-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, HWaeauFlOX0AK+4I92L7la2QAR+RA9JMBMN3A2/6X7g3V2zGcKgXgINZTfFW6Wk5 k0NMISnPCVht7HdCqcHC+w== 0000950147-94-000094.txt : 19940906 0000950147-94-000094.hdr.sgml : 19940906 ACCESSION NUMBER: 0000950147-94-000094 CONFORMED SUBMISSION TYPE: S-2/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19940902 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERCO /NV/ CENTRAL INDEX KEY: 0000004457 STANDARD INDUSTRIAL CLASSIFICATION: 3711 IRS NUMBER: 880106815 STATE OF INCORPORATION: NV FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: S-2/A SEC ACT: 1933 Act SEC FILE NUMBER: 033-54289 FILM NUMBER: 94547819 BUSINESS ADDRESS: STREET 1: 1325 AIRMOTIVE WY STE 100 CITY: RENO STATE: NV ZIP: 89502 BUSINESS PHONE: 7027860488 MAIL ADDRESS: STREET 1: 1325 AIRMOTIVE WAY STREET 2: SUITE 100 CITY: RENO STATE: NV ZIP: 89502 FORMER COMPANY: FORMER CONFORMED NAME: AMERCO DATE OF NAME CHANGE: 19770926 S-2/A 1 REGISTRATION STATEMENT As filed with the Securities and Exchange Commission on September 2, 1994 REGISTRATION NO. 33-54289 - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------- PRE-EFFECTIVE AMENDMENT NO. 1 TO FORM S-2 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 -------------- AMERCO (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) NEVADA 88-0106815 (STATE OR OTHER (I.R.S. EMPLOYER JURISDICTION OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) -------------- 1325 AIRMOTIVE WAY, SUITE 100 RENO, NEVADA 89502-3239 (702) 688-6300 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) -------------- JON S. COHEN, ESQ. SNELL & WILMER ONE ARIZONA CENTER PHOENIX, ARIZONA 85004 (602) 382-6247 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) -------------- COPY TO: DEBRA K. WEINER, ESQ. CHRISTOPHER S. BERTICS, ESQ. GROVER WICKERSHAM, P.C. COOLEY GODWARD CASTRO 430 CAMBRIDGE AVENUE, SUITE 100 HUDDLESON & TATUM PALO ALTO, CALIFORNIA 94306 5 PALO ALTO SQUARE, 4TH FLOOR (415) 323-6400 PALO ALTO, CALIFORNIA 94306 (415) 843-5000 -------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE. IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED ON A DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF 1933, CHECK THE FOLLOWING BOX. [ ] IF THE REGISTRANT ELECTS TO DELIVER ITS LATEST ANNUAL REPORT TO SECURITY HOLDERS, OR A COMPLETE AND LEGIBLE FACSIMILE THEREOF PURSUANT TO ITEM 11(A)(1) OF THIS FORM, CHECK THE FOLLOWING BOX. [ ] -------------- The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission acting pursuant to Section 8(a) may determine. CROSS REFERENCE SHEET SHOWING LOCATION IN PROSPECTUS OF INFORMATION REQUIRED BY FORM S-2 FILED AS PART OF REGISTRATION STATEMENT ITEM NUMBER IN FORM S-2 ITEM CAPTION IN FORM S-2 CAPTION IN PROSPECTUS - ---- ------------------------ --------------------- 1. Forepart of Registration Statement and Outside Front Cover Page of Prospectus ........................... Facing Page; Cross Reference Sheet; Cover Page 2. Inside Front and Outside Back Cover Pages of Prospectus ............ Inside Front Cover Page; Available Information; Information Incorporated by Reference; Table of Contents 3. Summary Information, Risk Factors and Ratio of Earnings to Fixed Charges .............................. Prospectus Summary; Risk Factors; The Company 4. Use of Proceeds ...................... Prospectus Summary 5. Determination of Offering Price ...... Cover Page; Underwriting 6. Dilution ............................. Inapplicable 7. Selling Security Holders ............. Selling Security Holder 8. Plan of Distribution ................. Underwriting 9. Description of Securities to be Registered ........................ Description of Securities 10. Interests of Named Experts and Counsel .......................... Legal Opinions; Experts 11. Information with Respect to Registrant ........................... Prospectus Summary; Risk Factors; The Company; Capitalization; Stockholder Matters; Selected Consolidated Financial Data; Management's Discussion and Analysis; Business; Certain Transactions; Selling Security Holder; Financial Statements 12. Incorporation of Certain Information by Reference ............. Information Incorporated by Reference 13. Disclosure of Commission Position on Indemnification for Securities Act Liabilities ...................... Inapplicable SUBJECT TO COMPLETION, DATED SEPTEMBER 6, 1994 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. PROSPECTUS 500,000 SHARES A M E R C O COMMON STOCK -------------------- Ponderosa Insurance Holdings U-Haul AMERCO Real Estate Company Sophia M. Shoen ("Selling Stockholder") hereby offers 500,000 shares of Common Stock (the "Securities") of AMERCO (the "Company"), a holding company for U-Haul International, Inc., Ponderosa Holdings, Inc., and Amerco Real Estate Company. The Company will not receive any portion of the proceeds from the sale of the Securities offered hereby. Prior to this offering, there has been no public trading market for the Company's common stock. See "Underwriting" for a discussion of factors considered in determining the initial public offering price. It is anticipated that the initial public offering price will be between $25.00 and $27.00 per share. Some of the Securities may be offered to non-U.S. persons. The Securities offered hereby has been approved for quotation on the Nasdaq National Market upon notice of issuance under the symbol "AMOO." SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SECURITIES OFFERED HEREBY. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ Underwriting PROCEEDS TO Price to Discounts and SELLING Public Commissions(1) STOCKHOLDER(2) - -------------------------------------------------------------------------------- Per Share.................. $ $ $ - -------------------------------------------------------------------------------- TOTAL.................. $ $ $ - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (1) Excludes a non-accountable expense allowance of $ payable by Selling Stockholder to Cruttenden & Company, the representative (the "Representative") of the several Underwriters. The Company and the Selling Stockholder have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the "Securities Act"). See "Underwriting." (2) The Company will be paying expenses in connection with this offering, estimated at approximately $250,000. The Securities offered by this Prospectus are offered by the Underwriters subject to prior sale when, as and if delivered to and accepted by the Underwriters, and subject to their right to withdraw, cancel, or modify such offer and to reject orders in whole or in part and to certain other conditions. It is expected that delivery of the Securities will be made at the offices of Cruttenden & Company, Irvine, California, on or about , 1994. -------------------- CRUTTENDEN & COMPANY THE DATE OF THIS PROSPECTUS IS , 1994. AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith, files reports and other information with the Securities and Exchange Commission (the "Commission"). Reports, proxy statements, and other information filed by the Company may be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at its regional offices located at 7 World Trade Center, 13th Floor, New York, New York 10048, and Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material may be obtained from the Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Company has filed with the Commission a registration statement (the "Registration Statement") with respect to the Securities offered hereby. This Prospectus, which constitutes part of the Registration Statement, does not contain all of the information contained in the Registration Statement and the exhibits thereto. For further information with respect to the Company and the Securities offered hereby, reference is made to the Registration Statement, including the exhibits thereto, which may be examined without charge at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and copies of all or any part thereof may be obtained from the Public Reference Section of the Commission at prescribed rates. Statements contained in this Prospectus as to the contents of any contract or any other document are not necessarily complete and, in each instance, reference is made to the copy of such contract or document filed as an exhibit to the Registration Statement, each statement being qualified in all respects by such reference. The Company's Series A 81/2% Preferred Stock is listed on the New York Stock Exchange. Reports, proxy statements, and other information filed by the Company may be inspected at the New York Stock Exchange, 20 Broad Street, New York, New York 10005. INFORMATION INCORPORATED BY REFERENCE The Annual Report of the Company on Form 10-K for the fiscal year ended March 31, 1994, the Quarterly Report of the Company on Form 10-Q for the quarter ended June 30, 1994, and the Company's definitive Notice and Proxy Statement filed with the Commission on July 8, 1994 are incorporated herein by reference. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document that is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company will cause to be furnished without charge to each person, including any beneficial owner, to whom this Prospectus is delivered, upon the written or oral request of such person, a copy of any documents described above, other than certain exhibits to such documents. Requests should be addressed to: AMERCO, Investor Relations, 1325 Airmotive Way, Suite 100, Reno, Nevada 89502; telephone: (702) 688-6300. PROSPECTUS SUMMARY The following summary is qualified in its entirety by the detailed information and financial statements, including the notes thereto, appearing elsewhere or incorporated by reference in this Prospectus. THE COMPANY AMERCO, a Nevada corporation (the "Company"), is the holding company for U-Haul International, Inc. ("U-Haul"), Ponderosa Holdings, Inc. ("Ponderosa"), and Amerco Real Estate Company ("AREC"). Throughout this Prospectus, unless the context otherwise requires, the term "Company" includes all of the Company's subsidiaries. U-Haul is primarily engaged, through subsidiaries, in the rental of trucks, automobile-type trailers, and support rental items to the do-it-yourself moving customer, all under the registered tradename U-Haul(R). Additionally, U-Haul sells related products and services and rents self-storage facilities and various kinds of equipment. AREC owns and manages a majority of the real estate used in connection with the foregoing businesses. Ponderosa serves as the holding company for the Company's insurance businesses. Ponderosa's two principal subsidiaries are Oxford Life Insurance Company ("Oxford") and Republic Western Insurance Company ("RWIC"). Oxford primarily reinsures life, health, and annuity type insurance products and administers the Company's self-insured employee health plan. RWIC originates and reinsures property and casualty type insurance products for various market participants, including independent third parties, the Company's customers, and the Company. See "The Company" and "Business." The Company's principal executive offices are located at 1325 Airmotive Way, Suite 100, Reno, Nevada 89502-3239, and the telephone number of the Company is (702) 688-6300. As used in this Prospectus, all references to a fiscal year refer to the Company's fiscal year ended March 31 of that year. THE OFFERING Securities Offered ........................ 500,000 shares of Common Stock. Securities Outstanding .................... 6,100,000 shares of Series A 8-1/2% Preferred Stock, 29,426,048 shares of Common Stock, and 9,238,015 shares of Series A Common Stock. Use of Proceeds ........................... The Company will receive no proceeds from the sale of the Securities offered hereby. Proposed Nasdaq National Market Symbol .... "AMOO" SUMMARY CONSOLIDATED FINANCIAL DATA The following summary financial information was derived from and is qualified by reference to the financial statements and other information and data contained in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1994, and the Company's unaudited Quarterly Report on Form 10-Q for the quarter ended June 30, 1994, which are incorporated by reference. Oxford and RWIC have been consolidated on the basis of fiscal years ended December 31. To give effect to Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes," the Company has restated its financial statements to April 1, 1988. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Other." The summaries for the quarters ended June 30 are unaudited; however, in the opinion of management, all adjustments necessary for a fair presentation of such financial information have been included. The results of operations for the quarter ended June 30, 1994 may not be indicative of the results to be expected for fiscal 1995 because the Company's U-Haul business is seasonal, with a majority of its revenue and substantially all of its net earnings being generated in the first and second quarters of each fiscal year.
For the Quarters For the Fiscal Years Ended March 31, Ended June 30, ----------------------------------------------------------------------- -------------------------- 1990 1991 1992 1993 1994 1993 1994 ------------ ------------ ------------- ------------- ------------- ------------ ------------ (in thousands, except per share data) SUMMARY OF OPERATIONS DATA: Rental, net sales, and other revenues .. $ 830,998 $ 860,044 $ 845,128 $ 901,446 $ 972,704 $ 255,684 $ 281,509 Premiums and net investment income .......... 119,641 126,620 126,756 139,465 162,151 35,664 42,069 ------------ ------------ ------------- ------------- ------------- ------------ ------------ 950,639 986,664 971,884 1,040,911 1,134,855 291,348 323,578 ------------ ------------ ------------- ------------- ------------- ------------ ------------ Operating expenses and cost of sales ........... 627,396 668,149 661,229 697,700 735,841 188,138 194,336 Benefits, losses, and amortization of deferred acquisition costs 121,602 126,626 99,091 115,969 130,168 26,094 29,496 Depreciation ...... 105,437 114,589 109,641 110,105 133,485 30,140 37,282 Interest expense .. 74,657 80,815 76,189 67,958 68,859 17,338 16,638 ------------ ------------ ------------- ------------- ------------- ------------ ------------ 929,092 990,179 946,150 991,732 1,068,353 261,710 277,752 ------------ ------------ ------------- ------------- ------------- ------------ ------------ Pretax earnings (loss) from operations ...... 21,547 (3,515) 25,734 49,179 66,502 29,638 45,826 Income tax expense (3,516) (6,354) (4,940) (17,270) (19,853) (8,775) (16,413) ------------ ------------ ------------- ------------- ------------- ------------ ------------ Earnings (loss) before cumulative effect oF change in accounting principle and extraordinary item ............ 18,031 (9,869) 20,794 31,909 46,649 20,863 29,413 ============ ============ ============= ============= ============= ============ ============ Extraordinary loss on early extinguishment of debt, net .... -- -- -- -- (3,370) -- -- Cumulative effect of change in accounting principle, net .. -- -- -- -- (3,095) (3,504) -- Net earnings (loss) .......... $ 18,031 $ (9,869) $ 20,794 $ 31,909 $ 40,184 $ 17,359 $ 29,413 Earnings (loss) from operations before extraordinary loss on early extinguishment of debt and cumulative effect of change in accounting principle per common share .... $ .46 $ (.25) $ .53 $ .83 $ 1.06 $ .56 $ .71 Net earnings (loss) per common share ....... .46 (.25) .53 .83 .89 .47 .71 Weighted average common shares outstanding ..... 39,483,960 39,312,080 38,880,069 38,664,063 38,664,063 37,158,211 37,107,536 Cash dividends declared -- common shares ... $ 2,575 $ 1,176 $ -- $ 1,994 $ 3,147 $ -- $ -- MARCH 31, JUNE 30, ----------------------------------------------------------------------- -------------------------- 1990 1991 1992 1993 1994 1993 1994 ------------ ------------ ------------- ------------- ------------- ------------ ------------ (IN THOUSANDS) BALANCE SHEET DATA: Total property, plant, and equipment, net............ $ 975,675 $ 1,040,342 $ 987,095 $ 989,603 $ 1,174,236 $ 1,123,541 $ 1,224,674 Total assets. 1,725,660 1,822,977 1,979,324 2,024,023 2,344,442 2,169,040 2,411,381 Notes and loans payable 749,113 804,826 733,322 697,121 723,764 766,946 725,565 Stockholders' equity......... 446,294 435,180 451,888 479,958 651,787 495,458 673,803 ---------- For the fiscal year ended March 31, 1994, and the quarter ended June 30, 1994, net earnings per common share amounts were computed after giving effect to the dividend on the Company's Series A 81/2% Preferred Stock. See "Description of Capital Stock -- Dividends."
RISK FACTORS THE PURCHASE OF THE SECURITIES OFFERED HEREBY INVOLVES SUBSTANTIAL RISK. THE FOLLOWING MATTERS, INCLUDING THOSE MENTIONED ELSEWHERE, SHOULD BE CONSIDERED CAREFULLY BY A PROSPECTIVE INVESTOR IN EVALUATING A PURCHASE OF THE SECURITIES. EXISTING MANAGEMENT -- POTENTIAL CHANGE IN CONTROL For the reasons set forth below, there can be no assurance that the Company's current management or its current operating strategy will remain in place. The Company believes that the Selling Stockholder opposes current management. See "Selling Security Holder" for information about Selling Stockholder. At the date of this Prospectus, members of a stockholder group (the "Inside Stockholder Group"), which includes the Trust (the "ESOP Trust") under the AMERCO Employee Savings, Profit Sharing and Employee Stock Ownership Plan (the "ESOP"), Oxford (acting as a trustee), Selling Stockholder, certain members of the Company's management, and certain other stockholders vote approximately, 47.6% of the Company's common stock pursuant to a stockholder agreement. The ESOP Trust holds approximately 7.7% of the Company's voting stock. Approximately 2.8% of the Company's outstanding voting stock is allocated to participants' ESOP Trust accounts and voted by the ESOP Trustees in accordance with the participants' direction. The ESOP Trust votes approximately 4.9% of the Company's voting stock in its discretion as part of the Inside Stockholder Group. Oxford acts as trustee for various trusts that own approximately 4.2% of the Company's voting stock. At the completion of the offering of the Securities, the Inside Stockholder Group will vote approximately 46.3% of the Company's common stock. There exists a second stockholder group (the "Outside Stockholder Group") controlling approximately 49.1% of the Company's common stock that is currently opposed to existing Company management. See "Principal Stockholders -- Outside Stockholder Group." Arbitration Proceedings. Selling Stockholder and Paul F. Shoen have claimed that the Company has defaulted in its obligations to register their common stock under separate Share Repurchase and Registration Rights Agreements. The matter is the subject of an arbitration proceeding described in "Business -- Litigation." The arbitration panel concluded hearings in the matter on August 21, 1994 and is expected to render a decision on September 9, 1994. Selling Stockholder and Paul F. Shoen claim that as a result of such alleged defaults they have the right to give notice of termination of the Inside Stockholder Group. See "Principal Stockholders -- Inside Stockholder Group." Annual Meeting of Stockholders. The current members of the Inside Stockholder Group, excluding Selling Stockholder and Paul F. Shoen, control approximately 33.0% of the Company's common stock. Edward J. Shoen, the Company's Chairman and President, and Mark V. Shoen, Executive Vice President of Product for U-Haul International, Inc., who have been instrumental in the Company's performance since 1987, and Aubrey K. Johnson, one of three independent directors and the only director without a current or past employment history with the Company, are standing for re-election at the Company's 1994 Annual Meeting of Stockholders. There is no assurance that these individuals will be re-elected. Selling Stockholder and Paul F. Shoen have nominated themselves in opposition to Edward J. Shoen and Mark V. Shoen. The Outside Stockholder Group, controlling 49.1% of the voting stock, also has competing candidates. As a result of the foregoing, if Selling Stockholder or Paul F. Shoen is successful in leaving the Inside Stockholder Group, Edward J. Shoen and Mark V. Shoen probably will not be re-elected. Accordingly, there can be no assurance that the Company's current management or its current operating strategy will remain in place. In addition, the entire Board of Directors can be removed without cause by stockholders holding two-thirds of the Company's voting stock. The Annual Meeting of Stockholders was scheduled for July 21, 1994 but was enjoined, pursuant to litigation initiated by Paul F. Shoen, by the United States District Court for the District of Nevada pending further briefing and hearings on allegations raised by Paul F. Shoen relating to the proxy solicitation for the Company's Annual Meeting of Stockholders. See "Principal Stockholders" and "Business --Litigation." Credit Agreements. Certain of the Company's credit agreements contain provisions that could result in a required prepayment upon a "change in control" of the Company. There can be no assurance that a change in control will not occur if Selling Stockholder or Paul F. Shoen is successful in leaving the Inside Stockholder Group. Approximately $509 million of the Company's outstanding debt was covered by such credit agreements as of June 30, 1994. The Company does not currently have available sources of financing to fund such prepayments if they became payable in full. In addition, upon such a "change in control," the Company might lose the ability to draw on approximately $375 million under unutilized lines of credit otherwise available at June 30, 1994. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity and Capital Resources -- Credit Agreements." DEPENDENCE UPON KEY PERSONNEL The success and growth of the Company since 1987 has been dependent upon the performance of its senior management team, the loss of whose services could have an adverse effect on the Company. There is no assurance that the senior management will remain employed by the Company. The Company has not entered into employment contracts with anyone on the senior management team and has not granted restricted stock or stock option awards to any employee pursuant to the Company's Stock Option and Incentive Plan. However, Edward J., Mark V., and James P. Shoen are members of the Company's senior management and have substantial common stock holdings in the Company. See "Principal Stockholders." NO PRIOR PUBLIC MARKET OR PRICE FOR COMMON STOCK Prior to the initial offering of Securities under this Prospectus, there has been no public market for the Company's common stock. Although the Company has applied to have the Securities offered hereby approved for quotation on the Nasdaq National Market, there can be no assurance that an active trading market will develop or be maintained following such offering. Because no public market for the common stock has existed prior to this offering, the public offering price for the Securities offered hereby will be determined by negotiation between Selling Stockholder and the Underwriters. For information relating to the factors to be considered in determining the offering price, see "Underwriting." For additional information relating to recent sales of Common Stock by Selling Stockholder, see "Selling Security Holder." OTHER SHARES OF COMMON STOCK -- MARKET OVERHANG In addition to the Securities, the Company has 38,164,063 other shares of common stock outstanding. Those shares could potentially be sold by the holders thereof, which could adversely affect the market price of the Securities. However, the Company's Bylaws provide for a right of first refusal in favor of the Company with respect to all of the common stock, except for the Securities offered hereby and the common stock held by the ESOP Trust, which will be released from the right of first refusal. In addition, the Company is contractually obligated to lift the right of first refusal on all shares of common stock held by Selling Stockholder and Paul F. Shoen, assuming that such shares are sold in accordance with the limitations of Rule 144. Generally, under Rule 144, each of Selling Stockholder and Paul F. Shoen would be allowed to sell up to at least approximately 380,000 shares of common stock during any three month period. If holders of common stock subject to the right of first refusal wish to sell any of their shares, they are required to offer such shares to the Company by sending a notice to the Secretary of the Company, designating the terms of any proposed sale. The Company then can accept the offer stated in the notice or permit the stockholder to dispose of all or part of such shares. There is no assurance that the right of first refusal will be exercised by the Company with respect to any sale of common stock or that the Bylaws will continue to provide for a right of first refusal. In addition, the Company has received a stockholder proposal requiring the approval of stockholders holding two-thirds of the Company's voting stock to be acted upon at the Company's Annual Meeting of Stockholders to eliminate the right of first refusal from the Company's Bylaws, and the Selling Stockholder and Paul F. Shoen are asserting in arbitration proceedings described in "Business -- Litigation" that the Company has an obligation to remove the right of first refusal. See "Principal Stockholders -- Inside Stockholder Group -- Registration Rights; Release of Shares from Stockholder Agreement." On September 1, 1994, Paul F. Shoen demanded registration of 500,000 of his shares pursuant to a Share Repurchase and Registration Rights Agreement. Subject to certain limitations, the Company is required to effect registration of those shares on or before March 1, 1995. ENVIRONMENTAL MATTERS The Company owns properties that contained approximately 1,500 underground storage tanks as of June 30, 1994 and has been named a "potentially responsible party" with respect to the disposal of hazardous wastes at fifteen federal or state superfund sites. See "Business -- Environmental Matters." QUARTERLY FLUCTUATIONS -- SEASONALITY The Company's results of operations have historically fluctuated from period to period, including on a quarterly basis. In particular, the Company's U-Haul business is seasonal and a majority of the Company's revenues and substantially all of its net earnings from its U-Haul business are generated in the first and second quarters of each fiscal year (April through September). In addition, the Company's results of operations have in the past and will continue to be affected by a wide variety of factors, including events that are beyond the control of the Company. For example, the results of operations of RWIC in fiscal 1992 and 1993 were adversely affected due to losses related to Hurricane Andrew. Results of operations in any period should not be considered indicative of the results to be expected for any future periods, and fluctuations in operating results may also result in fluctuations in the price of the Company's common stock. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." REGULATED INDUSTRIES The Company's insurance operations are subject to regulation. See "Business -- Insurance Operations -- Regulation." ABILITY TO ISSUE SERIAL COMMON STOCK AND PREFERRED STOCK The Board of Directors has the authority to issue up to 50,000,000 shares of preferred stock and up to 150,000,000 shares of serial common stock and to fix the rights, preferences, privileges, and restrictions, including voting rights, of those shares without any further vote or action by the stockholders. The rights of the holders of the Securities will be subject to, and may be adversely affected by, the rights of the holders of any serial common stock and preferred stock that may be issued in the future. The issuance of serial common stock and preferred stock, while providing desired flexibility in connection with possible acquisitions and other corporate purposes, could have the effect of making it more difficult for a third party to acquire a majority of the outstanding voting stock of the Company, thereby delaying, deferring, or preventing a change in control of the Company. Furthermore, holders of such serial common stock or preferred stock may have other rights, including economic rights senior to the Securities, and, as a result, the issuance thereof could have a material adverse effect on the market value of the Securities. The Company has in the past issued, and may from time to time in the future issue, preferred stock for financing purposes with rights, preferences, or privileges senior to the Securities offered hereby. Although, as of the date of this Prospectus, the Company's Board of Directors has no present intention to issue shares of either serial common stock or preferred stock with rights, preferences, or privileges senior to the Securities or to modify the rights, preferences, or privileges of currently outstanding common stock or preferred stock, no assurance can be given as to the Company's future plans in this regard. See "Description of Capital Stock." THE COMPANY The following chart represents the corporate structure of the material operating subsidiaries of the Company. [A chart showing the corporate structure of the Company and its major subsidiaries. The chart shows the Company on top, above its three principal subsidiaries; Ponderosa Holdings, Inc., U-Haul International, Inc., and Amerco Real Estate Company situated horizontally beside one another. Directly below Ponderosa Holdings, Inc. are its subsidiaries, Oxford Life Insurance Company and Republic Western Insurance Company, situated horizontally beside one another.] CAPITALIZATION The following table sets forth the consolidated capitalization of the Company at June 30, 1994: June 30, 1994 ------------- (in thousands) Long-term debt, less current maturities..................... $ 648,910 Stockholders' equity: Serial preferred stock with or without par value, 50,000,000 shares authorized; 6,100,000 shares issued without par value and outstanding.................. -- Serial common stock, with or without par value, 150,000,000 shares authorized...................... -- Series A Common Stock of $.25 par value, authorized 10,000,000 shares, issued 5,754,334 shares (1)............................... 1,438 Common Stock of $.25 par value, authorized 150,000,000 shares, issued 34,245,666 shares (1).......... 8,562 Additional paid-in capital.................................. 165,651 Foreign currency translation................................ (11,461) Retained earnings........................................... 540,325 Less: Cost of common shares in treasury, 1,335,937 shares....... 10,461 Loan to leveraged employee stock ownership plan........... 20,251 ------------- Total stockholders' equity:............................. $ 673,803 ============= - ---------- (1) On August 24, 1994, the Company issued 3,483,681 shares of Series A Common Stock to Edward J. Shoen, Chairman of the Board and President of the Company, in exchange for 3,483,681 shares of Common Stock, $.25 par value. Giving effect to this transaction, the number of outstanding shares of Series A Common Stock is 9,238,015, and the number of outstanding shares of Common Stock, $.25 par value, is 29,426,048. See "Certain Transactions." STOCKHOLDER MATTERS As of August 31, 1994, there were 157 holders of record of the Company's Common Stock and three holders of record of the Company's Series A Common Stock. No established public trading market exists for the purchase and sale of the Company's common stock, and to the best knowledge and belief of the Company there is no one engaged in making a market for the Company's common stock. Cash dividends declared on the Company's common stock for the two most recent fiscal years are as follows: RECORD DATE CASH DIVIDEND PER COMMON SHARE ----------------------- ---------------------------------- August 4, 1992 $ .0258 October 6, 1992 $ .0258 August 3, 1993 $ .0814 The Company does not have a dividend policy with respect to the common stock. The Company's Board of Directors periodically considers the advisability of declaring and paying dividends in light of the existing circumstances. The above dividends on common stock are not indicative of future dividends on common stock. As of the date of this Prospectus no dividends on common stock are currently declared and unpaid and there can be no assurance that dividends on common stock will be declared in the future. The holders of the Series A 81/2% Preferred Stock are entitled to receive cumulative dividends prior to and in preference to the holders of common stock at a fixed annual rate. See Note 5 of Notes to Consolidated Financial Statements for a discussion of certain contractual restrictions on the Company's ability to pay dividends. See Note 19 of Notes to Consolidated Financial Statements for a discussion of certain statutory restrictions on Ponderosa's ability to pay dividends to the Company. See Note 15 of Notes to Consolidated Financial Statements for a discussion of the Company's non-cash dividends. See Note 6 of Notes to Consolidated Financial Statements for a discussion of changes to common shares outstanding and per share amounts. SELECTED CONSOLIDATED FINANCIAL DATA The following summary financial information was derived from and is qualified by reference to the financial statements and other information and data contained in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1994, and the Company's unaudited Quarterly Report on Form 10- Q for the quarter ended June 30, 1994, which are incorporated by reference. Oxford and RWIC have been consolidated on the basis of fiscal years ended December 31. To give effect to Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes," the Company has restated its financial statements to April 1, 1988. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Other." The summaries for the quarters ended June 30, 1993 and 1994 are unaudited; however, in the opinion of management, all adjustments necessary for a fair presentation of such financial information have been included. The results of operations for the quarter ended June 30, 1994 may not be indicative of the results to be expected for fiscal 1995 because the Company's U-Haul business is seasonal, with a majority of its revenue and substantially all of its net earnings being generated in the first and second quarters of each fiscal year.
For the Quarters For the Fiscal Years Ended March 31, Ended June 30, -------------------------------------------------------------------- -------------------------- 1990 1991 1992 1993 1994 1993 1994 ------------ ------------ ------------ ------------ ------------ ------------ ------------ (in thousands, except per share data) SUMMARY OF OPERATIONS DATA: Rental, net sales, and other revenues ........ $ 830,998 $ 860,044 $ 845,128 $ 901,446 $ 972,704 $ 255,684 $ 281,509 Premiums and net investment income .......... 119,641 126,620 126,756 139,465 162,151 35,664 42,069 ------------ ------------ ------------ ------------ ------------ ------------ ------------ 950,639 986,664 971,884 1,040,911 1,134,855 291,348 323,578 ------------ ------------ ------------ ------------ ------------ ------------ ------------ Operating expenses and cost of sales.... 627,396 668,149 661,229 697,700 735,841 188,138 194,336 Benefits, losses, and amortization of deferred acquisition costs............ 121,602 126,626 99,091 115,969 130,168 26,094 29,496 Depreciation....... 105,437 114,589 109,641 110,105 133,485 30,140 37,282 Interest expense... 74,657 80,815 76,189 67,958 68,859 17,338 16,638 ------------ ------------ ------------ ------------ ------------ ------------ ------------ 929,092 990,179 946,150 991,732 1,068,353 261,710 277,752 ------------ ------------ ------------ ------------ ------------ ------------ ------------ Pretax earnings (loss) from operations....... 21,547 (3,515) 25,734 49,179 66,502 29,638 45,826 Income tax expense.......... (3,516) (6,354) (4,940) (17,270) (19,853) (8,775) (16,413) ------------ ------------ ------------ ------------ ------------ ------------ ------------ Earnings (loss) before cumulative effect of change in accounting principle and extraordinary item............. 18,031 (9,869) 20,794 31,909 46,649 20,863 29,413 Extraordinary loss on early extinguishment of debt, net..... -- -- -- -- (3,370) -- -- Cumulative effect of change in accounting principle, net.............. -- -- -- -- (3,095) (3,504) -- ------------ ------------ ------------ ------------ ------------ ------------ ------------ Net earnings (loss)........... $ 18,031 $ (9,869) $ 20,794 $ 31,909 $ 40,184 $ 17,359 $ 29,413 ============ ============ ============ ============ ============ ============ ============ Earnings (loss) from operations before extraordinary loss on early extinguishment of debt and cumulative effect of change in accounting principle per common share..... $ .46 $ (.25) $ .53 $ .83 $ 1.06 $ .56 $ .71 Net earnings (loss) per common share ............. .46 (.25) .53 .83 .89 .47 .71 Weighted average common shares outstanding...... 39,483,960 39,312,080 38,880,069 38,664,063 38,664,063 37,158,211 37,107,536 Cash dividends declared -- common shares.... $ 2,575 $ 1,176 $ -- $ 1,994 $ 3,147 $ -- $ -- MARCH 31, JUNE 30, -------------------------------------------------------------------- -------------------------- 1990 1991 1992 1993 1994 1993 1994 ------------ ------------ ------------ ------------ ------------ ------------ ------------ (IN THOUSANDS) BALANCE SHEET DATA: Total property, plant, and equipment, net $ 975,675 $ 1,040,342 $ 987,095 $ 989,603 $ 1,174,236 $ 1,123,541 $ 1,224,674 Total assets. 1,725,660 1,822,977 1,979,324 2,024,023 2,344,442 2,169,040 2,411,381 Notes and loans payable 749,113 804,826 733,322 697,121 723,764 766,946 725,565 Stockholders' equity. 446,294 435,180 451,888 479,958 651,787 495,458 673,803 - ---------- For the fiscal year ended March 31, 1994, and the quarter ended June 30, 1994, net earnings per common share amounts were computed after giving effect to the dividend on the Company's Series A 81/2% Preferred Stock. See "Description of Capital Stock -- Dividends."
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For financial statement preparation, the Company's insurance subsidiaries report on a calendar year basis, while the Company reports on a fiscal year basis ending March 31. Accordingly, with respect to the Company's insurance subsidiaries, any reference to the years 1994, 1993, 1992, and 1991 corresponds to the Company's fiscal years 1995, 1994, 1993, and 1992, respectively. There have been no events as to such subsidiaries between January 1 and March 31 of each of 1994, 1993, and 1992 that would materially affect the Company's consolidated financial position or results of operations as of and for the fiscal years ended March 31, 1994, 1993, and 1992, respectively. The following discussion should be read in conjunction with Notes 1, 19, and 20 of the Notes to Consolidated Financial Statements, which discuss the principles of consolidation, condensed consolidated financial information, and industry segment and geographic data, respectively. In consolidation, all intersegment premiums are eliminated, and the benefits, losses, and expenses are retained by the insurance companies. RESULTS OF OPERATIONS (UNAUDITED) Quarters Ended June 30, 1994 and 1993 The following table shows industry segment data from the Company's three industry segments, rental operations, life insurance, and property and casualty insurance, for the quarters ended June 30, 1994 and 1993. Rental operations is composed of the operations of U-Haul and AREC. Life insurance is composed of the operations of Oxford. Property and casualty insurance is composed of the operations of RWIC.
Property/ Adjustments Rental Life Casualty and Operations Insurance Insurance Eliminations Consolidated ----------- --------- --------- ------------ ------------ (in thousands) QUARTER ENDED JUNE 30, 1994 Revenues: Outside......................... $ 280,389 $ 8,112 $ 35,077 $ -- $ 323,578 Intersegment.................... -- 372 2,627 (2,999) -- ----------- --------- --------- ---------- ----------- Total Revenue................. $ 280,389 $ 8,484 $ 37,704 $ (2,999) $ 323,578 =========== ========= ========= ========== =========== Operating profit.................. $ 53,588 $ 1,875 $ 7,001 $ -- $ 62,464 =========== ========= ========= ========== =========== Interest expense.................. 16,638 ----------- Pretax earnings from operations... $ 45,826 =========== Identifiable Assets at June 30.... $ 1,659,617 $ 461,407 $ 565,496 $ (275,139) $ 2,411,381 =========== ========= ========= ========== =========== QUARTER ENDED JUNE 30, 1993 Revenues: Outside......................... $ 254,099 $ 7,523 $ 29,726 $ -- $ 291,348 Intersegment.................... -- (114) 2,564 (2,450) -- ----------- --------- --------- ---------- ----------- Total Revenue................. $ 254,099 $ 7,409 $ 32,290 $ (2,450) $ 291,348 =========== ========= ========== ========== =========== Operating profit.................. $ 39,054 $ 2,550 $ 5,372 $ -- $ 46,976 =========== ========= ========== ========== =========== Interest expense.................. 17,338 ----------- Pretax earnings from operations... $ 29,638 =========== Identifiable Assets at June 30.... $ 1,528,430 $ 453,628 $ 441,882 $ (254,900) $ 2,169,040 =========== ========= ========== ========== ===========
RESULTS OF OPERATIONS Years Ended March 31, 1994, 1993, and 1992 The following table shows industry segment data from the Company's three industry segments, rental operations, life insurance, and property and casualty insurance, for the fiscal years ended March 31, 1994, 1993, and 1992. Rental operations is composed of the operations of U-Haul and AREC. Life insurance is composed of the operations of Oxford. Property and casualty insurance is composed of the operations of RWIC.
Property/ Adjustments Rental Life Casualty and Operations Insurance Insurance Eliminations Consolidated ----------- --------- --------- ------------ ------------ (in thousands) (in thousands) 1994 Revenues: Outside.......................... $ 965,839 $ 31,357 $ 137,659 $ -- $ 1,134,855 Intersegment..................... (357) 2,834 18,862 (21,339) -- ----------- --------- --------- ---------- ----------- Total Revenue.................. $ 965,482 $ 34,191 $ 156,521 $ (21,339) $ 1,134,855 =========== ========= ========= ========== =========== Operating profit................... $ 106,248 $ 9,106 $ 20,705 $ (698) $ 135,361 =========== ========= ========= ========== =========== Interest expense................... 68,859 ----------- Pretax earnings from operations.... $ 66,502 ========== Identifiable assets................ $ 1,593,044 $ 461,464 $ 550,795 $ (260,861) $ 2,344,442 =========== ========= ========= ========== =========== 1993 Revenues: Outside.......................... $ 891,599 $ 33,619 $ 115,693 $ -- $ 1,040,911 Intersegment..................... -- 2,630 18,402 (21,032) -- ----------- --------- --------- ---------- ----------- Total Revenue.................. $ 891,599 $ 36,249 $ 134,095 $ (21,032) $ 1,040,911 =========== ========= ========= ========== =========== Operating profit................... $ 88,581 $ 12,325 $ 16,231 $ -- $ 117,137 =========== ========= ========= ========== =========== Interest expense................... 67,958 ----------- Pretax earnings from operations.... $ 49,179 =========== Identifiable assets................ $ 1,377,386 $ 472,669 $ 422,079 $ (248,111) $ 2,024,023 =========== ========= ========== ========== =========== 1992 Revenues: Outside.......................... $ 844,492 $ 31,391 $ 96,001 $ -- $ 971,884 Intersegment..................... -- 1,158 21,991 (23,149) -- ----------- --------- --------- ---------- ----------- Total Revenue.................. $ 844,492 $ 32,549 $ 117,992 $ (23,149) $ 971,884 =========== ========= ========= ========== =========== Operating profit................... $ 69,628 $ 11,056 $ 21,239 $ -- $ 101,923 =========== ========= ========= ========== =========== Interest expense................... 76,189 ----------- --------- --------- ---------- ----------- Pretax earnings from operations.... $ 25,734 =========== ========= ========= ========== =========== Identifiable assets................ $ 1,354,758 $ 457,324 $ 402,190 $ (234,948) $ 1,979,324 =========== ========= ========= ========== ===========
QUARTER ENDED JUNE 30, 1994 VERSUS QUARTER ENDED JUNE 30, 1993 U-Haul Operations U-Haul revenues consist of (i) total rental and other revenue and (ii) net sales. Total rental and other revenue increased by $22.6 million, approximately 11.0%, to $229.1 million in the first quarter of fiscal 1995. The increase in fiscal 1995 is primarily attributable to a $23.4 million increase in net revenues from the rental of moving related equipment, which benefited from transactional growth reflecting higher utilization and rental fleet expansion. Revenues from the rental of self-storage facilities increased by $2.1 million to $18.8 million in fiscal 1995, an increase of approximately 12.6%. Storage revenues were positively impacted by additional rentable square footage, higher average occupancy levels, and higher average rental rates. Net sales were $51.3 million in the first quarter of fiscal 1995, which represented an increase of approximately 7.8% from fiscal 1994 net sales of $47.6 million. Revenue growth from the sale of hitches, moving support items (i.e., boxes, etc.), and propane resulted in a $4.2 million increase during the quarter, which was offset by a $.4 million decrease in gasoline sales. Cost of sales was $27.6 million in the first quarter of fiscal 1995, which represented a decrease of approximately 5.8% from $29.3 million in fiscal 1994. The reduction in fiscal 1994 reflects a combination of the absence of recreational vehicle part sales, reduced levels of outside repair and a reduction in inventory adjustments which fully offset increased material costs corresponding to the increase in hitch, moving support and propane sales. Operating expenses increased to $162.0 million in the first quarter of fiscal 1995 from $155.6 million in the first quarter of fiscal 1994, an increase of approximately 4.1%. The change from the prior year primarily reflects higher rental equipment maintenance costs. Efforts to reduce downtime, an increase in fleet size and higher transaction levels are primarily responsible for the increase. Lease expense declined by $12.5 million to $15.2 million reflecting lease terminations, lease restructuring, and lower finance costs on new leases originated during the past 15 months. All other operating expense categories increased in the aggregate by $8.9 million to $96.3 million. Depreciation expense for the three month period was $37.3 million, as compared to $30.1 million in the same period of the prior year, reflecting an increase in fleet size, the acquisition of trucks that were previously leased and real property acquisitions. Oxford Life Insurance Company Premiums from Oxford's reinsurance lines before intercompany eliminations were $3.8 million for the quarter ended March 31, 1994, an increase of $.5 million, approximately 15.2% over 1993 and accounted for 89.5% of Oxford's premiums in 1994. These premiums are primarily from term life insurance and single and flexible premium deferred annuities. Increases in premiums are primarily from the anticipated increase in annuitizations as a result of the maturing of deferred annuities. Premiums from Oxford's direct lines before intercompany eliminations were $.4 million in 1994, an increase of $.5 million from 1993. Oxford's direct lines are principally related to the underwriting of group life and disability income. Insurance on the lives of the employees of AMERCO and its subsidiary companies accounted for approximately 10.4% of Oxford's premiums in 1994. Unaffiliated direct lines accounted for approximately .1% of Oxford's premiums in 1994. Net investment income before intercompany eliminations was $3.6 million and $3.4 million for the period ended March 31, 1994 and 1993, respectively. Gains on the disposition of fixed maturity investments were $.2 million and $.3 million. Oxford had $.5 million of other income for both quarters ended March 31, 1994 and 1993. Benefits and expenses incurred were $6.6 million for the quarter ended March 31, 1994, an increase of 34.7% over 1993. Comparable benefits and expenses incurred for 1993 were $4.9 million. This increase is primarily due to the increase in reserve caused by the increase in annuitizations discussed above and an increase in the amortization of deferred acquisition costs. Operating profit after intercompany eliminations decreased by $.6 million, or approximately 24%, in 1994 to $1.9 million, primarily due to an increase in the amortization of deferred acquisition costs. RWIC -- Property and Casualty RWIC gross premium writings continued to grow in the first quarter of 1994 to $47.7 million, compared to $34.1 million in 1993, an increase of approximately 39.9%. The rental industry market accounted for a significant share of these premiums, approximately 19.7% and 22.6% in 1994 and 1993, respectively. These writings include U-Haul customers, fleetowners and U-Haul, as well as other rental industry insureds with similar characteristics. RWIC continues underwriting reinsurance via broker markets, and premiums in this area increased to $29.1 million or 61.0% of the total premium in fiscal 1994 from $10.8 million or 31.6% of the total premium in fiscal 1993. Net earned premiums increased $6.4 million, approximately 27%, to $30.1 million for the first quarter of fiscal 1994. This compares with net earned premiums of $23.7 million for fiscal 1993. The premium increase was primarily due to increased writings in the reinsurance area. Underwriting expenses incurred were $30.7 million for the first quarter of 1994, an increase of $3.8 million, approximately 14.1% over fiscal 1993. Comparable underwriting expenses incurred for 1993 were $26.9 million. Higher underwriting expenses are due to larger premium volumes being written in 1994, which increased acquisition costs and commensurate reserves. Net investment income was $6.9 million for the first quarter of fiscal 1994, a decrease of approximately 10.4%, as compared to 1993 net investment income of $7.7 million. The decrease is attributable to a combination of funds invested at lower rates and maturities and calls on bonds during 1993. RWIC completed the first quarter of 1994 with net after tax income of $4.9 million, as compared to $4.3 million for the comparable period ended March 1993. This represents an increase of $.6 million, or 14.0% over first quarter 1993. The increase is due to better underwriting results. Interest Expense Interest expense declined by $.7 million to $16.6 million for the quarter ended June 30, 1994, as compared to $17.3 million for the quarter ended June 30, 1993. This decrease primarily reflects a reduction in the costs of funds. Consolidated Group As a result of the foregoing, pretax earnings of $45.8 million were realized in the three months ended June 30, 1994, as compared to $29.9 million for the same period in 1993. After providing for income taxes and cumulative effect of change in accounting principle, net earnings for the three months ended June 30, 1994 were $29.4 million, as compared to $17.4 million for the same period of the prior year. FISCAL YEAR ENDED MARCH 31, 1994 VERSUS FISCAL YEAR ENDED MARCH 31, 1993 U-Haul Operations U-Haul revenues consist of (i) total rental and other revenue and (ii) net sales. Total rental and other revenue increased by $63.3 million, approximately 8.5%, to $809.4 million in fiscal 1994. The increase from fiscal 1993 is primarily attributable to a $52.2 million increase in net revenues from the rental of moving related equipment, which benefited from transactional growth reflecting higher utilization and rental fleet expansion. Revenues from the rental of self-storage facilities increased by $6.6 million to $70.5 million in fiscal 1994, an increase of approximately 10.3%. Storage revenues were positively impacted by additional rentable square footage, higher average occupancy levels, and higher average rental rates. All other revenue categories increased in the aggregate by $8.7 million during the current year, which primarily reflects increases in gains on note sales of approximately $5.0 million and interest income. Net Sales were $156.0 million in fiscal 1994, which represented an increase of approximately 7.2% from fiscal 1993 net sales of $145.5 million. Revenue growth from the sale of hitches, moving support items (i.e. boxes, etc.), and propane net sales increased $10.7 million during fiscal 1994. Cost of sales was $92.2 million in fiscal 1994, which represented a decrease of approximately 1.0% from fiscal 1993. The reduction in fiscal 1994 reflects a combination of the absence of recreational vehicle sales, reduced levels of outside repair and a reduction in inventory adjustments which fully offset increased material costs corresponding to the increase in hitch, moving support and propane sales. Operating expenses increased to $633.6 million in fiscal 1994 from $599.8 million in fiscal 1993, an increase of approximately 5.6%. The change from the prior year reflects increases in almost all major expense categories with the exception of lease expense for equipment. Rental equipment maintenance costs increased by $27.4 million reflecting fleet expansion, higher utilization, a marginal increase in the age of the fleet and increased emphasis on maximizing rental equipment available to rent by reducing downtime. Lease expense for equipment declined from $117.6 million in fiscal 1993 to $82.9 million in fiscal 1994, a decrease of approximately 29.5%, reflecting lease terminations, lease restructuring and lower finance costs on new leases originated during fiscal 1994. All other operating expense categories increased in the aggregate by $41.1 million, approximately 12.4%, to $373.0 million which is primarily attributable to higher levels of rental and sales activity. Depreciation expense during fiscal 1994 was $133.5 million as compared to $110.1 million in the prior year, reflecting the addition of new trucks and trailers and the acquisition of trucks that were previously leased. Oxford -- Life Insurance Premiums from Oxford's reinsurance lines before intercompany eliminations were $15.8 million for the year ended December 31, 1993, an increase of $0.9 million, approximately 6.0% over 1992 and accounted for 88.7% of Oxford's premiums in 1993. These premiums are primarily from term life insurance and single and flexible premium deferred annuities. Increases in premiums are primarily from the anticipated increase in annuitizations as a result of the maturing of deferred annuities. Premiums from Oxford's direct lines before intercompany eliminations were $2.0 million in 1993, a decrease of $1.0 million (33%) from the prior year. The decrease is primarily attributable to an experience refund incurred on the Company's group life insurance business. Oxford's direct lines are principally related to the underwriting of group life and disability income. Insurance on the lives of the employees of AMERCO and its subsidiary companies accounted for approximately 6.3% of Oxford's premiums in 1993. Unaffiliated direct lines accounted for approximately 5.0% of Oxford's premiums in 1993. Net investment income before intercompany eliminations was $12.6 million and $11.5 million for the years ended December 31, 1993 and 1992, respectively. The increase was primarily due to a decrease in interest credited to policyholders because of the increase in annuitizations. Gains on the disposition of fixed maturity investments were $2.1 million and $4.7 million for the years ended December 31, 1993 and 1992, respectively. Oxford had $1.8 million and $2.2 million of other income, for 1993 and 1992, respectively. Benefits and expenses incurred were $24.4 million for the year ended December 31, 1993, an increase of 5.2% over 1992. Comparable benefits and expenses incurred for 1992 were $23.2 million. This increase is primarily due to the increase in annuitizations discussed above. Operating profit after intercompany eliminations decreased by $3.4 million, approximately 27.6%, in 1993 to $8.9 million, primarily due to the decrease in gains on fixed maturity investments. RWIC -- Property and Casualty RWIC gross premium writings for the year ended December 31, 1993 were $175.1 million, compared to $155.2 million in 1992, an increase of approximately 12.8% The rental industry market accounted for a significant share of these premiums, approximately 37% and 40% in 1993 and 1992, respectively. These writings include U-Haul customers, fleetowners and U-Haul as well as other rental industry insureds with similar characteristics. Selected general agency lines, principally commercial multiple peril, surety and excess workers' compensation and casualty accounted for 8.1%, 3.2% and 5.4% respectively, of gross premium writings in 1993, compared to approximately 15.4%, 2.8% and 11.9% respectively in 1992. RWIC also underwrites reinsurance via broker markets, and premiums in this area increased from $47.1 million in 1992 to $59.5 million in 1993 due to favorable market conditions. Net earned premiums increased $24.3 million, approximately 24%, to $125.4 million for the year ended December 31, 1993. This compares with net earned premiums of $101.1 million for the year ended December 31, 1992. The premium increase was primarily due to increased writings in the reinsurance area, along with growth in the excess workers' compensation line of RWIC's general agency business. Underwriting expenses incurred were $135.6 million for the year ended December 31, 1993, an increase of $17.8 million, approximately 15.1% over 1992. Comparable underwriting expenses incurred for 1992 were $117.8 million. Higher underwriting expenses are due to larger premium volumes being written in 1993 which increased acquisition costs and commensurate reserves. Net investment income was $27.4 million in 1993, a decrease of approximately 6.5%, as compared to 1992 net investment income of $29.3 million. This decrease is due primarily to lower rates available in the high quality fixed income market. RWIC's net realized gain on the sale of investments was $2.1 million and $0.7 million in 1993 and 1992, repectively, while other income totaled $1.4 million and $2.9 million. RWIC completed 1993 with net after tax income of $14.8 million as compared to $11.8 million for the comparable period ended December 1992. This represents an increase of $3.0 million, or 25.4% over 1992. The increase is due to a combination of better underwriting results and unplanned gains on bond calls. Net income at December 31, 1992 of $11.8 million includes the effect of adopting SFAS 109 (Accounting for Income Taxes), previously reported December 31, 1992 net income was $12.8 million. Interest Expense Interest expense was $68.8 million in fiscal 1994, as compared to $68.0 million in fiscal 1993. The increase reflects higher average levels of debt outstanding (see "Liquidity and Capital Resources"), a higher proportion of fixed rate debt, and a lengthening of maturities offset by lower cost of funds. Extraordinary Loss on Extinguishment of Debt During the first and third quarters of fiscal 1994, the Company extinguished $25.2 million of its medium-term notes originally due in fiscal 1995 through 2000. The weighted average rate of the notes purchased is 9.34%. The purchase resulted in an extraordinary charge of $1,897,000 net of $1,021,000 of tax benefit. During the fourth quarter of fiscal 1994, the Company terminated swaps with a notional value of $77 million originally due in fiscal 1995. The terminations resulted in an extraordinary charge of $1,473,000 net of $793,000 of tax benefit. FISCAL YEAR ENDED MARCH 31, 1993 VERSUS FISCAL YEAR ENDED MARCH 31, 1992 U-Haul Operations U-Haul revenues consist of (i) total rental and other revenue and (ii) net sales. Total rental and other revenue increased by $57.6 million, approximately 8.4%, to $746.1 million in fiscal 1993. The increase from fiscal 1992 is primarily attributable to a $54.7 million increase in net revenues from the rental of moving related equipment, which rose to $684.1 million, as compared to $629.4 million, in fiscal 1992. Improved utilization within the truck rental fleet accounted for the majority of the revenue growth, with one-way rental transactions increasing by 6.1% and local rental transactions increasing by 16.5%. Also contributing to the increased revenues was an increase in the number of available rental trailers and trucks. Revenues from the rental of self-storage facilities increased $5.3 million to $63.9 million in fiscal 1993, an increase of approximately 9.2%. Storage revenues were positively impacted by additional rentable square footage, higher average occupancy levels, and higher average rental rates. The increases in revenues from the rental of moving-related equipment and self-storage facilities were partially offset by an aggregate decrease of $2.4 million in general rental item revenues, gains on the sale of property, plant, and equipment, and other miscellaneous revenues. Net sales were $145.5 million in fiscal 1993, which represented a decrease of approximately 6.7% from fiscal 1992 net sales of $156.0 million. Moderate revenue growth from the sale of hitches, moving support items (i.e. boxes, etc.), and propane was offset by reduced sales of recreational vehicles due to the liquidation of inventory as well as a reduction in outside repair income due to a reduction in rental trucks owned by a third party, which were previously under a managed equipment agreement. Cost of sales was $93.1 million in fiscal 1993, which represented a decrease of approximately 9.5% from fiscal 1992. The reduction in fiscal 1993 reflects reductions in recreational vehicle sales and outside repair income. Operating expenses increased to $599.8 million in fiscal 1993 from $562.3 million in fiscal 1992, an increase of approximately 6.7%. The change from the prior year primarily reflects increased rental equipment maintenance costs and higher personnel costs. The higher maintenance costs reflect a slight increase in the age of the truck fleet due to no new units being added in fiscal 1992 and a relatively small number of new units being added in fiscal 1993. Also contributing to higher maintenance costs were U-Haul's repurchase of rental trucks owned by a third party, which were previously under a managed equipment agreement, and higher utilization. Lease expense for the fleet replacement cycle initiated in 1987 peaked in fiscal 1992 at $121.9 million and subsequently declined to $117.6 million in fiscal 1993, a decrease of approximately 3.5%. Oxford -- Life Insurance Premiums from Oxford's reinsurance lines before intercompany eliminations were $14.9 million for the year ended December 31, 1992, a decrease of $4.1 million, approximately 21.6% from 1991 and accounted for 83.3% of Oxford's premiums in 1992. These premiums are primarily from term life insurance and single and flexible premium deferred annuities. Reductions in premiums reflect the anticipated decrease in renewal premiums as a result of normal attrition and mortality, combined with the fact that during 1992 Oxford reduced its activities in the reinsurance market compared to 1991 because of unfavorable market conditions. Premiums from Oxford's direct lines before intercompany eliminations were $3.0 million in 1992, an increase of $1.5 million (100%) over the prior year. The increase is primarily due to the issuance of a single premium immediate annuity of $0.8 million. Oxford's other direct lines are principally related to the underwriting of group life and disability income. Insurance on the lives of the employees of AMERCO and its subsidiary companies accounted for approximately 10.8% of Oxford's premiums in 1992. Unaffiliated direct lines accounted for approximately 5.9% of Oxford's premiums in 1992. Net investment income before intercompany eliminations was $11.5 million and $10.2 million for the years ended December 31, 1992 and 1991, respectively. The increase is due to increased margins on interest-sensitive business. Gains on the disposition of fixed maturity investments were $4.7 million and $0.1 million. Oxford had $2.2 million and $1.6 million of other income, for 1992 and 1991, respectively. Other income consists of administration fees and income on the surrender of annuities. Benefits and expenses incurred were $23.2 million for the year ended December 31, 1992, an increase of 7.9% over 1991. Comparable benefits and expenses incurred for 1991 were $21.5 million. This increase is primarily due to the increase in deferred acquisition cost amortization discussed below. Operating profit increased by $1.3 million, approximately 11.5%, in 1992 to $12.3 million, primarily due to increased margins on interest-sensitive business and gains on disposition or prepayments of fixed maturity investments. As required by generally accepted accounting principles, the amortization of deferred policy acquisition costs was accelerated due to gains on the fixed maturity investments associated with interest-sensitive products, resulting in a charge of approximately $2.0 million. RWIC -- Property and Casualty RWIC gross premium writings for the year ended December 31, 1992 were $155.2 million, compared to $133.7 million in 1991, an increase of approximately 16.1%. The rental industry market accounted for a significant share of these premiums, approximately 40% and 53% in 1992 and 1991, respectively. These writings include U-Haul customers, fleetowners, and U-Haul, as well as other rental industry insureds with similar characteristics. Selected general agency lines, principally commercial multiple peril, surety and excess workers compensation and casualty accounted for approximately 15.4%, 2.8%, and 11.9% respectively, of gross premium writings in 1992, compared to approximately 12.8%, 1.8%, and 14.8% respectively, in 1991. RWIC also underwrites reinsurance via broker markets, and premiums in this area increased from $23.1 million in 1991 to $47.1 million in 1992 due to favorable market conditions. Net earned premiums increased $12.3 million, approximately 13.9%, to $101.1 million for the year ended December 31, 1992. This compares with net earned premiums of $88.8 million for the year ended December 31, 1991. The premium increase was primarily due to increased writings in the reinsurance area, along with growth in the commercial multiple peril lines of RWIC's general agency business. Underwriting expenses incurred were $117.8 million for the year ended December 31, 1992, an increase of $21.1 million, approximately 21.8%, over 1991. Comparable underwriting expenses incurred for 1991 were $96.7 million. Higher underwriting expenses due to losses related to Hurricane Andrew (approximately $12 million on a pre-tax basis) incurred in the reinsurance area were the largest contributors to this increase, and accounted for approximately 57% of the increase. Net investment income was $29.3 million in 1992, a decrease of approximately 0.7%, as compared to 1991 net investment income of $29.5 million. The slight decrease in net investment income is due largely to the lower rates available in the high quality fixed income market. RWIC's gain on the sale of investments was $0.7 million and $0.6 million, and RWIC had $2.9 million of other income for 1992 and other expense of $0.9 million for 1991. RWIC's operating profit in 1992 decreased $5.0 million, approximately 23.6%, to $16.2 million from $21.2 million for the year ended December 31, 1991. Interest Expense Interest expense was $68.0 million in fiscal 1993, as compared to $76.2 million in fiscal 1992. The decline in interest expense reflects lower average debt levels outstanding and favorable refinance costs on maturing debt. Result of Operations -- Consolidated Group As a result of the foregoing, pre-tax earnings of $66.0 million were realized in fiscal 1994 as compared to $49.2 million in fiscal 1993 and $25.7 million in fiscal 1992. After providing for income taxes, extraordinary costs associated with the early retirement of debt and the cumulative effect of a change in accounting principle, net earnings for fiscal 1994 were $40.2 million as compared to $31.9 million in fiscal 1993 and $20.8 million in fiscal 1992. Income tax as a percentage of pretax earnings from operations was 35.1% in 1993 compared to 19.2% in 1992, due to the Company's increased taxable earnings and the relative impact of tax-exempt interest. QUARTERLY RESULTS The following table presents unaudited quarterly results for the nine quarters in the period beginning April 1, 1992 and ending June 30, 1994. The Company believes that all necessary adjustments have been included in the amounts stated below to present fairly, and in accordance with generally accepted accounting principles, the selected quarterly information when read in conjunction with the Consolidated Financial Statements included elsewhere herein. The Company's results of operations have historically fluctuated from period to period, including on a quarterly basis. In particular, the Company's U-Haul business is seasonal and a majority of the Company's revenues and substantially all of its net earnings from its U-Haul business are generated in the first and second quarters of each fiscal year (April through September). The operating results for the periods presented are not necessarily indicative of results for any future period.
Quarters Ended (in thousands, except per share data) ------------------------------------------------------------------------------------------------------ June 30, Sept. 30, Dec. 31, March 31, June 30, Sept. 30, Dec. 31, March 31, June 30, 1992 1992 1992 1993 1993 1993 1993 1994 1994 --------- --------- ---------- ---------- --------- --------- --------- ---------- ----------- Total Revenues............. $ 274,744 $ 303,871 $ 242,921 $ 219,375 $ 291,348 $ 324,968 $ 267,448 $ 251,091 $ 323,578 Net Earnings (loss)........ 24,982 26,736 (6,843) (12,966) 17,359 30,601 1,799 (9,575) 29,413 Net Earnings per common share .... .65 .69 (.18) (.34) .47 .79 .01 (.33) .71 - ---------- For the quarters ended December 31, 1993, March 31, 1994 and June 30, 1994 net earnings per common share amounts were computed after giving effect to the dividend on the Company's Series A 81/2% Preferred Stock. See "Description of Capital Stock -- Dividends."
LIQUIDITY AND CAPITAL RESOURCES U-Haul Operations To meet the needs of its customers, U-Haul must maintain a large inventory of fixed asset rental items. At June 30, 1994, net property, plant and equipment represented approximately 73.8% of total U-Haul assets and approximately 50.8% of consolidated assets. In the first quarter of fiscal 1995, capital expenditures were $144.8 million, as compared to $226.8 million in the first quarter of fiscal 1994. These expenditures reflect expansion of the rental truck fleet, purchase of trucks previously leased, and real property acquisitions. The capital needs required to fund these acquisitions were funded with internally generated funds from operations, debt, and lease financings. Cash flows from operations was $113.2 million in the first quarter of fiscal 1995, as compared to $61.6 million in the first quarter of fiscal 1994. The increase results from an increase in net earnings, depreciation and amortization and net change in other operating assets and liabilities, specifically receivables, accounts payable and accrued liabilities, and deferred credits. At June 30, 1994, total notes and loans payable outstanding was $725.6 million as compared to $723.8 million at March 31, 1994 and $766.9 million at June 30, 1993. During each of the fiscal years ending March 31, 1995, 1996, and 1997, U-Haul estimates gross capital expenditures will average approximately $360 million as a result of the expansion of the rental truck fleet and self-storage segment. This level of capital expenditures, combined with an average of approximately $100 million in annual long-term debt maturities during this same period, are expected to create annual average funding needs of approximately $460 million. Management estimates that U-Haul will fund approximately 55% of these requirements with internally generated funds, including proceeds from the disposition of older trucks and other asset sales. The remainder of the required capital expenditures are expected to be financed through existing credit facilities, new debt placements, lease fundings, and equity offerings. Oxford Life Insurance Company Oxford's primary sources of cash are premiums, receipts from interest-sensitive products and investment income. The primary uses of cash are operating costs and benefit payments to policyholders. Matching the investment portfolio to the cash flow demands of the types of insurance being written is an important consideration. Benefit and claim statistics are continually monitored to provide projections of future cash requirements. Cash (used) provided by operations and financing was ($3.5) million and $3.0 million for the three month period ended March 31, 1994. Cash provided by operations and financing for the same period ended March 31, 1993 was $3.0 million. During 1994 and 1993 there were no cash flows from new reinsurance agreements. In addition to cash flow from operations and financing activities, a substantial amount of liquid funds is available through Oxford's short-term portfolio. At March 31, 1994 and 1993, short-term investments amounted to $18.5 million and $9.8 million, respectively. Management believes that the overall sources of liquidity will continue to meet foreseeable cash needs. Stockholder's equity of Oxford, excluding investment in RWIC, decreased to $88.2 million in 1994 from $92.5 million in 1993. In May 1993, Oxford paid dividends of $10.0 million to Ponderosa. Applicable laws and regulations of the State of Arizona require the Company's insurance subsidiaries to maintain minimum capital determined in accordance with statutory accounting practices in the amount of $600,000. In addition, the amount of dividends that can be paid to stockholders by insurance companies domiciled in the State of Arizona is limited. Any dividend in excess of the limit requires prior approval of the Insurance Commissioner. Statutory surplus that can be distributed as dividends is $17,076,000 at March 31, 1993. These restrictions are not expected to have a material adverse effect on the ability of the Company to meet its cash obligations. RWIC -- Property and Casualty RWIC's short-term investment portfolio was $6.6 million at March 31, 1994. This level of liquid assets, combined with budgeted cash flow, is believed by management to be adequate to meet periodic needs. The structure of the long-term portfolio is designed to match future cash needs. Through capital and operating budgets, RWIC seeks to schedule cash needs in accordance with investment and underwriting proceeds. RWIC does not have plans for any near-term large capital outlays. RWIC maintains a diversified investment portfolio, primarily in bonds at varying maturity levels. Approximately 98.2% of the portfolio consists of investment grade securities. The maturity distribution is designed to provide sufficient liquidity to meet future cash needs. Current liquidity is adequate, with current invested assets equal to 98.7% of total liabilities. The liability for unpaid losses is based on the estimated ultimate cost of settling claims reported prior to the end of the accounting period, estimates received from ceding reinsurers and estimates for unreported losses based on the historical experience of RWIC, supplemented by insurance industry historical experience. Unpaid loss adjustment expenses are based on historical ratios of loss adjustment expenses paid to losses paid. Unpaid loss and loss expenses are not discounted. Stockholder equity increased 2.3% from $165.1 million at December 31, 1993 to $168.9 million at March 31, 1994. RWIC considers current stockholders' equity to be adequate to support future growth and absorb unforseen risk events. RWIC does not use debt or equity issues to increase capital and therefore has no exposure to capital market conditions. During the first quarter of 1994, RWIC paid no stockholder dividends. Credit Agreements The Company's operations are funded by various credit and financing arrangements, including unsecured long-term borrowings, unsecured medium-term notes, and revolving lines of credit with domestic and foreign banks. Principally to finance its fleet of trucks and trailers, the Company routinely enters into sale and leaseback transactions. As of June 30, 1994, the Company had $725.5 million in total notes and loans payable outstanding and unutilized lines of credit of approximately $375 million. Certain of the Company's credit agreements contain restrictive financial and other covenants, including, among others, covenants with respect to incurring additional indebtedness, maintaining certain financial ratios, and placing certain additional liens on its properties and assets. At June 30, 1994, the Company was in compliance with these covenants. In addition, these credit agreements contain provisions that could result in a required prepayment upon a "change in control" of the Company. Approximately $509 million of the Company's outstanding debt was covered by such credit agreements as of June 30, 1994. Under certain of the Company's credit agreements, a "change in control" is deemed to occur if (a) any transfer of any shares of any class of capital stock results in the Company's ESOP and members of the Shoen family owning in the aggregate less than the amount of capital stock as may be necessary to enable them to cast in excess of 50% of the votes for the election of directors of the Company or (b) during any period for two consecutive years, persons who at the beginning of such period constituted the Board of Directors of the Company (including any director approved by a vote of not less than 662/3% of such board) cease for any reason to constitute greater than 50% of the then acting Board. OTHER Statement of Financial Accounting Standards No. 106, "Employers" Accounting for Postretirement Benefits Other Than Pensions," was issued by the Financial Accounting Standards Board in December 1990. The statement requires that the expected costs of health care and life insurance provided to retired employees by recognized as expense during the years employees render service. The Company adopted the provisions of this statement effective April 1, 1993. The accumulated postretirement benefit obligation recognized by the Company at April 1, 1993 was $5.0 million. Net of income taxes, the cumulative effect of adoption at April 1, 1993 was $3.1 million. Further, during the first quarter of fiscal 1994 the Company adopted the Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." This statement requires a change from the deferred to the liability method of computing deferred income taxes. The adoption of the provisions of this statement resulted in a $11.1 million net increase in deferred income taxes payable. The Company adopted this change retroactively to April 1, 1988. For additional information, see Note 7 of Notes to Consolidated Financial Statements. In November 1992, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 112, "Employers" Accounting for Postemployment Benefits." The statement applies to employers who provide certain benefits to former or inactive employees after employment but before retirement. It requires that the cost of such benefits be recognized over the service period of employees as these benefits vest or accumulate. The provisions of this statement must be adopted for fiscal years beginning after December 15, 1993. The effect of this statement on the Company's financial position or results of operations will not be material. In December 1992, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 113, "Accounting and Reporting for Reinsurance of Short-Duration and Long-Duration Contracts." Effective January 1, 1993, the Company adopted the standard. The primary impact on the Company's financial statements is the requirement to report assets and liabilities relating to reinsured contracts gross of the effects of reinsurance. Previously, such effects were reported on a net basis. As a result of adoption of the standard, unpaid losses and loss expenses as of March 31, 1994 have been increased by approximately $76 million to reflect the Company's policy liabilities without regard to reinsurance. A corresponding amount due from reinsurers on unpaid losses, including amounts related to claims incurred but not reported, has also been reflected. Additionally, unearned premiums have been increased by approximately $12 million for policy premiums ceded to reinsurers for which the coverage period has not yet expired. Prepaid insurance premiums of a corresponding amount have also been reflected in the consolidated balance sheet. The consolidated balance sheet as of March 31, 1993 has not been restated to reflect the adoption of the standard. Statement of Financial Accounting Standards No. 114, "Accounting by Creditors for Impairment of a Loan," was issued by the Financial Accounting Standards Board in May 1993. This standard is effective for years beginning after December 15, 1994. The standard requires that an impaired loan's fair value be measured and compared to the recorded investment in the loan. If the fair value of the loan is less than the recorded investment in the loan, a valuation allowance is established. The Company has not completed an evaluation of the effect of this standard. Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities," was issued by the Financial Accounting Standards Board in May 1993. This standard requires classification of debt securities into one of the following three categories based on management's intention with regard to such securities: held-to-maturity, available-for-sale and trading. Securities classified as held-to-maturity are recorded at cost adjusted for the amortization of premiums or accretion of discounts while those classified as available-for-sale are recorded at fair value with unrealized gains or losses reported on a net basis in a separate component of stockholders' equity. Securities classified as trading are recorded at fair value with unrealized gains or losses reported on a net basis in income. Effective December 31, 1993, RWIC adopted the standard. RWIC does not currently maintain a trading portfolio. Oxford and U-Haul have not completed an evaluation of this standard. Statement of Position 93-7, "Reporting on Advertising Costs," was issued by the Accounting Standards Executive Committee in December 1993. This statement of position provides guidance on financial reporting on advertising costs in annual financial statements. The statement of position requires reporting advertising costs as expenses when incurred or when the advertising takes place, reporting the costs of direct-response advertising, and amortizing the amount of direct-response advertising reported as assets. This statement of position is effective for financial statements for years beginning after June 15, 1994. The Company currently matches certain advertising costs with revenue generated in future periods, and at March 31, 1994, $8.2 million in advertising costs are deferred and included in prepaid expenses. The Company has completed an evaluation of the effect of this statement of position but has not determined the timing of adoption. IMPACT OF INFLATION Inflation has had no material financial effect on the Company's results of operations in the years discussed. BUSINESS HISTORY The Company was founded in 1945 under the name "U-Haul Trailer Rental Company." From 1945 to 1975, the Company rented trailers and trucks on a one-way and local round-trip basis through independent dealers (at that time principally independent gasoline service stations). Since 1974, the Company has developed a network of Company-owned rental centers ("U-Haul Centers") (through which U-Haul rents its trucks and trailers and provides a number of other related products and services) and has expanded the number and geographic diversity of its independent dealers. At June 30, 1994, the Company's distribution network included approximately 1,000 U-Haul Centers and approximately 11,600 independent dealers. In March 1974, in conjunction with the acquisition and construction of U-Haul Centers, the Company entered the self-storage business. As of June 30, 1994, such self-storage facilities were located at or near approximately 64% of the Company's U-Haul Centers. Beginning in 1974, the Company introduced the sale and installation of hitches and towing systems, as well as the sale of support items such as packing and moving aids. During 1983, the Company expanded its range of do-it-yourself rental products to include tools and equipment for the homeowner and small contractor and other general rental items. In 1969, the Company acquired Oxford to provide employee health and life insurance for the Company in a cost-effective manner. In 1973, the Company formed RWIC to provide automobile liability insurance for the U-Haul truck and trailer rental customers. Commencing in 1987, the Company began the implementation of a strategic plan designed to emphasize reinvestment in its core do-it-yourself rental, moving, and storage business. The plan included a fleet renewal program (see "Business - -- U-Haul Operations -- Rental Equipment Fleet"), and provided for the discontinuation of certain unprofitable and unrelated operations. As part of its plan, the Company discontinued the operation of its full-service moving van lines, initiated the phase out of its recreational vehicle rental operations, and began the disposition of its recreational vehicle rental fleet. The disposition of the moving van lines' assets and the recreational vehicle rental fleet were completed in 1988 and 1992, respectively. The Company also eliminated various types of rental equipment and closed certain warehouses and repair facilities. The Company believes that its refocused business strategy enabled U-Haul to generate higher revenues and to achieve significant cost savings. This plan has been and continues to be vigorously opposed by the Outside Stockholder Group and would in all likelihood not be pursued in the event of a change in control. See "Risk Factors -- Existing Management -- Potential Change in Control." Since 1987, the Company has sold surplus real estate assets with a book value of approximately $38.2 million for total proceeds of approximately $76.7 million. At June 30, 1994, the book value of the Company's real estate assets deemed to be surplus was approximately $18.3 million. In 1990, the Company reorganized its operations into separate legal entities, each with its own operating, financial, and investment strategies. The reorganization separated the Company into three parts: U-Haul rental operations, insurance, and real estate. The purpose of the reorganization was to increase management accountability and to allow the allocation of capital based on defined performance measurements. BUSINESS STRATEGY U-HAUL OPERATIONS The Company's present business strategy remains focused on the do-it-yourself moving customer. The objective of this strategy is to offer, in an integrated manner over a diverse geographical area, a wide range of products and services to the do-it-yourself moving customer. Through its "Moving Made Easier(R)" program, the Company strives to offer its customers a high quality, reliable, and convenient fleet of trucks and trailers at reasonable prices while simultaneously offering other related products and services, including moving accessories, self-storage facilities, and other items often desired by the do-it-yourself mover. The rental trucks purchased in the fleet renewal program have been designed with the do-it-yourself customer in mind to include features such as low decks, air conditioning, power steering, automatic transmissions, soft suspensions, AM/FM cassette stereo systems, and over-the-cab storage. The Company has introduced certain insurance products, including "Safemove(R)" and "Safestor(R),"to provide the do-it-yourself mover with certain moving-related insurance coverage. In addition, the Company provides rental customers the option of storing their possessions at either their points of departure or destination. The Company believes that customer access, in terms of truck or trailer availability and proximity of rental location, is critical to its success. Since 1987, the Company has more than doubled the number of U-Haul rental locations, with a net addition of approximately 6,000 independent dealers. To effectively service the U-Haul customer at these additional rental locations with equipment commensurate with the Company's commitment to product excellence, the Company, as part of the fleet renewal program, purchased approximately 67,000 new trucks between March 1987 and June 1994 and reduced the overall average age of its truck fleet from approximately 11 years at March 1987 to approximately 5 years at June 1994. During this period, approximately 61,000 trucks were retired or sold. Since 1990, U-Haul has replaced approximately 49% of its trailer fleet with new, more aerodynamically designed trailers better suited to the low height profile of many newly manufactured automobiles. Given the mechanical simplicity of a trailer relative to a truck and a trailer's longer useful life, the Company expects to replace trailers only as necessary. Beginning in 1983, the Company implemented a point-of-sale computer system for all of its Company-owned locations. The system was designed primarily to handle the Company's reservations, traffic, and reporting of rental transactions. The Company believes that the implementation of the system has been a significant factor in allowing the Company to increase its fleet utilization. Since the initial implementation, the Company has added several additional enhancements to the system, including full budgeting and financial reporting systems. INSURANCE OPERATIONS Oxford's business strategy emphasizes long-term capital growth funded through earnings from reinsurance and investment activities. In the past, Oxford has selectively reinsured life, health, and annuity-type insurance products. Oxford anticipates pursuing its growth strategy by providing reinsurance facilities to well-managed insurance or reinsurance companies offering similar type products who are desirous of additional capital either as a result of rapid growth or regulatory demands or who are divesting non-core business lines. RWIC's principal business strategy is to capitalize on its knowledge of insurance products aimed at the moving and rental markets. RWIC believes that providing U-Haul and U-Haul customers with property and casualty insurance coverage has enabled it to develop expertise in the areas of rental vehicle lessee insurance, self-storage property coverage, motorhome insurance coverage, and general rental equipment coverage. RWIC has used and plans to continue to use this knowledge to expand its customer base by offering similar products to customers other than U-Haul. In addition, RWIC plans to expand its involvement in specialized areas by offering commercial multi-peril and surety coverage and by assuming reinsurance business. U-HAUL OPERATIONS GENERAL The Company's do-it-yourself moving business operates under the U-Haul name through an extensive and geographically diverse distribution network of Company-owned U-Haul Centers and independent dealers throughout the United States and Canada. Substantially all of the Company's rental revenue is derived from do-it-yourself moving customers. The remaining business comes from commercial/ industrial customers. Moving rentals include: (i) local (round-trip) rentals, where the equipment is returned to the originating U-Haul Center or independent dealer and (ii) one-way rentals, where the equipment is returned to a U-Haul Center or independent dealer in another city. Typically, the number of local rental transactions in any given year is substantially greater than the number of one-way rental transactions. However, total revenues generated by one-way transactions in any given year typically exceed total revenues from local rental transactions. As part of the Company's integrated approach to the do-it-yourself moving market, U-Haul has a variety of product offerings. U-Haul's "Moving Made Easier(R)" program is designed to offer safe, well-equipped rental trucks and trailers at a reasonable price and to provide support items such as furniture pads, hand trucks, appliance and utility dollies, mirrors, tow bars, tow dollies, and bumper hitches. The Company also sells boxes, tape, and packaging materials and rents additional items such as floor polishers and carpet cleaning equipment at its U-Haul Center locations. U-Haul Centers also install hitches and sell propane, and some of them sell gasoline. U-Haul sells insurance packages such as (i) "Safemove(R)," which provides moving customers with a damage waiver, cargo protection, and medical and life coverage, and (ii) "Safestor(R)," which provides self-storage rental customers with various insurance coverages. The U-Haul truck and trailer rental business tends to be seasonal with more transactions and revenues generated in the spring and summer months than during the balance of the year. The Company attributes this seasonality to the preference of do-it-yourself movers to move during this time. Also, consistent with do-it-yourself mover preferences, the number of rental transactions tends to be higher on weekends than on weekdays. RENTAL EQUIPMENT FLEET As of June 30, 1994, U-Haul's rental equipment fleet consisted of approximately 76,000 trucks and approximately 90,000 trailers. Rental trucks are offered in five sizes and range in size from the ten-foot "Mini-Mover(R)" to the twenty-six-foot "Super-Mover(R)." In addition, U-Haul offers pick-up trucks and cargo vans at many of its locations. Trailers range between six feet and twelve feet in length and are offered in both open and closed box configurations. DISTRIBUTION NETWORK The Company's U-Haul products and services are marketed across the United States and Canada through, as of June 30, 1994, approximately 1,000 Company-owned U-Haul Centers and approximately 11,600 independent dealers. The independent dealers, which include gasoline station operators, general equipment rental operators, and others, rent U-Haul trucks and trailers in addition to carrying on their principal lines of business. U-Haul Centers, however, are dedicated to the U-Haul line of products and services and offer those and related products and services. Independent dealers are commonly located in suburban and rural markets, while U-Haul Centers are concentrated in urban and suburban markets. Independent dealers receive U-Haul equipment on a consignment basis and are paid a commission on gross revenues generated from their rentals. Independent dealers also may earn referral commissions on U-Haul products and services provided at other U-Haul locations. The Company maintains contracts with its independent dealers that can be cancelled upon thirty days' written notice by either party. In addition, the Company has sought to improve the productivity of its rental locations by installing computerized reservations and network management systems in each U-Haul Center and a limited number of independent dealers. The Company believes that these systems have been a major factor in enabling the Company to deploy equipment more effectively throughout its network of locations and anticipates expanding these systems to cover additional independent dealers. The Company's U-Haul Center and independent dealer network in the United States and Canada is divided into 12 districts, each supervised by an area district vice president. Within the districts, the Company has established local marketing companies, each of which, guided by a marketing company president, is responsible for retail marketing at all U-Haul Centers and independent dealers within its respective geographic area. Although rental dealers are independent, U-Haul area field managers oversee the dealer network by inspecting each independent dealer's facilities and auditing their activities on a regular basis. In addition, the area field managers recruit new independent dealers for expansion or replacement purposes. U-Haul has instituted performance compensation programs that focus on accomplishment and reward strong performers. SELF-STORAGE BUSINESS U-Haul entered the self-storage business in 1974 and since that time has increased the rentable square footage of its storage locations through the acquisition of existing facilities and new construction. In addition, the Company has entered into management agreements to manage self-storage properties owned by other companies and is exploring the possibility of expanding this type of operation as well as expanding its ownership of self-storage facilities. The Company also provides financing and management services for independent self-storage businesses. Through approximately 650 Company-owned locations in the United States and Canada, the Company offers for rent more than 13.0 million square feet of self-storage space. The Company's self-storage facility locations have an average of 20,000 square feet of storage space, with individual storage spaces ranging in size from 16 square feet to 200 square feet. Units are rented to individuals and businesses for temporary storage on a monthly basis. In fiscal 1994, occupancy rates increased to approximately 91% from approximately 85% in the prior year. During fiscal 1994 and fiscal 1993, delinquent rentals as a percentage of total storage rentals were approximately 5% in each year, which rate the Company considers to be satisfactory. EQUIPMENT DESIGN, MANUFACTURE AND MAINTENANCE The Company designs and manufactures its truck van boxes, trailers, and various other support rental equipment items. With the needs of the do-it-yourself moving customer in mind, the Company's equipment is designed to achieve high safety standards, simplicity of operation, reliability, convenience, durability, and fuel economy. Truck chassis are manufactured to Company specifications by both foreign and domestic truck manufacturers. These chassis receive certain post-delivery modifications and are joined with van boxes at 7 Company-owned manufacturing and assembly facilities in the United States. The Company services and maintains its trucks and trailers through a periodic maintenance program. Regular vehicle maintenance is generally performed at Company-owned facilities located throughout the United States and Canada. Major repairs are performed either by the chassis manufacturers' dealers or by Company-owned repair shops. To the extent available, the Company takes advantage of manufacturers' warranties. Since the fleet renewal program began in fiscal 1987, the number of repair locations has been reduced significantly. Maintenance costs declined from a high of $163.0 million in fiscal 1987 to a low of $80.5 million in fiscal 1989. However, due to a reduction both in new truck purchases and older truck retirements in fiscal 1992 and fiscal 1993, maintenance expense increased to $150.3 million in fiscal 1993 and $177.7 million in fiscal 1994. During fiscal 1994, the Company, as part of its fleet renewal program, resumed the purchase and manufacture of new trucks with the objective of increasing the size of the truck fleet. COMPETITION The do-it-yourself moving truck and trailer rental market is highly competitive and dominated by national operators in both the local and one-way markets. These competitors include the truck rental divisions of Ryder System, Penske Truck Leasing, and Budget Rent-A-Car. Management believes that there are two distinct users of rental trucks: commercial users and do-it-yourself users. As noted above, the Company focuses on the do-it-yourself mover. The Company believes that the principal competitive factors are price, convenience of rental locations, and availability of quality rental equipment. The self-storage industry is also highly competitive. In addition to the Company, there are two other national firms, Public Storage and Shurgard, and numerous regional and local operators. Efficient management of occupancy and delinquency rates, as well as price and convenience, are key competitive factors. EMPLOYEES For the period ending June 30, 1994, the Company's non-seasonal workforce consisted of approximately 11,300 employees comprised of approximately 46% part-time and 54% full-time employees. During the summer months, the Company increases its workforce by approximately 1,000 employees. The percentage of part-time employees was approximately 46% of the total workforce on June 30, 1994. The Company's employees are non-unionized, and management believes that its relations with its employees are satisfactory. INSURANCE OPERATIONS OXFORD -- LIFE INSURANCE Oxford underwrites life, health and annuity insurance, both as a direct writer and as an assuming reinsurer. Oxford's direct lines are primarily related to group life and disability coverage issued to employees of AMERCO and its subsidiaries. For the year ended December 31, 1993, approximately 6.3% of Oxford's premium revenues resulted from business with AMERCO and its subsidiaries. Oxford's other direct writings include individual life insurance acquired from other insurers and a small volume of individual annuity products written through independent agents, which together accounted for approximately 5.0% of Oxford's premium revenues for the year ended December 31, 1993. Oxford administers AMERCO's self-insured group health and dental plans. Oxford's reinsurance assumed lines, which accounted for approximately 88.7% of Oxford's premium revenues for the year ended December 31, 1993, include individual life insurance coverage, annuity coverages, excess loss health insurance coverage, and short-term travel accident coverage. These reinsurance arrangements are entered into with unaffiliated insurers, except for travel accident products reinsured from RWIC. RWIC -- PROPERTY AND CASUALTY RWIC's underwriting activities consist of three basic areas: U-Haul and U-Haul affiliated underwriting; direct underwriting; and assumed reinsurance underwriting. U-Haul underwritings include coverage for U-Haul and U-Haul employees, and U-Haul affiliated underwritings consist primarily of coverage for U-Haul customers. For the year ended December 31, 1993, approximately 38% of RWIC's written premiums resulted from U-Haul and U-Haul affiliated underwriting activities. RWIC's direct underwriting is done through home office underwriters and selected general agents. The products provided include liability coverage for rental vehicle lessees and storage rental properties, and coverage for commercial multiple peril, surety, and excess workers' compensation. RWIC's assumed reinsurance underwriting is done via broker markets and includes, among other things, reinsurance of municipal bond insurance written through MBIA, Inc. RWIC provides a liability for unpaid losses that is based on the estimated ultimate cost of settling claims reported prior to the end of the accounting period, estimates received from ceding reinsurers and estimates for incurred but unreported losses based on RWIC's historical experience supplemented by insurance industry historical experience. Unpaid loss adjustment expenses are based on historical ratios of loss adjustment expense paid to losses paid. The liabilities are estimates necessary to settle all claims as of the date of the stated reserves and all incurred but not reported claims. RWIC updates the reserves as additional facts regarding claims become apparent. In addition, court decisions, economic conditions and public attitudes impact the estimation of reserves and also the ultimate cost of claims. In estimating reserves, no attempt is made to isolate inflation from the combined effect of numerous factors including inflation. Unpaid losses and unpaid loss expenses are not discounted. RWIC's unpaid loss and loss expenses are certified annually by an independent actuarial consulting firm as required by state regulation. The following table is a reconciliation in summary form, for each of the last three years, of the beginning and end of year unpaid loss and loss expenses: For the Years Ended December 31 ------------------------------- 1993 1992 1991 --------- --------- --------- (in thousands) Unpaid loss and loss expenses, beginning of year.......................... $ 238,762 $ 236,019 $ 226,324 --------- --------- --------- Losses and loss adjustment expenses: attributable to the current year........... 91,044 96,451 74,510 Increase (Decrease) attributable to prior years........................... 12,688 (4,241) 3,124 --------- ---------- --------- Total................................ 103,732 92,210 77,634 --------- ---------- ---------- Payments: Loss and loss adjustment expenses attributable to current year............. 20,200 23,936 12,810 Payments attributable to prior years....... 83,923 65,531 55,129 --------- --------- --------- Total................................ 104,123 89,467 67,939 --------- --------- --------- Increase due to adoption of FAS113........... 76,111 -- -- --------- --------- --------- Unpaid loss and loss expenses, end of year... $ 314,482 $ 238,762 $ 236,019 --------- --------- --------- Effective December 31, 1993, RWIC adopted Statement of Financial Accounting Standards (SFAS) No. 113, "Accounting and Reporting for Reinsurance of Short-Duration and Long-Duration Contracts." The primary impact of SFAS No. 113 is the requirement to report assets and liabilities relating to reinsured contracts gross of the effects of reinsurance. Previously, RWIC reported such effects on a net basis. As a result of adoption of SFAS No. 113, the liability for unpaid losses and loss adjustment expenses as of December 31, 1993 has been increased approximately $76 million to reflect policy liabilities without regard to reinsurance. A corresponding amount due from reinsurers on unpaid losses, including amounts related to claims incurred but not reported, has also been reflected. The table on the next page illustrates the change in unpaid loss and loss expenses. The first line shows the reserves as originally reported at the end of the stated year. The second section, reading down, shows the cumulative amounts paid as of the end of successive years with respect to that reserve. The third section, reading down, shows reestimates of the original recorded reserve as of the end of successive years. The last section compares the latest reestimated reserve amount to the reserve amount as originally established. This last section is cumulative and should not be summed.
Unpaid Loss and Loss Expenses December 31 ------------------------------------------------------------------------------------------------------------- 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 --------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- (in thousands) Reserve for Unpaid Loss and Loss Adjusment Expenses: $ 67,129 90,315 123,342 146,391 168,688 199,380 207,939 226,324 236,019 238,762 314,482 PAID (CUMULATIVE) AS OF : One year later 21,140 24,602 41,170 54,627 49,681 59,111 50,992 55,128 65,532 83,923 Two years later 35,340 50,628 77,697 92,748 91,597 89,850 87,850 97,014 105,432 Three years later 47,544 70,719 105,160 124,278 110,834 114,979 116,043 120,994 Four years later 56,197 84,936 126,734 137,744 129,261 133,466 132,703 Five years later 61,826 95,583 133,421 151,354 142,618 145,864 Six years later 68,722 98,018 142,909 161,447 152,579 Seven years later 68,496 102,805 151,379 169,601 Eight years later 70,822 109,055 158,728 Nine years late r 74,809 114,334 Ten years later 77,700 RESERVE REESTIMATED AS OF : One year later 72,462 101,097 138,287 167,211 187,663 200,888 206,701 229,447 231,779 251,450 Two years later 74,850 107,111 147,968 192,272 190,715 202,687 206,219 221,450 224,783 Three years later 76,811 115,746 168,096 192,670 194,280 203,343 199,925 211,988 Four years later 80,453 119,977 168,040 199,576 195,917 199,304 198,986 Five years later 82,823 119,513 175,283 201,303 195,203 200,050 Six years later 82,209 122,791 178,232 202,020 196,176 Seven years later 81,894 125,863 182,257 202,984 Eight years later 83,943 128,815 184,266 Nine years later 85,816 132,207 Ten years later 86,856 INITIAL RESERVE IN EXCESS OF (LESS THAN) REESTIMATED RESERVE: Amount (cumulative) $ (19,727) (41,892) (60,924) (56,593) (27,488) (670) 8,953 14,336 11,236 (12,688)
The operating results of the property and casualty insurance industry, including RWIC, are subject to significant fluctuations due to numerous factors, including premium rate competition, catastrophic and unpredictable events (including man-made and natural disasters), general economic and social conditions, interest rates, investment returns, changes in tax laws, regulatory developments, and the ability to accurately estimate liabilities for unpaid losses and loss expenses. INVESTMENTS Oxford's and RWIC's investments must comply with the insurance laws of the State of Arizona where the companies are domiciled. These laws prescribe the type, quality, and concentration of investments that may be made. In general, these laws permit investments in federal, state, and municipal obligations, corporate bonds, preferred and common stocks, real estate mortgages, and real estate, within specified limits and subject to certain qualifications. Moreover, in order to be considered an acceptable reinsurer by cedents and intermediaries, a reinsurer must offer financial security. The quality and liquidity of invested assets are important considerations in determining such security. The investment philosophies of Oxford and RWIC emphasize protection of principal through the purchase of investment grade fixed income securities. Approximately 99% of their respective portfolios consist of investment grade securities. The maturity distributions are designed to provide sufficient liquidity to meet future cash needs. REINSURANCE The Company's insurance operations assume and cede insurance from and to other insurers and members of various reinsurance pools and associations. Reinsurance arrangements are utilized to provide greater diversification of risk and to minimize exposure on large risks. However, the original insurer remains liable should the assuming insurer not be able to meet its obligations under the reinsurance agreements. REGULATION The Company's insurance subsidiaries are subject to considerable regulation and supervision in the states in which they transact business. The purpose of such regulation and supervision is primarily to provide safeguards for policyholders. As a result of federal legislation, the primary regulation of the insurance industry is performed by the states. State regulation extends to such matters as licensing companies; restricting the types or quality of investments; regulating capital and surplus and actuarial reserve maintenance; setting solvency standards; requiring triennial financial examinations, market conduct surveys, and the filing of reports on financial condition; licensing agents; regulating aspects of the insurance companies' relationship with their agents; restricting expenses, commissions, and new business issued; imposing requirements relating to policy contents; restricting use of some underwriting criteria; regulating rates, forms, and advertising; limiting the grounds for cancellations or non-renewal of policies; regulating solicitation and replacement practices; and specifying what might constitute unfair practices. State laws also regulate transactions and dividends between an insurance company and its parent or affiliates, and generally require prior approval or notification for any change in control of the insurance subsidiary. In the past few years, the insurance and reinsurance regulatory framework has been subjected to increased scrutiny by the National Association of Insurance Commissioners (the "NAIC"), state legislatures, insurance regulators, and the United States Congress. State legislatures have considered or enacted legislative proposals that alter, and in many cases increase, state authority to regulate insurance companies and holding company systems. The NAIC and state insurance regulators have been examining existing laws and regulations with an emphasis on insurance company investment and solvency issues. Legislation has been introduced in Congress that could result in the federal government assuming some role in the regulation of the insurance industry. It is not possible to predict the future impact of changing state and federal regulation on the operations of Oxford and RWIC. Beginning in 1993, the NAIC adopted and implemented minimum risk-based capitalization requirements for life insurance companies, including Oxford. As of the date of this report, Oxford is in compliance with these requirements. The NAIC has adopted a model for establishing minimum risk-based capitalization requirements for property and casualty insurance and reinsurance companies. The NAIC's stated objective in developing such risk-based capital standards is to improve solvency monitoring. RWIC will adopt the minimum risk-based capitalization requirements in fiscal 1995. Adoption will have no material effect on RWIC. COMPETITION The insurance industry is competitive. Competitors include a large number of life insurance companies and property and casualty insurance companies, some of which are owned by stockholders and others of which are owned by policyholders (mutual). Many companies in competition with Oxford and RWIC have been in business for a longer period of time or possess substantially greater financial resources. Competition in the insurance business is based upon price, product design, and services rendered to producers and policyholders. AMERCO REAL ESTATE COMPANY AREC owns and manages most of the Company's real estate assets, including the Company's U-Haul Center locations. AREC has responsibility for acquiring and developing properties suitable for new U-Haul Centers and self-storage locations. In addition to the U-Haul operations, AREC actively seeks to lease or dispose of surplus properties. See "Business -- History." LITIGATION Certain members of the Company's Board of Directors are defendants in an action currently pending in the Superior Court of the State of Arizona in and for the County of Maricopa entitled Samuel W. Shoen, M.D., et al. v. Edward J. Shoen, et al., No. CV88-20139, instituted August 2, 1988. The Company was also a defendant in the action as originally filed, but the Company was dismissed from the action on August 15, 1994, subject only to the right, to the extent that any exists, of the plaintiffs to appeal such dismissal. The plaintiffs, who are all members of the Outside Stockholder Group that is currently opposed to existing Company management (see "Principal Stockholders"), filed a Fourth Amended Complaint in February 1992 and have alleged, among other things, that certain of the individual plaintiffs were wrongfully excluded from sitting on the Company's Board of Directors in 1988 through the sale of Company common stock to certain key employees. That sale allegedly prevented the Outside Stockholder Group from gaining a majority position in the Company's voting stock and control of the Company's Board of Directors. The plaintiffs allege various breaches of fiduciary duty and other unlawful conduct by the individual defendants and seek equitable relief, compensatory damages, and punitive damages. The Court has dismissed all claims for equitable relief that would have allowed the plaintiffs to sit on the Board of Directors, subject only to the right, to the extent that any exists, of the plaintiffs to appeal such dismissal. The plaintiffs also allege that their stock is virtually worthless and that they are entitled to compensatory damages of approximately $600 million. The defendants are vigorously contesting the plaintiffs' claims. Pursuant to separate indemnification agreements, the Company has agreed to advance litigation expenses to the defendants and will be required to indemnify the defendants to the fullest extent permitted by law or the Company's Articles of Incorporation or Bylaws, for all expenses and damages, if any, incurred by the defendants in this proceeding. The trial of this case commenced August 17, 1994 and is expected to last six to eight weeks. Selling Stockholder, Paul F. Shoen and the Company are parties to separate Share Repurchase and Registration Rights Agreements which require all disputes relating thereto to be resolved by arbitration. On April 8, 1994, Selling Stockholder and Paul F. Shoen commenced the dispute resolution process. Private arbitration proceedings pursuant to these agreements were convened on June 19, 1994. In the arbitration, the Selling Stockholder asserts that the Company has breached its obligations to her by failing to timely register the sale of her shares pursuant to this Prospectus and by failing to remove the right of first refusal on all Company common stock. Paul F. Shoen asserts that the Company has breached its obligations to him by failing to timely consummate the purchase from him of 58,823 shares of Company common stock for an aggregate purchase price of $1,000,000 and, on an anticipatory basis, by failing to remove the right of first refusal on all of the Company's outstanding common stock. The ESOP Trust purchased 58,823 shares from Paul F. Shoen on June 30, 1994. Selling Stockholder and Paul F. Shoen assert that, as a consequence of these alleged breaches, they are entitled to give notice of termination of the Stockholder Agreement described under "Principal Stockholders." The Company disagrees with the above assertions. Selling Stockholder gave such notice of termination on July 11, 1994. The arbitration hearings concluded on August 21, 1994 and the arbitration panel is expected to render a decision on September 9, 1994. See "Risk Factors -- Existing Management -- Potential Change in Control." The Company, the Company's Board of Directors, the ESOP, and the ESOP Trustee are defendants in an action currently pending in United States District Court for the District of Nevada entitled Paul F. Shoen v. AMERCO, et al., No. CV-N-94-475-DWH, instituted July 19, 1994. Paul F. Shoen alleges among other things that the defendants have solicited proxies in connection with the Company's annual meeting by means of false and misleading proxy materials, that the Company has violated the proxy rules, and that the ESOP Trustee has prevented him from communicating with participants in the ESOP. The Court on July 20, 1994 issued a temporary restraining order enjoining the Company's Annual Meeting of Stockholders, scheduled for July 21, 1994, pending further briefing and hearings on the matter as the Court may determine. Subsequently, Paul F. Shoen has asked the Court to enjoin the holding of the Company's Annual Meeting of Stockholders until the defendants have circulated curative disclosures, the Commission has cleared the defendants' proxy materials, the plaintiff has been afforded an opportunity to communicate with and solicit proxies from the Company's stockholders, and the stockholders have been afforded sufficient time to assimilate and act on all information. As a result, the Company is unable to predict when its annual meeting will be held. The Company and its subsidiaries are defendants in a number of suits and claims incident to the type of business conducted and several administrative proceedings arising from state and local provisions that regulate the removal and/or clean up of underground fuel storage tanks. It is the opinion of management that none of the suits, claims or proceedings involving the Company, individually or in the aggregate, are expected to result in any material loss and, accordingly, no provision has been made in the financial statements included herein. ENVIRONMENTAL MATTERS UNDERGROUND STORAGE TANKS The Company owns properties that, as of June 30, 1994, contained a total of approximately 1,500 underground storage tanks ("USTs"). The USTs are used to store various petroleum products, including gasoline, fuel oil, and waste oil. The USTs are subject to various federal, state, and local laws and regulations that require testing and removal of leaking USTs, and remediation of polluted soils and groundwater under certain circumstances. In addition, if leakage from USTs has migrated, the Company may be subject to civil liability to third parties. In fiscal years 1990 through 1994, the Company incurred expenditures totaling approximately $16.5 million for removal and remediation of approximately 1,229 USTs, a portion of which may be recovered from insurance and certain states' funds for the removal of USTs. Expenditures incurred through the end of fiscal 1994 may not be representative of future experience. Although the Company believes that compliance with laws and regulations, and cleanup and liability costs related to USTs will not have a material adverse effect on the Company's financial condition or operating results, there can be no assurance that this will be the case. In fiscal 1989, the Company instituted a program to test its USTs for leakage and to remove all but approximately 100 of the approximately 2,755 USTs then existing by the year 2000. The approximately 100 USTs expected to remain at the conclusion of the Company's testing and removal program are currently anticipated to consist primarily of waste oil tanks not required to be removed under current laws and regulations and gasoline tanks located at its remote rental locations where their use is deemed necessary to service the Company's moving customers. The Company currently budgets $3 million annually for UST testing, removal, and remediation. The Company treats these costs as capital costs to the extent that they improve the safety or efficiency of the associated properties as compared to when the properties were originally acquired or if the costs are incurred in preparing the properties for sale. FEDERAL SUPERFUND SITES The Company has been named as a "potentially responsible party" ("PRP") with respect to the disposal of hazardous wastes at fifteen federal or state superfund hazardous waste sites located in twelve states. Under applicable laws and regulations the Company could be held jointly and severally liable for the costs to clean-up these sites. Currently, the Company has entered into buyout agreement settlements for seven of the sites and one site is under negotiation for settlement. Four of the sites have been inactive for more than two years and two of the sites have been disputed by the Company with no response for more than two years. One site is under state clean-up direction. Based upon the information currently available to the Company regarding these fifteen sites, the current anticipated magnitude of the clean-up, the number of PRPs, and the volumes of hazardous waste currently anticipated to be attributed to the Company and other PRPs, the Company believes its share of the cost of investigation and clean-up at the fifteen superfund sites will not have a material adverse effect on the Company's financial condition or operating results. In addition, the Company believes that insurance coverage may be available to cover all or some of the cost with respect to these sites. WASHINGTON STATE HAZARDOUS WASTE SITES The Company owns property within two state hazardous waste sites in the State of Washington. The Company owns a parcel of property in Yakima, Washington that is believed to contain elevated levels of pesticide and other contaminant residue as a result of onsite operations conducted by one or more former owners. The State of Washington has designated the property as a state hazardous waste site known as the "Yakima Valley Spray Site." The Company has been named by the State of Washington as a "potentially liable party" ("PLP") under state law with respect to this site. The Company, together with eight other companies and persons, has formed a committee that has retained an environmental consultant. The process of site assessment on the Yakima Valley Spray Site is in its early stages and, based upon the information currently available to the Company regarding the volume and nature of wastes present, the Company is unable to reasonably assess the potential investigation and clean-up costs, but the costs could be substantial. Although the Company has entered into an agreement with such other companies and persons under which the Company has assumed responsibility for 20% of the costs to investigate the site, no agreement among the parties with respect to clean-up costs has been entered into at the date of this Prospectus. In addition, the Company has been named by the State of Washington as a PLP along with 12 other PLPs with respect to another state-listed hazardous waste site known as the "Yakima Railroad Site." The Yakima Valley Spray Site is located within the Yakima Railroad Site. The Company has been notified that the Yakima Railroad Site involves potential groundwater contamination in an area of approximately two square miles. The Company has contested its designation as a PLP at this site, but, at the date of this Prospectus, no formal ruling has been issued in this matter. In February 1992, the State of Washington issued an enforcement order to the Company and eight other parties requiring conduct of an interim remedial action involving the provision of bottled water to households that obtain drinking water from wells within the Yakima Railroad Site. Without conceding any liability, the Company and several of the other PLPs have implemented the bottled water program. The State of Washington has stated its intention to expand the existing municipal water system to supply municipal water to those households currently receiving bottled water, and it is estimated that the cost thereof will be approximately $6 million, with such cost being allocated among the PLPs. In addition, there will be costs associated with remedial measures to address the regional groundwater contamination issue. The process of site assessment on the Yakima Railroad Site is in its early stages and, based upon the information currently available to the Company regarding the volume and nature of wastes present, the Company is unable to reasonably assess the potential investigation and clean-up costs, but the costs could be substantial. Moreover, the investigative and remedial costs incurred by the State can be imposed upon the Company and any other PLP as a joint and several liability. At the date of this Prospectus, other than the indication of the expansion of the municipal water system, there has been no formal indication from the State of Washington of its intentions regarding future cost recoveries at the Yakima Railroad Site. OTHER The Company owns 7 facilities that manufacture and assemble various components of the Company's equipment. In addition, the Company owns various facilities engaged in the maintenance and servicing of its equipment. Various individual properties owned and operated by the Company are subject to various state and local laws and regulations relating to the methods of disposal of solvents, tires, batteries, antifreeze, waste oils and other materials. Compliance with these requirements is monitored and enforced at the local level. Based upon information currently available to the Company, compliance with these local laws and regulations has not had, and is not expected to have, a material adverse effect on the Company's financial condition or operating results. The Company currently leases approximately 179 properties to various businesses. The Company has a policy of leasing properties subject to an environmental indemnification from the lessee for operations conducted by the lessee. It should be recognized, however, that such indemnifications do not cover pre-existing conditions and may be limited by the lessee's financial capabilities. In any event, to the extent that any lessee does not perform any of its obligations under applicable environmental laws and regulations, the Company may remain potentially liable to governmental authorities and other third parties for environmental conditions at the leased properties. Furthermore, as between the Company and its lessees, disputes may arise as to allocations of liability with respect to environmental conditions at the leased properties. Finally, it should be recognized that the Company's present and past facilities have been in operation for many years and, over that time in the course of those operations, some of the Company's facilities have generated, used, stored, or disposed of substances or wastes that are or might be considered hazardous. Therefore, it is possible that additional environmental issues may arise in the future, the precise nature of which the Company cannot now predict. MANAGEMENT DIRECTORS AND EXECUTIVE OFFICERS The following table sets forth certain information about the current directors and executive officers of the Company effective August 31, 1994. Name Age Office - ---- ------ ------ Edward J. Shoen (1)(2) 45 Chairman of the Board and President Mark V. Shoen 43 Director James P. Shoen 34 Director William E. Carty (1) 67 Director John M. Dodds 57 Director Charles J. Bayer (2) 54 Director Richard J. Herrera 40 Director Aubrey K. Johnson (1)(2) 72 Director Gary B. Horton 51 Treasurer Gary V. Klinefelter 46 Secretary John A. Lorentz 67 Assistant Secretary Rocky D. Wardrip 36 Assistant Treasurer George R. Olds 52 Assistant Secretary - ---------- (1) Member of the Audit Committee (2) Member of Executive Finance Committee Edward J. Shoen has served as a Director and Chairman of the Board of the Company since December 1986, as President since June 1987, as a Director of U-Haul since June 1990, and as the President of U-Haul since March 1991. Mr. Shoen has been associated with the Company since May 1971. Mark V. Shoen has served as a Director of the Company since April 1990. He is a Director of U-Haul, and served as President of U-Haul from June 1990 to March 1991. From June to August 1987, he was Assistant to the President of the Company with responsibilities relating to product. He served from August 1987 to December 1990 as President of A&M Associates, Inc., a wholly-owned subsidiary of U-Haul. He served from December 1990 to the present as Executive Vice President of Product for U-Haul. James P. Shoen, a Director of the Company since December 1986, Vice President of the Company since May 1989, and a Director of U-Haul since June 1990, has been associated with the Company since July 1976. He was employed as a Center General Manager with U-Haul Co. of San Francisco from 1981 to 1989. From March 1989 to March 1990 he served as the Director of the U-Haul Technical Services Center. He has served from April 1990 to present as Executive Vice President of U-Haul. William E. Carty, a Director of the Company since May 1987 and a Director of U-Haul since June 1990, has been associated with the Company since 1946. He has served in various executive positions in all areas of the Company. He served most recently as product director. Mr. Carty retired from the Company in December 1987. John M. Dodds, a Director of the Company since September 1987, Vice President of U-Haul from June 1990 until July 1994, and Director of U-Haul since June 1990, has been associated with the Company since 1963. He served in regional field operations until December 1986. Mr. Dodds retired from the Company in May 1994. Charles J. Bayer has been associated with the Company since 1967. He has served in various executive positions and has served as President of Amerco Real Estate since September 1990. He also served as a Director of U-Haul from July 1988 until June 1990, Product Director for U-Haul from January 1988 to August 1990, the Director of Finance and Administration for the U-Haul Technical Center from 1986 to 1988, and the Manager of Repair and Maintenance of the Company from 1984 to 1986. Richard J. Herrera, a Director of the Company since September 1991, has been a Director of U-Haul since June 1990, and has been associated with the Company since April 1988. He is presently the Vice President of Marketing, Retail Sales, for U-Haul. Aubrey K. Johnson was a director of the Company from 1987 until 1991. From 1991 until his re-election to the Board in August 1993, he served as a consultant and advisor to various organizations and individuals. Gary B. Horton has been associated with the Company since October 1969. He has served as Treasurer since 1982. His previous positions include Treasurer of U-Haul. Gary V. Klinefelter, Secretary of the Company since July 1988, and Secretary of U-Haul since June 1990, is licensed as an Attorney at Law in the State of Arizona and has served as General Counsel for the Company since June 1988. John A. Lorentz, Assistant Secretary of the Company since July 1988, and Assistant Secretary of U-Haul since June 1990, is licensed as an Attorney at Law in the State of Oregon and has been associated with the Company since September 1953. His previous positions include Secretary of the Company and of U-Haul. Rocky D. Wardrip, Assistant Treasurer of the Company since September 1990, has been associated with the Company since 1978 in various capacities within accounting and treasury operations. Mr. Wardrip was previously Assistant Treasurer of U-Haul from 1988 to 1990. George R. Olds, Assistant Secretary of the Company and U-Haul since February 1993, has been associated with the Company since 1975 as a member of the U-Haul legal department specializing in taxation. OTHER KEY EMPLOYEES Donald W. Murney has been Treasurer of U-Haul since June 1990. He was previously employed as the Senior Vice President and Chief Financial Officer of Conry Financial Services. Henry E. Martin joined the Company in 1973 and has served in various capacities in the insurance subsidiaries since 1975. He is currently President of Ponderosa. The Company does not have a compensation committee. Compensation decisions are made by the full Board of Directors. The Audit Committee makes recommendations to the Board of Directors regarding the selection of independent auditors, reviews the Company's financial statements for each interim period and reviews and evaluates the Company's internal audit and control functions. The Executive Finance Committee supervises the financial affairs of the Company and, among other things, has the power to give final approval for the borrowing of funds on behalf of the Company without further action or approval of the Board of Directors. PRINCIPAL STOCKHOLDERS INSIDE STOCKHOLDER GROUP Three of the Company's eight directors, Edward J. Shoen, Mark V. Shoen, and James P. Shoen, as well as the Selling Stockholder, Paul F. Shoen, Oxford (as trustee) and the ESOP Trustee, are members of the Inside Stockholder Group that on the date of this Prospectus votes approximately 47.6% of the Company's outstanding voting stock. If Selling Stockholder and Paul F. Shoen are successful in leaving the Inside Stockholder Group, then the other current members of the Inside Stockholder Group will control approximately 33% of the Company's outstanding voting stock. See "Security Ownership of Certain Beneficial Owners and Management" in the Company's definitive Notice and Proxy Statement filed with the Commission on July 8, 1994. See "Risk Factors - --Existing Management -- Potential Change in Control." The number of shares controlled by the Inside Stockholder Group includes shares beneficially owned by Edward J. Shoen (3,483,681); Mark V. Shoen (3,475,520); James P. Shoen (2,278,814); Paul F. Shoen (3,419,690); Sophia M. Shoen (2,213,472); certain Irrevocable Trusts for which Oxford Life Insurance Company acts as trustee (1,605,340); and The ESOP Trust (1,907,714). Term The members of the Inside Stockholder Group are parties to a stockholder agreement, dated as of May 1, 1992, as amended (the "Stockholder Agreement"), that restricts the disposition of the parties' shares of common stock to certain types of permitted dispositions. The Stockholder Agreement will expire on March 5, 1999, unless earlier terminated. Voting of Shares All of the shares subject to the Stockholder Agreement are voted as agreed upon by the members holding a majority of the shares subject to the Stockholder Agreement. As of the date of this Prospectus, Edward J. Shoen, Mark V. Shoen, and James P. Shoen, each of whom is a director of the Company, collectively hold a majority of the shares subject to the Stockholder Agreement and, therefore, have the ability, if they so agree, to control the vote of the Company's common stock that is subject to the Stockholder Agreement. ESOP On March 16, 1973, the Company established the AMERCO Profit Sharing Retirement Trust (the "Profit Sharing Plan") for certain of its employees. The Profit Sharing Plan was subsequently amended from time to time. Effective April 1, 1984, the Company established the AMERCO Employee Savings and Protection Plan (the "Savings Plan") to permit employee contributions to be made on a favorable tax basis through utilization of the provisions of Section 401(k) of the Internal Revenue Code. The Savings Plan was subsequently amended from time to time. Effective January 1, 1988, the Profit Sharing Plan and the Savings Plan were merged to form a single plan called the AMERCO Retirement Savings and Profit Sharing Plan. The AMERCO Retirement Savings and Profit Sharing Plan was amended and restated in its entirety to form the ESOP, effective as of July 24, 1988, by adding an "employee stock ownership plan" (as defined in Section 407(d)(6) of the Employee Retirement Income Security Act of 1974 and Section 4975(e)(7) of the Internal Revenue Code) component, which component is designed to invest primarily in "qualifying employer securities" of the Company. The ESOP Trust holds shares of the Company's common stock. As of August 25, 1994, shares of the Company's common stock held by the ESOP Trust were allocated to 5,460 Company employees and as of such date 6,364 Company employees were eligible to participate in the ESOP. The Company makes periodic contributions to the ESOP Trust, which contributions are used to purchase Company common stock. Under the terms of the ESOP, the Company's common stock is appraised annually. The most recent such appraisal, dated as of December 31, 1993, was conducted by American Appraisal Associates. As of December 31, 1993, the Company's common stock was valued at $20 per share and was discounted 15% because of a lack of marketability for a value of $17 per share. ESOP Trust; Release of Shares from Stockholder Agreement Three U-Haul officers collectively serve as the "ESOP Trustee" under the ESOP Trust. The ESOP Trustee is appointed by the Company's Board of Directors, and prior to the issuance of the Series A 81/2% Preferred Stock in October 1993 had the power to vote all common stock held in the ESOP Trust in its discretion (other than with respect to certain significant corporate transactions such as mergers or consolidations, recapitalizations, and sales of all or substantially all of the assets of the Company). Under the ESOP, if the Company has outstanding a "registration-type class of securities," which includes the Series A 81/2% Preferred Stock, each participant (or such participant's beneficiary) in the ESOP may direct the ESOP Trustee with respect to the voting of all common stock allocated to the participant's account. All shares in the ESOP Trust not allocated to participants continue to be voted by the ESOP Trustee in accordance with the Stockholder Agreement. As of August 31, 1994, of the 2,994,655 shares of Company common stock held by the ESOP Trust, 1,086,941 shares were allocated to participants and 1,907,714 shares remained unallocated. Of the 1,086,941 allocated shares, approximately 6,643 shares are allocated to members of the Inside Stockholder Group, which shares shall be voted together with the unallocated shares and the other shares held by the members of the Inside Stockholder Group in accordance with the terms of the Stockholder Agreement. Therefore, as of the date of this Prospectus, without giving effect to the matters discussed in the succeeding subsection, the Inside Stockholder Group controls approximately 47.6% of the Company's outstanding common stock. Additional shares of common stock not presently allocated to participants' accounts in the ESOP Trust will be allocated as certain debt obligations of the ESOP Trust are repaid, resulting in a further reduction in the number of common shares subject to the Stockholder Agreement. As a result of the foregoing, there can be no assurance that the Inside Stockholder Group will be able to continue to elect directors acceptable to it to the Company's Board of Directors or that the Company's current management will remain in place; however, the Company's four-class Board of Directors may delay the effectiveness of any change in management. See "Certain Provisions That May Limit Changes in Control." Registration Rights; Release of Shares from Stockholder Agreement Subject to certain limitations and restrictions, Paul F. Shoen and Selling Stockholder, who are currently members of the Inside Stockholder Group, may elect to cause the Company to effect a registration under the Securities Act and applicable state securities laws of all or a part (but not less than 100,000 shares) of the shares of common stock held by each of them. Selling Stockholder has elected to require the Company to register 500,000 shares of Company's common stock for public sale pursuant to this registration statement. On September 1, 1994, Paul F. Shoen demanded such registration. Subject to certain limitations, the Company is required to effect registration of those shares on or before March 1, 1995, unless certain conditions specified in the Share Repurchase and Registration Rights Agreement occur. No more than two such registrations may be demanded by either Paul F. Shoen or Selling Stockholder. The Stockholder Agreement permits the disposition of any shares pursuant to a registered public offering under the Securities Act. All registered shares, when sold, will be released from the Stockholder Agreement. As of the date of this Prospectus, upon the sale of the Securities offered hereby the Inside Stockholder Group would control the vote of approximately 46.3% of the Company's common stock. Assuming that Paul F. Shoen and Selling Stockholder sold all of their respective shares pursuant to this and subsequent registration requests, the Inside Stockholder Group would control the vote of approximately 33.0% of the Company's common stock. As a result, there can be no assurance that the shares of common stock held by Paul F. Shoen and Selling Stockholder will remain subject to the Stockholder Agreement. For this reason, there can be no assurance that the Company's current management will remain in place. See "Business -- Litigation" for a description of arbitration proceedings whereby Selling Stockholder and Paul F. Shoen have asserted claims, which are disputed by the Company, that the Stockholder Agreement is terminated because of the Company's alleged failure to timely register their shares of common stock. OUTSIDE STOCKHOLDER GROUP Certain other stockholders are members of the Outside Stockholder Group that votes approximately 49.1% of the Company's outstanding voting stock. See "Security Ownership of Certain Beneficial Owners and Management" in the Company's definitive Notice and Proxy Statement filed with the Commission on July 8, 1994. Members The Outside Stockholder Group controls 18,254,596 shares of the Company's common stock pursuant to the stockholder agreement described below and 734,376 shares of the Company's common stock pursuant to several trusts described below. The number of shares controlled by the Outside Stockholder Group includes shares beneficially owned by Samuel W. Shoen (4,041,924); Michael L. Shoen (4,035,924); Mary Anna Shoen-Eaton (3,343,076); Cecilia M. Shoen-Hanlon (2,331,984); Katrina M. Carlson (2,016,624); Theresa M. Shoen (1,651,644); and Leonard S. Shoen (833,420). Term The members of the Outside Stockholder Group are parties to a fourth amended stockholder agreement, dated June 20, 1994, that provides for the voting of the subject shares. The original agreement was dated July 17, 1988. Unless earlier terminated by a majority of the stockholders, the agreement will terminate on January 1, 2001. Voting of Shares All of the shares subject to the agreement are voted at the direction of a majority of the stockholders (on the basis of one vote per stockholder) party to the agreement. Leonard S. Shoen, Michael L. Shoen, and Theresa M. Shoen have each been granted a proxy to vote the shares as agreed upon by a majority of the stockholders. Control of Trust for Minor Children The Company has been advised that four trusts for the benefit of Leonard S. Shoen's minor children are the record owners of an aggregate of 734,376 shares of the Company's voting stock representing 1.9% of the Company's voting stock. Samuel W. Shoen and Michael L. Shoen, who are members of the Outside Stockholder Group, are co-trustees for the trusts and vote such shares in their discretion. Director Nominations The Outside Stockholder Group has nominated Samuel W. Shoen, Theresa M. Shoen, and Ronald Belec to replace Edward J. Shoen, Mark V. Shoen, and Aubrey K. Johnson on the Company's Board of Directors. The following information about the director nominees is based upon information furnished to the Company by such nominees. Samuel W. Shoen, age 49, has been engaged in the occupation of private investor since March 1, 1993 and served in the capacities of employee, officer, and director of the Company at various times from 1973 to 1987. Theresa M. Shoen, age 30, has been employed for the past 5 years as manager, waitress, and general help at Baby Kay's restaurant in Scottsdale, Arizona and served as a director of the Company from 1982 to 1984. Ronald Belec, age 47, is currently employed by ABC, Inc., a courier service in Seattle, Washington. CERTAIN PROVISIONS THAT MAY LIMIT CHANGES IN CONTROL Certain provisions summarized below may have the effect of delaying, deferring, or preventing a change in control of the Company. The Articles of Incorporation of the Company (the "Articles") provide for the Board of Directors to be divided into four classes of directors serving staggered four-year terms. As a result, approximately one-fourth of the Board of Directors will be elected each year. Moreover, under the Nevada General Corporation Law, an affirmative vote of holders of two-thirds of the then outstanding stock entitled to vote is required to remove a director. This provision, when coupled with the provision of the Articles authorizing only the Board of Directors to fill vacant directorships, may hinder the removal of incumbent directors by stockholders entitled to vote and the simultaneous election of new directors by such stockholders to fill the vacancies created by such removal unless Selling Stockholder and Paul F. Shoen are successful in leaving the Inside Stockholder Group. Moreover, (i) the Company's Bylaws grant the Company a right of first refusal exercisable in connection with any sale of outstanding shares of the Company's common stock (however, the Company has received a stockholder proposal to be acted upon at the Company's Annual Meeting of Stockholders to eliminate the right of first refusal from the Company's Bylaws. See "Risk Factors -- Existing Management -- Potential Change in Control."), (ii) the Articles require holders of two-thirds of the then outstanding shares of common stock to amend certain provisions of the Articles, including the classified board provision, to amend the Bylaws, and to approve certain transactions with, among others, holders of five percent of any class of voting stock of the Company, (iii) the Articles prohibit stockholder action by written consent, and (iv) certain of the Company's credit agreements contain provisions that could require the prepayment of all monies outstanding thereunder upon a "change in control." With the exception of (iv) above, each of these provisions could be amended if Selling Stockholder and Paul F. Shoen are successful in leaving the Inside Stockholder Group. See "Management's Discussion and Analysis of Financial Condition and Results of Operations --Liquidity and Capital Resources -- Credit Agreements." See "Risk Factors -- Ability to Issue Serial Common Stock and Preferred Stock" regarding the potential anti-takeover effects of the Board of Directors' ability to issue serial common stock and preferred stock and to fix the rights, preferences, privileges and restrictions, including voting rights, of those shares without any further vote or action by the stockholders. The Board of Directors has adopted a stockholder rights plan. Pursuant to the plan, rights have been distributed to the holders of the common stock of the Company that entitle such holders to purchase from the Company one one-hundredth of a share of the Company's Series C Preferred Stock at an exercise price of $15,000 per share (the price per share and the exercise price are subject to adjustment). See Note 15 to Notes to Consolidated Financial Statements. The rights become exercisable if any person or group of affiliated or associated persons becomes the beneficial owner of fifty percent or more of the Company's common stock without approval of a majority of the disinterested members of the Board of Directors (as defined in the plan); such person being defined as an "acquiring person." Upon the occurrence of an Affiliate Merger or Triggering Event (certain transactions defined in the plan involving an acquiring person), each right entitles its holder to purchase, for the exercise price, that number of shares of common stock of the Company having a value equal to twice the exercise price. Upon the occurrence of a Business Combination (as defined in the plan), each right entitles its holder to purchase, for the exercise price, that number of shares of common stock of the acquiring or surviving company having a value equal to twice the exercise price. The rights will expire on July 29, 1998, unless earlier redeemed by the Company pursuant to authorization by a majority of the disinterested Board. CERTAIN TRANSACTIONS On August 24, 1994, the Company entered into an Exchange Agreement with Edward J. Shoen, the Company's Chairman of the Board and President. In exchange for 3,483,681 shares of Common Stock owned by Edward J. Shoen, the Company issued 3,483,681 shares of Series A Common Stock to him. See "Description of Capital Stock -- Common Stock" below. SELLING SECURITY HOLDER The common stock offered hereunder is held by Selling Stockholder. Selling Stockholder currently owns 2,213,472 shares of common stock directly and 108,891 shares of common stock indirectly through Oxford Life Insurance Company, Trustee under that certain Irrevocable Trust dated December 20, 1982 (Sophia M. Shoen, Grantor) (the "Irrevocable Trust"). Five hundred thousand shares of common stock are offered hereunder. After the sale of the Securities, Selling Stockholder will own 1,713,472 shares directly (4.43%) and 108,891 shares indirectly (0.28%). The Company believes that the Selling Stockholder opposes current management of the Company. On May 4, 1994 Selling Stockholder nominated herself for election to the Company's Board of Directors. Selling Stockholder has advised the Representative that she does not have a position regarding the participation (employment) of management and key employees. In recent years, Selling Stockholder has been involved in several transactions with the Company, both individually and through affiliates. A tow dolly fleet owned by Samlo, a partnership in which Selling Stockholder is a partner, generated net operating revenues from the Company of $65,000, $78,000, and $109,000 for the years ended March 31, 1994, 1993, and 1992, respectively. On September 1, 1993, the Company, Sophmar, Inc., a corporation controlled by Selling Stockholder, and Sophmar Acquisition, Inc., a subsidiary of the Company ("S.A.") entered into an Agreement and Plan of Merger pursuant to which S.A. merged into Sophmar, Inc., and Sophmar, Inc. became a wholly-owned subsidiary of the Company. In exchange for Sophmar, Inc.'s capital stock, the stockholders of Sophmar, Inc. (Selling Stockholder and the Irrevocable Trust) collectively received 2,500,920 shares of common stock, the same number of shares of common stock held by Sophmar, Inc. Selling Stockholder received 2,392,029 of these shares and the Irrevocable Trust received 108,891 of the shares. The merger described in the preceding paragraph was effected in accordance with the terms of a Merger Option Agreement, dated as of May 1, 1992, among Selling Stockholder, Sophmar, Inc., and the Company (the "Sophmar Merger Option Agreement"). The Sophmar Merger Option Agreement required the Company to cause a subsidiary of the Company to be merged with or into Sophmar, Inc. at its request. The Company conditioned these merger rights on Selling Stockholder and Sophmar, Inc. entering into an agreement that, among other things, prohibits Selling Stockholder and Sophmar, Inc. directly or indirectly from offering, selling, pledging, or otherwise disposing of any shares of common stock or securities convertible into or exchangeable for common stock prior to March 1, 1999. This prohibition does not apply, however, to sales of securities pursuant to a registered offering and limited sales of securities that are designed not to disrupt a public offering of securities by the Company. With certain limitations, the Company has agreed to indemnify Sophmar, Inc. and Selling Stockholder for liabilities arising out of the merger. Pursuant to a Share Repurchase and Registration Rights Agreement, dated as of May 1, 1992 (the "Registration Rights Agreement"), among Selling Stockholder, Sophmar, Inc., and the Company, Selling Stockholder was given the right to require the Company to repurchase, with certain limitations, up to $3,000,000 of common stock owned by her. The Registration Rights Agreement provides that the Company's obligations to repurchase any shares from Selling Stockholder shall be satisfied if such shares are purchased by the ESOP Trust. The Registration Rights Agreement restricts the disposition of common stock held by Selling Stockholder. Pursuant to the Registration Rights Agreement (i) on May 15, 1992 Sophmar, Inc. sold 9,260 shares of common stock to the ESOP Trust at the then appraised value of $10.80 per share for an aggregate sales price of approximately $100,000, (ii) on September 29, 1993, Selling Stockholder sold 90,322 shares of common stock to the ESOP Trust at the then appraised value of $15.50 per share for an aggregate sales price of approximately $1,400,000, and (iii) on June 30, 1994, Selling Stockholder sold 88,235 shares of common stock to the ESOP Trust at the most recent (December 31, 1993) appraised value of $17.00 per share for an aggregate sales price of approximately $1,500,000. Selling Stockholder, subject to certain limitations and restrictions, may elect to cause the Company to effect a registration under the Securities Act and applicable state securities laws of shares of common stock held by her. Selling Stockholder gave notice of exercise of her registration right to register the 500,000 shares of common stock registered hereunder in October, 1993. Pursuant to a Management Consulting Agreement, dated as of May 1, 1992, Selling Stockholder agreed to provide environmental and other consulting services to the Company. In consideration for these services, the Company paid Selling Stockholder a yearly fee of $100,000. The Management Consulting Agreement was scheduled to expire on May 1, 1994. However, Selling Stockholder has asserted that the Management Consulting Agreement, according to its terms, may be extended for up to an additional year because of the Company's alleged failure to timely register the sale of her shares pursuant to this Prospectus. The Company disputes Selling Stockholder's allegation and the matter is the subject of the arbitration proceedings described in "Business -- Litigation." DESCRIPTION OF CAPITAL STOCK COMMON STOCK The Company's Restated Articles of Incorporation authorize the issuance of 150,000,000 shares of Common Stock with a par value of $0.25 per share and 150,000,000 shares of serial common stock, in one or more series, and with such voting powers, designations, preferences, limitations, restrictions, and relative rights as the Board of Directors of the Company may determine. As of the date of this Prospectus, there are 29,426,048 issued and outstanding shares of the Company's Common Stock and 9,238,015 issued and outstanding shares of Series A Common Stock. All of the Series A Common Stock is held by Mark V. Shoen, Executive Vice-President of Product for U-Haul International, Inc. and a Director of the Company, James P. Shoen, a Vice-President and Director of the Company, and Edward J. Shoen, Chairman of the Board and President of the Company. The Series A Common Stock is not convertible into Common Stock and votes together as a single class with the Common Stock on all matters. See "Risk Factors -- Serial Common Stock and Preferred Stock" for a discussion of the potential anti-takeover effects of the Board's ability to issue serial common stock and preferred stock. Dividends Holders of shares of the common stock are entitled to receive dividends payable when and as declared by the Board of Directors out of funds legally available therefor. The Company does not have a formal dividend policy. The Company's Board of Directors periodically considers the advisability of declaring and paying dividends in light of existing circumstances. See "Stockholder Matters." The Company is restricted in the amount of dividends that it may issue or pay pursuant to covenants contained in its credit agreements. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity and Capital Resources -- Credit Agreements." At the date of this Prospectus, the most restrictive of such covenants provides that the Company may pay cash dividends on its capital stock only in an amount not exceeding, in the aggregate, computed on a cumulative basis, the sum of (i) $15 million and (ii) 50% of consolidated net income computed on a cumulative basis for the entire period subsequent to March 31, 1993 (or if such consolidated net income is a deficit figure, then minus 100% of such deficit); provided such dividend is paid within 60 days of being declared. At June 30, 1994, the aggregate amount available for dividends on common stock after providing for dividends on the Series A 8-1/2% Preferred Stock was approximately $38.7 million. Voting Each share of common stock entitles the holder to one vote in the election of directors and other corporate matters. The Company's Board of Directors is classified into four (4) classes. Voting rights are non-cumulative. For a description of articles of incorporation and bylaw provisions that would have the effect of delaying, deferring or preventing a change in control of the Company see "Certain Provisions that May Limit Changes in Control." No Prior Public Market for Company's Common Stock Prior to this offering, there has been no public market for any of the Company's common stock. The Company expects the Securities to be approved for quotation on the Nasdaq National Market but there is no assurance that an active trading market will develop or be maintained following this offering. The initial public offering price will be determined by negotiations among Selling Stockholder and the Underwriters. There can be no assurance as to the stability of the market price for the Securities. See "Underwriting." PREFERRED STOCK The Company's Restated Articles of Incorporation authorize the issuance of 50,000,000 shares of preferred stock, with or without par value, in one or more series, and with such voting powers, designations, preferences, limitations, restrictions, and relative rights as the Board of Directors of the Company may determine. As of the date of this Prospectus, 6,100,000 shares of Series A 81/2% Preferred Stock (the "Preferred Stock") are outstanding and 5,000 shares of Series C Preferred Stock have been reserved for issuance pursuant to a stockholder rights plan. See "Risk Factors -- Serial Common Stock and Preferred Stock" for a discussion of the potential anti-takeover effects of the Board's ability to issue Serial Common Stock and Preferred Stock. The Preferred Stock is non-voting and is not convertible into, or exchangeable for, shares of any other class or classes of stock of the Company. The Preferred Stock has priority as to dividends over the Company's common stock. Holders of the Preferred Stock are entitled to receive cumulative dividends at a fixed annual rate of $2.125 per share. The Preferred Stock is not redeemable prior to December 1, 2000. On and after such date, the Company, at its option may redeem the Preferred Stock at any time or from time to time at a redemption price of $25 per share, plus accrued and unpaid dividends thereon to the date of redemption. Holders of the Preferred Stock are entitled to liquidation preference of $25 per share. Holders of the Preferred Stock have no voting rights unless, among other things, the Company shall have failed to declare and pay in full dividends for six quarterly periods, in which case holders of the Preferred Stock will be entitled to elect two directors until the full dividends accumulated on all outstanding shares of Preferred Stock shall have been declared and paid in full. TRANSFER AGENT The transfer agent and registrar for the common stock is Chemical Trust Company of California. UNDERWRITING The Underwriters named below (the "Underwriters"), represented by Cruttenden & Company (the "Representative"), have severally agreed, subject to the terms and conditions contained in the Underwriting Agreement, to purchase from the Selling Stockholder the number of shares of common stock indicated below opposite their respective names at the initial public offering price less the underwriting discounts and commissions set forth on the cover of this Prospectus. The Underwriting Agreement provides that the obligations of the Underwriters are subject to certain conditions precedent and that the Underwriters shall purchase the total number of shares of common stock shown above if any such shares are purchased. Number Underwriter of Shares - ----------- ------------- Cruttenden & Company........................................ ------- Total................................................... 500,000 ======= The Underwriting Agreement contains covenants of indemnity and contribution among the Underwriters, the Company and the Selling Stockholder with respect to certain civil liabilities, including liabilities under the Securities Act. The Company and the Selling Stockholder have been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. The Company and the Selling Stockholder have been advised by the Representative that the Underwriters propose to offer the common stock purchased by them directly to the public at the initial public offering price set forth on the cover of this Prospectus and to certain dealers at a price that represents a concession within the discretion of the Representative. The Representative has advised the Company that less than 1% of the Securities will be sold on a discretionary basis. The Underwriters may allow, and such dealers may reallow, a concession within the discretion of the Representative. After the initial public offering, the offering price and the selling terms may be changed by the Underwriters. The Underwriters will purchase the common stock from the Selling Stockholder at a price per share representing a discount of 8% of the public offering price. In addition, the Selling Stockholder has agreed to pay the Representative a nonaccountable expense allowance of 2.5% of the aggregate public offering price of the common stock. To the extent that the expenses of the Representative are less than the nonaccountable expense allowance, the excess shall be deemed to be compensation to the Representative. Prior to this offering, there has been no public market for the common stock. Consequently, the initial public offering price for the common stock will be been determined by negotiation between Selling Stockholder and the Underwriters. Factors considered in determining such price will be prevailing market conditions, the net revenues and results of operations of the Company in recent periods, market valuations of publicly traded companies that the Company, the Selling Stockholder and the Representative believe to be comparable to the Company, estimates of the business potential of the Company and the current state of the industry and the economy as a whole. The initial public offering price set forth on the cover page of this Prospectus should not be considered an indication of the actual value of the Securities. Such price is subject to change as a result of market conditions and other factors and no assurance can be given that the Securities can be resold at the initial public offering price. Up to 75,000 shares registered herein may be offered and sold to non-U.S. persons in compliance with applicable foreign and U.S. securities law. The foregoing sets forth the material terms and conditions of the Underwriting Agreement, but does not purport to be a complete statement of the terms and conditions thereof, copies of which are on file at the offices of the Representative, the Company and the Commission. See "Available Information." LEGAL OPINIONS The validity of the Securities offered hereunder will be passed upon for the Company by Lionel, Sawyer & Collins, 300 S. 4th Street, Suite 1700, Las Vegas, Nevada 89101 in reliance with respect to matters of law of the State of Arizona upon Snell & Wilmer, One Arizona Center, Phoenix, Arizona 85004. Certain legal matters in connection with this offering will be passed upon for the Underwriters by Cooley Godward Castro Huddleson & Tatum, 5 Palo Alto Square, Palo Alto, California 94306 and for the Selling Stockholder by Grover Wickersham, P.C., 430 Cambridge Avenue, Suite 100, Palo Alto, California 94306. EXPERTS The consolidated financial statements of the Company as of March 31, 1994 and 1993 and for each of the years in the three-year period ended March 31, 1994 included herein have been included herein in reliance on the report of Price Waterhouse LLP, independent accountants, appearing elsewhere herein, given on the authority of said firm as experts in auditing and accounting. INDEX TO FINANCIAL STATEMENTS REPORT: Report of Independent Accountants -- AMERCO and Consolidated Subsidiaries...................................... F-2 AUDITED FINANCIAL STATEMENTS: Consolidated Balance Sheets -- March 31, 1994 and 1993........... F-3 Consolidated Statements of Earnings -- Years ended March 31, 1994, 1993 and 1992.................................. F-4 Consolidated Statements of Changes in Stockholders' Equity -- Years ended March 31, 1994, 1993 and 1992............ F-5 Consolidated Statements of Cash Flows -- Years ended March 31, 1994, 1993 and 1992.................................. F-6 Notes to Consolidated Financial Statements -- March 31, 1994, 1993 and 1992.................................. F-7 UNAUDITED INTERIM FINANCIAL STATEMENTS: Consolidated Balance Sheets -- June 30, 1994 and 1993............ F-33 Consolidated Statements of Earnings -- Quarters ended June 30, 1994 and 1993......................................... F-34 Consolidated Statements of Changes in Stockholders' Equity -- Quarters ended June 30, 1994 and 1993................ F-35 Consolidated Statements of Cash Flows -- Quarters ended June 30, 1994 and 1993......................................... F-36 Notes to Consolidated Financial Statements -- June 30, 1994 and 1993......................................... F-37 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of AMERCO In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of AMERCO and its subsidiaries at March 31, 1994 and 1993, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 1994, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. As described in Notes 1 and 11 to the consolidated financial statements, the Company changed its method of accounting for ceded reinsurance, certain investments and postretirement benefits in fiscal 1994. Price Waterhouse LLP Phoenix, Arizona June 24, 1994, except as to Notes 14 and 21, which are as of August 15, 1994 and July 26, 1994, respectively. AMERCO AND CONSOLIDATED SUBSIDIARIES CONSOLIDATED BALANCE SHEETS MARCH 31, (IN THOUSANDS) 1994 1993 ----------- ------------ ASSETS Cash and cash equivalents................... $ 18,442 $ 21,291 Receivables................................. 204,814 79,672 Inventories................................. 49,012 51,437 Prepaid expenses............................ 24,503 26,985 Investments, fixed maturities............... 719,605 647,505 Investments, other.......................... 84,738 129,535 Deferred policy acquisition costs........... 47,846 49,748 Other assets................................ 21,246 28,247 ----------- ------------ Property, plant and equipment, at cost: Land...................................... 186,210 180,171 Buildings and improvements................ 676,297 614,343 Furniture and equipment................... 163,495 158,366 Rental trailers and other rental equipment........................ 212,187 203,024 Rental trucks............................. 820,395 609,306 General rental items...................... 57,421 61,699 ----------- ------------ 2,116,005 1,826,909 Less accumulated depreciation............. 941,769 837,306 ----------- ------------ Total property, plant and equipment..... 1,174,236 989,603 ----------- ------------ $ 2,344,442 $ 2,024,023 =========== ============ LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Accounts payable and accrued liabilities.. $ 124,062 $ 113,653 Notes and loans........................... 723,764 697,121 Policy benefits and losses, claims and loss expenses payable............... 439,266 336,838 Liabilities from premium deposits......... 312,708 320,961 Other policyholders' funds and liabilities......................... 9,592 9,200 Deferred income........................... 5,913 6,328 Deferred income taxes..................... 50,791 35,113 ----------- ------------ Stockholders' equity: Serial preferred stock, with or without par value, 50,000,000 shares authorized; 6,100,000 issued without par value and outstanding as of March 31, 1994 and none issued or outstanding as of March 31, 1993..... -- -- Serial common stock, with or without par value, 150,000,000 shares authorized.... -- -- Series A common stock of $.25 par value. Authorized 10,000,000 shares, issued 5,754,334 shares in 1994, none in 1993................................. 1,438 -- Common stock of $.25 par value. Authorized 150,000,000 shares, issued 34,245,666 shares in 1994 and 40,000,000 shares in 1993............... 8,562 10,000 Additional paid-in capital................ 165,651 19,331 Foreign currency translation adjustment... (11,152) (6,122) Retained earnings......................... 515,200 482,163 ----------- ------------ 679,699 505,372 Less: Cost of common shares in treasury (1,335,937 shares as of March 31, 1994 and March 31, 1993)...... 10,461 10,461 Loan to leveraged employee stock ownership plan.................... 17,451 14,953 ----------- ------------ Total stockholders' equity.............. 651,787 479,958 Contingent liabilities and commitments...... ----------- ------------ $ 2,344,442 $ 2,024,023 =========== ============ The accompanying notes are an integral part of these consolidated financial statements. AMERCO AND CONSOLIDATED SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS YEARS ENDED MARCH 31, (IN THOUSANDS EXCEPT PER SHARE DATA) 1994 1993 1992 ------------ ------------ ------------ Revenues Rental and other revenue...... $ 816,666 $ 755,932 $ 689,139 Net sales..................... 156,038 145,514 155,989 Premiums...................... 123,344 98,825 87,126 Net investment income......... 38,807 40,640 39,630 ------------ ------------ ------------ Total revenues.............. 1,134,855 1,040,911 971,884 Costs and expenses Operating expense............. 643,662 604,596 558,313 Cost of sales................. 92,179 93,104 102,916 Benefits and losses........... 120,825 106,617 93,652 Amortization of deferred acquisition costs........... 9,343 9,352 5,439 Depreciation.................. 133,485 110,105 109,641 Interest expense.............. 68,859 67,958 76,189 ------------ ------------ ------------ Total costs and expenses.... 1,068,353 991,732 946,150 Pretax earnings from operations. 66,502 49,179 25,734 Income tax (expense).......... (19,853) (17,270) (4,940) ------------ ------------ ------------ Earnings from operations before extraordinary loss on early extinguishment of debt and cumulative effect of change in accounting principle........ 46,649 31,909 20,794 Extraordinary loss on early extinguishment of debt, net......................... (3,370) -- -- Cumulative effect of change in accounting principle, net......................... (3,095) -- -- ------------ ------------ ------------ Net earnings................ $ 40,184 $ 31,909 $ 20,794 ============ ============ ============ Earnings per common share: Earnings from operations before extraordinary loss on early extinguishment of debt and cumulative effect of change in accounting principle................... $ 1.06 $ .83 $ .53 Extraordinary loss on early extinguishment of debt, net. (.09) -- -- Cumulative effect of change in accounting principle, net. (.08) -- -- ------------ ------------ ------------ Net earnings................ $ .89 $ .83 $ .53 ============ ============ ============ Weighted average common shhares outstanding........... 38,664,063 38,664,063 38,880,069 ============ ============ ============ The accompanying notes are an integral part of these consolidated financial statements. AMERCO AND CONSOLIDATED SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY YEARS ENDED MARCH 31, (IN THOUSANDS) 1994 1993 1992 ------------ ------------ ------------ Series A common stock of $.25 par value: Authorized 10,000,000 shares, issued 5,754,334 in 1994, none in 1993 and 1992 Beginning of year............. $ -- $ -- $ -- Exchange for common stock... 1,438 -- -- ------------ ------------ ------------ End of year................... 1,438 -- -- ------------ ------------ ------------ Common stock of $.25 par value: Authorized 150,000,000 shares in 1994 and 1993 and 65,000,000 shares in 1992, 34,245,666 issued in 1994, 40,000,000 issued in 1993 and 1992 Beginning of year............. 10,000 10,000 10,000 Exchange for Series A common stock.............. (1,438) -- -- ------------ ------------ ------------ End of year................... 8,562 10,000 10,000 ------------ ------------ ------------ Additional paid-in capital: Beginning of year............. 19,331 19,331 18,158 Interest received on notes receivable -- restricted stock purchase plan....... -- -- 1,173 Issuance of preferred stock. 146,320 -- -- ------------ ------------ ------------ End of year................... 165,651 19,331 19,331 ------------ ------------ ------------ Foreign currency translation: Beginning of year............. (6,122) (3,551) (2,378) Change during year.......... (5,030) (2,571) (1,173) ------------ ------------ ------------ End of year................... (11,152) (6,122) (3,551) ------------ ------------ ------------ Retained earnings: Beginning of year.............. 482,163 452,202 431,408 Net earnings................. 40,184 31,909 20,794 Dividends paid to stockholders: Preferred stock: ($.78 per share for 1994)...... (4,753) -- -- Common stock: ($.08, $.05 per share for 1994 and 1993, respectively)...... (3,147) (1,994) -- Tax benefits related to ESOP dividends............. 74 46 -- Change in net unrealized gain on investments........ 679 -- -- ------------ ------------ ------------ End of year................... 515,200 482,163 452,202 ------------ ------------ ------------ Treasury stock: Beginning of year............. 10,461 10,461 4,500 Net increase (648,017 shares for 1992)................. -- -- 5,961 ------------ ------------ ------------ End of year................... 10,461 10,461 10,461 ------------ ------------ ------------ Notes receivable -- restricted stock purchase plan: Beginning of year............. -- -- 4,236 Cancellation of notes....... -- -- (4,236) ------------ ------------ ------------ End of year................... -- -- -- ------------ ------------ ------------ Loan to leveraged employee stock ownership plan: Beginning of year............. 14,953 15,633 13,272 Increase in loan............ 4,335 1,120 4,078 Proceeds from loan.......... (1,837) (1,800) (1,717) ------------ ------------ ------------ End of year................... 17,451 14,953 15,633 ------------ ------------ ------------ Total stockholders' equity...... $ 651,787 $ 479,958 $ 451,888 ============ ============ ============ The accompanying notes are an integral part of these consolidated financial statements. AMERCO AND CONSOLIDATED SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED MARCH 31, (IN THOUSANDS) 1994 1993 1992 ---------- ---------- ---------- Cash flows from operating activities: Net earnings............................... $ 40,184 $ 31,909 $ 20,794 Depreciation and amortization............ 148,740 128,530 124,368 Provision for losses on accounts receivable.................... 1,938 2,354 1,276 Net gain on sale of real and personal property...................... (2,114) (2,428) (3,740) Gain on sale of investments.............. (4,195) (5,392) (691) Cumulative effect of change in accounting principle................... 3,095 -- -- Changes in policy liabilities and accruals........................... 13,330 22,637 10,971 Additions to deferred policy acquisition costs...................... (7,440) (8,735) (14,801) Net change in other operating assets and liabilities................. 8,781 (6,063) 6,674 ---------- ---------- ---------- Net cash provided by operating activities.. 202,319 162,812 144,851 Cash flows from investing activities: Purchases of investments: Property, plant and equipment.......... (530,520) (130,841) (68,754) Fixed maturities....................... (280,345) (276,946) (364,448) Real estate............................ (176) (529) (846) Mortgage loans......................... (64,467) (54,346) (19,591) Proceeds from sales of investments: Property, plant and equipment.......... 214,543 20,656 16,241 Fixed maturities....................... 211,437 251,808 222,272 Real estate............................ 1,552 1,882 195 Mortgage loans......................... 81,619 5,984 3,516 Changes in other investments........... 8,539 37,475 (54,096) ---------- ---------- ---------- Net cash used by investing activities...... (357,818) (144,857) (265,511) Cash flows from financing activities: Net change in notes payable and commercial paper....................... 21,750 2,975 (160,562) Proceeds from notes...................... 186,000 55,000 185,000 Loan to leveraged Employee Stock Ownership Plan......................... (4,335) (1,120) (4,078) Proceeds from leveraged Employee Stock Ownership Plan................... 1,837 1,800 1,717 Principal payments on notes.............. (181,107) (94,176) (95,942) Issuance of preferred stock.............. 146,320 -- -- Extraordinary loss on early extinguishment of debt................. (3,370) -- -- Net change in cash overdraft............. 1,708 5,307 (1,227) Treasury stock acquisitions.............. -- -- (552) Dividends paid........................... (7,900) (1,994) -- Investment contract deposits............. 31,932 51,047 200,534 Investment contract withdrawals.......... (40,185) (27,889) (10,534) ---------- ---------- ---------- Net cash (used) provided by financing activities..................... 152,650 (9,050) 114,356 ---------- ---------- ---------- Increase (Decrease) in cash................ (2,849) 8,905 (6,304) Cash and cash equivalents at beginning of year........................ 21,291 12,386 18,690 ---------- ---------- ---------- Cash and cash equivalents at end of year... $ 18,442 $ 21,291 $ 12,386 ========== ========== ========== The accompanying notes are an integral part of these consolidated financial statements. AMERCO AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1994, 1993 AND 1992 AMERCO AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation: The consolidated financial statements include the accounts of the parent corporation, AMERCO, and its subsidiaries, all of which are wholly-owned. All material intercompany accounts and transactions of AMERCO and its subsidiaries (herein called the "Company" or the "consolidated group") have been eliminated. The operating results and financial position of AMERCO's consolidated insurance operations are determined as of December 31 of each year. There were no effects related to intervening events which would significantly affect consolidated financial position or results of operations for the financial statements presented herein. See Note 19 of Notes to Consolidated Financial Statements of AMERCO for additional information regarding the subsidiary. Description of Business: The consolidated group's principal line of business is the rental of various kinds of equipment, principally trucks, automobile-type trailers, auto transports and general rental items, including floor care items, tools for home and garden use, recreational equipment and accessories under the brand name U-Haul and the sale of related products and services. In addition, the consolidated group is engaged in the rental of self-storage facilities for the storage of household goods and other forms of personal property. Through Ponderosa Holdings, Inc., ("Ponderosa"), which serves as the holding company for Oxford Life Insurance Company ("Oxford") and Republic Western Insurance Company ("RWIC"), the Company operates in various life, annuity, group health and property/casualty insurance products. A portion of the insurance subsidiaries' business is conducted with members of the consolidated group. Foreign Currency: The consolidated financial statements include the accounts of U-Haul Co. (Canada) Ltd., a subsidiary of AMERCO. Assets (including property, plant and equipment) and liabilities, denominated in currencies other than U.S. dollars, are translated to U.S. dollars at the exchange rate as of the balance sheet date. Income and expense amounts (including depreciation expense) are translated at the average exchange rate during the fiscal year. Cash and Cash Equivalents: The Company considers liquid investments with an original maturity of three months or less to be cash equivalents. Accounts Receivable and Allowance for Doubtful Accounts: Accounts receivable of Ponderosa include premiums and agents' balances due net of commissions payable and amounts due from ceding reinsurers. Accounts receivable of Ponderosa are reduced by amounts considered to be uncollectible. Accounts receivable of the Company's rental subsidiaries principally include trade accounts receivable and mortgage and other notes receivable. Allowance for doubtful accounts are provided based on historical collection loss experience and a review of the current status of existing receivables by the Company's rental subsidiaries. Inventories: Inventories are primarily valued at the lower of cost (last- in first-out) (LIFO) or market. Investments: Fixed maturities consist of bonds and redeemable preferred stock which are carried at cost, adjusted for amortization of premium or accretion of discount. Oxford's intent is to hold these investments until maturity. Mortgage loans on real estate are carried at unpaid balances, less allowance for possible losses and any unamortized premium or discount. Real estate is carried at cost less accumulated depreciation. Policy loans are carried at their unpaid balance. Short-term investments consist of other securities scheduled to mature within one year of their acquisition date. Amounts held by ceding reinsurers represent obligations due to Oxford. These obligations of the ceding company are supported by investments in fixed maturities. See Note 4 of Notes to Consolidated Financial Statements of AMERCO. Interest on bonds is recognized when earned. Dividends on preferred stocks are recognized on ex-dividend dates. Realized gains and losses on the sale of investments are recognized at the trade date and included in net income using the specific identification method. Deferred Policy Acquisition Costs: Commissions and other costs incurred in acquiring traditional life insurance, interest sensitive life and annuity policies, group health insurance and property-casualty insurance which vary with and are primarily related to the production of new business, have been deferred. Traditional life, annuity and group health acquisition costs are amortized over the premium paying period of the related policies in proportion to the ratio of annual premium income to expected total premium income. Such expected premium income is estimated using assumptions as to mortality and withdrawals consistent with those used in calculating the policy benefit reserves. Acquisition costs for interest sensitive life insurance and annuity policies are being amortized over the lives of the policies in relation to the present value of estimated gross profits from surrender charges and investment, mortality and expense margins. Property-casualty acquisition costs are amortized over the related contract period which generally does not exceed one year. Property, Plant and Equipment: Property, plant and equipment are carried at cost and are depreciated on the straight-line and accelerated methods over the estimated useful lives of the assets. Maintenance and repairs are charged to operating expenses as incurred. Major overhaul costs of rental equipment, principally trucks, are amortized over an estimated period benefitted of one year. Renewals and betterments are capitalized. Gains and losses on dispositions of property, plant and equipment are included in other revenue as realized. Interest costs incurred as part of the initial acquisition of assets are capitalized. Interest expense of $595,000, $159,000 and $234,000 was capitalized in the years ended 1994, 1993 and 1992, respectively. Rental truck extended warranty costs are amortized over a period of 5 or 6 years. The amount amortized is based on an annual percentage provided by the truck manufacturer. Extended warranty costs of $2,830,000 are deferred as of March 31, 1993 and are included in prepaid expenses. Extended warranty costs deferred as of March 31, 1994 are immaterial. Certain recoverable environmental costs related to the removal of underground storage tanks or related contamination are capitalized and depreciated over the estimated useful lives of the properties. The capitalized costs improve the safety or efficiency of the property as compared to when the property was originally acquired or are incurred in preparing the property for sale. Financial Instruments: The Company enters into interest rate swap agreements to reduce its interest rate exposure. Amounts to be paid or received under the agreements are accrued as interest rates change and are recognized as incurred. Although the Company is exposed to credit loss for the interest rate differential in the event of nonperformance by the counterparties to the agreements, it does not anticipate nonperformance by the counterparties. At March 31, 1994, interest rate swap agreements with an aggregate notional amount of $193,000,000 were outstanding. At March 31, 1994, a value of $14,000,000 was determined from treasury rates combined with a swap spread which represents the estimated amount the Company would pay to terminate the agreements. The Company has one additional swap outstanding in the amount of $15,000,000 which is a component of a note agreement with a bank. The fair value of the swap component of the agreement cannot be separated from the entire note agreement to determine the estimated fair value. The amount of the note outstanding at March 31, 1994 is $15,000,000 with a fixed yen interest rate of 6.2% and a maturity date of November 30, 1994. The Company has mortgage loans which potentially expose the Company to credit risk. The portfolio of notes is principally comprised of mini-warehouse storage facilities and other residential and commercial properties. The Company has not experienced losses related to the notes from individual notes or groups of notes in any particular industry or geographic area. At March 31, 1994, mortgage notes with a book value of $90,876,000 were outstanding. The estimated fair value of the notes at March 31, 1994 was $92,778,000. The value was determined using discounted cash flows at a rate of 7.1% for residential and commercial notes and from bids related to the mini-warehouse storage notes. At March 31, 1993, mortgage notes with a book value of $104,888,000 were outstanding. The estimated fair value of the notes at March 31, 1993 was $107,367,000. Other financial instruments that are subject to fair value disclosure requirements are carried in the financial statements at amounts that approximate fair value. The Company's financial instruments that are exposed to concentrations of credit risk consist primarily of temporary cash investments and trade receivables. The Company places its temporary cash investments with financial institutions and limits the amount of credit exposure to any one financial institution. Concentrations of credit risk with respect to trade receivables are limited due to the large number of customers and their dispersion across many different industries and geographic areas. Policy Benefits and Losses, Claims and Loss Expenses Payable: Liabilities for policy benefits payable on traditional life and annuity policies are established in amounts adequate to meet estimated future obligations on policies in force. These liabilities are computed using the net level premium method and include mortality and withdrawal assumptions which are based upon recognized actuarial tables and contain margins for adverse deviation. At December 31, 1993, interest assumptions used to compute policy benefits payable range from 2 1/2% to 11 1/4%. With respect to interest sensitive life and annuity policies, the liability for policy benefits and expenses payable consists of policy account balances that accrue to the benefit of the policyholders, excluding surrender charges. Liabilities for group health and other policy claims and benefits payable represent estimates of payments to be made on insurance claims for reported losses and estimates of losses incurred but not yet reported. These estimates are based on past claims experience and consider current claim trends as well as social and economic conditions. Liabilities for property-casualty losses represent the estimated ultimate unpaid cost of settling claims reported prior to the end of the accounting period, estimates received from ceding reinsurers and estimates for unreported losses based on historical experience supplemented by insurance industry historical experience. Unpaid loss adjustment expenses are based on historical ratios of loss adjustment expenses paid to losses paid. Rental and Other Revenue: AMERCO recognizes its share of rental revenue on the accrual basis pursuant to contractual arrangements between AMERCO, fleet owners, rental dealers and customers. See Note 8 of Notes to Consolidated Financial Statements of AMERCO for further discussion. Premium Revenue: Group health and property-casualty gross premiums are prorated over the term of the related contracts. Traditional life and annuity premiums are recognized as revenue when due from policyholders. Revenue for interest sensitive life insurance and annuity policies consist of surrender charges that have been assessed against policy account balances during the period. Benefits and expenses are associated with amortization of policy acquisition costs. Reinsurance: Reinsurance premiums, commissions, expense reimbursements, and reserves related to reinsured business are accounted for on bases consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. Premiums ceded to other companies have been reported as a reduction of premium income. Amounts applicable to reinsurance ceded for future policy benefits, unearned premium reserves, and claim liabilities have been reported as reductions of these items, and expense allowances received in connection with reinsurance ceded have been accounted for as a reduction of the related policy acquisition costs and are deferred and amortized accordingly. Income Taxes: Deferred income taxes are provided for all items included in the Consolidated Statements of Earnings which are reported in different accounting periods for tax purposes. Effective fiscal 1991, the Company elected to file a consolidated federal income tax return with its insurance subsidiaries. Previously, federal income tax returns were filed separately by the insurance company subsidiaries. See Note 7 of Notes to Consolidated Financial Statements of AMERCO. New Accounting Standards: Statement of Financial Accounting Standards No. 112 -- Employers' Accounting for Postemployment Benefits. Issued in November 1992, this Statement applies to employers who provide certain benefits to former or inactive employees after employment but before retirement. It requires that the cost of such benefits be recognized over the service period of employees as these benefits vest or accumulate. The provisions of this statement must be adopted for fiscal years beginning after December 15, 1993. The impact of adoption of this statement will not be material. Statement of Financial Accounting Standards No. 113 -- Accounting and Reporting for Reinsurance of Short-Duration and Long-Duration Contracts. Effective January 1, 1993, the Company adopted SFAS 113. The primary impact on the Company's financial statements is the requirement to report assets and liabilities relating to reinsured contracts gross of the effects of reinsurance. Previously, such effects were reported on a net basis. As a result of the adoption of SFAS 113, unpaid losses and loss expenses as of March 31, 1994 have been increased by approximately $76 million to reflect the Company's policy liabilities without regard to reinsurance. A corresponding amount due from reinsurers on unpaid losses, including amounts related to claims incurred but not reported, has also been reflected. Additionally, unearned premiums have been increased by approximately $12 million for policy premiums ceded to reinsurers for which the coverage period has not yet expired. Prepaid reinsurance premiums of a corresponding amount have also been reflected in the accompanying consolidated balance sheet. The consolidated balance sheet as of March 31, 1993 has not been restated to reflect the adoption of SFAS 113 as of that date. Statement of Financial Accounting Standards No. 114, "Accounting by Creditors for Impairment of a Loan", was issued by the Financial Accounting Standards Board in May 1993. This standard is effective for years beginning after December 15, 1994. The standard requires that an impaired loan's fair value be measured and compared to the recorded investment in the loan. If the fair value of the loan is less than the recorded investment in the loan, a valuation allowance is established. The Company has not completed an evaluation of the effect of this standard. Statement of Financial Accounting Standards No. 115 -- Accounting for Certain Investments in Debt and Equity Securities. Effective December 31, 1993, RWIC adopted SFAS 115. This statement requires classification of debt securities into one of the following three categories based on management's intention with regard to such securities: held-to-maturity, available-for-sale and trading. Securities classified as held-to-maturity are recorded at cost adjusted for the amortization of premiums or accretion of discounts while those classified as available-for-sale are recorded at fair value with unrealized gains or losses reported on a net basis as a separate component of stockholders' equity. Securities classified as trading, if any, are recorded at fair value with unrealized gains or losses reported on a net basis in income. RWIC does not currently maintain a trading portfolio. U-Haul and Oxford will adopt this statement in fiscal 1995. An evaluation of this statement has not been completed by U-Haul or Oxford. Statement of Position 93-7, "Reporting on Advertising Costs", was issued by the Accounting Standards Executive Committee in December 1993. This statement of position provides guidance on financial reporting on advertising costs in annual financial statements. The statement of position requires reporting advertising costs as expenses when incurred or when the advertising takes place, reporting the costs of direct-response advertising, and amortizing the amount of direct-response advertising reported as assets. This statement of position is effective for financial statements for years beginning after June 15, 1994. The Company currently matches certain advertising costs with revenue generated in future periods, and at March 31, 1994, $8.2 million in advertising costs are deferred and included in prepaid expenses. The Company has completed an evaluation of the effect of this statement of position but has not determined the timing of adoption. Earnings per share: Earnings per common share are computed based on the weighted average number of shares outstanding and net income reduced for preferred dividends. See Note 6 of Notes to Consolidated Financial Statements of AMERCO for further discussion. Financial Statement Presentation: Certain reclassifications have been made to the financial statements for the years ended 1993 and 1992 to conform with the current year's presentation. AMERCO AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 2. RECEIVABLES A summary of receivables follows: Year ended ----------------------- 1994 1993 --------- --------- (in thousands) Trade accounts receivable $ 16,073 $ 8,658 Mortgage and note receivables, net of discount 45,288 23,267 Premiums and agents' balances in course of collection 29,078 11,281 Reinsurance recoverable 81,760 8,945 Accrued investment income 13,565 15,263 Independent dealer receivable 6,870 11,259 Other receivables 14,189 2,547 --------- --------- 206,823 81,220 Less allowance for doubtful accounts (2,009) (1,548) --------- --------- $ 204,814 $ 79,672 ========= ========= 3. INVENTORIES A summary of inventory components follows: Year ended ----------------------- 1994 1993 --------- --------- (in thousands) Trailers, truck and recreational vehicle parts and accessories $ 31,684 $ 33,799 Moving aids and promotional items 7,032 6,080 Hitches and towing components 10,236 11,414 Other 60 144 --------- --------- $ 49,012 $ 51,437 ========= ========= Certain general and administrative expenses are allocated to ending inventories. Such costs remaining in inventory at years-ended 1994, 1993 and 1992 are estimated at $7,679,000, $7,224,000 and $7,100,000, respectively. For the years-ended March 31, 1994, 1993 and 1992, aggregate general and administrative costs were $430,209,000, $467,390,000 and $426,021,000, respectively. LIFO inventories, which represent approximately 98% of total inventories at year-end 1994 (95% at year-end 1993), would have been $3,591,000 greater at year-end 1994 ($3,325,000 at year-end 1993) if the consolidated group had used the FIFO method. 4. INVESTMENTS Major categories of net investment income consists of the following (in thousands): December 31, ---------------------------------- 1993 1992 1991 -------- -------- -------- Fixed maturities $ 52,903 $ 54,836 $ 45,438 Real estate 142 235 111 Policy loans 609 566 418 Mortgage loans 4,669 5,751 4,423 Short-term, amounts held by ceding reinsurers, net and other investments 874 2,481 3,336 -------- -------- -------- Investment revenue 59,197 63,869 53,726 Investment expenses 20,390 23,229 14,096 -------- -------- -------- Net investment income $ 38,807 $ 40,640 $ 39,630 ======== ======== ========
A comparison of amortized cost to market for fixed maturities is as follows(in thousands): Par Value Gross Gross Estimated or number Amortized unrealized unrealized market December 31, 1993 of shares cost gains losses value - ----------------- --------- --------- -------- ------- -------- OXFORD U.S. Treasury securities and government obligations $ 10,340 $ 9,395 $ 949 $ -- $ 10,344 U.S. government agency mortgage backed securities 69,653 69,053 1,626 448 70,231 States, municipalities and political subdivisions 1,000 1,003 28 -- 1,031 Foreign government securities 1,000 1,002 152 -- 1,154 Corporate securities 191,177 194,940 11,499 924 205,515 Mortgage-backed securities 41,001 40,252 1,182 282 41,152 Public utility securities $ 38,950 $ 37,844 $ 2,503 -- $ 40,347 --------- -------- ------- --------- Total $ 353,489 $ 17,939 $ 1,654 $ 369,774 ========= ======== ======= ========= DECEMBER 31, 1993 - ----------------- RWIC Held-to-Maturity U.S. Treasury securities and government obligations $ 38,213 $ 39,425 $ 3,025 $ 55 $ 42,395 States, municipalities and political subdivisions 43,625 43,154 4,345 334 47,165 Corporate securities 195,350 202,401 8,444 1,577 209,268 Mortgage-backed securities $ 36,085 $ 36,140 $ 488 $ 368 $ 36,260 Redeemable preferred stock 2,300 2,300 400 -- 2,700 --------- -------- ------- --------- $ 323,420 $ 16,702 $ 2,334 $ 337,788 RWIC Available-for-Sale U.S. Treasury securities and government obligations $ 6,000 $ 6,125 $ 1,175 $ -- $ 7,300 States, municipalities and political subdivisions 40 40 -- 2 38 Corporate securities 19,000 19,233 23 152 19,104 Mortgage-backed securities $ 16,098 $ 16,254 $ -- $ -- $ 16,254 --------- -------- ------- --------- 41,652 1,198 154 42,696 --------- -------- ------- --------- Total $ 365,072 $ 17,900 $ 2,488 $ 380,484 ========= ======== ======= =========
AMERCO AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Par Value Gross Gross Estimated or number Amortized unrealized unrealized market December 31, 1992 of shares cost gains losses value - ----------------- ---------- --------- --------- ------- ---------- Consolidated U.S. Treasury securities and government obligations $ 80,657 $ 81,211 $ 4,193 $ 28 $ 85,376 U.S. government agency mortgage backed securities 40,070 38,292 622 285 38,629 States, municipalities and political subdivisions 72,320 70,978 6,782 150 77,610 Foreign government securities 1,000 1,002 97 -- 1,099 Corporate securities 322,152 325,610 11,969 606 336,973 Mortgage-backed securities 72,813 71,993 2,513 11 74,495 Public utility securities $ 55,041 $ 53,186 $ 2,178 $ 40 $ 55,324 Redeemable preferred stock 58 5,233 613 156 5,690 --------- -------- ------- ---------- Total $ 647,505 $ 28,967 $ 1,276 $ 675,196 ========= ======== ======= ==========
The fair value of fixed maturities are based on publicly quoted market prices at the close of trading December 31, 1993 or December 31, 1992, as appropriate. The amortized cost and estimated market value of debt securities by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Amortized Estimated December 31, 1993 cost fair value ----------------- --------- --------- (in thousands) OXFORD Due in one year or less $ 15,362 $ 15,641 Due after one year through five years 118,343 125,274 Due after five years through ten years 108,693 115,402 After ten years 1,786 2,074 --------- --------- 244,184 258,391 Mortgage-backed securities 109,305 111,383 --------- --------- Total $ 353,489 $ 369,774 ========= ========= RWIC Held-to-Maturity Due in one year or less $ 35,997 $ 32,090 Due after one year through five years 148,894 155,908 Due after five years through ten years 90,443 100,726 After ten years 9,646 10,104 --------- --------- 284,980 298,828 Mortgage-backed securities 36,140 36,260 Redeemable preferred stock 2,300 2,700 --------- -------- 323,420 337,788 RWIC Available-for-sale Due after one year through five years 9,864 9,829 Due after five years through ten years 8,185 8,838 After ten years 7,349 7,775 --------- --------- 25,398 26,442 Mortgage-backed securities 16,254 16,254 --------- --------- 41,652 42,696 --------- --------- Total $ 365,072 $ 380,484 ========= ========= December 31, 1992 ----------------- Due in one year or less $ 46,930 $ 49,484 Due after one year through five years 231,130 241,272 Due after five years through ten years 219,678 226,201 After ten years 34,249 39,425 --------- --------- 531,987 556,382 Mortgage-backed securities 110,285 113,124 Redeemable preferred stock 5,233 5,690 --------- --------- Totals $ 647,505 $ 675,196 ========= ========= Proceeds from sales of investments in debt securities during 1993 and 1992 were $25,409,000 and $114,229,000, respectively. Gross gains of $1,665,000 and $4,872,000 and gross losses of $91,000 and $951,000 were realized on those sales during 1993 and 1992, respectively. Proceeds from maturities and early redemptions of investments in debt securities during 1993 and 1992 were $169,089,000 and $137,047,000. Gross gains of $2,326,000 and $1,463,000 and gross losses of $254,000 and $99,000 were realized on these securities during 1993 and 1992, respectively. At December 31, 1993, 1992 and 1991 fixed maturities include bonds with an amortized cost of $15,450,000, $15,461,000 and $15,456,000, respectively, on deposit with insurance regulatory authorities to meet statutory requirements. Mortgage loans are reported net of allowance for possible losses of $525,000 in both 1993 and 1992. Other investments consist of the following: December 31, ----------------------- 1993 1992 -------- --------- (in thousands) Mortgage loans on real estate $ 47,869 $ 84,361 Real estate, net 1,651 1,793 Policy loans 10,718 9,978 Short-term and other investments 24,500 33,403 -------- --------- Totals $ 84,738 $ 129,535 ======== ========= 5. NOTES AND LOANS PAYABLE Notes and loans payable consist of the following: Year ended --------------------- 1994 1993 --------- ---------- (in thousands) Mortgages payable, secured 5.0% to 10.25% interest rates, due through 2016 $ 1,246 $ 2,448 Medium-term notes payable, unsecured 8.50% to 11.50% interest rates, due through 2000 198,870 289,670 Notes payable to insurance companies, unsecured 5.89% to 10.27% interest rates, due through 2006 281,000 140,000 Notes payable to banks, unsecured 2.94% to 9.40% interest rates, due through 1999 94,800 138,900 Other notes payable, unsecured 9.50% interest rate, due through 2005 98 103 Notes payable to banks under revolving lines of credit, unsecured 3.81% to 4.06% interest rates, 97,750 106,000 Other short-term promissory notes 50,000 20,000 --------- --------- $ 723,764 $ 697,121 ========= ========= Mortgages payable are secured by land and buildings at various locations, which carry a net book value of $13,900,000 at year-end 1994. AMERCO AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Domestic/Eurodollar revolving credit loans are available from participating banks under an agreement which provides for a total credit line of $170,500,000 through the expiration date of the revolving term of September 25, 1995. The Company may elect to borrow under the credit agreement in the form of Eurodollar borrowings or domestic dollar borrowings. Depending on the form of borrowing elected, interest will be based on the prime rate, the certificate of deposit rate, the federal funds effective rate or the interbank offering rate and in addition, margin interest rates will be charged. Loans may also be at a fixed rate based upon the discretion of the borrower and lender. At March 31, 1994, the weighted average interest rate on borrowings outstanding was 3.97%. Facility fees, which are based upon the amount of credit line, aggregated $588,000 and $381,000 for 1994 and 1993, respectively. Prior to August 1992, the agreement required payment of commitment fees. Commitment fees, which are based upon any unused credit line, aggregated $230,000 for 1993. As of year-end 1994, loans outstanding under the revolving credit line totaled $45,000,000. Management intends to refinance the borrowings on a long-term basis by either replacing them with long-term obligations, renewing or extending them. Year ended -------------------------------- 1994 1993 1992 --------- --------- -------- (in thousands) A summary of revolving credit activity follows: Weighted average interest rate during the year 3.62% 4.36% 6.66% at year end 3.93% 3.56% 5.55% Maximum amount outstanding during the year $ 159,750 $ 126,000 $ 278,621 Average amount outstanding during the year $ 67,354 $ 96,667 $ 156,153 A summary of notes payable follows: Weighted average interest rate: during the year 3.80% 4.09% 6.17% at year end 4.04% 3.66% 5.20% Maximum amount outstanding during the year $ 50,000 $ 25,000 $ 33,756 Average amount outstanding during the year $ 11,380 $ 14,167 $ 18,109 AMERCO has lines of credit with various banks totaling $106,289,000 at March 31, 1994. The Company has executed interest rate swap agreements ("SWAPS") to potentially mitigate the impact of changes in interest rates on its floating rate debt. These agreements effectively change the Company's interest rate exposure on $208,000,000 of floating rate notes to a weighted average fixed rate of 8.61%. The SWAP's mature at the time the related notes mature. During fiscal 1994, SWAP's aggregating approximately $77.0 million were terminated. In addition, the Company exercised existing SWAP agreements aggregating approximately $50.0 million during fiscal 1994. Incremental interest expense associated with SWAP activity was $11,989,000 and $9,724,000 during 1994 and 1993, respectively. The notes payable and the loan agreements contain certain restrictive covenants including limits on the incurrence of other indebtedness, restrictions on related party transactions, and restrictions on the aggregate amount of dividends payable to Common stockholders and repurchases of capital stock. Under the most restrictive dividend covenant, AMERCO is prohibited from paying dividends if, at the time of payment, cumulative dividends are in excess of the sum of $15,000,000 plus 50% of consolidated net income as defined, for the entire period subsequent to March 31, 1993. See also Note 14. During the first and third quarters of fiscal 1994, the Company extinguished $25.2 million of its medium-term notes originally due in fiscal 1995 through 2000. The weighted average rate of the notes purchased is 9.34%. The purchase resulted in an extraordinary charge of $1,897,000 net of $1,021,000 of tax benefit. During the fourth quarter of fiscal 1994, the Company terminated swaps with a notional value of $77 million originally due in fiscal 1995. The terminations resulted in an extraordinary charge of $1,473,000 net of $793,000 of tax benefit. In April 1994, the Company terminated three $10 million floating-rate notes. The notes were due to mature in fiscal years 1995, 1996 and 1997. In May 1994, the Company terminated five revolving credit agreements providing committed lines of credit totaling $259 million; amounts outstanding under these agreements at March 31, total $118 million. The Company subsequently entered into two revolving credit loans. The agreements provide for lines of credit of $185 million and $365 million through the maturity dates of May 1995 and June 1997, respectively. The Company may elect to borrow under the credit agreements in the form of Eurodollar borrowings or domestic dollar borrowings. Depending on the form of borrowing elected, interest will be based on the prime rate, the certificate of deposit rate, the Federal funds effective rate or the London interbank offering rate. Under the three-year agreement, loans may also be at a fixed rate based upon the discretion of the borrower and lender. In June 1994, the Company entered into a $10 million uncommitted revolving credit agreement. Interest on the loans is based upon the discretion of the lender. The aggregate annual maturities of long-term debt for the next five years, as adjusted for the transactions referred to in the immediately preceding paragraph, if the revolving credit lines are converted by the Company to term notes (see the discussion in the preceding paragraphs regarding the revolving credit agreements and the Company's intention to refinance such debt on a long-term basis) are $187,601,000 in 1995, $107,168,000 in 1996, $152,387,000 in 1997, $61,971,000 in 1998 and $62,765,000 in 1999. 6. STOCKHOLDERS' EQUITY In October 1990, the stockholders approved an amendment to the Company's Articles of Incorporation to reduce the par value of the Common Stock from $100.00 per share to $0.25 per share and to effect a 400-for-1 stock split whereby each issued share of Common Stock, $100.00 par value, was converted into 400 shares of Common Stock, $0.25 par value per share. The number of shares of Common Stock authorized increased from 107,500 to 65,000,000 shares. The amendment also changed the par value of the Company's Preferred Stock from no par value to $.01 par value per share and increased the number of preferred shares authorized from 100,000 to 5,000,000 shares. All references in the accompanying financial statements to the number of common shares and per-share amounts reflect the above described change in outstanding shares. In October 1992, the stockholders approved an amendment to the Company's Articles of Incorporation to increase the authorized capital stock of the Company to a total of 350,000,000 shares from 65,000,000 shares of Common Stock and 5,000,000 shares of Preferred Stock. The increased capital stock consists of 150,000,000 shares of Common Stock, 150,000,000 shares of Serial Common Stock and 50,000,000 shares of Preferred Stock. The Board of Directors (the Board) may authorize the Serial Common Stock to be issued in such series and on such terms as the Board shall determine. The amendment also clarifies the voting rights of the Preferred Stock and allows the issuance of Preferred Stock with or without par value. In October 1993, the Company issued 6,100,000 shares of 8.5% cumulative, no par, non-voting preferred stock. The preferred stock is not convertible into, or exchangeable for, shares of any other class or classes of stock of the Company. Dividends are payable quarterly in arrears and have priority as to dividends over the Company's common stock. The preferred stock is not redeemable prior to December 1, 2000. On or after December 1, 2000, the Company, at its option, may redeem all or part of the preferred stock, for cash at $25.00 per share plus accrued and unpaid dividends to the redemption date. 7. INCOME TAXES The components of the consolidated expense (benefit) for income taxes applicable to operations are as follows: Year ended ------------------------------------- 1994 1993 1992 ----------- ----------- ----------- (in thousands) Current: $ Federal $ 2,112 $ 1,800 -- State 185 726 346 Deferred: Federal 16,365 13,902 4,629 State 1,191 842 (35) ----------- ----------- ----------- $ 19,853 $ 17,270 $ 4,940 =========== =========== =========== AMERCO AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Deferred tax liabilities (assets) are comprised as follows: Year ended ------------------------------------------ 1994 1993 1992 ---------- ---------- ---------- (in thousands) Accelerated depreciation of property, plant and equipment $ 145,391 $ 134,466 $ 125,223 Benefit of tax NOL and credit carryforwards (74,905) (85,326) (94,880) Rental equipment overhaul costs amortized 751 1,126 2,089 Deferred inventory adjustments (1,177) (356) (736) Deferred acquisition costs 15,361 15,761 15,781 Deferred gain from intercompany transactions (894) (2,780) (1,376) Bad debt expense (1,635) (1,429) (1,650) Accrued expense on future dealer benefits (3,347) (2,576) (2,051) Accrued vacation and sick-pay (1,182) (1,132) (1,203) Accelerated retirement deductions -- 860 860 Customer deposit liability (2,375) -- -- Deferred revenue from sale/leaseback (1,357) (1,779) (2,396) Accrued retirement expense (1,755) -- -- Policy benefits and losses, claims and loss expenses payable (24,022) (24,986) (23,126) Other (283) 1,041 1,611 ---------- ---------- ---------- Total $ 48,571 $ 32,890 $ 18,146 ========== ========== ========== Actual tax expense reported on earnings from operations differs from the "expected" tax expense amount (computed by applying the United States federal corporate tax rate of 35% in 1994, and 34% in 1993 and 1992) as follows: Year ended -------------------------------------- 1994 1993 1992 --------- --------- -------- (in thousands) Computed "expected" tax expense $ 23,276 $ 16,938 $ 8,749 Increases (reductions) in taxes resulting from: Tax-exempt interest income (1,525) (2,278) (2,927) Dividends received deduction (101) (289) (421) Net reinsurance effect 120 116 117 Canadian subsidiary income tax (expense) benefit unrealized (204) 230 909 Net tax settlement -- -- 31 Recognition of provision to return reconciliation(1) (1,327) -- -- Federal tax benefit of state and local taxes (482) (534) (106) Other(2) (1,280) 1,519 (1,723) --------- --------- -------- Actual federal tax expense 18,477 15,702 4,629 State and local income tax expense 1,376 1,568 311 --------- --------- -------- Actual tax expense of operations $ 19,853 $ 17,270 $ 4,940 ========= ========= ======== - ---------- (1) Every year an estimate is made of the current federal and state tax liabilities position at the time the Form 10-K is filed. This reconciliation amount represents the difference between the estimated and actual tax liability based upon the filed return for the preceding fiscal year. (2) The amount is comprised of several miscellaneous permanent differences, none of which are individually material. The 1993 and 1992 financial statements have been restated to give retroactive effect to the adoption of SFAS 109. The impact on previously issued financial statements, income (loss), is as follows (in thousands except per share data): Year ended ------------------------ 1993 1992 --------- --------- (in thousands) Earnings: Effect of change on income before extraordinary item as originally reported $ (2,309) $ 1,890 Effect of change on net income as originally reported (8,687) (886) Earnings per common share: Effect of change on income before extraordinary item as originally reported $ (.06) $ .05 Effect of change on net income as originally reported (.22) (.02) Under the provisions of the Tax Reform Act of 1984 (the Act), the balance in Oxford's account designated "Policyholders" Surplus Account" is frozen at its December 31, 1983 balance of $19,251,000. Federal income taxes (Phase III) will be payable thereon at applicable current rates if amounts in this account are distributed to the stockholder or to the extent the account exceeds a prescribed maximum. Oxford did not incur a Phase III liability for the years ended December 31, 1993, 1992 and 1991. The Internal Revenue Service has examined AMERCO's income tax returns for the years ended 1987 through 1989. All issues have been agreed to and provisions have been made in the financial statements. An examination of years ended 1990 and 1991 is currently underway. The tax effect of the adjustments which have been proposed have been reflected in the current year's tax provision. At year-end 1994 AMERCO and RWIC have non-life net operating loss carryforwards available to offset taxable income in future years of $166,955,000 for tax purposes. These carryforwards expire in 2000 through 2007. AMERCO also has investment tax credit and other credit carryforwards of $7,319,000 for tax purposes which expire in 1999 through 2004. The use of certain carryforwards may be limited or prohibited if a reorganization or other change in corporate ownership were to occur. Provision for federal income taxes has not been made for the difference between the Company's book and tax bases of its investment in Ponderosa, since the Company believes such difference to be permanent in duration. 8. TRANSACTIONS WITH FLEET OWNERS AND OTHER RENTAL EQUIPMENT OWNERS Fleet Owners (independent rental equipment owners) own approximately 25% of all U-Haul rental trailers, .07% of all U-Haul rental trucks and certain other rental equipment. There are over 5,600 fleet owners, including certain officers, directors, employees and stockholders of the Company. All rental equipment is operated under contract with U-Haul, a wholly-owned subsidiary of AMERCO, whereby U-Haul administers the operations and marketing of such equipment and in return receives a percentage of rental fees paid by customers. AMERCO guarantees performance of these contracts. Based on the terms of various contracts, rental fees are distributed to the subsidiaries of AMERCO (for services as operators), to the fleet owners (including certain subsidiaries and related parties of AMERCO) and to Rental Dealers (including Company-operated U-Haul Centers). The Company owns over 99% of all general rental items and the remainder of the rental equipment is consigned to AMERCO and its consolidated subsidiaries. The equipment is operated under various contracts with subsidiaries of AMERCO, whereby the consolidated group administers the operations and marketing of the equipment. In return the investors receive a percentage of the rental fees paid by customers. Oxford reinsures short-term accidental death and medical insurance risks for customers who rent vehicles owned by the Company and fleet owners. Premiums earned were $1,428,000, $1,399,000 and $1,917,000 in 1994, 1993 and 1992, respectively. RWIC insures and reinsures general liability, auto liability, commercial multiple peril and worker's compensation coverage for member companies of the consolidated group. Premiums earned by RWIC on these policies amounted to $18,800,000, $18,300,000 and $21,900,000 in 1994, 1993 and 1992, respectively and were eliminated in consolidation. RWIC insures and reinsures certain risks of U-Haul customers and independent fleet owners. Premiums earned on these policies amounted to $32,800,000, $31,700,000 and $33,800,000 in 1994, 1993, and 1992, respectively. 9. DEALER FINANCIAL SECURITY PLAN In September 1984, the Company adopted an unfunded dealer financial security plan (the Security Plan) for its independent dealers and their key employees who elected to enroll in the plan. Subsequent to the initial enrollment in the Security Plan, the Company suspended the plan to additional enrollees. Under the Security Plan, deductions are made from dealer commissions in return for future benefits including death, disability and retirement benefits. These benefits are paid directly from the general assets of the Company. Life insurance is carried on each Security Plan participant in favor of the Company to indirectly fund future benefit payments. Total deductions withheld from commissions for 1994, 1993, and 1992 were $613,000, $714,000 and $729,000, respectively. Total insurance premium expense for the years ended 1994, 1993 and 1992 amounted to $1,304,000, $1,300,000 and $1,391,000, respectively. Benefits paid under the Security Plan for the years ended 1994, 1993 and 1992 were insignificant. 10. EMPLOYEE BENEFIT PLANS AMERCO and its subsidiaries participate in the AMERCO Employee Savings, Profit Sharing and Employee Stock Ownership Plan (the Plan) which is designed to provide all eligible employees with savings for their retirement and to acquire a proprietary interest in the Company. The Plan has three separate features: a profit sharing feature (the Profit Sharing Plan) under which the Employer may make contributions on behalf of participants; a savings feature (the Savings Plan) which allows participants to defer income under Section 401k of the Internal Revenue Code of 1986; and an employee stock ownership feature (the ESOP) under which the Company may make contributions of AMERCO common stock or cash to acquire such stock on behalf of participants. Generally, employees of the Company are eligible to participate in the Plan upon completion of a one year service requirement. At its discretion, profits of such amounts as determined by the Board of Directors (which shall not exceed the amounts that are deductible under the Internal Revenue Code) may be contributed to the Profit Sharing Plan at the end of each Plan year to a designated trustee and administered and applied in accordance with the terms of the trust agreement. The Company did not contribute to the Profit Sharing Plan during the years ended 1994, 1993 and 1992. Under the Savings Plan, an employee may make pre-tax contributions of up to eighteen percent of base salary. Participants are immediately vested in all contributions plus actual earnings thereon. The ESOP is designed to enable eligible employees to acquire a proprietary interest in the Company. The Company may, in its sole and absolute discretion, elect to contribute to the trust fund amounts to be used by the ESOP trustee to purchase shares of the $.25 par value common stock of the Company and/or the Company may contribute stock directly to the trust fund. To fund the ESOP trust (ESOT), the Company borrowed $16,000,000 repayable over ten years in annual installments of $1,600,000 beginning December 1989. Proceeds of this borrowing were loaned to the ESOT on the same terms and are used by the ESOT to purchase shares of AMERCO common stock. Interest payments under this agreement were $253,000 in 1994, $402,000 in 1993 and $566,000 in 1992. With each loan payment, a portion of the stock is allocated to the participating employees' accounts. Contributions to the ESOT charged to expense were $2,269,000, $2,255,000 and $1,023,000 for the years ended 1994, 1993 and 1992, respectively. To fund additional purchases of the Company stock, the ESOT borrowed $1,172,000 from the Company repayable over ten years under a stock pledge agreement. The interest rate is based upon the average interest rate paid by the Company. Interest payments amounted to $90,000, $105,000 and $101,000 for 1994, 1993 and 1992, respectively. As of March 31, 1994, $820,000 is outstanding under this agreement. During fiscal year 1991, the Company executed an additional stock pledge agreement with the ESOT to make loans available in an aggregate principal amount equal to $10,000,000 over a five year commitment period. Borrowings under the agreement are repaid based upon a twenty year amortization period. Interest is based upon the average rate paid by AMERCO under all promissory notes, commercial paper and other evidences of indebtedness issued by AMERCO and outstanding as of the date the rate is to be calculated. Under this agreement, $9,331,000 is outstanding at March 31, 1994. Interest payments under this agreement were $474,000 and $366,000 for 1994 and 1993, respectively. Subsequent to March 31, 1994 borrowings total $418,000. The Plan held 1,111,557 shares in trust valued at the appraised value of $17.00 per share as of March 31, 1994. In April, 1994 the ESOT modified the 1991 agreement to increase the commitment from $10,000,000 to $20,000,000 and extend the commitment period an additional five years. During fiscal 1989, the Company adopted a Key Employee Stock Purchase Plan (the KESPP) authorizing it to sell to employees and non-employee directors of the Company up to 3,240,000 shares of common stock of the Company at a per share price of $6.79, the fair market value of such shares on the date such plan was adopted. Pursuant to authorization by the Board of Directors, five key employees purchased 3,239,600 shares under the KESPP for cash and promissory notes at the rate of nine percent per annum. In July 1989, the Plan purchased 1,904,000 shares of the Company's $.25 par value common stock from four key employees at a per share price of $8.63, the fair market value of such shares on the date of sale. Principal and interest payments on the promissory notes were received by the Company from the key employees. Oxford insures various group life and group disability insurance plans covering employees of the consolidated group. As of January 1, 1991, the Company elected to self-fund its group-health and dental plans. Premiums earned were $1,325,000, $1,037,000 and $308,000 for the years ended 1994, 1993 and 1992, respectively and were eliminated in consolidation. 11. POSTRETIREMENT BENEFITS The Company provides medical and life insurance benefits to retired employees and eligible dependents over age 65 if the employee meets specified age and service requirements. The Company adopted the provisions of Statement of Financial Accounting Standards No. 106, "Employers" Accounting for Postretirement Benefits Other Than Pensions" effective April 1, 1993. The standard requires that employers use the accrual method of accounting for postretirement benefits. Prior to 1994, the Company recognized these costs, which were not material, as claims were incurred. The Company elected to immediately recognize the cumulative effect of the change in accounting for postretirement benefits of $5.0 million ($3.1 million net of income tax benefit) which represents the accumulated postretirement benefit obligation (APBO) existing at April 1, 1993. In addition, the impact of the change in 1994 ongoing operations is an increase in expense of about $1.1 million ($672 thousand after income taxes). The Company continues to fund medical and life insurance benefit costs as claims are incurred. The components of net periodic postretirement benefit cost are as follows (in thousands): 1994 -------- Service cost for benefits earned during the period $ 489 Interest cost on APBO 598 ------- Net periodic postretirement benefit cost $ 1,087 ======== The amounts recognized in the Company's balance sheet at March 31, 1994 were as follows (in thousands): Accumulated postretirement benefit obligation: Retirees $ 1,848 Eligible active employees 413 Other active employees 3,832 -------- Accrued postretirement benefit cost $ 6,093 ======== The discount rate used in determining the APBO was 7.75%. The assumed health care cost trend rate used in measuring the accumulated postretirement benefit obligation was 9.3% in 1994, declining annually to an ultimate rate of 3.5% in 2010. The assumed health care cost trend rate reflects a $20,000 maximum lifetime benefit included in the Company's plan. If the health care cost trend rate assumptions were increased by 1.0%, the APBO, as of March 31, 1994, would be increased by approximately $950 thousand. The effect of this change on the sum of the service cost and interest cost components of net periodic postretirement benefit cost for 1994 would be an increase of approximately $148 thousand. AMERCO AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 12. SUPPLEMENTAL INCOME STATEMENT INFORMATION Supplemental income statement information from operations is as follows: Year ended --------------------------------- 1994 1993 1992 --------- --------- --------- (in thousands) Maintenance and repairs $ 205,511 $ 170,688 $ 141,267 ========= ========= ========= Depreciation and amortization $ 148,740 $ 128,530 $ 124,368 ========= ========= ========= Taxes, other than income taxes: Payroll $ 18,950 $ 16,302 $ 15,400 Premiums 2,182 2,429 2,670 Property and other 27,874 25,364 26,398 --------- --------- ---------- $ 49,006 $ 44,095 $ 44,468 ========= ========= ========= Lease expense $ 84,359 $ 119,106 $ 123,368 ========= ========= ========= Advertising costs $ 26,291 $ 23,180 $ 23,078 ========= ========= ========= 13. REINSURANCE The Company assumes and cedes reinsurance on both a coinsurance and risk premium basis. The Company obtains reinsurance for that portion of risks exceeding retention limits. The Company also reinsures a wide range of property-casualty risks with third parties and insures general and auto liability, multiple peril and worker's compensation coverage for the consolidated group, independent fleet owners and customers as a direct writer and as a reinsurer through third party companies. To the extent that a reinsurer is unable to meet its obligation under the related reinsurance agreements, the Company would remain liable for the unpaid losses and loss expenses. Pursuant to certain of these agreements, the Company holds letters of credit in the amount of $17,000,000 from reinsurers. The Company has issued letters of credit totaling approximately $2,200,000 in favor of certain ceding companies. Losses and loss expense recoveries from reinsurers of $24,300,000 and $25,400,000 were recognized in 1993 and 1992, respectively. RWIC is a reinsurer of municipal bond insurance through an agreement with MBIA Inc. Premium generated through this agreement is recognized pro rata over the contract coverage period. The related unearned premium as of December 31, 1993 and 1992 was $4,400,000 and $4,700,000, respectively. RWIC's share of case loss reserves related to this coverage is approximately $41,000 at December 31, 1993. RWIC's aggregate exposure for Class 1 municipal bond insurance was $686,000,000 as of December 31, 1993. A summary of reinsurance transactions by business segment follows:
Percentage Ceded Assumed of amount Direct to other from other Net assumed to amount companies companies amount net ----------- ----------- ------------ ------------ ------------ (in thousands) Year end 1994 - ------------- Life insurance in force $ 19,860 $ 524 $ 2,979,714 $ 2,999,050 99% Premiums earned: Life $ 53 $ 16 $ 8,876 $ 8,913 99% Accident and health 1,120 209 1,455 2,366 61 Annuity -- -- 5,419 5,419 100 Property casualty 81,676 45,122 70,092 106,646 66 ----------- ----------- ------------ ------------ Total $ 82,849 $ 45,347 $ 85,842 $ 123,344 =========== =========== ============ ============ Year end 1993 - ------------- Life insurance in force $ 20,983 $ 547 $ 3,375,548 $ 3,395,984 99% =========== =========== ============ ============ Premiums earned: Life $ 81 $ -- 9,910 $ 9,991 99% Accident and health 996 103 2,111 3,004 70 Annuity 202 -- 2,907 3,109 94 Property casualty 73,523 39,016 48,214 82,721 58 ----------- ----------- ------------ ------------ Total $ 74,802 $ 39,119 $ 63,142 $ 98,825 =========== =========== ============ ============ Year end 1992 - ------------- Life insurance in force $ 21,044 $ 571 $ 3,988,265 $ 4,008,738 99% =========== =========== ============ ============ Premiums earned: Life $ 153 $ 14 $ 11,680 $ 11,819 99% Accident and health 1,051 16 4,574 5,609 82 Annuity 72 54 2,784 2,802 99 Property casualty 71,786 33,205 28,315 66,896 42 ----------- ----------- ------------ ------------ Total $ 73,062 $ 33,289 $ 47,353 $ 87,126 =========== =========== ============ ============
14. CONTINGENT LIABILITIES AND COMMITMENTS The Company and certain members of the Company's Board of Directors are defendants in an action where the plaintiffs, certain stockholders of the Company have alleged, among other things, that certain of the individual plaintiffs were wrongfully excluded from sitting on the Company's Board of Directors in 1988 through the sale of Company common stock to certain key employees. The plaintiffs seek equitable relief, compensatory damages, and punitive damages. All claims for equitable relief that would have allowed the plaintiffs to sit on the Board of Directors have been dismissed, subject only to the right of the plaintiffs to appeal such dismissal. The Company and director-defendants filed a motion for summary judgement that would be dispositive of all remaining claims. On August 15, 1994, the Company was dismissed from the action, subject only to the right, to the extent that any exists, of the plaintiffs to appeal such dismissal. The Company is a defendant in a number of suits and claims incident to the type of business conducted and several administrative proceedings arising from state and local provisions that regulate the removal and/or clean up of underground fuel storage tanks. The Company owns property within two state hazardous waste sites in the state of Washington. At this time, the remedial cleanup costs or range of costs for such sites cannot be estimated. Management's opinion is that none of the suits or claims involving AMERCO and/ or its subsidiaries is expected to result in any material loss. The Company occupies certain facilities and uses certain equipment under operating lease commitments with terms expiring through 2079. Lease expense was $84,359,000, $119,106,000 and $123,368,000 for the years ended 1994, 1993 and 1992, respectively. During the year ended March 31, 1994, U-Haul Leasing & Sales Co., a wholly-owned subsidiary of U-Haul, entered into twenty-seven transactions, and entered into four additional subsequent transactions whereby the Company sold rental trucks and subsequently leased them back. AMERCO has guaranteed $39,205,000 of residual values at March 31, 1994 and $3,109,000 of residual values subsequent to March 31, 1994 on these assets at the end of lease term. Certain leases contain renewal and fair market value purchase options and mileage and other restrictions similar to those disclosed in Note 5 for notes payable and loan agreements. Following are the lease commitments for leases having terms of more than one year (in thousands): Year end 1994 ------------------------ Property, plant and Additions other Rental Subsequent Year ended equipment Trucks to year-end Total ---------- --------- --------- ----------- --------- 1995 $ 2,781 $ 51,014 $ 6,506 $ 60,301 1996 1,094 36,099 8,143 45,336 1997 775 29,217 8,143 38,135 1998 598 29,217 8,143 37,958 1999 432 29,217 8,143 37,792 Thereafter 4,873 42,442 17,920 65,235 -------- --------- -------- --------- $ 10,553 $ 217,206 $ 56,998 $284,757 ======== ========= ======== ========= The Company has reduced future lease commitments during the year ended March 31, 1994 in the amount of $37,238,000 through the early termination of certain leases. Residual value guarantees were also reduced by $34,036,000 in connection with the terminations. Certain of the Company's credit agreements contain provisions that could result in a required prepayment upon a "change in control" of the Company. A "change in control" is deemed to occur if (a) any transfer of any shares of any class of capital stock results in the Company's ESOP and members of the Shoen family owning in the aggregate less than the amount of capital stock as may be necessary to enable them to cast in excess of 50% of the votes for the election of directors of the Company or (b) during any period for two consecutive years, persons who at the beginning of such period constituted the Board of Directors of the Company (including any director approved by a vote of not less than 662/3% of such board) cease for any reason to constitute greater than 50% of the then acting Board. The Company does not currently have available sources of financing to fund such prepayments if they became payable in full. In addition, upon such a "change in control," the Company might lose the ability to draw on certain unutilized lines of credit otherwise available. 15. PREFERRED STOCK PURCHASE RIGHTS In July 1988, the Company's Board of Directors adopted a stockholder-rights plan, and such rights were distributed as a dividend at the rate of one right for each outstanding share of the Company's common stock to the holders of record of common shares on July 29, 1988. As a result of the 400-for-1 common stock split that occurred on October 1, 1990, each outstanding share of common stock currently has one four-hundredth of a right associated with it. When exercisable, each right will entitle its holder to purchase from the Company one one-hundredth of a share of the new Series C Preferred Stock of the Company at a price of $15,000. AMERCO has reserved 5,000 shares of authorized but unissued preferred stock for the Series C Preferred Stock authorized in this stockholder-rights plan. The rights will become exercisable if a person or group of affiliated or associated persons acquire or obtain the right to acquire beneficial ownership of 50% or more of the common stock without approval of a majority of the Board of Directors of the Company. The majority approval must be made by members of the Board who were members as of July 25, 1988 (Disinterested Directors) or subsequent members elected to the Board if such persons are recommended or approved by a majority of the Disinterested Directors. The rights will expire on July 29, 1998 unless earlier redeemed by the Company pursuant to authorization by a majority of the Disinterested Directors. In the event the Company is acquired in a merger or other business combination transaction after the rights become exercisable, provision shall be made so that each holder of a right shall have the right to receive, upon exercise thereof and payment of the exercise price, that number of common shares of such corporation which at the time of such transaction would have a market or book value of two times the exercise price of the right. If the Company is the surviving company, each holder would have the right to receive, upon payment of the exercise price, common shares with a market or book value of two times the exercise price. 16. STOCK OPTION PLAN In October 1992, the stockholders approved a ten year incentive plan entitled the AMERCO Stock Option and Incentive Plan (the Plan) for officers and key employees of the Company. Under the Plan, Incentive Stock Options (ISOs), Non-qualified Stock Options, Stock Appreciation Rights (SAR), Restricted Stock Dividend Equivalents and Performance Shares may be awarded. The aggregate numbers of shares of stock subject to award under the Plan may not exceed 3,000,000. The stock subject to the Plan is AMERCO Common Stock unless prior to the date the first award is made under the Plan, a Committee of at least two Board members determines, in its discretion, to utilize another class of the Company's stock. No options or awards have been granted under the Plan. The Plan provides for the granting of ISOs as defined under the Internal Revenue Code and Non-qualified Stock Options under such terms and conditions as the Committee determines in its discretion. The ISOs may be granted at prices not less than one-hundred percent of the fair market value at the date of grant with a term not exceeding ten years. The Plan provides for the granting of SARs subject to certain conditions and limitations to holders of options under the Plan. SARs permit the optionee to surrender an exercisable option for an amount equal to the excess of the market price of the common stock over the option price when the right is exercised. Under the Restricted Stock feature of the Plan, a specified number of common shares may be granted subject to certain restrictions. Restriction violations during a specified period result in forfeiture of the stock. The Committee may, in its discretion, impose any restrictions on a Restricted Stock award. The Plan authorizes the Committee to grant Dividend Equivalents in connection with options. Dividend Equivalents are rights to receive additional shares of Company stock at the time of exercise of the option to which such Dividend Equivalents apply. Under the Plan, Performance Share units may be granted. Each unit is deemed to be the equivalent of one share of Company stock and such units are credited to a Performance Share account. The value of the units at the time of award or payment is the fair market value of an equivalent number of shares of stock. At the end of the award period, payment may be made subject to certain predetermined criteria and restrictions. 17. RELATED PARTY TRANSACTIONS AMERCO and Consolidated Subsidiaries have related party transactions with certain major stockholders, directors and officers of the consolidated group as disclosed in Notes 10 and 19 of Notes to Consolidated Financial Statements of AMERCO. Additionally, during the years ended 1994, 1993 and 1992, a subsidiary of AMERCO purchased $2,607,000, $2,608,000 and $2,681,000, respectively, of printing from a company wherein an officer is a major stockholder, director and officer of AMERCO. Management believes that these transactions were consummated on terms equivalent to those that prevail in arm's-length transactions. AMERCO AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 18. SUPPLEMENTAL CASH FLOWS INFORMATION During the year ended March 31, 1992, the Company received 648,000 shares of common stock in exchange for cash and the cancellation of a restricted stock purchase plan note receivable and accrued interest and returned the shares to the treasury. In conjunction with the transaction, non-cash financing activities were recorded as follows (in thousands): Restricted stock purchase plan notes receivable cancelled $ 4,236 Additional paid-in capital recognized 1,173 Common stock exchanged at fair market value (5,961) -------- Cash paid on exchange $ (552) ======== The (increase) decrease in receivables, inventories and accounts payable and accrued liabilities net of other operating and investing activities follows: Year ended ------------------------------ 1994 1993 1992 --------- -------- --------- (in thousands) Receivables $(19,945) $(4,508) $(10,156) ========= ======== ========= Inventories $ 2,425 $(4,664) $ 15,211 ========= ======== ========= Accounts payable and accrued liabilities $ 11,538 $(1,899) $ 2,659 ========= ======== ========= Cash paid for income taxes amounted to $3,275,000, $303,000 and $1,970,000 for 1994, 1993 and 1992, respectively. Interest paid in cash amounted to $71,448,000, $81,115,000 and $78,488,000 for 1994, 1993 and 1992, respectively. 19. SUMMARIZED CONSOLIDATED FINANCIAL INFORMATION OF PONDEROSA HOLDINGS, INC. AND ITS SUBSIDIARIES A summary consolidated balance sheet for Ponderosa Holdings, Inc. and its subsidiaries is presented below: December 31, -------------------- 1993 1992 ---------- -------- (in thousands) Investments -- fixed maturities $ 719,605 $647,505 Other investments 84,738 129,535 Receivables 138,049 37,264 Deferred policy acquisition costs 47,846 49,748 Due from affiliate 4,927 12,899 Deferred federal income taxes 8,350 9,305 Other assets 8,744 18,743 ---------- -------- Total assets $1,012,259 $904,999 ========== ======== Policy liabilities and accruals $ 380,424 $298,162 Unearned premiums 58,842 39,094 Premium deposits 312,708 320,961 Other policyholders' funds and liabilities 13,399 11,570 ---------- -------- Total liabilities 765,373 669,787 Stockholder's equity 246,886 235,212 ---------- -------- Total liabilities and stockholder's equity $1,012,259 $904,999 ========== ======== A summarized consolidated income statement for Ponderosa Holdings, Inc. and subsidiaries is presented below: Year ended December 31, ------------------------------------------ 1993 1992 1991 ---------- ---------- ---------- (in thousands) Premiums $ 142,347 $ 118,206 $ 109,372 Net investment income 40,019 40,817 39,752 Other income (loss) 7,447 10,495 1,381 ---------- ---------- ---------- Total revenue 189,813 169,518 150,505 Benefits and losses 120,825 106,617 93,652 Amortization of deferred policy acquisition costs 9,343 9,352 5,439 Other expenses 29,834 24,993 19,119 ---------- ---------- ---------- Income from operations 29,811 28,556 32,295 Federal income tax expense (8,723) (7,387) (12,442) ---------- ---------- ---------- Earnings from operations before change in accounting principle 21,088 21,169 19,853 Cumulative effect of a change in accounting principle (93) -- -- ---------- ---------- ---------- Net income $ 20,995 $ 21,169 $ 19,853 ========== ========== ========== Applicable laws and regulations of the State of Arizona require maintenance of minimum capital determined in accordance with statutory accounting practices in the amount of $1,000,000. In addition, the amount of dividends which can be paid to stockholders by insurance companies domiciled in the State of Arizona is limited. Any dividend in excess of the limit requires prior regulatory approval. Statutory surplus which can be distributed as dividends is $17,619,000 at December 31, 1993. The consolidated audited statutory net income for the years ended December 31, 1993, 1992 and 1991 was $20,644,000, $19,708,000 and $20,984,000, respectively; audited statutory capital and surplus was $176,194,000 and $170,762,000 at December 31, 1993 and 1992, respectively. 20. INDUSTRY SEGMENT AND GEOGRAPHIC AREA DATA Industry Segment Data -- AMERCO's three industry segments are Rental operations, Life insurance and Property/Casualty insurance. Rental operations is composed of the operations of U-Haul International, Inc., which is engaged in the rental of various kinds of equipment and sales of related products and services. Life insurance is composed of the operations of Oxford Life Insurance Company which operates in various life, accident and health and annuity lines. Property/Casualty insurance is composed of the operations of Republic Western Insurance Company which operates in various property and casualty lines. Information concerning operations by industry segment follows:
Property/ Adjustments Rental Life Casualty and Operations Insurance Insurance Eliminations Consolidated ----------- --------- ---------- ------------ ------------ (in thousands) 1994 - ---- Revenues: Outside $ 965,839 $ 31,357 $ 137,659 $ -- $ 1,134,855 Intersegment (357) 2,834 18,862 (21,339) -- ---------- -------- --------- --------- ----------- Total revenue $ 965,482 $ 34,191 $ 156,521 $ (21,339) $ 1,134,855 ========== ======== ========= ========= =========== Pretax operating profit $ 106,248 $ 9,106 $ 20,705 $ (698) $ 135,361 ========== ======== ========= ========= =========== Interest expense 68,859 ----------- Pretax earnings from operations $ 66,502 =========== Identifiable assets $1,593,044 $461,464 $ 550,795 $(260,861) $ 2,344,442 ========== ======== ========= ========= =========== Depreciation/amortization $ 137,220 $ 4,277 $ 7,243 $ -- $ 148,740 Capital expenditures $ 530,520 $ -- $ -- $ -- $ 530,520 ========== ======== ========= ========= =========== 1993 - ---- Revenues: Outside $ 891,599 $ 33,619 $ 115,693 $ -- $ 1,040,911 Intersegment -- 2,630 18,402 (21,032) -- ---------- -------- --------- --------- ----------- Total revenue $ 891,599 $ 36,249 $ 134,095 $ (21,032) $ 1,040,911 ========== ======== ========= ========= =========== Pretax operating profit $ 88,581 $ 12,325 $ 16,231 $ -- $ 117,137 ========== ======== ========= ========= =========== Interest expense 67,958 ----------- Pretax earnings from operations $ 49,179 =========== Identifiable assets $1,377,386 $472,669 $ 422,079 $(248,111) $ 2,024,023 ========== ======== ========= ========= =========== Depreciation/amortization $ 118,438 $ 5,353 $ 4,739 -- $ 128,530 ========== ======== ========= ========= =========== Capital expenditures $ 130,841 $ -- $ -- $ -- $ 130,841 ========== ======== ========= ========= =========== 1992 - ---- Revenues: Outside $ 844,492 $ 31,391 $ 96,001 $ -- $ 971,884 Intersegment -- 1,158 21,991 (23,149) -- ---------- -------- --------- --------- ----------- Total revenue $ 844,492 $ 32,549 $ 117,992 $ (23,149) $ 971,884 ========== ======== ========= ========= =========== Pretax operating profit $ 69,628 $ 11,056 $ 21,239 $ -- $ 101,923 ========== ======== ========= ========= =========== Interest expense 76,189 ----------- Pretax earnings from operations $ 25,734 =========== Identifiable assets $1,354,758 $457,324 $ 402,190 $(234,948) $ 1,979,324 ========== ======== ========= ========= =========== Depreciation/amortization $ 118,637 $ 2,712 $ 3,019 $ -- $ 124,368 ========== ======== ========= ========= =========== Capital expenditures $ 68,754 $ -- $ -- $ -- $ 68,754 ========== ======== ========= ========= ===========
United States Canada Consolidated Geographic Area Data -- ------------- -------- ------------ (in thousands) 1994 - ---- Revenues $ 1,106,761 $ 28,094 $ 1,134,855 Pretax earnings (loss) from operations $ 65,919 $ 583 $ 66,502 Identifiable assets $ 2,298,948 $ 45,494 $ 2,344,442 1993 - ---- Revenues $ 1,013,884 $ 27,027 $ 1,040,911 Pretax earnings (loss) from operations $ 49,855 $ (676) $ 49,179 Identifiable assets $ 1,983,419 $ 40,604 $ 2,024,023 1992 - ---- Revenues $ 947,181 $ 24,703 $ 971,884 Pretax earnings (loss) from operations $ 28,407 $ (2,673) $ 25,734 Identifiable assets $ 1,942,361 $ 36,963 $ 1,979,324 21. SUBSEQUENT EVENTS On May 3, 1994, the Company declared a cash dividend of $3,241,000 ($.53125 per preferred share) to preferred stockholders of record as of May 13, 1994. On July 26, 1994, the Company declared a cash dividend of $3,241,000 ($.53125 per preferred share) to preferred stockholders of record as of August 12, 1994. Subsequent to the date of these financial statements, the board of directors of Oxford declared a dividend of its stock in RWIC to Ponderosa. AMERCO AND CONSOLIDATED SUBSIDIARIES CONSOLIDATED BALANCE SHEETS JUNE 30, (UNAUDITED) (IN THOUSANDS) 1994 1993 --------------- --------------- ASSETS Cash......................................... $ 19,617 $ 15,459 Receivables.................................. 208,833 92,735 Inventories.................................. 41,920 48,240 Prepaid expenses............................. 24,307 25,093 Investments, fixed maturities................ 718,438 667,013 Investments, other........................... 94,392 121,479 Deferred policy acquisition costs............ 48,917 49,353 Other assets................................. 30,283 26,127 --------------- --------------- Property, plant and equipment, at cost: Land....................................... 200,720 180,074 Buildings and improvements................. 693,041 621,747 Furniture and equipment.................... 166,268 159,711 Rental trailers and other rental equipment. 218,445 207,848 Rental trucks.............................. 863,982 753,522 General rental items....................... 55,186 59,580 -------------- --------------- 2,197,642 1,982,482 Less accumulated depreciation.............. 972,968 858,941 --------------- --------------- Total property, plant and equipment...... 1,224,674 1,123,541 --------------- --------------- $ 2,411,381 $ 2,169,040 =============== =============== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Accounts payable and accrued liabilities... $ 158,920 $ 138,003 Notes and loans............................ 725,565 766,946 Policy liabilities and accruals............ 449,986 330,019 Liabilities from premium deposits.......... 308,408 321,025 Other policyholders' funds and liabilities. 6,617 13,429 Deferred income............................ 8,714 5,524 Deferred income taxes...................... 64,799 38,660 --------------- --------------- Stockholders' equity: Serial preferred stock, with or without par value, 50,000,000 shares authorized; 6,100,000 issued without par value and outstanding as of June 30, 1994 and none issued or outstanding as of June 30, 1993....... -- -- Serial common stock, with or without par value, 150,000,000 shares authorized. -- -- Series A common stock of $.25 par value, authorized 10,000,000 shares, issued 5,754,334 shares as of June 30, 1994 and none as of June 30, 1993........ 1,438 -- Common stock of $.25 par value, authorized 150,000,000 shares, issued 34,245,666 shares as of June 30, 1994 and 40,000,000 shares as of June 30, 1993............................ 8,562 10,000 Additional paid-in capital................. 165,651 19,331 Foreign currency translation............... (11,461) (7,102) Retained earnings.......................... 540,325 499,522 --------------- --------------- 704,515 521,751 Less: Cost of common shares in treasury (1,335,937 shares as of June 30, 1994 and June 30, 1993)......... 10,461 10,461 Loan to leveraged employee stock ownership plan........................... 20,251 15,832 --------------- --------------- Total stockholders' equity............... 673,803 495,458 Contingent liabilities and commitments....... --------------- --------------- $ 2,411,381 $ 2,169,040 =============== =============== The accompanying notes are an integral part of these consolidated financial statements. AMERCO AND CONSOLIDATED SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS QUARTERS ENDED JUNE 30, (UNAUDITED) (IN THOUSANDS EXCEPT PER SHARE DATA) 1994 1993 --------------- --------------- Revenues Rental and other revenue................... $ 230,207 $ 208,042 Net sales.................................. 51,302 47,642 Premiums................................... 31,559 24,640 Net investment income...................... 10,510 11,024 --------------- --------------- Total revenues........................... 323,578 291,348 Costs and expenses Operating expense.......................... 27,550 29,273 Benefits and losses........................ 26,412 23,941 Amortization of deferred acquisition costs. 3,084 2,153 Depreciation............................... 37,282 30,140 Interest expense........................... 16,638 17,338 --------------- --------------- Total costs and expenses................. 277,752 261,710 Pretax earnings from operations.............. 45,826 29,638 Income tax expense......................... (16,413) (8,775) --------------- --------------- Earnings from operations before cumulative effect of change in accounting principle....................... 29,413 20,863 Cumulative effect of a change in accounting principle....................... -- (3,504) --------------- --------------- Net earnings............................. 29,413 17,359 =============== =============== Earnings per common share: Earnings from operations before cumulative effect of change in accounting principle.................. $ .71 $ .56 Cumulative effect of a change in accounting principle..................... -- (.09) --------------- --------------- Net earnings............................. $ .71 $ .47 =============== =============== Weighted average common shares outstanding... 37,107,536 37,158,211 =============== ===============- The accompanying notes are an integral part of these consolidated financial statements. AMERCO AND CONSOLIDATED SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY QUARTERS ENDED JUNE 30, (UNAUDITED) (IN THOUSANDS) 1994 1993 ------------ ------------- Series A common stock of $.25 par value: Authorized 10,000,000 shares, issued 5,754,334 in 1994, none in 1993 Beginning and end of quarter.................. $ 1,438 $ -- ------------- ------------- Common stock of $.25 par value: Authorized 150,000,000 shares in 1994 and 1993, 34,245,666 issued in 1994, 40,000,000 issued in 1993 Beginning and end of quarter.................. 8,562 10,000 ------------- ------------- Additional paid-in capital: Beginning and end of quarter.................. 165,651 19,331 ------------- ------------- Foreign currency translation: Beginning of quarter.......................... (11,152) (6,122) Change during quarter......................... (309) (980) ------------- ------------- End of quarter................................ (11,461) (7,102) ------------- ------------- Retained earnings: Beginning of quarter.......................... 515,200 482,163 Net earnings................................ 29,413 17,359 Dividends paid to stockholders: Preferred stock: ($.53 per share 1994).... (3,241) -- Change in net unrealized gain on investments (1,047) -- ------------ ------------- End of quarter................................. 540,325 499,522 ------------- ------------- Treasury stock: Beginning and end of quarter................... 10,461 10,461 ------------- ------------- Loan to leveraged Employee Stock Ownership Plan: Beginning of quarter........................... 17,451 14,953 Increase in loan............................. 2,919 1,000 Proceeds from loan........................... (119) (121) ------------- ------------- End of quarter................................. 20,251 15,832 ------------- ------------- Total stockholders' equity....................... $ 673,803 $ 495,458 -============ ============= The accompanying notes are an integral part of these consolidated financial statements. AMERCO AND CONSOLIDATED SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS QUARTERS ENDED JUNE 30, (UNAUDITED) (IN THOUSANDS) 1994 1993 ---------- --------- Cash flows from operating activities: Net earnings............................................. $ 29,413 $ 17,359 Depreciation and amortization.......................... 1,489 32,622 Provision for losses on accounts receivable............ 736 108 Net gain on sale of real and personal property......... (131) (1,324) (Gain) loss on sale of investments..................... 30 (411) Cumulative effect of a change in accounting principle.. -- 5,006 Changes in policy liabilities and accruals............. 11,766 (6,819) Additions to deferred policy acquisition costs......... (4,155) (5,790) Net change in other operating assets and liabilities... 43,182 22,333 --------- --------- Net cash provided by operating activities................ 122,330 63,084 --------- --------- Cash flows from investing activities: Purchases of investments: Property, plant and equipment........................ (144,794) (226,844) Fixed maturities..................................... (31,098) (70,438) Real estate.......................................... (8) -- Mortgage loans....................................... (5,504) -- Proceeds from sales of investments: Property, plant and equipment........................ 58,868 64,657 Fixed maturities..................................... 30,756 51,305 Real estate.......................................... 220 324 Mortgage loans....................................... 1,442 2,600 Changes in other investments......................... (10,507) 5,345 --------- --------- Net cash used by investing activities.................... (100,625) (173,051) --------- --------- Cash flows from financing activities: Net change in short-term borrowings.................... 46,250 (4,000) Proceeds from notes.................................... -- 95,000 Loan to leveraged Employee Stock Ownership Plan........ (2,919) (1,000) Proceeds from leveraged Employee Stock Ownership Plan.. 119 121 Principal payments on notes............................ (44,449) (21,175) Net change in cash overdraft........................... (11,990) 35,125 Dividends paid......................................... (3,241) -- Investment contract deposits........................... 6,966 8,758 Investment contract withdrawals........................ (11,266) (8,694) --------- --------- Net cash provided (used) by financing activities......... (20,530) 104,135 --------- --------- Increase (decrease) in cash.............................. 1,175 (5,832) Cash at beginning of quarter............................. 18,442 21,291 --------- --------- Cash at end of quarter................................... $ 19,617 $ 15,459 ========= ========= The accompanying notes are an integral part of these consolidated financial statements. AMERCO AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1994 AND 1993 (UNAUDITED) AMERCO AND CONSOLIDATED SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 1. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the parent corporation, AMERCO, and its subsidiaries, all of which are wholly-owned. All material intercompany accounts and transactions of AMERCO and its subsidiaries (herein called the "Company" or the "consolidated group") have been eliminated. The consolidated balance sheets as of June 30, 1994 and 1993, and the related consolidated statements of earnings, changes in stockholders' equity and cash flows for the quarters ended June 30, 1994 and 1993 are unaudited; in the opinion of management, all adjustments necessary for a fair presentation of such financial statements have been included. Such adjustments consisted only of normal recurring items. Interim results are not necessarily indicative of results for a full year. The financial statements and notes are presented as permitted by Form 10-Q and do not contain information included in the Company's annual financial statements and notes. Earnings per share are computed based on the weighted average number of shares outstanding, not including ESOP shares that have not been committed to release. Net income is reduced for preferred dividends. Certain reclassifications have been made to the financial statements for the quarter ended June 30, 1993 to conform with the current year's presentation. 2. SUMMARIZED CONSOLIDATED FINANCIAL INFORMATION OF PONDEROSA HOLDINGS, INC. AND ITS SUBSIDIARIES A summary consolidated balance sheet (unaudited) for Ponderosa Holdings, Inc. and its subsidiaries is presented below: March 31, ---------------------------- 1994 1993 -------------- ------------ (in thousands) Investments -- fixed maturities................ $ 718,438 $ 667,013 Other investments.............................. 94,392 121,479 Receivables.................................... 132,944 37,409 Deferred policy acquisition costs.............. 48,917 49,353 Due from affiliate............................. 9,125 1,083 Deferred federal income taxes.................. 8,195 8,123 Other assets................................... 14,892 11,050 -------------- ------------ Total assets............................... $ 1,026,903 $ 895,510 ============== ============ Policy liabilities and accruals................ $ 385,539 $ 292,801 Unearned premiums.............................. 64,292 37,636 Premium deposits............................... 308,408 321,025 Other policyholders' funds and liabilities..... 11,543 13,266 -------------- ------------ Total liabilities.......................... 769,782 664,728 Stockholder's equity........................... 257,121 230,782 -------------- ------------ Total liabilities and stockholder's equity................. $ 1,026,903 $ 895,510 ============== ============ A summarized consolidated income statement (unaudited) for Ponderosa Holdings, Inc. and its subsidiaries is presented below: Three Months ended March 31, ------------------------- 1994 1993 -------- -------- (in thousands) Premiums ....................... $ 34,352 $ 26,875 Net investment income .......... 10,554 11,067 Other income ................... 1,267 1,745 -------- -------- Total revenue .............. 46,173 39,687 Benefits and losses ............ 26,412 23,941 Amortization of deferred policy acquisition costs ............ 3,084 2,153 Other expenses ................. 7,801 5,671 -------- -------- Income from operations ..... 8,876 7,922 Federal income tax expense ..... (2,742) (2,267) -------- -------- Earnings from operations before change in accounting principle 6,134 5,655 Cumulative effect of a change in accounting principle ......... -- (85) -------- -------- Net income ................. $ 6,134 $ 5,570 ======== ======== 3. CONTINGENT LIABILITIES AND COMMITMENTS AMERCO and/or its subsidiaries are defendants in a number of suits and claims incident to the type of business conducted. It is the opinion of management that none of the suits or claims involving AMERCO and/or its subsidiaries is expected to result in any material loss and, accordingly, no provision has been made in the accompanying financial statements. 4. SUPPLEMENTAL CASH FLOWS INFORMATION The (increase) decrease in receivables, inventories and accounts payable and accrued liabilities net of other operating and investing activities follows: Three Months ended June 30, ---------------------------- 1994 1993 ------------- ------------- (in thousands) Receivables................................. $ (14,042) $ (28,320) ============= ============= Inventories................................. $ 7,092 $ 3,197 ============= ============= Accounts payable and accrued liabilities.... $ 39,141 $ 24,350 ============= ============= Cash paid for income taxes amounted to $224,000 and $200,000 for 1994 and 1993, respectively. Interest paid in cash amounted to $20,569,000 and $23,466,000 for 1994 and 1993, respectively. 5. NEW ACCOUNTING STANDARDS Statement of Financial Accounting Standards No. 112 -- Employers' Accounting for Postemployment Benefits. Issued in November 1992, this statement applies to employers who provide certain benefits to former or inactive employees after employment but before retirement. It requires that the cost of such benefits be recognized over the service period of employees as these benefits vest or accumulate. The provisions of this statement must be adopted for fiscal years beginning after December 15, 1993. The impact of adoption of this statement will not be material. Statement of Financial Accounting Standards No. 114, "Accounting by Creditors for Impairment of a Loan", was issued by the Financial Accounting Standards Board in May 1993. This standard is effective for years beginning after December 15, 1994. The standard requires that an impaired loan's fair value be measured and compared to the recorded investment in the loan. If the fair value of the loan is less than the recorded investment in the loan, a valuation allowance is established. The Company has not completed an evaluation of the effect of this standard. Statement of Financial Accounting Standards No. 115 -- Accounting for Certain Investments in Debt and Equity Securities. Effective December 31, 1993, RWIC adopted SFAS 115. This statement requires classification of debt securities into one of the following three categories based on management's intention with regard to such securities: held-to-maturity, available-for-sale and trading. Securities classified as held-to-maturity are recorded at cost adjusted for the amortization of premiums or accretion of discounts while those classified as available-for-sale are recorded at fair value with unrealized gains or losses reported on a net basis as a separate component of stockholders' equity. Securities classified as trading, if any, are recorded at fair value with unrealized gains or losses reported on a net basis in income. RWIC does not currently maintain a trading portfolio. U-Haul and Oxford will adopt this statement in fiscal 1995. An evaluation of this statement has not been completed by U-Haul or Oxford. Statement of Position 93-7, "Reporting on Advertising Costs," was issued by the Accounting Standards Executive Committee in December 1993. This statement of position provides guidance on financial reporting on advertising costs in annual financial statements. The statement of position requires reporting advertising costs as expenses when incurred or when the advertising takes place, reporting the costs of direct-response advertising, and amortizing the amount of direct-response advertising reported as assets. This statement of position is effective for financial statements for years beginning after June 15, 1994. The Company currently matches certain advertising costs with revenue generated in future periods, and at June 30, 1994, $9.1 million in advertising costs are deferred and included in prepaid expenses. The Company has completed an evaluation of the effect of this statement of position but has not determined the timing of adoption. NO DEALER, SALESMAN, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDER, ANY OF THE UNDERWRITERS, OR ANY OTHER PERSON. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. -------------- TABLE OF CONTENTS Prospectus PAGE -------- Available Information........................................ 2 Information Incorporated by Reference........................ 2 Prospectus Summary........................................... 3 Risk Factors................................................. 5 The Company.................................................. 8 Capitalization............................................... 8 Stockholder Matters.......................................... 9 Selected Consolidated Financial Data......................... 10 Management's Discussion and Analysis of Financial Condition and Results of Operations.............. 11 Business..................................................... 23 Management................................................... 35 Principal Stockholders....................................... 36 Certain Transactions......................................... 40 Selling Security Holder...................................... 40 Description of Capital Stock................................. 41 Underwriting................................................. 43 Legal Opinions............................................... 44 Experts...................................................... 44 Index to Financial Statements................................ F-1 500,000 Shares AMERCO Ponderosa Insurance Holdings U-Haul AMERCO Real Estate Company COMMON STOCK ---------------- PROSPECTUS ---------------- CRUTTENDEN & COMPANY , 1994 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION Securities and Exchange Commission Registration Fee............ $7,758.68 NASD Filing Fee................................................ 2,750.00 Printing and Engraving Expenses................................ 75,000.00** Listing Fees................................................... * Legal Fees and Expenses........................................ 100,000.00** Accounting Fees and Expenses................................... 75,000.00** Blue Sky Fees and Expenses..................................... 7,500.00** Transfer Agent Fees............................................ 2,500.00 Underwriter's Non-accountable Expense Allowance................ * # Other Expenses................................................. * ----------- Total Expenses............................................... * ----------- * ----------- * To be filed by amendment. ** Estimated. # To be paid by Selling Stockholder ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS The Nevada General Corporation Law requires the Company to indemnify officers and directors for any expenses incurred by any officer or director in connection with any actions or proceedings, whether civil, criminal, administrative, or investigative, brought against such officer or director because of his or her status as an officer or director, to the extent that the director or officer has been successful on the merits or otherwise in defense of the action or proceeding. The Nevada General Corporation Law permits a corporation to indemnify an officer or director, even in the absence of an agreement to do so, for expenses incurred in connection with any action or proceeding if such officer or director acted in good faith and in a manner in which he or she reasonably believed to be in or not opposed to the best interests of the corporation and such indemnification is authorized by the stockholders, by a quorum of disinterested directors, by independent legal counsel in a written opinion authorized by a majority vote of a quorum of directors consisting of disinterested directors, or by independent legal counsel in a written opinion if a quorum of disinterested directors cannot be obtained. The Company's Restated Articles of Incorporation eliminate personal liability of directors and officers, to the Corporation or its stockholders, for damages for breach of their fiduciary duties as directors or officers, except for liability (i) for acts or omissions that involve intentional misconduct, fraud, or a knowing violation of law, or (ii) for the unlawful payment of dividends. In addition, the Company's Bylaws provide that the Company shall indemnify, to the fullest extent authorized or permitted by law, any person made, or threatened to be made, a defendant in any threatened, pending, or completed action, suit, or proceeding by reason of the fact that he or she was a director or officer of the Company. The Company has also executed Indemnification Agreements that provide that certain of the Company's directors and officers shall be indemnified and held harmless by the Company to the fullest extent permitted by applicable law or the Restated Articles of Incorporation or Bylaws of the Company. The Company has established a trust fund with Harris Trust and Savings Bank as trustee in order to fund its obligations under the Indemnification Agreements. The Company has agreed to maintain a minimum balance in the trust fund of $1,000,000. The Nevada General Corporation Law prohibits indemnification of a director or officer if a final adjudication establishes that the officer's or director's acts or omissions involved intentional misconduct, fraud, or a knowing violation of the law and were material to the cause of action. Despite the foregoing limitations on indemnification, the Nevada General Corporation Law may permit an officer or director to apply to the court for approval of indemnification even if the officer or director is adjudged to have committed intentional misconduct, fraud, or a knowing violation of the law. The Nevada General Corporation Law also provides that indemnification of directors is not permitted for the unlawful payment of distributions, except for those directors registering their dissent to the payment of the distribution. ITEM 16. EXHIBITS EXHIBIT NUMBER EXHIBIT - ------ ------- 1 Proposed Form of Underwriting Agreement. 4(a) Restated Articles of Incorporation.(4) 4(b) Form of Stock Certificate. 4(c) Bylaws.(1) 5 Opinion re Legality.# 10(a) AMERCO Employee Savings, Profit Sharing and Employee Stock Ownership Plan(2) 10(b) U-Haul Dealership Contract(2) 10(c) Share Repurchase and Registration Rights Agreement(2) 10(d) Share Repurchase and Registration Rights Agreement(2) 10(e) Management Consulting Agreement(2) 10(f) Management Consulting Agreement(2) 10(g) ESOP Loan Credit Agreement(3) 10(h) ESOP Loan Agreement(3) 10(i) Trust Agreement for the AMERCO Employee Savings, Profit Sharing and Employee Stock Ownership Plan(3) 10(j) Amended Indemnification Agreement(3) 10(k) Indemnification Trust Agreement(3) 10(l) W.E. Carty Installment Sales Agreement(3) 10(m) Exchange Agreement with Mark V. Shoen.# 10(n) Exchange Agreement with James P. Shoen# 10(o) Exchange Agreement with Edward J. Shoen.# 23(a) Consent of Independent Accountants. 23(b) Consent of Lionel, Sawyer & Collins (included in Exhibit 5). 28 Information from Reports Furnished to State Insurance Regulatory Authorities.(1) - ---------- # To be filed by amendment. (1) Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended March 31, 1994, file no. 0-7862. (2) Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended March 31, 1993, file no. 0-7862. (3) Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended March 31, 1990, file no. 0-7862. (4) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1993, file no. 0-7862. ITEM 17. UNDERTAKINGS The undersigned registrant hereby undertakes: (1) That, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (2) That, for purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424 (b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (3) That, for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (4) That, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described in Item 15 above, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-2 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Phoenix, State of Arizona, on the 31st day of August, 1994. AMERCO By: /s/ Edward J. Shoen ---------------------------------------------- Edward J. Shoen Chairman of the Board and President Pursuant to the requirements of the Securities Act of 1933, this Pre-Effective Amendment No. 1 to this registration statement has been signed by the following persons in the capacities and on the dates indicated. NAME AND SIGNATURE TITLE DATE ------------------ ----- ---- /s/ Edward J. Shoen President and Chairman August 31, 1994 - ----------------------------- of the Board (Principal Edward J. Shoen executive officer) /s/ Gary B. Horton Treasurer (Principal financial August 31, 1994 - ----------------------------- and accounting officer) Gary B. Horton /s/ Mark V. Shoen Director August 31, 1994 - ----------------------------- Mark V. Shoen /s/ James P. Shoen Director August 31, 1994 - ----------------------------- James P. Shoen /s/ William E. Carty Director August 31, 1994 - ----------------------------- William E. Carty /s/ John M. Dodds Director August 31, 1994 - ----------------------------- John M. Dodds /s/ Charles J. Bayer Director August 31, 1994 - ----------------------------- Charles J. Bayer /s/ Richard J. Herrera Director August 31, 1994 - ----------------------------- Richard J. Herrera /s/ Aubrey K. Johnson Director August 31, 1994 - ----------------------------- Aubrey K. Johnson EX-1 2 UNDERWRITING AGREEMENT AMERCO (a Nevada corporation) 500,000 Shares of Common Stock UNDERWRITING AGREEMENT Dated , 1994 AMERCO (a Nevada corporation) 500,000 Shares of Common Stock UNDERWRITING AGREEMENT ___________________, 1994 Cruttenden & Company, Inc. 18301 Von Karman, Suite 100 Irvine, CA 92715 Ladies and Gentlemen: AMERCO, a Nevada corporation (the "Company"), and Sophia M. Shoen (the "Selling Stockholder"), confirm their agreements with Cruttenden & Company, Inc., the representative of the several underwriters named in Schedule A hereto (collectively, the "Underwriters," which term shall also include any underwriter substituted as hereinafter provided in Section 10), with respect to the sale by the Seller Stockholder and the purchase by the Underwriters, acting severally and not jointly, of the respective numbers of shares totaling 500,000 shares of Common Stock, par value $.25 per share (the "Shares"), of the Company ("Common Stock") set forth in said Schedule A. You have advised us that each of you, acting severally and not jointly, desire to purchase the Shares and that you have been authorized by the other Underwriters to execute this Agreement on their behalf. The Company has prepared and filed with the Securities and Exchange Commission (the "Commission") a registration statement on Form S-2 (File No. 33-54289) covering the registration of the Shares under the Securities Act of 1933, as amended (the "1933 Act"), including the related preliminary prospectus, and either (A) has prepared and proposes to file, prior to the effective date of such registration statement, one or more amendments to such registration statement, including a final prospectus, or (B) if the Company has elected to rely upon Rule 430A ("Rule 430A") of the rules and regulations of the Commission under the 1933 Act (the "1933 Act Regulations"), will prepare and file a prospectus, in accordance with the provisions of Rule 430A and Rule 424(b) ("Rule 424(b)") of the 1933 Act Regulations, promptly after execution and delivery of this Agreement. The information, if any, included in such prospectus that was omitted from any prospectus included in such registration statement at the time it becomes effective but that is deemed, pursuant to Rule 430A(b), to be part of such registration statement at the time it becomes effective is referred to herein as the "Rule 430A Information." Each form of prospectus used before the time such registration statement becomes effective is herein called a "preliminary prospectus." Such registration statement, including the exhibits thereto, as amended at the time it becomes effective and including, if applicable, the Rule 430A Information, is herein called the "Registration Statement," and the form of prospectus included in the Registration Statement at the time it becomes effective is herein called the "Prospectus" except that, if the final Prospectus first furnished to the Underwriters after the execution of this Agreement for us in connection with the offering of the Shares differs from the prospectus included in the Registration Statement at the time it becomes effective (whether or not such prospectus is required to be filed pursuant to Rule 424(b), the term "Prospectus," shall refer to the final Prospectus first furnished to the Underwriters for such use. The Company and the Selling Stockholder understands that the Underwriters propose to make a public offering of the Shares as soon as you deem advisable after the Registration Statement becomes effective . Section 1. Representations and Warranties. (a) The Company represents and warrants to and agrees with each of the Underwriters that: (i) When the Registration Statement and any further amendments thereto shall become effective, (A) the Registration Statement and any such amendments will comply in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations; (B) neither the Registration Statement nor any such amendment will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. Neither the Prospectus nor any amendment or supplement thereto will, as of their respective issue dates, at the Closing Date referred to below, include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. Notwithstanding the foregoing, this representation and warranty does not apply to statements or omissions from the Registration Statement or the Prospectus or any amendments or supplements thereto made in reliance upon and in conformity with information furnished or confirmed in writing to the Company by or on behalf of any Underwriter expressly for use in the Registration Statement or the Prospectus or any amendments or supplements thereto. (ii) Price Waterhouse, who are reporting upon the audited consolidated financial statements and schedules included in the Registration Statement, are independent public accountants as required by the 1933 Act and the 1933 Act Regulations. The Company and the Subsidiaries (as hereinafter defined) maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management's general and specific authorizations; (ii) transactions are recorded as necessary to permit preparations of financial statements in conformance with generally accepted accounting principles and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management's general or specific authorizations; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. (iii) The Company has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement, and this Agreement has been duly authorized, executed and delivered by the Company. (iv) The consolidated financial statements included in the Registration Statement present fairly the financial position of the Company and the Subsidiaries as of the dates indicated and the consolidated statements of operations, stockholders' equity and cash flows of the Company and the Subsidiaries for the periods specified. Such financial statements have been prepared in conformity with generally accepted accounting principles applied on a consistent basis throughout the periods involved. The financial statement schedules, if any, included in the Registration Statement present fairly the information required to be stated therein. The pro forma financial information included in the Prospectus has been prepared in all material respects in accordance with the Commission's rules and guidelines with respect to pro forma financial statements, has been properly compiled on the pro forma bases described therein, and, in the opinion of the Company, the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions or circumstances referred to therein. (v) The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Nevada with corporate power under such laws to own, lease and operate its properties and conduct its business as described in the Prospectus; and the Company is duly qualified to transact business as a foreign corporation and is in good standing in each other jurisdiction in which it owns or leases property of a nature, or transact business of a type, that would make such qualification necessary, except to the extent that the failure to so qualify or be in good standing would not have a material adverse effect on the condition (financial or otherwise), earnings, business affairs or business prospects of the Company and the Significant Subsidiaries, taken as a whole. (vi) The Company's only Subsidiaries are listed on Exhibit A hereto (collectively, the "Subsidiaries"). U-Haul International, Inc., Ponderosa Holdings, Inc. (whose Significant Subsidiaries are Oxford Life Insurance Company and Republic Western Insurance Company) and AMERCO Real Estate Company are the only subsidiaries that are "significant subsidiaries" of the Company as defined in Section 1-02 of Regulation S-X under the Securities Act. Each Subsidiary is a corporation duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation with corporate power under such laws to own, lease and operate its properties and conduct its business as described in the Prospectus; and each Subsidiary is duly qualified to transact business as a foreign corporation and is in good standing in each other jurisdiction in which it owns or leases property of a nature, or transacts business of a type, that would make such qualification necessary, except to the extent that the failure to so qualify or be in good standing would not have a material adverse effect on the condition (financial or otherwise), earnings, business affairs or business prospects of the Company and the Subsidiaries, taken as a whole. All of the outstanding shares of capital stock of each Subsidiary have been duly authorized and validly issued and are fully paid and non-assessable, and are owned by the Company, directly or through one or more Subsidiaries, free and clear of any pledge, lien, security interest, claim or encumbrance of any kind; none of the outstanding shares of capital stock of the Subsidiaries was issued in violation of the preemptive or similar rights of any stockholder of such corporation arising by operation of law, under the charter or bylaws of any Subsidiary or under any agreement to which the Company or any Subsidiary is a party. (vii) The Company had at the date indicated a duly authorized and outstanding capitalization as set forth in the Prospectus under the caption "Capitalization," and the Shares conform in all material respects to the description thereof contained in the Prospectus. (viii) The Shares to be sold by the Selling Stockholder pursuant to this Agreement have been duly authorized and are validly issued, fully paid and non-assessable; no holder thereof shall be subject to personal liability by reason of being such holder; such Shares are not subject to the preemptive or other similar rights of any stockholder of the Company arising by operation of law, under the charter and bylaws of the Company or under any agreement to which the Company is a party, except as have been waived. (ix) Except as disclosed in the Prospectus, there are no outstanding options, warrants or other rights calling for issuance of, and no commitments, plans or arrangements to issue, any shares of capital stock of the Company or any security convertible into or exchangeable for capital stock of the Company. (x) All of the outstanding shares of capital stock of the Company, including the Shares, have been duly authorized and validly issued and are fully paid and non-assessable; and none of the outstanding shares of Common Stock of the Company was issued in violation of the preemptive or other similar rights of any stockholder of the Company arising by operation of law, under the charter and bylaws of the Company or under any agreement to which the Company or any Subsidiary is a party. (xi) Since the respective dates as of which information is given in the Registration Statement and the Prospectus, except as otherwise stated therein or contemplated thereby, there has not been (A) any material adverse change in the condition (financial or otherwise) earnings, business affairs or business prospects of the Company and the Subsidiaries, taken as a whole, whether or not arising in the ordinary course of business, (B) any transaction entered into by the Company or any of the Subsidiaries, other than in the ordinary course of business, that is material to the Company and the Subsidiaries, taken as a whole, or (C) any dividend or distribution of any kind declared, paid or made by the Company, on its capital stock. (xii) Neither the Company nor any Subsidiary is in violation of its charter or in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which it is a party or by which it is bound or to which any of its properties or assets is subject, except for such defaults that would not have a material adverse effect on the condition (financial or otherwise), earnings, business affairs or business prospects of the Company and the Subsidiaries, taken as a whole. The execution and delivery of this Agreement by the Company, the consummation by the Company of the transactions contemplated in this Agreement and compliance by the Company with the terms of this Agreement have been duly authorized by all necessary corporate action on the part of the Company and do not and will not result in any violation of the charter or bylaws of the Company or any Subsidiary, and do not and will not conflict with, or result in a breach of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or the Subsidiaries under (A) any indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which the Company or any of the Subsidiaries is a party or by which the Company or any of the Subsidiaries is bound or to which any of the Company's or any of the Subsidiaries' properties or assets is subject (except for such conflicts, violations, defaults or breaches as have been waived), or (b) any existing applicable law, rule, regulation, judgment, order or decree of any government, governmental instrumentality or court having jurisdiction over the Company or any of the Subsidiaries or any of the Company's or any of the Subsidiaries' properties or assets, in each case, except as disclosed in the Prospectus and except for such conflicts, breaches, violations or defaults or liens, charges or encumbrances that would not have a material adverse effect on the condition (financial or otherwise), earnings, business affairs or business prospects of the Company and the Subsidiaries, taken as a whole. (xiii) The Company is not required to obtain any authorization, approval, consent or license of any government, governmental instrumentality or court (other than under the 1933 Act and the 1933 Act Regulations and the securities or blue sky laws of the various states) in connection with the due authorization, execution, delivery and performance by the Company of this Agreement and the valid sale and delivery of the Shares. (xiv) Except as disclosed in the Prospectus, there is no action, suit, or proceeding before or by any government, governmental instrumentality or court, domestic or foreign, now pending or, to the knowledge of the Company, threatened against or affecting the Company or any Subsidiary that is required to be disclosed in the Prospectus or that could reasonably be expected to result in any material adverse change in the condition (financial or otherwise), earnings, business affairs or business prospects of the Company and the Subsidiaries, taken as a whole, or that could reasonably be expected to materially and adversely affect the properties or assets of the Company and the Subsidiaries, taken as a whole, or that reasonably be expected to materially and adversely affect the consummation of the transactions contemplated in this Agreement; all pending legal or governmental proceedings to which the Company or any Subsidiary is a party or to which any of the Company's or any Subsidiary's properties are subject that are not described or referred to in the Prospectus, including ordinary routine litigation incidental to their business, would not reasonably be expected to have a material adverse effect on the condition (financial or otherwise), earnings, business affairs or business prospects of the Company and the Subsidiaries, taken as a whole. (xv) There are no contracts or documents of a character required to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement that are not described and filed as required. (xvi) Each of the Company and the Subsidiaries has good and marketable title to all properties and assets described in the Prospectus as owned by it, free and clear of all liens, encumbrances or restrictions, except such as (A) are described in the Prospectus or (B) do not materially impair or interfere with the current use made of such properties or (C) could not reasonably be expected to materially adversely affect the condition (financial or otherwise), earnings, business affairs or business prospects or the Company and the Subsidiaries, taken as a whole, all of the leases and subleases material to the businesses of the Company and the Subsidiaries, and under which the Company or any Subsidiary holds properties described in the Prospectus, are in full force and effect and neither the Company nor any Subsidiary has received any notice of any claim of any sort that has been asserted by anyone adverse to the rights of the Company or any Subsidiary under any of the leases or subleases mentioned above or affecting or questioning the rights of the Company or any Subsidiary, as the case may be, to the continued possession of the leased or subleased premises under any such lease or sublease, which claims, in the aggregate could reasonably be expected to have a material adverse effect on the condition (financial or otherwise), earnings, business affairs or business prospects of the Company and the Subsidiaries, taken as a whole. (xvii) Each of the Company and the Subsidiaries owns or possesses all foreign and domestic governmental licenses, permits, certificates, consents, orders, approvals and other authorizations (collectively, "Government Licenses") necessary to own or lease, as the case may be, and to operate its properties and to carry on its business as presently conducted, except where the failure to own or possess such Governmental Licenses could reasonably be expected to not have a material adverse effect on the condition (financial or otherwise), earnings, business affairs or business prospects of the Company and the Subsidiaries, taken as a whole, and neither the Company nor any Subsidiary has received any notice of proceedings relating to revocation or modification of any such Governmental Licenses that, singly or in the aggregate, if the subject of an unfavorable decision, rulings or findings, could reasonably be expected to have a material adverse effect on the condition (financial or otherwise), earnings, business affairs or business prospects of the Company and the Subsidiaries, taken as a whole. (xviii) Each of the Company and the Subsidiaries owns or possesses, or has the right to use or can require on reasonable terms, adequate patents, patent rights, licenses, copyrights, trademarks, service marks, trade names and know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures) (collectively, "intellectual property") necessary to carry on their business as presently operated by them, except where the failure to own or possess or have the right to use or ability to acquire any such intellectual property would not have a material adverse effect on the condition (financial or otherwise), earnings, business affairs or business prospects of the Company and the Subsidiaries, taken as a whole, and neither the Company nor any of the Subsidiaries has received any notice of infringement of or conflict with asserted rights of others with respect to any intellectual property or of any facts which would render any intellectual property invalid or inadequate to protect the interest of the Company or any of the Subsidiaries therein and which infringement or conflict, singly or in the aggregate, if the subject of any unfavorable decision, ruling or findings or invalidity or inadequacy, would materially adversely affect the condition (financial or otherwise), earnings, business affairs or business prospects of the Company and the Subsidiaries. (xix) Except as disclosed in the Prospectus, the Company and the Subsidiaries comply in all material respects with all Environmental Laws (as defined below), except to the extent that failure to comply with such Environmental Laws would not have a material adverse effect on the condition (financial or otherwise), earnings, business affairs or business prospects of the Company and the Subsidiaries, taken as a whole. To the knowledge of the Company, other than as disclosed in the Prospectus, none of the Company nor the Subsidiaries (i) is the subject of any pending of threatened federal, state or local investigation evaluating whether any remedial action by the Company or any Subsidiary is needed to respond to a release of any Hazardous Materials (as defined below) into the environment, resulting from the Company's or any of the Subsidiaries' business operations or ownership or possession of any of their properties or assets or (ii) is in contravention or any Environmental Law that, in the case of (i) or (ii), could reasonably be expected to have a material adverse effect on the condition (financial or otherwise), earnings, business affairs or business prospects of the Company and the Subsidiaries, taken as a whole. Except as disclosed in the Prospectus, neither the Company nor any Subsidiary has received any notice or claim, nor are there pending or, to the knowledge of the Company, threatened lawsuits against them, with respect to violations of an Environmental Law or in connection with any release of any Hazardous Material into the environment that, in the aggregate, if the subject of any unfavorable decision, ruling or finding, could reasonably be expected to have a material adverse effect on the condition (financial or otherwise), earnings, business affairs or business prospects of the Company and the Subsidiaries, taken as a whole. As used herein, "Environmental Laws" means any federal, state or local law or regulation applicable to the Company's or any of the Subsidiaries' business operations or ownership or possession of any of their properties or assets relating to environmental matters, and "Hazardous Materials" means those substances that are regulated by or form the basis of liability under any Environmental Laws. (xx) No labor dispute exists with the Company's or the Subsidiaries' employees or, to the knowledge of the Company, is imminent that could reasonably be expected to materially adversely affect the Company and the Subsidiaries, taken as a whole; and neither the Company nor the Subsidiaries are aware of any existing or imminent labor disturbance by the employees of its principal suppliers, manufacturers or contractors which might be expected to result in any material adverse change in the conditions (financial or otherwise), earnings, business affairs or business prospects of the Company and the Subsidiaries, taken as a whole. (xxi) Neither the Company nor any of its officers, directors of affiliates (as defined in the 1933 Act Regulations) has not taken and will not take, directly or indirectly, any action designed to cause or result in stabilization or manipulation of the price of the Common Stock or any outstanding securities convertible into or exchangeable for the Common Stock ("convertible securities"); and the Company has not distributed nor will it distribute any prospectus (as such term is defined in the 1933 Act and the 1933 Act Regulations) in connection with the offering and sale of the Shares other than any preliminary prospectus or the Prospectus or other material permitted by the 1933 Act or the 1933 Act Regulations. (xxii) Except as disclosed in the Prospectus, all United States federal income tax returns of the Company and the Subsidiaries required by law to be filed have been filed and all taxes shown by such returns or otherwise assessed, which are due and payable, have been paid, except tax assessments, if any, as are being contested in good faith and as to which adequate reserves have been provided. To the best of the Company's knowledge, the charges, accruals and reserves on the respective books of the Company and the Subsidiaries in respect of any United States federal income tax liability for any years not finally determined are adequate to meet any assessments or re-assessments for additional United States federal income tax for any years not finally determined, except as disclosed in the Prospectus and except to the extent of any inadequacy that would not have a material adverse effect on the condition (financial or otherwise), earnings, business affairs or business prospects of the Company and the Subsidiaries, taken as a whole. (xxiii) There are no holders of securities (debt or equity) of the Company, or holders of rights (including, without limitation, preemptive rights), warrants or options to obtain securities of the Company or the Subsidiaries, who have the right to request the Company to register securities held by them under the Securities Act, other than as disclosed in the Prospectus. (xxiv) Each of the Company and the Subsidiaries is conducting its business in compliance with all applicable local, state, federal and foreign laws, rules and regulations of the jurisdictions in which it is conducting business except to the extent that such failure to comply would not have a material adverse effect on the condition (financial or otherwise), earnings, business affairs or business prospects of the Company and the Subsidiaries taken as a whole. (xxv) The Company is not an investment company within the meaning of the investment Company Act of 1940, as amended. (xxvi) The Shares are free from any Company-imposed restrictions preventing or limiting their resale as contemplated hereby, including without limitation, the restriction on transfer set forth in Article VII, Section 2 of the Company's Restated Bylaws. (xxvii) Neither the Company nor any director, officer, agent, employee or other person associated with or acting on behalf of the Company has, directly or indirectly: used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity; made any unlawful payment to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns from corporate funds; violated any provision of the Foreign Corrupt Practices Act of 1977, as amended; or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment. (xxviii) The Company has not incurred any liability for a fee, commission or other compensation on account of the employment of a broker or finder in connection with the transactions contemplated by this Agreement. (xxvix) The Company is eligible to use Form S-2 for the registration of the Shares. (b) The Selling Stockholder represents and warrants to, and agrees with each of the Underwriters as follows: (i) The Selling Stockholder is not prompted to sell the Shares to be sold by the Selling Stockholder by any information concerning the Company that is not set forth in the Prospectus or other documents filed by the Company with the Commission pursuant to the periodic reporting and other informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (ii) Without having undertaken to determine independently the accuracy or completeness of either the representations and warranties of the Company contained in Section 1(a) hereof or the information contained in the Registration Statement, including the Prospectus (and any amendment or supplement thereto), the Selling Stockholder (A) does not have any knowledge or any reason to believe that the representations and warranties of the Company contained in Section 1(a) hereof are not true and correct, and (B) is familiar with the Registration Statement and does not have any knowledge or any reason to believe that the Registration Statement contains any untrue statements of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; except that the foregoing shall not apply to statements in or omissions from any such document in reliance upon, and in conformity with, written information furnished to the Company by the Underwriters specifically for use in the preparation thereof. (iii) The Selling Stockholder has full right, power and authority to enter into this Agreement and the Custody Agreement (as defined below) and to sell, transfer and deliver the Shares pursuant to this Agreement, and this Agreement has been duly authorized, executed and delivered by the Selling Stockholder. (iv) Except as set forth in the Prospectus, there is no action, suit, investigation (of which such Selling Stockholder has received written notice) or proceeding before or by any government, governmental instrumentality or court, domestic or foreign, or otherwise now pending or, to the knowledge of the Selling Stockholder, threatened to which the Selling Stockholder is or would be a party or of which the property of the Selling Stockholder is or may be subject, that (i) seeks to restrain, enjoin, prevent the consummation of or otherwise challenge the sale of Shares by the Selling Stockholder or any of the other transactions contemplated hereby or (ii) questions the legality or validity of any such transactions or seeks to recover damages or obtain other relief in connection with any such transactions. (v) The Selling Stockholder has duly executed and delivered, in the form heretofore furnished to the Underwriters, an irrevocable power of attorney and custody agreement (the "Custody Agreement") with _____________ as custodian (the "Custodian"), and ________________ and ______________, as attorneys-in-fact (the "Attorneys-in-Fact"); the Attorneys-in-Fact and the Custodian are each authorized to deliver the Shares to be sold by the Selling Stockholder pursuant to this Agreement and to accept payment therefor and to otherwise act on behalf of the Selling Stockholder as set forth in the Custody Agreement. (vi) No authorization, approval, consent or license of any government, governmental instrumentality or court (other than under the 1933 Act and the 1933 Act Regulations and the securities or blue sky laws of the various states) is required for the execution and delivery by the Selling Stockholder of the Custody Agreement, the execution and delivery by or on behalf of the Selling Stockholder of this Agreement and the valid sale and delivery of the Shares to be sold by the Selling Stockholder hereunder. (vii) The execution and delivery of this Agreement and the consummation of the transactions herein contemplated will not result in a breach by the Selling Stockholder of, or constitute a default by the Selling Stockholder under, any indenture, deed of trust, contract or other agreement or instrument or any decree, judgment or order to which the Selling Stockholder is a party or by which the Selling Stockholder may be bound or the properties of the Selling Stockholder may be subject. (viii) The Selling Stockholder will at the Closing Date (as hereinafter defined) have good and valid title to the Shares to be sold by the Selling Stockholder pursuant to this Agreement, free and clear of any pledge, lien, security interest, charge, claim, equity or encumbrance of any kind; and, upon delivery of such Shares and payment of the purchase price therefor as contemplated in this Agreement, each of the Underwriters will receive good and valid title to the Shares purchased by it form the Selling Stockholder, free and clear of any pledge, lien, security interest, charge, claim, restriction or transfer, equity or encumbrance of any kind. (ix) Certificates for all of the Shares to be sold by the Selling Stockholder pursuant to this Agreement, in suitable form for transfer by delivery or accompanied by duly executed instruments of transfer or assignment in blank with signatures guaranteed, have been placed in custody with the Custodian with irrevocable conditional instructions to deliver the Shares to the Underwriters pursuant to this Agreement. (x) The Selling Stockholder has not taken and will not take, directly or indirectly, any action designed to cause or result in stabilization or manipulation of the price of the Common Stock; and the Selling Stockholder has not distributed and will not distribute any prospectus (as such term is defined in the 1933 Act and the 1933 Act Regulations) in connection with the offering and sale of the Shares other than any preliminary prospectus or the Prospectus or other material permitted by the 1933 Act or the 1933 Act Regulations. (xi) Neither the Selling Stockholder nor any of her affiliates directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, or has any other association with (within the meaning of Article I, Section 1(m) of the Bylaws of the National Association of Securities Dealers, Inc.), any member firm of the National Association of Securities Dealers, Inc. (xii) The Selling Stockholder has not relied upon any representation by the Underwriters with respect to any tax consequences (federal, state or local) of the transactions contemplated hereby, or otherwise. The Selling Stockholder acknowledges that any tax liability that might arise with respect to the Shares to be sold by the Selling Stockholder shall be solely the responsibility of the Selling Stockholder. (c) Any certificate signed by any officer of the Company and delivered to you or to Cooley, Godward, Castro, Huddleson & Tatum, as counsel for the Underwriters pursuant to this Agreement or at the Closing contemplated hereby shall be deemed a representation and warranty by the Company to each Underwriter as to the matters covered thereby; and any certificate signed by or on behalf of the Selling Stockholder and delivered to you or to counsel for the Underwriters at or prior to the Closing Date pursuant to the terms of this Agreement or the transactions contemplated hereby shall be deemed a representation and warranty by the Selling Stockholder to each Underwriter as to matters covered thereby. Section 2. Sale and Delivery to the Underwriters; Closing. (a) On the basis of the representations and warranties herein contained, and subject to the terms and conditions herein set forth, the Selling Stockholder agrees to sell to each Underwriter, severally and not jointly, and each Underwriter agrees, severally and not jointly, to purchase from the Selling Stockholder the number of Shares set forth in Schedule A opposite the name of such Underwriter (plus such additional number of Shares that such Underwriter may become obligated to purchase pursuant to Section 10 hereof). The purchase price per Share to be paid by the Underwriters shall be $______. The initial public offering price of the Shares shall be $______. (b) Payment of the purchase price for, and delivery of certificates for, the Shares shall be made at the offices of Cruttenden & Company, Suite 100, 18301 Von Karman, Irvine, California, or at such other place as shall be agreed upon by the Company, the Selling Stockholder and you, at 10:00 a.m. Pacific Time either (i) on the fifth full business day after the effective date of the Registration Statement, or (ii) at such other time not more than ten full business days thereafter as you, the Company and the Selling Stockholder shall determine (such date and time of payment and delivery being herein called the "Closing Date"). Payment shall be made to the Selling Stockholder by certified or official bank check or checks in California Clearing House funds or similar next day funds payable to the order of the Selling Stockholder against delivery to you for the respective accounts of the several Underwriters of certificates for the Shares to be purchased by them. (c) Certificates for the Shares to be purchased by the Underwriters shall be in such denominations and registered in such names as you may request in writing at least two full business days before the Closing Date. The certificates for the Shares will be made available for examination and packaging by you not later than 10:00 a.m. on the business day prior to the Closing Date. (d) It is understood that each Underwriter has authorized you, for its account, to accept delivery of, receipt for, and make payment of the purchase price for, the Shares that it has agreed to purchase. You, individually, may (but shall not be obligated to) make payment of the purchase price for the Shares to be purchased by any Underwriter whose check or checks shall not have been received by the Closing Date. Section 3. Certain Covenants of the Company. The Company covenants with each Underwriter as follows: (a) The Company will use its best efforts to cause the Registration Statement to become effective and, if the Company elects to rely upon Rule 430A and subject to Section 3(b), will comply in all material respects with the requirements of Rule 430A and will notify you promptly, (i) when the Registration Statement, or any post-effective amendment to the Registration Statement, shall have become effective, or any supplement to the Prospectus or any amended Prospectus shall have been filed, (ii) of the receipt of any comments from the Commission, (iii) of any request by the Commission to amend the Registration Statement or amend or supplement any Prospectus or for additional information and (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of any order preventing or suspending the use of any preliminary prospectus, or of the suspension of the qualification of the Shares for offering or sale in any jurisdiction, or of the institution or threatening of any proceedings for any of such purposes. The Company will make every reasonable effort to prevent the issuance of any such stop order or of any order preventing or suspending such use and, if any such order is issued, to obtain the lifting thereof at the earliest possible moment. (b) The Company will not at any time file or make any amendment to the Registration Statement, or any amendment or supplement (i) if the Company has not elected to rely upon Rule 430A, to the Prospectus or (ii) if the Company has elected to rely upon Rule 430A, to either the prospectus included in the Registration Statement at the time it becomes effective or to the Prospectus, of which you shall not have previously been advised and furnished a copy or to which you or Cooley, Godward, Castro, Huddleson & Tatum, as counsel for the Underwriters shall have promptly and reasonably objected in writing; provided that such objections shall not prevent the filing of any amendment or supplement which, in the opinion of counsel for the Company, is required by the 1933 Act or the 1933 Act Regulations, in which case the Company shall make such changes in any such document prior to the filing thereof as the Underwriters upon advice of counsel may reasonably request. (c) The Company has furnished or will furnish to you and your counsel, without charge, two signed copies of the Registration Statement as originally filed and of all amendments thereto, whether filed before or after the Registration Statement becomes effective, copies of all exhibits and documents filed therewith and signed copies of all consents and certificates of experts and has furnished or will furnish to you, for each other Underwriter, one conformed copy of the Registration Statement as originally filed and each amendment thereto (without exhibits). In addition, the Company has furnished or will furnish to you and your counsel, without charge, such additional conformed copies of the Registration Statement, any amendments or supplements thereto and exhibits as shall be reasonably requested. (d) The Company will deliver to each Underwriter, without charge, from time to time until the effective date of the Registration Statement as many copies of each preliminary prospectus as such Underwriter may reasonably request, and the Company hereby consents to the use of such copies for purposes permitted by the 1933 Act. The Company will deliver to each Underwriter, without charge, as soon as the Registration Statement shall have become effective and thereafter from time to time as requested during the period when the Prospectus is required to be delivered under the 1933 Act and prior to the expiration of nine months after the effective date of the Registration Statement such number of copies of the Prospectus (as supplemented or amended) as such Underwriter may reasonably request, and in case any Underwriter is required to deliver a prospectus in connection with sales of any of the Shares at any time nine months or more after the effective date of the Registration Statement upon such Underwriter's request through you, but at the expense of such Underwriter, the Company will prepare and deliver to such Underwriter, as many copies as you may request of an amended or supplemented Prospectus complying with Section 10(a)(3) of the 1933 Act. (e) The Company will comply to the best of its ability with the 1933 Act and the 1933 Act Regulations, and the Exchange Act, as amended, and the rules and regulations of the Commission thereunder so as to permit the completion of the distribution through the Underwriters of the Shares as contemplated in this Agreement and in the Prospectus. If at any time when a prospectus is required by the 1933 Act to be delivered in connection with Sales by the Underwriters of the Shares any event shall occur or condition exist as a result of which it is necessary, in the opinion of counsel for the Underwriters or counsel for the Company, to amend the Registration Statement or amend or supplement any Prospectus in order that the Prospectus will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time it is delivered to a purchaser, or if it shall be necessary, in the opinion of either such counsel, at any such time to amend the Registration Statement or amend or supplement any Prospectus in order to comply with the requirements of the 1933 Act or the 1933 Act Regulations, the Company will promptly prepare and file with the Commission, subject to Section 3(b), such amendment or supplement as may be necessary to correct such untrue statement or omission or to make the Registration Statement or the Prospectus comply with such requirements, provided that the Company shall make such changes in any such document as the Underwriters upon advice of counsel may reasonably request; provided, further,that the Company shall determine the final terms of any such amendment or supplement. (f) The Company will endeavor, in cooperation with the Underwriters, to qualify the Shares for offering and sale under the applicable securities laws of such states and other jurisdictions as you may designate and to maintain such qualifications in effect for a period of not less than one year from the effective date of the Registration Statement; provided, however, that neither the Company nor any Subsidiary shall be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject. The Company will file such statements and reports as may be required by the laws of each jurisdiction in which the Shares have been qualified as above provided. (g) The Company will make generally available (within the meaning of Section 11(a) of the 1933 Act and the 1933 Act Regulations) to its security holders as soon as practicable, but not later than 15 months after the date of the Prospectus, an earnings statement of the Company (which need not be certified by independent certified public accountants unless required by the 1933 Act or the 1933 Act Regulations, but which shall satisfy the provisions of Section 11(a) of the 1933 Act Regulations), covering a period of 12 months beginning after the effective date of the Registration Statement but beginning not later than the first day of the Company's fiscal quarter next following such effective date. (h) The Company will cause the Shares to be listed on the Nasdaq National Market and comply with all applicable rules of the Nasdaq National Market in connection with the transactions contemplated hereby. (i) If the Company has elected to rely upon Rule 430A, it will take such steps as it deems necessary to ascertain promptly whether the form of prospectus transmitted for filing under Rule 424(b) was received for filing by the Commission and, in the event that it was not, it will promptly file such prospectus. (h) For a period of five years after the effect date of the Registration Statement, furnish you, without charge, the following: (i) within 90 days after the end of each fiscal year, three copies of financial statements certified by independent certified public accountants, including a balance sheet, statement of operations and statement of cash flows of the Company and its then existing subsidiaries, with supporting schedules, prepared in accordance with generally accepted accounting principles, at the end of such fiscal year and for the 12 months then ended, which may be on a consolidated basis; (ii) as soon as practicable after they have been sent to stockholders of the Company or filed with the Commission, three copies of each annual and interim financial and other report or communication sent by the Company to its stockholders or filed with the Commission; (iii) as soon as practicable, two copies of every press release and every material news item and article in respect of the Company or its affairs that was released by the Company; and (iv) such additional documents and information with respect to the Company and its affairs and the affairs of any of its subsidiaries as you may from time to time reasonably request. (i) The Company will furnish to you as early as practicable prior to the Closing Date, but not less than two full business days prior thereto, a copy of its latest available unaudited interim financial statements that have been read by the Company's independent certified public accountants, as stated in their letters to be furnished pursuant to Section 5(h) and 5(i). (j) The Company will comply with all registration, filing and reporting requirements of the Exchange Act, which may from time to time by applicable to the Company. (k) The Company will comply with all provisions of all undertakings contained in the Registration Statement; (l) Prior to the Closing Date, the Company will issue no press release or other communication, directly or indirectly, and hold no press conferences and grant no interviews with respect to the Company, the financial condition, results of operations, business, properties, assets or liabilities of the Company, or this offering, without your prior written consent. (m) The Company will file timely with the Commission and the National Association of Securities Dealers, Inc. (the "NASD"), if required, a report on Form 10-C in accordance with the Rules and Regulations of the Commission under the Exchange Act. (n) At the Closing, the Company will deliver to you true and correct copies of the Articles of Incorporation and all amendments thereto of the Company and the Significant Subsidiaries, all such copies to be certified as of a recent date by the Secretary of State of the State of Nevada or the respective state official of the state of incorporation of such Significant Subsidiares; true and correct copies of the bylaws of the Company and of the minutes of all meetings of the directors and stockholders of the Company (or Actions by Written Consent in Lieu of Meetings) held prior to the Closing which in any way relate to the subject matter of this Agreement; and such other documents and certificates as you or your counsel may reasonably request. (o) The Company will use all reasonable efforts to comply or cause to be complied with the conditions precedent to the several obligations of the Underwriters in Section 5 hereof. (p) The Company shall supply to you, your counsel, the Selling Stockholder and (if different from your counsel, the Selling Stockholder's counsel, at the Company's cost, bound volumes for each such party each containing material documents relating to the offering of the Shares within a reasonable time after the Closing, not to exceed 90 days. Section 4. Payment of Expenses. The Company will pay all expenses incident to the performance of its obligations under this Agreement, including (a) the printing and filing of the Registration Statement (including financial statements and exhibits), as originally filed and as amended, the preliminary prospectus and the Prospectus and any amendments or supplements thereto, and the cost of furnishing copies thereof to the Underwriters, (b) the printing and distribution of the certificates for the Shares, (c) the delivery of the certificates for the Shares to the Underwriter, including any capital duties, stamp duties and stock transfer taxes payable upon the sale of the Shares to the Underwriters, (d) the fees and disbursements of the Company's counsel and accountants, (e) the filing fees in connection with the filing of the Registration Statement, (f) the qualification of the Shares under the applicable securities laws in accordance with Section 3(f) and any filing for review of the offering with the Corporate Financing Department of the NASD, including filing fees and reasonable fees and disbursements of counsel for the Underwriters in connection therewith and in connection with the Blue Sky Survey, (g) application and listing fees in connection with the approval and inclusion of the Shares for quotation on the Nasdaq National Market; (h) fees and disbursements of the Selling Stockholder's counsel and accountants and (i) the Representative's nonaccountable expense allowance equal to 2.5% of the aggregate gross proceeds from the sale of the Shares. If this Agreement is terminated by you in accordance with the provisions of Section 5, 9(b)(i) or 11, the Company shall reimburse the Underwriters for all their out-of-pocket expenses, including the reasonable fees and disbursements of Cooley, Godward, Castro, Huddleson & Tatum, as counsel for the Underwriters, except that the Selling Stockholder shall reimburse the Underwriters for such expenses if the Selling Stockholder fails to satisfy the conditions set forth in Sections 5(d) or 5(g) or Section 11. Section 5. Conditions of Underwriters' Obligations. The obligations of the several Underwriters to purchase and pay for the Shares that they have respectively agreed to purchase hereunder are subject to the accuracy of the representations and warranties of the Company and the Selling Stockholder contained herein or in certificates of the Company's officers delivered pursuant to the provisions hereof, to the performance by the Company and the Selling Stockholder of their respective obligations hereunder, and to the following further conditions: (a) The Registration Statement shall have become effective no later than 6:00 p.m. on the date of this Agreement or, with your consent, at a later time and date not later, however, than 6:00 p.m. on the first business day following the date hereof, or at such later time or on such later date as you may agree to in writing with the approval of a majority in interest of the several Underwriters; and at the Closing Date, no stop orders suspending the effectiveness of the Registration Statement shall have been issued under the 1933 Act and no proceedings for that purpose shall have been instituted or shall be pending or, to your knowledge or the knowledge of the Company, shall have been threatened by the Commission, and any request on the part of the Commission for additional information shall have been complied with to the reasonable satisfaction of Cooley, Godward, Castro, Huddleson & Tatum, as counsel for the Underwriters. If the Company has elected to rely upon Rule 430A, the Prospectus containing the Rule 430A Information shall have been filed with the Commission in accordance with Rule 424(b) (or a post-effective amendment providing such information shall have been filed and declared effective in accordance with the requirements of Rule 430A). (b) At the Closing Date, you shall have received signed opinions of Snell & Wilmer and/or Lionel, Sawyer & Collins, counsel for the Company, dated as of the Closing Date, together with reproduced copies of such opinions for each of the other Underwriters, in form and substance reasonably satisfactory to the Underwriters upon advice of counsel, to the effect that: (i) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada, with full power and authority and all necessary consents, authorizations, approvals, orders, certificates and permits of and from, and declarations and filings with, all federal, state, local and other governmental authorities and all courts and other tribunals, to own, lease, license and use its properties and assets and to conduct its business in the manner described in the Prospectus. The Company is duly qualified to do business and is in good standing in every jurisdiction in which its ownership, leasing, licensing or use of property and assets or the conduct of its business makes such qualification necessary. (ii) Each of the Company's subsidiaries incorporated in Nevada or Arizona is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation, with full power and authority and all necessary consents, authorizations, approvals, orders, certificates and permits of and from, and declarations and filings with, all federal, state, local and other governmental authorities and all courts and other tribunals, to own, lease, license and use its properties and assets and to conduct its business in the manner described in the Prospectus. Each Subsidiary is duly qualified to do business and is in good standing in every jurisdiction in which its ownership, leasing, licensing or use of property and assets or the conduct of its business makes such qualification necessary. (iii) Each of the Company and the Subsidiaries incorporated in Arizona or Nevada has the corporate power to own, lease and operate its properties and to conduct its business as described in the Prospectus, and the Company has the corporate power to enter into and perform its obligations under this Agreement. (iv) The authorized capital stock of the Company as of the date of this Agreement consists of (i) 50,000,000 shares of Serial Preferred Stock, with or without par value, of which 6,100,000 shares have been designated Series A 8-1/2% Preferred Stock, no par value, and all of which are issued and outstanding; (ii) 150,000,000 shares of Serial Common Stock, with or without par value, of which 10,000,000 shares have been designated Series A Common Stock, $.25 par value, 5,754,334 of which are issued and outstanding; and 150,000,000 shares of Common Stock, $.25 par value, of which 32,909,729 shares are issued and outstanding; 1,335,937 shares of Common Stock are in treasury; and there have been no changes in the authorized and outstanding capital stock of the Company since the date of this Agreement. Each outstanding share of capital stock (including all of the Shares) is validly authorized, validly issued, fully paid and nonassessable, with no personal liability attaching to the ownership thereof , has not been issued and is not owned or held in violation of any preemptive right of stockholders and has been issued or sold or exchanged in compliance with all applicable state and federal securities laws and regulations. To the knowledge of such counsel, there is no commitment, plan or arrangement to issue, and no outstanding option, warrant or other right calling for the issuance of, any share of capital stock of the Company or any security or other instrument which by its terms is convertible into, exercisable for, or exchangeable for capital stock of the Company, except as described in the Prospectus. There is outstanding no security or other instrument which by its terms is convertible into or exchangeable for capital stock of the Company, except as described in the Prospectus. (v) The Shares are not subject to any preemptive right under the General Corporation Law of Nevada or, to such counsel's knowledge, other rights to purchase shares of capital stock of the Company (except contractual rights which have been waived). (vi) To the best of such counsel's knowledge, the Company has granted no options or awards relating to the Company's capital stock under the AMERCO Stock Option and Incentive Plan. (vii) Except as disclosed in or specifically contemplated by the Prospectus, to the best of such counsel's knowledge, there are no outstanding options, warrants or other rights calling for the issuance of, and no commitments or obligations to issue, any shares of capital stock of the Company or any security convertible into or exchangeable for capital stock of the Company. (viii) The statements made in the Prospectus under "Description of Securities," insofar as such section purports to constitute a summary of the terms of the Common Stock, constitutes an accurate and fair summary thereof in all material respects, and the form of certificate used to evidence the Common Stock is in due and proper form and complies with all applicable requirements of the General Corporation Law of Nevada. (vix) This Agreement has been duly authorized, executed and delivered by the Company. (x) The Company is not required to obtain any authorization, approval, consent or license of any government, governmental instrumentality or court (other than under the 1933 Act and the 1933 Act Regulations and the rules and regulations of the Commission thereunder, and state securities laws) under federal or Nevada or Arizona law for the sale and delivery of the Shares by the Selling Stockholder to the Underwriters. (xi) The execution and delivery of this Agreement by the Company, the consummation by the Company of the transactions contemplated in this Agreement and the compliance by the Company with the terms of this Agreement have been duly authorized by all necessary corporate action on the part of the Company and do not and will not result in any violation of the Restated Articles of Incorporation, as amended (the "Articles of Incorporation"), or the Restated Bylaws, as currently in effect (the "Bylaws"), of the Company or any of the Subsidiaries incorporated in Arizona or Nevada, and do not and will not conflict with, or constitute a breach or violation of, any of the terms and provisions of, or constitute a default under, or result in the creation or imposition of any lien or encumbrance upon any property or assets of the Company or any of the Subsidiaries under (A) any indenture, mortgage, deed of trust, loan or credit agreement, bond, debenture, note agreement or any other agreement or instrument to which the Company or any of its Subsidiaries incorporated in Arizona or Nevada is a party or by which it is bound, (B) any existing applicable federal or Nevada or Arizona corporate laws, rules or regulations, and except to the extent that the indemnification provisions thereof may conflict with any applicable law, rule or regulation or (C) to such counsel's knowledge, any judgment, order, writ or decree of any government agency or body, domestic or foreign, having jurisdiction over the Company, any of its Subsidiaries incorporated in Arizona or Nevada or any of their properties or operations. Such counsel need express no opinion, however, as to whether the execution and delivery of, or the performance by the Company of its obligations under this Agreement will constitute a violation of, or default under, any financial covenant or financial ratios contained in any of the agreements referred to in the preceding sentence. (xii) Such counsel has been advised by the Division of Corporation Finance of the Commission that the Registration Statement has become effective under the 1933 Act, and, to the best of the knowledge of such counsel, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are pending or are contemplated under the 1933 Act; any required filing of the Prospectus or any supplement thereto pursuant to Rule 424(b) of the 1933 Act Regulations have been made in the manner and within the time period required by Rule 424(b). (xiii) The Registration Statement (including the Rule 430A Information, if applicable), the Prospectus and each amendment or supplement to the Registration Statement and Prospectus, as of their respective effective or issue dates (other than the financial statements, notes or schedules thereto and other financial or statistical data and supplemental schedules included therein or omitted therefrom, as to which such counsel need express no opinion), complied as to form in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations. (xiv) The Company is not an investment company within the meaning of the Investment Company Act of 1940, as amended. (xv) All descriptions in the Prospectus of contracts and other documents to which the Company and the Subsidiaries are parties are accurate in all material respects; to such counsel's knowledge, there are no other franchises, contracts, indentures, mortgages, loan agreements, notes, leases or other instruments or agreements that are required to be described in or filed as exhibits in the Registration Statement by the 1933 Act or by the 1933 Act Regulations that have not been described or filed as required. (xvi) To the best of such counsel's knowledge, there are no legal or governmental actions, suits or proceedings pending or threatened against the Company which are required to be described in the Prospectus which are not described as required. (xvii) Insofar as statements in the Prospectus purport to summarize the status of litigation or other legal proceedings or the provisions of laws, rules, regulations, orders, judgments, decrees, contracts, agreements, instruments, leases or licenses, such statements have been prepared or reviewed by such counsel and accurately reflect the status of such litigation or other legal proceedings and provisions purported to be summarized and are correct in all material respects. (xviii) To such counsel's knowledge, no holders of the Company's securities have rights to the registration of shares of Common Stock or other securities in connection with the Offering as a result of the filing of the Registration Statement by the Company or the offering contemplated hereby, except for any such rights which have been waived. (xvix) The Shares are duly approved for quotation subject to notice of issuance on the Nasdaq National Market. (xx) Since the effective date of the Registration Statement, any event that has occurred which should have been set forth in an amendment or supplement to the Registration Statement or the Prospectus has been set forth in such an amendment or supplement. (xxi) The Company is not currently offering any securities for sale. (xxii) Such counsel has no knowledge of any promoter, affiliate, parent or Subsidiary of the Company, except as are described in the Registration Statement. In addition, such opinion shall state that such counsel has participated in the preparation of the Registration Statement and Prospectus and in conferences with officers and other representatives of the Company, representatives of the independent public accountants for the Company, and your representatives and your counsel at which the contents of the Registration Statement, the Prospectus and related matters were discussed and, although such counsel need not pass upon or assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement or the Prospectus and although such counsel has not undertaken to verify independently the accuracy or completeness of the statements in the Registration Statement and the Prospectus and, therefore, would not necessarily have become aware of any material misstatement of fact or omission to state a material fact, on the basis of and subject to the foregoing, such counsel does not believe that either the Registration Statement or the Prospectus (other than the financial statements, notes or schedules thereto and other financial or statistical data and supplemental schedules included therein or omitted therefrom, as to which such counsel need express no opinion) contained as of its date or contains as of the date of such opinion any untrue statement of a material fact or omitted as of its date or omits as of the date of such opinion to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Such opinion shall be to such further effect with respect to legal matters relating to issues or events which the Underwriters become aware of after the date of this Agreement relating to this Agreement and the sale of the Shares pursuant to this Agreement as counsel to the Underwriters may reasonably request. In giving such opinion, such counsel may rely as to all matters governed by laws of jurisdiction other than the State of Arizona, the General Corporation Law of the State of Nevada or the federal law of the United States, on opinions of other local counsel in such jurisdictions, who shall be counsel satisfactory to Cooley, Godward, Castro, Huddleson & Tatum, as counsel for the Underwriters, in which case the opinion shall state that they believe you and they are entitled to so rely. Such counsel may also state that, insofar as such opinions involve factual matters, they have relied, to the extent they deem proper, upon certificates of officers of the Company and the Subsidiaries and certificates of public officials. (c) At the Closing Date, you shall have received a signed opinion of Gary V. Klinefelter, General Counsel for the Company, dated as of the Closing Date, together with reproduced copies of such opinion for each of the other Underwriters, in form and substance reasonably satisfactory to the Underwriters upon advice of counsel, to the effect that: (i) Such counsel does not know of any statutes or regulations, or any pending or threatened legal or governmental proceedings, required to be described in the Prospectus that are not described as required, nor of any contracts or documents of a character required to be described or referred to in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement that are not described, referred to or filed as required. (ii) To the knowledge of such counsel, no default exists in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, loan agreement, note, lease or other agreement or instrument to which the Company or any of the Subsidiaries is party or to which any of their respective properties are bound, except as disclosed in the Registration Statement and except for such defaults that would not have a material adverse effect on the Company and the Subsidiaries, taken as a whole. (iii) The descriptions in the Prospectus of the statutes, regulations, legal or governmental proceedings, contracts and other documents therein described, to the extent that they constitute matters of law or legal conclusion, have been reviewed by such counsel and fairly present the information disclosed therein in all material respects. (iv) The execution and delivery of this Agreement by the Company, the consummation by the Company of the transactions contemplated in this Agreement and compliance by the Company with the terms of this Agreement have been duly authorized by all necessary corporate action on the part of the Company and do not and will not result in any violation of the Articles of Incorporation or Bylaws of the Company or any of the Subsidiaries, and do not and will not conflict with, or constitute a breach of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien or encumbrance under any property or assets of the Company or any of the Subsidiaries under (A) any indenture, mortgage, deed of trust, loan or credit agreement, bond, debenture, note agreement or any other agreement or instrument to which the Company or any of the Subsidiaries is a party or by which any of their respective properties are bound, (B) any existing applicable Arizona or Nevada laws, rules or regulations (other than securities or blue sky laws of the various states, as to which such counsel need express no opinion, and except to the extent that the indemnification provisions thereof may conflict with any applicable Arizona or Nevada law, rule or regulation), or (C) to such counsel's knowledge, any judgment, order, writ or decree of any governmental agency or body, domestic or foreign, having jurisdiction over the Company or any of the Subsidiaries or any of their respective properties or operations. (v) Each of the Company's subsidiaries incorporated in a United States jurisdiction other than Arizona or Nevada is validly existing and in good standing under the laws of the jurisdiction of its incorporation. (vi) Each of the Company and its Subsidiaries is duly qualified to do business as a foreign corporation in good standing in all jurisdictions, if any, where it owns or leases real properties and in which the failure so to qualify when taken in the aggregate would have a material and adverse effect on the business, operations or financial condition of the Company and its Subsidiaries, taken as a whole. (vii) There are no legal or governmental proceedings pending or to such counsel's knowledge, threatened that are required to be disclosed in the Registration Statement and are not so described therein. (viii) No authorization, approval, consent or license of any government, governmental instrumentality or court (other than under the 1933 Act and the 1933 Act Regulations and the rules and regulations of the Commission thereunder, and state securities law) is required to be made or obtained by the Company under Arizona or Nevada law for the valid sale and delivery of the Shares by the Selling Stockholder or for the consummation by the Company and the Selling Stockholder of the transactions contemplated in this Agreement. (ix) The Company has taken all necessary and appropriate action to remove the Company's right of first refusal set forth in Article VII, Section 2 of the Bylaws with respect to the Shares and such number of additional shares of Common Stock as the Selling Stockholder may, from time to time, elect to sell pursuant to Rule 144 promulgated under the 1933 Act, and such shares are, as of the Closing Date, free and clear of any such restriction. In addition, such opinion shall state that such counsel has participated in the preparation of the Registration Statement and Prospectus and in conferences with officers and other representatives of the Company, representatives of the independent public accountants for the Company, and your representatives and your counsel at which the contents of the Registration Statement, the Prospectus and related matters were discussed and, although such counsel need not pass upon or assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement or the Prospectus and although such counsel has not undertaken to verify independently the accuracy or completeness of the statements in the Registration Statement and the Prospectus and, therefore, would not necessarily have become aware of any material misstatement of fact or omission to state a material fact, on the basis of and subject to the foregoing, such counsel does not believe that either the Registration Statement or the Prospectus (other than the financial statements, notes or schedules thereto and other financial or statistical data and supplemental schedules included therein or omitted therefrom, as to which such counsel need express no opinion) contained as of its date or contains as of the date of such opinion any untrue statement of a material fact or omitted as of its date or omits as of the date of such opinion to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Such opinion shall be to such further effect with respect to the legal matters relating to issues or events which the Underwriters become aware of after the date of this Agreement relating to this Agreement and the sale of the Shares pursuant to this Agreement as counsel for the Underwriters may reasonably request. Such counsel may also state that, insofar as such opinion involves factual matters, they have relied, to the extent they deem proper, upon certificates of officers of the Company and the Subsidiaries and certificates of public officials. (d) At the Closing Date, you shall have received a signed opinion of Grover T. Wickersham, P.C., counsel for the Selling Stockholder, dated as of the Closing Date, together with reproduced copies of such opinion for each of the other Underwriters, in form and substance reasonably satisfactory to the Underwriters upon advice of counsel, to the effect that: (i) No authorization, approval, consent or license of any government, governmental instrumentality or court (other than under the 1933 Act and the 1933 Act Regulations and the rules and regulations of the Commission thereunder, and state securities law) is necessary for the valid sale and delivery of the Shares or for the consummation by the Selling Stockholder of the transactions contemplated in this Agreement. (ii) The execution and delivery of this Agreement by the Selling Stockholder, the delivery of the Shares sold by the Selling Stockholder to the Underwriters, the consummation by the Selling Stockholder of the transactions contemplated in this Agreement and the compliance by the Selling Stockholder with the terms of this Agreement do not and will not conflict with, or constitute a breach or violation of, any of the terms and provisions of, or constitute a default under, or result in the creation or imposition of any lien or encumbrance upon any property or assets of the Selling Stockholder under (A) any indenture, mortgage, deed of trust, loan or credit agreement, bond, debenture, note agreement or any other agreement or instrument known to such counsel to which the Selling Stockholder is a party or by which any of her respective properties are bound, (B) except to the extent that the indemnification provisions thereof may conflict with any applicable law, rule or regulation, any existing applicable laws, rules or regulations, other than the securities or blue sky laws of the various states, as to which such counsel need express no opinion, or (C) to such counsel's knowledge, any judgment, order, writ or decree of any government agency or body, domestic or foreign, having jurisdiction over the Selling Stockholder or any of her properties or operations. Such counsel need express no opinion, however, as to whether the execution and delivery of, or the performance by the Selling Stockholder of her obligations under this Agreement will constitute a violation of, or default under, any financial covenants or financial ratios contained in any of the agreements referred to in the preceding sentence. (iii) The Custody Agreement (including the Power of Attorney contained therein) has been duly authorized, executed and delivered by the Selling Stockholder and constitutes the valid and binding obligation of the Selling Stockholder in accordance with its terms. (iv) This Agreement has been duly executed and delivered by the Selling Stockholder. (v) The Selling Stockholder is the sole registered owner of the Shares to be sold by the Selling Stockholder; upon completion and registration with the transfer agent of the sale of the Shares pursuant to this Agreement, each of the Underwriters will be the registered owner of the Shares purchased by it from the Selling Stockholder and, assuming the Underwriters purchased the Shares in good faith and without notice of any adverse claim, the Underwriters will have acquired the Shares free of any adverse claim, any lien in favor of the Company; the owner of the Shares, if other than the Selling Stockholder, is precluded from asserting against the Underwriters the ineffectiveness of any unauthorized endorsement; and the Selling Stockholder has the full right and power (A) to enter into this Agreement and the Custody Agreement and (B) to sell, transfer and deliver the Shares to be sold by the Selling Stockholder under this Agreement. Such opinion shall be to such further effect with respect to the legal matters relating to this Agreement and the sale of the Shares pursuant to this Agreement as counsel for the Underwriters may reasonably request. Such counsel may also state that, insofar as such opinion involves factual matters, they have relied, to the extent they deem proper, upon certificates of officers of the Company and the Subsidiaries and certificates of public officials. (e) At the Closing Date, you shall have received the favorable opinion of Cooley, Godward, Castro, Huddleson & Tatum, as counsel for the Underwriters, dated as of the Closing Date, together with reproduced copies of such opinion for each of the other Underwriters, to the effect that the opinions delivered pursuant to Sections 5(b), (c) and (d) appear on their faces to be appropriately responsive to the requirements of this Agreement except, specifying the same, to the extent waived by you, and with respect to the legal existence of the Company, the Shares, this Agreement, the Registration Statement, the Prospectus and such other related matters as you may require. In giving such opinion, such counsel may rely, as to all matters governed by the laws of jurisdictions other than the law of the State of California and the federal law of the United States, upon the opinions of counsel satisfactory to you. Such counsel may also state that, insofar as such opinion involves factual matters, they have relied, to the extent they deem proper, upon certificates of officers of the Company and certificates of public officials. (f) At the Closing Date, (i) the Registration Statement and the Prospectus, as they may then be amended or supplemented, shall conform in all material respects to the requirements of the 1933 Act and the 1933 Act Regulations, the Company shall have complied in all material respects with Rule 430A (if it shall have elected to rely thereon), the Registration Statement, as it may then be amended or supplemented, shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements in the Registration Statement not misleading, and the Prospectus, as they may then be amended or supplemented, shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements in the Prospectus, in light of the circumstances under which they were made, not misleading, (ii) there shall not have been, since the date as of which information is given in the Prospectus, any material adverse change in the condition (financial or otherwise), earnings, business affairs or business prospects of the Company and the Subsidiaries, taken as a whole, whether or not arising in the ordinary course of business, (iii) no action, suit or proceeding at law or in equity shall be pending or, to the knowledge of the Company, threatened against the Company or the Subsidiaries that would be required to be set forth in the Prospectus other than as set forth therein and no proceedings shall be pending or, to the knowledge of the Company, threatened against the Company or the Subsidiaries or before or by any federal, state or other commission, board or administrative agency that could reasonably be expected to materially adversely affect the condition (financial or otherwise), earnings, business affairs or business prospects of the Company and the Subsidiaries, taken as a whole, other than as set forth in the Prospectus, (iv) the Company shall have complied in all material respects with all agreements and satisfied in all material respects all conditions on its part to be performed or satisfied at or prior to the Closing Date and (v) the other representations and warranties of the Company set forth in Section 1(a) shall be accurate as though expressly made at and as of the Closing Date and the condition set forth in clause (j) of this Section shall have been satisfied. At the Closing Date, you shall have received a certificate of the Chairman or the President and the chief financial or chief accounting officer of the Company, dated as of the Closing Date, to such effect. As used in Section 5(f)(ii) and (iii), the term "Prospectus" means the Prospectus in the form first used to confirm sales of the Shares. (g) At the Closing Date, (i) the representations and warranties of the Selling Stockholder set forth in Section 1(b) and in any certificates by or on behalf of the Selling Stockholder delivered pursuant to the provisions hereof shall be accurate as though expressly made at and as of the Closing Date, (ii) the Selling Stockholder shall have performed her obligations under this Agreement in all material respects and (iii) you shall have received a certificate of the Selling Stockholder, dated as of the Closing Date, to the effect set forth in subsections (i) and (ii) of this Section 5(g). (h) At the time that this Agreement is executed by the Company, you shall have received from Price Waterhouse a letter, dated such date, in form and substance satisfactory to you, together with signed or reproduced copies of such letter for each of the other Underwriters, confirming that they are independent public accountants with respect to the Company within the meaning of the 1933 Act and the applicable published 1933 Act Regulations, and stating in effect that: (i) in their opinion, the audited financial statements and the related financial statement schedules included in the Registration Statement and the Prospectus comply as to form in all material respects with the applicable accounting requirements of the 1933 Act and the published rules and regulations thereunder; (ii) on the basis of procedures (but not an examination in accordance with generally accepted auditing standards) consisting of a reading of the minutes of all meetings of the stockholders and directors of the Company and each Committee of the Board of Directors of the Company from April 1, 1994 through September __, 1994, inquiries of certain officials of the Company responsible for financial and accounting matters, and such other inquiries and procedures as may be specified in such letter, nothing came to their attention that caused them to believe that: (A) at August 31, 1994, and at a specified date not more than five days prior to the date of this Agreement, there was any change in the capital stock or long term debt of the Company and the Subsidiaries on a combined basis or any decrease in combined total current assets or combined total assets as compared with the amounts shown in the latest balance sheet included in the Registration Statement; or (B) for the period from July 1, 1994 to August 31, 1994 and to a specified date not more than five days prior to the date of this Agreement, there was any decrease in combined net revenue or in combined income before income taxes in each case as compared with the comparable period in the preceding year, except in each case for any decreases that the Registration Statement discloses have occurred or may occur; and (iii) in addition to the procedures referred to in clause (ii) above, they have performed other specified procedures, not constituting an audit, with respect to certain amounts, percentages, numerical data and financial information appearing in the Registration Statement, which have previously been specified by you and which shall be specified in such letter, and have compared certain of such items with, and have found such items to be in agreement with, the accounting and financial records of the Company and the Subsidiaries. (i) At the Closing Date, you shall have received from Price Waterhouse a letter, in form and substance satisfactory to you and dated as of the Closing Date, to the effect that they reaffirm the statements made in the letter furnished pursuant to Section 5(h), except that the specified date referred to shall be a date not more than five business days prior to the Closing Date. In the event the Company relies on Rule 430A and the final Prospectus furnished to the Underwriters in connection with the offering of the Shares differs from the Prospectus included in the Registration Statement at the time of effectiveness, such letter shall update the procedures referred to in clauses (h)(ii) and (iii) above. (j) At the Closing Date, counsel for the Underwriters shall have been furnished with all such documents, certificates and opinions as they may reasonably request for the purpose of enabling them to pass upon the sale of the Shares as contemplated in this Agreement and the matters referred to in Section 5(e) and in order to evidence the accuracy and completeness of any of the representations, warranties or statements of the Company and the Selling Stockholder, the performance of any of the covenants of the Company and the Selling Stockholder, or the fulfillment of any of the conditions herein contained; and all proceedings taken by the Company and the Selling Stockholder at or prior to the Closing Date in connection with the sale of the Shares as contemplated in this Agreement shall be reasonably satisfactory in form and substance to you upon advice of counsel. (k) The Shares shall have been included for quotation on the Nasdaq National Market. (l) The NASD, upon review of the terms of the public offering of the Shares, shall not have objected to your participation in such offering. If any of the conditions specified in this Section 5 shall not have been fulfilled when and as required by this Agreement to be fulfilled, this Agreement may be terminated by you upon notice to the Company and the Selling Stockholder at any time at or prior to the Closing Date, and such termination shall be without liability of any party to any other party except as provided in Section 4 herein. Notwithstanding any such termination, the provisions of Sections 7 and 8 herein shall remain in effect. Section 6. Indemnification. (a) Subject to the conditions set forth below, the Company and the Selling Stockholder agree to indemnify and hold harmless the Underwriters, any member of the selling group, and each of such entities' officers, directors, partners, employees, agents, and counsel, and each person, if any, who controls any one of the Underwriters or selling group members within the meaning of Section 15 of the 1933 Act or Section 20(a) of the Exchange Act, against any and all loss, liability, claim, damage, and expense whatsoever (which shall include, for all purposes of this Section 6, but not be limited to, attorneys' fees and any and all expense whatsoever incurred in investigations, preparing or defending against any litigation, commenced or threatened, or any claim whatsoever and any and all amounts paid in settlement of any claim or litigation) as and when incurred arising out of, based upon, or in connection with (i) any untrue statement or alleged untrue statement of a material fact contained (A) in any Preliminary Prospectus, the Registration Statement, or the Prospectus (as from time to time amended and supplemented), or any amendment or supplement thereto (including the 430A Information, if applicable), or (B) in any application or other document or communication (in this Section 6, collectively called an "application") in any jurisdiction in order to qualify the Shares under the "blue sky" or securities laws thereof or filed with the Commission or any securities exchange or national market system; or any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or (ii) any breach of any representation, warranty, covenant or agreement of the Company or of the Selling Stockholder contained in this Agreement. The foregoing agreement to indemnify shall be in addition to any liability the Company and the Selling Stockholder may otherwise have, including liabilities arising under this Agreement. However, (i) the Company and the Selling Stockholder shall have no liability under this Section 6 if such statement or omission was made in reliance upon and in conformity with written information furnished to the Company as stated in Section 6(b) with respect to the Underwriters by or on behalf of the Underwriters expressly for inclusion in any Preliminary Prospectus, the Registration Statement, or the Prospectus, or any amendment or supplement thereto, or in any application, as the case may be, and (ii) the liability of the Selling Stockholder under this Section 6(a) shall be limited to the proportion which the number of shares of Common Stock sold by such Selling Stockholder bears to all shares of Common Stock purchased by the Underwriters, but in no event shall the Selling Stockholder be liable under this Section 6(a) for an amount exceeding the aggregate purchase price received by the Selling Stockholder from the Underwriters for the shares sold hereunder, and (iii) the Selling Stockholder shall be liable under this Section 6(a) only if such loss, liability, claim, damage, or expense arises out of or is based upon the representations and warranties of such Selling Stockholder contained in Section 1(b) hereof. The foregoing notwithstanding, the indemnity provided for in this Section 6(a) with respect to any preliminary prospectus shall not inure to the benefit of any Underwriter or selling group member (or any person controlling such Underwriter or selling group member) from whom the person asserting such loss, claim, damage or liability purchased the Shares that are the subject thereof if such person did not receive a copy of the Prospectus (or the Prospectus, as amended or supplemented) at or prior to confirmation of the sale of the Shares to such person in any case where such delivery is required by the 1933 Act and the true statement or omission or alleged untrue statement or omission of a material fact contained in such preliminary prospectus was corrected in the Prospectus (or the Prospectus as amended or supplemented). If any action is brought against the Underwriters, any members of the selling group or any of their respective officers, directors, partners, employees, agents, or counsel, or any controlling persons of an Underwriter or selling group member (an "indemnified party") in respect of which indemnity may be sought against the Company or the Selling Stockholder (the "indemnifying party") pursuant to the foregoing paragraph, such indemnified party or parties shall promptly notify the indemnifying party or parties in writing of the institution of such action (but the failure so to notify shall not relieve the indemnifying party or parties from any liability they may have other than pursuant to this Section 6(a), and the indemnifying party or parties shall promptly assume the defense of such action, including the employment of counsel (satisfactory to such indemnified party or parties) and payment of expenses. Such indemnified party or parties shall have the right to employ its or their own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such indemnified party or parties unless the employment of such counsel shall have been authorized in writing by the indemnifying party or parties in connection with the defense of such action or the indemnifying party or parties shall not have promptly employed counsel satisfactory to such indemnified party or parties to have charge of the defense of such action or such indemnified party or parties shall have reasonably concluded that there may be one or more legal defenses available to it or them or to other indemnified parties which are different from or additional to those available to the indemnifying party or parties, in any of which events such fees and expenses shall be borne by the indemnifying party or parties which shall not have the right to direct the defense of such action on behalf of the indemnified party or parties. Anything in this paragraph to the contrary notwithstanding, the indemnifying party or parties shall not be liable for any settlement of any such claim or action effected without its or their written consent; provided, however, if a settlement is reached with such consent or if there is a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. The Company and the Selling Stockholder each agrees promptly to notify the Underwriters and the Representative of the commencement of any litigation or proceedings against the Company or the Selling Stockholder, respectively, or against any of their officers or directors in connection with the sale of the Shares, any Preliminary Prospectus, the Registration Statement, or the Prospectus, or any amendment or supplement thereto, or any application. To the extent any provision of this Section 6(a) entitles the indemnified party to reimbursement of fees and expenses, such obligations may be billed by the indemnified party monty and shall be due and payable within 10 days of the date thereof. (b) The Underwriters agree to indemnify and hold harmless the Company, each director of the Company, each officer of the Company who shall have signed the Registration Statement, each other person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act or Section 20(a) of the Exchange Act, and the Selling Stockholder to the same extent as the foregoing indemnity from the Company to the Underwriters in Section 6(a), but only with respect to statements or omissions, if any, made in any Preliminary Prospectus, the Registration Statement, or the Prospectus (as from time to time amended and supplemented), or any amendment or supplement thereto, or in any application, in reliance upon and in conformity with written information furnished to the Company as stated in this Section 6(b) with respect to the Underwriters by or on behalf of the Underwriters expressly for inclusion in any Preliminary Prospectus, the Registration Statement, or the Prospectus, or any amendment or supplement thereto, or in any application, as the case may be; provided, however, that the obligation of the Underwriters to provide indemnity under the provisions of this Section 6(b) shall be limited to the amount which represents the product of the number of Shares sold hereunder and the initial public offering price per Share set forth on the cover page of the Prospectus. For all purposes of this Agreement, the amounts of the selling concession and reallowance set forth in the Prospectus and the information under "UNDERWRITING" constitute the only information furnished in writing by or on behalf of the Underwriters expressly for inclusion in any Preliminary Prospectus, the Registration Statement, or the Prospectus (as from time to time amended or supplemented), or any amendment or supplement thereto, or in any application, as the case may be. If any action shall be brought against the Company, the Selling Stockholder or any other person so indemnified based on any Preliminary Prospectus, the Registration Statement, or the Prospectus, or any amendment or supplement thereto, or any application, and in respect of which indemnity may be sought against the Underwriters pursuant to this Section 6(b), the Underwriters shall have the rights and duties given to the Company, and the Company, the Selling Stockholder and each other person so indemnified shall have the rights and duties given to the indemnified parties, by the provisions of Section 6(a). Section 7. Contribution. In order to provide for just and equitable contribution in circumstances in which the indemnity agreement provided for in Section 6 is for any reason held to be unavailable to the Underwriters, the Company or the Selling Stockholder, then the Company and the Selling Stockholder shall contribute to the damages paid by the several Underwriters, and the several Underwriters shall contribute to the damages paid by the Company and the Selling Stockholder; provided, however, that no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. In determining the amount of contribution to which the respective parties are entitled, there shall be considered the relative benefits received by each party from the offering of the Shares (taking into account the portion of the proceeds of the offering realized by each), the parties' relative knowledge and access to information concerning the matter with respect to which the claim was asserted, the opportunity to correct and prevent any statement or omission, and any other equitable considerations appropriate in the circumstances. The Company, the Selling Stockholder and the Underwriters agree that it would not be equitable if the amount of such contribution were determined by pro rata or per capita allocation (even if the Underwriters were treated as one entity for such purpose). No Underwriter or person controlling such Underwriter shall be obligated to make contribution hereunder which in the aggregate exceeds the total public offering price of the Shares purchased by such Underwriter under this Agreement, less the aggregate amount of any damages which such Underwriter and its controlling persons have otherwise been required to pay in respect of the same or any substantially similar claim. The Selling Stockholder shall not be obligated to contribute any amount in excess of the amount by which the product of the purchase price per share of Common Stock, as set forth in Section 2 hereof, and the number of shares of Common Stock being sold by the Selling Stockholder exceeds the amount of damages which the Selling Stockholder has otherwise been required to pay in respect of the same or any substantially similar claim. The Underwriters' obligations to contribute hereunder are several in proportion to their respective underwriting obligations and not joint. For purposes of this Section 7, each person, if any, who controls an Underwriter within the meaning of Section 15 of the 1933 Act shall have the same rights to contribution as such Underwriter, and each director of the Company, each officer of the Company who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act, shall have the same rights to contribution as the Company. Anything in this Section 7 contrary notwithstanding, no party shall be liable for contribution with respect to the settlement of any claim or action effected without its written consent; provided, however, if a settlement is reached with such consent or if there is a final judgment for the plaintiff, the party liable to make contribution agrees to so contribute by reason of such settlement or judgment to the extent provided in this Section 7. This Section 7 is intended to supersede any right to contribution under the 1933 Act, the Exchange Act, or otherwise. Section 8. Representations, Warranties and Agreements to Survive Delivery. The representations, warranties, indemnities, agreements and other statements of the Company, its officers and the Selling Stockholder set forth in or made pursuant to this Agreement shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Company and the Selling Stockholder or any Underwriter or controlling person and will survive delivery of and payment for the Shares. Section 9. Effective Date of this Agreement and Termination of Agreement. (a) This Agreement shall become effective at 6:30 a.m. Pacific Time, on the first full business day following the day on which the Registration Statement becomes effective or at the time of the initial public offering of the Shares, whichever is earlier. The time of the initial public offering shall mean the time, after the Registration Statement becomes effective, of the release by you for publication of the first newspaper advertisement which is subsequently published relating to the Shares or the time, after the Registration Statement becomes effective, when the Shares are first released by you for offering by dealers by letter or telegram, whichever shall first occur. You or the Company may prevent this Agreement from becoming effective without liability of any party to any other party, except as noted below in this Section 9, by giving the notice indicated in Section 9(c) before the time this Agreement becomes effective. (b) You shall have the right to terminate this Agreement at any time prior to the Closing Date by giving notice to the Company and the Selling Stockholder (i) if there has been, since the date as of which the information is given in the Prospectus, any material adverse change in the condition (financial or otherwise), earnings, business affairs or business prospects of the Company and the Subsidiaries, taken as a whole, whether or not arising in the ordinary course of business, or (ii) if there has occurred any material adverse change in the financial markets in the United States or internationally or any outbreak of hostilities or escalation of existing hostilities or other calamity or crisis the effect of which is such as to make it, in your reasonable judgment, impracticable to market the Shares or enforce contracts for the sale of the Shares, or (iii) if trading in any securities of the Company has been suspended by the Commission, or if trading generally on either the American Stock Exchange or the New York Stock Exchange or in the over-the-counter market has been suspended, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices for securities have been required, by either of such Exchanges or by order of the Commission, any other governmental authority or the NASD, or (iv) if a banking moratorium has been declared by either federal, Arizona, Nevada or New York authorities, or (v) if there has occurred any change or development involving a prospective change in national or international political, financial or economic controls, which in your opinion is likely to have a material adverse effect on the market for the Shares. As used in this Section 9(a), the term "Prospectus" means the Prospectus in the form first used to confirm sales of the Shares. (c) If you elect to prevent this Agreement from becoming effective as provided in this Section 9, or to terminate this Agreement, you shall notify the Company and the Selling Stockholder, promptly by telephone, telex or telegram, confirmed by letter. If, as so provided, the Company elects to prevent this Agreement from becoming effective, the Company shall notify you and the Selling Stockholder by telephone, telex or telegram, confirmed by letter. If, as so provided, the Selling Stockholder elects to prevent this Agreement from becoming effective, the Selling Stockholder shall notify you and the Company by telephone, telex or telegram, confirmed by letter. (d) Anything in this Agreement to the contrary notwithstanding other than Section 9(d), if this Agreement shall not become effective by reason of an election pursuant to this Section 9 or if this Agreement shall terminate or shall otherwise not be carried out within the time specified herein by reason of any failure on the part of the Company or the Selling Stockholder to perform any covenant or agreement or satisfy any condition of this Agreement by any of them to be performed or satisfied, the sole liability of the Company to you, in addition to the obligations the Company assumed pursuant to Section 4, will be to reimburse you for such out-of-pocket expenses (including the fees and disbursements of your counsel) as shall have been incurred by you in connection with this Agreement or the proposed offer, sale and delivery of the Shares, and upon demand, the Company agrees to pay promptly the full amount thereof to you. Anything in this Agreement to the contrary notwithstanding other than Section 9(e), if this Agreement shall not be carried out within the time specified herein for any reason other than the failure on the part of the Company or the Selling Stockholder to perform any covenant or agreement or satisfy any condition of this Agreement by them to be performed or satisfied, the Company shall no liability to you other than for obligations assumed by the Company pursuant to Section 4. (e) Notwithstanding any election hereunder or any termination of this Agreement, and whether or not this Agreement is otherwise carried out, the provisions of Section 3(a), 4, 6, 7, 8 and 9 shall not be in any way affected by such election or termination or failure to carry out the terms of this Agreement or any part hereof. (f) This Agreement may also terminate pursuant to the provisions of Section 2(c) and Section 5, with the effect stated in such Sections. Section 10. Default by One or More of the Underwriters. If for any reason one or more Underwriters shall fail or refuse (otherwise than for a reason sufficient to justify the termination of this Agreement under the provisions of Section 9 hereof) to purchase and pay for the number of Shares agreed to be purchased by such Underwriter, the Company or the Selling Stockholder shall immediately give notice thereof to you, and the non- defaulting Underwriters shall have the right within 24 hours after the receipt by you of such notice, to purchase or procure one or more other Underwriters to purchase, in such proportions as may be agreed upon among you and such purchasing Underwriter or Underwriters and upon the terms herein set forth, the Shares that such defaulting Underwriter or Underwriters agreed to purchase. If the non-defaulting Underwriters fail so to make such arrangements with respect to all such Shares, the number of Shares which each non-defaulting Underwriter is otherwise obligated to purchase under the Agreement shall be automatically increased pro rata to absorb the remaining Shares that the defaulting Underwriter or Underwriters agreed to purchase; provided, however, that the non-defaulting Underwriters shall not be obligated to purchase the Shares that the defaulting Underwriter or Underwriters agreed to purchase in excess of 10% of the total number of Shares that such non-defaulting Underwriter agreed to purchase hereunder, and provided, further, that the non-defaulting Underwriters shall not be obligated to purchase any Shares that the defaulting Underwriter or Underwriters agreed to purchase if such additional purchase would cause the Underwriter to be in violation of the net capital rule of the Commission or other applicable law. If the total number of Shares that the defaulting Underwriter or Underwriters agreed to purchase shall not be purchased or absorbed in accordance with the two preceding sentences, the Selling Stockholder shall have the right, within 24 hours next succeeding the 24- hour period above referred to, to make arrangements with other underwriters or purchasers satisfactory to you for the purchase of such Shares on the terms herein set forth. In any such case, either you or the Selling Stockholder shall have the right to postpone the Closing for not more than seven business days after the date originally fixed as the Closing in order that any necessary changes in the Registration Statement, the Prospectus or any other documents or arrangements may be made. As used herein, the term "Underwriter" includes any person substituted for an Underwriter under this Section 10. If neither the non-defaulting Underwriters nor the Selling Stockholder shall make arrangements within the 24-hour periods stated above for the purchase of all the Shares that the defaulting Underwriter or Underwriters agreed to purchase hereunder, this Agreement shall be terminated without further act or deed and without any liability on the part of the Company or the Selling Stockholder to any non-defaulting Underwriter, except the Company shall be liable for actual expenses incurred by you as provided in Section 4 hereof, and without any liability on the part of any non-defaulting Underwriter to the Selling Stockholder. Nothing contained herein shall relieve any defaulting Underwriter of its liability, if any, to the Selling Stockholder or to the remaining Underwriters for damages occasioned by its default hereunder. Section 11. Default by the Selling Stockholder. If the Selling Stockholder shall fail at the Closing Date to sell and deliver the number of Shares that she is obligated to sell, then this Agreement shall terminate without any liability on the part of any non-defaulting party except to the extent provided in Section 4 and except that the provisions of Sections 7 and 8 shall remain in effect. No action taken pursuant to this Section shall relieve the Selling Stockholder from liability, if any, in respect of such default. Section 12. Notices. All notices and other communications under this Agreement shall be in writing and shall be deemed to have been duly given if delivered, mailed or transmitted by any standard form of telecommunication (notices transmitted by telecopier to be promptly confirmed in writing). Notices to you or the Underwriters shall be directed to you at Suite 100, 18301 Von Karman, Irvine, California 92715, attention of Walter Cruttenden, III; notices to the Company shall be directed to the Company at 2727 North Central Avenue, Phoenix, Arizona 85004, attention of Gary V. Klinefelter; and notices to the Selling Stockholder shall be directed to the Selling Stockholder c/o Grover T. Wickersham, P.C., 430 Cambridge Avenue, Suite 100, Palo Alto, California 94306, attention of Grover T. Wickersham. Section 13. Parties. This Agreement is made solely for the benefit of the several Underwriters, the Selling Stockholder and the Company and, to the extent expressed, any person controlling the Company, the Selling Stockholder or any of the Underwriters, and directors of the Company, the Selling Stockholder, their officers who have signed the Registration Statement, and their respective executors, administrators, successors and assigns and, subject to the provisions of Section 10, no other person shall acquire or have any right under or by virtue of this Agreement. The term "successors and assigns" shall not include any purchaser, as such purchaser, from any of the several Underwriters of the Shares. All of the obligations of the Underwriters hereunder are several and not joint. Section 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA. SPECIFIED TIMES OF THE DAY REFER TO PACIFIC TIME. Section 15. Counterparts. This Agreement may be executed in one or more counterparts and, when a counterpart has been executed by each party, all such counterparts taken together shall constitute and the same agreement. If the foregoing is in accordance with your understanding of our agreement, please sign and return to us a counterpart hereof, whereupon this instrument will become a binding agreement among the Company, the Selling Stockholder and the several Underwriters in accordance with its terms. Very truly yours, AMERCO By: ____________________________________ Name: Title: _________________________________________ Sophia M. Shoen Confirmed and accepted as of the date first above written: CRUTTENDEN & COMPANY By: Name: Title: SCHEDULE A Number of Shares Underwriter to be Purchased ----------- --------------- Cruttenden & Company . . . . . . . . . . . Total . . . . . . . . . . . . . . . . 500,000 ======= Exhibit A AMERCO SUBSIDIARIES 500,000 Shares AMERCO Common Stock AGREEMENT AMONG UNDERWRITERS ________________, 1994 Cruttenden & Company 18301 Von Karman, Suite 100 Irvine, California 92715 Gentlemen: We wish to confirm our agreement with you with respect to the several purchases from Sophia M. Shoen, an individual residing in the State of Arizona (the "Selling Stockholder) by you and the other Underwriters hereinafter referred to, including ourselves, of an aggregate of 500,000 shares of Common Stock (the "Shares") of AMERCO, a Nevada corporation (the "Company") and with respect to the offering of the Shares. The Selling Stockholder proposes to offer and sell the Shares pursuant to the registration provisions of the Securities Act of 1933, as amended (the "Act") and on the terms set forth in an Underwriting Agreement dated _______________, 1994 (the "Underwriting Agreement") by and among the Company, the Selling Stockholder and the Underwriters (the offering of the Shares to the public in the manner contemplated by the Underwriting Agreement being referred to herein as the "Public Offering"). The Shares are subject to a registration statement which has been filed with the Securities and Exchange Commission (the "Commission") under the Act and which is more particularly described in the Underwriting Agreement. One or more amendments to or supplements of such registration statement have been or may be filed in which, with our consent hereby given, we have been or will be named as one of the Underwriters of the Public Offering of the Shares. The registration statement and the prospectus have been and may be further amended or supplemented, but no such amendment or supplement shall release or affect our obligations hereunder or under the Underwriting Agreement. The registration statement and the prospectus constituting a part thereof, including all documents incorporated by reference therein, as amended and supplemented from time to time in accordance with the Act, are hereinafter respectively referred to as the "Registration Statement" and the "Prospectus." The Registration Statement has not yet become effective under the Act. 1. Underwriting Agreement. Annexed hereto is a copy of the proposed Underwriting Agreement with the Company and the Selling Stockholder providing for the purchase from the Selling Stockholder by each Underwriter, severally, of the respective number of Shares set forth opposite its name on Schedule I hereto, subject to increase as provided in Section 10 of the Underwriting Agreement upon certain defaults by Underwriters. The term "Underwriting Commitment" with respect to any Underwriter shall refer to the number of Shares which such Underwriter will be obligated to purchase as shown on Schedule I and pursuant to the provisions of the Underwriting Agreement. It is understood that changes may be made in those who are to be Underwriters and in the respective numbers of Shares to be purchased by the Underwriters but that the number of Shares to be purchased by us as set forth herein will not be changed without our consent, subject to Section 10 of the Underwriting Agreement. 2. Authority of Representative. We authorize you, as Representative of the several Underwriters, (i) to enter into an agreement substantially in the form of the Underwriting Agreement annexed hereto; (ii) to act as our representative in all matters concerning the Underwriting Agreement, this Agreement and the sale and distribution of the Shares thereunder; (iii) to exercise all authority vested in the Underwriters or the Representative by the Underwriting Agreement; and (iv) to take such action as you may deem necessary or advisable in respect of all matters pertaining thereto, including the determination of the time of the initial public offering and of the information to be included in the Prospectus with respect to the terms of the Public Offering. We understand that you will advise us when the Shares are released for offer and sale to the public. We authorize you to reserve for sale and to sell for our account (a) to institutions and other retail purchasers and (b) to dealers selected by you ("Selected Dealers"), including Underwriters, such numbers of Shares to be purchased by us as hereinafter provided as you determine, and we authorize you to fix the concessions and reallowances in connection with any such sales to Selected Dealers. Such concessions and reallowances may be allowed only as consideration for services rendered in distribution and in accordance with the form of Selected Dealers Agreement annexed hereto. Except for sales for the accounts of Underwriters designated by a purchaser, aggregate sales of the Shares to institutions and other retail purchasers will be made for the accounts of the several Underwriters as nearly as practicable in proportion to the respective Underwriting Commitments. Sales of the Shares to Selected Dealers will be made for the accounts of the several Underwriters in such proportion as you determine. We authorize you in your discretion, after the Shares are released for sale to the public, to change the public offering price of the Shares, the concessions and reallowances in connection with the sales to Selected Dealers and other terms of sale hereunder and under the agreements with Selected Dealers. Sales of Shares between Underwriters may be made with your prior consent, or as you deem advisable for Blue Sky purposes. At or prior to the time when the Shares are released for sale, you will advise us of the numbers of Shares so sold or reserved for sale for our account. We will retain for direct sale any Shares purchased by us and not sold or reserved for sale for our account. With your consent, we may obtain release from you for direct sale of Shares reserved for sale to Selected Dealers but not sold and paid for, in which event the number of Shares reserved for our account for sale Selected Dealers shall be correspondingly reduced. After advice from you that the Shares are released for sale to the public, we will offer for sale to the public in conformity with the terms of the offering set forth in the Prospectus such of our Shares as you advise us are not sold or reserved for sale for our account. We will advise you, from time to time, at your request, of the number of Shares retained by us remaining unsold. You may at any time (a) reserve any of such Shares for sale by you for our account or (b) purchase any of such Shares which, in your opinion, are needed to enable you to make deliveries for the accounts of several Underwriters pursuant to this Agreement. Such purchases will be made at the public offering price or, at your option, at such price less any part of the Selected Dealers' concession. In respect of any Shares sold directly by us and thereafter purchased by you at or below the initial public offering price prior to the termination of this Agreement (or such longer period as may be necessary to cover any short position with respect to the Public Offering), you may charge our account with an amount equal to the Selected Dealers' concession with respect thereto and credit such amount against the cost thereof, or you may require us to purchase such Shares at a price equal to the total cost thereof, including any commissions and transfer taxes on redelivery. 3. Stabilization and Trading in Shares. We authorize you, at any time prior to the termination of this Agreement, in your discretion (a) to make purchases and sales of the Shares of the Company in the open market or otherwise, either for long or short account, and on such terms and at such prices as you may determine and (b) in arranging for sales of the Shares, to over-allot, and to make purchases for the purpose of covering any over- allotment so made; provided, however, that at no time will the aggregate of our net commitments resulting from such purchases and sales and over- allotments whether for long or short account, exceed 10% of our Underwriting Commitment. We agree to take up at cost on demand any of the Shares of the Company so purchased for our account and to deliver on demand any of the Shares so sold for our account. Without limiting the generality of the foregoing, you may buy or take over for the accounts of the several Underwriters, at the price at which reserved, any Shares of any Underwriter reserved for sale by you, but not purchased and paid for. We understand that, in the event that you effect stabilization pursuant to this Section, you will notify us promptly of the date and time when the first stabilizing purchase is effected and the date and time when stabilizing is terminated. We agree (and such agreement will survive the termination of this Agreement) to comply with all requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations thereunder, with respect to notification and keeping of records of stabilizing transactions and that, if stabilizing is effected, we will file with you, for filing with the Commission, duplicate original copies of a "not as manager" report on Form X-17A-1 not later than five business days following the day on which stabilizing is terminated. Except as permitted by you, we will not bid for, purchase, attempt to induce others to purchase, sell, directly or indirectly, any Shares other than by (a) the purchase and sale of Shares as provided in the Underwriting Agreement, this Agreement or the agreements with Selected Dealers, (b) the purchase from or sale to other Underwriters or Selected Dealers of Shares at the public offering price or at such price less any part of the Selected Dealers' concession, and (c) as brokers pursuant to unsolicited orders. We confirm that we have and agree that we will at all times comply with the provisions of Rule 10b-6 of the Commission under the Exchange Act applicable to the Public Offering. 4. Delivery and Payment. At your request, we will furnish you with funds in an amount equal to the public offering price, less the Selected Dealers' concession, of either our Shares or our unreserved Shares, as you may direct, and we will authorize you to make payment therewith pursuant to the provisions of the Underwriting Agreement. Such payment will be credited to our account. You may, in your discretion, make such payment on our behalf with your own funds, in which event we will reimburse you on request. If and when you receive payment for our reserved Shares sold for our account, you will remit to us the purchase price paid by us for such Shares (if any) and debit or credit, as appropriate, our account with the difference between the sale price and the purchase price of such Shares. You will promptly deliver to us any Shares purchased by us and not sold or reserved for sale by you. You may, in your discretion, deliver such Shares to us through the facilities of the Depository Trust Company if we are a member or, if we are not a member, through our ordinary correspondent who is a member, unless we promptly give you written instructions otherwise. All other Shares which you then hold for our account will be delivered to us upon termination of this Agreement, or prior thereto in your discretion, and may at any time be delivered to us for carrying purposes only, subject to redelivery upon demand. If upon termination of this Agreement, an agreement of not to exceed 50,000 shares remains unsold out of the Shares reserved by you pursuant to Section 2 hereof, you may, in your discretion, sell such Shares at such prices as you may determine. We authorize you, in connection with the purchase, distribution and resale of the Shares to advance your own funds for our account (in which event we will reimburse you on request), charging current interest rates, or to arrange loans for our account and execute on our behalf any note in connection therewith, and to hold or pledge all or any part of our Shares as security therefor. Any lender is hereby authorized to accept your instructions with respect thereto. You will promptly remit to us or credit to our account (a) the proceeds from any loan made on our behalf and (b) upon payment to you for any Shares sold for our account, an amount equal to the sale price of such Shares received by you, less transfer taxes (if any) and expenses. 5. Underwriter Undertakings. We will not make any representations concerning the Shares other than those set forth in the Company's then current Prospectus and will offer and sell the Shares in conformity with the terms of the offering set forth in the Prospectus. By accepting this Agreement, we (i) acknowledge our understanding of (a) Section 1 of Article III of the Rules of Fair Practice of the National Association of Securities Dealers, Inc. (the "Association") and the interpretations of such Section promulgated by the Board of Governors of the Association (the "Interpretations") including, but not limited to the Interpretation with respect to Free-Riding and Withholding, (b) Rule 174 of the Rules and Regulations promulgated under the Act and Rules 10b-5 and 10b-6 promulgated under the Exchange Act, (c) Release No. 3907 under the Act, (d) Release No. 4150 under the Act and (e) Sections 8, 24, 25, and 36 of Article III of the Rules of Fair Practice of the Association and the Interpretations of such Sections promulgated by the Board of Governors of the Association; and (ii) represent, warrant, covenant and agree that we will comply with all applicable requirements of the Act and the Exchange Act in addition to the specific provisions cited at subparagraph (i) of this Paragraph 5, and that we will not violate, directly or indirectly, any provision of applicable law in connection with our participation in the Public Offering of the Shares. By accepting this Agreement, we agree to comply with all applicable federal laws including, but not limited to, the Act and the Exchange Act and Rules and Regulations of the Commission thereunder; the Constitution and all applicable federal laws; the laws of the states or other jurisdictions in which the Shares may be offered or sold by us; and the Constitution, Bylaws and Rules of Fair Practice of the Association. Further, we agree that we will not offer or sell the Shares in any state or jurisdiction except those in which the Shares have been qualified or qualification is not required. We acknowledge we will not be entitled to any compensation hereunder for any period during which we have been suspended or expelled from membership in the Association. Upon completion of billing of the Public Offering, we will furnish to you one copy of an executed Territorial Distribution Questionnaire and one copy of a full and complete list of all record and beneficial owners (if known) of the Shares sold by us. 6. Employees and other Representatives. By accepting this Agreement, we assume full responsibility for thorough and proper training of our employees and other agents and representatives concerning the selling methods to be used in connection with the Public Offering of the Shares, giving special emphasis to the principles of full and fair disclosure to prospective investors and the prohibitions against "Free-Riding and Withholding" as set forth by the Interpretation of the Board of Governors to Section 1 of Article III of the Rules of Fair Practice of the Association. 7. Termination and Settlement. This Agreement will terminate (a) at the close of business on the thirtieth day after the date of the Underwriting Agreement; or (b) on such earlier or later date, not more than 30 days after the date specified in (a), as you may determine; or (c) on the date of termination of the Underwriting Agreement, if the same shall be terminated as provided by its terms. Upon termination of this Agreement, all authorizations, rights and obligations hereunder will cease, except (a) the mutual obligation to settle accounts hereunder, (b) our obligation to pay any claims referred to in the last paragraph of this Section 7, (c) the obligations with respect to indemnity set forth in Section 8 hereof (all obligations of which will continue until fully discharged), and (d) our obligation with respect to purchases which may be made by you from time to time thereafter to cover any short position with respect to the Public Offering, all of which will continue until fully discharged, and except your authority with respect to matters to be determined by you, or by you and the Company or the Selling Stockholder, pursuant to the terms of the Underwriting Agreement, which will survive the termination of this Agreement. The accounts arising pursuant to this Agreement will be settled and paid as soon as practicable after termination. The determination by you of the amounts to be paid to or by us will be final and conclusive. Notwithstanding any settlement upon the termination of this Agreement, we will pay our proportionate share of any amount asserted against and discharged by the Underwriters, or any of them, based upon the claim that the Underwriters constitute an association, unincorporated business or other separate entity, or based upon or arising out of a claim that this Agreement or the Underwriting Agreement is invalid or illegal for any reason, including any expense incurred in defending against such claim, and will pay any transfer taxes which may be assessed thereafter on account of any sale or transfer of Shares for our account. 8. Indemnity and Contribution. Each Underwriter, including ourselves, agrees to indemnify, hold harmless and reimburse each other Underwriter, each person who controls any other Underwriter within the meaning of Section 15 of the Act, and any successor of any other Underwriter, all if and to the extent that each Underwriter will be obligated in the Underwriting Agreement to indemnify, hold harmless and reimburse the Company, each of its directors, each of its officers who signed the Registration Statement, each person, if any, who controls the Company within the meaning of the Act, and the Selling Stockholder. Each Underwriter (including ourselves) will pay upon request, as contribution, its proportionate share, based upon its Underwriting Commitment, of any and all losses, claims, damages or liabilities, joint or several, paid or incurred by any Underwriter to any person other than an Underwriter arising out of or based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, the Prospectus or any other related preliminary prospectus or any other selling or advertising material approved by you for use by the Underwriters in connection with the sale of the Shares, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein not misleading (other than an untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with written information furnished to the Company by an Underwriter specifically for use therein); and will pay such proportionate share of any legal or other expenses reasonably incurred by you or with your consent in connection with investigating or defending any such loss, claim, damage or liability, or any action in respect thereof. In determining the amount of any Underwriter's obligation under this paragraph, appropriate adjustment may be made by you to reflect any amounts received by any one or more Underwriters in respect of such claim from the Company, pursuant to Sections 6 and 7 of the Underwriting Agreement or otherwise. There will be credited against any amount paid or payable by us pursuant to this paragraph, any loss, damage, liability or expense which is incurred by us as a result of any such claim asserted against us, and if such loss, claim, damage, liability or expense is incurred by us subsequent to any payment by us pursuant to this paragraph, appropriate provision will be made to effect such credit, by refund or otherwise. If any such claim is asserted, you may take such action in connection therewith as you deem necessary or desirable, including retention of counsel to the Underwriters, and in your discretion separate counsel for any particular Underwriter or group of Underwriters, and the fees and disbursements of counsel so retained by you, including fees and disbursements for a successful defense, will be included in the amounts payable pursuant to this paragraph. In determining amounts payable pursuant to this paragraph, any loss, claim, damage, liability or expenses incurred by any person controlling any Underwriter within the meaning of Section 15 of the Act or Section 20 of the Exchange Act which has been incurred by reason of such control relationship will be deemed to have been incurred by such Underwriter. Any Underwriter may elect to retain at its own expense its own counsel. You may settle or consent to the settlement of any such claim, on advise of counsel retained by you, with the approval of a majority in interest of the Underwriters. Whenever you receive notice of the assertion of any claim to which the provisions of this paragraph would be applicable, you will give prompt notice thereof to each Underwriter. You will also furnish each Underwriter with periodic reports as to the status of such claim and the action taken by you in connection therewith. If any Underwriter or Underwriters default in their obligations to make any payment under this paragraph, each non-defaulting Underwriter will be obligated to pay its proportionate share of all defaulted payments, based upon such Underwriter's Underwriting Commitment as related to the Underwriting Commitments of all non-defaulting Underwriters. Any Underwriter or Underwriters defaulting in their obligations shall be liable for all losses, claims, damages, liabilities, costs and attorneys fees paid or incurred by any Underwriter in collection of the defaulted payments from the defaulting Underwriter. 9. Position of Representative. In taking any action under this Agreement, you will act only as agent of the Underwriters and will be under no liability to us, except for lack of good faith, for obligations expressly assumed by you in this Agreement and for any liability imposed by the Act. 10. Miscellaneous. The Underwriting Agreement provides that the obligations of the Underwriters thereunder are subject to the condition that the Registration Statement, as defined therein, shall have become effective not later than 6:00 p.m., Pacific Time, on the date of the Underwriting Agreement. You are hereby authorized, in your discretion, to extend such date to any subsequent date and to execute on our behalf any supplementary agreement that may be necessary for such purpose. With respect to the Underwriting Agreement, you are also authorized in your discretion to postpone any date specified therein, and to exercise any right of cancellation or termination. Default by any other Underwriter with respect to the Underwriting Agreement will release us from any of our obligations thereunder and hereunder only if the Underwriting Agreement in thereupon terminated in accordance with its terms. If one or more Underwriters default under the Underwriting Agreement, you may arrange for the purchase by others, including non-defaulting Underwriters, of Shares not taken up by the defaulting Underwriter or Underwriters. Nothing herein contained will constitute the Underwriters a partnership, association or separate entity, and the obligations of ourselves and of each of the other Underwriters are several and not joint. If for Federal income tax purposes the Underwriters should be deemed to constitute a partnership, then each Underwriter elects to be excluded from the application of Subchapter K, Chapter 1, Subtitle A, of the Internal Revenue Code of 1986, as amended. You, as Representative of the Underwriters, are authorized, in your discretion, to execute on behalf of the Underwriters, such evidence of such election as may be required by the Internal Revenue Service. We authorize you to file with any governmental agency any reports required to be filed by you in connection with the transactions contemplated by this Agreement or the Underwriting Agreement, and we will furnish any information in our possession needed for such reports. You do not assume any responsibility or obligation as to our right to sell the Shares in any jurisdiction, notwithstanding any information you may furnish in that connection. We will not advertise over our name until after the first public advertisement made by you and then only at our own expense and risk. We authorize you to exercise complete discretion with regard to the first public advertisement. You will not be under any duty to account for any interest on our funds at any time in your hands. We hereby confirm that (i) we have examined the Registration Statement, (ii) we are familiar with the information contained therein and that insofar as it relates to us, it is correct and is not misleading and (iii) we are willing to accept the responsibilities under the Act of an Underwriter named in such Registration Statement. You are authorized, in your discretion, on our behalf, to approve of or to object to any further amendments or supplements to the Registration Statement. We agree that we will deliver all preliminary and final prospectuses required for compliance with the provisions of Rule 15c2-8 under the Exchange Act. Any notice form you to us will be deemed to have been duly given if mailed, telexed or sent by facsimile or other written communication to us at the address set forth in our Underwriters' Questionnaire addressed to the Company. Any notice to you will be deemed to have been duly given if mailed, telexed or sent by facsimile or other written communication to you at Cruttenden & Company, Inc., Suite 100, 18301 Von Karman, Irvine, California 92715. This Agreement will be governed by and construed in accordance with the laws of the State of California. This Agreement embodies the entire agreement and underwriting between us and supersedes all prior agreements and understandings related to the subject matter hereof, and this Agreement may not be modified or amended or any term or provision hereof waived or discharged except in writing signed by the party against whom such amendment, modification, waiver or discharge is sought to be enforced. All the terms of this Agreement, whether so expressed or not, shall be binding upon the respective successors and assigns of the parties hereto (in respect of "successors and assigns," reference is made to Section 13 of the Underwriting Agreement) and shall inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns, provided, however, that neither party hereto can assign this Agreement or any of its rights hereunder without the prior written consent of the other party hereto, and any such attempted assignment or transfer without the other party's prior written consent shall be void and without force or effect. The headings of this Agreement are for purposes of reference only and shall not limit or otherwise affect the meaning hereof. Very truly yours, By __________________________________ As Attorney-in-Fact for each of the several Underwriters named in Schedule I annexed hereto Confirmed the day and year first above written. CRUTTENDEN & COMPANY, as Representative of the several Underwriters By _______________________________________ Title _____________________________________ SCHEDULE I UNDERWRITING Under the terms and subject to the conditions contained in the Underwriting Agreement, the Selling Stockholder has agreed to sell to each of the Underwriters for whom Cruttenden & Company is acting as Representative, and the Underwriters have severally agreed to purchase from the Selling Stockholder, the number of shares of Common Stock set forth opposite their respective names: Number of Underwriter Shares - -------------------- --------- Cruttenden & Company _________ Total 500,000 The nature of the obligations of the Underwriters is such that if any of the Shares are purchased, all of them must be purchased. The Underwriters propose to offer the Shares to the public at the price set forth on the cover page of the Prospectus and to dealers at such price less a concession not in excess of $____ per share. After the initial public offering, the public offering price and concessions may be changed by the Representative. DRAFT DATED AUGUST 20, 1994 SELECTED DEALERS AGREEMENT PUBLIC OFFERING OF 500,000 Shares of Common Stock Offering Price of $____ per Share AMERCO ________________, 1994 Cruttenden & Company (the "Representative") has severally agreed with AMERCO, a Nevada corporation (the "Company") and Sophia M. Shoen (the "Selling Stockholder") to purchase from the Selling Stockholder 500,000 shares ("Shares") of common stock, $0.25 par value (the "Common Stock") of the Company. We are offering the Shares to the public at an offering price of $______ per Share. Certain other capitalized terms used herein are defined in the Underwriting Agreement and are used herein as therein defined. The Representative is offering the Shares to certain selected dealers (the "Selected Dealers"), when, as and if accepted by us and subject to withdrawal, cancellation or modification of the offer without notice and further subject to the terms of (i) the Company's current Prospectus, (ii) the Underwriting Agreement, (iii) this Agreement, and (iv) the Representative's instructions which may be forwarded to the Selected Dealer from time to time. A copy of the Underwriting Agreement will be delivered to you forthwith for inspection or copying or both, upon your request therefor. This invitation is made by the Representative only if the Shares may be offered lawfully to dealers in your state. The further terms and conditions of this invitation are as follows: 1. Acceptance of Orders. Orders received by us from the Selected Dealer will be accepted only at the price, in the amounts and on the terms which are set forth in the Company's current Prospectus, subject to allotment in the Representative's uncontrolled discretion. We reserve the right to reject any orders, in whole or in part. 2. Selling Concession. As a Selected Dealer, you will be allowed on all Shares purchased by you, which we have not repurchased or contracted to repurchase prior to termination of this Agreement at or below the initial public offering price, a concession of ___% of the full __% Underwriting discount, i.e., $__ per Share as shown in the Company's current Prospectus. No selling concession will be allowed to any domestic broker-dealer who is not a member of the National Association of Securities Dealers, Inc. (the "Association") or to any foreign broker-dealer eligible for membership in the Association who is not a member of the Association. Payment of such selling concession to you will be made only as provided in Section 4 hereof. After the Shares are released for sale to the public, the Representative is authorized to, and may, change the initial public offering price and the selling concession. 3. Reoffer of Shares. Shares purchased by you are to be bona fide reoffered by you in conformity with this Agreement and the terms of offering set forth in the Prospectus. You agree that you will not bid for, purchase, attempt to induce others to purchase or sell, directly or indirectly, any Shares except as contemplated by this Agreement and except as a broker pursuant to unsolicited orders. You confirm that you have complied and agree that you will at all times comply with the provisions of Rule 10b-6 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") applicable to this offering. In respect of Shares sold by you and thereafter purchased by us at or below the initial public offering price prior to the termination of this Agreement as described hereinafter (or such longer period as may be necessary to cover any short position with respect to the offering), you agree at our option either to repurchase the Shares at a price equal to the cost thereof to us, including commissions and transfer taxes on redelivery, or to repay us such part of your Selected Dealers' concessions on such Shares as we designate. 4. Payment for Shares. Payment for the Shares purchased by you is to be made at the net Selected Dealers' price of $___ per Share, at the office of Cruttenden & Company, Suite 100, 18301 Von Karman, Irvine, California 92715, at such time and on such date as we may designate, by certified or official bank check, payable in clearing house funds to the order of Cruttenden & Company, against delivery of certificates for the Shares so purchased. If such payment is not made at such time and on such date, you agree to pay Cruttenden & Company interest on such funds at the current interest rates. We may in our discretion deliver the Shares purchased by you through the facilities of the Depository Trust Company or, if you are not a member, through your ordinary correspondent who is a member, unless you promptly give us written instructions otherwise. 5. Offering Representations. We have been informed that a Registration Statement in respect of the Shares is expected to become effective under the Securities Act of 1933, as amended (the "1933 Act"). You are not authorized to give any information or to make any representations other than those contained in the Prospectus or to act as agent for the Company or for the undersigned when offering the Shares to the public or otherwise. 6. Blue Sky. We do not assume any responsibility or obligations as to your right to sell the Shares in any jurisdiction, notwithstanding any information we may furnish in that connection. The Selected Dealer shall report in writing to the Representative the number of Shares which have been sold by it in each state and the number of transactions made in each such state. This state report shall be submitted to the Representative as soon as possible after completion of billing, but in any event not more than three days after the closing. 7. Dealer Undertakings. By accepting this Agreement, the Selected Dealer in offering and selling the Shares in the Public Offering (i) acknowledges its understanding of (a) Section 1 of Article II of the Rules of Fair Practice (the "Rules") of the Association and the interpretations of such Rules promulgated by the Board of Governors of the Association (the "Interpretations") including, but not limited to the Interpretation with respect to "Free-Riding and Withholding" defined therein, (b) Rule 174 of the rules and regulations promulgated under the 1933 Act, (c) Rules 10b-5 and 10b-6 promulgated under the Exchange Act, (d) Release No. 3907 under the 1933 Act, (e) Release No. 4150 under the 1933 Act and (f) Sections 8, 24, 25 and 36 of Article III of the Rules and Interpretations, and (ii) represents, warrants, covenants and agrees that it shall comply with all applicable requirements of the 1933 Act and the Exchange Act in addition to the specific provisions cited in subparagraph (i) above and that it shall not violate, directly or indirectly, any provision of applicable law in connection with its participation in the Public Offering of the Shares. 8. Conditions of Public Offering. All sales shall be subject to delivery by the Company and Selling Stockholder of certificates evidencing the Shares against payment therefor. 9. Failure of Order. If an order is rejected or if a payment is received which proves insufficient or worthless, any compensation paid to the Selected Dealer shall be returned by (i) restoration by the Representative to the Selected Dealer of the latter's remittance or (ii) a charge against the account of the Selected Dealer with the Representative, as the latter may elect without notice being given of such election. 10. Additional Representations, Covenants and Warranties of Selected Dealer. By accepting this Agreement, the Selected Dealer represents that it is registered as a broker-dealer under the Exchange Act; is qualified to act as a dealer in the states or the jurisdictions in which it shall offer the Shares; is a member in good standing of the Association; and shall maintain such registrations, qualifications and membership in full force and effect and in good standing throughout the term of this Agreement. If the Selected Dealer is not a member of the Association, it represents that it is a foreign dealer not registered under the Exchange Act and agrees to make no sales within the United States, its territories or its possessions or to persons who are citizens thereof or residents therein, and in making any sales, to comply with the Association's Interpretation with respect to Free- Riding and Withholding. Further, the Selected Dealer agrees to comply with all applicable federal laws including, but not limited to, the 1933 Act and the Exchange Act and the rules and regulations of the Commission thereunder; the laws of the states or other jurisdictions in which Shares may be offered or sold by it; and the Constitution, Bylaws and Rules of Fair Practice of the Association. Further, the Selected Dealer agrees that it will not offer or sell the Shares in any state or jurisdiction except those in which the Shares have been qualified or qualification is not required. The Selected Dealer acknowledges its understanding that it shall not be entitled to any compensation hereunder for any period during which it has been suspended or expelled from membership in the Association. 11. Employees and other Agents of the Selected Dealer. By accepting this Agreement, the Selected Dealer assumes full responsibility for thorough and proper training of its employees and other agents and representatives concerning the selling methods to be used in connection with the Public Offering of the Shares, giving special emphasis to the principles of full and fair disclosure to prospective investors and the prohibitions against "Free-Riding and Withholding" as set forth in the Rules and Interpretation of the Board of Governors to Section 1 of Article III of the Rules of Fair Practice of the Association. 12. Indemnification by the Company. The Company and the Selling Stockholder have agreed in Section 6 of the Underwriting Agreement to indemnify and hold harmless the Underwriters, including the Representative, and members of the selling group and each person, if any, who controls the Underwriters and any selling group member within the meaning of Section 15 of the 1933 Act or Section 20(a) of the Exchange Act, against any and all loss, liability, claim, damage and expense (including reasonable legal and other expenses incurred by such Underwriter, each such selling group member and such controlling persons in connection with defending or investigating, any such claims or liabilities, and any and all amounts paid in settlement of any claim or litigation), which the Underwriter, selling group member or controlling persons may incur arising out of, based upon, or in connection with (i) any untrue statement or alleged untrue statement of a material fact contained (A) in any Preliminary Prospectus, the Registration Statement, or the Prospectus, or any amendment or supplement thereto, or (B) in any application or other document or communication (in this Section 12, collectively called an "application") executed by or on behalf of the Company or the Selling Stockholder or based upon written information furnished by or on behalf of the Company or the Selling Stockholder filed in any jurisdiction in order to qualify the Shares under the "blue sky" or securities laws thereof or filed with the Commission or any securities exchange or national market system; or any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, unless such statement or omission was made in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Underwriters in the manner contemplated by Sections 6 and 7 of the Underwriting Agreement expressly for inclusion in the Preliminary Prospectus, the Registration Statement, or the Prospectus, or any amendment or supplement thereto, or in any application, as the case may be, or (ii) any breach of any representation, warranty, covenant, or agreement of the Company or the Selling Stockholder contained in the Underwriting Agreement. The Representative has agreed to give the Company an opportunity and the right to participate in the defense or preparation of the defense of any action brought against the Underwriters, any selling group member or any controlling person thereof to enforce any such loss, claim, demand, liability or expense. The agreement of the Company under this indemnity is conditioned upon notice of any such action having been promptly given by the indemnified party to the Company. Failure to notify the Company as provided in the Underwriting Agreement shall not relieve the Company of its liability which it may have to the Underwriters, any selling group member or any controlling person thereof other than pursuant to Sections 6 and 7 of the Underwriting Agreement. This agreement is subject in all respects, especially insofar as the foregoing description of the indemnification provisions set forth in the Underwriting Agreement, a copy of which will be made available for inspection or copying or both to the Selected Dealer upon written request to the Representative therefor. 13. Indemnification by the Selected Dealer. The Selected Dealer shall indemnify and hold harmless the Representative and the Company and each person, if any, who controls the Representative or the Company within the meaning of Section 15 of the 1933 Act, and the Selling Stockholder from and against any and all losses, claims, damages or liabilities to which the Company, the Selling Stockholder or the Representative may become subject under the 1933 Act or otherwise, but only insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon information contained in the Registration Statement, Prospectus or other documents filed with the Commission or in any Blue Sky Application to the extent such information is supplied by the Selected Dealer to the Representative or the Company for inclusion therein, or are based upon alleged misrepresentations or omissions to state material facts in connection with statements made by the Selected Dealer or the Selected Dealer's employees or other agents to the Company, the Selling Stockholder or the Representative orally or by any other means; and the Selected Dealer shall reimburse the Company, the Selling Stockholder and the Representative for any legal or other expenses reasonably incurred by them in connection with the investigation of or the defense of any such action or claim. The Representative shall, after receiving the first summons or other legal process disclosing the nature of the 1933 Action being brought against it, the Company or the Selling Stockholder in any proceeding with respect to which indemnity may be sought by the Company, the Selling Stockholder or the Representative hereunder, notify promptly the Selected Dealer in writing of the commencement thereof; and the Selected Dealer shall be entitled to participate in (and, to the extent the Selected Dealer shall wish, to direct) the defense thereof at the expense of the Selected Dealer, but such defense shall be conducted by counsel satisfactory to the Company and the Representative. If the Selected Dealer shall fail to provide such defense, the Company, the Selling Stockholder or the Representative may defend such action at the cost and expense of the Selected Dealer. The Selected Dealer's obligation under this Section 13 shall survive any termination of this Agreement, the Underwriting Agreement and the delivery of and payment for the Shares under the Underwriting Agreement, and shall remain in full force and effect regardless of the investigation made by or on behalf of any Representative within the meaning of Section 15 of the 1933 Act. 14. No Authority to Act as Partner or Agent. Nothing herein shall constitute the Selected Dealers as an association or other separate entity or partners with or agents of the Representative or with each other, but each Selected Dealer shall be responsible for its pro rata share of any liability or expense based upon any claims to the contrary. The Representative shall not be under any liability for or in respect of the value, validity or form of the Shares, or the delivery of certificates for the Shares or the performance by any person of any agreement on its part, or the qualification of the Shares for sale under the laws of any jurisdiction, or for or in respect of any matter in connection with this Agreement, except for the lack of good faith and for obligations expressly assumed by the Representative in this Agreement. 15. Expenses. No expenses incurred in connection with offers and sales of the Shares under the Public Offering will be chargeable to the Selected Dealers. A single transfer tax, if any, on the sale of Shares by the Selected Dealer to its customers will be paid when such Shares are delivered to the Selected Dealer for delivery to its customers. Notwithstanding the foregoing, the Selected Dealer shall pay its proportionate share of any transfer tax or any other tax (other than the single transfer tax described above) if any such tax shall at any time be assessed against the Representative and other Selected Dealers. 16. Notices. All notices, demands or requests required or authorized hereunder shall be deemed given sufficiently if in writing and sent by registered or certified mail, return receipt requested and postage prepaid, or by tested telex, telegram, cable or facsimile to, in the case of the Representative, the address set forth above, directed to the attention of the President, and in the case of the Selected Dealer, to the address provided below by the Selected Dealer, directed to the attention of the President. 17. Termination. This Agreement may be terminated by the Representative with or without cause upon written notice to the Selected Dealer to such effect; and such notice having been given, this Agreement shall terminate at the time specified therein. Additionally, this Agreement shall terminate upon the earlier of the termination of the Underwriting Agreement, or at the close of Business thirty days after the Shares are released by us for sale to the public. 18. General Provisions. This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of California. This Agreement embodies the entire agreement and understanding between the Representative and the Selected Dealer and supersedes all prior agreements and understandings related to the subject matter hereof, and this Agreement may not be modified or amended or any term or provision hereof waived or discharged except in writing signed by the party against whom such amendment, modification, waiver or discharge is sought to be enforced. All the terms of this Agreement, whether so expressed or not, shall be binding upon, and shall inure to the benefit of, the respective successors, legal representatives and assigns of the parties hereto; provided, however, that neither party hereto may assign this Agreement or any of its rights hereunder without the prior written consent of the other party hereto, and any such attempted assignment or transfer without the other party's prior written consent shall be void and without force or effect. The headings of this Agreement are for purposes of reference only and shall not limit or otherwise affect the meaning hereof. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. If the foregoing correctly sets forth the terms and conditions of your agreement to purchase the Shares allotted to you, please indicate your acceptance thereof by signing and returning to us the duplicate copy of this Agreement, whereupon this letter and your acceptance shall become evidence of a binding contract between us. CRUTTENDEN & COMPANY By: _______________________________ Walter Cruttenden III Chairman Gentlemen: The undersigned confirms its agreement to purchase ___________ Shares of AMERCO, upon the terms and subject to the conditions of the foregoing Selected Dealers Agreement, and further agrees that any agreement by it to purchase additional Shares during the life of such Agreement will be upon the same terms and subject to the same conditions. The undersigned acknowledges receipt of the Prospectus relating to the Public Offering of the Shares and confirms that in agreeing to purchase such Shares it has relied on such Prospectus and not on any other statement whatsoever written or oral. Firm Name: _______________________________________________________________ (PRINT OR TYPE NAME OF FIRM) By: ______________________________________________________________________ (AUTHORIZED AGENT) ______________________________________________________________________ (PRINT OR TYPE NAME AND TITLE OF AUTHORIZED AGENT) Address: _________________________________________________________________ _________________________________________________________________ Telephone Number: ________________________________________________________ Facsimile Number: ________________________________________________________ IRS Employer Identification Number: ______________________________________ Dated: ____________________________________, 1994 EX-4.B 3 FORM OF STOCK CERTIFICATE COMMON STOCK COMMON STOCK GK NUMBER AMERCO SHARES INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA SEE REVERSE FOR CERTAIN DEFINITIONS THIS CERTIFIES THAT CUSIP IS THE RECORD HOLDER OF FULLY PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK, PAR VALUE $.25, OF AMERCO transferable on the books of the Corporation by the holder hereof in person or by duly authorized attorney upon surrender of this certificate properly endorsed. This certificate is not valid until countersigned and registered by the Transfer Agent and Registrar. WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers. Dated: S E C RETARY AMERCO CORPORATE SEAL NEVADA PRESIDENT COUNTERSIGNED AND REGISTERED: CHEMICAL TRUST COMPANY OF CALIFORNIA TRANSFER AGENT AND REGISTRAR BY AUTHORIZED SIGNATURE The Corporation will furnish to any stockholder, upon request and without charge, a statement of the powers, designations, preferences and relative, participating, optional or other s p ecial rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights, so far as the same shall have been fixed, and of the authority of the Board of Directors to designate and fix any preferences, rights and limitations of any wholly unissued series. Any such request should be addressed to the Secretary of the Corporation at 1325 Airmotive Way, Suite 100, Reno. Nevada 89502-3239. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common TEN ENT - as tenants by the entireties JT TEN - - as joint tenants with right of survivorship and not as tenants in common UNIF GIFT MIN ACT - Custodian (Cust) (Minor) under Uniform Gifts to Minors Act (State) UNIF TRF MIN ACT - Custodian (until age _____) (Cust) under Uniform Transfers (Minor) to Minors Act (State) Additional abbreviations may a l s o be used though not in the above list. FOR VALUE RECEIVED, _______________ hereby sell, assign and transfer unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE) of the common stock represented by the within Certificate, and do hereby irrevocably constitute and appoint Shares to transfer the said stock on the books of the within named Corporation with full power of substitution in the premises. Dated _______________ X X NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER. Signature(s) Guaranteed By THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15. EX-23.A 4 CONSENT OF INDEPENDENT ACCOUNTANTS CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Prospectus constituting part of this Registration Statement on Form S-2 of our report dated June 24, 1994, except as to Notes 14 and 21, which are as of August 15, 1994 and July 26, 1994, respectively, appearing on page 37 of AMERCO's Annual Report on Form 10-K for the year ended March 31, 1994. We also consent to the reference to us under the heading "Experts" in such Prospectus. Price Waterhouse LLP September 1, 1994 Phoenix, Arizona -----END PRIVACY-ENHANCED MESSAGE-----