What changed in this filing

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Item 1. Financial Statements

2023-10-30 compared with 2023-08-04 · 65 added, 64 removed, 493 unchanged (21% of the section changed)

1 unchanged sentence

Condensed Consolidated Balance Sheets

June 30, December 31,

September 30, December 31,

(In millions, except per share data) 2023 2022

33 unchanged sentences

116 and 115 shares issued and

outstanding as of June 30, 2023 and December 31, 2022, respectively

outstanding as of September 30, 2023 and December 31, 2022, respectively

Additional paid-in capital 1,284 1,238

5 unchanged sentences

Condensed Consolidated Statements of Income

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

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

(In millions, except per share data) 2023 2022 2023 2022

5 unchanged sentences

Insurance and claims 39 41 129 145

Gains on sales of property and equipment ( 2 ) ( 1 ) ( 5 ) ( 2 )

(Gains) losses on sales of property and equipment 1 ( 1 ) ( 4 ) ( 3 )

Depreciation and amortization expense 110 99 318 289

26 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income

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

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

(In millions) 2023 2022 2023 2022

4 unchanged sentences

$ ( 21 ) $ ( 60 ) $ 6 $ ( 132 )

Unrealized gain on financial assets/liabilities designated as hedging

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

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

3 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Six Months Ended June 30,

Nine Months Ended September 30,

(In millions) 2023 2022

7 unchanged sentences

Accretion of debt 8 12

Deferred tax expense (benefit) ( 6 ) 22

Deferred tax expense 16 30

Gains on sales of property and equipment ( 4 ) ( 3 )

40 unchanged sentences

Comprehensive Loss Total Equity

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

Balance as of June 30, 2023 115,939 $ — $ 1,268 $ 43 $ ( 192 ) $ 1,119

Net income — — — 84 — 84

Other comprehensive income — — — — 15 15

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

Exercise and vesting of stock compensation awards

189 — — — — —

Tax withholdings related to vesting of stock compensation awards

2 unchanged sentences

— — 17 — — 17

Balance as of June 30, 2023 115,939 $ — $ 1,268 $ 43 $ ( 192 ) $ 1,119

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

Balance as of September 30, 2023 115,972 $ — $ 1,284 $ 127 $ ( 214 ) $ 1,197

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

(Accumulated Deficit) Accumulated Other

Comprehensive Loss Total Equity

8 unchanged sentences

— — 58 — — 58

Balance as of June 30, 2023 115,939 $ — $ 1,268 $ 43 $ ( 192 ) $ 1,119

Balance as of September 30, 2023 115,972 $ — $ 1,284 $ 127 $ ( 214 ) $ 1,197

Condensed Consolidated Statements of Changes in Equity (continued)

1 unchanged sentence

Comprehensive Loss Total Equity

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

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

Net income — — — 131 — 131

1 unchanged sentence

Exercise and vesting of stock compensation awards

Tax withholdings related to vesting of stock compensation awards

— — ( 1 ) — — ( 1 )

Stock compensation expense

— — 10 — — 10

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

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

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

10 unchanged sentences

Other — — 3 — — 3

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

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

See accompanying notes to condensed consolidated financial statements.

15 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 six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

Operating results for the three and nine months ended September 30, 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.

3 unchanged sentences

Restricted Cash

As of June 30, 2023 and December 31, 2022, our restricted cash included in Other long-term assets on our Condensed Consolidated Balance Sheets was $ 7 million and $ 10 million, respectively.

As of September 30, 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

2 unchanged sentences

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 $ 218 million as of June 30, 2023).

As of June 30, 2023, € 5 million (approximately $ 5 million) was available under the program.

The weighted average interest rate was 4.41 % as of June 30, 2023.

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 $ 211 million as of September 30, 2023).

As of September 30, 2023, € 15 million (approximately $ 16 million) was available under the program.

The weighted average interest rate was 5.07 % as of September 30, 2023.

The program expires in July 2026.

Information related to the trade receivables sold was as follows:

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

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

(In millions) 2023 2022 2023 2022

16 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 June 30, 2023 and December 31, 2022 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 September 30, 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

June 30, 2023 $ 231 $ 231 $ 231

September 30, 2023 $ 305 $ 305 $ 305

December 31, 2022 402 402 402

11 unchanged sentences

Discontinued Operations

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

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

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

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

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

(In millions) 2022 2022

10 unchanged sentences

Income tax provision 7 127

Net income from discontinued operations attributable to discontinued

For the three and six months ended June 30, 2023, we incurred approximately $ 16 million and $ 40 million, respectively, of costs related to the RXO spin-off, of which $ 0 million and $ 4 million, respectively, are reflected within income (loss) from discontinued operations in our Condensed Consolidated Statements of Income.

For the three and six months ended June 30, 2022, we incurred approximately $ 18 million and $ 21 million, respectively, of costs related to the RXO spin-off, of which $ 17 million and $ 20 million, respectively, are reflected within income (loss) from discontinued operations in our Condensed Consolidated Statements of Income.

Net income from discontinued operations $ 39 $ 540

For the three and nine months ended September 30, 2023, we incurred approximately $ 9 million and $ 49 million, respectively, of costs related to the RXO spin-off, of which $ 1 million and $ 5 million, respectively, are reflected within income (loss) from discontinued operations in our Condensed Consolidated Statements of Income.

For the three and nine months ended September 30, 2022, we incurred approximately $ 22 million and $ 43 million, respectively, of costs related to the RXO spin-off, of which $ 20 million and $ 40 million, respectively, are reflected within income (loss) from discontinued operations in our Condensed Consolidated Statements of Income.

The supplemental disclosure of cash paid for income taxes on our Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 excludes $ 67 million of cash taxes paid primarily related to the gain on the sale of our intermodal operation.

Segment Reporting

3 unchanged sentences

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.

In our European Transportation segment, we serve a large base of customers within the 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.

8 unchanged sentences

Selected financial data for our segments is as follows:

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

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

(in millions) 2023 2022 2023 2022

13 unchanged sentences

Restructuring costs (2)

Other 1 — 1 —

Income from continuing operations $ 86 $ 92 $ 134 $ 220

4 unchanged sentences

Total $ 110 $ 99 $ 318 $ 289

(1) Transaction and integration costs for the periods ended June 30, 2023 are primarily comprised of stock-based compensation and retention awards for certain employees related to strategic initiatives.

Transaction and integration costs for the periods ended June 30, 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 June 30, 2023 and 2022 include $ 0 million and $ 2 million, respectively, related to our North American LTL segment, $ 0 million and $ 1 million, respectively, related to our European Transportation segment, and $ 17 million and $ 4 million, respectively, related to Corporate.

Transaction and integration costs for the six months ended June 30, 2023 and 2022 include $ 0 million and $ 2 million, respectively, related to our North American LTL segment, $ 1 million and $ 3 million, respectively, related to our European Transportation segment, and $ 38 million and $ 9 million, respectively, related to Corporate.

(1) Transaction and integration costs for the periods ended September 30, 2023 are primarily comprised of stock-based compensation and retention awards for certain employees related to strategic initiatives.

Transaction and integration costs for the periods ended September 30, 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 September 30, 2023 and 2022 include $ 1 million and $ 2 million, respectively, related to our European Transportation segment, and $ 7 million and $ 0 million , respectively, related to Corporate.

Transaction and integration costs for the nine months ended September 30, 2023 and 2022 include $ 0 million and $ 2 million, respectively, related to our North American LTL segment, $ 2 million and $ 5 million, respectively, related to our European Transportation segment, and $ 45 million and $ 9 million, respectively, related to Corporate.

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

2 unchanged sentences

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

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

(In millions) North American LTL European Transportation Total

5 unchanged sentences

Total $ 1,228 $ 752 $ 1,980

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

(In millions) North American LTL European Transportation Total

5 unchanged sentences

Total $ 1,205 $ 741 $ 1,946

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

(In millions) North American LTL European Transportation Total

5 unchanged sentences

Total $ 3,484 $ 2,320 $ 5,804

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

(In millions) North American LTL European Transportation Total

9 unchanged sentences

Our restructuring-related activity was as follows:

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

(In millions) Reserve Balance

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

June 30, 2023

September 30, 2023

North American LTL $ 2 $ 4 $ ( 4 ) $ — $ 2

3 unchanged sentences

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 six months of 2023 will be completed within 12 months.

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

Derivative Instruments

5 unchanged sentences

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

June 30, 2023

September 30, 2023

Derivative Assets Derivative Liabilities

16 unchanged sentences

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 June 30,

Three Months Ended September 30,

(In millions) 2023 2022 2023 2022 2023 2022

4 unchanged sentences

Total $ 19 $ 25 $ 1 $ — $ 2 $ 1

Six Months Ended June 30,

Amount of Gain 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)

Nine Months Ended September 30,

(In millions) 2023 2022 2023 2022 2023 2022

15 unchanged sentences

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.

In the second quarter of 2022, we received approximately $ 19 million related to the settlement of certain cross currency swaps that matured during the quarter.

During the first nine months of 2023 and 2022, we received approximately $ 2 million and $ 29 million, respectively, related to cross-currency swaps that were settled during the period.

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

3 unchanged sentences

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

The outstanding interest rate swap matures in November 2023.

The outstanding interest rate swap matures in the fourth quarter of 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.

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

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

12 unchanged sentences

(In millions) Fair Value Level 1 Level 2

June 30, 2023 $ 2,616 $ 1,691 $ 925

September 30, 2023 $ 2,574 $ 1,655 $ 919

December 31, 2022 2,601 392 2,209

1 unchanged sentence

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

As of June 30, 2023, our borrowing base was $ 513 million and our availability under our revolving loan credit agreement (the “ABL Facility”) was $ 512 million after considering outstanding letters of credit of less than $ 1 million.

As of June 30, 2023, we were in compliance with the ABL Facility’s financial covenants.

As of September 30, 2023, our borrowing base was $ 590 million and our availability under our revolving loan credit agreement (the “ABL Facility”) was $ 589 million after considering outstanding letters of credit of less than $ 1 million.

As of September 30, 2023, we were in compliance with the ABL Facility’s financial covenants.

In February 2023, we amended our ABL Facility to, among other things:

6 unchanged sentences

Letters of Credit Facility

As of June 30, 2023, we had issued $ 141 million in aggregate face amount of letters of credit under our $ 200 million uncommitted secured evergreen letter of credit facility.

As of September 30, 2023, we had issued $ 139 million in aggregate face amount of letters of credit under our $ 200 million uncommitted secured evergreen letter of credit facility.

Term Loan Facility

3 unchanged sentences

The New Term Loan Facility will bear interest at a rate per annum equal to, at our option, either (a) a Term Secured Overnight Financing (“SOFR”) rate (subject to a 0.00 % floor) or (b) a base rate (subject to a 0.00 % floor), in each case, plus an applicable margin of 2.00 % for Term SOFR loans or 1.00 % for base rate loans.

The interest rate was 7.09 % as of June 30, 2023.

The interest rate was 7.32 % as of September 30, 2023.

In the second quarter of 2023, we used net proceeds from the New Term Loan Facility and new Senior Notes, as described below, together with cash on hand, to repay $ 2.0 billion of outstanding principal under the Existing Term Loan Facility and to pay related fees, expenses and accrued interest.

We recorded a debt extinguishment loss of $ 23 million in the second quarter of 2023.

We recorded a debt extinguishment loss of $ 23 million in the first nine months of 2023 due to this redemption.

Senior Notes Due 2028 and 2031

5 unchanged sentences

The Senior Notes are guaranteed by each of our direct and indirect wholly-owned restricted subsidiaries (other than certain excluded subsidiaries) that are obligors under, or guarantee obligations under, our existing secured ABL Facility or the Term Loan Credit Agreement (or certain replacements thereof) or guarantee certain of our other indebtedness.

The Senior Secured Notes due 2028 and the guarantees thereof are secured by substantially all of our assets and our guarantors equally and ratably with the indebtedness under the Term Loan Credit Agreement (subject to permitted liens and certain other exceptions).

liens and certain other exceptions).

The Senior Notes due 2031 and the guarantees thereof are unsecured, unsubordinated indebtedness for us and our guarantors.

5 unchanged sentences

We paid for the redemption using available liquidity.

We recorded a debt extinguishment loss of $ 26 million in the second quarter of 2022 due to this redemption.

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

In the fourth quarter of 2022, we repurchased an additional $ 408 million of the outstanding principal amount of our Senior Notes due 2025 in a cash tender offer.

1 unchanged sentence

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

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

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

(In millions, except per share data) 2023 2022 2023 2022

21 unchanged sentences

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

We review and adjust accruals for loss contingencies quarterly and as additional information becomes available.

We review and adjust accruals for loss contingencies quarterly

and as additional information becomes available.

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

25 unchanged sentences

In July 2021, the matter was remanded to the trial court for further proceedings consistent with the Oregon Supreme Court’s decision.

The trial court recently decided the parties’ cross-motions for summary judgment, leaving open the pollution exclusion and allocation issues.

In June 2023, the trial court decided the parties’ cross-motions for summary judgment, leaving open the pollution exclusion and allocation issues.

The trial on the pollution exclusion issue is scheduled to take place in the spring of 2024, and the trial on allocation of defense costs among the applicable insurance policies is set for the fall of 2024.

7 unchanged sentences

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