Note 19. 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 and in accordance to 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 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 third party, arm’s-length transactions.

SAC Holdings was 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 Revenues

		Years Ended March 31,
		2015		2014		2013
		(In thousands)
U-Haul interest income revenue from SAC Holdings	$	5,914	$	7,071	$	8,373
U-Haul interest income revenue from Private Mini		4,918		5,348		5,383
U-Haul management fee revenue from SAC Holdings		18,472		18,007		18,731
U-Haul management fee revenue from Private Mini		2,614		2,437		2,305
U-Haul management fee revenue from Mercury		4,255		4,049		3,342
	$	36,173	$	36,912	$	38,134

During fiscal 2015, subsidiaries of ours 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 $5.7 million, $17.2 million and $12.6 million, from SAC Holdings during fiscal 2015, 2014 and 2013, respectively. During the first quarter of fiscal 2014, SAC Holdings made a payment of $10.4 million to reduce its outstanding deferred interest payable to AMERCO. We received repayments of $20.2 million during the third quarter of fiscal 2015 on these notes and interest receivables. After this repayment the scheduled maturities of these notes are 2017. The largest aggregate amount of notes receivable outstanding during fiscal 2015 was $71.5 million and the aggregate notes receivable balance at March 31, 2015 was $50.4 million. In accordance with the terms of these notes, SAC Holdings may prepay the notes without penalty or premium at any time.

During fiscal 2015, 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 $5.1 million, $5.4 million and $5.4 million from Private Mini during fiscal years 2015, 2014 and 2013, respectively. The largest aggregate amount outstanding during fiscal 2015 was $65.5 million and the aggregate notes receivable balance at March 31, 2015 was $56.5 million. We received repayments of $9.0 million during the third quarter of fiscal 2015 on these notes and interest receivables.

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 $25.8 million, $25.8 million and $23.7 million from the above mentioned entities during fiscal 2015, 2014 and 2013, respectively. This management fee is consistent with the fee received for other properties we previously managed for third parties. SAC Holdings, 4 SAC, 5 SAC, Galaxy and Private Mini are substantially controlled by Blackwater. Mercury is substantially controlled by Mark V. Shoen. James P. Shoen, a significant shareholder of AMERCO, and an estate planning trust benefitting Shoen children also have an interest in Mercury.

Related Party Costs and Expenses

		Years Ended March 31,
		2015		2014		2012
		(In thousands)
U-Haul lease expenses to SAC Holdings	$	2,618	$	2,619	$	2,626
U-Haul commission expenses to SAC Holdings		48,833		46,886		41,185
U-Haul commission expenses to Private Mini		3,258		3,047		2,650
	$	54,709	$	52,552	$	46,461

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 March 31, 2015, 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 notes with subsidiaries of SAC Holdings, 4 SAC, 5 SAC, Galaxy and Private Mini, excluding Dealer Agreements, provided revenues of $31.9 million, expenses of $2.6 million and cash flows of $60.0 million during fiscal 2015. Revenues and commission expenses related to the Dealer Agreements were $241.3 million and $52.1 million, respectively for fiscal 2015.

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

Management determined that they do not have a variable interest in the holding entities SAC Holding II Corporation, 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 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 to consolidate these entities.

We do not have the power to direct the activities that most significantly impact the economic performance of the individual operating entities which have 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 fiscal year ended March 31, 2015 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 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 our involvement with these entities:

Related Party Assets

		March 31,
		2015		2014
		(In thousands)
U-Haul notes, receivables and interest from Private Mini	$	59,375	$	68,451
U-Haul notes receivable from SAC Holding Corporation		50,428		71,464
U-Haul interest receivable from SAC Holdings		4,579		4,376
U-Haul receivable from SAC Holdings		20,108		19,418
U-Haul receivable from Mercury		6,667		5,930
Other (a)		633		(15)
	$	141,790	$	169,624

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