Charges Produce Loss for Horizon

Horizon Lines said a drop in shipping volume combined with $35.2 million in one-time charges, including $20 million to settle class-action lawsuits in the Puerto Rico trade, to produce a $31.1 million net loss for the domestic offshore carrier in the second quarter ended June 21.

Excluding the charges, Horizon had $4.1 million in adjusted net income on $278.5 million in revenue, compared with $5.8 million in net income on $331 million in revenue a year earlier.

The $52.5 million revenue decline was due to a reduction in fuel surcharges, and a 9.8 percent reduction in volume. Horizon said the volume decline was offset by a 2.5 percent increase in average revenue per container and by cost cutting.

"Our company experienced weak volumes in all trade lanes during the second quarter, as the unabated global recession continued to dampen consumer sentiment and spending throughout our markets," said Chuck Raymond, Horizon's chairman, president and CEO.

"While revenue and adjusted EBITDA for the quarter were below internal expectations, we achieved better-than-expected cash flow relative to EBITDA, earned a 2.5 percent container rate increase, net of fuel, and estimate that market share in each of our trade lanes held steady and in some cases improved slightly," Raymond said. "We finished the second quarter with adequate corporate liquidity and in compliance with our credit facility financial covenants.

Horizon's results reflect a previously announced settlement of a class-action lawsuit alleging price-fixing by Puerto Rico carriers and $4.1 million in legal costs from the government's criminal antitrust investigation of Jones Act carriers. Additional charges included a $10.5 million tax valuation allowance and $900,000 in other charges.

Horizon is the largest domestic offshore carrier and operates between the continental U.S. and Puerto Rico, Alaska, Hawaii and Guam.

Contact Joseph Bonney at jbonney@joc.com.