Exhibit 99.1

 

		Williams (NYSE: WMB)     One Williams Center     Tulsa, OK 74172     800-Williams     www.williams.com

DATE: Aug. 1, 2012

 

MEDIA CONTACT:		INVESTOR CONTACTS:
Jeff Pounds (918) 573-3332		John Porter (918) 573-0797		Sharna Reingold (918) 573-2078

Williams Reports Second-Quarter 2012 Financial Results

 

—

Guidance is Consistent with July 23 Announcement; 2Q Adjusted EPS is $0.01 Higher Than July 23 Estimate

 

—

Company Maintains Guidance for Strong Dividend Growth: 55% Higher in 2012, 20% Higher in Each of 2013-2014

 

—

Second-Quarter 2012 Net Income is $132 Million, $0.21 per Share

 

—

Adjusted Earnings are $138 Million, $0.22 per Share for 2Q 2012; $374 Million, $0.61 per Share for First Half of 2012

 

—

Sharply Lower NGL Margins at Williams Partners, Other Items Drive Down 2Q Results

 

Quarterly Summary Financial Information		2Q 2012								2Q 2011
Per share amounts are reported on a diluted basis. All amounts are attributable to The Williams Companies, Inc.		millions				per share				millions				per share
Income from continuing operations		$	133			$	0.21			$	171			$	0.29
Income (loss) from discontinued operations			(1	)			—				56				0.09
Net income		$	132			$	0.21			$	227			$	0.38
Adjusted income from continuing operations*		$	138			$	0.22			$	172			$	0.29
Year-to-Date Summary Financial Information		YTD 2012								YTD 2011
Per share amounts are reported on a diluted basis. All amounts are attributable to The Williams Companies, Inc.		millions				per share				millions				per share
Income from continuing operations		$	420			$	0.68			$	471			$	0.79
Income from discontinued operations			135				0.22				77				0.13
Net income			$555				$0.90				$548				$0.92
Adjusted income from continuing operations*			$374				$0.61				$341				$0.57

 

 

*	A schedule reconciling income (loss) from continuing operations to adjusted income from continuing operations (non-GAAP measures) is available at www.williams.com and as an attachment to this press release.

TULSA, Okla. – Williams (NYSE: WMB) announced second-quarter 2012 unaudited net income attributable to Williams of $132 million, or $0.21 per share on a diluted basis, compared with net income of $227 million, or $0.38 per share on a diluted basis for second-quarter 2011.

 

Williams (NYSE:WMB) · 2Q 2012 Financial Results · Aug. 1, 2012			Page 1 of 8

---

A sharp decline in natural gas liquid (NGL) margins and other factors at Williams Partners, as well as the absence of $56 million in income from discontinued operations in second-quarter 2011, drove the decline in net income during second-quarter 2012.

For the first half of 2012, Williams reported net income of $555 million, or $0.90 per share on a diluted basis, compared with net income of $548 million, or $0.92 per share, for the same time period in 2011.

The increase in year-to-date 2012 net income is primarily due to gains associated with the sale of Williams’ former assets in Venezuela. A number of factors mostly offset this benefit, including the absence of a $124 million income tax benefit primarily associated with a federal settlement that was recorded during first-quarter 2011; and the previously noted decline in NGL margins at Williams Partners and other factors during the second quarter of 2012.

Prior-period results throughout this release have been recast to reflect the separation of Williams’ former exploration and production business on Dec. 31, 2011. The results of the former exploration and production business are reported in discontinued operations for 2011.

Adjusted Income from Continuing Operations

Adjusted income from continuing operations was $138 million, or $0.22 per share, for second-quarter 2012, compared with $172 million, or $0.29 per share for second-quarter 2011. The second-quarter adjusted results are $0.01 higher than the estimate of $0.21 per share that the company provided in its July 23 guidance news release.

The decline in adjusted earnings for the second quarter of 2012 is due to lower results at Williams Partners driven by the sharply lower NGL margins and other factors in the second quarter.

Year-to-date through June 30, adjusted income from continuing operations was $374 million, or $0.61 per share, compared with $341 million, or $0.57 per share for the first half of 2011.

The increase in adjusted income from continuing operations for the first half of 2012 was due to improvement in the Midstream Canada & Olefins segment, driven by a strong first quarter, and decreased interest expense reflecting both corporate debt retirements in December 2011 and increased capitalized interest at Midstream Canada & Olefins associated with construction projects. Lower second-quarter results in the Williams Partners segment partially offset these benefits in the year-to-date period.

 

Williams (NYSE:WMB) · 2Q 2012 Financial Results · Aug. 1, 2012			Page 2 of 8

---

Adjusted income from continuing operations reflects the removal of items considered unrepresentative of ongoing operations and is a non-GAAP measure. Reconciliation to the most relevant GAAP measure is attached to this news release.

CEO Comment

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

“As we previously announced, the second-quarter results were driven down by a sharp decline in NGL prices. While we lowered our 2012 and 2013 earnings guidance, we raised our 2014 earnings guidance and reaffirmed our commitment to delivering strong dividend growth.

“We continue to see growth in Williams Partners’ fee-based revenue, particularly in the partnership’s midstream business, where the fee-based revenue was up 19 percent during the second quarter; we expect that trend to continue, as Williams Partners’ fee-based business is expected to be more than 80 percent of its total business by 2014.

“Furthermore, the proposed drop-down of the Geismar facility will significantly benefit both Williams and Williams Partners. We expect to continue to see volatility in the natural gas-to-ethane spread as domestic NGL markets go through growth spurts and periods of oversupply prior to significant new cracking capacity coming online in 2015 and beyond. This will shift Williams Partners’ commodity exposure from ethane to ethylene which we expect to be in tighter supply during this same period.”

Business Segment Results

Williams’ business segments for financial reporting are Williams Partners, Midstream Canada & Olefins, and Other. The Williams Partners segment includes the consolidated results of Williams Partners L.P. (NYSE:WPZ), and Midstream Canada & Olefins includes the results of Williams’ Canadian midstream and domestic olefins business.

 

Williams (NYSE:WMB) · 2Q 2012 Financial Results · Aug. 1, 2012			Page 3 of 8

---

Consolidated Segment Profit		2Q								YTD
Amounts in millions		2012				2011				2012				2011
Williams Partners		$	339			$	471			$	827			$	908
Midstream Canada & Olefins			68				72				171				146
Other			1				2				60				22
Consolidated Segment Profit		$	408			$	545			$	1,058			$	1,076
Adjusted Consolidated Segment Profit*		2Q								YTD
Amounts in millions		2012				2011				2012				2011
Williams Partners		$	352			$	474			$	841			$	911
Midstream Canada & Olefins			68				72				171				146
Other			1				2				7				11
Adjusted Consolidated Segment Profit		$	421			$	548			$	1,019			$	1,068

 

 

*	A schedule reconciling segment profit to adjusted segment profit (non-GAAP measures) is available at www.williams.com and as an attachment to this press release.

Williams Partners

Williams Partners is focused on natural gas transportation, gathering, treating, processing and storage; NGL fractionation; and oil transportation.

For second-quarter 2012, Williams Partners reported segment profit of $339 million, compared with $471 million for second-quarter 2011. Year-to-date through June 30, Williams Partners reported $827 million in segment profit, compared with $908 million for the same period in 2011.

The decline in Williams Partners’ segment profit during the second quarter and year-to-date 2012 is primarily due to a significant decline in NGL prices, primarily in the second quarter of 2012, which led to lower NGL margins and lower marketing margins in Williams Partners’ midstream business. Other factors also negatively affected the second-quarter results, including higher expenses, primarily associated with the partnership’s recent acquisitions. An increase in fee-based revenue, including an increase of 19 percent in the partnership’s midstream business, partially offset the negative impacts of lower NGL prices and other factors.

 

Williams (NYSE:WMB) · 2Q 2012 Financial Results · Aug. 1, 2012			Page 4 of 8

---

Williams Partners

Key Operational Metrics		2011																2012
		1Q				2Q				3Q				4Q				1Q				2Q				2Q Change
Fee-based Revenues* (millions)																										Year-over-year				Sequential
Gas pipeline business		$	361			$	359			$	368			$	384			$	384			$	366				1.9	%			-4.7	%
Midstream business			217				230				249				248				258				274				19.1	%			6.2	%
Williams Partners Total		$	578			$	589			$	617			$	632			$	642			$	640				8.7	%			-0.3	%
NGL Margins
NGL margins (millions)		$	207			$	253			$	234			$	287			$	242			$	189				-25.3	%			-21.9	%
NGL equity volumes (gallons in millions)			289				308				274				317				308				295				-4.2	%			-4.2	%
Per-unit NGL margins ($/gallon)		$	0.71			$	0.83			$	0.85			$	0.91			$	0.79			$	0.64				-22.9	%			-19.0	%

 

 

*	Fee-based revenues is a non-GAAP measure. A reconciliation to the most relevant measure included in GAAP is attached to this news release.

The increase in fee-based revenues during second-quarter 2012 was primarily due to new volumes on Williams Partners’ recently acquired Ohio Valley Midstream system and Susquehanna Supply Hub gathering assets in the Marcellus Shale and higher volumes on the Perdido Norte gas and oil pipelines in the western deepwater Gulf of Mexico.

As previously announced, Williams Partners maintained its outlook for strong annual cash distribution growth. It expects an increase of 8 percent in 2012 and 9 percent in both 2013 and 2014 at guidance midpoints.

There is a more detailed description of Williams Partners’ interstate gas pipeline and midstream business results in the partnership’s second-quarter 2012 financial results news release, which is also being issued today.

Midstream Canada & Olefins

Midstream Canada & Olefins includes Williams’ operations in the United States and Canada focused on recovering, transporting, storing and producing ethylene, propylene, NGLs and other related products.

Midstream Canada & Olefins reported segment profit of $68 million for second-quarter 2012, compared with $72 million for second-quarter 2011.

The slight decline in segment profit during second-quarter 2012 was due to lower Canadian NGL product margins driven by lower sales volumes and lower per-unit margins. The lower sales volumes were due to the impact of filling the new Boreal Pipeline, which was placed into service in June. These items were mostly offset by higher Geismar ethylene product margins.

For the first half of 2012, Midstream Canada & Olefins reported segment profit of $171 million, compared with $146 million for the first half of 2011. The increase in segment profit for the first half of 2012 was primarily due to strong

 

Williams (NYSE:WMB) · 2Q 2012 Financial Results · Aug. 1, 2012			Page 5 of 8

---

results in the first quarter, driven by higher Geismar ethylene product sales margins and higher Geismar butadiene and other product margins. These items were partially offset by higher operating and maintenance costs and lower Canadian NGL product margins.

Other

The Other segment benefited from gains related to the 2010 sale of the company’s Accroven investment in Venezuela of $53 million in the year-to-date 2012 period and $11 million in the year-to-date 2011 period.

Guidance Unchanged from July 23 Announcement

Williams’ guidance issued on July 23 for dividends, earnings and capital expenditures for 2012-14 is unchanged. Williams continues to expect to pay a full-year 2012 shareholder dividend of $1.20 per share, a 55 percent increase over 2011. As well, the company expects the full-year dividend it pays shareholders in each of 2013 and 2014 to increase by 20 percent – to $1.44 and $1.75 per share, respectively.

Williams’ revised guidance midpoints for full-year 2012 and 2013 are, respectively, $1.15 and $1.38 for adjusted earnings per share. For 2014, the company’s guidance for adjusted earnings per share is a range with midpoint of $1.95 – a level 59 percent higher than the $1.23 it reported in 2011.

As previously reported on July 23, Williams’ guidance ranges were based on lower near-term NGL prices resulting from record warm winter, high third-party ethylene cracker downtime, growing supplies and other factors.

Williams continues to expect the influence of NGL prices on its earnings to diminish over the next few years as it transitions to a business mix that is increasingly fee-based in its Williams Partners segment. The company’s 2013 and 2014 earnings expectations reflect that shift to greater fee-based business; the benefit of projects coming into service; and some improvement from current NGL market conditions.

The previously reported increase in 2014 earnings guidance is based on the ethylene crack spread recovering to the first-half 2012 level, the strength of the company’s fundamental businesses, growth and some improvement in NGL prices.

For capital and investing expenditures, the company’s guidance includes ranges with midpoints of $6.7 billion in 2012, $3.6 billion in 2013 and $2.6 billion in 2014. The 2013 and 2014 ranges do not include a number of potential projects in development that have not yet been placed into guidance.

 

Williams (NYSE:WMB) · 2Q 2012 Financial Results · Aug. 1, 2012			Page 6 of 8

---

Second-Quarter Materials to be Posted Shortly; Q&A Webcast Scheduled for Tomorrow

Williams’ second-quarter 2012 financial results package will be posted shortly at www.williams.com. The package will include the data book and analyst package, and the investor presentation with a recorded commentary from CEO Alan Armstrong.

The company will host the second-quarter Q&A live webcast on Thursday, Aug. 2 at 9:30 a.m. EDT. A link to the live webcast of the event, as well as replays in both streaming and downloadable podcast formats, will be available at www.williams.com. A limited number of phone lines will be available at (888) 430-8690. International callers should dial (719) 325-2356.

Non-GAAP Measures

This press release includes certain financial measures – adjusted segment profit, fee-based revenues, adjusted income from continuing operations (“earnings”) and adjusted earnings per share – that are non-GAAP financial measures as defined under the rules of the Securities and Exchange Commission. Adjusted segment profit, adjusted earnings and adjusted earnings per share measures exclude items of income or loss that the company characterizes as unrepresentative of its ongoing operations. Management believes these measures provide investors meaningful insight into the company’s results from ongoing operations. Fee-based revenues include total revenues less commodity-based and tracked revenue. Such excluded items can be volatile due to changing market conditions, which are largely beyond our management’s control. Fee-based revenues provide investors with information about the growth of our revenues that are not subject to this volatility.

This press 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 widely accepted financial indicators used by investors to compare a company’s performance. In addition, management believes that these measures provide investors an enhanced perspective of the operating performance of the company and aid investor understanding. Neither fee-based revenues, adjusted segment profit, adjusted earnings, nor adjusted earnings per share measures are intended to represent an alternative to revenues, segment profit, net income or earnings per share. 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.

About Williams (NYSE: WMB)

Williams is one of the leading energy infrastructure companies in North America. It owns interests in or operates 15,000 miles of interstate gas pipelines, 1,000 miles of NGL transportation pipelines, and more than 10,000 miles of oil and gas gathering pipelines. The company’s facilities have daily gas processing capacity of 6.6 billion cubic feet of natural gas and NGL production of more than 200,000 barrels per day. Williams owns a 68-percent ownership interest in Williams Partners L.P. (NYSE: WPZ), one of the largest diversified energy master limited partnerships. Williams Partners owns most of Williams’ interstate gas pipeline and domestic midstream assets. The company’s headquarters is in Tulsa, Okla.

# # #

 

Williams (NYSE:WMB) · 2Q 2012 Financial Results · Aug. 1, 2012			Page 7 of 8

---

Our reports, filings, and other public announcements may include “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. These forward-looking statements relate to anticipated financial performance, management’s plans and objectives for future operations, business prospects, outcome of regulatory proceedings, market conditions and other matters. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995.

All statements, other than statements of historical facts, included in this report that address activities, events or developments that we expect, believe or anticipate will exist or may occur in the future, are forward-looking statements. Forward-looking statements can be identified 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,” “guidance,” “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:

 

—

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;

 

—

The levels of dividends to stockholders;

 

—

Seasonality of certain business components;

 

—

Natural gas, natural gas liquids and crude oil prices and demand.

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 report. 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 we have sufficient cash to enable us to pay current and expected levels of dividends;

 

—

Availability of supplies, market demand, volatility of prices, and the availability and cost of capital;

 

—

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

 

—

The strength and financial resources of our competitors;

 

—

Ability to acquire new businesses and assets and integrate those operations and assets into our existing businesses, as well as expand our facilities;

 

—

Development of alternative energy sources;

 

—

The impact of operational and development hazards;

 

—

Costs of, changes in, or the results of laws, government regulations (including safety and climate change regulation and changes in natural gas production from exploration and production areas that we serve), environmental liabilities, litigation, and rate proceedings;

 

—

Our costs and funding obligations for defined benefit pension plans and other postretirement benefit

 

—

plans;

 

—

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 strategy and financing, including restrictions stemming from our debt agreements, future changes in our credit ratings and the availability and cost of credit;

 

—

Risks associated with future weather conditions;

 

—

Acts of terrorism, including cybersecurity threats and related disruptions;

 

—

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

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 to 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 announcement. 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 our annual report on Form 10-K filed with the SEC on Feb. 28, 2012, and our quarterly reports on Form 10-Q available from our offices or from our website at www.williams.com.

 

Williams (NYSE:WMB) · 2Q 2012 Financial Results · Aug. 1, 2012			Page 8 of 8

---

 

Financial Highlights and Operating Statistics

(UNAUDITED)

Final

June 30, 2012

---

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

(UNAUDITED)

 

		2011																				2012
(Dollars in millions, except per-share amounts)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				Year
Income (loss) from continuing operations attributable to The Williams Companies, Inc. available to common stockholders		$	300			$	171			$	253			$	79			$	803			$	287			$	133			$	420
Income (loss) from continuing operations - diluted earnings per common share		$	0.50			$	0.29			$	0.43			$	0.13			$	1.34			$	0.47			$	0.21			$	0.68
Adjustments:
Williams Partners
Acquisition- and transition-related costs		$	—			$	—			$	—			$	—			$	—			$	—			$	19			$	19
Loss related to Eminence storage facility leak			4				3				6				2				15				1				—				1
Gain on sale of certain assets			—				—				—				—				—				—				(6	)			(6	)
Gain on sale of base gas from Hester storage field			(4	)			—				—				—				(4	)			—				—				—
Total Williams Partners adjustments			—				3				6				2				11				1				13				14
Midstream Canada & Olefins (MC&O)
Gulf Liquids litigation contingency accrual reduction			—				—				—				(19	)			(19	)			—				—				—
Total Midstream Canada & Olefins adjustments			—				—				—				(19	)			(19	)			—				—				—
Other
Gain from Venezuela investment			(11	)			—				—				—				(11	)			(53	)			—				(53	)
Total Other adjustments			(11	)			—				—				—				(11	)			(53	)			—				(53	)
Adjustments included in segment profit (loss)			(11	)			3				6				(17	)			(19	)			(52	)			13				(39	)
Adjustments below segment profit (loss)
Early debt retirement costs - Corporate			—				—				—				271				271				—				—				—
Gulf Liquids litigation contingency interest accrual reduction - MC&O			—				—				—				(14	)			(14	)			—				—				—
Gain from Venezuela investment - related interest - Other			—				—				—				—				—				(10	)							(10	)
Reorganization-related costs			—				—				—				—				—				—				6				6
Interest income on note receivable from sale of Venezuela assets - Other			—				—				—				—				—				—				(3	)			(3	)
Allocation of adjustments to noncontrolling interests			—				(1	)			(1	)			(1	)			(3	)			—				(6	)			(6	)
			—				(1	)			(1	)			256				254				(10	)			(3	)			(13	)
Total adjustments			(11	)			2				5				239				235				(62	)			10				(52	)
Less tax effect for above items			4				(1	)			(2	)			(89	)			(88	)			11				(6	)			5
Adjustments for tax-related items [1]			(124	)			—				(77	)			(15	)			(216	)			—				1				1
Adjusted income from continuing operations available to common stockholders		$	169			$	172			$	179			$	214			$	734			$	236			$	138			$	374
Adjusted diluted earnings per common share [2]		$	0.28			$	0.29			$	0.30			$	0.36			$	1.23			$	0.39			$	0.22			$	0.61
Weighted-average shares - diluted (thousands)			596,567				597,633				597,550				600,921				598,175				600,520				626,620				613,570

 

[1]	The first, third and fourth quarters of 2011 include federal settlements and an international revised assessment. The third quarter of 2011 includes an adjustment to reverse taxes on undistributed earnings of certain foreign operations that are now considered permanently reinvested.

 

[2]	Interest expense, net of tax, associated with our convertible debentures has been added back to adjusted income from continuing operations available to common stockholders to calculate adjusted diluted earnings per common share.

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.

 

1

---

Consolidated Statement of Income

(UNAUDITED)

 

		2011																				2012
(Dollars in millions, except per-share amounts)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				Year
Revenues		$	1,871			$	1,984			$	1,972			$	2,103			$	7,930			$	2,019			$	1,846			$	3,865
Segment costs and expenses:
Costs and operating expenses			1,311				1,398				1,392				1,463				5,564				1,351				1,350				2,701
Selling, general and administrative expenses			80				78				75				78				311				93				105				198
Other (income) expense - net			(6	)			3				—				4				1				8				9				17
Total segment costs and expenses			1,385				1,479				1,467				1,545				5,876				1,452				1,464				2,916
Equity earnings (losses)			34				40				40				41				155				31				27				58
Income (loss) from investments			11				—				—				(4	)			7				52				(1	)			51
Total segment profit (loss)			531				545				545				595				2,216				650				408				1,058
Reclass equity earnings (losses)			(34	)			(40	)			(40	)			(41	)			(155	)			(31	)			(27	)			(58	)
Reclass income (loss) from investments			(11	)			—				—				4				(7	)			(52	)			1				(51	)
General corporate expenses			(47	)			(45	)			(48	)			(47	)			(187	)			(40	)			(50	)			(90	)
Operating income (loss)			439				460				457				511				1,867				527				332				859
Interest accrued			(156	)			(155	)			(153	)			(134	)			(598	)			(141	)			(140	)			(281	)
Interest capitalized			5				5				7				8				25				10				12				22
Investing income - net			44				40				43				41				168				100				30				130
Early debt retirement costs			—				—				—				(271	)			(271	)			—				—				—
Other income (expense) - net			6				(2	)			—				7				11				(4	)			3				(1	)
Income (loss) from continuing operations before income taxes			338				348				354				162				1,202				492				237				729
Provision (benefit) for income taxes			(22	)			109				33				4				124				133				71				204
Income (loss) from continuing operations			360				239				321				158				1,078				359				166				525
Income (loss) from discontinued operations			24				58				21				(520	)			(417	)			136				(1	)			135
Net income (loss)			384				297				342				(362	)			661				495				165				660
Less: Net income attributable to noncontrolling interests			63				70				70				82				285				72				33				105
Net income (loss) attributable to The Williams Companies, Inc.		$	321			$	227			$	272			$	(444	)		$	376			$	423			$	132			$	555
Amounts attributable to The Williams Companies, Inc.:
Income (loss) from continuing operations		$	300			$	171			$	253			$	79			$	803			$	287			$	133			$	420
Income (loss) from discontinued operations			21				56				19				(523	)			(427	)			136				(1	)			135
Net income (loss)		$	321			$	227			$	272			$	(444	)		$	376			$	423			$	132			$	555
Diluted earnings (loss) per common share:
Income (loss) from continuing operations		$	0.50			$	0.29			$	0.43			$	0.13			$	1.34			$	0.47			$	0.21			$	0.68
Income (loss) from discontinued operations			0.04				0.09				0.03				(0.87	)			(0.71	)			0.23				—				0.22
Net income (loss)		$	0.54			$	0.38			$	0.46			$	(0.74	)		$	0.63			$	0.70			$	0.21			$	0.90
Weighted-average number of shares used in computations (thousands)			596,567				597,633				597,550				600,921				598,175				600,520				626,620				613,570
Common shares outstanding at end of period (thousands)			587,990				588,637				588,955				591,505				591,505				595,271				626,563				626,563
Market price per common share (end of period)		$	31.18			$	30.25			$	24.34			$	33.02			$	33.02			$	30.81			$	28.82			$	28.82
Common dividends per share		$	0.125			$	0.200			$	0.200			$	0.250			$	0.775			$	0.25875			$	0.300			$	0.55875

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.

 

2

---

Reconciliation of Segment Profit (Loss) to Adjusted Segment Profit (Loss)

(UNAUDITED)

 

		2011																				2012
(Dollars in millions)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				Year
Segment profit (loss):
Williams Partners		$	437			$	471			$	471			$	517			$	1,896			$	488			$	339			$	827
Midstream Canada & Olefins			74				72				73				77				296				103				68				171
Other			20				2				1				1				24				59				1				60
Total segment profit (loss)		$	531			$	545			$	545			$	595			$	2,216			$	650			$	408			$	1,058
Adjustments:
Williams Partners		$	—			$	3			$	6			$	2			$	11			$	1			$	13			$	14
Midstream Canada & Olefins			—				—				—				(19	)			(19	)			—				—				—
Other			(11	)			—				—				—				(11	)			(53	)			—				(53	)
Total segment adjustments		$	(11	)		$	3			$	6			$	(17	)		$	(19	)		$	(52	)		$	13			$	(39	)
Adjusted segment profit (loss):
Williams Partners		$	437			$	474			$	477			$	519			$	1,907			$	489			$	352			$	841
Midstream Canada & Olefins			74				72				73				58				277				103				68				171
Other			9				2				1				1				13				6				1				7
Total adjusted segment profit (loss)		$	520			$	548			$	551			$	578			$	2,197			$	598			$	421			$	1,019

Note: Segment profit (loss) includes equity earnings (losses) and income (loss) from investments reported in investing income - net in the Consolidated Statement of Income. Equity earnings (losses) results from investments accounted for under the equity method. Income (loss) from investments results from the management of certain equity investments.

 

3

---

Williams Partners

(UNAUDITED)

 

		2011																				2012
(Dollars in millions)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				Year
Revenues		$	1,579			$	1,671			$	1,673			$	1,806			$	6,729			$	1,685			$	1,583			$	3,268
Segment costs and expenses:
Costs and operating expenses			1,107				1,167				1,172				1,240				4,686				1,137				1,163				2,300
Selling, general, and administrative expenses			71				70				66				69				276				85				95				180
Other (income) expense - net			(11	)			(1	)			4				21				13				5				13				18
Total segment costs and expenses			1,167				1,236				1,242				1,330				4,975				1,227				1,271				2,498
Equity earnings			25				36				40				41				142				30				27				57
Reported segment profit			437				471				471				517				1,896				488				339				827
Adjustments			—				3				6				2				11				1				13				14
Adjusted segment profit		$	437			$	474			$	477			$	519			$	1,907			$	489			$	352			$	841

 

4

---

Midstream Canada & Olefins

(UNAUDITED)

 

		2011																				2012
(Dollars in millions)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				Year
Revenues:
Olefin and NGL production sales		$	290			$	305			$	305			$	290			$	1,190			$	323			$	249			$	572
Marketing sales			67				74				63				70				274				67				47				114
Other revenues			6				5				8				9				28				9				8				17
			363				384				376				369				1,492				399				304				703
Intrasegment eliminations			(47	)			(37	)			(50	)			(46	)			(180	)			(54	)			(33	)			(87	)
Total revenues			316				347				326				323				1,312				345				271				616
Segment costs and expenses:
Olefin and NGL production cost of goods sold			186				200				198				195				779				190				146				336
Marketing cost of goods sold			66				73				64				71				274				65				49				114
Operating costs			23				29				38				27				117				29				32				61
Other:
Selling, general and administrative expenses			8				9				8				10				35				9				10				19
Other (income) expense - net			6				1				(5	)			(11	)			(9	)			3				(1	)			2
Intrasegment eliminations			(47	)			(37	)			(50	)			(46	)			(180	)			(54	)			(33	)			(87	)
Total segment costs and expenses			242				275				253				246				1,016				242				203				445
Reported segment profit			74				72				73				77				296				103				68			$	171
Adjustments			—				—				—				(19	)			(19	)			—				—				—
Adjusted segment profit		$	74			$	72			$	73			$	58			$	277			$	103			$	68			$	171
Operating statistics
Geismar ethylene sales volumes (million lbs)			272				254				270				242				1,038				284				250				534
Canadian propylene sales volumes (million lbs)			38				26				38				37				139				41				30				71
Canadian NGL sales volumes (million gallons)*			45				32				38				48				163				47				26				73

 

*	NGL products include: propane, normal butane, isobutane/butylene (butylene), and condensate.

 

5

---

Capital Expenditures and Investments

(UNAUDITED)

 

		2011																				2012
(Dollars in millions)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				Year
Capital expenditures:
Williams Partners		$	156			$	153			$	285			$	397			$	991			$	256			$	485			$	741
Midstream Canada & Olefins			45				48				39				72				204				68				104				172
Other			6				5				13				8				32				5				4				9
Discontinued operations			319				362				402				486				1,569				—								—
Total*		$	526			$	568			$	739			$	963			$	2,796			$	329			$	593			$	922
Purchase of businesses:
Williams Partners		$	—			$	—			$	31			$	—			$	31			$	325			$	1,724			$	2,049
Midstream Canada & Olefins			—				—				10				—				10				—				—				—
Total		$	—			$	—			$	41			$	—			$	41			$	325			$	1,724			$	2,049
Purchase of investments:
Williams Partners		$	36			$	65			$	39			$	57			$	197			$	48			$	136			$	184
Other			2				23				—				—				25				—				—				—
Discontinued operations			4				2				2				3				11				—				—				—
Total		$	42			$	90			$	41			$	60			$	233			$	48			$	136			$	184
Summary:
Williams Partners		$	192			$	218			$	355			$	454			$	1,219			$	629			$	2,345			$	2,974
Midstream Canada & Olefins			45				48				49				72				214				68				104				172
Other			8				28				13				8				57				5				4				9
Discontinued operations			323				364				404				489				1,580				—				—				—
Total		$	568			$	658			$	821			$	1,023			$	3,070			$	702			$	2,453			$	3,155
Cumulative summary:
Williams Partners		$	192			$	410			$	765			$	1,219			$	1,219			$	629			$	2,974			$	2,974
Midstream Canada & Olefins			45				93				142				214				214				68				172				172
Other			8				36				49				57				57				5				9				9
Discontinued operations			323				687				1,091				1,580				1,580				—				—				—
Total		$	568			$	1,226			$	2,047			$	3,070			$	3,070			$	702			$	3,155			$	3,155
Capital expenditures incurred and purchase of investments:
Increases to property, plant, and equipment		$	482			$	604			$	828			$	1,039			$	2,953			$	371			$	628			$	999
Purchase of businesses			—				—				41				—				41				325				1,724				2,049
Purchase of investments			42				90				41				60				233				48				136				184
Total		$	524			$	694			$	910			$	1,099			$	3,227			$	744			$	2,488			$	3,232
*Increases to property, plant, and equipment		$	482			$	604			$	828			$	1,039			$	2,953			$	371			$	628			$	999
Changes in related accounts payable and accrued liabilities			44				(36	)			(89	)			(76	)			(157	)			(42	)			(35	)			(77	)
Capital expenditures		$	526			$	568			$	739			$	963			$	2,796			$	329			$	593			$	922

 

6

---

Depreciation, Depletion, and Amortization and Other Selected Financial Data

(UNAUDITED)

 

		2011																				2012
(Dollars in millions)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				Year
Depreciation, depletion, and amortization:
Williams Partners		$	150			$	154			$	155			$	152			$	611			$	156			$	168			$	324
Midstream Canada & Olefins			6				7				6				7				26				7				6				13
Other			6				5				6				7				24				5				7				12
Discontinued operations			219				237				251				246				953				—				—				—
Total		$	381			$	403			$	418			$	412			$	1,614			$	168			$	181			$	349
Other selected financial data:
Cash and cash equivalents		$	883			$	1,130			$	946			$	889			$	889			$	1,100			$	679			$	679
Total assets		$	25,083			$	25,705			$	26,146			$	16,502			$	16,502			$	17,790			$	20,267			$	20,267
Capital structure:
Debt
Current		$	532			$	383			$	361			$	353			$	353			$	329			$	4			$	4
Noncurrent		$	8,577			$	8,925			$	9,022			$	8,369			$	8,369			$	8,366			$	9,033			$	9,033
Stockholders’ equity*		$	7,052			$	7,231			$	7,412			$	1,296			$	1,296			$	2,622			$	2,960			$	2,960
Debt to debt-plus-stockholders’ equity ratio			56.4	%			56.3	%			55.9	%			87.1	%			87.1	%			76.8	%			75.3	%			75.3	%

 

*	Prior period amounts have been recast to reflect a correction to our noncurrent deferred income tax liability related to amounts previously recognized in capital in excess of par value related to the issuance of common units of Williams Partners.

 

7

---

2012 Forecast Guidance—Reported to Adjusted

 

		August 1 Guidance
		Reported												Adjustment				Adjusted
(Dollars in millions, except earnings per share)		Low — High												Items				Low — High
Segment profit		$	1,934				—			$	2,259			$	(34	)		$	1,900				—			$	2,225
Net interest expense			(485	)			—				(500	)			—				(485	)			—				(500	)
General corporate/other/rounding			(143	)			—				(168	)			(7	)			(150	)			—				(175	)
Pretax income			1,306				—				1,591				(41	)			1,265				—				1,550
Provision for income tax			(385	)			—				(480	)			5				(380	)			—				(475	)
Income from continuing operations		$	921				—			$	1,111			$	(36	)		$	885				—			$	1,075
Net income attributable to noncontrolling interests			(207	)			—				(267	)			(8	)			(215	)			—				(275	)
Amounts attributable to Williams:
Income from continuing operations		$	714				—			$	844			$	(44	)		$	670				—			$	800
Diluted EPS		$	1.12				—			$	1.32							$	1.05				—			$	1.25

Segment Profit Guidance—Reported to Adjusted

 

		2012 Guidance												2013 Guidance												2014 Guidance
(Dollars in millions)		Low				Midpoint				High				Low				Midpoint				High				Low				Midpoint				High
Reported segment profit:
Williams Partners (WPZ)		$	1,611			$	1,706			$	1,801			$	1,800			$	2,000			$	2,200			$	2,125			$	2,350			$	2,575
Midstream Canada & Olefins			275				338				400				325				400				475				700				800				900
Other			48				53				58				—				—				—				—				—				—
Total Reported segment profit		$	1,934			$	2,097			$	2,259			$	2,125			$	2,400			$	2,675			$	2,825			$	3,150			$	3,475
Adjustments:
Total Williams Partners adjustments		$	19			$	19			$	19			$	—			$	—			$	—			$	—			$	—			$	—
Total Midstream Canada & Olefins adjustments			—				—				—				—				—				—				—				—				—
Total Other adjustments			(53	)			(53	)			(53	)			—				—				—				—				—				—
Total Adjustments		$	(34	)		$	(34	)		$	(34	)		$	—			$	—			$	—			$	—			$	—			$	—
Adjusted segment profit:
Williams Partners (WPZ)		$	1,630			$	1,725			$	1,820			$	1,800			$	2,000			$	2,200			$	2,125			$	2,350			$	2,575
Midstream Canada & Olefins			275				338				400				325				400				475				700				800				900
Other			(5	)			—				5				—				—				—				—				—				—
Total Adjusted segment profit		$	1,900			$	2,063			$	2,225			$	2,125			$	2,400			$	2,675			$	2,825			$	3,150			$	3,475

Reconciliation of Forecasted Reported Income from Continuing Operations to Adjusted Income from Continuing Operations

 

		2012 Guidance												2013 Guidance												2014 Guidance
(Dollars in millions, except earnings per share)		Low				Midpoint				High				Low				Midpoint				High				Low				Midpoint				High
Reported income from continuing operations		$	714			$	779			$	844			$	770			$	883			$	995			$	1,100			$	1,263			$	1,425
Adjustments—pretax			(49	)			(49	)			(49	)			—				—				—				—				—				—
Less taxes			5				5				5				—				—				—				—				—				—
Adjustments—after tax			(44	)			(44	)			(44	)			—				—				—				—				—				—
Adjusted income from continuing ops		$	670			$	735			$	800			$	770			$	883			$	995			$	1,100			$	1,263			$	1,425
Adjusted diluted EPS		$	1.05			$	1.15			$	1.25			$	1.20			$	1.38			$	1.55			$	1.70			$	1.95			$	2.20

Note: All amounts attributable to Williams

 

8

---

Non-GAAP Reconciliation of Fee Revenues to Total Segment Revenues

(UNAUDITED)

 

		2011																				2012
(Dollars in millions)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				Year
Revenues
Fee revenues from gas pipeline business		$	361			$	359			$	368			$	384			$	1,472			$	384			$	366			$	750
Fee revenues from midstream business			217				230				249				248				944				258				274				532
Tracked revenues from gas pipeline business			50				48				61				42				201				38				33				71
Commodity-based revenues from midstream business			1,441				1,608				1,542				1,759				6,350				1,520				1,341				2,861
Other/Elims			(490	)			(574	)			(547	)			(627	)			(2,238	)			(515	)			(431	)			(946	)
Total Williams Partners revenue		$	1,579			$	1,671			$	1,673			$	1,806			$	6,729			$	1,685			$	1,583			$	3,268

 

9