1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 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 [ ].
21,384,337 shares of AMERCO Common Stock, $0.25 par value were outstanding at
May 17, 2002.
5,385 shares of U-Haul International, Inc. Common Stock, $0.01 par value, were
outstanding at May 17, 2002. 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 (unaudited).................... 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 (unaudited)
and September 30, 2000 (unaudited)............................ 11
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations......................................... 29
Item 3. Quantitative and Qualitative Disclosures About Market Risk........ 39
PART II. OTHER INFORMATION
Item 1. Legal Proceedings................................................. 40
Item 4. Submission of Matters to a Vote of Security Holders............... 41
Item 6. Exhibits and Reports on Form 8-K.................................. 42
3
INTRODUCTORY NOTE
This amendment to Form 10-Q is being filed to restate the interim financial
statements previously filed for the quarter ended September 30, 2001 to reflect
the consolidation of SAC Holding Corporation and its consolidated subsidiaries
(SAC Holdings or SAC) with AMERCO and its consolidated subsidiaries (AMERCO or
the Company) due to a revised interpretation of EITF 90-15 by the Company's
independent public accountants. The Company concurs with this revised
interpretation. AMERCO has no ownership interest in SAC, nor does it guarantee
the debt of SAC. Further, the holders of such SAC notes have no recourse to the
assets of AMERCO. The condensed consolidated financial statements presented
herein include the accounts of AMERCO and SAC Holdings. All material
intercompany accounts and transactions have been eliminated in consolidation.
4
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERCO AND CONSOLIDATED SUBSIDIARIES AND SAC HOLDING CORPORATION AND
CONSOLIDATED SUBSIDIARIES
Condensed Consolidated Balance Sheets
September 30, March 31,
Assets 2001 2001
-------------------------
(Unaudited)
(in thousands)
Cash and cash equivalents $ 33,253 52,788
Inventories, net 81,644 85,330
Prepaid expenses 17,571 14,416
Investments, fixed maturities 974,405 952,482
Investments, other 175,840 207,494
Other assets 480,956 449,380
Minority interest assets 15,992 17,907
-----------------------
Property, plant and equipment, at cost:
Buildings and improvements 1,145,913 1,068,956
Rental trucks 1,075,263 1,037,653
Other property, plant, and equipment 831,752 834,463
-----------------------
3,052,928 2,941,072
Less accumulated depreciation 1,228,919 1,187,103
-----------------------
Total property, plant and equipment 1,824,009 1,753,969
-----------------------
Total Assets $ 3,603,670 3,533,766
=======================
The accompanying notes are an integral part of these consolidated financial
statements.
5
AMERCO AND CONSOLIDATED SUBSIDIARIES AND SAC HOLDING CORPORATION AND
CONSOLIDATED SUBSIDIARIES
Condensed Consolidated Balance Sheets, Continued
Liabilities and September 30, March 31,
Stockholders' Equity 2001 2001
-------------------------
(Unaudited)
(in thousands)
Liabilities:
AMERCO's notes and loans payable $ 1,095,574 1,156,848
SAC Holdings' notes and loans payable,
non-recourse to AMERCO 279,599 257,109
Policy benefits and losses, claims and
loss expenses payable 686,705 668,830
Liabilities from premium deposits 532,993 522,207
Deferred income 22,334 24,546
Deferred income taxes 133,885 96,598
Other liabilities 261,638 272,298
-----------------------
Total liabilities 3,012,728 2,998,436
Contingent liabilities and commitments
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 236,221 236,002
Accumulated other comprehensive income (39,704) (40,709)
Retained earnings 815,383 755,174
Cost of common shares in treasury, net (416,602) (410,527)
Unearned ESOP shares (14,919) (15,173)
-----------------------
Total stockholders' equity 590,942 535,330
-----------------------
Total Liabilities and Stockholders' Equity $ 3,603,670 3,533,766
=======================
The accompanying notes are an integral part of these consolidated financial
statements.
6
AMERCO AND CONSOLIDATED SUBSIDIARIES AND SAC HOLDING CORPORATION 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 $ 750,100 717,314
Net sales 130,592 121,875
Premiums 202,880 121,495
Net investment and interest income 31,361 31,675
-----------------------
Total revenues 1,114,933 992,359
Costs and expenses
Operating expenses 551,881 505,149
Cost of sales 71,113 70,389
Benefits and losses 180,773 95,815
Amortization of deferred policy
acquisition costs 20,933 16,558
Lease expense 90,614 86,813
Depreciation, net 42,865 46,555
-----------------------
Total costs and expenses 958,179 821,279
Earnings from operations 156,754 171,080
Interest expense 52,541 53,214
-----------------------
Pretax earnings 104,213 117,866
Income tax expense (37,757) (43,980)
-----------------------
Earnings before minority interest 66,456 73,886
Minority interest 233 4,959
-----------------------
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 AND SAC HOLDING CORPORATION 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 AND SAC HOLDING CORPORATION 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 $ 392,028 379,374
Net sales 61,803 58,579
Premiums 102,550 66,508
Net investment and interest income 15,998 15,671
-----------------------
Total revenues 572,379 520,132
Costs and expenses
Operating expenses 289,681 265,446
Cost of sales 34,704 35,894
Benefits and losses 89,341 53,580
Amortization of deferred policy
acquisition costs 11,139 8,689
Lease expense 44,272 46,379
Depreciation, net 11,395 23,137
-----------------------
Total costs and expenses 480,532 433,125
Earnings from operations 91,847 87,007
Interest expense 26,444 26,161
-----------------------
Pretax earnings 65,403 60,846
Income tax expense (24,272) (22,840)
-----------------------
Earnings before minority interest 41,131 38,006
Minority interest 555 3,227
-----------------------
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 AND SAC HOLDING CORPORATION 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
Changes in other comprehensive income:
Foreign currency translation (4,617) (3,120)
Fair market value of cash flow hedge (647) (206)
Unrealized 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 AND SAC HOLDING CORPORATION 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 $ 43,912 117,479
Cash flows from investing activities:
Purchases of investments:
Property, plant and equipment (108,224) (333,413)
Fixed maturities (92,465) (52,636)
Real estate (36) -
Mortgage loans (561) (13,591)
Proceeds from sale of investments:
Property, plant and equipment 60,945 140,803
Fixed maturities 75,973 58,550
Mortgage loans 6,889 8,361
Changes in other investments 38,751 25,521
-----------------------
Net cash used by
investing activities (18,728) (166,405)
-----------------------
Cash flows from financing activities:
Net change in short-term borrowings (77,494) (41,566)
Principal payments on notes 26,861 73,078
Investment contract deposits 74,159 40,128
Investment contract withdrawals (65,079) (37,750)
Proceeds from minority interest - -
Changes in other financing activities (3,166) (6,991)
-----------------------
Net cash provided (used) by
financing activities (44,719) 26,899
Decrease in cash and cash equivalents (19,535) (22,027)
Cash and cash equivalents at
beginning of period 52,788 48,445
-----------------------
Cash and cash equivalents at
end of period $ 33,253 26,418
=======================
The accompanying notes are an integral part of these Consolidated financial
statements.
11
AMERCO AND CONSOLIDATED SUBSIDIARIES AND SAC HOLDING CORPORATION 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 parent company for U-Haul
International, Inc. (U-Haul), which conducts moving and storage operations,
Amerco Real Estate Company (Real Estate), which conducts real estate operations,
Republic Western Insurance Company (RepWest), which conducts property and
casualty insurance operations, and Oxford Life Insurance Company (Oxford), which
conducts life insurance operations.
As of September 30, 2001, SAC Holding Corporation (SAC Holdings), a Nevada
corporation, is owned by Mark V. Shoen. Mark V. Shoen is the beneficial owner
of 15.6% of AMERCO's common stock and is an executive officer of U-Haul.
This amendment is being filed and the accounts of AMERCO and SAC Holdings
are presented as consolidated due to a revised interpretation of EITF 90-15 by
AMERCO's independent public accountants. AMERCO agrees with this
interpretation. The accompanying condensed consolidated financial statements as
of and for the periods ending March 31, 2001 and September 30, 2001 have been
restated to reflect such consolidation. The following table presents the impact
of such consolidation on the dates presented:
September 30, 2001 March 31, 2001
-------------------------- --------------------------
As reported(1)As restated As reported(1)As restated
(Unaudited) (Unaudited)
(in thousands) (in thousands)
Assets 3,428,293 3,603,670 3,384,064 3,533,766
Liabilities 2,757,315 3,012,728 2,768,698 2,998,436
Stockholders' equity 670,978 590,942 615,366 535,330
(1) As reported in the Company's September 30, 2001 Form 10-Q filed on
November 14, 2001 and March 31, 2001 Form 10-K, filed on July 2, 2001,
respectively, prior to the consolidation of SAC Holdings described above.
The consolidation of AMERCO with SAC Holdings had no impact on the
consolidated net earnings. The reduction in stockholders' equity is due to the
elimination of gains previously recorded in connection with sales of properties
from AMERCO to SAC Holdings. Such gains had been previously recognized as a
component of stockholders' equity. See Note 11.
During fiscal year 2002, based on an in-depth market analysis, U-Haul
increased the estimated salvage value of certain rental trucks. The effect of
the changes increased net earnings by $1,515,000 ($0.07 per share) for the six
months ended September 30, 2001. The adjustment reflects management's best
estimate, based on information available, of the estimated salvage value of
these rental trucks.
PRINCIPLES OF CONSOLIDATION
The condensed consolidated financial statements presented here include the
accounts of AMERCO and its wholly owned subsidiaries and SAC Holdings and its
consolidated subsidiaries. All material intercompany accounts and transactions
have been eliminated in consolidation. AMERCO has not (and has never had any)
ownership interest in SAC Holdings or any of SAC Holdings' subsidiaries, nor
does it guarantee any of the debt of SAC Holdings. The condensed consolidated
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. For a more detailed breakout of the accounts of AMERCO, refer to
AMERCO's Form 10-K.
The condensed consolidated balance sheet as of September 30, 2001 and the
related condensed consolidated statements of earnings and the condensed
consolidated statements of comprehensive income for the three and six months
ended September 30, 2001 and 2000 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 consolidated financial statements have been included. Such
12
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 RepWest and Oxford have
been consolidated on the basis of a calendar year, and accordingly, are
determined on a one quarter lag for financial reporting purposes. 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.
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.
13
AMERCO AND CONSOLIDATED SUBSIDIARIES AND SAC HOLDING CORPORATION 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
========================================
14
AMERCO AND CONSOLIDATED SUBSIDIARIES AND SAC HOLDING CORPORATION 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
================= =================
15
AMERCO AND CONSOLIDATED SUBSIDIARIES AND SAC HOLDING CORPORATION 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
================ ================
16
AMERCO AND CONSOLIDATED SUBSIDIARIES AND SAC HOLDING CORPORATION 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 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 $ (28,448) (8,502)
======================
17
AMERCO AND CONSOLIDATED SUBSIDIARIES AND SAC HOLDING CORPORATION AND
CONSOLIDATED SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements, Continued
(Unaudited)
6. EARNINGS PER SHARE OF AMERCO
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
====== ========== ====
7. RELATED PARTY TRANSACTIONS
During September 2001 the Company consummated a transfer of cash in the
amount of $7.5 million and real estate properties in the amount of $65.5 million
from Real Estate and other subsidiaries 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.
Sales of properties from AMERCO to SAC Holdings have been eliminated in
consolidation, as presented in note 11.
18
AMERCO AND CONSOLIDATED SUBSIDIARIES AND SAC HOLDING CORPORATION 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.
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 at present value and accreted over the life of the asset 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 June 15, 2002.
Management has not yet determined the effects of adopting this Statement on the
financial position or results of operations.
19
AMERCO AND CONSOLIDATED SUBSIDIARIES AND SAC HOLDING CORPORATION AND
CONSOLIDATED SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements, Continued
(Unaudited)
9. INDUSTRY SEGMENT AND GEOGRAPHIC AREA DATA
Information concerning operations by industry segment follows:
Moving Property/ Adjustments AMERCO
and Storage Real Casualty Life and and
Operations Estate Insurance Insurance Eliminations SAC Holdings
----------------------------------------------------------------------
(in thousands)
Quarter ended
September 30, 2001
------------------
Revenues:
Outside $ 451,789 3,616 72,500 44,474 - 572,379
Intersegment - 16,324 1,036 407 (17,767) -
--------- ------- ------- ------- -------- ---------
Total revenue $ 451,789 19,940 73,536 44,881 (17,767) 572,379
Depreciation/
amortization $ 23,283 2,735 6,976 4,617 - 37,611
Interest expense $ 26,444 9,517 - - (9,517) 26,444
Pretax earnings
(loss) $ 59,471 18,085 (13,329) 1,176 - 65,403
Income tax
benefit
(expense) $ (22,378) (6,330) 4,708 (272) - (24,272)
Identifiable
assets $1,664,653 685,777 735,071 875,270 (357,101) 3,603,670
Quarter ended
September 30, 2000
------------------
Revenues:
Outside $ 435,419 3,802 48,590 32,321 - 520,132
Intersegment - 17,102 1,079 358 (18,539) -
--------- ------- ------- ------- -------- ---------
Total revenue $ 435,419 20,904 49,669 32,679 (18,539) 520,132
Depreciation/
amortization $ 25,843 2,632 3,298 5,556 - 37,329
Interest expense $ 26,161 10,911 - - (10,911) 26,161
Pretax earnings $ 55,613 4,190 (446) 1,489 - 60,846
Income tax $ (21,598) (1,459) 273 (56) - (22,840)
Identifiable
assets $1,505,996 747,255 665,137 727,455 (342,530) 3,303,313
20
AMERCO AND CONSOLIDATED SUBSIDIARIES AND SAC HOLDING CORPORATION AND
CONSOLIDATED SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements, Continued
(Unaudited)
9. INDUSTRY SEGMENT AND GEOGRAPHIC AREA DATA, continued
Moving and Property/ Adjustments AMERCO
Storage Real Casualty Life and and
Operations Estate Insurance Insurance Eliminations SAC Holdings
----------------------------------------------------------------
(in thousands)
Six months ended
September 30, 2001
------------------
Revenues:
Outside $ 876,974 6,031 141,985 89,943 - 1,114,933
Intersegment - 33,653 2,145 779 (36,577) -
--------- ------- ------ ------ -------- ---------
Total
revenues $ 876,974 39,684 144,130 90,722 (36,577) 1,114,933
Depreciation/
amortization $ 54,454 5,550 12,262 9,411 - 81,677
Interest
expense $ 52,541 19,724 - - (19,724) 52,541
Pretax
earnings
(loss) $ 96,573 22,693 (18,912) 3,859 - 104,213
Income tax
benefit
(expense) $ (35,269) (7,943) 6,687 (1,232) - (37,757)
Identifiable
assets $1,664,653 685,777 735,071 875,270 (357,101) 3,603,670
Six months ended
September 30, 2000
------------------
Revenues:
Outside $ 836,431 6,318 86,418 63,192 - 992,359
Intersegment - 34,845 1,666 695 (37,206) -
--------- ------- ------ ------ -------- ---------
Total
revenues $ 836,431 41,163 88,084 63,887 (37,206) 992,359
Depreciation/
amortization $ 50,757 5,384 6,755 10,625 - 73,521
Interest
expense $ 53,214 22,244 - - (22,244) 53,214
Pretax
earnings $ 103,127 8,100 1,895 4,744 - 117,866
Income tax $ (39,430) (2,835) (590) (1,125) - (43,980)
Identifiable
assets $1,505,996 747,255 665,137 727,455 (342,530) 3,303,313
21
AMERCO AND CONSOLIDATED SUBSIDIARIES AND SAC HOLDING CORPORATION AND
CONSOLIDATED SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements, Continued
(Unaudited)
9. INDUSTRY SEGMENT AND GEOGRAPHIC AREA DATA, continued
Geographic Area Data - AMERCO AMERCO
(All amounts are in United and United and
U.S. $'s) States Canada SAC Holdings States Canada SAC Holdings
------------------------------- ---------------------------------
Quarter ended Six months ended
------------------------------- ---------------------------------
(in thousands)
September 30, 2001
------------------
Total revenues $ 559,939 12,440 572,379 1,091,351 23,582 1,114,933
Depreciation/
amortization $ 36,875 736 37,611 79,928 1,749 81,677
Interest expense $ 26,457 (13) 26,444 52,502 39 52,541
Pretax earnings $ 62,091 3,312 65,403 98,395 5,818 104,213
Income tax $ (24,272) - (24,272) (37,757) - (37,757)
Identifiable assets $3,546,987 56,683 3,603,670 3,546,987 56,683 3,603,670
September 30, 2000
------------------
Total revenues $ 507,438 12,694 520,132 969,078 23,281 992,359
Depreciation/
amortization $ 36,227 1,102 37,329 71,351 2,170 73,521
Interest expense $ 26,160 1 26,161 53,207 7 53,214
Pretax earnings $ 57,932 2,914 60,846 112,651 5,215 117,866
Income tax $ (22,834) (6) (22,840) (43,974) (6) (43,980)
Identifiable assets $3,245,622 57,691 3,303,313 3,245,622 57,691 3,303,313
10. SUBSEQUENT EVENTS OF AMERCO
On May 7, 2002, AMERCO declared a cash dividend of $3,241,000 ($0.53125 per
preferred share) to preferred stockholders of record as of May 17, 2002.
In March 2002, Real Estate completed the sale of fifty-eight storage
properties to Twenty-Four SAC Self-Storage Limited Partnership, Twenty-Five SAC
Self-Storage Limited Partnership, Twenty-Six SAC Self-Storage Limited
Partnership and Twenty-Seven SAC Self-Storage Limited Partnership for
$146,852,000. The Company received cash and notes from the sale. The gain on
sale will be eliminated in consolidation.
On February 6, 2002, AMERCO declared a cash dividend of $3,241,000
($0.53125 per preferred share) to preferred stockholders of record as of
February 18, 2002.
In January 2002, Real Estate completed the sale of thirty-seven storage
properties to Twenty SAC Self-Storage Corporation, Twenty-One SAC Self-Storage
Corporation, Twenty-Two SAC Self-Storage Corporation and Twenty-Three SAC Self-
Storage Corporation, subsidiaries of SAC Holdings, for $93,679,000. Real Estate
received cash and notes from the sale. The gain on sale will be eliminated in
consolidation.
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
NOTE 11 - CONDENSED CONSOLIDATING BALANCE SHEETS (UNAUDITED)
AMERCO AND CONSOLIDATED SAC HOLDING CORPORATION AND
SUBSIDIARIES CONSOLIDATED SUBSIDIARIES
(AMERCO) (SAC HOLDINGS)
-------------------------- ---------------------------
SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31,
2001 2001 2001 2001
------------- ---------- ----------- ----------
(IN THOUSANDS) (IN THOUSANDS)
ASSETS
Cash and cash equivalents $ 33,243 $ 52,778 $ 10 $ 10
Inventories, net 80,319 84,005 1,325 1,325
Prepaid expenses 17,571 14,416 -- --
Investments, fixed maturities 974,405 952,482 -- --
Investments, other 420,923 464,958 3,910 3,910
Other assets 477,065 452,781 13,750 8,991
Minority interest assets -- -- -- --
---------- ---------- ---------- ----------
Property, plant and equipment, at cost:
Buildings and improvements 888,397 832,372 376,463 355,531
Rental trucks 1,075,263 1,037,653 -- --
Other property, plant and equipment 669,120 660,802 162,632 173,661
---------- ---------- ---------- ----------
2,632,780 2,530,827 539,095 529,192
---------- ---------- ---------- ----------
Less accumulated depreciation 1,208,013 1,168,183 26,998 23,320
---------- ---------- ---------- ----------
Total property, plant and equipment 1,424,767 1,362,644 512,097 505,872
---------- ---------- ---------- ----------
Total assets $3,428,293 $3,384,064 $ 531,092 $ 520,108
========== ========== ========== ==========
ADJUSTMENTS AND
ELIMINATIONS
----------------------------
SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31,
2001 2001 2001 2001
------------- ------------ ------------- ----------
(IN THOUSANDS) (IN THOUSANDS)
ASSETS
Cash and cash equivalents $ -- $ -- $ 33,253 $ 52,788
Inventories, net -- -- 81,644 85,330
Prepaid expenses -- -- 17,571 14,416
Investments, fixed maturities -- -- 974,405 952,482
Investments, other (248,993)a,b,c) (261,374)a,b,c) 175,840 207,494
Other assets (9,859)b) (12,392)b) 480,956 449,380
Minority interest assets 15,992 c,g) 17,907 c,g) 15,992 17,907
------------ ------------ ---------- ----------
Property, plant and equipment, at cost:
Buildings and improvements (118,947)d) (118,947)d) 1,145,913 1,068,956
Rental trucks -- -- 1,075,263 1,037,653
Other property, plant and equipment -- -- 831,752 834,463
------------ ------------ ---------- ----------
(118,947) (118,947) 3,052,928 2,941,072
------------ ------------ ---------- ----------
Less accumulated depreciation (6,092)d) (4,400)d) 1,228,919 1,187,103
------------ ------------ ---------- ----------
Total property, plant and equipment (112,855) (114,547) 1,824,009 1,753,969
------------ ------------ ---------- ----------
Total assets $ (355,715) $ (370,406) $3,603,670 $3,533,766
============ ============ ========== ==========
See accompanying notes.
23
NOTE 11 - CONDENSED CONSOLIDATING BALANCE SHEETS (UNAUDITED), CONTINUED
AMERCO AND CONSOLIDATED SAC HOLDING CORPORATION AND
SUBSIDIARIES CONSOLIDATED SUBSIDIARIES
(AMERCO) (SAC HOLDINGS)
---------------------------- ----------------------------
SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31,
2001 2001 2001 2001
------------- ----------- ----------- -----------
(IN THOUSANDS) (IN THOUSANDS)
LIABILITIES AND STOCKHOLDERS' EQUITY
AMERCO's notes and loans payable $ 1,095,574 $ 1,156,848 $ -- $ --
SAC Holdings' notes and loans payable,
non-recourse to AMERCO -- -- 514,797 504,157
Policy benefits and losses, claims and
loss expenses payable 686,705 668,830 -- --
Liabilities from premium deposits 532,993 522,207 -- --
Deferred income 22,334 24,546 -- --
Deferred income taxes 176,706 139,419 -- --
Other liabilities 243,003 256,848 28,494 27,842
----------- ----------- ----------- -----------
Total liabilities 2,757,315 2,768,698 543,291 531,999
Minority interest -- -- 9,885 10,416
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 5,912 3,312
Accumulated other comprehensive income (39,704) (40,709) (3,031) (1,398)
Retained earnings 815,383 755,174 (24,965) (24,221)
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 (22,084) (22,307)
Contingent liabilities and commitments
----------- ----------- ----------- -----------
Total liabilities and stock
stockholders' equity $ 3,428,293 $ 3,384,064 $ 531,092 $ 520,108
=========== =========== =========== ===========
ADJUSTMENTS AND
ELIMINATIONS
-----------------------------
SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31,
2001 2001 2001 2001
------------- ------------ ------------- -----------
(IN THOUSANDS) (IN THOUSANDS)
LIABILITIES AND STOCKHOLDERS' EQUITY
AMERCO's notes and loans payable $ -- $ -- $ 1,095,574 $ 1,156,848
SAC Holdings' notes and loans payable,
non-recourse to AMERCO (235,198)b) (247,048)b) 279,599 257,109
Policy benefits and losses, claims and
loss expenses payable -- -- 686,705 668,830
Liabilities from premium deposits -- -- 532,993 522,207
Deferred income -- -- 22,334 24,546
Deferred income taxes (42,821)d) (42,821)d) 133,885 96,598
Other liabilities (9,859)b) (12,392)b) 261,638 272,298
------------ ------------ ----------- -----------
Total liabilities (287,878) (302,261) 3,012,728 2,998,436
Minority interest (9,885)c) (10,416)c) -- --
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 (82,038)d,g) (79,438)d,g) 236,221 236,002
Accumulated other comprehensive income 3,031 g) 1,398 g) (39,704) (40,709)
Retained earnings 24,965 g) 24,221 g) 815,383 755,174
Cost of common shares in treasury, net (3,910)a) (3,910)a) (416,602) (410,527)
Unearned ESOP shares -- -- (14,919) (15,173)
------------ ------------ ----------- -----------
Total stockholders' equity (57,952) (57,729) 590,942 535,330
Contingent liabilities and commitments
------------ ------------ ----------- -----------
Total liabilities and stock
stockholders' equity $ (355,715) $ (370,406) $ 3,603,670 $ 3,533,766
============ ============ =========== ===========
See accompanying notes.
24
NOTE 11 - CONDENSED CONSOLIDATING STATEMENTS OF EARNINGS
SIX MONTHS ENDED SEPTEMBER 30 (UNAUDITED)
AMERCO AND CONSOLIDATED SAC HOLDING CORPORATION AND
SUBSIDIARIES CONSOLIDATED SUBSIDIARIES
(AMERCO) (SAC HOLDINGS)
---------------------------- ----------------------------
2001 2000 2001 2000
----------- ----------- ----------- -----------
(IN THOUSANDS) (IN THOUSANDS)
Revenues:
Rental revenue $ 700,981 $ 680,283 $ 53,007 $ 39,899
Net sales 118,272 113,961 12,320 7,914
Premiums 202,880 121,495 -- --
Net investment and interest income 46,959 46,604 -- --
----------- ----------- ----------- -----------
Total revenues 1,069,092 962,343 65,327 47,813
----------- ----------- ----------- -----------
Costs and expenses:
Operating expenses 526,723 486,839 29,046 21,178
Cost of sales 65,166 65,974 5,947 4,415
Benefits and losses 180,773 95,815 -- --
Amortization of deferred policy
acquisition costs 20,933 16,558 -- --
Lease expense 90,225 86,536 389 277
Depreciation, net 40,831 44,485 4,134 3,069
----------- ----------- ----------- -----------
Total costs and expenses 924,651 796,207 39,516 28,939
----------- ----------- ----------- -----------
Earnings from operations 144,441 166,136 25,811 18,874
----------- ----------- ----------- -----------
Interest expense 40,856 44,052 27,283 24,091
----------- ----------- ----------- -----------
Pretax earnings (loss) 103,585 122,084 (1,472) (5,217)
----------- ----------- ----------- -----------
Income tax expense (36,896) (43,239) (111) (392)
Earnings (loss) from operations
before minority interest 66,689 78,845 (1,583) (5,609)
ADJUSTMENTS AND
ELIMINATIONS
----------------------------
2001 2000 2001 2000
----------- ----------- ----------- -----------
(IN THOUSANDS) (IN THOUSANDS, EXCEPT
SHARE AND PER SHARE DATA)
Revenues:
Rental revenue $ (3,888)e) $ (2,868)e) $ 750,100 $ 717,314
Net sales -- -- 130,592 121,875
Premiums -- -- 202,880 121,495
Net investment and interest income (15,598)f) (14,929)f) 31,361 31,675
--------- --------- ----------- -----------
Total revenues (19,486) (17,797) 1,114,933 992,359
--------- --------- ----------- -----------
Costs and expenses:
Operating expenses (3,888)e) (2,868)e) 551,881 505,149
Cost of sales -- -- 71,113 70,389
Benefits and losses -- -- 180,773 95,815
Amortization of deferred policy
acquisition costs -- -- 20,933 16,558
Lease expense -- -- 90,614 86,813
Depreciation, net (2,100)d) (999)d) 42,865 46,555
--------- --------- ----------- -----------
Total costs and expenses (5,988) (3,867) 958,179 821,279
--------- --------- ----------- -----------
Earnings from operations (13,498) (13,930) 156,754 171,080
--------- --------- ----------- -----------
Interest expense (15,598)f) (14,929)f) 52,541 53,214
--------- --------- ----------- -----------
Pretax earnings (loss) 2,100 999 104,213 117,866
--------- --------- ----------- -----------
Income tax expense (750) (349) (37,757) (43,980)
Earnings (loss) from operations
before minority interest 1,350 650 66,456 73,886
See accompanying notes.
25
NOTE 11 - CONDENSED CONSOLIDATING STATEMENTS OF EARNINGS,CONTINUED
SIX MONTHS ENDED SEPTEMBER 30 (UNAUDITED)
AMERCO AND CONSOLIDATED SAC HOLDING CORPORATION AND
SUBSIDIARIES CONSOLIDATED SUBSIDIARIES
(AMERCO) (SAC HOLDINGS)
---------------------------- ----------------------------
2001 2000 2001 2000
----------- ----------- ----------- -----------
(IN THOUSANDS) (IN THOUSANDS)
Minority interest -- -- -- --
----------- ----------- ----------- -----------
Net earnings (loss) $ 66,689 $ 78,845 $ (1,583) $ (5,609)
=========== =========== =========== ===========
Basic and diluted earnings per common share:
Basic and diluted average common
shares outstanding
ADJUSTMENTS AND
ELIMINATIONS
----------------------------
2001 2000 2001 2000
----------- ----------- ----------- -----------
(IN THOUSANDS) (IN THOUSANDS, EXCEPT
SHARE AND PER SHARE DATA)
Minority interest 233 4,959 233 4,959
--------- --------- ----------- -----------
Net earnings (loss) $ 1,583 $ 5,609 $ 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
=========== ===========
See accompanying notes.
26
NOTE 11 - CONDENSED CONSOLIDATING STATEMENTS OF EARNINGS
QUARTERS ENDED SEPTEMBER 30 (UNAUDITED)
AMERCO AND CONSOLIDATED SAC HOLDING CORPORATION AND
SUBSIDIARIES CONSOLIDATED SUBSIDIARIES
(AMERCO) (SAC HOLDINGS)
------------------------ ------------------------
2001 2000 2001 2000
--------- --------- --------- ---------
(IN THOUSANDS) (IN THOUSANDS)
Revenues:
Rental revenue $ 366,438 $ 357,535 $ 27,569 $ 23,537
Net sales 55,849 53,815 5,954 4,764
Premiums 102,550 66,508 -- --
Net investment and interest income 24,373 25,048 -- --
--------- --------- --------- ---------
Total revenues 549,210 502,906 33,523 28,301
--------- --------- --------- ---------
Costs and expenses:
Operating expenses 277,756 255,189 13,904 11,955
Cost of sales 31,398 32,777 3,306 3,117
Benefits and losses 89,341 53,580 -- --
Amortization of deferred policy
acquisition costs 11,139 8,689 -- --
Lease expense 43,883 46,102 389 277
Depreciation, net 10,581 21,675 2,152 1,954
--------- --------- --------- ---------
Total costs and expenses 464,098 418,012 19,751 17,303
--------- --------- --------- ---------
Earnings from operations 85,112 84,894 13,772 10,998
--------- --------- --------- ---------
Interest expense 19,736 21,242 15,083 14,296
--------- --------- --------- ---------
Pretax earnings (loss) 65,376 63,652 (1,311) (3,298)
--------- --------- --------- ---------
Income tax expense (23,690) (22,419) (99) (247)
Earnings (loss) from operations
before minority interest 41,686 41,233 (1,410) (3,545)
ADJUSTMENTS AND
ELIMINATIONS
------------------------ --------- ---------
2001 2000 2001 2000
--------- --------- --------- ---------
(IN THOUSANDS) (IN THOUSANDS, EXCEPT
SHARE AND PER SHARE DATA)
Revenues:
Rental revenue $ (1,979)e) $ (1,698)e) $ 392,028 $ 379,374
Net sales -- -- 61,803 58,579
Premiums -- -- 102,550 66,508
Net investment and interest income (8,375)f) (9,377)f) 15,998 15,671
--------- --------- ---------- ---------
Total revenues (10,354) (11,075) 572,379 520,132
--------- --------- ---------- ---------
Costs and expenses:
Operating expenses (1,979)e) (1,698)e) 289,681 265,446
Cost of sales -- -- 34,704 35,894
Benefits and losses -- -- 89,341 53,580
Amortization of deferred policy
acquisition costs -- -- 11,139 8,689
Lease expense -- -- 44,272 46,379
Depreciation, net (1,338)d) (492)d) 11,395 23,137
--------- --------- ----------- ---------
Total costs and expenses (3,317) (2,190) 480,532 433,125
--------- --------- ----------- ---------
Earnings from operations (7,037) (8,885) 91,847 87,007
--------- --------- ----------- ---------
Interest expense (8,375)f) (9,377)f) 26,444 26,161
--------- --------- ----------- ---------
Pretax earnings (loss) 1,338 492 65,403 60,846
--------- --------- ----------- ---------
Income tax expense (483) (174) (24,272) (22,840)
Earnings (loss) from operations
before minority interest 855 318 41,131 38,006
See accompanying notes.
27
NOTE 11 - CONDENSED CONSOLIDATING STATEMENTS OF EARNINGS, CONTINUED
QUARTERS ENDED SEPTEMBER 30 (UNAUDITED)
AMERCO AND CONSOLIDATED SAC HOLDING CORPORATION AND
SUBSIDIARIES CONSOLIDATED SUBSIDIARIES
(AMERCO) (SAC HOLDINGS)
------------------------ ------------------------
2001 2000 2001 2000
--------- --------- --------- ---------
(IN THOUSANDS) (IN THOUSANDS)
Minority interest -- -- -- --
--------- --------- --------- ---------
Net earnings (loss) $ 41,686 $ 41,233 $ (1,410) $ (3,545)
========= ========= ========= =========
Basic and diluted earnings per common share:
Basic and diluted average common
shares outstanding
ADJUSTMENTS AND
ELIMINATIONS
------------------------ --------- ---------
2001 2000 2001 2000
--------- --------- --------- ---------
(IN THOUSANDS) (IN THOUSANDS, EXCEPT
SHARE AND PER SHARE DATA)
Minority interest 555 3,227 555 3,227
--------- --------- ---------- ----------
Net earnings (loss) $ 1,410 $ 3,545 $ 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
========== ==========
See accompanying notes.
28
AMERCO AND CONSOLIDATED SUBSIDIARIES AND SAC HOLDING CORPORATION AND
CONSOLIDATED SUBSIDIARIES
Note 11 - Notes to Consolidating Information
September 30, 2001 and 2000
a) To eliminate the investment of AMERCO stock held by SAC Holdings.
b) To eliminate notes payable and other liabilities payable to AMERCO from SAC
Holdings.
c) To eliminate minority interest investment held by RepWest and Oxford.
d) To eliminate the gain on sale of assets and related deferred taxes from
AMERCO to SAC Holdings.
e) To eliminate management fees received by AMERCO from SAC Holdings.
f) To eliminate interest income received by AMERCO from SAC Holdings.
g) To eliminate SAC equity.
29
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q/A contains forward-looking statements.
Additional written or oral forward-looking statements may be made by AMERCO or
the consolidated group 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 are not limited to, projections of revenues, income
or loss, estimates of capital expenditures, the anticipated results of legal
proceedings against the Company, 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.
Some of the important factors that could cause our actual results, performance
or financial condition to differ materially from our expectations are:
fluctuations in our costs to maintain and update our fleet and facilities;
changes in government regulations, particularly environmental regulations; our
credit ratings; changes in demand for our products; changes in the general
domestic economy; degree and nature of our competition; and other factors
described in this Quarterly Report on Form 10-Q/A or the other documents we file
with the Securities and Exchange Commission. As a result of these factors
AMERCO's stock price may fluctuate dramatically.
GENERAL
Information on industry segments is incorporated by reference from "Item 1.
Financial Statements - Notes 1, 3 and 9 of Notes to Condensed Consolidated
Financial Statements". The notes discuss the principles of combination and
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.
30
RESULTS OF OPERATIONS
SIX MONTHS ENDED SEPTEMBER 30, 2001 VERSUS SIX MONTHS ENDED SEPTEMBER 30, 2000
Moving and Storage Operations
Adjustments
and
AMERCO SAC Holdings Eliminations Total
-----------------------------------------------
(in thousands)
Six months ended
September 30, 2001
Revenues:
Outside $ 831,133 65,327 (19,486) 876,974
Intersegment - - - -
-----------------------------------------------
Total revenues $ 831,133 65,327 (19,486) 876,974
Depreciation/amortization $ 52,420 4,134 (2,100) 54,454
Interest expense $ 40,856 27,283 (15,598) 52,541
Pretax earnings (loss) $ 95,945 (1,472) 2,100 96,573
Income tax expense $ (34,408) (111) (750) (35,269)
Identifiable assets $ 1,489,276 531,092 (355,715) 1,664,653
Adjustments
and
AMERCO SAC Holdings Eliminations Total
-----------------------------------------------
(in thousands)
Six months ended
September 30, 2000
Revenues:
Outside $ 806,415 47,813 (17,797) 836,431
Intersegment - - - -
-----------------------------------------------
Total revenues $ 806,415 47,813 (17,797) 836,431
Depreciation/amortization $ 48,687 3,069 (999) 50,757
Interest expense $ 44,052 24,091 (14,929) 53,214
Pretax earnings (loss) $ 107,345 (5,217) 999 103,127
Income tax expense $ (38,689) (392) (349) (39,430)
Identifiable assets $ 1,437,776 495,255 (427,035) 1,505,996
AMERCO
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 attributable 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
increased 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.
31
SAC Holdings
Rental revenues of $53.0 million and $39.9 million were recognized during
the six months ended September 30, 2001 and 2000, respectively. Increased
facility capacity through the acquisition of new locations and increased storage
rates accounted for the increase. The occupancy of existing storage locations
has remained stable.
Net sales revenue was $12.3 million and $7.9 million for the six months
ended September 30, 2001 and 2000, respectively. The growth is related to the
acquisition of new locations.
Operating expenses were $29.0 million and $21.2 million for the six months
ended September 30, 2001 and 2000, respectively. Personnel costs, liability
insurance, property taxes and utility expenses all increased proportionately in
relation to the increased revenues from the acquisition of new locations.
Net depreciation expense was $4.1 million and $3.1 million for the six
months ended September 30, 2001 and 2000, respectively. The increase is
attributed to the acquisition of new locations.
Operating profit before interest and tax was $25.8 million and $18.9
million for the six months ended September 30, 2001 and 2000, respectively.
AMERCO's Real Estate Operations
Rental revenue was $34.9 million and $36.1 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 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.
32
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.
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 by
$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
AMERCO
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.
SAC Holdings
Interest expense was $27.3 million and $24.1 million for the six months
ended September 30, 2001 and 2000, respectively. The increase is due to higher
amounts of debt outstanding related to the acquisition of new locations.
Consolidated Group
As a result of the foregoing, pretax earnings totaled $104.2 million and
$117.9 million for the six months ended September 30, 2001 and 2000,
respectively. After providing for income taxes, net earnings were $66.5 million
and $73.9 million for the six months ended September 30, 2001 and 2000,
respectively. After the elimination of SAC Holdings, net earnings were $66.7
and $78.8 for the six months ended September 30, 2001 and 2000, respectively.
The net earnings of SAC Holdings are completely eliminated because AMERCO does
not have an equity interest in SAC Holdings. The presentation of consolidated
statements is due to a revised interpretation of ETIF 90-15 by the AMERCO's
independent public accountants. AMERCO agrees with this interpretation.
33
QUARTER ENDED SEPTEMBER 30, 2001 VERSUS QUARTER ENDED DECEMBER 31, 2000
Moving and Storage Operations
Adjustments
and
AMERCO SAC Holdings Eliminations Total
------------------------------------------------
(in thousands)
Quarter ended
September 30, 2001
- ------------------
Revenues:
Outside $ 428,620 33,523 (10,354) 451,789
Intersegment - - - -
------------------------------------------------
Total revenues $ 428,620 33,523 (10,354) 451,789
Depreciation/amortization $ 22,469 2,152 (1,338) 23,283
Interest expense $ 19,736 15,083 (8,375) 26,444
Pretax earnings (loss) $ 59,444 (1,311) 1,338 59,471
Income tax expense $ (21,796) (99) (483) (22,378)
Identifiable assets $ 1,489,276 531,092 (355,715) 1,664,653
Adjustments
and
AMERCO SAC Holdings Eliminations Total
------------------------------------------------
(in thousands)
Quarter ended
September 30, 2000
- ------------------
Revenues:
Outside $ 418,193 28,301 (11,075) 435,419
Intersegment - - - -
------------------------------------------------
Total revenues $ 418,193 28,301 (11,075) 435,419
Depreciation/amortization $ 24,381 1,954 (492) 25,843
Interest expense $ 21,242 14,296 (9,377) 26,161
Pretax earnings (loss) $ 58,419 (3,298) 492 55,613
Income tax expense $ (21,177) (247) (174) (21,598)
Identifiable assets $ 1,437,776 495,255 (427,035) 1,505,996
AMERCO
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.
34
SAC Holdings
Rental revenues of $27.5 million and $23.5 million were recognized during
the quarters ended September 30, 2001 and 2000, respectively. Increased
facility capacity through the acquisition of new locations and increased storage
rates accounted for the increase. The occupancy of existing storage locations
has remained stable.
Net sales revenue was $6.0 million and $4.8 million for the quarters ended
September 30, 2001 and 2000, respectively. The growth is related to the
acquisition of new locations.
Operating expenses were $13.9 million and $12.0 million for the quarters
ended September 30, 2001 and 2000, respectively. Personnel costs, liability
insurance, property taxes and utility expenses all increased proportionately in
relation to the increased revenues from the acquisition of new locations.
Net depreciation expense was $2.2 million and $2.0 million for the quarter
ended September 30, 2001 and 2000, respectively. The increase is attributed to
the acquisition of new locations.
Operating profit before interest and tax was $13.8 million and $11.0
million for the quarters ended September 30, 2001 and 2000, respectively.
AMERCO's Real Estate Operations
Rental revenue was $17.0 million and $17.9 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.
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.
35
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
AMERCO
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.
SAC Holdings
Interest expense was $15.1 million and $14.3 million for the quarters ended
September 30, 2001 and 2000, respectively. The increase is due to higher
amounts of debt outstanding related to the acquisition of new locations.
Consolidated Group
As a result of the foregoing, pretax earnings were $65.4 million and $60.8
million for the quarters ended September 30, 2001 and 2000, respectively. After
providing for income taxes, net earnings were $41.1 million and $38.0 million
for the quarters ended September 30, 2001 and 2000, respectively. After the
elimination of SAC Holdings, the net earnings were $41.7 million and $41.2
million for the quarters ended September 30, 2001 and 2000, respectively.
36
LIQUIDITY AND CAPITAL RESOURCES
AMERCO's 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. These
expenditures primarily reflect the renewal 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.
SAC Holdings
Cash used by operating activities was $0.7 million and $0.6 million for the
six months ended September 30, 2001 and 2000, respectively.
At September 30, 2001, total outstanding notes and mortgages payable were
$514.8 million compared to $504.2 million at March 31, 2001.
SAC Holdings intends to meet its current debt obligations through cash
flows generated from its operating activities.
AMERCO's 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.
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 increased 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.
37
Consolidated group
At September 30, 2001, total outstanding notes and mortgages payable for
AMERCO and consolidated subsidiaries was $1,095.6 million compared to $1,156.8
million at March 31, 2001. At September 30, 2001, total outstanding notes and
mortgages payable for SAC Holdings and consolidated subsidiaries was $514.8
million compared to $504.2 million at March 31, 2001. SAC Holdings' loan
agreements have no guarantees, or triggers that could create a guarantee, from
AMERCO. SAC Holdings' creditors have no recourse to AMERCO. AMERCO is not
liable for the debts of SAC Holdings. Further, there are no cross default
provisions on indebtedness between AMERCO and SAC Holdings.
AMERCO has no (and has never had any) ownership interest in SAC Holdings or
its subsidiaries. The presentation of the consolidated statements has no
bearing on the credit agreements or the operations of each. The accounts of
AMERCO and SAC Holdings are presented as consolidated due to a revised
interpretation of EITF 90-15 by the Company's independent public accountants.
During each of the fiscal years ended March 31, 2002, 2003 and 2004, AMERCO
estimates gross capital expenditures will average approximately $200 million
primarily reflecting rental fleet rotation. This level of capital expenditures,
combined with a potential range of $150 - $300 million in annual long-term debt
maturities during this same period, are expected to create annual average
funding needs of approximately $350 - $500 million. The Company plans to meet
these needs through cash flows, asset sales and various current and future
sources of credit (See Credit Agreements discussion below). AMERCO has
historically enjoyed a substantial and predictable level of cashflow (EBITDAR)
from its non-insurance subsidiaries. These cashflows are dependent on revenues
and expenses that can be impacted by economic trends. In the past, the Company
has not been as affected by these economic trends as other businesses. Cashflow
(defined as EBITDAR) is anticipated to range approximately from $400 million to
$425 million annually. The sale of assets is less predictable and substantially
lower than the cashflows. The sale of assets is dependant upon economic
conditions, the amount and nature of sale and leaseback transactions and
AMERCO's fleet rotation program. In many cases, a decline in asset sales is
accompanied by a decrease in capital expenditures.
The Company intends to meet these needs through cash flows, existing lines
of credit, additional borrowings and sale of assets. We may be unable to secure
such additional
borrowings on satisfactory terms or in a timely manner. Depending on the
results of our operations, and general economic and competitive conditions, many
of which we cannot control, we may take certain actions, including delaying or
reducing capital expenditures.
From time to time, Real Estate sells storage properties to SAC Holdings.
These sales have in the past provided significant cash flows to the Company.
The ability of the Company to engage in similar transactions in the future is
dependent to a large degree on the ability of SAC Holdings to obtain third party
financing for its acquisition of the properties from Real Estate and in general,
its willingness to engage in such transactions.
Credit Agreements
AMERCO's operations are funded by various credit and financing
arrangements, including unsecured long-term borrowings, unsecured medium-term
notes, revolving lines of credit with banks and operating leases. The operating
leases are primarily used to finance the Company's fleet of trucks and trailers.
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. In addition to the economic pressures, there has been a reduction in
the number of leasing companies and banks, which has had a negative impact on
the financial markets. This has led to less availability and higher prices.
Management of AMERCO believes there are enough leasing companies and banks to
meet the Company's financing needs.
Certain of AMERCO's credit agreements contain restrictive financial and
other covenants, including, among others, covenants with respect to incurring
additional indebtedness, making third party guarantees, entering into contingent
obligations, 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. AMERCO's various credit and financing arrangements are affected by
its credit ratings such that were AMERCO to experience a credit downgrade, the
interest rates that it is charged might be increased, which would result in an
increase in the Company's interest expense and hinder its ability to obtain
additional financing on terms acceptable to it, if at all.
38
SAC Holdings' operations are funded by various mortgage loans and unsecured
notes, with interest rates ranging from 8.0% to 13.0%. SAC does not utilize
revolving lines of credit or leasing facilities to finance its operations or
acquisitions. Certain of SAC's agreements contain restrictive covenants
including coverage ratios and restrictions in incurring additional subsidiary
indebtedness. At September 30, 2001, SAC Holdings was in compliance with all
of 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.
CRITICAL ACCOUNTING POLICIES
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are carried at cost and are depreciated on
the straight-line and accelerated methods over the estimated useful lives of the
assets. Building and non-rental equipment have estimated lives ranging from
three to fifty-five years, while rental equipment have estimated lives ranging
from one to twenty years. Maintenance is charged to operating expenses as
incurred, while renewals and betterments are capitalized. Major overhaul costs
are amortized over the estimated period benefited. Gains and losses on
dispositions are netted against depreciation expense when realized. Interest
costs incurred as part of the initial construction of assets are capitalized.
During fiscal year 2002, based on an in-depth market analysis, U-Haul increased
the estimated salvage value of certain rental trucks. The effect of the changes
increased net earnings by $1,515,000 ($0.07 per share) for the six months ended
September 30, 2001. The adjustment reflects management's best estimate, based
on information available, of the estimated salvage value of these rental trucks.
AMERCO reviews property, plant and equipment for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may
not be fully recoverable through expected undiscounted future operating cash
flows.
The carrying value of AMERCO's real estate that is no longer necessary for
use in its current operations, and available for sale/lease, at March 31, 2001
and 2000, was approximately $27,691,000 and $27,732,000, respectively. Such
properties available for sale are carried at cost, less accumulated
depreciation, which is less than fair market value.
POLICY BENEFITS AND LOSSES, CLAIMS AND LOSS EXPENSES PAYABLE
Liabilities for policy benefits payable on traditional life and certain
annuity policies are established in amounts adequate to meet estimated future
obligations on policies in force. These liabilities are computed using
mortality and withdrawal assumptions which are based upon recognized actuarial
tables and contain margins for adverse deviation.
The liability for annuity contracts, which are accounted for as investment
contract deposits, consists of contract account balances that accrue to the
benefit of the policyholders, excluding surrender charges. Carrying value of
investment contract deposits were $522,207,000 and $461,673,000 at December 31,
2000 and 1999, respectively.
Liabilities for health and disability and other policy claims and benefits
payable represent estimates of payments to be made on insurance claims for
reported losses and estimates of losses incurred but not yet reported. These
estimates are based on past claims experience and consider current claim trends
as well as social and economic conditions.
RepWest's liability for reported and unreported losses is based on
RepWest's historical and industry averages. The liability for unpaid loss
adjustment expenses is based on historical ratios of loss adjustment expenses
paid to losses paid. Amounts recoverable from reinsurers on unpaid losses are
estimated in a manner consistent with the claim liability associated with the
reinsured policy. Adjustments to the liability for unpaid losses and loss
expenses as well as amounts recoverable from reinsurers on unpaid losses are
charged or credited to expense in periods in which they are made.
LEASE EXPENSE
AMERCO uses certain equipment and occupies certain facilities under
operating lease commitments. The majority of the equipment leases are
"sale and leaseback transactions". Certain leases contain renewal and fair
market value purchase options. The leases contain various restrictions similar
to the Company's notes payable and loan agreements. The treatment of these
leases is governed by various accounting pronouncements that include FAS 13,
FAS 66 and FAS 98. Any changes in the treatment of operating leases could have
a material impact on the financial statements AMERCO. At March 31, 2001 the
total lease commitments were approximately $691.7 million.
39
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.
40
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.
41
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 -
42
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 Eighteen SAC Self Storage
Corporation and subsidiaries of AMERCO(1)
10.2 Management Agreement between Twenty SAC Self Storage
Corporation and subsidiaries of AMERCO(1)
10.3 Management Agreement between Twenty-One SAC Self Storage
Corporation and subsidiaries of AMERCO(1)
10.4 Management Agreement between Twenty-Two SAC Self Storage
Corporation and subsidiaries of AMERCO(1)
10.5 Management Agreement between Twenty-Three SAC Self Storage
Corporation and subsidiaries of AMERCO(1)
10.6 Promissory note between SAC Holding Corporation and a
subsidiary of AMERCO(3)
10.7 Promissory note between SAC Holding Corporation and a
subsidiary of AMERCO(3)
10.8 Promissory note between SAC Holding Corporation and Oxford
Life Insurance Company(3)
10.9 Promissory note between SAC Holding Corporation and a
subsidiary of AMERCO(3)
10.10 Promissory note between SAC Holding Corporation and a
subsidiary of AMERCO(3)
10.11 Promissory note between SAC Holding Corporation and a
subsidiary of AMERCO(3)
10.12 Promissory note between SAC Holding Corporation and a
subsidiary of AMERCO(3)
10.13 Promissory note between SAC Holding Corporation and a
subsidiary of AMERCO(3)
10.14 Management Agreement between Securespace Limited Partnership
and a subsidiary of AMERCO(3)
10.15 Purchase and sale agreement between Eighteen SAC Self-Storage
Corporation subsidiaries of AMERCO(3)
10.16 Purchase and sale agreement between Twenty SAC Self-Storage
Corporation, Twenty-One SAC Self-Storage Corporation,
Twenty-Two SAC Self-Storage Corporation, Twenty-Three SAC
Self-Storage Corporation and subsidiaries of AMERCO(3)
10.17 Management Agreement between Twenty-Four SAC Self Storage
Limited Partnership and subsidiaries of AMERCO
10.18 Management Agreement between Twenty-Five SAC Self Storage
Limited Partnership and subsidiaries of AMERCO
10.19 Management Agreement between Twenty-Six SAC Self Storage
Limited Partnership and subsidiaries of AMERCO
10.20 Management Agreement between Twenty-Seven SAC Self Storage
Limited Partnership and subsidiaries 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, 2001, 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.
(3) Incorporated by reference to AMERCO's Quarterly Report on Form 10-Q/A for
the quarter ended December 31, 2001, file no. 1-11255.
43
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: May 20, 2002 By: /S/ GARY B. HORTON
____________________________________
Gary B. Horton, Treasurer
(Principal Financial Officer)