What changed in this filing

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Item 1. Financial Statements

2023-05-04 compared with 2022-11-02 · 144 added, 399 removed, 327 unchanged (62% of the section changed)

Financial Statements.

XPO Logistics, Inc.

Condensed Consolidated Balance Sheets

September 30, December 31,

March 31, December 31,

(In millions, except per share data) 2023 2022

32 unchanged sentences

300 shares authorized;

115 shares issued and outstanding as of

September 30, 2022 and December 31, 2021

116 and 115 shares issued and outstanding

as of March 31, 2023 and December 31, 2022, respectively

Additional paid-in capital 1,252 1,238

Retained earnings 803 43

Retained earnings (accumulated deficit) 10 ( 4 )

Accumulated other comprehensive loss ( 207 ) ( 222 )

2 unchanged sentences

See accompanying notes to condensed consolidated financial statements.

XPO Logistics, Inc.

Condensed Consolidated Statements of Income (Loss)

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

Condensed Consolidated Statements of Income

Three Months Ended March 31,

(In millions, except per share data) 2023 2022

Revenue $ 1,907 $ 1,894

Cost of transportation and services (exclusive of

depreciation and amortization)

2,044 2,306 6,634 6,545

Direct operating expense (exclusive of depreciation

and amortization)

363 366 1,113 1,058

Sales, general and administrative expense 298 339 966 1,001

Salaries, wages and employee benefits 762 725

Purchased transportation 457 510

Fuel, operating expenses and supplies 427 418

Operating taxes and licenses 15 16

Insurance and claims 44 56

Gains on sales of property and equipment ( 3 ) ( 1 )

Depreciation and amortization expense 101 94

Gain on sale of business — — ( 434 ) —

Transaction and integration costs 22 7

2 unchanged sentences

Other income ( 5 ) ( 14 )

Debt extinguishment loss — 46 26 54

Interest expense 42 37

Income from continuing operations before income tax

165 32 955 257

Income from continuing operations before income tax provision 21 40

Income tax provision 4 8

1 unchanged sentence

Income (loss) from discontinued operations, net of taxes ( 3 ) 456

Net income (loss) 131 ( 57 ) 760 219

Net income from discontinued operations attributable

to noncontrolling interests

Net income (loss) attributable to XPO $ 131 $ ( 57 ) $ 760 $ 214

Net income attributable to XPO $ 14 $ 488

Net income (loss) attributable to common shareholders

1 unchanged sentence

Discontinued operations ( 3 ) 456

Net income (loss) attributable to common

$ 131 $ ( 57 ) $ 760 $ 214

Net income attributable to common shareholders $ 14 $ 488

Earnings (loss) per share data

Basic earnings per share from continuing operations $ 0.15 $ 0.28

Basic earnings (loss) per share from discontinued

— ( 0.69 ) ( 0.01 ) 0.15

Basic earnings (loss) per share attributable to common

$ 1.14 $ ( 0.50 ) $ 6.61 $ 1.93

Basic earnings (loss) per share from discontinued operations ( 0.02 ) 3.97

Basic earnings per share attributable to common shareholders $ 0.13 $ 4.25

Diluted earnings per share from continuing operations $ 0.15 $ 0.28

Diluted earnings (loss) per share from discontinued

— ( 0.68 ) ( 0.01 ) 0.14

Diluted earnings (loss) per share attributable to

common shareholders

$ 1.13 $ ( 0.49 ) $ 6.57 $ 1.87

Diluted earnings (loss) per share from discontinued operations ( 0.02 ) 3.94

Diluted earnings per share attributable to common shareholders $ 0.13 $ 4.22

Weighted-average common shares outstanding

2 unchanged sentences

See accompanying notes to condensed consolidated financial statements.

XPO Logistics, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

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

Condensed Consolidated Statements of Comprehensive Income

Three Months Ended March 31,

(In millions) 2023 2022

Net income (loss) $ 131 $ ( 57 ) $ 760 $ 219

Other comprehensive loss, net of tax

Foreign currency translation loss, net of tax effect of $( 7 ), $ 7 , $( 18 ) and $ 4

Net income $ 14 $ 488

Other comprehensive income (loss), net of tax

Foreign currency translation gain (loss), net of tax effect of $ 8 and $( 2 )

$ 13 $ ( 26 )

Unrealized gain (loss) on financial assets/liabilities designated as hedging

Unrealized gain on financial assets/liabilities designated as hedging

instruments, net of tax effect of $ 1 and $ —

— ( 3 ) 4 ( 3 )

Defined benefit plans adjustments, net of tax effect of $ — , $( 9 ), $ —

Other comprehensive loss ( 60 ) ( 22 ) ( 128 ) ( 49 )

Comprehensive income (loss) $ 71 $ ( 79 ) $ 632 $ 170

Comprehensive income attributable to noncontrolling interests — — — 3

Comprehensive income (loss) attributable to XPO $ 71 $ ( 79 ) $ 632 $ 167

Other comprehensive income (loss) 15 ( 25 )

Comprehensive income attributable to XPO $ 29 $ 463

See accompanying notes to condensed consolidated financial statements.

XPO Logistics, Inc.

Condensed Consolidated Statements of Cash Flows

Nine Months Ended September 30,

Three Months Ended March 31,

(In millions) 2023 2022

8 unchanged sentences

Accretion of debt 3 4

Deferred tax expense 10 5

Debt extinguishment loss 26 54

Gain on sale of business ( 434 ) —

Deferred tax expense (benefit) ( 2 ) 5

Gains on sales of property and equipment ( 3 ) ( 1 )

6 unchanged sentences

Cash flows from investing activities of continuing operations

Proceeds from sale of business 705 —

Payment for purchases of property and equipment ( 224 ) ( 123 )

Proceeds from sale of property and equipment 8 3

Proceeds from settlement of cross currency swaps 29 —

Other — ( 3 )

Net cash provided by (used in) investing activities from continuing operations 351 ( 143 )

Net cash used in investing activities from continuing operations ( 216 ) ( 120 )

Cash flows from financing activities of continuing operations

Repayment of borrowings related to securitization program — ( 24 )

Repurchase of debt ( 651 ) ( 2,769 )

Proceeds from borrowings on ABL facility 275 —

Repayment of borrowings on ABL facility ( 275 ) ( 200 )

Repayment of debt and finance leases ( 16 ) ( 16 )

Payment for debt issuance costs — ( 5 )

Issuance of common stock — 384

Change in bank overdrafts 19 3

Payment for tax withholdings for restricted shares ( 12 ) ( 12 )

Distribution from GXO — 794

Other ( 1 ) 1

Net cash used in financing activities from continuing operations ( 10 ) ( 24 )

Nine Months Ended September 30,

(In millions) 2022 2021

Cash flows from discontinued operations

1 unchanged sentence

Investing activities of discontinued operations 1 691

Financing activities of discontinued operations — ( 302 )

Net cash used in discontinued operations ( 3 ) ( 329 )

Net cash provided by (used in) discontinued operations ( 7 ) 704

Effect of exchange rates on cash, cash equivalents and restricted cash 2 ( 3 )

10 unchanged sentences

See accompanying notes to condensed consolidated financial statements.

XPO Logistics, Inc.

Condensed Consolidated Statements of Changes in Equity

Series A Preferred Stock Common Stock

(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 June 30, 2022 — $ — 115,033 $ — $ 1,187 $ 672 $ ( 152 ) $ 1,707 $ — $ 1,707

Net income — — — — — 131 — 131 — 131

Other comprehensive loss — — — — — — ( 60 ) ( 60 ) — ( 60 )

Exercise and vesting of stock compensation awards

— — 19 — — — — — — —

Stock compensation expense

— — — — 8 — — 8 — 8

Balance as of September 30, 2022 — $ — 115,052 $ — $ 1,195 $ 803 $ ( 212 ) $ 1,786 $ — $ 1,786

Series A Preferred Stock Common Stock

(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

(Shares in thousands, dollars in millions) Shares Amount Additional Paid-In Capital Retained Earnings (Accumulated Deficit) Accumulated Other

Comprehensive Loss Total Equity

Balance as of December 31, 2022 115,435 $ — $ 1,238 $ ( 4 ) $ ( 222 ) $ 1,012

Net income — — — 14 — 14

Other comprehensive loss — — — — — — ( 128 ) ( 128 ) — ( 128 )

Exercise and vesting of stock compensation awards

— — 315 — — — — — — —

Tax withholdings related to vesting of stock compensation awards

— — — — ( 13 ) — — ( 13 ) — ( 13 )

Stock compensation expense

— — — — 26 — — 26 — 26

— — — — 3 — — 3 — 3

Balance as of September 30, 2022 — $ — 115,052 $ — $ 1,195 $ 803 $ ( 212 ) $ 1,786 $ — $ 1,786

XPO Logistics, Inc.

Condensed Consolidated Statements of Changes in Equity (continued)

Series A Preferred Stock Common Stock

(Shares in thousands, dollars in millions) Shares Amount Shares Amount Additional Paid-In Capital Retained Earnings (Accumulated Deficit) Accumulated Other

Comprehensive Loss Total XPO Stockholders' Equity Non-controlling Interests Total Equity

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

Net loss — — — — — ( 57 ) — ( 57 ) — ( 57 )

Other comprehensive loss — — — — — — ( 22 ) ( 22 ) — ( 22 )

Spin-off of GXO — — — — ( 1,199 ) ( 1,161 ) 126 ( 2,234 ) ( 40 ) ( 2,274 )

Other comprehensive income — — — — 15 15

Exercise and vesting of stock compensation awards

2 unchanged sentences

— — ( 8 ) — — ( 8 )

Issuance of common stock — — 2,875 — 384 — — 384 — 384

Stock compensation expense

— — 22 — — 22

Balance as of September 30, 2021 — $ — 114,673 $ — $ 1,174 $ ( 79 ) $ ( 79 ) $ 1,016 $ — $ 1,016

Series A Preferred Stock Common Stock

(Shares in thousands, dollars in millions) Shares Amount Shares Amount Additional Paid-In Capital Retained Earnings (Accumulated Deficit) Accumulated Other

Comprehensive Loss Total XPO Stockholders' Equity Non-controlling Interests Total Equity

Balance as of March 31, 2023 115,750 $ — $ 1,252 $ 10 $ ( 207 ) $ 1,055

(Shares in thousands, dollars in millions) Shares Amount Additional Paid-In Capital Retained Earnings Accumulated Other

Comprehensive Loss Total Equity

Balance as of December 31, 2021 114,737 $ — $ 1,179 $ 43 $ ( 84 ) $ 1,138

1 unchanged sentence

Other comprehensive loss — — — — ( 25 ) ( 25 )

Spin-off of GXO — — — — ( 1,199 ) ( 1,161 ) 126 ( 2,234 ) ( 40 ) ( 2,274 )

Exercise and vesting of stock compensation awards

2 unchanged sentences

— — ( 12 ) — — ( 12 )

Issuance of common stock — — 2,875 — 384 — — 384 — 384

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 — — — — — — —

Stock compensation expense

— — — — 44 — — 44 — 44

Other — — 1 — — 1

Balance as of September 30, 2021 — $ — 114,673 $ — $ 1,174 $ ( 79 ) $ ( 79 ) $ 1,016 $ — $ 1,016

Balance as of March 31, 2022 114,982 $ — $ 1,176 $ 531 $ ( 109 ) $ 1,598

See accompanying notes to condensed consolidated financial statements.

XPO Logistics, Inc.

Notes to Condensed Consolidated Financial Statements

Organization, Description of Business and Basis of Presentation

XPO Logistics, Inc., together with its subsidiaries (“XPO” or “we”), is a leading provider of freight transportation services.

We use our proprietary technology to move goods efficiently through our customers’ supply chains;

in North America, we achieved this primarily by providing less-than-truckload (“LTL”) and truck brokerage services.

XPO, Inc., together with its subsidiaries (“XPO” or “we”), is a leading provider of freight transportation services.

We use our proprietary technology to move goods efficiently through our customers’ supply chains in North America and Europe.

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

2022 Strategic Plan

On March 8, 2022, we announced that our Board of Directors approved a strategic plan to pursue the spin-off of our tech-enabled brokered transportation platform as a publicly traded company, which we completed in November 2022.

In addition, our Board of Directors authorized the planned divestitures of our North American intermodal operation, which we sold in March 2022, and our European business, which we intend to divest.

For further information on the sale of intermodal, see Note 3—Divestiture.

There can be no assurance that the divestiture of our European business will occur, or of the terms or timing of a transaction.

We completed the spin-off of our tech-enabled brokered transportation platform on November 1, 2022, which created a new public company, RXO, Inc.

(“RXO”), comprised of our former services for truck brokerage, managed transportation, last mile and freight forwarding.

The transaction is intended to be tax-free to XPO and our shareholders for U.S.

federal income tax purposes.

The spin-off was accomplished by the distribution of 100 % of the outstanding common stock of RXO to XPO shareholders, creating a new, independent public company that began trading under the symbol “RXO” on the New York Stock Exchange.

XPO shareholders received one share of RXO common stock for every share of XPO common stock held at the close of business on October 20, 2022, the record date for the distribution.

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

The historical results of operations and the financial position of RXO are included in the condensed consolidated financial statements in this Form 10-Q.

The RXO businesses will not be consolidated in our reporting from November 1, 2022 forward, and such businesses will be reflected as discontinued operations in all periods prior to the spin-off.

In connection with the spin-off, we have entered into a separation and distribution agreement as well as various other agreements with RXO 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 provide certain services to RXO.

2022 RXO Spin-Off and Intermodal Sale

On November 1, 2022, we completed the spin-off of RXO, Inc.

(“RXO”), our tech-enabled brokered transportation platform as a publicly traded company (the “RXO spin-off”).

The historical results of operations and the financial positions of RXO and our intermodal operation, which was sold in March 2022, are presented as discontinued operations in our Condensed Consolidated Financial Statements.

For information on our discontinued operations, see Note 2—Discontinued Operations.

Basis of Presentation

4 unchanged sentences

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 nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

Operating results for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

In the first quarter of 2023, we made certain changes to our financial reporting to increase transparency and improve comparability.

Specifically, we changed the expense captions within Operating income in the Condensed Consolidated Statements of Income to reflect the nature of the expense.

The change to natural expense classification had no impact on consolidated Revenues or Operating income.

We have recast prior period amounts to conform to the current year’s presentation.

Restricted Cash

As of September 30, 2022 and December 31, 2021, our restricted cash included in Other long-term assets on our Condensed Consolidated Balance Sheets was $ 10 million.

As of March 31, 2023 and December 31, 2022, our restricted cash included in Other long-term assets on our Condensed Consolidated Balance Sheets was $ 6 million and $ 10 million, respectively.

Trade Receivables Securitization and Factoring Programs

We sell certain of our trade accounts receivable on a non-recourse basis to third-party financial institutions under factoring agreements.

We also sell trade accounts receivable under our securitization program.

We also sell trade accounts receivable under a securitization program for our European transportation business.

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.

The maximum amount of net cash proceeds available at any one time under our securitization program, inclusive of any unsecured borrowings, is € 200 million (approximately $ 196 million as of September 30, 2022).

As of September 30, 2022, € 6 million (approximately $ 6 million) was available under the program, subject to having sufficient receivables available to sell and with consideration to amounts previously sold.

The weighted average interest rate was 1.16 % as of September 30, 2022.

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 and nine months ended September 30, 2022 and 2021.

The maximum amount of net cash proceeds available at any one time under our securitization program, inclusive of any unsecured borrowings, is € 200 million (approximately $ 217 million as of March 31, 2023).

As of March 31, 2023, the maximum amount available under the program was utilized.

The weighted average interest rate was 3.41 % as of March 31, 2023.

In May 2023, we entered into an agreement to extend the securitization program, which was scheduled to expire in July 2024, through July 2026.

The terms and conditions of the extended securitization program are materially consistent with the prior program.

Information related to the trade receivables sold was as follows:

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

Three Months Ended March 31,

(In millions) 2023 2022

1 unchanged sentence

Receivables sold in period

$ 418 $ 504 $ 1,323 $ 1,259

Cash consideration

418 504 1,323 1,259

Factoring programs

10 unchanged sentences

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 September 30, 2022 and December 31, 2021 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 March 31, 2023 and December 31, 2022 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 and a cash deposit for the securitization program.

3 unchanged sentences

(In millions) Carrying Value Fair Value Level 1

September 30, 2022 $ 502 $ 502 $ 502

March 31, 2023 $ 238 $ 238 $ 238

December 31, 2022 402 402 402

Adoption of New Accounting Standard

In November 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-10, “Government Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance.” The ASU increases the transparency surrounding government assistance by requiring annual disclosure of:

(i) the types of assistance received;

(ii) an entity’s accounting for the assistance;

and (iii) the effect of the assistance on the entity’s financial statements.

We adopted this standard on January 1, 2022, on a prospective basis.

The adoption did not have a material impact on our financial statement disclosures.

Accounting Pronouncement Issued but Not Yet Effective

In September 2022, the FASB issued ASU 2022-04, “Liabilities - Supplier Finance Programs (Subtopic 405-50):

In September 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-04, “Liabilities - Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations.” The ASU increases the transparency surrounding supplier finance programs by requiring the buyer to disclose information on an annual basis about the key terms of the program, the outstanding obligation amounts as of the end of the period, a rollforward of such amounts, and the balance sheet presentation of the related amounts.

Additionally, the obligation amount outstanding at the end of the period must be disclosed in interim periods.

The amendments are effective for fiscal years beginning after December 15, 2022 except for the requirement to disclose the rollforward information, which is effective for fiscal years beginning after December 15, 2023.

Early adoption is permitted.

We are currently evaluating the impact of the new guidance, which is limited to financial statement disclosures.

In March 2020, the FASB issued ASU 2020-04, “Reference rate reform (Topic 848)—Facilitation of the effects of reference rate reform on financial reporting.” The ASU provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform.

We adopted this standard on January 1, 2023, on a prospective basis.

The adoption, which is limited to financial statement disclosures, did not have a material impact on our financial statements.

In March 2020, the FASB issued ASU 2020-04, “Reference rate reform (Topic 848):

Facilitation of the effects of reference rate reform on financial reporting.” The ASU provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform.

The amendments apply only to contracts and hedging relationships that reference London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform.

The amendments are elective and are effective upon issuance through December 31, 2022.

We intend to apply this guidance if modifications of contracts that include LIBOR occur.

Adoption of the standard is not expected to have a material impact on our consolidated financial statements.

The amendments are elective and

are effective upon issuance.

In December 2022, the FASB issued ASU 2022-06, “Reference rate reform (Topic 848):

Deferral of the sunset date of Topic 848” which defers the expiration date for Topic 848 from December 31, 2022 until December 31, 2024.

At December 31, 2022, our revolving loan credit agreement (the “ABL Facility”) and the senior secured term loan credit agreement, as amended (the “Term Loan Facility”), provide for an interest rate based on LIBOR.

In February 2023, we amended the terms of our ABL Facility, including transitioning the interest rate from LIBOR to other base rates, and we expect to similarly modify the interest rate basis in the Term Loan Facility in 2023.

We do not expect the modifications of these facilities to have a material impact on our consolidated financial statements.

Discontinued Operations

On August 2, 2021, we completed the spin-off of our logistics segment as GXO Logistics, Inc.

In connection with the spin-off, we received a cash distribution of $ 794 million, which we used to repay a portion of our outstanding borrowings.

The historical results of our logistics segment are presented as discontinued operations in our Condensed Consolidated Financial Statements.

The following table summarizes the financial results from discontinued operations of GXO:

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

As discussed above, the results of RXO and intermodal are presented as discontinued operations.

In addition, discontinued operations include GXO Logistics, Inc.

(“GXO”), our former logistics segment that we spun off in August 2021.

The following table summarizes the results of operations from discontinued operations:

Three Months Ended March 31,

(In millions) 2022

Revenue $ 1,645

Direct operating expense (exclusive of depreciation and amortization) 544 3,614

Sales, general and administrative expense 53 363

Salaries, wages and employee benefits 164

Purchased transportation 1,221

Fuel, operating expenses and supplies 115

Operating taxes and licenses 1

Insurance and claims 9

Depreciation and amortization expense 22

Gain on sale of business ( 450 )

Transaction and other operating costs 2

Operating income (loss) ( 31 ) 87

Other income ( 4 ) ( 27 )

Interest expense 3 12

Income (loss) from discontinued operations before income tax

Operating income 561

Income tax provision 105

Net income (loss) from discontinued operations, net of taxes ( 78 ) 22

Net income from discontinued operations attributable to

noncontrolling interests

Net income (loss) from discontinued operations attributable to GXO $ ( 78 ) $ 17

No costs related to the GXO spin-off were incurred for the three months ended September 30, 2022.

For the nine months ended September 30, 2022, we incurred costs of approximately $ 4 million related to the GXO spin-off.

For the three and nine months ended September 30, 2021, we incurred costs of approximately $ 68 million and $ 111 million, respectively, related to the GXO spin-off, of which $ 57 million and $ 96 million, respectively, are reflected within income (loss) from discontinued operations in our Condensed Consolidated Statements of Income (Loss).

Net income from discontinued operations attributable to discontinued operations $ 456

For the three months ended March 31, 2023, we incurred approximately $ 24 million of costs related to the RXO spin-off, of which $ 4 million are reflected within income (loss) from discontinued operations in our Condensed Consolidated Statements of Income.

For the three months ended March 31, 2022, we incurred approximately $ 4 million of costs related to the GXO spin-off all of which are reflected within income from continuing operations in our Condensed Consolidated Statements of income.

In accordance with a separation and distribution agreement, GXO has agreed to indemnify XPO for payments XPO makes with respect to certain self-insurance matters that were incurred by the logistics segment prior to the spin-off and remain obligations of XPO.

The receivable and accrued expense for these matters was approximately $ 17 million each as of September 30, 2022 and approximately $ 23 million and $ 21 million, respectively, as of December 31, 2021.

In March 2022, we sold intermodal for cash proceeds of approximately $ 705 million, net of cash disposed and subject to customary post-closing working capital adjustments that remain ongoing.

We recorded a $ 450 million pre-tax gain on the sale, net of transaction costs, during the first quarter of 2022.

During the second quarter of 2022, we recognized a working capital adjustment of $ 16 million, which reduced the gain initially recognized in the first quarter of 2022.

We agreed to provide certain specified customary transition services for a period not exceeding 12 months from the sale.

Intermodal generated revenue of $ 1.2 billion ($ 1.1 billion excluding intercompany transactions) and operating income of approximately $ 53 million for the year ended December 31, 2021.

Intermodal was included in our Brokerage and Other Services segment through the date of the sale.

In conjunction with the RXO spin-off, and effective in the fourth quarter of 2022, the results of intermodal qualify to be accounted for as a discontinued operation because the sale was part of one strategic plan of disposal, and all periods prior to the date of the spin-off will be reflected as a discontinued operation.

The receivable and reserve for these matters was approximately $ 16 million and $ 15 million, respectively, as of March 31, 2023 and approximately $ 17 million and $ 16 million, respectively, as of December 31, 2022.

Segment Reporting

Effective through September 30, 2022, we are organized into two reportable segments:

(i) North American LTL;

and (ii) Brokerage and Other Services.

In our asset-based North American LTL segment, we provide our customers with geographic density and day-definite regional, national and cross-border LTL freight services.

In our asset-light Brokerage and Other Services segment, our core truck brokerage business places shippers’ freight with qualified independent carriers using our XPO Connect ® technology platform.

Truck brokerage is the largest component of the segment, which also includes complementary brokered transportation services for managed transportation, last mile and freight forwarding.

In addition, our European business is reported in this segment, and intermodal was included in the segment through its date of sale in March 2022.

Some of our operating units provide services to our other operating units outside of their reportable segment.

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

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

We eliminate intersegment revenues and expenses in our consolidated results.

Corporate includes corporate headquarters costs for executive officers and certain legal and financial functions, and other costs and credits not attributed to our operating segments.

We are organized into two reportable segments:

North American LTL, the largest component of our business, and European Transportation.

In our asset-based North American LTL segment, we provide shippers with geographic density and day-definite domestic and cross-border services to the U.S., as well as Mexico, Canada and the Caribbean.

Our North American LTL segment also includes the results of our trailer manufacturing operations.

In our European Transportation segment, we serve a large base of customers with consumer, trade and industrial markets.

We offer dedicated truckload, LTL, truck brokerage, managed transportation, last mile, freight forwarding and multimodal solutions, such as road-rail and road-short sea combinations.

Corporate includes corporate headquarters costs for executive officers and certain legal and financial functions, and other costs and credits not attributed to our reportable segments.

Our chief operating decision maker (“CODM”) regularly reviews financial information at the operating segment level to allocate resources to the segments and to assess their performance.

1 unchanged sentence

We do not provide asset information by segment to the CODM.

Our CODM evaluates segment profit (loss) based on adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”), which we define as net income from continuing operations attributable to common shareholders before debt extinguishment loss, interest expense, income tax, depreciation and amortization expense, gain on sale of business, litigation settlements for significant matters, transaction and integration costs, restructuring costs and other adjustments.

Our CODM evaluates segment profit (loss) based on adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”), which we define as income from continuing operations before interest expense, income tax, depreciation and amortization expense, transaction and integration costs, restructuring costs and other adjustments.

Segment Adjusted EBITDA has historically reflected an allocation of corporate costs.

In the first quarter of 2023, we began allocating incremental corporate costs from Corporate to North American LTL.

Prior periods have been recast to reflect these incremental allocations, which approximate $ 80 million annually.

Selected financial data for our segments is as follows:

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

Three Months Ended March 31,

(in millions) 2023 2022

North American LTL $ 1,120 $ 1,107

Brokerage and Other Services 1,921 2,261 6,420 6,493

Eliminations ( 83 ) ( 62 ) ( 221 ) ( 162 )

European Transportation 787 787

Total $ 1,907 $ 1,894

1 unchanged sentence

North American LTL $ 182 $ 186

Brokerage and Other Services 123 131 439 386

European Transportation 37 38

Corporate ( 9 ) ( 40 )

Total Adjusted EBITDA 210 184

Debt extinguishment loss — 46 26 54

Interest expense 42 37

1 unchanged sentence

Depreciation and amortization expense 101 94

Unrealized loss on foreign currency

option and forward contracts

Gain on sale of business — — ( 434 ) —

Litigation settlements — 29 — 29

Transaction and integration costs (1)

Restructuring costs (2)

Net income from continuing operations

attributable to common shareholders

$ 131 $ 21 $ 761 $ 197

Income from continuing operations $ 17 $ 32

Depreciation and amortization expense

North American LTL $ 68 $ 56

Brokerage and Other Services 54 60 168 180

European Transportation 32 33

Corporate 1 5

Total $ 101 $ 94

(1) Transaction and integration costs for the periods ended September 30, 2022 and 2021 are primarily comprised of third-party professional fees related to strategic initiatives, including the spin-offs and other divestment activities, as well as retention awards paid to certain employees.

Transaction and integration costs for the three months ended September 30, 2022 and 2021 include $ — million and $ 1 million, respectively, related to our North American LTL segment, $ 3 million and $ 5 million, respectively, related to our Brokerage and Other Services segment and $ 22 million and $ 9 million, respectively, related to Corporate.

Transaction and integration costs for the nine months ended September 30, 2022 and 2021 include $ 2 million and $ 1 million, respectively, related to our North American LTL segment, $ 6 million and $ 8 million, respectively, related to our Brokerage and Other Services segment and $ 52 million and $ 17 million, respectively, related to Corporate.

(1) Transaction and integration costs for the first quarter of 2023 are primarily comprised of stock-based compensation for certain employees related to strategic initiatives.

Transaction and integration costs for the first quarter of 2022 are primarily comprised of third-party professional fees related to strategic initiatives as well as retention awards paid to certain employees.

Transaction and integration costs for the three months ended March 31, 2023 and 2022 include $ 1 million and $ 2 million, respectively, related to our European Transportation segment and $ 21 million and $ 5 million, respectively, related to Corporate.

(2) See Note 5— Restructuring Charges for further information on our restructuring actions.

In connection with the RXO spin-off, and effective in the fourth quarter of 2022, we will revise our reportable segments to reflect our new internal organization.

Revenue Recognition

Disaggregation of Revenues

We disaggregate our revenue by geographic area and service offering.

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

Three Months Ended September 30, 2022

(In millions) North American LTL Brokerage and Other Services Eliminations Total

United States $ 1,178 $ 1,079 $ ( 83 ) $ 2,174

North America (excluding United States) 26 90 — 116

France — 313 — 313

United Kingdom — 217 — 217

Europe (excluding France and United Kingdom) — 212 — 212

Other — 10 — 10

Total $ 1,204 $ 1,921 $ ( 83 ) $ 3,042

Three Months Ended September 30, 2021

(In millions) North American LTL Brokerage and Other Services Eliminations Total

United States $ 1,049 $ 1,384 $ ( 62 ) $ 2,371

North America (excluding United States) 22 73 — 95

France — 330 — 330

United Kingdom — 224 — 224

Europe (excluding France and United Kingdom) — 199 — 199

Other — 51 — 51

Total $ 1,071 $ 2,261 $ ( 62 ) $ 3,270

Nine Months Ended September 30, 2022

(In millions) North American LTL Brokerage and Other Services Eliminations Total

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

Three Months Ended March 31, 2023

(In millions) North American LTL European Transportation Total

United States $ 1,097 $ — $ 1,097

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Europe (excluding France and United Kingdom) — 223 223

Other — 52 — 52

Total $ 1,120 $ 787 $ 1,907

Nine Months Ended September 30, 2021

(In millions) North American LTL Brokerage and Other Services Eliminations Total

Three Months Ended March 31, 2022

(In millions) North American LTL European Transportation Total

United States $ 1,084 $ — $ 1,084

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Europe (excluding France and United Kingdom) — 210 210

Other — 94 — 94

Total $ 1,107 $ 787 $ 1,894

Our revenue disaggregated by service offering was as follows:

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

(In millions) 2022 2021 2022 2021

North America

$ 1,250 $ 1,091 $ 3,658 $ 3,165

Truck brokerage 686 700 2,265 1,903

Last mile 264 250 784 765

Other brokerage (2)

186 547 936 1,486

Total North America 2,386 2,588 7,643 7,319

Europe 741 757 2,335 2,311

Eliminations ( 85 ) ( 75 ) ( 231 ) ( 185 )

Total $ 3,042 $ 3,270 $ 9,747 $ 9,445

(1) LTL revenue is before intercompany eliminations and includes revenue from our trailer manufacturing business.

(2) Other brokerage includes expedite, freight forwarding and managed transportation services, and intermodal through its date of sale in March 2022.

For further information, see Note 3—Divestiture.

Freight forwarding includes operations conducted outside of North America but managed by our North American entities.

Performance Obligations

Remaining performance obligations represent firm contracts for which services have not been performed and future revenue recognition is expected.

As permitted in determining the remaining performance obligation, we omit obligations that:

(i) have original expected durations of one year or less;

or (ii) contain variable consideration.

On September 30, 2022, the fixed consideration component of our remaining performance obligation was approximately $ 151 million, and we expect approximately 91 % of that amount to be recognized over the next three years and the remainder thereafter.

We estimate remaining performance obligations at a point in time;

actual amounts may differ from these estimates due to changes in foreign currency exchange rates and contract revisions or terminations.

Restructuring Charges

We engage in restructuring actions as part of our ongoing efforts to best use our resources and infrastructure, including actions in connection with spin-offs and other divestment activities.

These actions generally include severance and facility-related costs, including impairment of operating lease assets, as well as contract termination costs, and are intended to improve our efficiency and profitability going forward.

These actions generally include severance and facility-related costs, including impairment of lease assets, as well as contract termination costs, and are intended to improve our efficiency and profitability.

Our restructuring-related activity was as follows:

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

(In millions) Reserve Balance

December 31, 2022 Charges Incurred Payments Foreign Exchange and Other Reserve Balance

September 30, 2022

March 31, 2023

North American LTL $ 2 $ — $ ( 1 ) $ — $ 1

Brokerage and Other Services 6 6 ( 9 ) ( 1 ) 2

European Transportation 1 7 ( 2 ) — 6

Corporate 19 11 ( 6 ) ( 1 ) 23

Total severance 13 14 ( 15 ) ( 1 ) 11

Brokerage and Other Services 2 1 ( 1 ) — 2

Total facilities 2 1 ( 1 ) — 2

Contract termination

North American LTL — 3 ( 3 ) — —

Brokerage and Other Services — 1 — — 1

Total contract termination — 4 ( 3 ) — 1

Total $ 22 $ 18 $ ( 9 ) $ ( 1 ) $ 30

We expect that the majority of the cash outlays related to the charges incurred in the first nine months of 2022 will be completed within 12 months.

In addition to the severance charges noted in the table above, we recorded a non-cash lease impairment charge of $ 6 million in our North American LTL segment in the first quarter of 2023.

We expect that the majority of the cash outlays related to the severance charges incurred in the first three months of 2023 will be completed within 12 months.

Derivative Instruments

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

September 30, 2022

March 31, 2023

Derivative Assets Derivative Liabilities

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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 (Loss) was as follows:

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

Three Months Ended September 30,

(In millions) 2022 2021 2022 2021 2022 2021

Derivatives designated as cash flow hedges

Cross-currency swap agreements $ — $ — $ — $ 3 $ — $ —

Derivatives designated as net investment hedges

Cross-currency swap agreements 25 41 — — 1 1

Total $ 25 $ 41 $ — $ 3 $ 1 $ 1

Amount of Gain Recognized in Other Comprehensive 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)

Nine Months Ended September 30,

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

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

Three Months Ended March 31,

(In millions) 2023 2022 2023 2022

Derivatives designated as cash flow hedges

Cross-currency swap agreements $ — $ 4 $ — $ 7 $ — $ —

Interest rate swaps 1 1 — —

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Cash flows related to the periodic exchange of interest payments for these net investment hedges are included in Cash flows from operating activities of continuing operations on our Condensed Consolidated Statements of Cash Flows.

During the first nine months of 2022, we received approximately $ 29 million related to the settlement of certain cross currency swaps that matured during the period.

The fair value adjustments related to these swaps remain in AOCI and partially offset foreign currency translation adjustment losses on our net investments in foreign subsidiaries.

The proceeds were included in Cash flows from investing activities of continuing operations on our Condensed Consolidated Statements of Cash Flows.

Prior to the spin-off of GXO in 2021, we held cross-currency swap agreements to manage the related foreign currency exposure from intercompany loans.

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

Gains and losses resulting from the change in the fair value of the cross-currency swaps was initially recognized in AOCI and reclassified to Other income on our Condensed Consolidated Statements of Income (Loss) to offset the foreign exchange impact in earnings created by settling intercompany loans.

Cash flows related to these cash flow hedges was included in Cash flows from operating activities of continuing operations on our Condensed Consolidated Statements of Cash Flows.

These swaps were re-designated as net investment hedges in the third quarter of 2021.

Interest Rate Hedging

We execute short-term interest rate swaps to mitigate variability in forecasted interest payments on our Senior Secured Term Loan Credit Agreement (the “Term Loan Credit Agreement”).

We execute short-term interest rate swaps to mitigate variability in forecasted interest payments on our Senior Secured Term Loan Credit Agreement.

The interest rate swaps convert floating-rate interest payments into fixed rate interest payments.

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

The outstanding interest rate swaps mature in the fourth quarter of 2022.

The outstanding interest rate swaps mature on various dates through 2023.

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.

Cash flows related to the interest rate swaps are included in Cash flows from operating activities of continuing operations on our Condensed Consolidated Statements of Cash Flows.

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

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

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(In millions) Fair Value Level 1 Level 2

September 30, 2022 $ 2,944 $ 808 $ 2,136

March 31, 2023 $ 2,616 $ 395 $ 2,221

December 31, 2022 2,601 392 2,209

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We valued Level 2 debt using bid evaluation pricing models or quoted prices of securities with similar characteristics.

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 September 30, 2022, our borrowing base was $ 1 billion and our availability under our revolving loan credit agreement (the “ABL Facility”) was $ 996 million after considering outstanding letters of credit of $ 4 million.

As of September 30, 2022, we were in compliance with the ABL Facility’s financial covenants.

In connection with the spin-off, effective November 4, 2022, the commitments under the ABL Facility will automatically be reduced from $ 1 billion to $ 600 million with no further action by any of the parties thereto.

Adjusting for this reduction of commitments and the borrowing base, our total liquidity of $ 1.5 billion as of September 30, 2022 would have been $ 1.0 billion.

As of March 31, 2023, our borrowing base and availability under our revolving loan credit agreement (the “ABL Facility”) was $ 502 million.

Outstanding letters of credit were less than $ 1 million as of March 31, 2023.

As of March 31, 2023, we were in compliance with the ABL Facility’s financial covenants.

Letters of Credit Facility

As of September 30, 2022, we had issued $ 185 million in aggregate face amount of letters of credit under our $ 200 million uncommitted secured evergreen letter of credit facility.

As of March 31, 2023, we had issued $ 154 million in aggregate face amount of letters of credit under our $ 200 million uncommitted secured evergreen letter of credit facility.

Term Loan Facility

In the first quarter of 2021, we amended our Term Loan Credit Agreement and recorded a debt extinguishment loss of $ 3 million in the first nine months of 2021.

The interest rate on our term loan facility was 4.38 % as of September 30, 2022.

Senior Notes Due 2025

In April 2022, we redeemed $ 630 million of the then $ 1.15 billion outstanding principal amount of our 6.25 % senior notes due 2025 (“Senior Notes due 2025”).

The redemption price for the notes was 100 % of the principal amount plus a premium, as defined in the indenture, of approximately $ 21 million and accrued and unpaid interest.

We paid for the redemption using available liquidity.

We recorded a debt extinguishment loss of $ 26 million in the first nine months of 2022 due to this redemption.

In October 2022, we commenced a tender offer to purchase for cash any and all of our outstanding Senior Notes due 2025.

See Note 12—Subsequent Events for more information.

Senior Notes Due 2023 and 2024

In the third quarter of 2021, we redeemed our outstanding 6.125 % senior notes due 2023 (“Senior Notes due 2023”) and our outstanding 6.75 % senior notes due 2024 (“Senior Notes due 2024”).

The redemption price for the Senior Notes due 2023 was 100.0 % of the principal amount, plus accrued and unpaid interest and the redemption price for the Senior Notes due 2024 was 103.375 % of the principle amount, plus accrued and unpaid interest.

We paid for the redemption using approximately $ 794 million of cash received from GXO, proceeds from an equity offering described in Note 9—Stockholders’ Equity and available cash.

We recorded debt extinguishment losses in the third quarter of 2021 of $ 3 million and $ 43 million related to the redemption of the Senior Notes due 2023 and Senior Notes due 2024, respectively.

Senior Notes Due 2022

In the first quarter of 2021, we redeemed our outstanding 6.50 % senior notes due 2022.

The redemption price for the notes was 100 % of the principal amount, plus accrued and unpaid interest.

We paid for the redemption with available cash.

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

Stockholders’ Equity

Share Issuance

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 Jacobs Private Equity, LLC (“JPE”), an entity controlled by the Company’s former chief executive officer and current executive chairman.

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

We received approximately $ 384 million of proceeds, net of fees and expenses, from the sale of the shares and used them to repay a portion of our outstanding borrowings and for general corporate purposes.

XPO did not receive any proceeds from the sale of shares by JPE.

Series A Convertible Perpetual Preferred Stock and Warrants

Commencing in the fourth quarter of 2020, holders of our convertible preferred stock and warrants exchanged their holdings for our common stock or a combination of our common stock and cash.

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

In the first quarter of 2021, 975 preferred shares were exchanged, and we issued approximately 139 thousand 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.

The warrants exchanged included holdings of JPE.

Subsequent to the exchange in the second quarter of 2021, there are no shares of preferred stock or warrants outstanding.

Share Repurchases

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.

We are not obligated to repurchase any specific number of shares and may suspend or discontinue the program at any time.

There have been no share repurchases since the first quarter of 2020.

Our remaining share repurchase authorization was $ 503 million as of September 30, 2022.

The interest rate on our term loan facility was 6.45 % as of March 31, 2023.

Earnings (Loss) per Share

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

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

Three Months Ended March 31,

(In millions, except per share data) 2023 2022

Net income from continuing operations attributable to

common shares

$ 131 $ 21 $ 761 $ 197

Net income (loss) from discontinued operations, net of

amounts attributable to noncontrolling interest

— ( 78 ) ( 1 ) 17

Net income (loss) attributable to common shares, basic $ 131 $ ( 57 ) $ 760 $ 214

Net income from continuing operations attributable to common shares $ 17 $ 32

Net income (loss) from discontinued operations, net of amounts attributable

to noncontrolling interest

Net income attributable to common shares, basic $ 14 $ 488

Basic weighted-average common shares 116 115

Dilutive effect of stock-based awards and warrants 1 1 1 3

Dilutive effect of stock-based awards — 1

Diluted weighted-average common shares 116 116

Basic earnings from continuing operations per share $ 0.15 $ 0.28

Basic earnings (loss) from discontinued operations per

— ( 0.69 ) ( 0.01 ) 0.15

Basic earnings (loss) per share $ 1.14 $ ( 0.50 ) $ 6.61 $ 1.93

Basic earnings (loss) from discontinued operations per share ( 0.02 ) 3.97

Basic earnings per share $ 0.13 $ 4.25

Diluted earnings from continuing operations per share $ 0.15 $ 0.28

Diluted earnings (loss) from discontinued operations per

— ( 0.68 ) ( 0.01 ) 0.14

Diluted earnings (loss) per share $ 1.13 $ ( 0.49 ) $ 6.57 $ 1.87

Diluted earnings (loss) from discontinued operations per share ( 0.02 ) 3.94

Diluted earnings per share $ 0.13 $ 4.22

Commitments and Contingencies

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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.

As of October 31, 2022, the company’s last mile subsidiary was involved in several class action and collective action cases involving claims that the contract carriers with which it contracted for performance of delivery services, or their delivery workers, should be treated as employees, rather than independent contractors (“misclassification claims”).

The misclassification claims pertained solely to the company’s last mile services, which operated as a wholly owned subsidiary of the company until the spin-off of RXO was completed.

As of November 1, 2022, pursuant to the Separation and Distribution Agreement between the company and RXO, the liabilities of the company’s last mile subsidiary, including legal liabilities, if any, related to the misclassification claims, were spun-off as part of RXO.

Pursuant to the Separation and Distribution Agreement, RXO has agreed to indemnify the company for certain matters relating to RXO, including indemnifying the company from and against any liabilities, damages, costs, or expenses incurred by the company arising out of or resulting from the misclassification claims described above.

Shareholder Litigation

On December 14, 2018, a putative class action captioned Labul v.

XPO Logistics, Inc.

was filed in the U.S.

District Court for the District of Connecticut against us and some of our current and former executives, alleging violations of Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 thereunder, and Section 20(a) of the Exchange Act.

On March 19, 2021, the Court dismissed the complaint with prejudice, and on June 30, 2022, the U.S.

Court of Appeals for the Second Circuit affirmed the dismissal.

The case is now concluded.

Also, on May 13, 2019, Adriana Jez filed a purported shareholder derivative action captioned Jez v.

Jacobs, et al.

, (the “Jez complaint”) in the U.S.

District Court for the District of Delaware, alleging breaches of fiduciary duty, unjust enrichment, waste of corporate assets, and violations of the Exchange Act against some of our current and former directors and officers, with the company as a nominal defendant.

The Jez complaint was later consolidated with similar derivative complaints.

On July 26, 2022, the Court issued an order dismissing the consolidated derivative complaints with prejudice.

The case is now concluded.

Insurance Contribution Litigation

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Co., et al., Multnomah County Circuit Court (Case No.

Allianz Global Risks US Ins.

(“Allianz”) sought contribution on environmental and product liability claims that Allianz agreed to defend and indemnify on behalf of its insured, Daimler Trucks North America (“DTNA”).

18 unchanged sentences

In August 2022, the Company received a letter from the San Bernardino County District Attorney’s Office, written in cooperation with certain other California District Attorneys and the Los Angeles City Attorney, notifying the Company of an investigation into alleged violations with respect to underground storage tanks, hazardous materials, and hazardous waste in California, and offering a meeting.

On October 20, 2022, the company met with the County Attorneys and the Los Angeles City Attorney.

We are assessing the allegations and the underlying facts.

On October 20, 2022 and April 6, 2023, the Company met with the County Attorneys and the Los Angeles City Attorney.

We are assessing the allegations and the underlying facts, and continue to engage with the County and Los Angeles City Attorneys to address the alleged violations.

No discussion of potential monetary sanctions or settlement amount has occurred to date, nor can we reasonably estimate potential costs at this time.

Subsequent Events

As described in Note 1—Organization, Description of Business and Basis of Presentation, on November 1, 2022, we completed the spin-off of our tech-enabled brokered transportation platform into an independent public company, RXO, in a transaction intended to be tax-free to XPO and our shareholders for U.S.

federal income tax purposes.

In preparation for the spin-off, in October 2022, a wholly-owned subsidiary of XPO that merged with and into RXO substantially concurrent with the consummation of the spin-off, completed an offering of $ 355 million aggregate principal amount of notes due 2027 (the “RXO Notes”).

The RXO Notes bear interest at a rate of 7.50 % per annum payable semiannually in cash in arrears on May 15 and November 15 of each year, beginning May 15, 2023, and mature on November 15, 2027.

They were issued at an issue price of 98.962 % of par.

In addition to the RXO Notes, RXO entered into a term loan facility that provides $ 100 million in aggregate principal amount of term loans (the “RXO Term Loan”) and a revolving credit facility that provides $ 500 million in aggregate commitments.

The net proceeds (including any interest thereon) from the issuance of the RXO Notes and incurrence of the RXO Term Loan, together with RXO’s cash and cash equivalents on hand, were used to fund a cash distribution of approximately $ 488 million to XPO in October 2022, which we intend to use to repay existing indebtedness and fund any related fees and expenses prior to the 12-month anniversary of the distribution.

As the spin-off has been consummated, the RXO Notes, the RXO Term Loan and RXO’s revolving credit facility are direct obligations of RXO.

Debt Tender Offer

In October 2022, we commenced a tender offer to purchase for cash any and all of our outstanding Senior Notes due 2025, which had a principal balance outstanding of $ 520 million as of September 30, 2022.

The tender offer will expire on November 17, 2022, unless extended or earlier terminated by XPO.

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