U-Haul 2004 Annual Report Download - page 33

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Liquidity and Capital Resources
Our successful Ñnancial restructuring has provided us with a strengthened balance sheet and we believe a
capital structure that will allow us to achieve our operational plans and goals and provide us with suÇcient
liquidity. The majority of the obligations we incurred in connection with our Ñnancial restructuring mature at
the end of Ñscal 2009. The senior subordinated notes mature at the end of Ñscal 2011. As a result, we believe
that our liquidity is strong, which will allow us the ability to focus on our operations and business to improve
our liquidity in the long term. We further believe that as we are successful in improving our operations and
further strengthening our liquidity, we will improve our access to the capital markets. However, there is no
assurance that future cash Öows will be suÇcient to meet our outstanding obligations or our future capital
needs. The terms of our secured indebtedness place Ñnancial and operational covenants on AMERCO and its
subsidiaries, and restrict our ability to incur additional indebtedness and other obligations.
As a result of the deconsolidation of SAC Holding during the fourth quarter of 2004, AMERCO's assets
and liabilities were reduced approximately $472 million and $629 million, respectively, and equity increased
approximately $157 million. This deconsolidation was the result of AMERCO no longer being the primary
beneÑciary of a majority of its variable interests in SAC Holdings.
At March 31, 2004, cash and cash equivalents totaled $81.6 million, up from $66.8 million at March 31,
2003. In addition, AMERCO had availability under its revolving credit facility of $35.9 million.
At March 31, 2004 notes and loans payable, as reported, was $1.0 billion, and represented 1.9 times
stockholders' equity. At March 31, 2003, notes and loans payable, as reported, was $1.4 billion and represented
4.3 times stockholders' equity.
On April 30, 2004, AMERCO completed its transaction with UH Storage DE, a W.P. Carey aÇliate,
eÅectively terminating its amended and restated leases (the synthetic leases) with the Bank of Montreal and
Citibank. This transaction will result in AMERCO eliminating its capital lease obligation of approximately
$99.5 million during the Ñrst quarter of Ñscal 2005. (See footnote 23 to Consolidated Financial Statements for
a more complete discussion of this transaction and its eÅect on the Company's Ñnancial statements.)
For Ñscal year 2004, cash (used) provided by operating activities was $(40.3) million, compared to
$74.5 million in Ñscal year 2003, and $(19.6) million in Ñscal year 2002.
We provided $55.2 million in net cash from investing activities during Ñscal year 2004, compared to a use
of $36.1 million in Ñscal year 2003 and a use of $148.1 million in Ñscal year 2002. Gross capital expenditures
were $198.4 million, $243.2 million and $381.5 million in 2004, 2003 and 2002, respectively. Capital
dispositions were $63.2 million, $96.9 million and $229.4 million in 2004, 2003 and 2002, respectively. Net
capital expenditures were $135.2 million, $146.3 million and $152.1 million in 2004, 2003 and 2002,
respectively.
Financing activities used $(0.1) million during Ñscal year 2004. This compares with usage of
$(13.0) million during Ñscal year 2003. We provided $159.5 million from Ñnancing activities during Ñscal year
2002.
Liquidity and Capital Resources and Requirements of Our Operating Segments
Moving and Self-Storage
To meet the needs of its customers, U-Haul maintains a large Öeet of rental equipment. Historically,
capital expenditures have primarily reÖected new rental equipment acquisitions. The capital required to fund
these expenditures has historically been obtained through internally generated funds from operations, lease
Ñnancing and sales of used equipment. Going forward, we anticipate that a substantial portion of our internally
generated funds will be used to enhance liquidity by paying down existing indebtedness. During each of the
Ñscal years ended March 31, 2005, 2006 and 2007, U-Haul estimates that net capital expenditures will average
approximately $150 million to maintain its Öeet at current levels. Financial covenants contained in our loan
agreements limit the amount of capital expenditures we can make in 2005, 2006 and 2007, net of dispositions,
to $185 million, $245 million and $195 million, respectively. Management estimates that U-Haul will fund its
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