UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 29, 2015

The Williams Companies, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware   1-4174   73-0569878

(State or other

jurisdiction of incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

 

One Williams Center, Tulsa, Oklahoma   74172
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: 918-573-2000

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240-14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Item 2.02.    Results of Operations and Financial Condition.

On April 29, 2015, The Williams Companies, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended March 31, 2015. A copy of the press release and accompanying financial highlights and operating statistics and reconciliation schedules are furnished herewith as Exhibit 99.1 and are incorporated herein in their entirety by reference.

The press release and accompanying financial highlights and operating statistics and reconciliation schedules are being furnished pursuant to Item 2.02, Results of Operations and Financial Condition. The information furnished is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, is not subject to the liabilities of that section and is not deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

Item 9.01.    Financial Statements and Exhibits.

 

  (a) None

 

  (b) None

 

  (c) None

 

  (d) Exhibits

 

  Exhibit 99.1 Press release of the Company dated April 29, 2015, and accompanying schedules, publicly announcing the Company’s financial results for the quarter ended March 31, 2015.

 

2


Pursuant to the requirements of the Securities Exchange Act of 1934, Williams has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

        THE WILLIAMS COMPANIES, INC.
Date: April 29, 2015      

  /s/ Donald R. Chappel

        Name: Donald R. Chappel
        Title: Senior Vice President and Chief
                  Financial Officer

 

3


INDEX TO EXHIBITS

 

EXHIBIT
NUMBER

  

DESCRIPTION

Exhibit 99.1    Press release of the Company dated April 29, 2015, and accompanying schedules, publicly announcing the Company’s financial results for the quarter ended March 31, 2015.

 

4



Exhibit 99.1

 

News Release      

Williams (NYSE: WMB)        

One Williams Center        

Tulsa, OK 74172        

800-Williams        

www.williams.com        

   LOGO

 

LOGO

DATE: April 29, 2015

 

MEDIA CONTACT:    INVESTOR CONTACTS:   

Tom Droege

(918) 573-4034

  

John Porter

(918) 573-0797

  

Brett Krieg

(918) 573-4614

Williams Reports First Quarter 2015 Financial Results

 

    First Quarter 2015 Cash Distributions from Williams Partners Totaled $515 Million, Up $60 Million, or 13%

 

    Adjusted EBITDA is $918 Million, up 12%

 

    Reaffirming Williams Partners Adjusted EBITDA Guidance For 2015-2017 with 2015 Expected to be Near Low End of Range on Extended Geismar Ramp-Up and Effects of Low Commodity Prices

 

    Reaffirming Williams Dividend Guidance of $2.38 Per Share in 2015 with 10% to 15% Annual Dividend Growth through 2017 with Growing Coverage

 

    Williams Analyst Day Set for May 13

TULSA, Okla. – Williams (NYSE: WMB) today announced unaudited first quarter 2015 financial results, including the financial results of its master limited partnership (MLP), Williams Partners (NYSE: WPZ), which merged with Access Midstream Partners, L.P. in the first quarter.

 

Williams Summary Financial Information    1Q  
Amounts in millions, except per-share amounts. Per share amounts are reported on a diluted basis. All
amounts are attributable to The Williams Companies, Inc.
   2015      2014  
(Unaudited)              

MLP Cash Distributions to Williams (1)

   $ 515       $ 455   

Dividend Coverage Ratio (2)

     1.14      1.42

Quarterly Dividend Per Share

   $ 0.58       $ 0.4025   

Adjusted EBITDA (2)

   $ 918       $ 821   

Adjusted income from continuing operations (2)

   $ 122       $ 190   

Adjusted income from continuing operations per share (2)

   $ 0.16       $ 0.28   

Net income

   $ 70       $ 140   

Net income per share

   $ 0.09       $ 0.20   

 

(1) Quarterly cash distributions in this table are declared and received in the following quarter, as these distributions relate to the first quarter’s cash flow.
(2) Schedules reconciling dividend coverage ratio, adjusted EBITDA and adjusted income from continuing operations (non-GAAP measures) are available at www.williams.com and as an attachment to this news release.

 

1


Williams reported first quarter 2015 cash distributions from Williams Partners of $515 million, a $60 million or 13 percent increase from total MLP cash distributions received in first quarter 2014. Quarterly cash distributions discussed in this news release are declared and received in the following quarter, as these distributions relate to the first quarter’s cash flow.

Williams reported adjusted EBITDA of $918 million for first quarter 2015, compared with $821 million in the first quarter 2014, an increase of $97 million, or 12 percent.

Williams reported adjusted income from continuing operations of $122 million, or $0.16 per share, for first quarter 2015, compared with $190 million, or $0.28 per share, for first quarter 2014. The variance in adjusted income was driven by the absence of $173 million of business interruption insurance proceeds included in adjusted results related to the Geismar plant and sharp declines in NGL margins driven by low prices, partially offset by new fee-based revenues from Gulfstar One and Transco expansion projects.

Williams reported unaudited first quarter 2015 net income attributable to Williams of $70 million, or $0.09 per share on a diluted basis, compared with first quarter 2014 net income of $140 million, or $0.20 per share on a diluted basis. The $70 million decrease in net income attributable to Williams was primarily the result of the absence of insurance proceeds received in first quarter 2014 and sharply lower NGL margins, partially offset by the absence of 2014 losses associated with the discontinued Bluegrass Pipeline project and new fee-based revenues from Gulfstar One and Transco expansion projects.

CEO Comment

Alan Armstrong, Williams’ president and chief executive officer, made the following comments:

“First quarter 2015 results showed strong fee-based revenue growth for Williams Partners and we expect the second quarter to be even higher with Gulfstar One and Keathley Canyon Connector nearing full production and additional projects being placed in service such as the Rockaway Lateral and the mainline portion of Leidy Southeast.”

“We’ve reaffirmed 2015-2017 guidance, but we do expect 2015 adjusted EBITDA to be near the low end of the range due to the extended Geismar ramp-up and the effects of low commodity prices on volumes and margins. Williams’ strong annual dividend growth rate of 10 to 15 percent through 2017 with growing coverage remains unchanged.”

“Our strategy remains sound and our backlog of projects to serve the demand side of the growing natural gas market continues to build.”

Business Segment Results

Williams’ business segments for financial reporting are Williams Partners, Williams NGL & Petchem Services and Other.

For periods prior to July 1, 2014, the Other segment includes Williams’ equity earnings from its 50-percent interest in privately held Access Midstream Partners GP, L.L.C. and an approximate 23-percent limited-partner interest in Access Midstream Partners, L.P. As a result of Williams’ acquisition of additional ownership interests, periods after July 1, 2014 include the consolidated results of Access Midstream Partners. Furthermore, following the closing of the merger between Williams Partners and Access Midstream Partners in February 2015, the consolidated results of Access Midstream for periods following July 1, 2014 are now reported as part of the Williams Partners segment.

Williams NGL & Petchem Services segment is comprised of projects in various stages of development, including offgas processing at the CNRL’s Horizon upgrader plant as well as petchem pipeline projects on the Gulf Coast.

 

2


Williams    Adjusted EBITDA  
Amounts in millions    1Q 2015      1Q 2014  

Williams Partners

   $ 917       $ 768   

Williams NGL & Petchem

     (5      (5

Other

     6         58   
  

 

 

    

 

 

 

Total

$ 918    $ 821   
  

 

 

    

 

 

 

Schedules reconciling adjusted EBITDA to modified EBITDA and net income are attached to this news release.

The first quarter of 2014 includes Williams’ proportional share of the adjusted EBITDA from its equity-method investment in Access Midstream in its Other segment. Following the closing of the merger between Williams Partners and Access Midstream, the consolidated results of Access Midstream are reported as part of the Williams Partners segment. Williams NGL & Petchem Services segment is comprised of projects in various stages of development, including the CNRL Horizon offgas processing project in Canada as well as NGL and petrochemical pipeline projects on the Gulf Coast.

Williams Partners Segment

Williams Partners is focused on natural gas and natural gas liquids (NGL) transportation, gathering, treating, processing and storage; NGL fractionation; olefins production; and crude oil transportation.

Williams Partners reported adjusted EBITDA of $917 million for first quarter 2015, compared with $768 million for first quarter 2014. The increase is due primarily to the contribution of approximately $314 million of adjusted EBITDA from Access Midstream as a result of the merger and new fee-based revenues from Gulfstar One and Transco expansion projects, partially offset by the absence of $173 million of Geismar business interruption proceeds included in adjusted EBITDA in 2014, as well as sharply lower NGL margins.

Williams Partners’ complete financial results for first quarter 2015 are provided in the earnings news release issued today by Williams Partners.

Other Segment

The first quarter of 2014 includes $51 million for Williams’ proportional share of the adjusted EBITDA from Williams’ equity-method investment in Access Midstream, L.P. As a result of Williams’ acquisition of additional ownership interests, periods after July 1, 2014 include the consolidated results of Access Midstream Partners. Furthermore, following the closing of the merger between Williams Partners and Access Midstream Partners in February 2015, the consolidated results of Access Midstream for periods following July 1, 2014 are now reported as part of the Williams Partners segment.

Guidance

Williams is reaffirming its guidance for the years 2015 through 2017 provided on Feb. 18, 2015. We expect Williams Partners’ 2015 adjusted EBITDA and distributable cash flow to be near the low end of the range due to the extended Geismar ramp-up and the effects of low commodity prices on volumes and margins.

 

3


Williams’ current guidance for its earnings and capital expenditures are displayed in the following table:

Williams - Financial outlook and commodity price assumptions

 

     2015     2016     2017  
     Low     Mid     High     Low     Mid     High     Low     Mid     High  

Adjusted EBITDA (1)

   $ 4,345      $ 4,510      $ 4,675      $ 5,170      $ 5,375      $ 5,580      $ 5,825      $ 6,050      $ 6,275   

Total Capital & Investment Expenditures

   $ 3,960      $ 4,275      $ 4,590      $ 3,300      $ 3,605      $ 3,910      $ 3,025      $ 3,325      $ 3,625   

Williams

                  

Cash Available for Dividends (1)

     $ 1,875          $ 2,135          $ 2,525     

Cash Dividends

     $ 1,785          $ 2,020          $ 2,290     

Dividends per Share

     $ 2.38          $ 2.68          $ 3.01     

Dividend Coverage Ratio (1)

       1.05         1.06         1.10  

Williams Partners

                  

Distributable Cash Flow (1)

   $ 2,845      $ 3,010      $ 3,175      $ 3,475      $ 3,675      $ 3,875      $ 3,960      $ 4,185      $ 4,410   

Cash Distributions

   $ 3,010      $ 3,005      $ 2,995      $ 3,380      $ 3,440      $ 3,515      $ 3,770      $ 3,925      $ 4,090   

Cash Distributions per LP Unit

   $ 3.40      $ 3.40      $ 3.40      $ 3.64      $ 3.71      $ 3.78      $ 3.89      $ 4.04      $ 4.19   

Cash Distribution Coverage Ratio (1)

     0.95     1.00     1.06     1.03     1.07     1.10     1.05     1.07     1.08

Commodity Price Assumptions

                  

Crude Oil - WTI ($ per barrel)

   $ 45.00      $ 55.00      $ 65.00      $ 53.75      $ 65.00      $ 76.25      $ 57.50      $ 70.00      $ 82.50   

Natural Gas - Henry Hub ($/MMBtu)

   $ 2.50      $ 3.00      $ 3.50      $ 2.75      $ 3.25      $ 3.75      $ 3.25      $ 3.75      $ 4.25   

Composite NGL Barrel ($ per gallon)

   $ 0.360      $ 0.450      $ 0.520      $ 0.410      $ 0.490      $ 0.560      $ 0.460      $ 0.550      $ 0.620   

Crack Spread ($ per pound) (2)

   $ 0.297      $ 0.350      $ 0.411      $ 0.323      $ 0.376      $ 0.443      $ 0.346      $ 0.395      $ 0.466   

Ethylene spot - ($ per pound)

   $ 0.360      $ 0.430      $ 0.500      $ 0.395      $ 0.465      $ 0.540      $ 0.430      $ 0.500      $ 0.580   

Ethane - ($ per gallon)

   $ 0.150      $ 0.190      $ 0.210      $ 0.170      $ 0.210      $ 0.230      $ 0.200      $ 0.250      $ 0.270   

Propane ($ per gallon)

   $ 0.500      $ 0.600      $ 0.700      $ 0.550      $ 0.650      $ 0.750      $ 0.600      $ 0.700      $ 0.800   

Propylene Spot ($ per pound)

   $ 0.405      $ 0.475      $ 0.545      $ 0.415      $ 0.485      $ 0.555      $ 0.430      $ 0.500      $ 0.570   

 

(1) Adjusted EBITDA, distributable cash flow, cash distribution coverage ratio, cash available for dividends and dividend coverage ratio are non-GAAP measures. Reconciliations to the most relevant measures included in GAAP are attached to this news release.
(2) Crack spread is based on delivered U.S. Gulf Coast ethylene and Mont Belvieu ethane.

Williams, Williams Partners Analyst Day Set for May 13

Williams is scheduled to host its annual Analyst Day event May 13. During the event, Williams’ management will give in-depth presentations covering all of Williams’ and Williams Partners L.P.’s energy infrastructure businesses. The event is scheduled from 8:30 a.m. to approximately 2:30 p.m. EDT.

On the day of the event, www.williams.com will feature presentation files for download along with a link to a live webcast. A replay of the Analyst Day webcast will be available for two weeks following the event.

First Quarter Materials to be Posted Shortly, Q&A Webcast Scheduled for Tomorrow

Williams’ first quarter 2015 financial results will be posted shortly at www.williams.com. The information will include the data book and analyst package.

The company and the partnership will jointly host a conference call and live webcast on Thursday, April 30, at 9:30 a.m. EDT. A limited number of phone lines will be available at (800) 475-3716. International callers should dial (719) 457-2660. A link to the webcast, as well as replays of the webcast in both streaming and downloadable podcast formats, will be available for two weeks following the event at www.williams.com.

Form 10-Q

The company plans to file its first quarter 2015 Form 10-Q with the Securities and Exchange Commission this week. Once filed, the document will be available on both the SEC and Williams websites.

 

4


Definitions of Non-GAAP Financial Measures

This news release includes certain financial measures – adjusted EBITDA, adjusted income from continuing operations (“earnings”), adjusted earnings per share, cash available for dividends, dividend coverage ratio, distributable cash flow and cash distribution coverage ratio – that are non-GAAP financial measures as defined under the rules of the Securities and Exchange Commission.

Our segment performance measure, modified EBITDA, is defined as net income (loss) before income tax expense, net interest expense, equity earnings from equity-method investments, other net investing income, depreciation and amortization expense, and accretion expense associated with asset retirement obligations for nonregulated operations. We also add our proportional ownership share (based on ownership interest) of modified EBITDA of equity investments.

Adjusted EBITDA further excludes items of income or loss that we characterize as unrepresentative of our ongoing operations and may include assumed business interruption insurance related to the Geismar plant. Management believes these measures provide investors meaningful insight into results from ongoing operations.

For Williams, cash available for dividends is defined as cash received from its ownership in MLPs, cash received (used) by its NGL & Petchem Services segment (other than cash for capital expenditures) less interest, taxes and maintenance capital expenditures associated with Williams and not the underlying MLPs. We also calculate the ratio of cash available for dividends to the total cash dividends paid (dividend coverage ratio). This measure reflects Williams’ cash available for dividends relative to its actual cash dividends paid.

For Williams Partners L.P., we define distributable cash flow as adjusted EBITDA less maintenance capital expenditures, cash portion of interest expense, income attributable to noncontrolling interests and cash income taxes, plus WPZ restricted stock unit non-cash compensation and certain other adjustments that management believes affects the comparability of results. Adjustments for maintenance capital expenditures and cash portion of interest expense include our proportionate share of these items of our equity-method investments.

For Williams Partners L.P., we also calculate the ratio of distributable cash flow to the total cash distributed (cash distribution coverage ratio). This measure reflects the amount of distributable cash flow relative to our cash distribution. We have also provided this ratio calculated using the most directly comparable GAAP measure, net income.

This news release is accompanied by a reconciliation of these non-GAAP financial measures to their nearest GAAP financial measures. Management uses these financial measures because they are accepted financial indicators used by investors to compare company performance. In addition, management believes that these measures provide investors an enhanced perspective of the operating performance of the Company’s assets and the cash that the business is generating.

Neither adjusted EBITDA, adjusted income from continuing operations, cash available for dividends, nor distributable cash flow are intended to represent cash flows for the period, nor are they presented as an alternative to net income or cash flow from operations. They should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with United States generally accepted accounting principles.

 

5


About Williams

Williams (NYSE: WMB) is a premier provider of large-scale infrastructure to connect North American natural gas and natural gas products to growing demand for cleaner fuel and feedstocks. Headquartered in Tulsa, Okla., Williams owns approximately 60 percent of Williams Partners L.P. (NYSE: WPZ), including the general-partner interest. Williams Partners is an industry-leading, large-cap master limited partnership with operations across the natural gas value chain from gathering, processing and interstate transportation of natural gas and natural gas liquids to petchem production of ethylene, propylene and other olefins. With major positions in top U.S. supply basins and also in Canada, Williams Partners owns and operates more than 33,000 miles of pipelines system wide – including the nation’s largest volume and fastest growing pipeline – providing natural gas for clean-power generation, home heating and industrial use. Williams Partners’ operations touch approximately 30 percent of U.S. natural gas. www.williams.com

Forward Looking Statements

The reports, filings, and other public announcements of The Williams Companies, Inc. (Williams) and Williams Partners L.P. (WPZ) may contain or incorporate by reference statements that do not directly or exclusively relate to historical facts. Such statements are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995. You typically can identify forward-looking statements by various forms of words such as “anticipates,” “believes,” “seeks,” “could,” “may,” “should,” “continues,” “estimates,” “expects,” “forecasts,” “intends,” “might,” “goals,” “objectives,” “targets,” “planned,” “potential,” “projects,” “scheduled,” “will,” “assumes,” “guidance,” “outlook,” “in service date” or other similar expressions. These forward-looking statements are based on management’s beliefs and assumptions and on information currently available to management and include, among others, statements regarding:

 

    Expected levels of cash distributions by WPZ with respect to general partner interests, incentive distribution rights, and limited partner interests;

 

    The levels of dividends to Williams stockholders;

 

    Future credit ratings of Williams and WPZ;

 

    Amounts and nature of future capital expenditures;

 

    Expansion and growth of our business and operations;

 

    Financial condition and liquidity;

 

    Business strategy;

 

    Cash flow from operations or results of operations;

 

    Seasonality of certain business components;

 

    Natural gas, natural gas liquids, and olefins prices, supply, and demand; and

 

    Demand for our services.

Forward-looking statements are based on numerous assumptions, uncertainties and risks that could cause future events or results to be materially different from those stated or implied in this presentation. Many of the factors that will determine these results are beyond our ability to control or predict. Specific factors that could cause actual results to differ from results contemplated by the forward-looking statements include, among others, the following:

 

    Whether WPZ will produce sufficient cash flows to provide the level of cash distributions we expect;

 

    Whether Williams is able to pay current and expected levels of dividends;

 

    Availability of supplies, market demand, and volatility of prices;

 

    Inflation, interest rates, and fluctuation in foreign exchange rates and general economic conditions (including future disruptions and volatility in the global credit markets and the impact of these events on customers and suppliers);

 

    The strength and financial resources of our competitors and the effects of competition;

 

    Whether we are able to successfully identify, evaluate and execute investment opportunities;

 

    Our ability to acquire new businesses and assets and successfully integrate those operations and assets into our existing businesses as well as successfully expand our facilities;

 

    Development of alternative energy sources;

 

    The impact of operational and developmental hazards and unforeseen interruptions;

 

    Costs of, changes in, or the results of laws, government regulations (including safety and environmental regulations), environmental liabilities, litigation, and rate proceedings;

 

    Williams’ costs and funding obligations for defined benefit pension plans and other postretirement benefit plans;

 

    WPZ’s allocated costs for defined benefit pension plans and other postretirement benefit plans sponsored by its affiliates;

 

    Changes in maintenance and construction costs;

 

    Changes in the current geopolitical situation;

 

    Our exposure to the credit risk of our customers and counterparties;

 

    Risks related to financing, including restrictions stemming from debt agreements, future changes in credit ratings as determined by nationally-recognized credit rating agencies and the availability and cost of capital;

 

6


    The amount of cash distributions from and capital requirements of our investments and joint ventures in which we participate;

 

    Risks associated with weather and natural phenomena, including climate conditions;

 

    Acts of terrorism, including cybersecurity threats and related disruptions; and

 

    Additional risks described in our filings with the Securities and Exchange Commission (SEC).

Given the uncertainties and risk factors that could cause our actual results to differ materially from those contained in any forward-looking statement, we caution investors not to unduly rely on our forward-looking statements. We disclaim any obligations to and do not intend to update the above list or announce publicly the result of any revisions to any of the forward-looking statements to reflect future events or developments.

In addition to causing our actual results to differ, the factors listed above may cause our intentions to change from those statements of intention set forth in this presentation. Such changes in our intentions may also cause our results to differ. We may change our intentions, at any time and without notice, based upon changes in such factors, our assumptions, or otherwise.

Investors are urged to closely consider the disclosures and risk factors in Williams’ and WPZ’s annual reports on Form 10-K filed with the SEC on Feb. 25, 2015, and each of our quarterly reports on Form 10-Q available from our offices or from our website at www.williams.com.

# # #

 

7


 

 

LOGO

Financial Highlights and Operating Statistics

(UNAUDITED)

Final

March 31, 2015


Reconciliation of Income (Loss) from Continuing Operations Attributable to The Williams Companies, Inc. to Adjusted Income

(UNAUDITED)

 

     2014*     2015  
(Dollars in millions, except per-share amounts)    1st Qtr     2nd Qtr     3rd Qtr     4th Qtr     Year     1st Qtr  

Income (loss) from continuing operations attributable to The Williams Companies, Inc. available to common stockholders

   $ 140      $ 99      $ 1,678      $ 193      $ 2,110      $ 70   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations—diluted earnings per common share

   $ .20      $ .14      $ 2.22      $ .26      $ 2.91      $ .09   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjustments:

            

Williams Partners

            

Merger and transition related expenses

   $      $      $ 11      $ 30      $ 41      $ 32   

Acquisition-related expenses

            2        13        1        16          

Impairment of certain materials and equipment

            17               35        52        3   

Share of impairment at equity-method investment

                                        8   

Contingency loss (gain), net of legal costs

                          (143     (143       

Net gain related to partial acreage dedication release

                   (12            (12       

Loss related to compressor station fire

     6                             6          

Geismar Incident adjustment for insurance and timing

     54        96               (71     79          

Loss related to Geismar Incident

                   5        5        10        1   

Loss related to Opal incident

            6               2        8        1   

Loss on sale of equipment

                          7        7          

Estimated minimum volume commitments [1]

                   47        (114     (67     55   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Williams Partners adjustments

     60        121        64        (248     (3     100   

Williams NGL & Petchem Services

            

Bluegrass Pipeline project development costs

     25        1               (1     25          

Bluegrass Pipeline and Moss Lake write-off of previously capitalized project development costs

     70                             70          
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Williams NGL & Petchem Services adjustments

     95        1               (1     95          

Other

            

WMB impact of ACMP transaction-related compensation expenses

                   19               19          

Transition-related costs

                   3        7        10        6   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Other adjustments

                   22        7        29        6   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjustments included in Modified EBITDA

     155        122        86        (242     121        106   

Adjustments below Modified EBITDA

            

Acquisition-related financing expenses—Williams Partners

            9                      9        2   

Gain on remeasurement of equity-method investment in ACMP—Other

                   (2,522     (22     (2,544       

Gain associated with ACMP equity issuance—Other

            (4     4                        

Interest income on receivable from sale of Venezuela assets—Other

     (13     (14     (14            (41       

Allocation of adjustments to noncontrolling interests

     (25     (36     3        38        (20     (33
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     (38     (45     (2,529     16        (2,596     (31

Total adjustments

     117        77        (2,443     (226     (2,475     75   

Less tax effect for above items

     (47     (32     925        41        887        (28

Adjustments for tax-related items [2]

     (20     14        (3     2        (7     5   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted income from continuing operations available to common stockholders [1]

   $ 190      $ 158      $ 157      $ 10      $ 515      $ 122   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted diluted earnings per common share [1]

   $ .28      $ .23      $ .21      $ .01      $ .71      $ .16   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average shares—diluted (thousands)

     688,904        700,696        752,064        751,898        723,641        752,028   

 

(1) The third and fourth quarter of 2014 have been recast to include adjustments to normalize the quarterly impact of approximately $167 million of annual minimum volume commitments related to ACMP that were recorded during the fourth quarter. The recast impacts adjusted diluted earnings per common share by an increase of $.06 in the third quarter 2014 and a decrease of $.15 in the fourth quarter 2014, for a total year decrease of $.09.

 

(2) The first quarter of 2014 includes an unfavorable adjustment related to completing the dropdown of certain Canadian operations to Williams Partners. The second quarter of 2014 includes a favorable adjustment to reflect taxes on undistributed earnings of certain foreign operations that are no longer considered permanently reinvested.

Note: The sum of earnings per share for the quarters may not equal the total earnings per share for the year due to changes in the weighted-average number of common shares outstanding.

 

* Recast due to the merger between Williams Partners L.P. and Access Midstream Partners, L.P. and the change to Modified EBITDA as our measure of segment performance in first quarter 2015.


Consolidated Statement of Income

(UNAUDITED)

 

     2014     2015  
(Dollars in millions, except per-share amounts)    1st Qtr     2nd Qtr     3rd Qtr     4th Qtr     Year     1st Qtr  

Revenues:

            

Service revenues

   $ 819      $ 825      $ 1,127      $ 1,345      $ 4,116      $ 1,197   

Product sales

     930        853        942        796        3,521        519   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     1,749        1,678        2,069        2,141        7,637        1,716   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Costs and expenses:

            

Product costs

     769        724        807        716        3,016        462   

Operating and maintenance expenses

     298        308        412        474        1,492        387   

Depreciation and amortization expenses

     214        214        369        379        1,176        427   

Selling, general, and administrative expenses

     150        136        171        204        661        196   

Net insurance recoveries—Geismar Incident

     (119     (42            (71     (232       

Other (income) expense—net

     17        27        3        (92     (45     17   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     1,329        1,367        1,762        1,610        6,068        1,489   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     420        311        307        531        1,569        227   

Equity earnings (losses)

     (48     37        66        89        144        51   

Gain on remeasurement of equity-method investment

                   2,522        22        2,544          

Other investing income (loss)—net

     14        18        11               43          

Interest incurred

     (169     (192     (262     (265     (888     (273

Interest capitalized

     29        29        52        31        141        22   

Other income (expense)—net

     1        4        10        16        31        16   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes

     247        207        2,706        424        3,584        43   

Provision (benefit) for income taxes

     51        84        998        116        1,249        30   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     196        123        1,708        308        2,335        13   

Income (loss) from discontinued operations

            4                      4          
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     196        127        1,708        308        2,339        13   

Less: Net income attributable to noncontrolling interests

     56        24        30        115        225        (57
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to The Williams Companies, Inc.

   $ 140      $ 103      $ 1,678      $ 193      $ 2,114      $ 70   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Amounts attributable to The Williams Companies, Inc.:

            

Income (loss) from continuing operations

   $ 140      $ 99      $ 1,678      $ 193      $ 2,110      $ 70   

Income (loss) from discontinued operations

            4                      4          
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 140      $ 103      $ 1,678      $ 193      $ 2,114      $ 70   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings (loss) per common share:

            

Income (loss) from continuing operations

   $ .20      $ .14      $ 2.22      $ .26      $ 2.91      $ .09   

Income (loss) from discontinued operations

            .01                      .01          
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ .20      $ .15      $ 2.22      $ .26      $ 2.92      $ .09   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average number of shares used in computations (thousands)

     688,904        700,696        752,064        751,898        723,641        752,028   

Common shares outstanding at end of period (thousands)

     685,419        747,190        747,453        747,531        747,531        748,912   

Market price per common share (end of period)

   $ 40.58      $ 58.21      $ 55.35      $ 44.94      $ 44.94      $ 50.59   

Common dividends per share

   $ .4025      $ .4250      $ .56      $ .57      $ 1.9575      $ .58   

Note: The sum of earnings (loss) per share for the quarters may not equal the total earnings (loss) per share for the year due to changes in the weighted-average number of common shares outstanding.


Reconciliation of Non-GAAP “Modified EBITDA” to Non-GAAP “Adjusted EBITDA”

(UNAUDITED)

 

     2014*     2015  
(Dollars in millions)    1st Qtr     2nd Qtr     3rd Qtr     4th Qtr     Year     1st Qtr  

Net income (loss)

   $ 196      $ 127      $ 1,708      $ 308      $ 2,339      $ 13   

(Income) loss from discontinued operations

            (4                   (4       

Provision (benefit) for income taxes

     51        84        998        116        1,249        30   

Interest expense

     140        163        210        234        747        251   

Equity (earnings) losses

     48        (37     (66     (89     (144     (51

(Gain) on remeasurement of equity-method investments

                   (2,522     (22     (2,544       

Other investing (income) loss

     (14     (18     (11            (43       

Proportional Modified EBITDA of equity-method investments

     28        113        132        165        438        136   

Depreciation and amortization expenses

     214        214        369        379        1,176        427   

Accretion for asset retirement obligations associated with nonregulated operations

     3        6        4        5        18        6   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Modified EBITDA

   $ 666      $ 648      $ 822      $ 1,096      $ 3,232      $ 812   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Williams Partners

   $ 708      $ 596      $ 843      $ 1,097      $ 3,244      $ 817   

Williams NGL & Petchem Services

     (100     (8     (4     (3     (115     (5

Other

     58        60        (17     2        103          
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Modified EBITDA

   $ 666      $ 648      $ 822      $ 1,096      $ 3,232      $ 812   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjustments included in Modified EBITDA:

            

Williams Partners

   $ 60      $ 121      $ 64      $ (248   $ (3   $ 100   

Williams NGL & Petchem Services

     95        1               (1     95          

Other

                   22        7        29        6   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Adjustments included in Modified EBITDA

   $ 155      $ 122      $ 86      $ (242   $ 121      $ 106   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA:

            

Williams Partners

   $ 768      $ 717      $ 907      $ 849      $ 3,241      $ 917   

Williams NGL & Petchem Services

     (5     (7     (4     (4     (20     (5

Other

     58        60        5        9        132        6   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Adjusted EBITDA

   $ 821      $ 770      $ 908      $ 854      $ 3,353      $ 918   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

* Recast due to the merger between Williams Partners L.P. and Access Midstream Partners, L.P. and the change to Modified EBITDA as our measure of segment performance in first quarter 2015.


Williams Partners

(UNAUDITED)

 

     2014*     2015  
(Dollars in millions)    1st Qtr     2nd Qtr     3rd Qtr     4th Qtr     Year      1st Qtr  

Revenues:

            

Service revenues

   $ 763      $ 763      $ 1,066      $ 1,296      $ 3,888      $ 1,192   

Product sales

     930        853        942        796        3,521        519   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     1,693        1,616        2,008        2,092        7,409        1,711   

Segment Costs and expenses:

            

Product costs

     769        724        807        716        3,016        463   

Operating and maintenance expenses

     245        245        351        419        1,260        373   

Selling, general, and administrative expenses

     130        134        168        201        633        193   

Net insurance recoveries—Geismar Incident

     (119     (42            (71     (232       

Other segment costs and expenses

     14        21        (11     (105     (81     1   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total segment costs and expenses

     1,039        1,082        1,315        1,160        4,596        1,030   

Proportional Modified EBITDA of equity-method investments

     54        62        150        165        431        136   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Modified EBITDA

     708        596        843        1,097        3,244        817   

Adjustments

     60        121        64        (248     (3     100   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 768      $ 717      $ 907      $ 849      $ 3,241      $ 917   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating statistics

            

Interstate Transmission

            

Throughput (Tbtu)

     1,141.6        938.1        978.0        1,083.9        4,141.6        1,207.8   

Avg. daily transportation volumes (Tbtu)

     12.6        10.4        10.6        11.7        11.4        13.5   

Avg. daily firm reserved capacity (Tbtu)

     12.6        12.4        12.5        12.9        12.9        13.5   

Former WPZ Operations Gathering and Processing (1)

            

Gathering volumes (Tbtu)

     436        450        461        487        1,834        493   

Plant inlet natural gas volumes (Tbtu)

     339        344        370        366        1,419        360   

Former ACMP Gathering Operations Throughput, bcf per day (2)

            

Barnett shale

                   0.876        0.853        0.865        0.812   

Eagle Ford shale

                   0.348        0.376        0.362        0.388   

Haynesville shale

                   0.714        0.802        0.758        0.971   

Marcellus shale

                   1.193        1.272        1.233        1.232   

Niobrara shale

                   0.030        0.034        0.032        0.039   

Utica shale

                   0.418        0.484        0.451        0.513   

Mid-Continent

                   0.554        0.537        0.545        0.506   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total throughput

                   4.133        4.358        4.246        4.461   

Ethane equity sales (million gallons)

     33        39        42        43        157        54   

Non-ethane equity sales (million gallons)

     113        108        124        131        476        131   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NGL equity sales (million gallons)

     146        147        166        174        633        185   

Ethane margin ($/gallon)

   $ 0.20      $ 0.18      $ 0.16      $ 0.17      $ 0.17      $ 0.13   

Non-ethane margin ($/gallon)

   $ 0.88      $ 0.80      $ 0.78      $ 0.58      $ 0.76      $ 0.28   

NGL margin ($/gallon)

   $ 0.73      $ 0.64      $ 0.63      $ 0.48      $ 0.61      $ 0.24   

Ethane production (million gallons)

     135        173        154        163        625        111   

Non-ethane production (million gallons)

     372        384        417        408        1,581        405   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NGL production (million gallons)

     507        557        571        571        2,206        516   

Petrochemical Services

            

Geismar ethylene sales volumes (million lbs)

                                        2   

Geismar ethylene margin ($/lb)

   $      $      $      $      $      $   

Equity investments—100%

            

Discovery NGL equity sales (million gallons)

     10        10        18        15        53        17   

Discovery NGL production (million gallons)

     47        54        65        61        227        62   

Laurel Mountain gathering volumes (Tbtu)

     34        36        38        40        148        40   

Overland Pass NGL transportation volumes (Mbbls)

     8,612        8,926        9,482        10,118        37,138        10,845   

 

* Recast due to the merger between Williams Partners L.P. and Access Midstream Partners, L.P. and the change to Modified EBITDA as our measure of segment performance in the first quarter 2015.
(1) Excludes volumes associated with partially owned assets that are not consolidated for financial reporting purposes.
(2) Throughput in all regions represents the net throughput allocated to the Partnership’s interest.


Williams NGL & Petchem Services

(UNAUDITED)

 

     2014*     2015  
(Dollars in millions)    1st Qtr     2nd Qtr     3rd Qtr     4th Qtr     Year     1st Qtr  

Segment costs and expenses:

            

Operating and maintenance expenses

   $ 2      $ 1      $ 2      $ 2      $ 7      $ 4   

Selling, general, and administrative expenses

     22        4        4        1        31        2   

Other (income) expense—net

     (1     1        (1   $        (1     (1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total segment costs and expenses

     23        6        5        3        37        5   

Proportional Modified EBITDA of equity-method investments

     (77     (2     1               (78       
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Modified EBITDA

     (100     (8     (4     (3     (115     (5

Adjustments

     95        1               (1     95          
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ (5   $ (7   $ (4   $ (4   $ (20   $ (5
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

* Recast due to the change to Modified EBITDA as our measure of segment performance in first quarter 2015.


Capital Expenditures and Investments

(UNAUDITED)

 

     2014**      2015  
(Dollars in millions)    1st Qtr     2nd Qtr      3rd Qtr     4th Qtr     Year      1st Qtr  

Capital expenditures:

              

Williams Partners

   $ 724      $ 943       $ 1,029      $ 996      $ 3,692       $ 735   

Williams NGL & Petchem Services

     61        85         62        78        286         91   

Other

     8        18         13        14        53         6   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Total*

   $ 793      $ 1,046       $ 1,104      $ 1,088      $ 4,031       $ 832   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Purchase of business (net of cash acquired):

              

Other

   $      $       $ 5,958      $      $ 5,958       $   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Purchase of investments:

              

Williams Partners

   $ 215      $ 16       $ 99      $ 138      $ 468       $ 83   

Williams NGL & Petchem Services

     13        2                (1     14           

Other

                                            
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Total

   $ 228      $ 18       $ 99      $ 137      $ 482       $ 83   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Summary:

              

Williams Partners

   $ 939      $ 959       $ 1,128      $ 1,134      $ 4,160       $ 818   

Williams NGL & Petchem Services

     74        87         62        77        300         91   

Other

     8        18         5,971        14        6,011         6   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Total

   $ 1,021      $ 1,064       $ 7,161      $ 1,225      $ 10,471       $ 915   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Capital expenditures incurred, purchase of business (net of cash acquired), and purchase of investments:

              

Increases to property, plant, and equipment

   $ 840      $ 949       $ 1,113      $ 1,014      $ 3,916       $ 738   

Purchase of businesses (net of cash acquired)

                    5,958               5,958           

Purchase of investments

     228        18         99        137        482         83   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Total

   $ 1,068      $ 967       $ 7,170      $ 1,151      $ 10,356       $ 821   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

*Increases to property, plant, and equipment

   $ 840      $ 949       $ 1,113      $ 1,014      $ 3,916       $ 738   

Changes in related accounts payable and accrued liabilities

     (47     97         (9     74        115         94   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Capital expenditures

   $ 793      $ 1,046       $ 1,104      $ 1,088      $ 4,031       $ 832   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

 

** Recast due to the merger between Williams Partners L.P. and Access Midstream Partners, L.P. in first quarter 2015.


Depreciation and Amortization and Other Selected Financial Data

(UNAUDITED)

 

     2014*     2015  
(Dollars in millions)    1st Qtr     2nd Qtr     3rd Qtr     4th Qtr     Year     1st Qtr  

Depreciation and amortization:

            

Williams Partners

   $ 208      $ 207      $ 364      $ 372      $ 1,151      $ 419   

Other

     6        7        5        7        25        8   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 214      $ 214      $ 369      $ 379      $ 1,176      $ 427   

Other selected financial data:

            

Cash and cash equivalents

   $ 1,064      $ 860      $ 302      $ 240      $ 240      $ 341   

Total assets

   $ 28,306      $ 34,949      $ 49,807      $ 50,563      $ 50,563      $ 50,457   

Capital structure:

            

Debt

            

Commercial paper

   $      $      $ 265      $ 798      $ 798      $   

Current

   $ 751      $ 751      $ 754      $ 4      $ 4      $ 801   

Noncurrent

   $ 12,099      $ 15,539      $ 19,922      $ 20,888      $ 20,888      $ 21,690   

Stockholders’ equity

   $ 4,616      $ 7,863      $ 9,129      $ 8,777      $ 8,777      $ 8,212   

Debt to debt-plus-stockholders’ equity ratio

     73.6     67.4     69.6     71.2     71.2     73.3

Cash distributions received from interests in:

            

Williams Partners L.P.

            

General partner

   $      $      $      $      $      $ 226   

Limited partner

                                        289   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   $      $      $      $      $      $ 515   

Pre-merger Williams Partners L.P.

            

General partner

   $ 164      $ 170      $ 175      $ 178      $ 687      $   

Limited partner

     250        252        256        260        1,018          
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   $ 414      $ 422      $ 431      $ 438      $ 1,705      $   

Access Midstream Partners, L.P.

            

General partner

   $ 9      $ 10      $ 25      $ 29      $ 73      $   

Limited partner

     22        23        53        54        152          
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   $ 31      $ 33      $ 78      $ 83      $ 225      $   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   $ 445      $ 455      $ 509      $ 521      $ 1,930      $ 515   

 

* Recast due to the merger between Williams Partners L.P. and Access Midstream Partners, L.P. in first quarter 2015.


Dividend Coverage Ratio

(UNAUDITED)

 

     2014     2015  
(Dollars in millions, except per share amounts)    1st Qtr     2nd Qtr     3rd Qtr     4th Qtr     Year     1st Qtr  

Distributions from Pre-merger WPZ (accrued / “as declared” basis)

   $ 422      $ 431      $ 438      $      $ 1,291      $   

Distributions from ACMP (accrued / “as declared” basis)

     33        78        83               194          

Distributions from WPZ (accrued / “as declared” basis)

                          515        515        515   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions from Pre-merger WPZ, ACMP, and WPZ

     455        509        521        515        2,000        515   

Williams NGL & Petchem Services adjusted cash flow (see below)*(1)

     (5     (9     (5     (5     (24     (5

Corporate interest

     (38     (50     (65     (54     (207     (64
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

     412        450        451        456        1,769        446   

WMB cash tax rate

     3     3             2     -12

WMB cash taxes (excludes cash taxes paid by WPZ)(2)

     (13     (14                   (27     55   

Corporate Capex

     (8     (18     (13     (14     (53     (6
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

WMB cash flow available for dividends

   $ 391      $ 418      $ 438      $ 442      $ 1,689      $ 495   

- per share

   $ 0.57      $ 0.61      $ 0.59      $ 0.59      $ 2.36      $ 0.66   

WMB dividends paid

     (276     (291     (419     (426     (1,412     (434
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Excess cash flow available after dividends

   $ 115      $ 127      $ 19      $ 16      $ 277      $ 61   

Dividend per share

   $ 0.4025      $ 0.4250      $ 0.5600      $ 0.5700      $ 1.9575      $ 0.5800   

Coverage ratio(3)

     1.42        1.44        1.05        1.04        1.20        1.14   

Williams NGL & Petchem Services Adjusted Cash Flow:*

            

Modified EBITDA

     (100     (8     (4     (3     (115     (5

Segment adjustments

     95        1               (1     95          
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

     (5     (7     (4     (4     (20     (5

Less: Maintenance Capex

            (2     (1     (1     (4       
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted cash flow

     (5     (9     (5     (5     (24     (5

 

* Recast due to the change to Modified EBITDA as our measure of segment performance in first quarter 2015.

 

Notes:       (1) Targeted for dropdown in the future.

(2) A 2014 tax Net Operating Loss, due to bonus depreciation, yielded a carryback refund from 2012.

(3) WMB cash flow available for dividends / WMB dividends paid.


WMB Net Income to Adjusted EBITDA

 

     2015     2016     2017  
($ in millions)    Low     Base     High     Low     Base     High     Low     Base     High  

Net income from continuing operations

     925        1,050        1,175        1,275        1,435        1,595        1,650        1,825        2,000   

Add: Net interest expense

     1,095        1,095        1,095        1,225        1,220        1,215        1,335        1,325        1,315   

Add: Provision for income taxes

     380        420        460        495        545        595        585        645        705   

Add: Depreciation & amortization (DD&A)

     1,750        1,750        1,750        1,870        1,870        1,870        1,945        1,945        1,945   

Less: Equity earnings from investments

     (380     (385     (390     (495     (505     (515     (645     (660     (675

Add: Proportionate share of EBITDA from investments1

     665        670        675        800        810        820        955        970        985   

Adjustments2

     (90     (90     (90                                          
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 4,345      $ 4,510      $ 4,675      $ 5,170      $ 5,375      $ 5,580      $ 5,825      $ 6,050      $ 6,275   
     2015     2016     2017  
1) Proportionate Share of EBITDA from investments:    Low     Base     High     Low     Base     High     Low     Base     High  

Net income from continuing operations

   $ 380      $ 385      $ 390      $ 495      $ 505      $ 515      $ 645      $ 660      $ 675   

Add: Net interest expense

     53        53        53        58        58        58        61        61        61   

Add: Depreciation & amortization (DD&A)

     206        206        206        226        226        226        236        236        236   

Other

     26        26        26        21        21        21        13        13        13   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA from Equity Investments

   $ 665      $ 670      $ 675      $ 800      $ 810      $ 820      $ 955      $ 970      $ 985   
     2015     2016     2017  
2) Adjustments:    Low     Base     High     Low     Base     High     Low     Base     High  

Geismar incident adjustment for insurance and timing (WPZ)

   ($ 150   ($ 150   ($ 150                                          

ACMP retention expenses (WPZ)

     35        35        35                                             

ACMP acquisition-related expenses

     25        25        25                                             
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Adjustments

   ($ 90   ($ 90   ($ 90                                          


WPZ Distributable Cash Flow and Cash Distribution Coverage Ratio

 

     2015     2016     2017  
Dollars in millions, except per L.P. unit    Low     Base     High     Low     Base     High     Low     Base     High  

Adjusted EBITDA1

   $ 4,300      $ 4,465      $ 4,630      $ 5,120      $ 5,315      $ 5,510      $ 5,750      $ 5,965      $ 6,180   

Less: Maintenance Capex2

     (430     (430     (430     (440     (440     (440     (440     (440     (440

Less: Interest Expense (cash portion)3

     (885     (885     (885     (1,000     (995     (990     (1,110     (1,100     (1,090

Less: Cash Taxes

     (5     (5     (5     (10     (10     (10     (10     (10     (10

Less: Noncontrolling Interests

     (135     (135     (135     (195     (195     (195     (230     (230     (230
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributable Cash Flow Attributable to Partnership Operations

   $ 2,845      $ 3,010      $ 3,175      $ 3,475      $ 3,675      $ 3,875      $ 3,960      $ 4,185      $ 4,410   

Cash Distributions (accrued)

   $ 3,010      $ 3,005      $ 2,995      $ 3,380      $ 3,440      $ 3,515      $ 3,770      $ 3,925      $ 4,090   

- per L.P. Unit

   $ 3.40      $ 3.40      $ 3.40      $ 3.64      $ 3.71      $ 3.78      $ 3.89      $ 4.04      $ 4.19   

- Annual growth rate

           7     9     11     7     9     11

Cash Distribution Coverage Ratio

     0.95     1.00     1.06     1.03     1.07     1.10     1.05     1.07     1.08

Notes: 1 A more detailed schedule reconciling this non-GAAP measure is provided in this presentation.    2 Includes proportionate share of maintenance capex of equity investments    3 Includes proportionate share of interest expense of equity investments


WMB Dividend Illustration and Coverage Calculation

(Midpoint of guidance, dollars in millions except per share amounts)

 

     2015     2016     2017  

Distributions from MLP

   $ 2,140      $ 2,455      $ 2,805   

Williams NGL & Petchem Services Adjusted Cash Flow (see below)

     (5            25   

Corporate Interest

     (255     (260     (260
  

 

 

   

 

 

   

 

 

 

Subtotal

     1,880        2,195        2,570   

WMB Cash Tax Rate1

     -2.9     0.0     0.2

WMB Cash Taxes (excludes cash taxes paid by MLP)

     55               (5

Corporate Capex and Other

     (60     (60     (40
  

 

 

   

 

 

   

 

 

 

WMB Cash Flow Available for Dividends

   $ 1,875      $ 2,135      $ 2,525   

- per share

   $ 2.50      $ 2.83      $ 3.32   

WMB Expected Dividends Paid

     (1,785     (2,020     (2,290
  

 

 

   

 

 

   

 

 

 

Excess Cash Flow Available After Dividends

   $ 90      $ 115      $ 235   

Coverage Ratio2

     1.05     1.06     1.10

Dividend Per Share

   $ 2.38      $ 2.68      $ 3.01   

Annual Growth Rate

     22     12.5     12.5

Williams NGL & Petchem Services Adjusted Cash Flow:

      

Adjusted EBITDA (see reconciliation provided in this presentation)

     (5     5        30   

Maintenance Capital

            (5     (5
  

 

 

   

 

 

   

 

 

 

Adjusted Cash Flow

     (5            25   

Notes: 1 Near-term tax rates are lower than longer-term rates due to accelerated depreciation and deductions related to our investment in ACMP. A 2014 tax Net Operating Loss, due to bonus depreciation, will yield a carryback refund from 2012 and a carryforward reducing taxes through 2017. The average tax rate for 2018–2019 is expected to be approximately 4%, which represents a blended rate on MLP distributions, WMB NGL Petchem earnings, and corporate interest expense as well other tax items impacting the WMB corporate entity.    2 WMB Cash Flow Available for Dividends / WMB Expected Dividends Paid.

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