Williams reports large 2Q loss because of decline in energy trading

Monday, July 29th 2002, 12:00 am

By: News On 6

TULSA, Okla. (AP) _ Williams Cos. reported a huge second-quarter loss Monday in line with its warning last week that its energy trading business was suffering from the company's credit crunch.

The Tulsa-based energy giant said it lost $349.1 million, or 68 cents per share, in the period, compared with earnings of $339.5 million, or 69 cents per share, last year.

Revenues fell 26 percent to $2.16 billion compared with $2.92 billion in the year-earlier period, Williams said.

Excluding one-time charges, which include declines in the values of Williams' long-term energy trading contracts and a writedown of its anticipated claim in its bankrupt former telecommunications subsidiary, the company reported losses of 34 cents per share. That operating loss met analysts' expectations, but fell short of last year's second-quarter operating earnings of 57 cents per share.

But Williams shares, which had fallen below $1 last week on its profit warning and credit troubles, rose 24 cents, or 23 percent, to $1.30 Monday on the New York Stock Exchange. The shares have a 52-week high of $34.41.

For the first six months of 2002, Williams has lost $225.9 million, or 58 cents per share, compared to profits last year of $695.7 million, or $1.42 per share.

Williams' once-profitable trading division, hurt by Enron Corp. fallout and a deepening credit problem, lost $497.5 million in the second quarter, compared with earnings of $262.2 million last year.

The company says customers have been unwilling to sign new long-term contracts because of Williams' credit problems, which deepened last week as all three major rating agencies lowered the company's $16 billion debt to junk.

The downgrades came after Williams warned of its second-quarter loss and said it would slash its stock dividend by 95 percent to conserve cash. Williams is trying to bolster its balance sheet by $8 billion through asset sales, spending cuts and a possible equity issue. It also is seeking a partner with better credit for its energy trading division, which it is also considering selling.

One-time charges this quarter include a $15 million writedown of receivables and claims Williams has in bankrupt Williams Communications Group, which it spun off last year.

Williams last week agreed to sell its 45 percent claim in its former subsidiary for $180 million to Leucadia National Corp., an insurance and investment banking holding company.

Williams, the nation's second-largest natural gas pipeline company, said its other units were meeting performance expectations.

Its pipeline division earned $156.7 million in the quarter compared with $181 a year earlier, the decline partially due to a $20 million write-off of terminated projects and $11.2 million for an early retirement program, the company said.

Energy services reported a second-quarter profit of $131.8 million, below the $263.9 million the unit earned last year. Williams said the 2001 earnings were buoyed by $72.1 million from a sale of convenience stores.