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SEC Filings

S-4/A
KEY ENERGY SERVICES INC filed this Form S-4/A on 03/08/1996
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Environmental

Key is subject to  extensive  federal,  state and local  environmental  laws and
regulations.  These laws, which are constantly changing,  regulate the discharge
of materials into the  environment and may require Key to remove or mitigate the
environmental  effects  of the  disposal  or release of  petroleum  or  chemical
substances  at  various  sites.   Environmental  expenditures  are  expensed  or
capitalized depending on their future economic benefit. Expenditures that relate
to an  existing  condition  caused  by past  operations  and that have no future
economic  benefits are expensed.  Liabilities  for  expenditures of a noncapital
nature  are  recorded  when  environmental   assessment  and/or  remediation  is
probable, and the costs can be reasonably estimated.

Goodwill

At June 30, 1995, Key classified as Goodwill the cost in excess of fair value of
the net assets acquired in purchase transactions. Goodwill is being amortized on
a  straight-line  basis over ten years.  Goodwill is included in other assets in
the consolidated  balance sheet at June 30, 1995. Key evaluates the existence of
Goodwill  impairment on the basis of whether Goodwill is fully  recoverable from
projected, undiscounted net cash flows of the related assets.

Earnings per Share

Primary earnings per share are determined by dividing net earnings applicable to
common  stock  by  the  weighted   average  number  of  common  shares  actually
outstanding  during the period and common  equivalent  shares resulting from the
assumed exercise of stock options and warrants (if any) using the treasury stock
method,  except in periods with reported losses as the inclusion of common stock
equivalents would be antidilutive. Fully diluted earnings per share are based on
the increased number of shares that would be outstanding  assuming conversion of
dilutive outstanding  convertible securities using the "as if converted" method.
Earnings  per share for the five months  ended  November  30,  1992  reflect the
previous  capital  structure of Key prior to the 1992  Reorganization  Plan (see
Note 3).

Income Taxes

On November  30, 1992,  as part of Key's  "fresh-start  reporting",  Key adopted
Statement of Financial Accounting Standards No. 109 ("SFAS 109"), Accounting for
Income Taxes.  The adoption of SFAS 109 changed  Key's method of accounting  for
income  taxes  from the  deferred  method  (APB 11) to an  asset  and  liability
approach.  Under the asset and liability method of SFAS 109, deferred tax assets
and liabilities are recognized for the future tax  consequences  attributable to
differences  between the financial statement carrying amounts of existing assets
and  liabilities  and their  respective  tax  bases.  Deferred  tax  assets  and
liabilities are measured using enacted tax rates expected to apply to taxable


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