Williams Partners L.P. - FORM 8-K - EX-99.4

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8-K - FORM 8-K - Williams Partners L.P.	c55965e8vk.htm
EX-99.2 - EX-99.2 - Williams Partners L.P.	c55965exv99w2.htm
EX-99.3 - EX-99.3 - Williams Partners L.P.	c55965exv99w3.htm
EX-99.1 - EX-99.1 - Williams Partners L.P.	c55965exv99w1.htm
EX-99.5 - EX-99.5 - Williams Partners L.P.	c55965exv99w5.htm

SUMMARY HISTORICAL AND PRO FORMA FINANCIAL AND OPERATING DATA

Williams Partners

The following table shows (i) summary historical financial and operating data of Williams Partners, (ii) summary pro forma financial data of Williams Partners, and (iii) summary historical financial and operating data for the Contributed Entities for the periods and as of the dates indicated. The summary historical financial data of Williams Partners as of December 31, 2007 and 2008 and for the years ended December 31, 2006, 2007 and 2008 are derived from the audited consolidated financial statements of Williams Partners, which are included in our Current Report on Form 8-K filed on October 28, 2009. The summary historical financial data of Williams Partners as of September 30, 2009 and for the nine months ended September 30, 2008 and 2009 are derived from the unaudited consolidated financial statements of Williams Partners, which are included in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009. All other historical financial data are derived from our financial records. The results of operations for the nine months ended September 30, 2009 are not necessarily indicative of the operating results for the entire year or any future period. Our Current Report on Form 8-K filed on October 28, 2009 and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009 are incorporated herein by reference.

The summary pro forma financial data of Williams Partners as of September 30, 2009 and for the year ended December 31, 2008 and nine months ended September 30, 2009 are derived from the unaudited pro forma consolidated financial statements of Williams Partners included elsewhere in this offering memorandum. The pro forma financial statements present the impact on our financial position and results of operations of:


	•	the consummation of the Dropdown, including the cash payment of the Net Cash Consideration to Williams, the issuance of 203 million Class C Units to Williams, the increase in our general partner’s capital account to allow it to maintain its 2% general partner interest and the issuance of 4,142,857 additional general partner units to our general partner;

	•	this offering of the notes, assuming an offering size of $3.5 billion and an issuance at par, and the application of the net proceeds of this offering as described in “Use of Proceeds”;

	•	our entry into the New Credit Facility and the termination of our existing credit facility; and

	•	our payment of estimated commissions, fees, other offering expenses and other expenses associated with the Dropdown.

The pro forma financial statements as of September 30, 2009 and for the year ended December 31, 2008 and nine months ended September 30, 2009 have been derived from our historical consolidated financial statements incorporated by reference in this offering memorandum and are qualified in their entirety by reference to such historical consolidated financials statements and related notes contained therein. The pro forma financial statements should be read in conjunction with the notes accompanying such pro forma financial statements and with the historical consolidated financial statements and related notes incorporated by reference in this offering memorandum.

The pro forma adjustments are based upon currently available information and certain estimates and assumptions; therefore, actual adjustments will differ from the pro forma adjustments. However, management believes that the assumptions provide a reasonable basis for presenting the significant effects of the transactions as contemplated and that the pro forma adjustments give appropriate effect to these assumptions and are properly applied in the pro forma financial information. The pro forma financial statements may not be indicative of the results that actually would have occurred if we had owned these businesses on the dates indicated. The following tables include these non-GAAP financial measures:


	•	EBITDA for Williams Partners, on a historical and pro forma basis; and

	•	EBITDA for the Contributed Entities.

These measures are presented because such information is relevant to and is used by management, industry analysts, investors, lenders and rating agencies to assess the financial performance and operating results of our and the Contributed Entities’ fundamental business activities.

For Williams Partners, we define EBITDA, on both a historical and pro forma basis, as net income plus interest (income) expense — net, depreciation and amortization and provision (benefit) for income taxes.

For the Contributed Entities, we define EBITDA as net income plus interest (income) expense — net, depreciation and amortization and provision (benefit) for income taxes.

For a reconciliation of these measures to their most directly comparable financial measures calculated and presented in accordance with GAAP, see “— Non-GAAP Financial Measures.”

The information in the following table should be read together, and is qualified in its entirety by reference to, the historical financial statements and the accompanying notes appearing elsewhere in this offering memorandum or incorporated herein by reference and the pro forma financial statements and the accompanying notes appearing elsewhere in this offering memorandum. The information in the following tables should also be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Contributed Entities” included elsewhere in this offering memorandum and in our Annual Report on Form 10-K for the year ended December 31, 2008, and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, for information concerning significant trends in the financial condition and results of operations of Williams Partners and the Contributed Entities.


	Williams Partners
																Pro Forma
	Historical																		Nine Months
	Year Ended									Nine Months Ended						Year Ended			Ended
	December 31,									September 30,						December 31,			September 30,
	2006			2007			2008			2008			2009			2008			2009
	($ in millions, except per unit data)

Statement of Income Data:
Revenues	$	563		$	573		$	637		$	504		$	337		$	5,778		$	3,227
Costs and expenses		420			458			490			388			265			4,532			2,475

Operating income		143			115			147			116			72			1,246			752
Investment income		80			105			111			110			74			77			55
Interest expense — net		(8	)		(55	)		(67	)		(50	)		(46	)		(425	)		(312	)
Other income — net		—			—			—			—			—			10			9

Income before income taxes		215			165			191			176			100			908			504
Provision for income taxes		—			—			—			—			—			6	(a)		4	(a)

Net Income		215			165			191			176			100			902			500

Less: Net income attributable to noncontrolling interests		—			—			—			—			—			24			20

Net income attributable to Williams Partners	$	215		$	165		$	191		$	176		$	100		$	878		$	480

Basic and diluted net income per limited partner unit	$	1.73		$	1.99		$	3.08		$	2.92		$	1.88		$	3.27	(a)	$	1.85	(a)


(a)		Our operations are treated as a partnership with each member being separately taxed on its ratable share of our taxable income. Therefore, we have excluded income tax expense from this financial information except for a partnership-level tax imposed by the state of Texas, which began in 2007.


	Williams Partners
											Pro Forma(a)
	Historical												Nine Months
	Year Ended						Nine Months Ended				Year Ended		Ended
	December 31,						September 30,				December 31,		September 30,
	2006		2007		2008		2008		2009		2008		2009
	($ in millions, except per unit data)

Balance Sheet Data (at period end):
Total Assets	$	1,292	$	1,283	$	1,292	$	1,334	$	1,283			$	11,845
Property, plant and equipment, net		648		642		641		650		635				10,077
Investments		483		499		462		488		469				600
Long-term debt		750		1,000		1,000		1,000		1,000				6,480
Partners’ capital		471		161		204		233		198				4,018
Cash Flow Data:
Cash distributions declared and paid per unit	$	1.605	$	2.045	$	2.435	$	1.80	$	1.905
Other Financial Data:
EBITDA	$	267	$	265	$	302	$	259	$	179	$	1,839	$	1,215
Ratio of earnings to fixed charges(b)		13.24		2.41		4.40		4.70		3.24		2.80		2.22
Operating Information:
Williams Partners:
Four Corners gathering volumes (BBtu/d)		1,500		1,442		1,380		1,377		1,351
Four Corners plant inlet natural gas volumes (BBtu/d)		678		620		646		636		620
Four Corners NGL production (million gallons)		569		545		518		386		389
Four Corners NGL equity sales (million gallons)		182		167		162		122		122
Four Corners NGL margin ($/gallon)	$	.47	$	.61	$	.75	$	.80	$	.39
Conway storage revenues	$	25	$	28	$	31	$	23	$	25
Conway fractionation volumes (Mbbls/d) — our 50%		39		34		39		38		38
Carbonate Trend gathering volumes (BBtu/d)		29		23		22		23		18
Wamsutter — 100%:
Wamsutter — gathering volumes (BBtu/d)		490		516		499		487		541
Wamsutter — plant inlet natural gas volumes (BBtu/d)		432		425		409		408		423
Wamsutter NGL production (million gallons)		377		420		415		317		328
Wamsutter NGL equity sales (million gallons)		141		113		139		107		108
Wamsutter NGL margin ($/gallon)	$	.29	$	.48	$	.59	$	.65	$	.36
Discovery Producer Services — 100%:
Discovery plant inlet natural gas volumes (BBtu/d)		467		582		457		539		455
Discovery gross processing margin ($/MMbtu)	$	.23	$	.33	$	.37	$	.42	$	.22
Discovery NGL production (million gallons)		232		252		181		171		165
Discovery NGL equity sales (million gallons)		60		99		85		81		67


(a)		No pro forma balance sheet data as of December 31, 2008 or pro forma operating information is provided.
(b)		For purposes of computing the ratio of earnings to fixed charges, “earnings” is the aggregate of the following items: pre-tax income or loss from continuing operations before income or loss from equity investees; plus fixed charges; plus distributed income of equity investees; less our share of pre-tax losses of equity investees for which charges arising from guarantees are included in fixed charges; and less capitalized interest. The term “fixed charges” means the sum of the following: interest expensed and capitalized; amortized premiums, discounts and capitalized expenses related to indebtedness; and an estimate of the interest within rental expense; and our share of interest from equity investees where the related pre-tax loss has been included in earnings.

Contributed Entities

The following table shows summary financial and operating data of the Contributed Entities for the periods and as of the dates indicated. The summary historical financial data of the Contributed Entities as of December 31, 2007 and 2008 and for the years ended December 31, 2007 and 2008 are derived from the audited financial statements of the Contributed Entities appearing elsewhere in this offering memorandum. The summary historical financial data of the Contributed Entities as of September 30, 2009 and for the nine months ended September 30, 2008 and 2009 are derived from the unaudited financial statements of the Contributed Entities appearing elsewhere in this offering memorandum. All other historical financial data are derived from the Contributed Entities’ financial records. The results of operations for the nine months ended September 30, 2009 are not necessarily indicative of the operating results for the entire year or any future period. The information in this table should be read together with, and is qualified in its entirety by reference to, the historical financial statements of the Contributed Entities and the accompanying notes as of December 31, 2007 and 2008 and for the years ended December 31, 2007 and 2008 and the historical financial statements and the accompanying notes as of September 30, 2009 and for the nine months ended September 30, 2008 and 2009 appearing elsewhere in this offering memorandum. The information in this table should also be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Contributed Entities” included elsewhere in this offering memorandum.


	Contributed Entities
	Year Ended December 31,						Nine Months Ended September 30,
	2007			2008			2008			2009
	(In millions)

Statement of Income Data:
Revenues	$	5,326		$	5,455		$	4,504		$	3,003
Costs and expenses		4,059			4,356			3,589			2,323

Operating income		1,267			1,099			915			680
Equity earnings		51			55			48			39
Interest expense — net(a)		(121	)		(119	)		(89	)		(89	)
Other income — net		19			10			9			9

Income before income taxes		1,216			1,045			883			639
Provision (benefit) for income taxes		(144	)		(952	)		107			4

Net income	$	1,360		$	1,997		$	776		$	635

Balance Sheet Data (at period end):
Total assets	$	10,092		$	10,678					$	11,126
Property, plant and equipment, net		8,621			9,176						9,443
Long-term debt		1,821			1,971						1,980
Total equity		5,991			7,470						7,870
Other Financial Data:
EBITDA	$	1,769		$	1,622		$	1,304		$	1,090


	Contributed Entities
	Year Ended December 31,				Nine Months Ended September 30,
	2007		2008		2008		2009


Operating Information:
Transco (TBtus):
Market-area deliveries:
Long-haul transportation		839		753		577		502
Market-area transportation		875		969		700		766

Total market-area deliveries		1,714		1,722		1,277		1,268
Production-area transportation		190		188		151		146

Total system deliveries		1,904		1,910		1,428		1,414

Average daily transportation volumes		5.2		5.2		5.2		5.2
Average daily firm reserved capacity		6.6		6.8		6.8		6.8
Northwest Pipeline (TBtus):
Total transportation volume		757		781		570		563
Average daily transportation volumes		2.1		2.1		2.1		2.1
Average daily reserved capacity under long-term base firm contracts, excluding peak capacity		2.5		2.5		2.5		2.6
Average daily reserved capacity under short-term firm contracts(b)		.8		.7		.7		.5
Midstream Gas and Liquids:(c)
Gathering (Tbtu)		510		500		372		406
Plant inlet natural gas (Tbtu)		1,048		1,075		816		808
NGL production (Mbbls/d)(d)		127		121		126		125
NGL equity sales (Mbbls/d)(d)		81		70		72		68
Crude oil gathering (Mbbls/d)(d)		80		70		69		111


(a)		Does not include any interest expense associated with Williams’ general unsecured debt, which was historically used for general corporate purposes related to all of its businesses and not specifically related to the operations or assets of any particular business or subsidiary. Only includes interest expense associated with the specific indebtedness of Transco and Northwest Pipeline.

(b)		Consists primarily of additional capacity created from time to time through the installation of new receipt or delivery points or the segmentation of existing mainline capacity. Such capacity is generally marketed on a short-term firm basis.

(c)		Excludes volumes associated with partially-owned assets that are not consolidated for financial reporting purposes. Includes 100 percent of the volumes associated with Wamsutter LLC, which is currently partially owned by us and accounted for under the equity method of accounting in our historical results. Wamsutter LLC will become our wholly owned subsidiary upon the consummation of the Dropdown.

(d)		Annual average Mbbls/d.

Non-GAAP Financial Measures

EBITDA, on both an historical and pro forma basis in our case and on an historical basis in the case of the Contributed Entities, is used as a supplemental financial measure by management and by external users of our financial statements, such as investors and commercial banks, to assess:


	•	the financial performance of our assets and the assets of the Contributed Entities without regard to financing methods, capital structure or historical cost basis;

	•	the ability of our assets and the assets of the Contributed Entities to generate cash sufficient to pay interest on our indebtedness and to make distributions to our partners; and

	•	our operating performance and the operating performance of the Contributed Entities and return on invested capital as compared to those of other publicly traded limited partnerships that own energy infrastructure assets, without regard to their financing methods and capital structure.

Our EBITDA, on both an historical and pro forma basis, and the Contributed Entities’ EBITDA should not be considered alternatives to net income, operating income, cash flow from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Our EBITDA, on both an historical and pro forma basis, and the Contributed Entities’ EBITDA exclude some, but not all, items that affect net income and operating income, and these measures may vary among other companies. Therefore, our EBITDA, on both an historical and pro forma basis, and the Contributed Entities’ EBITDA as presented may not be comparable to similarly titled measures of other companies.

The following tables represent a reconciliation of our non-GAAP financial measure of EBITDA to the GAAP financial measure of net income, on an historical basis and a pro forma basis. The pro forma information included in the following tables has been adjusted for the items set forth in the bullets on page 11.


	Williams Partners
											Pro Forma
											Year		Nine Months
	Historical										Ended		Ended
	Year Ended December 31,						Nine Months Ended September 30,				December 31,		September 30,
	2006		2007		2008		2008		2009		2008		2009
							(In millions)

Reconciliation of Non-GAAP “EBITDA” to GAAP “Net Income”
Net income	$	215	$	165	$	191	$	176	$	100	$	902	$	500
Interest expense, net of interest income and capitalized interest		8		55		67		50		46		429		316
Depreciation and amortization		44		45		44		33		33		502		395
Provision for income taxes		—		—		—		—		—		6		4

EBITDA	$	267	$	265	$	302	$	259	$	179	$	1,839	$	1,215

The following table represents a reconciliation of the Contributed Entities’ non-GAAP financial measure of EBITDA to the GAAP financial measures of net income attributable to the Contributed Entities.


	Contributed Entities
							Nine Months Ended
	Year Ended December 31,						September 30,
	2007			2008			2008		2009
				(In millions)

Reconciliation of Non-GAAP “EBITDA” to GAAP “Net Income”
Net income	$	1,360		$	1,997		$	776	$	635
Interest expense, net of interest income and capitalized interest		121			119			89		89
Depreciation and amortization		432			458			332		362
Provision (benefit) for income taxes		(144	)		(952	)		107		4

EBITDA	$	1,769		$	1,622		$	1,304	$	1,090

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