8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 3, 2011

HORIZON LINES, INC.

(Exact name of registrant as specified in its Charter)

Delaware	001-32627	74-3123672
(State or Other Jurisdiction of Organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

4064 Colony Road, Suite 200
Charlotte, North Carolina 28211
(Address of Principal Executive Offices, including Zip Code)

(704) 973-7000
(Registrant’s telephone number, including area code)

N/A
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

EX-99.1

EX-99.2

EX-99.3

Item 2.02. Results of Operations and Financial Condition.

     On March 3, 2011, Horizon Lines, Inc. (the “Company”) issued a press release announcing its financial results for the fourth fiscal quarter and year ended December 26, 2010 and held a conference call to discuss its financial results and outlook for fiscal 2011. A copy of the press release is filed as Exhibit 99.1 hereto, a copy of the transcript of the conference call is filed as Exhibit 99.2 hereto and a copy of the Fourth Quarter 2010 Review presentation is attached as Exhibit 99.3 hereto. Each of these exhibits is incorporated herein by reference.

     The information under Items 2.02 and 7.01 in this Current Report, and Exhibits 99.1, 99.2 and 99.3 hereto, are being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall this information be deemed incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

Item 7.01. Regulation FD Disclosure.

     The disclosure under Item 2.02 of this Current Report on Form 8-K is incorporated herein by reference.

SAFE HARBOR STATEMENT

     The information contained in this Current Report on Form 8-K (including the exhibits hereto) should be read in conjunction with our filings made with the Securities and Exchange Commission. This Current Report on Form 8-K (including the exhibits hereto) contains “forward-looking statements” within the meaning of the federal securities laws. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those that do not relate solely to historical fact. They include, but are not limited to, any statement that may predict, forecast, indicate or imply future results, performance, achievements or events. Words such as, but not limited to, “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “targets,” “projects,” “likely,” “will,” “would,” “could” and similar expressions or phrases identify forward-looking statements.

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

     Factors that may cause actual results to differ from expected results include: failure by us or the United Statement Department of Justice to comply with the terms of the plea agreement; failure to obtain court approval of the plea agreement; any new developments relating to antitrust

matters in any of our trades; failure to obtain court approval of the class-action settlement in Puerto Rico; failure to obtain covenant relief under our credit agreement and secured convertible notes; our ability to refinance our existing debt; our ability to integrate and retain new management; decreases in shipping volumes; legal or other proceedings to which we are or may become subject, including investigations related to recordkeeping and reporting requirements for ship generated pollution and any other government investigations and legal proceedings; volatility in fuel prices; competitive nature of the trans-Pacific ocean transportation market between Asia and the U.S. West Coast; cyclical nature of international shipping industry and resulting volatile changes in freight rates; international regulatory and currency environment; labor interruptions or strikes; job related claims, liability under multi-employer pension plans; compliance with safety and environmental protection and other governmental requirements; the successful start-up of any Jones-Act competitor; increased inspection procedures and tighter import and export controls; restrictions on foreign ownership of our vessels; repeal or substantial amendment of the coastwise laws of the United States, also known as the Jones Act; escalation of insurance costs, catastrophic losses and other liabilities; the arrest of our vessels by maritime claimants; severe weather and natural disasters; our inability to exercise our purchase options for our chartered vessels; the aging of our vessels; unexpected substantial dry-docking costs for our vessels; actions by our stockholders; changes in tax laws or in their interpretation or application (including the repeal of the application of the tonnage tax to our trade in any one of our applicable shipping routes); and adverse tax audits and other tax matters.

     In light of these risks and uncertainties, expected results or other anticipated events or circumstances discussed in this Form 8-K might not occur. We undertake no obligation, and specifically decline any obligation, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

     See the section entitled “Risk Factors” in our Form 10-K for the fiscal year ended December 20, 2009 and in our Form 10-Q for the fiscal quarter ended June 20, 2010, as filed with the SEC for a more complete discussion of the above mentioned risks and uncertainties and for other risks and uncertainties. Those factors and the other risk factors described therein are not necessarily all of the important factors that could cause actual results or developments to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could harm our results. Consequently, there can be no assurance that actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, us. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking statements.

NON-GAAP FINANCIAL MEASURES

     Item 2.02 and 7.01, and Exhibits 99.1, 99.2 and 99.3 hereto, contain the following financial measures: adjusted net income, adjusted net income per diluted share, adjusted operating income, free cash flow, adjusted free cash flow, adjusted operating expense, adjusted other expense, adjusted income tax expense, adjusted pretax income, adjusted earnings per share, adjusted earnings per diluted share and adjusted operating ratio, as well as EBITDA and adjusted EBITDA on a consolidated basis and for the Company’s shipping and logistics business

segments. These are non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission.

     The Company uses adjusted net income, adjusted net income per diluted share, adjusted operating income, adjusted operating expense, adjusted other expense, adjusted income tax expense, adjusted pretax income and adjusted earnings per diluted share to exclude certain items to provide a useful measure of the Company’s operations without the impact of significant special items. The Company defines free cash flow as EBITDA adjusted to include certain non-cash items and net proceeds from sale of fixed assets and to exclude certain uses of cash flow, EBITDA as net income plus net interest expense, income taxes, depreciation and amortization and adjusted EBITDA as net income plus net interest expense, income taxes, depreciation and amortization adjusted to exclude unusual items.

     The Company believes that these non-GAAP financial measures provide information that is useful to the Company’s investors. The Company believes that this information is helpful in understanding period-over-period operating results separate and apart from items that may, or could, have a disproportional positive or negative impact on the Company’s results of operations in any particular period. Additionally, the Company uses these non-GAAP measures to evaluate its past performance and prospects for future performance. The Company also utilizes certain of these measures to compensate certain management personnel of the Company.

     The Company believes that EBITDA is a meaningful measure for investors as (i) EBITDA is a component of the measure used by the Company’s board of directors and management team to evaluate the Company’s operating performance, (ii) the senior credit facility contains covenants that require the Company to maintain certain interest expense coverage and leverage ratios, which contain EBITDA, and (iii) EBITDA is a measure used by the Company’s management team to make day-to-day operating decisions. EBITDA for the Company’s business segments is used by the Company’s internal decision makers to evaluate segment operating performance. The Company believes free cash flow provides supplemental information about the Company’s ability to fund its working capital needs and capital expenditures, and to pay interest and service debt.

     The Company also uses a non-GAAP net income measure on a per diluted share basis. The Company believes that it is important to provide per share information, in addition to absolute dollar measures, when describing its business, including when presenting non-GAAP measures.

     The Company uses adjusted financial measures to exclude certain items in order to illustrate the affect of those items on the financial performance of the Company. Adjusted financial measures are the measures used by management to compare operating results and to evaluate operating performance.

     The financial measures adjusted net income, adjusted net income per diluted share, adjusted operating income, free cash flow, adjusted free cash flow, adjusted operating expense, adjusted other expense, adjusted income tax expense, adjusted pretax income, adjusted earnings per share, adjusted earnings per diluted share, adjusted operating ratio, EBITDA and Adjusted

EBITDA are not recognized terms under GAAP and do not purport to be alternatives to net income or earnings per share as a measure of earnings or free cash flow as a measure of cash flow for management’s discretionary use, as they do not consider certain cash requirements such as dividend payments and debt service requirements. Because all companies do not use identical calculations, these presentations of non-GAAP financial measures may not be comparable to other similarly titled measures of other companies.

     Reconciliations of the non-GAAP measures to the most directly comparable GAAP measures are provided in the press release and the Earnings Release Presentation filed as Exhibits 99.1 and 99.3, respectively.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

99.1	Press Release of Horizon Lines, Inc. dated March 3, 2011.
99.2	Transcript of conference call held on March 3, 2011.
99.3	Earnings Release Presentation for the Fourth Fiscal Quarter ended December 26, 2010.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	HORIZON LINES, INC. (Registrant)
Date: March 9, 2011	By:	/s/ Michael T. Avara
		Michael T. Avara
		Senior Vice President and Chief Financial Officer

Exhibit Index

Item 9.01 Financial Statements and Exhibits.

     (d) Exhibits

99.1	Press Release of Horizon Lines, Inc. dated March 3, 2011.
99.2	Transcript of conference call held on March 3, 2011.
99.3	Earnings Release Presentation for the Fourth Fiscal Quarter ended December 26, 2010.

EX-99.1

Exhibit 99.1

PRESS RELEASE

For information contact:
Jim Storey
Director, Investor Relations & Corporate Communications
704.973.7107
jstorey@horizonlines.com

HORIZON LINES REPORTS 2010 FINANCIAL RESULTS

Adjusted Full-Year EBITDA from Continuing Operations Totaled $96.4 Million

Comparable Volume Down 1.1% from 2009; Rate, Net of Fuel, Slightly Lower

Adjusted Free Cash Flow from Continuing Operations of $40.5 Million

Company in Discussions with Lenders as it Moves Forward to Refinance Debt

CHARLOTTE, NC, March 3, 2011 – Horizon Lines, Inc. (NYSE: HRZ) today reported financial results for its fiscal fourth quarter and year ended December 26, 2010.

As a result of the company’s previously announced plans to divest its logistics business, financial results are being presented on a continuing operations basis, excluding the discontinued logistics operations.

On a GAAP basis, the fourth-quarter net loss from continuing operations totaled $46.4 million, or $1.50 per share, on revenue from continuing operations of $298.8 million. On an adjusted basis, the fourth-quarter net loss from continuing operations totaled $10.2 million, or $0.33 per diluted share, after excluding charges totaling $36.2 million after tax, or $1.17 per diluted share. The majority of these charges, $30.0 million, represents the net present value of a $45.0 million, non-interest bearing fine associated with the resolution of the Department of Justice’s antitrust investigation. The remaining charges include a reduction in non-union workforce, antitrust-related legal fees, an agreement to settle indirect purchaser litigation in Puerto Rico, and equipment impairment charges.

In the year-ago fourth quarter, Horizon Lines reported net income from continuing operations of $1.6 million, or $0.05 per diluted share, on revenue of $286.7 million. On an adjusted basis, net income totaled $3.9 million, or $0.12 per diluted share, after excluding antitrust-related legal expenses, costs for early retirement of certain union employees, and tax adjustments totaling $2.3 million, or $0.07 per share.

Horizon Lines 4th Quarter 2010 Page 2 of 11

Comparison of GAAP and Non-GAAP Earnings from Continuing Operations

	Quarters Ended
(in millions, except per share data)*	12/26/10			12/20/09
GAAP:
Operating revenue	$	298.8		$	286.7
Net (loss) income	$	(46.4	)	$	1.6
Net (loss) income per diluted share	$	(1.50	)	$	0.05
Non-GAAP:
EBITDA	$	(19.4	)	$	25.9
Adjusted EBITDA *	$	17.1		$	27.9
Adjusted net (loss) income *	$	(10.2	)	$	3.9
Adjusted net (loss) income per share*	$	(0.33	)	$	0.12

* See attached schedules for reconciliation of fourth-quarter 2010 and 2009 reported GAAP results to adjusted Non-GAAP results. 2010 includes 53 weeks versus 52 weeks in 2009.

Container volume for the 2010 fourth quarter totaled 69,427 loads, a 7.9% increase from 64,320 loads for the same period a year ago, due largely to the extra week and the contribution of the company’s new China service, which began operations in December. Excluding these factors, fourth-quarter volume declined 1.1% from a year ago. Comparable container volume (excluding the extra week and international loads) for the year totaled 254,854 loads, down 1.1% from 257,625 loads a year ago.

Container rates, net of fuel, for the 2010 fourth quarter, eased to $3,229 from $3,251 for the fourth quarter a year ago, largely a result of continued pricing pressures in Puerto Rico. For the year, container rates, net of fuel, were $3,250, marginally below the rate of $3,262 a year ago.

“The fourth-quarter turned out to be very challenging, due to lower-than-anticipated volumes in Hawaii, particularly in the latter months of the quarter, increased fuel prices, continuing rate pressures in Puerto Rico, and anticipated start-up costs related to our new China service,” said Brian W. Taylor, Executive Vice President and Chief Operating Officer. “Despite these challenges we delivered a decent financial performance for the year, including adjusted EBITDA from continuing operations of $96.4 million and adjusted free cash flow from continuing operations of $40.5 million.

“Our achievements for the quarter included the successful launch of our new Five Star Express service between the U.S. West Coast and China, which is operating according to management expectations,” Mr. Taylor said. “In addition, we continued to demonstrate diligent cost management, maintained relatively consistent container rates in the face of

Horizon Lines 4th Quarter 2010 Page 3 of 11

continuing pricing pressures, and delivered excellent customer service and improved schedule integrity across our tradelanes.”

Fourth-Quarter 2010 Financial Highlights

Operating Revenue — Fourth-quarter operating revenue from continuing operations increased 4.2% to $298.8 million from $286.7 million a year ago. The largest factors in the $12.1 million revenue gain were a $17.7 million increase in revenue due to volume and a $2.8 million contribution from the company’s terminal services business. These gains were partially offset by a $5.2 million revenue decline resulting from lost space charter revenue, a $3.5 million decrease related to the expiration of a vessel management contract with the federal government, and a $2.4 million decline resulting from a decrease in rates, net of fuel.

Operating Income — The GAAP operating loss from continuing operations for the fourth quarter totaled $35.5 million, compared with operating income from continuing operations of $11.9 million a year ago. The 2010 GAAP operating income includes expenses of $36.5 million. These consist of a $30.0 million charge related to the resolution of the Department of Justice’s antitrust investigation, $2.0 million in charges associated with non-union workforce reductions, $1.8 million in antitrust-related legal expenses, $1.8 million to be paid to settle indirect purchaser litigation in Puerto Rico, and $0.9 million for equipment impairment charges. The 2009 GAAP operating income includes $1.7 million of antitrust-related legal expenses, and $0.3 million in costs for early retirement of certain union employees. Excluding these items, the fourth-quarter 2010 adjusted operating income from continuing operations totaled $0.9 million, compared with $13.9 million a year ago. The decline in 2010 fourth-quarter adjusted operating income from the prior year was primarily due to lower fuel recovery, higher vessel operating expenses associated with dry-dockings, and lower rates, net of fuel. These negative factors were partially offset by terminal services savings and a decrease in overhead expenses.

EBITDA — EBITDA from continuing operations totaled a negative $19.4 million for the 2010 fourth quarter, compared with a positive $25.9 million for the same period a year ago. Adjusted EBITDA from continuing operations for the fourth quarter of 2010 was $17.1 million, compared with $27.9 million for 2009. EBITDA and adjusted EBITDA for the 2010 and 2009 fourth quarters were impacted by the same factors affecting operating income.

Shares Outstanding — The company had a weighted daily average of 30.9 million fully diluted shares outstanding for the fourth quarter of 2010, the same as the fourth quarter of 2009.

Full-Year Results — For the fiscal year ended December 26, 2010, operating revenue increased 3.4% to $1.16 billion from $1.12 billion for 2009. EBITDA totaled $54.2 million compared with $80.2 million a year ago. Adjusted EBITDA from continuing operations for 2010 totaled $96.4 million, after excluding $42.2 million in charges

Horizon Lines 4th Quarter 2010 Page 4 of 11

related to the resolution of the Department of Justice’s antitrust investigation, antitrust-related legal expenses, equipment impairment charges, non-union workforce reductions, resolution of indirect purchaser litigation in Puerto Rico, and charges associated with early retirement of certain union employees. Adjusted EBITDA from continuing operations for 2009 totaled $115.4 million, after excluding $35.2 million in charges related to the Puerto Rico class-action settlement, antitrust-related legal expenses, restructuring, and impairment and other charges. The 2010 net loss from continuing operations totaled $45.8 million, or $1.49 per diluted share, compared with a net loss from continuing operations of $26.4 million, or $0.87 per diluted share for 2009. The adjusted net loss from continuing operations for 2010 totaled $4.0 million, or $0.13 per diluted share, compared with adjusted net income from continuing operations of $19.1 million, or $0.62 per diluted share, a year ago.

Liquidity, Credit Facility Compliance & Debt Structure — As of December 26, 2010, the company had total liquidity of $60.4 million, consisting of $2.8 million in cash and $57.6 million of effective revolver availability. The company’s trailing 12-month interest coverage and senior secured leverage ratios were 3.61 times and 2.14 times, respectively, in compliance with the credit agreement requirement of above 3.5 times and below 2.75 times, respectively. Funded debt outstanding totaled $532.9 million, a reduction of $7.8 million from the third quarter and $9.6 million from a year-ago. The funded debt outstanding at December 26, 2010, consisted of $202.9 million in senior secured debt and $330.0 million in convertible notes, at a weighted average interest rate of 4.48%. The company’s senior secured debt matures in August 2012, but the maturity will accelerate to February 2012 if the convertible notes are not refinanced or if arrangements are not being made for their refinancing by that date.

Please see attached schedules for the reconciliation of fourth-quarter and full-year 2010 and 2009 reported GAAP results and Non-GAAP adjusted results.

Outlook

“We are cautiously optimistic about the outlook for 2011 and expect modest volume improvements in line with the pace of economic recovery in our tradelanes,” said Michael T. Avara, Executive Vice President and Chief Financial Officer. “We expect some strengthening of our tradelane economies, combined with our cost-reduction initiatives, to result in revenue and EBITDA growth for 2011. We expect the seasonal weakness typical in the first quarter to be exaggerated by start-up costs associated with our new China service and the corresponding loss of steady month-to-month revenue from our previous TP1 agreement with Maersk, but we also anticipate improving growth as the year progresses.

“Our progress in 2011 will continue to be influenced by the pace and breadth of economic recovery in our tradelanes, the success of our start-up in China, and the continued high fuel costs and ongoing pricing pressures in Puerto Rico,” Mr. Avara said. “Horizon Lines is positioned to make progress in this environment. With the Department of Justice investigation behind us, we are now moving ahead with our refinancing efforts. We are targeting a completion of this process in the second or third quarter, and are currently in

Horizon Lines 4th Quarter 2010 Page 5 of 11

discussions with our lenders to obtain covenant relief so that we can move forward with our plans.

“Our new China business also is ramping up according to management expectations,” Mr. Avara said. “We are encouraged by the EBITDA contribution potential of this business over the longer term, but do not expect it to break even on a standalone basis this year, which is consistent with our earlier projections.”

Webcast & Conference Call Information

Company executives will provide additional perspective on the company’s financial results during a conference call beginning at 11:00 a.m. Eastern Time today. Those interested in participating in the call may do so by dialing 1-866-394-6819, and providing the operator with conference number 36140537. A copy of the presentation materials may be obtained from the Horizon Lines website, http://www.horizonlines.com, shortly before the start of the call. Alternatively, a live audio webcast of the call may be accessed at http://www.horizonlines.com. In order to access the live audio webcast, please allow at least 15 minutes before the start of the call to visit Horizon Lines’ website and download and install any necessary audio/video software for the webcast.

Use of Non-GAAP Measures

Horizon Lines reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). The company also believes that the presentation of certain non-GAAP measures, i.e., EBITDA, free cash flow and results excluding certain costs and expenses, provides useful information for the understanding of its ongoing operations and enables investors to focus on period-over-period operating performance without the impact of significant special items. The company further feels these non-GAAP measures enhance the user’s overall understanding of the company’s current financial performance relative to past performance and provide a better baseline for modeling future earnings expectations. Non-GAAP measures are reconciled in the financial tables accompanying this news release. The company cautions that non-GAAP measures should be considered in addition to, but not as a substitute for, the company’s reported GAAP results.

About Horizon Lines

Horizon Lines, Inc., is the nation’s leading domestic ocean shipping and integrated logistics company. The company owns or leases a fleet of 20 U.S.-flag containerships and operates five port terminals linking the continental United States with Alaska, Hawaii, Guam, Micronesia and Puerto Rico. The company also manages a domestic and overseas service partner network and provides integrated, reliable and cost competitive logistics solutions. Horizon Lines, Inc., is based in Charlotte, NC, and trades on the New York Stock Exchange under the ticker symbol HRZ.

Forward Looking Statements

Horizon Lines 4th Quarter 2010 Page 6 of 11

The information contained in this press release should be read in conjunction with our filings made with the Securities and Exchange Commission. This press release contains “forward-looking statements” within the meaning of the federal securities laws. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those that do not relate solely to historical fact. They include, but are not limited to, any statement that may predict, forecast, indicate or imply future results, performance, achievements or events. Words such as, but not limited to, “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “target,” “projects,” “likely,” “will,” “would,” “could,” and similar expressions or phrases identify forward-looking statements.

Factors that may cause expected results or anticipated events or circumstances discussed in this press release to not occur or to differ from expected results include: failure by us or the Department of Justice to comply with the terms of the plea agreement, the court’s failure to approve the plea agreement or any settlement agreement, any further government investigations, decreases in shipping volumes, our substantial debt, restrictive covenants under our debt agreements, or changes in our management personnel.

All forward-looking statements involve risk and uncertainties. In light of these risks and uncertainties, expected results or other anticipated events or circumstances discussed in this press release might not occur. We undertake no obligation, and specifically decline any obligation, to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. See the section entitled “Risk Factors” in our Form 10-K filed with the SEC on February 4, 2010, and in our Form 10-Q for the period ended June 20, 2010, for a more complete discussion of these risks and uncertainties and for other risks and uncertainties. Those factors and the other risk factors described therein are not necessarily all of the important factors that could cause actual results or developments to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could harm our results. Consequently, there can be no assurance that actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences.

(Tables Follow)

Horizon Lines 4th Quarter 2010 Page 7 of 11

Horizon Lines, Inc.
Unaudited Condensed Consolidated Balance Sheets
(in thousands, except per share data)

	December 26,			December 20,
	2010			2009
Assets
Current assets
Cash	$	2,751		$	6,419
Accounts receivable, net of allowance of $6,959 and $6,996 at December 26, 2010 and December 20, 2009, respectively		111,887			115,069
Prepaid vessel rent		4,076			4,580
Materials and supplies		29,413			30,254
Deferred tax asset		3,534			2,929
Assets of discontinued operations		9,772			12,925
Other current assets		7,150			9,024
Total current assets		168,583			181,200
Property and equipment, net		194,657			192,624
Goodwill		314,149			314,149
Intangible assets, net		80,824			104,859
Other long-term assets		30,438			25,678
Total assets	$	788,651		$	818,510
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	43,413		$	42,372
Current portion of long-term debt, including capital leases		20,379			18,750
Accrued vessel rent		3,697			4,339
Current liabilities of discontinued operations		3,699			6,599
Other accrued liabilities		107,954			104,759
Total current liabilities		179,142			176,819
Long-term debt, including capital leases, net of current portion		495,944			496,105
Deferred rent		18,026			22,585
Deferred tax liability		4,775			4,248
Other long-term liabilities		47,533			17,475
Total liabilities		745,420			717,232
Stockholders’ equity
Preferred stock, $.01 par value, 30,500 shares authorized; no shares issued or outstanding		—			—
Common stock, $.01 par value, 100,000 shares authorized, 34,546 shares issued and 30,746 shares outstanding as of December 26, 2010 and 34,091 shares issued and 30,291 shares outstanding as of December 20, 2009		345			341
Treasury stock, 3,800 shares at cost		(78,538	)		(78,538	)
Additional paid in capital		193,267			196,900
Accumulated deficit		(70,405	)		(15,874	)
Accumulated other comprehensive loss		(1,438	)		(1,551	)
Total stockholders’ equity		43,231			101,278
Total liabilities and stockholders’ equity	$	788,651		$	818,510

Horizon Lines 4th Quarter 2010 Page 8 of 11

Horizon Lines, Inc.
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share data)

	Quarters Ended						Years Ended
	December 26,			December 20,			December 26,			December 20,
	2010			2009			2010			2009
Operating revenue	$	298,849		$	286,691		$	1,162,505		$	1,124,215
Operating expense:
Vessel		103,701			92,977			400,327			355,352
Marine		58,229			56,548			215,750			210,322
Inland		51,020			45,525			184,892			179,651
Land		38,600			34,868			147,488			140,586
Rolling stock rent		11,170			8,952			40,966			37,048
Cost of services (excluding depreciation expense)		262,720			238,870			989,423			922,959
Depreciation and amortization		11,765			11,235			44,475			44,307
Amortization of vessel dry-docking		4,365			2,758			15,046			13,694
Selling, general and administrative		21,489			21,683			83,187			97,257
Legal settlements		31,770			—			31,770			20,000
Restructuring charge		2,057			—			2,057			787
Impairment charge		856			—			2,655			1,867
Miscellaneous (income) expense, net		(646	)		274			(803	)		1,056
Total operating expense		334,376			274,820			1,167,810			1,101,927
Operating (loss) income		(35,527	)		11,871			(5,305	)		22,288
Other expense:
Interest expense, net		10,608			9,942			40,117			38,036
Loss on modification of debt		—			—			—			50
Other expense, net		10			8			27			20
(Loss) income from continuing operations before income tax expense		(46,145	)		1,921			(45,449	)		(15,818	)
Income tax expense		258			368			305			10,589
(Loss) income from continuing operations		(46,403	)		1,553			(45,754	)		(26,407	)
Loss from discontinued operations		(6,280	)		(227	)		(8,776	)		(4,865	)
Net (loss) income	$	(52,683	)	$	1,326		$	(54,530	)	$	(31,272	)
Basic and diluted net (loss) income per share:
Continuing operations	$	(1.50	)	$	0.05		$	(1.49	)	$	(0.87	)
Discontinued operations		(0.21	)		(0.01	)		(0.28	)	$	(0.16	)
Basic and diluted net (loss) income per share	$	(1.71	)	$	0.04		$	(1.77	)	$	(1.03	)
Number of shares used in calculation:
Basic		30,897			30,484			30,789			30,451
Diluted		30,897			30,942			30,789			30,451
Dividends declared per common share	$	0.05		$	0.11		$	0.20		$	0.44

Horizon Lines 4th Quarter 2010 Page 9 of 11

Horizon Lines, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)

	Years Ended
	December 26,			December 20,
	2010			2009
Cash flows from operating activities:
Net loss from continuing operations	$	(45,754	)	$	(26,407	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		23,777			24,002
Amortization of other intangible assets		20,698			20,305
Amortization of vessel dry-docking		15,046			13,694
Amortization of deferred financing costs		3,412			2,947
Impairment charge		2,655			1,867
Restructuring charge		2,057			787
Loss on modification of debt		—			50
Deferred income taxes		148			10,617
Gain on equipment disposals		(47	)		(154	)
Gain on sale of interest in joint venture		(724	)		—
Stock-based compensation		2,122			3,096
Accretion of interest on convertible notes		11,060			10,011
Changes in operating assets and liabilities:
Accounts receivable		1,301			13,710
Materials and supplies		807			(6,739	)
Other current assets		(1,148	)		1,247
Accounts payable		1,041			910
Accrued liabilities		36			(767	)
Vessel rent		(3,898	)		(4,874	)
Vessel dry-docking payments		(19,159	)		(14,735	)
Accrued legal settlements		31,770			15,000
Other assets/liabilities		(768	)		(3,486	)
Net cash provided by operating activities		44,432			61,081
Cash flows from investing activities:
Purchases of property and equipment		(16,298	)		(12,931	)
Proceeds from the sale of interest in joint venture		1,100			—
Proceeds from the sale of property and equipment		454			1,237
Net cash used in investing activities		(14,744	)		(11,694	)
Cash flows from financing activities:
Borrowing under revolving credit facility		108,800			64,000
Payments on revolving credit facility		(108,800	)		(84,000	)
Payments on long-term debt		(18,750	)		(7,968	)
Dividends to stockholders		(6,281	)		(13,397	)
Common stock issued under employee stock purchase plan		111			104
Payments on capital lease obligations		(124	)		—
Payments of financing costs		(75	)		(3,492	)
Net cash used in financing activities		(25,119	)		(44,753	)
Net increase in cash from continuing operations		4,569			4,634
Net decrease in cash from discontinued operations		(8,237	)		(3,702	)
Net decrease in cash		(3,668	)		932
Cash at beginning of period		6,419			5,487
Cash at end of period	$	2,751		$	6,419

Horizon Lines 4th Quarter 2010 Page 10 of 11

Horizon Lines, Inc.
Adjusted Operating Income Reconciliation
($ in Thousands)

	Quarter Ended			Quarter Ended		Year Ended			Year Ended
	December 26, 2010			December 20, 2009		December 26, 2010			December 20, 2009
Operating (Loss) Income	$	(35,527	)	$	11,871	$	(5,305	)	$	22,288
Adjustments:
Legal Settlements		31,770			—		31,770			20,000
Restructuring Charge		2,057			—		2,057			787
Antitrust Legal Expenses		1,780			1,748		5,243			12,192
Impairment Charge		856			—		2,655			1,867
Union Severance		—			306		468			306
Total Adjustments		36,463			2,054		42,193			35,152
Adjusted Operating Income	$	936		$	13,925	$	36,888		$	57,440

Horizon Lines, Inc.
Adjusted Net Income Reconciliation
($ in Thousands)

	Quarter Ended			Quarter Ended			Year Ended			Year Ended
	December 26, 2010			December 20, 2009			December 26, 2010			December 20, 2009
Net (Loss) Income	$	(52,683	)	$	1,326		$	(54,530	)	$	(31,272	)
Net Loss from Discontinued Operations		(6,280	)		(227	)		(8,776	)		(4,865	)
Net (Loss) Income from Continuing Operations		(46,403	)		1,553			(45,754	)		(26,407	)
Adjustments:
Legal Settlements		31,770			—			31,770			20,000
Restructuring Charge		2,057			—			2,057			787
Antitrust Legal Expenses		1,780			1,748			5,243			12,192
Impairment Charge		856			—			2,655			1,867
Union Severance		—			306			468			306
Loss on Modification of Debt		—			—			—			50
Tax Valuation Allowance		—			—			—			10,561
Tax Impact of Adjustments		(274	)		282			(389	)		(232	)
Total Adjustments		36,189			2,336			41,804			45,531
Adjusted Net (Loss) Income from Continuing Operations	$	(10,214	)	$	3,889		$	(3,950	)	$	19,124

Horizon Lines 4th Quarter 2010 Page 11 of 11

Horizon Lines, Inc.
Adjusted Net Income Per Share Reconciliation

	Quarter Ended			Quarter Ended			Year Ended			Year Ended
	December 26, 2010			December 20, 2009			December 26, 2010			December 20, 2009
Net (Loss) Income Per Share	$	(1.71	)	$	0.04		$	(1.77	)	$	(1.03	)
Net Loss Per Shares from Discontinued Operations		(0.21	)		(0.01	)		(0.28	)		(0.16	)
Net (Loss) Income Per Share from Continuing Operations		(1.50	)		0.05			(1.49	)		(0.87	)
Adjustments Per Share:
Legal Settlements		1.03			—			1.03			0.66
Restructuring Charge		0.07			—			0.07			0.03
Antitrust Legal Expenses		0.06			0.06			0.17			0.40
Impairment Charge		0.02			—			0.09			0.06
Union Severance		—			0.01			0.01			0.01
Tax Valuation Allowance		—			—			—			0.35
Tax Impact of Adjustments		(0.01	)		—			(0.01	)		(0.02	)
Total Adjustments		1.17			0.07			1.36			1.49
Adjusted Net (Loss) Income Per Share from Continuing Operations	$	(0.33	)	$	0.12		$	(0.13	)	$	0.62

Horizon Lines, Inc.
EBITDA and Adjusted EBITDA Reconciliation
($ in Thousands)

	Quarter Ended			Quarter Ended			Year Ended			Year Ended
	December 26, 2010			December 20, 2009			December 26, 2010			December 20, 2009
Net (Loss) Income	$	(52,683	)	$	1,326		$	(54,530	)	$	(31,272	)
Net Loss from Discontinued Operations		(6,280	)		(227	)		(8,776	)		(4,865	)
Net (Loss) Income from Continuing Operations		(46,403	)		1,553			(45,754	)		(26,407	)
Interest Expense, Net		10,608			9,942			40,117			38,036
Tax Expense		258			368			305			10,589
Depreciation and Amortization		16,131			13,992			59,521			58,000
EBITDA		(19,406	)		25,855			54,189			80,218
Legal Settlements		31,770			—			31,770			20,000
Restructuring Charge		2,057			—			2,057			787
Antitrust Legal Expenses		1,780			1,748			5,243			12,192
Impairment Charge		856			—			2,655			1,867
Union Severance		—			306			468			306
Loss on Modification of Debt		—			—			—			50
Adjusted EBITDA	$	17,057		$	27,909		$	96,382		$	115,420

Note: EBITDA is defined as net income plus net interest expense, income taxes, depreciation and amortization. We believe that EBITDA is a meaningful measure for investors as (i) EBITDA is a component of the measure used by our board of directors and management team to evaluate our operating performance, (ii) the senior credit facility contains covenants that require the Company to maintain certain interest expense coverage and leverage ratios, which contain EBITDA, and (iii) EBITDA is a measure used by our management team to make day-to-day operating decisions. Adjusted EBITDA excludes certain charges in order to evaluate our operating performance, for making day-to-day operating decisions and w hen determining the payment of discretionary bonuses.

# # #

EX-99.2

Exhibit 99.2

On March 3, 2011, Horizon Lines, Inc. hosted a conference call to discuss financial results for the fourth quarter ended December 26, 2010. The following transcript is an interpretation of the statements made on the call. The actual conference call may have differed slightly.

Operator	Good morning, my name is Christy, I will be your conference operator today. At this time, I would like to welcome everyone to the Horizon Lines fourth quarter earnings release conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session.
	As a reminder, ladies and gentleman, this conference is being recorded today, March 3, 2011. Thank you. I would now like to introduce Mr. Jim Storey, Director of Investor Relations for Horizon Lines. Mr. Storey, you may begin your conference.
Jim Storey	Thank you, Christy, and good morning, everyone, and welcome to Horizon Lines’ fourth quarter 2010 conference call. Our speakers this morning are Stephen Fraser, Incoming President and Chief Executive Officer; Brian Taylor, Executive Vice President and Chief Operating Officer; and Mike Avara, Executive Vice President and Chief Financial Officer. This morning, our executives will first walk you through a review of 2010 and the fourth quarter, and then discuss the outlook for the current year. Before we get started, I want to remind everyone that copies of our press release and slide presentation accompanying this conference call are available in the Investor Relations section of our website at www.HorizonLines.com. We will be referring to these slides during our remarks.
	I also want to remind everyone that management’s remarks this morning contain certain forward-looking statements, and that actual results could differ materially from those projected today. These forward-looking statements speak as of today, and we undertake no obligation to update them. Factors that might affect future results are discussed in our filings with the SEC, and we encourage you to review these detailed Safe Harbor and risk factor disclosures. Please also note that, where appropriate, we’ll continue to refer to non-GAAP financial measures, such as EBITDA, to evaluate our business. Reconciliations of non-GAAP financial measures to GAAP financial measures are included in the appendix of this presentation and in our earnings release and accompanying materials.
	Now, to introduce our incoming President, let me turn the call over to Chuck Raymond. Chuck?

Chuck Raymond	Thank you, Jim, and good morning, everyone.
	You’ve read of my retirement schedule, and it’s my pleasure to close out my 45-year career in this business by thanking you for your confidence in Horizon Lines, and for your support of the Company in the future. Today’s call will be hosted by Stephen Fraser, who will be replacing me March 11, as CEO of the Company.
	As you know, we’re blessed with an incredibly experienced and professional Board of Directors here at Horizon Lines, and last June, we recruited Stephen to join our Board. At that time, we were intent on further strengthening our governance, with broad management experience and knowledge of international shipping operations, domestic transportation and logistics. Stephen’s 30 plus years of leadership in these industry sectors perfectly suited the Board’s requirements and our Company’s needs. I know you’ll understand and be excited with our choice of Stephen, both as a Director and, more importantly, as CEO and President, as you get to know him.
	So, with that, Stephen, you have the call.
Stephen Fraser	Thank you, Chuck, and good morning, ladies and gentleman.
	I want to spend the next few minutes providing a brief introduction of who I am and, more importantly, why I’m here, and why I think Horizon Lines is a unique Company with a good future. By way of background, Chuck referenced my background in transportation and logistics, and I would note that the first decade of my career was working for a company which provided lease finance for ships and container equipment to the container shipping industry. And in those days, Sea-land, the company from which Horizon Lines was formed, was one of my largest customers. For me, Horizon Lines was an interesting opportunity to serve on the Board of a Company whose business I understood. What I didn’t expect when I agreed to join the Board was that I would become so attracted to the business, its people and its suppliers.
	Prior to and after joining the Board, I spent a significant amount of time conducting my own due diligence to understand the Company. I spent time at headquarters here in Charlotte, at the Company’s offices in Dallas, walked the port terminals and met the staff in New Jersey and Florida, California, Washington and Alaska, and even rode aboard a vessel to Anchorage earlier this winter. I spent time with a vessel operations teams and visited customers.
	Over the course of the due diligence time, I was able two match faces

	with names and jobs with challenges. I got personally engaged by both the challenge the business faces and the upside in opportunity in the traditional domestic ocean operations, as well as the new venture in China. But to put it as plainly as I can, I am pleased to begin serving as the new President and CEO, though I clearly have some very big shoes to fill. I want to thank Chuck Raymond and John Keenan for their many decades of leadership and service, not just to our Company, but to the industry. They served and led with distinction. Our Company and our industry owes them much.
	Now let’s look forward. I want to make three points. First, over the next several weeks and months, I welcome the opportunity to talk to and meet with many of our investors, customers, suppliers, and our partners from organized labor. Second, I believe this Company has a compelling story to tell, and with the events of the past week behind us, Horizon Lines can now move forward free from a cloud of uncertainty which hovered over this Company for the last nearly three years. Third, challenges clearly remain, but the Company is better positioned today than it was even a week ago to address these challenges. We’re moving forward in 2011 with a credible business plan that both solidifies our unique franchise as a domestic ocean carrier and captures the longer-term growth opportunity inherent in the Trans-pacific and Guam trade lanes.
	With that, let me now turn the call over to Brian Taylor and Mike Avara, who will walk you through fourth-quarter results and provide an outlook for 2011. Brian.
Brian Taylor	Thank you, Stephen. Good morning, everybody.
	As I’m sure all of you are aware, these past few weeks have been a monumental time for us here at Horizon Lines. Let me by start off reviewing a couple of key items. We resolved our antitrust issues with the DOJ, agreeing to a $45 million fine payable over a five-year period, a manageable amount for this Company. We are moving forward in the Puerto Rico class action suits and implementing a number of strategies relating to companies that have opted out of that settlement.
	One of our largest customers recently released us from all antitrust claims related to Puerto Rico, and we now have until April 1 to decide to move ahead with the broader class action settlement. With the DOJ issue finally resolved and behind us, we are moving ahead with our refinancing efforts, and Mike will share some more details on this with you in a few minutes. Let me just say now that we are in the final stages of obtaining covenant relief from our lenders, and this

will help facilitate a broader refinancing in the near-term.

We’ve navigated through a challenging year, one that had strong headwinds in the fourth quarter. We now have a credible business plan for 2011, that combines modest volume recoveries in our domestic ocean business and aggressive cost management initiatives. These two things, along with a gradual ramp-up in our China service, position us for modestly positive expectations this year.

Slide seven provides a few brief highlights of our year and the quarter. For 2010, for the full year, we generated adjusted EBITDA from continuing operations of $96.4 million on revenues of just over $1 billion dollars. We generated $40.5 million dollars in adjusted free cash flow, and ended the year with almost $19 million less in debt.

Things did get a little bit more challenging in the fourth quarter, and this was primarily driven by lower volume than expected in our Hawaii trade, some continuing rate pressures in Puerto Rico and, of course, rising fuel prices. But the quarter also had some key successes. The start-up of our international service, improved schedule reliability, and ongoing vigilant cost management.

I am going to turn to slide eight. The gradual rebound that we saw in the US economy did not translate into growth in our domestic trade lanes. Comparable volume for the quarter slipped 1.1%, although when you add in our additional week for this 53 week year and containers from our new China service, volume actually increased overall 7.9%. In Hawaii, lean inventories and sluggish construction activity did hold volume below expectation in the fourth quarter. In Alaska, we did see a slight easing of shipments in the quarter, and in Puerto Rico, volume actually showed a nice uptick in the fourth quarter, although at reduced margins. If you turn to slide nine, this provides a quick overview of revenue per box and, as you can see, revenue per box eased slightly, largely due to the addition of the international volume that we began handling at lower average rates and the ongoing rate pressure that we experienced in Puerto Rico.

The vessel performance metrics that you see on slide 10 reinforce our commitment to schedule integrity. Our 85%
on-time arrival performance was actually two full percentage points ahead of last year, and vessel availability remain near 100%. This is driven primarily by our aggressive fleet maintenance program. You can see that our utilization levels dipped to 58%, that was down from 61% the previous year, and this was largely due to roughly 8% capacity increase related to vessels that were activated and positioned for our dry dock coverage. As we activate our own idle ships to try and

	provide dry dock relief and ensure uninterrupted service to the markets, we can actually create a temporary bump in capacity, which is what happened last quarter. But having the capacity in place to carry more cargo without additional capital cost, does give this Company significant EBITDA leverage, even with a modest volume improvement.
	Turning to slide 11, our new Five Star Express service from China began on December 13. We’ve seen vessel utilization steadily climbing, peaking at near-full capacity just before Chinese New Year in early February. As a part of this new deployment, we now also offer direct service from the U.S. West Coast to Guam. This new schedule actually provides improved transit and cut-off times for our Guam customers, and we now have the right service and the capacity in place to support a prolonged build-up effort on the island. This new China service was designed to focus on some select inland locations; one of them includes a 15-day service between Shanghai and Kansas City. We believe this is the fastest service of its kind between these two locations, and a high-speed transit that is really helping some of our customers reach into America’s heartland.
	With that overview, let me turn this over to Mike, and he’s going to take you through the fourth-quarter financials.
Mike Avara	Brian, thank you, and good morning, everyone. Thanks for joining us today.
	I’ll now review our fourth quarter 2010 financial performance. As Brian mentioned, we did face some headwinds, but despite those, we delivered decent financial performance in the fourth quarter. Challenges included lower than anticipated volumes in Hawaii, continuing rate pressure in Puerto Rico, higher fuel prices, and the start-up costs that we’re associated with our new China service, which we expected. Cash flow generation remains a very good story for the Company, and we continued to pay down debt during the year. So, before we get started, I want to take you through some of the factors impacting our financial results in the fourth quarter. You read last week that we made a decision to sell our logistics business, and we now account for that on a discontinued-operations basis. Accordingly, we are presenting results today on a continuing-operations basis, but really more importantly, we no longer will be incurring the losses that we had in the logistic business going forward.
	Our results also include, as you see, a number of fourth-quarter adjustments, and let me walk you through those. We did record a $30 million charge relating to the DOJ settlement. The way the

accounting works on that is that we discount the $45 million fine by taking the present value of the payments, resulting in the $30 million charge you see here. We also resolved another case, the Puerto Rico indirect purchaser case, and a $1.8 million charge resulted from that resolution. We had a second reduction in force in the Company, and a resulting charge of $2.1 million for severance of the non-union workforce. This is really part of our overall cost savings initiatives, which I’ll address on a subsequent slide. In addition, we incurred antitrust-related legal expenses of $1.8 million, and we had an almost $1 million impairment charge for certain equipment. I would also note that the fourth quarter and the year had an extra week, and we made adjustments where appropriate to put results on an apples-to-apples basis.

So moving to slide 14 and turning to operating revenue, let me go into a little more detail on our financial results. Fourth quarter operating revenue rose by $12.1 million. Slide 15 shows that the increase over last year was primarily due to a few factors. First of all, we had volume growth that contributed nearly $18 million. Our terminal services and other revenue contributed $2.8 million, and higher fuel surcharges generated $2.7 million.

These higher fuel surcharges allowed us to partially mitigate the 5.4% increase in bunker prices from a year ago. The positive factors were partially offset by the number of negative variances, including the space charter revenue decrease related to the expiration of our Maersk service in December, as well as another agreement. We also had the expiration of a previous vessel management contract, which we decided not to renew, and that resulted in a reduction in revenue of $3.5 million. And wrapping this slide up, lower rate and mix reduced revenue by about $2.4 million.

So, moving to slide 16 and adjusted operating income. Adjusted operating income decreased by over $13 million from 2009. This reduction was really the result of the same factors that affected EBITDA, which I’ll discuss on the next page. So, looking at slide 17, this will provide you with information on the factors that drove the adjusted EBITDA decline of $10.9 million. The major negative changes were as follows. The fuel recovery shortfall of $5.5 million, although we continued to recover roughly at about 90% across the Company. Obviously as fuel prices go up, that 10% differential results in a lower recovery amount. Our vessel operating expenses increased by $2.5 million. As Brian mentioned, with additional vessel dry dockings, we incurred some costs to reposition ships, and that’s reflected in this number. Again, rates net of fuel declined, resulting in a margin loss of $2.1 million. Now, these negative factors

	were partially offset by additional terminal service agreement savings from agreements we renewed in 2009, and cost reductions for A&G and overhead, totaling about $1.7 million.
	Now, moving to slide 18, and you can see that we reported a loss of about $10.2 million on an adjusted basis resulting in an EPS of a negative $0.33 per share. Now, these results compare with the fourth quarter 2009 adjusted net income of $3.9 million, or $0.12 per diluted share. We’ve also provided, on slide 19, the full year results for the Company and, obviously, these are a roll-up of the numbers we spoke about over the last three quarters and today, so I really won’t delve into them at this point.
	So, turning to free cash flow on page 20. Despite a very challenging year, we still generated adjusted free cash flow in excess of $40 million. This was a decline of $34 million from a year ago. It was largely due to the adjusted EBITDA decline of $19 million, and we did have a little bit higher combined dry dock and capital spending to the tune of about $8 million, as we return to a more normal level of CapEx spending, and the higher number of dry docks that Brian and I both mentioned.
	I want to focus for a minute on working capital. That continues to be a great story, and provided a source of $12.2 million, up nearly $5 million from 2009. This working capital improvement was driven really primarily by our continued focus on accounts receivable, and despite the difficult economy, our cash collections remain strong. I’m happy to say that we have experienced no deterioration in our accounts receivable aging during this period.
	So, turning to page 21. You can see at the end of the fiscal year, we continued to operate with adequate liquidity totalling in excess of $60 million. We remained in compliance with our financial covenants. We continue to enjoy a very low-weighted average cost of debt at under 4.5%, and 82% of our funded debt is fixed through maturity in 2012. In addition, during the fourth quarter, we made voluntary debt repayments of $12.3 million, and we ended the year with $9.6 million less debt than we began the year, and $18.8 million lower, excluding a new capital lease. In the first quarter 2011, we have made our customary additional revolver borrowings to fund vessel lease payments, and for our typical seasonal working capital needs.
	So with that, I’m going to turn the call back over to Brian Taylor.
Brian Taylor	Thanks, Mike.

I’m now picking up on slide 23. Looking at 2011, we believe market conditions will continue to remain somewhat challenging. Our trade lane economies are in various states of recovery. From a stubborn recession in Puerto Rico that we’ve talked about many times, slow recovery in Hawaii, to more solid growth in Alaska, and near double-digit growth in China. We expect the cost of fuel is likely to increase due to tensions in the Middle East and, at this point, we see average prices will be above what we saw in 2010. We also expect that overall rate pressure is likely to persist for us, particularly in the Puerto Rico market.

We’re still cautiously optimistic for a number of key reasons. First, we expect that volume will gradually improve as the year progresses. Second, we expect our China business to continue to ramp-up over the year, though it will not contribute to EBITDA growth in 2011. Third, we are aggressively managing our costs, as we always do. Over the last few months, we’ve implemented a 10% reduction in our non-union workforce, and we have recently also achieved some important contractual adjustments from our organized labor groups. And I have to say, our maritime and shore-side union partners have really stepped-up, and they’re working closely with us in this still challenging environment.

We also remain very well aligned with some strong and growing customers and, clearly, our international service represents a nice long-term growth opportunity that we previously did not have in this Company. We have always been strong managers of cost, and 2011 is not going to be any different for us. We continue pursuing a variety of initiatives, all of them expected to provide recurring savings, things like our inland expense efficiencies, container network balancing and, of course, as Mike mentioned earlier, our exit from the logistics business.

Let me walk you through the economic and business outlook now, for each of the trade lanes, starting with Alaska on slide 24. Alaskans are generally optimistic about the prospects for their economy in 2011. The economic forecasts appear to be projecting modest growth, driven primarily by high oil prices, ongoing construction projects, and a growing healthcare industry. High oil prices really do help build upon an already existing state budget surplus, and state-funded construction spending is also expected to rise this year, all of this leading to some job growth, important job growth, of course. And right now, the business community continues to maintain a moderately positive outlook for the year. As such, we also expect to see improving southbound seafood shipments, due to significant increases in the pollack and cod quotas that have been put in place for

this year. And right now, in terms of our outlook, we are projecting modest increases in Alaska volumes and rates as we progress through the year.

Turning to Hawaii on slide 25. We did see a recovery in the state’s tourism business in 2010, but typically it takes some time for this to translate into other sectors, such as construction and real estate. We expect that some continued improvement in the tourism sector in 2011 will lead to some modest recoveries in the other sectors. The military segment, another key driver of the Hawaii economy, was stable throughout the recession, and right now, we expect it to remain that way for this year. We’re adopting a conservative assessment regarding the 2011 business outlook for this lane, at least until we start to see more evidence of an economic recovery, really demonstrated in volume growth. As such, look for Hawaii to generate modest volume growth, and a slight improvement in rate in 2011.

Looking at Puerto Rico, slide 26, the island is in its fifth year of economic recession. Finally though, forecasters may be pointing to modest improvements in 2011. Real GSP, which contracted at a rate of 5.1% last year, is expected to decline much less here in 2011. Unemployment is likely to remain high, around 16%, but personal income is expected to grow slightly and, as you can see here, building permits are clearly rebounding. The current administration in Puerto Rico has been doing all the right things to cut the budget deficit and, as a result of that, S&P raised it’s outlook in November on Puerto Rico, to positive from stable. Perhaps that’s a good sign for all of us that things may be beginning to turn. We expect 2011 volumes to begin increasing in this lane, but I have to say, I caution rates, net of fuel, will probably decrease due to continued competitive pressure.

Turning to China, on slide 27. The country’s economy is expecting solid growth over the next two years, though there has been some recent indicators that are pointing toward some moderation. The rebound that we all saw in 2010 resulted in a 16% increase in Trans-Pacific container volumes from China, and while growth is expected to continue this year, it’s going to be at a more subdued pace, roughly 6%.

Vessel capacity, we’ve seen it grow in central China, and that combined with the slow period around Chinese New Year, we are seeing, and continue to expect to see, some rate pressure here throughout the first-half of 2011. But growth is expected to resume in the second-half of the year, and that’s pretty consistent with what we’ve built into our business plan. Looking at Guam on slide 28, the island is continuing to prepare for the US military build-up that is

	certainly going to be the growth driver over the next five to seven years. The island’s infrastructure really does need a lot of rebuilding and modernization, and while some of that is starting now, the timing of a lot of these construction projects still remains a little bit unclear. A more gradual build-up appears to be much more likely, and so we expect that our volumes will begin picking-up gradually as this year progresses.
	Our China and Guam deployment is clearly an investment in future growth potential. And as you see on slide 29, we established the FSX service in December; there were no glitches; there were no service issues. We’ve successfully deployed over 12,000 new containers to support not only the international service, but the Guam business, and our trade lane in Hawaii. And right now, we are enjoying solid and continued support from our customers. If you look at the earnings sensitivity analysis you see on this page, what it shows is the impact that a healthy rate environment can have on this business going forward.
	So, with that, I’m going to turn this back over to Mike now, and he will take you through some of our key financial considerations for this year. Mike?
Mike Avara	Okay. Thank you, Brian.
	I’m going to start on page 31, and let’s walk through some of the major factors impacting the financial outlook for 2011. So, EBITDA growth will depend on the pace of the economic recovery in each of our domestic trade lanes, and Brian just reviewed those for you. This will, of course, be influenced also by the strength of the overall US and global economies, which in turn will also impact the ramp-up of our new China business. We will also be contending with significantly higher fuel costs this year, and some continued rate pressures.
	Finally, we do not expect our new China service to fully offset the lost earnings from the agreement we had with Maersk previously. And, while we do expect Guam to accelerate significantly as the military build-up continues, we think that will happen in late 2011 and will be a bit more gradual over a multi-year period than initially expected. But as Brian noted, we will be ready. We have the cranes and the people to deal with this opportunity.
	So, in light of these realities, our cost reduction initiatives have played a very important role in developing our business plan for 2011. And I’ll walk you through those in just a minute. But I would

like to take a step back. Horizon Lines has a long history of very successful cost management. Our EDGE program, that some of you may remember, implemented back in 2004 and 2005, has served us very well and has become ingrained in the way that we run the business, as well as our more tactical decisions over the past couple of years, as we’ve dealt with this global recession of really historic proportions.

So, turning to slide 32, you can see our major financial assumptions for 2011. If you exclude the international business, we expect volume to increase by about 5% this year. That compares to a 1.1% decline in 2010, on a comparable 52-week basis. And, it excludes our international service, which had just three sailings last year. Rates net of fuel, however, are expected to decline by about 6% for the year, compared to a very, very small decline in 2010.

So, now I want to turn to our revenue and cost initiatives on slide 33. Let me start on the revenue side. Revenue initiatives are targeting a total of $4 million. I think it’s important to note that these are comprised of specific opportunities in each of our trade lanes, rather than based on general economic improvement assumptions. As I noted a few moments ago, our ability to reduced costs in this environment has been a very important component of our business plan for 2011, and we already have cost savings plans targeting more than $15 million, and we’re pursuing more cost reductions.

Workforce savings are comprised of both cost reductions in our non-union and our union workforces. A 10% reduction in force on the non-union side was completed, and this will yield savings of $5.5 million in 2011 for 11 months, and $6 million for 12 months in 2012 and, more importantly, beyond. So, these savings are locked into the business. Vessel union compensation saving commitments thus far total $6.8 million, with more possible.

I’d like to take just a minute and reiterate Brian’s comments and recognize our vessel partners. The Master, Mates & Pilots, the MM&P; the Marine Engineers Beneficial Association, MEBA; and the Seafarers International Union, the SIU, who have stepped-up and helped us navigate through this difficult period of time. On the land side, the West Coast Teamsters locals have also rendered some cost-saving assistance and, finally, all management wage increases, incentive compensation and equity awards have been eliminated in 2011. We’re also securing smaller, but still very important savings, for equipment maintenance, inter-modal and various other categories. Finally, we are working with our vessel charter partners to capture necessary savings on our seven leased vessels. So, wrapping this up

and putting things in context, the savings targets on the cost side of $15 million will allow us to lock-in that same amount in EBITDA contribution for the year, thereby significantly removing risk from our projections for the current year.

We are going to move to slide 34 and summarize our outlook for 2011. Again, we currently anticipate modest EBITDA growth in 2011 compared to 2010. This will be driven by the local economies as well as the US and global economy. Now, our typically slow first quarter will be somewhat exacerbated this year by the seasonality in our new FSX service, and Brian has discussed that with you. We believe we are well-positioned to grow our business in 2011.

We are intently focused on cost management, as well as revenue growth opportunities. Our operating leverage is very substantial, and even just a small increase in volume will deliver big EBITDA growth, as well as cash flow improvements. In addition to our solid and stable domestic trade lane business, we are now investing in future opportunities inherent in the China and Guam businesses. And again, we expect to complete our refinancing process in the second or third quarter of this year.

So, turning to the refinancing, let me give you a brief update on page 35. The resolution of the DOJ matter has now allowed us to move forward at full speed with our refinancing efforts. We are in constructive discussions with our lenders on a credit agreement amendment and indenture waiver, and expect to obtain required consent release the very near future.

Turning now to our broader refinancing. We’re also pursuing a comprehensive refinancing of the existing capital structure at the same time. We are targeting completion of this work in the second or third quarter. The refinancing is intended to accomplish the following goals: to provide the ability to reduce our leverage, to maintain a cost to capital that we can afford, and to implement a long-term capital structure solution for our Company.

So, this concludes the prepared remarks, but before I turn the call over to the operator, I wanted to share just a few final thoughts with you on why I think 2011 holds a lot of promise for Horizon Lines. First, all three of our Alaska vessels have just been upgraded and modified with improved capacity for the higher-demand 45-foot containers, so we are poised to serve this growing business in Alaska. Second, the vast majority of the legal costs and the Management distraction associated with the antitrust matters are behind us, and we have decided to exit the logistics business. So, we can now sharpen

	our focus on our core transportation business.
	Third, we are seeing some strength in local economies that Brian has referenced, and although still small, as I’ve said before, we can accomplish a lot with just a little bit of help on the volume line. Fourth, we are a leaner organization. We’ve taken two reduction in forces in the Company, reducing the non-union workforce by 20% as a result of that, and we will keep those costs out of the business. Fifth, we have successfully launched our FSX service without a hitch, thanks to Brian and his team who did a fantastic job starting a brand-new service without any issues whatsoever. And finally, we are partnering with our workforce, both union and non-union, to secure improved efficiencies, so we can continued to provide the excellent service that Horizon Lines is renowned for.
	So, with that, I would like to now turn the call over to the operator for the Q&A session.
George Pickral	Thanks. Mike, first question for you. On the guidance — that is good color on the volume and the rates. I guess I’m a little confused by your commentary; you just mentioned if you can get a little improvement in volume, but it looks like the pricing could be more of an issue in 2011. Can you maybe talk about why you think it’s going to be down 6% this year?
Mike Avara	George, good morning. There are a couple factors impacting pricing. Obviously, we continue to face rate pressures in the Puerto Rico trade, and in addition, the start-up of the new FSX service brings with it somewhat lower rates than our domestic services.
George Pickral	So that includes China in there?
Mike Avara	Yes, it does, George.
George Pickral	And the volume includes China, too?
Mike Avara	Yes, we’ve actually given you the volume on both bases. The increase is exclusive of the FSX service, which just had three sailings in 2010, so we have excluded that to give you a comparable look.
George Pickral	Okay. So with the rate pressures in Puerto Rico, are these contracts where you have to honor some lower market rate, or are you in a situation where you could turn away unprofitable business?
Brian Taylor	Certainly we will always take a look at each piece of business that we are handling, George, to make sure that it is appropriate business for

	us to continue to handle. But what we are seeing in Puerto Rico, as we have mentioned previously, is the additional tonnage deployed in the Northeast by one of our other competitors. As that tonnage has been deployed, that has put increased pressure on pricing in this lane, particularly Northeast pricing. We’ll continue to respond where appropriate and ensure we protect the business that we want to and need to continue to carry.
George Pickral	Okay, thank you for that, Brian. And one more question as it relates to the guidance, where does the logistics piece fit into that? And what are your assumptions on fuel in your guidance?
Mike Avara	I will take that, George. In terms of logistics, since it’s now discontinued operations, we are excluding that from the continuing operations in the guidance that we have given you relative to 2010. Those losses will be excluded, prospectively, and will be carved out as a discontinued operations line item in the income statement.
	In terms of fuel, obviously it’s something we’re watching very closely. The recent events in the Mid-East have caused fuel to surge to the $625 to $650 per ton range. We have initially budgeted at lower amounts, but we have updated not only our fuel prices but our fuel surcharges to take into consideration the current prices.
George Pickral	Okay, so does the current guidance, if I’m understanding you correctly, it assumes today’s fuel prices of $625 to $650?
Mike Avara	Yes, what we’ve done, George, is we have anticipated the current prices for some period of time, and using the help of World Fuels, have looked at the cost curves which show prices coming back down in the second, third and fourth quarters. Obviously we will stay very, very close to that, and react accordingly if that does not occur.
George Pickral	Okay, and then just one or two more, and I’ll turn it over. With respect to the start-up costs in China, I get the sense that they will actually be more in Q1 than Q4. Can you quantify that to help us think about modeling Q1?
Brian Taylor	George, this is Brian. I would say that we incurred, obviously, start-up costs in November and December of last year Q4, where we had really very little corresponding revenue to offset those costs as we set up infrastructure, hired people, set up agencies and so forth in the international lane. As we move into quarter one, the costs that we had built into our plan are very close to what we are actually seeing here in January and February. Obviously, there is a ramp-up in volume that we anticipate here in the first quarter. We did not expect to go

	from zero to a full shift, day one. So I think right now everything is very much in line with the assumptions that we built into our plan from a cost perspective, and from a volume perspective.
Mike Avara	George, I would just add to Brian’s comments that, as you know, we have our normal lowest quarter in the first quarter; that’s where we have the most seasonality across even our domestic trades, and that will be really heightened with the FSX services. So the fact that the FSX service will not fully recover the old Maersk agreements on a full-year basis, and the heightened cyclicality in that trade in the first quarter will have a meaningful impact on the results that we delivered last year, I think about $11 million, if I recall, before accounting for discontinued and continued operations. So there will be a pretty big impact on the first-quarter results.
George Pickral	Okay, that’s great. Thank you, Mike. And then the last question, I noticed that the slide on Guam, 100,000 containers moving to 600,000 containers. How much of that 100,000 do you move now, how much of that 600,000 do you think you can capture, and of your Hunter Class vessels, how comfortable are you capturing all of that potential market share?
Brian Taylor	George, obviously that volume is spread out over a fairly long period of time. But as we look at that market today, it is a market that we pretty much share relatively equally with our primary competitor in that lane. But we have a significant amount of unused capacity today in the FSX vessels that will enable us to capture additional business as that build-up begins and continues to grow in the next couple of years.
George Pickral	Okay, so you could go from the 50 to the 300 without really any increase in costs?
Brian Taylor	Yes.
George Pickral	Okay, perfect, thanks for the time, guys.
Mike Avara	Thank you.
Chaz Jones	Thank you for taking my questions. The first one was just related to the union concessions. Was just curious on maybe how long those last, or is there an expiration on the union concessions?
Mike Avara	Chaz, good morning, it’s Mike. I will take that question. The agreements we have with the vessel unions, the MEBA and the MM&P, start in March of this year and will go through June of next

	year. At that point in time we’ll sit back down together, and if the Company is on firmer footing, which we certainly expect we will be, there will be a restoration of the wage increases going forward.
Chaz Jones	Okay. And then I guess, Mike, you had mentioned the legal expense that we have been incurring here for several years. Obviously I would expect some carryover into Q1; that has been running I guess somewhere in the ballpark of about $1 million. Is that what you’re expecting for Q1, or were there additional expense related to getting things wrapped up there?And then, looking past Q1, what should we be thinking about in terms of legal expense?
Mike Avara	Chaz, it’s really the latter, although we expect expense to be down significantly from what we incurred in 2010 and prior years.The resolution that you saw announced last Thursday obviously involved a lot of legal work. So you will see a big portion of the $3 million of expenses for the full year in the first quarter.
Chaz Jones	Okay. I was just curious, can you guys be any more specific on some of the Puerto Rico opt-outs in terms of those customers who have opted out of the settlement, what type of arrangements that you’re getting with those customers? And is that playing into your rate outlook for Puerto Rico at all?
Brian Taylor	This is Brian, I will take that one. Obviously we continue to be in active dialogue with a number of the customers that have opted out, and at this point it is probably not appropriate for us to discuss the specific terms or share any of those discussions, but I can tell you that there is active ongoing dialogue on a variety of fronts.
Chaz Jones	Okay. Is it a large number of customers, or could you maybe quantify it in those terms, or is it just a handful of customers?
Brian Taylor	It is not a large number of customers, but obviously they are all still important customers of ours, and others in the trade, and we need to ensure that we work through this appropriately with them.
Chaz Jones	Okay. And then, Brian, I don’t know if you guys want to get into specifics on this, but you stated that China or the FSX service has met your expectations so far. I think in maybe some of the prior calls, you had talked about getting to 75%, 80% vessel utilization there to meet a breakeven, I guess, in terms of operations. Can you share with us where the service is here in early March, in terms of utilization?
Brian Taylor	Sure. As I mentioned in my earlier comments, we actually were in a position of being near full capacity on the ship here leading into

	Chinese New Year. Obviously what happens around Chinese New Year during the factory shutdown period is, there is very little cargo. So we’ve obviously seen a significant fall-off, as planned, and vessel utilization is obviously relatively low here in the second period as a result of that, and leading into the third period. It is quickly recovering. We expect that we will back at levels that are appropriate with our plans, and certainly being in that 70% to 75% range appears clear at this point.
Chaz Jones	Okay. So when you say for the full year, maybe we get to slightly below breakeven, or it’s not going to contribute to full year. Is that the utilization assumption for the full year, knowing that obviously it’s going to vary quarter to quarter, is 70% to 75%?
Brian Taylor	Yes, what we have said all along, Chaz, as you remember, is that the contribution from the FSX this year in conjunction with our terminal savings would get us to a relatively breakeven period, and the volume assumptions that we’ve built into our plan here for the international service are consistent with that. So, again, right now I think we are tracking very closely to what we had expected, and don’t see any deviation at this point.
Chaz Jones	Okay. I think that’s all I had. I guess I’ll just end it with congratulating Brian and Mike on your promotions.
Brian Taylor	Thanks, Chaz.
Mike Avara	Thank you.
Operator	What that, we will turn it back over to Stephen Fraser for closing remarks.
Stephen Fraser	Thank you, operator. As the new guy here, I would like to share why I find the Horizon Lines story to be compelling. First, look at the core business. Horizon has an attractive base business serving the domestic US trades, which includes Alaska, which will continue to grow in importance as a major domestic energy-producing state. Next, consider the operating leverage. You all know the operating leverage story, and I think it’s a good one, as the Company’s market economies begin to grow again.
	Third, look at the customer base. Horizon does business with the bluest of blue-chip customers, and this Company is universally recognized for customer service excellence. Fourth, it is growing its international presence, and that’s part of the recipe for long-term success. Finally, Horizon is on the path to a comprehensive

	refinancing that will result in a financially stronger Company with good growth opportunities. I’m excited and energized, and thank you for joining us today. And we look forward to talking with you again on our next quarterly conference call in April. Bye.
Operator	This concludes today’s conference call; you may now disconnect.

EX-99.3

Exhibit 99.3

Horizon Lines, Inc. Fourth Quarter 2010 Review & 2011 Outlook March 3, 2011

Agenda IntroductionStephen Fraser - President & Chief Executive OfficerFourth Quarter 2010 ReviewOperations Review Brian Taylor - Executive Vice President & Chief Operating OfficerFinancial Review Mike Avara - Executive Vice President & Chief Financial Officer2011 OutlookTradelane Economies and Operations Brian Taylor - Executive Vice President & Chief Operating OfficerFinancial and Refinancing Update Mike Avara - Executive Vice President & Chief Financial OfficerQuestions and Answers 2

Forward-Looking Statements & Use of Non-GAAP Measures Risks, Uncertainties, Other Factors with Respect to "Forward-Looking Statements":The information contained in this presentation should be read in conjunction with our filings made with the Securities and Exchange Commission. This presentation contains "forward-looking statements" within the meaning of the federal securities laws. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those that do not relate solely to historical fact. They include, but are not limited to, any statement that may predict, forecast, indicate or imply future results, performance, achievements or events. Words such as, but not limited to, "believe," "expect," "anticipate," "estimate," "intend," "plan," "target," "projects," "likely," "will," "would," "could," and similar expressions or phrases identify forward-looking statements. All forward-looking statements involve risk and uncertainties. Factors that may cause expected results or anticipated events or circumstances discussed in this presentation to not occur or to differ materially from expected results include: failure by us or the DOJ to comply with the terms of the plea agreement, the court's failure to approve the plea agreement or any settlement agreement, or further government investigations, decreases in shipping volumes, or substantial debt, restrictive covenants under our debt agreements, or changes in our management personnel. In light of these risks and uncertainties, expected results or other anticipated events or circumstances discussed in this presentation might not occur. We undertake no obligation, and specifically decline any obligation, to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. See the section entitled "Risk Factors" in our Form 10-K filed with the SEC on February 4, 2010, and in our Form 10-Q for the period ended June 20, 2010, for a more complete discussion of these risks and uncertainties and for other risks and uncertainties. Those factors and the other risk factors described therein are not necessarily all of the important factors that could cause actual results or developments to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could harm our results. Consequently, there can be no assurance that actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences.Use of Non-GAAP MeasuresHorizon Lines reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). The Company also believes that the presentation of certain non-GAAP measures, i.e., results excluding certain costs and expenses, provides useful information for the understanding of its ongoing operations and enables investors to focus on period-over-period operating performance without the impact of significant special items, and thereby enhances the user's overall understanding of the Company's current financial performance relative to past performance and provides a better baseline for modeling future earnings expectations. The Company cautions that non-GAAP measures should be considered in addition to, but not as a substitute for, the Company's reported GAAP results. 3

Fourth Quarter 2010 Review Stephen Fraser President and CEOIntroduction

Fourth Quarter 2010 Review Brian TaylorExecutive Vice President and Chief Operating OfficerOperations Review

Watershed period for Horizon LinesResolved major antitrust issuesDOJ resolutionCivil antitrust progressRefinancing effort underwayCovenant relief moving forwardComprehensive refinancing targeted for second or third quarterChallenging 2010 is behind us2011 plan in placeExpect volume growth to track tradelane economies Aggressive cost-management initiatives in placeNew China service ramping upLogistics business exit 6 Horizon Lines Overview

Financial HighlightsGenerated $40.5 million in 2010 adjusted free cash flow from continuing operationsEnded fiscal year 2010 with $18.8 million less debt under the senior credit facility than prior yearChallenges includedHawaii volume shortfall relative to expectations Continuing rate pressures, particularly in Puerto RicoIncreased fuel prices Anticipated start-up costs related to new China serviceSuccesses includedSuccessful launch of new Five Star Express service to Guam and ChinaIntense focus on customer serviceVigilant cost management Q4 2010 Revenue from Continuing Operations $298.8 $1,162.5 Adjusted EBITDA from Continuing Operations $17.1 $96.4 7 Fourth-Quarter Highlights ($ in Millions)

Volume Update - Fourth Quarter 7.9% volume increase reflects new international volume and extra weekComparable volume declined 1.1%, due largely to Hawaii/Guam; Alaska eased slightly, Puerto Rico rose New FSX service added 1,765 loads at lower margin (CHART) 8 * 2010 fourth quarter includes international volume and extra week. Additional week added 4,067 loads and new FSX service added 1,765 loads. Excluding these factors, fourth-quarter volume decreased by 725 loads, down 1.1% from year ago. (CHART) 1.1% 2.7% 69,427 6.3% Container Volume*

(CHART) (CHART) Unit Revenue Update - Fourth Quarter Total revenue per container slipped, due largely to ongoing rate pressures and introduction of international service Rates, net of fuel, down slightly on international service and ongoing rate pressures 0.6% Net of Fuel 0.7% Total Unit Revenue Per Container 9

(CHART) (CHART) Vessel Performance - Fourth Quarter 2.0% Vessel availability at 100%, reflecting continued near perfect fleet reliability On-time arrivals improved from a year ago Vessel utilization at 58%, reflecting continued soft market conditions and 8.4% capacity increase versus year ago due to dry dock schedules 10 Vessel Availability Vessel On-Time Arrivals Vessel Utilization 2009 2010 2009 2010 2009 2010 3.0%

First sailings New China service commenced December 13thNecessary equipment in place as company made smooth transition from Maersk serviceSomewhat soft rate environmentVessel utilization increased through Chinese New Year, generally in line with expectations Implemented express schedule between Shanghai and Kansas City Guam service is now direct; provides improved scheduling and customer service Five Star Express - December 13th Launch 11

Fourth Quarter 2010 Review Mike Avara Executive Vice President and Chief Financial Officer Financial Review

Financial Presentation Financial measures in this presentation exclude discontinued operations and significant items unless otherwise notedDiscontinued operationsCompany is in the process of divesting logistics businessLost $3.7 million from operations in 2010 and incurred $5.1 million in impairment chargesFourth-quarter adjustments$30.0 million charge (Net Present Value of non-interest bearing fine of $45 million) related to DOJ resolution, and $1.8 million charge for indirect purchaser settlement in Puerto Rico$2.1 million charge related to non-union workforce reduction$1.8 million in antitrust-related legal expenses$0.9 million in impairment charges for equipment Fourth quarter and year 2010 include extra week 13

Operating Revenue from Continuing Operations Operating Revenue from Continuing Operations ($ in Millions) 4.2% (CHART) 3.4% Fourth Quarter Fiscal Year 14

Operating Revenue Change Operating Revenue Change ($ in Millions) 15

Adjusted Operating Income and EBITDA from Continuing Operations(1) Adjusted Operating Income and EBITDA from Continuing Operations(1) ($ in Millions) 93.5% See reconciliation of Operating Income to Adjusted Operating Income and Net Income to Adjusted EBITDA on pages 41 and 47, respectively. Fourth Quarter (CHART) 38.7% 16

Adjusted EBITDA Change ($ in Thousands) 17 Fourth Fiscal Quarter Year 2010 Adjusted EBITDA $ 27,909 $ 115,420 Fuel recovery (5,511) (12,572) Vessel operating (2,506) (6,598) Rate, net of fuel (2,081) (8,007) Maintenance expenses (1,722) (3,717) Non transportation revenue (1,186) 5,677 Volume (137) (4,633) Other (1,417) (4,741) Overhead 1,673 10,139 Terminal savings 2,035 5,414 Sub-Total (10,852) (19,038) 2011 Adjusted EBITDA $ 17,057 $ 96,382

Adjusted Net (Loss) Income and Diluted EPS from Continuing Operations(1) Adjusted Net (Loss) Income and Diluted EPS from Continuing Operations(1) ($ in Millions, except per share) Fourth Quarter 375% (CHART) 362% Adjusted Diluted EPS Adjusted Net (Loss) Income (1) See reconciliations of Net (Loss) Income to Adjusted Net (Loss) Income and EPS on pages 45 and 46, respectively. 2009 2010 2009 2010 18

Fiscal-Year Financial Highlights (1, 2 ) (1) See reconciliation tables for Adjusted Operating Income, EBITDA, Net (Loss) Income and Diluted EPS on pages 41, 47, 45 and 46, respectively.(2) From Continuing Operations ($ in Millions, except per share) (CHART) 121% (CHART) (CHART) (CHART) Adjusted Net (Loss) Income Adjusted Diluted EPS Adjusted Operating Income Adjusted EBITDA 121% 35.7% 16.5% 2009 2010 2009 2010 19

2010 Free Cash Flow ($ in Millions) 20 2010 2009 Adjusted EBITDA From Continuing Operations $ 96.4 $ 115.4 Stock Based Compensation 2.1 3.1 Gain on Equipment Disposals / Chenega Sale 0.8 1.1 Working Capital 12.2 7.4 Vessel Payments in Excess of Accruals (3.9) (4.9) Annual Cash Incentive Plan (5.4) 3.4 Capital Expenditures (16.3) (12.9) Dry-Dock Expenditures (19.2) (14.7) Interest, Net (26.2) (24.5) Taxes - 0.7 Adjusted Free Cash Flow From Continuing Operations 40.5 74.1 DoJ Investigation Related Expenses (10.3) (18.2) Restructuring Charge Payments (0.2) (3.6) Vessel / Equipment Impairment Charge (0.1) (2.4) Union OPEIU Severance (0.3) (0.4) Free Cash Flow From Continuing Operations 29.6 49.4 Debt Borrowing 108.8 64.0 Debt/Capital Lease Payments (127.7) (92.0) Financing Fees / Loss on Debt Modification (0.1) (3.5) Common Stock Issued Under Employee Stock Purchase Plan 0.1 0.1 Dividends (6.2) (13.4) Net Cash Flow From Continuing Operations $ 4.5 $ 4.6 Net Cash Flow From Discontinued Operations $ (8.2) $ (3.7) Net Cash Flow $ (3.7) $ 0.9

Debt Structure GAAP Amount FundedAmount Rate Formula Interest Rate Maturity Revolver $100.0 $100.0 LIBOR + 3.00% 3.29%* 08/08/12 (1) Term Loan 93.8 93.8 3.02% + 3.00% 6.02% 08/08/12 (1) Capital Lease 9.1 9.1 10.22% 11/01/17 Total Senior Debt 202.9 202.9 Convertible Notes 313.4 330.0 4.25% 08/15/12 Total Long-Term Debt $516.3 $532.9 4.48%* (1) Maturity will accelerate to February 15, 2012 if convertible notes are not refinanced or refinancing plan acceptable to the bank group is not in place by that date.* Weighted average Corporate Liquidity Corporate Liquidity Cash Balance $2.8 Effective Revolver Availability 57.6 Total Liquidity $60.4 Credit Facility Compliance Credit Facility Compliance Credit Facility Compliance Ratio Q4 LTM 2010 Covenant Interest Coverage 3.61x >3.50x Senior Secured Leverage 2.14x <2.75x Corporate Liquidity, Credit Facility Compliance & Debt Structure ($ in Millions) 21 At December 26, 2010

2011 Outlook Brian TaylorExecutive Vice President and Chief Operating OfficerTradelane Economies and Operations

Market conditions remain challengingTradelane economies remain in slow, uneven recovery, lagging U.S. Fuel prices expected to continue rising Container rate pressures persist, particularly in Puerto RicoOutlook is cautiously optimistic Volumes expected to increase slowly as year progressesChina growth expected to contribute to EBITDA over long term, but not in 2011Key cost savings initiatives underway, with $15.3 million in savings achievedHorizon Lines remains well positionedOperating leverage will accelerate EBITDA growth with rising volumesCompany well aligned with strong, growing customersChina service offers new, longer-term earnings growth opportunity Certain cost initiatives provide recurring savingsDownsizing and inland efficiencies provide extended savingsLogistics exit eliminates losses and refocuses resources 23 2011 Outlook

(1) Sources: Moody's, Northern Economics, Alaska Department of Labor and Workforce Development, U.S. Energy Information Administration.(2) Average oil price is for West Texas Intermediate. Alaska North slope West Coast spot price is generally $2.50 less. 2009 2010 Indicator (1) 2011Forecast 2012Forecast (4.7)% 6.0% Real Gross State Product 4.0% 5.2% 8.0% 8.1% Unemployment Rate 8.7% 8.3% (1.5)% 1.9% Real Personal Income Growth 2.4% 6.0% (7.5)% 16.7% Single-Family Permits 32.5% 47.7% $61.66 $79.41 Average Oil Price (2) $93.42 $97.50 Alaska economy supported by recuperating energy industry, federal/state construction spending, and expanding healthcare industry American Recovery and Reinvestment Act has provided a major impetus to economic activityJob growth expected to be among the nation's fastest over the next few yearsOngoing military presence, recovering seafood industry and sustained energy industry expansion expected to bolster outlookBusiness climate is improving modestlyRetail store expansion remains largely mutedSeafood business improving due to significant 2011 increase in pollock & cod quotasTourism seen increasing in line with recovery in personal income and national wealth 24 Alaska 2011 Economic Outlook (% Change YOY, except Unemployment Rate & Average Oil Price)

Hawaii's economic recovery continues slight improvementTourism rebounded strongly in 2010 as international visitors and spending surged 2011 tourism forecast is more subdued due to expected slowing global growth Military segment remains stableWorst is over in construction/real estateBusiness growth remains muted Very little retail expansion on tap for 2011Job creation continues to lag visitor industry revivalEmployment and personal income expected to see gradual improvement in 2011 as construction and non- tourism sectors begin firming (1) Sources: University of Hawaii Economic Research Organization; Hawaii Department of Business, Economic Development & Tourism; NF: No Forecast. 2009 2010 Indicator 2011 Forecast (1) 2011 Forecast (1) 2012 Forecast (1) 2012 Forecast (1) 2009 2010 Indicator UHERO DBEDT UHERO DBEDT (0.7)% 1.1% Real GDP 2.7% 1.8% 3.4% 1.9% (4.4)%/(12.3)% 8.2%/14.8% Visitor Arrivals / Spending 3.8 %/9.2% 4.1%/ 8.4% 1.9%/NF 3.5%/ 7.7% 6.8% 6.5% Unemployment Rate 5.9% NF 5.3% NF (0.1)% 0.3% Real Personal Income Growth 2.3% 1.0% 2.4% 1.2% (17.3)% (2.5)% Construction Income 3.2% NF 2.9% NF 25 Hawaii 2011 Economic Outlook (% Change YOY, except Unemployment Rate)

(1) Sources: Moody's (forecasts based on calendar year - Puerto Rico FY ends in June); Caribbean Business. 2009 2010 Indicator (1) 2011Forecast 2012 Forecast (2.4)% (5.1)% Real Gross State Product (0.2)% 2.6% (4.7)% (3.1)% Total Employment (0.4)% 1.5% 15.1% 16.4% Unemployment Rate 16.0% 12.0% 4.9% 0.2% Real Personal Income Growth 0.3% 1.1% 25.3% 3.9% Personal Bankruptcies (1.6)% 6.7% (42.9)% 1.1% Multi- & Single-Family Permits 33.3% 19.5% Puerto Rico may begin to emerge from recession in 2011Ongoing recession since 2006 has been deepest and most prolonged economic downturn since the 1930sS&P raised outlook on Puerto Rico to "positive" from "stable," citing balanced budget progress Fortuno administration reducing budget deficit through expense controls and revenue enhancement measures, including tax reform Unemployment rate expected to remain highBusiness environment remains challengingLack of private sector growth continues to impact capacity and pricing issues 26 Puerto Rico 2011 Economic Outlook (% Change YOY, except Unemployment Rate)

Trans-Pacific Eastbound Container Volume China economic growth expected to continue2011-2012 GDP growth expected in the 9% range Trans-Pacific volume experienced strong recovery in 2010, seen growing moderately in 2011Tradelane outlook in line with 2011 plan Increased capacity likely to pressure rates in first halfVolume growth in second half expected to push rates higher Trans-Pacific 2011 Eastbound Container Rate Forecast (1) Source: Drewry Research. (1) Forecast rate is bid/FEU. Source: ICAP Securities Ltd Container Derivatives Report. China 2011 Economic Outlook 27

U.S. military buildup in Guam remains key driver of expected multi-year growth Population of 180,000 is expected to grow by 23,000 (8,000 Marines from Okinawa and their families)Total move is expected to cost about $13 billionConstruction projects in advance of move are beginning to be awardedAnnual container shipments into Guam seen rising from 100,000 to 600,000 within a few yearsHowever, timing of major construction projects remains in questionFinal Environmental Impact Study introduced an "Adaptive Program Management" approach to the military buildupPacing military construction and population increases to capacity of Guam's infrastructureApproach suggests build-up will be more gradual Sources: First Hawaiian Bank, The Washington Post, Public Radio International. Guam 2011 Economic Outlook 28

Launched FSX service in DecemberMore than 12,000 new containers to support FSX, Guam and Hawaii servicesFast inland express networkSolid customer support, with over 150 service contracts signed Longer-term growth potentialChina's growing exports to the U.S.Expanding U.S. export opportunities to ChinaProjected Guam growth Earnings Sensitivity AnalysisRate Change Annualized EBITDA Impact $100 in rate ~ $4.5 million Five Star Express - Update 29

2011 Outlook Mike Avara Executive Vice President and Chief Financial Officer Financial

EBITDA growth dependent on pace of recovery in each market and international start-upDomestic tradelane economies in modest recovery mode High fuel prices present significant headwindPuerto Rico pricing pressures will continue New China service not expected to fully replace TP1earnings stream in 2011Guam volume growth expected to be substantial, but 2011 contribution still dependent on timingCost reduction initiatives will play key role in meeting financial objectives 2011 Financial Outlook 31

(1) Year-over-year variances for 2010 are on a comparable basis (converting 2010 to a 52 week year).Not Meaningful: International service began operations in December 2010.Excluding International loads,. Impact of international loads at lower rate and, to a lesser extent, continued pricing pressure in Puerto Rico 2011 Major Financial Assumptions ($ in Millions) 32

Revenue Initiatives Volume Improvements $ 4,043 Cost Initiatives Workforce Savings 12,662 Equipment Maintenance 1,088 Intermodal Savings 958 All Other 641 Sub-Total $ 15,349 Total Initiatives $ 19,392 2011 Revenue and Cost Initiatives ($ in Thousands) 33 Revenue and Cost Initiatives

Horizon Lines is well-positionedIntensely focused on cost management and selective growth opportunitiesConsistent and reliable service providing for essential needs in domestic tradelanesOperating leverage can be significant as volumes recover Capitalizing on emerging growth opportunities in China and GuamExpect refinancing process to be completed in near term 2011 Financial Outlook Summary 34

Refinancing process moving ahead in wake of DOJ resolutionEngaged in constructive discussions with lenders regarding credit agreement and covenant relief Pursuing comprehensive refinancing of existing capital structure in the near termTargeting completion of sustainable long-term capital structure in second or third quarterRefinancing intended to accomplish the following goals:Flexibility to deleverCost affordabilityPermanent capital solution 2011 Refinancing Update 35

Horizon Lines, Inc. Fourth Quarter 2010 Review & 2011 Outlook Questions & Answers

Horizon Lines, Inc. Fourth Quarter 2010 Review & 2011 Outlook Financial Appendix

Income Statement Summary - Fourth Quarter Income Statement Summary - Fourth Quarter Adjustments exclude the impact of items as noted on pages 40-47. ($ in Thousands, Except Share and Per Share Amounts) 38

Income Statement Summary - Fiscal Year Income Statement Summary - Fiscal Year Adjustments exclude the impact of items as noted on pages 40-47. ($ in Thousands, Except Share and Per Share Amounts) 39

Adjusted Operating Expense Reconciliation ($ in Thousands) 40

Adjusted Operating Income Reconciliation ($ in Thousands) 41

Adjusted Other Expense Reconciliation ($ in Thousands) 42

Adjusted Pretax (Loss) Income Reconciliation ($ in Thousands) 43

Adjusted Income Tax Expense Reconciliation ($ in Thousands) 44

Adjusted Net (Loss) Income Reconciliation ($ in Thousands) 45

Adjusted Net (Loss) Income Per Share Reconciliation 46

EBITDA and Adjusted EBITDA Reconciliation ($ in Thousands) Note: EBITDA is defined as net income plus net interest expense, income taxes, depreciation and amortization. We believe that EBITDA is a meaningful measure for investors as (i) EBITDA is a component of the measure used by our board of directors and management team to evaluate our operating performance, (ii) the senior credit facility contains covenants that require Horizon Lines Inc. to maintain certain interest expense coverage and leverage ratios, which contain EBITDA and (iii) EBITDA is a measure used by our management team to make day-to- day operating decisions. Adjusted EBITDA excludes certain charges in order to evaluate our operating performance, for making day-to-day operating decisions and when determining the payment of discretionary bonuses. 47

2010-2011 Capital Expenditures Summary ($ in Millions) Capital Spending Capital Spending Capital Spending Capital Spending 2011 Plan 2010Actual Terminal Infrastructure and Equipment $ 7.4 $ 3.9 Anchorage Cranes 7.1 1.2 Vessel Regulatory and Operational Preservation Initiatives 6.3 4.2 Container Lease Buy-Out 4.2 3.3 Information Technology 2.2 2.4 San Juan Terminal Redevelopment 0.9 1.3 Total $ 28.1 $ 16.3 48

Dry-Dock Expenditures Summary Dry-Dock Expenditures Summary * EstimateExpenditures amortized over 2 1/2 yearsIncludes 2 Underwater Inspections in Lieu of Dry-docking on D8 VesselsIncludes 3 Underwater Inspections in Lieu of Dry-docking on D8 Vessels ($ in Millions) 49 Dry-Dock Expenditures

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