What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-11-08 compared with 2023-08-03 · 127 added, 129 removed, 446 unchanged (36% of the section changed)

2 unchanged sentences

Condensed Consolidated Statements of Operations

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(Dollars in millions, shares in thousands, except per share amounts) 2023 2022 2023 2022

21 unchanged sentences

GXO Logistics, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

Three Months Ended June 30, Six Months Ended June 30,

Condensed Consolidated Statements of Comprehensive Income

Three Months Ended September 30, Nine Months Ended September 30,

(In millions) 2023 2022 2023 2022

1 unchanged sentence

Other comprehensive income (loss), net of tax

Foreign currency translation gain (loss), net of tax (expense) benefit of $ 6 , $( 10 ), $ 9 and $( 10 )

Foreign currency translation loss, net of tax expense of $( 9 ), $( 22 ), $ 0 and $( 32 )

( 69 ) ( 43 ) ( 39 ) ( 163 )

1 unchanged sentence

Defined benefit plans, amortization of net loss, net of tax of $ 0 , $ 0 , $ 0 and $ 0

Other comprehensive income (loss), net of tax 22 ( 75 ) 32 ( 120 )

Comprehensive income (loss) 88 ( 23 ) 124 ( 30 )

Comprehensive income attributable to noncontrolling interest 2 — 3 —

Comprehensive income (loss) attributable to GXO $ 86 $ ( 23 ) $ 121 $ ( 30 )

Other comprehensive loss, net of tax ( 68 ) ( 34 ) ( 36 ) ( 154 )

Comprehensive income — 30 124 —

Comprehensive income (loss) attributable to noncontrolling interest — ( 1 ) 3 ( 1 )

Comprehensive income attributable to GXO $ — $ 31 $ 121 $ 1

See accompanying Notes to Condensed Consolidated Financial Statements.

1 unchanged sentence

Condensed Consolidated Balance Sheets

June 30, December 31,

September 30, December 31,

(Dollars in millions, shares in thousands, except per share amounts) 2023 2022

33 unchanged sentences

Retained earnings 479 323

Accumulated other comprehensive loss ( 223 ) ( 254 )

Accumulated Other Comprehensive Income (Loss) (“AOCIL”) ( 289 ) ( 254 )

Total stockholders’ equity before noncontrolling interests 2,784 2,645

5 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Six Months Ended June 30,

Nine Months Ended September 30,

(In millions) 2023 2022

5 unchanged sentences

Deferred tax expense (benefit)

Other 16 ( 4 )

Changes in operating assets and liabilities

15 unchanged sentences

Taxes paid related to stock-based compensation awards ( 7 ) ( 12 )

Other 5 ( 2 )

Net cash provided by (used in) financing activities ( 170 ) 863

Effect of exchange rates on cash and cash equivalents 5 ( 15 )

Net (decrease) increase in cash and cash equivalents ( 190 ) 51

Cash and cash equivalents, beginning of period 495 333

Cash and cash equivalents, end of period

Supplemental disclosure of non-cash activities:

Effect of exchange rates on cash, restricted cash and cash equivalents ( 2 ) ( 22 )

Net (decrease) increase in cash, restricted cash and cash equivalents ( 21 ) 101

Cash, restricted cash and cash equivalents, beginning of period 495 333

Cash, restricted cash and cash equivalents, end of period

Cash and cash equivalents $ 473 $ 434

Restricted Cash (included in Other long-term assets) 1 —

Total cash, restricted cash and cash equivalents $ 474 $ 434

Non-cash investing activities:

Common stock issued for acquisition $ — $ 203

4 unchanged sentences

Capital Retained

Earnings Accumulated

Comprehensive

Loss Equity Before

Earnings AOCIL Equity Before

Noncontrolling

3 unchanged sentences

dollars in millions) Shares Amount

Balance as of March 31, 2023 118,889 $ 1 $ 2,580 $ 348 $ ( 244 ) $ 2,685 $ 34 $ 2,719

Balance as of June 30, 2023 118,932 $ 1 $ 2,587 $ 413 $ ( 223 ) $ 2,778 $ 33 $ 2,811

Net income — — — 66 — 66 2 68

Other comprehensive income — — — — 21 21 1 22

Other comprehensive loss — — — — ( 66 ) ( 66 ) ( 2 ) ( 68 )

Stock-based compensation — — 7 — — 7 — 7

1 unchanged sentence

Tax withholding on vesting of stock-based compensation awards ( 11 ) — ( 1 ) — — ( 1 ) — ( 1 )

Dividends — — — — — — ( 3 ) ( 3 )

Balance as of June 30, 2023 118,932 $ 1 $ 2,587 $ 413 $ ( 223 ) $ 2,778 $ 33 $ 2,811

Balance as of September 30, 2023 118,951 $ 1 $ 2,593 $ 479 $ ( 289 ) $ 2,784 $ 33 $ 2,817

(Shares in thousands,

1 unchanged sentence

Capital Retained

Earnings Accumulated

Comprehensive

Loss Equity Before

Earnings AOCIL Equity Before

Noncontrolling

4 unchanged sentences

Net income — — — 156 — 156 4 160

Other comprehensive income — — — — 31 31 1 32

Other comprehensive loss — — — — ( 35 ) ( 35 ) ( 1 ) ( 36 )

Stock-based compensation — — 25 — — 25 — 25

2 unchanged sentences

Dividends — — — — — — ( 3 ) ( 3 )

Balance as of June 30, 2023 118,932 $ 1 $ 2,587 $ 413 $ ( 223 ) $ 2,778 $ 33 $ 2,811

Balance as of September 30, 2023 118,951 $ 1 $ 2,593 $ 479 $ ( 289 ) $ 2,784 $ 33 $ 2,817

See accompanying Notes to Condensed Consolidated Financial Statements.

3 unchanged sentences

Capital Retained

Earnings Accumulated

Comprehensive

Loss Equity Before

Earnings AOCIL Equity Before

Noncontrolling

3 unchanged sentences

dollars in millions) Shares Amount

Balance as of March 31, 2022 114,840 $ 1 $ 2,349 $ 163 $ ( 172 ) $ 2,341 $ 34 $ 2,375

Balance as of June 30, 2022 118,610 $ 1 $ 2,561 $ 214 $ ( 246 ) $ 2,530 $ 31 $ 2,561

Net income — — — 63 — 63 1 64

3 unchanged sentences

Tax withholding on vesting of stock compensation awards ( 14 ) — — — — — — —

Common stock issued for acquisition 3,749 — 203 — — 203 — 203

Dividends — — — — — — ( 3 ) ( 3 )

Balance as of June 30, 2022 118,610 $ 1 $ 2,561 $ 214 $ ( 246 ) $ 2,530 $ 31 $ 2,561

Balance as of September 30, 2022 118,629 $ 1 $ 2,569 $ 277 $ ( 278 ) $ 2,569 $ 30 $ 2,599

Common Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

Loss Equity Before

Earnings AOCIL Equity Before

Noncontrolling

12 unchanged sentences

Dividends — — — — — — ( 3 ) ( 3 )

Balance as of June 30, 2022 118,610 $ 1 $ 2,561 $ 214 $ ( 246 ) $ 2,530 $ 31 $ 2,561

Balance as of September 30, 2022 118,629 $ 1 $ 2,569 $ 277 $ ( 278 ) $ 2,569 $ 30 $ 2,599

See accompanying Notes to Condensed Consolidated Financial Statements.

4 unchanged sentences

The accompanying unaudited Condensed Consolidated Financial Statements of GXO Logistics, Inc.

(“GXO” or the “Company”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and pursuant to the rules of the Securities and Exchange Commission (“SEC”).

Securities and Exchange Commission (the “SEC”).

Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements.

11 unchanged sentences

In 2021, the FASB expanded the scope of the guidance to include derivatives.

In 2022, the FASB deferred the expiration date for Topic 848 from December 31, 2022, until December 31, 2024.

On March 9, 2023, the Company entered into Amendment No.

4 unchanged sentences

Revenue disaggregated by geographical area was as follows:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In millions) 2023 2022 2023 2022

8 unchanged sentences

The Company’s revenue can also be disaggregated by the customer’s primary industry.

Revenue disaggregated by industries was as follows:

Three Months Ended June 30, Six Months Ended June 30,

Revenue disaggregated by industry was as follows:

Three Months Ended September 30, Nine Months Ended September 30,

(In millions) 2023 2022 2023 2022

8 unchanged sentences

Contract assets consist of two components, customer acquisition costs and costs to fulfill a contract.

Contract assets are primarily amortized to Direct operating expense in the Condensed Consolidated Statements of Operations over the contract term.

Contract assets are amortized to Direct operating expense in the Condensed Consolidated Statements of Operations over the contract term.

Contract liabilities represent the Company’s obligation to transfer services to a customer for which the Company has received consideration or the amount is due from the customer.

The contract asset and contract liability balances from contracts with customers were as follows:

June 30, December 31,

September 30, December 31,

(In millions) 2023 2022

8 unchanged sentences

Revenue included the following:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In millions) 2023 2022 2023 2022

2 unchanged sentences

Remaining Performance Obligations

As of June 30, 2023, the fixed consideration component of the Company’s remaining performance obligation was approximately $ 3.5 billion, and the Company expects to recognize approximately 74 % of that amount over the next three years and the remainder thereafter.

As of September 30, 2023, the fixed consideration component of the Company’s remaining performance obligation was approximately $ 3.4 billion, and the Company expects to recognize approximately 72 % of that amount over the next three years and the remainder thereafter.

The Company estimates remaining performance obligations at a point in time, and actual amounts may differ from these estimates due to changes in foreign currency exchange rates and contract revisions or terminations.

The Company has operating leases primarily for real estate, warehouse equipment, trucks, trailers, containers and material handling equipment.

The Company has operating leases for real estate, warehouse equipment, trucks, trailers, containers and material handling equipment.

In addition, the Company has finance leases for warehouse equipment.

The following amounts related to leases were recorded in the Condensed Consolidated Balance Sheets:

June 30, December 31,

September 30, December 31,

(In millions) 2023 2022

10 unchanged sentences

The components of lease expense recorded in the Condensed Consolidated Statements of Operations were as follows:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In millions) 2023 2022 2023 2022

10 unchanged sentences

Total operating and finance lease cost $ 288 $ 248 $ 850 $ 696

(1) Operating lease cost is primarily included in Direct operating expenses in the Condensed Consolidated Statements of Operations.

(1) Operating lease cost is primarily included in Direct operating expense in the Condensed Consolidated Statements of Operations.

Supplemental cash flow information was as follows:

Six Months Ended June 30,

Nine Months Ended September 30,

(In millions) 2023 2022

3 unchanged sentences

The following table summarizes the carrying value of debt:

June 30, December 31,

September 30, December 31,

(In millions) Rate (1)

12 unchanged sentences

Total Long-term debt $ 1,621 $ 1,739

(1) Interest rate as of June 30, 2023.

(2) Net of unamortized debt issuance costs of $ 2 million as of June 30, 2023 and $ 3 million as of December 31, 2022.

(3) Net of unamortized debt issuance costs of $ 3 million as of June 30, 2023 and December 31, 2022.

(1) Interest rate as of September 30, 2023.

(2) Net of unamortized debt issuance costs of $ 2 million as of September 30, 2023, and $ 3 million as of December 31, 2022.

(3) Net of unamortized debt issuance costs of $ 3 million as of September 30, 2023 and December 31, 2022.

(4) Repaid in the second quarter of 2023.

(5) Net of unamortized debt issuance costs of $ 1 million as of December 31, 2022.

(6) Net of unamortized debt issuance costs of $ 1 million as of June 30, 2023 and December 31, 2022.

(6) Net of unamortized debt issuance costs of $ 1 million as of September 30, 2023 and December 31, 2022.

Factoring Programs

2 unchanged sentences

Information related to the trade receivables sold was as follows:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In millions) 2023 2022 2023 2022

1 unchanged sentence

Cash consideration 286 258 815 714

Net cash used in operating cash flows (1)

— ( 8 ) — ( 2 )

(1) The three months ended June 30, 2022, includes $ 8 million of cash used by factoring programs.

The six months ended June 30, 2022, includes $ 116 million of cash provided by factoring program, reduced by $ 118 million of cash used in the securitization program that was terminated in the first quarter of 2022.

Net cash provided by operating cash flows (1)

(1) The nine months ended September 30, 2022, includes $ 134 million of cash provided by factoring program, reduced by $ 118 million of cash used in the securitization program that was terminated in the first quarter of 2022.

Covenants and Compliance

1 unchanged sentence

In addition, the facilities require the Company to maintain a consolidated leverage ratio below a specified maximum.

As of June 30, 2023, the Company was in compliance with the covenants contained in its debt and financing arrangements.

As of September 30, 2023, the Company was in compliance with the covenants contained in its debt and financing arrangements.

Fair Value Measurements and Financial Instruments

8 unchanged sentences

The Company bases its fair value estimates on market assumptions and available information.

The carrying values of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and current maturities of long-term debt approximated their fair values as of June 30, 2023, and December 31, 2022, due to their short-term nature.

The carrying values of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and current maturities of long-term debt approximated their fair values as of September 30, 2023, and December 31, 2022, due to their short-term nature.

The fair value of debt was as follows:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

(In millions) Level Fair Value Carrying Value Fair Value Carrying Value

16 unchanged sentences

The fair value of the Company’s derivative instruments and the related notional amounts was as follows:

June 30, 2023

(In millions) Notional Derivative Assets (1)

Derivative Liabilities (2)

September 30, 2023

(In millions) Notional Derivative

Liabilities (2)

Designated as hedges:

3 unchanged sentences

Foreign currency option contracts $ 424 $ 16 $ —

Foreign currency forward contracts 58 — —

(1) Derivative assets are included in Other current assets and Other long-term assets in the Condensed Consolidated Balance Sheets.

(2) Derivative liabilities are included in Other current liabilities and Other long-term liabilities in the Condensed Consolidated Balance Sheets.

(3) In June 2023, the Company amended one interest rate swap scheduled to mature in 2027 to 2024, with a notional amount of $ 125 million.

In connection with this amendment, the Company received $ 2 million of cash representing the fair value of the reduced term.

(3) In June 2023, the Company amended one interest rate swap, with a notional amount of $ 125 million, scheduled to mature in 2027 to 2024.

December 31, 2022

(In millions) Notional Derivative Assets (1)

Derivative Liabilities (2)

(In millions) Notional Derivative

Liabilities (2)

Designated as hedges:

6 unchanged sentences

(2) Derivative liabilities are included in Other current liabilities and Other long-term liabilities in the Condensed Consolidated Balance Sheets.

As of June 30, 2023 and December 31, 2022, the derivatives were classified as Level 2 within the fair value hierarchy.

The effect of hedges on accumulated other comprehensive loss (“AOCL”) and in the Condensed Consolidated Statements of Operations was as follows:

Three Months Ended June 30, 2023 Six Months Ended June 30, 2023

(In millions) Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivative Gain (Loss) Reclassified from AOCL into Net Income (1)

As of September 30, 2023 and December 31, 2022, the derivatives were classified as Level 2 within the fair value hierarchy.

The effect of hedges on AOCIL and in the Condensed Consolidated Statements of Operations was as follows:

Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023

(In millions) Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivative Gain (Loss) Reclassified from AOCIL into Net Income (1)

Gain (Loss) Recognized in Net Income on Derivative (Excluded from effectiveness testing) (1)

Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivative Gain (Loss) Reclassified from AOCL into Net Income (1)

Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivative Gain (Loss) Reclassified from AOCIL into Net Income (1)

Gain (Loss) Recognized in Net Income on Derivative (Excluded from effectiveness testing) (1)

3 unchanged sentences

Interest rate swaps $ 1 $ — $ — $ 2 $ — $ —

(1) Amounts reclassified to net income are reported within Interest expense, net in the Condensed Consolidated Statements of Operations.

Three Months Ended June 30, 2022 Six Months Ended June 30, 2022

(In millions) Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivative Gain (Loss) Reclassified from AOCL into Net Income (1)

(1) Amounts reclassified to net income are reported in Interest expense, net in the Condensed Consolidated Statements of Operations.

Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022

(In millions) Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivative Gain (Loss) Reclassified from AOCIL into Net Income (1)

Gain (Loss) Recognized in Net Income on Derivative (Excluded from effectiveness testing) (1)

Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivative Gain (Loss) Reclassified from AOCL into Net Income (1)

Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivative Gain (Loss) Reclassified from AOCIL into Net Income (1)

Gain (Loss) Recognized in Net Income on Derivative (Excluded from effectiveness testing) (1)

3 unchanged sentences

Interest rate swaps $ 12 $ — $ — $ 11 $ — $ —

(1) Amounts reclassified to net income are reported within Interest expense, net in the Condensed Consolidated Statements of Operations.

(1) Amounts reclassified to net income are reported in Interest expense, net in the Condensed Consolidated Statements of Operations.

Derivatives Not Designated as Hedges

Gains and losses recognized in Other income, net in the Condensed Consolidated Statements of Operations for foreign currency options and forward contracts were as follows:

Three Months Ended June 30, Six Months Ended

Three Months Ended September 30, Nine Months Ended September 30,

(In millions) 2023 2022 2023 2022

Realized foreign currency contracts gain (loss) $ ( 3 ) $ 10 $ ( 9 ) $ 19

Unrealized foreign currency contracts gain 3 9 4 15

Total foreign currency gain (loss) recognized in net income

Unrealized foreign currency contracts gain (loss) 8 ( 1 ) 12 14

Total foreign currency gain recognized in net income

$ 5 $ 9 $ 3 $ 33

Stockholders’ Equity

The following table summarizes the changes in AOCL by component:

The following tables summarize the changes in AOCIL by component:

(In millions) Foreign

3 unchanged sentences

noncontrolling

interest AOCL

As of March 31, 2023 $ ( 136 ) $ 4 $ ( 112 ) $ — $ ( 244 )

Foreign currency translation gain 33 — — ( 1 ) 32

Unrealized gain (loss) on hedges, net of tax ( 13 ) 4 — — ( 9 )

Amounts reclassified from AOCL to net income ( 3 ) — 1 — ( 2 )

Other comprehensive income, net of tax 17 4 1 ( 1 ) 21

interest AOCIL

As of June 30, 2023 $ ( 119 ) $ 8 $ ( 111 ) $ ( 1 ) $ ( 223 )

Foreign currency translation loss ( 98 ) — — 2 ( 96 )

Unrealized gain on hedges, net of tax 27 — — — 27

Amounts reclassified from AOCIL to net income 2 — 1 — 3

Other comprehensive income (loss), net of tax ( 69 ) — 1 2 ( 66 )

As of September 30, 2023 $ ( 188 ) $ 8 $ ( 110 ) $ 1 $ ( 289 )

(In millions) Foreign

3 unchanged sentences

noncontrolling

interest AOCL

interest AOCIL

As of December 31, 2022 $ ( 149 ) $ 7 $ ( 112 ) $ — $ ( 254 )

Foreign currency translation gain 57 — — ( 1 ) 56

Unrealized gain (loss) on hedges, net of tax ( 26 ) 1 — — ( 25 )

Amounts reclassified from AOCL to net income ( 1 ) — 1 — —

Other comprehensive income, net of tax 30 1 1 ( 1 ) 31

As of June 30, 2023 $ ( 119 ) $ 8 $ ( 111 ) $ ( 1 ) $ ( 223 )

(In millions) Foreign Currency Translation Adjustments Cash Flow Hedges Defined Benefit Plan Less:

AOCI attributable to noncontrolling interest AOCL attributable to GXO

As of March 31, 2022 $ ( 94 ) $ — $ ( 76 ) $ ( 2 ) $ ( 172 )

Foreign currency translation loss ( 41 ) — — 1 ( 40 )

Unrealized gain on hedges, net of tax 1 1 — — 2

Amounts reclassified from AOCL to net income ( 2 ) — — — ( 2 )

Other comprehensive loss, net of tax ( 75 ) — — 1 ( 74 )

Amounts reclassified from AOCIL to net income 1 — 2 — 3

Other comprehensive income (loss), net of tax ( 39 ) 1 2 1 ( 35 )

As of September 30, 2023 $ ( 188 ) $ 8 $ ( 110 ) $ 1 $ ( 289 )

(In millions) Foreign Currency Translation Adjustments Cash Flow Hedges Defined Benefit Plan Less:

AOCIL attributable to noncontrolling interest AOCIL attributable to GXO

As of June 30, 2022 $ ( 169 ) $ — $ ( 76 ) $ ( 1 ) $ ( 246 )

Foreign currency translation loss ( 111 ) — — 2 ( 109 )

Unrealized gain on hedges, net of tax 69 9 — — 78

Amounts reclassified from AOCIL to net income ( 1 ) — — — ( 1 )

Other comprehensive income (loss), net of tax ( 43 ) 9 — 2 ( 32 )

As of September 30, 2022 $ ( 212 ) $ 9 $ ( 76 ) $ 1 $ ( 278 )

(In millions) Foreign Currency Translation Adjustments Cash Flow Hedges Defined Benefit Plan Less:

AOCI attributable to noncontrolling interest AOCL attributable to GXO

AOCIL attributable to noncontrolling interest AOCIL attributable to GXO

As of December 31, 2021 $ ( 53 ) $ — $ ( 76 ) $ ( 1 ) $ ( 130 )

1 unchanged sentence

Unrealized gain on hedges, net of tax 102 9 — — 111

Amounts reclassified from AOCL to net income ( 4 ) — — — ( 4 )

Other comprehensive loss, net of tax ( 120 ) — — 2 ( 118 )

Amounts reclassified from AOCIL to net income ( 5 ) — — — ( 5 )

Other comprehensive income (loss), net of tax ( 163 ) 9 — 4 ( 150 )

Deconsolidation of variable interest entity 4 — — ( 2 ) 2

As of June 30, 2022 $ ( 169 ) $ — $ ( 76 ) $ ( 1 ) $ ( 246 )

As of September 30, 2022 $ ( 212 ) $ 9 $ ( 76 ) $ 1 $ ( 278 )

Employee Benefit Plans

4 unchanged sentences

Retirement Plan were as follows:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In millions) 2023 2022 2023 2022

4 unchanged sentences

$ 2 $ 7 $ 6 $ 25

(1) Net periodic pension income is recorded within Other income, net in the Condensed Consolidated Statements of Operations.

(1) Net periodic pension income is recorded in Other income, net in the Condensed Consolidated Statements of Operations.

The Company also maintains defined benefit pension plans for some of its foreign subsidiaries that are excluded from the disclosure due to their immateriality.

2 unchanged sentences

employees and employees of certain foreign subsidiaries.

The Company’s contributions for both the three months ended June 30, 2023 and 2022 were $ 5 million.

For the six months ended June 30, 2023 and 2022 were $ 22 million and $ 19 million, respectively.

Defined contribution costs were primarily recorded in Direct operating expenses in the Condensed Consolidated Statements of Operations.

The Company’s contributions for the three months ended September 30, 2023 and 2022, were $ 15 million and $ 12 million, respectively, and for the nine months ended September 30, 2023 and 2022 were $ 47 million and $ 40 million, respectively.

Defined contribution costs were primarily recorded in Direct operating expense in the Condensed Consolidated Statements of Operations.

Restructuring Costs and Other

Restructuring costs and other are primarily related to severance, including projects to optimize finance, human resources and information technology functions, and are not associated with customer attrition.

For the three months ended June 30, 2023, restructuring costs and other totaled $ 3 million and related to severance charges.

For the six months ended June 30, 2023, restructuring costs and other totaled $ 24 million and included severance charges of $ 18 million and impairment charges of $ 6 million as a result of closing certain corporate and administrative offices.

For the three months ended September 30, 2023, Restructuring costs and other totaled $ 7 million including $ 6 million related to severance charges, primarily from the exit of non-core businesses in Asia.

For the nine months ended September 30, 2023, Restructuring costs and other totaled $ 31 million, including $ 24 million related to severance charges and $ 7 million related to non-cash impairment charges.

The following is a roll forward of the restructuring liability, which is included in Other current liabilities in the Condensed Consolidated Balance Sheets:

3 unchanged sentences

Payments ( 26 )

Balance as of June 30, 2023 $ 10

The remaining restructuring liability at June 30, 2023 primarily relates to severance payments and is expected to be substantially paid within the next twelve months.

The effective tax rate was 23.0 % for the three months ended June 30, 2023, compared with 29.4 % for the same period in 2022.

The effective tax rate was 19.9 % for the six months ended June 30, 2023, compared with 26.4 % for the same period in 2022.

The decrease in our effective tax rate for the three and six months was primarily driven by a decrease in pre-tax losses in certain jurisdictions for which no benefit was recognized and higher transaction costs for the same period in 2022 related to the Clipper Acquisition which were non deductible.

The decrease in our effective tax rate for the six months ended June 30, 2023 also reflects a valuation allowance release.

As of June 30, 2023 and December 31, 2022, the Company had valuation allowances of $ 39 million and $ 44 million on its deferred income tax asset, respectively.

The following table presents the changes in goodwill for the six months ended June 30, 2023:

Balance as of September 30, 2023 $ 11

The remaining restructuring liability at September 30, 2023 primarily relates to severance payments and is expected to be substantially paid within the next 12 months.

The effective tax rate was 17.9 % for the three months ended September 30, 2023, compared with 22.5 % for the same period in 2022.

The effective tax rate was 19.1 % for the nine months ended September 30, 2023, compared with 24.7 % for the same period in 2022.

The decrease in our effective tax rate for the three months was primarily driven by a tax benefit related to return-to-provision true-up adjustments.

The decrease in our effective tax rate for the nine months was primarily driven by a tax benefit related to valuation allowance release.

As of September 30, 2023 and December 31, 2022, the Company had valuation allowances of $ 36 million and $ 44 million on its deferred income tax asset, respectively.

The following table presents the changes in Goodwill for the nine months ended September 30, 2023:

(In millions)

2 unchanged sentences

Impact of foreign exchange translation (2)

Balance as of June 30, 2023 $ 2,802

Balance as of September 30, 2023 $ 2,734

(1) Represents the finalization of the purchase price allocation for the Clipper acquisition.

1 unchanged sentence

(2) Changes to goodwill amounts resulting from foreign currency translation after the acquisition date are presented as the impact of foreign exchange translation.

As of September 30, 2023, and December 31, 2022, there were no accumulated goodwill impairment losses.

On May 24, 2022, the Company completed the acquisition of Clipper Logistics plc (“Clipper”), an omnichannel retail logistics specialist based in Leeds, England (the “Clipper Acquisition”).

The Company acquired Clipper for $ 1,106 million, consisting of $ 902 million in cash and the issuance of 3,757,657 shares of GXO common stock having a value of $ 204 million.

The Company acquired Clipper for $ 1,106 million, consisting of $ 902 million in cash and the issuance of 3,757,657 shares of GXO common stock with a value of $ 204 million.

The Company accounted for the Clipper Acquisition as a business combination using the acquisition method of accounting.

41 unchanged sentences

The Company establishes accruals for specific legal proceedings when it is considered probable that a loss has been incurred and the amount of the loss can be reasonably estimated.

The Company reviews and adjusts accruals for loss contingencies quarterly and as additional information becomes available.

If a loss is not both probable and

reasonably estimable, or if an exposure to a loss exists in excess of the amount accrued, the Company assesses whether there is at least a reasonable possibility that a loss, or additional loss, may have been incurred.

The Company reviews and adjusts accruals for loss

contingencies quarterly and as additional information becomes available.

If a loss is not both probable and reasonably estimable, or if an exposure to a loss exists in excess of the amount accrued, the Company assesses whether there is at least a reasonable possibility that a loss, or additional loss, may have been incurred.

If there is a reasonable possibility that a loss, or additional loss, may have been incurred, the Company discloses the estimate of the possible loss or range of loss if it is material and an estimate can be made, or discloses that such an estimate cannot be made.

6 unchanged sentences

In the event the Company is required to satisfy a legal claim outside the scope of the coverage provided by insurance, its financial condition, results of operations or cash flows could be negatively impacted.

Subsequent Events

Financial Instruments - Net Investment Hedges

In October 2023, the Company terminated a hedge with a notional amount of $ 115 million.

Also, the Company amended a $ 235 million hedge to extend its maturity from 2024 to 2025.

Additionally, the Company entered into various hedges for an aggregate notional amount of $ 313 million that will mature from 2025 to 2028.

On September 13, 2023, the Company entered into an Agreement and Plan of Merger to acquire PFSweb, Inc., a Delaware corporation headquartered in Irving, Texas (“PFS”), and on October 23, 2023, the Company completed its acquisition of PFS.

PFS provides e-commerce order fulfillment services.

The Company acquired the shares of PFSweb at a price per share of $ 7.50 in cash, totaling approximately $ 181 million.

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