U-Haul 2011 Annual Report Download - page 15

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exemptions from the rules that require the Company to have (i) a majority of independent directors on the
Board; (ii) independent director oversight of executive officer compensation; and (iii) independent director
oversight of director nominations. Of the above available exemptions, the Company currently avails itself
to the exemption from independent director oversight of executive officer compensation, other than with
respect to the compensation of the President of AMERCO.
We bear certain risks related to our notes receivable from SAC Holdings.
At March 31, 2011, we held approximately $196.2 million of notes receivable from SAC Holding
Corporation and its subsidiaries (“SAC Holding Corporation”) and SAC Holding II Corporation and its
subsidiaries (“SAC Holding II”) (collectively “SAC Holdings”), which consist of junior unsecured notes.
SAC Holdings is highly leveraged with significant indebtedness to others. 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.
Our quarterly results of operations fluctuate due to seasonality and other factors associated with
our industry.
Our business is seasonal and our results of operations and cash flows fluctuate significantly from
quarter to quarter. Historically, revenues have been stronger in the first and second fiscal quarters due to
the overall increase in moving activity during the spring and summer months. The fourth fiscal quarter is
generally weakest, due to a greater potential for adverse weather conditions and other factors that are not
necessarily seasonal. As a result, our operating results for a given quarterly period are not necessarily
indicative of operating results for an entire year.
Our operations subject us to numerous environmental regulations and the possibility that
environmental liability in the future could adversely affect our operations.
Compliance with environmental requirements of federal, state and local governments significantly
affects our business. Among other things, these requirements regulate the discharge of materials into the
air, land and water and govern the use and disposal of hazardous substances. Under environmental laws
or common law principles, we can be held liable for hazardous substances that are found on real property
we have owned or operated. We are aware of issues regarding hazardous substances on some of our
real estate and we have put in place a remediation plan at each site where we believe such a plan is
necessary. See Note 19, Contingencies of the Notes to Consolidated Financial Statements. We regularly
make capital and operating expenditures to stay in compliance with environmental laws. In particular, we
have managed a testing and removal program since 1988 for our underground storage tanks. Despite
these compliance efforts, we believe that risk of environmental liability is part of the nature of our
business.
Environmental laws and regulations are complex, change frequently and could become more stringent
in the future. We cannot assure you that future compliance with these regulations, future environmental
liabilities, the cost of defending environmental claims, conducting any environmental remediation or
generally resolving liabilities caused by us or related third parties will not have a material adverse effect
on our business, financial condition or results of operations.
We operate in a highly regulated industry and changes in existing regulations or violations of
existing or future regulations could have a material adverse effect on our operations and
profitability.
Our truck and trailer rental business is subject to regulation by various federal, state and foreign
governmental entities. Specifically, the U.S. Department of Transportation and various state and federal
agencies exercise broad powers over our motor carrier operations, safety, and the generation, handling,
storage, treatment and disposal of waste materials. In addition, our storage business is also subject to
federal, state and local laws and regulations relating to environmental protection and human health and
safety. The failure to adhere to these laws and regulations may adversely affect our ability to sell or rent
such property or to use the property as collateral for future borrowings. Compliance with changing
regulations could substantially impair real property and equipment productivity and increase our costs.