Notes to Consolidated Financial Statements
December 31, 2016, 2015 and 2014
(1)
|
Summary of Significant Accounting Policies
|
Universal Logistics Holdings, Inc. (“Universal” or the “Company”), through its subsidiaries, is a leading asset-light provider of customized transportation and logistics solutions throughout the United States, and in Mexico, Canada and Colombia. Formerly known as Universal Truckload Services, Inc., we provide our customers with supply chain solutions that can be scaled to meet their changing demands. We offer our customers with a broad array of services across their entire supply chain, including transportation, value-added, and intermodal services. Our customized solutions and flexible business model are designed to provide us with a highly variable cost.
|
(b)
|
Basis of Presentation
|
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions relating to these entities have been eliminated.
Our fiscal year consists of four quarters, each with thirteen weeks.
Certain immaterial reclassifications have been made to the prior financial statements in order for them to conform to the December 31, 2016 presentation.
The preparation of the consolidated financial statements requires management of the Company to make a number of estimates and assumptions related to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Significant items subject to such estimates and assumptions include the fair value of assets and liabilities acquired in business combinations; carrying amounts of property and equipment and intangible assets; marketable securities; valuation allowances for receivables; and liabilities related to insurance and claim costs. Actual results could differ from those estimates.
|
(d)
|
Cash and Cash Equivalents
|
We consider all highly liquid investments, purchased with a maturity of three months or less, to be cash equivalents. Accounts at banks with an aggregate excess of the amount of checks issued over cash balances are included as accounts payable in current liabilities in the consolidated balance sheets, and changes in such accounts are reported as cash flows from operating activities in the consolidated statements of cash flows.
|
(e)
|
Marketable Securities
|
At December 31, 2016 and 2015, marketable securities, all of which are available-for-sale, consist of common and preferred stocks. Marketable securities are carried at fair value, with unrealized gains and losses, net of related income taxes, reported as accumulated other comprehensive income (loss), except for losses from impairments which are determined to be other-than-temporary. Realized gains and losses, and declines in value judged to be other-than-temporary on available-for-sale securities are included in the determination of net income and are included in other non-operating income (expense), at which time the average cost basis of these securities are adjusted to fair value. Fair values are based on quoted market prices at the reporting date. Interest and dividends on available-for-sale securities are included in other non-operating income (expense). During the years ended December 31, 2016 and 2015, we received proceeds of $0.9 million and $0.4 million from the sale of marketable securities with a combined cost of $0.5 million and $0.1 million resulting in a realized gain of $0.4 million and $0.3 million, respectively. The Company did not sell any marketable securities during the year ended December 31, 2014.
41
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Consolidated Financial Statements – (Continued)
December 31, 2016, 2015 and 2014
(1)
|
Summary of Significant Accounting Policies—continued
|
|
(e)
|
Marketable Securities—continued
|
The cost, gross unrealized holding gains, gross unrealized holding losses, and fair value of available-for-sale securities by type were as follows (in thousands):
|
|
Cost
|
|
|
Gross
unrealized
holding
gains
|
|
|
Gross
unrealized
holding
(losses)
|
|
|
Fair
Value
|
|
At December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Securities
|
|
$
|
10,168
|
|
|
$
|
4,780
|
|
|
$
|
(589
|
)
|
|
$
|
14,359
|
|
At December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Securities
|
|
$
|
10,614
|
|
|
$
|
3,958
|
|
|
$
|
(1,141
|
)
|
|
$
|
13,431
|
|
Included in equity securities at December 31, 2016 were securities with a book basis of $3.5 million and a cumulative loss position of $0.6 million, the impairment of which we consider to be temporary. We consider several factors in determining as to whether declines in value are judged to be temporary or other-than-temporary, including the severity and duration of the decline, the financial condition and near-term prospects of the specific issuers and the industries in which they operate, and our intent and ability to hold these securities. We may incur future impairment charges if declines in market values continue and/or worsen and impairments are no longer considered temporary.
The fair value and gross unrealized holding losses of our marketable securities that are not deemed to be other-than-temporarily impaired aggregated by type and length of time they have been in a continuous unrealized loss position were as follows (in thousands):
|
|
Less than 12 Months
|
|
|
12 Months or Greater
|
|
|
Total
|
|
|
|
Fair
Value
|
|
|
Unrealized
Losses
|
|
|
Fair
Value
|
|
|
Unrealized
Losses
|
|
|
Fair
Value
|
|
|
Unrealized
Losses
|
|
At December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
|
$
|
426
|
|
|
$
|
41
|
|
|
$
|
2,438
|
|
|
$
|
548
|
|
|
$
|
2,864
|
|
|
$
|
589
|
|
At December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
|
$
|
3,099
|
|
|
$
|
987
|
|
|
$
|
345
|
|
|
$
|
154
|
|
|
$
|
3,444
|
|
|
$
|
1,141
|
|
At December 31, 2016, our portfolio of equity securities in a continuous loss position, the impairment of which we consider to be temporary, consists primarily of common stocks in the oil and gas, banking, transportation, communication, and pharmaceutical industries. The fair value and unrealized losses are distributed in 27 publicly traded companies, with no single industry or company representing a material or concentrated unrealized loss. We have evaluated the near-term prospects of the various industries, as well as the specific issuers within our portfolio, in relation to the severity and duration of the impairments, and based on that evaluation, and our ability and intent to hold these investments for a reasonable period of time to allow for a recovery of fair value, we do not consider these investments to be other-than-temporarily impaired at December 31, 2016.
42
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Consolidated Financial Statements – (Continued)
December 31, 2016, 2015 and 2014
(1)
|
Summary of Significant Accounting Policies—continued
|
Accounts receivable are recorded at the net invoiced amount, net of an allowance for doubtful accounts, and do not bear interest. They include unbilled amounts for services rendered in the respective period but not yet billed to the customer until a future date, which typically occurs within one month. In order to reflect customer receivables at their estimated net realizable value, we record charges against revenue based upon current information. These charges generally arise from rate changes, errors, and revenue adjustments that may arise from contract disputes or differences in calculation methods employed by the customer. The allowance for doubtful accounts is our best estimate of the amount of probable credit losses in our existing accounts receivable. We determine the allowance based on historical write-off experience and the aging of our outstanding accounts receivable. Balances are considered past due based on invoiced terms. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. We do not have any off‑balance‑sheet credit exposure related to our customers. Accounts receivable from affiliates are shown separately and include trade receivables from the sale of services to affiliates.
Included in prepaid expenses and other is inventory used in a portion of our value-added service operations. Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out method. Provisions for excess and obsolete inventories are based on our assessment of excess and obsolete inventory on a product-by-product basis.
At December 31, inventory consists of the following (in thousands):
|
|
2016
|
|
|
2015
|
|
Raw materials and supplies
|
|
$
|
7,077
|
|
|
$
|
7,660
|
|
Finished goods
|
|
|
1,540
|
|
|
|
962
|
|
|
|
$
|
8,617
|
|
|
$
|
8,622
|
|
|
(h)
|
Property and Equipment
|
Property and equipment, including leasehold improvements, are carried at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows:
Description
|
|
Life in Years
|
Transportation equipment
|
|
3 - 15
|
Other operating assets
|
|
3 - 15
|
Information technology equipment
|
|
3 - 5
|
Buildings and related assets
|
|
10 - 39
|
The amounts recorded for depreciation expense were $29.2 million, $25.8 million, and $23.1 million for the years ended December 31, 2016, 2015 and 2014, respectively.
Tire repairs, replacement tires, replacement batteries, consumable tools used in our logistics services, and routine repairs and maintenance on vehicles are expensed as incurred. Parts and fuel inventories are included in prepaid expenses and other. We capitalize certain costs associated with vehicle repairs and maintenance that materially extend the life or increase the value of the vehicle or pool of vehicles.
43
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Consolidated Financial Statements – (Continued)
December 31, 2016, 2015 and 2014
(1)
|
Summary of Si
gnificant Accounting Policies—continued
|
Intangible assets subject to amortization consist of customer contracts and agent and customer relationships that have been acquired in business combinations. These assets are amortized either over the period of economic benefit or on a straight-line basis over the estimated useful lives of the related intangible asset. The estimated useful lives of these intangible assets range from three to nineteen years. The weighted average amortization period for customer contracts is approximately three years, and the weighted average amortization period for agent and customer relationships is approximately fifteen years. Collectively, the weighted average amortization period of assets subject to amortization is approximately twelve years. The useful lives of acquired trademarks are indefinite and, therefore, not subject to amortization.
Our identifiable intangible assets as of December 31, 2016 and 2015 are as follows (in thousands):
|
|
2016
|
|
|
2015
|
|
Indefinite Lived Intangibles:
|
|
|
|
|
|
|
|
|
Trademarks
|
|
$
|
2,500
|
|
|
$
|
2,500
|
|
Definite Lived Intangibles:
|
|
|
|
|
|
|
|
|
Agent and customer relationships
|
|
|
65,060
|
|
|
|
65,060
|
|
Customer contracts
|
|
|
20,600
|
|
|
|
20,600
|
|
Less: accumulated amortization
|
|
|
(50,971
|
)
|
|
|
(43,495
|
)
|
Intangible assets, net
|
|
$
|
34,689
|
|
|
$
|
42,165
|
|
Total Identifiable Intangible Assets
|
|
$
|
37,189
|
|
|
$
|
44,665
|
|
Estimated amortization expense by year is as follows (in thousands):
2017
|
|
$
|
5,995
|
|
2018
|
|
|
2,517
|
|
2019
|
|
|
2,265
|
|
2020
|
|
|
1,970
|
|
2021
|
|
|
1,959
|
|
Thereafter
|
|
|
19,983
|
|
Total
|
|
$
|
34,689
|
|
The amounts recorded for amortization expense were $7.5 million, $9.2 million, and $9.9 million for the years ended December 31, 2016, 2015 and 2014, respectively.
Goodwill represents the excess purchase price over the fair value of assets acquired in connection with the Company’s acquisitions. Under FASB Accounting Standards Codification, or ASC, Topic 350 “
Intangibles – Goodwill and Other
”, we are required to test goodwill for impairment annually (in our third fiscal quarter) or more frequently, whenever events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit with goodwill below its carrying amount. We have the option to first assess qualitative factors such as current performance and overall economic conditions to determine whether or not it is necessary to perform a two-step quantitative goodwill impairment test. If we choose that option, we would not be required perform Step 1 of the test unless we determine that, based on a qualitative assessment, it is more likely than not that the fair value of a reporting unit is less than its carrying value. If we determine that it is more likely than not, or if we choose not to perform a qualitative assessment, we may then proceed with Step 1 of the two-step impairment test. In the quantitative goodwill test, a company compares the carrying value of a reporting unit to its fair value. If the carrying value of the reporting unit exceeds the estimated fair value, a second step is performed, which compares the implied fair value of goodwill to the carrying value, to determine the amount of impairment. During the third quarter of 2016, we completed our goodwill impairment testing by performing a quantitative assessment. Based on the results of this test, no impairment loss was recognized.
44
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Consolidated Financial Statements – (Continued)
December 31, 2016, 2015 and 2014
(1)
|
Summary of Significant Accounting Policies—
continued
|
At both December 31, 2016 and 2015, the carrying amount of goodwill was $74.5 million, of which $18.2 million was recorded in our transportation segment and $56.3 million in our logistics segment.
Long-lived assets, other than goodwill and indefinite lived intangibles such as property and equipment and purchased intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or group may not be recoverable. If circumstances require a long-lived asset to be tested for possible impairment, we first compare the undiscounted cash flows expected to be generated by a long-lived asset or group to its carrying value. If the carrying value of the long-lived asset or group is deemed to not be recoverable on an undiscounted cash flow basis, an impairment charge is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market prices and independent third-party appraisals. Changes in management’s judgment relating to salvage values and/ or estimated useful lives could result in greater or lesser annual depreciation expense or impairment charges in the future. Indefinite lived intangibles are tested for impairment annually by comparing the carrying value of the assets to their fair value.
|
(l)
|
Contingent Consideration
|
Contingent consideration arrangements granted in connection with a business combination are evaluated to determine whether contingent consideration is, in substance, additional purchase price of an acquired enterprise or compensation for services, use of property or profit sharing. Additional purchase price is added to the fair value of consideration transferred in the business combination and compensation is included in operating expenses in the period it is incurred. Contingent consideration related to additional purchase price is remeasured to fair value at each reporting date until the contingency is resolved.
|
(m)
|
Fair Value of Financial Instruments
|
For cash equivalents, accounts receivables, accounts payable, and accrued expenses, the carrying amounts are reasonable estimates of fair value as the assets are readily redeemable or short‑term in nature and the liabilities are short-term in nature. Marketable securities, consisting of equity securities, are carried at fair market value as determined by quoted market prices. Our revolving credit and term loan agreements consist of variable rate borrowings. The carrying value of these borrowings approximates fair value because the applicable interest rates are adjusted frequently based on short-term market rates. For our equipment promissory notes, the fair values are estimated using discounted cash flow analyses, based on our current incremental borrowing rates for similar types of borrowing arrangements. See Note 7 “Fair Value Measurement and Disclosures” for further information.
|
(n)
|
Deferred Compensation
|
Deferred compensation relates to our bonus plans. Annual bonuses may be awarded to certain operating, sales and management personnel based on overall Company performance and achievement of specific employee or departmental objectives. Such bonuses are typically paid in annual installments over a five-year period. All bonus amounts earned by and due to employees in the current year are included in accrued expenses and other current liabilities. Those that are payable in subsequent years are included in other long-term liabilities.
45
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Consolidated Financial Statements – (Continued)
December 31, 2016, 2015 and 2014
(1)
|
Summary of Significant Accounting Policies—continued
|
Our customers may discontinue or alter their business activity in a location earlier than anticipated, prompting us to exit a customer-dedicated facility. We recognize exit costs associated with operations that close or are identified for closure as an accrued liability in the Consolidated Balance Sheets. Such charges include lease termination costs, employee termination charges, asset impairment charges, and other exit-related costs associated with a plan approved by management. If we close an operating facility before its lease expires, costs to terminate a lease are recognized when an early termination provision is exercised, or we record a liability for non-cancellable lease obligations based on the fair value of remaining lease payments, reduced by any existing or prospective sublease rentals. Employee termination costs are recognized in the period that the closure is communicated to affected employees. The recognition of exit and disposal charges requires us to make certain assumptions and estimates as to the amount and timing of such charges. Subsequently, adjustments are made for changes in estimates in the period in which the change becomes known.
|
(p)
|
Revenue and Related Expenses
|
We are the primary obligor when rendering transportation services, value-added services and intermodal services, and we assume the corresponding credit risk with customers. We have discretion in setting sales prices and, as a result, our earnings may vary. In addition, we have discretion to choose and negotiate terms with our multiple suppliers for the services ordered by our customers. This includes owner-operators with whom we contract to deliver our transportation services. As such, revenue and the related purchased transportation and commissions are recognized on a gross basis when persuasive evidence of an arrangement exists, delivery has occurred at the receiver’s location or for service arrangements after the related services have been rendered, the revenue and related expenses are fixed or determinable and collectability is reasonably assured. Fuel surcharges, where separately identifiable, of $50.9 million, $75.7 million and $119.7 million for the years ended December 31, 2016, 2015 and 2014, respectively, are included in operating revenues.
Revenues and associated costs for the sales of axles and machined components are recognized when title has passed and the risks and rewards of ownership are transferred, which is at the time of shipment.
Our customer contracts could involve multiple revenue-generating activities performed for the same customer. When several contracts are entered into with the same customer in a short period of time, we evaluate whether these contracts should be considered as a single, multiple element contract for revenue recognition purposes. Criteria we consider that may result in the aggregation of contracts include whether such contracts are actually entered into within a short period of time, whether services in multiple contracts are interrelated, or if the negotiation and terms of one contract show or include consideration for another contract or contracts. Our current contracts have not been required to be aggregated, as they are negotiated independently on a standalone basis. Our customers typically choose their vendor and award business at the conclusion of a competitive bidding process for each service. As a result, although we evaluate customer purchase orders and agreements for multiple elements and aggregation of individual contracts into a multiple element arrangement, our current contracts do not meet the criteria required for multiple element contract accounting.
Insurance and claims expense represents charges for premiums and the accruals made for claims within our self-insured retention amounts. The accruals are primarily related to auto liability, general liability, cargo and equipment damage, and service failure claims. A liability is recognized for the estimated cost of all self-insured claims including an estimate of incurred but not reported claims based on historical experience and for claims expected to exceed our policy limits. We may also make accruals for personal injury and property damage to third parties, and workers’ compensation claims if a claim exceeds our insurance coverage. Such accruals are based upon individual cases and estimates of ultimate losses, incurred but not reported losses, and losses arising from known claims ultimately settling in excess of insurance coverage using loss development factors based upon industry data and past experience. Since the reported accrual is an estimate, the ultimate liability may be different from the amount recorded.
If adjustments to previously established accruals are required, such amounts are included in operating expenses in the current period. We maintain insurance with licensed insurance carriers. Legal expenses related to auto liability claims are covered under our insurance policy. We are responsible for all other legal expenses related to claims.
46
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Consolidated Financial Statements – (Continued)
December 31, 2016, 2015 and 2014
(1)
|
Summary of Significant Accounting Policies—continued
|
|
(q)
|
Insurance & Claims—continued
|
In brokerage arrangements, our exposure to liability associated with accidents incurred by other third-party carriers, who haul freight on our behalf, is reduced by various factors including the extent to which the third party providers maintain their own insurance coverage.
Our insurance expense varies primarily based upon the frequency and severity of our accident experience, insurance rates, coverage limits, and self-insured retention amounts.
|
(r)
|
Stock Based Compensation
|
We record compensation expense for the grant of stock based awards. Compensation expense is measured at the grant date, based on the calculated fair value of the award, and recognized as an expense over the requisite service period (generally the vesting period of the grant). See Note 13 “Stock Based Compensation” for further information.
Deferred income taxes are provided for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. During 2016, we adopted Accounting Standards Update 2015-17 –
Balance Sheet Classification of Deferred Taxes
(“ASU 2015-17”), which requires an entity to present deferred tax assets and deferred tax liabilities as noncurrent in a classified balance sheet. Deferred tax assets in the prior period presented have been reclassified to conform to the current year presentation. See Note 9, Income Taxes, for further information.
We are no longer subject to U.S. federal income tax examinations by tax authorities for years before 2012. In addition, we file income tax returns in various state, local and foreign jurisdictions. Historically, we have been responsible for filing separate state, local and foreign income tax returns for our self and our subsidiaries. We are no longer subject to state or foreign jurisdiction income tax examinations for years before 2011 and 2010, respectively.
We recognize the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. We recognize interest related to unrecognized tax benefits in income tax expense and penalties in other operating expenses.
|
(t)
|
Foreign Currency Translation
|
The financial statements of the Company’s subsidiaries operating in Mexico, Canada and Colombia are prepared to conform to U.S. GAAP and translated into U.S. Dollars by applying a current exchange rate. The local currency has been determined to be the functional currency. Items appearing in the Consolidated Statements of Income are translated using average exchange rates during each period. Assets and liabilities of international operations are translated at period-end exchange rates. Translation gains and losses are reported in accumulated other comprehensive income (loss) as a component of shareholders’ equity.
We report our financial results in two reportable segments, the transportation segment and the logistics segment, based on the nature of the underlying customer commitment and the types of investments required to support these commitments. This presentation reflects the manner in which management evaluates our operating segments, including an evaluation of economic characteristics and applicable aggregation criteria.
Operations aggregated in our transportation segment are associated with individual freight shipments coordinated by our agents, company-managed terminals and specialized services operations. In contrast, operations aggregated in our logistics segment deliver value-added services or transportation services to specific customers on a dedicated basis, generally pursuant to contract terms of one year or longer. Other non-reportable operating segments are comprised of the Company’s subsidiaries that provide support services to other subsidiaries and to owner-operators, including shop maintenance and equipment leasing.
47
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Consolidated Financial Statements – (Continued)
December 31, 2016, 2015 and 2014
(1)
|
Summary of Significant Accounting Policies—continued
|
|
(v)
|
Concentrations of Credit Risk
|
Financial instruments, which potentially subject us to concentrations of credit risk, consist principally of cash and cash equivalents, marketable securities and accounts receivable. We maintain our cash and cash equivalents and marketable securities with high quality financial institutions. We perform ongoing credit evaluations of our customers and generally do not require collateral. Our customers are generally concentrated in the automotive, wind energy, building materials, machinery and metals industries. During the fiscal years ended December 31, 2016, 2015 and 2014, aggregate sales in the automotive industry totaled 42.5%, 37.3% and 36.5% of revenue, respectively. In 2016, 2015 and 2014, General Motors accounted for approximately 17.9%, 11.4% and 9.7% of our total operating revenues, respectively. In 2016, sales to our top 10 customers, including General Motors, totaled 40.9%.
|
(w)
|
Recent Accounting Pronouncements
|
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. In applying the new guidance, an entity will (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the contract’s performance obligations; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. In July 2015, the FASB approved deferring the effective date by one year to December 15, 2017 for annual reporting periods beginning after that date. The FASB also approved permitting early adoption of the standard, but not before the original effective date of December 15, 2016. We do not plan to adopt the standard early and have not yet determined which transition method will be used. We are currently evaluating the effects of this standard. We have performed an initial assessment by reviewing our current revenue recognition practices to those required by the new standard. The adoption of ASU 2014-09 is not expected to have a material impact on the Company’s financial statements.
In April 2015, the FASB issued ASU 2015-03, Interest—Imputation of Interest. On January 1, 2016, the Company adopted this ASU on a retrospective basis. Adoption resulted in a reclassification in the Company’s current prepaid expenses and other, and noncurrent other assets in its consolidated balance sheet as of December 31, 2015 of $0.3 million and $1.2 million, respectively. The corresponding decreases were in the net presentation of the Company’s debt liability to the current portions of long-term debt and noncurrent long-term debt, respectively. See Note 4, Debt, for further information.
In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes, which is intended to simplify the presentation of deferred income taxes. During 2016, the Company adopted this ASU. Deferred tax assets in the prior period presented have been reclassified to conform to the current year presentation. See Note 9, Income Taxes, for further information.
In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. Among other things, the ASU requires equity investments, with certain exceptions, to be measured at fair value with changes in fair value recognized in net income; simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements; and clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities. The amendments are to be applied by means of a cumulative-effect adjustment to the balance sheet and are effective for interim and annual periods beginning after December 15, 2017. With certain exceptions, early adoption is not permitted. We are currently evaluating the effects ASU 2016-01 will have on our consolidated financial statements and related disclosures. We currently disclose approximately $4.8 million in gross unrealized holdings gains and $0.6 million in gross unrealized holdings losses in Note 1(e), Marketable Securities.
48
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Consolidated Financial Statements – (Continued)
December 31, 2016, 2015 and 2014
(1)
|
Summary of Significant Accounting Policies
—continued
|
|
(w)
|
Recent Accounting Pronouncements - continued
|
In February 2016, the FASB issued ASU 2016-02, Leases. The objective of the new standard is to establish principles for lessees and lessors to report information about the amount, timing, and uncertainty of cash flows arising from a lease. The ASU will require a lessee to recognize the assets and liabilities that arise from leases, including operating leases. Under the new requirements, a lessee will recognize in the statement of financial position a liability to make lease payments (the lease liability) and the right-of-use asset representing the right to the underlying asset for the lease term. For leases with a term of 12 months or less, the lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application of the amendment is permitted. We are currently evaluating the effects ASU 2016-02 will have on our consolidated financial statements and related disclosures. We currently disclose approximately $72.1 million in operating lease obligations in Note 10, Leases. We will evaluate those contracts as well as other existing arrangements to determine if they qualify for lease accounting under the new standard. Upon adoption, we would expect the amount recognized for the right-of-use assets and lease liabilities to be material. We do not plan to early adopt the new standard.
In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This update simplifies the accounting for goodwill impairments by eliminating step 2 from the goodwill impairment test. Instead, if the carrying amount of a reporting unit exceeds its fair value, and impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The ASU is effective for annual and any interim impairment tests for periods beginning after December 15, 2019. We have not yet selected a transition date nor have we determined the effect of the standard on our ongoing financial reporting.
(2)
|
Business Combinations
|
In September 2014, we acquired certain assets of Bull’s-Eye Express, Inc. and its affiliates (collectively, “Bull’s-Eye”), based in Albany, Missouri for $1.6 million. Bull’s-Eye is a regional provider of industrial equipment transportation and freight consolidation services and is strategically positioned to service customers in the Midwest. As of December 31, 2014, $1.3 million of the purchase price was paid in cash and the remaining $0.3 million consisted of partial forgiveness of a debt due to us. Following the acquisition, Bull’s-Eye operates as part of Universal Truckload, Inc.
The pro forma effect of this acquisition has been omitted, as the effect is immaterial to the Company’s results of operations, financial position and cash flows. The allocation of the purchase price was as follows (in thousands):
Intangible assets
|
|
$
|
1,007
|
|
Property and equipment
|
|
|
400
|
|
Goodwill (tax deductible)
|
|
|
163
|
|
|
|
$
|
1,570
|
|
The intangible assets, which represent Bull’s-Eye’s customer relationships, are being amortized over a period of seven years.
The operating results of Bull’s-Eye have been included in the Consolidated Statements of Income since its acquisition date; however, such operating results have not been separately disclosed as it is deemed immaterial.
Goodwill represents the excess of the purchase price over the estimated fair value assigned to the net tangible and identifiable intangible assets acquired by Universal, and the expected synergies to be achieved through the integration of Bull’s-Eye into Universal.
49
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Consolidated Financial Statements – (Continued)
December 31, 2016, 2015 and 2014
Accounts receivable amounts appearing in the financial statements include both billed and unbilled receivables. We bill customers in accordance with contract terms, which may result in a brief timing difference between when revenue is recognized and when invoices are rendered. Unbilled receivables, which usually are billed within one month, totaled $16.4 million and $11.8 million at December 31, 2016 and 2015, respectively.
Accounts receivable are presented net of an allowance for doubtful accounts. Following is a summary of the activity in the allowance for doubtful accounts for the years ended December 31 (in thousands):
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
Balance at beginning of year
|
|
$
|
5,173
|
|
|
$
|
5,207
|
|
|
$
|
2,688
|
|
Provision for doubtful accounts
|
|
|
3,099
|
|
|
|
3,004
|
|
|
|
3,504
|
|
Uncollectible accounts written off
|
|
|
(6,659
|
)
|
|
|
(3,038
|
)
|
|
|
(985
|
)
|
Balance at end of year
|
|
$
|
1,613
|
|
|
$
|
5,173
|
|
|
$
|
5,207
|
|
(4)
|
Property and Equipment
|
Property and equipment at December 31 consists of the following (in thousands):
|
|
2016
|
|
|
2015
|
|
Transportation equipment
|
|
$
|
214,046
|
|
|
$
|
185,351
|
|
Land, buildings and related assets
|
|
|
96,549
|
|
|
|
73,096
|
|
Other operating assets
|
|
|
77,252
|
|
|
|
66,290
|
|
Information technology equipment
|
|
|
19,520
|
|
|
|
18,660
|
|
Construction in process
|
|
|
20,204
|
|
|
|
5,607
|
|
|
|
|
427,571
|
|
|
|
349,004
|
|
Less accumulated depreciation
|
|
|
(181,294
|
)
|
|
|
(171,815
|
)
|
Total
|
|
$
|
246,277
|
|
|
$
|
177,189
|
|
(5)
|
Accrued Expenses and Other Current Liabilities
|
Accrued expenses consist of the following items at December 31 (in thousands):
|
|
2016
|
|
|
2015
|
|
Payroll related items
|
|
$
|
8,379
|
|
|
$
|
6,833
|
|
Driver escrow liabilities
|
|
|
7,601
|
|
|
|
4,486
|
|
Commissions, taxes and other
|
|
|
3,685
|
|
|
|
7,670
|
|
Total
|
|
$
|
19,665
|
|
|
$
|
18,989
|
|
50
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Consolidated Financial Statements – (Continued)
December 31, 2016, 2015 and 2014
Debt is comprised of the following (in thousands):
|
|
Interest Rates at
|
|
|
December 31,
|
|
|
|
December 31, 2016
|
|
|
2016
|
|
|
2015
|
|
Outstanding Debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
ABL Facility (1)
|
|
2.27% to 4.25%
|
|
|
$
|
71,600
|
|
|
$
|
59,569
|
|
Westport Facility (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
Term Loan
|
|
|
3.26%
|
|
|
|
34,000
|
|
|
|
40,000
|
|
Revolver
|
|
|
2.76%
|
|
|
|
3,000
|
|
|
|
11,766
|
|
Equipment Financing (3)
|
|
3.18% to 4.11%
|
|
|
|
104,607
|
|
|
|
83,578
|
|
Real Estate Financing (4)
|
|
|
3.00%
|
|
|
|
49,643
|
|
|
|
—
|
|
Margin Facility (5)
|
|
|
1.86%
|
|
|
|
—
|
|
|
|
—
|
|
Unsecured Loan
|
|
NA
|
|
|
|
—
|
|
|
|
40,000
|
|
Unamortized debt issuance costs
|
|
|
|
|
|
|
(1,583
|
)
|
|
|
(1,499
|
)
|
|
|
|
|
|
|
|
261,267
|
|
|
|
233,414
|
|
Less current portion of long-term debt
|
|
|
|
|
|
|
34,455
|
|
|
|
61,224
|
|
Total long-term debt, net of current portion
|
|
|
|
|
|
$
|
226,812
|
|
|
$
|
172,190
|
|
(1) The ABL Facility provides for maximum borrowings of $120 million at a variable rate of interest based on LIBOR or a base rate, and matures on December 23, 2020. The facility, which is secured by cash, deposits and accounts receivable of the borrowing subsidiaries, includes customary affirmative and negative covenants and events of default, as well as financial covenants requiring a minimum fixed charge coverage ratio to be maintained after a triggering event. Interest on base rate advances is payable quarterly, and interest on each LIBOR-based advance is payable on the last day of the applicable interest period. At December 31, 2016, we were in compliance with all covenants under the Facility, and $22.9 million was available for borrowing.
(2) The Westport Facility provides our subsidiary, Westport Axle Corporation, with maximum borrowings of $60 million in the form of a $40 million term loan and a $20 million revolver. Borrowings under the Westport Facility, which matures on December 23, 2020, accrue interest at a variable interest rate based on LIBOR or a base rate, and are secured by all of Westport’s assets. The Company becomes a guarantor upon the occurrence of certain events specified in the Westport Facility. Borrowings are repaid in part quarterly with the balance due at maturity. Interest on base rate advances is payable quarterly, and interest on each LIBOR-based advance is payable on the last day of the applicable interest period. The Westport Facility includes customary affirmative and negative covenants and events of default. At December 31, 2016, we were in compliance with all covenants, and $7.4 million was available for borrowing.
(3) The Equipment Financing consists of a series of promissory notes issued by a wholly-owned subsidiary in order to finance transportation equipment. The equipment notes, which are secured by liens on selected titled vehicles, include certain affirmative and negative covenants, are generally payable in 60 monthly installments and bear interest at fixed rates ranging from 3.18% to 4.11%. At December 31, 2016, we were in compliance with all covenants.
(4) The Real Estate Financing consists of a series of promissory notes issued by a wholly-owned subsidiary in order to finance certain purchases of real property and refinance a portion of existing indebtedness pursuant to a $40 million unsecured loan. The promissory notes require monthly payments of principal and accrued interest until their maturity on June 30, 2026. The notes are secured by first mortgages and assignment of leases on specific parcels of real estate and improvements included in a collateral pool specified in the security documents. The Real Estate Financing includes an additional promissory note that is secured by other real property and improvements and matures on September 5, 2026. Each of the notes bears interest at LIBOR plus 2.25%. At December 31, 2016, we were in compliance with all covenants.
(5) The Margin Facility is a short-term line of credit secured by our portfolio of marketable securities. It bears interest at LIBOR plus 1.10%. The amount available under the line of credit is based on a percentage of the market value of the underlying securities. We did not have any amounts outstanding under our line of credit at December 31, 2016 or 2015, and the maximum available borrowings under the line of credit were $7.0 million and $7.4 million, respectively.
51
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Consolidated Financial Statements – (Continued)
December 31, 2016, 2015 and 2014
The following table reflects the maturities of our principal repayment obligations as of December 31, 2016 (in thousands):
Years Ending
December 31
|
|
ABL
Facility
|
|
|
Westport Facility -
Term Loan
|
|
|
Westport Facility -
Revolver
|
|
|
Equipment Financing
|
|
|
Real Estate Financing
|
|
|
Total
|
|
2017
|
|
$
|
—
|
|
|
$
|
6,000
|
|
|
$
|
—
|
|
|
$
|
23,525
|
|
|
$
|
5,176
|
|
|
$
|
34,701
|
|
2018
|
|
|
—
|
|
|
|
6,000
|
|
|
|
—
|
|
|
|
24,440
|
|
|
|
5,176
|
|
|
|
35,616
|
|
2019
|
|
|
—
|
|
|
|
6,000
|
|
|
|
—
|
|
|
|
25,312
|
|
|
|
5,176
|
|
|
|
36,488
|
|
2020
|
|
|
71,600
|
|
|
|
16,000
|
|
|
|
3,000
|
|
|
|
26,217
|
|
|
|
5,176
|
|
|
|
121,993
|
|
2021
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,025
|
|
|
|
5,175
|
|
|
|
10,200
|
|
Thereafter
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
88
|
|
|
|
23,764
|
|
|
|
23,852
|
|
Total
|
|
$
|
71,600
|
|
|
$
|
34,000
|
|
|
$
|
3,000
|
|
|
$
|
104,607
|
|
|
$
|
49,643
|
|
|
$
|
262,850
|
|
The Company is also party to three interest rate swap agreements that qualify for hedge accounting. The swap agreements were executed to fix a portion of the interest rates on its variable rate debt that have a combined notional amount of $27.7 million at December 31, 2016. Under two of the swap agreements, the Company receives interest at the one-month LIBOR rate plus 2.25%, and pays a fixed rate. The March 2016 swap (swap A) became effective October 2016, has a rate of 4.16% (amortizing notional amount of $10.0 million) and expires July 2026, and an additional March 2016 swap (swap B) became effective October 2016, has a rate of 3.83% (amortizing notional amount of $5.7 million) and expires May 2022. The third interest rate swap agreement (swap C) has a notional amount of $12.0 million and expires February 2018. Under swap C, the Company receives interest at the one-month LIBOR rate, and pays a fixed rate of 0.78%. At December 31, 2016, the fair value of the three swap agreements was an asset of $0.2 million. Since these swap agreements qualify 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.
(7)
|
Fair Value Measurement and Disclosures
|
ASC Topic 820, “
Fair Value Measurements and Disclosures
”, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date and expanded disclosures with respect to fair value measurements.
ASC Topic 820 also establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
|
•
|
Level 1 — Quoted prices in active markets for identical assets or liabilities.
|
|
•
|
Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
|
|
•
|
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
|
52
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Consolidated Financial Statements – (Continued)
December 31, 2016, 2015 and 2014
(7)
|
Fair Value Measurement and Disclosures—continued
|
We have segregated all financial assets 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):
|
|
December 31, 2016
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Fair Value
Measurement
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4
|
|
Marketable securities
|
|
|
14,359
|
|
|
|
—
|
|
|
|
—
|
|
|
|
14,359
|
|
Interest rate swaps
|
|
|
—
|
|
|
|
161
|
|
|
|
—
|
|
|
|
161
|
|
Total Assets
|
|
$
|
14,363
|
|
|
$
|
161
|
|
|
$
|
—
|
|
|
$
|
14,524
|
|
|
|
December 31, 2015
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Fair Value
Measurement
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents
|
|
$
|
96
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
96
|
|
Marketable securities
|
|
|
13,431
|
|
|
|
—
|
|
|
|
—
|
|
|
|
13,431
|
|
Total Assets
|
|
$
|
13,527
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13,527
|
|
The valuation techniques used to measure fair value for the items in the tables above are as follows:
|
•
|
Cash equivalents – This category consists of money market funds which are listed as Level 1 assets and measured at fair value based on quoted prices for identical instruments in active markets.
|
|
•
|
Marketable securities – Marketable securities represent equity securities, which consist of common and preferred stocks, are actively traded on public exchanges and are listed as Level 1 assets. Fair value was measured based on quoted prices for these securities in active markets.
|
|
•
|
Interest rate swaps - The fair value of our interest rate swaps, as provided by a third party service provider, is determined using a methodology of netting the discounted future fixed cash payments (or receipts) and the discounted expected variable cash receipts (or payments). The variable cash receipts (or payments) are based on the expectation of future interest rates (forward curves) derived from observed market interest rate curves. 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 revolving credit and term loan agreements and our real estate promissory notes all consists of variable rate borrowings. We categorize borrowings under these credit agreements as Level 2 in the fair value hierarchy. The carrying value of these borrowings approximate fair value because the applicable interest rates are adjusted frequently based on short-term market rates.
For our equipment promissory notes with fixed rates, the fair values are estimated using discounted cash flow analyses, based on our current incremental borrowing rates for similar types of borrowing arrangements. We categorize borrowings under this credit agreement as Level 2 in the fair value hierarchy. The carrying values and estimated fair values of these promissory notes at December 31, 2016 is summarized as follows:
|
|
2016
|
|
|
|
Carrying Value
|
|
|
Estimated Fair
Value
|
|
Equipment promissory notes
|
|
$
|
104,607
|
|
|
$
|
104,433
|
|
We have not elected the fair value option for any of our financial instruments.
53
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Consolidated Financial Statements – (Continued)
December 31, 2016, 2015 and 2014
(8)
|
Transactions with Affiliates
|
CenTra, Inc., an affiliate of the Company, provides administrative support services to Universal in the ordinary course of business, including legal, human resources, tax, and IT infrastructure and related services. The cost of these services is based on the actual or estimated utilization of the specific service.
Universal also purchases other services from affiliates. Following is a schedule of cost incurred and included in operating expenses for services provided by affiliates for the years ended December 31 (in thousands):
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
Administrative support services
|
|
$
|
2,638
|
|
|
$
|
3,234
|
|
|
$
|
2,459
|
|
Truck fuel, tolls and maintenance
|
|
|
2,656
|
|
|
|
2,523
|
|
|
|
1,320
|
|
Real estate rent and related costs
|
|
|
17,174
|
|
|
|
13,174
|
|
|
|
10,472
|
|
Insurance and employee benefit plans
|
|
|
44,548
|
|
|
|
46,173
|
|
|
|
36,073
|
|
Contracted transportation services
|
|
|
233
|
|
|
|
969
|
|
|
|
930
|
|
Total
|
|
$
|
67,249
|
|
|
$
|
66,073
|
|
|
$
|
51,254
|
|
We pay CenTra 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. In connection with our transportation services, we also pay tolls and other fees for international bridge crossings to certain related entities which are under common control with CenTra.
A significant number of our operating locations are located in facilities leased from affiliates. At 36 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. See Note 10, “Leases” for further information regarding the cost of leased properties.
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 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 December 31, 2016 and 2015, amounts due to affiliates were $4.6 million and $3.4 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 December 31, 2016 and 2015, there were $8.7 million and $11.5 million, respectively, included in each of these accounts for insured claims.
We contracted with an affiliate to provide real property improvements to us totaling $1.0 million during 2016. We also purchased from an affiliate $2.3 million of wheels and tires for new trailering equipment and an additional $0.2 million in revenue equipment components during the same period. During 2015, we purchased used snow removal equipment from an affiliate for $18,000.
We periodically use the law firm of Sullivan Hincks & Conway to provide 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 2015 and 2014 were $1,500 and $92,000, respectively. No amounts were paid for legal services during 2016.
Effective August 4, 2016, we exercised our right of first refusal to acquire 1,600 shares of restricted stock from our former CFO, David A. Crittenden, for $23,856 based on the closing market price on the effective date of the transaction.
On August 8, 2016, we purchased from a subsidiary of CenTra, Crown Enterprises, Inc., for a multi-building, cross-dock logistics terminal located in Romulus, Michigan. The purchase price, which was established by an independent third party appraisal, was $22.5 million payable pursuant to a promissory note issued to Crown. At December 31, 2016, the promissory note was fully repaid.
54
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Consolidated Financial Statements – (Continued)
December 31, 2016, 2015 and 2014
(8)
|
Transactions with Affiliates—continued
|
Services provided by Universal to Affiliates
We periodically assist our affiliates 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 CenTra and affiliates for the years ended December 31 (in thousands):
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
Purchased transportation and equipment rent
|
|
$
|
1,090
|
|
|
$
|
400
|
|
|
$
|
308
|
|
Fueling, maintenance and other support services
|
|
|
—
|
|
|
|
—
|
|
|
|
158
|
|
Total
|
|
$
|
1,090
|
|
|
$
|
400
|
|
|
$
|
466
|
|
At December 31, 2016 and 2015, amounts due from affiliates were $2.5 million and $1.9 million, respectively.
A summary of income (loss) related to U.S. and non-U.S. operations are as follows (in thousands):
|
|
Year Ended December 31,
|
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Domestic
|
|
$
|
40,172
|
|
|
$
|
62,781
|
|
|
$
|
70,079
|
|
Foreign
|
|
|
(767
|
)
|
|
|
2,224
|
|
|
|
3,020
|
|
Total pre-tax income
|
|
$
|
39,405
|
|
|
$
|
65,005
|
|
|
$
|
73,099
|
|
The provision for income taxes attributable to income from continuing operations for the years ended December 31 consists of the following (in thousands):
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
Current:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Federal
|
|
$
|
7,432
|
|
|
$
|
19,544
|
|
|
$
|
20,822
|
|
State
|
|
|
748
|
|
|
|
4,469
|
|
|
|
4,838
|
|
Foreign
|
|
|
284
|
|
|
|
449
|
|
|
|
590
|
|
|
|
|
8,464
|
|
|
|
24,462
|
|
|
|
26,250
|
|
Deferred:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Federal
|
|
|
6,521
|
|
|
|
1,183
|
|
|
|
489
|
|
State
|
|
|
140
|
|
|
|
(730
|
)
|
|
|
891
|
|
Foreign
|
|
|
36
|
|
|
|
89
|
|
|
|
99
|
|
|
|
|
6,697
|
|
|
|
542
|
|
|
|
1,479
|
|
Total
|
|
$
|
15,161
|
|
|
$
|
25,004
|
|
|
$
|
27,729
|
|
During 2016, the Company adopted Accounting Standards Update 2015-17 – Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”), which requires an entity to present deferred tax assets and deferred tax liabilities as noncurrent in a classified balance sheet. As a result of the adoption, the Company reclassified $6.3 million of current deferred tax assets to noncurrent deferred income tax liabilities, and additional $0.1 million of current deferred tax assets to noncurrent deferred assets to conform to the current year presentation.
55
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Consolidated Financial Statements – (Continued)
December 31, 2016, 2015 and 2014
(9)
|
Income Taxes—continued
|
Deferred income tax assets and liabilities at December 31 consist of the following (in thousands):
|
|
2016
|
|
|
2015
|
|
Domestic deferred tax assets:
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts
|
|
$
|
633
|
|
|
$
|
1,809
|
|
Other assets
|
|
|
2,792
|
|
|
|
4,434
|
|
Accrued expenses
|
|
|
5,384
|
|
|
|
4,868
|
|
Total domestic deferred tax assets
|
|
$
|
8,809
|
|
|
$
|
11,111
|
|
Domestic deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
$
|
144
|
|
|
$
|
383
|
|
Marketable securities
|
|
|
1,613
|
|
|
|
1,060
|
|
Intangible assets
|
|
|
13,341
|
|
|
|
15,987
|
|
Property and equipment
|
|
|
41,530
|
|
|
|
34,177
|
|
Total domestic deferred tax liabilities
|
|
$
|
56,628
|
|
|
$
|
51,607
|
|
Net domestic deferred tax liabilities
|
|
$
|
47,819
|
|
|
$
|
40,496
|
|
Foreign deferred tax asset
|
|
|
|
|
|
|
|
|
Other assets
|
|
$
|
571
|
|
|
$
|
489
|
|
Valuation allowance - foreign
|
|
|
(407
|
)
|
|
|
(406
|
)
|
Total foreign deferred tax asset
|
|
$
|
164
|
|
|
$
|
83
|
|
Net deferred tax liability
|
|
$
|
47,655
|
|
|
$
|
40,413
|
|
|
|
|
|
|
|
|
|
|
In assessing whether deferred tax assets may be realized in the future, management considers whether it is more likely than not that some portion of such tax assets will not be realized. The deferred tax assets and liabilities were reviewed separately by jurisdictions when measuring the need for valuation allowances. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income (both ordinary income and taxable capital gains) during the periods in which those temporary differences reverse. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Valuation allowances are established when necessary to reduce deferred tax assets when it is more likely than not that a portion or all of the deferred tax assets will not be realized. Based upon the level of historical taxable income, reversal of existing taxable temporary differences, projections for future taxable income over the periods in which the domestic deferred tax assets are expected to reverse, and our ability to generate future capital gains, management believes it is more likely than not that we will realize the benefits of these deductible differences. Thus, no valuation allowance has been established for the domestic deferred tax assets. Based on the anticipated earnings projections of the foreign subsidiaries, management has recorded a full valuation allowance for the deferred tax assets associated with a German subsidiary.
We have not provided for U.S. income taxes on foreign subsidiaries undistributed earnings since they are expected to be reinvested indefinitely outside the U.S. It is not possible to predict the amount of U.S. income taxes that might be payable if these earnings are eventually repatriated. As of December 31, 2016, the undistributed earnings of foreign subsidiaries were approximately $8.7 million.
Income tax expense attributable to income from continuing operations differs from the statutory rates as follows:
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
Federal statutory rate
|
|
|
35
|
%
|
|
|
35
|
%
|
|
|
35
|
%
|
Non-deductible (benefit) expense
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
-2
|
%
|
State, net of federal benefit
|
|
|
2
|
%
|
|
|
4
|
%
|
|
|
5
|
%
|
Foreign
|
|
|
1
|
%
|
|
|
-1
|
%
|
|
|
0
|
%
|
Effective tax rate
|
|
|
38
|
%
|
|
|
38
|
%
|
|
|
38
|
%
|
56
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Consolidated Financial Statements – (Continued)
December 31, 2016, 2015 and 2014
(9)
|
Income Taxes—continued
|
As of December 31, 2016, the total amount of unrecognized tax benefit representing uncertainty in certain tax positions was $0.4 million. These uncertain tax positions are based on recognition thresholds and measurement attributes for the financial statement recognition and measurements of a tax position taken or expected to be taken in a tax return. Any prospective adjustments to our accrual for uncertain tax positions will be recorded as an increase or decrease to the provision for income taxes and would impact our effective tax rate. At December 31, 2016, there are no positions for which it is reasonably possible that the total amounts of unrecognized tax benefits would significantly increase or decrease within 12 months. As of December 31, 2016, the amount of accrued interest and penalties was $0.1 million and $0.1 million, respectively.
The changes in our gross unrecognized tax benefits during the years ended December 31 are as follows (in thousands):
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
Unrecognized tax benefit – beginning of year
|
|
$
|
333
|
|
|
$
|
414
|
|
|
$
|
652
|
|
Increases related to prior year tax positions
|
|
|
24
|
|
|
|
42
|
|
|
|
4
|
|
Increases related to current year tax positions
|
|
|
95
|
|
|
|
6
|
|
|
|
13
|
|
Decreases related to prior year tax positions
|
|
|
(36
|
)
|
|
|
(129
|
)
|
|
|
(255
|
)
|
Unrecognized tax benefit – end of year
|
|
$
|
416
|
|
|
$
|
333
|
|
|
$
|
414
|
|
We lease office space, warehouses, freight distribution centers, terminal yards and equipment under non-cancelable capital and operating lease arrangements. Except where we deliver services within facilities provided by our customers, we lease warehouse and freight distribution centers used in our logistics operations, often in connection with a specific customer program. Where facilities are substantially dedicated to a single customer and our lease is with an independent property owner, we attempt to align lease terms with the expected duration of the underlying customer program.
In most cases, we expect our facility leases will be renewed or replaced by other leases in the ordinary course of business. Where possible, we contractually secure the recovery of certain occupancy costs, including rent, during the term of a customer program. Future minimum rental payments pursuant to leases that have an initial or remaining non-cancelable lease term in excess of one year as of December 31, 2016 are as follows (in thousands):
|
|
|
|
|
|
Operating Leases
|
|
|
|
|
|
Years Ending December 31
|
|
Capital
Leases
|
|
|
With
Affiliates
|
|
|
With Third
Parties
|
|
|
Total
|
|
2017
|
|
$
|
106
|
|
|
$
|
12,831
|
|
|
$
|
9,154
|
|
|
$
|
22,091
|
|
2018
|
|
|
95
|
|
|
|
9,032
|
|
|
|
5,143
|
|
|
|
14,270
|
|
2019
|
|
|
—
|
|
|
|
7,513
|
|
|
|
2,876
|
|
|
|
10,389
|
|
2020
|
|
|
—
|
|
|
|
5,520
|
|
|
|
2,162
|
|
|
|
7,682
|
|
2021
|
|
|
—
|
|
|
|
4,898
|
|
|
|
400
|
|
|
|
5,298
|
|
Thereafter
|
|
|
—
|
|
|
|
12,582
|
|
|
|
—
|
|
|
|
12,582
|
|
Total required payments
|
|
|
201
|
|
|
$
|
52,376
|
|
|
$
|
19,735
|
|
|
$
|
72,312
|
|
Less amounts representing interest (3.8% to 4.0%)
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Present value of minimum lease payments
|
|
|
192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less current maturities
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2016 and 2015, assets under capital leases, consisting primarily of vehicles, machinery and equipment, had a cost of approximately $0.5 million and $5.4 million, respectively, and accumulated amortization of $0.3 million and $1.5 million, respectively. Included in depreciation and amortization expense in the accompanying Consolidated Statements of Income for the years ended December 31, 2016, 2015 and 2014 is amortization expense associated with the capital leases of $0.1 million, $0.9 million and $0.8 million, respectively.
57
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Consolidated Financial Statements – (Continued)
December 31, 2016, 2015 and 2014
Rental expense for facilities, vehicles and other equipment leased from third parties under operating leases approximated $20.2 million, $19.2 million and $21.9 million for the years ended December 31, 2016, 2015 and 2014.
(11)
|
Comprehensive Income
|
Comprehensive income includes the following for the years ended December 31 (in thousands):
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
Unrealized holding (losses) gains on available-for-sale
securities arising during the period:
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross amount
|
|
$
|
1,787
|
|
|
$
|
(1,597
|
)
|
|
$
|
620
|
|
Income tax (expense) benefit
|
|
|
(645
|
)
|
|
|
582
|
|
|
|
(208
|
)
|
Net of tax amount
|
|
$
|
1,142
|
|
|
$
|
(1,015
|
)
|
|
$
|
412
|
|
Realized (gains) on available-for-sale securities
reclassified into income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized gains on sales of available-for-sale securities
|
|
$
|
(412
|
)
|
|
$
|
(347
|
)
|
|
$
|
—
|
|
Other-than-temporary impairment losses
|
|
|
—
|
|
|
|
230
|
|
|
|
—
|
|
Total before tax
|
|
|
(412
|
)
|
|
|
(117
|
)
|
|
|
—
|
|
Income tax expense
|
|
|
148
|
|
|
|
45
|
|
|
|
—
|
|
Net of tax amount
|
|
$
|
(264
|
)
|
|
$
|
(72
|
)
|
|
$
|
—
|
|
Unrealized holding gains on interest rate swaps
arising during the period:
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross amount
|
|
$
|
161
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Income tax expense
|
|
|
(62
|
)
|
|
|
—
|
|
|
|
—
|
|
Net of tax amount
|
|
$
|
99
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign currency translation adjustments
|
|
$
|
(1,161
|
)
|
|
$
|
(2,252
|
)
|
|
$
|
(1,631
|
)
|
The unrealized holding gains and losses on available-for-sale investments represent mark-to-market adjustments net of related income taxes.
We offer 401(k) defined contribution plans to our employees. The plans are administered by a company controlled by our principal shareholders and include different matching provisions depending on which subsidiary or affiliate is involved. In the plans available to certain employees not subject to collective bargaining agreements, we matched contributions up to $600 annually for each employee who is not considered highly compensated through December 31, 2008, after which some matching contributions were suspended as a response to market conditions at certain subsidiaries. Three other 401(k) plans are provided to employees of specific operations and offer matching contributions that range from zero to $2,080 per participant annually. The total expense for contributions for 401(k) plans, including plans related to collective bargaining agreements, was $0.5 million, $0.2 million and $0.4 million for the years ended December 31, 2016, 2015 and 2014, respectively.
In connection with a collective bargaining agreement that covered 12 Canadian employees at December 31, 2016, we are required to make defined contributions into the Canada Wide Industrial Pension Plan. At December 31, 2016 and 2015, the required contributions totaled approximately $31,000 and $38,000, respectively.
58
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Consolidated Financial Statements – (Continued)
December 31, 2016, 2015 and 2014
(13)
|
Stock Based Compensation
|
On April 23, 2014, our Board of Directors adopted the 2014 Amended and Restated Stock Incentive Plan, or the Plan. The Plan was approved by our shareholders at the 2014 Annual Meeting and became effective as of the date it was adopted by the Board of Directors. The Plan replaced our 2004 Stock Incentive Plan and carried forward the shares of common stock that remained available for issuance under the 2004 Stock Incentive Plan. The grants may be made in the form of stock options, restricted stock bonuses, restricted stock purchase rights, stock appreciation rights, phantom stock units, restricted stock units or unrestricted common stock. Restricted stock awards currently outstanding under the 2004 Stock Incentive Plan will remain outstanding in accordance with the terms of that plan.
|
On February 24, 2016, April 29, 2015 and March 5, 2015, the Company granted 10,000, 20,000 and 10,000 shares, respectively, of restricted stock to its Chief Executive Officer. The restricted stock grants have fair values of $15.55 per share, $22.03 per share, and $25.18 per share, respectively, based on the closing price of the Company’s stock on each grant date. The shares vested 25% immediately on the grant dates, and an additional 25% will vest in three equal installments with the final vesting on March 5, 2019, subject to continued employment with the company.
|
On December 23, 2015, the Company granted 50,000 shares of restricted stock to certain of its employees, including 5,000 shares to its Chief Financial Officer. The restricted stock grants have a grant date fair value of $14.93 per share, based on the closing price of the Company’s stock, of which 25% vested immediately, and an additional 25% will vest in three equal increments on each December 20 in 2016, 2017 and 2018.
On December 20, 2012, the Company granted 178,137 shares of restricted stock to certain of its employees. The restricted stock grants had a grant date fair value of $16.42 per share, based on the closing price of the Company’s stock, of which 25% vested immediately and an additional 20% vested on each anniversary of the grant through December 20, 2016.
A grantee’s vesting of restricted stock awards may be accelerated under certain conditions, including retirement.
A summary of the status of our non-vested shares as of December 31, 2016, and changes during the year ended December 31, 2016, is presented below:
|
|
Shares
|
|
|
Weighted
Average Grant
Date Fair Value
|
|
Non-vested at January 1, 2016
|
|
|
68,225
|
|
|
$
|
17.80
|
|
Granted
|
|
|
10,000
|
|
|
$
|
15.55
|
|
Vested
|
|
|
(33,225
|
)
|
|
$
|
17.19
|
|
Forfeited
|
|
|
—
|
|
|
$
|
—
|
|
Balance at December 31, 2016
|
|
|
45,000
|
|
|
$
|
17.75
|
|
During the years ended December 31, 2016, 2015 and 2014, the total grant date fair value of vested shares recognized as compensation cost was $0.6 million, $0.5 million and $1.5 million, respectively. As of December 31, 2016, there was $0.8 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized on a straight-line basis over the remaining vesting period. As a result, the Company expects to recognize stock-based compensation costs of $0.4 million, $0.3 million, and $0.1 million during 2017, 2018 and 2019, respectively.
(14)
|
Commitments and Contingencies
|
Our principal commitments relate to long-term real estate leases and payment obligations to equipment vendors.
We are involved in certain claims and pending litigation arising from the ordinary conduct of business. We also provide accruals for claims within our self-insured retention amounts. Based on the knowledge of the facts, and in certain cases, opinions of outside counsel, in the Company’s opinion the resolution of these claims and pending litigation will not have a material effect on our financial position, results of operations or cash flows.
At December 31, 2016, approximately 31% of our employees in the United States, Canada and Colombia, and 94% of our employees in Mexico are subject to collective bargaining agreements that are renegotiated periodically, 18% of which are subject to contracts that expire in 2017.
59
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Consolidated Financial Statements – (Continued)
December 31, 2016, 2015 and 2014
Basic earnings per common share amounts are based on the weighted average number of common shares outstanding, excluding outstanding non-vested restricted stock. Diluted earnings per common share include dilutive common stock equivalents determined by the treasury stock method. For the years ended December 31, 2016, 2015 and 2014, there were zero, 2,273 and 31,230 weighted average non-vested shares of restricted stock, respectively, included in the denominator for the calculation of diluted earnings per share.
For the years ended December 31, 2016 and 2015, 45,000 and 30,725 shares of non-vested restricted stock, respectively, were excluded from the calculation of diluted earnings per share because such shares were anti-dilutive. No shares were excluded from the calculation of diluted earnings per share for the year ended December 31, 2014.
(16)
|
Quarterly Financial Data (unaudited)
|
|
|
2016
|
|
|
|
1
st
quarter
|
|
|
2
nd
quarter
|
|
|
3
rd
quarter
|
|
|
4
th
quarter
|
|
|
|
(in thousands, except per share information)
|
|
Operating revenue
|
|
$
|
260,394
|
|
|
$
|
276,813
|
|
|
$
|
271,493
|
|
|
$
|
264,051
|
|
Operating income
|
|
|
13,930
|
|
|
|
16,774
|
|
|
|
10,027
|
|
|
|
5,849
|
|
Income before income taxes
|
|
|
12,105
|
|
|
|
14,771
|
|
|
|
8,119
|
|
|
|
4,410
|
|
Provision for income taxes
|
|
|
4,628
|
|
|
|
5,724
|
|
|
|
3,122
|
|
|
|
1,687
|
|
Net income
|
|
$
|
7,477
|
|
|
$
|
9,047
|
|
|
$
|
4,997
|
|
|
$
|
2,723
|
|
Earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.26
|
|
|
$
|
0.32
|
|
|
$
|
0.18
|
|
|
$
|
0.10
|
|
Diluted
|
|
$
|
0.26
|
|
|
$
|
0.32
|
|
|
$
|
0.18
|
|
|
$
|
0.10
|
|
Weighted average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
28,402
|
|
|
|
28,414
|
|
|
|
28,413
|
|
|
|
28,415
|
|
Diluted
|
|
|
28,402
|
|
|
|
28,414
|
|
|
|
28,413
|
|
|
|
28,415
|
|
|
|
2015
|
|
|
|
1
st
quarter
|
|
|
2
nd
quarter
|
|
|
3
rd
quarter
|
|
|
4
th
quarter
|
|
|
|
(in thousands, except per share information)
|
|
Operating revenue
|
|
$
|
263,561
|
|
|
$
|
295,007
|
|
|
$
|
284,214
|
|
|
$
|
285,991
|
|
Operating income
|
|
|
15,067
|
|
|
|
22,920
|
|
|
|
16,944
|
|
|
|
18,464
|
|
Income before income taxes
|
|
|
13,332
|
|
|
|
21,584
|
|
|
|
15,001
|
|
|
|
15,088
|
|
Provision for income taxes
|
|
|
5,168
|
|
|
|
8,300
|
|
|
|
5,754
|
|
|
|
5,782
|
|
Net income
|
|
$
|
8,164
|
|
|
$
|
13,284
|
|
|
$
|
9,247
|
|
|
$
|
9,306
|
|
Earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.27
|
|
|
$
|
0.44
|
|
|
$
|
0.32
|
|
|
$
|
0.33
|
|
Diluted
|
|
$
|
0.27
|
|
|
$
|
0.44
|
|
|
$
|
0.32
|
|
|
$
|
0.33
|
|
Weighted average number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
29,992
|
|
|
|
29,979
|
|
|
|
28,661
|
|
|
|
28,380
|
|
Diluted
|
|
|
29,998
|
|
|
|
29,980
|
|
|
|
28,661
|
|
|
|
28,382
|
|
We report our financial results in two reportable segments, the transportation segment and the logistics segment, based on the nature of the underlying customer commitment and the types of investments required to support these commitments. This presentation reflects the manner in which management evaluates our operating segments, including an evaluation of economic characteristics and applicable aggregation criteria.
Operations aggregated in our transportation segment are associated with individual freight shipments coordinated by our agents, company-managed terminals and specialized services operations. In contrast, operations aggregated in our logistics segment deliver value-added services or transportation services to specific customers on a dedicated basis, generally pursuant to contract terms of one year or longer. Other non-reportable operating segments are comprised of the Company’s subsidiaries that provide support services to other subsidiaries and to owner-operators, including shop maintenance and equipment leasing.
60
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Consolidated Financial Statements – (Continued)
December 31, 2016, 2015 and 2014
(17)
|
Segment Reporting—continued
|
The following tables summarize information about our reportable segments as of and for the fiscal years ended December 31, 2016, 2015 and 2014 (in thousands):
2016
|
|
Transportation
|
|
|
Logistics
|
|
|
Other
|
|
|
Total
|
|
Operating revenues
|
|
$
|
656,496
|
|
|
$
|
414,948
|
|
|
$
|
1,307
|
|
|
$
|
1,072,751
|
|
Eliminated inter-segment revenues
|
|
|
1,896
|
|
|
|
7,482
|
|
|
|
—
|
|
|
|
9,378
|
|
Depreciation and amortization
|
|
|
13,459
|
|
|
|
23,064
|
|
|
|
179
|
|
|
|
36,702
|
|
Income from operations
|
|
|
22,399
|
|
|
|
27,653
|
|
|
|
(3,472
|
)
|
|
|
46,580
|
|
Capital expenditures
|
|
|
9,464
|
|
|
|
91,045
|
|
|
|
500
|
|
|
|
101,009
|
|
Total assets
|
|
|
252,164
|
|
|
|
292,227
|
|
|
|
26,066
|
|
|
|
570,457
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
Transportation
|
|
|
Logistics
|
|
|
Other
|
|
|
Total
|
|
Operating revenues
|
|
$
|
721,437
|
|
|
$
|
406,822
|
|
|
$
|
514
|
|
|
$
|
1,128,773
|
|
Eliminated inter-segment revenues
|
|
|
3,659
|
|
|
|
6,170
|
|
|
|
—
|
|
|
|
9,829
|
|
Depreciation and amortization
|
|
|
11,153
|
|
|
|
23,565
|
|
|
|
155
|
|
|
|
34,873
|
|
Income from operations
|
|
|
28,683
|
|
|
|
43,848
|
|
|
|
864
|
|
|
|
73,395
|
|
Capital expenditures
|
|
|
2,034
|
|
|
|
23,797
|
|
|
|
426
|
|
|
|
26,257
|
|
Total assets
|
|
|
219,759
|
|
|
|
253,429
|
|
|
|
29,967
|
|
|
|
503,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
Transportation
|
|
|
Logistics
|
|
|
Other
|
|
|
Total
|
|
Operating revenues
|
|
$
|
778,603
|
|
|
$
|
412,507
|
|
|
$
|
411
|
|
|
$
|
1,191,521
|
|
Eliminated inter-segment revenues
|
|
|
5,160
|
|
|
|
7,473
|
|
|
|
—
|
|
|
|
12,633
|
|
Depreciation and amortization
|
|
|
11,256
|
|
|
|
21,507
|
|
|
|
290
|
|
|
|
33,053
|
|
Income from operations
|
|
|
34,931
|
|
|
|
50,892
|
|
|
|
(4,988
|
)
|
|
|
80,835
|
|
Capital expenditures
|
|
|
16,444
|
|
|
|
42,413
|
|
|
|
927
|
|
|
|
59,784
|
|
Total assets
|
|
|
246,190
|
|
|
|
247,155
|
|
|
|
35,669
|
|
|
|
529,014
|
|
We provide a portfolio of transportation and logistics services to a wide range of customers throughout the United States and in Mexico, Canada and Colombia. Revenues for selected services as provided to the chief operating decision maker are as follows (in thousands):
|
|
Year Ended December 31,
|
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
Transportation services
|
|
$
|
629,192
|
|
|
$
|
696,134
|
|
|
$
|
769,308
|
|
Value-added services
|
|
|
302,225
|
|
|
|
285,258
|
|
|
|
284,496
|
|
Intermodal services
|
|
|
141,334
|
|
|
|
147,381
|
|
|
|
137,717
|
|
Total
|
|
$
|
1,072,751
|
|
|
$
|
1,128,773
|
|
|
$
|
1,191,521
|
|
Revenues attributed to geographic areas are as follows (in thousands).
|
|
Year Ended December 31,
|
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
United States
|
|
$
|
1,038,963
|
|
|
$
|
1,090,683
|
|
|
$
|
1,156,875
|
|
Mexico
|
|
|
20,046
|
|
|
|
27,676
|
|
|
|
24,860
|
|
Canada
|
|
|
12,157
|
|
|
|
8,577
|
|
|
|
9,786
|
|
Colombia
|
|
|
1,585
|
|
|
|
1,837
|
|
|
|
—
|
|
Total
|
|
$
|
1,072,751
|
|
|
$
|
1,128,773
|
|
|
$
|
1,191,521
|
|
61
UNIVERSAL LOGISTICS HOLDINGS, INC.
Notes to Consolidated Financial Statements – (Continued)
December 31, 2016, 2015 and 2014
(17)
|
Segment Reporting—continued
|
Net long-lived property and equipment assets are presented in the table below (in thousands):
|
|
Year Ended December 31,
|
|
|
|
2016
|
|
|
2015
|
|
United States
|
|
$
|
233,644
|
|
|
$
|
173,009
|
|
Mexico
|
|
|
12,188
|
|
|
|
3,674
|
|
Canada
|
|
|
431
|
|
|
|
500
|
|
Colombia
|
|
|
14
|
|
|
|
6
|
|
Total
|
|
$
|
246,277
|
|
|
$
|
177,189
|
|
On February 23, 2017, our Board of Directors declared a quarterly cash dividend of $0.07 per share of common stock, which is payable to shareholders of record at the close of business on March 6, 2017 and is expected to be paid on March 16, 2017. 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.
62