U-Haul 2006 Annual Report Download - page 128

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Item 7A. 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. We do not believe that inflation has or will have a direct
impact on our operations.
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 and cap agreements to reduce our exposure to changes in interest rates.
Notional Amount Effective Date Expiration Date Fixed Rate Floating Rate
$ 100,000,000 (a) 6/8/2005 6/8/2008 3.97% 3 Month LIBOR
100,000,000 (a) 6/8/2005 6/8/2010 4.09% 3 Month LIBOR
142,264,071 (a) 5/10/2006 4/10/2012 5.06% 1 Month LIBOR
200,000,000 (b) 5/17/2004 5/17/2006 3.00% 3 Month LIBOR
50,000,000 (b) 5/17/2004 5/17/2007 3.00% 3 Month LIBOR
(a) interest rate swap agreement
(b) interest rate cap agreement
As of March 31, 2006, the Company had approximately $434.3 million of variable rate debt obligations. If
LIBOR were to increase or decrease 100 basis points, the increase or decrease in interest expense on the variable
rate debt would increase or decrease future earnings and cash flows by approximately $4.3 million annually (before
consideration of the effect of the above derivative contracts).
Additionally, our insurance subsidiaries’ fixed income investment portfolio’ s expose the Company to interest rate
risk. This interest rate risk is the price sensitivity of a fixed income security to change in interest rates. As part of
our insurance companies’ asset and liability management, actuaries estimate the cash flow patterns of our existing
liabilities to determine their duration. These outcomes are compared to the characteristics of the assets that are
currently supporting these liabilities assisting management in determining an asset allocation strategy for future
investments that management believes will mitigate the overall effect of interest rates.
Foreign Currency Exchange Rate Risk
The exposure to market risk for changes in foreign currency exchange rates relates primarily to our Canadian
business. Approximately 2.5%, 2.6% and 3.0% of our revenue in fiscal 2006, 2005 and 2004, respectively was
generated in Canada. The result of a 10.0% 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.
Item 8.
Financial Statements and Supplementary Data
The Report of Independent Registered Public Accounting and Consolidated Financial Statements of AMERCO
and its consolidated subsidiaries including the notes to such statements and the related schedules are set forth on
pages F-3 through F-63 and are thereby incorporated herein.
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.
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