Filed by The Williams Companies, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Williams Partners L.P.
Commission File No.: 001-32599
The following is a slide presentation made publicly available by The Williams Companies, Inc., Williams Partners L.P., and Access Midstream Partners, L.P. in connection with the announcement of financial results for the quarter ended September 30, 2014.
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Williams, Williams Partners and
Access Midstream Partners Third Quarter 2014 Earnings
October 30, 2014
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Presentation overview
WPZ 3Q results in line with our expectations:
Lower results vs. normal, expanded operations due to Geismar outage (lost opportunity of ~$200MM)
Seasonally higher maintenance capital, as expected
Strong 3Q for ACMP on record volumes
WPZ expecting nearly $1 billion in annual cash flow from projects nearing in-service:
Expect improved results in 4Q and 2015 as we place major projects into service in November and December
Gulfstar One (November), expanded Geismar (November), Keathley Canyon Connector (December)
Continuing string of major Transco expansion projects, prospects
WPZ/ACMP merger agreement finalized; creating industry leading MLP
Expect to close early 15targeting January
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© 2014 The Williams Companies, Inc. All rights reserved.
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WPZ 3Q DCF impacted by Geismar downtime;
3Q ACMP DCF shows strong 42% growth
WMB expects $521 million in MLP cash distributions
WPZ 3Q vs. prior year
Distributable Cash Flow $367 million
Fee-based revenues up $35 million
to $756 million
108% higher distributions from equity
investees, up $37 million to $71 million
Blue Racer, LMM, Discovery all higher
Adjusted segment profit + DD&A $575
million
3Q14 includes no contribution from
Geismar (lost opportunity of ~$200MM)
WMB 3Q vs. prior year
Adjusted Segment Profit + DD&A
36% higher, up $221 million to $838 million
Includes effect of consolidating ACMP beginning 3Q14
MLP Cash distributions in November:
Williams Partners, $438 million
ACMP, $83 million, including higher ownership interest
WMB NGL & Petchem Services
Segment only includes development projects expected to be dropped down to WPZ in late 2014 or early 2015
ACMP 3Q vs. prior year
42% higher Adjusted Distributable Cash Flow, up $72 million to $244 million
20% higher fee-based revenues, up $53 million to $314 million
Adjusted Segment Profit + DD&A, Distributable Cash Flow and Adjusted Distributable Cash Flow (DCF) are non-GAAP measures. Reconciliations to the most relevant measures included in GAAP are provided in this presentation and on ACMPs website.
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© 2014 The Williams Companies, Inc. All rights reserved.
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ACMP: continued record volumes and strong financial performance
3Q results vs. prior year
Adjusted EBITDA of $319 million, up 40%
Adjusted DCF of $244 million, up 42%
Adjusted cash distribution coverage of 1.67x
Distribution increase to $0.615, up 15%
3Q operational highlights
Over 6 Bcf/dgross volume recordSeptember 2014
CHK/SWN transaction strengthens CHK credit and reduces CHK concentration; SWN becomes a growth-motivated, new ACMP customer with strong credit profile
UEO Leesville Processing Planttrain one online EOY 2014 and train two online EOY 2015
Niobrara Bucking Horse Processing Plantonline EOY 2014
3Q gathering volumes and capital expenditures
Total net volume of 4.1 Bcf/d, up 9%; 3Q capex of $272 million and YTD capex of $911 million
Marcellus1.2 Bcf/d, up 12%; 3Q capex of $56 million and YTD capex of $143 million
Eagle Ford348 MMcf/d, up 18%; 3Q capex of $33 million and YTD capex of $157 million
Utica418 MMcf/d, up ~200%; 3Q capex of $88 million and YTD capex of $362 million
Adjusted EBITDA, Adjusted Distributable Cash Flow (DCF) and Adjusted Cash Distribution Coverage ratio are non-GAAP measures. Reconciliations to the most relevant measures included in GAAP are provided on ACMPs website.
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© 2014 The Williams Companies, Inc. All rights reserved.
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WPZ: Large-scale, value-creating projects ready to contribute; many more to come
Near-Term Growth Drivers
Expecting nearly $1 billion of annual cash flows coming from projects starting up in 4Q
- Gulfstar One
- Geismar expansion
- Keathley Canyon
Connector
Recent Milestones
Geismar restart
- All construction complete
- Startup procedures underway
- Expect ethylene sales at expanded production in November
Several new OVM projects placed in service
Laurel Mountain Midstream interest now 69%
Gulfstar One turned over to producer for first-oil
Keathley Canyon mechanically complete; expect 4Q first production
Constitution Pipeline progress; FERC issues final EIS
Transcos industry-leading market and supply growth
- Two major new open seasons
- South LA methanol project
- Rockaway Lateral project construction progressing
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© 2014 The Williams Companies, Inc. All rights reserved.
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Nearly $30 Billion in WPZ/ACMP committed plus potential capital projects 2014-19
TARGET IN-SERVICE DATES FOR VISIBLE GROWTH PROJECTS
*WMB projects expected to be dropped down to WPZ in late 2014 to early 2015
2014 2015 2016 2017 2017+
NE: Frac II Rockaway Gunflint Atlantic Sunrise Northeast G&P
NE: ethane line Lateral Northeast G&P Dalton Lateral Sabal Trail ownership option
& de-ethanizer Constitution
NE: Other Pipeline1 Plant Parachute Expansion Phase Hillabee 1 expansions Transconumerous other
facilities Leidy SE Northeast G&P Gulfstar FPS and pipelines
Gulfstar One Virginia U.S., PEMEX
Southside Gulf Trace
NE: Oak Grove Gulf of Mexicoother
Garden State
TXP I Kodiak oil-driven services
Keathley Northeast G&P Pacific Connector and other
Canyon NWP projects
Mobile Bay
Connector South III Canadian PDH 1&2*
Geismar
Expansion CNRL Offgas Syncrude Offgas Processing*
Processing* Geismar 2*
Gulf Coast
Petchem
Services* In progress
Potential/under negotiation
Plus $4 billion2 ACMP Growth Capex
1. Constitution Pipeline expected in-service date range is late 2015 to 2016. 2. ACMP growth capex range is $3.675 billion to $4.075 billion.
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© 2014 The Williams Companies, Inc. All rights reserved.
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Transcos proposed Appalachian Connector project creates direct access to major Transco system markets
Oak Grove
Clarington Fort Beeler
Natrium River Road
Transcos Proposed
Strong response to Appalachian Connector
Project
open season;
negotiating precedent
agreements 165
155
Capacity: ~2 Bcf/d
Target in-service:
Late 2018 140
125
85 100
65
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© 2014 The Williams Companies, Inc. All rights reserved.
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ACMP/WPZ merger will create leading, large-cap natural gas MLP
Expected 2015 adjusted EBITDA of approximately $5 billion
Expected
Expect $3.65 per unit distribution from merged MLP in 2015, up 50% and 30%, respectively, from
Benefits ACMPs 2Q 2014 distribution and 2015 distribution guidance1
Best-in-class distribution growth rate of 10-12% through 2017 with strong distribution coverage ratio
Financial estimated to be approximately at or above 1.1x or an aggregate of $1.1 billion of excess cash flow
through 2017
Expected strong investment-grade credit ratings with limited equity needs in current business plan
Expected Creates one of the largest MLPs with leading positions across the three key components of the
midstream sector:
Benefits Natural Gas Pipelines: Transco, Northwest and Gulfstream represent the nations premier interstate pipeline system
Natural Gas Gathering and Processing: Large-scale positions in growing natural gas supply areas in major shale
and unconventional producing areas
NGL and Petrochemical Services: Unique downstream presence on Gulf Coast and in western Canada provides
Commercial differentiated long-term growth
and Combines the stability and growth of Access Midstream Partners current contract portfolio with
Operational Williams Partners significant long-term growth opportunities and development expertise
Opportunity to further enhance and streamline operations, business-development, commercial and
support capabilities
Aligns WPZ and ACMP unitholders
Expected to increase efficiency in capital allocation to growth opportunities
1Assumes merger is completed before record date of related cash distributions and subject to board approval.
Cash distribution coverage ratio and adjusted EBITDA are non-GAAP measures. Reconciliations to the most relevant measures included in GAAP are provided in this presentation.
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© 2014 The Williams Companies, Inc. All rights reserved.
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Significant valuation re-rating opportunity still ahead
2014-2016 DISTRIBUTION CAGR
Current Yield
10.0% Median large-cap, diversified coverage ratio is 1.1x
Merged MLP expected to be at or above 1.1x through 2017
8.0%
WPZ Implied ACMP/WPZ at 3.6%
EEP yield ~$94
6.0% ETP(based on 85 cent distribution for 1Q15)
OKS
PAA
SEP ACMP2
4.0% EPD
2.0%
Pro Forma ACMP / WPZ
0.0% 1416
0.0% 5.0% 10.0% 15.0% Distribution CAGR
Source: Company filings and FactSet as of 10/27/2014
Notes: 1. Based on Wall Street research consensus as of 10/20/2014; 2. ACMP is not included in the regression line; 3. Peer group includes large cap diversified midstream MLPs
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© 2014 The Williams Companies, Inc. All rights reserved.
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Williams well positioned to participate in once-in-a-generation industry supercycle
WMB now one of the largest publicly traded GP holding companies with control of both WPZ and ACMP
ACMP/WPZ merger will create leading natural gas MLP
Right long-term strategy at the right time
Ideally positioned assets, sustainable competitive positions
Hard-wired focus on safe, reliable operations and project execution
Nearly $30 billion of potential growthdisciplined capital allocation
Strong leadership in place to capture the value opportunity
All the right ingredients to deliver sustained value growth
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© 2014 The Williams Companies, Inc. All rights reserved.
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Forward Looking Statements and Non-GAAP Reconciliations
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Important information
In connection with the proposed merger of ACMP and WPZ, ACMP will file with the SEC a Registration Statement on Form S-4 that will include a consent statement of WPZ that will also constitute a prospectus of ACMP. WPZ will mail the consent statement/prospectus to the holders of WPZ units. Investors are urged to read the consent statement/prospectus and other relevant documents filed with the SEC regarding the proposed transaction when they become available, because they will contain important information. The consent statement/prospectus and other documents that will be filed by ACMP and WPZ with the SEC will be available free of charge at the SECs website, www.sec.gov, or by directing a request when such a filing is made either to Access Midstream Partners L.P., 525 Central Park Drive, Oklahoma City, Oklahoma 73105, Attention: Investor Relations, or to Williams Partners L.P., One Williams Center, Tulsa, Oklahoma 74172, Attention: Investor Relations.
ACMP, WPZ and certain of their directors and executive officers may be deemed to be participants (as defined in Schedule 14A under the Exchange Act) in respect of the proposed transaction. Information about ACMPs directors and executive officers is available in ACMPs annual report on Form 10-K for the fiscal year ended December 31, 2014, as amended, initially filed with the SEC on February 21, 2014.
Information about WPZs directors and executive officers is available in WPZs annual report on Form 10-K for the fiscal year ended December 31, 2013 filed with the SEC on February 26, 2014. Other information regarding the participants and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the consent statement/prospectus and other relevant materials to be filed with the SEC regarding the transaction. Investors should read the consent statement/prospectus carefully when it becomes available before making any voting or investment decisions. You may obtain free copies of these documents from WPZ or ACMP using the sources indicated above.
This document shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.
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© 2014 The Williams Companies, Inc. All rights reserved.
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Forward Looking Statements
The reports, filings, and other public announcements of The Williams Companies, Inc. (Williams) and Williams Partners L.P. (WPZ) may contain or incorporate by reference statements that do not directly or exclusively relate to historical facts. Such statements are 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. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995. You typically can identify forward-looking statements by various forms of words such as anticipates, believes, seeks, could, may, should, continues, estimates, expects, forecasts, intends, might, proposed, goals, objectives, targets, planned, potential, projects, scheduled, will, assumes, guidance, outlook, in service date or other similar expressions. These forward-looking statements are based on managements beliefs and assumptions and on information currently available to management and include, among others, statements regarding:
The levels of dividends to Williams stockholders;
Expected levels of cash distributions by Access Midstream Partners, L.P. (ACMP) and WPZ with respect to general partner interests, incentive distribution rights, and limited partner interests;
The closing, expected timing and benefits of the proposed merger of ACMP and WPZ;
The expected timing of the drop-down of Williams remaining NGL & Petchem Services assets and projects;
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 olefins prices, supply, and demand;
Demand for our service.
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 presentation. 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 WPZ, ACMP, or the merged partnership will produce sufficient cash flows to provide the level of cash distributions we expect;
Whether Williams is able to pay current and expected levels of dividends;
Availability of supplies, market demand, and volatility of commodity prices;
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© 2014 The Williams Companies, Inc. All rights reserved.
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Forward Looking Statements (contd)
Inflation, interest rates, and fluctuation in foreign exchange rates and general economic conditions (including future disruptions and volatility in the global credit markets and the impact of these events on customers and suppliers);
The strength and financial resources of our competitors and the effects of competition;
Whether we are able to successfully identify, evaluate and execute investment opportunities;
Our ability to acquire new businesses and assets and successfully integrate those operations and assets, including ACMPs business, into our existing businesses as well as successfully expand our facilities;
Development of alternative energy sources;
The impact of operational and developmental hazards and unforeseen interruptions;
The ability to restart the Geismar plant and recover expected insurance proceeds;
Costs of, changes in, or the results of laws, government regulations (including safety and environmental regulations), environmental liabilities, litigation, and rate proceedings;
Williams costs and funding obligations for defined benefit pension plans and other postretirement benefit plans sponsored by its affiliates;
WPZs allocated costs for defined benefit pension plans and other postretirement benefit plans sponsored by its affiliates;
Changes in maintenance and construction costs;
Changes in the current geopolitical situation;
Exposure to the credit risk of our customers and counterparties;
ACMPs dependence on a limited number of customers and vendors;
Risks related to financing, including restrictions stemming from debt agreements, future changes in Williams credit ratings as well as the credit ratings of ACMP, WPZ or the merged partnership as determined by nationally-recognized credit rating agencies and the availability and cost of capital;
The amount of cash distributions from and capital requirements of our investments and joint ventures in which we participate;
Risks associated with weather and natural phenomena, including climate conditions;
Acts of terrorism, including cybersecurity threats and related disruptions; and
Additional risks described in our filings with the Securities and Exchange Commission (SEC).
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 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 Williams and WPZs annual reports on Form 10-K filed with the SEC on Feb. 26, 2014, and each of our quarterly reports on Form 10-Q available from our offices or from our websites at www.williams.com and www.williamslp.com.
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© 2014 The Williams Companies, Inc. All rights reserved.
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FORWARD-LOOKING STATEMENTS
Certain statements and information in this presentation may constitute forward-looking statements. The words believe, expect, anticipate, plan, intend, foresee, should,
would, could, or similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. These forward-looking statements are based on current expectations and beliefs concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our expectations for future revenues and operating results are based on our forecasts for our existing operations and do not include the potential impact of any future acquisitions. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, those summarized below: dependence on Chesapeake Energy Corporation, Total E&P USA, Inc., Mitsui & Co., Anadarko Petroleum Corporation and Statoil for a majority of our revenues; the impact on our growth strategy and ability to increase cash distributions if producers do not increase the volume of natural gas they provide to our gathering systems; oil and natural gas realized prices; the termination of our gas gathering agreements; the availability, terms and effects of acquisitions; our potential inability to maintain existing distribution amounts or pay the minimum quarterly distribution to our unitholders; the limitations that our level of indebtedness may have on our financial flexibility; our ability to obtain new sources of natural gas, which is dependent on factors largely beyond our control; the availability of capital resources to fund capital expenditures and other contractual obligations, and our ability to access those resources through the debt or equity capital markets; competitive conditions; the unavailability of third-party pipelines interconnected to our gathering systems or the potential that the volumes we gather do not meet the quality requirement of such pipelines; new asset construction may not result in revenue increases and will be subject to regulatory, environmental, political, legal and economic risks; our exposure to direct commodity price risk may increase in the future; our ability to maintain and/or obtain rights to operate our assets on land owned by third parties; hazards and operational risks that may not be fully covered by insurance; our dependence on Exterran Partners, L.P. for a significant portion of our compression capacity; our lack of industry diversification; and legislative or regulatory changes, including changes in environmental regulations, environmental risks, regulations by FERC and liability under federal and state environmental laws and regulations.
Other factors that could cause our actual results to differ from our projected results are described in our 2013 Form 10-K and our other SEC filings. Individuals are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.
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WMB Non-GAAP Disclaimer
This presentation includes certain financial measuresadjusted segment profit, adjusted segment profit + DD&A, adjusted income from continuing operations (earnings) and adjusted earnings per sharethat 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 and may include assumed business interruption insurance related to the Geismar plant. Management believes these measures provide investors meaningful insight into the companys results from ongoing operations.
This presentation 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 companys 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 segment profit + DD&A, 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.
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© 2014 The Williams Companies, Inc. All rights reserved.
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WMB Non-GAAP Reconciliations
WMB non-GAAP reconciliation schedule
2013 2014
(Dollars in millions, except per-share amounts) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year 1st Qtr 2nd Qtr 3rd Qtr Year
Income (loss) from continuing operations attributable to The Williams Companies, Inc. available to common
stockholders $ 162 $ 149 $ 143 $(13 ) $ 441 $ 140 $ 99 $ 1,678 $ 1,917
Income (loss) from continuing operationsdiluted earnings per common share $ .23 $ .22 $ .20 $(.02 ) $ .64 $ .20 $ .14 $ 2.22 $ 2.68
Adjustments:
Williams Partners
Net loss (recovery) related to Eminence storage facility leak
$ $(5 ) $ 5 $(2 ) $(2 ) $ $ $ $
Share of impairments at equity method investee
7 7
Contingency loss (gain)
(6) 9 16 19
Loss related to Geismar Incident
6 4 4 14 5 5
Geismar Incident adjustment for insurance and timing
(35 ) 118 83 54 96 150
Loss related to compressor station fire 6 6
Impairment of certain equipment held for sale 17 17
Loss related to Opal incident 6 6
Net gain related to partial acreage dedication release (12 )(12 )
Total Williams Partners adjustments(6) 1(17 ) 143 121 60 119(7 ) 172
Access Midstream Partners
Equity-method investment in ACMP remeasurement gain (2,522 )(2,522 )
WMB impact of ACMP transaction-related compensation expenses 24 24
Gain associated with ACMP equity issuance
(26 ) (5 )(31 ) (4 )(1 )(5 )
Acquisition-related expenses 2 13 15
Transition costs 8 8
Total Access Midstream Partners adjustments
(26 ) (5 )(31 ) (2 )(2,478 )(2,480 )
Williams NGL & Petchem Services
Write-off of abandoned project
20 20
Bluegrass Pipeline project development costs(100% consolidated) 19 19
Bluegrass Pipeline and Moss Lake project development costs (50% equity investment losses) 6 1 7
Equity investment losses related to Bluegrass Pipeline and Moss Lake write-offs 70 70
Total Williams NGL & Petchem Services adjustments 20 20 95 1 96
Adjustments included in segment profit (loss)(6 )(25 )(17 ) 158 110 155 118(2,485 )(2,212 )
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WMB Non-GAAP Reconciliations
WMB non-GAAP reconciliation schedule contd
2013 2014
(Dollars in millions, except per-share amounts) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year 1st Qtr 2nd Qtr 3rd Qtr Year
Adjustments below segment profit (loss)
Reorganization-related costs 2 2
Transition-related costs 6 6
Acquisition-related financing expensesAccess Midstream Partners 9 9
Interest income on receivable from sale of Venezuela assetsOther(13 )(13 )(11 )(13 )(50 )(13 )(14 )(14 )(41 )
Allocation of adjustments to noncontrolling interests 5 4 9(46 )(28 )(25 )(36 ) 3(58 )
(6 )(9 )(2 )(59 )(76 )(38 )(41 )(5 )(84 )
Total adjustments(12 )(34 )(19 ) 99 34 117 77(2,490 )(2,296 )
Less tax effect for above items 1 10 4(39 )(24 )(47 )(32 ) 925 846
Adjustments for tax-related items [1] 1 4 2 101 108(20 ) 14(3 )(9 )
Adjusted income from continuing operations available to common stockholders $ 152 $ 129 $ 130 $ 148 $ 559 $ 190 $ 158 $ 110 $ 458
Adjusted diluted earnings per common share [2] $ .22 $ .19 $ .19 $ .22 $ .81 $ .28 $ .23 $ .15 $ .64
687,143 686,924 687,306 687,712 687,185 688,904 700,696 752,064 714,119
Weighted-average sharesdiluted (thousands)
[1] The fourth quarter of 2013 includes a favorable adjustment to reflect taxes on undistributed earnings of certain foreign operations that are no longer considered permanently reinvested. The first quarter of 2014 includes
an unfavorable adjustment related to completing the dropdown of certain Canadian operations to Williams Partners. The second quarter of 2014 includes a favorable adjustment to reflect taxes on undistributed earnings
of certain foreign operations that are no longer 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.
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WMB Non-GAAP Reconciliations
Non-GAAP reconciliation schedule adjusted segment
profit (loss) and adjusted segment profit +DD&A
2013 2014
(Dollars in millions) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year 1st Qtr 2nd Qtr 3rd Qtr Year
Segment profit (loss):
Williams Partners $ 494 $ 427 $ 411 $ 345 $ 1,677 $ 503 $ 393 $ 373 $ 1,269
Access Midstream Partners 29 6 26 61 6 9 2,563 2,578
Williams NGL & Petchem Services(2 )(1 )(4 )(25 )(32 )(100 )(8 )(3 )(111 )
Other(5 ) 1(1 ) (5 ) 3 1 1 5
Total segment profit (loss) $ 487 $ 456 $ 412 $ 346 $ 1,701 $ 412 $ 395 $ 2,934 $ 3,741
Segment adjustments:
Williams Partners $(6 ) $ 1 $(17 ) $ 143 $ 121 $ 60 $ 119 $(7 ) $ 172
Access Midstream Partners (26 ) (5 )(31 ) (2 )(2,478 )(2,480 )
Williams NGL & Petchem Services 20 20 95 1 96
Other
Total segment adjustments $(6 ) $(25 ) $(17 ) $ 158 $ 110 $ 155 $ 118 $(2,485 ) $(2,212 )
Adjusted segment profit (loss):
Williams Partners $ 488 $ 428 $ 394 $ 488 $ 1,798 $ 563 $ 512 $ 366 $ 1,441
Access Midstream Partners 3 6 21 30 6 7 85 98
Williams NGL & Petchem Services(2 )(1 )(4 )(5 )(12 )(5 )(7 )(3 )(15 )
Other(5 ) 1(1 ) (5 ) 3 1 1 5
Total adjusted segment profit (loss) $ 481 $ 431 $ 395 $ 504 $ 1,811 $ 567 $ 513 $ 449 $ 1,529
19 WMB, WPZ, ACMP Third-Quarter 2014 Earnings | 10/30/14 © 2014 The Williams Companies, Inc. All rights reserved.
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WMB Non-GAAP Reconciliations
Non-GAAP reconciliation schedule adjusted segment
profit (loss) and adjusted segment profit +DD&A
2013 2014
(Dollars in millions) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year 1st Qtr 2nd Qtr 3rd Qtr Year
Depreciation and amortization (DD&A):
Williams Partners $ 196 $ 191 $ 201 $ 203 $ 791 $ 208 $ 207 $ 209 $ 624
Access Midstream Partners* 17 15 16 15 63 15 15 175 205
Williams NGL & Petchem Services 1(1 )
Other 5 7 6 6 24 6 6 6 18
$ 229 $ 229 $ 389 $ 847
Total depreciation and amortization $ 218 $ 213 $ 223 $ 224 $ 878
Adjusted segment profit (loss) + DD&A:
Williams Partners $ 684 $ 619 $ 595 $ 691 $ 2,589 $ 771 $ 719 $ 575 $ 2,065
Access Midstream Partners 17 18 22 36 93 21 22 260 303
Williams NGL & Petchem Services(2 )(1 )(4 )(5 )(12 )(5 )(6 )(4 )(15 )
Other 8 5 6 19 9 7 7 23
Total adjusted segment profit (loss) + DD&A $ 699 $ 644 $ 618 $ 728 $ 2,689 $ 796 $ 742 $ 838 $ 2,376
* DD&A adjustment for Access Midstream Partners reflects the amortization of the basis difference between Williams investments and its proportional share of the underlying net assets.
Note: Segment profit (loss) includes equity earnings (losses) and income (loss) from investments reported in other investing income (loss)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.
20 WMB, WPZ, ACMP Third-Quarter 2014 Earnings | 10/30/14 © 2014 The Williams Companies, Inc. All rights reserved.
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WMB Non-GAAP Reconciliations
WMB schedule of expected adjustments
(dollars in millions)
Segment Profit Adjustments: 2014 2015
Williams Partners (WPZ)
Loss related to compressor station fire $6 -
Impairment of certain equipment held for sale 17 -
Net gain related to partial acreage dedication release(12) -
Loss related to Opal incident 6 -
Loss related to Geismar incident 5 -
Geismar incident adjustment for insurance and timing(115) -
Other -(136)
Total Williams Partners adjustments(93)(136)
Williams NGL & Petchem Services
Bluegrass Pipeline project development costs (100% consolidated) 19 -
Bluegrass Pipeline and Moss Lake project development costs (50% equity investment losses) 7 -
Equity investment losses related to Bluegrass Pipeline and Moss Lake write-offs 70 -
Total Williams NGL & Petchem Services adjustments 96 -
Access Midstream Partners
Equity method investment in ACMP remeasurement gain(2,522) -
WMB impact of ACMP transaction-related compensation expenses 24 -
Gain associated with ACMP equity issuance(5) -
Acquisition-related expenses 15 -
Transition costs 8 -
Total Access Midstream Partners adjustments(2,480) -
Adjustments included in segment profit (loss)($2,477)($136)
21 WMB, WPZ, ACMP Third-Quarter 2014 Earnings | 10/30/14 © 2014 The Williams Companies, Inc. All rights reserved.
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WPZ Non-GAAP Reconciliations
WPZ Non-GAAP Disclaimer
This presentation includes certain financial measures, adjusted segment profit, adjusted segment profit + DD&A, distributable cash flow, and cash distribution coverage ratio that are non-GAAP financial measures as defined under the rules of the Securities and Exchange Commission.
For Williams Partners L.P., adjusted segment profit excludes items of income or loss that we characterize as unrepresentative of our ongoing operations and may include assumed business interruption insurance related to the Geismar plant. Adjusted segment profit + DD&A is further adjusted to add back depreciation and amortization expense. Management believes these measures provide investors meaningful insight into Williams Partners L.P.s results from ongoing operations.
For Williams Partners L.P. we define distributable cash flow as net income plus depreciation and amortization and cash distributions from our equity investments less our earnings from equity investments, income attributable to noncontrolling interests and maintenance capital expenditures. We also adjust for reimbursements under omnibus agreements with Williams and certain other adjustments. Total distributable cash flow is reduced by any amounts associated with operations which occurred prior to our ownership of the underlying assets to arrive at distributable cash flow attributable to partnership operations.
For Williams Partners L.P. we also calculate the ratio of distributable cash flow attributable to partnership operations to the total cash distributed (cash distribution coverage ratio). This measure reflects the amount of distributable cash flow relative to our cash distribution. We have also provided this ratio calculated using the most directly comparable GAAP measure, net income.
This presentation 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 accepted financial indicators used by investors to compare company performance. In addition, management believes that these measures provide investors an enhanced perspective of the operating performance of the Partnerships assets and the cash that the business is generating. Neither adjusted segment profit, adjusted segment profit + DD&A, nor distributable cash flow are intended to represent cash flows for the period, nor are they presented as an alternative to net income or cash flow from operations. 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.
22 WMB, WPZ, ACMP Third-Quarter 2014 Earnings | 10/30/14 © 2014 The Williams Companies, Inc. All rights reserved.
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WPZ Non-GAAP Reconciliations
Reconciliation of non-GAAP distributable cash
flow to GAAP net income
2013 2014
(Dollars in millions, except coverage ratios) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year 1st Qtr 2nd Qtr 3rd Qtr Year
Williams Partners L.P.
Reconciliation of Non-GAAP Distributable cash flow to GAAP Net income
Net income $ 344 $ 272 $ 285 $ 218 $ 1,119 $ 352 $ 234 $ 218 $ 804
Income attributable to noncontrolling interests (3 )(3 ) (2 )(1 )(3 )
Depreciation and amortization 196 191 201 203 791 208 207 209 624
Non-cash amortization of debt issuance costs included in interest expense 3 4 4 3 14 4 3 4 11
Equity earnings from investments(18 )(35 )(31 )(20 )(104 )(23 )(32 )(36 )(91 )
Allocated reorganization-related costs 2 2
Impairment of certain equipment held for sale 17 17
Loss related to Geismar Incident 6 4 4 14 5 5
Geismar Incident adjustment for insurance and timing (35 ) 118 83 54 96 150
Contingency loss 9 16 25
Reimbursements from Williams under omnibus agreements 4 4 2 3 13 3 4 1 8
Loss related to Opal incident 6 6
Plymouth incident adjustment 3 3 6
Canadian income tax 4 8 12
Income related to partial acreage dedication release (12 )(12 )
Maintenance capital expenditures(44 )(76 )(79 )(59 )(258 )(36 )(90 )(103 )(229 )
Distributable cash flow excluding equity investments 487 366 360 483 1,696 562 450 296 1,308
Plus: Equity investments cash distributions to Williams Partners L.P. 38 41 34 41 154 43 54 71 168
Distributable cash flow 525 407 394 524 1,850 605 504 367 1,476
Less: Pre-partnership distributable cash flow 28 20 16 15 79 23 23
Distributable cash flow attributable to partnership operations $ 497 $ 387 $ 378 $ 509 $ 1,771 $ 582 $ 504 $ 367 $ 1,453
Total cash distributed $ 473 $ 489 $ 442 $ 556 $ 1,960 $ 566 $ 577 $ 587 $ 1,730
Coverage ratios:
Distributable cash flow attributable to partnership operations divided by Total cash distributed 1.05 0.79 0.86 0.92 0.90 1.03 0.87 0.63 0.84
Net income divided by Total cash distributed 0.73 0.56 0.64 0.39 0.57 0.62 0.41 0.37 0.46
23 WMB, WPZ, ACMP Third-Quarter 2014 Earnings | 10/30/14 © 2014 The Williams Companies, Inc. All rights reserved.
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WPZ Non-GAAP Reconciliations
Adjusted segment profit reconciliation and
adjusted segment profit + DD&A
2013 2014
(Dollars in millions) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year 1st Qtr 2nd Qtr 3rd Qtr Year
Segment profit (loss):
Northeast G&P $(9 ) $ 12 $(1 ) $(26 ) $(24 ) $ 6 $ 15 $ 35 $ 56
Atlantic-Gulf 159 152 137 166 614 165 168 162 495
West 186 162 207 186 741 165 152 175 492
NGL & Petchem Services 158 101 68 19 346 167 58 1 226
Total segment profit (loss) $ 494 $ 427 $ 411 $ 345 $ 1,677 $ 503 $ 393 $ 373 $ 1,269
Segment adjustments:
Northeast G&P
Share of impairments at equity method investee $ $ $ $ 7 $ 7 $ $ $
Contingency loss 9 16 25
Loss related to compressor station fire 6 6
Net gain related to partial acreage dedication release (12 )(12 )
Impairment of certain equipment held for sale 17 17
Total Northeast G&P adjustments 9 23 32 6 17(12 ) 11
Atlantic-Gulf
Litigation settlement gain(6 ) (6 )
Net loss (recovery) related to Eminence storage facility leak (5 ) 5(2 )(2 )
Total Atlantic-Gulf adjustments(6 )(5 ) 5(2 )(8 )
West
Loss related to Opal incident 6 6
Total West adjustments 6 6
NGL & Petchem Services
Loss related to Geismar Incident 6 4 4 14 5 5
Geismar Incident adjustment for insurance and timing (35 ) 118 83 54 96 150
Total NGL & Petchem Services adjustments 6(31 ) 122 97 54 96 5 155
Total segment adjustments $(6 ) $ 1 $(17 ) $ 143 $ 121 $ 60 $ 119 $(7 ) $ 172
24 WMB, WPZ, ACMP Third-Quarter 2014 Earnings | 10/30/14 © 2014 The Williams Companies, Inc. All rights reserved.
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WPZ Non-GAAP Reconciliations
Adjusted segment profit reconciliation and
adjusted segment profit + DD&A contd
2013 2014
(Dollars in millions) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year 1st Qtr 2nd Qtr 3rd Qtr Year
Adjusted segment profit (loss):
Northeast G&P $(9 ) $ 12 $ 8 $(3 ) $ 8 $ 12 $ 32 $ 23 $ 67
Atlantic-Gulf 153 147 142 164 606 165 168 162 495
West 186 162 207 186 741 165 158 175 498
NGL & Petchem Services 158 107 37 141 443 221 154 6 381
Total adjusted segment profit (loss) $ 488 $ 428 $ 394 $ 488 $ 1,798 $ 563 $ 512 $ 366 $ 1,441
Depreciation and amortization (DD&A):
Northeast G&P $ 29 $ 32 $ 33 $ 38 $ 132 $ 39 $ 40 41 $ 120
Atlantic-Gulf 93 87 92 91 363 94 91 91 276
West 61 58 58 59 236 58 60 60 178
NGL & Petchem Services 13 14 18 15 60 17 16 17 50
Total depreciation and amortization $ 196 $ 191 $ 201 $ 203 $ 791 $ 208 $ 207 $ 209 $ 624
Adjusted segment profit (loss) + DD&A:
Northeast G&P $ 20 $ 44 $ 41 $ 35 $ 140 $ 51 $ 72 64 $ 187
Atlantic-Gulf 246 234 234 255 969 259 259 253 771
West 247 220 265 245 977 223 218 235 676
NGL & Petchem Services 171 121 55 156 503 238 170 23 431
Total adjusted segment profit (loss) + DD&A $ 684 $ 619 $ 595 $ 691 $ 2,589 $ 771 $ 719 $ 575 $ 2,065
Note: Segment profit (loss) includes equity earnings (losses) and income (loss) from investments reported in other income (expense)net below operating income
in the Consolidated Statement of Comprehensive Income. Equity earnings (losses) result from investments accounted for under the equity method. Income
(loss) from investments results from the management of certain equity investments.
25 WMB, WPZ, ACMP Third-Quarter 2014 Earnings | 10/30/14 © 2014 The Williams Companies, Inc. All rights reserved.
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WPZ Non-GAAP Reconciliations
Segment profit guidancereported to adjusted
Dollars in millions 2014 Guidance 2015 Guidance 2016 Guidance
Low Midpoint High Low Midpoint High Low Midpoint High
Reported segment profit:
Northeast G&P $184 $491
AtlanticGulf 630 965
West 614 595
NGL & Petchem Services 1,010 915
Unallocated Revisions(335) * -
Total reported segment profit 1,953 2,103 2,253 2,746 2,966 3,186 2,925 3,225 3,525
Adjustments:
Loss related to compressor station fire 6 6 6
Impairment of certain equipment held for sale 17 17 17
Net gain related to partial acreage dedication release(12)(12)(12)
Other -(136)(136)(136) -
Total adjustmentsNortheast G&P 11 11 11(136)(136)(136) -
Total adjustmentsAtlanticGulf -
Loss related to Opal incident 6 6 6
Total adjustmentsWest 6 6 6
Geismar incident adjustment for insurance and timing(115)(115)(115)
Loss related to Geismar incident 5 5 5
Total adjustmentsNGL & Petchem Services(110)(110)(110)
Total segment profit adjustments(93)(93)(93)(136)(136)(136) -
Adjusted segment profit:
Northeast G&P 195 355
AtlanticGulf 630 965
West 620 595
NGL & Petchem Services 900 915
Unallocated Revisions(335) * -
Total adjusted segment profit $1,860 $2,010 $2,160 $2,610 $2,830 $3,050 $2,925 $3,225 $3,525
Guidance does not reflect impact of WPZ/AMCP merger agreement as announced on 10/26/14.
Notes: * Unallocated revisions of $195 (low/mid/high) as previously announced in ACMP acquisition press release on 6/15/14 and $190 low /
$140 mid / $90 high as announced in WPZ press release on 7/30/14.
26 WMB, WPZ, ACMP Third-Quarter 2014 Earnings | 10/30/14 © 2014 The Williams Companies, Inc. All rights reserved.
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WPZ Non-GAAP Reconciliations
WPZ adjusted segment profit + DD&A
Dollars in millions 2014 Guidance 2015 Guidance 2016 Guidance
Low Midpoint High Low Midpoint High Low Midpoint High
Adjusted segment profit:
Northeast G&P $195 $355
AtlanticGulf 630 965
West 620 595
NGL & Petchem Services 900 915
Unallocated Revisions(335) * -
Total adjusted segment profit 1,860 $2,010 2,160 2,610 2,830 3,050 2,925 3,225 3,525
Depreciation, Depletion and Amortiz. (DD&A):
Northeast G&P 170 210
AtlanticGulf 430 495
West 235 235
NGL & Petchem Services 75 95
Total DD&A 885 910 935 1,010 1,035 1,060 1,105 1,130 1,155
Adjusted segment profit + DD&A:
Northeast G&P 365 565
AtlanticGulf 1,060 1,460
West 855 830
NGL & Petchem Services 975 1,010
Unallocated Revisions(335) * -
Total adjusted segment profit + DD&A $2,745 $2,920 $*3,095 $3,620 $3,865 $4,110 $4,030 $4,355 $4,680
Guidance does not reflect impact of WPZ/AMCP merger agreement as announced on 10/26/14.
Notes: * Unallocated revisions of $195 (low/mid/high) as previously announced in ACMP acquisition press release on 6/15/14 and $190 low / $140 mid / $90 high as announced in WPZ press release on 7/30/14.
27 WMB, WPZ, ACMP Third-Quarter 2014 Earnings | 10/30/14 © 2014 The Williams Companies, Inc. All rights reserved.
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WPZ Non-GAAP Reconciliations
Distributable cash flow (DCF) and DCF per
common unit
Dollars in millions 2013 2014 Guidance 2015 Guidance 2016 Guidance
Actual Low Midpoint High Low Midpoint High Low Midpoint High
Net Income (After Tax) 1,119 $1,406 1,566 $1,726 $1,850 $2,035 $2,220 $2,000 $2,290 $2,580
D D & A 791 885 910 935 1,010 1,035 1,060 1,105 1,130 1,155
Maintenance Capex(258)(305)(340)(375)(295)(325)(355)(300)(330)(360)
Attributable to Noncontrolling Interests(3)(30)(35)(40)(100)(105)(110)(130)(135)(140)
Geismar incident adjustment for insurance and timing 97(115)(115)(115)
Other / Rounding 104(18)(13)(8) 140 145 150 125 130 135
Distributable Cash Flow 1,850 1,823 1,973 2,123 2,605 2,785 2,965 2,800 3,085 3,370
Less: Pre-Partnership Distributable Cash Flow 79 23 23 23
Distributable Cash Flow Attributable to Partnership Operations $1,771 $1,800 $1,950 $2,100 $2,605 $2,785 $2,965 $2,800 $3,085 $3,370
Cash Distributions 1 $1,960 $2,340 $2,370 $2,400 $2,632 $2,714 $2,796 $2,868 $2,950 $3,032
Cash Distribution Coverage Ratio 0.90x 0.77x 0.82x 0.88x 0.99x 1.03x 1.06x 0.98x 1.05x 1.11x
Net Income / Cash Distributions 0.57x 0.60x 0.66x 0.72x 0.70x 0.75x 0.79x 0.70x 0.78x 0.85x
Distributable Cash Flow (DCF) Attributable to Partnership Operations $1,771 $1,800 $1,950 $2,100 $2,605 $2,785 $2,965 $2,800 $3,085 $3,370
Allocation to General Partner 472 717 735 752 873 916 958 972 1,024 1,075
Allocation to Common Units 1,299 1,083 1,216 1,348 1,732 1,870 2,007 1,828 2,062 2,295
Weighted Average Common Units Outstanding (millions) 420.9 450.2 450.2 450.1 460.3 460.1 459.9 481.2 473.2 465.3
DCF Attributable to Partnership Operations Per Common Unit $3.09 $2.41 $2.70 $2.99 $3.76 $4.06 $4.36 $3.80 $4.36 $4.93
Guidance does not reflect impact of WPZ/AMCP merger agreement as announced on 10/26/14.
Note: Net Income presented above is on an after tax basis but was presented on a pretax basis in prior guidance. 1 Distributions
reflect per-unit increases of 5%7% annually in 2014 and 2015, and 3%-6% in 2016.
28 WMB, WPZ, ACMP Third-Quarter 2014 Earnings | 10/30/14 © 2014 The Williams Companies, Inc. All rights reserved.
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Non-GAAP Disclaimer
This presentation includes combined adjusted EBITDA for Williams Partners and Access Midstream Partners for 2015 and cash distribution coverage ratio, which are non-GAAP financial measures as defined under the rules of the SEC.
For Williams Partners L.P. we define adjusted EBITDA as net income (loss) attributable to partnership before income tax expense, net interest expense, depreciation and amortization expense, equity earnings from investments and allowance for equity funds used during construction, adjusted for equity investments cash distributions to partnership and certain other items management believes affect the comparability of operating results.
Access Midstream Partners defines adjusted EBITDA as net income (loss) before income tax expense, interest expense, depreciation and amortization expense and certain other items management believes affect the comparability of operating results.
For Williams Partners L.P. we also calculate the ratio of distributable cash flow to the total cash distributed (cash distribution coverage ratio). This measure reflects the amount of distributable cash flow relative to our cash distribution. We define distributable cash flow as net income plus depreciation and amortization and cash distributions from our equity investments less our earnings from our equity investments, income attributable to noncontrolling interests and maintenance capital expenditures. We also adjust for payments and/or reimbursements under omnibus agreements with Williams and certain other items.
This presentation is accompanied by a reconciliation of adjusted EBITDA to its nearest GAAP financial measure. Management uses this financial measure because it is an accepted financial indicator used by investors to compare company performance. In addition, management believes that this measure provides investors an enhanced perspective of the operating performance of the partnerships assets and the cash that the business is generating. Adjusted EBITDA is not intended to represent cash flows for the period, nor is it presented as an alternative to net income or cash flow from operations. It should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with United States generally accepted accounting principles
29 WMB, WPZ, ACMP Third-Quarter 2014 Earnings | 10/30/14 © 2014 The Williams Companies, Inc. All rights reserved.
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Net Income After Tax Reconciliation to 2015
Adjusted EBITDA
Williams Access
Partners Midstream Combined*
Low High Low High Low High
Net income after tax attributable to partnership $1,755 $2,105 $ 470 $ 645
Net interest expense 645 665 225 175
Income tax expense 45 55 5 5
Equity earnings from investments(310)(340)
Equity investments cash distributions to partnership 360 400
Depreciation & amortization (DD&A) 1,010 1,060 550 525
Equity allowance for funds used during construction(90)(100)
Adjusted EBITDA attributable to partnership $3,415 $3,845 $ 1,250 $1,350 $4,665 $ 5,195
30 WMB, WPZ, ACMP Third-Quarter 2014 Earnings | 10/30/14 © 2014 The Williams Companies, Inc. All rights reserved.