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Basis of Presentation and Significant Accounting Policies
Restructuring Charges
Stockholder's Equity
Quarterly Financial Data (Unaudited)
Segment Reporting and Geographic Information
Conformed Historical Quarterly Segment Data (Unaudited)
Basis of Presentation and Significant Accounting Policies (Policies)
Basis of Presentation and Significant Accounting Policies (Tables)
Acquisitions (Tables)
Restructuring Charges (Tables)
Debt (Tables)
Intangible Assets (Tables)
Goodwill (Tables)
Stock-Based Compensation (Tables)
Earnings per Share (Tables)
Quarterly Financial Data (Unaudited) (Tables)
Segment Reporting and Geographic Information (Tables)
Conformed Historical Quarterly Segment Data (Unaudited) (Tables)
Organization - Additional Information (Detail)
Basis of Presentation and Significant Accounting Policies - Revenue Recognition - Additional Information (Detail)
Basis of Presentation and Significant Accounting Policies - Allowance for Doubtful Accounts Rollforward (Details)
Basis of Presentation and Significant Accounting Policies - Property and Equipment - Additional Information (Detail)
Basis of Presentation and Significant Accounting Policies - Estimated Useful Life of Assets (Detail)
Basis of Presentation and Significant Accounting Policies - Goodwill and Intangible Assets with Indefinite Lives - Additional Information (Detail)
Basis of Presentation and Significant Accounting Policies - Schedule of Estimated Useful Lives of Intangible Assets (Details)
Basis of Presentation and Significant Accounting Policies - Other Long-Term Assets - Additional Information (Details)
Basis of Presentation and Significant Accounting Policies - Summary of Accrued Expenses (Details)
Basis of Presentation and Significant Accounting Policies - Other Long Term Liabilities (Detail)
Basis of Presentation and Significant Accounting Policies - Schedule of Change in Asset Retirement Obligation (Details)
Basis of Presentation and Significant Accounting Policies - Fair Value Measurements - Additional Information (Details)
Basis of Presentation and Significant Accounting Policies - Estimated Fair Value of Financial Instruments - Additional Information (Detail)
Basis of Presentation and Significant Accounting Policies - Stock-Based Compensation - Additional Information (Detail)
Acquisitions - New Breed Logistics - Additional Information (Details)
Acquisitions - Recognized Identified Assets Acquired and Liabilities Assumed (Detail)
Acquisitions - Atlantic Central Logistics - Additional Information (Details)
Acquisitions - Pacer International - Additional Information (Details)
Acquisitions - NLM - Additional Information (Detail)
Acquisitions - Optima Service Solutions - Additional Information (Detail)
Acquisitions - 3PD - Additional Information (Detail)
Acquisitions - Interide Logistics - Additional Information (Detail)
Acquisitions - Covered Logistics & Transportation - Additional Information (Detail)
Acquisitions - East Coast Air Charter - Additional Information (Detail)
Acquisitions - Business Acquisition Pro Forma Information (Detail)
Restructuring Charges - Summary of Restructuring Reserve (Details)
Commitments and Contingencies - Additional Information (Detail)
Debt - Additional Information (Detail)
Debt - Schedule of Debt Obligations (Detail)
Property and Equipment - Summary of Property and Equipment (Details)
Property and Equipment - Additional Information (Details)
Intangible Assets - Schedule of Identifiable Intangible Assets (Details)
Intangible Assets - Estimated Future Amortization Expense for Amortizable Intangible Assets (Details)
Intangible Assets - Additional Information (Details)
Goodwill - Schedule of Goodwill (Detail)
Stockholder's Equity - Additional Information (Detail)
Stock-Based Compensation - Additional Information (Detail)
Stock-Based Compensation - Schedule of Stock-based Compensation Expense (Details)
Stock-Based Compensation - Schedule of Valuation Assumptions (Details)
Stock-Based Compensation - Equity Awards Outstanding and Exercisable (Detail)
Income Taxes - Schedule of Income before Income Tax, Related to Domestic and Foreign (Detail)
Income Taxes - Schedule of Components of Income Tax Expense (Benefit) (Detail)
Income Taxes - Schedule of Effective Income Tax Rate Reconciliation (Detail)
Income Taxes - Additional Information (Detail)
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Detail)
Income Taxes - Schedule of Unrecognized Tax Benefits Roll Forward (Detail)
Earnings per Share - Additional Information (Detail)
Earnings per Share - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Detail)
Related Party Transactions - Additional Information (Detail)
Quarterly Financial Data (Unaudited) - Schedule of Quarterly Financial Information (Detail)
Segment Reporting and Geographic Information - Additional Information (Detail)
Segment Reporting and Geographic Information - Selected Financial Data for Each of Operating Segments (Detail)
Segment Reporting and Geographic Information - Schedule of Revenues Generated by Geographical Area (Detail)
Conformed Historical Quarterly Segment Data (Unaudited) (Details)
Subsequent Events - Additional information (Detail)
Rendering Log
Document and Entity Information - USD ($)
Document And Entity Information [Abstract]
Document Type 10-K
Amendment Flag false
Document Period End Date Dec. 31, 2014
Document Fiscal Year Focus 2014
Document Fiscal Period Focus (Q1,Q2,Q3,FY) FY
Trading Symbol XPO
Entity Registrant Name XPO Logistics, Inc.
Entity Central Index Key 0001166003
Current Fiscal Year End Date --12-31
Entity Filer Category Large Accelerated Filer
Entity Common Stock, Shares Outstanding 79,367,271
Entity Well-known Seasoned Issuer Yes
Entity Voluntary Filers No
Entity Current Reporting Status Yes
Entity Public Float $ 1,505,183,527
If the value is true, then the document is an amendment to previously-filed/accepted document.
Name: dei_AmendmentFlag
Namespace Prefix: dei_
End date of current fiscal year in the format --MM-DD.
Name: dei_CurrentFiscalYearEndDate
Data Type: xbrli:gMonthDayItemType
This is focus fiscal period of the document report. For a first quarter 2006 quarterly report, which may also provide financial information from prior periods, the first fiscal quarter should be given as the fiscal period focus. Values: FY, Q1, Q2, Q3, Q4, H1, H2, M9, T1, T2, T3, M8, CY.
Name: dei_DocumentFiscalPeriodFocus
Data Type: dei:fiscalPeriodItemType
This is focus fiscal year of the document report in CCYY format. For a 2006 annual report, which may also provide financial information from prior periods, fiscal 2006 should be given as the fiscal year focus. Example: 2006.
Name: dei_DocumentFiscalYearFocus
Data Type: xbrli:gYearItemType
The end date of the period reflected on the cover page if a periodic report. For all other reports and registration statements containing historical data, it is the date up through which that historical data is presented. If there is no historical data in the report, use the filing date. The format of the date is CCYY-MM-DD.
Name: dei_DocumentPeriodEndDate
The type of document being provided (such as 10-K, 10-Q, 485BPOS, etc). The document type is limited to the same value as the supporting SEC submission type, or the word "Other".
Name: dei_DocumentType
Data Type: dei:submissionTypeItemType
A unique 10-digit SEC-issued value to identify entities that have filed disclosures with the SEC. It is commonly abbreviated as CIK.
-Publisher SEC
-Name Regulation 12B
-Number 240
-Section 12b
-Subsection 1
Name: dei_EntityCentralIndexKey
Data Type: dei:centralIndexKeyItemType
Indicate number of shares or other units outstanding of each of registrant's classes of capital or common stock or other ownership interests, if and as stated on cover of related periodic report. Where multiple classes or units exist define each class/interest by adding class of stock items such as Common Class A [Member], Common Class B [Member] or Partnership Interest [Member] onto the Instrument [Domain] of the Entity Listings, Instrument.
Name: dei_EntityCommonStockSharesOutstanding
Indicate "Yes" or "No" whether registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. This information should be based on the registrant's current or most recent filing containing the related disclosure.
Name: dei_EntityCurrentReportingStatus
Data Type: dei:yesNoItemType
Indicate whether the registrant is one of the following: (1) Large Accelerated Filer, (2) Accelerated Filer, (3) Non-accelerated Filer, (4) Smaller Reporting Company (Non-accelerated) or (5) Smaller Reporting Accelerated Filer. Definitions of these categories are stated in Rule 12b-2 of the Exchange Act. This information should be based on the registrant's current or most recent filing containing the related disclosure.
Name: dei_EntityFilerCategory
Data Type: dei:filerCategoryItemType
State aggregate market value of voting and non-voting common equity held by non-affiliates computed by reference to price at which the common equity was last sold, or average bid and asked price of such common equity, as of the last business day of registrant's most recently completed second fiscal quarter. The public float should be reported on the cover page of the registrants form 10K.
Name: dei_EntityPublicFloat
The exact name of the entity filing the report as specified in its charter, which is required by forms filed with the SEC.
Name: dei_EntityRegistrantName
Data Type: xbrli:normalizedStringItemType
Indicate "Yes" or "No" if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Name: dei_EntityVoluntaryFilers
Indicate "Yes" or "No" if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Is used on Form Type: 10-K, 10-Q, 8-K, 20-F, 6-K, 10-K/A, 10-Q/A, 20-F/A, 6-K/A, N-CSR, N-Q, N-1A.
Name: dei_EntityWellKnownSeasonedIssuer
Trading symbol of an instrument as listed on an exchange.
Name: dei_TradingSymbol
Name: xpo_DocumentAndEntityInformationAbstract
Namespace Prefix: xpo_
Consolidated Balance Sheets - USD ($)
$ in Millions
Cash and cash equivalents $ 644.1 $ 21.5
Accounts receivable, net of allowances of $9.8 and $3.5, respectively 543.8 134.2
Prepaid expenses 13.2 3.9
Deferred tax asset, current 9.2 3.0
Income tax receivable 15.4 0.0
Other current assets 7.4 7.4
Total current assets 1,233.1 170.0
Property and equipment, net of $47.3 and $11.8 in accumulated depreciation, respectively 221.9 56.6
Goodwill 929.3 363.4
Identifiable intangible assets, net of $74.6 and $15.4 in accumulated amortization, respectively 341.5 185.2
Restricted cash 9.1 2.1
Other long-term assets 26.3 2.9
Total long-term assets 1,528.1 610.2
Total assets 2,761.2 780.2
Accounts payable 252.7 71.4
Accrued salaries and wages 50.1 11.7
Accrued expenses, other 69.8 9.5
Current maturities of long-term debt 1.8 2.0
Other current liabilities 6.7 4.7
Total current liabilities 381.1 99.3
Senior notes due 2019 500.0 0.0
Convertible senior notes 91.9 106.3
Revolving credit facility and other long-term debt, net of current maturities 0.2 75.4
Deferred tax liability, long term 74.5 15.2
Other long-term liabilities 58.4 28.1
Total long-term liabilities 725.0 225.0
Stockholders' equity:
Series A convertible perpetual preferred stock, $.001 par value; 10,000,000 shares; 73,335 and 74,175 shares issued and outstanding at December 31, 2014 and December 31, 2013, respectively 42.2 42.7
Common stock, $.001 par value; 150,000,000 shares authorized; 77,421,683 shares issued and outstanding at December 31, 2014 and 30,583,073 and 30,538,073 shares issued and outstanding, respectively, at December 31, 2013 0.1 0.0
Additional paid-in capital 1,831.9 525.0
Treasury stock, at cost, 0 and 45,000 shares held at December 31, 2014 and December 31, 2013, respectively 0.0 (0.1)
Accumulated deficit (219.1) (111.7)
Total stockholders' equity 1,655.1 455.9
Total liabilities and stockholders' equity $ 2,761.2 $ 780.2
-Name Regulation S-X (SX)
-Article 5
-Subparagraph (SX 210.5-02.3-4)
-Subparagraph a(1)
Carrying value as of the balance sheet date of the obligations incurred through that date and payable for employees' services provided. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer).
Name: us-gaap_AccruedSalariesCurrent
-Subparagraph (SX 210.5-02.30(a)(1))
Sum of the carrying amounts as of the balance sheet date of all assets that are expected to be realized in cash, sold or consumed after one year or beyond the normal operating cycle, if longer.
Name: us-gaap_AssetsNoncurrent
Represents the caption on the face of the balance sheet to indicate that the entity has entered into (1) purchase or supply arrangements that will require expending a portion of its resources to meet the terms thereof, and (2) is exposed to potential losses or, less frequently, gains, arising from (a) possible claims against a company's resources due to future performance under contract terms, and (b) possible losses or likely gains from uncertainties that will ultimately be resolved when one or more future events that are deemed likely to occur do occur or fail to occur.
-Subparagraph (SX 210.7-03.(a),19)
Name: us-gaap_CommitmentsAndContingencies
Carrying value as of the balance sheet date of long-term debt (with maturities initially due after one year or beyond the operating cycle if longer) identified as Convertible Notes Payable, excluding current portion. Convertible Notes Payable is a written promise to pay a note which can be exchanged for a specified amount of another, related security, at the option of the issuer and the holder.
Name: us-gaap_ConvertibleLongTermNotesPayable
Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards expected to be realized or consumed within one year or operating cycle, if longer.
Name: us-gaap_DeferredTaxAssetsNetCurrent
Amount of deferred tax liability attributable to taxable temporary differences, net of deferred tax asset attributable to deductible temporary differences and carryforwards net of valuation allowances expected to be realized or consumed after one year (or the normal operating cycle, if longer).
Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.
Name: us-gaap_Goodwill
Carrying amount due within one year of the balance sheet date (or one operating cycle, if longer) from tax authorities as of the balance sheet date representing refunds of overpayments or recoveries based on agreed-upon resolutions of disputes.
-Subparagraph (SX 210.7-03.5(c))
-Subparagraph c
Name: us-gaap_IncomeTaxesReceivable
Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.
-Subparagraph ((a)(1),(b))
Name: us-gaap_IntangibleAssetsNetExcludingGoodwill
Name: us-gaap_LiabilitiesCurrentAbstract
Amount of obligation due after one year or beyond the normal operating cycle, if longer.
-Paragraph 22, 23, 24, 25, 26, 27
Name: us-gaap_LiabilitiesNoncurrent
Amount of long-term debt, after unamortized discount or premium, scheduled to be repaid within one year or the normal operating cycle, if longer. Includes, but not limited to, notes payable, bonds payable, debentures, mortgage loans and commercial paper. Excludes capital lease obligations.
-Subparagraph (SX 210.5-02.19,20)
Name: us-gaap_LongTermDebtCurrent
The carrying value as of the balance sheet date of the noncurrent portion of long-term obligations drawn from a line of credit, which is a bank's commitment to make loans up to a specific amount. Examples of items that might be included in the application of this element may consist of letters of credit, standby letters of credit, and revolving credit arrangements, under which borrowings can be made up to a maximum amount as of any point in time conditional on satisfaction of specified terms before, as of and after the date of drawdowns on the line. Includes short-term obligations that would normally be classified as current liabilities but for which (a) postbalance sheet date issuance of a long term obligation to refinance the short term obligation on a long term basis, or (b) the enterprise has entered into a financing agreement that clearly permits the enterprise to refinance the short-term obligation on a long term basis and the following conditions are met (1) the agreement does not expire within 1 year and is not cancelable by the lender except for violation of an objectively determinable provision, (2) no violation exists at the BS date, and (3) the lender has entered into the financing agreement is expected to be financially capable of honoring the agreement.
-Glossary Line-of-Credit Arrangement
Name: us-gaap_LongTermLineOfCredit
Carrying value as of the balance sheet date of obligations incurred through that date and payable arising from transactions not otherwise specified in the taxonomy. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer).
Name: us-gaap_OtherAccruedLiabilitiesCurrent
Aggregate carrying amount, as of the balance sheet date, of current assets not separately disclosed in the balance sheet. Current assets are expected to be realized or consumed within one year (or the normal operating cycle, if longer).
Aggregate carrying amount, as of the balance sheet date, of noncurrent assets not separately disclosed in the balance sheet. Noncurrent assets are expected to be realized or consumed after one year (or the normal operating cycle, if longer).
Aggregate carrying amount of current liabilities (due within one year or within the normal operating cycle if longer) not separately disclosed in the balance sheet. Includes costs that are statutory in nature, are incurred on contractual obligations, or accumulate over time and for which invoices have not yet been received or will not be rendered and of liabilities not separately disclosed.
Aggregate carrying amount, as of the balance sheet date, of noncurrent obligations not separately disclosed in the balance sheet. Noncurrent liabilities are expected to be paid after one year (or the normal operating cycle, if longer).
Aggregate par or stated value of issued nonredeemable preferred stock (or preferred stock redeemable solely at the option of the issuer). This item includes treasury stock repurchased by the entity. Note: elements for number of nonredeemable preferred shares, par value and other disclosure concepts are in another section within stockholders' equity.
Name: us-gaap_PreferredStockValue
Amount of asset related to consideration paid in advance for costs that provide economic benefits within a future period of one year or the normal operating cycle, if longer.
-Subparagraph (g)
Name: us-gaap_PrepaidExpenseCurrent
Cash and equivalents whose use in whole or in part is restricted for the long-term, generally by contractual agreements or regulatory requirements.
Name: us-gaap_RestrictedCashAndCashEquivalentsNoncurrent
Carrying value as of the balance sheet date of Notes with the highest claim on the assets of the issuer in case of bankruptcy or liquidation (with maturities initially due after one year or beyond the operating cycle if longer), excluding current portion. Senior note holders are paid off in full before any payments are made to junior note holders.
Name: us-gaap_SeniorLongTermNotes
-Paragraph 29, 30, 31
-Name Staff Accounting Bulletin (SAB)
-Number Topic 4
-Section E
Name: us-gaap_StockholdersEquityAbstract
The amount allocated to treasury stock. Treasury stock is common and preferred shares of an entity that were issued, repurchased by the entity, and are held in its treasury.
Name: us-gaap_TreasuryStockValue
Consolidated Balance Sheets (Parenthetical) - USD ($)
Statement of Financial Position [Abstract]
Accounts receivable allowances $ 9.8 $ 3.5
Property and equipment, accumulated depreciation 47.3 11.8
Identifiable intangible assets, accumulated amortization $ 74.6 $ 15.4
Preferred stock, par value (in usd per share) $ 0.001 $ 0.001
Preferred stock, shares authorized 10,000,000 10,000,000
Preferred stock, shares issued 73,335 74,175
Preferred stock, shares outstanding 73,335 74,175
Common stock, par value (in usd per share) $ 0.001 $ 0.001
Common stock, shares authorized 150,000,000 150,000,000
Common stock, shares issued 77,421,683 30,583,073
Common stock, shares outstanding 77,421,683 30,538,073
Treasury stock, shares 0 45,000
A valuation allowance for trade and other receivables due to an Entity within one year (or the normal operating cycle, whichever is longer) that are expected to be uncollectible.
Name: us-gaap_AllowanceForDoubtfulAccountsReceivableCurrent
The maximum number of common shares permitted to be issued by an entity's charter and bylaws.
Name: us-gaap_CommonStockSharesAuthorized
Total number of common shares of an entity that have been sold or granted to shareholders (includes common shares that were issued, repurchased and remain in the treasury). These shares represent capital invested by the firm's shareholders and owners, and may be all or only a portion of the number of shares authorized. Shares issued include shares outstanding and shares held in the treasury.
Name: us-gaap_CommonStockSharesIssued
Number of shares of common stock outstanding. Common stock represent the ownership interest in a corporation.
Name: us-gaap_CommonStockSharesOutstanding
Accumulated amount of amortization of assets, excluding financial assets and goodwill, lacking physical substance with a finite life.
-Subparagraph (a)(1)
Name: us-gaap_FiniteLivedIntangibleAssetsAccumulatedAmortization
Face amount or stated value per share of preferred stock nonredeemable or redeemable solely at the option of the issuer.
Name: us-gaap_PreferredStockParOrStatedValuePerShare
The maximum number of nonredeemable preferred shares (or preferred stock redeemable solely at the option of the issuer) permitted to be issued by an entity's charter and bylaws.
Name: us-gaap_PreferredStockSharesAuthorized
Total number of nonredeemable preferred shares (or preferred stock redeemable solely at the option of the issuer) issued to shareholders (includes related preferred shares that were issued, repurchased, and remain in the treasury). May be all or portion of the number of preferred shares authorized. Excludes preferred shares that are classified as debt.
Name: us-gaap_PreferredStockSharesIssued
Aggregate share number for all nonredeemable preferred stock (or preferred stock redeemable solely at the option of the issuer) held by stockholders. Does not include preferred shares that have been repurchased.
Name: us-gaap_PreferredStockSharesOutstanding
Name: us-gaap_StatementOfFinancialPositionAbstract
Number of shares held for each class of treasury stock.
Name: us-gaap_TreasuryStockNumberOfSharesHeld
Consolidated Statements of Operations - USD ($)
Income Statement [Abstract]
Revenue $ 2,356.6 $ 702.3 $ 278.6
Cost of purchased transportation and services 1,701.8 578.7 237.8
Direct operating expense 273.2 6.4 0.0
Sales, general and administrative expense 422.5 169.5 68.8
Total operating expenses 2,397.5 754.6 306.6
Operating loss (40.9) (52.3) (28.0)
Other expense 0.8 0.5 0.3
Interest expense 48.0 18.2 3.2
Loss before income tax benefit (89.7) (71.0) (31.5)
Income tax benefit (26.1) (22.5) (11.2)
Net loss (63.6) (48.5) (20.3)
Preferred stock beneficial conversion charge (40.9) 0.0 0.0
Cumulative preferred dividends (2.9) (3.0) (3.0)
Net loss available to common stockholders $ (107.4) $ (51.5) $ (23.3)
Basic loss per share
Net loss (in usd per share) $ (2.00) $ (2.26) $ (1.49)
Diluted loss per share
Weighted average common shares outstanding
Basic weighted average common shares outstanding 53,629,962 22,752,320 15,694,430
Diluted weighted average common shares outstanding 53,600,000 22,800,000 15,700,000
The aggregate direct operating costs incurred during the reporting period.
Name: us-gaap_DirectOperatingCosts
Name: us-gaap_DirectOperatingCostsAbstract
The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.
Name: us-gaap_EarningsPerShareBasic
Name: us-gaap_EarningsPerShareBasicAbstract
The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.
Name: us-gaap_EarningsPerShareDiluted
Name: us-gaap_EarningsPerShareDilutedAbstract
The aggregate total of expenses of managing and administering the affairs of an entity, including affiliates of the reporting entity, which are not directly or indirectly associated with the manufacture, sale or creation of a product or product line.
Name: us-gaap_GeneralAndAdministrativeExpense
Sum of operating profit and nonoperating income or expense before Income or Loss from equity method investments, income taxes, extraordinary items, and noncontrolling interest.
-Subparagraph (SX 210.4-08.(h)(1)(i))
Name: us-gaap_IncomeLossFromContinuingOperationsBeforeIncomeTaxesMinorityInterestAndIncomeLossFromEquityMethodInvestments
Name: us-gaap_IncomeStatementAbstract
Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.
-Subparagraph (a),(b)
-Subparagraph (SX 210.4-08.(h))
-Glossary Income Tax Expense (or Benefit)
-Paragraph h
Name: us-gaap_IncomeTaxExpenseBenefit
Amount of the cost of borrowed funds accounted for as interest expense.
Name: us-gaap_InterestExpense
The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.
-Glossary Net Income
-Glossary Other Comprehensive Income
Name: us-gaap_NetIncomeLoss
Net income after adjustments for dividends on preferred stock (declared in the period) and/or cumulative preferred stock (accumulated for the period).
Name: us-gaap_NetIncomeLossAvailableToCommonStockholdersBasic
Generally recurring costs associated with normal operations except for the portion of these expenses which can be clearly related to production and included in cost of sales or services. Includes selling, general and administrative expense.
Name: us-gaap_OperatingExpenses
The net result for the period of deducting operating expenses from operating revenues.
Name: us-gaap_OperatingIncomeLoss
The net amount of other income and expense amounts, the components of which are not separately disclosed on the income statement, resulting from ancillary business-related activities (that is, excluding major activities considered part of the normal operations of the business) also known as other nonoperating income (expense) recognized for the period. Such amounts may include: (a) dividends, (b) interest on securities, (c) net gains or losses on securities, (d) unusual costs, (e) gains or losses on foreign exchange transactions, and (f) miscellaneous other income and expense items.
Name: us-gaap_OtherNonoperatingIncomeExpense
Other preferred stock dividends and adjustments, not otherwise defined in the taxonomy, that are necessary to adjust net income to obtain net income applicable to common stockholders.
-Section Q
Name: us-gaap_OtherPreferredStockDividendsAndAdjustments
The amount of preferred stock dividends that is an adjustment to net income apportioned to common stockholders.
Name: us-gaap_PreferredStockDividendsIncomeStatementImpact
Amount of revenue recognized from goods sold, services rendered, insurance premiums, or other activities that constitute an earning process. Includes, but is not limited to, investment and interest income before deduction of interest expense when recognized as a component of revenue, and sales and trading gain (loss).
Name: us-gaap_Revenues
Cost incurred during the reporting period in transporting goods and services to customers. Includes freight-out costs.
-Glossary Handling Costs
-Glossary Shipping Costs
Name: us-gaap_ShippingHandlingAndTransportationCosts
The average number of shares or units issued and outstanding that are used in calculating diluted EPS or earnings per unit (EPU), determined based on the timing of issuance of shares or units in the period.
Name: us-gaap_WeightedAverageNumberOfDilutedSharesOutstanding
Number of [basic] shares or units, after adjustment for contingently issuable shares or units and other shares or units not deemed outstanding, determined by relating the portion of time within a reporting period that common shares or units have been outstanding to the total time in that period.
-Glossary Weighted-Average Number of Common Shares Outstanding
Name: us-gaap_WeightedAverageNumberOfSharesOutstandingBasic
Weighted Average Common Shares Outstanding [Abstract]
Name: xpo_WeightedAverageCommonSharesOutstandingAbstract
Consolidated Statements of Cash Flows - USD ($)
Operating activities
Net loss $ (63.6) $ (48.5) $ (20.3)
Adjustments to reconcile net loss to net cash from operating activities
Provisions for allowance for doubtful accounts 6.9 2.6 0.9
Depreciation and amortization 98.3 20.8 2.7
Stock compensation expense 7.5 4.7 4.4
Accretion of debt 7.3 6.0 1.5
Deferred tax expense (30.0) (22.7) (8.3)
Other 4.3 1.3 0.0
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable (143.9) (37.0) (13.8)
Income tax receivable 2.1 0.1 (1.6)
Prepaid expense and other current assets 8.1 (3.0) 0.8
Other long-term assets (1.0) 0.0 (0.3)
Accounts payable 53.9 5.2 10.9
Accrued expenses and other liabilities 28.8 4.2 (1.2)
Cash flows used by operating activities (21.3) (66.3) (24.3)
Investing activities
Acquisition of businesses, net of cash acquired (814.0) (458.8) (57.2)
Payment for purchases of property and equipment (44.6) (11.6) (7.0)
Cash flows used by investing activities (858.3) (470.3) (64.2)
Financing activities
Proceeds from common stock offerings, net 733.8 239.5 137.0
Proceeds from issuance of preferred stock, net 363.6 0.0 0.0
Proceeds from issuance of senior notes, net 489.6 0.0 0.0
Proceeds from issuance of convertible senior notes, net 0.0 0.0 138.5
Proceeds from borrowings on revolving credit facility 130.0 73.3 0.0
Repayment of borrowings on revolving credit facility (205.0) 0.0 0.0
Dividends paid to preferred stockholders (2.9) (3.0) (3.0)
Payments of tax withholdings for restricted shares (3.4) (1.6) (1.2)
Other (3.5) (2.5) (4.5)
Cash flows provided by financing activities 1,502.2 305.7 266.8
Net increase (decrease) in cash 622.6 (230.9) 178.3
Cash and cash equivalents, beginning of period 21.5 252.4 74.1
Cash and cash equivalents, end of period 644.1 21.5 252.4
Supplemental disclosure of cash flow information:
Cash paid for interest 19.0 12.4 0.0
Cash paid for income taxes, net of receipts 2.3 0.2 0.2
Equity portion of acquisition purchase price $ 138.2 $ 10.4 $ 0.0
Amount recognized for the passage of time, typically for liabilities, that have been discounted to their net present values. Excludes accretion associated with asset retirement obligations.
Name: us-gaap_AccretionExpense
Name: us-gaap_AdjustmentsToReconcileNetIncomeLossToCashProvidedByUsedInOperatingActivitiesAbstract
Amount of increase (decrease) in cash and cash equivalents. Cash and cash equivalents are the amount of currency on hand as well as demand deposits with banks or financial institutions. Includes other kinds of accounts that have the general characteristics of demand deposits. Also includes short-term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Includes effect from exchange rate changes.
Name: us-gaap_CashAndCashEquivalentsPeriodIncreaseDecrease
Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations.
-Glossary Deferred Tax Expense (or Benefit)
-Subparagraph (SAB TOPIC 6.I.7)
-Section I
Name: us-gaap_DeferredIncomeTaxExpenseBenefit
The current period expense charged against earnings on long-lived, physical assets not used in production, and which are not intended for resale, to allocate or recognize the cost of such assets over their useful lives; or to record the reduction in book value of an intangible asset over the benefit period of such asset; or to reflect consumption during the period of an asset that is not used in production.
Name: us-gaap_DepreciationAndAmortization
The amount of cash paid during the current period to foreign, federal, state, and local authorities as taxes on income, net of any cash received during the current period as refunds for the overpayment of taxes.
Name: us-gaap_IncomeTaxesPaidNet
The increase (decrease) during the reporting period in the aggregate amount of liabilities incurred (and for which invoices have typically been received) and payable to vendors for goods and services received that are used in an entity's business.
Name: us-gaap_IncreaseDecreaseInAccountsPayable
The increase (decrease) during the reporting period in amount due within one year (or one business cycle) from customers for the credit sale of goods and services.
Name: us-gaap_IncreaseDecreaseInAccountsReceivable
The increase (decrease) during the reporting period in the aggregate amount of accrued expenses and other operating obligations not separately disclosed in the statement of cash flows.
Name: us-gaap_IncreaseDecreaseInAccruedLiabilitiesAndOtherOperatingLiabilities
The increase (decrease) during the reporting period in the amounts payable to taxing authorities for taxes that are based on the reporting entity's earnings, net of amounts receivable from taxing authorities for refunds of overpayments or recoveries of income taxes, and in deferred and other tax liabilities and assets.
Name: us-gaap_IncreaseDecreaseInIncomeTaxes
The increase (decrease) during the reporting period in other noncurrent operating assets not separately disclosed in the statement of cash flows.
Name: us-gaap_IncreaseDecreaseInOtherNoncurrentAssets
The increase (decrease) during the reporting period in the value of prepaid expenses and other assets not separately disclosed in the statement of cash flows, for example, deferred expenses, intangible assets, or income taxes.
Name: us-gaap_IncreaseDecreaseInPrepaidDeferredExpenseAndOtherAssets
The amount of cash paid for interest during the period.
-Subparagraph (e)
Name: us-gaap_InterestPaid
Name: us-gaap_NetCashProvidedByUsedInFinancingActivitiesAbstract
Amount of cash inflow (outflow) of financing activities, excluding discontinued operations. Financing activity cash flows include obtaining resources from owners and providing them with a return on, and a return of, their investment; borrowing money and repaying amounts borrowed, or settling the obligation; and obtaining and paying for other resources obtained from creditors on long-term credit.
Name: us-gaap_NetCashProvidedByUsedInFinancingActivitiesContinuingOperations
Amount of cash inflow (outflow) from investing activities, including discontinued operations. Investing activity cash flows include making and collecting loans and acquiring and disposing of debt or equity instruments and property, plant, and equipment and other productive assets.
Name: us-gaap_NetCashProvidedByUsedInInvestingActivities
Name: us-gaap_NetCashProvidedByUsedInInvestingActivitiesAbstract
Amount of cash inflow (outflow) from operating activities, including discontinued operations. Operating activity cash flows include transactions, adjustments, and changes in value not defined as investing or financing activities.
Name: us-gaap_NetCashProvidedByUsedInOperatingActivities
Name: us-gaap_NetCashProvidedByUsedInOperatingActivitiesAbstract
Other income (expense) included in net income that results in no cash inflows or outflows in the period. Includes noncash adjustments to reconcile net income (loss) to cash provided by (used in) operating activities that are not separately disclosed.
Name: us-gaap_OtherNoncashIncomeExpense
The net cash outflow or inflow from other investing activities. This element is used when there is not a more specific and appropriate element in the taxonomy.
-Glossary Investing Activities
Name: us-gaap_PaymentsForProceedsFromOtherInvestingActivities
Amount of cash outflow in the form of ordinary dividends to preferred shareholders of the parent entity.
-Glossary Financing Activities
Name: us-gaap_PaymentsOfDividendsPreferredStockAndPreferenceStock
The cash outflow associated with the acquisition of a business, net of the cash acquired from the purchase.
Name: us-gaap_PaymentsToAcquireBusinessesNetOfCashAcquired
The cash outflow associated with the acquisition of long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale; includes cash outflows to pay for construction of self-constructed assets.
Name: us-gaap_PaymentsToAcquirePropertyPlantAndEquipment
The cash inflow from the issuance of a long-term debt instrument which can be exchanged for a specified amount of another security, typically the entity's common stock, at the option of the issuer or the holder.
Name: us-gaap_ProceedsFromConvertibleDebt
Proceeds from issuance of capital stock which provides for a specific dividend that is paid to the shareholders before any dividends to common stockholders and which takes precedence over common stockholders in the event of liquidation.
Name: us-gaap_ProceedsFromIssuanceOfPreferredStockAndPreferenceStock
The cash inflow from a borrowing with the highest claim on the assets of the entity in case of bankruptcy or liquidation (with maturities initially due after one year or beyond the operating cycle, if longer).
Name: us-gaap_ProceedsFromIssuanceOfSeniorLongTermDebt
Amount of cash inflow from contractual arrangement with the lender, including but not limited to, letter of credit, standby letter of credit and revolving credit arrangements.
-Subparagraph (SX 210.4-08.(f))
-Paragraph f
Name: us-gaap_ProceedsFromLinesOfCredit
The net cash inflow or outflow from other financing activities. This element is used when there is not a more specific and appropriate element in the taxonomy.
Name: us-gaap_ProceedsFromPaymentsForOtherFinancingActivities
Amount of expense related to write-down of receivables to the amount expected to be collected. Includes, but is not limited to, accounts receivable and notes receivable.
Name: us-gaap_ProvisionForDoubtfulAccounts
The cash outflow for the settlement of obligation drawn from a contractual arrangement with the lender, including letter of credit, standby letter of credit and revolving credit arrangements, under which borrowings can be made up to a specific amount at any point in time with maturities due beyond one year or the operating cycle, if longer.
Name: us-gaap_RepaymentsOfLongTermLinesOfCredit
The aggregate amount of noncash, equity-based employee remuneration. This may include the value of stock or unit options, amortization of restricted stock or units, and adjustment for officers' compensation. As noncash, this element is an add back when calculating net cash generated by operating activities using the indirect method.
Name: us-gaap_ShareBasedCompensation
Name: us-gaap_SupplementalCashFlowInformationAbstract
Business Acquisition Cost Of Acquired Entity Amount Of Purchase Price
Name: xpo_BusinessAcquisitionCostOfAcquiredEntityAmountOfPurchasePrice
Changes In Assets And Liabilities Net Of Effects Of Acquisitions [Abstract]
Name: xpo_ChangesInAssetsAndLiabilitiesNetOfEffectsOfAcquisitionsAbstract
Payment For Cash Held As Collateral In Lending Arrangement
Name: xpo_PaymentForCashHeldAsCollateralInLendingArrangement
Consolidated Statements of Changes in Stockholders' Equity - USD ($)
shares in Thousands, $ in Millions
Paid-In Capital
Series A Preferred Stock
Series B Preferred Stock
Balance (in shares) at Dec. 31, 2011 8,410 45 75 0
Balance at Dec. 31, 2011 $ 108.4 $ 0.0 $ (0.1) $ 102.6 $ (36.9) $ 42.8 $ 0.0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss (20.3) (20.3)
Issuance of common stock for exercises, net of withholdings (in shares) 393
Issuance of common stock for exercises, net of withholdings (1.0) (1.0)
Conversion of preferred stock to common stock (in shares) 1
Proceeds from common stock offering, net of issuance costs (in shares) 9,200
Proceeds from common stock offering, net of issuance costs 137.0 137.0
Dividend paid (3.0) (3.0)
Stock compensation expense 4.4 4.4
Equity component of convertible debt offering, net of issuance costs and deferred taxes 19.7 19.7
Balance (in shares) at Dec. 31, 2012 18,003 45 74 0
Balance at Dec. 31, 2012 245.2 $ 0.0 $ (0.1) 262.7 (60.2) $ 42.8 $ 0.0
Tax withholdings on restricted shares and other issuances of common stock (in shares) 192
Tax withholdings on restricted shares and other issuances of common stock (1.8) (1.8)
Conversion of preferred stock to common stock 0.0 0.1 $ (0.1)
Conversion of preferred stock to common stock (in shares) 14
Proceeds from common stock offering, net of issuance costs (in shares) 11,148
Issuance of common stock for acquisitions (in shares) 617
Issuance of common stock for acquisitions 10.4 10.4
Issuance of common stock upon conversion of senior notes, net of tax (in shares) 609
Issuance of common stock upon conversion of senior notes, net of tax 9.4 9.4
Balance at Dec. 31, 2013 455.9 $ 0.0 $ (0.1) 525.0 (111.7) $ 42.7 $ 0.0
Exercises of warrants and stock options and other (in shares) 293
Exercise of warrants and stock options and other (4.5) (4.5)
Conversion of preferred stock to common stock $ 0.0 $ (0.5) $ 0.5 $ 0.0 $ (363.6) $ 363.6
Conversion of preferred stock to common stock (in shares) 1 120 400 12,128
Proceeds from issuance of preferred stock, net of issuance costs (in shares) 400
Proceeds from issuance of preferred stock, net of issuance costs 363.6 $ 363.6
Deemed distribution for recognition of beneficial conversion feature on preferred stock 0.0 40.9 (40.9)
Proceeds from common stock offering, net of issuance costs 733.8 $ 0.1 733.7
Issuance of common stock for acquisitions (in shares) 4,704 45
Issuance of common stock for acquisitions 138.2 $ 0.1 138.1
Issuance of common stock upon conversion of senior notes, net of tax (in shares) 1,641
Issuance of common stock upon conversion of senior notes, net of tax 27.1 27.1
Balance (in shares) at Dec. 31, 2014 77,422 0 73 0
Balance at Dec. 31, 2014 $ 1,655.1 $ 0.1 $ 0.0 $ 1,831.9 $ (219.1) $ 42.2 $ 0.0
Adjustment to additional paid in capital resulting from the recognition of convertible debt instruments as two separate components - a debt component and an equity component. This bifurcation may result in a basis difference associated with the liability component that represents a temporary difference for purposes of applying accounting for income taxes. The initial recognition of deferred taxes for the tax effect of that temporary difference is as an adjustment to additional paid in capital.
Name: us-gaap_AdjustmentsToAdditionalPaidInCapitalEquityComponentOfConvertibleDebt
Changes in additional paid in capital related to exercise of share-based payments awards (such as stock options) and the amount of recognized equity-based compensation during the period (such as nonvested shares).
Name: us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationAndExerciseOfStockOptions
Amount of a favorable spread to a debt holder between the amount of debt being converted and the value of the securities received upon conversion. This is an embedded conversion feature of convertible debt issued that is in-the-money at the commitment date.
-Glossary Beneficial Conversion Feature
Name: us-gaap_DebtInstrumentConvertibleBeneficialConversionFeature
Amount of paid and unpaid cash dividends declared for classes of stock, for example, but not limited to, common and preferred.
Name: us-gaap_DividendsCash
A roll forward is a reconciliation of a concept from the beginning of a period to the end of a period.
Name: us-gaap_IncreaseDecreaseInStockholdersEquityRollForward
The number of restricted shares issued as compensation, net of shares for the payment of withholding taxes. This element is to be used only if shares are used in lieu of cash to satisfy all or a portion of withholding taxes.
Name: us-gaap_RestrictedStockSharesIssuedNetOfSharesForTaxWithholdings
The value of restricted shares issued as compensation, net of the value of shares for the payment of withholding taxes. This element is to be used only if shares are used in lieu of cash to satisfy all or a portion of withholding taxes.
Name: us-gaap_RestrictedStockValueSharesIssuedNetOfTaxWithholdings
Number of shares of stock issued as of the balance sheet date, including shares that had been issued and were previously outstanding but which are now held in the treasury.
Name: us-gaap_SharesIssued
Number of shares of stock issued during the period pursuant to acquisitions.
-Paragraph 29, 30
Name: us-gaap_StockIssuedDuringPeriodSharesAcquisitions
Number of shares issued during the period as a result of the conversion of convertible securities.
Name: us-gaap_StockIssuedDuringPeriodSharesConversionOfConvertibleSecurities
Number of shares (or other type of equity) issued during the period as a result of any equity-based compensation plan other than an employee stock ownership plan (ESOP), net of any shares forfeited. Shares issued could result from the issuance of restricted stock, the exercise of stock options, stock issued under employee stock purchase plans, and/or other employee benefit plans.
Name: us-gaap_StockIssuedDuringPeriodSharesShareBasedCompensation
Value of stock issued pursuant to acquisitions during the period.
Name: us-gaap_StockIssuedDuringPeriodValueAcquisitions
The gross value of stock issued during the period upon the conversion of convertible securities.
Name: us-gaap_StockIssuedDuringPeriodValueConversionOfConvertibleSecurities
Equity impact of the value of new stock issued during the period. Includes shares issued in an initial public offering or a secondary public offering.
Name: us-gaap_StockIssuedDuringPeriodValueNewIssues
Convertible Preferred Stock, Shares Issued Upon Conversion, Number
Name: xpo_ConvertiblePreferredStockSharesIssuedUponConversionNumber
Convertible Preferred Stock Shares Issued Upon Conversion Value
Name: xpo_ConvertiblePreferredStockSharesIssuedUponConversionValue
Preferred Stock Issued During Period, Shares, New Shares
Name: xpo_PreferredStockIssuedDuringPeriodSharesNewShares
Preferred Stock Issued During Period, Value, New Shares
Name: xpo_PreferredStockIssuedDuringPeriodValueNewShares
Stock Issued During Period, Shares, Stock Options Warrants And Other Exercises
Name: xpo_StockIssuedDuringPeriodSharesStockOptionsWarrantsAndOtherExercises
Stock issued during period value stock options exercised net of tax withholdings.
Name: xpo_StockIssuedDuringPeriodValueStockOptionsExercisedNetOfTaxWithholdings
Stock Issued During Period, Value, Stock Options Warrants And Other Exercises
Name: xpo_StockIssuedDuringPeriodValueStockOptionsWarrantsAndOtherExercises
Organization, Consolidation and Presentation of Financial Statements [Abstract]
XPO Logistics, Inc. ("XPO" or the "Company")—provides premium transportation and logistics services to thousands of customers through our two reportable segments:
Transportation—provides transportation brokerage services to large multi-national, medium-sized and small business customers where the Company manages all aspects of the services offered including selecting qualified carriers/vessels, negotiating rates, tracking shipments, billing and resolving disputes. Transportation offers a comprehensive suite of services with the common goal of facilitating the movement of goods using proprietary transportation management technology and third-party carriers. Under the Company's cross-selling initiative, all services are offered to all customers to fulfill their shipping requirements. Under the brands XPO Logistics, XPO Last Mile (formerly 3PD), and Pacer, the Company provides truckload, less-than truckload and intermodal brokerage, and last-mile delivery logistics services. Such services are arranged using relationships with subcontracted motor and rail carriers, as well as vehicles that are owned and operated by independent contract drivers. Under the brands XPO Express (formerly Express-1), XPO NLM and XPO Air Charter, the Company provides for the management of time-critical, urgent shipments, transacted through direct selling and through our web-based technology to customers in North America. Expedited ground services are provided through a fleet of exclusive-use vehicles that are owned and operated by independent contract drivers, referred to as owner operators, and through contracted third-party motor carriers. For shipments requiring air charter, service is arranged using our relationships with third-party air carriers. Under the brands XPO Global Logistics (formerly Concert Group Logistics) and Ocean World Lines (a Pacer brand), the Company provides freight forwarding and ocean transportation services to North America-based customers with domestic and global interests. These services are sold and arranged through a network of Company-owned and independently-owned offices in the United States, Canada, Europe and Asia.
Logistics—provides specialized logistics and comprehensive supply chain management solutions to large multi-national and medium-sized corporations and government agencies under the brand New Breed Logistics, which was acquired in September 2014. See Note 3—Acquisitions. New Breed Holding Company ("New Breed") and its subsidiaries conduct operations principally in the United States. These services include value-added warehousing and distribution, reverse logistics, transportation management, freight bill audit and payment, lean manufacturing support, aftermarket support and supply chain optimization.
For specific financial information relating to the above segments, refer to Note 16—Segment Reporting and Geographic Information.
Name: us-gaap_OrganizationConsolidationAndPresentationOfFinancialStatementsAbstract
The entire disclosure for organization, consolidation and basis of presentation of financial statements disclosure.
-URI http://asc.fasb.org/extlink&oid=35735333&loc=d3e288-107754
-URI http://asc.fasb.org/extlink&oid=6359566&loc=d3e326-107755
Name: us-gaap_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock
Accounting Policies [Abstract]
The accompanying Consolidated Financial Statements of the Company have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and in accordance with the instructions to Form 10-K. The Company believes that the disclosures contained herein are adequate to make the information presented not misleading.
These Consolidated Financial Statements reflect, in the opinion of the Company, all material adjustments (which include only normal recurring adjustments) necessary to fairly present the Company's financial position as of December 31, 2014 and 2013, and results of operations for the years ended December 31, 2014, 2013 and 2012. The preparation of the Consolidated Financial Statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements as well as the reported amounts of revenue and expense during the reporting period. Estimates have been prepared on the basis of the most current and best available information, but actual results could differ materially from those estimates. Intercompany transactions have been eliminated in the Consolidated Financial Statements. Where the presentation of these intercompany eliminations differs between the consolidated and reportable segment financial statements, reconciliations of certain line items are provided.
Use of Estimates
The Company prepares its Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America. These principles require management to make estimates and assumptions that impact the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenue and expense during the reporting period. The Company reviews its estimates on a regular basis and makes adjustments based on historical experience and existing and expected future conditions. Estimates are made with respect to, among other matters, recognition of revenue, costs of purchased transportation and services, direct operating expenses, recoverability of long-lived assets, estimated legal accruals, estimated restructuring accruals, valuation allowances for deferred taxes, reserve for uncertain tax positions, probability of achieving performance targets for vesting of performance-based restricted stock units, and allowance for doubtful accounts. These evaluations are performed and adjustments are made as information is available. Management believes that these estimates, which have been discussed with the audit committee of the Company's board of directors, are reasonable; however, actual results could differ from these estimates.
Statements of Operations, Balance Sheet, and Statement of Cash Flows Presentation
Certain line items from the December 31, 2013 consolidated balance sheet and consolidated statement of cash flows for the years ended December 31, 2013 and 2012 have been conformed to the 2014 presentation. The carrier costs related to unbilled revenue are now included in accounts payable rather than accrued expenses, other. The conformed line items had no impact on previously reported results.
Certain line items from the consolidated statements of operations for the years ended December 31, 2013 and 2012 have been conformed to the 2014 presentation, including the retitling of direct expense to cost of purchased transportation and services and the addition of the direct operating expense category. The conformed line items had no impact on previously reported results.
The Company recognizes revenue at the point in time when delivery is completed and the shipping terms of the contract have been satisfied, or in the case of the Company's contract logistics business, based on specific, objective criteria within the provisions of each contract as described below. Related costs of delivery and service are accrued and expensed in the same period the associated revenue is recognized. Revenue is recognized once the following criteria have been satisfied:
Persuasive evidence of an arrangement exists;
Services have been rendered;
The sales price is fixed and determinable; and
Collectability is reasonably assured.
The Company's Logistics segment recognizes a significant portion of its revenue based on objective criteria that do not require significant estimates or uncertainties. Revenues on cost-reimbursable contracts are recognized by applying a factor to costs as incurred, such factor being determined by the contract provisions. Revenues on unit-price contracts are recognized at the contractual selling prices of work completed. Revenues on time and material contracts are recognized at the contractual rates as the labor hours and direct expenses are incurred. Revenues from fixed-price contracts are recognized as services are provided, unless revenues are earned and obligations fulfilled in a different pattern. Generally, the contracts contain provisions for adjustments to future pricing based upon changes in volumes, services and other market conditions, such as inflation. Revenues relating to such incentive or contingency payments are recorded when the contingency is satisfied and the Company concludes the amounts are earned.
The Company evaluates all agreements for multiple elements and aggregation of individual agreements into a multiple element agreements. Within its intermodal business, the Company has entered into certain agreements that represent multiple-deliverable arrangements. Deliverables under the arrangements represent separate units of accounting that have stand-alone value and no customer-negotiated refunds or return rights exist for the delivered services. These deliverables consist of network management fees, equipment use fees, ocean carrier intermodal services and drayage services. Revenue is allocated to each deliverable based on the relative selling price method. The relative selling price method is based on a hierarchy consisting of vendor-specific objective evidence (VSOE), if available, third-party evidence (TPE), if VSOE is not available, or estimated selling prices (ESP), if neither VSOE nor TPE is available. For the ocean carrier intermodal and drayage services, revenue is allocated based on VSOE. VSOE is not available for either the network management fees or the equipment fees. TPE was established for the equipment fees by evaluating similar and interchangeable competitor services in stand-alone sales. TPE could not be established for the network management fees. Therefore, the Company determined ESP for the network management fees by considering several external and internal factors including, but not limited to, pricing practices, similar product offerings, margin objectives and internal costs. ESP for each deliverable is updated, when appropriate, to ensure that it reflects recent pricing experience. Revenue is recognized for each of the deliverables when the revenue recognition conditions discussed above are met. No other multiple element arrangements have been identified.
For all subsidiaries (other than XPO NLM and New Breed with respect to those transactions where New Breed is serving as the customer's agent in arranging purchased transportation), the Company reports revenue on a gross basis in accordance with the Financial Accounting Standards Board's ("FASB") Accounting Standard Codification ("ASC") Topic 605, "Reporting Revenue Gross as Principal Versus Net as an Agent." The Company believes presentation on a gross basis is appropriate under ASC Topic 605 in light of the following factors:
The Company is the primary obligor and is responsible for providing the service desired by the customer.
The customer holds the Company responsible for fulfillment, including the acceptability of the service (requirements may include, for example, on-time delivery, handling freight loss and damage claims, establishing pick-up and delivery times, tracing shipments in transit, and providing contract-specific services).
For the Company's expedited, truck brokerage, last mile and intermodal businesses, the Company has complete discretion to select contractors or other transportation providers (collectively, "service providers"). For its freight forwarding business, the Company enters into agreements with significant service providers that specify the cost of services, among other things, and has ultimate authority in providing approval for all service providers that can be used by its independently-owned stations. Independently-owned stations may further negotiate the cost of services with approved service providers for individual customer shipments.
The Company has complete discretion to establish sales and contract pricing. Independently-owned stations within its freight forwarding business have the discretion to establish sales prices.
The Company bears credit risk for all receivables. In the case of freight forwarding, the independently-owned stations reimburse the Company for a portion (typically 70-80%) of credit losses. The Company retains the risk that the independent station owners will not meet this obligation.
For the Company's subsidiaries XPO NLM and New Breed with respect to those transactions where New Breed is serving as the customer's agent in arranging purchased transportation, revenue is recognized on a net basis in accordance with ASC Topic 605. The Company does not serve as the primary obligor. XPO NLM receives a fixed management fee for its services while New Breed receives a variable fee after deducting the cost of purchased transportation. Neither entity assumes credit risk in these transactions. In certain instances with XPO NLM, the Company also does not have discretion to select its service providers.
The Company's freight forwarding operations collect certain taxes and duties on behalf of their customers as part of the services offered and arranged for international shipments. The Company's accounting policy is to present these collections on a gross basis with the revenue recognized of $23.3 million, $3.7 million and $2.4 million for the years ended December 31, 2014, 2013 and 2012, respectively.
The Company considers all highly liquid investments with an original maturity of three months or less as of the date of purchase to be cash equivalents unless the investments are legally or contractually restricted for more than three months.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable are recorded at the invoice amount or in the case of unbilled amounts at the expected invoice amount. The Company records its allowance for doubtful accounts based upon its assessment of various factors. The Company considers historical experience, the age of the accounts receivable balances, credit quality of the Company's customers, any specific customer collection issues that have been identified, current economic conditions, and other factors that may affect customers' ability to pay. The Company writes off accounts receivable balances that have aged significantly once all collection efforts have been exhausted and the receivables are no longer deemed collectible from the customer. The rollforward of the allowance for doubtful accounts is as follows (in millions):
Year Ended December 31,
Beginning balance
Provision, charged to expense
Write-offs, less recoveries, and other adjustments
Prepaid expenses and other current assets include prepaid rent, software maintenance costs, insurance premiums, other prepaid operating expenses, prepaid railcar leases, certain inventories at XPO Last Mile and New Breed, and other miscellaneous receivables. Prepaid expenses are amortized into expense over the respective contract term or other applicable time period.
Property and equipment are generally recorded at cost or in the case of acquired property and equipment at fair value at the date of acquisition. Maintenance and repair expenditures are charged to expense as incurred. When assets are sold, the applicable costs and accumulated depreciation are removed from the accounts, and any gain or loss is included in income. For internally-developed software, the Company has adopted the provisions of ASC Topic 350, "Intangibles—Goodwill and Other." Accordingly, certain costs incurred in the planning and evaluation stage of internally-developed computer software are expensed as incurred. Costs incurred during the application development stage are capitalized and included in property and equipment. Capitalized internally-developed software also includes the fair value of acquired internally-developed technology. The net book value of capitalized internally-developed software totaled $70.1 million and $31.7 million as of December 31, 2014 and 2013, respectively.
Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows:
Estimated Useful Life
Buildings and leasehold improvements
Term of lease to 39 years
Rail cars, container and chassis
Office and warehouse equipment
Computer software and equipment
For additional information refer to Note 7—Property and Equipment.
Goodwill and Intangible Assets with Indefinite Lives
Goodwill consists of the excess of cost over the fair value of net assets acquired in business combinations. During June 2014, the Company rebranded its Express-1 business to XPO Express. As a result of this action, the Company accelerated the amortization of $3.3 million in indefinite-lived intangible assets related to the Express-1 trade name based on the reduction in its remaining useful life. The full $3.3 million of accelerated amortization was recorded during the quarter ended June 30, 2014 and represented the full value of the Express-1 trade name intangible asset.
The Company follows the provisions of ASC Topic 350, "Intangibles—Goodwill and Other," which requires an annual impairment test for goodwill. The Company may first choose to perform a qualitative evaluation of the likelihood of goodwill impairment. If the Company determines a quantitative evaluation is necessary, the goodwill at the reporting unit is subject to a two-step impairment test. The first step compares the book value of a reporting unit, including goodwill, with its fair value. If the book value of a reporting unit exceeds its fair value, the Company completes the second step in order to determine the amount of goodwill impairment loss that should be recorded. In the second step, the Company determines an implied fair value of the reporting unit's goodwill by allocating the fair value of the reporting unit to all of the assets and liabilities other than goodwill. The amount of impairment is equal to the excess of the book value of goodwill over the implied fair value of that goodwill. The Company performs the annual impairment testing as of August 31 each year unless events or circumstances indicate impairment of the goodwill may have occurred before that time. For goodwill impairment testing as of August 31, 2014, the Company elected to bypass the qualitative evaluation. The Company determines fair values for each of the reporting units using an income approach. For purposes of the income approach, fair value is determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate. The Company uses its internal forecasts to estimate future cash flows and includes an estimate of long-term future growth rates based on its most recent views of the long-term outlook for the business. Actual results may differ from those assumed in the Company's forecasts. The Company derives its discount rates using a capital asset pricing model and analyzing public company market data for its industry to estimate the weighted average cost of capital. The Company uses discount rates that are commensurate with the risks and uncertainty inherent in the respective businesses and in its internally developed forecasts. Discount rates used in the Company's reporting unit valuations approximated 10.5%. For the periods presented, the Company did not recognize any goodwill impairment as the estimated fair value of its reporting units with goodwill exceeded the book value of these reporting units. For each of the Company's reporting units, the excess of the fair value over the book value ranged from 20% to over 600%. For additional information refer to Note 9—Goodwill.
Intangible Assets with Definite Lives
The Company follows the provisions of ASC Topic 360, "Property, Plant and Equipment," which establishes accounting standards for the impairment of long-lived assets such as property, plant and equipment and intangible assets subject to amortization. The Company reviews long-lived assets to be held-and-used for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. 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, the asset is considered to be impaired. Impairment losses are measured as the amount by which the carrying amount of the asset group exceeds the fair value of the asset. The Company estimates fair value using the expected future cash flows discounted at a rate commensurate with the risks associated with the recovery of the asset. For the periods presented, the Company did not recognize any impairment of the identified intangible assets.
The Company's intangible assets subject to amortization consist of customer lists and relationships, carrier relationships, trade names, non-compete agreements, and other intangibles. Customer lists and relationships and trade names are amortized on an accelerated basis over the period of economic benefit based on the estimated cash flows attributable to the related intangible assets. Non-compete agreements, carrier relationships and other intangibles are amortized on a straight-line basis over the estimated useful lives of the related intangible asset. The range of estimated useful lives and the weighted-average useful lives of the respective intangible assets by type are as follows:
Weighted-Average Amortization Period
Customer lists and relationships
Term of agreement
Other intangible assets
For additional information refer to Note 8—Intangible Assets.
Restricted cash primarily consists of cash held to fund healthcare claims for employees in our Logistics business who are covered by the McNamara-O'Hara Service Contract Act (SCA), cash held as collateral for letters of credit in conjunction with the acquisition of New Breed, and cash held as security under XPO Last Mile's captive insurance contracts.
Other Long-Term Assets
Other long-term assets consist primarily of debt issuance costs related to the Company's 7.875% senior notes due 2019 (the "Senior Notes due 2019"), revolving credit facility and 4.5% convertible senior notes due October 1, 2017 (the "Convertible Notes"), favorable leasehold interests (recorded as part of purchase accounting), balances representing deposits related to facility lease arrangements, notes receivable from various XPO Global Logistics independent station owners, and incentive payments to independent station owners within the XPO Global Logistics network. The debt issuance costs related to the revolving credit facility are amortized on a straight-line basis over the respective term while the debt issuance costs related to the Senior Notes due 2019 and Convertible Notes are amortized using the effective interest method. The favorable leasehold interest assets are amortized through rent expense on a straight-line basis over the remaining lease term. The incentive payments are made by XPO Global Logistics to certain station owners as an incentive to establish an independently-owned station and are amortized over the life of each independent station contract and the unamortized portion generally is recoverable in the event of default under the terms of the agreements.
The following table outlines the Company's other long-term assets as of December 31, 2014 and 2013 (in millions):
Long-term deposits
Favorable leasehold interests
Total Other Long-Term Assets
Accrued Expenses, Other
Accrued expenses, other consist primarily of accrued purchased services; accrued litigation and insurance claims; accrued interest on the Company's outstanding debt; accrued equipment costs, including maintenance; accrued transportation and facility charges; deferred revenue; and other accrued expenses, including accrued property and other taxes and other miscellaneous accrued expenses. The following table outlines the Company's accrued expenses, other as of December 31, 2014 and 2013 (in millions):
Accrued purchased services
Accrued litigation reserves and insurance claims
Accrued equipment costs
Accrued transportation and facility charges
Other accrued expenses
Total Accrued Expenses, Other
Other Long Term Liabilities
Other long-term liabilities consist primarily of the holdback of a portion of the purchase price in connection with acquisitions; asset retirement obligations; reserves for uncertain tax positions; deferred rent liabilities; unfavorable leasehold interests (recorded as part of purchase accounting); an unfavorable customer contract (recorded as part of purchase accounting); certain liability insurance reserves; and other long-term liabilities. The unfavorable leasehold interest liabilities are amortized through rent expense on a straight-line basis over the remaining lease term. The unfavorable customer contract is amortized on an accelerated basis over the period of economic benefit based on the estimated cash flows attributable to the intangible asset. The following table outlines the Company's other long term liabilities as of December 31, 2014 and 2013 (in millions):
Acquisition-related holdbacks
Uncertain tax positions
Long-term portion of deferred rent liability
Unfavorable leasehold interests
Long-term portion of vacant rent liability
Unfavorable customer contract
Long-term workers compensation insurance claims
Total Other Long-Term Liabilities
As part of the purchase accounting related to its acquisition of Pacer International, Inc. ("Pacer"), the Company accrued an asset retirement obligation for retirement costs related to its leased railcars. For additional information on the acquisition of Pacer refer to Note 3—Acquisitions. The costs consist of removing all Company-related and other markings from the railcars, transporting the railcars to return locations designated within the leases, and storing the railcars during the return process. The asset retirement obligation is recorded at its net present value in other long-term liabilities as noted above and the fair value of the underlying asset is zero. Accretion expense is classified as interest expense in the consolidated statements of operations.
The reconciliation of changes in the asset retirement obligation during the year ended December 31, 2014 is summarized below (in millions):
Balance at December 31, 2013
Asset retirement obligation recorded in purchase accounting
Accretion expense
Liabilities settled
Revisions in estimated cash flows
Taxes on income are provided for in accordance with ASC Topic 740, "Income Taxes." Deferred income tax assets and liabilities are recognized for the expected future tax consequences of events that have been reflected in the consolidated financial statements. Deferred tax assets and liabilities are determined based on the differences between the book value and the tax basis of particular assets and liabilities, and the tax effects of net operating loss and capital loss carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in the tax rate is recognized as income or expense in the period that included the enactment date. A valuation allowance is provided to offset net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Management periodically assesses the likelihood that the Company will utilize its existing deferred tax assets and records a valuation allowance for deferred tax assets when it is more likely than not that such deferred tax assets will not be realized.
Accounting for uncertainty in income taxes is determined based on ASC Topic 740, which clarifies the accounting for uncertainty in income taxes recognized in a company's financial statements and provides guidance on the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosures and transition. For additional information refer to Note 12—Income Taxes.
Exchange gains or losses incurred on transactions conducted by business units in a currency other than the business units' functional currency are normally reflected in sales, general and administrative expense in the consolidated statements of operations. Revenues and expenses of foreign subsidiaries whose functional currencies are other than the U.S. dollar are translated into U.S. dollars using average exchange rates for the period while assets and liabilities are translated into U.S. dollars using exchange rates as of the balance sheet date. The effects of foreign currency translation adjustments are recorded in stockholders' equity.
FASB ASC Topic 820, "Fair Value Measurements and Disclosures", defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and classifies the inputs used to measure fair value into the following hierarchy:
Level 1—Quoted prices for identical instruments in active markets;
Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets; and
Level 3—Valuations based on inputs that are unobservable, generally utilizing pricing models or other valuation techniques that reflect management's judgment and estimates.
At December 31, 2014 and 2013, the Company's financial assets that were accounted for at fair value on a recurring basis included $330.8 million and $1.6 million of money market funds, respectively.
Estimated Fair Value of Financial Instruments
The aggregate net fair value estimates are based upon certain market assumptions and pertinent information available to management. The respective carrying value of certain financial instruments approximated their fair values as of the periods ended December 31, 2014 and 2013. These financial instruments include cash, accounts receivable, notes receivable, accounts payable, accrued expense, notes payable and current maturities of long-term debt. Fair values approximate carrying values for these financial instruments since they are short-term in nature, and they are receivable or payable on demand. The fair value of the freight forwarding notes receivable from the owners of the independently-owned stations approximated their respective carrying values based on the interest rates associated with these instruments.
As of December 31, 2014, the Company had outstanding $500 million of Senior Notes due 2019, which the Company is obligated to repay at face value unless they are redeemed prior to the maturity date. Holders of the Senior Notes due 2019 are due interest semiannually in arrears on March 1 and September 1 of each year commencing March 1, 2015 and maturing on September 1, 2019. Prior to September 1, 2016, the Company may redeem some or all of the Senior Notes due 2019 at a price equal to 100% of the principal amount of the notes plus the applicable "make-whole" premium. Additionally, the Company may redeem some or all of the Senior Notes due 2019 beginning on September 1, 2016. The initial redemption price is 103.938% of their principal amount, plus accrued interest. The redemption price will decline each year after 2016 and will be 100% of their principal amount, plus accrued interest, beginning on September 1, 2018. In addition, on or prior to September 1, 2016, the Company may redeem up to 40% of the aggregate principal amount of Senior Notes due 2019 with the proceeds of certain equity offerings at 107.875% of their principal amount plus accrued interest. The fair value of the Senior Notes due 2019 was $527.5 million as of December 31, 2014 based on market data. For additional information refer to Note 6—Debt.
As of December 31, 2014, the Company had outstanding $106.8 million of Convertible Notes, which the Company is obligated to repay at face value unless the holder agrees to a lesser amount or elects to convert all or a portion of such notes into the Company's common stock. Holders of the Convertible Notes are due interest semiannually in arrears on April 1 and October 1 of each year. The conversion rate is 60.8467 shares of common stock per $1,000 principal amount of notes (equivalent to an initial conversion price of approximately $16.43 per share of common stock) and is subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. The fair value of the Convertible Notes was $271.3 million as of December 31, 2014 based on market data. For additional information refer to Note 6—Debt.
The Company accounts for share-based compensation based on the equity instrument's grant date fair value in accordance with ASC Topic 718, "Compensation—Stock Compensation". The fair value of each share-based payment award is established on the date of grant. For grants of restricted stock units ("RSUs") subject to service or performance-based vesting conditions only, the fair value is established based on the market price on the date of the grant. For grants of RSUs subject to market-based vesting conditions, the fair value is established using the Monte Carlo simulation lattice model. For grants of options, the Company uses the Black-Scholes option pricing model to estimate the fair value of share-based payment awards. The determination of the fair value of share-based awards is affected by the Company's stock price and a number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends.
The weighted-average fair value of each stock option recorded in expense for the years ended December 31, 2014, 2013 and 2012 was estimated on the date of grant using the Black-Scholes option pricing model and is amortized over the requisite service period of the option. The Company has used one grouping for the assumptions, as its option grants have similar characteristics. The expected term of options granted has been derived based upon the Company's history of actual exercise behavior and represents the period of time that options granted are expected to be outstanding. Historical data was also used to estimate option exercises and employee terminations. Estimated volatility is based upon the Company's historical market price at consistent points in a period equal to the expected life of the options. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant and the expected dividend yield is zero. For options with graded vesting, it is the Company's policy to recognize compensation cost on a straight-line basis over the requisite service period for the entire award; however, the amount of compensation cost recognized at any date will at least equal the portion of the grant date value of the award that is vested at that date.
For the Company's performance-based restricted stock units ("PRSUs"), the Company recognizes expense on a straight line basis over the awards' requisite service period based on the number of awards expected to vest according to actual and expected financial results of the individual performance periods compared to set performance targets for those periods. If achievement of the performance targets for a PRSU award is not considered to be probable, then no expense will be recognized until achievement of such targets becomes probable. For additional information refer to Note 11—Stock-Based Compensation.
Earnings per common share are computed in accordance with ASC Topic 260, "Earnings per Share", which requires companies to present basic earnings per share and diluted earnings per share. For additional information refer to Note 13—Earnings per Share.
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The entire disclosure for all significant accounting policies of the reporting entity.
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Business Combinations [Abstract]
New Breed Logistics
On July 29, 2014, the Company entered into a definitive Agreement and Plan of Merger (the "New Breed Merger Agreement") with New Breed, providing for the Company to acquire all of New Breed (the "New Breed Transaction"). New Breed is a provider of highly engineered contract logistics solutions for multi-national and medium-sized corporations and government agencies in the United States. The closing of the transaction was effective on September 2, 2014. At the closing, the Company paid $615.9 million in cash including a $1.1 million estimate of the working capital adjustment.
In conjunction with the New Breed Merger Agreement, the Company entered into a subscription agreement with Louis DeJoy, the Chief Executive Officer of New Breed. Pursuant to the subscription agreement, Mr. DeJoy purchased $30.0 million of unregistered XPO common stock at a per share purchase price in cash equal to (1) the closing price of XPO common stock on the New York Stock Exchange on July 29, 2014 with respect to 50% of such purchase and (2) the closing price of XPO common stock on the New York Stock Exchange on the trading day immediately preceding September 2, 2014 with respect to the remaining 50% of such purchase. Due to the interrelationship between the New Breed Merger Agreement and the subscription agreement, the Company considers the substance of the consideration paid to be a combination of net cash and equity as described below.
The fair value of the total consideration paid under the New Breed Merger Agreement was $615.9 million and consisted of $585.8 million of net cash paid at the time of closing, including an estimate of the working capital adjustment, and $30.1 million of equity representing the fair value of 1,060,598 shares of the Company's common stock at the closing market price of $32.45 per share on September 2, 2014 less a marketability discount on the shares issued due to a holding period restriction. The net cash paid at the time of closing consisted of $615.8 million less the $30.0 million paid by Louis DeJoy to purchase XPO common stock per the subscription agreement.
The New Breed Transaction was accounted for as a purchase business combination in accordance with ASC 805 "Business Combinations." Assets acquired and liabilities assumed were recorded in the accompanying consolidated balance sheet at their estimated fair values as of September 2, 2014, with the remaining unallocated purchase price recorded as goodwill. Goodwill represents the expected synergies and cost rationalization from the merger of operations as well as intangible assets that do not qualify for separate recognition such as an assembled workforce. The following table outlines the consideration transferred and purchase price allocation at the respective estimated fair values as of September 2, 2014 (in millions):
Prepaid and other current assets
Income tax receivable
Trademarks/trade names
Contractual customer relationships asset
Contractual customer relationships liability
Non-contractual customer relationships
Deferred tax liabilities, non-current
As of December 31, 2014, the purchase price allocation is considered final, except for the fair value of taxes and assumed liabilities. All goodwill recorded in the acquisition relates to the Logistics reportable segment. The goodwill as a result of the acquisition is not deductible for income tax purposes. The working capital adjustments in connection with this acquisition have been finalized, and there was no material change in the purchase price as a result.
Atlantic Central Logistics
On July 28, 2014, the Company entered into a Stock Purchase Agreement with Perry Barbaruolo, Thomas G. Bartley, Robert Humes II, Jeffrey E. Patterson, Brian Ruane, The Bryn Mawr Trust Company of Delaware, as Trustee of the Perry Barbaruolo 2014 Delaware Trust, Thomas Bartley, as Trustee of the Janice C. Day 2014 Trust, Thomas Bartley, as Trustee of the Jessica M. Clark 2014 Trust, Thomas Bartley, as Trustee of the Jacqueline M. Patterson 2014 Trust, Thomas Bartley, as Trustee of the Patterson 2014 Grandchildren's Trust, The Bryn Mawr Trust Company of Delaware as Trustee of the Brian Ruane 2014 Delaware Trust, and The Bryn Mawr Trust Company of Delaware, as Trustee of the Richard Roberts 2014 Trust to acquire all of the outstanding capital stock of Simply Logistics Inc d/b/a Atlantic Central Logistics ("ACL") for $36.2 million in cash consideration and deferred payments. ACL provides e-commerce fulfillment services by facilitating the time-sensitive, local movement of goods between distribution centers and the end-consumer.
The ACL acquisition was accounted for as a purchase business combination in accordance with ASC Topic 805 "Business Combinations." Assets acquired and liabilities assumed were recorded in the accompanying consolidated balance sheet at their estimated fair values as of July 28, 2014 with the remaining unallocated purchase price recorded as goodwill. As a result of the acquisition, the Company recorded goodwill of $25.5 million and intangible assets of $11.7 million. All goodwill recorded related to the acquisition relates to the Transportation reportable segment. The goodwill as a result of the acquisition is not deductible for income tax purposes. As of December 31, 2014, the purchase price is considered final except for the fair value of accounts receivable, intangible assets, taxes and assumed liabilities. The working capital adjustments in connection with this acquisition have been finalized, and there was no material change in the purchase price as a result.
Pacer International
On January 5, 2014, the Company entered into a definitive Agreement and Plan of Merger (the "Pacer Merger Agreement") with Pacer, providing for the acquisition of Pacer by the Company (the "Pacer Transaction"). Pacer is an asset-light North American freight transportation and logistics services provider. The closing of the transaction was effective on March 31, 2014 (the "Effective Time").
At the Effective Time, each share of Pacer's common stock, par value $0.01 per share, issued and outstanding immediately prior to the Effective Time was converted into the right to receive (i) $6.00 in cash and (ii) 0.1017 of a share of XPO common stock, which amount is equal to $3.00 divided by the average of the volume-weighted average closing prices of XPO common stock for the ten trading days prior to the Effective Time (the "Pacer Merger Consideration"). Pursuant to the terms of the Pacer Merger Agreement, all vested and unvested Pacer options outstanding at the Effective Time were settled in cash based on the value of the Pacer Merger Consideration. In addition, all Pacer restricted stock, and all vested and unvested Pacer restricted stock units and performance units outstanding at the Effective Time were converted into the right to receive the Pacer Merger Consideration. The fair value of the total consideration paid under the Pacer Merger Agreement was $331.5 million and consisted of $223.3 million of cash paid at the time of closing and $108.2 million of equity representing the fair value of 3,688,246 shares of the Company's common stock at the closing market price of $29.41 per share on March 31, 2014 less a marketability discount on a portion of shares issued to certain former Pacer executives due to a holding period restriction. The marketability discount did not have a material impact on the fair value of the equity consideration provided.
The Pacer Transaction was accounted for as a purchase business combination in accordance with ASC 805 "Business Combinations." Assets acquired and liabilities assumed were recorded in the accompanying consolidated balance sheet at their fair values as of March 31, 2014, with the remaining unallocated purchase price recorded as goodwill. Goodwill represents the expected synergies and cost rationalization from the merger of operations as well as intangible assets that do not qualify for separate recognition such as an assembled workforce. The following table outlines the consideration transferred and purchase price allocation at the respective fair values as of March 31, 2014 (in millions):
Deferred tax assets, current
Contractual customer relationships
Accrued salaries and wages
As of December 31, 2014, the purchase price allocation is considered final, except for the fair value of taxes and assumed liabilities. All goodwill recorded related to the acquisition relates to the Transportation reportable segment. The carryover of the tax basis in goodwill is deductible for income tax purposes while the step-up in goodwill as a result of the acquisition is not deductible for income tax purposes. Total tax deductible goodwill was $323.2 million on the acquisition date of March 31, 2014. The difference between book and tax goodwill represents the tax basis in goodwill from acquisitions made by Pacer prior to the acquisition by XPO.
On December 10, 2013, the Company entered into a Stock Purchase Agreement with Landstar Supply Chain Solutions, Inc. and Landstar System Holdings, Inc. (the "NLM Stock Purchase Agreement") to acquire all of the outstanding capital stock of Landstar Supply Chain Solutions, Inc. known as National Logistics Management ("NLM") (the "NLM Transaction"). NLM is the largest provider of web-based expedited transportation management in North America. The closing of the transaction occurred on December 28, 2013. The fair value of the total consideration paid under the NLM Stock Purchase Agreement was $87.0 million, paid in cash, excluding any working capital adjustments.
The NLM acquisition was accounted for as a purchase business combination in accordance with ASC Topic 805 "Business Combinations." Assets acquired and liabilities assumed were recorded in the accompanying consolidated balance sheet at their fair values as of December 28, 2013 with the remaining unallocated purchase price recorded as goodwill. Goodwill represents the expected synergies and cost rationalization from the joining of operations as well as intangible assets that do not qualify for separate recognition such as an assembled workforce. The following table outlines the consideration transferred and purchase price allocation at the respective fair values as of December 28, 2013 (in millions):
Prepaid and other assets
All goodwill recorded related to the acquisition relates to the Transportation reportable segment and is fully deductible for income tax purposes based on the Internal Revenue Code Section 338(h)(10) election made with respect to the NLM Transaction. The working capital adjustments in connection with this acquisition have been finalized, and there was no material change in the purchase price as a result.
Optima Service Solutions
On November 13, 2013, the Company entered into a Membership Interest Purchase Agreement with A-1 Home Services, Inc., Mr. Steve Gordon and Mr. Glenn Lebowitz to acquire all of the outstanding equity interests of Optima Service Solutions, LLC ("Optima") for $26.6 million in cash consideration and deferred payments, excluding any working capital adjustments. Optima is a non-asset, third-party logistics service provider focusing on arranging in-home complex installation and residential delivery services for major retailers.
The Optima acquisition was accounted for as a purchase business combination in accordance with ASC Topic 805 "Business Combinations." Assets acquired and liabilities assumed were recorded in the accompanying consolidated balance sheet at their estimated fair values as of November 13, 2013 with the remaining unallocated purchase price recorded as goodwill. As a result of the acquisition, the Company recorded goodwill of $14.1 million and intangible assets of $11.3 million. All goodwill recorded related to the acquisition relates to the Transportation reportable segment and is fully deductible for income tax purposes. In addition, the Company recorded an acquired technology asset of $0.9 million as property and equipment in the consolidated balance sheet. The working capital adjustment in connection with this acquisition has been finalized, and there was no material change in the purchase price as a result.
On July 12, 2013, the Company entered into a Stock Purchase Agreement with 3PD Holding, Inc. ("3PD"), Logistics Holding Company Limited, Mr. Karl Meyer, Karl Frederick Meyer 2008 Irrevocable Trust II, Mr. Randall Meyer, Mr. Daron Pair and Mr. James J. Martell (the "3PD Stock Purchase Agreement") to acquire all of the outstanding capital stock of 3PD (the "3PD Transaction"). 3PD is a non-asset, third-party provider of heavy goods, last-mile logistics in North America. The closing of the transaction occurred on August 15, 2013. The fair value of the total consideration paid under the 3PD Stock Purchase Agreement was $364.3 million and consisted of $333.2 million of net cash payable at the time of closing, $22.5 million of deferred payments, $7.4 million representing the fair value of 407,479 restricted shares of the Company's common stock at the closing market price of $21.99 per share on August 15, 2013 less a marketability discount of $1.6 million on shares issued to the sellers due to a holding period restriction, and the final working capital adjustment of $1.2 million. The majority of the shares issued are restricted until September 2, 2016.
The 3PD Transaction was accounted for as a purchase business combination in accordance with ASC 805 "Business Combinations." Assets acquired and liabilities assumed were recorded in the accompanying consolidated balance sheet at their fair values as of August 15, 2013, with the remaining unallocated purchase price recorded as goodwill. Goodwill represents the expected synergies and cost rationalization from the joining of operations as well as intangible assets that do not qualify for separate recognition such as an assembled workforce. The following table outlines the consideration transferred and purchase price allocation at the respective fair values as of August 15, 2013 (in millions):
All goodwill recorded related to the acquisition relates to the Transportation reportable segment. The carryover of the tax basis in goodwill is deductible for income tax purposes while the step-up in goodwill as a result of the acquisition is not deductible for income tax purposes. Total tax deductible goodwill was $27.1 million on the acquisition date of August 15, 2013. The difference between book and tax goodwill represents the tax basis in goodwill from acquisitions made by 3PD prior to the acquisition by XPO.
Interide Logistics
On May 6, 2013, pursuant to an asset purchase agreement, the Company acquired substantially all of the assets of Interide Logistics, LC ("Interide") for $3.1 million in cash consideration and 36,878 restricted shares of the Company's common stock with a value of $0.6 million, excluding any working capital adjustments, with no assumption of debt. Interide is a non-asset, third-party transportation logistics service provider focusing on freight brokerage with offices in Salt Lake City, UT, Louisville, KY and St. Paul, MN.
The Interide acquisition was accounted for as a purchase business combination in accordance with ASC Topic 805 "Business Combinations." Assets acquired and liabilities assumed were recorded in the accompanying consolidated balance sheet at their fair values as of May 6, 2013 with the remaining unallocated purchase price recorded as goodwill. As a result of the acquisition, the Company recorded goodwill of $3.4 million and intangible assets of $1.7 million. All goodwill recorded related to the acquisition relates to the Transportation reportable segment and is fully deductible for income tax purposes. The working capital adjustment in connection with this acquisition has been finalized, and there was no material change in the purchase price as a result.
Covered Logistics & Transportation
On February 26, 2013, pursuant to an asset purchase agreement, the Company acquired substantially all of the assets of Covered Logistics & Transportation LLC ("Covered") for $8.0 million in cash consideration and 173,712 restricted shares of the Company's common stock with a value of $3.0 million, excluding any working capital adjustments, with no assumption of debt. Covered is a non-asset, third-party transportation logistics service provider focusing on freight brokerage with offices in Lake Forest, IL and Dallas, TX.
The Covered acquisition was accounted for as a purchase business combination in accordance with ASC Topic 805 "Business Combinations." Assets acquired and liabilities assumed were recorded in the accompanying consolidated balance sheet at their fair values as of February 26, 2013 with the remaining unallocated purchase price recorded as goodwill. As a result of the acquisition, the Company recorded goodwill of $7.4 million and intangible assets of $2.8 million. All goodwill recorded related to the acquisition relates to the Transportation reportable segment and is fully deductible for income tax purposes. The working capital adjustment in connection with this acquisition has been finalized, and there was no material change in the purchase price as a result.
East Coast Air Charter
On February 8, 2013, pursuant to an asset purchase agreement, the Company purchased substantially all of the operating assets of East Coast Air Charter, Inc. and 9-1-1 Air Charter LLC (together, "ECAC" or "East Coast Air Charter") for total cash consideration of $9.3 million, excluding any working capital adjustments, with no assumption of debt. ECAC is a non-asset, third-party logistics service provider specializing in expedited air charter brokerage in Statesville, NC.
The ECAC acquisition was accounted for as a purchase business combination in accordance with ASC Topic 805 "Business Combinations." Assets acquired and liabilities assumed were recorded in the accompanying consolidated balance sheet at their fair values as of February 8, 2013 with the remaining unallocated purchase price recorded as goodwill. As a result of the acquisition, the Company recorded goodwill of $3.8 million and intangible assets of $4.8 million. All goodwill recorded related to the acquisition relates to the Transportation reportable segment and is fully deductible for income tax purposes. The working capital adjustment in connection with this acquisition has been finalized, and there was no material change in the purchase price as a result.
Pro Forma Financial Information
The following unaudited pro forma consolidated results of operations for the twelve-month periods ended December 31, 2014 and 2013 present consolidated information of the Company as if the acquisitions of New Breed, Pacer and 3PD had occurred as of January 1, 2013 (in millions, except per share data):
Pro Forma Year Ended December 31, 2014
Operating loss
(129.1
Loss per common share
The unaudited pro forma consolidated results for the twelve-month periods were prepared using the acquisition method of accounting and are based on the historical financial information of New Breed, Pacer, 3PD and the Company. The unaudited pro forma consolidated results incorporate historical financial information for all significant acquisitions since January 1, 2013. Pro forma information for ECAC, Covered, Interide, Optima, NLM and ACL has not been included as the impacts were not considered material to the pro forma disclosure. The historical financial information has been adjusted to give effect to pro forma adjustments that are: (i) directly attributable to the acquisition, (ii) factually supportable and (iii) expected to have a continuing impact on the combined results. The unaudited pro forma consolidated results are not necessarily indicative of what the Company's consolidated results of operations actually would have been had it completed these acquisitions on January 1, 2013.
The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).
Reference 10: http://www.xbrl.org/2003/role/presentationRef
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Restructuring and Related Activities [Abstract]
On March 31, 2014, the Company initiated a facility rationalization and severance program to close facilities and reduce employment in order to improve efficiency and profitability in conjunction with its acquisition of Pacer. The program includes facility exit activities and employment reduction initiatives.
The amount of restructuring charges incurred during the year ended December 31, 2014 and included in the consolidated statements of operations as sales, general and administrative expense is summarized below (in millions). These charges are not allocated to our reportable segments. No amount of the restructuring liability was included in the purchase price allocation for Pacer as all activities were initiated by XPO to benefit the post-combination period.
Contract termination
Reserve balance at December 31, 2013
Charges incurred
Name: us-gaap_RestructuringAndRelatedActivitiesAbstract
The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.
-Subparagraph (SAB TOPIC 5.P.4)
-Section P
-Subsection 3, 4
Name: us-gaap_RestructuringAndRelatedActivitiesDisclosureTextBlock
Commitments and Contingencies Disclosure [Abstract]
Purchase Commitments
As of December 31, 2014, the Company had approximately $8.3 million in future minimum payments required under non-cancellable service agreements for ongoing services, maintenance and support to information technology providers. Remaining future minimum payments related to these agreements amount to approximately $6.4 million, $1.7 million and $0.2 million for the years ending December 31, 2015, 2016 and 2017, respectively.
During the year ended December 31, 2014, $6.0 million of expense was recognized related to these agreements. No expense was recognized in the years ended December 31, 2013 and 2012 related to these agreements.
Lease Commitments
As of December 31, 2014, the Company had approximately $342.1 million in future minimum payments required under operating leases for various real estate, double-stack railcars, containers, chassis, tractors, data processing equipment, transportation and office equipment leases that have an initial or remaining non-cancelable lease term in excess of one year. Remaining future minimum payments related to these operating leases amount to approximately $123.7 million, $76.5 million, $53.1 million, $39.5 million, and $49.3 million for the periods ending December 31, 2015, 2016, 2017, 2018, and 2019 and thereafter, respectively.
Rent expense was approximately $82.3 million, $6.9 million and $1.9 million for the years ended December 31, 2014, 2013 and 2012, respectively.
The Company is involved, and will continue to be involved, in numerous legal proceedings arising out of the conduct of its business. These proceedings may include, among other matters, claims for property damage or personal injury incurred in connection with the transportation of freight and employment-related claims, including claims involving asserted breaches of employee restrictive covenants and tortious interference with contract. These proceedings also include numerous purported class-action lawsuits, multi-plaintiff and individual lawsuits and state tax and other administrative proceedings that claim that the Company's owner operators or contract carriers should be treated as employees, rather than independent contractors. These lawsuits and proceedings may seek substantial monetary damages (including claims for unpaid wages, overtime, failure to provide meal and rest periods, unreimbursed business expenses and other items), injunctive relief, or both.
The Company establishes 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. Accruals for loss contingencies are reviewed quarterly and adjusted as additional information becomes available. In connection with certain acquisitions of privately-held businesses, the Company has retained purchase price holdbacks to provide security for a negotiated duration with respect to damages incurred in connection with pre-acquisition claims and litigation matters. If a loss is not both probable and reasonably estimable, or if an exposure to loss exists in excess of the amount accrued therefor or the applicable purchase price holdback, the Company assesses whether there is at least a reasonable possibility that a loss, or additional loss, may have been incurred. If there is a reasonable possibility that a loss, or additional loss, may have been incurred, the Company discloses the estimate of the possible loss or range of loss if it is material and an estimate can be made, or states that such an estimate cannot be made. The evaluation as to whether a loss is reasonably possible or probable is based on the Company's assessment, in conjunction with legal counsel, regarding the ultimate outcome of the matter.
The Company believes that it has adequately accrued for, or has adequate purchase price holdbacks with respect to, the potential impact of loss contingencies that are probable and reasonably estimable, and, except as noted below under "Pacer Classification Claims," there was no indication of a reasonable possibility that a material loss, or additional material loss (including in excess of any applicable purchase price holdback), may have been incurred. The Company does not believe that the ultimate resolution of any matters to which the Company is presently party will have a material adverse effect on its results of operations, financial condition or cash flows. However, the results of these matters cannot be predicted with certainty, and an unfavorable resolution of one or more of these matters could have a material adverse effect on the Company's financial condition, results of operations or cash flows. Legal costs incurred related to these matters are expensed as incurred.
The Company carries liability and excess umbrella insurance policies that it deems sufficient to cover potential legal claims arising in the normal course of conducting its operations as a transportation company. In the event the Company is required to satisfy a legal claim in excess of the coverage provided by this insurance, the Company's financial condition, results of operations or cash flows could be negatively impacted.
Pacer Classification Claims
The Company's Pacer subsidiary, which was acquired on March 31, 2014, received notices from the California Labor Commissioner, Division of Labor Standards Enforcement (the "DLSE"), that a total of 153 owner operators contracted with certain Pacer subsidiaries have filed claims with the DLSE in which they assert that they should be classified as employees, as opposed to independent contractors. These claims seek reimbursement for the owner operators' business expenses, including fuel, tractor maintenance and tractor lease payments. A decision has been rendered by a DLSE hearing officer in seven of these claims, who awarded a total of $2.2 million to the seven claimants. Pacer has appealed these awards to California Superior Court, San Diego, where a de novo trial was held on the merits of those claims. On January 28, 2015, the court issued a tentative statement of decision in which it indicated its intent to find that the seven claimants were employees rather than independent contractors, and to award an aggregate of $2.0 million to the claimants. Under the court's tentative statement of decision, either the claimants or the Company may file objections or comments by February 17, 2015, after which the court will render its final decision. The court's final decision is subject to appeal, but the Company cannot provide assurance that the Company will determine to pursue an appeal or that an appeal will be successful. The remaining DLSE claims have been transferred to California Superior Court in three separate actions involving 175 claimants. These matters are in the initial procedural stages.
Pacer also is a party to a putative class action litigation brought by Edwin Molina in the U.S. District Court, Southern District of California. Molina asserts that he should be classified as an employee, as opposed to an independent contractor, and seeks damages for alleged violation of various California wage and hour laws. Molina seeks to have the litigation certified as a class action involving all owner-operators contracted with Pacer Cartage at any time from August 2009 to the present, which could involve as many as 600 claimants. Certain of these potential claimants also may have claims under the actions pending in California Superior Court as described above. This matter is in the initial stages of discovery and the court has not yet determined whether to certify the matter as a class action. The Company has reached a tentative agreement to settle this litigation with the claimant, subject to court approval and acceptance by a minimum percentage of members of the purported class. There can be no assurance that the settlement agreement will be finalized and executed, that the court will approve any such settlement agreement or that it will be accepted by the requisite members of the purported class.
During the fourth quarter of 2014, in connection with its Pacer acquisition accounting process, the Company established a reserve for the estimated probable loss with respect to certain of the cases described above, as required pursuant to applicable accounting standards. This amount was not material to the Company's total liabilities or goodwill. The Company continues to evaluate these and other claims in light of the recent adverse decisions and other factors. The Company believes there is a reasonable possibility that a loss may be incurred in excess of the reserve amount; however, the Company cannot estimate the possible loss or range of such possible losses at this time. There can be no assurance that the amount of any actual loss the Company incurs in connection with these matters would not materially exceed any reserve that may be established.
Pacer Acquisition Litigation
Between January 8 and January 16, 2014, five substantially identical putative class actions were filed in the Tennessee Chancery Court against the Company, Pacer and Pacer's directors challenging the Company's acquisition of Pacer. By stipulation and order dated February 18, 2014, the Chancery Court for Davidson County consolidated these cases under the caption In re Pacer International, Inc. Shareholder Litigation, No. 14-39-IV. The operative complaint in the consolidated case alleges, among other things, that the directors of Pacer breached their fiduciary duties to Pacer's shareholders in connection with the proposed acquisition of Pacer by XPO by agreeing to the proposed merger at an allegedly unfair price pursuant to a purportedly flawed and conflicted sales process, by including certain allegedly preclusive deal-protection measures, and by misrepresenting and/or omitting certain allegedly material information in the proxy statement relating to the transaction. The parties have reached a settlement agreement that required certain additional disclosures which were made pursuant to a Current Report on Form 8-K filed with the SEC on March 18, 2014, and the Company's payment of the plaintiff attorneys' fees of $0.6 million. The settlement agreement has received final court approval and has been fully performed.
Name: us-gaap_CommitmentsAndContingenciesDisclosureAbstract
The entire disclosure for commitments and contingencies.
Name: us-gaap_CommitmentsAndContingenciesDisclosureTextBlock
Debt Disclosure [Abstract]
Senior Notes due 2019
On August 25, 2014, the Company completed a private placement of $500.0 million aggregate principal amount of 7.875% Senior Notes due 2019. Total unamortized debt issuance costs related to the Senior Notes due 2019 classified in other long-term assets at December 31, 2014 are $9.8 million.
The Senior Notes due 2019 were offered only to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the "Securities Act") and, outside the United States, only to non-U.S. investors pursuant to Regulation S. The Senior Notes due 2019 were not registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent an effective registration statement or an applicable exemption from registration requirements or a transaction not subject to the registration requirements of the Securities Act or any state securities laws. The Senior Notes due 2019 bear interest at a rate of 7.875% per annum payable semiannually, in cash in arrears, on March 1 and September 1 of each year, commencing March 1, 2015 and maturing on September 1, 2019. The Senior Notes due 2019 are guaranteed by each of the Company's direct and indirect wholly-owned restricted subsidiaries (other than certain excluded subsidiaries) that are obligors under, or guarantee obligations under, the Company's existing credit agreement (or certain replacements thereof) or guarantee certain capital markets indebtedness of the Company or any guarantor of the Senior Notes due 2019. The Senior Notes due 2019 and the guarantees thereof are unsecured, unsubordinated indebtedness of the Company and the guarantors. Among other things, the covenants of the Senior Notes due 2019 limit the Company's ability to, with certain exceptions: incur indebtedness or issue disqualified stock; grant liens; pay dividends or make distributions in respect of capital stock; make certain investments or other restricted payments; prepay or repurchase subordinated debt; sell or transfer assets; engage in certain mergers, consolidations, acquisitions and dispositions; and enter into certain transactions with affiliates.
Prior to September 1, 2016, the Company may redeem some or all of the Senior Notes due 2019 at a price equal to 100% of the principal amount of the notes plus the applicable "make-whole" premium. The "make-whole" premium equals the greater of 1% of the then outstanding principal amount of the note and the excess of (a) the present value at such redemption date of (i) the redemption price of the note, at September 1, 2016, plus (ii) all required interest payments due on the note through September 1, 2016 (excluding accrued but unpaid interest), computed using a discount rate equal to the treasury rate as of such redemption date, plus 50 basis points; over (b) the then outstanding principal amount of the note. On and after September 1, 2016, the Company may redeem some or all of the notes for a redemption price that declines each year. The initial redemption price is 103.938% of their principal amount, plus accrued interest. The redemption price will decline each year after 2016 and will be 100% of their principal amount, plus accrued interest, beginning on September 1, 2018. In addition, on or prior to September 1, 2016, the Company may redeem up to 40% of the aggregate principal amount of notes with the proceeds of certain equity offerings at 107.875% of their principal amount plus accrued interest. The Company may make such redemption only if, after any such redemption, at least 60% of the aggregate principal amount of notes originally issued remains outstanding.
See Note 18—Subsequent Events for information concerning the Company's most recent issuance of debt.
The Company may from time to time use debt financing for acquisitions and business start-ups, among other things. The Company also enters into long-term debt and capital leases with various third-parties from time to time to finance certain operational equipment and other assets used in its business operations. Generally, these loans and capital leases bear interest at market rates, and are collateralized with accounts receivable, equipment and certain other assets of the Company.
As of December 31, 2014, the Company and certain of its wholly-owned subsidiaries, as borrowers, were parties to a $415 million multicurrency secured Amended and Restated Revolving Loan Credit Agreement (the "Amended Credit Agreement") with the lender parties thereto and Morgan Stanley Senior Funding, Inc., as administrative agent for such lenders, with a commitment termination date of October 17, 2018. The principal amount of the commitments under the Amended Credit Agreement may be increased by an aggregate amount of up to $100 million, subject to certain terms and conditions specified in the Amended Credit Agreement. The Amended Credit Agreement replaces and supersedes in its entirety the $125 million multicurrency secured Revolving Loan Credit Agreement that the Company entered into on October 18, 2013. At December 31, 2014, the Company had outstanding letters of credit of $14.1 million. Of the $14.1 million of letters of credit outstanding, $4.9 million were fully cash collateralized by the Company. The collateral is included in restricted cash on the consolidated balance sheet as of December 31, 2014. The Company's availability under the Amended Credit Agreement is not impacted by the cash collateralized outstanding letters of credit. Total unamortized debt issuance costs related to the Amended Credit Agreement classified in other long-term assets at December 31, 2014 are $3.1 million.
On August 8, 2014, the Company amended its revolving loan facility to permit, among other things, the acquisition of New Breed and the related transactions and the offering of the Senior Notes due 2019.
The proceeds of the Amended Credit Agreement may be used by the Company and its subsidiaries for ongoing working capital needs and other general corporate purposes, including strategic acquisitions, and fees and expenses in connection with the transaction. At December 31, 2014, the Company had no amount drawn under the Amended Credit Agreement. Borrowings under the Amended Credit Agreement bear interest at a per annum rate equal to, at the Company's option, the one, two, three or six month (or such other period less than one month or greater than six months as the lenders may agree) LIBOR rate plus a margin of 1.75% to 2.25%, or a base rate plus a margin of 0.75% to 1.25%. The Company is required to pay an undrawn commitment fee equal to 0.25% or 0.375% of the quarterly average undrawn portion of the commitments under the Amended Credit Agreement, as well as customary letter of credit fees. The margin added to LIBOR, or base rate, will depend on the quarterly average availability of the commitments under the Amended Credit Agreement.
All obligations under the Amended Credit Agreement are secured by substantially all of the Company's assets and unconditionally guaranteed by certain of its subsidiaries, provided that no foreign subsidiary guarantees, and no assets of any foreign subsidiary secures, any obligations of any of the Company's domestic borrower subsidiaries. Within the meaning of Regulation S-X, Rule 3-10, XPO Logistics, Inc. (the parent company) has no independent assets or operations, the guarantees of its subsidiaries are full and unconditional and joint and several, and any subsidiaries other than the guarantor subsidiaries are minor. The Amended Credit Agreement contains representations, warranties and covenants that are customary for agreements of this type. Among other things, the covenants in the Amended Credit Agreement limit the Company's ability to, with certain exceptions: incur indebtedness; grant liens; engage in certain mergers, consolidations, acquisitions and dispositions; make certain investments and restricted payments; and enter into certain transactions with affiliates. In certain circumstances, the Amended Credit Agreement also requires the Company to maintain minimum EBITDA or, at the Company's election, maintain a Fixed Charge Coverage Ratio (as defined in the Amended Credit Agreement) of not less than 1.00 to 1.00. If an event of default under the Amended Credit Agreement shall occur and be continuing, the commitments thereunder may be terminated and the principal amount outstanding thereunder, together with all accrued unpaid interest and other amounts owed thereunder, may be declared immediately due and payable. Certain subsidiaries acquired by the Company in the future may be excluded from the restrictions contained in certain of the foregoing covenants.
At December 31, 2014, the Company had outstanding $106.8 million aggregate principal amount of 4.50% Convertible Senior Notes due October 1, 2017 (the "Convertible Notes"). Total unamortized debt issuance costs classified in other long-term assets at December 31, 2014 are $2.1 million. Interest is payable on the Convertible Notes on April 1 and October 1 of each year.
During the twelve months ended December 31, 2014, the Company issued an aggregate of 1,640,908 shares of the Company's common stock to certain holders of the Notes in connection with the conversion of $27.0 million aggregate principal amount of the Convertible Notes. The conversions were allocated to long-term debt and equity in the amounts of $22.1 million and $27.1 million, respectively. Certain of these transactions represented induced conversions pursuant to which the Company paid the holder a market-based premium in cash. The negotiated market-based premiums, in addition to the difference between the current fair value and the book value of the Convertible Notes, were reflected in interest expense. The number of shares of common stock issued in the foregoing transactions equals the number of shares of common stock presently issuable to holders of the Convertible Notes upon conversion under the original terms of the Convertible Notes.
Under certain circumstances at the election of the holder, the Convertible Notes may be converted until the close of business on the business day immediately preceding April 1, 2017, into cash, shares of the Company's common stock, or a combination of cash and shares of common stock, at the Company's election, at the initial conversion rate of approximately 60.8467 shares of common stock per $1,000 in principal amount, which is equivalent to an initial conversion price of approximately $16.43 per share. In addition, following certain corporate events that occur prior to the maturity date, the Company will increase the conversion rate for a holder who elects to convert its Convertible Notes in connection with such corporate event in certain circumstances. On or after April 1, 2017, until the close of business on the business day immediately preceding the maturity date, holders may convert their Convertible Notes at any time.
The Convertible Notes may be redeemed by the Company on or after October 1, 2015 if the last reported sale price of the Company's common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption. The Convertible Notes are currently redeemable under this provision. The Company may redeem the Convertible Notes in whole but not in part, at a redemption price in cash equal to 100% of the principal amount to be redeemed, plus accrued and unpaid interest, but excluding, the redemption date, plus a make-whole premium payment. The "make whole premium" payment or delivery will be made, as the case may be, in cash, shares of the Company's common stock or a combination of cash and shares of the Company's common stock, at the Company's election, equal to the present values of the remaining scheduled payments of interest on the Convertible Notes to be redeemed through October 1, 2017 (excluding interest accrued to, but excluding, the redemption date), computed using a discount rate equal to 4.50%. The make-whole premium is paid to holders whether or not they convert the Convertible Notes following the Company's issuance of a redemption notice.
The Convertible Notes do not contain any financial or operating covenants or restrictions on the payment of dividends, the incurrence of indebtedness or the issuance or repurchase of securities by the Company or any of its subsidiaries. If the Company undergoes a fundamental change, holders may, subject to certain conditions, require the Company to repurchase for cash all or part of their Convertible Notes at a repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.
The following table outlines the Company's debt obligations as of December 31, 2014 and 2013 (in millions):
Capital leases for equipment
Less: unamortized discount on convertible senior notes
Less: current maturities of long-term debt
Total long-term debt, net of current maturities
Name: us-gaap_DebtDisclosureAbstract
The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.
-Subparagraph (SX 210.5-02.19,20,22)
Name: us-gaap_DebtDisclosureTextBlock
Property, Plant and Equipment [Abstract]
The following table sets forth the Company's property and equipment as of December 31, 2014 and 2013 (in millions):
Property and Equipment, at cost
Rail cars, containers and chassis
Less: Accumulated depreciation
Depreciation of property and equipment was $35.8 million, $6.7 million and $1.4 million for the years ended December 31, 2014, 2013 and 2012, respectively.
Name: us-gaap_PropertyPlantAndEquipmentAbstract
The entire disclosure for long-lived, physical assets used in the normal conduct of business and not intended for resale. Includes, but is not limited to, accounting policies and methodology, roll forwards, depreciation, depletion and amortization expense, including composite depreciation, accumulated depreciation, depletion and amortization expense, useful lives and method used, income statement disclosures, assets held for sale and public utility disclosures.
Name: us-gaap_PropertyPlantAndEquipmentDisclosureTextBlock
Goodwill and Intangible Assets Disclosure [Abstract]
The following table sets forth the Company's identifiable intangible assets as of December 31, 2014 and 2013 (in millions):
Indefinite lived intangibles:
Definite lived intangibles:
Less: Accumulated amortization
Total Identifiable Intangibles
Estimated future amortization expense for amortizable intangible assets for the next five years is as follows (in millions):
Estimated future amortization expense
Actual amounts of amortization expense may differ from estimated amounts due to changes in foreign currency exchange rates, additional intangible asset acquisitions, impairment of intangible assets, accelerated amortization of intangible assets and other events.
Intangible asset amortization expense recorded in sales, general and administrative expense was $62.5 million, $14.1 million and $1.3 million for the years ended December 31, 2014, 2013 and 2012, respectively.
Name: us-gaap_GoodwillAndIntangibleAssetsDisclosureAbstract
The entire disclosure for all or part of the information related to intangible assets.
Name: us-gaap_IntangibleAssetsDisclosureTextBlock
The following table is a roll-forward of goodwill from December 31, 2012 to December 31, 2014. The 2013 additions are the result of the goodwill recognized as excess purchase price in the acquisitions of ECAC, Covered, Interide, 3PD, Optima and NLM while the 2014 additions are the result of the goodwill recognized as the excess purchase price in the acquisitions of Pacer, ACL and New Breed (in millions):
Goodwill at December 31, 2012
Other adjustments
The entire disclosure for goodwill.
Name: us-gaap_GoodwillDisclosureTextBlock
Equity [Abstract]
Stockholder's Equity
On September 11, 2014, the Company entered into an Investment Agreement (the "Investment Agreement") with Public Sector Pension Investment Board ("PSP Investments"), GIC Private Limited ("GIC") (an affiliate of Singapore's sovereign wealth fund), and Ontario Teachers' Pension Plan Board ("OTPP"). Pursuant to the Investment Agreement, on September 17, 2014, the Company issued and sold 10,702,934 shares (the "Purchased Common Shares") in the aggregate of Company common stock, par value $0.001 per share (the "Company Common Stock"), and 371,848 shares (the "Purchased Preferred Stock" and, together with the Purchased Common Shares, the "Purchased Securities") in the aggregate of the Company's Series B Convertible Perpetual Preferred Stock, par value $0.001 per share, in a private placement. The purchase price per Purchased Common Share was $30.66 (resulting in aggregate gross proceeds to the Company of approximately $328.0 million), and the purchase price per share of Purchased Preferred Stock was $1,000 (resulting in aggregate gross proceeds to the Company of approximately $372.0 million). The Company received net proceeds of $684.2 million after equity issuance costs which was initially allocated between common and preferred stock based on the relative fair values of each instrument. The Purchased Preferred Stock was mandatorily convertible into an aggregate of 12,128,115 additional shares of Company Common Stock subject to the approval of the Company's stockholders. The Company held a special meeting of stockholders of the Company on December 23, 2014 in which the Company's stockholders approved the issuance of shares of Company Common Stock upon the conversion of the Purchased Preferred Stock. Immediately following the special meeting, the Purchased Preferred Stock was automatically converted into 12,128,115 shares of Company Common Stock. No additional consideration was received by the Company in connection with the conversion of the Purchased Preferred Stock into Company Common Stock.
The issuance and sale of the Purchased Securities pursuant to the Investment Agreement and the conversion of the Purchased Preferred Stock are exempt from registration under the Securities Act, pursuant to Section 4(a)(2) of the Securities Act, or any state securities laws.
The Purchased Preferred Stock was issued with an initial conversion price of $30.66, which represented a 5% discount to the then-current trailing 20-day volume weighted average price. As of September 11, 2014, the Company's common stock price was $34.05. As a result, the conversion feature was issued "in-the-money" and the Company allocated the intrinsic value of the conversion feature of $40.9 million to additional paid-in capital. The beneficial conversion feature was contingent upon receiving the approval of the Company's stockholders and was therefore recognized in net loss available to common stockholders upon receiving stockholder approval.
On February 5, 2014, the Company closed a registered underwritten public offering of 15,000,000 shares of common stock, and on February 11, 2014, the Company closed as part of the same public offering the sale of an additional 2,250,000 shares as a result of the full exercise of the underwriters' overallotment option, in each case at a price of $25.00 per share (together, the "February 2014 Offering"). The Company received $413.2 million in net proceeds from the February 2014 Offering after underwriting discounts and expenses.
On August 13, 2013, the Company closed a registered underwritten public offering of 9,694,027 shares of common stock, and on August 16, 2013, the Company closed as part of the same public offering the sale of an additional 1,454,104 shares as a result of the full exercise of the underwriters' overallotment option, in each case at a price of $22.75 per share (together, the "August 2013 Offering"). The Company received $239.5 million in net proceeds from the August 2013 Offering after underwriting discounts and expenses.
On March 20, 2012, the Company closed a registered underwritten public offering of 9,200,000 shares of common stock (the "March 2012 Offering"), including 1,200,000 shares issued and sold as a result of the full exercise of the underwriters' overallotment option, at a price of $15.75 per share. The Company received $137.0 million in net proceeds from the March 2012 Offering after underwriting discounts and expenses.
Name: us-gaap_EquityAbstract
The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.
-Subparagraph (SX 210.4-08.(d),(e))
-Subparagraph (SAB TOPIC 4.C)
-Glossary Preferred Stock
-Paragraph d
-Section C
Name: us-gaap_StockholdersEquityNoteDisclosureTextBlock
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
On May 31, 2012, the stockholders of the Company approved the XPO Logistics, Inc. Amended and Restated 2011 Omnibus Incentive Compensation Plan (the "2011 Plan"). The 2011 Plan provides for grants or awards to directors, officers and key employees of stock options, stock appreciation rights, restricted stock, restricted stock units, deferred share units, performance compensation awards, performance units, cash incentive awards and other equity-based or equity-related awards (collectively, "Awards") that the Compensation Committee of the Board of Directors (the "Committee") determines are consistent with the purpose of the 2011 Plan and interests of the Company.
The maximum aggregate number of shares of common stock that may be delivered pursuant to Awards under the 2011 Plan is 4,000,000 million shares plus shares remaining available for awards under the prior plan as of May 31, 2012 and any shares with respect to awards granted under the predecessor plans that are forfeited after May 31, 2012. In the event of any extraordinary dividend or other extraordinary distribution, recapitalization, rights offering, stock split, reverse stock split, split-up or spin-off, the Committee shall equitably adjust any or all of the number of shares of the Company with respect to which Awards may be granted, including 2011 Plan share limits, the terms of any outstanding Award, the number of shares subject to outstanding Awards, and the exercise price of any Award, if applicable. Any shares delivered pursuant to an Award may consist, in whole or in part, of authorized and unissued shares or of treasury shares.
The 2011 Plan will continue in effect until May 31, 2022, unless terminated earlier by the Board of Directors. As of December 31, 2014, there were 1.0 million shares available for issuance under the 2011 Plan.
During the years ended December 31, 2014, 2013 and 2012, the Company recognized the following stock-based compensation expense in sales, general and administrative expense.
The Company did not realize any excess tax benefit for tax deductions from any of the stock-based compensation plans in 2014, 2013 and 2012.
During the years ended December 31, 2014, 2013 and 2012, the Company granted stock options to certain key employees, officers and directors of the Company. For employees and officers, the options typically vest over three to five years after the grant date, have a ten year life, and an exercise price equal to the Company's stock price on the grant date while for directors, the options vest one year after the grant date, have a ten year life, and an exercise price equal to the Company's stock price on the grant date. The fair value of all options granted in 2014, 2013 and 2012 was estimated using the Black-Scholes valuation model and the assumptions noted in the following table.
Black-Scholes option-pricing model assumptions:
Weighted average risk-free interest rate
Weighted average volatility
Weighted average dividend yield
Weighted average expected option term (in years)
For stock options with an exercise price equal to the Company's stock price on the date of grant, the expected term of options granted has been derived based upon the Company's history of actual exercise behavior and represents the period of time that options granted are expected to be outstanding. The expected volatility is based upon the Company's historical market price at consistent points in a period equal to the expected life of the options. The risk-free interest rate is based on the U.S. Treasury yield curve with a term equal to the expected term of the option in effect at the time of grant.
A summary of stock option award activity for the years ended December 31, 2014, 2013 and 2012 is presented below:
Weighted Average Exercise Price
Weighted Average Remaining Term
Outstanding at December 31, 2011
Options exercisable at December 31, 2014
As of December 31, 2014, the Company had 839,145 options vested and exercisable and $2.5 million of unrecognized compensation cost related to stock options. The intrinsic value of options vested and exercisable at December 31, 2014 was $25.8 million. The remaining estimated compensation expense related to the existing stock options for the periods ended December 31, 2015, 2016, 2017, 2018 and 2019 is as follows:
Remaining estimated compensation expense related to existing stock options
The total intrinsic value of options exercised during 2014, 2013 and 2012 was $1.7 million, $0.8 million and $0.6 million, respectively.
Restricted Stock Units and Performance-based Restricted Stock Units
During the years ended December 31, 2014, 2013 and 2012, the Company granted RSUs and PRSUs to certain key employees, officers and directors of the Company under the 2011 Plan with various vesting requirements as established by the Compensation Committee of the Board of Directors. The RSUs granted vest based on the passage of time. The vesting of certain RSU awards also is subject to the price of the Company's common stock exceeding a specified per share price for a designated period of time and continued employment at the Company by the grantee as of the vesting date. The PRSUs granted will vest based on the achievement of certain targets with respect to the Company's overall financial performance for specified periods. The vesting of certain PRSU awards also is subject to the price of the Company's common stock exceeding a specified per share price for a designated period of time and generally require continued employment at the Company by the grantee as of the vesting date.
In connection with the New Breed Transaction, the Company granted certain members of the New Breed management team an aggregate of 367,705 PRSU awards under the 2011 Plan. Pursuant to the PRSU award agreements, grantees are eligible to earn up to 367,705 PRSUs in the aggregate which will vest based on the achievement of certain targets with respect to New Breed's financial performance during 2015, 2016 and 2017. The vesting of all such PRSUs also is subject to the price of the Company's common stock exceeding a specified per share price for a designated period of time and continued employment at the Company by the grantee as of the vesting date.
In connection with the Pacer Transaction, certain members of the Pacer senior management team signed employment agreements with the Company that became effective upon completion of the acquisition. As part of their employment agreements, the Company granted the Pacer management team members an aggregate of 122,569 time-based RSU awards under the 2011 Plan. Certain of these awards vested 25% on the acquisition date of March 31, 2014 while the remaining 75% of the awards vest ratably on each of December 31, 2014, 2015 and 2016, subject to the employee's continued employment with the Company through each such date. Other RSUs awarded to the Pacer senior management team provided for vesting of 33.4% of the award on March 31, 2015, 33.3% on March 31, 2016 and 33.3% on March 31, 2017, subject to the employee's continued employment with the Company through each such date.
In connection with the 3PD Transaction, each member of the 3PD senior management team signed an employment agreement with the Company that became effective upon completion of the acquisition. Additionally, in order to incentivize 3PD's management, the Company granted the 3PD management team time-based RSUs and performance-based PRSUs under the 2011 Plan. Pursuant to the award agreements, members of the 3PD management team are eligible to earn up to 600,000 RSUs and PRSUs in the aggregate, of which 150,000 RSUs will vest in equal tranches on each of December 31, 2014, 2015 and 2016 based on the passage of time and 450,000 PRSUs will vest based on the achievement of certain targets with respect to 3PD's financial performance during 2016 and 2017 as part of the combined company. The vesting of all such RSUs and PRSUs also is subject to the price of the Company's common stock exceeding a specified per share price for a designated period of time and continued employment at the Company by the grantee as of the vesting date.
The RSUs and PRSUs may vest in whole or in part before the applicable vesting date if the grantee's employment is terminated by the Company without cause or by the grantee with good reason (as defined in the grant agreement), upon death or disability of the grantee or in the event of a change in control of the Company. Upon vesting, the RSUs and PRSUs result in the issuance of shares of XPO common stock after required minimum tax withholdings. The holders of the RSUs and PRSUs do not have the rights of a stockholder and do not have voting rights until certificates representing shares are issued and delivered in settlement of the awards.
For grants of RSUs and PRSUs subject to service or performance-based vesting conditions only, the fair value is established based on the market price of XPO common stock on the date of the grant. For grants of RSUs and PRSUs subject to market-based vesting conditions, the fair value is established using the Monte Carlo simulation lattice model. The actual number of PRSUs earned will be based on the Company's overall financial performance or the respective business unit's financial performance, as applicable, over the applicable performance periods. The fair value of RSUs is recognized as expense on a straight line basis over the awards' requisite service period. The fair value of PRSUs is recognized as expense on a straight line basis over the awards' requisite service period based on the number of awards expected to vest according to actual and expected financial results of the individual performance periods compared to set performance targets for those periods. If achievement of the performance targets for a PRSU award is not considered to be probable, then no expense will be recognized until achievement of such targets becomes probable.
The fair value of all grants of RSUs and PRSUs subject to market-based vesting conditions in 2014 and 2013 was estimated using the Monte Carlo simulation lattice model and the assumptions noted in the following table. No RSU grants in 2012 contained a market condition.
Monte Carlo model assumptions:
Weighted average term (in years)
A summary of RSU and PRSU award activity for the years ended December 31, 2014, 2013 and 2012 is presented below:
Performance-based Restricted Stock Units
Performance-based Restricted
The stock-based compensation expense for outstanding RSUs was $5.8 million, $3.2 million and $3.3 million for the years ended December 31, 2014, 2013 and 2012, respectively. The total fair value of RSUs vested during 2014, 2013 and 2012 was $9.9 million, $5.1 million and $3.4 million, respectively. Of the 692,823 outstanding RSUs, 452,109 vest subject to service conditions and 240,714 vest subject to service and market conditions.
No PRSUs vested during and no stock-based compensation expense was recognized for outstanding PRSUs for the years ended December 31, 2014, 2013 or 2012, respectively. Of the 1,563,951 outstanding PRSUs, 1,455,370 vest subject to service and a combination of market and performance conditions and 108,581 vest subject to service and performance conditions.
As of December 31, 2014, the Company had approximately $9.0 million of unrecognized compensation cost related to non-vested RSU compensation that is anticipated to be recognized over a weighted-average period of approximately 1.92 years. Remaining estimated compensation expense related to outstanding RSUs for the years ending December 31, 2015, 2016, 2017, 2018 and 2019 is as follows:
Remaining estimated compensation expense related to outstanding RSUs
The remaining estimated compensation expense excludes the impact of PRSUs not deemed probable as of December 31, 2014. The unrecognized compensation cost related to PRSUs not deemed probable as of December 31, 2014 is $29.4 million.
The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.
-Number Topic 14
Name: us-gaap_Di