U-Haul 2011 Annual Report Download - page 41

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36
At March 31, 2011, 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 on
equipment rental revenues. The Company paid the above mentioned entities $37.3 million, $34.7 million
and $34.7 million in commissions pursuant to such dealership contracts during fiscal 2011, 2010 and
2009, respectively.
During fiscal 2011, subsidiaries of the Company held various junior unsecured notes of SAC Holdings.
Substantially all of the equity interest of SAC Holdings is controlled by Blackwater. Blackwater is wholly-
owned by Mark V. Shoen. The Company does not have an equity ownership interest in SAC Holdings.
The Company recorded interest income of $19.2 million, $18.9 million and $18.4 million and received
cash interest payments of $15.8 million, $13.9 million and $14.1 million from SAC Holdings during fiscal
2011, 2010 and 2009, respectively. The largest aggregate amount of notes receivable outstanding during
fiscal 2011 was $196.9 million and the aggregate notes receivable balance at March 31, 2011 was $196.2
million. In accordance with the terms of these notes, SAC Holdings may prepay the notes without penalty
or premium at any time. The scheduled maturities of these notes are between 2019 and 2024.
These agreements along with notes with subsidiaries of SAC Holdings, 4 SAC, 5 SAC, Galaxy and
Private Mini, excluding Dealer Agreements, provided revenues of $46.7 million, expenses of $2.5 million
and cash flows of $42.1 million during fiscal 2011. Revenues and commission expenses related to the
Dealer Agreements were $177.0 million and $37.3 million, respectively during fiscal 2011.
Fiscal 2012 Outlook
We will continue to focus our attention on increasing transaction volume and improving pricing, product
and utilization for self-moving equipment rentals. Maintaining an adequate level of new investment in our
truck fleet is an important component of our plan to meet our operational goals. Revenue in the U-Move
program could be adversely impacted should we fail to execute in any of these areas. Even if we execute
our plans we could see declines in revenues primarily due to the economic conditions or competitive
pressures that are beyond our control.
We have added new storage locations and expanded at existing locations. In fiscal 2012, we are
looking to complete current projects and increase occupancy in our existing portfolio of locations. New
projects and acquisitions will be considered and pursued if they fit our long-term plans and meet our
financial objectives. In the current environment we have focused fewer resources on new construction
than in recent history. The Company will continue to invest capital and resources in the U-BoxTM storage
container program throughout fiscal 2012.
The Property and Casualty Insurance operating segment will continue to provide loss adjusting and
claims handling for U-Haul and underwrite components of the Safemove, Safetow, Super Safemove and
Safestor protection packages to U-Haul customers.
The Life Insurance operating segment is pursuing its goal of expanding its presence in the senior
market through the sales of its Medicare supplement, life and annuity policies. This strategy includes
growing its agency force, expanding its new product offerings, and pursuing business acquisition
opportunities.