What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-08-04 compared with 2021-05-04 · 265 added, 123 removed, 418 unchanged (48% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

March 31, December 31,

June 30, December 31,

(In millions, except per share data) 2021 2020

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10 shares authorized;

— and 0.001 of Series A shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively

— and 0.001 of Series A shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

Common stock, $ 0.001 par value;

300 shares authorized;

112 and 102 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively

112 and 102 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

Additional paid-in capital 1,971 1,998

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XPO Logistics, Inc.

Condensed Consolidated Statements of Income

Three Months Ended March 31,

Condensed Consolidated Statements of Income (Loss)

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

(In millions, except per share data) 2021 2020 2021 2020

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Sales, general and administrative expense 594 632 1,182 1,157

Operating income 202 81

Operating income (loss) 246 ( 141 ) 448 ( 60 )

Other income ( 24 ) ( 21 ) ( 50 ) ( 39 )

Foreign currency gain ( 2 ) ( 8 )

Foreign currency (gain) loss 3 3 1 ( 5 )

Debt extinguishment loss — — 8 —

Interest expense 63 82 132 154

Income before income tax provision 153 35

Income tax provision 35 10

Net income 118 25

Net income attributable to noncontrolling interests ( 3 ) ( 2 )

Net income attributable to XPO $ 115 $ 23

Net income attributable to common shareholders $ 115 $ 21

Income (loss) before income tax provision (benefit) 204 ( 205 ) 357 ( 170 )

Income tax provision (benefit) 46 ( 71 ) 81 ( 61 )

Net income (loss) 158 ( 134 ) 276 ( 109 )

Net (income) loss attributable to noncontrolling interests ( 2 ) 3 ( 5 ) 1

Net income (loss) attributable to XPO $ 156 $ ( 131 ) $ 271 $ ( 108 )

Net income (loss) attributable to common shareholders $ 156 $ ( 132 ) $ 271 $ ( 110 )

Earnings per share data

Basic earnings per share $ 1.08 $ 0.23

Diluted earnings per share $ 1.02 $ 0.20

Basic earnings (loss) per share $ 1.39 $ ( 1.45 ) $ 2.48 $ ( 1.20 )

Diluted earnings (loss) per share $ 1.38 $ ( 1.45 ) $ 2.40 $ ( 1.20 )

Weighted-average common shares outstanding

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Condensed Consolidated Statements of Comprehensive Income (Loss)

Three Months Ended March 31,

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

(In millions) 2021 2020 2021 2020

Net income $ 118 $ 25

Net income (loss) $ 158 $ ( 134 ) $ 276 $ ( 109 )

Other comprehensive income (loss), net of tax

Foreign currency translation loss, net of tax effect of $( 6 ) and $( 11 )

Foreign currency translation gain (loss), net of tax effect of $ 3 , $ 4 , $( 3 ) and $( 7 )

$ 15 $ 21 $ ( 27 ) $ ( 44 )

Defined benefit plans adjustments, net of tax effect of $ — , $ — , $ — and $ 2

Other comprehensive loss ( 42 ) ( 70 )

Other comprehensive income (loss) 15 21 ( 27 ) ( 49 )

Comprehensive income (loss) $ 173 $ ( 113 ) $ 249 $ ( 158 )

Comprehensive loss attributable to noncontrolling interests ( 2 ) ( 3 )

Comprehensive income (loss) attributable to noncontrolling interests 5 — 3 ( 3 )

Comprehensive income (loss) attributable to XPO $ 168 $ ( 113 ) $ 246 $ ( 155 )

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Condensed Consolidated Statements of Cash Flows

Three Months Ended March 31,

Six Months Ended June 30,

(In millions) 2021 2020

Operating activities

Net income $ 118 $ 25

Adjustments to reconcile net income to net cash from operating activities

Net income (loss) $ 276 $ ( 109 )

Adjustments to reconcile net income (loss) to net cash from operating activities

Depreciation, amortization and net lease activity 397 379

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Accretion of debt 10 8

Deferred tax benefit ( 4 ) ( 2 )

Deferred tax (benefit) expense ( 1 ) 3

Debt extinguishment loss 8 —

Unrealized gain on foreign currency option and forward contracts ( 1 ) ( 4 )

Unrealized (gain) loss on foreign currency option and forward contracts 1 ( 1 )

Gains on sales of property and equipment ( 31 ) ( 39 )

Other ( 2 ) 5

Changes in assets and liabilities

9 unchanged sentences

Financing activities

Proceeds from issuance of debt — 1,161

Proceeds from (repayment of) borrowings related to securitization program ( 49 ) 109

4 unchanged sentences

Payment for debt issuance costs ( 5 ) ( 21 )

Purchase of noncontrolling interests ( 128 ) —

Repurchase of common stock — ( 114 )

1 unchanged sentence

Payment for tax withholdings for restricted shares ( 22 ) ( 18 )

Other 2 ( 1 )

Net cash provided by (used in) financing activities ( 1,639 ) 1,701

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Supplemental disclosure of cash flow information

Leased assets obtained in exchange for new operating lease liabilities, including $ 306 million related an acquisition

Leased assets obtained in exchange for new operating lease liabilities, including $ 281 related to an acquisition in 2021

Leased assets obtained in exchange for new finance lease liabilities 41 17

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(Shares in thousands, dollars in millions) Shares Amount Shares Amount Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Total XPO Stockholders' Equity Non-controlling Interests Total Equity

Balance as of March 31, 2021 — $ — 111,676 $ — $ 1,988 $ 983 $ ( 195 ) $ 2,776 $ 138 $ 2,914

Net income — — — — — 156 — 156 2 158

Other comprehensive income

— — — — — — 12 12 3 15

Exercise and vesting of stock compensation awards

— — 44 — — — — — — —

Tax withholdings related to vesting of stock compensation awards

— — — — ( 1 ) — — ( 1 ) — ( 1 )

Conversion of preferred stock to common stock — — 6 — — — — — — —

Purchase of noncontrolling interests — — — — ( 34 ) — — ( 34 ) ( 100 ) ( 134 )

Dividend declared

— — — — — — — — ( 3 ) ( 3 )

Stock compensation expense

— — — — 15 — — 15 — 15

— — — — 3 — — 3 — 3

Balance as of June 30, 2021 — $ — 111,726 $ — $ 1,971 $ 1,139 $ ( 183 ) $ 2,927 $ 40 $ 2,967

Series A Preferred Stock Common Stock

Balance as of December 31, 2020 1 $ 1 102,052 $ — $ 1,998 $ 868 $ ( 158 ) $ 2,709 $ 140 $ 2,849

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Conversion of preferred stock to common stock ( 1 ) ( 1 ) 145 — 1 — — — — —

Purchase of noncontrolling interests — — — — ( 34 ) — — ( 34 ) ( 100 ) ( 134 )

Dividend declared

— — — — — — — — ( 3 ) ( 3 )

Exercise of warrants — — 9,215 — — — — — — —

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— — — — 25 — — 25 — 25

— — — — 3 — — 3 — 3

Balance as of June 30, 2021 — $ — 111,726 $ — $ 1,971 $ 1,139 $ ( 183 ) $ 2,927 $ 40 $ 2,967

XPO Logistics, Inc.

Condensed Consolidated Statements of Changes in Equity (continued)

Series A Preferred Stock Common Stock

Balance as of March 31, 2020 72 $ 41 91,044 $ — $ 1,943 $ 804 $ ( 210 ) $ 2,578 $ 150 $ 2,728

Net loss — — — — — ( 131 ) — ( 131 ) ( 3 ) ( 134 )

Other comprehensive income — — — — — — 18 18 3 21

Exercise and vesting of stock compensation awards

— — 216 — — — — — — —

Tax withholdings related to vesting of stock compensation awards

— — — — ( 2 ) — — ( 2 ) — ( 2 )

Dividend declared

— — — — — ( 1 ) — ( 1 ) — ( 1 )

Stock compensation expense

— — — — 20 — — 20 — 20

— — 62 — 2 — — 2 — 2

Balance as of June 30, 2020 72 $ 41 91,322 $ — $ 1,963 $ 672 $ ( 192 ) $ 2,484 $ 150 $ 2,634

Series A Preferred Stock Common Stock

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Balance as of December 31, 2019 72 $ 41 92,342 $ — $ 2,061 $ 786 $ ( 145 ) $ 2,743 $ 153 $ 2,896

— — — — — 23 — 23 2 25

Net loss — — — — — ( 108 ) — ( 108 ) ( 1 ) ( 109 )

Other comprehensive loss

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— — 62 — 2 ( 4 ) — ( 2 ) — ( 2 )

Balance as of March 31, 2020 72 $ 41 91,044 $ — $ 1,943 $ 804 $ ( 210 ) $ 2,578 $ 150 $ 2,728

Balance as of June 30, 2020 72 $ 41 91,322 $ — $ 1,963 $ 672 $ ( 192 ) $ 2,484 $ 150 $ 2,634

See accompanying notes to condensed consolidated financial statements.

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XPO Logistics, Inc., together with its subsidiaries (“XPO” or “we”), provides cutting-edge supply chain solutions to the most successful companies in the world.

We use our integrated network of people, technology and physical assets to help customers manage their goods most efficiently throughout their supply chains.

We use our extensive network of people, technology and physical assets to help customers manage their goods most efficiently throughout their supply chains.

Our customers are multinational, national, mid-size and small enterprises.

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See Note 3—Segment Reporting for additional information on our operations.

In December 2020, we announced that our Board of Directors unanimously approved a plan to pursue a spin-off of 100 % of our Logistics segment as a separate publicly traded company.

The spin-off, which we intend to qualify as a transaction that is generally tax-free for U.S.

federal income tax purposes to XPO shareholders, would result in XPO shareholders owning stock in both companies.

If completed, the spin-off will result in separate public companies with clearly delineated service offerings.

XPO will be a global provider of primarily less-than-truckload (“LTL”) transportation and truck brokerage services, and GXO Logistics, Inc.

(“GXO”), the planned spin-off, will be a global provider of contract logistics services.

Both companies’ stocks are expected to trade on the New York Stock Exchange, and we plan to consider a dual listing on the London Stock Exchange for GXO in due course.

The transaction is currently expected to be completed in the second half of 2021, subject to various conditions, including the approval of XPO’s board of directors.

There can be no assurance that the spin-off will occur or, if it does occur, of its terms or timing.

On August 2, 2021, we completed the previously announced spin-off of our Logistics segment in a transaction intended to qualify as tax-free to our stockholders for U.S.

federal income tax purposes, which was accomplished by the distribution of 100 % of the outstanding common stock of GXO Logistics, Inc.

(“GXO”) to XPO stockholders.

XPO stockholders received one share of GXO common stock for every share of XPO common stock held at the close of business on July 23, 2021, the record date for the distribution.

XPO does not beneficially own any shares of GXO’s common stock following the spin-off.

GXO, a global provider of contract logistics services, is an independent public company trading under the symbol “GXO” on the New York Stock Exchange.

The historical results of operations and the financial position of GXO are included in these condensed consolidated financial statements.

After the spin-off, we will no longer consolidate GXO, and all periods prior to the spin-off will reflect our Logistics segment as a discontinued operation.

In connection with the spin-off, we have entered into a separation and distribution agreement as well as various other agreements with GXO that provide a framework for the relationships between the parties going forward, including, among others, an employee matters agreement, a tax matters agreement, an intellectual property license agreement and a transition services agreement, through which XPO will continue to provide certain services to GXO following the spin-off.

With the completion of the spin-off, XPO is a leading provider of transportation services, primarily less-than-truckload (“LTL”) transportation and truck brokerage services.

We prepared our Condensed Consolidated Financial Statements in accordance with U.S.

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These Condensed Consolidated Financial Statements should be read in conjunction with the 2020 Form 10-K.

The Condensed Consolidated Financial Statements are not audited but reflect all adjustments that are of a normal recurring nature and are necessary for a fair presentation of financial condition, operating results and cash flows for the interim periods presented.

Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

Our historical results reflect a noncontrolling interest in XPO Logistics Europe SA (“XPO Logistics Europe”), a business we acquired majority ownership of in 2015.

In April 2021, we announced a buy-out offer to be followed by a squeeze-out for the remaining 3 % of XPO Logistics Europe that we did not already own.

The buy-out offer and squeeze-out were completed in the second quarter of 2021 at a cost of $ 128 million plus expenses.

Following the squeeze-out, we own all of the outstanding shares of XPO Logistics Europe.

The Condensed Consolidated Financial Statements are not audited but reflect all adjustments that are of a normal recurring nature and are necessary for a fair presentation of the financial condition, operating results and cash flows for the interim periods presented.

Operating results for the three and six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

Restricted Cash

As of March 31, 2021 and December 31, 2020, our restricted cash included in Other long-term assets on our Condensed Consolidated Balance Sheets was $ 11 million.

As of June 30, 2021 and December 31, 2020, our restricted cash included in Other long-term assets on our Condensed Consolidated Balance Sheets was $ 11 million.

Trade Receivables Securitization and Factoring Programs

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We use trade receivables securitization and factoring programs to help manage our cash flows and offset the impact of extended payment terms for some of our customers.

XPO Logistics Europe SA (“XPO Logistics Europe”), one of our majority-owned subsidiaries, participates in a trade receivables securitization program co-arranged by three European banks (the “Purchasers”).

Under the program, a wholly-owned bankruptcy-remote special purpose entity of XPO Logistics Europe sells trade receivables that

originate with wholly-owned subsidiaries of XPO Logistics Europe in the United Kingdom and France to unaffiliated entities managed by the Purchasers.

XPO Logistics Europe participates in a trade receivables securitization program co-arranged by three European banks (the “Purchasers”).

Under the program, a wholly-owned bankruptcy-remote special purpose entity of XPO Logistics Europe sells trade receivables that originate with wholly-owned subsidiaries of XPO Logistics Europe in the United Kingdom and France to unaffiliated entities managed by the Purchasers.

The special purpose entity is a variable interest entity and is consolidated by XPO based on our control of the entity’s activities.

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For these transfers, the receivables are removed from our Condensed Consolidated Balance Sheets at the date of transfer.

In the securitization and factoring arrangements, our continuing involvement is limited to servicing the receivables.

In the securitization and factoring arrangements, our continuing involvement is limited to servicing the receivables and, in the case of the securitization arrangements, providing recourse in certain defined circumstances.

The fair value of any servicing assets and liabilities is immaterial.

Our trade receivables securitization program permits us to borrow, on an unsecured basis, cash collected in a servicing capacity on previously sold receivables, which we report within short-term debt on our Condensed Consolidated Balance Sheets.

We had no such borrowings outstanding as of March 31, 2021 and had borrowings of € 41 million ($ 50 million) as of December 31, 2020.

We had no such borrowings outstanding as of June 30, 2021 and had borrowings of € 41 million ($ 50 million) as of December 31, 2020.

See Note 7—Debt for additional information on these borrowings.

The maximum amount of net cash proceeds available at any one time under the securitization program, inclusive of any unsecured borrowings, is € 400 million (approximately $ 469 million as of March 31, 2021).

As of March 31, 2021, € 82 million (approximately $ 96 million) was available to us, subject to having sufficient receivables available to sell to the Purchasers.

The weighted average interest rate was 0.58 % as of March 31, 2021.

Charges for commitment fees, which are based on a percentage of available amounts, and charges for administrative fees were not material to our results of operations for the three months ended March 31, 2021 and 2020.

The maximum amount of net cash proceeds available at any one time under the securitization program, inclusive of any unsecured borrowings, is € 400 million (approximately $ 474 million as of June 30, 2021).

As of June 30, 2021, € 59 million (approximately $ 70 million) was available to us, subject to having sufficient receivables available to sell to the Purchasers.

The weighted average interest rate was 0.60 % as of June 30, 2021.

Information related to the trade receivables sold was as follows:

Three Months Ended March 31,

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

(In millions) 2021 2020 2021 2020

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Receivables sold in period

$ 882 $ 598 $ 1,657 $ 1,289

Cash consideration

882 598 1,657 1,289

Factoring programs

Receivables sold in period

113 199 229 463

Cash consideration

112 199 228 462

The trade receivables securitization program was amended in July 2021.

See Note 11—Subsequent Events for more information.

Fair Value Measurements

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quoted prices for identical or similar instruments in markets that are not active;

and model-derived valuations in which all significant inputs are observable in active markets;

and model-derived valuations in which all significant inputs are

observable in active markets;

• Level 3—Valuations based on inputs that are unobservable, generally utilizing pricing models or other valuation techniques that reflect management’s judgment and estimates.

We base our 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 March 31, 2021 and December 31, 2020 due to their short-term nature and/or being receivable or payable on demand.

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, 2021 and December 31, 2020 due to their short-term nature and/or being receivable or payable on demand.

The Level 1 cash equivalents include money market funds valued using quoted prices in active markets.

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(In millions) Carrying Value Fair Value Level 1

March 31, 2021 $ 249 $ 249 $ 249

June 30, 2021 $ 535 $ 535 $ 535

December 31, 2020 1,738 1,738 1,738

The decrease in cash equivalents from December 31, 2020 was primarily due to the redemption of our senior notes due 2022 and the repayment of borrowings under our revolving loan credit agreement (the “ABL Facility”).

The decrease in cash equivalents from December 31, 2020 was primarily due to the redemption of our senior notes due 2022 in January 2021 and the repayment of borrowings under our revolving loan credit agreement (the “ABL Facility”).

For further information, see Note 7—Debt for further information.

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In our Transportation segment, we provide multiple services to facilitate the movement of raw materials, parts and finished goods.

We accomplish this by using our proprietary technology, third-party independent carriers and our transportation assets and service centers.

We accomplish this by using our proprietary technology, third-party independent carriers and our

transportation assets and service centers.

Our transportation services include LTL, truck brokerage services and other transportation services.

In our Logistics segment, which we sometimes refer to as supply chain, we provide a wide range of services differentiated by our proprietary technology and our ability to customize solutions for individual customers.

In our Logistics segment, we provide a wide range of services differentiated by our proprietary technology and our ability to customize solutions for individual customers.

Our services include value-added warehousing and distribution, e-commerce and omnichannel fulfillment, cold-chain logistics, packaging and labeling, factory support, aftermarket support, inventory management, order personalization and supply chain optimization, such as product flow management.

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Billings for such services are based on negotiated rates and are reflected as revenues of the billing segment.

adjust these rates from time to time based on market conditions.

We adjust these rates from time to time based on market conditions.

We eliminate intersegment revenues and expenses in our consolidated results.

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(In millions) Transportation Logistics Corporate Eliminations/Other Total

Three months ended March 31, 2021

Three months ended June 30, 2021

Revenue $ 3,186 $ 1,881 $ — $ ( 31 ) $ 5,036

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Depreciation and amortization 117 85 3 — 205

Three months ended March 31, 2020

Three months ended June 30, 2020

Revenue $ 2,127 $ 1,404 $ — $ ( 29 ) $ 3,502

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Depreciation and amortization 113 80 3 — 196

(1) Consolidated operating income for the three months ended March 31, 2021 includes $ 18 million of transaction and integration costs and $ 4 million of restructuring expense.

Six months ended June 30, 2021

Revenue $ 6,175 $ 3,699 $ — $ ( 64 ) $ 9,810

Operating income (loss) (3)

464 139 ( 155 ) — 448

Depreciation and amortization 232 159 6 — 397

Six months ended June 30, 2020

Revenue $ 4,586 $ 2,841 $ — $ ( 61 ) $ 7,366

Operating income (loss) (4)

105 ( 5 ) ( 160 ) — ( 60 )

Depreciation and amortization 223 149 7 — 379

(1) Consolidated operating income for the three months ended June 30, 2021 includes $ 35 million of transaction and integration costs and $ 2 million of restructuring income.

$ 2 million of the transaction and integration costs relate to our Transportation segment, $ 7 million relate to our Logistics segment and $ 26 million relate to Corporate.

(2) Consolidated operating income for the three months ended March 31, 2020 includes $ 44 million of transaction and integration costs and $ 3 million of restructuring expense.

(2) Consolidated operating loss for the three months ended June 30, 2020 includes $ 46 million of transaction and integration costs and $ 50 million of restructuring expense.

$ 13 million of the transaction and integration costs relate to our Transportation segment, $ 18 million relate to our Logistics segment and $ 15 million relate to Corporate.

The transaction and integration costs for the first three months of 2021 are primarily related to the planned spin-off of the Logistics segment and our acquisition of the Kuehne + Nagel business.

The transaction and integration costs for the first three months of 2020 are primarily related to our previously announced exploration of strategic alternatives that was terminated in March 2020.

(3) Consolidated operating income for the six months ended June 30, 2021 includes $ 53 million of transaction and integration costs and $ 2 million of restructuring expense.

$ 3 million of the transaction and integration costs relate to our Transportation segment, $ 12 million relate to our Logistics segment and $ 38 million relate to Corporate.

(4) Consolidated operating loss for the six months ended June 30, 2020 includes $ 90 million of transaction and integration costs and $ 53 million of restructuring expense.

$ 20 million of the transaction and integration costs relate to our Transportation segment, $ 25 million relate to our Logistics segment and $ 45 million relate to Corporate.

The transaction and integration costs for the first six months of 2021 are primarily related to the spin-off of the Logistics segment and our acquisition of the Kuehne + Nagel business in January 2021.

The transaction and integration costs for the first six months of 2020 are primarily related to our previously announced exploration of strategic alternatives that was terminated in March 2020.

For further information on our restructuring actions, see Note 5—Restructuring Charges.

We also incurred in the first three months of 2021 and 2020, net incremental and direct costs as a result of the COVID-19 pandemic, including costs for personal protective equipment, site cleanings and enhanced employee benefits, such as appreciation pay.

We also incurred net incremental and direct costs as a result of the COVID-19 pandemic in the second quarter and first six months of 2021 and 2020, including costs for personal protective equipment, site cleanings and enhanced employee benefits, such as appreciation pay.

Revenue Recognition

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Our revenue disaggregated by geographical area, based on sales office location, was as follows:

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

(In millions) Transportation Logistics Eliminations Total

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Total $ 3,186 $ 1,881 $ ( 31 ) $ 5,036

Three Months Ended March 31, 2020

Three Months Ended June 30, 2020

(In millions) Transportation Logistics Eliminations Total

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Total $ 2,127 $ 1,404 $ ( 29 ) $ 3,502

Six Months Ended June 30, 2021

(In millions) Transportation Logistics Eliminations Total

United States $ 4,394 $ 1,135 $ ( 19 ) $ 5,510

North America (excluding United States) 185 32 — 217

France 694 370 ( 5 ) 1,059

United Kingdom 431 1,167 ( 31 ) 1,567

Europe (excluding France and United Kingdom) 428 947 ( 6 ) 1,369

Other 43 48 ( 3 ) 88

Total $ 6,175 $ 3,699 $ ( 64 ) $ 9,810

Six Months Ended June 30, 2020

(In millions) Transportation Logistics Eliminations Total

United States $ 3,207 $ 1,045 $ ( 19 ) $ 4,233

North America (excluding United States) 142 24 — 166

France 566 292 ( 6 ) 852

United Kingdom 307 667 ( 27 ) 947

Europe (excluding France and United Kingdom) 334 769 ( 7 ) 1,096

Other 30 44 ( 2 ) 72

Total $ 4,586 $ 2,841 $ ( 61 ) $ 7,366

Our revenue disaggregated by service offering was as follows:

Three Months Ended March 31,

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

(In millions) 2021 2020 2021 2020

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Last mile (1)

269 218 515 419

Managed transportation 106 74 203 157

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(i) have original expected durations of one year or less or (ii) contain variable consideration.

On March 31, 2021, the fixed consideration component of our remaining performance obligation was approximately $ 2.1 billion, and we expect to recognize approximately 66 % of that amount over the next three years and the

remainder thereafter.

The remaining performance obligation at March 31, 2021 includes contracts related to the Kuehne + Nagel acquisition.

On June 30, 2021, the fixed consideration component of our remaining performance obligation was approximately

$ 2.2 billion, and we expect approximately 67 % of that amount to be recognized over the next three years and the remainder thereafter.

The remaining performance obligation at June 30, 2021 includes contracts related to the Kuehne + Nagel acquisition.

The majority of the remaining performance obligation relates to our Logistics reportable segment.

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Restructuring Charges

We engage in restructuring actions as part of our ongoing efforts to best use our resources and infrastructure.

We engage in restructuring actions as part of our ongoing efforts to best use our resources and infrastructure, including actions in response to COVID-19.

These actions generally include severance and facility-related costs, including impairment of right-of-use assets, and are intended to improve our efficiency and profitability.

We recorded restructuring charges of $ 4 million and $ 3 million in Sales, general and administrative expense on our Condensed Consolidated Statements of Income for the first three months of 2021 and 2020, respectively.

Restructuring charges (credits) were recorded on our Condensed Consolidated Statements of Income (Loss) as follows:

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

(In millions) 2021 2020 2021 2020

Cost of transportation and services $ — $ 1 $ — $ 1

Direct operating expense — 6 — 6

Sales, general and administrative expense ( 2 ) 43 2 46

Total $ ( 2 ) $ 50 $ 2 $ 53

Our restructuring-related activity was as follows:

Three Months Ended March 31, 2021

(In millions) Reserve Balance as of December 31, 2020 Charges Incurred Payments Foreign Exchange and Other Reserve Balance as of March 31, 2021

Six Months Ended June 30, 2021

(In millions) Reserve

Balance as of December 31, 2020 Charges Incurred Payments Reversals Foreign Exchange and Other Reserve Balance as of June 30, 2021

Transportation $ 7 $ 1 $ ( 7 ) $ — $ 1 $ 2

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Total $ 33 $ 11 $ ( 16 ) $ ( 9 ) $ ( 5 ) $ 14

We expect the majority of the cash outlays related to the charges incurred in the first quarter of 2021 will be complete within twelve months.

We expect the majority of the cash outlays related to the charges incurred in 2021 will be complete within twelve months.

Derivative Instruments

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The fair value of our derivative instruments and the related notional amounts were as follows:

March 31, 2021

June 30, 2021

Derivative Assets Derivative Liabilities

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Cross-currency swap agreements 130 Other long-term assets — Other long-term liabilities ( 6 )

Interest rate swaps 2,003 Other current assets — Other current liabilities —

Derivatives not designated as hedges

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The derivatives are valued using inputs other than quoted prices such as foreign exchange rates and yield curves.

The effect of derivative and nonderivative instruments designated as hedges on our Condensed Consolidated Statements of Income was as follows:

The effect of derivative and nonderivative instruments designated as hedges on our Condensed Consolidated Statements of Income (Loss) was as follows:

Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives Amount of Gain (Loss) Reclassified from AOCI into Net Income (Loss) Amount of Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)

Three Months Ended June 30,

(In millions) 2021 2020 2021 2020 2021 2020

Derivatives designated as cash flow hedges

Cross-currency swap agreements $ ( 2 ) $ ( 3 ) $ ( 2 ) $ ( 3 ) $ — $ —

Derivatives designated as net investment hedges

Cross-currency swap agreements ( 13 ) ( 19 ) — — 2 —

Total $ ( 15 ) $ ( 22 ) $ ( 2 ) $ ( 3 ) $ 2 $ —

Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) on Derivatives Amount of Gain Reclassified from AOCI into Net Income Amount of Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)

Three Months Ended March 31,

Six Months Ended June 30,

(In millions) 2021 2020 2021 2020 2021 2020

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Total $ 39 $ 19 $ 4 $ — $ 5 $ 4

The pre-tax gain recognized in earnings for foreign currency option and forward contracts not designated as hedging instruments were gains of $ 1 million and $ 4 million for the three months ended March 31, 2021 and 2020, respectively.

These amounts are recorded in Foreign currency gain on our Condensed Consolidated Statements of Income.

The pre-tax gain (loss) recognized in earnings for foreign currency option and forward contracts not designated as hedging instruments were losses of $ 2 million and $ 1 million for the three and six months ended June 30, 2021, respectively, and a loss of $ 2 million and a gain of $ 2 million for the three and six months ended June 30, 2020, respectively.

These amounts are recorded in Foreign currency (gain) loss on our Condensed Consolidated Statements of Income (Loss).

Cross-Currency Swap Agreements

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We designated these cross-currency swaps as qualifying hedging instruments and account for them as cash flow hedges.

Gains and losses resulting from the change in the fair value of the cross-currency swaps are initially recognized in AOCI and reclassified to Foreign currency gain to offset the foreign exchange impact in earnings created by the intercompany loans.

Gains and losses resulting from the change in the fair value of the cross-currency swaps are initially recognized in AOCI and reclassified to Foreign currency (gain) loss to offset the foreign exchange impact in earnings created by the intercompany loans.

Cash flows related to these cash flow hedges are included in Operating activities on our Condensed Consolidated Statements of Cash Flows.

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We designated the interest rate swaps as qualifying hedging instruments and account for these derivatives as cash flow hedges.

The interest rate swaps mature on various dates through 2021.

There were no interest rate swaps

outstanding as of June 30, 2021.

We record gains and losses resulting from fair value adjustments to the designated portion of interest rate swaps in AOCI and reclassify them to Interest expense on the dates that interest payments accrue.

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Additionally, we use foreign currency forward contracts to mitigate exposure from intercompany loans that are not designated as permanent and can create volatility in earnings.

The foreign currency contracts (both option and forward contracts) were not designated as qualifying hedging instruments as of March 31, 2021.

The foreign currency contracts (both option and forward contracts) were not designated as qualifying hedging instruments as of June 30, 2021.

The contracts are used to manage our exposure to foreign currency exchange rate fluctuations and are not speculative.

The contracts generally expire in 12 months or less.

Gains or losses on the contracts are recorded in Foreign currency gain on our Condensed Consolidated Statements of Income.

Gains or losses on the contracts are recorded in Foreign currency (gain) loss on our Condensed Consolidated Statements of Income (Loss).

Cash flows related to the foreign currency contracts are included in Investing activities on our Condensed Consolidated Statements of Cash Flows, consistent with the nature and purpose for which these derivatives were acquired.

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

(In millions) Principal Balance Carrying Value Principal Balance Carrying Value

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Long-term debt $ 5,322 $ 5,181 $ 5,515 $ 5,369

In July and August 2021, we issued notices to redeem our outstanding senior notes due 2024 and senior notes due 2023, respectively.

See Note 11—Subsequent Events for more information.

The fair value of our debt and classification in the fair value hierarchy was as follows:

(In millions) Fair Value Level 1 Level 2

March 31, 2021 $ 5,590 $ 3,190 $ 2,400

June 30, 2021 $ 5,592 $ 3,168 $ 2,424

December 31, 2020 7,094 4,431 2,663

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The fair value of the asset financing arrangements approximates carrying value as the debt is primarily issued at a floating rate, the debt may be prepaid at any time at par without penalty, and the remaining life of the debt is short-term in nature.

As of March 31, 2021, our borrowing base was $ 1.1 billion and our availability under our ABL Facility was $ 1.084 billion after considering outstanding letters of credit on the ABL Facility of $ 16 million.

As of March 31, 2021, we were in compliance with the ABL Facility’s financial covenants.

Under our Senior Secured Term Loan Credit Agreement, we have a $ 200 million uncommitted secured evergreen letter of credit facility, under which we have issued $ 198 million in aggregate face amount of letters of credit as of March 31, 2021.

As of March 31, 2021, we were in compliance with the financial covenants in the Senior Secured Term Loan Agreement.

As of June 30, 2021, our borrowing base was $ 1.1 billion and our availability under our ABL Facility was $ 1.084 billion after considering outstanding letters of credit on the ABL Facility of $ 16 million.

As of June 30, 2021, we were in compliance with the ABL Facility’s financial covenants.

The ABL facility was amended in July 2021.

See Note 11—Subsequent Events for more information.

As of June 30, 2021, we were in compliance with the financial covenants in the Senior Secured Term Loan Agreement.

Term Loan Facilities

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December 31, 2020

(In millions) March 31, 2021 First Tranche Second Tranche

(In millions) June 30, 2021 First Tranche Second Tranche

Principal balance $ 2,003 $ 1,503 $ 500

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Maturity date February 2025 February 2025 February 2025

We recorded a debt extinguishment loss of $ 3 million in the first quarter of 2021 due to this amendment.

The interest rate on our term loan facility was 1.86 % as of March 31, 2021.

We recorded a debt extinguishment loss of $ 3 million in the first six months of 2021 due to this amendment.

The interest rate on our term loan facility was 1.87 % as of June 30, 2021.

Senior Notes Due 2022

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We paid for the redemption with available cash.

We recorded a debt extinguishment loss of $ 5 million in our first quarter 2021 results of operations due to this redemption.

We recorded a debt extinguishment loss of $ 5 million in the first six months of 2021 due to this redemption.

Senior Notes Due 2025

In the second quarter of 2020, we completed private placements of $ 1.15 billion aggregate principal amount of senior notes due 2025.

Net proceeds from the notes were initially invested in cash and cash equivalents and were subsequently used to redeem our outstanding senior notes due 2022 in January 2021.

GXO Revolving Credit Facility

In June 2021, in preparation for the spin-off, GXO, which was our wholly-owned subsidiary at the time, entered into a five-year , unsecured, multi-currency revolving credit facility (the “GXO Facility”).

Initially, the GXO Facility provides commitments up to $ 800 million, of which $ 60 million will be available for the issuance of letters of credit.

Loans under the GXO Facility will bear interest at a fluctuating rate equal to:

(i) with respect to borrowings in dollars, at GXO’s option, the alternate base rate or the reserve-adjusted LIBOR, (ii) with respect to borrowings in Canadian dollars, the reserve-adjusted Canadian Dollar Offered Rate and (iii) with respect to borrowings in Euros, the reserve-adjusted Euro Interbank Offered Rate, in each case, plus an applicable margin calculated based on GXO’s credit ratings.

The availability of the GXO Facility was subject to the spin-off occurring.

The covenants in the GXO Facility, which are customary for financings of this type, can limit the ability to incur indebtedness and grant liens, among other restrictions.

In addition, the GXO Facility requires GXO to maintain a consolidated leverage ratio below a stated maximum consolidated leverage ratio.

There was no amount outstanding under the GXO Facility at June 30, 2021.

Following the spin-off, the GXO Facility is not available to us.

Stockholders’ Equity

Series A Convertible Perpetual Preferred Stock and Warrants

In 2011, we issued 75,000 shares of the Series A Preferred Stock with an initial liquidation preference of $ 1,000 per share which are convertible into shares of our common stock at a conversion price of $ 7.00 per common share (subject to customary anti-dilution adjustments).

In 2011, we issued 75,000 shares of the Series A Preferred Stock with an initial liquidation preference of $ 1,000 per share which were convertible into shares of our common stock at a conversion price of $ 7.00 per common share (subject to customary anti-dilution adjustments).

We also issued warrants exercisable for shares of our common stock at an initial exercise price of $ 7.00 per common share (subject to customary anti-dilution adjustments).

Our preferred stock pays quarterly cash dividends equal to the greater of:

Our preferred stock paid quarterly cash dividends equal to the greater of:

(i) the “as-converted” dividends on our underlying common stock for the relevant quarter and (ii) 4 % of the then-applicable liquidation preference per annum.

In December 2020, some holders of our convertible preferred stock exchanged their holdings for a combination of our common stock, based on the stated conversion price, and a lump-sum payment that represents an approximation of the net present value of the future dividends payable on the preferred stock.

Additionally, some holders of our warrants exchanged (or committed to exchange subject to the satisfaction of certain customary closing conditions) their holdings, including Jacobs Private Equity, LLC, an entity controlled by the Company’s chairman and chief executive officer, for a number of shares of our common stock equal to the number of shares of common stock that such holder would be entitled to receive upon an exercise of the warrants less the number of shares of common stock that have an approximate value equal to the exercise price of the warrants.

Additionally, some holders of our warrants exchanged (or committed to exchange subject to the satisfaction of certain customary closing conditions) their holdings, including Jacobs Private Equity, LLC (“JPE”), an entity controlled by the Company’s chairman and chief executive officer, for a number of shares of our common stock equal to the number of shares of common stock that such holder would be entitled to receive upon an exercise of the warrants less the number of shares of common stock that have an approximate value equal to the exercise price of the warrants.

With respect to the preferred stock, through December 31, 2020, 69,445 shares were exchanged, and we issued 9.9 million shares of common stock and paid $ 22 million of cash.

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In the first quarter of 2021, 975 preferred shares were exchanged, and we issued 0.1 million shares of common stock.

In the second quarter of 2021, the remaining 40 preferred shares were exchanged, and we issued 5,714 shares of common stock.

With respect to the warrants, in the first quarter of 2021, 9.8 million warrants were exchanged, and we issued 9.2 million shares of common stock.

These exchanges are intended to simplify our equity capital structure, including in contemplation of our previously announced plan to pursue a spin-off of our Logistics segment.

As of March 31, 2021, 40 shares of preferred stock remain outstanding, which are convertible into 5,714 shares of our common stock, and no warrants are outstanding.

These exchanges were intended to simplify our equity capital structure, including in contemplation of the spin-off of our Logistics segment.

As of June 30, 2021, there were no shares of preferred stock or warrants outstanding.

Share Repurchases

In February 2019, our Board of Directors authorized additional repurchases of up to $ 1.5 billion of our common stock.

In February 2019, our Board of Directors authorized repurchases of up to $ 1.5 billion of our common stock.

Our share repurchase authorization permits us to purchase shares in both the open market and in private transactions, with the timing and number of shares dependent on a variety of factors, including price, general business conditions, market conditions, alternative investment opportunities and funding considerations.

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The share purchases were funded by our available cash and proceeds from our 2019 debt offerings.

There were no share purchases in the first quarter of 2021.

Our remaining share repurchase authorization was $ 503 million as of March 31, 2021.

There were no share purchases in the first six months of 2021 or in the second quarter of 2020.

Our remaining share repurchase authorization was $ 503 million as of June 30, 2021.

Earnings per Share

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Losses are not allocated to the preferred shares.

As discussed in Note 8—Stockholders’ Equity, we recorded a preferred stock conversion charge in December 2020 in connection with the conversion of our Series A preferred stock.

The computations of basic and diluted earnings per share were as follows:

Three Months Ended March 31,

The computations of basic and diluted earnings (loss) per share were as follows:

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

(In millions, except per share data) 2021 2020 2021 2020

Basic earnings per common share

Net income attributable to XPO $ 115 $ 23

Basic earnings (loss) per common share

Net income (loss) attributable to XPO $ 156 $ ( 131 ) $ 271 $ ( 108 )

Series A preferred stock dividends — ( 1 ) — ( 2 )

Non-cash allocation of undistributed earnings — ( 1 )

Net income attributable to common shares, basic $ 115 $ 21

Net income (loss) attributable to common shares, basic $ 156 $ ( 132 ) $ 271 $ ( 110 )

Basic weighted-average common shares 112 91 109 92

Basic earnings per share $ 1.08 $ 0.23

Diluted earnings per common share

Net income attributable to common shares, diluted $ 115 $ 21

Basic earnings (loss) per share $ 1.39 $ ( 1.45 ) $ 2.48 $ ( 1.20 )

Diluted earnings (loss) per common share

Net income (loss) attributable to common shares, diluted $ 156 $ ( 132 ) $ 271 $ ( 110 )

Basic weighted-average common shares 112 91 109 92

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Diluted weighted-average common shares 113 91 113 92

Diluted earnings per share $ 1.02 $ 0.20

Diluted earnings (loss) per share $ 1.38 $ ( 1.45 ) $ 2.40 $ ( 1.20 )

Potential common shares excluded — 20 — 21

Certain shares were not included in the computation of diluted earnings per share because the effect was anti-dilutive.

Certain shares were not included in the computation of diluted earnings (loss) per share because the effect was anti-dilutive.

Legal and Regulatory Matters

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We believe that we have adequately accrued for the potential impact of loss contingencies that are probable and reasonably estimable.

We do not believe that the ultimate resolution of any matters to which we are presently a party will have a material adverse effect on our results of operations, financial condition or cash flows.

We do not believe that the ultimate resolution of any matters to which we are presently a party

will have a material adverse effect on our results of operations, financial condition or cash flows.

However, the results of these matters cannot be predicted with certainty, and an unfavorable resolution of one or more of these matters could have a material adverse effect on our financial condition, results of operations or cash flows.

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

Subsequent Event

On April 6, 2021, the Company announced a buy-out offer to be followed by a squeeze-out for the remaining 3 % of XPO Logistics Europe that it does not already own, at a price of € 315 per share for 341,887 shares.

It is expected that the total cash consideration to be paid in connection with this offer will be approximately € 108 million (approximately $ 128 million).

The offer will be subject to review by the Supervisory Board of XPO Logistics Europe, as well as regulatory bodies, and is expected to close in the second quarter of 2021.

Subsequent Events

As described in Note 1—Organization, Description of Business and Basis of Presentation, on August 2, 2021, we completed the spin-off of our Logistics segment into an independent public company, GXO, in a transaction intended to qualify as tax-free to our stockholders for U.S.

federal income tax purposes .

In preparation for the spin-off, in July 2021, GXO completed an offering of $ 800 million aggregate principal amount of notes, consisting of $ 400 million of notes due 2026 (the “GXO 2026 Notes”) and $ 400 million of notes due 2031 (the “GXO 2031 Notes”, and together with the GXO 2026 Notes, the “GXO Notes”).

The GXO 2026 Notes will bear interest at a rate of 1.65 % per annum payable semiannually in cash in arrears on January 15 and July 15 of each year, beginning January 15, 2022, and will mature on July 15, 2026.

The GXO 2031 Notes will bear interest at a rate of 2.65 % per annum payable semiannually in cash in arrears on January 15 and July 15 of each year, beginning January 15, 2022, and will mature on July 15, 2031.

The net proceeds from the sale of the GXO Notes were used to fund a cash payment from GXO to XPO of $ 794 million, which we intend to use to repay a portion of our outstanding borrowings as noted below.

Following the completion of the spin-off, the GXO Notes are no longer an obligation of XPO.

Equity Offering

In July 2021, we completed a registered underwritten offering of 5.0 million shares of our common stock at a public offering price of $ 138.00 per share, plus an additional 750,000 shares of our common stock through an option granted to underwriters.

Of the 5.0 million shares, we offered 2.5 million shares directly and 2.5 million shares were offered by JPE.

The additional 750,000 purchased shares were also split equally between us and JPE.

We received approximately $ 385 million of proceeds, net of fees and expenses, from the sale of the shares and intend to use them to repay a portion of our outstanding borrowings as noted below and for general corporate purposes.

XPO did no t receive any proceeds from the sale of shares by JPE.

Debt Redemption

In July 2021, we issued notice to redeem our outstanding 6.75 % senior notes due 2024 that had a principal balance of $ 1.0 billion as of June 30, 2021.

Also, in August 2021, we issued notice to redeem our outstanding 6.125 % senior notes due 2023 that had a principal balance of $ 535 million as of June 30, 2021.

The redemption price for our senior notes due 2024 was 103.375 %, plus accrued and unpaid interest.

The redemption price for our senior notes due 2023 was 100.0 % of the principal amount, plus accrued and unpaid interest.

We expect to pay for these redemptions using the cash payment of $ 794 million received from GXO, the proceeds from the July 2021 equity offering and available cash.

ABL Amendment

In July 2021, we amended our existing ABL facility which matures in April 2024 to reduce the commitments from $ 1.1 billion to $ 1.0 billion.

There were no other significant changes made to the terms of the facility, including the maturity date, the interest rate margin, and financial covenants.

Trade Securitization Program

In July 2021, in connection with the spin-off, the existing trade receivables securitization program was amended;

the existing € 400 million program is now comprised of two separate € 200 million programs, one of which will continue to be available to us and one of which will be part of GXO following the spin-off.

The new program expires in July 2024.

Changes to Legal Entity Structure

In July 2021, in connection with the spin-off of our Logistics segment, we amended our legal entity structure.

These changes will result in one-time cash and non-cash tax expenses in the second half of 2021.

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