AMERCO Earnings 2019-06-30

UHAL 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2019

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

For the transition period from __________________ to __________________


Commission File Number	Registrant, State of Incorporation, Address and Telephone Number	I.R.S. Employer Identification No.



001-11255	AMERCO /NV/	88-0106815
	(A Nevada Corporation)
	5555 Kietzke Lane Suite 100
	Reno NV 89511
	Telephone 775 688-6300

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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.25 par value	UHAL	NASDAQ Global Select Market

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

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [x] No [ ]

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

Large Accelerated Filer[x] Accelerated filer [ ]

Non-accelerated filer [ ] Smaller reporting company [ ]

Emerging growth company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [x]

19,607,788 shares of AMERCO Common Stock, $0.25 par value, were outstanding at August 2, 2019.

TABLE OF CONTENTS

		Page
	PART I FINANCIAL INFORMATION
Item 1.	Financial Statements
	a) Condensed Consolidated Balance Sheets as of June 30, 2019 (unaudited) and March 31, 2019	1
	b) Condensed Consolidated Statements of Operations for the Quarters Ended June 30, 2019 and 2018 (unaudited)	2
	c) Condensed Consolidated Statements of Comprehensive Income (Loss) for the Quarters Ended June 30, 2019 and 2018 (unaudited)	3
	d) Condensed Consolidated Statements of Stockholders’ Equity for the Quarters Ended June 30, 2019 and 2018 (unaudited)	4
	e) Condensed Consolidated Statements of Cash Flows for the Quarters Ended June 30, 2019 and 2018 (unaudited)	5
	f) Notes to Condensed Consolidated Financial Statements (unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49
Item 4.	Controls and Procedures	51

	PART II OTHER INFORMATION
Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	52
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 3.	Defaults Upon Senior Securities	52
Item 4.	Mine Safety Disclosures	52
Item 5.	Other Information	52
Item 6.	Exhibits	53

Part i Financial information

Item 1. Financial Statements

AMERCO AND CONSOLIDATED SUBSIDIARIES

CONDENSED CONSOLIDATED balance sheets

		June 30,		March 31,
		2019		2019
		(Unaudited)
		(In thousands, except share data)
ASSETS
Cash and cash equivalents	$	519,831	$	673,701
Reinsurance recoverables and trade receivables, net		243,235		224,785
Inventories and parts, net		101,032		103,504
Prepaid expenses		188,153		174,100
Investments, fixed maturities and marketable equities		2,336,585		2,235,397
Investments, other		313,050		300,736
Deferred policy acquisition costs, net		124,490		136,276
Other assets		73,176		78,354
Right of use assets - financing, net		1,265,023		0
Right of use assets - operating		105,384		–
Related party assets		31,215		30,889
		5,301,174		3,957,742
Property, plant and equipment, at cost:
Land		991,213		976,454
Buildings and improvements		4,183,178		4,003,726
Furniture and equipment		676,263		689,780
Rental trailers and other rental equipment		475,913		590,039
Rental trucks		3,324,576		4,762,028
		9,651,143		11,022,027
Less: Accumulated depreciation		(2,477,573)		(3,088,056)
Total property, plant and equipment, net		7,173,570		7,933,971
Total assets	$	12,474,744	$	11,891,713
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses	$	591,139	$	556,873
Notes, loans and finance/capital leases payable, net		4,343,935		4,163,323
Operating lease liability		105,008		0
Policy benefits and losses, claims and loss expenses payable		1,013,933		1,011,183
Liabilities from investment contracts		1,705,422		1,666,742
Other policyholders' funds and liabilities		9,763		15,047
Deferred income		42,353		35,186
Deferred income taxes, net		794,168		750,970
Total liabilities		8,605,721		8,199,324

Commitments and contingencies (notes 4, 8, 9 and 10)
Stockholders' equity:
Series preferred stock, with or without par value, 50,000,000 shares authorized:
Series A preferred stock, with no par value, 6,100,000 shares authorized;
6,100,000 shares issued and none outstanding as of June 30 and March 31, 2019
Series B preferred stock, with no par value, 100,000 shares authorized; none
issued and outstanding as of June 30 and March 31, 2019
Serial common stock, with or without par value, 250,000,000 shares authorized:
Serial common stock of $0.25 par value, 10,000,000 shares authorized;
none issued and outstanding as of June 30 and March 31, 2019
Common stock, with $0.25 par value, 250,000,000 shares authorized:
Common stock of $0.25 par value, 250,000,000 shares authorized; 41,985,700
issued and 19,607,788 outstanding as of June 30 and March 31, 2019		10,497		10,497
Additional paid-in capital		453,535		453,326
Accumulated other comprehensive loss		(23,873)		(66,698)
Retained earnings		4,109,384		3,976,962
Cost of common stock in treasury, net (22,377,912 shares as of June 30 and March 31, 2019)		(525,653)		(525,653)
Cost of preferred stock in treasury, net (6,100,000 shares as of June 30 and March 31, 2019)		(151,997)		(151,997)
Unearned employee stock ownership plan shares		(2,870)		(4,048)
Total stockholders' equity		3,869,023		3,692,389
Total liabilities and stockholders' equity	$	12,474,744	$	11,891,713

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

AMERCO AND CONSOLIDATED SUBSIDIARIES

CONDENSED CONSOLIDATED Statements of operations

		Quarter Ended June 30,
		2019		2018
		(Unaudited)
		(In thousands, except share and per share amounts)
Revenues:
Self-moving equipment rentals	$	748,596	$	716,602
Self-storage revenues		98,274		86,212
Self-moving and self-storage products and service sales		80,026		79,241
Property management fees		7,156		7,416
Life insurance premiums		32,710		36,888
Property and casualty insurance premiums		13,424		12,781
Net investment and interest income		35,749		24,605
Other revenue		63,314		55,832
Total revenues		1,079,249		1,019,577

Costs and expenses:
Operating expenses		534,472		496,554
Commission expenses		80,899		79,257
Cost of sales		48,929		49,881
Benefits and losses		49,006		48,554
Amortization of deferred policy acquisition costs		6,064		6,031
Lease expense		7,036		8,169
Depreciation, net of gains on disposal of ($16,678 and $16,295, respectively)		140,600		126,427
Net gains on disposal of real estate		(1,622)		0
Total costs and expenses		865,384		814,873

Earnings from operations		213,865		204,704
Other components of net periodic benefit costs		(263)		(253)
Interest expense		(38,888)		(35,254)
Pretax earnings		174,714		169,197
Income tax expense		(42,292)		(41,348)
Earnings available to common stockholders	$	132,422	$	127,849
Basic and diluted earnings per common stock	$	6.76	$	6.53
Weighted average common stock outstanding: Basic and diluted		19,597,697		19,590,585

Related party revenues for the first quarter of fiscal 2020 and 2019, net of eliminations, were $7.2 million and $7.4 million, respectively.

Related party costs and expenses for the first quarter of fiscal 2020 and 2019, net of eliminations, were $17.9 million and $17.2 million, respectively.

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

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

AMERCO AND CONSOLIDATED SUBSIDIARIES

Condensed consolidatED statements of COMPREHENSIVE INCOME (loss)

Quarter Ended June 30, 2019		Pre-tax		Tax		Net
		(Unaudited)
		(In thousands)
Comprehensive income:
Net earnings	$	174,714	$	(42,292)	$	132,422
Other comprehensive income (loss):
Foreign currency translation		2,982				2,982
Unrealized net gain on investments		51,827		(11,039)		40,788
Change in fair value of cash flow hedges		(1,253)		308		(945)
Total comprehensive income	$	228,270	$	(53,023)	$	175,247



Quarter Ended June 30, 2018		Pre-tax		Tax		Net
		(Unaudited)
		(In thousands)
Comprehensive income:
Net earnings	$	169,197	$	(41,348)	$	127,849
Other comprehensive income (loss):
Foreign currency translation		(2,093)				(2,093)
Unrealized net loss on investments		(50,218)		10,546		(39,672)
Change in fair value of cash flow hedges		560		(138)		422
Total comprehensive income	$	117,446	$	(30,940)	$	86,506

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

Amerco and consolidated subsidiaries

condensed consolidated statements of changes in stockholders’ equity

Description		Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Less: Treasury Common Stock		Less: Treasury Preferred Stock		Less: Unearned Employee Stock Ownership Plan Shares		Total Stockholders' Equity
	(In thousands)
Balance as of March 31, 2019	$	10,497	$	453,326	$	(66,698)	$	3,976,962	$	(525,653)	$	(151,997)	$	(4,048)	$	3,692,389
Increase in market value of released ESOP shares		0		209		0		0		0		0		0		209
Release of unearned ESOP shares		0		0		0		0		0		0		1,309		1,309
Purchase of ESOP shares		0		0		0		0		0		0		(131)		(131)
Foreign currency translation		0		0		2,982		0		0		0		0		2,982
Unrealized net gain on investments, net of tax		0		0		40,788		0		0		0		0		40,788
Change in fair value of cash flow hedges, net of tax		0		0		(945)		0		0		0		0		(945)
Net earnings		0		0		0		132,422		0		0		0		132,422
Net activity		0		209		42,825		132,422		0		0		1,178		176,634
Balance as of June 30, 2019	$	10,497	$	453,535	$	(23,873)	$	4,109,384	$	(525,653)		(151,997)	$	(2,870)	$	3,869,023

Balance as of March 31, 2018	$	10,497	$	452,746	$	(4,623)	$	3,635,561	$	(525,653)	$	(151,997)	$	(7,823)	$	3,408,708
Increase in market value of released ESOP shares		0		116		0		0		0		0		0		116
Release of unearned ESOP shares		0		0		0		0		0		0		943		943
Purchase of ESOP shares		0		0		0		0		0		0		(57)		(57)
Foreign currency translation		0		0		(2,093)		0		0		0		0		(2,093)
Unrealized net loss on investments, net of tax		0		0		(39,672)		0		0		0		0		(39,672)
Change in fair value of cash flow hedges, net of tax		0		0		422		0		0		0		0		422
Adjustment for adoption of ASU 2016 - 01		0		0		0		9,724		0		0		0		9,724
Net earnings		0		0		0		127,849		0		0		0		127,849
Common stock dividends: ($0.50 per share for fiscal 2019)		0		0		0		(9,795)		0		0		0		(9,795)
Net activity		0		116		(41,343)		127,778		0		0		886		87,437
Balance as of June 30, 2018	$	10,497	$	452,862	$	(45,966)	$	3,763,339	$	(525,653)	$	(151,997)	$	(6,937)	$	3,496,145

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

AMERCO AND CONSOLIDATED subsidiaries

Condensed consolidatED statements of cash flows

		Quarter Ended June 30,
		2019		2018
		(Unaudited)
		(In thousands)
Cash flows from operating activities:
Net earnings	$	132,422	$	127,849
Adjustments to reconcile net earnings to cash provided by operations:
Depreciation		157,278		142,722
Amortization of deferred policy acquisition costs		6,064		6,031
Amortization of premiums and accretion of discounts related to investments, net		3,275		3,219
Amortization of debt issuance costs		1,053		984
Interest credited to policyholders		14,218		8,060
Change in allowance for losses on trade receivables		(162)		38
Change in allowance for inventories and parts reserves		367		2,139
Net gains on disposal of personal property		(16,678)		(16,295)
Net gains on disposal of real estate		(1,622)		0
Net (gains) losses on sales of investments		(4,267)		506
Net (gains) losses on equity investments		(2,215)		1,176
Deferred income taxes		29,763		37,574
Net change in other operating assets and liabilities:
Reinsurance recoverables and trade receivables		(18,215)		(14,543)
Inventories and parts		2,110		(7,170)
Prepaid expenses		(15,720)		(17,999)
Capitalization of deferred policy acquisition costs		(5,090)		(5,808)
Other assets		3,337		(761)
Related party assets		(1,364)		2,205
Accounts payable and accrued expenses		89,716		86,430
Policy benefits and losses, claims and loss expenses payable		2,318		5,291
Other policyholders' funds and liabilities		(5,281)		(184)
Deferred income		8,527		7,732
Related party liabilities		1,092		474
Net cash provided by operating activities		380,926		369,670

Cash flows from investing activities:
Escrow deposits		1,968		(4,559)
Purchases of:
Property, plant and equipment		(847,248)		(548,147)
Short term investments		(8,689)		(14,390)
Fixed maturities investments		(76,515)		(103,121)
Equity securities		0		(46)
Preferred stock		0		(81)
Real estate		(328)		(80)
Mortgage loans		(9,410)		(8,262)
Proceeds from sales and paydowns of:
Property, plant and equipment		160,754		187,546
Short term investments		6,982		20,416
Fixed maturities investments		38,258		14,645
Preferred stock		0		500
Real estate		311		–
Mortgage loans		1,678		9,402
Net cash used by investing activities		(732,239)		(446,177)

Cash flows from financing activities:
Borrowings from credit facilities		333,700		103,641
Principal repayments on credit facilities		(61,104)		(73,770)
Payment of debt issuance costs		(5)		(1,420)
Finance/capital lease payments		(94,446)		(84,374)
Employee stock ownership plan stock		(131)		(57)
Securitization deposits		0		–
Common stock dividends paid		(9,796)		(9,795)
Investment contract deposits		61,515		76,343
Investment contract withdrawals		(37,054)		(38,763)
Net cash provided (used) by financing activities		192,679		(28,195)

Effects of exchange rate on cash		4,764		(4,275)

Decrease in cash and cash equivalents		(153,870)		(108,977)
Cash and cash equivalents at the beginning of period		673,701		759,388
Cash and cash equivalents at the end of period	$	519,831	$	650,411

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

amerco and consolidated subsidiaries

notes to condensed consolidated financial statements – (continued)

1.Basis of Presentation

AMERCO, a Nevada corporation (“AMERCO”), has a first fiscal quarter that ends on the 30th of June for each year that is referenced. Our insurance company subsidiaries have a first quarter that ends on the 31st of March for each year that is referenced. They have been consolidated on that basis. Our insurance companies’ financial reporting processes conform to calendar year reporting as required by state insurance departments. Management believes that consolidating their calendar year into our fiscal year financial statements does not materially affect the presentation of financial position or results of operations. We disclose material events, if any, occurring during the intervening period. Consequently, all references to our insurance subsidiaries’ years 2019 and 2018 correspond to fiscal 2020 and 2019 for AMERCO.

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

The condensed consolidated balance sheet as of June 30, 2019 and the related condensed consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for the first quarter of fiscal 2020 and 2019 are unaudited.

In our opinion, all adjustments necessary for the fair presentation of such condensed consolidated financial statements have been included. Such adjustments consist only of normal recurring items. Interim results are not necessarily indicative of results for a full year. The information in this Quarterly Report on Form 10-Q (“Quarterly Report”) should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2019.

Intercompany accounts and transactions have been eliminated.

Description of Legal Entities

AMERCO is the holding company for:

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

Amerco Real Estate Company (“Real Estate”);

Repwest Insurance Company (“Repwest”); and

Oxford Life Insurance Company (“Oxford”).

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

Description of Operating Segments

AMERCO has three (3) reportable segments. They are Moving and Storage, Property and Casualty Insurance and Life Insurance.

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

The Property and Casualty Insurance operating segment (“Property and Casualty Insurance”) includes Repwest and its wholly owned subsidiaries and ARCOA Risk Retention Group (“ARCOA”). Property and Casualty Insurance provides loss adjusting and claims handling for U-Haul® through regional offices in the United States and Canada. Property and Casualty Insurance also underwrites components of the Safemove®, Safetow®, Safemove Plus®, Safestor® and Safestor Mobile® protection packages to U-Haul customers. The business plan for Property and Casualty Insurance includes offering property and casualty insurance products in other U-Haul-related programs. ARCOA is a group captive insurer owned by us and our wholly owned subsidiaries whose purpose is to provide insurance products related to our moving and storage business.

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

2. Earnings per Share

Our earnings per share is calculated by dividing our earnings available to common stockholders by the weighted average common shares outstanding, basic and diluted.

The weighted average common shares outstanding exclude post-1992 shares of the employee stock ownership plan that have not been committed to be released. The unreleased shares, net of shares committed to be released, were 8,216 and 16,828 as of June 30, 2019 and June 30, 2018, respectively.

3. Investments

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

We deposit bonds with insurance regulatory authorities to meet statutory requirements. The adjusted cost of bonds on deposit with insurance regulatory authorities was $31.5 million and $30.8 million at June 30, 2019 and March 31, 2019, respectively.

Available-for-Sale Investments

Available-for-sale investments at June 30, 2019 were as follows:

		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses More than 12 Months		Gross Unrealized Losses Less than 12 Months		Estimated Market Value
		(Unaudited)
		(In thousands)
U.S. treasury securities and government obligations	$	135,055	$	3,709	$	(913)	$	(24)	$	137,827
U.S. government agency mortgage-backed securities		41,359		442		(95)		(35)		41,671
Obligations of states and political subdivisions		301,255		13,579		(198)		0		314,636
Corporate securities		1,639,004		36,966		(9,868)		(1,350)		1,664,752
Mortgage-backed securities		147,102		2,834		(127)		(6)		149,803
Redeemable preferred stocks		1,493		57		0		0		1,550
	$	2,265,268	$	57,587	$	(11,201)	$	(1,415)	$	2,310,239

Available-for-sale investments at March 31, 2019 were as follows:

		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses More than 12 Months		Gross Unrealized Losses Less than 12 Months		Estimated Market Value

		(In thousands)
U.S. treasury securities and government obligations	$	136,010	$	2,409	$	(2,104)	$	(447)	$	135,868
U.S. government agency mortgage-backed securities		31,101		433		(146)		(19)		31,369
Obligations of states and political subdivisions		298,955		8,079		(233)		(905)		305,896
Corporate securities		1,613,199		14,777		(14,257)		(24,986)		1,588,733
Mortgage-backed securities		148,203		880		(285)		(903)		147,895
Redeemable preferred stocks		1,493		20		0		(45)		1,468
	$	2,228,961	$	26,598	$	(17,025)	$	(27,305)	$	2,211,229

The available-for-sale tables include gross unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.

We sold available-for-sale securities with a fair value of $37.3 million during the first quarter of fiscal 2020. The gross realized gains on these sales totaled $1.2 million. The gross realized losses on these sales totaled $0.1 million.

The unrealized losses of more than twelve months in the available-for-sale tables are considered temporary declines. We track each investment with an unrealized loss and evaluate them on an individual basis for other-than-temporary impairments, including obtaining corroborating opinions from third party sources, performing trend analysis and reviewing management’s future plans. Certain of these investments may have declines determined by management to be other-than-temporary and we recognize these write-downs, if any, through earnings. There were no write-downs in the first quarter of fiscal 2020 or 2019.

The investment portfolio primarily consists of corporate securities and obligations of states and political subdivisions. We believe we monitor our investments as appropriate. Our methodology of assessing other-than-temporary impairments is based on security-specific analysis as of the balance sheet date and considers various factors including the length of time to maturity, the extent to which the fair value has been less than the cost, the financial condition and the near-term prospects of the issuer, and whether the debtor is current on its contractually obligated interest and principal payments. Nothing has come to management’s attention that would lead to the belief that any issuer would not have the ability to meet the remaining contractual obligations of the security, including payment at maturity. We have the ability and intent not to sell our fixed maturity and common stock investments for a period of time sufficient to allow us to recover our costs.

The portion of other-than-temporary impairment related to a credit loss is recognized in earnings. The significant inputs utilized in the evaluation of mortgage-backed securities credit losses include ratings, delinquency rates, and prepayment activity. The significant inputs utilized in the evaluation of asset backed securities credit losses include the time frame for principal recovery and the subordination and value of the underlying collateral.

There were no credit losses recognized in earnings for which a portion of an other-than-temporary impairment was recognized in accumulated other comprehensive income (loss) (“AOCI”) for the first quarter of fiscal 2020 and fiscal 2019, respectively.

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

		June 30, 2019				March 31, 2019
		Amortized Cost		Estimated Market Value		Amortized Cost		Estimated Market Value
		(Unaudited)
		(In thousands)
Due in one year or less	$	80,244	$	80,481	$	71,987	$	71,954
Due after one year through five years		553,626		562,599		541,195		540,658
Due after five years through ten years		646,677		660,403		621,031		614,485
Due after ten years		836,126		855,403		845,052		834,769
		2,116,673		2,158,886		2,079,265		2,061,866

Mortgage-backed securities		147,102		149,803		148,203		147,895
Redeemable preferred stocks		1,493		1,550		1,493		1,468
	$	2,265,268	$	2,310,239	$	2,228,961	$	2,211,229

As of June 30, 2019 and March 31, 2019, our common stock and non-redeemable preferred stock that are included in Investments, fixed maturities and marketable equities on our balance sheet are stated in the table below. The changes in the fair value of these equity investments are recognized through Net investment and interest income.

Equity investments of common stock and non-redeemable preferred stock were as follows:

		June 30, 2019				March 31, 2019
		Amortized Cost		Estimated Market Value		Amortized Cost		Estimated Market Value
		(Unaudited)
		(In thousands)

Common stocks	$	10,123	$	19,035	$	10,123	$	17,379
Non-redeemable preferred stocks		7,451		7,311		7,451		6,789
	$	17,574	$	26,346	$	17,574	$	24,168

4. Borrowings

Long Term Debt

Long term debt was as follows:

										June 30,		March 31,
	2020 Rates (a)					Maturities				2019		2019
										(Unaudited)
										(In thousands)
Real estate loan (amortizing term)				3.91	%			2023	$	100,413	$	102,913
Senior mortgages	3.72	%	-	6.62	%	2021	-	2038		1,729,184		1,741,652
Real estate loans (revolving credit)	3.03	%	-	3.93	%	2021	-	2024		435,000		429,400
Fleet loans (amortizing term)	1.95	%	-	4.66	%	2019	-	2025		261,677		263,209
Fleet loans (revolving credit)				3.59	%	2021	-	2023		555,000		530,000
Finance/capital leases (rental equipment)	1.92	%	-	5.04	%	2019	-	2026		948,206		1,042,652
Finance liability (rental equipment)	3.21	%	-	4.22	%			2026		259,617		0
Other obligations	2.75	%	-	8.00	%	2019	-	2048		82,724		82,417
Notes, loans and finance/capital leases payable										4,371,821		4,192,243
Less: Debt issuance costs										(27,886)		(28,920)
Total notes, loans and finance/capital leases payable, net									$	4,343,935	$	4,163,323

(a) Interest rates as of June 30, 2019, including the effect of applicable hedging instruments.

Real Estate Backed Loans

Real Estate Loan

Real Estate and certain of its subsidiaries and U-Haul Company of Florida are borrowers under a real estate loan (the “Real Estate Loan”). The Real Estate Loan requires monthly principal and interest payments, with the unpaid loan balance and accrued and unpaid interest due at maturity. The Real Estate Loan is secured by various properties owned by the borrowers.

The interest rate, per the provisions of the amended loan agreement, is the applicable London Inter-Bank Offer Rate (“LIBOR”) plus the applicable margin. As of June 30, 2019, the applicable LIBOR was 2.41% and the applicable margin was 1.50%, the sum of which was 3.91%. The default provisions of the Real Estate Loan include non-payment of principal or interest and other standard reporting and change-in-control covenants. There are limited restrictions regarding our use of the funds.

Senior Mortgages

Various subsidiaries of Real Estate and U-Haul are borrowers under certain senior mortgages. The senior mortgages require monthly principal and interest payments. The senior mortgages are secured by certain properties owned by the borrowers. The fixed interest rates, per the provisions of the senior mortgages, range between 3.72% and 6.62%. Certain senior mortgages have an anticipated repayment date and a maturity date. If these senior mortgages are not repaid by the anticipated repayment date, the interest rate on these mortgages would increase from the current fixed rate. We are using the anticipated repayment date for our maturity schedule. Real Estate and U-Haul have provided limited guarantees of the senior mortgages. The default provisions of the senior mortgages include non-payment of principal or interest and other standard reporting and change-in-control covenants. There are limited restrictions regarding our use of the funds.

Real Estate Loans (Revolving Credit)

Various subsidiaries of Real Estate are borrowers under asset-backed real estate loans with an aggregate borrowing capacity of $335.0 million. As of June 30, 2019, the outstanding balance of these loans in the aggregate was $335.0 million. These loans are secured by certain properties owned by the borrowers. The loan agreements provide for term loans, subject to the terms of the loan agreements. The final maturity of the loans is between June 2022 and February 2024. The loans require monthly interest payments with the unpaid loan balance and accrued and unpaid interest due at maturity. The interest rate, per the provision of the loan agreements, is the applicable LIBOR plus the applicable margin. As of June 30, 2019, the applicable LIBOR was between 2.43% and 2.44% and the margin was between 1.25% and 1.50%, the sum of which was between 3.68% and 3.93%. Certain loans have interest rate swaps fixing the rate between 3.03% and 3.14% based on current margins. AMERCO is the guarantor of these loans. The default provisions of the loan include non-payment of principal or interest and other standard reporting and change-in-control covenants.

AMERCO is a borrower under a real estate loan. The current maximum credit commitment is $150.0 million, which can be increased to $300.0 million by bringing in other lenders. As of June 30, 2019, the outstanding balance was $100.0 million. This loan agreement provides for revolving loans, subject to the terms of the loan agreement. The final maturity of this loan is September 2021. This loan requires monthly interest payments with the unpaid loan balance and accrued and unpaid interest due at maturity. As of June 30, 2019, the applicable LIBOR was 2.44% and the margin was 1.38%, the sum of which was 3.82%. The default provisions of the loan include non-payment of principal or interest and other standard reporting and change-in-control covenants. There is a 0.30% fee charged for unused capacity.

Fleet Loans

Rental Truck Amortizing Loans

The amortizing loans require monthly principal and interest payments, with the unpaid loan balance and accrued and unpaid interest due at maturity. These loans were used to purchase new trucks. The interest rates, per the provision of the loan agreements, are carried at fixed rates ranging between 1.95% and 4.66%. Additionally, one of these loans is carried at a variable rate with the applicable LIBOR plus the applicable margins. As of June 30, 2019, the applicable LIBOR was 2.39% and applicable margin was 1.75% with a sum of 4.14%. The interest rate is hedged with an interest rate swap fixing the rate at 2.82% based on current margins.

AMERCO, and in some cases U-Haul, is guarantor of these loans. The default provisions of these loans include non-payment of principal or interest and other standard reporting and change-in-control covenants.

Rental Truck Revolvers

Various subsidiaries of U-Haul entered into three revolving fleet loans with an aggregate borrowing capacity of $580.0 million. The interest rates, per the provision of the loan agreements, are the applicable LIBOR plus the applicable margin. As of June 30, 2019, the applicable LIBOR was 2.44%, and the margin was 1.15%, the sum of which was 3.59%. Only interest is paid on the loans until the last nine months of the respective loan terms when principal becomes due monthly. In April 2019, the rental truck revolving loan that was scheduled to mature in January 2021 was extended to May 2024 and availability increased by $10.0 million.

Finance/Capital Leases

The Finance/Capital Lease balance represents our sale-leaseback transactions of rental equipment that were entered into and classified as capital leases prior to the adoption of ASC 842 on April 1, 2019. The historical capital lease balance was reclassified to ROU assets-finance, net and have an outstanding balance of $948.2 million as of June 30, 2019. The agreements are generally 7-year terms with interest rates ranging from 1.92% to 5.04%. All of our finance leases and are collateralized by our rental fleet. There were no new financing leases, as assessed under the new leasing guidance, entered into during the quarter ended June 30, 2019.

Finance Liability

Finance Liabilities represent our rental equipment financing transactions that have historically been accounted for as capital leases prior to the adoption of ASC 842 on April 1, 2019 which substantially changed the accounting for sale-leasebacks going forward. In accordance with the new leasing guidance, we assess if sale-leaseback transactions qualify as a sale at initiation by determining if a transfer of ownership occurs. We have determined that our equipment sale-leasebacks do not qualify as a sale, as the buyer-lessors do not obtain control of the assets in our ongoing sale-leaseback arrangements. As a result, we expect future sale-leasebacks to be accounted for as a financial liability and the leased assets will be capitalized at cost. As of June 30, 2019, we have failed sale-leasebacks transactions totaling $259.6 million. Our finance liabilities have an average term of 7 years and interest rates ranging from 3.21% to 4.22%. These finance liabilities are collateralized by our rental fleet.

Other Obligations

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

As of June 30, 2019, the aggregate outstanding principal balance of the U-Notes® issued was $85.8 million, of which $3.1 million is held by our insurance subsidiaries and eliminated in consolidation. Interest rates range between 2.75% and 8.00% and maturity dates range between 2019 and 2048.

Oxford is a member of the Federal Home Loan Bank (“FHLB”) and, as such, the FHLB has made deposits with Oxford. As of December 31, 2019, the deposits had an aggregate balance of $60.0 million, for which Oxford pays fixed interest rates between 1.67% and 2.95% with maturities between September 29, 2019 and March 29, 2021. As of March 31, 2019, available-for-sale investments held with the FHLB totaled $127.9 million, of which $69.8 million were pledged as collateral to secure the outstanding deposits. The balances of these deposits are included within Liabilities from investment contracts on the condensed consolidated balance sheets.

Annual Maturities of Notes, Loans and Finance/Capital Leases Payable

The annual maturities of our notes, loans and finance/capital leases payable, as of June 30, 2019 for the next five years and thereafter are as follows:

		Year Ended June 30,
		2020		2021		2022		2023		2024		Thereafter
		(Unaudited)
		(In thousands)
Notes, loans and finance/capital leases payable, secured	$	511,219	$	394,680	$	811,709	$	555,826	$	767,871	$	1,330,516

Interest on Borrowings

Interest Expense

Components of interest expense include the following:

		Quarter Ended June 30,
		2019		2018
		(Unaudited)
		(In thousands)
Interest expense	$	43,331	$	34,196
Capitalized interest		(5,499)		(419)
Amortization of transaction costs		1,053		961
Interest expense resulting from cash flow hedges		3		516
Total interest expense	$	38,888	$	35,254

Interest paid in cash, including payments related to derivative contracts, amounted to $40.5 million and $34.4 million for the first quarter of fiscal 2020 and 2019, respectively.

Interest Rates

Interest rates and Company borrowings were as follows:

		Revolving Credit Activity
		Quarter Ended June 30,
		2019		2018
		(Unaudited)
		(In thousands, except interest rates)
Weighted average interest rate during the quarter		3.73	%	3.11	%
Interest rate at the end of the quarter		3.69	%	3.16	%
Maximum amount outstanding during the quarter	$	990,000	$	525,000
Average amount outstanding during the quarter	$	967,358	$	497,967
Facility fees	$	62	$	144

5. Derivatives

We manage exposure to changes in market interest rates. Our use of derivative instruments is limited to highly effective interest rate swaps to hedge the risk of changes in cash flows (future interest payments) attributable to changes in LIBOR swap rates with the designated benchmark interest rate being hedged on certain of our LIBOR indexed variable rate debt and a variable rate operating lease. The interest rate swaps effectively fix our interest payments on certain LIBOR indexed variable rate debt. We monitor our positions and the credit ratings of our counterparties and do not currently anticipate non-performance by the counterparties. Interest rate swap agreements are not entered into for trading purposes. The following is a summary of our interest rate swap agreements as of June 30, 2019:

The derivative fair values reflected in prepaid expense and accounts payable and accrued expenses in the balance sheet were as follows:

		Derivatives Fair Values as of
		June 30, 2019		March 31, 2019
		(Unaudited)
		(In thousands)
Interest rate contracts designated as hedging instruments:
Assets	$	64	$	139
Liabilities	$	1,181	$	0
Notional amount	$	249,625	$	22,792

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

		June 30, 2019		June 30, 2018
		(Unaudited)
		(In thousands)
Gain recognized in AOCI on interest rate contracts	$	1,253	$	(560)
Loss reclassified from AOCI into income	$	3	$	516

Gains or losses recognized in income on derivatives are recorded as interest expense in the statements of operations. During the first quarter of fiscal 2020, we recognized a decrease in the fair value of our cash flow hedges of $0.9 million, net of taxes. No (gains) or losses were reclassified from AOCI to interest expense during the first quarter of fiscal 2020. As of June 30, 2019, we expect to reclassify $1.7 million of net gains on interest rate contracts from AOCI to earnings as interest expense over the next twelve months.

6. Accumulated Other Comprehensive Income (Loss)

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

		Foreign Currency Translation		Unrealized Net Gain on Investments		Fair Market Value of Cash Flow Hedges		Postretirement Benefit Obligation Net Loss		Accumulated Other Comprehensive Income (Loss)
		(Unaudited)
		(In thousands)
Balance at March 31, 2019	$	(56,612)	$	(7,259)	$	107	$	(2,934)	$	(66,698)
Foreign currency translation		2,982		0		0		0		2,982
Unrealized net gain on investments		0		40,788		0		0		40,788
Change in fair value of cash flow hedges		0		0		(945)		0		(945)
Other comprehensive income (loss)		(2,093)		40,788		(945)		0		42,825
Balance at June 30, 2019	$	(58,705)	$	33,529	$	(838)	$	(2,934)	$	(23,873)

Amounts reclassified from AOCI to interest expense for the quarters ended June 30, 2019 and 2018 were $40 thousand and $64 thousand, respectively.

7. Stockholders’ Equity

The dividends declared or paid during the first quarter of fiscal 2020 were as follows:

Common Stock Dividends
Declared Date		Per Share Amount	Record Date	Dividend Date

March 6, 2019	$	0.50	March 21, 2019	April 4, 2019

On June 8, 2016, our stockholders’ approved the 2016 AMERCO Stock Option Plan (Shelf Stock Option Plan). As of June 30, 2019 no awards had been issued under this plan.

8. Leases

Lessor

We have determined that revenues derived by providing self-moving equipment rentals, self-storage rentals and certain other revenues, including U-Box rentals, are within the scope of the accounting guidance contained in Topic 842. Our self-moving equipment rental related revenues have been accounted for under the revenue accounting standard Topic 606, until the adoption of Topic 842.

For the periods after April 1, 2019, we combined all lease and non-lease components of lease contracts for which the timing and pattern of transfer are the same and the lease component meets the classification of an operating lease, and account for them in accordance with Topic 842. The revenue streams accounted for in accordance with Topic 842 are recognized evenly over the period of rental. Please see Note 15, Revenue Recognition, to the Notes to Condensed Consolidated Financial Statements.

Lessee

We determine if an arrangement is a lease at inception. Operating leases, which are comprised primarily of storage rental locations, are included in Right-of-Use (“ROU“) assets - operating and operating lease liability in our balance sheet dated June 30, 2019. Finance leases, which are comprised primarily of rental equipment leases, are included in ROU assets - financing, net, and notes, loans and finance/capital leases payable, net in our balance sheet dated June 30, 2019.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the expected remaining lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on information available at commencement date in determining the present value of lease payments. Our lease terms may include options to extend or terminate the lease, which are included in the calculation of ROU assets when it is reasonably certain that we will exercise those options. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

We have lease agreements with lease and non-lease components, which are generally not accounted for separately. Additionally, for certain leases, we apply a portfolio approach to account for the operating lease ROU assets and liabilities as the leases are similar in nature and have nearly identical contract provisions.

Adoption of this standard resulted in most of our operating lease commitments being recognized as operating lease liabilities and ROU assets, which increased total assets and total liabilities by approximately $105.4 million related to property operating leases. In addition, we reclassified a net amount $948.2 million related to vehicle financing leases from property, plant, and equipment, net to ROU assets financing, net.

The standard also changed the manner by which we account for our equipment sale/leaseback transactions. Based on our assessment, the lease transactions are classified as financing leases, and therefore the transactions do not qualify as a sale. Pursuant to the guidance, new sale leaseback transactions that fail to qualify as a sale will be accounted for as a financial liability. Please see Note 4, Borrowings, of the Notes to Condendsed Consolidated Finanical Statements for additional information.

The following table shows the components of our right-of-use assets:

		As of June 30, 2019
		(Unaudited)
		(In thousands)

		Finance		Operating		Total
Buildings and improvements	$	0	$	110,096	$	110,096
Furniture and equipment		36,304		0		36,304
Rental trailers and other rental equipment		129,826		0		129,826
Rental trucks		1,813,633		0		1,813,633
Right-of-use assets, gross		1,979,763		110,096		2,089,859
Less: Accumulated depreciation		(714,740)		(4,712)		(719,452)
Right-of-use assets, net	$	1,265,023	$	105,384	$	1,370,407

	Finance	Operating

Weighted average remaining lease term (years)

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$386.28	20	$7,570

10-Q	2019-06-30	Quarter: 2019-06-30
10-K	2019-03-31	Annual: 2019-03-31
10-Q	2018-12-31	Quarter: 2018-12-31
10-Q	2018-09-30	Quarter: 2018-09-30
10-Q	2018-06-30	Quarter: 2018-06-30
10-K	2018-03-31	Annual: 2018-03-31
10-Q	2017-12-31	Quarter: 2017-12-31
10-Q	2017-09-30	Quarter: 2017-09-30
10-Q	2017-06-30	Quarter: 2017-06-30
10-K	2017-03-31	Annual: 2017-03-31
10-Q	2016-12-31	Quarter: 2016-12-31
10-Q	2016-09-30	Quarter: 2016-09-30
10-Q	2016-06-30	Quarter: 2016-06-30
10-K	2016-03-31	Annual: 2016-03-31
10-Q	2015-12-31	Quarter: 2015-12-31
10-Q	2015-09-30	Quarter: 2015-09-30
10-Q	2015-06-30	Quarter: 2015-06-30
10-K	2015-03-31	Annual: 2015-03-31
10-Q	2014-12-31	Quarter: 2014-12-31
10-Q	2014-09-30	Quarter: 2014-09-30
10-Q	2014-06-30	Quarter: 2014-06-30
10-K	2014-03-31	Annual: 2014-03-31
10-Q	2013-12-31	Quarter: 2013-12-31

8-K	2019-08-02
8-K	2019-05-03	Exhibits
8-K	2019-05-03	Exhibits
8-K	2018-12-05	Other Events, Exhibits
8-K	2018-10-23	Exhibits
8-K	2018-08-28	Exhibits
8-K	2018-08-28	Exhibits
8-K	2018-08-23	Shareholder Vote, Other Events, Exhibits
8-K	2018-06-12	Other Events
8-K	2018-06-06	Other Events, Exhibits
8-K	2018-03-08	Other Events, Exhibits
8-K	2018-03-06	Exhibits

NGHC	National General Holdings	2,770
AXE	Anixter	2,020
ENTA	Enanta Pharmaceuticals	1,720
CPLG	Corepoint Lodging	784
CRESY	Cresud	526
FFNW	First Financial Northwest	172
NTRP	Neurotrope	89
ARDS	Aridis Pharmaceuticals	75
AAC	AAC Holdings	48
WFCF	Where Food Comes From	0

EX-31.1	ex311.htm
EX-31.2	ex312.htm
EX-32.1	ex321.htm
EX-32.2	ex322.htm