U-Haul 2004 Annual Report Download

Download and view the complete annual report

Please find the complete 2004 U-Haul annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 125

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125

®
®
INTERNATIONAL
LIFE INSURANCE COM
PAN
Y
®
04
AMERCO
ANNUAL
REPORT
®
®
HOLDING COMPANY OF THE U-HAUL SYSTEM
®

Table of contents

  • Page 1
    04 AMERCO ANNUAL R E P O R T ® LI FE IN SU R A N C E C O M PA N Y ® IN TE R N AT I O N A L ® HOLDING COMPANY OF THE U-HAUL SYSTEM ® ®

  • Page 2
    ... data) Summary of Operations: Total revenues ...Total costs and expenses ...Earnings from operations ...Interest expense ...Fees on early termination of BBATs Pretax earnings (loss) ...Income tax benefit (expense)...Net earnings (loss) ...Less: Preferred stock dividends ...Earnings (loss) available...

  • Page 3
    ... balance sheet and increased shareholder value. Our core U-Haul moving and self-storage business is strong and our balance sheet and financial condition continue to improve. Fiscal 2004 revenues from our moving and self-storage business were 7 percent above those recorded in fiscal 2003. Operating...

  • Page 4
    ...groups. Encourage a coincidence of interest between ownership, management, operative U-Haul System members and dealers. • Maintaining a reasonable price/earnings ratio on our common stock. Emphasize the strength of the company, not the strength of the stock price. • Employing people who are high...

  • Page 5
    ...) 2727 N. Central Avenue Phoenix, Arizona 85004 Telephone (602) 263-6645 Securities registered pursuant to Section 12(b) of the Act: 88-0106815 86-0663060 Registrant Title of Class Name of Each Exchange on Which Registered AMERCO U-Haul International, Inc. Series A 81/2% Preferred Stock None...

  • Page 6
    ... of the Registrants Executive Compensation Security Ownership of Certain BeneÃ'cial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions Principal Accounting Fees and Services PART IV Exhibits, Financial Statement Schedules, and Reports on Form...

  • Page 7
    ...managed retail centers, through which we rent our trucks and trailers and sell moving and self-storage related supplies and services, to complement our independent dealer network. AMERCO and U-Haul are each incorporated in Nevada. Our Internet address is uhaul.com. On our investor relations web site...

  • Page 8
    ... we also oÃ...er emergency road service at no additional charge. U-Haul also provides customers the equipment to transport their auto. We provide three towing options, including; auto transport, in which all four wheels are oÃ... the ground, tow dolly, in which the front wheels of the towed vehicle are...

  • Page 9
    ... the rental and sale of self moving related products and services within the Self Moving and Storage operating segment represented approximately 72% of consolidated net revenue in 2004. Self Moving Within our truck and trailer rental operation, we continue to focus on expanding our dealer network...

  • Page 10
    ... hour access; and an internet based customer reservation and account management system. eMove Our eMove.com web site connects independent providers of moving and self-storage services with ""do-ityourself'' moving and storage customers. The eMove.com web site connects business to business, business...

  • Page 11
    ...trucks, 73,000 trailers and 33,000 towing devices. This equipment, and our U-Haul brand self moving and self storage products and services are distributed through a network of 1,351 U-Haul operated retail centers and 13,870 independent U-Haul dealers. Independent U-Haul dealers receive U-Haul rental...

  • Page 12
    ... convenience of storage rental locations, cleanliness, security and price. Our primary competitors in the self-storage market are Public Storage, Shurgard, Storage USA and others. Insurance The highly competitive insurance industry includes a large number of life insurance companies and property and...

  • Page 13
    ... also a director of Pinnacle West Capital Corporation and the Omaha World Herald Company. As of June 9, 2004 The Board appointed Daniel R. Mullen as a second Advisory Board member. Mr. Mullen is a retired Ã'nancial executive with public company experience. Recent Developments Emergence from Chapter...

  • Page 14
    ...also operate over 200 Ã'xed site repair facilities located throughout the United States and Canada. SAC Holdings owns property, plant and equipment that are utilized in the rental of self-storage rooms and U-Haul equipment. Such facilities exist throughout the United States and Canada. We manage the...

  • Page 15
    ... section 10(b) and Rule 10b-5 and section 20(a) of the Securities Exchange Act. IG Holdings v. AMERCO, et al., United States District Court, District of Nevada, Case No. CV-N-03-0199. IG Holdings, an AMERCO bondholder, commenced this putative class action on behalf of all persons and entities who...

  • Page 16
    ... respond to the complaints. Management has stated that it intends to defend these cases vigorously. Department of Labor On May 18, 2004, the United States Department of Labor (""DOL'') completed its investigation of the AMERCO Employee Savings, ProÃ't Sharing, and Employee Stock Ownership Plan (the...

  • Page 17
    ... restrictions on the ability of the insurance subsidiaries to pay dividends to AMERCO. See Note 11 of Notes to Consolidated Financial Statements for a discussion of AMERCO's preferred stock. During the fourth quarter of Ã'scal 2004, we did not repurchase any shares of our equity securities. 12

  • Page 18
    ...,998 Selected Balance Sheet Data: Property, plant and equipment, net $1,451,805 Total assets 3,375,605 AMERCO capitalized portion of Synthetic leases 99,609 SAC Holdings capitalized portion of Synthetic leases AMERCO's notes and loans payable 880,519 SAC Holdings' notes and loans payable 78,637...

  • Page 19
    ... March 31: 2004 For the Year Ended March 31, 2003 2002 2001 (In thousands except share and per share data) 2000 Summary of Operations: Rental revenue Net sales Net investment and interest income Total revenues Operating expenses ÏÏÏÏÏ Commission expenses ÏÏÏ Cost of sales Lease expense...

  • Page 20
    ... U-Haul entities. Real Estate is responsible for overseeing property acquisitions, dispositions and managing environmental risks of the properties. SAC moving and self-storage operations consist of the rental of self-storage spaces, sales of moving supplies, sales of trailer hitches, and sales of...

  • Page 21
    ... and availability of rental equipment to satisfy the needs of our customers. With respect to our retail sales of product, U-Haul has developed a number of specialty packing boxes, ""Mover's Wrap'' and Smart Move tape. Mover's Wrap is a sticks-to-itself plastic stretch wrap used to bind, bundle...

  • Page 22
    ...subjective. Principles of Consolidation The 2004 balance sheet includes the accounts of AMERCO, its wholly owned subsidiaries, and SAC Holding II Corporation and its subsidiaries. The 2003 balance sheet and the 2004 statements of operations, comprehensive income, and cash Ã-ows, and the consolidated...

  • Page 23
    ...prices, dealer quotes or discounted cash Ã-ows are reviewed. Other-than-temporary declines in value are recognized in the current period operating results to the extent of the decline. Results of Operations AMERCO and Consolidated Entities 2004 March 31, 2003 (In thousands) 2002 Rental revenue Net...

  • Page 24
    ... with Ã'scal 2003. At the Oxford Life Insurance Company, revenue decreased 4.8% before eliminating entries, primarily as a result of its rating downgrade by A.M. Best in 2003. This downgrade resulted from liquidity issues that faced AMERCO. Earnings from operations at Oxford were $11.3 million in...

  • Page 25
    ... 2005. Self Moving and Storage The following tables sets forth certain revenue and consolidated statements of operations data for the periods indicated: U-Haul International 2004 March 31, 2003 (In thousands) 2002 Rental revenue Net sales Net investment and interest income $1,548,408 181,799...

  • Page 26
    ...Cost of sales Depreciation, net Total costs and expenses Earnings from operations Interest expense Pre-tax loss Income tax beneÃ't Net loss Amerco Real Estate 108,412 24,450 21,400 154,262 64,693 80,963 (16,270) 4,719 $(11,551) 2004 March 31, 2003 (In thousands) 2002 Rental revenue Net...

  • Page 27
    ... rent. Rental revenues at Real Estate, before consolidating entries, were $59.8 million in Ã'scal 2004, compared with $59.2 million in 2003. This represents an increase of $0.6 million, or 1.0%, and reÃ-ects increased rental rates. Net sales of moving and self-storage related products and services...

  • Page 28
    ... from U-Haul and increased storage rates. Rental revenues at Real Estate, before consolidating entries, were $59.2 million in Ã'scal 2003, compared with $68.2 million in 2002. This represents a decrease of $9.0 million, or 13.3%, and reÃ-ects the sale of properties to SAC Holdings. Net sales of...

  • Page 29
    ...71.9 million in 2002. This represents a decrease of $15.9 million, or 22.1%, and was driven by a reduction in rental revenues and reductions in gains on asset disposals. Oxford Life Insurance Company The following table sets forth certain net revenue and statements of operations data for the periods...

  • Page 30
    ... revenue and statements of operations data for the periods indicated: 2003 December 31, 2002 2001 Premiums Net investment income Total revenue BeneÃ'ts and losses Amortization of deferred policy acquisition costs Operating expenses Total expenses Loss from operations Income tax beneÃ't Net...

  • Page 31
    ...'s business. Amortization of deferred policy acquisition costs was $14.1 million, $17.3 million, and $22.1 million for the twelve months ended December 31, 2003, 2002, and 2001, respectively. The decreases are due to decreased premium writings. Operating expenses, before intercompany eliminations...

  • Page 32
    ... loss adjustment expenses. First line Ì reserves as originally reported at the end of the stated year. Second section, reading down, Ì cumulative amounts paid as of the end of successive years with respect to that reserve. Third section, reading down, Ì revised estimates of the original recorded...

  • Page 33
    ... from operations, lease Ã'nancing and sales of used equipment. Going forward, we anticipate that a substantial portion of our internally generated funds will be used to enhance liquidity by paying down existing indebtedness. During each of the Ã'scal years ended March 31, 2005, 2006 and 2007, U-Haul...

  • Page 34
    ... from the sale of trucks. We intend to focus our growth on expanding our independent dealer network, which does not require a substantial amount of capital resources. Real Estate has traditionally Ã'nanced the acquisition of self-storage properties to support U-Haul's growth through lease and debt...

  • Page 35
    ... by an increase in depreciation expense of rental equipment. Cash provided (used) from operating activities for Real Estate was $93.8 million, $(87.1) million and $(144.1) million for Ã'scal years 2004, 2003 and 2002, respectively. Cash provided (used) from operating activities for SAC Holdings was...

  • Page 36
    ... million. These agreements were prepaid in full and terminated in April 2004. See Note 23 to the Consolidated Financial Statements. OÃ... Balance Sheet Arrangements AMERCO used certain equipment and occupies certain facilities under operating lease commitments with terms expiring substantially through...

  • Page 37
    ... which the Company receives a management fee equal to 6% of the gross receipts. Business Outlook As we look ahead to Ã'scal 2005, we believe the momentum in our Moving and Self-Storage segment will continue, adjusted for the deconsolidation of SAC Holding Corporation. We reported approximately $177...

  • Page 38
    ... operations, products or services, Ã'nancing needs and plans, our perceptions of our legal positions and anticipated outcomes of pending litigation against us, liquidity, goals and strategies, plans for new business, growth rate assumptions, pricing, costs, and access to capital and leasing markets...

  • Page 39
    ... to present fairly, and in accordance with generally accepted accounting principles, such results. 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 self-storage operations are generated in the Ã'rst and...

  • Page 40
    ...local competitors. Competition is generally based on convenience of rental locations, availability of quality rental moving equipment, breadth of essential services and price. In our truck rental business, we face competition from Budget Car and Truck Rental Company and Penske Truck Leasing. Some of...

  • Page 41
    ... to C°. Upon emergence from bankruptcy in March 2004, Oxford and its subsidiaries were upgraded to B¿. A.M. Best has indicated the rating outlook for our life insurance business is positive. Prior to AMERCO's restructuring Oxford was rated B°°. Financial strength ratings are important external...

  • Page 42
    ... of AMERCO's common stock on Nasdaq provided that AMERCO complies with all requirements for continued listing on Nasdaq and timely Ã'les all periodic reports with the SEC for all periods ending on or before June 30, 2004, without the beneÃ't of any extensions provided pursuant to Exchange Act Rule...

  • Page 43
    ... Company by approximately $5.2 million annually. Foreign Currency Exchange Rate Risk The exposure to market risk for changes in foreign currency exchange rates relates primarily to our Canadian business. Approximately 2% of our revenue is generated in Canada. The result of a 10% change in the value...

  • Page 44
    ..., processed, summarized and reported within the time periods speciÃ'ed in the rules and forms of the Securities and Exchange Commission. Disclosure Controls are also designed to reasonably assure that such information is accumulated and communicated to our management, including the CEO and the CFO...

  • Page 45
    ... or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and accurately reported, within the time periods speciÃ'ed in the SEC's rules and forms. We also sought to address other control matters in the control evaluation, and in each case if a problem was identiÃ'ed, we...

  • Page 46
    ... & General Counsel of AMERCO and U-Haul Chief Financial OÇcer of AMERCO and U-Haul Assistant Treasurer of AMERCO President of U-Haul Phoenix Operations Director and Executive V.P. of U-Haul Executive V.P. of U-Haul Field Operations President of Oxford Life Insurance Company President of Amerco Real...

  • Page 47
    ... to November 2000 as Executive Vice President of U-Haul. He is currently Vice President of Amerco Business Consultants, a subsidiary of the Company. Class IV (Term Expires at 2006 Meeting) William E. Carty has served as a Director of AMERCO since 1987 and as a Director of U-Haul since 1986. He has...

  • Page 48
    ... has served as President of Amerco Real Estate Company since September 2000. He began his previous position as Vice President/Storage Product Group for U-Haul in 1988. Richard M. Amoroso has served as President of RepWest since August 2000. He was Assistant General Counsel of U-Haul from 1993 until...

  • Page 49
    ... Shoen 2004 President of U-Haul 2003 Phoenix Operations 2002 Ronald C. Frank 2004 Executive V.P. 2003 U-Haul Field Operations 2002 Gary B. Horton 2004 Treasurer of AMERCO and 2003 Assistant Treasurer of U-Haul 2002 Gary V. Klinefelter 2004 Secretary and General Counsel 2003 of AMERCO and U-Haul...

  • Page 50
    ... director nominee of AMERCO, by each executive oÇcer named above, and by all directors and executive oÇcers of the Company as a group, of the percentage of net payments received by such persons during the 2004 Ã'scal year in respect of Ã-eet-owner contracts issued by U-Haul. Shares of Common Stock...

  • Page 51
    ...Stock Class Percentage of Net Fleet Owner Contract Payments M. Frank Lyons Director and Director Nominee 2727 N. Central Avenue Phoenix, Arizona 85004 Gary V. Klinefelter Secretary and General Counsel 2727 N. Central Avenue Phoenix, Arizona 85004 Gary B. Horton Treasurer of AMERCO and Assistant...

  • Page 52
    ... 2004, the Company leased space for marketing company oÇces, vehicle repair shops and hitch installation centers owned by subsidiaries of SAC Holdings. Total lease payments pursuant to such leases were $2.6 million, during Ã'scal year 2004. The terms of the leases are similar to the terms of leases...

  • Page 53
    ... and director of AMERCO, owns Space Age Auto Paint Store Inc. Item 14. Principal Accounting Fees and Services The ultimate responsibility for good corporate governance rests with the Board, whose primary roles are oversight, counseling and direction to the Company's management in the best long-term...

  • Page 54
    ... liability of any other member of the Audit Committee or the Board. The Audit Committee meets each quarter with BDO Seidman, LLP and management to review AMERCO's interim Ã'nancial results before the publication of AMERCO's quarterly earnings press releases. Management's and the independent auditors...

  • Page 55
    ... March 31, 2004 2003 (In thousands) Audit fees Audit-related fees Tax fees All other fees Total $2,500 70 105 77 $2,752 $4,190 35 230 330 $4,785 Audit Fees. This category includes the audit of AMERCO's annual Ã'nancial statements, review of Ã'nancial statements included in AMERCO's Form 10...

  • Page 56
    ... emergence from Chapter 11. On May 5, 2004, we Ã'led a current report on Form 8-K disclosing that the Board of Directors of AMERCO had approved the AMERCO Code of Ethics. Exhibit Number Description Page or Method of Filing 2.1 Joint Plan of Reorganization of AMERCO and AMERCO Real Estate Company...

  • Page 57
    ... and Employee Stock Ownership Plan Loan and Security Agreement among AMERCO and Wells Fargo Foothill, Inc., dated as of March 1, 2004 SAC Participation and Subordination Agreement, dated as of March 15, 2004 among SAC Holding Corporation, SAC Holding II Corporation, AMERCO, U-Haul International, Inc...

  • Page 58
    ... of AMERCO Management Agreement between Four SAC Self-Storage Corporation and subsidiaries of AMERCO Agreement, dated October 17, 1995, among AMERCO, Edward J. Shoen, James P. Shoen, Aubrey K. Johnson, John M. Dodds and William E. Carty Directors' Release, dated October 17, 1995, executed by...

  • Page 59
    ... and U-Haul Management Agreement between TwentySeven SAC Self-Storage Limited Partnership and U-Haul Promissory Note between SAC Holding Corporation and Oxford Life Insurance Company 10.32 10.33 10.34 10.35 10.36 10.37 10.38 10.39 10.40 10.41 Incorporated by reference to AMERCO's Form...

  • Page 60
    ... Promissory Note between SAC Holding Corporation and U-Haul International, Inc. (in an aggregate principal amount up to $76,000,000) Property Management Agreement Code of Ethics 10.42A 10.43 10.44 10.45 10.46 10.47 Incorporated by reference to AMERCO's Quarterly Report on Form 10-Q for the...

  • Page 61
    ....1 32.2 CertiÃ'cate of Edward J. Shoen, President and Chairman of the Board of AMERCO and U-Haul International, Inc. pursuant to Section 906 of the Sabanes-Oxley Act of 2002 CertiÃ'cate of Jack A. Peterson, Chief Financial OÇcer of AMERCO and U-Haul International, Inc. pursuant to Section 906 of...

  • Page 62
    ... REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders AMERCO Reno, Nevada We have audited the accompanying consolidated balance sheets of AMERCO and its subsidiaries and SAC Holding II Corporation and its subsidiaries (collectively, the ""Company'') as of March 31, 2004 and...

  • Page 63
    ... policy acquisition costs, net Deferred income taxes Other assets Related party receivables Property, plant, and equipment, at cost: Land Buildings and improvements Furniture and equipment Rental trailers and other rental equipment Rental trucks SAC Holdings Ì property, plant and equipment...

  • Page 64
    ...Cost of sales BeneÃ'ts and losses Amortization of deferred policy acquisition costs Lease expense Depreciation, net Restructuring expenses Total costs and expenses Earnings from operations Interest expense Pretax earnings (loss Income tax beneÃ't (expense Net (loss Less: Preferred stock...

  • Page 65
    ...leveraged employee stock ownership plan Foreign Currency Translation Fair market value of cash Ã-ow hedge Unrealized gain (loss) on investments Net loss Preferred stock Dividends: Series A ($2.13 per share for 2004, 2003, and 2002) ÏÏÏ Contribution from related party SAC Holding Corporation...

  • Page 66
    AMERCO AND CONSOLIDATED ENTITIES CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME/(LOSS) 2004 Years Ended March 31, 2003 2002 (In thousands) Comprehensive income/(loss): Net earnings/(loss Other comprehensive income/(loss) net of tax: Foreign currency translation Fair market value of cash Ã-...

  • Page 67
    ... Common stock Preferred stock Real estate Mortgage loans Changes in other investments Net cash provided (used) by investing activities Cash Ã-ow from Ã'nancing activities: Net change in short-term borrowings Proceeds from notes Debt issuance costs Leveraged Employee Stock Ownership Plan...

  • Page 68
    ... 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 its wholly-owned...

  • Page 69
    ..., U-Haul's customers, and the Company. Oxford originates and reinsures annuities, credit life and disability, life insurance, and supplemental health products. Oxford also administers the self-insured employee health and dental plans for the Company. Note 3: Accounting Policies Use of Estimates The...

  • Page 70
    ...for-sale, long-term investments, mortgage loans and notes on real estate, swaps and forward currency contracts are based on quoted market prices, dealer quotes or discounted cash Ã-ows. Fair values of trade receivables approximate their recorded value. Limited credit risk exists on trade receivables...

  • Page 71
    ... and promotional items Total $37,165 9,899 5,738 $52,802 $33,256 10,389 9,625 $53,270 Inventories consist primarily of truck and trailer parts and accessories used to repair rental equipment products purchased directly for resale and are valued at the lower of cost or market. Inventory cost is...

  • Page 72
    ... of surplus real estate, which is lower than market value, at the balance sheet date was $1.5 million for 2004 and 2003, and is included in the investments, other. Receivables Accounts receivable include trade accounts from self moving and self storage customers and dealers, insurance premiums and...

  • Page 73
    ...underground storage tanks or related contamination are capitalized and amortized over the estimated useful lives of the properties. These costs improve the safety or eÇciency of the property or are incurred in preparing the property for sale. Income Taxes AMERCO Ã'les a consolidated tax return with...

  • Page 74
    ... to the Ã'nancial statements. Note 4: Earnings Per Share Net income for purposes of computing earnings per common share is net income minus preferred stock dividends. Preferred stock dividends include accrued dividends of AMERCO. The shares used in the computation of the company's basic and diluted...

  • Page 75
    ... Losses (In thousands) Estimated Market Value December 31, 2002 Consolidated Held-to Maturity U.S. treasury securities and government obligations U.S. government agency mortgage-backed securities Corporate securities Mortgage-backed securities Redeemable preferred stocks $ 500 Ì Ì 15,683...

  • Page 76
    AMERCO AND CONSOLIDATED ENTITIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ÃŒ (Continued) The adjusted cost and estimated market value of Ã'xed maturity investments in debt securities at December 31, 2003 as compared to December 31, 2002, by contractual maturity, were as follows: December 31, 2003 ...

  • Page 77
    ... Estimated Estimated Amortized Market Amortized Market Cost Value Cost Value (In thousands) Consolidated Available-for-Sale Due in one year or less Due after one year through Ã've years Due after Ã've years through ten years After ten years Mortgage-backed securities Redeemable preferred stock...

  • Page 78
    AMERCO AND CONSOLIDATED ENTITIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ÃŒ (Continued) Investments, Other The carrying value of other investments at Ã'scal year-ends was as follows: March 31, 2004 2003 (In thousands) Short-term investments Mortgage loans Real estate Policy loans Other $...

  • Page 79
    ... CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued) On June 30, 2003, the Company's insurance subsidiaries exchanged their investments in Private Mini Storage Realty, L.P. for other real property owned by SAC Holdings. The exchanges were non-monetary and were recorded on the basis of the book value of...

  • Page 80
    ... of AMERCO (including the Senior Secured Facility and the 9.0% Second Lien Senior Secured Notes due 2009), are secured by certain assets of AMERCO, including the capital stock of our life insurance subsidiary (Oxford Life Insurance Company), certain real estate held for sale, 75% of the net proceeds...

  • Page 81
    ... borrower under the abovementioned loan agreements is restricted. As of March 31, 2004 the Company was in compliance with these covenants. Restructuring of Synthetic Lease Agreements At the time of our emergence from bankruptcy, Amerco Real Estate Company restructured approximately $249.5 million of...

  • Page 82
    ... FINANCIAL STATEMENTS ÃŒ (Continued) SAC Holdings' Notes and Loans SAC Holdings' notes and loans payable at Ã'scal year-ends were as follows: March 31, 2004 2003 (In thousands) Notes payable, secured, bearing interest rates ranging from 7.87% to 9.00% due 2027 Less discounts on notes payable...

  • Page 83
    ... respectively. Interest Rates Interest rates and company borrowings were as follows: Revolving Credit Activity Short-Term Borrowing Year Ended Year Ended 2004 2003 2002 2004 2003 2002 (In thousands, except interest rates) AMERCO Weighted average interest rate during the year Interest rate at year...

  • Page 84
    ... Series A preferred stock for cash, at $25.00 per share plus accrued and unpaid dividends to the redemption date. As of our Ã'scal year-end, we had accrued and unpaid dividends of $16.2 million. $3.2 million was authorized for payment by the Board on June 1, 2004. Note 12: Comprehensive Income The...

  • Page 85
    ...: 2004 March 31, 2003 (In percentage) 2002 Statutory federal income tax rate Increase (reduction) in rate resulting from: State and foreign taxes, net of federal beneÃ't Canadian subsidiary income (loss Interest on deferred taxes Tax-exempt interest income (loss Dividends received deduction...

  • Page 86
    ... of the Internal Revenue Code, a change in ownership for tax purposes will limit the amount of net operating loss carryforwards that can be used to oÃ...set future taxable income. Note 14: Employee BeneÃ't Plans ProÃ't Sharing Plans The Company provides tax-qualiÃ'ed proÃ't sharing retirement plans...

  • Page 87
    ...defer income under Section 401(k) of the Internal Revenue Code of 1986. ESOP Plan The Company also provides an Employee Stock Ownership Plan (the ""Plan'') under which the Company may make contributions of its common stock or cash to acquire such stock on behalf of participants. Generally, employees...

  • Page 88
    ... income investments with cash Ã-ow streams suÇcient to satisfy beneÃ't obligations under the plan when due. Fluctuations in the discount rate assumptions primarily reÃ-ect changes in U.S. interest rates. The estimated health care cost inÃ-ation rates used to measure the accumulated post retirement...

  • Page 89
    AMERCO AND CONSOLIDATED ENTITIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued) Note 15: Reinsurance During their normal course of business, our insurance subsidiaries assume and cede reinsurance on both a coinsurance and a risk premium basis. They also obtain reinsurance for that ...

  • Page 90
    ... 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 2034. AMERCO has guaranteed $235.3 million of residual values at March 31, 2004, for these assets at...

  • Page 91
    ... Virginia, Civil Action No. 00-C-51-K, entitled Charles Kocher v. Oxford Life Insurance Co. (Oxford) seeking compensatory and punitive damages for breach of contract, bad faith and unfair claims settlement practices arising from an alleged failure of Oxford to properly and timely pay a claim under...

  • Page 92
    ... section 10(b) and Rule 10b-5 and section 20(a) of the Securities Exchange Act. IG Holdings v. AMERCO, et al., United States District Court, District of Nevada, Case No. CV-N-03-0199. IG Holdings, an AMERCO bondholder, commenced this putative class action on behalf of all persons and entities who...

  • Page 93
    ...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 have a material adverse eÃ...ect on AMERCO's Ã'nancial position or operating results. Note 18: Preferred Stock Purchase Rights The Board of...

  • Page 94
    ...and executive oÇcer of AMERCO. The Company does not have an equity ownership interest in SAC Holdings, except for minority investments made by RepWest and Oxford in a SAC Holdingscontrolled limited partnership which holds Canadian self-storage properties. The Company received cash interest payments...

  • Page 95
    ...a major stock holder, oÇcer and director of AMERCO, owns Space Age Auto Paint Store Inc. No real estate transactions with SAC Holdings that involve the Company or its subsidiaries are expected in the foreseeable future. Independent Ã-eet owners own approximately 4% of all U-Haul rental trailers and...

  • Page 96
    ... a support agreement the Company entered to enhance the credit of Private Mini Storage, L.P. The company expects to fully recover these amounts. On June 30, 2003, RepWest and Oxford exchanged their respective interests in Private Mini for certain real property owned by certain SAC Holding's entities...

  • Page 97
    ... are reÃ-ected in the Company's Statement of Changes in Stockholders' Equity for the year ended March 31, 2004. In prior years, U-Haul sold various properties to SAC Holding Corporation at prices in excess of U-Haul's carrying values resulting in gains which U-Haul deferred and treated as additional...

  • Page 98
    AMERCO AND CONSOLIDATED ENTITIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued) On May 20, 2003, RepWest consented to an Order for Supervision issued by the Arizona Department of Insurance (""DOI''). The DOI determined that RepWest's level of risk based capital (""RBC'') allowed for ...

  • Page 99
    ...Segment AMERCO has three industry segments represented by moving and storage operations (U-Haul and Real Estate), property and casualty insurance and life insurance. SAC Holdings is part of the moving and storage industry segment, but is not a part of the Obligated Group. Management tracks revenues...

  • Page 100
    ... March 31, 2004 are as follows: AMERCO Obligated Group Real U-Haul Estate Elim Obligated Grp Cons AMERCO Legal Group Property and Casualty Life Insurance Insurance (a) (a) Elim (In thousands) $ $ AMERCO as Consolidated SAC Moving and AMERCO Storage Total Consolidated Operations Elim Consolidated...

  • Page 101
    ... NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued) Consolidating balance sheets by industry segment as of March 31, 2004 are as follows: AMERCO Obligated Group Real U-Haul Estate Elim Obligated Grp Cons AMERCO Legal Group Property and Casualty Life Insurance Insurance (a) (a) Elim (In...

  • Page 102
    ... and equipment, at cost: Land Buildings and improvementsÏÏÏ Furniture and equipment Rental trailers and other rental equipment Rental trucks SAC HoldingsÌProperty, plant and equipment Less: Accumulated depreciationÏÏ Total property, plant and equipment Total assets (a) Balances for...

  • Page 103
    ... NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued) Consolidating balance sheets by industry segment as of March 31, 2003 are as follows: AMERCO Obligated Group Real U-Haul Estate Elim Obligated Grp Cons AMERCO Legal Group Property and Casualty Life Insurance Insurance (a) (a) Elim (In...

  • Page 104
    ... CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued) Consolidating income statements by industry segment for period ending March 31, 2004 are as follows: AMERCO Obligated Group Real U-Haul Estate Elim Obligated Grp Cons AMERCO Legal Group Property and Casualty Life Insurance Insurance (a) (a) Elim...

  • Page 105
    ... 174,121 314,016 71,366 $168,027 48,768 Ì Ì 216,795 AMERCO as Consolidated SAC Moving and AMERCO Storage Total Consolidated Operations Elim Consolidated Revenues: Rental revenue Net sales Premiums Net investment and interest income 1,195 1,195 1,636,865 69,913 (60,116) 1,647,857 $1,433,442...

  • Page 106
    ...(10,185)(c) 411,170 Ì 75,706 $112,747 24,449 Ì Ì 137,196 AMERCO as Consolidated SAC Moving and AMERCO Storage Total Consolidated Operations Elim Consolidated Revenues: Rental revenue Net sales Premiums Net investment and interest income 873 873 1,646,683 76,621 (64,325) 1,659,852 $1,425,685...

  • Page 107
    ..., 2004 are as follows: AMERCO Legal Group AMERCO as Consolidated Property SAC and Moving Obligated Group Casualty Life and Real Obligated Insurance Insurance Amerco Storage Total Amerco U-Haul Estate Elim Group (a) (a) Elim Consolidated Operations Elim Consolidated (In thousands) Net cash provided...

  • Page 108
    ... Real U-Haul Estate Elim Obligated Group AMERCO as Consolidated SAC Moving and Amerco Storage Total Consolidated Operations Elim Consolidated $ (1,011) $ 74,530 Net cash provided by (used in) operating activities ÏÏ $ 200,516 AMERCO Legal Group Property and Casualty Life Insurance Insurance...

  • Page 109
    ...March 31, 2002 are as follows: Net cash provided by (used in) operating activities AMERCO Legal Group AMERCO as Consolidated Property SAC and Moving Obligated Group Casualty Life and Real Obligated Insurance Insurance Amerco Storage Total Amerco U-Haul Estate Elim Group (a) (a) Elim Consolidated...

  • Page 110
    ... and September, 1999 AMERCO, U-Haul International, Inc. and Amerco Real Estate Company entered into Ã'nancing agreements for the purchase and construction of self-storage facilities with the Bank of Montreal and Citibank, respectively (the synthetic leases). As part of the Company's overall plan of...

  • Page 111
    ...AND CONSOLIDATED ENTITIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued) Preferred Stock Dividends On May 5, 2004, the Board of Directors of AMERCO, the holding company for U-Haul International, Inc., and other companies, declared a regular quarterly cash dividend of $0.53125 per share on...

  • Page 112
    ... statements. 2004 2003 2002 2001 2000 (In thousands, except earnings per $100 of average Investment) Earnings data (Note A): Fleet owner income: Credited to Ã-eet owner gross rental income 739 Credited to trailer accident fund (Notes D and E) ÏÏ 46 Total Ã-eet owner income Fleet owner operation...

  • Page 113
    ... Monday of each month and received by U-Haul International, Inc. by the end of the month and U-Haul Center reports of rentals transacted through the last day of each month. Payments to Ã-eet owners for trailers lost or retired from rental service as a result of damage by accident have not been re...

  • Page 114
    ... of independent Ã-eet owner expenses borne by the Trailer Accident Fund follows: Fleet Owners Subsidiary U-Haul Companies Subsidiary Companies Sub Independent Total (In thousands) Trailer Accident Retirements Total Trailer Accident Repair Expenses Year ended: March 31, 2004 March 31, 2003 March...

  • Page 115
    SCHEDULE I CONDENSED FINANCIAL INFORMATION OF AMERCO BALANCE SHEETS March 31, 2004 2003 (In thousands) ASSETS Cash Investment in subsidiaries Due from consolidated subsidiaries Other assets Total assets LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Notes and loans payable Other ...

  • Page 116
    CONDENSED FINANCIAL INFORMATION OF AMERCO STATEMENTS OF OPERATIONS Years Ended March 31, 2004 2003 2002 (In thousands, except share and per share data) Revenues Net interest income from subsidiaries Expenses Operating expenses Restructuring expenses Other expenses Total expenses Equity in ...

  • Page 117
    ... activities: Purchases of property, plant and equipment Proceeds from sale of property, plant and equipment Net cash used by investing activities Cash Ã-ows from Ã'nancing activities: Net change in short term borrowings Proceeds from notes Leveraged employee stock ownership plan-repayments from...

  • Page 118
    ...holding company for UHaul International, Inc., Republic Western Insurance Company, Oxford Life Insurance Company and Amerco Real Estate Company. The Ã'nancial statements of the Registrant should be read in conjunction with the Consolidated Financial Statements and notes thereto included in this Form...

  • Page 119
    ... Reserves Amortization Paid Incurred Deferred for Unpaid of Deferred Claims and Related to Policy Claims and Discount Net Policy Claim Net Acquisition Adjustment if any, Unearned Net Earned Investment Current Prior Acquisition Adjustment Premiums Cost Expenses Deducted Premiums Premiums(1) Income...

  • Page 120
    ... or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AMERCO By: EDWARD J. SHOEN Edward J. Shoen Chairman of the Board and President /s/ Dated: June 17, 2004 POWER OF ATTORNEY KNOW ALL...

  • Page 121
    Signature Title Date /s/ JOHN P. BROGAN John P. Brogan M. FRANK LYONS M. Frank Lyons Director June 17, 2004 /s/ Director June 17, 2004

  • Page 122
    ...15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. U-HAUL INTERNATIONAL, INC. By: EDWARD J. SHOEN Edward J. Shoen Chairman of the Board and President /s/ Dated: June 17, 2004 POWER OF...

  • Page 123
    ... General Counsel of AMERCO and U-Haul Chief Financial Officer of AMERCO and U-Haul Assistant Treasurer of AMERCO Chief of U-Haul Phoenix Operations Director and Executive V.P. of U-Haul Executive V.P. U-Haul Field Operations President of Oxford Life Insurance Company President of Amerco Real Estate...

  • Page 124
    ... the name "U-Haul Trailer Rental Company." The Company is primarily engaged in the short-term rental of trucks, trailers, and related equipment to the do-it-yourself mover. The Company also sells related moving products and services, and rents self-storage facilities and general rental items. In...

  • Page 125
    UH-6000(K) CC10.4 ©2004 U-HAUL® INT'L.