EX-99.1 3 d05065exv99w1.txt PRO FORMA FINANCIAL INFORMATION 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 --------- --------- --------- 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) --------- --------- --------- Total revenues 4,948.9 6,465.2 5,937.3 --------- --------- --------- 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 --------- --------- --------- Total segment costs and expenses 4,230.7 4,224.0 4,110.7 --------- --------- --------- General corporate expenses 142.8 124.3 97.2 --------- --------- --------- 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) --------- --------- --------- 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) --------- --------- --------- 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 --------- --------- --------- Income (loss) from continuing operations (580.2) 700.2 700.1 Loss from discontinued operations (174.5) (1,177.9) (175.8) --------- --------- --------- Net income (loss) (754.7) (477.7) 524.3 Preferred stock dividends 90.1 -- -- --------- --------- --------- 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) --------- --------- --------- 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) --------- --------- --------- 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, ----------------------------------------------- ---------------------- 2002 2001 --------- --------- 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 --------- --------- 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 --------- --------- Total assets $34,988.5 $38,614.2 ========= ========= 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 --------- --------- 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) --------- --------- 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) --------- --------- Total stockholders' equity 5,049.0 6,044.0 --------- --------- 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, ---------- -------------------------------- 2002 2001 2000 -------- -------- -------- 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 -------- -------- -------- 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 -------- -------- -------- Net cash provided (used) by operating activities (542.2) 1,851.0 583.8 -------- -------- -------- 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) -------- -------- -------- 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 -------- -------- -------- Net cash provided (used) by financing activities (127.1) 3,330.0 3,751.0 -------- -------- --------
Continued on the next page THE WILLIAMS COMPANIES, INC. PRO FORMA CONSOLIDATED STATEMENT OF CASH FLOWS--(Continued) (UNAUDITED)
(Millions) Years Ended December 31, ---------- -------------------------------- 2002 2001 2000 -------- -------- -------- 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 -------- -------- -------- 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) -------- -------- -------- Net cash provided (used) by investing activities 1,104.2 (4,994.1) (4,205.7) -------- -------- -------- Cash of discontinued operations at spinoff -- (96.5) -- -------- -------- -------- 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 -------- -------- -------- Cash and cash equivalents at end of year* $1,736.0 $1,301.1 $1,210.7 -------- -------- --------
*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.