UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 2013
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. |
|
|
|
|
|
|
|
|
|
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 requiremen ts for the past 90 days. Yes [x] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulat ion 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 [x] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an ac celerated filer, a non-accelerated filer , or a smaller reporting company. See the definition s of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [x]
Non-accelerated filer [ ] (Do not check if a smaller reporting company) 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 [x]
19,607,788 shares of AMERCO Common Stock, $0.25 par value, were outstanding at August 1, 201 3 .
TABLE OF CONTENTS
|
PART I FINANCIAL INFORMATION |
|
Item 1. |
Financial Statements |
|
|
a) Condensed Consolidated Balance Sheets as of June 30, 2013 (unaudited) and March 31, 2013 |
1 |
|
b) Condensed Consolidated Statements of Operations for the Quarters ended June 30, 2013 and 2012 (unaudited) |
2 |
|
c ) Condensed Consolidated Statements of Comprehensive Income for the Quarters ended June 30, 2013 and 2012 (unaudited) |
3 |
|
d ) Condensed Consolidated Statements of Cash Flows for the Quarters ended June 31, 2013 and 2012 (unaudited) |
4 |
|
e ) Notes to Condensed Consolidated Financial Statements (unaudited) |
5 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
3 1 |
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
4 7 |
Item 4. |
Controls and Procedures |
4 8 |
|
|
|
|
PART II OTHER INFORMATION |
|
Item 1. |
Legal Proceedings |
4 9 |
Item 1A. |
Risk Factors |
4 9 |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
4 9 |
Item 3. |
Defaults Upon Senior Securities |
4 9 |
Item 4. |
Mine and Safety Disclosures |
4 9 |
Item 5. |
Other Information |
4 9 |
Item 6. |
Exhibits |
4 9 |
ITEM 1. Financial Statements
AMERCO AND CONSOLIDATED ENTITIES
CONDENSED CONSOLIDATED balance sheets
|
June 30, |
|
March 31, |
|
|
|
2013 |
|
2013 |
|
|
(Unaudited) |
|
|
|
|
(In thousands, except share data) |
||
ASSETS |
|
|
|
|
Cash and cash equivalents |
$ |
552,587 |
$ |
463,744 |
Reinsurance recoverables and trade receivables, net |
|
284,518 |
|
261,789 |
Inventories, net |
|
58,304 |
|
56,396 |
Prepaid expenses |
|
43,378 |
|
57,451 |
Investments, fixed maturities and marketable equities |
|
1,117,008 |
|
1,095,338 |
Investments, other |
|
231,418 |
|
241,765 |
Deferred policy acquisition costs, net |
|
97,823 |
|
93,043 |
Other assets |
|
104,744 |
|
99,986 |
Related party assets |
|
151,127 |
|
182,035 |
|
|
2,640,907 |
|
2,551,547 |
Property, plant and equipment, at cost: |
|
|
|
|
Land |
|
348,234 |
|
333,228 |
Buildings and improvements |
|
1,278,622 |
|
1,197,875 |
Furniture and equipment |
|
313,796 |
|
311,142 |
Rental trailers and other rental equipment |
|
331,433 |
|
317,476 |
Rental trucks |
|
2,263,692 |
|
2,154,688 |
|
|
4,535,777 |
|
4,314,409 |
Less: Accumulated depreciation |
|
(1,597,922) |
|
(1,559,355) |
Total property, plant and equipment |
|
2,937,855 |
|
2,755,054 |
Total assets |
$ |
5,578,762 |
$ |
5,306,601 |
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
Liabilities: |
|
|
|
|
Accounts payable and accrued expenses |
$ |
366,302 |
$ |
358,491 |
Notes, loans and leases payable |
|
1,737,277 |
|
1,661,845 |
Policy benefits and losses, claims and loss expenses payable |
|
1,115,821 |
|
1,115,048 |
Liabilities from investment contracts |
|
538,777 |
|
510,789 |
Other policyholders' funds and liabilities |
|
7,114 |
|
7,294 |
Deferred income |
|
37,752 |
|
30,217 |
Deferred income taxes |
|
429,428 |
|
393,658 |
Total liabilities |
|
4,232,471 |
|
4,077,342 |
|
|
|
|
|
Commitments and contingencies (notes 4, 7, 8 and 9) |
|
– |
|
– |
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 shares issued and none outstanding as of June 30 and March 31, 2013 |
|
– |
|
– |
Series B preferred stock, with no par value, 100,000 shares authorized; none |
|
|
|
|
issued and outstanding as of June 30 and March 31, 2013 |
|
– |
|
– |
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 June 30 and March 31, 2013 |
|
– |
|
– |
Common stock of $0.25 par value, 150,000,000 shares authorized; 41,985,700 |
|
|
|
|
issued and 19,607,788 outstanding as of June 30 and March 31, 2013 |
|
10,497 |
|
10,497 |
Additional paid-in capital |
|
439,524 |
|
438,168 |
Accumulated other comprehensive loss |
|
(20,099) |
|
(22,680) |
Retained earnings |
|
1,595,598 |
|
1,482,630 |
Cost of common shares in treasury, net (22,377,912 shares as of June 30 and March 31, 2013) |
|
(525,653) |
|
(525,653) |
Cost of preferred shares in treasury, net (6,100,000 shares as of June 30 and March 31, 2013) |
|
(151,997) |
|
(151,997) |
Unearned employee stock ownership plan shares |
|
(1,579) |
|
(1,706) |
Total stockholders' equity |
|
1,346,291 |
|
1,229,259 |
Total liabilities and stockholders' equity |
$ |
5,578,762 |
$ |
5,306,601 |
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
AMERCO AND CONSOLIDATED ENTITIES
CONDENSED CONSOLIDATED Statements of operations
|
Quarter Ended June 30, |
|||
|
|
2013 |
|
2012 |
|
|
(Unaudited) |
||
|
|
(In thousands, except share and per share amounts) |
||
Revenues: |
|
|
|
|
Self-moving equipment rentals |
$ |
521,649 |
$ |
466,994 |
Self-storage revenues |
|
42,099 |
|
34,736 |
Self-moving and self-storage products and service sales |
|
70,691 |
|
67,178 |
Property management fees |
|
5,161 |
|
4,860 |
Life insurance premiums |
|
41,062 |
|
46,426 |
Property and casualty insurance premiums |
|
7,966 |
|
7,243 |
Net investment and interest income |
|
18,989 |
|
14,517 |
Other revenue |
|
39,214 |
|
25,722 |
Total revenues |
|
746,831 |
|
667,676 |
|
|
|
|
|
Costs and expenses: |
|
|
|
|
Operating expenses |
|
309,501 |
|
283,393 |
Commission expenses |
|
68,627 |
|
61,107 |
Cost of sales |
|
35,570 |
|
32,227 |
Benefits and losses |
|
42,633 |
|
48,338 |
Amortization of deferred policy acquisition costs |
|
3,683 |
|
2,811 |
Lease expense |
|
27,007 |
|
32,796 |
Depreciation, net of (gains) on disposals of (($11,565) and ($7,516), respectively) |
|
57,434 |
|
56,125 |
Total costs and expenses |
|
544,455 |
|
516,797 |
|
|
|
|
|
Earnings from operations |
|
202,376 |
|
150,879 |
Interest expense |
|
(23,328) |
|
(23,491) |
Pretax earnings |
|
179,048 |
|
127,388 |
Income tax expense |
|
(66,080) |
|
(46,819) |
Earnings available to common stockholders |
$ |
112,968 |
$ |
80,569 |
Basic and diluted earnings per common share |
$ |
5.78 |
$ |
4.13 |
Weighted average common shares outstanding: Basic and diluted |
|
19,545,618 |
|
19,502,369 |
|
|
|
|
|
Related party revenues for the first quarter of fiscal 201 4 and 201 3 , net of eliminations, were $ 8.4 million and $ 8.7 million , respectively.
Related party costs and expenses for the first quarter of fiscal 201 4 and 201 3 , net of eliminations, were $ 14.0 million and $ 12.3 million , respectively.
The accompanying notes are an integral part of these condensed consolidated financial statements.
AMERCO AND CONSOLIDATED ENTITIES
Condensed consolidatED statements of COMPREHENSIVE INCOME (loss)
|
Pre-tax |
|
Tax |
|
Net |
|
|
|
(Unaudited) |
||||
|
|
(In thousands) |
||||
Comprehensive income: |
|
|
|
|||
Net earnings |
$ |
179,048 |
$ |
(66,080) |
$ |
112,968 |
Other comprehensive income (loss): |
|
|
|
|
|
|
Foreign currency translation |
|
(3,762) |
|
– |
|
(3,762) |
Unrealized net gain on investments |
|
89 |
|
(68) |
|
21 |
Change in fair value of cash flow hedges |
|
10,196 |
|
(3,874) |
|
6,322 |
Total comprehensive income |
$ |
185,571 |
$ |
(70,022) |
$ |
115,549 |
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended June 30, 2012 |
|
Pre-tax |
|
Tax |
|
Net |
|
|
(Unaudited) |
||||
|
|
(In thousands) |
||||
Comprehensive income: |
|
|
|
|||
Net earnings |
$ |
127,388 |
$ |
(46,819) |
$ |
80,569 |
Other comprehensive income (loss): |
|
|
|
|
|
|
Foreign currency translation |
|
(1,929) |
|
– |
|
(1,929) |
Unrealized net gain on investments |
|
1,873 |
|
(580) |
|
1,293 |
Change in fair value of cash flow hedges |
|
(515) |
|
196 |
|
(319) |
Total comprehensive income |
$ |
126,817 |
$ |
(47,203) |
$ |
79,614 |
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
AMERCO AND CONSOLIDATED ENTITIES
Condensed consolidatED statements of cash flows
Quarter Ended June 30, |
||||
|
2013 |
2012 |
||
|
|
(Unaudited) |
||
|
|
(In thousands) |
||
Cash flow from operating activities: |
||||
Net earnings |
112,968 |
80,569 |
||
Adjustments to reconcile net earnings to cash provided by operations: |
|
|
||
Depreciation |
68,999 |
63,641 |
||
Amortization of deferred policy acquisition costs |
3,683 |
2,811 |
||
Change in allowance for losses on trade receivables |
(14) |
(102) |
||
Change in allowance for inventory reserves |
(935) |
695 |
||
Net gain on sale of real and personal property |
(11,565) |
(7,516) |
||
Net (gain)loss on sale of investments |
(1,776) |
39 |
||
Deferred income taxes |
31,828 |
4,641 |
||
Net change in other operating assets and liabilities: |
|
|
||
Reinsurance recoverables and trade receivables |
(22,715) |
23,486 |
||
Inventories |
(973) |
(5,398) |
||
Prepaid expenses |
14,098 |
267 |
||
Capitalization of deferred policy acquisition costs |
(7,808) |
(5,420) |
||
Other assets |
(4,532) |
20,518 |
||
Related party assets |
24,878 |
144,890 |
||
Accounts payable and accrued expenses |
18,162 |
47,981 |
||
Policy benefits and losses, claims and loss expenses payable |
1,609 |
(24,242) |
||
Other policyholders' funds and liabilities |
(180) |
(1,884) |
||
Deferred income |
7,584 |
6,457 |
||
Related party liabilities |
5,962 |
1,448 |
||
Net cash provided by operating activities |
239,273 |
352,881 |
||
|
|
|
||
Cash flows from investing activities: |
|
|
||
Purchases of: |
|
|
||
Property, plant and equipment |
(275,156) |
(157,786) |
||
Short term investments |
(64,652) |
(60,395) |
||
Fixed maturities investments |
(66,855) |
(50,553) |
||
Equity securities |
(388) |
– |
||
Preferred stock |
(634) |
– |
||
Real estate |
(131) |
– |
||
Mortgage loans |
(12,904) |
(14,452) |
||
Proceeds from sale of: |
|
|
||
Property, plant and equipment |
93,239 |
62,426 |
||
Short term investments |
64,818 |
59,421 |
||
Fixed maturities investments |
41,491 |
23,978 |
||
Equity securities |
904 |
– |
||
Preferred stock |
3,295 |
1,003 |
||
Real estate |
– |
4 |
||
Mortgage loans |
23,258 |
11,547 |
||
Net cash used by investing activities |
(193,715) |
(124,807) |
||
|
|
|
||
Cash flows from financing activities: |
|
|
||
Borrowings from credit facilities |
|
88,182 |
26,187 |
|
Principal repayments on credit facilities |
|
(61,996) |
(61,142) |
|
Debt issuance costs |
|
(232) |
– |
|
Capital lease payments |
|
(10,449) |
(3,888) |
|
Leveraged Employee Stock Ownership Plan - repayments from loan |
|
127 |
162 |
|
Securitization deposits |
|
– |
(908) |
|
Investment contract deposits |
|
34,742 |
28,993 |
|
Investment contract withdrawals |
|
(6,754) |
(7,967) |
|
Net cash provided (used) by financing activities |
43,620 |
(18,563) |
||
|
|
|
||
Effects of exchange rate on cash |
(335) |
(376) |
||
|
|
|
||
Increase in cash and cash equivalents |
88,843 |
209,135 |
||
Cash and cash equivalents at the beginning of period |
463,744 |
357,180 |
||
Cash and cash equivalents at the end of period |
552,587 |
566,315 |
||
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
AMERCO and consolidated entities
notes to condensed consolidatED financial statements
1. Basis of Presentation
AMERCO, a Nevada corporation (“AMERCO”), has a first fiscal quarter that ends on the 30 th of June for each year that is referenced. Our insurance company subsidiaries have a firs t quarter that ends on the 3 1 st of March 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. Mana gement 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 201 3 and 20 12 correspond to fiscal 201 4 and 201 3 for AMERCO.
Accounts denominated in non-U.S. currencies have been translated into U.S. dollars. Certain amounts reported in previous years ha ve been reclassified to conform to the current presentation.
The condensed consolidated balance sheet as of June 30 , 201 3 and the related condensed consolidated statements of operations , comprehensive income and cash flows for the first quarter of fiscal 201 4 and 201 3 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 necess arily indicative of results for a full year. The information in this Quarterly Report on Form 10-Q (“Quarterly Report”) should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and financial s tatements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended March 31, 201 3 .
Intercompany accounts and transactions have been eliminated.
Description of Legal Entities
AMERCO is the holding company for:
U-Haul Internatio nal, Inc. (“U-Haul”),
Amerco Real Estate Company (“Real Estate”),
Rep w est Insurance Company (“Rep w est”), and
Oxford Life Insurance Company (“Oxford”).
Unless the context otherwise requires, the term “Company,” “we,” “us” or “our” refers to AMERCO and all o f 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 operati ng segment include s 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, and the rental of fixed and mobi le 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.
AMERCO and consolidated entities
notes to condensed consolidatED financial statements (Continued)
The Property and Casualty Insurance operating segment includes Rep w est and its wholly-owned subsidiaries and ARCOA risk retention group (“ARCOA”). The Property and Casualty Insurance operating segment provides loss adjusting and claims handling for U-Haul through regional offices across North America. The Property and Casualty Insurance operating segment also underwrites components of the Safemove, Safetow, Safemove Plus, Safestor and Safestor Mobile 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. ARC OA is a group captive insurer owned by us and our wholly-owned subsidiaries whose purpose is to provide insurance products related to the moving and storage business.
The Life Insurance operating segment includes Oxford and its wholly-owned subsidiaries. T he Life Insurance operating segment provides life and health insurance products primarily to the senior market through the direct writing and reinsuring of life insurance, Medicare supplement and annuity policies.
Our earn ings per share is calculated by dividing our earnings available to common stockholders by the weighted average common shares outstanding, basic and diluted.
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 57,681 and 100,302 as of June 30 , 201 3 and June 30 , 201 2 , respectively.
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.
We deposit bonds with insurance regulatory authorities to meet statutory requirements. The adjusted cost of bonds on deposit with insurance regulatory authorities was $ 16.4 millio n at June 30 , 201 3 .
Available-for-Sale Investments
Available-for-sale investments at June 30 , 201 3 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 |
$ |
28,083 |
$ |
2,568 |
$ |
(3) |
$ |
(3) |
30,645 |
|
U.S. government agency mortgage-backed securities |
|
42,332 |
|
3,627 |
|
(5) |
|
(34) |
45,920 |
|
Obligations of states and political subdivisions |
|
154,644 |
|
16,482 |
|
– |
|
(382) |
170,744 |
|
Corporate securities |
|
754,664 |
|
49,736 |
|
(195) |
|
(4,276) |
799,929 |
|
Mortgage-backed securities |
|
6,117 |
|
251 |
|
(28) |
|
– |
6,340 |
|
Redeemable preferred stocks |
|
21,163 |
|
871 |
|
(28) |
|
(6) |
22,000 |
|
Common stocks |
|
43,219 |
|
1,660 |
|
(3,405) |
|
(44) |
41,430 |
|
|
$ |
1,050,222 |
$ |
75,195 |
$ |
(3,664) |
$ |
(4,745) |
1,117,008 |
|
|
|
|
|
|
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.
We sold available-for-sale securities with a fair value of $ 44.2 million during the first quarter of fiscal 201 4 . The gross realized gains on these sales totaled $ 1.2 million. T here were no gross realized losses on these sales.
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
The unrealized losses of more than twelve months in the available-for-sale table are considered temporary declines. The majority of this unrealized loss is related to our long term investments in 1.8 milli on shares of Bank of America common stock. We track each investment with an unrealized loss and evaluate 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 we recognized these write-downs through earnings. There were no write downs in the first quarter of fis cal 2014 and 2013.
The investment portfolio primarily consists of corporate securities and U.S. government securities. We believe we monitor our investments as appropriate. Our 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 wh ether 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 o f the security, including payment at maturity. We have the ability and intent not to sell our fixed maturity and common stock investments for a period of time sufficient to allow us to recover our costs.
The portion of other-than-temporary impairment relat ed 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 a sset backed securities credit losses include the time frame for principal recovery and the subordination and value of the underlying collateral.
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, 2013 |
$ |
552 |
Additions: |
|
|
Other-than-temporary impairment not previously recognized |
|
– |
Balance at June 30, 2013 |
$ |
552 |
|
|
|
The adjusted cost and estimated market value of available-for-sale investments at June 30 , 201 3 , by contractual maturity, were as follows:
|
Amortized Cost |
|
Estimated Market Value |
|
|
|
(Unaudited) |
||
|
|
(In thousands) |
||
Due in one year or less |
$ |
40,195 |
$ |
40,825 |
Due after one year through five years |
172,665 |
183,996 |
||
Due after five years through ten years |
293,659 |
315,929 |
||
Due after ten years |
473,204 |
506,488 |
||
|
979,723 |
1,047,238 |
||
|
|
|
||
Mortgage backed securities |
6,117 |
6,340 |
||
Redeemable preferred stocks |
21,163 |
22,000 |
||
Common stocks |
43,219 |
41,430 |
||
|
$ |
1,050,222 |
$ |
1,117,008 |
|
|
|
|
|
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
Long-Term Debt
Long-term debt was as follows:
|
|
|
|
June 30, |
|
March 31, |
|
|
2014 Rate (a) |
|
Maturities |
|
2013 |
|
2013 |
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
(In thousands) |
||
Real estate loan (amortizing term) |
6.93% |
|
2023 |
$ |
257,500 |
$ |
235,000 |
Real estate loan (amortizing term) |
2.09% |
|
2016 |
|
24,406 |
|
24,630 |
Real estate loan (revolving credit) |
- |
|
2014 |
|
– |
|
– |
Senior mortgages |
4.90% - 5.75% |
|
2015 - 2038 |
|
550,926 |
|
556,522 |
Working capital loan (revolving credit) |
- |
|
2015 |
|
– |
|
– |
Fleet loans (amortizing term) |
1.95% - 6.92% |
|
2013 - 2020 |
|
369,761 |
|
361,079 |
Fleet loans (securitization) |
4.90% - 5.56% |
|
2014 - 2017 |
|
182,466 |
|
190,801 |
Capital leases (rental equipment) |
2.23% - 9.58% |
|
2015 - 2020 |
|
323,009 |
|
273,458 |
Other obligations |
3.00% - 8.00% |
|
2013 - 2043 |
|
29,209 |
|
20,355 |
Total notes, loans and leases payable |
|
|
$ |
1,737,277 |
$ |
1,661,845 |
|
|
|
|
|
|
|
|
|
(a) Interest rate as of June 30, 2013, 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. During the first quarter of fiscal 2014 this loan was amended. As part of the amendment the revolver component of the agreement was t erminated and certain collateral was released. The final maturity date of the term loan was extended to April 20 23 . As of June 30 , 201 3 , the outstanding balance on the Real Estate Loan was $ 257.5 million . U-Haul International, Inc. is a guarantor of this l oan. The Real Estate Loan requires monthly principal and interest payments, with the unpaid loan balance and accrued and unpaid interest due at maturity. The Real Estate Loan is secured by various properties owned by the borrowers.
The interest rate, pe r the provisions of the amended l oan a greement, is the applicable London Inter-Bank Offer Rate (“LIBOR”) plus the applicable margin. At June 30 , 201 3 , the applicable LIBOR was 0.20 % and the applicable margin was 1.50%, the sum of which was 1.7 0 %. 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 default provisions of the Real Estate Loan include non-payment of principal or interest and other standard report ing 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 lo an was modified and extended on June 2 7 , 201 1 . The loan is now comprised of a term loan facility with an initial availability of $ 26.1 million and a final maturity of June 201 6 . As of June 30 , 201 3 , the outstanding balance was $ 24.4 million .
This Real Esta te Loan requires monthly principal and interest payments , with the unpaid loan balance and any accrued and unpaid interest due at maturity. The interes t rate, per the provision of this loan a greement, is the applicable LIBOR plus a margin of 1.90%. At June 30, 201 3 , the applicable LIBOR was 0.19 % and the margin was 1.90%, the sum of which was 2. 09 %. 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.
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
On April 29, 2011, Amerco Real Estate Company and U-Haul Company of Florida entered into a revolvin g credit agreement for $100.0 million. This agreement was amended in February 2013 and the maturity extended to April 2014 with an option for a one year extension and the revolver balance reduced to $50.0 million. As of June 30, 2013, we had the full $50.0 million available to be drawn. The interest rate is the applicable LIBOR plus a margin of 1.25%. 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 oth er 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 June 30 , 201 3 were in the aggregate amount of $ 550.9 million and mature between 2015 and 2038 . The s enior m ortgages require average monthly principal and interest payments with the unpaid loan balance and accrued and unpaid interest due at maturity. The senior mortgages are secured by certain properties owned by the borrowers. The interest rates, per the provisions of the senior mortgages, range between 4.90 % and 5. 75 %. Amerco Real Estate Company and U-Haul International, Inc. have provided limited guarantees of the seni or mortgages. The default provisions of the 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.
Working Capital Loans
A merco 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 June 30, 2013, we had the full $25.0 million available to be drawn. This loan is secured by certai n properties owned by the borrower. This loan agreement provides for revolving loans, subject to the terms of the loan agreement. This agreement was amended in February 2013 and the maturity extended to April 2015. This loan requires monthly interest payme nts 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 repo rting and change-in-control covenants. The interest rate, per the provision of th is loan a greement, is the applicable LIBOR plus a margin of 1. 25 %.
Fleet Loans
Rental Truck Amortizing Loans
U-Haul International, Inc. and several of its subsidiaries are bor rowers under amortizing term loans. The balance of the loans as of June 30 , 201 3 was $ 254.8 million with the final maturities between July 2013 and May 2020.
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 2.63%. At June 30, 2013, the applicable L IBOR was between 0. 19 % and 0.2 0 % and applicable margins were between 0.90% and 2.63%. The interest rates are hedged with interest rate swaps fixing the rates between 2.82 % and 6.92% based on current margins. Additionally, $ 59.8 million of these loans are c arried at fixed rates ranging between 1.95 % and 3.94%.
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.
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
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 pas t t wo years. This term note was amended on August 26, 2011. The amount of the term note was increased to $95.0 million. On December 22, 2011, we entered into another term loan for $20.0 million. The final maturity date of these notes is August 2016 . The agreement s contain options to extend the maturity throu gh May 2017 . The se note s are secured by the purchased equipment and the corresponding operating cash flows associated with their operation. These notes have fixed interest rates between 3.52% and 3.53% . At June 30, 2013, the outstanding balance was $115.0 million.
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.
Rental Truck Securitizations
U-H aul 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 expected final maturity of February 2014. At June 30 , 201 3 , the outstanding balance was $ 78.6 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 Tr uck 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 trus tee for this securitization.
The 2010 Box Truck Note has a fixed interest rate of 4.90% with an expected final maturity of October 2017. At June 30 , 201 3 , the outstanding balance was $ 103.8 million. The note is secur ed 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 a ssets 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.
Capital Leases
We entered in to capital leases for new equipment between April 2008 and May 2013, with terms of the leases between 3 and 7 years. At June 30, 2013, the balance of these leases was $ 323.0 million .
Other Obligations
In February 2011 , the Company and US Bank, N ational A ssociation (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 us directly to investors over our proprietary website, uhaulinvestorsc lub.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 secu red by the associated collateral; they are not guaranteed by any of the Company’s affiliates or subsidiaries.
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
At June 30 , 201 3, the aggregate outstanding principal balance of the U-N otes issued was $ 35.7 million of which $6.4 million is with our insuranc e subsidiaries with interest rates between 3.00% and 8.00% and maturity dates between 2013 and 204 3 .
Annual Maturities of Notes, Loans and Leases Payable
The annual maturities of long-term debt as of June 30 , 201 3 for the next five years and thereafter are as follows:
|
Year Ending June 30, |
|||||||||||
|
|
2014 |
|
2015 |
|
2016 |
|
2017 |
|
2018 |
|
Thereafter |
|
|
(Unaudited) |
||||||||||
|
|
(In thousands) |
||||||||||
Notes, loans and leases payable, secured |
$ |
260,964 |
$ |
129,895 |
$ |
544,926 |
$ |
259,114 |
$ |
180,359 |
$ |
362,019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on Borrowings
Interest Expense
Components of interest expense include the following:
|
Quarter Ended June 30, |
|||
|
|
2013 |
|
2012 |
|
|
(Unaudited) |
||
|
|
(In thousands) |
||
Interest expense |
$ |
17,814 |
$ |
15,646 |
Capitalized interest |
|
(142) |
|
(77) |
Amortization of transaction costs |
|
851 |
|
1,085 |
Interest expense resulting from derivatives |
|
4,805 |
|
6,837 |
Total interest expense |
$ |
23,328 |
$ |
23,491 |
|
|
|
|
|
Interest paid in cash , including payments related to derivative contracts, amounted to $ 22.0 million and $ 21.2 million for the first quarter of fiscal 201 4 and 201 3 , respectively.
Interest Rates
Interest rates and Company borrowings were as follows:
|
Revolving Credit Acti vity |
|||
|
|
Quarter Ended June 30, |
||
|
|
2013 |
|
2012 |
|
|
(Unaudited) |
||
|
|
(In thousands, except interest rates) |
||
Weighted average interest rate during the quarter |
|
1.48% |
|
1.74% |
Interest rate at the end of the quarter |
|
- |
|
1.74% |
Maximum amount outstanding during the quarter |
$ |
25,000 |
$ |
23,920 |
Average amount outstanding during the quarter |
$ |
24,176 |
$ |
23,920 |
Facility fees |
$ |
92 |
$ |
178 |
amerco and consolidated subsidiaries
notes to condens ed consolidated financial statements – (continued)
We manage exposure to changes in market interest rates. Our use of derivative instruments is limited to highly effective interest rate swaps to hedge the risk of changes in cash flows (fu ture 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 and a variable rate operating lease . The interest rate swaps effectively fix our int erest payments on certain LIBOR indexed variable rate debt. We monitor our positions and the credit ratings of our counterparties and do not currently anticipate non-performance by the counterparties. Interest rate swap agreements are not entered into for trading purposes.
Original variable rate debt amount |
|
Agreement Date |
|
Effective Date |
|
Expiration Date |
|
Designated cash flow hedge date |
||
|
(Unaudited) |
|||||||||
|
(In millions) |
|||||||||
$ |
50.0 |
|
|
6/21/2006 |
|
7/10/2006 |
|
7/10/2013 |
|
6/9/2006 |
|
300.0 |
|
|
8/16/2006 |
|
8/18/2006 |
|
8/10/2018 |
|
8/4/2006 |
|
30.0 |
|
|
2/9/2007 |
|
2/12/2007 |
|
2/10/2014 |
|
2/9/2007 |
|
20.0 |
|
|
3/8/2007 |
|
3/12/2007 |
|
3/10/2014 |
|
3/8/2007 |
|
20.0 |
|
|
3/8/2007 |
|
3/12/2007 |
|
3/10/2014 |
|
3/8/2007 |
|
19.3 |
(a) |
|
4/8/2008 |
|
8/15/2008 |
|
6/15/2015 |
|
3/31/2008 |
|
19.0 |
|
|
8/27/2008 |
|
8/29/2008 |
|
7/10/2015 |
|
4/10/2008 |
|
30.0 |
|
|
9/24/2008 |
|
9/30/2008 |
|
9/10/2015 |
|
9/24/2008 |
|
15.0 |
(a) |
|
3/24/2009 |
|
3/30/2009 |
|
3/30/2016 |
|
3/25/2009 |
|
14.7 |
(a) |
|
7/6/2010 |
|
8/15/2010 |
|
7/15/2017 |
|
7/6/2010 |
|
25.0 |
(a) |
|
4/26/2011 |
|
6/1/2011 |
|
6/1/2018 |
|
7/1/2011 |
|
50.0 |
(a) |
|
7/29/2011 |
|
8/15/2011 |
|
8/15/2018 |
|
7/29/2011 |
|
20.0 |
(a) |
|
8/3/2011 |
|
9/12/2011 |
|
9/10/2018 |
|
8/3/2011 |
|
15.1 |
(b) |
|
3/27/2012 |
|
3/28/2012 |
|
3/28/2019 |
|
3/26/2012 |
|
25.0 |
|
|
4/13/2012 |
|
4/16/2012 |
|
4/1/2019 |
|
4/12/2012 |
|
44.3 |
|
|
1/11/2013 |
|
1/15/2013 |
|
12/15/2019 |
|
1/11/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
(a) forward swap |
|
|
|
|
|
|
|
|
|
|
(b) operating lease |
|
|
|
|
|
|
|
|
|
As of June 30, 2013 , the total notional amount of our variable interest rate swaps on debt and an operating lease was $ 437.9 million and $13.4 million, respectively .
The derivative fair values located in A ccounts payable and accrued expenses in the balance sheets were as fol lows:
|
Liability Derivatives Fair Values as of |
|||
|
|
June 30, 2013 |
|
March 31, 2013 |
|
|
(Unaudited) |
|
|
|
|
(In thousands) |
||
Interest rate contracts designated as hedging instruments |
$ |
41,749 |
$ |
51,550 |
amerco and consolidated subsidiaries
notes to condens ed consolidated financial statements – (continued)
|
The Effect of Interest Rate Contracts on the Statements of Operations |
|||
|
|
|||
|
|
June 30, 2013 |
|
June 30, 2012 |
|
|
(Unaudited) |
||
|
|
(In thousands) |
||
Loss recognized in income on interest rate contracts |
$ |
4,805 |
$ |
6,837 |
(Gain) loss recognized in AOCI on interest rate contracts (effective portion) |
$ |
(10,196) |
$ |
515 |
Loss reclassified from AOCI into income (effective portion) |
$ |
4,410 |
$ |
5,269 |
(Gain) loss recognized in income on interest rate contracts (ineffective portion and amount excluded from effectiveness testing) |
$ |
395 |
$ |
1,568 |
Gains or losses recognized in income on derivatives are recorded as interest expense in the statements of operations. At June 30, 2013, we expect to reclassify $15.6 million of net losses on interest rate contracts from accumulated other comprehensive income to earnings as interest expense over the next twelve months. During the first quarter of fiscal 2014, we reclassified $4.4 million of net losses on interest rate contracts from accumulated other comprehensive income to interest expense.
6 . Comprehensive Income (Loss)
A summary of accumulated other comprehensive income (loss) components, net of tax, were as follows:
|
Foreign Currency Translation |
|
Unrealized Net 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, 2013 |
$ |
(30,153) |
$ |
39,645 |
$ |
(32,298) |
$ |
126 |
$ |
(22,680) |
Foreign currency translation |
|
(3,762) |
|
– |
|
– |
|
– |
|
(3,762) |
Unrealized net gain on investments |
|
– |
|
21 |
|
– |
|
– |
|
21 |
Change in fair value of cash flow hedges |
|
– |
|
– |
|
1,912 |
|
– |
|
1,912 |
Amounts reclassified from AOCI |
|
– |
|
– |
|
4,410 |
|
– |
|
4,410 |
Other comprehenive income (loss) |
|
(3,762) |
|
21 |
|
6,322 |
|
– |
|
2,581 |
Balance at June 30, 2013 |
$ |
(33,915) |
$ |
39,666 |
$ |
(25,976) |
$ |
126 |
$ |
(20,099) |
|
|
|
|
|
|
|
|
|
|
|
7 . Contingent Liabilities and Commitments
We lease a portion of our rental equipment and certain of our facilities under operating leases with terms that expire at various dates substantially through 201 9 . As of June 30, 2013 , we have guaranteed $ 111.8 million of residual values for these rental equipment assets at the end of the respective lease terms. Cer tain leases contain renewal and fair market value purchase options as well as mileage and other restrictions. At the expiration of the lease, we have the option to renew the lease, purchase the asset for fair market value, or sell the asset to a third part y on behalf of the lessor. We have been leasing equipment since 1987 and ha ve experienced no material losses relating to these types of residual value guarantees.
amerco and consolidated subsidiaries
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 June 30: |
|
|
|
|||
2014 |
$ |
13,579 |
$ |
79,078 |
$ |
92,657 |
2015 |
|
2,017 |
55,621 |
|
57,638 |
|
2016 |
|
1,856 |
23,017 |
|
24,873 |
|
2017 |
|
1,767 |
13,279 |
|
15,046 |
|
2018 |
|
1,285 |
10,907 |
|
12,192 |
|
Thereafter |
|
4,893 |
7,757 |
|
12,650 |
|
Total |
$ |
25,397 |
$ |
189,659 |
$ |
215,056 |
|
|
|
|
|
|
|
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 a ir, 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 e nvironmental 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.
O ther
We are 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 our financial position and results of operations.
9 . Related Party Transactions
As set forth in the Audit Committee Charter and consistent with Nasdaq Listing Rules, our Audit Committee (the “Audit Committee”) reviews and maintains oversight over related party transactions which are required to be disclosed under the Securities and Ex change Commission (“SEC”) rules and regulations. Accordingly, all such related party transactions are submitted to the Audit Committee for ongoing review and oversight. Our internal processes ensure that our legal and finance departments identify and monit or potential related party transactions which may require disclosure and Audit Committee oversight.
AMERCO has engaged in related party transactions and has continuing related party interests with certain major stockholders, directors and officers of the c onsolidated 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 us pursuant to management agreements. In the past, we have sold various self-storage properties to SAC Holdings, and such sales provided significant cash flows to the Company.
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
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 propert y management fee revenues from the SAC Holdings self-storage properties that the Company manages.
Related Party Revenue
|
Quarter Ended June 30, |
|||
|
|
2013 |
|
2012 |
|
|
(Unaudited) |
||
|
|
(In thousands) |
||
U-Haul interest income revenue from SAC Holdings |
$ |
1,919 |
$ |
2,476 |
U-Haul interest income revenue from Private Mini |
|
1,337 |
|
1,345 |
U-Haul management fee revenue from SAC Holdings |
|
4,074 |
|
3,829 |
U-Haul management fee revenue from Private Mini |
|
594 |
|
567 |
U-Haul management fee revenue from Mercury |
|
493 |
|
464 |
|
$ |
8,417 |
$ |
8,681 |
|
|
|
During the first quarter of fiscal 201 4 , 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 stock holder of AMERCO. We do not have an equity ownership interest in SAC Holdings. We received cash interest payments of $ 12.3 million an d $ 7.2 million from SAC Holdings during the first quarter of fiscal 201 4 and 201 3 , respectively. The largest aggregate amount of notes receivable outstanding during the first quarter of fiscal 201 4 was $ 72.4 million and the aggregate notes receivable balan ce at June 30 , 201 3 was $ 72.2 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 201 7 and 20 19 .
During the first quarter of fi scal 201 4 , 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. We received cash interest payments of $ 1.4 million from Priva te Mini during the first quarters of both fiscal 201 4 and 201 3 . The largest aggregate amount outstanding during the first quarter of fiscal 201 4 was $ 65.9 million and t he aggregate notes receivable balance at June 30 , 201 3 was $ 65.8 million.
We currently manage 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 we receive a management fee of between 4% and 10% of the gross receipts plus reimbursement for certain expenses. We received management fees, exclusive of reimbursed expenses, of $ 10.3 million and $9. 4 million from the above mentioned entities during the first quarter of fiscal 201 4 and 201 3, respectively . 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 stock holder and director of AMERCO and an estate planning trust benefitting the Shoen children have an interest in Mercury.
Related Party Costs and Expenses
|
Quarter Ended June 30, |
|||
|
|
2013 |
|
2012 |
|
|
(Unaudited) |
||
|
|
(In thousands) |
||
U-Haul lease expenses to SAC Holdings |
$ |
655 |
$ |
661 |
U-Haul commission expenses to SAC Holdings |
|
12,520 |
|
10,934 |
U-Haul commission expenses to Private Mini |
|
795 |
|
695 |
|
$ |
13,970 |
$ |
12,290 |
|
|
|
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
We lease 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 us .
At June 30 , 201 3 , 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 subsidi aries are substantially identical to the terms of those with our 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 $ 7.9 million, expenses of $ 0.7 million and cash flows of $ 21.7 million during the first quarter of fiscal 201 4 . Revenues and commission expenses related to the Dealer Agreements were $ 60.5 million and $ 13.3 million, respectively during the first quarter of fiscal 201 4 .
Pursuant to the variable interest entity model under ASC 810 – Consolidation (“ASC 810”), Management determined that the junior notes of SAC Holdings and Private Mini as well as the management agreements with SAC Holdings, Mercury, 4 SAC, 5 SAC, Galaxy, and Private Mini represent potential variable interests for us . Management evaluated whether it should be identified as the primary beneficiary of one or more of these variabl e 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, SAC Holding II Corporation, 4 SAC, 5 SAC, or Galaxy based upon management agreements which are with the indiv idual operating entities or through the issuance of junior debt therefore, we are precluded from consolidating these entities.
We have junior debt with the holding entities SAC Holding Corporation and Private Mini which represents a variable interest in e ach individual entity. Though we have certain protective rights within these debt agreements, we have no present influence or control over these holding entities unless their protective rights become exercisable, which management considers unlikely based o n their payment history. As a result, we have no basis under ASC 810 to consolidate these entities.
We do not have the power to direct the activities that most significantly impact the economic performance of the individual operating entities which have ma nagement agreements with U-Haul. There are no fees or penalties disclosed in the management agreement for termination of the agreement. Through control of the holding entities assets, and its ability and history of making key decisions relating to the enti ty 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, we have no basis under ASC 810 to consolidate these entities.
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
We have not provided financial or other support explicitly or implicitly during the quarter ended June 30, 2013 to any of these entities that it was not previously contractually required to provide. In addition, we currently have no plan to provide any financial support to any of these entities in the future. The carrying amount and classification of the assets and liabilities in our balance sheet s that relate to our variable interests in the aforementioned entities are as follows, which approximate the maximum exposure to loss as a result of our involvement with these entities:
Related Party Assets
|
June 30, |
|
Marc h 31, |
|
|
|
2013 |
|
2013 |
|
|
(Unaudited) |
|
|
|
|
(In thousands) |
||
U-Haul notes, receivables and interest from Private Mini |
$ |
68,225 |
$ |
68,593 |
U-Haul notes receivable from SAC Holdings |
|
72,181 |
|
72,397 |
U-Haul interest receivable from SAC Holdings |
|
4,111 |
|
14,483 |
U-Haul receivable from SAC Holdings |
|
10,651 |
|
22,336 |
U-Haul receivable from Mercury |
|
2,275 |
|
3,640 |
Other (a) |
|
(6,316) |
|
586 |
|
$ |
151,127 |
$ |
182,035 |
|
|
|
||
|
|
|
|
|
(a) Timing difference for intercompany balances with insurance subsidiaries, including a mortgage loan of $4.3 million with Repwest. |
1 0 . 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 Rep w est and its subsidiaries and ARCOA, and
• Life Insuran ce , 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 cons olidate AMERCO, the parent, with its subsidiaries.
Investments in subsidiaries are accounted for by the parent using the equity method of accounting.
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued )
1 0 . Financial Information by Consolidating Industry Segment:
Consolidating balance sheets by industry segment as of June 30, 2013 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 |
|
|
(U naudited) |
||||||||||||||||||
|
|
(In thousands) |
||||||||||||||||||
Assets: |
|
|||||||||||||||||||
Cash and cash equivalents |
$ |
371,619 |
$ |
133,684 |
$ |
1,499 |
$ |
– |
|
$ |
506,802 |
$ |
10,578 |
$ |
35,207 |
$ |
– |
|
$ |
552,587 |
Reinsurance recoverables and trade receivables, net |
|
– |
|
64,354 |
|
– |
|
– |
|
|
64,354 |
|
185,490 |
|
34,674 |
|
– |
|
|
284,518 |
Inventories, net |
|
– |
|
58,304 |
|
– |
|
– |
|
|
58,304 |
|
– |
|
– |
|
– |
|
|
58,304 |
Prepaid expenses |
|
– |
|
42,679 |
|
699 |
|
– |
|
|
43,378 |
|
– |
|
– |
|
– |
|
|
43,378 |
Investments, fixed maturities and marketable equities |
|
21,931 |
|
– |
|
– |
|
– |
|
|
21,931 |
|
169,730 |
|
925,347 |
|
– |
|
|
1,117,008 |
Investments, other |
|
– |
|
– |
|
35,587 |
|
– |
|
|
35,587 |
|
66,720 |
|
129,111 |
|
– |
|
|
231,418 |
Deferred policy acquisition costs, net |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
– |
|
97,823 |
|
– |
|
|
97,823 |
Other assets |
|
118 |
|
71,018 |
|
32,350 |
|
– |
|
|
103,486 |
|
1,017 |
|
241 |
|
– |
|
|
104,744 |
Related party assets |
|
1,064,653 |
|
102,558 |
|
9 |
|
(1,007,825) |
(c) |
|
159,395 |
|
8,950 |
|
489 |
|
(17,707) |
(c) |
|
151,127 |
|
|
1,458,321 |
|
472,597 |
|
70,144 |
|
(1,007,825) |
|
|
993,237 |
|
442,485 |
|
1,222,892 |
|
(17,707) |
|
|
2,640,907 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in subsidiaries |
|
341,164 |
|
– |
|
– |
|
43,253 |
(b) |
|
384,417 |
|
– |
|
– |
|
(384,417) |
(b) |
|
– |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, at cost: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land |
|
– |
|
54,144 |
|
294,090 |
|
– |
|
|
348,234 |
|
– |
|
– |
|
– |
|
|
348,234 |
Buildings and improvements |
|
– |
|
188,694 |
|
1,089,928 |
|
– |
|
|
1,278,622 |
|
– |
|
– |
|
– |
|
|
1,278,622 |
Furniture and equipment |
|
135 |
|
295,830 |
|
17,831 |
|
– |
|
|
313,796 |
|
– |
|
– |
|
– |
|
|
313,796 |
Rental trailers and other rental equipment |
|
– |
|
331,433 |
|
– |
|
– |
|
|
331,433 |
|
– |
|
– |
|
– |
|
|
331,433 |
Rental trucks |
|
– |
|
2,263,692 |
|
– |
|
– |
|
|
2,263,692 |
|
– |
|
– |
|
– |
|
|
2,263,692 |
|
|
135 |
|
3,133,793 |
|
1,401,849 |
|
– |
|
|
4,535,777 |
|
– |
|
– |
|
– |
|
|
4,535,777 |
Less: Accumulated depreciation |
|
(116) |
|
(1,220,985) |
|
(376,821) |
|
– |
|
|
(1,597,922) |
|
– |
|
– |
|
– |
|
|
(1,597,922) |
Total property, plant and equipment |
|
19 |
|
1,912,808 |
|
1,025,028 |
|
– |
|
|
2,937,855 |
|
– |
|
– |
|
– |
|
|
2,937,855 |
Total assets |
$ |
1,799,504 |
$ |
2,385,405 |
$ |
1,095,172 |
$ |
(964,572) |
|
$ |
4,315,509 |
$ |
442,485 |
$ |
1,222,892 |
$ |
(402,124) |
|
$ |
5,578,762 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
(a) Balances as of March 31, 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) Eliminate investment in subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) Eliminate intercompany receivables and payables |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued )
Consolidating balance sheets by industry segment as of June 30, 2013 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 |
|
|
(U naudited) |
||||||||||||||||||
|
|
(In thousands) |
||||||||||||||||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Accounts payable and accrued expenses |
$ |
7,386 |
$ |
348,957 |
$ |
4,253 |
$ |
– |
|
$ |
360,596 |
$ |
– |
$ |
5,706 |
$ |
– |
|
$ |
366,302 |
Notes, loans and leases payable |
|
– |
|
940,975 |
|
796,302 |
|
– |
|
|
1,737,277 |
|
– |
|
– |
|
– |
|
|
1,737,277 |
Policy benefits and losses, claims and loss expenses payable |
|
– |
|
374,398 |
|
– |
|
– |
|
|
374,398 |
|
331,510 |
|
409,913 |
|
– |
|
|
1,115,821 |
Liabilities from investment contracts |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
– |
|
538,777 |
|
– |
|
|
538,777 |
Other policyholders' funds and liabilities |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
2,656 |
|
4,458 |
|
– |
|
|
7,114 |
Deferred income |
|
– |
|
37,752 |
|
– |
|
– |
|
|
37,752 |
|
– |
|
– |
|
– |
|
|
37,752 |
Deferred income taxes |
|
444,248 |
|
– |
|
– |
|
– |
|
|
444,248 |
|
(34,805) |
|
19,985 |
|
– |
|
|
429,428 |
Related party liabilities |
|
– |
|
590,184 |
|
432,588 |
|
(1,007,825) |
(c) |
|
14,947 |
|
2,319 |
|
441 |
|
(17,707) |
(c) |
|
– |
Total liabilities |
|
451,634 |
|
2,292,266 |
|
1,233,143 |
|
(1,007,825) |
|
|
2,969,218 |
|
301,680 |
|
979,280 |
|
(17,707) |
|
|
4,232,471 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series preferred stock: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A preferred stock |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
– |
|
– |
|
– |
|
|
– |
Series B preferred stock |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
– |
|
– |
|
– |
|
|
– |
Series A common stock |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
– |
|
– |
|
– |
|
|
– |
Common stock |
|
10,497 |
|
1 |
|
1 |
|
(2) |
(b) |
|
10,497 |
|
3,301 |
|
2,500 |
|
(5,801) |
(b) |
|
10,497 |
Additional paid-in capital |
|
439,734 |
|
121,230 |
|
147,941 |
|
(269,171) |
(b) |
|
439,734 |
|
91,120 |
|
26,271 |
|
(117,601) |
(b) |
|
439,524 |
Accumulated other comprehensive income (loss) |
|
(20,099) |
|
(59,765) |
|
– |
|
59,765 |
(b) |
|
(20,099) |
|
5,609 |
|
35,794 |
|
(41,403) |
(b) |
|
(20,099) |
Retained earnings (deficit) |
|
1,595,388 |
|
33,252 |
|
(285,913) |
|
252,661 |
(b) |
|
1,595,388 |
|
40,775 |
|
179,047 |
|
(219,612) |
(b) |
|
1,595,598 |
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 |
|
– |
|
(1,579) |
|
– |
|
– |
|
|
(1,579) |
|
– |
|
– |
|
– |
|
|
(1,579) |
Total stockholders' equity (deficit) |
|
1,347,870 |
|
93,139 |
|
(137,971) |
|
43,253 |
|
|
1,346,291 |
|
140,805 |
|
243,612 |
|
(384,417) |
|
|
1,346,291 |
Total liabilities and stockholders' equity |
$ |
1,799,504 |
$ |
2,385,405 |
$ |
1,095,172 |
$ |
(964,572) |
|
$ |
4,315,509 |
$ |
442,485 |
$ |
1,222,892 |
$ |
(402,124) |
|
$ |
5,578,762 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Balances as of March 31, 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) Eliminate investment in subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) Eliminate intercompany receivables and payables |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued )
Consolidating balance sheets by industry segment as of March 31, 201
3
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 |
$ |
327,119 |
$ |
98,926 |
$ |
1,515 |
$ |
– |
|
$ |
427,560 |
$ |
14,120 |
$ |
22,064 |
$ |
– |
|
$ |
463,744 |
Reinsurance recoverables and trade receivables, net |
|
– |
|
43,259 |
|
– |
|
– |
|
|
43,259 |
|
186,010 |
|
32,520 |
|
– |
|
|
261,789 |
Inventories, net |
|
– |
|
56,396 |
|
– |
|
– |
|
|
56,396 |
|
– |
|
– |
|
– |
|
|
56,396 |
Prepaid expenses |
|
22,475 |
|
34,956 |
|
20 |
|
– |
|
|
57,451 |
|
– |
|
– |
|
– |
|
|
57,451 |
Investments, fixed maturities and marketable equities |
|
21,228 |
|
– |
|
– |
|
– |
|
|
21,228 |
|
160,455 |
|
913,655 |
|
– |
|
|
1,095,338 |
Investments, other |
|
– |
|
100 |
|
50,553 |
|
– |
|
|
50,653 |
|
65,212 |
|
125,900 |
|
– |
|
|
241,765 |
Deferred policy acquisition costs, net |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
– |
|
93,043 |
|
– |
|
|
93,043 |
Other assets |
|
118 |
|
69,671 |
|
28,828 |
|
– |
|
|
98,617 |
|
1,212 |
|
157 |
|
– |
|
|
99,986 |
Related party assets |
|
1,032,663 |
|
127,751 |
|
9 |
|
(975,683) |
(c) |
|
184,740 |
|
8,846 |
|
514 |
|
(12,065) |
(c) |
|
182,035 |
|
|
1,403,603 |
|
431,059 |
|
80,925 |
|
(975,683) |
|
|
939,904 |
|
435,855 |
|
1,187,853 |
|
(12,065) |
|
|
2,551,547 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in subsidiaries |
|
239,541 |
|
– |
|
– |
|
140,100 |
(b) |
|
379,641 |
|
– |
|
– |
|
(379,641) |
(b) |
|
– |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, at cost: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land |
|
– |
|
81,421 |
|
251,807 |
|
– |
|
|
333,228 |
|
– |
|
– |
|
– |
|
|
333,228 |
Buildings and improvements |
|
– |
|
184,053 |
|
1,013,822 |
|
– |
|
|
1,197,875 |
|
– |
|
– |
|
– |
|
|
1,197,875 |
Furniture and equipment |
|
136 |
|
292,621 |
|
18,385 |
|
– |
|
|
311,142 |
|
– |
|
– |
|
– |
|
|
311,142 |
Rental trailers and other rental equipment |
|
– |
|
317,476 |
|
– |
|
– |
|
|
317,476 |
|
– |
|
– |
|
– |
|
|
317,476 |
Rental trucks |
|
– |
|
2,154,688 |
|
– |
|
– |
|
|
2,154,688 |
|
– |
|
– |
|
– |
|
|
2,154,688 |
|
|
136 |
|
3,030,259 |
|
1,284,014 |
|
– |
|
|
4,314,409 |
|
– |
|
– |
|
– |
|
|
4,314,409 |
Less: Accumulated depreciation |
|
(116) |
|
(1,185,796) |
|
(373,443) |
|
– |
|
|
(1,559,355) |
|
– |
|
– |
|
– |
|
|
(1,559,355) |
Total property, plant and equipment |
|
20 |
|
1,844,463 |
|
910,571 |
|
– |
|
|
2,755,054 |
|
– |
|
– |
|
– |
|
|
2,755,054 |
Total assets |
$ |
1,643,164 |
$ |
2,275,522 |
$ |
991,496 |
$ |
(835,583) |
|
$ |
4,074,599 |
$ |
435,855 |
$ |
1,187,853 |
$ |
(391,706) |
|
$ |
5,306,601 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
(a) Balances as of December 31, 2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) Eliminate investment in subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) Eliminate intercompany receivables and payables |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued )
Consolidating balance sheets by indus
try segment as of March 31, 2013
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 |
$ |
110 |
$ |
345,864 |
$ |
4,378 |
$ |
– |
|
$ |
350,352 |
$ |
– |
$ |
8,139 |
$ |
– |
|
$ |
358,491 |
Notes, loans and leases payable |
|
– |
|
881,766 |
|
780,079 |
|
– |
|
|
1,661,845 |
|
– |
|
– |
|
– |
|
|
1,661,845 |
Policy benefits and losses, claims and loss expenses payable |
|
– |
|
380,824 |
|
– |
|
– |
|
|
380,824 |
|
330,184 |
|
404,040 |
|
– |
|
|
1,115,048 |
Liabilities from investment contracts |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
– |
|
510,789 |
|
– |
|
|
510,789 |
Other policyholders' funds and liabilities |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
3,157 |
|
4,137 |
|
– |
|
|
7,294 |
Deferred income |
|
– |
|
30,217 |
|
– |
|
– |
|
|
30,217 |
|
– |
|
– |
|
– |
|
|
30,217 |
Deferred income taxes |
|
412,089 |
|
– |
|
– |
|
– |
|
|
412,089 |
|
(36,241) |
|
17,810 |
|
– |
|
|
393,658 |
Related party liabilities |
|
– |
|
638,448 |
|
347,248 |
|
(975,683) |
(c) |
|
10,013 |
|
1,844 |
|
208 |
|
(12,065) |
(c) |
|
– |
Total liabilities |
|
412,199 |
|
2,277,119 |
|
1,131,705 |
|
(975,683) |
|
|
2,845,340 |
|
298,944 |
|
945,123 |
|
(12,065) |
|
|
4,077,342 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series preferred stock: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A preferred stock |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
– |
|
– |
|
– |
|
|
– |
Series B preferred stock |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
– |
|
– |
|
– |
|
|
– |
Series A common stock |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
– |
|
– |
|
– |
|
|
– |
Common stock |
|
10,497 |
|
1 |
|
1 |
|
(2) |
(b) |
|
10,497 |
|
3,301 |
|
2,500 |
|
(5,801) |
(b) |
|
10,497 |
Additional paid-in capital |
|
438,378 |
|
121,230 |
|
147,941 |
|
(269,171) |
(b) |
|
438,378 |
|
91,120 |
|
26,271 |
|
(117,601) |
(b) |
|
438,168 |
Accumulated other comprehensive income (loss) |
|
(22,680) |
|
(62,325) |
|
– |
|
62,325 |
(b) |
|
(22,680) |
|
4,568 |
|
37,567 |
|
(42,135) |
(b) |
|
(22,680) |
Retained earnings (deficit) |
|
1,482,420 |
|
(58,797) |
|
(288,151) |
|
346,948 |
(b) |
|
1,482,420 |
|
37,922 |
|
176,392 |
|
(214,104) |
(b) |
|
1,482,630 |
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 |
|
– |
|
(1,706) |
|
– |
|
– |
|
|
(1,706) |
|
– |
|
– |
|
– |
|
|
(1,706) |
Total stockholders' equity (deficit) |
|
1,230,965 |
|
(1,597) |
|
(140,209) |
|
140,100 |
|
|
1,229,259 |
|
136,911 |
|
242,730 |
|
(379,641) |
|
|
1,229,259 |
Total liabilities and stockholders' equity |
$ |
1,643,164 |
$ |
2,275,522 |
$ |
991,496 |
$ |
(835,583) |
|
$ |
4,074,599 |
$ |
435,855 |
$ |
1,187,853 |
$ |
(391,706) |
|
$ |
5,306,601 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Balances as of December 31, 2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) Eliminate investment in subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) Eliminate intercompany receivables and payables |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued )
Consolidating statement of operations by industry segment for the quarter ended
June 30, 2013
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 |
|
|
(U naudited) |
||||||||||||||||||
|
|
(In thousands) |
||||||||||||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Self-moving equipment rentals |
$ |
– |
$ |
522,083 |
$ |
– |
$ |
– |
|
$ |
522,083 |
$ |
– |
$ |
– |
$ |
(434) |
(c) |
$ |
521,649 |
Self-storage revenues |
|
– |
|
41,822 |
|
277 |
|
– |
|
|
42,099 |
|
– |
|
– |
|
– |
|
|
42,099 |
Self-moving and self-storage products and service sales |
|
– |
|
70,691 |
|
– |
|
– |
|
|
70,691 |
|
– |
|
– |
|
– |
|
|
70,691 |
Property management fees |
|
– |
|
5,161 |
|
– |
|
– |
|
|
5,161 |
|
– |
|
– |
|
– |
|
|
5,161 |
Life insurance premiums |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
– |
|
41,062 |
|
– |
|
|
41,062 |
Property and casualty insurance premiums |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
7,966 |
|
– |
|
– |
|
|
7,966 |
Net investment and interest income |
|
1,238 |
|
2,170 |
|
1 |
|
– |
|
|
3,409 |
|
2,477 |
|
13,222 |
|
(119) |
(b) |
|
18,989 |
Other revenue |
|
– |
|
42,530 |
|
24,569 |
|
(26,139) |
(b) |
|
40,960 |
|
– |
|
495 |
|
(2,241) |
(b) |
|
39,214 |
Total revenues |
|
1,238 |
|
684,457 |
|
24,847 |
|
(26,139) |
|
|
684,403 |
|
10,443 |
|
54,779 |
|
(2,794) |
|
|
746,831 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
2,221 |
|
323,007 |
|
2,622 |
|
(26,139) |
(b) |
|
301,711 |
|
4,096 |
|
6,360 |
|
(2,666) |
(b,c) |
|
309,501 |
Commission expenses |
|
– |
|
68,627 |
|
– |
|
– |
|
|
68,627 |
|
– |
|
– |
|
– |
|
|
68,627 |
Cost of sales |
|
– |
|
35,570 |
|
– |
|
– |
|
|
35,570 |
|
– |
|
– |
|
– |
|
|
35,570 |
Benefits and losses |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
1,957 |
|
40,676 |
|
– |
|
|
42,633 |
Amortization of deferred policy acquisition costs |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
– |
|
3,683 |
|
– |
|
|
3,683 |
Lease expense |
|
23 |
|
26,998 |
|
32 |
|
– |
|
|
27,053 |
|
– |
|
– |
|
(46) |
(b) |
|
27,007 |
Depreciation, net of (gains) losses on disposals |
|
1 |
|
54,166 |
|
3,267 |
|
– |
|
|
57,434 |
|
– |
|
– |
|
– |
|
|
57,434 |
Total costs and expenses |
|
2,245 |
|
508,368 |
|
5,921 |
|
(26,139) |
|
|
490,395 |
|
6,053 |
|
50,719 |
|
(2,712) |
|
|
544,455 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from operations before equity in earnings of subsidiaries |
|
(1,007) |
|
176,089 |
|
18,926 |
|
– |
|
|
194,008 |
|
4,390 |
|
4,060 |
|
(82) |
|
|
202,376 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of subsidiaries |
|
99,795 |
|
– |
|
– |
|
(94,287) |
(d) |
|
5,508 |
|
– |
|
– |
|
(5,508) |
(d) |
|
– |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from operations |
|
98,788 |
|
176,089 |
|
18,926 |
|
(94,287) |
|
|
199,516 |
|
4,390 |
|
4,060 |
|
(5,590) |
|
|
202,376 |
Interest income (expense) |
|
21,932 |
|
(30,044) |
|
(15,298) |
|
– |
|
|
(23,410) |
|
– |
|
– |
|
82 |
(b) |
|
(23,328) |
Pret ax earnings |
|
120,720 |
|
146,045 |
|
3,628 |
|
(94,287) |
|
|
176,106 |
|
4,390 |
|
4,060 |
|
(5,508) |
|
|
179,048 |
Income tax expense |
|
(7,752) |
|
(53,996) |
|
(1,390) |
|
– |
|
|
(63,138) |
|
(1,537) |
|
(1,405) |
|
– |
|
|
(66,080) |
Earn ings available to common shareholders |
$ |
112,968 |
$ |
92,049 |
$ |
2,238 |
$ |
(94,287) |
|
$ |
112,968 |
$ |
2,853 |
$ |
2,655 |
$ |
(5,508) |
|
$ |
112,968 |
(a) Balances for the quarter ended March 31, 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) Eliminate intercompany lease / interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) Eliminate intercompany premiums |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d) Eliminate equity in earnings of subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued )
Consolidating statements of operations by industry for the quarter ended June 30, 2012 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 |
|
|
(U naudited) |
||||||||||||||||||
|
|
(In thousands) |
||||||||||||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Self-moving equipment rentals |
$ |
– |
$ |
467,315 |
$ |
– |
$ |
– |
|
$ |
467,315 |
$ |
– |
$ |
– |
$ |
(321) |
(c) |
$ |
466,994 |
Self-storage revenues |
|
– |
|
34,452 |
|
284 |
|
– |
|
|
34,736 |
|
– |
|
– |
|
– |
|
|
34,736 |
Self-moving and self-storage products and service sales |
|
– |
|
67,178 |
|
– |
|
– |
|
|
67,178 |
|
– |
|
– |
|
– |
|
|
67,178 |
Property management fees |
|
– |
|
4,860 |
|
– |
|
– |
|
|
4,860 |
|
– |
|
– |
|
– |
|
|
4,860 |
Life insurance premiums |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
– |
|
46,426 |
|
– |
|
|
46,426 |
Property and casualty insurance premiums |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
7,243 |
|
– |
|
– |
|
|
7,243 |
Net investment and interest income |
|
1,253 |
|
1,688 |
|
194 |
|
– |
|
|
3,135 |
|
2,200 |
|
9,270 |
|
(88) |
(b) |
|
14,517 |
Other revenue |
|
81 |
|
27,167 |
|
21,085 |
|
(22,708) |
(b) |
|
25,625 |
|
– |
|
446 |
|
(349) |
(b) |
|
25,722 |
Total revenues |
|
1,334 |
|
602,660 |
|
21,563 |
|
(22,708) |
|
|
602,849 |
|
9,443 |
|
56,142 |
|
(758) |
|
|
667,676 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
3,462 |
|
290,311 |
|
2,540 |
|
(22,708) |
(b) |
|
273,605 |
|
3,290 |
|
7,155 |
|
(657) |
(b,c) |
|
283,393 |
Commission expenses |
|
– |
|
61,107 |
|
– |
|
– |
|
|
61,107 |
|
– |
|
– |
|
– |
|
|
61,107 |
Cost of sales |
|
– |
|
32,227 |
|
– |
|
– |
|
|
32,227 |
|
– |
|
– |
|
– |
|
|
32,227 |
Benefits and losses |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
3,566 |
|
44,772 |
|
– |
|
|
48,338 |
Amortization of deferred policy acquisition costs |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
– |
|
2,811 |
|
– |
|
|
2,811 |
Lease expense |
|
24 |
|
32,797 |
|
5 |
|
– |
|
|
32,826 |
|
– |
|
– |
|
(30) |
(b) |
|
32,796 |
Depreciation, net of (gains) losses on disposals |
|
1 |
|
52,320 |
|
3,804 |
|
– |
|
|
56,125 |
|
– |
|
– |
|
– |
|
|
56,125 |
Total costs and expenses |
|
3,487 |
|
468,762 |
|
6,349 |
|
(22,708) |
|
|
455,890 |
|
6,856 |
|
54,738 |
|
(687) |
|
|
516,797 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from operations before equity in earnings of subsidiaries |
|
(2,153) |
|
133,898 |
|
15,214 |
|
– |
|
|
146,959 |
|
2,587 |
|
1,404 |
|
(71) |
|
|
150,879 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of subsidiaries |
|
66,615 |
|
– |
|
– |
|
(64,033) |
(d) |
|
2,582 |
|
– |
|
– |
|
(2,582) |
(d) |
|
– |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from operations |
|
64,462 |
|
133,898 |
|
15,214 |
|
(64,033) |
|
|
149,541 |
|
2,587 |
|
1,404 |
|
(2,653) |
|
|
150,879 |
Interest income (expense) |
|
24,660 |
|
(34,154) |
|
(14,068) |
|
– |
|
|
(23,562) |
|
– |
|
– |
|
71 |
(b) |
|
(23,491) |
Pret ax earnings |
|
89,122 |
|
99,744 |
|
1,146 |
|
(64,033) |
|
|
125,979 |
|
2,587 |
|
1,404 |
|
(2,582) |
|
|
127,388 |
Income tax expense |
|
(8,553) |
|
(36,413) |
|
(444) |
|
– |
|
|
(45,410) |
|
(906) |
|
(503) |
|
– |
|
|
(46,819) |
Earn ings available to common shareholders |
$ |
80,569 |
$ |
63,331 |
$ |
702 |
$ |
(64,033) |
|
$ |
80,569 |
$ |
1,681 |
$ |
901 |
$ |
(2,582) |
|
$ |
80,569 |
|
|
|
|
|
|
|
|
|
|
|||||||||||
(a) Balances for the quarter ended March 31, 2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) Eliminate intercompany lease / interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) Eliminate intercompany premiums |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d) Eliminate equity in earnings of subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued )
Consolidating cash flow statements by industry segment for the quarter ended June 30, 2013 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 |
$ |
112,968 |
$ |
92,049 |
$ |
2,238 |
$ |
(94,287) |
|
$ |
112,968 |
$ |
2,853 |
$ |
2,655 |
$ |
(5,508) |
|
$ |
112,968 |
Earnings from consolidated entities |
|
(99,795) |
|
– |
|
– |
|
94,287 |
|
|
(5,508) |
|
– |
|
– |
|
5,508 |
|
|
– |
Adjustments to reconcile net earnings to the cash provided by operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
1 |
|
65,055 |
|
3,943 |
|
– |
|
|
68,999 |
|
– |
|
– |
|
– |
|
|
68,999 |
Amortization of deferred policy acquisition costs |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
– |
|
3,683 |
|
– |
|
|
3,683 |
Change in allowance for losses on trade receivables |
|
– |
|
(14) |
|
– |
|
– |
|
|
(14) |
|
– |
|
– |
|
– |
|
|
(14) |
Change in allowance for inventory reserve |
|
– |
|
(935) |
|
– |
|
– |
|
|
(935) |
|
– |
|
– |
|
– |
|
|
(935) |
Net gain on sale of real and personal property |
|
– |
|
(10,889) |
|
(676) |
|
– |
|
|
(11,565) |
|
– |
|
– |
|
– |
|
|
(11,565) |
Net gain on sale of investments |
|
(6) |
|
– |
|
– |
|
– |
|
|
(6) |
|
(258) |
|
(1,512) |
|
– |
|
|
(1,776) |
Deferred income taxes |
|
27,824 |
|
– |
|
– |
|
– |
|
|
27,824 |
|
875 |
|
3,129 |
|
– |
|
|
31,828 |
Net change in other operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reinsurance recoverables and trade receivables |
|
– |
|
(21,081) |
|
– |
|
– |
|
|
(21,081) |
|
520 |
|
(2,154) |
|
– |
|
|
(22,715) |
Inventories |
|
– |
|
(973) |
|
– |
|
– |
|
|
(973) |
|
– |
|
– |
|
– |
|
|
(973) |
Prepaid expenses |
|
22,475 |
|
(7,723) |
|
(679) |
|
– |
|
|
14,073 |
|
– |
|
25 |
|
– |
|
|
14,098 |
Capitalization of deferred policy acquisition costs |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
– |
|
(7,808) |
|
– |
|
|
(7,808) |
Other assets |
|
– |
|
(1,172) |
|
(3,467) |
|
– |
|
|
(4,639) |
|
190 |
|
(83) |
|
– |
|
|
(4,532) |
Related party assets |
|
552 |
|
24,213 |
|
– |
|
– |
|
|
24,765 |
|
(96) |
|
– |
|
209 |
(b) |
|
24,878 |
Accounts payable and accrued expenses |
|
8,633 |
|
10,400 |
|
(126) |
|
– |
|
|
18,907 |
|
– |
|
(745) |
|
– |
|
|
18,162 |
Policy benefits and losses, claims and loss expenses payable |
|
– |
|
(5,590) |
|
– |
|
– |
|
|
(5,590) |
|
1,326 |
|
5,873 |
|
– |
|
|
1,609 |
Other policyholders' funds and liabilities |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
(501) |
|
321 |
|
– |
|
|
(180) |
Deferred income |
|
– |
|
7,584 |
|
– |
|
– |
|
|
7,584 |
|
– |
|
– |
|
– |
|
|
7,584 |
Related party liabilities |
|
– |
|
1,158 |
|
4,313 |
|
– |
|
|
5,471 |
|
467 |
|
233 |
|
(209) |
(b) |
|
5,962 |
Net cash provided (used) by operating activities |
|
72,652 |
|
152,082 |
|
5,546 |
|
– |
|
|
230,280 |
|
5,376 |
|
3,617 |
|
– |
|
|
239,273 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
– |
|
(156,306) |
|
(118,850) |
|
– |
|
|
(275,156) |
|
– |
|
– |
|
– |
|
|
(275,156) |
Short term investments |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
(16,298) |
|
(48,354) |
|
– |
|
|
(64,652) |
Fixed maturities investments |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
(14,285) |
|
(52,570) |
|
– |
|
|
(66,855) |
Equity securities |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
(388) |
|
– |
|
– |
|
|
(388) |
Preferred stock |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
(634) |
|
– |
|
– |
|
|
(634) |
Real estate |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
– |
|
(131) |
|
– |
|
|
(131) |
Mortgage loans |
|
– |
|
(1,580) |
|
(6,500) |
|
2,514 |
(b) |
|
(5,566) |
|
– |
|
(5,785) |
|
(1,553) |
(b) |
|
(12,904) |
Proceeds from sales and paydown's of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
– |
|
92,112 |
|
1,127 |
|
– |
|
|
93,239 |
|
– |
|
– |
|
– |
|
|
93,239 |
Short term investments |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
14,570 |
|
50,248 |
|
– |
|
|
64,818 |
Fixed maturities investments |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
5,213 |
|
36,278 |
|
– |
|
|
41,491 |
Equity securities |
|
516 |
|
– |
|
– |
|
– |
|
|
516 |
|
388 |
|
– |
|
– |
|
|
904 |
Preferred stock |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
2,295 |
|
1,000 |
|
– |
|
|
3,295 |
Real estate |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
– |
|
– |
|
– |
|
|
– |
Mortgage loans |
|
– |
|
1,680 |
|
21,466 |
|
(2,514) |
(b) |
|
20,632 |
|
221 |
|
852 |
|
1,553 |
(b) |
|
23,258 |
Net cash provided (used) by investing activities |
|
516 |
|
(64,094) |
|
(102,757) |
|
– |
|
|
(166,335) |
|
(8,918) |
|
(18,462) |
|
– |
|
|
(193,715) |
|
|
(page 1 of 2) |
||||||||||||||||||
(a) Balance for the period ended March 31, 2013 |
|
|
|
|
|
|
|
|
|
|||||||||||
(b) Elimination of intercompany investments |
|
|
|
|
|
|
|
|
|
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued )
Continuation of consolidating cash flow statements by industry segment for the quarter ended June 30, 2013 are as follows:
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued )
Consolidating cash flow statements by industry segment for the quarter ended June 30, 2012 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 |
|
|
(U naudited) |
||||||||||||||||||
Cash flows from operating activities: |
|
(In thousands) |
||||||||||||||||||
Net earnings |
$ |
80,569 |
$ |
63,331 |
$ |
702 |
$ |
(64,033) |
|
$ |
80,569 |
$ |
1,681 |
$ |
901 |
$ |
(2,582) |
|
$ |
80,569 |
Earnings from consolidated entities |
|
(66,615) |
|
– |
|
– |
|
64,033 |
|
|
(2,582) |
|
– |
|
– |
|
2,582 |
|
|
– |
Adjustments to reconcile net earnings to cash provided by operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
1 |
|
59,836 |
|
3,804 |
|
– |
|
|
63,641 |
|
– |
|
– |
|
– |
|
|
63,641 |
Amortization of deferred policy acquisition costs |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
– |
|
2,811 |
|
– |
|
|
2,811 |
Change in allowance for losses on trade receivables |
|
– |
|
(102) |
|
– |
|
– |
|
|
(102) |
|
– |
|
– |
|
– |
|
|
(102) |
Change in allowance for inventory reserve |
|
– |
|
695 |
|
– |
|
– |
|
|
695 |
|
– |
|
– |
|
– |
|
|
695 |
Net gain on sale of real and personal property |
|
– |
|
(7,516) |
|
– |
|
– |
|
|
(7,516) |
|
– |
|
– |
|
– |
|
|
(7,516) |
Net loss on sale of investments |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
12 |
|
27 |
|
– |
|
|
39 |
Deferred income taxes |
|
4,399 |
|
– |
|
– |
|
– |
|
|
4,399 |
|
(236) |
|
478 |
|
– |
|
|
4,641 |
Net change in other operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reinsurance recoverables and trade receivables |
|
– |
|
(12,416) |
|
– |
|
– |
|
|
(12,416) |
|
38,152 |
|
(2,250) |
|
– |
|
|
23,486 |
Inventories |
|
– |
|
(5,398) |
|
– |
|
– |
|
|
(5,398) |
|
– |
|
– |
|
– |
|
|
(5,398) |
Prepaid expenses |
|
9,496 |
|
(9,063) |
|
(166) |
|
– |
|
|
267 |
|
– |
|
– |
|
– |
|
|
267 |
Capitalization of deferred policy acquisition costs |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
– |
|
(5,420) |
|
– |
|
|
(5,420) |
Other assets |
|
3 |
|
19,649 |
|
(259) |
|
– |
|
|
19,393 |
|
1,164 |
|
(39) |
|
– |
|
|
20,518 |
Related party assets |
|
(1,488) |
|
146,547 |
|
2 |
|
– |
|
|
145,061 |
|
(222) |
|
(32) |
|
83 |
(b) |
|
144,890 |
Accounts payable and accrued expenses |
|
27,709 |
|
20,736 |
|
181 |
|
– |
|
|
48,626 |
|
– |
|
(645) |
|
– |
|
|
47,981 |
Policy benefits and losses, claims and loss expenses payable |
|
– |
|
6,777 |
|
– |
|
– |
|
|
6,777 |
|
(42,772) |
|
11,753 |
|
– |
|
|
(24,242) |
Other policyholders' funds and liabilities |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
(703) |
|
(1,181) |
|
– |
|
|
(1,884) |
Deferred income |
|
– |
|
6,457 |
|
– |
|
– |
|
|
6,457 |
|
– |
|
– |
|
– |
|
|
6,457 |
Related party liabilities |
|
– |
|
1,447 |
|
– |
|
– |
|
|
1,447 |
|
105 |
|
(21) |
|
(83) |
(b) |
|
1,448 |
Net cash provided (used) by operating activities |
|
54,074 |
|
290,980 |
|
4,264 |
|
– |
|
|
349,318 |
|
(2,819) |
|
6,382 |
|
– |
|
|
352,881 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
– |
|
(131,874) |
|
(25,912) |
|
– |
|
|
(157,786) |
|
– |
|
– |
|
– |
|
|
(157,786) |
Short term investments |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
(22,430) |
|
(37,965) |
|
– |
|
|
(60,395) |
Fixed maturities investments |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
(9,576) |
|
(40,977) |
|
– |
|
|
(50,553) |
Mortgage loans |
|
– |
|
(5,048) |
|
(7,583) |
|
– |
|
|
(12,631) |
|
(1,821) |
|
– |
|
– |
|
|
(14,452) |
Proceeds from sales and paydown's of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
– |
|
62,426 |
|
– |
|
– |
|
|
62,426 |
|
– |
|
– |
|
– |
|
|
62,426 |
Short term investments |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
12,706 |
|
46,715 |
|
– |
|
|
59,421 |
Fixed maturities investments |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
12,983 |
|
10,995 |
|
– |
|
|
23,978 |
Preferred stock |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
1,003 |
|
– |
|
– |
|
|
1,003 |
Real estate |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
– |
|
4 |
|
– |
|
|
4 |
Mortgage loans |
|
– |
|
8,029 |
|
1,073 |
|
– |
|
|
9,102 |
|
577 |
|
1,868 |
|
– |
|
|
11,547 |
Net cash provided (used) by investing activities |
|
– |
|
(66,467) |
|
(32,422) |
|
– |
|
|
(98,889) |
|
(6,558) |
|
(19,360) |
|
– |
|
|
(124,807) |
|
|
(page 1 of 2) |
||||||||||||||||||
(a) Balance for the period ended March 31, 2012 |
|
|
|
|
|
|
|
|
|
|||||||||||
(b) Elimination of intercompany investments |
|
|
|
|
|
|
|
|
|
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued )
Continuation of consolidating cash flow statements by industry segment for the quarter ended June 30, 2012 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 |
|
|
(U naudited) |
||||||||||||||||||
Cash flows from financing activities: |
|
|||||||||||||||||||
Borrowings from credit facilities |
|
– |
|
26,187 |
|
– |
|
– |
|
|
26,187 |
|
– |
|
– |
|
– |
|
|
26,187 |
Principal repayments on credit facilities |
|
– |
|
(55,254) |
|
(5,888) |
|
– |
|
|
(61,142) |
|
– |
|
– |
|
– |
|
|
(61,142) |
Capital lease payments |
|
– |
|
(3,888) |
|
– |
|
– |
|
|
(3,888) |
|
– |
|
– |
|
– |
|
|
(3,888) |
Leveraged Employee Stock Ownership Plan - repayments from loan |
|
– |
|
162 |
|
– |
|
– |
|
|
162 |
|
– |
|
– |
|
– |
|
|
162 |
Proceeds from (repayment of) intercompany loans |
|
(55,326) |
|
21,300 |
|
34,026 |
|
– |
|
|
– |
|
– |
|
– |
|
– |
|
|
– |
Securitization deposits |
|
– |
|
(908) |
|
– |
|
– |
|
|
(908) |
|
– |
|
– |
|
– |
|
|
(908) |
Investment contract deposits |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
– |
|
28,993 |
|
– |
|
|
28,993 |
Investment contract withdrawals |
|
– |
|
– |
|
– |
|
– |
|
|
– |
|
– |
|
(7,967) |
|
– |
|
|
(7,967) |
Net cash provided (used) by financing activities |
|
(55,326) |
|
(12,401) |
|
28,138 |
|
– |
|
|
(39,589) |
|
– |
|
21,026 |
|
– |
|
|
(18,563) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effects of exchange rate on cash |
|
– |
|
(376) |
|
– |
|
– |
|
|
(376) |
|
– |
|
– |
|
– |
|
|
(376) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents |
|
(1,252) |
|
211,736 |
|
(20) |
|
– |
|
|
210,464 |
|
(9,377) |
|
8,048 |
|
– |
|
|
209,135 |
Cash and cash equivalents at beginning of period |
|
201,502 |
|
106,951 |
|
775 |
|
– |
|
|
309,228 |
|
22,542 |
|
25,410 |
|
– |
|
|
357,180 |
Cash and cash equivalents at end of period |
$ |
200,250 |
$ |
318,687 |
$ |
755 |
$ |
– |
|
$ |
519,692 |
$ |
13,165 |
$ |
33,458 |
$ |
– |
|
$ |
566,315 |
|
|
(page 2 of 2) |
||||||||||||||||||
(a) Balance for the period ended March 31, 2012 |
|
|
|
|
|
|
|
|
|
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
1 1 . Industry Segment and Geographic Area Data
|
United States |
|
Canada |
|
Consolidated |
|
|
|
(Unaudited) |
||||
|
|
(All amounts are in thousands of U.S. $'s) |
||||
Quarter ended June 30, 2013 |
|
|||||
Total revenues |
$ |
703,963 |
$ |
42,868 |
$ |
746,831 |
Depreciation and amortization, net of (gains) losses on disposals |
|
59,170 |
1,947 |
61,117 |
||
Interest expense |
|
23,186 |
142 |
23,328 |
||
Pretax earnings |
|
171,756 |
7,292 |
179,048 |
||
Income tax expense |
|
64,148 |
1,932 |
66,080 |
||
Identifiable assets |
|
5,425,667 |
153,095 |
5,578,762 |
||
|
|
|||||
Quarter ended June 30, 2012 |
|
|||||
Total revenues |
$ |
626,183 |
$ |
41,493 |
$ |
667,676 |
Depreciation and amortization, net of (gains) losses on disposals |
|
56,963 |
1,973 |
58,936 |
||
Interest expense |
|
23,339 |
152 |
23,491 |
||
Pretax earnings |
|
119,384 |
8,004 |
127,388 |
||
Income tax expense |
|
44,698 |
2,121 |
46,819 |
||
Identifiable assets |
|
4,690,153 |
148,683 |
4,838,836 |
1 2 . Employee Benefit Plans
The components of the net periodic benefit costs with respect to postretirement benefits were as follows:
|
Quarter Ended June 30, |
|||
|
|
2013 |
|
2012 |
|
|
(Unaudited) |
||
|
|
(In thousands) |
||
|
|
|
|
|
Service cost for benefits earned during the period |
$ |
181 |
155 |
|
Interest cost on accumulated postretirement benefit |
|
141 |
139 |
|
Other components |
|
5 |
1 |
|
Net periodic postretirement benefit cost |
$ |
327 |
295 |
|
|
|
1 3 . 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.
Our financial instruments that are exposed to concentrations of credit risk consist primarily of t emporary 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. We place our tempor ary cash investments with financial institutions and limit the amount of credit exposure to any one financial institution.
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
We have mortgage receivables, which potentially expose us to credit risk. The portfolio of notes is principally collateralized by sel f- storage facilities and commercial properties. We have 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 discounte d 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.
A ssets 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 Meas urements 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 valuati ons 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.
A financial instrument’s le vel 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 June 30, 201 3 , that are subject to ASC 820 and the valuation approach applied to each of these items.
|
Total |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
|
|
(Unaudited) |
||||||
|
|
(In thousands) |
||||||
Assets |
|
|
|
|
|
|
|
|
Short-term investments |
$ |
516,150 |
$ |
516,150 |
$ |
– |
$ |
– |
Fixed maturities - available for sale |
|
1,053,578 |
|
938,666 |
|
113,737 |
|
1,175 |
Preferred stock |
|
22,000 |
|
22,000 |
|
– |
|
– |
Common stock |
|
41,430 |
|
41,430 |
|
– |
|
– |
Derivatives |
|
1,212 |
|
– |
|
1,212 |
|
– |
Total |
$ |
1,634,370 |
$ |
1,518,246 |
$ |
114,949 |
$ |
1,175 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
Guaranteed residual values of TRAC leases |
$ |
– |
$ |
– |
$ |
– |
$ |
– |
Derivatives |
|
41,749 |
|
– |
|
41,749 |
|
– |
Total |
$ |
41,749 |
$ |
– |
$ |
41,749 |
$ |
– |
|
|
|
|
|
|
|
|
|
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
The following table represents the fair value measurements for our assets at June 30, 2013 using significant unobservable inputs (Level 3).
|
Fixed Maturities - Asset Backed Securities |
|
|
|
(Unaudited) |
|
|
(In thousands) |
Balance at March 31, 2013 |
1,180 |
|
|
|
|
Fixed Maturities - Asset Backed Securities - redemption |
(8) |
|
Fixed Maturities - Asset Backed Securities - gain (realized) |
3 |
|
Balance at June 30, 2013 |
1,175 |
|
|
|
|
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 pro ducts 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, w e discuss our results of operations for the first quarter of fiscal 201 4 , compared with the first quarter of fiscal 201 3 , 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 Re sources and Disclosures about Contractual Obligations and Commercial Commitments and a discussion of off-balance sheet arrangements . We conclude this MD&A by discussing our current outlook for the remainder of fiscal 201 4 .
This MD&A should be read in conjunction with the other sections of this Quarterly Report, 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 S tatements Regarding Forward-Looking Statements , all of which are based on our current expectations and could be affected by the uncertainties and risk s described throughout this filing or in our most recent Annual Report on Form 10-K for the fiscal year en ded March 31, 201 3 . Many of these risks and uncertainties are beyond our control and our actual results may differ materially from these forward-looking statements.
AMERCO, a Nevada corporation (“AMERCO”), has a first fiscal quarter that ends on the 30 th of June for each year that is referenced. Our insurance company subsidiaries have a first quarter that ends on the 3 1 st of March for each year that is referenced. They have been consolidated on that basis. Our insurance companies’ financial reporting proce sses 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 operati ons. The Company discloses any material events occurring during the intervening period. Consequently, all references to our insurance subsidiaries’ years 201 3 and 20 12 correspond to fiscal 201 4 and 201 3 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 stra tegy, 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 movin g 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 and portable storage boxes available for rent, expanding the number of independent dealers in our network and expanding and taking advantage of our growing eMove ® capabilities.
Our Property and Casualty Insurance operating segment is focused on providing and a dministering property and casualty insurance to U-Haul and its customers, its independent dealers and affiliates.
Our Life Insurance operating segment is focused on long-term capital growth through direct writing and reinsuring of life, Medicare suppleme nt 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 Casu alty Insurance, comprised of Rep w est and its subsidiaries and ARCOA, and
• Life Insurance, comprised of Oxford and its subsidiaries.
Moving and Storage Operating Segment
Our Moving and Storage operating segment consists of the rental of trucks, trailers, por table moving and 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 a vailability 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 th e 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 tho usands of independent U-Haul Self-Storage Affiliates. Our network of customer rated affiliates and service provide r s furnish pack and load help, cleaning help, self-storage and similar services, all over North America. Our goal is to further utilize our we b-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 sha ring 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 t hat 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 p rovides loss adjusting and claims handling for U-Haul through regional offices across North America. Our Property and Casualty Insurance operating segment also underwrites components of the Safemove, Safetow, Safemove Plus, Safestor and Safestor Mobile pro tection 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 our Property and Casualty Insurance operating segment includes offering property and c asualty 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 and reinsuring of life insurance, Medicare supplement and annuity policies.
Critical Accounting Policies and Estimates
Our financial statements have been prepared in accordance with the generally accepted accounting principles (“GAAP”) in the United States. The methods, estimates and jud gments 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 th e 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 par ticular 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 liabi lities 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 mos t critical to us, and involve the most difficult, subjective or complex judgments include the following:
Principles of Consolidation
We apply ASC 810 in our principles of consolidation. ASC 810 addresses arrangements where a company does not hold a majorit y 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 eff ective 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 rela tionship with the primary beneficiary trigger a reconsideration under the provisions of ASC 810. After a triggering event occurs the facts and circumstances are utilized in determining whether or not a company is a VIE, which other company(s) have a variab le interest in the entity, and whether or not the company’s interest is such that it is the primary beneficiary.
We will continue to monitor our relationships with the other entities regarding who is the primary beneficiary, which could change based on fac ts and circumstances of any reconsideration events.
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-rent al equipment 3-55 years. We follow the deferral method of accounting based on ASC 908 - Airlines for major overhauls in which engine and transmission overhauls are currently 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 estima ted 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.
M anagement determined that addit ions to the fleet resulting from purchase s should be depreciated on an accelerated method based upon a declining formula. 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 to a salvage value of 2 0% by the end of year fifteen. Beginning in October 2012, rental equipment subject to this depreciation schedule is being depreciated to a salvage vale of 15%. This change had an immaterial effect on our current financial statements. Comparatively , a standard straight line approach would reduce the book value by approximately 5. 7 % per year over the life of the truck. For the affected equipment, the accelerated depreciation was $ 13.5 million and $1 4.8 million greater than what it would have been if calculated under a straight line approach for the first quarter of fiscal 201 4 and 201 3 , 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 con dition 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 1-866-404-03 55. 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 o f 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 paym ents to be made on insurance claims for reported losses and estimates of losses incurred, but not yet reported. Liabilities for annuity contracts consist of contract account balances that accrue to the benefit of the policyholders.
Insurance reserves for o ur Property and Casualty Insurance operating segment and U-Haul take into account losses incurred based upon actuarial estimates and are management’s best approximation of future payments. These estimates are based upon past claims experience and current claim trends as well as social and economic conditions such as changes in legal theories and inflation. These reserves consist of case reserves for reported losses and a provision for losses incurred but not reported (“IBNR”), both reduced by applicable r einsurance recoverables, resulting in a net liability.
Due to the nature of the underlying risks and 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 these liabilities cannot be precisely determined and may vary significantly from the estimated liability, especially for long-tailed casualty lines of business such as excess workers’ compensation. As a result of the long-tailed nature of the ex cess workers ’ compensation policies written by Repwest during 1983 through 2002, and similar policies assumed by Repwest during 2001 through 2003, it may take a number of years for claims to be fully reported and finally settled.
On a regular basis insuran ce reserve adequacy is reviewed by management to determine if existing assumptions need to be updated . In determining the assumptions for calculating workers ’ compensation reserves, management considers multiple factors including the following:
• Cost trends associated with claimant treatments
• Changes in ceding entity and third party administrator reporting practices
• Changes in environmental factors including legal and regulatory
• Current conditions affecting claim settlements
• Future economi c conditions including inflation
We have reserved each claim based upon the accumulation of current claim costs projected through the claimants’ life expectancy, and then adjusted for applicable reinsurance arrangements. Management reviews each claim bi-a nnually to determine if the estimated life-time claim costs have increased and then adjusts the reserve estimate accordingly at that time. We have factored in an estimate of what the potential cost increases could be in our IBNR liability. We have not as sumed settlement of the existing claims in calculating the reserve amount, unless it is in the final stages of completion.
Continued i ncreases in claim costs, including medical inflation and new treatments and medications could lead to future adverse devel opment resulting in additional reserve strengthening. Conversely, settlement of existing claims or if injured workers return to work or expire prematurely, could lead to future positive development.
Impairment of Investments
Investments are evaluated purs uant 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 valu e is recognized in the current period operating results. There were no write downs in the first quarter of fiscal 2014 and 201 3 .
Income Taxes
Our 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.
Fair Va lues
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.
Our 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. We place our t emporary cash investments with financial institutions and limit the amount of credit exposure to any one financial institution.
We have mortgage receivables, which potentially expose us to credit risk. The portfolio of notes is principally collateralized b y self- storage facilities and commercial properties. We have 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 o ffered 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 ava ilable 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
Our management has evaluated subsequent events occurring after June 30, 2013 , the date of our most recent balance sheet, through the date our financial statements were issued. W e do not believe any subsequent events have occurred that wou ld require further disclosure or adjustment to our financial statements.
Adoption of New Accounting Pronouncements
In February 2013, the FASB issued Accounting Standards Update (“ASU”) 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Com prehensive Income , (“ASU 2013-02”) an amendment to FASB ASC Topic 220. The update requires disclosure of amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present either on the face of th e statement of operations or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required to be reclassified to net income in its ent irety in the same reporting period. For amounts not reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures that provide additional detail about those amounts. This ASU is effective prospectively for the Company’s fiscal years, and interim periods within those years beginning after December 15, 2012. We adopted ASU 2013-02 in the first quarter of fiscal 2014 and it did not have a material impact on our financial statements.
From time to time, new accountin g 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 indus tries or entities and therefore will have minimal, if any, impact on our financial position or results of operations upon adoption.
AMERCO and Consolidated Entities
Quarter Ended June 30, 2013 compared with the Quarter Ended June 30, 2012
Listed below on a consolidated basis are revenues for our major product lines for the first quarter of fiscal 201 4 and the first quarter of fiscal 201 3 :
Quarter Ended June 30, |
||||
2013 |
2012 |
|||
(Unaudited) |
||||
(In thousands) |
||||
Self-moving equipment rentals |
521,649 |
466,994 |
||
Self-storage revenues |
42,099 |
34,736 |
||
Self-moving and self-storage products and service sales |
70,691 |
67,178 |
||
Property management fees |
5,161 |
4,860 |
||
Life insurance premiums |
41,062 |
46,426 |
||
Property and casualty insurance premiums |
7,966 |
7,243 |
||
Net investment and interest income |
18,989 |
14,517 |
||
Other revenue |
|
39,214 |
25,722 |
|
Consolidated revenue |
746,831 |
667,676 |
||
Self-moving equipment rental revenues increased $ 54.7 million during the first quarter of fiscal 201 4 , compared with t he first quarter of fiscal 2013. The improvement in revenue came primarily from growth in moving transactions across both our truck and trailer fleets. The additional transac tions were facilitated by an increase in the amount of equipment available to rent along with incremental utilization improvements.
Self-storage revenues increased $ 7.4 million during the first quarter of fiscal 201 4 , com pared with the first quarter o f fiscal 201 3 due primarily to an increase in the number of rooms rented . The average monthly amount of occupied square feet increased by nearly 21 % during the first quarter of fiscal 201 4 compared to the same period last year. The growth in revenues and square feet rented comes from a combination of improved occupancy at existing locations as well as the addition of new facilities to the portfolio. Over the last twelve months we have added approximately 2.5 million net rentable square feet to the self-st orage portfolio with over 0.8 million of that coming on during the first quarter.
Sales of self-moving and self-storage products and services increased $ 3.5 million during the first quarter of fiscal 201 4 , compared with the first quarter of fiscal 201 3 . Increases were recognized in the sales of moving supplies , propane and towing accessories and related installations.
Life insurance premiums dec reased $ 5.4 million during the first quarter of fiscal 201 4 , compared with the first quarter of fiscal 2013 du e primarily to reduced life and Medicare supplement premiums.
Property and casualty insurance premiums inc reased $ 0.7 million during the first quarter of fiscal 2014, compared with the first quarter of fiscal 201 3 due to an increase in Safestor and Safetow sales which were a result of increased equipment and storage rental transactions.
Net investment and interest income increased $4.5 million during the first quarter of fiscal 2014, compared with the first quarter of fiscal 2013. The Life Insurance operati ng segment recognized increased investment income due to a larger invested asset base and realized gains compared to the same period last year.
Other revenue increased $ 13.5 million during the first quarter of fiscal 201 4 , compared with the first quarter of fiscal 201 3 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 $ 746.8 million for the first quarter of fiscal 201 4 , compared with $ 667.7 million for the first quarter of fiscal 201 3 .
Listed below are revenues and earnings from operations at each of our operating segments for the first quarter of fiscal 201 4 and the first quarter of fiscal 201 3 . The insurance companies first quarters ended March 31 , 201 3 and 20 12 .
Quarter Ended June 30, |
||||
2013 |
2012 |
|||
(Unaudited) |
||||
(In thousands) |
||||
Moving and storage |
|
|
||
Revenues |
684,403 |
602,849 |
||
Earnings from operations before equity in earnings of subsidiaries |
194,008 |
146,959 |
||
Property and casualty insurance |
|
|
||
Revenues |
10,443 |
9,443 |
||
Earnings from operations |
4,390 |
2,587 |
||
Life insurance |
|
|
||
Revenues |
54,779 |
56,142 |
||
Earnings from operations |
4,060 |
1,404 |
||
Eliminations |
|
|
||
Revenues |
(2,794) |
(758) |
||
Earnings from operations before equity in earnings of subsidiaries |
(82) |
(71) |
||
Consolidated results |
|
|
||
Revenues |
746,831 |
667,676 |
||
Earnings from operations |
|
202,376 |
|
150,879 |
Total costs and expenses in creased $ 27.7 million during the first quarter of fiscal 201 4 , compared with the first quarter of fiscal 201 4 . Operating expenses for the Moving and Storage operating segment increased $ 28.1 million with a significant portion of this coming from spending on personnel and operating costs associated with the U-Box program along with an increase in rental equipment maintenance. Commission expenses increased in relation to the associated revenues. Depreciation expense increased $ 5.4 million and gains from the disposal property, plant and equi pment increased $4.1 million. This resulted in a $1.3 million increase in depreciation expense, net. Conversely, lease expense decreased $5.8 million as a result of the Company’s continued trend in financing new equipment on the balance sheet versus thro ugh operating leases.
As a result of the above mentioned changes in revenues and expenses, earnings from operations in creased to $ 202.4 million for the first quarter of fiscal 201 4 , compared with $ 150.9 million for the first quarter of fiscal 201 3 .
Interest expense for the first quarter of fiscal 201 4 was $ 23.3 million, compared with $ 23.5 million for the first quarter of fiscal 201 3 .
Income tax expense was $ 66.1 million for the first quarter of fiscal 201 4 , compared with $ 46.8 million for the first quarter of fiscal 201 3 .
As a result of the above mentioned items, earnings available to common shareholders were $ 113.0 million for the first quarter of fiscal 201 4 , compared with $ 80.6 million for the first quarter of fiscal 201 3 .
Basic and diluted earn ings per share for the first quarter of fiscal 201 4 were $ 5.78 , compared with $ 4.13 for the first quarter of fiscal 201 3 .
The weighted average common shares outstanding basic and diluted were 19,545,618 for the first quarter of fiscal 201 4 , compared with 1 9,502,369 for the first quarter of fiscal 201 3 .
Moving and Storage
Quarter Ended June 30, 2013 compared with the Quarter Ended June 30, 2012
Listed below are revenues for the major product lines at our Moving and Storage operating segment for the first quarter of fiscal 201 4 and the first quarter of fiscal 201 3 :
Quarter Ended June 30, |
||||
2013 |
2012 |
|||
(Unaudited) |
||||
(In thousands) |
||||
Self-moving equipment rentals |
522,083 |
467,315 |
||
Self-storage revenues |
42,099 |
34,736 |
||
Self-moving and self-storage products and service sales |
70,691 |
67,178 |
||
Property management fees |
5,161 |
4,860 |
||
Net investment and interest income |
3,409 |
3,135 |
||
Other revenue |
40,960 |
25,625 |
||
Moving and Storage revenue |
684,403 |
602,849 |
||
Self-moving equipment rental revenues increased $ 54.8 million during the first quarter of fiscal 201 4 , compared with the first quarter of fiscal 201 3 . The improvement in revenue came primarily from growth in moving transactions across both our truck and trailer fleets. The additiona l transactions were facilitated by an increase in the amount of equipment available to rent along with incremental utilization improvements.
Self-storage revenues increased $ 7.4 million during the first quarter of fiscal 201 4 , com pared with the first quarter of fiscal 201 3 due primarily to an increase in the number of rooms rented . The average monthly amount of occupied square feet increased by nearly 21 % during the first quarter of fiscal 201 4 compared to the same period last year. The growth in re venues and occupancy comes from a combination of improved occupancy at existing locations as well as the addition of new facilities to the portfolio. Over the last twelve months we have added approximately 2.5 million net rentable square feet to the self- storage portfolio with over 0.8 million of that coming on during the first quarter .
Sales of self-moving and self-storage products and services increased $ 3.5 million during the first quarter of fiscal 201 4 , compared with the first quarter of fiscal 201 3 . Increases were recognized in the sales of moving supplies , propane and towing accessories and related installations.
Net investment and interest income increased $0.3 million during the first quarter of fiscal 2014, compared with the first quarter of fiscal 2013 primarily due to increased investment income offset by a decrease in interest income on the SAC Holdings notes compared to the same period last year . In June 2013, SAC Holdings made a payment to reduce its outstanding deferred interest payable to AMERCO by $10.4 million.
Other revenue increased $ 15.3 million during the first quarter of fiscal 201 4 , compared with the first quarter of fiscal 201 3 primarily from the expansion of new business initiatives including our U-Box TM program.
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 June 30, |
|||
|
|
2013 |
2012 |
|
|
|
(Unaudited) |
||
|
|
(In thousands, except occupancy rate) |
||
Room count as of June 30 |
|
195 |
170 |
|
Square footage as of June 30 |
|
16,854 |
14,308 |
|
Average monthly number of rooms occupied |
|
153 |
131 |
|
Average monthly occupancy rate based on room count |
|
80.2% |
|
78.0% |
Average monthly square footage occupied |
|
13,448 |
11,119 |
Total costs and expenses in creased $ 34.5 million during the first quarter of fiscal 201 4 , compared with the first quarter of fiscal 201 3 . Operating expenses increased $ 28.1 million with a significant portion of this coming from spending on personnel and operating costs associated with the U-Box program along with an increase in rental equipment maintenance. Commission expenses increased in relation to the associated revenues. Depreciation e xpense increased $ 5.4 million and gains from the disposal property, plant and equipment increased $4.1 million. This resulted in a $1.3 million increase in depreciation expense, net. Conversely, lease expense decreased $5.8 million as a result of the Com pany’s continued trend in financing new equipment on the balance sheet versus through operating leases.
As a result of the above mentioned changes in revenues and expenses, earnings from operations for the Moving and Storage operating segment before consol idation of the equity in the earnings of the insurance subsidiaries, increased to $194.0 million for the first quarter of fiscal 2014, compared with $147.0 million for the first quarter of fiscal 2013.
Equity in the earnings of AMERCO’s insurance subsidiar ies was $ 5.5 million and $2.6 million for the first quarter of fiscal 201 4 and 201 3, respectively .
As a result of the above mentioned changes in revenues and expenses, earnings from operations increased to $ 199.5 million for the first quarter of fiscal 201 4 , compared with $ 149.5 million for the first quarter of fiscal 201 3 .
Property and Casualty Insurance
Quarter Ended March 31 , 201 3 compared with the Quarter Ended March 31, 2012
Net premiums were $ 8.0 million and $ 7.2 million for the quarters ended March 31, 201 3 and 201 2 , respectively. A significant portion of Repwest’s premiums are from policies sold in conjunction with U-Haul rental transactions. The premium increase corresponded with the increased moving and storag e transactions at U-Haul during the same time period.
Net investment income was $2.5 million and $2.2 million for the quarters ended March 31, 201 3 and 201 2 , respectively. The increase was due to $0.3 million of gains on the sale of bonds and preferred sto ck.
Net operating expenses were $ 4.1 million and $ 3.3 million for the quarters ended March 31, 201 3 and 201 2 , respectively. The increase was primarily due to an increase in commissions.
Benefits and losses incurred were $ 2.0 million and $ 3.6 million for t he quarters ended March 31, 201 3 and 201 2 , respectively. The decrease was due to a $1.4 million strengthening of reserves on assumed reinsurance business in the first quarter of last year whereas no similar adjustment was necessary this year.
As a result of the above mentioned changes in revenues and expenses, pretax earnings from operations were $ 4.4 million and $ 2.6 million for t he quarters ended March 31, 2013 and 201 2 , respectively.
Life Insurance
Quarter Ended March 31, 2013 compared with the Quarter Ended March 3 1 , 20 12
Net premiums were $ 41.1 million and $ 46.4 million for the quarters ended March 31 , 201 3 and 201 2 , respectively . Medicare supplement premiums decreased $2.7 million while premiums from single premium whole life insurance and immediate annuities decreased by $2.6 million. In the past year n ew business activity shifted more towards deferred annuity policies with sales of these products accounted for as deposits on the balance sheet instead of premium income. Annuity deposits were $27.7 million, an increase of $1.3 million compared to the same period last year.
Net investment income was $ 13.2 million and $ 9.3 million for the quarters ended March 31 , 201 3 and 201 2 , respectively. The re was an increase of $3.0 mil lion of investment income due to a larger invested asset base and an increase in realized gains of $1.0 million compared to the same period last year .
Net operating expenses were $ 6.4 million and $ 7.2 million for the quarters ended March 31 , 201 3 and 201 2 , respectively. The variance is due to a reduction in Medicare supplement, single premium life, and immediate annuities commissions resulting from a lower Medicare supplement policy base and decreased sales of single premium life and immediate annuity pol icies.
Benefits and losses incurred were $ 40.7 million and $ 44.8 million for the quarter ended March 31 , 201 3 and 201 2 , respectively . Life and immediate annuity benefits decreased $2.3 million primarily due to a reduction in reserves from reduced sales. M edicare supplement incurred benefits decreased by $3.0 million from a reduction of policies in force and an improved benefit ratio. Interest credited to policyholders increased $1.5 million as a result of increased deferred annuity deposits.
Amortization o f deferred acquisition costs (“DAC”), sales inducement asset (“SIA”) and the value of business acquired was $ 3.7 million and $ 2.8 million for the quarters ended March , 201 3 and 201 2 , respectively . The variance is a result of increased amortization of annuity DAC and SIA due to growth of the in force business.
As a result of the above mentioned changes in revenues and expenses, pretax earnings from operations were $ 4.1 million and $ 1.4 million for the quarters ended March 31, 201 3 and 201 2 , respectiv ely.
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 th e foreseeable future. The majority of our obligations currently in place mature between fiscal years 201 6 and 201 9 . However, since there are many factors which could affect our liquidity, including some which are beyond our control, there is no assurance t hat future cash flows and liquidity resources will be sufficient to meet our outstanding debt obligations and our other future capital needs.
At June 30, 2013 , cash and cash equivalents totaled $ 552.6 million, compared with $ 463.7 million on March 31, 201 3 . 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 June 30, 2013 (or as otherwise indicated), cash and cash equivalents, other financial assets (receivables, short-term investments, other investments, fixed maturities, and related party assets) and debt obligations of each operating segment were:
|
Moving & Storage |
|
Property and Casualty Insurance (a) |
|
Life Insurance (a) |
|
|
|
(Unaudited) |
||||
|
|
(In thousands) |
||||
Cash and cash equivalents |
$ |
506,802 |
$ |
10,578 |
$ |
35,207 |
Other financial assets |
|
281,267 |
430,890 |
1,089,621 |
||
Debt obligations |
|
1,737,277 |
– |
– |
||
|
|
|
|
|
|
|
(a) As of March 31, 2013 |
|
|
|
|
|
|
At June 30, 2013, o ur Moving and Storage operating segment had additional cash available under existing credit facilities of $ 75.0 million .
Net cash provided by operating activities de creased $ 113.6 million in the first quarter of fiscal 201 4 compared with fiscal 201 3 primarily due to repayments of $127.3 million of the notes and interest receivables with SAC Holdings in fiscal 2013 that did not recur this year.
Net cash used in investing activities in creased $ 68.9 million in the first quarter of fiscal 201 4, compared with fiscal 201 3 . Purchases of property, plant and equipment, which are reported net of cash from leases, in creased $ 117.4 million. Cash from the sales of property, plant and equipment increased $ 30.8 million largely due to an increase in pickup and cargo van sales.
Net cash provide d by fina ncing activities in creased $62.2 million in the first quarter of fiscal 201 4 , as compared with fiscal 201 3 . Borrowings increased by $62.0 million and were offset by an increase in capital lease payments of $6.6 million. Additionally , net annuity d eposits at the Life i nsurance segment increased $7.0 million in the first quarter of fiscal 201 4 compared to the same period last year.
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 obtai ned 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 tha t during fiscal 201 4, we will reinvest in our truck and trailer rental fleet approximately $ 300 million , net of equipment sales excluding any lease buyouts. Through the first quarter of fiscal 2014, we have invested , net of sales, approximately $ 120 million before any lease buyouts in our truck and trailer fleet of this projected amount . Fleet investments in fiscal 201 4 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 201 4 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 acqu isition of self-storage properties to support U-Haul's growth through debt financing and funds from operations and sales. Our 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. We are funding these development projects through construction loans and internally generated funds. For the fir st quarter of fiscal 201 4 , we invested approximately $99 million in real estate acquisitions, new construction and renovation and repair. For fiscal 201 4 , 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 expendi tures (purchases of property, plant and equipment less proceeds from the sale of property, plant and equipment and lease proceeds ) were $ 181.9 million and $ 95.4 million for the first quarter of fiscal 201 4 and 201 3 , respectively. The components of our net capital expenditures are provided in the following table:
|
Three Months Ending June 30, |
|||
|
|
2013 |
2012 |
|
|
(Unaudited) |
|||
|
(In thousands) |
|||
Purchases of Rental Equipment |
213,255 |
196,138 |
||
Equipment Lease Buyouts |
9,106 |
24,374 |
||
Purchases of Real Estate, Construction and Renovations |
99,400 |
36,423 |
||
Other capital expenditures |
13,394 |
|
9,260 |
|
Gross capital expenditures |
335,155 |
|
266,195 |
|
Less: Lease proceeds |
(59,999) |
(108,409) |
||
Less: Sales of property, plant and equipment |
(93,239) |
|
(62,426) |
|
Net capital expenditures |
181,917 |
95,360 |
||
|
|
|
|
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 co mpanies. As a result, our Property and Casualty Insurance’s operating segment assets are generally not available to satisfy the claims of AMERCO or its legal subsidiaries.
We believe that stockholders equity at the Property and Casualty operating segment remains sufficient and we do not believe that its ability to pay ordinary dividends to AMERCO will be restricted per state regulations.
Our Property and Casualty operating segment s tockholder’s equity was $ 140.8 million and $ 136.9 million at March 31, 2013 and December 31, 20 12 , respectively. The increase resulted from net earnings of $ 2.9 m illion and a n increase in other comprehensive income of $ 1.0 million. Our Property and Casualty Insurance operating segment does not use debt or equity issues to increas e capital and therefore has no direct exposure to capital market conditions other than through its investment portfolio.
Life Insurance
Our Life Insurance operating segment manages its financial assets to meet policyholder and other obligations including i nvestment contract withdrawals and deposits . Our Life Insurance’s operating segment net deposits for the quarter ended March 31, 2013 were $ 28.0 million. State insurance regulations restrict the amount of dividends that can be paid to stockholders of insur ance companies. As a result, our Life Insurance’s operating segment funds are generally not available to satisfy the claims of AMERCO or its legal subsidiaries.
Our Life Insurance’s operating segment stockholder’s equity was $ 243.6 million and $ 242.7 milli on at March 31, 2013 and December 31, 20 12 , respectively. The increase resulted from net earnings of $ 2.7 million and a de crease in other comprehensive income of $ 1.8 million. Our Life Insurance operating segment does not use debt or equity issues to incre ase capital and therefore has no direct exposure to capital market conditions other than through its investment portfolio.
Cash Provided (Used) from Operating Activities by Operating Segments
Moving and Storage
Net cash provided from operating activities were $ 230.3 million and $ 349.3 million for the first quarter of fiscal 2014 and 201 3 , respectively primarily due to repayments of $127.3 million of the notes and interest receivables with SAC Holdings in fiscal 2013 that did not recur this year, offset by increased revenues this year.
Property and Casualty Insurance
Net cash provided (used) by operating activities were $5.4 million and ($2.8) million for the first quarter ended March 31, 2013 and 2012 , respectively. The increase in cash provided was primari ly due to a decrease in claim payments.
Our Property and Casualty Insurance’s operating segment cash and cash equivalents and short-term investment portfolio amounted to $ 43.4 million and $ 45.2 million at March 31, 2013 and December 31, 20 12 , 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 o ur Property and Casualty Insurance operating segment to schedule cash needs in accordance with investment and underwriting proceeds.
Life Insurance
Net cash provided by operating activities were $ 3.6 million and $ 6.4 million for the first quarter ended Mar ch 31, 2013 and 20 12 , respectively. The decrease in cash provided was attributable to the decrease in collected premiums offset by an increase in net investment income.
In addition to cash flows from operating activities and financing activities, a substan tial amount of liquid funds are available through our Life Insurance’s operating segment short-term portfolio. At March 31, 2013 and December 31, 20 12 , cash and cash equivalents and short-term investments amounted to $ 45.9 million and $ 34.6 million, respec tively. 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 capi tal needs. We continue to hold significant cash and have access to existing credit facilities and additional liquidity to meet our anticipated capital expenditure requirements for investment in our rental fleet, rent al 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 contain s 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 c ash 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 June 30, 2013 , we had cash availability under existing credit facilities of $ 75.0 mil lion. It is possible that circumstances beyond our control could alter the ability of the financial institutions to lend us the unused lines of credit. W e 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.
Fair Value of Financial Instruments
A ssets and liabilities recorded at fair value on the cond ensed 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 ca tegory. For more information, please see Note 1 3 , 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 June 30, 2013 , we had $ 1.2 million of available-for-sale assets classified in Level 3.
The interest rate swaps held by us 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 Obliga tions and Commercial Commitments
Our estimates as to future contractual obligations have not materially changed from the disclosure included under the subheading Disclosures About Contractual Obligations and Commercial Commitments in Part II, Item 7, Manag ement’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, 201 3 .
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.
We utilize operating leases for certain rental equipment and facilities with terms expiring substantially through 201 9 . In the event of a shortfall in proceeds from th e sales of the underlying rental equipment assets, we have guaranteed $ 111.8 million of resid ual values at June 30, 2013 for these assets at the end of their respective lease terms. We have been leasing rental equipment since 1987. To date, we have not exp erienced residual value shortfalls related to these leasing arrangements. Using the average cost of fleet related debt as the discount rate, the present value of our minimum lease payments and residual value guarantees were $ 276.8 million at June 30, 2013 .
Historically, we have used off-balance sheet arrangements in connection with the expansion of our self-storage business. For more information please see Note 9 , 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 year s. In the future, we will continue to identify and consider off-balance sheet opportunities to the extent such arrangements would be economically advantageous to us and our stockholders.
We currently manage the self-storage properties owned or leased by SA C Holdings, Mercury, 4 SAC, 5 SAC, Galaxy, and Private Mini pursuant to a standard form of management agreement, under which we receive a management fee of between 4% and 10% of the gross receipts plus reimbursement for certain expenses. We received manage ment fees, exclusive of reimbursed expenses, of $ 10.3 million and $9.4 million from the above mentioned entities during the first quarter of fiscal 201 4 and 201 3, respectively . This management fee is consistent with the fee received for other properties we previously managed for third parties. SAC Holdings, 4 SAC, 5 SAC, Galaxy and Private Mini are substantially controlled by Blackwater. Blackwater is wholly-owned by Mark V. Shoen, a significant stockholder of AMERCO. Mercury is substantially controlled by Mark V. Shoen. James P. Shoen, a significant shareholder and director of AMERCO and an estate planning trust benefitting the Shoen children ha ve an interest in Mercury.
We lease space for marketing company offices, vehicle repair shops and hitch installati on centers from subsidiaries of SAC Holdings, 5 SAC and Galaxy. Total lease payments pursuant to such leases were $ 0.7 million in the first quarters of both fiscal 201 4 and 201 3, respectively . The terms of the leases are similar to the terms of leases for other properties owned by unrelated parties that are leased to us .
At June 30, 2013 , 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 our other independent dealers whereby commissions are paid by us based on equipment rental revenues. We paid the above mentioned entities $ 13.3 million and $ 11.6 million in commissions pursuant to such dealership contracts during the first quarter of fiscal 201 4 and 201 3 , respectively.
During the first quarter of fiscal 201 4, subsidiaries of ours held various junior unsecured notes of SAC Holdings. Substantially all of the equity interest of SAC Holdings is controlled by Blackwater. We do not have an equity ownership interest in SAC Holdings. We recorded interest income of $ 1.9 million and $ 2.5 million, and received cash interest payments of $ 12.3 million and $ 7.2 million, from SAC Holdings during the first quarter of fiscal 201 4 and 201 3 , respectively. The largest aggregate amount of notes receivable outstanding during the first quarter of fisc al 201 4 was $ 72.4 million and the aggregate notes receivable balance at June 30, 2013 was $ 72.2 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 thes e notes are between 201 7 and 20 19
These agreements along with notes with subsidiaries of SAC Holdings, 4 SAC, 5 SAC, Galaxy and Private Mini, excluding Dealer Agreements, provided revenues of $ 7.9 million, expenses of $ 0.7 million and cash flows of $ 21.7 m illion during the first quarter of fiscal 201 3 . Revenues and commission expenses related to the Dealer Agreements were $ 60.5 million and $ 13.3 million, respectively during the first quarter of fiscal 201 4 .
Fiscal 201 4 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 go als. 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 due to unforeseen events including the continuation of adverse economic conditio ns that are beyond our control.
W ith respect to our storage business, w e have added new locations and expanded at existing locations. In fiscal 201 4, we are looking to continue to acquire new locations, 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 rec ent history. We will continue to invest capital and resources in the U-Box storage container program throughout fiscal 201 4 .
Our Property and Casualty Insurance operating segment will continue to provide loss adjusting and claims handling for U-Haul and un derwrite components of the Safemove, Safetow, Safemove Plus, Safestor and Safestor Mobile protection packages to U-Haul customers.
Our 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 Quar terly Report 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 forwa rd-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 a re 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 anticipated outcomes of government inv estigations 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 uncertai nties, 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 th e fiscal year ended March 31, 201 3 , as well as the following: our ability to operate pursuant to the terms of its credit facilities; our ability to maintain contracts that are critical to our operations; the costs and availability of financing; our ability to execute our business plan; our 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 governme nt 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 litigat ion against us ; changes in accounting standards and other factors described in this Quarterly R eport or the other documents we file with the SEC. The above factors, the following disclosures, as well as other statements in this Quarterly R eport 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 us that such matters will be realized. We assume 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 fina ncial 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 and one variable rate operating lease . We have used interest rate swap agreements and forward swaps to reduce our exposure to changes in interest rates. We enter 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 |
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|||
|
(In thousands) |
|
|
|
|
|
|
|
|
|||
$ |
15,157 |
|
$ |
(28) |
|
7/10/2006 |
|
7/10/2013 |
|
5.67% |
|
1 Month LIBOR |
|
231,666 |
|
|
(37,843) |
|
8/18/2006 |
|
8/10/2018 |
|
5.43% |
|
1 Month LIBOR |
|
10,000 |
|
|
(297) |
|
2/12/2007 |
|
2/10/2014 |
|
5.24% |
|
1 Month LIBOR |
|
6,595 |
|
|
(212) |
|
3/12/2007 |
|
3/10/2014 |
|
4.99% |
|
1 Month LIBOR |
|
6,600 |
|
|
(217) |
|
3/12/2007 |
|
3/10/2014 |
|
4.99% |
|
1 Month LIBOR |
|
7,800 |
(a) |
|
(448) |
|
8/15/2008 |
|
6/15/2015 |
|
3.62% |
|
1 Month LIBOR |
|
7,760 |
|
|
(487) |
|
8/29/2008 |
|
7/10/2015 |
|
4.04% |
|
1 Month LIBOR |
|
12,067 |
|
|
(866) |
|
9/30/2008 |
|
9/10/2015 |
|
4.16% |
|
1 Month LIBOR |
|
6,476 |
(a) |
|
(250) |
|
3/30/2009 |
|
4/15/2016 |
|
2.24% |
|
1 Month LIBOR |
|
7,688 |
(a) |
|
(279) |
|
8/15/2010 |
|
7/15/2017 |
|
2.15% |
|
1 Month LIBOR |
|
17,500 |
(a) |
|
(654) |
|
6/1/2011 |
|
6/1/2018 |
|
2.38% |
|
1 Month LIBOR |
|
33,750 |
(a) |
|
(638) |
|
8/15/2011 |
|
8/15/2018 |
|
1.86% |
|
1 Month LIBOR |
|
13,750 |
(a) |
|
(216) |
|
9/12/2011 |
|
9/10/2018 |
|
1.75% |
|
1 Month LIBOR |
|
13,374 |
(b) |
|
(28) |
|
3/28/2012 |
|
3/28/2019 |
|
1.42% |
|
1 Month LIBOR |
|
20,625 |
|
|
53 |
|
4/16/2012 |
|
4/1/2019 |
|
1.28% |
|
1 Month LIBOR |
|
40,500 |
|
|
661 |
|
1/15/2013 |
|
12/15/2019 |
|
1.07% |
|
1 Month LIBOR |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) forward swap |
|
|
|
|
|
|
|||||
|
(b) operating lease |
|
|
|
|
|
|
As of June 30, 2013 , we had $ 476.9 million of variable rate debt obligations and $ 13.7 million of a variable rate operating lease . 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 $ 0.4 million annually (after consideration of the effect of the above derivative contracts.)
Additionally, our insurance subsidiaries’ fixed income investment portfolios expose us to interest rate risk. This interest rate risk is the price sensitivity of a fixed income security to changes in interest rat es. 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 s upporting 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 busi ness. Approximately 5.7% and 6.2% of our revenue was generated in Canada during the first quarter of fiscal 201 4 and 201 3, respectively . The result of a 10.0% change in t he 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 Quarterly Report 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 secti on, 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 Comp any’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 most recently completed fiscal quarter covered by this Quarterly Report . Our Disclosure Controls are de signed to reasonably assure that information required to be disclosed in our reports filed under the Exchange Act, such as this Quarterly Report , 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 cont rols evaluation, our CEO and CAO have concluded that as of the end of the period covered by this Quarterly Report , 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 c osts. 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 th e 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 som e 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 dete rioration in the degree of compliance with policies or procedures.
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 ly completed 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
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, 201 3 .
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults upon Senior S ecurities
Not applicable.
Item 4. Mine Safety Disclosure
Not applicable.
Not applicable.
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 Definitive Proxy filed July 17 , 2013 on F orm DEF 14A, file no. 1-11255
|
3.2 |
Restated By l aws of AMERCO |
Incorporated by reference to AMERCO’s Current Report on Form 8-K , file d on Sept ember 10 , 20 10 , file no. 1-11255
|
10 . 1 |
Amendment No. 2 to the Amended and Restated Credit Agreement and Security Agreement, dated as of May 28,2013, to Amendment No. 1 to the Amended and Restated Credit Agreement and Security Agreement, dated as of August 18, 2006, to the Amended and Restated Credit Agreement, dated as of June 8, 2005, among Amerco Real Estate Company of Texas, Inc., Amerco Real Estate Company of Alabama, Inc., U-Haul Co. of Florida, Inc., U-Haul International, Inc. and Bank o f America, NA as lender
|
Filed herewith
|
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
|
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
|
Filed herewith |
101.SCH |
XBRL Taxonomy Extension Schema
|
Filed herewith |
101.CAL |
XBRL Taxonomy Extension Calculation Linkbase
|
Filed herewith |
101.LAB |
XBRL Taxonomy Extension Label Linkbase
|
Filed herewith |
101.PRE |
XBRL Taxonomy Extension Presentation Linkbase
|
Filed herewith |
101.DEF |
XBRL Taxonomy Extension Definition Linkbase
|
Filed herewith |
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: August 7 , 201 3 |
/s/ Edward J. Shoen |
||
|
Edward J. Shoen President and Chairman of the Board (Duly Authorized Officer) |
|
|
|
Date: August 7 , 201 3 |
/s/ Jason A. Berg |
|
|
Jason A. Berg Chief Accounting Officer (Principal Financial Officer) |
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
among
AMERCO REAL ESTATE COMPANY
AMERCO REAL ESTATE COMPANY OF TEXAS, INC.
AMERCO REAL ESTATE COMPANY OF ALABAMA, INC.
U-HAUL CO. OF FLORIDA, INC.
Borrowers,
U-HAUL INTERNATIONAL, INC.,
Guarantor,
and
BANK OF AMERICA, N.A.,
as Lender
Dated as of May 28, 2013
Page
SECTION 1. DEFINITIONS
1.1 Defined Terms
1.2 Other Definitional Provisions
SECTION 2. AMOUNT AND TERMS OF TERM LOAN COMMITMENT
2.1 Commitmen t
2.2 Procedure for Borrowing
2.3 [Reserved].
2.4 Mandatory Reduction of Commitment
2.5 Substitution of Eligible Properties
SECTION 3. GENERAL PROVISIONS APPLICABLE TO THE TERM LOAN
3.1 Interest Rates and Payment Dates
3.2 Continuation
3.3 [Reserved]
3.4 Repayment of Term Loan; Evidence of Debt.
3.5 Optional Prepayments.
3.6 Mandatory Prepayments
3.7 Computation of Interest and Fees
3.8 Inability to Determine Interest Rate
3.9 Payments
3.10 Illegality
3.11 Requirements of Law
3.12 Taxes
3.13 Indemnity
3.14 Lending Offices; Change of Lending Office
SECTION 4. REPRESENTATIONS AND WARRANTIES
4.1 Financial Condition.
4.2 No Change
4.3 Existence; Compliance with Law
4.4 Power; Authorization; Enforceable Obligations
4.5 No Legal Bar
4.6 No Material Litigation
4.7 No Default
4.8 Ownership of Property; Liens
4.9 Taxes
4.10 Federal Regulations
4.11 ERISA
4.12 Investment Company Act; Other Regulations
4.13 Subsidiaries, Corporate Structure
4.14 Security Documents
4.15 Accuracy and Completeness of Information.
4.16 Labor Relations
4.17 Insurance
4.18 Solvency
4.19 Purpose of Term Loan
4.20 Environmental Matters
4.21 Eligible Properties
4.22 OFAC
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Term Loan
SECTION 6. AFFIRMATIVE COVENANTS
6.1 Financial Statements
6.2 Certificates; Other Information
6.3 Payment of Obligations
6.4 Conduct of Business and Maintenance of Existence
6.5 Maintenance of Property; Insurance
6.6 Inspection of Property; Books and Records; Discussions
6.7 Notices
6.8 Environmental Laws
6.9 CMBS Maturity and Refinancing.
6.10 Bank Accounts.
6.11 Post Closing Matters.
6.12 Continuation of Lines of Business.
SECTION 7. NEGATIVE COVENANTS
7.1 Negative Pledge
7.2 Limitation on Fundamental Changes.
7.3 Limitation on Modifications of Agreements.
7.4 Sale of Eligible Properties and Collateral.
7.5 Governing Documents.
7.6 Alterations.
SECTION 8. EVENTS OF DEFAULT
SECTION 9. MISCELLANEOUS
9.1 Amendments and Waivers
9.2 Notices
9.3 No Waiver; Cumulative Remedies
9.4 Survival of Representations and Warranties
9.5 Payment of Expenses and Taxes
9.6 Successors and Assigns; Participations and Assignments
9.7 Set ‑ off
9.10 Integration
9.11 GOVERNING LAW
9.12 Submission To Jurisdiction; Waivers
9.13 Acknowledgements
9.14 WAIVERS OF JURY TRIAL
9.15 Confidentiality
9.16 Guarantee Provisions; Joint and Several Liability.
9.17 Cooperation by Lender.
SCHEDULES
Schedule 1.0 Applicable Lending Office
Schedule 1.1 Initial Eligible Properties and Appraisals
Schedule 1.3 TL Amortization Schedule
Schedule 1.4 Eligibility Criteria
Schedule 1.5 CMBS Properties
Schedule 4.4 Consents and Filings
Schedule 4.13 Subsidiaries, Corporate Structure
Schedule 4.14(b) Filing Jurisdicti ons
Schedule 4.20 Environmental Matters
Schedule 6.5 Eligible Property Insurance
Schedule 6.11 Post-Closing Searches; Good Standing Certificates
EXHIBITS
Exhibit A Form of Note
Exhibit B [Reserved]
Exhibit C [Reserved]
Exhibit D [Reserved]
Exhibit E Form of Non Bank Status Certificate
Exhibit F Form of Secretary’s Certificate
Exhibit G-1 Form of Opinion of Katten Muchin Rosenman LLP
Exhibit G-2 Form of Opinion of Jennifer Settles, Esq.
Exhibit H-1 Form of CMBS Properties Excess Cash Flow Report
Exhibi t H-2 Form of NOI Report
Exhibit H-3 Form of Debt Service Coverage Ratio Report
Exhibit I [Reserved]
ANNEXES
Annex I [Reserved]
Annex II [Reserved]
Annex III Form of Notice of Prepayment
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of May 28, 2013, among AMERCO Real Estate Company , a Nevada corporation (“ AREC ”), AMERCO Real Estate Company of Texas, Inc. , a Texas corporation (“ AREC Texas ”), AMERCO Real Es tate Company of Alabama, Inc. , an Alabama corporation (“ AREC Alabama ”), and U-Haul Co. of Florida, Inc. , a Florida corporation (“ U-Haul Florida ”) (each, a “ Borrower ” and, individually and collectively, jointly and severally, the “ Borrowers ”), U-Haul Intern ational, Inc. , a Nevada corporation (the “ Guarantor ”), and BANK OF AMERICA, N.A., a national banking association (as successor by merger to Merrill Lynch Commercial Finance Corp., together with its permitted successors or assigns, the “ Lender ”).
RECITALS
W HEREAS, reference is made to that certain Amended and Restated Loan and Security Agreement, dated as of June 8, 2005 (as amended, supplemented or otherwise modified prior to the date hereof, the “ Existing Loan Agreement ”), among the Borrowers, the Guaranto r and the Lender;
WHEREAS, the Borrowers are the direct or indirect legal and beneficial owners of the initial Eligible Properties (as herein defined) set forth on Schedule 1.1;
WHEREAS, the Borrowers and the Lender wish to amend and restate the Existing L oan Agreement on the terms and conditions set forth herein and in the other Loan Documents (as herein defined); and
NOW THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein , the parties hereto hereby agree that th e Existing Loan Agreement is amended and restated to read in its entirety as follows:
. As used in this Agreement, the following terms shall have the following meanings:
“ 2004 Creditors ”: the “Lenders”, the “Issuing Lender” and the “Agent” under, and each as defined in, the 2004 Loan Agreement.
“ 2004 Financing Documents ”: collectively, the 2004 Loan Agreement, the 2004 Mortgages, and the other “Loan Documents” as defined in the 2004 Loan Agreement.
“ 2004 Guarantors ”: the AMERCO subsidiaries guaranteeing the obligations of the 2004 Borrowers under the 2004 Financing Documents.
“ 2004 Loan Agreement ”: the Loan and Security Agreement, dated as of March 1, 2004 (as amended, supplemented or otherwise modified prior to the “Closing Date ” (as defined in the Existing Loan Agreement)), among AMERCO, a Nevada corporation and the parent corporation of the Borrowers (“ AMERCO ”), various subsidiaries of AMERCO, including, but not limited to, the Borrowers (the “ 2004 Borrowers ”), the lenders iden tified therein (the “ 2004 Lenders ”) and Wells Fargo Foothill, Inc., as lead arranger, administrative agent, syndication agent and collateral agent for the 2004 Lenders (the “ 2004 Agent ”).
“ 2004 Loan Assignment Agreement ”: the Letter Agreement, dated as of June 8, 2005, by and among the 2004 Agent, the 2004 Borrowers, AMERCO, the 2004 Guarantors and the Lender, as the same may be amended, supplemented or otherwise modified from time to time.
“ 2004 Loans ”: the “Existing Loans” as defined in the Existing Loan Agreement.
“ 2004 Mortgage ”: each of the duly recorded mortgages or deeds of trust dated as of March 1, 2004 in respect of the Eligible Properties, made for the benefit of 2004 Agent, as agent for the 2004 Creditors.
“ Account and Payment Instructions Cert ificate ”: a certificate, in form satisfactory to the Lender and the Borrower, setting forth the account numbers for certain deposit accounts and certain payment instructions, as provided in this Agreement.
“ Affiliate ”: as to any Person, any other Person w hich, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, “ control ” of a Person (including, with its correlative meanings, “ controlled by ” and “ under common control wit h ”) means the power, directly or indirectly, either to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting shares, partnership interests or other Capital Stock or by contract or otherwise.
“ Agreement ”: this Credit Agreement, as amended, supplemented or otherwise modified from time to time.
“ Alternate Rate ”: at any time, a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus 1/2 of 1%, (b) the rate of interest i n effect for such day as publicly announced from time to time by the Lender as its “ prime rate, ” and (c) the Eurodollar Rate plus 1.00% . The “ prime rate ” is a rate set by the Lender based upon various factors including the Lender’ s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such prime rate announced by Bank of America shall take effect at th e opening of business on the day specified in the public announcement of such change.
“ Applicable Lending Office ”: for the Lender, the lending office of the Lender designated on Schedule 1.0 hereto (or any other lending office from time to time notified to the Borrower by the Lender) as the office at which its Term Loan is to be maintained.
“ Applicable Margin ”: for the Term Loan, 1.50% per annum.
“ Appraised Value ”: (a) with respect to the Properties listed on Schedule 1.1, the appraised value of such Prope rty as set forth in the appraisal thereof previously provided to the Lender by the Borrowers and referenced on Schedule 1.1, and (b) with respect to any other Property, the appraised value of such Property as set forth in the appraisal of such Property by Cushman & Wakefield (or other appraiser satisfactory to the Lender) existing as of the date hereof, or if the date of such existing is more than 24 months prior to the date of determination, a new appraisal by an appraiser, and in form and scope, satisfact ory to the Lender, provided that, in each case, the Borrowers may, in their sole discretion, elect to update the appraised value of any Property by obtaining a new appraisal of such Property by Cushman & Wakefield (or other appraiser satisfactory to the Le nder) and delivering such appraisal and such updated appraised value to the Lender.
“ Award ”: any compensation paid by any Governmental Authority in connection with a Condemnation in respect of all or any part of a Property.
“ Bank Account ”: a deposit, custody, money-market or other similar account (whether, in any case, time or demand or interest or non-interest bearing) maintained by a Loan Party with a financial institution, which may at any time hold any Collateral or Proceeds of Collateral, includin g without limitation, the Concentration Account, the Collection Account and the Collection Sub-Account.
“ Board ”: the Board of Governors of the Federal Reserve System of the United States (or any successor).
“ Borrower ”: as defined in the heading to this Agreement.
“ Business ”: as defined in Section 4.20(c).
“ Business Day ”: (i) for all purposes other than as covered by clause (ii) of this definition, a day other than a Saturday, Sunday or other day on which commercial banks in New York City, are authorize d or required by law to close, and, (ii) with respect to all notices and determinations in connection with, and payments of principal and interest on, Eurodollar Loans, any day which is a Business Day as described in clause (i) of this definition and which is also a day on which dealings in Dollar deposits are carried out in the interbank market.
“ Capital Stock ”: any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, membership interests i n a limited liability company, partnership interests in a partnership, any and all similar ownership interests in a Person (other than a corporation, limited liability company or partnership) and any and all warrants, rights or options to purchase any of t he foregoing.
“ CERCLA ”: as defined in the definition of “Environmental Laws”.
“ Change of Control ”: (a) any “person” or “group” (within the meaning of Section 13(d) and 14(d) of the Exchange Act), other than Permitted Holders, that becomes the beneficial o wner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of 50%, or more, of the Capital Stock of AMERCO having the right to vote for the election of members of the Board of Directors or (b) a majority of the members of th e Board of Directors do not constitute Continuing Directors.
“ Closing Date ”: the date on which the conditions precedent set forth in Section 5.1 shall be satisfied or waived.
“ CMBS Accounts ”: collectively, the Merrill Lynch CMBS Account and the Morgan St anley CMBS Account.
“ CMBS Banks ”: collectively, the Merrill Lynch CMBS Bank and the Morgan Stanley CMBS Bank.
“ CMBS Bank Direction Letters ”: as defined in Section 6.10(b).
“ CMBS Documents ”: collectively, the Merrill Lynch CMBS Documents and the Morgan Stan ley CMBS Documents.
“ CMBS Mortgage Agreements ”: collectively, the Merrill Lynch CMBS Mortgage Agreements and the Morgan Stanley CMBS Mortgage Agreements.
“ CMBS Primary Documents ”: collectively, the Merrill Lynch CMBS Primary Documents and the Morgan Stanley CMBS Primary Documents.
“ CMBS Properties ”: as listed on Schedule 1.5 attached hereto; provided that, following the CMBS Release Date with respect to any CMBS Properties and the effectiveness of th e releases thereof pursuant to Section 6.9(d), such properties will thereafter cease to be “CMBS Properties” for the purposes of the Loan Documents.
“ CMBS Properties Excess Cash Flow ”: for any period, the sum of (a) all amounts which are distributable to a ny of the “Borrowers” under and as defined in any CMBS Mortgage Agreements pursuant to Section 5.05 of such CMBS Mortgage Agreements for such period, net of, without duplication, Operating Expenses in respect of any CMBS Properties subject to such CMBS Mor tgage Agreements and payments of principal and interest under the CMBS Mortgage Agreements, in each case accrued during such period, and (b) any Permitted CMBS Refinancing Excess Cash Flow and any Unencumbered CMBS Excess Cash Flow for such period.
“ CMBS P roperties Excess Cash Flow Report ”: the monthly report to be given by the Guarantor substantially in the form of Exhibit H-1 hereto.
“ CMBS Release Date ”: means the Merrill Lynch CMBS Release Date or the Morgan Stanley CMBS Release Date, as applicable.
“ Cod e ”: the Internal Revenue Code of 1986, as amended from time to time.
“ Collateral ”: all property and interests in property of the Loan Parties, now owned or hereinafter acquired, upon which a Lien is purported to be created by any Security Document.
“ Coll ection Account ”: the deposit account designated as such in the Account and Payment Instructions Certificate established at the Collection Account Bank, in the name of the Guarantor and subject to the Collection Account Control Agreement, or such other depo sit account (located in the United States) established by a Borrower with the written consent of the Lender.
“ Collection Account Bank ”: JPMorgan Chase Bank, N.A.
“ Collection Account Control Agreement ”: the Blocked Account Control Agreement (“Shifting Cont rol”), dated as of June 8, 2005, by and among, the Guarantor, the Lender and the Collection Account Bank with respect to the Collection Account, as the same may be amended, supplemented or otherwise modified from time to time.
“ Collection Sub-Account ”: the interest-bearing deposit account designated as such in the Account and Payment Instructions Certificate established at the Collection Sub-Account Bank, in the name of the Guarantor and subject to the Collection Sub-Account Control Agreement, or such other deposit account (located in the United States) established by a Borrower with the written consent of the Lender.
“ Collection Sub-Account Control Agreement ”: the Blocked Account Control Agreement (“ Automatic Sweep/Frozen Account”), dated as of June 8, 2005, by and among, the Guarantor, the Lender and the Collection Sub-Account Bank with respect to the Collection Sub-Account, as the same may be amended, supplemented or otherwise modified from time to time.
“ Collection Sub-Account Deposit ”: for any calendar month, the deposit to be made by the Guarantor into the Collection Sub-Account pursuant to Section 6.10(c) for such month, consisting of an amount equal to the sum of (i) the monthly principal amorti zation payment, if required, of the Term Loan pursuant to the TL Amortization Schedule required to be paid on the Payment Date next following the end of such month, and (ii) the interest which would be due to be paid on the Payment Date next following the end of such month calculated assuming that applicable Debt Service Coverage Ratio at all times during such month would result in the Term Loan bearing the highest possible interest rate provided for under Section 3.1(a) at all times during such month.
“ C ollection Sub-Account Failure ”: the failure of the Guarantor to make the required Collection Sub-Account Deposit by the 21 st day of each calendar month (or, if unrestricted funds are already on deposit in the Collection Sub-Account, the failure of the Guar antor to deposit an amount sufficient such that the unrestricted funds on deposit in the Collection Sub-Account by such 21 st day of such calendar month is not less than the Collection Sub-Account Deposit).
“ Co mbined NOI ”: for any period with respect to th e Borrowers, the NOI of all of the Eligible Properties owned by the Borrowers on a combined basis.
“ Commodity Exchange Act ” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.
“ Commonly Controll ed Entity ”: an entity, whether or not incorporated, which is under common control with the Borrower within the meaning of Section 4001 of ERISA or is part of a group which includes the Borrower and which is treated as a single employer under Section 414(b ) or (c) of the Code or, for purposes of the Code, Section 414(m) or (o) of the Code.
“ Concentration Account ”: the depo sit account designated as such in the Account and Payment Instructions Certificate in the name of the Guarantor maintained at the Concent ration Account Bank at Phoenix, Arizona or such other deposit account (located in the United States) established by a Borrower with the consent of the Lender.
“ Concentration Account Bank ”: JPMorgan Chase Bank, N.A.
“ Concentration Account Direction Letter ” : as defined in Section 6.10(b).
“ Condemnation ”: a temporary or permanent taking by any Governmental Authority as the result, in lieu or in anticipation, of the exercise of the right of condemnation or eminent domain, of all or any part of any Property, or any interest therein or right accruing thereto, including any right of access thereto affecting the Property or any part thereof.
“ Continuation ”, “ Continuing ” and “ Continued ” shall refer to the continuation of a Eurodollar Loan from one Interest Period to the next Interest Period.
“ Continuing Directors ”: the directors of AMERCO on the Closing Date and each other director of AMERCO, if such other director’s nomination for election to the Board of Directors of AMERCO is recommended by a majority of the the n Continuing Directors or by a Permitted Holder.
“ Contractual Obligation ”: as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.
“ Debt Service Coverage Ratio ”: as of the last day of any fiscal quarter of the Borrowers, the ratio of (a) the sum of (i) NOI of the CMBS Properties which, as of such day, have not been released pursuant to Section 6.9(d) hereof, for the period of twelve consecutive calendar months ended on the last day of the month immediately preceding the month in which such day occurs and (ii) Combined NOI for the period of twelve consecutive calendar months ended on the last day of the month imme diately preceding the month in which such day occurs, to (b) the sum of (i) Interest Expense for the period of twelve consecutive calendar months ended on the last day of the month immediately preceding the month in which such day occurs and (ii) payments of principal on the Term Loan made during the period of twelve consecutive calendar months ended on the last day of the month immediately preceding the month in which such day occurs; provided that, solely for purposes of calculating the amount set forth i n clause (b)(ii) of this definition, the amount of the reduction of the Term Loan Commitment provided in Schedule 1.3 for each of September 10, 2015, September 10, 2016, September 10, 2017, September 10, 2018, April 10, 2021, April 10, 2022 and the Termina tion Date shall be deemed to be the amount of such reduction provided in such Schedule for the immediately preceding monthly date referenced therein (for each such date, the “ Prior Monthly Amount ”), and the amount of principal prepayment of the Term Loan r equired pursuant to Section 3.6(a) as a result of such reductions in the Term Loan Commitment as of such dates in excess of the applicable Prior Monthly Amount shall be disregarded.
“ Default ”: any of the events specified in Section 8, whether or not any r equirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied.
“ Designated Jurisdiction ” means any country or territory to the extent that such country or territory itself is the subject of any Sanction.
“ Direc tion Letters ”: as defined in Section 6.10(b).
“ Disposed Property ”: as defined in Section 2.4(b)(ii).
“ Dollars ” and “ $ ”: dollars in lawful currency of the United States of America.
“ Eligible Property ”: any Property which satisfies the Eligibility Criteri a and is approved by the Lender in its reasonable discretion. The Lender hereby acknowledges that the Properties listed on Schedule 1.1 are Eligible Properties. The Lender acknowledges that, upon request of the Borrowers, other Properties (“ Substitute Pr operties ”) may be substituted for Eligible Properties, so long as at the time of such substitution such Substitute Properties satisfy the Eligibility Criteria and the representations set forth in Sections 4.20 and 4.21 shall be true and correct with respec t to such Substitute Property.
“ Eligible Property Disposition ”: as defined in Section 2.4(b)(ii).
“ Eligibility Criteria ”: with respect to any Property, the criteria listed on Schedule 1.4.
“ Environmental Indemnity Agreement ”: the Environmental Indemnity, dated as of June 8, 2005, by and among the Borrowers, the Guarantor and the Lender, as the same may be amended, supplemented or otherwise modified from time to time.
“ Environmental Indemnity Reaffirmation Agreement ”: the Environmental Indemnity Reaffirmation Agreement, dated as of the date hereof, by and among the Borrowers, the Guarantor and
the Lender reaffirming the obligations of the Borrowers and the Guarantor to the Lender under the Environmental Indemnity Agr eement.
“ Environmental Laws ”: collectively, any civil or criminal, local, state or federal law, rule or regulation ordinance, code, decree, judgment, permit, license, agreement with Governmental Authorities, or other requirements of law, including common law, pertaining to the environment, natural resources, pollution, health, safety, clean-up, underground storage tanks and/or governing the handling, use, presence, release, transportation, treatment, storage, disposal, or exposure to hazardous substances i ncluding, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. § 9601 et seq.) (“ CERCLA ”), the Resource Conservation and Recovery Act of 1976 (42 U.S.C. § 6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C. § 1251 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. § 5101 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. § 136 et seq.), the Emergency Pla nning and Community Right to Know Act (42 U.S.C. § 11001 et seq.), the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.), the Residential Lead-Based Paint Hazard Reduction Act (42 U.S.C. § 4851 et seq.), any analogous state or local laws, any am endments thereto, and the regulations promulgated pursuant to said laws, together with all amendments from time to time to any of the foregoing.
“ Environmental Permits ”: as defined in Section 4.20(b).
“ Environmental Reports ”: as defined in the Environmenta l Indemnity Agreement.
“ ERISA ”: the Employee Retirement Income Security Act of 1974, as amended from time to time.
“ Eurocurrency Reserve Percentage ”: for any day during any Interest Period, the reserve percentage (expressed as a decimal, carried out to f ive decimal places) in effect on such day, whether or not applicable to any Lender, under regulations issued from time to time by the Board for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve req uirement) with respect to Euro dollar funding (currently referred to as “ Eurocurrency liabilities ” ). The Euro dollar Rate for each outstanding Euro dollar Loan shall be adjusted automatically as of the effective date of any change in the Eurocurrency Reserve Percentage.
“ Eurodollar Base Rate ” the rate per annum equal to (i) the British Bankers Association LIBOR Rate or the successor thereto if the British Bankers Association is no longer making a LIBOR rate available (“ LIBOR ”), as published by Reuters (or su ch other commercially available so urce providing quotations of LIBOR as may be designated by the Lender from time to time) at approximately 12:00 p.m. central time, three Business Days prior to the commencement of such Interest Period, for deposits in doll ars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period or, (ii) if such rate is not available at such time for any reason, the rate per annum determined by the Lender to be the rate at which deposits in d ollars for delivery on the first day of such Interest Period in Same Day F unds in the approximate amount of the Eurodollar Loan being made, continued or converted and with a term equivalent to such Interest Period would be offered by the Lender’s London Br anch (or another branch or Affiliate of Lender) to major banks in the London or other offshore interbank market for such currency at their request at approximately 12:00 p.m. central time, three Business Days prior to the commencement of such Interest Peri od ; provided , that, on any day during which the circumstances specified in Section 3.8 or 3.10 are in existence, the Eurodollar Rate shall be the Alternate Rate.
“ Eurodollar Loans ”: Term Loans the rate of interest applicable to which is based upon the Eurodollar Rate.
“ Eurodollar Rate ”: for any Interest Period with respect to a Eurodollar Loan , a rate per annum determined by the Lender pursuant to the following formula (rounded upwards to the nearest 1/100th of 1%) :
Eurodollar Base Rate
1.00 ‑ Eurocurrency Reserve Percentage
“ Event of Default ”: any of the events specified in Section 8; provided that any requirement for the giving of notice, the lapse of time, or b oth, or any other condition, has been satisfied.
“ Excluded Swap Obligation ” means, with respect to any Guarantor or Borrower , any Swap Obligation if, and to the extent that, all or a portion of the Guarantee of such Guarantor of, or the joint and several o bligations of such Borrower pursuant to Section 9.16 hereof with respect to, or the grant by such Guarantor or Borrower of a security interest to secure, such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s or Borrower’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the Guarantee of such Guarantor, the obligations under Section 9.16 of such Borrower or the grant of such security interest becomes effective with respect to such Swap Obl igation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guarantee, joint and several obligations or secu rity interest is or becomes illegal.
“ Existing Loan Agreement ”: as defined in the recitals hereto.
“ Existing Loan Documents ”: the “Loan Documents”, as defined in the Existing Loan Agreement.
“ Existing Term Loans ”: as defined in Section 2.1(a) hereof.
“ Faci lity ”: the Term Loan Commitment and the Term Loans made thereunder.
“ Family Member ”: with respect to any individual, the spouse and lineal descendants (including children and grandchildren by adoption) of such individual, the spouses of each such lineal d escendants, and the lineal descendants of such Persons.
“ Family Trusts ”: with respect to any individual, any trusts, limited partnerships or other entities established for the primary benefit of, the executor or administrator of the estate of, or other le gal representative of, such individual.
“ Federal Funds Rate ” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds bro kers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the nex t preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a wh ole multiple of 1/100 of 1%) charged to the Lender on such day on such transactions as reasonably determined by the Lender .
“ Financing Lease ”: any lease of property, real or personal, the obligations of the lessee in respect of which are required in accor dance with GAAP to be capitalized on a balance sheet of the lessee.
“ GAAP ”: generally accepted accounting principles in the United States of America in effect from time to time.
“ Governing Documents ”: as to any Person, its articles or certificate of inco rporation and by ‑ laws, its partnership agreement, its certificate of formation and operating agreement, and/or the other organizational or governing documents of such Person.
“ Governmental Authority ”: any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.
“ Guarantee ”: the Guarantee, dated as of June 8, 2005, by the Guarantor, in favor of the Lender, as the s ame may be amended, supplemented or otherwise modified from time to time.
“ Guarantee Obligation ”: as to any Person (the “ guaranteeing person ”), any obligation of (a) the guaranteeing person or (b) another Person (including, without limitation, any bank un der any letter of credit) to induce the creation of which the guaranteeing person has issued a reimbursement, counterindemnity or similar obligation, in either case guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or other obligat ions (the “ primary obligations ”) of any other third Person (the “ primary obligor ”) in any manner, whether directly or indirectly; provided , however , that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection, non-recourse carve out guarantees, performance guarantees or construction and completion guarantees, in each case in the ordinary course of business. The terms “ Guarantee ” and “ Guaranteed ” used as a verb shall have a correlative meaning. The amount of a ny Guarantee Obligation of any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for wh ich such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, i n which case the amount of such Guarantee Obligation shall be such guaranteeing person’s maximum reasonably anticipated liability in respect thereof as determined by the Borrowers in good faith.
“ Guarantee Reaffirmation Agreement and Amendment ”: the Guaran tee Reaffirmation Agreement and Amendment, dated as of the date hereof, by the Guarantor, in favor of the Lender, amending the Guarantee and reaffirming the obligations of the Guarantor to the Lender under the Guarantee.
“ Guarantor ”: U-Haul International.
“ Hazardous Substances ”: collectively, any hazardous, toxic or harmful substances, wastes, materials, pollutants or contaminants (including, without limitation, asbestos, polychlorinated biphenyls (“ PCBs ”), petroleum or petroleum by-products or wastes, fl ammable explosives, radioactive materials, infectious substances, mold, materials containing lead-based paint or raw materials which include hazardous constituents) or any other substances or materials which are identified under or regulated by Environment al Laws.
“ Hedge Agreement ”: any interest rate, cap or collar agreement or similar arrangement entered into by any Borrower or any of its Subsidiaries providing for protection against fluctuations in interest rates or the exchange of nominal interest oblig ations.
“ Indebtedness ”: of any Person at any date, without duplication, (a) all indebtedness of such Person for borrowed money (whether by loan or the issuance and sale of debt securities) or for the deferred purchase price of property or services (other than current trade liabilities incurred in the ordinary course of business and payable in accordance with customary practices), (b) any other indebtedness of such Person which is evidenced by a note, bond, debenture or similar instrument, (c) all obligatio ns of such Person under Financing Leases, (d) all obligations of such Person in respect of letters of credit, acceptances or similar instruments issued or created for the account of such Person, (e) all liabilities secured by (or for which the holder of su ch obligations has an existing right, contingent or otherwise, to be secured by) any Lien on any property owned by such Person even though such Person has not assumed or otherwise become liable for the payment thereof, (f) all Guarantee Obligations of such Person in respect of obligations of the kind referred to in clauses (a) through (e) above, and (g) for the purposes of Section 8(e) only, all obligations of such Person in respect of Hedge Agreements. The amount of any Indebtedness under clause (e) shall be equal to the lesser of (A) the stated amount of the relevant obligations and (B) the fair market value of the property subject to the relevant Lien and under clause (g) shall be the net amount, including any net termination payments, required to be pai d to a counterparty, calculated on a net aggregate basis assuming all such Hedge Agreements were terminated at the same time, rather than the notional amount of the applicable Hedge Agreement.
“ Ineligibility Event ”: as defined in Section 2.4(b)(ii).
“ Inel igible Property ”: as defined in Section 2.4(b)(ii).
“ Initial NOI ”: as defined in Section 2.4(b)(ii).
“ Insolvency ”: with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA.
“ Insolvent ”: pertaining to a condition of Insolvency.
“ Interest Expense ”: for any period, the amount of interest payable on the Term Loan during such period, on an adjusted basis, after giving effect to the interest rate Hedge Agreement with Merrill Lynch Capital Services, Inc. (or any substitute or replacement interest rate Hedge Agreement entered into with the Lender or any Affiliate of the Lender) as in effect during such period.
“ Interest Period ”: with respect to any Eurodollar Loan:
(a) initially, the period comme ncing (i) on the date that the applicable Interest Period (as defined in the Existing Loan Agreement) began for any Eurodollar Loan that is an Existing Term Loan on the Closing Date and (ii) on the Closing Date for any Eurodollar Loan that is an Additional Term Loan and, in each case, ending on the next following Payment Date; and
(b) thereafter, each period commencing on the day following the last day of the preceding Interest Period applicable to such Eurodollar Loan and ending on the next following Payment D ate;
provided that, all of the foregoing provisions relating to Interest Periods are subject to the following:
(1) if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Bus iness Day, unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day; and
(2) any Interest Period with respect to the Term Loan that would otherwise extend beyond the Termination D ate, shall end on the Termination Date.
“ Lender ”: as defined in the heading hereto.
“ Lien ”: any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever intended as a security device (including, without limitation, any conditional sale or other title retention agreement and any Financing Lease having substant ially the same economic effect as any of the foregoing), and the filing of any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction in respect of any of the foregoing to the extent intended as a security device or to give notice of a security interest.
“ Loan Documents ”: this Agreement, the Note, the 2004 Loan Assignment Agreement, the Guarantee, the Guarantee Reaffirmation Agreement and Amendment, the Environmental Indemnity, the Environmental Indemnity Reaffirmation Agreement and the Security Documents.
“ Loan Parties ”: the Borrowers, the Guarantor and the Marketing Grantors.
“ Local Account ”: a Bank Account associated with an Eligible Property, and identified by the Borrowers to the Lender in writing pursuant to Sect ion 6.10(a) hereof, into which the Borrowers shall deposit or cause to be deposited daily all cash receipts and collections of Collateral relating to such Eligible Property.
“ Marketing Grantors ”: as defined in the Security Agreement.
“ Material Adverse Effe ct ”: a material adverse effect on (a) the business, operations, property, condition (financial or otherwise) of the Loan Parties taken as a whole or (b) the validity or enforceability of this Agreement or any of the other Loan Documents or the rights or r emedies of the Lender or the Lender hereunder or thereunder.
“ Merrill Lynch CMBS Account ”: the “Central Account” as defined in the Merrill Lynch CMBS Mortgage Agreements, being the deposit account so designated in the Account and Payment Instructions Certi ficate.
“ Merrill Lynch CMBS Bank ”: JPMorgan Chase Bank, N.A., as the bank at which the Merrill Lynch CMBS Account is maintained.
“ Merrill Lynch CMBS Bank Direction Letter ”: as defined in Section 6.10(b).
“ Merrill Lynch CMBS Documents ”: all “Loan Documents” as defined in the Merrill Lynch CMBS Mortgage Agreements.
“ Merrill Lynch CMBS Mortgage Agreement ”: each Mortgage, Security Agreement, Assignment of Rents and Fixture Filing, dated as of June 8, 2005, made by the respective borrowers named therein to Merri ll Lynch Mortgage Lending, Inc.
“ Merrill Lynch CMBS Primary Documents ”: the “Security Instrument”, the “Note”, the “Assignment”, each as defined in the Merrill Lynch CMBS Mortgage Agreements, and the Guaranty, dated as of June 8, 2005, made by AREC, AREC T exas, U-Haul Company of Florida, in favor of Merrill Lynch Mortgage Lending, Inc., in respect of the Merrill Lynch CMBS Documents.
“ Merrill Lynch CMBS Release Date ”: September 10, 2018.
“ Mezzanine Financing ”: any “Mez Loan” as defined in a CMBS Mortgage Ag reement, or any other mezzanine debt financing incurred by any Loan Party of any Affiliate of a Loan Party and entitled to any payment of any amounts prior to the CMBS Properties Excess Cash Flow, whether pursuant to the “waterfall” provisions of any CMBS Documents, pursuant to the corporate or capital structure of the borrowers of such Mezzanine Financing and its Affiliates, or otherwise, it being understood that the aggregate principal amount of such Mezzanine Financings are not to exceed $50,000,000 at a ny time.
“ Morgan Stanley CMBS Account ”: the “Central Account” as defined in the Morgan Stanley CMBS Mortgage Agreements, being the deposit account so designated in the Account and Payment Instructions Certificate.
“ Morgan Stanley CMBS Bank ”: JPMorgan Chas e Bank, N.A., as the bank at which the Morgan Stanley CMBS Account is maintained.
“ Morgan Stanley CMBS Bank Direction Letter ”: as defined in Section 6.10(b).
“ Morgan Stanley CMBS Documents ”: all “Loan Documents” as defined in the Morgan Stanley CMBS Mortgage Agreements.
“ Morgan Stanley CMBS Mortgage Agreement ”: each Mortgage, Security Agreement, Assignment of Rents and Fixture Filing, dated as of June 8, 2005, made by the respective borrowers named therein to Morgan Stanley Mortgage Capital, Inc.
“ Mor gan Stanley CMBS Primary Documents ”: the “Security Instrument”, the “Note”, the “Assignment”, as defined in the Morgan Stanley CMBS Mortgage Agreements, and the Guaranty, dated as of June 8, 2005, made by AREC, AREC Texas, U-Haul Company of Florida, in fav or of Morgan Stanley Mortgage Capital, Inc., in respect of the Morgan Stanley CMBS Documents.
“ Morgan Stanley CMBS Release Date ”: the earlier to occur of (a) July 1, 2015 and (b) the date on which the financing under the Morgan Stanley CMBS Documents has b een paid in full.
“ Mortgage ”: each mortgage or deed of trust (a) with respect to any initial Eligible Property, currently securing the loans made by the Lender to the Borrowers under the Existing Loan Agreement, including any 2004 Mortgage for any Eligibl e Property, as assigned to the Lender and modified pursuant to a Mortgage Assignment and (b) any mortgage or deed of trust for any new or substitute Eligible Properties, on substantially the same terms and conditions as such 2004 Mortgages as so assigned a nd modified, or on such other terms as shall be approved by the Lender in its sole discretion, in each case, as the same may be amended, supplemented or otherwise modified from time to time.
“ Mortgage Assignment ”: each Mortgage Assignment executed and deli vered by the 2004 Agent, the Lender and the relevant Loan Party in respect of an Eligible Property owned by such Loan Party in connection with the closing of the Existing Loans (as defined in the Existing Loan Agreement) or pursuant to Section 6.11(d) of t he Existing Loan Agreement, as the same may be amended, supplemented or otherwise modified from time to time.
“ Mortgage Documents ”: the 2004 Mortgages, the Mortgage Assignments, any other Mortgages and each title insurance policy covering the same togeth er with any endorsements thereto.
“ Multiemployer Plan ”: a Plan which is a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA and which is subject to Title IV of ERISA.
“ New Lending Office ”: as defined in Section 3.12(c).
“ NOI ”: with respect t o any Property for any period of time, the amount obtained by subtracting Operating Expenses for such Property for such period from Operating Revenue for such Property for such period.
“ Non-Bank Status Certificate ”: as defined in Section 3.12(c)(2).
“ Non- Excluded Taxes ”: as defined in Section 3.12(a).
“ Non-US Lender ”: as defined in Section 3.12(c).
“ Note ”: as defined in Section 3.4(c).
“ Obligations ”: the unpaid principal amount of, and interest (including, without limitation, interest accruing after the maturity of the Term Loan and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to any Borrower, whether or not a claim for post ‑ filing or post ‑ petition inte rest is allowed in such proceeding) on the Term Loan, and all other obligations and liabilities of the Loan Parties to the Lender, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may ar ise under, or out of or in connection with this Agreement, the Note, the Guarantee, the Security Documents, any other Loan Documents, and any other document made, delivered or given in connection therewith or herewith, whether on account of principal, inte rest, reimbursement obligations, fees, indemnities, costs, expenses (including, without limitation, all fees and disbursements of counsel to the Lender that are required to be paid by a Loan Party pursuant to the terms of the Loan Documents) or otherwise, but excluding (for the avoidance of doubt) any Excluded Swap Obligations.
“ Obligor ”: as the context may require, each Borrower, the Guarantor and each other Person (other than the Lender or any Person that is not an Affiliate of the Borrowers or the Guaran tor) obligated under any Loan Document.
“ OFAC ” : the Office of Foreign Assets Control of the United Sta tes Department of the Treasury.
“ Operating Expenses ”: with respect to any Property for any period of time, the total of all expenses actually paid or paya ble, computed on a cash accounting basis consistent with prior practice, of whatever kind relating to the operation, maintenance and management of the Property.
“ Operating Revenue ”: with respect to any Property for any period of time, all revenue, compute d on a cash accounting basis consistent with prior practice, derived from the ownership and operation of the Property from whatever source, including, without limitation, self-storage rental revenue, retail income, rental equipment commissions and other mi scellaneous income derived from such Property.
“ Payment Date ”: the 10th day of each calendar month.
“ PBGC ”: the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA.
“ Permitted CMBS Refinancing ”: with respect to any CMBS Properties, at any time prior to the applicable CMBS Release Date, a financing (whatever the form) with respect to such CMBS Properties which:
(a) provides for the payment of excess cash flow to the Borrowers or Affiliates of the Borro wers in an amount during each fiscal quarter of the Borrowers sufficient such that the Debt Service Coverage Ratio for such fiscal quarter would be equal to at least 1.50 (such excess cash flow in respect of any Permitted CMBS Refinancing being referred to herein as “Permitted CMBS Refinancing Excess Cash Flow”), unless otherwise approved by the Lender;
(b) the Borrowers shall have entered into, and shall have caused the applicable financing parties subject to such proposed Permitted CMBS Refinancing and o ther Persons to have entered into, such direction letters and other documents to provide that the Permitted CMBS Refinancing Excess Cash Flow shall be directed to the Collection Account in the same manner as provided in Section 6.10 with respect to CMBS Pr operties Excess Cash Flow; and
(c) the Lender shall have received substantially final drafts of the proposed Permitted CMBS Refinancing Documents at least ten (10) Business Days prior to the closing date of such proposed Permitted CMBS Refinancing, and whi ch documents shall be consistent with the terms of this definition and otherwise in form and substance reasonably satisfactory to the Lender.
“ Permitted CMBS Refinancing Documents ”: with respect to any Permitted CMBS Refinancing, all of the mortgage notes , mortgage agreements, other security agreements, assignments and other financing documents evidencing, governing or otherwise relating to such Permitted CMBS Refinancing.
“ Permitted CMBS Refinancing Excess Cash Flow ”: as defined in the definition of “Perm itted CMBS Refinancing” in this Section 1.1.
“ Permitted Holder ”: Edward J. Shoen, Mark V. Shoen, James P. Shoen and their Family Members, and their Family Trusts.
“ Permitted Liens ”: Liens permitted pursuant to the Negative Pledge provision contained in Section 7.1 of this Agreement.
“ Person ”: an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.
“ Plan ”: at a particular time, any employee benefit plan which is covered by Title IV of ERISA and in respect of which the Borrower or a Commonly Controlled Entity is (or, if such plan were
terminated at such time, would under Section 4069 of ERISA be deem ed to be) an “employer” as defined in Section 3(5) of ERISA.
“ Property ”: a parcel of real property, operated by a Borrower or an Affiliate thereof as a moving center or self-storage facility, together with the improvements and fixtures thereon and owned i n fee directly by a Borrower, together with all rights pertaining to such property and improvements.
“ Qualified ECP Guarantor ” means, in respect of any Swap Obligation, each Loan Party that has total assets exceeding $10,000,000 at the time the relevant Guarantee or grant of the relevant security interest becomes effective with respect to such Swap Obligation or such other person as constitutes an “eligible contract participant” under the Commodity Exchange Act or any regulations promulgated thereunder an d can cause another person to qualify as an “eligible contract participant” at such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.
“ Rapid Amortization Event ”: on any date of determination, a Rapid Amortizatio n Event shall exist if the Debt Service Coverage Ratio for the fiscal quarter of any Borrower most recently ended on or prior to such date was less than 1.5 to 1.
“ Regulation U ”: Regulation U of the Board of Governors of the Federal Reserve System as in e ffect from time to time.
“ Release ": means any spilling, leaking, pumping, pouring, emitting, emptying, leaching, discharging, injecting, escaping, leaching, dumping, or disposing of a Hazardous Substance.
“ Reorganization ”: with respect to any Multiemploye r Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA.
“ Reportable Event ”: any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the thirty day notice period is waived under Sections .21, .22, .23, .26, .27 or .28 of PBGC Reg. § 4043.
“ Requirement of Law ”: as to any Person, the certificate of incorporation and by ‑ laws or other organizational or Governing Documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject ; provided that notwithstanding anything he rein to the contrary (including without limitation Sections 3.10, 3.11 and 3.12) , with respect to any determination of any change in a Requirement of Law, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or t he United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a change in a Requirement of Law, regardless of the date enacted, adopted or issued .
“ Responsible Officer ”: with respect to any Loan Party, any officer of such Loan Party or, with respect to financial matters, the chief financial officer or treasurer of such Loan Party.
“ Sanction s ” : any international economic sanction administered or enforced by OFAC, the United Nations Security Counci l, the European Union, Her Majesty’s Treasury or othe r relevant sanctions authority.
“ Security Agreement :” the Security Agreement, dated as of June 8, 2005, by and among the Borrowers, the Guarantor, the Marketing Grantors and the Lender, as the same may b e amended, supplemented or otherwise modified from time to time.
“ Security Agreement Reaffirmation Agreement and Amendment ”: the Security Agreement Reaffirmation Agreement and Amendment, dated as of the date hereof, by and among the Borrowers, the Guaranto r, the Marketing Grantors and the Lender amending the Security Agreement and reaffirming the obligations of the Borrowers, the Guarantor and the Marketing Grantors to the Lender under the Security Agreement.
“ Security Documents ”: the collective reference to the Security Agreement, the Security Agreement Reaffirmation Agreement and Amendment, the Mortgage Documents, and all other security documents, if any, hereafter delivered to the Lender granting a Lien on any asset or assets of any Person to secure any of the Obligations or to secure any guarantee of any such Obligations.
“ Single Employer Plan ”: any Plan which is covered by Title IV of ERISA, but which is not a Multiemployer Plan.
“ Subsidiary ”: as to any Person, a corporation, partnership or other enti ty of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or o ther managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person.
“ Swap Obligation ” means, with resp ect to any Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.
“ Taxes ”: all real estate and personal property taxes, assessme nts, water rates or sewer rents, now or hereafter levied or assessed or imposed against the Property or part thereof.
“ Tenants ”: all tenants, lessees, subtenants and other occupants of the Eligible Properties.
“ Termination Date ”: the earliest to occur of ( a) April 10, 2023 and (b) the date of termination of the Term Loan Commitment pursuant to Sections 2.4, 2.5 or 8.
“ Term Loan ”: as defined in Section 2.1.
“ Term Loan Commitment ”: the obligation of the Lender to make and/or continue outstanding the Term Loa n to the Borrowers pursuant to Section 2.1 in an aggregate principal amount at any one time outstanding not to exceed during any month, the amount set forth opposite such month on the TL Amortization Schedule under the caption “Term Loan Commitment”, as su ch amount may be changed from time to time in accordance with the provisions of this Agreement. As of the Closing Date, the Term Loan Commitment was $258,333,000.
“ TL Amortization Schedule ”: at any time with respect to the Term Loan Commitment, (i) if no Rapid Amortization Event is in effect, the schedule attached hereto as Schedule 1.3 , and (ii) if a Rapid Amortization Event is in effect, sum of (A) the amount set forth in Schedule 1.3 for such time plus (B) such an additional amount that, after giving ef fect to the reduction of the Term Loan Commitment pursuant to both subclauses (A) and (B) of this clause (ii) and the prepayments of the Term Loan required
pursuant to Section 3.6(a) as a result thereof, on a pro forma basis as if such reductions and prepa yments occurred as of the last day of the fiscal quarter of the Borrowers immediately preceding such time, the Debt Service Coverage Ratio would be 1.50.
“ Tranche ”: the collective reference to Eurodollar Loans of the then current Interest Periods with res pect to all of which begin on the same date and end on the same later date (whether or not such Eurodollar Loans shall originally have been made on the same day).
“ U-Haul International ”: as defined in the Preamble.
“ Unencumbered CMBS Properties ”: as defined in Section 6.9(a)(ii).
“ Unencumbered CMBS Properties Excess Cash Flow ”: as defined in Section 6.9(a)(ii).
“ Unencumbered CMBS Properties Security Documents ”: as defined in Section 6.9(a)(ii).
“ US Person ”: as defined in Section 3.12(c).
.
.
.
.
.
In the event of any reduction pursuant to clause (i) or (ii) of this Section 2.4(b), the Borrowers shall prepay the Term Loans as required by Section 3.6(a) her eof.
. The Borrowers shall have the right, upon not less than 30 days notice to the Lender, to substitute a new Property for an Eligible Property included in the Collateral; provided , that (a) such Property shall satisf y all of the Eligibility Criteria as an Eligible Property, and the Borrowers shall provide the Lender with such information as the Lender shall reasonably request to confirm the same; (b) all of the conditions specified in Section 5.2(c) and (d) shall have been satisfied with respect to such new Property and the environmental searches and reports required under Section 6.8(f) shall have been performed and delivered; (c) the representations and warranties specified in Sections 4.20 and 4.21 (with respect to such new Property) shall be true and correct in all material respects after giving effect to such requested substitution; (d) if the appraisal on such Property is dated more than 24 months prior to the date of such requested substitution, the Lender shall have the right to receive a new appraisal by an appraiser, and in form, satisfactory to the Lender; (e) the sum of the Appraised Value of such new Property, plus the amount of any concurrent reduction of the Term Loan Commitment made pursuant to Section 2. 4(b)(ii) divided by 65%, shall be not less than the Appraised Value of the Property being substituted; and (f) after giving effect to such substitution, no Default or Event of Default shall have occurred and be continuing; provided , further , however, that if such new Property is a Property that has been released from the Lien of the CMBS Documents and would not satisfy the requirements set forth in clause (b) and (c) of the immediately preceding proviso solely because the representation in Section 4.21(b) w ould not be true and correct, the Borrowers may, prior the applicable CMBS Release Date, nonetheless substitute such Eligible Property for such new Property as long as the Borrowers prepay the Term Loan pursuant to Section 3.5 not later than five Business Days following the date the Borrowers receive any proceeds of any Award in respect of such new Property in an amount equal to the greater of 65% of the Appraised Value of such new Property and the amount of the Award received in respect of such new Propert y. If the conditions specified in the immediately preceding sentence shall have been satisfied, the substituted Eligible Property shall cease to be an Eligible Property and the Lender shall release the substituted Eligible Property from the Liens of the M ortgages, and the new Property shall thereafter be deemed to be an Eligible Property for all purposes of the Loan Documents.
.
. Any Term Loan which is a Eurodollar Loan shall be Continued as such upon the expiration of the then current Interest Period with respect thereto.
.
.
.
. If prior to the first day of any Interest Period:
the Lender shall give facsimile or electronic mail notice thereof to the Borrowers as soon as practicable thereafter. If such notice is given and until such notice has been withdrawn by the Lender the Eurodollar Base Rate shall be determined as provided in the proviso to the definition of “Eurodollar Base Rate” in Section 1.1. The Lender shall withdraw any such notice pursuant to clauses (a) or (b) above if the Lender determines that the relevant circumstances have ceased to exist.
.
All payments (including prepayments) to be made by the Borrowers hereunder, whether on account of principal, interest, fees or otherwise, shall be made without set ‑ off or counterclaim and shall be made prior to 5:00 p.m., New York City time, on the due date thereof to the Lender, in Dollars and in immediately available funds, in accordance with the instructions designated in the Account and Payment Instructions Certificate as the Lender payment instructions, or as otherwise specified by the Lender; provided that the Collection Sub-Account Deposits shall be paid and deposited into the Collection Sub-Account. If any payment hereunder (other than payments on the Term Loan) becomes due and payable o n a day other than a Business Day, such payment shall be extended to the next succeeding Business Day, and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension. If any payment on the T erm Loan becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day unless the result of such extension would be to extend such payment into another calendar month in which event s uch payment shall be made on the immediately preceding Business Day. In the case of any extension of any payment of principal pursuant to the preceding two sentences, interest thereon shall be payable at the then applicable rate during such extension.
. Notwithstanding any other provision herein, if the adoption of or any change in any Requirement of Law or in the interpretation or application thereof shall make it unlawful for the Lender to make or maintain Eurodollar Loans as contemplated b y this Agreement, the Eurodollar Base Rate shall be determined as provided in the proviso to the definition of “Eurodollar Base Rate” in Section 1.1.
.
and the result of any of the foregoing is to increase the cost to the Lender, by an amount which the Lender deems to be material, of making, Continuing or maintaining Eurodollar Loans or to reduce any amount receivable hereunder in respect thereof, then, in any such cas e, the Borrowers shall promptly, after receiving notice as specified in clause (e) of this Section, pay the Lender such additional amount or amounts as will compensate the Lender for such increased cost or reduced amount receivable.
Such documents shall be delivered by the Lender on or before the d ate it becomes a party to this Agreement and on or before the date, if any, the Lender (or Transferee) changes its applicable lending office by designating a different lending office (a “ New Lending Office ”). In addition, the Lender shall
deliver or cause to be delivered such Forms and/or Certificates promptly upon or before the expiration, obsolescence or invalidity of any document previously delivered by the Lender. Notwithstanding any other provision of this Section 3.12(c), the Lender shall not be req uired to deliver any document pursuant to this Section 3.12(c) that the Lender is not legally able to deliver.
. The Borrowers agree to indemnify the Lender and to hold the Lender harmless from any actual loss or ex pense which the Lender may sustain or incur as a consequence of (a) default by any Borrower in making a borrowing of or Continuation of Eurodollar Loans after any Borrower has given a notice requesting the same in accordance with the provisions of this Agr eement, (b) default by any Borrower in making any prepayment after any Borrower has given a notice thereof in accordance with the provisions of this Agreement or (c) the making of a prepayment of Eurodollar Loans on a day which is not the last day of an In terest Period with respect thereto. This covenant shall survive the termination of this Agreement and the payment of the Term Loan and all other amounts payable hereunder.
.
To i nduce the Lender to enter into this Agreement and to make the Term Loan, the Borrowers and the Guarantor hereby represent and warrant to the Lender that:
(a) T he audited consolidated balance sheet of AMERCO and its consolidated Subsi diaries for the fiscal year ended March 31, 2012 and the related audited consolidated statements of operations, stockholders’ equity and cash flows for the fiscal year ended on such date , reported on without a “going concern” or like qualification or exception, or qualification arising out of the scope of the audit, by BDO USA LLP , copies of which have heretofore been furnished to the Agent, are complete and correct and present fairly the consolidated financial condition of AMERCO and its consolida ted Subsidiaries as at such date, and the consolidated results of their operations and their consolidated cash flows for the fiscal year then ended.
(b) T he unaudited consolidated balance sheet of AMERCO and its consolidated Subsidiaries as at December 3 1 , 20 12 and the related unaudited consolidated statements of income and of cash flows for the nine-month period ended on such date, copies of which have heretofore been furnished to the Agent and each Lender, are complete and correct and present fairly the consolidated financial condition of AMERCO and its consolidated Subsidiaries as at such date, and the consolidated results of their operations and their consolidated cash flows for the nine-month period then ended (subject to normal year-end audit adjustm ents).
(c) All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by such Responsible Officer, and as disclosed t herein). Neither AMERCO nor any of its consolidated Subsidiaries had, at the date of the most recent balance sheet referred to above, any material Guarantee Obligation, contingent liability or liability for taxes, or any long term lease or unusual forward or long term commitment, including, without limitation, any interest rate or foreign currency swap or exchange transaction or other financial derivative, which is not reflected in the foregoing statements or in the notes thereto. During the period from D ecember 31, 2012 to and including the date hereof there has been no sale, transfer or other disposition by AMERCO or any of its consolidated Subsidiaries of any material part of its business or property and no purchase or other acquisition of any business or property (including any Capital Stock of any other Person) material in relation to the consolidated financial condition of AMERCO and its consolidated Subsidiaries at December 31, 2012.
. Since December 31, 2012 there has been no development or event which has had or could reasonably be expected to have a Material Adverse Effect.
. Each Loan Party (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its org anization, (b) has the power and authority, and the legal right, to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged, (c) is duly qualified as a foreign Person and in goo d standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification except where the failure to so qualify could not, in the aggregate, reasonably be expected to have a Material Adverse Effect, and (d) is in compliance with all Requirements of Law except to the extent that the failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect.
. Each Loan Party has the power and authority, and the legal right, to make, deliver and perform the Loan Documents to which it is a party and, in the case of the Borrowers, to borrow hereunder, and has taken all necessary action to auth orize the execution, delivery and performance of the Loan Documents to which it is a party and, in the case of the Borrowers, to authorize the borrowings on the terms and conditions of this Agreement and any Notes. No
consent or authorization of, filing w ith, notice to or other act by or in respect of, any Governmental Authority or any other Person is required in connection with the borrowings hereunder or with the execution, delivery, performance, validity or enforceability of the Loan Documents to which any Loan Party is a party other than the consents, authorizations, filings, notices and other acts listed on Schedule 4.4, all of which have been obtained or made and are in full force and effect. This Agreement has been, and each other Loan Document to w hich it is a party will be, duly executed and delivered on behalf of the Loan Parties party thereto. This Agreement constitutes, and each other Loan Document to which it is a party when executed and delivered will constitute, a legal, valid and binding ob ligation of the Loan Parties party thereto enforceable against such Loan Parties in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecti ng creditors’ rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing.
. The execution, delivery and performance of the Loan Documents to w hich any Loan Party is a party, the borrowings hereunder and the use of the proceeds thereof will not violate any Requirement of Law or Contractual Obligation (except those with respect to which consents have been obtained as listed on Schedule 4.4 and whi ch are in full force and effect) of any Loan Party or of any of their respective Subsidiaries and will not result in, or require, the creation or imposition of any Lien on any of its or their respective properties or revenues pursuant to any such Requireme nt of Law or Contractual Obligation (other than Liens created by the Security Documents in favor of the Lender).
. E xcept as disclosed in the public filings of Guarantor, dated December 31, 2012, and any subsequent Current Report o n Form 8-K filed prior to the date hereof, as of the date hereof, no litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of the Loan Parties, threatened by or against any Loan Party or any of their respective Subsidiaries or against any of its or their respective properties or revenues (a) with respect to any of the Loan Documents or any of the transactions contemplated hereby or thereby, or (b) which could reasonably be expected to h ave a Material Adverse Effect.
. Neither any Loan Party nor any of their respective Subsidiaries is in default under or with respect to any of its Contractual Obligations in any respect which could reasonably be expected to have a Material Adve rse Effect. No Default or Event of Default has occurred and is continuing.
. Each Loan Party has good record and marketable title in fee simple to, or a valid leasehold interest in, all its real property, and good title to, o r a valid leasehold interest in, all its other property, and none of such property to the extent the same constitutes Collateral is subject to any Lien except Liens in favor of the Lender under the Security Documents and other Permitted Liens.
. Eac h of the Loan Parties and their respective Subsidiaries has filed or caused to be filed all tax returns which, to the knowledge of the Loan Parties, are required to be filed and has paid all taxes shown to be due and payable on said returns or on any asses sments made against it or any of its property and all other taxes, fees or other charges imposed on it or any of its property by any Governmental Authority (other than any the amount or validity of which are currently being contested in good faith by appro priate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of the applicable Loan Party or its Subsidiaries, as the case may be); no tax Lien has been filed, and, to the knowledge of the Loan Parties, no c laim is being asserted, with respect to any such tax, fee or other charge.
. No part of the proceeds of the Term Loan will be used for “purchasing” or “carrying” any “margin stock” within the respective meanings of each of the quoted terms under Regulation U of the Board of Governors of the Federal Reserve System as now and from time to time hereafter in effect, or for any purpose which violates, or which would be inconsistent with, the provisions of the regulations of such Board of Go vernors. If requested by the Lender, the Borrowers will furnish to the Lender a statement to the foregoing effect in conformity with the requirements of FR Form G ‑ 3 or FR Form U ‑ 1 referred to in said Regulation U.
. Neither a Reportable Event nor a n “accumulated funding deficiency” (within the meaning of Section 412 of the Code or Section 302 of ERISA) has occurred during the five-year period prior to the date on which this representation is made or deemed made with respect to any Single Employer Pl an, and each Plan (other than a Multiemployer Plan or a multiemployer welfare plan maintained pursuant to a collective bargaining agreement) has complied in all material respects with the applicable provisions of ERISA and the Code. No termination of a Si ngle Employer Plan has occurred (other than a termination described in Section 4041(b) of ERISA with respect to which any Loan Party has incurred no liability (i) to the PBGC or (ii) in excess of $1,000,000), and no Lien in favor of the PBGC or a Plan has arisen, during such five-year period. Except to the extent that any such excess could not have a Material Adverse Effect, the present value of all accrued benefits under each Single Employer Plan (based on those assumptions used to fund such Plans) did no t, as of the last annual valuation date prior to the date on which this representation is made or deemed made, exceed the value of the assets of such Plan allocable to such accrued benefits. Neither any Borrower nor any Commonly Controlled Entity has had a complete or partial withdrawal from any Multiemployer Plan for which any withdrawal liability remains unpaid, and, to the knowledge of the Loan Parties, any Borrower would not become subject to any material liability under ERISA if any Borrower or any Co mmonly Controlled Entity were to withdraw completely from all Multiemployer Plans as of the valuation date most closely preceding the date on which this representation is made or deemed made. To the knowledge of the Loan Parties, no such Multiemployer Pla n is in Reorganization or Insolvent. Except to the extent that any such excess could not have a Material Adverse Effect, the present value (determined using actuarial and other assumptions which are reasonable in respect of the benefits provided and the e mployees participating) of the liability of the Borrowers and each Commonly Controlled Entity for post retirement benefits to be provided to their current and former employees under Plans which are welfare benefit plans (as defined in Section 3(1) of ERISA ) other than such liability disclosed in the financial statements of the Borrowers does not, in the aggregate, exceed the assets under all such Plans allocable to such benefits.
. No Borrower is an “investment c ompany”, or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended. No Borrower is subject to regulation under any Federal or State statute or regulation (other than Regulation X of the Boar d of Governors of the Federal Reserve System) which limits its ability to incur Indebtedness.
. Schedule 4.13 hereto sets forth as of the date hereof the name of each Loan Party, the name of each Loan Party which is a dir ect or indirect Subsidiary of a Loan Party, its form of organization, its jurisdiction of organization and the percentage of all outstanding shares or other interests of such class of Capital Stock held by the immediate parent entity.
.
. No Loan Party is engaged in any un fair labor practice which could reasonably be expected to have a Material Adverse Effect. As of the date hereof there is (a) no unfair labor practice complaint pending or, to the best knowledge of each Loan Party and each of the Subsidiaries, threatened a gainst a Loan Party before the National Labor Relations Board which could reasonably be expected to have a Material Adverse Effect and no grievance or arbitration proceeding arising out of or under a collective bargaining agreement is so pending or threate ned; (b) no strike, labor dispute, slowdown or stoppage pending or, to the best knowledge of each Loan Party, threatened against a Loan Party; and (c) no union representation question existing with respect to the employees of a Loan Party and no union orga nizing activities are taking place with respect to any thereof.
. As of the date hereof, each Loan Party has, with respect to its properties and business, insurance covering the risks, in the amounts, with the deductible or other retention amoun ts, as set forth on Schedule 6.5 and meeting the requirements of Section 6.5 hereof as of the date hereof and the Closing Date.
. As of the date hereof, the Closing Date, and each other date of determination, after giving effect to the Term Loan and the granting of the mortgages on the Eligible Properties and the granting of the security interests in the other Collateral to be made on or prior to such date, (i) the amount of the “present fair saleable value” of the assets of the Borrowers, taken a s a whole, and of the Guarantor and its Subsidiaries, taken as a whole, will, as of such date, exceed the amount of all “liabilities of the Borrowers, taken as a whole, and of the Guarantor and its Subsidiaries, taken as a whole, contingent or otherwise”, as of such date, as such quoted terms are determined in accordance with
applicable federal and state laws governing determinations of the insolvency of debtors, (ii) the present fair saleable value of the assets of the Borrowers, taken as a whole, and of t he Guarantor and its Subsidiaries, taken as a whole, will, as of such date, be greater than the amount that will be required to pay the liabilities of the Borrowers, taken as a whole, and of the Guarantor and its Subsidiaries, taken as a whole, on their re spective debts as such debts become absolute and matured, (iii) neither the Borrowers, taken as a whole, nor the Guarantor and its Subsidiaries, taken as a whole, will have, as of such date, an unreasonably small amount of capital with which to conduct the ir respective businesses, and (iv) each of the Borrowers, taken as a whole, and the Guarantor and its Subsidiaries, taken as a whole, will be able to pay their respective debts as they mature. For purposes of this Section 4.18, “debt” means “liability on a claim”, “claim” means any (x) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured, and (y) right to an equitab le remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured or unsecured.
. The proceeds of the Existing Term Loan were used by the Borrowers for the purposes specified under Section 4.19 of the Existing Loan Agreement. The proceeds of the Additional Term Loan shall be used by the Borrowers for working capital purposes in the ordinary course of business.
. Except as disclosed on Schedule 4.20,
. With respect to each of the Eligible Properties, the Loan Parties hereby represent and warrant, as of the Closing Date with re spect to the initial Eligible Properties and, as of the date of substitution with respect to any Substitute Property:
. No Loan Party or Affiliate of any Loan Party , (i) is currently the subje ct of any Sanctions, (ii) is located, organized or residing in any Designated Jurisdiction, or (iii) is or has been (within the previous five years) engaged in any transaction with any Person who is now or was then the subject of Sanctions or who is locate d, organized or residing in any Designated Jurisdiction. The Term Loan and the proceeds from the Term Loan , ha ve not been used, directly or indirectly, to lend, contribute, provide or has otherwise made available to fund any activity or business in any De signated Jurisdiction or to fund any activity or business of any Person located, organized or residing in any
Designated Jurisdiction or who is the subject of any Sanctions, or in any other manner that will result in any violation by any Person (including the Lender) of Sanctions.
. The agreement of the Lender to enter into this Agreement amending and restating the Existing Loan Agreement, to continue outstanding the Existing Term Loan and to make the Additional Term Loan, as set forth in Section 2.1(a) and 2.2(a) hereof, is subject to the satisfaction, immediately prior to or concurrently with such amendment and restatement, the continuing of the Existing Term Loan and the making of the Additional Term Loan on t he Closing Date, of the following conditions precedent:
The borrowing by the Borrowers of the Term Loans hereunder on the Closing Date shall constitute a representation and warranty by the Borr owers as of the date thereof that the conditions contained in this Section 5.1 have been satisfied.
Each Borrower and the Guarantor hereby agrees that, so long as the Term Loan Commitment remains in effect or any amount is owing to th e Lender or the Lender hereunder or under any other Loan Document, the Borrowers and the Guarantor shall:
. Furnish to the Lender:
all such financial statements shal l be complete and correct in all material respects and shall be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein and with prior periods (except as approved by such accountants or office r, as the case may be, and disclosed therein and for the absence of footnotes on interim financial statements).
. Furnish to the Lender:
. Pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all its obligations of whatever nature, except where the amount or val idity thereof is currently being contested in good faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto have been provided on the books of the Loan Parties.
. Continue to engage in business of the same general type as now conducted by it and preserve, renew and keep in full force and effect its corporate existence and take all reasonable action to maintain all rights, privileges and franchises necessary or de sirable in the normal conduct of its business except as otherwise permitted pursuant to Section 7.2; comply with all Contractual Obligations and Requirements of Law except to the extent that failure to comply therewith could not, in the aggregate, be reaso nably expected to have a Material Adverse Effect.
. (a) Keep all property useful and necessary in its business in good working order and condition; maintain with financially sound and reputa ble insurance companies insurance on all its property in at least such amounts and against at least such risks as are usually insured against in the same general area by companies engaged in the same or a similar business ; and furnish to the Lender, upon w ritten request, full information as to the insurance carried.
. Keep proper books of records and account in which full, true and correct entries in conformity with GAAP and all Requirements of Law shall be made of all dealings and transactions in relation to its business and activities; and permit representatives of the Lender to visit and inspect any of its properties and examine and make abstracts from any of its books and records at any reasonable time and as often as may reasonably be desired and to discu ss the business, operations, properties and financial and other condition of the Loan Parties with officers and employees of the applicable Loan Parties and with their independent certified public accountants.
. Promptly give notice to the Lender and the Lender of:
Each notice pursuant to this Section 6.7 shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action the Borrower pr oposes to take with respect thereto.
.
in each case not later than the date of the maturity of such Indebtedness under such CMBS Documents (the maturity date of the Indebtedness under any CMBS Documents or Permitted CMBS Refinancing Documents being referred to as the “CMBS Maturity Date” thereof).
Continue to engage in the businesses in which the Loan Parties are engaged in on the date of this Agreement at the Eligible Properties, except (a) to the extent that the failure to so continue to engage in any such business at any Eligible Property resulted from circu mstances not subject to the control of the Borrowers or the Guarantor, or (b) to the extent that the failure to so continue to engage in any such business or businesses at the applicable Eligible Properties would not, in the aggregate, reasonably be expect ed to have a Material Adverse Effect.
The Borrowers and the Guarantor hereby agree that, so long as the Term Loan Commitment remains in effect or any amount is owing to the Lender hereunder or under any other Loan Document, each Borrowe r and the Guarantor shall not, directly or indirectly:
. Create, incur, assume or suffer to exist any Lien upon any Eligible Property or any Collateral, except for:
Enter into any merger, consolidation or a malgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or convey,
sell, lease, assign, transfer or otherwise dispose of, all or substantially all of its property, business or assets, or make any material change in its present method of conducting business, except:
Prior to the applicable CMBS Release Date, amend, modify or change, or consent or agree to any amendment, modification or change to, any of the terms relating to the payment or prepayment or principal of or interest on, any Indebtedness under the CMBS Do cuments, other than:
Sell, exchange, transfer or otherwise dispose of any inter est in any of the Eligible Properties or any of the other Collateral, except:
Amend its certificate of incorporation (except to increase or decrease the number of authorized shares of common stock, to authorize the issuance of any preferred stock, to amend or expand its directors’ and officers’ indemnification provisions, or to change the size of the board of directors), partnership agreement or other Governing Documents, without the prior written consent of the Lender, which shall not be unr easonably withheld or delayed.
Make any alteration or modification to any Eligible Property unless such alterations or modifications would not impair or diminish the Appraised Value of the Property.
If any of the following events shall occur and be continuing:
then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or (ii) of paragraph (f) of this Section with respect t o any Borrower, automatically the Term Loan Commitment shall immediately terminate and the Term Loan hereunder (with accrued interest thereon) and all other amounts owing under this Agreement shall immediately become due and payable, and (B) if such event is any other Event of Default, either or both of the following actions may be taken: (i) the Lender may, by notice to the Borrowers, declare the Term Loan Commitment to be terminated forthwith, whereupon the Term Loan Commitment shall immediately termina te; and (ii) the Lender may, by notice to the Borrowers, declare the Term Loan hereunder (with accrued interest thereon) and all other amounts owing under this Agreement to be due and payable forthwith, whereupon the same shall immediately become due and payable.
. Neither this Agreement nor any other Loan Document, nor any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this Section 9.1. The Lender may, f rom time to time, (a) enter into with the Borrowers written amendments, supplements or modifications hereto and to the other Loan
Documents for the purpose of adding any provisions to this Agreement or the other Loan Documents or changing in any manner the rights of the Lender or of the Borrowers hereunder or thereunder or (b) waive, on such terms and conditions as the Lender may specify in such instrument, any of the requirements of this Agreement or the other Loan Documents or any Default or Event of Default and its consequences. Any such waiver and any such amendment, supplement or modification shall apply to the Lender and shall be binding upon the Borrowers, the Lender, and all future holders of the Term Loan. In the case o f any waiver, the Borrowers and the Lender shall be restored to their former positions and rights hereunder and under the other Loan Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver sh all extend to any subsequent or other Default or Event of Default or impair any right consequent thereon.
. All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by electronic mai l ) and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made (a) in the case of delivery by hand, when delivered, (b) in the case of delivery by mail, three Business Days after being deposited in the mails, postage pr epaid, or (c) in the case of delivery by electronic mail, when sent and receipt has been electronically confirmed, addressed as follows, or to such other address as may be hereafter notified by the respective parties hereto:
The Borrowers:
Gary Horton
AMERCO Real Estate Company
AMERCO Real Estate Company of Texas, Inc.
AMERCO Real Estate Company of Alabama, Inc.,
U-Haul Co. of Florida, Inc.
2727 North Central Avenue
Phoenix, Arizona 85004
email:
ghorton@amerco.com
with a copy to:
Jennifer Settles, Esq.
AMERCO
2727 North Central Avenue
Phoenix, Arizona 85004
email: jennifer_settles@uhaul.com
The Guarantor:
Gary Horton
AMERCO
1325 Airmotive Way, Suite 100
Reno, NV 89502
email: email:
ghorton@amerco.com
with a copy to:
Jennifer Settles, Esq.
AMERCO
2727
North Central Avenue
Phoenix, Arizona 85004
email: jennifer_settles@uhaul.com
The Lender:
David L. McCauley
Bank of America Merrill Lynch
Senior Vice President
901 Main Street, 10th Fl.
Dallas, TX 75202
email:
david.l.mccauley@baml.com
with a copy to:
G
eraldine Evans
Bank of America Merrill Lynch
Assistant Vice President
901 Main Street, 10th Fl.
Dallas, TX 75202
email:
geri.l.evans@baml.com
Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient); provided that any notice, request or demand to or upon the Lender pursuant to Section 2.2, 3.2, 3.5 or 3.6 shall not be effective until received.
. No failure to exercise and no delay in exercising, on the part of the Lender or the Lender, any right, remedy, power or privilege hereunder or under the other Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of a ny right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of a ny rights, remedies, powers and privileges provided by law.
. All representations and warranties made hereunder, in the other Loan Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Term Loan hereunder.
. The Borrowers agree (a) to pay or reimburse the Lender for all its out ‑ of ‑ pocket costs and exp enses reasonably incurred in connection with the development, preparation and execution of, and any amendment, supplement or modification to, this Agreement and the other Loan Documents and any other documents prepared in connection herewith or therewith, and the consummation and administration of the transactions contemplated hereby and thereby, including, without limitation, the reasonable fees and disbursements of counsel to the Lender, (b) to pay or reimburse the Lender for all its costs and expenses in curred in connection with the enforcement or preservation of any rights under this Agreement, the other Loan Documents and any such other documents, including, without limitation, the fees and disbursements of counsel to the Lender, (c) to pay, indemnify, and hold the Lender harmless from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other taxes, if any, which may be payable or determined to be payable in connecti on with the execution and delivery of, or consummation or administration of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, the other Loan Documents and any such other documents, (d) to pay or reimburse the Lender for all of its ongoing out-of-pocket due diligence and monitoring expenses, provided that, so long as no Default or Event of Default has occurred during such year, the amount of such expenses for which the Loan Parties shall be responsible under this clause (d) shall not exceed $25,000 during any year, and (e) to pay, indemnify, and hold the Lender and each of its officers, employees, directors, trustees, agents, advisors, affiliates and contr olling persons (each, an “ Indemnitee ”), harmless from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execu tion, delivery, enforcement, performance and administration of this Agreement, the other Loan Documents or the use of the proceeds of the Term Loan, and any such other documents, including, without limitation, any of the foregoing relating to the violation of, noncompliance with or liability or potential liability under, any Environmental Law applicable to the operations of each Borrower, any of its Subsidiaries, or any of the Properties (all the foregoing in this clause (d), collectively, the “I ndemnified Liabilities ”); provided , that no Borrower shall have any obligation hereunder to any Indemnitee with respect to Indemnified Liabilities to the extent such Indemnified Liabilities are found by a court of competent jurisdiction (which finding has not been mo dified, reversed or withdrawn) to have resulted from the gross negligence or willful misconduct of such Indemnitee or to arise out of a breach by the Lender of its obligations hereunder or under any other Loan Document . The agreements in this Section shal l survive repayment of the Term Loan and all other amounts payable hereunder.
. This Agreement shall be binding upon and inure to the benefit of each Borrower, the Guarantor, the Lender and their resp ective successors and assigns, except that (a) no Loan Party may assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the Lender (and any purported such assignment or transfer by a Loan Party without such consent of the Lender shall be null and void) and (b) the Lender may not assign or transfer any of its rights or obligations under this Agreement, except to an Affiliate of the Lender, without the prior written consent of each Borrower, which consent of each Borrower shall not be unreasonably withheld or delayed, provided that no such consent of such Borrower shall be required at any time any Default or Event of Default is then existing.
. In addition to any rights and rem edies of the Lender provided by law, the Lender shall have the right, without prior notice to the Borrowers, any such notice being expressly waived by the Borrowers to the extent permitted by applicable law, upon any amount becoming due and payable by the Borrowers hereunder (whether at the stated maturity, by acceleration or otherwise) to set ‑ off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other cred its, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by the Lender or any branch or agency thereof to or for the credit or the account of the Borrower . The Lender agrees promptly to notify the Borrowers after any such set ‑ off and application made by the Lender, provided that the failure to give such notice shall not affect the validity of such set ‑ off and application.
. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by facsimile transmission or electronic mail transmission (in portable document format (pdf) or a similar format for electronic transmission) of signature pages hereto), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Agreement signed by all the parties shall be lodged with the Borrowers and the Lender.
. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
. This Agreement and the other Loan Documents represent the final agreement AMONG the parties and m ay not be contradicted by evidence of prior, contemporaneous, or subsequent oral
agreements of the parties. There are no unwritten oral agreements AMONG the parties.
. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT (EXCEPT, AS TO ANY OTHER LOAN DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND THE TRANSACTIONS CONTEMPL ATED HEREBY AND THEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK .
.
. Each Borrower and the Guarantor hereby acknowledges that:
. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY
OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE TH E FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
. The L ender agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its affiliates’ directors, officers and employees, including accountants, legal counsel and other advisors (it being understood that the parties to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) in connection with any suit, action or proceeding relating to this Agreement, (e) subject to a written agreement containing provisions substantially the same as tho se of this Section, or (f) with the consent of the Borrowers. For the purposes of this Section 9.15, “ Information ” means all information received from any Borrower relating to its business, other than any such information that is available to Borrower on a non-confidential basis prior to disclosure by such Borrower. Notwithstanding anything to the contrary contained in this Agreement or any other Loan Document, all persons may disclose to any and all persons, without limitation of any kind, the federal in come tax treatment or structure of the Term Loan and other Obligations, any fact relevant to understanding the federal tax treatment or structure of the Term Loan and other Obligations, and all materials of any kind (including opinions or other tax analys es) relating to such federal tax treatment or structure.
Each Borrower acknowledges and agrees that, whether or not specifically indicated as such in a Loan Document, all Obligations shall be joint and several Obligations of each individual Borrower, and in furtherance of such joint and several Obligations, eac h Borrower hereby irrevocably guarantees the payment of all Obligations of each other Borrower as set forth below:
(a) Guarantee. Each Borrower hereby jointly and severally, absolutely, unconditionally and irrevocably guarantees the full and punctual paym ent when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise, of all Obligations; provided , however , that each Borrower shall only be liable under this Agreement for the maximum amount of such liability t hat can be hereby incurred without rendering this Agreement, as it relates to such Borrower, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount. This guarantee constitutes a guaranty of p ayment when due and not of collection, and each Borrower specifically agrees that it shall not be necessary or required that the Lender exercise any right, assert any claim or demand or enforce any remedy whatsoever against any Obligor or any other Person before or as a condition to the obligations of such Borrower hereunder.
(b) Guarantee Absolute, etc. The guarantee agreed to above shall in all respects be a continuing, absolute, unconditional and irrevocable guarantee of payment, and shall remain in ful l force and effect until the Termination Date. Each Borrower jointly and severally guarantees that the Obligations shall be paid strictly in accordance with the terms of each Loan Document under which such Obligations arise, regardless of any law, regulat ion or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Lender with respect thereto. The liability of each
Borrower under this Agreement shall be joint and several, absolute, unconditional and irrevocab le irrespective of (i) any lack of validity, legality or enforceability of any Loan Document; (ii) the failure of the Lender (A) to assert any claim or demand or to enforce any right or remedy against any Obligor or any other Person (including any other gu arantor) under the provisions of any Loan Document or otherwise, or (B) to exercise any right or remedy against any other guarantor (including any Obligor) of, or collateral securing, any Obligations; (iii) any change in the time, manner or place of paymen t of, or in any other term of, all or any part of the Obligations, or any other extension, compromise or renewal of any Obligation; (iv) any reduction, limitation, impairment or termination of any Obligations for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and each Borrower hereby waives any right to or claim of) any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality, irregula rity, compromise, unenforceability of, or any other event or occurrence affecting, any Obligations or otherwise; (v) any amendment to, rescission, waiver, or other modification of, or any consent to or departure from, any of the terms of any Loan Document; (vi) any addition, exchange, release, surrender or non-perfection of any collateral, or any amendment to or waiver or release or addition of, or consent to or departure from, any other guarantee held by the Lender securing any of the Obligations; or (vii ) any other circumstance which might otherwise constitute a defense available to, or a legal or equitable discharge of, any Obligor, any surety or any guarantor.
(c) Reinstatement, etc. Each Borrower agrees that its guarantee shall continue to be effectiv e or be reinstated, as the case may be, if at any time any payment (in whole or in part) of any of the Obligations is rescinded or must otherwise be restored by the Lender, upon the insolvency, bankruptcy or reorganization of any other Borrower, any other Obligor or otherwise, all as though such payment had not been made.
(d) Waiver, etc. Each Borrower hereby waives promptness, diligence, notice of acceptance and any other notice with respect to any of the Obligations and this Agreement and any requirement that the Lender protect, secure, perfect or insure any Lien, or any property subject thereto, or exhaust any right or take any action against any other Obligor or any other Person (including any other guarantor) or entity or any collateral securing the Ob ligations, as the case may be.
(e) Postponement of Subrogation, etc. Each Borrower agrees that it shall not exercise any rights which it may acquire by way of rights of subrogation under any Loan Document to which it is a party, nor shall any Borrower see k or be entitled to seek any contribution or reimbursement from any Obligor, in respect of any payment made hereunder, under any other Loan Document or otherwise, until following the Termination Date. Any amount paid to any Borrower on account of any such subrogation rights prior to the Termination Date shall be held in trust for the benefit of the Lender and shall immediately be paid and turned over to the Lender in the exact form received by such Borrower (duly endorsed in favor of the Lender, if require d), to be credited and applied against the Obligations, whether matured or unmatured; provided , however , that if (i) any Borrower has made payment to the Lender of all or any part of the Obligations; and (ii) the Termination Date has occurred; then at su ch Borrower’s request, the Lender shall, at the expense of such Borrower, execute and deliver to such Borrower appropriate documents (without recourse and without representation or warranty) necessary to evidence the transfer by subrogation to such Borrowe r of an interest in the Obligations resulting from such payment. In furtherance of the foregoing, at all times prior to the Termination Date, each Borrower shall refrain from taking any action or commencing any proceeding against any Obligor (or its succe ssors or assigns, whether in connection with a bankruptcy proceeding or otherwise) to recover any amounts in the respect of payments made under any Loan Document to the Lender.
(f) Right of Contribution. Each Borrower hereby agrees that, to the extent tha t a Borrower shall have paid more than its proportionate share of any payment made hereunder or in respect
of the Obligations, such Borrower shall be entitled to seek and receive contribution from and against the other Borrower hereunder which has not paid its proportionate share of such payment. The provisions of this Section shall in no respect limit the obligations and liabilities of any Borrower to the Lender, and each Borrower shall remain liable to the Lender for the full amount guaranteed by it here under.
(g) Each Borrower hereby acknowledges and agrees that such Borrower shall be jointly and severally liable to the Lender for all representations, warranties, covenants, obligations and indemnities of the Borrowers hereunder.
Each Qualified ECP Guarantor hereby jointly and severally absolutely, unconditionally and irrevocably undertakes to provide such funds or other support as may be needed f rom time to time by each other Loan Party to honor all of its obligations under the Guaranty or the provisions of Section 9.16 hereof in respect of Swap Obligations (provided, however, that each Qualified ECP Guarantor shal l only be liable under this Section 9.18 for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 9.18 , or otherwise under th e Guaranty or Section 9.16 hereof , voidable under applicable law r elating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations of each Qualified ECP Guarantor under this Section 9.18 shall remain in full force and effect until a the Term Loan has been paid in full and no Term Loan Commitment remains outstanding . Each Qualified ECP Guarantor intends that this Section 9.18 constitute, and this Section 9.18 shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of each other Loan Party for all p urposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.
[Signature Pages Follow]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.
BORROWERS:
AMERCO REAL ESTATE COMPANY
AMERCO REAL ESTATE COMPANY OF TEXAS, INC.
AMERCO REAL ESTATE COMPANY OF ALABAMA, INC.
U-HAUL CO. OF FLORIDA, INC.
By:
Name: Gary B. Horton
Title: Treasurer
GUARA
NTOR:
U-HAUL INTERNATIONAL, INC.
TL Amortization Schedule
Term Loan Commitment |
|
---|---|
Closing Date |
$258,333,000 |
June 10, 2013 |
$257,500,000 |
July 10, 2013 |
$256,667,000 |
August 10, 2013 |
$255,833,000 |
September 10, 2013 |
$255,000,000 |
October 10, 2013 |
$254,167,000 |
November 10, 2013 |
$253,333,000 |
December 10, 2013 |
$252,500,000 |
January 10, 2014 |
$251,667,000 |
February 10, 2014 |
$250,833,000 |
March 10, 2014 |
$250,000,000 |
April 10, 2014 |
$249,167,000 |
May 10, 2014 |
$248,333,000 |
June 10, 2014 |
$247,500,000 |
July 10, 2014 |
$246,667,000 |
August 10, 2014 |
$245,833,000 |
September 10, 2014 |
$245,000,000 |
October 10, 2014 |
$244,167,000 |
November 10, 2014 |
$243,333,000 |
December 10, 2014 |
$242,500,000 |
January 10, 2015 |
$241,667,000 |
February 10, 2015 |
$240,833,000 |
March 10, 2015 |
$240,000,000 |
April 10, 2015 |
$239,167,000 |
May 10, 2015 |
$238,333,000 |
June 10, 2015 |
$237,500,000 |
July 10, 2015 |
$236,667,000 |
August 10, 2015 |
$235,833,000 |
September 10, 2015 |
$210,000,000 |
October 10, 2015 |
$209,167,000 |
November 10, 2015 |
$208,333,000 |
December 10, 2015 |
$207,500,000 |
January 10, 2016 |
$206,667,000 |
February 10, 2016 |
$205,833,000 |
March 10, 2016 |
$205,000,000 |
April 10, 2016 |
$204,167,000 |
May 10, 2016 |
$203,333,000 |
June 10, 2016 |
$202,500,000 |
July 10, 2016 |
$201,667,000 |
August 10, 2016 |
$200,833,000 |
September 10, 2016 |
$174,289,000 |
October 10, 2016 |
$173,456,000 |
November 10, 2016 |
$172,622,000 |
December 10, 2016 |
$171,789,000 |
January 10, 2017 |
$170,122,000 |
|
March 10, 2017 |
$169,289,000 |
April 10, 2017 |
$168,456,000 |
May 10, 2017 |
$167,622,000 |
June 10, 2017 |
$166,789,000 |
July 10, 2017 |
$165,956,000 |
August 10, 2017 |
$165,122,000 |
September 10, 2017 |
$140,287,000 |
October 10, 2017 |
$139,454,000 |
November 10, 2017 |
$138,620,000 |
December 10, 2017 |
$137,787,000 |
January 10, 2018 |
$136,954,000 |
February 10, 2018 |
$136,120,000 |
March 10, 2018 |
$135,287,000 |
April 10, 2018 |
$134,454,000 |
May 10, 2018 |
$133,620,000 |
June 10, 2018 |
$132,787,000 |
July 10, 2018 |
$131,954,000 |
August 10, 2018 |
$131,120,000 |
September 10, 2018 |
$107,913,000 |
October 10, 2018 |
$107,080,000 |
November 10, 2018 |
$106,246,000 |
December 10, 2018 |
$105,413,000 |
January 10, 2019 |
$104,580,000 |
February 10, 2019 |
$103,746,000 |
March 10, 2019 |
$102,913,000 |
April 10, 2019 |
$102,080,000 |
May 10, 2019 |
$101,246,000 |
June 10, 2019 |
$100,413,000 |
July 10, 2019 |
$99,580,000 |
August 10, 2019 |
$98,746,000 |
September 10, 2019 |
$97,913,000 |
October 10, 2019 |
$97,080,000 |
November 10, 2019 |
$96,246,000 |
December 10, 2019 |
$95,413,000 |
January 10, 2020 |
$94,580,000 |
February 10, 2020 |
$93,746,000 |
March 10, 2020 |
$92,913,000 |
April 10, 2020 |
$92,080,000 |
May 10, 2020 |
$91,246,000 |
June 10, 2020 |
$90,413,000 |
July 10, 2020 |
$89,580,000 |
August 10, 2020 |
$88,746,000 |
September 10, 2020 |
$87,913,000 |
October 10, 2020 |
$87,080,000 |
November 10, 2020 |
$86,246,000 |
December 10, 2020 |
$85,413,000 |
January 10, 2021 |
$84,580,000 |
February 10, 2021 |
$83,746,000 |
March 10, 2021 |
$82,913,000 |
April 10, 2021 |
$56,368,000 |
May 10, 2021 |
$55,257,000 |
|
July 10, 2021 |
$54,702,000 |
August 10, 2021 |
$54,146,000 |
September 10, 2021 |
$53,591,000 |
October 10, 2021 |
$53,036,000 |
November 10, 2021 |
$52,480,000 |
December 10, 2021 |
$51,925,000 |
January 10, 2022 |
$51,370,000 |
February 10, 2022 |
$50,814,000 |
March 10, 2022 |
$50,259,000 |
April 10, 2022 |
$25,702,000 |
May 10, 2022 |
$25,424,000 |
June 10, 2022 |
$25,147,000 |
July 10, 2022 |
$24,870,000 |
August 10, 2022 |
$24,592,000 |
September 10, 2022 |
$24,315,000 |
October 10, 2022 |
$24,038,000 |
November 10, 2022 |
$23,760,000 |
December 10, 2022 |
$23,483,000 |
January 10, 2023 |
$23,206,000 |
February 10, 2023 |
$22,928,000 |
March 10, 2023 |
$22,651,000 |
Termination Date |
$0 |
Eligibility Criteria
To qualify as an Eligible Property, such Property must satisfy the following criteria:
(a) such Property contains a U-Haul Move Center or other moving storage facility satisfactory to the Lender;
(b) such Property is located in the United States;
(c) such Pr operty is subject to a Mortgage in favor of the Agent , and
(d) such Property is unencumbered by any Liens other than Liens in favor of the Agent pursuant to the Security Documents and Permitted Liens.
Subsidiaries, Corporate Structure
Name of each Loan Party
U-Haul International, Inc.
Amerco Real Estate Company
The two entities listed immediately below are direct, 100% owned, subsidiaries of Amerco Real Estate Company
Amerco Real Estate Company of Alabama, Inc.
Amerco Real Estate Company of Texas, Inc.
All of the entities listed below are direct, 100% owned, subsidiaries of U-Haul International, Inc .
U-Haul Co. of Alabama, Inc., an Alabama corporation
U-Haul Co. of Alaska, an Alaska corporation
U-Haul Co. of Arizona, an Arizona corporation
U-Haul Co. of California, a California corporation
U-Haul Co. of Colorado, a Colorado corporation
U-Haul Co. of Florida, a Florida corporation
U-Haul Co. of Georgia, a Georgia corporation
U-Haul Co. of Idaho, In c., an Idaho corporation
U-Haul Co. of Illinois, Inc., an Illinois corporation
U-Haul Co. of Indiana, Inc., an Indiana corporation
U-Haul Co. of Iowa, Inc., an Iowa corporation
U-Haul Co. of Kansas, Inc., a Kansas corporatio n
U-Haul Co. of Louisiana, a Louisiana corporation
U-Haul Co. of Massachusetts and Ohio, Inc., a Massachusetts corporation
U-Haul Co. of Maine, Inc., a Maine corporation
U-Haul Co. of Maryland, Inc., a Maryland corporation
U-Haul Co. of Michigan, a Michigan corporation
U-Haul Co. of Minnesota, a Minnesota corporation
U-Haul Company of Missouri, a Missouri corporation
U-Haul Co. of Mississippi, a Mississippi corporati on
U-Haul Co. of Montana, Inc., a Montana corporation
U-Haul Co. of Nevada, Inc., a Nevada corporation
U-Haul Co. of New Hampshire, Inc., a New Hampshire corporation
U-Haul Co. of New Jersey, Inc., a New Jer sey corporation
U-Haul Co. of New Mexico, Inc., a New Mexico corporation
U-Haul Co. of New York and Vermont, Inc., a New York corporation
U-Haul Co. of North Carolina, a North Carolina corporation
U-Haul Co. of North Dakota, a North Dakota corporation
U-Haul Co. of Oklahoma, Inc., an Oklahoma corporation
U-Haul Co. of Oregon, an Oregon corporation
U-Haul Co. of Pennsylvania, a Pennsylvania corporation
U-Haul Co. of Rhode Island , a Rhode Island corporation
U-Haul Co. of South Carolina, Inc., a South Carolina corporation
U-Haul Co. of Tennessee, a Tennessee corporation
U-Haul Co. of Texas, a Texas corporation
U-Haul Co. of Utah, In c., a Utah corporation
U-Haul Co. of Virginia, a Virginia corporation
U-Haul Co. of Washington, a Washington corporation
U-Haul Co. of Wisconsin, Inc., a Wisconsin corporation
U-Haul Co. of West Virginia, a West Virginia corporation
Filing Jurisdictions
Loan Party Name : Filing Jurisdiction:
Amerco Real Estate Company Nevada
Amerco Real Estate Company of Alabama, Inc. Alabama
Amerco Real E state Company of Texas, Inc. Texas
U-Haul Co. of Alabama, Inc., an Alabama corporation Alabama
U-Haul Co. of Alaska, an Alaska corporation Alaska
U-Haul Co. of Arizona, an Arizona corporation Arizona
U-Haul Co. of California, a Californi a corporation California
U-Haul Co. of Colo rado, a Colorado corporation Colorado
U-Haul Co. of Florida, a Florida corporation Florida
U-Haul Co. of Georgia, a Georgia corporation Georgia
U-Haul Co. of Idaho, Inc., an Idaho corporation Idaho
U-Haul Co. of Illinois, Inc., an Illinois corpor ation Illinois
U-Haul Co. of Indiana, Inc., an Indiana corporation Indiana
U-Haul Co. of Iowa, Inc., an Iowa corporation Iowa
U-Haul Co. of Kansa s, Inc., a Kansas corporation Kansas
U-Haul Co. of Louisiana, a Louisia na corporation Louisiana
U-Haul Co. of Massachusetts and Ohio, Inc., Massachusetts
a Massachusetts corporation
U-Haul Co. of Maine, Inc., a Maine corporation Maine
U-Haul Co. of Maryland, Inc., a Maryland corporation Maryland
U-Haul Co. of Minnesota, a Minnesota corporation Minnesota
U-Haul Company of Missouri, a Missouri corporation Missouri
U-Haul Co. of Mississippi, a Mississippi c orporation Mississippi
U-Haul Co. of Montana, Inc., a Montana corporation Montana
U-Haul Co. of Nevad a, Inc., a Nevada corporation Ne vada
U-Haul Co. of New Hampshire, Inc., a New Hampshire corporation New Hampshire
U-Haul Co. of New Jersey, Inc., a New Jersey corporation New Jersey
U-Haul Co. of New Mexico, Inc., a New Mexico corporation New Mexico U-Haul Co. of New York and Vermont, Inc., a New York corporation New York
U-Haul Co. of North Carolina , a North Carolina corporation North Carolina
U-Haul Co. of North Dakota, a North Dakota corporation North Dakota
U-Haul Co. of Oklahoma, Inc., an Oklahoma corporation Oklahoma
U-Haul Co. of Oregon, an Oregon corporation Oregon
U-Haul Co. of Pennsylvania, a Pennsylvania corporation Pennsylvania
U-Haul Co. of Rhode Island, a Rhode Island corporation Rhode Island
U-Haul Co. of South Carolina, Inc., a South Carolina corporation South Carolina
U-Haul Co. of Tennessee, a Tennessee corporation Tennessee
U-Haul Co. of Texas, a Texas corporation Texas
U-Haul Co. of Utah, Inc., a Utah corporation Utah
U-Haul Co. of Virginia, a Virginia corporation Virginia
U-Haul Co. of Washington, a Washington corporation Washington
U-Haul Co. of Wisconsin, Inc., a Wisconsin corporation Wisconsin
U-Haul Co. of West Virginia, a West Virginia corporation West Virginia
Environmental Matters
None which could reasonably expected to have a Material Adverse Effect on any Loan Party.
Eligible Property Insurance
(i) Insurance against loss or damage by fire, casualty and other hazards included in an “all-risk” extended coverage endorsement or its equivalent, covering the Eligible Property in an amount not less than the gre ater of (A) 100% of the insurable replacement value of the Eligible Property (exclusive of the premises and footings and foundations) and (B) such other amount as is necessary to prevent any reduction in such policy by reason of and to prevent Borrower, Le nder or any other insured thereunder from being deemed to be a co-insurer.
(ii) Commercial comprehensive general liability insurance against claims for personal and bodily injury and/or death to one or more persons or property damage, occurring on, in or about the Eligible Property (including the adjoining streets, sidewalks and passageways therein) in amounts of not less than $1,000,000 per occurrence and $2,000,000 general aggregate on a per location basis and, in addition thereto, not less than $75,000 ,000 excess and/or umbrella liability insurance shall be maintained for any and all claims.
(iii) Business interruption, rent loss or other similar insurance with loss payable to Lender, in an amount not less than 100% of the projected fixed or base rent p lus percentage rent for the succeeding twelve (12) month period based on an occupancy rate of 100%.
(iv) War risk insurance when such insurance is obtainable from the United States of America or any agency or instrumentality thereof at reasonable rates ( for the maximum amount of insurance obtainable) and if requested by Lender, and such insurance is then customarily required by institutional lenders of similar properties similarly situated.
(v) Insurance against loss or damages from (A) leakage of sprinkl er systems and (B) explosion of steam boilers, air conditioning equipment, pressure vessels or similar apparatus now or hereafter installed at the Eligible Property, in such amounts as Lender may from time to time reasonably require and which are then cust omarily required by institutional lenders of similar properties similarly situated.
(vi) Flood insurance in an amount equal to the full insurable value of the Eligible Property or the maximum amount available, whichever is less, if the improvements are loc ated in an area designated by the Secretary of Housing and Urban Development as being “an area of special flood hazard” under the National Flood Insurance Program ( i.e. , having a one percent or greater chance of flooding), and if flood insurance is availab le under the National Flood Insurance Act. (To be provided on a post-closing basis).
(vii) Worker’s compensation insurance or other similar insurance which may be required by governmental authorities or other legal requirements.
(viii) Intentionally omit ted.
(ix) Insurance against damage resulting from acts of terrorism, or an insurance policy without an exclusion for damages resulting from terrorism, on terms consistent with the commercial property insurance policy required under subsections (i) (ii) and (iii) above.
Policy Terms . (a) All insurance policies described above shall be issued by financially responsible insurers authorized to do business in the state where the Eligible Property is located, with a general policyholder’s service rating of not less than A and a financial rating of not less than VIII as rated in the most currently available Best’s Insurance Reports (or the equivalent, if such rating system shall hereafter be altered or replaced) and shall have a claims paying ability rating and/ or financial strength rating, as applicable, of not less than “A” (or its equivalent), or such lower claims paying ability rating and/or financial strength rating, as applicable, as Lender shall, in its sole and absolute discretion, consent to. All such p olicies (except policies for worker’s compensation) shall name Lender, its successors and/or assigns as an additional named insured, shall provide for loss payable to Lender, its successors and/or assigns and shall contain (or have attached): (i) standard “non-contributory mortgagee” endorsement or its equivalent relating, inter alia , to recovery by Lender notwithstanding the negligent or willful acts or omissions of Borrower; (ii) a waiver of subrogation endorsement as to Lender; (iii) an endorsement indi cating that neither Lender nor Borrower shall be or be deemed to be a co-insurer with respect to any casualty risk insured by such policies
Post-Closing Searches; Good Standing Certificates
Section 6.11(c) – Lien Searches, Marketing Grantors
1. U-Haul Co. of Arizona
2. U-Haul Co. of California
3. U-Haul Co. of Florida
4. U-Haul Co. of Illinois, Inc.
5. U-Haul Co. of Massachusetts and Ohio, Inc.
6. U-Haul Co. of Michigan
7. U-Haul Co. of New York and Vermont, Inc.
8. U-Haul Co. of Pennsylvania
9. U-Haul Co. of Texas
10. U-Haul Co. of Washington
Section 6.11(d) – Title Searches, Eligible Properties
Reference ID |
Address |
706046 U-HAUL CENTER OF ROSEVILLE |
111 WILLIS ROAD, ROSEVILLE, CALIFORNIA 95678 |
708081 U-HAUL CENTER SUNNYVALE |
939 E EL CAMINO REAL, SUNNYVALE, CALIFORNIA 94087 |
707069 U-HAUL CTR DOWNTOWN |
1027 THE ALAMEDA, SAN JOSE, CALIFORNIA 95126 |
793085 U-HAUL CENTER CORALVILLE |
2601 2ND ST / HWY 6 W, CORALVILLE, IOWA 52241 |
784071 U-HAUL CTR WESTSIDE |
6100 BLANDING BLVD, JACKSONVILLE, FLORIDA 32244 |
706059 U-HAUL CTR OF RANCHO |
11351 PYRITES WAY, RANCHO CORDOVA, CALIFORNIA 95670 |
745062 U-HAUL CENTER MIDTOWN |
1617 SAN JACINTO, HOUSTON NORTH, TEXAS 77002 |
822056 U-HAUL UNIVERSITY |
800 N MCCLINTOCK, TEMPE, ARIZONA 85281 |
83 0077 U-HAUL S FT MYERS |
11401 CLEVELAND AVE, FORT MYERS, FLORIDA 33907 |
812046 U-HAUL FEASTERVILLE |
333 W STREET RD, FEASTERVILLE, PENNSYLVANIA 19053 |
Section 6.11(f) – Good Standing Certificates
U-Haul Co. of Washington
Form of Non Bank Status Certificate
NON-BANK STATUS CERTIFICATE
Reference is hereby made to the Second Amended and Restated Credit Agreement, dated as of May 28, 2013 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among AMERCO Real Estate Company, AMERCO Real Estate Company of Texas, Inc., AMERCO Real Estate Company of Alabama, Inc., and U-Haul Co. of Florida, Inc., as borrowers (the “ Borrowers ”), U-Haul Internati onal, Inc., as guarantor (the “ Guarantor ”) and Bank of America, N.A., as lender ( together with its permitted successors or assigns, the “ Lender ” ). All capitalized terms used but not defined herein have the meanings ascribed to them in the Credit Agreement . Pursuant to the provisions of Section 3.12(c) of the Credit Agreement, the Lender hereby certifies that:
1. It is a ___ natural individual person, ____ treated as a corporation for U.S. federal income tax purposes, ____ disregarded for federal income tax p urposes (in which case a copy of this Non-Bank Status Certificate is attached in respect of its sole beneficial owner), or ____ treated as a partnership for U.S. federal income tax purposes. [One must be checked]
2. It is the beneficial owner of the Note, ex cept to the extent of a transferee that has satisfied the requirements of Section 9.6 of the Credit Agreement.
3. It is not a bank, as such term is used in section 881(c)(3)(A) of the Internal Revenue Code of 1986, as amended (the “ Code ”), or the Credit Agree ment is not, with respect to the undersigned, a loan agreement entered into in the ordinary course of its trade or business, within the meaning of such section.
4. It is not a 10-percent shareholder of any Borrower within the meaning of section 871(h)(3) or 8 81(c)(3)(B) of the Code.
5. It is not a controlled foreign corporation that is related to any Borrower within the meaning of section 881(c)(3)(C) of the Code.
6. Amounts received by it pursuant to the Credit Agreement and under the Note are not effectively conne cted with its conduct of a trade or business in the United States.
[NAME OF LENDER]
By:
Title:
Date: ______________ ___, 20__
Form of Notice of Prepayment
NOTICE OF PREPAYMENT
[Date]
Bank of America, N.A.
c/o
Bank of America Merrill Lynch
901 Main Street, 10th Fl.
Dallas, TX 75202
Attention: David L. McCauley
Re: Prepaymen t under the Second Amended and Restated Credit Agreement , dated as of May 28, 2013 (as amended, supplemented, restated, or otherwise modified from time to time, the “ Credit Agreement ”) , by and among AMERCO Real Estate Company, AMERCO Real Estate Company of Texas, Inc., AMERCO Real Estate Company of Alabama, Inc. and U-Haul Co. of Florida, Inc., as borrowers (the “Borrowers ”), U-Haul International, Inc., as guarantor (the “Guarantor”) and Bank of America, N.A., as lender (the “ Lender ”)
Ladies and Gentlemen:
This Notice of Prepayment is delivered to you pursuant to Section 3.5(a) of the Credit Agreement. Unless otherwise defined herein or the context otherwise requires, terms used herein have the meanings provided in the Credit Agreement.
The Borrowers hereby irrevocably notify the Lender that the Borrowers shall prepay the Term Loans, on ______________, 20__, in an aggregate principal amount of $____________, which amount shall constitute a [full] [partial] prepayment of the Term Loans.
The Borrowers hereby a cknowledge that, pursuant to the Credit Agreement (including Section 3.13 thereof), the Borrowers may be liable for certain losses or expenses incurred by the Lender as a consequence of the Borrowers making a prepayment of Eurodollar Loans on a day which i s not the last day of an Interest Period with respect thereto.
[Signature page follows]
The Borrowers have caused this Notice of Prepayment to be executed and delivered, and the certification and warranties contained herein to be made, by its duly author ized officer this ____ day of ________________, 20___.
AMERCO REAL ESTATE COMPANY
AMERCO REAL ESTATE COMPANY OF TEXAS, INC.
AMERCO REAL ESTATE COMPANY OF ALABAMA, INC.
U-HAUL CO. OF FLORIDA, INC.
By:
Name:
Title:
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 res pect 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 t he 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-1 5(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) De signed 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 fi nancial 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 eq uivalent 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 rep ort 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: August 7 , 201 3 |
|
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 res pect 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 t he 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-1 5(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) De signed 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 fi nancial 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 Registran t’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 e quivalent functions):
(a) A ll 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 re port 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: August 7 , 201 3 |
|
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 June 30 , 201 3 of AMERCO (the “Company”), as filed with the Securities and Exchange Commission on August 7 , 201 3 (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, t hat:
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: August 7, 2013 |
|
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 June 30 , 201 3 of AMERCO (the “Company”), as filed with the Securities and Exchange Commission on August 7 , 201 3 (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 Repo rt 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 Compan y.
AMERCO |
|
|
|
|
a Nevada corporation |
|
|
|
|
|
/s/ Jason A. Berg |
|
Jason A. Berg |
|
Principal Financial Officer and |
|
Chief Accounting Officer |
|
|
Date: August 7, 2013 |
|