Horizon Lines : Reports First-Quarter Financial Results

For information contact:

Mike Avara
704-973-7027 mavara@horizonlines.com

CHARLOTTE, NC, May 7, 2014 - Horizon Lines, Inc. (OTCQB: HRZL) today reported financial results for the fiscal first quarter ended March 23, 2014.
Financial results are being presented on a continuing operations basis.

"Horizon Lines generated 7.6% higher revenue container volume over the same period a year ago, driven largely by volume increases in our Hawaii and Puerto Rico trade lanes, which were partially offset by lower volumes in our Alaska market," said Sam Woodward, President and Chief Executive Officer. "Volume increases in our Hawaii market were predominantly due to modest growth in the Hawaii economy, including construction materials and tourism, as well as an increase in automobile shipments. Improvement in our Puerto Rico lift was primarily due to the full quarter impact of 2013's addition of a bi- weekly Jacksonville sailing to our southbound service between Houston and San Juan, as well as market share gains in our service between Philadelphia and San Juan.

Horizon Lines 1st Quarter 2014 Page 2 of 12

"The 3.0% improvement in operating revenue over the same period a year ago was due to the higher revenue container volume, which was partially offset by a 3.8% decrease in average unit revenue," Mr. Woodward said. "The decline in our container rates was mainly due to lower bunker and intermodal fuel surcharges, the competitive environment in the Puerto Rico market, and a shift in cargo mix. The adjusted EBITDA shortfall of $6.9 million from a year ago was primarily due to a $6.9 million increase in fuel and labor costs associated with vessel dry-docking transits. Lower rates, net of fuel and contractual cost increases were offset by higher volumes and the elimination of vessel lease expense due to the purchase of the D7 vessels in January 2013."

Volume, Rate & Fuel Cost - Container volume for the 2014 first quarter totaled 55,223 revenue loads, up 7.6% from 51,321 loads for the same period a year ago. The increase was primarily due to improved volumes in our Hawaii and Puerto Rico markets, partially offset by a decline in volumes in our Alaska market. Unit revenue per container totaled $4,197 in the 2014 first quarter, compared with $4,363 a year ago. First-quarter unit revenue per container, net of fuel surcharges, was $3,221, down 2.0% from $3,286 a year ago. Vessel fuel costs averaged $638 per metric ton in the first quarter, 5.5% below the average price of $675 per ton in the same quarter a year ago.

Operating Revenue - First-quarter operating revenue from continuing operations grew 3.0% to $251.9 million from $244.5 million a year ago. The factors driving the $7.4 million revenue improvement were a $12.9 million volume increase - driven by higher volumes in our Hawaii market, the addition of a bi-weekly Jacksonville sailing to our southbound service between Houston and San Juan, and market share gains in our service between Philadelphia and San Juan - and a $0.2 million rise in non- transportation services revenue. These were partially offset by a $3.3 million decrease in container revenue rates and a $2.4 million drop in bunker and intermodal fuel surcharges.

Operating Loss - The GAAP operating loss from continuing operations for the first quarter totaled $8.6 million, compared with an operating loss of $4.3 million a year ago. The $4.3 million decline was mainly due to higher fuel and labor costs associated with dry-docking transits and contractual cost increases that impacted marine, inland transportation and terminal expenses. The 2014 first-quarter GAAP operating loss includes charges totaling $1.9 million associated with employee severance and certain legal expenses. The 2013 first-quarter GAAP operating loss includes $5.4 million of costs associated with a restructuring charge, employee severance, and certain legal expenses. (See reconciliation tables for specific line-item amounts.) Adjusting for these items, the first-quarter 2014 adjusted operating loss from continuing operations totaled

$6.6 million, compared with adjusted operating income of $1.1 million a year ago.

EBITDA - EBITDA from continuing operations totaled $4.9 million for the 2014 first quarter, compared with $8.4 million for the same period a year ago. Adjusted EBITDA from continuing operations for the first quarter of 2014 was $6.8 million versus $13.7

Horizon Lines 1st Quarter 2014 Page 3 of 12

million for 2013. EBITDA and adjusted EBITDA for the 2014 and 2013 first quarters were impacted by the same factors affecting operating loss. Additionally, 2014 and
2013 first quarter adjusted EBITDA reflect the exclusion of $71 thousand and $45 thousand, respectively, of non-cash gains on marking the conversion feature in the
company's convertible debt to fair value. (See reconciliation tables for specific line-item
amounts.)

Net Loss - On a GAAP basis, the first-quarter net loss from continuing operations totaled $26.3 million, or $0.66 per share, on a weighted average of 39.9 million basic and fully diluted shares outstanding. This compares with year-ago net loss of $20.1 million, or $0.58 per share, based on a weighted average of 34.7 million basic and fully diluted shares outstanding. On an adjusted basis, the first-quarter net loss from continuing operations totaled $24.1 million, or $0.60 per share, compared with an adjusted net loss of $14.5 million, or $0.42 per share, a year ago. The 2014 and 2013 first-quarter net losses reflect the same items impacting adjusted EBITDA. Additionally, the adjusted net loss for both periods excludes the non-cash accretion of payments associated with certain legal settlements, and includes the tax impact of the adjustments. (See reconciliation tables for specific line-item amounts.)

Shares Outstanding - The company had a weighted daily average of 39.9 million basic and fully diluted shares outstanding for the first quarter of 2014. This compares with a weighted daily average of 34.7 million basic and fully diluted shares outstanding for the

2013 first quarter. At April 30, 2014, the equivalent of 91.8 million fully diluted shares
of the company's stock were outstanding, consisting of 38.9 million shares of common stock and warrants convertible into 52.9 million shares of common stock.

Liquidity, Credit Facility Compliance & Debt Structure - The company had total liquidity of $48.6 million as of March 23, 2014, consisting of cash of $1.5 million and

$47.1 million available under its asset-based loan (ABL) revolving credit facility. Funded debt outstanding totaled $528.3 million, consisting of: $220.5 million of 11.00% first-lien secured notes due October 15, 2016; $183.9 million of second-lien secured notes due October 15, 2016, bearing interest at 15.00% being paid in kind with
additional second-lien secured notes; $13.5 million drawn on the ABL facility, maturing October 5, 2016, and bearing interest at a weighted average of 3.16%; a $75.8 million term loan to fund the January 2013 purchase of the company's Alaska vessels, bearing interest at 10.25% and maturing September 30, 2016; a $20.0 million super-priority
term loan, also for purchase of the Alaska vessels, bearing interest at 8.00% and maturing September 30, 2016; $2.0 million of 6.00% convertible notes, due April 15,
2017; and $12.6 million in capital leases. The company's weighted average interest rate for funded debt was 11.96%. Availability under the ABL credit facility is based on a percentage of eligible accounts receivable and customary reserves, with a maximum of
$100.0 million. Letters of credit issued against the ABL facility totaled $12.1 million at
March 23, 2014.

Please see attached schedules for the reconciliation of first-quarter 2014 and 2013 reported

GAAP results and Non-GAAP adjusted results.

Horizon Lines 1st Quarter 2014 Page 4 of 12

We expect 2014 revenue container loads to be above 2013 levels due to anticipated modest volume growth in all three markets we serve. This projected volume growth takes into consideration the estimated impacts of a new competitor that entered the Puerto Rico Gulf service in May 2013, as well as a second vessel being added by a competitor in our Hawaii service during the fourth quarter of 2014, partially offset by the full-year impact of adding a bi-weekly Jacksonville sailing to our southbound service between Houston, Texas and San Juan, Puerto Rico.
Overall, container rates are expected to be below 2013 levels due to very competitive market conditions and a slight change in cargo mix. The new vessel capacity added in Puerto Rico in 2013 and expected to be added in Hawaii in 2014 will continue to impact rates as well.
We will experience increases in expenses associated with our revenue container volumes, including our vessel payroll costs and benefits, stevedoring, port charges, wharfage, inland transportation costs, and rolling stock costs, among others. Although the number of vessels being dry-docked in 2014 is less than 2013, the costs associated with repositioning vessels and expenses related to spare vessels will slightly exceed 2013 levels.
We expect 2014 financial results to approximate 2013 results, with 2014 adjusted EBITDA
projected between $85.0 million and $95.0 million, compared with $95.2 million in fiscal
2013.
Based on our current level of operations, we believe cash flow from operations and borrowings available under the ABL Facility will be adequate to support our business plans. We expect total liquidity during 2014 to reach a low of approximately $35.0 million during the second quarter, then build over the balance of the year and end 2014 at approximately $70.0 million.

Horizon Lines reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). The company also believes that the presentation of certain non-GAAP measures, i.e., EBITDA and results excluding certain expenses and income, provides useful information for the understanding of its ongoing operations and enables investors to focus on period-over-period operating performance without the impact of significant special items. The company further feels these non-GAAP measures enhance the user's overall understanding of the company's current financial performance relative to past performance and provide a better baseline for modeling future earnings expectations. Non-GAAP measures are reconciled in the financial tables accompanying this press release. The company cautions that non-GAAP measures should be considered in addition to, but not as a substitute for, the company's reported GAAP results.

Horizon Lines 1st Quarter 2014 Page 5 of 12

Horizon Lines, Inc. is one of the nation's leading domestic ocean shipping companies and the only ocean cargo carrier serving all three noncontiguous domestic markets of Alaska, Hawaii and Puerto Rico from the continental United States. The company owns a fleet of 13 fully Jones Act qualified vessels and operates five port terminals in Alaska, Hawaii and Puerto Rico. A trusted partner for many of the nation's leading retailers, manufacturers and U.S. government agencies, Horizon Lines provides reliable transportation services that leverage its unique combination of ocean transportation and inland distribution capabilities to deliver goods that are vital to the prosperity of the markets it serves. The company is based in Charlotte, NC, and its stock trades on the over-the-counter market under the symbol HRZL.

The information contained in this press release should be read in conjunction with our filings made with the Securities and Exchange Commission. This press release contains "forward-looking statements" within the meaning of the federal securities laws. 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 or anticipated events or circumstances discussed in this press release to not occur or to differ from expected results include: unfavorable economic conditions in the markets we serve, despite general economic improvement elsewhere; our substantial leverage may restrict cash flow and thereby limit our ability to invest in our business; the vessels in our fleet continue to age, and we may not have the resources to replace our vessels; our ability to obtain financing on acceptable terms to pay for the potential vessel repowering project; our ability to manage the potential vessel repowering project effectively to deliver the results we hope to achieve; volatility in fuel prices; decreases in shipping volumes; our ability to maintain adequate liquidity to operate our business; our ability to make interest payments on our outstanding indebtedness; work stoppages, strikes and other adverse union actions; government investigations and legal proceedings; suspension or debarment by the federal government; failure to comply with safety and environmental protection and other governmental requirements; failure to comply with the terms of our probation; increased inspection procedures and tighter import and export controls; the start-up of any additional Jones-Act competitors; repeal or substantial amendment of the coastwise laws of the United States, also known as the Jones Act; catastrophic losses and other liabilities; failure to comply with the various ownership,

Horizon Lines 1st Quarter 2014 Page 6 of 12

citizenship, crewing, and build requirements dictated by the Jones Act; the arrest of our vessels by maritime claimants; severe weather and natural disasters; or unexpected substantial dry-docking or repair costs for our vessels.
In light of these risks and uncertainties, expected results or other anticipated events or circumstances discussed in this press release (including the exhibits hereto) might not occur. We undertake no obligation, and specifically decline any obligation, to publicly update or revise any forward-looking statements, even if experience or future developments make it clear that projected results expressed or implied in such statements will not be realized, except as may be required by law.
See the section entitled "Risk Factors" in our Form 10-K for the fiscal year ended December
22, 2013, as filed with the SEC 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.
(tables follow)

Horizon Lines 1st Quarter 2014 Page 7 of 12

Horizon Unes, Inc.

Unaudted Condensed Consol.idated Bai ance Sheets

(in thousands, except per share data)

Assets

Current assets

March23, December 22,

2014 2013

Uatilities andStockhol.ders' Deficiency

Current liabilities

Stockholders' deficiency

Preferred stock, $.01 par value, 30,500 shares authorized; no shares issued or outstanding

Connnon stock, $.01 parvalue, 150,000 shares authorized, 38,928 and

Horizon Li nes 1st Quarter 2014

Horizon Lines, fuc.

Unaudited Condensed Consolidlted Statements of Operations

(in thousands, except per share dl1a)

Page 8 of 12

Quarters Ended

March23,

2014

March24,

2013

Horizon Lines 1st Quarter 2014

Page 9 of 12

Horizon lines, fuc. ThauditedCondensed Consolidated Statements ofCash Flow.;

(in thousands)

Quarters Ended

March 23, March 24,

2014 2013

Cash flow.; frominwsting actii.ties:

Cash flow.; from financing activities:

Horizon Lines 1st Quarter 2014 Page 10 of 12

March 23, 2014

March 24, 2013

Operating Los s

$ (8,568) $

(4,295)

Adjus ted Operating (Los s ) Income

$ (6,646)$

1,061

Horizon Lines , Inc.

Adjus ted Net Los s Reconciliation

(in thous ands )

Quarter Ended

March 23, 2014

Quarter Ended

March 24, 2013

Net Los s

$ (26,238) $

(20,351)

Net Income (Los s ) from Dis continued Operations 37 (278) Net Los s from Continuing Operations (26,275) (20,073)

Adjus tments :

Union/Other Severance 1,104 300

Antitrus t and Fals e Claims Legal Expens es 768 212

Accretion of Non-Cas h Interes t 284 265

Legal Settlement 45 - Res tructuring Charge 5 4,844

Gain on Change in Value of Debt Convers ion Features (71) (45) Tax Impact of Adjus tments - 6

Total Adjus tments 2,135 5,582

Adjus ted Net Los s from Continuing Operations

$ (24,140)$

(14,491)

Horizon Lines 1st Quarter 2014 Page 11 of 12

Horizon Lines, Inc. AljustedNet Loss Per Share Reconciliation

Net Loss Per Share

Net Loss Per Share fromDiscontinued Operations

Net Loss Per Share fromContinuing Operations

Adiust::rn2nts Per Share: Union/Other Severance

Antitrust and False Oa:itm Legal Expenses

Accretion ofNon-Cash Interest

Restructuring Charge

Total Adjust::rn2nts

Adjusted Net Loss Per Share from Continuing Operations

Quarter Jiìuled Quarter Jiìuled

March 23,2014 March 24, 2013

$ (0.66) $ (0.59)

(O 01)(0.66) (0.58)

0.03 0.01

0.02

0.01 0.01

0.14

0.06 0.16

$ (O 60) $ (042)

Horizon Lines, htc.

EBITDA and Adjus ted EBITDA Reconciliation

(in thousands)

Quarter Ended Quarter Ended

March 23,2014 March 24,2013 Net Loss $ (26,238) $ (20,351) Net Incarne (Loss) from Discontinued Operations 37 278 Net Las s from Continuing Operations (26,275) (20,073)

Note: EBrTDA is defined as net incarne plus net interest expense, incarne taxes, depreciation and amortization. Ne believe that EBrTDA is a meaningful measure far investors as (i) EBrTDA is a component of the measure used by our board of directors and management team to evaluate our operating performance and (ii) EBrTDA is a measure used by our management to facilitate internai comparisons to competitors' results and the marine container shipping and logistics industry in generai. Adjusted EBrTDA excludes certain charges in arder to evaluate our operating performance, and w hen determining the payment of discretionary bonus es.

Horizon Lines 1st Quarter 2014 Page 12 of 12

Horizon Lines , Inc.

2014 Projected EBITDA and Adjus ted EBITDA Reconciliation

(in thous ands )

2014

Net Los s from Continuing Operations $ (40,446) - (30,446) Interes t Expens e, Net 70,905

Income Taxes 355

Depreciation and Amortization 51,070 EBITDA 81,884 - 91,884

Antitrus t and Fals e Claims Legal Expens es 1,500

Severance 1,250

Impairment Charges 250

Gain on Change in Value of Debt Convers ion Features 71

Legal Settlement 45 Adjus ted EBITDA $ 85,000 - 95,000

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