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AMERCO Message Board

  • chfriend03 chfriend03 Aug 27, 2003 2:20 AM Flag

    Understanding the balance sheet, 1

    This is based on the balance sheet on pages 96,97,98, that lists the details of assets and debt of Amerco, Amerco's four subsidiaries, SAC and SAC's subsidiaries.

    The information on other pages could mean balance sheet for Amerco alone (excluding its affiliates) like that on page 110, or for a subsidiary, or for SAC.

    I think the serious investors need to understand the figures on pages 96,97,..... It is not easy because of SAC, intercompany adjustments, elliminations, etc.

    If SAC were an independent company, then we could ignore the last three collumns on: SAC, Elliminations, Total Consolidated.

    Since 90% of whatever SAC makes (either annual cash flow from operation, or gains on sale of properties) go to Amerco, I consider SAC at least 90% owned by Amerco. (Legally it is not.) I said at least 90% because I do not know about what is going on with the remaining 10%, that may (or may not) eventually flow back to Amerco.

    SAC's listed its properties at value of $985,901,000 less 39,156,000 "cumulative depreciation" (page 98). "Included in this caption (i.e., $985,991 thousand) is land of $264,410 (thousand), buildings and improvements of $719,728 (thousand) and furniture and equipment of $1,763 (thousand)." So 98+% of SAC's properties are in real estate.

    These figures are based on acquisition prices SAC paid Amerco and others for these properties. Amerco had realized a gain of $258,271 thousand on the sales to SAC, and that is elliminated (as the sale was considered to be equivalent of Amerco selling to itself). Basically, you cannot raise your book value of your real estate buildings by selling them from one of your own subsidiaries to another.

    "Amerco Consolidated" means Amerco + its 4 subsidiaries. For some reason, Amerco holds some assets and debt by itself, its balance sheet does not include the assets and debt of its subsidiaries. So Amerco Consolidated is the total of everything Amerco's shareholders legally owns.

    The total book value of Amerco Consolidated (the true equity of Amerco's shareholders if SAC were independent) is $540,299 thousand. The total book value of Total Consolidated, counting SAC as a subsidiary, is $381,524 thousand. Again, the latter figure elliminated the gains realized by Amerco in its sale to SAC.

    Tomorrow morning I will write on how I arrive at

    $1.6+ billion real estate values at ORIGINAL cost (without counting the gains of $258,271 thousand realized by Amerco in its sale of properties to SAC).

    The $350+ million "cumulative" real estate depreciation in the balance sheet.

    The over $670+ million equity for Amerco's shareholders (without counting the gains of $258,271 thousand in the sale to SAC), under the hypothetical assumption that the real estate values did not change during the last 40 years.

    How much would be the total value of Amerco's stocks, if the real estate were counted at market?

    The values of the trucks, and whether they are overvalued? The leases?

    The value of a share of UHAEQ if the company were to be liquidated today?

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    • I'll second Flipper's thanks to all for the civil tone and great amount of work on this board. The ratio of significant information to unfounded cheering or booing, and personal attacks, is several orders of magnitude above most Yahoo boards.

    • What I would to see is the AO loan to SAC be secured, not unsecured. I realize some portion of the loan is secured but I believe the massive bulk of the loan is the gain and is written as unsecured.

      But as chfriend says the large part of SAC and it's cash flow and gains flows to AO. Those assets on the AO's balance now would probably have allowed them to complete an out of court settlement and I feel SAC was a big reason for the BK. But it's water over the dam.

      I hope it's safe to assume SAC is solvent. We can't see all that's happening in SAC's subs so we are stuck with a lot of guess work.

      This CC on Friday is a must hear for all, especially the Q and A. I expect a lot of tough questions asked, I can certainly think of a few. A retirement announcement of one of the Schoen's will sent this stock flying.

      I would like to say thanks to all for the civil tone and great number work. We all don't agree but I feel our goals our the same. But I appreciate that no one (with me at least) have turned this into a complete personal attack as many boards do.


    • I cannot remember where I read that the properties were appraised. I also have read the cash flow basis negotiations with the treasurer stuff. Perhaps it is as simple as my confusing the fact that using cash flow is one of the accepted methods of appraising an income producing property. I did not intend to mislead.

      My guess is that the properties which were sold at AMerco's purchase price were those which the company bought and quickly sold, or those which the company bought, developed, and then relatively quickly sold to SAC.

      Properties which the company had owned for years that were sold, were not sold at cost.

      Whether the $250 million gain figure is an accurate reflection of the market value at the time of the transfer is anybody's guess. Among the items not factored into the sales prices was the fact that the various sites had a locked in right to continue marketing the entire U-Haul product line basically in perpetuity. The neat trick is that for anyone to dispute the prices at which the properties were transferred is very expensive, entailing at least getting appraisals of those properties transferred.

    • "There were no real gains on the sale of anything to SAC"

      True we have a unsecured loan for the sale of secured property...huh?

      I wish I believed the class action theory that cleaned SAC. I know some powerful class-action attorneys and they are not finance guys. Just a an IPO prospectus, it's doesn't mean the comapnay is good it just means they did the transaction within the limits of the law. SAC I beleive is in this category. It's certainly not a clean no conflict set-up.

      In my Opinion.

    • There were no real gains on the sale of anything to SAC. It is a snake eating its own tail.

    • ""The properties were sold to SAC at current market appraisals""

      Where are you getting this information?

      According to Amerco documentation in the Omnibus and later 10-K the first properites were sold at Amerco's purchase price and later properites were sold to SAC based on the properities cash flow as determined by Amerco's Tres. at the time. Nothing is mentioned about appraisals. Also is $250m truly a fully represent the gains?

      AREC's has 1000 or so properites and that appraised value is $500m more. SAC I believe has a similar number of properites and that gain was attempted at $250m...what's $250m additional amoungst friends?

    • If we could convince management to leave, the stock price would certainly go high enough so that they could maintain a majority share of the stock without dilution.

    • Real estate appreciation can be inferred by general land price change during the years.
      I'd rather call it common sense than conservation.

    • As my understanding about your V,X,Y accounting game. I think it totally has no impact on the way Chfriend03 calculates company's net value.
      If you own the most shares of a company why will you risk to cheat the book and take money away. What shoen did in the last years with the stolen money as you keep mentioning.

    • I happen to agree with you, but they did use window dressing to satisfy a cursory look at the "arms length" nature of the transaction.

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