U-Haul 2008 Annual Report Download - page 84

AMERCO AND CONSOLIDATED ENTITIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The total amount of unrecognized tax benefits at April 1, 2007 was $6.3 million. During the current fiscal year we
recorded tax expense resulting from uncertain tax positions in the amount of $0.8 million. The total amount of
unrecognized tax benefits as of March 31, 2008 was $7.1 million. This entire amount of unrecognized tax benefits, if
resolved in our favor, would favorably impact our effective tax rate.
The Company recognizes interest related to unrecognized tax benefits as interest expense, and penalties as operating
expenses. At April 1, 2007, the amount of interest accrued on unrecognized tax benefits was $2.3 million, net of tax. During
the current fiscal year we recorded interest expense on uncertain tax positions in the amount of $0.4 million, net of tax. At
March 31, 2008, the amount of interest accrued on unrecognized tax benefits was $2.7 million, net of tax.
The Company files income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. With
some exceptions, the Company is no longer subject to audit for years prior to the fiscal year ended March 31, 2005.
A reconciliation of beginning and ending amount of unrecognized tax benefits are as follows:
Amount
(In thousands)
Unrecognized tax benefits as of April 1, 2007 $ 6,305
Additions based on tax positions related to the current year 865
Reductions for tax positions of prior years (28)
Unrecognized tax benefits as of March 31, 2008 $ 7,142
At March 31, 2008 and March 31, 2007, AMERCO has alternative minimum tax credit carryforwards of $2.1 million and
$0.0 million, respectively, which do not have an expiration date, and may only be utilized in years in which regular tax
exceeds alternative minimum tax.
Note 14: Employee Benefit Plans
Profit Sharing Plans
The Company provides tax-qualified profit sharing retirement plans for the benefit of eligible employees, former
employees and retirees in the U.S. and Canada. The plans are designed to provide employees with an accumulation of funds
for retirement on a tax-deferred basis and provide for annual discretionary employer contributions. Amounts to be
contributed are determined by the Chief Executive Officer (“CEO”) of the Company under the delegation of authority from
the Board, pursuant to the terms of the Profit Sharing Plan. No contributions were made to the profit sharing plan during
fiscal 2008, 2007 or 2006.
The Company also provides an employee savings plan which allows participants to defer income under Section 401(k) of
the Internal Revenue Code of 1986.
ESOP Plan
The Company sponsors a leveraged employee stock ownership plan (“ESOP”) that generally covers all employees with
one year or more of service. The ESOP shares initially were pledged as collateral for its debt which was originally funded
by U-Haul. As the debt is repaid, shares are released from collateral and allocated to active employees, based on the
proportion of debt service paid in the year. When shares are scheduled to be released from collateral, prorated over the year,
the Company reports compensation expense equal to the current market price of the shares scheduled to be released, and the
shares become outstanding for earnings per share computations. ESOP compensation expense was $3.8 million, $4.7
million and $3.3 million for fiscal 2008, 2007 and 2006, respectively. Listed below is a summary of these financing
arrangements as of fiscal year-end:
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