SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: April 22, 2003
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(Date of earliest event reported)
The Williams Companies, Inc.
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(Exact Name of Registrant as Specified in Charter)
Delaware 1-4174 73-0569878
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(State or Other (Commission File Number) (IRS Employer
Jurisdiction of 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
Not Applicable
(Former name or former address, if changed since last report)
Item 5. Other Events
The Williams Companies, Inc. ("Williams") is filing with the Securities
& Exchange Commission pro forma financial information reflecting its Texas Gas
pipeline system and its Williams Energy Partners segment as discontinued
operations to supplement Williams previously issued consolidated financial
statements included in Williams' Annual Report on From 10-K for the year ended
December 31, 2002.
Item 7. Financial Statements and Exhibits
The Company files the following exhibits as part of this report:
Exhibit 99.1 Pro forma Financial Information presenting Williams Energy
Partners and Texas Gas Transmission Corporation as
discontinued operations
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
The Williams Companies, Inc.
Date: April 22, 2003 /s/ Brian K. Shore
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Name: Brian K. Shore
Title: Corporate Secretary
INDEX TO EXHIBITS
Exhibit Number Description
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Exhibit 99.1 Pro forma Financial Information presenting Williams Energy
Partners and Texas Gas Transmission Corporation as
discontinued operations
EXHIBIT 99.1
PRO FORMA FINANCIAL INFORMATION PRESENTING WILLIAMS ENERGY PARTNERS
AND TEXAS GAS TRANSMISSION CORPORATION AS DISCONTINUED
OPERATIONS
As previously announced on February 20, 2003, Williams reported it
intended to offer for sale its general partner and limited partner interests in
Williams Energy Partners and its 5,800-mile Texas Gas pipeline system. In April
2003, Williams' Board of Directors approved resolutions that authorized
management to execute and deliver, in the name of the sellers, agreements for
the sales of the above mentioned businesses. 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, 2002, to present the operations of Williams
Energy Partners and Texas Gas as discontinued operations. The impact to
consolidated revenues as reported in Williams' Annual Report on Form 10-K as a
result of this reclassification was a decrease of $659.5 million, $600.3 million
and $622 million for the years ended December 31, 2002, 2001 and 2000,
respectively. The combined net income impact of these operations previously
included in income (loss) from continuing operations was $78.7 million, $102.5
million and $120.3 million for the years ended December 31, 2002, 2001 and 2000,
respectively. The unaudited pro forma consolidated statement of operations does
not reflect any potential gain or loss related to the expected sales. Consistent
with Williams' previously issued consolidated financial statements, other assets
and/or businesses are also reported as discontinued operations, those being Kern
River natural gas pipeline system, Central natural gas pipeline system, soda ash
mining operations, Mid-America and Seminole Pipelines, Midsouth refinery and
related assets, Williams travel centers, bio-energy facilities and Williams
Communications Group, Inc.
For comparative purposes, income (loss) from continuing operations as
reported in Williams' Form 10-K was a loss of $501.5 million for the year ended
December 31, 2002 and income of $802.7 million and $820.4 million for the years
ended December 31, 2001 and 2000, respectively. Additionally, the reported loss
from discontinued operations was $253.2 million, $1,280.4 million and $296.1
million for the years ended December 31, 2002, 2001 and 2000, 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, 2002 and other information filed with the Securities and Exchange
Commission.
THE WILLIAMS COMPANIES, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
(Millions, except per-share amounts) Years Ended December 31,
- ------------------------------------ -----------------------------------
2002 2001 2000
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Revenues:
Energy Marketing & Trading $ 56.2 $ 1,705.6 $ 1,295.1
Gas Pipeline 1,241.8 1,180.8 1,310.3
Exploration & Production 899.9 615.2 331.0
Midstream Gas & Liquids 1,909.1 1,906.8 1,574.3
Petroleum Services* 866.0 1,109.7 1,456.3
Other 65.8 80.3 74.4
Intercompany eliminations (89.9) (133.2) (104.1)
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Total revenues 4,948.9 6,465.2 5,937.3
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Segment costs and expenses:
Costs and operating expenses* 3,313.7 3,539.9 3,506.3
Selling, general and administrative expenses 620.1 698.6 522.1
Other (income) expense - net 296.9 (14.5) 82.3
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Total segment costs and expenses 4,230.7 4,224.0 4,110.7
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General corporate expenses 142.8 124.3 97.2
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Operating income (loss):
Energy Marketing & Trading (471.7) 1,294.6 968.2
Gas Pipeline 470.7 398.3 467.1
Exploration & Production 516.8 219.5 75.8
Midstream Gas & Liquids 171.7 185.9 282.0
Petroleum Services 48.1 145.8 39.5
Other (17.4) (2.9) (6.0)
General corporate expenses (142.8) (124.3) (97.2)
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Total operating income 575.4 2,116.9 1,729.4
--------- --------- ---------
Interest accrued (1,174.5) (692.6) (620.7)
Interest capitalized 27.9 37.0 32.3
Interest rate swap loss (124.2) -- --
Investing income (loss) (112.9) (172.4) 83.9
Minority interest in income and preferred returns of consolidated subsidiaries (41.8) (71.7) (56.8)
Other income (expense) - net 24.2 26.2 (.6)
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Income (loss) from continuing operations before income taxes (825.9) 1,243.4 1,167.5
Provision (benefit) for income taxes (245.7) 543.2 467.4
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Income (loss) from continuing operations (580.2) 700.2 700.1
Loss from discontinued operations (174.5) (1,177.9) (175.8)
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Net income (loss) (754.7) (477.7) 524.3
Preferred stock dividends 90.1 -- --
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Income (loss) applicable to common stock $ (844.8) $ (477.7) $ 524.3
========= ========= =========
Basic earnings (loss) per common share:
Income (loss) from continuing operations $ (1.29) $ 1.41 $ 1.58
Loss from discontinued operations (.34) (2.37) (.40)
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Net income (loss) $ (1.63) $ (.96) $ 1.18
========= ========= =========
Diluted earnings (loss) per common share:
Income (loss) from continuing operations $ (1.29) $ 1.40 $ 1.56
Loss from discontinued operations (.34) (2.35) (.39)
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Net income (loss) $ (1.63) $ (.95) $ 1.17
========= ========= =========
*Includes consumer excise taxes of $10.8 million, $33.4 million and $95.6
million in 2002, 2001 and 2000, respectively.
THE WILLIAMS COMPANIES, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(Dollars in millions, except per-share amounts) December 31,
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2002 2001
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ASSETS
Current assets:
Cash and cash equivalents $ 1,652.2 $ 1,243.6
Restricted cash 102.8 --
Accounts and notes receivable, less allowance of $112.2 ($252.1 in 2001) 2,459.9 2,706.4
Inventories 427.3 522.6
Energy risk management and trading assets 5,276.5 6,401.1
Margin deposits 804.8 171.4
Assets of discontinued operations 1,155.0 915.4
Deferred income taxes 569.2 440.6
Other current assets and deferred charges 438.4 423.9
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Total current assets 12,886.1 12,825.0
Restricted cash 188.3 --
Investments 1,475.3 1,554.9
Property, plant and equipment - net 12,725.9 12,396.8
Energy risk management and trading assets 3,578.7 4,030.4
Goodwill 1,060.2 1,119.0
Assets of discontinued operations 2,222.4 5,792.2
Receivables from Williams Communications Group, Inc.
(less allowance of $103.2 in 2001) 120.3 137.2
Other assets and deferred charges 731.3 758.7
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Total assets $34,988.5 $38,614.2
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 934.8 $ 1,424.5
Accounts payable 2,000.0 2,532.5
Accrued liabilities 1,416.7 1,604.5
Liabilities of discontinued operations 466.9 762.3
Energy risk management and trading liabilities 5,359.6 5,412.7
Guarantees and payment obligations related to Williams Communications
Group, Inc. 47.7 645.6
Long-term debt due within one year 1,082.8 999.4
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Total current liabilities 11,308.5 13,381.5
Long-term debt 11,076.7 8,303.0
Deferred income taxes 3,353.6 3,689.9
Liabilities and minority interests of discontinued operations 1,254.7 1,485.5
Energy risk management and trading liabilities 1,863.5 2,757.6
Guarantees and payment obligations related to Williams Communications
Group, Inc. -- 1,120.0
Other liabilities and deferred income 998.8 785.3
Contingent liabilities and commitments
Minority interests in consolidated subsidiaries 83.7 71.0
Preferred interests in consolidated subsidiaries -- 976.4
Stockholders' equity:
Preferred stock, $1 per share par value, 30 million shares authorized, 1.5 million
issued in 2002, none in 2001 271.3 --
Common stock, $1 per share par value, 960 million shares authorized, 519.9 million
issued in 2002, 518.9 million issued in 2001 519.9 518.9
Capital in excess of par value 5,177.2 5,085.1
Retained earnings (deficit) (884.3) 199.6
Accumulated other comprehensive income 33.8 345.1
Other (30.3) (65.0)
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5,087.6 6,083.7
Less treasury stock (at cost), 3.2 million shares of common stock in 2002 and
3.4 million in 2001 (38.6) (39.7)
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Total stockholders' equity 5,049.0 6,044.0
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Total liabilities and stockholders' equity $34,988.5 $38,614.2
========= =========
THE WILLIAMS COMPANIES, INC.
PRO FORMA CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(Millions) Years Ended December 31,
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2002 2001 2000
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OPERATING ACTIVITIES:
Income (loss) from continuing operations $ (580.2) $ 700.2 $ 700.1
Adjustments to reconcile to cash provided (used) by operations:
Depreciation, depletion and amortization 702.2 548.5 445.3
Provision (benefit) for deferred income taxes (172.9) 335.2 349.9
Payments of guarantees and payment obligations related to Williams
Communications Group, Inc. (753.9) -- --
Provision for loss on property and other assets 455.2 157.4 57.3
Net gain on dispositions of assets (190.4) (91.1) (7.8)
Provision for uncollectible accounts:
Williams Communications Group, Inc. 268.7 188.0 --
Other 9.9 13.6 3.4
Accrual for interest included in RMT note payable 32.2 -- --
Amortization of deferred set-up fee and fixed rate interest on RMT note payable 110.9 -- --
Minority interest in income and preferred returns of consolidated subsidiaries 41.8 71.7 56.8
Tax benefit received and amortization of stock-based awards 32.3 48.4 36.7
Cash provided (used) by changes in current assets and liabilities:
Restricted cash (4.0) -- --
Accounts and notes receivable 227.7 338.8 (1,520.2)
Inventories 73.4 285.5 (291.5)
Margin deposits (633.4) 559.5 (671.7)
Other current assets and deferred charges (339.3) 128.7 12.1
Accounts payable (614.3) (456.2) 1,271.8
Accrued liabilities (242.0) 241.8 277.0
Changes in current energy risk management and trading assets and liabilities 1,071.4 (742.9) (218.8)
Changes in noncurrent energy risk management and trading assets and liabilities (442.4) (806.1) (485.2)
Changes in noncurrent restricted cash (104.2) -- --
Other, including changes in noncurrent assets and liabilities 67.4 (22.0) 105.3
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Net cash provided (used) by operating activities of continuing operations (983.9) 1,499.0 120.5
Net cash provided by operating activities of discontinued operations 441.7 352.0 463.3
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Net cash provided (used) by operating activities (542.2) 1,851.0 583.8
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FINANCING ACTIVITIES:
Proceeds from notes payable 913.0 1,830.0 2,190.4
Payments of notes payable (2,024.4) (2,631.4) (723.9)
Proceeds from long-term debt 3,481.5 3,377.1 984.6
Payments of long-term debt (2,538.1) (1,654.9) (701.9)
Proceeds from issuance of common stock 5.2 1,388.5 64.1
Proceeds from issuance of preferred stock 271.3 -- --
Dividends paid (230.8) (341.0) (265.8)
Net proceeds from issuance of preferred interests of consolidated subsidiaries -- 95.3 546.8
Retirement of preferred interest in consolidated subsidiary (135.0) -- --
Redemption of Williams obligated mandatorily redeemable preferred securities of
Trust holding only Williams indentures -- (194.0) --
Payments/dividends to minority and preferred interests (48.0) (50.3) (35.7)
Changes in restricted cash (182.1) -- --
Payments for debt issuance costs (186.3) (44.8) (3.9)
Changes in cash overdrafts 28.4 (28.8) (31.9)
Other - net (8.4) (.1) (.1)
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Net cash provided (used) by financing activities of continuing operations (653.7) 1,745.6 2,022.7
Net cash provided by financing activities of discontinued operations 526.6 1,584.4 1,728.3
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Net cash provided (used) by financing activities (127.1) 3,330.0 3,751.0
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Continued on the next page
THE WILLIAMS COMPANIES, INC.
PRO FORMA CONSOLIDATED STATEMENT OF CASH FLOWS--(Continued)
(UNAUDITED)
(Millions) Years Ended December 31,
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2002 2001 2000
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INVESTING ACTIVITIES:
Property, plant and equipment:
Capital expenditures $(1,742.3) $(1,483.0) $(1,034.5)
Proceeds from dispositions 549.2 28.5 28.5
Acquisitions of businesses (primarily property, plant and equipment),
net of cash acquired -- (1,291.6) (726.4)
Purchases of investments/advances to affiliates (308.7) (568.3) (181.9)
Proceeds from sales of businesses 2,300.4 163.7 --
Proceeds from dispositions of investments and other assets 273.0 243.9 47.0
Proceeds received on advances to affiliates 75.0 95.0 --
Proceeds received on sale of claims against Williams Communications Group, Inc. 180.0 -- --
Purchase of assets subsequently leased to seller -- (276.0) --
Other - net 34.9 24.6 .7
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Net cash provided (used) by investing activities of continuing operations 1,361.5 (3,063.2) (1,866.6)
Net cash used by investing activities of discontinued operations (257.3) (1,930.9) (2,339.1)
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Net cash provided (used) by investing activities 1,104.2 (4,994.1) (4,205.7)
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Cash of discontinued operations at spinoff -- (96.5) --
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Increase in cash and cash equivalents 434.9 90.4 129.1
Cash and cash equivalents at beginning of year 1,301.1 1,210.7 1,081.6
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Cash and cash equivalents at end of year* $1,736.0 $1,301.1 $1,210.7
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*Includes cash and cash equivalents of discontinued operations of $83.8 million,
$57.5 million and $247.2 million for 2002, 2001 and 2000, respectively.
