Horizon Lines: Loss reflects legal costs
Horizon Lines Inc. said it had a second quarter net loss of $31.1 million compared to a profit of $5.8 million in the same 2008 period.
Operating income was $278.5 million for the period compared to
$331 million in the second quarter of 2008.
The company said the results reflect legal expenses of $4.1 million related to a U.S. government antitrust probe of the Puerto Rico-mainland trade, $20 million charge related to a settlement of a class-action law suit by Puerto Rico shippers, a $10.5 million tax valuation allowance, and $900,000 for impairment and restructuring charges, as well as a loss on debt modification.
In May three former Horizon Lines employees were given prison sentences and fined for what the U.S. Justice Department described as an antitrust conspiracy involving goods moving between the U.S.
mainland and Puerto Rico. Two executives from competitor Sea Star have also been jailed and fined in related actions.
After excluding these and other charges totaling $35.2 million adjusted net income was $4.1 million for the quarter, Horizon said.
“Our company experienced weak volumes in all trade lanes during the second quarter, as the unabated global recession continued to dampen consumer sentiment and spending throughout our markets,” said Chuck Raymond, chairman, president and chief executive officer. “We combated these challenges through continued focus on customer service excellence, schedule integrity, and cost reductions throughout the organization.”
Raymond said the company’s volume levels “compare very favorably to other transportation segments and reflect our focus on U.S.
domestic ocean markets.”
He added that the company’s logistics business continued to be adversely impacted by the economic recession.
“During the quarter, we reached an agreement to settle class action antitrust litigation in Puerto Rico and at the same time executed an amended credit agreement with our lender group, as we previously disclosed,” Raymond said. “We also continue to fully cooperate with the Department of Justice in its investigation into pricing practices in domestic ocean shipping.”