Horizon Lines Reports Fourth-Quarter 2013 Financial Results Adjusted EBITDA Increases 33.1%, For 4th Consecutive Quarter of Double-Digit Improvement

Sets Date for Annual Meeting

CHARLOTTE, N.C., March 21, 2014 /PRNewswire/ -- Horizon Lines, Inc. (OTCQB: HRZL) today reported financial results for the fiscal fourth quarter ended December 22, 2013.

Financial results are being presented on a continuing operations basis.  

Comparison of GAAP and Non-GAAP Results from Continuing Operations

Quarter Ended

(in millions, except per share data)*

12/22/2013


12/23/2012





GAAP:




Operating revenue

$                 255.4


$                    259.8

Operating income (loss)

$                     1.8


$                      (3.9)

Net loss

$                 (14.0)


$                    (17.9)

Net loss per share 

$                 (0.36)


$                    (0.52)





Non-GAAP:*




EBITDA

$                   14.7


$                        8.2

Adjusted operating income

$                     4.5


$                        1.0

Adjusted EBITDA

$                   17.3


$                      13.0

Adjusted net loss

$                 (11.5)


$                    (12.8)

Adjusted net loss per share

$                 (0.29)


$                    (0.38)

 

* See attached schedules for reconciliation of fourth-quarter 2013 and 2012 reported GAAP results to Non-GAAP results.  Per-share amounts reflect the weighted average of 39.4 million basic shares outstanding for the 2013 fourth quarter, compared with 34.3 million basic shares outstanding for the 2012 period.

"Horizon Lines fourth-quarter adjusted EBITDA increased 33.1% over the same period a year ago and the company generated GAAP operating income of $1.8 million in the quarter, the first fourth-quarter GAAP operating profit since 2009. The improvement in adjusted EBITDA was driven largely by reduced vessel charter expense, the absence of vessel incidents, and an increase in third party services," said Sam Woodward, President and Chief Executive Officer. "The factors driving adjusted EBITDA growth were partially offset by modestly lower rates, net of fuel and reduced fuel recovery. Results represent the fourth consecutive quarter with double-digit percentage growth in adjusted EBITDA over prior-year results, adding further momentum to the improvement of Horizon Lines' financial performance."

Fourth-Quarter 2013 Financial Highlights  

  • Volume, Rate & Fuel Cost – Container volume for the 2013 fourth quarter totaled 56,628 revenue loads, up 27 loads from the same period a year ago.  Unit revenue per container totaled $4,187 in the fourth quarter, compared with $4,295 in 2012.  Unit revenue per container, net of fuel surcharges was $3,222, down 0.3% from $3,233 a year ago.  Vessel fuel costs averaged $645 per metric ton in the fourth quarter, down 7.1% from the average price of $694 per ton for the same quarter in 2012.    

  • Operating Revenue – Fourth-quarter operating revenue declined 1.7% to $255.4 million from $259.8 million a year ago.  The factors in the $4.4 million revenue shortfall were a $5.1 million decrease in fuel surcharges and a $0.5 million decline in container revenue rates, partially offset by a $1.2 million rise in non-transportation revenue.

  • Operating Income – The GAAP operating income for the fourth quarter totaled $1.8 million, compared with a loss of $3.9 million a year ago.  The 2013 GAAP operating income reflects charges totaling $2.7 million associated with legal settlements, an equipment impairment charge and certain legal expenses.  The 2012 GAAP operating loss includes charges totaling $4.9 million related to a restructuring charge, employee severance, certain legal expenses and an equipment impairment charge. Adjusting to exclude these items, fourth-quarter 2013 adjusted operating income totaled $4.5 million, compared with $1.0 million a year earlier. (See reconciliation tables for specific line-item amounts)

  • EBITDA – EBITDA totaled $14.7 million for the 2013 fourth quarter, compared with $8.2 million for the same period a year ago.  Adjusted EBITDA for the fourth quarter of 2013 was $17.3 million, versus $13.0 million for 2012.  EBITDA and adjusted EBITDA for the 2013 and 2012 fourth quarters were impacted by the same factors affecting operating income. Additionally, 2013 adjusted EBITDA excludes $0.1 million of gain on the conversion of debt.  Adjusted EBITDA for the 2012 fourth quarter excludes $0.2 million in gains on the conversion of debt (see reconciliation tables for specific line-item amounts).

  • Net Loss – On a GAAP basis, the fourth-quarter net loss totaled $14.0 million, or $0.36 per share on a weighted average of 39.4 million fully diluted shares outstanding.  This compares with year-ago net loss of $17.9 million, or $0.52 per fully diluted share, based on a weighted average of 34.3 million fully diluted shares outstanding.  On an adjusted basis, the 2013 fourth-quarter net loss totaled $11.5 million, or $0.29 per share, compared with a net loss of $12.8 million, or $0.38 per share, for the 2012 fourth quarter.  Adjusted net income for the 2013 and 2012 fourth quarters reflects the same items that impacted adjusted EBITDA.  Additionally, adjusted net income for both periods excludes the accretion of non-cash interest and includes the tax impact of the adjustments (see reconciliation tables for specific line-item amounts).

  • Full-Year Results – For the full fiscal year ended December 22, 2013, operating revenue decreased 3.8% to $1.03 billion from $1.07 billion for fiscal 2012. EBITDA totaled $83.2 million compared with $39.7 million a year ago. Adjusted EBITDA for 2013 totaled $95.2 million, versus $66.0 million a year ago. The $29.2 million improvement was principally due to a reduction in vessel lease expense, lower dry-dock transit and crew-related expenses, higher non-transportation revenue, lower overhead and cost efficiencies resulting from our 2012 and 2013 initiatives, partially offset by lower fuel recovery and lower rates, net of fuel. Adjusted EBITDA for 2013 excludes expenses totaling $12.3 million associated with restructuring charges, equipment impairment charges, a legal settlement, certain legal expenses and severance expense, as well as $0.3 million of gains from marking the conversion feature of debt to fair value. Adjusted EBITDA in 2012 excludes expenses totaling $45.7 million associated with a loss on modification of debt and other refinancing charges, a restructuring charge, employee severance, certain legal expenses and an equipment impairment charge, as well as $19.4 million of gains from marking the conversion feature of debt to fair value (see reconciliation tables for specific line-item amounts). The net loss for 2013 totaled $33.4 million, or $0.91 per share, based on a weighted average of 36.5 million shares outstanding. This compares with a 2012 net loss of $74.4 million, or $3.26 per share, based on a weighted average of 22.8 million shares outstanding. The adjusted net loss for 2013 totaled $20.9 million, or $0.57 per share, compared with an adjusted net loss of $46.1 million, or $2.02 per share per share, for 2012.

  • Shares Outstanding – The company had a weighted daily average of 39.4 million basic and fully diluted shares outstanding for the fourth quarter of 2013, and 36.5 million basic and fully diluted for the full year.  This compares with a weighted daily average of 34.3 million basic and fully diluted shares outstanding for the 2012 fourth quarter, and 22.8 million basic and fully diluted shares for the full year.  Shares outstanding reflect a mandatory debt-for-equity exchange in the first quarter of 2012, and a further financial restructuring in the second quarter of 2012.  As of March 14, 2014, the equivalent of 92.9 million fully diluted shares of the company's stock were outstanding, consisting of 40.0 million shares of common stock and warrants convertible into 52.9 million shares of common stock.   

Liquidity & Debt Structure

The company had total liquidity of $68.6 million as of December 22, 2013, consisting of cash of $5.2 million and $63.4 million available under its asset-based loan (ABL) revolving credit facility. Funded debt outstanding totaled $514.6 million, consisting of: $220.5 million of 11.00% first-lien secured notes due October 15, 2016; $183.9 million of second-lien secured notes due October 15, 2016, bearing interest at 15.00%, being paid in kind with additional second-lien secured notes; a $75.8 million term loan to fund the January 2013 purchase of the company's Alaska vessels, bearing interest at 10.25% and maturing September 30, 2016; a $20.0 million super-priority term loan, also for purchase of the Alaska vessels, bearing interest at 8.00% and maturing September 30, 2016; $2.0 million of 6.00% convertible notes, due April 15, 2017; and $12.4 million in capital leases. There were no borrowings on the company's ABL revolving credit facility, which matures October 5, 2016. The company's weighted average interest rate for funded debt was 12.2%.  Availability under the ABL revolving credit facility is based on a percentage of eligible accounts receivable and customary reserves, with a maximum of $100 million. Letters of credit issued against the ABL revolving credit facility totaled $12.9 million at December 22, 2013. 

Please see attached schedules for the reconciliation of fourth-quarter and full-year 2013 and 2012 reported GAAP results and Non-GAAP adjusted results.

2014 Outlook 

We expect 2014 revenue container loads to be above 2013 levels due to anticipated modest volume growth in all three markets we serve. This projected volume growth takes into consideration the estimated impacts of a new competitor that entered the Puerto Rico Gulf service during 2013 for a full year in 2014, as well as a second vessel being added by a competitor in our Hawaii service during 2014, partially offset by the full-year impact of adding a bi-weekly Jacksonville sailing to our southbound service between Houston, Texas and San Juan, Puerto Rico.

Overall, revenue container rates are expected to range from flat to a marginal improvement in 2014. We expect the new vessel capacity added in Puerto Rico during 2013 and being added in Hawaii in 2014, as well as a challenging economic environment in Puerto Rico, to impact rates in 2014.

We will experience increases in expenses associated with our revenue container volumes, including our vessel payroll costs and benefits, stevedoring, port charges, wharfage, inland transportation costs, and rolling stock costs, among others. Although the number of vessels being dry-docked in 2014 is less than 2013, the costs associated with repositioning vessels and expenses related to spare vessels will slightly exceed 2013 levels.

We expect 2014 financial results to approximate 2013 results, with 2014 adjusted EBITDA projected between $82.0 million and $97.0 million, compared with $95.2 million in fiscal 2013.

Based on our current level of operations, we believe cash flow from operations and borrowings available under the ABL Facility will be adequate to support our business plans. We expect total liquidity during 2014 to reach a low of approximately $30.0 million following payment in April of our semiannual cash interest and principal obligations under the First Lien Notes, then build over the balance of the year and end 2014 at approximately $70.0 million.

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 expenses and income, 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 press 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.  

Date Set For Annual Meeting of Stockholders

Horizon Lines also announced that it has established a record date for its 2014 meeting of stockholders.  The company's stockholders of record at the close of business on April 7, 2014, will be entitled to receive notice of the annual meeting and to vote upon matters considered at the meeting.  The annual meeting will be held at 11 a.m. local time on Thursday, June 5, 2014, in Charlotte, North Carolina.  Additional information regarding the annual meeting will be provided in the company's Notice of Annual Meeting, which is expected to be furnished to all stockholders of record in April 2014.

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 owns a fleet of 13 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: unfavorable economic conditions in the markets we serve, despite general economic improvement; our substantial leverage may restrict cash flow and thereby limit our ability to invest in our business; the vessels in our fleet continue to age, and we may not have the resources to replace our vessels; our ability to obtain financing on acceptable terms to pay for the potential vessel repowering project; our ability to manage the potential vessel repowering project effectively, to deliver the results we hope to achieve; 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; government investigations and legal proceedings; suspension or debarment by the federal government; failure to comply 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 start-up of any additional 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; or 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 2013 Form 10-K to be filed with the SEC on March 21, 2014, 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.

(tables follow)

 

Horizon Lines, Inc.

Unaudited Condensed Consolidated Balance Sheets

(in thousands, except per share data)














December 22,


December 23,


2013


2012

Assets




Current assets




Cash

$                   5,236


$                    27,839

Accounts receivable, net of allowance 

100,460


99,685

Materials and supplies

23,369


29,521

Deferred tax asset

1,140


4,626

Other current assets

8,915


8,563

Total current assets

139,120


170,234

Property and equipment, net

226,838


160,050

Goodwill

198,793


198,793

Intangible assets, net

35,154


48,573

Other long-term assets

24,702


23,584

Total assets

$               624,607


$                  601,234





Liabilities and Stockholders' Deficiency




Current liabilities




Accounts payable

$                 49,897


$                    46,584

Current portion of long-term debt, including capital lease

11,473


3,608

Accrued vessel rent

-


4,902

Other accrued liabilities

77,406


87,358

Total current liabilities

138,776


142,452

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

504,845


434,222

Deferred rent

-


9,081

Deferred tax liability

1,391


4,662

Other long-term liabilities

23,387


27,559

Total liabilities

668,399


617,976





Stockholders' deficiency




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




    issued or outstanding

-


-

Common stock, $.01 par value, 150,000 shares authorized, 38,885




shares issued and outstanding as of December 22, 2013, and 100,000 shares

authorized, 34,434 shares issued and outstanding as of  December 23, 2012

999


954

Additional paid in capital

384,073


381,445

Accumulated deficit

(429,891)


(397,958)

Accumulated other comprehensive income (loss)

1,027


(1,183)

Total stockholders' deficiency

(43,792)


(16,742)

Total liabilities and stockholders' deficiency

$               624,607


$                  601,234

 

Horizon Lines, Inc.

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except per share data)










Quarter Ended


Year Ended


December 22,


December 23,


December 22,


December 23,


2013


2012


2013


2012









Operating revenue

$               255,372


$                  259,825


$            1,033,310


$               1,073,722

Operating expense:








Vessel

71,586


83,219


293,213


347,937

Marine

53,602


52,618


206,988


208,794

Inland

47,998


46,209


183,445


186,437

Land

36,058


36,378


143,747


147,936

Rolling stock rent

9,216


9,931


38,727


41,474

Cost of services (excluding depreciation expense)

218,460


228,355


866,120


932,578

Depreciation and amortization

8,484


8,657


36,850


38,774

Amortization of vessel dry-docking

4,271


3,316


14,701


13,904

Selling, general and administrative

20,018


19,220


76,709


79,710

Restructuring charge

29


4,340


6,324


4,340

Impairment charge

658


129


3,295


386

Legal settlements

1,387


-


1,387


-

Miscellaneous expense (income), net

287


(279)


(3,453)


(222)

Total operating expense

253,594


263,738


1,001,933


1,069,470









Operating income (loss)

1,778


(3,913)


31,377


4,252

Other expense:








Interest expense, net

17,266


13,852


66,916


62,888

(Gain) loss on conversion of debt

-


(174)


(5)


36,615

Gain on change in value of debt conversion features

(135)


(20)


(271)


(19,405)

Other expense, net

-


10


16


39









Loss from continuing operations before income taxes

(15,353)


(17,581)


(35,279)


(75,885)

Income tax (benefit) expense

(1,322)


323


(1,925)


(1,482)









Net loss from continuing operations

(14,031)


(17,904)


(33,354)


(74,403)

Net (loss) income from discontinued operations

(127)


(68)


1,421


(20,295)

Net loss

$               (14,158)


$                  (17,972)


$               (31,933)


$                  (94,698)









Basic net loss per share:








Continuing operations

$                   (0.36)


$                      (0.52)


$                   (0.91)


$                      (3.26)

Discontinued operations

(0.00)


(0.00)


0.04


(0.89)

Basic net loss per share

$                   (0.36)


$                      (0.52)


$                   (0.87)


$                      (4.15)









Diluted net loss per share:








Continuing operations

$                   (0.36)


$                      (0.52)


$                   (0.91)


$                      (3.26)

Discontinued operations

(0.00)


(0.00)


0.04


(0.89)

Diluted net loss per share

$                   (0.36)


$                      (0.52)


$                   (0.87)


$                      (4.15)









Number of weighted average shares used in calculation:








Basic

39,426


34,349


36,498


22,794

Diluted

39,426


34,349


36,498


22,794

 

Horizon Lines, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)






Years Ended


December 22,


December 23,


2013


2012





Cash flows from operating activities:




Net loss from continuing operations

$               (33,354)


$                  (74,403)

Adjustments to reconcile net loss to net cash provided by operating activities:




Depreciation

24,781


21,295

Amortization of other intangible assets

12,069


17,479

Amortization of vessel dry-docking

14,701


13,904

Amortization of deferred financing costs

3,259


2,615

Gain on change in value of conversion features

(271)


(19,405)

Restructuring charge

6,324


4,340

Impairment charge

3,295


386

Legal settlements

1,387


-

(Gain) loss on conversion of debt

(5)


36,615

Deferred income taxes

(1,922)


(112)

Gain on equipment disposals

(3,604)


(832)

Stock-based compensation

2,895


2,169

Payment-in-kind interest expense

25,587


20,493

Accretion of interest on debt

1,032


3,996

Other non-cash interest accretion

1,374


1,971

Changes in operating assets and liabilities:




Accounts receivable

(775)


6,200

Materials and supplies

5,865


(1,508)

Other current assets

(493)


(1,233)

Accounts payable

3,314


14,900

Accrued liabilities

(9,277)


(2,800)

Vessel rent

(777)


(13,223)

Vessel dry-docking payments

(17,123)


(18,802)

Legal settlement payments

(6,500)


(5,500)

Other assets/liabilities

61


(222)

Net cash provided by operating activities from continuing operations

31,843


8,323

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

1,806


(25,711)





Cash flows from investing activities:




Purchases of property and equipment

(113,846)


(14,823)

Proceeds from the sale of property and equipment

15,739


3,407

Net cash used in investing activities from continuing operations

(98,107)


(11,416)

Net cash provided by investing activities from discontinued operations

-


6,000





Cash flows from financing activities:




Proceeds from issuance of debt

95,000


-

Borrowing under ABL facility

34,300


42,500

Payments under ABL facility

(76,800)


-

Payments on long-term debt

(2,250)


(4,484)

Payments of financing costs

(5,711)


(6,406)

Payments on capital lease obligations

(2,684)


(2,114)





Net cash provided by financing activities

41,855


29,496





Net (decrease) increase in cash from continuing operations

(24,409)


26,403

Net increase (decrease) in cash from discontinued operations

1,806


(19,711)

Net (decrease) increase in cash

(22,603)


6,692

Cash at beginning of year

27,839


21,147

Cash at end of year

$                   5,236


$                    27,839

 

Horizon Lines, Inc.

Adjusted Operating Income Reconciliation

(in thousands)










 Quarter Ended

December 22, 2013 


 Quarter Ended

December 23, 2012 


 Year Ended

December 22, 2013 


 Year Ended

December 23, 2012 

Operating Income (Loss)

$                              1,778


$                             (3,913)


$                              31,377


$                                   4,252









Adjustments:








Restructuring Charge

29


4,340


6,324


4,340

Antitrust and False Claims Legal Expenses

656


149


921


1,567

Legal Settlement

1,387


-


1,387


-

Impairment Charge

658


129


3,295


386

Union/Other Severance

-


299


327


1,812

Refinancing Costs

-


-


-


972

Total Adjustments

2,730


4,917


12,254


9,077









Adjusted Operating  Income

$                              4,508


$                               1,004


$                              43,631


$                                 13,329












Horizon Lines, Inc.

Adjusted Net Loss Reconciliation

(in thousands)










 Quarter Ended

December 22, 2013 


 Quarter Ended

December 23, 2012 


 Year Ended

December 22, 2013 


 Year Ended

December 23, 2012 

Net Loss

$                           (14,158)


$                           (17,972)


$                            (31,933)


$                            (94,698)

Net (Loss) Income from  Discontinued Operations

(127)


(68)


1,421


(20,295)

Net Loss from Continuing Operations

(14,031)


(17,904)


(33,354)


(74,403)









Adjustments:








Restructuring Charge

29


4,340


6,324


4,340

Accretion of Non-Cash Interest

240


428


1,362


1,971

Legal Settlement

1,387


-


1,387


-

Antitrust and False Claims Legal Expenses

656


149


921


1,567

Impairment Charge

658


129


3,295


386

Union/Other Severance

-


299


327


1,812

Gain on Change in Value of Debt Conversion Features

(135)


(20)


(271)


(19,405)

(Gain) Loss on Conversion of Debt/Other Refinancing Costs

-


(174)


(5)


37,587

Tax Impact of Adjustments

(309)


-


(912)


-

Total Adjustments

2,526


5,151


12,428


28,258









Adjusted Net Loss from Continuing Operations 

$                           (11,505)


$                           (12,753)


$                            (20,926)


$                            (46,145)











Horizon Lines, Inc.

Adjusted Net Loss Per Share Reconciliation










 Quarter Ended

December 22, 2013 


 Quarter Ended

December 23, 2012 


 Year Ended

December 22, 2013 


 Year Ended

December 23, 2012 

Net Loss Per Share

$                               (0.36)


$                               (0.52)


$                                (0.87)


$                                (4.15)

Net Income (Loss) Per Share from Discontinued Operations

-


-


0.04


(0.89)

Net Loss Per Share from Continuing Operations

(0.36)


(0.52)


(0.91)


(3.26)









Adjustments Per Share:








Restructuring Charge

-


0.13


0.17


0.19

Accretion of Non-Cash Interest

0.01


0.01


0.04


0.08

Legal Settlement

0.03


-


0.04


-

Antitrust and False Claims Legal Expenses

0.02


-


0.02


0.07

Impairment Charge

0.02


-


0.09


0.02

Union/Other Severance

-


0.01


0.01


0.08

Gain on Change in Value of Debt Conversion Features

-


-


(0.01)


(0.85)

(Gain) Loss on Conversion of Debt/Other Refinancing Costs

-


(0.01)


-


1.65

Tax Impact of Adjustments

(0.01)


-


(0.02)


-

Total Adjustments

0.07


0.14


0.34


1.24









Adjusted Net Loss Per Share from Continuing Operations

$                               (0.29)


$                               (0.38)


$                                (0.57)


$                                (2.02)











Horizon Lines, Inc.

EBITDA and Adjusted EBITDA Reconciliation

(in thousands)










 Quarter Ended

December 22, 2013 


 Quarter Ended

December 23, 2012 


 Year Ended

December 22, 2013 


 Year Ended

December 23, 2012 

Net Loss

$                           (14,158)


$                           (17,972)


$                            (31,933)


$                            (94,698)

Net Income (Loss) from Discontinued Operations

(127)


(68)


1,421


(20,295)

Net Loss from Continuing Operations

(14,031)


(17,904)


(33,354)


(74,403)









Interest Expense, Net

17,266


13,852


66,916


62,888

Tax (Benefit) Expense

(1,322)


323


(1,925)


(1,482)

Depreciation and Amortization

12,755


11,973


51,551


52,678

EBITDA

14,668


8,244


83,188


39,681

Restructuring Charge

29


4,340


6,324


4,340

Antitrust and False Claims Legal Expenses

656


149


921


1,567

Legal Settlement

1,387


-


1,387


-

Impairment Charge

658


129


3,295


386

Union/Other Severance

-


299


327


1,812

Gain on Change in Value of Debt Conversion Features

(135)


(20)


(271)


(19,405)

(Gain) Loss on Conversion of Debt/Other Refinancing Costs

-


(174)


(5)


37,587

Adjusted EBITDA

$                             17,263


$                             12,967


$                              95,166


$                              65,968


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 to facilitate internal comparisons to competitors' results and the marine container shipping and logistics industry in general. Adjusted EBITDA excludes certain charges in order to evaluate our operating performance, and when determining the payment of discretionary bonuses.

 

Horizon Lines, Inc.

2014 Projected EBITDA and Adjusted EBITDA Reconciliation

(in thousands)








2014

Net Loss from Continuing Operations



$      (40,700) - (25,700) 

Interest Expense, Net



71,050

Income Taxes



-

Depreciation and Amortization



49,700

EBITDA



 80,050 - 95,050 

Impairment Charges



250

Severance



700

Antitrust and False Claims Legal Expenses                                                                    



1,000

Adjusted EBITDA



 $          82,000 - 97,000 

SOURCE Horizon Lines, Inc.



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