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S-4/A
KEY ENERGY SERVICES INC filed this Form S-4/A on 03/08/1996
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8. STOCKHOLDERS' EQUITY

On September  27, 1993, a Stock Grant Plan (the "Plan") was adopted by the Board
and was approved by Key's  stockholders  on July 25, 1994. The Plan authorized a
Compensation  and Stock Grant Plan Committee of the Board (the  "Committee")  to
recommend  to the Board the award of up to 600,000  shares of Key's Common Stock
to key employees  between October 15, 1993 and December 31, 2003.  Subsequent to
June 30, 1995,  the Board has voted to terminate the Plan subject to shareholder
approval of 1995 Stock Option Plan. No shares have been awarded under the Plan.

9. INCOME TAXES

As  discussed  in Note 3, Key adopted  SFAS 109  effective  November 30, 1992 by
recording a net deferred tax liability of $50,000 as part of Key's  "fresh-start
reporting".  The cumulative effect of SFAS 109 at July 1, 1992 was not material.
Financial  statements  of Key prior to  November  30,  1992 do not  reflect  the
adoption of SFAS 109.

Income  tax  expense  for the  fiscal  years  ended  June 30,  1995 and 1994 was
$1,150,000 and $950,000,  respectively,  and $413,000 for the seven months ended
June 30, 1993.

Components of income tax expense (benefit) are as follows:





                                                     Seven Months   Five Months
                            Year Ended                  Ended          Ended
                          June 30,   June 30,         June 30,      November 30,
                            1995      1994               1993            1992
                          -------    --------         -----------   ------------
                                               (in thousands)
Federal and State:
         Current          $  (220)    $  457            $  413         $     -
         Deferred           1,370        493                 -               -
                            -----     ------           -------         -------
                           $1,150     $  950            $  413         $     -
                           ======     ======            ======         =======


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