Horizon: Revenue up, antitrust costs reach $7 million

The domestic shipping company Horizon Lines reported improved third quarter revenue, but revealed legal bills related to the U.S. Justice Department's antitrust investigation of Jones Act carriers had reached $7 million.

Horizon said it had profit of $12.5 million in the third quarter ending Sept. 21 compared to $1.6 million in the same 2007 period. It said adjusted earnings were $16.2 million for the most recent quarter and $20.7 million for the same period in 2007.

Adjusted 2007 results excluded a loss on extinguishing debt of $38 million and a tonnage tax deferred revaluation benefit of $4.8 million.

Operating revenue for the quarter was $352.6 million compared to $321.1 million in the same 1007 period.

The adjusted 2008 third quarter results exclude $4.6 million in legal expenses related to the Justice Department investigation combined with expenses from the second quarter they are about $7 million through Sept. 21, the company said in a filing with the Securities and Exchange Commission.

The Justice Department's Antitrust Division is investigating possible antitrust violations in the domestic ocean shipping business, and on Oct. 20 three former managers of Horizon pleaded guilty to a conspiracy to eliminate competition and raise prices for moving freight between the Continental U.S. and Puerto Rico.

Horizon said it providing documents to the Justice Department in response to the subpoena, and the company intends to continue to fully cooperate with the investigation.

It also revealed that since commencement of Justice's investigation, class action lawsuits have been filed against the company and other domestic shipping carriers. It said 54 cases have been filed in federal district courts in Florida, Puerto Rico, California, Oregon, Washington and Alaska. 

Our company performed well in the face of increased challenges during the third-quarter, said Chuck Raymond, chairman, president and chief executive officer. Volumes were negatively impacted by continued weakness in our Puerto Rico market, which was exacerbated by five tropical storms including three hurricanes, and by a sharper-than-anticipated slowdown in Hawaii, where a steep drop in tourism pressured the economy. Although fuel prices moderated somewhat during the period, they remained high; on average, 82 percent above their levels of a year ago.

We contained costs through measures including strict fuel conservation while preserving our high standards of vessel on-time performance, and we continued to position our logistics business for long-term organic growth opportunities, he said.

He also said the company had "repaid $12.5 million of outstanding debt under our revolving credit facility during the quarter. We finished the quarter with strong corporate liquidity and comfortably in compliance with our credit facility financial covenants.