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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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<PAGE>

Income tax expense  (benefit)  differs  from  amounts  computed by applying  the
statutory federal rate as follows:




<TABLE>
<CAPTION>

                                                          Seven Months   Five Months
                                         Year Ended          Ended         Ended
                                      June 30,  June 30,    June 30,     November 30,
                                        1995     1994         1993          1992
                                      -------   --------  -------------  ------------
<S>                                   <C>       <C>        <C>           <C>   

Income tax computed at
   Statutory rate                      34.0%     34.0%       34.0%         34.0%
State taxes net of federal benefit         -       2.4         2.7           2.4
Expiration of capital loss carryover       -       4.4           -             -
Book net operating loss benefit            -         -           -          (2.7)
Reorganization items                       -         -           -         (30.0)
Foreign income tax effects                 -         -           -          (0.3)
Meals and entertainment
  disallowance                           2.2         -           -             -
Accrual to return adjustments           (1.0)        -           -             -
Other                                   (0.7)      0.5           -          (3.4)
                                       -------   -------      ------       ------
                                        34.5%     41.3%       36.7%          0.0%
                                       =======   =======      ======       ======
</TABLE>



Deferred tax assets (liabilities) are comprised of the following :


                                                           June, 30
                                                      1995           1994
                                                ----------------------------
   Net operating loss carry-forwards            $     1,140      $  1,143
   Property and equipment                            (3,437)       (2,095)
   Other                                                (25)            -
                                                  -----------     ---------
   Net deferred tax liability                       $(2,322)       $ (952)
                                                  ===========     =========

A  valuation  allowance  is  provided  when it is more likely than not that some
portion of the deferred tax assets will not be realized.  Based on  expectations
for the future,  management has determined  that taxable income of Key will more
likely than not be sufficient to fully utilize available  carryforwards prior to
their ultimate expiration.

Key estimates that as of June 30, 1995,  Key will have  available  approximately
$3,352,000 of net operating loss carryforwards  (which begin to expire in 2006).
The net  operating  loss  carryforwards  are subject to an annual  limitation of
approximately $270,000,  under Sections 382 and 383 of the Internal Revenue Code
of 1986, as amended.

                                      F-18