U-Haul 2005 Annual Report Download - page 44

43 I AMERCO ANNUAL REPORT
Quantitative and Qualitative Disclosures
About Market Risk
We฀ are฀ exposed฀ to฀ financial฀ market฀ risks,฀ including฀
changes฀in฀interest฀rates฀and฀currency฀exchange฀rates.฀To฀
mitigate฀these฀risks,฀we฀ may฀utilize฀derivative฀financial฀
instruments,฀ among฀ other฀ strategies.฀ We฀ do฀ not฀ use฀
derivative฀financial฀instruments฀for฀speculative฀purposes.
Interest฀Rate฀Risk
The฀exposure฀to฀market฀risk฀for฀changes฀in฀interest฀rates฀
relates฀ primarily฀ to฀ our฀ variable฀ rate฀ debt฀ obligations.฀
We฀ have฀ used฀ interest฀ rate฀ swap฀ agreements฀ to฀ provide฀
for฀matching฀the฀gain฀or฀loss฀recognition฀on฀the฀hedging฀
instrument฀ with฀ the฀ recognition฀ of฀ the฀ changes฀ in฀ the฀
cash฀ flows฀ associated฀ with฀ the฀ hedged฀ asset฀ or฀ liability฀
attributable฀to฀the฀hedged฀ risk฀ or฀the฀ earnings฀effect฀of฀
the฀hedged฀forecasted฀transaction.฀At฀March฀31,฀2005฀the฀
Company฀ had฀ no฀ interest฀ rate฀ swap฀ contracts.฀ On฀ May฀
13,฀2004฀the฀Company฀entered฀into฀separate฀interest฀rate฀
cap฀ contracts฀ for฀ $200฀ million฀ of฀ its฀ variable฀ rate฀ debt฀
obligations฀for฀a฀two฀year฀term฀and฀for฀$50฀million฀of฀its฀
variable฀ rate฀ debt฀ obligations฀ for฀ a฀ three฀ year฀ term.฀ At฀
March฀31,฀2005,฀ the฀ Company฀had฀ approximately฀$430฀
million฀ of฀ variable฀ rate฀ debt฀ obligations.฀ A฀ fluctuation฀
in฀ the฀ interest฀ rates฀ of฀ 100฀ basis฀ points฀ would฀ change฀
interest฀expense฀for฀the฀Company฀by฀approximately฀$4.3฀
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฀of฀the฀
U.S.฀dollar฀relative฀to฀the฀Canadian฀dollar฀would฀not฀be฀
material.฀We฀typically฀do฀not฀hedge฀any฀foreign฀currency฀
risk฀since฀the฀exposure฀is฀not฀considered฀material.
Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
Not฀applicable.฀
Controls and Procedures
Attached฀ as฀ exhibits฀ to฀ our฀ Form฀ 10-K฀ that฀ was฀ filed฀
with฀ the฀ Securities฀ and฀ Exchange฀ Commission฀ are฀
certifications฀of฀the฀registrants’฀Chief฀Executive฀Officer฀
(CEO)฀ and฀ Chief฀ Financial฀ Officer฀ (CFO),฀ which฀ are฀
required฀in฀accordance฀with฀Rule฀13a-14฀of฀the฀Securities฀
Exchange฀ Act฀ of฀ 1934,฀ as฀ amended฀ (the฀ Exchange฀
Act).฀ This฀ “Controls฀ and฀ Procedures”฀ section฀ includes฀
information฀ concerning฀ the฀ controls฀ and฀ controls฀
evaluation฀ referred฀ to฀ in฀ the฀ certifications.฀ Following฀
this฀ discussion฀ is฀the฀ report฀of฀BDO฀Seidman฀ LLP,฀our฀
independent฀registered฀public฀accounting฀firm,฀regarding฀
its฀ audit฀ of฀ AMERCO’s฀ internal฀ control฀ over฀ financial฀
reporting฀ and฀ of฀ management’s฀ assessment฀ of฀ internal฀
control฀ over฀ financial฀ reporting฀ set฀ forth฀ below฀ in฀ this฀
section.฀This฀section฀should฀be฀read฀in฀conjunction฀with฀
the฀certifications฀and฀the฀BDO฀Seidman,฀LLP฀report฀for฀a฀
more฀complete฀understanding฀of฀the฀topics฀presented.
Evaluation฀of฀Disclosure฀Controls฀and฀Procedures
We฀ conducted฀ an฀ evaluation฀ of฀ the฀ effectiveness฀ of฀
the฀ design฀ and฀ operation฀ of฀ our฀ “disclosure฀ controls฀
and฀ procedures”฀ (Disclosure฀ Controls)฀ as฀ of฀ the฀ end฀ of฀
the฀ period฀ covered฀ by฀ this฀ annual฀ report.฀ The฀ controls฀
evaluation฀was฀conducted฀under฀the฀supervision฀and฀with฀
the฀participation฀of฀management,฀including฀our฀CEO฀and฀
CFO.฀ Disclosure฀ Controls฀ are฀ controls฀ and฀ procedures฀
designed฀to฀reasonably฀assure฀ that฀information฀required฀
to฀be฀disclosed฀in฀ our฀reports฀filed฀ under฀the฀ Exchange฀
Act,฀ is฀ recorded,฀ processed,฀ summarized฀ and฀ reported฀
within฀ the฀ time฀ periods฀ specified฀ in฀ the฀ U.S.฀Securities฀
and฀ Exchange฀ Commission’s฀ (SEC’s)฀ rules฀ and฀ forms.฀
Disclosure฀Controls฀are฀also฀designed฀to฀reasonably฀assure฀
that฀such฀information฀is฀accumulated฀and฀communicated฀
to฀ our฀ management,฀ including฀ the฀ CEO฀ and฀ CFO,฀ as฀
appropriate฀to฀allow฀timely฀decisions฀regarding฀required฀
disclosure.฀ Our฀ quarterly฀ evaluation฀ of฀ Disclosure฀
Controls฀ includes฀ an฀ evaluation฀ of฀ some฀ components฀
of฀ our฀ internal฀ control฀ over฀ financial฀ reporting,฀ and฀
internal฀control฀over฀financial฀reporting฀is฀also฀separately฀
evaluated฀ on฀ an฀ annual฀ basis฀ for฀ purposes฀ of฀ providing฀
the฀management฀report฀which฀is฀set฀forth฀below.
The฀ evaluation฀ of฀ our฀ Disclosure฀ Controls฀ included฀
a฀ review฀ of฀ the฀ controls’฀ objectives฀ and฀ design,฀ the฀
company’s฀implementation฀of฀the฀controls฀and฀the฀effect฀
of฀ the฀ controls฀ on฀ the฀ information฀ generated฀ for฀ use฀ in฀
filings฀with฀the฀Securities฀and฀Exhange฀Commission.
In฀ the฀ course฀ of฀ the฀ controls฀ evaluation,฀ we฀ reviewed฀
identified฀data฀ errors,฀control฀problems฀or฀ acts฀ of฀fraud฀
and฀sought฀to฀confirm฀that฀appropriate฀corrective฀actions,฀
including฀process฀improvements,฀were฀being฀undertaken.฀
This฀ type฀ of฀ evaluation฀ is฀ performed฀ on฀ a฀ quarterly฀
basis฀ so฀ that฀ the฀ conclusions฀ of฀ management,฀ including฀
the฀ CEO฀ and฀ CFO,฀ concerning฀ the฀ effectiveness฀ of฀ the฀
Disclosure฀ Controls฀ can฀ be฀ reported฀ in฀ our฀ periodic฀
reports฀ on฀ Form฀ 10-Q฀ and฀ Form฀ 10-K.฀ Many฀ of฀ the฀
components฀of฀our฀Disclosure฀Controls฀are฀also฀evaluated฀
on฀ an฀ ongoing฀ basis฀ by฀ our฀ Internal฀ Audit฀ Department฀
and฀by฀other฀personnel฀in฀our฀Finance฀organization.฀The฀
overall฀goals฀of฀these฀various฀evaluation฀activities฀are฀to฀
monitor฀our฀Disclosure฀Controls,฀and฀to฀modify฀them฀as฀
necessary.฀Our฀intent฀is฀to฀maintain฀the฀Disclosure฀Controls฀
as฀dynamic฀systems฀that฀change฀as฀conditions฀warrant.
Based฀upon฀the฀controls฀evaluation,฀our฀ CEO฀and฀CFO฀
have฀ concluded฀ that,฀ subject฀ to฀ the฀ limitations฀ noted฀ in฀
Quantitative and Qualitative Disclosures About Market Risk
and Controls and Procedures