Market Overview

Horizon Lines Reports Third-Quarter Financial Results

Share:

Volume Improves 3.4% and Rate, Net of Fuel, Rises 2.9% from a Year Ago

CHARLOTTE, N.C., Oct. 29, 2012 /PRNewswire/ -- Horizon Lines, Inc. (OTCQB: HRZL) today reported financial results for the fiscal third quarter ended September 23, 2012.

Financial results are presented on a continuing operations basis, excluding the previously discontinued trans-Pacific FSX service and logistics operations.

Comparison of GAAP and Non-GAAP Results from Continuing Operations

Quarter Ended

(in millions, except per share data)*

9/23/2012



9/25/2011









GAAP:







Operating revenue

$279.6



$267.6

Net income (loss)

$1.4



$(111.7)

Net income (loss) per diluted share 

$0.02



$(90.36)









Non-GAAP:*







EBITDA

$26.4



$(85.3)

Adjusted EBITDA

$27.0



$33.0

Adjusted net income

$2.3



$6.1

Adjusted net income per diluted share

$0.03



$4.93

* See attached schedules for reconciliation of third-quarter 2012 and 2011 reported GAAP results to Non-GAAP results.  Per-share amounts reflect the weighted average of 90.7 million fully diluted shares outstanding for the 2012 third quarter, compared with 1.2 million shares for the 2011 period.

"Horizon Lines generated a 3.4% improvement in container volume and a 2.9% increase in container revenue, net of fuel surcharges, for the third quarter, relative to the same period a year ago," said Sam Woodward, President and Chief Executive Officer. "Volume increases in Hawaii and Alaska offset volume weakness in Puerto Rico. However, third-quarter adjusted EBITDA of $27.0 million declined by $6.0 million from a year ago, largely due to $4.6 million of incremental transit and crew costs associated with dry-docking three Puerto Rico vessels in China. We are doing this to facilitate extensive maintenance and high-quality enhancements in the most cost-efficient manner possible in order to improve vessel reliability and service integrity in Puerto Rico.

"Excluding these incremental dry-dock transit and crew costs, the remaining adjusted EBITDA shortfall of $1.4 million reflects a decline in non-transportation revenue, as well as increased maintenance, terminal operations, vessel operating and overhead costs, primarily due to contractual rate increases, port security fees and higher container volumes," Mr. Woodward said. "These negative variances were partially offset by increased volume, associated improved fuel-cost recovery and modest container rate improvements."    

Reviewing each trade lane, Alaska's seasonally strong summer business benefited from increased northbound automobile shipments and southbound seafood volume. Hawaii's positive volume trend continued during the quarter, driven in part by stronger tourism. Puerto Rico revenue container loads contracted on lower volume. Reduced shipments in Puerto Rico were partially offset by stabilizing container rates and increased refrigerated cargo volume relative to a year ago.

Third-Quarter 2012 Financial Highlights      

  • Volume, Rate & Fuel Cost – Container volume for the 2012 third quarter totaled 61,514 revenue loads, up 3.4% from 59,518 loads for the same period a year ago. Unit revenue per container totaled $4,245 in the 2012 third quarter, compared with $4,171 in 2011.  Unit revenue per container, net of fuel surcharges, was $3,218, up 2.9% from $3,127 a year ago.  Vessel fuel costs averaged $649 per metric ton in the third quarter, down 1.4% from the average price of $658 per ton for the same quarter in 2011.
  • Operating Revenue – Third-quarter operating revenue from continuing operations increased 4.5% to $279.6 million from $267.6 million a year ago.  The factors driving the $12.0 million revenue improvement were: a $6.3 million gain in volume; a $5.6 million increase from higher container revenue rates; and a $0.7 million rise from fuel surcharges. These increases were partially offset by a $0.6 million decline in non-transportation services revenue.  
  • Operating Income – GAAP operating income from continuing operations for the 2012 third quarter totaled $13.2 million, compared with an operating loss of $99.7 million a year ago. GAAP operating income for the 2012 third quarter includes costs of $0.5 million for antitrust-related legal expenses, severance and refinancing costs. The GAAP operating loss for the 2011 third quarter includes a $117.5 million goodwill impairment charge and $0.8 million for antitrust-related legal expenses and employee severance (see reconciliation tables for specific line-item amounts).  Adjusting for these items, third-quarter 2012 adjusted operating income totaled $13.7 million, compared with $18.6 million a year ago.
  • EBITDA – EBITDA from continuing operations totaled $26.4 million for the 2012 third quarter, compared with a negative $85.3 million for the same period a year ago.  Adjusted EBITDA from continuing operations for the third quarter of 2012 was $27.0 million, compared with $33.0 million for 2011. EBITDA and adjusted EBITDA for the 2012 and 2011 third quarters were impacted by the same factors affecting operating income. Additionally, 2012 adjusted EBITDA excludes a $0.3 million gain on marking the conversion feature in the company's convertible debt to fair value, as well as a $0.4 million loss on the conversion of debt to equity (see reconciliation tables for specific line item amounts).
  • Net Income – On a GAAP basis, third-quarter net income from continuing operations totaled $1.4 million, or $0.02 per diluted share on a weighted average of 90.7 million fully diluted shares outstanding. This compares with a 2011 third-quarter net loss from continuing operations of $111.7 million, or $90.36­­ per share on 1.2 million weighted average shares outstanding. On an adjusted basis, 2012 third-quarter net income from continuing operations totaled $2.3 million, or $0.03 per fully diluted share, compared with net income of $6.1 million, or $4.93 per fully diluted share, a year ago.  Adjusted net income for the 2012 and 2011 third quarters reflects the same items impacting adjusted EBITDA in each period. Additionally, adjusted net income for both periods excludes the non-cash accretion of antitrust-related legal settlements and includes the tax impact of the adjustments (see reconciliation tables for specific line item amounts).  
  • Nine-Month Results – For the fiscal 2012 nine-month period, operating revenue from continuing operations increased 6.8% to $813.9 million from $762.1 million for the same period in 2011. EBITDA from continuing operations totaled $31.4 million, compared with negative $47.3 million a year ago. Nine-month 2012 adjusted EBITDA totaled $53.0 million, compared with $63.2 million for the same period in 2011.  Net incremental costs for the 2012 period, including transit and crew costs associated with vessels being dry-docked in China, negatively impacted 2012 nine-month adjusted EBITDA by approximately $10.3 million. Nine-month adjusted EBITDA for 2012 excludes net costs totaling $21.6 million, comprised of $3.2 million for severance, antitrust-related legal expenses and equipment impairment, as well as an $18.4 million primarily non-cash net loss that reflects a $37.8 million loss on the conversion of debt to equity, partially offset by a $19.4 million gain from marking the conversion feature in the company's convertible debt to fair value. Adjusted EBITDA for the 2011 nine-month period excludes $120.3 million in goodwill and equipment impairment charges, an $18.2 million expense reversal related to net legal settlement reductions, and charges of $8.4 million for antitrust-related legal expenses, severance and refinancing costs (see reconciliation tables for specific line-item amounts).  The net loss from continuing operations for the 2012 nine-month period totaled $56.5 million, or $2.98 per share on 18.9 million weighted average shares outstanding, compared with a net loss from continuing operations of $127.4 million, or $103.24 per share on 1.2 million weighted average shares outstanding, for the prior year.  The adjusted net loss from continuing operations for the 2012 nine-month period totaled $33.5 million, or $1.77 per share, compared with an adjusted net loss from continuing operations of $17.3 million, or $13.99 per share, for the comparable year-ago period.
  • Shares Outstanding – The company had a weighted daily average of 33.6 million basic and 90.7 million fully diluted shares outstanding for the third quarter of 2012, and 18.9 million basic and fully diluted shares for the first nine months of the year.  This compares with a weighted average of 1.2 million basic and fully diluted shares outstanding for corresponding periods a year ago. Shares outstanding reflect the previously disclosed financial restructuring and 1-for-25 reverse stock split in the fourth quarter of 2011, a mandatory debt-for-equity exchange in the first quarter of 2012, and a further financial restructuring in the second quarter of 2012.  At October 24, 2012, the equivalent of 91.8 million fully diluted shares of the company's stock were outstanding, consisting of 34.4 million shares of common stock and warrants convertible into 57.4 million shares of common stock.  
  • Liquidity, Credit Facility Compliance & Debt Structure – Based on accounts receivable outstanding as of September 23, 2012, the company had total liquidity of $46.3 million, consisting of $18.9 million of asset-based loan ("ABL") borrowing availability and $27.4 million in cash. Outstanding debt totaled $432.9 million, consisting of: $223.9 million of 11.00% first-lien senior secured notes due October 15, 2016; $157.8 million of second-lien senior secured notes due October 15, 2016, bearing interest at 15.00%, being paid in kind with additional second-lien secured notes; and $42.5 million drawn on the ABL facility, bearing interest at a weighted average of 4.18%.  Also remaining outstanding were $2.7 million of 6.00% convertible secured notes due April 15, 2017, and a $6.0 million capital lease.  The company's weighted average interest rate for funded debt was 11.8%. 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 $17.1 million at September 23, 2012. 

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

Outlook

For the full fiscal year, container volumes are projected to increase slightly from 2011 levels, due to modestly improving economic conditions and consumer sentiment in certain of the company's markets.  Container rates, net of fuel surcharges, are expected to rise slightly, mitigating much of the contractual rate increases the company is incurring this year from its vessel union partners, transportation service providers and for other marine services.  During 2011, many of the company's union partners and transportation service providers reduced or maintained rate levels to assist the company in its cost-savings initiatives, which included a reduction in non-union workforce.

Fuel prices are projected to remain at historically high levels, averaging $700 per ton in the fourth quarter and $690-$695 per ton for the full year.

The company expects cash flow from operations and available cash will be adequate to meet liquidity needs over the next 12 months, and projects total liquidity to approximate $40 million at the end of the current fiscal year.    

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: volatility in fuel prices; decreases in shipping volumes; our ability to maintain adequate liquidity to operate our business; our ability to make interest payments on our outstanding indebtedness; work stoppages, strikes and other adverse union actions; the reaction of our customers and business partners to our announcements and filings, including those referred to herein; government investigations and legal proceedings; suspension or debarment by the federal government; compliance with safety and environmental protection and other governmental requirements; failure to comply with the terms of our probation; 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; 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)



























September 23,



December 25,



2012



2011

Assets







Current assets







Cash

$27,355



$21,147

Accounts receivable, net of allowance of $3,473 and $6,416 at







September 23, 2012 and December 25, 2011, respectively

115,874



105,949

Materials and supplies

27,860



28,091

Deferred tax asset

4,685



10,608

Assets of discontinued operations

7,159



12,975

Other current assets

8,097



7,196









Total current assets

191,030



185,966

Property and equipment, net

159,391



167,145

Goodwill

198,793



198,793

Intangible assets, net

51,448



69,942

Other long-term assets

19,845



17,963









Total assets

$620,507



$639,809









Liabilities and Stockholders' Equity (Deficiency)







Current liabilities







Accounts payable

$44,619



$31,683

Current portion of long-term debt, including capital lease

3,277



6,107

Accrued vessel rent

7,090



13,652

Current liabilities of discontinued operations

2,917



45,313

Other accrued liabilities

90,111



97,097









Total current liabilities

148,014



193,852

Long-term debt, including capital lease, net of current portion

429,395



509,741

Deferred rent

10,199



13,553

Deferred tax liability

4,609



10,702

Liabilities of discontinued operations

772



51,293

Other long-term liabilities

24,490



26,654









Total liabilities

617,479



805,795









Stockholders' equity (deficiency)







Preferred stock, $.01 par value, 30,500 shares authorized; no shares 







    issued or outstanding

-



-

Common stock, $.01 par value, 100,000 shares authorized, 34,168







shares issued and outstanding as of September 23, 2012 and 







2,421 shares issued and 2,269 shares outstanding as of







December 25, 2011

952



605

Treasury stock, 152 shares at cost as of December 25, 2011

-



(78,538)

Additional paid in capital

380,328



213,135

Accumulated deficit

(379,983)



(303,260)

Accumulated other comprehensive income

1,731



2,072









Total stockholders' equity (deficiency)

3,028



(165,986)









Total liabilities and stockholders' equity (deficiency)

$620,507



$639,809

 

 

 

Horizon Lines, Inc.

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except per share data)



















Quarter Ended



Nine Months Ended



September 23,



September 25,



September 23,



September 25,



2012



2011



2012



2011

















Operating revenue

$279,604



$267,629



$813,898



$762,080

Operating expense:















Vessel

83,850



77,814



264,718



231,547

Marine

53,832



47,570



156,176



143,073

Inland

46,902



45,664



140,228



132,599

Land

38,069



35,422



111,557



106,196

Rolling stock rent

10,875



10,306



31,542



30,400

Cost of services (excluding depreciation expense)

233,528



216,776



704,221



643,815

Depreciation and amortization

9,319



10,533



30,116



32,357

Amortization of vessel dry-docking

3,954



3,732



10,589



11,871

Selling, general and administrative

19,447



19,017



60,492



62,721

Goodwill impairment

-



117,506



-



117,506

Impairment charge

-



-



257



2,818

Legal settlements

-



-



-



(18,202)

Miscellaneous expense (income), net

134



(268)



51



130

















Total operating expense

266,382



367,296



805,726



853,016

















Operating income (loss) 

13,222



(99,667)



8,172



(90,936)

Other expense:















Interest expense, net

13,808



13,418



49,036



37,044

Loss on conversion/modification of debt

368



30



36,789



633

Gain on change in value of debt conversion features

(255)



-



(19,385)



-

Other expense (income), net

8



(91)



32



(70)

















Loss from continuing operations before income tax benefit

(707)



(113,024)



(58,300)



(128,543)

Income tax benefit

(2,150)



(1,339)



(1,805)



(1,143)

















Net income (loss) from continuing operations

1,443



(111,685)



(56,495)



(127,400)

Net income (loss) from discontinued operations

414



(14,682)



(20,228)



(38,454)

















Net income (loss)

$1,857



$(126,367)



$(76,723)



$(165,854)

















Basic net income (loss) per share:















Continuing operations

$0.05



$(90.36)



$(2.98)



$(103.24)

Discontinued operations

0.01



(11.88)



(1.07)



(31.16)

Basic net income (loss) per share

$0.06



$(102.24)



$(4.05)



$(134.40)

















Diluted net income (loss) per share:















Continuing operations

$0.02



$(90.36)



$(2.98)



$(103.24)

Discontinued operations

0.00



(11.88)



(1.07)



(31.16)

Diluted net income (loss) per share

$0.02



$(102.24)



$(4.05)



$(134.40)

















Number of weighted average shares used in calculation:















Basic

33,642



1,236



18,943



1,234

Diluted

90,745



1,236



18,943



1,234

 

Horizon Lines, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)











Nine Months Ended



September 23,



September 25,



2012



2011









Cash flows from operating activities:







Net loss from continuing operations

$(56,495)



$(127,400)

Adjustments to reconcile net loss to net cash used in operating activities:







Depreciation

16,015



17,118

Amortization of other intangible assets

14,101



15,239

Amortization of vessel dry-docking

10,589



11,871

Amortization of deferred financing costs

1,977



3,167

Goodwill impairment

-



117,506

Gain on change in value of conversion features

(19,385)



-

Impairment charge

257



2,818

Legal settlements

-



(18,202)

Loss on conversion/modification of debt

36,789



633

Deferred income taxes

(170)



1,244

Gain on equipment disposals

(170)



(814)

Stock-based compensation

1,274



582

Payment-in-kind interest expense

14,946



-

Accretion of interest on convertible notes

3,963



8,732

Accretion of interest on legal settlements

1,543



547

Changes in operating assets and liabilities:







Accounts receivable

(9,988)



(19,139)

Materials and supplies

153



94

Other current assets

(902)



(501)

Accounts payable

12,937



(7,181)

Accrued liabilities

8,515



(10,120)

Vessel rent

(9,918)



1,623

Vessel dry-docking payments

(14,578)



(8,038)

Accrued legal settlements

(5,500)



(2,768)

Other assets/liabilities

128



(869)









Net cash provided by (used in) operating activities from continuing operations

6,081



(13,858)

Net cash used in operating activities from discontinued operations

(23,875)



(38,736)









Cash flows from investing activities:







Purchases of property and equipment

(9,511)



(9,527)

Proceeds from the sale of property and equipment

1,407



2,111









Net cash used in investing activities from continuing operations

(8,104)



(7,416)

Net cash used in investing activities from discontinued operations

-



(544)









Cash flows from financing activities:







Borrowing under ABL facility

42,500



-

Borrowing under revolving credit facility

-



104,500

Borrowing under bridge loan

-



14,657

Payments on revolving credit facility

-



(14,500)

Payments on long-term debt

(3,359)



(14,063)

Payments of financing costs

(5,679)



(17,934)

Payments on capital lease obligations

(1,356)



(1,201)









Net cash provided by financing activities

32,106



71,459









Net increase in cash from continuing operations

30,083



50,185

Net decrease in cash from discontinued operations

(23,875)



(39,280)

Net increase in cash

6,208



10,905

Cash at beginning of period

21,147



2,751









Cash at end of period

$27,355



$13,656









Supplemental disclosure of non-cash financing activity:







Second lien notes issued to SFL

$40,000



$ -

Conversion of debt to equity

$283,278



$ -

Notes issued as payment-in-kind

$15,730



$ -

 


 

Horizon Lines, Inc.

Adjusted Operating Income Reconciliation

(in thousands)



















 Quarter Ended September 23, 2012 



Quarter Ended   September 25, 2011 



Nine Months Ended September 23, 2012 



 Nine Months Ended September 25, 2011 

Operating Income (Loss) 

$13,222



$(99,667)



$8,172



$(90,936)

















Adjustments:















Antitrust Legal Expenses

234



678



1,418



3,805

Union/Other Severance

234



101



1,513



3,047

Refinancing Costs

23



-



972



905

Goodwill Impairment

-



117,506



-



117,506

Impairment Charge

-



-



257



2,818

Legal Settlements

-



-



-



(18,202)

Total Adjustments

491



118,285



4,160



109,879

















Adjusted Operating  Income

$13,713



$18,618



$12,332



$18,943

 

















Horizon Lines, Inc.

Adjusted Net Income (Loss) Reconciliation

(in thousands)



















Quarter Ended

September 23, 2012 



Quarter
Ended September 25, 2011 



Nine Months Ended September 23, 2012 



 Nine Months Ended September 25, 2011 

Net Income (Loss) 

$1,857



$(126,367)



$(76,723)



$(165,854)

Net Income (Loss) from  Discontinued Operations

414



(14,682)



(20,228)



(38,454)

Net Income (Loss) Income from Continuing Operations

1,443



(111,685)



(56,495)



(127,400)

















Adjustments:















Accretion of Legal Settlements

421



263



1,543



547

Loss on Conversion/Modification of Debt/Other Refinancing Costs

391



30



37,761



1,538

Antitrust Legal Expenses

234



678



1,418



3,805

Union/Other Severance

234



101



1,513



3,047

Gain on Change in Value of Debt Conversion Features

(255)



-



(19,385)



-

Goodwill Impairment

-



117,506



-



117,506

Impairment Charge

-



-



257



2,818

Legal Settlements

-



-



-



(18,202)

Tax Impact of Adjustments

(152)



(797)



(152)



(924)

Total Adjustments

873



117,781



22,955



110,135

















Adjusted Net Income (Loss) from Continuing Operations 

$2,316



$6,096



$(33,540)



$(17,265)

 

















Horizon Lines, Inc.

Adjusted Net Income (Loss) Per Share Reconciliation



















Quarter Ended September 23, 2012 



Quarter Ended September 25, 2011 



Nine Months Ended September 23, 2012 



Nine Months Ended September 25, 2011 

Net Income (Loss) Per Share

$0.02



$(102.24)



$(4.05)



$(134.40)

Net Income (Loss) Per Share from Discontinued Operations

-



(11.88)



(1.07)



(31.16)

Net Income (Loss) Per Share from Continuing Operations

0.02



(90.36)



(2.98)



(103.24)

















Adjustments Per Share:















Accretion of Legal Settlements

0.01



0.21



0.08



0.44

Loss on Conversion/Modification of Debt/Other Refinancing Costs

-



0.02



1.99



1.25

Antitrust Legal Expenses

-



0.55



0.07



3.08

Union/Other Severance

-



0.08



0.08



2.47

Gain on Change in Value of Debt Conversion Features

-



-



(1.02)



-

Goodwill Impairment

-



95.07



-



95.23

Impairment Charge

-



-



0.01



2.28

Legal Settlements

-



-



-



(14.75)

Tax Impact of Adjustments

-



(0.64)



-



(0.75)

Total Adjustments

0.01



95.29



1.21



89.25

















Adjusted Net Income (Loss) Per Share from Continuing Operations

$0.03



$4.93



$(1.77)



$(13.99)


 

Horizon Lines, Inc.

EBITDA and Adjusted EBITDA Reconciliation

(in thousands)



















Quarter Ended September 23, 2012 



Quarter Ended September 25, 2011 



Nine Months Ended September 23, 2012 



Nine Months Ended September 25, 2011 

Net Income (Loss)

$1,857



$(126,367)



$(76,723)



$(165,854)

Net Income (Loss) from Discontinued Operations

414



(14,682)



(20,228)



(38,454)

Net Income (Loss) from Continuing Operations

1,443



(111,685)



(56,495)



(127,400)

















Interest Expense, Net

13,808



13,418



49,036



37,044

Tax Expense

(2,150)



(1,339)



(1,805)



(1,143)

Depreciation and Amortization

13,273



14,265



40,705



44,228

EBITDA

26,374



(85,341)



31,441



(47,271)

Loss on Conversion/Modification of Debt/Other Refinancing Costs

391



30



37,761



1,538

Antitrust Legal Expenses

234



678



1,418



3,805

Union/Other Severance

234



101



1,513



3,047

Gain on Change in Value of Debt Conversion Features

(255)



-



(19,385)



-

Goodwill Impairment

-



117,506



-



117,506

Impairment Charge

-



-



257



2,818

Legal Settlements

-



-



-



(18,202)

Adjusted EBITDA

$26,978



$32,974



$53,005



$63,241

































Note:  EBITDA is defined as net income plus net interest expense, income taxes, depreciation and amortization.  We believe that EBITDA is a meaningful measure for investors as (i) EBITDA is a component of the measure used by our board of directors and management team to evaluate our operating performance  and (ii) EBITDA is a measure used by our management team to make day-to-day operating decisions.  Adjusted EBITDA excludes certain charges in order to evaluate our operating performance, for making day-to-day operating decisions and when determining the payment of discretionary bonuses.     

 

SOURCE Horizon Lines, Inc.

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