U-Haul 2004 Annual Report Download - page 14

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the Company's access to capital. The restatement, which involved the consolidation of SAC Holdings resulted
in a material decrease in reported net worth and a corresponding increase in its reported leverage ratios. The
restatement also required a costly and time-consuming restatement of prior periods' results that led to the
untimely Ñling of quarterly and annual reports with the Securities and Exchange Commission.
As this situation was occurring, AMERCO was attempting to negotiate and replace its then existing
revolving credit facility and complete a $275 million bond oÅering. Although we were able to replace our
revolving credit facility, the amount of the facility was substantially reduced. We were not able to successfully
complete the $275 million bond oÅering, exemplifying the signiÑcantly reduced access AMERCO had to the
capital markets to meet its Ñnancial needs due to, among other things, the confusion and adverse perception
resulting from the restatement. As a result of our failure to complete the $275 million bond oÅering, we did
not have suÇcient funds to meet our maturity obligations for our Series 1997-C Bond Backed Asset Trust
(BBAT) and related SWAP agreements which were due on October 15, 2002. Our inability to meet these
maturity obligations resulted in a default on BBAT obligations, which led to cross-defaults and an acceleration
of substantially all of the other outstanding instruments in the Company's debt structure. Although we worked
diligently with our creditors to resolve and cure or restructure these defaults, we were left with no viable
alternative but to seek Chapter 11 protection, which we did on June 20, 2003. On March 15, 2004 we emerged
from Chapter 11.
Upgraded Ratings of AMERCO Life Insurance Subsidiaries
A.M. Best Co. recently upgraded the Ñnancial strength ratings of Oxford Life Insurance Company and its
subsidiaries, Christian Fidelity Life Insurance Company and North American Insurance Company from C°
(weak) to B¿ (fair). The rating outlook for all three companies is positive. Although our life insurance
subsidiaries continue to face challenges to regain their marketing momentum, we believe these rating upgrades
will favorably impact the operations of our life insurance subsidiaries.
AMERCO Chief Financial OÇcer
On June 9, 2004, Jack A. Peterson was appointed Chief Financial OÇcer of AMERCO and U-Haul
International, Inc.
Item 2. Properties
The Company's subsidiaries own property, plant and equipment that are utilized in the manufacture,
repair and rental of U-Haul equipment and storage space as well as providing oÇce space for the Company.
Such facilities exist throughout the United States and Canada. The Company also manages storage facilities
owned by others. The Company operates 1,351 U-Haul retail centers (including approximately 941 Company
owned locations), and operates 11 manufacturing and assembly facilities. We also operate over 200 Ñxed site
repair facilities located throughout the United States and Canada.
SAC Holdings owns property, plant and equipment that are utilized in the rental of self-storage rooms
and U-Haul equipment. Such facilities exist throughout the United States and Canada. We manage the
storage facilities under management agreements whereby the management fees are consistent with manage-
ment fees received by U-Haul for other properties owned by unrelated parties and managed by us.
Item 3. Legal Proceedings
Kocher
On July 20, 2000, Charles Kocher (Kocher) Ñled suit in Wetzel County, West Virginia, Civil Action
No. 00-C-51-K, entitled Charles Kocher v. Oxford Life Insurance Co. (Oxford) seeking compensatory and
punitive damages for breach of contract, bad faith and unfair claims settlement practices arising from an
alleged failure of Oxford to properly and timely pay a claim under a disability and dismemberment policy. On
March 22, 2002, the jury returned a verdict of $5 million in compensatory damages and $34 million in punitive
damages. On November 5, 2002, the trial court entered an Order (Order) aÇrming the $39 million jury
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