/FIRST AND FINAL ADD -- NYW063 -- Williams Earnings/

/FIRST AND FINAL ADD -- NYW063 -- Williams Earnings/




   Financial Highlights
   (Unaudited)
                             Three months ended            Years ended
                                December 31,               December 31,

   (Millions, except
    per-share amounts)        2004        2003*          2004      2003*

  Revenues                  $2,964.2    $3,513.5    $ 12,461.3  $16,651.0
  Income (loss) from
   continuing operations       $95.5      $(73.3)        $93.2     $(57.5)
  Income (loss) from
   discontinued
   operations                 $(22.1)      $19.6         $70.5     $326.6
  Cumulative effect
   of change in
   accounting principles          $-          $-            $-    $(761.3)
  Net income (loss)            $73.4      $(53.7)       $163.7    $(492.2)
  Basic earnings (loss)
   per common share:
    Income (loss) from
     continuing operations      $.17       $(.14)         $.18      $(.17)
    Income (loss) from
     discontinued operations   $(.04)       $.04          $.13       $.63
    Cumulative effect of
     change in accounting
     principles                   $-          $-            $-     $(1.47)
    Net income (loss)           $.13      $(.10)          $.31     $(1.01)
    Average shares
     (thousands)             552,272     518,502       529,188    518,137
  Diluted earnings
   (loss) per common share:
    Income (loss) from
     continuing operations      $.17       $(.14)         $.18      $(.17)
    Income (loss) from
     discontinued operations   $(.04)       $.04          $.13       $.63
    Cumulative effect of
     change in accounting
     principles                   $-          $-            $-     $(1.47)
    Net income (loss)           $.13       $(.10)         $.31     $(1.01)
    Average shares
     (thousands)             586,497     518,502       535,611    518,137
  Shares outstanding
   at December 31
   (thousands)                                         557,957    518,232


  * Amounts have been restated or reclassified as described in Note 1 of
    Notes to Consolidated Statement of Operations.


   Consolidated Statement of Operations
   (Unaudited)

                           Three months ended            Years ended
                               December 31,              December 31,

  (Millions, except
   per-share amounts)       2004         2003*        2004         2003*

  REVENUES
    Power                 $2,038.6    $ 2,585.4     $9,272.4    $13,195.5
    Gas Pipeline             351.3        364.0      1,362.3      1,368.3
    Exploration & Production 214.1        166.9        777.6        779.7
    Midstream Gas & Liquids  867.1        709.7      2,882.6      2,784.8
    Other                      6.5         12.9         32.8         72.0
    Intercompany
     eliminations           (513.4)     (325.4)    (1,866.4)    (1,549.3)

    Total revenues         2,964.2      3,513.5     12,461.3     16,651.0

  SEGMENT COSTS AND EXPENSES
    Costs and operating
     expenses              2,543.5      3,152.8     10,751.7     15,004.3
    Selling, general and
     administrative expenses  97.8         92.7        355.5        421.3
    Other (income)
     expense - net           (77.4)       135.6        (51.6)       (21.3)

    Total segment
     costs and expenses    2,563.9      3,381.1     11,055.6     15,404.3

    General corporate
     expenses                 35.3         24.5        119.8         87.0

  OPERATING INCOME
    Power                    (50.8)      (110.6)         86.5        145.3
    Gas Pipeline             148.0        142.2        557.6        539.6
    Exploration & Production  67.7         48.3        223.9        392.5
    Midstream Gas & Liquids  247.0         58.5        552.2        178.0
    Other                    (11.6)        (6.0)       (14.5)        (8.7)
    General corporate
     expenses                (35.3)      (24.5)      (119.8)       (87.0)

    Total operating income   365.0        107.9      1,285.9      1,159.7

    Interest accrued        (171.5)      (251.1)      (834.4)    (1,293.5)
    Interest capitalized       1.0         10.9          6.7         45.5
    Interest rate swap
     income (loss)              .3          4.2        (5.0)         (2.2)
    Investing income          16.8         29.5         48.0         73.2
    Early debt retirement
     costs                   (29.7)       (66.8)      (282.1)       (66.8)
    Minority interest in
     income and preferred
     returns of consolidated
     subsidiaries             (5.4)        (4.3)       (21.4)       (19.4)
    Other income - net         7.2          1.0         26.8         40.7

    Income (loss) from
     continuing operations
     before income taxes
     and cumulative effect
     of change in accounting
     principles              183.7       (168.7)       224.5        (62.8)
    Provision (benefit)
     for income taxes         88.2        (95.4)       131.3         (5.3)

    Income (loss) from
     continuing operations    95.5        (73.3)        93.2        (57.5)
    Income (loss) from
     discontinued operations (22.1)        19.6         70.5        326.6

    Income (loss) before
     cumulative effect of
     change in accounting
     principles               73.4        (53.7)       163.7        269.1
    Cumulative effect of
     change in accounting
     principles                  -            -            -       (761.3)

    Net income (loss)         73.4        (53.7)       163.7       (492.2)

    Preferred stock dividends    -            -            -         29.5

    Income (loss) applicable
     to common stock         $73.4       $(53.7)      $163.7      $(521.7)

  EARNINGS (LOSS) PER SHARE
    Basic earnings (loss)
     per common share:
    Income (loss) from
     continuing operations    $.17        $(.14)        $.18        $(.17)
    Income (loss) from
     discontinued
     operations               (.04)         .04          .13          .63

    Income (loss) before
     cumulative effect
     of change in
     accounting principles     .13         (.10)         .31          .46
    Cumulative effect of
     change in accounting
     principles                  -            -            -        (1.47)

    Net income (loss)         $.13        $(.10)        $.31       $(1.01)

    Diluted earnings (loss)
     per common share:
    Income (loss) from
     continuing operations    $.17        $(.14)        $.18        $(.17)
    Income (loss) from
     discontinued operations  (.04)         .04          .13          .63

    Income (loss) before
     cumulative effect of
     change in accounting
     principles                .13         (.10)         .31          .46
    Cumulative effect of
     change in accounting
     principles                  -            -            -        (1.47)

    Net income (loss)         $.13        $(.10)        $.31       $(1.01)

  * Certain amounts have been restated or reclassified as described in
    Note 1 of Notes to Consolidated Statement of Operations.

   See accompanying notes.


  Notes to Consolidated Statement of Operations
  (Unaudited)

   1. BASIS OF PRESENTATION

   Discontinued operations


In accordance with the provisions related to discontinued operations within
Statement of Financial Accounting Standards (SFAS) No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," the results of operations for the
following components have been reflected in the Consolidated Statement of
Operations as discontinued operations (see Note 7):

   -- retail travel centers concentrated in the Midsouth, part of the
      previously reported Petroleum Services segment;

   -- refining and marketing operations in the Midsouth, including the
      Midsouth refinery, part of the previously reported Petroleum Services
      segment;

   -- Texas Gas Transmission Corporation, previously one of Gas Pipeline's
      segments;

   -- natural gas properties in the Hugoton and Raton basins, previously
      part of the Exploration & Production segment;

   -- bio-energy operations, part of the previously reported Petroleum
      Services segment;

   -- general partnership interest and limited partner investment in
      Williams Energy Partners, previously the Williams Energy Partners
      segment;

   -- the Colorado soda ash mining operations, part of the previously
      reported International segment;

   -- certain gas processing, natural gas liquids fractionation, storage and
      distribution operations in western Canada and at a plant in Redwater,
      Alberta, previously part of the Midstream Gas & Liquids (Midstream)
      segment;

   -- refining, retail and pipeline operations in Alaska, part of the
      previously reported Petroleum Services segment; and

   -- straddle plants in western Canada, previously part of the Midstream
      segment.



During fourth-quarter 2004, we reclassified the operations of Gulf Liquids New
River Project LLC (Gulf Liquids) to continuing operations within our Midstream
segment in accordance with Emerging Issues Task Force (EITF) Issue No. 03-13,
"Applying the Conditions in Paragraph 42 of FASB Statement No. 144, Accounting
for the Impairment or Disposal of Long-Lived Assets, in Determining Whether to
Report Discontinued Operations" (EITF 03-13), which was issued in the fourth
quarter.  Under the provisions of EITF 03-13, Gulf Liquids activities no longer
qualify for reporting as discontinued operations based on management's
expectation that we will continue to have significant commercial activity with
the disposed entity.  The operations of Gulf Liquids were reclassified to
continuing operations within our Midstream segment.  All periods presented
reflect these reclassifications.

Unless indicated otherwise, the information in the Notes to the Consolidated
Statement of Operations relates to our continuing operations. Other components
of our business may be classified as discontinued operations in the future as
those operations are sold or classified as held-for-sale.

2. HEDGE ACCOUNTING - POWER SEGMENT

As a result of our past intent to exit the Power business, our Power segment
did not previously qualify for hedge accounting.  Therefore, we reported
changes in the forward fair value of our derivative contracts in earnings as
unrealized gains or losses.  However, with the decision to retain the business,
Power became eligible for hedge accounting under SFAS 133, "Accounting for
Derivative Instruments and Hedging Activities," and elected hedge accounting
beginning October 1, 2004, on a prospective basis for certain qualifying
derivative contracts. Under cash flow hedge accounting, to the extent that the
hedges are effective, prospective changes in the forward fair value of the
hedges are reported as changes in other comprehensive income in the equity
section of the balance sheet, and then reclassified to earnings when the
underlying hedged transactions (i.e. power sales and gas purchases) affect
earnings.

  3. SEGMENT REVENUES AND PROFIT (LOSS)

  Segments - performance measurement


We currently evaluate performance based on segment profit (loss) from
operations, which includes revenues from external and internal customers,
operating costs and expenses, depreciation, depletion and amortization, equity
earnings (losses) and income (loss) from investments including gains/losses on
impairments related to investments accounted for under the equity method.
Equity earnings (losses) and income (loss) from investments are reported in
investing income in the Consolidated Statement of Operations.

The majority of energy commodity hedging by certain of our business units is
done through intercompany derivatives with Power which, in turn, enters into
offsetting derivative contracts with unrelated third parties.  Power bears the
counterparty performance risks associated with unrelated third parties. 
External Revenues of our Exploration & Production segment includes third party
oil and gas sales, more than offset by transportation expenses and royalties
due third parties on intercompany sales.

Reclassification of operations

Due in part to FERC Order 2004, management and decision-making control of
certain activities were transferred from our Midstream segment.  Certain
regulated gas gathering assets were transferred from our Midstream segment to
our Gas Pipeline segment effective June 1, 2004, and our equity method
investment in the Aux Sable gas processing plant and related business was
transferred from our Midstream segment to our Power segment effective September
21, 2004.  Consequently, the results of operations were similarly reclassified.
 All periods presented reflect these classifications.

                                                  Exploration    Midstream
                                         Gas          &            Gas &
  (Millions)                 Power     Pipeline   Production      Liquids

  Three months ended
   December 31, 2004

  Segment revenues:
    External               $1,784.8     $345.7       $(27.7)      $859.2
    Internal                  256.7        5.6        241.8          7.9

  Total segment revenues    2,041.5      351.3        214.1        867.1

  Less intercompany interest
   rate swap income             2.9          -            -            -

  Total revenues           $2,038.6     $351.3       $214.1       $867.1

  Segment profit (loss)      $(44.4)    $156.8        $70.9       $235.7
  Less:
    Equity earnings (losses)    3.5        8.8          3.2          5.5
    Income (loss)
     from investments             -          -            -        (16.8)
    Intercompany interest
     rate swap income           2.9          -            -            -

  Segment operating
   income (loss)             $(50.8)    $148.0        $67.7       $247.0

  General corporate expenses
  Consolidated operating income

  Three months ended
   December 31, 2003

  Segment revenues:
    External               $2,455.5     $361.6       $(8.8)       $702.1
    Internal                  139.6        2.4        175.7          7.6

  Total segment revenues    2,595.1      364.0        166.9        709.7

  Less intercompany
   interest rate
   swap income                  9.7          -            -            -

  Total revenues           $2,585.4     $364.0       $166.9       $709.7

  Segment profit (loss)     $(101.0)    $148.2        $50.1        $63.8

  Less:
    Equity earnings (losses)     .4        6.0          1.8          1.0
    Income (loss) from
     investments                (.5)         -            -          4.3
    Intercompany interest
     rate swap income           9.7          -            -            -

  Segment operating
   income (loss)            $(110.6)    $142.2        $48.3        $58.5

  General corporate
   expenses

  Consolidated
   operating income


  (Millions)                     Other     Eliminations        Total

  Three months ended
   December 31, 2004

  Segment revenues:
    External                     $2.2            $-          $2,964.2
    Internal                      4.3        (516.3)                -

  Total segment revenues          6.5        (516.3)          2,964.2

  Less intercompany interest
   rate swap income                 -          (2.9)                -

  Total revenues                 $6.5       $(513.4)         $2,964.2

  Segment profit (loss)        $(21.0)           $-            $398.0
  Less:
    Equity earnings (losses)     (9.3)            -              11.7
    Income (loss) from
     investments                  (.1)            -             (16.9)
    Intercompany interest
     rate swap income               -             -               2.9

  Segment operating
   income (loss)               $(11.6)           $-             400.3

  General corporate
   expenses                                                     (35.3)

  Consolidated operating
   income                                                      $365.0

  Three months ended
   December 31, 2003

  Segment revenues:
    External                     $3.1            $-          $3,513.5
    Internal                      9.8        (335.1)                -

  Total segment revenues         12.9        (335.1)          3,513.5

  Less intercompany interest
   rate swap income                 -          (9.7)                -

  Total revenues                $12.9       $(325.4)         $3,513.5

  Segment profit (loss)         $(7.7)           $-            $153.4
  Less:
    Equity earnings (losses)     (1.1)            -               8.1
    Income (loss)
     from investments             (.6)            -               3.2
    Intercompany interest
     rate swap income               -             -               9.7

  Segment operating
   income (loss)                $(6.0)           $-             132.4

  General corporate
   expenses                                                     (24.5)

  Consolidated
   operating income                                            $107.9


                                                  Exploration    Midstream
                                         Gas          &            Gas &
  (Millions)                 Power     Pipeline   Production      Liquids

  Year ended
   December 31, 2004

  Segment revenues:
    External               $8,346.2    $1,345.0      $(84.0)     $2,844.7
    Internal                  912.5        17.3        861.6         37.9

  Total segment revenues    9,258.7     1,362.3        777.6      2,882.6

  Less intercompany
   interest
   rate swap loss             (13.7)          -            -            -

  Total revenues           $9,272.4    $1,362.3       $777.6     $2,882.6


  Segment profit (loss)       $76.7      $585.8       $235.8       $549.7

  Less:
    Equity earnings (losses)    3.9        29.2         11.9         14.6
    Loss from investments         -        (1.0)           -        (17.1)
    Intercompany interest
     rate swap loss           (13.7)          -            -            -

  Segment operating
   income (loss)              $86.5      $557.6       $223.9       $552.2

  General corporate expenses

  Consolidated operating income


  Year ended
   December 31, 2003

  Segment revenues:
    External              $12,570.5    $1,344.3       $(36.3)    $2,740.2
    Internal                  622.1        24.0        816.0         44.6

  Total segment revenues   13,192.6     1,368.3        779.7      2,784.8

  Less intercompany interest
   rate swap loss              (2.9)          -            -            -

  Total revenues          $13,195.5    $1,368.3       $779.7     $2,784.8

  Segment profit (loss)      $135.1      $555.5       $401.4       $197.3

  Less:
    Equity earnings (losses)   (4.9)       15.8          8.9         (.8)
    Income (loss)
     from investments          (2.4)         .1            -         20.1
    Intercompany interest
     rate swap loss            (2.9)          -            -            -

  Segment operating
   income (loss)             $145.3      $539.6       $392.5       $178.0

  General corporate expenses

  Consolidated operating income


  (Millions)                     Other     Eliminations        Total

  Year ended
   December 31, 2004

  Segment revenues:
    External                     $9.4             $-        $12,461.3
    Internal                     23.4       (1,852.7)               -

  Total segment revenues         32.8       (1,852.7)        12,461.3

  Less intercompany interest
   rate swap loss                   -           13.7                -

  Total revenues                $32.8      $(1,866.4)       $12,461.3

  Segment profit (loss)        $(41.6)            $-         $1,406.4
  Less:
    Equity earnings (losses)     (9.7)             -             49.9
    Loss from investments       (17.4)             -            (35.5)
    Intercompany interest
     rate swap loss                 -              -            (13.7)

  Segment operating
   income (loss)               $(14.5)            $-          1,405.7

  General corporate expenses                                   (119.8)

  Consolidated operating income                              $1,285.9


  Year ended
   December 31, 2003

  Segment revenues:
    External                    $32.3             $-        $16,651.0
    Internal                     39.7       (1,546.4)               -

  Total segment revenues         72.0       (1,546.4)        16,651.0

  Less intercompany interest
   rate swap loss                   -            2.9                -

  Total revenues                $72.0      $(1,549.3)       $16,651.0

  Segment profit (loss)        $(50.5)            $-         $1,238.8
  Less:
    Equity earnings (losses)      1.3              -             20.3
    Income (loss)
     from investments           (43.1)             -            (25.3)
    Intercompany interest
     rate swap loss                 -              -             (2.9)

  Segment operating
   income (loss)                $(8.7)            $-          1,246.7

  General corporate expenses                                    (87.0)

  Consolidated operating income                             $ 1,159.7


  4. ASSET SALES, IMPAIRMENTS AND OTHER ACCRUALS


Significant gains or losses from asset sales, impairments and other accruals
included in other (income) expense - net within segment costs and expenses for
the three months and the years ended December 31, 2004 and 2003, are as
follows:

                                              (Income) Expense
                                Three months ended           Years ended
                                    December 31,             December 31,


  (millions)                     2004         2003         2004       2003

  Power
    Gain on sale of Jackson
     power contract              $ -           $-           $-     $(188.0)
    Impairment of goodwill         -         45.0            -        45.0
    Impairment of
     generation facilities         -         44.1            -        44.1
    Commodity Futures Trading
    Commission settlement          -            -            -        20.0
    California rate refund
     and other
     accrual adjustments           -         19.5            -        19.5
  Gas Pipeline
    Write-off of
     previously-capitalized
     costs on an idled
     segment of a pipeline         -            -          9.0           -
    Write-off of software
     development costs due
     to cancelled
     implementation                -           .1            -        25.6
  Exploration & Production
    Loss provision related to an
     ownership dispute           4.1            -         15.4           -
    Net gain on sale of
     certain natural
     gas properties                -          (.3)           -       (96.7)
  Midstream Gas & Liquids
    Gain on sale of the wholesale
     propane business              -        (16.2)           -       (16.2)
    Impairment of Gulf Liquids
     assets                      2.5         16.4          2.5       108.7
    Arbitration award on a Gulf
    Liquids insurance claim
     dispute                   (93.6)           -        (93.6)          -
  Other
    Gain on sale of
     blending assets               -            -            -        (9.2)
    Environmental accrual
     related to the Augusta
     refinery facility          11.8            -         11.8           -


  Power


Goodwill.  During 2003, we were pursuing a strategy of exiting the Power
business.  Because of this and the market conditions in which this business
operated, we evaluated Power's remaining goodwill for impairment.  In
estimating the fair value of the Power segment, we considered our derivative
portfolio which is carried at fair value on the balance sheet, and our non-
derivative portfolio, which is no longer carried at fair value on the balance
sheet.  Because of the significant negative fair value of certain of our non-
derivative contracts, we may be unable to realize our carrying value of this
reporting unit.  As a result, we recognized a $45 million impairment of the
remaining goodwill within Power during 2003.

Generation facilities.  The 2003 impairment relates to the Hazelton generation
facility.  Fair value was estimated using future cash flows based on current
market information and discounted at a risk adjusted rate.

California rate refund and other accrual adjustments.  In addition to the $19.5
million charge included in other (income) expense - net within segment costs
and expenses for 2003, a $13.8 million charge is recorded within costs and
operating expenses.  These two amounts, totaling $33.3 million, are for
California rate refund and other accrual adjustments and relate to power
marketing activities in California during 2000 and 2001.

Midstream Gas & Liquids

Impairment of Gulf Liquids assets.  During second-quarter 2003, our Board of
Directors approved a plan authorizing management to negotiate and facilitate a
sale of the assets of Gulf Liquids.  We are currently negotiating purchase and
sale agreements related to the sale of these assets.  We expect the sale of
these operations to close by March 31, 2005. We recognized impairment charges
of $2.5 million in the fourth quarter of 2004 and $108.7 million during 2003 to
reduce the carrying cost of the long-lived assets to estimated fair value less
costs to sell the assets.  We estimated fair value based on a
probability-weighted analysis of various scenarios including expected sales
prices, discounted cash flows and salvage valuations.  Prior to fourth-quarter
2004, the operations of Gulf Liquids were included in discontinued operations.

Arbitration award on a Gulf Liquids insurance claim dispute.  Winterthur
International Insurance Company (Winterthur) issued policies to Gulf Liquids
providing financial assurance related to construction contracts.  After
disputes arose regarding obligations under the construction contracts,
Winterthur disputed coverage resulting in arbitration between Winterthur and
Gulf Liquids.  In July 2004, the arbitration panel awarded Gulf Liquids $93.6
million, plus interest of $9.6 million. Following the arbitration decision,
Winterthur filed a Petition to Vacate the Final Award in the New York State
court and Gulf Liquids filed a Cross-Petition to Confirm the Final Award. Prior
to the State court's ruling, Winterthur agreed to the terms of the award and on
November 1, 2004, remitted the proceeds to us.  As a result, we recognized
total income of approximately $103 million related to the arbitration award in
fourth-quarter 2004.

Other

Environmental accrual related to the Augusta refinery facility.  As a result of
new information obtained in the fourth quarter related to the Augusta refinery
site, we have accrued additional amounts for completion of work under a current
Administrative Order on Consent and reasonably estimated net remediation costs.
 Accruals may be adjusted as more information from the site investigation
becomes available.

5. INVESTING INCOME

Investing income for the three months and the years ended December 31, 2004 and
2003, is as follows:

                             Three months ended           Years ended
                                December 31,              December 31,
   (millions)                2004         2003         2004         2003

   Equity earnings*         $11.7         $8.1        $49.9        $20.3
   Income (loss) from
    investments*            (16.9)          3.2       (35.5)       (25.3)
   Impairments of cost-based
    investments              (5.1)         (.4)       (28.5)       (35.0)
   Interest income and other 27.1         18.6         62.1        113.2
   Total                    $16.8        $29.5        $48.0       $ 73.2

  * Item also included in segment profit (see Note 3).



Income (loss) from investments for the year ended December 31, 2004, includes:

   -- a $10.8 million additional impairment of our investment in equity
      securities of Longhorn Partners, Pipeline L.P. (Longhorn) primarily
      associated with the terms of a recapitalization plan, which is
      included in our Other segment;

   -- $6.5 million net unreimbursed Longhorn recapitalization advisory fees,
      which is included in our Other segment; and

   -- a $16.9 million impairment of our equity investment in Discovery
      Pipeline resulting from management's estimate of fair value, which is
      included in our Midstream segment.



Income (loss) from investments for the year ended December 31, 2003, includes:

   -- a $43.1 million impairment of our investment in equity and debt
      securities of Longhorn, which is included in our Other segment;

   -- a $14.1 million impairment of our equity interest in Aux Sable, which
      is included in our Power segment;

   -- a $13.5 million gain on the sale of stock in eSpeed Inc., which is
      included in our Power segment; and

   -- an $11.1 million gain on sale of our equity interest in West Texas LPG
      Pipeline, L.P. which is included in our Midstream segment.



Impairments of cost-based investments for the years ended December 31, 2004 and
2003, primarily include impairments of certain international investments.

6. EARLY DEBT RETIREMENT

Early debt retirement costs include payments in excess of the carrying value of
the debt, dealer fees and the write-off of deferred debt issuance costs and
discount/premium on the debt.

  7. DISCONTINUED OPERATIONS

  Summarized results of discontinued operations


The following table presents the summarized results of discontinued operations
for the three months and the years ended December 31, 2004 and 2003.  Income
(loss) from discontinued operations before income taxes for the years ended
December 31, 2004 and 2003 includes charges of $152.7 million and $52.7
million, respectively, to increase our accrued liability associated with
litigation concerning the Trans-Alaska Pipeline System Quality Bank.  The
provision for income taxes for the year ended December 31, 2004, is less than
the federal statutory rate due primarily to the effect of net Canadian tax
benefits realized from the sale of the Canadian straddle plants partially
offset by the United States tax effect of earnings associated with these
assets.

                            Three months ended          Years ended
                                December 31,            December 31,
  (millions)                  2004       2003         2004         2003

  Revenues                     $-      $ 289.3       $353.4     $2,614.6

  Income (loss)
   from discontinued
   operations before income
   taxes                      $(.9)      $32.5      $(121.3)       197.5
    (Impairments) and gain
    (loss) on sales - net       .6        (2.5)       200.5        277.7
  Provision for income taxes (21.8)      (10.4)        (8.7)      (148.6)
  Total income (loss) from
   discontinued operations  $(22.1)      $19.6        $70.5       $326.6


  2004 Completed transactions

  Canadian straddle plants


On July 28, 2004, we completed the sale of the Canadian straddle plants for
approximately $544 million in U.S. funds, including amounts paid to our
subsidiaries for amounts previously due from the straddle plants.  During
third-quarter 2004, we recognized a pre-tax gain on the sale of $189.8 million,
which is included in (Impairments) and gain (loss) on sales - net in the
preceding table of summarized results of discontinued operations.  These assets
were previously written down to estimated fair value, resulting in a $36.8
million impairment in 2002 and an additional $41.7 million impairment in 2003. 
In 2004, the fair value of the assets increased substantially due primarily to
renegotiation of certain customer contracts and a general improvement in the
market for processing assets.  These operations were part of the Midstream
segment.

Alaska refining, retail and pipeline operations

On March 31, 2004, we completed the sale of our Alaska refinery, retail and
pipeline and related assets for approximately $304 million, subject to closing
adjustments for items such as the value of petroleum inventories.  We received
$279 million in cash at the time of sale and $25 million in cash during the
second quarter of 2004. Throughout the sales negotiation process, we regularly
reassessed the estimated fair value of these assets based on information
obtained from the sales negotiations using a probability-weighted approach.  As
a result, impairment charges of $8 million and $18.4 million were recorded in
2003 and 2002, respectively.  We recognized a $3.6 million pre-tax gain on the
sale during first-quarter 2004. The gain and the 2003 impairment charge are
included in (Impairments) and gain (loss) on sales - net in the preceding table
of summarized results of discontinued operations. These operations were part of
the previously reported Petroleum Services segment.

  2003 Completed transactions

  Canadian liquids operations


During the third quarter of 2003, we completed the sales of certain gas
processing, natural gas liquids fractionation, storage and distribution
operations in western Canada and at our Redwater, Alberta plant for total
proceeds of $246 million in cash.  We recognized pre-tax gains totaling $92.1
million in 2003 on the sales which are included in (Impairments) and gain
(loss) on sales - net in the preceding table of summarized results of
discontinued operations.  These operations were part of the Midstream segment.

Soda ash operations

On September 9, 2003, we completed the sale of our soda ash mining facility
located in Colorado.  The December 31, 2002 carrying value resulted from the
recognition of impairments of $133.5 million and $170 million in 2002 and 2001,
respectively, and reflected the then estimated fair value less cost to sell. 
During 2003, ongoing sale negotiations continued to provide new information
regarding estimated fair value, and, as a result, we recognized additional
impairment charges of $17.4 million in 2003.  We also recognized a pre-tax loss
on the sale in 2003 of $4.2 million.  The 2003 impairments and the loss on sale
are included in (Impairments) and gain (loss) on sales - net in the preceding
table of summarized results of discontinued operations.  The soda ash
operations were part of the previously reported International segment.

Williams Energy Partners

On June 17, 2003, we completed the sale of our 100 percent general partnership
interest and 54.6 percent limited partner investment in Williams Energy
Partners for $512 million in cash and assumption by the purchasers of $570
million in debt.  In December 2003, we received additional cash proceeds of $20
million following the occurrence of a contingent event.  We recognized a total
pre-tax gain of $310.8 million on the sale during 2003, including the $20
million of additional proceeds, all of which is included in (Impairments) and
gain (loss) on sales - net in the preceding table of summarized results of
discontinued operations. We deferred an additional $113 million associated with
certain indemnifications we provided to the purchasers under the sales
agreement.  In second-quarter 2004, we settled these indemnifications with an
agreement to pay $117.5 million over a four-year period.  Williams Energy
Partners was a previously reported segment.

Bio-energy facilities

On May 30, 2003, we completed the sale of our bio-energy operations for
approximately $59 million in cash.  During 2003, we recognized a pre-tax loss
on the sale of $5.4 million, which is included in (Impairments) and gain (loss)
on sales - net in the preceding table of summarized results of discontinued
operations.  These assets were previously written down by $195.7 million,
including $23 million related to goodwill, to their estimated fair value less
cost to sell at December 31, 2002.  These operations were part of the
previously reported Petroleum Services segment.

Natural gas properties

On May 30, 2003, we completed the sale of natural gas exploration and
production properties in the Raton Basin in southern Colorado and the Hugoton
Embayment in southwestern Kansas.  This sale included all of our interests
within these basins.  We recognized a $39.7 million pre-tax gain on the sale
during 2003. The gain is included in  (Impairments) and gain (loss) on sales -
net in the preceding table of summarized results of discontinued operations.
These properties were part of the Exploration & Production segment.

Texas Gas

On May 16, 2003, we completed the sale of Texas Gas Transmission Corporation
for $795 million in cash and the assumption by the purchaser of $250 million in
existing Texas Gas debt.  We recorded a $109 million impairment charge in 2003
reflecting the excess of the carrying cost of the long-lived assets over our
estimate of fair value based on our assessment of the expected sales price
pursuant to the purchase and sale agreement.  The impairment charge is included
in (Impairments) and gain (loss) on sales - net in the preceding table of
summarized results of discontinued operations.  No significant gain or loss was
recognized on the subsequent sale.  Texas Gas was a segment within Gas
Pipeline.

Midsouth refinery and related assets

On March 4, 2003, we completed the sale of our refinery and other related
operations located in Memphis, Tennessee, for $455 million in cash.  These
assets were previously written down by $240.8 million to their estimated fair
value less cost to sell at December 31, 2002.  We recognized a pre-tax gain on
sale of $4.7 million in the first quarter of 2003.  During the second quarter
of 2003, we recognized a $24.7 million gain on the sale of an earn-out
agreement we retained in the sale of the refinery.  These gains are included in
(Impairments) and gain (loss) on sales - net in the preceding table of
summarized results of discontinued operations.  These operations were part of
the previously reported Petroleum Services segment.

Williams travel centers

On February 27, 2003, we completed the sale of our travel centers for
approximately $189 million in cash.  We had previously written these assets
down by $146.6 million in 2002 and $14.7 million in 2001 to their then
estimated fair value to sell at December 31, 2002, and did not recognize a
significant gain or loss on the sale.  These operations were part of the
previously reported Petroleum Services segment.

8. CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLES

On October 25, 2002, the EITF reached a consensus on Issue No. 02-3, "Issues
Related to Accounting for Contracts Involved in Energy Trading and Risk
Management Activities."  This Issue rescinded EITF Issue No. 98-10, "Accounting
for Contracts Involved in Energy Trading and Risk Management Activities," the
impact of which is to preclude fair value accounting for energy trading
contracts that are not derivatives pursuant to SFAS No. 133 and commodity
trading inventories.  The EITF also reached a consensus that gains and losses
on derivative instruments within the scope of SFAS No. 133 should be shown net
in the income statement if the derivative instruments are held for trading
purposes.  The consensus is applicable for fiscal periods beginning after
December 15, 2002, except for physical trading commodity inventories purchased
after October 25, 2002, which may not be reported at fair value.  We initially
applied the consensus effective January 1, 2003, and reported the initial
application as a cumulative effect of a change in accounting principle.  The
effect of initially applying the consensus reduced net income by approximately
$762.5 million on an after tax basis. Physical trading commodity inventories at
December 31, 2003, that were purchased prior to October 25, 2002, were reported
at fair value at December 31, 2003, and included in the effect of initially
applying the consensus.  The change results primarily from power tolling load
serving, transportation and storage contracts not meeting the definition of a
derivative and no longer being reported at fair value.  These contracts are now
accounted for under an accrual model. Physical trading commodity inventories
are stated at cost, not to be in excess of market.

9. RECENT ACCOUNTING STANDARDS In December 2004, the Financial Accounting
Standards Board issued revised SFAS No. 123, "Share-Based Payment."  The
statement requires that compensation cost for all share based awards to
employees be recognized in the financial statements at fair value.  The
Statement is effective as of the beginning of the first interim or annual
reporting period that begins after June 15, 2005. We currently intend to adopt
the new statement as of the interim reporting period beginning July 1, 2005. 
Prior to adoption, we will continue to account for our stock-based compensation
plans under Accounting Principles Board Opinion No. 25 and related guidance
while applying the proforma disclosure requirements of SFAS No. 148,
"Accounting for Stock-Based Compensation- Transition and Disclosure-an
amendment of SFAS No. 123." 

PRNewswire -- Feb. 23

END FIRST AND FINAL ADD

DATASOURCE: Williams

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