Transactions with Affiliates | (6) Transactions with Affiliates Through December 31, 2004, we were a wholly-owned subsidiary of CenTra, Inc. On December 31, 2004, CenTra distributed all of our common stock to the shareholders of CenTra. Subsequent to our initial public offering in 2005, our majority shareholders retained and continue to hold a controlling interest in us. CenTra and affiliates of CenTra provide administrative support services to us, including legal, human resources, and tax services. The cost of these services is based on the actual or estimated utilization of the specific service. Management believes these charges are reasonable. However, the costs of these services charged to us are not necessarily indicative of the costs that would have been incurred if we had internally performed or acquired these services as a separate unaffiliated entity. (6) Transactions with Affiliates – continued In addition to the administrative support services described above, we purchase other services from affiliates. Following is a schedule of cost incurred for services provided by affiliates for the thirteen weeks and thirty-nine weeks ended September 26, 2015 and September 27, 2014 (in thousands): Thirteen weeks ended Thirty-nine weeks ended September 26, 2015 September 27, 2014 September 26, 2015 September 27, 2014 Administrative support services $ 1,026 $ 770 $ 2,749 $ 1,728 Truck fueling and maintenance 867 436 1,247 1,042 Real estate rent and related costs 3,149 2,578 9,578 7,852 Insurance and employee benefit plans 13,374 8,695 37,358 27,717 Contracted transportation services 218 494 686 705 Total $ 18,634 $ 12,973 $ 51,618 $ 39,044 In connection with our transportation services, we also routinely cross the Ambassador Bridge between Detroit, Michigan and Windsor Ontario, and we pay tolls and other fees to certain related entities which are under common control with CenTra. CenTra also charges us for the direct variable cost of various maintenance, fueling and other operational support costs for services delivered at their trucking terminals that are geographically remote from our own facilities. Such activities are billed when incurred, paid on a routine basis, and reflect actual labor utilization, repair parts costs or quantities of fuel purchased. A significant number of our transportation and logistics service operations are located at facilities leased from affiliates. At 43 facilities, occupancy is based on either month-to-month or contractual, multi-year lease arrangements which are billed and paid monthly. Leasing properties provided by an affiliate that owns a substantial commercial property portfolio affords us significant operating flexibility. However, we are not limited to such arrangements. In July 2015, we entered into a lease agreement with Cedar Investments LLC, an affiliate, to provide us a logistics facility of up to 500,000 sq. ft. located on 33 acres in close proximity to a major customer in Detroit, Michigan. The term of the lease is 124 months at a rate of approximately $256,500 per month once the new facility is made available for occupancy, which is expected to occur prior to the end of 2015. We purchase workers’ compensation, property and casualty, cargo, warehousing and other general liability insurance from an insurance company controlled by our majority shareholders. Our employee health care benefits and 401(k) programs are also provided by this affiliate. Other services from affiliates, including leased real estate, insurance and employee benefit plans, and 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 26, 2015 and December 31, 2014, amounts due to affiliates were $5.0 million and $2.9 million, respectively. In our Consolidated Balance Sheets, we record our insured claims liability and the related recovery from an affiliate insurance provider in insurance and claims, and other receivables. At September 26, 2015 and December 31, 2014, there were $13.7 million and $10.7 million, respectively, included in each of these accounts for insured claims. We did not purchase any tractors or trailers from affiliates during the thirteen weeks or thirty-nine weeks ended September 26, 2015. We did however purchase used snow removal equipment from an affiliate during the thirty-nine weeks ended September 26, 2015, for $18,000. For the thirty-nine weeks ended September 27, 2014, we purchased 10 used tractors and one used trailer from an affiliate totaling approximately $0.8 million. We have retained the law firm of Sullivan Hincks & Conway to provide us legal services. Daniel C. Sullivan, a member of our Board, is a partner at Sullivan Hincks & Conway. Not included in the table above are amounts paid for legal services during the thirteen and thirty-nine weeks ended September 26, 2015 of $500 and $1,500, respectively. Also not included in the table above are amounts paid for legal services during the thirteen and thirty-nine weeks ended September 27, 2014 of $46,000 and $71,000, respectively. We also exercised our right of first refusal to acquire 25,000 shares of restricted stock from a director, H.E. “Scott” Wolfe, for $622,500 based on the closing market price on March 5, 2015, the effective date of the transaction. Effective August 19, 2015, we exercised our right of first refusal to acquire 2,500 shares of restricted stock from our CEO, Jeff Rogers, for $50,825 based on the closing market price on the effective date of the transaction. (6) Transactions with Affiliates – continued Services provided by Universal to Affiliates We may assist our affiliates with selected transportation and logistics services in connection with their specific customer contracts or purchase orders. Following is a schedule of services provided to affiliates for the thirteen weeks and thirty-nine weeks ended September 26, 2015 and September 27, 2014 (in thousands): Thirteen weeks ended Thirty-nine weeks ended September 26, 2015 September 27, 2014 September 26, 2015 September 27, 2014 Transportation and intermodal services $ 10 $ 5 $ 191 $ 293 Truck fueling and maintenance — 1 — 87 Administrative and customer support services — 66 — 71 Total $ 10 $ 72 $ 191 $ 451 At September 26, 2015 and December 31, 2014, amounts due from affiliates were $1.9 million and $1.6 million, respectively. We did not sell any equipment to affiliates during the thirteen or thirty-nine weeks ended September 26, 2015. During the thirteen weeks ended September 27, 2014, we sold two used trailers to an affiliate for $4,000. The trailers were fully depreciated, and therefore, the sale resulted in a gain of approximately $4,000. For the thirty-nine weeks ended September 27, 2014, we sold 41 used trailers to an affiliate for approximately $82,000. The trailers were fully depreciated, and therefore, the sale resulted in a gain of approximately $82,000. In June 2015, our Board of Directors authorized the repurchase of up to 1,000,000 shares of our common stock through a “Dutch auction” tender offer. Subject to certain limitations and legal requirements, we could repurchase up to an additional 2% of our outstanding shares. The tender offer began on the date of the announcement, June 9, 2015, and expired on July 8, 2015. Through this tender offer, the Company’s shareholders had the opportunity to tender some or all of their shares at a price within the range of $21.50 to $23.50 per share. Upon expiration, 1,599,605 shares were purchased through this offer at a final purchase price of $21.50 per share for a total purchase price of approximately $34.4 million, including fees and commission. The tender offer was settled on July 14, 2015, and we used funds borrowed under our existing line of credit and from our available cash and cash equivalents to fund the offering. Immediately following the consummation of the tender offer, we had 28,380,679 shares of common stock outstanding. The total amount of shares purchased in the tender offer included 1,486,060 shares tendered by Mr. Manuel J. Moroun, a member of Universal’s Board of Directors, and a trust controlled by him. Mr. Moroun is the father of Mr. Matthew T. Moroun, the Chairman of the Board of Directors. During the thirty-nine weeks ended September 27, 2014, we incurred approximately $0.5 million of costs related to an underwritten public offering of our common stock. Under the Amended and Restated Registration Rights Agreement, dated as of July 25, 2012 with our majority shareholders, we were responsible to pay for the cost of the offering. After deducting the underwriting discount and offering expenses, we did not have any remaining proceeds from the sale of our common stock. |