What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-07 compared with 2024-02-08 · 207 added, 287 removed, 1099 unchanged (31% of the section changed)

42 unchanged sentences

Liabilities for self-insured claims

As discussed in Note 2 to the consolidated financial statements, the Company uses a combination of self-insurance programs and purchased insurance to provide for the costs of liability, vehicular, and workers’ compensation claims (self-insured claims).

As discussed in Note 2 to the consolidated financial statements, the Company uses a combination of self-insurance programs and purchased insurance to provide for the costs of vehicular and workers’ compensation claims (self-insured claims).

The Company records estimates of the undiscounted liability associated with claims incurred as of the balance sheet date, including estimates of claims incurred but not reported, by considering historical cost experience, demographic and severity factors, and judgments about current and expected levels of cost per claim and retention levels.

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We have served as the Company’s auditor since 2011.

Stamford, Connecticut

New York, New York

February 7, 2025

5 unchanged sentences

Other current assets 283 208

Current assets of discontinued operations — 17

Total current assets 1,505 1,593

14 unchanged sentences

Other current liabilities 46 93

Current liabilities of discontinued operations — 16

Total current liabilities 1,420 1,590

12 unchanged sentences

Additional paid-in capital 1,274 1,298

Retained earnings (accumulated deficit) 185 ( 4 )

Retained earnings 572 185

Accumulated other comprehensive loss ( 246 ) ( 217 )

1 unchanged sentence

Total liabilities and equity $ 7,712 $ 7,492

Amounts may not add due to rounding.

See accompanying notes to consolidated financial statements.

23 unchanged sentences

Net income $ 387 $ 189 $ 666

Net income from discontinued operations attributable to

noncontrolling interests

Net income attributable to XPO $ 189 $ 666 $ 336

Net income (loss) attributable to common shareholders

Net income (loss)

Continuing operations $ 387 $ 192 $ 184

Discontinued operations — ( 3 ) 482

Net income attributable to common shareholders $ 189 $ 666 $ 336

Net income $ 387 $ 189 $ 666

Earnings (loss) per share data

1 unchanged sentence

Basic earnings (loss) per share from discontinued operations — ( 0.02 ) 4.19

Basic earnings per share attributable to common shareholders $ 1.64 $ 5.79 $ 2.99

Basic earnings per share $ 3.33 $ 1.64 $ 5.79

Diluted earnings per share from continuing operations $ 3.23 $ 1.62 $ 1.59

Diluted earnings (loss) per share from discontinued operations — ( 0.02 ) 4.17

Diluted earnings per share attributable to common shareholders $ 1.60 $ 5.76 $ 2.93

Diluted earnings per share $ 3.23 $ 1.60 $ 5.76

Weighted-average common shares outstanding

1 unchanged sentence

Diluted weighted-average common shares outstanding 120 118 116

Amounts may not add due to rounding.

See accompanying notes to consolidated financial statements.

6 unchanged sentences

$ ( 16 ) $ 28 $ ( 69 )

Unrealized loss on financial assets/liabilities designated as hedging instruments, net of tax effect of $ 1 , $( 1 ) and $ 1

— ( 2 ) ( 3 )

Unrealized gain (loss) on financial assets/liabilities designated as hedging instruments, net of tax effect of $ — , $ 1 and $( 1 )

Defined benefit plans adjustment, net of tax effect of $ 5 , $ 9 and $ 21

2 unchanged sentences

Comprehensive income $ 359 $ 194 $ 526

Comprehensive income attributable to noncontrolling interests — — 3

Comprehensive income attributable to XPO $ 194 $ 526 $ 284

Amounts may not add due to rounding.

See accompanying notes to consolidated financial statements.

6 unchanged sentences

Income from continuing operations 387 192 184

Adjustments to reconcile income (loss) from continuing operations to net

cash from operating activities

Depreciation, amortization and net lease activity 432 392 385

Adjustments to reconcile income from continuing operations to net cash

from operating activities

Depreciation and amortization 490 432 392

Goodwill impairment — — 64

14 unchanged sentences

Proceeds from settlement of cross currency swaps — 2 29

Other — — ( 3 )

Proceeds from sale of investment 12 — —

Net cash used in investing activities from continuing operations ( 702 ) ( 1,502 ) ( 404 )

1 unchanged sentence

Proceeds from issuance of debt — 2,962 —

Repayment of borrowings related to securitization program — — ( 24 )

Repurchase of debt — ( 2,117 ) ( 1,068 )

3 unchanged sentences

Payment of debt issuance costs ( 4 ) ( 27 ) —

Issuance of common stock — — 384

Change in bank overdrafts ( 9 ) 34 ( 20 )

Payment for tax withholdings for restricted shares ( 129 ) ( 19 ) ( 27 )

Distribution from RXO and GXO spins, net — 312 794

Distribution from RXO spin, net — — 312

Other ( 1 ) ( 1 ) 3

12 unchanged sentences

Cash, cash equivalents and restricted cash, end of year $ 298 $ 419 $ 470

Cash, cash equivalents and restricted cash of discontinued operations,

Cash, cash equivalents and restricted cash of continuing operations, end of

$ 419 $ 470 $ 238

Supplemental disclosure of cash flow information from continuing operations:

1 unchanged sentence

Cash paid for income taxes 90 34 87

Amounts may not add due to rounding.

See accompanying notes to consolidated financial statements.

1 unchanged sentence

For the Years Ended December 31, 2024, 2023 and 2022

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

(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, 2021 114,737 $ — $ 1,179 $ 43 $ ( 84 ) $ 1,138

1 unchanged sentence

Other comprehensive loss — — — — ( 140 ) ( 140 )

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

Spin-off of RXO — — — ( 713 ) 2 ( 711 )

Exercise and vesting of stock compensation awards 698 — — — — —

Tax withholdings related to vesting of stock compensation awards — — ( 23 ) — — ( 23 )

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 — — 77 — — 77

2 unchanged sentences

Net income — — — 189 — 189

Other comprehensive loss — — — — — — ( 140 ) ( 140 ) — ( 140 )

Spin-off of RXO — — — — — ( 713 ) 2 ( 711 ) — ( 711 )

Other comprehensive income — — — — 5 5

Exercise and vesting of stock compensation awards 638 — — — — —

5 unchanged sentences

For the Years Ended December 31, 2024, 2023 and 2022

Series A Preferred Stock Common Stock

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, 2023 116,073 $ — $ 1,298 $ 185 $ ( 217 ) $ 1,266

Net income — — — 387 — 387

Other comprehensive income — — — — — — 5 5 — 5

Other comprehensive loss — — — — ( 29 ) ( 29 )

Exercise and vesting of stock compensation awards 1,101 — — — — —

1 unchanged sentence

Stock compensation expense — — 87 — — 87

Other — — — — 2 — — 2 — 2

Balance as of December 31, 2024 117,174 $ — $ 1,274 $ 572 $ ( 246 ) $ 1,601

Amounts may not add due to rounding.

See accompanying notes to consolidated financial statements.

2 unchanged sentences

Nature of Operations

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

XPO, Inc., together with its subsidiaries (“XPO,” “we” or the “Company”), 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.

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Strategic Developments

2023 was the first full year that XPO operated solely as an asset-based LTL service provider in North America, following the completion of three key parts of our strategic plan, as previously announced:

the spin-offs of RXO, Inc.

(“RXO”) and GXO Logistics, Inc.

(“GXO”) in November 2022 and August 2021, respectively;

and the sale of our North American intermodal operation in March 2022.

On December 20, 2023, we acquired 28 LTL service centers in the U.S.

previously operated by Yellow Corporation (the “Yellow Asset Acquisition”).

Under the transaction, we purchased 26 of the service centers and assumed existing leases for the other two locations.

This is a strategic acquisition of assets that aligns with our commitment to invest in expanding our LTL network capacity.

Our Board of Directors has previously authorized the divestiture of our European business.

XPO has operated solely as an asset-based less-than-truckload (“LTL”) service provider in North America since November 2022, when we completed the spin-off of RXO, Inc.

This followed our completion of two additional components of our strategic plan:

the spin-off of GXO Logistics, Inc.

(“GXO”) in August 2021, and the sale of our North American intermodal operation in March 2022.

In December 2023, we completed the acquisition of 28 service centers previously operated by Yellow Corporation (the “Yellow Asset Acquisition”), purchasing 26 LTL service centers and assuming existing leases for two additional locations.

This targeted expansion of our network aligns with our commitment to invest in growth capacity in key markets and operate the network more efficiently.

The previously announced authorization by our Board of Directors to divest our European business remains in effect.

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

The historical results of operations and financial positions of RXO, GXO and our intermodal operation are presented as discontinued operations and, as such, have been excluded from both continuing operations and segment results for all periods presented.

The historical results of operations and financial positions of RXO and our intermodal operation are presented as discontinued operations during the periods presented and, as such, have been excluded from both continuing operations and segment results.

For information on our discontinued operations, see Note 3—Discontinued Operations.

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We prepared these estimates based on the most current and best available information, but actual results could differ materially from these estimates and assumptions.

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 more clearly reflect the nature of the expenses.

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

At the time of the change, we recast prior period amounts to conform to the current presentation.

Within our consolidated financial statements and the accompanying notes, certain amounts may not add due to the use of rounded numbers.

Unless otherwise indicated, percentages presented are calculated from the underlying numbers in millions.

Consolidation

1 unchanged sentence

We have eliminated intercompany accounts and transactions.

To determine if we are a primary beneficiary of a VIE, we evaluate whether we are able to direct the activities that significantly impact the VIE’s economic performance, including whether we control the operations of each VIE and

whether we can operate the VIE under our brand or policies.

Investors in the VIE only have recourse to the assets owned by the VIE and not to our general credit.

Investors in the VIE only have recourse to the assets

owned by the VIE and not to our general credit.

We do not have implicit support arrangements with the VIE.

1 unchanged sentence

We have a controlling financial interest in entities generally when we own a majority of the voting interest.

The noncontrolling interests reflected in our consolidated financial statements primarily related to a minority interest in XPO Logistics Europe SA (“XPO Logistics Europe”), a business we acquired majority ownership of in 2015.

In 2021, we completed a buy-out offer and squeeze-out for the remaining 3 % of XPO Logistics Europe that we did not already own.

Significant Accounting Policies

25 unchanged sentences

As of December 31, 2024, 2023 and 2022, our restricted cash included in Other long-term assets on our Consolidated Balance Sheets was $ 53 million, $ 7 million and $ 10 million, respectively.

Our restricted cash balance as of December 31, 2024 includes approximately $ 47 million of proceeds received from the sale of a service center in our North American LTL segment in December 2024.

In January 2025, the proceeds from this sale were used to purchase four new service centers that were previously leased.

Accounts Receivable and Allowance for Credit Losses

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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 $ 207 million as of December 31, 2024).

As of December 31, 2023, € 1 million (approximately $ 1 million) was available under the program.

As of December 31, 2024, the maximum amount available under the program was utilized.

The weighted average interest rate was 5.09 % as of December 31, 2024.

12 unchanged sentences

We generally record property and equipment at cost, or in the case of property and equipment acquired in a business combination, at fair value at the date of acquisition.

In connection with the Yellow Asset Acquisition, on December 20, 2023, we acquired 28 LTL service centers for a purchase price of $ 918 million, including a cash payment of $ 870 million, the assumption of certain liabilities and direct transaction costs.

In connection with the Yellow Asset Acquisition in December 2023, we acquired 28 LTL service centers for a purchase price of $ 918 million, including a cash payment of $ 870 million, the assumption of certain liabilities and direct transaction costs.

Under the transaction, we purchased 26 of the service centers, primarily consisting of land and buildings, and assumed existing leases for the other two locations.

35 unchanged sentences

The qualitative assessment includes a review of macroeconomic conditions, industry and market considerations, internal cost factors, and overall financial performance, among other factors.

For our 2024 annual goodwill assessment, we performed a step-zero qualitative analysis for two of our reporting units.

Based on the qualitative assessments performed, we concluded that it was not more-likely-than-not that the fair value of these reporting units was less than their carrying amounts and, therefore, further quantitative analysis was not performed, and we did no t recognize any goodwill impairment.

For our other three reporting units, we performed a quantitative analysis using a combination of income and market approaches.

All reporting units had fair values in excess of their carrying values, resulting in no impairment of goodwill.

For our 2023 annual goodwill assessment, we performed a step-zero qualitative analysis for our five reporting units.

Based on the qualitative assessments performed, we concluded that it was not more-likely-than-not that the fair value of each of our reporting units was less than their carrying amounts and, therefore, further quantitative analysis was not performed, and we did not recognize any goodwill impairment.

Similarly, for our 2022 annual goodwill assessment performed as of August 31, we performed a step-zero qualitative analysis for each of the three reporting units that existed at that time and reached the same conclusion.

2 unchanged sentences

As a result, in the fourth quarter of 2022, we tested each of the four new reporting units for potential impairment.

A quantitative test was performed for each of these four new reporting units using a combination of income and market approaches and we recorded an aggregate impairment charge of $ 64 million related to two of these new reporting units.

The income approach of determining fair value is based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate.

5 unchanged sentences

We review long-lived assets to be held-and-used, including tangible assets and intangible assets subject to amortization, for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.

An asset is considered to be impaired if the sum of the undiscounted expected future

cash flows over the remaining useful life of a long-lived asset group is less than its carrying amount.

An asset is considered to be impaired if the sum of the undiscounted expected future cash flows over the remaining useful life of a long-lived asset group is less than its carrying amount.

An impairment loss is measured as the amount by which the carrying amount of the asset group exceeds the fair value of the asset.

20 unchanged sentences

Stockholders’ Equity

We retire shares purchased under our share repurchase program and return them to authorized and unissued status.

Shares purchased under our share repurchase program are retired and returned to authorized and unissued status.

We charge any excess of cost over par value to Additional paid-in capital if a balance is present.

7 unchanged sentences

Net current period other comprehensive income (loss) 28 — ( 23 ) 5

Spin-off of RXO 2 — — 2

As of December 31, 2023 ( 91 ) ( 2 ) ( 124 ) ( 217 )

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We record Global Intangible Low-Taxed Income (“GILTI”) tax as a period cost.

As of December 31, 2024, our income tax receivable included in Other current assets on our Consolidated Balance Sheets was $ 77 million, which was primarily comprised of the anticipated cash refund related to the legal entity reorganization in our European Transportation business.

Our tax returns are subject to examination by U.S.

22 unchanged sentences

The Level 1 cash equivalents include money market funds valued using quoted prices in active markets and a cash deposit for the securitization program.

For information on the fair value hierarchy of our derivative instruments, see Note 11—Derivative Instruments and for information on financial liabilities, see Note 12—Debt.

The fair value hierarchy of cash equivalents was as follows:

2 unchanged sentences

December 31, 2023 369 369 369

We measure Level 1 equity investments at fair value on a recurring basis using quoted prices in active markets.

As of December 31, 2024, the value of our equity investment, reflected within Other current assets on our Consolidated Balance Sheets, was no t material.

During the year ended December 31, 2024, we recognized a gain on equity investments of $ 13 million in Other income on our Consolidated Statements of Income.

For information on the fair value hierarchy of our derivative instruments, financial liabilities and defined benefit pension plan assets, see Note 11—Derivative Instruments, Note 12—Debt and Note 13—Employee Benefit Plans, respectively.

Derivative Instruments

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Assumptions include discount rates, inflation rates, expected long-term rate of return on plan assets, mortality rates, and other factors.

The assumptions used in recording the projected benefit obligation and fair value of plan assets represent our best estimates based on available information regarding historical experience and factors that may

cause future expectations to differ.

Our obligation and future expense amounts could be materially impacted by differences in actual experience or changes in assumptions.

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We recognize the grant date fair value of equity awards as compensation cost over the requisite service period.

We recognize expense for our performance-based restricted stock units (“PRSUs”) over the awards’ requisite service period based on the number of awards expected to vest with consideration to the actual and expected financial results.

We do not recognize expense until achievement of the performance targets for a PRSU award is considered probable.

We recognize expense for our performance-based restricted stock units (“PSUs”) over the awards’ requisite service period based on the number of awards expected to vest with consideration to the actual and expected financial results.

We do not recognize expense until achievement of the performance targets for a PSU award is considered probable.

Adoption of New Accounting Standard

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.

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 senior secured term loan credit agreement, as amended (the “Existing Term Loan Facility”), provided for an interest rate based on LIBOR.

In 2023, we amended the terms of our ABL Facility and Existing Term Loan Facility, including transitioning the interest rate from LIBOR to other base rates.

See Note 12—Debt for further information.

The modifications of these facilities to transition from LIBOR to other base rates did not have a material impact on our consolidated financial statements.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.” The amendments in the ASU increase reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses.

In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit and loss, and provide new segment disclosure requirements for entities with a single reportable segment, among other disclosure requirements.

We adopted this standard on a retrospective basis for the 2024 annual period, and for interim periods beginning January 1, 2025.

The impact is limited to financial statement disclosures.

See Note 4—Segment Reporting and Geographic Information.

Accounting Pronouncements Issued but Not Yet Effective

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.” The ASU modifies income tax disclosures by requiring (i) consistent categories and greater disaggregation of information in the rate reconciliations and (ii) the disclosure of income taxes paid disaggregated by jurisdiction, among other requirements.

This ASU is effective for fiscal years beginning after December 31, 2024 and should be applied on a prospective basis, with the option to apply the standard retrospectively.

In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40).” The ASU requires new tabular disclosures disaggregating prescribed expense categories within relevant income statement captions.

In addition, the ASU requires disclosure of the total amount of selling expenses and, in annual periods, an entity’s definition of selling expenses, among other disclosure requirements.

This ASU is effective for annual periods beginning in 2027, and for interim periods beginning January 1, 2028.

Early adoption is permitted.

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

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.” The amendments in the ASU improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses.

This ASU is effective for fiscal years beginning after December 15, 2023 and should

be applied retrospectively to all prior periods presented in the financial statements.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740):

This ASU is effective for annual periods beginning in 2025, and should be applied on a prospective basis, with the option to apply retrospectively.

Early adoption is permitted.

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

The company expects to adopt the guidance as of the effective date.

Discontinued Operations

As discussed above, the results of RXO, our intermodal operation and GXO 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:

12 unchanged sentences

Other income ( 2 )

Interest expense — 12

Income from discontinued operations before income tax provision 606

1 unchanged sentence

Net income from discontinued operations, net of taxes $ 482

Net income from discontinued operations attributable to noncontrolling interests — ( 5 )

Net income from discontinued operations $ 482 $ 240

During the years ended December 31, 2023, 2022 and 2021, we incurred approximately $ 57 million, $ 152 million and $ 125 million, respectively, of costs related to the spin-offs, of which $ 6 million, $ 120 million and $ 101 million, respectively, are reflected within income from discontinued operations in our Consolidated Statements of Income.

In 2022, we completed the sale of our intermodal operation for cash proceeds of approximately $ 705 million, net of cash disposed.

1 unchanged sentence

Additionally, in 2022, RXO completed debt offerings and used the net proceeds of $ 446 million to fund a cash payment from RXO to XPO, which we used to repay a portion of our outstanding borrowings and fund any related fees and expenses.

Similarly, in 2021, GXO completed a debt offering and used the net proceeds to fund a cash payment from GXO to XPO of $ 794 million, which we used to repay a portion of our outstanding borrowings.

For further information, see Note 12—Debt.

Prior to the spin-off of GXO, the pension plan for some employees in the United Kingdom was sold to a GXO entity and approximately $ 82 million of AOCI, net of tax, was transferred to GXO.

In connection with both spin-offs, we entered into separation and distribution agreements as well as various other agreements that provided a framework for the relationships between the parties going forward, including, among others, an employee matters agreement (“EMA”), a tax matters agreement, an intellectual property license agreement and a transition services agreement, through which XPO agreed to provide certain services for a period of time specified in the applicable agreement following the spin-offs.

In connection with the spin-off, we entered into separation and distribution agreements as well as various other agreements that provided a framework for the relationships between the parties going forward, including, among others, an employee matters agreement (“EMA”), a tax matters agreement, an intellectual property license agreement and a transition services agreement, through which XPO agreed to provide certain services for a period of time specified in the applicable agreement following the spin-off.

The impact of these services on the consolidated financial statements was immaterial.

1 unchanged sentence

We are organized into two reportable segments:

North American Less-Than-Truckload (“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.

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

In our 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 operation.

In our European Transportation segment, we serve an extensive 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.

We offer dedicated truckload, LTL, truck brokerage, managed transportation, last mile, freight forwarding, warehousing 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.

We include items directly attributable to a segment, and those that can be allocated on a reasonable basis, in segment results reported to the CODM.

Our chief operating decision maker (“CODM”) is our chief executive officer.

Our CODM regularly reviews financial information at the operating segment level to allocate resources to the segments and to assess their performance.

We include items directly attributable to a segment, and those that can be allocated on a reasonable basis, including corporate costs, in segment results reported to the CODM.

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 income from continuing operations before debt extinguishment loss, interest expense, income tax, depreciation and amortization expense, goodwill impairment charges, litigation matters, transaction and integration costs, restructuring costs and other adjustments.

Segment Adjusted EBITDA reflects an allocation of corporate costs.

Selected financial data for our segments is as follows:

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 debt extinguishment loss, interest expense, income tax provision, depreciation and amortization expense, goodwill impairment charges, litigation matters, transaction and integration costs, restructuring costs and other adjustments.

Our CODM uses adjusted EBITDA to allocate resources, including property and equipment and financial or capital resources, to the segments and to assess their performance by monitoring budget-to-actual and year-over-year variances.

The following tables present revenue and significant segment expenses that are included within adjusted EBITDA:

Year Ended December 31, 2024

(in millions) North American LTL European Transportation Corporate (1)

Revenue $ 4,899 $ 3,173 $ — $ 8,072

Salaries, wages and employee benefits 2,515 846 16 3,377

Purchased transportation 248 1,454 — 1,701

Fuel, operating expenses and supplies 928 661 — 1,589

Operating taxes and licenses 65 15 — 80

Insurance and claims 80 51 3 134

Gains on sales of property and equipment ( 27 ) ( 14 ) — ( 40 )

Pension (income) expense ( 25 ) 1 — ( 25 )

Other (income) expense — 1 ( 12 ) ( 12 )

Adjusted EBITDA $ 1,115 $ 158 $ ( 7 ) $ 1,266

Year Ended December 31, 2023

(in millions) North American LTL European Transportation Corporate (1)

Revenue $ 4,671 $ 3,073 $ — $ 7,744

Salaries, wages and employee benefits 2,346 795 18 3,159

Purchased transportation 366 1,394 — 1,760

Fuel, operating expenses and supplies 956 661 6 1,623

Operating taxes and licenses 48 12 — 60

Insurance and claims 102 59 6 167

(Gains) losses on sales of property and equipment 8 ( 13 ) — ( 5 )

Pension income ( 17 ) — — ( 17 )

Other (income) expense ( 2 ) 2 1 1

Adjusted EBITDA $ 864 $ 163 $ ( 31 ) $ 996

Year Ended December 31, 2022

(in millions) North American LTL European Transportation Corporate (1)

Revenue $ 4,645 $ 3,073 $ — $ 7,718

Salaries, wages and employee benefits 2,176 717 52 2,945

Purchased transportation 499 1,465 — 1,964

Fuel, operating expenses and supplies 983 660 44 1,687

Operating taxes and licenses 48 10 — 58

Insurance and claims 123 57 3 183

Gains on sales of property and equipment ( 54 ) ( 6 ) — ( 60 )

Pension income ( 59 ) — — ( 59 )

Other (income) expense ( 3 ) 1 5 3

Adjusted EBITDA $ 932 $ 169 $ ( 104 ) $ 997

(1) Primarily represents unallocated corporate costs, as well as investment income of approximately $ 13 million within Other (income) expense in 2024.

The following table presents adjusted EBITDA by segment and provides a reconciliation to consolidated income from continuing operations:

Years Ended December 31,

(in millions) 2024 2023 2022

North American LTL $ 4,671 $ 4,645 $ 4,125

European Transportation 3,073 3,073 3,077

Total $ 7,744 $ 7,718 $ 7,202

Adjusted EBITDA

North American LTL $ 1,115 $ 864 $ 932

$ 864 $ 932 $ 826

European Transportation 158 163 169

Corporate ( 7 ) ( 31 ) ( 104 )

( 31 ) ( 104 ) ( 179 )

Total Adjusted EBITDA 1,266 996 997

8 unchanged sentences

Income from continuing operations $ 387 $ 192 $ 184

(1) See Note 9— Goodwill for further information on the impairment charge.

The following table presents depreciation and amortization expense by segment:

Years Ended December 31,

(in millions) 2024 2023 2022

Depreciation and amortization expense

3 unchanged sentences

Total $ 490 $ 432 $ 392

(1) 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.

(2) See Note 9— Goodwill for further information on the impairment charge.

(3) See Note 18— Commitments and Contingencies for further information on the litigation matter.

(4) Transaction and integration costs for 2023 are primarily comprised of stock-based compensation and retention awards for certain employees related to strategic initiatives.

Transaction and integration costs for 2022 and 2021 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 2023, 2022 and 2021 include $ 0 million , $ 3 million and $ 1 million, respectively, related to our North American LTL segment;

$ 2 million, $ 6 million and $ 14 million, respectively, related to our European Transportation segment and $ 56 million, $ 49 million and $ 21 million, respectively, related to Corporate.

(5) See Note 6— Restructuring Charges for further information on our restructuring actions.

As of December 31, 2023 and 2022, we held long-lived tangible assets outside of the U.S.

of $ 427 million and $ 397 million, respectively.

As of December 31, 2024 and 2023, we held long-lived tangible assets outside of the U.S., including right of use assets, of $ 715 million and $ 727 million, respectively.

Revenue Recognition

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Total $ 11 $ 21 $ ( 27 ) $ — $ 5

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.

In addition to the severance charges noted in the table above, we recorded non-cash charges in our North American LTL segment, European Transportation segment and Corporate of $ 4 million, $ 1 million and $ 1 million, respectively, during 2024.

We expect the majority of the cash outlays related to the charges incurred in 2024 will be complete within twelve months.

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Corporate 19 20 ( 30 ) ( 1 ) 8

7 39 ( 9 ) ( 18 ) 19

Total severance 13 47 ( 22 ) ( 16 ) 22

Contract termination

North American LTL — 3 ( 3 ) — —

Total contract termination — 3 ( 3 ) — —

Total $ 22 $ 38 $ ( 47 ) $ ( 2 ) $ 11

(1) For the year ended December 31, 2022, charges incurred and foreign exchange and other included the recognition of share-based compensation costs and the corresponding settlement of equity awards upon vesting in conjunction with the spin-off of RXO.

In addition to the severance charges noted in the table above, we recorded non-cash charges in our North American LTL segment of $ 6 million during 2023.

Property and Equipment

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Property and equipment

Land $ 879 $ 860

Buildings and leasehold improvements 874 733

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Net book value of capitalized internally-developed software included in property and equipment, net $ 112 $ 120

(1) The increase in Land as of December 31, 2023 compared to December 31, 2022 reflects land acquired in December 2023 as part of the Yellow Asset Acquisition.

Depreciation of property and equipment and amortization of computer software was $ 432 million, $ 376 million and $ 336 million for the years ended December 31, 2024, 2023 and 2022, respectively.

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Gain recognized on sale-leaseback transactions (1)

$ — $ 40 $ 69

(1) For the year ended December 31, 2023 we did not complete any sale-leaseback transactions.

For the years ended December 31, 2022 and 2021, we completed multiple sale-leaseback transactions primarily for land and buildings.

We received aggregate cash proceeds of $ 49 million and $ 96 million in 2022 and 2021, respectively.

(1) For the years ended December 31, 2024 and 2023, we did no t complete any sale-leaseback transactions.

For the year ended December 31, 2022, we completed multiple sale-leaseback transactions primarily for land and buildings.

We received aggregate cash proceeds of $ 49 million in 2022.

Gains on sale-leaseback transactions are included in Gains on sales of property and equipment in our Consolidated Statements of Income.

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Finance leases

Net operating lease activity, including the reduction of the operating lease asset and the accretion of the operating lease liability, are reflected in Depreciation, amortization and net lease activity on our Consolidated Statements of Cash Flows.

Net operating lease activity, including the reduction of the operating lease asset and the accretion of the operating lease liability, are reflected in operating activities on our Consolidated Statements of Cash Flows.

Maturities of lease liabilities as of December 31, 2024 were as follows:

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As of December 31, 2024, we had additional operating leases that have not yet commenced with future undiscounted lease payments of $ 45 million.

These operating leases will commence at various times beginning in 2024 through 2025 with initial lease terms of 4.5 years to 15 years.

These operating leases will commence in 2025 with initial lease terms of 3 years to 12 years.

(In millions) North American LTL European Transportation Total

Goodwill as of December 31, 2022 $ 726 $ 746 $ 1,472

Goodwill impairment — ( 64 ) ( 64 )

Impact of foreign exchange translation — 26 26

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Goodwill as of December 31, 2024 $ 726 $ 735 $ 1,461

As described in Note 2— Basis of Presentation and Significant Accounting Policies, we recorded no impairment losses in 2023, while we recorded an aggregate impairment charge of $ 64 million in 2022 related to reporting units within our European Transportation reportable segment.

Prior to the 2022 impairment, there were no accumulated impairment losses.

As described in Note 2— Basis of Presentation and Significant Accounting Policies, we recorded no impairment losses in 2024 and 2023.

We recorded an aggregate impairment charge of $ 64 million in 2022 related to reporting units within our European Transportation reportable segment.

Prior to the 2022 impairment, there were no impairment losses.

Intangible Assets

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Derivatives designated as hedges

Cross-currency swap agreements $ — Other current assets $ — Other current liabilities $ ( 34 )

Cross-currency swap agreements $ 652 Other long-term assets $ 7 Other long-term liabilities $ ( 5 )

Interest rate swaps 200 Other current assets — Other current liabilities —

Interest rate swaps 200 Other long-term assets — Other long-term liabilities —

Total $ 7 $ ( 5 )

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Cross-currency swap agreements $ 652 Other current assets $ — Other current liabilities $ ( 34 )

Cross-currency swap agreements 68 Other long-term assets 3 Other long-term liabilities —

Interest rate swaps 350 Other current assets — Other current liabilities ( 2 )

Interest rate swaps 200 Other long-term assets — Other long-term liabilities —

Total $ — $ ( 36 )

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Derivatives designated as cash flow hedges

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

Interest rate swaps $ 2 $ ( 1 ) $ — $ 1 $ 3 $ — $ — $ — $ —

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The risk management objective of these transactions is to manage foreign currency risk relating to net investments in subsidiaries denominated in foreign currencies and reduce the variability in the functional currency equivalent cash flows of this debt.

During the term of the swap contracts, we will receive interest on a quarterly basis from the counterparties based on USD fixed interest rates, and we will pay interest, also on a quarterly basis, to the counterparties based on EUR fixed interest rates.

During the term of the swap contracts, we receive interest on a quarterly basis from the counterparties based on USD fixed interest rates, and we pay interest, also on a quarterly basis, to the counterparties based on EUR fixed interest rates.

At maturity, we will repay the original principal amount in EUR and receive the principal amount in USD.

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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 2024 and 2025.

The outstanding interest rate swap at December 31, 2024 matured in January 2025, at which time we executed two new interest rate swaps with a notional amount of $ 550 million maturing in 2026.

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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Term loan facility $ 1,100 $ 1,089 $ 1,100 $ 1,087

6.25 % senior notes due 2025

6.25 % senior secured notes due 2028

830 823 830 822

7.125 % senior notes due 2031

450 445 450 445

7.125 % senior notes due 2032

585 576 585 575

6.70 % senior debentures due 2034

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There were no other significant changes made to the terms of the facility at that time.

In February 2023, we amended the facility to, among other things:

(i) extend the maturity date to April 30, 2026 (subject, in certain circumstances, to a springing maturity if more than $ 250 million of our existing term loan debt or certain refinancings thereof remain outstanding 91 days prior to their respective maturity dates);

(ii) replace LIBOR-based benchmark rates applicable to loans outstanding with Secured Overnight Financing Rate (“SOFR”)-based rates;

(iii) reduce the sublimit for issuance of letters of credit to $ 200 million;

(iv) reduce the

sublimit for borrowings in Canadian Dollars to $ 50 million;

(v) exclude real property from the collateral securing the obligations and (vi) make certain other changes to the covenants and other provisions therein.

The aggregate commitment of all lenders under the amended ABL Facility remains equal to $ 600 million.

In February 2023, we amended the facility to extend the maturity date to April 30, 2026, among other changes.

The aggregate commitment of all lenders under the amended ABL Facility remains $ 600 million.

Our availability under the ABL Facility is equal to the borrowing base less advances and outstanding letters of credit.

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A maximum of 30 % of our borrowing base can be equipment and rolling stock in the aggregate.

As of December 31, 2023, our borrowing base under the ABL facility was $ 508 million and our availability was $ 508 million after considering outstanding letters of credit of less than $ 1 million.

As of December 31, 2024, our borrowing base under the

ABL facility was $ 512 million and our availability was $ 511 million after considering outstanding letters of credit of less than $ 1 million.

As of December 31, 2024, we were in compliance with the ABL Facility’s financial covenants.

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As of December 31, 2024, we have $ 137 million in aggregate face amount of letters of credit outstanding under the facility.

Bridge Facility

On December 4, 2023, in connection with the Yellow Asset Acquisition, we entered into a senior secured bridge term loan credit agreement (the “Bridge Credit Agreement”).

Under this agreement, we were able to borrow up to an aggregate amount of $ 870 million (the “Bridge Facility”).

Concurrently with the issuance of the Incremental Term Loans and the Senior Notes due 2032, described below, on December 13, 2023, we terminated the commitments under this agreement.

The Bridge Facility remained unfunded at the termination date.

Term Loan Facility

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In December 2023, we entered into an incremental amendment to the Term Loan Credit Agreement to obtain $ 400 million of incremental term loans (the “Incremental Term Loans”).

The Incremental Term Loans are a new tranche of loans under the Term Loan Credit Agreement, having substantially similar terms as the New Term Loan Facility, except with respect to maturity date, issue price, prepayment premiums in connection with certain voluntary prepayments and certain other provisions.

The Incremental Term Loans were issued under the Term Loan Credit Agreement, having substantially similar terms as the New Term Loan Facility, except with respect to maturity date, issue price, prepayment premiums in connection with certain voluntary prepayments and certain other provisions.

The Incremental Term Loans were issued at par and will mature on February 1, 2031.

Both the New Term Loan Facility and Incremental Term Loans bear interest at a rate per annum equal to, at our option, either (a) a Term 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 for both tranches was 7.36 % as of December 31, 2023.

We must prepay an aggregate principal amount of the term loan facility equal to (a) 50 % of any Excess Cash Flow, as defined in the agreement, for the most recent fiscal year ended, minus (b) the sum of (i) all voluntary prepayments of loans during the fiscal year and (ii) all voluntary prepayments of loans under the ABL Facility or any other revolving credit facilities during the fiscal year if accompanied by a corresponding permanent reduction in the commitments under the credit agreement or any other revolving credit facilities in the case of each of the immediately preceding clauses (i) and (ii), if such prepayments are funded with internally generated cash flow, as defined in the agreement.

The weighted average interest rate of our term loans was approximately 6.53 % as of December 31, 2024.

commitments under the credit agreement or any other revolving credit facilities in the case of each of the immediately preceding clauses (i) and (ii), if such prepayments are funded with internally generated cash flow, as defined in the agreement.

If our Consolidated Secured Net Leverage Ratio, as defined in the agreement, for the fiscal year was less than or equal to 3.00 :1.00 and greater than 2.50 :1.00, the Excess Cash Flow percentage will be 25 %.

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In December 2023, we completed the private placement of $ 585 million aggregate principal amount of senior notes due 2032 (the “Senior Notes due 2032”), which mature on February 1, 2032 and bear interest at a rate of 7.125 % per annum.

Interest is payable semi-annually in cash in arrears, commencing August 1, 2024.

Interest is payable semi-annually in cash in arrears, and commenced August 1, 2024.

These notes were issued at par.

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

In 2021, we redeemed our outstanding 6.125 % senior notes due 2023 (“Senior Notes due 2023”), 6.75 % senior notes due 2024 (“Senior Notes due 2024”) and 6.50 % senior notes due 2022 (“Senior Notes due 2022”).

The redemption price for the Senior Notes due 2023 and Senior Notes due 2022 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 principal amount, plus accrued and unpaid interest.

We paid for the redemptions using available cash, net proceeds from a debt issuance and equity offering and cash received from GXO of approximately $ 794 million.

We recorded debt extinguishment losses of $ 51 million related to these redemptions.

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.

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These pension plans include qualified plans that are eligible for beneficial treatment under the Internal Revenue Code and non-qualified plans that provide additional benefits for employees who are impacted by limitations on compensation eligible for benefits available under the qualified plans.

We also maintain defined benefit pension plans for some of our foreign subsidiaries that are excluded from the disclosures below due to their immateriality.

We also maintain a defined benefit pension plan for one of our foreign subsidiaries that is excluded from the disclosures below due to immateriality.

We measure defined benefit pension plan obligations based on the present value of projected future benefit payments for all participants for services rendered to date.

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Interest cost 72 74

Plan amendment ( 3 ) —

Actuarial (gain) loss ( 59 ) 65

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Projected benefit obligation at end of year $ 1,338 $ 1,466

The actuarial gain in 2024 was a result of assumption changes, including an increase in the discount rate and other assumptions for plan participants.

The actuarial loss in 2023 was a result of assumption changes, including a decrease in the discount rate and other changes to assumptions for plan participants.

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Amounts recognized in Other comprehensive income (loss):

Actuarial (gain) loss $ 32 $ 99 $ ( 7 )

Reclassification of recognized AOCI gain due to settlements — — —

(Gain) loss recognized in Other comprehensive income (loss) $ 32 $ 99 $ ( 7 )

Actuarial loss $ 23 $ 32 $ 99

Prior-service cost ( 3 ) — —

Amortization of actuarial loss ( 1 ) — —

Loss recognized in Other comprehensive income (loss) $ 19 $ 32 $ 99

The weighted-average assumptions used to determine the net periodic benefit costs and benefit obligations for the year ended December 31 were as follows:

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Our current investment strategy is to achieve an investment mix of approximately 90 % in fixed income securities and 10 % of investments in equity securities.

The fixed income allocation consists primarily of domestic fixed income securities and targets to hedge approximately 100 % of domestic projected liabilities.

The fixed income allocation consists primarily of domestic fixed income securities and targets to hedge approximately 100 % of projected liabilities.

The target allocations for equity securities includes approximately 50 % in U.S.

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Generally, our investment strategy does not include an allocation to cash and cash equivalents, but a cash allocation may arise periodically in response to timing considerations regarding contributions, investments, and the payment of benefits and eligible plan expenses.

We periodically evaluate our

defined benefit plans’ asset portfolios for significant concentrations of risk.

We periodically evaluate our defined benefit plans’ asset portfolios for significant concentrations of risk.

Types of investment concentration risks that are evaluated include concentrations in a single issuer, specific security, asset class, credit rating, duration, industry/sector, currency, foreign country or individual fund manager.

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Cash and cash equivalents $ 20 $ — $ — $ 20 1.4 %

Short-term investment fund $ — $ — $ 36 $ 36 2.4 %

large companies — 56 — 56 4.0 %

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Cash and cash equivalents $ — $ — $ 36 $ 36 2.4 %

Short-term investment fund $ — $ — $ 33 $ 33 2.2 %

large companies — 56 — 56 3.7 %

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Stockholders’ Equity

Share Issuance

In 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 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 (“Preferred Stock”) and Warrants

In order to simplify our equity capital structure, in 2021, the remaining 1,015 preferred shares outstanding were exchanged for 0.1 million shares of common stock and the remaining 9.8 million warrants outstanding were exchanged for 9.2 million shares of common stock.

The warrants exchanged included holdings of JPE.

Subsequent to the exchange, there are no shares of Preferred Stock or warrants outstanding.

Share Repurchases

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These awards have included stock options, restricted stock, restricted stock units, performance-based units, cash incentive awards and other equity-related awards (collectively, “Awards”).

As a result of the RXO spin-off and in accordance with plan rules, the shares remaining for future issuance under the 2016 incentive plan were equitably adjusted.

With this adjustment, and an amendment to the 2016 incentive plan approved by stockholders in May 2022 which increased the 2016 incentive plan’s number of authorized shares by 2.3 million shares, up to 11.4 million shares of our common stock have been authorized for issuance as Awards.

The 2016 incentive plan authorizes the issuance of up to 11.4 million shares of our common stock as Awards.

Shares awarded may consist of authorized and unissued shares or treasury shares.

In May 2022, the stockholders also approved an amendment to the 2016 incentive plan to extend its term by three years so the 2016 incentive plan will terminate on May 18, 2032, unless terminated earlier by our Board of Directors.

As of December 31, 2023, 3.6 million shares of our common stock were available for the grant of Awards under the 2016 incentive plan.

For the March 2023 and prior offering periods, our employee stock purchase plan offered eligible employees, excluding our executive officers and directors, the right to purchase our common stock using up to 10 % of each employee’s compensation.

Shares were purchased at 5 % below fair market value on the last trading day of each six-month offering period.

The plan authorized the purchase of up to two million shares of our common stock.

We did not recognize stock-based compensation expense as the plan was non-compensatory.

During the first quarter of 2023, the Compensation Committee of the Board of Directors approved the suspension of our employee stock purchase plan, effective after the March 2023 offering period was completed.

The 2016 incentive plan will terminate on May 18, 2032, unless terminated earlier by our Board of Directors.

As of December 31, 2024, approximately 3.2 million shares of our common stock were available for the grant of Awards under the 2016 incentive plan.

Our stock-based compensation expense is recorded in Salaries, wages and employee benefits or Transaction and integration costs on our Consolidated Statements of Income:

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Tax benefit on stock-based compensation $ ( 13 ) $ ( 1 ) $ ( 1 )

Stock Options

Our stock options typically vested over three to five years after the grant date for our employees and officers and one year after the grant date for our Board of Directors.

The stock options had a 10 -year contractual term and the exercise price equaled our stock price on the grant date.

No stock option awards were outstanding as of December 31, 2023.

The total intrinsic value of options exercised during 2023, 2022 and 2021 was $ 0 million , less than $ 1 million and $ 4 million, respectively.

The total cash received from options exercised during 2023, 2022 and 2021 was $ 0 million , less than $ 1 million and less than $ 2 million, respectively.

Restricted Stock Units and Performance-Based Restricted Stock Units

We grant RSUs and PRSUs to our key employees, officers and directors with various vesting requirements.

RSUs generally vest based on the passage of time (service conditions) and PRSUs generally vest based on the achievement of our financial targets (performance conditions).

PRSUs may also be subject to stock price (market conditions), employment and other non-financial conditions.

The holders of the RSUs and PRSUs do not have the rights of a stockholder and do not have voting rights until the shares are issued and delivered in settlement of the awards.

The number of RSUs and PRSUs vested includes shares of our common stock that we withheld on behalf of our employees to satisfy the minimum tax withholdings.

We estimate the fair value of PRSUs subject to market-based vesting conditions using a Monte Carlo simulation lattice model.

A summary of RSU and PRSU award activity for the year ended December 31, 2023 is presented below:

RSUs Weighted-Average Grant Date Fair Value Number of PRSUs Weighted-Average Grant Date Fair Value

We grant RSUs and PSUs to our key employees, officers and directors with various vesting requirements.

RSUs generally vest based on the passage of time (service conditions) and PSUs generally vest based on the achievement of our financial targets (performance conditions).

PSUs may also be subject to stock price (market conditions), employment and other non-financial conditions.

The holders of the RSUs and PSUs do not have the rights of a stockholder and do not have voting rights until the shares are issued and delivered in settlement of the awards.

The number of RSUs and PSUs vested includes shares of our common stock that we withheld on behalf of our employees to satisfy the minimum tax withholdings.

We estimate the fair value of PSUs subject to market-based vesting conditions using a Monte Carlo simulation lattice model, utilizing several key assumptions, including expected Company and peer company share price volatility, correlation coefficients between peers and the Company, the risk-free rate of return and other award design features.

For 2024 PSU grants, we assumed share price volatility of 46.47 % and a risk-free rate of return of 4.27 %.

A summary of RSU and PSU award activity for the year ended December 31, 2024 is presented below:

RSUs Weighted-Average Grant Date Fair Value Number of PSUs Weighted-Average Grant Date Fair Value

Outstanding as of December 31, 2023 (1)

2,609,449 $ 35.15 1,218,528 $ 42.75

Granted 217,096 117.94 229,978 117.81

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Outstanding as of December 31, 2024 (1)

846,678 $ 58.10 1,404,436 $ 54.77

(1) With respect to our PSUs, the outstanding balance reflects the number of shares to be issued based on the performance target.

The actual number of shares ultimately issued will generally be reflected within the table upon vesting and depends on the final performance achieved, generally ranging from 0 % to 200 % of target.

The weighted-average grant date fair value of RSUs granted during the years 2024, 2023 and 2022 was $ 117.94 , $ 38.65 and $ 39.07 , respectively.

The weighted-average grant date fair value of PSUs granted during the years 2024, 2023 and 2022 was $ 117.81 , $ 44.07 and $ 57.67 , respectively.

The total fair value of RSUs that vested during 2024, 2023 and 2022 was $ 244 million, $ 23 million and $ 46 million, respectively.

All of the outstanding RSUs as of December 31, 2024 vest subject to service conditions.

The total fair value of PRSUs that vested during 2023, 2022 and 2021 was $ 27 million, $ 8 million and $ 2 million, respectively.

Of the outstanding PRSUs as of December 31, 2023, 193,702 vest subject to service and performance conditions, 886,462 vest subject to service and a combination of market and performance conditions and 138,364 vest subject to service and market conditions.

As of December 31, 2023, unrecognized compensation cost related to non-vested RSUs and PRSUs of $ 92 million is anticipated to be recognized over a weighted-average period of approximately 2.03 years.

The total fair value of PSUs that vested during 2024, 2023 and 2022 was $ 3 million, $ 27 million and $ 8 million, respectively.

Of the outstanding PSUs as of December 31, 2024, 163,222 vest subject to service and performance conditions, 1,102,850 vest subject to service and a combination of market and performance conditions and 138,364 vest subject to service and market conditions.

As of December 31, 2024, unrecognized compensation cost related to non-vested RSUs and PSUs of $ 82 million is anticipated to be recognized over a weighted-average period of approximately 1.94 years.

Employee Stock Purchase Plan

During the first quarter of 2023, the Compensation and Human Capital Committee of the Board of Directors approved the suspension of our previous employee stock purchase plan, effective after the completion of the March 2023 offering period.

There was no stock-based compensation expense recognized under this plan as it was non-compensatory.

During 2024, the Compensation and Human Capital Committee of the Board of Directors approved the reinstatement of our employee stock purchase plan, with the first offering period commencing on December 1, 2024.

Our current employee stock purchase plan offers eligible employees, excluding our executive officers and directors, the right to purchase our common stock using up to 10 % of each employee’s compensation.

Shares are purchased at 10 % below fair market value on the last trading day of each six-month offering period.

The plan authorized the purchase of up to five million shares of our common stock, which is incremental to the shares authorized under the 2016 incentive plan as discussed above.

The plan will terminate in October 2027, unless terminated earlier by our Board of Directors.

We recognize stock-based compensation expense related to the plan over the offering period as the plan is compensatory.

The amount recognized during 2024 was not material.

At December 31, 2024, approximately four million shares of our common stock were available for purchase under the plan.

Income (loss) from continuing operations before taxes related to our U.S.

9 unchanged sentences

Federal $ 8 $ 25 $ ( 17 )

State 6 2 ( 1 )

Foreign 15 6 9

1 unchanged sentence

Federal $ 56 $ 38 $ 80

State 3 5 ( 7 )

Foreign ( 6 ) ( 10 ) ( 5 )

1 unchanged sentence

Total income tax provision $ 86 $ 68 $ 74

During the second quarter of 2024, the Company executed a legal entity reorganization in our European Transportation business that resulted in a one-time tax benefit of $ 41 million in 2024.

The effective tax rate reconciliations were as follows:

7 unchanged sentences

Contribution- and margin-based taxes 0.4 0.8 1.6

Losses for which no tax benefit can be recognized 1.8 — —

Changes in uncertain tax positions 0.1 ( 1.1 ) ( 0.1 )

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Stock-based compensation ( 1.1 ) 0.1 ( 0.3 )

Long-term capital loss — — ( 42.4 )

Benefit from legal entity reorganization ( 8.6 ) — —

Non-deductible goodwill impairment charge — — 5.2

( 0.6 ) 0.3 ( 5.0 )

Other ( 0.6 ) ( 0.6 ) 0.3

Effective tax rate 18.1 % 26.0 % 28.6 %

(1) Foreign operations include the net impact of changes to valuation allowances, the cost of inclusion of foreign income in the U.S.

(1) Foreign operations include the cost of inclusion of foreign income in the U.S.

net of foreign taxes, the impact of foreign tax rate differences from the U.S.

Federal rate and permanent items related to foreign operations.

(2) In the year ended December 31, 2021, the impact of “Other” on the effective tax rate was disproportionately high compared to 2022 and 2023 due to the low income from continuing operations before income tax provision in 2021.

For 2021, “Other” is primarily composed of ( 3.6 )% of U.S.

Federal tax credits and ( 1.8 )% of U.S.

Federal tax permanent adjustments.

Components of the Net Deferred Tax Asset or Liability

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Various times starting in 2025 (1)

Federal tax credit carryforwards Various times starting in 2033 — 1

State tax credit carryforward Various times starting in 2025 (1)

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We are subject to taxation in the United States and various state and foreign jurisdictions.

As of December 31, 2023, we have no tax years under examination by the IRS.

As of December 31, 2024, we have one tax year under examination by the IRS.

We have various U.S.

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(In millions, except per share data) 2024 2023 2022

Net income from continuing operations attributable to common shares $ 192 $ 184 $ 96

Net income (loss) from discontinued operations attributable to common

( 3 ) 482 240

Net income attributable to common shares, basic $ 189 $ 666 $ 336

Net income from continuing operations $ 387 $ 192 $ 184

Net income (loss) from discontinued operations — ( 3 ) 482

Net income $ 387 $ 189 $ 666

Basic weighted-average common shares 116 116 115

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We are involved, and expect to continue to be involved, in numerous proceedings arising out of the conduct of our business.

These proceedings may include claims for property damage or personal injury incurred in connection with the transportation of freight, environmental liability, commercial disputes, insurance coverage disputes and employment-related claims, including claims involving asserted breaches of employee restrictive covenants.

These proceedings may include claims for property damage or personal injury incurred in connection with the transportation of freight, cargo damage or loss, environmental liability, commercial disputes, insurance coverage disputes and employment-related claims, including claims involving asserted breaches of employee restrictive covenants.

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.

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

The determination as to whether a loss can reasonably be considered to be possible or probable is based on our assessment, together with legal counsel, regarding the ultimate outcome of the matter.

The determination as to whether a loss can be considered reasonably possible or probable is based on our assessment, together with legal counsel, regarding the ultimate outcome of the matter.

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

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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.

The trial on the pollution exclusion issue took place in October 2024 where the jury issued a favorable verdict for the Company, finding that the pollution exclusion applied to the General policy over several years for which Allianz seeks contribution.

The trial on allocation of defense and indemnity costs among the applicable insurance policies is to take place in early 2025.

We have accrued an immaterial amount for the potential exposure associated with ultimate allocation to the relevant policies;

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In August 2022, the Company received a letter from the San Bernardino County District Attorney’s Office (the “County”), 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.

The Company has met with the County attorneys and the Los Angeles City Attorney on multiple occasions.

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 and negotiate potential monetary sanctions or settlement amount.

We have accrued an immaterial amount for the potential exposure associated with this matter.

Quarterly Financial Data (Unaudited)

Our unaudited results of operations for each of the quarters in the years ended December 31, 2023 and 2022 are summarized below:

(In millions, except per share data) First

Quarter Second Quarter Third Quarter Fourth Quarter

Revenue $ 1,907 $ 1,917 $ 1,980 $ 1,940

Operating income 58 107 154 119

Income from continuing operations 17 31 86 58

Income (loss) from discontinued operations, net of taxes ( 3 ) 2 ( 2 ) —

Net income 14 33 84 58

Net income (loss) attributable to common shareholders:

Continuing operations 17 31 86 58

Discontinued operations ( 3 ) 2 ( 2 ) —

Net income attributable to common shareholders 14 33 84 58

Basic earnings (loss) per share:

Continuing operations 0.15 0.27 0.74 0.50

Discontinued operations ( 0.02 ) 0.01 ( 0.01 ) —

Basic earnings per share attributable to common

0.13 0.28 0.73 0.50

Diluted earnings (loss) per share:

Continuing operations 0.15 0.27 0.72 0.49

Discontinued operations ( 0.02 ) 0.01 ( 0.01 ) —

Diluted earnings per share attributable to common

0.13 0.28 0.71 0.49

(1) The sum of the quarterly earnings (loss) per share may not equal year-to-date amounts due to differences in the weighted-average number of shares outstanding during the respective periods.

(In millions, except per share data) First

Second Quarter Third Quarter Fourth Quarter (3)

Revenue $ 1,894 $ 2,047 $ 1,946 $ 1,831

Operating income 63 171 139 4

Income (loss) from continuing operations 32 96 92 ( 36 )

Income (loss) from discontinued operations, net of taxes 456 45 39 ( 58 )

Net income (loss) 488 141 131 ( 94 )

Net income (loss) attributable to common shareholders:

Continuing operations 32 96 92 ( 36 )

Discontinued operations 456 45 39 ( 58 )

Net income (loss) attributable to common shareholders 488 141 131 ( 94 )

Basic earnings (loss) per share:

Continuing operations 0.28 0.83 0.80 ( 0.31 )

Discontinued operations 3.97 0.40 0.34 ( 0.50 )

Basic earnings (loss) per share attributable to common

4.25 1.23 1.14 ( 0.81 )

Diluted earnings (loss) per share:

Continuing operations 0.28 0.83 0.79 ( 0.31 )

Discontinued operations 3.94 0.39 0.34 ( 0.50 )

Diluted earnings (loss) per share attributable to common

4.22 1.22 1.13 ( 0.81 )

(1) The sum of the quarterly earnings (loss) per share may not equal year-to-date amounts due to differences in the weighted-average number of shares outstanding during the respective periods.

(2) Income from discontinued operations, net of tax during the first quarter of 2022 included the gain on the sale of our intermodal business of approximately $ 372 million.

(3) The fourth quarter of 2022 included a goodwill impairment charge of $ 64 million, transaction and integration costs of $ 42 million and restructuring costs of $ 35 million.

Following meetings between the Company and County attorneys and the Los Angeles City Attorney and an assessment of the allegations and the underlying facts, the Company engaged in negotiations with the County and Los Angeles City Attorneys to address settlement of the alleged violations.

The Company previously accrued for this matter, and it was resolved for $ 7.9 million in April 2024.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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What changed 10-K

Item 8. Financial Statements and Supplementary Data