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Press release from Business Wire

Williams Reports Third-Quarter 2012 Financial Results

<ul> <li class='bwlistitemmargb'> <i>Third Quarter 2012 Net Income is $155 Million, $0.25 per Share</i> </li> <li class='bwlistitemmargb'> <i>Adjusted Earnings are $161 Million, $0.25 per Share for 3Q 2012; $535 Million, $0.86 per Share for First Nine Months of 2012</i> </li> <li class='bwlistitemmargb'> <i>Continued Fee-based Business Growth at Williams Partners Offset by Lower NGL Margins, Hurricane Isaac Impact</i> </li> <li class='bwlistitemmargb'> <i>Gulf Olefins Drop-Down Strengthens Williams Partners, Increases Cash Distributions to Williams</i> </li> <li class='bwlistitemmargb'> <i>Strong Dividend Growth Guidance Reaffirmed, Earnings Guidance Updated to Reflect Lower Expected Gathering Volume Growth Rate at Williams Partners, Gulf Olefins Drop-down, Other Items</i> </li> </ul>

Wednesday, October 31, 2012

Williams Reports Third-Quarter 2012 Financial Results16:01 EDT Wednesday, October 31, 2012 TULSA, Okla. (Business Wire) -- Williams (NYSE: WMB):           Quarterly Summary Financial Information3Q 20123Q 2011Per share amounts are reported on a diluted basis. All amounts are attributable to The Williams Companies, Inc.millionsper sharemillionsper share   Income from continuing operations $ 152 $ 0.25 $ 253 $ 0.43 Income from discontinued operations   3   −   19   0.03 Net income $ 155 $ 0.25 $ 272 $ 0.46                   Adjusted income from continuing operations* $ 161 $ 0.25 $ 179 $ 0.30   Year-to-Date Summary Financial InformationYTD 2012YTD 2011Per share amounts are reported on a diluted basis. All amounts are attributable to The Williams Companies, Inc.millionsper share   millionsper share   Income from continuing operations $ 572 $ 0.93 $ 724 $ 1.21 Income from discontinued operations   138   0.22   96   0.16 Net income $ 710 $ 1.15 $ 820 $ 1.37                   Adjusted income from continuing operations* $ 535 $ 0.86 $ 520 $ 0.87   * 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 (NYSE: WMB) announced third-quarter 2012 unaudited net income attributable to Williams of $155 million, or $0.25 per share on a diluted basis, compared with net income of $272 million, or $0.46 per share on a diluted basis for third-quarter 2011. Lower natural gas liquid (NGL) margins at Williams Partners drove the decline in net income during third-quarter 2012. Increased costs associated with developing businesses Williams Partners acquired earlier in the year and the absence of a $66 million income tax benefit in third-quarter 2011 related to undistributed earnings of certain foreign operations also contributed to the decline. These declines were partially offset by higher fee-based revenues at Williams Partners. For the first nine months of 2012, Williams reported net income of $710 million, or $1.15 per share on a diluted basis, compared with net income of $820 million, or $1.37 per share, for the same time period in 2011. The decline in NGL margins at Williams Partners and the absence of both a $124 million income tax benefit primarily associated with a federal settlement that was recorded during first-quarter 2011 and the previously described $66 million income tax benefit in third-quarter 2011 were the primary factors in the decline in net income for the year-to-date 2012 period. These items were partially offset by gains in 2012 associated with the sale of Williams' former assets in Venezuela. 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 results of the former exploration and production business are reported in discontinued operations for 2011. Adjusted Income from Continuing Operations Adjusted income from continuing operations was $161 million, or $0.25 per share, for third-quarter 2012, compared with $179 million, or $0.30 per share for third-quarter 2011. The decline in adjusted earnings for the third quarter of 2012 is due to lower results at Williams Partners driven by the lower NGL margins in the third quarter and increased costs associated with developing businesses Williams Partners acquired earlier this year. Despite the lower results compared with third-quarter 2011, adjusted income from continuing operations increased 17 percent sequentially over the second-quarter 2012 results, which was $138 million, or $0.22 per share. Year-to-date through Sept. 30, adjusted income from continuing operations was $535 million, or $0.86 per share, compared with $520 million, or $0.87 per share for the first nine months of 2011. The increase in adjusted income from continuing operations for the first nine months of 2012 was due to improvement in the Midstream Canada & Olefins segment and decreased interest expense reflecting both corporate debt retirements in December 2011 and increased capitalized interest associated with construction projects. Lower results in the Williams Partners segment significantly offset these benefits in the year-to-date period. Adjusted income from continuing operations reflects the removal of items considered unrepresentative of ongoing operations and is a non-GAAP measure. Reconciliation to the most relevant GAAP measure is attached to this news release. Gulf Olefins Drop-down Transaction Strengthens Williams Partners, Supports Williams' Dividend Growth Strategy In a separate announcement today, Williams Partners and Williams announced an agreement for Williams Partners to acquire Williams' 83.3-percent interest in the Geismar olefins production facility, as well as Williams' refinery-grade propylene splitter and pipelines in the Gulf region, for approximately $2.36 billion. Williams Partners plans to fund the acquisition with the issuance to Williams of 42.8 million WPZ limited-partner units, $25 million in cash, and an increase to the general partner's capital account to maintain Williams' 2-percent general-partner interest. Williams expects the transaction will result in increased distributions from Williams Partners for the limited-partner units it will receive as consideration for the transaction and related incentive distribution rights. The increased distributions from Williams Partners supports Williams' dividend growth strategy. Additionally, Williams Partners will be responsible for the completion of the ongoing expansion of the Geismar facility. Williams Partners' overall undivided ownership interest in Geismar following the expansion will be approximately 88 percent. Please see the separate news release for more details on the drop-down transaction. Williams Acquires Gulf Coast Pipelines, Plans Development of Petrochemical Services Williams also recently agreed to acquire 12 idle pipelines from ExxonMobil (NYSE:XOM) in the Gulf Coast region. The acquired pipelines will be combined with an organic build-out of several projects that will expand Williams' petrochemical services in the Gulf Coast region. The projects include significant expansion of the company's existing ethylene hub, the establishment of a propylene hub that will connect propylene customers with Mont Belvieu and establishment of an isobutane network that will connect to single-sourced or undersupplied customers. The company will also pursue additional projects using unused portions of the acquired pipelines. The projects are expected to be placed into service beginning in late 2014. The business associated with these services will be reservation-charge, fee-based transportation agreements with cash flows that support Williams' dividend growth. The capital expenditures for the acquisition, organic build out through 2014 and capitalized interest are approximately $480 million. This amount is included in Williams' 2012-14 capital expenditure guidance. CEO Comment Alan Armstrong, Williams' president and chief executive officer, made the following comments: “We continued to see the expected growth in Williams Partners' fee-based business in the third quarter, but it was offset by continued unfavorable commodity prices and significant downtime in the Gulf Coast assets due to Hurricane Isaac's impact on company owned and adjacent facilities. “We are reaffirming our extraordinary dividend growth rate of 55 percent in 2012, followed by 20 percent growth rate in 2013 and 2014, despite the unfavorable near-term commodity price environment. “Our earnings guidance has been updated to reflect the impact of lower gas prices on gathering volumes at Williams Partners, as well as the drop-down of the Gulf Olefins assets into Williams Partners. This drop-down transaction will strengthen Williams Partners' cash flows and significantly increase the cash distributions that Williams receives from Williams Partners, providing support to our dividend growth rate. “Our long-term outlook remains very strong. We continue to have visibility to a diverse set of attractive infrastructure projects across our businesses and remain bullish on long-term natural gas demand growth that will drive our fee-based revenues." New Guidance Reflects Geismar Drop-Down, Lower Expected Growth Rate in Gathered Volumes, Other Items; Dividend Guidance Unchanged Williams is updating its 2012-14 earnings and capital expenditure guidance to reflect the drop-down of the Geismar and Gulf Olefins assets to Williams Partners, as well as lower expected overall rate of growth in gathering volumes at Williams Partners and other items. Williams' previous guidance on dividends is unchanged. The company continues to expect to pay a full-year 2012 shareholder dividend of $1.20 per share, a 55 percent increase over 2011. As well, the company expects the full-year dividend it pays shareholders in each of 2013 and 2014 to increase by 20 percent – to $1.44 and $1.75 per share, respectively. The company's current commodity price assumptions and the corresponding guidance for its earnings and capital expenditures are displayed in the following table: Commodity Price Assumptions and Financial Outlook                                 As of Oct. 31, 2012   2012   2013   2014             Low   Mid   HighLow   Mid   HighLow   Mid   HighCommodity Price Assumptions Ethane ($ per gallon) $ 0.41 $ 0.44 $ 0.46 $ 0.45 $ 0.55 $ 0.65 $ 0.45 $ 0.55 $ 0.65 Propane ($ per gallon) $ 0.97 $ 1.04 $ 1.10 $ 1.05 $ 1.25 $ 1.45 $ 1.05 $ 1.25 $ 1.45 Natural Gas - NYMEX ($/MMBtu) $ 2.50 $ 2.50 $ 2.50 $ 2.75 $ 3.25 $ 3.75 $ 3.25 $ 3.75 $ 4.25 Ethylene Spot ($ per gallon) $ 0.53 $ 0.56 $ 0.58 $ 0.40 $ 0.50 $ 0.59 $ 0.53 $ 0.63 $ 0.73 Crude Oil - WTI ($ per barrel) $ 88 $ 93 $ 98 $ 70 $ 85 $ 100 $ 70 $ 85 $ 100   Crude to Gas Ratio 35.2x 37.2x 39.2x 25.5x 26.1x 26.7x 21.5x 22.5x 23.5x NGL to Crude Oil Relationship (1) 41 % 41 % 41 % 54 % 52 % 49 % 54 % 52 % 49 %   Average NGL Margins ($ per gallon) $ 0.64 $ 0.67 $ 0.69 $ 0.64 $ 0.71 $ 0.78 $ 0.54 $ 0.63 $ 0.71 Composite Frac Spread ($ per gallon) (2) $ 0.65 $ 0.70 $ 0.74 $ 0.68 $ 0.78 $ 0.87 $ 0.63 $ 0.73 $ 0.83   Capital & Investment Expenditures (millions) Williams Partners $ 5,665 $ 5,803 $ 5,940 $ 3,025 $ 3,225 $ 3,425 $ 1,700 $ 1,900 $ 2,100 Midstream Canada & Olefins 625 675 725 425 525 625 450 600 750 Other   35       35       35       35       35       35       25       25       25   Total Capital & Investment Expenditures $ 6,325 $ 6,513 $ 6,700 $ 3,485 $ 3,785 $ 4,085 $ 2,175 $ 2,525 $ 2,875   Cash Flow from Operations (millions) $ 1,750 $ 1,850 $ 1,950 $ 2,000 $ 2,200 $ 2,400 $ 2,850 $ 3,050 $ 3,250   Adjusted Segment Profit (millions) (3) Williams Partners $ 1,655 $ 1,725 $ 1,795 $ 1,950 $ 2,150 $ 2,350 $ 2,575 $ 2,800 $ 3,025 Midstream Canada & Olefins 250 300 350 50 100 150 75 150 225 Other   (5 )     −       5       −       −       −       −       −       −   Total Adjusted Segment Profit $ 1,900 $ 2,025 $ 2,150 $ 2,000 $ 2,250 $ 2,500 $ 2,650 $ 2,950 $ 3,250   Adjusted Segment Profit + DD&A (millions) Williams Partners $ 2,345 $ 2,435 $ 2,525 $ 2,720 $ 2,940 $ 3,160 $ 3,460 $ 3,705 $ 3,950 Midstream Canada & Olefins 275 330 385 75 130 185 110 190 270 Other   5       10       15       20       20       20       30       30       30   Total Adjusted Segment Profit + DD&A $ 2,625 $ 2,775 $ 2,925 $ 2,815 $ 3,090 $ 3,365 $ 3,600 $ 3,925 $ 4,250   Adjusted Diluted Earnings Per Share (3) $ 1.05 $ 1.15 $ 1.25 $ 1.05 $ 1.25 $ 1.45 $ 1.45 $ 1.70 $ 1.95     (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 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. (NYSE:WPZ), and Midstream Canada & Olefins includes the results of Williams' Canadian midstream and domestic olefins business.         Consolidated Segment Profit3QYTDAmounts in millions   2012   2011   2012   2011   Williams Partners $ 373 $ 471 $ 1,200 $ 1,379 Midstream Canada & Olefins 72 73 243 219 Other   1   1   61   23   Consolidated Segment Profit $ 446 $ 545 $ 1,504 $ 1,621     Adjusted Consolidated Segment Profit*3QYTDAmounts in millions   2012   2011   2012   2011   Williams Partners $ 384 $ 477 $ 1,225 $ 1,388 Midstream Canada & Olefins 76 73 247 219 Other   1   1   8   12   Adjusted Consolidated Segment Profit $ 461 $ 551 $ 1,480 $ 1,619 * A schedule reconciling segment profit to adjusted segment profit (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 third-quarter 2012, Williams Partners reported segment profit of $373 million, compared with $471 million for third-quarter 2011. Year-to-date through Sept. 30, Williams Partners reported $1.20 billion in segment profit, compared with $1.38 billion for the same period in 2011. The decline in Williams Partners' segment profit during the third quarter and year-to-date 2012 periods is due to a significant decline in NGL margins, which led to lower results in the partnership's midstream business. Other factors, including higher expenses associated with developing businesses acquired earlier in the year, also contributed to the lower results in 2012. An increase in fee-based revenue, including a third-quarter 2012 increase of 12 percent in the partnership's midstream business, partially offset the impacts of lower NGL prices and other factors.                     Williams PartnersKey Operational Metrics201120121Q2Q3Q4Q1Q2Q3Q 3Q Change Fee-based Revenues (millions) Year-over-year Sequential Gas pipeline business $ 361 $ 359 $ 368 $ 384 $ 384 $ 366 $ 372 1.1 % 1.6 % Midstream business   217     230     249     248   258     274     278   11.6 %   1.5 % Williams Partners Total $ 578 $ 589 $ 617 $ 632 $ 642 $ 640 $ 650 5.3 % 1.6 %   NGL Margins NGL margins (millions) $ 207 $ 253 $ 234 $ 287 $ 242 $ 189 $ 167 -28.6 % -11.6 % NGL equity volumes (gallons in millions) 289 308 274 317 308 295 301 9.9 % 2.0 % Per-unit NGL margins ($/gallon) $ 0.71 $ 0.83 $ 0.85 $ 0.91 $ 0.79 $ 0.64 $ 0.55 -35.3 % -14.1 % The increase in fee-based revenues during third-quarter 2012 was primarily due to higher volumes in the Marcellus Shale area including new volumes on Williams Partners' recently acquired Ohio Valley Midstream system and Susquehanna Supply Hub gathering assets, partially offset by unfavorable impacts related to Hurricane Isaac in the eastern Gulf of Mexico. There is a more detailed description of Williams Partners' interstate gas pipeline and midstream business results in the partnership's third-quarter 2012 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, transporting, storing and producing ethylene, propylene, NGLs and other related products. Midstream Canada & Olefins reported segment profit of $72 million for third-quarter 2012, compared with $73 million for third-quarter 2011. The slight decline in segment profit during third-quarter 2012 was due to lower Canadian NGL and propylene product margins driven by lower per-unit sales prices. Higher Geismar ethylene product margins resulting from lower feedstock costs substantially offset these impacts. For the first nine months of 2012, Midstream Canada & Olefins reported segment profit of $243 million, compared with $219 million for the first nine months of 2011. The increase in segment profit for the first nine months of 2012 was primarily due to higher Geismar ethylene and other product sales margins. These items were partially offset by lower Canadian NGL and propylene product margins and higher operating and maintenance costs. Other The Other segment benefited from gains related to the 2010 sale of the company's Accroven investment in Venezuela of $53 million in the year-to-date 2012 period and $11 million in the year-to-date 2011 period. Third-Quarter Materials to be Posted Shortly; Q&A Webcast Scheduled for Tomorrow Williams' third-quarter 2012 financial results package will 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 third-quarter Q&A live webcast on Thursday, Nov. 1 at 9:30 a.m. EDT. 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. A limited number of phone lines will be available at (800) 768-6570. International callers should dial (785) 830-1942. Non-GAAP Measures This press release includes certain financial measures – adjusted segment profit, adjusted income from continuing operations (“earnings”) and adjusted earnings 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 earnings 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 earnings 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 approximately 66 percent of 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, where the company routinely posts important information. 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,” “assumes,” “forecasts,” “intends,” “might,” “goals,” “objectives,” “targets,” “planned,” “potential,” “projects,” “scheduled,” “will,” “guidance,” “outlook,” “in service date” 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;The levels of dividends to stockholders;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:Whether we have sufficient cash to enable us to pay current and expected levels of dividends;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. 28, 2012, and our quarterly reports on Form 10-Q available from our offices or from our website at www.williams.com.Reconciliation of Income (Loss) from Continuing Operations Attributable to The Williams Companies, Inc. to Adjusted Income (UNAUDITED)                         2011   2012   (Dollars in millions, except per-share amounts)   1st Qtr   2nd Qtr   3rd Qtr   4th Qtr   Year1st Qtr   2nd Qtr   3rd Qtr   Year                                           Income (loss) from continuing operations attributable to The WilliamsCompanies, Inc. available to common stockholders $ 300     $ 171     $ 253     $ 79     $ 803   $ 287     $ 133     $ 152     $ 572     Income (loss) from continuing operations - diluted earnings per common share $ 0.50     $ 0.29     $ 0.43     $ 0.13     $ 1.34   $ 0.47     $ 0.21     $ 0.25     $ 0.93     Adjustments:   Williams Partners Acquisition and transition-related costs $ - $ - $ - $ - $ - $ - $ 19 $ 4 $ 23 Loss related to Eminence storage facility leak 4 3 6 2 15 1 - 1 2 Impairment of certain assets - - - - - - - 6 6 Gain on sale of certain assets - - - - - - (6 ) - (6 ) Gain on sale of base gas from Hester storage field (4 ) - - - (4 ) - - - -                                 Total Williams Partners adjustments - 3 6 2 11 1 13 11 25   Midstream Canada & Olefins (MC&O) Loss due to Geismar furnace fire - - - - - - - 4 4 Gulf Liquids litigation contingency accrual reduction - - - (19 ) (19 ) - - - -                                 Total Midstream Canada & Olefins adjustments - - - (19 ) (19 ) - - 4 4   Other Gain from Venezuela investment (11 ) - - - (11 ) (53 ) - - (53 )                                 Total Other adjustments (11 ) - - - (11 ) (53 ) - - (53 )                                 Adjustments included in segment profit (loss) (11 ) 3 6 (17 ) (19 ) (52 ) 13 15 (24 )   Adjustments below segment profit (loss)Early debt retirement costs - Corporate - - - 271 271 - - - - Gulf Liquids litigation contingency interest accrual reduction - MC&O - - - (14 ) (14 ) - - - - Reorganization-related costs - - - - - - 6 6 12 Gain from Venezuela investment - related interest - Other - - - - - (10 ) - - (10 ) Interest income on note receivable from sale of Venezuela assets - Other - - - - - - (3 ) (2 ) (5 ) Allocation of adjustments to noncontrolling interests - (1 ) (1 ) (1 ) (3 ) - (6 ) (5 ) (11 )                                 - (1 ) (1 ) 256 254 (10 ) (3 ) (1 ) (14 )   Total adjustments (11 ) 2 5 239 235 (62 ) 10 14 (38 ) Less tax effect for above items 4 (1 ) (2 ) (89 ) (88 ) 11 (6 ) (6 ) (1 )   Adjustments for tax-related items [1]   (124 )     -       (77 )     (15 )     (216 )   -       1       1       2     Adjusted income from continuing operations available to common stockholders $ 169     $ 172     $ 179     $ 214     $ 734   $ 236     $ 138     $ 161     $ 535     Adjusted diluted earnings per common share [2] $ 0.28     $ 0.29     $ 0.30     $ 0.36     $ 1.23   $ 0.39     $ 0.22     $ 0.25     $ 0.86     Weighted-average shares - diluted (thousands) 596,567 597,633 597,550 600,921 598,175 600,520 626,620 632,019 619,765       [1] The first, third and fourth quarters of 2011 include federal settlements and an international revised assessment. The third quarter of 2011 includes an adjustment to reverse taxes on undistributed earnings of certain foreign operations that are now considered permanently reinvested. [2] Interest expense, net of tax, associated with our convertible debentures has been added back to adjusted income from continuing operations available to common stockholders to calculate adjusted diluted earnings per common share. Note: The sum of earnings per share for the quarters may not equal the total earnings per share for the year due to changes in the weighted-average number of common shares outstanding.   Reconciliation of Segment Profit (Loss) to Adjusted Segment Profit (Loss) (UNAUDITED)                             2011   2012   (Dollars in millions)   1st Qtr   2nd Qtr   3rd Qtr   4th Qtr   Year1st Qtr   2nd Qtr   3rd Qtr   Year                                           Segment profit (loss):   Williams Partners $ 437 $ 471 $ 471 $ 517 $ 1,896 $ 488 $ 339 $ 373 $ 1,200 Midstream Canada & Olefins 74 72 73 77 296 103 68 72 243 Other   20       2     1     1       24     59       1     1     61   Total segment profit (loss)$531     $545   $545   $595     $2,216   $650     $408   $446   $1,504     Adjustments:   Williams Partners $ - $ 3 $ 6 $ 2 $ 11 $ 1 $ 13 $ 11 $ 25 Midstream Canada & Olefins - - - (19 ) (19 ) - - 4 4 Other   (11 )     -     -     -       (11 )   (53 )     -     -     (53 ) Total segment adjustments$(11)   $3   $6   $(17)   $(19)$(52)   $13   $15   $(24)   Adjusted segment profit (loss):   Williams Partners $ 437 $ 474 $ 477 $ 519 $ 1,907 $ 489 $ 352 $ 384 $ 1,225 Midstream Canada & Olefins 74 72 73 58 277 103 68 76 247 Other   9       2     1     1       13     6       1     1     8   Total adjusted segment profit (loss)$520     $548   $551   $578     $2,197   $598     $421   $461   $1,480     Note:Segment profit (loss) includes equity earnings (losses) and income (loss) from investments reported in investing income - net in the Consolidated Statement of Income. Equity earnings (losses) results from investments accounted for under the equity method. Income (loss) from investments results from the management of certain equity investments.               2012 Forecast Guidance—Reported to Adjusted     October 30 Guidance Reported Adjustment Adjusted (Dollars in millions, except earnings per share) Low   —   High Items Low   —   High                                 Segment profit $ 1,924 — $ 2,174 $ (24 ) $ 1,900 — $ 2,150 Net interest expense (495 ) — (505 ) — (495 ) — (505 ) General corporate/other/rounding   (137 )   —     (152 )   (3 )   (140 )   —     (155 ) Pretax income 1,292 — 1,517 (27 ) 1,265 — 1,490 Provision for income tax   (381 )   —     (436 )   1     (380 )   —     (435 ) Income from continuing operations $ 911 — $ 1,081 $ (26 ) $ 885 — $ 1,055 Net income attributable to noncontrolling interests   (214 )   —     (259 )   (11 )   (225 )   —     (270 )   Amounts attributable to Williams: Income from continuing operations $ 697 — $ 822 $ (37 ) $ 660 — $ 785   Diluted EPS $ 1.11     —   $ 1.31   $ 1.05     —   $ 1.25                     Segment Profit Guidance—Reported to Adjusted     2012 Guidance2013 Guidance2014 Guidance(Dollars in millions) Low   Midpoint   High Low   Midpoint   High Low   Midpoint   High                                           Reported segment profit: Williams Partners (WPZ) $ 1,630 $ 1,700 $ 1,770 $ 1,950 $ 2,150 $ 2,350 $ 2,575 $ 2,800 $ 3,025 Midstream Canada & Olefins 246 296 346 50 100 150 75 150 225 Other 48   53   58 -   -   - -   -   - Total Reported segment profit $ 1,924   $ 2,049   $ 2,174 $ 2,000   $ 2,250   $ 2,500 $ 2,650   $ 2,950   $ 3,250   Adjustments: Total Williams Partners adjustments $ 25 $ 25 $ 25 $ - $ - $ - $ - $ - $ -   Total Midstream Canada & Olefins adjustments 4 4 4 - - - - - - Total Other adjustments (53)   (53)   (53) -   -   - -   -   - Total Adjustments $ (24) $ (24) $ (24) $ - $ - $ - $ - $ - $ -   Adjusted segment profit: Williams Partners (WPZ) $ 1,655 $ 1,725 $ 1,795 $ 1,950 $ 2,150 $ 2,350 $ 2,575 $ 2,800 $ 3,025 Midstream Canada & Olefins 250 300 350 50 100 150 75 150 225 Other (5)   -   5 -   -   - -   -   - Total Adjusted segment profit $ 1,900   $ 2,025   $ 2,150 $ 2,000   $ 2,250   $ 2,500 $ 2,650   $ 2,950   $ 3,250   Note: Amounts reflect dropdown of Geismar from MC&O to WPZ in November 2012.       Reconciliation of Forecasted Reported Income from Continuing Operations to Adjusted Income from Continuing Operations             2012 Guidance2013 Guidance2014 Guidance(Dollars in millions, except earnings per share) Low   Midpoint   High Low   Midpoint   High Low   Midpoint   High                                         Reported income from continuing operations$697$760$822$670$798$925$935$1,095$1,255 Adjustments—pretax (38 ) (38 ) (38 ) - - - - - - Less taxes   1       1       1     -     -     -   -     -     - Adjustments—after tax (37 ) (37 ) (37 ) - - - - - - Adjusted income from continuing ops$660$723$785$670$798$925$935$1,095$1,255Adjusted diluted EPS$1.05$1.15$1.25$1.05$1.25$1.45$1.45$1.70$1.95   Note: All amounts attributable to Williams WilliamsMedia Contact:Jeff Pounds, 918-573-3332orInvestor Contacts:John Porter, 918-573-0797orSharna Reingold, 918-573-2078