For tax purposes WellTech had available, as of December 31, 1994,
substantial NOL carryforwards which begin to expire in 1998. Utilization of
pre-June 1991 Recapitalization NOL carryforwards is generally limited to
approximately $1.3 million per year effective as of June 1991. As a result of
the 1994 recapitalization, utilization of NOL carryforwards from the period June
1991 through December 31, 1993, is expected to be generally limited to $950,000
per year. WellTech also has available investment tax credit carryforwards of
approximately $11 million, portions of which expire each year. As presented
above, a valuation allowance has been established for those NOL carryforwards
and tax credits which have not met the recognition requirements of SFAS No. 109.
(7) Capital Accumulation 401(k) Plan
WellTech established a capital accumulation 401(k) plan for the benefit
of its employees during 1987. Employees may, after the completion of one year's
service, contribute up to 15% of their salaries (subject to certain maximums) to
the plan. Contributions to the plan by WellTech are made at the discretion of
the Board of Directors. WellTech did not make contributions to the plan during
1994 or 1993.
In November 1994, the Board of Directors authorized WellTech to begin
making contributions to the plan in 1995. These contributions are limited to 50%
of the employees' contributions up to a maximum of $1,000. While employees may
generally contribute up to 15% of their pay, WellTech's matching contribution is
limited to the first 6%.
(8) Commitments and Contingencies
At December 31, 1994, the minimum future payments under long-term
non-cancelable operating lease obligations amounted to (in thousands):
1995 $ 359
Total rentals under operating leases charged against income amounted to
approximately $1,548,000 and $2,273,000 in 1994 and 1993, respectively, which
includes $1,231,000 and $1,727,000 in 1994 and 1993, respectively, for vehicle
rentals under cancelable leases.
WellTech accrues for the self-insured retention under its casualty
insurance policies. These amounts represent losses payable as a result of
WellTech's claims experience, subject to certain policy maximums. A charge to
income is provided currently based on the assessment of the expected costs of
claims incurred. The estimated costs of casualty claims are based on WellTech's
historical loss experience, type of claim, knowledge of the specific
circumstances of the claim and judgement of the possible effect that future
economic and legal factors might have on the ultimate settlement of the claim.
As of December 31, 1994 and 1993, $4,254,000 and $4,004,000, respectively, was
accrued for the estimated cost of resolving actual and potential claims under
casualty insurance policies.