10-QPeriod: Q2 FY2009

WILLIAMS COMPANIES, INC. Quarterly Report for Q2 Ended Jun 30, 2009

Filed August 6, 2009For Securities:WMB

Summary

Williams Companies, Inc. (WMB) reported mixed financial results for the second quarter and first half of 2009, heavily impacted by the prevailing unfavorable economic and energy commodity price environment. Revenues significantly declined year-over-year due to lower realized prices across segments, particularly in Gas Marketing and Midstream. Despite cost reductions, operating income and net income attributable to the company saw substantial decreases, with a net loss reported for the six months ended June 30, 2009. The company also disclosed the expropriation of its Venezuela operations by the government, classifying them as discontinued operations and recording significant impairment charges. Management is focused on cost control, maintaining liquidity, and strategic investments in growth areas like the Marcellus Shale. Liquidity remains a key focus, with the company expecting to maintain at least $1 billion in cash and unused credit facilities. Capital expenditures were reduced compared to the prior year, with a significant portion designated as non-discretionary. Despite the challenging environment and ongoing legal and environmental matters, management believes the company is positioned to manage its obligations and capitalize on future opportunities when economic conditions improve.

Financial Highlights

44 data points
Beta

Revenue

$1.91B

Net Income

$142.00M

7.4% Net Margin

EPS (Diluted)

$0.24

Total Assets

$25.03B

Cash & Equivalents

$1.85B

Free Cash Flow

$622.00M

Financial Statements
Beta
Revenue$1.91B
SG&A Expenses$129.00M
Operating Income$351.00M
Net Income$142.00M
EPS (Basic)$0.24
EPS (Diluted)$0.24
Shares Outstanding (Basic)580.73M
Shares Outstanding (Diluted)588.78M

Key Highlights

  • 1Significant year-over-year decline in total revenues (-48% for Q2, -44% for H1) driven by lower commodity prices and reduced marketing activities.
  • 2Net loss attributable to The Williams Companies, Inc. of $(30) million for the six months ended June 30, 2009, compared to a net income of $1,039 million in the prior year period.
  • 3Expropriation of Venezuela operations by the government resulted in classification as discontinued operations and significant impairment charges totaling $211 million.
  • 4Focus on cost containment and maintaining liquidity, with a projected minimum of $1 billion in cash and unused credit facilities.
  • 5Reduction in capital expenditures, with a focus on completing major projects and maintaining a reduced level of natural gas production development.
  • 6Strategic investments in growth areas such as the Marcellus Shale through joint ventures and development agreements.
  • 7Continued exposure to legal and environmental matters, with ongoing proceedings and accruals for potential liabilities, though management believes the overall impact will not be material.

Frequently Asked Questions

The primary driver of the significant revenue decrease was the unfavorable energy commodity price environment, leading to lower realized revenues in segments like Gas Marketing and Midstream. This was compounded by a general slowdown in economic activity impacting demand.

The expropriation of Venezuela operations led to their classification as discontinued operations. The company recorded significant impairment charges, including a $211 million impairment of property, plant, and equipment, and a $9 million gain on deconsolidation. These events contributed to the overall net loss reported for the period.

Williams Companies expects to maintain at least $1 billion in liquidity from cash and cash equivalents and unused revolving credit facilities. Funding for operations, capital expenditures, and debt payments is expected to come from operating cash flow, existing cash, and credit facilities.

Yes, the company is involved in various legal proceedings, including those related to California energy crisis refund proceedings, reporting of natural gas-related information, and royalty litigation. Environmental matters include ongoing remediation for PCB and mercury contamination at various sites. While management accrues for these matters, they believe the ultimate resolution, taken as a whole, will not have a material adverse effect on the company's future liquidity or financial position.