SEC Company Response from KITTY HAWK INC (CIK 0000932110) — May 31, 2005
KITTY HAWK INC (CIK 0000932110)
Date: May 31, 2005 · CIK: 0000932110 · Accession: 0000950134-05-011093
AI Filing Summary & Sentiment
Referenced dates: April 25, 2005, May 13, 2005
Letter
Securities and Exchange Commission Kitty Hawk, Inc. Form 10-K for the year ended December 31, 2004 Filed March 10, 2005 File No. 0-14275
RE:
Dear Ladies and Gentlemen:
On behalf of our client, Kitty Hawk, Inc. (“Kitty Hawk”), we submit the following response to the letter dated May 13, 2005, containing a comment from the staff of the Securities and Exchange Commission (the “Staff”) relating to Kitty Hawk’s response letter to the Staff dated April 25, 2005 regarding Kitty Hawk’s Form 10-K for the year ended December 31, 2004 (the “Form 10-K”). Please be advised that the responses contained herein, and the information provided herein, have been prepared by, and obtained from, Kitty Hawk.
We respectfully request that the Staff provide any further comments at its earliest convenience. For your convenience, the Staff’s comment has been reproduced immediately preceding Kitty Hawk’s response.
Item 8. Financial Statements and Supplementary Data
16. Business Segment Data, page F-29
14. We note that your response to our prior comment number 16 indicates that the asset balances allocated to each of your segments have fluctuated primarily due to intercompany costs and debt. As you state that there have been no changes in Kitty Hawk’s methodology for allocating costs for the periods presented and the largest intercompany expense for each of the periods presented appears to have related to your Cargo Airline segment supporting your Scheduled Freight Network segment, please explain to us in detail how intercompany costs and debt have resulted in such significant fluctuations in your allocation of assets between segments. For example, please explain why the total assets of your Scheduled Freight Network have increased from $6,278 at December 31, 2002 to $15,842 at December 31, 2004, and the total assets of your Cargo Airline have declined from $20,155 at December 31, 2002 to $7,205 at December 31, 2004. We may have further comment upon the receipt of your response.
Response:
In the “Business Segment Data” footnote in the Form 10-K, the line item “Total Assets” presents the total assets of each segment, including both intercompany receivables and payables between segments. The fluctuations in the “Total Assets” of each segment over the time periods presented is largely due to fluctuations in the amounts of the intercompany payables owed by each segment which have offset any intercompany receivables from other segments. The fluctuations are not due to changes in the allocation of tangible or intangible assets to each segment. If the
intercompany payables were not included in the “Total Assets” of each segment, but instead were presented as a liability, the amount of assets (which we refer to as “Gross Assets”) of each segment would not fluctuate nearly as much over the time periods presented. Intercompany transactions between the segments are not settled in cash and will continue to fluctuate over time based on the intercompany activities between the segments.
To illustrate this, we have attached three exhibits to this letter. Exhibit A presents the calculation of “Total Assets” and “Gross Assets” of the Scheduled Freight Network segment for the periods presented in footnote 16, along with a calculation of the year-over-year variances. Exhibit B presents the calculation of “Total Assets” and “Gross Assets” of the Cargo Airline segment for the periods presented in footnote 16, along with a calculation of the year-over-year variances. Exhibit C presents the calculation of “Total Assets” and “Gross Assets” of the Other segment for the periods presented in footnote 16, along with a calculation of the year-over-year variances.
Following the receipt of the April 8, 2005 SEC Staff letter, the Company revised the presentation of “Total Assets” for each segment in its Form 10-Q for the period ended March 31, 2005. In the Form 10-Q, the presentation of “Total Assets” did not include intercompany payables and an elimination entry was included for consolidation purposes. In future SEC filings, the Company will present “Total Assets” for each segment in this manner.
Kitty Hawk acknowledges that: (i) Kitty Hawk is responsible for the adequacy and accuracy of the disclosure in the filings; (ii) staff comments or changes to disclosure in response to staff comments in the filings reviewed by the staff do not foreclose the Commission from taking any action with respect to the filing; and (iii) Kitty Hawk may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
Should any members of the Staff have any questions or comments concerning the enclosed materials, please contact Garrett A. DeVries, Esq. at (214) 651-5614.
Very truly yours,
/s/ GARRETT A. DEVRIES
Show Raw Text
CORRESP
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filename1.htm
corresp
May 31, 2005
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
RE:
Kitty Hawk, Inc.
Form 10-K for the year ended December 31, 2004
Filed March 10, 2005
File No. 0-14275
Dear Ladies and Gentlemen:
On behalf of our client, Kitty Hawk, Inc. (“Kitty Hawk”), we submit the following response to the
letter dated May 13, 2005, containing a comment from the staff of the Securities and Exchange
Commission (the “Staff”) relating to Kitty Hawk’s response letter to the Staff dated April 25, 2005
regarding Kitty Hawk’s Form 10-K for the year ended December 31, 2004 (the “Form 10-K”). Please be
advised that the responses contained herein, and the information provided herein, have been
prepared by, and obtained from, Kitty Hawk.
We respectfully request that the Staff provide any further comments at its earliest convenience.
For your convenience, the Staff’s comment has been reproduced immediately preceding Kitty Hawk’s
response.
Item 8. Financial Statements and Supplementary Data
16. Business Segment Data, page F-29
14.
We note that your response to our prior comment number 16 indicates that the asset balances
allocated to each of your segments have fluctuated primarily due to intercompany costs and
debt. As you state that there have been no changes in Kitty Hawk’s methodology for
allocating costs for the periods presented and the largest intercompany expense for each of
the periods presented appears to have related to your Cargo Airline segment supporting your
Scheduled Freight Network segment, please explain to us in detail how intercompany costs and
debt have resulted in such significant fluctuations in your allocation of assets between
segments. For example, please explain why the total assets of your Scheduled Freight Network
have increased from $6,278 at December 31, 2002 to $15,842 at December 31, 2004, and the total
assets of your Cargo Airline have declined from $20,155 at December 31, 2002 to $7,205 at
December 31, 2004. We may have further comment upon the receipt of your response.
Response:
In the “Business Segment Data” footnote in the Form 10-K, the line item “Total Assets” presents the
total assets of each segment, including both intercompany receivables and payables between
segments. The fluctuations in the “Total Assets” of each segment over the time periods presented
is largely due to fluctuations in the amounts of the intercompany payables owed by each segment
which have offset any intercompany receivables from other segments. The fluctuations are not due
to changes in the allocation of tangible or intangible assets to each segment. If the
intercompany payables were not included in the “Total Assets” of each segment, but instead were
presented as a liability, the amount of assets (which we refer to as “Gross Assets”) of each
segment would not fluctuate nearly as much over the time periods presented. Intercompany
transactions between the segments are not settled in cash and will continue to fluctuate over time
based on the intercompany activities between the segments.
To illustrate this, we have attached three exhibits to this letter. Exhibit A presents the
calculation of “Total Assets” and “Gross Assets” of the Scheduled Freight Network segment for the
periods presented in footnote 16, along with a calculation of the year-over-year variances.
Exhibit B presents the calculation of “Total Assets” and “Gross Assets” of the Cargo
Airline segment for the periods presented in footnote 16, along with a calculation of the
year-over-year variances. Exhibit C presents the calculation of “Total Assets” and “Gross
Assets” of the Other segment for the periods presented in footnote 16, along with a calculation of
the year-over-year variances.
Following the receipt of the April 8, 2005 SEC Staff letter, the Company revised the presentation
of “Total Assets” for each segment in its Form 10-Q for the period ended March 31, 2005. In the
Form 10-Q, the presentation of “Total Assets” did not include intercompany payables and an
elimination entry was included for consolidation purposes. In future SEC filings, the Company will
present “Total Assets” for each segment in this manner.
Kitty Hawk acknowledges that: (i) Kitty Hawk is responsible for the adequacy and accuracy of the
disclosure in the filings; (ii) staff comments or changes to disclosure in response to staff
comments in the filings reviewed by the staff do not foreclose the Commission from taking any
action with respect to the filing; and (iii) Kitty Hawk may not assert staff comments as a defense
in any proceeding initiated by the Commission or any person under the federal securities laws of
the United States.
Should any members of the Staff have any questions or comments concerning the enclosed materials,
please contact Garrett A. DeVries, Esq. at (214) 651-5614.
Very truly yours,
/s/ GARRETT A. DEVRIES
Garrett A. DeVries
(214) 651-5614
garrett.devries@haynesboone.com
cc:
Steven E. Markhoff
Robert W. Zoller
Lauren Swann
2
Exhibit A
Kitty Hawk, Inc.
Scheduled Freight Network
Variance
12/31/2004
12/31/2003
12/31/2002
2004 v 2003
2003 v 2002
ASSETS
CURRENT ASSETS:
CASH
$
1,491,598
$
36,847
$
1,927,094
1,454,751
(1,890,247
)
RESTRICTED CASH
—
52,500
—
(52,500
)
52,500
ACCOUNTS RECEIVABLE, LESS ALLOWANCE
13,453,189
11,538,324
11,123,207
1,914,865
415,117
INTERCOMPANY RECEIVABLE (PAYABLE)
(632,924
)
(3,115,525
)
(9,927,194
)
2,482,601
6,811,669
DEPOSITS, PREPAID EXPENSES AND OTHER ASSETS
148,794
183,488
363,925
(34,694
)
(180,437
)
SETTLEMENT RECEIVABLE
—
1,765,245
(1,765,245
)
1,765,245
OTHER CURRENT ASSETS, NET
81,343
114,944
597,684
(33,601
)
(482,740
)
TOTAL CURRENT ASSETS
14,542,000
10,575,823
4,084,716
3,966,177
6,491,107
TOTAL PROPERTY AND EQUIPMENT
2,104,645
1,642,993
1,799,979
461,652
(156,986
)
LESS ACCUMULATED DEPRECIATION
(804,042
)
(476,049
)
(85,761
)
(327,993
)
(390,288
)
NET PROPERTY & EQUIPMENT
1,300,603
1,166,944
1,714,218
133,659
(547,274
)
OTHER ASSETS, NET
—
84,938
479,181
(84,938
)
(394,243
)
TOTAL ASSETS AS PRESENTED IN NOTE 16
15,842,603
11,827,705
6,278,115
4,014,898
5,549,590
ELIMINATION OF INTERCOMPANY PAYABLE
632,924
3,115,525
9,927,194
GROSS ASSETS
16,475,527
14,943,230
16,205,309
1,532,297
(1,262,079
)
Exhibit B
Kitty Hawk, Inc.
Cargo Airline Segment
Variance
12/31/2004
12/31/2003
12/31/2002
2004 v 2003
2003 v 2002
ASSETS
CURRENT ASSETS:
CASH
$
16,904
$
350
$
69,563
16,554
(69,213
)
RESTRICTED CASH
971,137
171,255
—
799,882
171,255
ACCOUNTS RECEIVABLE, LESS ALLOWANCE
417,015
541,685
2,146,287
(124,670
)
(1,604,602
)
INTERCOMPANY RECEIVABLE (PAYABLE)
(7,734,808
)
1,737,137
1,336,959
(9,471,945
)
400,178
ASSETS HELD FOR SALE
65,000
114,250
816,998
(49,250
)
(702,748
)
INVENTORY AND AIRCRAFT SUPPLIES
4,719,498
5,440,824
6,014,496
(721,326
)
(573,672
)
DEPOSITS, PREPAID EXPENSES AND OTHER ASSETS
702,781
598,179
790,445
104,602
(192,266
)
PREPAID FUEL
2,309,598
1,122,179
967,290
1,187,419
154,889
OTHER CURRENT ASSETS, NET
28,253
(1,589
)
(4,524
)
29,842
2,935
TOTAL CURRENT ASSETS
1,495,378
9,724,270
12,137,514
(8,228,892
)
(2,413,244
)
TOTAL PROPERTY AND EQUIPMENT
11,504,296
9,555,077
8,869,602
1,949,219
685,475
LESS ACCUMULATED DEPRECIATION
(5,794,515
)
(3,752,936
)
(852,468
)
(2,041,579
)
(2,900,468
)
NET PROPERTY & EQUIPMENT
5,709,781
5,802,141
8,017,134
(92,360
)
(2,214,993
)
TOTAL ASSETS AS PRESENTED IN NOTE 16
7,205,159
15,526,411
20,154,648
(8,321,252
)
(4,628,237
)
ELIMINATION OF INTERCOMPANY PAYABLE
7,734,808
0
0
GROSS ASSETS
14,939,967
15,526,411
20,154,648
(586,444
)
(4,628,237
)
Exhibit C
Kitty Hawk, Inc.
Other Segment
Variance
12/31/2004
12/31/2003
12/31/2002
2004 v 2003
2003 v 2002
ASSETS
CURRENT ASSETS:
CASH
$
14,775,956
$
15,691,521
$
8,355,994
(915,565
)
7,335,527
RESTRICTED CASH
250,000
355,000
592,890
(105,000
)
(237,890
)
ACCOUNTS RECEIVABLE, LESS ALLOWANCE
(712,155
)
(540,865
)
(1,809,596
)
(171,290
)
1,268,731
INTERCOMPANY RECEIVABLES
8,367,732
1,378,388
8,590,235
6,989,344
(7,211,847
)
ASSETS HELD FOR SALE
—
—
1,044,559
—
(1,044,559
)
DEPOSITS, PREPAID EXPENSES AND OTHER ASSETS
898,747
353,741
543,526
545,006
(189,785
)
OTHER CURRENT ASSETS, NET
91,538
29,796
687,290
61,742
(657,494
)
TOTAL CURRENT ASSETS
23,671,818
17,267,581
18,004,898
6,404,237
(737,317
)
TOTAL PROPERTY AND EQUIPMENT
2,764,745
2,516,469
2,504,606
248,276
11,863
LESS ACCUMULATED DEPRECIATION
(813,635
)
(427,915
)
(82,622
)
(385,720
)
(345,293
)
NET PROPERTY & EQUIPMENT
1,951,110
2,088,554
2,421,984
(137,444
)
(333,430
)
OTHER ASSETS, NET
400,000
400,000
400,000
—
—
TOTAL ASSETS AS PRESENTED IN NOTE 16
26,022,928
19,756,135
20,826,882
6,266,793
(1,070,747
)
ELIMINATION OF INTERCOMPANY PAYABLE
0
0
0
GROSS ASSETS
26,022,928
19,756,135
20,826,882
6,266,793
(1,070,747
)