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): March 13, 2002
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The Williams Companies, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 1-4174 73-0569878
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
One Williams Center, Tulsa, Oklahoma 74172
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 918/573-2000
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Not Applicable
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(Former name or former address, if changed since last report)
1
Item 5. Other Events.
On March 13, 2002, The Williams Companies, Inc. (NYSE:WMB)
announced it has received early termination of the Hart-Scott-Rodino antitrust
waiting period regarding the planned sale of its Kern River pipeline system to
MidAmerican Energy Holdings Company. The sale is expected to close by March 31.
Additionally, Williams announced that it would file with the
Securities & Exchange Commission pro forma financial information reflecting its
Kern River business as a discontinued operation to supplement Williams'
previously issued consolidated financial statements included in Williams' Annual
Report on Form 10-K for the year ended December 31, 2001. The pro forma
financial information was included in the news release.
Item 7. Financial Statements and Exhibits.
Williams files the following exhibit as part of this report:
Exhibit 99.1 Copy of Williams' press release dated March 13,
2002, publicly announcing the matters reported
herein.
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: March 13, 2002 /s/ William G. von Glahn
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Name: William G. von Glahn
Title: Senior Vice President and
General Counsel
2
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
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99.1 Copy of Williams' press release dated March 13, 2002, publicly announcing the matters
reported herein.
3
EXHIBIT 99.1
NEWS RELEASE [WILLIAMS LOGO]
NYSE: WMB
================================================================================
DATE: March 13, 2002
CONTACT: Jim Gipson Rick Rodekohr Richard George
Williams (media relations) Williams (investor relations) Williams (investor relations)
(918) 573-2111 (918) 573-2087 (918) 573-3679
jim.gipson@williams.com rick.rodekohr@williams.com richard.george@williams.com
WILLIAMS, BERKSHIRE HATHAWAY UNIT RECEIVE EARLY HART-SCOTT-RODINO TERMINATION
FOR KERN RIVER PIPELINE SALE
TULSA, Okla. -- Williams (NYSE:WMB) today announced it has received
early termination of the Hart-Scott-Rodino antitrust waiting period regarding
the planned sale of its Kern River pipeline system to MidAmerican Energy
Holdings Company. The sale is expected to close by March 31.
Additionally, Williams today will file with the Securities & Exchange
Commission pro forma financial information reflecting its Kern River business as
a discontinued operation to supplement Williams' previously issued consolidated
financial statements included in Williams' Annual Report on Form 10-K for the
year ended December 31, 2001. The pro forma financial information is included
with this news release.
Williams on March 7 announced that it had signed a definitive agreement
with MidAmerican, one of the Berkshire Hathaway Inc. family of companies, to
sell its Kern River natural gas pipeline business to MidAmerican for $450
million in cash and assumption of $510 million in debt.
The sale is part of an enhanced balance-sheet improvement plan
announced on March 7. This enhanced plan is designed to improve leverage and
coverage ratios beyond what was envisioned in the original plan Williams
presented on Dec. 19, 2001. The major rating agencies all reaffirmed Williams'
credit ratings at that time. The enhanced plan fully addresses Williams'
potential obligations to its former telecommunications subsidiary, Williams
Communications Group, in a manner that improves Williams' financial flexibility
for 2002 and beyond.
Upon completion of the sale, the Kern River business will become a unit
of MidAmerican. MidAmerican is expected to complete previously announced system
expansion projects designed to more than double capacity to meet growing natural
gas demand in the West.
4
KERN RIVER SYSTEM
The Kern River pipeline is an important route for the transmission of
natural gas from the vast reserves in the Rocky Mountain states to the rapidly
growing markets in Utah, Nevada and California. Constructed in 1992, Kern River
extends 926 miles from Opal, Wyo., to the San Joaquin Valley near Bakersfield,
Calif. Kern River has a design capacity of 835 million cubic feet per day.
Williams in August 2001 filed with the Federal Energy Regulatory
Commission to more than double capacity on the Kern River system by adding
approximately 900 million cubic feet per day of additional capacity from Wyoming
to California and markets in between.
Upon completion of the expansion project in May 2003, Kern River will
be capable of transporting 1.7 billion cubic feet of natural gas per day. When
converted to electricity, that is enough energy to power approximately 10
million homes.
ABOUT BERKSHIRE HATHAWAY INC.
Berkshire Hathaway Inc. is a holding company owning subsidiaries engaged in a
number of diverse business activities. The most important of these is the
property and casualty insurance business conducted on both a direct and
reinsurance basis through a number of subsidiaries.
ABOUT MIDAMERICAN ENERGY HOLDINGS COMPANY
MidAmerican Energy Holdings Company, headquartered in Des Moines, Iowa, is a
privately owned global energy provider. The company has 10,000 employees and
provides electric and natural gas service to approximately 5 million customers.
The company has approximately 10,000 net megawatts of diversified power
generation under ownership, contract and in operation, construction and advanced
development. Information on MidAmerican and its principal business platforms,
CalEnergy Generation, MidAmerican Energy, and Northern and Yorkshire Electric,
is available on the Internet at www.midamerican.com.
ABOUT WILLIAMS (NYSE:WMB)
Williams, through its subsidiaries, connects businesses to energy, delivering
innovative, reliable products and services. Williams information is available at
www.williams.com.
###
Portions of this document may constitute "forward-looking statements" as defined
by federal law. Although the company believes any such statements are based on
reasonable assumptions, there is no assurance that actual outcomes will not be
materially different. Any such statements are made in reliance on the "safe
harbor" protections provided under the Private Securities Reform Act of 1995.
Additional information about issues that could lead to material changes in
performance is contained in the company's annual reports filed with the
Securities and Exchange Commission.
5
PRO FORMA FINANCIAL INFORMATION PRESENTING KERN RIVER GAS TRANSMISSION
COMPANY AS DISCONTINUED OPERATIONS
As previously announced on March 7, 2002, Williams reported it had
committed to sell and signed a definitive agreement to sell its Kern River
interstate natural gas pipeline business to a unit of MidAmerican Energy
Holdings Company for $450 million in cash and assumption of $510 million in
debt. The following unaudited pro forma financial information is included to
supplement Williams' previously issued consolidated financial statements
included in Williams' Annual Report on Form 10-K for the year ended December 31,
2001, to present the operations of Kern River as discontinued operations.
Consistent with Williams' previously issued consolidated financial statements,
Williams Communications Group, Inc. is also presented as discontinued
operations. The unaudited pro forma consolidated statement of operations does
not reflect any gain or loss related to the sale.
For comparative purposes, income from continuing operations as reported in
Williams' Form 10-K was $835.4 million, $965.4 million and $354.9 million for
2001, 2000 and 1999, respectively. Additionally, the reported loss from
discontinued operations was $1,313.1 million, $441.1 million and $198.7 million
or 2001, 2000, and 1999, respectively.
The unaudited pro forma financial information on the following pages should
be read in conjunction with the historical financial statements and notes
thereto included in the Williams Annual Report on Form 10-K for the year ended
December 31, 2001 and other information filed with the Securities and Exchange
Commission.
6
THE WILLIAMS COMPANIES, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
(Millions, except per-share amounts) Years Ended December 31,
----------------------------------------------
2001 2000 1999
----------- ----------- -----------
Revenues:
Energy Marketing & Trading $ 1,871.8 $ 1,572.6 $ 662.3
Gas Pipeline 1,584.8 1,729.8 1,672.3
Energy Services* 8,155.1 6,591.5 4,324.4
Other 76.3 66.8 65.4
Intercompany eliminations (814.6) (517.3) (244.2)
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Total revenues 10,873.4 9,443.4 6,480.2
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Segment costs and expenses:
Costs and operating expenses* 7,340.3 6,414.0 4,695.3
Selling, general and administrative expenses 918.1 755.5 671.1
Impairment of soda ash mining facility 170.0 -- --
Other (income) expense--net (28.8) 75.1 (30.6)
----------- ----------- -----------
Total segment costs and expenses 8,399.6 7,244.6 5,335.8
----------- ----------- -----------
General corporate expenses 124.3 97.2 76.9
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Operating income:
Energy Marketing & Trading 1,296.1 1,005.5 104.5
Gas Pipeline 573.3 610.1 589.2
Energy Services 591.5 571.7 439.6
Other 12.9 11.5 11.1
General corporate expenses (124.3) (97.2) (76.9)
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Total operating income 2,349.5 2,101.6 1,067.5
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Interest accrued (748.1) (665.9) (544.1)
Interest capitalized 39.4 49.3 34.5
Investing income (loss) (200.1) 105.0 24.9
Preferred returns and minority interest in income of
consolidated subsidiaries (67.5) (58.0) (38.2)
Other income (expense)--net 27.9 .3 (12.3)
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Income from continuing operations before income taxes
and extraordinary gain 1,401.1 1,532.3 532.3
Provision for income taxes 606.8 606.9 210.8
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Income from continuing operations 794.3 925.4 321.5
Loss from discontinued operations (1,272.0) (401.1) (165.3)
----------- ----------- -----------
Income (loss) before extraordinary gain (477.7) 524.3 156.2
Extraordinary gain -- -- 65.2
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Net income (loss) (477.7) 524.3 221.4
Preferred stock dividends -- -- 2.8
----------- ----------- -----------
Income (loss) applicable to common stock $ (477.7) $ 524.3 $ 218.6
=========== =========== ===========
Basic earnings (loss) per common share:
Income from continuing operations $ 1.60 $ 2.08 $ .73
Loss from discontinued operations (2.56) (.90) (.38)
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Income (loss) before extraordinary gain (.96) 1.18 .35
Extraordinary gain -- -- .15
----------- ----------- -----------
Net income (loss) $ (.96) $ 1.18 $ .50
=========== =========== ===========
Average Shares 496,935 444,416 436,117
Diluted earnings (loss) per common share:
Income from continuing operations $ 1.59 $ 2.06 $ .72
Loss from discontinued operations (2.54) (.89) (.37)
----------- ----------- -----------
Income (loss) before extraordinary gain (.95) 1.17 .35
Extraordinary gain -- -- .15
----------- ----------- -----------
Net income (loss) $ (.95) $ 1.17 $ .50
=========== =========== ===========
Average Shares 500,567 449,320 446,915
* Includes consumer excise taxes of $308.9 million, $287.6 million and $229.0
million in 2001, 2000 and 1999, respectively.
7
THE WILLIAMS COMPANIES, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(Dollars in millions, except per-share amounts) December 31,
---------------------------
2001 2000
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ASSETS
Current assets:
Cash and cash equivalents $ 1,291.4 $ 986.5
Accounts and notes receivable, net of allowance 3,118.6 3,336.4
Inventories 813.2 847.8
Energy risk management and trading assets 6,514.1 7,879.8
Margin deposits 213.8 730.9
Deferred income taxes 440.6 64.9
Assets of discontinued operations-Kern River Gas Transmission 25.6 31.9
Other 520.7 319.2
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Total current assets 12,938.0 14,197.4
Net assets of discontinued operations-Williams Communications Group, Inc. -- 2,290.2
Investments 1,563.1 1,368.6
Property, plant and equipment, net 16,938.8 13,502.4
Energy risk management and trading assets 4,209.4 1,831.1
Goodwill and other intangible assets, net 1,180.6 42.5
Assets of discontinued operations-Kern River Gas Transmission 935.9 856.4
Other assets and deferred charges, net of allowance 1,140.4 688.0
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Total assets $ 38,906.2 $ 34,776.6
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 1,424.5 $ 2,036.7
Accounts payable 2,885.9 3,085.0
Accrued liabilities 1,957.1 1,367.9
Liabilities of discontinued operations-Kern River Gas Transmission 40.9 483.0
Energy risk management and trading liabilities 5,525.7 7,597.3
Guarantees and payment obligations related to Williams
Communications Group, Inc. 645.6 --
Long-term debt due within one year 1,014.8 1,173.6
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Total current liabilities 13,494.5 15,743.5
Long-term debt 9,012.7 6,830.5
Deferred income taxes 3,689.9 2,863.9
Energy risk management and trading liabilities 2,936.6 1,302.8
Guarantees and payment obligations related to Williams
Communications Group, Inc. 1,120.0 --
Liabilities of discontinued operations-Kern River Gas Transmission 488.0 32.9
Other liabilities and deferred income 943.1 945.1
Contingent liabilities and commitments
Minority interests in consolidated subsidiaries 201.0 98.1
Preferred interests in consolidated subsidiaries 976.4 877.9
Williams obligated mandatorily redeemable preferred securities of
Trust holding only Williams indentures -- 189.9
Stockholders' equity:
Preferred stock -- --
Common stock 518.9 447.9
Capital in excess of par value 5,085.1 2,473.9
Retained earnings 199.6 3,065.7
Accumulated other comprehensive income 345.1 28.2
Other (65.0) (81.2)
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6,083.7 5,934.5
Less treasury stock (at cost) (39.7) (42.5)
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Total stockholders' equity 6,044.0 5,892.0
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Total liabilities and stockholders' equity $ 38,906.2 $ 34,776.6
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8
THE WILLIAMS COMPANIES, INC.
PRO FORMA CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(Millions) Years Ended December 31,
--------------------------------------
2001 2000 1999
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OPERATING ACTIVITIES:
Income from continuing operations $ 794.3 $ 925.4 $ 321.5
Adjustments to reconcile to cash provided from operations:
Depreciation, depletion and amortization 764.7 634.2 587.5
Provision for deferred income taxes 335.8 430.0 473.3
Impairment of soda ash mining facility 170.0 -- --
Provision for loss on property and other assets 163.7 57.3 21.5
Net gain on dispositions of assets (92.4) (14.7) (34.1)
Provision for uncollectible accounts 202.4 4.7 (.1)
Preferred returns and minority interest in income of consolidated
subsidiaries 67.5 58.0 38.2
Tax benefit of stock-based awards 26.0 25.6 76.1
Cash provided (used) by changes in assets and liabilities:
Accounts and notes receivable 186.5 (1,554.3) (633.8)
Inventories 43.1 (293.7) (102.9)
Margin deposits 517.1 (671.7) (56.5)
Other current assets 121.4 (28.7) (62.1)
Accounts payable (289.3) 1,276.9 897.9
Accrued liabilities 304.4 251.3 (154.8)
Changes in current energy risk management and trading assets
and liabilities (742.9) (218.8) .8
Changes in noncurrent energy risk management and trading
assets and liabilities (806.1) (485.2) (59.1)
Changes in noncurrent deferred income (4.1) 28.2 91.1
Other, including changes in noncurrent assets and liabilities (42.8) 58.4 35.1
-------- -------- --------
Net cash provided by operating activities of continuing operations 1,719.3 482.9 1,439.6
Net cash provided by operating activities of discontinued operations 71.0 65.2 44.4
-------- -------- --------
Net cash provided by operating activities 1,790.3 548.1 1,484.0
-------- -------- --------
FINANCING ACTIVITIES:
Proceeds from notes payable 1,830.0 2,190.4 939.6
Payments of notes payable (2,631.4) (723.9) (729.8)
Proceeds from long-term debt 3,525.1 984.6 1,696.4
Payments of long-term debt (1,678.5) (702.1) (972.1)
Proceeds from issuance of common stock 1,410.9 75.2 65.2
Dividends paid (341.0) (265.8) (263.7)
Proceeds from sale of limited partner units of consolidated partnership 92.5 -- --
Proceeds from issuance of preferred interests of consolidated subsidiaries 95.3 546.8 --
Proceeds (payments) from issuance (redemption) of Williams obligated
mandatorily redeemable preferred securities of Trust holding only
Williams indentures (194.0) -- 175.0
Payments/dividends to preferred and minority interests (59.5) (42.0) (27.4)
Payments for debt issuance costs (45.8) (4.0) (12.1)
Other--net (.1) .2 50.8
-------- -------- --------
Net cash provided by financing activities of continuing operations 2,003.5 2,059.4 921.9
Net cash provided by financing activities of discontinued operations 1,387.2 1,727.3 3,455.0
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Net cash provided by financing activities 3,390.7 3,786.7 4,376.9
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Continued on the next page
9
(Millions) Years Ended December 31,
-----------------------------------------
2001 2000 1999
--------- --------- ---------
INVESTING ACTIVITIES:
Property, plant and equipment:
Capital expenditures (1,788.2) (1,508.5) (1,790.2)
Proceeds from dispositions 33.5 38.5 27.4
Acquisitions of businesses (primarily property, plant and equipment),
net of cash acquired (1,343.1) (726.4) (162.9)
Purchases of investments/advances to affiliates (574.0) (183.2) (347.2)
Proceeds from dispositions of investments and other assets 407.6 47.2 307.4
Proceeds received on advances to affiliates 95.0 -- --
Purchase of assets subsequently leased to seller (276.0) -- --
Other--net 24.3 .7 10.6
--------- --------- ---------
Net cash used by investing activities of continuing operations (3,420.9) (2,331.7) (1,954.9)
Net cash used by investing activities of discontinued operations (1,573.2) (1,874.0) (3,321.1)
--------- --------- ---------
Net cash used by investing activities (4,994.1) (4,205.7) (5,276.0)
--------- --------- ---------
Cash of discontinued operations at spinoff (96.5) -- --
--------- --------- ---------
Increase in cash and cash equivalents 90.4 129.1 584.9
Cash and cash equivalents at beginning of year 1,210.7 1,081.6 496.7
--------- --------- ---------
Cash and cash equivalents at end of year* $ 1,301.1 $ 1,210.7 $ 1,081.6
========= ========= =========
* Includes cash and cash equivalents of discontinued operations of $9.7 million,
$224.2 million and $484.3 million for 2001, 2000 and 1999, respectively.
10
