Fiscal 1994 costs and expenses increased $9,161,000 or 40% over fiscal
1993 costs and expenses of $23,165,000 due to the acquisition of Odessa
Exploration and the West Texas operations of WellTech as well as start-up costs
for the several new services offered by Yale E. Key.
Income before reorganization items, income taxes and extraordinary
items was $2,295,000 for the year ended June 30, 1994, which was an increase of
51% from $1,524,000 in fiscal 1993. The increase in income before reorganization
items, income taxes and extraordinary items was due to the increase in gross
revenues for 1994 fiscal and the acquisition of Odessa Exploration and the
operations of WellTech West Texas.
Net income for fiscal 1994 was $1,345,000, a 21% increase from
$1,111,000 for fiscal 1993, before an adjustment of $4,586,000 related to the
1992 reorganization plan, pursuant to which Key emerged from bankruptcy (the
"1992 Reorganization Plan").
Interest expense increased 12% from $740,000 during fiscal 1993 to
$830,000 during fiscal 1994, primarily as a result of the acquisition of Odessa
Exploration. The increase in interest expense was partially offset by a decrease
in interest expense for the seven months ended June 30, 1993 as a result of the
successful consummation of the 1992 Reorganization Plan.
General and Administrative Expenses
General and administrative expenses increased $836,000 or 31% to
$3,540,000 during fiscal 1994 from $2,704,000 during fiscal 1993, primarily due
to the acquisition of Odessa Exploration and the West Texas operations of
WellTech. However, as a percent of revenues, general and administrative expenses
decreased from 11% of revenues during fiscal 1993 to 10% of revenues during
Depreciation and Depletion Expense
Depreciation and depletion expense increased to $1,371,000 in fiscal
1994 from $911,000 in fiscal 1993 due mainly to the acquisition of Odessa
Exploration which contributed $386,000 in depletion expense for fiscal 1994. The
increase was partially offset by a decrease in depreciation expense for the
seven months ended June 30, 1993 as the result of Key's adoption of "fresh start
reporting" upon emergence from bankruptcy. See Note 3 of Notes to Consolidated
Financial Statements of Key.