U-Haul 2005 Annual Report Download - page 75

74 I AMERCO ANNUAL REPORT
Amerco and Consolidated Entities
Notes to Consolidated Financial Statements, continued
Note 18: Preferred Stock Purchase Rights
The฀ Board฀ of฀ Directors฀ of฀ AMERCO฀ adopted฀ a฀
stockholder-rights฀ plan฀ in฀ July฀ 1998.฀ The฀ rights฀ were฀
declared฀ as฀ a฀ dividend฀ of฀ one฀ preferred฀ share฀ purchase฀
right฀ for฀ each฀ outstanding฀ share฀ of฀ the฀ common฀ stock฀
of฀AMERCO.฀The฀dividend฀distribution฀was฀payable฀on฀
August฀ 17,฀ 1998฀ to฀ stockholders฀ of฀ record฀ on฀ that฀ date.฀
When฀ exercisable,฀ each฀ right฀ will฀ entitle฀ its฀ holder฀ to฀
purchase฀from฀AMERCO฀one฀one-hundredth฀of฀a฀share฀
of฀ AMERCO฀ Series฀ C฀ Junior฀ Participating฀ Preferred฀
Stock฀ (Series฀ C),฀ no฀ par฀ value,฀ at฀ a฀ price฀ of฀ $132.00฀
per฀one฀one-hundredth฀of฀a฀share฀of฀Series฀C,฀subject฀to฀
adjustment.฀AMERCO฀has฀created฀a฀series฀of฀3,000,000฀
shares฀of฀authorized฀but฀not฀issued฀preferred฀stock฀for฀the฀
Series฀C฀stock฀authorized฀in฀this฀stockholder-rights฀plan.
The฀rights฀will฀become฀exercisable฀if฀a฀person฀or฀group฀
of฀affiliated฀or฀associated฀persons฀acquire฀or฀obtain฀the฀
right฀to฀acquire฀beneficial฀ownership฀of฀10%฀or฀more฀of฀
the฀common฀stock฀without฀approval฀of฀a฀majority฀of฀the฀
Board฀ of฀ Directors฀ of฀ AMERCO.฀ The฀ rights฀ expire฀ on฀
August฀ 7,฀ 2008฀ unless฀ earlier฀ redeemed฀ or฀ exchanged฀฀
by฀AMERCO.
In฀ the฀ event฀ AMERCO฀ is฀ acquired฀ in฀ a฀ merger฀ or฀
other฀ business฀ combination฀ transaction฀ after฀ the฀ rights฀
become฀ exercisable,฀ each฀ holder฀ of฀ a฀ right฀ would฀ be฀
entitled฀to฀receive฀that฀number฀of฀shares฀of฀the฀acquiring฀
company’s฀ common฀ stock฀ equal฀ to฀ the฀ result฀ obtained฀
by฀ multiplying฀ the฀ then฀ current฀ purchase฀ price฀ by฀ the฀
number฀ one฀ one-hundredths฀ of฀ a฀ share฀ of฀ Series฀ C฀ for฀
which฀a฀right฀is฀then฀exercisable฀and฀dividing฀that฀product฀
by฀50%฀of฀the฀then฀current฀market฀price฀per฀share฀of฀the฀฀
acquiring฀company.
Note 19: Related Party Transactions
AMERCO฀has฀engaged฀in฀related฀party฀transactions฀and฀
has฀continuing฀related฀party฀interests฀with฀certain฀major฀
stockholders,฀ directors฀ and฀ officers฀ of฀ the฀ consolidated฀
group฀as฀disclosed฀below.฀Management฀believes฀that฀the฀
transactions฀ described฀ below฀ and฀ in฀ the฀ related฀ notes฀
were฀ consummated฀ on฀ terms฀ equivalent฀ to฀ those฀ that฀
would฀prevail฀in฀arm’s-length฀transactions.
On฀ December฀ 23,฀ 2002,฀ Mark฀ V.฀ Shoen,฀ a฀ significant฀
shareholder฀ purchased฀ a฀ condominium฀ in฀ Phoenix,฀
Arizona฀ from฀ Oxford฀ Life฀ Insurance฀ Company.฀ The฀
purchase฀price฀was฀$279,573,฀which฀was฀in฀excess฀of฀the฀
appraised฀value.
During฀ fiscal฀ 2005฀ a฀ subsidiary฀ of฀ the฀ Company฀ held฀
various฀ unsecured฀ notes฀ of฀ SAC฀ Holding฀ Corporation฀
and฀ SAC฀ Holding฀ II฀ Corporation,฀ collectively฀ referred฀
to฀ as฀ SAC฀ Holdings.฀ Substantially฀ all฀ of฀ the฀ equity฀
transactions฀ properly.฀ The฀ action฀ has฀ been฀ transferred฀
to฀the฀United฀States฀District฀Court,฀District฀of฀Arizona.฀
Defendants฀have฀filed฀motions฀to฀dismiss฀and฀will฀defend฀
the฀case฀vigorously.
Securities and Exchange Commission
The฀ Securities฀and฀Exchange฀Commission฀(“SEC”)฀has฀
issued฀a฀formal฀order฀of฀investigation฀to฀determine฀whether฀
the฀ Company฀ has฀ violated฀ the฀ federal฀ securities฀ laws.฀
The฀Company฀has฀produced฀and฀delivered฀all฀requested฀
documents฀ and฀ provided฀ testimony฀ from฀ all฀ requested฀
witnesses฀to฀the฀SEC.฀The฀Company฀is฀cooperating฀with฀
the฀SEC฀and฀is฀facilitating฀the฀expeditious฀review฀of฀its฀
financial฀statements฀and฀any฀other฀issues฀that฀may฀arise.฀
We฀cannot฀predict฀the฀outcome฀of฀the฀investigation.
Environmental
In฀the฀normal฀course฀of฀business,฀AMERCO฀is฀a฀defendant฀
in฀a฀number฀of฀suits฀and฀claims.฀AMERCO฀is฀also฀a฀party฀
to฀several฀administrative฀proceedings฀arising฀from฀state฀
and฀ local฀ provisions฀ that฀ regulate฀ the฀ removal฀ and/or฀
cleanup฀ of฀ underground฀ fuel฀ storage฀ tanks.฀ It฀ is฀ the฀
opinion฀of฀management฀that฀none฀of฀these฀suits,฀claims฀or฀
proceedings฀involving฀AMERCO,฀individually฀or฀in฀the฀
aggregate,฀are฀expected฀to฀result฀in฀a฀material฀loss.
Compliance฀with฀environmental฀requirements฀of฀federal,฀
state฀ and฀ local฀ governments฀ significantly฀ affects฀ Real฀
Estate’s฀business฀ operations.฀Among฀other฀ things,฀these฀
requirements฀ regulate฀ the฀ discharge฀ of฀ materials฀ into฀
the฀water,฀air฀and฀land฀and฀govern฀the฀use฀and฀disposal฀
of฀hazardous฀ substances.฀ Real฀ Estate฀ is฀aware฀ of฀ issues฀
regarding฀hazardous฀substances฀on฀some฀of฀its฀properties.฀
Real฀ Estate฀ regularly฀ makes฀ capital฀ and฀ operating฀
expenditures฀ to฀ stay฀ in฀ compliance฀ with฀ environmental฀
laws฀ and฀ has฀ put฀ in฀ place฀ a฀ remedial฀ plan฀ at฀ each฀ site฀
where฀ it฀ believes฀ such฀ a฀ plan฀ is฀ necessary.฀ Since฀ 1988,฀
Real฀Estate฀has฀managed฀a฀testing฀and฀removal฀program฀
for฀underground฀storage฀tanks.
Based฀ upon฀ the฀ information฀ currently฀ available฀ to฀ Real฀
Estate,฀ compliance฀ with฀ the฀ environmental฀ laws฀ and฀
its฀ share฀ of฀ the฀ costs฀ of฀ investigation฀ and฀ cleanup฀
of฀ known฀ hazardous฀ waste฀ sites฀ are฀ not฀ expected฀ to฀
have฀a฀ material฀ adverse฀effect฀on฀AMERCO’s฀financial฀
position฀or฀operating฀results.฀Real฀Estate฀expects฀to฀spend฀
approximately฀ $8.7฀ million฀ through฀ 2011฀ to฀ remediate฀
these฀properties.
Other
The฀ Company฀ is฀ named฀ as฀ a฀ defendant฀ in฀ various฀
litigation฀and฀claims฀arising฀out฀of฀the฀normal฀course฀of฀
business.฀In฀managements฀opinion฀none฀of฀these฀matters฀
will฀ have฀ a฀ material฀ effect฀ on฀ the฀ Company’s฀ financial฀
position฀and฀results฀of฀operations.