Colorado's largest firms made big increases in cash reserves

 

The Denver Post

By Aldo Svaldi

April 8, 2010

Colorado companies significantly boosted their cash reserves last year, a sign that the downturn wasn't as severe as many anticipated.

The state's 77 largest public companies reported cash on their balance sheets of $23.4 billion, an 89 percent increase from the $12.4 billion held at the end of 2008.

Fifty of those Colorado companies boosted their cash, 26 decreased it, and one kept it level.

"Companies cut their workers and inventories as though we were going into a depression, but the economy has not been that bad," said Barbara Walchli, manager of the Aquila Rocky Mountain Equity Fund.

Lower overhead costs allowed companies to set aside cash when the recession didn't prove as severe as expected, she said.

And with banks more reluctant to lend, the buildup in cash also has been partly defensive in that more companies are self-financing, she said.

Some corporations, such as Qwest Communications, also have debt coming due that they may pay off rather than refinance.

Qwest more than quadrupled its cash holdings last year, from $565 million to $2.4 billion.

Uncertainty also plays into the equation: Why spend money to expand when the economy isn't growing?

Besides paying down debt, companies sitting on copious amounts of cash can boost dividends, purchase shares, make acquisitions and, in theory, hire more workers.

Conversely, an absence of cash or burning through reserves rapidly can point to troubles ahead.

Forest Oil recorded the largest percentage increase in cash of any Colorado public company last year — from $2.2 million in 2008 to $467.2 million.

"We sold a very big chunk of assets in 2009 from our interest in the Permian Basin (in west Texas) to some assets in Alberta," said Patrick Redmond, vice president of corporate planning and investor relations at Forest.

Newmont Mining reported the biggest dollar increase, raising cash holdings from $435 million to $3.2 billion, a 639 percent jump.

Gold gained nearly 25 percent in value last year, and Newmont was on the right side of that trend.

"Over the last three years, Newmont has focused on delivering on our plans and responsibly managing costs while providing full exposure to rising metal prices," said spokesman Omar Jabara.

Liberty Media, traded through three tracking stocks — Liberty Starz, Liberty Capital and Liberty Interactive — reported $4.84 billion in cash on hand, the largest stash of any company in the state.

Behind it was Liberty Global, which operates cable systems overseas, with $3.27 billion in cash.

Qwest, Western Union and MDC Holdings were the other Colorado companies with more than $1 billion in cash.

Aldo Svaldi: 303-954-1410 or asvaldi@denverpost.com