What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-02-05 compared with 2025-02-07 · 199 added, 250 removed, 1056 unchanged (30% of the section changed)

94 unchanged sentences

300 shares authorized;

117 and 116 shares issued and

117 shares issued and

outstanding as of December 31, 2025 and 2024, respectively

17 unchanged sentences

Depreciation and amortization expense 521 490 432

Goodwill impairment — — 64

Litigation matter — 8 —

Pre-Con-way acquisition environmental matter 35 — —

Legal matters ( 13 ) — 8

Transaction and integration costs 8 53 58

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Income from continuing operations 316 387 192

Income (loss) from discontinued operations, net of taxes — ( 3 ) 482

Loss from discontinued operations, net of taxes — — ( 3 )

Net income $ 316 $ 387 $ 189

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Basic earnings per share from continuing operations $ 2.69 $ 3.33 $ 1.66

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

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

Basic earnings per share $ 2.69 $ 3.33 $ 1.64

Diluted earnings per share from continuing operations $ 2.64 $ 3.23 $ 1.62

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

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

Diluted earnings per share $ 2.64 $ 3.23 $ 1.60

23 unchanged sentences

Net income $ 316 $ 387 $ 189

Income (loss) from discontinued operations, net of taxes — ( 3 ) 482

Loss from discontinued operations, net of taxes — — ( 3 )

Income from continuing operations 316 387 192

2 unchanged sentences

Depreciation and amortization 521 490 432

Goodwill impairment — — 64

Stock compensation expense 77 87 78

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Repurchase of debt ( 115 ) — ( 2,117 )

Proceeds from borrowings on ABL facility — — 275

Repayment of borrowings on ABL facility — — ( 275 )

Repayment of debt and finance leases ( 73 ) ( 82 ) ( 71 )

Payment of debt issuance costs ( 3 ) ( 4 ) ( 27 )

Repurchase of common stock ( 125 ) — —

Change in bank overdrafts 23 ( 9 ) 34

Payment for tax withholdings for restricted shares ( 50 ) ( 129 ) ( 19 )

Distribution from RXO spin, net — — 312

Other 4 ( 1 ) ( 1 )

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Financing activities of discontinued operations — — —

Net cash provided by (used in) discontinued operations — ( 9 ) 656

Net cash used in discontinued operations — — ( 9 )

Effect of exchange rates on cash, cash equivalents and restricted cash ( 1 ) — 5

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Cash paid for interest 229 223 185

Cash paid for income taxes 90 34 87

Amounts may not add due to rounding.

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Net income — — — 189 — 189

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

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

Other comprehensive income — — — — 5 5

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

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Net income — — — 387 — 387

Other comprehensive income — — — — 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

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

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Net income — — — 316 — 316

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

Other comprehensive income — — — — 59 59

Exercise and vesting of stock compensation awards 734 — — — — —

Tax withholdings related to vesting of stock compensation awards — — ( 70 ) — — ( 70 )

Retirement of common stock ( 954 ) — ( 125 ) — — ( 125 )

Stock compensation expense — — 77 — — 77

Other — — 4 — — 4

Balance as of December 31, 2025 116,954 $ — $ 1,160 $ 888 $ ( 187 ) $ 1,861

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Years Ended December 31, 2025, 2024 and 2023

Description of Business and Basis of Presentation

Nature of Operations

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

Strategic Developments

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 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.

Basis of Presentation and Significant Accounting Policies

Basis of Presentation

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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.

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As of December 31, 2025, 2024 and 2023, our restricted cash included in Other long-term assets on our Consolidated Balance Sheets was $ 20 million, $ 53 million and $ 7 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.

Our restricted cash balance as of December 31, 2024 included approximately $ 47 million of proceeds received from the sale of a service center in our North American LTL segment in December 2024 that was used to purchase four new service centers in January 2025 that were previously leased.

Accounts Receivable and Allowance for Credit Losses

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In determining the allowance for credit losses, we consider historical collection experience, the age of the accounts receivable balances, the credit quality and risk of our customers, any specific customer collection issues, current economic conditions, and other factors that may impact our customers’ ability to pay.

We also consider reasonable and supportable forecasts of future economic conditions and their expected impact on customer collections in determining our allowance for credit losses.

We write off accounts receivable balances once the receivables are no longer deemed collectible.

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Under the trade receivables securitization program, a wholly-owned bankruptcy-remote special purpose entity of XPO sells trade receivables that originate with wholly-owned subsidiaries to unaffiliated entities.

The program expires in July 2026 and contains financial covenants customary for this type of arrangement, including maintaining a defined average days sales outstanding ratio.

The program contains financial covenants customary for this type of arrangement, including maintaining a defined average days sales outstanding ratio.

In January 2026, the program was amended to extend the maturity date through March 2029.

We account for transfers under our securitization and factoring arrangements as sales because we sell full title and ownership in the underlying receivables and control of the receivables is considered transferred.

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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 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.

The transaction was accounted for as an asset acquisition, with the assets recorded at cost.

The Consolidated Statements of Cash Flows for the year ended December 31, 2023 reflects an $ 878 million investing cash outflow for this transaction.

Maintenance and repair expenditures are charged to expense as incurred.

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As most of our leases do not provide an implicit rate, we use incremental borrowing rates based on the information available at commencement date to determine the present value of future lease payments.

This rate is determined from a hypothetical yield curve that takes into consideration market yield levels of our relevant debt outstanding as well as the index that matches our credit rating, and then adjusts as if the borrowings were collateralized.

This rate is determined from a hypothetical yield curve that takes into consideration market yield levels of our relevant debt outstanding as well as the corresponding index that matches our credit rating, and then adjusts as if the borrowings were collateralized.

We include options to extend or terminate a lease in the lease term when we are reasonably certain to exercise such options.

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For each subsequent period, the liability is increased for accretion expense and the capitalized cost is depreciated over the useful life of the related asset.

In connection with the Yellow Asset Acquisition, in December 2023, we recognized $ 6 million of Asset Retirement Obligations.

We measure goodwill as the excess of consideration transferred over the fair value of net assets acquired in business combinations.

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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 2025 annual goodwill assessment, we performed a step-zero qualitative analysis for four 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 reporting unit, we performed a quantitative analysis using a combination of income and market approaches.

The fair value of the reporting unit exceeded its carrying value, resulting in no impairment of goodwill.

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

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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 no t 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.

However, in the fourth quarter of 2022 and in connection with the RXO spin-off, we performed additional impairment tests because the number of our reporting units increased from three to five to reflect our new internal organization.

Specifically, while our European Transportation business was previously considered a single reporting unit, after the spin-off of RXO, it was determined that the European Transportation business was comprised of four reporting units.

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 in the fourth quarter of 2022 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.

We use our internal forecasts to estimate future cash flows and include an estimate of long-term future growth rates based on our most recent views of the long-term outlook for our business.

The market approach of determining fair value is based on comparable market multiples for companies engaged in similar businesses, as well as recent transactions within our industry.

The market approach of determining fair value is generally based on comparable market multiples for companies engaged in similar businesses, as well as recent transactions within our industry.

Intangible Assets

Our intangible assets subject to amortization consist primarily of customer relationships and favorable leases.

In connection with the Yellow Asset Acquisition, the assumed leases contained favorable terms compared to market terms for similar leases and, as result, we recognized a $ 65 million favorable lease intangible asset in December 2023.

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.

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We use a combination of self-insurance programs and purchased insurance to provide for the costs of medical, casualty, liability, vehicular, cargo, workers’ compensation, cyber risk and property claims.

We periodically evaluate our level of insurance coverage and adjust our insurance levels based on risk tolerance and premium expense.

Liabilities for the risks we retain, including estimates of claims incurred but not reported, are not discounted and are estimated, in part, by considering historical cost experience, demographic and severity factors, and judgments about current and expected levels of cost per claim and retention levels.

We periodically evaluate our level of insurance coverage and adjust our insurance levels based on risk tolerance, premium expense, and insurance availability.

current and expected levels of cost per claim and retention levels.

Changes in these assumptions and factors can impact actual costs paid to settle the claims and those amounts may be different than our estimates.

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Stockholders’ Equity

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

Shares purchased under our share repurchase program are retired upon settlement.

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

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As of December 31, 2024 ( 107 ) — ( 139 ) ( 246 )

Other comprehensive income (loss) ( 7 ) 3 ( 16 ) ( 20 )

Other comprehensive income 49 1 18 68

Amounts reclassified from AOCI ( 10 ) ( 2 ) 3 ( 9 )

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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.

As of December 31, 2025 and 2024, our income tax receivable included in Other current assets on our Consolidated Balance Sheets was $ 53 million and $ 77 million, respectively.

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

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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.

We have no equity investments as of December 31, 2025, and, 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, while there was no material gain on equity investments in 2025.

For information on the fair value hierarchy of our derivative instruments, financial liabilities and defined benefit pension plan assets, see Note 10—Derivative Instruments, Note 11—Debt and Note 12—Employee Benefit Plans, respectively.

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Our accounting treatment for changes in the fair value of derivative instruments depends on whether the instruments have been designated and qualify as part of a hedging relationship and on the type of hedging relationship.

For those derivative instruments that are designated and qualify as hedging instruments, we must designate the derivative based on the exposure being hedged and assess, both at the hedge’s inception and on an ongoing basis, whether the designated derivative instruments are highly effective in offsetting changes in earnings and cash flows of the hedged items.

For those derivative instruments that are designated and qualify as hedging instruments, we must designate the derivative

based on the exposure being hedged and assess, both at the hedge’s inception and on an ongoing basis, whether the designated derivative instruments are highly effective in offsetting changes in earnings and cash flows of the hedged items.

When a derivative instrument is determined not to be highly effective as a hedge or the underlying hedged transaction is no longer probable, hedge accounting is discontinued prospectively.

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Gains and losses on cash flow hedges and net investment hedges representing hedge components excluded from the assessment of effectiveness will be amortized into Interest expense on our Consolidated Statements of Income in a systematic manner.

Derivatives that are not designated as hedging instruments are adjusted to fair value through earnings and are recorded in Other income on our Consolidated Statements of Income.

Defined Benefit Pension Plans

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Adoption of New Accounting Standard

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.

In July 2025, the FASB issued ASU 2025-05, “Financial Instruments – Credit Losses (Topic 326).” In developing forecasts as part of estimating expected credit losses, the ASU allows entities to elect a practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset.

We early adopted this standard in the fourth quarter of 2025, and it did not have a material impact on our financial statements.

In December 2023, the Financial Accounting Standards Board (“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.

We adopted this standard on a

retrospective basis for the 2025 annual period.

The impact is limited to financial statement disclosures.

See Note 4—Segment Reporting and Geographic Information.

See Note 15 —Income Taxes.

Accounting Pronouncements Issued but Not Yet Effective

In December 2025, the FASB issued ASU 2025-10, “Government Grants (Topic 832) – Accounting for Government Grants Received by Business Entities.” This ASU provides recognition, measurement and presentation guidance for government grants received by business entities and is effective for annual and interim periods beginning in 2029.

Early adoption is permitted.

We are currently evaluating the impact of the new standard.

In September 2025, the FASB issued ASU 2025-06, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40).” The ASU updates the guidance on accounting for internal-use software costs by (i) removing all references to software development stages, and (ii) requiring that an entity capitalize software costs when both management has authorized and committed to funding the software project, and it is probable that the project will be completed and the software will be used to perform the function intended.

This ASU is effective for annual and interim periods beginning in 2028.

Early adoption is permitted.

We are currently evaluating the impact of the new standard.

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.

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

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 and our intermodal operation are presented as discontinued operations.

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

Years Ended December 31,

(In millions) 2022

Revenue $ 4,403

Salaries, wages and employee benefits 503

Purchased transportation 3,216

Fuel, operating expenses and supplies 296

Operating taxes and licenses 3

Insurance and claims 19

Depreciation and amortization expense 67

Gain on sale of business ( 430 )

Transaction and other operating costs 125

Operating income 604

Other income ( 2 )

Income from discontinued operations before income tax provision 606

Income tax provision 124

Net income from discontinued operations, net of taxes $ 482

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

The pre-tax gain on the sale was $ 430 million, net of transaction costs and working capital adjustment.

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.

For further information, see Note 12—Debt.

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.

Segment Reporting and Geographic Information

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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, warehousing and multimodal solutions, such as road-rail and road-short sea combinations.

We offer dedicated truckload, LTL, full truckload brokerage, warehousing, managed transportation, last mile, freight forwarding, and multimodal solutions.

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.

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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 provision, depreciation and amortization expense, goodwill impairment charges, litigation matters, transaction and integration costs, restructuring costs and other adjustments.

Our CODM evaluates segment profit (loss) based on adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”), which we define as income from continuing operations before debt extinguishment loss, interest expense, income tax provision, depreciation and amortization expense, legal 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.

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Insurance and claims 80 51 3 134

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

Pension income ( 17 ) — — ( 17 )

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

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

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

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Insurance and claims 102 59 6 167

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

Pension income ( 59 ) — — ( 59 )

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

Pension (income) expense ( 17 ) — — ( 17 )

Other (income) expense ( 2 ) 2 1 1

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Depreciation and amortization expense 521 490 432

Goodwill impairment (1)

Litigation matter — 8 —

Pre-Con-way acquisition environmental matter (1)

Legal matters (2)

Transaction and integration costs 8 53 58

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Income from continuing operations $ 316 $ 387 $ 192

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

(1) Relates to environmental and product liability claims involving a former subsidiary of Con-way, which was sold prior to XPO's acquisition of Con-way in 2015.

(2) In 2025, reflects the settlement of claims against certain truck manufacturers related to purchases by our European Transportation segment covering periods prior to our acquisition of Norbert Dentressangle SA in 2015.

For 2023, see Note 17— Commitments and Contingencies for further information on the California Environmental Matters.

The following table presents depreciation and amortization expense by segment:

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Restructuring Charges

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

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

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

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

Our restructuring-related activity was as follows:

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Total $ 5 $ 35 $ ( 28 ) $ ( 1 ) $ 11

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.

In addition to the severance charges noted in the table above, we recorded restructuring-related charges in our North American LTL segment, European Transportation segment and Corporate of $ 1 million, $ 6 million and $ 16 million, respectively, during 2025, which are primarily non-cash.

We expect that the majority of the cash outlays related to the severance charges incurred in 2025 will be completed within 12 months.

Year Ended December 31, 2024

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Total $ 11 $ 21 $ ( 27 ) $ — $ 5

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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Depreciation of property and equipment and amortization of computer software was $ 467 million, $ 432 million and $ 376 million for the years ended December 31, 2025, 2024 and 2023, respectively.

In connection with the Yellow Asset Acquisition, in December 2023, we recognized approximately $ 850 million of Land and Buildings and leasehold improvements, including amounts related to assumed finance leases.

Most of our leases are real estate leases.

In addition, we lease trucks, trailers and material handling equipment.

The components of our lease expense and gain realized on sale-leaseback transactions were as follows:

The components of our lease expense were as follows:

Years Ended December 31,

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Total lease cost $ 356 $ 354 $ 338

Gain recognized on sale-leaseback transactions (1)

(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.

Supplemental balance sheet information related to leases was as follows:

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3.88 % 3.69 %

In connection with the Yellow Asset Acquisition, in December 2023, we recognized $ 23 million of Property and equipment, net and Long-term debt for finance leases assumed and $ 3 million of Operating lease assets and Operating lease liabilities for operating leases assumed.

Supplemental cash flow information related to leases was as follows:

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These operating leases will commence in 2026 with initial lease terms of 4 years to 15 years.

(In millions) North American LTL European Transportation Total

(In millions) North American LTL European Transportation (1)

Goodwill as of December 31, 2023 $ 726 $ 772 $ 1,498

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Goodwill as of December 31, 2025 $ 726 $ 820 $ 1,547

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.

(1) European Transportation goodwill balances presented above are net of $ 64 million accumulated impairment losses.

As described in Note 2—Significant Accounting Policies, we recorded no impairment losses in 2025, 2024 and 2023.

Intangible Assets

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Total $ 891 $ 580 $ 860 $ 499

In connection with the Yellow Asset Acquisition, in December 2023, we recognized $ 65 million of Favorable leases.

For further information, see Note 2—Basis of Presentation and Significant Accounting Policies.

We did no t recognize any impairment of our identified intangible assets in 2025, 2024 and 2023.

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Derivatives designated as hedges

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

Cross-currency swap agreements $ 284 Other current assets $ — Other current liabilities $ ( 32 )

Cross-currency swap agreements 369 Other long-term liabilities — Other long-term liabilities ( 44 )

Interest rate swaps 550 Other current assets — Other current liabilities ( 2 )

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Derivatives designated as hedges

Cross-currency swap agreements $ 652 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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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 Consolidated Statements of Cash Flows.

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

During 2023, we received approximately $ 2 million related to cross-currency swaps that were settled during the period.

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

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Interest Rate Hedging

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

We execute short-term interest rate swaps to mitigate variability in forecasted interest payments on our Refinancing Term Loan Facilities (defined below).

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

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

The outstanding interest rate 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.

Our outstanding interest rate swaps mature in the fourth quarter of 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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December 31, 2024 3,541 2,223 1,318

We valued Level 1 debt using quoted prices in active markets.

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

We valued Level 1 debt using quoted prices in active markets and Level 2 debt using bid evaluation pricing models.

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

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Principal payments on debt $ — $ — $ 1,415 $ — $ — $ 1,735

In 2015, we entered into the ABL Facility which provided commitments of up to $ 1.0 billion with a maturity date of October 30, 2020.

This facility was subsequently amended to adjust the amount of the commitment and to extend the maturity date to April 30, 2024.

In connection with the spin-off of RXO, effective November 4, 2022, the commitments under the facility were reduced from $ 1.0 billion to $ 600 million.

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

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.

Our borrowing base includes a fixed percentage of:

(i) our eligible U.S.

and Canadian accounts receivable;

plus (ii) any of our eligible U.S.

and Canadian rolling stock and equipment.

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

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.

Our loans under the ABL Facility bear interest at a rate equal to:

SOFR or base rate plus (i) an applicable margin of 1.25 % to 1.50 % for SOFR loans or (ii) 0.25 % to 0.50 %, for base rate loans.

The ABL Facility is secured on a first lien basis by the assets of the credit parties as priority collateral and on a second lien basis by certain other assets.

The priority collateral consists primarily of our U.S.

and Canadian accounts receivable and any of our U.S.

and Canadian rolling stock and equipment included in our borrowing base.

The ABL Facility contains representations and warranties, affirmative and negative covenants, and events of default customary for agreements of this nature.

The covenants in the ABL Facility can limit our ability to incur indebtedness;

engage in certain mergers, consolidations, acquisitions and dispositions;

make certain investments and restricted payments;

and enter into certain transactions with affiliates.

We may also be required to maintain a Fixed Charge Coverage Ratio (as defined in the ABL Facility) of not less than 1.00 if availability under the ABL Facility is below certain thresholds.

As of December 31, 2024, we were compliant with this financial covenant.

Revolving Credit Facility

In February 2025, we terminated our Second Amended and Restated Revolving Credit Agreement, as amended (the “ABL Facility”), and entered into a Revolving Credit Agreement (the “Revolving Credit Agreement”).

The Revolving Credit Agreement provides for revolving credit commitments in an aggregate amount of $ 600 million (the “Revolving Credit Facility”), of which $ 200 million is available for issuances of letters of credit.

The maturity date of the Revolving Credit Facility is April 30, 2030.

As of December 31, 2025, we have approximately $ 600 million available to draw under our Revolving Credit Facility, after considering outstanding letters of credit of less than $ 1 million.

Our borrowings under the Revolving Credit Facility bear interest at a rate equal to:

(a) for loans denominated in U.S.

Dollars, Term Secured Overnight Financing Rate (“SOFR”) or the Base Rate and (b) for loans denominated in Canadian Dollars, Term Canadian Overnight Repo Rate (“CORRA”) or the Canadian base rate plus (i) in the case of base rate loans, an applicable rate ranging from 0.25 % to 1.00 % or, (ii) in the case of Term SOFR or Term CORRA loans, an applicable rate ranging from 1.25 % to 2.00 %, which is determined based on our Consolidated Total Net Leverage Ratio (as defined in the Revolving Credit Agreement).

In addition, we are required to pay an unused commitment fee of between 0.20 % and 0.30 % on the undrawn commitments under the Revolving Credit Facility, determined based on our Consolidated Total Net Leverage Ratio.

The Revolving Credit Facility is secured by a lien on substantially all of our assets and the assets of our guarantors, with certain exceptions, and contains representations and warranties, affirmative and negative covenants, and events of default customary for agreements of this nature.

Security interests and certain covenants under the Revolving Credit Agreement will release, terminate or be amended upon, among other things, the Company’s achievement of investment grade ratings from at least two rating agencies.

As of December 31, 2025, we were in compliance with the Revolving Credit Facility’s financial covenants.

Letters of Credit Facility

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Term Loan Facility

In 2015, we entered into a Term Loan Credit Agreement that provided for a single borrowing of $ 1.6 billion, which was subsequently amended to increase the principal balance to $ 2.0 billion and to extend the maturity date to February 2025 (the “Existing Term Loan Facility”).

In May 2023, we amended the Term Loan Credit Agreement to obtain $ 700 million of new term loans (the “New Term Loan Facility”) having substantially similar terms as the Existing Term Loan Facility, except with respect to maturity date, issue price, interest rate, prepayment premiums in connection with certain voluntary prepayments and certain other provisions.

The New Term Loan Facility was issued at 99.5 % of the face amount and will mature on May 24, 2028.

In the same period, we used net proceeds from the New Term Loan Facility, the Senior Secured Notes due 2028 and the Senior Notes due 2031, as described below, together with cash on hand, to repay $ 2.0 billion of outstanding principal under the Existing Term Loan Facility, which was scheduled to mature in 2025, and to pay related fees, expenses and accrued interest.

We recorded a debt extinguishment loss of $ 23 million in 2023 due to this repayment.

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 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.

In February 2025, we amended our Senior Secured Term Loan Credit Agreement (“Amended Term Loan Credit Agreement”).

Pursuant to the amendment, the lenders provided the company (a) a term loan B facility in an aggregate principal amount of $ 700 million, maturing on May 24, 2028 (the “Refinancing Term Loan B-2 Facility”), and (b) a term loan B facility in an aggregate principal amount of $ 400 million, maturing on February 1, 2031 (the “Refinancing Term Loan B-3 Facility” and together with the Refinancing Term Loan B-2 Facility, the “Refinancing Term Loan Facilities”).

The proceeds of the Refinancing Term Loan Facilities were used to refinance our existing term loans.

We recorded a debt extinguishment loss of $ 5 million in the first quarter of 2025 due to this refinancing.

In the second half of 2025, we used cash on hand to repay $ 115 million of outstanding principal under the Refinancing Term Loan B-2 Facility, which was scheduled to mature in 2028.

The Refinancing Term Loan Facilities bear interest at a rate per annum equal to, at the Company’s option, either alternate base rate (“ABR”) or Term SOFR plus (i) in the case of ABR Loans, 0.75 % or, (ii) in the case of Term SOFR Loans, 1.75 %, which shall be reduced by 0.25 % upon the achievement of a Consolidated First Lien Net Leverage Ratio (as defined in the Amended Term Loan Credit Agreement) of less than or equal to 1.21 to 1.00.

The Refinancing Term Loan Facilities are secured by a lien on substantially all of our assets and the assets of our guarantors, with certain exceptions.

The Amended Term Loan Credit Agreement contains customary mandatory prepayment requirements, representations and warranties, events of default, reporting and other affirmative covenants and negative covenants, including limitations on indebtedness, liens, investments, dividends, repayments of junior financings and asset sales, in each case subject to a number of important exceptions and qualifications.

The weighted average interest rate of our term loans was approximately 5.4 % as of December 31, 2025.

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.

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 %.

If our Consolidated Secured Net Leverage Ratio for the fiscal year was less than or equal to 2.50 :1.00, the Excess Cash Flow percentage will be 0 %.

The remaining principal is due at maturity.

As of December 31, 2024, our Consolidated Secured Net Leverage Ratio was less than 2.50 :1.00, and no excess cash payment was required.

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, and commenced August 1, 2024.

Interest is payable semi-annually in cash in arrears.

These notes were issued at par.

In the same period, we used net proceeds from the Incremental Term Loans and the Senior Notes due 2032, together with cash on hand, to finance the Yellow Asset Acquisition, to repay in full the $ 112 million aggregate principal amount outstanding of our 6.25 % Senior Notes due 2025 (the “Senior Notes due 2025”), and to pay related fees, expenses and accrued interest.

The redemption price for the Senior Notes due 2025 was 101.563 % of the principal amount plus accrued and unpaid interest.

We recorded a debt extinguishment loss of $ 2 million due to this redemption.

In May 2023, we completed private placements of $ 830 million aggregate principal amount of senior secured notes due 2028 (the “Senior Secured Notes due 2028”) and $ 450 million aggregate principal amount of senior notes due 2031 (the “Senior Notes due 2031”).

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The Senior Notes due 2031 mature on June 1, 2031 and bear interest at a rate of 7.125 % per annum.

Interest is payable semi-annually in cash in arrears and commenced December 1, 2023.

These notes were issued at par and were used to repay our Existing Term Loan Facility as described above.

In November 2022, we repurchased $ 408 million of the then $ 520 million outstanding Senior Notes due 2025 in a cash tender offer.

Holders of the Senior Notes due 2025 received total consideration of $1,022.50 per $1,000.00 principal amount of notes tendered and accepted for purchase, plus accrued and unpaid interest.

We paid for the tender using cash received from RXO in connection with its spin-off.

We recorded a debt extinguishment loss of $ 13 million due to this repurchase in the fourth quarter of 2022.

In April 2022, we redeemed $ 630 million of the then $ 1.15 billion outstanding principal amount of the Senior Notes due 2025.

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

We paid for the redemption using available liquidity.

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

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).

Interest is payable semi-annually in cash in arrears.

These notes were issued at par.

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 Revolving Credit Facility or the Amended 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 Amended Term Loan Credit Agreement (subject to permitted liens and certain other exceptions).

All other senior notes and the guarantees thereof are unsecured, unsubordinated indebtedness for us and our guarantors.

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Projected benefit obligation at end of year $ 1,329 $ 1,338

The actuarial loss in 2025 was a result of assumption changes, including a decrease in the discount rate and other assumptions for plan participants.

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.

The reconciliation of the changes in the fair value of plan assets as of December 31 was as follows:

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Amounts recognized in Other comprehensive income (loss):

Actuarial loss $ 23 $ 32 $ 99

Actuarial loss (gain) $ ( 26 ) $ 23 $ 32

Prior-service cost — ( 3 ) —

Amortization of actuarial loss ( 3 ) ( 1 ) —

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

Loss (gain) recognized in Other comprehensive income (loss) $ ( 28 ) $ 19 $ 32

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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Cash and cash equivalents $ 28 $ — $ — $ 28 2.0 %

large companies — 56 — 56 4.0 %

small companies — 14 — 14 1.0 %

— 43 — 43 3.0 %

International — 31 — 31 2.2 %

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Share Repurchases

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

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

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

There were no share repurchases in 2024, 2023 or 2022.

Our remaining share repurchase authorization as of December 31, 2024 is $ 503 million.

In March 2025, our Board of Directors authorized repurchases of up to $ 750 million of our common stock.

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

We retire common shares that we repurchase upon settlement.

The new share repurchase program has no expiration date and may be utilized over time, with no obligation to repurchase any specific number of shares.

We may suspend or discontinue this program at any time.

This plan replaced our previous share repurchase plan, authorized in February 2019.

During 2025, we repurchased 954 thousand shares of common stock with an aggregate value of $ 125 million at an average price of $ 130.96 per share.

The share repurchases were funded by cash on hand.

There were no share

repurchases in 2024 and 2023.

As of December 31, 2025, our remaining share repurchase authorization was $ 625 million.

Stock-Based Compensation

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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.

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

As of December 31, 2025, approximately 2.6 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:

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

Years ended December 31,

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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.

Upon vesting, we generally withhold a portion of the shares of our common stock to satisfy the employee’s minimum tax withholdings.

Cash paid for tax withholdings is reflected in financing activities on our Consolidated Statements of Cash Flows.

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.

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Granted 236,149 114.31 284,825 120.38

Vested ( 1,914,623 ) 34.03 ( 26,069 ) 44.43

Net adjustment for performance condition achieved (2)

— — 205,823 33.74

( 491,100 ) 53.37 ( 730,651 ) 36.49

Forfeited and canceled ( 60,780 ) 73.94 ( 10,986 ) 100.63

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(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.

(2) Represents an adjustment in the number of PSUs granted based on the final performance achieved upon vesting, generally ranging from 0 % to 200 % of target.

(3) The number of RSUs and PSUs vested includes the portion withheld to satisfy employee tax withholdings.

The weighted-average grant date fair value of RSUs granted during the years 2025, 2024 and 2023 was $ 114.31 , $ 117.94 and $ 38.65 , respectively.

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The total fair value of PSUs that vested during 2025, 2024 and 2023 was $ 105 million, $ 3 million and $ 27 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.

Of the outstanding PSUs as of December 31, 2025, 107,468 vest subject to service and performance conditions, 907,615 vest subject to service and a combination of market or performance conditions and 138,364 vest subject to service and market conditions.

As of December 31, 2025, unrecognized compensation cost related to non-vested RSUs and PSUs of $ 70 million is anticipated to be recognized over a weighted-average period of approximately 1.82 years.

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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.

Compensation expense related to the plan was immaterial in 2025 and 2024.

At December 31, 2025 and 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.

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Total deferred income tax provision $ 99 $ 57 $ 31

Federal $ 96 $ 64 $ 63

State 14 13 9

Foreign 11 9 ( 4 )

Total income tax provision $ 121 $ 86 $ 68

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:

Years Ended December 31,

2024 2023 2022

federal statutory tax rate 21.0 % 21.0 % 21.0 %

State taxes, net of U.S.

federal benefit 2.7 1.6 1.8

Foreign operations (1)

(Dollars in millions) 2025 2024 2023

US federal statutory income tax rate $ 92 21.0 % $ 99 21.0 % $ 54 21.0 %

Domestic state and local taxes, net of federal effect (1)

11 2.5 11 2.3 7 2.7

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 )

Foreign Tax Effects

Changes in valuation allowances 4 1.0 7 1.4 1 0.2

Other 3 0.7 4 0.8 2 0.7

Changes in valuation allowances 8 1.8 — — — —

Other ( 2 ) ( 0.4 ) ( 2 ) ( 0.4 ) ( 1 ) ( 0.3 )

Other foreign jurisdictions 3 0.6 3 0.6 ( 1 ) ( 0.3 )

Effect of Cross-Border Tax Laws

Global intangible low-taxed income — — 9 1.8 — ( 0.1 )

Other 1 0.2 — — ( 2 ) ( 0.6 )

Nontaxable or Nondeductible Items

Non-deductible compensation 11 2.6 15 3.1 13 5.0

Provision to return adjustments ( 0.4 ) ( 0.3 ) ( 2.0 )

Effect of law changes — — 0.1

Other 1 0.1 — 0.1 1 0.2

Changes in Unrecognized Tax Benefits — — — 0.1 ( 3 ) ( 1.1 )

Foreign Tax Credits ( 6 ) ( 1.4 ) ( 3 ) ( 0.5 ) — —

Other ( 2 ) ( 0.5 ) ( 2 ) ( 0.3 ) ( 2 ) ( 0.7 )

Other Adjustments

Stock-based compensation ( 5 ) ( 1.1 ) ( 6 ) ( 1.2 ) — ( 0.2 )

Benefit from legal entity reorganization (2)

Non-deductible goodwill impairment charge — — 5.2

Other ( 0.6 ) ( 0.6 ) 0.3

— — ( 50 ) ( 10.5 ) — —

Other adjustments 2 0.5 — ( 0.1 ) ( 1 ) ( 0.6 )

Effective tax rate $ 121 27.8 % $ 86 18.1 % $ 68 26.0 %

(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.

(1) State taxes in California, Wisconsin, Massachusetts, Illinois, Michigan, and Georgia made up the majority (greater than 50%) of the tax effect in this category.

(2) 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 impact of this benefit is reflected in the table within Domestic state and local taxes ($ 3 million benefit), Foreign tax effects ($ 5 million expense), Effect of cross-border laws ($ 9 million expense), Tax credits ($ 2 million benefit), and Other adjustments ($ 50 million benefit).

As previously disclosed, we expect the legal entity reorganization in our European Transportation business to generate a net cash refund of approximately $ 45 million.

In 2024, we made tax payments of $ 7 million and in 2025 we received a cash refund of $ 49 million.

We expect to receive the remaining $ 3 million cash refund in 2026.

Components of the Net Deferred Tax Asset or Liability

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Accrued expenses 49 75

Pension and other retirement obligations — 6

Total deferred tax asset 156 132

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Property and equipment ( 454 ) ( 384 )

Pension and other retirement obligations ( 7 ) —

Other ( 31 ) ( 25 )

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Tax effect (before federal benefit) of state net operating

Various times starting in 2025 (1)

losses Various times starting in 2026 (1)

Federal tax credit carryforwards Various times starting in 2033 2 —

State tax credit carryforward Various times starting in 2026 (1)

Foreign net operating losses available to offset future

taxable income

Various times starting in 2025 (1)

taxable income Various times starting in 2026 (1)

(1) Some credits and losses have unlimited carryforward periods.

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We established a valuation allowance for some of our deferred tax assets as it is more likely than not that these assets will not be realized in the foreseeable future.

We concluded that the remaining deferred tax assets will more likely than not be realized, though this is not assured, and as such no valuation allowance has been provided on these assets.

We concluded that the remaining deferred tax assets will more

likely than not be realized, though this is not assured, and as such no valuation allowance has been provided on these assets.

The balances and activity related to our valuation allowance were as follows:

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Additions for tax positions of prior years — — 2

Reductions for tax positions of prior years — — ( 1 )

Settlements with tax authorities — ( 1 ) —

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the effective income tax rate as of the end of the year $ 6 $ 5 $ 6

We could reflect a reduction to unrecognized tax benefits of up to $ 1 million over the next 12 months due to the statute of limitations lapsing on positions or because tax positions are sustained on audit.

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

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

As of December 31, 2025, we have three tax years under examination by the IRS.

We have various U.S.

3 unchanged sentences

returns after 2016 are open under relevant statutes of limitations and are subject to audit.

Cash Paid (Received) for Income Taxes

Cash paid (received) for income taxes is comprised of the following:

Years Ended December 31,

(In millions) 2025 2024 2023

Federal $ ( 28 ) $ 65 $ 21

State and Local 9 13 4

United Kingdom 5 6 3

Total Foreign 15 12 10

Total cash paid (received) for income taxes, net of refunds $ ( 4 ) $ 90 $ 34

*Jurisdiction below the threshold for separate disclosure for the period presented.

Cash paid (received) included in Other.

In July 2025, the One Big Beautiful Bill Act was signed into law.

The legislation includes modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions including 100% bonus depreciation for qualified property placed in service after January 19, 2025, immediate expensing of domestic research and experimental costs, and business interest expense limitations.

We recognized the effects of the legislation in 2025 for the provisions currently enacted, which increased our deferred tax liability and reduced our federal income tax liability and related tax payments for 2025.

We anticipate similar impacts in future years with no significant impact on our annual effective tax rate.

Earnings (Loss) Per Share

6 unchanged sentences

Net income from continuing operations $ 316 $ 387 $ 192

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

Net loss from discontinued operations — — ( 3 )

Net income $ 316 $ 387 $ 189

3 unchanged sentences

Basic earnings from continuing operations per share $ 2.69 $ 3.33 $ 1.66

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

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

Basic earnings per share $ 2.69 $ 3.33 $ 1.64

Diluted earnings from continuing operations per share $ 2.64 $ 3.23 $ 1.62

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

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

Diluted earnings per share $ 2.64 $ 3.23 $ 1.60

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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, as appropriate, accruals for loss contingencies at least 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.

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Insurance Contribution Litigation

In April 2012, Allianz Global Risks US Insurance Company sued eighteen insurance companies in a case captioned Allianz Global Risks US Ins.

We have been engaged in litigation in a case captioned Allianz Global Risks US Ins.

ACE Property & Casualty Ins.

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

Allianz Global Risks US Ins.

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

Defendants had insured Freightliner’s assets, which DTNA acquired in 1981.

Con-way, Freightliner’s former parent company, intervened.

We acquired Con-way in 2015.

Con-way and Freightliner had self-insured under fronting agreements with defendant insurers ACE, Westport, and General.

1204-04552) since we acquired Con-way in 2015.

In April 2012, prior to the acquisition, Allianz Global Risks US Ins.

(“Allianz”) filed suit against eighteen insurance companies seeking contribution on environmental and product liability claims that Allianz agreed to defend and indemnify on behalf of its insured, Daimler Trucks North America (“DTNA”).

These claims involved truck and part manufacturing plants of Freightliner, a former subsidiary of Con-way, which Con-way sold to DTNA in 1981.

The defendants had insured Freightliner’s assets and Con-way and Freightliner had self-insured under fronting agreements with three of the defendant insurers, ACE, Westport, and General.

Under those agreements, Con-way agreed to indemnify the fronting carriers for damages assessed under the fronting policies.

Con-way’s captive insurer, Centron, was also a named defendant.

After a seven-week jury trial in 2014, the jury found that Con-way and the fronting insurers never intended that the insurers defend or indemnify any claims against Freightliner.

In connection with the acquisition of Con-way, we became responsible for any potential liability of Con-way related to this matter.

After a seven-week jury trial in 2014, the jury found that Con-way and the fronting insurers never intended that the fronting insurers defend or indemnify any claims against Freightliner.

In June 2015, Allianz appealed to the Oregon Court of Appeals.

1 unchanged sentence

In September 2019, Allianz appealed to the Oregon Supreme Court.

In March 2021, the Oregon Supreme Court reversed the jury verdict, holding that it was an error to allow the jury to decide how the parties intended the fronting policies to operate, and also holding that the trial court improperly instructed the jury concerning one of the pollution exclusions at issue.

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

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 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;

however, any losses that may arise in connection with the fronting policies issued by defendant insurers ACE, Westport, and General are not reasonably estimable at this time.

In June 2023, the trial court decided the parties’ cross-motions for summary judgment and determined that the fronting policies do provide coverage for the environmental and product liability claims.

The pollution exclusion and allocation issues remained open.

The trial on the pollution exclusion issue took place in October 2024, where the jury issued a favorable verdict, finding that the pollution exclusion applied to the

General policy over several years for which Allianz seeks contribution.

The trial addressing legal and factual issues relating to the allocation of defense and indemnity costs among the applicable insurance policies took place during the first half of 2025 and final hearings on allocation took place in early October 2025.

While the court has not entered a final judgment, we revised our estimate for our share of the liability associated with this matter and recognized a charge of approximately $ 35 million in the third quarter of 2025.

The additional charge we recognized includes an allocation of defense and indemnity costs already incurred by Allianz as well as an estimate of future allocated defense and indemnity costs.

This matter is solely related to a legacy Con-way truck manufacturing business and is unrelated to our current Less-than-Truckload operations.

California Environmental Matters

4 unchanged sentences

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What changed 10-K

Item 8. Financial Statements and Supplementary Data