10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2013

¨

For the transition period from                      to                     

Commission file number 001-32172

XPO Logistics, Inc.

(Exact name of registrant as specified in its charter)

Delaware	03-0450326
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Five Greenwich Office Park

Greenwich, CT 06831

(Address of principal executive offices)

(855) 976-4636

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has 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 the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    x  Yes    ¨  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of July 31, 2013, there were 18,210,716 shares of the registrant’s common stock, par value $0.001 per share, outstanding.

XPO Logistics, Inc.

Form 10-Q

Index

Part I—Financial Information
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets	3
Condensed Consolidated Statements of Operations	4
Condensed Consolidated Statements of Cash Flows	5
Condensed Consolidated Statements of Changes in Stockholders’ Equity	6
Notes to Condensed Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3. Quantitative and Qualitative Disclosures About Market Risk	29
Item 4. Controls and Procedures	29
Part II—Other Information
Item 1. Legal Proceedings	30
Item 1A. Risk Factors	30
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3. Defaults Upon Senior Securities	30
Item 4. Mine Safety Disclosures	30
Item 5. Other Information	30
Item 6. Exhibits	31
EX-31.1
EX-31.2
EX-32.1
EX-32.2

2

Part I—Financial Information

Item 1. Financial Statements.

XPO Logistics, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share data)

	June 30, 2013			December 31, 2012
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	178,155		$	252,293
Accounts receivable, net of allowances of $1,318 and $603, respectively		89,740			61,245
Prepaid expenses		2,095			1,555
Deferred tax asset, current		938			1,406
Income tax receivable		2,840			2,569
Other current assets		4,203			1,866
Total current assets		277,971			320,934
Property and equipment, net of $6,954 and $5,323 in accumulated depreciation, respectively		15,554			13,090
Goodwill		69,927			55,947
Identifiable intangible assets, net of $6,295 and $4,592 in accumulated amortization, respectively		30,121			22,473
Deferred tax asset, long-term		72			—
Other long-term assets		834			764
Total long-term assets		116,508			92,274
Total assets	$	394,479		$	413,208
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	23,591		$	22,108
Accrued salaries and wages		5,570			3,516
Accrued expenses, other		23,733			21,123
Current maturities of notes payable and capital leases		850			491
Other current liabilities		1,548			1,789
Total current liabilities		55,292			49,027
Convertible senior notes		111,197			108,280
Notes payable and capital leases, net of current maturities		767			676
Deferred tax liability, long term		6,553			6,781
Other long-term liabilities		3,838			3,385
Total long-term liabilities		122,355			119,122
Stockholders’ equity:
Preferred stock, $.001 par value; 10,000,000 shares; 74,275 shares issued and outstanding		42,794			42,794
Common stock, $.001 par value; 150,000,000 shares authorized; 18,241,217 and 18,002,985 shares issued, respectively; and 18,196,217 and 17,957,985 shares outstanding, respectively		18			18
Additional paid-in capital		267,806			262,641
Treasury stock, at cost, 45,000 shares held		(107	)		(107	)
Accumulated deficit		(93,679	)		(60,287	)
Total stockholders’ equity		216,832			245,059
Total liabilities and stockholders’ equity	$	394,479		$	413,208

The accompanying notes are an integral part of the condensed consolidated financial statements.

3

XPO Logistics, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Revenue	$	137,091		$	54,540		$	251,090		$	99,100
Expenses
Direct expense		117,751			46,074			215,490			83,861
Gross margin		19,340			8,466			35,600			15,239
Sales general and administrative expense		33,355			11,834			60,982			22,831
Operating loss		(14,015	)		(3,368	)		(25,382	)		(7,592	)
Other (income) expense		167			26			58			5
Interest expense		3,106			3			6,170			15
Loss before income tax provision		(17,288	)		(3,397	)		(31,610	)		(7,612	)
Income tax expense (benefit)		74			1,780			296			259
Net loss		(17,362	)		(5,177	)		(31,906	)		(7,871	)
Cumulative preferred dividends		(743	)		(750	)		(1,486	)		(1,500	)
Net loss available to common shareholders	$	(18,105	)	$	(5,927	)	$	(33,392	)	$	(9,371	)
Basic loss per share
Net loss	$	(1.00	)	$	(0.34	)	$	(1.84	)	$	(0.56	)
Diluted loss per share
Net loss	$	(1.00	)	$	(0.34	)	$	(1.84	)	$	(0.56	)
Weighted average common shares outstanding
Basic weighted average common shares outstanding		18,180			17,637			18,107			16,629
Diluted weighted average common shares outstanding		18,180			17,637			18,107			16,629

The accompanying notes are an integral part of the condensed consolidated financial statements.

4

XPO Logistics, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

	Six Months Ended June 30,
	2013			2012
Operating activities
Net loss	$	(31,906	)	$	(7,871	)
Adjustments to reconcile net loss to net cash from operating activities
Provisions for allowance for doubtful accounts		627			84
Depreciation & amortization expense		3,349			741
Stock compensation expense		2,147			2,266
Gain on sale of business interests		(176	)		—
Accretion of debt		2,916			—
Exchange loss		46			—
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable		(24,134	)		(5,496	)
Deferred tax expense		167			1,537
Income tax receivable		(732	)		(1,388	)
Prepaid expenses and other current assets		(275	)		(495	)
Other long-term assets		(28	)		(18	)
Accounts payable		(5,973	)		(1,313	)
Accrued expenses and other liabilities		4,899			1,816
Cash used by operating activities		(49,073	)		(10,137	)
Investing activities
Acquisition of businesses, net of cash acquired		(19,660	)		(3,713	)
Proceeds from sale of business interests		125			—
Payment of acquisition earn-out		—			(450	)
Payment for purchases of property and equipment		(3,864	)		(2,569	)
Cash Flows used by investing activities		(23,399	)		(6,732	)
Financing Activities
Credit line, net activity		(150	)		—
Payments of notes payable and capital leases		16			(2,018	)
Proceeds from stock offering, net		—			136,961
Proceeds from exercise of options, net		(56	)		131
Proceeds from exercise of warrants		10			—
Dividends paid to preferred stockholders		(1,486	)		(1,500	)
Cash flows (used)/provided by financing activities		(1,666	)		133,574
Net (decrease)/increase in cash		(74,138	)		116,705
Cash and cash equivalents, beginning of period		252,293			74,007
Cash and cash equivalents, end of period	$	178,155		$	190,712
Supplemental disclosure of noncash activities:
Cash paid during the period for interest	$	3,337		$	15
Cash paid during the period for income taxes	$	906		$	159

The accompanying notes are an integral part of the condensed consolidated financial statements.

5

XPO Logistics, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

Six Months Ended June 30, 2013

(Unaudited)

(In thousands)

	Preferred Stock				Common Stock				Treasury Stock						Paid-In			Accumulated
	Shares		Amount		Shares		Amount		Shares			Amount			Capital			Deficit			Total
Balance, December 31, 2012		74	$	42,794		18,003	$	18		(45	)	$	(107	)	$	262,641		$	(60,287	)	$	245,059
Net loss		—		—		—		—		—			—			—			(31,906	)		(31,906	)
Issuance of common stock for option exercise net of withholdings		—		—		28		—		—			—			(45	)		—			(45	)
Issuance of common stock for acquisition		—		—		210		—		—			—			3,087			—			3,087
Sale of business interest		—		—		—		—		—			—			(24	)		—			(24	)
Dividend paid		—		—		—		—		—			—			—			(1,486	)		(1,486	)
Stock compensation expense		—		—		—		—		—			—			2,147			—			2,147
Balance, June 30, 2013		74	$	42,794		18,241	$	18		(45	)	$	(107	)	$	267,806		$	(93,679	)	$	216,832

The accompanying notes are an integral part of the condensed consolidated financial statements.

6

XPO Logistics, Inc.

Notes to Condensed Consolidated Financial Statements

Three and Six Months Ended June 30, 2013 and 2012

(Unaudited)

1. Organization

Nature of Business

XPO Logistics, Inc. (the “Company”) provides premium transportation and logistics services to thousands of customers through its three business units:

Freight Brokerage—provides truckload brokerage transportation services throughout North America through its wholly-owned subsidiaries XPO Logistics, LLC, Bounce Logistics, Inc. (“Bounce”), and XPO Logistics Canada Inc. Freight brokerage services are arranged using relationships with sub-contracted motor and rail carriers.

Expedited Transportation—provides time-critical expedited transportation through its wholly-owned subsidiaries Express-1, Inc. (“Express-1”) and XPO Air Charter, LLC (“Air Charter”). Expedited Transportation services are provided through a fleet of exclusive use vehicles that are owned and operated by independent contract drivers, whom it refers to as owner operators. For Air Charter, this involves the use of third-party aircraft to expedite shipment of goods for a customer.

Freight Forwarding—provides freight forwarding services through its wholly-owned subsidiary Concert Group Logistics, Inc. (“CGL”). Freight forwarding transportation services are sold and arranged for under the authority of CGL through independently-owned stations and nine company-owned branches located in the United States and Canada.

The use of non-owned resources to provide services minimizes the amount of capital investment required and is often described with the terms “non-asset” or “asset-light.”

For specific financial information relating to the above business units, refer to Note 12—Reportable Segments.

2. Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed 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-Q. Certain information and note disclosures normally included in annual financial statements have been condensed or omitted pursuant to those rules and regulations. However, management believes that the disclosures contained herein are adequate to make the information presented not misleading.

These unaudited condensed 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 June 30, 2013 and December 31, 2012, and results of operations for the three- and six-month periods ended June 30, 2013 and 2012. The preparation of the condensed 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 and actual results could differ materially from those estimates.

These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto for the fiscal year ended December 31, 2012 that are set forth in the Company’s Annual Report on Form 10-K, a copy of which is available on the SEC’s website (www.sec.gov). Results of operations for interim periods are not necessarily indicative of results to be expected for a full year.

Use of Estimates

The Company prepares its unaudited condensed 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 condensed 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, accrued revenue, purchased transportation, recoverability of long-lived assets, accrual of acquisition earn-outs, estimated legal accruals, valuation allowances for deferred taxes, reserve for uncertain tax positions, 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.

7

Significant Accounting Policies

Revenue Recognition

The Company recognizes revenue at the point in time when delivery is completed on the freight shipments it handles, with related costs of delivery being accrued as incurred and expensed within the same period in which the associated revenue is recognized. The Company uses the following supporting criteria to determine that revenue has been earned and should be recognized:

• Persuasive evidence of an arrangement exists;

• Services have been rendered;

• The sales price is fixed and determinable; and

• Collectability is reasonably assured.

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, and tracing shipments in transit).

• For Expedited Transportation and Freight Brokerage, the Company has complete discretion to select its drivers, contractors or other transportation providers (collectively, “service providers”). For Freight Forwarding, 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 Freight Forwarding’s independently-owned stations. Independently-owned stations may further negotiate the cost of services with Freight Forwarding-approved service providers for individual customer shipments.

• Expedited Transportation and Freight Brokerage have complete discretion to establish sales prices. Independently-owned stations within Freight Forwarding 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 Freight Forwarding for a portion (typically 70-80%) of credit losses. Freight Forwarding retains the risk that the independent station owners will not meet this obligation.

The Company’s Freight Forwarding Segment collects on behalf of its customers certain taxes and duties as a complimentary service for international shipments. The Company’s accounting policy is to present these collections on a gross basis. The Company recognized $1.5 million and $0.7 million of such revenue for the three-month periods ended June 30, 2013 and 2012, respectively, and $2.3 million and $1.4 million of such revenue for the six-month periods ended June 30, 2013 and 2012, respectively.

Cash and cash equivalents

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.

Income Taxes

Taxes on income are provided 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 unaudited condensed consolidated financial statements. Deferred tax assets and liabilities are determined based on the differences between the book values 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 the 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 10—Income Taxes.

8

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. Intangible assets with indefinite lives consist principally of the Express-1 and CGL trade names. The Company follows the provisions of ASC Topic 350, “Intangibles—Goodwill and Other”, which requires an annual impairment test for goodwill and intangible assets with indefinite lives. The Company may first choose to perform a qualitative evaluation of the likelihood of goodwill and intangible assets impairment. For the goodwill that was the result of current year acquisitions, the Company chose to perform a qualitative evaluation. If the Company determined a quantitative evaluation was necessary, the goodwill at the reporting unit was 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 during the third quarter unless events or circumstances indicate impairment of the goodwill may have occurred before that time. 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 additional information refer to Note 6—Goodwill.

The fair values of purchased intangible assets with indefinite lives, primarily trade names, are estimated and compared to their carrying values. The Company estimates the fair value of these intangible assets based on an income approach using the relief-from-royalty method. This methodology assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to exploit the related benefits of these types of assets. This approach is dependent on a number of factors, including estimates of future growth and trends, royalty rates for this category of intellectual property, discount rates and other variables. The Company bases its fair value estimates on assumptions it believes to be reasonable, but which are unpredictable and inherently uncertain. Actual future results may differ from those estimates. The Company recognizes an impairment loss when the estimated fair value of the intangible asset is less than the carrying value. The Company performs the annual impairment testing during the third quarter unless events or circumstances indicate impairment of the intangible assets with indefinite lives may have occurred before that time. For the periods presented, the Company did not recognize any impairment of intangible assets with indefinite lives as the estimated fair value of its intangible assets with indefinite lives exceeded the book value of these reporting units.

Identifiable Intangible Assets

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. During the six-month periods ended June 30, 2013 and 2012, there was no impairment of the identified intangible assets.

The Company’s intangible assets subject to amortization consist of non-compete agreements, customer relationships and other intangibles that are amortized on a straight-line basis over the estimated useful lives of the related intangible asset. The estimated useful lives of the respective intangible assets range from three months to 12 years.

9

The following table sets forth the Company’s identifiable intangible assets as of June 30, 2013 and December 31, 2012 (in thousands):

	June 30, 2013			December 31, 2012
Indefinite Lived Intangibles
Trade Name	$	6,416		$	6,416
Definite Lived Intangibles:
Trade name		1,321			1,246
Non-compete agreements		4,145			3,050
Customer lists and relationships		22,366			14,281
Other intangible assets		2,168			2,072
		30,000			20,649
Less: accumulated amortization		(6,295	)		(4,592	)
Intangible assets, net	$	23,705		$	16,057
Total Identifiable Intangibles	$	30,121		$	22,473

Estimated future amortization expense for amortizable intangible assets for the next five years is as follows:

(in thousands)	2013		2014		2015		2016		2017
Estimated future amortization expense	$	1,385	$	2,544	$	2,420	$	2,407	$	2,366

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.

Other Long-Term Assets

Other long-term assets consist primarily of balances representing various deposits, and notes receivable from various CGL independent station owners. Also included within this account classification are incentive payments to independent station owners within the CGL network. These payments are made by CGL to certain station owners as an incentive to establish an independently-owned station. These amounts 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.

Foreign Currency Translation

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 cost of sales in the condensed consolidated statements of operations. Assets and liabilities of XPO Logistics Canada, which has the U.S. dollar as its functional currency (but which maintains its accounting records in Canadian currency), have their values remeasured into U.S. dollars at period-end exchange rates, except for non-monetary items for which historical rates are used. Exchange gains or losses are not material to the condensed consolidated statements of operations for the periods presented.

Foreign Currency Hedging and Derivative Financial Instruments

The Company enters into derivative contracts to protect against fluctuations in currency exchange rates from time to time. These contracts are for expected future cash flows and not for speculative purposes. The Company reflects changes in fair value of these contracts in the condensed consolidated statements of operations. In accordance with FASB ASC Topic 815 “Derivatives and Hedging”, the Company does not apply hedge accounting to its derivative contracts.

Fair Value Measurements

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.

10

The following table sets forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of June 30, 2013 and December 31, 2012 (in thousands):

	Fair Value Measurements as of June 30, 2013
	Total		Level 1		Level 2		Level 3
Assets:
Money market funds	$	179,572	$	179,572	$	—	$	—
Liabilities:
Contingent consideration obligations	$	443	$	—	$	—	$	443
	Fair Value Measurements as of December 31, 2012
	Total		Level 1		Level 2		Level 3
Assets:
Money market funds	$	239,443	$	239,443	$	—	$	—
Liabilities:
Contingent consideration obligations	$	392	$	—	$	—	$	392

Estimated Fair Value of Financial Instruments

The aggregate net fair value estimates discussed herein 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 June 30, 2013 and December 31, 2012. These financial instruments include cash, accounts receivable, notes receivable, accounts payable, accrued expense, notes payable and short-term borrowings. 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.

The Company has outstanding $143.8 million of 4.50% Convertible Senior Notes due October 1, 2017, 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. The convertible senior notes were allocated to long-term debt and equity in the amounts of $106.8 million and $31.7 million, respectively. These amounts are net of debt issuance costs of $4.1 million for debt and $1.2 million for equity. Holders of the convertible senior notes are due interest semiannually in arrears on April 1 and October 1 of each year, beginning on April 1, 2013. The conversion rate was initially 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 senior notes was $177.4 million as of June 30, 2013. The convertible senior notes contain an optional redemption right in favor of the Company, although it is the Company’s present intent not to exercise such redemption right. Accordingly, the fair value of the bifurcated coupon make-whole premium that would be payable to holders in the event of a redemption has been valued at $0.0 million. For additional information refer to Note 5—Debt.

Stock-Based Compensation

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, including those subject to service-based vesting conditions and those subject to service and performance-based vesting conditions, the fair value is established based on the market price on the date of the grant. 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 six-month periods ended June 30, 2013 and 2012 were 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

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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 additional information refer to Note 8—Stock-Based Compensation.

Earnings per Share

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 9—Earnings per Share.

Internal Use 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 internal use computer software are expensed as incurred. Costs incurred during the application development stage are capitalized and included in property and equipment. Capitalized internal use software totaled $1.6 million as of June 30, 2013 and $1.2 million as of December 31, 2012. Capitalized internal use software costs are amortized over the expected economic life of three years using the straight-line method.

Allowance for Doubtful Accounts

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, current economic conditions, and other factors that may affect customers’ ability to pay.

Please also refer to Note 1 of the “Notes to Consolidated Financial Statements” in the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012 for a more complete discussion of the Company’s significant accounting policies.

3. Acquisitions

2013 Acquisitions

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 Logistics”) for $3.1 million in cash consideration and 36,878 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 Logistics 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 Logistics 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 condensed consolidated balance sheet at their estimated 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 $3.0 million and intangible assets of $1.8 million. The working capital adjustments and intangible asset valuation in connection with this acquisition are being finalized, although the Company does not expect there to be a 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 Logistics”) for $8.0 million in cash consideration and 173,712 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 Logistics is a non-asset, third-party transportation logistics service provider focusing on freight brokerage with offices in Lake Forest, IL and Dallas, TX.

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The Covered Logistics 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 condensed consolidated balance sheet at their estimated 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 $7.1 million and intangible assets of $2.8 million. The working capital adjustments in connection with this acquisition are being finalized, although the Company does not expect there to be a 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”) 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 condensed consolidated balance sheet at their estimated 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. 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.

2012 Acquisitions

Turbo Logistics

On October 24, 2012, pursuant to an asset purchase agreement, the Company purchased substantially all of the assets of Turbo Logistics, Inc. and Turbo Dedicated, Inc. (collectively, “Turbo”) for total cash consideration of $50.1 million, excluding any working capital adjustments, with no assumption of debt. As a result of the final working capital adjustment, the cash consideration was reduced by $0.2 million.

Kelron Logistics

On August 3, 2012, the Company purchased all of the outstanding capital stock of Kelron Corporate Services Inc. and certain related entities (collectively, “Kelron”), a non-asset, third-party logistics business based in Canada. Founded in 1992, Kelron serves more than 750 customers through locations in Toronto, Ontario; Vancouver, British Columbia; Montreal, Quebec; and Cleveland, Ohio. The purchase price was $8.0 million, including $2.6 million of consideration for the outstanding stock and $5.4 million of assumed debt and 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.

As of June 30, 2013, the purchase price allocation is considered final, except for any impact resulting from any final working capital adjustments. All goodwill recorded related to the acquisition relates to the Freight Brokerage segment and is not deductible for Canadian income tax purposes.

In conjunction with the acquisition, the Company issued notes payable to the sellers totaling $1.0 million. The notes do not bear any interest. The notes were treated as consideration transferred as part of the acquisition and are payable in equal quarterly installments on November 3, February 3, May 3 and August 3 of each year with the final installment to be due and payable on August 3, 2015. The Company used an imputed interest rate of 4.53% to determine the appropriate discount to apply to the notes. The carrying value of the notes payable at June 30, 2013 was $0.7 million.

Continental Freight Services

On May 8, 2012, the Company purchased all of the outstanding capital stock of Continental Freight Services, Inc. (“Continental”) and all of the membership interests in G & W Tanks, LLC. The cash purchase price was $3.5 million, excluding any working capital adjustments and a potential earn-out of up to $0.3 million. The acquisition of Continental includes a contingent consideration arrangement that requires additional consideration to be paid by the Company to Continental’s former owners based on the adjusted gross profit of Continental during the twelve month period commencing June 1, 2012. The fair value of the contingent consideration at June 30, 2013 is $0.3 million.

4. Commitments and Contingencies

Lease Commitments

As of June 30, 2013, the Company had approximately $25.5 million in future minimum payments required under operating leases for various real estate, transportation and office equipment leases that have an initial or remaining non-cancelable lease term. Remaining future minimum payments related to these operating leases amount to approximately $2.4 million, $4.3 million, $4.1 million, $3.9 million, and $10.8 million for the periods ending December 31, 2013, 2014, 2015, 2016, and 2017 and thereafter, respectively.

Rent expense was approximately $1.0 million and $0.4 million for the three-month periods ended June 30, 2013 and 2012, respectively, and $1.8 million and $0.6 million for the six-month periods ended June 30, 2013 and 2012, respectively.

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Litigation

The Company is involved in litigation in the Fourth Judicial District Court of Hennepin County, Minnesota relating to its hiring of former employees of C.H. Robinson Worldwide, Inc. (“CHR”). In the litigation, CHR asserts claims for breach of contract, breach of fiduciary duty and duty of loyalty, tortious interference with contractual relationships and prospective contractual relationships, misappropriation of trade secrets, violation of the federal Computer Fraud and Abuse Act, inducing, aiding and abetting breaches, and conspiracy. CHR seeks temporary, preliminary and permanent injunctions, as well as direct and consequential damages and attorneys’ fees. CHR has asserted that it may seek punitive damages as well. On January 17, 2013, the Court issued an Order Regarding Motion for Temporary Injunction (the “Order”). The Order (as amended on April 16, 2013) prohibits the Company from engaging in business with certain CHR customers within a specified radius of Phoenix, AZ, until July 1, 2014. On February 7, 2013, CHR filed a First Amended Complaint. On April 11, 2013, the Company moved to dismiss the new claims asserted in that First Amended Complaint and moved to stay discovery pending the Court’s resolution of the motion to dismiss. A hearing on the Company’s motions was held on June 5, 2013. The Company intends to vigorously defend the action in court. The outcome of this litigation is uncertain and could have a material adverse effect on the Company’s business and results of operations.

The Company is a party to a variety of other legal actions, both as a plaintiff and as a defendant, that arose in the ordinary course of business, and may in the future become involved in other legal actions. The Company does not currently expect any of these matters or these matters in the aggregate to have a material adverse effect on the Company’s 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.

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.

5. Debt

Long-Term Debt and Capital Leases

The Company uses 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.

On September 26, 2012, the Company completed the registered underwritten public offering of 4.50% Convertible Senior Notes due October 1, 2017, in an aggregate principal amount of $125.0 million. The convertible senior notes were allocated to long-term debt and equity in the amounts of $92.8 million and $27.5 million, respectively. These amounts are net of debt issuance costs of $3.6 million for debt and $1.1 million for equity. On October 17, 2012, as part of the underwritten registered public offering on September 26, 2012 of the 4.50% convertible senior notes due October 1, 2017, the underwriters exercised the overallotment option to purchase $18.8 million additional principal amount of the convertible senior notes. The Company received approximately $18.2 million in net proceeds after underwriting discounts, commissions and expenses were paid. The overallotment option was allocated to long-term debt and equity in the amounts of $14.0 million and $4.2 million, respectively. These amounts are net of debt issuance costs of $0.5 million for debt and $0.1 million for equity. Interest is payable on the notes on April 1 and October 1 of each year, beginning on April 1, 2013.

Under certain circumstances at the election of the holder, the convertible senior 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 senior 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 senior notes at any time. The convertible senior 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 Company may redeem the convertible senior 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 senior notes to be redeemed through October 1, 2017 (excluding interest accrued to, but excluding, the redemption date), computed using a discount rate equal to 4.5%. The make-whole premium is paid to holders whether or not they convert the convertible senior notes following the Company’s issuance of a redemption notice.

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For accounting purposes, the redemption feature in the convertible senior notes is an embedded derivative that is not clearly and closely related to the convertible senior notes. Consequently, it was initially bifurcated from the indenture and separately recorded at its fair value as a liability with subsequent changes in fair value to be recorded through earnings. As of June 30, 2013, the fair value of the embedded redemption feature was $0.0 million as management has determined it is not the Company’s intent to exercise the conversion feature.

The following table outlines the Company’s debt obligations (in thousands) as of June 30, 2013 and December 31, 2012:

	Interest rates			Term (months)		As of June 30, 2013		As of December 31, 2012
Capital leases for equipment		13.91	%		59	$	189	$	154
Notes payable		N/A			N/A		1,119		863
Line of credit		5.0	%		N/A		309		150
Convertible senior notes		4.50	%		60		111,197		108,280
Total debt and capital leases							112,814		109,447
Less: current maturities of notes payable and capital leases							850		491
Non-current maturities of debt and capital leases						$	111,964	$	108,956

6. Goodwill

The following table is a roll-forward of goodwill from December 31, 2012 to June 30, 2013. The current period additions are the result of the goodwill recognized as excess purchase price in the acquisitions of East Coast Air Charter, Covered Logistics and Interide Logistics (in thousands):

	Expedited Transportation		Freight Forwarding		Freight Brokerage		Total
Goodwill at December 31, 2012	$	7,737	$	9,222		38,988	$	55,947
Acquisitions and other adjustments		3,823		—		10,157		13,980
Goodwill at June 30, 2013	$	11,560	$	9,222	$	49,145	$	69,927

7. Stockholder’s Equity

On March 20, 2012, the Company closed a registered underwritten public offering of 9,200,000 shares of common stock (the “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 Offering after underwriting discounts and estimated expenses.

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8. Stock-Based Compensation

The following table summarizes the Company’s equity awards outstanding and exercisable as of December 31, 2012 and June 30, 2013:

	Options							Restricted Stock Units
	Options		Weighted Average Exercise Price		Exercise Price Range	Weighted Average Remaining Term		Restricted Stock Units		Weighted Average Grant Date Fair Value
Outstanding at December 31, 2012		1,383,332		10.06	2.28 - 18.07		8.29		883,816		11.31
Granted		55,500		17.32	17.10 - 18.59				140,714		12.62
Exercised		42,184		4.49	2.96 - 6.08				—		—
Forfeited		10,348		13.12	6.08 - 13.37				68,000		10.65
Outstanding at June 30, 2013		1,386,300	$	10.49	$2.28 - 18.59		7.99		956,530	$	11.55

The stock-based compensation expense for outstanding restricted stock units (“RSUs”) was $0.7 million and $0.9 million for the three-month periods ended June 30, 2013 and 2012, respectively, and $1.4 million and $1.8 million for the six-month periods ended June 30, 2013 and 2012, respectively. Of the 956,530 outstanding RSUs, 505,816 vest subject to service conditions, 310,000 vest subject to service and performance-based conditions and 140,714 vest subject to service and market conditions. Based on the Company’s financial performance in 2012, all performance-based conditions relating to outstanding RSUs vesting have been satisfied.

As of June 30, 2013, the Company had approximately $8.8 million of unrecognized compensation cost related to non-vested RSU compensation that is anticipated to be recognized over a weighted-average period of approximately 2.78 years. Remaining estimated compensation expense related to outstanding restricted stock-based grants is $1.5 million, $2.8 million, $2.7 million, $1.7 million and $0.1 million for the years ending December 31, 2013, 2014, 2015, 2016 and 2017, respectively.

As of June 30, 2013, the Company had 481,050 options vested and exercisable and $4.0 million of unrecognized compensation cost related to stock options. The remaining estimated compensation expense related to the existing stock options is $0.8 million, $1.1 million, $1.1 million, $0.8 million and $0.2 million for the years ended December 31, 2013, 2014, 2015, 2016 and 2017, respectively.

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9. Earnings per Share

Basic earnings per common share are computed by dividing net income available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share are computed by dividing net income available to common shareholders by the combined weighted average number of shares of common stock outstanding and the potential dilution of stock options, warrants, RSUs, convertible senior notes and the Company’s Series A Convertible Perpetual Preferred Stock, par value $0.001 per share (“preferred stock”), outstanding during the period, if dilutive. The weighted average of potentially dilutive securities excluded from the computation of diluted earnings per share for the three- and six-month periods ending June 30, 2013 and 2012 is shown per the table below.

	Three Months Ended				Six Months Ended
	June 30, 2013		June 30, 2012		June 30, 2013		June 30, 2012
Basic common stock outstanding		18,179,570		17,636,834		18,106,564		16,629,420
Potentially Dilutive Securities:
Shares underlying the conversion of preferred stock to common stock		10,610,714		10,714,286		10,610,714		10,714,286
Shares underlying the conversion of the convertible senior notes		8,749,239		—		8,749,239		—
Shares underlying warrants to purchase common stock		6,262,380		6,282,659		6,302,668		6,282,659
Shares underlying stock options to purchase common stock		526,813		401,793		533,977		348,682
Shares underlying restricted stock units		436,275		559,381		418,898		613,139
		26,585,421		17,958,119		26,615,496		17,958,766
Diluted weighted shares outstanding		44,764,991		35,594,953		44,722,060		34,588,186

The impact of this dilution was not reflected in the earnings per share calculations in the unaudited condensed consolidated statements of operations because the impact was anti-dilutive. The treasury method was used to determine the shares underlying warrants, stock options and RSUs for potential dilution with an average market price of $16.85 per share and $16.92 per share for the three-month periods ended June 30, 2013 and 2012, respectively, and $17.00 per share and $15.44 per share for the six-month periods ended June 30, 2013 and 2012, respectively.

10. Income Taxes

The Company has determined its interim tax provision projecting an estimated annual effective tax rate. For the three- and six-months ended June 30, 2013, the Company recorded income tax expense of $0.1 million and $0.3 million, respectively, yielding an effective tax rate of 0.4% and 0.9%, respectively. The effective tax rate differs from the U.S. statutory rate of 34% in the periods ended June 30, 2013 and 2012, primarily due to the impact of recording a valuation allowance against the benefits of the current period’s loss.

The Company has a valuation allowance of $12.7 million as of June 30, 2013 on the deferred tax assets generated for federal, state and foreign net operating losses where it is not more likely than not that the deferred tax assets will be utilized. In evaluating the Company’s ability to realize its deferred income tax assets, the Company considers all available positive and negative evidence, including operating results, ongoing tax planning, and forecasts of future taxable income on a jurisdiction by jurisdiction basis. The valuation allowance as of June 30, 2013 relates primarily to domestic net operating loss and credit carryforwards that will reduce the provision for income taxes if and when recognized.

In general, it is the practice and intention of the Company to reinvest the earnings of its non-U.S. subsidiaries in those operations. As of June 30, 2013, the Company has not made a provision for U.S. or additional foreign withholding taxes for financial reporting over the tax basis of investments in foreign subsidiaries that are essentially permanent in duration, if any exists. Generally, such amounts become subject to U.S. taxation upon the remittance of dividends and under certain other circumstances. It is not practicable to estimate the amount of deferred tax liability related to investments in these foreign subsidiaries.

11. Related Party Transactions

There were no related party transactions that occurred during the quarters ended June 30, 2013 and 2012.

12. Reportable Segments

The Company has three reportable segments as described in Note 1 of the unaudited condensed consolidated financial statements.

Corporate charges include the costs of the Company’s executive and shared service teams, professional services such as legal and consulting, board of directors, and certain other corporate costs associated with operating as a public company. The Company allocates charges to the reportable segments for IT services, depreciation of IT fixed assets as well as centralized recruiting and training resources.

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The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. The Company evaluates performance based on operating income of the respective business segments. The following schedule identifies select financial data for each of the Company’s operating segments for the three- and six-month periods ended June 30, 2013 and 2012, respectively (in thousands):

XPO Logistics, Inc.

Segment Data

(Unaudited)

(In thousands)

	Freight Brokerage			Expedited Transportation		Freight Forwarding		Corporate			Eliminations			Total
Three Months Ended June 30, 2013
Revenue	$	95,360		$	26,445	$	19,338	$	—		$	(4,052	)	$	137,091
Operating income (loss) from operations		(4,990	)		1,187		478		(10,690	)		—			(14,015	)
Depreciation and amortization		1,180			291		93		231			—			1,795
Interest expense		3			2		—		3,101			—			3,106
Tax provision (benefit)		—			2		—		72			—			74
Goodwill		49,145			11,560		9,222		—			—			69,927
Total assets		208,408			63,303		31,088		422,672			(330,992	)		394,479
Three Months Ended June 30, 2012
Revenue	$	13,877		$	25,731	$	16,468	$	—		$	(1,536	)	$	54,540
Operating income (loss) from operations		(825	)		2,634		218		(5,395	)		—			(3,368	)
Depreciation and amortization		76			129		145		73			—			423
Interest expense (income)		—			1		1		1			—			3
Tax (benefit) provision		—			—		—		1,780			—			1,780
Goodwill		2,125			7,737		9,222		—			—			19,084
Total assets		12,899			28,953		22,920		237,335			(41,376	)		260,731
Six Months Ended June 30, 2013
Revenue	$	173,590		$	50,320	$	35,571	$	—		$	(8,391	)	$	251,090
Operating income (loss) from operations		(8,810	)		1,940		850		(19,362	)		—			(25,382	)
Depreciation and amortization		2,194			559		181		415			—			3,349
Interest expense		5			4		—		6,161			—			6,170
Tax provision (benefit)		41			2		—		253			—			296
Goodwill		49,145			11,560		9,222		—			—			69,927
Total assets		208,408			63,303		31,088		422,672			(330,992	)		394,479
Six Months Ended June 30, 2012
Revenue	$	21,805		$	48,151	$	31,925	$	—		$	(2,781	)	$	99,100
Operating income (loss) from operations		(911	)		4,422		459		(11,562	)		—			(7,592	)
Depreciation and amortization		96			266		289		90			—			741
Interest expense		1			2		—		12			—			15
Tax provision (benefit)		—			—		—		259			—			259
Goodwill		2,125			7,737		9,222		—			—			19,084
Total assets		12,899			28,953		22,920		237,335			(41,376	)		260,731

13. Subsequent Events

Preferred Stock Dividend

On June 26, 2013, the Company’s board of directors approved the declaration of a dividend payable to holders of the preferred stock. The declared dividend equaled $10 per share of preferred stock as specified in the Certificate of Designation of the preferred stock. The total declared dividend equaled $0.7 million and was paid on July 15, 2013.

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Pending Acquisition of 3PD

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 “Stock Purchase Agreement”) to acquire all of the outstanding capital stock of 3PD (the “3PD Transaction”). 3PD is the largest non-asset, third party provider of heavy goods, last-mile logistics in North America.

The total consideration payable under the Stock Purchase Agreement is approximately $365 million, payable in cash, deferred payments (including an escrow), $8 million of restricted shares of the Company’s common stock, and the payoff of certain indebtedness. The closing of the transactions contemplated in the Stock Purchase Agreement is expected to occur in the third quarter of 2013 and is subject to customary closing conditions. The Stock Purchase Agreement contains certain termination rights for both the Company and the sellers and provides that if the Company fails to close the transaction after all of its conditions to close have been satisfied or waived, the Company may be required to pay 3PD a termination fee in the amount of $18 million.

In connection with the 3PD Transaction, each member of the 3PD senior management team has signed an employment agreement with the Company that is effective upon completion of the acquisition. Additionally, in order to incentivize 3PD’s management, at or promptly following the closing the Company intends to grant to the 3PD management team time- and performance-based restricted stock unit awards under the XPO Logistics, Inc. Amended and Restated 2011 Omnibus Incentive Compensation Plan. Pursuant to the RSU award agreements, members of the 3PD management team would be eligible to earn up to 600,000 RSUs in the aggregate, of which 100,000 would vest based on the passage of time and 500,000 would vest based on the achievement of certain goals with respect to 3PD’s financial performance during 2014, 2015 and 2016 as part of the combined company. The vesting of all such RSUs also would be subject to the price of the Company’s common stock exceeding $32.50 per share for a designated period of time and continued employment at the Company by the grantee as of the vesting date.

Also, on July 12, 2013, in connection with the Stock Purchase Agreement, XPO AQ, Inc., a wholly-owned subsidiary of the Company, entered into a commitment letter (the “Commitment Letter”) with Credit Suisse Securities (USA) LLC and Credit Suisse AG. The Commitment Letter provides that, subject to the conditions set forth therein, Credit Suisse AG will commit to provide a $140 million first lien term loan credit facility and a $55 million second lien term loan credit facility, and the proceeds of each facility may solely be used to consummate the 3PD Transaction. The commitment is subject to various conditions, including (i) the absence of a material adverse effect having occurred with respect to 3PD and its subsidiaries, (ii) the execution of satisfactory definitive documentation and (iii) other customary closing conditions. Any permanent debt or equity financing obtained by the Company on or prior to the closing of the 3PD Transaction will reduce the amount of the commitment. Under the terms of the Commitment Letter, the Company will not be an obligor. On July 25, 2013, Morgan Stanley Senior Funding, Inc. entered into a Joinder Letter with Credit Suisse AG and XPO AQ, Inc. to assume 50% of the obligation of Credit Suisse AG under the Commitment Letter.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q and other written reports and oral statements we make from time to time contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. In some cases, forward-looking statements can be identified by the use of forward-looking terms such as “anticipate,” “estimate,” “believe,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “should,” “will,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” or the negative of these terms or other comparable terms. However, the absence of these words does not mean that the statements are not forward-looking. These forward-looking statements are based on certain assumptions and analyses made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause or contribute to a material difference include those discussed elsewhere in this Quarterly Report, the risks discussed in our other filings with the SEC and the following: economic conditions generally; competition; our ability to find suitable acquisition candidates and execute our acquisition strategy; the projected satisfaction of closing conditions for the 3PD Transaction and related financing; the expected closing date for the 3PD Transaction; the expected impact of the 3PD Transaction and related financing, including the expected impact on the Company’s results of operations; our ability to raise debt and equity capital; our ability to attract and retain key employees to execute our growth strategy, including retention of 3PD’s management team; litigation, including litigation related to misclassification of independent contractors; our ability to develop and implement a suitable information technology system; our ability to maintain positive relationships with our network of third-party transportation providers; our ability to retain our and 3PD’s largest customers; our ability to successfully integrate 3PD and other acquired businesses; and governmental regulation. All forward-looking statements set forth in this Quarterly Report are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to or effects on us or our business or operations. Forward-looking statements set forth in this Quarterly Report speak only as of the date hereof and we do not undertake any obligation to update forward-looking statements to reflect subsequent events or circumstances, changes in expectations or the occurrence of unanticipated events, except to the extent required by law.

The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report. In addition, reference should be made to our audited consolidated financial statements and notes thereto and related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our most recent Annual Report on Form 10-K.

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Critical Accounting Policies

The preparation of condensed consolidated financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions. In certain circumstances, those estimates and assumptions can affect amounts reported in the accompanying unaudited condensed consolidated financial statements. We have made our best estimates and judgments of certain amounts included in the financial statements, giving due consideration to materiality. We do not believe there is a great likelihood that materially different amounts will be reported related to the accounting policies described below. However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ materially from these estimates. Note 1 of the “Notes to Consolidated Financial Statements” in the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2012 includes a summary of the significant accounting policies and methods used in the preparation of our consolidated financial statements. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2012 includes a summary of our critical accounting policies. For the period ended June 30, 2013, there were no significant changes to our critical accounting policies.

New Pronouncements

No applicable new accounting pronouncements were noted during the period ended June 30, 2013.

Executive Summary

XPO Logistics, Inc., a Delaware corporation, and its subsidiaries (collectively, the “Company”, “we”, “our” or “us”), is one of the fastest growing providers of non-asset transportation logistics services in North America. We use our relationships with more than 22,000 ground, sea and air carriers to move freight for over 8,500 customers in the manufacturing, industrial, retail, commercial, life sciences and government sectors. As of June 30, 2013, we operated at 62 locations in the United States and Canada: 41 Company-owned branches and 21 agent-owned offices.

We offer our services through three distinct business segments: Freight Brokerage, Expedited Transportation and Freight Forwarding. Our freight brokerage business places shippers’ freight with qualified over-the-road carriers. In 2012, XPO Logistics was ranked the 17th largest U.S. freight brokerage firm by Transport Topics. Our expedited transportation business, which is a top five provider of its kind in the U.S., facilitates urgent freight movements by using its network of independent contractors and air carriers. Our freight forwarding business arranges domestic and international shipments using ground, air and ocean transport through a network of Company-owned and agent-owned locations.

In September of 2011, following the equity investment in the Company led by Jacobs Private Equity, LLC, we began to implement a strategy designed to leverage our strengths with the goal of significant long-term growth and value creation.

Our growth strategy has three main components:

• Acquisitions. We take a disciplined approach to acquisitions: we look for companies that are highly scalable and are a good strategic fit with our core competency. When we acquire a company, we integrate it with our operations and scale it up by adding salespeople. We put the acquired operations on our technology platform, which connects them to our broader organization, and we give them access to our shared carrier pool. We gain more carriers, customers, lane histories and pricing histories with each acquisition, and in some cases an acquisition adds complementary services. We use these resources Company-wide to buy transportation more efficiently and to cross-sell a more complete supply chain solution to customers. In the past 19 months, we have developed an active pipeline of targets. In 2012, we completed the acquisition of four non-asset based third party logistics companies; we acquired another three companies in the first half of 2013; and on July 12, 2013, we agreed to acquire 3PD Holding, Inc. (“3PD”), a non-asset logistics provider specializing in heavy goods, last-mile logistics. We plan to continue to acquire quality companies that fit our strategy for growth.

• Cold-starts. We believe that cold-starts can generate high returns on invested capital because of the relatively low investment required and the large component of variable-based incentive compensation. From December of 2011 through the first quarter of 2013, we opened 18 cold-starts: eight in Freight Brokerage, nine in Freight Forwarding and one in Expedited Transportation. Each of our Freight Brokerage cold-starts is located in a prime area for sales recruitment and is led by a highly experienced branch president. We plan to continue to open cold-start locations where we see the potential for superior returns.

• Optimization of operations. We are continuing to optimize our existing operations by growing the sales force at each location, implementing advanced information technology, cross-selling our services and leveraging our shared carrier capacity. We have a disciplined framework of processes in place for the recruiting, training and mentoring of newly hired employees. Once established in our branches, our salespeople reach out to hundreds of thousands of small and medium-sized prospects. In addition, we have a strategic and national accounts team focused on developing business relationships with the largest shippers in North America. Our network is supported by our national operations center in Charlotte, North Carolina, which we opened in March of 2012, and by our information technology. We have a scalable platform in place across the Company, with sales, service, carrier and track-and-trace capabilities, as well as benchmarking and analysis. Most important to our growth strategy, we are developing a culture of passionate, world-class service for customers.

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Convertible Debt Offering

On September 26, 2012, we completed a registered underwritten public offering of 4.50% Convertible Senior Notes due October 1, 2017, in an aggregate principal amount of $125.0 million. On October 17, 2012, the underwriters exercised the overallotment option to purchase $18.8 million additional principal amount of the convertible senior notes. We received $138.5 million in net proceeds after underwriting discounts, commissions and expenses were paid. The convertible senior notes were allocated to long-term debt and equity in the amounts of $106.8 million and $31.7 million, respectively. These amounts are net of debt issuance costs of $4.1 million for debt and $1.2 million for equity.

We are obligated to pay holders of our 4.50% Convertible Senior Notes interest semiannually in arrears on April 1 and October 1 of each year, beginning on April 1, 2013. The notes will mature on October 1, 2017 unless earlier converted or repurchased. The conversion rate was initially 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.

Common Stock Offering

On March 20, 2012, we closed a registered underwritten public offering of 9,200,000 shares of common stock (the “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. We received $137.0 million in net proceeds from the Offering after underwriting discounts and estimated expenses.

Other Reporting Disclosures

This discussion and analysis also refers from time to time to our Freight Brokerage international operations. These brokered shipments may originate in either the United States or Canada and are largely attributable to our acquisition of Kelron in August 2012. These services are provided to both U.S. and Canadian customers who primarily pay in their home currency.

This discussion and analysis refers from time to time to Expedited Transportation’s international operations. These operations involve the transportation of freight shipments that originate in or are delivered to either Canada or Mexico. These freight shipments either originate in or are delivered to the United States, and therefore only a portion of the freight movement actually takes place in Canada or Mexico. This service is provided to domestic customers who pay primarily in U.S. dollars. We discuss this freight separately because our Expedited Transportation segment has developed an expertise in cross-docking freight at the border through the utilization of Canadian and Mexican carriers, and this portion of our business has seen significant growth.

This discussion and analysis also refers from time to time to our Freight Forwarding international operations. These freight movements also originate in or are delivered to the United States and are primarily paid for in U.S. dollars.

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XPO Logistics, Inc.

Consolidated Summary Financial Table

(Unaudited)

(In thousands)

	For the Three Months Ended June 30,						Percent of Revenue						Change			For the Six Months Ended June 30,						Percent of Revenue						Change
	2013			2012			2013			2012			%			2013			2012			2013			2012			%
Revenue	$	137,091		$	54,540			100.0	%		100.0	%		151.4	%	$	251,090		$	99,100			100.0	%		100.0	%		153.4	%
Direct expense
Transportation services		114,924			42,700			83.8	%		78.3	%		169.1	%		209,804			77,234			83.6	%		77.9	%		171.6	%
Station commissions		1,992			2,457			1.5	%		4.5	%		-18.9	%		3,700			4,773			1.5	%		4.8	%		-22.5	%
Other direct expense		835			917			0.6	%		1.7	%		-8.9	%		1,986			1,854			0.8	%		1.9	%		7.1	%
Total direct expense		117,751			46,074			85.9	%		84.5	%		155.6	%		215,490			83,861			85.8	%		84.6	%		157.0	%
Gross margin		19,340			8,466			14.1	%		15.5	%		128.4	%		35,600			15,239			14.2	%		15.4	%		133.6	%
SG&A expense
Salaries & benefits		20,491			7,263			14.9	%		13.3	%		182.1	%		38,539			13,612			15.3	%		13.7	%		183.1	%
Purchased services		5,914			1,870			4.3	%		3.4	%		216.3	%		9,729			4,606			3.9	%		4.6	%		111.2	%
Other SG&A expense		5,198			2,328			3.8	%		4.3	%		123.3	%		9,459			3,974			3.8	%		4.0	%		138.0	%
Depreciation & amortization		1,752			373			1.3	%		0.7	%		369.7	%		3,255			639			1.3	%		0.6	%		409.4	%
Total SG&A expense		33,355			11,834			24.3	%		21.7	%		181.9	%		60,982			22,831			24.3	%		23.0	%		167.1	%
Operating loss		(14,015	)		(3,368	)		-10.2	%		-6.2	%		316.1	%		(25,382	)		(7,592	)		-10.1	%		-7.7	%		234.3	%
Other (income) expense		167			26			0.1	%		0.0	%		542.3	%		58			5			0.0	%		0.0	%		1060.0	%
Interest expense		3,106			3			2.3	%		0.0	%		103433.3	%		6,170			15			2.5	%		0.0	%		41033.3	%
Loss before income tax		(17,288	)		(3,397	)		-12.6	%		-6.2	%		408.9	%		(31,610	)		(7,612	)		-12.6	%		-7.7	%		315.3	%
Income tax expense (benefit)		74			1,780			0.1	%		3.3	%		-95.8	%		296			259			0.1	%		0.3	%		14.3	%
Net loss	$	(17,362	)	$	(5,177	)		-12.7	%		-9.5	%		235.4	%	$	(31,906	)	$	(7,871	)		-12.7	%		-7.9	%		305.4	%

Consolidated Results

Three Months Ended June 30, 2013 Compared to Three Months Ended June 30, 2012

Our consolidated revenue for the second quarter of 2013 increased 151.4% to $137.1 million from $54.5 million in the second quarter of 2012. This increase was driven largely by the increased revenues in Freight Brokerage due to the acquisitions of Turbo, Kelron, Continental, Covered Logistics, and Interide Logistics as well as the revenue attributable to the growth of our eight Freight Brokerage cold-start locations, and the acquisition of East Coast Air Charter.

Direct expense is primarily attributable to the cost of procuring freight transportation services for our customers and commissions paid to independent station owners in our freight forwarding business. Our non-asset operating model provides transportation capacity through variable cost third-party transportation arrangements, therefore enabling us to be flexible to adapt to changes in economic or industry conditions. Our primary means of providing capacity are through our base of independent owner operators in Expedited Transportation and our network of independent ground, ocean and air carriers in Freight Brokerage and Freight Forwarding. We view this operating model as a strategic advantage due to its flexibility, particularly in uncertain economic conditions.

Total gross margin dollars for the second quarter of 2013 increased 128.4% to $19.3 million from $8.5 million in the second quarter of 2012. As a percentage of revenue, gross margin was 14.1% in the second quarter of 2013 as compared to 15.5% in the second quarter of 2012. The decrease in gross margin as a percentage of revenue is attributable primarily to lower margins in our Expedited Transportation segment and increased revenues in our Freight Brokerage segment, which typically experiences lower margins than our other operations.

Selling, general and administrative (“SG&A”) expense as a percentage of revenue was 24.3% in the second quarter of 2013, as compared to 21.7% in the second quarter of 2012. SG&A expense increased by $21.5 million in the second quarter of 2013 compared to the second quarter of 2012, due to significant growth initiatives, including seven acquisitions, sales force recruitment, cost associated with our new Freight Brokerage offices, and an increase in Corporate SG&A.

Our effective income tax rates in the second quarter of 2013 and 2012 were 0.4% and 52.4%, respectively. The tax rate for the second quarter of 2013 is due to the effects of recording a tax valuation allowance against the potential income tax benefit. The second quarter of 2012 had additional tax expense due to the initial recording of the valuation allowance to remove previously recorded tax benefits.

The increase in net loss was due primarily to higher SG&A expenses associated with significant growth initiatives, including sales force recruitment, costs associated with our new Freight Brokerage offices, and an increase in Corporate costs.

Six Months Ended June 30, 2013 Compared to Six Months Ended June 30, 2012

Our consolidated revenue for the first six months of 2013 increased 153.4% to $251.1 million from $99.1 million in the first six months of 2012. This increase was driven largely by the increased revenues in Freight Brokerage due to the acquisitions of Turbo, Kelron, Continental, Covered Logistics, and Interide Logistics as well as the revenue attributable to the growth of our eight Freight Brokerage cold-start locations, and the acquisition of East Coast Air Charter.

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Total gross margin dollars for the first six months of 2013 increased 133.6% to $35.6 million from $15.2 million in the first six months of 2012. As a percentage of revenue, gross margin was 14.2% in the first six months of 2013 as compared to 15.4% in the first six months of 2012. The decrease in gross margin as a percentage of revenue is attributable to lower margins in our Expedited Transportation segment and increased revenues in our Freight Brokerage segment, which typically experiences lower margins than our other operations.

SG&A expense as a percentage of revenue was 24.3% in the first six months of 2013, as compared to 23.0% in the first six months of 2012. SG&A expense increased by $38.2 million in the first six months of 2013 compared to the first six months of 2012, due to significant growth initiatives, including seven acquisitions, sales force recruitment, costs associated with our new Freight Brokerage offices, and an increase in Corporate SG&A.

Our effective income tax rates were relatively flat at 0.9% and 3.4% for the first six months of 2013 and 2012 , respectively.

The increase in net loss was due primarily to higher SG&A expenses associated with significant growth initiatives, including sales force recruitment, costs associated with our new Freight Brokerage offices, and an increase in Corporate costs.

Freight Brokerage

Summary Financial Table

(Unaudited)

(In thousands)

	For the Three Months Ended June 30,						Percent of Revenue						Change			For the Six Months Ended June 30,						Percent of Revenue						Change
	2013			2012			2013			2012			%			2013			2012			2013			2012			%
Revenue	$	95,360		$	13,877			100.0	%		100.0	%		587.2	%	$	173,590		$	21,805			100.0	%		100.0	%		696.1	%
Direct expense
Transportation services		82,705			12,255			86.7	%		88.3	%		574.9	%		150,662			19,160			86.8	%		87.9	%		686.3	%
Other direct expense		88			101			0.1	%		0.7	%		-12.9	%		295			95			0.2	%		0.4	%		210.5	%
Total direct expense		82,793			12,356			86.8	%		89.0	%		570.1	%		150,957			19,255			87.0	%		88.3	%		684.0	%
Gross margin		12,567			1,521			13.2	%		11.0	%		726.2	%		22,633			2,550			13.0	%		11.7	%		787.6	%
SG&A expense
Salaries & benefits		12,367			1,572			13.0	%		11.3	%		686.7	%		22,530			2,431			13.0	%		11.1	%		826.8	%
Purchased services		979			266			1.0	%		1.9	%		268.0	%		1,793			328			1.0	%		1.5	%		446.6	%
Other SG&A expense		3,031			432			3.2	%		3.1	%		601.6	%		4,926			606			2.8	%		2.8	%		712.9	%
Depreciation & amortization		1,180			76			1.2	%		0.5	%		1452.6	%		2,194			96			1.3	%		0.4	%		2185.4	%
Total SG&A expense		17,557			2,346			18.4	%		16.9	%		648.4	%		31,443			3,461			18.1	%		15.9	%		808.5	%
Operating (loss) income	$	(4,990	)	$	(825	)		-5.2	%		-5.9	%		504.8	%	$	(8,810	)	$	(911	)		-5.1	%		-4.2	%		867.1	%

Freight Brokerage

Three Months Ended June 30, 2013 Compared to Three Months Ended June 30, 2012

Revenue in our Freight Brokerage segment increased by 587.2% to $95.4 million in the second quarter of 2013 compared to $13.9 million in the second quarter of 2012. Revenue growth was primarily due to the acquisitions of Turbo, Kelron, Covered Logistics, and Interide Logistics, as well as revenue growth from our eight Freight Brokerage cold-start sales locations. Headcount in our Freight Brokerage segment increased to 788 from 92 as of June 30, 2013 and 2012, respectively.

Direct expenses consist primarily of transportation costs paid to the carrier. Freight Brokerage’s gross margin dollars increased 726.2% to $12.6 million in the second quarter of 2013 from $1.5 million in the second quarter of 2012. As a percentage of revenue, Freight Brokerage’s gross margin was 13.2% in the second quarter of 2013, compared to 11.0% in the second quarter of 2012. The margin improvement is due to the acquisitions in Freight Brokerage as well as improvements in gross margin percentage of our cold starts. SG&A expense increased to $17.6 million in the second quarter of 2013 from $2.3 million in the second quarter of 2012. The increase in SG&A expense was associated with acquisitions, sales force expansion, technology and training. As a percentage of revenue, SG&A expense decreased to 18.4% in the second quarter of 2013 as compared to 16.9% in the second quarter of 2012.

Our Freight Brokerage operations generated an operating loss of $5.0 million in the second quarter of 2013 compared to an operating loss of $0.8 million in the second quarter of 2012. The increase in operating loss was attributable to the increase in SG&A expense as we continue to invest in sales and procurement personnel to support our growth initiatives.

Management’s growth strategy for Freight Brokerage is based on:

• Selective acquisitions of non-asset based freight brokerage firms that would benefit from our scale and potential access to capital;

• The opening of new freight brokerage sales offices;

• Investment in an expanded sales and service workforce;

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• Technology investments to improve efficiency in sales, freight tracking and carrier procurement; and

• The integration of industry best practices, with specific focus on better leveraging our scale and lowering administrative overhead.

Six Months Ended June 30, 2013 Compared to Six Months Ended June 30, 2012

Revenue in our Freight Brokerage segment increased by 696.1% to $173.6 million in the first six months of 2013 compared to $21.8 million in the first six months of 2012. Revenue growth was primarily due to the acquisitions of Turbo, Kelron, Continental, Covered Logistics, and Interide Logistics, as well as revenue growth from our eight Freight Brokerage cold-start sales locations. Headcount in our Freight Brokerage segment increased to 788 from 92 as of June 30, 2013 and 2012, respectively.

Freight Brokerage’s gross margin dollars increased 787.6% to $22.6 million in the first six months of 2013 from $2.6 million in the first six months of 2012. As a percentage of revenue, Freight Brokerage’s gross margin increased to 13.0% in the first six months of 2013, compared to 11.7% in the first six months of 2012 due to the acquisitions in Freight Brokerage as well as improvements in gross margin percentage of our cold starts.

SG&A expense increased to $31.4 million in the first six months of 2013 from $3.5 million in the first six months of 2012. As a percentage of revenue, SG&A expense increased to 18.1% in the first six months of 2013 as compared to 15.9% in the first six months of 2012. The increase in SG&A expense was associated with acquisitions, sales force expansion, technology and training.

Our Freight Brokerage operations generated an operating loss of $8.8 million in the first six months of 2013 compared to an operating loss of $0.9 million in the first six months of 2012. The increase in operating loss was attributable to the increase in SG&A expense as we continue to invest in sales and procurement personnel to support our growth initiatives.

Expedited Transportation

Summary Financial Table

(Unaudited)

(In thousands)

	For the Three Months Ended June 30,				Percent of Revenue						Change			For the Six Months Ended June 30,				Percent of Revenue						Change
	2013		2012		2013			2012			%			2013		2012		2013			2012			%
Revenue	$	26,445	$	25,731		100.0	%		100.0	%		2.8	%	$	50,320	$	48,151		100.0	%		100.0	%		4.5	%
Direct expense
Transportation services		21,528		19,830		81.4	%		77.1	%		8.6	%		40,680		37,192		80.8	%		77.2	%		9.4	%
Other direct expense		707		766		2.7	%		3.0	%		-7.7	%		1,622		1,665		3.2	%		3.5	%		-2.6	%
Total direct expense		22,235		20,596		84.1	%		80.0	%		8.0	%		42,302		38,857		84.1	%		80.7	%		8.9	%
Gross margin		4,210		5,135		15.9	%		20.0	%		-18.0	%		8,018		9,294		15.9	%		19.3	%		-13.7	%
SG&A expense
Salaries & benefits		2,016		1,665		7.6	%		6.5	%		21.1	%		3,961		3,325		7.9	%		6.9	%		19.1	%
Purchased services		246		251		0.9	%		1.0	%		-2.0	%		535		448		1.1	%		0.9	%		19.4	%
Other SG&A expense		513		506		1.9	%		2.0	%		1.4	%		1,117		935		2.2	%		1.9	%		19.5	%
Depreciation & amortization		248		79		0.9	%		0.3	%		213.9	%		465		164		0.9	%		0.3	%		183.5	%
Total SG&A expense		3,023		2,501		11.4	%		9.7	%		20.9	%		6,078		4,872		12.1	%		10.1	%		24.8	%
Operating income	$	1,187	$	2,634		4.5	%		10.2	%		-54.9	%	$	1,940	$	4,422		3.9	%		9.2	%		-56.1	%

Note: Total depreciation and amortization for the Expedited Transportation operating segment included in both direct expense and SG&A was $291 and $129 for the three-month periods ended June 30, 2013 and 2012, respectively, and $559 and $266 for the six-month periods ended June 30, 2013 and 2012, respectively.

Expedited Transportation

Three Months Ended June 30, 2013 Compared to Three Months Ended June 30, 2012

Revenue in our Expedited Transportation segment increased 2.8% to $26.4 million in the second quarter of 2013 from $25.7 million in the second quarter of 2012. This growth was driven by the acquisition of East Coast Air Charter on February 8, 2013 partially offset by a decline in our over-the-road expedited business.

Direct expenses consist primarily of payments to independent contractors for ground transportation and air charter services, insurance and truck leasing expense. Expedited Transportation gross margin dollars decreased 18.0% to $4.2 million in the second quarter of 2013 from $5.1 million in the second quarter of 2012. As a percentage of revenue, Expedited Transportation gross margin was 15.9% in the second quarter of 2013, compared to 20.0% in the second quarter of 2012. The decrease in gross margin as a percentage of revenue primarily reflects a soft expedited freight environment as well as the addition of revenues from air charter, which typically experiences lower margins than our over-the-road expedited business.

24

SG&A expense increased 20.9% to $3.0 million in the second quarter of 2013 from $2.5 million in the second quarter of 2012. The increase was due to the addition of East Coast Air Charter. As a percentage of revenue, SG&A expense increased to 11.4% in the second quarter of 2013 compared to 9.7% in the second quarter of 2012.

Operating income decreased to $1.2 million in the second quarter of 2013 compared to $2.6 million in the second quarter of 2012. The decrease in operating income was primarily related to the decrease in gross margin as a percent of revenue and an increase in SG&A, as described above.

Management’s growth strategy for our Expedited Transportation segment is based on:

• Targeted investments to expand the sales and service workforce, in order to capture key opportunities in specialized areas (e.g., cross-border, refrigeration and air charter);

• An increased focus on carrier recruitment and retention, as well as improved utilization of the current carrier fleet;

• Technology upgrades to improve efficiency in sales and carrier procurement;

• Selective acquisitions of non-asset based expedited businesses that would benefit from our scale and potential access to capital; and

• Cross-selling of expedited transportation services to customers of our business segments.

Six Months Ended June 30, 2013 Compared to Six Months Ended June 30, 2012

Revenue in our Expedited Transportation segment increased 4.5% to $50.3 million in the first six months of 2013 from $48.2 million in the first six months of 2012. This growth was driven by the acquisition of East Coast Air Charter on February 12, 2013 partially offset by a decline in the rest of our over-the-road expedited business.

Direct expenses consist primarily of payments to independent contractors for ground transportation and air charter services, insurance and truck leasing expense. Expedited Transportation gross margin dollars decreased 13.7% to $8.0 million in the first six months of 2013 from $9.3 million in the first six months of 2012. As a percentage of revenue, Expedited Transportation gross margin was 15.9% in the first six months of 2013, compared to 19.3% in the first six months of 2012. The decrease in gross margin as a percentage of revenue primarily reflects a soft expedited freight environment as well as the additions of revenues from air charter, which typically generates lower margins than our over-the-road expedited business.

SG&A expense increased 24.8% to $6.1 million in the first six months of 2013 from $4.9 million in the first six months of 2012. The increase was due largely to the addition of East Coast Air Charter. As a percentage of revenue, SG&A expense increased to 12.1% in the first six months of 2013 compared to 10.1% in the first six months of 2012.

Operating income decreased to $1.9 million in the first six months of 2013 compared to $4.4 million in the first six months of 2012. The decrease in operating income was primarily related to the decrease in gross margin as a percent of revenue and an increase in SG&A, as described above.

25

Freight Forwarding

Summary Financial Table

(Unaudited)

(In thousands)

	For the Three Months Ended June 30,				Percent of Revenue						Change			For the Six Months Ended June 30,				Percent of Revenue						Change
	2013		2012		2013			2012			%			2013		2012		2013			2012			%
Revenue	$	19,338	$	16,468		100.0	%		100.0	%		17.4	%	$	35,571	$	31,925		100.0	%		100.0	%		11.4	%
Direct expense
Transportation services		14,743		12,150		76.2	%		73.8	%		21.3	%		26,853		23,663		75.5	%		74.1	%		13.5	%
Station commissions		1,992		2,457		10.3	%		14.9	%		-18.9	%		3,700		4,773		10.4	%		15.0	%		-22.5	%
Other direct expense		40		52		0.2	%		0.3	%		-23.1	%		69		95		0.2	%		0.3	%		-27.4	%
Total direct expense		16,775		14,659		86.7	%		89.0	%		14.4	%		30,622		28,531		86.1	%		89.4	%		7.3	%
Gross margin		2,563		1,809		13.3	%		11.0	%		41.7	%		4,949		3,394		13.9	%		10.6	%		45.8	%
SG&A expense
Salaries & benefits		1,518		924		7.8	%		5.6	%		64.3	%		2,951		1,711		8.3	%		5.4	%		72.5	%
Purchased services		157		146		0.8	%		0.9	%		7.5	%		247		187		0.7	%		0.6	%		32.1	%
Other SG&A expense		317		376		1.6	%		2.3	%		-15.7	%		720		748		2.0	%		2.3	%		-3.7	%
Depreciation & amortization		93		145		0.5	%		0.9	%		-35.9	%		181		289		0.5	%		0.9	%		-37.4	%
Total SG&A expense		2,085		1,591		10.8	%		9.7	%		31.0	%		4,099		2,935		11.5	%		9.2	%		39.7	%
Operating income	$	478	$	218		2.5	%		1.3	%		119.3	%	$	850	$	459		2.4	%		1.4	%		85.2	%

Freight Forwarding

Three Months Ended June 30, 2013 Compared to Three Months Ended June 30, 2012

Revenue in our Freight Forwarding segment increased 17.4% to $19.3 million in the second quarter of 2013 from $16.5 million in the second quarter of 2012. The increase was primarily the result of the opening of new freight forwarding locations and growth in international shipments.

As of June 30, 2013, Freight Forwarding had 28 locations, consisting of 18 independently-owned stations and 10 company-owned branches. This compares to 27 locations as of June 30, 2012, consisting of 22 independently-owned stations and five company-owned branches.

Direct expense consists primarily of payments for purchased transportation and commissions paid to Freight Forwarding’s independently-owned stations. Freight Forwarding’s gross margin dollars increased 41.7% to $2.6 million in the second quarter of 2013 from $1.8 million in the second quarter of 2012. As a percentage of revenue, Freight Forwarding gross margin increased to 13.3% in the second quarter of 2013 as compared to 11.0% in the second quarter of 2012. The increase was primarily driven by conversions of independently-owned stations to company-owned branches, which yield higher gross margins.

SG&A expense increased 31.0% to $2.1 million in the second quarter of 2013 from $1.6 million in the second quarter of 2012. As a percentage of revenue, SG&A expense increased to 10.8% in the second quarter of 2013 as compared to 9.7% in the second quarter of 2012. The increase in SG&A expense is mainly due to the investment associated with opening our company-owned branches in Chicago, IL, Houston, TX, Los Angeles, CA, Minneapolis, MN, Orlando, FL and Montreal, QC.

Operating income increased to $0.5 million in the second quarter of 2013 compared to $0.2 million in the second quarter of 2012. The increase in operating income was primarily related to the growth in gross margin driven by conversions of independently-owned stations to company-owned branches.

Management’s growth strategy for Freight Forwarding is based on:

• Plans to open new offices in key U.S. markets, which will consist of both company-owned branches and independently-owned stations;

• Growth of international shipments;

• Technology upgrades to improve efficiency in sales and carrier procurement;

• Selective acquisitions of complementary, non-asset based freight forwarding businesses; and

• Cross-selling of freight forwarding services to customers of our other business segments

Six Months Ended June 30, 2013 Compared to Six Months Ended June 30, 2012

Revenue in our Freight Forwarding segment increased 11.4% to $35.6 million in the first six months of 2013 from $31.9 million in the first six months of 2012. The increase was primarily the result of the opening of new freight forwarding locations.

Freight Forwarding’s gross margin dollars increased 45.8% to $5.0 million in the first six months of 2013 from $3.4 million in the first six months of 2012. As a percentage of revenue, Freight Forwarding gross margin increased to 13.9% in the first six months of 2013 as compared to 10.6% in the first six months of 2012. The increase was primarily driven by conversions of independently-owned stations to company-owned branches, which yield higher gross margins.

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SG&A expense increased 39.7% to $4.1 million in the first six months of 2013 from $2.9 million in the first six months of 2012. As a percentage of revenue, SG&A expense increased to 11.5% in the first six months of 2013 as compared to 9.2% in the first six months of 2012. The increase in SG&A expense is mainly due to the investment associated with opening our company-owned branches in Chicago, IL, Houston, TX, Los Angeles, CA, Minneapolis, MN, Orlando, FL, Atlanta, GA and Montreal, QC.

Operating income increased to $0.9 million in the first six months of 2013 compared to $0.5 million in the first six months of 2012. The increase in operating income was primarily related to an increase in gross margins driven by conversions of independently-owned stations to company-owned branches.

XPO Corporate

Summary of Selling, General and Administrative Expense

(Unaudited)

(In thousands)

	For the Three Months Ended June 30,				Percent of Consolidated Revenue						Change			For the Six Months Ended June 30,				Percent of Consolidated Revenue						Change
	2013		2012		2013			2012			%			2013		2012		2013			2012			%
SG&A expense
Salaries & benefits		4,590		3,101		3.3	%		5.7	%		48.0	%		9,097		6,144		3.6	%		6.2	%		48.1	%
Purchased services		4,532		1,207		3.3	%		2.2	%		275.5	%		7,154		3,643		2.8	%		3.7	%		96.4	%
Other SG&A expense		1,337		1,014		1.0	%		1.9	%		31.9	%		2,696		1,685		1.1	%		1.7	%		60.0	%
Depreciation & amortization		231		73		0.2	%		0.1	%		216.4	%		415		90		0.2	%		0.1	%		361.1	%
Total SG&A expense	$	10,690	$	5,395		7.8	%		9.9	%		98.1	%	$	19,362	$	11,562		7.7	%		11.7	%		67.5	%

Corporate

Three Months Ended June 30, 2013 Compared to Three Months Ended June 30, 2012

Corporate SG&A expense in the second quarter of 2013 increased by $5.3 million compared to the second quarter of 2012. Salaries and benefits increased due to a year-over-year increase in headcount in corporate shared services. Purchased services increased in the second quarter of 2013 due largely to $1.5 million of litigation-related legal costs. Corporate SG&A for the second quarter of 2013 also included $1.8 million of acquisition-related transaction costs and $1.1 million of non-cash share based compensation. As a percentage of consolidated revenue, Corporate SG&A expense decreased to 7.8% in the second quarter of 2013, compared with 9.9% in the second quarter of 2012.

Six Months Ended June 30, 2013 Compared to Six Months Ended June 30, 2012

Corporate SG&A expense in the first six months of 2013 increased by $7.8 million compared to the first six months of 2012. As a percentage of consolidated revenue, Corporate SG&A expense was 7.7% in the first six months of 2013, compared with 11.7% in the first six months of 2012 due to improved leverage as the Company executed its acquisition and organic growth strategies. Salaries and benefits increase was driven by a year-over-year increase in headcount in corporate shared services. Purchased services increased in the first six months of 2013 due largely to $2.6 million of litigation-related legal costs. Corporate SG&A for the first six months of 2013 also included $2.1 million of non-cash share based compensation and $2.1 million of acquisition-related transaction costs.

Liquidity and Capital Resources

General

As of June 30, 2013, we had $222.7 million of working capital, including cash of $178.2 million, compared to working capital of $271.9 million, including cash of $252.3 million, as of December 31, 2012. This decrease of $49.2 million in working capital during the six-month period was mainly due to cash used for operations, capital expenditures and preferred stock dividends, as well as for the acquisitions of East Coast Air Charter, Covered Logistics and Interide Logistics.

We also intend to fund a portion of the pending 3PD Transaction with cash on hand. Subject to satisfaction of the closing conditions contained therein, the Commitment Letter is available to fund up to $195 million of the 3PD Transaction purchase price (see Note 13 to the financial statements included elsewhere herein). We continually evaluate our liquidity requirements, capital needs and availability of capital resources based on our operating needs and our planned growth initiatives. In addition to our existing cash balances and net cash provided by operating activities, in certain circumstances we may also use debt financings and issuances of equity or equity-related securities to fund our operating needs and growth initiatives. In that regard, we are currently evaluating opportunities to secure an asset based revolving credit facility.

We believe that our existing cash balances and potential financing sources will be sufficient to consummate the 3PD Transaction and finance our existing operations.

27

Cash Flow

During the first six months of 2013, $49.1 million was used in cash from operations compared to $10.1 million used for the comparable period in 2012. The primary use of cash for the period was payment of transportation services and various SG&A expenses.

Cash generated from revenue equaled $227.0 million for the first six months of 2013 as compared to $93.6 million for the same period in 2012 and correlates directly with the revenue increase between the two periods. Cash flow increases are related primarily to volume increases between the periods ended June 30, 2013 and 2012.

Cash used for payment of transportation services for the first six months of 2013 equaled $213.8 million as compared to $81.3 million for the same period in 2012. The increase in cash outflows between the two periods also directly correlates to the increase in revenues between the two periods.

Other operating uses of cash included SG&A items, which equaled $57.8 million and $22.4 million for the six-month periods ended June 30, 2013 and 2012, respectively. Significant SG&A items include payroll and purchased services. For the first six months of 2013, payroll expense equaled $26.5 million as compared to $10.0 million for the same period in 2012.

Investing activities used approximately $23.4 million during the first six months of 2013 compared to a use of $6.7 million from these activities during the same period in 2012. During the current period, $19.7 million was used in acquisitions and $3.9 million was used to purchase fixed assets while $0.1 million was received from the sale of business interests. During the same period in 2012, $3.5 million was used to purchase Continental, $2.6 million to purchase fixed assets and $0.5 million to make the final earn-out payment to the former owners of LRG International.

Financing activities used approximately $1.7 million for the first six months of 2013, compared to $133.6 million generated for the same period in 2012. Our primary use of cash in financing activities during the first six months of 2013 was the dividends paid to preferred stockholders of $1.5 million and payments on our line of credit of $0.2 million. During the same period in 2012, our main source of cash was the $137.0 million of net proceeds from the stock offering while our primary use of cash in the payoff of our revolving credit facility and term loan for $2.1 million and the dividend paid to preferred stockholders of $1.5 million during the period.

Long-Term Debt and Line of Credit

In conjunction with the acquisition of Kelron on August 3, 2012, the Company assumed Kelron’s credit agreements with Royal Bank of Canada (“RBC”) dated April 21, 2011 and amended May 8, 2012 (the “Agreements”), which provided for a $5.0 million revolving demand facility (the “Revolving Demand Facility”) subject to certain borrowing limits. Borrowings under the Agreements can be made either as Royal Bank Prime based loans in Canadian currency at the interest rate equal to the Royal Bank Prime Rate (as defined in the Agreements) plus 2.00 percent or as Royal Bank US Base Rate loans in U.S. currency at the interest rate equal to the Royal Bank US Base Rate (as defined in the Agreements) plus 2.00 percent. Borrowings under the Revolving Demand Facility are payable upon demand by RBC. The Revolving Demand Facility is guaranteed by a first ranking security interest in all personal property of Kelron. The Agreements contain customary representations, warranties and general covenants, with which we were in compliance at June 30, 2013.

Contractual Obligations

The following table reflects our contractual obligations as of June 30, 2013 (in thousands):

	Payments Due by Period
Contractual Obligations	Total		Less than 1 Year		1 to 3 Years		3 to 5 Years		More than 5 Years
Capital leases payable	$	189	$	41	$	100	$	48	$	—
Notes Payable		1,428		809		619		—		—
Operating/real estate leases		25,308		4,547		8,092		6,823		5,846
Employment contracts		14,857		5,035		8,368		1,454		—
Convertible Senior Notes		39,140		6,469		12,938		19,733		—
Total contractual cash obligations	$	80,922	$	16,901	$	30,117	$	28,058	$	5,846

We do not have any material commitments that have not been disclosed elsewhere.

28

Off-Balance Sheet Arrangements

We are not a party to any transactions that would be considered “off-balance sheet arrangements” under Item 303(a)(4) of Regulation S-K.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

The following discussion about our market risk disclosures involves forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements. We are exposed to market risk related to changes in interest rates and foreign currency exchange rates.

Interest Rate Risk. As of June 30, 2013, we held $178.2 million of cash in cash depository and money market funds held in depository accounts at five financial institutions. The primary market risk associated with these investments is liquidity risk. A hypothetical 100-basis-point change in the interest rate would not have a material effect on our earnings. We do not use derivative financial instruments to manage interest rate risk or to speculate on future changes in interest rates.

Foreign Currency Exchange Risk. As a result of our acquisition of the freight brokerage operations of Kelron on August 3, 2012, our Canadian-based business and results of operations are exposed to movements in the U.S. dollar to Canadian dollar foreign currency exchange rate. As a result of our presence in Canada, a portion of our revenue is denominated in Canadian dollars. If the U.S. dollar strengthens against the Canadian dollar, our revenues reported in U.S. dollars would decline. With regard to operating expense, our primary exposure to foreign currency exchange risk relates to operating expense incurred in Canadian dollars. If the Canadian dollar strengthens, costs reported in U.S. dollars will increase. Movements in the U.S. dollar to Canadian dollar foreign currency exchange rate did not have a material effect on our revenue during the first six months of 2013. A hypothetical ten percent change in average exchange rates versus the U.S. dollar would not have resulted in a material change to our earnings for the first six months of 2013.

From time to time, we use foreign currency forward contracts to reduce part of the variability in certain forecasted Canadian dollar denominated cash flows. Generally, these instruments are for maturities of six months or less. We consider several factors when evaluating hedges of our forecasted foreign currency exposures, such as significance of the exposure, offsetting economic exposures and potential costs of hedging. We do not enter into derivative transactions for purposes other than hedging economic exposures. During the first six months of 2013, we have not entered into any forward contracts to reduce the variability in our Canadian dollar denominated revenues and operating expenses that relate to our Canadian-based operations.

Convertible Debt Outstanding. The fair market value of our outstanding issue of convertible senior notes is subject to interest rate and market price risk due to the convertible feature of the notes and other factors. Generally the fair market value of fixed interest rate debt will increase as interest rates fall and decrease as interest rates rise. The fair market value of the notes may also increase as the market price of our stock rises and decrease as the market price of our stock falls. Interest rate and market value changes affect the fair market value of the convertible senior notes, and may affect the prices at which we would be able to repurchase such convertible senior notes were we to do so. These changes do not impact our financial position, cash flows or results of operations. For additional information on the fair value of our outstanding convertible senior notes, see Note 2 to our condensed consolidated financial statements included in this Quarterly Report.

Item 4. Controls and Procedures.

Evaluation of disclosure controls and procedures. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report. Based on their evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of such time such that the material information required to be included in our SEC reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to the Company, including our consolidated subsidiaries, and was made known to them by others within those entities, particularly during the period when this report was being prepared.

Changes in internal controls. Except as described below, there have not been any changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2013 that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting. The Company has replaced its financial reporting system with a new financial reporting system from Oracle and implementation is occurring during 2013. On May 6th, 2013, the Company completed its acquisition of the freight brokerage operations of Interide Logistics and is in the process of integrating the acquired businesses into the Company’s overall internal controls over financial reporting process. For additional information on the acquisition of Interide Logistics, see Note 3 to our condensed consolidated financial statements included in this Quarterly Report.

29

Part II—Other Information

Item 1. Legal Proceedings.

As previously disclosed, we are involved in litigation in the Fourth Judicial District Court of Hennepin County, Minnesota relating to our hiring of former employees of C.H. Robinson Worldwide, Inc. (“CHR”). In the litigation, CHR asserts claims for breach of contract, breach of fiduciary duty and duty of loyalty, tortious interference with contractual relationships and prospective contractual relationships, misappropriation of trade secrets, violation of the federal Computer Fraud and Abuse Act, inducing, aiding and abetting breaches, and conspiracy. CHR seeks temporary, preliminary and permanent injunctions, as well as direct and consequential damages and attorneys’ fees. CHR has asserted that it may seek punitive damages as well. On January 17, 2013, the Court issued an Order Regarding Motion for Temporary Injunction (the “Order”). The Order (as amended on April 16, 2013) prohibits us from engaging in business with certain CHR customers within a specified radius of Phoenix, AZ, until July 1, 2014. On February 7, 2013, CHR filed a First Amended Complaint. On April 11, 2013, we moved to dismiss the new claims asserted in that First Amended Complaint and moved to stay discovery pending the Court’s resolution of the motion to dismiss. A hearing on our motions was held on June 5, 2013. We intend to vigorously defend the action in court. The outcome of this litigation is uncertain and could have a material adverse effect on our business and results of operations.

We are a party to a variety of other legal actions, both as a plaintiff and as a defendant, that arose in the ordinary course of business, and may in the future become involved in other legal actions. We do not currently expect any of these matters or these matters in the aggregate to have a material adverse effect on our 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 our financial condition, results of operations or cash flows.

We carry liability and excess umbrella insurance policies that we deem sufficient to cover potential legal claims arising in the normal course of conducting our operations as a transportation company. In the event we are required to satisfy a legal claim in excess of the coverage provided by this insurance, our financial condition, results of operations or cash flows could be negatively impacted.

Item 1A. Risk Factors.

In addition to the information set forth in this Form 10-Q, you should carefully consider the risk factors discussed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2012, which could materially affect our business, financial condition or future results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On May 6, 2013, we issued 36,878 unregistered shares of our common stock, and paid $3.1 million in cash, as consideration for substantially all the assets of Interide Logistics, LC. These shares were issued to the two principals of Interide Logistics, LC. The issuance of these shares was exempt from the registration requirements of the Securities Act of 1933, as amended, in accordance with Section  4(2) thereof, as a transaction by an issuer not involving any public offering.

Item  3. Defaults upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

The Board of Directors of the Company has not appointed a lead director to preside at the executive sessions of the Company’s independent directors. As set forth in the XPO Logistics, Inc. Corporate Governance Guidelines (the “Guidelines”), the presiding director for each executive session shall be rotated among the Company’s committee chairs. The Guidelines are available on the Company’s corporate website at www.xpologistics.com under the Investors tab.

30

Item 6. Exhibits.

Exhibit Number	Description
31.1	Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrants Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2013.
31.2	Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrants Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2013.
32.1†	Certification of the Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, with respect to the registrants Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2013.
32.2†	Certification of the Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, with respect to the registrants Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2013.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

† This exhibit will not be deemed “filed” for purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such exhibit will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities and Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference.

31

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

XPO Logistics, Inc.

/s/ Bradley S. Jacobs

Bradley S. Jacobs

Chief Executive Officer

(Principal Executive Officer)

/s/ John J. Hardig

John J. Hardig

Chief Financial Officer

(Principal Financial Officer)

Date: July 31, 2013

32

EX-31.1

EXHIBIT 31.1

I, Bradley S. Jacobs, certify that:

1. I have reviewed this quarterly report on Form 10-Q of XPO Logistics, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Bradley S. Jacobs

Chief Executive Officer

(Principal Executive Officer)

Date: July 31, 2013

EX-31.2

EXHIBIT 31.2

I, John J. Hardig, certify that:

1. I have reviewed this quarterly report on Form 10-Q of XPO Logistics, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ John J. Hardig

Chief Financial Officer

(Principal Financial Officer)

Date: July 31, 2013

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

Pursuant to 18 U.S.C. Section 1350

As adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Solely for the purposes of complying with 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, the undersigned Chief Executive Officer of XPO Logistics, Inc. (the “Company”), hereby certify, based on my knowledge, that the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2013 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ Bradley S. Jacobs
	Chief Executive Officer
	(Principal Executive Officer)

Date: July 31, 2013

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

Pursuant to 18 U.S.C. Section 1350

As adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Solely for the purposes of complying with 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, the undersigned Chief Financial Officer of XPO Logistics, Inc. (the “Company”), hereby certify, based on my knowledge, that the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2013 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ John J. Hardig
	Chief Financial Officer
	(Principal Financial Officer)

Date: July 31, 2013

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Related Party Transactions

6 Months Ended

Jun. 30, 2013

Related Party Transactions [Abstract]

Related Party Transactions

11. Related Party Transactions

There were no related party transactions that occurred during the quarters ended June 30, 2013 and 2012.

XML

Condensed Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Income Statement [Abstract]
Revenue	$ 137,091	$ 54,540	$ 251,090	$ 99,100
Expenses
Direct expense	117,751	46,074	215,490	83,861
Gross margin	19,340	8,466	35,600	15,239
Sales general and administrative expense	33,355	11,834	60,982	22,831
Operating loss	(14,015)	(3,368)	(25,382)	(7,592)
Other (income) expense	167	26	58	5
Interest expense	3,106	3	6,170	15
Loss before income tax provision	(17,288)	(3,397)	(31,610)	(7,612)
Income tax expense (benefit)	74	1,780	296	259
Net loss	(17,362)	(5,177)	(31,906)	(7,871)
Cumulative preferred dividends	(743)	(750)	(1,486)	(1,500)
Net loss available to common shareholders	$ (18,105)	$ (5,927)	$ (33,392)	$ (9,371)
Basic loss per share
Net loss	$ (1.00)	$ (0.34)	$ (1.84)	$ (0.56)
Diluted loss per share
Net loss	$ (1.00)	$ (0.34)	$ (1.84)	$ (0.56)
Weighted average common shares outstanding
Basic weighted average common shares outstanding	18,180	17,637	18,107	16,629
Diluted weighted average common shares outstanding	18,180	17,637	18,107	16,629

XML

Commitments and Contingencies

6 Months Ended

Jun. 30, 2013

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

4. Commitments and Contingencies

Lease Commitments

As of June 30, 2013, the Company had approximately $25.5 million in future minimum payments required under operating leases for various real estate, transportation and office equipment leases that have an initial or remaining non-cancelable lease term. Remaining future minimum payments related to these operating leases amount to approximately $2.4 million, $4.3 million, $4.1 million, $3.9 million, and $10.8 million for the periods ending December 31, 2013, 2014, 2015, 2016, and 2017 and thereafter, respectively.

Rent expense was approximately $1.0 million and $0.4 million for the three-month periods ended June 30, 2013 and 2012, respectively, and $1.8 million and $0.6 million for the six-month periods ended June 30, 2013 and 2012, respectively.

Litigation

The Company is involved in litigation in the Fourth Judicial District Court of Hennepin County, Minnesota relating to its hiring of former employees of C.H. Robinson Worldwide, Inc. (“CHR”). In the litigation, CHR asserts claims for breach of contract, breach of fiduciary duty and duty of loyalty, tortious interference with contractual relationships and prospective contractual relationships, misappropriation of trade secrets, violation of the federal Computer Fraud and Abuse Act, inducing, aiding and abetting breaches, and conspiracy. CHR seeks temporary, preliminary and permanent injunctions, as well as direct and consequential damages and attorneys’ fees. CHR has asserted that it may seek punitive damages as well. On January 17, 2013, the Court issued an Order Regarding Motion for Temporary Injunction (the “Order”). The Order (as amended on April 16, 2013) prohibits the Company from engaging in business with certain CHR customers within a specified radius of Phoenix, AZ, until July 1, 2014. On February 7, 2013, CHR filed a First Amended Complaint. On April 11, 2013, the Company moved to dismiss the new claims asserted in that First Amended Complaint and moved to stay discovery pending the Court’s resolution of the motion to dismiss. A hearing on the Company’s motions was held on June 5, 2013. The Company intends to vigorously defend the action in court. The outcome of this litigation is uncertain and could have a material adverse effect on the Company’s business and results of operations.

The Company is a party to a variety of other legal actions, both as a plaintiff and as a defendant, that arose in the ordinary course of business, and may in the future become involved in other legal actions. The Company does not currently expect any of these matters or these matters in the aggregate to have a material adverse effect on the Company’s 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.

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.

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2013

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Equity Awards Outstanding and Exercisable

The following table summarizes the Company’s equity awards outstanding and exercisable as of December 31, 2012 and June 30, 2013:  

	Options							Restricted Stock Units
	Options		Weighted Average Exercise Price		Exercise Price Range	Weighted Average Remaining Term		Restricted Stock Units		Weighted Average Grant Date Fair Value
Outstanding at December 31, 2012		1,383,332		10.06	2.28 - 18.07		8.29		883,816		11.31
Granted		55,500		17.32	17.10 - 18.59				140,714		12.62
Exercised		42,184		4.49	2.96 - 6.08				—		—
Forfeited		10,348		13.12	6.08 - 13.37				68,000		10.65
Outstanding at June 30, 2013		1,386,300	$	10.49	$2.28 - 18.59		7.99		956,530	$	11.55

XML

Reportable Segments

6 Months Ended

Jun. 30, 2013

Segment Reporting [Abstract]

Reportable Segments

12. Reportable Segments

The Company has three reportable segments as described in Note 1 of the unaudited condensed consolidated financial statements.

Corporate charges include the costs of the Company’s executive and shared service teams, professional services such as legal and consulting, board of directors, and certain other corporate costs associated with operating as a public company. The Company allocates charges to the reportable segments for IT services, depreciation of IT fixed assets as well as centralized recruiting and training resources.

The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. The Company evaluates performance based on operating income of the respective business segments. The following schedule identifies select financial data for each of the Company’s operating segments for the three- and six-month periods ended June 30, 2013 and 2012, respectively (in thousands):

XPO Logistics, Inc.

Segment Data

(Unaudited)

(In thousands)

	Freight Brokerage			Expedited Transportation		Freight Forwarding		Corporate			Eliminations			Total
Three Months Ended June 30, 2013
Revenue	$	95,360		$	26,445	$	19,338	$	—		$	(4,052	)	$	137,091
Operating income (loss) from operations		(4,990	)		1,187		478		(10,690	)		—			(14,015	)
Depreciation and amortization		1,180			291		93		231			—			1,795
Interest expense		3			2		—		3,101			—			3,106
Tax provision (benefit)		—			2		—		72			—			74
Goodwill		49,145			11,560		9,222		—			—			69,927
Total assets		208,408			63,303		31,088		422,672			(330,992	)		394,479
Three Months Ended June 30, 2012
Revenue	$	13,877		$	25,731	$	16,468	$	—		$	(1,536	)	$	54,540
Operating income (loss) from operations		(825	)		2,634		218		(5,395	)		—			(3,368	)
Depreciation and amortization		76			129		145		73			—			423
Interest expense (income)		—			1		1		1			—			3
Tax (benefit) provision		—			—		—		1,780			—			1,780
Goodwill		2,125			7,737		9,222		—			—			19,084
Total assets		12,899			28,953		22,920		237,335			(41,376	)		260,731
Six Months Ended June 30, 2013
Revenue	$	173,590		$	50,320	$	35,571	$	—		$	(8,391	)	$	251,090
Operating income (loss) from operations		(8,810	)		1,940		850		(19,362	)		—			(25,382	)
Depreciation and amortization		2,194			559		181		415			—			3,349
Interest expense		5			4		—		6,161			—			6,170
Tax provision (benefit)		41			2		—		253			—			296
Goodwill		49,145			11,560		9,222		—			—			69,927
Total assets		208,408			63,303		31,088		422,672			(330,992	)		394,479
Six Months Ended June 30, 2012
Revenue	$	21,805		$	48,151	$	31,925	$	—		$	(2,781	)	$	99,100
Operating income (loss) from operations		(911	)		4,422		459		(11,562	)		—			(7,592	)
Depreciation and amortization		96			266		289		90			—			741
Interest expense		1			2		—		12			—			15
Tax provision (benefit)		—			—		—		259			—			259
Goodwill		2,125			7,737		9,222		—			—			19,084
Total assets		12,899			28,953		22,920		237,335			(41,376	)		260,731

XML

Stock-Based Compensation - Equity Awards Outstanding and Exercisable (Detail) (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Options, Weighted Average Remaining Term
Options, Weighted Average Remaining Term at the end of the period	7 years 11 months 27 days	8 years 3 months 15 days
Options Outstanding
Options outstanding at beginning of period	1,383,332
Options, Granted	55,500
Options, Exercised	42,184
Options, Forfeited	10,348
Options, outstanding at end of period	1,386,300	1,383,332
Options, Weighted Average Exercise Price
Options, Weighted Average Exercise Price, at beginning of period	$ 10.06
Options, Weighted Average Exercise Price, Granted	$ 17.32
Options, Weighted Average Exercise Price, Exercised	$ 4.49
Options, Weighted Average Exercise Price, Forfeited	$ 13.12
Options, Weighted Average Exercise Price, at end of period	$ 10.49	$ 10.06
Options, Weighted Average Remaining Term at the end of the period	7 years 11 months 27 days	8 years 3 months 15 days
Restricted Stock Units, Shares
Restricted Stock Units, shares at beginning of period	883,816
Restricted Stock Units, shares, Granted	140,714
Restricted Stock Units, shares, Exercised
Restricted Stock Units, shares, Forfeited	68,000
Restricted Stock Units, shares at end of period	956,530	883,816
Restricted Stock, Weighted Average Grant Date Fair Value
Restricted Stock, Weighted Average Grant Date Fair Value at beginning of period	$ 11.31
Restricted Stock, Weighted Average Grant Date Fair Value, Granted	$ 12.62
Restricted Stock, Weighted Average Grant Date Fair Value, Exercised
Restricted Stock, Weighted Average Grant Date Fair Value, Forfeited	$ 10.65
Restricted Stock, Weighted Average Grant Date Fair Value at end of period	$ 11.55	$ 11.31
Minimum [Member]
Options, Weighted Average Exercise Price
Options, Weighted Average Exercise Price, at beginning of period	$ 2.28
Options, Weighted Average Exercise Price, Granted	$ 17.10
Options, Weighted Average Exercise Price, Exercised	$ 2.96
Options, Weighted Average Exercise Price, Forfeited	$ 6.08
Options, Weighted Average Exercise Price, at end of period	$ 2.28
Maximum [Member]
Options, Weighted Average Exercise Price
Options, Weighted Average Exercise Price, at beginning of period	$ 18.07
Options, Weighted Average Exercise Price, Granted	$ 18.59
Options, Weighted Average Exercise Price, Exercised	$ 6.08
Options, Weighted Average Exercise Price, Forfeited	$ 13.37
Options, Weighted Average Exercise Price, at end of period	$ 18.59

XML

Organization - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2013 Segment Branch
Organization Consolidation And Presentation Of Financial Statements [Abstract]
Number of Operating Segments	3
Company-owned branches located throughout the united states	9

XML

Reportable Segments (Tables)

6 Months Ended

Jun. 30, 2013

Segment Reporting [Abstract]

Selected Financial Data for Each of Operating Segments

The following schedule identifies select financial data for each of the Company’s operating segments for the three- and six-month periods ended June 30, 2013 and 2012, respectively (in thousands):

XPO Logistics, Inc.

Segment Data

(Unaudited)

(In thousands)

	Freight Brokerage			Expedited Transportation		Freight Forwarding		Corporate			Eliminations			Total
Three Months Ended June 30, 2013
Revenue	$	95,360		$	26,445	$	19,338	$	—		$	(4,052	)	$	137,091
Operating income (loss) from operations		(4,990	)		1,187		478		(10,690	)		—			(14,015	)
Depreciation and amortization		1,180			291		93		231			—			1,795
Interest expense		3			2		—		3,101			—			3,106
Tax provision (benefit)		—			2		—		72			—			74
Goodwill		49,145			11,560		9,222		—			—			69,927
Total assets		208,408			63,303		31,088		422,672			(330,992	)		394,479
Three Months Ended June 30, 2012
Revenue	$	13,877		$	25,731	$	16,468	$	—		$	(1,536	)	$	54,540
Operating income (loss) from operations		(825	)		2,634		218		(5,395	)		—			(3,368	)
Depreciation and amortization		76			129		145		73			—			423
Interest expense (income)		—			1		1		1			—			3
Tax (benefit) provision		—			—		—		1,780			—			1,780
Goodwill		2,125			7,737		9,222		—			—			19,084
Total assets		12,899			28,953		22,920		237,335			(41,376	)		260,731
Six Months Ended June 30, 2013
Revenue	$	173,590		$	50,320	$	35,571	$	—		$	(8,391	)	$	251,090
Operating income (loss) from operations		(8,810	)		1,940		850		(19,362	)		—			(25,382	)
Depreciation and amortization		2,194			559		181		415			—			3,349
Interest expense		5			4		—		6,161			—			6,170
Tax provision (benefit)		41			2		—		253			—			296
Goodwill		49,145			11,560		9,222		—			—			69,927
Total assets		208,408			63,303		31,088		422,672			(330,992	)		394,479
Six Months Ended June 30, 2012
Revenue	$	21,805		$	48,151	$	31,925	$	—		$	(2,781	)	$	99,100
Operating income (loss) from operations		(911	)		4,422		459		(11,562	)		—			(7,592	)
Depreciation and amortization		96			266		289		90			—			741
Interest expense		1			2		—		12			—			15
Tax provision (benefit)		—			—		—		259			—			259
Goodwill		2,125			7,737		9,222		—			—			19,084
Total assets		12,899			28,953		22,920		237,335			(41,376	)		260,731

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Debt - Additional Information (Detail) (USD $)	1 Months Ended		3 Months Ended
	Oct. 17, 2012	Sep. 26, 2012	Jun. 30, 2013
Debt Instrument [Line Items]
Convertible Debt, Conversion Rate, Shares Per $1000 In Principal Amount		60.8467	60.8467
Convertible Debt, Conversion Rate, Principal Amount Increment		$ 1,000	$ 1,000
Debt Instrument, Convertible, Conversion Price (in Dollars per share)		$ 16.43	$ 16.43
Convertible Debt, Redemption Terms, Common Stock Market Price As a Percent of the Conversion Price		130.00%
Convertible Debt, Redemption Terms, Redemption Price As Percent of Principal Amount to be Redeemed		100.00%
Convertible Debt, Redemption Terms, "Make Whole Premium" Payment, Discount Rate		4.50%
Embedded Derivative, Fair Value of Embedded Derivative Liability			0
Debt Portion of Convertible Note [Member]
Debt Instrument [Line Items]
Debt Issuance Cost	500,000	3,600,000	4,100,000
Proceeds from Debt, Net of Issuance Costs	14,000,000
Equity Portion of Convertible Note [Member]
Debt Instrument [Line Items]
Debt Issuance Cost	100,000	1,100,000	1,200,000
Proceeds from Debt, Net of Issuance Costs	4,200,000
Convertible Debt [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage		4.50%	4.50%
Debt Instrument, due date		Oct. 01, 2017	Oct. 01, 2017
Proceeds from Debt, Net of Issuance Costs	18,200,000
Convertible Debt [Member] | Public Offering [Member]
Debt Instrument [Line Items]
Issuance Of Debt, Principal Amount		125,000,000
Convertible Debt [Member] | Underwriters' Exercise of Overallotment Option [Member]
Debt Instrument [Line Items]
Issuance Of Debt, Principal Amount	18,800,000
Portion of Debt Issuance Allocated to Long-Term Debt [Member]
Debt Instrument [Line Items]
Convertible Debt		92,800,000	106,800,000
Portion of Debt Issuance Allocated to Equity [Member]
Debt Instrument [Line Items]
Debt Instrument, Convertible, Carrying Amount of Equity Component		$ 27,500,000	$ 31,700,000

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Earnings per Share - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Earnings Per Share [Line Items]
Convertible preferred stock par value	$ 0.001		$ 0.001		$ 0.001
Assumed Average Market Price Per Share Exercise Of Warrants Treasury Method	$ 16.85	$ 16.92	$ 17.00	$ 15.44
Series A Convertible Preferred Stock [Member]
Earnings Per Share [Line Items]
Convertible preferred stock par value	$ 0.001		$ 0.001

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Basis of Presentation and Significant Accounting Policies - Fair Value of Assets and Liabilities Accounted for at Fair Value on Recurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Assets:
Money market funds	$ 179,572	$ 239,443
Liabilities:
Contingent consideration obligations	443	392
Level 1 [Member]
Assets:
Money market funds	179,572	239,443
Liabilities:
Contingent consideration obligations
Level 2 [Member]
Assets:
Money market funds
Liabilities:
Contingent consideration obligations
Level 3 [Member]
Assets:
Money market funds
Liabilities:
Contingent consideration obligations	$ 443	$ 392

XML

Reportable Segments - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2013 Segment
Segment Reporting [Abstract]
Number of Reportable Segments	3

XML

Earnings per Share (Tables)

6 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The weighted average of potentially dilutive securities excluded from the computation of diluted earnings per share for the three- and six-month periods ending June 30, 2013 and 2012 is shown per the table below.  

	Three Months Ended				Six Months Ended
	June 30, 2013		June 30, 2012		June 30, 2013		June 30, 2012
Basic common stock outstanding		18,179,570		17,636,834		18,106,564		16,629,420
Potentially Dilutive Securities:
Shares underlying the conversion of preferred stock to common stock		10,610,714		10,714,286		10,610,714		10,714,286
Shares underlying the conversion of the convertible senior notes		8,749,239		—		8,749,239		—
Shares underlying warrants to purchase common stock		6,262,380		6,282,659		6,302,668		6,282,659
Shares underlying stock options to purchase common stock		526,813		401,793		533,977		348,682
Shares underlying restricted stock units		436,275		559,381		418,898		613,139
		26,585,421		17,958,119		26,615,496		17,958,766
Diluted weighted shares outstanding		44,764,991		35,594,953		44,722,060		34,588,186

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Condensed Consolidated Statements of Changes in Stockholders' Equity (USD $) In Thousands	Total	Preferred Stock [Member]	Common Stock [Member]	Treasury Stock [Member]	Paid-In Capital [Member]	Accumulated Deficit [Member]
Balance at Dec. 31, 2012	$ 245,059	$ 42,794	$ 18	$ (107)	$ 262,641	$ (60,287)
Balance (in shares) at Dec. 31, 2012		74	18,003	(45)
Net loss	(31,906)					(31,906)
Issuance of common stock for option exercise net of withholdings	(45)				(45)
Issuance of common stock for option exercise net of withholdings, shares			28
Issuance of common stock for acquisition	3,087				3,087
Issuance of common stock for acquisition, shares			210
Sale of business interest	(24)				(24)
Dividend paid	(1,486)					(1,486)
Stock compensation expense	2,147				2,147
Balance at Jun. 30, 2013	$ 216,832	$ 42,794	$ 18	$ (107)	$ 267,806	$ (93,679)
Balance (in shares) at Jun. 30, 2013		74	18,241	(45)

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Basis of Presentation and Significant Accounting Policies

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Basis of Presentation and Significant Accounting Policies

2. Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed 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-Q. Certain information and note disclosures normally included in annual financial statements have been condensed or omitted pursuant to those rules and regulations. However, management believes that the disclosures contained herein are adequate to make the information presented not misleading.

These unaudited condensed 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 June 30, 2013 and December 31, 2012, and results of operations for the three- and six-month periods ended June 30, 2013 and 2012. The preparation of the condensed 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 and actual results could differ materially from those estimates.

These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto for the fiscal year ended December 31, 2012 that are set forth in the Company’s Annual Report on Form 10-K, a copy of which is available on the SEC’s website (www.sec.gov). Results of operations for interim periods are not necessarily indicative of results to be expected for a full year.

Use of Estimates

The Company prepares its unaudited condensed 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 condensed 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, accrued revenue, purchased transportation, recoverability of long-lived assets, accrual of acquisition earn-outs, estimated legal accruals, valuation allowances for deferred taxes, reserve for uncertain tax positions, 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.

Significant Accounting Policies

Revenue Recognition

The Company recognizes revenue at the point in time when delivery is completed on the freight shipments it handles, with related costs of delivery being accrued as incurred and expensed within the same period in which the associated revenue is recognized. The Company uses the following supporting criteria to determine that revenue has been earned and should be recognized:

• Persuasive evidence of an arrangement exists;

• Services have been rendered;

• The sales price is fixed and determinable; and

• Collectability is reasonably assured.

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, and tracing shipments in transit).

• For Expedited Transportation and Freight Brokerage, the Company has complete discretion to select its drivers, contractors or other transportation providers (collectively, “service providers”). For Freight Forwarding, 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 Freight Forwarding’s independently-owned stations. Independently-owned stations may further negotiate the cost of services with Freight Forwarding-approved service providers for individual customer shipments.

• Expedited Transportation and Freight Brokerage have complete discretion to establish sales prices. Independently-owned stations within Freight Forwarding 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 Freight Forwarding for a portion (typically 70-80%) of credit losses. Freight Forwarding retains the risk that the independent station owners will not meet this obligation.

The Company’s Freight Forwarding Segment collects on behalf of its customers certain taxes and duties as a complimentary service for international shipments. The Company’s accounting policy is to present these collections on a gross basis. The Company recognized $1.5 million and $0.7 million of such revenue for the three-month periods ended June 30, 2013 and 2012, respectively, and $2.3 million and $1.4 million of such revenue for the six-month periods ended June 30, 2013 and 2012, respectively.

Cash and cash equivalents

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.

Income Taxes

Taxes on income are provided 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 unaudited condensed consolidated financial statements. Deferred tax assets and liabilities are determined based on the differences between the book values 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 the 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 10—Income Taxes.

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. Intangible assets with indefinite lives consist principally of the Express-1 and CGL trade names. The Company follows the provisions of ASC Topic 350, “Intangibles—Goodwill and Other”, which requires an annual impairment test for goodwill and intangible assets with indefinite lives. The Company may first choose to perform a qualitative evaluation of the likelihood of goodwill and intangible assets impairment. For the goodwill that was the result of current year acquisitions, the Company chose to perform a qualitative evaluation. If the Company determined a quantitative evaluation was necessary, the goodwill at the reporting unit was 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 during the third quarter unless events or circumstances indicate impairment of the goodwill may have occurred before that time. 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 additional information refer to Note 6—Goodwill.

The fair values of purchased intangible assets with indefinite lives, primarily trade names, are estimated and compared to their carrying values. The Company estimates the fair value of these intangible assets based on an income approach using the relief-from-royalty method. This methodology assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to exploit the related benefits of these types of assets. This approach is dependent on a number of factors, including estimates of future growth and trends, royalty rates for this category of intellectual property, discount rates and other variables. The Company bases its fair value estimates on assumptions it believes to be reasonable, but which are unpredictable and inherently uncertain. Actual future results may differ from those estimates. The Company recognizes an impairment loss when the estimated fair value of the intangible asset is less than the carrying value. The Company performs the annual impairment testing during the third quarter unless events or circumstances indicate impairment of the intangible assets with indefinite lives may have occurred before that time. For the periods presented, the Company did not recognize any impairment of intangible assets with indefinite lives as the estimated fair value of its intangible assets with indefinite lives exceeded the book value of these reporting units.

Identifiable Intangible Assets

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. During the six-month periods ended June 30, 2013 and 2012, there was no impairment of the identified intangible assets.

The Company’s intangible assets subject to amortization consist of non-compete agreements, customer relationships and other intangibles that are amortized on a straight-line basis over the estimated useful lives of the related intangible asset. The estimated useful lives of the respective intangible assets range from three months to 12 years.

The following table sets forth the Company’s identifiable intangible assets as of June 30, 2013 and December 31, 2012 (in thousands):

	June 30, 2013			December 31, 2012
Indefinite Lived Intangibles
Trade Name	$	6,416		$	6,416
Definite Lived Intangibles:
Trade name		1,321			1,246
Non-compete agreements		4,145			3,050
Customer lists and relationships		22,366			14,281
Other intangible assets		2,168			2,072
		30,000			20,649
Less: accumulated amortization		(6,295	)		(4,592	)
Intangible assets, net	$	23,705		$	16,057
Total Identifiable Intangibles	$	30,121		$	22,473

Estimated future amortization expense for amortizable intangible assets for the next five years is as follows:

(in thousands)	2013		2014		2015		2016		2017
Estimated future amortization expense	$	1,385	$	2,544	$	2,420	$	2,407	$	2,366

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.

Other Long-Term Assets

Other long-term assets consist primarily of balances representing various deposits, and notes receivable from various CGL independent station owners. Also included within this account classification are incentive payments to independent station owners within the CGL network. These payments are made by CGL to certain station owners as an incentive to establish an independently-owned station. These amounts 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.

Foreign Currency Translation

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 cost of sales in the condensed consolidated statements of operations. Assets and liabilities of XPO Logistics Canada, which has the U.S. dollar as its functional currency (but which maintains its accounting records in Canadian currency), have their values remeasured into U.S. dollars at period-end exchange rates, except for non-monetary items for which historical rates are used. Exchange gains or losses are not material to the condensed consolidated statements of operations for the periods presented.

Foreign Currency Hedging and Derivative Financial Instruments

The Company enters into derivative contracts to protect against fluctuations in currency exchange rates from time to time. These contracts are for expected future cash flows and not for speculative purposes. The Company reflects changes in fair value of these contracts in the condensed consolidated statements of operations. In accordance with FASB ASC Topic 815 “Derivatives and Hedging”, the Company does not apply hedge accounting to its derivative contracts.

Fair Value Measurements

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.

The following table sets forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of June 30, 2013 and December 31, 2012 (in thousands):

	Fair Value Measurements as of June 30, 2013
	Total		Level 1		Level 2		Level 3
Assets:
Money market funds	$	179,572	$	179,572	$	—	$	—
Liabilities:
Contingent consideration obligations	$	443	$	—	$	—	$	443
	Fair Value Measurements as of December 31, 2012
	Total		Level 1		Level 2		Level 3
Assets:
Money market funds	$	239,443	$	239,443	$	—	$	—
Liabilities:
Contingent consideration obligations	$	392	$	—	$	—	$	392

Estimated Fair Value of Financial Instruments

The aggregate net fair value estimates discussed herein 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 June 30, 2013 and December 31, 2012. These financial instruments include cash, accounts receivable, notes receivable, accounts payable, accrued expense, notes payable and short-term borrowings. 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.

The Company has outstanding $143.8 million of 4.50% Convertible Senior Notes due October 1, 2017, 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. The convertible senior notes were allocated to long-term debt and equity in the amounts of $106.8 million and $31.7 million, respectively. These amounts are net of debt issuance costs of $4.1 million for debt and $1.2 million for equity. Holders of the convertible senior notes are due interest semiannually in arrears on April 1 and October 1 of each year, beginning on April 1, 2013. The conversion rate was initially 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 senior notes was $177.4 million as of June 30, 2013. The convertible senior notes contain an optional redemption right in favor of the Company, although it is the Company’s present intent not to exercise such redemption right. Accordingly, the fair value of the bifurcated coupon make-whole premium that would be payable to holders in the event of a redemption has been valued at $0.0 million. For additional information refer to Note 5—Debt.

Stock-Based Compensation

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, including those subject to service-based vesting conditions and those subject to service and performance-based vesting conditions, the fair value is established based on the market price on the date of the grant. 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 six-month periods ended June 30, 2013 and 2012 were 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 additional information refer to Note 8—Stock-Based Compensation.

Earnings per Share

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 9—Earnings per Share.

Internal Use 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 internal use computer software are expensed as incurred. Costs incurred during the application development stage are capitalized and included in property and equipment. Capitalized internal use software totaled $1.6 million as of June 30, 2013 and $1.2 million as of December 31, 2012. Capitalized internal use software costs are amortized over the expected economic life of three years using the straight-line method.

Allowance for Doubtful Accounts

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, current economic conditions, and other factors that may affect customers’ ability to pay.

Please also refer to Note 1 of the “Notes to Consolidated Financial Statements” in the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012 for a more complete discussion of the Company’s significant accounting policies.

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Debt

6 Months Ended

Jun. 30, 2013

Debt Disclosure [Abstract]

Debt

5. Debt

Long-Term Debt and Capital Leases

The Company uses 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.

On September 26, 2012, the Company completed the registered underwritten public offering of 4.50% Convertible Senior Notes due October 1, 2017, in an aggregate principal amount of $125.0 million. The convertible senior notes were allocated to long-term debt and equity in the amounts of $92.8 million and $27.5 million, respectively. These amounts are net of debt issuance costs of $3.6 million for debt and $1.1 million for equity. On October 17, 2012, as part of the underwritten registered public offering on September 26, 2012 of the 4.50% convertible senior notes due October 1, 2017, the underwriters exercised the overallotment option to purchase $18.8 million additional principal amount of the convertible senior notes. The Company received approximately $18.2 million in net proceeds after underwriting discounts, commissions and expenses were paid. The overallotment option was allocated to long-term debt and equity in the amounts of $14.0 million and $4.2 million, respectively. These amounts are net of debt issuance costs of $0.5 million for debt and $0.1 million for equity. Interest is payable on the notes on April 1 and October 1 of each year, beginning on April 1, 2013.

Under certain circumstances at the election of the holder, the convertible senior 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 senior 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 senior notes at any time. The convertible senior 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 Company may redeem the convertible senior 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 senior notes to be redeemed through October 1, 2017 (excluding interest accrued to, but excluding, the redemption date), computed using a discount rate equal to 4.5%. The make-whole premium is paid to holders whether or not they convert the convertible senior notes following the Company’s issuance of a redemption notice.

For accounting purposes, the redemption feature in the convertible senior notes is an embedded derivative that is not clearly and closely related to the convertible senior notes. Consequently, it was initially bifurcated from the indenture and separately recorded at its fair value as a liability with subsequent changes in fair value to be recorded through earnings. As of June 30, 2013, the fair value of the embedded redemption feature was $0.0 million as management has determined it is not the Company’s intent to exercise the conversion feature.

The following table outlines the Company’s debt obligations (in thousands) as of June 30, 2013 and December 31, 2012:  

	Interest rates			Term (months)		As of June 30, 2013		As of December 31, 2012
Capital leases for equipment		13.91	%		59	$	189	$	154
Notes payable		N/A			N/A		1,119		863
Line of credit		5.0	%		N/A		309		150
Convertible senior notes		4.50	%		60		111,197		108,280
Total debt and capital leases							112,814		109,447
Less: current maturities of notes payable and capital leases							850		491
Non-current maturities of debt and capital leases						$	111,964	$	108,956

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Acquisitions

6 Months Ended

Jun. 30, 2013

Business Combinations [Abstract]

Acquisitions

3. Acquisitions

2013 Acquisitions

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 Logistics”) for $3.1 million in cash consideration and 36,878 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 Logistics 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 Logistics 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 condensed consolidated balance sheet at their estimated 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 $3.0 million and intangible assets of $1.8 million. The working capital adjustments and intangible asset valuation in connection with this acquisition are being finalized, although the Company does not expect there to be a 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 Logistics”) for $8.0 million in cash consideration and 173,712 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 Logistics 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 Logistics 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 condensed consolidated balance sheet at their estimated 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 $7.1 million and intangible assets of $2.8 million. The working capital adjustments in connection with this acquisition are being finalized, although the Company does not expect there to be a 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”) 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 condensed consolidated balance sheet at their estimated 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. 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.

2012 Acquisitions

Turbo Logistics

On October 24, 2012, pursuant to an asset purchase agreement, the Company purchased substantially all of the assets of Turbo Logistics, Inc. and Turbo Dedicated, Inc. (collectively, “Turbo”) for total cash consideration of $50.1 million, excluding any working capital adjustments, with no assumption of debt. As a result of the final working capital adjustment, the cash consideration was reduced by $0.2 million.

Kelron Logistics

On August 3, 2012, the Company purchased all of the outstanding capital stock of Kelron Corporate Services Inc. and certain related entities (collectively, “Kelron”), a non-asset, third-party logistics business based in Canada. Founded in 1992, Kelron serves more than 750 customers through locations in Toronto, Ontario; Vancouver, British Columbia; Montreal, Quebec; and Cleveland, Ohio. The purchase price was $8.0 million, including $2.6 million of consideration for the outstanding stock and $5.4 million of assumed debt and 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.

As of June 30, 2013, the purchase price allocation is considered final, except for any impact resulting from any final working capital adjustments. All goodwill recorded related to the acquisition relates to the Freight Brokerage segment and is not deductible for Canadian income tax purposes.

In conjunction with the acquisition, the Company issued notes payable to the sellers totaling $1.0 million. The notes do not bear any interest. The notes were treated as consideration transferred as part of the acquisition and are payable in equal quarterly installments on November 3, February 3, May 3 and August 3 of each year with the final installment to be due and payable on August 3, 2015. The Company used an imputed interest rate of 4.53% to determine the appropriate discount to apply to the notes. The carrying value of the notes payable at June 30, 2013 was $0.7 million.

Continental Freight Services

On May 8, 2012, the Company purchased all of the outstanding capital stock of Continental Freight Services, Inc. (“Continental”) and all of the membership interests in G & W Tanks, LLC. The cash purchase price was $3.5 million, excluding any working capital adjustments and a potential earn-out of up to $0.3 million. The acquisition of Continental includes a contingent consideration arrangement that requires additional consideration to be paid by the Company to Continental’s former owners based on the adjusted gross profit of Continental during the twelve month period commencing June 1, 2012. The fair value of the contingent consideration at June 30, 2013 is $0.3 million.

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Earnings per Share - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Detail)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Earnings Per Share [Abstract]
Basic common stock outstanding	18,180,000	17,637,000	18,107,000	16,629,000
Shares underlying the conversion of preferred stock to common stock	10,610,714	10,714,286	10,610,714	10,714,286
Shares underlying the conversion of the convertible senior notes	8,749,239		8,749,239
Shares underlying warrants to purchase common stock	6,262,380	6,282,659	6,302,668	6,282,659
Shares underlying stock options to purchase common stock	526,813	401,793	533,977	348,682
Shares underlying restricted stock units	436,275	559,381	418,898	613,139
Antidilutive shares excluded from the computation of earnings per share	26,585,421	17,958,119	26,615,496	17,958,766
Diluted weighted shares outstanding	44,764,991	35,594,953	44,722,060	34,588,186

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Basis of Presentation and Significant Accounting Policies - Additional Information (Detail) (USD $)	1 Months Ended	3 Months Ended		6 Months Ended			1 Months Ended		3 Months Ended	1 Months Ended		3 Months Ended	1 Months Ended	3 Months Ended			6 Months Ended	12 Months Ended			6 Months Ended
	Sep. 26, 2012	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012	Oct. 17, 2012 Debt Portion of Convertible Note [Member]	Sep. 26, 2012 Debt Portion of Convertible Note [Member]	Jun. 30, 2013 Debt Portion of Convertible Note [Member]	Oct. 17, 2012 Equity Portion of Convertible Note [Member]	Sep. 26, 2012 Equity Portion of Convertible Note [Member]	Jun. 30, 2013 Equity Portion of Convertible Note [Member]	Sep. 26, 2012 Convertible Debt [Member]	Jun. 30, 2013 Convertible Debt [Member]	Jun. 30, 2013 Portion of Debt Issuance Allocated to Long-Term Debt [Member]	Sep. 26, 2012 Portion of Debt Issuance Allocated to Long-Term Debt [Member]	Jun. 30, 2013 Computer Software, Intangible Asset [Member]	Dec. 31, 2012 Computer Software, Intangible Asset [Member]	Jun. 30, 2013 Portion of Debt Issuance Allocated to Equity [Member]	Sep. 26, 2012 Portion of Debt Issuance Allocated to Equity [Member]	Jun. 30, 2013 Minimum [Member]	Jun. 30, 2013 Maximum [Member]
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Typical Percentage Of Credit Losses Reimbursed To Freight Forwarding By Independently Owned Stations				70-80%
Percentage Of Credit Losses Reimbursed To Freight Forwarding By Independently Owned Stations																					70.00%	80.00%
Taxes and Duties Collected on Behalf of Customer		$ 1,500,000	$ 700,000	$ 2,300,000	$ 1,400,000
Finite-Lived Intangible Asset, Useful Life																	3 years	3 years			3 months	12 years
Convertible senior notes outstanding														143,800,000
Debt Instrument, Interest Rate, Stated Percentage													4.50%	4.50%
Debt Instrument, due date													Oct. 01, 2017	Oct. 01, 2017
Convertible Debt															106,800,000	92,800,000
Debt Instrument, Convertible, Carrying Amount of Equity Component																			31,700,000	27,500,000
Debt Issuance Cost							500,000	3,600,000	4,100,000	100,000	1,100,000	1,200,000
Convertible Debt, Conversion Rate, Shares Per $1000 In Principal Amount	60.8467	60.8467
Convertible Debt, Conversion Rate, Principal Amount Increment	1,000	1,000
Debt Instrument, Convertible, Conversion Price (in Dollars per share)	$ 16.43	$ 16.43		$ 16.43
Convertible Debt, Fair Value Disclosures		177,400,000		177,400,000
Debt Instrument, Convertible, Beneficial Conversion Feature		0
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate				0.00%
Capitalized Computer Software, Gross		$ 1,600,000		$ 1,600,000		$ 1,200,000

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Acquisitions - Additional information (Detail) (USD $)			1 Months Ended					1 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	May 06, 2013 Interide Logistics, LC ("Interide Logistics") [Member]	Feb. 26, 2013 Covered Logistics & Transportation LLC ("Covered Logistics") [Member]	Oct. 24, 2012 Turbo Logistics, Inc. [Member]	Jun. 30, 2013 Kelron Logistics, Inc. [Member]	Aug. 03, 2012 Kelron Logistics, Inc. [Member]	Aug. 03, 2012 Kelron Logistics, Inc. [Member] Note Payable to Sellers [Member]	Aug. 03, 2012 Kelron Logistics, Inc. [Member] Minimum [Member] Customer	Jun. 30, 2013 Continental Freight Services, Inc. [Member]	May 08, 2012 Continental Freight Services, Inc. [Member]	May 08, 2012 Continental Freight Services, Inc. [Member] Maximum [Member] Potential Earn-Out [Member]	Feb. 08, 2013 ECAC [Member]
Loans At Acquisition Date [Line Items]
Business Acquisition, Cost of Acquired Entity, Cash Paid			$ 3,100,000	$ 8,000,000	$ 50,100,000						$ 3,500,000		$ 9,300,000
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares			36,878	173,712
Business Acquisition, Equity Interest Issued or Issuable			600,000	3,000,000
Business Acquisition, Purchase Price Allocation, Goodwill Amount			3,000,000	7,100,000									3,800,000
Business Acquisition, Purchase Price Allocation, Intangible Assets			1,800,000	2,800,000									4,800,000
Business Acquisition, Cost Consideration, Final Working Capital Adjustment					200,000
Business Acquisition, Cost of Acquired Entity, Purchase Price							8,000,000
Business Acquisition, Cost of Acquired Entity, Equity Interests Issued and Issuable							2,600,000
Business Acquisition, Purchase Price Allocation, Liabilities Assumed							5,400,000
Number of customers									750
Business Acquisition, Cost of Acquired Entity, Liabilities Incurred								1,000,000
Fair Value Inputs, Discount Rate								4.53%
Notes payable	1,119,000	863,000				700,000
Business Acquisition, Contingent Consideration, Potential Cash Payment												300,000
Business Acquisition, Contingent Consideration, at Fair Value	$ 443,000	$ 392,000								$ 300,000	$ 300,000

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Stockholder's Equity - Additional Information (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	1 Months Ended	6 Months Ended
	Mar. 31, 2012	Jun. 30, 2012
Stockholders Equity [Line Items]
Equity Issuance, Per Share Amount	$ 15.75
Proceeds from Issuance of Common Stock	$ 137,000	$ 136,961
Common Stock [Member]
Stockholders Equity [Line Items]
Stock Issued During Period, Shares, New Issues	9,200,000
Shares Issued and Sold as a Result of the Full Exercise of the Underwriters' Overallotment Option	1,200,000

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Subsequent Events - Additional information (Detail) (USD $)	6 Months Ended				1 Months Ended							1 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012	Jun. 30, 2013 Stock Purchase Agreement [Member]	Jun. 26, 2013 Dividend Paid [Member]	Jul. 12, 2013 Subsequent Event [Member]	Jun. 30, 2013 Subsequent Event [Member] RSU [Member] Minimum [Member]	Jul. 12, 2013 Subsequent Event [Member] Credit Suisse AG [Member] First Lien Credit Facility Term Loan [Member]	Jul. 12, 2013 Subsequent Event [Member] Credit Suisse AG [Member] Second Lien Credit Facility Term Loan [Member]	Jul. 12, 2013 Subsequent Event [Member] Passage of Time [Member]	Jul. 12, 2013 Subsequent Event [Member] Achievement of Certain Goals [Member]	Jul. 15, 2013 Subsequent Event [Member] Dividend Paid [Member]
Subsequent Event [Line Items]
Preferred Stock, Dividend Rate, Per-Dollar-Amount					$ 10
Payments of Ordinary Dividends, Preferred Stock and Preference Stock	$ 1,486,000	$ 1,500,000										$ 700,000
Stock Purchase Agreement Initiation Date	Jul. 12, 2013
Consideration payable under the Stock Purchase Agreement				365,000,000
Restricted shares amount payable under agreement	8,000,000
Termination fee payable	18,000,000
Commitment conditions	The commitment is subject to various conditions, including (i) the absence of a material adverse effect having occurred with respect to 3PD and its subsidiaries, (ii) the execution of satisfactory definitive documentation and (iii) other customary closing conditions. Any permanent debt or equity financing obtained by the Company on or prior to the closing of the 3PD Transaction will reduce the amount of the commitment.
Credit agreement under Commitment Letter						50.00%
Maximum credit borrowing capacity								$ 140,000,000	$ 55,000,000
Potential number of Restricted Stock Units awarded						600,000				100,000	500,000
RSU vesting price per share.	$ 0.001		$ 0.001				$ 32.50

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Statement Of Financial Position [Abstract]
Accounts receivable, allowances	$ 1,318	$ 603
Property and equipment, accumulated depreciation	6,954	5,323
Identifiable intangible assets, accumulated amortization	$ 6,295	$ 4,592
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	74,275	74,275
Preferred stock, shares outstanding	74,275	74,275
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	18,241,217	18,002,985
Common stock, shares outstanding	18,196,217	17,957,985
Treasury stock, shares	45,000	45,000

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2013

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

8. Stock-Based Compensation

The following table summarizes the Company’s equity awards outstanding and exercisable as of December 31, 2012 and June 30, 2013:  

	Options							Restricted Stock Units
	Options		Weighted Average Exercise Price		Exercise Price Range	Weighted Average Remaining Term		Restricted Stock Units		Weighted Average Grant Date Fair Value
Outstanding at December 31, 2012		1,383,332		10.06	2.28 - 18.07		8.29		883,816		11.31
Granted		55,500		17.32	17.10 - 18.59				140,714		12.62
Exercised		42,184		4.49	2.96 - 6.08				—		—
Forfeited		10,348		13.12	6.08 - 13.37				68,000		10.65
Outstanding at June 30, 2013		1,386,300	$	10.49	$2.28 - 18.59		7.99		956,530	$	11.55

The stock-based compensation expense for outstanding restricted stock units (“RSUs”) was $0.7 million and $0.9 million for the three-month periods ended June 30, 2013 and 2012, respectively, and $1.4 million and $1.8 million for the six-month periods ended June 30, 2013 and 2012, respectively. Of the 956,530 outstanding RSUs, 505,816 vest subject to service conditions, 310,000 vest subject to service and performance-based conditions and 140,714 vest subject to service and market conditions. Based on the Company’s financial performance in 2012, all performance-based conditions relating to outstanding RSUs vesting have been satisfied.

As of June 30, 2013, the Company had approximately $8.8 million of unrecognized compensation cost related to non-vested RSU compensation that is anticipated to be recognized over a weighted-average period of approximately 2.78 years. Remaining estimated compensation expense related to outstanding restricted stock-based grants is $1.5 million, $2.8 million, $2.7 million, $1.7 million and $0.1 million for the years ending December 31, 2013, 2014, 2015, 2016 and 2017, respectively.

As of June 30, 2013, the Company had 481,050 options vested and exercisable and $4.0 million of unrecognized compensation cost related to stock options. The remaining estimated compensation expense related to the existing stock options is $0.8 million, $1.1 million, $1.1 million, $0.8 million and $0.2 million for the years ended December 31, 2013, 2014, 2015, 2016 and 2017, respectively.

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Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Operating activities
Net loss	$ (31,906)	$ (7,871)
Adjustments to reconcile net loss to net cash from operating activities
Provisions for allowance for doubtful accounts	627	84
Depreciation & amortization expense	3,349	741
Stock compensation expense	2,147	2,266
Gain on sale of business interests	(176)
Accretion of debt	2,916
Exchange loss	46
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable	(24,134)	(5,496)
Deferred tax expense	167	1,537
Income tax receivable	(732)	(1,388)
Prepaid expenses and other current assets	(275)	(495)
Other long-term assets	(28)	(18)
Accounts payable	(5,973)	(1,313)
Accrued expenses and other liabilities	4,899	1,816
Cash used by operating activities	(49,073)	(10,137)
Investing activities
Acquisition of businesses, net of cash acquired	(19,660)	(3,713)
Proceeds from sale of business interests	125
Payment of acquisition earn-out		(450)
Payment for purchases of property and equipment	(3,864)	(2,569)
Cash Flows used by investing activities	(23,399)	(6,732)
Financing Activities
Credit line, net activity	(150)
Payments of notes payable and capital leases	16	(2,018)
Proceeds from stock offering, net		136,961
Proceeds from exercise of options, net	(56)	131
Proceeds from exercise of warrants	10
Dividends paid to preferred stockholders	(1,486)	(1,500)
Cash flows (used)/provided by financing activities	(1,666)	133,574
Net (decrease)/increase in cash	(74,138)	116,705
Cash and cash equivalents, beginning of period	252,293	74,007
Cash and cash equivalents, end of period	178,155	190,712
Supplemental disclosure of noncash activities:
Cash paid during the period for interest	3,337	15
Cash paid during the period for income taxes	$ 906	$ 159

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 178,155	$ 252,293
Accounts receivable, net of allowances of $1,318 and $603, respectively	89,740	61,245
Prepaid expenses	2,095	1,555
Deferred tax asset, current	938	1,406
Income tax receivable	2,840	2,569
Other current assets	4,203	1,866
Total current assets	277,971	320,934
Property and equipment, net of $6,954 and $5,323 in accumulated depreciation, respectively	15,554	13,090
Goodwill	69,927	55,947
Identifiable intangible assets, net of $6,295 and $4,592 in accumulated amortization, respectively	30,121	22,473
Deferred tax asset, long-term	72
Other long-term assets	834	764
Total long-term assets	116,508	92,274
Total assets	394,479	413,208
Current liabilities:
Accounts payable	23,591	22,108
Accrued salaries and wages	5,570	3,516
Accrued expenses, other	23,733	21,123
Current maturities of notes payable and capital leases	850	491
Other current liabilities	1,548	1,789
Total current liabilities	55,292	49,027
Convertible senior notes	111,197	108,280
Notes payable and capital leases, net of current maturities	767	676
Deferred tax liability, long term	6,553	6,781
Other long-term liabilities	3,838	3,385
Total long-term liabilities	122,355	119,122
Stockholders' equity:
Preferred stock, $.001 par value; 10,000,000 shares; 74,275 shares issued and outstanding	42,794	42,794
Common stock, $.001 par value; 150,000,000 shares authorized; 18,241,217 and 18,002,985 shares issued, respectively; and 18,196,217 and 17,957,985 shares outstanding, respectively	18	18
Additional paid-in capital	267,806	262,641
Treasury stock, at cost, 45,000 shares held	(107)	(107)
Accumulated deficit	(93,679)	(60,287)
Total stockholders' equity	216,832	245,059
Total liabilities and stockholders' equity	$ 394,479	$ 413,208

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Basis of Presentation and Significant Accounting Policies - Identifiable Intangible Assets (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Indefinite Lived Intangibles
Trade Name	$ 6,416	$ 6,416
Definite Lived Intangibles:
Trade name	1,321	1,246
Non-compete agreements	4,145	3,050
Customer lists and relationships	22,366	14,281
Other intangible assets	2,168	2,072
Intangible assets, gross	30,000	20,649
Less: accumulated amortization	(6,295)	(4,592)
Intangible assets, net	23,705	16,057
Total Identifiable Intangibles	$ 30,121	$ 22,473

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Goodwill (Tables)

6 Months Ended

Jun. 30, 2013

Goodwill And Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

The following table is a roll-forward of goodwill from December 31, 2012 to June 30, 2013. The current period additions are the result of the goodwill recognized as excess purchase price in the acquisitions of East Coast Air Charter, Covered Logistics and Interide Logistics (in thousands):  

	Expedited Transportation		Freight Forwarding		Freight Brokerage		Total
Goodwill at December 31, 2012	$	7,737	$	9,222		38,988	$	55,947
Acquisitions and other adjustments		3,823		—		10,157		13,980
Goodwill at June 30, 2013	$	11,560	$	9,222	$	49,145	$	69,927

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Reportable Segments - Selected Financial Data for Each of Operating Segments (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Segment Reporting Information [Line Items]
Revenue	$ 137,091	$ 54,540	$ 251,090	$ 99,100
Operating income (loss) from operations	(14,015)	(3,368)	(25,382)	(7,592)
Depreciation and amortization	1,795	423	3,349	741
Interest expense (income)	3,106	3	6,170	15
Tax provision (benefit)	74	1,780	296	259
Goodwill	69,927	19,084	69,927	19,084	55,947
Total assets	394,479	260,731	394,479	260,731	413,208
Freight Brokerage [Member]
Segment Reporting Information [Line Items]
Goodwill	49,145		49,145		38,988
Expedited Transportation [Member]
Segment Reporting Information [Line Items]
Goodwill	11,560		11,560		7,737
Freight Forwarding [Member]
Segment Reporting Information [Line Items]
Goodwill	9,222		9,222		9,222
Operating Segments [Member] | Freight Brokerage [Member]
Segment Reporting Information [Line Items]
Revenue	95,360	13,877	173,590	21,805
Operating income (loss) from operations	(4,990)	(825)	(8,810)	(911)
Depreciation and amortization	1,180	76	2,194	96
Interest expense (income)	3		5	1
Tax provision (benefit)			41
Goodwill	49,145	2,125	49,145	2,125
Total assets	208,408	12,899	208,408	12,899
Operating Segments [Member] | Expedited Transportation [Member]
Segment Reporting Information [Line Items]
Revenue	26,445	25,731	50,320	48,151
Operating income (loss) from operations	1,187	2,634	1,940	4,422
Depreciation and amortization	291	129	559	266
Interest expense (income)	2	1	4	2
Tax provision (benefit)	2		2
Goodwill	11,560	7,737	11,560	7,737
Total assets	63,303	28,953	63,303	28,953
Operating Segments [Member] | Freight Forwarding [Member]
Segment Reporting Information [Line Items]
Revenue	19,338	16,468	35,571	31,925
Operating income (loss) from operations	478	218	850	459
Depreciation and amortization	93	145	181	289
Interest expense (income)		1
Goodwill	9,222	9,222	9,222	9,222
Total assets	31,088	22,920	31,088	22,920
Operating Segments [Member] | Corporate [Member]
Segment Reporting Information [Line Items]
Revenue	0
Operating income (loss) from operations	(10,690)	(5,395)	(19,362)	(11,562)
Depreciation and amortization	231	73	415	90
Interest expense (income)	3,101	1	6,161	12
Tax provision (benefit)	72	1,780	253	259
Total assets	422,672	237,335	422,672	237,335
Operating Segments [Member] | Eliminations [Member]
Segment Reporting Information [Line Items]
Revenue	(4,052)	(1,536)	(8,391)	(2,781)
Total assets	$ (330,992)	$ (41,376)	$ (330,992)	$ (41,376)

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Stock-Based Compensation - Additional Information (Detail) (USD $) In Millions, except Share data, unless otherwise specified								3 Months Ended		6 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2013 2013 [Member]	Jun. 30, 2013 2014 [Member]	Jun. 30, 2013 2015 [Member]	Jun. 30, 2013 2016 [Member]	Jun. 30, 2013 2017 [Member]	Jun. 30, 2013 RSU [Member]	Jun. 30, 2012 RSU [Member]	Jun. 30, 2013 RSU [Member]	Jun. 30, 2012 RSU [Member]	Jun. 30, 2013 RSU [Member] 2013 [Member]	Jun. 30, 2013 RSU [Member] 2014 [Member]	Jun. 30, 2013 RSU [Member] 2015 [Member]	Jun. 30, 2013 RSU [Member] 2016 [Member]	Jun. 30, 2013 RSU [Member] 2017 [Member]	Jun. 30, 2013 Restricted Stock Units (RSUs) - subject to service conditions [Member]	Jun. 30, 2013 Restricted Stock Units (RSUs) - subject to service and performance-based conditions [Member]	Jun. 30, 2013 Restricted Stock Units (RSUs) - subject to service and market conditions [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated Share-based Compensation Expense								$ 0.7	$ 0.9	$ 1.4	$ 1.8
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number	956,530	883,816															505,816	310,000	140,714
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized								8.8		8.8		1.5	2.8	2.7	1.7	0.1
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition										2 years 9 months 11 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Number	481,050
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Stock Options	$ 4.0		$ 0.8	$ 1.1	$ 1.1	$ 0.8	$ 0.2

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Debt - Schedule of Debt Obligations (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Debt Disclosure [Abstract]
Capital leases for equipment, interest rates	13.91%
Line of credit, interest rates	5.00%
Convertible senior notes, interest rates	4.50%
Capital leases for equipment, term (months)	59 months
Convertible senior notes, term (months)	60 months
Capital leases for equipment	$ 189	$ 154
Notes payable	1,119	863
Line of credit	309	150
Convertible senior notes	111,197	108,280
Total debt and capital leases	112,814	109,447
Less: current maturities of notes payable and capital leases	850	491
Non-current maturities of debt and capital leases	$ 111,964	$ 108,956

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Goodwill - Schedule of Goodwill (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Goodwill [Line Items]
Goodwill at beginning of period	$ 55,947	$ 19,084
Acquisitions and other adjustments	13,980
Goodwill at end of period	69,927	19,084
Expedited Transportation [Member]
Goodwill [Line Items]
Goodwill at beginning of period	7,737
Acquisitions and other adjustments	3,823
Goodwill at end of period	11,560
Freight Forwarding [Member]
Goodwill [Line Items]
Goodwill at beginning of period	9,222
Acquisitions and other adjustments
Goodwill at end of period	9,222
Freight Brokerage [Member]
Goodwill [Line Items]
Goodwill at beginning of period	38,988
Acquisitions and other adjustments	10,157
Goodwill at end of period	$ 49,145

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Stockholder's Equity

6 Months Ended

Jun. 30, 2013

Equity [Abstract]

Stockholder's Equity

7. Stockholder’s Equity

On March 20, 2012, the Company closed a registered underwritten public offering of 9,200,000 shares of common stock (the “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 Offering after underwriting discounts and estimated expenses.

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Basis of Presentation and Significant Accounting Policies - Estimated Amortization Expense for Amortizable Intangible Assets (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013
Goodwill And Intangible Assets Disclosure [Abstract]
Estimated future amortization expense 2013	$ 1,385
Estimated future amortization expense 2014	2,544
Estimated future amortization expense 2015	2,420
Estimated future amortization expense 2016	2,407
Estimated future amortization expense 2017	$ 2,366

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Income Taxes - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Income Tax Disclosure [Abstract]
Income tax expense (benefit)	$ 74,000	$ 1,780,000	$ 296,000	$ 259,000
Effective Income Tax Rate, Continuing Operations	0.40%		0.90%
Statutory Income Tax Rate			34.00%	34.00%
Deferred Tax Assets, Valuation Allowance	$ 12,700,000		$ 12,700,000

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Income Taxes

6 Months Ended

Jun. 30, 2013

Income Tax Disclosure [Abstract]

Income Taxes

10. Income Taxes

The Company has determined its interim tax provision projecting an estimated annual effective tax rate. For the three- and six-months ended June 30, 2013, the Company recorded income tax expense of $0.1 million and $0.3 million, respectively, yielding an effective tax rate of 0.4% and 0.9%, respectively. The effective tax rate differs from the U.S. statutory rate of 34% in the periods ended June 30, 2013 and 2012, primarily due to the impact of recording a valuation allowance against the benefits of the current period’s loss.

The Company has a valuation allowance of $12.7 million as of June 30, 2013 on the deferred tax assets generated for federal, state and foreign net operating losses where it is not more likely than not that the deferred tax assets will be utilized. In evaluating the Company’s ability to realize its deferred income tax assets, the Company considers all available positive and negative evidence, including operating results, ongoing tax planning, and forecasts of future taxable income on a jurisdiction by jurisdiction basis. The valuation allowance as of June 30, 2013 relates primarily to domestic net operating loss and credit carryforwards that will reduce the provision for income taxes if and when recognized.

In general, it is the practice and intention of the Company to reinvest the earnings of its non-U.S. subsidiaries in those operations. As of June 30, 2013, the Company has not made a provision for U.S. or additional foreign withholding taxes for financial reporting over the tax basis of investments in foreign subsidiaries that are essentially permanent in duration, if any exists. Generally, such amounts become subject to U.S. taxation upon the remittance of dividends and under certain other circumstances. It is not practicable to estimate the amount of deferred tax liability related to investments in these foreign subsidiaries.

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Goodwill

6 Months Ended

Jun. 30, 2013

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill

6. Goodwill

The following table is a roll-forward of goodwill from December 31, 2012 to June 30, 2013. The current period additions are the result of the goodwill recognized as excess purchase price in the acquisitions of East Coast Air Charter, Covered Logistics and Interide Logistics (in thousands):  

	Expedited Transportation		Freight Forwarding		Freight Brokerage		Total
Goodwill at December 31, 2012	$	7,737	$	9,222		38,988	$	55,947
Acquisitions and other adjustments		3,823		—		10,157		13,980
Goodwill at June 30, 2013	$	11,560	$	9,222	$	49,145	$	69,927

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Organization

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Organization

1. Organization

Nature of Business

XPO Logistics, Inc. (the “Company”) provides premium transportation and logistics services to thousands of customers through its three business units:

Freight Brokerage—provides truckload brokerage transportation services throughout North America through its wholly-owned subsidiaries XPO Logistics, LLC, Bounce Logistics, Inc. (“Bounce”), and XPO Logistics Canada Inc. Freight brokerage services are arranged using relationships with sub-contracted motor and rail carriers.

Expedited Transportation—provides time-critical expedited transportation through its wholly-owned subsidiaries Express-1, Inc. (“Express-1”) and XPO Air Charter, LLC (“Air Charter”). Expedited Transportation services are provided through a fleet of exclusive use vehicles that are owned and operated by independent contract drivers, whom it refers to as owner operators. For Air Charter, this involves the use of third-party aircraft to expedite shipment of goods for a customer.

Freight Forwarding—provides freight forwarding services through its wholly-owned subsidiary Concert Group Logistics, Inc. (“CGL”). Freight forwarding transportation services are sold and arranged for under the authority of CGL through independently-owned stations and nine company-owned branches located in the United States and Canada.

The use of non-owned resources to provide services minimizes the amount of capital investment required and is often described with the terms “non-asset” or “asset-light.”

For specific financial information relating to the above business units, refer to Note 12—Reportable Segments.

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Commitments and Contingencies - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Commitments And Contingencies Disclosure [Abstract]
Operating Leases, Future Minimum Payments Due	$ 25.5		$ 25.5
Operating Leases, Future Minimum Payments Due, Remainder of fiscal year	2.4		2.4
Operating Leases, Future Minimum Payments, Due in Two Years	4.3		4.3
Operating Leases, Future Minimum Payments, Due in Three Years	4.1		4.1
Operating Leases, Future Minimum Payments, Due in Four Years	3.9		3.9
Operating Leases, Future Minimum Payments, Due Thereafter	10.8		10.8
Operating Leases, Rent Expense	$ 1.0	$ 0.4	$ 1.8	$ 0.6

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Subsequent Events

6 Months Ended

Jun. 30, 2013

Subsequent Events [Abstract]

Subsequent Events

13. Subsequent Events

Preferred Stock Dividend

On June 26, 2013, the Company’s board of directors approved the declaration of a dividend payable to holders of the preferred stock. The declared dividend equaled $10 per share of preferred stock as specified in the Certificate of Designation of the preferred stock. The total declared dividend equaled $0.7 million and was paid on July 15, 2013.

Pending Acquisition of 3PD

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 “Stock Purchase Agreement”) to acquire all of the outstanding capital stock of 3PD (the “3PD Transaction”). 3PD is the largest non-asset, third party provider of heavy goods, last-mile logistics in North America.

The total consideration payable under the Stock Purchase Agreement is approximately $365 million, payable in cash, deferred payments (including an escrow), $8 million of restricted shares of the Company’s common stock, and the payoff of certain indebtedness. The closing of the transactions contemplated in the Stock Purchase Agreement is expected to occur in the third quarter of 2013 and is subject to customary closing conditions. The Stock Purchase Agreement contains certain termination rights for both the Company and the sellers and provides that if the Company fails to close the transaction after all of its conditions to close have been satisfied or waived, the Company may be required to pay 3PD a termination fee in the amount of $18 million.

In connection with the 3PD Transaction, each member of the 3PD senior management team has signed an employment agreement with the Company that is effective upon completion of the acquisition. Additionally, in order to incentivize 3PD’s management, at or promptly following the closing the Company intends to grant to the 3PD management team time- and performance-based restricted stock unit awards under the XPO Logistics, Inc. Amended and Restated 2011 Omnibus Incentive Compensation Plan. Pursuant to the RSU award agreements, members of the 3PD management team would be eligible to earn up to 600,000 RSUs in the aggregate, of which 100,000 would vest based on the passage of time and 500,000 would vest based on the achievement of certain goals with respect to 3PD’s financial performance during 2014, 2015 and 2016 as part of the combined company. The vesting of all such RSUs also would be subject to the price of the Company’s common stock exceeding $32.50 per share for a designated period of time and continued employment at the Company by the grantee as of the vesting date.

Also, on July 12, 2013, in connection with the Stock Purchase Agreement, XPO AQ, Inc., a wholly-owned subsidiary of the Company, entered into a commitment letter (the “Commitment Letter”) with Credit Suisse Securities (USA) LLC and Credit Suisse AG. The Commitment Letter provides that, subject to the conditions set forth therein, Credit Suisse AG will commit to provide a $140 million first lien term loan credit facility and a $55 million second lien term loan credit facility, and the proceeds of each facility may solely be used to consummate the 3PD Transaction. The commitment is subject to various conditions, including (i) the absence of a material adverse effect having occurred with respect to 3PD and its subsidiaries, (ii) the execution of satisfactory definitive documentation and (iii) other customary closing conditions. Any permanent debt or equity financing obtained by the Company on or prior to the closing of the 3PD Transaction will reduce the amount of the commitment. Under the terms of the Commitment Letter, the Company will not be an obligor. On July 25, 2013, Morgan Stanley Senior Funding, Inc. entered into a Joinder Letter with Credit Suisse AG and XPO AQ, Inc. to assume 50% of the obligation of Credit Suisse AG under the Commitment Letter.

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Earnings per Share

6 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

Earnings per Share

9. Earnings per Share

Basic earnings per common share are computed by dividing net income available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share are computed by dividing net income available to common shareholders by the combined weighted average number of shares of common stock outstanding and the potential dilution of stock options, warrants, RSUs, convertible senior notes and the Company’s Series A Convertible Perpetual Preferred Stock, par value $0.001 per share (“preferred stock”), outstanding during the period, if dilutive. The weighted average of potentially dilutive securities excluded from the computation of diluted earnings per share for the three- and six-month periods ending June 30, 2013 and 2012 is shown per the table below.  

	Three Months Ended				Six Months Ended
	June 30, 2013		June 30, 2012		June 30, 2013		June 30, 2012
Basic common stock outstanding		18,179,570		17,636,834		18,106,564		16,629,420
Potentially Dilutive Securities:
Shares underlying the conversion of preferred stock to common stock		10,610,714		10,714,286		10,610,714		10,714,286
Shares underlying the conversion of the convertible senior notes		8,749,239		—		8,749,239		—
Shares underlying warrants to purchase common stock		6,262,380		6,282,659		6,302,668		6,282,659
Shares underlying stock options to purchase common stock		526,813		401,793		533,977		348,682
Shares underlying restricted stock units		436,275		559,381		418,898		613,139
		26,585,421		17,958,119		26,615,496		17,958,766
Diluted weighted shares outstanding		44,764,991		35,594,953		44,722,060		34,588,186

The impact of this dilution was not reflected in the earnings per share calculations in the unaudited condensed consolidated statements of operations because the impact was anti-dilutive. The treasury method was used to determine the shares underlying warrants, stock options and RSUs for potential dilution with an average market price of $16.85 per share and $16.92 per share for the three-month periods ended June 30, 2013 and 2012, respectively, and $17.00 per share and $15.44 per share for the six-month periods ended June 30, 2013 and 2012, respectively.

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Debt (Tables)

6 Months Ended

Jun. 30, 2013

Debt Disclosure [Abstract]

Schedule of Debt Obligations

The following table outlines the Company’s debt obligations (in thousands) as of June 30, 2013 and December 31, 2012:  

	Interest rates			Term (months)		As of June 30, 2013		As of December 31, 2012
Capital leases for equipment		13.91	%		59	$	189	$	154
Notes payable		N/A			N/A		1,119		863
Line of credit		5.0	%		N/A		309		150
Convertible senior notes		4.50	%		60		111,197		108,280
Total debt and capital leases							112,814		109,447
Less: current maturities of notes payable and capital leases							850		491
Non-current maturities of debt and capital leases						$	111,964	$	108,956

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Basis of Presentation and Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed 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-Q. Certain information and note disclosures normally included in annual financial statements have been condensed or omitted pursuant to those rules and regulations. However, management believes that the disclosures contained herein are adequate to make the information presented not misleading.

These unaudited condensed 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 June 30, 2013 and December 31, 2012, and results of operations for the three- and six-month periods ended June 30, 2013 and 2012. The preparation of the condensed 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 and actual results could differ materially from those estimates.

These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto for the fiscal year ended December 31, 2012 that are set forth in the Company’s Annual Report on Form 10-K, a copy of which is available on the SEC’s website (www.sec.gov). Results of operations for interim periods are not necessarily indicative of results to be expected for a full year.

Use of Estimates

Use of Estimates

The Company prepares its unaudited condensed 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 condensed 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, accrued revenue, purchased transportation, recoverability of long-lived assets, accrual of acquisition earn-outs, estimated legal accruals, valuation allowances for deferred taxes, reserve for uncertain tax positions, 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.

Revenue Recognition

Revenue Recognition

The Company recognizes revenue at the point in time when delivery is completed on the freight shipments it handles, with related costs of delivery being accrued as incurred and expensed within the same period in which the associated revenue is recognized. The Company uses the following supporting criteria to determine that revenue has been earned and should be recognized:

• Persuasive evidence of an arrangement exists;

• Services have been rendered;

• The sales price is fixed and determinable; and

• Collectability is reasonably assured.

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, and tracing shipments in transit).

• For Expedited Transportation and Freight Brokerage, the Company has complete discretion to select its drivers, contractors or other transportation providers (collectively, “service providers”). For Freight Forwarding, 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 Freight Forwarding’s independently-owned stations. Independently-owned stations may further negotiate the cost of services with Freight Forwarding-approved service providers for individual customer shipments.

• Expedited Transportation and Freight Brokerage have complete discretion to establish sales prices. Independently-owned stations within Freight Forwarding 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 Freight Forwarding for a portion (typically 70-80%) of credit losses. Freight Forwarding retains the risk that the independent station owners will not meet this obligation.

The Company’s Freight Forwarding Segment collects on behalf of its customers certain taxes and duties as a complimentary service for international shipments. The Company’s accounting policy is to present these collections on a gross basis. The Company recognized $1.5 million and $0.7 million of such revenue for the three-month periods ended June 30, 2013 and 2012, respectively, and $2.3 million and $1.4 million of such revenue for the six-month periods ended June 30, 2013 and 2012, respectively.

Cash and cash equivalents

Cash and cash equivalents

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.

Income Taxes

Income Taxes

Taxes on income are provided 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 unaudited condensed consolidated financial statements. Deferred tax assets and liabilities are determined based on the differences between the book values 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 the 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 10—Income Taxes.

Goodwill and Intangible Assets with Indefinite Lives

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. Intangible assets with indefinite lives consist principally of the Express-1 and CGL trade names. The Company follows the provisions of ASC Topic 350, “Intangibles—Goodwill and Other”, which requires an annual impairment test for goodwill and intangible assets with indefinite lives. The Company may first choose to perform a qualitative evaluation of the likelihood of goodwill and intangible assets impairment. For the goodwill that was the result of current year acquisitions, the Company chose to perform a qualitative evaluation. If the Company determined a quantitative evaluation was necessary, the goodwill at the reporting unit was 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 during the third quarter unless events or circumstances indicate impairment of the goodwill may have occurred before that time. 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 additional information refer to Note 6—Goodwill.

The fair values of purchased intangible assets with indefinite lives, primarily trade names, are estimated and compared to their carrying values. The Company estimates the fair value of these intangible assets based on an income approach using the relief-from-royalty method. This methodology assumes that, in lieu of ownership, a third party would be willing to pay a royalty in order to exploit the related benefits of these types of assets. This approach is dependent on a number of factors, including estimates of future growth and trends, royalty rates for this category of intellectual property, discount rates and other variables. The Company bases its fair value estimates on assumptions it believes to be reasonable, but which are unpredictable and inherently uncertain. Actual future results may differ from those estimates. The Company recognizes an impairment loss when the estimated fair value of the intangible asset is less than the carrying value. The Company performs the annual impairment testing during the third quarter unless events or circumstances indicate impairment of the intangible assets with indefinite lives may have occurred before that time. For the periods presented, the Company did not recognize any impairment of intangible assets with indefinite lives as the estimated fair value of its intangible assets with indefinite lives exceeded the book value of these reporting units.

Identifiable Intangible Assets

Identifiable Intangible Assets

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. During the six-month periods ended June 30, 2013 and 2012, there was no impairment of the identified intangible assets.

The Company’s intangible assets subject to amortization consist of non-compete agreements, customer relationships and other intangibles that are amortized on a straight-line basis over the estimated useful lives of the related intangible asset. The estimated useful lives of the respective intangible assets range from three months to 12 years.

The following table sets forth the Company’s identifiable intangible assets as of June 30, 2013 and December 31, 2012 (in thousands):

	June 30, 2013			December 31, 2012
Indefinite Lived Intangibles
Trade Name	$	6,416		$	6,416
Definite Lived Intangibles:
Trade name		1,321			1,246
Non-compete agreements		4,145			3,050
Customer lists and relationships		22,366			14,281
Other intangible assets		2,168			2,072
		30,000			20,649
Less: accumulated amortization		(6,295	)		(4,592	)
Intangible assets, net	$	23,705		$	16,057
Total Identifiable Intangibles	$	30,121		$	22,473

Estimated future amortization expense for amortizable intangible assets for the next five years is as follows:

(in thousands)	2013		2014		2015		2016		2017
Estimated future amortization expense	$	1,385	$	2,544	$	2,420	$	2,407	$	2,366

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.

Other Long-Term Assets

Other Long-Term Assets

Other long-term assets consist primarily of balances representing various deposits, and notes receivable from various CGL independent station owners. Also included within this account classification are incentive payments to independent station owners within the CGL network. These payments are made by CGL to certain station owners as an incentive to establish an independently-owned station. These amounts 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.

Foreign Currency Translation

Foreign Currency Translation

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 cost of sales in the condensed consolidated statements of operations. Assets and liabilities of XPO Logistics Canada, which has the U.S. dollar as its functional currency (but which maintains its accounting records in Canadian currency), have their values remeasured into U.S. dollars at period-end exchange rates, except for non-monetary items for which historical rates are used. Exchange gains or losses are not material to the condensed consolidated statements of operations for the periods presented.

Foreign Currency Hedging and Derivative Financial Instruments

Foreign Currency Hedging and Derivative Financial Instruments

The Company enters into derivative contracts to protect against fluctuations in currency exchange rates from time to time. These contracts are for expected future cash flows and not for speculative purposes. The Company reflects changes in fair value of these contracts in the condensed consolidated statements of operations. In accordance with FASB ASC Topic 815 “Derivatives and Hedging”, the Company does not apply hedge accounting to its derivative contracts.

Fair Value Measurements

Fair Value Measurements

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.

The following table sets forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of June 30, 2013 and December 31, 2012 (in thousands):

	Fair Value Measurements as of June 30, 2013
	Total		Level 1		Level 2		Level 3
Assets:
Money market funds	$	179,572	$	179,572	$	—	$	—
Liabilities:
Contingent consideration obligations	$	443	$	—	$	—	$	443
	Fair Value Measurements as of December 31, 2012
	Total		Level 1		Level 2		Level 3
Assets:
Money market funds	$	239,443	$	239,443	$	—	$	—
Liabilities:
Contingent consideration obligations	$	392	$	—	$	—	$	392

Estimated Fair Value of Financial Instruments

Estimated Fair Value of Financial Instruments

The aggregate net fair value estimates discussed herein 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 June 30, 2013 and December 31, 2012. These financial instruments include cash, accounts receivable, notes receivable, accounts payable, accrued expense, notes payable and short-term borrowings. 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.

The Company has outstanding $143.8 million of 4.50% Convertible Senior Notes due October 1, 2017, 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. The convertible senior notes were allocated to long-term debt and equity in the amounts of $106.8 million and $31.7 million, respectively. These amounts are net of debt issuance costs of $4.1 million for debt and $1.2 million for equity. Holders of the convertible senior notes are due interest semiannually in arrears on April 1 and October 1 of each year, beginning on April 1, 2013. The conversion rate was initially 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 senior notes was $177.4 million as of June 30, 2013. The convertible senior notes contain an optional redemption right in favor of the Company, although it is the Company’s present intent not to exercise such redemption right. Accordingly, the fair value of the bifurcated coupon make-whole premium that would be payable to holders in the event of a redemption has been valued at $0.0 million. For additional information refer to Note 5—Debt.

Stock-Based Compensation

Stock-Based Compensation

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, including those subject to service-based vesting conditions and those subject to service and performance-based vesting conditions, the fair value is established based on the market price on the date of the grant. 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 six-month periods ended June 30, 2013 and 2012 were 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 additional information refer to Note 8—Stock-Based Compensation.

Earnings per Share

Earnings per Share

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 9—Earnings per Share.

Internal Use Software

Internal Use 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 internal use computer software are expensed as incurred. Costs incurred during the application development stage are capitalized and included in property and equipment. Capitalized internal use software totaled $1.6 million as of June 30, 2013 and $1.2 million as of December 31, 2012. Capitalized internal use software costs are amortized over the expected economic life of three years using the straight-line method.

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts

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, current economic conditions, and other factors that may affect customers’ ability to pay.

Please also refer to Note 1 of the “Notes to Consolidated Financial Statements” in the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012 for a more complete discussion of the Company’s significant accounting policies.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2013	Jul. 31, 2013
Document Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2
Trading Symbol	XPO
Entity Registrant Name	XPO Logistics, Inc.
Entity Central Index Key	0001166003
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		18,210,716

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Basis of Presentation and Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Identifiable Intangible Assets

The following table sets forth the Company’s identifiable intangible assets as of June 30, 2013 and December 31, 2012 (in thousands):  

	June 30, 2013			December 31, 2012
Indefinite Lived Intangibles
Trade Name	$	6,416		$	6,416
Definite Lived Intangibles:
Trade name		1,321			1,246
Non-compete agreements		4,145			3,050
Customer lists and relationships		22,366			14,281
Other intangible assets		2,168			2,072
		30,000			20,649
Less: accumulated amortization		(6,295	)		(4,592	)
Intangible assets, net	$	23,705		$	16,057
Total Identifiable Intangibles	$	30,121		$	22,473

Estimated Future Amortization Expense for Amortizable Intangible Assets

Estimated future amortization expense for amortizable intangible assets for the next five years is as follows:

(in thousands)	2013		2014		2015		2016		2017
Estimated future amortization expense	$	1,385	$	2,544	$	2,420	$	2,407	$	2,366

Fair Value of Assets and Liabilities Accounted for at Fair Value on Recurring Basis

The following table sets forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of June 30, 2013 and December 31, 2012 (in thousands):

	Fair Value Measurements as of June 30, 2013
	Total		Level 1		Level 2		Level 3
Assets:
Money market funds	$	179,572	$	179,572	$	—	$	—
Liabilities:
Contingent consideration obligations	$	443	$	—	$	—	$	443
	Fair Value Measurements as of December 31, 2012
	Total		Level 1		Level 2		Level 3
Assets:
Money market funds	$	239,443	$	239,443	$	—	$	—
Liabilities:
Contingent consideration obligations	$	392	$	—	$	—	$	392