Kitty Hawk (AMEX:KHK)
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Kitty Hawk, Inc. (AMEX:KHK) today reported third quarter
2005 gross revenues of $40.7 million, a decrease of $1.8 million, or
4.3%, from third quarter 2004 and a third quarter 2005 net loss of
$0.4 million, or $0.01 loss per diluted share, compared to net income
of $2.3 million, or $0.04 income per diluted share, for the third
quarter of 2004.
During both the third quarter of 2005 and third quarter of 2004,
operating results were impacted by, among other things, $0.8 million
and $0.2 million, respectively, in overhead expense for the Company's
induction into service of seven newer generation fuel-efficient Boeing
737-300SF cargo aircraft.
"During the third quarter, in response to customer demand, we
embarked on a growth strategy that efficiently combines existing
internal and external resources to expand our service offering," said
Robert W. Zoller, president and CEO. "As a result, on October 31, we
launched with our logistic and forwarding customers a deferred freight
product with the same level of superior customer service found in the
Kitty Hawk "mission-critical" air network. Initially, the Kitty Hawk
team is offering a ground network serving 28 business centers in North
America with coast-to-coast, scheduled, less-than-truckload (LTL)
service. The new LTL service is off to an excellent start with service
and delivery results matching the excellent level of our air cargo
operations, and we plan to expand the service to 46 business centers
during the first quarter of 2006.
"Kitty Hawk's dependability, reliability and superior customer
service continues to stimulate other new opportunities for strategic
growth," continued Mr. Zoller. "Expanding the number of transportation
service options for our current and future customers means we can more
efficiently and effectively serve the logistic needs of shippers
throughout North America as well as provide additional air and ground
connecting options for global freight and maximize the productivity of
our resources. We believe the launch of the scheduled LTL service,
combined with the efficiencies of the Boeing 737-300SF aircraft, as
well as other programs to improve operating efficiency and
productivity, will position us over the long term for profitable
growth in a high fuel cost operating environment," Mr. Zoller
concluded.
For the first nine months of 2005, Kitty Hawk reported gross
revenues of $110.8 million, a decrease of $3.3 million, or 2.9%, from
the first nine months of 2004 and a net loss for the nine months ended
September 30, 2005 of $4.7 million, or $0.09 loss per diluted share,
compared to net income of $1.1 million, or $0.02 income per diluted
share, for the same period in 2004.
Results for the nine months ended September 30, 2005 were impacted
by, among other things, $1.5 million in incremental expense for the
induction of the seven Boeing 737-300SF cargo aircraft, $0.4 million
cash benefit related to the recovery of retroactive adjustments on a
worker's compensation policy and $0.6 million cash benefit from the
recovery of a customer accounts receivable balance.
Results for the nine months ended September 30, 2004 also
included, among other things, $1.5 million in expense during the first
six months of 2004 incurred for incremental lease return expenses to
meet the lease return conditions on four Boeing 727-200F cargo
aircraft, an additional $0.4 million charge related to Pratt & Whitney
JT8D-9A engine maintenance reserves and a $0.5 million reversal of
expense in the first quarter of 2004 related to excess airframe
maintenance reserves on one Boeing 727-200F cargo aircraft that
completed a heavy maintenance check at a cost that was lower than
expected..
Third quarter 2005 average yield (revenue per unit of chargeable
weight) increased 13.4% and chargeable weight (accounting for
associated oversize and special handling requirements) decreased 13.7%
over the same period last year. For the nine months ended September
30, 2005, average yield increased 10.3% and chargeable weight
decreased 11.7% over the same period last year on reduced capacity.
The increase in average yield is due to an increase in fuel and
security surcharges implemented to help defray the rising costs of
these items as well as a revised pricing structure introduced in
January 2005, all of which were partially offset by competitive
pricing pressures in selected markets and a higher proportion of
chargeable weight from markets with lower yields. Volumes for the
higher-priced expedited freight were down as the effects of higher
fuel prices contributed to a shift by customers to lower-priced
non-expedited services. The decrease in chargeable weight for 2005
resulting from these factors was partially offset by an improvement in
chargeable weight for operations in San Juan, Puerto Rico, which
started during the second quarter of 2004.
The Company has placed into revenue service the seventh and final
of its leased, fuel-efficient Boeing 737-300SF cargo aircraft. "The
successful integration of B737-300SF cargo aircraft into the Kitty
Hawk Aircargo fleet during 2005 has been a major achievement for the
Kitty Hawk team and a significant strategic milestone for the
Company," added Mr. Zoller.
Kitty Hawk, Inc. also announced today the sale of 14,800 shares of
Series B Convertible Preferred Stock coupled with warrants in a
private placement to accredited investors. The placement resulted in
net proceeds to Kitty Hawk of approximately $14 million, which will be
used to fund the Company's scheduled LTL ground freight transportation
network expansion and for general corporate purposes. In addition, the
Company announced the expansion of Kitty Hawk's revolving line of
credit with Wells Fargo Business Credit, Inc. to $15 million from $10
million.
As a recognized leader in air cargo customer service, Kitty Hawk
is the premier provider of guaranteed, mission-critical, scheduled
overnight air freight transportation to major business centers
throughout North America and Alaska, Hawaii, Toronto, Canada, San
Juan, Puerto Rico and Mexico. 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 fleet of
Boeing 727 and 737 cargo aircraft, its ground truck-network, as well
as its 239,000 square-foot cargo warehouse, U.S. Customs clearance and
sort facility at its Fort Wayne, Indiana hub. Kitty Hawk is the North
American launch customer for the fuel-efficient and environmentally
friendly Boeing 737-300SF cargo aircraft. Kitty Hawk's extensive
air-ground cargo network and award winning, guaranteed overnight
express service is ideal for heavy-weight shipments, special goods
with unique dimensions, perishables, animals and other valuable
shipments.
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 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," "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 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 and inflation. 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, 2004. 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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*T
KITTY HAWK, INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
Three months ended Nine months ended
September 30, September 30,
----------------------- -----------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
(in thousands, except share and per share data)
Revenue:
Scheduled freight $39,724 $40,603 $108,028 $110,991
ACMI 400 1,197 932 1,837
Miscellaneous 566 702 1,810 1,291
----------- ----------- ----------- -----------
Total revenue 40,690 42,502 110,770 114,119
Cost of revenue:
Flight expense 8,134 6,955 21,415 21,525
Transportation
expense 3,381 4,254 10,226 10,504
Fuel expense 13,874 12,102 39,059 32,181
Maintenance expense 3,219 2,446 8,271 8,623
Freight handling
expense 6,472 7,234 19,277 20,584
Depreciation and
amortization 966 790 2,791 2,290
Operating overhead
expense 3,152 2,924 8,974 8,421
----------- ----------- ----------- -----------
Total cost of
revenue 39,198 36,705 110,013 104,128
----------- ----------- ----------- -----------
Gross profit 1,492 5,797 757 9,991
General and
administrative
expense 1,898 2,733 5,974 8,087
----------- ----------- ----------- -----------
Operating income
(loss) (406) 3,064 (5,217) 1,904
Other (income)
expense:
Interest expense 66 72 209 240
Other, net (63) 25 (750) (100)
----------- ----------- ----------- -----------
Income before income
taxes (409) 2,967 (4,676) 1,764
Income taxes -- 644 -- 644
----------- ----------- ----------- -----------
Net income (loss) $(409) $2,323 $(4,676) $1,120
=========== =========== =========== ===========
Basic income (loss)
per share $(0.01) $0.05 $(0.09) $0.02
=========== =========== =========== ===========
Weighted average
common shares
outstanding 51,582,032 50,791,723 51,403,186 50,688,309
=========== =========== =========== ===========
Diluted income (loss)
per share $(0.01) $0.04 $(0.09) $0.02
=========== =========== =========== ===========
Weighted average
diluted common
shares outstanding 51,582,032 54,405,449 51,403,186 54,206,167
=========== =========== =========== ===========
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