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AMERCO Message Board

  • ZAnalyzer ZAnalyzer Jun 18, 2004 10:48 AM Flag

    10K and deconsolidation

    Amerco's press release indicates the 10K is out but the Amerco wesite doesn't list it yet.
    I'm extremely curious about how SAC holdings is now being deconsolidated. I never heard anything about it. Why are they no longer prime beneficiary? Who is?
    from press release-

    SAC Holdings

    During the fourth quarter, the majority of SAC Holdings was deconsolidated from the financial statements of AMERCO. AMERCO is no longer the primary beneficiary of a majority of its variable interests in SAC Holdings. This deconsolidation has reduced assets and liabilities $472 million and $629 million, respectively, and increased shareholder equity $157 million. Included in fiscal 2004 results for AMERCO are $177.9 million of revenues, $55.2 million of earnings from operations, $67.9 million of interest expense and a net loss of $9.4 million related to its variable interests in SAC Holdings that are being deconsolidated. The revenues, earnings from operations, interest expense, and net profits/losses representing the majority of the variable interests in SAC Holdings will be excluded from the future financial results of AMERCO.

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    • **I would not be surprised to see about $3 per share profit in next fiscal year, given that these one time charges are gone.**

      And we should start to see the big numbers this summer when they earn all their money. After rereading the paragraph on deconsolidatiuon, it seems that they just gave their interest to Mark Shoen. Just because a highly leveraged real estate business doesn't make the balance sheet look pretty, doesn't mean it has no value. Even if it had no value two years ago (which I doubt), the recent appreciation of real estate assets would have added tremendous value. I like the way they say they transferred interests to SAC's sole shareholder instead of "gave our interests to our related party, Mark Shoen, with no type of competitive bidding or exposure to the market". I had hoped these guys had gotten religion but something smells rotten in Denmark and we may soon see more shareholder money spent defending the indefensible. Hope I'm wrong.

    • Makes sense chfriend03, what a mess.

      Roth has $2.38 estimate for next year for what that is worth. But these guys seem to be always in for a new surprise.

      I have dropped off on my DD here as I feel fine about the preferred stock security. SO I have not spent the time to really dig here lately. I hope the CC clears up a few issues. If not maybe ol' Jennifer might help if she'll actually call back.

    • Profit excluding one time charges (BK fees, termination of non UHAUL related insurance at RepWest) in the past fiscal year was $2+ per share. These one time charges cost UHAL more than $2.70+ per share.

      I would not be surprised to see about $3 per share profit in next fiscal year, given that these one time charges are gone. The management indicated that RepWest's loss will not repeat next year.

      Regarding SAC's new treatment: This might be related to the $200 million new SAC notes (at 8% interest). The $200 million "proceeds" (from the issuance of debt) passed to AMERCO, and AMERCO used the money to pay down AMERCO's bondholders (part of the BK reorganization). SAC owes to third party $200 million instead of to AMERCO. None of SAC's debt is secured by AMERCO.

      The $200 million new SAC debt has made AMERCO reduce its own debt by $200 million, and thus boosting its equity value by $100+ million. The reason is, before BK reorganization, AMERCO's $200 million SAC note was written down to under $100 million in the consolidated balance sheet. Amerco could not count the $200 million SAC note as $200 million in the balance sheet because SAC was not independent.

      This is my understanding.

      At this point, SAC still owes AMERCO $100+ million. In the consolidated balance sheet, this $100+ million "asset" is NOT counted as $100+ million in the consolidated balance sheet, as SAC is still not independent. The $100 million SAC note (held by AMERCO) is probably counted something like $40 million in the balance sheet (not sure of exact figure), the rest in the "SAC ellimination" column. But if SAC further borrows $100+ million from third party to pay AMERCO, then this $100+ million will be fully recognized, thus boosting AMERCO's equity again.

    • ""AMERCO is no longer the primary beneficiary of a majority of its variable interests in SAC Holdings.""

      SAC was designed to breakeven and upstream cash beyond a point. I assume that relationship is discontinued in order to get SAC off the parent's books. I wish SAC was folded in, in BK, but not so easy I guess. I believe AO still benefits from gains on sales in SAC.

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