![]() sm Horizon Lines 2006 Earnings Guidance Increase October 19, 2006 Exhibit 99.1 |
![]() sm 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- |
![]() sm 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- th |
![]() sm 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. -3- |
![]() sm 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. -4- |
![]() sm 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 19.9 Revaluation of Deferred Tax Assets and Liabilities $ 10.4 $ 10.4 2005 Impact Upon Election in 2006 Forecast 2006 Actual Q3 2006 -5- |
![]() sm 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) -6- |
![]() sm 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 Q3 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. -7- |
![]() sm |