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 with the 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 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,
		2015		2014
		(Unaudited)
		(In thousands)
U-Haul interest income revenue from SAC Holdings	$	1,249	$	1,719
U-Haul interest income revenue from Private Mini		–		1,340
U-Haul management fee revenue from SAC Holdings		4,883		4,622
U-Haul management fee revenue from Private Mini		878		648
U-Haul management fee revenue from Mercury		559		526
	$	7,569	$	8,855

		Six Months Ended September 30,
		2015		2014
		(Unaudited)
		(In thousands)
U-Haul interest income revenue from SAC Holdings	$	2,488	$	3,423
U-Haul interest income revenue from Private Mini		1,126		2,666
U-Haul management fee revenue from SAC Holdings		9,697		9,145
U-Haul management fee revenue from Private Mini		1,624		1,284
U-Haul management fee revenue from Mercury		1,110		1,044
	$	16,045	$	17,562

During the first six months of fiscal 2016, 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 Mark V. Shoen, a significant stockholder of AMERCO. We do not have an equity ownership interest in SAC Holdings. We received cash interest payments of $2.3 million and $3.3 million from SAC Holdings during the first six months of fiscal 2016 and 2015, respectively. The largest aggregate amount of notes receivable outstanding during the first six months of fiscal 2016 was $50.4 million and the aggregate notes receivable balance at September 30, 2015 was $49.9 million. In accordance with the terms of these notes, SAC Holdings may prepay the notes without penalty or premium at any time. After this repayment the scheduled maturity of this note is 2017.

During the first six months of fiscal 2016, 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 and $2.7 million from Private Mini during the first six months of fiscal 2016 and 2015, respectively. The largest aggregate amount outstanding during the first six months of fiscal 2016 was $56.5 million. In July 2015, Private Mini repaid its note and all outstanding interest due AMERCO totalling $56.8 million.

We currently manage the self-storage properties owned or leased by SAC Holdings, Mercury Partners, L.P. (“Mercury”), Four SAC Self-Storage Corporation (“4 SAC”), Five SAC Self-Storage Corporation (“5 SAC”), Galaxy Investments, L.P. (“Galaxy”) and Private Mini pursuant to a standard form of management agreement, under which we receive a management fee of between 4% and 10% of the gross receipts plus reimbursement for certain expenses. We received management fees, exclusive of reimbursed expenses, of $15.5 million and $15.2 million from the above mentioned entities during the first six months of fiscal 2016 and 2015, 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 stockholder and director of AMERCO and an estate planning trust benefitting Shoen children have an interest in Mercury.

Related Party Costs and Expenses

		Quarter Ended September 30,
		2015		2014
		(Unaudited)
		(In thousands)
U-Haul lease expenses to SAC Holdings	$	654	$	655
U-Haul commission expenses to SAC Holdings		15,268		14,742
U-Haul commission expenses to Private Mini		1,058		972
	$	16,980	$	16,369

		Six Months Ended September 30,
		2015		2014
		(Unaudited)
		(In thousands)
U-Haul lease expenses to SAC Holdings	$	1,308	$	1,310
U-Haul commission expenses to SAC Holdings		29,259		28,226
U-Haul commission expenses to Private Mini		2,038		1,834
	$	32,605	$	31,370

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, 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 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 $14.9 million, expenses of $1.3 million and cash flows of $71.7 million during the first six months of fiscal 2016. Revenues and commission expenses related to the Dealer Agreements were $145.2 million and $31.3 million, respectively during the first six months of fiscal 2016.

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, 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 SAC Holding Corporation which represents a variable interest. Though we have certain protective rights within this debt agreement, we have no present influence or control over this holding entity 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 this entity. A redetermination event caused by the Private Mini repayment of the outstanding principal on its junior note with AMERCO occurred during the second quarter of fiscal 2016. After evaluation, Management has confirmed that we do not have a variable interest in Private Mini.

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 30, 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

		September 30,		March 31,
		2015		2015
		(Unaudited)
		(In thousands)
U-Haul notes, receivables and interest from Private Mini	$	2,885	$	59,375
U-Haul notes receivable from SAC Holdings		49,900		50,428
U-Haul interest receivable from SAC Holdings		4,757		4,579
U-Haul receivable from SAC Holdings		19,972		20,108
U-Haul receivable from Mercury		5,723		6,667
Other (a)		680		633
	$	83,917	$	141,790

(a) Timing differences for intercompany balances with insurance subsidiaries.