Kitty Hawk to Acquire Air Container Transport; Proposed Transaction Positions Kitty Hawk to Become Dominant West Coast Airport-
May 10 2006 - 7:30AM
Business Wire
Air Container Transport Generated Approximately $45 Million in 2005
Revenue Kitty Hawk, Inc. (AMEX: KHK) through its newly-created
wholly-owned subsidiary Kitty Hawk Ground, Inc., announced today
that it has entered into an Asset Purchase Agreement with privately
held Air Container Transport, Inc. (ACT), to acquire substantially
all of the operating assets of ACT for total consideration of $5
million. ACT operates an airport-to-airport LTL ground freight
network primarily in California, Oregon, Washington, British
Columbia, Colorado, Utah, Illinois and Texas. In 2005, ACT had
revenue of $44.5 million. For ACT's assets, Kitty Hawk Ground will
pay total consideration of $5 million in a combination of cash and
shares of unregistered Kitty Hawk common stock. Kitty Hawk Ground
will not assume any liabilities of ACT, except for the liabilities
expressly set forth in the Asset Purchase Agreement. Kitty Hawk has
agreed to register the resale of the shares of Kitty Hawk common
stock to be delivered to ACT within ninety days of the closing
date. The closing of the asset purchase is anticipated to occur
during the second quarter of 2006 and is subject to various closing
conditions. There is no assurance that the closing will occur or
will not be delayed. The proposed transaction is expected to be
accretive to Kitty Hawk's financial performance and has been
approved by the Board of Directors of both companies and the
stockholders of ACT. ACT is considered by independent analysts to
be the West Coast's dominant airport-to-airport less than truckload
(LTL) deferred freight network carrier. Its operations are focused
along the I-5 highway corridor and extend to all key business
centers and international gateway airports from Southwest Canada to
San Diego, California and extending as far east as Illinois and
Texas. ACT operates in 26 cities offering air and ground freight
delivery as well as local pick up and delivery services. The ACT
fleet is comprised of approximately 150 owned, leased and
owner-operated dedicated trucks. Kitty Hawk will acquire and assume
contracts relating to ACT's customer base, trucks and trailers,
leased operating facilities, various other facility and equipment
leases and its fleet of owner operators. ACT, with more than 20
years of experience, offers its customers full EDI capabilities,
quality control, 24 hour/365 day dispatch, customer service
assistance and express service. ACT's assets will be operated by
Kitty Hawk Ground, Inc. doing business as Air Container Transport.
"This strategic acquisition strengthens Kitty Hawk's scheduled
North American expedited air network as well as our nationwide
scheduled LTL ground network," said Robert W. Zoller, President and
CEO. "While the majority of ACT's customers and its geographic
coverage represent new opportunities for Kitty Hawk, ACT's
operations and service offerings are complementary to the existing
Kitty Hawk scheduled operations and provide us with a solid
infrastructure to expand all of our businesses with existing and
new customers. Through this acquisition, we expect to begin to
realize marketing and sales synergies during the remainder of
2006," Mr. Zoller added. Philip Scherer, ACT's President,
commented, "The West Coast and international gateway strengths
developed by ACT over the past 20 years combined with the 30 year
history of Kitty Hawk as a premier air and, most recently, ground
LTL freight transportation company suggests a significant future
value proposition for the domestic and international freight
forwarders, logistics companies, airlines and integrators we serve.
The ACT senior leadership and staff are excited about their
opportunity to blend our strong West Coast, Asia and Pacific Basin
business and customer focus with Kitty Hawk's reputation for
superior service and extensive North American air and ground
transportation system." First Quarter Results and Conference Call
Kitty Hawk, Inc. will release its first quarter 2006 financial
results on Thursday, May 11 after market. The first quarter 2006
financial results conference call will be held Friday, May 12 at
8:30 a.m. Eastern Time. The dial-in information for the call is
800-257-3401 for domestic participants and 303-262-2125 for
international participants. A taped replay of the conference call
will also be available beginning approximately one hour after the
call's conclusion and will remain available for 7 days. It can be
accessed by dialing 800-405-2236 for domestic callers or
303-590-3000 for international callers, both using the pass code
11060190#. To access the live web cast of the call, go to Kitty
Hawk's website at www.kittyhawkcompanies.com and click on the
Investors icon. An archived web cast will also be available at
www.kittyhawkcompanies.com. About Air Container Transport, Inc.
(ACT) http://www.aircontainertransport.com/ Air Container
Transport, Inc. is a premier expedited transportation service
company who pioneered the transportation of airline containers by
engineering specialized low-ride tractors and high cube trailers
with pneumatic retractable rollers. The Company's unique equipment
can easily handle small parcels or accommodate five upper deck
Airline containers. ACT operates a fleet of over 150 Airride
tractor/trailer combinations among terminals in California, Oregon,
Washington, British Columbia, Utah, Idaho, Colorado, Illinois, and
Texas. About Kitty Hawk, Inc. www.kittyhawkcompanies.com As a
recognized leader in customer service, Kitty Hawk is the premier
provider of guaranteed, mission-critical, scheduled overnight air
and beginning October 31, 2005, of scheduled time-definite
coast-to-coast less-than-truckload (LTL) ground freight
transportation to major business centers and surrounding
communities throughout North America, including, Alaska, Hawaii,
Toronto, Canada, and San Juan, Puerto Rico. With more than 30 years
experience in the aviation and air freight industries, Kitty Hawk
plays a key connecting role in the global supply chain. Kitty Hawk
serves the logistics needs of more than 550 freight forwarders,
integrated carriers, logistics companies and major airlines with
its extensive integrated air and ground network, fleet of Boeing
737-300SF and 727-200 cargo aircraft, as well as a 239,000
square-foot cargo warehouse, US Customs clearance and sort facility
at its Fort Wayne, Indiana hub. In 2005, Kitty Hawk became the
North American launch customer for the fuel-efficient and
environmentally-friendly Boeing 737-300SF aircraft. Kitty Hawk's
air and ground cargo networks and award-winning, guaranteed
overnight time-definite service are ideal for heavy-weight
shipments (over 150 lbs), special goods with unique dimensions,
perishables, animals and other valuable shipments. Statement under
the Private Securities Litigation Reform Act: This report may
contain forward-looking statements that are intended to be subject
to the safe harbor protection provided by Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. These statements relate to future events or future
financial and operating performance and involve known and unknown
risks and uncertainties that may cause actual results or
performance to be materially different from those indicated by any
forward-looking statements. In some cases, you can identify
forward-looking statements by terminology such as "forecast,"
"may," "will," "could," "should," "expect," "intends," "plan,"
"believe," "potential" or other similar words indicating future
events or contingencies. Some of the things that could cause actual
results to differ from expectations are: economic conditions; the
impact of high fuel prices; our inability to successfully implement
and operate our expanded ground network; our failure to close the
acquisition of the operating assets of Air Container Transport; our
inability to successfully operate and integrate the Air Container
Transport operations; failure of key suppliers and vendors to
perform; our inability to attract sufficient customers at
economical prices for our expanded ground network; unforeseen
increases in liquidity and working capital requirements related to
our expanded ground network; potential competitive responses from
other operators of coast-to-coast less than truckload networks; the
continued impact of terrorist attacks, global instability and
potential U.S. military involvement; the Company's significant
lease obligations and indebtedness; the competitive environment and
other trends in the Company's industry; changes in laws and
regulations; changes in the Company's operating costs including
fuel; changes in the Company's business plans; interest rates and
the availability of financing; liability and other claims asserted
against the Company; labor disputes; the Company's ability to
attract and retain qualified personnel; inflation; and costs. For a
discussion of these and other risk factors, see Item 7 of the
Company's Annual Report on Form 10-K for the year ended December
31, 2005. All of the forward-looking statements are qualified in
their entirety by reference to the risk factors discussed therein.
These risk factors may not be exhaustive. The Company operates in a
continually changing business environment, and new risk factors
emerge from time to time. Management cannot predict such new risk
factors, nor can it assess the impact, if any, of such new risk
factors on the Company's business or events described in any
forward-looking statements. The Company disclaims any obligation to
publicly update or revise any forward-looking statements after the
date of this report to conform them to actual results.
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