1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________________ to __________________ Commission Registrant, State of Incorporation I.R.S. Employer File Number Address and Telephone Number Identification No. ________________________________________________________________________________ 1-11255 AMERCO 88-0106815 (A Nevada Corporation) 1325 Airmotive Way, Ste. 100 Reno, Nevada 89502-3239 Telephone (775) 688-6300 2-38498 U-Haul International, Inc. 86-0663060 (A Nevada Corporation) 2727 N. Central Avenue Phoenix, Arizona 85004 Telephone (602) 263-6645 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]. 21,520,437 shares of AMERCO Common Stock, $0.25 par value were outstanding at November 8, 2001. 5,385 shares of U-Haul International, Inc. Common Stock, $0.01 par value, were outstanding at November 8, 2001. U-Haul International, Inc. meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format.
2 TABLE OF CONTENTS PART I. FINANCIAL INFORMATION Item 1. Financial Statements a) Condensed Consolidated Balance Sheets as of September 30, 2001 (unaudited) and March 31, 2001................................ 4 b) Condensed Consolidated Statements of Earnings for the Six months ended September 30, 2001 and 2000 (unaudited).......... 6 c) Condensed Consolidated Statements of Comprehensive Income for the Six months ended September 30, 2001 and 2000 (unaudited).. 7 d) Condensed Consolidated Statements of Earnings for the Quarters ended September 30, 2001 and 2000 (unaudited)................. 8 e) Condensed Consolidated Statements of Comprehensive Income for the Quarters ended September 30, 2001 and 2000 (unaudited).... 9 f) Condensed Consolidated Statements of Cash Flows for the Six months ended September 30, 2001 and 2000 (unaudited).......... 10 g) Notes to Condensed Consolidated Financial Statements - September 30, 2001 (unaudited), March 31, 2001 and September 30, 2000 (unaudited)................................ 11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations......................................... 22 Item 3. Quantitative and Qualitative Disclosures About Market Risk........ 30 PART II. OTHER INFORMATION Item 1. Legal Proceedings................................................. 31 Item 4. Submission of Matters to a Vote of Security Holders............... 32 Item 6. Exhibits and Reports on Form 8-K.................................. 33
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4 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS AMERCO AND CONSOLIDATED SUBSIDIARIES Condensed Consolidated Balance Sheets September 30, March 31, Assets 2001 2001 ------------------------- (Unaudited) (in thousands) Cash and cash equivalents $ 33,243 52,778 Inventories, net 80,319 84,005 Investments, fixed maturities 974,405 952,482 Investments, other 420,923 464,958 Other assets 494,636 467,197 ------------------------ Property, plant and equipment, at cost: Buildings and improvements 888,397 832,372 Rental trucks 1,075,263 1,037,653 Other property, plant, and equipment 669,120 660,802 ------------------------ 2,632,780 2,530,827 Less accumulated depreciation 1,208,013 1,168,183 ------------------------ Total property, plant and equipment 1,424,767 1,362,644 ------------------------ Total Assets $ 3,428,293 3,384,064 ======================== The accompanying notes are an integral part of these consolidated financial statements.
5 September 30, March 31, Liabilities and Stockholders' Equity 2001 2001 ------------------------- (Unaudited) (in thousands) Liabilities: Notes and loans payable $ 1,095,574 1,156,848 Policy benefits and losses, claims and loss expenses payable 686,705 668,830 Liabilities from premium deposits 532,993 522,207 Cash overdraft 35,762 26,484 Deferred income 15,631 24,546 Deferred income taxes 189,859 139,419 Other liabilities 200,791 230,364 ------------------------ Total liabilities 2,757,315 2,768,698 Stockholders' equity: Serial preferred stock - Series A preferred stock - - Series B preferred stock - - Serial common stock - Series A common stock 1,441 1,441 Common stock 9,122 9,122 Additional paid-in capital 312,347 312,128 Accumulated other comprehensive income (39,704) (40,709) Retained earnings 815,383 755,174 Cost of common shares in treasury, net (412,692) (406,617) Unearned ESOP shares (14,919) (15,173) ------------------------ Total stockholders' equity 670,978 615,366 Contingent liabilities and commitments ------------------------ Total Liabilities and Stockholders' Equity $ 3,428,293 3,384,064 ======================== The accompanying notes are an integral part of these consolidated financial statements.
6 AMERCO AND CONSOLIDATED SUBSIDIARIES Condensed Consolidated Statements of Earnings Six months ended September 30, (Unaudited) 2001 2000 ------------------------- (in thousands, except share and per share data) Revenues Rental revenue $ 700,981 680,283 Net sales 118,272 113,961 Premiums 202,880 121,495 Net investment and interest income 46,959 46,604 ---------------------- Total revenues 1,069,092 962,343 Costs and expenses Operating expenses 526,723 486,839 Cost of sales 65,166 65,974 Benefits and losses 180,773 95,815 Amortization of deferred policy acquisition costs 20,933 16,558 Lease expense 90,225 86,536 Depreciation, net 40,831 44,485 ---------------------- Total costs and expenses 924,651 796,207 Earnings from operations 144,441 166,136 Interest expense 40,856 44,052 ---------------------- Pretax earnings 103,585 122,084 Income tax expense (36,896) (43,239) ---------------------- Net earnings $ 66,689 78,845 ====================== Basic and diluted earnings per common share: $ 2.84 3.35 ====================== Basic and diluted average common shares outstanding: 21,192,166 21,606,388 ====================== The accompanying notes are an integral part of these consolidated financial statements.
7 AMERCO AND CONSOLIDATED SUBSIDIARIES Condensed Consolidated Statements of Comprehensive Income Six months ended September 30, (Unaudited) 2001 2000 ------------------- (in thousands) Comprehensive income: Net earnings $ 66,689 78,845 Changes in other comprehensive income: Foreign currency translation (3,120) (3,585) Fair market value of cash flow hedge (290) (182) Unrealized gain (loss) on investments 4,415 (4,041) ------------------- Total comprehensive income $ 67,694 71,037 =================== The accompanying notes are an integral part of these consolidated financial statements.
8 AMERCO AND CONSOLIDATED SUBSIDIARIES Condensed Consolidated Statements of Earnings Quarters ended September 30, (Unaudited) 2001 2000 --------------------------- (in thousands, except share and per share data) Revenues Rental revenue $ 366,438 357,535 Net sales 55,849 53,815 Premiums 102,550 66,508 Net investment and interest income 24,373 25,048 ----------------------- Total revenues 549,210 502,906 Costs and expenses Operating expense 277,756 255,189 Cost of sales 31,398 32,777 Benefits and losses 89,341 53,580 Amortization of deferred policy acquisition costs 11,139 8,689 Lease expense 43,883 46,102 Depreciation, net 10,581 21,675 ----------------------- Total costs and expenses 464,098 418,012 Earnings from operations 85,112 84,894 Interest expense 19,736 21,242 ----------------------- Pretax earnings 65,376 63,652 Income tax expense (23,690) (22,419) ----------------------- Net earnings $ 41,686 41,233 ======================= Basic and diluted earnings per common share: $ 1.82 1.77 ======================= Basic and diluted average common shares outstanding: 21,106,343 21,489,970 ======================= The accompanying notes are an integral part of these consolidated financial statements.
9 AMERCO AND CONSOLIDATED SUBSIDIARIES Condensed Consolidated Statements of Comprehensive Income Quarters ended September 30, (Unaudited) 2001 2000 ------------------- (in thousands) Comprehensive income: Net earnings $ 41,686 41,233 Change in other comprehensive income: Foreign currency translation (4,617) (3,120) Fair market value of cash flow hedge (647) (206) Unrealized gain (loss) on investments (4,374) (1,783) ------------------- Total comprehensive income $ 32,048 36,124 =================== The accompanying notes are an integral part of these consolidated financial statements
10 AMERCO AND CONSOLIDATED SUBSIDIARIES Condensed Consolidated Statements of Cash Flows Six months ended September 30, (Unaudited) 2001 2000 ------------------- (in thousands) Net cash provided by operating activities 44,650 118,092 ------------------- Cash flows from investing activities: Purchases of investments: Property, plant and equipment (91,265) (260,914) Fixed maturities (92,465) (52,636) Mortgage loans (561) (13,591) Proceeds from sale of investments: Property, plant and equipment 53,889 231,147 Fixed maturities 75,973 58,550 Changes in other investments 45,604 (56,462) ------------------- Net cash used by investing activities (8,825) (93,906) ------------------- Cash flows from financing activities: Net change in short-term borrowings (77,494) (41,566) Principal borrowings (payments) on notes 16,220 (34) Investment contract deposits 74,159 40,128 Investment contract withdrawals (65,079) (37,750) Changes in other financing activities (3,166) (6,991) ------------------- Net cash used by financing activities (55,360) (46,213) ------------------- Increase (decrease) in cash and cash equivalents (19,535) (22,027) Cash and cash equivalents at beginning of period 52,778 48,435 ------------------- Cash and cash equivalents at end of period $ 33,243 26,408 =================== Summary of Non-cash investing and financing activity: A note and other receivables were reduced in exchange for the purchase of storage properties from a related party. $ 35,196 - An investment was received in exchange for the sale of storage properties to a related party. $ 530 98,351 The accompanying notes are an integral part of these consolidated financial statements.
11 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Condensed Consolidated Financial Statements September 30, 2001, March 31, 2001 and September 30, 2000 (Unaudited) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION AMERCO, a Nevada corporation (AMERCO), is the holding company for U-Haul International, Inc. (U-Haul), Amerco Real Estate Company (Real Estate), Republic Western Insurance Company (RepWest) and Oxford Life Insurance Company (Oxford). PRINCIPLES OF CONSOLIDATION The condensed consolidated financial statements include the accounts of the parent corporation, AMERCO, and its wholly-owned subsidiaries. All material intercompany accounts and transactions of AMERCO and its subsidiaries have been eliminated. The financial statements and notes are presented as permitted by Form 10-Q and do not contain certain information included in AMERCO's annual financial statements and notes. The condensed consolidated balance sheet as of September 30, 2001 and the related condensed consolidated statements of earnings for the three and six months ended September 30, 2001 and 2000 and the condensed consolidated statements of comprehensive income and the condensed consolidated cash flows for the six months ended September 30, 2001 and 2000 are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of such condensed financial statements have been included. Such adjustments consisted only of normal recurring items. Interim results are not necessarily indicative of results for a full year. The operating results and financial position of AMERCO's consolidated insurance operations are determined on a one quarter lag. There were no effects related to intervening events which would materially affect the consolidated financial position or results of operations for the financial statements presented herein, except for as described in Note 9. Certain reclassifications have been made to the financial statements for the three and six months ended September 30, 2000 to conform with the current year's presentation.
12 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Condensed Consolidated Financial Statements, Continued (Unaudited) 2. INVESTMENTS A comparison of amortized cost to market for fixed maturities is as follows: June 30, 2001 ------------- Par Value Gross Gross Estimated Consolidated or number Amortized unrealized unrealized market Held-to-Maturity of shares cost gains losses value ------------------------------------------------------ (in thousands) U.S. treasury securities and government obligations $ 4,100 $ 3,610 164 - 3,774 U.S. government agency mortgage- backed securities $ 11,299 11,245 265 (13) 11,497 Corporate securities $ 43,607 43,704 1,591 (42) 45,253 Mortgage-backed securities $ 35,264 34,827 699 (69) 35,457 Redeemable preferred stocks 4,541 114,674 247 (3,307) 111,614 ---------------------------------------- 208,060 2,966 (3,431) 207,595 ---------------------------------------- June 30, 2001 ------------- Par Value Gross Gross Estimated Consolidated or number Amortized unrealized unrealized market Available-for-Sale of shares cost gains losses value ------------------------------------------------------ (in thousands) U.S. treasury securities and government obligations $ 42,760 $ 43,280 1,812 (319) 44,773 U.S. government agency mortgage- backed securities $ 31,620 31,364 725 (39) 32,050 Obligations of states and political subdivisions $ 15,925 16,065 660 (112) 16,613 Corporate securities $ 608,680 604,300 14,257 (16,239) 602,318 Mortgage-backed securities $ 31,270 31,203 1,013 (153) 32,063 Redeemable preferred stocks 1,260 31,834 281 (447) 31,668 Redeemable common stocks 633 7,900 - (1,040) 6,860 ---------------------------------------- 765,946 18,748 (18,349) 766,345 ---------------------------------------- Total $ 974,006 21,714 (21,780) 973,940 ========================================
13 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Condensed Consolidated Financial Statements, Continued (Unaudited) 3. SUMMARIZED CONSOLIDATED FINANCIAL INFORMATION OF INSURANCE SUBSIDIARIES A summarized condensed consolidated balance sheet for RepWest is presented below: June 30, ------------------- 2001 2000 ------------------- (in thousands) Investments, fixed maturities $ 396,466 398,127 Receivables 212,299 176,416 Due from affiliate 46,310 23,665 Other assets 79,996 66,929 ------------------- Total assets $ 735,071 665,137 =================== Policy liabilities and accruals $ 381,350 325,043 Unearned premiums 113,463 77,364 Other policyholders' funds and liabilities 59,117 52,867 ------------------- Total liabilities 553,930 455,274 Stockholder's equity 181,141 209,863 ------------------- Total liabilities and stockholder's equity $ 735,071 665,137 =================== A summarized condensed consolidated income statement for RepWest is presented below: Quarter ended Six months ended June 30, June 30, ----------------------------------------- 2001 2000 2001 2000 ----------------------------------------- (in thousands) Premiums $ 66,087 41,925 128,265 72,332 Net investment income 7,449 7,744 15,865 15,752 ----------------- ----------------- Total revenue 73,536 49,669 144,130 88,084 Benefits and losses 62,371 35,519 122,638 60,101 Amortization of deferred policy acquisition costs 6,590 3,186 11,630 6,360 Operating expenses 17,904 11,410 28,774 19,728 ----------------- ----------------- Total expenses 86,865 50,115 163,042 86,189 Income (loss) from operations (13,329) (446) (18,912) 1,895 Income tax benefit (expense) 4,708 273 6,687 (590) ----------------- ----------------- Net income (loss) $ (8,621) (173) (12,225) 1,305 ================= =================
14 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Condensed Consolidated Financial Statements, Continued (Unaudited) 3. SUMMARIZED CONSOLIDATED FINANCIAL INFORMATION OF INSURANCE SUBSIDIARIES, continued A summarized condensed consolidated balance sheet for Oxford is presented below: June 30, ------------------- 2001 2000 ------------------- (in thousands) Investments, fixed maturities $ 577,939 481,879 Investments, other 173,863 148,115 Receivables 30,541 18,120 Deferred policy acquisition costs 83,280 74,787 Other assets 9,647 4,554 ------------------- Total assets $ 875,270 727,455 =================== Policy liabilities and accruals $ 187,758 149,151 Premium deposits 532,993 463,360 Deferred federal income taxes 12,211 9,620 Other policyholders' funds and liabilities 36,739 17,707 ------------------- Total liabilities 769,701 639,838 Stockholder's equity 105,569 87,617 ------------------- Total liabilities and stockholder's equity $ 875,270 727,455 =================== A summarized condensed consolidated income statement for Oxford is presented below: Quarter ended Six months ended June 30, June 30, ---------------------------------------- 2001 2000 2001 2000 ---------------------------------------- (in thousands) Premiums $ 37,905 26,020 77,538 51,524 Net investment income 6,976 6,659 13,184 12,363 ---------------- ---------------- Total revenue 44,881 32,679 90,722 63,887 Benefits and losses 26,970 18,061 58,135 35,714 Amortization of deferred policy acquisition costs 4,538 5,503 9,292 10,198 Operating expenses 12,197 7,626 19,436 13,231 ---------------- ---------------- Total expenses 43,705 31,190 86,863 59,143 Income from operations 1,176 1,489 3,859 4,744 Income tax expense (272) (56) (1,232) (1,125) ---------------- ---------------- Net income $ 904 1,433 2,627 3,619 ================ ================
15 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Condensed Consolidated Financial Statements, Continued (Unaudited) 4. CONTINGENT LIABILITIES AND COMMITMENTS During the six months ended September 30, 2001, a subsidiary of U-Haul entered into three transactions and has subsequently entered into one transaction, whereby the subsidiary sold rental trucks, which were subsequently leased back. AMERCO has guaranteed $10,528,000 of residual values at September 30, 2001 for these assets at the end of the respective lease terms. Following are the lease commitments for the leases executed during the six months ended September 30, 2001, and subsequently which have a term of more than one year (in thousands): Net activity Year ended Lease subsequent to March 31, Commitments period end Total -------------------------------------------------------- 2002 $ 777 131 908 2003 1,553 524 2,077 2004 1,553 524 2,077 2005 1,228 524 1,752 2006 1,119 524 1,643 Thereafter 3,416 1,965 5,381 ------------------------------------ $ 9,646 4,192 13,838 ==================================== 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 clean-up of underground fuel storage tanks. It is the opinion of management that none of such suits, claims or proceedings involving AMERCO, individually or in the aggregate are expected to result in a material loss. 5. SUPPLEMENTAL CASH FLOWS INFORMATION The (increase) decrease in receivables, inventories, investment, other and accounts payable and accrued liabilities net of other operating and investing activities follows: Six months ended September 30, 2001 2000 ---------------------- (in thousands) Receivables $ (14,209) (20,937) ====================== Inventories $ 3,686 943 ====================== Accounts payable and accrued expenses $ (26,499) (7,709) ======================
16 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Condensed Consolidated Financial Statements, Continued (Unaudited) 6. EARNINGS PER SHARE The following table reflects the calculation of the earnings per share: <TABLE> <CAPTION> Weighted Average Common Shares Income Outstanding Per Share (Numerator) (Denominator) Amount ------------- ---------------- --------- (in thousands, except share and per share data) <S> <C> <C> <C> Quarter ended September 30, 2001: Earnings from operations $ 41,686 Less: preferred stock dividends 3,241 ------ Basic and diluted earnings per common share 38,445 21,106,343 $ 1.82 ====== ========== ==== Quarter ended September 30, 2000: Earnings from operations $ 41,233 Less: preferred stock dividends 3,241 ------ Basic and diluted earnings per common share 37,992 21,489,970 $ 1.77 ====== =========== ==== Six months ended September 30, 2001: Earnings from operations $ 66,689 Less: preferred stock dividends 6,481 ------ Basic and diluted earnings per common share 60,208 21,192,166 $ 2.84 ====== ========== ==== Six months ended September 30, 2000: Earnings from operations $ 78,845 Less: preferred stock dividends 6,481 ------ Basic and diluted earnings per common share 72,364 21,606,388 $ 3.35 ====== ========== ==== </TABLE>
17 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Condensed Consolidated Financial Statements, Continued (Unaudited) 7. RELATED PARTIES During the six months ended September 30, 2001, subsidiaries of AMERCO held various senior and junior notes with SAC Holding Corporation and its subsidiaries (SAC Holdings). The voting common stock of SAC Holdings is held by Mark V. Shoen, a major stockholder of AMERCO. AMERCO's subsidiaries received interest payments of $16,253,308 and principal payments of $32,249,767 from SAC Holdings during the six months ended September 30, 2001. The terms of the notes with SAC Holdings are consistent with the terms of notes held by U-Haul for other properties owned by unrelated parties and managed by U-Haul. These amounts are reflected in Investments, other of the condensed consolidated balance sheet. During the six months ended September 30, 2001, a subsidiary of AMERCO funded through a note the purchase of properties and construction costs for SAC Holdings of approximately $20,699,000. This amount is reflected in Investments, other of the condensed consolidated balance sheet. U-Haul currently manages the properties owned by SAC Holdings pursuant to a management agreement, under which U-Haul receives a management fee equal to 6% of the gross receipts from the properties. Management fees of $3,756,000 and $2,690,000 were received during the six months ended September 30, 2001 and 2000, respectively. The management fee percentage is consistent with the fees received by U-Haul for other properties owned by unrelated parties and managed by U-Haul. In August 2001, Real Estate completed the sale of one storage property to SAC Holdings, for $341,000. Real Estate received notes from the sale. The gain is reflected in the equity section of the condensed consolidated balance sheet. In June 2000, Real Estate completed the sale of twenty-four storage properties to Twelve SAC Self-Storage Corporation, Thirteen SAC Self-Storage Corporation and Fourteen SAC Self-Storage Corporation, subsidiaries of SAC Holding Corporation, for $98,351,000. Real Estate received cash and notes from the sale. The gain is reflected in the equity section of the condensed consolidated balance sheet. In September 2001, the Company purchased nine storage properties from Five SAC Self-Storage Corporation, a subsidiary of SAC Holdings at a purchase price of $35.2 million, which approximates fair value. These properties were not previously owned by the consolidated company. Management believes that the foregoing transactions were consummated on terms equivalent to those that prevail in arm's-length transactions. During September 2001 the Company consummated a legal transfer of cash in the amount of $7.5 million and real estate properties in the amount of $65.5 million from Moving and Storage Operations and Real Estate to Oxford and RepWest. The transferred assets were recorded by RepWest and Oxford at their original book value and no gain or loss was recorded. See Note 9 for additional discussion.
18 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (Unaudited) 8. NEW ACCOUNTING STANDARDS In July 2001, the Financial Accounting Standards Board ("FASB") issued Statements of Financial Accounting Standards No. 141 (SFAS 141), "Business Combinations", and No. 142 (SFAS 142), "Goodwill and Other Intangible Assets". SFAS 141 supercedes Accounting Principles Board Opinion No. 16 (APB 16), "Business Combinations". The most significant changes made by SFAS 141 are: (1) requiring that the purchase method of accounting be used for all business combinations initiated after June 30, 2001, (2) establishing specific criteria for the recognition of intangible assets separately from goodwill, and (3) requiring unallocated negative goodwill to be written off immediately as an extraordinary gain (instead of being deferred and amortized). SFAS 142 supercedes APB 17, "Intangible Assets". SFAS 142 primarily addresses the accounting for goodwill and intangible assets subsequent to their acquisition (i.e., the post-acquisition accounting). The provisions of SFAS 142 will be effective for fiscal years beginning after December 15, 2001. The most significant changes made by SFAS 142 are: (1) goodwill and indefinite lived intangible assets will no longer be amortized, (2) goodwill will be tested for impairment at least annually at the reporting unit level, (3) intangible assets deemed to have an indefinite life will be tested for impairment at least annually, and (4) the amortization period of intangible assets with finite lives will no longer be limited to forty years. SFAS No. 141 and 142 are not expected to affect the consolidated financial position or results of operations. During the quarter ended June 30, 2000, AMERCO adopted Staff Accounting Bulletin No. 101 (SAB 101), "Revenue Recognition in Financial Statements", which provides guidance on the recognition, presentation and disclosure of revenue in the financial statements filed with the Securities and Exchange Commission. The adoption of SAB 101 was not material to AMERCO's consolidated financial statements. SFAS No. 143, Accounting for Asset Retirement Obligations, requires recognition of the fair value of liabilities associated with the retirement of long-lived assets when a legal obligation to incur such costs arises as a result of the acquisition, construction, development and/or the normal operation of a long-lived asset. Upon recognition of the liability, a corresponding asset is recorded and depreciated over the remaining life of the long-lived asset. The Statement defines a legal obligation as one that a party is required to settle as a result of an existing or enacted law, statute, ordinance, or written or oral contract or by legal construction of a contract under the doctrine of promissory estoppel. SFAS 143 is effective for fiscal years beginning after December 15, 2002. Managament has not yet determined the total likely effects of adopting this Statement on the financial position or results of operations. In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment of Disposal of Long-Lived Assets," which addresses issues relating to the implementation of FASB Statement No. 121 (FAS 121), "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," and develops a single accounting model, based on the framework established in FAS 121, for long-lived assets to be disposed of by sale, whether previously held and used or newly acquired. The Company is in the process of determining the extent to which this statement will impact its results of operations or financial position.
19 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Condensed Consolidated Financial Statements, Continued (Unaudited) 9. INDUSTRY SEGMENT AND GEOGRAPHIC AREA DATA Industry Segment Data - AMERCO has four industry segments represented by Moving and Storage Operations (U-Haul), Real Estate (AREC), Property and Casualty Insurance (RepWest) and Life Insurance (Oxford). Information concerning operations by industry segment follows: <TABLE> <CAPTION> Moving and Property/ Adjustments Storage Real Casualty Life and Operations Estate Insurance Insurance Eliminations Consolidated ---------------------------------------------------------------- (in thousands) <S< <C> <C> <C> <C> <C> <C> Six months ended September 30, 2001 ------------------ Revenues: Outside $ 831,133 6,031 141,985 89,943 - 1,069,092 Intersegment - 33,653 2,145 779 (36,577) - --------- ------- ------- ------- -------- --------- Total revenues $ 831,133 39,684 144,130 90,722 (36,577) 1,069,092 Depreciation/ amortization $ 52,420 5,550 12,262 9,411 - 79,643 Interest expense $ 40,856 19,724 - - (19,724) 40,856 Pretax earnings $ 95,945 22,693 (18,912) 3,859 - 103,585 Income tax $ (34,408) (7,943) 6,687 (1,232) - (36,896) Identifiable assets $1,489,276 685,777 735,071 865,087 (346,918) 3,428,293 Six months ended September 30, 2000 ------------------ Revenues: Outside $ 806,415 6,318 86,418 63,192 - 962,343 Intersegment - 34,845 1,666 695 (37,206) - --------- ------- ------- ------- -------- --------- Total revenues $ 806,415 41,163 88,084 63,887 (37,206) 962,343 Depreciation/ amortization $ 48,687 5,384 6,755 10,625 - 71,451 Interest expense $ 44,052 22,244 - - (22,244) 44,052 Pretax earnings $ 107,345 8,100 1,895 4,744 - 122,084 Income tax $ (38,689) (2,835) (590) (1,125) - (43,239) Identifiable assets $1,437,776 747,255 665,137 727,455 (342,530) 3,235,093 </TABLE>
20 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Condensed Consolidated Financial Statements, Continued (Unaudited) 9. INDUSTRY SEGMENT AND GEOGRAPHIC AREA DATA, continued <TABLE> <CAPTION> Moving Property/ Adjustments and Storage Real Casualty Life and Operations Estate Insurance Insurance Eliminations Consolidated ---------------------------------------------------------------------- (in thousands) <S> <C> <C> <C> <C> <C> <C> Quarter ended September 30, 2001 ------------------ Revenues: Outside $ 428,620 3,616 72,500 44,474 - 549,210 Intersegment - 16,324 1,036 407 (17,767) - --------- ------- ------- ------- -------- --------- Total revenue $ 428,620 19,940 73,536 44,881 (17,767) 549,210 Depreciation/ amortization $ 22,469 2,735 6,976 4,617 - 36,797 Interest expense $ 19,736 9,517 - - (9,517) 19,736 Pretax earnings $ 59,444 18,085 (13,329) 1,176 - 65,376 Income tax $ (21,796) (6,330) 4,708 (272) - (23,690) Identifiable assets $1,489,276 685,777 735,071 865,087 (346,918) 3,428,293 Quarter ended September 30, 2000 ------------------ Revenues: Outside $ 418,193 3,802 48,590 32,321 - 502,906 Intersegment - 17,102 1,079 358 (18,539) - --------- ------- ------- ------- -------- --------- Total revenue $ 418,193 20,904 49,669 32,679 (18,539) 502,906 Depreciation/ amortization $ 24,381 2,632 3,298 5,556 - 35,867 Interest expense $ 21,242 10,911 - - (10,911) 21,242 Pretax earnings $ 58,419 4,190 (446) 1,489 - 63,652 Income tax $ (21,177) (1,459) 273 (56) - (22,419) Identifiable assets $1,437,776 747,255 665,137 727,455 (342,530) 3,235,093 </TABLE>
21 AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Condensed Consolidated Financial Statements, Continued (Unaudited) 9. INDUSTRY SEGMENT AND GEOGRAPHIC AREA DATA, continued <TABLE> <CAPTION> Geographic Area Data - United United (All amounts are in States Canada Consolidated States Canada Consolidated -------------------------------- ----------------------------- U.S. $'s) Six months ended Quarter ended -------------------------------- ----------------------------- (in thousands) <S> <C> <C> <C> <C> <C> <C> September 30, 2001 ------------------ Total revenues $ 1,045,510 23,582 1,069,092 536,770 12,440 549,210 Depreciation/ amortization $ 77,894 1,749 79,643 36,061 736 36,797 Interest expense $ 40,817 39 40,856 19,749 (13) 19,736 Pretax earnings $ 97,767 5,818 103,585 62,064 3,312 65,376 Income tax $ (36,896) - (36,896) (23,690) - (23,690) Identifiable assets $ 3,371,610 56,683 3,428,293 3,371,610 56,683 3,428,293 September 30, 2000 Total revenues $ 939,062 23,281 962,343 490,212 12,694 502,906 Depreciation/ amortization $ 69,281 2,170 71,451 34,765 1,102 35,867 Interest expense $ 44,045 7 44,052 21,241 1 21,242 Pretax earnings $ 116,869 5,215 122,084 60,738 2,914 63,652 Income tax $ (43,233) (6) (43,239) (22,413) (6) (22,419) Identifiable assets $ 3,177,402 57,691 3,235,093 3,177,402 57,691 3,235,093 </TABLE> During September, 2001 the Company consummated a legal transfer of cash in the amount of $7.5 million and real estate properties in the amount of $65.5 million from Moving and Storage Operations and Real Estate to Oxford and RepWest. The transferred assets were recorded by the RepWest and Oxford at their original book value; however, given the operating results and financial position of the Company's insurance operations are reflected on a one quarter lag, the amounts have not been reflected within identifiable assets line of the Property/Casualty or Life Insurance segments above. Since the Moving and Storage and Real Estate operations are not reported on a one quarter lag, the assets have been removed from the Real Estate industry segment identifiable assets and are reflected as an adjustment and elimination within the above table for the inclusion within the consolidated company. 10. SUBSEQUENT EVENTS On November 5, 2001, AMERCO declared a cash dividend of $3,241,000 ($0.53125 per preferred share) to preferred stockholders of record as of November 15, 2001.
22 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD-LOOKING STATEMENTS This report contains forward-looking statements. Additional written or oral forward-looking statements may be made by AMERCO from time to time in filings with the Securities and Exchange Commission or otherwise. Management believes such forward-looking statements are within the meaning of the safe-harbor provisions. Such statements may include, but not be limited to, projections of revenues, income or loss, estimates of capital expenditures, plans for future operations, products or services and financing needs or plans, as well as assumptions relating to the foregoing. The words "believe", "expect", "anticipate", "estimate", "project" and similar expressions identify forward-looking statements, which speak only as of the date the statement was made. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Future events and actual results could differ materially from those set forth in, contemplated by or underlying the forward-looking statements. The following disclosures, as well as other statements in this report and in the Notes to AMERCO's Consolidated Financial Statements, describe factors, among others, that could contribute to or cause such differences, or that could affect AMERCO's stock price. GENERAL Information on industry segments is incorporated by reference from "Item 1. Financial Statements - Notes 1, 3 and 8 of Notes to Consolidated Financial Statements". The notes discuss the principles of consolidation, summarized consolidated financial information and industry segment and geographical area data, respectively. In consolidation, all intersegment premiums are eliminated and the benefits, losses and expenses are retained by the insurance companies. For a discussion of new accounting standards please refer to Note 8 of the Consolidated Financial Statements. RESULTS OF OPERATIONS SIX MONTHS ENDED SEPTEMBER 30, 2001 VERSUS SIX MONTHS ENDED SEPTEMBER 30, 2000 Moving and Storage Operations Revenues consist of rental revenues and net sales. Total rental revenue was $702.4 million and $679.1 million for the six months ended September 30, 2001 and 2000, respectively. Net revenues from the rental of moving equipment increased by $16.1 million. The increase was primarily atributable to higher truck and trailer rental revenues and storage revenues. Net sales revenues were $118.2 million and $114.0 million for the six months ended September 30, 2001 and 2000, respectively. Revenue growth resulted from an increase in the sale of moving support items and an increase in the sale of propane. Cost of sales was $65.2 million and $66.0 million for the six months ended September 30, 2001 and 2000, respectively. Operating expenses before intercompany eliminations were $521.0 million and $491.8 million for the six months ended September 30, 2001 and 2000, respectively. Increased expenditure levels for personnel and rental equipment maintenance, due to an increase in truck rental transactions, were primarily responsible. Net depreciation expense was $46.9 million and $39.1 million for the six months ended September 30, 2001 and 2000, respectively. The increase reflects depreciation on the rental truck fleet. Operating profit before tax and intercompany elimination was $112.2 million and $121.6 million for the six months ended September 30, 2001 and 2000, respectively.
23 Real Estate Operations Rental revenue before intercompany eliminations was $34.9 million and $36.1 million for the six months ended September 30, 2001 and 2000, respectively. Intercompany revenue was $36.3 million and $34.8 million for the six months ended September 30, 2001 and 2000, respectively. Net investment and interest income was $4.8 million and $5.1 million for the six months ended September 30, 2001 and 2000, respectively. Net depreciation expense (income) was $(6.0) million and $5.3 million for the six months ended September 30, 2001 and 2000, respectively. The decrease is due to an increase in the gain from the sale of property plant and equipment. Operating profit before tax and intercompany elimination was $22.7 million and $8.1 million for the six months ended September 30, 2001 and 2000, respectively. The increase mainly reflects a gain of $11.4 million on sales of property plant and equipment. Property and Casualty RepWest's premiums were $128.3 million and $72.3 million for the six months ended June 30, 2001 and 2000, respectively. General agency premiums were $62.8 million and $20.3 million for the six months ended June 30, 2001 and 2000, respectively. The change from 2000 to 2001 was the result of two agency programs, Non-Standard Auto and Transportation, which are responsible for $33.4 million of the increase. Assumed treaty reinsurance premium was $31.7 million and $22.9 million for the six months ended June 30, 2001 and 2000, respectively. Of this increase, $6.3 million is associated with two Non-Standard Auto treaties. Rental industry revenue was $17.8 million and $17.0 million for the six months ending June 30, 2001 and 2000, respectively. Net investment income was $15.9 million and $15.8 million for the six months ended June 30, 2001 and 2000, respectively. The increase is attributed to increased invested assets and increased realized gains, offset by decreasing market interest rates. Benefits and losses were $122.6 million and $60.1 million for the six months ended June 30, 2001 and 2000, respectively. This increase is due to agency programs in Non-Standard Auto and Transportation that grew significantly in the second half of 2000, as well as assumed treaty reinsurance and direct multiple peril business. The amortization of deferred acquisition costs (DAC) was $11.6 million a and $6.4 million for the six months ended June 30, 2001 and 2000, respectively. The increase is mainly due to the premium growth and resultant deferral of acquisition expenses in 2000 for the assumed treaty and general agency programs. Operating expenses were $28.8 million and $19.7 million for the six months ended June 30, 2001 and 2000, respectively. The increase is a result of commissions on new agency business premium and premium taxes resulting from increased premium writings. Operating profit (loss) before tax and intercompany elimination was $(18.9) million and $1.9 million for the six months ended June 30, 2001 and 2000, respectively. The decrease is mainly attributable to a significant increase in incurred losses associated with Non-Standard Auto and Assumed Treaty business and increased operating expense, offset by an increase in earned premiums.
24 Life Insurance Net premiums were $77.5 million and $51.5 million for the six months ended June 30, 2001 and 2000, respectively. Medicare Supplement premiums increased $26.2 million; driven by new business, rate increases, and the acquisition of Christian Fidelity Life Insurance Company (CFLIC). Other business segments had premium decreases totaling $0.2 million. Net investment income before intercompany eliminations was $13.2 million and $12.4 million for the six months ended June 30, 2001 and 2000, respectively. The increase was primarily due to realized gains, offset by decreasing market interest rates. Benefits were $58.1 million and $35.7 million for the six months ended June 30, 2001 and 2000, respectively. This increase is primarily due to a greater volume of Medicare supplement business in force after the acquisition of CFLIC, which accounts for $21.7 million. Other health benefits increased $0.7 million, as loss ratios were worse year over year. Amortization of DAC and the value of business acquired (VOBA) was $9.3 million and $10.2 million for the six months ended June 30, 2001 and 2000, respectively. The decrease is primarily due to annuity DAC amortization. Operating expenses were $19.4 million and $13.2 million for the six months ended June 30, 2001 and 2000, respectively. Commissions have increased $3.8 million primarily due to the increase in Medicare supplement premiums. Personnel and other operating expenses net of fees collected increased $2.4 million, largely due to the acquisition of CFLIC. Operating profit before tax and intercompany eliminations was $3.9 million and $4.7 million for the six months ended June 30, 2001 and 2000, respectively. The decrease is due to a decline in profits from the annuity line of business of $1.4 million. New annuity business contains a first year bonus interest credited rate effecting initial spreads and there have been additional marketing and administration costs associated with increased annuity sales. All other segments including Medicare Supplemented improved year over year by $0.6 million. Interest Expense Interest expense was $40.9 million and $44.1 million for the six months ended September 30, 2001 and 2000, respectively. The decrease can be attributed to total outstanding debt interest rate reductions. Consolidated Group As a result of the foregoing, pretax earnings totaled $103.6 million and $122.1 million for the six months ended September 30, 2001 and 2000, respectively. After providing for income taxes, net earnings were $66.7 million and $78.8 million for the six months ended September 30, 2001 and 2000, respectively.
25 QUARTER ENDED SEPTEMBER 30, 2001 VERSUS QUARTER ENDED SEPTEMBER 30, 2000 Moving and Storage Operations Revenues consist of rental revenues and net sales. Total rental revenue was $367.0 million and $356.7 million for the quarters ended September 30, 2001 and 2000, respectively. Net revenues from the rental of moving related equipment increased by $8.3 million. This increase is primarily attributable to higher truck and trailer rental revenues and storage revenues increased $3.0 million due to increases in rates and in the number of storage rooms rented. Net sales revenues were $55.8 million and $53.8 million for the quarters ended September 30, 2001 and 2000, respectively. Revenue growth resulted from the sale of moving support items (i.e. boxes, etc.) which led to the majority of the increase during the quarter. Cost of sales was $31.4 million and $32.8 million for the quarters ended September 30, 2001 and 2000, respectively. Operating expenses before intercompany elimination were $267.5 million and $255.2 million for the quarters ended September 30, 2001 and 2000, respectively. The increase reflects higher personnel and rental equipment maintenance expenditures associated with an increase in truck rental transactions. Net depreciation expense was $19.8 million and $19.0 million for the quarters ended September 30, 2001 and 2000, respectively. The increase reflects an increase in depreciation recognized on the rental truck fleet. Operating profit before tax and intercompany elimination was $67.9 million and $65.7 million for the quarters ended September 30, 2001 and 2000, respectively. The increase reflects increases in revenues over increases in operating expenses. Real Estate Operations Rental revenue before intercompany eliminations was $17.0 million and $17.9 million for the quarters ended September 30, 2001 and 2000, respectively. Intercompany revenue was $17.6 million and $17.1 million for the quarters ended September 30, 2001 and 2000, respectively. Net investment and interest income was $2.9 million and $3.0 million for the quarters ended September 30, 2001 and 2000, respectively. Net depreciation expense (income) was $(9.2) million and $2.7 million for the quarters ended September 30, 2001 and 2000, respectively. The decrease reflects the gain realized from the sale of property plant and equipment. Operating profit before tax and intercompany elimination was $18.1 million and $4.2 million for the quarters ended September 30, 2001 and 2000, respectively. The increase reflects increases in the sale of property plant and equipment.
26 Property and Casualty RepWest's premiums were $66.1 million and $41.9 million for the quarters ended June 30, 2001 and 2000, respectively. General agency premiums were $33.2 million and $12.7 million for the quarters ended June 30, 2001 and 2000, respectively. The change from 2000 to 2001 was the result of two agency programs, Non-Standard Auto and Transportation, which are responsible for $14.4 million of the increase. Assumed treaty reinsurance premium were $15.9 million and $13.2 million for the quarters ended June 30, 2001 and 2000, respectively. Net investment income was $7.4 million and $7.7 million for the quarters ended June 30, 2001 and 2000, respectively. Benefits and losses incurred were $62.4 million and $35.5 million for the quarters ended June 30, 2001 and 2000, respectively. The increase is a result of new general agency business writings in Non-Standard Auto and Transportation, as well as in assumed treaty reinsurance and direct multiple peril business. The amortization of DAC was $6.6 million and $3.2 million for the quarters ended June 30, 2001 and 2000, respectively. The increase is due to the increase in new business. Operating expenses were $17.9 million and $11.4 million for the quarters ended June 30, 2001 and 2000, respectively. The change is due to increased commission expense resulting from new agency business premium writings on Non-Standard Auto Transportation coverages, as well as Assumed treaty business. General and administrative expenses also increased due to taxes resulting from increased premium writings. Operating loss before tax and intercompany elimination was $13.3 million and $0.4 million for the quarters ended June 30, 2001 and 2000, respectively. The increase is mainly attributable to a significant increase in incurred losses associated with Non-Standard Auto and Assumed Treaty business and increased operating expense, offset by an increase in earned premiums.
27 Life Insurance Net premiums were $37.9 million and $26.0 million for the quarters ended June 30, 2001 and 2000, respectively. Medicare Supplement premiums increased by $11.7 million from new business, rate increases and the acquisition of CFLIC. Other business segments had premium increases totaling $0.2 million. Net investment income before intercompany eliminations was $7.0 million and $6.7 million for the quarters ended June 30, 2001 and 2000, respectively. Benefits were $27.0 million and $18.1 million for the quarters ended June 30, 2001 and 2000, respectively. $8.7 million of the increase is due to a greater volume of Medicare supplement business in force, of which the acquisition of CFLIC accounts for the majority. All other segments had benefit increases of $0.2 million for the quarter. Amortization of DAC and VOBA was $4.5 million and $5.5 million for the quarters ended June 30, 2001 and 2000, respectively. The decrease is due primarily to annuity DAC amortization. Operating expenses were $12.2 million and $7.6 million for the quarters ended June 30, 2001 and 2000, respectively. Commissions have increased $3.2 million primarily due to the increase in Medicare supplement premiums. Personnel and other operating expenses net of fees collected increased $1.4 million primarily from the acquisition of CFLIC. Operating profit before tax and intercompany eliminations was $1.2 million and $1.5 million for the quarters ended June 30, 2001 and 2000, respectively. The decrease is due to a decline in profits from the annuity line of business of $0.9 million. New annuity business contains a first year bonus interest credited rate effecting initial spreads and there have been additional marketing and administration costs associated with increased annuity sales. All other segments including Medicare Supplement improved year over year by $0.6 million. Interest Expense Interest expense was $19.7 million and $21.2 million for the quarters ended September 30, 2001 and 2000, respectively. The decrease can be attributed to interest rate reductions. Consolidated Group As a result of the foregoing, pretax earnings were $65.4 million and $63.7 million for the quarters ended September 30, 2001 and 2000, respectively. After providing for income taxes, net earnings were $41.7 million and $41.2 million for the quarters ended September 30, 2001 and 2000, respectively.
28 LIQUIDITY AND CAPITAL RESOURCES Moving and Storage Operations To meet the needs of its customers, U-Haul maintains a large inventory of rental items. In the six months ended September 30, 2001 and 2000, capital expenditures were $120.9 million and $260.9 million, respectively (See note 7 for additional discussion). These expenditures primarily reflect the expansion of the rental truck fleet. The capital required to fund these acquisitions was obtained through internally generated funds from operations and through lease financings. Cash provided by operating activities was $40.8 million and $61.0 million for the six months ended September 30, 2001 and 2000, respectively. The decrease resulted primarily from a decrease in accounts payable and accrued liabilities. At September 30, 2001, total outstanding notes and loans payable was $1,095.6 million as compared to $1,156.8 million at March 31, 2001. Real Estate Operations Cash provided (used) by operating activities was $(27.4) million and $8.3 million for the six months ended September 30, 2001 and 2000, respectively. The decrease resulted from a decrease in accrued liabilities and lower net earnings. Property and Casualty Cash used by operating activities was $21.4 million and $1.8 million for six months ended June 30, 2001 and 2000, respectively. This change resulted from increased accounts receibable and other assets and decreased net income from December 2000 to June 2001, offset by an increase in loss and loss adjusting expense and unearned premium reserves from December 2000 to June 2001. RepWest's cash and cash equivalents and short-term investment portfolio were $8.9 million and $10.4 million at June 30, 2001 and 2000, respectively. RepWest maintains a diversified securities investment portfolio, primarily in bonds, at varying maturity levels with 88.0% of the fixed-income securities consisting of investment grade securities. The maturity distribution is designed to provide sufficient liquidity to meet future cash needs. Current liquidity remains strong with current invested assets equal to 75.6% of total liabilities. The liability for reported and unreported losses is based upon company historical and industry averages. Unpaid loss adjustment expenses are based on historical ratios of loss adjustment expenses paid to losses paid. Unpaid loss and loss expenses are not discounted.
29 Life Insurance Oxford's primary sources of cash are premiums, receipts from interest-sensitive products and investment income. The primary uses of cash are operating costs and benefit payments to policyholders. Matching the investment portfolio to the cash flow demands of the types of insurance being written is an important consideration. Cash provided (used) by operating activities was $2.0 million and $(3.4) million for the six months ended June 30, 2001 and 2000, respectively. The increase in cash flows from operating activities relates to increase premium writings and the timing of a settlement offset by higher claim payments. Cash provided by financing activities were $9.1 million and $2.4 million for the six months ended June 30, 2001 and 2000, respectively. Cash flows from deferred annuity sales increase investment contract deposits, which are a component of financing activities. The increase in investment contract deposits over 2000 is due to growth in new deposits offset by withdrawals and terminations of existing deposits. In addition to cash flows from operating and financing activities, a substantial amount of liquid funds is available through Oxford's short-term portfolio. Short-term investments were $53.9 million and $51.6 million for the six months ending June 30, 2001 and 2000, respectively. Management believes that the overall sources of liquidity will continue to meet foreseeable cash needs. Consolidated Group During each of the fiscal years ended March 31, 2002, 2003 and 2004, AMERCO estimates gross capital expenditures will average approximately $232 million primarily reflecting rental fleet rotation. This level of capital expenditures, combined with a potential range of $77.5 - $175 million in annual long-term debt maturities during this same period, are expected to create annual average funding needs of approximately $310 - $407 million. The Company plans to meet these needs through the cash flows, existing lines of credit and asset sales. Credit Agreements AMERCO's operations are funded by various credit and financing arrangements, including unsecured long-term borrowings, unsecured medium-term notes and revolving lines of credit with domestic and foreign banks. Principally to finance its fleet of trucks and trailers, AMERCO routinely enters into sale and leaseback transactions. As of September 30, 2001, AMERCO had $1,095.6 million in total notes and loans payable outstanding and total unutilized lines of credit of approximately $150.0 million. Certain of AMERCO's credit agreements contain restrictive financial and other covenants, including, among others, covenants with respect to incurring additional indebtedness, maintaining certain financial ratios and placing certain additional liens on its properties, assets and restricting the issuance of certain types of preferred stock. At September 30, 2001, AMERCO was in compliance with these covenants. Reference is made to Note 5 of Notes to Consolidated Financial Statements in AMERCO's Annual Report on Form 10-K for the fiscal year ended March 31, 2001 for additional information about AMERCO's credit agreements.
30 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Reference is made to Part II, Item 7A, Quantitative and Qualitative Disclosure About Market Risk, in AMERCO's Annual Report on Form 10-K for the fiscal year ended March 31, 2001.
31 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS 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 the suits, claims or proceedings involving AMERCO, individually or in the aggregate, are expected to result in a material loss. Reference is made to Part I, Item 1, Business, in AMERCO's Annual Report on Form 10-K for the fiscal year ended March 31, 2001 for a discussion of certain environmental proceedings and to Note 15 of Notes to Consolidated Financial Statements in AMERCO's Annual Report on Form 10-K for the fiscal year ended March 31, 2001 for a discussion of the California overtime litigation.
32 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The 2001 Annual Meeting of Stockholders was held on August 31, 2001. At the 2001 Annual Meeting of Stockholders James P. Shoen and John M. Dodds were elected to serve until the 2005 Annual Meeting of Stockholders. William E. Carty and Charles J. Bayer continue as directors with terms that expire at the 2002 Annual Meeting of Stockholders; John P. Brogan and James J. Grogan continue as directors with terms that expire at the 2003 Annual Meeting of Stockholders; and Edward J. Shoen continues as a director with a term that expires at the 2004 Annual Meeting of Stockholders. The following table sets forth the votes cast for, against or withheld, as well as the number of abstentions and broker non-votes with respect to each matter voted on at the 2001 Annual Meeting of Stockholders. <TABLE> <CAPTION> Matters Votes Broker Submitted Votes Cast Cast Votes Non- To a Vote For Against Withheld Abstentions Votes <S> <C> <C> <C> <C> <C> Election of Directors James P. Shoen 18,333,462 48,720 1,215,411 28,365 - John M. Dodds 18,183,710 31,285 1,377,451 33,812 - </TABLE>
33 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit No. Description ----------- ----------- 3.1 Restated Articles of Incorporation (1) 3.2 Restated By-Laws of AMERCO as of August 27, 1997 (2) 10.1 Management Agreement between Twelve SAC Self Storage Corporation and a subsidiary of AMERCO 10.2 Management Agreement between Thirteen SAC Self Storage Corporation and a subsidiary of AMERCO 10.3 Management Agreement between Fourteen SAC Self Storage Corporation and a subsidiary of AMERCO (b) Reports on Form 8-K. A report on Form 8-K was filed on October 5, 2001 in connection with the establishment of AMERCO's Medium-Term Note Program, which provides for the issuance to the public of up to $350 million of notes with maturities of nine months or more from the date of issuance. To date, no notes have been issued under the program. _________________ (1) Incorporated by reference to AMERCO's Quarterly Report on Form 10-Q for the quarter ended December 31, 1992, file no. 1-11255. (2) Incorporated by reference to AMERCO's Quarterly Report on Form 10-Q for the quarter ended December 31, 1997, file no. 1-11255.
34 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AMERCO ------------------------------------ (Registrant) Dated: November 13, 2001 By: /S/ GARY B. HORTON ------------------------------------ Gary B. Horton, Treasurer (Principal Financial Officer)