UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended September 30, 201 6

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.

 

 

 

 

AMERCOLOGO

 

 

 

 

1-11255

AMERCO

88-0106815

 

(A Nevada Corporation)

 

 

5555 Kietzke Lane , Ste. 100

 

 

Reno, Nevada 89511

 

 

Telephone (775) 688-6300

 

 

 

 

 

N/A

 

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant : (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [x]   No [ ]

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 Regulation   S-T (§232.405 of this chapter) during the preceding 12   months (or for such shorter period that the registrant was required to submit and post such files) .   Yes   [x]   No   [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer , or a smaller reporting company. See the definition s of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filer [x]   Accelerated filer [ ]  

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 November 1 , 201 6


TABLE OF CONTENTS

 

 

Page  

 

PART I FINANCIAL INFORMATION

 

Item 1.

Financial Statements

 

 

a) Condensed Consolidated Balance Sheets as of September 30, 201 6 (unaudited) and March 31, 201 6

1

 

b) Condensed Consolidated Statements of Operations for the Quarters ended September 30, 201 6 and 201 5 (unaudited)

2

 

c) Condensed Consolidated Statement of Operations for the Six Months ended September 30, 201 6 and 201 5 (unaudited)

3

 

d ) Condensed Consolidated Statements of Comprehensive Income (Loss) for the Quarters and Six Months ended September 30, 201 6 and 201 5 (unaudited)

4

 

e ) Condensed Consolidated Statements of Cash Flows for the Six Months ended September 30, 201 6 and 201 5 (unaudited)

5

 

f ) Notes to Condensed Consolidated Financial Statements (unaudited)

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

3 6

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

57

Item 4.

Controls and Procedures

59

 

 

 

 

PART II OTHER INFORMATION

 

Item 1.

Legal Proceedings

60

Item 1A.

Risk Factors

60

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

60

Item 3.

Defaults Upon Senior Securities

60

Item 4.

Mine Safety Disclosures

60

Item 5.

Other Information

60

Item 6.

Exhibits

61



 

Part i Financial information

ITEM 1. Financial Statements

AMERCO AND CONSOLIDATED ENTITIES

CONDENSED CONSOLIDATED balance sheets

 

 

September 30,

 

March 31,

 

 

2016

 

2016

 

 

(Unaudited)

 

 

 

 

(In thousands, except share data)

ASSETS

 

 

 

 

Cash and cash equivalents

$

921,327

$

600,646

Reinsurance recoverables and trade receivables, net

 

183,243

 

175,210

Inventories, net

 

81,609

 

79,756

Prepaid expenses

 

87,968

 

134,300

Investments, fixed maturities and marketable equities

 

1,632,420

 

1,510,538

Investments, other

 

382,065

 

310,072

Deferred policy acquisition costs, net

 

118,652

 

136,386

Other assets

 

85,600

 

77,210

Related party assets

 

80,171

 

85,734

 

 

3,573,055

 

3,109,852

Property, plant and equipment, at cost:

 

 

 

 

Land

 

616,969

 

587,347

Buildings and improvements

 

2,401,802

 

2,187,400

Furniture and equipment

 

448,990

 

399,943

Rental trailers and other rental equipment

 

490,451

 

462,379

Rental trucks

 

3,720,268

 

3,514,175

 

 

7,678,480

 

7,151,244

Less: Accumulated depreciation

 

(2,244,417)

 

(2,133,733)

Total property, plant and equipment

 

5,434,063

 

5,017,511

Total assets

$

9,007,118

$

8,127,363

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

Liabilities:

 

 

 

 

Accounts payable and accrued expenses

$

438,921

$

502,613

Notes, loans and leases payable

 

2,992,490

 

2,665,396

Policy benefits and losses, claims and loss expenses payable

 

1,088,128

 

1,071,412

Liabilities from investment contracts

 

1,043,129

 

951,490

Other policyholders' funds and liabilities

 

10,211

 

8,650

Deferred income

 

27,801

 

22,784

Deferred income taxes

 

791,524

 

653,612

Total liabilities

 

6,392,204

 

5,875,957

 

 

 

 

 

Commitments and contingencies (notes 4, 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 September 30 and March 31, 2016

 

 

Series B preferred stock, with no par value, 100,000 shares authorized; none

 

 

 

 

issued and outstanding as of September 30 and March 31, 2016

 

 

Series common stock, with or without par value, 250,000,000 shares authorized:

 

 

 

 

Series A common stock of $0.25 par value, 10,000,000 shares authorized;

 

 

 

 

none issued and outstanding as of September 30 and March 31, 2016

 

 

Common stock, with $0.25 par value, 250,000,000 shares authorized:

 

 

 

 

Common stock of $0.25 par value, 250,000,000 shares authorized; 41,985,700

 

 

 

 

issued and 19,607,788 outstanding as of September 30 and March 31, 2016

 

10,497

 

10,497

Additional paid-in capital

 

451,909

 

451,629

Accumulated other comprehensive loss

 

(19,890)

 

(60,525)

Retained earnings

 

2,857,289

 

2,533,641

Cost of common shares in treasury, net (22,377,912 shares as of September 30 and March 31, 2016)

 

(525,653)

 

(525,653)

Cost of preferred shares in treasury, net (6,100,000 shares as of September 30 and March 31, 2016)

 

(151,997)

 

(151,997)

Unearned employee stock ownership plan shares

 

(7,241)

 

(6,186)

Total stockholders' equity

 

2,614,914

 

2,251,406

Total liabilities and stockholders' equity

$

9,007,118

$

8,127,363

The accompanying notes are an integral part of these condensed consolidated financial statements.


AMERCO AND CONSOLIDATED ENTITIES

CONDENSED CONSOLIDATED Statements of operations

 

 

Quarter Ended September 30,

 

 

2016

 

2015

 

 

(Unaudited)

 

 

(In thousands, except share and per share amounts)

Revenues:

 

 

 

 

Self-moving equipment rentals

$

711,710

$

698,219

Self-storage revenues

 

72,163

 

62,060

Self-moving and self-storage products and service sales

 

70,330

 

70,703

Property management fees

 

6,712

 

6,320

Life insurance premiums

 

40,893

 

40,515

Property and casualty insurance premiums

 

14,009

 

13,372

Net investment and interest income

 

25,816

 

22,151

Other revenue

 

57,278

 

49,563

Total revenues

 

998,911

 

962,903

 

 

 

 

 

Costs and expenses:

 

 

 

 

Operating expenses

 

398,213

 

406,282

Commission expenses

 

80,462

 

80,799

Cost of sales

 

40,952

 

39,881

Benefits and losses

 

46,836

 

43,428

Amortization of deferred policy acquisition costs

 

5,989

 

5,643

Lease expense

 

9,349

 

12,724

Depreciation, net of (gains) on disposals of (($9,618) and ($32,821), respectively)

 

109,904

 

63,078

Total costs and expenses

 

691,705

 

651,835

 

 

 

 

 

Earnings from operations

 

307,206

 

311,068

Interest expense

 

(28,215)

 

(23,973)

Pretax earnings

 

278,991

 

287,095

Income tax expense

 

(102,516)

 

(103,716)

Earnings available to common stockholders

$

176,475

$

183,379

Basic and diluted earnings per common share

$

9.01

$

9.36

Weighted average common shares outstanding: Basic and diluted

 

19,586,411

 

19,597,717

 

Related party revenues for the second quarter of fiscal 201 7 and 201 6 , net of eliminations, were $ 7.9 million and $ 7.6 million , respectively.

Related party costs and expenses for the second quarter of fiscal 201 7 and 201 6 , net of eliminations, were $ 17.3 million and $ 17.0 million , respectively.

Please see N ote 10, Related Party Transactions, of the Notes to Condensed Consolidated Financial Statements for more information on the related party revenues and costs and expenses.

The accompanying notes are an integral part of these condensed consolidated financial statements.

 


AMERCO AND CONSOLIDATED ENTITIES

CONDENSED CONSOLIDATED Statements of operations

 

 

 

Six Months Ended September 30,

 

 

2016

 

2015

 

 

(Unaudited)

 

 

(In thousands, except share and per share amounts)

Revenues:

 

 

 

 

Self-moving equipment rentals

$

1,358,046

$

1,327,505

Self-storage revenues

 

139,885

 

119,251

Self-moving and self-storage products and service sales

 

147,633

 

147,961

Property management fees

 

13,316

 

12,431

Life insurance premiums

 

81,785

 

80,781

Property and casualty insurance premiums

 

25,264

 

23,928

Net investment and interest income

 

53,365

 

44,123

Other revenue

 

103,026

 

91,728

Total revenues

 

1,922,320

 

1,847,708

 

 

 

 

 

Costs and expenses:

 

 

 

 

Operating expenses

 

783,295

 

769,451

Commission expenses

 

154,278

 

153,857

Cost of sales

 

84,314

 

81,136

Benefits and losses

 

93,839

 

86,819

Amortization of deferred policy acquisition costs

 

13,931

 

10,421

Lease expense

 

20,397

 

29,788

Depreciation, net of (gains) on disposals of (($28,258) and ($78,805), respectively)

 

205,285

 

114,060

Total costs and expenses

 

1,355,339

 

1,245,532

 

 

 

 

 

Earnings from operations

 

566,981

 

602,176

Interest expense

 

(54,859)

 

(46,073)

Pretax earnings

 

512,122

 

556,103

Income tax expense

 

(188,474)

 

(201,439)

Earnings available to common stockholders

$

323,648

$

354,664

Basic and diluted earnings per common share

$

16.52

$

18.10

Weighted average common shares outstanding: Basic and diluted

 

19,586,240

 

19,596,921

 

Related party revenues for the first six months of fiscal 201 7 and 201 6 , net of eliminations, were $ 15.8 million and $ 16.0 million , respectively.

Related party costs and expenses for the first six months of fiscal 201 7 and 201 6 , net of eliminations, were $34.3 million and $ 32.6 million , respectively.

Please see N ote 10, Related Party Transactions, of the Notes to Condensed Consolidated Financial Statements for more information on the related party revenues and costs and expenses.

The accompanying notes are an integral part of these condensed consolidated financial statements.

 


AMERCO AND CONSOLIDATED ENTITIES

Condensed consolidatED statements of COMPREHENSIVE INCOME (loss)

Quarter Ended September 30, 2016

 

Pre-tax

 

Tax

 

Net

 

 

(Unaudited)

 

 

(In thousands)

Comprehensive income:

 

 

 

 

 

 

Net earnings

$

278,991

$

(102,516)

$

176,475

Other comprehensive income (loss):

 

 

 

 

 

 

Foreign currency translation

 

(1,704)

 

 

(1,704)

Unrealized net gain on investments

 

30,790

 

(10,777)

 

20,013

Change in fair value of cash flow hedges

 

3,105

 

(1,179)

 

1,926

Total comprehensive income

$

311,182

$

(114,472)

$

196,710

 

Quarter Ended September 30, 2015

 

Pre-tax

 

Tax

 

Net

 

 

(Unaudited)

 

 

(In thousands)

Comprehensive income:

 

 

 

 

 

 

Net earnings

$

287,095

$

(103,716)

$

183,379

Other comprehensive income (loss):

 

 

 

 

 

 

Foreign currency translation

 

(13,098)

 

 

(13,098)

Unrealized net loss on investments

 

(31,625)

 

11,069

 

(20,556)

Change in fair value of cash flow hedges

 

1,235

 

(469)

 

766

Total comprehensive income

$

243,607

$

(93,116)

$

150,491

 

Six Months Ended September 30, 2016

 

Pre-tax

 

Tax

 

Net

 

 

(Unaudited)

 

 

(In thousands)

Comprehensive income:

 

 

 

 

 

 

Net earnings

$

512,122

$

(188,474)

$

323,648

Other comprehensive income (loss):

 

 

 

 

 

 

Foreign currency translation

 

(1,982)

 

 

(1,982)

Unrealized net gain on investments

 

60,618

 

(21,217)

 

39,401

Change in fair value of cash flow hedges

 

5,186

 

(1,970)

 

3,216

Total comprehensive income

$

575,944

$

(211,661)

$

364,283

 

Six Months Ended September 30, 2015

 

Pre-tax

 

Tax

 

Net

 

 

(Unaudited)

 

 

(In thousands)

Comprehensive income:

 

 

 

 

 

 

Net earnings

$

556,103

$

(201,439)

$

354,664

Other comprehensive income (loss):

 

 

 

 

 

 

Foreign currency translation

 

(10,565)

 

 

(10,565)

Unrealized net loss on investments

 

(20,972)

 

7,341

 

(13,631)

Change in fair value of cash flow hedges

 

4,605

 

(1,750)

 

2,855

Total comprehensive income

$

529,171

$

(195,848)

$

333,323

 

The accompanying notes are an integral part of these condensed consolidated financial statements.


AMERCO AND CONSOLIDATED ENTITIES

Condensed consolidatED statements of cash flows

 

 

Six Months Ended September 30,

 

 

2016

 

2015

 

 

(Unaudited)

 

 

(In thousands)

Cash flow from operating activities:

 

 

 

 

Net earnings

$  

323,648

$  

354,664

Adjustments to reconcile net earnings to cash provided by operations:

 

 

 

 

Depreciation

 

233,543

 

192,865

Amortization of deferred policy acquisition costs

 

13,931

 

10,421

Amortization of debt issuance costs

 

1,765

 

1,512

Interest credited to policyholders

 

11,028

 

10,484

Change in allowance for losses on trade receivables

 

34

 

(9)

Change in allowance for inventory reserves

 

800

 

(603)

Net gain on sale of real and personal property

 

(28,258)

 

(78,805)

Net gain on sale of investments

 

(4,645)

 

(3,022)

Deferred income taxes

 

114,724

 

27,259

Net change in other operating assets and liabilities:

 

 

 

 

Reinsurance recoverables and trade receivables

 

(8,102)

 

13,618

Inventories

 

(2,674)

 

(2,107)

Prepaid expenses

 

46,248

 

71,813

Capitalization of deferred policy acquisition costs

 

(14,360)

 

(15,636)

Other assets

 

(8,695)

 

16,794

Related party assets

 

5,195

 

57,767

Accounts payable and accrued expenses

 

45,162

 

59,525

Policy benefits and losses, claims and loss expenses payable

 

16,922

 

11,702

Other policyholders' funds and liabilities

 

1,563

 

2,684

Deferred income

 

5,034

 

2,339

Related party liabilities

 

232

 

(97)

Net cash provided by operating activities

 

753,095

 

733,168

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Purchases of:

 

 

 

 

Property, plant and equipment

 

(761,277)

 

(720,265)

Short term investments

 

(409,925)

 

(249,082)

Fixed maturities investments

 

(168,817)

 

(169,899)

Equity securities

 

(489)

 

(1,315)

Preferred stock

 

 

(3)

Real estate

 

(15,788)

 

(23)

Mortgage loans

 

(136,682)

 

(86,361)

Proceeds from sales and paydowns of:

 

 

 

 

Property, plant and equipment

 

310,409

 

379,198

Short term investments

 

386,508

 

243,634

Fixed maturities investments

 

120,525

 

89,085

Equity securities

 

 

808

Preferred stock

 

2,651

 

Real estate

 

831

 

Mortgage loans

 

105,731

 

29,895

Net cash used by investing activities

 

(566,323)

 

(484,328)

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Borrowings from credit facilities

 

331,787

 

461,735

Principal repayments on credit facilities

 

(158,479)

 

(187,958)

Debt issuance costs

 

(2,085)

 

(5,957)

Capital lease payments

 

(83,414)

 

(77,786)

Employee Stock Ownership Plan

 

(4,653)

 

(1,484)

Securitization deposits

 

245

 

298

Common stock dividends paid

 

(19,586)

 

(19,594)

Investment contract deposits

 

130,166

 

140,220

Investment contract withdrawals

 

(49,555)

 

(25,974)

Net cash provided by financing activities

 

144,426

 

283,500

 

 

 

 

 

Effects of exchange rate on cash

 

(10,517)

 

(12,543)

 

 

 

 

 

Increase in cash and cash equivalents

 

320,681

 

519,797

Cash and cash equivalents at the beginning of period

 

600,646

 

441,850

Cash and cash equivalents at the end of period

$  

921,327

$  

961,647

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 second fiscal quarter that ends on the 30 th of September for each year that is referenced. Our insurance company subsidiaries have a second quarter that ends on the 3 0 th of June for each year that is referenced. They have been consolidated on that basis. Our insurance companies’ financial reporting processes conform to calendar year reporting as required by state insurance departments. Management believes that consolidating their calendar year into our fiscal year financial statements does not materially affect the presentation of financial position or results of operations. We disclose any material events , if any, occurring during the intervening period. Consequently, all references to our insurance subsidiaries’ years 201 6 and 20 15 correspond to fiscal 201 7 and 201 6 for AMERCO.

Accounts denominated in non-U.S. currencies have been translated into U.S. dollars. Certain amounts reported in previous years have been reclassified to conform to the current presentation.

The condensed consolidated balance sheet as of September 30 , 201 6 and the related condensed consolidated statements of operations , comprehensive income (loss) for the second quarter and first six months and cash flows for the first six months of fiscal 201 7 and 201 6 are unaudited.

In our opinion, all adjustments necessary for the fair presentation of such condensed consolidated financial statements have been included. Such adjustments consist only of normal recurring items. Interim results are not necessarily indicative of results for a full year. The information in this Quarterly Report on Form 10-Q (“Quarterly Report”) should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended March 31, 201 6 .

Intercompany accounts and transactions have been eliminated.

Description of Legal Entities

AMERCO is the holding company for:

U-Haul International, Inc. (“U-Haul”),

Amerco Real Estate Company (“Real Estate”),

Rep w est Insurance Company (“Rep w est”), and

Oxford Life Insurance Company (“Oxford”).

Unless the context otherwise requires, the term s “Company,” “we,” “us” or “our” refer to AMERCO and all of its legal subsidiaries.

Description of Operating Segments

AMERCO has three reportable segments. They are Moving and Storage, Property and Casualty Insurance and Life Insurance.

The Moving and Storage operati ng segment (“Moving and Storage”) include s AMERCO, U-Haul, 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 towin g accessories, sales of propane and the rental of fixed and portable moving and storage units 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 (“Property and Casualty Insurance”) includes Rep w est and its wholly-owned subsidiaries and ARCOA R isk R etention G roup (“ARCOA”). Property and Casualty Insurance provides loss adjusting and claims handling for U-Haul through regional offices across North America. Property and Casualty Insurance also underwrites components of the Safemove, Safetow, Safemove Plus, Safestor and Safestor Mobile protection packages to U-Haul customers. The business plan for Property and Casualty Insurance includes offering property and casualty products in other U-Haul related programs. ARCOA 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 (“Life Insurance”) includes Oxford and its wholly-owned subsidiaries. Life Insurance 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.

2. Earnings per Share

Our earnings 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 21,219 and 9,280 as of September 30 , 201 6 and 201 5 , respectively.

3. Investments

Expected maturities may differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

We deposit bonds with insurance regulatory authorities to meet statutory requirements. The adjusted cost of bonds on deposit with insurance regulatory authorities was $ 17.2 million and $17.3 million at September 30 , 201 6 and March 31, 2016, respectively .

Available-for-Sale Investments

Available-for-sale investments at September 30 , 201 6 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

$

73,751

$

7,216

$

$

$  

80,967

U.S. government agency mortgage-backed securities

 

29,902

 

2,116

 

(6)

 

(2)

 

32,010

Obligations of states and political subdivisions

 

161,620

 

16,285

 

(11)

 

 

177,894

Corporate securities

 

1,198,017

 

67,183

 

(7,775)

 

(3,266)

 

1,254,159

Mortgage-backed securities

 

42,765

 

1,238

 

 

(38)

 

43,965

Redeemable preferred stocks

 

15,332

 

795

 

 

(127)

 

16,000

Common stocks

 

17,970

 

9,482

 

(10)

 

(17)

 

27,425

 

$

1,539,357

$

104,315

$

(7,802)

$

(3,450)

$  

1,632,420

 

AMERCO AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


Available-for-sale investments at March 31 , 201 6 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

 

 

 

 

 

(In thousands)

U.S. treasury securities and government obligations

$

85,861

$

3,791

$

$

(193)

$  

89,459

U.S. government agency mortgage-backed securities

 

21,845

 

1,596

 

(6)

 

(39)

 

23,396

Obligations of states and political subdivisions

 

166,725

 

10,660

 

(81)

 

(414)

 

176,890

Corporate securities

 

1,143,125

 

26,861

 

(8,013)

 

(28,181)

 

1,133,792

Mortgage-backed securities

 

42,991

 

475

 

 

(62)

 

43,404

Redeemable preferred stocks

 

17,977

 

556

 

 

(105)

 

18,428

Common stocks

 

17,732

 

7,822

 

(10)

 

(375)

 

25,169

 

$

1,496,256

$

51,761

$

(8,110)

$

(29,369)

$  

1,510,538

The available-for-sale table s include 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 $120.7 million during the first six months of fiscal 201 7 . The gross realized gains on these sales totaled $3.1 million. The gross realized losses on these sales totaled $0.9 million .

The unrealized losses of more than twelve months in the available-for-sale table s are considered temporary declines. We track each investment with an unrealized loss and evaluate it 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 recognize these write-downs , if any, through earnings . There were no write downs in the second quarter or for the first six months of fiscal 2017 or 2016.

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 whether the debtor is current on its contractually obligated interest and principal payments. Nothing has come to management’s attention that would lead to the belief that each issuer would not have the ability to meet the remaining contractual obligations of the security, including payment at maturity. 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 related to a credit loss is recognized in earnings. The significant inputs utilized in the evaluation of credit losses on mortgage backed securities include ratings, delinquency rates, and prepayment activity. The significant inputs utilized in the evaluation of credit losses on asset backed securities include the time frame for principal recovery and the subordination and value of the underlying collateral.

There were no credit losses recognized in earnings for which a portion of an other-than-temporary impairment was recognized in accumulated other comprehensive income (loss) for the second quarter or first six months of fiscal 2017.

AMERCO AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


The adjusted cost and estimated market value of available-for-sale investments by contractual maturity, were as follows:

 

 

September 30, 2016

 

March 31, 2016

 

 

Amortized

Cost

 

Estimated

Market

Value

 

Amortized

Cost

 

Estimated

Market

Value

 

 

(Unaudited)

 

 

 

 

(In thousands)

Due in one year or less

$

29,344

$

29,790

$

48,679

$

49,146

Due after one year through five years

 

316,614

 

330,006

 

250,576

 

256,597

Due after five years through ten years

 

570,836

 

602,486

 

557,984

 

557,961

Due after ten years

 

546,496

 

582,748

 

560,317

 

559,833

 

 

1,463,290

 

1,545,030

 

1,417,556

 

1,423,537

 

 

 

 

 

 

 

 

 

Mortgage backed securities

 

42,765

 

43,965

 

42,991

 

43,404

Redeemable preferred stocks

 

15,332

 

16,000

 

17,977

 

18,428

Common stocks

 

17,970

 

27,425

 

17,732

 

25,169

 

$

1,539,357

$

1,632,420

$

1,496,256

$

1,510,538

4. Borrowings

Long-Term Debt

Long-term debt was as follows:

 

 

 

 

 

September 30,

 

March 31,

 

2016 Rate (a)

 

Maturities

 

2016

 

2016

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

(In thousands)

Real estate loan (amortizing term)

2.02% - 6.93%

 

2023

$

174,289

$

205,000

Senior mortgages

2.53% - 5.50%

 

2017 - 2038

 

1,202,737

 

1,121,897

Working capital loan (revolving credit)

-

 

2018

 

 

Fleet loans (amortizing term)

1.95% - 4.76%

 

2017 - 2023

 

227,781

 

218,998

Fleet loans (securitization)

4.90%

 

2017

 

56,195

 

62,838

Fleet loans (revolving credit)

1.67% - 2.37%

 

2018 - 2021

 

462,000

 

347,000

Capital leases (rental equipment)

2.12% - 7.69%

 

2016 - 2023

 

826,931

 

672,825

Other obligations

3.00% - 8.00%

 

2016 - 2045

 

66,238

 

60,200

Notes, loans and leases payable

 

 

 

 

3,016,171

 

2,688,758

Less: Debt issuance costs

 

 

 

 

(23,681)

 

(23,362)

Total notes, loans and leases payable

 

 

 

$

2,992,490

$

2,665,396

 

 

 

 

 

 

 

 

(a) Interest rate as of September 30, 2016, 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. As of September 30, 2016 , the outstanding balance on the Real Estate Loan was $174.3 million .   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 final maturity of the term loan is April 20 23

AMERCO AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


The interest rate, per the provisions of the amended loan agreement, is the applicable London Inter-Bank Offer Rate (“LIBOR”) plus the applicable margin. At September 30, 201 6 , the applicable LIBOR was 0.52 % and the applicable margin was 1.50%, the sum of which was 2.02 % , which was applied to $41.5 million of the Real Estate Loan. The rate of the remaining balance of $132.8 million of the Real Estate Loan is hedged with an interest rate swap fixing the rate at 6.93% based on current margin. The interest rate swap expires in August 2018, after which date the remaining balance will incur interest at a rate of LIBOR plus a margin of 1.50%. The default provisions of the Real Estate Loan include non-payment of principal or interest and other standard reporting and change-in-control covenants. There are limited restrictions regarding our use of the funds.

Senior Mortgages

Various subsidiaries of Amerco Real Estate Company and U-Haul International, Inc. are borrowers under certain senior mortgages. These senior mortgage loan balances as of September 30, 2016 were in the aggregate amount of $ 1,202.7 million and mature between 2017 and 2038 . The senior mortgages require 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 fixed interest rates, per the provisions of the senior mortgages, range between 3 . 72 % and 5.5 0 %. Certain senior mortgages have an anticipated repayment date and a maturity date. If these senior mortgages are not repaid by the anticipated repayment date the interest rate on these mortgages would increase from the current fixed rate. We are using the anticipated repayment date for our maturity schedule. Additionally , $ 133.6 million of these loans have variable interest rates comprised of applicable LIBOR base rates between 0.51 % and 0.53% plus margins between 2.00% and 2.50%, the sum of which was between 2.53 % and 3.03 %. Amerco Real Estate Company and U-Haul International, Inc. have provided limited guarantees of the senior 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

Amerco Real Estate Company is a borrower under an asset backed working capital loan. The maximum amount that can be drawn at any one time is $ 50 .0 million. At September 30, 201 6 the full $50.0 million was available to be drawn . This loan is secured by certain properties owned by the borrower. This loan agreement provides for revolving loans, subject to the terms of the loan agreement. The final maturity of this loan is September 2018. This loan requires monthly interest payments with the unpaid loan balance and accrued and unpaid interest due at maturity. The interest rate is the applicable LIBOR plus a margin of 1.25% . AMERCO is the guarantor 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.

Fleet Loans

Rental Truck Amortizing Loans

U-Haul International, Inc. and /or several of its subsidiaries are borrowers under amortizing term loans. The balance of the loans as of September 30, 2016 was $ 227.8 million with the final maturities between July 201 7 and Sept 202 3 .

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 the applicable margin s . At September 30, 2016 , the applicable LIBOR was 0.52 % and applicable margins were between 1.72% and 2.50%. The interest rates are hedged with interest rate swaps fixing the rates between 2.82% and 4.76% based on current margins. Additionally, $ 155.6 million of these loans are carried at fixed rates ranging between 1.95% and 3.94%.

AMERCO and , in some cases, 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)


Rental Truck Securitizations

2010 U-Haul S Fleet and its subsidiaries (collectively, “2010 USF”) issued a $155.0 million asset-backed note (“2010 Box Truck Note”). 2010 USF is a bankruptcy-remote special purpose entity wholly-owned by U-Haul International, Inc. The net proceeds from the securitized transaction were used to finance new box truck purchases. U.S. Bank, NA acts as the trustee for this securitization.

The 2010 Box Truck Note has a fixed interest rate of 4.90% with an expected final maturity of October 2017. At September 30, 2016 , the outstanding balance was $ 56.2 million . The note is secur ed by the box trucks purchased and the corresponding operating cash flows associated with their operation.

The 2010 Box Truck Note is subject to certain covenants with respect to liens, additional indebtedness of the special purpose entity , the disposition of assets and other customary covenants of bankruptcy-remote special purpose entities. The default provisions of this note include non-payment of principal or interest and other standard reporting and change-in-control covenants.

Rental Truck Revolvers

Various subsidiaries of U-Haul International, Inc. entered into a revolving fleet loan for $ 150 million, which can be increased to a maximum of $225 million. The loan matures in Septem ber 2018. The interest rate, per the provision of the Loan Agreement, is the applicable LIBOR plus the applicable margin . At September 30, 2016 , the applicable LIBOR was 0.52 % and the margin was 1.1 5% , the sum of which was 1.67 %. Only interest is paid on the loan until the last nine months when principal is due monthly . As of September 30, 2016, the outstanding balance was $ 150.0 million .

Various subsidiaries of U-Haul International, Inc. entered into a revolving fleet loan for $100 million, which can be increased to a maximum of $215 million . This loan matures March 2020. The interest rate, per the provision of the Loan Agreement, is the applicable LIBOR plus the applicable margin. At September 30, 2016, the applicable LIBOR was 0.52 % and the margin was 1.15%, the sum of which was 1.67 %. Only interest is paid on the loan until the last nine months when principal is due monthly . As of September 30, 2016 , the outstanding balance was $ 147.0 million .

Various subsidiaries of U-Haul International, Inc. entered into a revolving fleet loan for $70 million . The loan matures in May 2019 . In August 2016, the amount was reduced to $50.0 million. This agreement contains an option to extend the maturity through January 2020. At September 30, 2016 , the applicable LIBOR was 0.52 % and the margin was 1.85%, the sum of which was 2.37 % . Only interest is paid during the first five years of the loan with principal due upon maturity. As of September 30, 2016 , the outstanding balance was $ 40.0 million .

Various subsidiaries of U-Haul International, Inc. entered into a revolving fleet loan for $ 12 5 million. The loan matures in November 2021 . The interest rate, per the provision of the Loan Agreement, is the a pplicable LIBOR plus the applicable margin . At September 30, 2016 , the applicable LIBOR was 0.52 % and the margin was 1.1 5%, the sum of which was 1.67 %. Only interest is paid on the loan until the last nine months when principal is due monthly . As of September 30, 2016, the outstanding balance was $125.0 million .

Capital Leases

We regularly enter into capital leases for new equipment with the terms of the leases between five and seven years. During the first six months of fiscal 2017, we entered into $233.9 million of new capital leases. At September 30, 2016, the balance of our capital leases was $ 826.9 million . The net book value of the corresponding capitalized assets was $ 1,161.1 million at September 30, 2016.

AMERCO AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


Other Obligations

In February 2011 , AMERCO and U . S . Bank, NA (the “Trustee”) entered into the U-Haul Investors Club ® Indenture.   AMERCO and the Trustee entered into this indenture to provide for the issuance of notes by us directly to investors over our proprietary website, uhaulinvestorsclub.com (“U-Notes”). The U-Notes ® are secured by various types of collateral including rental equipment and real estate.   U-Notes are issued in smaller series that vary as to principal amount, interest rate and maturity.   U-Notes are obligations of the Company and secured by the associated collateral; they are not guaranteed by any of the Company’s affiliates or subsidiaries.

At September 30, 2016, the aggregate outstanding principal balance of the U-N otes issued was $71.1 million of which $ 4.9 million is held by our insurance subsidiaries and eliminated in consolidation. I nterest rates range between 3.00% and 8.00% and maturity dates range between 2016 and 2045.

Oxford is a member of the Federal Home Loan Bank (“FHLB”) and as such the FHLB has made a deposit with Oxford. As of June 30, 2016, the deposit balance was $30.0 million which Oxford pays a fixed interest rate of 0.57% due on the maturity date of September 30, 2016. The balance of the deposit is included within Liabilities from investment contracts on the consolidated balance sheet.

Annual Maturities of Notes, Loans and Leases Payable

The annual maturities of long-term debt , including capital leases and excluding debt issuance costs, as of September 30 , 201 6 for the next five years and thereafter are as follows:

 

 

Twelve Months Ending September 30,

 

 

2017

 

2018

 

2019

 

2020

 

2021

 

Thereafter

 

 

(Unaudited)

 

 

(In thousands)

Notes, loans and leases payable, secured

$

346,831

$

495,063

$

375,839

$

350,039

$

340,688

$

1,107,711

Interest on Borrowings

Interest Expense

Components of interest expense include the following:

 

 

Quarter Ended September 30,

 

 

2016

 

2015

 

 

(Unaudited)

 

 

(In thousands)

Interest expense

$

26,105

$

20,762

Capitalized interest

 

(985)

 

(871)

Amortization of transaction costs

 

804

 

748

Interest expense resulting from derivatives

 

2,291

 

3,334

Total interest expense

 

28,215

 

23,973

 

 

 

Six Months Ended September 30,

 

 

2016

 

2015

 

 

(Unaudited)

 

 

(In thousands)

Interest expense

$

50,408

$

39,304

Capitalized interest

 

(2,298)

 

(1,422)

Amortization of transaction costs

 

1,647

 

1,491

Interest expense resulting from derivatives

 

5,102

 

6,700

Total interest expense

 

54,859

 

46,073

Interest paid in cash , including payments related to derivative contracts, amounted to $ 28.1 million and $ 22.6 million for the second quarter of fiscal 201 7 and 201 6, respectively and $55.3 million and $44.6 million for the first six months of fiscal 2017 and 2016, respectively.

AMERCO AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


Interest Rates

Interest rates and Company borrowings were as follows:

 

 

Revolving Credit Activity

 

 

Quarter Ended September 30,

 

 

2016

 

2015

 

 

(Unaudited)

 

 

(In thousands, except interest rates)

Weighted average interest rate during the quarter

 

1.73%

 

1.63%

Interest rate at the end of the quarter

 

1.73%

 

1.63%

Maximum amount outstanding during the quarter

$

462,000

$

250,000

Average amount outstanding during the quarter

$

431,815

$

234,348

Facility fees

$

49

$

50

 

 

 

Revolving Credit Activity

 

 

Six Months Ended September 30,

 

 

2016

 

2015

 

 

(Unaudited)

 

 

(In thousands, except interest rates)

Weighted average interest rate during the period

 

1.73%

 

1.64%

Interest rate at the end of the period

 

1.73%

 

1.63%

Maximum amount outstanding during the period

$

462,000

$

250,000

Average amount outstanding during the period

$

400,896

$

207,678

Facility fees

$

89

$

144

5 . Derivatives

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 (future interest payments) attributable to changes in LIBOR swap rates, the designated benchmark interest rate being hedged on certain of our LIBOR indexed variable rate debt and a variable rate operating lease . The interest rate swaps effectively fix our interest 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)

 

 

 

 

 

 

 

 

 

$

300.0

 

 

8/16/2006

 

8/18/2006

 

8/10/2018

 

8/4/2006

 

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

 

6/1/2011

 

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 September 30, 2016 , the total notional amount of our variable interest rate swaps on debt and an operating lease was $ 205.9 million and $8.6 million, respectively .

AMERCO AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


The derivative fair values located in A ccounts payable and accrued expenses in the balance sheets were as follows:

 

 

Liability Derivatives Fair Values as of

 

 

September 30, 2016

 

March 31, 2016

 

 

(Unaudited)

 

 

 

 

(In thousands)

Interest rate contracts designated as hedging instruments

$

9,654

$

14,845

 

 

 

The Effect of Interest Rate Contracts on the Statements of Operations for the Six Months Ended

 

 

 

 

September 30, 2016

 

September 30, 2015

 

 

(Unaudited)

 

 

(In thousands)

Loss recognized in income on interest rate contracts

$

5,102

$

6,700

Gain recognized in AOCI on interest rate contracts (effective portion)

$

(5,186)

$

(4,605)

Loss reclassified from AOCI into income (effective portion)

$

5,107

$

6,621

(Gain) loss recognized in income on interest rate contracts (ineffective portion and amount excluded from effectiveness testing)

$

(5)

$

79

Gains or losses recognized in income on derivatives are recorded as interest expense in the statements of operations. During the first six months of fiscal 201 7 , we recognized an increase in the fair value of our cash flow hedges of $3.2 million, net of taxes. Embedded in this gain was $5.1 million of losses reclassified from accumulated other comprehensive income to interest expense during the first six months of fiscal 2017, net of taxes. At September 30, 2016, we expect to reclassify $6.9 million of net losses on interest rate contracts from accumulated other comprehensive income to earnings as interest expense over the next twelve months.

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 Net Loss

 

Accumulated Other Comprehensive Income (Loss)

 

 

(Unaudited)

 

 

(In thousands)

Balance at March 31, 2016

$

(63,643)

$

14,115

$

(9,208)

$

(1,789)

$

(60,525)

Foreign currency translation

 

(1,982)

 

 

 

 

(1,982)

Unrealized net gain on investments

 

 

39,401

 

 

 

39,401

Change in fair value of cash flow hedges

 

 

 

8,323

 

 

8,323

Amounts reclassified from AOCI

 

 

 

(5,107)

 

 

(5,107)

Other comprehensive income (loss)

 

(1,982)

 

39,401

 

3,216

 

 

40,635

Balance at September 30, 2016

$

(65,625)

$

53,516

$

(5,992)

$

(1,789)

$

(19,890)

7 . Stockholders’ Equity

On March 15, 2016, we declared a cash dividend on our Common Stock of $1.00 per share to holders of record on April 5, 2016. The dividend was paid on April 21, 2016.

On October 5, 2016, we declared a cash dividend on our Common Stock of $1.00 per share to holders of record on October 20, 2016. The dividend was paid on November 3, 2016.

AMERCO AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


On June 8, 2016, the stockholder’s approved the 2016 AMERCO Stock Option Plan (Shelf Stock Option Plan). As of September 30, 2016 , no awards had been issued under this plan .

8 . 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 2019 . As of September 30, 2016 , we have guaranteed $ 20.4 million of residual values for these rental equipment assets at the end of the respective lease terms. Certain leases contain renewal and fair market value purchase options as well as mileage and other restrictions. At the expiration of the lease, we have the option to renew the lease, purchase the asset for fair market value, or sell the asset to a third party on behalf of the lessor. We have been leasing equipment since 1987 and ha ve experienced no material losses relating to these types of residual value guarantees.  

Operating l ease commitments for leases having terms of more than one year were as follows:

 

 

Property,

Plant and

Equipment

 

Rental

Equipment

 

Total

 

 

(Unaudited)

 

 

 

 

(In thousands)

 

 

Twelve Months Ended September 30:

 

 

 

 

 

 

2017

$

15,966

$

12,110

$

28,076

2018

 

14,908

 

10,395

 

25,303

2019

 

14,769

 

5,428

 

20,197

2020

 

15,556

 

 

15,556

2021

 

15,363

 

 

15,363

Thereafter

 

45,168

 

 

45,168

Total

$

121,730

$

27,933

$

149,663

9 . Contingencies

PODS Enterprises, Inc. v. U-Haul International, Inc.

On July 3, 2012, PODS Enterprises, Inc. (“PEI”), filed a lawsuit against U-Haul International, Inc. (“U-Haul”), in the United States District Court for the Middle District of Florida, Tampa Division, alleging (1) Federal Trademark Infringement under Section 32 of the Lanham Act, (2) Federal Unfair Competition under Section 43(a) of the Lanham Act, (3) Federal Trademark dilution by blurring in violation of Section 43(c) of the Lanham Act, (4) common law trademark infringement under Florida law, (5) violation of the Florida Dilution; Injury to Business Reputation statute, (6) unfair competition and trade practices, false advertising and passing off under Florida common law, (7) violation of the Florida Deceptive and Unfair Trade Practices Act, and (8) unjust enrichment under Florida law. 

The claims arose from U-Haul’s use of the word “pod” and “pods” as a generic term for its U-Box moving and storage product. PEI alleged that such use is an inappropriate use of its PODS mark.  Under the claims alleged in its Complaint, PEI sought a Court Order permanently enjoining U-Haul from: (1) the use of the PODS mark, or any other trade name or trademark confusingly similar to the mark; and (2) the use of any false descriptions or representations or committing any acts of unfair competition by using the PODS mark or any trade name or trademark confusingly similar to the mark. PEI also sought a Court Order (1) finding all of PEI’s trademarks valid and enforceable and (2) requiring U-Haul to alter all web pages to promptly remove the PODS mark from all websites owned or operated on behalf of U-Haul. Finally, PEI sought an award of damages in an amount to be proven at trial, but which were alleged to be approximately $70 million. PEI also sought pre-judgment interest, trebled damages, and punitive damages.

AMERCO AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


U-Haul d id not believe that PEI’s claims ha d merit and vigorously defended the lawsuit.  On September 17, 2012, U-Haul filed its Counterclaims, seeking a Court Order declaring that: (1) U-Haul’s use of the term “pods” or “pod” does not infringe or dilute PEI’s purported trademarks or violate any of PEI’s purported rights; (2) t he purported mark “PODS” is not a valid, protectable, or registrable trademark; and (3) t he purported mark “PODS PORTABLE ON DEMAND STORAGE” is not a valid, protectable, or registrable trademark. U-Haul also sought a Court Order cancelling the marks at issue in the case.

The case was tried to a jury beginning on September 8, 2014.

On September 25, 2014, the jury returned a unanimous verdict, finding in favor of PEI and against U-Haul on all claims and counterclaims.  The jury awarded PEI $45 million in actual damages and $15.7 million in U-Haul’s alleged profits attributable to its use of the term “pod” or “pods . ” 

On October 1, 2014, the Court ordered briefing on U-Haul’s oral motion for directed verdict on its genericness defense, the motion on which the Court had deferred ruling during trial.  Pursuant to the Court’s order, the parties’ briefing on that motion was completed by October 21, 2014.

After hearing previously deferred motions, on March 11, 2015, the Court entered Judgment on the jury verdict in favor of PEI and against U-Haul in the amount of $60.7 million. This was recorded as an accrual in our financial statements.

On August 24, 2015, the Court entered a permanent injunction, and awarded PEI $4.9 million in pre-judgment interest, $82,727 in costs, and post-judgment interest at the rate of 0.25%, beginning March 11, 2015, computed daily and compounded annually. This was recorded as an accrual of $5.0 million in our financial statements during fiscal 2016.

On September 13, 2016, before oral argument, before the Eleventh Circuit Court of Appeals, the parties reached a settlement in principle, for $41.4 million.  On October 10, 2016, the parties signed a formal written settlement agreement.  U-Haul wired the settlement payment on or about October 12, 2016.  The parties are in the process of completing their remaining respective performances under the terms of the settlement agreement. 

Environmental

Compliance with environmental requirements of federal, state and local governments may significantly affect Real Estate’s business operations. Among other things, these requirements regulate the discharge of materials into the air, land and water and govern the use and disposal of hazardous substances. Real Estate is aware of issues regarding hazardous substances on some of its properties. Real Estate regularly makes capital and operating expenditures to stay in compliance with environmental laws and has put in place a remedial plan at each site where it believes such a plan is necessary. Since 1988, Real Estate has managed a testing and removal program for underground storage tanks.

Based upon the information currently available to Real Estate, compliance with the environmental laws and its share of the costs of investigation and cleanup of known hazardous waste sites are not expected to result in a material adverse effect on AMERCO’s financial position or results of operations.

Other

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.

10 . Related Party Transactions

As set forth in the Audit Committee Charter and consistent with N ASDAQ 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 Exchange Commission (“SEC”) rules and regulations and in accordance with generally accepted accounting principles (“GAAP”) . Accordingly, all such related party transactions are submitted to the Audit Committee for ongoing review and oversight. Our internal processes are designed to ensure that our legal and finance departments identify and monitor potential related party transactions that may require disclosure and Audit Committee oversight.

AMERCO AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


AMERCO has engaged in related party transactions and has continuing related party interests with certain major stockholders, directors and officers of the consolidated group as disclosed below. Management believes that the transactions described below and in the related notes were completed on terms substantially equivalent to those that would prevail in arm’s-length transactions.

SAC Holding Corporation and SAC Holding II Corporation (collectively “SAC Holdings”) were established in order to acquire and develop self-storage properties. These properties are being managed by us pursuant to management agreements. In the past, we sold real estate and various self-storage properties to SAC Holdings, and such sales provided significant cash flows to us .

Related Party Revenue

 

 

Quarter Ended September 30,

 

 

2016

 

2015

 

 

(Unaudited)

 

 

(In thousands)

U-Haul interest income revenue from SAC Holdings

$

1,232

$

1,249

U-Haul interest income revenue from Private Mini

 

 

U-Haul management fee revenue from SAC Holdings

 

5,189

 

4,883

U-Haul management fee revenue from Private Mini

 

931

 

878

U-Haul management fee revenue from Mercury

 

592

 

559

 

$

7,944

$

7,569

 

 

 

Six Months Ended September 30,

 

 

2016

 

2015

 

 

(Unaudited)

 

 

(In thousands)

U-Haul interest income revenue from SAC Holdings

$

2,455

$

2,488

U-Haul interest income revenue from Private Mini

 

 

1,126

U-Haul management fee revenue from SAC Holdings

 

10,308

 

9,697

U-Haul management fee revenue from Private Mini

 

1,832

 

1,624

U-Haul management fee revenue from Mercury

 

1,176

 

1,110

 

$

15,771

$

16,045

During the first six months of fiscal 201 7 , a subsidiary of ours held a junior unsecured note from SAC Holdings. Substantially all of the equity interest of SAC Holdings is controlled by Blackwater Investments, Inc. (“Blackwater”). Blackwater is wholly-owned by Willow Grove Holdings LP, which is owned by Mark   V. Shoen ( a significant stock holder ), and various trusts associated with Edward J. Shoen (our Chairman of the Board, President and a significant shareholder) and Mark V. Shoen . We do not have an equity ownership interest in SAC Holdings. We received cash interest payments of $ 2.3 million from SAC Holdings during both the first six months of fiscal 201 7 and 201 6 . The largest aggregate amount of notes receivable outstanding during the first six months of fiscal 201 7 was $ 49.3 million and the aggregate notes receivable balance at September 30 , 201 6 was $ 48.7 million. In accordance with the terms of th i s note, SAC Holdings may prepay the notes without penalty or premium at any time . T he scheduled maturity of th i s note is 2017.

During the first six months of fiscal 201 7 , AMERCO held a junior note 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 $1.5 million from Private Mini during the first six months of fiscal 201 6 . In July 2015, Private Mini repaid its note and all outstanding interest due AMERCO totaling $56.8 million.

AMERCO AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


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 cash payments for management fees, exclusive of reimbursed expenses, of $15.5 million from the above mentioned entities during both the first six months of fiscal 201 7 and 201 6 . 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. Mark V. Shoen controls the general partner of Mercury . The limited partner interests of Mercury are indirectly owned by Mark V. Shoen , James P. Shoen, ( a significant stock holder ) and a trust benefitting the children and grandchild of Edward J. Shoen .

Related Party Costs and Expenses

 

 

Quarter Ended September 30,

 

 

2016

 

2015

 

 

(Unaudited)

 

 

(In thousands)

U-Haul lease expenses to SAC Holdings

$

684

$

654

U-Haul commission expenses to SAC Holdings

 

16,007

 

15,268

U-Haul commission expenses to Private Mini

 

1,121

 

1,058

 

$

17,812

$

16,980

 

 

 

Six Months Ended September 30,

 

 

2016

 

2015

 

 

(Unaudited)

 

 

(In thousands)

U-Haul lease expenses to SAC Holdings

$

1,372

$

1,308

U-Haul commission expenses to SAC Holdings

 

30,708

 

29,259

U-Haul commission expenses to Private Mini

 

2,173

 

2,038

 

$

34,253

$

32,605

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 September 30 , 201 6 , 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 upon equipment rental revenues .

These agreements and note with subsidiaries of SAC Holdings, 4 SAC, 5 SAC, Galaxy and Private Mini, excluding Dealer Agreements, provided revenues of $14.6 million, expenses of $ 1.4 million and cash flows of $ 13.6 million during the first six months of fiscal 201 7 . Revenues and commission expenses related to the Dealer Agreements were $ 152.6 million and $ 32.9 million, respectively during the first six months of fiscal 201 7 .

Pursuant to the variable interest entity model under Accounting Standards Codification (“ ASC ”) 810 – Consolidation (“ASC 810”) , Management determined that the junior note of SAC Holdings as well as the management agreements with SAC Holdings, Mercury, 4 SAC, 5 SAC, Galaxy, and Private Mini represent s potential variable interests for us. Management evaluated whether it should be identified as the primary beneficiary of one or more of these VIEs using a two - step approach in which management (i) identified all other parties that hold interests in the VIEs, and (ii) determined if any variable interest holder has the power to direct the activities of the VIEs that most significantly impact their economic performance.

AMERCO AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


Management determined that they do not have a variable interest in the holding entities SAC Holding II Corporation, Private Mini, Mercury, 4 SAC, 5 SAC, or Galaxy based upon management agreements which are with the individual operating entities or through the issuance of junior debt ; therefore , we are precluded from consolidating these entities.

We have junior debt with the holding entity SAC Holding Corporation which represents a variable interest in the entity . Though we have certain protective rights within th is debt agreement, we have no present influence or control over th i s holding entit y unless the protective rights become exercisable, which management considers unlikely based on their payment history. As a result, we have no basis under ASC 810 to consolidate th i s entit y .

We do not have the power to direct the activities that most significantly impact the economic performance of the individual operating entities which have management agreements with U-Haul. 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 entity and its assets, Blackwater, and its owner, are the variable interest holder with the power to direct the activities that most significantly impact each of the individual holding entities and the individual operating entities’ performance.  As a result, we have no basis under ASC 810 to consolidate these entities.

We have not provided financial or other support explicitly or implicitly during the quarter ended September 3 0 , 201 6 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

 

 

September 30,

 

March 31,

 

 

2016

 

2016

 

 

(Unaudited)

 

 

 

 

(In thousands)

U-Haul notes, receivables and interest from Private Mini

$

2,394

$

2,752

U-Haul note receivable from SAC Holdings

 

48,742

 

49,322

U-Haul interest receivable from SAC Holdings

 

5,167

 

4,970

U-Haul receivable from SAC Holdings

 

18,013

 

20,375

U-Haul receivable from Mercury

 

5,105

 

8,016

Other (a)

 

750

 

299

 

$

80,171

$

85,734

(a) Timing differences for intercompany balances with insurance subsidiaries resulting from the three month difference in reporting periods .

AMERCO AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


1 1 . 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 Insurance , comprised of Oxford and its subsidiaries.

Management tracks revenues separately, but does not report any separate measure of the profitability for rental vehicles, rentals of self-storage spaces and sales of products that are required to be classified as a separate operating segment and accordingly does not present these as separate reportable segments. Deferred income taxes are shown as liabilities on the condensed consolidating statements.

The information includes elimination entries necessary to consolidate AMERCO, the parent, with its subsidiaries.

Investments in subsidiaries are accounted for by the parent using the equity method of accounting.

AMERCO AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


1 1 . Financial Information by Consolidating Industry Segment:

Consolidating balance sheets by industry segment as of September 30, 2016 are as follows:

 

 

Moving & Storage

Consolidated

 

Property & Casualty Insurance (a)

 

Life

Insurance (a)

 

Eliminations

 

 

AMERCO

Consolidated

 

 

(Unaudited)

 

 

(In thousands)

Assets:

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

907,861

$

11,775

$

1,691

$

 

$

921,327

Reinsurance recoverables and trade receivables, net

 

40,590

 

111,548

 

31,105

 

 

 

183,243

Inventories, net

 

81,609

 

 

 

 

 

81,609

Prepaid expenses

 

87,968

 

 

 

 

 

87,968

Investments, fixed maturities and marketable equities

 

 

245,627

 

1,386,793

 

 

 

1,632,420

Investments, other

 

22,579

 

66,862

 

292,624

 

 

 

382,065

Deferred policy acquisition costs, net

 

 

 

118,652

 

 

 

118,652

Other assets

 

82,272

 

1,005

 

2,323

 

 

 

85,600

Related party assets

 

82,278

 

13,246

 

507

 

(15,860)

(c)

 

80,171

 

 

1,305,157

 

450,063

 

1,833,695

 

(15,860)

 

 

3,573,055

 

 

 

 

 

 

 

 

 

 

 

 

Investment in subsidiaries

 

488,557

 

 

 

(488,557)

(b)

 

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment, at cost:

 

 

 

 

 

 

 

 

 

 

 

Land

 

616,969

 

 

 

 

 

616,969

Buildings and improvements

 

2,401,802

 

 

 

 

 

2,401,802

Furniture and equipment

 

448,990

 

 

 

 

 

448,990

Rental trailers and other rental equipment

 

490,451

 

 

 

 

 

490,451

Rental trucks

 

3,720,268

 

 

 

 

 

3,720,268

 

 

7,678,480

 

 

 

 

 

7,678,480

Less:  Accumulated depreciation

 

(2,244,417)

 

 

 

 

 

(2,244,417)

Total property, plant and equipment

 

5,434,063

 

 

 

 

 

5,434,063

Total assets

$

7,227,777

$

450,063

$

1,833,695

$

(504,417)

 

$

9,007,118

 

 

 

 

 

 

 

 

 

 

 

 

(a) Balances as of June 30, 2016

 

 

 

 

 

 

 

 

 

 

 

(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 September 30, 2016 are as follows:

 

 

Moving & Storage

Consolidated

 

Property & Casualty Insurance (a)

 

Life

Insurance (a)

 

Eliminations

 

 

AMERCO

Consolidated

 

 

(Unaudited)

 

 

(In thousands)

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

$

431,130

$

3,303

$

4,488

$

 

$

438,921

Notes, loans and leases payable

 

2,992,490

 

 

 

 

 

2,992,490

Policy benefits and losses, claims and loss expenses payable

 

399,325

 

249,931

 

438,872

 

 

 

1,088,128

Liabilities from investment contracts

 

 

 

1,043,129

 

 

 

1,043,129

Other policyholders' funds and liabilities

 

 

3,581

 

6,630

 

 

 

10,211

Deferred income

 

27,801

 

 

 

 

 

27,801

Deferred income taxes

 

749,144

 

12,028

 

30,352

 

 

 

791,524

Related party liabilities

 

12,973

 

2,780

 

107

 

(15,860)

(c)

 

Total liabilities

 

4,612,863

 

271,623

 

1,523,578

 

(15,860)

 

 

6,392,204

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

 

 

 

Series preferred stock:

 

 

 

 

 

 

 

 

 

 

 

Series A preferred stock

 

 

 

 

 

 

Series B preferred stock

 

 

 

 

 

 

Series A common stock

 

 

 

 

 

 

Common stock

 

10,497

 

3,301

 

2,500

 

(5,801)

(b)

 

10,497

Additional paid-in capital

 

452,119

 

91,120

 

26,271

 

(117,601)

(b)

 

451,909

Accumulated other comprehensive income (loss)

 

(19,890)

 

11,926

 

41,590

 

(53,516)

(b)

 

(19,890)

Retained earnings

 

2,857,079

 

72,093

 

239,756

 

(311,639)

(b)

 

2,857,289

Cost of common shares in treasury, net

 

(525,653)

 

 

 

 

 

(525,653)

Cost of preferred shares in treasury, net

 

(151,997)

 

 

 

 

 

(151,997)

Unearned employee stock ownership plan shares

 

(7,241)

 

 

 

 

 

(7,241)

Total stockholders' equity

 

2,614,914

 

178,440

 

310,117

 

(488,557)

 

 

2,614,914

Total liabilities and stockholders' equity

$

7,227,777

$

450,063

$

1,833,695

$

(504,417)

 

$

9,007,118

 

 

 

 

 

 

 

 

 

 

 

 

(a) Balances as of June 30, 2016

 

 

 

 

 

 

 

 

 

 

 

(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 6 are as follows:

 

 

Moving & Storage

Consolidated

 

Property & Casualty Insurance (a)

 

Life

Insurance (a)

 

Eliminations

 

 

AMERCO

Consolidated

 

 

 

Assets:

 

(In thousands)

Cash and cash equivalents

$

585,666

$

14,049

$

931

$

 

$

600,646

Reinsurance recoverables and trade receivables, net

 

34,451

 

111,978

 

28,781

 

 

 

175,210

Inventories, net

 

79,756

 

 

 

 

 

79,756

Prepaid expenses

 

134,300

 

 

 

 

 

134,300

Investments, fixed maturities and marketable equities

 

 

238,570

 

1,271,968

 

 

 

1,510,538

Investments, other

 

21,431

 

47,374

 

241,267

 

 

 

310,072

Deferred policy acquisition costs, net

 

 

 

136,386

 

 

 

136,386

Other assets

 

71,719

 

3,088

 

2,403

 

 

 

77,210

Related party assets

 

88,022

 

12,465

 

613

 

(15,366)

(c)

 

85,734

 

 

1,015,345

 

427,524

 

1,682,349

 

(15,366)

 

 

3,109,852

 

 

 

 

 

 

 

 

 

 

 

 

Investment in subsidiaries

 

432,277

 

 

 

(432,277)

(b)

 

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment, at cost:

 

 

 

 

 

 

 

 

 

 

 

Land

 

587,347

 

 

 

 

 

587,347

Buildings and improvements

 

2,187,400

 

 

 

 

 

2,187,400

Furniture and equipment

 

399,943

 

 

 

 

 

399,943

Rental trailers and other rental equipment

 

462,379

 

 

 

 

 

462,379

Rental trucks

 

3,514,175

 

 

 

 

 

3,514,175

 

 

7,151,244

 

 

 

 

 

7,151,244

Less:  Accumulated depreciation

 

(2,133,733)

 

 

 

 

 

(2,133,733)

Total property, plant and equipment

 

5,017,511

 

 

 

 

 

5,017,511

Total assets

$

6,465,133

$

427,524

$

1,682,349

$

(447,643)

 

$

8,127,363

 

 

 

 

 

 

 

 

 

 

 

 

(a) Balances as of December 31, 2015

 

 

 

 

 

 

 

 

 

 

 

(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, 2016 are as follows:

 

 

Moving & Storage

Consolidated

 

Property & Casualty Insurance (a)

 

Life

Insurance (a)

 

Eliminations

 

 

AMERCO

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In thousands)

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

$

492,982

$

1,535

$

8,096

$

 

$

502,613

Notes, loans and leases payable

 

2,665,396

 

 

 

 

 

2,665,396

Policy benefits and losses, claims and loss expenses payable

 

386,366

 

252,819

 

432,227

 

 

 

1,071,412

Liabilities from investment contracts

 

 

 

951,490

 

 

 

951,490

Other policyholders' funds and liabilities

 

 

3,017

 

5,633

 

 

 

8,650

Deferred income

 

22,784

 

 

 

 

 

22,784

Deferred income taxes

 

633,061

 

7,526

 

13,025

 

 

 

653,612

Related party liabilities

 

13,138

 

2,067

 

161

 

(15,366)

(c)

 

Total liabilities

 

4,213,727

 

266,964

 

1,410,632

 

(15,366)

 

 

5,875,957

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

 

 

 

Series preferred stock:

 

 

 

 

 

 

 

 

 

 

 

Series A preferred stock

 

 

 

 

 

 

Series B preferred stock

 

 

 

 

 

 

Series A common stock

 

 

 

 

 

 

Common stock

 

10,497

 

3,301

 

2,500

 

(5,801)

(b)

 

10,497

Additional paid-in capital

 

451,839

 

91,120

 

26,271

 

(117,601)

(b)

 

451,629

Accumulated other comprehensive income (loss)

 

(60,525)

 

3,611

 

10,504

 

(14,115)

(b)

 

(60,525)

Retained earnings

 

2,533,431

 

62,528

 

232,442

 

(294,760)

(b)

 

2,533,641

Cost of common shares in treasury, net

 

(525,653)

 

 

 

 

 

(525,653)

Cost of preferred shares in treasury, net

 

(151,997)

 

 

 

 

 

(151,997)

Unearned employee stock ownership plan shares

 

(6,186)

 

 

 

 

 

(6,186)

Total stockholders' equity

 

2,251,406

 

160,560

 

271,717

 

(432,277)

 

 

2,251,406

Total liabilities and stockholders' equity

$

6,465,133

$

427,524

$

1,682,349

$

(447,643)

 

$

8,127,363