Horizon Lines said Tuesday it expects to report a fourth quarter loss of $6.4 million from continuing operations basis on a GAAP (general accepted accounting principles) basis, compared with an operating loss of $32.6 million in the same period a year earlier.
The loss for the carrier’s fiscal fourth quarter, ended Dec. 25, represents an improvement from its third quarter loss of $126.5 million from continuing operations.
In its statement Tuesday, Horizon said it expects adjusted operating income of $5.5 million on revenue of $264.3 million for the fiscal fourth quarter. This compares with adjusted operating income of $4.3 million on revenue of $256.1 million a year earlier.
The struggling Jones Act carrier announced its preliminary fourth quarter results while it seeks an extension from the Securities and Exchange Commission to file its 2011 Form 10-K, which it said it would file by April 10. Horizon said it needs more time to complete the review and analysis of its financial statements, after the 2011 fourth quarter financial restructuring and discontinuance of its FSX trans-Pacific service.
Horizon said it signed a restructuring support agreement with more than 96 percent of its note holders to further deleverage its balance sheet in connection with and contingent upon a restructuring of the vessel charter obligations related to its discontinued FSX service.
The carrier’s adjusted operating income for the 2011 fourth quarter excludes charges of $14 million for antitrust-related legal settlements and expenses, employee severance and equipment impairment charges, partially offset by a $2.1 million gain resulting from a reduction of the goodwill impairment charge recorded in the 2011 third quarter. In the 2010 fourth quarter, adjusted operating income excluded $36.9 million in charges for antitrust-related legal settlements and expenses, restructuring costs related to a non-union work force reduction, an equipment impairment charge, and costs for union employee severance.
Following termination of the FSX service, Horizon stopped using five non-Jones Act qualified container vessels that are subject to "hell or high water" charters under which the company's obligations are absolute and unconditional. This left the carrier with aggregate annual charter hire debts of approximately $32.0 million. For the past several months, Horizon has been exploring sub-charter opportunities for the vessels, while engaging in discussions regarding a restructuring of the charters for the vessels in an effort to mitigate ongoing charter expense, lay-up costs, insurance expense and maintenance costs.
On a continuing operations basis, fourth quarter container volume totaled 60,279 revenue loads, down 5.8 percent from 63,977 revenue loads for the 2010 period, which contained an extra week. Excluding the additional week in 2010, container volume for the 2011 fourth quarter increased 0.2 percent from 60,133 loads a year ago on a comparable basis.
Container rates, net of fuel surcharges, totaled $3,136 in the 2011 fourth quarter, compared with $3,124 for the same period a year ago. Fuel costs averaged $665 per metric ton in the 2011 fourth quarter, a 42.4 percent increase from $467 a year ago.