DALLAS & SAN FRANCISCO--(BUSINESS WIRE)--May 10, 2006-- 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.
CONTACT: EVC Group, Inc. Investor Relations: Doug Sherk or Stacey Fisher, 415-896-6820 or Media Relations: Steve DiMattia, 646-277-8706 KEYWORD: CALIFORNIA TEXASINDUSTRY KEYWORD: AIRLINES TRANSPORTATION MERGERS/ACQSOURCE: Kitty Hawk, Inc.