##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 Form 10-Q
 (Mark one)
 þ
    
    Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended September 20, 2009
 OR
 o
    
    Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to
 Commission File Number 001-32627
 HORIZON LINES, INC.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    74-3123672(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)4064 Colony Road, Suite 200, Charlotte, North Carolina
    
    28211(Address of principal executive offices)
    
    (Zip Code)
 (704) 973-7000
(Registrants telephone number, including area code)
 NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last report)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
  At October 21, 2009, 30,284,448 shares of the Registrants common stock, par value $.01 per
share, were outstanding.




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##### 



HORIZON LINES, INC.
Form 10-Q Index
 Page No.Part I. Financial Information
    
    
    31. Financial Statements
    
    
    3Unaudited Condensed Consolidated Balance Sheets
    
    
    3Unaudited Condensed Consolidated Statements of Operations
    
    
    4Unaudited Condensed Consolidated Statements of Cash Flows
    
    
    5Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    62. Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    213. Quantitative and Qualitative Disclosures About Market Risk
    
    
    394. Controls and Procedures
    
    
    39Part II. Other Information
    
    
    401. Legal Proceedings
    
    
    401A. Risk Factors
    
    
    412. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    413. Defaults Upon Senior Securities
    
    
    414. Submission of Matters to a Vote of Security Holders
    
    
    415. Other Information
    
    
    416. Exhibits
    
    
    42Signature
    
    
    43Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 1. Financial Statements
 Horizon Lines, Inc.
 
 Unaudited Condensed Consolidated Balance Sheets
 (in thousands, except per share data)
 September 20,
    
    
    December 21,2009
    
    
    2008(As Adjusted)AssetsCurrent assetsCash
    
    $
    4,390
    
    
    $
    5,487Accounts receivable, net of allowance of $7,788 and
$8,217 at September 20, 2009 and December 21, 2008,
respectively
    
    
    137,850
    
    
    
    135,020Prepaid vessel rent
    
    
    5,940
    
    
    
    4,471Materials and supplies
    
    
    27,940
    
    
    
    23,644Deferred tax asset
    
    
    4,366
    
    
    
    7,450Other current assets
    
    
    12,620
    
    
    
    10,703Total current assets
    
    
    193,106
    
    
    
    186,775Property and equipment, net
    
    
    195,198
    
    
    
    208,453Goodwill
    
    
    317,068
    
    
    
    317,068Intangible assets, net
    
    
    111,409
    
    
    
    125,542Deferred tax asset
    
    
    
    
    
    
    10,669Other long-term assets
    
    
    22,809
    
    
    
    24,122Total assets
    
    $
    839,590
    
    
    $
    872,629Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    34,897
    
    
    $
    41,947Current portion of long-term debt
    
    
    15,939
    
    
    
    6,552Accrued vessel rent
    
    
    
    
    
    
    5,421Other accrued liabilities
    
    
    106,194
    
    
    
    97,720Total current liabilities
    
    
    157,030
    
    
    
    151,640Long-term debt, net of current portion
    
    
    534,387
    
    
    
    526,259Deferred rent
    
    
    23,703
    
    
    
    27,058Deferred tax liability
    
    
    5,458
    
    
    
    Other long-term liabilities
    
    
    20,694
    
    
    
    30,836Total liabilities
    
    
    741,272
    
    
    
    735,793Stockholders equityPreferred stock, $.01 par value, 30,500 shares
authorized, no shares issued or outstanding
    
    
    
    
    
    
    Common stock, $.01 par value, 100,000 shares
authorized, 34,029 shares issued and 30,229 shares
outstanding as of September 20, 2009 and 33,808
shares issued and 30,008 shares outstanding as of
December 21, 2008
    
    
    340
    
    
    
    338Treasury stock, 3,800 shares at cost
    
    
    (78,538
    )
    
    
    (78,538
    )Additional paid in capital
    
    
    199,454
    
    
    
    199,644(Accumulated deficit) retained earnings
    
    
    (17,198
    )
    
    
    22,094Accumulated other comprehensive loss
    
    
    (5,740
    )
    
    
    (6,702
    )Total stockholders equity
    
    
    98,318
    
    
    
    136,836Total liabilities and stockholders equity
    
    $
    839,590
    
    
    $
    872,629
   3




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Horizon Lines, Inc.
 
 Unaudited Condensed Consolidated Statements of Operations
 (in thousands, except per share amounts)
 Quarters Ended
    
    
    Nine Months EndedSeptember 20,
    
    
    September 21,
    
    
    September 20,
    
    
    September 21,2009
    
    
    2008
    
    
    2009
    
    
    2008(As Adjusted)
    
    
    
    
    
    (As Adjusted)Operating revenue
    
    $
    307,972
    
    
    $
    352,638
    
    
    $
    858,807
    
    
    $
    989,544Operating expense:Cost of services (excluding depreciation expense)
    
    
    248,364
    
    
    
    287,400
    
    
    
    704,362
    
    
    
    809,069Depreciation and amortization
    
    
    11,285
    
    
    
    11,449
    
    
    
    33,425
    
    
    
    34,325Amortization of vessel dry-docking
    
    
    3,530
    
    
    
    4,393
    
    
    
    10,936
    
    
    
    13,168Selling, general and administrative
    
    
    23,739
    
    
    
    26,513
    
    
    
    79,512
    
    
    
    80,517Settlement of class action lawsuit
    
    
    
    
    
    
    
    
    
    
    20,000
    
    
    
    Restructuring charge
    
    
    
    
    
    
    
    
    
    
    1,001
    
    
    
    Impairment charge
    
    
    1,208
    
    
    
    
    
    
    
    1,867
    
    
    
    Miscellaneous expense, net
    
    
    890
    
    
    
    1,095
    
    
    
    773
    
    
    
    2,392Total operating expense
    
    
    289,016
    
    
    
    330,850
    
    
    
    851,876
    
    
    
    939,471Operating income
    
    
    18,956
    
    
    
    21,788
    
    
    
    6,931
    
    
    
    50,073Other expense:Interest expense, net
    
    
    10,563
    
    
    
    10,016
    
    
    
    29,249
    
    
    
    31,528Loss on modification of debt
    
    
    
    
    
    
    
    
    
    
    50
    
    
    
    Other expense (income), net
    
    
    1
    
    
    
    (4
    )
    
    
    11
    
    
    
    (2
    )Income (loss) before income tax (benefit) expense
    
    
    8,392
    
    
    
    11,776
    
    
    
    (22,379
    )
    
    
    18,547Income tax (benefit) expense
    
    
    (46
    )
    
    
    673
    
    
    
    10,219
    
    
    
    885Net income (loss)
    
    $
    8,438
    
    
    $
    11,103
    
    
    $
    (32,598
    )
    
    $
    17,662Net income (loss) per share:Basic
    
    $
    0.28
    
    
    $
    0.37
    
    
    $
    (1.07
    )
    
    $
    0.58Diluted
    
    $
    0.27
    
    
    $
    0.37
    
    
    $
    (1.07
    )
    
    $
    0.57Number of shares used in calculations:Basic
    
    
    30,430
    
    
    
    30,304
    
    
    
    30,431
    
    
    
    30,330Diluted
    
    
    30,914
    
    
    
    30,393
    
    
    
    30,431
    
    
    
    30,583Dividends declared per common share
    
    $
    0.11
    
    
    $
    0.11
    
    
    $
    0.33
    
    
    $
    0.33
   4




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Horizon Lines, Inc.
 
 Unaudited Condensed Consolidated Statements of Cash Flows
 (in thousands)
 Nine Months EndedSeptember 20,
    
    
    September 21,2009
    
    
    2008(As Adjusted)Cash flows from operating activities:Net (loss) income
    
    $
    (32,598
    )
    
    $
    17,662Adjustments to reconcile net (loss) income to net cash
provided by operating activities:Depreciation
    
    
    17,950
    
    
    
    18,339Amortization of other intangible assets
    
    
    15,475
    
    
    
    15,986Amortization of vessel dry-docking
    
    
    10,936
    
    
    
    13,168Amortization of deferred financing costs
    
    
    2,081
    
    
    
    2,022Impairment charge
    
    
    1,867
    
    
    
    Restructuring charge
    
    
    1,001
    
    
    
    Loss on modification of debt
    
    
    50
    
    
    
    Deferred income taxes
    
    
    10,312
    
    
    
    (732
    )Gain on equipment disposals
    
    
    (45
    )
    
    
    (7
    )Stock-based compensation
    
    
    2,464
    
    
    
    3,532Accretion of interest on 4.25% convertible notes
    
    
    7,428
    
    
    
    6,601Changes in operating assets and liabilities:Accounts receivable
    
    
    (2,551
    )
    
    
    (28,521
    )Materials and supplies
    
    
    (4,425
    )
    
    
    (1,655
    )Other current assets
    
    
    (2,349
    )
    
    
    (593
    )Accounts payable
    
    
    (7,050
    )
    
    
    (13,054
    )Accrued liabilities
    
    
    10,466
    
    
    
    17,590Vessel rent
    
    
    (9,650
    )
    
    
    (9,657
    )Vessel dry-docking payments
    
    
    (11,269
    )
    
    
    (9,291
    )Other assets/liabilities
    
    
    (664
    )
    
    
    1,613Net cash provided by operating activities
    
    
    9,429
    
    
    
    33,003Cash flows from investing activities:Purchases of property and equipment
    
    
    (8,181
    )
    
    
    (26,351
    )Purchase of business
    
    
    
    
    
    
    (198
    )Proceeds from the sale of property and equipment
    
    
    1,009
    
    
    
    350Net cash used in investing activities
    
    
    (7,172
    )
    
    
    (26,199
    )Cash flows from financing activities:Payments on long-term debt
    
    
    (4,913
    )
    
    
    (4,902
    )Borrowing under revolving credit facility
    
    
    64,000
    
    
    
    73,000Payments on revolving credit facility
    
    
    (49,000
    )
    
    
    (37,500
    )Dividends to stockholders
    
    
    (10,041
    )
    
    
    (9,985
    )Payments of financing costs
    
    
    (3,475
    )
    
    
    (139
    )Common stock issued under employee stock purchase plan
    
    
    75
    
    
    
    38Proceeds from exercise of stock options
    
    
    
    
    
    
    13Purchase of treasury stock
    
    
    
    
    
    
    (29,330
    )Payments on capital lease obligation
    
    
    
    
    
    
    (81
    )Net cash used in financing activities
    
    
    (3,354
    )
    
    
    (8,886
    )Net decrease in cash
    
    
    (1,097
    )
    
    
    (2,082
    )Cash at beginning of period
    
    
    5,487
    
    
    
    6,276Cash at end of period
    
    $
    4,390
    
    
    $
    4,194
   5




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HORIZON LINES, INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 1. Organization
  2. Basis of Presentation
      6




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Statements of Operations:
 Quarter Ended September 21, 2008
    
    
    Nine Months Ended September 21, 2008As
    
    
    
    
    
    
    As
    
    
    As
    
    
    
    
    
    
    AsReported
    
    
    Adjustments
    
    
    Adjusted
    
    
    Reported
    
    
    Adjustments
    
    
    AdjustedInterest expense, net
    
    $
    7,772
    
    
    $
    2,244
    
    
    $
    10,016
    
    
    $
    24,927
    
    
    $
    6,601
    
    
    $
    31,528Income tax expense
    
    
    1,492
    
    
    
    (819
    )
    
    
    673
    
    
    
    3,294
    
    
    
    (2,409
    )
    
    
    885Net income
    
    
    12,528
    
    
    
    (1,425
    )
    
    
    11,103
    
    
    
    21,854
    
    
    
    (4,192
    )
    
    
    17,662Net income per shareBasic
    
    
    0.42
    
    
    
    (0.05
    )
    
    
    0.37
    
    
    
    0.73
    
    
    
    (0.15
    )
    
    
    0.58Diluted
    
    
    0.42
    
    
    
    (0.05
    )
    
    
    0.37
    
    
    
    0.72
    
    
    
    (0.15
    )
    
    
    0.57
 Balance Sheet:
 December 21, 2008As
    
    
    
    
    
    
    AsReported
    
    
    Adjustments
    
    
    AdjustedIntangible assets, net
    
    $
    126,697
    
    
    $
    (1,155
    )
    
    $
    125,542Deferred tax assets
    
    
    23,992
    
    
    
    (13,323
    )
    
    
    10,669Total assets
    
    
    887,107
    
    
    
    (14,478
    )
    
    
    872,629Long-term debt, net of current
    
    
    563,916
    
    
    
    (37,657
    )
    
    
    526,259Additional paid in capital
    
    
    168,779
    
    
    
    30,865
    
    
    
    199,644Retained earnings
    
    
    29,780
    
    
    
    (7,686
    )
    
    
    22,094Total liabilities and stockholders equity
    
    
    887,107
    
    
    
    (14,478
    )
    
    
    872,629
  7




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Quarter Ended September 21, 2008
    
    
    Nine Months Ended September 21, 2008As
    
    
    
    
    
    
    As
    
    
    As
    
    
    
    
    
    
    AsReported
    
    
    Adjustments
    
    
    Adjusted
    
    
    Reported
    
    
    Adjustments
    
    
    AdjustedDenominator for basic net income per share
    
    
    29,970
    
    
    
    334
    
    
    
    30,304
    
    
    
    30,060
    
    
    
    270
    
    
    
    30,330Effect of dilutive securities
    
    
    217
    
    
    
    (128
    )
    
    
    89
    
    
    
    467
    
    
    
    (214
    )
    
    
    253Denominator for diluted net income per
share
    
    
    30,187
    
    
    
    206
    
    
    
    30,393
    
    
    
    30,527
    
    
    
    56
    
    
    
    30,583
 3. Restructuring
   Balance at
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance atDecember 21,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Charged to Other
    
    
    September 20,2008
    
    
    Provision
    
    
    Payments
    
    
    Adjustments
    
    
    Accounts(1)
    
    
    2009Personnel related costs
    
    $
    3,132
    
    
    $
    1,148
    
    
    $
    (3,091
    )
    
    $
    (144
    )
    
    $
    (485
    )
    
    $
    560Other associated costs
    
    
    65
    
    
    
    25
    
    
    
    (62
    )
    
    
    (28
    )
    
    
    
    
    
    
    Total
    
    $
    3,197
    
    
    $
    1,173
    
    
    $
    (3,153
    )
    
    $
    (172
    )
    
    $
    (485
    )
    
    $
    560
 (1)
    
    Includes $0.5 million of stock-based compensation recorded in additional paid in capital.  4. Long-Term Debt
  September 20,
    
    
    December 21,2009
    
    
    2008(As Adjusted)Senior credit facilityTerm loan
    
    $
    114,063
    
    
    $
    118,750Revolving credit facility
    
    
    135,000
    
    
    
    120,0004.25% convertible senior notes
    
    
    299,771
    
    
    
    292,343Other
    
    
    1,492
    
    
    
    1,718Total long-term debt
    
    
    550,326
    
    
    
    532,811Less current portion
    
    
    (15,939
    )
    
    
    (6,552
    )Long-term debt, net of current portion
    
    $
    534,387
    
    
    $
    526,259
 Senior Credit Facility
   8




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Derivative Instruments
   4.25% Convertible Senior Notes
   9




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##### Table of Contents




    
    Prior to May 15, 2012, if during any calendar quarter, and only during
such calendar quarter, if the last reported sale price of the
Companys common stock for at least 20 trading days in a period of 30
consecutive trading days ending on the last trading day of the
preceding calendar quarter exceeds 120% of the applicable conversion
price in effect on the last trading day of the immediately preceding
calendar quarter;
    
    During any five business day period prior to May 15, 2012, immediately
after any five consecutive trading day period (the measurement
period) in which the trading price per $1,000 principal amount of
notes for each day of such measurement period was less than 98% of the
product of the last reported sale price of the Companys common stock
on such date and the conversion rate on such date;
    
    If, at any time, a change in control occurs or if the Company is a
party to a consolidation, merger, binding share exchange or transfer
or lease of all or substantially all of its assets, pursuant to which
the Companys common stock would be converted into cash, securities or
other assets; or
    
    At any time after May 15, 2012 through the fourth scheduled trading
day immediately preceding August 15, 2012.
    Other Debt
  Fair Value of Financial Instruments
   10




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5. Income Taxes
      Balance at December 21, 2008
    
    $
    8,989Additions based on tax positions related to the current year
    
    
    240Additions based on tax positions related to prior years
    
    
    3,273Balance at September 20, 2009
    
    $
    12,502
 6. Stock-Based Compensation
   Quarters Ended
    
    
    Nine Months EndedSeptember 20,
    
    
    September 21,
    
    
    September 20,
    
    
    September 21,2009
    
    
    2008
    
    
    2009
    
    
    2008Stock options
    
    $
    278
    
    
    $
    387
    
    
    $
    949
    
    
    $
    1,231Restricted stock
    
    
    186
    
    
    
    699
    
    
    
    1,435
    
    
    
    2,067ESPP
    
    
    80
    
    
    
    69
    
    
    
    80
    
    
    
    234Total
    
    $
    544
    
    
    $
    1,155
    
    
    $
    2,464
    
    
    $
    3,532
  11




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##### Table of Contents



Stock Options
  Weighted-Weighted-
    
    
    Average
    
    
    AggregateAverage
    
    
    Remaining
    
    
    IntrinsicNumber of
    
    
    Exercise
    
    
    Contractual
    
    
    ValueOptions
    
    Options
    
    
    Price
    
    
    Term (years)
    
    
    (000s)Outstanding at December 21, 2008
    
    
    1,633,942
    
    
    $
    15.77Granted
    
    
    Exercised
    
    
    Forfeited
    
    
    (78,952
    )
    
    
    18.68Expired
    
    
    (37,800
    )
    
    
    10.00Outstanding at September 20, 2009
    
    
    1,517,190
    
    
    $
    15.79
    
    
    
    6.80
    
    
    $
    Vested or expected to vest at September 20, 2009
    
    
    1,504,722
    
    
    $
    15.75
    
    
    
    6.79
    
    
    $
    Exercisable at September 20, 2009
    
    
    1,053,879
    
    
    $
    11.70
    
    
    
    6.33
    
    
    $
    
  Restricted Stock
  Weighted-AverageFair ValueNumber of
    
    
    at GrantRestricted Shares
    
    Shares
    
    
    DateNonvested at December 21, 2008
    
    
    428,812
    
    
    $
    21.39Granted
    
    
    576,987
    
    
    
    3.70Vested
    
    
    (120,777
    )
    
    
    12.75Forfeited
    
    
    (61,667
    )
    
    
    20.54Nonvested at September 20, 2009
    
    
    823,355
    
    
    $
    10.33
   12




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##### Table of Contents



7. Net Income (Loss) per Common Share
   Quarters Ended
    
    
    Nine Months EndedSeptember 20,
    
    
    September 21,
    
    
    September 20,
    
    
    September 21,2009
    
    
    2008
    
    
    2009
    
    
    2008(As Adjusted)
    
    
    
    
    
    (As Adjusted)Numerator:Net income (loss)
    
    $
    8,438
    
    
    $
    11,103
    
    
    $
    (32,598
    )
    
    $
    17,662Denominator:Denominator for basic income (loss) per common share:Weighted average shares outstanding
    
    
    30,430
    
    
    
    30,304
    
    
    
    30,431
    
    
    
    30,330Effect of dilutive securities:Stock-based compensation
    
    
    484
    
    
    
    89
    
    
    
    
    
    
    
    253Denominator for diluted net income (loss) per
common share
    
    
    30,914
    
    
    
    30,393
    
    
    
    30,431
    
    
    
    30,583Basic net income (loss) per common share
    
    $
    0.28
    
    
    $
    0.37
    
    
    $
    (1.07
    )
    
    $
    0.58Diluted net income (loss) per common share
    
    $
    0.27
    
    
    $
    0.37
    
    
    $
    (1.07
    )
    
    $
    0.57
  8. Comprehensive Income (Loss)
  Quarters Ended
    
    
    Nine Months EndedSeptember 20,
    
    
    September 21,
    
    
    September 20,
    
    
    September 21,2009
    
    
    2008
    
    
    2009
    
    
    2008(As Adjusted)
    
    
    
    
    
    (As Adjusted)Net income (loss)
    
    $
    8,438
    
    
    $
    11,103
    
    
    $
    (32,598
    )
    
    $
    17,662Change in fair value of interest rate swap
    
    
    (427
    )
    
    
    (1,113
    )
    
    
    630
    
    
    
    1,260Amortization of pension and
post-retirement benefit transition
obligation
    
    
    115
    
    
    
    39
    
    
    
    332
    
    
    
    70Comprehensive income (loss)
    
    $
    8,126
    
    
    $
    10,029
    
    
    $
    (31,636
    )
    
    $
    18,992
 9. Segment Reporting
   13




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Quarters Ended
    
    
    Nine Months EndedSeptember 20,
    
    
    September 21,
    
    
    September 20,
    
    
    September 21,2009
    
    
    2008
    
    
    2009
    
    
    2008(As Adjusted)
    
    
    
    
    
    (As Adjusted)Operating revenue:Horizon Lines
    
    $
    301,215
    
    
    $
    342,693
    
    
    $
    837,473
    
    
    $
    963,646Horizon Logistics
    
    
    37,748
    
    
    
    60,974
    
    
    
    112,539
    
    
    
    169,681338,963
    
    
    
    403,667
    
    
    
    950,012
    
    
    
    1,133,327Inter-segment revenue
    
    
    (30,991
    )
    
    
    (51,029
    )
    
    
    (91,205
    )
    
    
    (143,783
    )Consolidated operating revenue
    
    $
    307,972
    
    
    $
    352,638
    
    
    $
    858,807
    
    
    $
    989,544Depreciation and amortization:Horizon Lines
    
    $
    14,658
    
    
    $
    15,556
    
    
    $
    44,009
    
    
    $
    46,711Horizon Logistics
    
    
    157
    
    
    
    286
    
    
    
    352
    
    
    
    81214,815
    
    
    
    15,842
    
    
    
    44,361
    
    
    
    47,523Eliminations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (30
    )Consolidated depreciation and amortization
    
    $
    14,815
    
    
    $
    15,842
    
    
    $
    44,361
    
    
    $
    47,493Segment operating income (loss):Horizon Lines
    
    $
    21,219
    
    
    $
    22,119
    
    
    $
    14,008
    
    
    $
    52,559Horizon Logistics
    
    
    (2,263
    )
    
    
    (331
    )
    
    
    (7,077
    )
    
    
    (2,486
    )Consolidated operating income
    
    
    18,956
    
    
    
    21,788
    
    
    
    6,931
    
    
    
    50,073Unallocated interest expense, net
    
    
    10,563
    
    
    
    10,016
    
    
    
    29,249
    
    
    
    31,528Loss on modification of debt
    
    
    
    
    
    
    
    
    
    
    50
    
    
    
    Unallocated other expense (income), net
    
    
    1
    
    
    
    (4
    )
    
    
    11
    
    
    
    (2
    )Consolidated income (loss) before income
tax (benefit) expense
    
    $
    8,392
    
    
    $
    11,776
    
    
    $
    (22,379
    )
    
    $
    18,547Capital expenditures:Horizon Lines
    
    $
    1,019
    
    
    $
    18,826
    
    
    $
    7,906
    
    
    $
    25,996Horizon Logistics
    
    
    8
    
    
    
    63
    
    
    
    275
    
    
    
    355Consolidated capital expenditures
    
    $
    1,027
    
    
    $
    18,889
    
    
    $
    8,181
    
    
    $
    26,351
 September 20,2009Segment assets:Horizon Lines
    
    $
    828,963Horizon Logistics
    
    
    10,627Consolidated assets
    
    $
    839,590
  14




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10. Property and Equipment
  September 20,
    
    
    December 21,2009
    
    
    2008Vessels and vessel improvements
    
    $
    151,802
    
    
    $
    149,557Containers
    
    
    24,171
    
    
    
    24,099Chassis
    
    
    14,334
    
    
    
    14,713Cranes
    
    
    36,842
    
    
    
    26,852Machinery and equipment
    
    
    27,596
    
    
    
    26,127Facilities and land improvements
    
    
    22,305
    
    
    
    20,718Software
    
    
    22,898
    
    
    
    20,875Construction in progress
    
    
    23,301
    
    
    
    34,382Total property and equipment
    
    
    323,249
    
    
    
    317,323Accumulated depreciation
    
    
    (128,051
    )
    
    
    (108,870
    )Property and equipment, net
    
    $
    195,198
    
    
    $
    208,453
  11. Intangible Assets
  September 20,
    
    
    December 21,2009
    
    
    2008(As Adjusted)Customer contracts/relationships
    
    $
    142,475
    
    
    $
    142,475Trademarks
    
    
    63,800
    
    
    
    63,800Deferred financing costs
    
    
    14,813
    
    
    
    11,388Non-compete agreements
    
    
    262
    
    
    
    262Total intangibles with definite lives
    
    
    221,350
    
    
    
    217,925Accumulated amortization
    
    
    (109,941
    )
    
    
    (92,383
    )Net intangibles with definite lives
    
    
    111,409
    
    
    
    125,542Goodwill
    
    
    317,068
    
    
    
    317,068Intangible assets, net
    
    $
    428,477
    
    
    $
    442,610
  12. Accrued Liabilities
  September 20,
    
    
    December 21,2009
    
    
    2008Vessel operations
    
    $
    18,199
    
    
    $
    18,681Payroll and employee benefits
    
    
    16,322
    
    
    
    13,943Marine operations
    
    
    13,403
    
    
    
    12,162Terminal operations
    
    
    12,041
    
    
    
    11,847Fuel
    
    
    4,541
    
    
    
    7,443Interest
    
    
    3,563
    
    
    
    6,437Settlement of class action lawsuit
    
    
    15,000
    
    
    
    Restructuring costs
    
    
    560
    
    
    
    3,069Other liabilities
    
    
    22,565
    
    
    
    24,138Total other accrued liabilities
    
    $
    106,194
    
    
    $
    97,720
  15




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13. Fair Value Measurement
  Level 1:
    observable inputs such as quoted prices in active marketsLevel 2:
    inputs other than the quoted prices in active markets that are observable either
directly or indirectlyLevel 3:
    unobservable inputs in which there is little or no market data, which requires the
Company to develop its own assumptions
   
 14. Pension and Post-retirement Benefit Plans
  Pension Plans
    Post-retirement Benefit Plans
   16




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Other Plans
  15. Commitments and Contingencies
 Legal Proceedings
       17




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18




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SFL Agreements
   Standby Letters of Credit
  16. Recent Accounting Pronouncements
     19




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20




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2.
Managements Discussion and Analysis of Financial Condition and
Results of Operations
  Executive Overview
    Quarters Ended
    
    
    Nine Months EndedSeptember 20,
    
    
    September 21,
    
    
    September 20,
    
    
    September 21,2009
    
    
    2008
    
    
    2009
    
    
    2008($ in thousands)Operating revenue
    
    $
    307,972
    
    
    $
    352,638
    
    
    $
    858,807
    
    
    $
    989,544Operating expense
    
    
    289,016
    
    
    
    330,850
    
    
    
    851,876
    
    
    
    939,471Operating income
    
    $
    18,956
    
    
    $
    21,788
    
    
    $
    6,931
    
    
    $
    50,073Operating ratio
    
    
    93.8
    %
    
    
    93.8
    %
    
    
    99.2
    %
    
    
    94.9
    %Revenue containers (units)
    
    
    67,649
    
    
    
    71,748
    
    
    
    193,305
    
    
    
    209,112Average unit revenue
    
    $
    3,818
    
    
    $
    4,126
    
    
    $
    3,750
    
    
    $
    4,000
  21




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Quarters Ended
    
    
    Nine Months EndedSeptember 20,
    
    
    September 21,
    
    
    September 20,
    
    
    September 21,2009
    
    
    2008
    
    
    2009
    
    
    2008(As Adjusted)
    
    
    
    
    
    (As Adjusted)(in thousands)Net income (loss)
    
    $
    8,438
    
    
    $
    11,103
    
    
    $
    (32,598
    )
    
    $
    17,662Interest expense, net
    
    
    10,563
    
    
    
    10,016
    
    
    
    29,249
    
    
    
    31,528Income tax (benefit) expense
    
    
    (46
    )
    
    
    673
    
    
    
    10,219
    
    
    
    885Depreciation and amortization
    
    
    14,815
    
    
    
    15,842
    
    
    
    44,361
    
    
    
    47,493EBITDA
    
    $
    33,770
    
    
    $
    37,634
    
    
    $
    51,231
    
    
    $
    97,568
 General
  History
  Critical Accounting Policies
   22




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Seasonality
  Results of Operations
 Operating Revenue Overview
    Cost of Services Overview
   23




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Quarter Ended September 20, 2009 Compared with the Quarter Ended September 21, 2008
 Horizon Lines Segment
  Quarters EndedSeptember 20,
    
    
    September 21,2009
    
    
    2008
    
    
    Change
    
    
    % Change($ in thousands)Operating revenue
    
    $
    300,540
    
    
    $
    342,073
    
    
    $
    (41,533
    )
    
    
    (12.1
    )%Operating expense:Vessel
    
    
    95,008
    
    
    
    121,465
    
    
    
    (26,457
    )
    
    
    (21.8
    )%Marine
    
    
    55,116
    
    
    
    53,856
    
    
    
    1,260
    
    
    
    2.3
    %Inland
    
    
    46,276
    
    
    
    54,756
    
    
    
    (8,480
    )
    
    
    (15.5
    )%Land
    
    
    35,234
    
    
    
    37,961
    
    
    
    (2,727
    )
    
    
    (7.2
    )%Rolling stock rent
    
    
    9,541
    
    
    
    10,447
    
    
    
    (906
    )
    
    
    (8.7
    )%Cost of services
    
    
    241,175
    
    
    
    278,485
    
    
    
    (37,310
    )
    
    
    (13.4
    )%Depreciation and amortization
    
    
    11,128
    
    
    
    11,163
    
    
    
    (35
    )
    
    
    (0.3
    )%Amortization of vessel dry-docking
    
    
    3,530
    
    
    
    4,393
    
    
    
    (863
    )
    
    
    (19.6
    )%Selling, general and administrative
    
    
    21,388
    
    
    
    24,806
    
    
    
    (3,418
    )
    
    
    (13.8
    )%Impairment charge
    
    
    1,208
    
    
    
    
    
    
    
    1,208
    
    
    
    100.0
    %Miscellaneous expense, net
    
    
    892
    
    
    
    1,107
    
    
    
    (215
    )
    
    
    (19.4
    )%Total operating expense
    
    
    279,321
    
    
    
    319,954
    
    
    
    (40,633
    )
    
    
    (12.7
    )%Operating income
    
    $
    21,219
    
    
    $
    22,119
    
    
    $
    (900
    )
    
    
    (4.1
    )%Operating ratio
    
    
    92.9
    %
    
    
    93.5
    %
    
    
    
    
    
    
    (0.6
    )%Revenue containers (units)
    
    
    67,649
    
    
    
    71,748
    
    
    
    (7,069
    )
    
    
    (9.9
    )%Average unit revenue
    
    $
    3,818
    
    
    $
    4,126
    
    
    $
    (308
    )
    
    
    (7.5
    )%
 Operating Revenue.
 Bunker and intermodal fuel surcharges decline
    
    $
    (23,446
    )Revenue container volume decrease
    
    
    (13,365
    )Non-transportation services decrease
    
    
    (5,655
    )General rate increases
    
    
    933Total operating revenue decrease
    
    $
    (41,533
    )
  Cost of Services.
  24




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Vessel fuel costs decrease
    
    $
    (27,089
    )Vessel lease expense decrease
    
    
    (65
    )Labor and other vessel operating increase
    
    
    697Total vessel expense decrease
    
    $
    (26,457
    )
     Quarters EndedSeptember 20,
    
    
    September 21,2009
    
    
    2008
    
    

%Change(in thousands)Land expense:Maintenance
    
    $
    12,826
    
    
    $
    13,694
    
    
    
    (6.3
    )%Terminal overhead
    
    
    12,887
    
    
    
    14,509
    
    
    
    (11.2
    )%Yard and gate
    
    
    7,536
    
    
    
    7,620
    
    
    
    (1.1
    )%Warehouse
    
    
    1,985
    
    
    
    2,138
    
    
    
    (7.2
    )%Total land expense
    
    $
    35,234
    
    
    $
    37,961
    
    
    
    (7.2
    )%
   25




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Depreciation and Amortization.
 Quarters EndedSeptember 20,
    
    
    September 21,2009
    
    
    2008
    
    
    % Change(in thousands)Depreciation and amortization:Depreciationowned vessels
    
    $
    2,342
    
    
    $
    2,347
    
    
    
    (0.2
    )%Depreciation and amortizationother
    
    
    3,708
    
    
    
    3,738
    
    
    
    (0.8
    )%Amortization of intangible assets
    
    
    5,078
    
    
    
    5,078
    
    
    
    0.0
    %Total depreciation and amortization
    
    $
    11,128
    
    
    $
    11,163
    
    
    
    (0.3
    )%Amortization of vessel dry-docking
    
    $
    3,530
    
    
    $
    4,393
    
    
    
    (19.6
    )%
 Amortization of Vessel Dry-docking.
 Selling, General and Administrative.
 Impairment Charge
 Miscellaneous Expense, Net
  26




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Horizon Logistics Segment
  Quarters EndedSeptember 20,
    
    
    September 21,2009
    
    
    2008
    
    
    Change
    
    
    % Change(in thousands)Operating revenue
    
    $
    7,432
    
    
    $
    10,565
    
    
    $
    (3,133
    )
    
    
    (29.7
    )%Operating expense:Inland
    
    
    5,808
    
    
    
    8,046
    
    
    
    (2,238
    )
    
    
    (27.8
    )%Land
    
    
    1,398
    
    
    
    781
    
    
    
    617
    
    
    
    79.0
    %Rolling stock rent
    
    
    (16
    )
    
    
    89
    
    
    
    (105
    )
    
    
    (118.0
    )%Cost of services
    
    
    7,190
    
    
    
    8,916
    
    
    
    (1,726
    )
    
    
    (19.4
    )%Depreciation and amortization
    
    
    157
    
    
    
    286
    
    
    
    (129
    )
    
    
    (45.1
    )%Selling, general and administrative
    
    
    2,350
    
    
    
    1,706
    
    
    
    644
    
    
    
    37.7
    %Miscellaneous income, net
    
    
    (2
    )
    
    
    (12
    )
    
    
    10
    
    
    
    83.3
    %Total operating expense
    
    
    9,695
    
    
    
    10,896
    
    
    
    (1,201
    )
    
    
    (11.0
    )%Operating loss
    
    $
    (2,263
    )
    
    $
    (331
    )
    
    $
    (1,932
    )
    
    
    583.7
    %
 Operating Revenue.
 Cost of Services.
 Depreciation and Amortization.
 Quarters EndedSeptember 20,
    
    
    September 21,2009
    
    
    2008
    
    
    % Change(in thousands)Depreciation and amortization:Depreciation and amortizationother
    
    $
    75
    
    
    $
    42
    
    
    
    78.6
    %Amortization of intangible assets
    
    
    82
    
    
    
    244
    
    
    
    (66.4
    )%Total depreciation and amortization
    
    $
    157
    
    
    $
    286
    
    
    
    (45.1
    )%
 Selling, General and Administrative.
 Unallocated Expenses
 Interest Expense, Net.
  27




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##### Table of Contents



Income Tax Expense.
 Nine Months Ended September 20, 2009 Compared with the Nine Months Ended September 21, 2008
 Horizon Lines Segment
 Nine Months EndedSeptember 20,
    
    
    September 21,2009
    
    
    2008
    
    
    Change
    
    
    % Change($ in thousands)Operating revenue
    
    $
    835,032
    
    
    $
    963,493
    
    
    $
    (128,461
    )
    
    
    (13.3
    )%Operating expense:Vessel
    
    
    262,326
    
    
    
    334,843
    
    
    
    (72,517
    )
    
    
    (21.7
    )%Marine
    
    
    153,774
    
    
    
    153,996
    
    
    
    (222
    )
    
    
    (0.1
    )%Inland
    
    
    132,596
    
    
    
    154,935
    
    
    
    (22,339
    )
    
    
    (14.4
    )%Land
    
    
    104,116
    
    
    
    109,532
    
    
    
    (5,416
    )
    
    
    (4.9
    )%Rolling stock rent
    
    
    28,096
    
    
    
    33,284
    
    
    
    (5,188
    )
    
    
    (15.6
    )%Cost of services
    
    
    680,908
    
    
    
    786,590
    
    
    
    (105,682
    )
    
    
    (13.4
    )%Depreciation and amortization
    
    
    33,073
    
    
    
    33,513
    
    
    
    (440
    )
    
    
    (1.3
    )%Amortization of vessel dry-docking
    
    
    10,936
    
    
    
    13,168
    
    
    
    (2,232
    )
    
    
    (17.0
    )%Selling, general and administrative
    
    
    72,706
    
    
    
    75,294
    
    
    
    (2,588
    )
    
    
    (3.4
    )%Settlement of class action lawsuit
    
    
    20,000
    
    
    
    
    
    
    
    20,000
    
    
    
    100.0
    %Impairment charge
    
    
    1,867
    
    
    
    
    
    
    
    1,867
    
    
    
    100.0
    %Restructuring charge
    
    
    753
    
    
    
    
    
    
    
    753
    
    
    
    100.0
    %Miscellaneous expense, net
    
    
    781
    
    
    
    2,369
    
    
    
    (1,588
    )
    
    
    (67.0
    )%Total operating expense
    
    
    821,024
    
    
    
    910,934
    
    
    
    (89,910
    )
    
    
    (9.9
    )%Operating income
    
    $
    14,008
    
    
    $
    52,559
    
    
    $
    (38,551
    )
    
    
    (73.3)
    %Operating ratio
    
    
    98.3
    %
    
    
    94.5
    %
    
    
    
    
    
    
    3.8
    %Revenue containers (units)
    
    
    193,305
    
    
    
    209,112
    
    
    
    (15,807
    )
    
    
    (7.6
    )%Average unit revenue
    
    $
    3,750
    
    
    $
    4,000
    
    
    $
    (250
    )
    
    
    (6.3
    )%
 Operating Revenue.
 Bunker and intermodal fuel surcharges decline
    
    $
    (71,397
    )Revenue container volume decrease
    
    
    (51,106
    )Non-transportation services decrease
    
    
    (17,959
    )General rate increases
    
    
    12,001Total operating revenue decrease
    
    $
    (128,461
    )
   28




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##### Table of Contents



Cost of Services.
  Vessel fuel costs decline
    
    $
    (75,998
    )Vessel lease expense decrease
    
    
    (194
    )Labor and other vessel operating increase
    
    
    3,675Total vessel expense decrease
    
    $
    (72,517
    )
     Nine Months EndedSeptember 20,
    
    
    September 21,2009
    
    
    2008
    
    
    % Change(in thousands)Land expense:Maintenance
    
    $
    37,168
    
    
    $
    39,806
    
    
    
    (6.6
    )%Terminal overhead
    
    
    39,438
    
    
    
    42,437
    
    
    
    (7.1
    )%Yard and gate
    
    
    21,967
    
    
    
    21,098
    
    
    
    4.1
    %Warehouse
    
    
    5,543
    
    
    
    6,191
    
    
    
    (10.5
    )%Total land expense
    
    $
    104,116
    
    
    $
    109,532
    
    
    
    (4.9
    )%
   29




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##### Table of Contents



Depreciation and Amortization.
 Nine Months EndedSeptember 20,
    
    
    September 21,2009
    
    
    2008
    
    
    % Change(in thousands)Depreciation and amortization:Depreciationowned vessels
    
    $
    6,775
    
    
    $
    7,397
    
    
    
    (8.4
    )%Depreciation and amortizationother
    
    
    11,067
    
    
    
    10,881
    
    
    
    1.7
    %Amortization of intangible assets
    
    
    15,231
    
    
    
    15,235
    
    
    
    0.0
    %Total depreciation and amortization
    
    $
    33,073
    
    
    $
    33,513
    
    
    
    (1.3
    )%Amortization of vessel dry-docking
    
    $
    10,936
    
    
    $
    13,168
    
    
    
    (17.0
    )%
 Amortization of Vessel Dry-docking.
 Selling, General and Administrative.
 Settlement of Class Action Lawsuit
 Impairment Charge
 Restructuring Charge.
 Miscellaneous (Income) Expense, Net
  30




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##### Table of Contents



Horizon Logistics Segment
 Nine Months EndedSeptember 20,
    
    
    September 21,2009
    
    
    2008
    
    
    Change
    
    
    % Change(in thousands)Operating revenue
    
    $
    23,775
    
    
    $
    26,051
    
    
    $
    (2,276
    )
    
    
    (8.7
    )%Operating expense:Inland
    
    
    18,450
    
    
    
    19,389
    
    
    
    (939
    )
    
    
    (4.8
    )%Land
    
    
    4,499
    
    
    
    2,028
    
    
    
    2,471
    
    
    
    121.8
    %Rolling stock rent
    
    
    506
    
    
    
    299
    
    
    
    207
    
    
    
    69.2
    %Cost of services
    
    
    23,455
    
    
    
    21,716
    
    
    
    1,739
    
    
    
    8.0
    %Depreciation and amortization
    
    
    352
    
    
    
    812
    
    
    
    (460
    )
    
    
    (56.7
    )%Selling, general and administrative
    
    
    6,805
    
    
    
    5,988
    
    
    
    817
    
    
    
    13.6
    %Restructuring costs
    
    
    249
    
    
    
    
    
    
    
    249
    
    
    
    100.0
    %Miscellaneous (income) expense, net
    
    
    (9
    )
    
    
    21
    
    
    
    (30
    )
    
    
    (142.9
    )%Total operating expense
    
    
    30,852
    
    
    
    28,537
    
    
    
    2,315
    
    
    
    8.1
    %Operating loss
    
    $
    (7,077
    )
    
    $
    (2,486
    )
    
    $
    (4,591
    )
    
    
    184.7
    %
 Operating Revenue.
 Cost of Services.
 Depreciation and Amortization.
 Nine Months EndedSeptember 20,
    
    
    September 21,2009
    
    
    2008
    
    
    % Change(in thousands)Depreciation and amortization:Depreciation and amortizationother
    
    $
    108
    
    
    $
    61
    
    
    
    77.0
    %Amortization of intangible assets
    
    
    244
    
    
    
    751
    
    
    
    (67.5
    )%Total depreciation and amortization
    
    $
    352
    
    
    $
    812
    
    
    
    (56.7
    )%
 Selling, General and Administrative.
 Restructuring Charge.
 Unallocated Expenses
 Interest Expense, Net.
  31




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##### Table of Contents



Income Tax Expense.
 Liquidity and Capital Resources
   Operating Activities
  Earnings adjusted for non-cash charges
    
    $
    (39,612
    )Increase in payments related to Department of Justice antitrust
investigation and related legal proceedings
    
    
    (10,939
    )Increase in payments related to restructuring and impairment of assets
    
    
    (4,546
    )Increase in payments related to dry-dockings
    
    
    (1,978
    )Other changes in working capital, net
    
    
    (7,469
    )Decrease in accounts receivable
    
    
    25,970Increase in accrual for settlement of class action lawsuit
    
    
    15,000$
    (23,574
    )
 Investing Activities
  Financing Activities
    32




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##### Table of Contents



Capital Requirements and Commitments
     Long-Term Debt
 Senior Credit Facility
     33




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##### Table of Contents



Derivative Instruments
   4.25% Convertible Senior Notes
   
    
    Prior to May 15, 2012, if during any calendar quarter, and only during
such calendar quarter, if the last reported sale price of our common
stock for at least 20 trading days in a period of 30 consecutive
trading days ending on the last trading day of the preceding calendar
quarter exceeds 120% of the applicable conversion price in effect on
the last trading day of the immediately preceding calendar quarter;
    
    During any five business day period prior to May 15, 2012, immediately
after any five consecutive trading day period (the measurement
period) in which the trading price per $1,000 principal amount of
notes for each day of such measurement period was less than 98% of the
product of the last reported sale price of our common stock on such
date and the conversion rate on such date;
    
    If, at any time, a change in control occurs or if we are a party to a
consolidation, merger, binding share exchange or transfer or lease of
all or substantially all of its assets, pursuant to which the
Companys common stock would be converted into cash, securities or
other assets; or
    
    At any time after May 15, 2012 through the fourth scheduled trading
day immediately preceding August 15, 2012.
    34




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##### Table of Contents



Goodwill
   Interest Rate Risk
    Ratio of Earnings to Fixed Charges
  Quarter Ended
    
    
    Nine Months EndedSeptember 20, 2009
    
    
    September 20, 2009Pretax income (loss)
    
    $
    8,392
    
    
    $
    (22,379
    )Interest expense
    
    
    10,567
    
    
    
    29,279Rentals
    
    
    8,478
    
    
    
    25,777Total fixed charges
    
    $
    19,045
    
    
    $
    55,056Pretax earnings plus fixed charges
    
    $
    27,437
    
    
    $
    32,677Ratio of earnings to fixed charges
    
    
    1.44
    x
    
    
    0.59
    x
   35




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##### Table of Contents



Recent Accounting Pronouncements
      36




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##### Table of Contents



Statements of Operations:
 Quarter Ended September 21, 2008
    
    
    Nine Months Ended September 21, 2008As
    
    
    
    
    
    
    As
    
    
    As
    
    
    
    
    
    
    AsReported
    
    
    Adjustments
    
    
    Adjusted
    
    
    Reported
    
    
    Adjustments
    
    
    AdjustedInterest expense, net
    
    $
    7,772
    
    
    $
    2,244
    
    
    $
    10,016
    
    
    $
    24,927
    
    
    $
    6,601
    
    
    $
    31,528Income tax expense
    
    
    1,492
    
    
    
    (819
    )
    
    
    673
    
    
    
    3,294
    
    
    
    (2,409
    )
    
    
    885Net income
    
    
    12,528
    
    
    
    (1,425
    )
    
    
    11,103
    
    
    
    21,854
    
    
    
    (4,192
    )
    
    
    17,662Net income per shareBasic
    
    
    0.42
    
    
    
    (0.05
    )
    
    
    0.37
    
    
    
    0.73
    
    
    
    (0.15
    )
    
    
    0.58Diluted
    
    
    0.42
    
    
    
    (0.05
    )
    
    
    0.37
    
    
    
    0.72
    
    
    
    (0.15
    )
    
    
    0.57
 Balance Sheet:
 December 21, 2008As
    
    
    
    
    
    
    AsReported
    
    
    Adjustments
    
    
    AdjustedIntangible assets, net
    
    $
    126,697
    
    
    $
    (1,155
    )
    
    $
    125,542Deferred tax assets
    
    
    23,992
    
    
    
    (13,323
    )
    
    
    10,669Total assets
    
    
    887,107
    
    
    
    (14,478
    )
    
    
    872,629Long-term debt, net of current
    
    
    563,916
    
    
    
    (37,657
    )
    
    
    526,259Additional paid in capital
    
    
    168,779
    
    
    
    30,865
    
    
    
    199,644Retained earnings
    
    
    29,780
    
    
    
    (7,686
    )
    
    
    22,094Total liabilities and stockholders equity
    
    
    887,107
    
    
    
    (14,478
    )
    
    
    872,629
  Quarter Ended September 21, 2008
    
    
    Nine Months Ended September 21, 2008As
    
    
    
    
    
    
    As
    
    
    As
    
    
    
    
    
    
    AsReported
    
    
    Adjustments
    
    
    Adjusted
    
    
    Reported
    
    
    Adjustments
    
    
    AdjustedDenominator for basic net income per share
    
    
    29,970
    
    
    
    334
    
    
    
    30,304
    
    
    
    30,060
    
    
    
    270
    
    
    
    30,330Effect of dilutive securities
    
    
    217
    
    
    
    (128
    )
    
    
    89
    
    
    
    467
    
    
    
    (214
    )
    
    
    253Denominator for diluted net income per
share
    
    
    30,187
    
    
    
    206
    
    
    
    30,393
    
    
    
    30,527
    
    
    
    56
    
    
    
    30,583
  37




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##### Table of Contents



Forward Looking Statements
    38




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##### Table of Contents



3. Quantitative and Qualitative Disclosures About Market Risk
    
 4. Controls and Procedures
 Disclosure Controls and Procedures
  Internal Control over Financial Reporting
  Changes in Internal Control
   39




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##### Table of Contents



PART II. OTHER INFORMATION
 
 1. Legal Proceedings
          40




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##### Table of Contents



1A. Risk Factors
  
 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 3. Defaults Upon Senior Securities
  
 4. Submission of Matters to a Vote of Security-Holders
  
 5. Other Information
   41




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##### Table of Contents



6. Exhibits
 10.1
    
    
    Form of Restricted Stock Award Agreement (filed as Exhibit 10.1 to the Companys report on Form
8-K filed June 25, 2009)31.1
    *
    
    Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    *
    
    Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    *
    
    Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    *
    
    Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
 *
    
    Filed herewith.  42




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##### Table of Contents



SIGNATURE
   HORIZON LINES, INC.By:
    /s/ MICHAEL T. AVARAMichael T. AvaraSenior Vice President &
Chief Financial Officer
(Principal Financial Officer & Authorized Signatory)  43




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNo.
    
    Description10.1
    
    
    Form of Restricted Stock Award Agreement (filed as Exhibit 10.1 to the Companys report on Form
8-K filed June 25, 2009)31.1
    *
    
    Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    *
    
    Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    *
    
    Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    *
    
    Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
 *
    
    Filed herewith.  44