U-Haul 2008 Annual Report Download - page 23

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Substantially all of the equity interest of SAC Holdings is controlled by Blackwater. In November 2007,
Blackwater contributed additional capital to its wholly-owned subsidiary, SAC Holding II. This contribution was
determined by us to be material with respect to the capitalization of SAC Holding II; therefore, triggering a
requirement under FIN 46(R) for us to reassess the Company’ s involvement with those subsidiaries. This required
reassessment led to the conclusion that the Company was no longer the primary beneficiary of SAC Holding II as of
the date of Blackwater’ s contribution. Accordingly, the Company deconsolidated this entity. While the
deconsolidation affects AMERCO’ s financial reporting, it has no operational or financial impact on the Company’ s
relationship with SAC Holding II. The deconsolidation, effective October 31, 2007 was accounted for as a
distribution of SAC Holding II interests to Blackwater, the sole shareholder of SAC Holding II. Because of the
Company’ s continuing involvement with SAC Holding II, the distributions do not qualify as discontinued operations
as defined by SFAS 144.
Critical Accounting Policies and Estimates
The Company’ s financial statements have been prepared in accordance with the generally accepted accounting
principles (“GAAP”) in the United States. The methods, estimates and judgments we use in applying our accounting
policies can have a significant impact on the results we report in our financial statements. Note 3 Accounting
Policies of the Notes to Consolidated Financial Statements in “Item 8: Financial Statements and Supplementary
Data” of this Form 10-K summarizes the significant accounting policies and methods used in the preparation of our
consolidated financial statements and related disclosures. Certain accounting policies require us to make difficult
and subjective judgments and assumptions, often as a result of the need to make estimates of matters that are
inherently uncertain.
Below we have set forth, with a detailed description, the accounting policies that we deem most critical to us and
that require management’ s most difficult and subjective judgments. These estimates are based on historical
experience, observance of trends in particular areas, information and valuations available from outside sources and
on various other assumptions that are believed to be reasonable under the circumstances and which form the basis
for making judgments about the carrying values of assets and liabilities that are not readily apparent from other
sources. Actual amounts may differ from these estimates under different assumptions and conditions; such
differences may be material.
We also have other policies that we consider key accounting policies, such as revenue recognition; however, these
policies do not meet the definition of critical accounting estimates, because they do not generally require us to make
estimates or judgments that are difficult or subjective. The accounting policies that we deem most critical to us, and
involve the most difficult, subjective or complex judgments include the following:
Principles of Consolidation
The Company applies FIN 46(R), “Consolidation of Variable Interest Entities” and ARB 51, “Consolidated
Financial Statements” in its principles of consolidation. FIN 46(R) addresses arrangements where a company does
not hold a majority of the voting or similar interests of a VIE. A company is required to consolidate a VIE if it has
determined it is the primary beneficiary. ARB 51 addresses the policy when a company owns a majority of the
voting or similar rights and exercises effective control.
As promulgated by FIN 46(R), a VIE is not self-supportive due to having one or both of the following conditions:
a) it has an insufficient amount of equity for it to finance its activities without receiving additional subordinated
financial support or b) its owners do not hold the typical risks and rights of equity owners. This determination is
made upon the creation of a variable interest and can be re-assessed should certain changes in the operations of a
VIE, or its relationship with the primary beneficiary trigger a reconsideration under the provisions of FIN 46(R).
After a triggering event occurs the most recent facts and circumstances are utilized in determining whether or not a
company is a VIE, which other company(s) have a variable interest in the entity, and whether or not the company’ s
interest is such that it is the primary beneficiary.
In fiscal 2003 and fiscal 2002, SAC Holdings were considered special purpose entities and were consolidated
based on the provisions of Emerging Issues Task Force (“EITF”) Issue No. 90-15. In fiscal 2004 the Company
evaluated its interests in SAC Holdings utilizing the guidance promulgated in FIN 46(R). The Company concluded
that SAC Holdings were VIE’ s and that the Company was the primary beneficiary. Accordingly, the Company
continued to include SAC Holdings in its consolidated financial statements.