What changed in this filing

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Item 1. Financial Statements

2022-08-11 compared with 2022-05-12 · 148 added, 120 removed, 411 unchanged (39% of the section changed)

43 unchanged sentences

Retained earnings

Accumulated other comprehensive income (loss):

Accumulated other comprehensive (loss):

Interest rate swaps, net of income taxes of $( 193 ) and $( 60 ), respectively

7 unchanged sentences

Thirteen Weeks Ended

Twenty-six Weeks Ended

Operating revenues:

18 unchanged sentences

Interest expense

Other non-operating income

Other non-operating income (expense)

Income before income taxes

8 unchanged sentences

Thirteen Weeks Ended

Twenty-six Weeks Ended

Other comprehensive income (loss):

Unrealized changes in fair value of interest rate swaps, net of income taxes of

$ 82 and $ 33 , respectively

Unrealized changes in fair value of interest rate swaps,

net of income taxes of $( 215 ), $ 2 , $( 133 ) and $ 35 , respectively

Foreign currency translation adjustments

5 unchanged sentences

(In thousands)

Thirteen Weeks Ended

Twenty-six Weeks Ended

Cash flows from operating activities:

5 unchanged sentences

Amortization of debt issuance costs

Write-off of debt issuance costs

Stock-based compensation

22 unchanged sentences

Dividends paid

Capitalized financing costs

Purchases of treasury stock

15 unchanged sentences

Comprehensive income

Dividends paid ($ 0.105 per share)

Dividends ($ 0.105 per share)

Stock based compensation

Balances - April 3, 2021

Comprehensive income

Dividends ($ 0.105 per share)

Balances – July 3, 2021

Balances – December 31, 2021

Comprehensive (loss)

Dividends paid ($ 0.105 per share)

Comprehensive income

Purchases of treasury stock

Dividends ($ 0.105 per share)

Stock based compensation

Balances - April 2, 2022

Comprehensive income

Purchases of treasury stock

Dividends ($ 0.105 per share)

Balances – July 2, 2022

See accompanying notes to consolidated financial statements.

12 unchanged sentences

Our fiscal year ends on December 31 and consists of four quarters, each with thirteen weeks.

In June 2022, the Company made a change in an accounting estimate to revise the estimated useful life and salvage values of certain equipment.

The change resulted in additional depreciation expense of $ 9.7 million recorded during the thirteen weeks and twenty-six weeks ended July 2, 2022 ($ 7.2 million net of tax, or $ 0.27 per basic and diluted share).

In March of 2020, the World Health Organization declared the coronavirus outbreak (COVID-19) a pandemic.

68 unchanged sentences

Net unrealized gains

The following table shows the Company’s net realized gains on marketable equity securities (in thousands):

The following table shows the Company’s net realized gains (losses) on marketable equity securities (in thousands):

Thirteen weeks ended

Twenty-six weeks ended

Realized gain

3 unchanged sentences

Realized gain, net of taxes

The Company did no t sell marketable equity securities during the thirteen-week period April 2, 2022.

During the thirteen-week periods ended April 2, 2022 and April 3, 2021, our marketable equity securities portfolio experienced a net unrealized pre-tax gain in market value of approximately $ 949,000 and $ 974,000 , respectively, which was reported in other non-operating income for the period.

The Company did no t sell marketable equity securities during the thirteen-week or twenty-six week periods ended July 2, 2022, or in the thirteen-week period ended July 3, 2021.

During the thirteen-week and twenty-six week periods ended July 2, 2022, our marketable equity securities portfolio experienced a net unrealized pre-tax gain (loss) in market value of approximately $( 857,000 ) and $ 92,000 , respectively, which was reported in other non-operating income (expense) for the period.

During the thirteen-week and twenty-six week periods ended July 3, 2021, our marketable equity securities portfolio experienced a net unrealized pre-tax gain (loss) in market value of approximately $ 385,000 and $ 1,359,000 , respectively, which was reported in other non-operating income (expense) for the period.

UNIVERSAL LOGISTICS HOLDINGS, INC.

9 unchanged sentences

Interest Rates

at April 2, 2022

at July 2, 2022

Outstanding Debt:

Credit and Security Agreement (1)

Revolving Credit Facility (1)

Equipment Financing (2)

2.25% to 5.13%

Real Estate Financing (3)

2.30% to 2.70%

Real Estate Facility (3)

Margin Facility (4)

Debt paid upon refinancing:

Term Loan (1) (3)

Real Estate Notes (3)

Unamortized debt issuance costs

1 unchanged sentence

Total long-term debt, net of current portion

(1) Our Credit and Security Agreement (the “Credit Agreement”) provides for maximum borrowings of $ 350 million in the form of a $ 150 million term loan and a $ 200 million revolver.

Term loan proceeds were advanced on November 27, 2018 and mature on November 26, 2023 .

The term loan will be repaid in consecutive quarterly installments, as defined in the Credit Agreement, commencing March 31, 2019 , with the remaining balance due at maturity.

Borrowings under the revolving credit facility may be made until and mature on November 26, 2023 .

Borrowings under the Credit Agreement bear interest at LIBOR or a base rate, plus an applicable margin for each based on the Company’s leverage ratio.

The Credit Agreement is secured by a first priority pledge of the capital stock of applicable subsidiaries, as well as first priority perfected security interest in cash, deposits, accounts receivable, and selected other assets of the applicable borrowers.

The Credit Agreement includes customary affirmative and negative covenants and events of default, as well as financial covenants requiring minimum fixed charge coverage and leverage ratios, and customary mandatory prepayments provisions.

At April 2, 2022, we were in compliance with all covenants under the facility, and $ 51.0 million was available for borrowing on the revolver .

(2) Our Equipment Financing consists of a series of promissory notes issued by a wholly owned subsidiary.

The equipment notes, which are secured by liens on specific titled vehicles, include certain affirmative and negative covenants, are generally payable in 60 monthly installments and bear interest at fixed rates ranging from 2.25 % to 5.13 %.

(3) Our Real Estate Financing consists of a series of promissory notes issued by a wholly owned subsidiary.

The promissory notes, which are secured by first mortgages and assignment of leases on specific parcels of real estate and improvements, include certain affirmative and negative covenants and are generally payable in 120 monthly installments.

Each of the notes bears interest at a variable rate ranging from LIBOR plus 1.85 % to LIBOR plus 2.25 % .

At April 2, 2022, we were in compliance with all covenants.

(1) Our Revolving Credit Facility provides for maximum borrowings of $ 350 million in the form of a $ 200 million revolver, and it previously included a $ 150 million term loan.

Borrowings under the Revolving Credit Facility may be made until and mature on November 26, 2023 , and they bear interest at LIBOR or a base rate plus an applicable margin for each based the Company’s leverage ratio.

The t erm loan proceeds were advanced on November 27, 2018 , and on April 29, 2022 , the Company repaid in full its then outstanding balance on the term loan.

The Revolving Credit Facility is secured by a first priority pledge of the capital stock of applicable subsidiaries, as well as first priority perfected security interests in cash, deposits, accounts receivable, and selected other assets of the applicable borrowers.

The Revolving Credit Facility includes customary affirmative and negative covenants and events of default, as well as financial covenants requiring minimum fixed charge coverage and leverage ratios, and customary mandatory prepayments provisions.

At July 2, 2022, we were in compliance with all covenants under the facility, and $ 49.5 million was available for borrowing on the revolver .

UNIVERSAL LOGISTICS HOLDINGS, INC.

1 unchanged sentence

Debt – continued

(2) Our Equipment Financing consists of a series of promissory notes issued by a wholly owned subsidiary.

The equipment notes, which are secured by liens on specific titled vehicles, are generally payable in 60 monthly installments and bear interest at fixed rates ranging from 2.25 % to 5.13 %.

(3) Our Real Estate Facility provides for a $ 165.4 million term loan, the full amount of which was advanced on April 29, 2022.

The Company used the facility’s proceeds to repay the outstanding balances under the term loan portion of the Revolving Credit Facility and certain other Real Estate Financing obligations.

The facility matures on April 29, 2032 .

Obligations under the facility are secured by first-priority mortgages on specific parcels of real estate owned by the Company, including all land and real property improvements, and first-priority assignments of rents and related leases of the loan parties.

The credit agreement includes customary affirmative and negative covenants, and principal and interest are payable on the facility on a monthly basis, based on an annual amortization of 10 %.

The facility bears interest at Term SOFR , plus an applicable margin equal to 2.12 %.

At July 2, 2022, we were in compliance with all covenants under the facility.

(4) Our Margin Facility is a short-term line of credit secured by our portfolio of marketable securities.

1 unchanged sentence

The amount available under the line of credit is based on a percentage of the market value of the underlying securities.

At April 2, 2022, the maximum available borrowings under the line of credit were $ 4.4 million.

The Company is also party to two interest rate swap agreements that qualify for hedge accounting.

The Company executed the swap agreements to fix a portion of the interest rates on its variable rate debt that have a combined notional amount of $ 10.2 million at April 2, 2022.

Under the swap agreements, the Company receives interest at the one-month LIBOR rate plus 2.25 % and pays a fixed rate.

The first swap became effective in October 2016 , has a rate of 4.16 % (amortizing notional amount of $ 10.0 million) and expires in July 2026 .

The second swap became effective in October 2016 , has a rate of 3.83 % (amortizing notional amount of $ 0.2 million) and expires in May 2022 .

At April 2, 2022, the fair value of the swap agreements was an asset of $ 0.1 million.

Since these swap agreements qualify for hedge accounting, the changes in fair value are recorded in other comprehensive income (loss), net of tax.

At July 2, 2022, the maximum available borrowings under the line of credit were $ 4.6 million.

The Company is also party to an interest rate swap agreement that qualifies for hedge accounting.

The Company executed the swap agreement to fix a portion of the interest rate on its variable rate debt.

Under the swap agreement, the Company receives interest at Term SOFR and pays a fixed rate of 2.88 %.

The swap agreement has an effective date of April 29, 2022, a maturity date of April 30, 2027 , and an amortizing notional amount of $ 98.3 million.

At July 2, 2022, the fair value of the swap agreement was a liability of $ 0.8 million.

Since the swap agreement qualifies for hedge accounting, the changes in fair value are recorded in other comprehensive income (loss), net of tax.

See Note 7 for additional information pertaining to interest rate swaps.

10 unchanged sentences

This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

Fair Value Measurements and Disclosures – continued

We have segregated all financial assets and liabilities that are measured at fair value on a recurring basis into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date in the tables below (in thousands):

Fair Value Measurement

Cash equivalents

1 unchanged sentence

Interest rate swaps

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

Fair Value Measurements and Disclosures – continued

Fair Value Measurement

Cash equivalents

1 unchanged sentence

Interest rate swaps

Total liabilities

The valuation techniques used to measure fair value for the items in the tables above are as follows:

5 unchanged sentences

The fair value measurement also incorporates credit valuation adjustments to appropriately reflect both the Company’s nonperformance risk and the respective counterparty’s nonperformance risk.

Our Credit Agreement and our Real Estate Financing consist of variable rate borrowings.

Our Revolving Credit Facility and our Real Estate Facility consist of variable rate borrowings.

We categorize these borrowings as Level 2 in the fair value hierarchy.

2 unchanged sentences

We categorize these borrowings as Level 2 in the fair value hierarchy.

The carrying value and estimated fair value of these promissory notes at April 2, 2022 is summarized as follows:

The carrying value and estimated fair value of these promissory notes at July 2, 2022 is summarized as follows:

Carrying Value

7 unchanged sentences

We recognize a right-of-use asset and a lease liability on the effective date of a lease agreement.

As of April 2, 2022, our obligations under operating lease arrangements primarily related to the rental of office space, warehouses, freight distribution centers, terminal yards and equipment .

As of July 2, 2022, our obligations under operating lease arrangements primarily related to the rental of office space, warehouses, freight distribution centers, terminal yards and equipment .

Our lease obligations typically do not include options to purchase the leased property, nor do they contain residual value guarantees or material restrictive covenants.

Options to extend or terminate an agreement are included in the lease term when it becomes reasonably certain the option will be exercised.

As of April 2, 2022, we were not reasonably certain of exercising any renewal or termination options, and as such, no adjustments were made to the right-of-use lease assets or corresponding liabilities.

As of July 2, 2022, we were not reasonably certain of exercising any renewal or termination options, and as such, no adjustments were made to the right-of-use lease assets or corresponding liabilities.

We did not separate lease and nonlease components of contracts for purposes of determining the right-of use lease asset and corresponding liability.

4 unchanged sentences

Lease expense for short-term and long-term operating leases is recognized on a straight-line basis over the lease term.

The following table summarizes our lease costs for the thirteen week periods ended April 2, 2022 and April 3, 2021 (in thousands):

April 2, 2022

The following table summarizes our lease costs for the thirteen weeks and twenty-six weeks ended July 2, 2022 and July 3, 2021 (in thousands):

Thirteen weeks ended July 2, 2022

With Affiliates

With Third Parties

Operating lease cost

3 unchanged sentences

Total lease cost

April 3, 2021

Thirteen weeks ended July 3, 2021

With Affiliates

With Third Parties

Operating lease cost

6 unchanged sentences

(8) Leases – continued

The following table summarizes other lease related information as of and for the thirteen week periods ended April 2, 2022 and April 3, 2021 (in thousands):

April 2, 2022

Twenty-six weeks ended July 2, 2022

With Affiliates

With Third Parties

Operating lease cost

Short-term lease cost

Variable lease cost

Sublease income

Total lease cost

Twenty-six weeks ended July 3, 2021

With Affiliates

With Third Parties

Operating lease cost

Short-term lease cost

Variable lease cost

Sublease income

Total lease cost

The following table summarizes other lease related information as of and for the twenty-six week periods ended July 2, 2022 and July 3, 2021 (in thousands):

Other information

Cash paid for amounts included in the measurement of

operating leases

Right-of-use asset change due to lease termination

Right-of-use assets obtained in exchange for new operating

lease liabilities

Cash paid for amounts included in the measurement of operating leases

Right-of-use assets obtained in exchange for new operating lease liabilities

Right-of-use assets change due to lease termination

Weighted-average remaining lease term (in years)

Weighted-average discount rate

April 3, 2021

Other information

Cash paid for amounts included in the measurement of

operating leases

Future right-of-use asset change due to lease signed

with a future commencement date

Right-of-use assets obtained in exchange for new operating

lease liabilities

Cash paid for amounts included in the measurement of operating leases

Right-of-use assets obtained in exchange for new operating lease liabilities

Weighted-average remaining lease term (in years)

Weighted-average discount rate

Future minimum lease payments under operating leases as of April 2, 2022, are as follows (in thousands):

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

(8) Leases – continued

Future minimum lease payments under these operating leases as of July 2, 2022, are as follows (in thousands):

With Affiliates

With Third Parties

2022 (remaining)

2 unchanged sentences

Present value of lease liabilities

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

Transactions with Affiliates

1 unchanged sentence

Moroun, provide certain supplementary administrative support services to Universal, including legal, human resources, tax, IT infrastructure and other requested services.

The cost of these services is based on the actual or estimated utilization of the specific service.

Universal’s audit committee reviews and approves related party transactions with affiliates that involve Universal or its consolidated subsidiaries.

The cost of such services is based on the actual or estimated utilization of the specific service.

Universal also purchases other services from companies owned or controlled by our controlling shareholder.

Following is a schedule of costs incurred and included in operating expenses for services provided by affiliates for the thirteen weeks ended April 2, 2022 and April 3, 2021 (in thousands):

Following is a schedule of costs incurred and included in operating expenses for services provided by affiliates for the thirteen weeks and twenty-six weeks ended July 2, 2022 and July 3, 2021, respectively (in thousands):

Thirteen weeks ended

Twenty-six weeks ended

Real estate rent and related costs

11 unchanged sentences

In our Consolidated Balance Sheets, we record our insured claims liability and the related recovery in insurance and claims, and other receivables.

At April 2, 2022 and December 31, 2021, there were $ 21.4 million and $ 20.4 million, respectively, included in each of these accounts for insured claims.

At July 2, 2022 and December 31, 2021, there were $ 19.2 million and $ 20.4 million, respectively, included in each of these accounts for insured claims.

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

Transactions with Affiliates - continued

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 April 2, 2022 and December 31, 2021, amounts due to affiliates were $ 16.1 million and $ 17.8 million, respectively.

At July 2, 2022 and December 31, 2021, amounts due to affiliates were $ 14.2 million and $ 17.8 million, respectively.

Services provided by Universal to Affiliates

We periodically assist our affiliates by providing selected transportation and logistics support services in connection with their specific customer contracts or purchase orders.

Following is a schedule of services provided to affiliates for the thirteen weeks ended April 2, 2022 and April 3, 2021 (in thousands):

We periodically assist our affiliates by providing 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 twenty-six weeks ended July 2, 2022 and July 3, 2021 (in thousands):

Thirteen weeks ended

Twenty-six weeks ended

Contracted transportation services

Facilities and related support

At April 2, 2022 and December 31, 2021, amounts due from affiliates were $ 1.6 million and $ 0.8 million, respectively.

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

At July 2, 2022 and December 31, 2021, amounts due from affiliates were $ 1.4 million and $ 0.8 million, respectively.

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 $ 200,000 , and the balance of the purchase price is due at closing, which is expected to occur in the third quarter of 2022.

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.

“Scott” Wolfe.

We paid for the accepted shares with available cash and funds borrowed under our existing line of credit.

Stock Based Compensation

2 unchanged sentences

The 2014 Plan replaced our 2004 Stock Incentive Plan and carried forward the shares of common stock that remained available for issuance under the 2004 Plan.

The grants under the Plan may be made in the form of options, restricted stock awards, restricted stock purchase rights, stock appreciation rights, phantom stock units, restricted stock units or shares of unrestricted common stock.

In May 2022, the Company’s shareholders approved an amendment to the Plan to increase the number of shares of common stock authorized for issuance by 200,000 shares.

Grants under the Plan may be made in the form of options, restricted stock awards, restricted stock purchase rights, stock appreciation rights, phantom stock units, restricted stock units or shares of unrestricted common stock.

On September 9, 2021, the Company granted 2,355 shares of restricted stock to an employee of the Company.

7 unchanged sentences

The shares will vest in installments of 20,000 shares on January 10, 2024 and January 10, 2026, and installments of 10,000 shares on January 10, 2027 and January 10, 2028, subject to his continued employment with the Company.

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

Stock Based Compensation - continued

On February 20, 2019, the Company granted 44,500 shares of restricted stock to certain of its employees, including 10,000 shares to our Chief Financial Officer.

The restricted stock awards have a grant date fair value of $ 23.56 per share, based on the closing price of the Company’s stock, and any non-vested shares under the awards will vest in four equal increments on each February 20 in 2020, 2021, 2022 and 2023.

The restricted stock awards have a grant date fair value of $ 23.56 per share, based on the closing price of the Company’s stock, and any non-vested shares under the awards vest in four equal increments on each February 20 in 2020, 2021, 2022 and 2023.

A grantee’s vesting of restricted stock awards may be accelerated under certain conditions, including retirement.

3 unchanged sentences

Non-vested at January 1, 2022

Balance at April 2, 2022

In each of the thirteen-week periods ended April 2, 2022 and April 3, 2021, the total grant date fair value of vested shares recognized as compensation costs was $ 0.2 million.

As of April 2, 2022, there was approximately $ 1.4 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements.

Balance at July 2, 2022

In each of the twenty-six week periods ended July 2, 2022 and July 3, 2021, the total grant date fair value of vested shares recognized as compensation costs was $ 0.2 million.

As of July 2, 2022, there was approximately $ 1.4 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements.

That cost is expected to be recognized on a straight-line basis over the remaining vesting period.

3 unchanged sentences

Diluted earnings per common share include dilutive common stock equivalents determined by the treasury stock method.

For the thirteen weeks ended April 2, 2022 and April 3, 2021, we included 629 and 14,613 weighted average non-vested shares of restricted stock, respectively, in the denominator for the calculation of diluted earnings per share.

For the thirteen weeks ended April 2, 2022 and April 3, 2021, we excluded 9,230 and 0 shares of non-vested restricted stock, respectively, from the calculation of diluted earnings per share because such shares were anti-dilutive.

For the thirteen weeks and twenty-six weeks ended July 2, 2022, there were 14,554 and 8,247 weighted average non-vested shares of restricted stock, respectively, included in the denominator for the calculation of diluted earnings per share.

For the thirteen weeks and twenty-six weeks ended July 3, 2021, 16,704 and 15,689 weighted average non-vested shares of restricted stock, respectively, were included in the denominator for the calculation of diluted earnings per share.

In the thirteen weeks and twenty-six weeks ended July 2, 2022, we excluded 0 and 6,875 shares, respectively, of non-vested restricted stock from the calculation of diluted earnings per share because such shares were anti-dilutive.

No such shares were excluded from the calculation of diluted earnings per share during the thirteen weeks or twenty-six weeks ended July 3, 2021.

On May 5, 2022 , our Board of Directors declared a cash dividend of $ 0.105 per share of common stock, payable on July 5, 2022 to shareholders of record at the close of business on June 6, 2022 .

Declaration of future cash dividends is subject to final determination by the Board of Directors each quarter after its review of our financial condition, results of operations, capital requirements, any legal or contractual restrictions on the payment of dividends and other factors the Board of Directors deems relevant.

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

On February 10, 2022 , our Board of Directors declared a cash dividend of $ 0.105 per share of common stock, payable on April 4, 2022 to shareholders of record at the close of business on March 7, 2022 .

Segment Reporting

4 unchanged sentences

Our intermodal segment is associated with local and regional drayage moves coordinated by company-managed terminals using a mix of owner-operators, company equipment and third-party capacity providers (broker carriers).

Operations aggregated in our trucking segment are associated with individual freight shipments coordinated by primarily by our agents and company-managed terminals using a mix of owner-operators, company equipment and broker carriers.

Operations aggregated in our trucking segment are associated with individual freight shipments coordinated primarily by our agents using a mix of owner-operators, company equipment and broker carriers.

Our company-managed brokerage segment provides for the pick-up and delivery of individual freight shipments using broker carriers, coordinated by our company-managed operations.

1 unchanged sentence

Separate balance sheets are not prepared by segment, and we do not provide asset information by segment to the chief operating decision maker.

The following tables summarize information about our reportable segments for the thirteen week period ended April 2, 2022 and April 3, 2021 (in thousands):

The following tables summarize information about our reportable segments for the thirteen week and twenty-six week periods ended July 2, 2022 and July 3, 2021 (in thousands):

Operating Revenues

Thirteen weeks ended

Twenty-six weeks ended

Contract logistics

3 unchanged sentences

Thirteen weeks ended

Twenty-six weeks ended

Contract logistics

1 unchanged sentence

Total eliminated inter-segment revenues

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

Segment Reporting - continued

Income from Operations

Thirteen weeks ended

Twenty-six weeks ended

Contract logistics

1 unchanged sentence

Total income from operations

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

Commitments and Contingencies

Our principal commitments relate to long-term real estate leases and payment obligations to equipment vendors.

On March 17, 2021, the Company received a complaint from the National Labor Relations Board (the “NLRB”) based on charges alleged by the International Brotherhood of Teamsters against four of the Company’s operating subsidiaries.

The charges stem from the Company’s decision to close underperforming operations in California in December 2019.

In April 2021, the Company answered the complaint by denying it engaged in any unfair labor practices and maintaining that the Company closed the underperforming California terminal due to financial reasons.

In October 2021, the Company received an adverse ruling requiring the Company to, among other things, reinstate the terminated drivers and compensate them for back pay.

The Company is appealing the decision.

The calculation of the amount owed to the drivers will take into consideration any offsetting earnings made by terminated individuals since their separation from the Company.

The Company currently estimates the possible range of financial exposure in the matter to be between $ 4.3 million and $ 7.2 million.

Based on the Company’s best estimate of the liability at this time, the Company has recorded an accrued liability for this matter of $ 5.8 million.

While the outcome of these claims cannot be predicted with any certainty, management does not believe the outcome of any of these matters will have a material adverse effect on our business, financial position, results of operations or cash flows.

On January 28, 2022, the Company was served with charges from the NLRB based on allegations of the International Brotherhood of Teamsters against the Company and four of its subsidiaries.

The charges allege, among other things, that certain of the Company’s independent contractors in California should be classified as employees, rather than independent contractors.

The Company has denied all charges and plans to defend the use of independent contractors in conducting its business.

A hearing on the matter is schedule for June 2022.

Legal Proceedings

The Company is involved from time to time in claims, proceedings, and litigation, including the matters described in Item 16 of Part II, “Financial Statements and Supplementary Data — Note 16 — Commitments and Contingencies” of our 2021 Annual Report on Form 10-K and in Item 1 of Part I, “Financial Statements — Note 14 — Commitments and Contingencies” of our Quarterly Report on Form 10-Q for the Period Ended April 2, 2022, as supplemented by the following:

On August 4, 2022, the Company reached a Non-Board Settlement Agreement (the “Settlement Agreement”) with the International Brotherhood of Teamsters resolving the previously disclosed National Labor Relations Board charges from March 2021 and January 2022.

Pursuant to the terms of the Settlement Agreement, the Company is required to, among other things, reinstate certain terminated drivers and compensate them for back pay totaling approximately $ 2.8 million, for which the Company has an accrued liability.

The Company is involved in certain other claims and pending litigation arising from the ordinary conduct of business.

2 unchanged sentences

However, if we experience claims that are not covered by our insurance or that exceed our estimated claim reserve, it could increase the volatility of our earnings and have a materially adverse effect on our financial condition, results of operations or cash flows.

At April 2, 2022, approximately 34 % of our employees in the United States, Canada and Colombia, and approximately 80 % of our employees in Mexico were subject to collective bargaining agreements that are renegotiated periodically, 21 % of which are subject to contracts that expire in 2022.

At July 2, 2022, approximately 38 % of our employees in the United States, Canada and Colombia, and 78 % of our employees in Mexico were subject to collective bargaining agreements that are renegotiated periodically, less than 1 % of which are subject to contracts that expire in 2022.

Subsequent Events

On May 5, 2022 , our Board of Directors declared the regular quarterly cash dividend of $ 0.105 per share of common stock, payable to shareholders of record at the close of business on June 6, 2022 and is expected to be paid on July 5, 2022 .

On July 28, 2022 , our Board of Directors declared the regular quarterly cash dividend of $ 0.105 per share of common stock, payable to shareholders of record at the close of business on September 5, 2022 and is expected to be paid on October 3, 2022 .

UNIVERSAL LOGISTICS HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements - Continued

Subsequent Events - continued

On April 29, 2022, the Company executed a credit agreement and related security and mortgage agreement with a syndicate of lenders, and Fifth Third Bank, N.A., as administrative agent.

The credit agreement provided for a $ 165.4 million term loan facility, the full amount of which was advanced on April 29, 2022.

The facility matures on April 29, 2032 .

Under the terms of the credit agreement, the Company used the facility’s proceeds (a) to repay approximately $ 116.4 million of aggregate principal amount outstanding under the credit and security agreement among Universal’s applicable borrowing subsidiaries and KeyBank, N.A., including accrued and unpaid interest and related fees, (b) to repay in full approximately $ 39.5 million of aggregate principal amount outstanding under Universal’s term loan and security agreement with Flagstar Bank, FSB, including accrued and unpaid interest and related fees, and (c) to pay transaction-related fees and expenses.

The obligations under the facility are secured by first-priority mortgages on specific parcels of real estate owned by the Company, including all land and real property improvements, and first-priority assignments of rents and related leases of the loan parties.

The credit agreement includes customary affirmative and negative covenants, and principal and interest is payable on the facility on a monthly basis, based on an annual amortization of 10 %.

The facility bears interest at SOFR, plus an applicable margin equal to 2.12 %.

On April 29, 2022, the Company also entered into an interest rate swap with Fifth Third Bank, N.A.

to fix a portion of the variable rate debt with an amortizing notional amount of $ 100 million.

Under the swap agreement, the Company receives interest at Term SOFR and pays a fixed rate of 2.88 %.

The swap has an effective date of April 29, 2022 and a maturity date of April 30, 2027 .

On May 4, 2022, the Company’s shareholders approved an amendment to the 2014 Amended and Restated Stock Incentive Plan.

Under the amendment, the number of shares of the Company’s common stock authorized for issuance under the Plan increased to 700,000 shares.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements