U-Haul 2016 Annual Report Download - page 38

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Net cash provided by operating activities increased $282.0 million in fiscal 2016, compared with fiscal
2015, primarily due to an improvement in earnings, lower federal income tax payments, combined with
$56.8 million of note and interest repayments from Private Mini.
Net cash used in investing activities increased $518.1 million in fiscal 2016, compared with fiscal 2015.
Purchases of property, plant and equipment, which are reported net of cash from sales and lease-back
transactions, increased $467.2 million. Cash from the sales of property, plant and equipment increased
$127.6 million largely due to an increase in fleet sales. Life Insurance had an increase in net cash used
for investing of $186.9 million due to additional investment purchases.
Net cash provided by financing activities increased $453.2 million in fiscal 2016, as compared with
fiscal 2015 due to an increase in borrowings of $198.4 million, net decrease in repayments of debt and
capital leases of $117.8 million, an increase in annuity deposits, net of withdrawals, by Life Insurance of
$194.4 million and an increase in dividends paid of $58.8 million.
Liquidity and Capital Resources and Requirements of Our Operating Segments
Moving and Storage
To meet the needs of our customers, U-Haul maintains a large fleet of rental equipment. Capital
expenditures have primarily consisted of new rental equipment acquisitions and the buyouts of existing
fleet from leases. The capital to fund these expenditures has historically been obtained internally from
operations and the sale of used equipment and externally from debt and lease financing. In the future, we
anticipate that our internally generated funds will be used to service the existing debt and fund operations.
U-Haul estimates that during fiscal 2017 the Company will reinvest in its truck and trailer rental fleet
approximately $600 million, net of equipment sales and excluding any lease buyouts. For fiscal 2016, the
Company invested, net of sales, approximately $365 million before any lease buyouts in its truck and
trailer fleet. Fleet investments in fiscal 2017 and beyond will be dependent upon several factors including
availability of capital, the truck rental environment and the used-truck sales market. We anticipate that the
fiscal 2017 investments will be funded largely through debt financing, external lease financing and cash
from operations. Management considers several factors including cost and tax consequences when
selecting a method to fund capital expenditures. Our allocation between debt and lease financing can
change from year to year based upon financial market conditions which may alter the cost or availability
of financing options.
Real Estate has traditionally financed the acquisition of self-storage properties to support U-Haul's
growth through debt financing and funds from operations and sales. The Company’s plan for the
expansion of owned storage properties includes the acquisition of existing self-storage locations from
third parties, the acquisition and development of bare land, and the acquisition and redevelopment of
existing buildings not currently used for self-storage. The Company expects to fund these development
projects through construction loans and internally generated funds. For fiscal 2016, the Company
invested $592.4 million in real estate acquisitions, new construction and renovation and repair. For fiscal
2017, the timing of new projects will be dependent upon several factors, including the entitlement
process, availability of capital, weather, and the identification and successful acquisition of target
properties. U-Haul's growth plan in self-storage also includes the expansion of the U-Haul Storage
Affiliate program, which does not require significant capital.