None of Williams’ three main subsidiaries matched 1997 earningslevels, the company said Thursday, as it announced a total 1998 netincome of $140.7 million, or $0.31 per diluted share, down from$368.3 million, or $0.85 per diluted share in 1997. For the fourthquarter, Williams posted a net loss of $20.2 million or $0.05 perdiluted share versus a net income of $57.5 million or $0.13 perdiluted share in 1997. Company officials blamed poor marketconditions, large accrual and impairment amounts, and disappointingresults in the communications business as reasons for the poorperformance.

Williams’ gas pipeline businesses, comprised of the Transco,Texas Gas, Northwest, and Kern pipeline companies, reported a 1998profit of $610.4 million, down from $614.7 million for 1997.Expansions on the Transco and Texas Gas systems combined with loweroperating and maintenance expenses to bolster earnings, while adecision to take a fourth quarter $58 million charge related tolong-term supply contracts hurt year-end results. For the fourthquarter, gas pipeline businesses reported a segment profit of$120.5 million compared to a $160.3 million segmented profit in1997.

Williams Energy Services, which is comprised of Energy Marketing& Trading, Exploration & Production, Midstream Gas &Liquids, and Petroleum Services, registered the largest year toyear decrease out of the subsidiaries by posting a 1998 segmentprofit of $407.3 million, down over $150 million from 1997’stotals. Williams said expenses relating to the merger with MAPCOtotaling $51 million, litigation and rate fund accruals amountingto $22 million, low refining margins, a $17 million loss in chargesincurred to penetrate new markets, and a $16 million loss due tothe company’s decision to refocus sales from residential andcommercial markets to large end-users were responsible for thedecrease. In 4Q98, Energy Services reported a profit of $98.5million compared to $155.9 million in 1997.

The company’s communications outfit experienced large drops aswell. It reported a 1998 segment loss of $162.9 million compared toa segment loss of $58.1 million in 1997. The decreases wereattributed to lower margins and higher selling, administrativeexpenses, and the acceleration of William’s national fiber opticnetwork. For 4Q98, the communications unit reported a loss of $79.8million compared to a loss of $52.6 million during 4Q97. Resultsfor the last quarter in 1998 were hurt by a $49.8 million chargefor asset impairment.

Keith Bailey, CEO of Williams emphasized the future, “Even withthe overall earnings situation, we clearly met far more goals thanwe missed. This should become apparent when energy markets improveand our new investments are placed into service.” Some 1998 movesBailey said would help the future of Williams include the MAPCOmerger, the national fiber optic network, and a $2.3 billioncapital program.

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