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Case 2:04-cv-00662-DGC

Document 112-11

Filed 09/30/2005

Page 1 of 36

Case 2:04-cv-00662-DGC

Document 112-11

Filed 09/30/2005

Page 2 of 36

ARSAZ 3155
Case 2:04-cv-00662-DGC Document 112-11 Filed 09/30/2005 Page 3 of 36

io o

·c

ARSAZ ·156
zi zi
z

Case 2:04-cv-00662-DGC

Document 112-11

Filed 09/30/2005

Page 4 of 36

Case 2:04-cv-00662-DGC

Document 112-11

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Aon Risk Services
Case 2:04-cv-00662-DGC Document 112-11 Filed 09/30/2005 Page 6 of 36

Wa·hin·on, D.C. 20549
FORM 10-Q

(Mark Onel
[X] QUARTERLY REpOHT
PURSU;· TO

SECTION 13

15 Idl

ACT OF !934 oF THE SE·I.-E5 EXS·LANGE

For

the

30, guarterly period ended September
OK

1998

TRANSITION REPOKT PUKSUANT

TO S

N 13

15(d)

OF THE

5EZURITIES EXChaNGE ACT

OF

1934

88-0106815
0-7862
AMERCO (A Nevada Corporation) !325 Alrmotlve Way, Ste. !00 89502-3239 Reno, Nevada

Telephone

(702)

688-630·

2-38498

U-Haul international, Inc. (A Nevada Co_·poration) Z727 N. Cenzral Avenue phoenlx, Arizcn· 85004

86-0663060

Telephone

(602)

263-6645

be filed all reports required to whether the reqisnran· ·i) has filed during the preceding 12 months Indicate by check m·rk Act of 19·4 and (2) 15(d) cf the Securities Exchange by 5ection 13 requlred tc file such r·ports) r·giatran· such =hotter period that the (or f·r the past 90 days. for ,ubject to such filing requlremen· has been ]Yes [X] No November 9, value were outstanding a· AMERCO co·mon Stock, $0.25 par 22,614,087 shares

o·

1998.

outstanding at par value, inc. Co·mcn Stock, $0.·I set forth in General shares of U-Haul internatlonai, 5,3B5 the conditions meets inc. international, reduced November 9, 1998- U-Haul ng this fo-·m with the 18-Q and i· therefore and (b) of Foinstruction H(1) (a)

Case 2:04-cv-00662-DGC

Document 112-11

Filed 09/30/2005

Page 7 of 36

item

a)

ConSolidated
March
31,

of Sepnember 30, Balance Sheet· September 30, ·997 !99B and
Earnings

1998,
4

b)

months ended September
Equity for and 1997

of Consolidated Statements 30,

for the Six

1998 and 1997

6

c)

Consolidated Statement= the Six months

of Changes

Stockholders'
1998
7

ended September 30,
the

d)

of Earnings for Consolidated Statements 30, 1998 and 1997 September

Quarters ended

e)

·onths ended
Notes
to

of Consolidated Statements 30, September

Six cash FloWs for the

1998 and 1997

...............

9

f)

September 30, 1998, September 30, 1997

consolidated Financial Statements 199s and
March 31,

item

Mana·emen·

Discussion
of

and Analysis of

Financial

19

Condition and Results

Operations

Case 2:04-cv-00662-DGC

Document 112-11

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Page 8 of 36

THIS PAGE LEFT

I·ENT! ONALLY BLANK

Case 2:04-cv-00662-DGC

Document 112-11

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Page 9 of 36

AM·KCO AND

CONSOLIDATED SUBSIDIARIES
Balance Sheets

Consolidated

September
1998

3Q,

March 31,
1998

September 1997

30,

ASSETS

··I
14,150

(unaud·ted)

(in thousands)

3!,606
317,620

cash and cash equivalents

33,831 249,992

Receivables

inventories Prepaid expenses
Defezred policy ac·alsition
costs

308,267 75,236 18,017 902,354
152,953
53,248

68,887
21,154

72,273
16,069 856,383

886,873 164,064 44,255
IC3,062

149,757
47,505
Ul

948

103,171

and equipment, Property, plant Land
Buildinqs

at

and improvements

206,640 841,063 224,221 184,443
963,413

208,C28 838,419
2!4,513

209,944

822,767 2Q5,045 181,337
1

17£,225
939 56!

053,326

equipment
Less

accU·nulated

depreciation
and

Total property, plant

I 304 072

!,275 756

1

364,245

$

·93·r460

2rgi3r277

2r862tO0·

note· are The accompany&rig

con·oiidated financial i£·egral part of these

Case 2:04-cv-00662-DGC

Document 112-11

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ARSAZ 3162 Page 10 of 36

September
1998

30,

30, March 31, Sept·raber 1997 1995

Liabilities:
AcCOunts
Notes
PoliCy

payabl·
loans

and

accrued
997,952
losses,

expenses

1,025,323
592,642 425,347

1,055,044
477,980 427,556
21,113

an·

benefits and

claimm

Liabilities from premlUm cash overdraft liabilities

and loss

expenses payable
deposl·s

566,974 429,730 25,024
39,233 39,928
66 286

21,4!4
34,911
45,295 29,082

31,817
35,202
45

476

StOCkholde-s
serial

preferred

s·ock,

with

value,

10,000,000

shares authorized,

September 30, 1995,

March 31, 1998

1,441

1,441

1,441

and capital Additional paid-in

September

30,

1997

9,122 288,444

9,122

313,444

9,122 336,533

(15,642)

(9,354)

(10,424)

(19,635,913

September and September stock Unearned employee shares
ownership plan

of shares 30, 1998, March 31, 30, 1997)

1998

359,723

359,723

359,723

Total

s t°ckh°iders·

equity

Case 2:04-cv-00662-DGC

Document 112-11

Filed 09/30/2005

Page 11 of 36

598,901 107,567 96,223 829,509 446,984 62,909 79,991
of

571,330

105,611
79,845

78D,422
416,997

Cost of sales

60,520 82,033 7,123 45,455
643,543 136,879

Benefits and losses

Amortization

deferred acquisitlon

8,799 56,532

687,117
142,392

and $7,064 in income of $6,878 respectively 1998 and 1997,

__291757
i12,635

33,644

103,235

73,401

68,230

$

Net ear·ings
share (both Earnings per co--on and diluted): basic before Earnings from operatlons early extraordinary loss extinguishment of debt early Extraordinary loss on of debt, net

73t401

64t09[

2.93
2.93

2.63

extlnguish·ent

$

2.44

shares outstanding Weighted average common

211930t 301

21·8841614

notes The accompanying

are

integral part of these

consolidated financial statements-

Case 2:04-cv-00662-DGC

6 Document 112-11

Filed 09/30/2005

Page 3164 ARSAZ 12 of 36

ARSAZ 3165
Case 2:04-cv-00662-DGC Document 112-11 Filed 09/30/2005 Page 13 of 36

AM·RCO AND CONSOLIDATED

SUBSIDIARIES

Quarters

ended September 30, (Unaudited)
1998
share and

1997

per

share data)

317,488
Net sales

51,254 57,793 440,171

306,184 50,129
44,380

412,774
227,224

Costs and

expenses

Operating expense
Benefits and losses

237,448

30,214
44,411 4,188 29,570
14,329

29,710
43,612

3,663
22,438
10,836

360,!60

337,483 75,291

80,011

Income of

$3,236 and $3,586 in

1998 and 1997,

respectively

14 748

161176
59,115

65,263

(23,0921
before Earnings from operations early exrraordinary loss extin·uish·enr of debt early Extraordinary loss extinguishment of debt, net

42,171

39,032

421171
Earnings per co·on share: before Earnlngs from operations early extraordinary loss extinguishment of debt Extraordinary loss on early extinguishment of debt, net

34·894

(0.19)

shares outstanding Weighted average common

2119351854

2118901072

are The accompanylng notes

integral part of these

consolidated financial statements.

Case 2:04-cv-00662-DGC

Document 112-11

Filed 09/30/2005

Page 66 ARSAZ 3 14 of 36

Consolidated Statements

of Cash Flows

5ix months

ended Sep·er·ber 30, (Unaudited)
1998

19S7 (in thousands)

Cash flows from operatlng
Net
earnings

actlVltles:

Depreciation and amortizaElon
Net Net

73,401 47,676
2,272

64,092 42,368 2,350

receIv·ble (gain) loss

sale of real and

personal property
sale of investments (g·in) loss Changes in policy liabi!itie= and

(1,677] (1,979)
(210)

146·)
25

29,244 (5,709) (8,842)

Additions

to

deferred policy

(17,654)
Nen change in other operating assets

and liabi!itie=
Net cash

(8·148}
operatlng activlties

provided by

93,681

123t063

Cash flows from investing activities: Purchases of investments: Property, plant ·nd equipment

Fixed maturities Equity investment

(190,031) (!13,073)

(284,035) (66,883)

(24,500)
(15,500) (1,246]
(II,858) 134,320

Property,

plant and

equlpmen·

129,258
110,366

68,693
394

4,749
preferred stock Mortgage loans
Net cash provided
658

9,710

10,623

51063
(used) by investing

31D83
(170,363)
176,000 (1,506)

activities
Cash flows from financing activlties:

{601046)
19,000 (378] (46,341)

Net change in short-te· borrowlngs Debt issuance costs

Principal payments

notes

(100,506)
(4,138)

Extraordinary loss on early extinqulshment of debt, net Leveraged Employee Stock Ownership Plan: Purchase of shares Repayments from loan Net change in cash overdraft preferred stock dividends paid Repurchase of preferred stock Investment contract deposit· Investment contract withdrawals Net cash provided (used) by financing actlvities Increase (decrease)in cash and cash equivalents Cash and cash eqn/ivalents at beginning of period Cash and cash equivalents at end of period

(2) 186

(3)
169

3,610 (9,247) (25,000) 39,257

(2,493) (10,532) 11,726

(321176) (5!·093)
(17,456)

(291338)

39·379
(7,921)

311606
$

411752
33·831

!41150

The accompanying notes

an integral part of the·e consolidated financlal statements.

Case 2:04-cv-00662-DGC

Document 112-11

Filed 09/30/2005

Page 15 of 36

September

30,

199B, March 31,

1998 and September 30,

1997

(Unauditedl

Co,any

(K·IC)
OF

company and Oxford Life Insurance

(oxford)the

PRINCIPLES

CONSOLIDATION

consolidated The and cerporatlon, ·MERCO,
been

All material
The

substantially all of which its subsidiaries, and its and transactions of ·KCO intercompany accounts

financial

statements

include

accounts

of

the

parent
have

wholly-ownedsubsidiarles

and 1997, and the related of September 30, 1998 flows for the balance sheets equity and cash stockholder·' management, statements of earnings, changes in the opinion of consolidated IS9g are unaudited; statements have been September 30, 1998 and of such financial six months ended fair presentation necessary fo .nte·l· recurring ltemm. all adjustments conslsted only of no ·m·l

elirmlnated.

consolidated

includedof results for not necessarily indicative
opera tions

such adjustments

full year.

deter=ined
ts

which

would

signlflcan-ly
and notes

one gua·er

·ag. affect

consolidated financlal
per·itted
by
Form

posltlon

The

financial statements

presented

10-Q

and do

employee stock ownership plan excluding shares of the undeclarad outstanding for the period, preferred dividends include =hares for ·he to be released· not been co·mnltted for preferred dividends that have Net income is reduced common stock that of the Company. any potential unpaid dividends The Co, any does not have antidilutlve in share because it is purpose of the calculationof diluted earnings per equal. in the calculation earnings per share not included Accordingly, basic and diluted the current period. for the six the financial statements have been m·de to Certain reclassificatlons current year's presentation. the 30, 1997 to conform with month· ended September

Case 2:04-cv-00662-DGC

Document 112-11

Filed 09/30/2005

Page 16 of 36

(Unaudited)

obligations

$

13,415

$

13,249

1,413
501

14,662

(458)

33,379

subdivlsions
securities

$ $

26,745 140,772

26,642 143,464

1,243

27,885

4,178 1,879

{283)
(279)

147,359

B9,670

Jmne 30,

1998

Par Valua

consolidated

Available-for-Sale

number of shares

Amortized
cost

18,319

974

(3)

!9,2·0
34,069

hacked securities

$

33,332

32,795

1,281

(7)

and

political
$ $

subdivisions
s·curities

8,137 337,912
50,652

8,537
337,709

416

(15)
(1,351)
(25) I174)

8,938

12,273 1,190
664

348,631

securlties

$

50,459

51,624

_281747

291237 4911789
930·968,

·76·566
Total

161798 27t203

(I1575)

8871·33

131366)

Case 2:04-cv-00662-DGC

Document 112-11

Filed 09/30/2005

ARSAZ 3169of 36 Page 17

AF·KCO AND
Notes to

CONSOLIDATED

5UBSIDIAKIE$

Statements, Contlnued Consolidated Financlal (Unaudited)

(in

·housands)

431,983 22,B29 139,927

412,140

24,014
117,613 9,217
32,521

Recaivables

Deferred policy acquisition Due from affiliate

costs

6,116
23,533 17,244
8
$ $

16,851

588

9·867
622:223,
348,252

6·501220
380,188

Policy

liabilitles

and

accruals

47,562
22,891

55,235

Unearned premiums
other

pollcyholder s'
liabilities

funds and liabili=ies

·5,653
19·9
$

221166

Total

579

196,570

Stockholder's equity and Total liabilities stockholder's equlty

6·50·220

622·223,

$

65,261

78,996

Net

investment

income

·652

15t2BO
94,276 69,918 4,311

81,913
56,540

Benefits and losses deferred policy Amortizatlon of

2,401

acquisition

costs

161454
6,518

!4t224
5,B2·

Other expenses Income from operations expense Federal income tax
$

41558

4·178

Net income

Case 2:04-cv-00662-DGC

Document 112-11

Filed 09/30/2005

Page 18 3170 ARSAZ of 36

AMERCO A·D CONSOLIDATED SUE5IDI/·KIE5

(Unaudited)

INFO·MATIO· sUMMARIZED C·SOLIIIATED FI·IANCIAL
A

OF INS LrP·NCE SUbSIDIAriES,

continued

summarized consolidated

balance ·heet for oxford is

presenned
June
30

below:

Deferred policy acquisition Due from affiliate

costs

470,371 109,225 33,543 47,132
(307)
29,589
$

444,243 102,894
14,527

38,28B
121 2,402

6891553
139,224
429,730

6021475,
81.928 427,556
5,108 524,625

Policy

liabilities

and accruals

19,475 599,476

Stockholder's

equity
$

Total liabilities and

stockholder's
A

equity

6891553

602+475
presented
ended
below:

summarized consolidated

is income statement for oxford

six monthm

$

36.302

12,700

Premium· Net investment income

_·49440
45,742

·i 909
21,609 12,115 2,812

Tota! revenue
23,451

Amortization of deferred policy

acquisition

costs

6,398 6,753

Income from

operations

·(2,088)

3.906 (1·085]

Net income

On

November 21.

1997,

,Oxford.

·.

$

41665
the

2rB21

·hased all of
ies

'Encore)

for

issued and outstanding Encore's prlmary $11,569,000.

shar·s

of

of whose p and outstanding cD·on shares domiciled in Wisconsin N· o·= all of the issued and casualty insurance c·any life and disability produc·s. property Casualty Insurance Co.any, North ·eric· Fire &

0n

Nove·er

24,

1997,

issued and outstanding shares of oxford purchased all of the

Case 2:04-cv-00662-DGC

Document 112-11

Filed 09/30/2005

Page 19 of 36

A·ZRCO AND CONSOLIDATED

SUBSIDIARIES
Continued

Statements, Notes ·o Consolidate/ Financia!

(Unaudited)

Accumulated
currency

comprehensive
income

Balance at March 31, Foreign currency transla·lon Unreallzed gain (loss)
30, Balance at September

1998

$

(18,675)
(5,496)

9,291

(9,384) (5,496)
(762)

(762)

1998

{24,%71)
(14,133)
(520)

9·529
4,411
(1821
4,229

I!5, 642)
(9,722)
(520)
(182)

Balance

March 31, 1997 translatlon Foreign currency Unrealized gain (loss)
at

30, Balance at September

1997

II0r424,

Marc·311
1999
2000

Commitments
$

period
907 2,040 2,040

end

Total

8,344

2001 2002
2003

12,514 12,514 12,514 12,514
$

2,040
2,E40

9,251 14,554 14,554 14,554 14,554

Thereafter

291H17 881217

141·77

51210

3510·
102

494

and c!aim·.

The

company is also

regnl]te

the

removal and/or

clean-up

of

underground fuel

·he Company, Ind·v. proceedings invo!vlng

-Y

Case 2:04-cv-00662-DGC

Document 112-11

Filed 09/30/2005

ARS/ Z 3172 of 36 Page 20

IUnaudited)

Six Month· ended September 30,

1998

1997

(in thausands)

(25,092)

(14·736)

Accounts payable and

accrued liabilitie·
caxes ended September 30,
Income Interest

(12,!95)
and

[261!!2)
$I, 159,000

paid in cash amounted to $820,000 !998 and 1993, respectively.

for

paid
30,

ended September

cash a/·ouUn·ed to $36,921,000 1998 and 1997, respectively.

and

$44, 609,000

for

September 30,
1998

September 30,

1997 1998 1997 (in thousand· except share and per share data)

Earnings fr·n operations before extraordln·ry early extinguishment lo·s
of debt Less dividends

73,401

68,230

42,17·

38,032
5,336

preferred shares
early Extraordinary loss extinguishment of debt
$

8·073
64·328

I01571
57,659

4·586
37,585

33,716

(4,138)

(41138)

64r328

53152!

37r585

29157S

Net earnings for

per

share:

Earnings from operations before extraordinary loss early extinguishment of debt early Extraordinary loss extinguishment of debt, net

$

2.93

2.63
(0.19)

1.71

1,54

(0.19)

$

2.93

2.44

1.71

1.35

2!193013·!

2!188416] 4

2!19351854

2!18901072

Case 2:04-cv-00662-DGC

Document 112-11

Filed 09/30/2005

Page 21 of 36

(Unaudited)

Case 2:04-cv-00662-DGC

Document 112-11

Filed 09/30/2005

Page 22 of 36

(Unaudited)

and Storage Casualty

Life

and

707,194 707,194

77,162

45,153
589

829,509

4:75!
B1,913 3,438

·340)
(5,340)

45,742
10,662

829,509

Depreciation/
amortization
$

47,676

33,576

29,757
of $6,878
Income tax
$

99,364
$

35,186

6,518 1,960 650,220

6,753
2,088 689,553

39,234

$I,·22,349

(330,654)

2,931,468

676,458
Total revenue

83,031
I! 245

20,933
676

780,422

(11,7211
(II,721)

676,458 34,249

94,276 5,337

21,609 2,782

780,422
42,368

Depreciation/
amortization

33,644
Pretax earnings Income tax

33,644 93,506 32,275

5,823
1,645 622,223

3,906
1,085 602,475

103,235
35,005

identifiable

$1,961,218

(323,913)

2,862,003

ARSA - 317,
Case 2:04-cv-00662-DGC Document 112-11 Filed 09/30/2005 Page 23 of 36

(Unaudited)
continued
Canada
(in thousandm)

1O.

I·DUST·X S·[·T
/·rea

A·D G·OGRAPHIC AREA DATA,

Geographic
(All

Da·a ·!nounts are i· U.S·

United State·
$'s)

Consolidated

Total revenues
Income tax

199·8

Depreclation/amortizati°n net
Interest expense,

Identifiable
Total

assets

$ $ $ $ $

811,223 46,038

18,286

829,509

1,638
(117]

59,874
39,234

47,676 29,757 39,234

2,892,406
761,326
41,091

39,062
19,096 1,277
(92)

2,931,468
780,422 42,368
33,644

199·7 revenues Depreclatlon/a·rtlzatl°n

$
$

$

33,736

ii.

SUBSEQUENT EV·T8

O00 cash dividend of $3,241, zhe Company declared of NoVember 13, 1998. on November 3, 1998, of record share) to preferred stockholders per preferred

($0.53125

Case 2:04-cv-00662-DGC

Document 112-11

Filed 09/30/2005

Page 24 of 36

information

and

industry

segment

and

9eoqrap hical

area

data,

respectively.

In

increamed

by

$24.8

·llion

primarily due

to

·ncrease

truck

rental

revenue.

The

Net sales

revenues

$107.6 million during

the

first

months

of

fiscal

1999,

6.7% during this period,

!ed

to

the i·provement-

Operating expenses increased 1999 from $404.1 million compared
levels. 1999.

to

$426.7 million during the increase 1998, to fiscal

of

six months of Higher 5.6%.

fiscal rental

Equipment ·alntenance expenditures

within the planned target range for fiscal
first six months

Lease

compared

to

expense increased to $56.5 mmllion nine Additional leasing actlvity over the past $45.5 million in fiscal 1999.

during the

of fiscal

1999

minimal change. rental equlpment accounted for the

gross prerclu/· writings for the The decrease In premium writings r·sult·d compared to $87.9 million in 1997. million The rental industry share of transactions with U-Haul. primarily from reduced insurance co·pared to 51.4% in 1997 due to the decrease 1998 total premlums declined to 41.6% in via broker markets and RWIC underwrites professional reinsurance in U-Haul transactions· ended Jun· 30, 1998 to 35.3% of to·al increased during the six months accounted for premium· in this area RWIC's direct multiple peril coverag· 1997. cmmpar·d to gross pr·mmuun·, from 34.4% in months ended June 3·, 1998, during the 15.7% of total gross premlums 7.4· of gross lines increased to prem·um· in selected general agency the 11.9% in 1997. Increased written premium 2.3% in 1997. to written orem·um· in 1998 as compared contributed to ·his increase. excess w·rkers compensation business
RWIC

six

months

ended

June

30,

1998

were

$76.9

Case 2:04-cv-00662-DGC

Document 112-11

Filed 09/30/2005

Page 25 of 36

ARSAZ 31/7

Net

earned

premium· decreased

to

$65.3

m·llion

for

the

six

months

ended

June

30,

$45.1 ·l!llon

1997.

An

additiona!

$0.2

·.on

decrease

due

to

the

general
A·su·ed

agency

to

·il!ion ·or $7.8 199B compared 30, $9.8 mll!ion at June June 38, to $23.5 m·llion for the six months endin· reinsurance increased
!997.

treaty

1998

compared

1998,

Unde·wrlting expenses incurred decrease of $13.1 million,

$75·4

14.8%

million for the The from 1997-

six months ended June 30, loss and loss adjustment

for

1997.

This

represent·

increase

of

$0.7

Total premiu:nm month· ended June 30,

$36.3 million for the six These increases are $23.6 million over !997· 1998, (NAI) and Safe Mate of North American Insurance Company prim·rily due to the acquisition (SML). Life Insurance Company $11.2 eliminations lines before intercon· any million $2.5 Premiums from oxford's reinsuranne of increase 1998, 30, ended JU·e six months These the million for oxford's premiums in 1998. 1997 and accounted for 30.9% of health approximately 28.7% credit life and accident and insurance, primarily from term i·e
from

Oxford

and its increase cf

subsidiaries

pr·m·umm

before interco·pany from Oxford's direct lines premium· increase of $254 thous·d months ended June 30, 1998, million for the six attributable to writing of

eliminations

6.3%

$4.3 from

is primarily This increase in direct premium direct buslness related to group life and disability oxford's 1998 Life policies, premlum Whole months ended Ju· 30, of the Company for the six coverage issued to employees lines, including credit life Other direct 3.4% of premiums. accounted for approximately Oxford's prem·u·m in 1998. of accounted for approximately 8.3% 56.3% business, and health $20.4 million and accounted for and S·L subsidiaries, ·AI Premiu· from oxford's

new Single

1997.

of pre·lum·

for the six months

ended June 30,

1998.

$8.4 million and $8.9 before intercor·pany elimination= This increase is Net investment income 1998 and 1997, respectively. ended June 38, million for the six months of HAl and S·L. resulting from the acquisition larger asset base due to six monKhs ended June 30, were $41.2 million for the Benefits and expenses incurred were $22.1 million, increase of 25.6% over 1997. and acquisition costs Oxford's 1998. in the amortization of policy to oxford's subsidiaries ·nc ·ease is primarmly due to increases This Benefits and expenses related policies. for n·w credit insurance ended June 30, 1998. million for the slx months

benefits

expenses

were $19.I

Operating profit
m·lon

eliminatlons increased by $2.8 before tax and before interco·qoany due tc the acquisition of to $6.8 mlllion, primarily approxmmately 72.8% in 1998

Net interest

1999, as
to

compared

during expense declined to $29.8 million co·Ipared to fiscal 1998. The decrease to $33.· million

reduction

·n

the

average

cost

of

debt

and

the first six months of fiscal can be attributed levels decrease in average debt

Case 2:04-cv-00662-DGC

Document 112-11 2o

Filed 09/30/2005

Page 26 ARSAZ 3178 of 36

ex·inguished $76.0 ·iilon of second quarter of fiscal [998, zhe Company This 1999 nhr·ugh fiscal 2002. due in fiscal L0.27% interest-bearinq notes originally ne· of tax cf $2.3 million ($0.19 per extraordinary loss of $4.1 m·llion, resulted in
Durlnq

the

share).

operations

are

generated

in

the

first

and

second

·aarters

of

each

fiscal

year

(April

1998
$

1998

309,338

440,!7!
42,171

31,230
shares outstanding

(4)

21,924,749

21,935,054
1.71
Quarter

1.21

Ended
Dec 31

JUn 30

1997

Sep 30 1997

Mar 31

1997

1998

372,021

412,774

322,543

290,6D;

Earnings from operations
before extraordinary loss

early extinguishment

of debt (6) (7) 29,198 Net earnlngs (loss) (3) (6) (7) Weighted average common 2!,879,156 shares outstanding (4) 5arnlngs (loss) from operations before extraordinary loss

29,198

39,·32 34,894

(5,390) (15,236)

(14,184] (13,872)

21,890,072

21,901,521

21,913,654

early ex·inquishmen·
of deb· per common share (2) (6) (7) Net earnings (loss) per c·m·on share (both basic and di!uted) (i) (2) (4)
1,09

1.54

(0.49)

(0.85)

(61

(7)

1.09

1.35

(0.94)

(0.84)

Case 2:04-cv-00662-DGC

Document 112-11

Filed 09/30/2005

Page 27 of 36

j·n

30

sep 30

DeC

1996

7996

1997

361,253
ra·lens Earnings from ope loss

398,449

3·6,592

2·3,35

before extraordinary

40,t05
of debt Net earnrngs

(loss)

(5)

40,005

39,741 37,737

(9,538) (9,853)

(16,0241
(16,0241 21,868,241

32,015,301
Earnings

27,675,!92

20,359,873

(loss) from operations
1.15 1.29

(0.721
(0.741

(I)

(4)
i·15

1.22

1998. quarter of fiscal

Case 2:04-cv-00662-DGC

Document 112-11

Filed 09/30/2005

Page 28 of 36

28.8%

during

1997.

Direc·

m·tiple

perll

cDverage

of

varlous

co·ercial

properties

and

Liability
increase

progr·
in

in the

rental

industry

·rke· which decreased
buslness,

$3.8

·llion

from $26.8

·llion

direct multiple peril the general agency and and $i.4 ·llion ·llion for J·e 30, 1998 and $4.9
to $12.3 ·llion for

and

which consisted of $1.6 $4.0 ·llion in 1997,

co·ared

1997.

Case 2:04-cv-00662-DGC

Document 112-11

Filed 09/30/2005

Page 29 of 36

RWIC

con%pieted

the

second

quarter

of

1998

wlth

Income

before

tax

expense

of

54.3

for 1997. 30, 1998 and $4.4 million quarter ended June

quarter of fisCal 1999 versus $14.7 million in the second expense decreame in average debt to Net interest The decrease can be attributed $16.2 million for 1997. cost of debt. reductlcn in the average
and levels outstanding

were realized during earnings of $65.3 million A·t·r 1998. the foregoing, pretax $59.1 million for fiscal compared to net of fiscal 1999, the extinguishment of debt, the second quarter losses from taxes and extraordinary compared to $34.9 million, were 542.2 providing for income quarter of fiscal 1999
As

resul·
·he

earnings

for

second

Case 2:04-cv-00662-DGC

Document 112-11

Filed 09/30/2005

Page 30 of 36

cash

flows

provlded

(used)

by

operating

activltles

$(8.8)

·llion

and

$1.7

grade securities-

The maturlty distribution

designed to provide sufficient liquidity

to

Stockholder's equity Increased

$3.0

million from $196.6 ·llion a· JtUne

30,

1997

to

pre·iumm, deferred annuity ·ales and investment of cash to payments benefit and operating costs are cash of priory The income. of to the ·ash flow demands of the types Matching the investment portfolio policyholders. Benefit and claim statistlcs important considerationinsurance being written of future caah requiremenus. continually monitored to provide projec·ions $2.4 million and $14.5 n·illion for activities Cash flows provided by operating Cash flows provided (used) by June 30, 1998 and 1997, respectively. the slx months ended for the slx months ended June $7.1 million and $(17.6) nLlllion financing activities component of are cash flows from deferred annuity sales 30, 199B and 1997, respectively, component of fixed maturities, which are in the purchase financing activities and result and finmnclng from operatlng flows addition to cash In of investing actlvitles. is available through Oxford's short-term subs·antla· amount of liquid funds activities, investments amounted to $33.0 million and !997, short-te· portfolio. At June 30, 1998 and of liquidity will Management believes that the overall sources $4.5 ·llion, respectively.
Oxford's prlmary

continue

to meet

foreseeable cash ne·ds.
of

Stockholder's equity
!997

prinmrily

result of earnings

oxford increased to 589.6 million in 1998 from operations.

$77.8 million

Case 2:04-cv-00662-DGC

Document 112-11

Filed 09/30/2005

Page 31 of 36

·%pplicable

law·

and

regulations

of

the

State

of

in addition, the a·ount of dividends that be paid to ·hareholders by insurance co,shies domiciled in the State of Arizona is limited. /%ny dividend excess of the !i·it requlres prior regulatory approval. Statutory surplus which be distrrbuted dividends without regulatory approval zero at JUne 30, 1998. These

restrlctrons

not

obligations.

Durlng

each

·f

the

fiscal

years

ending

March

31,

1999,

2000

and

2001,

U-Haul

The

Con·any's

operations

funded

by

varlous

credit
to

and

financing
its

arrangements,

of crRdit with domestic and foreign banks.

Principally
re!ilion

finance

fleet of trucks and
and

September

30,

1998,

the

Company

had

$998.0

in

total

notes

loans

payable

30,

1998.
Certain

contain restrictive financial and other with to respect incurring additional indebtedness, ·naintaining certain financial ratlos and placing certain additional liens its propertles and assets. At September 3·, 1998, the Company in compliance with these

covenants,

of the Company's credit including, among others,

agreements

covenants

·tock.

The C o·pany is prohibited from issuing shares

of

preferred stock that provide

for

The Co·any'· date critical functions related to the Year 2000 and beyond, such rental transaction processing and financial system, may be adversely affected %unless these syst· are or become Year 2000 co·liant. co·uter The Co·pany has been replacing, upgrading or ·difying key financial syste· in the normal course ef business. The Co, any is utilizing both inte·nal and external resources to identify, correct, repr·gram and te·t its syste· for Year 2D00 co·pliance. The Company has c·mpleted the assessment phase. The Cor·any's internal inform,at!on techlno!ogy conversion phase is underway and on schedule with the ·esting phase scheduled f·r con%plot!on by fiscal year end. in particular, the Company has an outslde consulting f!· on-site currently r·akin· the necessary ·odifications ·o existing systems. The Company is also rev·ewlng its non-info·nation co·p!iance, such as rental vehicles and storage facilitles The

technology items security systemm.

for

Year

2000

Co·pany expects to be fully Year 2000 compliant by March !999 at esti·ted approxin%ately $2.0 million, of which $I.0 ·illion has been incurred through S·ptamber 30, 1998. ·ithough the Company believes It will achieve compliance on timely basi· and does not antlcipat· !ncurr·ng material costs beyond the estl·ted
cost

of

$2.C

million,

26

ARSAZ 3184
Case 2:04-cv-00662-DGC Document 112-11 Filed 09/30/2005 Page 32 of 36

lhe Company wi!l not be adverseiy affected by the be 2000 compliant, there For example, the Company may be affected o·hers to become Year 2C00 compliant. failure of card processors, credit suppliers, the failure cf Inventory things, among other by,

fourth quarter, wlth other vendor wil! be scheduled for testing durlng the Company's The Company is in the re·alnder of the calendar year !999. testing tc be scheduled during likely contingency plan to be u·ed, if in the most reasonably the process of developing
the contlngency plan will be completed by fiscal

year end.
the Co·any in the future.

problem wi!l net have

m·terial adverse effect

pART

ii.

OTHER INFORMATION

1998, the year ended March 31, the Company's Fo·n 10-K for the Superior Court of the State February 21, 1995 in the actlon judgment Edward J. Shoes et W. Shoes, M.D. et el. of Arizona, Harl·opa County, entitled Zamuel Edward J. Shoes in the amount of $7.0 a!., No. CV 88-20139 (the "Shoen Litigatlon") agalnst appeal with the 1998, Edward J. Shoen filed On July 15, punitive damages. ·lion On October supreme Court with respect to the award of punitive damages. United States subsequently reduced by award in the Shoen Litigation (which 1998, the puni=ive damage when the United States Supreme court partial se=tlement to $6.0 ·lllion) bec·me final denied cer·IorariA·

disclosed in enrered

E. Carry and Charles J. Bayer 1998 Annual Meeting of Stockholders, William John P. Brogan and ·nnua! Meeting of Stockholders; were elected to serve until the 2002 Meeting of elected t· fill vacated seats until the 1999 Arunual At the
Ja/nem

directors wlth termm that continue Stockholders. Edward J. Shoes and Richard J. Horrors john M. Dodds and James P. Shoen Meeting of Stockholders; expire at the 2000 !ulnual of Stockholders. serve as directors until the 2001 /·nnual Meeting
continue
to

J.

Grogan

withheld, cast for, against The following table sets forth the voteo voted and broker non-votes with respect to each m·tter the number of abstentions Annual Meeting of Stockholders: 1998

well
at

the

!.

Electlon of Directors
Brogan

John P.

20,334,779
20,341,242 20,344,328

53,992 46,023
41,797

63,520

James J. Grogan
William E.

6&,026
66,166

carry

Charle· J· Bayer

20,353,78·

33,703

63,800

Case 2:04-cv-00662-DGC

Document 112-11

Filed 09/30/2005

Page 33 of 36

ARSAZ 31B5

Exh±bit· Exhlbit No.
(!) Restated Artic!e· of !ncorporatlon of August ·estated By-Laws of AMZRZO
27,

1997

(2)

Financial Data Schedule

b.

Reports

For· 8

No report

Form 8-K

d during the

q·ar·er ended September

3·,

1998.

incorporated

for the quarter

Company's Quarterly by reference to the 0-7862. file ended December 31, 1992,
by reference to the

Report

Fo·

10-Q

Incorporated
for ·he

Company's Quarterly Report
1997,

Form 10-Q

·aarter

ended September 30,

file

0-7·62-

Case 2:04-cv-00662-DGC

Document 112-11

Filed 09/30/2005

Page 34 of 36

SIGNATURES

Pursuant to the requirements of the Securitie· Exchange Act of 1934, ha· duly caused this report to be siqned on its behalf by rhe ·ndersiqned,
authorized.

zhe

registran·

thereunto duly

By: /S/ DONALD W. ·JRNEY

3O

ARSAZ 3188
Case 2:04-cv-00662-DGC Document 112-11 Filed 09/30/2005 Page 35 of 36

SIGNATURES
Pursuant to the requirements of the has duly caused this report to be slqned authorized.

Securltie· Exchange ACE of 1934, Its behalf by the underslgned,

thereunto

duly

Dated: November 9,

1998

(Prlncipal Financlal Officer)

ARSAZ 3187
Case 2:04-cv-00662-DGC Document 112-11 Filed 09/30/2005 Page 36 of 36