| Transactions with Affiliates | (8) Transactions with Affiliates In the ordinary course of business, companies owned or controlled by our controlling shareholder provide us with certain supplementary administrative support services, including legal, human resources, tax, and IT infrastructure services. Universal’s audit committee reviews and approves related party transactions. The cost of these services is based on the actual or estimated utilization of the specific service. Universal also purchases other services from our affiliates. Following is a schedule of costs incurred and included in operating expenses for services provided by affiliates for the thirteen weeks and thirty-nine weeks ended September 30, 2023 and October 1, 2022, respectively (in thousands):
Thirteen Weeks Ended Thirty-nine Weeks Ended
September 30, October 1, September 30, October 1,
Insurance $ 19,611 $ 21,532 $ 58,739 $ 56,363
Real estate rent and related costs 3,250 3,035 9,789 9,114
Administrative support services 2,994 2,220 5,222 4,514
Truck fuel, maintenance and other operating costs 2,434 2,390 6,228 5,470
Contracted transportation services 93 269 264 958
Total $ 28,382 $ 29,446 $ 80,242 $ 76,419 We pay the direct variable cost of maintenance, fueling and other operational support costs for services delivered at our affiliate’s trucking terminals that are geographically remote from our own facilities. Such costs are billed when incurred, paid on a routine basis, and reflect actual labor utilization, repair parts costs or quantities of fuel purchased. We lease 30 facilities from related parties. Our occupancy is based on either month-to-month or contractual, multi-year lease arrangements that are billed and paid monthly. Leasing properties from a related party affords us significant operating flexibility; however, we are not limited to such arrangements. See Note 7, “Leases” for further information regarding the cost of leased properties. We purchase employee medical, workers’ compensation, property and casualty, cargo, warehousing and other general liability insurance from an insurance company controlled by our controlling shareholder. In our Consolidated Balance Sheets, we record our insured claims liability and the related recovery in insurance and claims, and other receivables. At September 30, 2023 and December 31, 2022, there were $ 16.4 million and $ 16.2 million, respectively, included in each of these accounts for insured claims. Other services from affiliates, including contracted transportation services, are delivered to us on a per-transaction basis or pursuant to separate contractual arrangements provided in the ordinary course of business. At September 30, 2023 and December 31, 2022, amounts due to affiliates were $ 14.9 million and $ 20.6 million, respectively. During the thirty-nine weeks ended September 30, 2023 and October 1, 2022, we purchased used tractors from an affiliate totaling $ 6.3 million and $ 1.2 million, respectively. During the thirty-nine weeks ended September 30, 2023, we contracted with an affiliate to provide real property improvements for us totaling $ 1.9 million. There were no such purchases made during the thirty-nine weeks ended October 1, 2022. In June 2022, we executed a real estate contract with an affiliate to acquire a multi-building, office complex located in Warren, Michigan for $ 8.3 million. The purchase price was established by an independent, third-party appraisal. The Company made an initial deposit of $ 0.2 million in 2022, and paid the balance at closing in the first quarter of 2023. (8) Transactions with Affiliates – continued Services provided by Universal to Affiliates We periodically assist companies that are owned by our controlling shareholder by providing selected transportation and logistics services in connection with their specific customer contracts or purchase orders. Truck fueling and administrative expenses are presented net in operating expense. Following is a schedule of services provided to affiliates for the thirteen weeks and thirty-nine weeks ended September 30, 2023 and October 1, 2022 (in thousands):
Thirteen Weeks Ended Thirty-nine Weeks Ended
September 30, October 1, September 30, October 1,
Contracted transportation services $ 1,878 $ 59 $ 3,746 $ 662
Facilities and related support 800 40 920 160
Total $ 2,678 $ 99 $ 4,666 $ 822 At September 30, 2023 and December 31, 2022, amounts due from affiliates were $ 1.9 million and $ 1.0 million, respectively. In May 2022, we sold an inactive Mexican subsidiary to an affiliate for approximately $ 0.1 million. The purchase price was based on the book value of the net assets sold in the transaction, and as such, no gain or loss was recorded. On May 13, 2022, the Company commenced a “Dutch auction” tender offer to repurchase up to 100,000 shares of the Company’s outstanding common stock at a price of not greater than $ 28.00 nor less than $ 25.00 per share. Following the expiration of the tender offer on June 15, 2022 , we accepted 164,189 shares, including 64,189 oversubscribed shares tendered, of our common stock for purchase at $ 28.00 per share, for a total purchase price of approximately $ 4.6 million, excluding fees and expenses related to the offer. The total number of shares purchased in the tender offer includes 5,000 shares tendered by a director of the Company, Mr. H.E. “Scott” Wolfe. We paid for the accepted shares with available cash and funds borrowed under our existing line of credit. |
