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Williams Reports Year-End 2011 Financial Results
TULSA, Okla., Feb 22, 2012 (BUSINESS WIRE) -- Copyright Business Wire 2012

--Adjusted Net Income for 2011 is $929 Million, $1.55 per Share; Includes Adjusted Results of Former E&P Business

--2011 Adjusted Income from Continuing Operations is $1.23 per Share, Up 35%

--Fee-based Business Growth at Williams Partners, Strong Margins Drive Improved 2011 Adjusted Results

--Williams Partners' Laser Acquisition, Higher Expected Ethylene Margins Drive Increase in Guidance

--Dividend Growth Accelerated - March 2012 Dividend More Than Double 2011 Level

--2012 Full-year Planned Dividend of $1.09 Up 41% Over 2011; 10-15% Dividend Growth Expected in 2013

Williams (NYSE: WMB) announced 2011 unaudited net income attributable to Williams of $376 million, or $0.63 per share on a diluted basis, compared with a net loss of $1,097 million, or a loss of $1.86 per share on a diluted basis for 2010.

* 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.

Net income for 2011 and 2010 reflect significant losses from discontinued operations. These losses were primarily due to significant non-cash property impairment and other charges associated with Williams' former exploration and production business.

Williams reported 2011 income from continuing operations of $803 million, or $1.34 per share, compared with income from continuing operations of $104 million, or $0.17 per share in 2010. Higher fee-based revenues and higher natural gas liquid (NGL) margins at Williams Partners along with lower early debt retirement costs drove the significant increase in income from continuing operations in 2011.

In 2011, Williams recorded pre-tax impairment charges to discontinued operations of approximately $576 million associated with certain natural gas properties of the former exploration and production business as well as a $179 million impairment of Williams' investment in the former exploration and production business at the time of the spinoff.

The full-year 2010 period included charges to discontinued operations of approximately $1 billion for an impairment of goodwill and pre-tax impairment charges of $678 million related to certain natural gas properties, both related to the former exploration and production business. Full-year 2010 also included $645 million of pre-tax charges in first-quarter 2010 in conjunction with the strategic restructuring that transformed Williams Partners L.P. (NYSE: WPZ) into a leading diversified master limited partnership.

For fourth quarter 2011, Williams reported a net loss of $444 million, or a loss of $0.74 per share, compared with net income of $174 million, or $0.29 per share for fourth quarter 2010. The net loss in the fourth quarter was due to the previously noted impairment charges associated with the former exploration and production business and $271 million of early debt retirement costs.

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 former exploration and production businesses' results are being reported in discontinued operations.

Adjusted Net Income

Williams' adjusted net income for 2011 was $929 million, or $1.55 per share. This measure is presented on a basis comparable to 2011 earnings guidance released on Nov. 1, 2011, prior to the WPX Energy spin-off. This amount includes the adjusted results of Williams' former exploration and production business.

Adjusted Income from Continuing Operations

Adjusted income from continuing operations was $734 million, or $1.23 per share, for 2011, compared with $537 million, or $0.91 per share for 2010. This measure reflects reporting WPX Energy's results in discontinued operations. It does not correspond with 2011 earnings guidance provided on Nov. 1, 2011.

For fourth quarter 2011, Williams' adjusted income from continuing operations was $214 million, or $0.36 per share, compared with $180 million, or $0.30 per share for fourth quarter 2010.

The significant increase in the adjusted income from continuing operations for 2011 was due to improved results in both the Williams Partners and Midstream Canada & Olefins segments. There is a more detailed description of the business results later in this press release.

Adjusted net income and adjusted income from continuing operations reflect the removal of items considered unrepresentative of ongoing operations and are non-GAAP measures. Reconciliations to the most relevant GAAP measures are attached to this news release.

CEO Comment

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

"Our infrastructure businesses performed extremely well in 2011, driving a 35-percent increase in adjusted EPS for the year and generating more than $2 billion in adjusted segment profit.

"We were also very successful in 2011 in both signing new business and making significant progress on major expansion projects across our businesses. On top of all of that, we completed the separation of our E&P business, transforming Williams into a high-dividend, high-growth energy infrastructure company.

"Our full-year 2012 planned dividend to shareholders will be 41 percent higher than the full-year 2011 level, and we continue to expect robust distributions from Williams Partners that will drive dividend growth at Williams.

"We're also expecting 12 percent adjusted EPS growth through 2013 despite an expectation of lower NGL margins and we're working on a number of large-scale projects that we expect to drive significant growth beyond the guidance period.

"Williams Partners is well on its way to creating a 3 Bcf/d natural gas supply hub in northeast Pennsylvania; it also has other major projects underway in the deepwater Gulf of Mexico and along the Transco pipeline. We also have significant expansions underway in our olefins business in both Canada and the U.S."

Williams Partners' Laser Acquisition Drives Increase in Guidance

Williams is increasing its capital expenditure and adjusted segment profit guidance for 2012-13 to reflect Williams Partners' acquisition of the Laser Northeast Gathering System. Capital expenditure guidance for 2012-13 has also been updated to reflect Williams Partners' Constitution Pipeline project. Higher expected ethylene margins at Midstream Canada & Olefins also contributed to the increased segment profit guidance in 2013.

Williams' updated assumptions for certain energy commodity prices for 2012-13 and the corresponding guidance for the company's earnings and capital expenditures are displayed in the table below.

(1) Average NGL margins are for Williams Partners' midstream business; they do not reflect Midstream Canada & Olefins' business. (2) Composite frac spread is based on Henry Hub natural gas and Mont Belvieu NGLs. (3) Adjusted Segment Profit, Adjusted Segment Profit + DD&A, and Adjusted Diluted EPS are adjusted to remove items considered unrepresentative of ongoing operations and are non-GAAP measures. Reconciliations to the most relevant GAAP measures are attached to this news release.

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., and Midstream Canada & Olefins includes the results of Williams' Canadian midstream and domestic olefins business.

* A schedule reconciling income 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.

Williams Partners

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

For 2011, Williams Partners reported segment profit of $1.90 billion, compared with $1.57 billion for 2010. For fourth quarter 2011, Williams Partners reported segment profit of $517 million, compared with $418 million for the same period in 2010.

Higher NGL margins and higher fee-based revenues in the partnership's midstream business, as well as improved results in the gas pipeline business, drove the significant improvement in both the full-year and fourth-quarter periods.

The improvement in Williams Partners' gas pipeline business was primarily due to increased revenue from expansion projects placed into service in 2010 and 2011.

Fee-based revenues in the partnership's midstream business increased by 12 percent in 2011. This improvement was driven by new gathering business in the Marcellus Shale, increased throughput on the Perdido Norte gas and oil pipelines in the Gulf of Mexico and a rate increase in the Piceance Basin associated with an agreement executed in November 2010.

Full-year per-unit NGL margins for 2011 were $0.83 per gallon, an increase of 46 percent over the full-year 2010 amount of $0.57 per gallon.

There is a more detailed description of Williams Partners' interstate gas pipeline and midstream business results and outlook in the partnership's year-end 2011 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 and producing ethylene, propylene, NGLs and other related products.

Midstream Canada & Olefins reported segment profit of $296 million for 2011, compared with $172 million for 2010. For fourth quarter 2011, Midstream Canada & Olefins reported segment profit of $77 million, compared with $49 million for fourth quarter 2010.

Higher Canadian NGL margins from butylene/butane mix products helped drive the improvement in the full-year and fourth-quarter results. The separate products produced by the company's Canadian butylene/butane splitter placed in service in August 2010 provide a higher combined per-unit margin than the butylene/butane mix product sold previously. Additionally, product sales prices and sales volumes increased.

Higher per-unit margins on Canadian propane and propylene and Geismar ethylene also contributed to the improved results in both 2011 periods. Fourth-quarter 2011 segment profit also benefited from a $19 million adjustment related to a litigation matter.

Midstream Canada & Olefins has two major expansion projects in Canada and one in the U.S. currently under way.

The Boreal Pipeline, which is a 12-inch diameter pipeline in Canada that will transport recovered NGLs and olefins from the extraction plant in Fort McMurray to the fractionator in Redwater, is expected to be placed into service in the second quarter of this year. An ethane recovery project is also under way in Canada that will enable Williams to initially recover and process 10,000 barrels per day of an ethane/ethylene mix in Canada. That project is expected to be placed into service in 2013.

Williams is also in the process of expanding its Geismar olefins production facility. The expansion is expected to increase the facility's ethylene production capacity by 600 million pounds per year to a new annual capacity of 1.95 billion pounds. The expansion is expected to be placed into service in 2013.

Year-end Materials to be Posted Shortly; Q&A Webcast Scheduled for Tomorrow

Williams' year-end financial results package should 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 year-end Q&A live webcast on Thursday, Feb. 23 at 9:30 a.m. EST. A limited number of phone lines will be available at (800) 967-7144. International callers should dial (719) 325-2207.

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.

Form 10-K

The company plans to file its 2011 Form 10-K with the Securities and Exchange Commission next week. Once filed, the document will be available on both the SEC and Williams websites.

Non-GAAP Measures

This press release includes certain financial measures -- adjusted segment profit, adjusted earnings and adjusted 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 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.

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 adjusted segment profit, adjusted earnings nor adjusted per share measures are intended to represent an alternative to 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 72 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. More information is available at www.williams.com. Go to http://www.b2i.us/irpass.asp?BzID=630&to=ea&s=0 to join our e-mail list.

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" 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;

-- 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:

-- 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. 24, 2011, and our quarterly reports on Form 10-Q available from our offices or from our website at www.williams.com.

SOURCE: Williams


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