U-Haul 2007 Annual Report Download - page 105

AMERCO AND CONSOLIDATED ENTITIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
During fiscal 2007, AMERCO and U-Haul held various junior notes with Private Mini. The equity interests of Private
Mini are ultimately controlled by Blackwater. The Company recorded interest income of $5.0 million and $5.1 million, and
received cash interest payments of $5.0 million and $1.4 million, from Private Mini during fiscal 2007 and 2006,
respectively. The balance of notes receivable from Private Mini at March 31, 2007 and 2006 was $70.1 million and $71.0
million, respectively. The largest aggregate amount outstanding during fiscal 2007 was $70.8 million.
The Company currently manages the self-storage properties owned or leased by SAC Holdings, Mercury, 4 SAC, 5
SAC, Galaxy, and Private Mini pursuant to a standard form of management agreement, under which the Company receives
a management fee of between 4% and 10% of the gross receipts plus reimbursement for certain expenses. The Company
received management fees, exclusive of reimbursed expenses, of $23.5 million, $22.5 million and $14.4 million from the
above mentioned entities during fiscal 2007, 2006 and 2005, respectively. This management fee is consistent with the fee
received for other properties the Company previously managed for third parties. SAC Holdings, 4 SAC, 5 SAC, Galaxy and
Private Mini are substantially controlled by Blackwater. Mercury is substantially controlled by Mark V. Shoen. James P.
Shoen, a significant shareholder and director of AMERCO, has an interest in Mercury.
RepWest and Oxford held 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 owned the remaining 53% limited partnership interest in Securespace.
Securespace was formed by SAC Holdings to be the owner of various Canadian self-storage properties. RepWest and
Oxford’ s investment in Securespace was included in Related Party Assets and was accounted for using the equity method
of accounting. On September 29, 2006, a subsidiary of SAC Holding Corporation exercised its right under the partnership
agreement to purchase all of the partnership interests held by RepWest and Oxford for a combined amount of $11.9 million.
The Company leases space for marketing company offices, vehicle repair shops and hitch installation centers from
subsidiaries of SAC Holdings, 5 SAC and Galaxy. Total lease payments pursuant to such leases were $2.7 million for fiscal
2007, 2006 and 2005, respectively. The terms of the leases are similar to the terms of leases for other properties owned by
unrelated parties that are leased to the Company.
At March 31, 2007, subsidiaries of SAC Holdings, 4 SAC, 5 SAC, Galaxy and Private Mini acted as U-Haul
independent dealers. The financial and other terms of the dealership contracts with the aforementioned companies and their
subsidiaries are substantially identical to the terms of those with the Company’ s other independent dealers whereby
commissions are paid by the Company based upon equipment rental revenue. During fiscal 2007, 2006 and 2005 the
Company paid the above mentioned entities $36.6 million, $36.8 million and $33.1 million, respectively in commissions
pursuant to such dealership contracts.
These agreements and notes with subsidiaries of SAC Holdings, 4 SAC, 5 SAC, Galaxy and Private Mini, excluding
Dealer Agreements, provided revenue of $39.7 million, expenses of $2.7 million and cash flows of $63.5 million during
fiscal 2007. Revenues and commission expenses related to the Dealer Agreements were $168.6 million and $36.6 million,
respectively.
On March 9, 2007, an exchange occurred between the Company and Edward J. Shoen. Mr. Shoen, transferred 3,483,681
shares of AMERCO Series A Common Stock, $0.25 par value, in exchange for 3,483,681 shares of AMERCO Common
Stock, $0.25 par value. Mr. Shoen is President and Chairman of the Board and a significant shareholder of AMERCO. No
gain or loss was recognized as a result of this transaction.
On March 9, 2007, an exchange occurred between the Company and James P. Shoen. Mr. Shoen, transferred 232,500
shares of AMERCO Series A Common Stock, $0.25 par value, in exchange for 232,500 shares of AMERCO Common
Stock, $0.25 par value. Mr. Shoen is a director and a significant shareholder of AMERCO. No gain or loss was recognized
as a result of this transaction.
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 paid-in capital. The transferred properties have
historically been stated at the original cost basis as the gains were eliminated in consolidation. In March 2004, these
deferred gains were recognized and treated as contributions from a related party in the amount of $111.0 million as a result
of the deconsolidation of SAC Holding Corporation.
In July 2006, RepWest completed the sale of two properties to 5 SAC, for approximately $0.9 million. RepWest
received cash from these sales. These sales resulted from 5 SAC exercising contractual purchase options they previously
held with RepWest.
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