U-Haul 2005 Annual Report Download - page 23

22 I AMERCO ANNUAL REPORT
Management’s Discussion and Analysis
of Financial Condition and Results of Operations
We฀ begin฀ Management’s฀ Discussion฀ and฀ Analysis฀ of฀
Financial฀Condition฀and฀Results฀of฀Operations฀(MD&A)฀
with฀ a฀ discussion฀ of฀ the฀ overall฀ strategy฀ of฀ AMERCO,฀
followed฀ by฀ a฀ description฀ of฀ our฀ operating฀ segments,฀
and฀ then฀ a฀ discussion฀ of฀ the฀ strategy฀ of฀ our฀ business฀
segments฀to฀give฀the฀reader฀an฀overview฀of฀the฀goals฀of฀
our฀business฀and฀the฀direction฀in฀which฀our฀business฀and฀
products฀ are฀ moving.฀ This฀ is฀ followed฀ by฀ a฀ discussion฀
of฀ the฀ Critical฀ Accounting฀ Estimates฀ that฀ we฀ believe฀
are฀ important฀ to฀ understanding฀ the฀ assumptions฀ and฀
judgments฀incorporated฀in฀our฀reported฀financial฀results.฀
In฀the฀next฀section,฀we฀discuss฀our฀Results฀of฀Operations฀
for฀fiscal฀2005฀compared฀with฀fiscal฀2004,฀and฀for฀fiscal฀
2004฀ compared฀ with฀ fiscal฀ 2003฀ beginning฀ with฀ an฀
overview.฀We฀then฀provide฀an฀analysis฀of฀changes฀in฀our฀
balance฀sheet฀and฀cash฀flows,฀and฀discuss฀our฀financial฀
commitments฀ in฀ the฀ sections฀ entitled฀ “Liquidity฀ and฀
Capital฀ Resources”฀ and฀ “Disclosures฀ about฀ Contractual฀
Obligations฀ and฀ Commercial฀ Commitments.”฀ We฀
conclude฀ this฀ MD&A฀ by฀ discussing฀ our฀ outlook฀ for฀
fiscal฀2006.
This฀MD&A฀should฀be฀read฀in฀conjunction฀with฀the฀other฀
sections฀of฀this฀Annual฀Report.฀The฀various฀sections฀of฀this฀
MD&A฀contain฀a฀number฀of฀forward฀looking฀statements,฀
all฀ of฀ which฀ are฀ based฀ on฀ our฀ current฀ expectations฀
and฀ could฀ be฀ affected฀ by฀ the฀ uncertainties฀ and฀ risk฀
factors฀described฀throughout฀this฀filing฀and฀particularly฀
under฀ the฀ caption฀ “Risk฀ Factors”฀ in฀ this฀ section.฀ Our฀
actual฀ results฀ may฀ differ฀ materially฀ from฀ these฀ forward฀฀
looking฀statements.
Description of Operating Segments
AMERCO฀ has฀ four฀ reportable฀operating฀segments.฀Our฀
segments฀are฀Moving฀and฀Storage,฀Property฀and฀Casualty฀
Insurance,฀ Life฀ Insurance฀ and฀ SAC฀ Holdings.฀ (See฀
Notes฀ 1,฀ 21฀ and฀ 21A฀ to฀ the฀ Consolidated฀ Financial฀
Statements.)
Overall฀Strategy
Our฀overall฀strategy฀is฀to฀maintain฀our฀leadership฀position฀
in฀ the฀ North฀ American฀ “do-it-yourself”฀ moving฀ and฀
storage฀ industry.฀ Our฀ plan฀ is฀ to฀ provide฀ a฀ seamless฀
and฀ integrated฀ supply฀ chain฀ to฀ the฀ “do-it-yourself”฀
moving฀ and฀ storage฀ market.฀ As฀ part฀ of฀ executing฀฀
this฀ plan,฀ we฀ leverage฀ the฀ brand฀ recognition฀ of฀ U-Haul฀
with฀ our฀ full฀ line฀ of฀ moving฀ and฀ self-storage฀ related฀
products฀and฀services฀and฀the฀convenience฀of฀our฀broad฀
geographic฀presence.
Our฀ primary฀ focus฀ is฀ to฀ provide฀ our฀ customers฀ with฀ a฀
wide฀ selection฀ of฀ moving฀ rental฀ equipment,฀ convenient฀
self-storage฀rental฀facilities฀and฀related฀moving฀and฀self-
storage฀products฀and฀services.฀We฀are฀able฀to฀expand฀our฀
distribution฀and฀improve฀customer฀service฀by฀increasing฀
the฀ amount฀ of฀ moving฀ equipment฀ and฀ storage฀ rooms฀
available฀for฀rent,฀expanding฀the฀number฀of฀independent฀
dealers฀ in฀ our฀ network฀ and฀ expanding฀ and฀ taking฀
advantage฀of฀our฀growing฀eMove฀capabilities.
During฀fiscal฀2004,฀RepWest฀decided฀to฀focus฀its฀activities฀
on฀providing฀property฀and฀casualty฀insurance฀to฀U-Haul,฀
its฀customers฀and฀its฀independent฀dealers฀ and฀ affiliates.฀
We฀ believe฀ this฀ will฀ enable฀ RepWest฀ to฀ focus฀ its฀ core฀
competencies฀ and฀ financial฀ resources฀ to฀ better฀ support฀
our฀ overall฀ strategy฀ by฀ exiting฀ its฀ non-U-Haul฀ lines฀ of฀
business.
Oxford’s฀ business฀ strategy฀ is฀ long-term฀ capital฀ growth฀
through฀ direct฀ writing฀ and฀ reinsuring฀ of฀ annuity,฀ credit฀
life฀ and฀ disability฀ and฀ Medicare฀ supplement฀ products.฀
Oxford฀is฀pursuing฀this฀growth฀strategy฀of฀increased฀direct฀
writing฀via฀acquisitions฀of฀insurance฀companies,฀expanded฀
distribution฀channels฀and฀product฀development.
Moving฀and฀Storage฀Operating฀Segment
Our฀Moving฀and฀Self-Storage฀Operating฀Segment฀consists฀
of฀ the฀ rental฀ of฀ trucks,฀ trailers฀ and฀ self-storage฀ spaces,฀
and฀sales฀of฀moving฀supplies,฀trailer฀hitches฀and฀propane฀
to฀the฀“do-it-yourself”฀mover.฀ Operations฀are฀conducted฀
under฀the฀registered฀trade฀name฀U-Haul®฀throughout฀the฀
United฀States฀and฀Canada.
With฀respect฀to฀our฀truck,฀trailer฀and฀self-storage฀rental฀
business,฀we฀are฀focused฀on฀expanding฀our฀dealer฀network,฀
which฀ provides฀ added฀ convenience฀ for฀ our฀ customers฀
and฀ expanding฀ the฀ selection฀ and฀ availability฀ of฀ rental฀
equipment฀to฀satisfy฀the฀needs฀of฀our฀customers.
With฀ respect฀ to฀ our฀ retail฀ sales฀ of฀ product,฀ U-Haul฀ has฀
developed฀a฀number฀of฀specialty฀packing฀boxes,฀“Mover’s฀
Wrap”฀and฀Smart฀Move฀tape.฀Mover’s฀Wrap฀is฀a฀sticks-to-
itself฀plastic฀stretch฀wrap฀used฀to฀bind,฀bundle,฀and฀fasten฀
items฀when฀moving฀or฀storing.฀Additionally,฀U-Haul฀has฀
added฀ a฀ full฀ line฀ of฀ Smart฀ Move฀ tape฀ products.฀ Smart฀
Move฀ tape฀ is฀ a฀ color฀ coded฀ packing฀ tape฀ that฀ has฀ the฀
room฀printed฀right฀on฀it฀allowing฀customers฀to฀tape฀and฀
label฀their฀belongings฀in฀one฀quick฀step.
eMove.com฀ is฀ an฀ online฀ marketplace฀ that฀ connects฀
consumers฀ to฀ over฀ 5,000฀ independent฀ customer฀ rated฀
Moving฀ Help฀ and฀ Self-฀ Storage฀ service฀ providers฀ who฀
provide฀ pack฀ and฀ load฀ help,฀ self-storage฀ and฀ more฀ all฀
over฀North฀America.฀A฀phone฀access฀system฀to฀Moving฀
Help฀ was฀launched฀ in฀ September฀ 2004฀ and฀ has฀already฀
serviced฀over฀10,000฀customers฀in฀less฀than฀six฀months.
eMove฀ also฀ offers฀ a฀ Storage฀ Affiliate฀ program฀ that฀
enables฀ independent฀ self-storage฀ facilities฀ to฀ connect฀
into฀the฀eMove฀network.฀Affiliates฀expand฀their฀reach฀by฀
connecting฀into฀a฀moving฀and฀storage฀reservation฀system฀
and฀ for฀ a฀ fee฀ receive฀ an฀ array฀ of฀ services฀ including฀฀