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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended March 31, 1997
---------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ______________________ to _______________________
Commission Registrant, State of Incorporation I.R.S. Employer
File Number Address and Telephone Number Identification No.
- ----------- ---------------------------------- ------------------
0-7862 AMERCO 88-0106815
(A Nevada Corporation)
1325 Airmotive Way, Suite 100
Reno, Nevada 89502-3239
Telephone (702) 688-6300
2-38498 U-Haul International, Inc. 86-0663060
(A Nevada Corporation)
2727 N. Central Avenue
Phoenix, Arizona 85004
Telephone (602) 263-6645
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Registrant Title of Class on Which Registered
- ---------- -------------- ---------------------
AMERCO Series A 8 1/2% New York Stock Exchange
Preferred Stock
U-Haul International, Inc. None
Securities registered pursuant to Section 12(g) of the Act:
Registrant Title of Class
---------- --------------
AMERCO Common
U-Haul International, Inc. None
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 .
----- ----
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of the registrant's knowledge, in
definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
22,614,087 shares of AMERCO Common Stock, $0.25 par value, were
outstanding at June 20, 1997. The aggregate market value of AMERCO
Common Stock held by non-affiliates (i.e., stock held by persons other
than officers and directors of AMERCO or those persons who are parties
to a stockholder agreement relating to 6,823,257 shares of AMERCO
Common Stock, was $197,874,453. The aggregate market value was
computed using the closing price for the Common Stock trading on
Nasdaq on June 20, 1997.
5,385 shares of U-Haul International, Inc. Common Stock, $0.01
par value, were outstanding at June 20, 1997. None of these shares
were held by non-affiliates. U-Haul International, Inc. meets the
conditions set forth in General Instructions (J)(1)(a) and (b) of Form
10-K and is therefore filing this Form with the reduced disclosure
format.
Portions of AMERCO's definitive Proxy Statement relating to its
Annual Meeting of Stockholders to be held on August 22, 1997, are
incorporated by reference in Part III hereof.
2
TABLE OF CONTENTS
PAGE NO.
PART I
ITEM 1. BUSINESS...................................... 3
A. THE COMPANY.............................. 3
B. HISTORY.................................. 3
C. MOVING AND STORAGE OPERATIONS............ 3
D. INSURANCE OPERATIONS..................... 6
ITEM 2. PROPERTIES.................................... 11
ITEM 3. LEGAL PROCEEDINGS............................. 11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS.............................. 12
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS............... 13
ITEM 6. SELECTED FINANCIAL DATA....................... 14
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.................................... 16
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA.......................................... 26
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE ................................... 26
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF
THE REGISTRANTS............................... 26
ITEM 11. EXECUTIVE COMPENSATION........................ 26
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT......................... 26
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS.................................. 26
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT
SCHEDULES AND REPORTS ON FORM 8-K............. 27
3
PART I
ITEM 1. BUSINESS
A. THE COMPANY
AMERCO, a Nevada corporation (AMERCO or Company), is the
holding company for U-Haul International, Inc. (U-Haul), Amerco
Real Estate Company (AREC), Republic Western Insurance Company
(RWIC) and Oxford Life Insurance Company (Oxford). Throughout this
Form 10-K, unless the context otherwise requires, the term
"Company" includes all of the Company's subsidiaries. The
Company's principal executive offices are located at 1325 Airmotive
Way, Suite 100, Reno, Nevada 89502-3239, and the telephone number
of the Company is (702) 688-6300. As used in this Form 10-K, all
references to a fiscal year refer to the Company's fiscal year
ended March 31 of that year. RWIC and Oxford have been
consolidated on the basis of calendar years ended December 31.
Accordingly, all references to the years 1996, 1995 and 1994
correspond to the Company's fiscal years 1997, 1996 and 1995,
respectively. See Note 20 of Notes to Consolidated Financial
Statements in Item 8 for financial information regarding the
Company's three primary industry segments, which are represented by
Moving and Storage Operations (U-Haul and AREC), Property/Casualty
(Republic Western Insurance Company) and Life Insurance (Oxford
Life Insurance Company).
Moving and Storage Operations
Moving and self-storage operations consist of the rental of
trucks, automobile-type trailers and self-storage space to the do-
it-yourself mover under the registered tradename U-Haul
throughout the United States and Canada.
AREC owns the majority of the Company's real estate assets,
including the Company's U-Haul Center and Storage locations.
Property/Casualty
RWIC originates and reinsures property and casualty-type
insurance products for various market participants, including
independent third parties, the Company's customers and the Company.
Life Insurance
Oxford originates and reinsures life, health and annuity-type
insurance products and administers the Company's self-insured
employee health and dental plans.
B. HISTORY
The Company was founded in 1945 under the name "U-Haul Trailer
Rental Company". From 1945 to 1974, the Company rented trailers and,
starting in 1959, trucks on a one-way and "In-Town"
basis through independent dealers. Since 1974, the Company has developed
a network of Company-owned rental centers (U-Haul Centers) through
which U-Haul rents its trucks and trailers and provides related
products and services (e.g., the sale and installation of hitches,
as well as boxes and moving supplies). At March 31, 1997, the
Company's distribution network included 1,100 U-Haul Centers and
14,200 independent dealers.
C. MOVING AND STORAGE OPERATIONS
Business Strategies
The Company's present business strategy remains focused on do-
it-yourself moving and self-storage customers. The Company
believes that customer access, in terms of truck or trailer
availability and proximity of rental locations, is critical to its
success. Under the U-Haul name, this strategy is to offer, in an
integrated manner over an extensive and geographically diverse
network of over 15,000 Company-owned Centers and independent
dealers, a wide range of products and services to do-it-yourself
moving and self-storage customers.
4
Moving Operations
U-Haul has a variety of product offerings. Rental trucks have
been designed with do-it-yourself customers in mind, and include
features such as Low Decks, air conditioning,
power steering, automatic transmissions,
Gentle-Ride Suspensions, AM/FM cassette
stereo systems and over-the-cab storage. Aerodynamically designed
U-Haul trailers are suited to the low profile of many newly
manufactured automobiles. As of March 31, 1997, the U-Haul rental
equipment fleet consisted of 86,000 trucks, 85,000 trailers and
15,000 tow dollies.
Additionally, the Company provides support rental items such
as furniture pads, hand trucks, Appliance Dollies,
Utility Dollies, mirrors, tow bars, tow dollies and
bumper hitches. The Company also sells boxes, tape and packaging materials,
and rents additional items such as floor polishers and carpet cleaning
equipment at its U-Haul Center locations. U-Haul Centers also sell
and install hitches and towing systems, and propane.
U-Haul offers protection packages such as
(i) "Safemove", which provides moving customers with a
damage waiver, cargo protection and medical and life coverage and
(ii) "Safestor", which provides self-storage rental
customers with various insurance coverages.
Independent dealers receive U-Haul equipment on a consignment
basis and are paid a commission on gross revenues generated from
their rentals. The Company maintains contracts with its independent
dealers that can typically be canceled upon 30 days written notice
by either party.
A high percentage of the Company's rental revenue is derived
from do-it-yourself movers. Moving rentals include:
(i) "In-Town" rentals, where the equipment is
returned to the originating U-Haul location and (ii) one-way rentals,
where the equipment is returned to a U-Haul location in another city.
The U-Haul truck and trailer rental business tends to be
seasonal, with proportionally more transactions and revenues
generated in the spring and summer months than during the balance
of the year.
The Company designs and manufactures its truck van boxes,
trailers and various other support rental equipment items. The
Company's equipment is designed to achieve high safety standards,
simplicity of operation, reliability, convenience, durability and
fuel economy. Truck chassis are manufactured by both foreign and
domestic truck manufacturers. These chassis receive certain post-
delivery modifications and are joined with van boxes at seven
Company-owned manufacturing and assembly facilities in the United
States.
The Company services and maintains its trucks and trailers
through an extensive preventive-maintenance program, generally
performed at Company-owned facilities located at or near U-Haul
Centers. Major repairs are performed either by the chassis
manufacturers' dealers or by Company-owned repair shops and take
advantage of manufacturers' warranties.
Self-Storage Business
U-Haul entered the self-storage business in 1974 and since
then has increased the rentable square footage of its storage
locations through the acquisition of existing facilities and new
construction. In addition, the Company has entered into management
agreements to manage self-storage properties owned by others. The
Company also provides financing and management services for
independent self-storage businesses.
Through over 800 Company-owned or managed storage locations in
the United States and Canada, the Company offers for rent more than
19.7 million square feet of self-storage space. The Company's self-
storage facility locations range in size up to 149,000 square feet
of storage space, with individual storage spaces in sizes from 16
square feet to 400 square feet or larger.
The primary market for storage rooms is the storage of
household goods. With the addition of over 14,000 storage rooms
during fiscal 1997, average occupancy rates were in the mid 80%
5
range, with modest seasonal variation. During fiscal 1997 and
fiscal 1996, delinquent rentals as a percentage of total storage
rentals were approximately 6% in each year. The Company considers
this rate to be satisfactory.
Competition
The do-it-yourself moving truck and trailer rental market is
highly competitive and dominated by national operators in both the
"In-Town" and one-way markets. Two competitors,
Ryder and Budget Rent-A-Car, were sold during the past year and are
under new management. Management believes that there are two distinct
users of rental trucks: commercial users and do-it-yourself users.
As noted above, the Company focuses on the do-it-yourself mover. The
Company believes that the principal competitive factors are
convenience of rental locations, availability of quality rental
equipment and price.
The self-storage industry is highly competitive. The top
three national firms, including the Company, Public Storage and
Shurgard, account for only 11% of total industry square footage.
Efficient management of occupancy and delinquency rates, as well as
price and convenience, are key competitive factors.
Employees
For the period ended March 31, 1997, the Company's non-
seasonal work force consisted of 14,400 employees.
Amerco Real Estate Operations
AREC has responsibility for actively marketing properties
available for sale or lease. AREC is also responsible for managing
any environmental risks associated with the Company's real estate.
Environmental Matters
The environment is protected by many federal, state and local
laws. Environmental laws impact the way the Company stores and
disposes of various petroleum products (including gasoline, fuel
oil and waste oil), tires, batteries and other materials used in
the rental, maintenance and manufacturing of its rental fleets.
Since fiscal 1990, the Company has incurred environmental-related
expenditures of approximately $31.5 million primarily for removal
and disposal fees and remediation of over 2,600 underground storage
tanks. There are approximately 400 underground storage tanks
remaining.
The Company has been named as a "potentially responsible party"
with respect to disposal of hazardous waste at 16 federal and one
state superfund sites located in 13 states. The Company has entered
into settlements for 15 of the sites for de minimus amounts. One of
these sites has been disputed by the Company with no response for
over five years.
A subsidiary of U-Haul owns one property located within two
different state hazardous waste sites in the State of Washington.
The property is located in Yakima, Washington and is believed to
contain elevated levels of pesticide and other contaminant residue
as a result of onsite operations conducted by one or more former
owners. The State of Washington has designated the property as a
state hazardous waste site known as the "Yakima Valley Spray Site".
The subsidiary, U-Haul Co. of Inland Northwest (Inland Northwest),
has been named by the State of Washington as a "potentially liable
party" (PLP) under state law with respect to this site, along with
approximately 100 other companies and individuals. Inland
Northwest, together with eight other companies and persons, has
formed a committee that has retained an environmental consultant.
The process of site assessment on the Yakima Valley Spray Site is
ongoing and, based upon the information currently available to
Inland Northwest regarding the volume and nature of wastes present,
Inland Northwest is unable to reasonably assess the potential
investigation and cleanup costs, but the costs could be
substantial. Although Inland Northwest has entered into an
agreement with such other companies and persons under which Inland
Northwest has assumed responsibility for 20% of the costs to
investigate the site, no agreement among the parties with respect
to cleanup costs has been entered into at the date hereof.
6
In addition, Inland Northwest has been named by the State of
Washington as a PLP along with 300 other PLPs with respect to
another state-listed hazardous waste site known as the "Yakima
Railroad Site". The Yakima Valley Spray Site is located within the
Yakima Railroad Site. Inland Northwest has been notified that the
Yakima Railroad Site involves potential groundwater contamination
in an area of approximately two square miles. Inland Northwest has
contested its designation as a PLP at this site, but, at the date
hereof, no formal ruling has been issued in this matter.
In February 1992, the State of Washington issued an
enforcement order to Inland Northwest and eight other parties
requiring an interim remedial action and the provision of bottled
water to households that obtain drinking water from wells within
the Yakima Railroad Site. Without conceding any liability, Inland
Northwest and several of the other PLPs have implemented the
bottled water program. Over the past four years, Inland Northwest
has incurred an average annual expense of $720 for the bottled
water program. The State of Washington has stated its intention to
expand the existing municipal water system to supply municipal
water to those households currently receiving bottled water, and it
is estimated that the cost thereof will be approximately $6
million, with such cost being allocated among the 300 PLPs.
In addition, there will be costs associated with remedial
measures to address the regional groundwater contamination issue.
The process of site assessment on the Yakima Railroad Site is
ongoing and, based upon the information currently available to
Inland Northwest regarding the volume and nature of wastes present,
Inland Northwest is unable to reasonably assess the potential
investigation and clean-up costs, but the costs could be
substantial. Moreover, the investigative and remedial costs
incurred by the State can be imposed upon Inland Northwest and any
other PLP as a joint and several liability. At the date of this
report, other than the indication of the expansion of the municipal
water system, there has been no formal indication from the State of
Washington of its intentions regarding future cost recoveries at
the Yakima Railroad Site.
Based upon the information currently available to the Company,
compliance with the environmental laws and its share of
investigation and cleanup costs of the hazardous waste sites, the
Company is not expecting to incur losses with respect to the sites
that would have a material adverse effect on the Company's
financial position or operating results.
D. INSURANCE OPERATIONS
Business Strategies
RWIC's principal business strategy is to capitalize on its
knowledge of insurance products aimed at the moving and rental
markets. RWIC believes that providing U-Haul and U-Haul customers
insurance coverage has enabled it to develop expertise in the areas
of rental vehicle lessee insurance coverage, self-storage property
coverage and general rental equipment coverage. RWIC plans to
continue to use this knowledge to expand its customer base by
offering similar products to insureds other than U-Haul and its
customers. In addition, RWIC continues to expand its involvement
in specialized areas by offering commercial multi-peril and excess
workers' compensation coverages.
Oxford's business strategy emphasizes long-term capital growth
funded through earnings from direct writing, reinsurance and
investment activities. In the past, Oxford has selectively
reinsured life, health and annuity-type insurance products. Oxford
will pursue its growth strategy by originating life, annuity and
health insurance products via agent and direct distribution
channels. Oxford will also be providing reinsurance facilities to
well-managed insurance or reinsurance companies which offer similar
products and are in need of additional capital either as a result
of rapid growth or regulatory demands, or are interested in
divesting non-core business lines.
7
Property and Casualty
RWIC's underwriting activities consist of three basic areas:
U-Haul and U-Haul-affiliated underwriting, direct underwriting and
assumed reinsurance underwriting. U-Haul underwritings include
coverage for U-Haul and U-Haul employees and U-Haul-affiliated
underwritings consist primarily of coverage for U-Haul customers.
For the year ended December 31, 1996, approximately 38.5% of RWIC's
written premiums resulted from U-Haul and U-Haul-affiliated
underwriting activities. RWIC's direct underwriting is done
through underwriters and selected general agents. The products
provided include liability coverage for rental vehicle lessees,
storage rental properties and coverage for commercial multiple
peril and excess workers' compensation. RWIC's assumed reinsurance
underwriting is done via broker markets.
RWIC's liability for unpaid losses is based on estimates of
the ultimate cost of settling claims reported prior to the end of
the accounting period, estimates of reinsurers and estimates of
incurred but unreported losses which are based on RWIC's experience
and insurance industry historical experience. Unpaid loss
adjustment expenses are based on historical ratios of loss
adjustment expenses paid to losses paid.
The liabilities are estimates of the amount necessary to
settle all claims as of the date of the stated reserves and all
incurred but not reported claims. RWIC updates the reserves as
additional facts regarding claims become available. In addition,
court decisions, economic conditions and public attitudes impact
the estimation of reserves and also the ultimate cost of claims.
In estimating reserves, no attempt is made to isolate inflation
from the combined effect of numerous factors including inflation.
Unpaid losses and unpaid loss expenses are not discounted.
RWIC's unpaid loss and loss expenses are certified annually by
an independent actuarial consulting firm as required by state
regulation.
Activity in the liability for unpaid claims and claim
adjustment expenses is summarized as follows:
1996 1995 1994
---------------------------
(in thousands)
Balance at January 1 $ 341,981 329,741 314,482
Less reinsurance recoverable 73,873 74,663 76,111
---------------------------
Net balance at January 1 268,108 255,078 238,371
Incurred related to:
Current year 112,394 114,110 102,782
Prior years 11,527 8,292 6,576
---------------------------
Total incurred 123,921 122,402 109,358
Paid related to:
Current year 30,633 22,576 22,269
Prior years 89,041 86,796 70,382
---------------------------
Total paid 119,674 109,372 92,651
Net balance at December 31 272,355 268,108 255,078
Plus reinsurance recoverable 60,319 73,873 74,663
---------------------------
Balance at December 31 $ 332,674 341,981 329,741
===========================
As a result of changes in estimates of insured events in prior
years, the provision for unpaid loss and loss adjustment expenses
(net of reinsurance recoveries of $23.4 million) increased by $11.5
million in 1996 due to higher than anticipated losses and related
expenses for claims associated with assumed reinsurance and certain
retrospectively rated policies.
The table on page 10 illustrates the change in unpaid loss and
loss adjustment expenses. The first line shows the reserves as
originally reported at the end of the stated year. The second
section, reading down, shows the cumulative amounts paid as of the
end of successive years with respect to that reserve. The third
section, reading down, shows revised estimates of the original
recorded reserve as of the end of successive years. The last
section compares the latest revised estimated reserve amount to the
8
reserve amount as originally established. This last section is
cumulative and should not be summed.
The operating results of the property and casualty insurance
industry, including RWIC, are subject to significant fluctuations
due to numerous factors, including premium rate competition,
catastrophic and unpredictable events (including man-made and
natural disasters), general economic and social conditions,
interest rates, investment returns, changes in tax laws, regulatory
developments and the ability to accurately estimate liabilities for
unpaid losses and loss adjustment expenses.
Life Insurance
Oxford underwrites life, health and annuity insurance, both as
a direct writer and as an assuming reinsurer. Oxford's direct
writings are primarily related to the underwriting of credit life
and credit accident and health business, which accounted for 18.7%
of Oxford's premium revenues for the year ended December 31, 1996.
Oxford's other direct lines are related to group life and
disability coverage issued to employees of the Company. For the
year ended December 31, 1996, approximately 7.9% of Oxford's
premium revenues resulted from business with the Company. In
addition, direct premium revenue includes individual life insurance
acquired from other insurers. Oxford administers the Company's
self-insured group health and dental plans.
Oxford's reinsurance assumed lines, which accounted for
approximately 73.0% of Oxford's premium revenues for the year ended
December 31, 1996, include individual life insurance coverage,
annuity coverages, excess loss health insurance coverage, credit
life and credit accident and health. These reinsurance
arrangements are entered into with unaffiliated insurers.
Investments
RWIC's and Oxford's investments must comply with the insurance
laws of the State of Arizona, where the companies are domiciled.
These laws prescribe the type, quality and concentration of
investments that may be made. Moreover, in order to be considered
an acceptable reinsurer by cedents and intermediaries, a reinsurer
must offer financial security. The quality and liquidity of
invested assets are important considerations in determining such
security.
The investment philosophies of RWIC and Oxford emphasize
protection of principal through the purchase of investment grade
fixed-income securities. Approximately 97% of both RWIC's and
Oxford's fixed-income securities consist of investment grade
securities. The maturity distributions are designed to provide
sufficient liquidity to meet future cash needs.
Reinsurance
The Company's insurance operations assume and cede insurance
from and to other insurers and members of various reinsurance pools
and associations. Reinsurance arrangements are utilized to provide
greater diversification of risk and to minimize exposure on large
risks. However, the original insurer remains liable should the
assuming insurer not be able to meet its obligations under the
reinsurance agreements.
Regulation
RWIC and Oxford are subject to comprehensive regulation
throughout the United States. The regulation extends to such
matters as licensing companies and agents, restricting the types or
quality of investments, regulating capital and surplus and
actuarial reserve maintenance, setting solvency standards, filing
of annual and other reports on financial position, and regulating
trade practices. State laws also regulate transactions and
dividends between an insurance company and its parent or
affiliates, and generally require prior approval or notification
for any change in control of the insurance subsidiary.
In the past few years, the insurance and reinsurance
regulatory framework has been subjected to increased scrutiny by
the National Association of Insurance Commissioners (the NAIC),
state legislatures, insurance regulators and the United States
Congress. These regulators are considering increased regulations,
with an emphasis on insurance company investment and solvency
issues. It is not possible to predict the future impact of
changing state and federal regulation on the operations of RWIC and
Oxford.
9
RWIC and Oxford have adopted the NAIC minimum risk-based
capitalization requirements for insurance companies. As of
December 31, 1996, RWIC and Oxford are in compliance with these
requirements.
Competition
The highly competitive insurance industry includes a large
number of property and casualty insurance companies and life
insurance companies. Many competitors have been in business for a
longer period of time or possess substantially greater financial
resources. Competition in the insurance business is based upon
price, product design and services rendered to producers and
policyholders.
10
Unpaid Loss and Loss Adjustment Expenses
December 31
- --------------------------------------------------------------------------------------------------------------------------
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
- --------------------------------------------------------------------------------------------------------------------------
(in thousands)
Adjustment Expenses: $146,391 168,688 199,380 207,939 226,324 236,019 238,762 314,482 329,741 341,981 332,674
Paid (Cumulative)
as of:
One year later 54,627 49,681 59,111 50,992 55,128 65,532 83,923 70,382 86,796 89,041
Two years later 92,748 91,597 89,850 87,850 97,014 105,432 123,310 115,467 139,247
Three years later 124,278 110,834 114,979 116,043 120,994 126,390 153,030 146,640
Four years later 137,744 129,261 133,466 132,703 133,338 143,433 173,841
Five years later 151,354 142,618 145,864 142,159 144,764 153,730
Six years later 161,447 152,579 153,705 151,227 152,424
Seven years later 169,601 158,531 161,498 158,043
Eight years later 173,666 165,021 167,224
Nine years later 178,101 170,411
Ten years later 181,743
Reserve Reestimated
as of:
One year later 167,211 187,663 200,888 206,701 229,447 231,779 251,450 321,058 338,033 353,508
Two years later 192,272 190,715 202,687 206,219 221,450 224,783 254,532 323,368 340,732
Three years later 192,670 194,280 203,343 199,925 211,998 223,403 253,844 309,936
Four years later 199,576 195,917 199,304 198,986 207,642 214,854 231,536
Five years later 201,303 195,203 200,050 197,890 200,629 198,320
Six years later 202,020 196,176 198,001 194,601 189,601
Seven years later 202,984 196,770 197,112 189,175
Eight years later 202,654 196,072 195,522
Nine years later 203,285 196,169
Ten years later 204,814
Initial Reserve
in Excess
of (Less than)
Reestimated Reserve:
Amount (Cumulative) $(58,423) (27,481) 3,858 18,764 36,723 37,699 7,226 4,546 (10,991) (11,527)
11
ITEM 2. PROPERTIES
The Company and its subsidiaries own property, plant and equipment
that are utilized in the manufacture, repair and rental of U-Haul equipment
and that provide offices for the Company. Such facilities exist throughout
the United States and Canada. The majority of land and buildings used by
U-Haul is owned in fee and is substantially unencumbered, also U-Haul
manages storage facilities owned by others. In addition, U-Haul owns
certain real estate not currently used in its operations. U-Haul operates
1,100 U-Haul Centers (including Company-owned storage locations), manages
145 storage centers and operates 12 manufacturing and assembly facilities.
The Company also operates 80 repair facilities located at or near a U-Haul
Center.
ITEM 3. LEGAL PROCEEDINGS
See Note 14 of Notes to Consolidated Financial Statements in Item 8 for
disclosure of the action in the Superior Court of the State of Arizona,
Maricopa County, entitled Samuel W. Shoen, M.D., et al. v. Edward J. Shoen,
-------------------------------------------------
et al., No. CV88-20139, instituted August 2, 1988 and the resulting
- -------
bankruptcy proceedings (the "Shoen Litigation").
On September 7, 1995, Paul F. Shoen, major stockholder of the Company
and a director, filed a complaint in the Ninth Judicial District Court of
the State of Nevada, Douglas County, entitled Paul F. Shoen v. AMERCO, Case
-----------------------
No. 95-CV-0227. The complaint alleges that by failing to advance his
expenses, including attorneys' fees and other charges, incurred by him in
the Shoen Litigation and the subsequent bankruptcy proceedings, the Company
breached his indemnification agreement with the Company. Mr. Shoen alleges
that the Company has caused damages of no less than $297,183 as of
September 7, 1995, and seeks additional amounts to be alleged at trial.
The Company has denied the allegations and believes it has valid defenses
against his claims. Paul F. Shoen filed a motion for partial summary
judgment on November 15, 1995, and the Company filed an opposition and
cross-motion for partial summary judgment on December 11, 1995. This
matter was heard on November 12, 1996, and both motions were denied.
Sophia M. Shoen, a major stockholder of the Company, has reached a
tentative agreement with the Company, which is subject to execution of
definitive agreements, resolving a lawsuit in the Second Judicial District
Court of the State of Nevada, Case No. CV96-01628 arising out of an
arbitration proceeding entitled JAMS-ENDISPUTE Link No. 940517195. In the
--------------
arbitration proceeding, Sophia Shoen alleged that the Company breached her
Share Repurchase and Registration Rights Agreement, dated as of May 1, 1992
(the Rights Agreement), with the Company by failing to timely register the
sale of her shares of Common Stock which were sold to the public in
November 1994. If the tentative agreement if consummated, (i) the Company
will pay Sophia M. Shoen $1.25 million, (ii) the Rights Agreement will be
terminated, (iii) Sophia M. Shoen will release the Company and others from
any liability relating to the foregoing proceedings and the Rights
Agreement, (iv) the Company will release Sophia M. Shoen and others from
any liability relating to the foregoing proceedings and the Rights
Agreement and (v) the shares of Common Stock held by Sophia M. Shoen will
be released from a stockholder agreement covering approximately 70% of the
Company's Common Stock. No assurance can be given that definitive
agreements will be executed or that this tentative agreement will be
consummated.
In the normal course of business, the Company is a defendant in a
number of suits and claims. The Company 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 the suits, claims, or proceedings
involving the Company, individually or in the aggregate, are expected to
result in a material loss. See "Item 1. Business - Environmental
Matters."
12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On January 17, 1997, the Company held its Combined Annual Meeting of
Stockholders. Prior to the meeting, the Company had not held annual
meetings of stockholders for 1994, 1995 or 1996. The 1994 Annual Meeting
of Stockholders was delayed as a result of litigation initiated by Paul F.
Shoen in July 1994. The 1994 Annual Meeting as well as the 1995 and 1996
Annual Meetings were subsequently delayed by court order in connection with
certain litigation involving the Shoen family relating to control of the
Company. As of October 1, 1996, the Company was no longer subject to any
restriction on its ability to hold annual meetings of stockholders.
At the Combined Annual Meeting of Stockholders, Aubrey K. Johnson and
Paul F. Shoen were elected to serve until the 1998 Annual Meeting of
Stockholders; William E. Carty and Charles J. Bayer were elected to serve
until the 1999 Annual Meeting of Stockholders; and Mark V. Shoen and Edward
J. Shoen were elected to serve until the 2000 Annual Meeting of
Stockholders. John M. Dodds and James P. Shoen continue as directors, with
terms expiring at the 1997 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 Combined Annual Meeting of
Stockholders:
Matters Submitted Votes Votes Votes Abstentions Broker
To a Vote Cast Cast Withheld Non-
For Against Votes
===============================================================================
1. Election of Directors
Aubrey K. Johnson 19,750,812 45,032 - - -
Paul F. Shoen 19,590,162 118,054 - - -
William E. Carty 19,759,375 45,032 - - -
Charles J. Bayer 19,758,697 44,782 - - -
Mark V. Shoen 19,743,851 45,683 - - -
Edward J. Shoen 19,751,564 45,683 - - -
2. Proposal to Amend the
Restated Articles of
Incorporation of the
Company 18,875,086 245,934 - 55,289 -
3. Proposal to ratify the
decision of the Board
of Directors to apply
the U-Haul Drug
Screening Program to
members of the Board
of Directors
(advisory vote only) 18,314,727 743,517 - 96,618 -
Subsequent to the Combined Annual Meeting of Stockholders,
on February 4, 1997, Mark V. Shoen resigned from the Board of Directors.
On that date, pursuant to Article III, Section 2 of the Company's By-Laws,
the Board of Directors elected Richard J. Herrera, whose term expired at
the Combined Annual Meeting of Stockholders, to fill the vacancy created by
Mark V. Shoen's resignation.
13
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
As of June 20, 1997, there were approximately 2,500 holders of record
of the Company's Common Stock.
The Company's Common Stock has been traded on Nasdaq National Market
(Nasdaq) since November 1994. In October 1996, the Company announced the
change of its trading symbol to "UHAL" from "AMOO" to be more reflective of
the majority of its operations. The following table sets forth the high
and low closing prices of the common stock of AMERCO trading on Nasdaq for
the periods indicated.
For the Years Ended March 31,
---------------------------------------------
1997 1996
---------------------------------------------
High Low High Low
------------------ -----------------
First quarter 28 1/4 19 1/2 23 3/4 19 1/2
Second quarter 41 21 1/2 19 3/4 14 3/4
Third quarter 48 1/2 33 1/2 21 16 1/2
Fourth quarter 38 1/2 24 1/2 25 1/2 17
The Company has not declared any cash dividends to common stockholders
for the two most recent fiscal years.
The Company does not have a formal dividend policy. The Company's
Board of Directors periodically considers the advisability of declaring and
paying dividends in light of existing circumstances. See Note 19 of Notes
to Consolidated Financial Statements in Item 8 for a discussion of certain
statutory restrictions on the ability of the Company's insurance
subsidiaries to pay dividends to the Company.
See Note 15 of Notes to Consolidated Financial Statements in Item 8
for a discussion of the Company's non-cash dividends. See Note 6 of Notes
to Consolidated Financial Statements in Item 8 for a discussion of changes
to common shares outstanding and per share amounts.
The common stock of U-Haul is wholly-owned by the Company. As a
result, no active trading market exists for the purchase and sale of such
common stock. No cash dividends were declared to the Company by U-Haul
during the two most recent fiscal years.
On August 30, 1996, the Company sold 100,000 shares of its Series B
Preferred Stock for a total purchase price of $100 million to Blue Ridge
Investments, LLC, a subsidiary of NationsBank Corporation. Exemption from
registration for this transaction was claimed pursuant to Section 4(2) of
the Securities Act of 1933, as amended, regarding transactions by an issuer
not involving any public offering. The Series B Preferred Stock is
convertible under certain circumstances into 4,000,000 shares, subject to
the Company's prior right to redeem the Series B Preferred Stock, of
AMERCO's Common Stock or all of the outstanding capital stock of Picacho
Peak Investment Co., a wholly-owned subsidiary of the Company.
14
Item 6. Selected Financial Data.
AMERCO AND CONSOLIDATED SUBSIDIARIES
ITEM 6. SELECTED FINANCIAL DATA
For the Years Ended March 31,
-------------------------------------------------------------------
1997 1996 1995 1994 1993
-------------------------------------------------------------------
(in thousands, except per share data and ratios)
Summary of Operations:
Rental, net sales and other revenue $ 1,212,079 1,150,040 1,103,367 1,011,562 939,724
Premiums and net investment income 213,024 200,238 177,733 162,151 139,465
--------- --------- --------- --------- ---------
1,425,103 1,350,278 1,281,100 1,173,713 1,079,189
--------- --------- --------- --------- ---------
Operating and advertising expense
and cost of sales (4) 1,022,077 936,284 824,170 774,699 735,978
Benefits, losses and amortization of
deferred acquisition costs 171,254 168,363 144,303 130,168 115,969
Depreciation (5) 74,721 81,847 151,409 133,485 110,105
Interest expense 73,523 67,558 67,762 68,859 67,958
--------- --------- --------- --------- ---------
1,341,575 1,254,052 1,187,644 1,107,211 1,030,010
--------- --------- --------- --------- ---------
Pretax earnings from operations 83,528 96,226 93,456 66,502 49,179
Income tax expense (29,344) (35,832) (33,424) (19,853) (17,270)
--------- --------- --------- --------- ---------
Earnings from operations before
extraordinary loss on early
extinguishment of debt and
cumulative effect of change
in accounting principle 54,184 60,394 60,032 46,649 31,909
Extraordinary loss on early
extinguishment of debt, net (6) (2,319) - - (3,370) -
Cumulative effect of change in
accounting principle, net (7) - - - (3,095) -
--------- --------- --------- --------- ---------
Net earnings $ 51,865 60,394 60,032 40,184 31,909
========= ========= ========= ========= =========
Earnings from operations before
extraordinary loss on early
extinguishment of debt and cumulative
effect of change in accounting
principle per common share (2) (3) (8) $ 1.44 1.33 1.23 1.06 .83
Net earnings per common share (2) (3) (8) 1.35 1.33 1.23 .89 .83
Weighted average common shares
outstanding (2) (8) 25,479,651 35,736,335 38,190,552 38,664,063 38,664,063
Cash dividends declared:
Preferred stock 16,875 12,964 12,964 4,753 -
Common stock - - - 3,147 1,994
Ratio of earnings to fixed charges (1) 1.64 1.89 1.87 1.64 1.45
15
Item 6. continued
AMERCO AND CONSOLIDATED SUBSIDIARIES
ITEM 6. SELECTED FINANCIAL DATA, continued
For the Years Ended March 31,
--------------------------------------------------------------------
1997 1996 1995 1994 1993
--------------------------------------------------------------------
(in thousands)
Balance Sheet Data:
Total property, plant and
equipment, net $ 1,247,066 1,316,715 1,274,246 1,174,236 989,603
Total assets 2,718,994 2,823,407 2,605,989 2,344,442 2,024,023
Notes and loans payable 983,550 998,220 881,222 723,764 697,121
Stockholders' equity (8) 602,320 649,548 686,784 651,787 479,958
(1) For purposes of computing the ratio of earnings to fixed charges,
"earnings" consists of pretax earnings from operations plus total fixed
charges excluding interest capitalized during the period and "fixed
charges" consists of interest expense, preferred stock dividends,
capitalized interest, amortization of debt expense and discounts and one-
third of the Company's annual rental expense (which the Company believes
is a reasonable approximation of the interest factor of such rentals).
(2) Reflects the adoption of Statement of Position 93-6, "Employers'
Accounting for Employee Stock Ownership Plans".
(3) For the fiscal year ended March 31, 1997, 1996, 1995 and 1994, earnings
and net earnings per common share were computed after giving effect to
the dividends on the Company's Series A 8 1/2% preferred stock and Series
B floating rate stock for the fiscal year ended 1997.
(4) Reflects the adoption of Statement of Position 93-7, "Reporting on
Advertising Costs" during the year ended March 31, 1996.
(5) Reflects the change in estimated residual value during the year ended
March 31, 1996.
(6) See "Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations".
(7) Reflects the adoption of Statement of Financial Accounting Standards No.
106, "Employers' Accounting for Postretirement Benefits other than
Pensions".
(8) Reflects the acquisiton of treasury shares acquired pursuant to the Shoen
Litigation as discussed in "Item 7. Managment's Discussion and Analysis
of Financial Condition and Results of Operations - Stockholder
Litigation".
16
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
This report contains forward looking statements. Additional
written or oral forward looking statements may be made by the
Company from time to time in filings with the Securities and
Exchange Commission or otherwise. Such forward looking statements
are within the meaning of that term in Section 27A of the
Securities Act, and Section 21E of the Securities Exchange Act of
1934, as amended. Such statements many include, but not be limited
to, projections of revenues, income, or loss, estimates of capital
expenditures, plans for future operations, products or services,
and financing needs or plans, as well as assumptions relating to
the foregoing. The words "believe", "expect", "anticipate",
"estimate", "project", and similar expressions identify forward looking
statements, which speak only as of the date the statement was made.
Forward looking statements are inherently subject to risks and
uncertainties, some of which cannot be predicted or quantified.
Future events and actual results could differ materially from those set forth
in, contemplated by, or underlying the forward looking statements. The
following disclosures, as well as other statements in the Company's report
and in the Notes to the Company's Consolidated Financial Statements, describe
factors, among others, that could contribute to or cause such differences,
or that could affect the Company's stock price.
General
For financial statement preparation, the Company's insurance
subsidiaries report on a calendar year basis while the Company
reports on a fiscal year basis ending March 31. Accordingly, with
respect to the Company's insurance subsidiaries, any reference to
the years 1996, 1995 and 1994 correspond to the Company's fiscal
years 1997, 1996 and 1995, respectively. There have been no events
related to such subsidiaries between January 1 and March 31 of
1997, 1996 or 1995 that would materially affect the Company's
consolidated financial position or results of operations as of and
for the fiscal years ended March 31, 1997, 1996 and 1995,
respectively.
Information on industry segments is incorporated by reference
to "Item 8. Financial Statements and Supplementary Data - Notes 1,
19 and 20 of Notes to Consolidated Financial Statements". The
notes discuss the principles of consolidation, summarized
consolidated financial information and industry segment and
geographic area data, respectively. In consolidation, all
intersegment premiums are eliminated and the benefits, losses and
expenses are retained by the insurance companies.
Results of Operations
Fiscal Year Ended March 31, 1997 Versus Fiscal Year Ended March 31, 1996
Moving and Storage Operations
Revenues consist of total rental and other revenue and net
sales.
Total rental and other revenue increased by $61.2 million,
approximately 6.3%, to $1,029.2 million in fiscal 1997. The
increase in net revenues resulted from growth in the rental of
moving-related equipment and self-storage market, which grew in the
aggregate by $40.6 million to $974.5 million, as compared to $933.9
million in fiscal 1996. Truck rental revenues growth was due to
improved utilization, an increase in the fleet size and higher
average dollars per transaction. Self-storage facilities rental
growth was positively impacted by additional rentable square
footage and higher management fees derived from storage facilities
managed for others. Other revenues increased in the aggregate by
$20.6 million. An increase in net gains from the sale of real
property of $10.1 million was the largest contributor to the
increase over the prior year for other revenues.
17
Net sales revenues were $179.4 million in fiscal 1997, an increase of
3.2% as compared to fiscal 1996 net sales of $173.8 million. Revenue growth
from the sale of moving support items (i.e. boxes, etc.), propane and hitches
resulted in an $8.3 million increase during the year, offset by a $2.7 million
decrease in revenue from gasoline sales and outside repair income.
Cost of sales was $107.0 million in fiscal 1997, a decrease of 1.6% from
$108.7 million in fiscal 1996. A contributing factor towards the decrease was
a $4.9 million decrease in allowances for inventory shrinkage and other
inventory adjustments. Material costs from the sale of propane and hitches
increased by $3.7 million reflecting higher sales levels.
Operating expenses increased to $898.7 million in fiscal 1997 from
$821.3 million during fiscal 1996, an increase of 9.4%. An aggregate
increase in personnel, rental equipment maintenance and rental equipment
lease expense of $56.8 million contributed to the increase. Increased rental,
sales and repair activity increased personnel costs. Expansion of the rental
fleet and transactional growth resulted in higher rental equipment maintenance
costs. Increased leasing activity resulted in higher lease expense for
rental equipment. Advertising expense in fiscal 1997 declined by $7.0 million
to $31.9 million from $38.9 million in fiscal 1996. This decrease reflects a
one-time expense of $8.6 million recognized in fiscal 1996, due to the
adoption of Statement of Position 93-7. The Company had been deferring
yellow page directory costs and amortizing the costs over the life of
the directory. The Company is currently reviewing its implementation
procedures. All other operating expense categories increased in the aggregate
by $27.6 million to $232.0 million.
Depreciation expense in fiscal 1997 declined by $7.1 million
to $74.7 million from $81.8 million in the prior year. The decline
from the prior year is due to the increase in leasing activity and
the sale/leaseback of rental trailers in June 1996.
Property and Casualty
RWIC gross premium writings for the year ended December 31,
1996 were $167.8 million as compared to $174.2 million in 1995.
The rental industry market accounts for a significant share of
total premiums, 46.5% and 45.2% in 1996 and 1995, respectively.
These writings include U-Haul customers, fleetowners and U-Haul as
well as other rental industry insureds with similar characteristics.
RWIC continues underwriting reinsurance via broker markets. Premiums
in this area decreased during 1996 to $49.0 million, or 29.2% of total
gross premiums, from comparable 1995 figures of $50.1 million, or
28.7% of total premiums. This decrease can be primarily attributed
to inadequate pricing and market conditions. Premium writings in
selected general agency lines were 13.1% of total gross written premiums in
1996 as compared to 16.3% in 1995. This decrease resulted from a business
decision to withdraw from a regional commercial multiple peril market.
RWIC continued its direct multiple peril coverage of various commercial
properties and businesses during 1996. These premiums accounted for 10.7%
of the total gross written premium during the year ended December 31, 1996
as compared to 9.1% during 1995.
Net earned premiums increased $15.7 million, or 11.2%, to
$156.5 million for the year ended December 31, 1996, compared with
premiums of $140.8 million for the year ended December 31, 1995.
The premium increase was primarily due to increased earnings on the
rental industry and direct multiple peril markets, offset by
decreases in assumed broker market reinsurance and general agency lines.
18
Underwriting expenses incurred were $170.8 million for the
year ended December 31, 1996, an increase of $19.9 million or 13.2%
over 1995. Comparable underwriting expenses incurred for 1995 were
$150.9 million. The increase is attributed to increased commission
expense and losses incurred. Commission expense at December 1995
was reduced by $9.0 million in order to realize a guaranteed margin
on a canceled general agency program with the Pace American Group
of Companies. Commission expense in 1996 includes a $2.0 million
allowance for doubtful accounts as a result of a settlement
agreement with the Receiver for American Bonding Company, which
provided for the return of $2.3 million of funds held as
collateral. Losses incurred increased in the rental industry
liability and broker market reinsurance segments, and was offset by
a decrease in the general agency lines. The ratio of underwriting
expenses to net earned premium was 1.09 in 1996 as compared to 1.07
in 1995.
Net investment income was $30.6 million for the year ended
December 31, 1996, an increase of 2.2% over 1995 net investment
income of $29.9 million. The marginal increase resulted from
enhanced yield provided by an increased investment in preferred
stock.
Income before tax expense was $18.3 million for the year ended
December 31, 1996, as compared to $21.4 million for the year ended
December 31, 1995. This represents a decrease of $3.1 million, or
14.5% over 1995. Increased premium earnings and investment income
were offset by a disproportionate increase in underwriting expenses
as discussed above.
Life Insurance
Premiums from Oxford's reinsurance lines before intercompany
eliminations were $20.3 million for the year ended December 31,
1996, an increase of $0.9 million or 4.6% over 1995 and accounted
for 73.0% of Oxford's premiums in 1996. These premiums are
primarily from matured term life insurance and deferred annuity
contracts. Increases in premiums are primarily from the
anticipated increase in annuitizations as a result of the maturing
of deferred annuities.
Premiums from Oxford's direct lines before intercompany
eliminations were $7.5 million in 1996, a decrease of $0.1 million
or 1.3% from the prior year. This decrease in direct premium is
primarily attributable to the credit life and credit accident and
health business ($5.2 million in premium). Oxford's direct
business related to group life and disability coverage issued to
employees of the Company accounted for approximately 7.9% of
premiums for the year ended December 31, 1996. Other direct lines,
including the credit business, accounted for approximately 19.1% of
Oxford's premiums in 1996.
Net investment income before intercompany eliminations was
$18.7 million and $16.5 million for the years ended December 31,
1996 and 1995, respectively. This increase is due to increasing
margins on the interest sensitive business. Gains (losses) on the
disposition of investments were $(0.4) million and $4.8 million for
1996 and 1995, respectively. Oxford reported $2.3 million and $6.8
million of other income for 1996 and 1995, respectively.
Benefits and expenses incurred were $38.3 million for the year
ended December 31, 1996, an increase of 1.3% over 1995. Comparable
benefits and expenses incurred for 1995 were $37.8 million. This
increase is primarily due to an increase in annuitizations on
maturing deferred annuities, partially offset by decreases in death
benefits and amortization of deferred acquisition costs.
Operating profit before tax and intercompany eliminations
decreased by $2.0 million, or approximately 15.9%, in 1996 to $10.6
million, primarily due to the realization of capital gains in 1995.
The decrease in operating profit was partially offset by larger
margins on Oxford's interest sensitive business in 1996.
Interest Expense
Interest expense increased by $5.9 million to $73.5 million in
fiscal 1997, as compared to $67.6 million in the prior year. The
increase resulted from higher average debt levels during fiscal
1997.
19
Extraordinary Loss on Extinguishment of Debt
During the second quarter of fiscal 1997, the Company extinguished debt
of approximately $76.3 million by irrevocably placing cash into a trust of
U.S. Treasury securities to be used to satisfy scheduled payments of principal
and interest. The Company also extinguished $86.2 million of its long-term
notes originally due in fiscal 1997 through fiscal 1999. These transactions
resulted in an extraordinary loss of $2.3 million, net of tax of $1.4 million
($0.09 per share).
Results of Operations - Consolidated Group
As a result of the foregoing, pretax earnings from operations
of $83.5 million were realized in fiscal 1997, as compared to $96.2
million for fiscal 1996. After providing for income taxes and
extraordinary loss on early extinguishment of debt, net of tax; net
earnings for fiscal 1997 were $51.9 million, as compared to $60.4
million for the prior year.
Fiscal Year Ended March 31, 1996 Versus Fiscal Year Ended March 31, 1995
Moving and Storage Operations
Revenues consist of total rental and other revenue and net sales.
Total rental and other revenue increased by $40.2 million
(4.3%) to $968.0 million during fiscal 1996. The increase in net
revenues results from growth in the rental of moving related
equipment and self-storage facilities which increased in the
aggregate by $39.2 million to $933.9 million, as compared to $894.7
million for fiscal 1995. In excess of 53% of the rental revenue
growth was realized during the fourth quarter of fiscal 1996.
Moving related rental revenues benefited from transactional growth
(volume) within the rental fleet. Self-storage facilities rental
growth was positively impacted by an increase in same store rents
realized per rentable square foot, higher management fees derived
from storage facilities managed for others and additional rentable square
footage. Other revenues increased in the aggregate by $1.0 million.
Net sales revenues were $173.8 million for fiscal 1996, an
increase of approximately 2.1% from fiscal 1995 net sales of $170.2
million. Revenue growth from the sale of moving support items
(i.e., boxes, etc.), hitches and propane resulted in a $9.1 million
increase during the year, which was offset by a $1.2 million
decrease in revenue from gasoline sales consistent with the
Company's ongoing efforts to remove underground storage tanks and
gradually discontinue gasoline sales. Other sales decreased by
$5.2 million due to the sale of discontinued repair parts during
the fourth quarter of fiscal 1995.
Cost of sales was $108.7 million for fiscal 1996, an increase
of 16.2% from $93.5 million for fiscal 1995. This increase in cost
of sales reflects a $7.0 million increase in material costs from
the sale of moving support items, hitches and propane as a result
of higher sales levels and an $8.1 million increase in allowances
for inventory shrinkage and other inventory adjustments.
Operating expenses increased to $821.3 million during fiscal
1996 from $723.9 million during fiscal 1995, an increase of 13.5%.
Increased rental equipment maintenance costs of $53.6 million were
related to rental fleet expansion and transactional growth.
Increased personnel costs of $16.8 million were due to the increase
in rental, sales and repair activity. Advertising expense increased
to $38.9 million during fiscal 1996 from $29.1 million for fiscal
1995. The increase primarily reflects a one-time expense of $8.6
million recognized during the first quarter of fiscal 1996, due to
the adoption of Statement of Position 93-7 which requires immediate
recognition of advertising costs not qualifying as direct-response.
All other operating expense categories increased in the aggregate
by $17.2 million, 6.7%, to $273.5 million.
20
Depreciation expense for fiscal 1996 was $81.8 million, as
compared to $151.4 million for fiscal year 1995. During the third
and fourth quarters of fiscal 1996, based on the Company's in-depth
market analysis, the Company increased the estimated residual value
of certain rental trucks. The effect of the change in estimate
reduced depreciation expense for fiscal 1996 by $71.4 million
($35.7 million during the third quarter, $26.6 million during the
fourth quarter for the fourth quarter change and $9.1 million
during the fourth quarter for the third quarter change). The effect of the
change increased net income for fiscal year 1996 by $44.4 million.
Property and Casualty
RWIC gross premium writings for the year ended December 31,
1995 were $174.2 million as compared to $179.2 million in 1994. As
in prior years, the rental industry market accounts for a
significant share of total premiums, approximately 45.2% and 42.8%
in 1995 and 1994, respectively. These writings include U-Haul
customers, fleetowners and U-Haul as well as other rental industry
insureds with similar characteristics. RWIC continues underwriting
reinsurance via broker markets. Premiums in this area decreased in
1995 to $50.1 million, or 28.7% of total gross premiums, from
comparable 1994 figures of $58.3 million, or 32.5% of total
premiums. This decrease can be primarily attributed to RWIC
electing not to renew several treaties because of inadequate
pricing or terms. Also contributing to the decrease was the
discontinuation of a significant fronting arrangement. Premium
writings in selected general agency lines were 16.3% of total gross
written premiums in 1995 as compared to a 15.1% in 1994. RWIC
expanded its direct business in 1995 to include multiple peril
coverage for a variety of commercial properties and businesses.
These premiums accounted for 9.1% of the total gross written
premium during the year ended December 31, 1995.
Net earned premiums increased $7.4 million, or 5.6%, to $140.8
million for the year ended December 31, 1995, compared with
premiums of $133.4 million for the year ended December 31, 1994.
This increase was primarily due to increased earnings on the
assumed treaty reinsurance business and the expanded commercial
coverage discussed above, offset by decreased premiums on canceled
agent programs and rental industry liability lines.
Underwriting expenses incurred were $150.9 million for the
twelve months ended December 31, 1995, an increase of $8.8 million
or 6.2% over 1994. The increase occurred in incurred loss and loss
adjusting expense, offset by decreased commissions expense. The
change in incurred loss and loss adjusting expense resulted from
increases on general agency, rental industry liability and assumed
treaty reinsurance, partially offset by improved underwriting
results in other programs. The decrease in commission expense
resulted from an adjustment made to realize a guaranteed margin on
a canceled general agency program. The ratio of underwriting
expenses to net earned premium remained the same, 1.07, in both
1995 and 1994.
Net investment income was $29.9 million for the year ended
December 31, 1995, an increase of 3.1% over 1994 net investment
income of $29.0 million. The increase is the result of favorable
interest rates along with a larger portfolio due to growth in
business.
Income before tax expense was $21.4 million as compared to
$23.2 million for the year ended December 1994. This represents a
decrease of $1.8 million, or 7.8% over 1994. Increased premium
earnings and investment income were offset by a disproportionate
increase in underwriting expenses as discussed above.
Life Insurance
Premiums from Oxford's reinsurance lines before intercompany
eliminations were $19.4 million for the year ended December 31,
1995, an increase of $2.0 million or approximately 11.5% over 1994
and accounted for 71.8% of Oxford's premiums in 1995. These
premiums are primarily from term life insurance and deferred
annuity contracts that have matured. Increases in premiums are
primarily from the anticipated increase in annuitizations as a
result of the maturing of deferred annuities and from additional
production in the credit life and credit accident and health
business.
21
Premiums from Oxford's direct lines before intercompany
eliminations were $7.6 million in 1995, an increase of $1.4 million
or 22.6% from the prior year. This increase in direct premium is
primarily attributable to the credit life and credit accident and
health business ($5.6 million in premium). Oxford's direct
business related to group life and disability coverage issued to
employees of the Company accounted for approximately 7.2% of
premiums for the year ended December 31, 1995. Other direct lines,
including the credit business, accounted for approximately 21.0% of
Oxford's premiums in 1995.
Net investment income before intercompany eliminations was
$16.5 million and $14.1 million for the years ended December 31,
1995 and 1994, respectively. This increase is due to increasing
margins on the interest sensitive business. Gains on the
disposition of fixed maturity investments were $4.8 million and
$1.3 million for 1995 and 1994, respectively. Oxford reported $2.0
million and $1.9 million of other income for 1995 and 1994,
respectively.
Benefits and expenses incurred were $37.8 million for the year
ended December 31, 1995, an increase of 21.9% over 1994.
Comparable benefits and expenses incurred for 1994 were $31.0
million. This increase is primarily due to disability, credit life
and credit disability benefits incurred and an increase in the
amortization of deferred acquisition costs, primarily as a result
of the increase in realized capital gains on the disposition of
fixed maturities.
Operating profit before intercompany eliminations increased by
$2.9 million, or approximately 29.9%, in 1995 to $12.6 million,
primarily due to the increasing margins on the interest sensitive
business and gains on the disposition of fixed maturity
investments, which were partially offset by the increase in the
amortization of deferred acquisition costs.
Interest Expense
Interest expense decreased by $0.2 million to $67.6 million in
fiscal 1996, as compared to $67.8 million in fiscal 1995. Despite
average debt levels increasing, interest expense declined
reflecting a reduction in the average cost of funds.
Results of Operations - Consolidated Group
As a result of the foregoing, pre-tax earnings of $96.2
million were realized in fiscal 1996 as compared to $93.5 million
in fiscal 1995. After providing for income taxes, net earnings for
fiscal 1996 were $60.4 million as compared to $60.0 million for the
same period of the prior year.
22
Quarterly Results
The following table presents unaudited quarterly results for
the eight quarters in the period beginning April 1, 1995 and ending
March 31, 1997. The Company believes that all necessary
adjustments have been included in the amounts stated below to
present fairly, and in accordance with generally accepted
accounting principles, the selected quarterly information when read
in conjunction with the consolidated financial statements
incorporated herein by reference. The Company's U-Haul moving and
storage operations are seasonal and proportionally more of the
Company's revenues and net earnings from its U-Haul moving and
storage operations are generated in the first and second quarters
of each fiscal year (April through September). The operating
results for the periods presented are not necessarily indicative of
results for any future period (in thousands except per share data).
Quarter Ended
----------------------------------------------
Jun 30 Sep 30 Dec 31 Mar 31
1996 1996 1996 1997
----------------------------------------------
Total revenues $ 379,192 417,223 320,583 308,105
Earnings from operations
before extraordinary loss
on early extinguishment
of debt (6) - 39,741 (9,538) -
Net earnings (loss) (4) (6) 40,005 37,737 (9,853) (16,024)
Weighted average common
shares outstanding (2) (5) 32,015,301 27,675,192 20,359,873 21,868,241
Earnings from operations
before extraordinary loss
on early extinguishment
of debt per common share (6) - 1.29 (0.72) -
Net earnings (loss) per
common share (1) (2) (5) (6) 1.15 1.22 (0.74) (0.97)
Quarter Ended
----------------------------------------------
Jun 30 Sep 30 Dec 31 Mar 31
1995 1995 1995 1996
----------------------------------------------
Total revenues $ 348,698 389,861 313,063 298,656
Net earnings (loss) (3) (4) 15,177 35,332 7,701 2,184
Weighted average common
shares outstanding (2) (5) 37,958,426 37,931,825 36,796,961 32,554,458
Net earnings (loss) per
common share (1) (2) 0.31 0.85 0.13 (0.04)
_______________
(1) Net earnings (loss) per common share amounts were computed
after giving effect to the dividends on the Company's Preferred Stock.
(2) Reflects the adoption of Statement of Position 93-6,
"Employers' Accounting for Employee Stock Ownership Plan".
(3) Reflects the adoption of Statement of Position 93-7, "Reporting
on Advertising Costs" in the first quarter of fiscal 1996.
(4) Reflects the change in estimated residual value during the
third and fourth quarters of fiscal 1996.
(5) Reflects the acquisition of treasury shares acquired pursuant
to the Shoen Litigation as discussed in "Item 7. Management's Discussion
and Analysis of Financial condition and Results of Operations-Stockholder
Litigation".
(6) During second quarter of fiscal 1997, the Company extinguished
$76.3 million of debt and $86.2 million of its long-term notes originally
due in fiscal 1997 through fiscal 1999. This resulted in an extraordinary
loss of $2.3 million, net of tax of $1.4 million ($0.09 per share).
23
Liquidity and Capital Resources
Moving and Storage Operations
To meet the needs of its customers, U-Haul must maintain a
large inventory of fixed asset rental items. At March 31, 1997,
net property, plant and equipment represented 68.9% of total U-Haul
assets and 45.8% of consolidated assets. In fiscal 1997, capital
expenditures were $203.9 million as compared to $291.1 million in
fiscal 1996, reflecting expansion of the rental fleet in both
periods, purchase of trucks previously leased and real property
acquisitions. The capital needs required to fund these
acquisitions were funded with internally generated funds from
operations and the proceeds of equity, debt and lease financings.
Cash flows from operating activities were $156.7 million in
fiscal 1997, as compared to $146.6 million and $178.0 million in
fiscal 1996 and 1995, respectively. The increase from the prior
year is due to payoffs of mortgage receivables offset by higher
operating expenses.
Property and Casualty
Cash flows from operating activities were $15.0 million, $31.0
million and $28.8 million for the years ended December 31, 1996,
1995 and 1994, respectively. The change is due to decreased
unearned premium reserve, temporary increases in paid losses
recoverable and due from affiliates and a smaller increase in loss
and expense reserves than for the year ended December 31, 1995.
These decreases in cash were offset by a decrease in accounts
receivable.
RWIC's cash and cash equivalents and short-term investment
portfolio were $30.8 and $10.5 million at December 31, 1996 and
1995, respectively. This level of liquid assets, combined with
budgeted cash flow, is adequate to meet periodic needs. The
balances reflect funds in transition from maturity proceeds to long-
term investments, as well as funds for an investment in a Texas-
based self-storage corporation, made in February 1997, in which
RWIC invested $13.5 million in exchange for a 27.3% limited
partnership interest. The structure of the long-term portfolio is
designed to match future liability cash needs. Capital and
operating budgets allow RWIC to schedule cash needs in accordance
with investment and underwriting proceeds.
RWIC maintains a diversified securities investment portfolio,
primarily in bonds at varying maturity levels with 97.6% 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 is
adequate, with current invested assets equal to 99.4% of total
liabilities.
Stockholder's equity increased 2.2% from $188.2 million at
December 31, 1995 to $192.3 million at December 31, 1996. RWIC
considers current stockholder's equity to be adequate to support
future growth and absorb unforeseen risk events. RWIC does not use
debt or equity issues to increase capital and therefore has no
exposure to capital market conditions. RWIC paid dividends of $6.7
million in December 1996 to its parent.
Applicable laws and regulations of the State of Arizona
require the Company's insurance subsidiaries to maintain minimum
capital determined in accordance with statutory accounting
practices. With respect to RWIC, such amount is $1.0 million. In
addition, the amount of dividends that can be paid to stockholders
by insurance companies domiciled in the State of Arizona is
limited. Any dividend in excess of the limit requires prior
regulatory approval.
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
24
consideration. Benefit and claim statistics are continually
monitored to provide projections of future cash requirements.
Cash provided by operating activities was $16.5 million, $9.0
million and $15.2 million for the years ended December 31, 1996,
1995 and 1994, respectively. In 1996, cash flows provided (used)
by financing activities were $(10.0) million. During 1995 and
1994, cash flows provided by financing activities were $87.9
million and $1.1 million, respectively. Cash flows from deferred
annuity sales increase investment contract deposits, which are a
component of financing activities, as well as an increase in the
purchase of fixed maturities which are a component of investing
activities. In addition to cash flows from operating and financing
activities, a substantial amount of liquid funds is available
through Oxford's short-term portfolio. At December 31, 1996 and
1995, short-term investments aggregated $4.5 million and $10.8
million, respectively. In February 1997, Oxford invested $11.0
million for a 22.2% limited partnership in a Texas-based self-
storage corporation. Management believes that the overall sources
of liquidity will continue to meet foreseeable cash needs.
Stockholder's equity of Oxford decreased to $75.3 million in
1996 from $106.2 million in 1995. During 1996, Oxford paid cash
dividends of $33.9 million to its parent.
Applicable laws and regulations of the State of Arizona
require the Company's insurance subsidiaries to maintain minimum
capital and surplus determined in accordance with statutory
accounting practices. With respect to Oxford, such amount is $0.6
million. In addition, the amount of dividends that can be paid to
shareholders by insurance companies domiciled in the State of
Arizona is limited. Any dividend in excess of the limit requires
prior regulatory approval. Statutory surplus which can be
distributed as dividends without regulatory approval is zero at
December 31, 1996. Any 1997 dividend requires prior regulatory
approval.
Consolidated Group
During each of the fiscal years ending March 31, 1998, 1999
and 2000, U-Haul estimates gross capital expenditures will range
from $250-$300 million as a result of acquisitions for the rental
fleet and self-storage locations. This level of capital
expenditures, combined with an average of approximately $75 million
in annual long-term debt maturities during this same period, are
expected to create annual average funding needs of approximately
$325-$375 million. Management estimates that U-Haul will fund
between 70% and 88% with internally generated funds, including
proceeds from the disposition of older trucks and other asset
sales. The remainder of the required capital expenditures will be
financed either through lease fundings, credit facilities, new debt
placements or equity offerings.
Credit Agreements
The Company's operations are funded by various credit and
financing arrangements, including unsecured long-term borrowings,
unsecured medium-term notes and revolving lines of credit with
domestic and foreign banks. Principally to finance its fleet of
trucks and trailers, the Company routinely enters into sale and
leaseback transactions. As of March 31, 1997, the Company had
$983.6 million in total notes and loans payable outstanding and
unutilized committed lines of credit of approximately $490.0
million.
Certain of the Company's credit agreements contain restrictive
financial and other covenants, including, among others, covenants
with respect to incurring additional indebtedness, maintaining
certain financial ratios and placing certain additional liens on
its properties and assets. At March 31, 1997, the Company was in
compliance with these covenants.
The Company is further restricted in the issuance of certain
types of preferred stock. The Company is prohibited from issuing
shares of preferred stock that provide for any mandatory
redemption, sinking fund payment, or mandatory prepayment, or that
allow the holders thereof to require the Company or any subsidiary
25
of the Company to repurchase such preferred stock at the option of
such holders or upon the occurrence of any event or events without
the consent of its lenders.
Stockholder Litigation
On October 1, 1996, the Company paid the last portion of a
total of approximately $448.1 million to the plaintiffs (non-
management members of the Shoen family and their affiliates) in
full settlement of a long-standing legal dispute involving the
Shoen family and related to control of the Company. As a result,
the plaintiffs that owned AMERCO stock were required to transfer
all of their shares of Common Stock to the Company. The total
number of shares transferred was 18,254,976.
An issue remains regarding whether or not the plaintiffs are
entitled to statutory post-judgment interest at the rate of ten
percent (10%) per year from February 21, 1995 (the date the
Director-Defendants filed for protection under Chapter 11) until
the judgment was satisfied. On July 19, 1996, the bankruptcy
court ruled the plaintiffs are entitled to such interest. The
Director-Defendants and the Company have appealed the court's
decision. The Company has deposited approximately $48.2 million
into an escrow account to secure payment of the disputed interest,
pending final resolution of this issue (including all appeals by
either side). If the interest issue is decided adversely to the
Company and the Director-Defendants, the amount deposited into the
escrow account will be transferred to the plaintiffs. The ultimate
outcome of this issue will not have the effect of increasing or
decreasing the Company's net income, but could reduce stockholders'
equity.
The Company has deducted for income tax purposes approximately
$324.0 million of the payments made to the plaintiffs. While the
Company believes that such income tax deductions are appropriate,
there can be no assurance that such deductions ultimately will be
allowed in full.
Other
On April 1, 1995, the Company implemented Statement of
Position 93 - 7, "Reporting on Advertising Costs", issued by the
Accounting Standards Executive Committee in December 1993. This
statement of position provides guidance on financial reporting on
advertising costs in annual financial statements. Upon
implementation, the Company recognized additional advertising
expense of $8,647,000 for advertising costs not qualifying as
direct-response. The adoption had the effect of reducing net
income by $5,474,000 ($0.15 per share) for the year ended March
31, 1996. The Company is currently reviewing its implementation
procedures.
Other pronouncements issued by the Financial Accounting
Standards Board adopted during the year are not material to the
consolidated financial statements of the Company. Further,
pronouncements with future effective dates are either not
applicable or not material to the consolidated financial statements
of the Company.
The Company has conducted a review of its computer systems to
identify those areas that could be affected by the "Year 2000"
issue and is developing an implementation plan to resolve the
issue. The Company presently believes, with modification to
existing software and converting to new software, the Year 2000
problem will not pose significant operational problems and is not
anticipated to be material to its financial position or results of
operations in any given year.
Impact of Inflation
Inflation has had no material financial effect on the Company's
results of operations in the years discussed.
26
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Report of Independent Accountants and Consolidated
Financial Statements of the Company, including the notes to such
statements and the related schedules, are set forth on pages 30
through 81 and are hereby incorporated herein.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNT
ING AND FINANCIAL DISCLOSURE
The Registrants have had no disagreements with their
independent accountant in regard to accounting and financial
disclosure matters and have not changed their independent
accountant during the two most recent fiscal years.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS
Information regarding (i) directors and executive officers of
the Company is set forth under the captions "Election of
Directors", "Executive Officers of the Company", and "Shoen
Litigation" and (ii) compliance with Section 16(a) is set forth
under the caption "Section 16(a) Beneficial Ownership Reporting
Compliance" in the Company's Proxy Statement relating to the 1997
Annual Meeting of Stockholders (the "1997 Proxy Statement")
incorporated by reference into this Form 10-K Report, which will be
filed with the Securities and Exchange Commission in accordance
with Rule 14a-6 promulgated under the Securities Exchange Act of
1934, as amended. With the exception of the foregoing information
and other information specifically incorporated by reference into
this report, the 1997 Proxy Statement is not being filed as a part
hereof.
ITEM 11. EXECUTIVE COMPENSATION
Information regarding executive compensation is set forth
under the caption "Executive Compensation" in the 1997 Proxy
Statement, which information is incorporated herein by reference;
provided, however, that the "Board Report on Executive
Compensation" and the "Performance Graph" contained in the 1997
Proxy Statement are not incorporated by reference herein.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
Information regarding security ownership of certain beneficial
owners and management is set forth under the caption "Security
Ownership of Certain Beneficial Owners and Management" in the 1997
Proxy Statement, which information is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding certain relationships and related
transactions of management is set forth under the captions "Certain
Relationships and Related Transactions" and "Shoen Litigation" in
the 1997 Proxy Statement, which information is incorporated herein
by reference.
27
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K
(a) The following documents are filed as part of this Report:
Page No.
--------
1. Financial Statements
Report of Independent Accountants 30
Consolidated Balance Sheets -
March 31, 1997 and 1996 31
Consolidated Statements of Earnings -
Years ended March 31, 1997, 1996 and 1995 33
Consolidated Statements of Changes in Stockholders'
Equity - Years ended March 31, 1997, 1996 and 1995 34
Consolidated Statements of Cash Flows - Years ended
March 31, 1997, 1996 and 1995 36
Notes to Consolidated Financial Statements 38
2. Additional Information
Summary of Earnings of Independent Trailer Fleets 74
Notes to Summary of Earnings of Independent
Trailer Fleets 75
3. Financial Statement Schedules required to be filed
by Item 8 and Paragraph (d) of this Item 14
Condensed Financial Information of Registrant --
Schedule I 77
Supplemental Information (For Property-Casualty
Insurance Underwriters) -- Schedule V 81
All other schedules are omitted as the required information is
not applicable or the information is presented in the financial
statements or related notes thereto.
(b) No report on Form 8-K has been filed during the last quarter
of the period covered by this report.
28
(c) Exhibits
Exhibit No. Description
----------- -----------
2.1 Order Confirming Plan (1)
2.2 Second Amended and Restated Debtor's Plan of
Reorganization Proposed by Edward J. Shoen (1)
3.1 Restated Articles of Incorporation (2)
3.2 Restated By-Laws of AMERCO as of August 27, 1996 (3)
4.1 Debt Securities Indenture (1)
4.2 First Supplemental Indenture, Dated as of May 6, 1996 (4)
4.3 Stockholders Rights Plan (5)
4.4 AMERCO Stock Option and Incentive Plan(5)
10.1 AMERCO Employee Savings, Profit Sharing and
Employee Stock Ownership Plan (5)
10.2 U-Haul Dealership Contract (5)
10.3 Share Repurchase and Registration Rights Agreement (5)
10.4 Share Repurchase and Registration Rights Agreement (5)
10.5 ESOP Loan Credit Agreement (6)
10.6 ESOP Loan Agreement (6)
10.7 Trust Agreement for the AMERCO Employee Savings,
Profit Sharing and Employee Stock Ownership Plan(6)
10.8 Amended Indemnification Agreement (6)
10.9 Indemnification Trust Agreement (6)
10.10 Promissory Note between SAC Holding Corporation
and a subsidiary of AMERCO
10.11 Promissory Notes between Four SAC Self-Storage Corporation
and a subsidiary of AMERCO
10.12 Management Agreement between Three SAC Self-Storage
Corporation and a subsidiary of AMERCO
10.13 Management Agreement between Four SAC Self-Storage
Corporation and a subsidiary of AMERCO
10.14 Settlement Agreement, dated September 19, 1995, among
Mary Anna Shoen Eaton, Maran, Inc., Edward J. Shoen,
James P. Shoen, Aubrey K. Johnson, John M. Dodds,
William E. Carty and AMERCO(8)
10.15 Full and Final Release of All Claims, dated September 19,
1995, executed by Maran, Inc., Mary Anna Shoen Eaton and
Timothy Eaton (8)
10.16 Full and Final Release of All Claims, dated September 19,
1995, executed by AMERCO, Edward J. Shoen, James P. Shoen,
Aubrey K. Johnson, John M. Dodds and William E. Carty (8)
10.17 Stock Purchase Agreement, dated September 19, 1995 among
Mary Anna Shoen Eaton, Maran, Inc., Edward J. Shoen,
James P. Shoen, Aubrey K. Johnson, John M. Dodds and
William E. Carty (8)
10.18 Agreement, dated October 17, 1995, among AMERCO,
Edward J. Shoen, James P. Shoen, Aubrey K. Johnson,
John M. Dodds and William E. Carty (8)
10.19 Directors' Release, dated October 17, 1995, executed by
Edward J. Shoen, James P. Shoen, Aubrey K. Johnson,
John M. Dodds and William E. Carty in favor of AMERCO (8)
10.20 AMERCO Release, dated October 17, 1995, executed by AMERCO
in favor of Edward J. Shoen, James P. Shoen,
Aubrey K. Johnson, John M. Dodds and William E. Carty (8)
10.21 Settlement Agreement with Paul F. Shoen (9)
10.22 Series B Preferred Stock Purchase Agreement, dated as of
August 30, 1996 (3)
10.23 Side Agreement, dated as of October 29, 1996(3)
10.24 Settlement Agreement, dated October 15, 1996 between
L.S. Shoen and AMERCO
12 Statements Re: Computation of Ratios
21 Subsidiaries of AMERCO
29
c. Exhibits, continued
23 Consent of Independent Accountants
27 Financial Data Schedule
________________
(1) Incorporated by reference to the Company's Registration
Statement on Form S-3, Registration no. 333-1195.
(2) Incorporated by reference to the Company's Quarterly Report on
Form 10-Q for the quarter ended December 31, 1992, file no.
0-7862.
(3) Incorporated by reference to the Company Quarterly Report on
Form 10-Q for the quarter ended September 30, 1996, file no.
0-7862.
(4) Incorporated by reference to the Company's Current Report on
Form 8-K, dated May 6, 1996.
(5) Incorporated by reference to the Company's Annual Report on
Form 10-K for the year ended March 31, 1993, file no. 0-7862.
(6) Incorporated by reference to the Company's Annual Report on
Form 10-K for the year ended March 31, 1990, file no. 0-7862.
(7) Incorporated by reference to the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1994, file no.
0-7862.
(8) Incorporated by reference to the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1995, file no.
0-7862.
(9) Incorporated by reference to the Company's Annual Report on
Form 10-K for the year ended March 31, 1995, file no. 0-7862.
30
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Board of Directors
and Stockholders of AMERCO
In our opinion, the consolidated financial statements listed in the
index appearing under Item 14(a)(1) and (3) on page 27 present
fairly, in all material respects, the financial position of AMERCO
and its subsidiaries at March 31, 1997 and 1996, and the results of
their operations and their cash flows for each of the three years in
the period ended March 31, 1997, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our
audits. We conducted our audits of these statements in accordance
with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.
As discussed in Note 1 to the consolidated financial statements, the
Company changed its method of accounting for advertising costs in
fiscal 1996.
Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The Summary of
Earnings of Independent Trailer Fleets included on pages 74 through
76 of this Form 10-K is presented for purposes of additional
analysis and is not a required part of the basic financial
statements. Such information has been subjected to the auditing
procedures applied in the audits of the basic financial statements
and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
PRICE WATERHOUSE LLP
Phoenix, Arizona
June 23, 1997
31
AMERCO AND CONSOLIDATED SUBSIDIARIES
Consolidated Balance Sheets
March 31,
Assets 1997 1996
---------------------
(in thousands)
Cash and cash equivalents $ 41,752 31,168
Receivables 238,523 340,564
Inventories 65,794 45,891
Prepaid expenses 17,264 16,415
Investments, fixed maturities 859,694 879,702
Investments, other 127,306 126,555
Deferred policy acquisition costs 48,598 49,995
Other assets 72,997 16,402
---------------------
Property, plant and equipment, at cost:
Land 209,803 212,593
Buildings and improvements 814,744 769,380
Furniture and equipment 199,126 188,734
Rental trailers and other rental
equipment 148,807 256,411
Rental trucks 947,911 968,131
General rental items 21,600 24,197
---------------------
2,341,991 2,419,446
Less accumulated depreciation 1,094,925 1,102,731
---------------------
Total property, plant and equipment 1,247,066 1,316,715
---------------------
$ 2,718,994 2,823,407
=====================
The accompanying notes are an integral part of these consolidated financial
statements.
32
Liabilities and Stockholders' Equity 1997 1996
---------------------
(in thousands)
Liabilities:
Accounts payable and accrued
expenses $ 131,099 151,754
Notes and loans 983,550 998,220
Policy benefits and losses, claims
and loss expenses payable 469,134 483,561
Liabilities from premium deposits 433,397 410,787
Cash overdraft 23,606 32,159
Other policyholders' funds and
liabilities 30,966 25,713
Deferred income 35,247 2,926
Deferred income taxes 9,675 68,739
---------------------
Stockholders' equity:
Serial preferred stock, with or
without par value, 50,000,000
shares authorized -
Series A preferred stock, with no par
value, 6,100,000 shares authorized;
6,100,000 shares issued and
outstanding as of March 31, 1997
and 1996 - -
Series B preferred stock, with no par
value, 100,000 shares authorized;
100,000 shares issued and
outstanding as of March 31, 1997,
none issued and outstanding as of
March 31, 1996 - -
Serial common stock, with or without
par value, 150,000,000 shares
authorized -
Series A common stock of $0.25 par
value, 10,000,000 shares
authorized; 5,762,495 shares
issued as of March 31, 1997 and 1996 1,441 1,441
Common stock of $0.25 par value,
150,000,000 shares authorized;
36,487,505 and 34,237,505 shares
issued as of March 31, 1997 and
1996, respectively 9,122 8,559
Additional paid-in capital 337,933 165,756
Foreign currency translation
adjustment (14,133) (11,877)
Unrealized gain on investments 4,411 11,097
Retained earnings 644,009 609,019
---------------------
982,783 783,995
Less:
Cost of common shares in treasury, net
(19,635,913 and 7,209,077 shares
as of March 31, 1997 and 1996,
respectively) 359,723 111,118
Unearned employee stock
ownership plan shares 20,740 23,329
---------------------
Total stockholders' equity 602,320 649,548
Contingent liabilities and commitments
---------------------
$ 2,718,994 2,823,407
=====================
The accompanying notes are an integral part of these consolidated financial
statements.
33
AMERCO AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Earnings
Years ended March 31,
1997 1996 1995
----------------------------------
(in thousands except per share data)
Revenues
Rental and other revenue $ 1,032,697 976,234 933,163
Net sales 179,382 173,806 170,204
Premiums 163,603 154,249 135,648
Net investment income 49,421 45,989 42,085
----------------------------------
Total revenues 1,425,103 1,350,278 1,281,100
Costs and expenses
Operating expense 915,102 827,622 730,685
Cost of sales 106,975 108,662 93,485
Benefits and losses 154,761 151,232 133,407
Amortization of deferred
acquisition costs 16,493 17,131 10,896
Depreciation 74,721 81,847 151,409
Interest expense 73,523 67,558 67,762
----------------------------------
Total costs and
expenses 1,341,575 1,254,052 1,187,644
Pretax earnings
from operations 83,528 96,226 93,456
Income tax expense (29,344) (35,832) (33,424)
----------------------------------
Earnings from operations before
extraordinary loss on early
extinguishment of debt 54,184 60,394 60,032
Extraordinary loss on early
extinguishment of debt, net (2,319) - -
----------------------------------
Net earnings $ 51,865 60,394 60,032
==================================
Earnings per common share:
Earnings from operations
before extraordinary loss
on early extinguishment of
debt $ 1.44 1.33 1.23
Extraordinary loss on early
extinguishment of debt, net (0.09) - -
----------------------------------
Net earnings $ 1.35 1.33 1.23
==================================
Weighted average common
shares outstanding 25,479,651 35,736,335 38,190,552
==================================
The accompanying notes are an integral part of these consolidated financial
statements.
34
AMERCO AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
Years ended March 31,
1997 1996 1995
---------------------------
(in thousands)
Series A common stock of $0.25 par
value: 10,000,000 shares
authorized, 5,762,495 shares issued
in 1997, 1996 and 1995
Beginning of year $ 1,441 1,441 1,438
Exchange for Series A common
stock - - 871
Exchange for common stock - - (868)
---------------------------
End of year 1,441 1,441 1,441
---------------------------
Common stock of $0.25 par value:
150,000,000 shares authorized in
1997, 1996 and 1995, 36,487,505
shares issued in 1997, 34,237,505
in 1996 and 1995
Beginning of year 8,559 8,559 8,562
Issuance of common stock 563 - -
Exchange for Series A common
stock - - (871)
Exchange for common stock - - 868
---------------------------
End of year 9,122 8,559 8,559
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Additional paid-in capital:
Beginning of year 165,756 165,675 165,651
Issuance of preferred stock 98,546 - -
Issuance of common stock 73,146 - -
Issuance of common shares under
leveraged employee stock
ownership plan 485 81 24
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End of year