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Horizon Lines Reports First-Quarter Financial Results

May 9, 2012

CHARLOTTE, N.C., May 9, 2012 /PRNewswire/ — Horizon Lines, Inc. (OTCQB: HRZL) today reported financial results for the fiscal first quarter ended March 25, 2012.

Financial results are presented on a continuing operations basis, excluding the discontinued trans-Pacific FSX service and logistics operations. Per-share amounts reflect a 1-for-25 reverse stock split, effective December 7, 2011.

    GAAP and Non-GAAP
     Results from
     Continuing
     Operations                                Quarters Ended
    -----------------                          --------------
    (in millions,
     except per share
     data)*                                               3/25/2012              3/27/2011
                                                          ---------              ---------

    GAAP:
    Operating revenue                                        $263.4                 $240.7
    Net loss                                                 $(26.8)                $(20.2)
    Net loss per basic
     and diluted share                                       $(8.58)               $(16.43)
    ------------------                                       ------                -------

    Non-GAAP:*
    EBITDA                                                     $5.6                   $5.0
    Adjusted EBITDA                                           $10.9                  $10.6
    Adjusted net loss                                        $(21.0)                $(15.8)
    Adjusted net loss
     per basic and
     diluted share                                           $(6.74)               $(12.83)

    * See attached schedules for reconciliation of reported 2012 and 2011 first-
     quarter GAAP results to Non-GAAP results.
    ----------------------------------------------------------------------------

“Horizon Lines generated slightly improved revenue container volume and higher EBITDA and adjusted EBITDA in the first quarter relative to a year ago, despite challenges that included severe winter weather in Alaska, higher fuel prices and increased expenses,” said Stephen H. Fraser, interim President and Chief Executive Officer. “Hawaii’s performance improved significantly on solid customer support and an improving economy. Alaska’s results were also better despite record cold and snowfall, which had a significant, adverse impact on customer demand and operations. Alaska was buoyed in part by domestic southbound volume that was driven by a strong seafood market. Earnings declined in Puerto Rico from the same period a year ago, due to continued slow business conditions and vessel service disruptions.

“In 2012, we are making significant investments in our Jones Act fleet with the dry-docking of three of our Puerto Rico vessels in Asia,” Mr. Fraser said. “Although dry-docking our vessels in Asia will add considerable transit expense in 2012, it will also facilitate extensive maintenance and high-quality enhancements that are instrumental in helping maintain service integrity in the Puerto Rico market.”

First-Quarter 2012 Financial Highlights

  • Volume, Rate & Fuel Cost – Container volume for the 2012 first quarter totaled 57,086 revenue loads, up 0.4% from 56,841 loads for the same period a year ago. Unit revenue per container totaled $4,257 in the 2012 first quarter, compared with $3,896 a year ago. First-quarter unit revenue per container, net of fuel surcharges, was $3,225, up 1.0% from $3,192 a year ago. Bunker fuel costs averaged $693 per metric ton in the first quarter, 26.5% above the average price of $548 per ton in the same quarter a year ago.
  • Operating Revenue – First-quarter operating revenue from continuing operations increased 9.4% to $263.4 million from $240.7 million a year ago. The factors driving the $22.7 million revenue improvement were: an $18.9 million increase in fuel surcharges; growth of $1.7 million in revenue container rates; a $1.3 million rise in other non-transportation services revenue; and a $0.8 million gain in volume.
  • Operating Loss – The GAAP operating loss from continuing operations for the first quarter totaled $6.1 million, compared with an operating loss of $9.4 million a year ago. The 2012 first-quarter GAAP operating loss includes a $1.1 million charge for severance expenses, $0.8 million in antitrust-related legal expenses, and $0.7 million in refinancing costs. The 2011 first-quarter GAAP operating loss includes a $2.8 million charge related to severance expenses and $2.2 million in antitrust-related legal expenses. Adjusting for these items, the first-quarter 2012 adjusted operating loss from continuing operations totaled $3.5 million, compared with an adjusted operating loss of $4.4 million a year ago. First-quarter 2012 operating results benefited from improved partial recovery of increased fuel costs, higher earnings from transportation services contracts, and slightly better volumes. The positive factors were partially offset by costs associated with vessel-related service disruptions, variable expense increases that exceeded the container rate improvements, and higher overhead costs.
  • EBITDA - EBITDA from continuing operations totaled $5.6 million for the 2012 first quarter, compared with $5.0 million for the same period a year ago. Adjusted EBITDA from continuing operations for the first quarter of 2012 was $10.9 million, an increase of 2.8% from $10.6 million for 2011. EBITDA and adjusted EBITDA for the 2012 and 2011 first quarters were impacted by the same factors affecting operating loss. Additionally, 2012 adjusted EBITDA reflects the exclusion of a $13.7 million non-cash loss on marking the conversion feature in the company’s convertible debt to fair value, partially offset by the elimination of a non-cash $10.3 million net gain resulting from the conversion of debt into equity. First-quarter 2011 adjusted EBITDA also excluded a charge of $0.6 million related to a loss on the modification of debt.
  • Net Loss – On a GAAP basis, the first-quarter net loss from continuing operations totaled $26.8 million, or $8.58 per share, compared with a 2011 first-quarter net loss from continuing operations of $20.2 million, or $16.43­­­ per share. On an adjusted basis, the first-quarter net loss from continuing operations totaled $21.0 million, or $6.74 per share, compared with an adjusted net loss of $15.8 million, or $12.83 per share, a year ago. The 2012 and 2011 first-quarter net losses reflect the same items impacting adjusted EBITDA in each period. Additionally, the net loss for both periods reflects non-cash accretion of payments associated with antitrust-related legal settlements, and the tax impact on the adjustments.
  • Shares Outstanding – The company had a weighted daily average of 3.1 million basic and fully diluted shares outstanding for the first quarter of 2012, compared with 1.2 million basic and fully diluted shares outstanding for the first quarter a year ago. Shares outstanding reflect a 1-for-25 reverse stock split approved at a special meeting of stockholders on December 2, 2011, and made effective on December 7, 2011.
  • Liquidity, Credit Facility Compliance & Debt Structure – Based on accounts receivable outstanding as of March 25, 2012, the company had total liquidity of $50.9 million, consisting of $24.9 million in cash and $26.0 million of asset-based loan (“ABL”) borrowing availability. Funded debt outstanding totaled $592.7 million, consisting of: $225.0 million of 11.00% first-lien senior secured notes due October 15, 2016; $100.0 million of second-lien senior secured notes due October 15, 2016, bearing interest at 13.00% if paid in cash, 14.00% if paid 50% in cash and 50% in kind, and 15.00% if paid in kind with additional second-lien secured notes; $228.4 million of 6.00% convertible secured notes due April 15, 2017; and $30.0 million drawn on the ABL facility, bearing interest at a weighted average of 3.73%. Also remaining outstanding were $2.2 million of 4.25% convertible notes due August 15, 2012, and a $7.1 million capital lease. The company’s weighted average interest rate for funded debt was 9.01%. Availability under the ABL facility is based on a percentage of eligible accounts receivable and customary reserves, with a maximum of $100.0 million. Letters of credit issued against the ABL facility totaled $19.6 million at March 25, 2012.

Please see attached schedules for the reconciliation of first-quarter 2012 and 2011 reported GAAP results and Non-GAAP adjusted results.

Completion of Financial Restructuring

On April 9, 2012, the company entered into transactions with noteholders representing approximately 99% of the outstanding $228.4 million of the 6.00% Series A and Series B convertible senior secured notes to substantially deleverage the balance sheet by converting the notes into common stock and warrants. At the same time, the company agreed with Ship Finance International Limited (“SFL”) and certain of its subsidiaries to terminate the company’s vessel charter obligations related to its discontinued trans-Pacific service in exchange for the issuance of $40.0 million of debt, plus warrants to purchase 9.25 million shares of the company’s common stock. These simultaneous transactions resulted in a net debt reduction of approximately $188.4 million and the elimination of $32.0 million in annual vessel charter obligations through 2018, and $4.8 million in 2019, as well as associated vessel lay-up costs of $3.0 million per year, assuming the five vessels were to remain inactive.

As a result of the conversion of the Series A and Series B notes, the company expects to record a non-cash loss on the conversion of approximately $185.4 million during the second quarter of 2012. In connection with the termination of the vessel lease obligations with SFL, the company also expects to record a second-quarter charge of $19.0 million, which will be recorded as part of discontinued operations.

Outlook

The company continues to project that 2012 container volumes will increase modestly, in the 1% to 2% range, and that container rates, net of fuel surcharges, will rise slightly from 2011 levels. Fuel prices for 2012 are currently projected in the $725-$730 per-ton range, excluding additional costs for low sulfur fuel that will be required in the Alaska tradelane, effective August 1, 2012.

Use of Non-GAAP Measures

Horizon Lines reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). The company also believes that the presentation of certain non-GAAP measures, i.e., EBITDA and results excluding certain costs and expenses, provides useful information for the understanding of its ongoing operations and enables investors to focus on period-over-period operating performance without the impact of significant special items. The company further feels these non-GAAP measures enhance the user’s overall understanding of the company’s current financial performance relative to past performance and provide a better baseline for modeling future earnings expectations. Non-GAAP measures are reconciled in the financial tables accompanying this news release. The company cautions that non-GAAP measures should be considered in addition to, but not as a substitute for, the company’s reported GAAP results.

About Horizon Lines

Horizon Lines, Inc. is one of the nation’s leading domestic ocean shipping companies and the only ocean cargo carrier serving all three noncontiguous domestic markets of Alaska, Hawaii and Puerto Rico from the continental United States. The company maintains a fleet of 15 fully Jones Act qualified vessels and operates five port terminals in Alaska, Hawaii and Puerto Rico. A trusted partner for many of the nation’s leading retailers, manufacturers and U.S. government agencies, Horizon Lines provides reliable transportation services that leverage its unique combination of ocean transportation and inland distribution capabilities to deliver goods that are vital to the prosperity of the markets it serves. The company is based in Charlotte, NC, and its stock trades on the over-the-counter market under the symbol HRZL.

Forward Looking Statements

The information contained in this press release should be read in conjunction with our filings made with the Securities and Exchange Commission. This press release contains “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements are those that do not relate solely to historical fact. They include, but are not limited to, any statement that may predict, forecast, indicate or imply future results, performance, achievements or events. Words such as, but not limited to, “believe,” “anticipate,” “plan,” “targets,” “projects,” “will,” “expect,” “would,” “could,” “should,” “may,” and similar expressions or phrases identify forward-looking statements.

Factors that may cause expected results or anticipated events or circumstances discussed in this press release to not occur or to differ from expected results include: our ability to maintain adequate liquidity to operate our business; our ability to make interest payments on our outstanding indebtedness; failure to comply with the terms of our probation imposed by the court in connection with our pleas relating to antitrust and environmental matters; volatility in fuel prices; decreases in shipping volumes; the reaction of our customers and business partners to our announcements and filings, including those referred to herein; government investigations related to (i) the imposition of fuel surcharges in connection with government contracts, (ii) regulations covering products transported on our vessels, including the FDA and USDA, or (iii) any other government investigations and legal proceedings; suspension or debarment by the federal government; compliance with safety and environmental protection and other governmental requirements; increased inspection procedures and tighter import and export controls; repeal or substantial amendment of the coastwise laws of the United States, also known as the Jones Act; catastrophic losses and other liabilities; our ability to integrate new and retain existing management; the successful start-up of any Jones-Act competitor; failure to comply with the various ownership, citizenship, crewing, and U.S. build requirements dictated by the Jones Act; the arrest of our vessels by maritime claimants; severe weather and natural disasters; and the aging of our vessels and unexpected substantial dry-docking or repair costs for our vessels.

All forward-looking statements involve risk and uncertainties. In light of these risks and uncertainties, expected results or other anticipated events or circumstances discussed in this press release might not occur. The forward-looking statements included in the press release are made only as of the date they are made and the company undertakes no obligation to update any such statements, except as otherwise required by applicable law. See the section entitled “Risk Factors” in our 2011 Form 10-K filed with the SEC on April 10, 2012, for a more complete discussion of these risks and uncertainties and for other risks and uncertainties. Those factors and the other risk factors described therein are not necessarily all of the important factors that could cause actual results or developments to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could harm our results. Consequently, there can be no assurance that actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences.

                                                              Horizon Lines, Inc.
                                                Unaudited Condensed Consolidated Balance Sheets
                                                     (in thousands, except per share data)

                                                                             March 25,              December 25,
                                                                                          2012                       2011
                                                                                          ----                       ----
    Assets
    Current assets
    Cash                                                                               $24,866                    $21,147
    Accounts receivable, net of allowance of $5,894 and $6,416 at
    March 25, 2012 and December 25, 2011,
     respectively                                                                      118,033                    105,949
    Materials and supplies                                                              29,520                     28,091
    Deferred tax asset                                                                  10,311                     10,608
    Assets of discontinued operations                                                    7,695                     12,975
    Other current assets                                                                 7,945                      7,196
                                                                                         -----                      -----
    Total current assets                                                               198,370                    185,966
    Property and equipment, net                                                        163,673                    167,145
    Goodwill                                                                           198,793                    198,793
    Intangible assets, net                                                              63,672                     69,942
    Other long-term assets                                                              16,238                     17,963
                                                                                        ------                     ------
    Total assets                                                                      $640,746                   $639,809
                                                                                      ========                   ========

    Liabilities and Stockholders' Deficiency
    Current liabilities
    Accounts payable                                                                   $44,585                    $31,683
    Current portion of long-term debt, including
     capital lease                                                                       5,925                      6,107
    Accrued vessel rent                                                                 11,465                     13,652
    Current liabilities of discontinued operations                                      28,269                     45,313
    Other accrued liabilities                                                          102,045                     97,097
                                                                                       -------                     ------
    Total current liabilities                                                          192,289                    193,852
    Long-term debt, including capital lease, net
     of current portion                                                                533,231                    509,741
    Deferred rent                                                                       12,435                     13,553
    Deferred tax liability                                                              10,702                     10,702
    Liabilities of discontinued operations                                              54,852                     51,293
    Other long-term liabilities                                                         25,031                     26,654
                                                                                        ------                     ------
    Total liabilities                                                                  828,540                    805,795
                                                                                       -------                    -------

    Stockholders' deficiency
    Preferred stock, $.01 par value, 30,500 shares authorized; no shares
        issued or outstanding                                                                -                          -
    Common stock, $.01 par value, 100,000 shares authorized, 3,456
    shares issued and 3,304 shares outstanding as of March 25, 2012
    and 2,421 shares issued and 2,269 shares outstanding as of
    December 25, 2011                                                                      615                        605
    Treasury stock, 152 shares at cost                                                 (78,538)                   (78,538)
    Additional paid in capital                                                         223,358                    213,135
    Accumulated deficit                                                               (335,769)                  (303,260)
    Accumulated other comprehensive income                                               2,540                      2,072
                                                                                         -----                      -----
    Total stockholders' deficiency                                                    (187,794)                  (165,986)
                                                                                      --------                   --------
    Total liabilities and stockholders' deficiency                                    $640,746                   $639,809
                                                                                      ========                   ========

                                                            Horizon Lines, Inc.
                                         Unaudited Condensed Consolidated Statements of Operations
                                                   (in thousands, except per share data)

                                                                          Quarters Ended
                                                                          --------------
                                                                             March 25,                March 27,
                                                                                          2012                       2011
                                                                                          ----                       ----

    Operating revenue                                                                 $263,354                   $240,720
    Operating expense:
    Vessel                                                                              88,645                     75,549
    Marine                                                                              50,605                     48,513
    Inland                                                                              46,697                     42,292
    Land                                                                                37,880                     35,634
    Rolling stock rent                                                                   9,974                      9,721
                                                                                         -----                      -----
    Cost of services (excluding depreciation
     expense)                                                                          233,801                    211,709
    Depreciation and amortization                                                       10,401                     10,877
    Amortization of vessel dry-docking                                                   4,012                      4,068
    Selling, general and administrative                                                 21,514                     22,979
    Miscellaneous expense (income), net                                                   (310)                       443
                                                                                          ----                        ---
    Total operating expense                                                            269,418                    250,076
    Operating loss                                                                      (6,064)                    (9,356)
    Other expense:
    Interest expense, net                                                               17,739                     10,716
    (Gain) loss on conversion/modification of debt                                     (10,982)                       620
    Loss on change in value of debt conversion
     features                                                                           13,670                          -
    Other expense, net                                                                      14                         14
                                                                                           ---                        ---
    Loss from continuing operations before income
     tax expense (benefit)                                                             (26,505)                   (20,706)
    Income tax expense (benefit)                                                           297                       (485)
                                                                                           ---                       ----
    Net loss from continuing operations                                                (26,802)                   (20,221)
    Net loss from discontinued operations                                               (5,707)                   (13,851)
                                                                                        ------                    -------
    Net loss                                                                          $(32,509)                  $(34,072)
                                                                                      ========                   ========

    Basic and diluted net loss per share:
    Continuing operations                                                               $(8.58)                   $(16.43)
    Discontinued operations                                                              (1.83)                   $(11.25)
    Basic net loss per share                                                           $(10.41)                   $(27.68)
                                                                                       =======                    =======

    Number of shares used in calculation:
    Basic                                                                                3,122                      1,231
    Diluted                                                                              3,122                      1,231

                                                            Horizon Lines, Inc.
                                         Unaudited Condensed Consolidated Statements of Cash Flows
                                                               (in thousands)

                                                                        Three Months Ended
                                                                        ------------------
                                                                             March 25,                March 27,
                                                                                          2012                       2011
                                                                                          ----                       ----

    Cash flows from operating activities:
    Net loss from continuing operations                                               $(26,802)                  $(20,221)
    Adjustments to reconcile net loss to net cash used in operating
     activities:
    Depreciation                                                                         5,339                      5,799
    Amortization of other intangible assets                                              5,062                      5,078
    Amortization of vessel dry-docking                                                   4,012                      4,068
    Amortization of deferred financing costs                                               770                        815
    Loss on change in value of conversion features                                      13,670                          -
    (Gain) loss on conversion/modification of debt                                     (10,982)                       620
    Deferred income taxes                                                                  297                       (685)
    Gain on equipment disposals                                                            (28)                       (12)
    Stock-based compensation                                                                48                        282
    Accretion of interest on convertible notes                                           2,710                      2,850
    Accretion of interest on legal settlements                                             544                        240
    Changes in operating assets and liabilities:
    Accounts receivable                                                                (12,069)                   (19,786)
    Materials and supplies                                                              (1,427)                    (1,470)
    Other current assets                                                                  (749)                        50
    Accounts payable                                                                    12,886                     (9,694)
    Accrued liabilities                                                                  9,345                      8,520
    Vessel rent                                                                         (3,306)                    (6,097)
    Vessel dry-docking payments                                                         (4,936)                    (4,966)
    Accrued legal settlements                                                           (1,000)                         -
    Other assets/liabilities                                                            (1,879)                       338
                                                                                        ------                        ---
    Net cash used in operating activities from
     continuing operations                                                              (8,495)                   (34,271)
    Net cash used in operating activities from
     discontinued operations                                                           (13,940)                    (8,630)
                                                                                       -------                     ------

    Cash flows from investing activities:
    Purchases of property and equipment                                                 (1,960)                    (3,255)
    Proceeds from the sale of property and
     equipment                                                                             127                        206
                                                                                           ---                        ---
    Net cash used in investing activities from
     continuing operations                                                              (1,833)                    (3,049)
    Net cash used in investing activities from
     discontinued operations                                                                 -                       (215)
                                                                                           ---                       ----

    Cash flows from financing activities:
    Borrowing under ABL facility                                                        30,000                          -
    Borrowing under revolving credit facility                                                -                     63,500
    Payments on revolving credit facility                                                    -                     (6,000)
    Payments on long-term debt                                                               -                     (4,688)
    Payments of financing costs                                                         (1,574)                    (3,243)
    Payments on capital lease obligations                                                 (439)                      (384)
                                                                                          ----                       ----
    Net cash provided by financing activities                                           27,987                     49,185
                                                                                        ------                     ------
    Net increase in cash from continuing operations                                     17,659                     11,865
    Net decrease in cash from discontinued
     operations                                                                        (13,940)                    (8,845)
                                                                                       -------                     ------
    Net increase in cash                                                                 3,719                      3,020
    Cash at beginning of period                                                         21,147                      2,751
                                                                                        ------                      -----
    Cash at end of period                                                              $24,866                     $5,771
                                                                                       =======                     ======

                                                            Horizon Lines, Inc.
                                                   Adjusted Operating Loss Reconciliation
                                                               (in thousands)

                                                                           Quarter Ended            Quarter Ended
                                                                          March 25, 2012           March 27, 2011
                                                                          --------------           --------------
    Operating Loss                                                                     $(6,064)                   $(9,356)

    Adjustments:
    ------------
    Union/Other Severance                                                                1,124                      2,806
    Antitrust Legal Expenses                                                               757                      2,178
    Refinancing Costs                                                                      646                          -
    Total Adjustments                                                                    2,527                      4,984

    Adjusted Operating  Loss                                                           $(3,537)                   $(4,372)
                                                                                       =======                    =======

                                                            Horizon Lines, Inc.
                                                      Adjusted Net Loss Reconciliation
                                                               (in thousands)

                                                                           Quarter Ended            Quarter Ended
                                                                          March 25, 2012           March 27, 2011
                                                                          --------------           --------------
    Net Loss                                                                          $(32,509)                  $(34,072)
    Net Loss from  Discontinued Operations                                              (5,707)                   (13,851)
                                                                                        ------                    -------
    Net Loss from Continuing Operations                                                (26,802)                   (20,221)

    Adjustments:
    ------------
    Loss on change in value of debt conversion
     features                                                                           13,670                          -
    Union/Other Severance                                                                1,124                      2,806
    Antitrust Legal Expenses                                                               757                      2,178
    Accretion of legal settlement                                                          544                        240
    (Gain) Loss on Conversion/Modification of
     Debt/Other Refinancing Costs                                                      (10,336)                       620
    Tax Impact of Adjustments                                                               10                     (1,422)
    Total Adjustments                                                                    5,769                      4,422

    Adjusted Net Loss from Continuing Operations                                      $(21,033)                  $(15,799)
                                                                                      ========                   ========

                                                            Horizon Lines, Inc.
                                                 Adjusted Net Loss Per Share Reconciliation

                                                                           Quarter Ended            Quarter Ended
                                                                          March 25, 2012           March 27, 2011
                                                                          --------------           --------------
    Net Loss Per Share                                                                 $(10.41)                   $(27.68)
    Net Loss Per Share from Discontinued Operations                                      (1.83)                    (11.25)
                                                                                         -----                     ------
    Net Loss Per Share from Continuing Operations                                        (8.58)                    (16.43)

    Adjustments Per Share:
    ----------------------
    Loss on change in value of debt conversion
     features                                                                             4.38                          -
    Union/Other Severance                                                                 0.36                       2.28
    Antitrust Legal Expenses                                                              0.24                       1.77
    Accretion of legal settlement                                                         0.17                       0.20
    (Gain) Loss on Conversion/Modification of
     Debt/Other Refinancing Costs                                                        (3.31)                      0.50
    Tax Impact of Adjustments                                                                -                      (1.15)
    Total Adjustments                                                                     1.84                       3.60

    Adjusted Net Loss Per Share from Continuing
     Operations                                                                         $(6.74)                   $(12.83)
                                                                                        ======                    =======

                                                            Horizon Lines, Inc.
                                                 EBITDA and Adjusted EBITDA Reconciliation
                                                               (in thousands)

                                                                           Quarter Ended            Quarter Ended
                                                                          March 25, 2012           March 27, 2011
                                                                          --------------           --------------
    Net Loss                                                                          $(32,509)                  $(34,072)
    Net Loss from Discontinued Operations                                               (5,707)                   (13,851)
                                                                                        ------                    -------
    Net Loss from Continuing Operations                                                (26,802)                   (20,221)

    Interest Expense, Net                                                               17,739                     10,716
    Tax Expense (Benefit)                                                                  297                       (485)
    Depreciation and Amortization                                                       14,413                     14,945
                                                                                        ------                     ------
    EBITDA                                                                               5,647                      4,955
    Loss on change in value of debt conversion
     features                                                                           13,670                          -
    Union/Other Severance                                                                1,124                      2,806
    Antitrust Legal Expenses                                                               757                      2,178
    (Gain) Loss on /Conversion/Modification of
     Debt/Other Refinancing Costs                                                      (10,336)                       620
                                                                                       -------                        ---
    Adjusted EBITDA                                                                    $10,862                    $10,559
                                                                                       =======                    =======
    Note:  EBITDA is defined as net
     income plus net interest           a measure used by our management
     expense, income taxes,             team to make day-to-day
     depreciation and amortization.     operating decisions.  Adjusted
     We believe that EBITDA is a        EBITDA excludes certain charges
     meaningful measure for investors   in order to evaluate our
     as (i) EBITDA is a component of    operating performance, for
     the measure used by our board of   making day-to-day operating
     directors and management team to   decisions and when determining
     evaluate our operating             the payment of discretionary
     performance  and (ii) EBITDA is

SOURCE Horizon Lines, Inc.


Source: PR Newswire