Company Quick10K Filing
Quick10K
AMERCO
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$368.99 20 $7,240
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 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
BK Bank of New York Mellon 51,030
ZBRA Zebra Technologies 12,640
HUBS Hubspot 6,590
CTLT Catalent 6,200
CCU United Breweries 5,290
UFS Domtar 3,160
AVRO Avrobio 498
PLSE Pulse Biosciences 333
AHNR Athena Silver 0
CYIG China YCT International Group 0
UHAL 2018-12-31
Part I Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 ex311.htm
EX-31.2 ex312.htm
EX-32.1 ex321.htm
EX-32.2 ex322.htm

AMERCO Earnings 2018-12-31

UHAL 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 dec201810q.htm DECEMBER 31, 2018 10-Q

 


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 December 31, 2018

or

[ ]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.

 

 

 

 

AMERCOlogo

 

 

 

 

1-11255

AMERCO

88-0106815

 

(A Nevada Corporation)

 

 

5555 Kietzke Lane, Ste. 100

 

 

Reno, Nevada 89511

 

 

Telephone (775) 688-6300

 

 

 

 

 

N/A

 

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

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 February 1, 2019.

 


TABLE OF CONTENTS

 

 

Page 

 

PART I FINANCIAL INFORMATION

 

Item 1.

Financial Statements

 

 

a) Condensed Consolidated Balance Sheets as of December 31, 2018 (unaudited) and March 31, 2018

1

 

b) Condensed Consolidated Statements of Operations for the Quarters Ended December 31, 2018 and 2017 (unaudited)

2

 

c) Condensed Consolidated Statements of Operations for the Nine Months Ended December 31, 2018 and 2017 (unaudited)

3

 

d) Condensed Consolidated Statements of Comprehensive Income (Loss) for the Quarters and Nine Months Ended December 31, 2018 and 2017 (unaudited)

4

 

e) Condensed Consolidated Statements of Stockholders’ Equity for the Quarter and Nine Months Ended December 31, 2018

5

 

f) Condensed Consolidated Statements of Stockholders’ Equity for the Quarter and Nine Months Ended December 31, 2017

6

 

g) Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2018 and 2017 (unaudited)

7

 

h) Notes to Condensed Consolidated Financial Statements (unaudited)

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

45

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

63

Item 4.

Controls and Procedures

65

 

 

 

 

PART II OTHER INFORMATION

 

Item 1.

Legal Proceedings

66

Item 1A.

Risk Factors

66

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds........................................................................

66

Item 3.

Defaults Upon Senior Securities

66

Item 4.

Mine Safety Disclosures

66

Item 5.

Other Information

66

Item 6.

Exhibits

66

 


 


 

Part i Financial information

ITEM 1. Financial Statements

AMERCO AND CONSOLIDATED subsidiaries

CONDENSED CONSOLIDATED balance sheets

 

 

December 31,

 

March 31,

 

 

2018

 

2018

 

 

(Unaudited)

 

 

 

 

(In thousands, except share data)

ASSETS

 

 

 

 

Cash and cash equivalents

$

984,385

$

759,388

Reinsurance recoverables and trade receivables, net

 

191,764

 

193,538

Inventories and parts, net

 

96,187

 

89,877

Prepaid expenses

 

177,918

 

166,129

Investments, fixed maturities and marketable equities

 

2,127,342

 

1,919,860

Investments, other

 

332,532

 

399,064

Deferred policy acquisition costs, net

 

140,673

 

124,767

Other assets

 

83,839

 

244,782

Related party assets

 

38,156

 

33,276

 

 

4,172,796

 

3,930,681

Property, plant and equipment, at cost:

 

 

 

 

Land

 

910,919

 

827,649

Buildings and improvements

 

3,762,491

 

3,140,713

Furniture and equipment

 

674,535

 

632,803

Rental trailers and other rental equipment

 

572,645

 

545,968

Rental trucks

 

4,532,134

 

4,390,750

 

 

10,452,724

 

9,537,883

Less: Accumulated depreciation

 

(2,979,760)

 

(2,721,142)

Total property, plant and equipment

 

7,472,964

 

6,816,741

Total assets

$

11,645,760

$

10,747,422

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

Liabilities:

 

 

 

 

Accounts payable and accrued expenses

$

517,360

$

511,115

Notes, loans and leases payable, net

 

3,975,764

 

3,513,076

Policy benefits and losses, claims and loss expenses payable

 

1,087,742

 

1,248,033

Liabilities from investment contracts

 

1,583,885

 

1,364,066

Other policyholders' funds and liabilities

 

12,907

 

10,040

Deferred income

 

29,226

 

34,276

Deferred income taxes, net

 

746,836

 

658,108

Total liabilities

 

7,953,720

 

7,338,714

 

 

 

 

 

Commitments and contingencies (notes 4, 8 and 9)

 

 

 

 

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 December 31 and March 31, 2018

 

 

Series B preferred stock, with no par value, 100,000 shares authorized; none

 

 

 

 

issued and outstanding as of December 31 and March 31, 2018

 

 

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 December 31 and March 31, 2018

 

 

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 December 31 and March 31, 2018

 

10,497

 

10,497

Additional paid-in capital

 

453,116

 

452,746

Accumulated other comprehensive loss

 

(74,707)

 

(4,623)

Retained earnings

 

3,985,927

 

3,635,561

Cost of common shares in treasury, net (22,377,912 shares as of December 31 and March 31, 2018)

 

(525,653)

 

(525,653)

Cost of preferred shares in treasury, net (6,100,000 shares as of December 31 and March 31, 2018)

 

(151,997)

 

(151,997)

Unearned employee stock ownership plan shares

 

(5,143)

 

(7,823)

Total stockholders' equity

 

3,692,040

 

3,408,708

Total liabilities and stockholders' equity

$

11,645,760

$

10,747,422

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

 


AMERCO AND CONSOLIDATED subsidiaries

CONDENSED CONSOLIDATED Statements of operations

 

 

 

Quarter Ended December 31,

 

 

2018

 

2017

 

 

(Unaudited)

 

 

(In thousands, except share and per share amounts)

Revenues:

 

 

 

 

Self-moving equipment rentals

$

626,136

$

574,801

Self-storage revenues

 

93,392

 

82,127

Self-moving and self-storage products and service sales

 

55,665

 

53,130

Property management fees

 

7,899

 

9,881

Life insurance premiums

 

34,778

 

38,957

Property and casualty insurance premiums

 

17,668

 

16,093

Net investment and interest income

 

32,211

 

28,821

Other revenue

 

51,342

 

39,072

Total revenues

 

919,091

 

842,882

 

 

 

 

 

Costs and expenses:

 

 

 

 

Operating expenses

 

478,461

 

437,840

Commission expenses

 

67,493

 

63,487

Cost of sales

 

34,149

 

33,995

Benefits and losses

 

42,869

 

45,168

Amortization of deferred policy acquisition costs

 

6,654

 

5,952

Lease expense

 

7,890

 

8,415

Depreciation, net of gains on disposal of ($796) and ($4,235), respectively

 

143,473

 

137,061

Net (gains) losses on disposal of real estate

 

 

(192,404)

Total costs and expenses

 

780,989

 

539,514

 

 

 

 

 

Earnings from operations

 

138,102

 

303,368

Other components of net periodic benefit costs

 

(253)

 

(231)

Interest expense

 

(34,827)

 

(31,558)

Pretax earnings

 

103,022

 

271,579

Income tax (expense) benefit

 

(24,387)

 

257,315

Earnings available to common stockholders

$

78,635

$

528,894

Basic and diluted earnings per common share

$

4.01

$

27.00

Weighted average common shares outstanding: Basic and diluted

 

19,591,963

 

19,589,218

 

Related party revenues for the third quarter of fiscal 2019 and 2018, net of eliminations, were $7.9 million and $10.8 million, respectively.

Related party costs and expenses for the third quarter of fiscal 2019 and 2018, net of eliminations, were $14.9 million and $14.1 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 operations

 

 

 

Nine Months Ended December 31,

 

 

2018

 

2017

 

 

(Unaudited)

 

 

(In thousands, except share and per share amounts)

Revenues:

 

 

 

 

Self-moving equipment rentals

$

2,124,451

$

1,985,217

Self-storage revenues

 

271,097

 

239,317

Self-moving and self-storage products and service sales

 

207,819

 

205,309

Property management fees

 

22,507

 

23,474

Life insurance premiums

 

107,586

 

116,910

Property and casualty insurance premiums

 

46,732

 

42,934

Net investment and interest income

 

85,043

 

82,507

Other revenue

 

177,940

 

147,825

Total revenues

 

3,043,175

 

2,843,493

 

 

 

 

 

Costs and expenses:

 

 

 

 

Operating expenses

 

1,504,365

 

1,346,782

Commission expenses

 

232,084

 

222,203

Cost of sales

 

130,432

 

124,456

Benefits and losses

 

137,196

 

139,997

Amortization of deferred policy acquisition costs

 

18,584

 

18,217

Lease expense

 

24,229

 

25,277

Depreciation, net of gains on disposal of ($29,127) and ($14,260), respectively

 

402,525

 

396,540

Net (gains) losses on disposal of real estate

 

10

 

(192,223)

Total costs and expenses

 

2,449,425

 

2,081,249

 

 

 

 

 

Earnings from operations

 

593,750

 

762,244

Other components of net periodic benefit costs

 

(760)

 

(695)

Interest expense

 

(105,111)

 

(93,926)

Pretax earnings

 

487,879

 

667,623

Income tax (expense) benefit

 

(117,853)

 

112,117

Earnings available to common stockholders

$

370,026

$

779,740

Basic and diluted earnings per common share

$

18.89

$

39.81

Weighted average common shares outstanding: Basic and diluted

 

19,591,282

 

19,588,558

 

Related party revenues for the first nine months of fiscal 2019 and 2018, net of eliminations, were $22.5 million and $26.8 million, respectively.

Related party costs and expenses for the first nine months of fiscal 2019 and 2018, net of eliminations, were $51.1 million and $48.9 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 December 31, 2018

 

Pre-tax

 

Tax

 

Net

 

 

(Unaudited)

 

 

(In thousands)

Comprehensive income:

 

 

 

 

 

 

Net earnings

$

103,022

$

(24,387)

$

78,635

Other comprehensive income (loss):

 

 

 

 

 

 

Foreign currency translation

 

(4,101)

 

 

(4,101)

Unrealized net loss on investments

 

1,827

 

(384)

 

1,443

Change in fair value of cash flow hedges

 

(115)

 

28

 

(87)

Total comprehensive income

$

100,633

$

(24,743)

$

75,890

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended December 31, 2017

 

Pre-tax

 

Tax

 

Net

 

 

(Unaudited)

 

 

(In thousands)

Comprehensive income:

 

 

 

 

 

 

Net earnings

$

271,579

$

257,315

$

528,894

Other comprehensive income (loss):

 

 

 

 

 

 

Foreign currency translation

 

(1,794)

 

 

(1,794)

Unrealized net gain on investments

 

4,388

 

(1,536)

 

2,852

Change in fair value of cash flow hedges

 

911

 

(346)

 

565

Total comprehensive income

$

275,084

$

255,433

$

530,517

 

Nine Months Ended December 31, 2018

 

Pre-tax

 

Tax

 

Net

 

 

(Unaudited)

 

 

(In thousands)

Comprehensive income:

 

 

 

 

 

 

Net earnings

$

487,879

$

(117,853)

$

370,026

Other comprehensive income (loss):

 

 

 

 

 

 

Foreign currency translation

 

(5,081)

 

 

(5,081)

Unrealized net loss on investments

 

(70,671)

 

14,841

 

(55,830)

Change in fair value of cash flow hedges

 

731

 

(180)

 

551

Total comprehensive income

$

412,858

$

(103,192)

$

309,666

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended December 31, 2017

 

Pre-tax

 

Tax

 

Net

 

 

(Unaudited)

 

 

(In thousands)

Comprehensive income:

 

 

 

 

 

 

Net earnings

$

667,623

$

112,117

$

779,740

Other comprehensive income (loss):

 

 

 

 

 

 

Foreign currency translation

 

19,240

 

 

19,240

Unrealized net gain on investments

 

30,492

 

(10,672)

 

19,820

Change in fair value of cash flow hedges

 

3,655

 

(1,390)

 

2,265

Total comprehensive income

$

721,010

$

100,055

$

821,065

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

 


 


AMERCO AND CONSOLIDATED subsidiaries

Condensed consolidatED statements of stockholders’ equity

 

 

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

 

(Unaudited)

 

(In thousands)

Balance as of September 30, 2018

$

10,497

$

453,006

$

(62,238)

$

3,917,087

$

(525,653)

$

(151,997)

$

(7,535)

$

3,633,167

Increase in market value of released ESOP shares

 

 

110

 

 

 

 

 

 

110

Release of unearned ESOP shares

 

 

 

 

 

 

 

2,695

 

2,695

Purchase of ESOP shares

 

 

 

 

 

 

 

(303)

 

(303)

Foreign currency translation

 

 

 

(4,101)

 

 

 

 

 

(4,101)

Unrealized net gain on investments, net of tax

 

 

 

(8,281)

 

 

 

 

 

(8,281)

Change in fair value of cash flow hedges, net of tax

 

 

 

(87)

 

 

 

 

 

(87)

Net earnings

 

 

 

 

78,635

 

 

 

 

78,635

Common stock dividends: ($0.50 per share for fiscal 2019)

 

 

 

 

(9,795)

 

 

 

 

(9,795)

Net activity

 

 

110

 

(12,469)

 

68,840

 

 

 

2,392

 

58,873

Balance as of December 31, 2018

$

10,497

$

453,116

$

(74,707)

$

3,985,927

$

(525,653)

$

(151,997)

$

(5,143)

$

3,692,040

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

370

 

 

 

 

 

 

370

Release of unearned ESOP shares

 

 

 

 

 

 

 

8,083

 

8,083

Purchase of ESOP shares

 

 

 

 

 

 

 

(5,403)

 

(5,403)

Foreign currency translation

 

 

 

(5,081)

 

 

 

 

 

(5,081)

Unrealized net gain on investments, net of tax

 

 

 

(55,830)

 

 

 

 

 

(55,830)

Change in fair value of cash flow hedges, net of tax

 

 

 

551

 

 

 

 

 

551

Adjustment for adoption of ASU 2016-01

 

 

 

(9,724)

 

9,724

 

 

 

 

Net earnings

 

 

 

 

370,026

 

 

 

 

370,026

Common stock dividends: ($1.50 per share for fiscal 2019)

 

 

 

 

(29,384)

 

 

 

 

(29,384)

Net activity

 

 

370

 

(70,084)

 

350,366

 

 

 

2,680

 

283,332

Balance as of December 31, 2018

$

10,497

$

453,116

$

(74,707)

$

3,985,927

$

(525,653)

$

(151,997)

$

(5,143)

$

3,692,040

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

 


AMERCO AND CONSOLIDATED subsidiaries

Condensed consolidatED statements of stockholders’ equity

 

 

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

 

(Unaudited)

 

(In thousands)

Balance as of September 30, 2017

$

10,497

$

452,474

$

(11,534)

$

3,124,152

$

(525,653)

$

(151,997)

$

(5,517)

$

2,892,422

Increase in market value of released ESOP shares

 

 

145

 

 

 

 

 

 

145

Release of unearned ESOP shares

 

 

 

 

 

 

 

2,680

 

2,680

Purchase of ESOP shares

 

 

 

 

 

 

 

(2,804)

 

(2,804)

Foreign currency translation

 

 

 

(1,794)

 

 

 

 

 

(1,794)

Unrealized net gain on investments, net of tax

 

 

 

2,852

 

 

 

 

 

2,852

Change in fair value of cash flow hedges, net of tax

 

 

 

565

 

 

 

 

 

565

Net earnings

 

 

 

 

528,894

 

 

 

 

528,894

Common stock dividends: ($0.50 per share for fiscal 2018)

 

 

 

 

(9,793)

 

 

 

 

(9,793)

Net activity

 

 

145

 

1,623

 

519,101

 

 

 

(124)

 

520,745

Balance as of December 31, 2017

$

10,497

$

452,619

$

(9,911)

$

3,643,253

$

(525,653)

$

(151,997)

$

(5,641)

$

3,413,167

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of March 31, 2017

$

10,497

$

452,172

$

(51,236)

$

2,892,893

$

(525,653)

$

(151,997)

$

(6,932)

$

2,619,744

Increase in market value of released ESOP shares

 

 

447

 

 

 

 

 

 

447

Release of unearned ESOP shares

 

 

 

 

 

 

 

8,055

 

8,055

Purchase of ESOP shares

 

 

 

 

 

 

 

(6,764)

 

(6,764)

Foreign currency translation

 

 

 

19,240

 

 

 

 

 

19,240

Unrealized net gain on investments, net of tax

 

 

 

19,820

 

 

 

 

 

19,820

Change in fair value of cash flow hedges, net of tax

 

 

 

2,265

 

 

 

 

 

2,265

Net earnings

 

 

 

 

779,740

 

 

 

 

779,740

Common stock dividends: ($1.50 per share for fiscal 2018)

 

 

 

 

(29,380)

 

 

 

 

(29,380)

Net activity

 

 

447

 

41,325

 

750,360

 

 

 

1,291

 

793,423

Balance as of December 31, 2017

$

10,497

$

452,619

$

(9,911)

$

3,643,253

$

(525,653)

$

(151,997)

$

(5,641)

$

3,413,167

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

 


 


AMERCO AND CONSOLIDATED subsidiaries

Condensed consolidatED statements of cash flows

 

 

Nine Months Ended December 31,

 

 

2018

 

2017

 

 

(Unaudited)

 

 

(In thousands)

Cash flows from operating activities:

 

 

 

 

Net earnings

$ 

370,026

$ 

779,740

Adjustments to reconcile net earnings to cash provided by operations:

 

 

 

 

Depreciation

 

431,652

 

410,800

Amortization of deferred policy acquisition costs

 

18,584

 

18,217

Amortization of debt issuance costs

 

2,922

 

2,910

Interest credited to policyholders

 

28,540

 

23,250

Change in allowance for losses on trade receivables

 

124

 

(25)

Change in allowance for inventories and parts reserves

 

2,539

 

4,334

Net gains on disposal of personal property

 

(29,127)

 

(14,260)

Net (gains) losses on disposal of real estate

 

10

 

(192,223)

Net gains on sales of investments

 

(3,594)

 

(4,250)

Deferred income taxes

 

108,614

 

(179,047)

Net change in other operating assets and liabilities:

 

 

 

 

Reinsurance recoverables and trade receivables

 

1,601

 

(27,659)

Inventories and parts

 

(8,858)

 

(17,410)

Prepaid expenses

 

(12,533)

 

(22,220)

Capitalization of deferred policy acquisition costs

 

(19,994)

 

(21,501)

Other assets

 

159,125

 

6,279

Related party assets

 

(1,838)

 

47,804

Accounts payable and accrued expenses

 

(5,420)

 

26,764

Policy benefits and losses, claims and loss expenses payable

 

(159,285)

 

2,767

Other policyholders' funds and liabilities

 

2,867

 

590

Deferred income

 

(4,982)

 

(1,297)

Related party liabilities

 

(3,269)

 

(4,542)

Net cash provided by operating activities

 

877,704

 

839,021

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Escrow deposits

 

(3,292)

 

19,707

Purchases of:

 

 

 

 

Property, plant and equipment

 

(1,325,365)

 

(970,472)

Short term investments

 

(39,494)

 

(48,743)

Fixed maturities investments

 

(394,266)

 

(274,283)

Equity securities

 

(957)

 

(662)

Preferred stock

 

(81)

 

(1,000)

Real estate

 

(505)

 

(1,783)

Mortgage loans

 

(56,892)

 

(80,707)

Proceeds from sales and paydowns of:

 

 

 

 

Property, plant and equipment

 

561,848

 

591,040

Short term investments

 

47,012

 

54,319

Fixed maturities investments

 

83,767

 

102,404

Equity securities

 

8,608

 

Preferred stock

 

1,625

 

3,188

Real estate

 

 

5,348

Mortgage loans

 

116,800

 

23,726

Net cash used by investing activities

 

(1,001,192)

 

(577,918)

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Borrowings from credit facilities

 

693,132

 

426,262

Principal repayments on credit facilities

 

(255,123)

 

(303,212)

Payment of debt issuance costs

 

(5,097)

 

(4,581)

Capital lease payments

 

(236,683)

 

(219,623)

Employee stock ownership plan shares

 

(203)

 

(6,764)

Securitization deposits

 

 

(2,181)

Common stock dividends paid

 

(29,385)

 

(19,587)

Investment contract deposits

 

300,920

 

347,695

Investment contract withdrawals

 

(109,641)

 

(163,499)

Net cash provided by financing activities

 

357,920

 

54,510

 

 

 

 

 

Effects of exchange rate on cash

 

(9,435)

 

9,468

 

 

 

 

 

Increase in cash and cash equivalents

 

224,997

 

325,081

Cash and cash equivalents at the beginning of period

 

759,388

 

697,806

Cash and cash equivalents at the end of period

$ 

984,385

$ 

1,022,887

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

 


AMERCO and consolidated subsidiaries

notes to condensed consolidatED financial statements

1.Basis of Presentation

AMERCO, a Nevada corporation (“AMERCO”), has a third fiscal quarter that ends on the 31st of December for each year that is referenced. Our insurance company subsidiaries have a third quarter that ends on the 30th of September 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 2018 and 2017 correspond to fiscal 2019 and 2018 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 December 31, 2018 and the related condensed consolidated statements of operations, comprehensive income (loss), stockholders’ equity for the third quarter and first nine months and cash flows for the first nine months of fiscal 2019 and 2018 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, 2018.

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 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.

 


AMERCO and consolidated subsidiaries

notes to condensed consolidatED financial statements (Continued)

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 15,559 and 18,279 as of December 31, 2018 and 2017, 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 $31.0 million and $30.2 million as of December 31, 2018 and March 31, 2018, respectively.

Available-for-Sale Investments

Available-for-sale investments as of December 31, 2018 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

$

128,934

$

1,140

$

(2,319)

$

(2,462)

$ 

125,293

U.S. government agency mortgage-backed securities

 

61,243

 

526

 

(44)

 

(1,558)

 

60,167

Obligations of states and political subdivisions

 

238,243

 

5,203

 

(251)

 

(2,456)

 

240,739

Corporate securities

 

1,576,170

 

14,898

 

(8,033)

 

(26,956)

 

1,556,079

Mortgage-backed securities

 

119,006

 

541

 

(212)

 

(1,384)

 

117,951

Redeemable preferred stocks

 

1,493

 

37

 

 

(20)

 

1,510

 

$

2,125,089

$

22,345

$

(10,859)

$

(34,836)

$ 

2,101,739

AMERCO AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


Available-for-sale investments as of March 31, 2018 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

$

123,557

$

3,595

$

(1,036)

$

(203)

$ 

125,913

U.S. government agency mortgage-backed securities

 

36,416

 

951

 

(1)

 

(93)

 

37,273

Obligations of states and political subdivisions

 

178,702

 

9,938

 

(217)

 

(18)

 

188,405

Corporate securities

 

1,388,300

 

50,056

 

(3,009)

 

(1,826)

 

1,433,521

Mortgage-backed securities

 

94,106

 

2,072

 

 

(153)

 

96,025

Preferred stocks

 

10,609

 

321

 

(29)

 

(40)

 

10,861

Common stocks

 

15,732

 

12,329

 

(10)

 

(189)

 

27,862

 

$

1,847,422

$

79,262

$

(4,302)

$

(2,522)

$ 

1,919,860

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 $76.0 million during the first nine months of fiscal 2019. The gross realized gains on these sales totaled $0.9 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 it 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 for the first nine months of fiscal 2019 or 2018.

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 first nine months of fiscal 2019 and fiscal 2018.

AMERCO AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


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

 

 

December 31, 2018

 

March 31, 2018

 

 

Amortized

Cost

 

Estimated

Market

Value

 

Amortized

Cost

 

Estimated

Market

Value

 

 

(Unaudited)

 

 

 

 

(In thousands)

Due in one year or less

$

58,311

$

58,532

$

36,446

$

36,674

Due after one year through five years

 

503,227

 

502,343

 

441,223

 

450,816

Due after five years through ten years

 

648,241

 

639,629

 

607,895

 

626,174

Due after ten years

 

794,811

 

781,774

 

641,411

 

671,448

 

 

2,004,590

 

1,982,278

 

1,726,975

 

1,785,112

 

 

 

 

 

 

 

 

 

Mortgage-backed securities

 

119,006

 

117,951

 

94,106

 

96,025

Redeemable preferred stocks

 

1,493

 

1,510

 

2,118

 

2,247

Equity securities

 

 

 

24,223

 

36,476

 

$

2,125,089

$

2,101,739

$

1,847,422

$

1,919,860

As of March 31, 2018, equity investments were classified as available-for-sale on our balance sheet. However, upon adoption of Accounting Standards Update (“ASU”) 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, on April 1, 2018, the updated guidance eliminated the available-for-sale balance sheet classification for equity investments. As of December 31, 2018 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:

 

 

Estimated Market Value as of

 

 

December 31, 2018

 

 

(Unaudited)

 

 

(In thousands)

 

 

 

Common stocks

$

18,298

Non-redeemable preferred stocks

 

7,305

 

$

25,603

 

AMERCO AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


4. Borrowings

Long Term Debt

Long term debt was as follows:

 

 

 

 

 

December 31,

 

March 31,

 

2019 Rate (a)

 

Maturities

 

2018

 

2018

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

(In thousands)

Real estate loan (amortizing term)

3.89%

 

2023

$

105,413

$

135,287

Senior mortgages

3.72% - 6.62%

 

2021 - 2038

 

1,659,930

 

1,487,645

Working capital loans (revolving credit)

3.59% - 3.72%

 

2021

 

335,000

 

55,000

Fleet loans (amortizing term)

1.95% - 4.66%

 

2019 - 2025

 

281,329

 

342,971

Fleet loans (revolving credit)

3.49% - 3.50%

 

2021 - 2023

 

530,000

 

460,000

Capital leases (rental equipment)

1.92% - 5.04%

 

2019 - 2025

 

1,012,791

 

984,217

Other obligations

2.75% - 8.00%

 

2019 - 2048

 

79,064

 

73,579

Notes, loans and leases payable

 

 

 

 

4,003,527

 

3,538,699

Less: Debt issuance costs

 

 

 

 

(27,763)

 

(25,623)

Total notes, loans and leases payable, net

 

 

 

$

3,975,764

$

3,513,076

 

 

 

 

 

 

 

 

(a) Interest rate as of December 31, 2018, 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”). As of December 31, 2018, the outstanding balance on the Real Estate Loan was $105.4 million.  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 final maturity of the term loan is April 2023. 

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 December 31, 2018, the applicable LIBOR was 2.39% and the applicable margin was 1.50%, the sum of which was 3.89%. 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. These senior mortgage loan balances as of December 31, 2018 were in the aggregate amount of $1,659.9 million and mature between 2021 and 2038. 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.

AMERCO AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


Working Capital Loans

Various subsidiaries of Real Estate are borrowers under asset-backed working capital loans. As of December 31, 2018, the outstanding balance of these loans in the aggregate was $235.0 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 2021 and October 2021. 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 December 31, 2018, the applicable LIBOR was 2.34% and the margin was between 1.25% and 1.38%, the sum of which was between 3.59% and 3.72%. 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 working capital 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 December 31, 2018, 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 December 31, 2018, the applicable LIBOR was 2.32% and the margin was 1.38%, the sum of which was 3.70%. 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

U-Haul and several of its subsidiaries are borrowers under amortizing term loans. The aggregate balance of the loans as of December 31, 2018 was $281.3 million with the final maturities between April 2019 and November 2025.

The amortizing loans require monthly principal and interest payments, with the unpaid loan balance and accrued and unpaid interest due at maturity. These loans were used to purchase new trucks. The interest rates, per the provision of the loan agreements, are the applicable LIBOR plus the applicable margins. As of December 31, 2018, the applicable LIBOR was between 2.35% and 2.46% and applicable margins were between 1.72% and 1.75%. The interest rates are hedged with interest rate swaps fixing the rates between 2.82% and 3.00% based on current margins. Additionally, $258.6 million of these loans are carried at fixed rates ranging between 1.95% and 4.66%.

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 $555.0 million. These loans mature between January 2021 and April 2023. The interest rates, per the provision of the loan agreements, are the applicable LIBOR plus the applicable margin. As of December 31, 2018, the applicable LIBOR was between 2.34% and 2.35%, and the margin was 1.15%, the sum of which was between 3.49% and 3.50%. Only interest is paid on the loans until the last nine months of the respective loan terms when principal becomes due monthly. As of December 31, 2018, the aggregate outstanding balance of the loans was $530.0 million.

Capital Leases

We regularly enter into capital leases for new equipment with the terms of the leases between five and seven years. During the first nine months of fiscal 2019, we entered into $255.3 million of new capital leases. As of December 31, 2018 and March 31, 2018, the balance of our capital leases was $1,012.8 million and $984.2 million, respectively. As of December 31, 2018 the interest rates were between 1.92% and 5.04%. The net book value of the corresponding capitalized assets was $1,479.9 million and $1,407.6 million as of December 31, 2018 and March 31, 2018, respectively.

AMERCO AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


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 December 31, 2018, the aggregate outstanding principal balance of the U-Notes® issued was $82.3 million, of which $3.3 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 September 30, 2018, 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 September 30, 2018, available-for-sale investments held with the FHLB totaled $122.1 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 Leases Payable

The annual maturities of long-term debt, including capital leases, as of December 31, 2018 for the next five years and thereafter are as follows:

 

 

Twelve Months Ending December 31,

 

 

2019

 

2020

 

2021

 

2022

 

2023

 

Thereafter

 

 

(Unaudited)

 

 

(In thousands)

Notes, loans and leases payable, secured

$

444,230

$

537,017

$

701,960

$

550,082

$

421,537

$

1,348,701

Interest on Borrowings

Interest Expense

Components of interest expense include the following:

 

 

Quarter Ended December 31,

 

 

2018

 

2017

 

 

(Unaudited)

 

 

(In thousands)

Interest expense

$

38,825

$

31,983

Capitalized interest

 

(5,055)

 

(2,075)

Amortization of transaction costs

 

909

 

963

Interest expense resulting from derivatives

 

148

 

687

Total interest expense

 

34,827

 

31,558

 

AMERCO AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


 

 

Nine Months Ended December 31,

 

 

2018

 

2017

 

 

(Unaudited)

 

 

(In thousands)

Interest expense

$

109,241

$

93,475

Capitalized interest

 

(7,701)

 

(5,769)

Amortization of transaction costs

 

2,751

 

2,909

Interest expense resulting from derivatives

 

820

 

3,311

Total interest expense

 

105,111

 

93,926

Interest paid in cash, including payments related to derivative contracts, amounted to $38.5 million and $32.7 million for the third quarter of fiscal 2019 and 2018, respectively, and $109.6 million and $96.1 million for the first nine months of fiscal 2019 and 2018, respectively.

Interest Rates

Interest rates and Company borrowings were as follows:

 

 

Revolving Credit Activity

 

 

Quarter Ended December 31,

 

 

2018

 

2017

 

 

(Unaudited)

 

 

(In thousands, except interest rates)

Weighted average interest rate during the quarter

 

3.52%

 

2.47%

Interest rate at the end of the quarter

 

3.57%

 

2.56%

Maximum amount outstanding during the quarter

$

865,000

$

535,000

Average amount outstanding during the quarter

$

812,174

$

532,261

Facility fees

$

41

$

159

 

 

 

 

Revolving Credit Activity

 

 

Nine Months Ended December 31,

 

 

2018

 

2017

 

 

(Unaudited)

 

 

(In thousands, except interest rates)

Weighted average interest rate during the period

 

3.31%

 

2.38%

Interest rate at the end of the period

 

3.57%

 

2.56%

Maximum amount outstanding during the period

$

865,000

$

538,000

Average amount outstanding during the period

$

632,509

$

516,349

Facility fees

$

313

$

284

 

AMERCO AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


5. Derivatives

We manage exposure to changes in market interest rates. Our use of derivative instruments is limited to highly effective interest rate swaps to hedge the risk of changes in cash flows (future interest payments) attributable to changes in LIBOR swap rates, 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 December 31, 2018.

 

Original variable rate debt amount

 

Agreement Date

 

Effective Date

 

Expiration Date

 

Designated cash flow hedge date

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

(In millions)

 

 

 

 

 

 

 

 

 

$

15.1

(a)

 

3/27/2012

 

3/28/2012

 

3/28/2019

 

3/26/2012

 

25.0

 

 

4/13/2012

 

4/16/2012

 

4/1/2019

 

4/12/2012

 

44.3

 

 

1/11/2013

 

1/15/2013

 

12/15/2019

 

1/11/2013

  1. Operating lease

As of December 31, 2018, the total notional amount of our variable interest rate swaps on debt and an operating lease was $23.7 million and $4.9 million, respectively.

The derivative fair values were as follows:

 

 

Derivatives Fair Values as of

 

 

December 31, 2018

 

March 31, 2018

 

 

(Unaudited)

 

 

 

 

(In thousands)

Interest rate contracts designated as hedging instruments

 

 

 

 

Assets

$

240

$

437

Liabilities

 

 

(897)

 

 

 

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

 

 

 

 

December 31, 2018

 

December 31, 2017

 

 

(Unaudited)

 

 

(In thousands)

Loss recognized in income on interest rate contracts

$

820

$

3,311

Gain recognized in AOCI on interest rate contracts (effective portion)

$

(731)

$

(3,655)

Loss reclassified from AOCI into income (effective portion)

$

789

$

3,308

(Gain) loss recognized in income on interest rate contracts (ineffective portion and amount excluded from effectiveness testing)

$

31

$

3

Gains or losses recognized in income on derivatives are recorded as interest expense in the statements of operations. During the first nine months of fiscal 2019, we recognized a net increase in the fair value of our cash flow hedges of $0.6 million, net of taxes. Embedded in this change was $0.8 million of losses reclassified from accumulated other comprehensive income (loss) to interest expense during the first nine months of fiscal 2019. As of December 31, 2018, we expect to reclassify $0.2 million of net gains on interest rate contracts from accumulated other comprehensive income (loss) to earnings as interest expense over the next twelve months.

AMERCO AND CONSOLIDATED SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


6. Accumulated Other Comprehensive Income (Loss)

A summary of the components of AOCI, net of tax, were as follows:

 

 

Foreign Currency Translation

 

Unrealized Net Gain (Loss) on Investments

 

Fair Market Value of Cash Flow Hedges

 

Postretirement Benefit Obligation Net Loss

 

Accumulated Other Comprehensive Income (Loss)

 

 

(Unaudited)

 

 

(In thousands)

Balance as of March 31, 2018

$

(54,853)

$

52,509

$

(370)

$

(1,909)

$

(4,623)

Foreign currency translation