1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from __________________ to __________________
Commission Registrant, State of Incorporation I.R.S. Employer
File Number Address and Telephone Number Identification No.
________________________________________________________________________________
1-11255 AMERCO 88-0106815
(A Nevada Corporation)
1325 Airmotive Way, Ste. 100
Reno, Nevada 89502-3239
Telephone (775) 688-6300
2-38498 U-Haul International, Inc. 86-0663060
(A Nevada Corporation)
2727 N. Central Avenue
Phoenix, Arizona 85004
Telephone (602) 263-6645
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ].
21,520,437 shares of AMERCO Common Stock, $0.25 par value were outstanding at
November 8, 2001.
5,385 shares of U-Haul International, Inc. Common Stock, $0.01 par value, were
outstanding at November 8, 2001. U-Haul International, Inc. meets the
conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is
therefore filing this form with the reduced disclosure format.
2
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
a) Condensed Consolidated Balance Sheets as of September 30, 2001
(unaudited) and March 31, 2001................................ 4
b) Condensed Consolidated Statements of Earnings for the Six
months ended September 30, 2001 and 2000 (unaudited).......... 6
c) Condensed Consolidated Statements of Comprehensive Income for
the Six months ended September 30, 2001 and 2000 (unaudited).. 7
d) Condensed Consolidated Statements of Earnings for the Quarters
ended September 30, 2001 and 2000 (unaudited)................. 8
e) Condensed Consolidated Statements of Comprehensive Income for
the Quarters ended September 30, 2001 and 2000 (unaudited).... 9
f) Condensed Consolidated Statements of Cash Flows for the Six
months ended September 30, 2001 and 2000 (unaudited).......... 10
g) Notes to Condensed Consolidated Financial Statements -
September 30, 2001 (unaudited), March 31, 2001 and
September 30, 2000 (unaudited)................................ 11
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations......................................... 22
Item 3. Quantitative and Qualitative Disclosures About Market Risk........ 30
PART II. OTHER INFORMATION
Item 1. Legal Proceedings................................................. 31
Item 4. Submission of Matters to a Vote of Security Holders............... 32
Item 6. Exhibits and Reports on Form 8-K.................................. 33
3
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INTENTIONALLY BLANK
4
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERCO AND CONSOLIDATED SUBSIDIARIES
Condensed Consolidated Balance Sheets
September 30, March 31,
Assets 2001 2001
-------------------------
(Unaudited)
(in thousands)
Cash and cash equivalents $ 33,243 52,778
Inventories, net 80,319 84,005
Investments, fixed maturities 974,405 952,482
Investments, other 420,923 464,958
Other assets 494,636 467,197
------------------------
Property, plant and equipment, at cost:
Buildings and improvements 888,397 832,372
Rental trucks 1,075,263 1,037,653
Other property, plant, and equipment 669,120 660,802
------------------------
2,632,780 2,530,827
Less accumulated depreciation 1,208,013 1,168,183
------------------------
Total property, plant and equipment 1,424,767 1,362,644
------------------------
Total Assets $ 3,428,293 3,384,064
========================
The accompanying notes are an integral part of these consolidated financial
statements.
5
September 30, March 31,
Liabilities and Stockholders' Equity 2001 2001
-------------------------
(Unaudited)
(in thousands)
Liabilities:
Notes and loans payable $ 1,095,574 1,156,848
Policy benefits and losses, claims and
loss expenses payable 686,705 668,830
Liabilities from premium deposits 532,993 522,207
Cash overdraft 35,762 26,484
Deferred income 15,631 24,546
Deferred income taxes 189,859 139,419
Other liabilities 200,791 230,364
------------------------
Total liabilities 2,757,315 2,768,698
Stockholders' equity:
Serial preferred stock -
Series A preferred stock - -
Series B preferred stock - -
Serial common stock -
Series A common stock 1,441 1,441
Common stock 9,122 9,122
Additional paid-in capital 312,347 312,128
Accumulated other comprehensive income (39,704) (40,709)
Retained earnings 815,383 755,174
Cost of common shares in treasury, net (412,692) (406,617)
Unearned ESOP shares (14,919) (15,173)
------------------------
Total stockholders' equity 670,978 615,366
Contingent liabilities and commitments
------------------------
Total Liabilities and Stockholders' Equity $ 3,428,293 3,384,064
========================
The accompanying notes are an integral part of these consolidated financial
statements.
6
AMERCO AND CONSOLIDATED SUBSIDIARIES
Condensed Consolidated Statements of Earnings
Six months ended September 30,
(Unaudited)
2001 2000
-------------------------
(in thousands, except
share and per share data)
Revenues
Rental revenue $ 700,981 680,283
Net sales 118,272 113,961
Premiums 202,880 121,495
Net investment and interest income 46,959 46,604
----------------------
Total revenues 1,069,092 962,343
Costs and expenses
Operating expenses 526,723 486,839
Cost of sales 65,166 65,974
Benefits and losses 180,773 95,815
Amortization of deferred policy
acquisition costs 20,933 16,558
Lease expense 90,225 86,536
Depreciation, net 40,831 44,485
----------------------
Total costs and expenses 924,651 796,207
Earnings from operations 144,441 166,136
Interest expense 40,856 44,052
----------------------
Pretax earnings 103,585 122,084
Income tax expense (36,896) (43,239)
----------------------
Net earnings $ 66,689 78,845
======================
Basic and diluted earnings per common share: $ 2.84 3.35
======================
Basic and diluted average common shares
outstanding: 21,192,166 21,606,388
======================
The accompanying notes are an integral part of these consolidated financial
statements.
7
AMERCO AND CONSOLIDATED SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income
Six months ended September 30,
(Unaudited)
2001 2000
-------------------
(in thousands)
Comprehensive income:
Net earnings $ 66,689 78,845
Changes in other comprehensive income:
Foreign currency translation (3,120) (3,585)
Fair market value of cash flow hedge (290) (182)
Unrealized gain (loss) on investments 4,415 (4,041)
-------------------
Total comprehensive income $ 67,694 71,037
===================
The accompanying notes are an integral part of these consolidated financial
statements.
8
AMERCO AND CONSOLIDATED SUBSIDIARIES
Condensed Consolidated Statements of Earnings
Quarters ended September 30,
(Unaudited)
2001 2000
---------------------------
(in thousands, except
share and per share data)
Revenues
Rental revenue $ 366,438 357,535
Net sales 55,849 53,815
Premiums 102,550 66,508
Net investment and interest income 24,373 25,048
-----------------------
Total revenues 549,210 502,906
Costs and expenses
Operating expense 277,756 255,189
Cost of sales 31,398 32,777
Benefits and losses 89,341 53,580
Amortization of deferred policy
acquisition costs 11,139 8,689
Lease expense 43,883 46,102
Depreciation, net 10,581 21,675
-----------------------
Total costs and expenses 464,098 418,012
Earnings from operations 85,112 84,894
Interest expense 19,736 21,242
-----------------------
Pretax earnings 65,376 63,652
Income tax expense (23,690) (22,419)
-----------------------
Net earnings $ 41,686 41,233
=======================
Basic and diluted earnings per common share: $ 1.82 1.77
=======================
Basic and diluted average common shares
outstanding: 21,106,343 21,489,970
=======================
The accompanying notes are an integral part of these consolidated financial
statements.
9
AMERCO AND CONSOLIDATED SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income
Quarters ended September 30,
(Unaudited)
2001 2000
-------------------
(in thousands)
Comprehensive income:
Net earnings $ 41,686 41,233
Change in other comprehensive income:
Foreign currency translation (4,617) (3,120)
Fair market value of cash flow hedge (647) (206)
Unrealized gain (loss) on investments (4,374) (1,783)
-------------------
Total comprehensive income $ 32,048 36,124
===================
The accompanying notes are an integral part of these consolidated financial
statements
10
AMERCO AND CONSOLIDATED SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
Six months ended September 30,
(Unaudited)
2001 2000
-------------------
(in thousands)
Net cash provided by operating activities 44,650 118,092
-------------------
Cash flows from investing activities:
Purchases of investments:
Property, plant and equipment (91,265) (260,914)
Fixed maturities (92,465) (52,636)
Mortgage loans (561) (13,591)
Proceeds from sale of investments:
Property, plant and equipment 53,889 231,147
Fixed maturities 75,973 58,550
Changes in other investments 45,604 (56,462)
-------------------
Net cash used by investing activities (8,825) (93,906)
-------------------
Cash flows from financing activities:
Net change in short-term borrowings (77,494) (41,566)
Principal borrowings (payments) on notes 16,220 (34)
Investment contract deposits 74,159 40,128
Investment contract withdrawals (65,079) (37,750)
Changes in other financing activities (3,166) (6,991)
-------------------
Net cash used by financing activities (55,360) (46,213)
-------------------
Increase (decrease) in cash and cash equivalents (19,535) (22,027)
Cash and cash equivalents at beginning of period 52,778 48,435
-------------------
Cash and cash equivalents at end of period $ 33,243 26,408
===================
Summary of Non-cash investing and financing
activity:
A note and other receivables were reduced
in exchange for the purchase of storage
properties from a related party. $ 35,196 -
An investment was received in
exchange for the sale of storage
properties to a related party. $ 530 98,351
The accompanying notes are an integral part of these consolidated financial
statements.
11
AMERCO AND CONSOLIDATED SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 2001, March 31, 2001 and September 30, 2000
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
AMERCO, a Nevada corporation (AMERCO), is the holding company for
U-Haul International, Inc. (U-Haul), Amerco Real Estate Company (Real Estate),
Republic Western Insurance Company (RepWest) and Oxford Life Insurance Company
(Oxford).
PRINCIPLES OF CONSOLIDATION
The condensed consolidated financial statements include the accounts of
the parent corporation, AMERCO, and its wholly-owned subsidiaries. All
material intercompany accounts and transactions of AMERCO and its subsidiaries
have been eliminated. The financial statements and notes are presented as
permitted by Form 10-Q and do not contain certain information included in
AMERCO's annual financial statements and notes.
The condensed consolidated balance sheet as of September 30, 2001 and the
related condensed consolidated statements of earnings for the three and six
months ended September 30, 2001 and 2000 and the condensed consolidated
statements of comprehensive income and the condensed consolidated cash flows
for the six months ended September 30, 2001 and 2000 are unaudited. In the
opinion of management, all adjustments necessary for a fair presentation of
such condensed financial statements have been included. Such adjustments
consisted only of normal recurring items. Interim results are not necessarily
indicative of results for a full year.
The operating results and financial position of AMERCO's consolidated
insurance operations are determined on a one quarter lag. There were no
effects related to intervening events which would materially affect the
consolidated financial position or results of operations for the financial
statements presented herein, except for as described in Note 9.
Certain reclassifications have been made to the financial statements for
the three and six months ended September 30, 2000 to conform with the current
year's presentation.
12
AMERCO AND CONSOLIDATED SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements, Continued
(Unaudited)
2. INVESTMENTS
A comparison of amortized cost to market for fixed maturities is as
follows:
June 30, 2001
------------- Par Value Gross Gross Estimated
Consolidated or number Amortized unrealized unrealized market
Held-to-Maturity of shares cost gains losses value
------------------------------------------------------
(in thousands)
U.S. treasury
securities
and government
obligations $ 4,100 $ 3,610 164 - 3,774
U.S. government
agency mortgage-
backed securities $ 11,299 11,245 265 (13) 11,497
Corporate
securities $ 43,607 43,704 1,591 (42) 45,253
Mortgage-backed
securities $ 35,264 34,827 699 (69) 35,457
Redeemable preferred
stocks 4,541 114,674 247 (3,307) 111,614
----------------------------------------
208,060 2,966 (3,431) 207,595
----------------------------------------
June 30, 2001
------------- Par Value Gross Gross Estimated
Consolidated or number Amortized unrealized unrealized market
Available-for-Sale of shares cost gains losses value
------------------------------------------------------
(in thousands)
U.S. treasury
securities
and government
obligations $ 42,760 $ 43,280 1,812 (319) 44,773
U.S. government
agency mortgage-
backed securities $ 31,620 31,364 725 (39) 32,050
Obligations of
states and
political
subdivisions $ 15,925 16,065 660 (112) 16,613
Corporate
securities $ 608,680 604,300 14,257 (16,239) 602,318
Mortgage-backed
securities $ 31,270 31,203 1,013 (153) 32,063
Redeemable preferred
stocks 1,260 31,834 281 (447) 31,668
Redeemable common
stocks 633 7,900 - (1,040) 6,860
----------------------------------------
765,946 18,748 (18,349) 766,345
----------------------------------------
Total $ 974,006 21,714 (21,780) 973,940
========================================
13
AMERCO AND CONSOLIDATED SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements, Continued
(Unaudited)
3. SUMMARIZED CONSOLIDATED FINANCIAL INFORMATION OF INSURANCE SUBSIDIARIES
A summarized condensed consolidated balance sheet for RepWest is
presented below:
June 30,
-------------------
2001 2000
-------------------
(in thousands)
Investments, fixed maturities $ 396,466 398,127
Receivables 212,299 176,416
Due from affiliate 46,310 23,665
Other assets 79,996 66,929
-------------------
Total assets $ 735,071 665,137
===================
Policy liabilities and accruals $ 381,350 325,043
Unearned premiums 113,463 77,364
Other policyholders' funds and liabilities 59,117 52,867
-------------------
Total liabilities 553,930 455,274
Stockholder's equity 181,141 209,863
-------------------
Total liabilities and
stockholder's equity $ 735,071 665,137
===================
A summarized condensed consolidated income statement for RepWest is
presented below:
Quarter ended Six months ended
June 30, June 30,
-----------------------------------------
2001 2000 2001 2000
-----------------------------------------
(in thousands)
Premiums $ 66,087 41,925 128,265 72,332
Net investment income 7,449 7,744 15,865 15,752
----------------- -----------------
Total revenue 73,536 49,669 144,130 88,084
Benefits and losses 62,371 35,519 122,638 60,101
Amortization of deferred
policy acquisition costs 6,590 3,186 11,630 6,360
Operating expenses 17,904 11,410 28,774 19,728
----------------- -----------------
Total expenses 86,865 50,115 163,042 86,189
Income (loss) from operations (13,329) (446) (18,912) 1,895
Income tax benefit (expense) 4,708 273 6,687 (590)
----------------- -----------------
Net income (loss) $ (8,621) (173) (12,225) 1,305
================= =================
14
AMERCO AND CONSOLIDATED SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements, Continued
(Unaudited)
3. SUMMARIZED CONSOLIDATED FINANCIAL INFORMATION OF INSURANCE SUBSIDIARIES,
continued
A summarized condensed consolidated balance sheet for Oxford is presented
below:
June 30,
-------------------
2001 2000
-------------------
(in thousands)
Investments, fixed maturities $ 577,939 481,879
Investments, other 173,863 148,115
Receivables 30,541 18,120
Deferred policy acquisition costs 83,280 74,787
Other assets 9,647 4,554
-------------------
Total assets $ 875,270 727,455
===================
Policy liabilities and accruals $ 187,758 149,151
Premium deposits 532,993 463,360
Deferred federal income taxes 12,211 9,620
Other policyholders' funds and liabilities 36,739 17,707
-------------------
Total liabilities 769,701 639,838
Stockholder's equity 105,569 87,617
-------------------
Total liabilities and
stockholder's equity $ 875,270 727,455
===================
A summarized condensed consolidated income statement for Oxford is
presented below:
Quarter ended Six months ended
June 30, June 30,
----------------------------------------
2001 2000 2001 2000
----------------------------------------
(in thousands)
Premiums $ 37,905 26,020 77,538 51,524
Net investment income 6,976 6,659 13,184 12,363
---------------- ----------------
Total revenue 44,881 32,679 90,722 63,887
Benefits and losses 26,970 18,061 58,135 35,714
Amortization of deferred
policy acquisition costs 4,538 5,503 9,292 10,198
Operating expenses 12,197 7,626 19,436 13,231
---------------- ----------------
Total expenses 43,705 31,190 86,863 59,143
Income from operations 1,176 1,489 3,859 4,744
Income tax expense (272) (56) (1,232) (1,125)
---------------- ----------------
Net income $ 904 1,433 2,627 3,619
================ ================
15
AMERCO AND CONSOLIDATED SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements, Continued
(Unaudited)
4. CONTINGENT LIABILITIES AND COMMITMENTS
During the six months ended September 30, 2001, a subsidiary of U-Haul
entered into three transactions and has subsequently entered into one
transaction, whereby the subsidiary sold rental trucks, which were subsequently
leased back. AMERCO has guaranteed $10,528,000 of residual values at
September 30, 2001 for these assets at the end of the respective lease terms.
Following are the lease commitments for the leases executed during the six
months ended September 30, 2001, and subsequently which have a term of more
than one year (in thousands):
Net activity
Year ended Lease subsequent to
March 31, Commitments period end Total
--------------------------------------------------------
2002 $ 777 131 908
2003 1,553 524 2,077
2004 1,553 524 2,077
2005 1,228 524 1,752
2006 1,119 524 1,643
Thereafter 3,416 1,965 5,381
------------------------------------
$ 9,646 4,192 13,838
====================================
In the normal course of business, AMERCO is a defendant in a number of
suits and claims. AMERCO is also a party to several administrative
proceedings arising from state and local provisions that regulate the removal
and/or clean-up of underground fuel storage tanks. It is the opinion of
management that none of such suits, claims or proceedings involving AMERCO,
individually or in the aggregate are expected to result in a material
loss.
5. SUPPLEMENTAL CASH FLOWS INFORMATION
The (increase) decrease in receivables, inventories, investment, other and
accounts payable and accrued liabilities net of other operating and investing
activities follows:
Six months ended
September 30,
2001 2000
----------------------
(in thousands)
Receivables $ (14,209) (20,937)
======================
Inventories $ 3,686 943
======================
Accounts payable and accrued expenses $ (26,499) (7,709)
======================
16
AMERCO AND CONSOLIDATED SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements, Continued
(Unaudited)
6. EARNINGS PER SHARE
The following table reflects the calculation of the earnings per share:
Weighted Average
Common Shares
Income Outstanding Per Share
(Numerator) (Denominator) Amount
------------- ---------------- ---------
(in thousands, except
share and per share data)
Quarter ended September 30, 2001:
Earnings from operations $ 41,686
Less: preferred stock dividends 3,241
------
Basic and diluted earnings
per common share 38,445 21,106,343 $ 1.82
====== ========== ====
Quarter ended September 30, 2000:
Earnings from operations $ 41,233
Less: preferred stock dividends 3,241
------
Basic and diluted earnings
per common share 37,992 21,489,970 $ 1.77
====== =========== ====
Six months ended September 30, 2001:
Earnings from operations $ 66,689
Less: preferred stock dividends 6,481
------
Basic and diluted earnings
per common share 60,208 21,192,166 $ 2.84
====== ========== ====
Six months ended September 30, 2000:
Earnings from operations $ 78,845
Less: preferred stock dividends 6,481
------
Basic and diluted earnings
per common share 72,364 21,606,388 $ 3.35
====== ========== ====
17
AMERCO AND CONSOLIDATED SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements, Continued
(Unaudited)
7. RELATED PARTIES
During the six months ended September 30, 2001, subsidiaries of AMERCO
held various senior and junior notes with SAC Holding Corporation and its
subsidiaries (SAC Holdings). The voting common stock of SAC Holdings is held
by Mark V. Shoen, a major stockholder of AMERCO. AMERCO's subsidiaries
received interest payments of $16,253,308 and principal payments of $32,249,767
from SAC Holdings during the six months ended September 30, 2001. The terms
of the notes with SAC Holdings are consistent with the terms of notes held
by U-Haul for other properties owned by unrelated parties and managed by
U-Haul. These amounts are reflected in Investments, other of the condensed
consolidated balance sheet.
During the six months ended September 30, 2001, a subsidiary of AMERCO
funded through a note the purchase of properties and construction costs for
SAC Holdings of approximately $20,699,000. This amount is reflected in
Investments, other of the condensed consolidated balance sheet.
U-Haul currently manages the properties owned by SAC Holdings pursuant to
a management agreement, under which U-Haul receives a management fee equal to
6% of the gross receipts from the properties. Management fees of $3,756,000
and $2,690,000 were received during the six months ended September 30, 2001
and 2000, respectively. The management fee percentage is consistent with the
fees received by U-Haul for other properties owned by unrelated parties and
managed by U-Haul.
In August 2001, Real Estate completed the sale of one storage property to
SAC Holdings, for $341,000. Real Estate received notes from the sale. The
gain is reflected in the equity section of the condensed consolidated balance
sheet.
In June 2000, Real Estate completed the sale of twenty-four storage
properties to Twelve SAC Self-Storage Corporation, Thirteen SAC Self-Storage
Corporation and Fourteen SAC Self-Storage Corporation, subsidiaries of SAC
Holding Corporation, for $98,351,000. Real Estate received cash and notes
from the sale. The gain is reflected in the equity section of the condensed
consolidated balance sheet.
In September 2001, the Company purchased nine storage properties from
Five SAC Self-Storage Corporation, a subsidiary of SAC Holdings at a purchase
price of $35.2 million, which approximates fair value. These properties were
not previously owned by the consolidated company.
Management believes that the foregoing transactions were consummated on
terms equivalent to those that prevail in arm's-length transactions.
During September 2001 the Company consummated a legal transfer of cash in
the amount of $7.5 million and real estate properties in the amount of
$65.5 million from Moving and Storage Operations and Real Estate to Oxford and
RepWest. The transferred assets were recorded by RepWest and Oxford at their
original book value and no gain or loss was recorded. See Note 9 for
additional discussion.
18
AMERCO AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Unaudited)
8. NEW ACCOUNTING STANDARDS
In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statements of Financial Accounting Standards No. 141 (SFAS 141),
"Business Combinations", and No. 142 (SFAS 142), "Goodwill and Other
Intangible Assets".
SFAS 141 supercedes Accounting Principles Board Opinion No. 16 (APB 16),
"Business Combinations". The most significant changes made by SFAS 141 are:
(1) requiring that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001, (2) establishing specific criteria
for the recognition of intangible assets separately from goodwill, and (3)
requiring unallocated negative goodwill to be written off immediately as an
extraordinary gain (instead of being deferred and amortized).
SFAS 142 supercedes APB 17, "Intangible Assets". SFAS 142 primarily
addresses the accounting for goodwill and intangible assets subsequent to
their acquisition (i.e., the post-acquisition accounting). The provisions of
SFAS 142 will be effective for fiscal years beginning after December 15, 2001.
The most significant changes made by SFAS 142 are: (1) goodwill and indefinite
lived intangible assets will no longer be amortized, (2) goodwill will be
tested for impairment at least annually at the reporting unit level,
(3) intangible assets deemed to have an indefinite life will be tested for
impairment at least annually, and (4) the amortization period of intangible
assets with finite lives will no longer be limited to forty years.
SFAS No. 141 and 142 are not expected to affect the consolidated
financial position or results of operations.
During the quarter ended June 30, 2000, AMERCO adopted Staff Accounting
Bulletin No. 101 (SAB 101), "Revenue Recognition in Financial Statements",
which provides guidance on the recognition, presentation and disclosure of
revenue in the financial statements filed with the Securities and Exchange
Commission. The adoption of SAB 101 was not material to AMERCO's
consolidated financial statements.
SFAS No. 143, Accounting for Asset Retirement Obligations, requires
recognition of the fair value of liabilities associated with the retirement of
long-lived assets when a legal obligation to incur such costs arises as a
result of the acquisition, construction, development and/or the normal
operation of a long-lived asset. Upon recognition of the liability, a
corresponding asset is recorded and depreciated over the remaining life of
the long-lived asset. The Statement defines a legal obligation as one that
a party is required to settle as a result of an existing or enacted law,
statute, ordinance, or written or oral contract or by legal construction of a
contract under the doctrine of promissory estoppel. SFAS 143 is effective for
fiscal years beginning after December 15, 2002. Managament has not yet
determined the total likely effects of adopting this Statement on the financial
position or results of operations.
In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment of Disposal of Long-Lived Assets," which addresses issues relating
to the implementation of FASB Statement No. 121 (FAS 121), "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of," and develops a single accounting model, based on the framework established
in FAS 121, for long-lived assets to be disposed of by sale, whether previously
held and used or newly acquired. The Company is in the process of determining
the extent to which this statement will impact its results of operations or
financial position.
19
AMERCO AND CONSOLIDATED SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements, Continued
(Unaudited)
9. INDUSTRY SEGMENT AND GEOGRAPHIC AREA DATA
Industry Segment Data - AMERCO has four industry segments represented by
Moving and Storage Operations (U-Haul), Real Estate (AREC), Property and
Casualty Insurance (RepWest) and Life Insurance (Oxford).
Information concerning operations by industry segment follows:
Moving and Property/ Adjustments
Storage Real Casualty Life and
Operations Estate Insurance Insurance Eliminations Consolidated
----------------------------------------------------------------
(in thousands)
<S<
Six months ended
September 30, 2001
------------------
Revenues:
Outside $ 831,133 6,031 141,985 89,943 - 1,069,092
Intersegment - 33,653 2,145 779 (36,577) -
--------- ------- ------- ------- -------- ---------
Total
revenues $ 831,133 39,684 144,130 90,722 (36,577) 1,069,092
Depreciation/
amortization $ 52,420 5,550 12,262 9,411 - 79,643
Interest
expense $ 40,856 19,724 - - (19,724) 40,856
Pretax
earnings $ 95,945 22,693 (18,912) 3,859 - 103,585
Income tax $ (34,408) (7,943) 6,687 (1,232) - (36,896)
Identifiable
assets $1,489,276 685,777 735,071 865,087 (346,918) 3,428,293
Six months ended
September 30, 2000
------------------
Revenues:
Outside $ 806,415 6,318 86,418 63,192 - 962,343
Intersegment - 34,845 1,666 695 (37,206) -
--------- ------- ------- ------- -------- ---------
Total
revenues $ 806,415 41,163 88,084 63,887 (37,206) 962,343
Depreciation/
amortization $ 48,687 5,384 6,755 10,625 - 71,451
Interest
expense $ 44,052 22,244 - - (22,244) 44,052
Pretax
earnings $ 107,345 8,100 1,895 4,744 - 122,084
Income tax $ (38,689) (2,835) (590) (1,125) - (43,239)
Identifiable
assets $1,437,776 747,255 665,137 727,455 (342,530) 3,235,093
20
AMERCO AND CONSOLIDATED SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements, Continued
(Unaudited)
9. INDUSTRY SEGMENT AND GEOGRAPHIC AREA DATA, continued
Moving Property/ Adjustments
and Storage Real Casualty Life and
Operations Estate Insurance Insurance Eliminations Consolidated
----------------------------------------------------------------------
(in thousands)
Quarter ended
September 30, 2001
------------------
Revenues:
Outside $ 428,620 3,616 72,500 44,474 - 549,210
Intersegment - 16,324 1,036 407 (17,767) -
--------- ------- ------- ------- -------- ---------
Total revenue $ 428,620 19,940 73,536 44,881 (17,767) 549,210
Depreciation/
amortization $ 22,469 2,735 6,976 4,617 - 36,797
Interest expense $ 19,736 9,517 - - (9,517) 19,736
Pretax earnings $ 59,444 18,085 (13,329) 1,176 - 65,376
Income tax $ (21,796) (6,330) 4,708 (272) - (23,690)
Identifiable
assets $1,489,276 685,777 735,071 865,087 (346,918) 3,428,293
Quarter ended
September 30, 2000
------------------
Revenues:
Outside $ 418,193 3,802 48,590 32,321 - 502,906
Intersegment - 17,102 1,079 358 (18,539) -
--------- ------- ------- ------- -------- ---------
Total revenue $ 418,193 20,904 49,669 32,679 (18,539) 502,906
Depreciation/
amortization $ 24,381 2,632 3,298 5,556 - 35,867
Interest expense $ 21,242 10,911 - - (10,911) 21,242
Pretax earnings $ 58,419 4,190 (446) 1,489 - 63,652
Income tax $ (21,177) (1,459) 273 (56) - (22,419)
Identifiable
assets $1,437,776 747,255 665,137 727,455 (342,530) 3,235,093
21
AMERCO AND CONSOLIDATED SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements, Continued
(Unaudited)
9. INDUSTRY SEGMENT AND GEOGRAPHIC AREA DATA, continued
Geographic Area Data - United United
(All amounts are in States Canada Consolidated States Canada Consolidated
-------------------------------- -----------------------------
U.S. $'s) Six months ended Quarter ended
-------------------------------- -----------------------------
(in thousands)
September 30, 2001
------------------
Total revenues $ 1,045,510 23,582 1,069,092 536,770 12,440 549,210
Depreciation/
amortization $ 77,894 1,749 79,643 36,061 736 36,797
Interest expense $ 40,817 39 40,856 19,749 (13) 19,736
Pretax earnings $ 97,767 5,818 103,585 62,064 3,312 65,376
Income tax $ (36,896) - (36,896) (23,690) - (23,690)
Identifiable assets $ 3,371,610 56,683 3,428,293 3,371,610 56,683 3,428,293
September 30, 2000
Total revenues $ 939,062 23,281 962,343 490,212 12,694 502,906
Depreciation/
amortization $ 69,281 2,170 71,451 34,765 1,102 35,867
Interest expense $ 44,045 7 44,052 21,241 1 21,242
Pretax earnings $ 116,869 5,215 122,084 60,738 2,914 63,652
Income tax $ (43,233) (6) (43,239) (22,413) (6) (22,419)
Identifiable assets $ 3,177,402 57,691 3,235,093 3,177,402 57,691 3,235,093
During September, 2001 the Company consummated a legal transfer of cash in
the amount of $7.5 million and real estate properties in the amount of $65.5
million from Moving and Storage Operations and Real Estate to Oxford and
RepWest. The transferred assets were recorded by the RepWest and Oxford at
their original book value; however, given the operating results and financial
position of the Company's insurance operations are reflected on a one quarter
lag, the amounts have not been reflected within identifiable assets line of the
Property/Casualty or Life Insurance segments above. Since the Moving and
Storage and Real Estate operations are not reported on a one quarter lag,
the assets have been removed from the Real Estate industry segment
identifiable assets and are reflected as an adjustment and elimination within
the above table for the inclusion within the consolidated company.
10. SUBSEQUENT EVENTS
On November 5, 2001, AMERCO declared a cash dividend of $3,241,000
($0.53125 per preferred share) to preferred stockholders of record as of
November 15, 2001.
22
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements. Additional written or
oral forward-looking statements may be made by AMERCO from time to time in
filings with the Securities and Exchange Commission or otherwise. Management
believes such forward-looking statements are within the meaning of the
safe-harbor provisions. Such statements may include, but not be limited to,
projections of revenues, income or loss, estimates of capital expenditures,
plans for future operations, products or services and financing needs or
plans, as well as assumptions relating to the foregoing. The words "believe",
"expect", "anticipate", "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. Future events
and actual results could differ materially from those set forth in,
contemplated by or underlying the forward-looking statements. The following
disclosures, as well as other statements in this report and in the Notes to
AMERCO's Consolidated Financial Statements, describe factors, among others,
that could contribute to or cause such differences, or that could affect
AMERCO's stock price.
GENERAL
Information on industry segments is incorporated by reference from
"Item 1. Financial Statements - Notes 1, 3 and 8 of Notes to Consolidated
Financial Statements". The notes discuss the principles of consolidation,
summarized consolidated financial information and industry segment and
geographical area data, respectively. In consolidation, all intersegment
premiums are eliminated and the benefits, losses and expenses are retained by
the insurance companies.
For a discussion of new accounting standards please refer to Note 8 of the
Consolidated Financial Statements.
RESULTS OF OPERATIONS
SIX MONTHS ENDED SEPTEMBER 30, 2001 VERSUS SIX MONTHS ENDED SEPTEMBER 30, 2000
Moving and Storage Operations
Revenues consist of rental revenues and net sales. Total rental revenue
was $702.4 million and $679.1 million for the six months ended
September 30, 2001 and 2000, respectively. Net revenues from the rental of
moving equipment increased by $16.1 million. The increase was primarily
atributable to higher truck and trailer rental revenues and storage revenues.
Net sales revenues were $118.2 million and $114.0 million for the six
months ended September 30, 2001 and 2000, respectively. Revenue growth
resulted from an increase in the sale of moving support items and an increase
in the sale of propane.
Cost of sales was $65.2 million and $66.0 million for the six months ended
September 30, 2001 and 2000, respectively.
Operating expenses before intercompany eliminations were $521.0 million
and $491.8 million for the six months ended September 30, 2001 and 2000,
respectively. Increased expenditure levels for personnel and rental equipment
maintenance, due to an increase in truck rental transactions, were primarily
responsible.
Net depreciation expense was $46.9 million and $39.1 million for the six
months ended September 30, 2001 and 2000, respectively. The increase reflects
depreciation on the rental truck fleet.
Operating profit before tax and intercompany elimination was
$112.2 million and $121.6 million for the six months ended September 30, 2001
and 2000, respectively.
23
Real Estate Operations
Rental revenue before intercompany eliminations was $34.9 million and
$36.1 million for the six months ended September 30, 2001 and 2000,
respectively. Intercompany revenue was $36.3 million and $34.8 million for
the six months ended September 30, 2001 and 2000, respectively.
Net investment and interest income was $4.8 million and $5.1 million for
the six months ended September 30, 2001 and 2000, respectively.
Net depreciation expense (income) was $(6.0) million and $5.3 million for
the six months ended September 30, 2001 and 2000, respectively. The decrease is
due to an increase in the gain from the sale of property plant and equipment.
Operating profit before tax and intercompany elimination was $22.7 million
and $8.1 million for the six months ended September 30, 2001 and 2000,
respectively. The increase mainly reflects a gain of $11.4 million on sales of
property plant and equipment.
Property and Casualty
RepWest's premiums were $128.3 million and $72.3 million for the six
months ended June 30, 2001 and 2000, respectively. General agency premiums
were $62.8 million and $20.3 million for the six months ended June 30, 2001
and 2000, respectively. The change from 2000 to 2001 was the result of two
agency programs, Non-Standard Auto and Transportation, which are responsible
for $33.4 million of the increase. Assumed treaty reinsurance premium was
$31.7 million and $22.9 million for the six months ended June 30, 2001 and
2000, respectively. Of this increase, $6.3 million is associated with two
Non-Standard Auto treaties. Rental industry revenue was $17.8 million and
$17.0 million for the six months ending June 30, 2001 and 2000, respectively.
Net investment income was $15.9 million and $15.8 million for the six
months ended June 30, 2001 and 2000, respectively. The increase is attributed
to increased invested assets and increased realized gains, offset by decreasing
market interest rates.
Benefits and losses were $122.6 million and $60.1 million for the six
months ended June 30, 2001 and 2000, respectively. This increase is due to
agency programs in Non-Standard Auto and Transportation that grew significantly
in the second half of 2000, as well as assumed treaty reinsurance and direct
multiple peril business.
The amortization of deferred acquisition costs (DAC) was $11.6 million a
and $6.4 million for the six months ended June 30, 2001 and 2000, respectively.
The increase is mainly due to the premium growth and resultant deferral of
acquisition expenses in 2000 for the assumed treaty and general agency programs.
Operating expenses were $28.8 million and $19.7 million for the six months
ended June 30, 2001 and 2000, respectively. The increase is a result of
commissions on new agency business premium and premium taxes resulting from
increased premium writings.
Operating profit (loss) before tax and intercompany elimination was
$(18.9) million and $1.9 million for the six months ended June 30, 2001
and 2000, respectively. The decrease is mainly attributable to a significant
increase in incurred losses associated with Non-Standard Auto and Assumed
Treaty business and increased operating expense, offset by an increase in
earned premiums.
24
Life Insurance
Net premiums were $77.5 million and $51.5 million for the six months
ended June 30, 2001 and 2000, respectively. Medicare Supplement premiums
increased $26.2 million; driven by new business, rate increases, and the
acquisition of Christian Fidelity Life Insurance Company (CFLIC). Other
business segments had premium decreases totaling $0.2 million.
Net investment income before intercompany eliminations was $13.2 million
and $12.4 million for the six months ended June 30, 2001 and 2000,
respectively. The increase was primarily due to realized gains, offset by
decreasing market interest rates.
Benefits were $58.1 million and $35.7 million for the six months ended
June 30, 2001 and 2000, respectively. This increase is primarily due to a
greater volume of Medicare supplement business in force after the acquisition
of CFLIC, which accounts for $21.7 million. Other health benefits increased
$0.7 million, as loss ratios were worse year over year.
Amortization of DAC and the value of business acquired (VOBA) was
$9.3 million and $10.2 million for the six months ended June 30, 2001
and 2000, respectively. The decrease is primarily due to annuity DAC
amortization.
Operating expenses were $19.4 million and $13.2 million for the six
months ended June 30, 2001 and 2000, respectively. Commissions have increased
$3.8 million primarily due to the increase in Medicare supplement premiums.
Personnel and other operating expenses net of fees collected increased
$2.4 million, largely due to the acquisition of CFLIC.
Operating profit before tax and intercompany eliminations was $3.9 million
and $4.7 million for the six months ended June 30, 2001 and 2000, respectively.
The decrease is due to a decline in profits from the annuity line of business
of $1.4 million. New annuity business contains a first year bonus interest
credited rate effecting initial spreads and there have been additional
marketing and administration costs associated with increased annuity sales.
All other segments including Medicare Supplemented improved year over year by
$0.6 million.
Interest Expense
Interest expense was $40.9 million and $44.1 million for the six months
ended September 30, 2001 and 2000, respectively. The decrease can be
attributed to total outstanding debt interest rate reductions.
Consolidated Group
As a result of the foregoing, pretax earnings totaled $103.6 million and
$122.1 million for the six months ended September 30, 2001 and 2000,
respectively. After providing for income taxes, net earnings were
$66.7 million and $78.8 million for the six months ended September 30, 2001
and 2000, respectively.
25
QUARTER ENDED SEPTEMBER 30, 2001 VERSUS QUARTER ENDED SEPTEMBER 30, 2000
Moving and Storage Operations
Revenues consist of rental revenues and net sales. Total rental revenue
was $367.0 million and $356.7 million for the quarters ended September 30, 2001
and 2000, respectively. Net revenues from the rental of moving related
equipment increased by $8.3 million. This increase is primarily attributable
to higher truck and trailer rental revenues and storage revenues increased
$3.0 million due to increases in rates and in the number of storage rooms
rented.
Net sales revenues were $55.8 million and $53.8 million for the quarters
ended September 30, 2001 and 2000, respectively. Revenue growth resulted from
the sale of moving support items (i.e. boxes, etc.) which led to the majority
of the increase during the quarter.
Cost of sales was $31.4 million and $32.8 million for the quarters ended
September 30, 2001 and 2000, respectively.
Operating expenses before intercompany elimination were $267.5 million
and $255.2 million for the quarters ended September 30, 2001 and 2000,
respectively. The increase reflects higher personnel and rental equipment
maintenance expenditures associated with an increase in truck rental
transactions.
Net depreciation expense was $19.8 million and $19.0 million for the
quarters ended September 30, 2001 and 2000, respectively. The increase
reflects an increase in depreciation recognized on the rental truck fleet.
Operating profit before tax and intercompany elimination was $67.9 million
and $65.7 million for the quarters ended September 30, 2001 and 2000,
respectively. The increase reflects increases in revenues over increases in
operating expenses.
Real Estate Operations
Rental revenue before intercompany eliminations was $17.0 million and
$17.9 million for the quarters ended September 30, 2001 and 2000,
respectively. Intercompany revenue was $17.6 million and $17.1 million for
the quarters ended September 30, 2001 and 2000, respectively.
Net investment and interest income was $2.9 million and $3.0 million for
the quarters ended September 30, 2001 and 2000, respectively.
Net depreciation expense (income) was $(9.2) million and $2.7 million
for the quarters ended September 30, 2001 and 2000, respectively. The decrease
reflects the gain realized from the sale of property plant and equipment.
Operating profit before tax and intercompany elimination was $18.1 million
and $4.2 million for the quarters ended September 30, 2001 and 2000,
respectively. The increase reflects increases in the sale of property plant
and equipment.
26
Property and Casualty
RepWest's premiums were $66.1 million and $41.9 million for the quarters
ended June 30, 2001 and 2000, respectively. General agency premiums were
$33.2 million and $12.7 million for the quarters ended June 30, 2001 and 2000,
respectively. The change from 2000 to 2001 was the result of two agency
programs, Non-Standard Auto and Transportation, which are responsible for
$14.4 million of the increase. Assumed treaty reinsurance premium were
$15.9 million and $13.2 million for the quarters ended June 30, 2001 and 2000,
respectively.
Net investment income was $7.4 million and $7.7 million for the quarters
ended June 30, 2001 and 2000, respectively.
Benefits and losses incurred were $62.4 million and $35.5 million for the
quarters ended June 30, 2001 and 2000, respectively. The increase is a result
of new general agency business writings in Non-Standard Auto and
Transportation, as well as in assumed treaty reinsurance and direct multiple
peril business.
The amortization of DAC was $6.6 million and $3.2 million for the quarters
ended June 30, 2001 and 2000, respectively. The increase is due to the
increase in new business.
Operating expenses were $17.9 million and $11.4 million for the quarters
ended June 30, 2001 and 2000, respectively. The change is due to increased
commission expense resulting from new agency business premium writings on
Non-Standard Auto Transportation coverages, as well as Assumed treaty business.
General and administrative expenses also increased due to taxes resulting from
increased premium writings.
Operating loss before tax and intercompany elimination was $13.3 million
and $0.4 million for the quarters ended June 30, 2001 and 2000, respectively.
The increase is mainly attributable to a significant increase in incurred
losses associated with Non-Standard Auto and Assumed Treaty business and
increased operating expense, offset by an increase in earned premiums.
27
Life Insurance
Net premiums were $37.9 million and $26.0 million for the quarters ended
June 30, 2001 and 2000, respectively. Medicare Supplement premiums increased
by $11.7 million from new business, rate increases and the acquisition of
CFLIC. Other business segments had premium increases totaling $0.2 million.
Net investment income before intercompany eliminations was $7.0 million
and $6.7 million for the quarters ended June 30, 2001 and 2000, respectively.
Benefits were $27.0 million and $18.1 million for the quarters ended
June 30, 2001 and 2000, respectively. $8.7 million of the increase is due to
a greater volume of Medicare supplement business in force, of which the
acquisition of CFLIC accounts for the majority. All other segments had benefit
increases of $0.2 million for the quarter.
Amortization of DAC and VOBA was $4.5 million and $5.5 million for the
quarters ended June 30, 2001 and 2000, respectively. The decrease is due
primarily to annuity DAC amortization.
Operating expenses were $12.2 million and $7.6 million for the quarters
ended June 30, 2001 and 2000, respectively. Commissions have increased
$3.2 million primarily due to the increase in Medicare supplement premiums.
Personnel and other operating expenses net of fees collected increased
$1.4 million primarily from the acquisition of CFLIC.
Operating profit before tax and intercompany eliminations was
$1.2 million and $1.5 million for the quarters ended June 30, 2001
and 2000, respectively. The decrease is due to a decline in profits
from the annuity line of business of $0.9 million. New annuity business
contains a first year bonus interest credited rate effecting initial spreads
and there have been additional marketing and administration costs associated
with increased annuity sales. All other segments including Medicare Supplement
improved year over year by $0.6 million.
Interest Expense
Interest expense was $19.7 million and $21.2 million for the quarters
ended September 30, 2001 and 2000, respectively. The decrease can be
attributed to interest rate reductions.
Consolidated Group
As a result of the foregoing, pretax earnings were $65.4 million and
$63.7 million for the quarters ended September 30, 2001 and 2000, respectively.
After providing for income taxes, net earnings were $41.7 million and
$41.2 million for the quarters ended September 30, 2001 and 2000, respectively.
28
LIQUIDITY AND CAPITAL RESOURCES
Moving and Storage Operations
To meet the needs of its customers, U-Haul maintains a large inventory
of rental items. In the six months ended September 30, 2001 and 2000,
capital expenditures were $120.9 million and $260.9 million, respectively
(See note 7 for additional discussion). These expenditures primarily reflect
the expansion of the rental truck fleet. The capital required to fund these
acquisitions was obtained through internally generated funds from operations
and through lease financings.
Cash provided by operating activities was $40.8 million and $61.0 million
for the six months ended September 30, 2001 and 2000, respectively. The
decrease resulted primarily from a decrease in accounts payable and accrued
liabilities.
At September 30, 2001, total outstanding notes and loans payable was
$1,095.6 million as compared to $1,156.8 million at March 31, 2001.
Real Estate Operations
Cash provided (used) by operating activities was $(27.4) million and
$8.3 million for the six months ended September 30, 2001 and 2000,
respectively. The decrease resulted from a decrease in accrued liabilities
and lower net earnings.
Property and Casualty
Cash used by operating activities was $21.4 million and $1.8 million for
six months ended June 30, 2001 and 2000, respectively. This change resulted
from increased accounts receibable and other assets and decreased net income
from December 2000 to June 2001, offset by an increase in loss and loss
adjusting expense and unearned premium reserves from December 2000 to
June 2001.
RepWest's cash and cash equivalents and short-term investment portfolio
were $8.9 million and $10.4 million at June 30, 2001 and 2000, respectively.
RepWest maintains a diversified securities investment portfolio, primarily
in bonds, at varying maturity levels with 88.0% of the fixed-income securities
consisting of investment grade securities. The maturity distribution is
designed to provide sufficient liquidity to meet future cash needs. Current
liquidity remains strong with current invested assets equal to 75.6% of total
liabilities.
The liability for reported and unreported losses is based upon company
historical and industry averages. Unpaid loss adjustment expenses are based
on historical ratios of loss adjustment expenses paid to losses paid. Unpaid
loss and loss expenses are not discounted.
29
Life Insurance
Oxford's primary sources of cash are premiums, receipts from
interest-sensitive products and investment income. The primary uses of cash
are operating costs and benefit payments to policyholders. Matching the
investment portfolio to the cash flow demands of the types of insurance being
written is an important consideration.
Cash provided (used) by operating activities was $2.0 million and
$(3.4) million for the six months ended June 30, 2001 and 2000, respectively.
The increase in cash flows from operating activities relates to increase
premium writings and the timing of a settlement offset by higher claim
payments. Cash provided by financing activities were $9.1 million and
$2.4 million for the six months ended June 30, 2001 and 2000, respectively.
Cash flows from deferred annuity sales increase investment contract deposits,
which are a component of financing activities. The increase in investment
contract deposits over 2000 is due to growth in new deposits offset by
withdrawals and terminations of existing deposits.
In addition to cash flows from operating and financing activities, a
substantial amount of liquid funds is available through Oxford's short-term
portfolio. Short-term investments were $53.9 million and $51.6 million for
the six months ending June 30, 2001 and 2000, respectively. Management
believes that the overall sources of liquidity will continue to meet
foreseeable cash needs.
Consolidated Group
During each of the fiscal years ended March 31, 2002, 2003 and 2004,
AMERCO estimates gross capital expenditures will average approximately
$232 million primarily reflecting rental fleet rotation. This level of
capital expenditures, combined with a potential range of
$77.5 - $175 million in annual long-term debt maturities during this same
period, are expected to create annual average funding needs of approximately
$310 - $407 million. The Company plans to meet these needs through the cash
flows, existing lines of credit and asset sales.
Credit Agreements
AMERCO's operations are funded by various credit and financing
arrangements, including unsecured long-term borrowings, unsecured medium-term
notes and revolving lines of credit with domestic and foreign banks.
Principally to finance its fleet of trucks and trailers, AMERCO routinely
enters into sale and leaseback transactions. As of September 30, 2001,
AMERCO had $1,095.6 million in total notes and loans payable outstanding and
total unutilized lines of credit of approximately $150.0 million.
Certain of AMERCO's credit agreements contain restrictive financial and
other covenants, including, among others, covenants with respect to incurring
additional indebtedness, maintaining certain financial ratios and placing
certain additional liens on its properties, assets and restricting the
issuance of certain types of preferred stock. At September 30, 2001,
AMERCO was in compliance with these covenants.
Reference is made to Note 5 of Notes to Consolidated Financial Statements
in AMERCO's Annual Report on Form 10-K for the fiscal year ended March 31, 2001
for additional information about AMERCO's credit agreements.
30
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Reference is made to Part II, Item 7A, Quantitative and Qualitative
Disclosure About Market Risk, in AMERCO's Annual Report on Form 10-K for
the fiscal year ended March 31, 2001.
31
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In the normal course of business, AMERCO is a defendant in a number of
suits and claims. AMERCO is also a party to several administrative proceedings
arising from state and local provisions that regulate the removal and/or
cleanup of underground fuel storage tanks. It is the opinion of management
that none of the suits, claims or proceedings involving AMERCO, individually
or in the aggregate, are expected to result in a material loss.
Reference is made to Part I, Item 1, Business, in AMERCO's Annual Report
on Form 10-K for the fiscal year ended March 31, 2001 for a discussion of
certain environmental proceedings and to Note 15 of Notes to Consolidated
Financial Statements in AMERCO's Annual Report on Form 10-K for the fiscal
year ended March 31, 2001 for a discussion of the California overtime
litigation.
32
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The 2001 Annual Meeting of Stockholders was held on August 31, 2001.
At the 2001 Annual Meeting of Stockholders James P. Shoen and
John M. Dodds were elected to serve until the 2005 Annual Meeting of
Stockholders. William E. Carty and Charles J. Bayer continue as directors
with terms that expire at the 2002 Annual Meeting of Stockholders;
John P. Brogan and James J. Grogan continue as directors with terms that
expire at the 2003 Annual Meeting of Stockholders; and Edward J. Shoen
continues as a director with a term that expires at the 2004 Annual Meeting
of Stockholders.
The following table sets forth the votes cast for, against or withheld,
as well as the number of abstentions and broker non-votes with respect to
each matter voted on at the 2001 Annual Meeting of Stockholders.
Matters Votes Broker
Submitted Votes Cast Cast Votes Non-
To a Vote For Against Withheld Abstentions Votes
Election of Directors
James P. Shoen 18,333,462 48,720 1,215,411 28,365 -
John M. Dodds 18,183,710 31,285 1,377,451 33,812 -
33
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. Description
----------- -----------
3.1 Restated Articles of Incorporation (1)
3.2 Restated By-Laws of AMERCO as of August 27, 1997 (2)
10.1 Management Agreement between Twelve SAC Self Storage
Corporation and a subsidiary of AMERCO
10.2 Management Agreement between Thirteen SAC Self
Storage Corporation and a subsidiary of AMERCO
10.3 Management Agreement between Fourteen SAC Self
Storage Corporation and a subsidiary of AMERCO
(b) Reports on Form 8-K.
A report on Form 8-K was filed on October 5, 2001 in connection
with the establishment of AMERCO's Medium-Term Note Program, which
provides for the issuance to the public of up to $350 million of notes
with maturities of nine months or more from the date of issuance. To
date, no notes have been issued under the program.
_________________
(1) Incorporated by reference to AMERCO's Quarterly Report on Form 10-Q
for the quarter ended December 31, 1992, file no. 1-11255.
(2) Incorporated by reference to AMERCO's Quarterly Report on Form 10-Q
for the quarter ended December 31, 1997, file no. 1-11255.
34
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
AMERCO
------------------------------------
(Registrant)
Dated: November 13, 2001 By: /S/ GARY B. HORTON
------------------------------------
Gary B. Horton, Treasurer
(Principal Financial Officer)