Income tax expenses of $950,000 for fiscal 1994 increased from $413,000
in income tax expense for fiscal 1993. The increase in income tax expense was
due to the increase in income before extraordinary items. Because of Key's
adoption of "fresh-start reporting," it is required to report any utilization of
net operating loss carryforwards arising prior to the 1992 Reorganization as an
increase in stockholders' equity rather than as a credit to income tax expense.
(See Note 3 of Notes to Consolidated Financial Statements of Key.)
During fiscal 1993, Key recorded an extraordinary gain on discharge of
indebtedness of $2,868,000 in connection with the 1992 Reorganization Plan. See
Note 3 of Notes to Consolidated Financial Statements of Key.
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.
Net cash provided by operating activities increased $1,524,000 from
$318,000 during the 1994 fiscal year to $1,842,000 for the 1993 period. The
increase was attributable primarily to an increase in net income.
Net cash used in investing activities increased from $1,821,000 for the
1993 period to $5,608,000 for fiscal 1994. The increase was primarily the result
of increased capital expenditures for the oil well service operations during
1994 and $850,000 for expenditures for oil gas properties. Increased oil well
service capital expenditures was primarily the result of improvements necessary
for the WellTech West Texas equipment.
Net cash provided by financing activities was $4,316,000 for fiscal
1994 as compared to $1,918,000 for fiscal 1993. The increase was primarily the
result of the proceeds from long-term debt during fiscal 1994 primarily as a
result of the financing of the improvement costs to the equipment of the West
Texas operations of WellTech and to finance the purchase of oil and gas
properties by Odessa Exploration.
Liquidity and Capital Resources
At December 31, 1995, Key had $955,000 in cash and restricted cash.
Yale E. Key has projected $2.5 million for oil field service capital
expenditures for fiscal 1996 as compared to approximately $2.8 million for
fiscal 1995. Capital expenditures are expected to be primarily capitalized