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): November 2, 2005

HORIZON LINES, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	333-123073	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:

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

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

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

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

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On November 2, 2005, Horizon Lines, Inc. (the “Company”) (i) held a conference call to discuss financial results for the quarter ended September 25, 2005 and (ii) issued a press release and made available its Third Quarter 2005 Earnings Release. A copy of the transcript of the conference call is attached as Exhibit 99.1, a copy of the press release is attached as Exhibit 99.2, and a copy of the Third Quarter 2005 Earnings Release is attached as Exhibit 99.3, and each is incorporated herein by reference. The press release and the Third Quarter 2005 Earnings Release are available on the Company’s website, www.horizonlines.com.

ITEM 7.01. REGULATION FD DISCLOSURE

The disclosure contained in Item 2.02 is incorporated herein by reference.

SAFE HARBOR STATEMENT

The discussion of our results of operations and financial condition contained in this Current Report on Form 8-K should be read in conjunction with our financial statements and notes thereto included in our filings made with the SEC. This Current Report on Form 8-K contains forward-looking statements. 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 risks 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: our substantial debt; restrictive covenants under our debt; decreases in shipping volumes; our failure to renew our commercial agreements with Maersk; rising fuel prices; labor interruptions or strikes; job-related claims; liability under multiemployer pension plans; compliance with safety and environmental protection and other governmental requirements; new statutory and regulatory directives in the United States addressing homeland security concerns; the successful start-up of any Jones Act competitor; increased inspection procedures and tight import and export controls; restrictions on foreign ownership of our vessels; repeal or substantial amendment of 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 drydocking costs for our vessels; the loss of our key management personnel; actions by our controlling stockholder; and legal or other proceedings to which we are or may become subject.

In light of these risks and uncertainties, expected results or other anticipated events or circumstances discussed in this Current Report on 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.

NON-GAAP FINANCIAL MEASURES

This Current Report on Form 8-K includes the financial measures EBITDA, adjusted EBITDA and adjusted operating income, which are non-GAAP financial measures. EBITDA is defined as net income plus interest expense, income taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA further adjusted to exclude unusual items and certain other adjustments. Adjusted operating income is defined as operating income adjusted to exclude unusual items. We acknowledge that there are limitations when using EBITDA, adjusted EBITDA or adjusted operating income. EBITDA, adjusted EBITDA and adjusted operating income are not recognized terms under GAAP and do not purport to be alternatives to net income or operating income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Additionally, EBITDA, adjusted EBITDA and adjusted operating income are not intended to be measures of free cash flow for management’s discretionary use, as they do not consider certain cash requirements such as tax payments and debt service requirements. Because all companies do not use identical calculations, these presentations of EBITDA, adjusted EBITDA and adjusted operating income may not be comparable to other similarly titled measures of other companies.

ITEM 9.01. EXHIBITS

(d) The following exhibits are being furnished herewith:

99.1    Transcript of conference call held on November 2, 2005.

99.2    Press release dated November 2, 2005.

99.3    Third Quarter 2005 Earnings Release.

2

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: November 3, 2005	By:	/S/    M. MARK URBANIA
		M. Mark Urbania
		Senior Vice President, Chief Financial Officer
		and Assistant Secretary

3

EX-99.1

Exhibit 99.1

TRANSCRIPT OF HORIZON LINES, INC. QUARTERLY EARNINGS RELEASE CONFERENCE CALL- THIRD QUARTER 2005

Charles Raymond: (CEO) Thank you very much and to our listeners and participants thank you joining us on our third quarter earnings call today. As you know, this call is being conducted to give you insight into our earnings reflected in the information which we distributed to you just shortly ago and to give you the opportunity to understand how we feel about the general direction of our company and for you to ask questions pertaining to our third quarter results. The principal focus will be on our financial results as of the close of our third quarter, which occurred on September 25, 2005. During this call, any forward looking statements made by management relate only to the time and date of this call and we must disclaim any duty to update these statements based on new information, future events or otherwise, and we trust that we are going to share with you here a positive story. This has been an exciting time for Horizon Lines and for you, our investors, and for our customers. We’ve had a flurry of activity over the last several months related to our initial public offering, which closed on September 30, 2005, and we’re also rolling out a new branding campaign under the theme “Always There. Always Delivering,” and we’re getting very solid customer feedback from that effort. Related to our third quarter earnings, the combination of the timing of the Castle Harlan private equity purchase of Horizon Lines back in July 2004, coupled with the heavy activity that was associated with our recent initial public offering, which actually occurred just a couple of days after the third quarter closed, makes our comparisons on a quarter-to-quarter and nine-month comparison basis pretty complicated for you, so we are going to try to carefully step through these financial results for you so you understand them. For example, our shares prior to the initial public offering were all privately held. There were approximately 19 million shares and we measured ourselves by earnings before interest, taxes, depreciation and amortization, referred to as EBITDA. As is customary for a private equity-sponsored company, EBITDA is a standard measure and we continued that through the third quarter of 2005. Going forward however, our reporting focus and our discussions with you will be on measures that are more appropriate and customary for a publicly held company, and that will include, of course, net earnings per share, and will include the approximately 33.5 million shares that are outstanding following the initial public offering and the exercise of the “green shoe” by our underwriters. So please bear with us as we explain our company’s performance net of the unusual or non-recurring costs associated with these equity restructuring activities. This

TRANSCRIPT OF HORIZON LINES, INC. THIRD QUARTER EARNINGS RELEASE CONFERENCE CALL

has been a good quarter for Horizon Lines. We were happy earlier this month, on October 25, 2005, to announce that our Board of Directors declared a dividend on our outstanding shares of common stock of $.11 per share. As you know, that will be payable on December 15, 2005 to all stockholders of record as of the close of business on December 1, 2005.

The economic climate in all three of our trades continued to exhibit steady growth during this last quarter. Revenue increased by $38 million, or 15.1%, over the third quarter of 2004. We’re happy to report that operating income and EBITDA both improved in the third quarter of 2005 after we exclude the impact of non-recurring expenses associated with the initial public offering, and we continued to invest in the business by acquiring two vessels off lease and some 900 new containers during the third quarter. Our intense focus on cost control continues, and we’ve undertaken initiatives to mitigate rising fuel expenses. The use of the initial public offering proceeds to pay down debt will improve our balance sheet and reduce our interest costs commencing in the fourth quarter. As we move into the fourth quarter, we remain very encouraged by the ongoing growth of our trades, and, as the largest Jones Act container shipper in these markets with excellent customer relations, we believe we are well positioned to take advantage of the opportunities ahead of us.

On slide number 5, again, to reiterate, our revenue increased by $38 million, operating income improved, adjusted EBITDA before non-recurring management fees increased by 22.5% in 2005 compared to 2004, and the economic climate was very stable. We turn to slide 6. On this page, you’ll see our operating revenue increased by $38 million, or 15.1%, to $289.1 million for the quarter and by $110.2 million, or 15.6%, to $817.2 million for the nine-month period, a nice increase in our operating revenue line.

Turning to the adjusted operating income line, for our third quarter, our operating income improved by $1.7 million, or 6.1%, over the prior year and was better by $10.1 million, or 21.4%, for the nine months compared to 2004, after adjustment for non-recurring management fees, non-cash stock compensation expenses, and transaction expenses.

On an EBITDA basis, our EBITDA increased by $8.7 million, or 22.5%, for the third quarter and $25.8 million, or 30.9%, for the nine month period. Again, this is very solid performance for this company. We’re very pleased with this growth and it is representative of what we’ve done in the past.

One of the key things that we look at in our markets, being that we are serving all three of the major Jones Act markets, are the macroeconomic measures of the various states. In the case of Alaska, there has been a very steady and stable growth since 2000. Alaska’s gross state product has actually

2

TRANSCRIPT OF HORIZON LINES, INC. THIRD QUARTER EARNINGS RELEASE CONFERENCE CALL

grown by $14 billion, or 63.6%, from 1998 to 2004. Hawaii’s gross state product has grown every year since 1998, and by a combined total of 45.5%, and is projected to surpass $53 billion in 2005. In the case of Puerto Rico, its gross domestic product surpassed $11 billion dollars last year, an increase of $1.4 billion, or 14.6%, since 1999. In Puerto Rico, we pay particular attention to the manufacturing sector, as that economy has moved from an agriculture and tourism-based economy to more of a manufacturing-based economy, and items such as pharmaceuticals, computer hardware and scientific instrument exports from the island drive employment, and we’re confident of a good solid market in Puerto Rico going forward.

With me on the call today are Mark Urbania, our Chief Financial Officer and Senior Vice President, and John Keenan, our Chief Operating Officer and Senior Vice President. I’m going to ask John to take you through some our operating highlights from this quarter.

John Keenan: (COO) Thank you Chuck. I’m on slide 13. I’d like to cover the operating highlights as Chuck mentioned. The first is fuel. We’ve proactively adjusted our fuel surcharges to address the steep rise in fuel costs. We initiated a third weekly sailing between Tacoma and Anchorage using the Horizon Fairbanks to service the Alaska market during the busy summer season. We also purchased the Horizon Pacific and Horizon Enterprise via a lease buyout during this period. We acquired 900 new refrigerated containers in the continuing upgrade of our container fleet. We have 1,000 new dry boxes and 300 additional new refrigerated containers which will be entering our network in the fourth quarter of 2005. We maintained strong vessel on-time performance despite inclement weather and the weather challenges during the last quarter. And, importantly, we recently received the Wal-Mart Carrier of the Year Award for the fourth time, and that’s reflective of our continued focus on operational and logistics excellence. Most of you follow this sector very closely and are familiar with the impact fuel has on all transportation companies. Vessel fuel expense increased by $9 million, or 41.9%, in the third quarter and by $21.1 million, or 34.1%, for the nine months of 2005 versus the comparable 2004 period. In the case of some of our initiatives, we proactively adjusted our fuel surcharges to recover a majority of the increase that we are seeing in our bunker fuel expense. We also continuously compare fuel prices at our various ports of call to identify the best fuel buying location, which is an advantage of the network we serve. And when opportunities existed, we entered into physical forward purchase agreements and/or paper hedges to help manage this major expense. Moving on to slide 15, a little bit about our vessel investments. On an

3

TRANSCRIPT OF HORIZON LINES, INC. THIRD QUARTER EARNINGS RELEASE CONFERENCE CALL

ongoing basis we are constantly looking at our core assets and, where it makes economic sense, we will acquire vessels. When you look at the two vessels on the bottom of the slide, you’ll see the Horizon Pacific and the Horizon Enterprise. These are two vessels we acquired via lease buyouts in the third quarter for a total of $29.8 million. This is important because when you look at all the vessels on this page, this generates about $14 million in annual lease savings for us going forward as a company.

As to container fleet investment on slide 16, I think you’ve seen in the S-1, we have about 22,000 containers that we operate today. 25% of these are our special equipment, our refrigerated containers. This obviously is our higher margin cargo. We continue to replenish our container fleet, acquiring 900 new containers in the third quarter. In addition, we are investing in 1,000 new dry boxes and 300 additional new refrigerator containers in the fourth quarter of 2005. So, literally, we are making ongoing reinvestments in the business and what this does for us is not only improve our customer satisfaction by having new boxes, it reduces our maintenance and it reduces some of our potential claim expense going forward.

On slide 17, a little about vessel availability. We are very proud of this statistic. 99.8% of the time when our vessels were ready to depart (i.e., when the captain is ready to let go the lines and depart the port, we’re ready to go). We measure ourselves against zero tolerance on this number, and it is up from 99% in 2004 to 99.8% in 2005.

On slide 18, our vessel utilization is about 90% 2005 year-to-date for overall Horizon Lines. Puerto Rico is at 90%, Hawaii/Guam is at 91% and Alaska is at 85%. I would note that, with the spare vessel, we have the opportunity to flex our vessel capacity in the networks. Specifically, as I mentioned earlier, we put a fourth ship in the Alaska trade this summer and we also use that spare vessel for Hawaii and Guam. But we also flex our fleet and our sailings over Jacksonville as the market demand ebbs and flows.

On slide 19, our vessel on-time arrivals, we’ve had an 84% on-time arrival performance for the third quarter of 2005. That is employing a zero tolerance. That means a minute late is late. Using the three hour standard, our performance is at 96%. So if you looked at our Puerto Rico trade, we’re at 96%. We are particularly proud of that number with the hurricanes and the weather destruction that we’ve seen in that market. Hawaii/Guam is at 90% and Alaska is at 99%. So in closing, when you look at reliability, 99.8% of the time we are ready to go, our vessels are ready to sail, and you also look at the on-time percentages, we’re very happy. This is indicative of our reliability and our customer availability and our various networks that we serve.

We continue to focus on the area of operational excellence, which

4

TRANSCRIPT OF HORIZON LINES, INC. THIRD QUARTER EARNINGS RELEASE CONFERENCE CALL

we’ve been known for. It’s been our trademark as an organization. And going forward what we’d like to do is share some of our various cost initiatives that we’re focused on for the balance of the year and into 2006. So with that I’d like to turn it over to Mark Urbania, our Senior Vice President and CFO.

Mark Urbania: (CFO) Thank you John. If you are able to follow along on the webcast, I’m on slide 21, which shows actual and adjusted results for the third quarter of 2005 compared to the third quarter of 2004. Although the initial public offering did not occur until a few days after the close of our third quarter, we did incur transaction or initial public offering-related expenses in our third quarter and that really impairs our comparability between the quarters. Therefore, what we have attempted to do to aid you in understanding these results is we have added the two columns on the right side of this page to show adjusted results. This is not pro forma results as depicted in the 10-Q, but adjusted. I’ll talk about what adjusted is in a moment. Essentially there are really two line items that were effected as a result of the initial public offering-related expenses in the third quarter. First, actual operating expenses, which is the second column, and includes $11.3 million of initial public offering or transaction-related expenses. Therefore, we’ve removed this $11.3 million of expenses in the adjusted column and that is why you see operating expenses going from $270.7 million in the actual column to the $259.4 million in the fourth column. I am going to cover with you what those adjustments are in a couple of moments. Secondly, we’ve tax effected for those adjustments. Therefore, you see the income tax expense line in the second column of $2.2 million going to $6.7 million due to the addback and the increase of the operating income and pre-tax income. In addition to the initial public offering-related expenses that I just talked to you about, there are really two other major items that are not depicted in this slide, but they do impair comparability between the two quarters. First, amortization expense is $4.2 million higher in the third quarter of 2005 compared to the same quarter of 2004. This is because of the write-up of assets, namely the customer contracts and trademarks, as a direct result of the purchase of the company by Castle Harlan in July 2004 and the fact that the write-up of these assets and the resulting amortization of those intangibles were not recorded until the fourth quarter of 2004. So essentially the third quarter of 2004 does not include that expense. That’s one item. Secondly, the interest expense of $3.2 million was recorded in the third quarter of 2005 and does not exist in the third quarter of 2004. This interest expense relates to the 11% senior discount notes and if you recall, the 11% senior discount notes were not issued by H-

5

TRANSCRIPT OF HORIZON LINES, INC. THIRD QUARTER EARNINGS RELEASE CONFERENCE CALL

Lines Finance Holding Corp. until December of 2004, so there was virtually no interest expense related to this in the third quarter in the prior year versus this year. So, I know that’s a lot and I know there are several things here, but that’s the best way we could think of to try and explain this to you.

Now, a key metric for us is EBITDA. As you can see in the adjusted column, if you compare the $38.7 million in EBITDA in the third quarter of 2004 to what the adjusted EBITDA is in the third quarter of 2005, $47.4 million, and again that adjustment is for initial public offering-related items, which are one-time non-recurring expenses added back. We had a good quarter from an EBITDA perspective.

The operating ratio is slightly worse at 89.7%, versus 88.8%, but once you take into account the amortization expense that I talked about, the operating ratio for the third quarter of 2005 vastly improves.

The other thing that is not on this page that I wanted to share with you, and I will be talking more about this in a few moments, is earnings per share. If you notice in the Horizon Lines, Inc. 10-Q, if you had an opportunity to look at it or the press release, we put out on an actual basis $.14 earnings per share for the third quarter and that is using a share count prior to the initial public offering of about 19,169,000 shares to calculate that $.14 earnings per share. On a net income pro forma basis, and what I mean by that is that if the initial public offering transaction had occurred at the beginning of this fiscal year, the third quarter would have been $.37 earnings per share using the post-initial public offering share count of about 33,544,000 shares. I wanted to make sure you understand that. I will be talking more about that in a few minutes.

The next page, slide 22, compares the nine months. Again, it’s the same drill. The operating expenses on an actual basis include $23.2 million of non-recurring initial public offering-related expenses. Therefore, the operating expenses for the nine-month period on an actual basis was $783 million, dropping to $759.8 million, the fourth column, and then we’ve tax effected and that’s why you see the income tax expense rising. But net income improves and the two things that are not depicted here that impair the comparability again are the amortization expense that I just talked about and the interest expense, which have a dramatic effect on net income. If I can draw your attention for a moment to EBITDA, you can see that EBITDA vastly improved as well, quarter over quarter.

The main point in all of this is that although we had these initial public offering-related transaction expenses and these things that skew comparability, from a revenue perspective, operating income perspective, net income perspective and EBITDA perspective, all of the major metrics by which we measure our business, the third quarter and year to date numbers are better than last year.

6

TRANSCRIPT OF HORIZON LINES, INC. THIRD QUARTER EARNINGS RELEASE CONFERENCE CALL

Let me spend a couple of minutes talking about operating revenue on slide 23. This page really breaks it down. Volume growth for the third quarter accounted for $6.9 million of the growth and then $23.4 million on a nine month basis. That represents 3% volume growth in our third quarter and 3.6% for the nine-month period. Rate improvement and changes in our product mix account for $10.8 million for the quarter and $30.2 million for the nine months. Bunker fuel surcharges, which we include in revenue to offset our rising fuel costs, are depicted in the reconciliation as well. We also have vessel management contracts that didn’t exist in the third quarter of 2004. There are seven oceanographic vessels that we manage and two ready reserve fleet vessels. That’s part of the drivers behind revenue growth. And then at the bottom, other non-transportation revenue has grown, and this is basically a result of an increase in our terminal service work that we provide for our customers, Maersk being one of them.

Speaking a couple of minutes about the adjustments, I told you I’d explain adjusted operating income results. We start at the top of the page with what the actual operating income was and we work our way down to adjustments. And you can see the adjustments in the middle of the page, both from a quarter perspective and a nine-month perspective. The first item there is management fees. In the third quarter, we incurred $8.2 million of management fees, and $9.7 million for the nine months, which we will not incur post-initial public offering going forward, so we’ve eliminated those for comparability purposes and then also on a nine month basis, the $9.7 million additional expense in the fourth quarter because of vesting. $1.6 million would have been recorded in the third quarter regardless. The stock compensation expense was $1.6 million in the quarter and $12 million for the nine months. We won’t have stock compensation expense with respect to the applicable restricted stock on a going-forward basis after a fourth quarter charge at $6.9 million due to the acceleration of the vesting in full. And then other transaction-related expenses for the quarter and nine months were $1.5 million. So, for purposes of adjusted numbers, we have added these back. Hopefully this will help you with your analysis.

On the next page, it’s the same thing for net income, where we start with the actual net income at the top of the page and work our way down to adjusted net income. In the middle of the page, it’s the same items. The management fees, stock compensation expense and transaction related expenses, so you can add that back. And for determination of net income you have to tax effect those.

On the next slide, for purposes of reconciling net income to adjusted EBITDA, we’ve done that here again, starting with net

7

TRANSCRIPT OF HORIZON LINES, INC. THIRD QUARTER EARNINGS RELEASE CONFERENCE CALL

income at the top, adding back the tax expense, interest expense and depreciation and amortization, to come to what our reported EBITDA would be, and then adding back all of the one-time non-recurring adjustments to get you to an adjusted EBITDA number so we can compare, and you can compare, the quarter and the nine months on a relative apples-to-apples basis.

Looking at our cash flow for the period, I’d like to focus on a couple of items when you’re looking at nine months versus nine months, last year versus this year. On the operating activities line we were pleased with that. We’ve generated cash flow of $43.3 million and that $43.3 million includes the management fee that we talked about of $8.2 million that we will not have going forward, so this will improve going forward and has improved historically. The major driver behind the financing activities of $28.5 million is exactly what John Keenan just talked to you about. It is the purchase of two vessels in the third quarter. The cash portion of that purchase was $25.2 million. It’s the right investment for us. We’ve done that, as John mentioned, since 2003 and economically the return was very nice on the money invested. All in all, even with those one-time, non-recurring items, cash still increased when you compare the periods by $11.1 million.

Let me spend a couple of moments on the initial public offering sources and uses, which are all listed in the Horizon Lines, Inc. 10-Q. The sources are $183.8 million, which is a combination of the shares issued, both in the initial public offering and the subsequent exercise of the underwriters’ option to purchase additional shares, combined with cash on our balance sheet, which gives us the total sources there of $183.8 million. Now what did we use the money for? We redeemed all of the preferred stock for $62.2 million. We also redeemed or will redeem the 9% senior notes for $53.0 million and the 11% senior discount notes for $43.2 million. There are claw-back premiums associated with both of those and then transaction fees. I think this is explained a little bit further on the following two slides which I would like to take you through now. These slides show the initial public offering fourth quarter financial statement impact. I want to spend a moment on this. Particularly, at the top of the page entitled “Income Statement Changes,” see the first line item, loss on extinguishment of debt. I want to explain and make sure you understand what that is. That will show as a separate line item in our income statement in the fourth quarter and that represents the premiums on the claw back of the bonds and the write-off of deferred financing costs related to the early extinguishment of that debt. We can no longer carry these fees on our balance sheet.

8

TRANSCRIPT OF HORIZON LINES, INC. THIRD QUARTER EARNINGS RELEASE CONFERENCE CALL

We’ll talk about that some more when we go through our next earnings call. From a balance sheet perspective, I don’t want to spend a lot of time on that. I think its self-explanatory. Cash will decrease because we’ve combined $40 million of cash from operations with the initial public offering proceeds. The reduction in intangibles I just talked to you about and you can see the uses going against the preferred stock and the debt there. I will draw your attention to one item that you may have a question on, that’s retained earnings. What is that? Again, that’s at the top of the page. That’s the income statement impact that will flow through retained earnings.

Debt reduction from the initial public offering process is very important to us. As you can see, our actual total debt on the left hand side of the page, $624.2 million, will be reduced in the fourth quarter to $528.0 million. Once we apply the proceeds for the redemption of the 9% senior notes, the aggregate principal amount outstanding of our 9% senior notes will drop down to $197.0 million, and you can see the use of proceeds drops the aggregate principal amount outstanding of the 11% senior discount notes down to $79.0 million. This is the accreted balance. Principal amount at maturity will be $104.0 million. We still carry the $4.5 million on the mortgages related to the two vessels purchased off lease. The redemption of the preferred stock is something that we’re excited about. All of these redemptions reduce our debt as a percentage of our capitalization from 88% to 79%.

You don’t have a slide on this but what I want to spend a couple minutes to take you through some general guidance for our fourth quarter and full year. Again, this guidance that I’m going to provide you is pro forma, as if the initial public offering transaction had occurred at the beginning of the year. And the reason I’m doing that is I want the earnings per share numbers that I’m going to share with you to be on a comparable basis to what you see in the press release and also to what you’ll see in the 10-Q for Horizon Lines, Inc. if you haven’t already had a chance to review it. But generally, we expect our revenues for the fourth quarter to be in a range of $270 million to $275 million. We expect our adjusted EBITDA, (i.e., before all these non-recurring charges that we will have), to be in the range of $35 million to $36 million. We expect earnings per share to be in the range of $.13 to $.16 and that’s using a share count after the initial public offering of about 33,544,000. Comparing again, I’ll review this a little bit, but on the same basis in the third quarter, we said $.37 using that same share count. On a full year basis, pro forma, but excluding the early extinguishment of debt, earnings per share for

9

TRANSCRIPT OF HORIZON LINES, INC. THIRD QUARTER EARNINGS RELEASE CONFERENCE CALL

the full year on a pro forma basis should be between $.62 and $.65. Again, that’s January through September, $.49, and then the fourth quarter earnings per share is expected to be between $.13 and $.16.

In closing, I thank you for bearing with me. While this is a difficult quarter to compare, the third quarter was a good quarter for our company. Revenue was up because of strong markets and higher volumes and rates in our trades. By all of the main financial metrics, once you’ve eliminated these one-time non-recurring initial public offering-related transaction adjustments, and then truly understand the impact on the interest expense and amortization and a few small other items, you’ll see that operating income, EBITDA and net income are all up and headed in the right direction compared to the same periods for the prior year. We are pleased as a company with these financial results. In addition, the initial public offering transactions we believe strengthen this company and its financial position going forward and we’re very pleased to get that process behind us and you’ll see the effect of that when we have our next earnings call.

With that I’d like to open it up for questions.

10

TRANSCRIPT OF HORIZON LINES, INC. THIRD QUARTER EARNINGS RELEASE CONFERENCE CALL

Question:	Hi. Good morning. I wanted to ask if you could provide revenue by trade lane for the quarter.
Answer:	Going forward, we’re not going to break down revenue and earnings by trade lane, but we’ll give you general guidance. But, I can tell you that there has been growth in all of the trades.
Question:	So, is there any insight into the growth other than volume and price over the entire business? When you run the business day to day, is that how you think about it, just overall volume, overall price?
Answer:	If you recall the revenue slide that we went through in the financial portion of the presentation, when we look at measuring our business and what we are doing from a revenue driver standpoint, we are looking at it from a volume prospective. We are looking at rates. We’re looking at our product mix. We are looking at how much of that component of revenue is related to bunker fuel surcharges and other fuel surcharges so that we get a good feel for the true revenue growth in the business, and we can tell you that quarter over quarter, year over year, we are very excited about the fact that all of our revenues are up, based upon good volume growth and rate growth in the business aside from what you see on the bunker fuel surcharges.
Question:	I know you are not going to break out the revenue by segment, but we kind of know what the government revenue is. So, if you strip that out and just look at that sort of growth without government revenue, maybe versus the revenue growth of the company, can you maybe talk about how the various trade lanes did against the total company growth rate for that sort of growth on the revenue for the quarter and how you might think about the individual segments from a strength prospective going into the fourth quarter.
Answer:	We had a very good third quarter in all three trade lanes. We had roughly 3% growth in the third quarter. About 3.6% growth for

11

TRANSCRIPT OF HORIZON LINES, INC. THIRD QUARTER EARNINGS RELEASE CONFERENCE CALL

	the nine months and generally it crossed all three trade lanes. The Alaska trade was robust. Of course, the third quarter is the strongest quarter up there typically. Hawaii stayed good and strong for us. As did Guam and Puerto Rico. When you go through the third quarter in Puerto Rico, there are four holidays down there and July and August tend to be a little light. September picked up nice and strong for us. As we look at the fourth quarter going forward, that’s the time of spending in the retail sector for the holidays. That’s been a little slow so far in Puerto Rico. We see that picking up in the next few weeks. Alaska is robust today, you know that economy is doing well in the oil environment. In Hawaii, the core market there appears to be in good shape. So, I would say that we could look at revenues for the fourth quarter being very much in line with our forecast. We don’t see any bumps in the road.
Question:	You talked about rearranging the fuel surcharge mechanism a bit. Can you talk a little bit about some of the specifics? How good has your capture been? And you mentioned changes, proactive changes, what sort of a target do you plan to get to? Whether it be total contracts under coverage, whether it be percentage of fuel cost, what do you expect to capture, etc.?
Answer:	As you know, we’ve got a little bit of a different regulatory environment. We’re covered by the STB, the Service Transportation Board, in all three trades. Puerto Rico tends to be a very heavily contracted trade with rates there negotiated on an annual basis with our major customers. We do a good job recovering our fuel surcharges in the Puerto Rico trade and we’ve kind of broken that down between the vessel portion which is shown on the freight bill as a bunker surcharge and now a surcharge depending upon zone of origin of the cargo or destination of the cargo in the lower 48 states. So, if we have a haul, for example, of product from the Pacific Northwest, you’ll pay a higher surcharge for the inland move then you might pay from Florida because of the number of miles involved. So we have intelligently moved from just focusing on the vessel to moving our surcharge to cover both the vessel and the inland portion. I think that trend will continue in our business. I expect we’ll take a good hard look at Alaska because the intermodal percentage up there seems to be growing just a little bit. And, as you know, we provide service up to Fairbanks from Anchorage, which is a truck call for us that’s fuel intensive.

12

TRANSCRIPT OF HORIZON LINES, INC. THIRD QUARTER EARNINGS RELEASE CONFERENCE CALL

Question:	The first question that I have is for Mark. I just wanted to double check on what the record date will be for the clawback for the bonds. Is that going to be November 2nd?
Answer:	It’s November 2nd for the first closing of the initial public offering and then November 21 for the green shoe.
Question:	And, so the green shoe amounts are the $13 million for the 9% and $3 million for the 11%, right?
Answer:	That’s correct.
Question:	The second question that I have is regarding the uses of cash flow. I’m assuming that the $56 million, or the $57 million that was on the balance sheet at the end of the third quarter, is already after the purchase of the two leases for $25 million. Right?
Answer:	That’s correct as well.
Question:	So, what does the company plan to do with the free cash flow going forward?
Answer:	Well, to the extent that we have any free cash flow going forward, we plan to use a significant portion of that to extinguish debt, as we’ve explained to investors in the past. But, relative to the fourth quarter, we used, as I explained, $40 million of that $56 million to redeem the preferred stock and extinguish debt.
Answer:	Beyond that, you can do the math of our EBITDA minus various costs and, and see that we are going to have pretty attractive cash flows going forward and that will be primarily used to pay down debt.
Question:	Is the cash flow sweep on the bank debt still going to take place in the first quarter of 2006?
Answer:	No.
Question:	The last question that I have is regarding the gross margin, taking into account the new containers that are going to be rotated in. The third quarter’s gross margin was up pretty significantly from the second quarter and I was wondering if you can give us some color as to how we can expect margins to change in light of the new dry and refrigerator containers that the company is bringing in.

13

TRANSCRIPT OF HORIZON LINES, INC. THIRD QUARTER EARNINGS RELEASE CONFERENCE CALL

Answer:

Well, as a result of bringing these new containers in as John explained in his presentation, it is going to benefit us in a couple of ways. Number one, these are newer containers replacing older containers. So, we will see our maintenance expense decrease. Also, one of the things that a company like ours typically has as an expense when you have older containers is spoilage. So, if you have spoilage, that will hit you in terms of cargo claims which is an expense in our income statement. So, bringing these new containers in and continually upgrading our equipment as we generally do will have a positive impact on our operating earnings.

Charles Raymond:

Thank you for your interest in Horizon Lines and for your questions. We are obviously pleased with the continued business improvement. This is a life-line business to Alaska, Hawaii, Puerto Rico and Guam. We move products that people are going to consume regardless of economic conditions. The combination of our markets, our customer base and the commodities that we move gives us a strong and predictable revenue base. The improved revenues that are moderate, going up 3 to 4%, have been driving good solid earnings improvements that result from a strong operating team at the company and our relentless focus on cost. Beyond that, our improved balance sheet gives us even stronger cash flows to support our core business and to support our shareholder interests. We thank you for your time this morning.

14

EX-99.2

Exhibit 99.2

Horizon Lines Reports Strong Third Quarter 2005 Earnings

CHARLOTTE, N.C., November 02, 2005 — Horizon Lines, Inc. (NYSE: HRZ) today reported strong results for the third quarter ended September 25, 2005, with solid quarter-over-quarter growth in key financial measures.

Operating revenue for the third quarter of 2005 was $289.1 million, an increase of $38.0 million or 15.1% from the $251.1 million for the third quarter of 2004. The improvement was led by volume growth, increased bunker fuel surcharges to offset rising fuel costs, cargo mix and rate improvement, new vessel management contracts and growth in other non-transportation revenue.

Operating income was $18.4 million in the 2005 third quarter compared to $27.4 million for the same period last year. The decline in operating income was primarily attributable to non-recurring expenses associated with the Company’s initial public offering (IPO), and higher non-cash amortization expense resulting from the purchase price accounting basis step-up in intangible assets associated with the July 2004 acquisition of the Company.

Results for the third quarter included non-recurring expenses related to the IPO for management fees, non-cash stock compensation expenses and transaction expenses totaling $11.3 million. In addition, non-cash amortization of intangible assets increased by $4.2 million in the third quarter of 2005, compared to 2004. Absent these non-recurring IPO related expenses and the increase in amortization expense, third quarter 2005 operating income would have been $33.9 million, an increase of $5.9 million over third quarter 2004 on a comparable basis.

Net income for the 2005 third quarter, which includes the above mentioned items, was $3.2 million compared to $11.3 million for the third quarter of 2004. Basic earnings per share for the third quarter of 2005 was $.14. Basic earnings per share on a pro forma basis would have been $.37, adjusted to give effect to the consummation of the issuance and sale of the Company of the shares of its common stock pursuant to its initial public offering, use of proceeds therefrom, and the related transactions, as if they occurred as of December 27, 2004.

Earnings before interest, taxes, depreciation and amortization (EBITDA) were $36.1 million for the third quarter of 2005 compared to $38.1 million for the 2004 third quarter. Excluding the non-recurring IPO related expenses, EBITDA would have been $47.4 million in the 2005 third quarter versus $38.7 million in 2004, an improvement of $8.7 million or 22.5%. See attached reconciliation from net income to EBITDA.

“This was a very good quarter for Horizon Lines,” said Chuck Raymond, President and Chief Executive Officer. “The economic climate in all three of our trades continued to exhibit steady growth. Revenue increased by $38.0 million or 15.1% over the third quarter of 2004. Operating income and EBITDA both improved in the third quarter of 2005, after excluding the impact of non- recurring expenses associated with Horizon Lines’ IPO. We continued to invest in the business by acquiring two vessels off of lease

and 900 new containers in the third quarter. Our intense focus on cost control continues and we have undertaken initiatives to mitigate rising fuel expenses. The use of IPO proceeds to pay down debt will improve our balance sheet and reduce interest costs commencing in the fourth quarter. As we move into the fourth quarter, we remain encouraged by the ongoing growth in our trades, and as the largest Jones Act container shipper in these markets with excellent customer relationships, we believe we are well positioned to take advantage of the opportunities ahead of us.”

The initial public offering of 12,500,000 shares of common stock, all of which were issued and sold by Horizon Lines at a price of $10.00 per share, was completed on September 30, 2005. The net proceeds to Horizon Lines of $110.5 million and $40.0 million of other cash are being applied to redeem $62.2 million of preferred stock and pay down $80.3 million of debt on November 2, 2005. The underwriters exercised their option to purchase 1,875,000 additional shares from Horizon Lines at $9.30 per share to cover over-allotments on October 12, 2005. The closing of this additional offering occurred on October 14, 2005, and the net proceeds of $17.4 million are being used to further pay down $15.9 million of debt on November 21, 2005.

Company executives will provide additional perspective on the Company’s quarterly results at its third-quarter earnings call, beginning at 11:00 a.m., Eastern Time, today. Those interested in participating in the call may do so by dialing 1-800-240-5318 and asking for the Horizon Lines Earnings Call. Presentation materials and a live audio webcast will be accessible at Horizon Lines’ website at www.horizonlines.com. In addition, Horizon Lines’ detailed financial information is contained in its Form 10-Q document, which is posted on www.horizonlines.com, and has been filed with the Securities and Exchange Commission.

Horizon Lines, Inc. is the nation’s leading Jones Act container shipping and integrated logistics company. It accounts for approximately 37% of total U.S. marine container shipments from the continental U.S. to the three non- contiguous Jones Act markets, Alaska, Hawaii and Puerto Rico, and to Guam.

This press release includes “forward-looking statements,” as defined by federal securities laws, with respect to financial condition, results of operations and business. 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: substantial debt; restrictive covenants under our debt; decreases in shipping volumes; our failure to renew our commercial agreements with Maersk; rising fuel prices; labor interruptions or strikes; job-related claims; liability under multi-employer pension plans; compliance with safety and environmental protection and other governmental requirements; new statutory and regulatory directives in the United States addressing homeland security concerns; the successful start-up of any Jones Act competitor; increased inspection procedures and

tight import and export controls; restrictions on foreign ownership of our vessels; repeal or substantial amendment of 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 loss of our key management personnel; actions by our significant stockholder; and legal or other proceedings to which we are or may become subject.

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 statements, whether as a result of new information, future events or otherwise.

Horizon Lines, Inc.

Unaudited Condensed Consolidated Balance Sheets

($ in thousands)

	December 26 2004(1)			September 25, 2005
Assets
Current assets
Cash and cash equivalents	$	56,766		$	64,024
Accounts receivable, net of allowance of $7,938 and $9,998 at December 26, 2004 and September 25, 2005, respectively		110,801			136,896
Income taxes receivable		9,354			9,560
Deferred tax asset		5,680			5,178
Materials and supplies		21,680			25,792
Other current assets		7,019			6,047
Total current assets		211,300			247,497
Property and equipment, net		190,123			197,402
Deferred tax assets		80,499			69,318
Intangible assets, net		522,412			505,948
Other long term assets		15,640			21,098
Total assets	$	1,019,974		$	1,041,263
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	25,275		$	23,609
Current portion of deferred tax liability		1,683			1,965
Current portion of long term debt		2,500			2,500
Other accrued liabilities		114,590			136,982
Total current liabilities		144,048			165,056
Long term debt, net of current		609,694			621,717
Deferred tax liability		136,538			126,391
Deferred rent		44,949			41,594
Other long term liabilities		2,429			3,134
Total liabilities		937,658			957,892
Series A redeemable preferred stock		56,708			60,682
Stockholders’ equity
Common stock, $.01 par value, 50,000,000 shares authorized and 16,345,421 and 18,216,845 shares issued and outstanding at December 26, 2004 and September 25, 2005, respectively		163			183
Additional paid in capital		26,530			34,748
Accumulated other comprehensive income (loss)		71			(58	)
Retained deficit		(1,156	)		(12,184	)
Total stockholders’ equity		25,608			22,689
Total liabilities and stockholders’ equity	$	1,019,974		$	1,041,263

(1) The balance sheet at December 26, 2004 has been derived from the audited financial statements of Horizon Lines, Inc.

Horizon Lines, Inc.

Unaudited Consolidated Statements of Operations

($ in thousands)

	Quarters Ended,				Nine Months Ended,
	September 19, 2004		September 25, 2005		September 19, 2004		September 25, 2005
Operating revenue	$	251,105	$	289,075	$	706,954	$	817,181
Operating expenses:
Operating expense		190,601		221,968		559,534		644,437
Selling, general and administrative		21,339		31,229		59,382		85,863
Depreciation and amortization		7,169		13,085		26,954		38,526
Amortization of vessel drydocking		3,767		3,815		11,978		12,359
Miscellaneous expense, net		844		585		2,715		1,805
Total operating expenses		223,720		270,682		660,563		782,990
Operating income		27,385		18,393		46,391		34,191
Other expense:
Interest expense, net		8,141		12,936		12,745		39,174
Interest expense—preferred units of subsidiary		302		—		2,686		—
Other expense, net		8		16		15		17
Income (loss) before income taxes		18,934		5,441		30,945		(5,000	)
Income tax expense		7,604		2,202		12,168		2,428
Net income (loss)	$	11,330	$	3,239	$	18,777	$	(7,428	)
Less: accretion of preferred stock		1,797		479		1,797		3,600
Net income (loss) available to common stockholders	$	9,533	$	2,760	$	16,980	$	(11,028	)

Horizon Lines, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

($ in thousands)

	Nine Months Ended,
	September 19, 2004			September 25, 2005
Cash flows from operating activities:
Net income (loss)	$	18,777		$	(7,428	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation		24,814			23,855
Amortization of other intangible assets		2,140			14,671
Amortization of vessel drydocking		11,978			12,359
Amortization of deferred financing costs		876			2,528
Deferred income taxes		2,968			1,818
Loss (gain) on equipment disposals		24			(253	)
Stock-based compensation		1,765			12,039
Accretion of preferred units of subsidiary		2,686			—
Accretion of interest on 11% senior discount notes		—			9,384
Changes in operating assets and liabilities:
Accounts receivable		(11,171	)		(26,095	)
Materials and supplies		(2,423	)		(4,112	)
Other current assets		(4,885	)		766
Accounts payable		(5,131	)		(1,666	)
Accrued liabilities		(4,706	)		19,366
Vessel drydocking payments		(10,793	)		(12,621	)
Other assets/liabilities		(3,136	)		(1,296	)
Net cash provided by (used in) operating activities		23,783			43,315
Cash flows from investing activities:
Purchases of property and equipment		(22,749	)		(29,481	)
Acquisition of Company		(663,027	)		—
Proceeds from the sale of property and equipment		1,399			904
Other investing activities		(150	)		—
Net cash used in investing activities		(684,527	)		28,577
Cash flows from financing activities:
Initial capitalization of Company		87,027			—
Borrowing under 13% promissory notes		70,000			—
Borrowing on term loans		250,000			—
Issuance of 9% Senior Notes		250,000			—
Borrowing under line of credit		6,000			—
Payment on line of credit		(6,000	)		—
Principal payments on long term debt		—			(1,875	)
Payment of financing costs		—			(1,588	)
Payment of costs associated with common stock offering		—			(4,456	)
Sale of stock		—			1,108
Distribution to holders of preferred stock		—			(535	)
Payments on capital lease obligation		(126	)		(134	)
Net cash (used in) provided by financing activities		656,901			(7,480	)
Net (decrease) increase in cash and cash equivalents		(3,843	)		7,258
Cash and cash equivalents at beginning of period		50,409			56,766
Cash and cash equivalents at end of period	$	46,566		$	64,024
Supplemental information: non-cash activities
Notes payable in conjunction with the acquisition of beneficial interest in vessel trusts		—		$	4,514

4

Horizon Lines, Inc.

Unaudited Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA

($ in thousands)

	Quarters Ended,				Nine Months Ended,
	September 19, 2004		September 25, 2005		September 19, 2004		September 25, 2005
Net income (loss)	$	11,330		3,240		18,777		(7,427	)
Interest expense		8,192		13,726		12,865		40,294
Income tax expense		7,604		2,204		12,168		2,430
Depreciation and amortization		10,936		16,900		38,932		50,885
EBITDA	$	38,062	$	36,070	$	87,742	$	86,182
Transaction expenses		—		1,505		—		1,505
Management fees		634		8,198		880		9,698
Non-cash stock		—		1,627		—		12,039
Adjusted EBITDA	$	38,696	$	47,400	$	83,622	$	109,424

Note: EBITDA is defined as net income before 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 Holding Corp. 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.

SOURCE Horizon Lines, Inc.

Media, Michael Avara of Horizon Lines, Inc.,

1-704-973-7000, or mavara@horizonlines.com

http://www.prnewswire.com

5

EX-99.3

Exhibit 99.3

Third Quarter 2005 Earnings Release November 2, 2005

Earnings Call Agenda

Introduction and Overview

– Chuck Raymond – President & Chief Executive Officer

Operations Review

– John Keenan – Senior Vice President & Chief Operating Officer

Financial Review

– Mark Urbania – Senior Vice President & Chief Financial Officer Questions and Answers

2

Third Quarter 2005 Earnings Release

Chuck Raymond

President & Chief Executive Officer

Forward Looking Statements

Risks, Uncertainties, Other Factors with Respect to “Forward-Looking Statements:

Certain statements contained in this presentation constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements that are not of historical fact constitute “forward-looking statements” and, accordingly, involve estimates, assumptions, judgments and uncertainties. There are a number of factors that could cause actual results or outcomes to differ materially from those addressed in the “forward-looking statements”. Such factors are detailed in the Horizon Lines, Inc.’s final prospectus filed with the Securities and Exchange Commission on September 26, 2005.

4

Third Quarter Highlights

Revenue increased by $38.0 million in the third quarter of 2005 or 15.1% over last year’s third quarter.

Operating income improved by $1.7 million or 6.1% versus the third quarter of 2004, after adjustment for non-recurring management fees, non-cash stock compensation expense and transaction expenses.

Adjusted EBITDA, before non-recurring management fees, non-cash stock compensation expense and transaction expenses, increased by $8.7 million or 22.5% in 2005 versus 2004.

Economic climate in all three of our trades continued to exhibit steady growth in the third quarter.

The IPO transaction was closed on September 30th, five days subsequent to the third quarter September 25th fiscal end date.

The Horizon Pacific and Horizon Enterprise, two of our five remaining leased vessels were purchased.

5

Operating Revenue

Operating Revenue increased by $38.0 million or 15.1% to $289.1 million for the third quarter, and by $110.2 million or 15.6% to $817.2 million for nine months.

Third Quarter

($in Millions)

350 300 250 200 150 100 50

251.1

289.1

2004

2005

Nine Months

($in Millions)

900 750 600 450 300 150

707.0

2004

817.2

2005

6

Adjusted Operating Income

Operating Income for the third quarter improved by $1.7 million or 6.1% over the prior year and was better by $10.1 million or 21.4% for nine months versus 2004, after adjustment for non-recurring management fees, non-cash stock compensation expense and transaction expenses.

Third Quarter

($in Millions)

35 30 25 20 15 10 5

28.0

2004

29.7

2005

Nine Months

($in Millions)

70 60 50 40 30 20 10 -

47.3

2004

57.4

2005

7

Adjusted EBITDA

Adjusted EBITDA(1) increased by $8.7 million or 22.5% in the third quarter and $25.8 million or 30.9% for nine months, after adjustment for non-recurring management fees, stock compensation and transaction expenses.

Third Quarter

($in Millions)

60 50 40 30 20 10 0

38.7

2004

47.4

2005

Nine Months

($in Millions)

(1) See reconciliation of Net Income to Adjusted EBITDA on page 26.

8

120 100 80 60 40 20 -

83.6

2004

109.4

2005

Alaska Gross State Product

Alaska’s Gross State Product has grown by $14.0 billion or 63.6% from 1998 to 2004.

Gross State Product

($in Billions)

40.0 30.0 20.0 10.0 -

22.0

25.0

24.0

24.0

29.0

31.0

36.0

1998 1999 2000 2001 2002 2003 2004

9

Hawaii’s Gross State Product

Hawaii’s Gross State Product has grown every year since 1998 by a combined total of 45.5% and is projected to surpass $53 billion in 2005.

Gross State Product

($in Billions)

60.0 50.0 40.0 30.0 20.0 10.0 -

36.5

37.4

40.0

41.6

44.0

47.1

50.3

53.1

1998 1999 2000 2001 2002 2003 2004 2005 Est.

10

Puerto Rico Gross Domestic Product

Puerto Rico’s Gross Domestic Product surpassed $11 billion in 2004 and has grown by $1.4 billion or 14.6% since 1999.

Puerto Rico Gross Domestic Product

($in Billons)

11.5 11.0 10.5 10.0 9.5 9.0 8.5

9.6

9.9

10.4

10.7

10.6

11.0

1999 2000 2001 2002 2003 2004

11

Third Quarter 2005 Earnings Release

John Keenan

Senior Vice President & Chief Operating Officer

Operating Highlights

Proactively adjusted fuel surcharges to address the steep rise in fuel costs.

Initiated a third weekly sailing between Tacoma and Anchorage to service the Alaskan market during the busy summer season.

Purchased the Horizon Pacific and Horizon Enterprise via lease buyout.

Acquired 900 new reefer containers in the continuing upgrade of our container fleet.

1,000 new dry boxes and 300 additional new reefers are being acquired in the fourth quarter of 2005.

Maintained strong vessel on-time performance.

Recently received Wal-Mart “Carrier of the Year” for the fourth time.

13

Vessel Fuel Expense Strategy

Vessel fuel expense has increased by $9.0 million or 41.9% in the third quarter and by $21.1 million or 34.1% for the nine months of 2005 versus the comparable 2004 quarters.

Fuel Initiatives

Proactively adjusted fuel surcharges to recover a majority of the increase in bunker fuel expense.

Continuously compared fuel prices at various ports of call to identify the best fuel buying location.

When opportunities existed, entered into a physical forward purchase agreement and/or paper hedging instruments.

14

Vessel Investments

Horizon Lines has continued investment in its vessel fleet by purchasing two vessels via lease buyout in the third quarter for $29.8 million.

Vessel Lease Buyouts

($in Millions)

Date of

Purchase Vessel Name Market Price

Dec. ‘03 Horizon Hawaii Puerto Rico $5.6

Jan. ‘04 Horizon Fairbanks Alaska (1) 3.8

Apr. ‘04 Horizon Navigator Hawaii & Guam 8.2

Oct. ‘04 Horizon Trader Hawaii & Guam 7.7

Sep. ‘05 Horizon Pacific Hawaii & Guam 14.8

Sep. ‘05 Horizon Enterprise Hawaii & Guam 15.0

Total $55.1

(1) Also serves as a spare vessel for use in all of our trades.

15

Container Fleet Investment

Horizon Lines has continued to replenish its container fleet, acquiring 900 new containers in the third quarter and is investing in 1,000 new dry boxes and 300 additional new reefers in the fourth quarter 2005.

Container Fleet Investment

Date Number of Container Owned /

Acquired Containers Type Leased

4th Qtr ‘03 300 High-Cube Reefer Leased

4th Qtr ‘04 900 High-Cube Reefer Leased

3rd Qtr ‘05 900 High-Cube Reefer Leased

4th Qtr ‘05 1,000 High-Cube Dry Owned

4th Qtr ‘05 300 High-Cube Reefer Leased

16

Vessel Availability

Horizon Lines vessels were in operational condition and ready to sail at full speed almost 100% of the time they were required to be ready to sail, employing a zero departure time delay tolerance.

Vessel Availability Percentage

100.0% 99.5% 99.0% 98.5%

99.0%

2004

99.8%

2005

17

Vessel Utilization

Horizon Lines is effectively deploying its vessels with vessel utilization for 2005 year-to-date at approximately 90%.

Vessel Utilization

100% 95% 90% 85% 80%

85%

91%

90%

90%

Alaska Hawaii/Guam Puerto Rico Horizon Lines

18

Vessel On-Time Arrivals

Vessels have an 84% on-time arrival performance for the third quarter 2005 employing a zero tolerance standard. Using a 3-hour tolerance, on-time performance increases to 96%.

Vessel On-Time Arrival Percentage

120% 100% 80%

60%

40%

20%

0%

94% 99%

90% 78%

96% 84%

96% 84%

Alaska Hawaii/Guam Puerto Rico Horizon Lines

Zero Tolerance 3-Hour Tolerance

19

Third Quarter 2005 Earnings Release

M. Mark Urbania

Senior Vice President & Chief Financial Officer

Income Statement Summary – Third Quarter

Actual Adjusted

($in Millions) ($in Millions)

Quarter Quarter Quarter Quarter

Ended Ended Ended Ended

Sept. 19, 2004 Sept. 25, 2005 Sept. 19, 2004 Sept. 25, 2005

Operating Revenue $251.1 $289.1 $251.1 $289.1

Operating Expense 223.7 270.7 223.1 259.4

Operating Income 27.4 18.4 28.0 29.7

Other Expense 8.5 13.0 8.5 13.0

Pretax Income 18.9 5.4 19.5 16.7

Income Tax Expense 7.6 2.2 7.8 6.7

Net Income $11.3 $3.2 $11.7 $10.0

EBITDA $38.1 $36.1 $38.7 $47.4

Operating Ratio 89.1% 93.6% 88.8% 89.7%

Revenue Containers (Units) 77,970 80,316 77,970 80,316

21

Income Statement Summary – Nine Months

Actual Adjusted

($in Millions) ($in Millions)

Nine Months Nine Months Nine Months Nine Months

Ended Ended Ended Ended

Sept. 19, 2004 Sept. 25, 2005 Sept. 19, 2004 Sept. 25, 2005

Operating Revenue $707.0 $817.2 $707.0 $817.2

Operating Expense 660.6 783.0 659.7 759.8

Operating Income 46.4 34.2 47.3 57.4

Other Expense 15.5 39.2 15.5 39.2

Pretax Income (Loss) 30.9 (5.0) 31.8 18.2

Income Tax Expense 12.1 2.4 12.4 7.5

Net Income (Loss) $18.8 $(7.4) $19.4 $10.7

EBITDA $82.7 $86.2 $83.6 $109.4

Operating Ratio 93.4% 95.8% 93.3% 93.0%

Revenue Containers (Units) 225,172 233,341 225,172 233,341

22

Operating Revenue

Operating Revenue increased by $38.0 million or 15.1% to $289.1 million for the third quarter, and by $110.2 million or 15.6% to $817.2 million for nine months.

Revenue Growth

($in Millions)

Third Quarter Nine Months

Volume Growth $6.9 $23.4

Rate and Mix Improvement 10.8 30.2

Bunker Fuel Surcharges 7.7 23.8

Vessel Management Contracts 5.8 17.0

Other / Non-Transportation Revenue 6.8 15.8

Total Revenue Increase $38.0 $110.2

23

Adjusted Operating Income Results

Adjusted Operating Income

($in Millions)

Quarter Quarter Nine Months Nine Months

Ended Ended Ended Ended

Sept. 19, 2004 Sept. 25, 2005 Sept. 19, 2004 Sept. 25, 2005

Operating Income $27.4 $18.4 $46.4 $34.2

IPO Non-Recurring Adjustments(a)

Management Fees 0.6 8.2 0.9 9.7

Stock Compensation Expense—1.6—12.0

Transaction-Related Expense—1.5—1.5

Total Adjustments 0.6 11.3 0.9 23.2

Adjusted Operating Income $28.0 $29.7 $47.3 $57.4

(a) These charges are not anticipated to recur regularly in the ordinary course of business.

24

Adjusted Net Income Results

Net Income

($in Millions)

Quarter Quarter Nine Months Nine Months

Ended Ended Ended Ended

Sept. 19, 2004 Sept. 25, 2005 Sept. 19, 2004 Sept. 25, 2005

Net Income (Loss) $11.3 $3.2 $18.8 $(7.4)

IPO Non-Recurring Adjustments

Management Fees 0.6 8.2 0.9 9.7

Stock Compensation Expense—1.6—12.0

Transaction-Related Expense—1.5—1.5

Total Pre-Tax Adjustments 0.6 11.3 0.9 23.2

Tax Expense Impact (0.2) (4.5) (0.3) (5.1)

After-Tax Adjustments 0.4 6.8 0.6 18.1

Adjusted Net Income $11.7 $10.0 $19.4 $10.7

25

Net Income/EBITDA Reconciliation

Operating Income/EBITDA Reconciliation

($in Millions)

Quarter Quarter Nine Months Nine Months

Ended Ended Ended Ended

Sept. 19, 2004 Sept. 25, 2005 Sept. 19, 2004 Sept. 25, 2005

Net Income (Loss) $11.3 $3.3 $18.8 $(7.4)

Tax Expense 7.6 2.2 12.2 2.4

Interest Expense 8.2 13.7 12.8 40.3

Depreciation and Amortization 11.0 16.9 38.9 50.9

EBITDA 38.1 36.1 82.7 86.2

Stock Compensation—1.6—12.0

Management Fees 0.6 8.2 0.9 9.7

Transaction Expense—1.5—1.5

Adjusted EBITDA $38.7 $47.4 $83.6 $109.4

Note: EBITDA is defined as net income plus interest expense (net of interest income), income taxes, depreciation and amortization. We believe that GAAP-based financial information for highly leveraged businesses, such as ours, should be supplemented by EBITDA so that investors better understand our financial information in connection with their analysis of our business.

26

Cash Flow Summary

Cash flows improved by $11.1 million for the nine-month year over year periods, with cash generated of $7.3 million in 2005 versus cash consumption of $3.8 million in 2004.

Cash Flow Summary

($in Millions)

Nine Months Nine Months Cash

Ended Ended Increase

Sept. 19, 2004 (1) Sept. 25, 2005 (Decrease)

Operating Activities $23.8 $43.3 $19.5

Investing Activities (21.5) (28.5) (7.0)

Financing Activities (6.1) (7.5) (1.4)

Change in Cash $(3.8) $7.3 $11.1

(1) Excludes the initial capitalization as part of the July 2004 acquisition transaction.

27

IPO Sources and Uses

The initial public offering of 12.5 million shares on September 30th and subsequent “green shoe” option exercise of 1.875 million shares on October 14th, resulted in the following Sources and Uses in the fourth quarter.

IPO Sources and Uses

($in Millions)

Sources

Primary Shares $143.8

Cash from Balance Sheet 40.0

Total Sources $183.8

Uses

Preferred Stock Redemption $62.2

Claw-Back 9% Senior Notes 53.0

Claw-Back Premium—9% Senior Notes 4.8

Claw-Back 11% Senior Discount Notes 43.2

Claw-Back Premium—11% Senior Discount Notes 4.8

Transaction Fees 15.8

Total Uses $183.8

28

IPO Fourth Quarter Financial Statement Impact

Income Statement Changes ($in Millions)

Initial Issue Green Shoe Total

Loss on Extinguishment of Debt $11.1 $2.1 $13.2

Stock Compensation 6.9—6.9

Total Expense $18.0 $2.1 $20.1

Balance Sheet Changes

($in Millions)

Initial Issue Green Shoe Total

Cash $(40.0) $- $(40.0)

Deferred Financing Fees (3.1) (0.6) (3.7)

Total Assets $(43.1) $(0.6) $(43.7)

11% Senior Discount Notes $(40.3) $(2.9) $(43.2)

9% Senior Notes (40.0) (13.0) (53.0)

Preferred Stock (62.2)—(62.2)

Common Stock 0.1—0.1

Additional Paid-In Capital 117.3 17.4 134.7

Retained Earnings (18.0) (2.1) (20.1)

Total Liabilities and Stockholder’s Equity $(43.1) $(0.6) $(43.7)

29

Debt Reduction from IPO Proceeds

The usage of $158.4 million of the net IPO proceeds and cash from the balance sheet will allow for significant debt reduction and the redemption of preferred stock in the fourth quarter.

IPO Proceeds and Cash Usage Debt Reduction

($in Millions)

Actual Pro Forma

Sept. 25, 2005 Initial Issue Green Shoe Sept. 25, 2005

Senior Credit Facility $247.5 $- $- $247.5

9% Senior Notes 250.0 (40.0) (13.0) 197.0

11% Senior Discount Notes 122.2 (40.3) (2.9) 79.0

Vessel Mortgages 4.5—- 4.5

Total Debt 624.2 (80.3) (15.9) 528.0

Series A Preferred Stock 62.2 (62.2)—-

Total Debt and Preferred Stock $686.4 $(142.5) $(15.9) $528.0

Debt to Capitalization Ratio 88% 79%

30

Third Quarter 2005 Earnings Release

Questions and Answers