Williams predicting large second quarter loss

Posted: Thursday, July 25, 2002

TULSA, Okla. -- Williams Co. said Monday it expects a large second-quarter loss because of a slump in its energy trading division and would slash its stock dividend by 95 percent to save cash.

The Tulsa-based energy firm said it projects a net loss of 63 cents to 73 cents per share for the second quarter, which includes a one-time pretax charge of $210 million to $240 million.

Excluding one-time items, Williams said it would report a loss of 35 cents to 40 cents per share, compared with earlier projected earnings of 20 cents to 35 cents per share.

Williams announced last month that it was putting its Alaska assets up for sale in an effort to raise $1 billion to shore up its balance sheet. Those assets include its North Pole refinery, gas stations and stake in the trans-Alaska oil pipeline. The company has about 500 employees in Alaska.

The company, which prides itself on providing generous dividends, also said it was slashing its common stock dividend to 1 cent from 20 cents to conserve cash.

''Reducing our common stock dividend is one of a series of prudent and realistic steps we have taken and are taking to address our current business environment,'' said Steve Malcolm, chairman, president and chief executive officer.

The pretax charge reflects a decline in the value of Williams long-term energy trading and risk management contracts, a writedown of its anticipated claim in its bankrupt former telecommunications subsidiary and other factors.

Williams, the nation's second-largest natural gas pipeline firm, said its other businesses -- pipelines, refining and oil and natural gas production and exploration -- continued to meet performance expectations.

Williams is trying to improve its balance sheet by about $8 billion through asset sales, spending cuts and equity issues after the collapse of Enron Corp. highlighted debt loads of other companies in the sector.

Moody's Investors Service and Standard & Poor's each have lowered Williams' $16 billion debt to their lowest investment grade rating.

This month, Williams announced it was selling its 6,000-mile Central pipeline system for an undisclosed price and its Kansas Hugoton natural gas gathering system in southwestern Kansas for $100 million cash. In June, it said it hoped to raise more than $1 billion by selling refineries in Tennessee and Alaska.

The company also has laid off 120 energy trading workers after cutting its capital commitment to that profitable business from $1.5 billion to $1 billion.

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