UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 10-Q
 
(Mark One)
 
R
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended September 30, 2011

or

 
£
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from __________________ to __________________
 
     
Commission
File Number
Registrant, State of Incorporation,
Address and Telephone Number
I.R.S. Employer
Identification No.
     
 
AMERCO LOGO
 
     
1-11255
AMERCO
88-0106815
 
(A Nevada Corporation)
 
 
1325 Airmotive Way, Ste. 100
 
 
Reno, Nevada 89502-3239
 
 
Telephone (775) 688-6300
 
     
 
 
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 R    No £
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  R No    £
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer £         Accelerated filer R         Non-accelerated filer £         Smaller reporting company £
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes £ No R

           19,607,788 shares of AMERCO Common Stock, $0.25 par value, were outstanding at November 1, 2011.
 
 

 
 

 

TABLE OF CONTENTS
 
   
Page
 
PART I FINANCIAL INFORMATION
 
Item 1.
Financial Statements
 
 
a) Condensed Consolidated Balance Sheets as of September 30, 2011 (unaudited) and March 31, 2011
1
 
b) Condensed Consolidated Statements of Operations for the Quarters ended September 30, 2011 and 2010 (unaudited)
2
 
c) Condensed Consolidated Statements of Operations for the Six Months ended September 30, 2011 and 2010 (unaudited)
3
 
d) Condensed Consolidated Statements of Comprehensive Income for the Quarters and the Six Months ended September 30, 2011 and 2010 (unaudited)
4
 
e) Condensed Consolidated Statements of Cash Flows for the Six Months ended September 30, 2011 and 2010 (unaudited)
5
 
f) Notes to Condensed Consolidated Financial Statements (unaudited)
6
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
38
Item 3.
Quantitative and Qualitative Disclosures About Market Risk                                                                                                                 
56
Item 4.
Controls and Procedures                                                                                                                 
57
     
 
PART II OTHER INFORMATION
 
Item 1.
Legal Proceedings                                                                                                                 
58
Item 1A.
Risk Factors                                                                                                                 
58
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                                 
58
Item 3.
Defaults Upon Senior Securities                                                                                                                 
58
Item 4.
(Removed and Reserved)                                                                                                                 
58
Item 5.
Other Information                                                                                                                 
58
Item 6.
Exhibits                                                                                                                 
59
 

 
 

 

PART I FINANCIAL INFORMATION
 
ITEM 1. Financial Statements
 
 
AMERCO AND CONSOLIDATED ENTITIES
 
CONDENSED CONSOLIDATED BALANCE SHEETS
 
   
September 30,
   
March 31,
 
   
2011
   
2011
 
   
(Unaudited)
       
   
(In thousands, except share data)
 
ASSETS
           
Cash and cash equivalents
  $ 448,159     $ 375,496  
Reinsurance recoverables and trade receivables, net
    227,750       205,371  
Inventories, net
    57,759       59,942  
Prepaid expenses
    48,900       57,624  
Investments, fixed maturities and marketable equities
    694,150       659,809  
Investments, other
    227,935       201,868  
Deferred policy acquisition costs, net
    55,626       52,870  
Other assets
    107,499       166,633  
Related party assets
    296,016       301,968  
      2,163,794       2,081,581  
Property, plant and equipment, at cost:
               
Land
    251,307       239,177  
Buildings and improvements
    1,052,203       1,024,669  
Furniture and equipment
    304,403       310,671  
Rental trailers and other rental equipment
    254,522       249,700  
Rental trucks
    1,739,993       1,611,763  
      3,602,428       3,435,980  
Less: Accumulated depreciation
    (1,363,085 )     (1,341,407 )
Total property, plant and equipment
    2,239,343       2,094,573  
Total assets
  $ 4,403,137     $ 4,176,154  
LIABILITIES AND STOCKHOLDERS' EQUITY
               
Liabilities:
               
Accounts payable and accrued expenses
  $ 330,671     $ 304,006  
Notes, loans and leases payable
    1,478,581       1,397,842  
Policy benefits and losses, claims and loss expenses payable
    961,514       927,376  
Liabilities from investment contracts
    238,116       246,717  
Other policyholders' funds and liabilities
    5,583       8,727  
Deferred income
    31,674       27,209  
Deferred income taxes
    350,656       271,257  
Total liabilities
    3,396,795       3,183,134  
                 
Commitments and contingencies (notes 4, 8, 9 and 10)
               
Stockholders' equity:
               
Series preferred stock, with or without par value, 50,000,000 shares authorized:
               
Series A preferred stock, with no par value, 6,100,000 shares authorized;
               
6,100,000 and 5,791,700 shares issued and none and 5,791,700 outstanding as of September 30 and March 31, 2011
    -       -  
Series B preferred stock, with no par value, 100,000 shares authorized; none
               
issued and outstanding as of September 30 and March 31, 2011
    -       -  
Series common stock, with or without par value, 150,000,000 shares authorized:
               
Series A common stock of $0.25 par value, 10,000,000 shares authorized;
               
none issued and outstanding as of September 30 and March 31, 2011
    -       -  
Common stock of $0.25 par value, 150,000,000 shares authorized; 41,985,700
               
issued as of September 30 and March 31, 2011
    10,497       10,497  
Additional paid-in capital
    432,127       425,212  
Accumulated other comprehensive loss
    (66,221 )     (46,467 )
Retained earnings
    1,310,415       1,140,002  
Cost of common shares in treasury, net (22,377,912 shares as of September 30 and March 31, 2011)
    (525,653 )     (525,653 )
Cost of preferred shares in treasury, net (6,100,000 shares as of September 30 and 308,300 shares as of  March 31, 2011)
    (151,997 )     (7,189 )
Unearned employee stock ownership plan shares
    (2,826 )     (3,382 )
Total stockholders' equity
    1,006,342       993,020  
Total liabilities and stockholders' equity
  $ 4,403,137     $ 4,176,154  
 
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.

 
1

 

AMERCO AND CONSOLIDATED ENTITIES
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
   
Quarter Ended September 30,
 
   
2011
   
2010
 
   
(Unaudited)
 
   
(In thousands, except share and per share amounts)
 
Revenues:
           
Self-moving equipment rentals
  $ 511,626     $ 467,128  
Self-storage revenues
    34,008       30,647  
Self-moving and self-storage products and service sales
    59,768       56,821  
Property management fees
    4,826       4,580  
Life insurance premiums
    46,197       40,022  
Property and casualty insurance premiums
    8,749       8,300  
Net investment and interest income
    15,901       12,874  
Other revenue
    22,106       16,604  
Total revenues
    703,181       636,976  
                 
Costs and expenses:
               
Operating expenses
    294,340       270,259  
Commission expenses
    64,049       57,613  
Cost of sales
    32,446       29,603  
Benefits and losses
    44,462       37,383  
Amortization of deferred policy acquisition costs
    2,675       1,876  
Lease expense
    32,712       37,964  
Depreciation, net of (gains) on disposals of (($7,917) and ($8,921), respectively)
    48,064       44,157  
Total costs and expenses
    518,748       478,855  
                 
Earnings from operations
    184,433       158,121  
Interest expense
    (22,963 )     (21,788 )
Pretax earnings
    161,470       136,333  
Income tax expense
    (60,459 )     (51,114 )
Net earnings
    101,011       85,219  
Less: Excess of redemption value over carrying value of preferred shares redeemed
    -       (140 )
Less: Preferred stock dividends
    164       (3,101 )
Earnings available to common shareholders
  $ 101,175     $ 81,978  
Basic and diluted earnings per common share
  $ 5.20     $ 4.22  
Weighted average common shares outstanding: Basic and diluted
    19,470,948       19,427,595  
 
 
Related party revenues for the second quarter of fiscal 2012 and 2011, net of eliminations, were $11.1 million and $10.8 million, respectively.
 
Related party costs and expenses for the second quarter of fiscal 2012 and 2011, net of eliminations, were $12.6 million and $12.0 million, respectively.
 
The accompanying notes are an integral part of these condensed consolidated financial statements.

 
2

 

AMERCO AND CONSOLIDATED ENTITIES
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
       
   
Six Months Ended September 30,
 
   
2011
   
2010
 
   
(Unaudited)
 
   
(In thousands, except share and per share amounts)
 
Revenues:
           
Self-moving equipment rentals
  $ 958,174     $ 886,591  
Self-storage revenues
    65,836       58,874  
Self-moving and self-storage products and service sales
    124,146       120,111  
Property management fees
    9,561       9,116  
Life insurance premiums
    97,196       77,825  
Property and casualty insurance premiums
    15,647       14,479  
Net investment and interest income
    33,164       26,229  
Other revenue
    42,422       29,698  
Total revenues
    1,346,146       1,222,923  
                 
Costs and expenses:
               
Operating expenses
    566,315       523,393  
Commission expenses
    121,001       109,782  
Cost of sales
    65,224       61,268  
Benefits and losses
    94,392       72,805  
Amortization of deferred policy acquisition costs
    7,050       4,069  
Lease expense
    66,946       76,630  
Depreciation, net of (gains) on disposals of (($17,627) and ($17,309), respectivley)
    92,422       88,746  
Total costs and expenses
    1,013,350       936,693  
                 
Earnings from operations
    332,796       286,230  
Interest expense
    (45,596 )     (43,252 )
Pretax earnings
    287,200       242,978  
Income tax expense
    (107,966 )     (91,257 )
Net earnings
    179,234       151,721  
Less: Excess of redemption value over carrying value of preferred shares redeemed
    (5,908 )     (171 )
Less: Preferred stock dividends
    (2,913 )     (6,257 )
Earnings available to common shareholders
  $ 170,413     $ 145,293  
Basic and diluted earnings per common share
  $ 8.75     $ 7.48  
Weighted average common shares outstanding: Basic and diluted
    19,465,530       19,421,205  
 
 
Related party revenues for the first six months of fiscal 2012 and 2011, net of eliminations, were $22.0 million and $21.4 million, respectively.
 
Related party costs and expenses for the first six months of fiscal 2012 and 2011, net of eliminations, were $23.9 million and $22.6 million, respectively.
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
 
 

 
3

 

AMERCO AND CONSOLIDATED ENTITIES
 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 
 
 
Quarter Ended September 30, 2011
 
Pre-tax
   
Tax
   
Net
 
   
(Unaudited)
 
   
(In thousands)
 
Comprehensive income:
                 
Net earnings
  $ 161,470     $ (60,459 )   $ 101,011  
Other comprehensive income (loss):
                       
Foreign currency translation
    (6,749 )     -       (6,749 )
Unrealized loss on investments
    (1,373 )     741       (632 )
Change in fair value of cash flow hedges
    (12,250 )     4,655       (7,595 )
Total comprehensive income
  $ 141,098     $ (55,063 )   $ 86,035  
 
Quarter Ended September 30, 2010
 
Pre-tax
   
Tax
   
Net
 
   
(Unaudited)
 
   
(In thousands)
 
Comprehensive income:
                 
Net earnings
  $ 136,333     $ (51,114 )   $ 85,219  
Other comprehensive income (loss):
                       
Foreign currency translation
    2,097       -       2,097  
Unrealized gain on investments
    5,575       (1,927 )     3,648  
Change in fair value of cash flow hedges
    (7,485 )     2,844       (4,641 )
Total comprehensive income
  $ 136,520     $ (50,197 )   $ 86,323  
 
Six Months Ended September 30, 2011
 
Pre-tax
   
Tax
   
Net
 
   
(Unaudited)
 
   
(In thousands)
 
Comprehensive income:
                 
Net earnings
  $ 287,200     $ (107,966 )   $ 179,234  
Other comprehensive income (loss):
                       
Foreign currency translation
    (5,757 )     -       (5,757 )
Unrealized loss on investments
    (6,751 )     2,742       (4,009 )
Change in fair value of cash flow hedges
    (16,110 )     6,122       (9,988 )
Total comprehensive income
  $ 258,582     $ (99,102 )   $ 159,480  
 
Six Months Ended September 30, 2010
 
Pre-tax
   
Tax
   
Net
 
   
(Unaudited)
 
   
(In thousands)
 
Comprehensive income:
                 
Net earnings
  $ 242,978     $ (91,257 )   $ 151,721  
Other comprehensive income (loss):
                       
Foreign currency translation
    (1,779 )     -       (1,779 )
Unrealized gain on investments
    6,763       (2,249 )     4,514  
Change in fair value of cash flow hedges
    (19,568 )     7,436       (12,132 )
Total comprehensive income
  $ 228,394     $ (86,070 )   $ 142,324  
 
The accompanying notes are an integral part of these condensed consolidated financial statements.

 
4

 

AMERCO AND CONSOLIDATED ENTITIES
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
   
Six Months Ended September 30,
 
   
2011
   
2010
 
   
(Unaudited)
 
   
(In thousands)
 
 Cash flow from operating activities:
           
 Net earnings
  $ 179,234     $ 151,721  
 Adjustments to reconcile net earnings to cash provided by operations:
               
 Depreciation
    110,049       106,055  
 Amortization of deferred policy acquisition costs
    7,050       4,069  
 Change in allowance for losses on trade receivables
    (16 )     (24 )
 Change in allowance for inventory reserves
    2,008       840  
 Net gain on sale of real and personal property
    (17,627 )     (17,309 )
 Net gain on sale of investments
    (4,880 )     (1,329 )
 Deferred income taxes
    89,129       57,091  
 Net change in other operating assets and liabilities:
               
Reinsurance recoverables and trade receivables
    (22,360 )     (5,969 )
Inventories
    177       (3,662 )
Prepaid expenses
    8,702       4,975  
Capitalization of deferred policy acquisition costs
    (9,010 )     (7,377 )
Other assets
    21,973       766  
Related party assets
    5,644       6,710  
Accounts payable and accrued expenses
    11,327       20,102  
Policy benefits and losses, claims and loss expenses payable
    35,676       39,452  
Other policyholders' funds and liabilities
    (3,144 )     (1,531 )
Deferred income
    4,558       2,399  
Related party liabilities
    293       693  
 Net cash provided by operating activities
    418,783       357,672  
                 
 Cash flows from investing activities:
               
 Purchases of:
               
Property, plant and equipment
    (348,331 )     (274,240 )
Short term investments
    (138,457 )     (109,785 )
Fixed maturities investments
    (137,121 )     (122,504 )
Equity securities
    (9,056 )     (9,043 )
Preferred stock
    (1,633 )     (11,902 )
Real estate
    (5,146 )     (1,784 )
Mortgage loans
    (65,612 )     (1,308 )
 Proceeds from sale of:
               
Property, plant and equipment
    110,289       122,157  
Short term investments
    154,026       178,461  
Fixed maturities investments
    97,010       56,841  
Equity securities
    10,210       133  
Preferred stock
    1,252       -  
Real estate
    109       683  
Mortgage loans
    29,722       1,421  
 Net cash used by investing activities
    (302,738 )     (170,870 )
                 
 Cash flows from financing activities:
               
Borrowings from credit facilities
    178,267       134,556  
Principal repayments on credit facilities
    (99,102 )     (209,420 )
Debt issuance costs
    (1,316 )     (89 )
Capital lease payments
    (3,505 )     (8,369 )
Leveraged Employee Stock Ownership Plan - repayments from loan
    556       592  
Securitization deposits
    38,428       -  
Preferred stock redemption paid
    (144,289 )     -  
Preferred stock dividends paid
    (2,913 )     (6,257 )
Contribution to related party
    (518 )     -  
Investment contract deposits
    6,070       5,875  
Investment contract withdrawals
    (14,671 )     (17,409 )
 Net cash used by financing activities
    (42,993 )     (100,521 )
                 
 Effects of exchange rate on cash
    (389 )     (569 )
                 
 Increase (decrease) in cash and cash equivalents
    72,663       85,712  
 Cash and cash equivalents at the beginning of period
    375,496       244,118  
 Cash and cash equivalents at the end of period
  $ 448,159     $ 329,830  
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.

 
5

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
 
1.      Basis of Presentation
 
AMERCO, a Nevada corporation (“AMERCO”), has a second fiscal quarter that ends on the 30 th of September for each year that is referenced. Our insurance company subsidiaries have a second quarter that ends on the 30 th of June for each year that is referenced. They have been consolidated on that basis. Our insurance companies’ financial reporting processes conform to calendar year reporting as required by state insurance departments. Management believes that consolidating their calendar year into our fiscal year financial statements does not materially affect the financial position or results of operations. The Company discloses any material events occurring during the intervening period. Consequently, all references to our insurance subsidiaries’ years 2011 and 2010 correspond to fiscal 2012 and 2011 for AMERCO.
 
Accounts denominated in non-U.S. currencies have been translated into U.S. dollars. Certain amounts reported in previous years have been reclassified to conform to the current presentation.
 
The condensed consolidated balance sheet as of September 30, 2011 and the related condensed consolidated statements of operations and comprehensive income for the second quarter and the first six months and the cash flows for the first six months ended fiscal 2012 and 2011 are unaudited.
 
In our opinion, all adjustments necessary for the fair presentation of such condensed consolidated financial statements have been included. Such adjustments consist only of normal recurring items. Interim results are not necessarily indicative of results for a full year. The information in this Quarterly Report on Form 10-Q should be read in conjunction with Management’s Discussion and Analysis and financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2011.
 
Intercompany accounts and transactions have been eliminated.
 
Description of Legal Entities
 
AMERCO is the holding company for:
 
U-Haul International, Inc. (“U-Haul”),
 
Amerco Real Estate Company (“Real Estate”),
 
Repwest Insurance Company (“Repwest”), and
 
Oxford Life Insurance Company (“Oxford”).
 
Unless the context otherwise requires, the term “Company,” “we,” “us” or “our” refers to AMERCO and all of its legal subsidiaries.
 
Description of Operating Segments
 
AMERCO has three reportable segments. They are Moving and Storage, Property and Casualty Insurance and Life Insurance.
 
The Moving and Storage operating segment includes AMERCO, U-Haul, and Real Estate and the wholly-owned subsidiaries of U-Haul and Real Estate. Operations consist of the rental of trucks and trailers, sales of moving supplies, sales of towing accessories, sales of propane, the rental of self-storage spaces to the “do-it-yourself” mover and management of self-storage properties owned by others. Operations are conducted under the registered trade name U-Haul ® throughout the United States and Canada.
 
The Property and Casualty Insurance operating segment includes Repwest and its wholly-owned subsidiaries and ARCOA risk retention group (“ARCOA”). Property and Casualty Insurance provides loss adjusting and claims handling for U-Haul through regional offices across North America. Property and Casualty Insurance also underwrites components of the Safemove, Safetow, Super Safemove and Safestor protection packages to U-Haul customers. The business plan for the Property and Casualty Insurance operating segment includes offering property and casualty products in other U-Haul related programs. ARCOA is a captive insurer owned by the Company whose purpose is to provide insurance products related to the moving and storage business.

 
6

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
 
 
The Life Insurance operating segment includes Oxford and its wholly-owned subsidiaries. Oxford provides life and health insurance products primarily to the senior market through the direct writing or reinsuring of life insurance, Medicare supplement and annuity policies.
 
2. Earnings per Share
 
Net earnings for purposes of computing earnings per common share are net earnings less preferred stock dividends paid, adjusted for the price paid by us for the redemption of our preferred stock less its carrying value on our balance sheet. Preferred stock dividends include accrued dividends of AMERCO. Preferred stock dividends paid to or accrued for entities that are part of the consolidated group are eliminated in consolidation.
 
The weighted average common shares outstanding exclude post-1992 shares of the employee stock ownership plan that have not been committed to be released. The unreleased shares, net of shares committed to be released, were 131,483 and 173,803 as of September 30, 2011 and September 30, 2010, respectively.
 
On June 1, 2011, the Company redeemed all 6,100,000 shares of its issued and outstanding Series A 8½% Preferred Stock (“Series A Preferred”) at a redemption price of $25 per share plus accrued dividends through that date.  Pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 260 – Earnings Per Share (“ASC 260”), for earnings per share purposes, we recognize the deficit of the carrying amount of the Series A Preferred over the consideration paid to redeem the shares.
 
The Series A Preferred was recorded in our Additional Paid-In Capital account, net of original issue costs at $146.3 million prior to the redemption.  The Company paid $152.5 million to redeem the shares on June 1, 2011 of which $7.7 million was paid to our insurance subsidiaries in exchange for their holdings.  The difference between what was paid to redeem the shares less their carrying amount on our balance sheet, reduced by our insurance subsidiaries holdings is $5.9 million.  This amount was recognized as a reduction to our earnings available to our common shareholders for the purposes of computing earnings per share for the first six months of fiscal 2012.
 
From January 1, 2009 through March 31, 2011, our insurance subsidiaries purchased 308,300 shares of our Series A Preferred on the open market for $7.2 million.  Pursuant to ASC 260, we recognized a $0.2 million charge to net earnings in the first six months of fiscal 2011 in connection with these purchases.
 
3. Investments
 
Expected maturities may differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
 
The Company deposits bonds with insurance regulatory authorities to meet statutory requirements. The adjusted cost of bonds on deposit with insurance regulatory authorities was $14.4 million at September 30, 2011.

 
7

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
 
 
Available-for-Sale Investments
 
Available-for-sale investments at September 30, 2011 were as follows:
 
 
   
Amortized
Cost
   
Gross
Unrealized
Gains
   
Gross
Unrealized
Losses More than 12 Months
   
Gross
Unrealized
Losses Less than 12 Months
   
Estimated
Market
Value
 
   
(Unaudited)
 
   
(In thousands)
 
U.S. treasury securities and government obligations
  $ 28,550     $ 1,941     $ (19 )   $ -     $ 30,472  
U.S. government agency mortgage-backed securities
    50,646       4,390       (1 )     -       55,035  
Obligations of states and political subdivisions
    116,559       2,648       (70 )     (917 )     118,220  
Corporate securities
    424,478       24,123       (676 )     (892 )     447,033  
Mortgage-backed securities
    6,017       213       (70 )     -       6,160  
Redeemable preferred stocks
    24,371       1,012       (459 )     (34 )     24,890  
Common stocks
    27,736       12       (14,055 )     (1,353 )     12,340  
    $ 678,357     $ 34,339     $ (15,350 )   $ (3,196 )   $ 694,150  
 
The table above includes gross unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.
 
The Company sold available-for-sale securities with a fair value of $122.0 million during the first six months of fiscal 2012. The gross realized gains on these sales totaled $5.2 million. The gross realized losses on these sales totaled $0.1 million.
 
The unrealized losses of more than twelve months in the available-for-sale table are considered temporary declines. The Company tracks each investment with an unrealized loss and evaluates them on an individual basis for other-than-temporary impairments including obtaining corroborating opinions from third party sources, performing trend analysis and reviewing management’s future plans. Certain of these investments may have declines determined by management to be other-than-temporary and the Company recognizes these write-downs through earnings. The Company’s insurance subsidiaries recognized $0.1 million in other-than-temporary impairments for the second quarter and first six months of fiscal 2012. There were no write downs in the second quarter or for the first six months of fiscal 2011.
 
The investment portfolio primarily consists of corporate securities and U.S. government securities. The Company believes it monitors its investments as appropriate. The Company’s methodology of assessing other-than-temporary impairments is based on security-specific analysis as of the balance sheet date and considers various factors including the length of time to maturity, the extent to which the fair value has been less than the cost, the financial condition and the near-term prospects of the issuer, and whether the debtor is current on its contractually obligated interest and principal payments. Nothing has come to management’s attention that would lead to the belief that each issuer would not have the ability to meet the remaining contractual obligations of the security, including payment at maturity. The Company has the ability and intent not to sell its fixed maturity and common stock investments for a period of time sufficient to allow the Company to recover its costs.
 
The portion of other-than-temporary impairment related to a credit loss is recognized in earnings. The significant inputs utilized in the evaluation of mortgage backed securities credit losses include ratings, delinquency rates, and prepayment activity. The significant inputs utilized in the evaluation of asset backed securities credit losses include the time frame for principal recovery and the subordination and value of the underlying collateral.

 
8

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
 
 
Credit losses recognized in earnings for which a portion of an other-than-temporary impairment was recognized in other comprehensive income were as follows:
 
 
   
Credit Loss
 
   
(Unaudited)
 
   
(In thousands)
 
Balance at March 31, 2011
  $ 552  
Additions:
       
Other-than-temporary impairment not previously recognized
    -  
Balance at September 30, 2011
  $ 552  
 
 
 
The adjusted cost and estimated market value of available-for-sale investments at September 30, 2011, by contractual maturity, were as follows:
 
   
Amortized
Cost
   
Estimated
Market
Value
 
   
(Unaudited)
 
   
(In thousands)
 
Due in one year or less
  $ 39,532     $ 40,213  
Due after one year through five years
    150,925       159,268  
Due after five years through ten years
    173,671       183,302  
Due after ten years
    256,105       267,977  
      620,233       650,760  
                 
Mortgage backed securities
    6,017       6,160  
Redeemable preferred stocks
    24,371       24,890  
Equity securities
    27,736       12,340  
    $ 678,357     $ 694,150  
 
 

 
9

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
 
 
4. Borrowings
 
Long-Term Debt
 
Long-term debt was as follows:
 
               
September 30,
   
March 31,
 
   
2012 Rate (a)
   
Maturities
   
2011
   
2011
 
               
(Unaudited)
       
               
(In thousands)
 
Real estate loan (amortizing term)
    6.93 %     2018     $ 250,000     $ 255,000  
Real estate loan (revolving credit)
    -       2018       -       -  
Real estate loan (amortizing term)
    2.13 %     2016       25,899       11,222  
Real estate loan (revolving credit)
    1.72 %     2012       23,599       -  
Senior mortgages
    5.47% - 5.75 %     2015       466,375       476,783  
Working capital loan (revolving credit)
    -       2012       -       -  
Fleet loans (amortizing term)
    3.52% - 7.95 %     2012 - 2018       403,938       325,591  
Fleet loans (securitization)
    4.90% - 5.56 %     2014 - 2017       244,127       271,290  
Other obligations
    3.00% - 9.50 %     2011 - 2031       66,648       57,956  
Less: Other obligations held by subsidiaries
                    (2,005 )     -  
Total notes, loans and leases payable
                  $ 1,478,581     $ 1,397,842  
                                 
(a) Interest rate as of September 30, 2011, including the effect of applicable hedging instruments .
                 
 
Real Estate Backed Loans
 
Real Estate Loan
 
Amerco Real Estate Company and certain of its subsidiaries and U-Haul Company of Florida are borrowers under a Real Estate Loan. The loan has a final maturity date of August 2018. The loan is comprised of a term loan facility with initial availability of $300.0 million and a revolving credit facility with a current availability of $198.8 million. As of September 30, 2011, the outstanding balance on the Real Estate Loan was $250.0 million and the Company had the full $198.8 million available to be drawn. U-Haul International, Inc. is a guarantor of this loan.
 
The amortizing term portion of the Real Estate Loan requires monthly principal and interest payments, with the unpaid loan balance and accrued and unpaid interest due at maturity. The revolving credit portion of the Real Estate Loan requires monthly interest payments when drawn, with the unpaid loan balance and any accrued and unpaid interest due at maturity. The Real Estate Loan is secured by various properties owned by the borrowers.
 
The interest rate for the amortizing term portion, per the provisions of the amended Loan Agreement, is the applicable London Inter-Bank Offer Rate (“LIBOR”) plus the applicable margin. At September 30, 2011, the applicable LIBOR was 0.23% and the applicable margin was 1.50%, the sum of which was 1.73%. The rate on the term facility portion of the Real Estate Loan is hedged with an interest rate swap fixing the rate at 6.93% based on current margin.
 
The interest rate for the revolving credit facility, per the provision of the amended Loan Agreement, is the applicable LIBOR plus the applicable margin. The margin ranges from 1.50% to 2.00%.
 
The default provisions of the Real Estate Loan include non-payment of principal or interest and other standard reporting and change-in-control covenants. There are limited restrictions regarding our use of the funds.
 
Amerco Real Estate Company and a subsidiary of U-Haul International, Inc. entered into a revolving credit construction loan effective June 29, 2006. This loan was modified and extended on June 27, 2011. The loan is now comprised of a term loan facility with initial availability of $26.1 million and a final maturity of June 30, 2016. As of September 30, 2011, the outstanding balance was $25.9 million.

 
10

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
 
 
This Real Estate Loan requires monthly principal and interest payments, with the unpaid loan balance and any accrued and unpaid interest due at maturity. The interest rate, per the provision of the Loan Agreement, is the applicable LIBOR plus a margin of 1.90%. At September 30, 2011, the applicable LIBOR was 0.23% and the margin was 1.90%, the sum of which was 2.13%. U-Haul International, Inc. and AMERCO are guarantors of this loan. The default provisions of the loan include non-payment of principal or interest and other standard reporting and change-in-control covenants.
 
On April 29, 2011, Amerco Real Estate Company and U-Haul Company of Florida entered into a revolving credit agreement for $100.0 million. This agreement has a maturity of April 2012 with an option for a one year extension. As of September 30, 2011, the Company had $76.4 million available to be drawn. The interest rate is the applicable LIBOR plus a margin of 1.50%. At September 30, 2011, the applicable LIBOR was 0.22% and the margin was 1.50%, the sum of which was 1.72%. AMERCO and U-Haul International, Inc. are guarantors of this facility. The default provisions of the loan include non-payment of principal or interest and other standard reporting and change-in-control covenants.
 
Senior Mortgages
 
Various subsidiaries of Amerco Real Estate Company and U-Haul International, Inc. are borrowers under certain senior mortgages. These senior mortgage loan balances as of September 30, 2011 were in the aggregate amount of $415.0 million and are due July 2015. The Senior Mortgages require average monthly principal and interest payments of $3.0 million with the unpaid loan balance and accrued and unpaid interest due at maturity. These senior mortgages are secured by certain properties owned by the borrowers. The interest rates, per the provisions of these senior mortgages, are 5.68% and 5.52% per annum. Amerco Real Estate Company and U-Haul International, Inc. have provided limited guarantees of these senior mortgages. The default provisions of these senior mortgages include non-payment of principal or interest and other standard reporting and change-in-control covenants. There are limited restrictions regarding our use of the funds.
 
Various subsidiaries of the Company are borrowers under the mortgage backed loans that we also classify as senior mortgages. These loans are secured by certain properties owned by the borrowers. The loan balance of these notes totals $51.4 million as of September 30, 2011. These loans mature in 2015. Rates for these loans range from 5.47% to 5.75%. The loans require monthly principal and interest payments with the balances due upon maturity. The default provisions of the loans include non-payment of principal or interest and other standard reporting and change-in-control covenants. There are limited restrictions regarding our use of the funds.
 
Working Capital Loans
 
Amerco Real Estate Company is a borrower under an asset backed working capital loan. The maximum amount that can be drawn at any one time is $25.0 million. At September 30, 2011, the Company had the full $25.0 million available to be drawn. The loan is secured by certain properties owned by the borrower. The loan agreement provides for revolving loans, subject to the terms of the loan agreement with final maturity in November 2012. The loan requires monthly interest payments with the unpaid loan balance and accrued and unpaid interest due at maturity. U-Haul International, Inc. and AMERCO are the guarantors of this loan. The default provisions of the loan include non-payment of principal or interest and other standard reporting and change-in-control covenants. The interest rate, per the provision of the Loan Agreement, is the applicable LIBOR plus a margin of 1.50%.
 
Fleet Loans
 
Rental Truck Amortizing Loans
 
U-Haul International, Inc. and several of its subsidiaries are borrowers under amortizing term loans. The balance of the loans as of September 30, 2011 was $308.9 million with the final maturities between April 2012 and September 2018.
 
The Amortizing Loans require monthly principal and interest payments, with the unpaid loan balance and accrued and unpaid interest due at maturity. These loans were used to purchase new trucks. The interest rates, per the provision of the Loan Agreements, are the applicable LIBOR plus a margin between 0.90% and

 
11

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
 
 
2.63%. At September 30, 2011, the applicable LIBOR was between 0.22% and 0.23% and applicable margins were between 1.13% and 2.63%. The interest rates are hedged with interest rate swaps fixing the rates between 3.85% and 7.32% based on current margins. Additionally, $11.8 million of these loans are carried at a fixed rate of 7.95%.
 
AMERCO and U-Haul International, Inc. are guarantors of these loans. The default provisions of these loans include non-payment of principal or interest and other standard reporting and change-in-control covenants.
 
On December 31, 2009 a subsidiary of U-Haul International, Inc. entered into an $85.0 million term note that was used to fund cargo van and pickup acquisitions for the past two years. This term note was amended on August 26, 2011. The amount of the term note was increased to $95 million and the final maturity of the note was extended to August 2016. The agreement contains options to extend the maturity through May 2017.  The note is secured by the purchased equipment and the corresponding operating cash flows associated with their operation.  This note has a fixed interest rate of 3.52%.
 
AMERCO and U-Haul International, Inc. are guarantors of this loan. The default provisions of these loans include non-payment of principal or interest and other standard reporting and change-in-control covenants.
 
Rental Truck Securitizations
 
U-Haul S Fleet and its subsidiaries (collectively, “USF”) issued a $217.0 million asset-backed note (“2007 Box Truck Note”) on June 1, 2007. USF is a bankruptcy-remote special purpose entity wholly-owned by U-Haul International, Inc. The net proceeds from the securitized transaction were used to finance new box truck purchases throughout fiscal 2008. U.S. Bank, NA acts as the trustee for this securitization.
 
The 2007 Box Truck Note has a fixed interest rate of 5.56% with an estimated final maturity of February 2014. At September 30, 2011, the outstanding balance was $106.3 million. The note is secured by the box trucks that were purchased and the corresponding operating cash flows associated with their operation.
 
The 2007 Box Truck Note has the benefit of a financial guaranty insurance policy which guarantees the timely payment of interest on and the ultimate payment of the principal of this note.
 
2010 U-Haul S Fleet and its subsidiaries (collectively, “2010 USF”) issued a $155.0 million asset-backed note (“2010 Box Truck Note”) on October 28, 2010. 2010 USF is a bankruptcy-remote special purpose entity wholly-owned by U-Haul International, Inc. The net proceeds from the securitized transaction were used to finance new box truck purchases. U.S. Bank, NA acts as the trustee for this securitization.
 
The 2010 Box Truck Note has a fixed interest rate of 4.90% with an estimated final maturity of October 2017. At September 30, 2011, the outstanding balance was $137.8 million. The note is secured by the box trucks being purchased and the corresponding operating cash flows associated with their operation.
 
The 2007 Box Truck Note and 2010 Box Truck Note are subject to certain covenants with respect to liens, additional indebtedness of the special purpose entities, the disposition of assets and other customary covenants of bankruptcy-remote special purpose entities. The default provisions of these notes include non-payment of principal or interest and other standard reporting and change-in-control covenants.
 
Other Obligations
 
The Company entered into capital leases for new equipment between April 2008 and September 2011, with terms of the leases between 3 and 7 years. At September 30, 2011, the balance of these leases was $59.7 million.
 
In January 2010, the Company entered into a $0.5 million premium financing arrangement for two years expiring in December 2011 with a fixed rate of 3.37%. At September 30, 2011, the outstanding balance was $0.1 million.

 
12

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
 
 
In February 2011, the Company and US Bank, National Association (the “Trustee”) entered into the U-Haul Investors Club Indenture.  The Company and the Trustee entered into this indenture to provide for the issuance of notes (“U-Notes”) by the Company directly to investors over our proprietary website, uhaulinvestorsclub.com .  The U-Notes are secured by various types of collateral including rental equipment and real estate.  U-Notes are issued in smaller series that vary as to principal amount, interest rate and maturity.  U-Notes are obligations of the Company and secured by the associated collateral; they are not guaranteed by any of the Company’s affiliates or subsidiaries.
 
At September 30, 2011 the aggregate outstanding principal balance of the U-Notes issued was $6.8 million with interest rates between 3.00% and 8.00% and maturity dates between 2013 and 2031.
 
Annual Maturities of Notes, Loans and Leases Payable
 
The annual maturities of long-term debt as of September 30, 2011 for the next five years and thereafter are as follows:
 
   
Year Ending September 30,
 
   
2012
   
2013
   
2014
   
2015
   
2016
   
Thereafter
 
   
(Unaudited)
 
   
(In thousands)
 
Notes, loans and leases payable, secured
  $ 226,513     $ 112,910     $ 167,231     $ 474,254     $ 250,700     $ 246,973  
 
Interest on Borrowings
 
Interest Expense
 
Components of interest expense include the following:
 
   
Quarter Ended September 30,
 
   
2011
   
2010
 
   
(Unaudited)
 
   
(In thousands)
 
Interest expense
  $ 16,040     $ 14,586  
Capitalized interest
    (46 )     (122 )
Amortization of transaction costs
    1,058       1,049  
Interest expense resulting from derivatives
    5,911       6,275  
Total interest expense
  $ 22,963     $ 21,788  
 
 
   
Six Months Ended September 30,
 
   
2011
   
2010
 
   
(Unaudited)
 
   
(In thousands)
 
Interest expense
  $ 31,879     $ 29,011  
Capitalized interest
    (78 )     (269 )
Amortization of transaction costs
    2,094       2,154  
Interest expense resulting from derivatives
    11,701       12,356  
Total interest expense
  $ 45,596     $ 43,252  
 
Interest paid in cash including payments related to derivative contracts, amounted to $20.6 million and $19.2 million for the second quarter of fiscal 2012 and 2011, respectively and $40.9 million and $38.8 million for the first six months of fiscal 2012 and 2011, respectively.

 
13

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
 
 
Interest Rates
 
Interest rates and Company borrowings were as follows:
 
   
Revolving Credit Activity
 
   
Quarter Ended September 30,
 
   
2011
   
2010
 
   
(Unaudited)
 
   
(In thousands, except interest rates)
 
Weighted average interest rate during the quarter
    1.65 %     1.82 %
Interest rate at the end of the quarter
    1.72 %     -  
Maximum amount outstanding during the quarter
  $ 38,599     $ 75,000  
Average amount outstanding during the quarter
  $ 21,717     $ 33,804  
Facility fees
  $ 100     $ 57  
 
 
   
Revolving Credit Activity
 
   
Six Months Ended September 30,
 
   
2011
   
2010
 
   
(Unaudited)
 
   
(In thousands, except interest rates)
 
Weighted average interest rate during the first six months
    1.68 %     1.81 %
Interest rate at the end of the first six months
    1.72 %     -  
Maximum amount outstanding during the first six months
  $ 38,599     $ 111,000  
Average amount outstanding during the first six months
  $ 18,049     $ 59,585  
Facility fees
  $ 307     $ 113  
 
 
 
5. Derivatives
 
The Company manages exposure to changes in market interest rates. The Company’s use of derivative instruments is limited to highly effective interest rate swaps to hedge the risk of changes in cash flows (future interest payments) attributable to changes in LIBOR swap rates, the designated benchmark interest rate being hedged on certain of our LIBOR indexed variable rate debt. The interest rate swaps effectively fix the Company’s interest payments on certain LIBOR indexed variable rate debt. The Company monitors its positions and the credit ratings of its counterparties and does not currently anticipate non-performance by the counterparties. Interest rate swap agreements are not entered into for trading purposes.

 
14

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
 
 
Original variable rate debt amount
 
Agreement Date
 
Effective Date
 
Expiration Date
 
Designated cash flow hedge date
(Unaudited)
(In millions)
$ 142.3  
(a), (b)
 
11/15/2005
 
5/10/2006
 
4/10/2012
 
5/31/2006
  50.0  
(a)
 
6/21/2006
 
7/10/2006
 
7/10/2013
 
6/9/2006
  144.9  
(a), (b)
 
6/9/2006
 
10/10/2006
 
10/10/2012
 
6/9/2006
  300.0  
(a)
 
8/16/2006
 
8/18/2006
 
8/10/2018
 
8/4/2006
  30.0  
(a)
 
2/9/2007
 
2/12/2007
 
2/10/2014
 
2/9/2007
  20.0  
(a)
 
3/8/2007
 
3/12/2007
 
3/10/2014
 
3/8/2007
  20.0  
(a)
 
3/8/2007
 
3/12/2007
 
3/10/2014
 
3/8/2007
  19.3  
(a), (b)
 
4/8/2008
 
8/15/2008
 
6/15/2015
 
3/31/2008
  19.0  
(a)
 
8/27/2008
 
8/29/2008
 
7/10/2015
 
4/10/2008
  30.0  
(a)
 
9/24/2008
 
9/30/2008
 
9/10/2015
 
9/24/2008
  15.0  
(a), (b)
 
3/24/2009
 
3/30/2009
 
4/15/2016
 
3/25/2009
  14.7  
(a)
 
7/6/2010
 
8/15/2010
 
7/15/2017
 
7/6/2010
  25.0  
(a), (b)
 
4/26/2011
 
6/1/2011
 
6/1/2018
 
7/1/2011
  50.0  
(a), (b)
 
7/29/2011
 
8/15/2011
 
8/15/2018
 
7/29/2011
  20.0  
(a), (b)
 
8/3/2011
 
9/12/2011
 
9/10/2018
 
8/3/2011
                       
(a) interest rate swap agreement
           
(b) forward swap
                   
 
 
As of September 30, 2011, the total notional amount of the Company’s variable interest rate swaps was $555.7 million.
 
The derivative fair values located in accounts payable and accrued expenses in the balance sheets were as follows:
 
   
Liability Derivatives Fair Value as of
 
   
September 30, 2011
   
March 31, 2011
 
   
(Unaudited)
       
   
(In thousands)
 
Interest rate contracts designated as hedging instruments
  $ 66,816     $ 51,052  
 
 
       
   
The Effect of Interest Rate Contracts on the Statements of Operations
 
   
September 30, 2011
   
September 30, 2010
 
   
(Unaudited)
 
   
(In thousands)
 
Loss recognized in income on interest rate contracts
  $ 11,701     $ 12,356  
(Gain) loss recognized in AOCI on interest rate contracts (effective portion)
  $ 16,110     $ 19,568  
Loss reclassified from AOCI into income (effective portion)
  $ 12,048     $ 12,509  
(Gain) loss recognized in income on interest rate contracts (ineffective portion and amount excluded from effectiveness testing)
  $ (347 )   $ (153 )
 
 

 
15

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
 
 
Gains or losses recognized in income on derivatives are recorded as interest expense in the statements of operations. At September 30, 2011, the Company expects to reclassify $21.1 million of net losses on interest rate contracts from accumulated other comprehensive income to earnings that will offset interest payments over the next twelve months.
 
6. Stockholders’ Equity
 
From January 1, 2009 through March 31, 2011, our insurance subsidiaries purchased 308,300 shares of Series A Preferred on the open market for $7.2 million. Pursuant to ASC 260, we recognized a $0.2 million charge to net earnings for the first six months of fiscal 2011 in connection with these entities.
 
On June 1, 2011, the Company redeemed all 6,100,000 shares of its issued and outstanding Series A Preferred at a redemption price of $25 per share plus accrued dividends through that date.  Pursuant to ASC 260, for earnings per share purposes, we recognize the deficit of the carrying amount of the Series A Preferred over the consideration paid to redeem the shares.
 
The Series A Preferred was recorded in our Additional Paid-In Capital account, net of original issue costs at $146.3 million prior to the redemption. The Company paid $152.5 million to redeem the shares on June 1, 2011 of which $7.7 million was paid to our insurance subsidiaries in exchange for their holdings. The difference between what was paid to redeem the shares less their carrying amount on our balance sheet, reduced by our insurance subsidiaries holdings is $5.9 million. This amount was recognized as a reduction to our earnings available to our common shareholders for the purposes of computing earnings per share for the first six months of fiscal 2012.
 
7. Comprehensive Income (Loss)
 
A summary of accumulated other comprehensive income (loss) components, net of tax, were as follows:
 
   
Foreign Currency Translation
   
Unrealized Gain on Investments
   
Fair Market Value of Cash Flow Hedges
   
Postretirement Benefit Obligation Gain
   
Accumulated Other Comprehensive Income (Loss)
 
   
(Unaudited)
 
   
(In thousands)
 
Balance at March 31, 2011
  $ (26,028 )   $ 10,861     $ (32,438 )   $ 1,138     $ (46,467 )
Foreign currency translation
    (5,757 )     -       -       -       (5,757 )
Unrealized gain on investments
    -       (4,009 )     -       -       (4,009 )
Change in fair value of cash flow hedges
    -       -       (9,988 )     -       (9,988 )
Balance at September 30, 2011
  $ (31,785 )   $ 6,852     $ (42,426 )   $ 1,138     $ (66,221 )
 
 
8. Contingent Liabilities and Commitments
 
The Company leases a portion of its rental equipment and certain of its facilities under operating leases with terms that expire at various dates substantially through 2018, with the exception of one land lease expiring in 2034. As of September 30, 2011, AMERCO has guaranteed $143.1 million of residual values for these rental equipment assets at the end of the respective lease terms. Certain leases contain renewal and fair market value purchase options as well as mileage and other restrictions. At the expiration of the lease, the Company has the option to renew the lease, purchase the asset for fair market value, or sell the asset to a third party on behalf of the lessor. AMERCO has been leasing equipment since 1987 and has experienced no material losses relating to these types of residual value guarantees.

 
16

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
 
 
Lease commitments for leases having terms of more than one year were as follows:
 
   
Property,
Plant and
Equipment
   
Rental
Equipment
   
Total
 
   
(Unaudited)
 
         
(In thousands)
       
Year-ended September 30:
                 
2012
  $ 14,584     $ 102,047     $ 116,631  
2013
    13,459       82,465       95,924  
2014
    8,847       63,315       72,162  
2015
    676       39,926       40,602  
2016
    550       9,707       10,257  
Thereafter
    5,139       4,022       9,161  
Total
  $ 43,255     $ 301,482     $ 344,737  
 
9. Contingencies
 
Shoen
 
In September 2002, Paul F. Shoen filed a shareholder derivative lawsuit in the Second Judicial District Court of the State of Nevada, Washoe County, captioned Paul F. Shoen vs. SAC Holding Corporation et al ., CV 02-05602, seeking damages and equitable relief on behalf of AMERCO from SAC Holdings and certain current and former members of the AMERCO Board of Directors, including Edward J. Shoen, Mark V. Shoen and James P. Shoen as Defendants. AMERCO is named as a nominal Defendant in the case. The complaint alleges breach of fiduciary duty, self-dealing, usurpation of corporate opportunities, wrongful interference with prospective economic advantage and unjust enrichment and seeks the unwinding of sales of self-storage properties by subsidiaries of AMERCO to SAC prior to the filing of the complaint. The complaint seeks a declaration that such transfers are void as well as unspecified damages. In October 2002, the Defendants filed motions to dismiss the complaint. Also in October 2002, Ron Belec filed a derivative action in the Second Judicial District Court of the State of Nevada, Washoe County, captioned Ron Belec vs. William E. Carty, et al ., CV 02-06331 and in January 2003, M.S. Management Company, Inc. filed a derivative action in the Second Judicial District Court of the State of Nevada, Washoe County, captioned M.S. Management Company, Inc. vs. William E. Carty, et al ., CV 03-00386. Two additional derivative suits were also filed against these parties. Each of these suits is substantially similar to the Paul F. Shoen case. The Court consolidated the five cases and thereafter dismissed these actions in May 2003, concluding that the AMERCO Board of Directors had the requisite level of independence required in order to have these claims resolved by the Board. Plaintiffs appealed this decision and, in July 2006, the Nevada Supreme Court reversed the ruling of the trial court and remanded the case to the trial court for proceedings consistent with its ruling, allowing the Plaintiffs to file an amended complaint and plead in addition to substantive claims, demand futility.
 
In November 2006, the Plaintiffs filed an amended complaint. In December 2006, the Defendants filed motions to dismiss, based on various legal theories. In March 2007, the Court denied AMERCO’s motion to dismiss regarding the issue of demand futility, stating that “Plaintiffs have satisfied the heightened pleading requirements of demand futility by showing a majority of the members of the AMERCO Board of Directors were interested parties in the SAC transactions.” The Court heard oral argument on the remainder of the Defendants’ motions to dismiss, including the motion (“Goldwasser Motion”) based on the fact that the subject matter of the lawsuit had been settled and dismissed in earlier litigation known as Goldwasser v. Shoen , C.V.N.-94-00810-ECR (D.Nev), Washoe County, Nevada. In addition, in September and October 2007, the Defendants filed Motions for Judgment on the Pleadings or in the Alternative Summary Judgment, based on the fact that the stockholders of the Company had ratified the underlying transactions at the 2007 annual meeting of stockholders of AMERCO. In December 2007, the Court denied this motion. This ruling does not preclude a renewed motion for summary judgment after discovery and further proceedings on these issues.

 
17

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
 
 
On April 7, 2008, the litigation was dismissed, on the basis of the Goldwasser Motion. On May 8, 2008, the Plaintiffs filed a notice of appeal of such dismissal to the Nevada Supreme Court. On May 20, 2008, AMERCO filed a cross appeal relating to the denial of its Motion to Dismiss in regard to demand   futility.
 
On May 12, 2011, the Nevada Supreme Court affirmed in part, reversed in part, and remanded the case for further proceedings.  First, the Court ruled that the Goldwasser settlement did not release claims that arose after the agreement and, therefore, reversed the trial court’s dismissal of the Complaint on that ground. Second, the Court affirmed the district court’s determination that the in pari delicto defense is available in a derivative suit and reversed and remanded to the district court to determine if the defense applies to this matter.  Third, the Court remanded to the district court to conduct an evidentiary hearing to determine whether demand upon the AMERCO Board was, in fact, futile.  Fourth, the Court invited AMERCO to seek a ruling from the district court as to the legal effect of the AMERCO Shareholders’ 2008 ratification of the underlying AMERCO/SAC transactions.
 
Last, as to individual claims for relief, the Court affirmed the district court’s dismissal of the breach of fiduciary duty of loyalty claims as to all defendants except Mark Shoen.  The Court affirmed the district court’s dismissal of the breach of fiduciary duty: ultra vires Acts claim as to all defendants. The Court reversed the district court’s dismissal of aiding and abetting a breach of fiduciary duty and unjust enrichment claims against the SAC entities.  The Court reversed the trial court’s dismissal of the claim for wrongful interference with prospective economic advantage as to all defendants.
 
On remand, on July 22, 2011, AMERCO filed a Motion for Summary Judgment based upon the Shareholder’s Ratification of the SAC transactions. In addition, on August 29, 2011, certain defendants filed a Motion to Dismiss Plaintiffs’ Claim for Wrongful Interference with Prospective Economic Advantage. On August 31, 2011, the trial court held a status conference and entered an order setting forth the briefing schedule for the two motions.
 
Environmental
 
Compliance with environmental requirements of federal, state and local governments may significantly affect Real Estate’s business operations. Among other things, these requirements regulate the discharge of materials into the air, land and water 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 result in a material adverse effect on AMERCO’s financial position or results of operations.
 
Other
 
The Company is named as a defendant in various other litigation and claims arising out of the normal course of business. In management’s opinion, none of these other matters will have a material effect on the Company’s financial position and results of operations.
 
10. Related Party Transactions
 
As set forth in the Audit Committee Charter and consistent with Nasdaq Listing Rules, the Company’s Audit Committee (the “Audit Committee”) reviews and maintains oversight over related party transactions which are required to be disclosed under the Securities and Exchange Commission (“SEC”) rules and regulations. Accordingly, all such related party transactions are submitted to the Audit Committee for ongoing review and oversight. The Company’s internal processes ensure that the Company’s legal and finance departments identify and monitor potential related party transactions which may require disclosure and Audit Committee oversight.

 
18

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
 
 
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 completed on terms substantially equivalent to those that would prevail in arm’s-length transactions.
 
SAC Holding Corporation and SAC Holding II Corporation, (collectively “SAC Holdings”) were established in order to acquire self-storage properties. These properties are being managed by the Company pursuant to management agreements. In the past, the Company has sold various self-storage properties to SAC Holdings, and such sales provided significant cash flows to the Company.
 
Management believes that the sales of self-storage properties to SAC Holdings has provided a unique structure for the Company to earn moving equipment rental revenues and property management fee revenues from the SAC Holdings self-storage properties that the Company manages.
 
Related Party Revenue
 
   
Quarter Ended September 30,
 
   
2011
   
2010
 
   
(Unaudited)
 
   
(In thousands)
 
U-Haul interest income revenue from SAC Holdings
  $ 4,858     $ 4,815  
U-Haul interest income revenue from Private Mini
    1,366       1,374  
U-Haul management fee revenue from SAC Holdings
    3,821       3,598  
U-Haul management fee revenue from Private Mini
    554       543  
U-Haul management fee revenue from Mercury
    451       438  
    $ 11,050     $ 10,768  
 
 
   
Six Months Ended September 30,
 
   
2011
   
2010
 
   
(Unaudited)
 
   
(In thousands)
 
U-Haul interest income revenue from SAC Holdings
  $ 9,674     $ 9,585  
U-Haul interest income revenue from Private Mini
    2,719       2,738  
U-Haul management fee revenue from SAC Holdings
    7,550       7,157  
U-Haul management fee revenue from Private Mini
    1,106       1,083  
U-Haul management fee revenue from Mercury
    905       875  
    $ 21,954     $ 21,438  
 
During the first six months of fiscal 2012, subsidiaries of the Company held various junior unsecured notes of SAC Holdings. Substantially all of the equity interest of SAC Holdings is controlled by Blackwater Investments, Inc. (“Blackwater”). Blackwater is wholly-owned by Mark V. Shoen, a significant shareholder and executive officer of AMERCO. The Company does not have an equity ownership interest in SAC Holdings. The Company received cash interest payments of $10.0 million and $8.8 million, from SAC Holdings during the first six months of fiscal 2012 and 2011, respectively. The largest aggregate amount of notes receivable outstanding during the first six months of fiscal 2012 was $196.2 million and the aggregate notes receivable balance at September 30, 2011 was $195.8 million. In accordance with the terms of these notes, SAC Holdings may prepay the notes without penalty or premium at any time. The scheduled maturities of these notes are between 2019 and 2024.
 
Interest accrues on the outstanding principal balance of junior notes of SAC Holdings that the Company holds at a 9.0% rate per annum. A fixed portion of that basic interest is paid on a monthly basis. Additional interest can be earned on notes totaling $122.2 million of principal depending upon the amount of remaining basic interest and the cash flow generated by the underlying property. This amount is referred to as the “cash flow-based calculation.”

 
19

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
 
 
To the extent that this cash flow-based calculation exceeds the amount of remaining basic interest, contingent interest would be paid on the same monthly date as the fixed portion of basic interest. To the extent that the cash flow-based calculation is less than the amount of remaining basic interest, the additional interest payable on the applicable monthly date is limited to the amount of that cash flow-based calculation. In such a case, the excess of the remaining basic interest over the cash flow-based calculation is deferred. In addition, subject to certain contingencies, the junior notes provide that the holder of the note is entitled to receive a portion of the appreciation realized upon, among other things, the sale of such property by SAC Holdings. To date, no excess cash flows related to these arrangements have been earned or paid.
 
During the first six months of fiscal 2012, AMERCO and U-Haul held various junior notes issued by Private Mini Storage Realty, L.P. (“Private Mini”). The equity interests of Private Mini are ultimately controlled by Blackwater. The Company received cash interest payments of $2.7 million and $2.8 million from Private Mini during the first six months of fiscal 2012 and 2011, respectively. The largest aggregate amount outstanding during the first six months of fiscal 2012 was $66.7 million and the aggregate notes receivable balance at September 30, 2011 was $66.5 million.
 
The Company currently manages the self-storage properties owned or leased by SAC Holdings, Mercury Partners, L.P. (“Mercury”), Four SAC Self-Storage Corporation (“4 SAC”), Five SAC Self-Storage Corporation (“5 SAC”), Galaxy Investments, L.P. (“Galaxy”) and Private Mini pursuant to a standard form of management agreement, under which the Company receives a management fee of between 4% and 10% of the gross receipts plus reimbursement for certain expenses. The Company received management fees, exclusive of reimbursed expenses, of $13.5 million from the above mentioned entities during the first six months of fiscal 2012 and 2011. This management fee is consistent with the fee received for other properties the Company previously managed for third parties. SAC Holdings, 4 SAC, 5 SAC, Galaxy and Private Mini are substantially controlled by Blackwater. Mercury is substantially controlled by Mark V. Shoen. James P. Shoen, a significant shareholder and director of AMERCO, has an interest in Mercury.
 
Related Party Costs and Expenses
 
   
Quarter Ended September 30,
 
   
2011
   
2010
 
   
(Unaudited)
 
   
(In thousands)
 
U-Haul lease expenses to SAC Holdings
  $ 503     $ 622  
U-Haul commission expenses to SAC Holdings
    11,379       10,628  
U-Haul commission expenses to Private Mini
    763       724  
    $ 12,645     $ 11,974  
 
 
   
Six Months Ended September 30,
 
   
2011
   
2010
 
   
(Unaudited)
 
   
(In thousands)
 
U-Haul lease expenses to SAC Holdings
  $ 1,126     $ 1,245  
U-Haul commission expenses to SAC Holdings
    21,382       20,044  
U-Haul commission expenses to Private Mini
    1,406       1,340  
    $ 23,914     $ 22,629  
 
The Company leases space for marketing company offices, vehicle repair shops and hitch installation centers from subsidiaries of SAC Holdings, 5 SAC and Galaxy. The terms of the leases are similar to the terms of leases for other properties owned by unrelated parties that are leased to the Company.

 
20

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
 
 
At September 30, 2011, subsidiaries of SAC Holdings, 4 SAC, 5 SAC, Galaxy and Private Mini acted as U-Haul independent dealers. The financial and other terms of the dealership contracts with the aforementioned companies and their subsidiaries are substantially identical to the terms of those with the Company’s other independent dealers whereby commissions are paid by the Company based upon equipment rental revenues
 
These agreements and notes with subsidiaries of SAC Holdings, 4 SAC, 5 SAC, Galaxy and Private Mini, excluding Dealer Agreements, provided revenues of $21.1 million, expenses of $1.1 million and cash flows of $23.9 million during the first six months of fiscal 2012. Revenues and commission expenses related to the Dealer Agreements were $108.1 million and $22.8 million, respectively during the first six months of fiscal 2012.
 
The Company adopted Accounting Standards Update 2009-17 (“ASU 2009-17”), which amends the FASB ASC for the issuance of FASB Statement 167, Amendments to FASB Interpretation 46(R) , as of April 1, 2010.  Management determined that the junior notes of SAC Holdings and Private Mini and the management agreements with SAC Holdings, Mercury, 4 SAC, 5 SAC, Galaxy, and Private Mini represent potential variable interests for the Company.  Management evaluated whether it should be identified as the primary beneficiary of one or more of these variable interest entity’s (“VIE’s”) using a two step approach in which management (i) identified all other parties that hold interests in the VIE’s, and (ii) determined if any variable interest holder has the power to direct the activities of the VIE’s that most significantly impact their economic performance.
 
Management determined that they do not have a variable interest in the holding entities Mercury, 4 SAC, 5 SAC, or Galaxy through management agreements which are with the individual operating entities or through the issuance of junior debt; therefore, the Company is precluded from consolidating these entities, which is consistent with the accounting treatment immediately prior to adopting ASU 2009-17.
 
The Company has junior debt with the holding entities SAC Holding Corporation, SAC Holding II Corporation, and Private Mini which represents a variable interest in each individual entity. Though the Company has certain protective rights within these debt agreements, the Company has no present influence or control over these holding entities unless their protective rights become exercisable, which management considers unlikely based on their payment history.  As a result, the Company has no basis under ASC 810 - Consolidation (“ ASC 810”) to consolidate these entities, which is consistent with the accounting treatment immediately prior to adopting ASU 2009-17.
 
The Company does not have the power to direct the activities that most significantly impact the economic performance of the individual operating entities which have management agreements with U-Haul.  Through control of the holding entities assets, and its ability and history of making key decisions relating to the entity and its assets, Blackwater, and its owner, are the variable interest holder with the power to direct the activities that most significantly impact each of the individual holding entities and the individual operating entities’ performance.  As a result, the Company has no basis under ASC 810 to consolidate these entities, which is consistent with the accounting treatment immediately prior to adopting ASU 2009-17.

 
21

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
 
 
The Company has not provided financial or other support explicitly or implicitly during the first six months ended September 30, 2011 to any of these entities that it was not previously contractually required to provide. The carrying amount and classification of the assets and liabilities in the Company’s balance sheets that relate to the Company’s variable interests in the aforementioned entities are as follows, which approximate the maximum exposure to loss as a result of the Company’s involvement with these related party entities:
 
Related Party Assets
 
   
September 30,
   
March 31,
 
   
2011
   
2011
 
   
(Unaudited)
       
   
(In thousands)
 
U-Haul notes, receivables and interest from Private Mini
  $ 69,344     $ 69,201  
U-Haul notes receivable from SAC Holdings
    195,831       196,191  
U-Haul interest receivable from SAC Holdings
    16,816       17,096  
U-Haul receivable from SAC Holdings
    12,645       16,346  
U-Haul receivable from Mercury
    2,529       3,534  
Other (a)
    (1,149 )     (400 )
    $ 296,016     $ 301,968  
 
(a) Timing differences for intercompany balances with insurance subsidiaries.
 
From January 1, 2009 through March 31, 2011, our insurance subsidiaries purchased 308,300 shares of our Series A Preferred on the open market for $7.2 million.
 
11. Consolidating Financial Information by Industry Segment
 
AMERCO’s three reportable segments are:
 
·  
Moving and Storage, comprised of AMERCO, U-Haul, and Real Estate and the subsidiaries of U-Haul and Real Estate,
 
·  
Property and Casualty Insurance, comprised of Repwest and its subsidiaries and ARCOA, and
 
·  
Life Insurance, comprised of Oxford and its subsidiaries.
 
Management tracks revenues separately, but does not report any separate measure of the profitability for rental vehicles, rentals of self-storage spaces and sales of products that are required to be classified as a separate operating segment and accordingly does not present these as separate reportable segments. Deferred income taxes are shown as liabilities on the condensed consolidating statements.
 
The information includes elimination entries necessary to consolidate AMERCO, the parent, with its subsidiaries.
 
Investments in subsidiaries are accounted for by the parent using the equity method of accounting.
 
 

 
22

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
 
 
11. Financial Information by Consolidating Industry Segment:
 
Consolidating balance sheets by industry segment as of September 30, 2011 are as follows:
 
 
   
Moving & Storage
        AMERCO Legal Group  
   
AMERCO
   
U-Haul
   
Real Estate
   
Eliminations
     
Moving & Storage
Consolidated
   
Property & Casualty Insurance (a)
   
Life
Insurance (a)
   
Eliminations
     
AMERCO
Consolidated
 
   
(Unaudited)
 
   
(In thousands)
 
Assets:
     
Cash and cash equivalents
  $ 289,563     $ 131,044     $ 818     $ -       $ 421,425     $ 16,812     $ 9,922     $ -       $ 448,159  
Reinsurance recoverables and trade receivables, net
    -       26,401       -       -         26,401       181,613       19,738       (2 )
(c)
    227,750  
Inventories, net
    -       57,759       -       -         57,759       -       -       -         57,759  
Prepaid expenses
    5,426       43,088       386       -         48,900       -       -       -         48,900  
Investments, fixed maturities and marketable equities
    10,880       -       -       -         10,880       118,816       564,454       -         694,150  
Investments, other
    -       8,409       32,706       -         41,115       102,141       85,429       (750 )
(c)
    227,935  
Deferred policy acquisition costs, net
    -       -       -       -         -       -       55,626       -         55,626  
Other assets
    695       77,839       28,125       -         106,659       502       338       -         107,499  
Related party assets
    1,072,200       241,951       96       (1,015,373 )
(c)
    298,874       3,455       -       (6,313 )
(c)
    296,016  
      1,378,764       586,491       62,131       (1,015,373 )       1,012,013       423,339       735,507       (7,065 )       2,163,794  
                                                                             
Investment in subsidiaries
    (640 )     -       -       355,025  
(b)
    354,385       -       -       (354,385 )
(b)
    -  
                                                                             
Property, plant and equipment, at cost:
                                                                           
Land
    -       51,451       199,856       -         251,307       -       -       -         251,307  
Buildings and improvements
    -       158,789       893,414       -         1,052,203       -       -       -         1,052,203  
Furniture and equipment
    167       285,885       18,351       -         304,403       -       -       -         304,403  
Rental trailers and other rental equipment
    -       254,522       -       -         254,522       -       -       -         254,522  
Rental trucks
    -       1,739,993       -       -         1,739,993       -       -       -         1,739,993  
      167       2,490,640       1,111,621       -         3,602,428       -       -       -         3,602,428  
Less:  Accumulated depreciation
    (142 )     (1,011,475 )     (351,468 )     -         (1,363,085 )     -       -       -         (1,363,085 )
Total property, plant and equipment
    25       1,479,165       760,153       -         2,239,343       -       -       -         2,239,343  
Total assets
  $ 1,378,149     $ 2,065,656     $ 822,284     $ (660,348 )     $ 3,605,741     $ 423,339     $ 735,507     $ (361,450 )     $ 4,403,137  
                                                                             
(a) Balances as of June 30, 2011
                                                                           
(b) Eliminate investment in subsidiaries
                                                                           
(c) Eliminate intercompany receivables and payables
                                                                           
 
 

 
23

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
 
 
Consolidating balance sheets by industry segment as of September 30, 2011 are as follows:
 
 
   
Moving & Storage
        AMERCO Legal Group  
   
AMERCO
   
U-Haul
   
Real Estate
   
Eliminations
     
Moving & Storage
Consolidated
   
Property & Casualty Insurance (a)
   
Life
Insurance (a)
   
Eliminations
     
AMERCO
Consolidated
 
   
(Unaudited)
 
   
(In thousands)
 
Liabilities:
                                                         
Accounts payable and accrued expenses
  $ 929     $ 319,772     $ 3,873     $ -       $ 324,574     $ -     $ 6,115     $ (18 )
(c)
  $ 330,671  
Notes, loans and leases payable
    -       752,425       728,161       -         1,480,586       -       -       (2,005 )
(c)
    1,478,581  
Policy benefits and losses, claims and loss expenses payable
    -       391,316       -       -         391,316       289,970       280,228       -         961,514  
Liabilities from investment contracts
    -       -       -       -         -       -       238,116       -         238,116  
Other policyholders' funds and liabilities
    -       -       -       -         -       2,973       2,610       -         5,583  
Deferred income
    -       31,674       -       -         31,674       -       -       -         31,674  
Deferred income taxes
    368,052       -       -       -         368,052       (28,553 )     11,157       -         350,656  
Related party liabilities
    -       776,654       241,916       (1,015,373 )
(c)
    3,197       1,653       192       (5,042 )
(c)
    -  
Total liabilities
    368,981       2,271,841       973,950       (1,015,373 )       2,599,399       266,043       538,418       (7,065 )       3,396,795  
                                                                             
Stockholders' equity:
                                                                           
Series preferred stock:
                                                                           
Series A preferred stock
    -       -       -       -         -       -       -       -         -  
Series B preferred stock
    -       -       -       -         -       -       -       -         -  
Series A common stock
    -       -       -       -         -       -       -       -         -  
Common stock
    10,497       540       1       (541 )
(b)
    10,497       3,301       2,500       (5,801 )
(b)
    10,497  
Additional paid-in capital
    432,337       121,230       147,941       (269,171 )
(b)
    432,337       89,620       26,271       (116,101 ) (b,d )     432,127  
Accumulated other comprehensive income (loss)
    (66,221 )     (73,073 )     -       73,073  
(b)
    (66,221 )     2,695       13,246       (15,941 )
(b)
    (66,221 )
Retained earnings (deficit)
    1,310,205       (252,056 )     (299,608 )     551,664  
(b)
    1,310,205       61,680       155,072       (216,542 ) (b,d)     1,310,415  
Cost of common shares in treasury, net
    (525,653 )     -       -       -         (525,653 )     -       -       -           (525,653 )
Cost of preferred shares in treasury, net
    (151,997 )     -       -       -         (151,997 )     -       -       -           (151,997 )
Unearned employee stock ownership plan shares
    -       (2,826 )     -       -         (2,826 )     -       -       -           (2,826 )
Total stockholders' equity (deficit)
    1,009,168       (206,185 )     (151,666 )     355,025         1,006,342       157,296       197,089       (354,385 )         1,006,342  
Total liabilities and stockholders' equity
  $ 1,378,149     $ 2,065,656     $ 822,284     $ (660,348 )     $ 3,605,741     $ 423,339     $ 735,507     $ (361,450 )       $ 4,403,137  
                                                                               
                                                                               
(a) Balances as of June 30, 2011
                                                                             
(b) Eliminate investment in subsidiaries
                                                                             
(c) Eliminate intercompany receivables and payables
                                                                             
(d) Eliminate intercompany preferred stock investment
                                                                             
 

 
24

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
 
 
Consolidating balance sheets by industry segment as of March 31, 2011 are as follows:
 
   
Moving & Storage
        AMERCO Legal Group  
   
AMERCO
   
U-Haul
   
Real Estate
   
Eliminations
     
Moving & Storage
Consolidated
   
Property & Casualty Insurance (a)
   
Life
Insurance (a)
   
Eliminations
     
AMERCO
Consolidated
 
       
   
(In thousands)
 
Assets:
     
Cash and cash equivalents
  $ 250,104     $ 72,634     $ 757     $ -       $ 323,495     $ 14,700     $ 37,301     $ -       $ 375,496  
Reinsurance recoverables and trade receivables, net
    -       19,210       -       -         19,210       173,256       12,905       -         205,371  
Inventories, net
    -       59,942       -       -         59,942       -       -       -         59,942  
Prepaid expenses
    15,966       41,533       125       -         57,624       -       -       -         57,624  
Investments, fixed maturities and marketable equities
    22,946       -       -       -         22,946       126,240       518,620       (7,997 )
(d)
    659,809  
Investments, other
    -       10,385       18,605       -         28,990       90,615       82,263       -         201,868  
Deferred policy acquisition costs, net
    -       -       -       -         -       -       52,870       -         52,870  
Other assets
    2,863       134,330       28,251       -         165,444       877       312       -         166,633  
Related party assets
    1,146,296       247,024       72       (1,089,457 )
(c)
    303,935       2,801       -       (4,768 )
(c)
    301,968  
      1,438,175       585,058       47,810       (1,089,457 )       981,586       408,489       704,271       (12,765 )       2,081,581  
                                                                             
Investment in subsidiaries
    (138,714 )     -       -       482,025  
(b)
    343,311       -       -       (343,311 )
(b)
    -  
                                                                             
Property, plant and equipment, at cost:
                                                                           
Land
    -       46,651       192,526       -         239,177       -       -       -         239,177  
Buildings and improvements
    -       150,585       874,084       -         1,024,669       -       -       -         1,024,669  
Furniture and equipment
    203       292,242       18,226       -         310,671       -       -       -         310,671  
Rental trailers and other rental equipment
    -       249,700       -       -         249,700       -       -       -         249,700  
Rental trucks
    -       1,611,763       -       -         1,611,763       -       -       -         1,611,763  
      203       2,350,941       1,084,836       -         3,435,980       -       -       -         3,435,980  
Less:  Accumulated depreciation
    (176 )     (996,192 )     (345,039 )     -         (1,341,407 )     -       -       -         (1,341,407 )
Total property, plant and equipment
    27       1,354,749       739,797       -         2,094,573       -       -       -         2,094,573  
Total assets
  $ 1,299,488     $ 1,939,807     $ 787,607     $ (607,432 )     $ 3,419,470     $ 408,489     $ 704,271     $ (356,076 )     $ 4,176,154  
                                                                             
(a) Balances as of December 31, 2010
                                                                           
(b) Eliminate investment in subsidiaries
                                                                           
(c) Eliminate intercompany receivables and payables
                                                                           
(d) Eliminate intercompany preferred stock investment
                                                                           
 
 

 
25

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
 
 
Consolidating balance sheets by industry segment as of March 31, 2011 are as follows:
 
   
Moving & Storage
        AMERCO Legal Group  
   
AMERCO
   
U-Haul
   
Real Estate
   
Eliminations
     
Moving & Storage
Consolidated
   
Property & Casualty Insurance (a)
   
Life
Insurance (a)
   
Eliminations
       
AMERCO
Consolidated
 
       
   
(In thousands)
 
Liabilities:
                                                           
Accounts payable and accrued expenses
  $ 854     $ 294,387     $ 3,729     $ -       $ 298,970     $ -     $ 5,036     $ -         $ 304,006  
Notes, loans and leases payable
    -       693,801       704,041       -         1,397,842       -       -       -           1,397,842  
Policy benefits and losses, claims and loss expenses payable
    -       397,381       -       -         397,381       276,726       253,269       -           927,376  
Liabilities from investment contracts
    -       -       -       -         -       -       246,717       -           246,717  
Other policyholders' funds and liabilities
    -       -       -       -         -       4,820       3,907       -           8,727  
Deferred income
    -       27,209       -       -         27,209       -       -       -           27,209  
Deferred income taxes
    294,518       -       -       -         294,518       (29,519 )     6,541       (283 )
(d)
      271,257  
Related party liabilities
    -       858,655       233,618       (1,089,457 )
(c)
    2,816       1,816       136       (4,768 )
(c)
      -  
Total liabilities
    295,372       2,271,433       941,388       (1,089,457 )       2,418,736       253,843       515,606       (5,051 )         3,183,134  
                                                                               
Stockholders' equity:
                                                                             
Series preferred stock:
                                                                             
Series A preferred stock
    -       -       -       -         -       -       -       -           -  
Series B preferred stock
    -       -       -       -         -       -       -       -           -  
Series A common stock
    -       -       -       -         -       -       -       -           -  
Common stock
    10,497       540       1       (541 )
(b)
    10,497       3,301       2,500       (5,801 )
(b)
      10,497  
Additional paid-in capital
    432,611       121,230       147,941       (269,171 )
(b)
    432,611       89,620       26,271       (123,290 ) (b,d )     425,212  
Accumulated other comprehensive income (loss)
    (45,942 )     (57,328 )     -       57,328  
(b)
    (45,942 )     2,707       9,951       (13,183 ) (b,d )     (46,467 )
Retained earnings (deficit)
    1,139,792       (392,686 )     (301,723 )     694,409  
(b)
    1,139,792       59,018       149,943       (208,751 ) (b,d )     1,140,002  
Cost of common shares in treasury, net
    (525,653 )     -       -       -         (525,653 )     -       -       -           (525,653 )
Cost of preferred shares in treasury, net
    (7,189 )     -       -       -         (7,189 )     -       -       -           (7,189 )
Unearned employee stock ownership plan shares
    -       (3,382 )     -       -         (3,382 )     -       -       -           (3,382 )
Total stockholders' equity (deficit)
    1,004,116       (331,626 )     (153,781 )     482,025         1,000,734       154,646       188,665       (351,025 )         993,020  
Total liabilities and stockholders' equity
  $ 1,299,488     $ 1,939,807     $ 787,607     $ (607,432 )     $ 3,419,470     $ 408,489     $ 704,271     $ (356,076 )       $ 4,176,154  
                                                                               
(a) Balances as of December 31, 2010
                                                                             
(b) Eliminate investment in subsidiaries
                                                                             
(c) Eliminate intercompany receivables and payables
                                                                       
(d) Eliminate intercompany preferred stock investment
                                                                       
 
 

 
26

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
 
 
Consolidating statement of operations by industry segment for the quarter ended September 30, 2011 are as follows:
 
   
Moving & Storage
        AMERCO Legal Group  
   
AMERCO
   
U-Haul
   
Real Estate
   
Eliminations
     
Moving & Storage
Consolidated
   
Property & Casualty Insurance (a)
   
Life
Insurance (a)
   
Eliminations
         
AMERCO
Consolidated
 
   
(Unaudited)
 
   
(In thousands)
 
Revenues:
                                                             
Self-moving equipment rentals
  $ -     $ 512,073     $ -     $ -       $ 512,073     $ -     $ -     $ (447 )  
(c)
    $ 511,626  
Self-storage revenues
    -       33,710       298       -         34,008       -       -       -             34,008  
Self-moving and self-storage products and service sales
    -       59,768       -       -         59,768       -       -       -             59,768  
Property management fees
    -       4,826       -       -         4,826       -       -       -             4,826  
Life insurance premiums
    -       -       -       -         -       -       46,197       -             46,197  
Property and casualty insurance premiums
    -       -       -       -         -       8,749       -       -             8,749  
Net investment and interest income
    1,549       5,150       110       -         6,809       2,924       6,662       (494 )   (b,e )     15,901  
Other revenue
    -       23,517       19,894       (21,277 )
(b)
    22,134       -       333       (361 )  
(b)
      22,106  
Total revenues
    1,549       639,044       20,302       (21,277 )       639,618       11,673       53,192       (1,302 )           703,181  
                                                                                 
Costs and expenses:
                                                                               
Operating expenses
    1,862       302,481       2,339       (21,277 )
(b)
    285,405       3,620       6,115       (800 )  
(b,c
)     294,340  
Commission expenses
    -       64,049       -       -         64,049       -       -       -             64,049  
Cost of sales
    -       32,446       -       -         32,446       -       -       -             32,446  
Benefits and losses
    -       -       -       -         -       5,856       38,606       -             44,462  
Amortization of deferred policy acquisition costs
    -       -       -       -         -       -       2,675       -             2,675  
Lease expense
    21       32,990       7       -         33,018       -       -       (306 )  
(b)
      32,712  
Depreciation, net of (gains) losses on disposals
    2       44,620       3,442       -         48,064       -       -       -             48,064  
Total costs and expenses
    1,885       476,586       5,788       (21,277 )       462,982       9,476       47,396       (1,106 )           518,748  
                                                                                 
Equity in earnings of subsidiaries
    86,685       -       -       (81,495 )
(d)
    5,190       -       -       (5,190 )  
(d)
      -  
                                                                                 
Earnings from operations
    86,349       162,458       14,514       (81,495 )       181,826       2,197       5,796       (5,386 )           184,433  
Interest income (expense)
    23,716       (34,131 )     (12,573 )     -         (22,988 )     -       -       25    
(b)
      (22,963 )
Pretax earnings
    110,065       128,327       1,941       (81,495 )       158,838       2,197       5,796       (5,361 )           161,470  
Income tax expense
    (8,883 )     (47,881 )     (892 )     -         (57,656 )     (769 )     (2,034 )     -             (60,459 )
Net earnings
    101,182       80,446       1,049       (81,495 )       101,182       1,428       3,762       (5,361 )           101,011  
Less: Excess of redemption value over carrying value of preferred shares redeemed
    -       -       -       -         -       -       -       -             -  
Less: Preferred stock dividends
    -       -       -       -         -       -       -       164    
(e)
      164  
Earnings available to common shareholders
  $ 101,182     $ 80,446     $ 1,049     $ (81,495 )     $ 101,182     $ 1,428     $ 3,762     $ (5,197 )         $ 101,175  
(a) Balances for the quarter ended June 30, 2011
                                                                               
(b) Eliminate intercompany lease / interest income
                                                                               
(c) Eliminate intercompany premiums
                                                                               
(d) Eliminate equity in earnings of subsidiaries
                                                                               
(e) Eliminate preferred stock dividends paid to affiliates
                                                                               
 
 

 
27

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
 
 
Consolidating statements of operations by industry for the quarter ended September 30, 2010 are as follows:
 
   
Moving & Storage
        AMERCO Legal Group  
   
AMERCO
   
U-Haul
   
Real Estate
   
Eliminations
     
Moving & Storage
Consolidated
   
Property & Casualty Insurance (a)
   
Life
Insurance (a)
   
Eliminations
         
AMERCO
Consolidated
 
   
(Unaudited)
 
   
(In thousands)
 
Revenues:
                                                             
Self-moving equipment rentals
  $ -     $ 467,797     $ -     $ -       $ 467,797     $ -     $ -     $ (669 )  
(c)
    $ 467,128  
Self-storage revenues
    -       30,282       365       -         30,647       -       -       -             30,647  
Self-moving and self-storage products and service sales
    -       56,821       -       -         56,821       -       -       -             56,821  
Property management fees
    -       4,580       -       -         4,580       -       -       -             4,580  
Life insurance premiums
    -       -       -       -         -       -       40,022       -             40,022  
Property and casualty insurance premiums
    -       -       -       -         -       8,300       -       -             8,300  
Net investment and interest income
    1,283       5,142       -       -         6,425       2,096       4,789       (436 )   (b,e )     12,874  
Other revenue
    -       17,841       19,286       (20,765 )
(b)
    16,362       -       588       (346 )  
(b)
      16,604  
Total revenues
    1,283       582,463       19,651       (20,765 )       582,632       10,396       45,399       (1,451 )           636,976  
                                                                                 
Costs and expenses:
                                                                               
Operating expenses
    1,816       276,725       2,328       (20,765 )
(b)
    260,104       4,154       7,007       (1,006 )   (b,c )     270,259  
Commission expenses
    -       57,613       -       -         57,613       -       -       -             57,613  
Cost of sales
    -       29,603       -       -         29,603       -       -       -             29,603  
Benefits and losses
    -       -       -       -         -       4,235       33,148       -             37,383  
Amortization of deferred policy acquisition costs
    -       -       -       -         -       -       1,876       -             1,876  
Lease expense
    22       38,246       1       -         38,269       -       -       (305 )  
(b)
      37,964  
Depreciation, net of (gains) losses on disposals
    2       40,971       3,184       -         44,157       -       -       -             44,157  
Total costs and expenses
    1,840       443,158       5,513       (20,765 )       429,746       8,389       42,031       (1,311 )           478,855  
                                                                                 
Equity in earnings of subsidiaries
    73,125       -       -       (69,567 )
(d)
    3,558       -       -       (3,558 )  
(d)
      -  
                                                                                 
Earnings from operations
    72,568       139,305       14,138       (69,567 )       156,444       2,007       3,368       (3,698 )           158,121  
Interest income (expense)
    20,288       (31,076 )     (11,000 )     -         (21,788 )     -       -       -             (21,788 )
Pretax earnings
    92,856       108,229       3,138       (69,567 )       134,656       2,007       3,368       (3,698 )           136,333  
Income tax expense
    (7,497 )     (40,400 )     (1,400 )     -         (49,297 )     (702 )     (1,115 )     -             (51,114 )
Net earnings
    85,359       67,829       1,738       (69,567 )       85,359       1,305       2,253       (3,698 )           85,219  
Less: Excess of redemption value over carrying value of preferred shares redeemed
    -       -       -       -         -       -       -       (140 )           (140 )
Less: Preferred stock dividends
    (3,241 )     -       -       -         (3,241 )     -       -       140    
(e)
      (3,101 )
Earnings available to common shareholders
  $ 82,118     $ 67,829     $ 1,738     $ (69,567 )     $ 82,118     $ 1,305     $ 2,253     $ (3,698 )         $ 81,978  
                                                                                 
(a) Balances for the quarter ended June 30, 2010
                                                                               
(b) Eliminate intercompany lease income
                                                                               
(c) Eliminate intercompany premiums
                                                                               
(d) Eliminate equity in earnings of subsidiaries
                                                                               
(e) Eliminate preferred stock dividends paid to affiliate
                                                                               
 
 

 
28

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
 
 
Consolidating statements of operations by industry for the six months ended September 30, 2011 are as follows:
 
 
   
Moving & Storage
        AMERCO Legal Group  
   
AMERCO
   
U-Haul
   
Real Estate
   
Eliminations
     
Moving & Storage
Consolidated
   
Property & Casualty Insurance (a)
   
Life
Insurance (a)
   
Eliminations
         
AMERCO
Consolidated
 
   
(Unaudited)
 
   
(In thousands)
 
Revenues:
                                                             
Self-moving equipment rentals
  $ -     $ 958,958     $ -     $ -       $ 958,958     $ -     $ -     $ (784 )  
(c)
    $ 958,174  
Self-storage revenues
    -       65,222       614       -         65,836       -       -       -             65,836  
Self-moving and self-storage products and service sales
    -       124,146       -       -         124,146       -       -       -             124,146  
Property management fees
    -       9,561       -       -         9,561       -       -       -             9,561  
Life insurance premiums
    -       -       -       -         -       -       97,196       -             97,196  
Property and casualty insurance premiums
    -       -       -       -         -       15,647       -       -             15,647  
Net investment and interest income
    3,268       10,310       260       -         13,838       5,158       15,200       (1,032 )   (b,e )     33,164  
Other revenue
    -       45,048       39,641       (42,411 )
(b)
    42,278       -       795       (651 )  
(b)
      42,422  
Total revenues
    3,268       1,213,245       40,515       (42,411 )       1,214,617       20,805       113,191       (2,467 )           1,346,146  
                                                                                 
Costs and expenses:
                                                                               
Operating expenses
    4,590       580,209       4,718       (42,411 )
(b)
    547,106       6,394       14,233       (1,418 )   (b,c )     566,315  
Commission expenses
    -       121,001       -       -         121,001       -       -       -             121,001  
Cost of sales
    -       65,224       -       -         65,224       -       -       -             65,224  
Benefits and losses
    -       -       -       -         -       10,315       84,077       -             94,392  
Amortization of deferred policy acquisition costs
    -       -       -       -         -       -       7,050       -             7,050  
Lease expense
    43       67,501       14       -         67,558       -       -       (612 )  
(b)
      66,946  
Depreciation, net of (gains) losses on disposals
    3       86,021       6,398       -         92,422       -       -       -             92,422  
Total costs and expenses
    4,636       919,956       11,130       (42,411 )       893,311       16,709       105,360       (2,030 )           1,013,350  
                                                                                 
Equity in earnings of subsidiaries
    150,536       -       -       (142,745 )
(d)
    7,791       -       -       (7,791 )  
(d)
      -  
                                                                                 
Earnings from operations
    149,168       293,289       29,385       (142,745 )       329,097       4,096       7,831       (8,228 )           332,796  
Interest income (expense)
    48,183       (68,413 )     (25,475 )     -         (45,705 )     -       -       109    
(b)
      (45,596 )
Pretax earnings
    197,351       224,876       3,910       (142,745 )       283,392       4,096       7,831       (8,119 )           287,200  
Income tax expense
    (17,789 )     (84,246 )     (1,795 )     -         (103,830 )     (1,434 )     (2,702 )     -             (107,966 )
Net earnings
    179,562       140,630       2,115       (142,745 )       179,562       2,662       5,129       (8,119 )           179,234  
Less: Excess of redemption value over carrying value of preferred shares redeemed
    (5,908 )     -       -       -         (5,908 )     -       -       -             (5,908 )
Less: Preferred stock dividends
    (3,241 )     -       -       -         (3,241 )     -       -       328    
(e)
      (2,913 )
Earnings available to common shareholders
  $ 170,413     $ 140,630     $ 2,115     $ (142,745 )     $ 170,413     $ 2,662     $ 5,129     $ (7,791 )         $ 170,413  
(a) Balances for the six months ended June 30, 2011
                                                                               
(b) Eliminate intercompany lease/interest income
                                                                               
(c) Eliminate intercompany premiums
                                                                               
(d) Eliminate equity in earnings of subsidiaries
                                                                               
(e) Eliminate preferred stock dividends paid to affiliates
                                                                               
 
 

 
29

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
 
 
Consolidating statements of operations by industry for the six months ended September 30, 2010 are as follows:
 
 
   
Moving & Storage
        AMERCO Legal Group  
   
AMERCO
   
U-Haul
   
Real Estate
   
Eliminations
     
Moving & Storage
Consolidated
   
Property & Casualty Insurance (a)
   
Life
Insurance (a)
   
Eliminations
         
AMERCO
Consolidated
 
   
(Unaudited)
 
   
(In thousands)
 
Revenues:
                                                             
Self-moving equipment rentals
  $ -     $ 887,677     $ -     $ -       $ 887,677     $ -     $ -     $ (1,086 )  
(c)
    $ 886,591  
Self-storage revenues
    -       58,197       677       -         58,874       -       -       -             58,874  
Self-moving and self-storage products and service sales
    -       120,111       -       -         120,111       -       -       -             120,111  
Property management fees
    -       9,116       -       -         9,116       -       -       -             9,116  
Life insurance premiums
    -       -       -       -         -       -       77,825       -             77,825  
Property and casualty insurance premiums
    -       -       -       -         -       14,479       -       -             14,479  
Net investment and interest income
    2,494       10,221       -       -         12,715       4,011       10,321       (818 )   (b,e )     26,229  
Other revenue
    20       32,013       38,658       (41,394 )
(b)
    29,297       -       1,095       (694 )  
(b)
      29,698  
Total revenues
    2,514       1,117,335       39,335       (41,394 )       1,117,790       18,490       89,241       (2,598 )           1,222,923  
                                                                                 
Costs and expenses:
                                                                               
Operating expenses
    3,895       537,382       4,591       (41,394 )
(b)
    504,474       6,972       13,710       (1,763 )   (b,c )     523,393  
Commission expenses
    -       109,782       -       -         109,782       -       -       -             109,782  
Cost of sales
    -       61,268       -       -         61,268       -       -       -             61,268  
Benefits and losses
    -       -       -       -         -       8,114       64,691       -             72,805  
Amortization of deferred policy acquisition costs
    -       -       -       -         -       -       4,069       -             4,069  
Lease expense
    47       77,187       6       -         77,240       -       -       (610 )  
(b)
      76,630  
Depreciation, net of (gains) losses on disposals
    4       83,578       5,164       -         88,746       -       -       -             88,746  
Total costs and expenses
    3,946       869,197       9,761       (41,394 )       841,510       15,086       82,470       (2,373 )           936,693  
                                                                                 
Equity in earnings of subsidiaries
    127,062       -       -       (120,463 )
(d)
    6,599       -       -       (6,599 )  
(d)
      -  
                                                                                 
Earnings from operations
    125,630       248,138       29,574       (120,463 )       282,879       3,404       6,771       (6,824 )           286,230  
Interest income (expense)
    41,568       (63,952 )     (20,868 )     -         (43,252 )     -       -       -             (43,252 )
Pretax earnings
    167,198       184,186       8,706       (120,463 )       239,627       3,404       6,771       (6,824 )           242,978  
Income tax expense
    (15,252 )     (68,698 )     (3,731 )     -         (87,681 )     (1,191 )     (2,385 )     -             (91,257 )
Net earnings
    151,946       115,488       4,975       (120,463 )       151,946       2,213       4,386       (6,824 )           151,721  
Less: Excess of redemption value over carrying value of preferred shares redeemed
    -       -       -       -         -       -       -       (171 )           (171 )
Less: Preferred stock dividends
    (6,482 )     -       -       -         (6,482 )     -       -       225    
(e)
      (6,257 )
Earnings available to common shareholders
  $ 145,464     $ 115,488     $ 4,975     $ (120,463 )     $ 145,464     $ 2,213     $ 4,386     $ (6,770 )         $ 145,293  
                                                                                 
(a) Balances for the six months ended June 30, 2010
                                                                               
(b) Eliminate intercompany lease income
                                                                               
(c) Eliminate intercompany premiums
                                                                               
(d) Eliminate equity in earnings of subsidiaries
                                                                               
(e) Eliminate preferred stock dividends paid to affiliate
                                                                               

 
30

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
 
 
Consolidating cash flow statements by industry segment for the six months ended September 30, 2011 are as follows:
 
   
Moving & Storage
      AMERCO Legal Group  
   
AMERCO
   
U-Haul
   
Real Estate
   
Elimination
   
Moving & Storage
Consolidated
   
Property &
Casualty
Insurance (a)
   
Life
Insurance (a)
   
Elimination
     
AMERCO
Consolidated
 
   
(Unaudited)
 
Cash flows from operating activities:
 
(In thousands)
 
Net earnings
  $ 179,562     $ 140,630     $ 2,115     $ (142,745 )   $ 179,562     $ 2,662     $ 5,129     $ (8,119 )     $ 179,234  
Earnings from consolidated entities
    (150,536 )     -       -       142,745       (7,791 )     -       -       7,791         -  
Adjustments to reconcile net earnings to the cash provided by operations:
                                                                         
Depreciation
    3       103,407       6,639       -       110,049       -       -       -         110,049  
Amortization of deferred policy acquisition costs
    -       -       -       -       -       -       7,050       -         7,050  
Change in allowance for losses on trade receivables
    -       (18 )     -       -       (18 )     -       2       -         (16 )
Change in allowance for inventory reserve
    -       2,008       -       -       2,008       -       -       -         2,008  
Net gain on sale of real and personal property
    -       (17,386 )     (241 )     -       (17,627 )     -       -       -         (17,627 )
Net gain on sale of investments
    (488 )     -       -       -       (488 )     (645 )     (3,747 )     -         (4,880 )
Deferred income taxes
    84,448       -       -       -       84,448       998       3,683       -         89,129  
Net change in other operating assets and liabilities:
                                                                         
Reinsurance recoverables and trade receivables
    -       (7,169 )     -       -       (7,169 )     (8,357 )     (6,834 )     -         (22,360 )
Inventories
    -       177       -       -       177       -       -       -         177  
Prepaid expenses
    10,540       (1,577 )     (261 )     -       8,702       -       -       -         8,702  
Capitalization of deferred policy acquisition costs
    -       -       -       -       -       -       (9,010 )     -         (9,010 )
Other assets
    2,168       19,245       212       -       21,625       375       (27 )     -         21,973  
Related party assets
    14       5,048       (24 )     -       5,038       (667 )     -       1,273  
(b)
    5,644  
Accounts payable and accrued expenses
    1,598       8,331       105       -       10,034       -       1,311       (18 )
(b)
    11,327  
Policy benefits and losses, claims and loss expenses payable
    -       (4,527 )     -       -       (4,527 )     13,244       26,959       -         35,676  
Other policyholders' funds and liabilities
    -       -       -       -       -       (1,847 )     (1,297 )     -         (3,144 )
Deferred income
    -       4,558       -       -       4,558       -       -       -         4,558  
Related party liabilities
    -       384       -       -       384       (150 )     59       -         293  
Net cash provided (used) by operating activities
    127,309       253,111       8,545       -       388,965       5,613       23,278       927         418,783  
                                                                           
Cash flows from investing activities:
                                                                         
Purchases of:
                                                                         
Property, plant and equipment
    -       (321,109 )     (27,222 )     -       (348,331 )     -       -       -         (348,331 )
Short term investments
    -       -       -       -       -       (33,880 )     (105,327 )     750  
(b)
    (138,457 )
Fixed maturities investments
    -       -       -       -       -       (9,934 )     (127,187 )     -         (137,121 )
Equity securities
    (8,855 )     -       -       -       (8,855 )     (201 )     -       -         (9,056 )
Preferred stock
    -       -       -       -       -       (1,633 )     -       -         (1,633 )
Real estate
    -       -       (5,062 )     -       (5,062 )     (84 )     -       -         (5,146 )
Mortgage loans
    -       (75 )     (47,649 )     -       (47,724 )     (26,331 )     (17,734 )     26,177  
(b)
    (65,612 )
Proceeds from sales of:
                                                                         
Property, plant and equipment
    -       109,781       508       -       110,289       -       -       -         110,289  
Short term investments
    -       -       -       -       -       36,889       117,137       -         154,026  
Fixed maturities investments
    -       -       -       -       -       11,478       85,532       -         97,010  
Equity securities
    8,800       -       -       -       8,800       1,410       -       -         10,210  
Preferred stock
    -       -       -       -       -       6,252       2,708       (7,708 )
(b)
    1,252  
Real estate
    -       -       -       -       -       69       40       -         109  
Mortgage loans
    -       2,051       38,609       -       40,660       12,464       2,775       (26,177 )
(b)
    29,722  
Net cash provided (used) by investing activities
    (55 )     (209,352 )     (40,816 )     -       (250,223 )     (3,501 )     (42,056 )     (6,958 )       (302,738 )
   
(page 1 of 2)
 
(a) Balance for the six months ended June 30, 2011
                                                                         
(b) Elimination of intercompany investments
                                                                         

 
31

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
 
 
Continuation of consolidating cash flow statements by industry segment for the six months ended September 30, 2011 are as follows:
 
   
Moving & Storage
      AMERCO Legal Group  
   
AMERCO
   
U-Haul
   
Real Estate
   
Elimination
   
Moving & Storage
Consolidated
   
Property &
Casualty
Insurance (a)
   
Life
Insurance (a)
   
Elimination
     
AMERCO
Consolidated
 
   
(Unaudited)
 
Cash flows from financing activities:
 
(In thousands)
 
Borrowings from credit facilities
    -       111,674       68,598       -       180,272       -       -       (2,005 )
(b)
    178,267  
Principal repayments on credit facilities
    -       (54,624 )     (44,478 )     -       (99,102 )     -       -       -         (99,102 )
Debt issuance costs
    -       (1,230 )     (86 )     -       (1,316 )     -       -       -         (1,316 )
Capital lease payments
    -       (3,505 )     -       -       (3,505 )     -       -       -         (3,505 )
Leveraged Employee Stock Ownership Plan - repayments from loan
    -       556       -       -       556       -       -       -         556  
Proceeds from (repayment of) intercompany loans
    67,961       (76,259 )     8,298       -       -       -       -       -         -  
Securitization deposits
    -       38,428       -       -       38,428       -       -       -         38,428  
Preferred stock redemption paid
    (151,997 )     -       -       -       (151,997 )     -       -       7,708  
(b)
    (144,289 )
Preferred stock dividends paid
    (3,241 )     -       -       -       (3,241 )     -       -       328  
(c)
    (2,913 )
Contribution to related party
    (518 )     -       -       -       (518 )     -       -       -         (518 )
Investment contract deposits
    -       -       -       -       -       -       6,070       -         6,070  
Investment contract withdrawals
    -       -       -       -       -       -       (14,671 )     -         (14,671 )
Net cash provided (used) by financing activities
    (87,795 )     15,040       32,332       -       (40,423 )     -       (8,601 )     6,031         (42,993 )
                                                                           
Effects of exchange rate on cash
    -       (389 )     -       -       (389 )     -       -       -         (389 )
                                                                           
Increase (decrease) in cash and cash equivalents
    39,459       58,410       61       -       97,930       2,112       (27,379 )     -         72,663  
Cash and cash equivalents at beginning of period
    250,104       72,634       757       -       323,495       14,700       37,301       -         375,496  
Cash and cash equivalents at end of period
  $ 289,563     $ 131,044     $ 818     $ -     $ 421,425     $ 16,812     $ 9,922     $ -       $ 448,159  
   
(page 2 of 2)
 
(a) Balance for the six months ended June 30, 2011
                                                                         
(b) Elimination of intercompany investments
                                                                         
(c) Eliminate preferred stock dividends paid to affiliates
                                                                         
 

 
32

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
 
 
Consolidating cash flow statements by industry segment for the six months ended September 30, 2010 are as follows:
 
 
   
Moving & Storage
      AMERCO Legal Group  
   
AMERCO
   
U-Haul
   
Real Estate
   
Elimination
   
Moving & Storage
Consolidated
   
Property &
Casualty
Insurance (a)
   
Life
Insurance (a)
   
Elimination
   
AMERCO
Consolidated
 
   
(Unaudited)
 
Cash flows from operating activities:
 
(In thousands)
 
Net earnings
  $ 151,946     $ 115,488     $ 4,975     $ (120,463 )   $ 151,946     $ 2,213     $ 4,386     $ (6,824 )   $ 151,721  
Earnings from consolidated entities
    (127,062 )     -       -       120,463       (6,599 )     -       -       6,599       -  
Adjustments to reconcile net earnings to cash provided by operations:
                                                                       
Depreciation
    4       99,673       6,378       -       106,055       -       -       -       106,055  
Amortization of deferred policy acquisition costs
    -       -       -       -       -       -       4,069       -       4,069  
Change in allowance for losses on trade receivables
    -       (25 )     -       -       (25 )     -       1       -       (24 )
Change in allowance for inventory reserve
    -       840       -       -       840       -       -       -       840  
Net gain on sale of real and personal property
    -       (16,095 )     (1,214 )     -       (17,309 )     -       -       -       (17,309 )
Net gain on sale of investments
    -       -       -       -       -       (36 )     (1,293 )     -       (1,329 )
Deferred income taxes
    54,034       -       -       -       54,034       864       2,193       -       57,091  
Net change in other operating assets and liabilities:
                                                                       
Reinsurance recoverables and trade receivables
    -       (2,407 )     -       -       (2,407 )     (3,592 )     30       -       (5,969 )
Inventories
    -       (3,662 )     -       -       (3,662 )     -       -       -       (3,662 )
Prepaid expenses
    -       5,518       (543 )     -       4,975       -       -       -       4,975  
Capitalization of deferred policy acquisition costs
    -       -       -       -       -       -       (7,377 )     -       (7,377 )
Other assets
    2       (602 )     845       -       245       314       207       -       766  
Related party assets
    286       7,602       (35 )     -       7,853       (1,143 )     -       -       6,710  
Accounts payable and accrued expenses
    (2,792 )     21,114       (52 )     -       18,270       -       1,832       -       20,102  
Policy benefits and losses, claims and loss expenses payable
    -       11,139       -       -       11,139       2,872       25,441       -       39,452  
Other policyholders' funds and liabilities
    -       -       -       -       -       (953 )     (578 )     -       (1,531 )
Deferred income
    -       2,399       -       -       2,399       -       -       -       2,399  
Related party liabilities
    -       53       -       -       53       626       14       -       693  
Net cash provided (used) by operating activities
    76,418       241,035       10,354       -       327,807       1,165       28,925       (225 )     357,672  
                                                                         
Cash flows from investing activities:
                                                                       
Purchases of:
                                                                       
Property, plant and equipment
    (1 )     (251,606 )     (22,633 )     -       (274,240 )     -       -       -       (274,240 )
Short term investments
    -       -       -       -       -       (38,243 )     (71,542 )     -       (109,785 )
Fixed maturities investments
    -       -       -       -       -       (24,350 )     (98,154 )     -       (122,504 )
Equity securities
    (5,746 )     -       -       -       (5,746 )     (3,297 )     -       -       (9,043 )
Preferred stock
    -       -       -       -       -       (9,305 )     (2,597 )     -       (11,902 )
Real estate
    -       -       (1,647 )     -       (1,647 )     (56 )     (81 )     -       (1,784 )
Mortgage loans
    -       -       -       -       -       (1,297 )     (11 )     -       (1,308 )
Proceeds from sales of:
                                                                       
Property, plant and equipment
    -       120,790       1,367       -       122,157       -       -       -       122,157  
Short term investments
    -       -       -       -       -       73,980       104,481       -       178,461  
Fixed maturities investments
    -       -       -       -       -       8,142       48,699       -       56,841  
Equity securities
    -       -       -       -       -       133       -       -       133  
Real estate
    -       610       -       -       610       73       -       -       683  
Mortgage loans
    -       -       -       -       -       37       1,384       -       1,421  
Net cash provided (used) by investing activities
    (5,747 )     (130,206 )     (22,913 )     -       (158,866 )     5,817       (17,821 )     -       (170,870 )
   
(page 1 of 2)
 
(a) Balance for the six months ended June 30, 2010
                                                                       

 
33

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
 
 
Continuation of consolidating cash flow statements by industry segment for the six months ended September 30, 2010 are as follows:
 
   
Moving & Storage
      AMERCO Legal Group  
   
AMERCO
   
U-Haul
   
Real Estate
   
Elimination
   
Moving & Storage
Consolidated
   
Property &
Casualty
Insurance (a)
   
Life
Insurance (a)
   
Elimination
     
AMERCO
Consolidated
 
   
(Unaudited)
 
Cash flows from financing activities:
 
(In thousands)
 
Borrowings from credit facilities
    -       100,422       34,134       -       134,556       -       -       -         134,556  
Principal repayments on credit facilities
    -       (51,853 )     (157,567 )     -       (209,420 )     -       -       -         (209,420 )
Debt issuance costs
    -       (89 )     -       -       (89 )     -       -       -         (89 )
Capital lease payments
    -       (8,369 )     -       -       (8,369 )     -       -       -         (8,369 )
Leveraged Employee Stock Ownership Plan - repayments from loan
    -       592       -       -       592       -       -       -         592  
Proceeds from (repayment of) intercompany loans
    19,364       (156,102 )     136,738       -       -       -       -       -         -  
Preferred stock dividends paid
    (6,482 )     -       -       -       (6,482 )     -       -       225  
(b)
    (6,257 )
Investment contract deposits
    -       -       -       -       -       -       5,875       -         5,875  
Investment contract withdrawals
    -       -       -       -       -       -       (17,409 )     -         (17,409 )
Net cash provided (used) by financing activities
    12,882       (115,399 )     13,305       -       (89,212 )     -       (11,534 )     225         (100,521 )
                                                                           
Effects of exchange rate on cash
    -       (569 )     -       -       (569 )     -       -       -         (569 )
                                                                           
Increase (decrease) in cash and cash equivalents
    83,553       (5,139 )     746       -       79,160       6,982       (430 )     -         85,712  
Cash and cash equivalents at beginning of period
    100,460       107,241       4       -       207,705       22,126       14,287       -         244,118  
Cash and cash equivalents at end of period
  $ 184,013     $ 102,102     $ 750     $ -     $ 286,865     $ 29,108     $ 13,857     $ -       $ 329,830  
   
(page 2 of 2)
 
(a) Balance for the six months ended June 30, 2010
                                                                         
(b) Eliminate preferred stock dividends paid to affiliate
                                                                         
 
 

 
34

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
 
 
12. Industry Segment and Geographic Area Data
 
   
United States
   
Canada
   
Consolidated
 
   
(Unaudited)
 
   
(All amounts are in thousands of U.S. $'s)
 
Quarter ended September 30, 2011
                 
Total revenues
  $ 656,095     $ 47,086     $ 703,181  
Depreciation and amortization, net of (gains) losses on disposals
    48,689       2,050       50,739  
Interest expense
    22,802       161       22,963  
Pretax earnings
    152,021       9,449       161,470  
Income tax expense
    57,681       2,778       60,459  
Identifiable assets
    4,269,467       133,670       4,403,137  
                         
Quarter ended September 30, 2010
                       
Total revenues
  $ 596,037     $ 40,939     $ 636,976  
Depreciation and amortization, net of (gains) losses on disposals
    44,037       1,996       46,033  
Interest expense
    21,601       187       21,788  
Pretax earnings
    129,062       7,271       136,333  
Income tax expense
    48,972       2,142       51,114  
Identifiable assets
    3,804,861       134,539       3,939,400  
 
 
   
United States
   
Canada
   
Consolidated
 
   
(Unaudited)
 
   
(All amounts are in thousands of U.S. $'s)
 
Six months ended September 30, 2011
                 
Total revenues
  $ 1,257,186     $ 88,960     $ 1,346,146  
Depreciation and amortization, net of (gains) losses on disposals
    95,553       3,919       99,472  
Interest expense
    45,272       324       45,596  
Pretax earnings
    270,378       16,822       287,200  
Income tax expense
    103,010       4,956       107,966  
Identifiable assets
    4,269,467       133,670       4,403,137  
                         
Six months ended September 30, 2010
                       
Total revenues
  $ 1,145,820     $ 77,103     $ 1,222,923  
Depreciation and amortization, net of (gains) losses on disposals
    89,074       3,741       92,815  
Interest expense
    42,911       341       43,252  
Pretax earnings
    228,944       14,034       242,978  
Income tax expense
    87,123       4,134       91,257  
Identifiable assets
    3,804,861       134,539       3,939,400  
 
 
 
13. Employee Benefit Plans
 
The components of the net periodic benefit costs with respect to postretirement benefits were as follows:
 
   
Quarter Ended September 30,
 
   
2011
   
2010
 
   
(Unaudited)
 
   
(In thousands)
 
             
Service cost for benefits earned during the period
  $ 128     $ 115  
Interest cost on accumulated postretirement benefit
    142       142  
Other components
    (4 )     (10 )
Net periodic postretirement benefit cost
  $ 266     $ 247  
 
 

 
35

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
 
 
 
   
Six Months Ended September 30,
 
   
2011
   
2010
 
   
(Unaudited)
 
   
(In thousands)
 
             
Service cost for benefits earned during the period
  $ 257     $ 230  
Interest cost on accumulated postretirement benefit
    284       284  
Other components
    (8 )     (19 )
Net periodic postretirement benefit cost
  $ 533     $ 495  
 
 
14. Fair Value Measurements
 
Fair values of cash equivalents approximate carrying value due to the short period of time to maturity. Fair values of short term investments, investments available-for-sale, long term investments, mortgage loans and notes on real estate, and interest rate swap contracts are based on quoted market prices, dealer quotes or discounted cash flows. Fair values of trade receivables approximate their recorded value.
 
The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of temporary cash investments, trade receivables, reinsurance recoverables and notes receivable. Limited credit risk exists on trade receivables due to the diversity of our customer base and their dispersion across broad geographic markets. The Company places its temporary cash investments with financial institutions and limits the amount of credit exposure to any one financial institution.
 
The Company has mortgage receivables, which potentially expose the Company to credit risk. The portfolio of notes is principally collateralized by self-storage facilities and commercial properties. The Company has not experienced any material losses related to the notes from individual or groups of notes in any particular industry or geographic area. The estimated fair values were determined using the discounted cash flow method and using interest rates currently offered for similar loans to borrowers with similar credit ratings.
 
The carrying amount of long term debt and short term borrowings are estimated to approximate fair value as the actual interest rate is consistent with the rate estimated to be currently available for debt of similar term and remaining maturity.
 
Other investments including short term investments are substantially current or bear reasonable interest rates. As a result, the carrying values of these financial instruments approximate fair value.
 
Assets and liabilities are recorded at fair value on the condensed consolidated balance sheets and are measured and classified based upon a three tiered approach to valuation. ASC 820 - Fair Value Measurements and Disclosure (“ASC 820”) requires that financial assets and liabilities recorded at fair value be classified and disclosed in one of the following three categories:
 
Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
 
Level 2 – Quoted prices for identical or similar financial instruments in markets that are not considered to be active, or similar financial instruments for which all significant inputs are observable, either directly or indirectly, or inputs other than quoted prices that are observable, or inputs that are derived principally from or corroborated by observable market data through correlation or other means; and
 
Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and are unobservable. These reflect management’s assumptions about the assumptions a market participant would use in pricing the asset or liability.

 
36

 

AMERCO AND CONSOLIDATED ENTITIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
 
 
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The following table represents the financial assets and liabilities on the condensed consolidated balance sheet at September 30, 2011, that are subject to ASC 820 and the valuation approach applied to each of these items.
 
   
Total
   
Quoted Prices in Active Markets for Identical Assets (Level 1)
   
Significant Other Observable Inputs (Level 2)
   
Significant Unobservable Inputs (Level 3)
 
   
(Unaudited)
 
   
(In thousands)
 
Assets
                       
Short-term investments
  $ 458,740     $ 458,740     $ -     $ -  
Fixed maturities - available for sale
    656,920       572,382       83,377       1,161  
Preferred stock
    24,890       24,890       -       -  
Common stock
    12,340       12,340       -       -  
Total
  $ 1,152,890     $ 1,068,352     $ 83,377     $ 1,161  
 
 
Liabilities
                       
Guaranteed residual values of TRAC leases
  $ -     $ -     $ -     $ -  
Derivatives
    66,816       -       66,816       -  
Total
  $ 66,816     $ -     $ 66,816     $ -  
 
The following table represents the fair value measurements for our assets at September 30, 2011 using significant unobservable inputs (Level 3).
 
   
Fixed Maturities - Asset Backed Securities
 
   
(Unaudited)
 
   
(In thousands)
 
Balance at March 31, 2011
  $ 1,377  
         
Fixed Maturities - Asset Backed Securities loss (unrealized)
    (163 )
Balance at June 30, 2011
  $ 1,214  
         
Fixed Maturities - Asset Backed Securities gain (unrealized)
    79  
Fixed Maturities - Asset Backed Securities OTTI
    (132 )
Balance at September 30, 2011
  $ 1,161  
 
 
 
 
 

 
37

 

 
 
ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
General
 
We begin Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) with the overall strategy of AMERCO, followed by a description of and strategy related to, our operating segments to give the reader an overview of the goals of our businesses and the direction in which our businesses and products are moving. We then discuss our critical accounting policies and estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results. Next, we then discuss our results of operations for the second quarter and first six months of fiscal 2012, compared with the second quarter and first six months of fiscal 2011, which is followed by an analysis of changes in our balance sheets and cash flows, and a discussion of 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 the remainder of fiscal 2012.
 
This MD&A should be read in conjunction with the other sections of this Quarterly Report on Form 10-Q, including the Notes to Condensed Consolidated Financial Statements. The various sections of this MD&A contain a number of forward-looking statements, as discussed under the caption, Cautionary Statements Regarding Forward-Looking Statements, all of which are based on our current expectations and could be affected by the uncertainties and risks described throughout this filing or in our most recent Annual Report on Form 10-K for the year ended March 31, 2011. Many of these risks and uncertainties are beyond our control and our actual results may differ materially from these forward-looking statements.
 
The second fiscal quarter for AMERCO ends on the 30 th of September for each year that is referenced. Our insurance company subsidiaries have a second quarter that ends on the 30 th of June for each year that is referenced. They have been consolidated on that basis. Our insurance companies’ financial reporting processes conform to calendar year reporting as required by state insurance departments. Management believes that consolidating their calendar year into our fiscal year financial statements does not materially affect the financial position or results of operations. The Company discloses all material events occurring during the intervening period. Consequently, all references to our insurance subsidiaries’ years 2011 and 2010 correspond to fiscal 2012 and 2011 for AMERCO.
 
Overall Strategy
 
Our overall strategy is to maintain our leadership position in the North American “do-it-yourself” moving and storage industry. We accomplish this by providing a seamless and integrated supply chain to the “do-it-yourself” moving and storage market. As part of executing this strategy, 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.
 
The Property and Casualty Insurance operating segment is focused on providing and administering property and casualty insurance to U-Haul and its customers, its independent dealers and affiliates.
 
The Life Insurance operating segment is focused on long-term capital growth through direct writing and reinsuring of life, Medicare supplement and annuity products in the senior marketplace.
 
Description of Operating Segments
 
AMERCO’s three reportable segments are:
 
·  
Moving and Storage, comprised of AMERCO, U-Haul, and Real Estate and the subsidiaries of U-Haul and Real Estate,
 
·  
Property and Casualty Insurance, comprised of Repwest and its subsidiaries and ARCOA, and
 
·  
Life Insurance, comprised of Oxford and its subsidiaries.

 
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Moving and Storage Operating Segment
 
Our Moving and Storage operating segment consists of the rental of trucks, trailers, portable storage boxes, specialty rental items and self-storage spaces primarily to the household mover as well as sales of moving supplies, towing accessories and propane. Operations are conducted under the registered trade name U-Haul ® throughout the United States and Canada.
 
With respect to our truck, trailer, specialty rental items 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.
 
U-Haul brand self-moving related products and services, such as boxes, pads and tape allow our customers to, among other things, protect their belongings from potential damage during the moving process. We are committed to providing a complete line of products selected with the “do-it-yourself” moving and storage customer in mind.
 
eMove ® is an online marketplace that connects consumers to independent Moving Help ® service providers and over 5,500 independent Self-Storage Affiliates. Our network of customer rated affiliates and service providers furnish pack and load help, cleaning help, self-storage and similar services, all over North America. Our goal is to further utilize our web-based technology platform to increase service to consumers and businesses in the moving and storage market.
 
Since 1945 U-Haul has incorporated sustainable practices into its everyday operations. We believe that our basic business premise of equipment sharing helps reduce greenhouse gas emissions and reduces the need for total large capacity vehicles. We continue to look for ways to reduce waste within our business and are dedicated to manufacturing reusable components and recyclable products. We believe that our commitment to sustainability, through our products and services and everyday operations has helped us to reduce our impact on the environment.
 
Property and Casualty Insurance Operating Segment
 
Our Property and Casualty Insurance operating segment provides loss adjusting and claims handling for U-Haul through regional offices across North America. Property and Casualty Insurance also underwrites components of the Safemove, Safetow, Super Safemove   and   Safestor   protection packages to U-Haul customers. We continue to focus on increasing the penetration of these products into the moving and storage market. The business plan for Property and Casualty Insurance includes offering property and casualty products in other U-Haul   related programs.
 
Life Insurance Operating Segment
 
Our Life Insurance operating segment provides life and health insurance products primarily to the senior market through the direct writing or reinsuring of life insurance, Medicare supplement and annuity policies.
 
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. Certain accounting policies require us to make difficult and subjective judgments and assumptions, often as a result of the need to estimate matters that are inherently uncertain.
 
In the following pages 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:

 
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Principles of Consolidation
 
The Company applies ASC 810 in its principles of consolidation. ASC 810 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. ASC 810 also addresses the policy when a company owns a majority of the voting or similar rights and exercises effective control.
 
As promulgated by ASC 810, a VIE is not self-supportive due to having one or both of the following conditions: i) it has an insufficient amount of equity for it to finance its activities without receiving additional subordinated financial support or ii) 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 is re-assessed on an on-going basis should certain changes in the operations of a VIE, or its relationship with the primary beneficiary trigger a reconsideration under the provisions of ASC 810. 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 Issue 90-15, Impact of Nonsubstantive Lessors, Residual Value Guarantees and Other Provisions in Leasing Transactions . In fiscal 2004, the Company evaluated its interests in SAC Holdings and 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.
 
Triggering events in February and March of 2004 for SAC Holding Corporation required AMERCO to reassess its involvement in specific SAC Holding Corporation entities. During these reassessments it was concluded that AMERCO was no longer the primary beneficiary, resulting in the deconsolidation of SAC Holding Corporation in fiscal 2004.
 
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 FASB Interpretation 46(R) for us to reassess the Company’s involvement with those entities. This required reassessment led to the conclusion that SAC Holding II had the ability to fund its own operations and execute its business plan without any future subordinated financial support; therefore, the Company was no longer the primary beneficiary of SAC Holding II as of the date of Blackwater’s contribution.
 
Accordingly, at the date AMERCO ceased to be considered the primary beneficiary of SAC Holding II and its current subsidiaries, it deconsolidated these entities. The deconsolidation was accounted for as a distribution of SAC Holding II’s interests to the sole shareholder of the SAC entities. Because of AMERCO’s continuing involvement with SAC Holding II and its subsidiaries, the distribution does not qualify as discontinued operations.
 
It is possible that SAC Holdings could take actions that would require us to re-determine whether SAC Holdings remains a VIE and we continually monitor whether we have become the primary beneficiary of SAC Holdings.  None of the events delineated in ASC 810-10-35-4 which would require a redetermination occurred during the period being reported upon in this Form 10-Q. Should we determine in the future that we are the primary beneficiary of SAC Holdings, we could be required to consolidate some or all of SAC Holdings within our financial statements.
 
The condensed consolidated balance sheets as of September 30, 2011 and March 31, 2011 include the accounts of AMERCO and its wholly-owned subsidiaries. The September 30, 2011 and 2010 condensed consolidated statements of operations, comprehensive income and cash flows include the accounts of AMERCO and its wholly-owned subsidiaries.
 
Recoverability of Property, Plant and Equipment
 
Property, plant and equipment are stated at cost. Interest expense incurred during the initial construction of buildings and rental equipment is considered part of cost. Depreciation is computed for financial reporting purposes using the straight-line or an accelerated method based on a declining balance formula over the following estimated useful lives: rental equipment 2-20 years and buildings and non-rental equipment 3-55 years. The Company follows the deferral method of accounting based on ASC 908 - Airlines for major overhauls

 
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in which engine overhauls are capitalized and amortized over five years and transmission overhauls are capitalized and amortized over three years. Routine maintenance costs are charged to operating expense as they are incurred. Gains and losses on dispositions of property, plant and equipment are netted against depreciation expense when realized. Equipment depreciation is recognized in amounts expected to result in the recovery of estimated residual values upon disposal, i.e., minimize gains or losses. In determining the depreciation rate, historical disposal experience, holding periods and trends in the market for vehicles are reviewed.
 
We regularly perform reviews to determine whether facts and circumstances exist which indicate that the carrying amount of assets, including estimates of residual value, may not be recoverable or that the useful life of assets are shorter or longer than originally estimated. Reductions in residual values (i.e., the price at which we ultimately expect to dispose of revenue earning equipment) or useful lives will result in an increase in depreciation expense over the life of the equipment. Reviews are performed based on vehicle class, generally subcategories of trucks and trailers. We assess the recoverability of our assets by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their estimated remaining lives against their respective carrying amounts. We consider factors such as current and expected future market price trends on used vehicles and the expected life of vehicles included in the fleet. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. If asset residual values are determined to be recoverable, but the useful lives are shorter or longer than originally estimated, the net book value of the assets is depreciated over the newly determined remaining useful lives.
 
In fiscal 2006, management performed an analysis of the expected economic value of new rental trucks and determined that additions to the fleet resulting from purchase should be depreciated on an accelerated method based upon a declining formula. The salvage value and useful life assumptions of the rental truck fleet remain unchanged. Under the declining balances method (2.4 times declining balance), the book value of a rental truck is reduced approximately 16%, 13%, 11%, 9%, 8%, 7%, and 6% during years one through seven, respectively and then reduced on a straight line basis an additional 10% by the end of year fifteen. Whereas, a standard straight line approach would reduce the book value by approximately 5.3% per year over the life of the truck. For the affected equipment, the accelerated depreciation was $13.3 million and $11.1 million greater than what it would have been if calculated under a straight line approach for the second quarter of fiscal 2012 and 2011, respectively and $26.3 million and $21.5 million for the first six months of fiscal 2012 and 2011, respectively.
 
Although we intend to sell our used vehicles for prices approximating book value, the extent to which we realize a gain or loss on the sale of used vehicles is dependent upon various factors including but not limited to, the general state of the used vehicle market, the age and condition of the vehicle at the time of its disposal and the depreciation rates with respect to the vehicle . We typically sell our used vehicles at our sales centers throughout North America, on our web site at uhaul.com/trucksales or by phone at 1-866-404-0355. Additionally, we sell a large portion of our pickup and cargo van fleet at automobile dealer auctions.
 
Insurance Reserves
 
Liabilities for life insurance and certain annuity and health policies are established to meet the estimated future obligations of policies in force, and are based on mortality, morbidity and withdrawal assumptions from recognized actuarial tables which contain margins for adverse deviation. In addition, liabilities for health, disability and other policies include estimates of payments to be made on insurance claims for reported losses and estimates of losses incurred, but not yet reported. Liabilities for deferred annuity contracts consist of contract account balances that accrue to the benefit of the policyholders.
 
Insurance reserves for our Property and Casualty Insurance operating segment and U-Haul take into account losses incurred based upon actuarial estimates. These estimates are based on past claims experience and current claim trends as well as social and economic conditions such as changes in legal theories and inflation. Due to the nature of the underlying risks and the high degree of uncertainty associated with the determination of the liability for future policy benefits and claims, the amounts to be ultimately paid to settle liabilities cannot be precisely determined and may vary significantly from the estimated liability.
 
Due to the long tailed nature of the assumed reinsurance and the excess workers compensation lines of insurance that were written by Repwest, it may take a number of years for claims to be fully reported and finally settled.

 
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Impairment of Investments
 
Investments are evaluated pursuant to guidance contained in ASC 320 - Investments - Debt and Equity Securities to determine if and when a decline in market value below amortized cost is other-than-temporary. Management makes certain assumptions or judgments in its assessment including but not limited to: ability and intent to hold the security, quoted market prices, dealer quotes or discounted cash flows, industry factors, financial factors, and issuer specific information such as credit strength. Other-than-temporary impairment in value is recognized in the current period operating results. The Company’s insurance subsidiaries recognized $0.1 million in other-than-temporary impairments for the second quarter and the first six months of fiscal 2012. There were no write downs in the second quarter or for the first six months of fiscal 2011.
 
Income Taxes
 
The Company’s tax returns are periodically reviewed by various taxing authorities. The final outcome of these audits may cause changes that could materially impact our financial results.
 
AMERCO files a consolidated tax return with all of its legal subsidiaries, except for Dallas General Life Insurance Company, a subsidiary of Oxford, which will file on a stand alone basis until 2012.
 
Fair Values
 
Fair values of cash equivalents approximate carrying value due to the short period of time to maturity. Fair values of short term investments, investments available-for-sale, long term investments, mortgage loans and notes on real estate, and interest rate swap contracts are based on quoted market prices, dealer quotes or discounted cash flows. Fair values of trade receivables approximate their recorded value.
 
The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of temporary cash investments, trade receivables, reinsurance recoverables and notes receivable. Limited credit risk exists on trade receivables due to the diversity of our customer base and their dispersion across broad geographic markets. The Company places its temporary cash investments with financial institutions and limits the amount of credit exposure to any one financial institution.
 
The Company has mortgage receivables, which potentially expose the Company to credit risk. The portfolio of notes is principally collateralized by self-storage facilities and commercial properties. The Company has not experienced any material losses related to the notes from individual or groups of notes in any particular industry or geographic area. The estimated fair values were determined using the discounted cash flow method and using interest rates currently offered for similar loans to borrowers with similar credit ratings.
 
The carrying amount of long term debt and short term borrowings are estimated to approximate fair value as the actual interest rate is consistent with the rate estimated to be currently available for debt of similar term and remaining maturity.
 
Other investments including short term investments are substantially current or bear reasonable interest rates. As a result, the carrying values of these financial instruments approximate fair value.
 
Subsequent Events
 
The Company’s management has evaluated subsequent events occurring after September 30, 2011, the date of our most recent balance sheet, through the date our financial statements were issued. We do not believe any subsequent events have occurred that would require further disclosure or adjustment to our financial statements.
 
Recent Accounting Pronouncements
 
In October 2010, the FASB issued ASU 2010-26 which amended FASB ASC 944-30 to provide further guidance regarding the capitalization of costs relating to the acquisition or renewal of insurance contracts. Specifically, only qualifying costs associated with successful contract acquisitions are permitted to be deferred. The amended guidance is effective for fiscal years beginning after December 15, 2011 (and for interim periods within such years), with early adoption permitted as of the beginning of the entity's annual reporting period. The amended guidance should be applied prospectively, but retrospective application for all prior periods is allowed. The Company does not believe that the adoption of this statement will have a material impact on our financial statements.

 
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In May 2011, the FASB issued ASU 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (“IFRS ”) (“ASU 2011-04”). This pronouncement was issued to provide a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between U.S. GAAP and IFRS. ASU 2011-04 changes certain fair value measurement principles and enhances the disclosure requirements particularly for Level 3 fair value measurements. This pronouncement is effective for reporting periods beginning on or after December 15, 2011, with early adoption prohibited. The new guidance will require prospective application. The Company does not believe that the adoption of this statement will have a material impact on our financial statements.
 
In June 2011, the FASB issued ASU 2011-05, Presentation of Comprehensive Income , (“ASU 2011-05”). ASU 2011-05 requires the presentation of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of equity. ASU 2011-05 will be effective for public companies during the interim and annual periods beginning after December 15, 2011, with early adoption permitted.  The adoption of ASU 2011-05 did not have a material effect on the Company’s condensed consolidated financial statements.
 
From time to time, new accounting pronouncements are issued by the FASB or the SEC that are adopted by the Company as of the specified effective date. Unless otherwise discussed, these ASU’s entail technical corrections to existing guidance or affect guidance related to specialized industries or entities and therefore will have minimal, if any, impact on our financial position or results of operations upon adoption.
 
Results of Operations
 
AMERCO and Consolidated Entities
 
Quarter Ended September 30, 2011 compared with the Quarter Ended September 30, 2010
 
Listed below on a consolidated basis are revenues for our major product lines for the second quarter of fiscal 2012 and the second quarter of fiscal 2011:
 
   
Quarter Ended September 30,
 
   
2011
   
2010
 
   
(Unaudited)
 
   
(In thousands)
 
 Self-moving equipment rentals
  $ 511,626     $ 467,128  
 Self-storage revenues
    34,008       30,647  
 Self-moving and self-storage products and service sales
    59,768       56,821  
 Property management fees
    4,826       4,580  
 Life insurance premiums
    46,197       40,022  
 Property and casualty insurance premiums
    8,749       8,300  
 Net investment and interest income
    15,901       12,874  
 Other revenue
    22,106       16,604  
 Consolidated revenue
  $ 703,181     $ 636,976  
 
Self-moving equipment rental revenues increased $44.5 million during the second quarter of fiscal 2012, compared with the second quarter of fiscal 2011. In-Town and one-way transactions both increased during the second quarter of fiscal 2012.  The number of trucks in our fleet increased approximately 4% during the quarter and we also recognized improvements in overall utilization of the fleet.  We believe the growth in the number of transactions was influenced by enhancements we have made in our ability to serve customers as well as from an increase in demand for our services.
 
Self-storage revenues increased $3.4 million during the second quarter of fiscal 2012, compared with the second quarter of fiscal 2011 due primarily to an increase in the number of rooms rented along with a modest improvement in overall rates per occupied square foot.  Average occupancy during the second quarter of fiscal 2012 increased by nearly 1,000,000 square feet compared to the same period last year.

 
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Sales of self-moving and self-storage products and services increased $2.9 million during the second quarter of fiscal 2012, compared with the second quarter of fiscal 2011.  Increases were recognized in the sale of moving supplies, propane and towing accessories and installation.
 
Life insurance premiums increased $6.2 million during the second quarter of fiscal 2012, compared with the second quarter of fiscal 2011 primarily attributable to Medicare supplement premiums.
 
Property and casualty insurance premiums increased $0.4 million during the second quarter of fiscal 2012, compared with the second quarter of fiscal 2011 due to increases in Safestor and Safetow.
 
Other revenue increased $5.5 million during the second quarter of fiscal 2012, compared with the second quarter of fiscal 2011 primarily from the expansion of new business initiatives including our U-Box TM program.
 
As a result of the items mentioned above, revenues for AMERCO and its consolidated entities were $703.2 million for the second quarter of fiscal 2012, compared with $637.0 million for the second quarter of fiscal 2011.
 
Listed below are revenues and earnings from operations at each of our operating segments for the second quarter of fiscal 2012 and the second quarter of fiscal 2011. The insurance companies second quarters ended June 30, 2011 and 2010.
 
   
Quarter Ended September 30,
 
   
2011
   
2010
 
   
(Unaudited)
 
   
(In thousands)
 
 Moving and storage
           
 Revenues
  $ 639,618     $ 582,632  
 Earnings from operations
    181,826       156,444  
 Property and casualty insurance
               
 Revenues
    11,673       10,396  
 Earnings from operations
    2,197       2,007  
 Life insurance
               
 Revenues
    53,192       45,399  
 Earnings from operations
    5,796       3,368  
 Eliminations
               
 Revenues
    (1,302 )     (1,451 )
 Earnings from operations
    (5,386 )     (3,698 )
 Consolidated results
               
 Revenues
    703,181       636,976  
 Earnings from operations
    184,433       158,121  
 
Total costs and expenses increased $39.9 million during the second quarter of fiscal 2012, compared with the second quarter of fiscal 2011.  Life Insurance accounted for $5.4 million of the increase due to additional commissions, benefits and losses associated with the increase in new business.
 
Operating expenses for Moving and Storage increased $25.3 million with a significant portion of this coming from spending on rental equipment maintenance, personnel, and operating costs associated with the U-Box program.  Cost of sales and commission expenses increased in relation to the associated revenues. Depreciation expense, before gains on the disposal of equipment increased $2.9 million while lease expense decreased $5.3 million.  Over the last several years the Company has decreased its use of leases for financing new equipment acquisitions and increased its use of term loans and securitizations, which is the primary cause of the decrease in lease expense and increase in depreciation.
 
As a result of the above mentioned changes in revenues and expenses, earnings from operations increased to $184.4 million for the second quarter of fiscal 2012, compared with $158.1 million for the second quarter of fiscal 2011.
 
Interest expense for the second quarter of fiscal 2012 was $23.0 million, compared with $21.8 million for the second quarter of fiscal 2011 due to an increase in average borrowings.

 
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Income tax expense was $60.5 million for the second quarter of fiscal 2012, compared with $51.1 million for the second quarter of fiscal 2011 due to higher pretax earnings for the second quarter of fiscal 2012.
 
All of the Series A Preferred stock was redeemed on June 1, 2011; therefore, no dividends were accrued for the second quarter of fiscal 2012. Dividends accrued on our Series A Preferred were $3.1 million for the second quarter of fiscal 2011.
 
As a result of the above mentioned items, earnings available to common shareholders were $101.2 million for the second quarter of fiscal 2012, compared with $82.0 million for the second quarter of fiscal 2011.
 
Basic and diluted earnings per share for the second quarter of fiscal 2012 were $5.20, compared with $4.22 for the second quarter of fiscal 2011.
 
The weighted average common shares outstanding basic and diluted were 19,470,948 for the second quarter of fiscal 2012, compared with 19,427,595 for the second quarter of fiscal 2011.
 
Moving and Storage
 
Quarter Ended September 30, 2011 compared with the Quarter Ended September 30, 2010
 
Listed below are revenues for the major product lines at our Moving and Storage operating segment for the second quarter of fiscal 2012 and the second quarter of fiscal 2011:
 
 
   
Quarter Ended September 30,
 
   
2011
   
2010
 
   
(Unaudited)
 
   
(In thousands)
 
 Self-moving equipment rentals
  $ 512,073     $ 467,797  
 Self-storage revenues
    34,008       30,647  
 Self-moving and self-storage products and service sales
    59,768       56,821  
 Property management fees
    4,826       4,580  
 Net investment and interest income
    6,809       6,425  
 Other revenue
    22,134       16,362  
 Moving and Storage revenue
  $ 639,618     $ 582,632  
 
Self-moving equipment rental revenues increased $44.3 million during the second quarter of fiscal 2012, compared with the second quarter of fiscal 2011. In-Town and one-way transactions both increased during the second quarter of fiscal 2012.  The number of trucks in our fleet increased approximately 4% during the quarter and we also recognized improvements in overall utilization of the fleet.  We believe the growth in the number of transactions was influenced by enhancements we have made in our ability to serve customers as well as from an increase in demand for our services.
 
Self-storage revenues increased $3.4 million during the second quarter of fiscal 2012, compared with the second quarter of fiscal 2011 due primarily to an increase in the number of rooms rented along with a modest improvement in overall rates per occupied square foot.  Average occupancy during the second quarter of fiscal 2012 increased by nearly 1,000,000 square feet compared to the same period last year.  During the quarter we added over 316,000 of new net rentable square feet to our portfolio, and compared to the same period last year we have increased available square feet by over 1,216,000 square feet.
 
Sales of self-moving and self-storage products and services increased $2.9 million during the second quarter of fiscal 2012, compared with the second quarter of fiscal 2011.  Increases were recognized in the sale of moving supplies, propane and towing accessories and installation.
 
Other revenue increased $5.8 million during the second quarter of fiscal 2012, compared with the second quarter of fiscal 2011 due primarily from the expansion of new business initiatives including our U-Box TM program.

 
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The Company owns and manages self-storage facilities. Self-storage revenues reported in the consolidated financial statements represent Company-owned locations only. Self-storage data for our owned storage locations follows:
 
   
Quarter Ended September 30,
 
   
2011
   
2010
 
   
(Unaudited)
 
   
(In thousands, except occupancy rate)
 
Room count as of September 30
    160       148  
Square footage as of September 30
    13,248       12,032  
Average number of rooms occupied
    126       115  
Average occupancy rate based on room count
    79.1 %     77.9 %
Average square footage occupied
    10,575       9,576  
 
Total costs and expenses increased $33.2 million during the second quarter of fiscal 2012, compared with the second quarter of fiscal 2011.  Operating expenses increased $25.3 million with a significant portion of this coming from spending on rental equipment maintenance, personnel, and operating costs associated with the U-Box program.  Cost of sales and commission expenses increased in relation to the associated revenues. Depreciation expense, before gains on the disposal of equipment increased $2.9 million while lease expense decreased $5.3 million.  Over the last several years the Company has decreased its use of leases for financing new equipment acquisitions and increased its use of term loans and securitizations, which is the primary cause of the decrease in lease expense and increase in depreciation.
 
Equity in the earnings of AMERCO’s insurance subsidiaries increased $1.6 million for the second quarter of fiscal 2012, compared with the second quarter of fiscal 2011.
 
As a result of the above mentioned changes in revenues and expenses, earnings from operations increased to $181.8 million for the second quarter of fiscal 2012, compared with $156.4 million for the second quarter of fiscal 2011.
 
Property and Casualty Insurance
 
Quarter Ended June 30, 2011 compared with the Quarter Ended June 30, 2010
 
Net premiums were $8.7 million and $8.3 million for the second quarters ended June 30, 2011 and 2010, respectively. The increase was due to increased revenues at U-Haul.
 
Net investment income was $2.9 million and $2.1 million for the second quarters ended June 30, 2011 and 2010, respectively. The increase was due to investment gains recognized on asset disposals.
 
Net operating expenses were $3.6 million and $4.2 million for the second quarters ended June 30, 2011 and 2010, respectively. The decrease was due to a decrease in the administrative fees paid on the sale of additional liability policies combined with an increase in fees earned from U-Haul in 2011.
 
Benefits and losses incurred were $5.9 million and $4.2 million for the second quarters ended June 30, 2011 and 2010, respectively. The increase was due to the settlement of a reinsurance dispute.
 
As a result of the above mentioned changes in revenues and expenses, pretax earnings from operations were $2.2 million and $2.0 million for the second quarters ended June 30, 2011 and 2010, respectively.
 
Life Insurance
 
Quarter Ended June 30, 2011 compared with the Quarter Ended June 30, 2010
 
Net premiums were $46.2 million and $40.0 million for the quarters ended June 30, 2011 and 2010, respectively.  Medicare supplement premiums increased $11.4 million, of which $12.8 million was attributable to the acquisition of a block of Medicare supplement policies in September 2010, offset by policy terminations in excess of rate increases on existing business.  All other business had a net decrease in premiums of $5.2 million for the quarter.
 
Net investment income was $6.7 million and $4.8 million for the quarters ended June 30, 2011 and 2010, respectively.  The increase was due to an additional $0.4 million in gains on the sale of securities and an increase in interest income due to a larger invested asset base.

 
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Net operating expenses were $6.1 million and $7.0 million for the quarters ended June 30, 2011 and 2010, respectively. The decrease was primarily due to a reduction in life insurance commissions offset by increases due to the acquisition of the last year’s Medicare supplement block of business.
 
Benefits and losses incurred were $38.6 million and $33.1 million for the quarters ended June 30, 2011 and 2010, respectively.  Medicare supplement benefits increased $9.8 million, of which $11.8 million was due to the acquisition of the Medicare supplement block of business, offset by reductions recognized on the existing business.  Other product lines experienced a $4.3 million decrease for the quarter.
 
Amortization of deferred acquisition costs (“DAC”) and the value of business acquired (“VOBA”) was $2.7 million and $1.9 million for the quarters ended June 30, 2011 and 2010, respectively.  The increase was primarily caused by acquisition of last year’s Medicare supplement block of business and coinsurance of the final expense block of business.
 
As a result of the above mentioned changes in revenues and expenses, pretax earnings from operations were $5.8 million and $3.4 million for the quarters ended June 30, 2011 and 2010, respectively.
 
AMERCO and Consolidated Entities
 
Six Months Ended September 30, 2011 compared with the Six Months Ended September 30, 2010
 
Listed below on a consolidated basis are revenues for our major product lines for the first six months of fiscal 2012 and the first six months of fiscal 2011:
 
   
Six Months Ended September 30,
 
   
2011
   
2010
 
   
(Unaudited)
 
   
(In thousands)
 
 Self-moving equipment rentals
  $ 958,174     $ 886,591  
 Self-storage revenues
    65,836       58,874  
 Self-moving and self-storage products and service sales
    124,146       120,111  
 Property management fees
    9,561       9,116  
 Life insurance premiums
    97,196       77,825  
 Property and casualty insurance premiums
    15,647       14,479  
 Net investment and interest income
    33,164       26,229  
 Other revenue
    42,422       29,698  
 Consolidated revenue
  $ 1,346,146     $ 1,222,923  
 
Self-moving equipment rental revenues increased $71.6 million during the first six months of fiscal 2012, compared with the first six months of fiscal 2011.  The increase was due to growth in both the number of transactions and average revenue per transaction for In-Town and one-way moves.  Factors which contribute to changes in revenue per transaction include average miles driven, the mix of equipment type rented and rental rates charged.  During the first six months of fiscal 2012 the number of trucks in our fleet increased approximately 4%.  We have also achieved improvements in overall utilization of the fleet.  We believe the growth in the number of transactions was influenced by enhancements we have made in our ability to serve customers as well as from an increase in demand for our services.
 
Self-storage revenues increased $7.0 million during the first six months of fiscal 2012, compared with the first six months of fiscal 2011 due primarily to an increase in the number of rooms rented combined with a modest improvement in overall rates per occupied square foot.  Our average occupancy during the first six months of fiscal 2012 increased by nearly 913,000 square feet compared to the same period last year.  During the first six months we added over 714,000 of new net rentable square feet to our portfolio.
 
Sales of self-moving and self-storage products and services increased $4.0 million during the first six months of fiscal 2012, compared with the first six months of fiscal 2011.  The primary reason for the increase was from the sale of moving supplies.
 
Life insurance premiums increased $19.4 million during the first six months of fiscal 2012, compared with the first six months of fiscal 2011 primarily attributable to Medicare supplement premiums.

 
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Property and casualty insurance premiums increased $1.2 million during the first six months of fiscal 2012, compared with the first six months of fiscal 2011 primarily from policies sold in conjunction with U-Haul rental transactions. As moving transactions have increased this year so have the related premiums.
 
Other revenue increased $12.7 million during the first six months of fiscal 2012, compared with the first six months of fiscal 2011 primarily from the expansion of new business initiatives including our U-Box TM program.
 
As a result of the items mentioned above, revenues for AMERCO and its consolidated entities were $1,346.1 million for the first six months of fiscal 2012, as compared with $1,222.9 million for the first six months of fiscal 2011.
 
Listed below are revenues and earnings from operations at each of our operating segments for the first six months of fiscal 2012 and the first six months of fiscal 2011. The insurance companies first six months ended June 30, 2011 and 2010.
 
   
Six Months Ended September 30,
 
   
2011
   
2010
 
   
(Unaudited)
 
   
(In thousands)
 
 Moving and storage
           
 Revenues
  $ 1,214,617     $ 1,117,790  
 Earnings from operations
    329,097       282,879  
 Property and casualty insurance
               
 Revenues
    20,805       18,490  
 Earnings from operations
    4,096       3,404  
 Life insurance
               
 Revenues
    113,191       89,241  
 Earnings from operations
    7,831       6,771  
 Eliminations
               
 Revenues
    (2,467 )     (2,598 )
 Earnings from operations
    (8,228 )     (6,824 )
 Consolidated results
               
 Revenues
    1,346,146       1,222,923  
 Earnings from operations
    332,796       286,230  
 
Total costs and expenses increased $76.7 million during the first six months of fiscal 2012, compared with the first six months of fiscal 2011.  Life Insurance accounted for $22.9 million of the increase due to additional commissions, benefits and losses associated with the increase in new business.
 
Operating expenses for the Moving and Storage operating segment increased $42.6 million due largely to spending on rental equipment maintenance and personnel.  Cost of sales and commission expenses increased in relation to the associated revenues.  Depreciation expense, before gains on the disposal of equipment increased $4.0 million while lease expense decreased $9.7 million.  Over the last several years the Company has decreased its use of leases for financing new equipment acquisitions and increased its use of term loans and securitizations, which is the primary cause of the decrease in lease expense and increase in depreciation.
 
 As a result of the above mentioned changes in revenues and expenses, earnings from operations increased to $332.8 million for the first six months of fiscal 2012, as compared with $286.2 million for the first six months of fiscal 2011.
 
Interest expense for the first six months of fiscal 2012 was $45.6 million, compared with $43.3 million for the first six months of fiscal 2011 due to increased borrowings.
 
Income tax expense was $108.0 million for the first six months of fiscal 2012, compared with $91.3 million for first six months of fiscal 2011 due to higher pretax earnings for the first six months of fiscal 2012.
 
Dividends accrued or paid on our Series A Preferred were $2.9 million and $6.3 million for the first six months of fiscal 2012 and 2011, respectively.  All of the Series A Preferred stock was redeemed on June 1, 2011; therefore, no dividends were accrued for the second quarter of fiscal 2012.

 
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As a result of the above mentioned items, earnings available to common shareholders were $170.4 million for the first six months of fiscal 2012, compared with $145.3 million for the first six months of fiscal 2011.
 
Basic and diluted earnings per common share for the first six months of fiscal 2012 were $8.75, compared with $7.48 for the first six months of fiscal 2011.
 
The weighted average common shares outstanding basic and diluted were 19,465,530 for the first six months of fiscal 2012, compared with 19,421,205 for the first six months of fiscal 2011.
 
Moving and Storage
 
Six Months Ended September 30, 2011 compared with the Six Months Ended September 30, 2010
 
Listed below are revenues for the major product lines at our Moving and Storage operating segment for the first six months of fiscal 2012 and the first six months of fiscal 2011:
 
   
Six Months Ended September 30,
 
   
2011
   
2010
 
   
(Unaudited)
 
   
(In thousands)
 
 Self-moving equipment rentals
  $ 958,958     $ 887,677  
 Self-storage revenues
    65,836       58,874  
 Self-moving and self-storage products and service sales
    124,146       120,111  
 Property management fees
    9,561       9,116  
 Net investment and interest income
    13,838       12,715  
 Other revenue
    42,278       29,297  
 Moving and Storage revenue
  $ 1,214,617     $ 1,117,790  
 
Self-moving equipment rental revenues increased $71.3 million during the first six months of fiscal 2012, compared with the first six months of fiscal 2011.  The increase was due to growth in both the number of transactions and average revenue per transaction for In-Town and one-way moves.  Factors which contribute to changes in revenue per transaction include average miles driven, the mix of equipment type rented and rental rates charged.  During the first six months of fiscal 2012 the number of trucks in our fleet increased approximately 4%.  We have also achieved improvements in overall utilization of the fleet.  We believe the growth in the number of transactions was influenced by enhancements we have made in our ability to serve customers as well as from an increase in demand for our services.
 
Self-storage revenues increased $7.0 million during the first six months of fiscal 2012, compared with the first six months of fiscal 2011 due primarily to an increase in the number of rooms rented combined with a modest improvement in overall rates per occupied square foot.  Our average occupancy during the first six months of fiscal 2012 increased by nearly 913,000 square feet compared to the same period last year.  During the first six months we added over 714,000 of new net rentable square feet to our portfolio.
 
Sales of self-moving and self-storage products and services increased $4.0 million during the first months of fiscal 2012, compared with the first six months of fiscal 2011.  The primary reason for the increase was from the sale of moving supplies.
 
Other revenue increased $13.0 million during the first six months of fiscal 2012, compared with the first six months of fiscal 2011 primarily from the expansion of new business initiatives including our U-Box TM program.

 
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The Company owns and manages self-storage facilities. Self-storage revenues reported in the consolidated financial statements represent Company-owned locations only. Self-storage data for our owned storage locations follows:
 
   
Six Months Ended September 30,
 
   
2011
   
2010
 
   
(Unaudited)
 
   
(In thousands, except occupancy rate)
 
Room count as of September 30
    160       148  
Square footage as of September 30
    13,248       12,032  
Average number of rooms occupied
    123       112  
Average occupancy rate based on room count
    78.0 %     76.8 %
Average square footage occupied
    10,311       9,398  
 
Total costs and expenses increased $51.8 million during the first six months of fiscal 2012, compared with the first six months of fiscal 2011.  Operating expenses increased $42.6 million due largely to spending on rental equipment maintenance and personnel.  Cost of sales and commission expenses increased in relation to the associated revenues.  Depreciation expense, before gains on the disposal of equipment increased $4.0 million while lease expense decreased $9.7 million.  Over the last several years the Company has decreased its use of leases for funding new equipment acquisitions and increased its use of term loans and securitizations, which is the primary cause of the decrease in lease expense and increase in depreciation.
 
Equity in the earnings of AMERCO’s insurance subsidiaries increased $1.2 million for the first six months of fiscal 2012, compared with the first six months of fiscal 2011.
 
As a result of the above mentioned changes in revenues and expenses, earnings from operations increased to $329.1 million for the first six months of fiscal 2012, compared with $282.9 million for the first six months of fiscal 2011.
 
Property and Casualty Insurance
 
Six Months Ended June 30, 2011 compared with the Six Months Ended June 30, 2010
 
Net premiums were $15.6 million and $14.5 million for the six months ended June 30, 2011 and 2010, respectively. The increase corresponded with the increased moving and storage transactions at U-Haul.
 
Net investment income was $5.2 million and $4.0 million for the six months ended June 30, 2011 and 2010, respectively. The increase was due to investment gains recognized on asset disposals.
 
Net operating expenses were $6.4 million and $7.0 million for the six months ended June 30, 2011 and 2010, respectively. The decrease was due to a decrease in the administrative fees paid on the sale of additional liability policies combined with an increase in fees earned from U-Haul in 2011.
 
Benefits and losses incurred were $10.3 million and $8.1 million for the six months ended June 30, 2011 and 2010, respectively. The increase was due to the settlement of a reinsurance dispute.
 
As a result of the above mentioned changes in revenues and expenses, pretax earnings from operations were $4.1 million and $3.4 million for the six months ended June 30, 2011 and 2010, respectively.
 
Life Insurance
 
Six Months Ended June 30, 2011 compared with the Six Months Ended June 30, 2010
 
Net premiums were $97.2 million and $77.8 million for the six months ended June 30, 2011 and 2010, respectively.  Medicare supplement premiums increased $22.8 million, of which $25.7 million was attributable to the acquisition of last year’s Medicare supplement block, offset by policy terminations which exceeded rate increases on existing business.  Increased premiums from the sale of life insurance products were more than offset by life insurance premiums ceded as part of a new reinsurance agreement entered into during the quarter.
 
Net investment income was $15.2 million and $10.3 million for the six months ended June 30, 2011 and 2010, respectively.  The increase was due to an additional $2.5 million in gains on the sale of securities and increased income due to a larger invested asset base.

 
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Net operating expenses were $14.2 million and $13.7 million for the six months ended June 30, 2011 and 2010, respectively.  General administrative expenses related to last year’s Medicare supplement acquisition accounted for the majority of this increase.
 
Benefits and losses incurred were $84.1 million and $64.7 million for the six months ended June 30, 2011 and 2010, respectively.  Medicare supplement benefits increased $21.7 million, of which $25.4 million was due to the acquisition of last year’s Medicare supplement block of business, offset by a reduction of $3.7 million in benefits on the existing business.  Other products lines accounted for a $2.3 million decrease for the six months.
 
Amortization of DAC and the VOBA was $7.1 million and $4.1 million for the six months ended June 30, 2011 and 2010, respectively.  Approximately $1.5 million of the increase was due to additional annuity DAC amortization which resulted from capital gains realized recognized during the year.  An additional $1.4 million was from the acquisition of last year’s Medicare supplement and final expense policies.
 
As a result of the above mentioned changes in revenues and expenses, pretax earnings from operations were $7.8 million and $6.8 million for the six months ended June 30, 2011 and 2010, respectively.
 
Liquidity and Capital Resources
 
We believe our current capital structure is a positive factor that will enable us to pursue our operational plans and goals, and provide us with sufficient liquidity for the foreseeable future. The majority of our obligations currently in place mature at the end of fiscal years 2014, 2015 or 2018. However, since there are many factors which could affect our liquidity, including some which are beyond our control, there is no assurance that future cash flows will be sufficient to meet our outstanding debt obligations and our other future capital needs.
 
At September 30, 2011, cash and cash equivalents totaled $448.2 million, compared with $375.5 million on March 31, 2011. The assets of our insurance subsidiaries are generally unavailable to fulfill the obligations of non-insurance operations (AMERCO, U-Haul and Real Estate). As of September 30, 2011 (or as otherwise indicated), cash and cash equivalents, other financial assets (receivables, short-term investments, other investments, fixed maturities, and related party assets) and obligations of each operating segment were:
 
 
   
Moving & Storage
   
Property and Casualty Insurance (a)
   
Life Insurance (a)
 
   
(Unaudited)
 
   
(In thousands)
 
Cash and cash equivalents
  $ 421,425     $ 16,812     $ 9,922  
Other financial assets
    377,270       406,025       669,621  
Debt obligations
    1,480,586       -       -  
                         
(a) As of June 30, 2011
                       
 
At September 30, 2011, our Moving and Storage operating segment had cash available under existing credit facilities of $300.2 million.
 
Net cash provided by operating activities increased $61.1 million in the first six months of fiscal 2012 compared with fiscal 2011 primarily due to improved profitability at the Moving and Storage operating segment.  This improvement largely came from increased revenues.
 
Net cash used in investing activities increased $131.9 million in the first six months of fiscal 2012, compared with fiscal 2011. Purchases of property, plant and equipment, which are reported net of cash from leases, increased $74.1 million. Cash from the sales of property, plant and equipment decreased $11.9 million largely due to a decline in the number of units sold.  Cash used for investing activities at the insurance companies increased $33.5 million primarily due to investment in their fixed maturity portfolios.
 
Net cash used by financing activities decreased $57.5 million in the first six months of fiscal 2012, as compared with fiscal 2011.  The net decrease in cash used was a result of an increase in new borrowing in fiscal 2012 compared to the same period in fiscal 2011.  Net annuity withdrawals at Life Insurance decreased $2.9 million.

 
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Liquidity and Capital Resources and Requirements of Our Operating Segments
 
Moving and Storage
 
To meet the needs of our customers, U-Haul maintains a large fleet of rental equipment. Capital expenditures have primarily reflected new rental equipment acquisitions and the buyouts of existing fleet from leases. The capital to fund these expenditures has historically been obtained internally from operations and the sale of used equipment and externally from debt and lease financing. In the future, we anticipate that our internally generated funds will be used to service the existing debt and fund operations. U-Haul estimates that during fiscal 2012, the Company will reinvest in its truck and trailer rental fleet approximately $315 million, net of equipment sales excluding any lease buyouts. Through the first six months of this year we have reinvested $149 million of this projected amount. Fleet investments in fiscal 2012 and beyond will be dependent upon several factors including availability of capital, the truck rental environment and the used-truck sales market. We anticipate that the fiscal 2012 investments will be funded largely through debt financing, external lease financing and cash from operations. Management considers several factors including cost and tax consequences when selecting a method to fund capital expenditures. Our allocation between debt and lease financing can change from year to year based upon financial market conditions which may alter the cost or availability of financing options.
 
Real Estate has traditionally financed the acquisition of self-storage properties to support U-Haul's growth through debt financing and funds from operations and sales. The Company’s plan for the expansion of owned storage properties includes the acquisition of existing self-storage locations from third parties, the acquisition and development of bare land, and the acquisition and redevelopment of existing buildings not currently used for self-storage. The Company is funding these development projects through construction loans and internally generated funds. For the first six months of fiscal 2012, the Company invested approximately $47 million in real estate acquisitions, new construction and renovation and repair. For fiscal 2012, the timing of new projects will be dependent upon several factors including the entitlement process, availability of capital, weather, and the identification and successful acquisition of target properties. U-Haul's growth plan in self-storage also includes the expansion of the eMove program, which does not require significant capital.
 
Net capital expenditures (purchases of property, plant and equipment less proceeds from the sale of property, plant and equipment) were $238.0 million and $152.1 million for the first six months of fiscal 2012 and 2011, respectively. The Company entered into new equipment leases of $14.6 million and $19.8 million, during the first six months of fiscal 2012 and 2011, respectively.
 
The Moving and Storage operating segment continues to hold significant cash and has access to additional liquidity. Management may invest these funds in our existing operations, expand our product lines or pursue external opportunities in the self-moving and storage market place or reduce existing indebtedness where possible.
 
Property and Casualty Insurance
 
State insurance regulations restrict the amount of dividends that can be paid to stockholders of insurance companies. As a result, Property and Casualty Insurance’s assets are generally not available to satisfy the claims of AMERCO or its legal subsidiaries.
 
Stockholder’s equity was $157.3 million and $154.6 million at June 30, 2011 and December 31, 2010, respectively. The increase resulted from earnings of $2.7 million. Property and Casualty Insurance does not use debt or equity issues to increase capital and therefore has no direct exposure to capital market conditions other than through its investment portfolio.
 
Life Insurance
 
The Life Insurance operating segment manages its financial assets to meet policyholder and other obligations including investment contract withdrawals. Life Insurance’s net withdrawals for the six months ended June 30, 2011 were $8.6 million. State insurance regulations restrict the amount of dividends that can be paid to stockholders of insurance companies. As a result, Life Insurance’s funds are generally not available to satisfy the claims of AMERCO or its legal subsidiaries.
 
Life Insurance’s stockholder’s equity was $197.1 million and $188.7 million at June 30, 2011 and December 31, 2010, respectively. The increase resulted from earnings of $5.1 million and an increase in other comprehensive income of $3.3 million. Life Insurance does not use debt or equity issues to increase capital and therefore has no direct exposure to capital market conditions other than through its investment portfolio.

 
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Cash Provided (Used) from Operating Activities by Operating Segments
 
Moving and Storage
 
Net cash provided from operating activities were $389.0 million and $327.7 million for the first six months of fiscal 2012 and 2011, respectively. The increase in self-moving equipment rental revenues and product and service sales was the principal contributor to the increase in operating cash flows.
 
Property and Casualty Insurance
 
Net cash provided by operating activities were $5.6 million and $1.2 million for the first six months ended June 30, 2011 and 2010, respectively. The increase was due to the collection of reinsurance recoverables.
 
Property and Casualty Insurance’s cash and cash equivalents and short-term investment portfolio amounted to $75.3 million and $76.2 million at June 30, 2011 and December 31, 2010, respectively. This balance reflects funds in transition from maturity proceeds to long term investments. Management believes this level of liquid assets, combined with budgeted cash flow, is adequate to meet foreseeable cash needs. Capital and operating budgets allow Property and Casualty Insurance to schedule cash needs in accordance with investment and underwriting proceeds.
 
Life Insurance
 
Net cash provided by operating activities were $23.3 million and $28.9 million for the first six months ended June 30, 2011 and 2010, respectively. The significant reason for the decrease was due to an increase of reinsurance recoverable of $5.1 million.
 
In addition to cash flows from operating activities and financing activities, a substantial amount of liquid funds are available through Life Insurance’s short-term portfolio. At June 30, 2011 and December 31, 2010, cash and cash equivalents and short-term investments amounted to $14.2 million and $53.6 million, respectively. Management believes that the overall sources of liquidity are adequate to meet foreseeable cash needs.
 
Liquidity and Capital Resources - Summary
 
We believe we have the financial resources needed to meet our business plans including our working capital needs. The Company continues to hold significant cash and has access to existing credit facilities and additional liquidity to meet our anticipated capital expenditure requirements for investment in our rental fleet, rental equipment and storage acquisitions and build outs.
 
Our borrowing strategy is primarily focused on asset-backed financing and rental equipment operating leases. As part of this strategy, we seek to ladder maturities and hedge floating rate loans through the use of interest rate swaps. While each of these loans typically contains provisions governing the amount that can be borrowed in relation to specific assets, the overall structure is flexible with no limits on overall Company borrowings. Management feels it has adequate liquidity between cash and cash equivalents and unused borrowing capacity in existing credit facilities to meet the current and expected needs of the Company over the next several years. At September 30, 2011, we had cash availability under existing credit facilities of $300.2 million. It is possible that circumstances beyond our control could alter the ability of the financial institutions to lend us the unused lines of credit. We believe that there are additional opportunities for leverage in our existing capital structure. For a more detailed discussion of our long-term debt and borrowing capacity, please see Note 4, Borrowings of the Notes to Condensed Consolidated Financial Statements.

 
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Fair Value of Financial Instruments
 
Assets and liabilities recorded at fair value on the condensed consolidated balance sheets and are measured and classified based upon a three tiered approach to valuation. ASC 820 requires that financial assets and liabilities recorded at fair value be classified and disclosed in a Level 1, Level 2 or Level 3 category. For more information, please see Note 14, Fair Value Measurements of the Notes to Condensed Consolidated Financial Statements.
 
The available-for-sale securities held by the Company are recorded at fair value. These values are determined primarily from actively traded markets where prices are based either on direct market quotes or observed transactions. Liquidity is a factor considered during the determination of the fair value of these securities. Market price quotes may not be readily available for certain securities or the market for them has slowed or ceased. In situations where the market is determined to be illiquid, fair value is determined based upon limited available information and other factors including expected cash flows. At September 30, 2011, we had $1.2 million of available-for-sale assets classified in Level 3.
 
The interest rate swaps held by the Company as hedges against interest rate risk for our variable rate debt are recorded at fair value. These values are determined using pricing valuation models which include broker quotes for which significant inputs are observable. They include adjustments for counterparty credit quality and other deal-specific factors, where appropriate and are classified as Level 2.
 
Disclosures about Contractual Obligations and Commercial Commitments
 
Our estimates as to future contractual obligations have not materially changed from the disclosure included under the subheading Contractual Obligations in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the fiscal year ended March 31, 2011.
 
Off-Balance Sheet Arrangements
 
The Company uses off-balance sheet arrangements in situations where management believes that the economics and sound business principles warrant their use.
 
AMERCO utilizes operating leases for certain rental equipment and facilities with terms expiring substantially through 2018, with the exception of one land lease expiring in 2034. In the event of a shortfall in proceeds from the sales of the underlying rental equipment assets, AMERCO has guaranteed approximately $143.1 million of residual values at September 30, 2011 for these assets at the end of their respective lease terms. AMERCO has been leasing rental equipment since 1987. To date, we have not experienced residual value shortfalls related to these leasing arrangements. Using the average cost of fleet related debt as the discount rate, the present value of AMERCO’s minimum lease payments and residual value guarantees were $398.5 million at September 30, 2011.
 
Historically, AMERCO has used off-balance sheet arrangements in connection with the expansion of our self-storage business. For more information please see Note 10, Related Party Transactions of the Notes to Condensed Consolidated Financial Statements. These arrangements were primarily used when the Company’s overall borrowing structure was more limited. The Company does not face similar limitations currently and off-balance sheet arrangements have not been utilized in our self-storage expansion in recent years. In the future, the Company will continue to identify and consider off-balance sheet opportunities to the extent such arrangements would be economically advantageous to the Company and its stockholders.
 
The Company currently manages the self-storage properties owned or leased by SAC Holdings, Mercury, 4 SAC, 5 SAC, Galaxy, and Private Mini pursuant to a standard form of management agreement, under which the Company receives a management fee of between 4% and 10% of the gross receipts plus reimbursement for certain expenses. The Company received management fees, exclusive of reimbursed expenses, of $13.5 million from the above mentioned entities during the first six months of fiscal 2012 and 2011. This management fee is consistent with the fee received for other properties the Company previously managed for third parties. SAC Holdings, 4 SAC, 5 SAC, Galaxy and Private Mini are substantially controlled by Blackwater. Mercury is substantially controlled by Mark V. Shoen. James P. Shoen, a significant shareholder and director of AMERCO, has an interest in Mercury.

 
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The Company leases space for marketing company offices, vehicle repair shops and hitch installation centers from subsidiaries of SAC Holdings, 5 SAC and Galaxy. Total lease payments pursuant to such leases were $1.1 million and $1.2 million in the first six months of fiscal 2012 and 2011, respectively. The terms of the leases are similar to the terms of leases for other properties owned by unrelated parties that are leased to the Company.
 
At September 30, 2011, subsidiaries of SAC Holdings, 4 SAC, 5 SAC, Galaxy and Private Mini acted as U-Haul independent dealers. The financial and other terms of the dealership contracts with the aforementioned companies and their subsidiaries are substantially identical to the terms of those with the Company’s other independent dealers whereby commissions are paid by the Company based on equipment rental revenues. The Company paid the above mentioned entities $22.8 million and $21.4 million in commissions pursuant to such dealership contracts during the first six months of fiscal 2012 and 2011, respectively.
 
During the first six months of fiscal 2011, subsidiaries of the Company held various junior unsecured notes of SAC Holdings. Substantially all of the equity interest of SAC Holdings is controlled by Blackwater. Blackwater is wholly-owned by Mark V. Shoen. The Company does not have an equity ownership interest in SAC Holdings. The Company recorded interest income of $9.7 million and $9.6 million, and received cash interest payments of $10.0 million and $8.8 million, from SAC Holdings during the first six months of fiscal 2012 and 2011, respectively. The largest aggregate amount of notes receivable outstanding during the first six months of fiscal 2012 was $196.2 million and the aggregate notes receivable balance at September 30, 2011 was $195.8 million. In accordance with the terms of these notes, SAC Holdings may prepay the notes without penalty or premium at any time. The scheduled maturities of these notes are between 2019 and 2024.
 
These agreements along with notes with subsidiaries of SAC Holdings, 4 SAC, 5 SAC, Galaxy and Private Mini, excluding Dealer Agreements, provided revenues of $21.1 million, expenses of $1.1 million and cash flows of $23.9 million during the first six months of fiscal 2012. Revenues and commission expenses related to the Dealer Agreements were $108.1 million and $22.8 million, respectively during the first six months of fiscal 2012.
 
Fiscal 2012 Outlook
 
We will continue to focus our attention on increasing transaction volume and improving pricing, product and utilization for self-moving equipment rentals. Maintaining an adequate level of new investment in our truck fleet is an important component of our plan to meet our operational goals. Revenue in the U-Move program could be adversely impacted should we fail to execute in any of these areas. Even if we execute our plans, we could see declines in revenues primarily due to the continuing adverse economic conditions that are beyond our control.
 
We have added new storage locations and expanded at existing locations. In fiscal 2012, we are looking to complete current projects and increase occupancy in our existing portfolio of locations. New projects and acquisitions will be considered and pursued if they fit our long-term plans and meet our financial objectives. In the current environment we have focused fewer resources on new construction than in recent history. The Company will continue to invest capital and resources in the U-Box TM storage container program throughout fiscal 2012.
 
The Property and Casualty Insurance operating segment will continue to provide loss adjusting and claims handling for U-Haul and underwrite components of the Safemove, Safetow, Super Safemove and Safestor protection packages to U-Haul customers.
 
The Life Insurance operating segment is pursuing its goal of expanding its presence in the senior market through the sales of its Medicare supplement, life and annuity policies. This strategy includes growing its agency force, expanding its new product offerings, and pursuing business acquisition opportunities.
 
Cautionary Statements Regarding Forward-Looking Statements
 
This Quarterly Report on Form 10-Q, contains “forward-looking statements” regarding future events and our future results of operations. We may make additional written or oral forward-looking statements from time to time in filings with the SEC or otherwise. We believe such forward-looking statements are within the meaning of the safe-harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such statements may include, but are not limited to, projections of revenues, earnings or loss, estimates of capital expenditures, plans for future operations, products or services, financing needs and plans, our perceptions of our legal positions and

 
55

 

 
anticipated outcomes of government investigations and pending litigation against us, liquidity, goals and strategies, plans for new business, storage occupancy, growth rate assumptions, pricing, costs, and access to capital and leasing markets 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. Factors that could significantly affect results include, without limitation, the risk factors set forth in the section entitled Item 1A. Risk Factors contained in our Annual Report on Form 10-K for the fiscal year ended March 31, 2011, as well as the following: the Company’s ability to operate pursuant to the terms of its credit facilities; the Company’s ability to maintain contracts that are critical to its operations; the costs and availability of financing; the Company’s ability to execute its business plan; the Company’s ability to attract, motivate and retain key employees; general economic conditions; fluctuations in our costs to maintain and update our fleet and facilities; our ability to refinance our debt; changes in government regulations, particularly environmental regulations; our credit ratings; the availability of credit; changes in demand for our products; changes in the general domestic economy; the degree and nature of our competition; the resolution of pending litigation against the Company; changes in accounting standards and other factors described in this report or the other documents we file with the SEC. The above factors, the following disclosures, as well as other statements in this report and in the Notes to Condensed Consolidated Financial Statements, could contribute to or cause such risks or uncertainties, or could cause our stock price to fluctuate dramatically. Consequently, the forward-looking statements should not be regarded as representations or warranties by the Company that such matters will be realized. The Company assumes no obligation to update or revise any of the forward-looking statements, whether in response to new information, unforeseen events, changed circumstances or otherwise.
 
Item 3. Quantitative and Qualitative Disclosures about Market Risk
 
We are exposed to financial market risks, including changes in interest rates and currency exchange rates. To mitigate these risks, we may utilize derivative financial instruments, among other strategies. We do not use derivative financial instruments for speculative purposes.
 
  Interest Rate Risk
 
The exposure to market risk for changes in interest rates relates primarily to our variable rate debt obligations.  We have used interest rate swap agreements and forward swaps to reduce our exposure to changes in interest rates. The Company enters into these arrangements with counterparties that are significant financial institutions with whom we generally have other financial arrangements. We are exposed to credit risk should these counterparties not be able to perform on their obligations.
 
Notional Amount
 
Fair Value
 
Effective Date
 
Expiration Date
 
Fixed Rate
 
Floating Rate
 
 
$ 54,956  
(a), (b)
   $ (1,053 )
5/10/2006
 
4/10/2012
    5.06 %
1 Month LIBOR
  54,981  
(a), (b)
    (2,386 )
10/10/2006
 
10/10/2012
    5.57 %
1 Month LIBOR
  19,075  
(a)
    (1,544 )
7/10/2006
 
7/10/2013
    5.67 %
1 Month LIBOR
  249,166  
(a)
    (52,545 )
8/18/2006
 
8/10/2018
    5.43 %
1 Month LIBOR
  12,325  
(a)
    (1,215 )
2/12/2007
 
2/10/2014
    5.24 %
1 Month LIBOR
  8,294  
(a)
    (780 )
3/12/2007
 
3/10/2014
    4.99 %
1 Month LIBOR
  8,300  
(a)
    (763 )
3/12/2007
 
3/10/2014
    4.99 %
1 Month LIBOR
  9,700  
(a), (b)
    (826 )
8/15/2008
 
6/15/2015
    3.62 %
1 Month LIBOR
  10,292  
(a)
    (941 )
8/29/2008
 
7/10/2015
    4.04 %
1 Month LIBOR
  14,990  
(a)
    (1,559 )
9/30/2008
 
9/10/2015
    4.16 %
1 Month LIBOR
  8,813  
(a), (b)
    (366 )
3/30/2009
 
4/15/2016
    2.24 %
1 Month LIBOR
  11,625  
(a)
    (408 )
8/15/2010
 
7/15/2017
    2.15 %
1 Month LIBOR
  24,063  
(a), (b)
    (1,024 )
6/1/2011
 
6/1/2018
    2.38 %
1 Month LIBOR
  49,167  
(a), (b)
    (1,065 )
8/15/2011
 
8/15/2018
    1.86 %
1 Month LIBOR
  20,000  
(a), (b)
    (341 )
9/12/2011
 
9/10/2018
    1.75 %
1 Month LIBOR
                               
(a) interest rate swap agreement
                   
(b) forward swap
             
 
 

 
56

 

 
As of September 30, 2011, the Company had approximately $690.7 million of variable rate debt obligations. If LIBOR were to increase 100 basis points, the increase in interest expense on the variable rate debt would decrease future earnings and cash flows by approximately $1.3 million annually (after consideration of the effect of the above derivative contracts.)
 
Additionally, our insurance subsidiaries’ fixed income investment portfolios expose the Company to interest rate risk. This interest rate risk is the price sensitivity of a fixed income security to changes in interest rates. As part of our insurance companies’ asset and liability management, actuaries estimate the cash flow patterns of our existing liabilities to determine their duration. These outcomes are compared to the characteristics of the assets that are currently supporting these liabilities assisting management in determining an asset allocation strategy for future investments that management believes will mitigate the overall effect of interest rates.
 
Foreign Currency Exchange Rate Risk
 
The exposure to market risk for changes in foreign currency exchange rates relates primarily to our Canadian business. Approximately 6.6% and 6.3% of our revenue was generated in Canada during the first six months of fiscal 2012 and 2011, respectively. The result of a 10.0% change in the value of the U.S. dollar relative to the Canadian dollar would not be material to net income. We typically do not hedge any foreign currency risk since the exposure is not considered material.
 
Item 4. Controls and Procedures
 
 
Attached as exhibits to this Form 10-Q are certifications of our Chief Executive Officer (“CEO”) and Chief Accounting Officer (“CAO”), which are required in accordance with Rule 13a-14 of the Exchange Act. This "Controls and Procedures" section includes information concerning the controls and procedures evaluation referred to in the certifications and it should be read in conjunction with the certifications for a more complete understanding of the topics presented in the section, Evaluation of Disclosure Controls and Procedures.
 
  Evaluation of Disclosure Controls and Procedures
 
The Company’s management, with the participation of the CEO and CAO, conducted an evaluation of the effectiveness of the design and operation of the Company’s "disclosure controls and procedures" (as such term is defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)) (“Disclosure Controls”) as of the end of the period covered by this Form 10-Q. Our Disclosure Controls are designed to reasonably assure that information required to be disclosed in our reports filed under the Exchange Act, such as this Form 10-Q, is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Our Disclosure Controls are also designed to reasonably assure that such information is accumulated and communicated to our management, including our CEO and CAO, as appropriate to allow timely decisions regarding required disclosure. Based upon the controls evaluation, our CEO and CAO have concluded that as of the end of the period covered by this Form 10-Q, our Disclosure Controls were effective related to the above stated design purposes.
 
Inherent Limitations on the Effectiveness of Controls
 
The Company's management, including our CEO and CAO, does not expect that our Disclosure Controls or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

 
57

 

 
Changes in Internal Control over Financial Reporting
 
There have not been any changes in the Company’s internal control over financial reporting as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
 
PART II OTHER INFORMATION
 
Item 1. Legal Proceedings
 
For information regarding our legal proceedings please see Note 9, Contingencies of the Notes to Condensed Consolidated Financial Statements.
 
Item 1A. Risk Factors
 
We are not aware of any material updates to the risk factors described in the Company’s previously filed Annual Report on Form 10-K for the fiscal year ended March 31, 2011.
 
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 
On December 3, 2008, the Board authorized us, using management’s discretion, to buy back shares from former employees who were participants in our Employee Stock Ownership Plan (“ESOP”). To be eligible for consideration, the employees’ respective ESOP account balances must be valued at more than $1,000 at the then-prevailing market prices but have less than 100 shares. No such shares have been purchased.
 
Item 3. Defaults upon Senior Securities
 
Not applicable.
 
Item 4. (Removed and Reserved)
 
Item 5. Other Information
 
Not applicable.

 
58

 

 
Item 6. Exhibits
 
The following documents are filed as part of this report:
 
 
Exhibit Number
 
Description
 
Page or Method of Filing
3.1
 
Restated Articles of Incorporation of AMERCO
 
Incorporated by reference to AMERCO’s Registration Statement on form S-4, filed March 30, 2004, file no. 1-11255
 
3.2
 
Restated Bylaws of AMERCO
 
Incorporated by reference to AMERCO’s Current Report on Form 8-K ,filed on September 10, 2010, file no. 1-11255
 
4.1
 
Fourteenth Supplemental Indenture dated July 20, 2011 by and between AMERCO and U.S. Bank National Association
 
Incorporated by reference to AMERCO’s Current Report on Form 8-K ,filed on August 17, 2011, file no. 1-11255
 
4.2
 
Fifteenth Supplemental Indenture dated July 27, 2011 by and between AMERCO and U.S. Bank National Association
 
Incorporated by reference to AMERCO’s Current Report on Form 8-K ,filed on August 17, 2011, file no. 1-11255
 
4.3
 
Sixteenth Supplemental Indenture dated August 31, 2011 by and between AMERCO and U.S. Bank National Association
 
Incorporated by reference to AMERCO’s Current Report on Form 8-K ,filed on September 28, 2011, file no. 1-11255
 
4.4
 
Eleventh Supplemental Indenture dated June 7, 2011 by and between AMERCO and U.S. Bank National Association
 
Incorporated by reference to AMERCO’s Current Report on Form 8-K ,filed on October 31, 2011, file no. 1-11255
 
31.1
 
Rule 13a-14(a)/15d-14(a) Certificate of Edward J. Shoen, President and Chairman of the Board of AMERCO
 
 
Filed herewith
31.2
 
Rule 13a-14(a)/15d-14(a) Certificate of Jason A. Berg, Principal Financial Officer and Chief Accounting Officer of AMERCO
 
 
Filed herewith
32.1
 
Certificate of Edward J. Shoen, President and Chairman of the Board of AMERCO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 
Furnished herewith
32.2
 
Certificate of Jason A. Berg, Principal Financial Officer and Chief Accounting Officer of AMERCO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 
Furnished herewith
101.INS
 
XBRL Instance Document
 
 
Furnished herewith
101.SCH
 
XBRL Taxonomy Extension Schema
 
 
Furnished herewith
101.CAL
 
XBRL Taxonomy Extension Calculation Linkbase
 
 
Furnished herewith
101.LAB
 
XBRL Taxonomy Extension Label Linkbase
 
 
Furnished herewith
101.PRE
 
XBRL Taxonomy Extension Presentation Linkbase
 
 
Furnished herewith
101.DEF
 
XBRL Taxonomy Extension Definition Linkbase
 
 
Furnished herewith

 
59

 

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
 
 
Date:  November 2, 2011                                                                            /s/ Edward J. Shoen                                                       
Edward J. Shoen
President and Chairman of the Board
(Duly Authorized Officer)
 
 
Date:  November 2, 2011                                                                            /s/ Jason A. Berg                                                       
Jason A. Berg
Chief Accounting Officer
(Principal Financial Officer)
 

 
60

 



EXHIBIT 31.1
Rule 13a-14(a)/15d-14(a) Certification
 
I, Edward J. Shoen, certify that:
 

1.
I have reviewed this quarterly report on Form 10-Q of AMERCO (the “Registrant”);
 
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
 
4.
The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
 
 
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant’s, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
 
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
 
(c)
Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
 
(d)
Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
 
5.
The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
 
 
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
 
 
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
 


 /s/ Edward J. Shoen                                                 
Edward J. Shoen
President and Chairman of the
Board of AMERCO


 
Date: November 2, 2011
 





 EXHIBIT 31.2
Rule 13a-14(a)/15d-14(a) Certification
 
I, Jason A. Berg, certify that:
 

1.
I have reviewed this quarterly report on Form 10-Q of AMERCO (the “Registrant”);
 
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
 
4.
The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
 
 
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant’s, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
 
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
 
(c)
Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
 
(d)
Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
 
5.
The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
 
 
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
 
 
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
 


 /s/ Jason A. Berg  
Jason A. Berg
Principal Financial Officer and
Chief Accounting Officer of AMERCO

 
Date:  November 2, 2011





EXHIBIT 32.1

 
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the Form 10-Q for the quarter ended September 30, 2011 of AMERCO (the “Company”), as filed with the Securities and Exchange Commission on November 2, 2011 (the “Report”), I, Edward J. Shoen, President and Chairman of the Board of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
 
1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and
 
2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 

AMERCO,
a Nevada corporation

/s/ Edward J. Shoen                                            
Edward J. Shoen
President and Chairman of the Board
Date:  November 2, 2011




EXHIBIT 32.2

 
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the Form 10-Q for the quarter ended September 30, 2011 of AMERCO (the “Company”), as filed with the Securities and Exchange Commission on November 2, 2011 (the “Report”), I, Jason A. Berg, Chief Accounting Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
 
1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and
 
2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
AMERCO,
a Nevada corporation

/s/ Jason A. Berg                                            
Jason A. Berg
Principal Financial Officer and
Chief Accounting Officer
Date:  November 2, 2011