##### 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 June 21, 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
(State or other jurisdiction of 
incorporation or organization)
    
    74-3123672
(I.R.S. Employer
Identification No.)4064 Colony Road, Suite 200, Charlotte, North Carolina
(Address of principal executive offices)
    
    28211
(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)
 Yes þ
No o
 Yes o No o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller
reporting company)
 Yes o No þ
  At
July 23, 2009, 30,224,199 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
    
    
    384. 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
    
    
    426. 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)
 December 21,June 21,
    
    
    20082009
    
    
    (As Adjusted)AssetsCurrent assetsCash
    
    $
    3,678
    
    
    $
    5,487Accounts receivable, net of allowance of
$7,879 and $8,217 at June 21, 2009 and
December 21, 2008, respectively
    
    
    134,636
    
    
    
    135,299Deferred tax asset
    
    
    2,558
    
    
    
    7,450Prepaid vessel rent
    
    
    10,575
    
    
    
    4,471Materials and supplies
    
    
    26,464
    
    
    
    23,644Other current assets
    
    
    10,060
    
    
    
    10,424Total current assets
    
    
    187,971
    
    
    
    186,775Property and equipment, net
    
    
    202,013
    
    
    
    208,453Goodwill
    
    
    317,068
    
    
    
    317,068Intangible assets, net
    
    
    117,372
    
    
    
    125,542Deferred tax asset
    
    
    
    
    
    
    10,669Other long-term assets
    
    
    26,360
    
    
    
    24,122Total assets
    
    $
    850,784
    
    
    $
    872,629Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    38,841
    
    
    $
    41,947Current portion of long-term debt
    
    
    12,802
    
    
    
    6,552Accrued vessel rent
    
    
    
    
    
    
    5,421Other accrued liabilities
    
    
    111,104
    
    
    
    97,720Total current liabilities
    
    
    162,747
    
    
    
    151,640Long-term debt, net of current portion
    
    
    546,640
    
    
    
    526,259Deferred rent
    
    
    24,821
    
    
    
    27,058Deferred tax liability
    
    
    3,696
    
    
    
    Other long-term liabilities
    
    
    19,884
    
    
    
    30,836Total liabilities
    
    
    757,788
    
    
    
    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, 34,024 shares issued and 30,224
shares outstanding as of June 21, 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
    
    
    202,257
    
    
    
    199,644(Accumulated deficit) retained earnings
    
    
    (25,635
    )
    
    
    22,094Accumulated other comprehensive loss
    
    
    (5,428
    )
    
    
    (6,702
    )Total stockholders equity
    
    
    92,996
    
    
    
    136,836Total liabilities and stockholders equity
    
    $
    850,784
    
    
    $
    872,629
   3




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Horizon Lines, Inc.
 
 Unaudited Condensed Consolidated Statements of Operations
 (in thousands, except per share amounts)
 Quarters Ended
    
    
    Six Months EndedJune 22,
    
    
    
    
    
    
    June 22,June 21,
    
    
    2008
    
    
    June 21,
    
    
    20082009
    
    
    (As Adjusted)
    
    
    2009
    
    
    (As Adjusted)Operating revenue
    
    $
    278,484
    
    
    $
    330,958
    
    
    $
    550,835
    
    
    $
    636,905Operating expense:Cost of services (excluding depreciation expense)
    
    
    226,339
    
    
    
    268,699
    
    
    
    455,998
    
    
    
    521,669Depreciation and amortization
    
    
    11,165
    
    
    
    11,550
    
    
    
    22,140
    
    
    
    22,875Amortization of vessel dry-docking
    
    
    3,609
    
    
    
    4,400
    
    
    
    7,407
    
    
    
    8,775Selling, general and administrative
    
    
    28,006
    
    
    
    28,873
    
    
    
    55,774
    
    
    
    54,004Settlement of class action lawsuit
    
    
    20,000
    
    
    
    
    
    
    
    20,000
    
    
    
    Restructuring charge
    
    
    213
    
    
    
    
    
    
    
    1,001
    
    
    
    Impairment charge
    
    
    659
    
    
    
    
    
    
    
    659
    
    
    
    Miscellaneous (income) expense, net
    
    
    (300
    )
    
    
    752
    
    
    
    (119
    )
    
    
    1,297Total operating expense
    
    
    289,691
    
    
    
    314,274
    
    
    
    562,860
    
    
    
    608,620Operating (loss) income
    
    
    (11,207
    )
    
    
    16,684
    
    
    
    (12,025
    )
    
    
    28,285Other expense:Interest expense, net
    
    
    9,254
    
    
    
    10,353
    
    
    
    18,686
    
    
    
    21,513Loss on modification of debt
    
    
    50
    
    
    
    
    
    
    
    50
    
    
    
    Other expense, net
    
    
    11
    
    
    
    4
    
    
    
    10
    
    
    
    1(Loss) income before income tax expense
    
    
    (20,522
    )
    
    
    6,327
    
    
    
    (30,771
    )
    
    
    6,771Income tax expense
    
    
    10,561
    
    
    
    493
    
    
    
    10,264
    
    
    
    212Net (loss) income
    
    $
    (31,083
    )
    
    $
    5,834
    
    
    $
    (41,035
    )
    
    $
    6,559Net (loss) income per share:Basic
    
    $
    (1.02
    )
    
    $
    0.19
    
    
    $
    (1.35
    )
    
    $
    0.21Diluted
    
    $
    (1.02
    )
    
    $
    0.19
    
    
    $
    (1.35
    )
    
    $
    0.21Number of shares used in calculations:Basic
    
    
    30,438
    
    
    
    30,193
    
    
    
    30,431
    
    
    
    30,343Diluted
    
    
    30,438
    
    
    
    30,273
    
    
    
    30,431
    
    
    
    30,582Dividends declared per common share
    
    $
    0.11
    
    
    $
    0.11
    
    
    $
    0.22
    
    
    $
    0.22
   4




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##### Table of Contents



Horizon Lines, Inc.
 
 Unaudited Condensed Consolidated Statements of Cash Flows
 (in thousands)
 Six Months EndedJune 22,June 21,
    
    
    20082009
    
    
    (As Adjusted)Cash flows from operating activities:Net (loss) income
    
    $
    (41,035
    )
    
    $
    6,559Adjustments to reconcile net (loss) income to net cash
(used in) provided by operating activities:Depreciation
    
    
    11,824
    
    
    
    12,211Amortization of other intangible assets
    
    
    10,316
    
    
    
    10,664Amortization of vessel dry-docking
    
    
    7,407
    
    
    
    8,775Amortization of deferred financing costs
    
    
    1,209
    
    
    
    1,347Impairment charge
    
    
    659
    
    
    
    Restructuring charge
    
    
    1,001
    
    
    
    Loss on modification of debt
    
    
    50
    
    
    
    Deferred income taxes
    
    
    10,357
    
    
    
    382Gain on equipment disposals
    
    
    (291
    )
    
    
    (23
    )Stock-based compensation
    
    
    1,919
    
    
    
    2,377Accretion of interest on 4.25% convertible notes
    
    
    4,905
    
    
    
    4,357Changes in operating assets and liabilities:Accounts receivable
    
    
    663
    
    
    
    (18,425
    )Materials and supplies
    
    
    (3,070
    )
    
    
    (4,118
    )Other current assets
    
    
    150
    
    
    
    435Accounts payable
    
    
    (3,106
    )
    
    
    (11,913
    )Accrued liabilities
    
    
    12,780
    
    
    
    22,786Vessel rent
    
    
    (13,361
    )
    
    
    (12,670
    )Vessel dry-docking payments
    
    
    (8,593
    )
    
    
    (6,544
    )Other assets/liabilities
    
    
    (992
    )
    
    
    362Net cash (used in) provided by operating activities
    
    
    (7,208
    )
    
    
    16,562Cash flows from investing activities:Purchases of property and equipment
    
    
    (7,154
    )
    
    
    (7,462
    )Purchase of business
    
    
    
    
    
    
    (198
    )Proceeds from the sale of property and equipment
    
    
    853
    
    
    
    208Net cash used in investing activities
    
    
    (6,301
    )
    
    
    (7,452
    )Cash flows from financing activities:Payments on long-term debt
    
    
    (3,275
    )
    
    
    (3,267
    )Borrowing under revolving credit facility
    
    
    45,000
    
    
    
    73,000Payments on revolving credit facility
    
    
    (20,000
    )
    
    
    (25,000
    )Dividends to stockholders
    
    
    (6,694
    )
    
    
    (6,649
    )Payments of financing costs
    
    
    (3,406
    )
    
    
    (137
    )Common stock issued under employee stock purchase plan
    
    
    75
    
    
    
    10Purchase of treasury stock
    
    
    
    
    
    
    (29,330
    )Payments on capital lease obligation
    
    
    
    
    
    
    (60
    )Net cash provided by financing activities
    
    
    11,700
    
    
    
    8,567Net (decrease) increase in cash
    
    
    (1,809
    )
    
    
    17,677Cash at beginning of period
    
    
    5,487
    
    
    
    6,276Cash at end of period
    
    $
    3,678
    
    
    $
    23,953
   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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##### Table of Contents



Statements of Operations:
 Quarter Ended June 22, 2008
    
    
    Six Months Ended June 22, 2008As
    
    
    
    
    
    
    As
    
    
    As
    
    
    
    
    
    
    AsReported
    
    
    Adjustments
    
    
    Adjusted
    
    
    Reported
    
    
    Adjustments
    
    
    AdjustedInterest expense, net
    
    $
    8,147
    
    
    $
    2,206
    
    
    $
    10,353
    
    
    $
    17,156
    
    
    $
    4,357
    
    
    $
    21,513Income tax expense
    
    
    1,298
    
    
    
    (805
    )
    
    
    493
    
    
    
    1,802
    
    
    
    (1,590
    )
    
    
    212Net income
    
    
    7,235
    
    
    
    (1,401
    )
    
    
    5,834
    
    
    
    9,326
    
    
    
    (2,767
    )
    
    
    6,559Net income per shareBasic
    
    
    0.24
    
    
    
    (0.05
    )
    
    
    0.19
    
    
    
    0.31
    
    
    
    (0.10
    )
    
    
    0.21Diluted
    
    
    0.24
    
    
    
    (0.05
    )
    
    
    0.19
    
    
    
    0.31
    
    
    
    (0.10
    )
    
    
    0.21
 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 June 22, 2008
    
    
    Six Months Ended June 22, 2008As
    
    
    
    
    
    
    As
    
    
    As
    
    
    
    
    
    
    AsReported
    
    
    Adjustments
    
    
    Adjusted
    
    
    Reported
    
    
    Adjustments
    
    
    AdjustedDenominator for basic net income per share
    
    
    29,919
    
    
    
    274
    
    
    
    30,193
    
    
    
    30,105
    
    
    
    238
    
    
    
    30,343Effect of dilutive securities
    
    
    244
    
    
    
    (164
    )
    
    
    80
    
    
    
    409
    
    
    
    (170
    )
    
    
    239Denominator for diluted net income per
share
    
    
    30,163
    
    
    
    110
    
    
    
    30,273
    
    
    
    30,514
    
    
    
    68
    
    
    
    30,582
  7




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##### Table of Contents



3. Restructuring
   Balance at
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance atDecember 21,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Charged to Other
    
    
    June 21,2008
    
    
    Provision
    
    
    Payments
    
    
    Adjustments
    
    
    Accounts(1)
    
    
    2009Personnel related costs
    
    $
    3,132
    
    
    $
    1,148
    
    
    $
    (2,534
    )
    
    $
    (150
    )
    
    $
    (485
    )
    
    $
    1,111Other associated costs
    
    
    65
    
    
    
    25
    
    
    
    (60
    )
    
    
    (22
    )
    
    
    
    
    
    
    8Total
    
    $
    3,197
    
    
    $
    1,173
    
    
    $
    (2,594
    )
    
    $
    (172
    )
    
    $
    (485
    )
    
    $
    1,119
 (1)
    
    Includes $0.5 million of stock-based compensation recorded in additional paid in capital.  4. Long-Term Debt
  December 21,June 21,
    
    
    20082009
    
    
    (As Adjusted)Senior credit facilityTerm loan
    
    $
    115,625
    
    
    $
    118,750Revolving credit facility
    
    
    145,000
    
    
    
    120,0004.25% convertible senior notes
    
    
    297,248
    
    
    
    292,343Other
    
    
    1,569
    
    
    
    1,718Total long-term debt
    
    
    559,442
    
    
    
    532,811Less current portion
    
    
    (12,802
    )
    
    
    (6,552
    )Long-term debt, net of current portion
    
    $
    546,640
    
    
    $
    526,259
 Senior Credit Facility
    8




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##### Table of Contents



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
  5. Income Taxes
    10




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##### Table of Contents



6. Stock-Based Compensation
   Quarters Ended
    
    
    Six Months EndedJune 21,
    
    
    June 22,
    
    
    June 21,
    
    
    June 22,2009
    
    
    2008
    
    
    2009
    
    
    2008Stock options
    
    $
    290
    
    
    $
    361
    
    
    $
    671
    
    
    $
    844Restricted stock
    
    
    689
    
    
    
    745
    
    
    
    1,248
    
    
    
    1,368ESPP
    
    
    
    
    
    
    85
    
    
    
    
    
    
    
    165Total
    
    $
    979
    
    
    $
    1,191
    
    
    $
    1,919
    
    
    $
    2,377
  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 June 21, 2009
    
    
    1,517,190
    
    
    $
    15.79
    
    
    
    7.05
    
    
    $
    Vested or expected to vest at June 21, 2009
    
    
    1,501,332
    
    
    $
    15.72
    
    
    
    7.04
    
    
    $
    Exercisable at June 21, 2009
    
    
    1,053,879
    
    
    $
    11.70
    
    
    
    6.58
    
    
    $
    
  Restricted Stock
  Weighted-AverageFair ValueNumber of
    
    
    at GrantRestricted Shares
    
    Shares
    
    
    DateNonvested at December 21, 2008
    
    
    428,812
    
    
    $
    21.39Granted
    
    
    558,295
    
    
    
    3.65Vested
    
    
    (120,777
    )
    
    
    12.75Forfeited
    
    
    (61,667
    )
    
    
    20.54Nonvested at June 21, 2009
    
    
    804,663
    
    
    $
    10.45
   12




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##### Table of Contents



7. Net (Loss) Income per Common Share
   Quarters Ended
    
    
    Six Months EndedJune 22,
    
    
    
    
    
    
    June 22,June 21,
    
    
    2008
    
    
    June 21,
    
    
    20082009
    
    
    (As Adjusted)
    
    
    2009
    
    
    (As Adjusted)Numerator:Net (loss) income
    
    $
    (31,083
    )
    
    $
    5,834
    
    
    $
    (41,035
    )
    
    $
    6,559Denominator:Denominator for basic (loss) income per common share:Weighted average shares outstanding
    
    
    30,438
    
    
    
    30,193
    
    
    
    30,431
    
    
    
    30,343Effect of dilutive securities:Stock-based compensation
    
    
    
    
    
    
    80
    
    
    
    
    
    
    
    239Denominator for diluted net (loss) income per common
share
    
    
    30,438
    
    
    
    30,273
    
    
    
    30,431
    
    
    
    30,582Basic net (loss) income per common share
    
    $
    (1.02
    )
    
    $
    0.19
    
    
    $
    (1.35
    )
    
    $
    0.21Diluted net (loss) income per common share
    
    $
    (1.02
    )
    
    $
    0.19
    
    
    $
    (1.35
    )
    
    $
    0.21
  8. Comprehensive (Loss) Income
  Quarters Ended
    
    
    Six Months EndedJune 22,
    
    
    
    
    
    
    June 22,June 21,
    
    
    2008
    
    
    June 21,
    
    
    20082009
    
    
    (As Adjusted)
    
    
    2009
    
    
    (As Adjusted)Net (loss) income
    
    $
    (31,083
    )
    
    $
    5,834
    
    
    $
    (41,035
    )
    
    $
    6,559Change in fair value of interest rate swap
    
    
    1,232
    
    
    
    2,373
    
    
    
    1,057
    
    
    
    2,373Amortization of pension and
post-retirement benefit transition
obligation
    
    
    115
    
    
    
    26
    
    
    
    217
    
    
    
    31Comprehensive (loss) income
    
    $
    (29,736
    )
    
    $
    8,233
    
    
    $
    (39,761
    )
    
    $
    8,963
 9. Segment Reporting
   13




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Quarters Ended
    
    
    Six Months EndedJune 22,
    
    
    
    
    
    
    June 22,June 21,
    
    
    2008
    
    
    June 21,
    
    
    20082009
    
    
    (As Adjusted)
    
    
    2009
    
    
    (As Adjusted)Operating revenue:Horizon Lines
    
    $
    271,209
    
    
    $
    323,036
    
    
    $
    536,256
    
    
    $
    620,953Horizon Logistics
    
    
    37,529
    
    
    
    57,249
    
    
    
    74,792
    
    
    
    108,706308,738
    
    
    
    380,285
    
    
    
    611,048
    
    
    
    729,659Inter-segment revenue
    
    
    (30,254
    )
    
    
    (49,327
    )
    
    
    (60,213
    )
    
    
    (92,754
    )Consolidated operating revenue
    
    $
    278,484
    
    
    $
    330,958
    
    
    $
    550,835
    
    
    $
    636,905Depreciation and amortization:Horizon Lines
    
    $
    14,676
    
    
    $
    15,697
    
    
    $
    29,352
    
    
    $
    31,154Horizon Logistics
    
    
    98
    
    
    
    253
    
    
    
    195
    
    
    
    52614,774
    
    
    
    15,950
    
    
    
    29,547
    
    
    
    31,680Eliminations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (30
    )Consolidated depreciation and amortization
    
    $
    14,774
    
    
    $
    15,950
    
    
    $
    29,547
    
    
    $
    31,650Segment operating (loss) income:Horizon Lines
    
    $
    (8,791
    )
    
    $
    17,735
    
    
    $
    (7,170
    )
    
    $
    30,440Horizon Logistics
    
    
    (2,416
    )
    
    
    (1,051
    )
    
    
    (4,855
    )
    
    
    (2,155
    )Consolidated operating (loss) income
    
    
    (11,207
    )
    
    
    16,684
    
    
    
    (12,025
    )
    
    
    28,285Unallocated interest expense, net
    
    
    9,254
    
    
    
    10,353
    
    
    
    18,686
    
    
    
    21,513Loss on modification of debt
    
    
    50
    
    
    
    
    
    
    
    50
    
    
    
    Unallocated other income, net
    
    
    11
    
    
    
    4
    
    
    
    10
    
    
    
    1Consolidated (loss) income before income
tax expense
    
    $
    (20,522
    )
    
    $
    6,327
    
    
    $
    (30,771
    )
    
    $
    6,771Capital expenditures:Horizon Lines
    
    $
    3,595
    
    
    $
    3,452
    
    
    $
    6,887
    
    
    $
    6,430Horizon Logistics
    
    
    244
    
    
    
    566
    
    
    
    267
    
    
    
    1,032Consolidated capital expenditures
    
    $
    3,839
    
    
    $
    4,018
    
    
    $
    7,154
    
    
    $
    7,462
 June 21,2009Segment assets:Horizon Lines
    
    $
    840,420Horizon Logistics
    
    
    10,364Consolidated assets
    
    $
    850,784
  14




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10. Property and Equipment
  June 21,
    
    
    December 21,2009
    
    
    2008Vessels and vessel improvements
    
    $
    149,363
    
    
    $
    149,557Containers
    
    
    24,431
    
    
    
    24,099Chassis
    
    
    14,537
    
    
    
    14,713Cranes
    
    
    35,885
    
    
    
    26,852Machinery and equipment
    
    
    27,218
    
    
    
    26,127Facilities and land improvements
    
    
    21,244
    
    
    
    20,718Software
    
    
    21,984
    
    
    
    20,875Construction in progress
    
    
    26,350
    
    
    
    34,382Total property and equipment
    
    
    321,012
    
    
    
    317,323Accumulated depreciation
    
    
    (118,999
    )
    
    
    (108,870
    )Property and equipment, net
    
    $
    202,013
    
    
    $
    208,453
  11. Intangible Assets
  December 21,June 21,
    
    
    20082009
    
    
    (As Adjusted)Customer contracts/relationships
    
    $
    142,475
    
    
    $
    142,475Trademarks
    
    
    63,800
    
    
    
    63,800Deferred financing costs
    
    
    14,277
    
    
    
    11,388Non-compete agreements
    
    
    262
    
    
    
    262Total intangibles with definite lives
    
    
    220,814
    
    
    
    217,925Accumulated amortization
    
    
    (103,442
    )
    
    
    (92,383
    )Net intangibles with definite lives
    
    
    117,372
    
    
    
    125,542Goodwill
    
    
    317,068
    
    
    
    317,068Intangible assets, net
    
    $
    434,440
    
    
    $
    442,610
  12. Accrued Liabilities
  June 21,
    
    
    December 21,2009
    
    
    2008Vessel operations
    
    $
    19,860
    
    
    $
    18,681Payroll and employee benefits
    
    
    15,452
    
    
    
    13,943Marine operations
    
    
    10,157
    
    
    
    12,162Terminal operations
    
    
    10,611
    
    
    
    11,847Fuel
    
    
    4,721
    
    
    
    7,443Interest
    
    
    6,658
    
    
    
    6,437Settlement of class action lawsuit
    
    
    20,000
    
    
    
    Restructuring costs
    
    
    1,119
    
    
    
    3,069Other liabilities
    
    
    22,526
    
    
    
    24,138Total other accrued liabilities
    
    $
    111,104
    
    
    $
    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
    
    
    Six Months EndedJune 21,
    
    
    June 22,
    
    
    June 21,
    
    
    June 22,2009
    
    
    2008
    
    
    2009
    
    
    2008($ in thousands)Operating revenue
    
    $
    278,484
    
    
    $
    330,958
    
    
    $
    550,835
    
    
    $
    636,905Operating expense
    
    
    289,691
    
    
    
    314,274
    
    
    
    562,860
    
    
    
    608,620Operating (loss) income
    
    $
    (11,207
    )
    
    $
    16,684
    
    
    $
    (12,025
    )
    
    $
    28,285Operating ratio
    
    
    104.0
    %
    
    
    95.0
    %
    
    
    102.2
    %
    
    
    95.6
    %Revenue containers (units)
    
    
    64,176
    
    
    
    71,169
    
    
    
    125,653
    
    
    
    137,399Average unit revenue
    
    $
    3,686
    
    
    $
    3,959
    
    
    $
    3,713
    
    
    $
    3,934
  21




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Quarters Ended
    
    
    Six Months EndedJune 22,
    
    
    
    
    
    
    June 22,June 21,
    
    
    2008
    
    
    June 21,
    
    
    20082009
    
    
    (As Adjusted)
    
    
    2009
    
    
    (As Adjusted)(in thousands)Net (loss) income
    
    $
    (31,083
    )
    
    $
    5,834
    
    
    $
    (41,035
    )
    
    $
    6,559Interest expense, net
    
    
    9,254
    
    
    
    10,353
    
    
    
    18,686
    
    
    
    21,513Income tax expense
    
    
    10,561
    
    
    
    493
    
    
    
    10,264
    
    
    
    212Depreciation and amortization
    
    
    14,774
    
    
    
    15,950
    
    
    
    29,547
    
    
    
    31,650EBITDA
    
    $
    3,506
    
    
    $
    32,630
    
    
    $
    17,462
    
    
    $
    59,934
 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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##### Table of Contents



Quarter Ended June 21, 2009 Compared with the Quarter Ended June 22, 2008
 Horizon Lines Segment
  Quarters EndedJune 21,
    
    
    June 22,2009
    
    
    2008
    
    
    Change
    
    
    % Change($ in thousands)Operating revenue
    
    $
    270,187
    
    
    $
    322,810
    
    
    $
    (52,623
    )
    
    
    (16.3
    )%Operating expense:Vessel
    
    
    82,501
    
    
    
    109,944
    
    
    
    (27,443
    )
    
    
    (25.0
    )%Marine
    
    
    49,266
    
    
    
    50,934
    
    
    
    (1,668
    )
    
    
    (3.3
    )%Inland
    
    
    42,818
    
    
    
    53,015
    
    
    
    (10,197
    )
    
    
    (19.2
    )%Land
    
    
    33,868
    
    
    
    36,369
    
    
    
    (2,501
    )
    
    
    (6.9
    )%Rolling stock rent
    
    
    9,641
    
    
    
    10,830
    
    
    
    (1,189
    )
    
    
    (11.0
    )%Cost of services
    
    
    218,094
    
    
    
    261,092
    
    
    
    (42,998
    )
    
    
    (16.5
    )%Depreciation and amortization
    
    
    11,067
    
    
    
    11,297
    
    
    
    (230
    )
    
    
    (2.0
    )%Amortization of vessel dry-docking
    
    
    3,609
    
    
    
    4,400
    
    
    
    (791
    )
    
    
    (18.0
    )%Selling, general and administrative
    
    
    25,848
    
    
    
    27,455
    
    
    
    (1,607
    )
    
    
    (5.9
    )%Settlement of class action lawsuit
    
    
    20,000
    
    
    
    
    
    
    
    20,000
    
    
    
    100.0
    %Impairment charge
    
    
    659
    
    
    
    
    
    
    
    659
    
    
    
    100.0
    %Miscellaneous (income) expense, net
    
    
    (299
    )
    
    
    831
    
    
    
    (1,130
    )
    
    
    (136.0
    )%Total operating expense
    
    
    278,978
    
    
    
    305,075
    
    
    
    (26,097
    )
    
    
    (8.6
    )%Operating (loss) income
    
    $
    (8,791
    )
    
    $
    17,735
    
    
    $
    (26,526
    )
    
    
    (149.6
    )%Operating ratio
    
    
    103.6
    %
    
    
    94.5
    %
    
    
    
    
    
    
    9.1
    %Revenue containers (units)
    
    
    64,176
    
    
    
    71,169
    
    
    
    (6,993
    )
    
    
    (9.8
    )%Average unit revenue
    
    $
    3,686
    
    
    $
    3,959
    
    
    $
    (273
    )
    
    
    (6.9
    )%
 Operating Revenue.
 Bunker and intermodal fuel surcharges included in rates decline
    
    $
    (27,811
    )Revenue container volume decrease
    
    
    (27,688
    )Non-transportation services decrease
    
    
    (6,353
    )General rate increases
    
    
    9,229Total operating revenue decrease
    
    $
    (52,623
    )
  Cost of Services.
  24




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Vessel fuel costs decrease
    
    $
    (26,657
    )Labor and other vessel operating decrease
    
    
    (613
    )Vessel lease expense decrease
    
    
    (173
    )Total vessel expense decrease
    
    $
    (27,443
    )
     Quarters EndedJune 21,
    
    
    June 22,2009
    
    
    2008
    
    
    % Change(in thousands)Land expense:Maintenance
    
    $
    12,086
    
    
    $
    13,549
    
    
    
    (10.8
    )%Terminal overhead
    
    
    13,112
    
    
    
    14,043
    
    
    
    (6.6
    )%Yard and gate
    
    
    6,853
    
    
    
    6,585
    
    
    
    4.1
    %Warehouse
    
    
    1,817
    
    
    
    2,192
    
    
    
    (17.1
    )%Total land expense
    
    $
    33,868
    
    
    $
    36,369
    
    
    
    (6.9
    )%
   25




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##### Table of Contents



Depreciation and Amortization.
 Quarters EndedJune 21,
    
    
    June 22,2009
    
    
    2008
    
    
    % Change(in thousands)Depreciation and amortization:Depreciationowned vessels
    
    $
    2,227
    
    
    $
    2,554
    
    
    
    (12.8
    )%Depreciation and amortizationother
    
    
    3,765
    
    
    
    3,665
    
    
    
    2.7
    %Amortization of intangible assets
    
    
    5,075
    
    
    
    5,078
    
    
    
    (0.1
    )%Total depreciation and amortization
    
    $
    11,067
    
    
    $
    11,297
    
    
    
    (2.0
    )%Amortization of vessel dry-docking
    
    $
    3,609
    
    
    $
    4,400
    
    
    
    (18.0
    )%
 Amortization of Vessel Dry-docking.
 Selling, General and Administrative.
 Settlement of Class Action Lawsuit
 Impairment Charge
 Miscellaneous Expense, Net
  26




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##### Table of Contents



Horizon Logistics Segment
  Quarters EndedJune 21,
    
    
    June 22,2009
    
    
    2008
    
    
    Change
    
    
    % Change(in thousands)Operating revenue
    
    $
    8,297
    
    
    $
    8,148
    
    
    $
    149
    
    
    
    1.8
    %Operating expense:Inland
    
    
    6,433
    
    
    
    6,097
    
    
    
    336
    
    
    
    5.5
    %Land
    
    
    1,520
    
    
    
    642
    
    
    
    878
    
    
    
    136.8
    %Rolling stock rent
    
    
    290
    
    
    
    103
    
    
    
    187
    
    
    
    181.6
    %Cost of services
    
    
    8,243
    
    
    
    6,842
    
    
    
    1,401
    
    
    
    20.5
    %Depreciation and amortization
    
    
    98
    
    
    
    253
    
    
    
    (155
    )
    
    
    (61.3
    )%Selling, general and administrative
    
    
    2,156
    
    
    
    2,182
    
    
    
    (26
    )
    
    
    (1.2
    )%Restructuring charge
    
    
    213
    
    
    
    
    
    
    
    213
    
    
    
    100.0
    %Miscellaneous expense (income), net
    
    
    3
    
    
    
    (78
    )
    
    
    81
    
    
    
    103.8
    %Total operating expense
    
    
    10,713
    
    
    
    9,199
    
    
    
    1,514
    
    
    
    16.5
    %Operating loss
    
    $
    (2,416
    )
    
    $
    (1,051
    )
    
    $
    (1,365
    )
    
    
    (130.0
    )%
 Operating Revenue.
 Cost of Services.
 Depreciation and Amortization.
 Quarters EndedJune 21,
    
    
    June 22,2009
    
    
    2008
    
    
    % Change(in thousands)Depreciation and amortization:Depreciation and amortizationother
    
    $
    16
    
    
    $
    9
    
    
    
    77.8
    %Amortization of intangible assets
    
    
    82
    
    
    
    244
    
    
    
    (66.4
    )%Total depreciation and amortization
    
    $
    98
    
    
    $
    253
    
    
    
    (61.3
    )%
 Selling, General and Administrative.
 Restructuring Charge.
 Unallocated Expenses
 Interest Expense, Net.
  27




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##### Table of Contents



Income Tax Expense.
 Six Months Ended June 21, 2009 Compared with the Six Months Ended June 22, 2008
 Horizon Lines Segment
 Six Months EndedJune 21,
    
    
    June 22,2009
    
    
    2008
    
    
    Change
    
    
    % Change($ in thousands)Operating revenue
    
    $
    534,491
    
    
    $
    621,378
    
    
    $
    (86,887
    )
    
    
    (14.0
    )%Operating expense:Vessel
    
    
    167,318
    
    
    
    213,377
    
    
    
    (46,059
    )
    
    
    (21.6
    )%Marine
    
    
    98,659
    
    
    
    100,139
    
    
    
    (1,480
    )
    
    
    (1.5
    )%Inland
    
    
    86,319
    
    
    
    100,141
    
    
    
    (13,822
    )
    
    
    (13.8
    )%Land
    
    
    68,882
    
    
    
    71,570
    
    
    
    (2,688
    )
    
    
    (3.8
    )%Rolling stock rent
    
    
    18,555
    
    
    
    22,837
    
    
    
    (4,282
    )
    
    
    (18.8
    )%Cost of services
    
    
    439,733
    
    
    
    508,064
    
    
    
    (68,331
    )
    
    
    (13.4
    )%Depreciation and amortization
    
    
    21,945
    
    
    
    22,349
    
    
    
    (404
    )
    
    
    (1.8
    )%Amortization of vessel dry-docking
    
    
    7,407
    
    
    
    8,775
    
    
    
    (1,368
    )
    
    
    (15.6
    )%Selling, general and administrative
    
    
    51,277
    
    
    
    50,485
    
    
    
    792
    
    
    
    1.6
    %Settlement of class action lawsuit
    
    
    20,000
    
    
    
    
    
    
    
    20,000
    
    
    
    100.0
    %Impairment charge
    
    
    659
    
    
    
    
    
    
    
    659
    
    
    
    100.0
    %Restructuring charge
    
    
    753
    
    
    
    
    
    
    
    753
    
    
    
    100.0
    %Miscellaneous (income) expense, net
    
    
    (113
    )
    
    
    1,265
    
    
    
    (1,378
    )
    
    
    (108.9
    )%Total operating expense
    
    
    541,661
    
    
    
    590,938
    
    
    
    (49,277
    )
    
    
    (8.3
    )%Operating (loss) income
    
    $
    (7,170
    )
    
    $
    30,440
    
    
    $
    (37,610
    )
    
    
    (123.6
    )%Operating ratio
    
    
    101.3
    %
    
    
    95.1
    %
    
    
    
    
    
    
    6.2
    %Revenue containers (units)
    
    
    125,653
    
    
    
    137,399
    
    
    
    (11,746
    )
    
    
    (8.5
    )%Average unit revenue
    
    $
    3,713
    
    
    $
    3,934
    
    
    $
    (221
    )
    
    
    (5.6
    )%
 Operating Revenue.
 Bunker and intermodal fuel surcharges included in rates decline
    
    $
    (47,951
    )Revenue container volume decrease
    
    
    (46,209
    )Non-transportation services decrease
    
    
    (14,990
    )General rate increases
    
    
    22,263Total operating revenue decrease
    
    $
    (86,887
    )
   28




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##### Table of Contents



Cost of Services.
  Vessel fuel costs decline
    
    $
    (48,909
    )Vessel lease expense decrease
    
    
    (128
    )Labor and other vessel operating increase
    
    
    2,978Total vessel expense decrease
    
    $
    (46,059
    )
     Six Months EndedJune 21,
    
    
    June 22,2009
    
    
    2008
    
    
    % Change(in thousands)Land expense:Maintenance
    
    $
    24,341
    
    
    $
    26,112
    
    
    
    (6.8
    )%Terminal overhead
    
    
    26,551
    
    
    
    27,926
    
    
    
    (4.9
    )%Yard and gate
    
    
    14,431
    
    
    
    13,476
    
    
    
    7.1
    %Warehouse
    
    
    3,559
    
    
    
    4,056
    
    
    
    (12.3
    )%Total land expense
    
    $
    68,882
    
    
    $
    71,570
    
    
    
    (3.8
    )%
   29




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##### Table of Contents



Depreciation and Amortization.
 Six Months EndedJune 21,
    
    
    June 22,2009
    
    
    2008
    
    
    % Change(in thousands)Depreciation and amortization:Depreciationowned vessels
    
    $
    4,432
    
    
    $
    5,050
    
    
    
    (12.2
    )%Depreciation and amortizationother
    
    
    7,360
    
    
    
    7,143
    
    
    
    3.0
    %Amortization of intangible assets
    
    
    10,153
    
    
    
    10,156
    
    
    
    0.0
    %Total depreciation and amortization
    
    $
    21,945
    
    
    $
    22,349
    
    
    
    (1.8
    )%Amortization of vessel dry-docking
    
    $
    7,407
    
    
    $
    8,775
    
    
    
    (15.6
    )%
 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
 Six Months EndedJune 21,
    
    
    June 22,2009
    
    
    2008
    
    
    Change
    
    
    % Change(in thousands)Operating revenue
    
    $
    16,343
    
    
    $
    15,528
    
    
    $
    815
    
    
    
    5.2
    %Operating expense:Inland
    
    
    12,642
    
    
    
    11,380
    
    
    
    1,262
    
    
    
    11.1
    %Land
    
    
    3,101
    
    
    
    1,247
    
    
    
    1,854
    
    
    
    148.7
    %Rolling stock rent
    
    
    521
    
    
    
    210
    
    
    
    311
    
    
    
    148.1
    %Cost of services
    
    
    16,264
    
    
    
    12,837
    
    
    
    3,427
    
    
    
    26.7
    %Depreciation and amortization
    
    
    195
    
    
    
    526
    
    
    
    (331
    )
    
    
    (62.9
    )%Selling, general and administrative
    
    
    4,497
    
    
    
    4,285
    
    
    
    212
    
    
    
    4.9
    %Restructuring costs
    
    
    249
    
    
    
    
    
    
    
    249
    
    
    
    100.0
    %Miscellaneous (income) expense, net
    
    
    (7
    )
    
    
    35
    
    
    
    (42
    )
    
    
    (120.0
    )%Total operating expense
    
    
    21,198
    
    
    
    17,683
    
    
    
    3,515
    
    
    
    19.9
    %Operating loss
    
    $
    (4,855
    )
    
    $
    (2,155
    )
    
    $
    (2,700
    )
    
    
    (125.3
    )%
 Operating Revenue.
 Cost of Services.
 Depreciation and Amortization.
 Six Months EndedJune 21,
    
    
    June 22,2009
    
    
    2008
    
    
    % Change(in thousands)Depreciation and amortization:Depreciation and amortizationother
    
    $
    33
    
    
    $
    18
    
    
    
    83.3
    %Amortization of intangible assets
    
    
    162
    
    
    
    508
    
    
    
    (68.1
    )%Total depreciation and amortization
    
    $
    195
    
    
    $
    526
    
    
    
    (62.9
    )%
 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
    
    $
    (38,060
    )Increase in payments related to Department of Justice antitrust
investigation and related legal proceedings
    
    
    (8,388
    )Increase in payments related to restructuring and impairment of assets
    
    
    (3,832
    )Increase in payments related to dry-dockings
    
    
    (2,049
    )Increase in vessel payments in excess of accrual
    
    
    (691
    )Increase in accrual for settlement of class action lawsuit
    
    
    20,000Other changes in working capital, net
    
    
    9,250$
    (23,770
    )
 Investing Activities
  Financing Activities
   Capital Requirements and Commitments
   32




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##### Table of Contents



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



Interest Rate Risk
    Ratio of Earnings to Fixed Charges
  Quarter Ended
    
    
    Six Months EndedJune 21, 2009
    
    
    June 21, 2009Pretax loss
    
    $
    (20,522
    )
    
    $
    (30,771
    )Interest expense
    
    
    9,257
    
    
    
    18,712Rentals
    
    
    8,704
    
    
    
    17,346Total fixed charges
    
    $
    17,961
    
    
    $
    36,058Pretax earnings plus fixed charges
    
    $
    (2,561
    )
    
    $
    5,287Ratio of earnings to fixed charges
    
    
    
    
    
    
    
   35




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##### Table of Contents



Recent Accounting Pronouncements
    Statements of Operations:
 Quarter Ended June 22, 2008
    
    
    Six Months Ended June 22, 2008As
    
    
    
    
    
    
    As
    
    
    As
    
    
    
    
    
    
    AsReported
    
    
    Adjustments
    
    
    Adjusted
    
    
    Reported
    
    
    Adjustments
    
    
    AdjustedInterest expense, net
    
    $
    8,147
    
    
    $
    2,206
    
    
    $
    10,353
    
    
    $
    17,156
    
    
    $
    4,357
    
    
    $
    21,513Income tax expense
    
    
    1,298
    
    
    
    (805
    )
    
    
    493
    
    
    
    1,802
    
    
    
    (1,590
    )
    
    
    212Net income
    
    
    7,235
    
    
    
    (1,401
    )
    
    
    5,834
    
    
    
    9,326
    
    
    
    (2,767
    )
    
    
    6,559Net income per shareBasic
    
    
    0.24
    
    
    
    (0.05
    )
    
    
    0.19
    
    
    
    0.31
    
    
    
    (0.10
    )
    
    
    0.21Diluted
    
    
    0.24
    
    
    
    (0.05
    )
    
    
    0.19
    
    
    
    0.31
    
    
    
    (0.10
    )
    
    
    0.21
 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
  36




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##### Table of Contents



Quarter Ended June 22, 2008
    
    
    Six Months Ended June 22, 2008As
    
    
    
    
    
    
    As
    
    
    As
    
    
    
    
    
    
    AsReported
    
    
    Adjustments
    
    
    Adjusted
    
    
    Reported
    
    
    Adjustments
    
    
    AdjustedDenominator for basic net income per share
    
    
    29,919
    
    
    
    274
    
    
    
    30,193
    
    
    
    30,105
    
    
    
    238
    
    
    
    30,343Effect of dilutive securities
    
    
    244
    
    
    
    (164
    )
    
    
    80
    
    
    
    409
    
    
    
    (170
    )
    
    
    239Denominator for diluted net income per
share
    
    
    30,163
    
    
    
    110
    
    
    
    30,273
    
    
    
    30,514
    
    
    
    68
    
    
    
    30,582
       37




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##### Table of Contents



Forward Looking Statements
      
 3. Quantitative and Qualitative Disclosures About Market Risk
     38




---



##### Table of Contents



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




---



##### 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
  (a)
    
    Elect to the Board of Directors of the Company the three Class I
directors named as the Companys nominees in the Proxy Statement for
the Annual Meeting, filed with the SEC on April 16, 2009, as follows:
 SharesWithholdingNominee
    
    Shares Voting For
    
    
    Authority to VoteJames G. Cameron
    
    
    27,226,340
    
    
    
    404,260Alex J. Mandl
    
    
    25,486,286
    
    
    
    2,144,314Norman Y. Mineta
    
    
    25,926,011
    
    
    
    1,704,589
  (b)
    
    Approve the Companys 2009 Incentive Compensation Plan.
 For
    
    Against
    
    
    Abstain21,937,511
    
    
    919,546
    
    
    
    25,919
 (c)
    
    Approve the Companys 2009 Employee Stock Purchase Plan.
 For
    
    Against
    
    Abstain21,267,358
    
    
    1,593,742
    
    
    
    21,876
  41




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##### Table of Contents



(d)
    
    Ratify the action of the Audit Committee of the Board of Directors in
appointing Ernst & Young LLP as independent registered public
accounting firm for the 2009 fiscal year.
 For
    
    Against
    
    
    Abstain27,566,718
    
    
    42,420
    
    
    
    21,462
 
 5. Other Information
  
 6. Exhibits
 10.1
    
    
    Performance Grant Agreement dated May 14, 2009, between Horizon Lines, Inc. and Charles G. Raymond
(filed as Exhibit 10.1 to the Companys report on Form 8-K filed May 20, 2009).10.2
    
    
    Form of Restricted Stock Award Agreement for Outside Directors (filed as Exhibit 10.1 to the
Companys report on Form 8-K filed June 5, 2009).10.3
    
    
    Settlement Agreement (filed as Exhibit 10.1 to the Companys report on Form 8-K filed June 12, 2009).10.4
    
    
    First Amendment to Credit Agreement (filed as Exhibit 10.2 to the Companys report on Form 8-K filed
June 12, 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
    
    
    Performance Grant Agreement dated May 14, 2009, between Horizon Lines, Inc. and Charles G. Raymond
(filed as Exhibit 10.1 to the Companys report on Form 8-K filed May 20, 2009).10.2
    
    
    Form of Restricted Stock Award Agreement for Outside Directors (filed as Exhibit 10.1 to the
Companys report on Form 8-K filed June 5, 2009).10.3
    
    
    Settlement Agreement (filed as Exhibit 10.1 to the Companys report on Form 8-K filed June 12,
2009).10.4
    
    
    First Amendment to Credit Agreement (filed as Exhibit 10.2 to the Companys report on Form 8-K
filed June 12, 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