U-Haul 2005 Annual Report Download - page 27

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26 I AMERCO ANNUAL REPORT
Management’s Discussion and Analysis
of Financial Condition and Results of Operations
Results of Operations
AMERCO฀and฀Consolidated฀Entities
Fiscal 2005 Compared with Fiscal 2004
Listed฀below฀on฀a฀consolidated฀basis฀are฀revenues฀for฀our฀major฀product฀lines฀for฀fiscal฀2005฀and฀fiscal฀2004:
Results of Operations
AMERCO and Consolidated Entities
Fiscal 2005 Compared with Fiscal 2004
Listed below on a consolidated basis are revenues for our major product lines for fiscal 2005 and fiscal
2004:
Year Ended March 31,
2005 2004
(In thousands)
Self-moving equipment rentals ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,437,895 $1,381,208
Self-storage revenues ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 114,155 247,640
Self-moving and self-storage product and service sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 206,098 232,965
Property management fees ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 11,839 259
Life insurance premiumsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 126,236 145,082
Property and casualty insurance premiums ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 24,987 92,036
Net investment and interest income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 56,739 38,281
Other revenueÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 30,172 38,523
Consolidated revenueÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $2,008,121 $2,175,994
During fiscal 2005, we built our moving equipment rentals through steady transaction volume, modest
price increases and improved mix. Reported storage revenues were reduced $109.2 million as a result of the
deconsolidation of SAC Holding Corporation in fiscal 2004 and were reduced $29.7 million as a result of the
W.P. Carey Transactions (see footnote 9 for a more detailed discussion of the W.P. Carey Transactions).
Self-storage revenues from remaining properties grew as a result of an increase in the number of rooms
available for rent, higher occupancy rates and modest price increases. Sales of moving and self storage related
products and services followed our growth in self-moving equipment rentals, net of the reduction of
approximately $36 million resulting from the deconsolidation of SAC Holding Corporation. Property
management fees increased $10.1 million as a result of the deconsolidation of SAC Holding Corporation and
increased $1.4 million as a result of the W.P. Carey Transactions.
RepWest continued to exit non U-Haul related lines of business and as a result, its premium revenues
declined approximately $67.0 million. Oxford's premium revenues declined approximately $18.8 million
primarily as a result of the lingering effects of its rating downgrade by A. M. Best in 2003.
Net investment and interest income increased primarily as a result of the deconsolidation of SAC
Holding Corporation and decreased primarily as a result of reduced loans with SAC Holdings.
As a result of the items mentioned above, revenues for AMERCO and its consolidated entities were
$2,008.1 million for fiscal 2005, compared with $2,176.0 million for fiscal 2004.
Total costs and expenses fell by $208.0 million as a result of productivity initiatives at U-Haul, the effect
of the W. P. Carey Transactions and the deconsolidation of SAC Holding Corporation. The decrease in total
costs and expenses was partially offset by payroll and benefit inflation, $4.4 million of self-moving equipment
impairment charges related to a lease buy-out, $2.1 million of additional depreciation expense related to lower
residual value assumptions, and litigation settlement costs of $10.6 million at Oxford, net of insurance
recoveries. Benefits and losses fell as a result of lower premium revenues at RepWest and Oxford. Benefits and
losses included approximately $9.5 million as a result of hurricane related losses at RepWest. The absence of
restructuring costs in fiscal 2005 contributed to lower costs and expenses compared with fiscal 2004.
As a result of the above mentioned changes in revenues and expenses, earnings from operations improved
31.6% to $167.0 million in fiscal 2005 compared with $126.9 million for fiscal 2004.
18
During฀ fiscal฀ 2005,฀ we฀ built฀ our฀ moving฀ equipment฀
rentals฀ through฀ steady฀ transaction฀ volume,฀ modest฀
price฀ increases฀ and฀ improved฀ mix.฀ Reported฀ storage฀
revenues฀were฀reduced฀ $109.2฀million฀as฀ a฀ result฀of฀the฀
deconsolidation฀ of฀ SAC฀ Holding฀ Corporation฀ in฀ fiscal฀
2004฀and฀were฀reduced฀ $29.7฀million฀as฀ a฀ result฀of฀the฀
W.P.฀ Carey฀ Transactions฀ (see฀ footnote฀ 9฀ for฀ a฀ more฀
detailed฀discussion฀of฀the฀W.P.฀Carey฀Transactions).฀Self-
storage฀ revenues฀ from฀ remaining฀ properties฀ grew฀ as฀ a฀
result฀of฀an฀increase฀in฀the฀number฀of฀rooms฀available฀for฀
rent,฀higher฀occupancy฀rates฀and฀modest฀price฀increases.฀
Sales฀ of฀ moving฀ and฀ self฀ storage฀ related฀ products฀ and฀
services฀ followed฀ our฀ growth฀ in฀ self-moving฀ equipment฀
rentals,฀net฀of฀the฀reduction฀of฀approximately฀$36฀million฀
resulting฀ from฀ the฀ deconsolidation฀ of฀ SAC฀ Holding฀
Corporation.฀Property฀management฀fees฀increased฀$10.1฀
million฀as฀a฀result฀of฀the฀deconsolidation฀of฀SAC฀Holding฀
Corporation฀and฀increased฀$1.4฀million฀as฀a฀result฀of฀the฀
W.P.฀Carey฀Transactions.
RepWest฀ continued฀ to฀ exit฀ non฀ U-Haul฀ related฀ lines฀ of฀
business฀and฀ as฀ a฀ result,฀its฀ premium฀revenues฀declined฀
approximately฀$67.0฀million.฀Oxford’s฀premium฀revenues฀
declined฀ approximately฀ $18.8฀ million฀ primarily฀ as฀ a฀
result฀of฀the฀lingering฀effects฀of฀its฀rating฀downgrade฀by฀
A.฀M.฀Best฀in฀2003.
Net฀investment฀and฀interest฀ income฀increased฀ primarily฀
as฀ a฀ result฀ of฀ the฀ deconsolidation฀ of฀ SAC฀ Holding฀
Corporation฀ and฀ decreased฀ primarily฀ as฀ a฀ result฀ of฀
reduced฀loans฀with฀SAC฀Holdings.
As฀ a฀ result฀ of฀ the฀ items฀ mentioned฀ above,฀ revenues฀ for฀
AMERCO฀ and฀ its฀ consolidated฀ entities฀ were฀ $2,008.1฀
million฀for฀fiscal฀2005,฀compared฀with฀$2,176.0฀million฀
for฀fiscal฀2004.
Total฀ costs฀ and฀ expenses฀ fell฀ by฀ $208.0฀ million฀ as฀ a฀
result฀of฀productivity฀initiatives฀at฀U-Haul,฀the฀effect฀of฀
the฀ W.฀ P.฀ Carey฀ Transactions฀ and฀ the฀ deconsolidation฀
of฀ SAC฀ Holding฀ Corporation.฀ The฀ decrease฀ in฀ total฀
costs฀ and฀ expenses฀ was฀ partially฀ offset฀ by฀ payroll฀ and฀
benefit฀inflation,฀$4.4฀million฀of฀self-moving฀equipment฀
impairment฀ charges฀ related฀ to฀ a฀ lease฀ buy-out,฀ $2.1฀
million฀ of฀ additional฀ depreciation฀ expense฀ related฀ to฀
lower฀residual฀value฀assumptions,฀and฀litigation฀settlement฀
costs฀ of฀ $10.6฀ million฀ at฀ Oxford,฀ net฀ of฀ insurance฀
recoveries.฀ Benefits฀ and฀ losses฀ fell฀ as฀ a฀ result฀ of฀ lower฀
premium฀revenues฀at฀RepWest฀and฀Oxford.฀Benefits฀and฀
losses฀ included฀ approximately฀ $9.5฀ million฀ as฀ a฀ result฀
of฀ hurricane฀ related฀ losses฀ at฀ RepWest.฀ The฀ absence฀ of฀
restructuring฀ costs฀ in฀ fiscal฀ 2005฀ contributed฀ to฀ lower฀
costs฀and฀expenses฀compared฀with฀fiscal฀2004.
As฀a฀result฀of฀the฀above฀mentioned฀changes฀in฀revenues฀
and฀expenses,฀earnings฀from฀operations฀improved฀31.6%฀
to฀ $167.0฀ million฀ in฀ fiscal฀ 2005฀ compared฀ with฀ $126.9฀
million฀for฀fiscal฀2004.