Horizon Lines ups earnings guidance after adopting tonnage tax

Horizon Lines ups earnings guidance after adopting tonnage tax    U.S. Jones Act carrier Horizon Lines has increased its earnings guidance for the third quarter and full year 2006 as a result of adopting the tonnage tax instead of the regular federal corporate income tax.
   The American Jobs Creation Act of 2004 instituted an elective tonnage tax regime whereby a corporation may elect to pay a tonnage tax based upon the net tonnage of U.S.-flag vessels of at least 10,000 deadweight tons operating in the U.S. foreign trade rather than the regular U.S. corporate income tax on the taxable income from such vessels.
   Horizon Lines has elected to apply the tonnage tax effective with the filing of its 2005 tax return during the third quarter of 2006, the full year 2006 and all future tax years.
   The carrier said that for the third quarter and nine months 2006 the decision resulted in a reduction in income tax expense of about $39.4 million and an increase in earnings per share from $1.17 to between $1.57 and $1.59.
   The projected 2006 full-year impact of the tonnage tax election is a reduction of income tax expense of about $42.6 million and an increase in earnings per share from $1.28 to between $2.13 and $2.18.