AMERCO /NV/ (Form: 10-Q, Received: 08/08/2012 16:32:40)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2012

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 requirements for the past 90 days. Yes R 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 R No £

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

Large accelerated filer £ Accelerated filer R

Non-accelerated filer £ (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 R

19,607,788 shares of AMERCO Common Stock, $0.25 par value, were outstanding at August 1, 2012.

TABLE OF CONTENTS

		Page
	PART I FINANCIAL INFORMATION
Item 1.	Financial Statements
	a) Condensed Consolidated Balance Sheets as of June 30, 2012 (unaudited) and March 31, 2012	1
	b) Condensed Consolidated Statements of Operations for the Quarters ended June 30, 2012 and 2011 (unaudited)	2
	c) Condensed Consolidated Statements of Comprehensive Income for the Quarters ended June 30, 2012 and 2011 (unaudited)	3
	d) Condensed Consolidated Statements of Cash Flows for the Quarters ended June 31, 2012 and 2011 (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	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47
Item 4.	Controls and Procedures	48

	PART II OTHER INFORMATION
Item 1.	Legal Proceedings	48
Item 1A.	Risk Factors	48
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48
Item 3.	Defaults Upon Senior Securities	49
Item 4.	Mine and Safety Disclosures	49
Item 5.	Other Information	49
Item 6.	Exhibits	49

PART I FINANCIAL INFORMATION

ITEM 1. Financial Statements

AMERCO AND CONSOLIDATED ENTITIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30,			March 31,
	2012			2012
	(Unaudited)
	(In thousands)
ASSETS
Cash and cash equivalents	$	566,239		$	350,100
Reinsurance recoverables and trade receivables, net		274,593			297,974
Inventories, net		63,438			58,735
Prepaid expenses		41,586			41,858
Investments, fixed maturities and marketable equities		793,382			766,792
Investments, other		262,456			265,631
Deferred policy acquisition costs, net		64,075			63,914
Other assets		100,910			120,525
Related party assets		169,797			316,157
		2,336,476			2,281,686
Property, plant and equipment, at cost:
Land		297,527			281,140
Buildings and improvements		1,105,315			1,087,119
Furniture and equipment		306,441			308,120
Rental trailers and other rental equipment		270,621			255,010
Rental trucks		1,971,558			1,856,433
		3,951,462			3,787,822
Less: Accumulated depreciation		(1,449,102	)		(1,415,457	)
Total property, plant and equipment		2,502,360			2,372,365
Total assets	$	4,838,836		$	4,654,051
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses	$	382,012		$	335,326
Notes, loans and leases payable		1,540,538			1,486,211
Policy benefits and losses, claims and loss expenses payable		1,121,200			1,145,943
Liabilities from investment contracts		261,987			240,961
Other policyholders' funds and liabilities		5,389			7,273
Deferred income		37,960			31,525
Deferred income taxes		375,090			370,992
Total liabilities		3,724,176			3,618,231

Commitments and contingencies (notes 4, 8, 9, and 10)
Stockholders' equity:
Series preferred stock, with or without par value, 50,000,000 shares authorized:
Series A preferred stock, with no par value, 6,100,000 shares authorized;
6,100,000 shares issued and none outstanding as of June 30 and March 31, 2012		-			-
Series B preferred stock, with no par value, 100,000 shares authorized; none
issued and outstanding as of June 30 and March 31, 2012		-			-
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, 2012		-			-
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, 2012		10,497			10,497
Additional paid-in capital		434,527			433,743
Accumulated other comprehensive loss		(46,391	)		(45,436	)
Retained earnings		1,395,913			1,317,064
Cost of common shares in treasury, net (22,377,912 shares as of June 30 and March 31, 2012)		(525,653	)		(525,653	)
Cost of preferred shares in treasury, net (6,100,000 shares as of June 30 and March 31, 2012)		(151,997	)		(151,997	)
Unearned employee stock ownership plan shares		(2,236	)		(2,398	)
Total stockholders' equity		1,114,660			1,035,820
Total liabilities and stockholders' equity	$	4,838,836		$	4,654,051

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,
	2012			2011
	(Unaudited)
	(In thousands, except share and per share amounts)
Revenues:
Self-moving equipment rentals	$	466,994		$	446,548
Self-storage revenues		34,736			31,828
Self-moving and self-storage products and service sales		67,178			64,378
Property management fees		4,860			4,735
Life insurance premiums		46,426			50,999
Property and casualty insurance premiums		7,243			6,898
Net investment and interest income		12,257			17,263
Other revenue		25,722			20,316
Total revenues		665,416			642,965

Costs and expenses:
Operating expenses		283,393			271,975
Commission expenses		61,107			56,952
Cost of sales		32,227			32,778
Benefits and losses		46,078			49,930
Amortization of deferred policy acquisition costs		2,811			4,375
Lease expense		32,796			34,234
Depreciation, net of (gains) on disposals of ($7,516) and ($9,710), respectively		56,125			44,358
Total costs and expenses		514,537			494,602

Earnings from operations		150,879			148,363
Interest expense		(23,491	)		(22,633	)
Pretax earnings		127,388			125,730
Income tax expense		(46,819	)		(47,507	)
Net earnings		80,569			78,223
Less: Excess of redemption value over carrying value of preferred shares redeemed		-			(5,908	)
Less: Preferred stock dividends		-			(3,077	)
Earnings available to common shareholders	$	80,569		$	69,238
Basic and diluted earnings per common share	$	4.13		$	3.56
Weighted average common shares outstanding: Basic and diluted		19,502,369			19,460,126

Related party revenues for the first quarter of fiscal 2013 and 2012, net of eliminations, were $8,681 thousand and $10,904 thousand, respectively.

Related party costs and expenses for the first quarter of fiscal 2013 and 2012, net of eliminations, were $12,290 thousand and $11,269 thousand, 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)

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 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

Quarter Ended June 30, 2011	Pre-tax			Tax			Net
	(Unaudited)
	(In thousands)
Comprehensive income:
Net earnings	$	125,730		$	(47,507	)	$	78,223
Other comprehensive income (loss):
Foreign currency translation		992			-			992
Unrealized loss on investments		(5,378	)		2,001			(3,377	)
Change in fair value of cash flow hedges		(3,860	)		1,467			(2,393	)
Total comprehensive income	$	117,484		$	(44,039	)	$	73,445

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,
	2012			2011
	(Unaudited)
	(In thousands)
Cash flow from operating activities:
Net earnings	$	80,569		$	78,223
Adjustments to reconcile net earnings to cash provided by operations:
Depreciation		63,641			54,068
Amortization of deferred policy acquisition costs		2,811			4,375
Change in allowance for losses on trade receivables		(102	)		135
Change in allowance for inventory reserves		695			1,377
Net gain on sale of real and personal property		(7,516	)		(9,710	)
Net (gain) loss on sale of investments		39			(3,516	)
Deferred income taxes		4,641			32,446
Net change in other operating assets and liabilities:
Reinsurance recoverables and trade receivables		23,486			(37,146	)
Inventories		(5,398	)		(393	)
Prepaid expenses		267			1,150
Capitalization of deferred policy acquisition costs		(5,420	)		(4,518	)
Other assets		20,518			10,586
Related party assets		139,519			(3,198	)
Accounts payable and accrued expenses		47,981			17,534
Policy benefits and losses, claims and loss expenses payable		(24,242	)		4,517
Other policyholders' funds and liabilities		(1,884	)		(1,084	)
Deferred income		6,457			8,328
Related party liabilities		1,531			245
Net cash provided by operating activities		347,593			153,419

Cash flows from investing activities:
Purchases of:
Property, plant and equipment		(157,786	)		(215,779	)
Short term investments		(55,075	)		(66,363	)
Fixed maturities investments		(50,553	)		(75,059	)
Equity securities		-			(8,759	)
Preferred stock		-			(541	)
Real estate		-			(12	)
Mortgage loans		(14,452	)		(36,202	)
Proceeds from sale of:
Property, plant and equipment		62,426			55,010
Short term investments		66,393			79,877
Fixed maturities investments		23,978			66,035
Equity securities		-			8,800
Preferred stock		1,003			1,000
Real estate		4			34
Mortgage loans		11,547			17,992
Net cash used by investing activities		(112,515	)		(173,967	)

Cash flows from financing activities:
Borrowings from credit facilities		26,187			58,558
Principal repayments on credit facilities		(61,142	)		(42,252	)
Debt issuance costs		-			(560	)
Capital lease payments		(3,888	)		(1,727	)
Leveraged Employee Stock Ownership Plan - repayments from loan		162			280
Securitization deposits		(908	)		27,953
Preferred stock redemption paid		-			(144,289	)
Preferred stock dividends paid		-			(3,077	)
Contribution to related party		-			(518	)
Investment contract deposits		28,993			2,588
Investment contract withdrawals		(7,967	)		(8,195	)
Net cash used by financing activities		(18,563	)		(111,239	)

Effects of exchange rate on cash		(376	)		44

Increase (decrease) in cash and cash equivalents		216,139			(131,743	)
Cash and cash equivalents at the beginning of period		350,100			375,496
Cash and cash equivalents at the end of period	$	566,239		$	243,753

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 first quarter that ends on the 31 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. Management believes that consolidating their calendar year into our fiscal year financial statements does not materially affect the financial position or results of operations. The Company discloses any material events occurring during the intervening period. Consequently, all references to our insurance subsidiaries’ years 2012 and 2011 correspond to fiscal 2013 and 2012 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 June 30, 2012 and the related condensed consolidated statements of operations, comprehensive income and cash flows for the first quarter of fiscal 2013 and 2012 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, 2012.

Intercompany accounts and transactions have been eliminated.

Description of Legal Entities

AMERCO is the holding company for:

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

Amerco Real Estate Company (“Real Estate”),

Repwest Insurance Company (“Repwest”), and

Oxford Life Insurance Company (“Oxford”).

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

Description of Operating Segments

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

The Moving and Storage operating segment includes AMERCO, U-Haul, and Real Estate and the wholly-owned subsidiaries of U-Haul and Real Estate. Operations consist of the rental of trucks and trailers, sales of moving supplies, sales of towing accessories, sales of propane, and the rental of fixed and mobile self-storage spaces to the “do-it-yourself” mover and management of self-storage properties owned by others. Operations are conducted under the registered trade name U-Haul ® throughout the United States and Canada.

The Property and Casualty Insurance operating segment includes Repwest and its wholly-owned subsidiaries and ARCOA risk retention group (“ARCOA”). 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, Super Safemove and Safestor protection packages to U-Haul customers. The business plan for the Property and Casualty Insurance operating segment includes offering property and casualty products in other U-Haul related programs. ARCOA is a 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.

AMERCO AND CONSOLIDATED ENTITIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

The Life Insurance operating segment includes Oxford and its wholly-owned subsidiaries. Oxford provides life and health insurance products primarily to the senior market through the direct writing and reinsuring of life insurance, Medicare supplement and annuity policies.

2. Earnings per Share

Net earnings for purposes of computing earnings per common share for the first quarter of fiscal 2012 are net earnings less preferred stock dividends paid, adjusted for the price paid by us for the redemption of our preferred stock less its carrying value on our balance sheet at that time. Preferred stock dividends include accrued dividends of AMERCO. Preferred stock dividends paid to or accrued for entities that are part of the consolidated group are eliminated in consolidation.

The weighted average common shares outstanding exclude post-1992 shares of the employee stock ownership plan that have not been committed to be released. The unreleased shares, net of shares committed to be released, were 100,302 and 142,199 as of June 30, 2012 and June 30, 2011, respectively.

On June 1, 2011, the Company redeemed all 6,100,000 shares of its issued and outstanding Series A 8½% Preferred Stock (“Series A Preferred”) at a redemption price of $25 per share plus accrued dividends through that date. Pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 260 – Earnings Per Share , (“ASC 260”) for earnings per share purposes, we recognized the deficit of the carrying amount of the Series A Preferred over the consideration paid to redeem the shares.

The Series A Preferred was recorded in our Additional Paid-In Capital account, net of original issue costs at $146.3 million prior to the redemption. The Company paid $152.5 million to redeem the shares on June 1, 2011 of which $7.7 million was paid to our insurance subsidiaries in exchange for their holdings. The difference between what was paid to redeem the shares less their carrying amount on our balance sheet, reduced by our insurance subsidiaries holdings is $5.9 million. This amount was recognized as a reduction to our earnings available to our common shareholders for the purposes of computing earnings per share for the first quarter of fiscal 2012.

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 $16.5 million at June 30, 2012.

AMERCO AND CONSOLIDATED ENTITIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Available-for-Sale Investments

Available-for-sale investments at June 30, 2012 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	$	28,722	$	2,510	$	(4	)	$	(8	)	$	31,220
U.S. government agency mortgage-backed securities		46,507		4,615		-			(7	)		51,115
Obligations of states and political subdivisions		146,121		11,481		-			(151	)		157,451
Corporate securities		473,600		33,067		(311	)		(1,666	)		504,690
Mortgage-backed securities		8,885		269		(15	)		(1	)		9,138
Redeemable preferred stocks		23,370		1,155		(547	)		(43	)		23,935
Common stocks		27,736		47		(11,945	)		(5	)		15,833
	$	754,941	$	53,144	$	(12,822	)	$	(1,881	)	$	793,382

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 $25.0 million during the first quarter of fiscal 2013. The gross realized gains on these sales totaled $0.1 million. There were no gross realized losses on these sales.

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 million 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 fiscal 2013 and 2012.

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 mortgage backed securities credit losses include ratings, delinquency rates, and prepayment activity. The significant inputs utilized in the evaluation of asset backed securities credit losses include the time frame for principal recovery and the subordination and value of the underlying collateral.

AMERCO AND CONSOLIDATED ENTITIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Credit losses recognized in earnings for which a portion of an other-than-temporary impairment was recognized in other comprehensive income were as follows:

	Credit Loss
	(Unaudited)
	(In thousands)
Balance at March 31, 2012	$	552
Additions:
Other-than-temporary impairment not previously recognized		-
Balance at June 30, 2012	$	552

The adjusted cost and estimated market value of available-for-sale investments at June 30, 2012, by contractual maturity, were as follows:

	Amortized Cost		Estimated Market Value
	(Unaudited)
	(In thousands)
Due in one year or less	$	43,244	$	43,995
Due after one year through five years		151,997		161,472
Due after five years through ten years		187,143		200,440
Due after ten years		312,566		338,569
		694,950		744,476

Mortgage backed securities		8,885		9,138
Redeemable preferred stocks		23,370		23,935
Equity securities		27,736		15,833
	$	754,941	$	793,382

AMERCO AND CONSOLIDATED ENTITIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

4. Borrowings

Long-Term Debt

Long-term debt was as follows:

						June 30,		March 31,
	2013 Rate (a)			Maturities		2012		2012
						(Unaudited)
						(In thousands)
Real estate loan (amortizing term)		6.93	%		2018	$	242,500	$	245,000
Real estate loan (revolving credit)		-			2018		-		-
Real estate loan (amortizing term)		2.14	%		2016		25,227		25,451
Real estate loan (revolving credit)		1.74	%		2013		23,920		23,920
Senior mortgages		5.47% - 5.75	%		2015		456,163		459,822
Working capital loan (revolving credit)		-			2013		-		-
Fleet loans (amortizing term)		3.00% - 7.95	%		2012 - 2019		365,212		384,888
Fleet loans (securitization)		4.90% - 5.56	%		2014 - 2017		218,579		228,655
Capital leases (rental equipment)		2.17% - 9.57	%		2012 - 2019		199,585		109,689
Other obligations		3.00% - 8.00	%		2013 - 2042		9,352		8,786
Total notes, loans and leases payable						$	1,540,538	$	1,486,211

(a) Interest rate as of June 30, 2012, including the effect of applicable hedging instruments.

Real Estate Backed Loans

Real Estate Loan

Amerco Real Estate Company and certain of its subsidiaries and U-Haul Company of Florida are borrowers under a Real Estate Loan. The loan has a final maturity date of August 2018. The loan is comprised of a term loan facility with initial availability of $300.0 million and a revolving credit facility with current availability of $198.8 million. As of June 30, 2012, the outstanding balance on the Real Estate Loan was $242.5 million and we had the full $198.8 million available to be drawn. U-Haul International, Inc. is a guarantor of this loan.

The amortizing term portion of the Real Estate Loan requires monthly principal and interest payments, with the unpaid loan balance and accrued and unpaid interest due at maturity. The revolving credit portion of the Real Estate Loan requires monthly interest payments when drawn, with the unpaid loan balance and any accrued and unpaid interest due at maturity. The Real Estate Loan is secured by various properties owned by the borrowers.

The interest rate for the amortizing term portion, per the provisions of the amended loan agreement, is the applicable London Inter-Bank Offer Rate (“LIBOR”) plus the applicable margin. At June 30, 2012, the applicable LIBOR was 0.25% and the applicable margin was 1.50%, the sum of which was 1.75%. The rate on the term facility portion of the Real Estate Loan is hedged with an interest rate swap fixing the rate at 6.93% based on current margin.

The interest rate for the revolving credit facility, per the provision of the amended loan agreement, is the applicable LIBOR plus the applicable margin. The margin ranges from 1.50% to 2.00%.

The default provisions of the Real Estate Loan include non-payment of principal or interest and other standard reporting and change-in-control covenants. There are limited restrictions regarding our use of the funds.

AMERCO AND CONSOLIDATED ENTITIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Amerco Real Estate Company and a subsidiary of U-Haul International, Inc. entered into a revolving credit construction loan effective June 29, 2006. This loan was modified and extended on June 27, 2011. The loan is now comprised of a term loan facility with an initial availability of $26.1 million and a final maturity of June 2016. As of June 30, 2012, the outstanding balance was $25.2 million.

This Real Estate Loan requires monthly principal and interest payments, with the unpaid loan balance and any accrued and unpaid interest due at maturity. The interest rate, per the provision of this loan agreement, is the applicable LIBOR plus a margin of 1.90%. At June 30, 2012, the applicable LIBOR was 0.24% and the margin was 1.90%, the sum of which was 2.14%. U-Haul International, Inc. and AMERCO are guarantors of this loan. The default provisions of the loan include non-payment of principal or interest and other standard reporting and change-in-control covenants.

On April 29, 2011, Amerco Real Estate Company and U-Haul Company of Florida entered into a revolving credit agreement for $100.0 million. This agreement was amended in March 2012 and the maturity extended to April 2013 with an option for a one year extension. As of June 30, 2012, we had $76.1 million available to be drawn. The interest rate is the applicable LIBOR plus a margin of 1.50%. At June 30, 2012, the applicable LIBOR was 0.24% and the margin was 1.50%, the sum of which was 1.74%. The amended agreement decreased the margin to 1.25% for any subsequent borrowings on the revolving credit facility. AMERCO and U-Haul International, Inc. are guarantors of this facility. The default provisions of the loan include non-payment of principal or interest and other standard reporting and change-in-control covenants.

Senior Mortgages

Various subsidiaries of Amerco Real Estate Company and U-Haul International, Inc. are borrowers under certain senior mortgages. These senior mortgage loan balances as of June 30, 2012 were in the aggregate amount of $456.2 million and mature in 2015. The senior mortgages 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 5.47% and 5.75%. 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 $25.0 million. At June 30, 2012, we had the full $25.0 million 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. This agreement was amended in March 2012 and the maturity extended to November 2013 with an option for a one year extension. This loan requires monthly interest payments with the unpaid loan balance and accrued and unpaid interest due at maturity. U-Haul International, Inc. and AMERCO are the guarantors of this loan. The default provisions of the loan include non-payment of principal or interest and other standard reporting and change-in-control covenants. The interest rate, per the provision of this loan agreement, 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 borrowers under amortizing term loans. The balance of the loans as of June 30, 2012 was $250.2 million with the final maturities between October 2012 and April 2019.

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

AMERCO AND CONSOLIDATED ENTITIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

2.63%. At June 30, 2012, the applicable LIBOR was between 0.24% and 0.25% and applicable margins were between 0.90% and 2.63%. The interest rates are hedged with interest rate swaps fixing the rates between 3.00% and 6.92% based on current margins. Additionally, $22.0 million of these loans are carried at fixed rates ranging between 3.94% and 7.95%.

AMERCO and U-Haul International, Inc. are guarantors of these loans. The default provisions of these loans include non-payment of principal or interest and other standard reporting and change-in-control covenants.

On December 31, 2009, a subsidiary of U-Haul International, Inc. entered into an $85.0 million term note that was used to fund cargo van and pickup acquisitions for the past two years. This term note was amended on August 26, 2011. The amount of the term note was increased to $95.0 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 agreements contain options to extend the maturity through May 2017. These notes 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, 2012, the outstanding balance was $115.0 million.

Rental Truck Securitizations

U-Haul S Fleet and its subsidiaries (collectively, “USF”) issued a $217.0 million asset-backed note (“2007 Box Truck Note”) on June 1, 2007. USF is a bankruptcy-remote special purpose entity wholly-owned by U-Haul International, Inc. The net proceeds from the securitized transaction were used to finance new box truck purchases throughout fiscal 2008. U.S. Bank, NA acts as the trustee for this securitization.

The 2007 Box Truck Note has a fixed interest rate of 5.56% with an expected final maturity of February 2014. At June 30, 2012, the outstanding balance was $95.1 million. The note is secured by the box trucks that were purchased and the corresponding operating cash flows associated with their operation.

The 2007 Box Truck Note has the benefit of a financial guaranty insurance policy which guarantees the timely payment of interest on and the ultimate payment of the principal of this note.

2010 U-Haul S Fleet and its subsidiaries (collectively, “2010 USF”) issued a $155.0 million asset-backed note (“2010 Box Truck Note”) on October 28, 2010. 2010 USF is a bankruptcy-remote special purpose entity wholly-owned by U-Haul International, Inc. The net proceeds from the securitized transaction were used to finance new box truck purchases. U.S. Bank, NA acts as the trustee for this securitization.

The 2010 Box Truck Note has a fixed interest rate of 4.90% with an expected final maturity of October 2017. At June 30, 2012, the outstanding balance was $123.5 million. The note is secured by the box trucks being purchased and the corresponding operating cash flows associated with their operation.

The 2007 Box Truck Note and 2010 Box Truck Note are subject to certain covenants with respect to liens, additional indebtedness of the special purpose entities, the disposition of assets and other customary covenants of bankruptcy-remote special purpose entities. The default provisions of these notes include non-payment of principal or interest and other standard reporting and change-in-control covenants.

Capital Leases

We entered into capital leases for new equipment between April 2008 and June 2012, with terms of the leases between 3 and 7 years. At June 30, 2012, the balance of these leases was $199.6 million.

Other Obligations

In February 2011, the Company and US Bank, National Association (the “Trustee”) entered into the U-Haul Investors Club Indenture. The Company and the Trustee entered into this indenture to provide for the issuance of notes (“U-Notes”) by us directly to investors over our proprietary website, uhaulinvestorsclub.com.

AMERCO AND CONSOLIDATED ENTITIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

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 June 30, 2012 the aggregate outstanding principal balance of the U-Notes issued was $15.3 million of which $6.1 million is with our insurance subsidiaries with interest rates between 3.00% and 8.00% and maturity dates between 2013 and 2042.

Annual Maturities of Notes, Loans and Leases Payable

The annual maturities of long-term debt as of June 30, 2012 for the next five years and thereafter are as follows:

	Year Ended June 30,
	2013		2014		2015		2016		2017		Thereafter
	(Unaudited)
	(In thousands)
Notes, loans and leases payable, secured	$	186,568	$	199,841	$	95,891	$	512,949	$	235,205	$	310,084

Interest on Borrowings

Interest Expense

Components of interest expense include the following:

	Quarter Ended June 30,
	2012			2011
	(Unaudited)
	(In thousands)
Interest expense	$	15,646		$	15,839
Capitalized interest		(77	)		(32	)
Amortization of transaction costs		1,085			1,036
Interest expense resulting from derivatives		6,837			5,790
Total interest expense	$	23,491		$	22,633

Interest paid in cash, including payments related to derivative contracts, amounted to $21.2 million and $21.7 million for the first quarter of fiscal 2013 and 2012, respectively.

Interest Rates

Interest rates and Company borrowings were as follows:

	Revolving Credit Activity
	Quarter Ended June 30,
	2012			2011
	(Unaudited)
	(In thousands, except interest rates)
Weighted average interest rate during the quarter		1.74	%		1.72	%
Interest rate at the end of the quarter		1.74	%		0.00	%
Maximum amount outstanding during the quarter	$	23,920		$	15,000
Average amount outstanding during the quarter	$	23,920		$	14,341
Facility fees	$	178		$	57

AMERCO AND CONSOLIDATED ENTITIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

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 and lease amount			Agreement Date	Effective Date	Expiration Date	Designated cash flow hedge date
(In millions)
$	50.0		6/21/2006	7/10/2006	7/10/2013	6/9/2006
	144.9	(a)	6/9/2006	10/10/2006	10/10/2012	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	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

(a) forward swap
(b) operating lease

As of June 30, 2012, the total notional amount of our variable interest rate swaps on debt and an operating lease was $480.5 million and $14.8 million, respectively.

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

	Liability Derivatives Fair Value as of
	June 30, 2012		March 31, 2012
	(Unaudited)
	(In thousands)
Interest rate contracts designated as hedging instruments	$	61,397	$	59,313

AMERCO AND CONSOLIDATED ENTITIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

	The Effect of Interest Rate Contracts
	on the Statements of Operations
	June 30, 2012		June 30, 2011
	(Unaudited)
	(In thousands)
Loss recognized in income on interest rate contracts	$	6,837	$	5,790
Loss recognized in AOCI on interest rate contracts (effective portion)	$	516	$	3,860
Loss reclassified from AOCI into income (effective portion)	$	5,269	$	5,903
(Gain) loss recognized in income on interest rate contracts (ineffective portion and amount excluded from effectiveness testing)	$	1,568	$	(113	)

Gains or losses recognized in income on derivatives are recorded as interest expense in the statements of operations. At June 30, 2012, we expect to reclassify $18.4 million of net losses on interest rate contracts from accumulated other comprehensive income to earnings as interest expense over the next twelve months.

6. Stockholders’ Equity

On June 1, 2011, the Company redeemed all 6,100,000 shares of its issued and outstanding Series A Preferred at a redemption price of $25 per share plus accrued dividends through that date. Pursuant to ASC 260 for earnings per share purposes, we recognized the deficit of the carrying amount of the Series A Preferred over the consideration paid to redeem the shares.

7. Comprehensive Income (Loss)

A summary of accumulated other comprehensive income (loss) components, net of tax, were as follows:

	Foreign Currency Translation			Unrealized Gain on Investments		Fair Market Value of Cash Flow Hedges			Postretirement Benefit Obligation Gain		Accumulated Other Comprehensive Income (Loss)
	(Unaudited)
	(In thousands)
Balance at March 31, 2012	$	(28,882	)	$	20,866	$	(38,129	)	$	709	$	(45,436	)
Foreign currency translation		(1,929	)		-		-			-		(1,929	)
Unrealized gain on investments		-			1,293		-			-		1,293
Change in fair value of cash flow hedges		-			-		(319	)		-		(319	)
Balance at June 30, 2012	$	(30,811	)	$	22,159	$	(38,448	)	$	709	$	(46,391	)

AMERCO AND CONSOLIDATED ENTITIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

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 June 30, 2012, AMERCO has guaranteed $132.4 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. AMERCO has been leasing equipment since 1987 and has experienced no material losses relating to these types of residual value guarantees.

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:
2013	$	14,235	$	94,511	$	108,746
2014		12,109		77,638		89,747
2015		969		54,068		55,037
2016		808		21,317		22,125
2017		714		11,552		12,266
Thereafter		5,461		14,759		20,220
Total	$	34,296	$	273,845	$	308,141

9. Contingencies

Shoen

In September 2002, Paul F. Shoen filed a shareholder derivative lawsuit in the Second Judicial District Court of the State of Nevada, Washoe County, captioned Paul F. Shoen vs. SAC Holding Corporation et al ., CV 02-05602, seeking damages and equitable relief on behalf of AMERCO from SAC Holdings and certain current and former members of the AMERCO Board of Directors, including Edward J. Shoen, Mark V. Shoen and James P. Shoen as Defendants. AMERCO is named as a nominal Defendant in the case. The complaint alleges breach of fiduciary duty, self-dealing, usurpation of corporate opportunities, wrongful interference with prospective economic advantage and unjust enrichment and seeks the unwinding of sales of self-storage properties by subsidiaries of AMERCO to SAC prior to the filing of the complaint. The complaint seeks a declaration that such transfers are void as well as unspecified damages. In October 2002, the Defendants filed motions to dismiss the complaint. Also in October 2002, Ron Belec filed a derivative action in the Second Judicial District Court of the State of Nevada, Washoe County, captioned Ron Belec vs. William E. Carty, et al ., CV 02-06331 and in January 2003, M.S. Management Company, Inc. filed a derivative action in the Second Judicial District Court of the State of Nevada, Washoe County, captioned M.S. Management Company, Inc. vs. William E. Carty, et al ., CV 03-00386. Two additional derivative suits were also filed against these parties. Each of these suits is substantially similar to the Paul F. Shoen case. The Court consolidated the five cases and thereafter dismissed these actions in May 2003, concluding that the AMERCO Board of Directors had the requisite level of independence required in order to have these claims resolved by the Board. Plaintiffs appealed this decision and, in July 2006, the Nevada Supreme Court reversed the ruling of the trial court and remanded the case to the trial court for proceedings consistent with its ruling, allowing the Plaintiffs to file an amended complaint and plead in addition to substantive claims, demand futility.

AMERCO AND CONSOLIDATED ENTITIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

In November 2006, the Plaintiffs filed an amended complaint. In December 2006, the Defendants filed motions to dismiss, based on various legal theories. In March 2007, the Court denied AMERCO’s motion to dismiss regarding the issue of demand futility, stating that “Plaintiffs have satisfied the heightened pleading requirements of demand futility by showing a majority of the members of the AMERCO Board of Directors were interested parties in the SAC transactions.” The Court heard oral argument on the remainder of the Defendants’ motions to dismiss, including the motion (“Goldwasser Motion”) based on the fact that the subject matter of the lawsuit had been settled and dismissed in earlier litigation known as Goldwasser v. Shoen , C.V.N.-94-00810-ECR (D.Nev), Washoe County, Nevada. In addition, in September and October 2007, the Defendants filed Motions for Judgment on the Pleadings or in the Alternative Summary Judgment, based on the fact that the stockholders of the Company had ratified the underlying transactions at the 2007 annual meeting of stockholders of AMERCO. In December 2007, the Court denied this motion. This ruling does not preclude a renewed motion for summary judgment after discovery and further proceedings on these issues. On April 7, 2008, the litigation was dismissed, on the basis of the Goldwasser Motion. On May 8, 2008, the Plaintiffs filed a notice of appeal of such dismissal to the Nevada Supreme Court. On May 20, 2008, AMERCO filed a cross appeal relating to the denial of its Motion to Dismiss in regard to demand futility.

On May 12, 2011, the Nevada Supreme Court affirmed in part, reversed in part, and remanded the case for further proceedings. First, the Court ruled that the Goldwasser settlement did not release claims that arose after the agreement and, therefore, reversed the trial court’s dismissal of the Complaint on that ground. Second, the Court affirmed the district court’s determination that the in pari delicto defense is available in a derivative suit and reversed and remanded to the district court to determine if the defense applies to this matter. Third, the Court remanded to the district court to conduct an evidentiary hearing to determine whether demand upon the AMERCO Board was, in fact, futile. Fourth, the Court invited AMERCO to seek a ruling from the district court as to the legal effect of the AMERCO Shareholders’ 2008 ratification of the underlying AMERCO/SAC transactions.

Last, as to individual claims for relief, the Court affirmed the district court’s dismissal of the breach of fiduciary duty of loyalty claims as to all defendants except Mark Shoen. The Court affirmed the district court’s dismissal of the breach of fiduciary duty: ultra vires Acts claim as to all defendants. The Court reversed the district court’s dismissal of aiding and abetting a breach of fiduciary duty and unjust enrichment claims against the SAC entities. The Court reversed the trial court’s dismissal of the claim for wrongful interference with prospective economic advantage as to all defendants.

On remand, on July 22, 2011, AMERCO filed a Motion for Summary Judgment based upon the Shareholder’s Ratification of the SAC transactions. In addition, on August 29, 2011, certain defendants filed a Motion to Dismiss Plaintiffs’ Claim for Wrongful Interference with Prospective Economic Advantage. On August 31, 2011, the trial court held a status conference and entered an order setting forth the briefing schedule for the two motions. On December 23, 2011, the trial court denied AMERCO’s motion for summary judgment and certain defendants’ motion to dismiss. The court has set a discovery schedule on the limited issue of demand futility. A four day evidentiary hearing on demand futility is scheduled to begin on August 20, 2012.

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.

AMERCO AND CONSOLIDATED ENTITIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

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 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 Exchange 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 monitor 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 consolidated group as disclosed below. Management believes that the transactions described below and in the related notes were completed on terms substantially equivalent to those that would prevail in arm’s-length transactions.

SAC Holding Corporation and SAC Holding II Corporation, (collectively “SAC Holdings”) were established in order to acquire self-storage properties. These properties are being managed by 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.

Management believes that the sales of self-storage properties to SAC Holdings has provided a unique structure for the Company to earn moving equipment rental revenues and property management fee revenues from the SAC Holdings self-storage properties that the Company manages.

Related Party Revenue

	Quarter Ended June 30,
	2012		2011
	(Unaudited)
	(In thousands)
U-Haul interest income revenue from SAC Holdings	$	2,476	$	4,816
U-Haul interest income revenue from Private Mini		1,345		1,353
U-Haul management fee revenue from SAC Holdings		3,829		3,729
U-Haul management fee revenue from Private Mini		567		552
U-Haul management fee revenue from Mercury		464		454
	$	8,681	$	10,904

During the first quarter of fiscal 2013, subsidiaries of the Company held various junior unsecured notes of SAC Holdings. Substantially all of the equity interest of SAC Holdings is controlled by Blackwater Investments, Inc. (“Blackwater”). Blackwater is wholly-owned by Mark V. Shoen, a significant shareholder of AMERCO. We do not have an equity ownership interest in SAC Holdings. We received cash interest payments of $7.2 million and $4.3 million from SAC Holdings during the first quarter of fiscal 2013 and 2012, respectively. The largest aggregate amount of notes receivable outstanding during the first quarter of fiscal 2013 was $195.4 million and the aggregate notes receivable balance at June 30, 2012 was $73.1 million. In accordance with the terms of these notes, SAC Holdings may prepay the notes without penalty or premium at any time. The scheduled maturities of these notes are between 2019 and 2024. We received repayments of $127.3 million during the first quarter of fiscal 2013 on these notes and interest receivables.

During the first quarter of fiscal 2013, 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 Private Mini during the first quarters of both fiscal 2013 and 2012. The largest aggregate amount outstanding during the first quarter of fiscal 2013 was $66.3 million and the aggregate notes receivable balance at June 30, 2012 was $66.2 million.

AMERCO AND CONSOLIDATED ENTITIES

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 management fees, exclusive of reimbursed expenses, of $9.4 million and $8.6 million from the above mentioned entities during the first quarter of fiscal 2013 and 2012, 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 shareholder and director of AMERCO, has an interest in Mercury.

Related Party Costs and Expenses

	Quarter Ended June 30,
	2012		2011
	(Unaudited)
	(In thousands)
U-Haul lease expenses to SAC Holdings	$	661	$	623
U-Haul commission expenses to SAC Holdings		10,934		10,003
U-Haul commission expenses to Private Mini		695		643
	$	12,290	$	11,269

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, 2012, 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 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 $8.2 million, expenses of $0.7 million and cash flows of $138.4 million during the first quarter of fiscal 2013. Revenues and commission expenses related to the Dealer Agreements were $53.1 million and $11.6 million, respectively during the first quarter of fiscal 2013.

We adopted Accounting Standards Update 2009-17 (“ASU 2009-17”), which amends the FASB ASC for the issuance of FASB Statement 167, Amendments to FASB Interpretation 46(R) , as of April 1, 2010. Management determined that the junior notes of SAC Holdings and Private Mini and the management agreements with SAC Holdings, Mercury, 4 SAC, 5 SAC, Galaxy, and Private Mini represent potential variable interests for us. Management evaluated whether it should be identified as the primary beneficiary of one or more of these variable interest entity’s (“VIE’s”) using a two step approach in which management (i) identified all other parties that hold interests in the VIE’s, and (ii) determined if any variable interest holder has the power to direct the activities of the VIE’s that most significantly impact their economic performance.

Upon adoption Management determined that they do not have a variable interest in the holding entities Mercury, 4 SAC, 5 SAC, or Galaxy through management agreements which are with the individual operating entities or through the issuance of junior debt; therefore, we are precluded from consolidating these entities, which is consistent with the accounting treatment immediately prior to adopting ASU 2009-17. Additionally, after a redetermination caused by the SAC Holding II repayment of the outstanding principal on its junior notes with AMERCO during the first quarter of fiscal 2013, Management has determined that the Company does not have a variable interest in the SAC Holding II holding entity.

AMERCO AND CONSOLIDATED ENTITIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

We have junior debt with the holding entities SAC Holding Corporation and Private Mini which represents a variable interest in each 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 on their payment history. As a result, we have no basis under ASC 810 - Consolidation (“ ASC 810”) to consolidate these entities, which is consistent with the accounting treatment immediately prior to adopting ASU 2009-17.

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. 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, which is consistent with the accounting treatment immediately prior to adopting ASU 2009-17.

We have not provided financial or other support explicitly or implicitly during the quarter ended June 30, 2012 to any of these entities that it was not previously contractually required to provide. The carrying amount and classification of the assets and liabilities in our balance sheets that relate to our variable interests in the aforementioned entities are as follows, which approximate the maximum exposure to loss as a result of the Company’s involvement with these related party entities:

Related Party Assets

	June 30,		March 31,
	2012		2012
	(Unaudited)
	(In thousands)
U-Haul notes, receivables and interest from Private Mini	$	68,288	$	68,798
U-Haul notes receivable from SAC Holdings		73,053		195,426
U-Haul interest receivable from SAC Holdings		13,939		18,667
U-Haul receivable from SAC Holdings		11,901		30,297
U-Haul receivable from Mercury		2,495		3,195
Other		121		(226	)
	$	169,797	$	316,157

11. Consolidating Financial Information by Industry Segment

AMERCO’s three reportable segments are:

·	Moving and Storage, comprised of AMERCO, U-Haul, and Real Estate and the subsidiaries of U-Haul and Real Estate,

·	Property and Casualty Insurance, comprised of Repwest and its subsidiaries and ARCOA, and

·	Life Insurance, comprised of Oxford and its subsidiaries.

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

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

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

AMERCO AND CONSOLIDATED ENTITIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

11. Financial Information by Consolidating Industry Segment:

Consolidating balance sheets by industry segment as of 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
	(Unaudited)
	(In thousands)
Assets:
Cash and cash equivalents	$	200,250		$	318,687		$	755		$	-			$	519,692		$	13,089	$	33,458	$	-			$	566,239
Reinsurance recoverables and trade receivables, net		-			49,621			-			-				49,621			193,059		31,913		-				274,593
Inventories, net		-			63,438			-			-				63,438			-		-		-				63,438
Prepaid expenses		-			41,109			477			-				41,586			-		-		-				41,586
Investments, fixed maturities and marketable equities		14,511			-			-			-				14,511			130,227		648,644		-				793,382
Investments, other		-			6,899			48,963			-				55,862			85,800		120,794		-				262,456
Deferred policy acquisition costs, net		-			-			-			-				-			-		64,075		-				64,075
Other assets		480			73,015			26,830			-				100,325			343		242		-				100,910
Related party assets		1,256,503			114,775			7			(1,199,675	)	(c)		171,610			7,761		514		(10,088	)	(c)		169,797
		1,471,744			667,544			77,032			(1,199,675	)			1,016,645			430,279		899,640		(10,088	)			2,336,476

Investment in subsidiaries		75,169			-			-			269,676		(b)		344,845			-		-		(344,845	)	(b)		-

Property, plant and equipment, at cost:
Land		-			71,266			226,261			-				297,527			-		-		-				297,527
Buildings and improvements		-			167,323			937,992			-				1,105,315			-		-		-				1,105,315
Furniture and equipment		138			287,919			18,384			-				306,441			-		-		-				306,441
Rental trailers and other rental equipment		-			270,621			-			-				270,621			-		-		-				270,621
Rental trucks		-			1,971,558			-			-				1,971,558			-		-		-				1,971,558
		138			2,768,687			1,182,637			-				3,951,462			-		-		-				3,951,462
Less: Accumulated depreciation		(116	)		(1,086,698	)		(362,288	)		-				(1,449,102	)		-		-		-				(1,449,102	)
Total property, plant and equipment		22			1,681,989			820,349			-				2,502,360			-		-		-				2,502,360
Total assets	$	1,546,935		$	2,349,533		$	897,381		$	(929,999	)		$	3,863,850		$	430,279	$	899,640	$	(354,933	)		$	4,838,836

(a) Balances as of March 31, 2012
(b) Eliminate investment in subsidiaries
(c) Eliminate intercompany receivables and payables

AMERCO AND CONSOLIDATED ENTITIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

Consolidating balance sheets by industry segment as of 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
	(Unaudited)
	(In thousands)
Liabilities:
Accounts payable and accrued expenses	$	28,801	$	340,668	$	3,790	$	-			$	373,259	$	-		$	8,753	$	-			$	382,012
Notes, loans and leases payable		-		829,712		710,826		-				1,540,538		-			-		-				1,540,538
Policy benefits and losses, claims and loss expenses payable		-		386,415		-		-				386,415		340,167			394,618		-				1,121,200
Liabilities from investment contracts		-		-		-		-				-		-			261,987		-				261,987
Other policyholders' funds and liabilities		-		-		-		-				-		2,735			2,654		-				5,389
Deferred income		-		37,960		-		-				37,960		-			-		-				37,960
Deferred income taxes		401,238		-		-		-				401,238		(41,349	)		15,201		-				375,090
Related party liabilities		-		877,570		331,885		(1,199,675	)	(c)		9,780		1,657			151		(11,588	)	(c)		-
Total liabilities		430,039		2,472,325		1,046,501		(1,199,675	)			2,749,190		303,210			683,364		(11,588	)			3,724,176

Stockholders' equity:
Series preferred stock:
Series A preferred stock		-		-		-		-				-		-			-		-				-
Series B preferred stock		-