Webcast presentation dated October 19, 2006.

EX-99.1 2 dex991.htm WEBCAST PRESENTATION DATED OCTOBER 19, 2006. Webcast presentation dated October 19, 2006.

Horizon Lines

2006 Earnings Guidance Increase

October 19, 2006

Exhibit 99.1

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”. Certain factors are detailed in the Horizon Lines, Inc.’s

final prospectus filed with the Securities and Exchange Commission on

September 13, 2006. Other factors may include changes in tax laws,

adverse tax audits and other tax matters.

-1-

Introduction

Horizon Lines is increasing its earnings guidance for the third

quarter and full year 2006.

The earnings guidance increase results solely from an election to

adopt tonnage tax in lieu of regular corporate income tax on its

qualifying trade routes.

Any other change to 2006 earnings guidance resulting from normal

business operations will be provided on the third quarter 2006

earnings release call to be conducted on October 30

at 11:00

a.m. Eastern Time.

-2-

Tonnage Tax Overview

Enacted on October 22, 2004, as part of the American Jobs

Creation Act of 2004.

Tonnage tax is an alternative to the corporate federal income tax.

Intended to provide a sustained corporate tax incentive for certain

operators of U.S. flag vessels thereby helping to revitalize the

U.S.

flag vessel industry and creating more U.S. jobs.

First year of eligibility is 2005. No sunset provisions.

Applicable “U.S. foreign trade”

–

Transportation between a U.S. location and a foreign location or

between foreign locations.

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Tonnage Tax Mechanics

Tonnage tax election must be made on or before the due date for

the federal income tax return.

Once made, the election remains effective for all subsequent years.

The election applies to all qualifying vessels used in the U.S. foreign

trade.

Election revocation requires five years before tonnage tax can be re-

elected.

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Tonnage Tax Financial Impact

($ in Millions)

(42.8)%

(130.5)%

Effective Tax Rate

42.6

39.4

Total Reduction in Tax Expense

12.3

9.1

2006 Impact

19.9

Revaluation of Deferred Tax Assets and Liabilities

10.4

2005 Impact Upon Election in 2006

Forecast

2006

Actual

Q3 2006

-5-

EPS Impacts and Resulting Cash and Book Taxes

20.0%

15.2%

N/A

Effective Tax Rate

(1)

$8.0 -

$10.0

$2.0 -

$3.0

Estimated Cash Taxes

$.40 -

$.45

1.28

1.17

EPS Impact –

Total

(2)

$.40 -

$.45

0.37

0.27

EPS Impact

(1)

Forecast

2007

Forecast

2006

Actual

Q3 2006

(1)

Excluding impact of 2005 election and revaluation of deferred tax assets and liabilities.

(2)

Includes combined 2006 impact, 2005 election and revaluation of deferred tax assets and liabilities.

($ in Millions, except EPS amounts)

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Revised 2006 Earnings Guidance

$ .85 -

$ .90

$ .40 -

$ .42

Current

EPS

$1.22 -

$1.27

$ .67 -

$ .69

EPS –

2006 Impact

(1)

$2.13 -

$2.18

$1.57 -

$1.59

EPS –

Total

(2)

Full Year

2006

(1)

Excluding 2005 election and revaluation of deferred tax assets and liabilities.

(2)

Includes combined 2006 impact, 2005 election and revaluation of deferred tax assets and liabilities.

Solely reflects impact of tonnage tax election on our current third quarter

and full year 2006 guidance.

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