01—Abstract
Summary
Summary of the 10-K/A filed May 1, 2012. Cited figures are marked; the original filing is the authoritative source.
Williams Companies, Inc. (WMB) filed an amended Annual Report (Form 10-K/A) on May 1, 2012, for the fiscal year ended December 31, 2011.
This amendment primarily restates financial data due to a correction in accounting for deferred income taxes related to its investment in Williams Partners L.P. (WPZ). The company identified a material weakness in its internal controls over financial reporting stemming from this accounting error, which involved not initially recording deferred income taxes on gains from WPZ unit issuances.
While this correction impacts the balance sheet and equity sections, it does not affect the consolidated statements of operations or cash flows. The company also completed the tax-free spin-off of its exploration and production business, WPX Energy, Inc., on December 31, 2011.
This transaction significantly altered the company's asset and equity structure. Despite the internal control weakness identified, the company's financial statements present fairly the consolidated financial position and results of operations in conformity with U.S. GAAP.
02—Key points
Key Highlights
- Restatement of Financial Data: The company restated its Selected Financial Data and Financial Statements due to an accounting correction for deferred income taxes related to its investment in Williams Partners L.P. (WPZ).
- Material Weakness in Internal Controls: A material weakness was identified concerning the accounting for deferred income taxes on gains from WPZ unit issuances, leading to an ineffective internal control over financial reporting as of December 31, 2011.
- Spin-off of WPX Energy, Inc.: Williams Companies completed the tax-free spin-off of its exploration and production business, WPX Energy, Inc., on December 31, 2011, which significantly impacted its asset and equity structure.
- Consolidated Financial Statements Audited: Ernst & Young LLP provided an unqualified opinion on the fairness of the consolidated financial statements for the years ended December 31, 2011, 2010, and 2009.
- Revenues Growth: Total revenues increased to $7.93 billion in 2011 from $6.64 billion in 2010, driven by strong performance in the Williams Partners segment.
- Income from Continuing Operations: Income from continuing operations attributable to The Williams Companies, Inc. rose significantly to $803 million in 2011 from $104 million in 2010.
- Debt Restructuring and Retirement: The company engaged in various debt issuances and retirements, including early debt retirement costs of $271 million in 2011.
03—Questions
Frequently Asked Questions
What was the primary reason for the restatement of the financial statements?
The financial statements were restated to correct an accounting error related to deferred income taxes associated with the company's investment in Williams Partners L.P. (WPZ). Specifically, deferred income taxes were not initially recorded for differences in financial and income tax bases arising from gains on WPZ unit issuances.
What is the significance of the 'material weakness' identified in internal controls?
A material weakness indicates a deficiency in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of financial statements will not be prevented or detected. In this case, it relates to the deferred income tax accounting for the WPZ investment. This means that while the financial statements themselves were corrected, the company has acknowledged a past control deficiency.
How did the spin-off of WPX Energy, Inc. affect the company's financial position?
The spin-off, completed on December 31, 2011, involved distributing all of the company's interest in WPX Energy, Inc. to shareholders. This resulted in a significant decrease in total assets and stockholders' equity for The Williams Companies, Inc. for the fiscal year 2011, as WPX's assets and liabilities were removed from the consolidated balance sheet.
What was the financial performance of Williams Partners L.P. (WPZ) in 2011?
Williams Partners was a significant driver of revenue growth for the company. Total revenues from Williams Partners were $6.73 billion in 2011, up from $5.72 billion in 2010. Segment profit for Williams Partners was $1.90 billion in 2011, compared to $1.57 billion in 2010, indicating strong operational performance.
04—Continue