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): July 27, 2006

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:

¨ 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 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

The Compensation Committee (the “Committee”) of the Board of Directors of Horizon Lines, Inc. (the “Company”) approved the increase of the base salary of M. Mark Urbania, Senior Vice President, Chief Financial Officer and Assistant Secretary of the Company, to $350,000 per annum, effective August 1, 2006. In addition, the Committee has determined that Mr. Urbania’s annual 2006 discretionary bonus shall be set at 70% of his annual base salary under, and in accordance with the terms of, the cash incentive plan (the “Plan”) of Horizon Lines, LLC (“Horizon Lines”), which is the Company’s principal operating subsidiary.

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On July 28, 2006, the Company (i) held a conference call to discuss financial results for the quarter ended June 25, 2006, and (ii) issued a press release and made available its Second Quarter 2006 Earnings Release. A copy of the transcript of the conference call is attached as Exhibit 99.1 hereto, a copy of the press release is attached as Exhibit 99.2 hereto, and a copy of the Second Quarter 2006 Earnings Release is attached as Exhibit 99.3 hereto, and each is incorporated herein by reference. The press release and the Second Quarter 2006 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.

ITEM 8.01 OTHER EVENTS

On August 2, 2006, the Company issued a press release announcing that the Board of Directors of the Company has voted to declare a cash dividend on its outstanding shares of common stock of $0.11 per share, payable on September 15, 2006 to all stockholders of record as of the close of business on September 1, 2006. A copy of this press release is attached as Exhibit 99.4 hereto.

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 Securities and Exchange Commission (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 A.P. Moller-Maersk Group; 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; delayed delivery or non-delivery of our new vessels; increased inspection procedures and tight import and export controls; restrictions on foreign

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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 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 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.

See the section entitled “Risk Factors” in our Form 10-K for the fiscal year ended December 25, 2005 as filed with the SEC or in our prospectus filed with the SEC pursuant to Rule 424(b)(4) on June 13, 2006 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 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

This Current Report on Form 8-K includes the financial measures EBITDA, adjusted EBITDA, adjusted operating income, and adjusted net income which are non-GAAP financial measures. EBITDA is defined as net income plus interest expense, net, 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. Adjusted net income is defined as net income adjusted to exclude unusual items. We acknowledge that there are limitations when using EBITDA, adjusted EBITDA, adjusted operating income or adjusted net income. EBITDA, adjusted EBITDA, adjusted operating income and adjusted net income are not recognized terms under GAAP and do not purport to be alternatives to operating income as a measure of operating performance, to net income as a measure of earnings or to cash flows from operating activities as a measure of liquidity. Additionally, EBITDA, adjusted EBITDA, adjusted operating income and adjusted net 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, adjusted operating income, and adjusted net income may not be comparable to other similarly titled measures of other companies.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits

Exhibit No.	Description
99.1	Transcript of conference call held on July 28, 2006.
99.2	Press release dated July 28, 2006.
99.3	Second Quarter 2006 Earnings Release.
99.4	Press release dated August 2, 2006.

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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: August 2, 2006	By:	/s/ M. Mark Urbania
		M. Mark Urbania
		Senior Vice President, Chief Financial Officer and Assistant Secretary

EXHIBIT INDEX

Exhibit No.	Description
99.1	Transcript of conference call held on July 28, 2006.
99.2	Press release dated July 28, 2006.
99.3	Second Quarter 2006 Earnings Release.
99.4	Press release dated August 2, 2006.

EX-99.1

Exhibit 99.1

Operator: Good morning, ladies and gentlemen, and welcome to the Horizon Lines’ Q2 2006 earnings conference call. At this time all participants are in a listen-only mode. Following today’s presentation instructions will be given for the question and answer session. If anyone needs assistance at any time throughout the conference, please press the star followed by the zero. As a reminder, we are recording today’s call, Friday, July 28, 2006.

I would now like to turn the conference over to your host, Mr. Chuck Raymond, CEO and President of Horizon Lines, Inc. Please go ahead, sir.

CEO

(C. Raymond): Thanks very much and thank you for joining us this morning. I’m joined today by John Handy, our Executive Vice President. John will provide a commercial and operations update for the company. I also have Mark Urbania, our Senior Vice President and Chief Financial Officer, with me and Mark will conduct the financial review and then we’ll leave some time for questions and answers following that.

As normal, we have to read this general warning with regard to risks and uncertainties and other factors. Certain statements contained in our presentation this morning constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any 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 Horizon Lines, Inc.’s final prospectus filed with the Securities and Exchange Commission on June 13, 2006

Second quarter of 2006, another great quarter for the Company. Our 18^th quarter of consecutive year-over-year adjusted EBITDA growth bringing in double digit earnings gains. We are on plan and in fact slightly ahead of schedule with our fleet enhancement strategy. Our customer focus and service efficiency effort, which we refer to internally here as Horizon Edge, is a project that John Handy is going to take you through. We’re excited about what we see on the horizon in terms of process improvement, customer service improvement and cost reductions in our business.

We have a positive economic outlook for the remainder of 2006 and once again Horizon Lines has been recognized for service excellence by our leading customers. I will turn to Mark to lead a discussion on financial highlights.

CFO

(M. Urbania): I’m on Page 6, if you’re following along. On the operating revenue side, in the second quarter we were up 7.1%. We’ll go through the components of

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that when we get back into the financial section, but we are very pleased with that. For the first six months of the year, our revenue was up 6.9% to $564.8 million.

On the adjusted EBITDA side, in the second quarter of 2006, we’re at $40.7 million, this compares very favorably to $36.0 million in 2005. For the full 6 months, again we’re up 10.9% to $72.5 million.

On adjusted EPS basis, in the second quarter on an adjusted basis we finished at 21 cents. This compares very favorably to the 13 cents on a pro forma basis in 2005, up 61.5%. For the full six months, comparatively, 28 cents for the first half of ‘06, up 75% over 2005. And we’ll be going into more detail on these analysis after John Handy gives the presentation on the commercial and operations update.

EVP

(J. Handy): Good morning. I am on Slide 10 now. We start out with our commercial highlights. In spite of some modest volume softness, we continued to use mix and rate improvements to deliver revenue growth. We’re very comfortable with our position in all the markets and we remain optimistic and confident for the remainder of 2006.

Turning now to Slide 11. The effort to significantly improve our mix began in the fourth quarter of 2005 and continued to be a big part of our success in the second quarter of 2006. Despite some volume challenges, we achieved our revenue growth plans and year-over-year RPB is up over 11%.

First quarter delays in the seafood harvest carried volume over into the second quarter, delivering modest refrigerated cargo growth in Alaska. Growth in our Guam volume, coupled with expanded refrigerated military and freight forward cargo to Hawaii, offset the impact of our planned vehicle reductions. The ability to handle more port-to-port and refrigerated cargo resulted in lower costs and better operating margins in Puerto Rico.

We continued our strategy of implementing recovery level surcharge adjustments to maintain a cost neutral impact as fuel prices rose in the second quarter.

Now on Slide 12, our volume update for the second quarter of 2006. Alaska’s building permits have been up nearly 35% in dollar terms, but the construction season has been a little slow getting out of the gate due an extended winter weather season. Military construction is still anticipated to be stronger than in 2005, which in itself was a record year.

The beginning of the quarter was clearly impacted by April rain in Hawaii, but we have seen momentum building in late May and June. Tourism and construction are expected to remain strong. One thousand fewer vehicle loads in the second quarter as result of our planned reduction have now replaced most but not all with better margin cargo.

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The unanticipated shut down of nonessential services in May and the tax law changes announced in June cast a shadow on Puerto Rico volumes in the second quarter. We have seen a gradual increase in volumes and inventory levels as we move beyond the shut down. This should continue as the sales tax implementation schedule and the plan to eliminate the current excise tax is clarified.

Slide 13, a competitive update for the second quarter. The Fairbanks was deployed in June as a third weekly sailing from Tacoma to Anchorage, which significantly improved customer service by eliminating backlogs and helped reduce the costs associated with handling that summer surge. Our position as first arrival into Guam continues to yield gains in the transit-sensitive segment such as reefer and military cargos.

All competitors have reacted responsibly to the economic slowdown in Puerto Rico by taking an estimated 15% tonnage decrease so far this year. At Horizon Lines we chose not to deploy our fifth vessel and will continue to evaluate this option into third quarter if we see some renewed strength in the market.

Slide 14. We see stability in Alaska and Hawaii. Guam is strong. Construction, robust tourism, low unemployment and military expansion have paved the way for the second half of the year. While the biggest impact of the government’s shutdown is now behind us, continued uncertainty over tax reform and rising energy costs will dampen consumer spending in Puerto Rico and likely contribute to continued volume softness throughout 2006. In anticipation of flat volumes, we will continue our aggressive mix upgrade strategy and an intense focus on cost that will further protect our operating margins in all trade lanes.

Some key operating highlights are shown on Page 15. As you know, our TP1 fleet enhancement initiative is ahead of schedule. Our Horizon Edge comprehensive customer focus and service efficiency program initiative has commenced and we’re well underway. Our rolling stock replacement program continues with 1,250 new containers. Strong performance continues across all key operating metrics and we have extended our string of service awards with Wal*Mart giving us the 2005 Jones Act Carrier of the Year Award for the 5^th year since 2000.

Slide 16 shows the detail of our vessel delivery and phase-in dates. You can see the new Transpacific TP1 ship delivery dates, starting with the Hunter in November 2006 through the Horizon Falcon in May 2007. We’re on track here. Our targeted 2007 phase-in dates start in March with the commencement of the TP1 out of Asia through the third quarter when the first C8 will report to Puerto Rico. We are designing the 2007 vessel phase-in plan to minimize the cost of positioning ships and the ramp up into this new network.

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Slide 17 is our Horizon Edge project introduction. You can see our mission and vision statement—working together to realize better ways to more efficiently serve our customers and add value to our organization and our stockholders.

The project’s structure utilizes a team of dedicated Horizon Line employees, along with Celerant Consulting Inc., for the entire project implementation and execution. The project implementation started in May 2006 and will extend until the end of 2008 and potentially beyond. Celerant will participate throughout this entire project and its total compensation is determined based upon the savings that we achieve. The estimated benefit targets in 2007 are $13 million and $40 million and beyond for 2008.

We continue to emphasize our key operating metrics of vessel availability, vessel utilization and vessel on time arrivals. I’d like to point out that availability and on time arrivals are based on a zero tolerance metric. You can see the statistics there to the right of the chart on page 18. Vessel utilization is the head haul direction.

Next I’d like to turn the briefing over to Mark Urbania, who will go into further details on our financial update.

CFO

(M. Urbania): Thank you, John. Starting on Page 20. We’re very pleased with the second quarter of 2006 from a financial perspective. It represents the 18th consecutive quarter of adjusted EBITDA growth. Our revenues are up, which is leading to operating income improvements, EBITDA improvements and net income improvements over the same period in 2005, and we’re very pleased with the performance of our earnings per share, which grew by 61.5% in the second quarter.

Page 21 provides a little bit more information in terms of the actual numbers themselves. The first two columns represent the actual results and the two columns to the right—where it says adjusted—represent some adjustments that we’ve made. You can’t see it on this page, though you will see it a little further back in the financial appendix, but we’ve adjusted the second quarter of 2006 for one item—transaction related expenses that we had in connection with our secondary offering. And then we’ve adjusted, for comparability purposes, the quarter ended June of ‘05 for transaction expenses related to our IPO.

When you adjust those numbers and place them on the same basis all the way to the right, down in the bottom blue box, our earnings per share, on an adjusted basis, is 21 cents. For the same period in ‘05, 13 cents compares very favorably. We did use the same share count of 33.5 million shares. Our EBITDA is up to $40.7 million, compared to $36 million for the same period in ‘05.

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And we’re most pleased with our operating ratio, which is 92%, which compares to 93.3% for the same period in ‘05. The improvement in the operating ratio is really the result of a couple of things: better cargo mix, particularly out in the Hawaii and Guam market as we’ve reduced the amount of automobiles we carry and upgraded our mix to more refrigerated cargo and higher margin cargo, and then really controlling our costs across the board, which we’ll continue to do as we move forward.

Page 22 compares the first six months of the year against the same period last year. All the same adjustments apply here in terms of adding back for non-recurring transaction-related expenses for the secondary offering in the second quarter of 2006 and initial public offering expenses in 2005. But, when you compare them on an apples-to-apples basis through the first six months of ‘06, our earnings per share were 28 cents compared to 16 cents for the same period in ‘05. Using the same share count, our EBITDA is $72.5 million compared to $65.4 million in the same period of ‘05 and again our operating ratio has improved for the reasons I gave previously.

We move along to Page 23 and look at the components of our revenue growth. Although on a volume basis we are down primarily as a result of upgrading our cargo mix, now carrying less automobiles, and some softness in the Puerto Rico market, we have more than offset that decrease with good cargo mix and rate improvement in our business. Our bunker intermodal fuel surcharges have made up a component of that softness both for the second quarter and for the full six months. And then our other non-transportation revenue, a much smaller component of our revenue growth, is up as well.

On Page 24, we look at our cash flow for the first six months of ‘06. On a comparative basis, our free cash flow in the business (highlighted in blue) is $6 million compared to $6.2 million in the corresponding of last year. You can see the variances there, but I will tell you that we decided in the first half of the year to use some of the free cash flow that we have generated to pay for some expenses that you can’t see here. We spent $2.6 million of our free cash flow for some containers that in the past we probably would have leased.

We did buy back some bonds, the 11% senior discount notes, in a small amount—$1.3 million. And we spent $800,000 in our credit agreement fees.

The second half of the year historically has been productive from a free cash flow perspective and will be for us again this year. We’re expecting free cash flow to be strong this year and in the $60 million range.

Turning to Page 25, Improving Leverage. I’ll drop right down to the credit

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statistics. If you look at the business from a debt-to-adjusted EBITDA basis, we’re continuing to improve, 3.4x for LTM June ‘06 versus ending up at 3.6x for 2005. Debt as a percentage of capitalization has remained unchanged as has LTM adjusted EBITDA from an interest expense coverage. I will make a comment on the interest expense coverage. Our bank debt is floating rate debt, LIBOR plus a spread.

Turning to Page 26, looking at our guidance for the third quarter and then for the full year. For the third quarter of ‘06 we expect our operating revenue to be in the range of $305 million to $310 million. The EBITDA that we’re expecting for the period is $48 million to $51 million. We expect earnings per share to be in the range of 40 cents to 42 cents.

For the full year, we left our guidance largely unchanged from what we gave you at the end of the first quarter, with the exception of revenue, which we’ve upped to $1.155 billion to $1.165 billion. EBITDA is in the range of $158 to $162 million and earnings per share in the range of a healthy 85 to 90 cents.

With that, you’ll see the financial appendix page, which I won’t go through with you, but hopefully you’ll find it helpful. Pages 28, 29 and 30 reconcile adjusted operating income. They take our operating income and add back for the adjustments that I spoke to you about earlier, same for adjusted net income and net income to EBITDA reconciliation, which I know many of you find helpful as you update your models.

With that, I’d like to turn it over for questions and answers.

Operator: Thank you, sir. Ladies and gentlemen, at this time we’ll begin the question and answer session. If you do have a question for management, please press the star followed by the one on your pushbutton phone. If you would like to decline from the polling process, please press the star followed by the two. You will hear a three-toned prompt acknowledging your selection. If you’re using speaker equipment you may need to lift the handset before pressing the numbers.

Question: Just a question. With some of the volume softness, I know you mentioned mix and price helped make up for it. Can you be a little bit more specific? How did mix work to offset some of that softness?

Answer

(M. Urbania): On the mix side we basically replaced a lot of our automobile volume, and the automobile volume that we were carrying carried a much lower price, so as we carry more refrigerated cargo and higher margin cargo, the rate per box is higher and the resulting margin is higher.

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Question: I know you touched on it on a segment by segment basis. Just to make sure, would you say the business tone has improved in Hawaii and Alaska since the end of the second quarter or since early in the second quarter?

Answer

(B. Taylor): This is Brian Taylor. I would say we have seen a significant improvement in the outlook for the Hawaii/Guam market since we have moved away from the rains that impacted the construction and tourism in the month of April. Alaska continues to remain robust. With military construction and obviously an energy-based economy, things continue to look very stable for the Alaska market at this time.

Question: Can you maybe hit on some big picture thoughts in terms of what we’ve heard about the costs and the consultant being used and what some of the big picture buckets that you may look to or you are attacking or may be attacking in the coming year?

Answer

(J. Handy): This is John Handy. I think a good way to look at our Horizon Edge project within the Company is that there is no area of our business that we will not look at to determine how efficiently and effectively we’re doing our business with the focus on customer service. So we’ll look at everything from a $45 million maintenance budget to the other big bucket items as well as small items because it’s essential in our view that we look everywhere, not just at those big ticket items. For example, marine ops, order to cash. I could go on and on in the various areas that we will scrub and frankly are getting underway right now to get the those targetable figures that you heard me talk about for 2007 and 2008.

Question: Just following up on the earlier question on volume softness. Two parts. First, you said that some of the auto volume is being replaced by higher margin volume, but as you roll on to next year a lot of that will lapse from the year-over-year.—What happens then? The next piece of that is the volume softness—When do you see that stabilizing? Are you still on track for 1% to 1.5% volume increase for 2006?

Answer

(B. Taylor): This is Brian Taylor. I’ll try to answer that question for you. I think since our initial call in the first quarter of this year we’ve obviously seen some of the impact of the government shutdown in Puerto Rico and we have obviously tempered our volume projections for the balance of the year as a result of the shut down, which impacted 95,000 non-essential government employees. We believe that our volume for the balance of this year will be flat. The softness that we have seen in Puerto Rico will be tempered with what we see as a little bit of optimism in Hawaii as well as Alaska.

Just quickly to touch on the automobiles, we have basically moved in the

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second quarter about 1,000 less automobiles than we moved in 2005 and the majority of that cargo has been replaced with other cargo—other commercial cargo that does yield a higher margin to the company. We see that trend continuing in 2007 as we look to replace lower margin cargo again, perhaps it is not automobiles, but some of the other lower margin freight that we have on the vessel and we will continue to benefit from some organic growth that we do continue to see in the primary markets that we serve and that will drive modest volume and revenue growth in 2007.

Question: I know you mentioned that you’re targeting just about anywhere in the business, no area is off limits. Is there a particular area where you do see a fair amount of low hanging fruit?

Answer

(J. Handy): If I go back to the analysis that Celerant gave us, I’d have to tell you that it’s across the board. I hesitate to want to grab on to the term you use of low hanging fruit, but clearly there is some, but some of these quick wins are in the hundreds of thousands of dollars, some of them are $1 or $2 million. The sum total of those efforts add up and we build that map through the end of the year and look forward to 2007 and 2008.

You can focus on broad areas like Dallas, our business areas. You can look at Horizon Services Group and then you can look at Marine Operations. Every detail of container handling and management tracking and tracing, it certainly covers the breadth, but we’re looking for some quick wins. We’ve discovered quick wins that I think you’ll probably ask me what are they. They’re in crane maintenance and some of our maintenance procedures, some of our dock and wharfage procedures, our yard handling procedures and all these add up and so while we could categorize some as quick wins, we’re looking forward to the more in-depth process improvements that’ll last throughout the life of the company.

Answer

(M. Urbania): I will point out that, if you look at the numbers that John has shared with you during his presentation and you take those numbers as a percentage of our overall cost in our P&L, we have roughly a billion dollars worth of cost so we don’t believe that taking out on a permanent basis the cost-saving numbers that John has shared with everyone is by any means a stretch.

Answer

(C. Raymond): For the benefit of those that are on the call, I’d just like to add a little bit more to clarify 2007 and beyond, the way we kind of see it here in the company. Brian categorized Alaska as being a positive story and Hawaii as a market in which we’re getting more confidence in as the year goes along. The real question frankly has been Puerto Rico and that’s stemmed from a number of changes down there to the tax code. Puerto Rico has an excise tax that is paid at the port and they’re converting that to a consumption tax.

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When you look at how you stimulate economies, generally governments do that in three ways. They do that through tax relief, they do it through employment and they do it through working the interest rate lever. All three of those throttles are at work in the United States and the reason we’ve seen our economy as strong as it has been in the last couple years is taxes have come down, employment has gone up and interest rates have been fairly reasonable. Now the Fed has been using interest rates as the brakes on that economy so we don’t run into inflation.

When you turn to Puerto Rico and look at those same levers, you look at the tax lever and it has not reduced taxes in Puerto Rico. The fears of the Puerto Rican consumer have been that, as we switch from this entry or excise tax at the port to a consumption tax at the cash register that the net result of that will be higher taxes, quite the contrary to what we’ve seen here in the base U.S. economy.

Looking to employment we don’t have a situation in Puerto Rico where the government has gone out and created jobs and employed more people. To the contrary, they’ve cut back in the public sector in order to deal with their debt and to protect their bond ratings. So you don’t have employment going up there, you have it relatively static.

And then there is the interest rate lever, which had been fairly absorbable in the lower 48 states. When you look at the Puerto Rican economy, interest rates down there are more of a factor for the consumer because people generally are a little more leveraged. They borrow more money. They have more credit card debt and interest rates are more of a factor in their own disposable spending, their own spending patterns. So the result of all that is that the Puerto Rico consumer is less confident of the economy than the U.S. citizen at large is.

Now why do I bring this all up? I bring it up because the tax picture in Puerto Rico is becoming clearer, we know what the tax rates are going to be both across the Commonwealth as well as across the municipalities. Employment has started to improve and it looks like the Fed is pretty much at the end of its cycle of rising interest rates. Should that be the case, then I think we can look for Puerto Rico to be a little stabler and to be a little stronger than it has been over the last 12 months or so.

So our outlook on Puerto Rico, by and large, remains cautious. We feel that we are a little more on the positive side of cautious then on the negative side. I hope this helps to give you a sense of the way we feel about 2007.

Question: We’re approaching the peak season and from both the Horizon point of view and the industry point of view, I was hoping to get some insight as to the types of volumes you’re seeing from Asia and whether you feel that you have sufficient capacity with your current TP1 service. And also with just one extra service tacked onto the peak season. What do you think the port

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situation will be like on the West Coast as volumes start to peak?

Answer

(C. Raymond): I think that we’re in pretty good shape here. Our service out of Asia is basically wholesaled to Maersk so that we are not participants in the retail market coming out of China, coming out of the rest of Asia. We basically sell those slots to Maersk, which is one of the motivations for increasing our capacity out of Asia with the TP1 going into 2007.

We see the market as being strong. Carriers that we talk to are doing well in Asia. And going to the port situation we have what I think is a very good grasp of the volume requirements in terms of manpower. We have the trained people that we’ve brought on board as employees from the various stevedoring companies that comprise the Pacific Maritime Association. The railroads have defined plans on dealing with the peak traffic so our view is that for 2006 we’re in good shape.

Question: Maersk had a pretty high profile pre-announcement a couple weeks ago. I’m just wondering if their financial difficulties, relatively speaking of course, and the integration problems they might be having with P&O are impacting your service with them at all or could potentially impact any future negotiations, including the new TP1 agreement?

Answer

(C. Raymond): No, I don’t believe so.

Question: We saw on some news reports yesterday that one of your ships hit the rocks or was grounded or something off Jacksonville. Any update on the status of that ship, when it can be redeployed, pollution, maintenance, anything like that?

Answer

(C. Raymond): Unfortunately, a lot of the information about that vessel was wrong. It did not hit the rocks. The ship was exiting the Port of Jacksonville in the St. John’s River. It’s soft clay and mud there. She did touch bottom for a little bit. She was freed on the high tide. We checked the bottom and made sure there was no damage to the vessel. She is in en route to Puerto Rico. She’ll be back on schedule Monday. There is no pollution and no damage to the vessel.

Question: And trade flow in that trade lane wasn’t disrupted?

Answer

(C. Raymond): No.

Operator: Thank you. Management, at this time I show no further audio questions.

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CEO

(C. Raymond): Thank you. Let me just wrap this up. Once again a good quarter for us in the second quarter. The string of positive financial results continues here at Horizon Lines. Our people are very focused on improving our service to customers and driving down our operating costs so we can maintain a reasonable rate structure.

Obviously we are very proud of our double digit earnings gains. Our management team is extremely focused on our fleet enhancement strategy as well as our service efficiency program, which we described as Horizon Edge. We’re confident that we’re going to see solid results with that going forward.

The economic outlook is stable overall and we’re feeling like this is another great year for Horizon Lines in 2006. We want to thank you for your time, your interest and for your questions.

Operator: Thank you. Ladies and gentlemen, this concludes the Horizon Lines Q2 2006 earnings conference call. Once again we would like to thank you for your participation. You may now disconnect.

* * *

-11-

EX-99.2

Exhibit 99.2

HORIZON LINES REPORTS ROBUST SECOND QUARTER 2006 EARNINGS GROWTH

CHARLOTTE, North Carolina, July 28, 2006 – Horizon Lines, Inc. (NYSE:HRZ) reported robust growth in second quarter 2006 earnings compared to the second quarter of 2005.

Net income for the second quarter 2006 was $6.4 million or $.19 per share, compared to a net loss of $(4.1) million, or $(.21) per share in the 2005 second quarter. After adjustment to exclude non-recurring transaction-related expenses associated with a secondary stock offering in 2006 and an initial public stock offering in 2005, adjusted net income was $7.0 million or $.21 per share in the second quarter of 2006, compared to adjusted net income of $4.4 million or $.13 per share in the second quarter of 2005.

Operating revenue increased by $19.3 million or 7.1% to $289.8 million for the second quarter of 2006 versus $270.5 million in the 2005 second quarter. Freight rate and cargo mix improvements more than offset some modest volume softness in the second quarter of 2006 compared to 2005.

Operating income for the second quarter 2006 was $22.4 million compared to $12.0 million in the second quarter of 2005. Absent the non-recurring transaction-related expenses, second quarter 2006 operating income would have been $23.3 million, an increase of $5.1 million or 28.0% over $18.2 million in the second quarter of 2005.

Earnings before interest expense, taxes, depreciation and amortization (EBITDA) was $39.8 million for the second quarter of 2006 compared to $29.3 million for the 2005 second quarter. Excluding the non-recurring transaction-related expenses, EBITDA was $40.7 million in the 2006 second quarter versus $36.0 million in the second quarter of 2005, an improvement of $4.7 million or 13.1%. Please see attached reconciliation from net income to EBITDA.

“The second quarter 2006 was another great one for Horizon Lines,” said Chuck Raymond, President and Chief Executive Officer. “We produced our 18^th consecutive quarter of adjusted EBITDA growth and enjoyed double digit gains in all earnings measures. Our vessel fleet enhancement program is ahead of schedule and we have launched our customer focus and service efficiency program, Horizon Edge. Also, we continue to invest in our container fleet as part of our rolling stock replacement program, with the acquisition of 1,250 new containers in the second quarter. Horizon Lines was again recognized for service excellence, the fourth such customer award in 2006.”

The Company updated its earnings guidance for the full year 2006, with projections of operating revenue at $1,155 - $1,165 million, EBITDA at $158 - $162 million and earnings per share (EPS) at $.85 - $.90. Earnings guidance for the third quarter of 2006 was also provided, with forecasts of operating revenue of $305 - $310 million, EBITDA of $48 - $51 million and EPS of $.40 - $.42.

Company executives will provide additional perspective on the Company’s quarterly results during its second quarter earnings call, beginning at 11:00 a.m., Eastern Time, today. Those interested in participating in the call may do so by dialing 1-800-240-2134 and asking for the Horizon Lines Earnings Call. Presentation materials and a live audio webcast will be accessible at Horizon Lines’ website www.horizonlines.com. In addition, Horizon Lines’ detailed financial information contained in its Form 10-Q document will be posted on www.horizonlines.com after filing 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 36% 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 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 agreements; 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 statement, whether as a result of new information, future events or otherwise.

Media Contact:

Michael Avara of Horizon Lines, Inc. 1-704-973-7000, or mavara@horizonlines.com.

Horizon Lines, Inc. and Subsidiaries

Unaudited Condensed Consolidated Balance Sheets

($ in thousands)

	June 25, 2006			December 25, 2005(1)
Assets
Current assets
Cash and cash equivalents	$	44,187		$	41,450
Accounts receivable, net of allowance of $7,504 and $6,064 at June 25, 2006 and December 25, 2005, respectively		134,619			119,838
Income taxes receivable		510			470
Deferred tax asset		11,634			16,380
Materials and supplies		24,864			26,355
Other current assets		6,695			5,969
Total current assets		222,509			210,462
Property and equipment, net		191,289			200,597
Goodwill		306,724			306,724
Intangible assets, net		180,276			191,502
Other long term assets		24,236			18,034
Total assets	$	925,034		$	927,319
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	23,348		$	22,368
Current portion of long term debt		2,500			2,500
Other accrued liabilities		113,477			118,483
Total current liabilities		139,325			143,351
Long term debt, net of current		529,577			527,568
Deferred tax liability		62,354			61,880
Deferred rent		38,240			40,476
Other long term liabilities		2,527			2,284
Total liabilities		772,023			775,559
Stockholders’ equity
Common stock, $.01 par value. 50,000,000 shares authorized and 33,614,170 and 33,544,170 shares issued and outstanding as of June 25, 2006 and December 25, 2005, respectively		336			336
Additional paid in capital		179,753			179,590
Accumulated other comprehensive (loss) income		(226	)		74
Retained deficit		(26,852	)		(28,240	)
Total stockholders’ equity		153,011			151,760
Total liabilities and stockholders’ equity	$	925,034		$	927,319

⁽¹⁾ The balance sheet at December 25, 2005 has been derived from the audited financial statements of Horizon Lines, Inc.

Horizon Lines, Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Operations

($ in thousands, except share and per share amounts)

	Quarters Ended						Six Months Ended
	June 25, 2006			June 26, 2005			June 25, 2006			June 26, 2005
Operating revenue	$	289,847		$	270,544		$	564,781		$	528,106
Operating expenses:
Operating expense (excluding depreciation expense)		224,423			216,266			444,347			422,469
Selling, general and administrative		24,772			25,121			47,694			54,634
Depreciation and amortization		12,592			12,548			25,095			25,441
Amortization of vessel drydocking		4,557			4,746			7,971			8,544
Miscellaneous expense, net		1,084			(94	)		1,383			1,220
Total operating expense		267,428			258,587			526,490			512,308
Operating income		22,419			11,957			38,291			15,798
Other expense:
Interest expense, net		12,304			13,386			24,024			26,238
Other expense (income), net		(201	)		(2	)		(186	)		1
Income (loss) before income taxes		10,316			(1,427	)		14,453			(10,441	)
Income tax expense		3,915			1,067			5,686			226
Net income (loss)		6,401			(2,494	)		8,767			(10,667	)
Less: accretion of preferred stock		—			1,561			—			3,122
Net income (loss) available to common stockholders	$	6,401		$	(4,055	)	$	8,767		$	(13,789	)
Net income (loss) per share:
Basic	$	0.19		$	(0.21	)	$	0.26		$	(0.73	)
Diluted	$	0.19		$	(0.21	)	$	0.26		$	(0.73	)
Number of shares used in calculations:
Basic		33,544,170			19,101,778			33,544,170			18,912,639
Diluted		33,621,120			19,101,778			33,586,992			18,912,639
Dividends declared per common share	$	0.11		$	—		$	0.22		$	—

Horizon Lines, Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Cash Flows

($ in thousands)

	Six Months Ended
	June 25, 2006			June 26, 2005
Cash flows from operating activities:
Net income (loss)	$	8,767		$	(10,667	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation		15,314			15,660
Amortization of other intangible assets		9,781			9,781
Amortization of vessel drydocking		7,971			8,544
Amortization of deferred financing costs		1,596			1,677
Deferred income taxes		5,220			226
Gain on equipment disposals		(465	)		(114	)
Stock-based compensation		384			10,412
Accretion of interest on 11% senior discount notes		4,489			6,191
Changes in operating assets and liabilities
Accounts receivable		(14,781	)		(16,980	)
Materials and supplies		1,613			(1,624	)
Other current assets		(766	)		1,422
Accounts payable		980			(4,035	)
Accrued liabilities		(3,713	)		(1,135	)
Vessel drydocking payments		(12,129	)		(9,991	)
Other assets/liabilities		(4,870	)		(972	)
Net cash provided by operating activities		19,391			8,395
Cash flows from investing activities:
Purchases of property and equipment		(7,218	)		(2,217	)
Proceeds from the sale of property and equipment		1,555			413
Net cash used in investing activities		(5,663	)		(1,804	)
Cash flows from financing activities:
Principal payments on long term debt		(1,250	)		(1,250	)
Purchase of 11% senior discount notes		(1,276	)		—
Dividends to stockholders		(7,380	)		—
Payment of financing costs		(834	)		(200	)
Costs associated with initial public offering		(158	)		(947	)
Sale of stock		—			1,108
Distribution to holders of preferred stock		—			(535	)
Payments on capital lease obligation		(93	)		(93	)
Net cash used in financing activities		(10,991	)		(1,917	)
Net increase in cash and cash equivalents		2,737			4,674
Cash and cash equivalents at beginning of period		41,450			56,766
Cash and cash equivalents at end of period	$	44,187		$	61,440

Horizon Lines, Inc. and Subsidiaries

Adjusted Net Income

($ in Millions)

	Quarter Ended						Six Months Ended
	June 25, 2006			June 26, 2005			June 25, 2006			June 26, 2005
Net Income (Loss)	$	6.4		$	(2.5	)	$	8.8		$	(10.7	)
Adjustments:(a)
Lease Buyout		—			1.3			—			2.7
IPO Restricted Stock Compensation		—			4.0			—			10.4
Management Fees		—			0.7			—			1.5
Transaction Related Expense		0.9			0.2			0.9			0.2
Interest Expense Reduction		—			2.4			—			4.8
Tax Impact		(0.3	)		(1.7	)		(0.3	)		(3.4	)
Total Adjustments		0.6			6.9			0.6			16.2
Adjusted Net Income	$	7.0		$	4.4		$	9.4		$	5.5

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

Horizon Lines, Inc. and Subsidiaries

Adjusted Operating Income

($ in Millions)

	Quarter Ended				Six Months Ended
	June 25, 2006		June 26, 2005		June 25, 2006		June 26, 2005
Operating Income	$	22.4	$	12.0	$	38.3	$	15.8
Adjustments:(a)
Lease Buyout		—		1.3		—		2.7
IPO Restricted Stock Compensation		—		4.0		—		10.4
Management Fees		—		0.7		—		1.5
Transaction Related Expense		0.9		0.2		0.9		0.2
Total Adjustments		0.9		6.2		0.9		14.8
Adjusted Operating Income	$	23.3	$	18.2	$	39.2	$	30.6

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

Horizon Lines, Inc. and Subsidiaries

Net Income / EBITDA Reconciliation

($ in Millions)

	Quarter Ended					Six Months Ended
	June 25, 2006		June 26, 2005			June 25, 2006		June 26, 2005
Net Income (Loss)	$	6.4	$	(2.5	)	$	8.8	$	(10.7	)
Interest Expense, Net		12.3		13.4			24.0		26.2
Tax Expense		3.9		1.1			5.7		0.3
Depreciation and Amortization		17.2		17.3			33.1		34.0
EBITDA		39.8		29.3			71.6		49.8
Lease Buyout		—		1.8			—		3.5
IPO Restricted Stock Compensation		—		4.0			—		10.4
Management Fees		—		0.7			—		1.5
Transaction Related Expense		0.9		0.2			0.9		0.2
Adjusted EBITDA	$	40.7	$	36.0		$	72.5	$	65.4

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 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.

EX-99.3

Second Quarter 2006 Earnings Release

July 28, 2006

Exhibit 99.3

2

Earnings Call Agenda

Introduction and Overview

–

Chuck Raymond –

President & Chief Executive Officer

Commercial and Operations Update

–

John Handy –

Executive Vice President

Financial Review

–

Mark Urbania –

Senior Vice President & Chief Financial Officer

Questions and Answers

3

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 June 12, 2006.

4

Second Quarter 2006 Earnings Release

Chuck Raymond

President & Chief Executive Officer

Introduction and Overview

5

Second Quarter Highlights

18   quarter of consecutive adjusted EBITDA growth

Double digit earnings gains

Fleet enhancement strategy ahead of schedule

Customer focus and service efficiency initiative launched

Positive economic outlook for remainder of 2006

Horizon Lines again recognized for service excellence

th

6

Operating Revenue

270.5

289.8

255

265

275

285

295

2005

2006

Second Quarter

($ in Millions)

528.1

564.8

500

510

520

530

540

550

560

570

2005

2006

Six Months

($ in Millions)

7.1%

6.9%

7

Adjusted EBITDA

36.0

40.7

32.0

34.0

36.0

38.0

40.0

42.0

2005

2006

Second Quarter

($ in Millions)

65.4

72.5

60.0

62.0

64.0

66.0

68.0

70.0

72.0

74.0

2005

2006

Six Months

($ in Millions)

13.1%

10.9%

8

Adjusted EPS

0.13

0.21

0.00

0.05

0.10

0.15

0.20

0.25

2005

2006

Second Quarter

0.16

0.28

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

2005

2006

Six Months

75.0%

61.5%

9

Second Quarter 2006 Earnings Release

John Handy

Executive Vice President

Commercial and Operations Update

10

Commercial Highlights

Rate/mix improvements more than offset some volume softness

Well positioned competitively

Economic outlook for remainder of 2006 remains positive

11

Rate Update Second Quarter 2006

Rate improvement continues and is expected to more than offset

modest volume softness in 2006

Refrigerated cargo yields solid mix upgrades in Alaska

Continued gains in higher margin Hawaii cargo and gains in

Guam drive revenue growth

Greater

mix

of

refrigerated

cargo

and

less

intermodal

volume

create revenue and margin improvement in Puerto Rico

Responsible surcharge adjustments maintain fuel cost recovery

12

Volume Update Second Quarter 2006

Alaska volumes up modestly as delayed construction season

starts

Lingering impact of record rainfall in Hawaii delayed shipping

cycles

Puerto Rico volumes affected by the non-essential government

service shutdown and tax law changes announced in June

Expanding Government Business

Revenue Containers

(3,002)

78,606

75,604

Variance

2005

2006

13

Competitive Update Second Quarter 2006

Seasonal deployment in Alaska has prevented significant cargo

backlogs during the peak season

Guam competitive deployment changes allow for continued

penetration in the refrigerated, military and freight-all-kinds

segments

Tonnage reductions enacted in Puerto Rico to combat market

softness

14

Economic Outlook -

2006

Look for stable economic conditions in Alaska and Hawaii/Guam,

but continued softness in the Puerto Rico economy that could

impact volume growth

Focus on offsetting softer volume with mix improvement that still

delivers revenue and profitability growth

15

Operating Highlights

Fleet enhancement initiative ahead of schedule

Comprehensive customer focus and service efficiency program 

initiative commenced

Rolling stock replacement program continues with 1,250 new

containers

Strong performance across all key operating metrics

Company extended string of service awards

Wal-Mart “2005 Jones Act Carrier of the Year Award”

for the fifth year

since 2000

16

Vessels Delivery and Phase-In Dates

New Transpacific (TP)1 ships delivery dates:

March 2007

Horizon Tiger

May 2007

Horizon Falcon

April 2007

Horizon Eagle

March 2007

Horizon Hawk

November 2006

Horizon Hunter

Current Outlook

Targeted 2007 phase-in dates:

March –

Commencement of TP1 ex Asia

April  –

Commence new Jones Act Pacific Northwest (PNW) Tacoma-

Oakland-Honolulu service

May –

Last new TP1 vessel deployed ex Asia

3Qtr –

First C8 to Puerto Rico

Designing 2007 vessel phase-in plan to minimize cost of positioning

ships and ramp-up into new network

17

Horizon Edge Project Introduction

Mission / Vision

Working together to realize better ways to more efficiently serve our

customers and add value to our organization.

Project Structure

Utilizing a team of dedicated Horizon Lines employees along with

Celerant

Consulting Inc. for project implementation. 

The project implementation started in May 2006 and will end in 2008.

Celerant

will participate throughout the entire project and their total

compensation is determined based upon the savings achieved.

Estimated Benefits Targets

2007 Net Benefits -

$13 million

2008 & Beyond Annual Net Benefits -

$40 million

18

Key Operating Metrics

89.0%

87.0%

Vessel On-Time Arrivals

(3)

87.0%

89.0%

Vessel Utilization

(2)

99.7%

99.6%

Vessel Availability

(1)

Second Quarter

2005

Second Quarter

2006

Notes:

(1)

Employs a zero departure time delay tolerance

(2)

Based upon headhaul

direction volume

(3)

Employs a zero arrival time delay tolerance

19

Second Quarter 2006 Earnings Release

Mark Urbania

Senior Vice President & Chief Financial Officer

Financial Update

20

Second Quarter Financial Highlights

Adjusted 2006 Results versus Adjusted 2005

18 consecutive quarters of adjusted EBITDA growth

Operating revenue increased by $19.3 million or 7.1%

Adjusted operating income improved by $5.1 million or 28.0%

Adjusted EBITDA higher by $4.7 million or 13.1%

Adjusted net income increased by $2.6 million or 59.1%

Adjusted earnings per share grew by $.08 or 61.5%

21

Income Statement Summary –

Second Quarter

Adjusted

(1)

($ in Millions)

Actual

($ in Millions)

33,544,170

33,544,170

19,101,778

33,544,170

Shares Outstanding –

Basic

$

4.4

$

7.0

$

(4.1)

$

6.4

Net Income (Loss) Common Shareholders

--

--

1.6

--

Preferred Stock Accretion

93.3%

92.0%

95.6%

92.3%

Operating Ratio

$

36.0

$

40.7

$

29.3

$

39.8

EBITDA

$

.13

$

.21

$

(.21)

$

.19

Earnings (Loss) Per Share –

Basic

4.4

7.0

(2.5)

6.4

Net Income (Loss)

2.8

4.2

1.1

3.9

Income Tax Expense

7.2

11.2

(1.4)

10.3

Pretax Income (Loss)

11.0

12.1

13.4

12.1

Other Expense

18.2

23.3

12.0

22.4

Operating Income

252.3

266.5

258.5

267.4

Operating Expense

$

289.8

Quarter Ended

June 25, 2006

$

270.5

$

270.5

$

289.8

Operating Revenue

Quarter Ended

June 26, 2005

Quarter Ended

June 26, 2005

Quarter Ended

June 25, 2006

(1)

Adjusted to exclude non-recurring transaction-related expenses associated with a secondary stock offering in 2006 and an

initial public stock offering in 2005.

22

Income Statement Summary –

Six Months

Adjusted

(1)

($ in Millions)

Actual

($ in Millions)

33,544,170

33,544,170

18,912,639

33,544,170

Shares Outstanding -

Basic

$

5.5

$

9.4

$

(13.8)

$

8.8

Net Income (Loss) Common Shareholders

--

--

3.1

--

Preferred Stock Accretion

94.2%

93.1%

97.0%

93.2%

Operating Ratio

$

65.4

$

72.5

$

49.8

$

71.6

EBITDA

$

.16

$

.28

$

(.73)

$

.26

Earnings (Loss) Per Share –

Basic

5.5

9.4

(10.7)

8.8

Net Income (Loss)

3.7

6.0

0.3

5.7

Income Tax Expense

9.2

15.4

(10.4)

14.5

Pretax Income (Loss)

21.4

23.8

26.2

23.8

Other Expense

30.6

39.2

15.8

38.3

Operating Income

497.5

525.6

512.3

526.5

Operating Expense

$

564.8

Six Months

Ended

June 25, 2006

$

528.1

$

528.1

$

564.8

Operating Revenue

Six Months

Ended

June 26, 2005

Six Months

Ended

June 26, 2005

Six Months

Ended

June 25, 2006

(1)

Adjusted to exclude non-recurring transaction-related expenses associated with a secondary stock offering in 2006 and an

initial public stock offering in 2005.

23

Operating Revenue

22.3

11.6

Cargo Mix and Rate Improvement

$

(17.8)

$

(9.2)

Volume Variance

27.7

15.3

Bunker and Intermodal

Fuel Surcharges

Revenue Growth

($ in Millions)

$

19.3

1.6

Second Quarter

2006

$

36.7

Total Revenue Increase

4.5

Other / Non-Transportation Revenue

Six Months

2006

24

Cash Flows

0.3

1.1

Net Proceeds from Sale of Fixed Assets

(1.1)

(1.8)

Financing/Transaction Costs**

(0.5)

--

Distribution  to Holders of Preferred Stock

1.1

--

Sale of Stock

10.4

0.4

Stock Compensation

Cash Flow Summary

($ in Millions)

$

4.7

$

2.7

Net Cash Flow

(1.3)

(2.6)

Debt Repayment*

6.2

6.0

Free Cash Flow

--

(7.4)

Dividends

(18.0)

(20.4)

Interest

--

--

Taxes

(10.0)

(12.1)

Dry-Dock Expenditures

(2.2)

(7.2)

Capital Expenditures

(23.8)

(18.9)

Working Capital

$

49.8

$

71.6

EBITDA

Six Months

June 26, 2005

Six Months

June 25, 2006

*Includes open market purchase of 11% Senior Discount Notes

**Includes credit agreement fees and fees associated with IPO/secondary offering

25

Improving Leverage

3.5x

3.5x

LTM Adj. EBITDA  / LTM Interest Expense (b)

78%

78%

Debt / Capitalization

3.6x

3.4x

Debt / LTM Adj. EBITDA

Credit Statistics:

$

682.4

$

685.4

Total Capitalization

151.8

153.0

Equity

---

---

Series A Preferred Stock

530.6

532.4

Total Debt

81.7

84.9

11% Notes (a)

197.0

197.0

9% Notes

251.9

250.5

Total Senior Secured Debt

0.5

0.4

Capital Leases

4.5

4.5

Vessel Mortgages

246.9

245.6

Term Loan

$

---

$

---

Revolver (a)

December 25,

2005

June 25,

2006

($ in Millions)

(a)

Fully accreted balances were $104 million at December 25, 2005 and $102.5 million on June 25, 2006.

(b)

Excludes amortization of Financing Fees.  December 25, 2005 and June 25, 2006 LTM Interest Expense are pro forma.

26

2006 Earnings Guidance

Year

Third Quarter

Earnings Guidance

($ in Millions except EPS)

$.85 -

$.90

$.40 -

$.42

EPS

$158 -

$162

$48 -

$51

EBITDA

$1,155 -

$1,165

$305 -

$310

Operating Revenue

27

Financial Appendix

28

Adjusted Operating Income Results

0.2

0.9

0.2

0.9

Transaction Related Expense

2.7

--

1.3

--

Lease Buyout

10.4

--

4.0

--

IPO Restricted Stock Compensation

Adjustments

(a)

Adjusted Operating Income

($ in Millions)

(a)

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

$

30.6

$

39.2

$

18.2

$

23.3

Adjusted Operating Income

14.8

0.9

6.2

0.9

Total Adjustments

1.5

--

0.7

--

Management Fees

$

12.0

Quarter

Ended

June 26, 2005

$

22.4

Quarter

Ended

June 25, 2006

$

15.8

$

38.3

Operating Income

Six Months

Ended

June 26, 2005

Six Months

Ended

June 25, 2006

29

Adjusted Net Income Results

0.2

0.9

0.2

0.9

Transaction Related Expense

2.7

--

1.3

--

Lease Buyout

$

5.5

16.2

(3.4)

4.8

1.5

10.4

$

(10.7)

Six Months

Ended

June 26, 2005

$

9.4

0.6

(0.3)

--

--

--

$

8.8

Six Months

Ended

June 25, 2006

(1.7)

(0.3)

Tax Impact

6.9

0.6

Total Adjustments

0.7

--

Management Fees

4.0

--

IPO Restricted Stock Compensation

Adjusted Net Income

($ in Millions)

$

4.4

$

7.0

Adjusted Net Income

2.4

--

Interest Expense Reduction

Adjustments

$

(2.5)

$

6.4

Net Income (Loss)

Quarter

Ended

June 26, 2005

Quarter

Ended

June 25, 2006

30

Net Income/EBITDA Reconciliation

0.2

0.9

0.2

0.9

Transaction Related Expense

3.5

--

1.8

--

Lease Buyout

$

65.4

1.5

10.4

49.8

34.0

0.3

26.2

$

(10.7)

Six Months

Ended

June 26, 2005

$

72.5

--

--

71.6

33.1

5.7

24.0

$

8.8

Six Months

Ended

June 25, 2006

0.7

--

Management Fees

4.0

--

IPO Restricted Stock Compensation

Net Income/EBITDA Reconciliation

($ in Millions)

$

36.0

$

40.7

Adjusted EBITDA

29.3

39.8

EBITDA

17.3

17.2

Depreciation and Amortization

1.1

3.9

Tax Expense

13.4

12.3

Interest Expense, Net

$

(2.5)

$

6.4

Net Income (Loss)

Quarter

Ended

June 26, 2005

Quarter

Ended

June 25, 2006

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 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.

31

Second Quarter 2006 Earnings Release

Questions & Answers

33

EX-99.4

Exhibit 99.4

“Horizon Lines, Inc. Declares Dividend”

Charlotte, North Carolina, August 2, 2006—Horizon Lines, Inc. (NYSE: HRZ) announced that its Board of Directors has voted to declare a cash dividend on its outstanding shares of common stock of $0.11 per share, payable on September 15, 2006 to all stockholders of record as of the close of business on September 1, 2006.

About Horizon Lines

Horizon Lines, LLC is the nation’s leading Jones Act container shipping and integrated logistics company, operating 16 U.S.-flag vessels on routes linking the continental United States with Alaska, Hawaii, Guam, and Puerto Rico. Horizon Lines also owns Horizon Services Group, an organization with a diversified offering of cargo management and tracking services being marketed to shippers, carriers, and other supply chain participants. Horizon Lines, LLC and Horizon Services Group are wholly-owned subsidiaries of Horizon Lines, Inc., which trades on the New York Stock Exchange under the ticker symbol HRZ.

Media Contact: Michael Avara, Horizon Lines, Inc., 704-973-7000, mavara@horizonlines.com