U-Haul 2004 Annual Report Download - page 94

AMERCO AND CONSOLIDATED ENTITIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 19: Related Party Transactions
AMERCO has engaged in related party transactions, and has continuing related party interests, with
certain major stockholders, directors and oÇcers 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.
On December 23, 2002, Mark V. Shoen, a signiÑcant shareholder purchased a condominium in Phoenix,
Arizona from Oxford Life Insurance Company. The purchase price was $279,573, which was in excess of the
appraised value.
Samuel J. Shoen, the son of Edward J. Shoen, is employed by U-Haul as project group supervisor.
Mr. Shoen was paid an aggregate salary and bonus of $86,532 and $77,327 for his services during the Ñscal
year 2004 and 2003.
James P. Shoen, the brother of Edward J. Shoen and Mark V. Shoen is Vice President of AMERCO
Business Consultants, a subsidiary of the Company. Mr. Shoen was paid an aggregate of $228,003 for his
services during Ñscal 2004.
During Ñscal 2004 a subsidiary of the Company held various senior and junior unsecured notes of SAC
Holdings. Substantially all of the equity interest of SAC Holdings is controlled by Mark V. Shoen, a
signiÑcant shareholder 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 Holdings-
controlled limited partnership which holds Canadian self-storage properties. The Company received cash
interest payments of $26.5 million and $26.6 million, from SAC Holdings during Ñscal year 2004 and 2003.
The notes receivable balance outstanding at March 31, 2004 and 2003 was, in the aggregate, $203.8 million
and $394.6 million. The largest aggregate amount outstanding during the Ñscal year ended March 31, 2004
was $403.5 million.
Interest accrues on the outstanding principal balance of junior notes of SAC Holdings that the Company
holds at a stated rate of basic interest. A Ñxed portion of that basic interest is paid on a monthly basis.
Additional interest is paid on the same payment date based on the amount of remaining basic interest and
of the cash Öow generated by the underlying property. This amount is referred to as the ""cash Öow-based
calculation.''
To the extent that this cash Öow-based calculation exceeds the amount of remaining basic interest,
contingent interest is paid on the same monthly date as the Ñxed portion of basic interest. To the extent that
the cash Öow-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 Öow-based calculation. In such a
case, the excess of the remaining basic interest over the cash Öow-based calculation is deferred and all
amounts so deferred bear the stated rate of basic interest until maturity of the junior note. In addition, subject
to certain contingencies, the junior notes provide that the holder of the note is entitled to receive 90% of the
appreciation realized upon, among other things, the sale of such property by SAC Holdings.
The Company currently manages the self-storage properties owned by SAC Holdings pursuant to a
standard form of management agreement with each SAC Holdings subsidiary, under which the Company
receives a management fee equal to 6% of the gross receipts. The Company received management fees of
$12.9 million, and $12.3 million during Ñscal year 2004 and 2003. This management fee is consistent with the
fees received for other properties the Company manages for third parties.
RepWest and Oxford currently hold a 46% limited partnership interest in Securespace Limited
Partnership (""Securespace''), a Nevada limited partnership. A SAC Holdings subsidiary serves as the general
partner of Securespace and owns a 1% interest. Another SAC Holdings subsidiary owns the remaining 53%
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