the process of evaluating the impact if any of the adoption of ASU 2018-12 2023-01
51
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
on our financial statements; however,statements.
18. Deferred Policy Acquisition Costs, Net
The following tables present a rollforward of deferred policy acquisition costs related to long-duration contracts for the adoptionsix-month periods ended September 30, 2023 and 2022.
|
| Six Months Ended September 30, 2023 | ||||||
|
| Payout Annuities |
| Life Insurance |
| Health Insurance |
| Total |
|
| (Unaudited) | ||||||
|
| (In thousands) | ||||||
|
|
|
|
|
|
|
|
|
Balance, beginning of year | $ | 55,396 | $ | 66,954 | $ | 6,113 | $ | 128,463 |
Capitalization |
| 5,441 |
| 2,212 |
| 120 |
| 7,773 |
Amortization expense |
| (9,631) |
| (4,515) |
| (725) |
| (14,871) |
Balance, end of period | $ | 51,206 | $ | 64,651 | $ | 5,508 | $ | 121,365 |
|
| Six Months Ended September 30, 2022 | ||||||
|
| Payout Annuities |
| Life Insurance |
| Health Insurance |
| Total |
|
| (Unaudited) | ||||||
|
| (In thousands) | ||||||
|
|
|
|
|
|
|
|
|
Balance, beginning of year | $ | 56,175 | $ | 68,676 | $ | 8,718 | $ | 133,569 |
Capitalization |
| 10,468 |
| 4,212 |
| 220 |
| 14,900 |
Amortization expense |
| (9,457) |
| (3,872) |
| (1,315) |
| (14,644) |
Balance, end of period | $ | 57,186 | $ | 69,016 | $ | 7,623 | $ | 133,825 |
52
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
19. Policy Benefits and Losses, Claims and Loss Expenses Payable
The following tables present the balances and changes in the policy benefitsand a reconciliation of ASU 2018-12 will impact the statements of operations because the effect of any updatenet liability for future policy benefits to the assumptions we used at the inception of the contracts will be recorded in net income.liability for future policy benefits for Oxford.
| Six Months Ended September 30, 2023 | |||||
|
| Life Insurance |
| Health Insurance |
| Total |
| (Unaudited) | |||||
| (In thousands) | |||||
Present value of expected net premiums |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of year | $ | 223,118 | $ | 196,569 | $ | 419,687 |
Beginning balance at original discount rate | $ | 225,071 | $ | 212,454 | $ | 437,525 |
Effect of changes in cash flow assumptions |
| – |
| – |
| – |
Effect of actual variances from expected experience |
| (187) |
| (5,644) |
| (5,831) |
Adjusted beginning of year balance | $ | 224,884 | $ | 206,810 | $ | 431,694 |
Issuances |
| 5,072 |
| 77 |
| 5,149 |
Interest accrual |
| 5,554 |
| 4,096 |
| 9,650 |
Net premium collected |
| (19,833) |
| (13,357) |
| (33,190) |
Other |
| – |
| – |
| – |
Ending balance at original discount rate | $ | 215,677 | $ | 197,626 | $ | 413,303 |
Effect of changes in discount rate assumptions (AOCI) |
| (1,650) |
| (14,337) |
| (15,987) |
Balance, end of period | $ | 214,027 | $ | 183,289 | $ | 397,316 |
|
|
|
|
|
|
|
Present value of expected future policy benefits |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of year | $ | 530,938 | $ | 210,054 | $ | 740,992 |
Beginning balance at original discount rate | $ | 533,688 | $ | 226,510 | $ | 760,198 |
Effect of changes in cash flow assumptions |
| – |
| – |
| – |
Effect of actual variances from expected experiences |
| (565) |
| (4,215) |
| (4,780) |
Adjusted beginning of year balance | $ | 533,123 | $ | 222,295 | $ | 755,418 |
Issuances |
| 5,211 |
| 77 |
| 5,288 |
Interest accrual |
| 13,166 |
| 4,402 |
| 17,568 |
Benefit payments |
| (27,720) |
| (16,162) |
| (43,882) |
Other |
| – |
| – |
| – |
Ending balance at original discount rate | $ | 523,780 | $ | 210,612 | $ | 734,392 |
Effect of changes in discount rate assumptions (AOCI) |
| 949 |
| (14,760) |
| (13,811) |
Balance, end of period | $ | 524,729 | $ | 195,852 | $ | 720,581 |
End of period, LFPB net |
|
|
|
|
| 323,265 |
Payout annuities and market risk benefits |
|
|
|
|
| 30,685 |
Life and annuity ICOS and IBNR / Reinsurance losses payable |
|
|
|
|
| 10,101 |
Life DPL / Other life and health |
|
|
|
|
| 26,556 |
Oxford end of period balance |
|
|
|
|
| 390,607 |
Moving and Storage balance |
|
|
|
|
| 324,642 |
Property and Casualty balance |
|
|
|
|
| 150,148 |
Policy benefit and losses, claims and loss expense balance, end of period |
|
|
|
| $ | 865,397 |
53
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
From time to time, new accounting pronouncements are issued by the FASB or the SEC that are adopted by us as of the specified effective date. Unless otherwise discussed, these ASUs entail technical corrections to existing guidance or affect guidance related to specialized industries or entities and therefore will have minimal, if any, impact on our financial position or results of operations upon adoption.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| Six Months Ended September 30, 2022 | |||||
|
| Life Insurance |
| Health Insurance |
| Total |
| (Unaudited) | |||||
| (In thousands) | |||||
Present value of expected net premiums |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of year | $ | 280,371 | $ | 280,732 | $ | 561,103 |
Beginning balance at original discount rate | $ | 242,741 | $ | 253,307 | $ | 496,048 |
Effect of changes in cash flow assumptions |
| – |
| – |
| – |
Effect of actual variances from expected experience |
| 748 |
| 1,026 |
| 1,774 |
Adjusted beginning of year balance | $ | 243,489 | $ | 254,333 | $ | 497,822 |
Issuances |
| 14,083 |
| 2,453 |
| 16,536 |
Interest accrual |
| 6,037 |
| 5,062 |
| 11,099 |
Net premium collected |
| (21,946) |
| (15,041) |
| (36,987) |
Other |
| – |
| – |
| – |
Ending balance at original discount rate | $ | 241,663 | $ | 246,807 | $ | 488,470 |
Effect of changes in discount rate assumptions (AOCI) |
| 7,814 |
| (7,959) |
| (145) |
Balance, end of period | $ | 249,477 | $ | 238,848 | $ | 488,325 |
|
|
|
|
|
|
|
Present value of expected future policy benefits |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of year | $ | 672,254 | $ | 299,628 | $ | 971,882 |
Beginning balance at original discount rate | $ | 552,109 | $ | 269,177 | $ | 821,286 |
Effect of changes in cash flow assumptions |
| – |
| – |
| – |
Effect of actual variances from expected experiences |
| 1,031 |
| 1,713 |
| 2,744 |
Adjusted beginning of year balance | $ | 553,140 | $ | 270,890 | $ | 824,030 |
Issuances |
| 14,083 |
| 2,453 |
| 16,536 |
Interest accrual |
| 13,714 |
| 5,391 |
| 19,105 |
Benefit payments |
| (29,783) |
| (17,653) |
| (47,436) |
Other |
| – |
| – |
| – |
Ending balance at original discount rate | $ | 551,154 | $ | 261,081 | $ | 812,235 |
Effect of changes in discount rate assumptions (AOCI) |
| 25,907 |
| (7,779) |
| 18,128 |
Balance, end of period | $ | 577,061 | $ | 253,302 | $ | 830,363 |
End of period, LFPB net |
|
|
|
|
| 342,038 |
Payout annuities and market risk benefits |
|
|
|
|
| 33,157 |
Life and annuity ICOS and IBNR / Reinsurance losses payable |
|
|
|
|
| 11,226 |
Life DPL / Other life and health |
|
|
|
|
| 37,130 |
Oxford end of period balance |
|
|
|
|
| 423,551 |
Moving and Storage balance |
|
|
|
|
| 348,854 |
Property and Casualty balance |
|
|
|
|
| 156,998 |
Policy benefit and losses, claims and loss expense balance, end of period |
|
|
|
| $ | 929,403 |
54
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| Six Months Ended September 30, 2023 | |||||
|
| Life Insurance |
| Health Insurance |
| Total |
| (Unaudited) | |||||
| (In thousands, except for percentages and weighted average information) | |||||
|
|
|
|
|
|
|
Expected gross premiums |
|
|
|
|
|
|
Undiscounted balance | $ | 387,141 | $ | 331,852 | $ | 718,993 |
Discounted balance at original discount rate | $ | 299,161 | $ | 256,658 | $ | 555,819 |
Discounted balance at current discount rate | $ | 296,505 | $ | 239,939 | $ | 536,444 |
|
|
|
|
|
|
|
Expected policy benefits |
|
|
|
|
|
|
Undiscounted balance | $ | 761,261 | $ | 273,079 | $ | 1,034,340 |
Discounted balance at original discount rate | $ | 523,777 | $ | 210,612 | $ | 734,389 |
Discounted balance at current discount rate | $ | 524,726 | $ | 195,852 | $ | 720,578 |
|
|
|
|
|
|
|
Mortality, lapses and morbidity |
|
|
|
|
|
|
Mortality actual experience |
| 5.02 | % | – | % |
|
Mortality expected experience |
| 5.06 | % | – | % |
|
Lapses actual experience |
| 1.87 | % | – | % |
|
Lapses expected experience |
| 2.65 | % | – | % |
|
Morbidity actual experience |
| – | % | 85.53 | % |
|
Morbidity expected experience |
| – | % | 73.50 | % |
|
|
|
|
|
|
|
|
Premiums and interest expense |
|
|
|
|
|
|
Gross premiums | $ | 26,667 | $ | 18,432 | $ | 45,099 |
Other premiums |
|
|
|
|
| – |
Total premiums |
|
|
|
| $ | 45,099 |
Interest expense | $ | 7,612 | $ | 306 | $ | 7,918 |
|
|
|
|
|
|
|
Expected duration (persistency) of policies in-force (years) |
| 6.9 |
| 6.5 |
|
|
|
|
|
|
|
|
|
Weighted average original interest rate of the liability for future policy benefits |
| 5.00 | % | 4.00 | % |
|
|
|
|
|
|
|
|
Weighted average current interest rate of the liability for future policy benefits |
| 5.00 | % | 5.00 | % |
|
55
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| Six Months Ended September 30, 2022 | |||||
|
| Life Insurance |
| Health Insurance |
| Total |
| (Unaudited) | |||||
| (In thousands, except for percentages and weighted average information) | |||||
|
|
|
|
|
|
|
Expected gross premiums |
|
|
|
|
|
|
Undiscounted balance | $ | 427,457 | $ | 434,063 | $ | 861,520 |
Discounted balance at original discount rate | $ | 329,233 | $ | 333,001 | $ | 662,234 |
Discounted balance at current discount rate | $ | 339,434 | $ | 325,323 | $ | 664,757 |
|
|
|
|
|
|
|
Expected policy benefits |
|
|
|
|
|
|
Undiscounted balance | $ | 807,725 | $ | 342,371 | $ | 1,150,096 |
Discounted balance at original discount rate | $ | 551,153 | $ | 261,081 | $ | 812,234 |
Discounted balance at current discount rate | $ | 577,060 | $ | 253,302 | $ | 830,362 |
|
|
|
|
|
|
|
Mortality, lapses and morbidity |
|
|
|
|
|
|
Mortality actual experience |
| 5.07 | % | – | % |
|
Mortality expected experience |
| 4.78 | % | – | % |
|
Lapses actual experience |
| 2.04 | % | – | % |
|
Lapses expected experience |
| 2.53 | % | – | % |
|
Morbidity actual experience |
| – | % | 79.25 | % |
|
Morbidity expected experience |
| – | % | 71.30 | % |
|
|
|
|
|
|
|
|
Premiums and interest expense |
|
|
|
|
|
|
Gross premiums | $ | 29,158 | $ | 21,703 | $ | 50,861 |
Other premiums |
|
|
|
|
| – |
Total premiums |
|
|
|
| $ | 50,861 |
Interest expense | $ | 7,677 | $ | 329 | $ | 8,006 |
|
|
|
|
|
|
|
Expected duration (persistency) of policies in-force (years) |
| 7.1 |
| 6.8 |
|
|
|
|
|
|
|
|
|
Weighted average original interest rate of the liability for future policy benefits |
| 5.00 | % | 4.00 | % |
|
|
|
|
|
|
|
|
Weighted average current interest rate of the liability for future policy benefits |
| 1.00 | % | 1.00 | % |
|
44
56
U-HAUL HOLDING COMPANY AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following tables present the balances and changes in Liabilities from investment contracts account balances:
|
| Six Months Ended September 30, 2023 |
|
| |
|
| Deferred Annuities |
|
| (Unaudited) |
|
| (In thousands, except for the average credited rate) |
Policyholder contract deposits account balance |
| |
Beginning of year | $ | 2,398,884 |
Deposits received |
| 125,122 |
Surrenders and withdrawals |
| (146,647) |
Benefit payments |
| (20,761) |
Interest credited |
| 36,992 |
Other |
| – |
End of period | $ | 2,393,590 |
Weighted average credited rate |
| 3.09 |
Cash surrender value | $ | 2,062,233 |
|
| Six Months Ended September 30, 2022 |
|
| |
|
| Deferred Annuities |
|
| (Unaudited) |
|
| (In thousands, except for the average credited rate) |
Policyholder contract deposits account balance |
| |
Beginning of year | $ | 2,336,238 |
Deposits received |
| 169,008 |
Surrenders and withdrawals |
| (122,450) |
Benefit payments |
| (18,334) |
Interest credited |
| 25,566 |
Other |
| – |
End of period | $ | 2,390,028 |
Weighted average credited rate |
| 2.16 |
Cash surrender value | $ | 2,082,936 |
57
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
General
We begin Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) with the overall strategy of AMERCO,U-Haul Holding Company, followed by a description of, and strategy related to, our operating segments to give the reader an overview of the goals of our businesses and the direction in which our businesses and products are moving. We then discuss our critical accounting policies and estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results. Next, we discuss our results of operations for the second quarter and first six months of fiscal 2023,2024, compared with the second quarter and first six months of fiscal 2022,2023, which is followed by an analysis of liquidity changes in our balance sheets and cash flows, and a discussion of our financial commitments in the sections entitled Liquidity and Capital Resources - Summary and Disclosures about Contractual Obligations and Commercial Commitments. We conclude this MD&A by discussing our current outlook for the remainder of fiscal 2023.2024.
This MD&A should be read in conjunction with the other sections of this Quarterly Report, including the Notes to Condensed Consolidated Financial Statements. The various sections of this MD&A contain a number of forward-looking statements, as discussed under the caption, Cautionary Statements Regarding Forward-Looking Statements, all of which are based on our current expectations and could be affected by the uncertainties and risks described throughout this filing or in our most recent Annual Report on Form 10-K for the fiscal year ended March 31, 2022.2023. Many of these risks and uncertainties are beyond our control and our actual results may differ materially from these forward-looking statements.
AMERCO,U-Haul Holding Company, a Nevada corporation, has a second fiscal quarter that ends on the 30thof September for each year that is referenced. Our insurance company subsidiaries have a second quarter that ends on the 30th of June for each year that is referenced. They have been consolidated on that basis. Our insurance companies’ financial reporting processes conform to calendar year reporting as required by state insurance departments. Management believes that consolidating their calendar year into our fiscal year financial statements does not materially affect the presentation of financial position or results of operations. We disclose material events, if any, occurring during the intervening period. Consequently, all references to our insurance subsidiaries’ years 20222023 and 20212022 correspond to fiscal 2024 and 2023 and 2022 for AMERCO.U-Haul Holding Company.
Overall Strategy
Our overall strategy is to maintain our leadership position in the United States and Canada “do-it-yourself” moving and storage industry. We accomplish this by providing a seamless and integrated supply chain to the “do-it-yourself” moving and storage market. As part of executing this strategy, we leverage the brand recognition of U-Haul®with our full line of moving and self-storage related products and services and the convenience of our broad geographic presence.
Our primary focus is to provide our customers with a wide selection of moving rental equipment, convenient self-storage rental facilities, portable moving and storage units and related moving and self-storage products and services. We are able to expand our distribution and improve customer service by increasing the amount of moving equipment and storage units and portable moving and storage units available for rent, expanding the number of independent dealers and company operated locations in our network and expanding and taking advantage of our eMove®capabilities.network.
Property and Casualty Insurance is focused on providing and administering property and casualty insurance to U-Haul and its customers, its independent dealers and affiliates.
Life Insurance is focused on long term capital growth through direct writing and reinsuring of life insurance, Medicare supplement and annuity products in the senior marketplace.
Description of Operating Segments
AMERCO’sU-Haul Holding Company’s three reportable segments are:
4558
Moving and Storage
Moving and Storage consists of the rental of trucks, trailers, portable moving and storage units, specialty rental items and self-storage spaces primarily to the household mover as well as sales of moving supplies, towing accessories and propane. Operations are conducted under the registered trade name U-Haul®throughout the United States and Canada.
With respect to our truck, trailer, specialty rental items and self-storage rental business, we are focused on expanding our dealer and center network, which provides added convenience for our customers, and expands the selection and availability of rental equipment to satisfy the needs of our customers.
U-Haul®branded self-moving related products and services, such as boxes, pads and tape, allow our customers to, among other things, protect their belongings from potential damage during the moving process. We are committed to providing a complete line of products selected with the “do-it-yourself” moving and storage customer in mind.
uhaul.com®is an online marketplace that connects consumers to our operations as well as independent Moving Help®service providers and thousands of independent Self-Storage Affiliates. Our network of customer-rated affiliates and service providers furnish pack and load help, cleaning help, self-storage and similar services throughout the United States and Canada. Our goal is to further utilize our web-based technology platform to increase service to consumers and businesses in the moving and storage market.
U-Haul’s mobile app, Truck Share 24/7, Skip-the-Counter Self-Storage rentals and Self-checkout for moving supplies provide our customers methods for conducting business with us directly via their mobile devices and also limiting physical exposure.
Since 1945, U-Haul has incorporated sustainable practices into its everyday operations. We believe that our basic business premise of equipment sharing helps reduce greenhouse gas emissions and reduces the inventory of total large capacity vehicles. We continue to look for ways to reduce waste within our business and are dedicated to manufacturing reusable components and recyclable products. We believe that our commitment to sustainability, through our products and services and everyday operations has helped us to reduce our impact on the environment.
Property and Casualty Insurance
Property and Casualty Insurance provides loss adjusting and claims handling for U-Haul through regional offices across the United States and Canada. Property and Casualty Insurance also underwrites components of the Safemove®, Safetow®, Safemove Plus®, Safestor®andSafestor Mobile®protection packages to U-Haul customers. We continue to focus on increasing the penetration of these products into the moving and storage market. The business plan for Property and Casualty Insurance includes offering property and casualty insurance products in other U-Haulrelated programs.
Life Insurance
Life Insurance provides life and health insurance products primarily to the senior market through the direct writing and reinsuring of life insurance, Medicare supplement and annuity policies.
Cybersecurity Incident
On September 9, 2022, we announced that the Company was made aware of a data security incident involving U-Haul‘s information technology network. U-Haul detected a compromise of two unique passwords used to access U-Haul customers‘ information. U-Haul took immediate steps to contain the incident and promptly enhanced its security measures to prevent any further unauthorized access. U-Haul retained cybersecurity experts and incident response counsel to investigate the incident and implement additional security safeguards. The investigation determined that between November 5, 2021 and April 8, 2022, the threat actor accessed customer contracts containing customers’ names, dates of birth, and driver’s license or state identification numbers. None of U-Haul’s financial, payment processing or email systems were involved. U-Haul has notified impacted customers and relevant governmental authorities.
Several class action lawsuits related to the incident have been filed against U-Haul. The lawsuits arehave been consolidated into one action in their early consolidation phasethe U.S. District Court for the District of Arizona and will be vigorously defended by the Company; however the outcome of such lawsuits cannot be predicted or guaranteed with any certainty.
4659
Critical Accounting Policies and Estimates
Please refer to our Annual Report on Form 10-K for the fiscal year ended March 31, 2022,2023, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Impairment of Investments
Under the current expected credit loss model, a valuation allowance is recognized in earnings for credit losses. If we intend to sell a debt security, or it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis, the debt security is written down to its fair value and the write down is charged against the allowance for credit losses, with any incremental impairment reported in earnings. Reversals of the allowance for credit losses are permitted and should not exceed the allowance amount initially recognized.
There was a $1.9 million net impairment charge associated with this allowance recorded for the first six months ended September 30, 2022.
Results of Operations
AMERCOU-Haul Holding Company and Consolidated Entities
Quarter Ended September 30, 20222023 compared with the Quarter Ended September 30, 20212022
Listed below, on a consolidated basis, are revenues for our major product lines for the second quarter of fiscal 20232024 and the second quarter of fiscal 2022:2023:
|
| Quarter Ended September 30, | ||
|
| 2022 |
| 2021 |
|
| (Unaudited) | ||
|
| (In thousands) | ||
Self-moving equipment rentals | $ | 1,162,025 | $ | 1,179,061 |
Self-storage revenues |
| 185,586 |
| 153,485 |
Self-moving and self-storage products and service sales |
| 96,864 |
| 92,191 |
Property management fees |
| 9,277 |
| 8,747 |
Life insurance premiums |
| 25,456 |
| 28,913 |
Property and casualty insurance premiums |
| 25,718 |
| 22,499 |
Net investment and interest income |
| 30,509 |
| 36,780 |
Other revenue |
| 167,429 |
| 142,578 |
Consolidated revenue | $ | 1,702,864 | $ | 1,664,254 |
|
| Quarter Ended September 30, | ||
|
| 2023 |
| 2022 |
|
| (Unaudited) | ||
|
| (In thousands) | ||
Self-moving equipment rentals | $ | 1,069,405 | $ | 1,162,025 |
Self-storage revenues |
| 208,890 |
| 185,586 |
Self-moving and self-storage products and service sales |
| 91,571 |
| 96,864 |
Property management fees |
| 9,267 |
| 9,277 |
Life insurance premiums |
| 22,498 |
| 25,456 |
Property and casualty insurance premiums |
| 25,571 |
| 25,718 |
Net investment and interest income |
| 64,738 |
| 30,509 |
Other revenue |
| 157,920 |
| 167,429 |
Consolidated revenue | $ | 1,649,860 | $ | 1,702,864 |
Self-moving equipment rental revenues decreased $17.0$92.6 million during the second quarter of fiscal 2023,2024, compared with the second quarter of fiscal 2022. 2023.Transactions, revenue and revenueaverage miles driven per transaction decreased.The declines were more pronounced for In-Town business increased but were offset by declines inour one-way business. Compared to the same period last year, we increased the number of Company operated retail locations independent dealers,as well as the number of box trucks, and trailers in the rental fleet.
Self-storage revenues increased $32.1$23.3 million during the second quarter of fiscal 2023,2024, compared with the second quarter of fiscal 2022.2023. The average monthly number of occupied units increased by 14%7%, or 64,50038,046 units, during the second quarter of fiscal 20232024 compared with the same period last year. The growth in revenues and square feet rented comes from a combination of occupancy gains, at existing locations, the addition of new capacity to the portfolio and from ana 6% improvement in average revenue per occupied foot. OverDuring the last twelve months,quarter, we added approximately 5.40.9 million of new net rentable square feet, or an 11% increase, with approximately 1.5 million of that coming on during the second quarter of fiscal 2023.feet.
Sales of self-moving and self-storage products and services increased $4.7decreased $5.3 million during the second quarter of fiscal 2023,2024, compared with the second quarter of fiscal 2022.2023. This was due to increaseddecreased sales of hitches, moving supplies and propane offset by decreasespropane. The decrease in self-moving transactions has negatively impacted the sales of moving supplies.
Life insurance premiums decreased $3.5$3.0 million during the second quarter of fiscal 2023,2024, compared with the second quarter of fiscal 20222023 due primarily to decreased life and Medicare supplement premiums.
47
Property and casualty insurance premiums increased $3.2decreased $0.1 million during the second quarter of fiscal 2023,2024, compared with the second quarter of fiscal 2022. A significant portion of Repwest’s premiums are from policies sold in conjunction with U-Haul rental transactions. The premium increase corresponded with the increased moving and storage transactions.2023.
Net investment and interest income decreased $6.3increased $34.2 million during the second quarter of fiscal 2023,2024, compared with the second quarter of fiscal 2022.2023. Moving and Storage accounted for $13.6 million of the improvement due to an increase in interest rates on short-term deposits. Changes in the market value of unaffiliated equitycommon stocks held at our Property and Casualty Insurance subsidiary accounted for $8.5$6.7 million of the decrease for the second quarter.increase. Our Life Insurance subsidiaries investment income decreased $11.9increased $12.6 million primarily from lossesgains on derivatives used as hedges to fixed indexed annuities. This was partially offset by a $14.3 million increase from Moving and Storage due to an increase in invested cash combined with higher interest rates on these short-term deposits.
Other revenue increased $24.9decreased $9.5 million during the first six monthssecond quarter of fiscal 2024, compared with the second quarter of fiscal 2023, compared with the same six months of fiscal 2022,caused primarily coming from increased moving and storage transactions withinby decreases in our U-Box®program.
60
Listed below are revenues and earnings from operations at each of our operating segments for the second quarter of fiscal 20232024 and the second quarter of fiscal 2022.2023. The insurance companies’ second quarters ended June 30, 20222023 and 2021.2022.
|
| Quarter Ended September 30, | ||
|
| 2022 |
| 2021 |
|
| (Unaudited) | ||
|
| (In thousands) | ||
Moving and storage |
|
|
|
|
Revenues | $ | 1,636,858 | $ | 1,576,999 |
Earnings from operations before equity in earnings of subsidiaries |
| 514,943 |
| 555,988 |
Property and casualty insurance |
|
|
|
|
Revenues |
| 23,363 |
| 29,539 |
Earnings from operations |
| 5,686 |
| 15,189 |
Life insurance |
|
|
|
|
Revenues |
| 45,696 |
| 60,985 |
Earnings from operations |
| 1,852 |
| 7,913 |
Eliminations |
|
|
|
|
Revenues |
| (3,053) |
| (3,269) |
Earnings from operations before equity in earnings of subsidiaries |
| (386) |
| (389) |
Consolidated results |
|
|
|
|
Revenues |
| 1,702,864 |
| 1,664,254 |
Earnings from operations |
| 522,095 |
| 578,701 |
|
| Quarter Ended September 30, | ||
|
| 2023 |
| 2022 |
|
| (Unaudited) | ||
|
| (In thousands) | ||
Moving and storage |
|
|
|
|
Revenues | $ | 1,565,578 | $ | 1,636,858 |
Earnings from operations before equity in earnings of subsidiaries |
| 401,704 |
| 514,943 |
Property and casualty insurance |
|
|
|
|
Revenues |
| 31,852 |
| 23,363 |
Earnings from operations |
| 15,419 |
| 5,686 |
Life insurance |
|
|
|
|
Revenues |
| 55,522 |
| 45,696 |
Earnings (losses) from operations |
| 5,608 |
| (297) |
Eliminations |
|
|
|
|
Revenues |
| (3,092) |
| (3,053) |
Earnings from operations before equity in earnings of subsidiaries |
| (376) |
| (386) |
Consolidated results |
|
|
|
|
Revenues |
| 1,649,860 |
| 1,702,864 |
Earnings from operations |
| 422,355 |
| 519,946 |
Total costs and expenses increased $95.2$44.6 million during the second quarter of fiscal 2023,2024, compared with the second quarter of fiscal 2022.2023. Operating expenses for Moving and Storage increased $114.2$24.1 million. Repair costsexpenses associated with the rental fleet experienced a $33.7$17.2 million increase during the quarter due to the higher cost of preventative maintenance resulting from higher fleet activity combinedalong with the slower rotation of new equipment into the fleet and older equipment out of the fleet.The addition of new equipment has been affected by delayscosts associated with our original equipment manufacturers.selling more retired trucks. Other increases included personnel, liability costs, non-rental equipmentproperty taxes, building maintenance and shippingutilities.Other operating costs including freight and payment processing decreased $20.5 million during the quarter.
Depreciation expense associated with U-Box transactions.our rental fleet increased $11.1 million for the second quarter of fiscal 2024 compared with the second quarter of fiscal 2023 due to an increase in the pace of new additions to the fleet combined with their higher cost. Net gains from the disposal of rental equipment increased $28.3decreased $17.5 million from an increase inas resale values.values have decreased while the average cost of units being sold has increased. Depreciation expense associated with our rental fleet was $129.2 million and $125.4 million forWe increased the secondnumber of retired trucks sold compared to the same quarter of fiscal 2023 and 2022, respectively.last year. Depreciation expense on all other assets, largely from buildings and improvements, increased $6.0 million to $52.4$8.1 million. Net losses on the disposal or retirement of land and buildings increased $1.3decreased $0.2 million. Additional details are available in the following Moving and Storage section.
As a result of the above-mentioned changes in revenues and expenses, earnings from operations decreased $56.6$97.6 million to $522.1$422.4 million for the second quarter of fiscal 2023,2024, compared with $578.7$519.9 million for the second quarter of fiscal 2022.2023.
Interest expense for the second quarter of fiscal 20232024 was $57.2$63.9 million, compared with $39.5$57.2 million for the second quarter of fiscal 2022,2023, due to an increase in our outstanding debtaverage cost of $972.3debt.
Income tax expense was $85.2 million infor the second quarter of fiscal 20232024, compared with the second quarter of fiscal 2022.
48
Income tax expense was $111.6 million for the second quarter of fiscal 2023, compared with $129.0 million for the second quarter of fiscal 2022.2023.
As a result of the above-mentioned items, earnings available to common stockholders were $352.0$273.5 million for the second quarter of fiscal 2023,2024, compared with $409.9$349.9 million for the second quarter of fiscal 2022.2023.
Basic and diluted earnings per share for the second quarter of fiscal 2023 were $17.95, compared with $20.90 for the second quarter of fiscal 2022.61
The weighted average common shares outstanding basic and diluted were 19,607,788 for both the second quarter of fiscal 2023 and fiscal 2022.
Moving and Storage
Quarter Ended September 30, 20222023 compared with the Quarter Ended September 30, 20212022
Listed below are revenues for our major product lines at Moving and Storage for the second quarter of fiscal 20232024 and the second quarter of fiscal 2022:2023:
|
| Quarter Ended September 30, | ||
|
| 2022 |
| 2021 |
|
| (Unaudited) | ||
|
| (In thousands) | ||
Self-moving equipment rentals | $ | 1,163,376 | $ | 1,180,329 |
Self-storage revenues |
| 185,586 |
| 153,485 |
Self-moving and self-storage products and service sales |
| 96,864 |
| 92,191 |
Property management fees |
| 9,277 |
| 8,747 |
Net investment and interest income |
| 15,077 |
| 675 |
Other revenue |
| 166,678 |
| 141,572 |
Moving and Storage revenue | $ | 1,636,858 | $ | 1,576,999 |
|
| Quarter Ended September 30, | ||
|
| 2023 |
| 2022 |
|
| (Unaudited) | ||
|
| (In thousands) | ||
Self-moving equipment rentals | $ | 1,070,688 | $ | 1,163,376 |
Self-storage revenues |
| 208,890 |
| 185,586 |
Self-moving and self-storage products and service sales |
| 91,571 |
| 96,864 |
Property management fees |
| 9,267 |
| 9,277 |
Net investment and interest income |
| 28,520 |
| 15,077 |
Other revenue |
| 156,642 |
| 166,678 |
Moving and Storage revenue | $ | 1,565,578 | $ | 1,636,858 |
Self-moving equipment rental revenues decreased $17.0$92.7 million during the second quarter of fiscal 2023,2024, compared with the second quarter of fiscal 2022. 2023.Transactions, revenue and revenueaverage miles driven per transaction decreased.The declines were more pronounced for In-Town business increased but were offset by declines inour one-way business. Compared to the same period last year, we increased the number of Company operated retail locations independent dealers,as well as the number of box trucks, and trailers in the rental fleet.
Self-storage revenues increased $32.1$23.3 million during the second quarter of fiscal 2023,2024, compared with the second quarter of fiscal 2022.2023. The average monthly number of occupied units increased by 14%7%, or 64,50038,046 units, during the second quarter of fiscal 20232024 compared with the same period last year. The growth in revenues and square feet rented comes from a combination of occupancy gains, at existing locations, the addition of new capacity to the portfolio and from ana 6% improvement in average revenue per occupied foot. OverDuring the last twelve months,quarter, we added approximately 5.40.9 million of new net rentable square feet, or an 11% increase, with approximately 1.5 million of that coming on during the second quarter of fiscal 2023.feet.
We own and manage self-storage facilities. Self-storage revenues reported in the consolidated financial statements represent Company-owned locations only. Self-storage data for our owned storage locations follows:
|
| Quarter Ended September 30, | ||
|
| 2022 |
| 2021 |
|
| (Unaudited) | ||
|
| (In thousands, except occupancy rate) | ||
Unit count as of September 30 |
| 638 |
| 568 |
Square footage as of September 30 |
| 53,303 |
| 47,903 |
Average monthly number of units occupied |
| 540 |
| 476 |
Average monthly occupancy rate based on unit count |
| 85.4% |
| 84.3% |
Average monthly square footage occupied |
| 46,538 |
| 41,743 |
49
|
| Quarter Ended September 30, | ||
|
| 2023 |
| 2022 |
|
| (Unaudited) | ||
|
| (In thousands, except occupancy rate) | ||
Unit count as of September 30 |
| 691 |
| 638 |
Square footage as of September 30 |
| 58,402 |
| 53,303 |
Average monthly number of units occupied |
| 578 |
| 540 |
Average monthly occupancy rate based on unit count |
| 84.2% |
| 85.4% |
End of September occupancy rate based on unit count |
| 83.5% |
| 84.8% |
Average monthly square footage occupied |
| 49,931 |
| 46,538 |
Over the last twelve months we added approximately 5.45.1 million net rentable square feet of new storage to the system. This was a mix of approximately 1.4 million square feet of existing storage locations we acquired and 3.7 million square feet of new development.
Sales of self-moving and self-storage products and services increased $4.7decreased $5.3 million during the second quarter of fiscal 2023,2024, compared with the second quarter of fiscal 2022.2023. This was due to increaseddecreased sales of hitches, moving supplies and propane offset by decreasespropane. The decrease in self-moving transactions has negatively impacted the sales of moving supplies.
Net investment and interest income increased $14.4$13.4 million during the second quarter of fiscal 2023,2024, compared with the second quarter of fiscal 2022,2023, due to increases in invested cash combined with higher interest rates on these short-term deposits.
Other revenue increased $25.1decreased $10.0 million during the second quarter of fiscal 2023,2024, compared with the second quarter of fiscal 20222023, caused primarily coming from increased moving and storage transactions withinby decreases in our U-Box®program.
62
Total costs and expenses increased $100.9$42.0 million during the second quarter of fiscal 2023,2024, compared with the second quarter of fiscal 2022.2023. Operating expenses increased $114.2$24.1 million. Repair costs associated with the rental fleet experienced a $33.7$17.2 million increase during the quarter due to the higher cost of preventative maintenance resulting from higher fleet activity combinedalong with the slower rotation of new equipment into the fleet and older equipment out of the fleet.The addition of new equipment has been affected by delayscosts associated with our original equipment manufacturers.selling more retired trucks. Other increases included personnel, liability costs, non-rental equipmentproperty taxes, building maintenance and shippingutilities.Other operating costs including freight and payment processing decreased $20.5 million during the quarter.
Depreciation expense associated with U-Box transactions.our rental fleet increased $11.1 million for the second quarter of fiscal 2024 compared with the second quarter of fiscal 2023 due to an increase in the pace of new additions to the fleet combined with their higher cost. Net gains from the disposal of rental equipment increased $28.3decreased $17.5 million from an increase inas resale values.values have decreased while the average cost of units being sold has increased. Depreciation expense associated with our rental fleet was $129.2 million and $125.4 million forWe increased the secondnumber of retired trucks sold compared to the same quarter of fiscal 2023 and 2022, respectively.last year. Depreciation expense on all other assets, largely from buildings and improvements, increased $6.0 million to $52.4$8.1 million. Net losses on the disposal or retirement of land and buildings increased $1.3decreased $0.2 million. Additional details are available in the following Moving and Storage section.
The components of depreciation, net of gains on disposals are as follows:
|
| Quarter Ended September 30 | ||
|
| 2023 |
| 2022 |
|
| (Unaudited) | ||
|
| (In thousands) | ||
Depreciation expense - rental equipment | $ | 140,341 | $ | 129,220 |
Depreciation expense - non rental equipment |
| 23,392 |
| 21,546 |
Depreciation expense - real estate |
| 37,192 |
| 30,895 |
Total depreciation expense | $ | 200,925 | $ | 181,661 |
|
|
|
|
|
Gains on disposals of rental equipment |
| (46,928) | $ | (64,312) |
(Gain) loss on disposals of non-rental equipment |
| 125 |
| (31) |
Total gains on disposals equipment | $ | (46,803) | $ | (64,343) |
|
|
|
|
|
Depreciation, net of gains on disposals | $ | 154,122 | $ | 117,318 |
|
|
|
|
|
Losses on disposals of real estate | $ | 1,715 | $ | 1,872 |
As a result of the above-mentioned changes in revenues and expenses, earnings from operations for Moving and Storage, before consolidation of the equity in the earnings of the insurance subsidiaries, decreased $41.1$113.2 million to $401.7 million for the second quarter of fiscal 2024, compared with $514.9 million for the second quarter of fiscal 2023, compared with $556.02023.
Equity in the earnings of U-Haul Holding Company’s insurance subsidiaries was $16.9 million for the second quarter of fiscal 2022.
Equity in the earnings of AMERCO’s insurance subsidiaries was $6.12024, compared with $3.9 million for the second quarter of fiscal 2023, compared with $18.3 million for the second quarter of fiscal 2022.2023.
As a result of the above-mentioned changes in revenues and expenses, consolidated earnings from operations for Moving and Storage decreased to $521.0$418.6 million for the second quarter of fiscal 2023,2024, compared with $574.3$518.8 million for the second quarter of fiscal 2022.2023.
Property and Casualty Insurance
Quarter Ended June 30, 20222023 compared with the Quarter Ended June 30, 20212022
Net premiums were $26.0$26.4 million and $23.4$26.0 million for the second quarters ended June 30, 20222023 and 2021,2022, respectively. A significant portion of Repwest’s premiums arewere from policies sold in conjunction with U-Haul rental transactions. The premium increasewritten corresponded with the increasedchange in moving and storage transactions at U-Haul during the same period.
Net investment and interest income (loss) was ($2.6)$5.5 million and $6.2$(2.6) million for the second quarters ended June 30, 20222023 and 2021,2022, respectively. The main driver forof the decreasechange in net investment income was the $8.5 million decreaseincrease in the market value of unaffiliated equitycommon stocks.
Net operatingOperating expenses were $11.6$12.1 million and $10.8$11.6 million for the second quarters ended June 30, 2023 and 2022, and 2021, respectively,respectively. The change was due to an increase in commissions offset by a decrease in loss adjusting fees.commissions.
63
Benefits and losses incurred were $6.1$4.2 million and $3.6$6.1 million for the second quarters ended June 30, 2023 and 2022, respectively. Benefits and 2021, respectively. The increase was due to unfavorable loss experience.losses incurred corresponded with the change in moving and storage transactions at U-Haul during the same period.
As a result of the above-mentioned changes in revenues and expenses, pretax earnings from operations were $5.7$15.4 million and $15.2$5.7 million for the second quarters ended June 30, 20222023 and 2021,2022, respectively.
50
Life Insurance
Quarter Ended June 30, 20222023 compared with the Quarter Ended June 30, 20212022
Net premiums were $25.5$22.5 million and $28.9$25.5 million for the quarters ended June 30, 2023 and 2022, and 2021, respectively. Medicare Supplementsupplement premiums decreased $1.9$1.6 million from the policy decrements offset by premium rate increases. Life premiums decreased $1.5$1.2 million primarily from the decrease in sales of single premium life and final expense. Both decreases are due to policyholder lapses currently outweighing sales levels. Deferred annuity deposits were $83.2$81.4 million or $2.4$1.9 million below prior year and are accounted for on the balance sheet as deposits rather than premiums.
Net investment income was $19.0$31.6 million and $30.9$19.0 million for the quarters ended June 30, 2023 and 2022, and 2021, respectively. The decrease was primarily due to $8.2 million of realized lossesRealized gain on derivatives used as economic hedges to fixed indexed annuities along with thewas $9.9 million. The change in the provision for expected credit losses that resulted in a decrease of $2.5 million. Additionally, net interest income and realized gains on invested assets decreased $1.2 million.$1.7 million additional increase to investment income.
Net operatingOperating expenses were $5.6$4.7 million and $5.2$5.6 million for the quarters ended June 30, 20222023 and 2021,2022, respectively. The increase wasdecrease is primarily due to the increasereduction in administrative expenses offset by the decreased commissions on single premium lifefinal expense products due to decreased premiums.
Benefits and losses incurred were $31.3$38.3 million and $41.1$33.4 million for the quarters ended June 30, 20222023 and 2021,2022, respectively. Interest credited to policyholders decreased $6.9increased $10.1 million due to a reductionan increase in the interest credited rates on equity - indexed annuities driven by market fluctuations.annuities. Life benefits decreased $1.4 million$0.5 due to lower death claims related to COVID-19 and lower sales due to premium adjustments that took place in late 2021.sales. Medicare supplement benefits decreased by $1.3$2.0 million from the declined policies in force.in-force. Benefits on the annuities decreased $0.2$0.7 million.
Amortization of deferred acquisition costs (“DAC”), sales inducement asset (“SIA”) and the value of business acquired (“VOBA”) was $7.0 million and $6.8 million for the quarters ended June 30, 2022 and 2021, respectively.
As a result of the above-mentioned changes in revenues and expenses, pretax earnings (losses) from operations were $1.7$5.5 million and $7.8($0.4) million for the quarters ended June 30, 20222023 and 2021,2022, respectively.
AMERCOU-Haul Holding Company and Consolidated Entities
Six Months Ended September 30, 20222023 compared with the Six Months Ended September 30, 20212022
Listed below on a consolidated basis are revenues for our major product lines for the first six months of fiscal 20232024 and the first six months of fiscal 2022:2023:
|
| Six Months Ended September 30, | ||
|
| 2022 |
| 2021 |
|
| (Unaudited) | ||
|
| (In thousands) | ||
Self-moving equipment rentals | $ | 2,252,800 | $ | 2,214,438 |
Self-storage revenues |
| 358,763 |
| 290,878 |
Self-moving and self-storage products and service sales |
| 206,215 |
| 197,076 |
Property management fees |
| 18,416 |
| 17,196 |
Life insurance premiums |
| 51,237 |
| 57,618 |
Property and casualty insurance premiums |
| 45,690 |
| 39,368 |
Net investment and interest income |
| 64,082 |
| 71,779 |
Other revenue |
| 303,501 |
| 248,757 |
Consolidated revenue | $ | 3,300,704 | $ | 3,137,110 |
|
| Six Months Ended September 30, | ||
|
| 2023 |
| 2022 |
|
| (Unaudited) | ||
|
| (In thousands) | ||
Self-moving equipment rentals | $ | 2,068,611 | $ | 2,252,800 |
Self-storage revenues |
| 407,851 |
| 358,763 |
Self-moving and self-storage products and service sales |
| 192,443 |
| 206,215 |
Property management fees |
| 18,444 |
| 18,416 |
Life insurance premiums |
| 45,629 |
| 51,237 |
Property and casualty insurance premiums |
| 45,893 |
| 45,690 |
Net investment and interest income |
| 129,330 |
| 64,082 |
Other revenue |
| 281,967 |
| 303,501 |
Consolidated revenue | $ | 3,190,168 | $ | 3,300,704 |
Self-moving equipment rental revenues increased $38.4decreased $184.2 million during the first six months of fiscal 2023,2024, compared with the first six months of fiscal 2022.2023. Transactions, revenue and average miles driven per transaction decreased.The declines were more pronounced for both our In-Town and one-way markets increased as did revenue per transaction.business. Compared to the same period last year, we increased the number of Company operated retail locations independent dealers,as well as the number of box trucks, and trailers in the rental fleet.
5164
Self-storage revenues increased $67.9$49.1 million during the first six months of fiscal 2023,2024, compared with the first six months of fiscal 2022.2023. The average monthly number of occupied units increased by 16%8%, or 73,20041,501 units, during the first six months of fiscal 20232024 compared with the same period last year. The growth in revenues and square feet rented comes from a combination of occupancy gains, at existing locations, the addition of new capacity to the portfolio and from ana 6% improvement in average revenue per occupied foot. OverDuring the last twelvefirst six months, we added approximately 5.42.0 million of new net rentable square feet, or an 11% increase, with approximately 2.2 million of that coming on during the first six months of fiscal 2023.feet.
Sales of self-moving and self-storage products and services increased $9.1decreased $13.8 million for the first six months of fiscal 2023,2024, compared with the first six months of fiscal 2022.2023. This was due to increaseddecreased sales of hitches, moving supplies and propane. The decrease in self-moving transactions has negatively impacted the sales of moving supplies.
Life insurance premiums decreased $6.4$5.6 million during the first six months of fiscal 2023,2024, compared with the first six months of fiscal 20222023 due primarily to decreased Medicare supplement premiums.
Property and casualty insurance premiums increased $6.3$0.2 million during the first six months of fiscal 2023,2024, compared with the first six months of fiscal 2022. A significant portion of Repwest’s premiums are from policies sold in conjunction with U-Haul rental transactions. The premium increase corresponded with the increased moving and storage transactions at U-Haul during the same period.2023.
Net investment and interest income decreased $7.7increased $65.2 million during the first six months of fiscal 2023,2024, compared with the first six months of fiscal 2022.2023. Moving and Storage accounted for $36.0 million of the improvement due to an increase in interest rates on short-term deposits. Changes in the market value of unaffiliated equitycommon stocks held at our Property and Casualty Insurance subsidiary accounted for $12.3$10.7 million of the decrease for the six months. increase.Our Life Insurance subsidiaries investment income decreased $13.9increased $16.7 million primarily from a net loss of $9.7 milliongains on derivatives used as hedges to fixed indexindexed annuities. In addition, the change in the provision for expected credit losses resulted in a $3.0 million decrease to the investment income. This was partially offset by a $18.7 million increase from Moving and Storage due to an increase in invested cash combined with higher interest rates on these short-term deposits.
Other revenue increased $54.7decreased $21.5 million during the first six months of fiscal 2023,2024, compared with the first six months of fiscal 2022,2023, caused primarily coming from increased moving and storage transactions withinby decreases in our U-Box®program.
Listed below are revenues and earnings from operations at each of our operating segments for the first six months of fiscal 20232024 and the first six months of fiscal 2022.2023. The insurance companies’ first six months ended June 30, 20222023 and 2021.2022.
|
| Six Months Ended September 30 | ||
|
| 2022 |
| 2021 |
|
| (Unaudited) | ||
|
| (In thousands) | ||
Moving and storage |
|
|
|
|
Revenues | $ | 3,160,456 | $ | 2,970,253 |
Earnings from operations before equity in earnings of subsidiaries |
| 996,560 |
| 1,038,983 |
Property and casualty insurance |
|
|
|
|
Revenues |
| 46,445 |
| 52,995 |
Earnings from operations |
| 14,037 |
| 24,421 |
Life insurance |
|
|
|
|
Revenues |
| 99,799 |
| 119,644 |
Earnings from operations |
| 3,425 |
| 10,279 |
Eliminations |
|
|
|
|
Revenues |
| (5,996) |
| (5,782) |
Earnings from operations before equity in earnings of subsidiaries |
| (768) |
| (774) |
Consolidated results |
|
|
|
|
Revenues |
| 3,300,704 |
| 3,137,110 |
Earnings from operations |
| 1,013,254 |
| 1,072,909 |
52
|
| Six Months Ended September 30 | ||
|
| 2023 |
| 2022 |
|
| (Unaudited) | ||
|
| (In thousands) | ||
Moving and storage |
|
|
|
|
Revenues | $ | 3,025,091 | $ | 3,160,456 |
Earnings from operations before equity in earnings of subsidiaries |
| 788,395 |
| 996,560 |
Property and casualty insurance |
|
|
|
|
Revenues |
| 59,691 |
| 46,445 |
Earnings from operations |
| 27,401 |
| 14,037 |
Life insurance |
|
|
|
|
Revenues |
| 111,203 |
| 99,799 |
Earnings from operations |
| 6,964 |
| 5,619 |
Eliminations |
|
|
|
|
Revenues |
| (5,817) |
| (5,996) |
Earnings from operations before equity in earnings of subsidiaries |
| (747) |
| (768) |
Consolidated results |
|
|
|
|
Revenues |
| 3,190,168 |
| 3,300,704 |
Earnings from operations |
| 822,013 |
| 1,015,448 |
Total costs and expenses increased $223.2$82.9 million during the first six months of fiscal 2023,2024, compared with the first six months of fiscal 2022.2023. Operating expenses for Moving and Storage increased $232.1$52.6 million. Repair costs associated with the rental fleet experienced a $65.8$46.8 million increase during the first six months of fiscal 20232024 due to the higher cost of preventative maintenance resulting from higher fleet activity combinedalong with the slower rotation of new equipment into the fleet and older equipment out of the fleet.The addition of new equipment has been affected by delayscosts associated with our original equipment manufacturers.selling more retired trucks. Other increases included personnel, liabilityproperty taxes, utilities and building maintenance.Other operating costs non-rental equipment maintenanceincluding freight and shippingpayment processing decreased $42.3 million during the quarter.
65
Depreciation expense associated with U-Box transactions.our rental fleet increased $19.8 million for the first six months of fiscal 2024 compared with the first six months of fiscal 2023 due to an increase in the pace of new additions to the fleet combined with their higher cost. Net gains from the disposal of rental equipment decreased $26.2 million as resale values have decreased while the average cost of units being sold has increased. We increased $42.3 million from an increase in resale values.Depreciation expense associated with our rental fleet was $255.7 million and $251.9 million for the first six monthsnumber of fiscal 2023 and 2022, respectively.retired trucks sold compared to the same quarter last year. Depreciation expense on all other assets, largely from buildings and improvements, increased $12.1 million to $104.1$14.8 million. Net losses on the disposal or retirement of land and buildings increased $8.1 million asdecreased $1.4 million. Additional details are available in the first six months of fiscal 2022 included a condemnation gain of $4.9 million.following Moving and Storage section.
As a result of the above-mentioned changes in revenues and expenses, earnings from operations decreased $59.6$193.4 million to $1,013.3$822.0 million for the first six months of fiscal 2023,2024, as compared with $1,072.9$1,015.4 million for the first six months of fiscal 2022.2023.
Interest expense for the first six months of fiscal 20232024 was $107.0$124.5 million, compared with $78.7$107.0 million for the first six months of fiscal 2022,2023, due to an increase in our outstanding debtaverage cost of $972.3debt.
Income tax expense was $167.0 million infor the first six months of fiscal 20232024, compared with the first six months of fiscal 2022.
Income tax expense was $218.7 million for the first six months of fiscal 2023, compared with $238.6 million for the first six months of fiscal 2022.2023.
As a result of the above-mentioned items, earnings available to common shareholdersstockholders were $686.0$530.3 million for the first six months of fiscal 2023,2024, compared with $755.1$688.3 million for the first six months of fiscal 2022.
Basic and diluted earnings per common share for the first six months of fiscal 2023 were $34.99, compared with $38.51 for the first six months of fiscal 2022.
The weighted average common shares outstanding basic and diluted were 19,607,788 for both the first six months of fiscal 2023 and fiscal 2022.2023.
Moving and Storage
Six Months Ended September 30, 20222023 compared with the Six Months Ended September 30, 20212022
Listed below are revenues for the major product lines at our Moving and Storage operating segment for the first six months of fiscal 20232024 and the first six months of fiscal 2022:2023:
|
| Six Months Ended September 30 | ||
|
| 2022 |
| 2021 |
|
| (Unaudited) | ||
|
| (In thousands) | ||
Self-moving equipment rentals | $ | 2,255,086 | $ | 2,216,542 |
Self-storage revenues |
| 358,763 |
| 290,878 |
Self-moving and self-storage products and service sales |
| 206,215 |
| 197,076 |
Property management fees |
| 18,416 |
| 17,196 |
Net investment and interest income |
| 20,017 |
| 1,355 |
Other revenue |
| 301,959 |
| 247,206 |
Moving and Storage revenue | $ | 3,160,456 | $ | 2,970,253 |
|
| Six Months Ended September 30 | ||
|
| 2023 |
| 2022 |
|
| (Unaudited) | ||
|
| (In thousands) | ||
Self-moving equipment rentals | $ | 2,070,767 | $ | 2,255,086 |
Self-storage revenues |
| 407,851 |
| 358,763 |
Self-moving and self-storage products and service sales |
| 192,443 |
| 206,215 |
Property management fees |
| 18,444 |
| 18,416 |
Net investment and interest income |
| 55,815 |
| 20,017 |
Other revenue |
| 279,771 |
| 301,959 |
Moving and Storage revenue | $ | 3,025,091 | $ | 3,160,456 |
Self-moving equipment rental revenues increased $38.5decreased $184.3 million during the first six months of fiscal 2023,2024, compared with the first six months of fiscal 2022.2023. Transactions, revenue and average miles driven per transaction decreased. TransactionsThe declines were more pronounced for both our In-Town and one-way markets increased as did revenue per transaction.business. Compared to the same period last year, we increased the number of Company operated retail locations independent dealers,as well as the number of box trucks, and trailers in the rental fleet.
53
Self-storage revenues increased $67.9$49.1 million during the first six months of fiscal 2023,2024, compared with the first six months of fiscal 2022.2023. The average monthly number of occupied units increased by 16%8%, or 73,20041,501 units, during the first six months of fiscal 20232024 compared with the same period last year. The growth in revenues and square feet rented comes from a combination of occupancy gains, at existing locations, the addition of new capacity to the portfolio and from ana 6% improvement in average revenue per occupied foot. OverDuring the last twelvefirst six months, we added approximately 5.42.0 million of new net rentable square feet, or an 11% increase, with approximately 2.2 million of that coming on during the first six months of fiscal 2023.feet.
66
We own and manage self-storage facilities. Self-storage revenues reported in the consolidated financial statements represent Company-owned locations only. Self-storage data for our owned storage locations follows:
|
| Six Months Ended September 30 | ||
|
| 2022 |
| 2021 |
|
| (Unaudited) | ||
|
| (In thousands, except occupancy rate) | ||
Unit count as of September 30 |
| 638 |
| 568 |
Square footage as of September 30 |
| 53,303 |
| 47,903 |
Average monthly number of units occupied |
| 529 |
| 456 |
Average monthly occupancy rate based on unit count |
| 85.0% |
| 82.1% |
Average monthly square footage occupied |
| 45,692 |
| 40,207 |
|
| Six Months Ended September 30 | ||
|
| 2023 |
| 2022 |
|
| (Unaudited) | ||
|
| (In thousands, except occupancy rate) | ||
Unit count as of September 30 |
| 691 |
| 638 |
Square footage as of September 30 |
| 58,402 |
| 53,303 |
Average monthly number of units occupied |
| 529 |
| 529 |
Average monthly occupancy rate based on unit count |
| 83.5% |
| 85.0% |
End of September occupancy rate based on unit count |
| 83.5% |
| 84.8% |
Average monthly square footage occupied |
| 49,279 |
| 45,692 |
Over the last twelve months we added approximately 5.45.1 million net rentable square feet of new storage to the system. This was a mix of approximately 1.4 million square feet of existing storage locations we acquired and 3.7 million square feet of new development.
Sales of self-moving and self-storage products and services increased $9.1decreased $13.8 million for the first six months of fiscal 2023,2024, compared with the first six months of fiscal 2022.2023. This was due to increaseddecreased sales of hitches, moving supplies and propane. The decrease in self-moving transactions has negatively impacted the sales of moving supplies.
Net investment and interest income increased $18.7$35.8 million during the second quarter of fiscal 2023,2024, compared with the second quarter of fiscal 2022,2023, due to increases in invested cash combined with higher interest rates on these short-term deposits.
Other revenue increased $54.8decreased $22.2 million during the first six months of fiscal 2023,2024, compared with the first six months of fiscal 2022,2023, caused primarily coming from increased moving and storage transactions withinby decreases in our U-Box®program.
Total costs and expenses increased $232.6$72.8 million during the first six months of fiscal 2023,2024, compared with the first six months of fiscal 2022.2023. Operating expenses increased $232.1$52.6 million.Repair costs associated with the rental fleet experienced a $65.8$46.8 million increase during the first six months of fiscal 20232024 due to the higher cost of preventative maintenance resulting from higher fleet activity combinedalong with the slower rotation of new equipment into the fleet and older equipment out of the fleet. The addition of new equipment has been affected by delayscosts associated with our original equipment manufacturers. selling more retired trucks.Other increases included personnel, liabilityproperty taxes, utilities and building maintenance.Other operating costs non-rental equipment maintenanceincluding freight and shippingpayment processing decreased $42.3 million during the quarter.
Depreciation expense associated with U-Box transactions.our rental fleet increased $19.8 million for the first six months of fiscal 2024 compared with the first six months of fiscal 2023 due to an increase in the pace of new additions to the fleet combined with their higher cost. Net gains from the disposal of rental equipment decreased $26.2 million as resale values have decreased while the average cost of units being sold has increased. We increased $42.3 million from an increase in resale values. Depreciation expense associated with our rental fleet was $255.7 million and $251.9 million for the first six monthsnumber of fiscal 2023 and 2022, respectively. retired trucks sold compared to the same quarter last year.Depreciation expense on all other assets, largely from buildings and improvements, increased $12.1 million to $104.1$14.8 million. Net losses on the disposal or retirement of land and buildings increased $8.1 million asdecreased $1.4 million. Additional details are available in the following Moving and Storage section.
67
The components of depreciation, net of gains on disposals for the first six months of fiscal 2022 included a condemnation gain of $4.9 million.2024 were as follows:
|
| Six Months Ended September 30 | ||
|
| 2023 |
| 2022 |
|
| (Unaudited) | ||
|
| (In thousands) | ||
Depreciation expense - rental equipment | $ | 275,533 | $ | 255,741 |
Depreciation expense - non rental equipment |
| 45,694 |
| 43,167 |
Depreciation expense - real estate |
| 73,173 |
| 60,897 |
Total depreciation expense | $ | 394,400 | $ | 359,805 |
|
|
|
|
|
Gains on disposals of rental equipment | $ | (102,735) | $ | (128,313) |
(Gain) loss on disposals of non-rental equipment |
| 271 |
| (378) |
Total gains on disposals equipment | $ | (102,464) | $ | (128,691) |
|
|
|
|
|
Depreciation, net of gains on disposals | $ | 291,936 | $ | 231,114 |
|
|
|
|
|
Losses on disposals of real estate | $ | 2,736 | $ | 4,179 |
As a result of the above-mentioned changes in revenues and expenses, earnings from operations for Moving and Storage before consolidation of the equity in the earnings of the insurance subsidiaries decreased to $788.4 million for the first six months of fiscal 2024, compared with $996.6 million for the first six months of fiscal 2023, compared with $1,039.02023.
Equity in the earnings of U-Haul Holding Company’s insurance subsidiaries was $27.1 million for the first six months of fiscal 2022.
Equity in the earnings of AMERCO’s insurance subsidiaries was $13.72024, compared with $15.9 million for the first six months of fiscal 2023, compared with $27.4 million for the first six months of fiscal 2022.2023.
As a result of the above-mentioned changes in revenues and expenses, earnings from operations decreased to $1,010.3$815.5 million for the first six months of fiscal 2023,2024, compared with $1,066.4$1,012.5 million for the first six months of fiscal 2022.2023.
54
Property and Casualty Insurance
Six Months Ended June 30, 20222023 compared with the Six Months Ended June 30, 20212022
Net premiums were $46.8$47.4 million and $40.8$46.8 million for the six months ended June 30, 20222023 and 2021,2022, respectively. A significant portion of Repwest’s premiums arecome from policies sold in conjunction with U-Haul rental transactions. The premium increasewritten corresponded with the increasedchange in moving and storage transactions at U-Haul during the same period.
Net investment and interest income (loss) was ($0.3)$12.3 million and $12.2$(0.3) million for the six months ended June 30, 20222023 and 2021,2022, respectively. The main driver of the change in net investment income was the decreaseincrease in valuationthe market value of unaffiliated common stock of $12.3 million.stock.
Net operatingOperating expenses were $21.8$23.4 million and $19.6$21.8 million for the six months ended June 30, 20222023 and 2021,2022, respectively. The change was due to an increase in commissions offset by a decrease inand loss adjusting fees.
Benefits and losses incurred were $10.5$8.7 million and $8.8$10.5 million for the six months ended June 30, 2023 and 2022, respectively. Benefits and 2021, respectively. The increase was due to unfavorable loss experience.losses incurred corresponded with the change in moving and storage transactions at U-Haul during the same period.
As a result of the above-mentioned changes in revenues and expenses, pretax earnings from operations were $14.0$27.4 million and $24.4$14.0 million for the six months ended June 30, 20222023 and 2021,2022, respectively.
Life Insurance
Six Months Ended June 30, 20222023 compared with the Six Months Ended June 30, 20212022
Net premiums were $51.2$45.6 million and $57.6$51.2 million for the six months ended June 30, 20222023 and 2021,2022, respectively. Medicare Supplementsupplement premiums decreased $3.8$3.3 million from the policy decrements offset by premium rate increases.decrements. Life premiums decreased $2.6$2.2 million primarily from the decrease in sales of single premium life and final expense. Deferred annuity deposits were $169.0$125.1 million or $15.4$43.9 million below prior year and are accounted for on the balance sheet as deposits rather than premiums.
68
Net investment income was $46.4$63.1 million and $60.3$46.4 million for the six months ended June 30, 2023 and 2022, and 2021, respectively. The decrease was primarily due to $9.7 million of realized lossesRealized gain on derivatives used as economic hedges to fixed indexed annuities along with thewas $12.0 million current year-to-date. The change in the provision for expected credit losses that resulted in a decrease of $2.7 million. Additionally, netcurrent year-to-date $2.0 million additional increase to the investment income. Net interest income and realized gainsgain on the invested assets decreased $1.5 million.increased $2.6 million, primarily on bonds, and $1.2 million on mortgage loans.
Benefits and losses incurredOperating expenses were $71.0$10.1 million and $83.1$10.7 million for the six months ended June 30, 2023 and 2022, respectively.
Benefits and 2021,losses incurred were $79.2 million and $68.8 million for the six months ended June 30, 2023 and 2022, respectively. Interest credited to policyholders decreased $7.4increased $13.4 million due to a reductionan increase in the interest credited rates on equity - indexed annuities driven by stock market fluctuations.annuities. Life benefits decreased $2.8$2.5 million due to lower death claims related to COVID-19 and lower sales due to premium adjustments that took place in late 2021.of new policies. Medicare supplement benefits decreased by $1.9$2.1 million from the declineddeclining policies in force.in-force.
Amortization of DAC, SIA and VOBA were $14.6$14.9 million and $15.6$14.6 million for the six months ended June 30, 2023 and 2022, and 2021, respectively. The decrease in DAC amortization was primarily associated with annuities.In addition, there was a steady decrease in Medicare supplement DAC Amortization from a decline in the in-force.
As a result of the above-mentioned changes in revenues and expenses, pretax earnings from operations were $3.2$6.7 million and $10.2$5.5 million for the six months ended June 30, 20222023 and 2021,2022, respectively.
Liquidity and Capital Resources
We believe our current capital structure is a positive factor that will enable us to pursue our operational plans and goals and provide us with sufficient liquidity for the foreseeable future. There are many factors that could affect our liquidity, including some of which are beyond our control, and there is no assurance that future cash flows and liquidity resources will be sufficient to meet our outstanding debt obligations and our other future capital needs.
55
As of September 30, 2022,2023, cash and cash equivalents totaled $3,065.1$2,145.6 million, compared with $2,704.1$2,060.5 million as of March 31, 2022.2023. The assets of our insurance subsidiaries are generally unavailable to fulfill the obligations of non-insurance operations (Moving and Storage). As of September 30, 20222023 (or as otherwise indicated), cash and cash equivalents, other financial assets (receivables, short-term investments, other investments, fixed maturities, and related party assets) and debt obligations of each operating segment were:
|
| Moving & Storage |
| Property & Casualty Insurance (a) |
| Life Insurance (a) |
|
| (Unaudited) | ||||
|
| (In thousands) | ||||
Cash and cash equivalents | $ | 3,025,390 | $ | 11,196 | $ | 28,529 |
Other financial assets |
| 204,671 |
| 444,990 |
| 2,803,275 |
Debt obligations |
| 6,298,831 |
| – |
| – |
|
|
|
|
|
|
|
(a) As of June 30, 2022 |
|
|
|
|
|
|
|
| Moving & Storage |
| Property & Casualty Insurance (a) |
| Life Insurance (a) |
|
| (Unaudited) | ||||
|
| (In thousands) | ||||
Cash and cash equivalents | $ | 2,068,790 | $ | 44,272 | $ | 32,069 |
Other financial assets |
| 314,005 |
| 436,100 |
| 2,722,737 |
Debt obligations (b) |
| 6,436,800 |
| – |
| – |
|
|
|
|
|
|
|
(a) As of June 30, 2023 |
|
|
|
|
|
|
(b) Excludes ($35,901) of debt issuance costs |
|
|
|
|
|
|
As of September 30, 2022,2023, Moving and Storage had additional cash available under existing credit facilities of $150.0$486.1 million. The majority of invested cash at the Moving and Storage segment is held in government money market funds.
Net cash provided by operating activities decreased $331.0$250.7 million in the first six months of fiscal 20232024 compared with the first six months of fiscal 2022. The decrease was primarily2023 due to reduced net earningsa decrease in operating profits combined with an increase in claim payments at Moving and the payment of $42.0 million in federal income tax in fiscal 2023 compared with the receipt of $243 million of federal income tax refunds in fiscal 2022.Storage.
Net cash used in investing activities increased $92.5decreased $18.5 million in the first six months of fiscal 2023,2024, compared with the first six months of fiscal 2022.2023. Purchases of property, plant and equipment increased $295.8$328.9 million, with fleet spending accounting for $256.2 million and real estate $49.0 million. Reinvestment in the rental fleet was less than our projection due to delays in receiving new equipment from our original equipment manufacturers during the first six months of fiscal 2023; however, the level of reinvestment in the rental fleet has increased in comparison to the first six months of fiscal 2022. Cash from the sales of property, plant and equipment increased $22.7$78.7 million largely due to fleet sales. For our insurance subsidiaries, net cash usedprovided in investing activities decreased $168.6increased $150.1 million due to a decrease in purchases in fixed maturity investments.investments and net cash provided by investing activities for Moving and Storage increased $127.7 million on short-term Treasury notes.
69
Net cash provided by financing activities decreased $442.8$57.7 million in the first six months of fiscal 2023,2024, as compared with the first six months of fiscal 2022.2023. This was due to a combination of increaseddecreased debt payments of $213.9$89.1 million, decreased finance lease repayments of $21.7$6.1 million, a decrease in cash from borrowings of $194.4$87.7 million, and a decrease in dividend payments of $5.5 million and an increase in net annuity depositswithdrawals from Life Insurance of $54.3$70.7 million.
Liquidity and Capital Resources and Requirements of Our Operating Segments
Moving and Storage
To meet the needs of our customers, U-Haul maintains a large fleet of rental equipment. Capital expenditures have primarily consisted of new rental equipment acquisitions and the buyouts of existing fleet from leases. The capital to fund these expenditures has historically been obtained internally from operations and the sale of used equipment and externally from debt and lease financing. U-Haul estimates that during fiscal 2023,2024, the Company will reinvest in its rental equipment fleet approximately $760$870 million, net of equipment sales and excluding any lease buyouts. Through the first six months of fiscal 2023,2024, the Company invested, net of sales, approximately $393$569 million before any lease buyouts in its rental equipment fleet. Fleet investments in fiscal 20232024 and beyond will be dependent upon several factors including the availability of capital, the truck rental environment, the availability of equipment from our original equipment manufacturers and the used-truck sales market. We anticipate that the fiscal 20232024 investments will be funded largely through debt financing, external lease financing and cash from operations. Management considers several factors including cost and tax consequences when selecting a method to fund capital expenditures. Our allocation between debt and lease financing can change from year to year based upon financial market conditions which may alter the cost or availability of financing options.
56
The Company has traditionally financedfunded the acquisition of self-storage properties to support U-Haul's growth through debt financing and funds from operations. The Company’s plan for the expansion of owned storage properties includes the acquisition of existing self-storage locations from third parties, the acquisition and development of bare land, and the acquisition and redevelopment of existing buildings not currently used for self-storage. For the first six months of fiscal 2023,2024, the Company invested $584$633 million in real estate acquisitions, new construction and renovation and repair. For fiscal 2023,2024, the timing of new projects will be dependent upon several factors, including the entitlement process, availability of capital, weather, and the identification and successful acquisition of target properties.properties and the availability of labor and materials.We are likely to maintain a high level of real estate capital expenditures in fiscal 2024. U-Haul's growth plan in self-storage also includes the expansion of the U-Haul Storage Affiliate program, which does not require significant capital.
Net capital expenditures (purchases of property, plant and equipment less proceeds from the sale of property, plant and equipment and lease proceeds) at Moving and Storage were $1,005.9$1,256.1 million and $732.7$1,005.9 million for the first six months of fiscal 20232024 and 2022,2023, respectively. The components of our net capital expenditures are provided in the following table:
|
| Six Months Ended September 30 | ||
|
| 2022 |
| 2021 |
|
| (Unaudited) | ||
|
| (In thousands) | ||
Purchases of rental equipment | $ | 718,231 | $ | 564,331 |
Purchases of real estate, construction and renovations |
| 583,889 |
| 444,334 |
Other capital expenditures |
| 33,408 |
| 31,023 |
Gross capital expenditures |
| 1,335,528 |
| 1,039,688 |
Less: Sales of property, plant and equipment |
| (329,611) |
| (306,946) |
Net capital expenditures | $ | 1,005,917 | $ | 732,742 |
|
| Six Months Ended September 30 | ||
|
| 2023 |
| 2022 |
|
| (Unaudited) | ||
|
| (In thousands) | ||
Purchases of rental equipment | $ | 974,436 | $ | 718,231 |
Purchases of real estate, construction and renovations |
| 632,902 |
| 583,889 |
Other capital expenditures |
| 57,049 |
| 33,408 |
Gross capital expenditures |
| 1,664,387 |
| 1,335,528 |
Less: Sales of property, plant and equipment |
| (408,279) |
| (329,611) |
Net capital expenditures | $ | 1,256,108 | $ | 1,005,917 |
Moving and Storage continues to hold significant cash and we believe has access to additional liquidity. Management may invest these funds in our existing operations, expand our product lines or pursue external opportunities in the self-moving and storage marketplace, pay dividends, repurchase shares of common stock or reduce existing indebtedness where possible.
70
Property and Casualty Insurance
State insurance regulations restrict the amount of dividends that can be paid to stockholders of insurance companies. As a result, Property and Casualty Insurance’s assets are generally not available to satisfy the claims of AMERCOU-Haul Holding Company or its legal subsidiaries. We believe that stockholders’ equity at Property and Casualty Insurance remains sufficient, and we do not believe that its ability to pay ordinary dividends to AMERCOU-Haul Holding Company will be restricted per state regulations.
Property and Casualty Insurance’s stockholder’s equity was $282.8$317.5 million and $296.1$294.5 million as of June 30, 20222023 and December 31, 2021,2022, respectively. The decreaseincrease resulted from net earnings of $11.1$21.7 million and a decreasean increase in other comprehensive income of $24.4$1.2 million due to the decrease in the market value of its investment portfolio. Property and Casualty Insurance does not use debt or equity issues to increase capital and therefore has no direct exposure to capital market conditions other than through its investment portfolio.
Life Insurance
Life Insurance manages its financial assets to meet policyholder and other obligations, including investment contract withdrawals and deposits. Life Insurance’s net depositswithdrawals as of June 30, 20222023 were $29.1$41.6 million. State insurance regulations restrict the amount of dividends that can be paid to stockholders of insurance companies. As a result, Life Insurance’s assets are generally not available to satisfy the claims of AMERCOU-Haul Holding Company or its legal subsidiaries.
57
Life Insurance’s stockholder’s equity was $219.5$145.0 million and $440.9$132.2 million as of June 30, 20222023 and December 31, 2021,2022, respectively. The decreaseincrease resulted from net earnings of $2.6$5.3 million and a decreasean increase in other comprehensive income of $224.0$7.5 million primarily due to the effect of interest rate changes on the fixed maturity portion of the investment portfolio. Outside of its membership in the Federal Home Loan Bank (“FHLB”) system, Life Insurance has not historically used debt or equity issues to increase capital and therefore has not had any significant direct exposure to capital market conditions other than through its investment portfolio. As of June 30, 2022,2023, Oxford had outstanding deposits of $60.0million in the FHLB.For a more detailed discussionFHLB with an availability of this deposit, please see Note 3, Borrowings,$76.7 million, for which Oxford pays fixed interest rates between 0.49% and 4.30% with maturities between March 30, 2024 and September 30, 2027. As of June 30, 2023, available-for-sale-investments held with the NotesFHLB totaled $93.9 million, of which $62.8 million were pledged as collateral to Condensed Consolidated Financial Statements.secure the outstanding advances. The balances of these advances are included within liabilities from investment contracts on the consolidated balance sheets.
Cash Provided from Operating Activities by Operating Segments
Moving and Storage
Net cash provided from operating activities were $1,129.9$887.3 million and $1,472.3$1,129.9 million for the first six months of fiscal 2024 and 2023, and 2022, respectively. The decrease was primarilyrespectively, due to reduced net earnings and the payment of $42.0 milliona decrease in federal income taxoperating profits combined with an increase in fiscal 2023 compared with the receipt of $243 million of federal income tax refunds in fiscal 2022.claim payments.
Property and Casualty Insurance
Net cash provided by operating activities were $16.2$18.1 million and $13.9$16.2 million for the first six months ended June 30, 20222023 and 2021,2022, respectively. The increase was the result of changes in intercompany balances anddue to the timing of payables activity.activity within the normal course of business.
Property and Casualty Insurance’s cash and cash equivalents and short-term investment portfolios amounted to $44.7$44.3 million and $41.7$27.2 million atas of June 30, 20222023 and December 31, 2021,2022, respectively. These balances reflect funds in transition from maturity proceeds to long termlong-term investments. Management believes this level of liquid assets, combined with budgeted cash flow, is adequate to meet foreseeable cash needs. Capital and operating budgets allow Property and Casualty Insurance to schedule cash needs in accordance with investment and underwriting proceeds.
Life Insurance
Net cash provided by operating activities were $42.1$32.1 million and $32.9$42.1 million for the first six months ended June 30, 20222023 and 2021,2022, respectively. The increasedecrease in operating cash flows was primarily due to timing of settlement of receivables for securities. This was offset by the decrease in premiums net of benefits and commissions.
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In addition to cash flows from operating activities and financing activities, a substantial amount of liquid funds are available through Life Insurance’s short-term portfolio and its membership in the FHLB. As of June 30, 20222023 and December 31, 2021,2022, cash and cash equivalents and short-term investments amounted to $28.5$32.1 million and $50.1$15.0 million, respectively. Management believes that the overall sources of liquidity are adequate to meet foreseeable cash needs.
Liquidity and Capital Resources - Summary
We believe we have the financial resources needed to meet our business plans, including our working capital needs. We continue to hold significant cash and have access to existing credit facilities and additional liquidity to meet our anticipated capital expenditure requirements for investment in our rental fleet, rental equipment and storage acquisitions and build outs.
As a result of the federal income tax provisions of the Coronavirus Aid, Relief and Economic Security Act, we have filed applicable forms with the Internal Revenue Service to carryback net operating losses. These refund claims total approximately $366 million, of which we have received approximately $243 million and arewith the remaining amount reflected in Prepaidprepaid expense. These amounts are expected to provide us additional liquidity whenever received. It is possible future legislation could negatively impact our ability to receive these tax refunds.
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Our borrowing strategy has primarily focused on asset-backed financing, rental equipment leases and private placement borrowings limited by the amount of unencumbered assets available. As part of this strategy, we seek to ladder maturities and fix interest rates. While each of these loans typically contains provisions governing the amount that can be borrowed in relation to specific assets, the overall structure is flexible with no limits on overall Company borrowings. Management believes it has adequate liquidity between cash and cash equivalents and unused borrowing capacity in existing credit facilities to meet the current and expected needs of the Company over the next several years. As of September 30, 2022,2023, we had available borrowing capacity under existing credit facilities of $150.0$486.1 million. Effective in October 2022, we have increased borrowing capacity under existing credit facilities to $465.0 million. ItWhile it is possible that circumstances beyond our control could alter the ability of the financial institutions to lend us the unused lines of credit. Wecredit, we believe that there are additional opportunities for leverage in our existing capital structure. For a more detailed discussion of our long term debt and borrowing capacity, please see Note 3, Borrowings,4, Notes, Loans and Finance Lease Payable, net, of the Notes to Condensed Consolidated Financial Statements.
Disclosures about Contractual Obligations and Commercial Commitments
Our estimates as to future contractual obligations have not materially changed from the disclosure included under the subheading Disclosures about Contractual Obligations and Commercial Commitments in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the fiscal year ended March 31, 2022.2023.
Fiscal 20232024 Outlook
We will continue to focus our attention on increasing transaction volume and improving pricing, product and utilization for self-moving equipment rentals. Maintaining an adequate level of new investment in our truck fleet is an important component of our plan to meet our operational goals and is likely to increase in fiscal 2023.2024. Revenue in the U-Move®program could be adversely impacted should we fail to execute in any of these areas. Should we be unable to acquire enough new rental equipment to properly rotate our fleet, repair and maintenance costs will continue to increase. Even if we execute our plans, we could see declines in revenues primarily due to unforeseen events including adverse economic conditions or heightened competition that is beyond our control.
With respect to our storage business, we have added new locations and expanded existing locations. In fiscal 2023,2024, we are actively looking to complete current projects, increase occupancy in our existing portfolio of locations and acquire new locations. New projects and acquisitions will be considered and pursued if they fit our long-term plans and meet our financial objectives. It is likely spending on acquisitions and new development will increase in fiscal 2023.2024. We will continue to invest capital and resources in the U-Box®program throughout fiscal 2023.2024.
Inflationary pressures may challenge our ability to maintain or improve upon our operating margin.
Property and Casualty Insurance will continue to provide loss adjusting and claims handling for U-Haul and underwrite components of the Safemove®, Safetow®, Safemove Plus®, Safestor®and Safestor Mobile®protection packages to U-Haul customers.
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Life Insurance is pursuing its goal of expanding its presence in the senior market through the sales of its Medicare supplement, life and annuity policies. This strategy includes growing its agency force, expanding its new product offerings, and pursuing business acquisition opportunities.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to financial market risks, including changes in interest rates and currency exchange rates. To mitigate these risks, we may utilize derivative financial instruments, among other strategies. We do not use derivative financial instruments for speculative purposes.
Interest Rate Risk
The exposure to market risk for changes in interest rates relates primarily to our variable rate debt obligations and one variable rate operating lease. We have used interest rate swap agreements and forward swaps to reduce our exposure to changes in interest rates. We enter into these arrangements with counterparties that are significant financial institutions with whom we generally have other financial arrangements. We are exposed to credit risk should these counterparties not be able to perform on their obligations. Following is a summary of our interest rate swap agreements as of September 30, 2022:2023:
| Notional Amount |
|
| Fair Value |
| Effective Date |
| Expiration Date |
| Fixed Rate |
| Floating Rate |
| (Unaudited) |
|
|
|
|
|
|
|
| |||
| (In thousands) |
|
|
|
|
|
|
|
| |||
$ | 61,587 |
| $ | 2,957 |
| 7/15/2022 |
| 7/15/2032 |
| 2.86% |
| 1 Month SOFR |
| 74,750 |
|
| 2,806 |
| 8/1/2022 |
| 8/1/2026 |
| 2.72% |
| 1 Month SOFR |
| 74,250 |
|
| 2,745 |
| 8/1/2022 |
| 8/31/2026 |
| 2.75% |
| 1 Month SOFR |
| Notional Amount |
|
| Fair Value |
| Effective Date |
| Expiration Date |
| Fixed Rate |
| Floating Rate |
| (Unaudited) |
|
|
|
|
|
|
|
| |||
| (In thousands) |
|
|
|
|
|
|
|
| |||
$ | 59,107 |
| $ | 5,083 |
| 7/15/2022 |
| 7/15/2032 |
| 2.86% |
| 1 Month SOFR |
| 71,750 |
|
| 3,468 |
| 8/1/2022 |
| 8/1/2026 |
| 2.72% |
| 1 Month SOFR |
| 71,250 |
|
| 3,399 |
| 8/1/2022 |
| 8/31/2026 |
| 2.75% |
| 1 Month SOFR |
| 100,000 |
|
| 378 |
| 8/31/2023 |
| 8/31/2025 |
| 4.71% |
| 1 Month SOFR |
As of September 30, 2022,2023, we had $975.6$707.1 million of variable rate debt obligations. obligations, of this amount, $405.0 million is not fixed through interest rate swaps.If SOFRSecured Overnight Funding Rate (“SOFR”) were to increase 100 basis points, the increase in interest expense on the variable rate debt would decrease future earnings and cash flows by $7.7$4.9 million annually (after consideration of the effect of the above derivative contracts). Certain senior mortgages have an anticipated repayment date and a maturity date. If these senior mortgages are not repaid by the anticipated repayment date the interest rate on these mortgages would increase from the current fixed rate. We are using the anticipated repayment date for our maturity schedule.
Additionally, our insurance subsidiaries’ fixed income investment portfolios expose us to interest rate risk. This interest rate risk is the price sensitivity of a fixed income security to changes in interest rates. As part of our insurance companies’ asset and liability management, actuaries estimate the cash flow patterns of our existing liabilities to determine their duration. These outcomes are compared to the characteristics of the assets that are currently supporting these liabilities assisting management in determining an asset allocation strategy for future investments that management believes will mitigate the overall effect of interest rates.
We use derivatives to hedge our equity market exposure to indexed annuity products sold by our Life Insurance company. These contracts earn a return for the contractholdercontract holder based on the change in the value of the S&P 500 index between annual index point dates. We buy and sell listed equity and index call options and call option spreads. The credit risk is with the party in which the options are written. The net option price is paid up front and there are no additional cash requirements or additional contingent liabilities. These contracts are held at fair market value on our balance sheet. AtAs of June 30, 20222023 and December 31, 2021,2022, these derivative hedges had a net market value of $1.7$10.5 million and $7.5$4.3 million, with notional amounts of $502.5$509.5 million and $416.7$465.7 million, respectively. These derivative instruments are included in Investments, other, on the condensed consolidated balance sheets.
Although the call options are employed to be effective hedges against our policyholder obligations from an economic standpoint, they do not meet the requirements for hedge accounting under GAAP. Accordingly, the call options are marked to fair value on each reporting date with the change in fair value, plus or minus, included as a component of net investment and interest income. The change in fair value of the call options includes the gains or losses recognized at the expiration of the option term and the changes in fair value for open contracts.
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Foreign Currency Exchange Rate Risk
The exposure to market risk for changes in foreign currency exchange rates relates primarily to our Canadian business. Approximately 5.5%5.3% and 5.2%5.5% of our revenue was generated in Canada during the first six months of fiscal 20232024 and 2022,2023, respectively. The result of a 10.0%10% change in the value of the U.S. dollar relative to the Canadian dollar would not be material to net income. We typically do not hedge any foreign currency risk since the exposure is not considered material.
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Cautionary Statements Regarding Forward-Looking Statements
This Quarterly Report contains “forward-looking statements” regarding future events and our future results of operations. We may make additional written or oral forward-looking statements from time to time in filings with the SEC or otherwise. We believe such forward-looking statements are within the meaning of the safe-harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such statements may include, but are not limited to, the risk associated with COVID-19 or similar events on employeessystem members or customers,customers; the impact onof the economic environment oron demand offor our products and the cost and availability of debt and capital,capital; estimates of capital expenditures,expenditures; plans for future operations, products or services, financing needs, plans and strategies,strategies; our perceptions of our legal positions and anticipated outcomes of government investigations and pending litigation against us,us; liquidity and the availability of financial resources to meet our needs, goals and strategies,strategies; plans for new business, storage occupancy, growth rate assumptions, pricing, costs, and access to capital and leasing markets,markets; the impact of our compliance with environmental laws and cleanup costs,costs; our beliefs regarding our sustainable practices,sustainability practices; our used vehicle disposition strategy,strategy; the sources and availability of funds for our rental equipment and self-storage expansion and replacement strategies and plans,plans; our plan to expand our U-Haul® storage affiliate program,program; that additional leverage can be supported by our operations and business,business; the availability of alternative vehicle manufacturers,manufacturers; the availability and economics of electric vehicles for our rental fleet; our estimates of the residual values of our equipment fleet,fleet; our plans with respect to off-balance sheet arrangements,arrangements; our plans to continue to invest in the U-Box®program, program; the impact of interest rate and foreign currency exchange rate changes on our operations,operations; the sufficiency of our capital resources,resources; the sufficiency of capital of our insurance subsidiaries,subsidiaries; inflationary pressures that may challenge our ability to maintain or improve upon our operating margin,margin; and expectations regarding the potential impact to our information technology infrastructure and on our financial performance and business operations of technology, cybersecurity or data security breaches, including any related costs, fines or lawsuits, and our ability to continue ongoing operations and safeguard the integrity of our information technology infrastructure, data, and employee, customer and vendor information, as well as assumptions relating to the foregoing. The words “believe,” “expect,” “anticipate,” “plan,” “may,” “will,” “could,” “estimate,” “project” and similar expressions identify forward-looking statements, which speak only as of the date the statement was made.
Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Factors that could significantly affect results include, without limitation, the degree and nature of our competition; our leverage; general economic conditions; fluctuations in our costs to maintain and update our fleet and facilities; the limited number of manufacturers that supply our rental trucks; our ability to effectively hedge our variable interest rate debt; that we are controlled by a small contingent of stockholders; fluctuations in quarterly results and seasonality; changes in, and our compliance with, government regulations, particularly environmental regulations and regulations relating to motor carrier operations; outcomes of litigation; our reliance on our third party dealer network; liability claims relating to our rental vehicles and equipment; our ability to attract, motivate and retain key employees; reliance on our automated systems and the internet; our credit ratings; our ability to recover under reinsurance arrangements and other factors described in our Annual Report on Form 10-K in Item 1A, Risk Factors, and in this Quarterly Report or the other documents we file with the SEC. The above factors, as well as other statements in this Quarterly Report and in the Notes to Condensed Consolidated Financial Statements, could contribute to or cause such risks or uncertainties, or could cause our stock price to fluctuate dramatically. Consequently, the forward-looking statements should not be regarded as representations or warranties by us that such matters will be realized. We assume no obligation to update or revise any of the forward-looking statements, whether in response to new information, unforeseen events, changed circumstances or otherwise, except as required by law.
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Item 4. Controls and Procedures
Attached as exhibits to this Quarterly Report are certifications of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), which are required in accordance with Rule 13a-14 of the Exchange Act. This "Controls and Procedures" section includes information concerning the controls and procedures evaluation referred to in the certifications and it should be read in conjunction with the certifications for a more complete understanding of the topics presented in the section titled Evaluation of Disclosure Controls and Procedures.
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Evaluation of Disclosure Controls and Procedures
Our management, with the participation of the CEO and CFO, conducted an evaluation of the effectiveness of the design and operation of our "disclosuredisclosure controls and procedures"procedures (as such term is defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)) (“Disclosure Controls”) as of the end of the most recently completed fiscal quarter covered by this Quarterly Report. Our Disclosure Controls are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act, such as this Quarterly Report, is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Our Disclosure Controls are also designed to ensure that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.September 30, 2023. Based upon the controlsthat evaluation, our CEO and CFO have concluded that as of September 30, 2023, our disclosure controls and procedures were not effective due to the endmaterial weakness in internal control over financial reporting described below.
Previously Disclosed Material Weaknesses and Remediation Plan
Two-Class Method of Earnings per Share. As previously disclosed in Part II, Item 9A of our Annual Report on Form 10-K for the period covered by this Quarterly Report, our Disclosure Controls were effective atfiscal year ended March 31, 2023, we implemented a reasonable assurance levelplan to address the material weakness related to the above stated design purposes.accounting for the two-class method of earnings per share associated with the recently issued UHAL.B common stock, including:
Inherent Limitations on
These actions were completed in advance of our year end close process as of March 31, 2023, and the redesigned control operated as planned as part of our March 31, 2023, year-end close process.
In conjunction with our interim period close process as of June 30, 2023, the redesigned control again operated as designed. Therefore, based upon our testing of the redesigned control over these instances, we have concluded that the material weakness related to the calculation of earnings per share using the two-class method associated with the recently issued UHAL.B common stock, has been remediated.
General Information Technology Controls. As previously disclosed in Part II, Item 9A of our Annual Report on Form 10-K for the fiscal year ended March 31, 2023, we determined a material weakness existed as management did not fully design, implement and monitor general information technology controls in the areas of program change management, user access, segregation of duties, and cyber security for systems supporting substantially all of the Company’s internal control processes. A substantial portion of the Company’s controls are dependent upon the information derived from the information technology systems and therefore the dependent controls were concluded to be ineffective. Our management, includingunder the oversight of our CEOAudit Committee, has begun evaluating and CFO, does not expectimplementing new controls or redesigning controls to remediate the control deficiencies giving rise to this material weakness. These remediations measures have included:
We are committed to maintaining a strong internal control environment, and believe that these remediation actions represent significant improvements in our Disclosure Controls orcontrols under the Internal Control – Integrated Framework Issued by the Committee of Sponsoring Organizations of the Treadway Commission. As we continue to evaluate and work to improve our internal control over financial reporting, additional remediation measures may be required, which may require additional implementation time, or we may modify certain of our remediation measures. The material weakness related to the general information technology controls will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, becauseremediated, until the applicable controls operate for a sufficient
75
period of the inherent limitations in all control systems, no evaluation oftime and management has concluded, through testing, that these controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of our controls to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.operating effectively.
Changes in Internal Control Over Financial Reporting
There
Other than the material weakness described above, there have not been any changes in our internal control over financial reporting as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f) during the most recently completed fiscal quarter ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II Other information
Item 1. Legal Proceedings
The information regarding our legal proceedings in Note 8,9, Contingencies, of the Notes to Condensed Consolidated Financial Statements is incorporated by reference herein.
Item 1A. Risk Factors
We refer youThe following discussion of potential risks under the caption ‘We are highly dependent upon our automated systems and the Internet for managing our business’ contains material updates to documents filed by us with the SEC, specifically “Item 1A. Risk Factors” of our most recent annual reportrisk factor described under the same heading in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2022, which identify important2023.Other than the following updated risk factors that could materially affect our business, financial condition and future results. We also refer you to the factors and cautionary language set forth in the section entitled “Cautionary Statements Regarding Forward-Looking Statements” in our MD&A of this quarterly report on Form 10-Q. MD&A and the consolidated financial statements and related notes should be read in conjunction with such risks and other factors for a full understanding of our operations and financial conditions. The risks described in our Form 10-K and hereinfactor, we are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
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Below we set forthaware of any material updates to the risk factors containeddescribed in “Item 1A. Risk Factors” of our most recently filed Form 10-K:
The trading price for our outstanding Common Stock may continue to be volatile and the trading price for our newly distributed Series N Non-Voting Common Stock may also be volatile.
An Independent Special Committee of the Board of Directors authorized the creation of a new Series of Common Stock, designated as Series N Non-Voting Common Stock, par value of $0.001 per share (the “Non-Voting Common Stock”). This series of stock is in addition to our outstanding common stock, $0.25 par value (the “Voting Common Stock”). On November 9, 2022, each holder of our Voting Common Stock as of November 3, 2022 received nine shares of Non-Voting Common Stock for every outstanding share of Voting Common Stock through a stock dividend. The stock dividend is intended to have the same general effects as a 10-for-1 stock split. that Annual Report.
We expect thatare highly dependent upon our automated systems and the market priceInternet for the shares ofmanaging our Voting Common Stock will generally reflect the effect of a stock split once the dividend is distributed.Although we plan to list the Non-Voting Common Stock on the NASDAQ Global Select Market, we cannot predict whether, or to what extent, a liquid trading market will develop for the Non-Voting Common Stock. If a liquid trading market does not develop or if the Non-Voting Common Stock is not attractive to retail investors, including team members and customers of the Company, we may not achieve our objectives in creating this new class.business.
The trading priceOur information systems are largely Internet-based, including our point-of-sale reservation system, payment processing and telephone systems. While our reliance on this technology lowers our cost of providing service and expands our stock has at times experienced substantial price volatility and may continueabilities to be volatile, including as a result of the distribution of shares of Non-Voting Common Stock. The market prices of our two series of stock and the allocation of value between the two may be volatile and their respective values may decline. The trading price of our Voting Common Stock and Non-Voting Common Stock may fluctuate widely in responsebetter serve customers, it exposes us to various factors, somerisks, including natural and man-made disasters, terrorist attacks and cyber-attacks. We have put into place extensive security protocols, backup systems and alternative procedures to mitigate these risks. However, disruptions or breaches, detected or undetected by us, for any period of which are beyond our control. These factors include, among others:
•Quarterly variationstime in any portion of these systems could adversely affect our results of operations or thoseand financial condition and inflict reputational damage.
In addition, the provision of service to our customers and the operation of our competitors.
•Announcementsnetworks and systems involve the storage and transmission of proprietary information and sensitive or confidential data, including personal information of customers, system members and others. Our information technology systems may be susceptible to computer viruses, attacks by uscomputer hackers, malicious insiders or our competitorscatastrophic events. Hackers, acting individually or in coordinated groups, may also launch distributed denial of acquisitions, new products, significant contracts, commercial relationships,service attacks or capital commitments.
•Recommendations by securities analystsransom or changesother coordinated attacks that may cause service outages or other interruptions in earnings estimates.
•Announcements about our earnings that are not in line with analyst expectations.
•Announcements by our competitors of their earnings that are not in line with analyst expectations.
•Commentary by industry and market professionals about our products, strategies, and other matters affecting our business and results, regardlessaccess to our data. In addition, breaches in security could expose us, our customers, or the individuals affected, to a risk of its accuracy.loss or misuse of proprietary information and sensitive or confidential data.
•In 2022 and 2021, we experienced a cybersecurity incident, which is described in this Form 10-Q under the heading “Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operation – Cybersecurity Incident”. We have also experienced and continue to experience a significant increase in the number of attempted attacks on our technology systems, which could increase the likelihood that any of the risks described in this risk factor may be realized.The volume of shares of Voting Common Stocktechniques used to obtain unauthorized access, disable or degrade service or sabotage systems change frequently, may be difficult to detect for a long time and Non-Voting Common Stock available for public sale.often are not recognized until launched against a target. As a result, we may be unable to anticipate these techniques or to implement adequate preventative or remedial measures.
Any of these occurrences could result in disruptions in our operations, the loss of existing or potential customers, damage to our brand and reputation, and litigation and potential liability for the Company. In addition, the cost and operational consequences of implementing further data or system protection measures could be significant, and our efforts to deter, identify, mitigate and/or eliminate any security breaches may not be successful.
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Sales of Voting Common Stock and Non-Voting Common Stock by us or by our stockholders (including sales by our directors, executive officers, and other employees).
•Short sales, hedging, and other derivative transactions on shares of our Voting Common Stock and Non-Voting Common Stock.
•The perceived values of Voting Common Stock and Non-Voting Common Stock relative to one another.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Not applicable.During the quarter ended September 30, 2023, none of our directors or officers adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement”, as those terms are defined in Item 408 of Regulation S-K.
Item 6. Exhibits
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The following documents are filed as part of this report:
Exhibit Number | Description | Page or Method of Filing |
Amended and Restated Articles of Incorporation of | Incorporated by reference to
| |
| Incorporated by reference to
| |
| Incorporated by reference to | |
Articles of Conversion/Exchange/Merger | Incorporated by reference to | |
|
| |
|
| |
|
| |
31.1 | Rule 13a-14(a)/15d-14(a) Certificate of Edward J. Shoen, President and Chairman of the Board of
| Filed herewith |
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31.2 | Rule 13a-14(a)/15d-14(a) Certificate of Jason A. Berg, Chief Financial Officer of
| Filed herewith |
32.1 | Certificate of Edward J. Shoen, President and Chairman of the Board of
| Furnished herewith |
32.2 | Certificate of Jason A. Berg, Chief Financial Officer of
| Furnished herewith |
101.INS | Inline XBRL Instance Document
| Filed herewith |
101.SCH | Inline XBRL Taxonomy Extension Schema
| Filed herewith |
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101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase
| Filed herewith |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase
| Filed herewith |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase
| Filed herewith |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase
| Filed herewith |
104 | Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit 101) | Filed herewith |
|
|
|
6578
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.
AMERCOU-Haul Holding Company
Date: November |
| /s/ Edward J. Shoen |
|
|
Edward J. Shoen |
|
| President and Chairman of the Board |
|
| (Principal Executive Officer) |
|
|
|
|
|
|
|
|
|
Date: November |
| /s/ Jason A. Berg |
|
|
Jason A. Berg |
|
| Chief Financial Officer |
|
| (Principal Financial Officer) |
|
|
|
|
|
|
|
|
|
Date: November |
| /s/ Maria L. Bell |
|
|
Maria L. Bell |
|
| Chief Accounting Officer |
|
| (Principal Accounting Officer) |
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