What was the financial impact of the Barrett Resources acquisition?

The acquisition of Barrett Resources Corporation was a significant event in 2001. The company became consolidated in August, contributing $69 million in revenues and $56.9 million in segment profit in the third quarter. For the nine-month period, it contributed $77 million in revenues and $28.2 million in segment profit (for the period it was consolidated). The acquisition significantly expanded Williams' natural gas and oil exploration and production assets and added approximately $1 billion in goodwill.

How did the spin-off of Williams Communications Group (WCG) affect the financial statements?

WCG was accounted for as discontinued operations following its tax-free spin-off in April 2001. The financial statements have been restated to reflect WCG's results, net assets, and cash flows as discontinued operations. A significant investment write-down of $70.9 million was recognized in the third quarter related to Williams' remaining investment in WCG due to other-than-temporary decline in value.

What are the main risks and uncertainties facing Williams Companies, as highlighted in this filing?

Key risks and uncertainties include significant regulatory scrutiny and potential liabilities related to energy trading, particularly in California, where the company faces potential refunds and ongoing investigations. There are also environmental liabilities and ongoing litigation related to various business operations. Additionally, the company's increased debt levels and interest expenses require careful management, and the company is exposed to commodity price volatility, although it utilizes hedging strategies to mitigate some of this risk.

How has the company's debt and equity structure changed?

Williams has taken on significant new debt, with total long-term debt increasing from $6.8 billion at the end of 2000 to $8.8 billion by September 30, 2001. This reflects new debt issuances to finance acquisitions and capital expenditures. Conversely, the company also strengthened its equity position through public stock offerings, including a $1.3 billion net proceeds offering in January 2001. The debt-to-debt-plus-equity ratio increased slightly to 54.2% from 53.5%.

WMB 10-Q Quarterly Report Q3 FY2001 — Revenue, Net Income, EPS

Summary

Williams Companies, Inc. (WMB) reported strong revenue growth for the nine months ended September 30, 2001, with total revenues increasing by 33% to $8.7 billion, driven significantly by its Energy Marketing & Trading and Energy Services segments. The acquisition of Barrett Resources Corporation in August 2001 was a major event, adding substantial natural gas and oil exploration and production assets. Despite robust top-line performance and a significant increase in operating income, the company faced challenges including a substantial investment write-down related to its former communications subsidiary, Williams Communications Group (WCG), and ongoing regulatory scrutiny and potential liabilities related to energy trading in California. The company's financial position shows increased debt levels, reflecting strategic acquisitions and capital expenditures, alongside a notable increase in equity due to stock issuances. While liquidity sources remain, including cash from operations and credit facilities, investors should monitor debt levels and the company's ability to manage its complex regulatory and legal environment, particularly concerning energy market practices and environmental matters.

Key Highlights

1Total revenues for the nine months ended September 30, 2001, surged by 33% to $8.7 billion, primarily fueled by strong performance in Energy Marketing & Trading and Energy Services.
2The acquisition of Barrett Resources Corporation was completed in August 2001, significantly expanding the company's upstream natural gas and oil assets.
3Operating income saw a substantial increase of 51% for the nine months ended September 30, 2001, to $2.2 billion, indicating improved operational profitability.
4Williams recognized a $94.2 million charge related to other-than-temporary declines in the value of certain investments, notably including a $70.9 million write-down on its investment in Williams Communications Group (WCG).
5Long-term debt increased significantly, reaching $8.8 billion as of September 30, 2001, reflecting debt issuances for acquisitions and capital expenditures.
6The company is actively involved in managing various legal and regulatory matters, particularly concerning energy trading practices in California and environmental compliance.
7Basic earnings per share from continuing operations improved to $1.55 for the nine months ended September 30, 2001, compared to $1.29 in the prior year period.

WILLIAMS COMPANIES, INC. Quarterly Report for Q3 Ended Sep 30, 2001

Summary

Key Highlights

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