Williams said it will take a $54 million nonrecurring, after-tax charge in the second quarter of 2006 as a result of jury verdicts returned earlier this week against two of its subsidiaries for breach of contract and fraud in connection with the design and construction of four Louisiana gas processing plants.
After a three-month trial in the 215th District Court of Harris County, TX, the Houston jury awarded $206 million damages to two Texas construction companies in a five-year dispute against Williams subsidiaries Williams Power Co. Inc. and Gulf Liquids New River Project LLC and against Winterthur International America Insurance Co. Corpus Christi-based Bay Limited was awarded $32 million in actual damages and $85 million in punitive damages. Humble, TX-based Gulsby-Bay Plant Partners was awarded $4.3 million in actual damages and $85 million in punitive damages. Plaintiffs Gulsby Engineering and National American Insurance Co. also were awarded actual and punitive damages in the case.
Williams said the amount of its second quarter charge represents its estimate of the potential future exposure for actual damages of $68 million and potential pre-judgment interest of $20 million. In addition, it said any ultimate judgment may include $185 million in excess of the 2006 second quarter charge, given potential punitive damage exposure under Texas law.
The jury verdicts are subject to trial and appellate court review. Entry of a judgment in the trial court is expected in the third or fourth quarter. If the trial court enters a judgment consistent with the jury’s verdicts against the company’s subsidiaries, Williams said it would seek a reversal through appeal.
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