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KEY ENERGY SERVICES INC filed this Form S-4/A on 03/08/1996
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(5)  Common Stock-

         In January  1994,  the  Certificate  of  Incorporation  of WellTech was
amended  and  restated  in its  entirety to provide for only one class of stock,
common stock $1 par value. In addition,  pursuant to the 1994  Recapitalization,
WellTech's  Board of Directors  authorized  a  ten-for-one  reverse  stock split
effective January 18, 1994.

(6)  Income Taxes -

         WellTech adopted Statement of Financial Accounting Standards (SFAS) No.
109,  "Accounting for Income Taxes",  effective January 1, 1993. The adoption of
SFAS No. 109 changed  WellTech's  method of accounting for income taxes from the
deferred  approach to an asset and liability  approach.  The asset and liability
approach requires the recognition of deferred tax assets and liabilities for the
expected future tax consequences of temporary  differences between the financial
reporting basis and tax basis of assets and liabilities.  The cumulative  effect
of the change in  accounting  principle  on prior years at January 1, 1993,  the
date of  adoption,  was not material to the results of  operations  or financial
position of WellTech.

         During the years ended  December 31, 1994 and 1993,  WellTech  incurred
pre-tax  losses  and had  available  net  operating  loss  (NOL)  carryforwards.
Consequently,  for financial  reporting  purposes WellTech did not record income
tax expense.  In  connection  with the  conversion of debt to equity in the 1994
Recapitalization discussed in Note 4 above, WellTech recognized an approximately
$18 million  taxable gain,  and recorded as a direct charge to capital in excess
of par value an accrual of $360,000 for alternative minimum taxes.

         At December 31, 1994 and 1993, WellTech had a net deferred tax asset of
approximately  $69 million and $77  million,  respectively,  and has provided an
equal  amount for a valuation  allowance  at each date.  Deferred  tax  (assets)
liabilities are comprised of the following (in thousands):

                                                          1994           1993
                                                          ----           ----
(Assets) Liabilities
Net tax operating loss carryforwards                 $(57,493)      $(66,262)
General business credits                              (11,335)       (12,144)
AMT credits                                         (     433)              -
Depreciation differences on PP&E                        2,470          2,227
Prepaid Expenses                                          266          1,221
Accrued insurance losses and other liabilities       (  1,563)       ( 2,114)
Allowance for doubtful accounts                     (     338)      (    130)
Differences between book and tax basis
  of partnership interests                           (    236)      (    119)
Other,  net                                          (    189)           224
                                                     ---------        -------
                                                      (68,851)       (77,097)
Valuation Allowance                                    68,851         77,097
                                                       -------        -------
Net Deferred Tax Asset                             $    -         $    -
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