UNITED STATES SECURITIES AND EXCHANGE COMMISSION ON MAY 1, 2003 REGISTRATION NO. 333-85568 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON,

Approximate date of commencement of proposed sale to the public: The exchange offer commenced, and the exchange offer prospectus and exchange offer materials were sent to security holders, beginning on September 17, 2004, and the registrant expects to commence the proposed sale pursuant to the exchange offer as soon as practicable ~~following the effectiveness of~~after this registration ~~statement.~~statement becomes effective and all other conditions to the exchange offer described herein have been satisfied or waived.

If the securities being registered on this form are ~~being~~to be offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. ~~[ ]~~o

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ~~[ ] ________~~o

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ~~[ ] --------------------- CALCULATION OF REGISTRATION FEE~~
- -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- PROPOSED MAXIMUM PROPOSED MAXIMUM TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF SECURITIES TO BE REGISTERED REGISTERED NOTE(1) PRICE(1) REGISTRATION FEE(2) - -------------------------------------------------------------------------------------------------------------------- 8.125% Notes due March 15, 2012.......................... $650,000,000 100% $650,000,000 $59,800 - -------------------------------------------------------------------------------------------------------------------- 8.750% Notes due March 15, 2032.......................... $850,000,000 100% $850,000,000 $78,200 - -------------------------------------------------------------------------------------------------------------------- Total........................... $1,500,000,000 $1,500,000,000 $138,000 - -------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------
~~(1) Estimated solely for~~o

The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the ~~purpose of calculating the registration fee~~registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with ~~Rule 457(f) promulgated under~~Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as amended. (2) Fee previously paid. --------------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTIONthe Commission, acting pursuant to said Section 8(a), ~~MAY DETERMINE. - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------~~ ~~THE INFORMATION CONTAINED IN THIS~~may determine.

The information in this exchange offer prospectus may change. We may not complete the exchange offer and issue these securities until the registration statement filed with the Securities and Exchange Commission is effective. This exchange offer prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

EXCHANGE OFFER PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT EXCHANGE THE OUTSTANDING SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THE NEW SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THE NEW SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. SUBJECT TO COMPLETION, DATED MAY 1, 2003 THE WILLIAMS COMPANIES, INC. OFFER TO EXCHANGE UP TO $650,000,000 OF 8.125% NOTES DUE MARCH 15, 2012, THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 FOR ANY AND ALL OUTSTANDING 8.125% NOTES DUE MARCH 15, 2012 AND UP TO $850,000,000 OF 8.750% NOTES DUE MARCH 15, 2032, THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 FOR ANY AND ALL OUTSTANDING 8.750% NOTES DUE MARCH 15, 2032 --------------------- THE NEW SECURITIES ISSUED BY WILLIAMS: - -

We are offering to exchange one (1.0000) share of our common stock plus $1.47 in cash for each validly tendered and accepted FELINE PACS in the form of an Income PACS, up to an aggregate of 43,900,000 Income PACS, upon the terms and subject to the conditions set forth in this exchange offer prospectus and in the related letter of transmittal. On October 6, 2004, 44,000,000 Income PACS were outstanding, and no Growth PACS were outstanding. We are conducting this exchange offer to reduce our overall indebtedness.

Income PACS validly tendered and not withdrawn will be subject to proration as described in this exchange offer prospectus (1) if we determine there is any likelihood that the New York Stock Exchange continued-listing condition described below may not be satisfied based on consultation with the New York Stock Exchange or (2) if more than 43,900,000 Income PACS are validly tendered and not withdrawn prior to the expiration date of the new 8.125% notes and the new 8.750% notes are substantially the same in all material respects as the terms of the outstanding 8.125% notes and the outstanding 8.750% notes, respectively, except that the transfer restrictions, registration rights and additional interest provisions relating to the outstanding 8.125% notes and the outstanding 8.750% notes do not apply to the new 8.125% notes and the new 8.750% notes. Weexchange offer.

The exchange offer will ~~issue up to $650.0 million aggregate principal amount of new 8.125% notes and up to $850.0 million aggregate principal amount of new 8.750% notes. THE EXCHANGE OFFER: - - Expiration:~~expire at 5:00 p.m., New York City time, on ~~June -- , 2003,~~October 18, 2004, unless extended or earlier terminated by us. You may withdraw Income PACS that you tender at any time before the exchange offer expires. In addition, you may withdraw any tendered Income PACS after November 15, 2004, which is 40 business days from September 17, 2004, if we ~~extend the expiration date. - - Conditions:~~ have not accepted them for exchange.

The exchange offer is ~~not conditioned upon any aggregate principal amount~~subject to the conditions described in “The Exchange Offer — Conditions to the Exchange Offer,” including, among other things, the effectiveness of outstanding 8.125% notes or outstanding 8.750% notes being tendered. - - Tendered Securities: All outstanding 8.125% notes and outstanding 8.750% notes that are validly tendered and not validly withdrawn will be exchanged for an equal principal amountthe registration statement of new 8.125% notes or new 8.750% notes that are registered under the Securities Act of 1933. If you fail to tender your outstanding 8.125% notes and outstanding 8.750% notes, you will continue to hold unregistered securities, and your ability to transfer them could be adversely affected. The outstanding 8.125% noteswhich this exchange offer prospectus forms a part and the ~~outstanding 8.750% notes currently bear interest at a rate equal to 8.625% and 9.250%, respectively, pursuant to the terms~~continued listing of the ~~Registration Rights Agreement, which provides for such increase in the interest rate payable~~Income PACS on the ~~outstanding notes until the completion of~~New York Stock Exchange after the exchange offer. ~~Upon~~The New York Stock Exchange will consider de-listing the ~~completion~~outstanding Income PACS if, following the exchange, the number of publicly-held outstanding Income PACS is less than 100,000, the number of holders of outstanding Income PACS is less than 100, the aggregate market value of the outstanding Income PACS is less than $1 million, or for any other reason based on the suitability for the continued listing of the outstanding Income PACS in light of all pertinent facts as determined by the New York Stock Exchange. We reserve the right to terminate or extend the exchange offer if any condition of the exchange offer ~~outstanding notes eligible for tender in~~is not satisfied and otherwise to amend the exchange offer in any respect.

The Income PACS are listed on the New York Stock Exchange under the symbol “WMB PrI,” and ~~not validly tendered for~~our common stock is listed on the New York Stock Exchange under the symbol “WMB.” On September 16, 2004, the day before commencement of the exchange offer, the last reported sale price of the Income PACS on the New York Stock Exchange was $13.34 per Income PACS and the ~~new 8.125% notes~~last reported sale price of our common stock on the New York Stock Exchange was $12.05 per share. On October 7, 2004, the last reported sale price of the Income PACS on the New York Stock Exchange was $14.20 per Income PACS and the ~~new 8.750% notes~~last reported sale price of our common stock on the New York Stock Exchange was $12.83 per share. The shares of our common stock to be issued in the exchange offer have been approved for listing on the New York Stock Exchange.

~~We urge you to carefully read the “Risk Factors” section beginning on page 15 before you make any decision regarding the exchange offer.~~

You must make your own decision whether to tender any Income PACS in the exchange offer and, if so, the number of Income PACS to tender. We do not make any recommendation as to whether or not holders of outstanding Income PACS should tender their Income PACS for exchange in the exchange offer.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities being offered in this exchange offer, or determined if this exchange offer prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

~~The date of this exchange offer prospectus is September 17, 2004 (as amended on October 8, 2004).~~

~~“FELINE PACS,” “Income PACS” and “Growth PACS” are service marks of Merrill Lynch & Co., Inc.~~

These answers to questions that you may have as a holder of FELINE PACS, as well as the summary that follows, provide an overview of material information regarding the exchange offer that is included elsewhere or incorporated by reference in this exchange offer prospectus. To fully understand the exchange offer and the other considerations that may be important to your decision about whether to participate in the exchange offer, you should carefully read this exchange offer prospectus in its entirety, including the section entitled “Risk Factors,” as well as the information incorporated by reference in this exchange offer prospectus. For further information regarding The Williams Companies, Inc., see the section of this exchange offer prospectus entitled “Where You Can Find More Information.”

We are making the exchange offer as part of our ongoing strategy to reduce our overall indebtedness. The exchange offer allows us to retire the notes included in the Income PACS instead of having them remain outstanding if a remarketing of the notes is successful. A remarketing of the notes will ~~bear~~be “successful” if a “failed remarketing” has not occurred as described in the section of this exchange offer prospectus entitled “Description of the Purchase Contracts — Remarketing.” If a remarketing of the notes included in the Income PACS is successful, the notes will have been sold to third parties, and the notes will remain outstanding as a stand alone security until February 16, 2007, bearing a new interest atrate to be established in connection with such successful remarketing as described in the section of this exchange offer prospectus entitled “Description of the Notes — Market Rate Reset.”

~~We are offering to exchange up to an aggregate of 43,900,000 of our outstanding Income PACS.~~

~~What is an Income PACS and how does it differ from a ~~rate~~Growth PACS?~~

Each Income PACS consists of a unit comprising a purchase contract and either a note or, after a successful remarketing on November 10, 2004, the appropriate applicable ownership interest in a portfolio of zero-coupon U.S. Treasury securities, which we refer to as the Treasury portfolio, that is pledged to secure the settlement of that purchase contract. If a holder of an Income PACS elects to substitute zero-coupon U.S. Treasury securities maturing on February 15, 2005 as pledged securities in substitution for the notes or the applicable ownership interest in the Treasury portfolio, as the case may be, the notes or the applicable ownership interest in the Treasury portfolio will be released from the pledge and delivered to the holder. This substitution would cause Income PACS to become Growth PACS. For more information on Income PACS, Growth PACS, how to create Growth PACS and how to recreate Income PACS see the sections of this exchange offer prospectus entitled “Description of FELINE PACS,” “— Creating Growth PACS” and “— Recreating Income PACS.”

~~What will participating Income PACS holders receive in the exchange offer?~~

For each Income PACS that you validly tender and that we accept for exchange, you will receive one (1.0000) share of our common stock plus $1.47 in cash upon the terms and subject to the conditions set forth in this exchange offer prospectus and the related letter of transmittal. The portion of the exchange consideration represented by the one (1.0000) share to be received in the exchange offer represents the number of shares of our common stock that you would be obligated to purchase from us on February 16, 2005 for each Income PACS you hold, assuming that the applicable market value of our common stock on that date is less than or equal to ~~8.125%~~$41.25 per share.

Our common stock and ~~8.750%~~the Income PACS are listed on the New York Stock Exchange under the symbols “WMB” and “WMB PrI,” respectively. On September 16, 2004, the day before commencement of the exchange offer, the last reported sale price per Income PACS on the New York Stock Exchange was $13.34 and the last reported sale price of our common stock on the New York Stock Exchange was $12.05 per share. On October 7, 2004, the last reported sale price of the Income PACS on the New York Stock Exchange was $14.20 per Income PACS and the last reported sale price of our common stock on the New York Stock Exchange was $12.83 per share.

~~If I participate by tendering my Income PACS, will I receive the quarterly contract adjustment payments and interest payments that are payable on November 16, 2004 and February 16, 2005?~~

No. If your Income PACS are validly tendered and accepted for exchange, you will lose your right to receive payments with respect to your Income PACS to be made after completion of the exchange offer, including any accrued interest or the accrued portion of the contract adjustment payment.

~~How does the cash payment I will receive if I tender my Income PACS compare to the payments I would receive on the Income PACS if I do not tender?~~

The $1.47 cash payment for each Income PACS you validly tender and that we accept for exchange is more than the interest and quarterly contract adjustment payments you will receive for each of your Income PACS if you do not participate in the exchange offer. If you do not participate in the exchange offer, you will receive $0.5625 for each Income PACS on each of November 16, 2004 and February 16, 2005, for a total of $1.125. Except in the circumstances described in the following sentence, you will receive no further quarterly payments after February 16, 2005, because you will have sold your note to a third party in the remarketing or surrendered your note to us to satisfy your stock purchase obligation of $25 for each Income PACS. If you create a Growth PACS or if the first remarketing of the notes fails and you subsequently elect to pay $25 in cash to settle your stock purchase contract instead of using the proceeds of the remarketing or surrendering your note, you will be able to retain the note and receive quarterly interest payments at the reset rate until February 16, 2007 (but not the quarterly contract adjustment payments, which terminate on February 16, 2005).

If a remarketing of the notes is successful, the proceeds of the remarketing will be used to satisfy your stock purchase obligation on February 16, 2005, and to pay the remarketing agent’s fee. The excess proceeds (up to $0.064 per Income PACS assuming a successful remarketing at 100.5% of the Treasury portfolio purchase price), ~~respectively. - - Withdrawal: Tenders~~if any, will be remitted to you.

Accordingly, if you do not participate in the exchange offer and hold your Income PACS through February 16, 2005, you will receive, over the period ending on that date, total cash payments of up to $1.189 per Income PACS. If on February 16, 2005, the applicable market value of our common stock is less than or equal to $41.25 per share, you will also receive one (1.000) share of our common stock on that date. If, however, you participate in the exchange offer and we accept your validly tendered Income PACS for exchange, you will receive, for each such Income PACS, $1.47 in cash and one (1.000) share of our common stock upon the closing of the exchange offer.

In addition, if you validly tender your Income PACS and we accept them for exchange, you will be entitled to receive cash dividends on our common stock if, as, and when declared by our board of directors on or after the closing date of the exchange offer. If you do not participate in the exchange offer, you will be entitled to receive cash dividends only after satisfying your stock purchase obligations on February 16, 2005.

~~How does the amount of common stock I will receive if I tender my Income PACS compare to the amount of common stock I will be obligated to purchase on February 16, 2005 if I do not tender?~~

~~The one (1.0000) share of our common stock that you will receive in the exchange offer for each Income PACS validly tendered and accepted for exchange is, based on the current price of the common~~

~~How will fluctuations in the trading price of our common stock and the Income PACS affect the amount I will receive if I tender my Income PACS?~~

We are offering to exchange one (1.0000) share of our common stock and $1.47 cash for each Income PACS regardless of any fluctuation in the trading price of our common stock or of the Income PACS. If the market price of our common stock declines, the value of the one (1.0000) share you will receive will decline. The trading value of our common stock could fluctuate depending upon any number of factors, including those specific to us and those that influence the trading prices of equity securities generally.

We may not exchange all of the Income PACS that you tender in the exchange offer. If holders validly tender more than an aggregate of 43,900,000 Income PACS for exchange, we will accept an aggregate of not more than 43,900,000 Income PACS from all holders, prorated among the tendering holders. If we determine that there is any likelihood that the New York Stock Exchange continued-listing condition may not be met, we may accept a pro rata amount of the Income PACS tendered in the exchange offer to ensure that the Income PACS continue to be listed on the New York Stock Exchange after the consummation of the exchange offer. Any Income PACS tendered but not accepted because of proration will be returned to you; see the section of this exchange offer prospectus entitled “The Exchange Offer — Priority of Exchanges and Proration.”

~~Yes. You do not have to tender all of your Income PACS to participate in the exchange offer.~~

If the exchange offer is consummated and I do not participate in the exchange offer or I do not exchange all of my Income PACS in the exchange offer, how will my rights and obligations under my unexchanged Income PACS be affected?

The terms of your Income PACS, if any, that remain outstanding ~~8.125% notes~~after the consummation of the exchange offer will not change as a result of the exchange offer. On February 16, 2005, you will be obligated to purchase from us, for the stated amount of $25, a fraction of a newly issued share of our common stock equal to the “settlement rate.” The settlement rate will be calculated based on the price of our common stock and cannot exceed one (1.0000) share, subject to adjustment as described in the section of this exchange offer prospectus entitled “Description of the Purchase Contracts — Anti-Dilution Adjustments.”

~~How will the exchange offer affect the trading market for the Income PACS that are not exchanged?~~

If a sufficiently large number of Income PACS do not remain outstanding ~~8.750% notes~~after the exchange offer, the trading market for the remaining outstanding Income PACS may be less liquid and more sporadic, and market prices may fluctuate significantly depending on the volume of trading in Income PACS.

~~What do we intend to do with the Income PACS that are tendered in the exchange offer?~~

Income PACS accepted for exchange by us in the exchange offer will be retired and cancelled. We intend to treat the exchange of your Income PACS for shares of our common stock plus cash pursuant to the exchange offer as a cash settlement of the purchase contract and a redemption of the note for its adjusted issue price. See the section of this exchange offer prospectus entitled “Material U.S. Federal Income Tax Consequences — Federal Income Tax Treatment of Participation in the Exchange.”

~~Are we making a recommendation regarding whether you should tender in the exchange offer?~~

~~We are not making any recommendation regarding whether you should tender or refrain from tendering your Income PACS in the exchange offer.~~

Accordingly, you must make your own determination as to whether to tender your Income PACS in the exchange offer and, if so, the number of Income PACS to tender. Before making your decision, we urge you to carefully read this exchange offer prospectus in its entirety, including the information set forth in the section of this exchange offer prospectus entitled “Risk Factors,” and the other documents incorporated by reference in this exchange offer prospectus.

~~Will the common stock to be issued in the exchange offer be listed for trading?~~

Yes. The shares of our common stock to be issued in the exchange offer have been approved for listing on the New York Stock Exchange. Generally, the common stock you receive in the exchange offer will be freely tradeable, unless you are considered an “affiliate” of ours, as that term is defined in the Securities Act of 1933. For more information regarding the market for our common stock, see the section of this exchange offer prospectus entitled “Market for Common Stock and Income PACS.”


	•	the effectiveness of the registration statement of which this exchange offer prospectus forms a part;

	•	there being no likelihood that the acceptance for exchange of outstanding Income PACS pursuant to the exchange offer will cause the outstanding Income PACS to be de-listed from the New York Stock Exchange for any reason;

	•	the accuracy of representations and warranties, and the compliance with certain covenants, contained in the dealer manager agreement, in each case, as of the expiration of the exchange offer; and

	•	the other closing conditions described in the section of this exchange offer prospectus entitled “The Exchange Offer — Conditions to the Exchange Offer.”

We may waive certain condition of this exchange offer. If any of the conditions is not satisfied or waived, we will not accept and exchange any validly tendered Income PACS. For more information regarding the conditions to the exchange offer (including conditions we cannot waive), see the section of this exchange offer prospectus entitled “The Exchange Offer — Conditions to the Exchange Offer.”

~~The exchange offer will expire at 5:00 p.m., New York City time, on October 18, 2004, unless extended or earlier terminated by us.~~

~~Under what circumstances can the exchange offer be extended, amended or terminated?~~

We reserve the right to extend the exchange offer for any reason or no reason at all. We also expressly reserve the right, at any time or from time to time, to amend the terms of the exchange offer in any respect prior to the expiration date of the exchange offer. Further, we may be required by law to extend the exchange offer if we make a material change in the terms of the exchange offer or in the information contained in this exchange offer prospectus or waive a material condition to the exchange offer. During any extension of the exchange offer, Income PACS that were previously tendered and not validly withdrawn will remain subject to the exchange offer. We reserve the right, in our sole and absolute discretion, to terminate the exchange offer, at any time prior to the expiration date of the exchange offer, if any condition to the exchange offer is not met. If the exchange offer is terminated, no Income PACS

~~How will I be notified if the exchange offer is extended, amended or terminated?~~

If the exchange offer is extended, amended or terminated, we will promptly issue a press release or another form of public announcement, with the announcement in the case of an extension to be issued no later than 9:00 a.m., New York City time, on the first business day after the previously scheduled expiration date of the exchange offer. ~~- - Tax Consequences: The~~For more information regarding notification of extensions, amendments or the termination of the exchange of outstanding 8.125% notes or outstanding 8.750% notes for new 8.125% notes or new 8.750% notes, respectively, will not be a taxable event for U.S. federal income tax purposes. - - Trading: Neitheroffer, see the new 8.125% notes nor the new 8.750% notes will be listed on any securities exchange. SEE THE SECTION ENTITLED "RISK FACTORS" THAT BEGINS ON PAGE 14 FOR A DISCUSSION OF THE RISKS THAT YOU SHOULD CONSIDER PRIOR TO TENDERING YOUR OUTSTANDING 8.125% NOTES OR 8.750% NOTES FOR EXCHANGE. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The datesection of this exchange offer prospectus ~~is May -- , 2003~~ ~~The information contained~~entitled “The Exchange Offer — Extension, Delay in ~~this prospectus was obtained from us~~Acceptance, Amendment or Termination.”

~~What risks should I consider in deciding whether or not to tender my Income PACS?~~

In deciding whether to participate in the exchange offer, you should carefully consider the discussion of risks and ~~other sources believed by us to be reliable. This prospectus also incorporates important~~uncertainties affecting our business, the Income PACS and ~~financial information about us that is not included~~our common stock described in ~~or delivered with this prospectus. The documents containing this information are listed under~~ the section of this exchange offer prospectus entitled ~~"Where You Can Find More Information." We will provide a copy of any~~“Risk Factors,” and ~~all of these~~the documents to you by first-class mail, without charge, upon written or oral request. ANY REQUEST FOR DOCUMENTS SHOULD BE MADE BY MAY -- , 2003 TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS PRIOR TO THE EXPIRATION DATE OF THE EXCHANGE OFFER. Requests for documents should be directed to: The Williams Companies, Inc. One Williams Center Tulsa, Oklahoma 74172 Attention: Corporate Secretary Telephone: (918) 573-2000 You should rely only on the information contained in this prospectus or any supplement and any information incorporated by reference in this exchange offer prospectus.

~~What are the federal income tax consequences of my participating in the exchange offer?~~

We intend to treat the exchange of your Income PACS for shares of our common stock plus cash pursuant to the exchange offer as a cash settlement of the purchase contract and a redemption of the note for its adjusted issue price. Accordingly, the note component will be redeemed for an amount equal to the fair market value of one share of our common stock as of the date of the exchange plus an amount of cash, which when added to the fair market value of one share of our common stock, equals the adjusted issue price of the note component as of the date of the exchange. The purchase contract component will be cash settled for a payment to us by you equal to the adjusted issue price of the note component minus the sum of the fair market value of one share of our common stock as of the date of the exchange plus $1.47. The redemption of the note component generally will give rise to your recognition of ordinary income or loss equal to the difference between the adjusted issue price of the note component as of the date of the exchange and your adjusted basis in the note component. If you purchased an Income PACS in our original issuance or when the purchase contract component had positive value, you will recognize a capital loss on the settlement of the purchase contract component equal to the amount you are treated as paying to cancel the purchase contract component plus your adjusted basis in the purchase contract component, if any. If you purchased an Income PACS when the purchase contract component had a negative value, you may recognize capital gain or capital loss on the settlement of the purchase contract component. For a detailed discussion, see the section of this exchange offer prospectus entitled “Material U.S. Federal Income Tax Consequences.”

~~Are the financial condition and results of operations of Williams relevant to my decision to tender in the exchange offer?~~

Yes. The price of both our common stock and the Income PACS are closely linked to our financial condition and results of operations. The successful completion of the exchange offer will reduce our debt service obligations and other related commitments. For information about the accounting treatment of the exchange offer, see the section of this exchange offer prospectus entitled “The Exchange Offer — Accounting Treatment.”

~~What amount of expenses will Williams incur to effect the exchange offer?~~

If the maximum of 43,900,000 Income PACS are validly tendered and accepted, we expect to incur an aggregate of approximately $74 million in cash expenses, including the cash payment portion of the exchange offer consideration, to effect the exchange offer. Approximately $49 million of this amount represents aggregate cash payment in lieu of quarterly interest and contract adjustment payments that would have been payable to holders on November 16, 2004 and February 16, 2005, but that will not be paid to tendering holders because their Income PACS would no longer be outstanding.

If you beneficially own Income PACS that are held in the name of a broker or other nominee and wish to tender such Income PACS, you should promptly instruct your broker or other nominee to tender on your behalf. To tender Income PACS, JPMorgan Chase Bank, the exchange agent, must receive, prior to the expiration date of the exchange offer, a timely confirmation of book-entry transfer of such Income PACS and a properly completed letter of transmittal or an agent’s message through the automated tender offer program of The Depository Trust Company, which we refer to in this exchange offer prospectus as the “depositary” or “DTC,” according to the procedure for book-entry transfer described in this exchange offer prospectus. For more information regarding the procedures for tendering your Income PACS, see the section of this exchange offer prospectus entitled “The Exchange Offer — Procedures for Tendering Income PACS.”

~~What happens if some or all of my Income PACS are not accepted for exchange?~~

If we decide for any ~~supplement. We have~~reason not ~~authorized anyone~~ to ~~provide~~accept some or all of your Income PACS, the Income PACS not accepted by us will be returned to you, ~~with~~at our expense, promptly after the expiration or termination of the exchange offer. In the case of Income PACS tendered by book entry transfer into the exchange agent’s account at DTC, DTC will credit any validly withdrawn or unaccepted Income PACS to your account at DTC. For more information, see the section of this exchange offer prospectus entitled “The Exchange Offer — Return of Unaccepted Income PACS.”

If not previously returned, you may withdraw previously tendered Income PACS at any time until the exchange offer has expired, that is, ~~different.~~5:00 p.m., New York City time, on October 18, 2004, unless extended or earlier terminated by us. In addition, you may withdraw any Income PACS that you tender that are not accepted for exchange by us after November 15, 2004, which is 40 business days from September 17, 2004. For more information, see the section of this exchange offer prospectus entitled “The Exchange Offer — Withdrawals of Tenders.”

To withdraw previously tendered Income PACS, you are required to deliver a written notice of withdrawal to the exchange agent, which you may deliver by facsimile, or you must comply with the appropriate procedures of DTC’s automated tender offer program. For more information regarding the procedures for withdrawing tendered Income PACS, see the section of this exchange offer prospectus entitled “The Exchange Offer — Withdrawals of Tenders.”

~~Will I have to pay any fees or commissions if I tender my Income PACS?~~

~~If your Income PACS are held through a broker or other nominee who tenders the Income PACS on your behalf (other than those tendered through one of the dealer managers), your broker may charge~~

~~Will my broker receive any fee from Williams if I tender my Income PACS?~~

If you ~~receive~~own 10,000 or fewer Income PACS and they are validly tendered and accepted, we will pay your broker a soliciting dealer fee of an amount equal to $0.0625 per Income PACS. For more information, see the section of this exchange offer prospectus entitled “The Exchange Offer — Fees and Expenses.”

~~May I participate in the exchange offer by tendering Growth PACS for exchange?~~

No. We are not offering to exchange any ~~unauthorized~~Growth PACS. There are currently no Growth PACS outstanding. If you create Growth PACS and desire to participate in the exchange offer, you may recreate Income PACS from your Growth PACS and then tender the recreated Income PACS in the exchange offer. See the section of this exchange offer prospectus entitled “Description of FELINE PACS — Recreating Income PACS” for a discussion on how to recreate Income PACS from your Growth PACS.

If you have questions regarding the exchange offer, please contact the lead dealer manager, Merrill Lynch & Co. You may call Merrill Lynch & Co. toll free at 1-888-ML4-TNDR (1-888-654-8637) or (212) 449-4914 (collect). If you have questions regarding the procedures for tendering in the exchange offer, require additional exchange offer materials or require assistance in tendering your Income PACS, please contact D.F. King & Co., Inc., the information ~~you must not rely~~agent. You may call the information agent toll-free at 1-800-848-2998. You may also write to the information agent or the lead dealer manager at one of their respective addresses set forth on ~~it. You should disregard anything we said in an earlier document that is inconsistent with what is in~~the back cover of this exchange offer prospectus.

~~SUMMARY~~

This summary highlights material information contained or incorporated by reference in this exchange offer prospectus. This summary is not complete and does not contain all of the information that you should consider when making a decision regarding the exchange offer. You should ~~not assume that~~carefully read this entire exchange offer prospectus, including “Risk Factors,” and the information in this prospectus or any supplement is current as of any date other than the date on the front page of this prospectus. This prospectus is not an offer to sell nor is it seeking an offer to buy these securities in any state or jurisdiction where the offer or sale is not permitted. None of Williams, the trustee under the indenture or the exchange agent is making any recommendation to you as to whether or not you should tender your outstanding 8.125% notes or your outstanding 8.750% notes in connection withwe have incorporated by reference into this exchange offer and no one has been authorized by any of them to make any such recommendation. You must make your own decision as to whether to tender your outstanding 8.125% notes or your outstanding 8.750% notes and, if so, the principal amount of securities to tender. You should read this document and the letter of transmittal carefullyprospectus before making a decision to ~~tender your outstanding 8.125% notes or your outstanding 8.750% notes. We include cross references~~participate in the prospectus to captions in these materials where you can find further related discussions. The following table of contents tells you where to find these captions. TABLE OF CONTENTS
~~PAGE ----~~ Prospectus Summary.......................................... 1 Risk Factors................................................ 14 Use of Proceeds............................................. 24 The Exchange Offer.......................................... 25 Description of the New Securities........................... 34 Material United States Federal Income Tax Considerations.... 42 Plan of Distribution........................................ 45 Forward-Looking Statements.................................. 46 Legal Matters............................................... 47 Experts..................................................... 47 Where You Can Find More Information......................... 47 Incorporation of Documents by Reference..................... 47
PROSPECTUS SUMMARY This summary highlights selected information from this prospectus to help you understand our business, the new 8.125% notes and the new 8.750% notes. It likely does not contain all the information that is important to you or that you should consider in making an investment decision. To understand all of the terms of the exchange offer and to attain a more complete understanding of our business and financial situation, you should read carefully this entire prospectus and should consider consulting with your own legal and tax advisors. References in this prospectus to "Williams," "we," "us" or "our" refer to The Williams Companies, Inc. GENERALoffer.

~~OUR COMPANY~~

We are ~~an energy~~a natural gas company originally incorporated under the laws of the state of Nevada in 1949 and reincorporated under the laws of the state of Delaware in 1987. We were founded in 1908 when two Williams brothers began a construction company in Fort Smith, Arkansas.

Today, we primarily find, produce, gather, process and transport natural gas. We also manage a wholesale power business. Our operations stretch across the country and serve the Northwest, California, Rocky Mountains, Gulf Coast and Eastern Seaboard markets. ~~In 2002, we faced many challenges including credit issues following the deterioration of our~~

The energy industry ~~sector in~~has substantially changed over the ~~wake~~last two years. Those changes have significantly impacted our operations and will continue to impact future operations. In light of the Enron bankruptcy and the assumption of payment obligations and performance on guarantees associated with our former telecommunications subsidiary, Williams Communications Group, Inc. (WCG). With the deterioration of the energy industry, the credit rating agencies' requirements for investment grade companies became more stringent. In response to those requirements, we announced plans on December 19, 2001, to strengthen our balance sheet in an effort to maintain our investment grade ratings. Those plans, including revisions throughout the year due to changing market conditions, included reducing capital expenditures, eliminating certain credit ratings triggers from our loan agreements, cost reductions including a reduction of quarterly dividends paid on our common stock, and asset sales to generate proceeds to be used to reduce outstanding debt. Despite our balance sheet strengthening efforts, we lost our investment grade ratings in July 2002. With the loss of our investment grade ratings our business changed significantly, especially our Energy Marketing & Trading business. Some counterparties were unwilling to extend credit and required cash, letters of credit, or other collateral. By mid-year we faced a liquidity crisis. Concurrently, our credit facility banks were unwilling to extend our $2.2 billion 364 day unsecured credit facility. We quickly worked with our banks and other parties to obtain secured credit facilities. In 2002, we also sold a significant amount of assets to meet our liquidity gap. Following this liquidity crisis, we continued to pursue cost reducing measures including a downsizing of our work force. We also settled substantially all issues between us and WCG through WCG's chapter 11 reorganization. To meet future debt obligations and liquidity needs and focus on creating future shareholder value,environment, on February 20, 2003, we ~~reiterated~~outlined our planned business strategy for the next few years. Our refocused strategy is to become a smaller integrated natural gas company focusing on key growth ~~markets within~~markets. We also focused on bolstering our ~~Gas Pipeline, Exploration & Production,~~liquidity through asset sales, strategic levels of financing and ~~Midstream Gas & Liquids segments. In conjunction with the strategy announcement~~reductions in operating costs to develop a balance sheet capable of supporting and ~~to help meet future debt obligations and future liquidity needs, we also announced plans to sell more assets including Texas Gas Transmission Corporation,~~ultimately growing our ~~general and limited partner interest in Williams Energy Partners L.P., and certain assets within our Midstream Gas & Liquids and Exploration & Production~~remaining businesses.

Our business segments and explained that we are attempting to further limit our exposure to losses in the Energy Marketing & Trading segment. We also expect further work force reductions in 2003. We will need to complete further cost reductions and asset sales and the realization of our strategy in order to meet our liquidity needs and to satisfy our loan covenants regarding minimum levels of liquidity. See the Management's Discussion and Analysis of Financial Condition and Results of Operations -- Financial Condition and Liquidity section of our annual report on Form 10-K for the fiscal year ending December 31, 2002 filed on March 19, 2003 incorporated herein by reference for further details regarding the liquidity issues we are facing. See also the Risk Factors on page 14 of this prospectus for a discussion 1 of factors that could adversely affect our business, operating results, and financial condition as well as adversely affect the value of an investment in our securities. Our ongoing business segments include Power, Gas Pipeline, Exploration & Production, Midstream ~~Gas & Liquids,~~ and Energy Marketing & Trading. At year-end 2002, our business segments also included Williams Energy Partners L.P. and Petroleum Services. Subject to completion of asset sales, those business segments will likely be eliminated in the future.Other. See ~~Part~~“Part I --— Item 1. Business --— Business Segments of our annual report on Form 10-K for the fiscal year ending December 31, 2002 for a more detailed description of assets owned and services provided by each our business segments. RECENT DEVELOPMENTS ASSET SALES AND COST REDUCTIONS Since December 2001, we have continued to work on strengthening our balance sheet through a number of efforts including asset sales and cost reductions. We have completed the sale of, or announced our intention to sell, the following: Gas Pipeline - March 27, 2002 -- We sold our Kern River interstate natural gas pipeline business to a unit of Mid-American Energy Holdings Company for $450 million in cash and the assumption of $510 million in debt. In conjunction with the sale, MEHC Investment, Inc., a wholly-owned subsidiary of Mid-American Energy Holdings Company, and a member of the Berkshire Hathaway family of companies, agreed to acquire 1,466,667 shares of our 9 7/8 percent cumulative convertible preferred stock at $187.50 per share for a total of $275 million. Each share of convertible preferred stock is convertible into ten shares of our common stock. - August 16, 2002 -- We completed the sale of our general partner interest in Northern Border Partners, L.P. for $12 million to a unit of Calgary-based TransCanada. - September 5, 2002 -- We sold our Cove Point liquefied natural gas facility and 87 mile pipeline for $217 million in cash before certain adjustments to a subsidiary of Dominion Resources. - October 29, 2002 -- We sold our ownership interest in the Canadian and United States segments of the Alliance pipeline to Enbridge Inc. and Fort Chicago Energy Partners L.P. for approximately $173 million cash. - November 15, 2002 -- We sold our Central interstate natural gas pipeline to Southern Star Central Corp for $380 million in cash and the assumption of $175 million in debt. - April 14, 2003 -- We announced the sale of Texas Gas Transmission Corporation to Loews Pipeline Holding Corp., a unit of Loews Corporation, for $1.045 billion, which includes $795 million in cash to be paid to us and $250 million in debt that will remain at Texas Gas. Exploration & Production - March 29, 2002 -- We completed a $73 million sale of selected exploration and production properties in the Wind River basin. - July 31, 2002 -- We sold our Jonah Field natural gas production properties in Wyoming for $350 million to EnCana Oil & Gas (USA) Inc. In addition, we completed the sale of the vast majority of our natural gas production properties in the Anadarko Basin to Chesapeake Exploration Limited Partnership for approximately $37.5 million. These sales of exploration and production properties generated $326 million in net cash proceeds. - April 9, 2003 -- We announced the sale of certain natural gas exploration and production properties in Kansas, Colorado and New Mexico for $400 million to XTO Energy Inc. of Fort Worth Texas. 2 The sale is expected to close in June 2003 and will result in an estimated pre-tax gain to us of between $80 million and $100 million. Midstream Gas & Liquids - July 22, 2002 -- We announced our intention to sell our natural gas processing and liquids extraction operations in western Canada. - July 29, 2002 -- We sold our Kansas Hugoton natural gas gathering system to FrontStreet Hugoton LLC, an affiliate of FrontStreet Partners, LLC and GE Structured Finance Group for $77 million in cash. - August 1, 2002 -- We announced a series of transactions including the sale for approximately $1.2 billion of 98 percent of Mapletree LLC and 98 percent of E-Oaktree, LLC to Enterprise Products Partners, L.P. Mapletree owns the Mid-America Pipeline, a 7,226-mile natural gas liquids pipeline system. E-Oaktree owns 80 percent of the Seminole Pipeline, a 1,281-mile natural gas liquids pipeline system. The sale generated $1.15 billion in net cash proceeds. - August 20, 2002 -- We announced our intention to sell our ownership interest in an olefins plant in Geismar, Louisiana and an associated ethylene pipeline system in Louisiana. - February 20, 2003 -- We announced our intention to sell selected assets within the Midstream Gas & Liquids segment. Energy Marketing & Trading - February 4, 2003 -- We announced the sale of our 170-megawatt power facility in Worthington, Indiana, to Hoosier Energy and terminated our power load serving full-requirements contract with Hoosier Energy for cash totaling $67 million. - March 20, 2003 -- We announced the sale of a full-requirements power agreement with Jackson Electric Membership Corporation to Progress Energy for cash totaling $188 million. The sale is expected to close on May 30, 2003. Petroleum Services - April 11, 2002 -- We transferred the Williams Pipe Line System to Williams Energy Partners in exchange for $674 million cash and 7,830,924 Class B units of limited partnership interests in Williams Energy Partners. - June 18, 2002 -- We announced plans to sell our Memphis and Alaska refineries and related petroleum assets. On March 4, 2003, we sold our Memphis, Tennessee refinery and other related operations to Premcor Inc. for approximately $455 million in cash. - February 20, 2003 -- We announced a definitive agreement to sell our equity interest in Williams Bio-Energy L.L.C. for approximately $75 million to a new company formed by Morgan Stanley Capital Partners. Williams Bio-Energy owns and operates an ethanol production plant in Pekin, Illinois, holds 78.4 percent interest in another ethanol plant in Aurora, Nebraska, and has various agreements to market ethanol from third-party plants. - February 27, 2003 -- We sold our retail travel center operations for approximately $190 million in cash before debt repayments to Pilot Travel Centers LLC. Williams Energy Partners - April 21, 2003 -- We announced the sale of our 54.6 percent ownership interest in Williams Energy Partners L.P. in a $1.1 billion transaction. The buyer, a newly formed entity owned equally by Madison Dearborn Partners, LLC and Carlyle/Riverstone Global Energy and Power Fund II, L.P., has agreed to pay approximately $512 million in cash to us. The sale also will have the effect of 3 removing $570 million of the partnership's debt from our consolidated balance sheet. The sale is scheduled to close in May 2003, subject to standard closing conditions. We expect to recognize a pre-tax gain of at least $285 million to $300 million, which will be reported in discontinued operations. Other - March 22, 2002 -- We announced our intention to sell our interest in a soda ash and sodium bicarbonate mining operation. - September 19, 2002 -- We sold our 26.85 percent equity interest in AB Mazeikiu Nafta, the Lithuania oil refining and transportation complex, to YUKOS Oil Company for $85 million. - In an effort to further reduce costs, we have reduced the total number of employees from approximately 12,400 at the end of 2001 to approximately 6,500 in April, 2003. The reduction in work force was carried out in part through an enhanced-benefit early retirement program that concluded during the second quarter of 2002 and reductions associated with asset sales. - Going forward, we intend to focus on our natural gas businesses including natural gas transportation through our interstate natural gas pipelines, natural gas exploration and production, and natural gas gathering and processing in key growth markets. IMPROVING OUR FINANCIAL POSITION In addition to asset sales, we have taken other steps to improve our financial position. On January 14, 2002, we completed the sale of $1.1 billion of publicly traded units, known as FELINE PACS initially consisting of Income PACS, which include a senior debt security and an equity purchase contract. These units trade on the New York Stock Exchange under the ticker symbol WMB PrI. The net proceeds of the offering were used to fund our capital program, repay commercial paper and other short-term debt and for general corporate purposes. On March 19, 2002, we closed a two-part debt transaction totaling $1.5 billion that included $850 million of 30-year notes with an interest rate of 8.75 percent and $650 million of 10-year notes with an interest rate of 8.125 percent. Proceeds were used to repay outstanding short-term debt, provide working capital and for general corporate purposes. These are the notes to which the exchange offer made by this prospectus relates. On August 1, 2002, we announced a series of transactions that resolved then-current liquidity issues and strengthened our finances. We entered into agreements for $1.1 billion of credit through an amended $700 million secured revolving credit facility and a new $400 million secured letter of credit facility. We also entered into a $900 million senior secured credit agreement with a group of investors led by Lehman Brothers Inc. and a Berkshire Hathaway affiliate. The execution of these new credit facilities in conjunction with the asset sales announced on August 1, 2002, addressed our mid-year liquidity crisis. See Note 11 to our Notes to Consolidated Financial StatementsSegments” in our annual report on Form 10-K for the fiscal year ending December 31, ~~2002 for more information on the credit facilities. On March 4,~~ 2003, Northwest Pipeline Corporation completed a $175 million debt offering of senior notes due 2010. Northwest Pipeline Corporation intends to use the proceeds for general corporate purposes, including the funding of capital expenditures. ADDRESSING ENERGY MARKETING AND TRADING ISSUES We have also spent considerable effort addressing concerns of the Federal Energy Regulatory Commission (FERC), the Commodity Futures Trading Commission (CFTC), the Securities and Exchange Commission (SEC), the Department of Justice (DOJ), and state regulatory bodies and attorneys general regarding energy trading practices. On July 26, 2002, we announced an agreement in principle with the state of California and other parties, including the states of Washington and Oregon, on 4 a settlement regarding certain outstanding litigation and claims against us, including the state's claims for refunds at issue before the FERC. On November 11, 2002, we announced that we had agreed to restructure our long-term energy contracts with the state of California as part of the settlement. All necessary approvals were obtained, and the settlement was closed on December 31, 2002, although court approvals are still pending with respect to certain private plaintiffs. The settlement resolved most of the outstanding litigation and civil claims filed against us related to our participation in the natural gas and power markets in the western United States during 2000 and 2001. The FERC ruled on March 26, 2003 that refunds are due to the State of California utilities, but that such refunds will be offset by amounts that remain due to sellers. The March 26, 2003 order also established the formula for deriving the refund, which amended, ~~the formula from the FERC's previous pronouncements to account~~ for a ~~change in the gas price determination. While the effect~~more detailed description of ~~the changes remains uncertain, due to the settlement, it only relates to the refunds to the utilities. Due to continuing market declines~~assets owned and ~~the overall energy marketing and trading environment in the post-Enron world, we announced on June 10, 2002, that we were reducing our financial commitment to that part~~services provided by each of our business ~~as a realistic response to industry upheavals. Consistent with the effort in 2002, Energy Marketing & Trading reduced its number of employees from approximately 1,000~~segments.

Our principal executive offices are located at December 31, 2001 to approximately 410 at December 31, 2002. As of February 25, 2003, the number of Energy Marketing & Trading employees was approximately 330. RESOLUTION OF WILLIAMS COMMUNICATIONS GROUP ISSUES In 2002, we settled substantially all claims and disputes between usOne Williams Center, Tulsa, Oklahoma 74172, and our former telecommunications subsidiary, WCG as part of WCG's chapter 11 reorganization. Prior to the commencement of WCG's chapter 11 on April 22, 2002, we held various claims against WCG and its subsidiaries in an aggregate amount of approximately $2.3 billion as a consequence of certain guarantees, services provided, and other financial accommodations, including the following: - Prior to the 2001 spinoff of WCG, we had provided various administrative services to WCG for which we were owed approximately $106 million. - Prior to the 2001 spinoff of WCG, we also provided indirect credit support for $1.4 billion of WCG's structured notes through a commitment to make available proceeds of an equity issuance in the event any one of the following were to occur: (1) a WCG default; (2) downgrading of our senior unsecured debt by any of our credit rating agencies to below investment grade if our common stock closing price remained below $30.22 for ten consecutive trading days while such downgradetelephone number is in effect; or (3) proceeds from WCG's refinancing or remarketing of the structured notes prior to March 2004 produced proceeds of less than $1.4 billion. On March 5, 2002, we received the requisite approvals on our consent solicitation to amend the terms of the WCG structured notes. The amendment, among other things, eliminated acceleration of the notes due to a WCG bankruptcy or our credit rating downgrade. The amendment also affirmed our obligations for all payments related to the WCG structured notes, which are due March 2004, and allows us to fund such payments from any available sources. In July 2002, we concluded an exchange offer pursuant to which we exchanged substantially all of the WCG structured notes for a series of our notes due March 2004. With the exception of the March and September 2002 interest payments, totaling $115 million, WCG remained indirectly obligated to reimburse us for any payments we are required to make in connection with the WCG structured notes. - In September 2001, we provided additional financing to WCG through a sale/leaseback transaction pursuant to which WCG sold to us the Williams Technology Center (Technology Center), related real estate and certain ancillary assets including corporate aircraft for $276 million in cash and WCG leased the foregoing property back from us for periods ranging from three to ten years. The Technology Center is a 15-story office building located in Tulsa, Oklahoma that WCG utilizes as its headquarters. 5 ~~- On March~~ (918) 573-2000.

8 2002, we received a lease obligation notice letter from WCG relating to the asset defeasance program (ADP) that was entered into while WCG was still one of our subsidiaries. Under the ADP, we were obligated to pay $754 million related to WCG's purchase of certain telecommunications facilities that WCG had been leasing. We paid the $754 million on March 29, 2002, and in return received an unsecured claim against WCG for the amount paid. - On April 22, 2002, WCG filed for chapter 11 bankruptcy protection. Through a negotiated settlement, we sold our claims against WCG including the $754 million claim associated with the ADP, the $1.4 billion claim associated with the WCG structured notes and a $106 million administrative services claim to Leucadia National Corporation (Leucadia) for $180 million in cash and received releases from WCG and its affiliates and insiders. In addition, the order confirming WCG's chapter 11 plan permanently enjoins all of WCG's creditors from asserting direct or derivative claims against us. As part of the settlement, we also sold the Technology Center to WCG in exchange for two promissory notes with face amounts totaling $174.4 million secured by a mortgage on the Technology Center. We no longer own any interest in WCG or its post-bankruptcy successor, WilTel Communications Group, Inc. (WilTel) and all prior WCG obligations to us have been extinguished as a result of the chapter 11 bankruptcy. We remain committed on certain pre-spinoff parental guarantees with a carrying value at December 31, 2002 of $48 million. Further, the September 2001 sale leaseback transaction involving the Technology Center was terminated as part of the bankruptcy process. The sale leaseback transaction involving WilTel's two corporate aircraft continues in effect until WilTel refinances that transaction. At that time, the proceeds of the refinancing are to be paid to us in partial satisfaction of one of the notes mentioned above. The settlement was closed into escrow on October 15, 2002, and finalized on December 2, 2002, and we received $180 million. See Note 2 of the Notes to Consolidated Financial Statements in our annual report on Form 10-K for the year ended December 31, 2002 for more information on our settlement with WCG. 6 ~~SUMMARY OF~~

THE EXCHANGE OFFER You are entitled to exchange in the exchange offer your outstanding 8.125% notes for new 8.125% notes with substantially identical terms, and your outstanding 8.750% notes for new 8.750% notes with substantially identical terms. You should read the discussion under the heading "Description of the New Securities" beginning on page 33 for further information regarding the new 8.125% notes and the new 8.750% notes. We summarize the

The material terms of the exchange offer are summarized below. In addition, we urge you to read the detailed descriptions in the sections of this exchange offer prospectus entitled “The Exchange Offer,” “Description of the Notes,” “Description of Capital Stock,” “Description of FELINE PACS,” “Description of the Purchase Contracts” and “Comparison of Rights Between the Income PACS and Our Common Stock.”


Offeror		The Williams Companies, Inc.

Securities Subject to the Exchange Offer		Up to an aggregate of 43,900,000 Income PACS.

		Each Income PACS consists of (1) a purchase contract, which obligates the holder to purchase from us on February 16, 2005, at a purchase price of $25, newly issued shares of our common stock equal to the “settlement rate” and (2) a note due February 16, 2007, in the principal amount of $25. The note is pledged to us to secure the holder’s obligation to purchase shares of our common stock under the purchase contract.


		The settlement rate will be, subject to adjustment as described in the section of this exchange offer prospectus entitled “Description of the Purchase Contracts — Anti-Dilution Adjustments”:



		• one (1.0000) share of our common stock if the applicable market value of our common stock, based on the average of the closing prices on each of the 20 consecutive trading days ending on February 11, 2005, is equal to or less than $41.25 per share; or



		• a fraction of one (1.0000) share of our common stock equal to the quotient of (a) $41.25 divided by (b) the applicable market value of our common stock if the applicable market value of our common stock is greater than $41.25 per share. Thus, if the applicable market value of our common stock is greater than $41.25 per share, a holder of an Income PACS will receive only $41.25 worth of common stock for each Income PACS on February 16, 2005.


		Based on the current price of our common stock, the settlement rate on February 16, 2005 is expected to be one (1.0000) share.

The Exchange Offer		We are offering to exchange one (1.0000) share of our common stock plus $1.47 in cash for each validly tendered and accepted FELINE PACS in the form of an Income PACS, up to an aggregate of 43,900,000 Income PACS, upon the terms and subject to the conditions set forth in this exchange offer prospectus and in the related letter of transmittal.

		Any Income PACS not exchanged will remain outstanding. The Income PACS validly tendered and accepted for exchange in the exchange offer will be retired and cancelled. We intend to treat the exchange of your Income PACS for shares of our common stock plus cash pursuant to the


		exchange offer as a cash settlement of the purchase contract and a redemption of the note for its adjusted issue price. See the section of this exchange offer prospectus entitled “Material U.S. Federal Income Tax Consequences — Federal Income Tax Treatment of Participation in the Exchange.”

		We are not seeking to exchange any Growth PACS that may be outstanding. However, if you hold Growth PACS and desire to participate in the exchange offer, you may recreate Income PACS from your Growth PACS.

Expiration Date		The exchange offer will expire at 5:00 p.m., New York City time, on October 18, 2004, unless extended or earlier terminated by us.

Proration of Tendered Income PACS		If more than an aggregate of 43,900,000 Income PACS are validly tendered and not withdrawn prior to the expiration date of the exchange offer, we will accept an aggregate of not more than 43,900,000 Income PACS from all holders who validly tender Income PACS, prorated among the tendering holders. If we determine that there is any likelihood that the New York Stock Exchange continued-listing condition may not be met, we may accept a pro rata amount of the Income PACS tendered in the exchange offer to ensure that the Income PACS continue to be listed on the New York Stock Exchange after the consummation of the exchange offer. Any Income PACS tendered but not accepted because of proration will be returned to you. See the section of this exchange offer prospectus entitled “The Exchange Offer — Priority of Exchanges and Proration.”

Certain Consequences to Non-Tendering Holders		Income PACS not exchanged in the exchange offer will remain outstanding after the consummation of the exchange offer. If a sufficiently large number of Income PACS do not remain outstanding after the exchange offer, the trading market for the remaining outstanding Income PACS may be less liquid and more sporadic, and market prices may fluctuate significantly depending on the volume of trading in Income PACS.

Source of Cash to be Paid in the Exchange Offer		We intend to fund the cash component of the exchange consideration from our available cash.


Conditions to the Exchange Offer		The exchange offer is conditioned upon:


		•		the effectiveness of the registration statement of which this exchange offer prospectus forms a part;
		•		there being no likelihood that the acceptance for exchange of outstanding Income PACS pursuant to the exchange offer will cause the outstanding Income PACS to be de-listed from the New York Stock Exchange for any reason;
		•		the accuracy of representations and warranties, and the compliance with certain covenants, contained in the dealer manager agreement, in each case, as of the expiration of the exchange offer, as described in the section of this exchange offer prospectus entitled “The Exchange Offer — Conditions to the Exchange Offer;” and
		•		the other closing conditions described in the section of this exchange offer prospectus entitled “The Exchange Offer — Conditions to the Exchange Offer.”


No Appraisal Rights		No appraisal rights are available to holders of Income PACS in connection with the exchange offer.

Regulatory Approvals		We are not aware of any governmental or regulatory approvals required for completing the exchange offer other than compliance with federal securities laws, including the effectiveness of the registration statement of which this exchange offer prospectus forms a part.

Procedures For Tendering PACS		To tender Income PACS, JPMorgan Chase Bank, the exchange agent, must receive, prior to the expiration date of the exchange offer, a timely confirmation of book-entry transfer of such Income PACS and a properly completed letter of transmittal or an agent’s message through the automated tender offer program of DTC according to the procedure for book-entry transfer described in this exchange offer prospectus. If you tender under DTC’s automated tender offer program, you will agree to be bound by the letter of transmittal that we are providing with this exchange offer prospectus as though you had signed the letter of transmittal.

		If you wish to tender Income PACS that are held in the name of a broker or other nominee, you should instruct your broker or other nominee to tender on your behalf.

		We describe the procedures for tendering Income PACS in more detail in the section of this exchange offer prospectus entitled “The Exchange Offer — Procedures for Tendering Income PACS.”

Withdrawal Rights		You may withdraw previously tendered Income PACS at any time before the expiration date of the exchange offer. In addition, you may withdraw any Income PACS that you tender that are not accepted by us for purchase after November 15, 2004, which is 40 business days from


		September 17, 2004. See the section of this exchange offer prospectus entitled “The Exchange Offer — Withdrawals of Tenders.”

Risk Factors		You should consider carefully all of the information set forth in this exchange offer prospectus and, in particular, you should evaluate the specific factors set forth in the section of this exchange offer prospectus entitled “Risk Factors” before deciding whether to participate in the exchange offer.


Material U.S. Federal Income Tax Consequences For Income PACS Holders		For federal income tax purposes, we intend to treat the exchange of your Income PACS for shares of our common stock plus cash pursuant to the exchange offer as a cash settlement of the purchase contract and redemption of the note for its adjusted issue price. Accordingly, the note component will be redeemed for an amount equal to the fair market value of one share of our common stock as of the date of the exchange plus an amount of cash, which when added to the fair market value of one share of our common stock, equals the adjusted issue price of the note component as of the date of the exchange. The purchase contract component will be cash settled for a payment to us by you equal to the adjusted issue price of the note component minus the sum of the fair market value of one share of our common stock as of the date of the exchange plus $1.47. The redemption of the note component generally will give rise to your recognition of ordinary income or loss equal to the difference between the adjusted issue price of the note component as of the date of the exchange and your adjusted basis in the note component. If you purchased an Income PACS in our original issuance or when the purchase contract component had positive value, you will recognize a capital loss on the settlement of the purchase contract component equal to the amount you are treated as paying to cancel the purchase contract component plus your adjusted basis in the purchase contract component, if any. If you purchased an Income PACS when the purchase contract component had a negative value, you may recognize capital gain or capital loss on the settlement of the purchase contract component. For a detailed discussion, see the section of this exchange offer prospectus entitled “Material U.S. Federal Income Tax Consequences.”


Brokerage Commissions		You are not required to pay any brokerage commissions to the dealer managers. If your Income PACS are held through a broker or other nominee who tenders the Income PACS on your behalf (other than those tendered through one of the dealer managers), your broker may charge you a commission for doing so.

		If you own 10,000 or fewer Income PACS and they are validly tendered and accepted, we will pay your broker a soliciting dealer fee of an amount equal to $0.0625 per Income PACS. For more information, see the section of this


		exchange offer prospectus entitled “The Exchange Offer — Fees and Expenses.”

Dealer Managers		Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc. and Banc of America Securities LLC.

Information Agent		D.F. King & Co., Inc.

Exchange Agent		JPMorgan Chase Bank


Market-Trading		The Income PACS are listed on the New York Stock Exchange under the symbol “WMB PrI,” and our common stock is listed on the New York Stock Exchange under the symbol “WMB.” On September 16, 2004, the day before commencement of the exchange offer, the last reported sale price of the Income PACS on the New York Stock Exchange was $13.34 per Income PACS and the last reported sale price of our common stock on the New York Stock Exchange was $12.05 per share. On October 7, 2004, the last reported sale price of the Income PACS on the New York Stock Exchange was $14.20 per Income PACS and the last reported sale price of our common stock on the New York Stock Exchange was $12.83 per share. The shares of our common stock to be issued in the exchange offer have been approved for listing on the New York Stock Exchange.


Further Information		If you have questions regarding the exchange offer, please contact the lead dealer manager. If you have questions regarding the procedures for tendering in the exchange offer or require assistance in tendering your Income PACS, please contact the information agent. If you would like additional copies of this exchange offer prospectus, our annual, quarterly, and current reports, proxy statement and other information that we incorporate by reference in this exchange offer prospectus, please contact the information agent. For all other questions, please contact the lead dealer manager. The contact information is set forth on the back cover of this exchange offer prospectus.

You should ~~read~~rely only on the ~~discussion under the heading "The Exchange Offer" beginning on page 24 for further~~ information ~~regarding the~~contained or incorporated by reference in this exchange offer ~~and resale of the new 8.125% notes~~prospectus. We have not, and the ~~new 8.750% notes. Securities~~dealer managers have not, authorized any other person to be Exchanged.... On March 19, 2002, we issued $650.0 million aggregate principal amount of outstanding 8.125% Notes due March 15, 2012 and $850.0 million aggregate principal amount of outstanding 8.750% Notes due March 15, 2032 to initial purchasers in transactions exempt from the registration requirements of the Securities Act of 1933. The outstanding 8.125% notes and the outstanding 8.750% notes currently bear interest at a rate equal to 8.625% and 9.250%, respectively, pursuant to the terms of the Registration Rights Agreement, whichprovide you with different or additional information. If anyone provides ~~for such increase in the interest rate payable~~you with different or inconsistent information, you should not rely on the outstanding notes until the completion of the exchange offer. Upon the completion of the exchange offer, outstanding notes eligible for tender in the exchange offer and not validly tendered for exchange and the new 8.125% notes and the new 8.750% notes to be issued in the exchange offer will bear interest at a rate equal to 8.125% and 8.750%, respectively. The terms of the new 8.125% notes and the new 8.750% notes are substantially the same in all material respects as the terms of the outstanding 8.125% notes and the outstanding 8.750% notes, except that (1) the new 8.125% notes and the new 8.750% notes will be freely transferable by the holders except as otherwise provided in this prospectus; (2) holders of the new 8.125% notes and the new 8.750% notes will have no registration rights; and (3) neither the new 8.125% notes nor the new 8.750% notes will contain provisions for an increase in their stated interest rate. The Exchange Offer............it. We are offering to exchange, ~~up to $650.0 million aggregate principal amount~~and are seeking tenders of, new 8.125% notes for up to $650.0 million aggregate principal amount of outstanding 8.125% notes. We are offering to exchange up to $850.0 million aggregate principal amount of new 8.750% notes for up to $850.0 million aggregate principal amount of outstanding 8.750% notes. Outstanding 8.125% notes and outstanding 8.750% notes may be exchangedthese securities only in ~~integral multiples of $1,000. The new 8.125% notes~~jurisdictions where the offers or tenders are permitted. You should assume that the information appearing in this exchange offer prospectus and the ~~new 8.750% notes will evidence~~documents incorporated by reference in this exchange offer prospectus is accurate only as of the ~~same debt as~~dates of this exchange offer prospectus or of those documents. Our business, financial condition, results of operations and prospects may have changed since those dates.

All references in this exchange offer prospectus to “Williams,” the ~~outstanding 8.125% notes~~“Company,” “we,” “our,” “ours” and “us” are to The Williams Companies, Inc., not including its subsidiaries, unless the ~~outstanding 8.750% notes, respectively,~~context requires otherwise and the new 8.125% notes and the new 8.750% notes will be governed by the same indenture as the outstanding 8.125% notes and the outstanding 8.750% notes, respectively. Resale........................ We believeexcept that ~~the new 8.125% notes and the new 8.750% notes issued~~such references in the sections of this exchange offer ~~may be offered for resale, resold~~prospectus entitled “Summary — Our Company,” “Risk Factors — Risks Related to Our Business,” “— Risks Related to Legal Proceedings and 7 ~~otherwise transferred by you without compliance with the registration~~Governmental Investigations,” “— Risks Affecting Our Strategy and ~~prospectus delivery provisions~~Financing

Needs,” “— Risks Related to Regulation of ~~the Securities Act, provided that: - the new 8.125% notes~~Our Business,” “— Risks Related to Environmental Matters,” “— Risks Related to Accounting Standards,” “— Risks Related to Our Industry,” “— Other Risks,” “Selected Historical Consolidated Financial Data” and ~~the new 8.750% notes~~“Cautionary Statement Regarding Forward-Looking Statements” are ~~being acquired in the ordinary course of your business; - you are not participating, do not intend~~ to ~~participate,~~The Williams Companies, Inc. and have no arrangement or understanding with any person to participate, in the distribution of the new 8.125% notes and the new 8.750% notes issued to you in the exchange offer; and - you are not an "affiliate" of ours. If any of these conditions is not satisfied and you transfer any new 8.125% notes or new 8.750% notes issued to you in the exchange offer without delivering a prospectus meeting the requirements of the Securities Act or without an exemption from registration for your new 8.125% notes and new 8.750% notes, you may incur liability under the Securities Act. We do not assume or indemnify you against any of those liabilities. Each broker-dealer that is issued new 8.125% notes or new 8.750% notes in the exchange offer for its own account in exchange for outstanding 8.125% notes or outstanding 8.750% notes which were acquired by that broker-dealer as a result of market-making or other trading activities must acknowledge that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of the new 8.125% notes or the new 8.750% notes. A broker-dealer may use this prospectus for an offer to resell, resale or other transfer of the new 8.125% notes or the new 8.750% notes issued to it in the exchange offer. Record Date................... The record date for the exchange offer is May -- , 2003. Only registered holders of outstanding 8.125% notes and outstanding 8.750% notes on the record date will receive materials relating to the exchange offer. Expiration Date............... The exchange offer will expire at 5:00 p.m., New York City time, on June -- , 2003, or such later date and time to which we extend it. Withdrawal of Tenders......... You may withdraw your tender of outstanding 8.125% notes or outstanding 8.750% notes at any time prior to 5:00 p.m., New York City time, on the expiration date. To withdraw, the exchange agent must receive a notice of withdrawal at its address indicated under "The Exchange Offer -- Exchange Agent" before 5:00 p.m., New York City time, on the expiration date. We will return to you, without charge, promptly after the expiration or termination of the exchange offer any outstanding 8.125% notes or outstanding 8.750% notes that you tendered but that were not accepted for exchange. Conditions to the Exchange Offer......................... We will not be required to accept outstanding 8.125% notes or outstanding 8.750% notes for exchange if various conditions are not satisfied or waived by us. The exchange offer is not 8 conditioned upon any minimum aggregate principal amount of outstanding 8.125% notes or outstanding 8.750% notes being tendered. Please read the section "The Exchange Offer -- Conditions to the Exchange Offer" on page 32 for more information regarding the conditions to the exchange offer. Procedures for Tendering Outstanding Securities........ If your outstanding 8.125% notes or outstanding 8.750% notes are held through The Depository Trust Company and you wishsubsidiaries.

In considering whether to participate in the exchange offer, you should carefully consider the risks described below and the other information we have included or incorporated by reference in this exchange offer prospectus.

We are offering to exchange a fixed number of shares of our common stock and a fixed dollar amount of cash for each Income PACS. The market price of our common stock has declined approximately 49% since the initial issuance of the Income PACS based on the last reported sale price of our common stock on the New York Stock Exchange of $12.83 per share on October 7, 2004, and the market price of our common stock may ~~do so through the automated tender offer program of DTC. By participating~~decline further in the ~~exchange offer,~~future. If the market price of our common stock declines further, the value of the fixed number of shares you will ~~agree to be bound by the letter~~receive in exchange for your Income PACS will decline. The trading value of ~~transmittal that we are providing with this prospectus as though you had signed the letter~~our common stock could fluctuate depending upon any number of ~~transmittal. By signing or agreeing to be bound by the letter of transmittal, you will represent~~factors, including those specific to us and those that ~~among other things: -~~influence the trading prices of equity securities generally. The market price of our common stock will likely continue to fluctuate in response to factors including the following, many of which are beyond our control:


	•	quarterly fluctuations in our operating and financial results;

	•	changes in financial estimates and recommendations by financial analysts;

	•	changes in the ratings of our indebtedness;

	•	developments related to litigation or regulatory proceedings involving us;

	•	fluctuations in the stock price and operating results of our competitors;

	•	dispositions, acquisitions and financings; and

	•	general conditions in the industries in which we operate.

In addition, the stock markets in general, including the New York Stock Exchange, experience significant price and trading fluctuations. These fluctuations have resulted in volatility in the market prices of securities that often has been unrelated or disproportionate to changes in operating performance. These broad market fluctuations may affect adversely the market prices of our notes and our common stock.

In any ~~new 8.125% notes~~liquidation, dissolution or ~~new 8.750%~~winding up of Williams, our common stock would rank below all debt claims against us, including the notes that ~~you~~are part of the Income PACS. As a result, holders of our common stock will not be entitled to receive any payment or other distribution of assets upon the liquidation or dissolution until after our obligations to our debt holders have been satisfied. In addition, holders of shares of our preferred stock, if any, that may be issued will ~~be acquired in~~have priority over the ~~ordinary course~~holders of ~~your business; - you have no arrangement or understanding~~our common stock with ~~any person or entity~~respect to ~~participate in~~ the distribution of our assets in the ~~new 8.125% notes~~event of our liquidation or dissolution.

~~As a holder of our common stock rather than Income PACS, in addition to surrendering the right to receive quarterly interest and contract adjustment payments, you will forgo the possibility of being~~

Holders of Income PACS are entitled to quarterly contract adjustment payments, quarterly interest payments, or ~~the new 8.750% notes; - if you~~both. If your Income PACS are ~~a broker-dealer that will receive new 8.125% notes or new 8.750% notes~~validly tendered and accepted for ~~your own account in~~ exchange for outstanding 8.125% notes or outstanding 8.750% notes that were acquired as a result of market-making activities, you will ~~deliver a prospectus, as required by law, in connection with~~lose the right to receive any ~~resale of the new 8.125% notes~~contract adjustment or new 8.750% notes; and - you are not our "affiliate," as defined in Rule 405 of the Securities Act, or, if you are our affiliate, you will comply with any applicable registration and prospectus delivery requirements of the Securities Act. We will accept for exchange any and all outstanding 8.125% notes or outstanding 8.750% notes which are properly tendered (and not withdrawn) in the exchange offer priorquarterly interest payments to the expiration date. The new 8.125% notes and the new 8.750% notes issued pursuant to the exchange offer will be delivered promptly following the expiration date. See "The Exchange Offer -- Acceptance of Outstanding Securities for Exchange." Effect of Not Tendering....... Outstanding 8.125% notes and outstanding 8.750% notes that are not tendered or that are tendered but not accepted will, following themade after completion of the exchange offer, including any accrued interest or the accrued portion of the contract adjustment payment.

Based upon the opinion of White & Case LLP, we intend to treat the exchange as a transaction in which the note component will be redeemed by us for the adjusted issue price of the note component as of the date of the exchange and the purchase contract component will be cash settled by a payment from you to us equal to: (A) the adjusted issue price of the note component of the Income PACS as of the date of the exchange; minus (B) the sum of: (x) the fair market value of one share of our common stock as of the date of the exchange; plus (y) $1.47. Redemption of the note component of the Income PACS generally will give rise to your recognition of ordinary income or loss equal to the difference between the adjusted issue price of the note as of the date of the exchange and your adjusted basis in the note. If you purchased an Income PACS in our original issuance of Income PACS or when the purchase contract component had positive value, you will recognize a capital loss equal to the amount you paid to us to cancel the purchase contract plus your adjusted basis in the purchase contract component, if any. If you purchased an Income PACS when the purchase contract component had a negative value, you may recognize a capital gain or a capital loss on the settlement of the purchase contract component, and White & Case LLP has not given its opinion regarding this matter. Your basis in a share of our common stock received on the exchange of an Income PACS pursuant to this treatment will equal the fair market value of the share as of the date of the exchange and your holding period for the share will begin on the day following the date of the exchange.

This treatment is not definitively supported by statutory, judicial or administrative authority and alternative characterizations of the exchange are possible. It is possible that the exchange may be treated as a tax-free recapitalization in which the note component of each Income PACS is exchanged for one share of our common stock, $1.47 in cash, and the cancellation of the purchase contract component of the Income PACS. In such case, you would not recognize a loss, your basis in the common stock received generally would be determined by reference to your adjusted basis in the note component, and your holding period of such stock would include the period that you held the note component. Alternatively, the exchange could possibly be treated as the cash settlement of the purchase contract component and a recapitalization in which the note component is redeemed for one share of our common stock and an amount of cash such that the total consideration for the note component equals the adjusted issue price of the note component. In such case, you would recognize gain or loss with respect to the cash settlement of the purchase contract component, you would not recognize any loss with respect to the redemption of the note component, your basis in the share of our common stock received in the exchange generally would be determined by reference to your adjusted basis in the note component, and your holding period of such share would include the period that you held the note component. We urge you to carefully review the section of this exchange offer prospectus entitled “Material U.S. Federal Income Tax Consequences.”

If a sufficiently large number of Income PACS do not remain outstanding after the exchange offer, the trading market for the remaining outstanding Income PACS may be less liquid and market prices may fluctuate significantly depending on the volume of trading in Income PACS. Furthermore, a security with a smaller “float” may command a lower price and trade with greater volatility or much less frequently than would a comparable security with a greater float. This decreased liquidity may also make it more difficult for holders of Income PACS that do not tender to sell their Income PACS.

Until you acquire shares of our common stock upon settlement of your purchase contract associated with the Income PACS, you will ~~continue~~not be entitled to any rights with respect to our common stock, including voting rights and rights to receive any dividends or other distributions on our common stock, but you will be subject to all changes affecting the ~~currently applicable transfer restrictions. Following the completion~~common stock. If you do not tender your Income PACS for exchange, you will only be entitled to rights with respect to our common stock if and when we deliver shares of common stock upon settlement of the ~~exchange offer, we will have no obligation to exchange new 8.125% notes~~Income PACS on February 16, 2005, or as a result of early settlement upon the occurrence of a corporate transaction, as the case may be, and ~~new 8.750% notes for outstanding 8.125% notes and outstanding 8.750% notes or to provide~~if the applicable record date, if any, for the ~~registration~~exercise of ~~those outstanding securities under~~rights or the ~~Securities Act. 9~~ ~~Upon the completion~~receipt of ~~the exchange offer, outstanding notes eligible for tender~~dividends or other distributions occurs after that date. For example, in the ~~exchange offer~~event that an amendment is proposed to our certificate of incorporation or bylaws in connection with a recapitalization of Williams and the record date for determining the stockholders of record entitled to vote on the amendment occurs prior to delivery of our common stock, you will not ~~validly tendered for exchange~~be entitled to vote on the amendment, although you will ~~bear interest at a rate equal~~nevertheless be subject to ~~8.125% and 8.750%, respectively. The trading market for outstanding 8.125% notes and outstanding 8.750% notes not exchanged~~any changes in the ~~exchange offer may be significantly more limited than it is at present. Therefore, if your outstanding 8.125% notes~~powers, preferences or outstanding 8.750% notes are not tendered and accepted in the exchange offer, it may become more difficult for you to sell or transfer your unexchanged securities. Special Procedures for Beneficial Owners............. special rights of our common stock.

Although you are the beneficial owner of ~~book-entry interests and~~the note or Treasury securities or Treasury portfolio, as applicable, underlying your ~~name does not appear on~~Income PACS, those securities will remain pledged after the exchange offer to secure your obligations under the related purchase contract pursuant to a pledge agreement. Thus, your rights to the pledged securities will remain subject to our security ~~position listing of DTC as~~interest. Additionally, even if the holder of those book-entry interests or you own a beneficial interest in outstanding 8.125% notes or outstanding 8.750% notes thatpurchase contracts are ~~registered~~terminated in the ~~name~~event that we become the subject of a ~~broker, dealer, commercial bank, trust company or other nominee,~~case under the U.S. Bankruptcy Code, the delivery of the pledged securities to you may be delayed, as provided in the pledge agreement, because of the commencement of a bankruptcy case and the protections given to debtors in such circumstances.

The purchase contract agreement between the purchase contract agent and us is not qualified as an indenture under the Trust Indenture Act of 1939, and the purchase contract agent is not required to qualify as a trustee under the Trust Indenture Act. The note constituting a part of each Income PACS was issued pursuant to an indenture that has been qualified under the Trust Indenture Act. Accordingly, if you ~~wish to tender that book-entry interest of outstanding 8.125% notes or outstanding 8.750% notes in~~hold Income PACS after the exchange offer, you ~~should contact~~will not have the ~~registered holder promptly and instruct~~benefit of the registered holder to tender on your behalf. Guaranteed Delivery Procedures.................... If you wish to tender your outstanding 8.125% notes or outstanding 8.750% notes and cannot comply, priorprotections of the Trust Indenture Act other than to the ~~expiration date, with~~extent applicable to a note included in an Income PACS. The protections generally afforded the ~~applicable procedures~~holder of a security issued under an indenture that has been qualified under the ~~automated tender offer program~~Trust Indenture Act include:


	•	provisions preventing a trustee that is also a creditor of the issuer from improving its own credit position at the expense of the security holders immediately prior to or after a default under such indenture; and

	•	the requirement that the indenture trustee deliver reports at least annually with respect to certain matters concerning the indenture trustee and the securities.

We have the option to redeem the notes, ~~or outstanding 8.750% notes according to~~on not less than 30 days nor more than 60 days prior written notice, in whole but not in part, at any time before February 16, 2007 if a tax event occurs and continues under the ~~guaranteed delivery procedures~~circumstances described in "The Exchange Offer -- Procedures for Tendering Outstanding Securities -- Guaranteed Delivery" beginning on page 29. Registration Rights Agreement..................... We soldthis exchange offer prospectus. A tax event means the ~~outstanding 8.125% notes and~~receipt by us of an opinion of nationally recognized independent tax counsel experienced in such matters stating that, as a result of: (i) an amendment to, change in, or announced proposed change in, the ~~outstanding 8.750% notes on March 19, 2002 in transactions exempt from the registration requirements~~laws, or any regulations thereunder, of the ~~Securities Act. In connection with these sales, we entered into~~United States or any political subdivision or taxing authority thereof or therein affecting taxation; (ii) an amendment to or change in an interpretation or application of any such laws or regulations by any legislative body, court, governmental agency or regulatory authority; or (iii) any interpretation or pronouncement that provides for a registration rights agreement with the initial purchasers which grants the holders of the outstanding 8.125% notes and the outstanding 8.750% notes exchange registration rights. This exchange offer satisfies those rights, which terminate upon consummation of this exchange offer. You will not be entitled to any exchange or registration rightsposition with respect to any such laws or regulations that differs from the ~~new 8.125%~~generally accepted position on January 7, 2002, which is effective or which is announced on or after January 7, 2002, there is more than insubstantial risk that interest or original issue discount on the notes or the new 8.750% notes. U.S. Federal Income Tax Considerations................ The exchange of outstanding 8.125% notes for new 8.125% notes or of outstanding 8.750% notes for new 8.750% notes in the exchange offer willwould not be ~~a taxable event~~deductible, in whole or in part, by us for U.S. federal income tax purposes. ~~See "Material United States Federal Income Tax Considerations." Use of Proceeds............... We~~If we exercise this option, we will ~~not receive any cash proceeds from~~redeem the ~~issuance of the new 8.125%~~ notes ~~or the new 8.750% notes. 10~~ Exchange Agent................ We have appointed JPMorgan Chase Bank as the exchange agent for the exchange offer. The mailing address and telephone number of the exchange agent are Corporate Trust Services, 2001 Bryan Street, 9th floor, Dallas, Texas 75201, Attention: Frank Ivins, phone: (214) 468-6464. See "The Exchange Offer -- Exchange Agent." SUMMARY OF THE TERMS OF THE NEW SECURITIES NEW 8.125% NOTES: New 8.125% Notes Offered...... Up to $650.0 million principal amount of our 8.125% notes due March 15, 2012. Interest Rate................. 8.125% per year. Interest Payment Dates........ March 15 and September 15 of each year, beginning September 15, 2003. Holders of new 8.125% notes will receive interest from March 15, 2003. Use of Proceeds............... We will not receive any cash proceeds from the exchange offer. Ranking....................... The new 8.125% notes will be senior unsecured obligations of Williams that will rank equally with all of our other outstanding senior unsecured and unsubordinated indebtedness. Optional Redemption........... We may redeem some or all of the new 8.125% notes at any time at the redemption price ~~described in this prospectus,~~ plus accrued and unpaid interest, if ~~any,~~any. If we redeem the notes, we will pay the redemption price in cash to the holders of the notes. If the tax event redemption occurs before November 16, 2004, or before February 16, 2005 if the notes are not successfully remarketed on November 10, 2004 (the third business day immediately preceding November 16, 2004), the redemption price payable to you as a holder of the Income PACS will be distributed to the collateral agent, who in turn will apply an amount equal to the redemption ~~date, as described in "Description~~price to purchase the Treasury portfolio on your behalf, and will remit the remainder of the New Securities -- Terms and Conditions." Optional Exchange............. Holders of outstanding 8.125% notes may opt not to tender their outstanding 8.125% notes in the exchange offer. Therefore, it is possible that not all new 8.125% notes offered by this prospectus will be issued. Covenants..................... We will issue the new 8.125% notes under an indenture between us and JPMorgan Chase Bank (successor trustee to Bank One Trust Company, N.A.), as trustee. The indenture contains covenants that, among other things, limit our ability to: - create liens; and - consolidate, merge or sell material assets. These covenants, which are identical to the covenants applicable to the outstanding 8.125% notes, are subject to a number of important limitations and exceptions. See "Description of the New Securities -- Covenants" for a more comprehensive description of the covenants contained in the indenture. NEW 8.750% NOTES: New 8.750% Notes Offered...... Up to $850.0 million principal amount of our 8.750% notes due March 15, 2032. Interest Rate................. 8.750% per year. 11 Interest Payment Dates........ March 15 and September 15 of each year, beginning September 15, 2003. Holders of new 8.750% notes will receive interest from March 15, 2003. Use of Proceeds............... We will not receive any cash proceeds from the exchange offer. Ranking....................... The new 8.750% notes will be senior unsecured obligations of Williams that will rank equally with all of our other outstanding senior unsecured and unsubordinated indebtedness. Optional Redemption........... We may redeem some or all of the new 8.750% notes at any time at the redemption price to you, and the Treasury portfolio will be substituted for the notes as collateral to secure your obligations under the purchase contracts related to the Income PACS. If your notes are not components of Income PACS, you will receive redemption payments directly. The market price for the Income PACS may decline if we substitute the Treasury portfolio of treasury securities as collateral in place of any notes so redeemed. A tax event redemption will be a taxable event to the holders of Income PACS and of the notes held separately.

The trading prices of the Income PACS in the secondary market are directly affected by the trading prices of our common stock, the general level of interest rates and our credit quality. It is impossible to predict whether the price of our common stock or interest rates will rise or fall. Trading prices of our common stock will be influenced by the factors described in the section of this exchange offer prospectus ~~plus accrued and unpaid interest, if any,~~entitled “Risk Factors — Risks Related to the ~~redemption date, as described in "Description~~Exchange Offer — The value of the New Securities -- Terms and Conditions." Optional Exchange............. Holders of outstanding 8.750% notes may opt not to tender their outstanding 8.750% notes incommon stock that you receive will decline if the exchange offer. Therefore, it is possible that not all new 8.750% notes offered by this prospectus will be issued. Covenants..................... We will issue the new 8.750% notes under an indenture between us and JPMorgan Chase Bank (successor trustee to Bank One Trust Company, N.A.), as trustee. The indenture contains covenants that, among other things, limit our ability to: - create liens; and - consolidate, merge or sell material assets. These covenants, which are identical to the covenants applicable to the outstanding 8.750% notes, are subject to a number of important limitations and exceptions. See "Description of the New Securities -- Covenants" for a more comprehensive description of the covenants contained in the indenture. RISK FACTORS See "Risk Factors" beginning on page 14 for a discussion of factors that should be considered by holders of outstanding 8.125% notes and outstanding 8.750% notes before tendering their securities in the exchange offer. RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDEND REQUIREMENTS The following table presents our consolidated ratio of earnings to combined fixed charges and preferred stock dividend requirements for the periods shown.
~~YEAR ENDED DECEMBER 31, - ------------------------------------ 2002 2001* 2000* 1999* 1998* - ---- ----- ----- ----- -----~~ ~~(a) 2.76 2.88 1.64 1.41~~
- --------------- * Certain amounts within the calculation of the ratio of earnings to fixed charges and preferred dividend requirements have been restated or reclassified due to certain activities of Williams which are now reported as discontinued operations as described in Note 1 of Notes to Consolidated Financial Statements included in Item 8 of Williams' Annual Report on Form 10-K incorporated herein by reference. (a) Earnings were inadequate to cover combined fixed charges and preferred stock dividend requirements by $656.3 million for the year ended December 31, 2002. 12 For purposes of computing these ratios, earnings means income (loss) from continuing operations before: - income taxes; - extraordinary gain (loss); - minority interest in income (loss) and preferred returns of consolidated subsidiaries; - interest expense, net of interest capitalized; - interest expense of 50-percent-owned companies; - that portion of rental expense that we believe to represent an interest factor; - pretax effect of dividends on preferred stock of Williams; - adjustment to equity earnings to exclude equity investments with losses; and - adjustment to equity earnings to reflect actual distributions from equity investments. Fixed charges means the sum of the following: - interest expense; - that portion of rental expense that we believe to represent an interest factor; - pretax effect of dividends on preferred stock of Williams; - pretax effect of dividends on preferred stock and other preferred returns of consolidated subsidiaries; and - interest expense of 50-percent-owned companies. 13 RISK FACTORS In addition to the other information contained in or incorporated by reference into this prospectus, you should carefully consider the following risk factors in deciding whether to exchange your outstanding 8.125% notes or outstanding 8.750% notes in the exchange offer. RISKS AFFECTING OUR STRATEGY AND FINANCING NEEDS OUR STRATEGY TO STRENGTHEN OUR BALANCE SHEET AND IMPROVE LIQUIDITY DEPENDS ON OUR ABILITY TO DIVEST SUCCESSFULLY CERTAIN ASSETS. On February 20, 2003, we announced our intention to sell an additional $2.25 billion in assets, properties and investments. At December 31, 2002, we had debt obligations of $3.8 billion (including certain contractual fees and deferred interest related to underlying debt) that will mature between now and March 2004. Because our cash flow from operations will be insufficient alone to repay all such debt and our access to capital markets is limited, in part as a result of the lossmarket price of our ~~investment grade ratings, we will depend on our sales of assets~~common stock declines.” Fluctuations in interest rates may give rise to generate sufficient net cash proceeds to enable the payment of our maturing obligations. Our secured credit facilities limit our ability to sell certain assets and require generally that one-half of all net proceeds from asset sales be applied (a) to repayment of certain long-term debt, (b) to cash collateralization of designated letters of credit, and (c) to reduction of the lender commitments under the secured facilities. The timing of and the net cash proceeds realized from such sales are dependent on locating and successfully negotiating sales with prospective buyers, regulatory approvals, industry conditions, and lender consents. If the realized cash proceeds are insufficient or are materially delayed, we might not have sufficient funds on hand to pay maturing indebtedness or to implement our strategy. RECENT DEVELOPMENTS AFFECTING THE WHOLESALE POWER AND ENERGY TRADING INDUSTRY SECTOR HAVE REDUCED MARKET ACTIVITY AND LIQUIDITY AND MIGHT CONTINUE TO ADVERSELY AFFECT OUR RESULTS OF OPERATIONS. As a result of the 2000-2001 energy crisis in California, the resulting collapse in energy merchant credit, the recent volatility in natural gas prices, the Enron Corporation bankruptcy filing, and investigations by governmental authorities into energy trading activities and increased litigation related to such inquiries, companies generally in the regulated and so-called unregulated utility businesses have been adversely affected. These market factors have led to industry-wide downturns that have resulted in some companies being forced to exit from the energy trading markets, leading to a reduction in the number of trading partners and in market liquidity and announcements by us, other energy suppliers and gas pipeline companies of plans to sell large numbers of assets in order to boost liquidity and strengthen their balance sheets. Proposed and completed sales by other energy suppliers and gas pipeline companies could increase the supply of the type of assets we are attempting to sell and potentially lead either to our failing to execute such asset sales or our obtaining lower prices on completed asset sales. If either of these developments were to occur, our ability to realize our strategy of improving our liquidity and reducing our indebtedness through asset sales could be significantly hampered. BECAUSE WE NO LONGER MAINTAIN INVESTMENT GRADE CREDIT RATINGS, OUR COUNTERPARTIES MIGHT REQUIRE US TO PROVIDE INCREASING AMOUNTS OF CREDIT SUPPORT WHICH WOULD RAISE OUR COST OF DOING BUSINESS. Our transactions in each of our businesses, especially in our Energy Marketing & Trading business, will require greater credit assurances, both to be given from, and received by, us to satisfy credit support requirements. Additionally, certain market disruptions or a further downgrade of our credit rating might 14 further increase our cost of borrowing or further impair our ability to access one or any of the capital markets. Such disruptions could include: - further economic downturns; - capital market conditions generally; - market prices for electricity and natural gas; - terrorist attacks or threatened attacks on our facilities or those of other energy companies; or - the overall health of the energy industry, including the bankruptcy of energy companies. RISKS RELATED TO OUR BUSINESS ELECTRICITY, NATURAL GAS LIQUIDS AND GAS PRICES ARE VOLATILE AND THIS VOLATILITY COULD ADVERSELY AFFECT OUR FINANCIAL RESULTS, CASH FLOWS, ACCESS TO CAPITAL AND ABILITY TO MAINTAIN EXISTING BUSINESSES. Our revenues, operating results, profitability, future rate of growth and the carrying value of our electricity and gas businesses depend primarilyarbitrage opportunities based upon the prices we receive for natural gas and other commodities. Prices also affect the amount of cash flow available for capital expenditures and our ability to borrow money or raise additional capital. Historically, the markets for these commodities have been volatile and they are likely to continue to be volatile. Wide fluctuations in prices might result from relatively minor changes in the supply of and demand for these commodities, market uncertainty and other factors that are beyond our control, including: - worldwide and domestic supplies of electricity, natural gas, petroleum and related commodities; - weather conditions; - the level of consumer demand; - the price and availability of alternative fuels; - the availability of pipeline capacity; - the price and level of foreign imports; - domestic and foreign governmental regulations and taxes; - the overall economic environment; and - the credit in the markets where products are bought and sold. These factors and the volatilityrelative value of the ~~energy markets make it extremely difficult to predict future electricity~~common stock underlying the purchase contracts and gas price movements with any certainty. Further, electricity and gas prices do not necessarily move in tandem. WE MIGHT NOT BE ABLE TO SUCCESSFULLY MANAGE THE RISKS ASSOCIATED WITH SELLING AND MARKETING PRODUCTS IN THE WHOLESALE ENERGY MARKETS. Our trading portfolios consist of wholesale contracts to buy and sell commodities, including contracts for electricity, natural gas, natural gas liquids and other commodities that are settled by the delivery of the ~~commodity or cash throughout~~other components of the ~~United States. If~~Income PACS. Any such arbitrage could, in turn, affect the ~~values~~trading prices of ~~these contracts change in a direction or manner~~the Income PACS that ~~we do not anticipate or cannot manage, we could realize material losses from~~remain outstanding after the exchange offer, the notes and our ~~trading activities. In the past, certain marketing and trading companies have experienced severe financial problems due~~common stock.

Risks Related to price volatility in the energy commodity markets. In certain instances this volatility has caused companies to be unable to deliver energy commodities that they had guaranteed under contract. In such event, we might incur additional losses to the extent of amounts, if any, already paid to, or received from, counterparties. In addition, in our businesses, we often extend credit to our counterparties. Despite 15 performing credit analysis prior to extending credit, we are exposed to the risk that we might not be able to collect amounts owed to us. If the counterparty to such a financing transaction fails to perform and any collateral we have secured is inadequate, we will lose money. If we are unable to perform under our energy agreements, we could be required to pay damages. These damages generally would be based on the difference between the market price to acquire replacement energy or energy services and the relevant contract price. Depending on price volatility in the wholesale energy markets, such damages could be significant. OUR RISK MEASUREMENT AND HEDGING ACTIVITIES MIGHT NOT PREVENT LOSSES. Although we haveOur Business

The risk management systems that we have in place ~~that use various methodologies to quantify risk, these systems~~ might not always be followed or might not always work as planned. Further, such risk measurement systems do not in themselves manage risk, and

To ~~lower~~manage our financial exposure related to commodity price ~~and market~~ fluctuations, we have entered into contracts to hedge certain risks associated with our assets and operations, including our long-term tolling agreements. In these hedging activities, we have used fixed-price, forward, physical purchase and sales contracts, futures, financial swaps and option contracts traded in the over-the-counter markets or on exchanges, as well as long-term structured transactions when feasible. Substantial declines in market liquidity, however, as well as deterioration of our credit, and termination of existing positions (due for example to credit concerns) have greatly limited our ability to hedge risks identified ~~risks~~ and have caused previously hedged positions to become unhedged. To the extent we have unhedged positions, fluctuating commodity prices could cause our net revenues and net income to be volatile. ~~OUR OPERATING RESULTS MIGHT FLUCTUATE ON~~

Some of the hedges of our tolling contracts are more effective than others in managing economic risk and creating future cash flow certainty. For example, we may resell our rights under a tolling contract through a forward contract, which has terms that match those of the tolling contract. This type of forward contract would be very effective at hedging not only the commodity price risk but also the volatility risk inherent in the tolling contract. However, this forward contract would not hedge the tolling contract’s counterparty credit or performance risk. A ~~SEASONAL AND QUARTERLY BASIS.~~ default by the tolling contract counterparty could result in a future loss of economic value and a change in future cash flows. Other economic hedges of the tolling contract, including full requirements contracts, forward physical commodity contracts and financial swaps and futures, could also effectively hedge the commodity price risk of a tolling contract. However, these types of contracts would be less effective or ineffective in hedging the volatility risk associated with the tolling contract because they do not possess the same optionality characteristics as the tolling contract. These other contracts would also be ineffective in hedging counterparty credit or performance risk.

The impact of changes in market prices for natural gas on the gas prices received by us may be reduced based on the level of our hedging strategies. These hedging arrangements may limit our potential gains if the market prices for natural gas were to rise substantially over the price established by the hedge. In addition, our hedging arrangements expose us to the risk of financial loss in certain circumstances, including instances in which:


	•	production is less than expected;

	•	a change in the difference between published price indexes established by pipelines in which our hedged production is delivered and the reference price established in the hedging arrangements is such that we are required to make payments to our counterparties; or

	•	the counterparties to our hedging arrangements fail to honor their financial commitments.

Our revenues, operating results, profitability, future rate of growth and the value of our power and gas businesses depend primarily upon the prices we receive for natural gas and other commodities. Prices also affect the amount of cash flow available for capital expenditures and our ability to borrow money or raise additional capital.

Historically, the markets for these commodities have been volatile and they are likely to continue to be volatile. Wide fluctuations in prices might result from relatively minor changes in the supply of and demand for these commodities, market uncertainty and other factors that are beyond our control, including:


	•	worldwide and domestic supplies of electricity, natural gas and related commodities;

	•	turmoil in the Middle East and other producing regions;

	•	weather conditions;


	•	the level of consumer demand;

	•	the price and availability of alternative fuels;

	•	the availability of pipeline capacity;

	•	domestic and foreign governmental regulations and taxes;

	•	increased volatility in the natural gas markets in light of continuing uncertainty surrounding regulatory proceedings and proposed regulations;

	•	the overall economic environment; and

	•	the credit of participants in the markets where products are bought and sold.

These factors and the volatility of the energy markets make it extremely difficult to predict future electricity and gas price movements with any certainty. Further, electricity and gas prices do not necessarily move in tandem.

Our portfolios consist of wholesale contracts to buy and sell commodities, including contracts for electricity, natural gas, natural gas liquids and other commodities that are settled by the delivery of the commodity or cash throughout the United States. If the values of these contracts change in a direction or manner that we do not anticipate or cannot manage, we could realize material losses from our marketing. In the past, certain marketing and trading companies have experienced severe financial problems due to price volatility in the energy commodity markets. In certain instances this volatility has caused companies to be unable to deliver energy commodities that they had guaranteed under contract. In such event, we might incur additional losses to the extent of amounts, if any, already paid to, or received from, counterparties. In addition, in our businesses, we often extend credit to our counterparties. Despite performing credit analysis prior to extending credit, we are exposed to the risk that we might not be able to collect amounts owed to us. If the counterparty to such a financing transaction fails to perform and any collateral that secures our counterparty’s obligation is inadequate, we will lose money.

If we are unable to perform under our energy agreements, we could be required to pay damages. These damages generally would be based on the difference between the market price to acquire replacement energy or energy services and the relevant contract price. Depending on price volatility in the wholesale energy markets, such damages could be significant.

Revenues from our businesses, including gas transmission and the sale of electric power, can have seasonal characteristics. In many parts of the country, demand for power peaks during the hot summer months, with market prices also peaking at that time. In other areas, demand for power peaks during the winter. In addition, demand for gas and other fuels peaks during the winter. As a result, our overall operating results in the future might fluctuate substantially on a seasonal basis. The pattern of this fluctuation might change depending on the nature and location of our facilities and pipeline systems and the terms of our power sale agreements and gas transmission arrangements. OUR INVESTMENTS AND PROJECTS LOCATED OUTSIDE OF THE UNITED STATES EXPOSE US TO RISKS RELATED TO LAWS OF OTHER COUNTRIES, TAXES, ECONOMIC CONDITIONS, FLUCTUATIONS IN CURRENCY RATES, POLITICAL CONDITIONS AND POLICIES OF FOREIGN GOVERNMENTS. THESE RISKS MIGHT DELAY OR REDUCE OUR REALIZATION OF VALUE FROM OUR INTERNATIONAL PROJECTS.

We currently own and might acquire and/or dispose of material energy-related investments and projects outside the United States. The economic and political conditions in certain countries where we have interests or in which we might explore development, acquisition or investment opportunities present

Operations in foreign countries also can present currency exchange rate and convertibility, inflation and repatriation risk. In certain conditions under which we develop or acquire projects, or make 16 investments, economic and monetary conditions and other factors could affect our ability to convert our earnings denominated in foreign currencies. In addition, risk from fluctuations in currency exchange rates can arise when our foreign subsidiaries expend or borrow funds in one type of currency but receive revenue in another. In such cases, an adverse change in exchange rates can reduce our ability to meet expenses, including debt service obligations. Foreign currency risk can also arise when the revenues received by our foreign subsidiaries are not in U.S. dollars. In such cases, a strengthening of the U.S. dollar could reduce the amount of cash and income we receive from these foreign subsidiaries. ~~While we believe we have~~The hedges and contracts that we have in place to ~~mitigate our most significant~~manage foreign currency exchange risks ~~our hedges~~ might not be sufficient or we might have some exposures that are not hedged which could result in losses or volatility in our revenues. RISKS RELATED TO LEGAL PROCEEDINGS AND GOVERNMENTAL INVESTIGATIONS WE MIGHT BE ADVERSELY AFFECTED BY GOVERNMENTAL INVESTIGATIONS RELATED TO PRICING INFORMATION THAT WE PROVIDED TO MARKET PUBLICATIONS. On October 25, 2002,

As of June 30, 2004, we ~~disclosed~~had approximately $9,759.6 million of indebtedness on a consolidated basis. Our debt agreements and other related transaction documents contain covenants that ~~inaccurate pricing information had been provided~~restrict, among other things, our ability to:


	•	incur or guarantee additional indebtedness;

	•	create liens;

	•	pay dividends or make other equity distributions;

	•	enter into agreements restricting our subsidiaries’ ability to pay dividends;

	•	purchase or redeem capital stock;

	•	make investments;

	•	sell assets or consolidate or merge with or into other companies; and

	•	engage in transactions with affiliates.

In addition, our debt agreements and other related transaction documents contain, and other debt agreements and other related transaction documents that we enter into in the future will contain, financial covenants and other limitations with which we will need to ~~energy industry trade publications. This disclosure came as~~comply. Our ability to comply with these covenants may be affected by many events beyond our control, and we cannot assure you that our future operating results will be sufficient to comply with the covenants or, in the event of a default under any of our debt agreements and other related transaction documents, to remedy that default.

Although we are currently in compliance with our financial and other covenants in our debt agreements and other related transaction documents, our failure to comply with such financial or other covenants could result in events of default. Upon the occurrence of an ~~internal review conducted~~event of default under our debt agreements, the lenders could elect to declare all amounts outstanding under a particular facility to be immediately due and payable and terminate all commitments, if any, to extend further credit. By reason of cross-default or cross-acceleration provisions in ~~conjunction with requests for information made by the FERC and the CFTC on energy trading practices. We had separately commenced a review~~substantially all of our ~~historical survey publication data after another market participant announced in September 2002~~debt agreements and other related transaction documents, substantially all of our indebtedness could also become immediately due and payable at that ~~certain~~time as well. If the lenders under any of ~~its employees had provided inaccurate pricing data to publications. Later we received a subpoena from~~our debt agreements and other related transaction

Risks Related to Legal Proceedings and net income or increase our operating costs in other ways. WE MIGHT BE ADVERSELY AFFECTED BY GOVERNMENTAL INVESTIGATIONS AND ANY RELATED LEGAL PROCEEDINGS RELATED TO THE ALLEGED CONDUCTING OF "ROUNDTRIP" TRADES BY OUR ENERGY TRADING BUSINESS.Governmental Investigations

Public and regulatory scrutiny of the energy industry and of the capital markets has resulted in increased regulation being either proposed or implemented. In particular, the activities of Enron Corporation and other energy traders in allegedly using "roundtrip" trades which involve the prearrangement of simultaneously executed and offsetting buy and sell trades for the purpose of increasing reported revenues or trading volumes, or influencing prices and which lack a legitimate business purpose, haveSuch scrutiny has also resulted in ~~increased public~~various inquiries, investigations and ~~regulatory scrutiny. To date, we have responded to requests for information from the FERC~~court proceedings.

Such inquiries, investigations and the SEC, related to an investigation of "roundtrip" energy transactions from January 2000 through 2002. We also have received and are responding to subpoenas and supplemental requests for information regarding gas and power trading activities, which involve the same issues and time period covered by the requests from the Commodity Futures Trading Commission (CFTC). Such inquiriescourt proceedings are ongoing and continue to adversely affect our business as well as the energy trading business as a whole. We might see these adverse effects continue as a result of the uncertainty of these ongoing inquiries or additional inquiries by ~~other~~ federal or state regulatory agencies. In addition, we cannot predict the outcome of any of these inquiries ~~including the grand jury inquiry,~~ or whether these inquiries will lead to additional legal proceedings against us, civil or criminal fines or penalties, or other regulatory action, including legislation, which might be materially adverse to the operation of our ~~trading~~ business and our ~~trading~~ revenues and net income or increase our operating costs in other ways. 17 ~~WE MIGHT BE ADVERSELY AFFECTED BY OTHER LEGAL PROCEEDINGS AND GOVERNMENTAL INVESTIGATIONS RELATED TO THE ENERGY MARKETING AND TRADING BUSINESS. Electricity~~

In 2002, several class action lawsuits were filed in the U.S. District Court for the Northern District of Oklahoma, alleging violations of various provisions of the Securities Act of 1933 and/or the Securities Exchange Act of 1934 against us and ~~natural gas markets~~certain of our present and former officers and directors. The majority of the suits allege that we and co-defendants, WilTel Communications, a previously owned subsidiary known as Williams Communications Group, and certain corporate officers, acted jointly and separately to inflate the stock price of both companies. Other suits allege similar causes of action related to the public offering of the FELINE PACS in ~~California~~January 2002. These suits were filed against us, certain corporate officers, members of our board of directors and ~~elsewhere will~~all of the underwriters, including the dealer managers for this exchange offer. The court ordered consolidation of these cases, and a Consolidated Amended Complaint was filed on behalf of various purchasers of our securities during the period July 24, 2000 through July 22, 2002. That pleading makes several claims against us relating to our former subsidiary Williams Communications Group, our power subsidiary, and various other alleged misrepresentations and omissions. Discovery in the now-consolidated actions is ongoing. See “Legal Proceedings” in our annual report for the year ended December 31, 2003 and our quarterly reports on Form 10-Q for the quarters ended March 31, 2004 and June 30, 2004, in each case as amended, if applicable. Our management has had to expend time addressing the demand of these cases, and we expect that management attention and resources may continue to be ~~subject to numerous~~diverted in the future, all of which could harm our business.

Risks Affecting Our Strategy and ~~far-reaching federal and state proceedings and investigations because of allegations that wholesale price increases resulted from the exercise of market power and collusion~~Financing Needs

As a result of the ~~power generators~~2000-2001 energy crisis in California, the resulting collapse in energy merchant credit, the recent volatility in natural gas prices, the Enron Corporation bankruptcy filing, and ~~sellers such as Energy Marketing & Trading. Discussions~~investigations by governmental authorities into energy trading activities and ~~representatives~~increased litigation related to such inquiries, companies generally in ~~California~~the regulated and ~~other states~~so-called unregulated utility businesses have ~~ranged~~been adversely affected.

These market factors have led to industry-wide downturns that have resulted in some companies being forced to exit from ~~threats~~the energy trading markets, leading to a reduction in the number of ~~re-regulation~~trading partners and in market liquidity.

Our transactions in each of our businesses require greater credit assurances, both to ~~suspension~~be given from and received by us to satisfy credit support requirements. Additionally, certain market disruptions or a further downgrade of ~~plans to move forward towards deregulation. The outcomes~~our credit rating might further increase our cost of ~~these proceedings and investigations might create corporate liability for Williams, directly~~borrowing or ~~indirectly affect~~further impair our ~~creditworthiness and~~ ability to access one or any of the capital markets. Such disruptions could include:


	•	further economic downturns;

	•	capital market conditions generally;

	•	market prices for electricity and natural gas;

	•	terrorist attacks or threatened attacks on our facilities or those of other energy companies; or

	•	the overall health of the energy industry, including the bankruptcy or insolvency of other energy companies.

Credit rating agencies perform ~~our contractual obligations as well as other market participants' creditworthiness~~independent analysis when assigning credit ratings. Given the significant changes in capital markets and the energy industry over the last few years, credit rating agencies continue to review the criteria for attaining investment grade ratings. Our goal is to attain investment grade ratings. However, there is no guarantee that the credit rating agencies will assign us investment grade ratings once we meet or exceed their ~~ability~~criteria for investment grade ratings.

Risks Related to perform their contractual obligations. RISKS RELATED TO THE REGULATION OF OUR BUSINESSES OUR BUSINESSES ARE SUBJECT TO COMPLEX GOVERNMENT REGULATIONS. THE OPERATION OF OUR BUSINESSES MIGHT BE ADVERSELY AFFECTED BY CHANGES IN THESE REGULATIONS OR IN THEIR INTERPRETATION OR IMPLEMENTATION.the Regulation of Our Businesses

Existing regulations might be revised or reinterpreted, new laws and regulations might be adopted or become applicable to us or to our facilities, and future changes in laws and regulations might have a detrimental effect on our business. Certain restructured markets have recently experienced supply problems and price volatility. These supply problems and volatility have been the subject of a significant amount of press coverage, much of which has been critical of the restructuring initiatives. In some of these markets, including California, proposals have been made by governmental agencies and other interested parties to re-regulate areas of these markets which have previously been deregulated. We cannot assure you that other proposals to re-regulate will not be made or that legislative or other attention to the electric power restructuring process will not cause the deregulation process to be delayed or reversed. If

The Federal Energy Regulatory Commission, or FERC, issued a rule, Order No. 2004, on November 25, 2003, which has been clarified in rehearing orders issued April 16, 2004 and August 2, 2004, adopting standards of conduct for transmission providers (including our interstate gas pipelines) when dealing with “energy affiliates” as defined by the ~~current trend towards competitive restructuring~~rule. The standards of conduct, effective September 22, 2004, are intended to prevent transmission providers from preferentially benefiting their energy affiliates, by requiring the employees of the ~~wholesale~~transmission provider to function independently from employees of energy affiliates and ~~retail power markets is reversed, discontinued or delayed,~~by restricting information transmission providers may provide to energy affiliates. The inefficiencies created by the restrictions on the sharing of employees and information may increase our ~~business models might be inaccurate~~costs, and ~~we might face difficulty in accessing capital to refinance our debt and funding for operating and generating revenues in accordance with our current business plans. For example, in 2000,~~ the ~~FERC issued Order 637, which sets forth revisions to its policies governing the regulation~~restrictions on sharing of interstate natural gas pipelines that it finds necessary to adjust its current regulatory model to the needs of evolving markets. The FERC, however, determined that any fundamental changes to its regulatory policy will be considered after further study and evaluation of the evolving marketplace. Order 637 revised the FERC's pricing policy to waive through September 30, 2002 the maximum price ceilings for short-term releases of capacity of less than one year and to permit pipelines to file proposals to implement seasonal rates for short-term services and term-differentiated rates. Certain parties requested rehearing of Order 637 and eventually appealed certain issues to the District of Columbia Circuit Court of Appeals. The D.C. Circuit remanded as to certain issues, and on October 31, 2002, the FERC issued its order on remand. Rehearing requests for that order are now pending with the FERC. Given the extent of the FERC's regulatory power, we cannot give any assurance regarding the likely regulations under which we will operate our natural gas transmission and storage business in the future or the effect of regulationinformation may have an adverse impact on our financial position and results of operations. The FERC has proposed to broaden its regulations that restrict relations between our jurisdictional natural gas companies, or "jurisdictional companies," and our marketing affiliates. In addition, the proposed rules would limit communications between each of our jurisdictional companies and all of our other companies engaged in energy activities. The rulemaking is pending at the FERC and the precise scope and effect of the rule is unclear. If adopted as proposed, the rule could adversely affect oursenior management’s ability to ~~coordinate and manage~~effectively obtain important information about our ~~energy activities. 18~~ OUR REVENUES MIGHT DECREASE IF WE ARE UNABLE TO GAIN ADEQUATE, RELIABLE AND AFFORDABLE ACCESS TO TRANSMISSION AND DISTRIBUTION ASSETS DUE TO THE FERC AND REGIONAL REGULATION OF WHOLESALE MARKET TRANSACTIONS FOR ELECTRICITY AND GAS.business.

We depend on transmission and distribution facilities owned and operated by utilities and other energy companies to deliver the electricity and natural gas we buy and sell in the wholesale market. If transmission is disrupted, if capacity is inadequate, or if credit requirements or rates of such utilities or energy companies are increased, our ability to sell and deliver products might be hindered. The FERC has issued power transmission regulations that require wholesale electric transmission services to be offered on an open-access, non-discriminatory basis. Although these regulations are designed to encourage competition in wholesale market transactions for electricity, some companies have failed to provide fair and equal access to their transmission systems or have not provided sufficient transmission capacity to enable other companies to transmit electric power. We cannot predict whether and to what extent the industry will comply with these initiatives, or whether the regulations will fully accomplish the ~~FERC'S~~FERC’s objectives.

In addition, the independent system operators who oversee the transmission systems in regional power markets, such as California, have in the past been authorized to impose, and might continue to impose, price limitations and other mechanisms to address volatility in the power markets. These types of price limitations and other mechanisms might adversely impact the profitability of our wholesale power marketing and trading. Given the extreme volatility and lack of meaningful long-term price history in many of these markets and the imposition of price limitations by regulators, independent system operators or other ~~marker~~market operators, we can offer no assurance that we will be able to operate profitably in all wholesale power markets. ~~THE DIFFERENT REGIONAL POWER MARKETS IN WHICH WE COMPETE OR WILL COMPETE IN THE FUTURE HAVE CHANGING REGULATORY STRUCTURES, WHICH COULD AFFECT OUR GROWTH AND PERFORMANCE IN THESE REGIONS.~~

Our results are likely to be affected by differences in the market and transmission regulatory structures in various regional power markets. Problems or delays that might arise in the formation and operation of new regional transmission organizations, ~~(RTOs)~~or RTOs, might restrict our ability to sell power produced by our generating capacity to certain markets if there is insufficient transmission capacity otherwise available. The rules governing the various regional power markets might also change from time to time which could affect our costs or revenues. Because it remains unclear which companies will be participating in the various regional power markets, or how RTOs will develop and evolve or what regions they will cover, we are unable to assess fully the impact that these power markets might have on our business. Problems that might arise in the formation and operation of new RTOs might result in delayed or disputed collection of revenues. The rules governing the various regional power markets might also change from time to time which could affect our costs or revenues. Because it remains unclear which companies will be participating in the various regional power markets, or how RTOs will develop or what regions they will cover, we are unable to assess fully the impact that these power markets might have on our business. OUR GAS SALES, TRANSMISSION, AND STORAGE OPERATIONS ARE SUBJECT TO GOVERNMENT REGULATIONS AND RATE PROCEEDINGS THAT COULD HAVE AN ADVERSE IMPACT ON OUR ABILITY TO RECOVER THE COSTS OF OPERATING OUR PIPELINE FACILITIES.

Our interstate gas sales, transmission, and storage operations conducted through our Gas ~~Pipelines~~Pipeline business are subject to the ~~FERC's~~FERC’s rules and regulations in accordance with the Natural Gas Act of 1938 and the Natural Gas Policy Act of 1978. The ~~FERC's~~FERC’s regulatory authority extends to: ~~- transportation and sale for resale of natural gas in interstate commerce; - rates and charges; - construction; 19~~ ~~- acquisition, extension or abandonment of services or facilities; - accounts and records; - depreciation and amortization policies; and -~~


	•	transportation and sale for resale of natural gas in interstate commerce;

	•	rates and charges;

	•	construction;

	•	acquisition, extension or abandonment of services or facilities;

	•	accounts and records;


	•	depreciation and amortization policies; and

	•	operating terms and conditions of service.

The FERC has taken certain actions to strengthen market forces in the natural gas pipeline industry that has led to increased competition throughout the industry. In a number of key markets, interstate pipelines are now facing competitive pressure from other major pipeline systems, enabling local distribution companies and end users to choose a transmission provider based on economic and other considerations. ~~RISKS RELATED TO ENVIRONMENTAL MATTERS WE COULD INCUR MATERIAL LOSSES IF WE ARE HELD LIABLE FOR THE ENVIRONMENTAL CONDITION OF ANY OF OUR ASSETS.~~

We are generally responsible for all on-site liabilities associated with the environmental condition of our facilities and assets, which we have acquired or developed, regardless of when the liabilities arose and whether they are known or unknown. In addition, in connection with certain acquisitions and sales of assets, we might obtain, or be required to provide, indemnification against certain environmental liabilities. If we incur a material liability, or the other party to a transaction fails to meet its indemnification obligations to us, we could suffer material losses. ENVIRONMENTAL REGULATION AND LIABILITY RELATING TO OUR BUSINESS WILL BE SUBJECT TO ENVIRONMENTAL LEGISLATION IN ALL JURISDICTIONS IN WHICH IT OPERATES, AND ANY CHANGES IN SUCH LEGISLATION COULD NEGATIVELY AFFECT OUR RESULTS OF OPERATIONS.If a purchaser of one of our divested assets incurs a liability due to the environmental condition of the divested asset, we may have a contractual obligation to indemnify that purchaser or otherwise retain responsibility for the environmental condition of the divested asset. We may also have liability for the environmental condition of divested assets under applicable federal, state or foreign laws and regulations. Changes to applicable laws and regulations, or changes to their interpretation, may increase our liability. Environmental conditions of divested assets may not be covered by insurance. Even if environmental conditions are covered by insurance, policy conditions may not be met.

We make assumptions and develop expectations about possible liability related to environmental conditions based on current laws and regulations and current interpretations of those laws and regulations. If the interpretation of laws or regulations, or the laws and regulations themselves, change, our assumptions may change. Our assumptions and expectations are also based on available information. If more information becomes available to us, our assumptions may change. Any of these changes may result in not only increased risk related to one or more of our assets, but material losses in excess of current estimates.

Our operations are subject to extensive environmental regulation pursuant to a variety of federal, ~~provincial,~~ state, municipal and ~~municipal~~foreign laws and regulations. Such environmental legislation imposes, among other things, restrictions, liabilities and obligations in connection with the generation, handling, use, storage, transportation, treatment and disposal of hazardous substances and waste and in connection with spills, releases and emissions of various substances into the environment. Environmental legislation also requires that our facilities, sites and other properties associated with our operations be operated, maintained, abandoned and reclaimed to the satisfaction of applicable regulatory authorities. Existing environmental regulations could also be revised or reinterpreted, new laws and regulations could be adopted or become applicable to us or our facilities, and future changes in environmental laws and regulations could occur. The federal government and several states recently have proposed increased environmental regulation of many industrial activities, including increased regulation of air quality, water quality and solid waste management.

Compliance with environmental legislation has required and will require significant expenditures, including expenditures for compliance with the Clean Air Act and ~~similar~~other legislation, and for clean up costs and damages arising out of contaminated ~~properties, and for failure~~properties. Failure to comply with environmental legislation and

Further, our regulatory rate structure and our contracts with clients might not necessarily allow us to recover capital costs we incur to comply with new or existing environmental regulations. Also, we might not be able to obtain or maintain from time to time all required environmental regulatory approvals for certain development projects. If there is a delay in obtaining any required environmental regulatory approvals or if we fail to obtain and comply with them, the operation of our facilities could be prevented or become subject to additional costs. Should we fail to comply with all applicable environmental laws, we might be subject to penalties and fines imposed against us by regulatory authorities. ~~Although we do not expect that the costs of complying with current environmental legislation will have a material adverse effect on our 20~~ ~~financial condition or results of operations, no~~No assurance can be made that the costs of complying with environmental legislation in the future will not have such an effect. Our wholly-owned subsidiary, Williams Energy Services, LLC, also retained some potential environmental exposure from its sale, in April of 2002, of Williams Pipe Line Company, LLC to Williams Energy Partners L.P. Included in the terms of this transaction were various indemnities given by Williams Energy Services, LLC to Williams Energy Partners L.P. The indemnities serve to protect Williams Energy Partners from "Damages" that it sustains or incurs from the pre-closing matters (including environmental liabilities and obligations pursuant to the standards established by applicable environmental laws ina material adverse effect on ~~April 11, 2002) specified in the sales agreement (the Contribution Agreement) and from breaches~~our financial condition or results of Williams Energy Services, LLC's representations, warranties or covenants. The term "Damages" includes losses, costs, expenses, fines, penalties, fees, liabilities and obligations. The parties agreed that Williams Energy Services, LLC's indemnity obligations under the Contribution Agreement would be limitedoperations.

Risks Related to a maximum aggregate amount of $125 million. The indemnities would survive the sale of Williams Pipe Line Company, LLC to another entity. RISKS RELATING TO ACCOUNTING POLICY POTENTIAL CHANGES IN ACCOUNTING STANDARDS MIGHT CAUSE US TO REVISE OUR FINANCIAL DISCLOSURE IN THE FUTURE, WHICH MIGHT CHANGE THE WAY ANALYSTS MEASURE OUR BUSINESS OR FINANCIAL PERFORMANCE.Accounting Standards

Recently discovered accounting irregularities in various industries have forced regulators and legislators to take a renewed look at accounting practices, financial disclosures, ~~companies'~~companies’ relationships with their independent auditors and retirement plan practices. Because it is still unclear what laws or regulations will develop, we cannot predict the ultimate impact of any future changes in accounting regulations or practices in general with respect to public companies or the energy industry or in our operations specifically.

In addition, the Financial Accounting Standards Board, ~~(FASB)~~or FASB, or the Securities and Exchange Commission, or SEC, could enact new accounting standards that might impact how we are required to record revenues, expenses, assets and liabilities. For instance, Statement of Financial Accounting Standards (SFAS) No. 143, "Accounting for Asset Retirement Obligations," implemented on January 1, 2003, requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate can be made. See Note 1

Risks Related to our Consolidated Financial Statements in our annual report on Form 10-K for the fiscal year ending December 31, 2002 for further details. In October 2002, the FASB's Emerging Issues Task Force (EITF) reached consensus on Issue No. 02-03 deliberations and rescinded Issue No. 98-10. As a result, all energy trading contracts that do not meet the definition of a derivative under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," will be reported on an accrual basis. We will initially apply the consensus effective January 1, 2003, and expect to record a reduction to net income of approximately $750 million to $800 million on an after-tax basis which will be reported as a cumulative effect of a change in accounting principle. The accounting for Energy Marketing & Trading's energy-related contracts, which include contracts such as transportation, storage, load serving and tolling agreements, requires us to assess whether certain of these contracts are executory service arrangements or leases pursuant to SFAS No. 13, "Accounting for Leases." On March 20, 2003, the EITF continued discussion on Issue No. 01-8, "Determining Whether an Arrangement Contains a Lease," and directed the working group considering this issue to further address certain matters, including transition. The most current report of the working group indicates the working group supports a prospective transition of this issue, where the consensus would be applied to arrangements consummated or substantively modified after the date of the final consensus. Our preliminary review indicates that certain of our tolling agreements could be considered to be leases under the model currently being discussed by the EITF. Accordingly, if the EITF did not adopt a 21 prospective transition and applied the consensus to existing arrangements there would be a significant negative impact to Williams' financial position and results of operations. RISKS RELATING TO OUR INDUSTRY THE LONG-TERM FINANCIAL CONDITION OF OUR U.S. AND CANADIAN NATURAL GAS TRANSMISSION AND MIDSTREAM BUSINESSES ARE DEPENDENT ON THE CONTINUED AVAILABILITY OF NATURAL GAS RESERVES. Industry

The development of additional natural gas reserves requires significant capital expenditures by others for exploration and development drilling and the installation of production, gathering, storage, transportation and other facilities that permit natural gas to be produced and delivered to our pipeline systems. Low prices for natural gas, regulatory limitations, or the lack of available capital for these projects could adversely affect the development of additional reserves and production, gathering, storage and pipeline transmission and import and export of natural gas supplies. Additional natural gas reserves might not be developed in commercial quantities and in sufficient amounts to fill the capacities of our gathering and processing pipeline facilities. ~~OUR GATHERING, PROCESSING AND TRANSPORTING ACTIVITIES INVOLVE NUMEROUS RISKS THAT MIGHT RESULT IN ACCIDENTS AND OTHER OPERATING RISKS AND COSTS. There~~

Our operations are subject to all of the risks and hazards typically associated with the exploitation, development and exploration for, and the production and transportation of oil and gas. These operating risks include, but are not limited to:


	•	blowouts, cratering and explosions;

	•	uncontrollable flows of oil, natural gas or well fluids;

	•	fires;

	•	formations with abnormal pressures;

In addition, there are inherent in our gas gathering, processing and transporting properties a variety of hazards and operating risks, such as leaks, explosions and mechanical problems that could cause substantial financial losses. In addition, these risks could result in loss of human life, significant damage to property, environmental pollution, impairment of our operations and substantial losses to us. In accordance with customary industry practice, we maintain insurance against some, but not all, of these risks and losses. The occurrence of any of these events not fully covered by insurance could have a material adverse effect on our financial position and results of operations. The location of pipelines near populated areas, including residential areas, commercial business centers and industrial sites, could increase the level of damages resulting from these risks. RISKS ARISING FROM THE EXCHANGE OFFER THE TRADING MARKET FOR OUTSTANDING 8.125% NOTES AND OUTSTANDING 8.750% NOTES NOT EXCHANGED IN THE EXCHANGE OFFER MAY BE SIGNIFICANTLY MORE LIMITED THAN IT IS AT PRESENT. To

Accidents or other operating risks could further result in loss of service available to our customers. Such circumstances could adversely impact our ability to meet contractual obligations and retain customers. For example, a 26 inch segment of Northwest Pipeline from Sumas to Washougal, Washington was idled in 2003 after two line breaks associated with stress corrosion cracking, or SCC, occurred. SCC is caused by a specific combination of stress and exposure to environmental factors such as soil acidity, moisture, and electro-chemical properties that occurs in older pipelines. This type of corrosion cracking is a very complex technical phenomenon and, while the ~~extent~~industry is making progress in developing methods to predict and identify SCC, there are still many unknowns. Northwest Pipeline is working with federal and state regulatory agencies and its customers to permanently replace the capacity associated with the 26 inch pipeline.

Potential customer impacts arising from service interruptions on any of our pipeline transmission facilities could include potential limitations on the pipeline’s ability to satisfy customer requirements, obligations to provide reservation charge credits to customers in times of constrained capacity, and solicitation of existing customers by others for potential new pipeline projects that ~~outstanding 8.125% notes~~would compete directly with existing service.

Implementation of new Pipeline Safety Improvement Act, or PSIA, regulations requires us to implement an Integrity Management Plan, or IMP, for our gas transmission pipelines by December 2004. As part of the IMP, we must identify High Consequence Areas, or HCA, through which our pipelines run. Although our investigations are ongoing, we believe that certain segments of our pipelines will be determined to run through HCAs. An HCA is defined by the rule as an area where the potential consequence of a gas pipeline accident may be significant or do considerable harm to people or property. Designing and ~~outstanding 8.750% notes are tendered~~implementing the IMP and ~~accepted for exchange pursuant~~identifying HCA’s could result in significant additional costs. There is always the possibility that the assessments related to the IMP would reveal an unexpected condition for which remedial action would be required.

Reserve engineering is a subjective process of estimating underground accumulations of oil and gas that cannot be measured in an exact manner. The process relies on interpretations of available geological, geophysical, engineering and production data. There are numerous uncertainties inherent in estimating quantities of proved reserves and in projecting future rates of production and timing of developmental expenditures, including many factors beyond the control of the producer. The reserve data incorporated by reference into this exchange offer the trading market for outstanding 8.125% notes and outstanding 8.750% notes that remain outstanding may be significantly more limited than it is at present. The outstanding 8.125% notes and the outstanding 8.750% notes have not been registered under the Securities Act and are subject to customary transfer restrictions. In addition, a debt security with a smaller outstanding principal amount available for trading (a smaller "float") may command a lower price than would a comparable debt security with a larger float. Therefore, the market price for outstanding 8.125% notes and outstanding 8.750% notes that are not tendered and accepted for exchange pursuant to the exchange offer may be affected adversely to the extent that the principal amount of the outstanding 8.125% notes and outstanding 8.750% notes exchanged pursuant to the exchange offer reduces the float. A reduced float may also make the trading prices of outstanding 8.125% notes and outstanding 8.750% notes that are not exchanged in the exchange offer more volatile. RISK RELATING TO THE NEW SECURITIES AND THE OUTSTANDING SECURITIES WE DEPEND ON PAYMENTS FROM OUR SUBSIDIARIES, AND CLAIMS OF NOTE HOLDERS RANK JUNIOR TO THOSE OF CREDITORS OF OUR SUBSIDIARIES. We are a holding company and we conduct substantially all of our operations through our subsidiaries. We perform management, legal, financial, tax, consulting, administrative and other services for our subsidiaries. Our principal sources of cash are from external financings by our subsidiaries, dividends and 22 advances from our subsidiaries, investments, payments by our subsidiaries for services rendered, and interest payments from our subsidiaries on cash advances. The amount of dividends available to us from our subsidiaries largely depends upon each subsidiary's earnings and operating capital requirements. The terms of some of our subsidiaries' borrowing arrangements limit the transfer of funds to us.prospectus represent estimates. In addition, the ~~ability~~estimates of future net revenues from our subsidiaries to make any payments to us will depend on our subsidiaries' earnings, business and tax considerations and legal restrictions. As a result of our holding company structure, the outstandingproved reserves and the ~~new 8.125% notes~~present value of such estimates are based upon certain assumptions about future production levels, prices and costs that may not prove to be correct over time.

Quantities of proved reserves are estimated based on economic conditions in existence during the ~~outstanding~~period of assessment. Lower oil and gas prices may have the ~~new 8.750% notes will effectively rank junior~~impact of shortening the economic lives of certain fields because it becomes uneconomic to produce all ~~existing and future debt, trade payables and other liabilities of our subsidiaries. Any right of Williams and our creditors to participate~~recoverable reserves on such fields, which reduces proved property reserve estimates.

If negative revisions in the ~~assets~~estimated quantities of ~~any~~proved reserves were to occur, it would have the effect of ~~our subsidiaries upon any liquidation or reorganization~~increasing the rates of any such subsidiary will be subject to the prior claims of that subsidiary's creditors, including trade creditors, except to the extent that we may ourselves be a creditor of such a subsidiary. THE COVENANTS CONTAINED IN OUR INDENTURE GENERALLY DO NOT LIMIT OUR ABILITY TO ENGAGE IN TRANSACTIONS THAT COULD ADVERSELY AFFECT OUR OPERATIONS. Except for the covenant limiting liens contained in our indenture, neither our indenture nor the outstanding or the new notes contains any covenants or other provisions designed to afford holders of the outstanding or the new 8.125% notesdepreciation, depletion and ~~the outstanding or the new 8.750% notes protection in the event of a highly leveraged transaction involving us or any restrictions~~amortization on the ~~amount of additional indebtedness that we~~affected properties, which would decrease earnings or result in losses through higher depreciation, depletion and amortization expense. The revisions may ~~issue. If we were~~also be sufficient to ~~engage~~trigger impairment losses on certain properties which would result in a ~~highly leveraged transaction or substantially increase our outstanding indebtedness, it~~further non-cash charge to earnings. The revisions could ~~negatively~~also affect ~~our operations in a number~~the evaluation of ~~ways, including: - require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow~~goodwill for other general corporate purposes; - limit our ability to fund future working capital, capital expenditures, acquisitions, investments, restructurings and other general corporate requirements; - limit our ability to obtain additional financing; and - limit our flexibility in responding to changes in our business and the energy industry. In addition, we would be required to repay any additional indebtedness as it matured. We might not have sufficient funds or might be unable to arrange for additional financing to repay any additional debt as it became due. OTHER RISKS RECENT TERRORIST ACTIVITIES AND THE POTENTIAL FOR MILITARY AND OTHER ACTIONS COULD ADVERSELY AFFECT OUR BUSINESS. impairment purposes.

The continued threat of terrorism and the impact of ~~retaliatory~~continued military and other action by the United States and its allies might lead to increased political, economic and financial market instability and volatility in prices for natural gas, which could affect the market for our gas operations. In addition, future acts of terrorism could be directed against companies operating in the United States, and it has been reported that terrorists might be targeting domestic energy facilities. While we are taking steps that we believe are appropriate to increase the security ofat locations where our energy assets are located, there is no assurance that we can completely secure our ~~assets~~locations or to completely protect them against a terrorist attack. These developments have subjected our operations to increased risks and, depending on their ultimate magnitude, could have a material adverse effect on our business. In particular, we might experience increased capital or operating costs to implement increased security for our energy assets. ~~The insurance industry has also been disrupted~~

~~Performance of our exploration and production business is affected in part by ~~these events. As~~factors beyond our control, such as:~~


	•	regulations and regulatory approvals;

	•	availability of capital for drilling projects which may be affected by other risk factors discussed in this exchange offer prospectus;

	•	cost-effective availability of drilling rigs and necessary equipment;

	•	availability of cost-effective transportation for products; or

	•	market risks already discussed, or incorporated by reference, in this exchange offer prospectus.

Our success rate for drilling projects in 2003 should not be considered a ~~result,~~predictor of future performance. Reserves that are “proven reserves” are those estimated quantities of crude oil, natural gas, and natural gas liquids which geological and engineering data demonstrate with reasonable certainty are recoverable in future years form known reservoirs under existing economic and operating conditions, but should not be considered as a guarantee of results for future drilling projects.

Our assets and operations, especially those located offshore, can be adversely affected by hurricanes, earthquakes, tornadoes and other natural phenomena and weather conditions including extreme temperatures.

A number of provisions in our restated certificate of incorporation, as supplemented, bylaws and rights agreement and under Delaware law could make it difficult for another company to acquire us and for you to receive any related takeover premium for our common stock. These provisions include, but are not limited to, provisions providing for a classified board of directors, providing that directors cannot be removed except for cause and by the ~~availability~~affirmative action of ~~insurance covering risks~~the holders of at least three-fourths of the outstanding shares of our common stock and providing that ~~we and~~only our ~~competitors typically insure against might decrease. In addition,~~chairman of the ~~insurance that we are able to obtain might have higher deductibles, higher premiums and more restrictive policy terms. 23~~ board or president or a majority of our board of directors may call a special meeting of the stockholders. See the section of this exchange offer prospectus entitled “Description of Capital Stock.”

We will not receive any cash proceeds from the ~~issuance~~exchange offer. We will pay all expenses related to the exchange offer, other than any commissions or concessions of any broker or dealer and the out of pocket expenses of the ~~new 8.125% notes or~~dealer managers. Except as otherwise provided in the ~~new 8.750% notes~~section of this exchange offer prospectus entitled “The Exchange Offer — Transfer Taxes,” we will pay the transfer taxes, if any, on the exchange of any Income PACS.

Our common stock and the Income PACS are listed on the New York Stock Exchange under the symbols “WMB” and “WMB PrI,” respectively. The following table sets forth the high and low sales price and dividends declared per share of our common stock and high and low sales price per Income PACS on the New York Stock Exchange during the periods shown:

On September 16, 2004, the day before commencement of the exchange offer, the last reported sale price of the Income PACS on the New York Stock Exchange was $13.34 per Income PACS and the last reported sale price of our common stock on the New York Stock Exchange was $12.05 per share. On October 7, 2004, the last reported sale price of the Income PACS on the New York Stock Exchange was $14.20 per Income PACS and the last reported sale price of our common stock on the New York Stock Exchange was $12.83 per share. As of October 6, 2004, there were 517,455,520 shares of common stock outstanding, owned by approximately 13,500 holders of record. As of October 6, 2004, there were 44,000,000 Income PACS outstanding. No Growth PACS were outstanding as of October 6, 2004.

Future dividends will be payable on our common stock only when, as and if declared by our board of directors, and will be dependent upon business conditions, earnings, our cash requirements and other relevant factors. We do not anticipate any change in ~~exchange~~our dividend policy in 2004.

The following table sets forth consolidated financial data as of the dates and for the ~~outstanding 8.125%~~periods presented. The financial data for each of the years during the five-year period ended December 31, 2003 have been derived from our consolidated financial statements as audited by Ernst & Young LLP, independent registered public accounting firm. The financial data are qualified in their entirety by, and should be read in conjunction with, our audited consolidated financial statements, the related notes orthereto and the ~~outstanding 8.750%~~related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our annual report on Form 10-K for the year ended December 31, 2003, as amended, which is incorporated in this exchange offer prospectus by reference. The financial data as of and for the six months ended June 30, 2003 and June 30, 2004 have been derived from, and should be read in conjunction with, our unaudited consolidated financial statements, the notes thereto and the related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our quarterly report on Form 10-Q for the quarter ended June 30, 2004, which is incorporated in this exchange offer prospectus by reference.


(1)	Certain amounts have been reclassified as described in Note 2 to Consolidated Financial Statements contained in our quarterly report on Form 10-Q for the quarter ended June 30, 2004, which is incorporated by reference into this exchange offer prospectus.

(2)	As discussed in Note 1 of Notes to Consolidated Financial Statements contained in our annual report on Form 10-K for the year ended December 31, 2003, as amended, the adoption of Emerging Issues Task Force Issue No. 02-3 (EITF 02-3) requires that revenues and costs of sale from non-derivative contracts and certain physically settled derivative contracts be reported on a gross basis. Prior to the adoption, these revenues were presented net of costs. As permitted by EITF 02-3, prior year amounts have not been restated.

(3)	See Note 4 of Notes to Consolidated Financial Statements contained in our annual report on Form 10-K for the year ended December 31, 2003, as amended, for discussion of asset sales, impairments and other accruals in 2003, 2002 and 2001 and see Note 3 of Notes to Consolidated Financial Statements contained in our annual report on Form 10-K for the year ended December 31, 2003, as amended, for discussion of write-downs of certain assets related to WilTel Communications, formerly Williams Communications Group, (WilTel) in 2002 and 2001. See Note 1 of Notes to Consolidated Financial Statements contained in our annual report on Form 10-K for the year ended December 31, 2003, as amended, for discussion of revenue recognized in 2003 related to the correction of prior period items.

(4)	See Note 2 of Notes to Consolidated Financial Statements contained in our annual report on Form 10-K for the year ended December 31, 2003, as amended, for the discussion of the 2003, 2002 and 2001 income (losses) from discontinued operations. The income (loss) from discontinued operations for 2000 and 1999 relates to the operations of WilTel; Kern River Gas Transmission; Williams Gas Pipelines Central; the Colorado soda ash mining; Mid-America and Seminole pipelines; retail travel centers; bio-energy; Midsouth refinery; Texas Gas Transmission; Williams Energy Partners; Alaska refining, retail and pipeline, Canadian liquids (2000 only) and the Canadian straddle plants (2000 only).

(5)	The extraordinary gain for 1999 relates to the sale of our retail propane business, Thermogas L.L.C.

(6)	See Note 1 of Notes to Consolidated Financial Statements contained in our annual report on Form 10-K for the year ended December 31, 2003, as amended, for discussion of the 2003 cumulative effect of change in accounting principles.

(7)	Includes cash provided by operating activities of discontinued operations of $11.5 million and $64.8 million for the six months ended June 30, 2004 and 2003, respectively, and $162.2 million, $583.2 million and $461.2 million for the years ended December 31, 2003, 2002 and 2001, respectively. The amounts for the years ended December 31, 2000 and 1999 as previously reported are not comparable due to the restatement reflected in our annual report on Form 10-K for the year ended December 31, 2003, as amended.

(8)	Earnings were inadequate to cover fixed charges by $14.5 million for the six months ended June 30, 2004 and by $909.6 million for the year ended December 31, 2002.

(9)

The ratio has been computed by dividing earnings by fixed charges. For purposes of computing these ratios, earnings means the following: income (loss) from continuing operations before income taxes, minority interest in income (loss) of consolidated subsidiaries, and equity earnings; plus fixed charges (discussed below) and an adjustment to reflect actual distributions from equity investments; less capitalized interest and preferred distributions. Fixed charges means the sum of the following: interest accrued, including a proportionate share from equity-method investees; that portion of rental expense that we believe to represent an interest factor; and the pretax effect of preferred distributions.

We are making ~~this~~the exchange ~~solely~~offer as part of our ongoing strategy to ~~satisfy~~reduce our ~~obligations under~~overall indebtedness. The exchange offer allows us to retire the notes included in the Income PACS instead of having them remain outstanding if a registration rights agreement. In consideration for issuing the new 8.125% notes and the new 8.750% notes, we will receive outstanding 8.125% notes and outstanding 8.750% notes in aggregate principal amounts equal to the aggregate principal amountsremarketing of the ~~new 8.125%~~ notes is successful.

We are offering to exchange one (1.0000) share of our common stock plus $1.47 in cash for each validly tendered and accepted FELINE PACS in the ~~new 8.750% notes, respectively. 24~~ ~~THE EXCHANGE OFFER EXCHANGE TERMS An aggregate~~form of ~~$650.0 million principal amount of outstanding 8.125% notes and~~an Income PACS, up to an aggregate of $850.0 million principal amount of outstanding 8.750% notes are currently issued and outstanding. The maximum principal amount of new 8.125% notes that will be issued in exchange for outstanding 8.125% notes is $650.0 million, and the maximum principal amount of new 8.750% notes that will be issued in exchange for outstanding 8.750% notes is $850.0 million. The terms of the new 8.125% notes and the new 8.750% notes and the outstanding 8.125% notes and the outstanding 8.750% notes, respectively, are substantially the same in all material respects, except that the transfer restrictions, registration rights and additional interest provisions relating to the outstanding 8.125% notes and the outstanding 8.750% notes do not apply to the new 8.125% notes and the new 8.750% notes. The new 8.125% notes will bear interest at a rate of 8.125% per year, payable semiannually on March 15 and September 15 of each year, beginning September 15, 2003. The new 8.750% notes will bear interest at the rate of 8.750% per year, payable semiannually on March 15 and September 15 of each year, beginning September 15, 2003. Holders of new 8.125% notes and new 8.750% notes will receive interest accrued from March 15, 2003, the date of the last payment of interest on the outstanding 8.125% notes and the outstanding 8.750% notes. In order to exchange your outstanding 8.125% notes or outstanding 8.750% notes for new 8.125% notes or new 8.750% notes in the exchange offer, you will be required to make the following representations: - any new 8.125% notes or new 8.750% notes will be acquired in the ordinary course of your business; - you have no arrangement with any person to participate in the distribution of the new 8.125% notes or new 8.750% notes; and - you are not our "affiliate," as defined in Rule 405 of the Securities Act, or if you are our affiliate, you will comply with the applicable registration and prospectus delivery requirements of the Securities Act. Upon43,900,000 Income PACS, upon the terms and subject to the conditions set forth in this exchange offer prospectus and in the related letter of ~~transmittal,~~transmittal. Income PACS validly tendered and not withdrawn will be subject to proration as described in this exchange offer prospectus (1) if we ~~will accept~~determine there is any likelihood that the New York Stock Exchange continued-listing condition described below may not be satisfied based on consultations with the New York Stock Exchange or (2) if more than 43,900,000 Income PACS are validly tendered and not withdrawn.

We are only tendering for ~~exchange any outstanding 8.125% notes~~Income PACS. We are not tendering for Growth PACS. If you hold Growth PACS and ~~outstanding 8.750% notes properly tendered~~would like to participate in the exchange offer, ~~and~~then before tendering, you must recreate Income PACS from your Growth PACS. See the section of this exchange ~~agent will deliver the new 8.125% notes and new 8.750% notes promptly after the expiration date (as defined below)~~offer prospectus entitled “Description of FELINE PACS — Recreating Income PACS” for a discussion on how to recreate Income PACS from Growth PACS.

Any Income PACS tendered but not accepted because they were not validly tendered shall remain outstanding upon completion of the exchange offer. ~~We expressly reserve the right to delay acceptance of any of the tendered outstanding 8.125% notes or outstanding 8.750% notes not already~~Income PACS accepted if any condition set forth below under "-- Conditions to the Exchange Offer" has not been satisfied or waived by us. If you tender your outstanding 8.125% notes or outstanding 8.750% notes, you will not be required to pay brokerage commissions or fees or, subject to the instructions in the ~~letter~~exchange offer, including the underlying purchase contracts and notes, will be retired and cancelled. We intend to treat the exchange of ~~transmittal, transfer taxes with respect~~your Income PACS for shares of our common stock plus cash pursuant to the exchange offer as a cash settlement of the ~~outstanding 8.125%~~purchase contract and redemption of the note for its adjusted issue price. See the section of this exchange offer prospectus entitled “Material U.S. Federal Income Tax Consequences — Federal Income Tax Treatment of Participation in the Exchange.”

By tendering your Income PACS, you will lose your right to receive quarterly contract adjustment payments and interest payments on the notes ~~and outstanding 8.750% notes. We will pay all charges, expenses and transfer taxes in connection with~~payable after the completion of the exchange offer, other than certain taxes described below under "-- Transfer Taxes." You may tender some or all of your outstanding 8.125% notes or outstanding 8.750% notes in connection with this exchange offer. ~~However, outstanding 8.125% notes and outstanding 8.750% notes may only be tendered in integral multiples of $1,000. EXPIRATION DATE; EXTENSIONS; TERMINATION; AMENDMENTS~~

The ~~exchange offer will expire at~~term “expiration date” means 5:00 p.m., New York City time, on ~~June -- , 2003,~~October 18, 2004. However, if we extend the ~~"expiration date," unless extended by us. We expressly reserve the right to extend~~period of time for which the exchange offer ~~on a daily basis or~~remains open, the term “expiration date of this exchange offer” means the latest time and date to which the exchange offer is so extended.

If Income PACS aggregating 43,900,000 units, the maximum amount we will accept for ~~such period or periods as~~exchange, are validly tendered and accepted for exchange by us, we ~~may determine~~will pay an aggregate of approximately $65 million in cash to exchanging holders. We intend to fund the cash component of the exchange consideration from our ~~sole discretion from time to time by giving oral, confirmed in writing, or written notice~~available cash.

Conditions to the exchange agent and by making a public announcement by press release to the Dow Jones News Service prior to 9:00 a.m., New York City time, on the first business 25 ~~day following the previously scheduled expiration date. During~~Exchange Offer

Notwithstanding any ~~extension~~other provision of the exchange offer ~~all outstanding 8.125% notes and outstanding 8.750% notes previously tendered, not validly withdrawn and not accepted for~~to the contrary, the exchange ~~will remain~~offer is subject to the following conditions that we may not waive:


		and no proceedings for that purpose shall have been instituted or be pending, or to our knowledge, be contemplated or threatened by the SEC;

	•	there being no likelihood that the acceptance for exchange of the outstanding Income PACS pursuant to the exchange offer will cause the outstanding Income PACS to be de-listed from the New York Stock Exchange for any reason; and


	•	the satisfaction of the following conditions set forth in the dealer manager agreement as of the exchange offer. Any waiver or amendment to the exchange offer will apply to all outstanding 8.125% notes and outstanding 8.750% notes tendered, regardless of when or in what order the outstanding 8.125% notes and outstanding 8.750% notes were tendered. If we make a material change in the terms of the exchange offer or if we waive a material condition of the exchange offer, we will disseminate additional exchange offer materials. If the amendment or waiver is made less than ten business days before the expiration date of the exchange offer (any of which may be waived by the dealer managers in their discretion):


	•	the accuracy in all material respects of the representations and warranties made by us in the dealer manager agreement;

	•	the delivery by us to the dealer managers of customary officers’ and secretary’s certificates as of the expiration date;

	•	the delivery by us to the dealer managers of a “comfort letter” from our independent registered public accounting firm with respect to certain information contained or incorporated by reference in this exchange offer prospectus; and

	•	the delivery by us to the dealer managers of legal opinions rendered by our counsel as of the expiration date.

The New York Stock Exchange will consider de-listing the outstanding Income PACS if, following the exchange, the number of publicly-held Income PACS is less than 100,000, the number of holders of Income PACS is less than 100, the aggregate market value of the Income PACS is less than $1 million or for any other reason based on the suitability for the continued listing of the Income PACS in light of all pertinent facts as determined by the New York Stock Exchange. In the event that a significant number of holders tender their Income PACS or a significant number of the Income PACS are tendered in the offer such that we believe there is any likelihood that the Income PACS could be de-listed from the New York Stock Exchange, we may accept a pro rata amount of the Income PACS tendered in order to ensure that the Income PACS continue to be listed on the New York Stock Exchange. Therefore, while we are making this exchange offer for up to 43,900,000 Income PACS, we may not accept 43,900,000 Income PACS if doing so may result in the de-listing of the Income PACS. If the Income PACS are likely to be de-listed, we are required to prorate the offer to ensure that the Income PACS remain listed on the New York Stock Exchange. If we decide to prorate the offer such that we will only accept an aggregate number of Income PACS that is lower than the 43,900,000 Income PACS that we are currently seeking to exchange, we will extend the exchange offer ~~so that holders~~for a period of ~~outstanding 8.125% notes and outstanding 8.750% notes have at least~~ ten business days ~~to tender or withdraw. We expressly reserve the right, in our sole discretion, to terminate the exchange offer if any~~and provide holders with notice of ~~the conditions set forth under "-- Conditions to the Exchange Offer" exists. Any~~ such termination will be followed promptly by a public announcement. In the event we terminate the exchange offer, we will give immediate notice to the exchange agent, and all outstanding 8.125% notes and outstanding 8.750% notes previously tendered and not accepted for payment will be returned promptly to the tendering holders. In the event that the exchange offer is withdrawn or otherwise not completed, new 8.125% notes and new 8.750% notes will not be given to holders of outstanding 8.125% notes and outstanding 8.750% notes who have tendered their outstanding 8.125% notes and outstanding 8.750% notes. RESALE OF NEW SECURITIES Based on interpretations of the SEC staff set forth in no action letters issued to third parties, we believe that new 8.125% notes and new 8.750% notes issued under the exchange offer in exchange for outstanding 8.125% notes and outstanding 8.750% notes, respectively, may be offered for resale, resold and otherwise transferred by you without compliance with the registration and prospectus delivery provisions of the Securities Act, if: - you are not our "affiliate" within the meaning of Rule 405 under the Securities Act; - you are acquiring new 8.125% notes or new 8.750% notes in the ordinary course of your business; and - you do not intend to participate in the distribution of the new 8.125% notes or new 8.750% notes. If you tender outstanding 8.125% notes or outstanding 8.750% notes in the exchange offer with the intention of participating in any manner in a distribution of the new 8.125% notes or new 8.750% notes: - you cannot rely on those interpretations by the SEC staff; and - you must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction and that secondary resale transaction must be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508,extension as applicable, of Regulation S-K. Unless an exemption from registration is otherwise available, any security holder intending to distribute new 8.125% notes and new 8.750% notes will need to rely on an effective registration statement under the Securities Act containing the selling security holder's information required by Item 507 of Regulation S-K under the Securities Act. This prospectus may be used for an offer to resell, a resale or other transfer of new 8.125% notes and new 8.750% notes only as specifically set forth in this prospectus. Broker-dealers may participate in the exchange offer only if they acquired their outstanding 8.125% notes 26 or outstanding 8.750% notes as a result of market-making activities or other trading activities. Each broker-dealer that receives new 8.125% notes or new 8.750% notes for its own account in exchange for outstanding 8.125% notes or outstanding 8.750% notes, where such outstanding 8.125% notes or outstanding 8.750% notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of the new 8.125% notes or new 8.750% notes. We have agreed to allow such broker-dealers and other persons, if any, subject to similar prospectus delivery requirements, to use this prospectus in connection with the resale of new 8.125% notes and new 8.750% notes. Please read the section captioned "Plan of Distribution" for more details regarding the transfer of new 8.125% notes and new 8.750% notes. ACCEPTANCE OF OUTSTANDING SECURITIES FOR EXCHANGE If the conditions specifieddescribed below under ~~"-- Conditions to the Exchange Offer" have been satisfied~~“— Extension, Delay in Acceptance, Amendment or ~~waived on or prior to the expiration date~~Termination.”

In addition, notwithstanding any other provision of the exchange offer ~~we will accept for exchange outstanding 8.125% notes and outstanding 8.750% notes validly tendered pursuant~~ to the exchange offer, or defectively tendered, if such defect has been waived by us, and not withdrawn prior to the expiration date of the exchange offer. We will not accept outstanding 8.125% notes or outstanding 8.750% notes for exchange subsequent to the expiration date of the exchange offer. Tenders of outstanding 8.125% notes and outstanding 8.750% notes will be accepted only in principal amounts equal to $1,000 or integral multiples thereof. We expressly reserve the right, in our sole discretion, to: - delay acceptance for exchange of outstanding 8.125% notes and outstanding 8.750% notes tendered under the exchange offer, subject to Rule 14e-1 under the Exchange Act, which requires that an offeror pay the consideration offered or return the securities deposited by or on behalf of the holders promptly after the termination or withdrawal of a tender offer; or - terminate the exchange offer and not accept for exchange any outstanding 8.125% notes or outstanding 8.750% notes not theretofore accepted for exchange, in whole or in part, if any of the conditions set forth below under "-- Conditions to the Exchange Offer" has not been satisfied or waived by us or in order to comply with any applicable law. In all cases, new 8.125% notes and new 8.750% notes will be issued only after timely receipt by the exchange agent of certificates representing outstanding 8.125% notes or outstanding 8.750% notes, or confirmation of book-entry transfer, a properly completed and duly executed letter of transmittal, or a manually signed facsimile thereof, or an agent's message in lieu thereof, and any other required documents. For purposes of the exchange offer,contrary, we will be deemed to have accepted for exchange validly tendered outstanding 8.125% notes and outstanding 8.750% notes, or defectively tendered outstanding 8.125% notes and outstanding 8.750% notes with respect to which we have waived such defect, if, as and when we give oral, confirmed in writing, or written notice to the exchange agent. Promptly after the expiration date, we will deposit the new 8.125% notes and the new 8.750% notes with the exchange agent, who will act as agent for the tendering holders for the purpose of receiving the new 8.125% notes and new 8.750% notes and transmitting them to the holders. The exchange agent will deliver the new 8.125% notes and new 8.750% notes to holders of outstanding 8.125% notes and outstanding 8.750% notes accepted for exchange after the exchange agent receives the new 8.125% notes and new 8.750% notes. If for any reason, we delay acceptance for exchange of validly tendered outstanding 8.125% notes or outstanding 8.750% notes or we are unable to accept for exchange validly tendered outstanding 8.125% notes or outstanding 8.750% notes, then the exchange agent may, nevertheless, on our behalf, retain tendered outstanding 8.125% notes and outstanding 8.750% notes, without prejudice to our rights described under "-- Expiration Date; Extensions; Termination; Amendments," "-- Withdrawal of Tenders" and "-- Conditions to the Exchange Offer," subject to Rule 14e-1 under the Exchange Act, which requires that an offeror pay the consideration offered or return the securities deposited by or on behalf of the holders thereof promptly after the termination or withdrawal of a tender offer. 27 If any tendered outstanding 8.125% notes or outstanding 8.750% notes are not accepted for exchange for any reason, including if certificates are submitted evidencing more tendered outstanding 8.125% notes or outstanding 8.750% notes than those that are outstanding, certificates evidencing outstanding 8.125% notes or outstanding 8.750% notes that are not accepted for exchange will be returned, without expense, to the tendering holder, or, in the case of outstanding 8.125% notes or outstanding 8.750% notes tendered by book-entry transfer into the exchange agent's account at a book-entry transfer facility under the procedure set forth under "-- Procedures for Tendering Outstanding Securities -- Book-Entry Transfer," such outstanding 8.125% notes and outstanding 8.750% notes will be credited to the account maintained at such book-entry transfer facility from which such outstanding 8.125% notes or outstanding 8.750% notes were delivered, unless otherwise required by such holder under "Special Delivery Instructions" in the letter of transmittal, promptly following the expiration date or the termination or withdrawal of the exchange offer. Tendering holders of outstanding 8.125% notes and outstanding 8.750% notes exchanged in the exchange offer will not be obligated to pay brokerage commissions or transfer taxes with respect to the exchange of their outstanding 8.125% notes or outstanding 8.750% notes other than as described in "-- Transfer Taxes" or in Instruction 9 to the letter of transmittal. We will pay all other charges and expenses in connection with the exchange offer. PROCEDURES FOR TENDERING OUTSTANDING SECURITIES Any beneficial owner whose outstanding 8.125% notes or outstanding 8.750% notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee or held through a book-entry transfer facility and who wishes to tender outstanding 8.125% notes or outstanding 8.750% notes should contact such registered holder promptly and instruct such registered holder to tender outstanding 8.125% notes or outstanding 8.750% notes on such beneficial owner's behalf. Tender of Outstanding Securities Held Through DTC. The exchange agent and DTC have confirmed that the exchange offer is eligible for the DTC automated tender offer program. Accordingly, DTC participants may electronically transmit their acceptance of the exchange offer by causing DTC to transfer outstanding 8.125% notes or outstanding 8.750% notes to the exchange agent in accordance with DTC's automated tender offer program procedures for transfer. DTC will then send an agent's message to the exchange agent. The term "agent's message" means a message transmitted by DTC, received by the exchange agent and forming part of the book-entry confirmation, which states that DTC has received an express acknowledgment from the participant in DTC tendering outstanding 8.125% notes or outstanding 8.750% notes that are the subject of that book-entry confirmation that the participant has received and agrees to be bound by the terms of the letter of transmittal, and that we may enforce such agreement against such participant. In the case of an agent's message relating to guaranteed delivery, the term means a message transmitted by DTC and received by the exchange agent, which states that DTC has received an express acknowledgment from the participant in DTC tendering outstanding 8.125% notes or outstanding 8.750% notes that they have received and agree to be bound by the notice of guaranteed delivery. Tender of Outstanding Securities Held in Physical Form. For a holder to validly tender outstanding 8.125% notes or outstanding 8.750% notes held in physical form: - the exchange agent must receive at its address set forth in this prospectus a properly completed and validly executed letter of transmittal, or a manually signed facsimile thereof, together with any signature guarantees and any other documents required by the instructions to the letter of transmittal; and - the exchange agent must receive certificates for tendered outstanding 8.125% notes or outstanding 8.750% notes at such address. LETTERS OF TRANSMITTAL AND OUTSTANDING 8.125% NOTES AND OUTSTANDING 8.750% NOTES SHOULD BE SENT ONLY TO THE EXCHANGE AGENT AND NOT TO US OR TO ANY BOOK-ENTRY TRANSFER FACILITY. 28 THE METHOD OF DELIVERY OF OUTSTANDING 8.125% NOTES, OUTSTANDING 8.750% NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDER TENDERING OUTSTANDING 8.125% NOTES AND OUTSTANDING 8.750% NOTES. DELIVERY OF SUCH DOCUMENTS WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF SUCH DELIVERY IS BY MAIL, WE SUGGEST THAT THE HOLDER USE PROPERLY INSURED, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, AND THAT THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE OF THE EXCHANGE OFFER TO PERMIT DELIVERY TO THE EXCHANGE AGENT PRIOR TO SUCH DATE. NO ALTERNATIVE, CONDITIONAL OR CONTINGENT TENDERS OF OUTSTANDING 8.125% NOTES OR OUTSTANDING 8.750% NOTES WILL BE ACCEPTED. Signature Guarantees. Signatures on the letter of transmittal must be guaranteed by an eligible institution unless: - the letter of transmittal is signed by the registered holder of the outstanding 8.125% notes or outstanding 8.750% notes tendered therewith, or by a participant in one of the book-entry transfer facilities whose name appears on a security position listing it as the owner of those outstanding 8.125% notes or outstanding 8.750% notes, or if any outstanding 8.125% notes or outstanding 8.750% notes for principal amounts not tendered are to be issued directly to the holder, or, if tendered by a participant in one of the book-entry transfer facilities, any outstanding 8.125% notes or outstanding 8.750% notes for principal amounts not tendered or not accepted for exchange are to be credited to the participant's account at the book-entry transfer facility, and neither the "Special Issuance Instructions" nor the "Special Delivery Instructions" box on the letter of transmittal has been completed, or - the outstanding 8.125% notes or outstanding 8.750% notes are tendered for the account of an eligible institution. An eligible institution is a firm that is a participant in the Security Transfer Agents Medallion Program or the Stock Exchanges Medallion Program, which is generally a member of a registered national securities exchange, a member of the National Association of Securities Dealers, Inc., or a commercial bank or trust company having an office in the United States. Book-Entry Transfer. The exchange agent will seek to establish a new account or utilize an outstanding account with respect to the outstanding 8.125% notes and outstanding 8.750% notes at DTC promptly after the date of this prospectus. Any financial institution that is a participant in the book-entry transfer facility system and whose name appears on a security position listing it as the owner of the outstanding 8.125% notes or outstanding 8.750% notes may make book-entry delivery of outstanding 8.125% notes or outstanding 8.750% notes by causing the book-entry transfer facility to transfer such outstanding 8.125% notes or outstanding 8.750% notes into the exchange agent's account. HOWEVER, ALTHOUGH DELIVERY OF OUTSTANDING 8.125% NOTES AND OUTSTANDING 8.750% NOTES MAY BE EFFECTED THROUGH BOOK-ENTRY TRANSFER INTO THE EXCHANGE AGENT'S ACCOUNT AT A BOOK-ENTRY TRANSFER FACILITY, A PROPERLY COMPLETED AND VALIDLY EXECUTED LETTER OF TRANSMITTAL, OR A MANUALLY SIGNED FACSIMILE THEREOF, OR AN AGENT'S MESSAGE IN LIEU THEREOF, MUST BE RECEIVED BY THE EXCHANGE AGENT AT ITS ADDRESS SET FORTH IN THIS PROSPECTUS ON OR PRIOR TO THE EXPIRATION DATE OF THE EXCHANGE OFFER, OR ELSE THE GUARANTEED DELIVERY PROCEDURES DESCRIBED BELOW MUST BE COMPLIED WITH. The confirmation of a book-entry transfer of outstanding 8.125% notes or outstanding 8.750% notes into the exchange agent's account at a book-entry transfer facility is referred to in this prospectus as a "book-entry confirmation." DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THAT BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT. Guaranteed Delivery. If you wish to tender your outstanding 8.125% notes or outstanding 8.750% notes and: - certificates representing your outstanding 8.125% notes or outstanding 8.750% notes are not lost but are not immediately available; 29 - time will not permit your letter of transmittal, certificates representing your outstanding 8.125% notes or outstanding 8.750% notes and all other required documents to reach the exchange agent on or prior to the expiration date of the exchange offer; or - the procedures for book-entry transfer cannot be completed on or prior to the expiration date of the exchange offer, then, you may tender if both of the following are complied with: - your tender is made by or through an eligible institution; and - on or prior to the expiration date of the exchange offer, the exchange agent has received from the eligible institution a properly completed and validly executed notice of guaranteed delivery, by manually signed facsimile transmission, mail or hand delivery, in substantially the form provided with this prospectus or an agent's message relating thereto. The notice of guaranteed delivery must: - set forth your name and address, the registered number(s) of your outstanding 8.125% notes or outstanding 8.750% notes and the principal amount of outstanding 8.125% notes or outstanding 8.750% notes tendered; - state that the tender is being made thereby; and - guarantee that, within three New York Stock Exchange trading days after the expiration date of the exchange offer, the letter of transmittal or facsimile thereof properly completed and validly executed, together with certificates representing the outstanding 8.125% notes or outstanding 8.750% notes, or a book-entry confirmation, and any other documents required by the letter of transmittal and the instructions thereto, will be deposited by the eligible institution with the exchange agent. The exchange agent must receive the properly completed and validly executed letter of transmittal or facsimile thereof with any required signature guarantees, together with certificates for all outstanding 8.125% notes or outstanding 8.750% notes in proper form for transfer, or a book-entry confirmation, and any other required documents, within three New York Stock Exchange trading days after the date of the notice of guaranteed delivery. Other Matters. New 8.125% notes and new 8.750% notes will be issued in exchange for outstanding 8.125% notes and outstanding 8.750% notes accepted for exchange only after timely receipt by the exchange agent of: - certificates for (or a timely book-entry confirmation with respect to) your outstanding 8.125% notes or outstanding 8.750% notes, a properly completed and duly executed letter of transmittal or facsimile thereof with any required signature guarantees, or, in the case of a book-entry transfer, an agent's message; and - any other documents required by the letter of transmittal. All questions as to the form of all documents and the validity, including time of receipt, and acceptance of all tenders of outstanding 8.125% notes or outstanding 8.750% notes will be determined by us, in our sole discretion, the determination of which shall be final and binding. ALTERNATIVE, CONDITIONAL OR CONTINGENT TENDERS OF OUTSTANDING 8.125% NOTES OR OUTSTANDING 8.750% NOTES WILL NOT BE CONSIDERED VALID. We reserve the absolute right to reject any or all tenders of outstanding 8.125% notes and outstanding 8.750% notes that are not in proper form or the acceptance of which, in our opinion, would be unlawful. We also reserve the right to waive any defects, irregularities or conditions of tender as to particular outstanding 8.125% notes or outstanding 8.750% notes. Our interpretation of the terms and conditions of the exchange offer, including the instructions in the letter of transmittal, will be final and binding. 30 Any defect or irregularity in connection with tenders of outstanding 8.125% notes or outstanding 8.750% notes must be cured within the time we determine, unless waived by us. Tenders of outstanding 8.125% notes and outstanding 8.750% notes will not be deemed to have been made until all defects and irregularities have been waived by us or cured. Neither we, the exchange agent nor any other person will be under any duty to give notice of any defects or irregularities in tenders of outstanding 8.125% notes or outstanding 8.750% notes, or will incur any liability to holders for failure to give any such notice. By signing or agreeing to be bound by the letter of transmittal, you will represent to us that, among other things: - any new 8.125% notes or new 8.750% notes that you receive will be acquired in the ordinary course of your business; - you have no arrangement or understanding with any person or entity to participate in the distribution of the new 8.125% notes or new 8.750% notes; - if you are not a broker-dealer, you are not engaged in and do not intend to engage in the distribution of the new 8.125% notes or new 8.750% notes; - if you are a broker-dealer that will receive new 8.125% notes or new 8.750% notes for your own account in exchange for outstanding 8.125% notes or outstanding 8.750% notes that were acquired as a result of market-making activities, you will deliver a prospectus, as required by law, in connection with any resale of those new 8.125% notes or new 8.750% notes; and - you are not our "affiliate," as defined in Rule 405 of the Securities Act, or, if you are an affiliate, you will comply with any applicable registration and prospectus delivery requirements of the Securities Act. WITHDRAWAL OF TENDERS Except as otherwise provided in this prospectus, you may withdraw your tender of outstanding 8.125% notes or outstanding 8.750% notes at any time prior to 5:00 p.m., New York City time, on the expiration date. For a withdrawal to be effective: - the exchange agent must receive a written notice of withdrawal at its address set forth below under "-- Exchange Agent," or - you must comply with the appropriate procedures of DTC's automated tender offer program system. Any notice of withdrawal must: - specify the name of the person who tendered the outstanding 8.125% notes or outstanding 8.750% notes to be withdrawn; and - identify the outstanding 8.125% notes or outstanding 8.750% notes to be withdrawn, including the principal amount of the outstanding 8.125% notes or outstanding 8.750% notes. If outstanding 8.125% notes or outstanding 8.750% notes have been tendered pursuant to the procedure for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawn outstanding 8.125% notes or outstanding 8.750% notes and otherwise comply with the procedures of DTC. We will determine all questions as to the validity, form, eligibility and time of receipt of notice of withdrawal, and our determination shall be final and binding on all parties. We will deem any outstanding 8.125% notes or outstanding 8.750% notes so withdrawn not to have been validly tendered for exchange for purposes of the exchange offer. Any outstanding 8.125% notes or outstanding 8.750% notes that have been tendered for exchange but that are not exchanged for any reason will be returned to their holder without cost to the holder or, in the 31 case of outstanding 8.125% notes or outstanding 8.750% notes tendered by book-entry transfer into the exchange agent's account at DTC according to the procedures described above, such outstanding 8.125% notes or outstanding 8.750% notes will be credited to an account maintained with DTC for the outstanding 8.125% notes or outstanding 8.750% notes. This return or crediting will take place as soon as practicable after withdrawal, rejection of tender or termination of the exchange offer. You may retender properly withdrawn outstanding 8.125% notes or outstanding 8.750% notes by following one of the procedures described under "-- Procedures for Tendering Outstanding Securities" at any time on or prior to the expiration date. CONDITIONS TO THE EXCHANGE OFFER We will not be required to accept for exchange ~~or exchange any new 8.125% notes for, any outstanding 8.125% notes~~Income PACS tendered ~~nor will we be required~~pursuant to ~~accept for exchange, or exchange any new 8.750% notes for, any outstanding 8.750% notes tendered, and we may terminate, extend or amend~~ the exchange offer and may terminate or extend the exchange offer if any condition to the exchange offer is not satisfied. We may also, subject to Rule 14e-1 under the Securities Exchange Act of 1934, which requires that an offeror pay the consideration offered or return the securities deposited by or on behalf of the holders thereof promptly after the termination or withdrawal of a tender offer, postpone the acceptance for exchange of ~~outstanding 8.125% notes~~Income PACS validly tendered and ~~outstanding 8.750% notes so tendered if, on or~~not withdrawn prior to the expiration date of the exchange offer, if any one of the conditions described above is not satisfied or any one of the following conditions has occurred, and the occurrence thereof has not been waived by us in our sole discretion:


		condition, assets, liabilities or prospects, or which would or might, in our reasonable judgment, prohibit, prevent, restrict or delay consummation of the exchange offer;

	•	an order, statute, rule, regulation, executive order, stay, decree, judgment or injunction shall have been proposed, enacted, entered, issued, promulgated, enforced or deemed applicable by any court or governmental, regulatory or administrative agency or instrumentality that, in our reasonable judgment, would or might prohibit, prevent, restrict or delay consummation of the exchange offer, or that is, or is reasonably likely to be, materially adverse to our business, operations, properties, condition, assets, liabilities or prospects;

	•	there shall have occurred or be likely to occur any material adverse change to our business, operations, properties, condition, assets, liabilities, prospects or financial affairs;

	•	there shall have occurred:


	•	any general suspension of, or limitation on prices for, trading in securities in U.S. securities or financial markets;

	•	any material adverse change in the price of our common stock in United States securities or financial markets;

	•	a declaration of a banking moratorium or any suspension of payments in respect to banks in the United States;

	•	any limitation (whether or not mandatory) by any government or governmental, administrative or regulatory authority or agency, domestic or foreign, or other event that, in our reasonable judgment, might affect the extension of credit by banks or other lending institutions; or


	•	a commencement or a materially significant worsening of a war or armed hostilities or other national or international calamity, including but not limited to, catastrophic terrorist attacks against the United States or its citizens.

These conditions to the exchange offer are for our sole benefit and may be asserted by us in our ~~sole~~reasonable discretion or may be waived by us, in whole or in part, in our ~~sole~~reasonable discretion on or before the expiration date of the exchange offer, whether or not any other condition of the exchange offer also is ~~waived.~~waived and regardless of the circumstances giving rise to the failure of any such condition. We have not made a decision as to what circumstances would lead us to waive any such condition, and any such waiver would depend on circumstances prevailing at the time of ~~that~~such waiver. Any determination by us concerning the events described in this section ~~shall~~will be final and binding upon all persons. ALTHOUGH WE HAVE NO PRESENT PLANS OR ARRANGEMENTS TO DO SO, WE RESERVE THE RIGHT TO AMEND, AT ANY TIME, THE TERMS OF THE EXCHANGE OFFER. WE WILL GIVE HOLDERS NOTICE OF ANY AMENDMENTS IF REQUIRED BY APPLICABLE LAW. CONSEQUENCES OF FAILURE TO EXCHANGE

We expressly reserve the right to extend the exchange offer for such period or periods as we may determine in our sole discretion from time to time by giving oral, confirmed in writing, or written notice to the exchange agent and by making public announcement by press release prior to 9:00 a.m., New York City time, on the next business day following the previously scheduled expiration date of the exchange offer. During any extension of the exchange offer, all Income PACS previously tendered and not accepted for purchase will remain subject to the exchange offer and may, subject to the terms of the exchange offer, be accepted for exchange by us.

~~We also expressly reserve the right, at any time or from time to time, subject to and in accordance with applicable law, to:~~


	•	waive any condition (other than those conditions we have identified as conditions we cannot waive) or otherwise amend the terms of the exchange offer in any respect prior to the expiration of the exchange offer, by giving oral, confirmed in writing, or written notice of such waiver or amendment to the exchange agent subject to and in accordance with applicable law; or

	•	terminate or withdraw the exchange offer if any condition to the exchange offer is not satisfied, by giving oral, confirmed in writing, or written notice of such termination or withdrawal to the exchange agent.

Other than an extension of the exchange offer or the administrative purposes described above, we are not aware of any circumstance that would cause us to delay acceptance of any validly tendered Income PACS.

If we make a material change in the terms of the exchange offer or the information concerning the exchange offer, or waive a material condition of the exchange offer, we will promptly disseminate disclosure regarding the changes to the exchange offer and extend the exchange offer, if required by law, to ensure that the exchange offer remains open a minimum of five business days from the date we disseminate disclosure regarding the changes.

If we make a change in the number of Income PACS sought or the amount of consideration offered in the exchange, we will promptly disseminate disclosure regarding the changes and extend the exchange offer, if required by law, to ensure that the exchange offer remains open a minimum of ten business days from the date we disseminate disclosure regarding the changes.

Any waiver, amendment or modification will apply to all Income PACS tendered, regardless of when or in what order such Income PACS were tendered. Any extension, amendment or termination will be followed promptly by public announcement thereof, with the announcement in the case of an extension to be issued no later than 9:00 a.m., New York City time, on the first business day after the previously scheduled expiration date of the exchange offer.

Except as set forth above or as otherwise required by law, without limiting the manner in which we may choose to make any public announcement, we will have no obligation to publish, advertise or otherwise communicate any such public announcement other than by issuing a press release.

We expressly reserve the right, in our sole discretion, to terminate the exchange offer if any of the conditions set forth above under “— Conditions to the Exchange Offer” shall have occurred. Any such termination will be followed promptly by a public announcement of such termination. In addition, if we terminate the exchange offer, we will give immediate notice thereof to the exchange agent. If the exchange offer is terminated, withdrawn or otherwise not completed, the consideration will not be paid or become payable to you, doeven if you have validly tendered your Income PACS in connection with the exchange offer, and any Income PACS you have tendered that we have not accepted for exchange ~~your outstanding 8.125% notes~~will be returned promptly to you.

Upon the terms and subject to the conditions of the exchange offer, if 43,900,000 or fewer Income PACS are validly tendered and not validly withdrawn on or prior to the expiration date of the exchange offer, we will accept for ~~new 8.125% notes~~exchange all validly tendered Income PACS if, and only if, the acceptance of such tendered Income PACS would not result in the de-listing of the Income PACS from the New York Stock Exchange.

Upon the terms and subject to the conditions of the exchange offer, if more than 43,900,000 Income PACS are validly tendered and not validly withdrawn on or prior to the expiration date of the exchange ~~your outstanding 8.750% notes for new 8.750% notes~~offer, we will accept Income PACS from all holders who validly tender Income PACS, on a pro rata basis with appropriate adjustment to avoid fractional units as described below under “ — Proration.”

If, for any reason, proration of tendered Income PACS is required, we will determine the final proration factor promptly after the expiration date of the exchange offer in a manner consistent with Rule 13e-4(f)(3) of the Securities Exchange Act of 1934. Proration for each holder validly tendering Income PACS will be based on the ratio of the number of Income PACS validly tendered by the holder to the ~~currently applicable restrictions on transfer: -~~total number of Income PACS validly tendered by all holders. This ratio will be applied to holders tendering Income PACS to determine the number of Income PACS, rounded up or down as ~~set forth in~~nearly as practicable to the ~~legend printed on the outstanding 8.125% notes and the outstanding 8.750% notes as a consequence of the issuance of the outstanding 8.125% notes or outstanding 8.750% notes~~nearest whole unit, that will be purchased from each holder pursuant to the ~~exemptions from,~~exchange offer. For instance, if 44,000,000 Income PACS are validly tendered and not withdrawn, the proration factor would be 99.772% (43,900,000 divided by 44,000,000). Accordingly, a holder who validly tendered 100,000 Income PACS would have 99,772 Income PACS accepted for exchange by us (99.772% multiplied by 100,000), and we would return 228 Income PACS to such holder. In addition, notwithstanding the foregoing, we may accept all Income PACS tendered by holders who own, beneficially or ~~in transactions~~of record, an aggregate of not ~~subject to, the registration requirements~~more than 99 Income PACS and who have validly tendered and not withdrawn all such Income PACS, before prorating Income PACS validly tendered by others.

Because of the ~~Securities Act~~potential difficulty in determining the number of Income PACS validly tendered and applicable state securities laws; and - otherwise set forth in the offering memorandum distributed in connection with the private offerings of the outstanding 8.125% notes and outstanding 8.750% notes. 32 ~~In general, you may~~ not offer or sell the outstanding 8.125% notes or outstanding 8.750% notes unless they are registered under the Securities Act, or unless the offer or sale is exempt from registration under the Securities Act and applicable state securities laws. Except as required by the registration rights agreement,withdrawn, we do not ~~intend~~expect that we will be able to ~~register resales~~announce the final proration percentage until three to five business days after the expiration date of the ~~outstanding 8.125% notes or outstanding 8.750% notes under~~exchange offer. The preliminary results of any proration will be announced by press release promptly after the ~~Securities Act. Based on interpretations~~expiration date of the ~~SEC staff, you~~exchange offer. Holders may ~~offer for resale, resell or otherwise transfer new 8.125% notes~~obtain preliminary proration information from the dealer managers and ~~new 8.750% notes issued in~~the information agent, and may be able to obtain this information from their brokers. In the event of proration, we anticipate that we will commence exchange of the tendered Income PACS promptly after the expiration date of the exchange offer, ~~without compliance with~~but no later than five business days after the ~~registration and prospectus delivery provisions~~expiration date of the ~~Securities Act, provided that (1) you are not our "affiliate" within the meaning of Rule 405 under the Securities Act, (2) you acquired the new 8.125% notes or new 8.750% notes~~exchange offer.

As described in the ~~ordinary course~~section of ~~your business and (3)~~this exchange offer prospectus entitled “Material U.S. Federal Income Tax Consequences,” you ~~have no arrangement~~may be required to recognize taxable gain or ~~understanding~~loss with respect to the ~~distribution~~notes that are part of your Income PACS. If you are required to recognize taxable gain or loss with respect to such notes, the amount of gain or loss recognized by you will depend in part on the adjusted basis you have in the notes that are part of your Income PACS. If any of your notes has an adjusted basis that is different from any of your other notes and we prorate the tendered Income PACS, you may wish to designate which of the ~~new 8.125% notes or new 8.750% notes~~Income PACS are to be ~~acquired~~purchased in the exchange. The letter of transmittal provides you the opportunity to designate the order of priority in which Income PACS are to be purchased, if we prorate the tendered Income PACS.

Only a holder of Income PACS may participate in the exchange offer. If you hold Growth PACS, see the section of this exchange offer prospectus entitled “Description of FELINE PACS — Recreating Income PACS” for a discussion of how to recreate Income PACS from Growth PACS.

If you beneficially own Income PACS that are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender ~~outstanding 8.125% notes or outstanding 8.750% notes~~those Income PACS, you should contact the registered holder promptly and instruct it to tender your Income PACS on your behalf.


	•	make appropriate arrangements to register ownership of the Income PACS in your name; or

	•	obtain a properly completed power from the registered holder of your Income PACS.

~~The transfer of registered ownership may take considerable time and may not be completed prior to the expiration date of the exchange offer.~~


	•	comply with the automated tender offer program procedures of DTC described below; or

	•	complete, sign and date the letter of transmittal, or a facsimile of the letter of transmittal;


	•	have the signature on the letter of transmittal guaranteed if the letter of transmittal so requires; and

	•	mail or deliver the letter of transmittal or facsimile to the exchange agent prior to the expiration date of the exchange offer.


	•	the exchange agent must receive the Income PACS along with the letter of transmittal prior to the expiration date of the exchange offer; or

	•	the exchange agent must receive, prior to the expiration date of the exchange offer, a timely confirmation of book-entry transfer of such Income PACS into the exchange agent’s account at DTC according to the procedure for book-entry transfer described below or a properly transmitted agent’s message.

To be validly tendered, the exchange agent must receive any physical delivery of the letter of transmittal and other required documents at its address indicated on the cover page of the letter of transmittal. The exchange agent must receive such documents prior to the expiration date of the exchange offer.

The tender by a holder that is not withdrawn prior to the expiration date of the exchange offer will constitute a binding agreement between the holder and us in accordance with the terms and subject to the conditions described in this exchange offer prospectus and in the letter of transmittal.

The method of delivery of the Income PACS, the letter of transmittal and all other required documents to the exchange agent is at your election and risk. Rather than mail these items, we recommend that you use an overnight or hand delivery service. In all cases, you should allow sufficient time to assure delivery to the exchange agent before the expiration date of the exchange offer. You should not send the letter of transmittal or Income PACS to us. You may request your brokers, dealers, commercial banks, trust companies or other nominees to effect the above transactions for you.

If you are using a letter of transmittal or a notice of withdrawal (as described below), you must have signatures guaranteed by a member firm of a registered national securities exchange or of the National Association of Securities Dealers. Inc., a commercial bank or trust company having an office or correspondent in the United States, or an “eligible guarantor institution” within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934. In addition, such entity must be a member of


	•	by a registered holder who has signed the letter of transmittal and the exchange consideration to be received in the exchange offer is to be issued directly to such registered holder and such holder has not completed the box entitled “Special Issuance Instructions” or “Special Delivery Instructions” on the letter of transmittal; or

	•	for the account of a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States, or an eligible guarantor institution.

If the letter of transmittal is signed by a person other than the registered holder of any Income PACS, the Income PACS must be endorsed or accompanied by a properly completed power of attorney. The power of attorney must be signed by the registered holder as the registered holder’s name appears on the Income PACS. A member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States, or an eligible guarantor institution must guarantee the signature on the power of attorney.

If the letter of transmittal or any Income PACS are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, those persons should so indicate when signing. Unless waived by us, they should also submit evidence satisfactory to us of their authority to deliver the letter of transmittal.

The exchange agent and DTC have confirmed that any financial institution that is a participant in DTC’s system may use DTC’s automated tender offer program to tender. Participants in the program may, instead of physically completing and signing the letter of transmittal and delivering it to the exchange agent, transmit their acceptance of the exchange offer electronically. They may do so by causing DTC to transfer the Income PACS to the exchange agent in accordance with its procedures for transfer. DTC will then send an agent’s message to the exchange agent.

~~The term “agent’s message” means a message transmitted by DTC, received by the exchange agent and forming part of the book-entry confirmation, to the effect that:~~


	•	DTC has received an express acknowledgment from a participant in its automated tender offer program that it is tendering Income PACS that are the subject of such book-entry confirmation;

	•	such participant has received and agrees to be bound by the terms of the letter of transmittal; and

	•	the agreement may be enforced against such participant.

We will determine in our sole discretion all questions as to the validity, form, eligibility, including time of receipt, and acceptance and withdrawal of tendered Income PACS. We reserve the absolute right to reject any and all Income PACS not validly tendered or any Income PACS whose acceptance by us would, in the opinion of our counsel, be unlawful. We also reserve the right to waive any defects or irregularities either before or after the expiration date of the exchange offer. Our interpretation of the terms and conditions of the exchange offer, including the instructions in the letter of transmittal, will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Income PACS must be cured within a time period that we will determine. Neither we, the exchange agent

You may validly withdraw Income PACS that you tender at any time prior to the expiration date of the exchange offer, which is 5:00 p.m., New York City time, on October 18, 2004, unless we extend it. In addition, if not previously returned, you may withdraw any Income PACS that you tender that are not accepted by us for exchange after November 15, 2004, which is 40 business days from September 17, 2004. For a withdrawal of Income PACS to be effective, a written notice of withdrawal must be received by the exchange agent prior to the expiration date or, if not previously accepted by us, after November 15, 2004, in both cases, at the address set forth on the back cover page of this exchange offer prospectus. Any notice of withdrawal must:


	•	specify the name of the person who tendered the Income PACS to be withdrawn;

	•	identify the Income PACS to be withdrawn, including the name and number of the account at the applicable book-entry transfer facility to be credited; and

	•	be signed by the holder in the same manner as the original signature on the letter of transmittal by which the Income PACS were tendered, including any required signature guarantees, or be accompanied by documents of transfer sufficient to have the trustee or other applicable person register transfer of the Income PACS into the name of the person withdrawing the tender.

If we extend the exchange offer, are delayed in our acceptance of the Income PACS for exchange or are unable to accept Income PACS pursuant to the exchange offer for any reason, then, without prejudice to our rights under the exchange offer, the exchange agent may retain tendered Income PACS and such Income PACS may not be withdrawn except as otherwise provided in this exchange offer prospectus, subject to provisions under the Securities Exchange Act of 1934 that provide that an issuer making an exchange offer shall either pay the consideration offered or return tendered securities promptly after the termination or withdrawal of the exchange offer.

~~If you have tendered your Income PACS through a custodian but wish to withdraw them, you must withdraw your tender through the custodian prior to the expiration date of the exchange offer.~~

All questions as to the validity, form and eligibility, including time or receipt, of notices of withdrawal will be determined by us. Our determination will be final and binding on all parties. Any Income PACS withdrawn will be deemed not to have been validly tendered for purposes of the exchange offer and no exchange consideration will be issued in exchange unless the Income PACS so withdrawn are validly retendered. Any Income PACS that have been tendered but which are effectively withdrawn will be credited by the exchange agent to the appropriate account at DTC without expense to the withdrawing person promptly after withdrawal. Properly withdrawn Income PACS may be retendered by following one of the procedures described above under “— Procedures for Tendering Income PACS” at any time prior to the expiration date of the exchange offer.

We will issue the exchange consideration, and cause it to be delivered, upon the terms of the exchange offer and applicable law in exchange for Income PACS validly tendered in the exchange offer promptly after the expiration date of the exchange offer and our acceptance of the validly tendered Income PACS. For purposes of the exchange offer, we will be deemed to have accepted for exchange validly

In all cases, payment for Income PACS accepted for exchange by us pursuant to the exchange offer will be made, and delivered, promptly after the expiration date of the exchange offer and assuming receipt by the exchange agent of:


	•	timely confirmation of a book-entry transfer of the Income PACS into the exchange agent’s account at DTC, pursuant to the procedures set forth in “— Procedures for Tendering Income PACS — Tendering through DTC’s automated tender offer program” above;

	•	a properly completed and duly signed letter of transmittal, or facsimile copy, or a properly transmitted agent’s message; and

	•	any other documents required by the letter of transmittal.

If we do not accept any Income PACS tendered for exchange pursuant to the exchange offer for any reason, the exchange agent will, without expense and promptly after expiration or termination of the exchange offer, credit such Income PACS to the account maintained at DTC from which the tendered Income PACS were delivered.

~~Under no circumstances will we pay interest on the exchange consideration regardless of any delay in making such payment.~~

Any tendered Income PACS that are not accepted for exchange by us, including due to the proration provisions, will be returned without expense to their tendering holder. In the case of Income PACS tendered by book-entry transfer in the exchange agent’s account at DTC according to the procedures described above, such non-exchanged Income PACS will be credited to an account maintained with DTC. These actions will occur promptly after the expiration or termination of the exchange offer.

We are making the exchange offer to all holders of outstanding Income PACS. We are not aware of any jurisdiction in which the making of the exchange offer is not in compliance with applicable law. If we become aware of any jurisdiction in which the making of the exchange offer would not be in compliance with applicable law, we will make a good faith effort to comply with any such law. If, after such good faith effort, we cannot comply with any such law, the exchange offer will not be made to, nor will tenders of Income PACS be accepted from or on behalf of, the holders of Income PACS residing in any such jurisdiction.

No action has been or will be taken in any jurisdiction other than in the United States that would permit a public offering of our shares of common stock, or the possession, circulation or distribution of ~~the new 8.125% notes~~this exchange offer prospectus or ~~new 8.750% notes: - you cannot rely on the applicable interpretations~~any other material relating to us or our shares of ~~the SEC;~~common stock in any jurisdiction where action for that purpose is required. Accordingly, our shares of common stock may not be offered or sold, directly or indirectly, and ~~- you must comply with the registration and~~neither this exchange offer prospectus ~~delivery requirements of the Securities Act~~nor any other offering material or advertisements in connection with ~~a secondary resale transaction~~our shares of common stock may be distributed or published, in or from any country or jurisdiction except in compliance with any applicable rules and ~~that secondary resale transaction must be covered by an effective registration statement containing the selling security holder information required by Item 507~~regulations of any such country or ~~508, as applicable, of Regulation S-K. The trading market for outstanding 8.125% notes and outstanding 8.750% notes not exchanged in the~~jurisdiction. This exchange offer ~~may be significantly more limited than it is at present. Therefore, if your outstanding 8.125% notes and outstanding 8.750% notes are~~prospectus does not ~~tendered and accepted in the exchange~~constitute an offer ~~it may become more difficult for you~~ to sell or ~~transfer your unexchanged securities. See "Risk Factors -- Risks Arising from~~a solicitation of an offer to buy in any jurisdiction where such offer or solicitation would be unlawful. Persons into whose possession this exchange offer prospectus comes are advised to inform

JPMorgan Chase Bank has been appointed as the exchange agent for the exchange offer. ~~You should direct questions and requests for assistance, requests for additional copies of this prospectus, the letter of transmittal or any other documents~~We have agreed to pay the exchange ~~agent. You should send certificates~~agent reasonable and customary fees for ~~outstanding 8.125% notes, outstanding 8.750% notes,~~its services. All executed letters of transmittal and any other required documents should be sent or delivered to the exchange agent ~~addressed~~at the address set forth on the back cover of this exchange offer prospectus. Delivery of a letter of transmittal to an address or transmission of the letter of transmittal via facsimile other than as ~~follows:~~set forth on the back cover of this exchange offer prospectus does not constitute a valid delivery of the letter of transmittal.

D.F. King & Co., Inc. has been appointed as the information agent for the exchange offer. We have agreed to pay the information agent reasonable and customary fees for its services and will reimburse the information agent for its reasonable out-of-pocket expenses. Any questions and requests for assistance or requests for additional copies of this exchange offer prospectus or of the letter of transmittal should be directed to the information agent at the address set forth on the back cover of this exchange offer prospectus.

The dealer managers for the exchange offer are Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc. and Banc of America Securities LLC. We have agreed to pay the dealer managers compensation for their services as dealer managers in connection with this exchange offer, which compensation is based on the total number of validly tendered and accepted Income PACS and varies from $0.1250 for each validly tendered and accepted Income PACS, if 26,340,000 or fewer Income PACS are accepted, to $0.1375 for each validly tendered and accepted Income PACS, if more than 26,340,000 Income PACS are accepted. Of the 44,000,000 Income PACS that are outstanding, (i) if 26,340,000 Income PACS are validly tendered and accepted, the compensation payable to the dealer managers would be approximately $3.3 million and (ii) if 43,900,000 are validly tendered and accepted, the compensation payable to the dealer managers would be approximately $6.0 million.

The dealer managers and their affiliates have rendered and may in the future render various investment banking, lending and commercial banking services and other advisory services to us and our subsidiaries. The dealer managers have received, and may in the future receive, customary compensation from us and our subsidiaries for such services. The dealer managers may from time to time hold Income PACS and shares of our common stock in their proprietary accounts, and, to the extent they own Income PACS in these accounts at the time of the exchange offer, the dealer managers may tender these Income PACS, although a dealer manager will not be paid a fee for Income PACS tendered by that dealer manager for its own account. During the course of the exchange offer, the dealer managers may trade shares of our common stock for their own account or for the accounts of their customers. As a result, the dealer managers may hold a long or short position in our common stock.

JPMorgan Chase Bank, Corporate Trust Services 2001 Bryan Street 9th floor Dallas, Texas 75201 Attention: Frank Ivins TRANSFER TAXESan affiliate of J.P. Morgan Securities Inc., is the purchase contract agent for the Income PACS and the trustee of the notes forming a part of the Income PACS. JPMorgan Chase Bank has in the past and may in the future receive customary compensation for such services.

Merrill Lynch, Pierce, Fenner & Smith Incorporated is the remarketing agent for the notes forming a part of the Income PACS and will receive a fee in connection with a successful remarketing of such notes in an amount not to exceed 0.25% of the Treasury portfolio price applicable to the notes (for the November 2004 remarketing) or 0.25% of the principal amount of the notes (for the February 2005 remarketing).

We will bear the fees and expenses of soliciting tenders for the exchange offer. We are making the principal solicitation by mail and overnight courier. However, where permitted by applicable law, additional

Soliciting Dealer Fees. We will pay a fee to soliciting dealers of an amount equal to $0.0625 for each validly tendered and accepted Income PACS in the exchange offer for beneficial owners whose ownership is equal to or fewer than 10,000 units. Any fees payable pursuant to this paragraph shall be paid in full to a soliciting dealer if such soliciting dealer is designated (as herein described), in which case such fees shall be payable in full to such designated soliciting dealer (which designated soliciting dealer may be a dealer manager). Reference to a soliciting dealer shall include a dealer manager designated as a soliciting dealer.

~~A designated soliciting dealer is an entity obtaining the tender, if the applicable letter of transmittal includes its name in the “Solicited Tenders” box and it is:~~


	•	a broker or dealer in securities, including a dealer manager in its capacity as a dealer or broker, which is a member of any national securities exchange or of the NASD;

	•	a foreign broker or dealer not eligible for membership in the NASD that agrees to conform to the NASD’s Rules of Fair Practice in soliciting tenders outside the U.S. to the same extent as though it were an NASD member; or

	•	a bank or trust company.

Soliciting dealers will include any of the organizations described above even when the activities of such organization in connection with the exchange offer consist solely of forwarding to clients materials relating to the exchange offer, including the applicable letter of transmittal, and tendering Income PACS as directed by beneficial owners thereof. No soliciting dealer is required to make any recommendation to holders of Income PACS as to whether to tender or refrain from tendering in the exchange offer. No assumption is made, in making payment to any soliciting dealer, that its activities in connection with the exchange offer included any activities other than those described in this paragraph. For all purposes noted in all materials relating to the exchange offer, the term “solicit” shall be deemed to mean no more than “processing shares tendered” or “forwarding to customers materials regarding the exchange offer.”

No such soliciting dealer fee shall be payable to a soliciting dealer with respect to the tender of Income PACS by a holder unless the letter of transmittal accompanying such tender designates such soliciting dealer. No such fee shall be paid to a soliciting dealer with respect to Income PACS tendered for such soliciting dealer’s own account. If tendered Income PACS are registered in the name of such soliciting dealer, no such fee shall be payable unless such Income PACS are held by such soliciting dealer as nominee and such Income PACS are being tendered for the benefit of one or more beneficial owners identified on the applicable letter of transmittal. You should complete the “Solicited Tenders” box in the applicable letter of transmittal to designate a soliciting dealer even if you tender through DTC’s automated tender offer program. No such fee shall be payable to a soliciting dealer if such soliciting dealer is required for any reason to transfer the amount of such fee to a beneficial owner. No broker, dealer, bank, trust company or fiduciary shall be deemed to be the agent of Williams, the exchange agent, the information agent or the dealer managers for purposes of the exchange offer.

~~By accepting any soliciting dealer fee, a person shall be deemed to have represented that:~~


	•	it has complied with the applicable requirements of the Exchange Act, and the applicable rules and regulations thereunder, in connection with such solicitation;

	•	it is entitled to such compensation for such solicitation under the terms and conditions of the exchange offer;

	•	in soliciting tenders of Income PACS, it has used no soliciting materials other than those furnished by us; and

~~Holders who tender their Income PACS for exchange will not be obligated to pay any transfer taxes. If, however:~~


	•	shares of our common stock are to be delivered to, or issued in the name of, any person other than the registered owner of the tendered Income PACS;

	•	the Income PACS are registered in the name of any person other than the person signing the letter of transmittal; or

	•	transfer tax is imposed for any reason other than the exchange of shares of our common stock for Income PACS in connection with the exchange offer,

then the amount of any transfer taxes, ~~applicable~~whether imposed on the registered owner or any other persons, will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemption from them is not submitted with the letter of transmittal, the amount of such transfer taxes will be billed directly to the ~~transfer and~~tendering holder.

~~No appraisal or dissenters’ rights are available to holders of Income PACS under applicable law in connection with the exchange offer.~~

As consideration for the exchange of ~~outstanding 8.125%~~the Income PACS, we will issue our common stock and pay cash. We will record as an increase to stockholders’ equity the fair value of the stock purchase contracts and the fair value of the common stock issued. We will reduce our liabilities for (1) the carrying amount of the senior notes retired, (2) the accrued interest on the senior notes retired and ~~outstanding 8.750%~~(3) the unpaid portion of contract adjustment payments that were recorded when the Income PACS were originally issued. We will record an expense from debt extinguishment in our income statement to the extent that the consideration allocated to the senior notes retired differs from their carrying amount. The amount of expense will depend upon the number of Income PACS tendered and the fair value of our common stock on the date the exchange offer is consummated.

Whether or not the exchange offer is consummated, we or our affiliates may from time to time acquire Income PACS, other than pursuant to the exchange ~~offer. If, however: - delivery~~offer, through open market purchases, privately negotiated transactions, tender offers, exchange offers or otherwise, upon such terms and at such prices as we may determine, which may be more or less than the prices to be paid pursuant to the exchange offer and could be for cash or other consideration. Rule 13e-4 under the Securities Exchange Act of 1934, as amended, however, prohibits us and our affiliates from purchasing any Income PACS, other than pursuant to the exchange offer, from the date of this exchange offer prospectus until at least ten business days after the expiration or termination of the ~~new 8.125%~~exchange offer. Any possible future purchases by us will depend on many factors, including the results of the exchange offer, the market price of the Income PACS, our business and financial position, and general economic and market conditions. We do not currently plan to effect any open-market repurchases of Income PACS if such purchases would cause the Income PACS to be de-listed from the New York Stock Exchange. Nothing contained in the exchange offer will prevent us or our affiliates from exercising rights under the indenture to defease or otherwise discharge our obligations thereunder with respect to the indenture and/or the notes by depositing cash and/or securities with the trustee in accordance with the terms of the indenture.

The following describes the material differences between the rights of holders of the Income PACS and holders of shares of our common stock. While we believe that the description covers the material differences between the Income PACS and our common stock, this summary may not contain all of the information that is important to you. You should carefully read this entire exchange offer prospectus and the other documents we refer to for a more complete understanding of the differences between being a holder of Income PACS and a holder of shares of our common stock.

In any liquidation, dissolution or winding up of Williams, our common stock would rank below all debt claims against Williams, including the notes that are part of the Income PACS. As a result, holders of our common stock will not be entitled to receive any payment or other distribution of assets upon the liquidation or dissolution until after our obligations to our debt holders have been satisfied. In addition, holders of shares of our preferred stock, if any, that may be issued will have priority over the holders of our common stock with respect to the distribution of our assets in the event of our liquidation or dissolution.

As a holder of Income PACS, your rights currently are set forth in, and you may enforce your rights under, the purchase contract agreement, the pledge agreement, the remarketing agreement and the indenture and supplemental indenture governing the notes. After completion of the exchange offer, holders of shares of our common stock will have their rights set forth in, and may enforce their rights under, Delaware General Corporation Law and our restated certificate of incorporation, as supplemented, and bylaws.

Holders of Income PACS are entitled to quarterly contract adjustment payments, quarterly interest payments, or both, as described in the section of this exchange offer prospectus entitled “Description of FELINE PACS — Current Payments.” Holders of shares of our common stock are entitled to receive ratable dividends as declared by our board of directors out of funds legally available for such purpose.

We may redeem the notes that comprise part of the Income PACS upon the occurrence of the tax events described in the section of this exchange offer prospectus entitled “Description of the Notes — Tax Event Redemption.” The shares of our common stock are not subject to redemption.

The Income PACS are listed and traded on the New York Stock Exchange under the symbol “WMB PrI,” and our common stock is listed and traded on the New York Stock Exchange under the symbol “WMB.” The Growth PACS and the notes are not listed on the New York Stock Exchange or any other national securities exchange.

Holders of purchase contracts forming part of the Income PACS or Growth PACS, in their capacities as such holders, have no voting rights in respect of our common stock. Holders of shares of our common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders.

The notes that comprise part of the Income PACS will mature on February 16, 2007, and the purchase contracts that comprise part of the Income PACS will settle on February 16, 2005. The concept of maturity is not applicable to our common stock.

Under our restated certificate of incorporation, as supplemented, we are authorized to issue up to 30,000,000 shares of preferred stock, par value $1.00 per share, in one or more series. As of the date of this prospectus, we are authorized to issue up to 960,000,000 shares of common stock, par value $1.00 per share. As of October 6, 2004, we had 517,455,520 issued and outstanding shares of common stock. In addition, as of October 6, 2004, 26,568,497 shares of common stock were subject to options or deferred rights outstanding under various stock and compensation incentive plans. The holders of our common stock are not entitled to preemptive or redemption rights. Shares of our common stock are not convertible into shares of any other class of capital stock. EquiServe Trust Company, N.A., is the transfer agent and registrar for our common stock.

~~We currently have the following provisions in our restated certificate of incorporation, as supplemented, or bylaws that could be considered to be “anti-takeover” provisions:~~


	•	an article in our restated certificate of incorporation, as supplemented, providing for a classified board of directors divided into three classes, one of which is elected for a three-year term at each annual meeting of stockholders;

	•	an article in our restated certificate of incorporation, as supplemented, providing that directors cannot be removed except for cause and by the affirmative vote of three-fourths of the outstanding shares of common stock;

	•	an article in our restated certificate of incorporation, as supplemented, requiring the affirmative vote of three-fourths of the outstanding shares of common stock for certain merger and asset sale transactions with holders of more than five percent of the voting power of Williams;

	•	a bylaw that only permits our chairman of the board, president or a majority of our board of directors to call a special meeting of the stockholders; and

	•	a bylaw requiring stockholders to provide prior notice for nominations for election to the board of directors or for proposing matters which can be acted upon at stockholders meetings.

We are a Delaware corporation and are subject to Section 203 of the Delaware General Corporation Law. In general, Section 203 prevents an interested stockholder, which is defined generally as a person owning 15% or more of Williams’ outstanding voting stock from engaging in a business combination with Williams for three years following the date that person became an interested stockholder unless:


	•	before that person became an interested stockholder, our board of directors approved the transaction in which the interested stockholder became an interested stockholder or approved the business combination;

	•	upon completion of the transaction that resulted in the interested stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced (excluding stock held by persons who are both directors and officers of Williams or by certain employee stock plans); or

	•	on or following the date on which that person became an interested stockholder, the business combination is approved by our board of directors and authorized at a meeting of stockholders by the affirmative vote of the holders of a least 66 2/3% of our outstanding voting stock (excluding shares held by the interested stockholder).

~~A business combination includes mergers, asset sales and other transactions resulting in a financial benefit to the interested stockholder.~~

The holders of our common stock are entitled to receive dividends when, as, and if declared by the board of directors of Williams, out of funds legally available for their payment subject to the rights of holders of any outstanding preferred stock.

~~The holders of our common stock are entitled to one vote per share on all matters submitted to a vote of stockholders.~~

In the event of our voluntary or involuntary liquidation, dissolution, or winding up, the holders of our common stock will be entitled to share equally in any assets available for distribution after the payment in full of all debts and distributions and after the holders of all series of outstanding preferred stock have received their liquidation preferences in full.

On September 21, 2004, we entered into an amended and restated rights agreement with EquiServe Trust Company, N.A., as rights agent (“EquiServe”). The amended and restated rights agreement amends and restates the rights agreement dated February 6, 1996 between us and EquiServe, as successor in interest to The First Chicago Trust Company of New York, as rights agent, which provides for a dividend of one-third preferred stock purchase right for each outstanding share of our common stock. The amended and restated rights agreement affects the issued and outstanding common stock of the Company. The rights agreement was amended to:



	•	extend the term of the prior rights agreement from February 6, 2006 to September 21, 2014;



	•	eliminate the concept of an adverse person;



	•	reset the exercise price to $50 per share; and



	•	broaden the board of director’s ability to exempt inadvertent triggers that result solely from the existence of a “group” among major stockholders.

The rights trade automatically with shares of common stock and become exercisable only under the circumstances described below. The rights are designed to protect the interests of Williams and its stockholders against coercive takeover tactics. The purpose of the rights is to encourage potential acquirers to negotiate with our board of directors prior to attempting a takeover and to provide the board with leverage in negotiating on behalf of all stockholders the terms of any proposed takeover. The rights may have anti-takeover effects. The rights should not, however, interfere with a merger or other business combination approved by our board of directors.

Until a right is exercised, the right does not entitle the holder to additional rights as a Williams’ stockholder, including, without limitation, the right to vote or to receive dividends. Upon becoming exercisable, each right entitles its holder to purchase from us one two-hundredth of a share of Series A Junior Participating Preferred Stock at an exercise or purchase price of $50.00 per right, subject to adjustment. Each one two-hundredth of a share of Series A Junior Participating Preferred Stock entitles the holder to receive quarterly dividends payable in cash of an amount per share equal to:



	•	the greater of (a) $120, or (b) 1,200 times the aggregate per share amount of all cash dividends; plus



	•	1,200 times the aggregate per share amount payable in kind of all non-cash dividends or other distributions other than dividends payable in common stock, since the immediately preceding quarterly dividend payment date.

The dividends on the Junior Participating Preferred Stock are cumulative. Holders of Junior Participating Preferred Stock have voting rights entitling them to 1,200 votes per share on all matters submitted to a vote of our stockholders.

In general, the rights will not be exercisable until the distribution date, which is the earlier of (a) the date of the first Section 11(a)(ii) Event (as defined below) or the date of the first Section 13 Event (as defined below) and (b) the close of business on the 10th business day (or such later date as our board of directors shall determine) after the commencement of a tender or exchange offer for 15% or more of our outstanding common stock. Below we refer to the person or group acquiring at least 15% of our common stock as an acquiring person.

In the event that a person or group acquires beneficial ownership of 15% or more of our outstanding common stock as described in Section 11(a)(ii) of the amended and restated rights agreement (a “Section 11(a)(ii) Event”) and the expiration date has not occurred prior to the tenth business day after a Section 11(a)(ii) Event, each holder of a right will have the right to exercise and receive common stock having a value equal to two times the exercise price of the right. The exercise price is the purchase price times the number of shares of common stock associated with each right. Any rights that are at any time beneficially owned by an acquiring person will be null and void and any holder of such right will be unable to exercise or transfer the right.

In the event that at any time after someone becomes an acquiring person prior to the earlier of the redemption date, as defined in the amended and restated rights agreement, or the expiration date as described in Section 13 of the amended and restated rights agreement (a “Section 13 Event”), either (a) we are involved in a merger or other business combination in which we are not the surviving corporation, (b) we are involved in a merger or other business combination in which we are the surviving corporation but all or a part of our common stock is changed or exchanged, or (c) 50% or more of our assets, cash flow or earning power is sold or transferred, each right becomes exercisable and each right will entitle its holder to receive common stock of the acquiring person having a value equal to two times the exercise price of the right.

The rights will expire at the close of business on September 21, 2014, unless redeemed before that time. At any time prior to the earlier of (a) a Section 11(a)(ii) Event, (b) the date of the first Section 13 Event, and (c) September 21, 2014, our board of directors may redeem the rights in whole, but not in part, at a price of $0.01 per right. Prior to the date of the first Section 11(a)(ii) Event or the date of the first Section 13 Event, we may amend the amended and restated rights agreement in any respect without the approval of the rights holders. However, after the date of the first Section 11(a)(ii) Event or the date of the first Section 13 Event, the amended and restated rights agreement may not be amended in any way that would adversely affect the holders of rights (other than any acquiring person or a principal party). The Junior Participating Preferred Stock ranks junior to all other series of our preferred stock as to the payment of dividends and the distribution of assets unless the terms of the series specify otherwise. You should refer to the applicable provisions of the amended and restated rights agreement, which we filed with the SEC as Exhibit 4.1 to our Current Report on Form 8-K filed September 21, 2004.

The summary of the FELINE PACS set forth below summarizes the material provisions of the related purchase contract agreement. You should refer to the actual terms of the related purchase contract agreement for the definitive terms and conditions of the FELINE PACS.

The FELINE PACS were issued under a purchase contract agreement between JPMorgan Chase Bank, the purchase contract agent, and us. On October 6, 2004, 44,000,000 Income PACS were issued and outstanding, and no Growth PACS were outstanding.


	•	the holder must purchase from us on February 16, 2005, for the stated amount of $25, newly issued shares of our common stock equal to the settlement rate described in the section of this exchange offer prospectus entitled “Description of the Purchase Contracts — Purchase of Common Stock,” and

	•	we are obligated to make unsecured contract adjustment payments to the holder at the rate of 2.50% of the $25 stated amount per year, paid quarterly, subject to our right to defer these payments; and


	•	a note having a principal amount equal to the stated amount of $25, or

	•	following a successful remarketing of the notes on November 10, 2004, the third business day immediately preceding November 16, 2004, or the occurrence of a tax event redemption prior to February 16, 2005, the appropriate applicable ownership interest in a portfolio of zero-coupon U.S. Treasury securities, which we refer to as the Treasury portfolio.

~~“Applicable ownership interest” means, with respect to an Income PACS and the U.S. Treasury securities in the Treasury portfolio:~~


	•	a 1/40, or 2.5%, undivided beneficial ownership interest in a $1,000 face amount of a principal or interest strip in a U.S. Treasury security included in the Treasury portfolio that matures on or prior to February 15, 2005; and

	•	for the scheduled interest payment date on the notes that occurs on February 16, 2005, in the case of a successful remarketing of the notes, or in the case of a tax event redemption, for each scheduled interest payment date on the notes that occurs after the tax event redemption date and on or before February 16, 2005, a 0.0406% undivided beneficial ownership interest in a $1,000 face amount of a principal or interest strip in a U.S. Treasury security included in the Treasury portfolio that matures prior to that interest payment date.

As long as a FELINE PACS is in the form of an Income PACS, the note or the appropriate applicable ownership interest in the Treasury portfolio, as applicable, forming a part of the Income PACS will be pledged to the collateral agent to secure the holder’s obligation to purchase common stock under the related purchase contract.

Unless the Treasury portfolio has replaced the notes as a component of the Income PACS as the result of a successful remarketing of the notes or ~~new 8.750%~~a tax event redemption, each holder of Income PACS has the right, at any time on or prior to the fifth business day immediately preceding February 16, 2005, to substitute for the related notes ~~and/or certificates~~held by the collateral agent, zero-coupon U.S. Treasury securities maturing on February 15, 2005, which we refer to as Treasury securities, in a total principal amount at maturity equal to the aggregate principal amount of the notes for ~~outstanding 8.125%~~which substitution is being made. This substitution will create Growth PACS, and the applicable notes will be released to the holder. The

Because Treasury securities are issued in multiples of $1,000, holders of Income PACS may make this substitution only in integral multiples of 40 Income PACS. If the Treasury portfolio has replaced the notes as a component of the Income PACS as the result of a successful remarketing of the notes or ~~outstanding 8.750%~~a tax event redemption, holders of Income PACS may make substitutions only in multiples of 32,000 Income PACS, at any time on or prior to the second business day immediately preceding February 16, 2005. In such a case, holders would also obtain the release of the appropriate applicable ownership interest in the Treasury portfolio rather than a release of the applicable notes.

~~Each Growth PACS consists of a unit with a stated amount of $25 and contains two components:~~


	•	the holder must purchase from us on February 16, 2005, for the stated amount, a fraction of a newly issued share of our common stock equal to the settlement rate described in the section of this exchange offer prospectus entitled “Description of the Purchase Contracts — Purchase of Common Stock,” and

	•	we are obligated to make unsecured contract adjustment payments to the holder at the rate of 2.50% of $25 stated amount per year, paid quarterly, subject to our right to defer these payments; and

~~(2) a 1/40, or 2.5%, undivided beneficial ownership interest in a Treasury security that matures on February 15, 2005 and has a principal amount at maturity of $1,000.~~

Contract adjustment payments are payable by us on these Growth PACS on each payment date from the later of January 14, 2002 and the last payment date on which contract adjustment payments were made. In addition, original issue discount, or OID, will accrue on the related Treasury securities.

Unless the Treasury portfolio has replaced the notes as a component of the Income PACS as a result of a successful remarketing of the notes or a tax event redemption, each holder of Growth PACS has the right, at any time on or prior to the fifth business day immediately preceding February 16, 2005, to substitute for the related Treasury securities held by the collateral agent notes in an aggregate principal ~~amounts~~amount equal to the aggregate principal amount at maturity of the Treasury securities. This substitution would create Income PACS, and the applicable Treasury securities would be released to the holder.

Because Treasury securities are issued in integral multiples of $1,000, holders of Growth PACS may make this substitution only in integral multiples of 40 Growth PACS. If the Treasury portfolio has replaced the notes as a component of the Income PACS as the result of a successful remarketing of the notes or a tax event redemption, holders of the Growth PACS may make this substitution at any time on or prior to the second business day immediately preceding February 16, 2005, but using the appropriate applicable ownership interest in the Treasury portfolio instead of notes and only in integral multiples of 32,000 Growth PACS.


	•	deposit with the collateral agent 40 notes, and

	•	transfer 40 Growth PACS certificates to the purchase contract agent accompanied by a notice stating that the Growth PACS holder has deposited 40 notes with the collateral agent and requesting that the purchase contract agent instruct the collateral agent to release the Treasury security relating to those Growth PACS.

Upon that deposit and the receipt of an instruction from the purchase contract agent, the collateral agent will release the related Treasury securities from the pledge under the pledge agreement, free and clear of our security interest, to the purchase contract agent. The purchase contract agent will then


	•	cancel the 40 Growth PACS,

	•	transfer the related Treasury security to the holder of Growth PACS, and

	•	deliver 40 Income PACS to the holder.

~~The substituted notes will be pledged with the collateral agent to secure the Income PACS holder’s obligation to purchase common stock under the related purchase contracts.~~

~~Holders that elect to substitute pledged securities, thereby creating Growth PACS or recreating Income PACS, are responsible for any fees or expenses payable in connection with the substitution.~~

Holders of Income PACS are entitled to receive aggregate cash payments at the rate of 9.00% of the $25 stated amount per year from and after the original issue date up to but excluding February 16, 2005, payable quarterly in arrears. The quarterly payments on the Income PACS consist of interest on the related note or cash distributions on the applicable ownership interest in the Treasury portfolio, as applicable, payable at the rate of 6.50% of the $25 stated amount per year, and quarterly contract adjustment payments payable by us at the rate of 2.50% of the $25 stated amount per year, subject to our right to defer the payment of such contract adjustment payments. In addition, OID for U.S. federal income tax purposes will accrue on the related notes.

Holders who create Growth PACS will be entitled to receive quarterly contract adjustment payments payable by us at the rate of 2.50% of the $25 stated amount per year, subject to our right to defer the payments of such contract adjustment payments.

Our obligations with respect to the contract adjustment payments are subordinate and junior in right of payment to our senior indebtedness. “Senior indebtedness” with respect to the contract adjustment payments means indebtedness of any kind provided the instrument under which such indebtedness is incurred does not ~~exchanged,~~expressly provide otherwise. The notes are our senior unsecured obligations and rank equal in right of payment with all of our other senior unsecured obligations.

~~Holders of purchase contracts forming part of the Income PACS or Growth PACS, in their capacities as such holders, have no voting or other rights in respect of our common stock.~~

~~Interest of Directors and Officers; Current Transactions Concerning the Income PACS~~

Based on our records and on information provided to us by our executive officers and directors, neither we nor any of our executive officers, directors, subsidiaries or affiliates, or associates of the foregoing beneficially own Income PACS. Further, based on our records and on information provided to us by our executive officers and directors, neither we nor any of our executive officers, directors, subsidiaries or affiliates, or associates of the foregoing, engaged in any transactions involving Income PACS during the sixty business days preceding the date of this exchange offer prospectus.

Neither we nor, to our knowledge, any of our principal executive officers or directors is a party to any contract, arrangement, understanding or relationship, whether or not legally enforceable, with any other person or entity with respect to any of our securities, including any contract, arrangement, understanding or relationship concerning the transfer or the voting of any such securities, joint ventures, loan or option arrangements, puts or call, guaranties of loans, guarantees against loss or the giving or withholding of proxies, consents or authorization.

The summary of the purchase contracts, the remarketing agreement and pledge agreement set forth below summarizes the material provisions of those agreements. You should refer to the actual terms of the agreements for the definitive terms and conditions of the purchase contracts, the remarketing agreement and pledge agreement.

Each purchase contract underlying a FELINE PACS obligates the holder of the purchase contract to purchase, and us to sell, on February 16, 2005, for an amount in cash equal to $25, the stated amount of the FELINE PACS, newly issued shares of common stock equal to the “settlement rate.” The settlement rate will be ~~made~~calculated, subject to adjustment under the circumstances described in “— Anti-Dilution Adjustments,” as follows:


	•	if the applicable market value of our common stock is greater than the appreciation cap price of $41.25, which is 65.00% above $25.00, the settlement rate will be equal to one (1.0000) share multiplied by the quotient of the appreciation cap price of $41.25 divided by the applicable market value of our common stock as of the settlement date;

	•	if the applicable market value of our common stock is less than or equal to the appreciation cap price of $41.25, the settlement rate will be one (1.0000) share.

“Applicable market value” of our common stock means the average of the closing price per share of common stock on each of the twenty consecutive trading days ending on the third trading day immediately preceding February 16, 2005.

“Closing price” of our common stock on any date of determination means the closing sale price (or, if no closing price is reported, the last reported sale price) of our common stock on the New York Stock Exchange on that date or, if the common stock is not listed for trading on the New York Stock Exchange on any such date, as reported in the composite transactions for the principal United States national or regional securities exchange on which the common stock is so listed. If the common stock is not so listed on a United States national or regional securities exchange, the closing price means the last closing sale price of the common stock as reported by the Nasdaq Stock Market, or, if the common stock is not so reported, the last quoted bid price for the common stock in the over-the-counter market as reported by the National Quotation Bureau or similar organization. If the bid price is not available, the closing price means the market value of the common stock on the date of determination as determined by a nationally recognized independent investment banking firm retained by us for this purpose.

A “trading day” means a day on which the common stock is not suspended from trading on any national or regional securities exchange or association or over-the-counter market at the close of business and has traded at least once on the national or regional securities exchange or association or over-the-counter market that is the primary market for the trading of the common stock.

We will not issue any fractional shares of common stock pursuant to the purchase contracts. In lieu of fractional shares otherwise issuable (calculated on an aggregate basis) in respect of purchase contracts being settled by a holder of Income PACS or Growth PACS, the holder will be entitled to receive an amount of cash equal to the fraction of a share times the applicable market value.


	•	a holder of Income PACS or Growth PACS has settled the related purchase contracts upon the occurrence of a cash merger through the early delivery of cash to the purchase contract agent in the manner described under “— Early Settlement Upon Cash Merger,”

	•	a holder of Income PACS that includes notes has settled the related purchase contracts with separate cash on the business day immediately preceding February 16, 2005 pursuant to prior notice given in the manner described under “— Notice to Settle with Cash,”


	•	a holder of Income PACS has had the notes related to the holder’s purchase contracts remarketed on the third business day immediately preceding November 16, 2004 in the manner described herein, or

	•	an event described under “— Termination” below has occurred,


	•	in the case of Income PACS, unless the Treasury portfolio has replaced the notes as a component of the Income PACS as the result of a successful remarketing of the notes or a tax event redemption, the collateral agent will, for our benefit and at our direction, exercise its rights as a secured party to dispose of the notes in accordance with applicable law, and

	•	in the case of Growth PACS or, in the case of Income PACS, in the event that the Treasury portfolio has replaced the notes as a component of the Income PACS as the result of a successful remarketing of the notes or a tax event redemption, the principal amount of the related Treasury securities, or the appropriate applicable ownership interest of the Treasury portfolio, as applicable, when paid at maturity, will automatically be applied to satisfy in full the holder’s obligation to purchase common stock under the related purchase contracts.

The common stock will then be issued and delivered to the holder or the holder’s designee, upon presentation and surrender of the certificate evidencing the FELINE PACS and payment by the holder of any transfer or similar taxes payable in connection with the issuance of the common stock to any person other than the record holder of the outstanding 8.125% notes or outstanding 8.750% notes tendered; - tendered certificates for outstanding 8.125% notes or outstanding 8.750% notes are recorded in the name of any person other than the person signing any letter of transmittal; or - a transfer tax is imposed for any reason other than the transfer and exchange of outstanding 8.125% notes or outstanding 8.750% notes to us or our order, 33 ~~then the amount of any such transfer taxes, whether imposed on the record holder or any other person, will be payable by the tendering holder prior~~holder.

Pursuant to the ~~issuance of the new 8.125% notes or new 8.750% notes. DESCRIPTION OF THE NEW SECURITIES We will issue the new 8.125% notes~~remarketing agreement and the new 8.750% notes under an indenture dated as of November 10, 1997, as amended by a seventh supplemental indenture between us and JPMorgan Chase Bank (successor trustee to Bank One Trust Company, N.A.), as trustee. The outstanding 8.125% notes and the outstanding 8.750% notes were also issued under this indenture and supplemental indenture. The terms of the outstanding 8.125% notes and the outstanding 8.750% notes are identical in all material respectssubject to the terms of the ~~new 8.125%~~supplemental remarketing agreement among the remarketing agent, the purchase contract agent and us, unless a tax event redemption has occurred, the notes of Income PACS holders will be remarketed and sold to third parties on November 10, 2004, the third business day immediately preceding November 16, 2004.

The remarketing agent must use its reasonable efforts to remarket these notes at an aggregate price of approximately 100.5% of the Treasury portfolio purchase price described below. The portion of the proceeds from the remarketing equal to the Treasury portfolio purchase price will be applied to purchase a Treasury portfolio consisting of:


	•	interest or principal strips of U.S. Treasury securities that mature on or prior to February 15, 2005 in an aggregate amount equal to the principal amount of the notes included in Income PACS, and

	•	interest or principal strips of U.S. Treasury securities that mature on or prior to February 15, 2005 in an aggregate amount equal to the aggregate interest payment that would be due on that date on the principal amount of the notes included in Income PACS if the interest rate on the notes was not reset as described in “Description of the Notes-Market Rate Reset.”

The Treasury portfolio will be substituted for the notes and will be pledged to the ~~new 8.750%~~collateral agent to secure the Income PACS holders’ obligation to purchase our common stock under the purchase contracts.

In addition, the remarketing agent may deduct, as a remarketing fee, an amount not exceeding 25 basis points (0.25%) of the Treasury portfolio purchase price from any amount of the proceeds in excess of the Treasury portfolio purchase price. The remarketing agent will then remit any remaining portion of the proceeds for the benefit of the holders. Income PACS holders whose notes ~~respectively, except~~are remarketed will not otherwise be responsible for the payment of any remarketing fee in connection with the remarketing.

As used in this context, “Treasury portfolio purchase price” means the lowest aggregate price quoted by a primary U.S. government securities dealer in New York City to the quotation agent on the third business day immediately preceding November 16, 2004 for the purchase of the Treasury portfolio described above for settlement on November 16, 2004.

~~“Quotation agent” means Merrill Lynch Government Securities, Inc. or its successor or any other primary U.S. government securities dealer in New York City selected by us.~~

If (1) despite using its reasonable efforts, the remarketing agent cannot remarket the related notes, other than to us, at a price equal to or greater than 100% of the Treasury portfolio purchase price, or (2) the remarketing has not occurred because a condition precedent to the remarketing has not been fulfilled, in each case resulting in a failed remarketing, the notes will continue to be a component of Income PACS, and another remarketing may be attempted as described below.

If the remarketing of the notes on the third business day preceding November 16, 2004 has resulted in a failed remarketing, and unless a tax event redemption has occurred, the notes of Income PACS holders who have failed to notify the purchase contract agent on or prior to the fifth business day immediately preceding February 16, 2005 of their intention to settle the related purchase contracts with separate cash will be remarketed on the third business day immediately preceding February 16, 2005.

The remarketing agent must then use its reasonable efforts to remarket these notes at a price of approximately 100.5% of the aggregate principal amount of the notes. The portion of the proceeds from this remarketing equal to the aggregate principal amount of the notes will be automatically applied to satisfy in full the Income PACS holders’ obligations to purchase common stock.

In addition, the remarketing agent may deduct, as a remarketing fee, an amount not exceeding 25 basis points (0.25%) of the aggregate principal amount of the remarketed notes from any amount of the proceeds in excess of the aggregate principal amount of the remarketed notes. The remarketing agent will then remit any remaining portion of the proceeds for the benefit of the holders. Income PACS holders whose notes are remarketed will not otherwise be responsible for the payment of any remarketing fee in connection with the remarketing.

If (1) despite using its reasonable efforts, the remarketing agent cannot remarket the related notes, other than to us, at a price equal to or greater than 100% of the aggregate principal amount of the notes, or (2) the remarketing has not occurred because a condition precedent to the remarketing has not been fulfilled, in each case resulting in a failed remarketing, the collateral agent will, for our benefit and at our direction, exercise its rights as a secured party to dispose of the notes in accordance with applicable law and satisfy in full each holder’s obligation to purchase common stock under the related purchase contracts.

We will cause a notice of any failed remarketing to be published on the second business day immediately preceding November 16, 2004 or February 16, 2005, as applicable, by publication in a daily newspaper in the English language of general circulation in New York City, which is expected to beThe Wall Street Journal, including, in the case of a second failed remarketing, the procedures that must be followed if a note holder wishes to exercise its right to put its note to us as described in this exchange offer prospectus. In addition, we will request, not later than seven nor more than 15 calendar days prior to a remarketing date, that the ~~outstanding 8.125%~~depositary notify its participants holding notes, Income PACS and Growth PACS of the remarketing and the procedures to be followed in the remarketing. If required by applicable law, we will endeavor to ensure that a registration statement with regard to the full amount of the notes to be remarketed will be effective in a form that will enable the remarketing agent to rely on it in connection with the remarketing process. Merrill Lynch, Pierce, Fenner & Smith Incorporated will be the remarketing agent.

~~Prior to the settlement date, if we are involved in a merger in which at least 30% of the consideration for our common stock consists of cash or cash equivalents, which we refer to as a cash~~

A holder of FELINE PACS may settle the related purchase contract with separate cash prior to 11:00 a.m., New York City time, on the business day immediately preceding February 16, 2005. If a successful remarketing of the notes ~~contain terms~~has not occurred on November 10, 2004, a holder of an Income PACS wishing to settle the related purchase contract with separate cash must notify the purchase contract agent by use of a notice substantially in the form of “Notice to Settle by Cash” attached as an exhibit to the purchase contract agreement completed and executed as indicated on or prior to 5:00 p.m., New York City time, on the fifth business day immediately preceding February 16, 2005. If a successful remarketing of the notes occurs on November 10, 2004, a holder of an Income PACS (which will then consist of a purchase contract and the Treasury portfolio) wishing to settle the related purchase contract with separate cash must notify the purchase contract agent by presenting the documents referred to above on or prior to 5:00 p.m., New York City time, on the second business day immediately preceding February 16, 2005. If a holder of an Income PACS consisting of a purchase contract and the related note who has given notice of its intention to settle the related purchase contract with separate cash fails to deliver the cash to the collateral agent on the business day immediately preceding February 16, 2005, the collateral agent will, for our benefit and at our direction, exercise its right as a secured party to dispose of, in accordance with applicable law, the related note to satisfy in full, from the disposition of the note, the holder’s obligation to purchase common stock under the related purchase contracts.

~~Contract adjustment payments in respect of Income PACS and Growth PACS are fixed at a rate per year of 2.50% of the $25 stated amount per purchase contract. Contract adjustment payments payable~~

Contract adjustment payments are payable to the holders of purchase contracts as they appear on the books and records of the purchase contract agent on the relevant record dates, which is on the first day of the month in which the relevant payment date falls. These distributions will be paid through the purchase contract agent, who will hold amounts received in respect of the contract adjustment payments for the benefit of the holders of the purchase contracts relating to the FELINE PACS.

If any date on which contract adjustment payments are to be made on the purchase contracts related to the FELINE PACS is not a business day, then payment of the contract adjustment payments payable on that date will be made on the next succeeding day which is a business day, and no interest or payment will be paid in respect of the delay. A business day means any day other than a Saturday, Sunday or any other day on which banking institutions in New York City or Chicago, Illinois are permitted or required by any applicable law to close or on which the trustee for the notes is closed for business.

Our obligations with respect to ~~transfer restrictions (and therefore~~contract adjustment payments are subordinated and junior in right of payment to our obligations under any of our senior indebtedness.

We will have the right to defer payment of all or part of the contract adjustment payments on the purchase contracts until no later than the purchase contract settlement date. We will pay interest on any deferred contract adjustment payment at a rate of 9.00% per year, compounded quarterly, until paid. If the purchase contracts are settled early or terminated, a holder of Income PACS will have no right to receive any deferred and unpaid contract adjustment payments. In the event we exercise our option to defer the payment of contract adjustment payments, then until the deferred contract adjustment payments have been paid, we and our subsidiaries will not, with certain exceptions, declare or pay dividends on, make distributions with respect to, or redeem, purchase or acquire, or make a liquidation payment with respect to, any of our capital stock. We have no present intention of exercising our right to defer the payment of the contract adjustment payments.

~~The formula for determining the settlement rate is subject to adjustment, without duplication, upon the occurrence of certain events, including:~~


	•	the payment of dividends and other distributions of common stock on common stock;

	•	the issuance to all holders of common stock of rights, warrants or options (other than any dividend reinvestment or share purchase plans) entitling them, for a period of up to 45 days, to subscribe for or purchase common stock at less than the current market price thereof;

	•	subdivisions, splits and combinations of common stock;

	•	distributions to all holders of common stock of evidences of our indebtedness or assets (including securities, but excluding any dividend or distribution covered by the first two bullets above and any dividend or distribution paid exclusively in cash);

	•	distributions consisting exclusively of cash to all holders of common stock in an aggregate amount that, together with (1) other all-cash distributions made within the preceding 12 months and (2) any cash and the fair market value, as of the expiration of the tender or exchange offer referred to below, of consideration payable in respect of any tender or exchange offer by us or any of our subsidiaries for common stock concluded within the preceding 12 months, exceeds 15% of our aggregate market capitalization (aggregate market capitalization being the product of the current market price of common stock multiplied by


		the number of shares of common stock then outstanding) on the date for the determination of holders of shares of common stock entitled to receive such distribution; and

	•	the successful completion of a tender or exchange offer made by us or any of our subsidiaries for common stock which involves an aggregate consideration that, together with (1) any cash and the fair market value of other consideration payable in respect of any tender or exchange offer by us or any of our subsidiaries for the common stock concluded within the preceding 12 months and (2) the aggregate amount of any all cash distributions to all holders of common stock made within the preceding 12 months, exceeds 15% of our aggregate market capitalization on the expiration of the tender or exchange offer.

The “current market price” per share of common stock on any day means the average of the daily closing prices for the ten consecutive trading days ending not later than the earlier of the day in question and the day before the “ex date” with respect to the issuance or distribution requiring the computation. For purposes of this paragraph, the term “ex date,” when used with respect to any issuance or distribution, shall mean the first date on which the common stock trades regular way on the applicable exchange or in the applicable market without the right to receive the issuance or distribution.

In the case of certain reclassifications, consolidations, mergers, sales or transfers of assets or other transactions pursuant to which the common stock is converted into the right to receive other securities, cash or property, each purchase contract then outstanding would, without the consent of the holders of the related Income PACS or Growth PACS, as the case may be, become a contract to purchase only the kind and amount of securities, cash and other property receivable upon such reorganization event (except as otherwise specifically provided, without any interest thereon and without any right to dividends or distributions thereon which have a record date that is prior to the purchase contract settlement date) which would have been received by the holder of the related Income PACS or Growth PACS immediately prior to the date of consummation of such transaction if such holder had then settled such purchase contract.

If at any time we make a distribution of property to our stockholders which would be taxable to the stockholders as a dividend for U.S. federal income tax purposes (i.e., distributions out of our current or accumulated earnings and profits or evidences of indebtedness or assets, but generally not stock dividends or rights to subscribe for capital stock) and, pursuant to the settlement rate adjustment provisions of the purchase contract agreement, the settlement rate is increased, this increase may give rise to a taxable dividend to holders of FELINE PACS.

In addition, we may make increases in the settlement rate to avoid or diminish any income tax to holders of our capital stock resulting from any dividend or distribution of capital stock (or rights to acquire capital stock) or from any event treated as such for income tax purposes or for any other reasons.

Adjustments to the settlement rate are calculated to the nearest 1/10,000th of a share. No adjustment in the settlement rate will be required unless the adjustment would require an increase or decrease of at least one percent in the settlement rate. However, any adjustments which are not ~~freely tradeable).~~required to be made because they would have required an increase or decrease of less than one percent will be carried forward and taken into account in any subsequent adjustment.

We will be required to provide an officer’s certificate to the purchase contract agent setting forth the adjusted settlement rate and its calculation and, within ten business days following the adjustment of the settlement rate, to provide written notice to the holders of FELINE PACS of the occurrence of that event and a statement specifying in reasonable detail the method by which the adjustment to the settlement rate was determined and the revised settlement rate.

~~Each adjustment to the settlement rate will result in a corresponding adjustment to the number of shares of common stock issuable upon early settlement of a purchase contract.~~

The purchase contracts, and our rights and obligations and the rights and obligations of the holders of the FELINE PACS under the purchase contracts, including the right and obligation to purchase common stock and the right to receive accumulated contract adjustment payments or deferred contract adjustment payments, will immediately and automatically terminate upon the occurrence of certain events of bankruptcy, insolvency or reorganization with respect to us. Upon any termination, the collateral agent will release the related notes, the appropriate applicable ownership interest of the Treasury portfolio or the Treasury securities, as the case may be, held by it to the purchase contract agent for distribution to the holders, subject, in the case of the Treasury portfolio or the Treasury securities, to the purchase contract agent’s disposition of the subject securities for cash, and the payment of this cash to the holders, to the extent that the holders would otherwise have been entitled to receive less than $1,000 principal amount at maturity of any such security. Upon any termination, however, the release and distribution may be subject to a delay. In the event that we become the subject of a case under the U.S. Bankruptcy Code, the delay may occur as a result of the automatic stay under the Bankruptcy Code and continue until the automatic stay has been lifted.

Pledged securities are pledged to the collateral agent, for our benefit, pursuant to the pledge agreement to secure the obligations of holders of FELINE PACS to purchase common stock under the related purchase contracts. The rights of holders of FELINE PACS to the related pledged securities are subject to our security interest created by the pledge agreement.

~~No holder of Income PACS or Growth PACS is permitted to withdraw the pledged securities related to the Income PACS or Growth PACS from the pledge arrangement except~~


	•	to substitute Treasury securities for the related notes or the appropriate applicable ownership interest of the Treasury portfolio, as the case may be, as provided for under “Description of FELINE PACS — Creating Growth PACS,”

	•	to substitute notes or the appropriate applicable ownership interest of the Treasury portfolio, as the case may be, for the related Treasury securities, as provided for under “Description of FELINE PACS — Recreating Income PACS,” or

	•	upon the termination or early settlement of the related purchase contracts.

Subject to the security interest and the terms of the ~~new 8.125% notes~~purchase contract agreement and the ~~new 8.750%~~pledge agreement, each holder of Income PACS, unless the Treasury portfolio has replaced the notes ~~include those set forth~~as a component of Income PACS as a result of a successful remarketing of the notes or a tax event redemption, is entitled through the purchase contract agent and the collateral agent to all of the proportional rights and preferences of the related notes, including distribution, voting, redemption, repayment and liquidation rights. Each holder of Growth PACS and each holder of Income PACS, if the Treasury portfolio has replaced the notes as a component of Income PACS as a result of a successful remarketing of the notes or a tax event redemption, will retain beneficial ownership of the related Treasury securities or the appropriate applicable ownership interest of the Treasury portfolio, as applicable, pledged in respect of the related purchase contracts. We have no interest in the ~~indenture and those made a part of~~pledged securities other than our security interest.

Unless (i) the ~~indenture by reference~~purchase contracts have terminated prior to February 16, 2005, (ii) the related pledged securities have been transferred to the Trust Indenture Act of 1939. The following description is a summary of the material provisions of the new 8.125% notes, the new 8.750% notes and the indenture. It does not restate the indenture in its entirety. We urge you to read the indenture and the seventh supplemental indenture because those documents, and not this description, define your rights as holders of the new 8.125% notes and the new 8.750% notes. Copies of the indenture and the seventh supplemental indenture are available at the offices of the trustee and have been filed or incorporated by reference as exhibitspurchase contract agent for distribution to the ~~registration statement of which this prospectus is~~holders, and (iii) a ~~part. TERMS AND CONDITIONS The new 8.125% notes will mature on March 15, 2012. The new 8.750% notes will mature on March 15, 2032. Interest will be payable semi-annually on March 15~~holder fails to present and ~~September 15 of each year, beginning September 15, 2003,~~surrender the FELINE PACS certificate evidencing the holder’s Income PACS or Growth PACS to the ~~person~~purchase contract agent, the collateral agent will, upon receipt, if any, of payments on the pledged securities, distribute the payments to the purchase contract agent, which will in turn distribute those payments to the persons in whose names the ~~new 8.125% notes~~related Income PACS or ~~the new 8.750% notes~~Growth PACS are registered at the close of business on the record date immediately preceding ~~March 1 and September 1, respectively, subject to certain exceptions. Holders of new 8.125% notes and new 8.750% notes will receive interest from March 15, 2003,~~ the date of payment.

The notes were issued as a separate series of securities under an Indenture dated as of November 10, 1997, as supplemented by a supplemental indenture dated as of January 14, 2002 between us and JPMorgan Chase Bank (as successor trustee to Bank One Trust Company, National Association (successor in interest to the ~~last~~First National Bank of Chicago)), as trustee. The notes were issued in the aggregate principal amount of $1,100,000,000. The notes will mature on February 16, 2007. The notes may not be redeemed prior to their stated maturity except as described below. The notes constitute senior debt securities.

The notes are our direct, senior and unsecured obligations and rank without preference or priority among themselves and equally with all of our existing and future unsecured and unsubordinated indebtedness. The notes are not subject to a sinking fund provision. Unless a tax event redemption has occurred prior to February 16, 2007, the entire principal amount of the notes will mature and become due and payable, together with any accrued and unpaid interest, on February 16, 2007. Except for a tax event redemption, the notes are not redeemable by us.

Notes forming a part of the Income PACS were issued in certificated form, in denominations of $25 and integral multiples of $25, without coupons, and may be transferred or exchanged, without service charge but upon payment of any taxes or other governmental charges payable in connection with the transfer or exchange, at the offices described below. Payments on notes issued as a global security are made to the depositary, a successor depositary or, in the event that no depositary is used, to a paying agent for the notes. Principal and interest with respect to certificated notes is payable, the transfer of the notes is registrable and notes are exchangeable for notes of other denominations of a like aggregate principal amount, at the office or agency maintained by us for this purpose in the Borough of Manhattan, The City of New York. However, at our option, payment of interest may be made by check mailed to the address of the holder entitled to payment or by wire transfer to an account appropriately designated by the holder entitled to payment. JPMorgan Chase Bank is the paying agent, transfer agent and registrar for the notes. We may at any time designate additional transfer agents and paying agents with respect to the notes, and may remove any transfer agent, paying agent or registrar for the notes. We are at all times required to maintain a paying agent and transfer agent for the notes in the Borough of Manhattan, The City of New York.

Any monies deposited with the trustee or any paying agent, or held by us in trust, for the payment of principal of or interest on any note and remaining unclaimed for two years after such principal or interest has become due and payable will, at our request, be repaid to us or released from trust, as applicable, and the holder of the note must thereafter look, as a general unsecured creditor, only to us for the payment thereof.

The indenture does not contain provisions that afford holders of the notes protection in the event of a highly leveraged transaction or other similar transaction involving us that may adversely affect the holders.

Each note bears interest initially at the rate of 6.50% per year from the original issue date, payable quarterly in arrears on February 16, May 16, August 16 and November 16 of each year, each an “interest payment date,” commencing May 16, 2002, to the person in whose name the note is registered at the close of business on the ~~outstanding 8.125%~~first day of the month in which the interest payment date falls. The original issue discount rules that apply to contingent payment debt instruments should govern the income inclusions with respect to the notes ~~and the outstanding 8.750% notes. Interest~~for U.S. federal income tax purposes.

The applicable interest rate on the ~~new 8.125%~~ notes will be reset on the third business day immediately preceding November 16, 2004 to the reset rate described below under “— Market Rate Reset,” unless the

~~The amount of interest payable for any period will be computed on the basis of a 360-day year consisting of twelve 30-day months.~~

The ~~new 8.125% notes~~reset rate will be equal to the sum of the reset spread and the ~~new 8.750% notes~~rate of interest on the applicable benchmark Treasury in effect on the third business day immediately preceding November 16, 2004 or February 16, 2005, as the case may be, and will be ~~our unsecured and unsubordinated~~determined by the reset agent. In the case of a reset on the third business day immediately preceding November 16, 2004, the reset rate will be the rate determined by the reset agent as the rate the notes should bear in order for the notes included in Income PACS to have an approximate aggregate market value on the reset date of 100.5% of the Treasury portfolio purchase price described under “Description of the Purchase Contracts — Remarketing.” In the case of a reset on the third business day immediately preceding February 16, 2005, the reset rate will be the rate determined by the reset agent as the rate the notes should bear in order for each note to have an approximate market value of 100.5% of the principal amount of the note. The reset rate will in no event exceed the maximum rate permitted by applicable law.

The “applicable benchmark Treasury” means direct obligations ~~ranking equally with our other outstanding unsecured and unsubordinated indebtedness. The new 8.125% notes~~of the United States, as agreed upon by us and the ~~new 8.750%~~reset agent (which may be obligations traded on a when-issued basis only), having a maturity comparable to the remaining term to maturity of the notes, which will be ~~redeemable,~~two years or two and one-quarter years as applicable. The rate for the applicable benchmark Treasury will be the bid side rate displayed at 10:00 A.M., New York City time, on the third business day immediately preceding November 16, 2004 or February 16, 2005, as applicable, in the Telerate system (or if the Telerate system is no longer available on that date or, in the opinion of the reset agent (after consultation with us), no longer an appropriate system from which to obtain the rate, such other nationally recognized quotation system as, in the opinion of the reset agent (after consultation with us), is appropriate). If this rate is not so displayed, the rate for the applicable benchmark Treasury will be, as calculated by the reset agent, the yield to maturity for the applicable benchmark Treasury, expressed as a bond equivalent on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis, and computed by taking the arithmetic mean of the secondary market bid rates, as of 10:30 A.M., New York City time, on the third business day immediately preceding November 16, 2004 or February 16, 2005, as applicable, of three leading U.S. government securities dealers selected by the reset agent (after consultation with us) (which may include the reset agent or an affiliate thereof). Merrill Lynch, Pierce, Fenner & Smith Incorporated will be the reset agent.

On the seventh business day immediately preceding November 16, 2004 or February 16, 2005, the applicable benchmark Treasury to be used to determine the reset rate on the third business day prior to November 16, 2004 or February 16, 2005, as applicable, will be selected, and the reset spread to be added to the rate on the applicable benchmark Treasury in effect on the third business day immediately preceding November 16, 2004 or February 16, 2005, as applicable, will be established by the reset agent, and the reset spread and the applicable benchmark Treasury will be announced by us (the “reset announcement date”). We will cause a notice of the reset spread and the applicable benchmark Treasury to be published on the business day following the reset announcement date by publication in a daily newspaper in the English language of general circulation in New York City, which is expected to beThe Wall Street Journal.We will request, not later than seven nor more than 15 calendar days prior to the reset announcement date, that the depositary notify its participants holding notes, Income PACS or Growth PACS of the reset announcement date and of the procedures that must be followed if any owner of Income PACS wishes to settle the related purchase contract with cash on the business day immediately preceding February 16, 2005.

On or prior to the fifth business day immediately preceding November 16, 2004, in the case of the remarketing to be conducted on the third business day preceding November 16, 2004, or February 16, 2005, in the case of the remarketing, if any, to be conducted on the third business day preceding February 16, 2005, but no earlier than the payment date immediately preceding November 16, 2004 or February 16, 2005, as applicable, holders of notes that are not components of Income PACS may elect to have their notes remarketed in the same manner as notes that are components of Income PACS by delivering their notes along with a notice of this election to the collateral agent. The collateral agent will hold the notes in an account separate from the collateral account in which the pledged securities will be held. Holders of notes electing to have their notes remarketed will also have the right to withdraw the election on or prior to the fifth business day immediately preceding November 16, 2004 or February 16, 2005, as applicable.

If the remarketing of the notes on the third business day immediately preceding February 16, 2005 has occurred and has resulted in a failed remarketing, holders of notes following February 16, 2005 will have the right to put the notes to us on April 1, 2005, upon at least three business days’ prior notice, at a price equal to 100% of the principal amount, plus accrued and unpaid interest, if any.

If a tax event occurs and is continuing, we may, at our option, redeem the notes in whole, orbut not in part, at any time at ~~our option, at~~ a price, which we refer to as the redemption price, equal to, for each note, the ~~greater of: - 100%~~redemption amount described below plus accrued and unpaid interest, if any, to the date of redemption. Installments of interest on notes which are due and payable on or prior to a redemption date will be payable to the holders of the notes registered as such at the close of business on the relevant record dates. If, following the occurrence of a tax event, we exercise our option to redeem the notes, the proceeds of the redemption will be payable in cash to the holders of the notes. If the tax event redemption occurs prior to November 16, 2004, or if the notes are not successfully remarketed on the third business day immediately preceding November 16, 2004, prior to February 16, 2005, the redemption price for the notes forming a part of the Income PACS will be distributed to the collateral agent, who in turn will purchase the Treasury portfolio described below on behalf of the holders of Income PACS and remit the remainder of the redemption price, if any, to the purchase contract agent for payment to the holders. The Treasury portfolio will be substituted for the notes and will be pledged to the collateral agent to secure the Income PACS holders’ obligations to purchase our common stock under the purchase contracts.

~~“Tax event” means the receipt by us of an opinion of nationally recognized independent tax counsel experienced in such matters to the effect that, as a result of~~


	•	any amendment to, change in, or announced proposed change in, the laws, or any regulations thereunder, of the United States or any political subdivision or taxing authority thereof or therein affecting taxation,

	•	any amendment to or change in an interpretation or application of any such laws or regulations by any legislative body, court, governmental agency or regulatory authority, or


	•	any interpretation or pronouncement that provides for a position with respect to any such laws or regulations that differs from the generally accepted position on January 7, 2002,

which amendment, change or proposed change is effective or which interpretation or pronouncement is announced on or after January 7, 2002, there is more than an insubstantial risk that interest or original issue discount on the notes would not be deductible, in whole or in part, by us for U.S. federal income tax purposes.

The Treasury portfolio to be purchased on behalf of the holders of Income PACS will consist of interest or principal strips of U.S. Treasury securities which mature on or prior to February 15, 2005 in an aggregate amount equal to the aggregate principal amount of the notes included in Income PACS and with respect to each scheduled interest payment date on the notes that occurs after the tax event redemption date and on or before February 16, 2005, interest or principal strips of U.S. Treasury securities which mature on or prior to that interest payment date in an aggregate amount equal to the aggregate interest payment that would be due on the aggregate principal amount of the notes on that date if the interest rate of the notes was not reset on the applicable reset date.

Solely for purposes of determining the Treasury portfolio purchase price in the case of a tax event redemption date occurring after November 16, 2004, or February 16, 2005 if the remarketing of the notes on the third business day preceding November 16, 2004 resulted in a failed remarketing, “Treasury portfolio” will mean a portfolio of zero-coupon U.S. Treasury securities consisting of principal or interest strips of U.S. Treasury securities which mature on or prior to February 15, 2007 in an aggregate amount equal to the aggregate principal amount of the notes outstanding on the tax event redemption date and with respect to each scheduled interest payment date on the notes that occurs after the tax event redemption date, interest or principal strips of U.S. Treasury securities which mature on or prior to that interest payment date in an aggregate amount equal to the aggregate interest payment that would be due on aggregate principal amount of the notes outstanding on the tax event redemption date if the interest rate of the notes was not reset on the applicable reset date.

“Redemption amount” means in the case of a tax event redemption occurring prior to November 16, 2004, or prior to February 16, 2005 if the remarketing of the notes on the third business day preceding November 16, 2004 resulted in a failed remarketing, for each note the product of the principal amount of the ~~new 8.125%~~note and a fraction whose numerator is the Treasury portfolio purchase price and whose denominator is the aggregate principal amount of notes included in Income PACS, and in the case of a tax event redemption date occurring on or after November 16, 2004, or February 16, 2005 if the ~~new 8.750% notes then outstanding to be redeemed, or - the sum~~remarketing of the ~~present values~~notes on the third business day preceding November 16, 2004 resulted in a failed remarketing, for each note the product of the ~~remaining scheduled payments~~principal amount of the note and a fraction whose numerator is the Treasury portfolio purchase price and whose denominator is the aggregate principal ~~and interest thereon discounted~~amount of the notes outstanding on the tax event redemption date.

“Treasury portfolio purchase price” means the lowest aggregate price quoted by a primary U.S. government securities dealer in New York City to the quotation agent on the third business day immediately preceding the tax event redemption date ~~on a semiannual basis (assuming a 360-day year consisting~~for the purchase of ~~twelve 30-day months) at~~ the Treasury ~~Rate, as defined below, plus 37.5 basis points, plus accrued interest thereon to~~portfolio for settlement on the ~~date~~tax event redemption date.

~~“Quotation agent” means Merrill Lynch Government Securities, Inc. or its successor or any other primary U.S. government securities dealer in New York City selected by us.~~

Notice of ~~redemption. We~~any redemption will ~~mail notice of redemption~~be mailed at least 30 days but not more than 60 days before the ~~applicable~~ redemption date to each registered holder of ~~the new 8.125% notes or new 8.750%~~ notes to be ~~redeemed. Upon the~~redeemed at its registered address. Unless we default in payment of the redemption price, ~~plus accrued~~on and ~~unpaid~~after the redemption date interest ~~if any, to the date of redemption, interest will~~shall cease to accrue on ~~and after~~ the ~~applicable redemption date on~~notes. In the ~~new 8.125%~~event any notes ~~and the new 8.750% notes or portions thereof~~are called for ~~redemption. 34~~ There is no provision for a sinking fund applicable to the notes. We may, from time to time, without the consent of the existing holders of the relevant series of notes, issue additional notes under the indenture having the same ranking and the same interest rate, maturity and other terms as the notes of such series in all respects except the issue date, the issue price and the initial interest payment date. Any additional notes will, together with the applicable notes, constitute a single series of notes under the indenture. COVENANTS Liens. The indenture refers to any of our instruments securing indebtedness, such as a mortgage, pledge, lien, security interest or encumbrance on any of our property, as a "mortgage." The indenture further provides that, subject to certain exceptions,redemption, neither we ~~will not,~~ nor will we permit any subsidiary to, issue, assume or guarantee any indebtedness secured by a mortgage unless we provide equal and proportionate security for the senior debt securities, including the new 8.125% notes and the new 8.750% notes, we issue under the indenture. Among these exceptions are: - certain purchase money mortgages; - certain preexisting mortgages on any property acquired or constructed by us or a subsidiary; - certain mortgages created within one year after completion of such acquisition or construction; - certain mortgages created on any contract for the sale of products or services related to the operation or use of any property acquired or constructed within one year after completion of such acquisition or construction; - mortgages on property of a subsidiary existing at the time it became our subsidiary; and - mortgages, other than as specifically excepted, in an aggregate amount which, at the time of, and after giving effect to, the incurrence does not exceed five percent of Consolidated Net Tangible Assets, as defined below. Consolidation, Merger, Conveyance of Assets. The indenture provides, in general, that we will not consolidate with or merge into any other entity or convey, transfer or lease our properties and assets substantially as an entirety to any person, unless: - the corporation, limited liability company, limited partnership, joint stock company or trust formed by such consolidation or into which we are merged or the person which acquires such assets expressly assumes our obligations under the indenture and the debt securities issued under the indenture; and - immediately after giving effect to such transaction, no event of default, and no event which, after notice or lapse of time or both, would become an event of default, shall have happened and be continuing. MODIFICATION OF THE INDENTURE The indenture provides that we and the trustee may enter into supplemental indentures which conform to the provisions of the Trust Indenture Act of 1939 without the consent of the holders to, in general: - secure any debt securities; - evidence the assumption by a successor person of our obligations; - add further covenants for the protection of the holders; - cure any ambiguity or correct any inconsistency in the indenture, so long as such action will ~~not adversely affect the interests of the holders; 35~~ - establish the form or terms of debt securities of any series; and - evidence the acceptance of appointment by a successor trustee. The indenture also permits us and the trustee to: - add any provisions to the indenture; - change in any manner the indenture; - eliminate any of the provisions of the indenture; and - modify in any way the rights of the holders of debt securities of each series affected. The above actions require the consent of the holders of at least a majority in principal amount of debt securities of each series issued under the indenture then outstanding and affected. These holders will vote as one class to approve such changes. The 8.125% notes and the 8.750% notes will constitute two different series under the indenture. Such changes must, however, conform to the Trust Indenture Act of 1939 and we and the trustee may not, without the consent of each holder of outstanding debt securities affected thereby: - extend the final maturity of the principal of any debt securities; - reduce the principal amount of any debt securities; - reduce the rate or extend the time of payment of interest on any debt securities; - reduce any amount payable on redemption of any debt securities; - change the currency in which the principal, including any amount in respect of original issue discount, or interest on any debt securities is payable; - reduce the amount of any original issue discount security payable upon acceleration or provable in bankruptcy; - alter certain provisions of the indenture relating to debt securities not denominated in U.S. dollars or for which conversion to another currency isbe required to ~~satisfy~~register the ~~judgment~~transfer of ~~any court; - impair the right to institute suit for the enforcement of any payment on any debt securities when due;~~ or - reduce the percentage in principal amount of debt securities of any series issued under the indenture, the consent of the holders of which is required for any such modification. EVENTS OF DEFAULT In general, the indenture defines an event of default with respect to debt securities of any series issued under the indenture as being: (a) default in payment of any principal of the debt securities of such series, either at maturity, upon any redemption, by declaration or otherwise; (b) default for 30 days in payment of any interest on any debt securities of such series unless otherwise provided; (c) default for 90 days after written notice in the observance or performance of any covenant or warranty in the debt securities of such series or the indenture other than - default in or breach of a covenant which is dealt with otherwise below, or - if certain conditions are met, if the events of default described in this clause (c) are the result of changes in generally accepted accounting principles; or (d) certain events of bankruptcy, insolvency or reorganization of us. 36 In general, the indenture provides that if an event of default described in clauses (a), (b) or (c) above occurs and does not affect all series of debt securities then outstanding, the trustee or the holders of debt securities may then declare the following amounts to be due and payable immediately: - the entire principal of all debt securities of each series affected by the event of default; and - the interest accrued on such principal. Such a declaration by the holders requires the approval of at least 25 percent in principal amount of the debt securities of each series issued under the indenture and then outstanding, treated as one class, which are affected by the event of default. The indenture also generally provides that if a default described in clause (c) above which is applicable to all series of debt securities then outstanding or certain events of bankruptcy, insolvency and reorganization of us occur and are continuing, the trustee or the holders of debt securities may declare the entire principal of all such debt securities and interest accrued thereon to be due and payable immediately. This declaration by the holders requires the approval of at least 25 percent in principal amount of all debt securities issued under the indenture and then outstanding, treated as one class. Upon certain conditions, the holders of a majority in aggregate principal amount of the debt securities of all such affected series then outstanding may annul such declarations and waive the past defaults. However, the majority holders may not annul or waive a continuing default in payment of principal of, premium, if any, or interest on such debt securities. The indenture provides that the holders of debt securities issued under the indenture, treated as one class, will indemnify the trustee before the trustee exercises any of its rights or powers under the indenture. This indemnification is subject to the trustee's duty to act with the required standard of care during a default. The holders of a majority in aggregate principal amount of the outstanding debt securities of each series affected, treated as one class, issued under the indenture may direct the time, method and place of: - conducting any proceeding for any remedy available to the trustee, or - exercising any trust or power conferred on the trustee. This right of the holders of debt securities is, however, subject to the provisions in the indenture providing for the indemnification of the trustee and other specified limitations. In general, the indenture provides that holders of debt securities issued under the indenture may only institute an action against us under the indenture if the following four conditions are fulfilled: - the holder previously has given to the trustee written notice of default and the default continues; - the holders of at least 25 percent in principal amount of the debt securities of each affected series (treated as one class) issued under the indenture and then outstanding have both (1) requested the trustee to institute such action and (2) offered the trustee reasonable indemnity; - the trustee has not instituted such action within 60 days of receipt of such request; and - the trustee has not received direction inconsistent with such written request by the holders of a majority in principal amount of the debt securities of each affected series (treated as one class) issued under the indenture and then outstanding. The above four conditions do not apply to actions by holders of the debt securities under the indenture against us for payment of principal or interest on or after the due date provided. The indenture contains a covenant that we will file annually with the trustee a certificate of no default or a certificate specifying any default that exists. 37 DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE We can discharge or defease our obligations under the indenture as set forth below. Under terms satisfactory to the trustee, we may discharge certain obligations to holders of any series of debt securities issued under the indenture which have not already been delivered to the trustee for cancellation. Such debt securities must also: - have become due and payable; - be due and payable by their terms within one year; or - be scheduled for redemption by their terms within one year. We may discharge any series of debt securities by irrevocably depositing an amount certified to be sufficient to pay at maturity or upon redemption the principal of and interest on such debt securities. We may make such deposit in cash or, in the case of debt securities payable only in U.S. dollars, U.S. government obligations, as defined in the indenture. We may also, upon satisfaction of the conditions listed below, discharge certain obligations to holders of any series of debt securities issued under the indenture at any time ("Defeasance"). Under terms satisfactory to the trustee, we may be released with respect to any outstanding series of debt securities issued under the indenture from the obligations imposed by sections 3.6 and 9.1 of the indenture. These sections contain the covenants described above limiting liens and consolidations, mergers and conveyances of assets. Also, under terms satisfactory to the trustee, we may avoid compliance with these sections without creating an event of default ("Covenant Defeasance"). Defeasance or Covenant Defeasance may be effected only if, among other things: - we irrevocably deposit with the trustee cash or, in the case of debt securities payable only in U.S. dollars, U.S. government obligations as trust funds in an amount certified to be sufficient to pay at maturity or upon redemption the principal of and interest on all outstanding debt securities of such series issued under the indenture; and - we deliver to the trustee an opinion of counsel to the effect that the holders of this series of debt securities will not recognize income, gain or loss for United States federal income tax purposes as a result of such Defeasance or Covenant Defeasance. Such opinion must further state that these holders will be subject to United States federal income tax on the same amounts, in the same manner and at the same times as would have been the case if Defeasance or Covenant Defeasance had not occurred. In the case of a Defeasance, this opinion must be based on a ruling of the Internal Revenue Service or a change in United States federal income tax law occurring after the date of the indenture, since this result would not occur under current tax law. CONCERNING THE TRUSTEE The trustee is one of a number of banks with which we and our subsidiaries maintain ordinary banking relationships and with which we and our subsidiaries maintain credit facilities. GOVERNING LAW The indenture, the new 8.125% notes and the new 8.750% notes are governed by, and construed in accordance with, the laws of the State of New York. DEFINED TERMS Set forth below are some of the definitions of the defined terms used in this prospectus in describing the new 8.125% notes and the new 8.750% notes. "Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term ofexchange the notes to be ~~redeemed 38~~ that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of such notes. "Comparable Treasury Price" means, with respect to any redemption date, (1) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third business day preceding such redemption date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations forredeemed.

MATERIAL U.S. Government Securities" or (2) if such release (or any successor release) is not published or does not contain such prices on such business day, (A) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (B) if we obtain fewer than four such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations. "Consolidated Funded Indebtedness" means the aggregate of all outstanding Funded Indebtedness of Williams and its consolidated subsidiaries, determined on a consolidated basis in accordance with generally accepted accounting principles. "Consolidated Net Tangible Assets" means the total assets appearing on a consolidated balance sheet of Williams and its consolidated subsidiaries less, in general: - intangible assets; - current and accrued liabilities (other than Consolidated Funded Indebtedness and capitalized rentals or leases), deferred credits, deferred gains and deferred income; - reserves; - advances to finance oil or natural gas exploration and development to the extent that the indebtedness related thereto is excluded from Funded Indebtedness; - an amount equal to the amount excluded from Funded Indebtedness representing the "production payment" financing of oil and gas exploration and development; and - minority stockholder interests. "Funded Indebtedness" means any indebtedness which matures more than one year after the date the amount of Funded Indebtedness is being determined, less any such indebtedness as will be retired by any deposit or payment required to be made within one year from such date under any prepayment provision, sinking fund, purchase fund or otherwise. Funded Indebtedness does not, however, include indebtedness of Williams or any of its subsidiaries incurred to finance outstanding advances to others to finance oil or natural gas exploration and development, to the extent that the latter are not in default in their obligations to Williams or such subsidiary. Funded Indebtedness also does not include indebtedness of Williams or any of its subsidiaries incurred to finance oil or natural gas exploration and development through what is commonly referred to as a "production payment" to the extent that Williams or any of its subsidiaries have not guaranteed the repayment of the production payment. "Independent Investment Banker" means one of the Reference Treasury Dealers appointed by us. "Reference Treasury Dealers" means Lehman Brothers Inc. and J.P. Morgan Securities Inc. and their respective successors and, at our option, additional primary U.S. Government securities dealers ("Primary Treasury Dealers"); provided, however, that if any of the foregoing shall cease to be a Primary Treasury Dealer, we shall substitute another nationally recognized investment banking firm that is a Primary Treasury Dealer. "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by us, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to us by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third business day preceding such redemption date. 39 "Treasury Rate" means, with respect to any redemption date, the rate per annum equal to the semiannual equivalent yield to a maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount equal to the Comparable Treasury Price for such redemption date). Investors should note that the term "subsidiary," as used in this section describing the notes, refers only to a corporation of which Williams, or another subsidiary or subsidiaries of Williams, own at least a majority of the outstanding securities which have voting power. BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY The new 8.125% notes and new 8.750% notes will be evidenced by one or more certificates in registered global form, which will be deposited with, or on behalf of, The Depository Trust Company (DTC) in New York, New York and registered in the name of Cede & Co., DTC's nominee. Except as set forth below, a global note may be transferred, in whole or in part, only to another nominee of DTC or to a successor to DTC or its nominee. DEPOSITARY PROCEDURES DTC has advised us that it is a: - limited-purpose trust company organized under the laws of the State of New York; - banking organization within the meaning of the laws of the State of New York; - member of the Federal Reserve System; - clearing corporation within the meaning of the New York Uniform Commercial Code; and - clearing agency registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities of its participants and to facilitate the clearance and settlement of securities transactions among its participants through electronic book-entry changes in their accounts, thereby eliminating the need for physical movement of securities certificates. DTC's participants include securities brokers and dealers, banks, trust companies, clearing corporations and other organizations. Banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant also have access to DTC's book-entry system. Holders of new 8.125% notes and new 8.750% notes may hold their beneficial interests in the securities directly as a participant in DTC or indirectly through organizations that are participants in DTC. Upon deposit of the global notes with DTC, DTC will credit, on its book-entry registration and transfer system, the accounts of those participants designated by the Exchange Agent with the principal amounts of the global notes held by or through the participants. The records of DTC will show ownership and effect the transfer of ownership of the global notes by its participants. The records of the participants will show ownership and effect the transfer of ownership of the global notes by persons holding beneficial interests in the global notes through them. In the case of beneficial interests held by or though participants in Euroclear Bank S.A./N.V., as operator of the Euroclear System and Clearstream Banking S.A., DTC will credit the accounts of their respective depositaries with the principal amounts of the global notes beneficially owned by or through Euroclear and Clearstream, respectively. These records of DTC will show ownership and effect the transfer of ownership of the global notes by the respective depositaries for Euroclear and Clearstream. The records of these depositaries will show ownership and effect the transfer of ownership of the global notes by Euroclear and Clearstream, respectively. The records of Euroclear and Clearstream will show ownership and effect the transfer of ownership of the global notes by their participants. The records of the participants will show ownership or transfer of ownership of the global notes by persons holding through them. 40 So long as DTC or its nominee is the registered owner of the global notes, it will be considered the sole owner and holder of the securities for all purposes under the indenture. Except as set forth below, if you own a beneficial interest in global notes, you will not: - be entitled to have the securities registered in your name; - receive or be entitled to receive physical delivery of a certificate in definitive form representing the securities; or - be considered the owner or holder of the securities under the indenture for any purpose, including with respect to the giving of any directions, approvals or instructions to the trustee. Therefore, if you are required by state law to take physical delivery of the securities in definitive form, you may not be able to own, transfer or pledge beneficial interests in the global notes. In addition, the lack of a physical certificate evidencing your beneficial interests in the global notes may limit your ability to pledge the interests to a person or entity that is not a participant in DTC. If you own beneficial interests in a global note, you will have to rely on the procedures of DTC and, if you are not a participant in DTC, the procedures of the participant through which you hold your beneficial interests, to exercise your rights as a holder under the indenture. DTC has advised us that it will take any action permitted to be taken by a holder of beneficial interests in the global notes only at the direction of one or more of the participants to whose accounts the interests are credited. We understand that, under existing industry practice, when a beneficial owner of a global note wants to give any notice or take any action that a registered holder is entitled to take, at our request or under the indenture, DTC will authorize the participant to give the notice or take the action, and the participant will authorize its beneficial owners to give the notice or take the action. Accordingly, we and the trustee will treat as a holder anyone designated as such in writing by DTC for purposes of obtaining any consents or directions required under the indenture. We will pay the principal of, and interest on, the global notes through the trustee or paying agent to DTC or its nominee, as the registered holder of the global notes, in immediately available funds. We expect DTC or its nominee, upon receipt of any payments, to immediately credit each participant's account with payments in amounts proportionate to that participant's beneficial interest as shown on the records of DTC or its nominee. We also expect each participant to pay each owner of beneficial interests in the global notes held through that participant in accordance with standing customer instructions and customary practices. These payments will be the sole responsibility of the participants. We will not, and the trustee and paying agent will not, assume any responsibility or liability for any aspect of the records relating to payments made on account of or actions taken with respect to the beneficial ownership interests in global notes, or for any other aspect of the relationship between DTC and its participants, Euroclear or Clearstream and their participants, or between the participants and the owners of beneficial interests. We, the trustee and the paying agent may conclusively rely on instructions from DTC for all purposes. We obtained the above information about DTC, Euroclear and Clearstream and their book-entry systems from sources we believe are reliable, but we take no responsibility for the accuracy of the information. SETTLEMENT PROCEDURES Secondary market trading between DTC participants will occur in the ordinary way in accordance with DTC's rules and procedures and will be settled in immediately available funds using DTC's Same-Day Funds Settlement System. Secondary market trading between participants of Euroclear and/or Clearstream will occur in the ordinary way in accordance with each of its rules and procedures and will be settled using the procedures applicable to conventional Eurobonds in immediately available funds. The respective depositaries for Euroclear and Clearstream will effect transfers in global notes between DTC participants, on the one hand, and Euroclear or Clearstream participants, on the other hand, in accordance with DTC's procedures and 41 will settle them in same-day funds. These depositaries must deliver instructions to Euroclear or Clearstream in accordance with Euroclear's or Clearstream's procedures. If the transfer meets its settlement requirements, Euroclear or Clearstream will instruct its respective depositary to effect final settlement on its behalf by delivering or receiving interests in the global notes in its accounts with DTC and making or receiving payment in accordance with normal procedures of same-day funds settlement applicable to DTC. Participants in Euroclear and Clearstream may not deliver instructions directly to the depositaries for Euroclear and Clearstream. Because of time zone differences, the accounts of Euroclear and Clearstream participants purchasing beneficial interests in the global notes from DTC participants will be credited with the securities purchased, and the crediting will be reported to the Euroclear and Clearstream participants, on the securities settlement processing day immediately following the DTC settlement processing day. Likewise, the accounts of Euroclear and Clearstream participants selling beneficial interests in the global notes to DTC participants will be credited with the cash received on the DTC settlement processing day, but the cash will not be available until the settlement processing day immediately following the DTC settlement processing day. Although DTC, Euroclear and Clearstream have agreed to the procedures to facilitate transfers of interests in the global notes among participants in DTC, Euroclear and Clearstream, they are under no obligation to perform or to continue to perform these procedures. These procedures may be changed or discontinued at any time. We take no responsibility for the performance by DTC, Euroclear or Clearstream or their respective participants of their respective obligations under the rules and procedures governing their operations. EXCHANGE OF GLOBAL NOTES FOR CERTIFICATED NOTES We will exchange beneficial interests in global notes for certificated notes only if: - DTC notifies us that it is unwilling or unable to continue as depositary for the global notes; - DTC ceases to be a clearing agency registered under the Exchange Act; or - we decide at any time not to have the securities represented by global notes and so notify the trustee. If there is an exchange, we will issue certificated notes in authorized denominations and registered in the names which DTC directs. MATERIAL UNITED STATES FEDERAL INCOME TAX ~~CONSIDERATIONS~~ CONSEQUENCES

�� In the opinion of White & Case LLP, special tax counsel to Williams, the following statements ~~discuss~~summarize the material U.S. federal income tax consequences of the exchange offer that may be relevant to you if you are a holder of ~~outstanding securities for~~Income PACS, to the ~~new securities~~extent that they constitute a description of the tax laws and regulations of the United States, are correct in ~~the exchange offer~~all material respects and constitute the opinion of White & Case LLP regarding such matters. The ~~discussion is based upon~~following addresses the ~~Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations, judicial authorities, published positions~~material U.S. federal income tax consequences of the ~~Internal Revenue Service (the "IRS")~~exchange offer to holders of Income PACS. Such opinion deals only with Income PACS held as capital assets (generally, assets held for investment) and, except where explicitly addressing the material U.S. federal income tax consequences of the exchange to holders other ~~applicable authorities, all as in effect~~than U.S. persons (defined below), pertains only to holders that are U.S. persons. The tax treatment of a holder may vary depending on ~~the date hereof and all of which are subject to change or differing interpretations (possibly with retroactive effect). The discussion~~such holder’s particular situation. Such opinion does not address all of the tax consequences that may be relevant to ~~a particular holder or to certain~~ holders that may be subject to special tax treatment ~~under~~such as, for example, insurance companies, broker dealers, tax-exempt organizations, regulated investment companies, persons holding Income PACS, notes or shares of our common stock as part of a straddle, hedge, conversion transaction or other integrated investment, former U.S. citizens that have expatriated, and U.S. persons whose functional currency is not the U.S. dollar. In addition, such opinion does not address any aspect of state, local, or foreign tax laws. Such opinion is based on the U.S. federal income tax ~~laws. This discussion is limited to persons that hold their outstanding securities~~laws, regulations, rulings and ~~new securities~~decisions in effect as ~~"capital assets" within the meaning of section 1221~~ of the ~~Code. Williams has not sought, and does not intend~~date of this exchange offer prospectus, which are subject to ~~seek,~~change or differing interpretations, possibly on a ruling from the IRS regarding the matters discussed herein. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax aspects set forth below. PROSPECTIVE INVESTORS MUSTretroactive basis.

CERTAIN ASPECTS OF THE U.S. FEDERAL INCOME TAX TREATMENT OF THE EXCHANGE OFFER ARE NOT DIRECTLY ADDRESSED BY ANY STATUTORY, ADMINISTRATIVE OR JUDICIAL AUTHORITY AND, THEREFORE, MAY BE SUBJECT TO DIFFERING INTERPRETATION. IN ADDITION, THE TAX CONSEQUENCES OF EXCHANGING YOUR INCOME PACS IN THE EXCHANGE OFFER WILL DEPEND ON YOUR PARTICULAR CIRCUMSTANCES. ACCORDINGLY, YOU ARE URGED TO CONSULT ~~THEIR~~YOUR OWN TAX ~~ADVISORS~~ADVISOR AS TO THE ~~FEDERAL INCOME~~PARTICULAR TAX CONSEQUENCES TO YOU OF ~~ACQUIRING, HOLDING~~EXCHANGING YOUR INCOME PACS IN THE EXCHANGE OFFER, INCLUDING THE APPLICATION AND ~~DISPOSING~~EFFECT OF ~~NEW SECURITIES, AS WELL AS THE EFFECTS OF~~U.S. FEDERAL, STATE, LOCAL AND ~~NON-U.S.~~FOREIGN TAX ~~LAWS. 42~~ LAWS TO YOUR PARTICULAR CIRCUMSTANCES.

For purposes of this ~~discussion,~~opinion, the term ~~"U.S. holder" means any one of the following: -~~“U.S. person” means: (1) a person who is a citizen or resident of the United States; -(2) a corporation ~~(or other entity treated as a corporation for U.S. federal income tax purposes)~~ created or organized in ~~the United States~~ or under the laws of the United States or any state thereof or the District of ~~any political subdivision thereof; -~~Columbia; (3) an estate the income of which is ~~includible in gross income for~~subject to U.S. federal income ~~tax purposes~~taxation regardless of its source; -or (4) a trust if (a) a court within the United States is able to exercise primary supervision over the administration of ~~which is subject to the primary supervision of the U.S. courts~~such trust and ~~that has~~ one or more U.S. persons ~~who~~ have the authority to control all substantial decisions of ~~the~~such trust or ~~that was~~(b) such trust has in ~~existence on August 20, 1996 and properly elected to continue~~effect a valid election to be treated as a ~~U.S. person; or - any individual or entity described above that is otherwise subject to~~domestic trust for U.S. federal income tax onpurposes.

If a ~~net~~partnership (including an entity treated as a partnership for U.S. federal income ~~basis~~tax purposes) holds Income PACS, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. A holder that is a partner of a partnership holding Income PACS should consult with its tax advisors with respect to the ~~new securities. The term "non-U.S. holder" means~~tax treatment of participation in the exchange offer.

We have treated each Income PACS you own as a ~~holder that is not~~unit consisting of two components — a ~~U.S. holder. The term "new securities" means~~note and a purchase contract — which, together, constitute an Income PACS. Your initial purchase price for each Income PACS was allocated between the ~~new 8.125% notes~~two components in proportion to their respective fair market values at the time of purchase, and such allocation established your initial tax basis in the underlying note and purchase contract. In our original issuance of Income PACS, we reported the fair market value of each note as $25 and the ~~new 8.750% notes. The term "outstanding securities" means~~fair market value of each purchase contract as $0. If you acquired Income PACS in the ~~outstanding 8.125% notes~~original issuance, our reporting position was binding on you (but not on the

We have treated the notes as contingent payment debt instruments. As such, you have been required to accrue original issue discount, or OID, on your notes. Your adjusted tax basis in your notes on the date such notes are exchanged pursuant to the exchange offer will, ~~not be treated~~accordingly, reflect increases to your basis in the amount of OID you have been required to include in income with respect to your notes through the date of the exchange and decreases to your basis equal to the total amount of projected payments with respect to your notes through the date of the exchange.

There is no direct authority addressing the treatment, under current law, of the contract adjustment payments, and the U.S. federal income tax treatment of such payments is therefore unclear. The quarterly contract adjustment payments may constitute taxable ordinary income to a holder when received or accrued, in accordance with such holder’s regular method of accounting. We have reported such payments on any required information returns as ~~an "exchange"~~taxable ordinary income to the holder. Holders who may have reported such payments or accruals in a different manner are urged to consult their tax advisors.

The following opinion of White & Case LLP assumes that your reporting for U.S. federal income tax purposes ~~because~~of the ~~new securities issued~~acquisition and ownership of Income PACS has been consistent with our treatment as outlined above.

On August 17, 2004, we received a private letter ruling from the IRS regarding the tax consequences to us from an exchange ~~offer~~of an Income PACS for one share of our common stock plus a specified amount of cash, pursuant to which the purchase contract component contained in such Income PACS would be cancelled and the note component contained in such Income PACS would be redeemed. The IRS ruled that we would not recognize any gain or loss from the cancellation of the purchase contract component in such Income PACS and would be treated as having redeemed the note component of the Income PACS for its original issue price of $25.00 increased by the amount of OID included with respect to a note through the date of the exchange and decreased by the total payments made with respect to a note through the date of the exchange, its “adjusted issue price.” The IRS expressed no opinion, however, as to whether the exchange would constitute a tax-free reorganization under section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the “Code”), whether the Income PACS would be treated as a note and a purchase contract (each of which is a separate instrument for U.S. federal income tax purposes), or whether the notes would be treated as contingent payment debt instruments for U.S. federal income tax purposes.

In the opinion of White & Case LLP, the Income PACS should be treated as a note and purchase contract (each of which is a separate instrument for U.S. federal income tax purposes) and the notes should be treated as contingent payment debt instruments for U.S. federal income tax purposes. In addition, in the opinion of White & Case LLP, it is more likely than not that the exchange of Income PACS for shares of our common stock and cash will not constitute a tax-free reorganization under the Code, in whole or in part, and will be ~~considered~~treated as the cash settlement of each purchase contract component of such Income PACS and the redemption of each note component of such Income PACS for its adjusted issue price. Such opinions, however, are not binding on the IRS or the courts, either or both of which may reach a contrary conclusion.

Based upon the opinion of White & Case LLP, we plan to ~~differ materially~~treat and to characterize the exchange as a transaction that does not constitute a tax-free reorganization under the Code in ~~kind~~which:

~~(i) the note component of an Income PACS is redeemed by us for an amount equal to:~~


	(A) the fair market value of one share of our common stock as of the date of the exchange; plus

	(B) an amount of cash which when added to the fair market value of the one share of our common stock equals the adjusted issue price of the note; and

~~(ii) the purchase contract component of an Income PACS is cash settled for a payment to us equal to:~~


	(A) the adjusted issue price of the note component of the Income PACS;minus

	(B) the sum of: (x) the fair market value of one share of our common stock as of the date of the exchange;plus(y) the actual amount of cash that is paid by us to the exchanging Income PACS holder.

In the opinion of White & Case LLP, redemption of the note pursuant to this treatment will give rise to gain or ~~extent from~~loss equal to the ~~outstanding securities. Rather,~~difference between the ~~new securities issued~~adjusted issue price of the note as of the date of the exchange and the holder’s adjusted basis in the ~~exchange offer received by a holder~~note. Because we have treated the notes as contingent payment debt instruments, any gain recognized on the notes will be treated as ordinary interest income. Loss recognized on such notes will be treated as ordinary loss to the extent of the holder’s prior inclusions of original issue discount on his or her notes. Any loss in excess of such amount will be treated as a ~~continuation~~capital loss. The deductibility of capital losses is subject to limitations.

In the opinion of White & Case LLP, a holder that purchased an Income PACS in our original issuance of Income PACS or when the purchase contract included in the Income PACS had positive value will recognize a capital loss equal to the amount that is treated as paid by the holder to cancel the purchase contract component of an Income PACS plus the holder’s adjusted tax basis for the purchase contract, if any. The deductibility of capital losses is subject to limitations. If you purchased an Income PACS when the purchase contract component had a negative value, the U.S. federal income tax consequences of the ~~outstanding securities~~settlement of the purchase contract are not clear and White & Case LLP has not given its opinion regarding this matter. Depending upon how you treated the purchase of such an Income PACS, it is possible that the settlement of the purchase contract component could give rise to a capital gain or capital loss. You should consult your tax advisor regarding the U.S. federal income tax consequences of the settlement of the purchase contract under such circumstances.

In the opinion of White & Case LLP, a holder’s basis in a share of our common stock received on the exchange of an Income PACS will be equal to the fair market value of the share on the date of the exchange. The holding period for the share of our common stock received in the ~~hands~~exchange will begin on the day following the holder’s acquisition of ~~such holder.~~the stock.

As noted above, the foregoing treatment is not definitively supported by existing authority, and alternative characterizations of the exchange are possible. It is possible that the exchange of an Income PACS for a ~~result,~~share of our common stock plus cash pursuant to the exchange offer may be treated as a recapitalization in which the notes are exchanged for shares of our common stock, the termination of the purchase contracts and the amount of cash received in the exchange by Income PACS unit holders. If the exchange of an Income PACS were characterized in this manner, no ~~gain or~~ loss ~~will~~could be recognized by an exchanging holder, a holder’s basis in his or her shares of our common stock received in the exchange generally would be determined by reference to the holder’s adjusted basis in the note component of his or her Income PACS, and the holding period of such stock would include the period the holder ~~who exchanges outstanding securities for new securities~~held the notes.

Again in the alternative, the exchange of Income PACS in the exchange offer could possibly be treated as the cash settlement of the purchase contract and ~~any~~a recapitalization in which the notes are

We will report cash received in ~~and income~~lieu of a fractional interest in ~~respect~~our common stock as a redemption of such fractional interest in exchange for cash. In the opinion of White & Case LLP, you would generally realize capital gain or loss on a redemption of a fractional interest in our common stock in an amount equal to the cash received for the fractional share over your basis (determined based on your treatment of the ~~new securities~~exchange offer, as described above) in such ~~holder had in~~fractional interest. Gain or loss on this redemption will generally be short-term capital gain or loss unless the ~~outstanding securities immediately prior to the exchange. U.S. HOLDERS Payments of Interest. Payments of interest on new securities generally will be taxable to~~exchange is treated as a ~~U.S. holder as ordinary interest income at the time such payments are accrued or received (in accordance with the U.S. holder's method of accounting~~recapitalization for U.S. federal income tax ~~purposes)~~purposes (in which case the gain or loss would be long-term capital gain or loss if the holder has held his or her Income PACS for more than twelve months). ~~Disposition~~

~~YOU ARE URGED TO CONSULT YOUR TAX ADVISOR CONCERNING THE PROPER TREATMENT OF THE EXCHANGE, AND OF ANY SUBSEQUENT DISPOSITION OF STOCK RECEIVED IN THE EXCHANGE, IN YOUR PARTICULAR CIRCUMSTANCES.~~

~~Federal Tax Aspects of ~~New Securities.~~Ownership of Common Stock Received in the Exchange Offer~~

Distributions paid by us out of our current or accumulated earnings and profits (as determined for U.S. federal income tax purposes) on common stock received as part of the exchange offer will constitute a dividend and will be includible in income by holders when received. Under current law, such dividends paid to individual holders may qualify for a special 15 percent tax rate on “qualified dividend income” through December 31, 2008. Dividends may also be eligible for the dividends received deduction if the holder is an otherwise qualifying corporate holder that meets the holding period and other requirements for the dividends received deduction.

Upon ~~the sale or other~~a disposition of ~~a new security, a U.S. holder~~our common stock, you generally will ~~generally~~ recognize capital gain or loss equal to the difference between the amount realized ~~on the sale or other disposition~~ and ~~the holder's~~your adjusted tax basis in the new security. For these purposes, the amount realized on the sale or other disposition of a new security does not include any amount received attributable to accrued but unpaid interest, which will be taxable as ordinary income unless previously taken into account. Capitalcommon stock. Such capital gain or loss ~~on the sale or other disposition of a new security~~generally will be long-term capital gain or loss if ~~the holder's cumulative holding period with respect to the new security and the outstanding securities exchanged therefor is~~you held such common stock for more than one year atimmediately prior to such disposition. Long-term capital gains of individuals are eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations.

If you hold Growth PACS and deliver notes to the ~~time~~collateral agent in substitution for Treasury securities, you generally will not recognize gain or loss upon your delivery of such notes or your receipt of the ~~sale~~Treasury securities. You will continue to take into account items of income or ~~other disposition. 43~~ ~~NON-U.S. HOLDERS Payments~~deduction otherwise includible or deductible, respectively, by you with respect to such Treasury securities and notes, and your adjusted tax bases in the Treasury securities, the notes and the purchase contract will not be affected by such delivery and release.

Unless you are an exempt recipient, such as a corporation, the exchange of ~~Interest. Subject~~Income PACS for shares pursuant to the ~~discussion below concerning~~exchange offer and the receipt of dividends on our common stock received as part of the exchange may be subject to information ~~reporting and backup withholding, payments of interest on a new security to any non-U.S. holder will generally not~~reporting. In addition, unless you are an exempt recipient, you may be subject to U.S. federal ~~income tax or~~backup withholding tax at a current rate of 28 percent, if you fail to supply an accurate taxpayer identification number or otherwise fail to comply with applicable U.S. information reporting or certification requirements.

~~Treatment Generally Applicable to Non-U.S. Holders Participating in the Exchange~~

The following statements apply to you if you are a holder other than a “U.S. person” as defined in the third paragraph of “Material U.S. Federal Income Tax Consequences,” above. Special rules may apply to you if you are a “controlled foreign corporation,” “passive foreign investment company,” “foreign personal holding company” or are otherwise subject to special treatment under the Code. If you are or may be subject to these special rules, you should consult your own tax advisor to determine the particular U.S. federal, state and local and other tax consequences applicable to you of participating in the exchange offer.

In the opinion of White & Case LLP, U.S. federal withholding tax should not apply to gain or income allocable to the notes provided that all of the following are true: - the interest on the new security is not effectively connected with the non-U.S. holder's conduct of a trade or business within the United States; - the non-U.S. holder doesthat: you do not actually ~~or constructively~~(or constructively) own ~~10%~~10 percent or more of the total combined voting power of all classes of ~~Williams stock; -~~our voting stock within the ~~non-U.S. holder is~~meaning of the Code and the Treasury regulations; you are not a ~~"controlled~~controlled foreign ~~corporation" with respect~~corporation that is related to ~~which Williams~~us through stock ownership; you are not a bank whose receipt of interest on the notes is ~~a "related person" for U.S. federal income tax purposes;~~described in section 881(c)(3)(A) of the Code; and ~~- the non-U.S. holder either (A) certifies,~~(a) you provide your name and address on an IRS Form W-8BEN (or a ~~permissible substitute or~~suitable successor form) and certify, under ~~penalties~~penalty of perjury, that ~~it is~~you are not a ~~non-U.S. holder and provides its name and address,~~U.S. person or ~~(B) is~~(b) a ~~securities clearing organization, bank or other~~ financial institution ~~that holds customers' securities in~~holding the ~~ordinary course of its trade or business (a "financial institution") and holds the new securities,~~Income PACS on your behalf certifies, under ~~penalties of perjury~~penalty, that it has received an IRS Form W-8BEN (or a ~~permissible substitute or~~suitable successor form) from the beneficial owner ~~of the new securities or that another financial institution has received such Form from the beneficial owner,~~ and ~~furnishes the payor~~provides us with a ~~copy thereof. Interest paid~~copy.

~~We do not intend to ~~a non-U.S. holder~~withhold on amounts received in the exchange offer that ~~does not qualify for exemption from~~are allocable to the notes if these requirements are met.~~

U.S. withholding tax generally will apply at a rate of 30 percent on dividends paid on the shares of our common stock received as part of the exchange. However, if a tax treaty applies, you may be eligible for a reduced rate of withholding. Dividends on our common stock that are effectively connected with the conduct of a trade or business by you within the United States (and, where a tax treaty applies, are attributable to a U.S. permanent establishment maintained by you), are not subject to the withholding oftax, but instead are subject to U.S. federal income tax ~~unless~~on a net basis, as described below. In order to claim any such exemption or reduction in the ~~non-U.S. holder of the new securities provides to Williams~~30 percent withholding tax, you should provide a properly ~~executed: (i)~~executed IRS Form W-8BEN (or a ~~permissible~~suitable substitute ~~or successor~~ form) claiming a reduction of or an exemption from ~~(or reduction in)~~ withholding under ~~the benefit of~~ an applicable ~~income~~ tax ~~treaty;~~treaty or ~~(ii)~~ IRS Form W-8ECI (or a ~~permissible~~suitable substitute ~~or successor~~ form) stating that ~~the interest paid on new securities is~~such payments are not subject to withholding tax because ~~it is~~they are effectively connected with ~~the non-U.S. holder's~~your conduct of a trade or business in the United States. ~~Non-U.S. holders should consult any applicable income~~

In the opinion of White & Case LLP, assuming you are not subject to U.S. federal withholding tax ~~treaties, which may provide for exemption from (or reduction in) U.S. withholding for other rules different from those~~as described ~~above. Disposition of New Securities. Subject to the discussion below concerning information reporting and backup withholding,~~above, any gain or income realized ~~by a non-U.S. holder~~ on the ~~sale~~notes and any gain or ~~other~~income realized on a disposition of ~~new securities generally~~our common stock received as part of the exchange will not be subject to U.S. federal income tax ~~unless~~unless: (i) such gain or income is, or is treated as, effectively connected with ~~the~~your conduct ~~by such non-U.S. holder~~ of a trade or business ~~within~~in the ~~U.S.~~United States; or (ii) ~~the non-U.S. holder is~~you are an individual who is present in the United States for 183 days or more in the taxable year of ~~the~~that disposition and certain other conditions are ~~satisfied. INFORMATION REPORTING AND BACKUP WITHHOLDING Generally, Williams must report annually to~~met; or, in the ~~IRS and to each holder the amounts~~case of ~~interest paid to that holder, and the amount~~gain or income realized on a disposition of ~~tax, if any, that was withheld on the interest. This information may also be made available to the tax authorities of~~our common stock, we are or have been a ~~country in which a non-U.S. holder resides. Backup withholding will generally apply to interest payments made to persons that fail to furnish certain required information. A~~non-publicly traded “U.S. real property holding corporation,” as described below, for U.S. holder may be subject to backup withholding on interest payments with respect to new securities unless such U.S. holder (i) is a corporation or comes within certain other exempt categories and demonstrates this fact, or (ii) provides a correct taxpayer identification number, certifies as to no loss of exemption from backup withholding and otherwise complies with applicable requirements. Backup withholding generally will not apply to interest payments made in respect of new securities held by a non-U.S. holder, if the holder properly certifies as to its non-U.S. status or otherwise establishes an exemption. 44 ~~Backup withholding is not an additional tax. Any amounts we withhold under the backup withholding rules will be allowed as a refund or credit against such non-U.S. holder's~~ federal income tax ~~liability, provided that the requisite procedures are followed and certain information is provided to the IRS. In the case~~purposes.

Gain or loss of ~~proceeds~~a non-U.S. person from the disposition of ~~new securities to or through~~stock in a ~~non-U.S. office~~“U.S. real property holding corporation” may be treated as effectively connected with the conduct of a ~~U.S. broker,~~trade or ~~foreign brokers with certain types of relationships to~~business in the United States ~~information reporting, but~~and subject to U.S. withholding and federal income tax. We do not know whether we are currently a U.S. real property holding corporation for U.S. federal income tax purposes. In any event, if we were to become a U.S. real property holding corporation, so long as our common stock continued to be regularly

No backup withholding will be required ~~on the payment, unless the broker has documentary evidence in its files that the owner is~~as a ~~non-U.S. holder and certain other conditions are met, or the holder otherwise establishes an exemption. PLAN OF DISTRIBUTION Based on interpretations by the staff~~result of the ~~SEC in no-action letters issued to third parties, we believe that you may transfer new 8.125% notes and new 8.750% notes issued under~~exchange of an Income PACS for a share of our common stock plus cash or for dividends paid on our common stock received as part of the exchange offer in exchange for the outstanding 8.125% notes and outstanding 8.750% notes if: - you acquire the new 8.125% notes or new 8.750% notes in the ordinary course of your business; and -if you are not ~~engaged~~a U.S. person and you have provided us with an IRS Form W-8BEN (or, where applicable, an IRS Form W-8ECI) and we do not have actual knowledge or reason to know that you are a U.S. person.

If you elect not to participate in the exchange, the exchange will have no federal income tax impact on you, and the consequences of your ownership and disposition of Income PACS, Growth PACS, notes or Treasury securities will be as described in the original prospectus supplement dated January 7, 2002.

This exchange offer prospectus includes, or incorporates by reference, forward-looking statements. 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. Words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan” and “objective” and other similar expressions identify those statements that are forward-looking. These statements are based on management’s beliefs and assumptions and on information currently available to management. Actual results could differ materially from those contemplated by the forward-looking statements. In addition to any assumptions and other factors referred to specifically in connection with such statements, factors that could cause our actual results to differ materially from those contemplated in any forward-looking statement include, among others:


	•	our substantial leverage and debt service requirements;

	•	execution of our planned asset sales;

	•	volatility of energy prices, including natural gas prices;

	•	pricing, market strategies, the expansion, consolidation and other activities of competitors;

	•	the effect of economic conditions in its markets;

	•	the regulatory environment in which we operate; and

	•	other factors listed in the documents we incorporate by reference.

All future written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by their cautionary statements. We do not intend to ~~engage~~release publicly any revisions to any forward-looking statements to reflect events or circumstances in ~~and have no arrangement~~the future or ~~understanding with any person~~ to ~~participate in, a distribution~~reflect the occurrence of unanticipated events, except as required by law.

The validity of the ~~new 8.125% notes or new 8.750% notes. Broker-dealers receiving new 8.125% notes or new 8.750% notes~~common stock to be issued in the exchange offer will be subject to a prospectus delivery requirement with respect to resales of the new 8.125% notes and new 8.750% notes. We believe that you may not transfer new 8.125% notes or new 8.750% notes issued under the exchange offer in exchange for the outstanding 8.125% notes or outstanding 8.750% notes without compliance with the registration and prospectus delivery provisions of the Securities Act if you are: - our "affiliate" within the meaning of Rule 405 under the Securities Act; - a broker-dealer that acquired outstanding 8.125% notes or outstanding 8.750% notes directly from us; or - a broker-dealer that acquired outstanding 8.125% notes or outstanding 8.750% notes as a result of market-making or other trading activities. To date, the staff of the SEC has taken the position that participating broker-dealers may fulfill their prospectus delivery requirements with respect to transactions involving an exchange of securities such as this exchange offer, other than a resale of an unsold allotment from the original sale of the outstanding 8.125% notes or outstanding 8.750% notes, with the prospectus contained in the exchange offer registration statement. We have agreed to permit participating broker-dealers to use this prospectus in connection with the resale of new 8.125% notes and new 8.750% notes. If you wish to exchange your outstanding 8.125% notes for new 8.125% notes or your outstanding 8.750% notes for new 8.750% notes in the exchange offer, you will be required to make representations to us as described in "The Exchange Offer -- Exchange Terms" and "-- Procedures for Tendering Outstanding Securities -- Other Matters" in this prospectus and in the letter of transmittal. In addition, if you are a broker-dealer who receives new 8.125% notes or new 8.750% notes for your own account in exchange for outstanding 8.125% notes or outstanding 8.750% notes that were acquired by you as a result of market-making activities or other trading activities, you will be required to acknowledge that you will deliver a prospectus in connection with any resale by you of such new 8.125% notes or new 8.750% notes. See "The Exchange Offer -- Resale of New Securities." 45 We will not receive any proceeds from any sale of new 8.125% notes or new 8.750% notes by broker-dealers or from any other person. Broker-dealers who receive new 8.125% notes or new 8.750% notes for their own account in the exchange offer may sell them from time to time in one or more transactions: - in the over-the-counter market; - in negotiated transactions; - through the writing of options on the new 8.125% notes or new 8.750% notes or a combination of such methods of resale; - at market prices prevailing at the time of resale; and - at prices related to such prevailing market prices or negotiated prices. Any resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any broker-dealer or the purchasers of any new 8.125% notes or new 8.750% notes. Any broker-dealer that resells new 8.125% notes or new 8.750% notes it received for its own account in the exchange offer and any broker or dealer that participates in a distribution of such new 8.125% notes or new 8.750% notes may be deemed to be an "underwriter" within the meaning of the Securities Act. Any profit on any resale of new 8.125% notes or new 8.750% notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. We have agreed to pay all expenses incidental to the exchange offer other than commissions and concessions of any brokers or dealers. We will indemnify holders of the outstanding 8.125% notes and outstanding 8.750% notes, including any broker-dealers, against certain liabilities, including liabilities under the Securities Act, as provided in the registration rights agreement. FORWARD-LOOKING STATEMENTS Certain matters discussed in this prospectus, excluding historical information, include forward-looking statements -- statements that discuss our expected future results based on current and pending business operations. Forward-looking statements can be identified by words such as "anticipates," "believes," "could," "continues," "estimates," "expects," "forecasts," "might," "planned," "potential," "projects," "scheduled" or similar expressions. Although we believe these forward-looking statements are based on reasonable assumptions, statements made regarding future results are subject to a number of assumptions, uncertainties and risks that could cause future results to be materially different from the results stated or implied in this prospectus. Events in 2002 significantly impacted the risk environment all businesses face and raised a level of uncertainty in the capital markets that has approached that which led to the general market collapse of 1929. Beliefs and assumptions as to what constitutes appropriate levels of capitalization and fundamental value have changed abruptly. The deterioration of our energy industry sector in the wake of the collapse of Enron combined with the meltdown of the telecommunications industry are both new realities that have had and will likely continue to have specific impacts on all companies, including us. Although we believe these forward-looking statements are based on reasonable assumptions, statements made regarding future results are subject to a number of assumptions, uncertainties and risks that could cause future results to be materially different from the results stated or implied in this prospectus. Additional information about issues that could lead to material changes in performance is contained in our annual report on Form 10-K for the year ended December 31, 2002 which is incorporated by reference in this prospectus. 46 ~~LEGAL MATTERS The validity of the new 8.125% notes and the new 8.750% notes has been~~ passed upon for us by ~~William G. von Glahn, Esq., who, prior to his retirement from Williams in December 2002, served as~~James J. Bender, Senior Vice President and General Counsel of ~~Williams.~~Williams, and Gibson, Dunn & Crutcher LLP, Denver, Colorado has acted as counsel to Williams in connection with the exchange offer. Certain U.S. federal income taxation matters will be passed upon for us by White & Case LLP, Washington, D.C. Davis Polk & Wardwell, New York, New York, will pass upon the validity of the dealer manager agreement for the dealer managers. As of ~~December 31, 2002,~~October 6, 2004, Mr. ~~von Glahn~~Bender was the beneficial holder of ~~75,000~~50,000 shares of ~~Williams~~our common ~~stock (including shares subject to stock options, deferred stock awards and Williams' 401(k) retirement plan).~~stock. Mr. ~~von Glahn was~~Bender is a participant in ~~Williams'~~our stock option plan and various other employee benefit plans offered to employees of Williams. White & Case LLP, special tax counsel for Williams, will pass upon the discussion set forth under the heading "Material United States Federal Income Tax Considerations" on page 42. our employees.

The consolidated financial statements and schedule of The Williams Companies, Inc. appearing in ~~Williams' Annual Report~~its current report on Form ~~10-K for~~8-K dated June 1, 2004 and filed with the ~~year ended December 31, 2002,~~Securities and Exchange Commission on September 16, 2004, have been audited by Ernst & Young LLP, independent ~~auditors,~~registered public accounting firm, as set forth in their report thereon included therein and incorporated ~~herein~~ by ~~reference.~~reference herein. Such consolidated financial statements and schedule are incorporated by reference herein. Such consolidated financial statements and schedule are incorporated herein by reference in reliance upon such report given on the authority of such firm as experts in accounting and auditing. Approximately 98% of our year-end 2003 U.S. proved reserves estimates included in our annual report on Form 10-K for the year ended December 31, 2003, as amended, which is incorporated by reference into this exchange offer prospectus, were either audited by Netherland, Sewell & Associates, Inc. or, in the case of reserves estimates related to properties underlying the Williams Coal Seam Gas Royalty Trust, were prepared by Miller and Lents, LTD.

We file ~~annual, quarterly and special~~ reports ~~proxy statements~~ and other information with the ~~SEC under~~Securities and Exchange Commission, which we refer to in this exchange offer prospectus as the ~~Exchange Act. The registration statement of which this prospectus forms a part~~SEC. You may read and ~~these~~copy any reports ~~proxy statements and~~or other information ~~can be inspected and copied~~that we file with the SEC at the SEC’s public reference room ~~maintained by the SEC~~located at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's regional offices at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and at 233 Broadway, New York, New York 10005. Copies of these materials may also be obtained from the SEC at prescribed rates by writing to the public reference room maintained by the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C. 20549. You may ~~obtain information on the operation~~also receive copies of ~~the public reference room~~these documents upon payment of a duplicating fee, by calling the SEC at 1-800-SEC-0330. Our filings are also available to the public on the SEC’s web site athttp://www.sec.gov.You may also inspect our SEC reports on our web site athttp://www.williams.com.We ~~have filed with the SEC a registration statement on Form S-4 under the Securities Act with respect~~do not intend for information in our web site to ~~this offering. This prospectus, which forms a~~be part of the registration statement, does not contain all the information included in the registration statement and the attached exhibits. The SEC maintains a World Wide Web site on the internet at http://www.sec.gov that contains reports, proxy and information statements and other information regarding us. The reports, proxy and information statements and other information about us can be downloaded from the SEC's website and can also be inspected and copied at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005. INCORPORATION OF DOCUMENTS BY REFERENCE The SEC allows us to "incorporatethis exchange offer prospectus.

We are incorporating by ~~reference"~~reference into this exchange offer prospectus ~~the~~ information we file with ~~it,~~the SEC, which means ~~that~~ we ~~can disclose~~are disclosing important information to you by referring you to those documents. The information ~~incorporated~~we incorporate by reference is considered to be part of this exchange offer prospectus, unless we update or supersede that information by the information contained in this exchange offer prospectus or the information we file subsequently that is incorporated by reference into this exchange offer prospectus. We are incorporating by reference the following documents that we have filed with the SEC:

~~2. quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2004;~~

~~3. quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2004;~~

4. current reports on Form 8-K filed March 31, 2004, May 27, 2004, September 16, 2004 (two filed on this date) September 17, 2004, September 20, 2004, September 21, 2004 and ~~later information~~September 29, 2004;

5. the description of our Income PACS contained in our registration statement on Form 8-A filed with the SEC on January 8, 2002, as amended by an amendment to Form 8-A filed with the SEC on January 23, 2002; and

~~6. the description of our common stock, par value $1.00 per share, contained in our registration statement on Form S-3 (Registration No. 333-85540) filed April 4, 2002.~~

We also incorporate by reference each of the documents that we file with the SEC ~~will automatically update and supersede this information. We incorporate by reference the documents listed below and any future~~(excluding those filings made ~~with the SEC~~ under ~~section~~Items 2.02 or 7.01 of Form 8-K (or any predecessor item)) under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of this exchange offer prospectus until the expiration date of the exchange ~~offer is completed: - our annual report on Form 10-K~~offer. The file number for the ~~year ended December 31, 2002; - our current reports on Form 8-K~~documents we file, or have filed, ~~January 2, 2003, January 9, 2003, January 17, 2003, January 24, 2003, February 19, 2003, February 21, 2003, March 6, 2003, March 12, 2003, 47~~ ~~March 19, 2003, March 21, 2003, April 10, 2003, April 15, 2003, April 16, 2003, April 21, 2003 and April 22, 2003; and - our definitive proxy statement on Schedule 14A filed April 7, 2003.~~under the Securities Exchange Act of 1934 is 001-04174.

You may request a copy of any of these filings (other than an exhibit to those filings unless we have specifically incorporated that exhibit by reference into the filing), at no cost, by ~~writing~~telephoning or ~~calling~~writing us at the ~~following address:~~ address set forth below. To obtain timely delivery of any requested information, FELINE PACS holders must make any request no later than five business days prior to the expiration date of the exchange offer.

~~D.F. King & Co., ~~2003 TO ENSURE TIMELY DELIVERY OF THE FILINGS PRIOR TO THE EXPIRATION DATE OF THE EXCHANGE OFFER. You should rely only on~~Inc.~~

Additional copies of this exchange offer prospectus, the letter of transmittal or other exchange offer materials may be obtained from the information ~~incorporated by reference~~agent and will be furnished at our expense. Questions and requests for assistance or ~~provided in this prospectus. We have not authorized anyone else~~additional copies hereof or the letter of transmittal should be directed to ~~provide you with any information. You should not assume that~~ the information ~~in this document is current as~~agent.

Questions and requests for information regarding the terms of ~~any date other than~~ the ~~date on~~exchange offer should be directed to the ~~front page of this prospectus. 48~~ lead dealer manager.

~~INFORMATION NOT REQUIRED IN ~~THE~~ PROSPECTUS ~~ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS~~~~

Williams, a Delaware corporation, is empowered by Section 145 of the General Corporation Law of the State of Delaware, subject to the procedures and limitations stated therein, to indemnify any person against expenses (including ~~attorneys'~~attorneys’ fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by them in connection with any threatened, pending, or completed action, suit, or proceeding in which such person is made party by reason of their being or having been a director, officer, employee, or agent of Williams. The statute provides that indemnification pursuant to its provisions is not exclusive of other rights of indemnification to which a person may be entitled under any by-law, agreement, vote of stockholders or disinterested directors, or otherwise. The By-laws of Williams provide for indemnification by Williams of its directors and officers to the fullest extent permitted by the General Corporation Law of the State of Delaware. In addition, Williams has entered into indemnity agreements with its directors and certain officers providing for, among other things, the indemnification of and the advancing of expenses to such individuals to the fullest extent permitted by law, and to the extent insurance is maintained, for the continued coverage of such individuals.

Policies of insurance are maintained by Williams under which the directors and officers of Williams are insured, within the limits and subject to the limitations of the policies, against certain expenses in connection with the defense of actions, suits, or proceedings, and certain liabilities which might be imposed as a result of such actions, suits or proceedings, to which they are parties by reason of being or having been such directors or officers. ~~ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES~~

~~(a) Exhibits ~~The following instruments and documents are included as Exhibits to this Registration Statement.~~~~


Delaware	4922	73-0569878 ~~(State~~
(State or Other Jurisdiction of ~~(Primary Standard Industrial (I.R.S. Employer~~ Incorporation or Organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)



	Common Stock						Income PACS

	High		Low		Dividends		High		Low

Year ended December 31, 2002:
First Quarter	$	26.35	$	14.05	$	0.20	$	26.15	$	17.50
Second Quarter		24.41		5.30		0.20		26.39		11.50
Third Quarter		6.73		0.78		0.01		12.90		3.45
Fourth Quarter		3.10		1.30		0.01		8.30		6.05
Year ended December 31, 2003:
First Quarter	$	4.84	$	2.51	$	0.01	$	9.80	$	7.75
Second Quarter		9.04		4.63		0.01		13.53		9.40
Third Quarter		9.57		6.05		0.01		13.44		9.82
Fourth Quarter		10.73		8.79		0.01		14.80		12.00
Year ending December 31, 2004:
First Quarter	$	11.47	$	8.49	$	0.01	$	14.86	$	11.95
Second Quarter		12.36		9.56		0.01		14.15		12.36
Third Quarter		12.67		11.36		0.01		14.54		12.79
Fourth Quarter (through October 7, 2004)		13.00		12.04		—		14.44		13.45



		Six Months Ended
		June 30						Year Ended December 31

		2004			2003(1)			2003			2002			2001			2000			1999


		(Unaudited)						(Dollars in millions, except per share amounts)
Consolidated Income Statement Data:
Revenues(2)		$	6,114.2		$	8,388.4		$	16,644.7		$	3,393.9		$	4,899.5		$	4,859.2		$	3,558.8
Income (loss) from continuing operations(3)			(19.5	)		70.6			28.2			(597.1	)		640.5			666.5			87.7
Income (loss) from discontinued operations(4)			11.2			145.9			240.9			(157.6	)		(1,118.2	)		(142.2	)		68.5
Extraordinary gain(5)			—			—			—			—			—			—			65.2
Cumulative effect of change in accounting principles(6)			—			(761.3	)		(761.3	)		—			—			—			—
Diluted earnings (loss) per common share:
	Income (loss) from continuing operations		(0.04	)		0.07			—			(1.33	)		1.28			1.49			0.19
	Income (loss) from discontinued operations		0.02			0.28			0.46			(0.30	)		(2.23	)		(0.32	)		0.16
	Extraordinary gain		—			—			—			—			—			—			0.15
	Cumulative effect of change in accounting principles		—			(1.45	)		(1.47	)		—			—			—			—
Cash dividends per common share			0.02			0.02			0.04			0.42			0.68			0.60			0.60
Cash Flow and Other Financial Data:
Net cash provided (used) by operating activities(7)		$	615.1		$	468.9		$	770.1		$	(515.3	)	$	1,828.6			N/A			N/A
Ratio of earnings to fixed charges(8)(9)			—			1.14			1.00			—			2.36			2.48			1.23



			As of December 31
	As of June 30,
	2004		2003		2002		2001		2000		1999

	(Unaudited)
			(Dollars in millions)
Balance Sheet Data:
Total assets	$	26,168.4	$	27,021.8	$	34,988.5	$	38,614.2	$	34,776.6	$	21,682.1
Short-term notes payable and long-term debt due within one year		276.6		938.5		2,077.1		2,510.4		3,193.2		1,525.1
Long-term debt		9,483.0		11,039.8		11,075.7		8,285.0		6,316.8		6,211.6
Stockholders’ equity		3,998.9		4,102.1		5,049.0		6,044.0		5,892.0		5,585.2


Gibson, Dunn & ~~CASE~~Crutcher LLP ~~DAVIS POLK~~ 1801 California Street, Suite 4100 Denver, Colorado 80202-2641 (303) 298-5700 Attention: Richard M. Russo, Esq. Robert R. Stark, Jr., Esq.		Davis Polk & ~~WARDWELL 1155 AVENUE OF THE AMERICAS~~ Wardwell 450 ~~LEXINGTON AVENUE NEW YORK, NEW YORK 10036 NEW YORK, NEW YORK~~Lexington Avenue New York, New York 10017 ~~(212) 819-8200~~ (212) 450-4000 ~~(212) 354-8113 (FAX) (212) 450-3800 (FAX)~~ Attention: Marlene Alva, Esq.


	Page

Questions and Answers About the Exchange Offer		1
Summary		8
Risk Factors		15
Use of Proceeds		30
Market for Common Stock and Income PACS		30
Selected Historical Consolidated Financial Data		31
The Exchange Offer		34
Comparison of Rights between the Income PACS and Our Common Stock		46
Description of Capital Stock		48
Description of FELINE PACS		51
Description of the Purchase Contracts		54
Description of the Notes		61
Material U.S. Federal Income Tax Consequences		65
Cautionary Statement Regarding Forward-Looking Statements		71
Legal Matters		71
Experts		71
Where You Can Find More Information		72
Opinion of James J. Bender, Esq
Tax Opinion of White & Case LLP
Consent of Ernst & Young LLP
Power of Attorney
Form Letter of Transmittal


	*The value of the common stock that you receive will decline if the market price of our common stock declines.*


	All of our debt obligations, including the notes associated with the Income PACS that remain outstanding after the exchange offer, will have priority over our common stock with respect to payment in the event of a liquidation, dissolution or winding up.


	*By tendering your Income PACS, you will lose your right to receive certain cash payments.*


	*Certain aspects of the U.S. federal income tax consequences of exchanging the Income PACS are unclear.*


	*Income PACS that you continue to hold after the exchange offer are expected to become less liquid following the exchange offer.*


	*If you do not participate in the exchange offer, you will have no rights as a common stockholder.*


	*The purchase contract agreement that is associated with the Income PACS is not qualified under the Trust Indenture Act of 1939; the obligations of the purchase contract agent are limited.*


	*We may redeem notes that are a part of the Income PACS upon the occurrence of a tax event.*


Citigroup	Banc of America Securities LLC


	*The trading prices for the Income PACS that remain outstanding after the exchange offer will be directly affected by the trading prices of our common stock.*


	*Our risk measurement and hedging activities might not prevent losses.*


	Electricity, natural gas liquids and gas prices are volatile and this volatility could adversely affect our financial results, cash flows, access to capital and ability to maintain existing businesses.


	*We might not be able to successfully manage the risks associated with selling and marketing products in the wholesale energy markets.*


	*Our operating results might fluctuate on a seasonal and quarterly basis.*


	Our investments and projects located outside of the United States expose us to risks related to laws of other countries, taxes, economic conditions, fluctuations in currency rates, political conditions and policies of foreign governments. These risks might delay or reduce our realization of value from our international projects.


	*Our debt agreements and other related transaction documents impose restrictions on us that may adversely affect our ability to operate our business.*


	*We might be adversely affected by governmental investigations and any related legal proceedings related to our power business.*


	*We might be adversely affected by securities class action litigation.*


	*Recent developments affecting the wholesale power and energy trading industry sector have reduced market activity and liquidity and might continue to adversely affect our results of operations.*


	*Because we no longer maintain investment grade credit ratings, our counterparties have required us to provide higher amounts of credit support which raises our cost of doing business.*


	*Despite our restructuring efforts, we may not attain investment grade ratings.*


	Our businesses are subject to complex government regulations. The operation of our businesses might be adversely affected by changes in these regulations or in their interpretation or implementation.


	Our revenues might decrease if we are unable to gain adequate, reliable and affordable access to transmission and distribution assets due to the FERC and regional regulation of wholesale market transactions for electricity and gas.


	*The different regional power markets in which we compete or will compete in the future have changing regulatory structures, which could affect our growth and performance in these regions.*


	Our gas sales, transmission, and storage operations are subject to government regulations and rate proceedings that could have an adverse impact on our ability to recover the costs of operating our pipeline facilities.


	*We could incur material losses if we are held liable for the environmental condition of any of our assets or divested assets, which could include losses that exceed our current expectations.*


	*Our business is subject to environmental legislation in all jurisdictions in which it operates, and any changes in such legislation could negatively affect our results of operations.*


	Potential changes in accounting standards might cause us to revise our financial results and disclosure in the future, which might change the way analysts measure our business or financial performance.


	*The long-term financial condition of our U.S. and Canadian natural gas transmission and midstream businesses are dependent on the continued availability of natural gas reserves.*