Horizon Lines Reports Second-Quarter Financial Results Adjusted EBITDA Rises 7.4% on a 10.8% Container Volume Increase from a Year Ago

CHARLOTTE, N.C., July 30, 2014 /PRNewswire/ -- Horizon Lines, Inc. (OTCQB: HRZL) today reported financial results for the fiscal second quarter ended June 22, 2014.

Financial results are being presented on a continuing operations basis. 

Comparison of GAAP and Non-GAAP Results from Continuing Operations

Quarters Ended

(in millions, except per share data)*

6/22/2014


6/23/2013





GAAP:




Operating revenue

$           281.2


$           259.8

Operating income

$              16.3


$              16.0

Net loss

$             (1.6)


$             (0.9)

Net loss per share 

$           (0.04)


$           (0.02)





Non-GAAP:*




EBITDA

$              29.5


$              28.8

Adjusted operating income

$              18.2


$              16.5

Adjusted EBITDA

$              31.4


$              29.2

Adjusted net income (loss)

$                0.4


$             (0.1)

Adjusted net income per share

$              0.01


$                   -

* See attached schedules for reconciliation of second-quarter 2014 and 2013 reported GAAP results to Non-GAAP results.  Per-share amounts reflect the weighted average of 40.8 million basic and fully diluted shares outstanding for the 2014 second quarter, compared with 35.6 million basic and fully diluted shares outstanding for the 2013 period.

"Horizon Lines second-quarter adjusted EBITDA increased 7.4% from the same period a year ago, driven primarily by higher revenue container volumes and improved fuel recovery," said Steve Rubin, Interim President and Chief Executive Officer. "The positive factors driving adjusted EBITDA growth were partially offset by lower container rates and contractual labor and other expense increases."

"An 8.3% improvement in operating revenue versus the second quarter of 2013 was generated largely by a 10.8% revenue container volume increase across our three markets," Mr. Rubin said. "In addition, growth in non-transportation services revenue in our Alaska market resulted from a protracted seafood season. These favorable variances were partially offset by a 3.8% decrease in average revenue per container.  The decline in our container rates was primarily due to a shift in cargo mix to include more automobiles and a change in overall market conditions."

Second-Quarter 2014 Financial Highlights   

Volume, Rate & Fuel Cost – Container volume for the 2014 second quarter totaled 62,216 revenue loads, up 10.8% from 56,159 loads for the same period a year earlier. Container volumes rose in each of our markets. Volume improvement in our Hawaii market was primarily due to modest growth in the Hawaii economy, including construction materials and tourism, as well as an increase in automobile shipments. The volume increases in our Puerto Rico market were due to the June 2013 addition of a bi-weekly Jacksonville, Florida sailing to our southbound service between Houston, Texas and San Juan, Puerto Rico, as well as volume gains in both our northbound and southbound service between Philadelphia, Pennsylvania and San Juan. These volume increases were partially offset by volume declines resulting from new competition that entered the Houston to San Juan service in May 2013. We also experienced marginal volume increases in our Alaska market. Unit revenue per container totaled $4,080 in the 2014 second quarter, compared with $4,240 a year ago.  Second-quarter unit revenue per container, net of fuel surcharges, was $3,128, down 3.5% from $3,243 a year ago. Vessel fuel costs averaged $636 per metric ton in the second quarter, 3.5% below the average price of $659 per ton in the same quarter a year ago.   

Operating Revenue – Second-quarter operating revenue improved 8.3% to $281.2 million from $259.8 million a year ago.  The factors driving the $21.4 million revenue increase were a $19.8 million volume expansion described above, $5.7 million rise in non-transportation services revenue, and a $3.2 million increase in fuel surcharges. Non-transportation revenue was higher due to Hawaii automobile processing, an increase in terminal services from an extension of the seafood season in Alaska that continued into the second quarter, as well as growth associated with certain transportation services agreements.  These positive items were partially offset by a $7.3 million decrease in container revenue rates resulting from a shift in cargo mix and increased competition in our markets.  

Operating Income – Operating income for the second quarter totaled $16.3 million, compared with $16.0 million in 2013. The increase in operating income was largely driven by greater container volumes and the associated improvement in fuel recovery, partially offset by lower container rates and increases in contractual labor and other expenses. Second-quarter 2014 GAAP operating income includes charges totaling $1.9 million associated with a legal settlement, certain legal expenses and employee severance. Second-quarter 2013 GAAP operating income includes expenses totaling $0.5 million primarily associated with the return of excess equipment related to the 2013 fourth-quarter service change in Puerto Rico. Excluding these items, second-quarter 2014 adjusted operating income totaled $18.2 million, compared with $16.5 million a year ago.  (See reconciliation tables for specific line-item amounts.)     

EBITDA – EBITDA totaled $29.5 million for the 2014 second quarter, compared with $28.8 million for the same period a year ago.  Adjusted EBITDA for the second quarter of 2014 was $31.4 million, an increase of 7.4% from $29.2 million for 2013.  EBITDA and adjusted EBITDA for the 2014 and 2013 second quarters were impacted by the same factors affecting operating income.  Additionally, 2014 and 2013 adjusted EBITDA reflect the exclusion of $45 thousand and $114 thousand, respectively, of non-cash gains on marking the conversion feature in the company's convertible debt to fair value. (See reconciliation tables for specific line-item amounts.) 

Net Loss – The second-quarter net loss from continuing operations totaled $1.6 million, or $0.04 per share, on a weighted average of 40.8 million shares outstanding. This compares with a year-ago net loss of $0.9 million, or $0.02 per share, on a weighted average of 35.6 million shares outstanding. On an adjusted basis, the second-quarter net income from continuing operations totaled $0.4 million, or $0.01 per share, compared with an adjusted net loss of $0.1 million, or $0.00 per share, a year ago. The 2014 and 2013 second-quarter adjusted net results reflect the same items impacting adjusted EBITDA, as well as the non-cash accretion of payments associated with certain legal settlements and the tax impact of adjustments. Additionally, the adjusted net loss for the 2013 second quarter excludes the non-cash accretion of the then estimated multi-employer pension plan withdrawal liability related to our 2013 move from Elizabeth, New Jersey to Philadelphia, Pennsylvania. The withdrawal liability was satisfied in the fourth quarter of 2013. (See reconciliation tables for specific line-item amounts.)

Six-Month Results – For the first half of fiscal 2014, operating revenue increased 5.7% to $533.2 million from $504.3 million for the same period in 2013. EBITDA totaled $34.4 million compared with $37.2 million a year ago. First-half 2014 adjusted EBITDA totaled $38.1 million, compared with $42.9 million for the same period in 2013. The $4.8 million decrease in adjusted EBITDA was primarily due to higher fuel and labor costs associated with dry-docking transits, as the positive impact from volume gains was largely offset by lower rates, net of fuel. The net loss from continuing operations for the 2014 six-month period totaled $27.9 million, or $0.69 per share on 40.4 million weighted average shares outstanding, compared with a net loss of $20.9 million, or $0.59 per share on 35.2 million weighted average shares outstanding, for the prior year.  The adjusted net loss from continuing operations for the 2014 six-month period totaled $23.8 million, or $0.59 per share, compared with an adjusted net loss from continuing operations of $14.6 million, or $0.41 per share, for the comparable year-ago period. (See reconciliation tables for specific line-item amounts.)

Shares Outstanding – The company had a weighted daily average of 40.8 million shares outstanding for the second quarter of 2014, and 40.4 million weighted average shares outstanding for the first six months of the year.  In 2013, the company had a weighted daily average of 35.6 million shares outstanding for the second quarter, and 35.2 million shares outstanding for the six-month period. At July 28, 2014, the equivalent of 94.5 million fully diluted shares of the company's stock was outstanding, consisting of 41.5 million shares of common stock and warrants convertible into 53.0 million shares of common stock.     

Liquidity & Debt Structure – The company had total liquidity of $54.2 million as of June 22, 2014, consisting of cash of $5.2 million and $49.0 million available under its asset-based loan (ABL) revolving credit facility. Funded debt outstanding totaled $553.3 million, consisting of: $219.4 million of 11.00% first-lien secured notes due October 15, 2016; $197.7 million of 13.00% – 15.00% second-lien secured notes due October 15, 2016, bearing interest at 15.00% being paid in kind with additional second-lien secured notes; $28.0 million drawn on the ABL facility, maturing October 5, 2016, and bearing interest at a weighted average of 4.06%; a $73.9 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 $12.3 million in capital leases. The company's weighted average interest rate for funded debt was 11.89%.  Availability under the ABL credit facility is based on a percentage of eligible accounts receivable and customary reserves, with a maximum of $100.0 million of borrowing availability. Letters of credit issued against the ABL facility totaled $11.4 million at June 22, 2014. 

Please see attached schedules for the reconciliation of second-quarter 2014 and 2013 reported GAAP results and Non-GAAP adjusted results.

Outlook

We expect 2014 revenue container loads to be above 2013 levels. This projected volume growth takes into consideration the estimated impacts of a competitor that entered the Puerto Rico Gulf service in May 2013, as well as a second vessel being added by a competitor in the Hawaii service during the fourth quarter of 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, container rates are expected to be below 2013 levels due to competitive market conditions and a slight shift in cargo mix, particularly an increase in automobile volume.  The vessel capacity added in Puerto Rico in 2013 will continue to impact rates, and the new vessel capacity expected to be added in Hawaii in 2014 could also impact rates as well.

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. However, the majority of costs associated with repositioning vessels was incurred in the first half of 2014 whereas the costs were more evenly distributed throughout 2013.

We expect 2014 financial results to approximate 2013 results, with 2014 adjusted EBITDA projected between $90.0 million and $95.0 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 the remainder of 2014 to range from a low of approximately $58.0 million during the third quarter, then build over the balance of the year and end 2014 at approximately $78.0 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. 

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," "expect," "anticipate," "estimate," "intend," "plan," "targets," "projects," "likely," "will," "would," "could" and similar expressions or phrases identify forward-looking statements.

All forward-looking statements involve risks and uncertainties. The occurrence of the events described, and the achievement of the expected results, depend on many events, some or all of which are not predictable or within our control. Actual results may differ materially from expected results.

Factors that may cause actual results to differ from expected results include: unfavorable economic conditions in the markets we serve, despite general economic improvement elsewhere; 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 refinance our existing indebtedness; our ability to make interest payments on our outstanding indebtedness; work stoppages, strikes and other adverse union actions, including those by workers who perform services for us but are not our employees; 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; the start-up of any additional Jones-Act competitors; repeal or substantial amendment of the coastwise laws of the United States, also known as the Jones Act;  catastrophic losses and other liabilities; failure to comply with the various ownership, citizenship, crewing, and 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.

In light of these risks and uncertainties, expected results or other anticipated events or circumstances discussed in this press release (including the exhibits hereto) might not occur. We undertake no obligation, and specifically decline any obligation, to publicly update or revise any forward-looking statements, even if experience or future developments make it clear that projected results expressed or implied in such statements will not be realized, except as may be required by law.

See the section entitled "Risk Factors" in our Form 10-K for the fiscal year ended December 22, 2013, as filed with the SEC 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 to, or effects on, us. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking statements.

(tables follow)

Horizon Lines, Inc.

Unaudited Condensed Consolidated Balance Sheets

(in thousands, except per share data)














June 22,


December 22,


2014


2013

Assets




Current assets




Cash

$      5,228


$            5,236

Accounts receivable, net of allowance 

122,213


100,460

Materials and supplies

22,196


23,369

Deferred tax asset

1,140


1,140

Other current assets

10,428


8,915

Total current assets

161,205


139,120

Property and equipment, net

220,884


226,838

Goodwill

198,793


198,793

Intangible assets, net

29,110


35,154

Other long-term assets

25,185


24,702

Total assets

$  635,177


$        624,607





Liabilities and Stockholders' Deficiency




Current liabilities




Accounts payable

$    41,626


$          49,897

Current portion of long-term debt, including capital lease

13,928


11,473

Other accrued liabilities

88,685


77,406

Total current liabilities

144,239


138,776

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

541,974


504,845

Deferred tax liability

1,610


1,391

Other long-term liabilities

18,753


23,387

Total liabilities

706,576


668,399





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, 39,776 and




38,885 shares issued and outstanding as of June 22, 2014 and December 22,
2013, respectively

1,008


999

Additional paid in capital

384,150


384,073

Accumulated deficit

(457,739)


(429,891)

Accumulated other comprehensive income

1,182


1,027

Total stockholders' deficiency

(71,399)


(43,792)

Total liabilities and stockholders' deficiency

$  635,177


$        624,607

 

Horizon Lines, Inc.

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except per share data)










Quarters Ended


Six Months Ended


June 22,


June 23,


June 22,


June 23,


2014


2013


2014


2013









Operating revenue

$  281,237


$  259,784


$  533,173


$  504,275

Operating expense:








Vessel

72,777


73,184


150,739


149,422

Marine

57,262


50,567


111,949


99,951

Inland

49,882


45,131


96,721


87,022

Land

40,937


36,215


78,299


71,633

Rolling stock rent

9,754


9,918


19,457


19,571

Cost of services (excluding depreciation expense)

230,612


215,015


457,165


427,599

Depreciation and amortization

8,589


9,580


17,041


19,150

Amortization of vessel dry-docking

4,598


3,178


9,547


6,210

Selling, general and administrative

20,262


18,075


40,383


37,839

Restructuring charge

-


409


5


5,252

Legal settlements

950


-


995


-

Miscellaneous (income) expense, net

(61)


(2,449)


319


(3,454)

Total operating expense

264,950


243,808


525,455


492,596

Operating income

16,287


15,976


7,718


11,679

Other expense:








Interest expense, net

17,795


16,934


35,288


32,635

Other income, net

(36)


(112)


(108)


(155)

Loss from continuing operations before income taxes

(1,472)


(846)


(27,462)


(20,801)

Income tax expense

134


7


417


126

Net loss from continuing operations

(1,606)


(853)


(27,879)


(20,927)

Net (loss) income from discontinued operations

(6)


(651)


31


(929)

Net loss

$    (1,612)


$    (1,504)


$  (27,848)


$  (21,856)









Basic and diluted net loss per share:








Continuing operations

$      (0.04)


$      (0.02)


$      (0.69)


$      (0.59)

Discontinued operations

-


(0.02)


-


(0.03)

Basic and diluted net loss per share

$      (0.04)


$      (0.04)


$      (0.69)


$      (0.62)









Number of weighted average shares used in calculations:








Basic

40,802


35,602


40,359


35,174

Diluted

40,802


35,602


40,359


35,174

 

Horizon Lines, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)






Six Months Ended


June 22,


June 23,


2014


2013





Cash flows from operating activities:




Net loss from continuing operations

$  (27,879)


$  (20,927)

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:




Depreciation

12,691


12,393

Amortization of other intangible assets

4,350


6,757

Amortization of vessel dry-docking

9,547


6,210

Amortization of deferred financing costs

1,692


1,580

Restructuring charge

5


5,252

Deferred income taxes

147


123

Gain on equipment disposals

(281)


(2,598)

Stock-based compensation

(86)


1,607

Payment-in-kind interest expense

14,175


12,472

Non-cash interest accretion

1,080


1,112

Other

(117)


(146)

Changes in operating assets and liabilities:




Accounts receivable

(21,737)


(5,016)

Materials and supplies

1,173


4,652

Other current assets

(1,513)


(796)

Accounts payable

(8,268)


(4,321)

Accrued liabilities

8,934


(3,774)

Vessel rent

-


(777)

Vessel dry-docking payments

(7,280)


(6,314)

Legal settlement payments

(4,128)


(6,500)

Other assets/liabilities

(826)


146

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

(18,321)


1,135

Net cash used in operating activities from discontinued operations

(94)


(1,331)





Cash flows from investing activities:




Purchases of property and equipment

(5,860)


(96,621)

Proceeds from the sale of property and equipment

1,150


5,480

Net cash used in investing activities from continuing operations

(4,710)


(91,141)





Cash flows from financing activities:




Proceeds from issuance of debt

-


95,000

Borrowing under ABL facility

65,650


15,000

Payments under ABL facility

(37,650)


(25,000)

Payments on long-term debt

(3,000)


(1,125)

Payments of financing costs

(11)


(5,557)

Payments on capital lease obligations

(1,872)


(996)

Net cash provided by financing activities

23,117


77,322

Net increase (decrease) in cash from continuing operations

86


(12,684)

Net decrease in cash from discontinued operations

(94)


(1,331)

Net decrease in cash

(8)


(14,015)

Cash at beginning of period

5,236


27,839

Cash at end of period

$      5,228


$   13,824

 









Horizon Lines, Inc.

Adjusted Operating Income Reconciliation

(in thousands)










 Quarter Ended
June 22, 2014 


 Quarter Ended
June 23, 2013 


 Six Months Ended
June 22, 2014 


 Six Months Ended 
June 23, 2013 

Operating Income

$                          16,287


$                         15,976


$                    7,718


$                                    11,679









Adjustments:








Union/Other Severance

148


17


1,252


318

Antitrust and False Claims Legal Expenses

790


35


1,558


247

Legal Settlement

950


-


995


-

Impairment Charge

-


18


-


18

Restructuring Charge

-


409


5


5,252

Total Adjustments

1,888


479


3,810


5,835









Adjusted Operating Income

$                          18,175


$                         16,455


$                   11,528


$                                    17,514

 









Horizon Lines, Inc.

Adjusted Net Income (Loss) Reconciliation

(in thousands)










 Quarter Ended
June 22, 2014 


 Quarter Ended
June 23, 2013 


 Six Months Ended
June 22, 2014 


 Six Months Ended
June 23, 2013 

Net Loss

$                          (1,612)


$                         (1,504)


$                 (27,848)


$                 (21,856)

Net (Loss) Income from  Discontinued Operations

(6)


(651)


31


(929)

Net Loss from Continuing Operations

(1,606)


(853)


(27,879)


(20,927)









Adjustments:








Union/Other Severance

148


17


1,252


318

Antitrust and False Claims Legal Expenses

790


35


1,558


247

Accretion of Non-Cash Interest

214


240


498


504

Accretion of Estimated Multi-employer Pension Plan Withdrawal Liability

-


157


-


157

Impairment Charge

-


18


-


18

Legal Settlement

950


-


995


-

Restructuring Charge

-


409


5


5,252

Gain on Change in Value of Debt Conversion Features

(45)


(114)


(117)


(159)

Gain on Conversion of Debt

-


(5)


-


(5)

Tax Impact of Adjustments

(64)


1


(64)


7

Total Adjustments

1,993

-

758

-

4,127

-

6,339









Adjusted Net Income (Loss) from Continuing Operations 

$                              387


$                              (95)


$                 (23,752)


$                 (14,588)

 









Horizon Lines, Inc.

Adjusted Net Income (Loss) Per Share Reconciliation










 Quarter Ended
June 22, 2014 


 Quarter Ended
June 23, 2013 


 Six Months Ended
June 22, 2014 


 Six Months Ended
June 23, 2013 

Net Loss Per Share

$                            (0.04)


$                           (0.04)


$                    (0.69)


$                    (0.62)

Net Loss Per Share from Discontinued Operations

-


(0.02)


-


(0.03)

Net Loss Per Share from Continuing Operations

(0.04)


(0.02)


(0.69)


(0.59)









Adjustments Per Share:








Union/Other Severance

-


-


0.03


0.01

Antitrust and False Claims Legal Expenses

0.02


-


0.04


0.01

Legal Settlements

0.02


-


0.02


-

Accretion of Non-Cash Interest

0.01


0.01


0.01


0.01

Restructuring Charge

-


0.01


-


0.15

Total Adjustments

0.05


0.02


0.10


0.18









Adjusted Net Income (Loss) Per Share from Continuing Operations

$                             0.01


$                               -


$                    (0.59)


$                    (0.41)

 









Horizon Lines, Inc.

EBITDA and Adjusted EBITDA Reconciliation

(in thousands)










 Quarter Ended
June 22, 2014 


 Quarter Ended 
June 23, 2013 


 Six Months Ended 
June 22, 2014 


 Six Months Ended 
June 23, 2013 

Net Loss

$                          (1,612)


$                         (1,504)


$                 (27,848)


$                 (21,856)

Net (Loss) Income from Discontinued Operations

(6)


(651)


31


(929)

Net Loss from Continuing Operations

(1,606)


(853)


(27,879)


(20,927)









Interest Expense, Net

17,795


16,934


35,288


32,635

Tax Expense

134


7


417


126

Depreciation and Amortization

13,187


12,758


26,588


25,360

EBITDA

29,510


28,846


34,414


37,194

Union/Other Severance

148


17


1,252


318

Antitrust and False Claims Legal Expenses

790


35


1,558


247

Legal Settlement

950


-


995


-

Impairment Charge

-


18


-


18

Restructuring Charge

-


409


5


5,252

Gain on Change in Value of Debt Conversion Features

(45)


(114)


(117)


(159)

Gain on Conversion of Debt

-


(5)


-


(5)

Adjusted EBITDA

$                          31,353


$                         29,206


$                   38,107


$                   42,865

















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



 $   (36,344) - (31,344) 

Interest Expense, Net



70,940

Income Taxes



390

Depreciation and Amortization



50,250

EBITDA



 85,236 - 90,236 

Antitrust and False Claims Legal Expenses



1,800

Severance



1,602

Legal Settlements



995

Impairment Charges



250

Gain on Change in Value of Debt Conversion Features



117

Adjusted EBITDA



 $        90,000 - 95,000 

 

SOURCE Horizon Lines, Inc.



RELATED LINKS
http://www.horizonlines.com

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