june10-q.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

(Mark One)
 
R
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2008

or

 
£
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from __________________ to __________________



     
Commission
File Number
Registrant, State of Incorporation
Address and Telephone Number
I.R.S. Employer
Identification No.
     
 
amerco logo
 
     
1-11255
AMERCO
88-0106815
 
(A Nevada Corporation)
 
 
1325 Airmotive Way, Ste. 100
 
 
Reno, Nevada 89502-3239
 
 
Telephone (775) 688-6300
 
     

 
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 R  No £
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of a “large accelerated filer,” “accelerated filer,” “non-accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Larger accelerated filer £                                                                Accelerated filer R                                           Non-accelerated filer £    Smaller reporting company £
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes £  No R
 
19,631,314 shares of AMERCO Common Stock, $0.25 par value, were outstanding at August 1, 2008.
 


 
 

 

TABLE OF CONTENTS

   
Page No.
 
PART I FINANCIAL INFORMATION
 
Item 1.
Financial Statements
 
 
1
 
2
 
3
 
4 - 29
Item 2.
30 - 43
Item 3.
43 - 44
Item 4.
44
     
 
PART II OTHER INFORMATION
 
Item 1.
45
Item 1A.
45
Item 2.
45
Item 3.
45
Item 4.
45
Item 5.
45
Item 6.
Exhibits                                                                                                            
46


 
 

 

PART I FINANCIAL INFORMATION
 
ITEM 1.         Financial Statements
 

AMERCO AND CONSOLIDATED ENTITIES
 
CONDENSED CONSOLIDATED BALANCE SHEETS
 
   
June 30,
   
March 31,
 
   
2008
   
2008
 
   
(Unaudited)
       
   
(In thousands)
 
ASSETS
           
Cash and cash equivalents
  $ 239,792     $ 206,622  
Reinsurance recoverables and trade receivables, net
    207,644       201,116  
Notes and mortgage receivables, net
    2,299       2,088  
Inventories, net
    71,075       65,349  
Prepaid expenses
    62,929       56,159  
Investments, fixed maturities and marketable equities
    567,532       633,784  
Investments, other
    247,988       185,591  
Deferred policy acquisition costs, net
    33,520       35,578  
Other assets
    130,686       131,138  
Related party assets
    296,966       303,886  
      1,860,431       1,821,311  
Property, plant and equipment, at cost:
               
Land
    208,391       208,164  
Buildings and improvements
    884,312       859,882  
Furniture and equipment
    320,615       309,960  
Rental trailers and other rental equipment
    208,826       205,572  
Rental trucks
    1,712,246       1,734,425  
      3,334,390       3,318,003  
Less: Accumulated depreciation
    (1,315,430 )     (1,306,827 )
Total property, plant and equipment
    2,018,960       2,011,176  
Total assets
  $ 3,879,391     $ 3,832,487  
LIABILITIES AND STOCKHOLDERS' EQUITY
               
Liabilities:
               
Accounts payable and accrued expenses
  $ 299,137     $ 292,526  
AMERCO's notes, loans and leases payable
    1,492,755       1,504,677  
Policy benefits and losses, claims and loss expenses payable
    785,252       789,374  
Liabilities from investment contracts
    328,628       339,198  
Other policyholders' funds and liabilities
    9,645       10,467  
Deferred income
    16,787       11,781  
Deferred income taxes
    146,338       126,033  
Total liabilities
    3,078,542       3,074,056  
Commitments and contingencies (notes 3, 7, 8 and 9)
               
Stockholders' equity:
               
Series 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 June 30 and March 31, 2008
    -       -  
Series B preferred stock, with no par value, 100,000 shares authorized; none
               
issued and outstanding as of June 30 and March 31, 2008
    -       -  
Series 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;
               
none issued and outstanding as of June 30 and March 31, 2008
    -       -  
Common stock of $0.25 par value, 150,000,000 shares authorized; 41,985,700
               
issued as of June 30 and March 31, 2008
    10,497       10,497  
Additional paid-in capital
    419,833       419,370  
Accumulated other comprehensive loss
    (40,224 )     (55,279 )
Retained earnings
    942,000       915,415  
Cost of common shares in treasury, net (22,354,386 shares as of June 30 and March 31, 2008)
    (524,677 )     (524,677 )
Unearned employee stock ownership plan shares
    (6,580 )     (6,895 )
Total stockholders' equity
    800,849       758,431  
Total liabilities and stockholders' equity
  $ 3,879,391     $ 3,832,487  
 

 
The accompanying notes are an integral part of these condensed consolidated financial statements.

 
1

 

 

AMERCO AND CONSOLIDATED ENTITIES
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 

   
Quarter Ended June 30,
 
   
2008
   
2007
 
   
(Unaudited)
 
   
(In thousands, except share and per share amounts)
 
Revenues:
           
Self-moving equipment rentals
  $ 390,029     $ 392,517  
Self-storage revenues
    27,551       32,036  
Self-moving and self-storage products and service sales
    62,556       68,655  
Property management fees
    4,716       3,947  
Life insurance premiums
    26,917       29,187  
Property and casualty insurance premiums
    6,124       5,916  
Net investment and interest income
    14,596       14,314  
Other revenue
    10,305       7,703  
Total revenues
    542,794       554,275  
                 
Costs and expenses:
               
Operating expenses
    259,271       273,201  
Commission expenses
    47,965       44,304  
Cost of sales
    34,985       34,648  
Benefits and losses
    27,317       29,277  
Amortization of deferred policy acquisition costs
    2,088       3,917  
Lease expense
    34,568       32,659  
Depreciation, net of (gains) losses on disposals
    64,938       44,265  
Total costs and expenses
    471,132       462,271  
                 
Earnings from operations
    71,662       92,004  
Interest expense
    (23,844 )     (23,716 )
Pretax earnings
    47,818       68,288  
Income tax expense
    (17,992 )     (26,536 )
Net earnings
    29,826       41,752  
Less: Preferred stock dividends
    (3,241 )     (3,241 )
Earnings available to common shareholders
  $ 26,585     $ 38,511  
Basic and diluted earnings per common share
  $ 1.37     $ 1.93  
Weighted average common shares outstanding: Basic and diluted
    19,343,184       19,937,152  

The accompanying notes are an integral part of these condensed consolidated financial statements.

 
2

 

AMERCO AND CONSOLIDATED ENTITIES
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
   
Quarter Ended June 30,
 
   
2008
   
2007
 
   
(Unaudited)
 
   
(In thousands)
 
 Cash flow from operating activities:
           
 Net earnings
  $ 29,826     $ 41,752  
 Adjustments to reconcile net earnings to the cash provided by operations:
               
 Depreciation
    60,253       55,233  
 Amortization of deferred policy acquisition costs
    2,088       3,917  
 Change in allowance for losses on trade receivables
    (55 )     166  
 Change in allowance for losses on mortgage notes
    (49 )     10  
 Change in allowance for inventory reserves
    3,370       (190 )
 Net (gain) loss on sale of real and personal property
    4,685       (10,968 )
 Net (gain) loss on sale of investments
    (138 )     83  
 Deferred income taxes
    22,088       6,166  
 Net change in other operating assets and liabilities:
               
Reinsurance recoverables and trade receivables
    (6,471 )     (6,075 )
Inventories
    (9,096 )     2,067  
Prepaid expenses
    6,558       12,863  
Capitalization of deferred policy acquisition costs
    (2,282 )     (1,315 )
Other assets
    813       (11,191 )
Related party assets
    8,270       5,909  
Accounts payable and accrued expenses
    3,650       11,110  
Policy benefits and losses, claims and loss expenses payable
    (4,110 )     (1,411 )
Other policyholders' funds and liabilities
    (1,404 )     133  
Deferred income
    5,013       (306 )
Related party liabilities
    (1,335 )     (826 )
 Net cash provided by operating activities
    121,674       107,127  
                 
 Cash flows from investing activities:
               
 Purchases of:
               
Property, plant and equipment
    (96,257 )     (224,680 )
Short term investments
    (146,434 )     (62,247 )
Fixed maturities investments
    (59,796 )     (12,586 )
Preferred stock
    (1,895 )     -  
Real estate
    (26 )     (270 )
Mortgage loans
    (4,910 )     (2,783 )
 Proceeds from sale of:
               
Property, plant and equipment
    36,304       54,128  
Short term investments
    86,726       70,238  
Fixed maturities investments
    130,919       20,475  
Equity securities
    27       46  
Preferred stock
    -       2,625  
Real estate
    15       -  
Mortgage loans
    2,039       2,615  
Payments from notes and mortgage receivables
    29       48  
 Net cash used by investing activities
    (53,259 )     (152,391 )
                 
 Cash flows from financing activities:
               
Borrowings from credit facilities
    15,330       445,294  
Principal repayments on credit facilities
    (37,197 )     (44,800 )
Debt issuance costs
    (360 )     (8,880 )
Capital lease payments
    (138 )     -  
Leveraged Employee Stock Ownership Plan - repayments from loan
    315       304  
Treasury stock repurchases
    -       (33,966 )
Securitization deposits
    -       (210,308 )
Preferred stock dividends paid
    (3,241 )     (3,241 )
Investment contract deposits
    4,703       4,027  
Investment contract withdrawals
    (15,273 )     (17,035 )
 Net cash provided (used) by financing activities
    (35,861 )     131,395  
                 
 Effects of exchange rate on cash
    616       226  
                 
 Increase in cash equivalents
    33,170       86,357  
 Cash and cash equivalents at the beginning of period
    206,622       75,272  
 Cash and cash equivalents at the end of period
  $ 239,792     $ 161,629  

The accompanying notes are an integral part of these condensed consolidated financial statements.

 
3

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
 
1.      Basis of Presentation
 
The first fiscal quarter for AMERCO ends on the 30th of June for each year that is referenced. Our insurance company subsidiaries have a first quarter that ends on the 31st of March for each year that is referenced. They have been consolidated on that basis. Our insurance companies’ financial reporting processes conform to calendar year reporting as required by state insurance departments. Management believes that consolidating their calendar year into our fiscal year financial statements does not materially affect the financial position or results of operations. The Company discloses any material events occurring during the intervening period. Consequently, all references to our insurance subsidiaries’ years 2008 and 2007 correspond to the Company’s fiscal years 2009 and 2008.
 
Accounts denominated in non-U.S. currencies have been translated into U.S. dollars. Certain amounts reported in previous years have been reclassified to conform to the current presentation.
 
The condensed consolidated balance sheet as of June 30, 2008 and March 31, 2008 include the accounts of AMERCO and its wholly-owned subsidiaries. The June 30, 2008 condensed consolidated statements of operations and cash flows include the accounts of AMERCO and its wholly-owned subsidiaries. The June 30, 2007 condensed consolidated statements of operations and cash flows include the accounts of AMERCO and its wholly-owned subsidiaries and SAC Holding II and its subsidiaries (“SAC Holding II”).
 
The condensed consolidated balance sheet as of June 30, 2008 and the related condensed consolidated statements of operations and cash flow for the first quarter of fiscal 2009 and 2008 are unaudited.
 
In our opinion, all adjustments necessary for the fair presentation of such condensed consolidated financial statements have been included. Such adjustments consist only of normal recurring items. Interim results are not necessarily indicative of results for a full year. The information in this 10-Q should be read in conjunction with Management’s Discussion and Analysis and financial statements and notes thereto included in the AMERCO 2008 Form 10-K.
 
Intercompany accounts and transactions have been eliminated.
 
Description of Legal Entities
 
AMERCO, a Nevada corporation (“AMERCO”), is the holding company for:
 
U-Haul International, Inc. (“U-Haul”),
 
Amerco Real Estate Company (“Real Estate”),
 
Republic Western Insurance Company (“RepWest”), and
 
Oxford Life Insurance Company (“Oxford”).
 
Unless the context otherwise requires, the term “Company,” “we,” “us” or “our” refers to AMERCO and all of its legal subsidiaries.
 

 


 
4

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
 
 
Description of Operating Segments
 
AMERCO has four reportable segments. They are Moving and Storage, Property and Casualty Insurance, Life Insurance and SAC Holding II (through October 2007).
 
Moving and Storage operations include AMERCO, U-Haul and Real Estate and the wholly-owned subsidiaries of U-Haul and Real Estate and consist of the rental of trucks and trailers, sales of moving supplies, sales of towing accessories, sales of propane, the rental of self-storage spaces to the “do-it-yourself” mover and management of self-storage properties owned by others. Operations are conducted under the registered trade name U-Haul® throughout the United States and Canada.
 
Property and Casualty Insurance includes RepWest and its wholly-owned subsidiaries. RepWest provides loss adjusting and claims handling for U-Haul through regional offices across North America. RepWest also underwrites components of the Safemove, Safetow and Safestor protection packages to U-Haul customers.
 
Life Insurance includes Oxford and its wholly-owned subsidiaries. Oxford provides life and health insurance products primarily to the senior market through the direct writing or reinsuring of life insurance, Medicare supplement and annuity policies. Additionally, Oxford administers the self-insured employee health and dental plans for Arizona employees of the Company.
 
SAC Holding II Corporation and its subsidiaries own self-storage properties that are managed by U-Haul under property management agreements and act as independent U-Haul rental equipment dealers. AMERCO, through its subsidiaries, has contractual interests in certain of SAC Holding II properties entitling AMERCO to potential future income based on the financial performance of these properties. Prior to November 2007 AMERCO was considered the primary beneficiary of these contractual interests. Consequently, for those reporting periods prior to November 2007, we included the results of SAC Holding II in the consolidated financial statements of AMERCO, as required by FIN 46(R).
 
2. Earnings per Share
 
Net earnings for purposes of computing earnings per common share are net earnings less preferred stock dividends. Preferred stock dividends include accrued dividends of AMERCO.
 
The weighted average common shares outstanding exclude post-1992 shares of the employee stock ownership plan that have not been committed to be released. The unreleased shares net of shares committed to be released were 281,892 and 331,802 as of June 30, 2008 and June 30, 2007, respectively.
 
6,100,000 shares of preferred stock have been excluded from the weighted average shares outstanding calculation because they are not common stock and they are not convertible into common stock.

 
5

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
 
 
3. Borrowings
 
Long-Term Debt
 
Long-term debt was as follows:
 
               
June 30,
   
March 31,
 
   
2009 Rate (a)
   
Maturities
   
2008
   
2008
 
               
(Unaudited)
       
               
(In thousands)
 
Real estate loan (amortizing term)
    6.93 %  
2018
    $ 282,500     $ 285,000  
Real estate loan (revolving credit)
    4.15 %  
2018
      95,000       100,000  
Senior mortgages
    5.19% - 5.75 %     2009-2015       509,154       511,818  
Construction loan (revolving credit)
    3.96 %  
2009
      37,280       30,783  
Working capital loan (revolving credit)
    -    
2009
      -       -  
Fleet loans (amortizing term)
    6.11% - 7.42 %     2012-2014       273,049       288,806  
Fleet loans (securitization)
    5.40% - 5.56 %     2010-2014       279,233       288,270  
Other obligations
    -       2009-2015       16,539       -  
Total AMERCO notes, loans and leases payable
            $ 1,492,755     $ 1,504,677  
                                 
(a) Interest rate as of June 30, 2008, including the effect of applicable hedging instruments.
                 
 

 
Real Estate Backed Loans
 
Real Estate Loan
 
Amerco Real Estate Company and certain of its subsidiaries and U-Haul Company of Florida are borrowers under a Real Estate Loan. The loan has a final maturity date of August 2018 and the loan is comprised of a term loan facility with initial availability of $300.0 million and a revolving credit facility with an availability of $200.0 million. As of June 30, 2008, the outstanding balance on the Real Estate Loan was $282.5 million and $95.0 million drawn down on the revolving credit facility. U-Haul International, Inc. is a guarantor of this loan.
 
The amortizing term portion of the Real Estate Loan requires monthly principal and interest payments, with the unpaid loan balance and accrued and unpaid interest due at maturity. The revolving credit portion of the Real Estate Loan requires monthly interest payments when drawn, with the unpaid loan balance and any accrued and unpaid interest due at maturity.  The Real Estate Loan is secured by various properties owned by the borrowers.
 
The interest rate for the amortizing term portion, per the provisions of the amended Loan Agreement, is the applicable London Inter-Bank Offer Rate (“LIBOR”) plus the applicable margin. At June 30, 2008, the applicable LIBOR was 2.45% and the applicable margin was 1.50%, the sum of which was 3.95%. The rate on the term facility portion of the loan is hedged with an interest rate swap fixing the rate at 6.93% based on current margin.
 
The interest rate for the revolving credit facility, per the provisions of the amended Loan agreement, is the applicable LIBOR plus the applicable margin. The margin ranges from 1.50% to 2.00%. At June 30, 2008, the applicable LIBOR was 2.45% and the applicable margin was 1.70%, the sum of which was 4.15%.
 
The default provisions of the Real Estate Loan include non-payment of principal or interest and other standard reporting and change-in-control covenants. There are limited restrictions regarding our use of the funds.

 
6

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
 
 
Senior Mortgages
 
Various subsidiaries of Amerco Real Estate Company and U-Haul International, Inc. are borrowers under certain senior mortgages. These senior mortgages loan balances as of June 30, 2008 were in the aggregate amount of $451.0 million and are due July 2015. The Senior Mortgages require average monthly principal and interest payments of $3.0 million with the unpaid loan balance and accrued and unpaid interest due at maturity. These senior mortgages are secured by certain properties owned by the borrowers. The interest rates, per the provisions of these senior mortgages, are 5.68% and 5.52% per annum. Amerco Real Estate Company and U-Haul International, Inc. have provided limited guarantees of these senior mortgages. The default provisions of these senior mortgages include non-payment of principal or interest and other standard reporting and change-in-control covenants. There are limited restrictions regarding our use of the funds.
 
Various subsidiaries of the Company are borrowers under the mortgage backed loans that we also classify as senior mortgages. These loans are secured by certain properties owned by the borrowers. The loan balance of these notes totals $58.2 million as of June 30, 2008. Maturity dates begin in 2009 with the majority maturing in 2015. Rates for these loans range from 5.19% to 5.75%. The loans require monthly principal and interest payments with the balances due upon maturity. The default provisions of the loans include non-payment of principal or interest and other standard reporting and change-in-control covenants. There are limited restrictions regarding our use of the funds.
 
Construction / Working Capital Loans
 
Amerco Real Estate Company and a subsidiary of U-Haul International, Inc. entered into a revolving credit construction loan effective June 29, 2006. The maximum amount that can be drawn at any one time is $40.0 million.  The final maturity is June 2009. As of June 30, 2008, the outstanding balance was $37.3 million.
 
The Construction Loan requires monthly interest only payments with the principal and any accrued and unpaid interest due at maturity. The loan can be used to develop new or existing storage properties. The loan is secured by the properties being constructed. The interest rate, per the provision of the Loan Agreement, is the applicable LIBOR plus a margin of 1.50%. At June 30, 2008, the applicable LIBOR was 2.46% and the margin was 1.50%, the sum of which was 3.96%. U-Haul International, Inc. is a guarantor of this loan. The default provisions of the loan include non-payment of principal or interest and other standard reporting and change-in-control covenants.
 
Amerco Real Estate Company is a borrower under an asset backed working capital loan. The maximum amount that can be drawn at any one time is $35.0 million. The loan is secured by certain properties owned by the borrower. The interest rate, per the provision of the Loan Agreement, is the applicable LIBOR plus a margin of 1.50%. The loan agreement provides for revolving loans, subject to the terms of the loan agreement with final maturity in November 2009. The loan requires monthly interest payments with the unpaid loan balance and accrued and unpaid interest due at maturity. U-Haul International, Inc. and AMERCO are the guarantors of this loan. The default provisions of the loan include non-payment of principal or interest and other standard reporting and change-in-control covenants. At June 30, 2008, the Company had utilized $25.0 million of availability as collateral for a letter of credit, leaving $10.0 million of available credit.
 
Fleet Loans
 
Rental Truck Amortizing Loans
 
U-Haul International, Inc. and several of its subsidiaries are borrowers under amortizing term loans. The loan balances as of June 30, 2008 were in the aggregate amount of $273.0 million with final maturities between April 2012 and March 2014.
 
The Amortizing Loans require monthly principal and interest payments, with the unpaid loan balance and accrued and unpaid interest due at maturity. These loans were used to purchase new trucks. The interest rates, per the provision of the Loan Agreements, are the applicable LIBOR plus a margin between 0.90% and 1.75%. At June 30, 2008, the applicable LIBOR was 2.45% and applicable margins were between 1.125% and 1.75%, the sum of which was between 3.575% and 4.20%. The interest rates are hedged with interest rate swaps fixing the rates between 6.11% and 7.42% based on current margins.

 
7

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
 
 
AMERCO and U-Haul International, Inc. are guarantors for certain of these loans. The default provisions of these loans include non-payment of principal or interest and other standard reporting and change-in-control covenants.
 
Rental Truck Securitizations
 
U-Haul S Fleet and its subsidiaries (collectively, “USF”) issued a $217.0 million asset-backed note (“Box-Truck Note”) and an $86.6 million asset-backed note (“Cargo Van/Pickup Note”) on June 1, 2007. USF is a bankruptcy-remote special purpose entity wholly-owned by U-Haul International, Inc. The net proceeds from these securitized transactions were used to finance new box truck, cargo van and pickup truck purchases throughout fiscal 2008. U.S. Bank, NA acts as the trustee for this securitization.
 
The Box Truck Note has a fixed interest rate of 5.56% with an estimated final maturity of February 2014. At June 30, 2008, the outstanding balance was $192.6 million. The note is secured by the box trucks that were purchased and operating cash flows associated with their operation.
 
The Cargo Van/Pickup Note has a fixed interest rate of 5.40% with an estimated final maturity of May 2010. At June 30, 2008, the outstanding balance was $86.6 million. The note is secured by the cargo vans and pickup trucks that were purchased and the operating cash flows associated with their operation.
 
The Box Truck Note and Cargo Van/Pickup Note have the benefit of financial guaranty insurance policies that guarantee the timely payment of interest on and the ultimate payment of the principal of the notes.
 
The Box Truck Note and the Cargo Van/Pickup Note are subject to certain covenants with respect to liens, additional indebtedness of the special purpose entities, the disposition of assets and other customary covenants of bankruptcy-remote special purpose entities. The default provisions of the notes include non-payment of principal or interest and other standard reporting and change in control covenants.
 
Other Obligations
 
In April 2008, the Company entered into a $10.0 million capital lease for new rental equipment. The term of the lease is seven years and the Company has the option to purchase the equipment at a predetermined amount after the fifth year of the lease.
 
The Company entered into $7.9 million of premium financing arrangements for one year expiring in March and April 2009 at rates between 3.64% and 5.10%. At June 30, 2008, the outstanding balance of these arrangements was $6.7 million.
 
Annual Maturities of AMERCO Consolidated Notes, Loans and Leases Payable
 
The annual maturities of AMERCO consolidated long-term debt as of June 30, 2008 for the next five years and thereafter is as follows:
 
   
Year Ending June 30,
 
   
2009
   
2010
   
2011
   
2012
   
2013
   
Thereafter
 
   
(Unaudited)
 
   
(In thousands)
 
Notes, loans and leases payable, secured
  $ 148,443     $ 166,209     $ 66,118     $ 119,748     $ 87,815     $ 904,422  
 


 
8

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
 
 
4. Interest on Borrowings
 
Interest Expense
 
Expenses associated with loans outstanding were as follows:
 
   
Quarter Ended June 30,
 
   
2008
   
2007
 
   
(Unaudited)
 
   
(In thousands)
 
Interest expense
  $ 19,587     $ 22,068  
Capitalized interest
    (110 )     (283 )
Amortization of transaction costs
    1,279       881  
Interest expense (income) resulting from derivatives
    3,088       (453 )
Total AMERCO interest expense
    23,844       22,213  
SAC Holding II interest expense
    -       3,231  
Less: Intercompany transactions
    -       1,728  
Total SAC Holding II interest expense
    -       1,503  
Total
  $ 23,844     $ 23,716  
 

 
Interest paid in cash by AMERCO amounted to $19.2 million and $20.1 million for the first quarter of fiscal 2009 and 2008, respectively.
 
The Company manages exposure to changes in market interest rates. The Company’s use of derivative instruments is limited to highly effective interest rate swaps to hedge the risk of changes in cash flows (future interest payments) attributable to changes in LIBOR swap rates, the designated benchmark interest rate being hedged on certain of our LIBOR-indexed variable-rate debt. The interest rate swaps effectively fix the Company’s interest payments on certain LIBOR-indexed variable-rate debt. The Company monitors its positions and the credit ratings of its counterparties and does not anticipate non-performance by the counterparties. Interest rate swap agreements are not entered into for trading purposes.
 
On June 8, 2005, the Company entered into separate interest rate swap agreements for $100.0 million of our variable-rate debt over a three year term and for $100.0 million of our variable-rate debt over a five-year term, that were designated as cash flow hedges effective July 1, 2005. These swap agreements were cancelled on August 18, 2006 in conjunction with our amendment of the Real Estate Loan and we entered into a new interest rate swap agreement for $300.0 million of our variable-rate debt over a twelve-year term effective on August 18, 2006. As of August 18, 2006, a net gain of approximately $6.0 million related to the two cancelled swaps was included in other comprehensive income (loss). As the variable-rate debt was replaced, it is probable that the original forecasted transaction (future interest payments) will continue to occur. Therefore the net derivative gain related to the two cancelled swaps shall continue to be reported in other comprehensive income (loss) and be reclassified into earnings when the original forecasted transaction affects earnings consistent with the term of the original designated hedging relationship. For the quarter ended June 30, 2008, the Company reclassified $0.5 million of the net derivative gain to interest income. The Company estimates that $1.0 million of the existing net gains will be reclassified into earnings within the next 12 months.
 
On November 15, 2005, the Company entered into a forward starting interest rate swap agreement for $142.3 million of our variable-rate debt over a six-year term that became effective on May 10, 2006. This swap was designated as a cash flow hedge effective May 31, 2006.

 
9

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
 
 
On June 21, 2006, the Company entered into a forward starting interest rate swap agreement for $50.0 million of our variable-rate debt over a seven-year term that became effective on July 10, 2006. On June 9, 2006, the Company entered into a forward starting interest rate swap agreement for $144.9 million of a variable-rate debt over a six-year term that became effective on October 10, 2006. On February 9, 2007, the Company entered into an interest rate swap agreement for $30.0 million of our variable-rate debt over a seven-year term that became effective on February 12, 2007. On March 8, 2007, the Company entered into two separate interest rate swap agreements each for $20.0 million of our variable-rate debt over seven-year terms that became effective on March 10, 2007. These interest rate swap agreements were designated as cash flow hedges on their effective dates. On April 8, 2008, the Company entered into a forward starting interest rate swap agreement for $19.3 million of our variable-rate debt over a seven year term that becomes effective on August 15, 2008.
 
On May 13, 2004, the Company entered into an interest rate cap agreement for $50.0 million of our variable rate debt over a three year term; however, this agreement was dedesignated as a cash flow hedge effective July 11, 2005 when the Real Estate Loan was paid down by $222.4 million. The $50.0 million interest rate cap agreement expired on May 17, 2007.  Subsequent to July 11, 2005, all changes in the interest rate caps fair value (including changes in the option’s time value), were charged to earnings as the original forecasted transaction was cancelled. Prior to July 11, 2005, the change in each caplets’ respective allocated fair value amount was reclassified out of accumulated other comprehensive income (loss) into earnings when each of the hedged forecasted transactions (the quarterly interest payments) impacted earnings and when interest payments were either made or received.
 
For the quarter ended June 30, 2008, the Company recognized net losses of $3.8 million from highly effective cash flow hedges, which are attributable to the portion of the change in the fair value of the hedges, excluded from the assessment of the effectiveness of the hedges. The hedging relationship of certain interest rate swap agreements is not considered to be perfectly effective in which an effectiveness test is performed for each reporting period. The net gains attributable to the portion of the change in the fair value representing the amount of the hedges’ ineffectiveness recognized in earnings during the first quarter was $0.2 million included in interest income. All forecasted transactions currently being hedged are expected to occur by 2018.
 
Interest Rates
 
Interest rates and Company borrowings were as follows:
 
   
Revolving Credit Activity
 
   
Quarter Ended June 30,
 
   
2008
   
2007
 
   
(Unaudited)
 
   
(In thousands, except interest rates)
 
Weighted average interest rate during the quarter
    4.25 %     6.72 %
Interest rate at the end of the quarter
    4.10 %     6.71 %
Maximum amount outstanding during the quarter
  $ 132,280     $ 138,700  
Average amount outstanding during the quarter
  $ 128,134     $ 101,269  
Facility fees
  $ 74     $ 69  
 


 
10

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
 
 
5. Stockholders Equity
 
On December 5, 2007, we announced that the Board of Directors (the “Board”) had authorized us to repurchase up to $50.0 million of our common stock. The stock may be repurchased by the Company from time to time on the open market until December 31, 2008. The extent to which the Company repurchases its shares and the timing of such purchases will depend upon market conditions and other corporate considerations. Any purchases will be funded from available working capital. During the first quarter of fiscal 2009, no shares of our common stock were repurchased.
 
Period
 
Total # of Shares Repurchased
   
Average Price Paid per Share (1)
   
Total # of Shares Repurchased as Part of Publicly Announced Plan
   
Total $ of Shares Repurchased as Part of Publicly Announced Plan
   
Maximum $ of Shares That May Yet be Repurchased Under the Plan
 
   
(Unaudited)
 
                               
April 1 - 30, 2008
    -     $ -       -     $ -     $ 26,487,620  
May 1 - 31, 2008
    -     $ -       -     $ -     $ 26,487,620  
June 1 - 30, 2008
    -     $ -       -     $ -     $ 26,487,620  
First Quarter Total
    -     $ -       -     $ -          
                                         
Cumulative Plan Total
    428,000     $ 54.94       428,000     $ 23,512,380          
                                         
(1) Represents weighted average purchase price for the periods presented.
                 
 

 
6. Comprehensive Income (Loss)
 
A summary of accumulated other comprehensive income (loss) components, net of tax, were as follows:
 
   
Foreign Currency Translation
   
Unrealized Gain on Investments
   
Fair Market Value of Cash Flow Hedge
   
Postretirement Benefit Obligation Gain
   
Accumulated Other Comprehensive Income (Loss)
 
   
(Unaudited)
 
   
(In thousands)
 
                               
Balance at March 31, 2008
  $ (27,583 )   $ 1,591     $ (30,578 )   $ 1,291     $ (55,279 )
Foreign currency translation
    1,182       -       -       -       1,182  
Unrealized gain on investments
    -       478       -       -       478  
Change in fair value of cash flow hedge
    -       -       13,395       -       13,395  
Balance at June 30, 2008
  $ (26,401 )   $ 2,069     $ (17,183 )   $ 1,291     $ (40,224 )
 

 
Total comprehensive income, net of taxes, for the quarter ended June 30, 2008 and 2007 were $44.9 million and $56.8 million, respectively.

 
11

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
 
 
7. Contingent Liabilities and Commitments
 
The Company leases a portion of its rental equipment and certain of its facilities under operating leases with terms that expire at various dates substantially through 2015, with the exception of one land lease expiring in 2034. At June 30, 2008, AMERCO had guaranteed $185.8 million of residual values for these rental equipment assets at the end of the respective lease terms. Certain leases contain renewal and fair market value purchase options as well as mileage and other restrictions. At the expiration of the lease, the Company has the option to renew the lease, purchase the asset for fair market value, or sell the asset to a third party on behalf of the lessor. AMERCO has been leasing equipment since 1987 and has experienced no material losses related to these types of residual value guarantees.
 
Lease commitments for leases having terms of more than one year were as follows:

   
Property,
Plant and
Equipment
   
Rental
Equipment
   
Total
 
   
(Unaudited)
 
   
(In thousands)
 
Year-ended June 30:
                 
2009
  $ 12,845     $ 119,605     $ 132,450  
2010
    12,445       106,494       118,939  
2011
    12,271       88,302       100,573  
2012
    11,917       72,941       84,858  
2013
    11,281       57,979       69,260  
Thereafter
    15,350       59,000       74,350  
Total
  $ 76,109     $ 504,321     $ 580,430  


 
12

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
 
 
8. Contingencies
 
Shoen
 
In September 2002, Paul F. Shoen filed a shareholder derivative lawsuit in the Second Judicial District Court of the State of Nevada, Washoe County, captioned Paul F. Shoen vs. SAC Holding Corporation et al., CV 02-05602, seeking damages and equitable relief on behalf of AMERCO from SAC Holdings and certain current and former members of the AMERCO Board of Directors, including Edward J. Shoen, Mark V. Shoen and James P. Shoen as Defendants. AMERCO is named as a nominal Defendant in the case. The complaint alleges breach of fiduciary duty, self-dealing, usurpation of corporate opportunities, wrongful interference with prospective economic advantage and unjust enrichment and seeks the unwinding of sales of self-storage properties by subsidiaries of AMERCO to SAC prior to the filing of the complaint. The complaint seeks a declaration that such transfers are void as well as unspecified damages. In October 2002, the Defendants filed motions to dismiss the complaint. Also in October 2002, Ron Belec filed a derivative action in the Second Judicial District Court of the State of Nevada, Washoe County, captioned Ron Belec vs. William E. Carty, et al., CV 02-06331 and in January 2003, M.S. Management Company, Inc. filed a derivative action in the Second Judicial District Court of the State of Nevada, Washoe County, captioned M.S. Management Company, Inc. vs. William E. Carty, et al., CV 03-00386. Two additional derivative suits were also filed against these parties. Each of these suits is substantially similar to the Paul F. Shoen case. The Court consolidated the five cases and thereafter dismissed these actions in May 2003, concluding that the AMERCO Board of Directors had the requisite level of independence required in order to have these claims resolved by the Board. Plaintiffs appealed this decision and, in July 2006, the Nevada Supreme Court reversed the ruling of the trial court and remanded the case to the trial court for proceedings consistent with its ruling, allowing the Plaintiffs to file an amended complaint and plead in addition to substantive claims, demand futility.
 
In November 2006, the Plaintiffs filed an amended complaint. In December 2006, the Defendants filed motions to dismiss, based on various legal theories. In March 2007, the Court denied AMERCO’s motion to dismiss regarding the issue of demand futility, stating that “Plaintiffs have satisfied the heightened pleading requirements of demand futility by showing a majority of the members of the AMERCO Board of Directors were interested parties in the SAC transactions.” The Court heard oral argument on the remainder of the Defendants’ motions to dismiss, including the motion (“Goldwasser Motion”) based on the fact that the subject matter of the lawsuit had been settled and dismissed in earlier litigation known as Goldwasser v. Shoen, C.V.N.-94-00810-ECR (D.Nev), Washoe County, Nevada. In addition, in September and October 2007, the Defendants filed Motions for Judgment on the Pleadings or in the Alternative Summary Judgment, based on the fact that the stockholders of the Company had ratified the underlying transactions at the 2007 annual meeting of stockholders of AMERCO. In December 2007, the Court denied this motion. This ruling does not preclude a renewed motion for summary judgment after discovery and further proceedings on these issues. On April 7, 2008, the litigation was dismissed, on the basis of the Goldwasser Motion. On May 8, 2008, the Plaintiffs filed a notice of appeal of such dismissal to the Nevada Supreme Court. On May 20, 2008, AMERCO filed a cross appeal relating to the denial of its Motion to Dismiss in regards to demand futility. The appeals are currently pending.
 
Environmental
 
In the normal course of business, AMERCO is a defendant in a number of suits and claims. AMERCO is also a party to several administrative proceedings arising from state and local provisions that regulate the removal and/or cleanup of underground fuel storage tanks. It is the opinion of management, that none of these suits, claims or proceedings involving AMERCO, individually or in the aggregate, are expected to result in a material adverse effect on AMERCO’s financial position or results of operations.
 
Compliance with environmental requirements of federal, state and local governments significantly affects Real Estate’s business operations. Among other things, these requirements regulate the discharge of materials into the water, air and land and govern the use and disposal of hazardous substances. Real Estate is aware of issues regarding hazardous substances on some of its properties. Real Estate regularly makes capital and operating expenditures to stay in compliance with environmental laws and has put in place a remedial plan at each site where it believes such a plan is necessary. Since 1988, Real Estate has managed a testing and removal program for underground storage tanks.

 
13

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
 
 
Based upon the information currently available to Real Estate, compliance with the environmental laws and its share of the costs of investigation and cleanup of known hazardous waste sites are not expected to result in a material adverse effect on AMERCO’s financial position or results of operations. Real Estate expects to spend approximately $5.7 million in total through 2011 to remediate these properties.
 
Other
 
The Company is named as a defendant in various other litigation and claims arising out of the normal course of business. In management’s opinion, none of these other matters will have a material effect on the Company’s financial position and results of operations.
 
9. Related Party Transactions
 
AMERCO has engaged in related party transactions and has continuing related party interests with certain major stockholders, directors and officers of the consolidated group as disclosed below. Management believes that the transactions described below and in the related notes were consummated on terms equivalent to those that would prevail in arm’s-length transactions.
 
SAC Holding Corporation and its subsidiaries, and SAC Holding II Corporation and its subsidiaries, collectively referred to as “SAC Holdings” were established in order to acquire self-storage properties. These properties are being managed by the Company pursuant to management agreements. The sale of self-storage properties by the Company to SAC Holdings has in the past provided significant cash flows to the Company.
 
Management believes that its sales of self-storage properties to SAC Holdings has provided a unique structure for the Company to earn moving equipment rental revenues and property management fee revenues from the SAC Holdings self-storage properties that the Company manages.
 
During the first quarter of fiscal 2009, subsidiaries of the Company held various junior unsecured notes of SAC Holdings. Substantially all of the equity interest of SAC Holdings is controlled by Blackwater Investments Inc. (“Blackwater”). Blackwater is wholly-owned by Mark V. Shoen, a significant shareholder and executive officer of AMERCO. The Company does not have an equity ownership interest in SAC Holdings. The Company recorded interest income of $4.6 million and $4.6 million, and received cash interest payments of $4.9 million and $4.6 million, from SAC Holdings during the first quarter of fiscal 2009 and 2008, respectively. The largest aggregate amount of notes receivable outstanding during the first quarter of fiscal 2009 was $198.1 million and the aggregate notes receivable balance at June 30, 2008 was $198.0 million. In accordance with the terms of these notes, SAC Holdings may repay the notes without penalty or premium at any time.
 
Interest accrues on the outstanding principal balance of junior notes of SAC Holdings that the Company holds at a 9.0% rate per annum. A fixed portion of that basic interest is paid on a monthly basis. Additional interest can be earned on notes totaling $122.2 million of principal depending upon the amount of remaining basic interest and the cash flow generated by the underlying property. This amount is referred to as the “cash flow-based calculation.”
 
To the extent that this cash flow-based calculation exceeds the amount of remaining basic interest, contingent interest would be paid on the same monthly date as the fixed portion of basic interest. To the extent that the cash flow-based calculation is less than the amount of remaining basic interest, the additional interest payable on the applicable monthly date is limited to the amount of that cash flow-based calculation. In such a case, the excess of the remaining basic interest over the cash flow-based calculation is deferred. In addition, subject to certain contingencies, the junior notes provide that the holder of the note is entitled to receive a portion of the appreciation realized upon, among other things, the sale of such property by SAC Holdings. To date, no excess cash flows related to these arrangements have been earned or paid.
 
During the first quarter of fiscal 2009, AMERCO and U-Haul held various junior notes with Private Mini Realty, L.P. (“Private Mini”). The equity interests of Private Mini are ultimately controlled by Blackwater. The Company recorded interest income of $1.3 million and $1.2 million during the first quarter of fiscal 2009 and 2008, respectively and received cash interest payments of $1.3 million from Private Mini during the first quarter of both fiscal 2009 and 2008. The balance of notes receivable from Private Mini at June 30, 2008 was $68.9 million. The largest aggregate amount of notes receivable outstanding during the first quarter of fiscal 2009 was $69.1 million.

 
14

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
 
 
The Company currently manages the self-storage properties owned or leased by SAC Holdings, Mercury Partners, L.P. (“Mercury”), Four SAC Self-Storage Corporation (“4 SAC”), Five SAC Self-Storage Corporation (“5 SAC”), Galaxy Investments, L.P. (“Galaxy”), and Private Mini pursuant to a standard form of management agreement, under which the Company receives a management fee of between 4% and 10% of the gross receipts plus reimbursement for certain expenses. The Company received management fees, exclusive of reimbursed expenses, of $10.9 million and $10.1 million from the above mentioned entities during the first quarter of fiscal 2009 and 2008, respectively. This management fee is consistent with the fee received for other properties the Company previously managed for third parties. SAC Holdings, 4 SAC, 5 SAC, Galaxy and Private Mini are substantially controlled by Blackwater. Mercury is substantially controlled by Mark V. Shoen. James P. Shoen, a significant shareholder and director of AMERCO, has an interest in Mercury.
 
The Company leases space for marketing company offices, vehicle repair shops and hitch installation centers from subsidiaries of SAC Holdings, 5 SAC and Galaxy. Total lease payments pursuant to such leases were $0.6 million during the first quarter of both fiscal 2009 and 2008, respectively. The terms of the leases are similar to the terms of leases for other properties owned by unrelated parties that are leased to the Company.
 
At June 30, 2008, subsidiaries of SAC Holdings, 4 SAC, 5 SAC, Galaxy and Private Mini acted as U-Haul independent dealers. The financial and other terms of the dealership contracts with the aforementioned companies and their subsidiaries are substantially identical to the terms of those with the Company’s other independent dealers whereby commissions are paid by the Company based upon equipment rental revenues. During the first quarter of fiscal 2009 and 2008, the Company paid the above mentioned entities $9.5 million and $9.8 million, respectively in commissions pursuant to such dealership contracts.
 
These agreements and notes with subsidiaries of SAC Holdings, 4 SAC, 5 SAC, Galaxy and Private Mini, excluding Dealer Agreements, provided revenues of $10.2 million, expenses of $0.6 million and cash flows of $13.6 million during the first quarter of fiscal 2009. Revenues and commission expenses related to the Dealer Agreements were $44.8 million and $9.5 million, respectively.
 
In prior years, U-Haul sold various properties to SAC Holdings at prices in excess of U-Haul’s carrying values resulting in gains which U-Haul deferred and treated as additional paid-in capital. The transferred properties have historically been stated at the original cost basis as the gains were eliminated in consolidation. In March 2004, a portion of these deferred gains were recognized and treated as contributions from a related party in the amount of $111.0 million as a result of the deconsolidation of SAC Holding Corporation. In November 2007, the remaining portion of these deferred gains were recognized and treated as contributions from a related party in the amount of $46.1 million as a result of the deconsolidation of SAC Holding II Corporation.
 
Related Party Assets
 
   
June 30,
   
March 31,
 
   
2008
   
2008
 
   
(Unaudited)
       
   
(In thousands)
 
Private Mini notes, receivables and interest
  $ 71,117     $ 71,038  
U-Haul notes receivable from SAC Holding Corporation
    198,012       198,144  
U-Haul interest receivable from SAC Holding Corporation
    4,200       4,498  
U-Haul receivable from SAC Holding Corporation
    17,913       20,617  
U-Haul receivable from Mercury
    4,205       6,791  
Other
    1,519       2,798  
    $ 296,966     $ 303,886  
 

 


 
15

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
 
 
10. Consolidating Financial Information by Industry Segment
 
AMERCO has or had four reportable segments. They are Moving and Storage, Property and Casualty Insurance, Life Insurance and SAC Holding II. Management tracks revenues separately, but does not report any separate measure of the profitability for rental vehicles, rentals of self-storage spaces and sales of products that are required to be classified as a separate operating segment and accordingly does not present these as separate reportable segments. Deferred income taxes are shown as liabilities on the condensed consolidating statements.
 
The consolidated balance sheet as of June 30, 2008 and March 31, 2008 includes the accounts of AMERCO and its wholly-owned subsidiaries. The June 30, 2008 consolidated statements of operations and cash flows include the accounts of AMERCO and its wholly-owned subsidiaries. The June 30, 2007 consolidated statements of operations and cash flows include the accounts of AMERCO and its wholly-owned subsidiaries and SAC Holding II and its subsidiaries.
 
AMERCO’s four reportable segments are (or were):
 
 
(a)
Moving and Storage, comprised of AMERCO, U-Haul, and Real Estate and the subsidiaries of U-Haul and Real Estate
 
 
(b)
Property and Casualty Insurance, comprised of RepWest and its subsidiaries
 
 
(c)
Life Insurance, comprised of Oxford and its subsidiaries
 
 
(d)
SAC Holding II and its subsidiaries (through October 2007)
 
The information includes elimination entries necessary to consolidate AMERCO, the parent, with its subsidiaries and SAC Holding II and its subsidiaries.
 
Investments in subsidiaries are accounted for by the parent using the equity method of accounting.
 


 
16

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
 
 
10.              Financial Information by Consolidating Industry Segment:
 
Consolidating balance sheets by industry segment as of June 30, 2008 are as follows:
 
   
Moving & Storage
   
AMERCO Legal Group
 
   
AMERCO
   
U-Haul
   
Real Estate
   
Eliminations
     
Moving & Storage
Consolidated
   
Property & Casualty Insurance (a)
   
Life
Insurance (a)
   
Eliminations
     
AMERCO
Consolidated
 
   
(Unaudited)
 
   
(In thousands)
 
Assets:
     
Cash and cash equivalents
  $ 30     $ 225,119     $ -     $ -       $ 225,149     $ 5,927     $ 8,716     $ -       $ 239,792  
Reinsurance recoverables and trade receivables, net
    -       29,043       28       -         29,071       168,379       10,194       -         207,644  
Notes and mortgage receivables, net
    -       1,178       1,121       -         2,299       -       -       -         2,299  
Inventories, net
    -       71,075       -       -         71,075       -       -       -         71,075  
Prepaid expenses
    1,908       60,977       44       -         62,929       -       -       -         62,929  
Investments, fixed maturities and marketable equities
    -       -       -       -         -       111,354       456,178       -         567,532  
Investments, other
    -       846       13,533       -         14,379       116,441       117,168       -         247,988  
Deferred policy acquisition costs, net
    -       -       -       -         -       21       33,499       -         33,520  
Other assets
    8       98,467       30,055       -         128,530       1,752       404       -         130,686  
Related party assets
    1,198,757       239,489       27,456       (1,164,717 )
(c)
    300,985       4,188       -       (8,207 )
(c)
    296,966  
      1,200,703       726,194       72,237       (1,164,717 )       834,417       408,062       626,159       (8,207 )       1,860,431  
                                                                             
Investment in subsidiaries
    (202,988 )     -       -       507,154  
(b)
    304,166       -       -       (304,166 )
(b)
    -  
                                                                             
Property, plant and equipment, at cost:
                                                                           
Land
    -       44,451       163,940       -         208,391       -       -       -         208,391  
Buildings and improvements
    -       133,231       751,081       -         884,312       -       -       -         884,312  
Furniture and equipment
    304       302,123       18,188       -         320,615       -       -       -         320,615  
Rental trailers and other rental equipment
    -       208,826       -       -         208,826       -       -       -         208,826  
Rental trucks
    -       1,712,246       -       -         1,712,246       -       -       -         1,712,246  
      304       2,400,877       933,209       -         3,334,390       -       -       -         3,334,390  
Less:  Accumulated depreciation
    (247 )     (1,005,177 )     (310,006 )     -         (1,315,430 )     -       -       -         (1,315,430 )
Total property, plant and equipment
    57       1,395,700       623,203       -         2,018,960       -       -       -         2,018,960  
Total assets
  $ 997,772     $ 2,121,894     $ 695,440     $ (657,563 )     $ 3,157,543     $ 408,062     $ 626,159     $ (312,373 )     $ 3,879,391  
                                                                             
(a)  Balances as of March 31, 2008
                                                                           
(b) Eliminate investment in subsidiaries
                                                                           
(c) Eliminate intercompany receivables and payables
                                                                           
 


 
17

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
 
 
Consolidating balance sheets by industry segment as of June 30, 2008 are as follows:
 
   
Moving & Storage
   
AMERCO Legal Group
 
   
AMERCO
   
U-Haul
   
Real Estate
   
Eliminations
     
Moving & Storage
Consolidated
   
Property & Casualty Insurance (a)
   
Life
Insurance (a)
   
Eliminations
     
AMERCO
Consolidated
 
   
(Unaudited)
 
   
(In thousands)
 
Liabilities:
                                                         
Accounts payable and accrued expenses
  $ 1,760     $ 286,585     $ 4,744     $ -       $ 293,089     $ -     $ 6,048     $ -       $ 299,137  
AMERCO's notes, loans and leases payable
    -       622,911       869,844       -         1,492,755       -       -       -         1,492,755  
Policy benefits and losses, claims and loss expenses payable
    -       362,542       -       -         362,542       286,774       135,936       -         785,252  
Liabilities from investment contracts
    -       -       -       -         -       -       328,628       -         328,628  
Other policyholders' funds and liabilities
    -       -       -       -         -       6,590       3,055       -         9,645  
Deferred income
    -       16,787       -       -         16,787       -       -       -         16,787  
Deferred income taxes
    188,583       -       -       -         188,583       (36,898 )     (5,347 )     -         146,338  
Related party liabilities
    -       1,167,655       -       (1,164,717 )
(c)
    2,938       1,938       3,331       (8,207 )
(c)
    -  
Total liabilities
    190,343       2,456,480       874,588       (1,164,717 )       2,356,694       258,404       471,651       (8,207 )       3,078,542  
                                                                             
Stockholders' equity:
                                                                           
Series preferred stock:
                                                                           
Series A preferred stock
    -       -       -       -         -       -       -       -         -  
Series B preferred stock
    -       -       -       -         -       -       -       -         -  
Series A common stock
    -       -       -       -         -       -       -       -         -  
Common stock
    10,497       540       1       (541 )
(b)
    10,497       3,300       2,500       (5,800 )
(b)
    10,497  
Additional paid-in capital
    419,833       121,230       147,481       (268,711 )
(b)
    419,833       86,121       26,271       (112,392 )
(b)
    419,833  
Accumulated other comprehensive income (loss)
    (40,224 )     (42,293 )     -       42,293  
(b)
    (40,224 )     (289 )     2,358       (2,069 )
(b)
    (40,224 )
Retained earnings (deficit)
    942,000       (407,483 )     (326,630 )     734,113  
(b)
    942,000       60,526       123,379       (183,905 )
(b)
    942,000  
Cost of common shares in treasury, net
    (524,677 )     -       -       -         (524,677 )     -       -       -         (524,677 )
Unearned employee stock ownership plan shares
    -       (6,580 )     -       -         (6,580 )     -       -       -         (6,580 )
Total stockholders' equity (deficit)
    807,429       (334,586 )     (179,148 )     507,154         800,849       149,658       154,508       (304,166 )       800,849  
Total liabilities and stockholders' equity
  $ 997,772     $ 2,121,894     $ 695,440     $ (657,563 )     $ 3,157,543     $ 408,062     $ 626,159     $ (312,373 )     $ 3,879,391  
                                                                             
(a)  Balances as of March 31, 2008
                                                                           
(b) Eliminate investment in subsidiaries
                                                                           
(c) Eliminate intercompany receivables and payables
                                                                           
 


 
18

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
 
 
Consolidating balance sheets by industry segment as of March 31, 2008 are as follows:
 

   
Moving & Storage
   
AMERCO Legal Group
 
   
AMERCO
   
U-Haul
   
Real Estate
   
Eliminations
     
Moving & Storage
Consolidated
   
Property & Casualty Insurance (a)
   
Life
Insurance (a)
   
Eliminations
     
AMERCO
Consolidated
 
       
   
(In thousands)
 
Assets:
     
Cash and cash equivalents
  $ 30     $ 191,220     $ -     $ -       $ 191,250     $ 6,848     $ 8,524     $ -       $ 206,622  
Reinsurance recoverables and trade receivables, net
    -       20,529       27       -         20,556       170,305       10,255       -         201,116  
Notes and mortgage receivables, net
    -       1,158       930       -         2,088       -       -       -         2,088  
Inventories, net
    -       65,349       -       -         65,349       -       -       -         65,349  
Prepaid expenses
    4,508       51,418       233       -         56,159       -       -       -         56,159  
Investments, fixed maturities and marketable equities
    -       -       -       -         -       144,171       489,613       -         633,784  
Investments, other
    -       838       13,515       -         14,353       80,786       90,452       -         185,591  
Deferred policy acquisition costs, net
    -       -       -       -         -       30       35,548       -         35,578  
Other assets
    8       97,285       30,494       -         127,787       2,808       543       -         131,138  
Related party assets
    1,164,092       244,801       29,198       (1,131,730 )
(c)
    306,361       7,067       -       (9,542 )
(c)
    303,886  
      1,168,638       672,598       74,397       (1,131,730 )       783,903       412,015       634,935       (9,542 )       1,821,311  
                                                                             
Investment in subsidiaries