U-Haul 2006 Annual Report Download - page 95

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Our life insurance business was downgraded by A.M. Best due to events surrounding the restructuring.
A.M. Best downgraded Oxford and its subsidiaries during AMERCO’ s restructuring to C+. Upon AMERCO’ s
emergence from bankruptcy in March 2004, Oxford and its subsidiaries were upgraded to B-. The ratings were again
upgraded in October 2004 to B. In October 2005, A.M. Best upgraded Oxford and its subsidiaries to B+ with a
stable outlook. Prior to AMERCO’ s restructuring, Oxford was rated B++. Financial strength ratings are important
external factors that can affect the success of Oxford’ s business plans. Accordingly, if Oxford’ s ratings, relative to
its competitors, do not continue to improve, Oxford may not be able to retain and attract business as currently
planned.
Our notes receivable from SAC Holdings.
At March 31, 2006, we held approximately $203.7 million of notes receivable from SAC Holdings, of which
$75.1 million are related to SAC Holding II and have been eliminated in the consolidating financial statements.
SAC Holdings is highly leveraged with significant indebtedness to others. We hold various junior unsecured notes
of SAC Holdings. If SAC Holdings is unable to meet its obligations to its senior lenders, it could trigger a default of
its obligations to us. In such an event of default, we could suffer a loss to the extent the value of the underlying
collateral of SAC Holdings is inadequate to repay SAC Holding’ s senior lenders and our junior unsecured notes.
We cannot assure you that SAC Holdings will not default on its loans to its senior lenders or that the value of SAC
Holdings assets upon liquidation would be sufficient to repay us in full.
We face risks related to an SEC investigation and securities litigation.
The SEC has issued a formal order of investigation to determine whether we have violated Federal Securities
laws. Although we have cooperated with the SEC in this matter and intend to continue to cooperate, the SEC may
determine that we have violated Federal Securities laws. We cannot predict when this investigation will be
completed or its outcome. If the SEC makes a determination that we have violated Federal Securities laws, we may
face sanctions, including, but not limited to, significant monetary penalties and injunctive relief.
In addition, the Company has been named a defendant in a number of class action and related lawsuits. The
findings and outcome of the SEC investigation may affect the class-action lawsuits that are pending. We are
generally obligated, to the extent permitted by law, to indemnify our directors and officers who are named
defendants in some of these lawsuits. We are unable to estimate what our liability in these matters may be, and we
may be required to pay judgments or settlements and incur expenses in aggregate amounts that could have a material
adverse effect on our financial condition or results of operations. Please refer to Item 3. Legal Proceedings.
Item 1B.
Unresolved Staff Comments
There were no unresolved staff comments at March 31, 2006.
Item 2.
Properties
The Company, through its legal subsidiaries, owns property, plant and equipment that are utilized in the
manufacture, repair and rental of U-Haul equipment and storage space as well as providing office space for the
Company. Such facilities exist throughout the United States and Canada. The Company also manages storage
facilities owned by others. The Company operates over 1,450 U-Haul retail centers, and operates 13 manufacturing
and assembly facilities. We also operate over 245 fixed site-repair facilities located throughout the United States and
Canada.
SAC Holdings owns property, plant and equipment that are utilized in the sale of moving supplies, rental of self-
storage rooms and U-Haul equipment. Such facilities exist throughout the United States and Canada. We manage the
storage facilities under property management agreements whereby the management fees are consistent with
management fees received by U-Haul for other properties owned by unrelated parties and previously managed by us.
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