As filed with the Securities and Exchange Commission ~~October 8, 2004~~on December 29, 2005

Registration~~Registration~~ No. ~~333-119077~~333-129779

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

This Offer will expire at 5:00 p.m., New York City time, on January 11, 2006, unless extended or earlier terminated (such date, as the same may be extended or earlier terminated, the “Expiration Date”). Holders of Debentures (as defined below) must surrender their Debentures for conversion on or prior to the Expiration Date to receive the Conversion Consideration (as defined below).

The Williams Companies, Inc.

~~Offer~~ (“Williams”) hereby offers to ~~Exchange~~

~~One (1.0000) Share~~pay a cash premium to holders (“Holders”) of ~~Common Stock Plus $1.47 in Cash~~

~~for~~

~~Each Outstanding FELINE PACS~~^SM

~~in the Form~~any and all of ~~an Income PACS~~^SM

Upits $299,987,000 principal amount outstanding 5.50% Junior Subordinated Convertible Debentures due 2033 (the “Debentures”) who elect to ~~an Aggregate~~convert their Debentures to shares of ~~43,900,000 Income PACS~~

~~We are offering to exchange one (1.0000) share of our~~Williams’ common stock, ~~plus $1.47~~$1.00 par value per share (“Common Stock”), in ~~cash for each validly tendered~~accordance with the terms of the Debentures 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~~Conversion Offer Prospectus (this “Conversion Offer Prospectus”), and in the ~~related letter~~accompanying Letter of ~~transmittal. On October 6, 2004, 44,000,000 Income PACS were outstanding,~~Transmittal (the “Letter of Transmittal” and ~~no Growth PACS were outstanding. We~~together with this Conversion Offer Prospectus, the “Offer”). The Debentures are ~~conducting this~~not listed on any national securities 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Income PACS validly tendered and not withdrawn will be subject to proration as described in this exchange offer prospectus (1) if we determine there is any likelihood that the New York Stock Exchange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with the New York Stock Exchange or (2) if more than 43,900,000 Income PACSbut are ~~validly tendered and not withdrawn prior to the expiration date of the exchange offer.~~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. 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 have not accepted themeligible for ~~exchange.~~

The exchange offer is subject to the conditions described in “The Exchange Offer — Conditions to the Exchange Offer,” including, among other things, the effectiveness of the registration statement of which this exchange offer prospectus forms a part and the continued listing of the Income PACStrading on the ~~New York~~PORTAL Market. The Common Stock ~~Exchange after the exchange offer. The New York Stock Exchange will consider de-listing the 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 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 our common stock is listed~~traded on the New York Stock Exchange under the symbol “WMB.” ~~On September 16, 2004, the day before commencement~~The last reported sale price of the ~~exchange offer,~~Common Stock on December 28, 2005 was $23.25 per share.

The consideration offered hereby is an amount, payable in cash, equal to $5.85 per $50 principal amount of Debentures validly surrendered for conversion, plus $0.35 per $50 principal amount of Debentures, which is equivalent to the interest accrued thereon from and after the last interest payment date prior to the Expiration Date, which interest payment date was December 1, 2005, up to, but not including, the Settlement Date (the “Conversion Consideration”). Williams paid interest in the amount of $0.6875 per $50 principal amount of Debentures on December 1, 2005. Although under the terms of the Debentures, Williams is not obligated to pay interest for a partial interest period on Debentures converted during that period, the Conversion Consideration includes $0.35 per $50 principal amount of Debentures, which is equivalent to the amount of interest that would have accrued and become payable on and after the last interest payment date prior to the Expiration Date, which interest payment date was December 1, 2005, up to, but not including, the Settlement Date, had the Debentures provided for payment of such amount as interest. Holders that validly surrender their Debentures for conversion will receive the Conversion Consideration in addition to the shares of Common Stock issuable upon conversion pursuant to the conversion terms of the Debentures. Each $50 principal amount of the Debentures is convertible into 4.5907 shares of Common Stock, which is equivalent to a conversion price of $10.8916 per share. Williams is not required to issue fractional shares of Common Stock upon conversion of the Debentures. Instead, Williams will pay a cash adjustment based upon the last reported sale price of the ~~Income PACS~~Common Stock on the Expiration Date in lieu of issuing any such fractional shares. The “Settlement Date” in respect of any Debentures that are validly surrendered for conversion is expected to be promptly following the Expiration Date. Holders surrendering their Debentures for conversion after 5:00 p.m., New York ~~Stock Exchange was $13.34 per Income PACS and the last reported sale price of our common stock~~City time, on the ~~New York Stock Exchange was $12.05 per share. On October 7, 2004,~~Expiration Date will not be eligible to receive the ~~last reported sale price~~Conversion Consideration.

Conversion of the ~~Income PACS on the New York~~Debentures and an investment in Williams’ Common 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.

~~We urge you to carefully read the~~involves risks. See “Risk Factors” ~~section beginning~~ on page ~~15 before~~6 for a discussion of issues that you ~~make any decision regarding~~should consider with respect to the ~~exchange offer.~~Offer.

Neither this transaction nor the securities to be issued upon conversion of the Debentures have been approved or ~~not holders of outstanding Income PACS should tender their Income PACS for exchange in~~disapproved by the ~~exchange offer.~~
Securities and Exchange Commission or any state securities commission. Neither the Securities and Exchange Commission nor any state securities commission has ~~approved~~passed upon the fairness or ~~disapproved~~merits of this transaction or upon the accuracy or adequacy of the ~~securities being offered~~information contained in this ~~exchange offer, or determined if this exchange offer prospectus is truthful or complete.~~document. Any representation to the contrary is a criminal offense.
~~Lead~~

~~Merrill Lynch & Co.~~

The ~~date~~Date of this ~~exchange offer prospectus~~Conversion Offer Prospectus is ~~September 17, 2004 (as amended on October 8, 2004).~~December 29, 2005

AVAILABLE INFORMATION

Williams files annual, quarterly and special reports, proxy statements and other information with the SEC under the Exchange Act. These reports, proxy statements and other information can be inspected and copied at the public reference room maintained by the SEC at Room 1580, 100 F Street, N.E., Washington, D.C. 20549. 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 1580, 100 F Street, N.E., Washington, D.C. 20549. Potential investors may obtain information on the operation of the public reference room by calling the SEC at1-800-SEC-0330. The SEC maintains a website on the Internet at http://www.sec.gov that contains reports, proxy and information statements and other information regarding Williams. The reports, proxy and information statements and other information regarding Williams can be downloaded from the SEC’s website and can also be inspected and copied at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005.

INCORPORATION BY REFERENCE

The following documents including all exhibits thereto are “incorporated by reference” into this Conversion Offer Prospectus, which means that important information is disclosed by referring to those documents. The information incorporated by reference is considered to be part of this Conversion Offer Prospectus, and later information that Williams files with the SEC will automatically update and supersede this information. Williams’ Annual Report onForm 10-K for the fiscal year ended December 31, 2004, as amended, Williams’ quarterly reports onForm 10-Q for the fiscal quarters ended March 31, 2005, June 30, 2005 and September 30, 2005, as amended, Williams’ current reports on Form 8-K filed November 17, 2005, November 18, 2005, December 19, 2005, and December 20, 2005 (two filed on this date) and any future filings made by Williams with the SEC under Section 13(a), 13(c), 14, or 15(d) of the Exchange Act (excluding those filings made under Items 2.02 or 7.01 ofForm 8-K) until the offering is completed are hereby incorporated by reference.

A copy of these filings may be obtained at no cost, by writing or calling Williams at the following address: The Williams Companies, Inc., One Williams Center, Tulsa, Oklahoma 74172, Attn: Corporate Secretary, telephone: (918) 573-2000. You may also visit our website at http://www.williams.com, although the information on our website is not part of this Conversion Offer Prospectus.

Holders should ~~carefully read this exchange offer prospectus in its entirety, including the section entitled “Risk Factors,” as well as~~rely only on the information incorporated by reference or provided in this ~~exchange offer prospectus. For further~~Conversion Offer Prospectus or any supplement to this Conversion Offer Prospectus. Williams has not authorized anyone else to provide Holders with information. Holders should not assume that the information ~~regarding The Williams Companies, Inc., see~~in this document is current as of any date other than the ~~section~~date on the front page of this ~~exchange offer prospectus entitled “Where You Can Find More Information.”~~

Conversion Offer Prospectus.

~~Who is making the exchange offer?~~IMPORTANT

~~We are making the exchange offer.~~

~~Why are we making the exchange offer?~~

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 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 rate 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.”

~~What amount of Income PACS is being sought in the exchange offer?~~

~~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 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 Debentures surrendered for ~~the notes or the applicable ownership interest in the Treasury portfolio, as the case~~conversion 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 $41.25 per share.

Our common stock and 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, includingwithdrawn at 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 ratetime up 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), 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~~

~~stock, the same number that you will be obligated to purchase on February 16, 2005, for each of your Income PACS that is not tendered and accepted.~~

~~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.

~~Will we exchange all validly tendered Income PACS?~~

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.”

~~May I tender only a portion of the Income PACS that I hold?~~

~~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 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 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.”

~~What are the 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; 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.”

~~When does the exchange offer expire?~~

~~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~~Expiration Date. In 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~~event of a termination of the ~~exchange offer in any respect prior~~Offer, the Debentures surrendered for conversion pursuant 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

Offer will be ~~accepted for exchange and any Income PACS that have been tendered will be~~promptly returned to the ~~holder. For more information regarding our right~~surrendering Holders.

Debentures surrendered for conversion, along with completed Letters of Transmittal and any other required documents should be directed to ~~extend, amend~~the Conversion Agent (as defined below). Any requests for assistance in connection with the Offer or ~~terminate the exchange offer, see the section~~for additional copies of this ~~exchange offer prospectus entitled “The Exchange~~Conversion Offer ~~— Extension, Delay in Acceptance, Amendment~~Prospectus or ~~Termination.”~~

~~How will I~~related materials should 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. For more information regarding notification of extensions, amendments or the termination of the exchange offer, see the section of this exchange offer prospectus entitled “The Exchange Offer — Extension, Delay in 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 uncertainties affecting our business, the Income PACS and our common stock described in the section of this exchange offer prospectus entitled “Risk Factors,” and the documents 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~~directed 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.”

~~Will Williams receive any cash proceeds from the exchange offer?~~

~~No. We will not receive any cash proceeds from the exchange offer.~~

~~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.

~~How do I tender my Income PACS?~~

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 reason not to accept some or all of your Income PACS, the Income PACS not accepted by us will be returned to you, 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.”

~~Until when may I withdraw previously tendered Income PACS?~~

If not previously returned, you may withdraw previously tendered Income PACS at any time until the exchange offer has expired, that is, 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.”

~~How do I withdraw previously tendered Income PACS?~~

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~~

~~you a commission for doing so. You should consult with your broker or nominee to determine whether any charges will apply.~~

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

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.”

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

No. We are not offering to exchange any 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.

~~With whom may I talk if I have questions about the exchange offer?~~

~~If you have~~Information Agent (as defined below). Any additional questions regarding the ~~exchange offer, please contact~~Offer should be directed to either of 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)~~Dealer Managers (as defined below). ~~If you have questions regarding~~Contact information for the ~~procedures for tendering in~~Information Agent, the ~~exchange offer, require additional exchange offer materials or require assistance in tendering your Income PACS, please contact D.F. King & Co., Inc.,~~Conversion Agent and the ~~information 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~~Dealer Managers is set forth on the back cover of this Conversion Offer Prospectus. Neither the Company nor any of the Dealer Managers, the Trustee (as defined below), the Information Agent or the Conversion Agent makes any recommendation as to whether or not Holders should surrender their Debentures for conversion pursuant to the Offer.

The Information Agent for the Offer is D.F. King & Co., Inc. (the “Information Agent”). The Conversion Agent for the Offer is JPMorgan Chase Bank, National Association (the “Conversion Agent”). JPMorgan Chase Bank, National Association is also the trustee (the “Trustee”) under the indenture pursuant to which the Debentures are governed. Lehman Brothers Inc. and Merrill Lynch & Co. (the “Dealer Managers”) are acting as dealer managers in connection with the Offer.

Subject to the terms and conditions set forth in the Offer, the Conversion Consideration to which a converting Holder is entitled pursuant to the Offer will be paid on the Settlement Date. Under no circumstances will any interest be payable because of any delay in the transmission of funds to Holders by the Conversion Agent.

Notwithstanding any other provision of the Offer, Williams’ obligation to pay the Conversion Consideration upon valid surrender of the Debentures for conversion pursuant to the Offer is subject to, and conditioned upon, the satisfaction of or, where applicable, Williams’ waiver of, the conditions described below under “Terms of the Offer — Conditions to the Offer.”

Williams reserves the right, in its sole discretion, to waive any one or more of the conditions to the Offer at any time. See “Terms of the Offer — Conditions to the Offer.”

Williams reserves the right to extend the Offer, if necessary, so that the Expiration Date occurs upon or shortly after the satisfaction of the conditions to the Offer.

Subject to applicable securities laws and the terms set forth in this Offer, Williams reserves the right:

In accordance with applicable securities laws, if a material change occurs in the information published, sent or given to Holders, Williams will promptly disclose the change in a manner reasonably calculated to inform Holders of the change.

In the event that the Offer is withdrawn or otherwise not completed, the Conversion Consideration will not be paid or become payable to Holders of the Debentures who have validly surrendered their Debentures for conversion in connection with the Offer and the Debentures surrendered for conversion pursuant to the Offer will be promptly returned to the surrendering Holders.

Any Holder who desires to surrender Debentures pursuant to the Offer and who holds physical certificates evidencing such Debentures must complete and sign a Letter of Transmittal in accordance with the instructions therein, have the signature thereon guaranteed (if required by Instruction 4 of the Letter of Transmittal) and send or deliver such manually signed Letter of Transmittal (or a manually signed facsimile thereof), together with certificates evidencing such Debentures being surrendered and any other required documents to the Conversion Agent at its address set forth on the back cover of this Conversion Offer Prospectus. Only Holders of Debentures are entitled to surrender Debentures for conversion.

Beneficial owners of Debentures that are held of record by a broker, dealer, commercial bank, trust company or other nominee must instruct such nominee to surrender the Debentures for conversion on the beneficial owner’s behalf. A Letter of Instructions is included in the materials provided along with this Conversion Offer Prospectus, which may be used by a beneficial owner in this process to effect the surrender of Debentures for conversion. See “Terms of the Offer — Procedure for Surrendering Debentures.”

The Depository Trust Company (“DTC”) has authorized DTC participants that hold Debentures on behalf of beneficial owners of Debentures through DTC to surrender their Debentures for conversion as if they were Holders. To surrender their Debentures for conversion, DTC participants may, in lieu of physically completing and signing the Letter of Transmittal, transmit their acceptance to DTC through the DTC Automated Tender Offer Program (“ATOP”), for which the transaction will be eligible, and follow the procedure for book-entry transfer set forth in “Terms of the Offer — Procedure for Surrendering Debentures.”

Converting Holders will not be obligated to pay brokerage fees or commissions to the Dealer Managers, the Conversion Agent, the Information Agent, the Trustee or the Company.

Any requests for assistance in connection with the Offer or for additional copies of this Conversion Offer Prospectus or related materials should be directed to the Information Agent. Any additional questions regarding the Offer should be directed to either of the Dealer Managers. Contact information for the Information Agent and the Dealer Managers is set forth on the back cover of this Conversion Offer Prospectus. Beneficial owners may also contact their brokers, dealers, commercial banks, trust companies or other nominees through which they hold the Debentures with questions and requests for assistance.

This Conversion Offer Prospectus and the Letter of Transmittal contain important information that should be read before any decision is made with respect to a conversion of Debentures.

The delivery of this Offer shall not under any circumstances create any implication that the information contained herein is correct as of any time subsequent to the date hereof or that there has been no change in the information set forth herein or in any attachments hereto or in the affairs of Williams or any of its subsidiaries or affiliates since the date hereof.

This offer does not constitute an offer to sell or exchange or a solicitation of an offer ~~prospectus.~~to buy or exchange securities in any jurisdiction where it is unlawful to make such an offer or solicitation.

No one has been authorized to give any information or to make any representations with respect to the matters described in this Conversion Offer Prospectus, other than those contained in this Conversion Offer Prospectus. If given or made, such information or representation may not be relied upon as having been authorized by Williams.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

All statements, other than statements of historical facts, included in this Conversion Offer Prospectus which address activities, events or developments that Williams expects, believes or anticipates will or may occur in the future are forward-looking statements. 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. These forward-looking statements include, among others, such things as:

These statements are based on certain assumptions and analysis made by Williams in light of its experience and perception of historical trends, current conditions and expected future developments as well as other factors Williams believes are appropriate in the circumstances. Although Williams believes 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 Conversion Offer Prospectus.

These risks and uncertainties include:

All written or oral forward-looking statements attributable to any of the parties to the Transaction Documents and other documents described herein affiliated with Williams or persons acting on their behalf are expressly qualified in their entirety by the foregoing cautionary statements. Williams undertakes no obligation to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise. However, in accordance with applicable securities laws, if a material change occurs in the information published, sent or given to Holders, Williams will promptly disclose the change in a manner reasonably calculated to inform Holders of the change. In light of these risks, uncertainties and assumptions, the forward-looking events discussed or incorporated by reference herein might not occur.

SUMMARY

~~This~~The following summary ~~highlights material information contained or incorporated by reference in this exchange offer prospectus.~~is provided solely for the convenience of the Holders of the Debentures. This summary is not intended to be complete and ~~does not contain all~~is qualified in its entirety by reference to the full text and more specific details contained elsewhere in this Conversion Offer Prospectus, the Letter of Transmittal and any amendments or supplements hereto or thereto. Holders of the ~~information that you should consider when making a decision regarding the exchange offer. You should carefully~~Debentures are urged to read this ~~entire exchange offer prospectus, including “Risk Factors,”~~Offer in its entirety. Each of the capitalized terms used in this summary and not defined herein has the ~~information we have incorporated by reference into~~meaning set forth elsewhere in this ~~exchange offer prospectus before making a decision to participate in the exchange offer.~~Offer.

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

Today, weWilliams primarily ~~find, produce, gather, process~~finds, produces, gathers, processes, and ~~transport~~transports natural gas. WeWilliams also ~~manage~~manages a wholesale power business. ~~Our~~Williams’ operations ~~stretch across~~are concentrated in the ~~country and serve the~~Pacific Northwest, ~~California,~~ Rocky Mountains, Gulf Coast, Southern California and Eastern ~~Seaboard markets.~~

~~The energy industry has substantially changed over the last two years. Those changes have significantly impacted our operations and will continue to impact future operations.~~Seaboard.

In ~~light of the changed environment, on~~ February ~~20,~~ 2003, ~~we outlined our planned~~Williams announced its business strategy ~~for the next few years. Our refocused strategy is~~focused on migrating to ~~become a smaller~~an integrated natural gas ~~company focusing on key growth markets. We also focused on bolstering our~~business comprised of a smaller portfolio of natural gas businesses, reducing debt and increasing its liquidity through asset sales, strategic levels of financing and reductions in operating ~~costs~~costs. During 2003, Williams made substantial progress in executing the announced plan. In 2004, Williams completed the plan and continued to ~~develop a balance sheet capable of supporting~~focus on disciplined growth, cash management and ~~ultimately growing our remaining businesses.~~

~~Our~~cost efficiencies.

Williams’ business segments include Power, Gas Pipeline, Exploration & Production, Midstream, and Other. See “Part I — ~~Item 1.~~Items 1 and 2. Business and Properties — Business Segments” in ~~our annual report~~the Williams Annual Report onForm 10-K for the fiscal year ending December 31, ~~2003,~~2004, as amended (the “Annual Report”), for a more detailed description of assets owned and services provided by each of ~~our~~its business segments.

~~Our~~

Williams’ principal executive offices are located at One Williams Center, Tulsa, Oklahoma 74172, and ~~our~~its telephone number is (918) 573-2000.

Williams is offering to pay the Conversion Consideration with respect to any and all of the Debentures surrendered for conversion upon the terms and subject to the conditions set forth in this Conversion Offer Prospectus and the related Letter of Transmittal. The Offer and the payment of the Conversion Consideration are conditioned upon, among other things, the satisfaction of certain conditions. See “Terms of the Offer — Conditions to the Offer.”

Purpose of the Offer

The purpose of the Offer is to induce the conversion to Common Stock of any and all of the outstanding Debentures. Williams believes that the issuance of Common Stock upon conversion of the Debentures will strengthen Williams’ capitalization by reducing long-term debt.

~~THE EXCHANGE OFFER~~Selected Summary Consolidated Financial Data of Williams

The ~~material terms~~following financial data for the nine months ended September 30, 2004 and 2005 (the “Interim Summary Data”) have been derived from Williams’ unaudited consolidated financial statements included in Williams’ Quarterly Report onForm 10-Q for the quarter ended September 30, 2005, as amended (the “Third Quarter Report”), and include, in Williams’ management’s opinion, all adjustments necessary to present fairly the data for such periods. The following financial data for the three years ended December 31, 2004 and the Interim Summary Data are integral parts of, and should be read in conjunction with, the consolidated financial statements and notes thereto in the Annual Report onForm 10-K for the year ended December 31, 2004, as amended (the “Annual Report”) and the Third Quarter Report, as well as the related sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” all of which are incorporated herein by reference. Certain amounts below have been restated or reclassified (see Note 1 of Notes to Consolidated Financial Statements in Item 8 of the ~~exchange offer are summarized below. In addition, we urge you to read the detailed descriptions~~Annual Report). Information concerning significant trends in the ~~sections~~financial condition and results of ~~this exchange offer prospectus entitled “The Exchange Offer,” “Description~~operations is contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the ~~Notes,” “Description~~Annual Report and the Third Quarter Report.

Statement of ~~Capital Stock,” “Description~~Operations


			Nine Months Ended
			September 30,						Year Ended December 31,

			2005			2004			2004			2003			2002

			(Millions)
Revenues:
	Power(1)		$	6,307.2		$	7,233.8		$	9,272.4		$	13,195.5		$	56.2
	Gas Pipeline			1,038.1			1,011.0			1,362.3			1,368.3			1,301.2
	Exploration & Production			848.9			563.5			777.6			779.7			860.4
	Midstream Gas & Liquids(1)			2,341.8			2,015.5			2,882.6			2,784.8			1,183.7
	Other			19.4			26.3			32.8			72.0			124.1
	Intercompany eliminations			(1,647.9	)		(1,353.0	)		(1,866.4	)		(1,549.3	)		(91.1	)

		Total revenues		8,907.5			9,497.1			12,461.3			16,651.0			3,434.5

Segment costs and expenses:
	Costs and operating expenses(1)			7,708.1			8,208.2			10,751.7			15,004.3			1,987.7
	Selling, general and administrative expenses			226.8			257.7			355.5			421.3			575.6
	Other (income) expense — net			(1.3	)		25.8			(51.6	)		(21.3	)		240.4

		Total segment costs and expenses		7,933.6			8,491.7			11,055.6			15,404.3			2,803.7

General corporate expenses				106.3			84.5			119.8			87.0			142.8

Operating income (loss):
	Power			(190.3	)		137.3			86.5			145.3			(471.7	)
	Gas Pipeline			456.7			409.6			557.6			539.6			461.3
	Exploration & Production			367.9			156.2			223.9			392.5			504.9
	Midstream Gas & Liquids			343.7			305.2			552.2			178.0			153.2
	Other			(4.1	)		(2.9	)		(14.5	)		(8.7	)		(16.9	)
	General corporate expenses			(106.3	)		(84.5	)		(119.8	)		(87.0	)		(142.8	)

		Total operating income		867.6			920.9			1,285.9			1,159.7			488.0


		Nine Months Ended
		September 30,						Year Ended December 31,

		2005			2004			2004			2003			2002

		(Millions)
Interest accrued		$	(495.3	)	$	(662.9	)	$	(834.4	)	$	(1,293.5	)	$	(1,169.2	)
Interest capitalized			4.3			5.7			6.7			45.5			27.3
Interest rate swap loss			—			(5.3	)		(5.0	)		(2.2	)		(124.2	)
Investing income (loss)			44.9			31.2			48.0			73.2			(113.1	)
Early debt retirement costs			—			(252.4	)		(282.1	)		(66.8	)		—
Minority interest in income and preferred returns of consolidated subsidiaries			(16.8	)		(16.0	)		(21.4	)		(19.4	)		(41.8	)
Other income — net			12.5			19.6			26.8			40.7			24.3

	Income (loss) from continuing operations before income taxes and cumulative effect of change in accounting principles		417.2			40.8			224.5			(62.8	)		(908.7	)
	Provision (benefit) for income taxes		168.6			43.1			131.3			(5.3	)		(290.3	)

	Income (loss) from continuing operations		248.6			(2.3	)		93.2			(57.5	)		(618.4	)

(1)

As discussed in Note 1 of Notes to Consolidated Financial Statements of the Annual Report, the January 1, 2003, adoption of Emerging Issues Task Force Issue No. 02-3 (“EITF 02-3”) required 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 byEITF 02-3, 2002 amounts have not been restated.

Ratio of ~~FELINE PACS,” “Description~~Earnings to Fixed Charges

The following table sets forth the Company’s consolidated ratio of earnings to fixed charges for the ~~Purchase Contracts”~~five years ended December 31, 2004 and ~~“Comparison of Rights Between~~ the ~~Income PACS and Our Common Stock.”~~nine months ended September 30, 2005.


			Year Ended December 31,
	Nine Months Ended
	September 30, 2005		2004		2003			2002			2001		2000

Ratio of earnings to fixed charges(a)		1.86		1.29		—	(b)		—	(b)		2.36		2.48

(a)

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) and preferred returns of consolidated subsidiaries, less 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.


~~Offeror~~(b)		Earnings were inadequate to cover fixed charges by $135.5 million and $944.0 million for the years ended December 31, 2003 and 2002, respectively.

The Offer


The Company		The Williams Companies, Inc.

~~Securities Subject to the Exchange Offer~~The Debentures		~~Up to~~5.50% Junior Subordinated Convertible Debentures due 2033 (CUSIP Nos. 969457845 and 969457852). The Debentures are governed by an ~~aggregate~~Indenture, dated as of ~~43,900,000 Income PACS.~~May 28, 2003, as amended or supplemented (the “Indenture”), among the Company and the Trustee.

The Offer		~~Each Income PACS consists~~Williams is offering to pay a cash premium upon the conversion to Common Stock of ~~(1) a purchase contract, which obligates~~any and all of the ~~holder to purchase from us on February 16, 2005, at a purchase price of $25, newly issued shares of our common stock~~outstanding Debentures equal to the ~~“settlement rate” and (2) a note due February 16, 2007, in the~~amount per $50 principal amount of ~~$25. The note is pledged~~Debentures converted set forth below as the Conversion Consideration on terms and subject to ~~us to secure~~ the ~~holder’s obligation to purchase shares of our common stock under the purchase contract.~~conditions set forth herein.


Expiration Date		~~The settlement rate will be, subject~~January 11, 2006, unless extended or earlier terminated by the Company. Williams reserves the right to ~~adjustment as described in~~extend the ~~section of this exchange offer prospectus entitled “Description~~Offer, if necessary, so that the Expiration Date occurs upon or shortly after the satisfaction of the ~~Purchase Contracts — Anti-Dilution Adjustments”:~~conditions to the Offer.



Conversion Consideration		~~• one (1.0000) share~~$5.85 per $50 principal amount of ~~our common stock if~~Debentures converted pursuant to the ~~applicable market value~~Offer, plus $0.35 per $50 principal amount of ~~our common stock, based~~Debentures, which is equivalent to the interest accrued thereon from and after the last interest payment date prior to the Expiration Date, which interest payment date was December 1, 2005, up to, but not including, the Settlement Date. Williams paid interest in the amount of $0.6875 per $50 principal amount of Debentures 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~~December 1, 2005.



		• 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


Material ~~U.S.~~United States Federal Income Tax Consequences ~~For Income PACS Holders~~		For a summary of the material U.S. 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~~consequences 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,Offer, see ~~the section of this exchange offer prospectus entitled~~ “Material ~~U.S.~~United States Federal Income Tax Consequences.”

Use of Proceeds		Williams will not receive any proceeds from the Offer.

Brokerage Commissions		~~You are not required to pay any~~No brokerage commissions are payable by Holders of the Debentures to the ~~dealer managers. If your Income PACS are held through a broker~~Dealer Managers, the Information Agent, the Company, the Trustee 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

You should ~~rely only on~~consider carefully all of the information ~~contained or~~included and incorporated by reference in this ~~exchange offer prospectus. We have not,~~Conversion Offer Prospectus before deciding to surrender Debentures for conversion. See “Where You Can Find More Information.” The risks and the dealer managers have not, authorized any other person to provide you with different or additional information. If anyone provides you with different or inconsistent information, you should not rely on it. We are offering to exchange, and are seeking tenders of, these securities only in jurisdictions where the offers or tenders are permitted. You should assume that the information appearing in this exchange offer prospectus and the documents incorporated by reference in this exchange offer prospectus is accurate only as of the 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 “Company,” “we,” “our,” “ours” and “us” are to The Williams Companies, Inc., not including its subsidiaries, unless the context requires otherwise and except that such references in the sections of this exchange offer prospectus entitled “Summary — Our Company,” “Risk Factors — Risks Related to Our Business,” “— Risks Related to Legal Proceedings and Governmental Investigations,” “— Risks Affecting Our Strategy and Financing

Risks ~~Related~~Relating to the ~~Exchange~~ Offer

To the extent that Debentures are surrendered for conversion and accepted in the Offer, the trading market for the Debentures that remain outstanding may become more limited. A bid for a debt security with a smaller outstanding principal amount available for trading (a smaller “float”) may be lower than a bid for a comparable debt security with greater float. Therefore, the market price for Debentures not converted pursuant to the Offer may be affected adversely as the Debentures converted pursuant to the Offer will reduce the float. The reduced float may also tend to make the trading price of the Debentures more volatile. Holders of unconverted Debentures may attempt to obtain quotations for the Debentures from their brokers; however, there can be no assurance that an active trading market will exist for the Debentures following the Offer. The extent of the public market for the Debentures following consummation of the Offer would depend upon the number of Holders remaining at such time, the interest in maintaining a market in the Debentures on the part of securities firms and other factors.

If you surrender Debentures pursuant to the Offer, you will be giving up your rights as a holder of Debentures including rights of payment of future principal and interest, and you will cease to be a creditor of Williams. Any shares of Common Stock that are issued upon conversion of the Debentures will be, by definition, junior to claims of the Williams’ creditors which, in turn, are effectively subordinate to the claims of the creditors of the Williams’ subsidiaries.

Williams paid quarterly cash dividends on its Common Stock of $0.01 per share from the quarter ended September 30, 2002, to the quarter ended September 30, 2004, $0.05 per share from the quarter ended December 31, 2004 to the quarter ended June 30, 2005, and $0.075 in the quarter ended September 30, 2005. On November 17, 2005, the Board declared a dividend on the Common Stock of $0.075 per share, which was paid on December 26, 2005 to shareholders of record on December 9, 2005. Because the Expiration Date follows the record date for the dividend, you will not be entitled to the dividend on the Common Stock even if you have validly surrendered and not validly withdrawn your Debentures prior to the record date. There can be no assurances, however, that Williams will continue to declare dividends on the Common Stock. Payment of dividends on the Common Stock will depend on the earnings and cash flows of Williams and its subsidiaries. Even if funds are available, before declaring any dividend, the Board will consider factors that ordinarily affect dividend policy, such as earnings, cash flow, estimates or future earnings and cash flow, business conditions, regulatory factors, Williams’ financial condition and other matters within the discretion of the Board. See “Risks Relating to Williams’ Business.” Williams cannot assure you that dividends will be paid in the future or, if paid, that the dividends will be in the same amount or with the same frequency as in the past.

Williams’ Business” below.

Williams’ Board of Directors has not made a ~~sufficiently large number~~recommendation with regard to whether you should surrender your Debentures for conversion pursuant to the Offer, and Williams has not obtained a third-party determination that the Offer is fair to Holders of ~~Income PACS do~~the Debentures. Williams has not ~~remain outstanding after~~retained and does not intend to retain any unaffiliated representative to act solely on behalf of the ~~exchange offer,~~Holders for purposes of negotiating the ~~trading market for~~terms of this Offer or preparing a report concerning the ~~remaining outstanding Income PACS may be less liquid and market prices may fluctuate significantly depending on the volume~~fairness 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.this Offer.

Williams intends to withhold taxes equal to 30% of ~~our common stock upon settlement of your purchase contract associated~~the Conversion Consideration payable to eachnon-U.S. Holder, as defined below, and submit the withheld amount to the Internal Revenue Service unless such Holder provides Williams with the applicable forms to demonstrate exemption from or entitlement to a reduced withholding tax rate. See “Material United States Federal Income ~~PACS, you will not be entitled~~Tax Consequences —Non-U.S. Holders —Conversion Pursuant to ~~any rights with respect~~the Offer.”

Risks Related 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 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 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 if the applicable record date, if any, for the exercise of rights or the receipt of dividends or other distributions occurs after that date. For example, in the 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 be entitled to vote on the amendment, although you will nevertheless be subject to any changes in the powers, preferences or special rights of our common stock.Williams’ Business

Although Williams has risk ~~management~~measurement 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

adverse changes in energy commodity market prices, volatility, adverse correlation of commodity prices, the liquidity of markets and changes in interest rates might still adversely affect ~~our~~Williams’ earnings and cash flows and ~~our~~its balance sheet under applicable accounting rules, even if risks have been identified.

In an effort to manage ~~our~~its financial exposure related to commodity price and market fluctuations, ~~we have~~Williams has entered into contracts to hedge certain risks associated with ~~our~~its assets and operations, including ~~our~~its long-term tolling agreements. In these hedging activities, ~~we have~~Williams has used fixed-price, forward, physical purchase and sales contracts, futures, financial swaps and option contracts traded in the ~~over-the-counter~~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~~its current credit rating and termination of existing positions (due for example to credit concerns) have greatly limited ~~our~~Williams’ ability to hedge risks identified and have caused

previously hedged positions to become unhedged. To the extent ~~we have~~Williams has unhedged positions, fluctuating commodity prices could cause ~~our~~its net revenues and net income to be volatile.

Some of the hedges of ~~our~~Williams’ tolling contracts are more effective than others in managing economic risk and creating future cash flow certainty. For example, weWilliams may resell ~~our~~its 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 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.

Williams manages counterparty credit risk at the enterprise level for its unregulated businesses and at the business unit level for its regulated business. Risk is managed within the guidelines established by its credit policy. Williams believes that the application of the requirements under the credit policy and the associated control framework, along with its analytical capabilities inherent in its credit system, will enhance its ability to manage counterparty credit risk. However, Williams might not be able to successfully manage all credit risk and as such, future cash flows could be impacted by counterparty default.

The impact of changes in market prices for natural gas on the gas prices received by usWilliams may be reduced based on the level of ~~our~~its hedging strategies. These hedging arrangements may limit ~~our~~Williams’ potential gains if the market prices for natural gas were to rise substantially over the price established by the hedge. In addition, ~~our~~Williams’ hedging arrangements expose usit 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~~Williams hedged production is delivered and the reference price established in the hedging arrangements is such that ~~we are~~Williams is required to make payments to ~~our~~its counterparties; or

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


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

~~Our~~

Williams’ revenues, operating results, profitability, future rate of growth and the value of ~~our~~its power and gas businesses depend primarily upon the prices ~~we receive~~it receives for natural gas and other commodities. Prices also affect the amount of cash flow available for capital expenditures and ~~our~~Williams’ 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~~Williams’ control, including:


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

	•	turmoil in the Middle East and other producing regions;

	•	terrorist attacks;

	•	weather conditions;

	•	the level of consumer demand;

198


	•	~~the level of consumer demand;~~

	•	the price and availability of ~~alternative~~other types of fuels;

	•	the availability of pipeline capacity;

	•	the price and level of foreign imports;

	•	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;~~markets;

	•	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.


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

~~Our~~

Williams’ 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~~Williams does not anticipate or cannot manage, weWilliams could realize material losses from ~~our marketing.~~selling and marketing products in the wholesale energy markets. 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, weWilliams might incur additional losses to the extent of amounts, if any, already paid to, or received from, counterparties. In addition, in ~~our~~Williams’ businesses, weit often ~~extend~~extends credit to ~~our~~its counterparties. Despite performing credit analysis prior to extending credit, ~~we are~~Williams is exposed to the risk that weit might not be able to collect amounts owed to ~~us.~~it. If the counterparty to such a financing transaction fails to perform and any collateral that secures ~~our~~its counterparty’s obligation is inadequate, weWilliams will lose money.

If ~~we are~~Williams is unable to perform under ~~our~~its energy agreements, weit 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~~Williams’ operating results might fluctuate on a seasonal and quarterly basis.*

Revenues from ~~our~~Williams’ 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~~Williams’ overall operating results in the future might fluctuate substantially on a seasonal basis. ~~The pattern of this fluctuation might change~~Demand for gas and other fuels could vary significantly from Williams’ expectations depending on the nature and location of ~~our~~Williams’ facilities and pipeline systems and the terms of ~~our~~its power sale agreements and gas transmission ~~arrangements.~~arrangements relative to demand created by unusual weather patterns.


	~~Our~~Williams’ investments and projects located outside of the United States expose usit 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~~Williams’ realization of value from ~~our~~its international projects.

Williams currently ~~own~~owns 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~~Williams

has interests or in which weit might explore development, acquisition or investment opportunities present

risks of delays in construction and interruption of business, as well as risks of war, expropriation, nationalization, renegotiation, trade sanctions or nullification of existing contracts and changes in law or tax policy, that are greater than in the United States. The uncertainty of the legal environment in certain foreign countries in which ~~we develop~~Williams develops or ~~acquire~~acquires projects or ~~make~~makes investments could make it more difficult to obtain non-recourse project or other financing on suitable terms, could adversely affect the ability of certain customers to honor their obligations with respect to such projects or investments and could impair ~~our~~its ability to enforce ~~our~~its rights under agreements relating to such projects or investments.

Operations in foreign countries also can present currency exchange rate and convertibility, inflation and repatriation risk. In certain conditions under which ~~we develop~~Williams develops or ~~acquire~~acquires projects, or ~~make~~makes investments, economic and monetary conditions and other factors could affect ~~our~~its ability to convert ~~our~~its earnings denominated in foreign currencies. In addition, risk from fluctuations in currency exchange rates can arise when ~~our~~Williams’ 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~~Williams’ ability to meet expenses, including debt service obligations. Foreign currency risk can also arise when the revenues received by ~~our~~Williams’ 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~~Williams receives from these foreign subsidiaries. The hedges and contracts that we have in place to manage foreign currency exchange risks might not be sufficient or we might have some exposures that are not hedged which could result in losses or volatility in our revenues.


	*~~Our~~Williams’ debt agreements and other related transaction documents impose restrictions on usit that may adversely affect ~~our~~its ability to operate ~~our~~its business.*

As of ~~June~~September 30, ~~2004, we~~2005, Williams had approximately ~~$9,759.6 million~~$7.72 billion of ~~indebtedness~~long-term debt outstanding, including the current portion, on a consolidated basis. ~~Our~~Certain of Williams’ debt agreements and other related transaction documents contain covenants that restrict, among other things, ~~our~~its ability ~~to:~~to create liens, sell assets, make certain distributions, repurchase equity and incur additional debt.

• ~~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~~some of Williams’ debt agreements and other related transaction documents contain, and other debt agreements and other related transaction documents that ~~we enter~~it enters into in the future ~~will~~may contain, financial covenants and other limitations with which weWilliams will need to comply. ~~Our~~Williams’ ability to comply with these covenants may be affected by many events beyond ~~our~~its control, and ~~we cannot assure you~~there can be no assurance that ~~our~~its future operating results will be sufficient to comply with the covenants or, in the event of a default under any of ~~our~~its debt agreements and other related transaction documents, to remedy that default.

Risks Related to Legal Proceedings and 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. Such scrutiny has also resulted in various inquiries, investigations and court ~~proceedings.~~proceedings, including a U.S. Department of Justice investigation and private class action and shareholder lawsuits in which Williams is a defendant.

Such inquiries, investigations and court proceedings are ongoing and continue to adversely affect ~~our business as well as the energy trading~~Williams’ business as a whole. WeWilliams might see these adverse effects continue as a result of the uncertainty of these ongoing inquiries and proceedings, or additional inquiries or proceedings, by federal or state regulatory ~~agencies.~~agencies or private plaintiffs. In addition, weWilliams cannot predict the outcome of any of these inquiries or whether these inquiries will lead to additional legal proceedings against ~~us,~~it, civil or criminal fines or penalties, or other regulatory action, including legislation, which might be materially adverse to the operation of ~~our~~Williams’ business and ~~our~~its revenues and net income or increase ~~our~~its operating costs in other ways. Current legal proceedings against Williams arising out of the operation of its Power business, its former telecommunications subsidiary, or other matters related to its ongoing business include environmental matters, disputes over gas measurement and royalty payments, ERISA litigation, shareholder class action suits, regulatory appeals and similar matters. Any or all of these matters might result in adverse decisions against Williams. The result of such adverse decisions, either individually or in the aggregate, could be material and may not be covered fully or at all by insurance. See “Legal Proceedings” in the Annual Report and Williams’ quarterly reports onForm 10-Q for the quarters ended March 31, 2005, June 30, 2005 and September 30, 2005.

Risks Affecting Williams’ Strategy and Financing Needs

In June 2002, Williams announced its intention to exit the wholesale power and energy trading business and divest its trading portfolio. Williams has since decided to maintain its wholesale power and energy trading business and trading portfolio.

Therefore, the legacy issues arising out of the 2000-2001 energy crisis in California, the resulting collapse in energy merchant credit ~~the recent~~and 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~~could continue to affect Williams in the ~~regulated and so-called unregulated utility businesses have been adversely affected.~~

future.

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.

Williams’ transactions in each of ~~our~~its businesses require greater credit assurances, both to be given from and received by usWilliams to satisfy credit support requirements. Additionally, certain market disruptions or a further downgrade of ~~our~~Williams’ credit rating might further increase ~~our~~its cost of borrowing or further impair ~~our~~its ability to access one or any of the capital markets. Such disruptions could include:

Credit rating agencies perform independent ~~analysis~~analyses 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~~ratings and make changes to their criteria from time to time. Williams’ goal is to attain investment grade ~~ratings.~~ratios. However, there is no guarantee that the credit rating

agencies will assign usWilliams investment grade ratings ~~once we meet~~if it meets or ~~exceed~~exceeds their criteria for investment grade ~~ratings.~~

ratios.

Risks Related to the Regulation of ~~Our~~Williams’ Businesses

Existing regulations might be revised or reinterpreted, new laws and regulations might be adopted or become applicable to usWilliams or to ~~our~~its facilities, and future changes in laws and regulations might have a detrimental effect on ~~our~~its business. ~~Certain~~Over the past few years, certain restructured energy 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~~Various forms of market controls and limitations including price caps and bid caps have already been implemented and new controls and market restructuring proposals are in various stages of development, consideration and implementation. There can be no assurance that changes in market structure and regulation will not adversely affect Williams’ business. There also can be no assurance 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.

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~~Williams’ interstate gas pipelines) when dealing with “energy affiliates” as defined by the 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 transmission provider to function independently from employees of energy affiliates, and by restricting the information that transmission providers may provide to energy affiliates. The inefficiencies created by the restrictions on the sharing of employees and information may increase ~~our~~Williams’ costs, and the restrictions on sharing of information may have an adverse impact on ~~our~~Williams’ senior management’s ability to effectively obtain important information about ~~our~~its business.

On June 30, 2005, the FERC issued an order, “Accounting for Pipeline Assessment Cost,” to be effective January 1, 2006. The order requires companies to expense certain assessment costs that Williams has historically capitalized. In September 2005, the FERC denied the Interstate Natural Gas Association of America’s filing for rehearing of this order. We anticipate expensing approximately $27 million to $35 million in 2006 that previously would have been capitalized.

Williams depends on transmission and distribution facilities owned and operated by utilities and other energy companies to deliver the electricity and natural gas ~~we buy~~it buys and ~~sell~~sells 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~~Williams’ 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~~nondiscriminatory 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. WeWilliams cannot predict whether and to what extent the industry will comply with these initiatives, or whether the regulations will fully accomplish the 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~~Williams’ 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 market operators, wethere can ~~offer~~be no assurance that weWilliams will be able to operate profitably in all wholesale power markets.

Williams’ 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, or RTOs, might restrict ~~our~~Williams’ ability to sell power produced by ~~our~~its 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~~Williams’ 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~~Williams is unable to assess fully the impact that these power markets might have on ~~our~~its business.

Williams’ interstate gas sales, transmission and storage operations conducted through ~~our~~its Gas Pipeline business are subject to the 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 regulatory authority extends to:

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~~Outsourcing of Non-Core Support Services

Due to the large number of Williams’ former employees who migrated to an outsourcing provider, access to significant amounts of internal historical knowledge and expertise could become unavailable to Williams, particularly if knowledge transfer initiatives are delayed or ineffective.

Some studies indicate a high failure rate of outsourcing relationships. Although Williams has taken steps to build a cooperative and mutually beneficial relationship with its outsourcing providers, a failure of all or part of these relationships could lead to loss of institutional knowledge and interruption of services necessary for Williams to be able to conduct its business.

Certain information technology application development, human resources and help desk services that are currently provided by an outsourcer have been relocated to service centers operated by Williams’ outsourcing provider outside of the United States during 2005. The economic and political conditions in certain countries from which Williams’ outsourcing providers may provide services to it present similar risks of business operations located outside of the United States, including risks of interruption of business, war, expropriation, nationalization, renegotiation, trade sanctions or nullification of existing contracts and changes in law or tax policy, that are greater than in the United States.

Risks Related to Environmental Matters

Williams is generally responsible for all ~~on-site~~ liabilities associated with the environmental condition of ~~our~~its facilities and assets, ~~which we have~~whether acquired or developed, regardless of when the conditions or liabilities arose and whether they are known or unknown. In addition, in connection with certain acquisitions and sales of assets, weWilliams might obtain, or be required to provide, indemnification against certain environmental liabilities. If ~~we incur~~Williams incurs a material liability, or the other party to a transaction fails to meet its indemnification obligations to ~~us, we~~it, Williams could suffer material losses. If a purchaser of one of ~~our~~Williams’ divested assets incurs a liability due to the environmental condition of the divested asset, weWilliams may have a contractual obligation to indemnify that purchaser or otherwise retain responsibility for the environmental condition of the divested asset. WeWilliams may also have liability for ~~the~~ environmental ~~condition of~~damages related to divested assets under applicable federal, state, municipal or foreign laws and regulations. Changes to applicable laws and regulations, or changes to their interpretation, may increase ~~our~~Williams’ liability. Environmental ~~conditions of~~liabilities related to Williams’ assets or divested assets may not be covered by insurance. Even if environmental ~~conditions~~liabilities are covered by insurance, policy conditions may not be met.

~~We make~~

Williams makes assumptions and ~~develop~~develops 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~~Williams’ assumptions may change. ~~Our~~Williams’ assumptions and expectations are also based on available information. If more information becomes available, ~~to us, our~~Williams’ assumptions may change. Any of these changes may result in not only increased risk related to one or more of ~~our~~its assets, but material losses in excess of current estimates.

Williams’ operations are subject to extensive environmental regulation pursuant to a variety of federal, state, municipal and 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~~Williams’ facilities, sites and other properties associated with ~~our~~Williams’ 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 usWilliams or ~~our~~its 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.~~management, which may affect Williams’ business. Failure to comply with environmental legislation and regulations might result in the imposition of fines and penalties or other sanctions.

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

~~regulations might result in the imposition of fines and penalties or other sanctions.~~ The steps ~~we take~~Williams takes to bring certain of ~~our~~its facilities into compliance could be prohibitively expensive, and weWilliams might be required to shut down, divest or alter the operation of those facilities, which might cause usit to incur losses.

Further, ~~our~~Williams’ regulatory rate structure and ~~our~~its contracts with clients might not necessarily allow usit to recover capital costs ~~we incur~~it incurs to comply with new or existing environmental regulations. Also, weWilliams 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~~Williams fails to obtain and comply with them, the operation of ~~our~~Williams’ facilities could be prevented or become subject to additional costs. Should weWilliams fail to comply with all applicable environmental laws, weWilliams might be subject to penalties and fines or other sanctions imposed against usit by regulatory authorities. No assurance can be made that the costs of complying with environmental legislation in the future will not have a material adverse effect on ~~our~~Williams’ financial condition or results of operations.

Risks Related to Accounting Standards


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

~~Recently~~

Accounting irregularities discovered ~~accounting irregularities~~in the last few years in various industries have forced regulators and legislators to take a renewed look at accounting practices, financial disclosures, companies’ relationships with their independent auditors and retirement plan practices. Because it is still unclear what laws or regulations will ultimately develop, weWilliams 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~~its operations specifically.

In addition, the Financial Accounting Standards Board, or FASB, or the ~~Securities and Exchange Commission, or~~ SEC could enact new accounting standards that might impact how ~~we are~~Williams is required to record revenues, expenses, assets, and liabilities.

Risks Related to ~~Our~~Williams’ Industry


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

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~~Williams’ 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~~Williams’ gathering and processing pipeline facilities.


	*~~Our~~Williams’ drilling, production, gathering, processing and transporting activities involve numerous risks that might result in accidents and other operating risks and costs.*

~~Our~~

Williams’ 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;

• pollution and other environmental risks; and

• natural disasters.

In addition, there are inherent in ~~our~~Williams’ 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~~Williams’ operations and substantial losses to ~~us.~~Williams. In accordance with customary industry practice, ~~we maintain~~Williams maintains 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.

Williams implemented an Integrity Management Plan, or IMP, for its gas transmission pipelines in December 2004, as required by the Pipeline Safety Improvement Act. As part of the IMP, Williams identified High Consequence Areas, or HCAs, through which its pipelines run. An HCA is an area where the potential consequence of a gas pipeline accident may be significant or do considerable harm to people or property. Certain segments of Williams’ pipelines run through HCAs. An event such as those described above in an HCA not only could cause considerable harm to people or property, but could have a material adverse effect on Williams’ financial position and results of operations, particularly if the event is not fully covered by insurance.

Accidents or other operating risks could further result in loss of service available to ~~our~~Williams’ customers. Such circumstances could adversely impact ~~our~~Williams’ ability to meet contractual obligations and retain customers. For example, a ~~26 inch~~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 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~~Williams’ 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 would compete directly with existing service.

In December 2003, Williams received an Amended Corrective Action Order, or ACAO, from the U.S. Department of Transportation’s Office of Pipeline Safety, or OPS, regarding two line breaks in the26-inch segment of Northwest Pipeline referred to above. Williams idled the pipeline segment until its integrity could be assured.

By June 2004, Williams had successfully completed its hydrostatic testing program and returned to service 111 miles of the 268 miles of pipe affected by the ACAO. That effort has restored 131 Mdt/d of the 360 Mdt/d of idled capacity and is anticipated to be adequate to meet most market conditions. To date, Williams’ ability to serve the market demand has not been significantly impacted.

As required by OPS, Williams plans to replace the pipeline’s entire capacity by November 2006 to meet long-term demands. Williams conducted a reverse open season to determine whether any existing customers were willing to relinquish or reduce their capacity commitments to allow Williams to reduce the scope of pipeline replacement facilities. That resulted in 13 Mdt/d of capacity being relinquished and incorporated into the replacement project. In September 2005, Williams received FERC approval to construct and operate approximately 80 miles of36-inch pipeline loop, which will replace most of the capacity previously served by 268 miles of26-inch pipeline in the Washington state area. The estimated cost of the project is $333 million, with a projected in-service date of no later than December 2006. The majority of these costs will be spent in

2005 and 2006. Williams anticipates filing a rate case to recover the capitalized costs relating to restoration and replacement facilities following the in-service date of the replacement facilities.


	*~~Compliance with the Pipeline Safety Improvement Act may result in unanticipated costs and consequences.~~*

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 implementing the IMP and 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.


	*Estimating reserves and future net revenues involves uncertainties and negative revisions to reserve estimates, and oil and gas price declines may lead to impairment of oil and gas assets.*

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 prospectus~~Memorandum represent estimates. In addition, the estimates of future net revenues from ~~our~~Williams’ proved reserves and the 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 period of assessment. Lower oil and gas prices may have the impact of shortening the economic lives of certain fields because it becomes uneconomic to produce all recoverable reserves on such fields, which reduces proved property reserve estimates.

If negative revisions in the estimated quantities of proved reserves were to occur, it would have the effect of increasing the rates of depreciation, depletion and amortization on the affected properties, which would decrease earnings or result in losses through higher depreciation, depletion and amortization expense. The revisions may also be sufficient to trigger impairment losses on certain properties, which would result in a further non-cash charge to earnings. The revisions could also affect the evaluation of goodwill for impairment purposes.

Other Risks


	*The threat of terrorist activities and the potential for continued military and other actions could adversely affect ~~our~~Williams’ business.*

The continued threat of terrorism and the impact of 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~~Williams’ 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~~Williams is taking steps that ~~we believe~~it believes are appropriate to increase the security at locations where ~~our~~its energy assets are located, there is no assurance that weWilliams can completely secure ~~our~~its locations or to completely protect them against a terrorist attack. These developments have subjected ~~our~~Williams’ operations to increased risks and, depending on their ultimate magnitude, could have a material adverse effect on ~~our~~its business. In particular, weWilliams might experience increased capital or operating costs to implement increased security for ~~our~~its energy assets.


	*Historic performance of ~~our~~Williams’ exploration and production business is no guarantee of future performance.*

Performance of ~~our~~Williams’ exploration and production business is affected in part by factors beyond ~~our~~its control, such as:


	•	regulations and regulatory approvals;

	•	availability of capital for drilling projects, which may be affected by other risk factors discussed, or incorporated by reference, in this ~~exchange offer prospectus;~~Conversion 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.~~Conversion Offer Prospectus.

~~Our~~

Williams’ success rate for drilling projects in ~~2003~~2004 should not be considered a predictor of future performance. Reserves that are ~~“proven~~“proved 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~~from known reservoirs under existing economic and operating conditions, but should not be considered as a guarantee of results for future drilling projects.


	*~~Our~~Williams’ assets and operations can be affected by weather and other natural phenomena.*

~~Our~~

Williams’ 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.~~temperatures, making it more difficult for Williams to realize the historical rates of return associated with these assets and operations.

2818

QUESTIONS AND ANSWERS ABOUT THE OFFER

For your convenience, the following is additional summary information regarding the Offer in a question and answer format.


	~~Our restated certificate of incorporation, as supplemented, and bylaw provisions, and several other factors, could limit another party’s ability, to acquire us and could deprive you~~Who is making the Offer?

The Williams Companies, Inc., the issuer of the Debentures, is offering to pay a cash premium if Holders of outstanding Debentures agree to convert their Debentures into shares of its Common Stock in accordance with the terms of the Offer.


	*What securities are the subject of the ~~opportunity to obtain a takeover premium for your shares~~Offer?*

The securities that are the subject of the Offer are Williams’ 5.50% Junior Subordinated Convertible Debentures due 2033. As of the date of this Conversion Offer Prospectus, there are $299,987,000 in aggregate principal amount of Debentures outstanding.


	*What is the purpose of ~~common stock.~~the Offer?*

The purpose of the Offer is to induce the conversion to Common Stock of any and all of the outstanding Debentures. Williams believes that the issuance of Common Stock upon conversion of the Debentures would strengthen Williams’ capitalization by reducing long-term debt.


	*What is the market value of the Debentures?*

The Debentures are not listed on any national securities exchange but are eligible for trading on the PORTAL Market. Accordingly, the Dealer Managers have advised us that there is no practical way to determine the trading history of the Debentures.


	*What is the recent market price of the Common Stock into which the Debentures are convertible?*

~~A number~~

The Common Stock is traded on the New York Stock Exchange under the symbol “WMB.” The last reported sale price of ~~provisions~~the Common Stock on December 28, 2005 was $23.25 per share. Each $50 principal amount of the Debentures is convertible into 4.5907 shares of Common Stock, which is equivalent to a conversion price of $10.8916 per share. See “Price Range of Common Stock and Dividend Policy.”


	*What will I receive in the Offer if I surrender Debentures for conversion and they are accepted?*

For each $50 in ~~our restated certificate~~principal amount of ~~incorporation, as supplemented, bylaws~~Debentures converted pursuant to the Offer, you will receive (1) 4.5907 shares of Common Stock issuable upon conversion of the Debentures in accordance with their terms and ~~rights agreement~~(2) the Conversion Consideration. Williams is not required to issue fractional shares of Common Stock upon conversion of the Debentures. Instead, Williams will pay a cash adjustment based upon the last reported sale price of the Common Stock on the Expiration Date.


	*How does the cash payment I will receive if I surrender Debentures for conversion compare to the payments I would receive on Debentures if I do not surrender them for conversion?*

If you do not surrender Debentures for conversion pursuant to the Offer you will receive interest payments of 5.50% per annum, payable quarterly in arrears on each March 1, June 1, September 1 and December 1 through maturity (subject to the interest deferral provision described below under ~~Delaware law could make it difficult~~“Description of the Debentures”) and will continue to have the right to convert your Debentures in accordance with their terms, subject to Williams’ right, on or after June 1, 2010, to redeem all or any portion of the Debentures at 100% of the principal amount of Debentures being redeemed, plus accrued and unpaid interest, if any, if for ~~another company to acquire us and for~~at least 20 trading days within the preceding period of 30 consecutive trading days, including on the last day in the30-day period, the closing price of Williams’ common stock exceeds 130% of the conversion price; however, you will not be entitled to receive ~~any related takeover premium for our common stock. These provisions include, but are not limited~~the Conversion Consideration to ~~provisions providing for a classified board of directors, providing that directors cannot~~ be ~~removed except for cause and by the affirmative action~~paid upon conversion of the ~~holders of at least three-fourths of~~Debentures pursuant to the outstanding shares of our common stock and providing that only our chairman of the 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.”

Offer.

2919

If, however, you participate in the Offer, for each $50 in principal amount of Debentures converted pursuant to the Offer, you will receive (1) 4.5907 shares of Common Stock issuable upon conversion of the Debentures in accordance with their terms and (2) the Conversion Consideration. If your Debentures are converted pursuant to the Offer, you will no longer be entitled to quarterly interest payments on your Debentures.

~~USE OF PROCEEDS~~


	*Will I receive accrued and unpaid interest from and after December 1, 2005 to the Expiration Date?*

Although under the terms of the Debentures, Williams is not obligated to pay interest for a partial interest period on Debentures converted during that period, the Conversion Consideration includes $0.35 per $50 principal amount of Debentures, which is equivalent to the amount of interest that would have accrued and become payable after the last interest payment date prior to the Expiration Date, which interest payment date was December 1, 2005, up to, but not including, the Settlement Date had the Debentures provided for payments of such amounts as interest.


	*If I surrender my Debentures for conversion, will I receive the $0.075 dividend on the Common Stock declared by the Williams’ Board on November 17, 2005?*

No. Only shareholders of record on December 9, 2005, were entitled to the $0.075 per share dividend on the Common Stock declared by the Board on November 17, 2005 and paid on December 26, 2005. Because the Expiration Date of the Offer follows the record date set by the Board, you will not ~~receive any cash proceeds from the exchange offer. We will pay all expenses related~~be entitled to the ~~exchange offer, other than any commissions or concessions~~dividend on the Common Stock even if you have validly surrendered and not validly withdrawn your Debentures for conversion prior to the record date.


	*How will fluctuations in the trading price of the Common Stock affect the amount I will receive if I surrender Debentures for conversion?*

For each $50 in principal amount of ~~any broker or dealer and~~Debentures converted pursuant to the ~~out~~Offer, you will receive (1) 4.5907 shares of ~~pocket expenses~~Common Stock issuable upon conversion of the ~~dealer managers. Except as otherwise provided~~Debentures in accordance with their terms and (2) the ~~section~~Conversion Consideration. If the market price of ~~this exchange offer prospectus entitled “The Exchange~~the Common Stock declines, the value of the shares of Common Stock you will receive will decline. The trading value of the Common Stock could fluctuate depending upon any number of factors, including those specific to Williams and those that influence the trading prices of equity securities generally, many of which are beyond Williams’ control.


	*When will I receive the Conversion Consideration for surrendering my Debentures for conversion pursuant to the Offer?*

Assuming Williams has not previously elected to terminate the Offer (which it can only do if a condition to the Offer has not been satisfied, see “Terms of the Offer — ~~Transfer Taxes,” we will pay~~Conditions to the ~~transfer taxes, if any,~~Offer”), Debentures validly surrendered for conversion in accordance with the procedures set forth herein prior to 5:00 p.m., New York City time, on the ~~exchange~~Expiration Date, will, upon the terms and subject to the conditions of ~~any Income PACS.~~

~~MARKET FOR COMMON STOCK AND INCOME PACS~~

~~Our common stock~~the Offer, be accepted for conversion and payment by the ~~Income PACS are~~Company of the Conversion Consideration, and payments will be made therefor promptly on the Settlement Date. Williams intends to deposit the Conversion Consideration with the Conversion Agent or return Debentures surrendered for Conversion pursuant to the Offer, as applicable, on the third business day following the Expiration Date. If the Offer is not consummated, no such conversion will occur and no payments will be made. Unless the Offer is terminated, all conditions to the Offer will be either satisfied or waived by the Company on or prior to the Expiration Date.


	*Will the Common Stock I receive upon conversion of the Debentures be freely tradable?*

Yes. The Common Stock will be listed on the New York Stock Exchange under the ~~symbols “WMB”~~symbol “WMB.” Generally, the Common Stock you will receive upon conversion will be freely tradable, unless you are an affiliate of Williams, as that term is defined in the Securities Act, or you acquired your Debentures from an affiliate of Williams in an unregistered transaction.


	*Can I still convert my Debentures into shares of Common Stock if I do not participate in the Offer?*

Yes. However, if you do not exercise your conversion rights prior to the Expiration Date, you will not receive the Conversion Consideration. Pursuant to the terms of the Indenture, the Debentures are convertible at a rate of 4.5907 shares of Common Stock for each $50 principal amount of Debentures, which is equivalent to a conversion price of $10.8916 per share of Common Stock. The number of shares of Common Stock you would receive upon conversion of your Debentures pursuant to the Offer is the same number of shares of Common Stock that you would receive if you exercised your conversion rights pursuant to the terms of the Indenture after the Expiration Date and ~~“WMB PrI,~~Williams makes the election described above, subject to adjustment for certain events. See “Description of Debentures — Conversion Rights.”


	*If the Offer is consummated and I do not participate or I do not surrender all of the Debentures that I hold, how will my rights and obligations under the Debentures be affected?*

Debentures not surrendered for conversion pursuant to the Offer will remain outstanding after the consummation of the Offer through maturity in 2033,providedthat, under specified circumstances, Williams may redeem all or a portion of the Debentures, at its option, on or after June 1, 2010 at 100% of the principal amount of Debentures being redeemed, plus accrued and unpaid interest, if any, if for at least 20 trading days within the preceding period of 30 consecutive trading days, including on the last day in the30-day period, the closing price of Williams’ common stock exceeds 130% of the conversion price. Holders of Debentures not surrendered for conversion pursuant to the Offer will continue to have the same rights under the Debentures as they are entitled to today. If the Company consummates the Offer and thereby reduces the aggregate principal amount of outstanding Debentures, the liquidity of your Debentures may be adversely affected. See “Risk Factors — Risks Relating to the Offer.”


	*Are any Debentures held by the Company’s officers or directors?*

No. None of the Company’s directors or executive officers beneficially holds Debentures.


	*Is Williams making a recommendation regarding whether I should surrender my Debentures for conversion pursuant to the Offer?*

Williams has not made, nor will it make a recommendation to any Holder, and will remain neutral as to whether you should surrender your Debentures for Conversion pursuant to the Offer. You must make your own investment decision with regard to the Offer. Williams urges you to carefully read this Conversion Offer Prospectus and the related Letter of Transmittal in its entirety, including the information set forth in the section entitled “Risk Factors,” ~~respectively.~~and the other documents incorporated by reference herein.


	*Does Williams have the authority to issue the Common Stock upon conversion of the Debentures?*

Yes. The Common Stock that will be issued upon conversion of the Debentures consists of authorized shares of Williams’ Common Stock which Williams may issue without further stockholder approval. Provided that the conditions described under the section of this Conversion Offer Prospectus entitled “Terms of the Offer — Conditions to the Offer” have been satisfied, and unless the Offer has been terminated, the Conversion Agent will distribute to Holders who have surrendered their Debentures for conversion the shares of Common Stock that such Holders are entitled to receive upon such conversion. The Debentures surrendered for conversion pursuant to the Offer will be retired and cancelled. Holders entitled to receive Common Stock issuable upon conversion of the Debentures will be treated for all purposes as the record holder or holders of the Common Stock on the Settlement Date. For more information regarding the timing of the issuance of the Common Stock in the Offer, see the section of this Conversion Offer Prospectus entitled “Terms of the Offer — Acceptance of Debentures for Conversion and Payment of Conversion Consideration.”


	*What are the conditions to the Offer?*

The Offer is subject to applicable law and the conditions described under “Terms of the Offer — Conditions to the Offer.”

The Offer is not conditioned upon any minimum principal amount of Debentures being surrendered for conversion. Williams currently expects that each of the conditions will be satisfied and that no waiver of any condition will be necessary.


	*When does the Offer expire?*

The Offer will expire at 5:00 p.m., New York City time, on January 11, 2006, unless extended or earlier terminated by the Company.


	*Under what circumstances can the Offer be extended, amended or terminated?*

Williams may extend or amend the Offer in its sole and absolute discretion, and it expressly reserves the right, in its sole discretion and subject toRule 14e-l(c) under the Exchange Act, to delay acceptance for conversion of, or payment of Conversion Consideration in respect of, Debentures in order to comply with any applicable law. In addition, Williams may terminate the Offer if any one or more of the conditions to the Offer is not satisfied, but in no other circumstance. See “Terms of the Offer — Conditions to the Offer.”


	*How will I be notified if the Offer is extended, amended or terminated?*

Any extension, amendment or termination of the Offer will be followed promptly by public announcement thereof, the announcement in the case of an extension of the Offer to be issued no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. Without limiting the manner in which any public announcement may be made, Williams shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than by issuing a release to the Dow Jones News Service.


	*What risks should I consider in deciding whether or not to surrender my Debentures for conversion pursuant to the Offer?*

In deciding whether to participate in the Offer, you should carefully consider the discussion of risks and uncertainties affecting the Offer, Williams’ business and the Common Stock described under “Risk Factors” herein and in the documents incorporated by reference herein.


	*What are the material United States federal income tax consequences of the Offer?*

In the opinion of Gibson, Dunn & Crutcher LLP, counsel to Williams, although the matter is not free from doubt, the surrender of the Debentures in exchange for the Conversion Consideration and Common Stock should be treated for U.S. federal income tax purposes as a “recapitalization.” Williams intends to withhold taxes equal to 30% of the Conversion Consideration payable to eachnon-U.S. Holder, as defined below, and submit the withheld amount to the Internal Revenue Service unless such Holder provides Williams with the applicable forms to demonstrate exemption from or entitlement to a reduced withholding tax rate. For more information, please see the section of this Conversion Offer Prospectus entitled “Material United States Federal Income Tax Consequences.” The U.S. federal income tax consequences of the Offer to you will depend on your own personal circumstances and the treatment of the conversion of Debentures pursuant to the Offer under current U.S. federal income tax law, which is not entirely clear. The Company therefore urges you to consult your own tax advisor for a full understanding of the tax consequences of participating in the Offer.


	*Will the Company receive any proceeds from the Offer?*

No.


	*How do I surrender my Debentures for conversion pursuant to the Offer?*

If your Debentures are held in the name of a broker, dealer or other nominee, the Debentures may be surrendered for conversion by your nominee through the Depository Trust Company (“DTC”). If your

Debentures are not held in the name of a broker, dealer or other nominee, you must surrender your Debentures for conversion together with a completed Letter of Transmittal and any other documents required thereby or hereby, to the Conversion Agent, no later than 5:00 p.m. New York City time, on the Expiration Date. For more information regarding the procedures for surrendering your Debentures pursuant to the Offer. See “Terms of the Offer — Procedures for Surrendering Debentures.”


	*May I surrender for conversion only a portion of the Debentures that I hold?*

Yes. You do not have to surrender all of your Debentures for conversion to participate in the Offer. However, you may only surrender Debentures for conversion in integral multiples of $50 principal amount of the Debentures.


	*What happens if some or all of my Debentures are not accepted for conversion?*

If the Offer closes, all Debentures properly surrendered will be accepted for conversion. If Williams decides not to accept some or all of your Debentures because they were not properly surrendered, the Debentures not accepted by Williams will be returned to you, at Williams’ expense, promptly after the Expiration Date. DTC will credit any withdrawn or unaccepted Debentures to the surrendering Holder’s account at DTC. See “Terms of the Offer — Procedure for Surrendering Debentures.”


	*What is the deadline and what are the procedures for withdrawing previously surrendered Debentures?*

Debentures previously surrendered for conversion may be withdrawn at any time up until 5:00 p.m. New York City time, on the Expiration Date. For a withdrawal of surrendered Debentures to be effective, a written, telegraphic or facsimile transmission with all the information required must be received by the Conversion Agent on or prior to 5:00 p.m. New York City time, on the Expiration Date at its address set forth on the back cover of this Conversion Offer Prospectus. See “Terms of the Offer — Withdrawal of Surrendered Debentures.”


	*Who do I call if I have any questions on how to surrender my Debentures for conversion or any other questions relating to the Offer?*

Any requests for assistance in connection with the Offer or for additional copies of this Conversion Offer Prospectus or related materials should be directed to the Information Agent. Any questions regarding the Offer should be directed to either of the Dealer Managers. Contact information for the Information Agent and the Dealer Managers is set forth on the back cover of this Conversion Offer Prospectus. Beneficial owners may also contact their brokers, dealers, commercial banks, trust companies or other nominees through which they hold the Debentures with questions and requests for assistance.

PRICE RANGE OF COMMON STOCK

The Common Stock is listed on the NYSE under the symbol “WMB.” The following table ~~sets forth~~shows the high and low ~~sales price~~reported sale prices and dividends ~~declared~~paid per share of ~~our common stock and high and low sales price per Income PACS on~~ the ~~New York~~Common Stock ~~Exchange during~~in the ~~periods shown:~~consolidated transaction reporting system in “The Dow Jones News Retrieval Service” for the stated calendar quarter.

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


		High		Low		Dividends

2005
	Fourth Quarter (through December 28, 2005)	$	25.72	$	19.54	$	0.075	(1)
	Third Quarter		25.32		18.91		0.075
	Second Quarter		19.40		15.62		0.05
	First Quarter		19.48		15.18		0.05
2004
	Fourth Quarter		17.18		12.04		0.05
	Third Quarter		12.67		11.36		0.01
	Second Quarter		12.36		9.56		0.01
	First Quarter		11.47		8.49		0.01
2003
	Fourth Quarter		10.73		8.79		0.01
	Third Quarter		9.57		6.05		0.01
	Second Quarter		9.04		4.63		0.01
	First Quarter		4.84		2.51		0.01

(1)

Only shareholders of record on December 9, 2005, were entitled to the $0.075 per share dividend on the Common Stock declared by the Board on November 17, 2005 and paid on December 26, 2005. Because the Expiration Date of the Offer follows the record date set by the Board, you will not be entitled to the dividend on the Common Stock even if you have validly surrendered and not validly withdrawn your Debentures for conversion prior to the record date.

On ~~September 16, 2004, the day before commencement of the exchange offer,~~December 28, 2005, the last reported sale price of the ~~Income PACS on the New York~~Common 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$23.25 per share. As of ~~October 6, 2004,~~December 15, 2005, there were ~~517,455,520 shares of common stock outstanding, owned by~~ approximately ~~13,500~~12,693 record holders of ~~record. As~~the Common Stock.

BOOK VALUE PER COMMON SHARE

The book value per share of ~~October 6, 2004, there were 44,000,000 Income PACS outstanding. No Growth PACS were outstanding~~the Common Stock as of ~~October 6, 2004.~~September 30, 2005 was $9.00.

USE OF PROCEEDS

The Company will not receive any proceeds from the Offer.

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 our dividend policy in 2004.

3024

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

The following ~~table sets forth consolidated~~financial data for the nine months ended September 30, 2004 and 2005 (the “Interim Selected Data”) have been derived from the Third Quarter Report and include, in Williams’ management’s opinion, all adjustments necessary to present fairly the data for such periods. The following financial data as of ~~the dates~~December 31, 2004 and 2003 and for the ~~periods presented. The financial data for each of the~~three 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~~2004 and the Interim Selected Data are ~~qualified in their entirety by,~~an integral part of, and should be read in conjunction with, ~~our audited~~the consolidated financial statements and notes thereto in the Annual Report and Third Quarter Report, as well as the related ~~notes thereto and the related~~sections entitled “Management’s Discussion and Analysis of Financial ~~Condition~~Conditions and Results of Operations” all of which are incorporated herein by reference. All other amounts have been prepared from our financial records. Certain amounts below have been restated or reclassified. See Item 8, “Notes to Consolidated Financial Statements — Note 1 — Description of business, basis of presentation and summary of significant accounting policies” in ~~our annual report on Form 10-K~~the Annual Report for discussion of changes in 2004, 2003 and 2002. Results for the ~~year ended December 31, 2003, as amended, which is incorporated in this exchange offer prospectus by reference. The financial data as~~years 2001 and 2000 also include amounts related to the discontinued operations 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,~~Williams Communications Group, 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.previously owned communications subsidiary (“WilTel”).

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


		Nine Months Ended
		September 30,						Year Ended December 31,

		2005			2004			2004		2003				2002			2001			2000

								(Millions, except per share amounts)
Revenues(1)		$	8,907.5		$	9,497.1		$	12,461.3	$	16,651.0			$	3,434.5		$	4,899.5		$	4,859.2
Income (loss) from continuing operations(2)			248.6			(2.3	)		93.2		(57.5	)			(618.4	)		640.5			666.5
Income (loss) from discontinued operations(3)			(1.8	)		92.6			70.5		326.6				(136.3	)		(1,118.2	)		(142.2	)
Cumulative effect of change in accounting principles(4)			—			—			—		(761.3	)			—			—			—
Diluted earnings (loss) per common share:
	Income (loss) from continuing operations		0.42			(0.01	)		0.18		(0.17	)			(1.37	)		1.28			1.49
	Income (loss) from discontinued operations		—			0.18			0.13		0.63				(0.26	)		(2.23	)		(0.32	)
	Cumulative effect of change in accounting principles		—			—			—		(1.47	)			—			—			—
Total assets(5)			33,655.8			25,559.1			23,993.0		27,021.8				34,988.5			38,614.2			34,776.6
Short-term notes payable and long-term debt due within one year(5)			122.4			276.6			250.1		938.5				2,077.1			2,510.4			3,193.2
Long-term debt(5)			7,598.7			8,667.1			7,711.9		11,039.8				11,075.7			8,285.0			6,316.8
Preferred interests in consolidated subsidiaries(5)			—			—			—		—				—			976.4			877.9
Williams obligated mandatorily redeemable preferred securities of Trust(5)			—			—			—		—		��		—			—			189.9
Stockholders’ equity(5)(6)			5,154.4			4,008.7			4,955.9		4,102.1				5,049.0			6,044.0			5,892.0
Cash dividends per common share			0.175			0.03			0.08		0.04				0.42			0.68			0.60


(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~~of the ~~year ended December 31, 2003, as amended,~~Annual Report, the adoption of ~~Emerging Issues Task Force Issue No.~~EITF 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 on January 1, 2003, these revenues were presented net of costs. As permitted byEITF 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 Also, 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~~of the ~~year ended December 31, 2003, as amended,~~Annual Report for discussion of revenue recognized in 2003 related to the correction of prior period items.

~~(4)~~(2) See Note 4 of Notes to Consolidated Financial Statements of the Annual Report for discussion of asset sales, impairments and other accruals in 2004, 2003 and 2002.
(3) See Note 2 of Notes to Consolidated Financial Statements ~~contained in our annual report on Form 10-K for~~of the ~~year ended December 31, 2003, as amended,~~Annual Report for the discussion of the 2004, 2003 ~~2002~~ and ~~2001 income (losses) from discontinued operations. The~~2002 income (loss) from discontinued ~~operations~~operations. Results for the years 2001 and 2000 ~~and 1999 relates~~also include amounts related to the discontinued 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).WilTel.

~~(5)~~(4) 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.~~principles includes a $762.5 million charge related to the adoption of EITF 02-3, “Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management Activities,” slightly offset by $1.2 million related to the adoption of SFAS No. 143, “Accounting for Asset Retirement Obligations.” The $762.5 million charge primarily consists of the fair value of power tolling, load serving, transportation and storage contracts. These contracts did not meet the definition of a derivative and, therefore, are no longer reported at fair value.

~~(7)~~(5) ~~Includes cash provided by operating activities of discontinued operations of $11.5 million and $64.8 million for the six months ended June~~At September 30 ~~2004 and 2003, respectively, and $162.2 million, $583.2 million and $461.2 million for the years ended~~or 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.~~appropriate.

~~(8)~~
(6) ~~Earnings were inadequate to cover fixed charges by $14.5 million~~Stockholders’ equity for 2001 includes the January 2001 common stock issuance, the issuance of common stock for the ~~six months ended June 30, 2004~~Barrett acquisition and ~~by $909.6 million for~~ the ~~year ended December 31, 2002.~~impact of the WilTel spinoff.

~~(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.

3326

TERMS OF THE ~~EXCHANGE~~ OFFER

~~Purpose and Effects of the Exchange Offer~~General

~~Terms of 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

Upon the terms and subject to the conditions set forth in this ~~exchange offer prospectus~~Conversion Offer Prospectus and in the related ~~letter~~Letter of ~~transmittal. Income PACS validly tendered~~Transmittal and ~~not withdrawn will be subject~~any supplements or amendments hereto or thereto, Williams hereby offers to ~~proration as described~~pay an amount in ~~this exchange offer prospectus (1) if we determine there is~~cash upon conversion of 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 Income PACS. We are not tendering for Growth PACS. If you hold Growth PACS and would like to participate in the exchange offer, then before tendering, you must recreate Income PACS from your Growth PACS. 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 Growth PACS.

~~Any Income PACS tendered but not accepted because they were not validly tendered shall remain outstanding upon completion~~all of the ~~exchange offer. Income PACS accepted~~$299,987,000 outstanding principal amount of the Debentures equal to the Conversion Consideration in ~~the exchange offer, including the underlying purchase contracts and notes, will be retired and cancelled. We intend~~addition to ~~treat~~ the ~~exchange of your Income PACS for~~ shares of ~~our common stock plus cash~~Common Stock issuable upon conversion pursuant to the ~~exchange offer as a cash settlement~~original terms of the ~~purchase contract~~Debentures. Holders that validly surrender and ~~redemption of the note~~do not validly withdraw their Debentures 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~~conversion prior to ~~receive quarterly contract adjustment payments and interest payments on the notes payable after the completion of the exchange offer.~~

~~Expiration Date~~

~~The term “expiration date” means~~ 5:00 p.m., New York City time, on ~~October 18, 2004. However, if we extend~~ the ~~period~~Expiration Date will, subject to the terms and conditions of the Offer, receive the Conversion Consideration.

Debentures surrendered for conversion may be validly withdrawn at any time up until 5:00 p.m., New York City time, on the Expiration Date. In the event of a termination of the Offer, Debentures surrendered for conversion pursuant to the Offer will be promptly returned to the surrendering Holders. Williams or its affiliates may seek to induce conversion of any Debentures that remain outstanding following termination or expiration of the Offer through privately negotiated transactions, tender offers, exchange offers or otherwise, upon such terms as it may determine, which may include cash consideration that is more or less than the ~~exchange offer remains open, the term “expiration date of this exchange offer” means the latest time and date to which the exchange offer is so extended.~~

~~Source of Cash~~Conversion Consideration to be ~~Paid in~~paid pursuant to the ~~Exchange~~ Offer

~~If Income PACS aggregating 43,900,000 units, the maximum amount we will~~ or other consideration.

Williams’ obligation to accept for ~~exchange, are validly tendered~~conversion and ~~accepted for exchange by us, we will~~to pay ~~an aggregate of approximately $65 million in cash to exchanging holders. We intend to fund~~ the ~~cash component~~related Conversion Consideration is conditioned upon satisfaction of the ~~exchange consideration from our available cash.~~

conditions as set forth in “Terms of the Offer — Conditions to the ~~Exchange~~Offer.” As described therein, subject to applicable securities laws and the terms set forth in this Conversion Offer

~~Notwithstanding any other provision~~ Prospectus, Williams reserves the right, prior to the expiration of the ~~exchange offer to~~Offer on the ~~contrary, the exchange offer is subject to the following conditions that we may not waive:~~

Expiration Date:

~~the registration statement of which this exchange offer prospectus forms a part shall have become effective and no stop order suspending the effectiveness of the registration statement~~

• to waive any 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~~all conditions to the ~~exchange offer will cause the outstanding Income PACS to be de-listed from the New York Stock Exchange for any reason; and~~Offer;

• to extend the satisfaction of the following conditions set forth in the dealer manager agreement as of the expiration date of the exchange offer (any of which may be waived by the dealer managers in their discretion):Offer;
• to terminate the Offer, but only if any condition to the offer is not satisfied (see “Terms of the Offer — Conditions to the Offer); or
• otherwise to amend the Offer in any respect.

Any amendment to the Offer will apply to all Debentures surrendered for conversion pursuant to the Offer. Any extension, amendment or termination will be followed promptly by public announcement thereof, the announcement in the case of an extension of the Offer to be issued no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. Without limiting the manner in which any public announcement may be made, Williams shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than by issuing a release to the Dow Jones News Service.

If Williams makes a material change in the terms of the Offer or the information concerning the Offer, Williams will promptly amend the Offer materials, disseminate notice of such change to Holders, extend such Offer to the extent required by law and, if required, promptly file a post-effective amendment to the registration statement relating to the Offer.

None of Williams, its Board, the Trustee, the Information Agent, the Conversion Agent or the Dealer Managers makes any recommendation as to whether or not Holders should surrender their Debentures for conversion pursuant to the Offer. Holders must make their own decisions with regard to surrendering their Debentures.

Acceptance of Debentures for Conversion and Payment of Conversion Consideration

Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment) and applicable law, Williams will accept for conversion, and promptly convert pursuant to the terms of the Debentures and will pay the Conversion Consideration in respect of, all Debentures validly surrendered for conversion pursuant to the

Offer (and not validly withdrawn, or if withdrawn and then validly re-surrendered). Such payment shall be made by the deposit of the Conversion Consideration in immediately available funds by Williams promptly after the Expiration Date with the Conversion Agent, which will act as agent for converting Holders for the purpose of receiving payment from Williams and transmitting such payment to converting Holders. Williams intends to deposit the Conversion Consideration with the Conversion Agent or to return Debentures surrendered for conversion pursuant to the Offer, as applicable, on the third business day following the Expiration Date. Under no circumstances will interest on the Conversion Consideration, as applicable, be paid by Williams by reason of any delay on behalf of the Conversion Agent in making payment. Williams expressly reserves the right, in its sole discretion and subject toRule 14e-l(c) under the Exchange Act, to delay acceptance for conversion of, or payment of Conversion Consideration in respect of, Debentures in order to comply with any applicable law. See “— Conditions to the Offer.” In all cases, payment by the Conversion Agent to Holders or beneficial owners of the Conversion Consideration for Debentures surrendered for conversion pursuant to the Offer will be made only after receipt by the Conversion Agent of (1) timely confirmation of a book-entry transfer of such Debentures into the Conversion Agent’s account at DTC pursuant to the procedures set forth in the section “— Procedure for Surrendering Debentures,” (2) a properly completed and duly executed Letter of Transmittal (or manually signed facsimile thereof) or a properly transmitted Agent’s Message (as defined below) through ATOP and (3) any other documents required by the Letter of Transmittal.

For purposes of the Offer, Debentures surrendered for conversion will be deemed to have been accepted for conversion and payment of Conversion Consideration, if, as and when Williams gives oral or written notice thereof to the Conversion Agent.

Converting Holders will not be obligated to pay brokerage fees or commissions to the Dealer Managers, the Information Agent, the Conversion Agent or the Company, or, except as set forth in Instruction 7 of the Letter of Transmittal, transfer taxes on the payment of the Conversion Consideration.

Procedure for Surrendering Debentures

The surrender of Debentures for conversion in accordance with the procedures described below will constitute a valid surrender of the Debentures. Holders will not be entitled to receive the Conversion Consideration unless they surrender their Debentures for conversion pursuant to the Offer prior to 5:00 p.m., New York City time, on the Expiration Date.

The method of delivery of Debentures and Letters of Transmittal, any required signature guarantees and all other required documents, including delivery through DTC and any acceptance of an Agent’s Message transmitted through ATOP, is at the election and risk of the person surrendering Debentures for conversion and delivering a Letter of Transmittal or transmitting an Agent’s Message and, except as otherwise provided in the Letter of Transmittal, delivery will be deemed made only when actually received by the Conversion Agent. If delivery is by mail, it is suggested 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 to permit delivery to the Conversion Agent on or prior to such date. Manually signed facsimile copies of the Letter of Transmittal, properly completed and duly executed, will be accepted.


	*Valid Surrender*

A Holder’s surrender of Debentures for conversion (and subsequent acceptance of such Debentures by Williams) pursuant to one of the procedures set forth below will constitute a binding agreement between such Holder and Williams in accordance with the terms and subject to the conditions set forth herein and in the Letter of Transmittal.

Only Holders are authorized to surrender their Debentures for conversion. The procedures by which Debentures may be surrendered by beneficial owners that are not Holders will depend upon the manner in which the Debentures are held. Holders who wish to transfer Debentures and who wish to obtain the Conversion Consideration or wish to provide such benefit to a transferee should validly surrender the Debentures for conversion prior to 5:00 p.m., New York City time, on the Expiration Date, designating the transferee as payee in the box marked “Special Delivery Instructions” contained in the Letter of Transmittal.

Holders that surrender for conversion and do not withdraw their Debentures prior to 5:00 p.m., New York City time, on the Expiration Date will receive the Conversion Consideration, including accrued and unpaid interest up to, but not including, the applicable Settlement Date. Notwithstanding any other provision hereof, payment of the Conversion Consideration for Debentures held through DTC surrendered and accepted for conversion will, in all cases, be made only after timely receipt (i.e., on or prior to 5:00 p.m., New York City time, on the Expiration Date, if the Holder is to receive the Conversion Consideration) by the Conversion Agent of a Book-Entry Confirmation (as defined below) of the transfer of such Debentures into the Conversion Agent’s account at DTC, as described above, and a properly transmitted Agent’s Message.


	*Debentures Held by Record Holders*

Each record Holder must complete and sign a Letter of Transmittal in accordance with the instructions therein, have the signature thereon guaranteed (if required by Instruction 4 of the Letter of Transmittal) and send or deliver such manually signed Letter of Transmittal (or a manually signed facsimile thereof), together with certificates, if any, evidencing such Debentures being surrendered for conversion and any other required documents to the Conversion Agent at its address set forth on the back cover of this Conversion Offer Prospectus.


	*Surrender of Debentures Held Through a Custodian*

To effectively surrender for conversion Debentures that are held of record by a broker, dealer, commercial bank, trust company or other nominee, the beneficial owner thereof must instruct such custodian to surrender the Debentures on the beneficial owner’s behalf. A Letter of Instructions included in the materials provided with this Offer may be used by a beneficial owner in this process to effect the surrender. Any beneficial owner of Debentures held of record by DTC or its nominee, through authority granted by DTC, may direct the DTC participant through which such beneficial owner’s Debentures are held in DTC to surrender, on such beneficial owner’s behalf, the Debentures beneficially owned by such beneficial owner.


	*Surrender of Debentures Held Through DTC*

To effectively surrender for conversion Debentures that are held through DTC, DTC participants should electronically transmit their acceptance through ATOP (and thereby surrender Debentures), for which the transaction will be eligible, followed by a properly completed and duly transmitted Agent’s Message delivered to the Conversion Agent. Upon receipt of such Holder’s acceptance through ATOP, DTC will edit and verify the acceptance and send an Agent’s Message to the Conversion Agent for its acceptance. Delivery of surrendered Debentures must be made to the Conversion Agent pursuant to the book-entry delivery procedures set forth below.

Except as provided below, unless the Debentures being surrendered for conversion are deposited with the Conversion Agent prior to 5:00 p.m., New York City time, on the Expiration Date, (accompanied by a properly completed and duly transmitted Agent’s Message), Williams may, at its option, treat such surrender as defective for purposes of the right to receive the Conversion Consideration. Payment of the Conversion Consideration will be made only against surrender of the Debentures for conversion and delivery of all other required documents.

In order to validly surrender for conversion on or prior to 5:00 p.m., New York City time, on the Expiration Date, with respect to Debentures surrendered pursuant to ATOP, a DTC participant using ATOP must also properly transmit an Agent’s Message. Pursuant to authority granted by DTC, any DTC participant which has Debentures credited to its DTC account at any time (and thereby held of record by DTC’s nominee) may directly instruct the Conversion Agent to surrender Debentures prior to 5:00 p.m., New York City time, on the Expiration Date, as though it were the Holder by so transmitting an Agent’s Message.


	*Book-Entry Delivery Procedures*

The Conversion Agent will establish accounts with respect to the Debentures at DTC for purposes of the Offer within two business days after the date of this Conversion Offer Prospectus, and any financial institution

that is a participant in DTC may make book-entry delivery of the Debentures by causing DTC to transfer such Debentures into the Conversion Agent’s account in accordance with DTC’s procedures for such transfer. However, although delivery of Debentures may be effected through book-entry transfer into the Conversion Agent’s account at DTC, the Letter of Transmittal (or manually signed facsimile thereof), with any required signature guarantees or an Agent’s Message in connection with a book-entry transfer, and any other required documents, must, in any case, be transmitted to and received by the Conversion Agent at one or more of its addresses set forth on the back cover of this Conversion Offer Prospectus on or prior to or the Expiration Date. Delivery of documents to DTC does not constitute delivery to the Conversion Agent. The confirmation of a book-entry transfer into the Conversion Agent’s account at DTC as described above is referred to herein as a “Book-Entry Confirmation.”

The term “Agent’s Message” means a message transmitted by DTC to, and received by, the Conversion Agent and forming a part of the Book-Entry Confirmation, which states that DTC has received an express acknowledgment from the participant in DTC surrendering the Debentures for conversion and that such participant has received the Letter of Transmittal and agrees to be bound by the terms of the Letter of Transmittal and the Company may enforce such agreement against such participant.

In the case of Debentures held through DTC, surrender of Debentures for conversion must be made by transfer of Debentures into the Conversion Agent’s account at DTC, and acceptance of the conversion offer must be made by causing an Agent’s Message to be transmitted to the Conversion Agent.


	*Signature Guarantees*

Signatures on all Letters of Transmittal must be guaranteed by a recognized participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Program or the Stock Exchange Medallion Program (a “Medallion Signature Guarantor”), unless the Debentures surrendered for conversion are surrendered:


	•	by a Holder of Debentures (or by a participant in DTC whose name appears on a security position listing as the ~~accuracy in all material respects~~owner of such Debentures) who has not completed the ~~representations and warranties made by us~~box marked “Special Issuance Instructions” or the box marked “Special Delivery Instructions” in the ~~dealer manager agreement;~~Letter of Transmittal or

	•	for the ~~delivery by us to the dealer managers~~account of ~~customary officers’ and secretary’s certificates as~~a member firm of a registered national securities exchange, a member of the ~~expiration date;~~National Association of Securities Dealers, Inc. or a commercial bank or trust company having an office or correspondent in the United States (each, an “Eligible Institution”).

See Instruction 4 of the Letter of Transmittal. If the Debentures are registered in the name of a person other than the signer of the Letter of Transmittal or if Debentures not accepted for payment or not surrendered for conversion are to be returned to a person other than the Holder, then the signatures on the Letter of Transmittal accompanying the surrendered Debentures must be guaranteed by a Medallion Signature Guarantor as described above. See Instruction 4 of the Letter of Transmittal.


	*Backup Withholding*

To prevent United States federal income tax backup withholding, each converting Holder of Debentures that is a United States person generally must provide the Conversion Agent with such Holder’s correct taxpayer identification number and certify that such Holder is not subject to United States federal income tax backup withholding by completing the SubstituteForm W-9 included in the Letter of Transmittal. Each converting Holder of Debentures that is not a United States person generally will be subject to a 30% withholding tax unless such holder provides the Conversion Agent with an applicable Form W-8BEN orW-8ECI to demonstrate exemption from withholding or a reduced rate of withholding. For a discussion of the material United States federal income tax consequences relating to backup withholding, see “Material United States Federal Income Tax Consequences.”


	*Determination of Validity*

All questions as to the validity, form, eligibility (including time of receipt) and acceptance of any Debentures surrendered for conversion pursuant to any of the procedures described above will be determined by Williams in Williams’ sole discretion (whose determination shall be final and binding). Williams reserves the absolute right to reject any and all surrenders of any Debentures determined by it not to be in proper form or if the acceptance for conversion of, or payment of Conversion Consideration in respect of, such Debentures may, in the opinion of Williams’ counsel, be unlawful. Williams also reserves the absolute right, in its sole discretion, to waive any of the conditions of the Offer or any defect or irregularity in any surrender with respect to Debentures of any particular Holder, whether or not similar defects or irregularities are waived in the case of other Holders. Williams’ interpretation of the terms and conditions of the Offer (including the Letter of Transmittal and the instructions thereto) will be final and binding. None of Williams, the Conversion Agent, the Dealer Managers, the Information Agent, the Trustee or any other person will be under any duty to give notification of any defects or irregularities in surrenders or will incur any liability for failure to give any such notification. If Williams waives its right to reject a defective surrender of Debentures, the Holder will be entitled to the Conversion Consideration.

Withdrawal of Surrendered Debentures

Debentures previously surrendered for conversion may be withdrawn at any time up until 5:00 p.m., New York City time, on the Expiration Date. In the event of a termination of the Offer, the Debentures surrendered for conversion pursuant to the Offer will be promptly returned to the surrendering Holders. In addition, even after the Expiration Date, if Williams has not accepted for payment any validly surrendered Debentures after 40 business days from the commencement of the Offer, such Debentures may be withdrawn.

For a withdrawal of surrendered Debentures to be effective, a written, telegraphic or facsimile transmission notice of withdrawal must be received by the Conversion Agent on or prior to 5:00 p.m., New York City time, on the Expiration Date at its address set forth on the back cover of this Conversion Offer Prospectus. Any such notice of withdrawal must:


	•	specify the name of the person who surrendered the Debentures to be withdrawn;

	•	contain the ~~delivery~~description of the Debentures to be withdrawn and the aggregate principal amount represented 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;such Debentures; and

	•	be signed by the ~~delivery~~Holder of such Debentures in the same manner as the original signature on the Letter of Transmittal by uswhich such Debentures were surrendered (including any required signature guarantees), if any, or be accompanied by (x) documents of transfer sufficient to have the ~~dealer managers of legal opinions rendered by our counsel as~~Trustee register the transfer of the ~~expiration date.~~Debentures into the name of the person withdrawing such Debentures and (y) a properly completed irrevocable proxy that authorized such person to effect such revocation on behalf of such Holder.

~~The New York Stock Exchange~~

If the Debentures to be withdrawn have been delivered or otherwise identified to the Conversion Agent, a signed notice of withdrawal is effective immediately upon written or facsimile notice of withdrawal even if physical release is not yet effected. Any Debentures validly withdrawn 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 valuebe deemed to be not validly surrendered for conversion for purposes of the ~~Income PACS is less than $1 million~~Offer.

Withdrawal of Debentures can be accomplished only in accordance with the foregoing procedures.

All questions as to the validity (including time of receipt) of notices of withdrawal will be determined by Williams in Williams’ sole discretion, and Williams’ determination shall be final and binding. None of Williams, the Conversion Agent, the Dealer Managers, the Information Agent, the Trustee or ~~for~~ any other ~~reason based on the suitability for the continued listing~~person will be under any duty to give notification of ~~the Income PACS~~any defects or irregularities 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 for a period of ten business days and provide holders with notice of withdrawal, or incur any liability for failure to give any such ~~extension as described below under “— Extension, Delay in Acceptance, Amendment or Termination.”~~notification.

~~In addition, notwithstanding~~31

Conditions to the Offer

Notwithstanding any other provision of the ~~exchange offer~~Offer and in addition to (and not in limitation of) Williams’ rights to extend and/or amend the ~~contrary, we will~~Offer, Williams shall not be required to accept for ~~exchange Income PACS tendered~~conversion pursuant to the ~~exchange offer~~Offer, pay Conversion Consideration in respect of, and may delay the acceptance for conversion and payment of Conversion Consideration in respect of, any Debentures surrendered for conversion pursuant to the Offer, in each event subject toRule 14e-l(c) under the Exchange Act, and may terminate ~~or extend~~ the ~~exchange offer~~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 Income PACS validly tendered and 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:~~

~~there shall~~ have been instituted, threatened or be pending any action or proceeding before or by any court, governmental, regulatory or administrative agency or instrumentality, or by any other person, in connection with the exchange offer, that is, or is reasonably likely to be, in our reasonable judgment, materially adverse to our business, operations, properties,occurred:



		(1) there shall have been instituted, threatened or be pending any action or proceeding (or there shall have been any material adverse development to any action or proceeding currently instituted, threatened or pending) before or by any court, governmental, regulatory or administrative agency or instrumentality, or by any other person, in connection with the Offer that, in the sole judgment of Williams, either (a) is, or is reasonably likely to be, materially adverse to the business, operations, properties, condition (financial or otherwise), assets or liabilities of Williams and its subsidiaries, taken as a whole, or ~~prospects, or which~~(b) would or might ~~in our reasonable judgment,~~ prohibit, prevent, restrict or delay consummation of the ~~exchange offer;~~Offer;



	•	(2) 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~~the sole judgment of Williams, either (a) is, or is reasonably likely to be, materially adverse to the business, operations, properties, condition (financial or otherwise), assets or liabilities of Williams and its subsidiaries, taken as a whole, or (b) 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;~~Offer;


	•	(3) there shall have occurred or be likely to occur any ~~material adverse change to our~~event affecting the business ~~operations, properties, condition, assets, liabilities, prospects~~ or financial ~~affairs;~~affairs of Williams that, in the sole judgment of Williams, would or might prohibit, prevent, restrict or delay consummation of the Offer;

	•	~~there~~ (4) the Trustee shall have ~~occurred:~~objected in any respect to, or taken action that could, in the sole judgment of Williams, adversely affect the consummation of, the Offer or shall have taken any action that challenges the validity or effectiveness of the procedures used by Williams in the making of the Offer or the acceptance for conversion of, or payment of Conversion Consideration in respect of, Debentures surrendered for conversion pursuant to the Offer; or

• (5) there has occurred (a) 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;~~
• markets, (b) any decline of more than 20% in the price of the Debentures or the Common Stock since the date of commencement of the Offer, (c) a declaration of a banking moratorium or any suspension of payments in respect toof banks in the United ~~States;~~
• States or other major financial markets, (d) 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~~the reasonable judgment of the Company, might affect the extension of credit by banks or other lending ~~institutions; or~~
• institutions, (e) 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~~directly or indirectly involving the United States or ~~its citizens.~~(f) in the case of any of the foregoing existing on the date hereof, a material acceleration or worsening thereof.

~~These~~

The foregoing conditions ~~to the exchange offer~~ are for ~~our~~the sole benefit of Williams and may be asserted by us in our reasonable discretion or may be waived by us, in whole or in part, in our 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 andWilliams 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 may be waived by Williams, in whole or in part, at any ~~such waiver would depend on circumstances prevailing at the~~ time ~~of such waiver. Any determination by us concerning the events described in this section will be final~~ and ~~binding upon all persons.~~

~~Extension, Delay in Acceptance, Amendment or Termination~~

~~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~~the sole discretion of Williams. Notwithstanding the previous sentence, unless the Offer is terminated, all conditions to the ~~exchange agent and~~Offer will be either satisfied or waived by ~~making public announcement by press release~~Williams prior to 9:the Expiration Date. The failure by Williams at any time to exercise any of the foregoing rights will not be deemed a waiver of any other right, and each right will be deemed an ongoing right which may be asserted at any time and from time to time, but only prior to the Expiration Date.

DESCRIPTION OF DEBENTURES

Williams issued $300,000,000 aggregate principal amount of Debentures pursuant to the Indenture. Holders may request a copy of the Indenture at Williams’ address shown under the caption “Incorporation by Reference.”

The following description is a summary of the material provisions of the Debentures. It does not purport to be complete. This summary is subject to and is qualified by reference to all the provisions of the Indenture, including the definitions of certain terms used in the Indenture. Wherever particular provisions or defined terms of the Indenture or form of Debenture are referred to, these provisions or defined terms are incorporated in this prospectus by reference. Williams urges Holders to read the Indenture because it, and not this description, defines the rights of Holders of the Debentures.

Unless otherwise specified, references to “Williams” in the following description mean only The Williams Companies, Inc. and not its subsidiaries.

General

The Debentures are general unsecured obligations of Williams. Williams’ payment obligations under the Debentures are subordinated to all of Williams’ current and future senior and senior subordinated indebtedness to the extent and in the manner set forth in the Indenture and effectively subordinated to all debts and other liabilities of Williams’ subsidiaries as described under “— Subordination of Debentures.” The Debentures are convertible into Common Stock as described under “— Conversion Rights.”

The Debentures are limited to $300,000,000 in aggregate principal amount. The Debentures are issued in minimum denominations of $50 and integral multiples of $50. The Debentures mature on June 1, 2033, unless converted, redeemed or repurchased earlier and are not subject to any sinking fund.

The Debentures bear interest at a rate of 5.50% per annum from May 28, 2003, or from the most recent date to which interest has been paid or duly provided for, and the amount of interest payable for any period is computed on the basis of a360-day year of twelve30-day months.

Interest is payable on March 1, June 1, September 1 and December 1 of each year, beginning September 1, 2003, to record Holders at the close of business on the preceding February 15, May 15, August 15 or November 15, as the case may be. Interest payable upon redemption or repurchase is paid to the person to whom principal is payable.

Interest payments payable on any Debentures that are not punctually paid on any interest payment date cease to be payable to the person in whose name such Debentures are registered on the original record date, and such defaulted payment is instead made to the person in whose name such Debentures are registered on the special record date or other specified date determined in accordance with the Indenture. Interest on the Debentures not paid on the scheduled payment date is accrued and compounded quarterly, to the extent permitted by law, at the applicable interest rate.

If any interest payment date is not a business day, then such interest payment is made on the next day which is a business day, and without any interest or other payment accruing as a result of such delay, except that if such business day falls in the next calendar year, such interest payment will be made on the immediately preceding business day, in each case with the same force and effect as if made on the date such interest payment was originally payable.

Williams maintains an office in the Borough of Manhattan, The City of New York, where it pays the principal and premium, if any, on the Debentures and Holders may present the Debentures for conversion, registration of transfer or exchange for other denominations. Williams pays interest by check mailed to each Holder’s address as it appears in the convertible debenture register, provided that a Holder with an aggregate principal amount in excess of $2.0 million, is paid, at its written election, by wire transfer in immediately available funds. However, payments to The Depository Trust Company, New York, New York, which Williams refers to as DTC, are made by wire transfer of immediately available funds to the account of DTC or its nominee.

Registration of transfers or exchanges of Debentures are effected without charge, but payment of a sum sufficient to cover any tax or any other governmental charges that may be imposed in connection with any transfer or exchange may be required.

Option to Extend Interest Payment Period

So long as Williams is not in default in the payment of interest on the Debentures, Williams has the right under the Indenture to defer payments of interest on the Debentures by extending the interest payment period at any time, and from time to time, on the Debentures. During any such extension period, interest on the Debentures continues to accrue at the then-applicable annual interest rate, compounded quarterly, to the extent permitted by law.

Williams may not extend any interest payment period for the Debentures to more than 20 consecutive quarters, and no extension may extend beyond the stated maturity of the Debentures or end on a date other than an interest payment date. If Williams exercises its right to defer payments of interest, then under the terms of the Debentures Williams may not, and may not permit any subsidiary to, make any of the payments described under “— Restrictions on Certain Payments.”

Prior to the termination of any extension period, Williams may further defer payments of interest by extending the interest payment period, subject to the limitations described above. Upon the termination of any extension period and the payment of all amounts then due, Williams may commence a new extension period, subject to the above requirements. Williams has no current intention of exercising its right to defer payments of interest on the Debentures.

Williams is required to give, or to cause the trustee to give, the Holders notice of Williams’ election of such extension period at least five business days before the earlier of (1) the record date for the scheduled interest payment date for the first quarter of such extension period or (2) the date upon which Williams is required to give notice of the record or payment date for such related interest payment for the first quarter to any national stock exchange or other organization on which the Debentures are listed or quoted, if any, or to Holders.

As used in this prospectus, a “business day” means any day, other than a Saturday or Sunday, that is not a day on which banking institutions in The City of New York, New York are authorized or obligated by law or executive order to remain closed or on which the principal corporate trust office of the trustee under the Indenture is closed for business.

Conversion Rights


	*General*

Holders may convert any of their Debentures, in whole or in part, into shares of Common Stock at any time prior to the close of business on the final maturity date of the Debentures or, in the case of Debentures called for redemption, prior to the close of business on the business day prior to the redemption date, subject to prior redemption or repurchase of the Debentures.

The number of shares of Common Stock a Holder will receive upon conversion of the Debentures will be determined by multiplying the number of $50 principal amount of Debentures such Holder converts by the conversion rate on the Expiration Date. The initial conversion rate for the Debentures is 4.5907 shares of Common Stock per $50 principal amount of Debentures, subject to adjustment as described below, which represents an initial conversion price of $10.8916 per share. If Williams calls Debentures for redemption, Holders may convert the Debentures only until the close of business on the business day prior to the redemption date unless Williams fails to pay the redemption price. If the Holder has submitted its Debentures for repurchase upon a change of control, it may not convert its Debentures unless it withdraws its repurchase election as described under “— Repurchase at Option of the Holder upon Change of Control.” A Holder may convert its Debentures in part so long as the principal amount of such part is $50 or an integral multiple of $50.

Upon conversion, a Holder will not be entitled to receive any accrued and unpaid interest, whether or not in arrears, on the Debentures and no interest will be payable on Debentures with respect to any interest payment date occurring subsequent to the date of conversion, except in the limited circumstance described below. However, if Debentures are surrendered for conversion after 5:00 ~~a.m.~~p.m., New York City time, on any record date but on or prior to the next succeeding interest payment date, Holders of such Debentures at the close of business on the record date will receive the interest payable on the corresponding interest payment date notwithstanding the conversion. Therefore, such Debentures, upon surrender for conversion, must be accompanied by payment in next day funds equal to the amount of interest that the registered Holder of such Debentures on such record date is entitled to receive. Notwithstanding the foregoing, no such payment need be made (1) if Williams has specified a redemption date that is after a record date and on or prior to the next interest payment date, (2) if Williams has specified a repurchase date following a change of control that is during such period or (3) to the extent of any overdue interest, if overdue interest exists at the time of conversion with respect to such Debenture.

Williams will not issue fractional common shares upon conversion of Debentures. Instead, Williams will pay cash in lieu of fractional shares based on the last reported sale price of the Common Stock on the Expiration Date. As used in this prospectus, a “trading day” means any day on which the New York Stock Exchange is open for business.

Williams’ delivery to the Holder of the full number of shares of Common Stock into which a Debenture is convertible, together with any cash payment for such Holder’s fractional shares, will be deemed to satisfy Williams’ obligation to pay:


	•	the principal amount of the Debenture; and

	•	accrued but unpaid interest attributable to the period from the most recent interest payment date to the date of conversion, subject to the fourth preceding sentence above.

As a result, accrued but unpaid interest to the date of conversion is deemed to be paid in full rather than cancelled, extinguished or forfeited.

Williams has authorized and reserved for issuance the maximum number of shares of its Common Stock that it may be required to issue upon the conversion of Debentures. Shares of Common Stock issued upon conversion are validly issued, fully paid and nonassessable.

Conversion Rate Adjustments

Williams is required to adjust the conversion rate if any of the following events occurs:


	•	Williams issues Common Stock as a dividend or distribution on its Common Stock;

	•	Williams issues to all holders of its Common Stock certain rights or warrants to purchase its Common Stock at less than the then current market value;

	•	Williams subdivides or combines its Common Stock; or

	•	Williams distributes to all holders of its Common Stock, shares of its capital stock, evidences of indebtedness or assets, including securities but excluding:


	•	rights or warrants specified above;

	•	any dividends or distributions in connection with the liquidation or winding up of Williams;

	•	dividends or distributions specified above; and

	•	cash distributions.

If Williams distributes capital stock of, or similar equity interests in, its subsidiary or any other business unit of Williams’, then the conversion rate will be adjusted based on the market value of the securities so distributed relative to the market value of Common Stock, in each case based on the average closing sale prices of those securities (where such closing sale prices are available) for the 10 trading days

commencing on and including the fifth trading day after the date on which “ex-dividend trading” commences for such distribution on the New York Stock Exchange or such other national or regional exchange or market on which the securities are then listed or quoted;


	•	Williams distributes cash, excluding any dividend or distribution in connection with its liquidation, dissolution or winding up or any quarterly cash dividend on Common Stock to the extent that the aggregate cash dividend per share of Common Stock in any quarter does not exceed the greater of:


	•	the amount per share of Common Stock of the next preceding quarterly cash dividend on the Common Stock to the extent that the preceding quarterly dividend did not require an adjustment of the conversion rate pursuant to this clause, as adjusted to reflect subdivisions or combinations of the Common Stock; and

	•	10% of the average of the last reported sale price of the Common Stock during the ten trading days immediately prior to the declaration date of the dividend, calculated at the time of each distribution.

If an adjustment is required to be made under this clause as a result of a distribution that is a quarterly dividend, the adjustment would be based upon the amount by which the distribution exceeds the amount of the quarterly cash dividend permitted to be excluded pursuant to this clause. If an adjustment is required to be made under this clause as a result of a distribution that is not a quarterly dividend, the adjustment would be based upon the full amount of the distribution;


	•	Williams or one of its subsidiaries makes a payment in respect of a tender offer or exchange offer for Common Stock to the extent that the cash and value of any other consideration included in the payment per share of Common Stock exceeds the closing sale price per share of Common Stock on the trading day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer; and

	•	someone other than Williams or one of Williams’ subsidiaries makes a payment in respect of a tender offer or exchange offer in which, as of the closing date of the offer, Williams’ board of directors is not recommending rejection of the offer. The adjustment referred to in this clause will only be made if:


	•	the tender offer or exchange offer is for an amount that increases the offeror’s ownership of Common Stock to more than 25% of the total shares of Common Stock outstanding; and

	•	the cash and value of any other consideration included in the payment per share of Common Stock exceeds the closing sale price per share of Common Stock on the business day next succeeding the last date on which tenders or exchanges may be made pursuant to the tender or exchange offer.


	However, the adjustment referred to in this clause will generally not be made if as of the closing of the offer, the offering documents disclose a plan or an intention to cause Williams to engage in a consolidation or merger or a sale of all or substantially all of Williams’ assets.

If the rights provided for in Williams’ rights agreement dated February 6, 1996 or in any future stockholder rights plan adopted by Williams have separated from Common Stock in accordance with the provisions of the applicable stockholder rights agreement so that the Holders would not be entitled to receive any rights in respect of the Common Stock issuable upon conversion of the Debentures, the conversion rate will be adjusted as if Williams distributed to all holders of its Common Stock, evidences of indebtedness or assets as described under the fourth bullet point above, subject to readjustment in the event of the expiration, termination or redemption of the rights. In lieu of any such adjustment, Williams may amend such applicable stockholder rights agreement to provide that upon conversion of the Debentures the Holders will receive, in addition to the Common Stock issuable upon such conversion, the rights which would have attached to such shares of Common Stock if the rights had not become separated from the Common Stock under such applicable stockholder rights agreement. See “Description of Capital Stock — Preferred Stock Purchase Rights.”

In the event of:


	•	any reclassification of Common Stock;

	•	a consolidation, merger or combination involving Williams; or

	•	a sale or conveyance to another person or entity of all or substantially all of Williams’ property and assets;

in which holders of Common Stock would be entitled to receive stock, other securities, other property, assets or cash for their Common Stock, upon conversion of a Holder’s Debentures the Holder will be entitled to receive the same type of consideration which it would have been entitled to receive if it had converted the Debentures into Common Stock immediately prior to any of these events. If the transaction also constitutes a change of control, the Holder can require Williams to repurchase all or a portion of its Debentures as described under “— Repurchase at Option of the Holder upon Change of Control.”

The Holder may in certain situations be deemed to have received a distribution subject to U.S. federal income tax as a dividend in the event of any taxable distribution to holders of Common Stock or in certain other situations requiring a conversion rate adjustment.

Williams may from time to time, to the extent permitted by law, increase the conversion rate by any amount for any period of at least 20 days. In that case, Williams will give at least 15 days’ notice of such increase. In addition, Williams may make such increases in the conversion rate as it deems advisable to avoid or diminish any income tax to Holders of Common Stock resulting from any dividend or distribution of stock, or rights to acquire stock, or from any event treated as such for income tax purposes.

Williams will not be required to make an adjustment in the conversion rate unless the adjustment would require a change of at least 1% in the conversion rate. However, Williams will carry forward any adjustments that are less than 1% of the conversion rate. Except as described above in this section, Williams will not adjust the conversion rate for any issuance of Common Stock or convertible or exchangeable securities or rights to purchase Common Stock or convertible or exchangeable securities.

The “closing sale price” of Common Stock on any date means the closing per share sale price, or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average closing bid and the average closing ask prices, on such date as reported in composite transactions for the principal United States securities exchange on which Common Stock is traded or, if Common Stock is not listed on a United States national or regional securities exchange, as reported by the Nasdaq System or by the National Quotation Bureau Incorporated. In the absence of such a quotation, Williams will determine the closing sale price on the basis Williams considers appropriate.

Optional Redemption By Williams

Williams may redeem the Debentures prior to maturity, in whole or in part, at any time on or after June 1, 2010 if the closing sale price of Common Stock for at least 20 trading days in the period of 30 consecutive trading days ending on the trading day prior to the mailing of the notice of redemption, including the last day in such period, exceeds 130% of the then-prevailing conversion price. The redemption price will be equal to 100% of the principal amount to be redeemed, plus accrued and unpaid interest, including deferred interest, and other amounts to but excluding the date of redemption, payable in cash.

Williams will mail any notice of redemption at least 30 and no more than 60 days before the redemption date to each Holder of Debentures to be redeemed at its registered address. Unless Williams defaults in payment of the redemption price, on the redemption date interest shall cease to accrue on the Debentures called for redemption.

Subject to applicable law, Williams or Williams’ affiliates may at any time and from time to time purchase outstanding Debentures by tender, in the open market or by private agreement.

If less than all of the outstanding Debentures are to be redeemed, the trustee will select the Debentures to be redeemed in principal amounts of $50 or multiples of $50 by lot, pro rata or by another method the trustee

considers fair and appropriate. If a portion of a Holder’s Debentures is selected for partial redemption and the Holder converts a portion of the Debentures, the converted portion will be deemed to be of the portion selected for redemption.

Williams may redeem the Debentures only in whole, and not in part, if it has failed to pay any interest on the Debentures when due and such failure to pay is continuing, including during an extension period. Williams will notify the Holders if it redeems the Debentures.

Repurchase at Option of the Holder Upon Change of Control

If a change of control, as defined below, occurs at any time prior to the maturity of the Debentures, Holders may require Williams to repurchase their Debentures, in whole or in part, on the repurchase date specified as described below. The Debentures may be repurchased in principal amounts of $50 or integral multiples of $50.

Williams will repurchase the Debentures at a price equal to 100% of the principal amount to be repurchased, plus accrued and unpaid interest, including deferred interest, to, but excluding, the repurchase date.

Within 30 days after the occurrence of a change of control, Williams must give notice of the change of control and the applicable repurchase date to registered Holders of Debentures at their addresses shown in the register of the registrar. Williams will also give notice to beneficial owners as required by applicable law. This notice will state, among other things, the repurchase date, which must be no less than 20 and no more than 45 days after the date of Williams’ change of control notice, the repurchase price and the procedures that Holders must follow to require Williams to repurchase their Debentures.

If a Holder elects to require Williams to repurchase its Debentures, the Holder must deliver to Williams or Williams’ designated agent, on or before the repurchase date specified in Williams’ change of control notice, the Holder’s repurchase notice and any Debentures to be repurchased by book-entry transfer or delivery of the Debenture, duly endorsed for transfer, to the paying agent at its corporate trust office in the Borough of Manhattan, The City of New York, or any other office of the paying agent. Williams will promptly pay the repurchase price for Debentures surrendered for repurchase following the later of the repurchase date and the time of book-entry transfer or delivery of the Debenture.

A Holder may withdraw its repurchase notice by delivering a written notice of withdrawal to the paying agent at any time prior to the close of business on the business day preceding the repurchase date. If a repurchase notice is given and withdrawn prior to the close of business on such day, Williams will not be obligated to repurchase the Debentures listed in the notice. The withdrawal notice must state:


	•	the principal amount of the withdrawn Debentures;

	•	if certificated debentures have been issued, the certificate numbers of the withdrawn Debentures, or, if the Holder’s Debentures are not certificated, the Holder’s withdrawal notice must comply with appropriate DTC procedures; and

	•	the principal amount, if any, which remains subject to the repurchase notice.

If the paying agent holds money sufficient to pay the repurchase price of the Holder’s Debentures on the business day following the ~~previously scheduled expiration~~repurchase date, then, on and after such date:


	•	those Debentures will cease to be outstanding;

	•	interest will cease to accrue; and

	•	all the Holder’s other rights as a Holder will terminate, other than the right to receive the repurchase price upon delivery of the Debentures.

This will be the case whether or not book-entry transfer of the ~~exchange offer. During any extension~~Debentures has been made or the Debentures have been delivered to the paying agent.

Williams will comply with the requirements of the ~~exchange offer, all Income PACS previously tendered~~Exchange Act and ~~not accepted for purchase will remain subject~~any other securities laws and regulations thereunder to the ~~exchange offer~~extent such laws and ~~may, subject to~~regulations are applicable in connection with the ~~terms~~repurchase of the ~~exchange offer,~~Debentures as a result of a change of control.

A “change of control” will be ~~accepted for exchange by us.~~

~~We also expressly reserve~~deemed to have occurred when any of the ~~right, at any time or from time to time, subject~~following has occurred:


	•	the acquisition by any person of beneficial ownership, directly or indirectly, through a purchase, merger, other acquisition transaction or a series of such transactions, of shares of Williams’ capital stock entitling that person to exercise 50% or more of the total voting power of all shares of Williams’ capital stock entitled to vote generally in elections of directors, other than any acquisition by Williams, any of Williams’ subsidiaries or future subsidiaries or any of Williams’ employee benefit plans;

	•	the first day on which a majority of the members of the board of directors of Williams are not “continuing directors,” which means, as of any date of determination, any member of the board of directors of Williams who:


	•	was a member of the board of directors throughout the 24 consecutive months preceding the date of determination; or

	•	was nominated for election or elected to the board of directors with the approval of a majority of the continuing directors who were members of the board at the time of such director’s nomination or election; or


	•	the consolidation, combination or merger of Williams with or into any other person, any merger of another person into Williams, or any conveyance, transfer, sale, lease or other disposition of all or substantially all of Williams’ properties and assets to another person, other than:


	•	any transaction:


	(a) that does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of Williams’ capital stock; and

	(b) pursuant to which Holders of Williams’ capital stock immediately prior to such transaction are entitled to exercise, directly or indirectly, 50% or more of the total voting power of all shares of Williams’ capital stock entitled to vote generally in elections of directors of the continuing or surviving person immediately after giving effect to such transaction; or


	•	any merger solely for the purpose of changing Williams’ jurisdiction of incorporation and resulting in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of Common Stock of the surviving entity.

Beneficial ownership will be determined in accordance with ~~applicable law, to:~~Rule 13d-3 promulgated by the SEC under the Securities Exchange Act of 1934 referred to herein as the “Exchange Act”. The term “person” includes any syndicate or group which would be deemed to be a “person” under Section 13(d)(3) of the Exchange Act.

However, a change of control will not be deemed to have occurred if:


	•	the closing sale price per share of the Common Stock for any five full trading days, not including extended hours trading, within the period of ten consecutive trading days ending immediately after the later of the change of control or the public announcement of the change of control, in the case of a change of control under the first bullet point above, or the period of ten consecutive full trading days, not including extended hours trading, ending immediately before the change of control, in the case of a change of control under the third bullet point above, equals or exceeds 110% of the conversion price per share of the Common Stock in effect on each of those trading days, as adjusted; or

	•	at least 90% of the consideration in the transaction or transactions constituting a change of control consists of shares of Common Stock traded or to be traded immediately following such change of control on a national securities exchange or the Nasdaq National Market and, as a result of such

delay the acceptance for exchange of Income PACS for administrative purposes, as such may be required by difficulties in determining the final proration percentage, if any, or calculating soliciting dealer fees, subject to and in accordance with applicable law;

3639

• ~~waive~~transaction or transactions, the Debentures become convertible into such Common Stock and any ~~condition (other than those conditions we have identified~~rights attached thereto.

Except as described above with respect to a change of control and below under “— Merger and Sale of Assets by Williams,” neither the Debentures nor the Indenture will contain provisions that permit Holders of Debentures to require that Williams repurchase the Debentures in the event of, or otherwise prohibit Williams from undertaking, a merger, takeover, recapitalization or similar business combination or restructuring transaction. The term “change of control” is limited to specified transactions and may not include other events that might adversely affect Williams’ financial condition or business operations. Williams may enter into certain transactions, including acquisitions, refinancings or other recapitalizations, that could affect its capital structure or the value of Common Stock, but that would not constitute a change of control. Williams’ obligation to offer to redeem the Debentures upon a change of control would not necessarily afford Holders protection in the event of a highly leveraged transaction, reorganization, merger or similar transaction involving Williams.

Williams’ ability to repurchase Debentures upon the occurrence of a change of control is subject to important limitations. The occurrence of a change of control could cause an event of default under, or be prohibited or limited by, the terms of Williams’ senior or senior subordinated debt. As a result, any repurchase of the Debentures would, absent a waiver, be prohibited under the Indentures governing such senior or senior subordinated debt until the debt is paid in full. Further, there can be no assurance that Williams would have the financial resources, or would be able to arrange financing, to pay the repurchase price for all the Debentures that might be delivered by Holders of Debentures seeking to exercise their repurchase right. Any failure by Williams to repurchase the Debentures when required following a change of control would result in an event of default under the Indenture, whether or not such repurchase is permitted by the Indentures governing Williams’ senior or senior subordinated debt. Any such default may, in turn, cause a default under Williams’ other indebtedness.

Subordination of Debentures

The payment of principal of and interest on the Debentures will, to the extent provided in the Indenture, be subordinated to the prior payment in full of all present and future senior and senior subordinated indebtedness, as defined below. The Debentures also are effectively subordinated to all debt and other liabilities, including trade payables and lease obligations, if any, of Williams’ subsidiaries.

Upon any payment or distribution of Williams’ assets upon any dissolution, winding up, liquidation or reorganization, or in a bankruptcy, insolvency or other proceeding, the payment of the principal of, or premium, if any, interest and liquidated damages, if any, on the Debentures will be subordinated in right of payment to the prior payment in full of all senior and senior subordinated indebtedness in cash, including interest after the commencement of any such proceeding at the rate specified in the applicable debt agreement or other document, whether or not allowed as a claim in such proceeding. In the event of any acceleration of the Debentures because of an event of default, the holders of any outstanding senior or senior subordinated indebtedness would be entitled to payment in full in cash, including interest after the commencement of any such proceeding at the rate specified in the applicable debt agreement or other document, whether or not allowed as a claim in such proceeding, of all senior and senior subordinated indebtedness obligations before the Holders of the Debentures are entitled to receive any payment or distribution. Williams is required under the Indenture to promptly notify holders of senior and senior subordinated indebtedness if payment of the Debentures is accelerated because of an event of default.

Neither Williams nor any of Williams’ subsidiaries may make any payment on the Debentures if:


	•	a default in the payment of designated senior indebtedness occurs and is continuing beyond any applicable period of grace which Williams refers to herein 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;a “payment default”; or

	•	~~terminate~~a default, other than a payment default, on any designated senior indebtedness occurs and is continuing that permits holders of any of the designated senior indebtedness to accelerate its maturity, or ~~withdraw~~in the ~~exchange offer if any condition to the exchange offer~~case of a lease that is ~~not satisfied, by giving oral, confirmed in writing, or written notice of such termination or withdrawal to the exchange agent.~~designated senior indebtedness, a default occurs and is continuing that permits

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, even 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 will be returned promptly to you.

~~Priority of Exchanges and Proration~~


	~~Priority of exchanges~~

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 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 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.”

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In addition, 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. We will announce this proration percentage, if it is necessary, after the expiration date of exchange offer.


	~~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 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 nearly as practicable to the nearest whole unit, that will be purchased from each holder pursuant to the 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 of record, an aggregate of not 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 potential difficulty in determining the number of Income PACS validly tendered and not withdrawn, we do not expect that we will be able to announce the final proration percentage until three to five business days after the expiration date of the exchange offer. The preliminary results of any proration will be announced by press release promptly after the expiration date of the exchange offer. Holders may obtain preliminary proration information from the dealer managers and 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, but no later than five business days after the expiration date of the exchange offer.

As described in the section of this exchange offer prospectus entitled “Material U.S. Federal Income Tax Consequences,” you may be required to recognize taxable gain or loss with respect to the 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 Income PACS are to be 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.

~~Procedures for Tendering 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.


	~~How to tender if you are a beneficial owner~~

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 those Income PACS, you should contact the registered holder promptly and instruct it to tender your Income PACS on your behalf.

~~If you are a beneficial owner and wish to tender on your own behalf, you must, prior to completing and executing the letter of transmittal and delivering your Income PACS, either:~~

• the lessor either to terminate the lease or to require Williams to make ~~appropriate arrangements~~an irrevocable offer to ~~register ownership~~terminate the lease following an event of default under the lease, and the trustee receives a notice of such default which Williams refers to herein as a “payment blockage notice” from any person permitted to give such notice under the Indenture which Williams refers to herein as a “non-payment default”.

Williams may resume payments and distributions on the Debentures:


	•	in case of a payment default, on the date on which such default is cured or waived or ceases to exist; and

	•	in case of a non-payment default, on the earlier of the ~~Income PACS~~date on which such non-payment default is cured or waived or ceases to exist and 179 days after the date on which the payment blockage notice is received, if the maturity of any of the designated senior indebtedness has not been accelerated or in ~~your name;~~the case of any lease, 179 days after notice is received if Williams has not received notice that the lessor under such lease has exercised its right to terminate the lease or require Williams to make an irrevocable offer to terminate the lease following an event of default under the lease.

Not more than one payment blockage may be commenced pursuant to a payment blockage notice during any 360 consecutive days. No non-payment default that existed or was continuing on the date of delivery of any payment blockage notice, to the extent the holder of designated senior debt or the trustee or agent giving such notice had knowledge of the same, shall be the basis for any later payment blockage notice.

If the trustee or any Holder of the Debentures receives any payment or distribution of Williams’ assets with respect to the Debentures in contravention of the subordination provisions, then such payment or distribution will be held in trust for the benefit of Holders of senior and senior subordinated indebtedness or their representatives to the extent necessary to make payment in full of all unpaid senior and senior subordinated indebtedness in cash.

Because of the subordination provisions discussed above, in the event of Williams’ bankruptcy, dissolution or reorganization, holders of senior and senior subordinated indebtedness may receive more, ratably, and Holders of the Debentures may receive less, ratably, than Williams’ other creditors. This subordination will not prevent the occurrence of any event of default under the Indenture that would otherwise occur upon any nonpayment of the Debentures.

The Debentures are exclusively Williams’ obligations and not obligations of any of Williams’ subsidiaries. Substantially all of Williams’ operations are conducted through Williams’ subsidiaries. As a result, Williams’ cash flow and Williams’ ability to service its debt, including the Debentures, is dependent upon the earnings of its subsidiaries. In addition, Williams is dependent on the distribution of earnings, loans or other payments from its subsidiaries. In addition, any payment of dividends, distributions, loans or advances by Williams’ subsidiaries to it could be subject to statutory or contractual restrictions. Payments to Williams by its subsidiaries will also be contingent upon Williams’ subsidiaries’ earnings and business considerations.

Williams’ right to receive any assets of any of its subsidiaries upon their liquidation or reorganization, and therefore the right of the Holders to participate in those assets, will be effectively subordinated to the claims of that subsidiary’s creditors, including trade creditors, except to the extent that Williams itself may be a creditor of such subsidiary. In addition, even if Williams was a creditor to any of its subsidiaries, Williams’ rights as a creditor would be subordinate to any security interest in the assets of its subsidiaries and any indebtedness of its subsidiaries senior to that held by Williams.

Subject to the qualifications described below, the term “senior and senior subordinated indebtedness” includes principal and premium, if any, and interest, including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law, on, and all other amounts owing in respect of (including, without limitation, obligations to pay principal and interest, reimbursement obligations under letters of credit, fees, expenses and indemnities thereunder) all of Williams’ indebtedness, whether outstanding on the date of the issuance of the Debentures or thereafter created, incurred or assumed. Notwithstanding the foregoing, senior and senior subordinated indebtedness will not include (1) any indebtedness which by its

terms is expressly made equal in rank and payment with or subordinated to the Debentures, (2) obligations of Williams owed to its subsidiaries or (3) Williams’ redeemable stock. Senior and senior subordinated indebtedness will continue to be senior and senior subordinated indebtedness and entitled to the benefits of the subordination provisions irrespective of any amendment, modification or waiver of any term of the senior and senior subordinated indebtedness or extension, renewal or refunding of the senior and senior subordinated indebtedness.

The term “indebtedness” is defined in the Indenture and includes, in general terms, Williams’ liabilities in respect of borrowed money, notes, bonds, debentures, letters of credit, bank guarantees, bankers’ acceptances, obligations for the deferred purchase price of property, other than trade accounts payable in the ordinary course of business, all of Williams’ obligations under leases required or permitted to be capitalized under generally accepted accounting principles, interest rate and foreign currency derivative contracts or similar arrangements, guarantees and certain other obligations described in the Indenture, subject to certain exceptions. The term does not include, for example, any account payable or other accrued current liability or obligation incurred in the ordinary course of business in connection with the obtaining of materials or services.

The term “designated senior indebtedness” is defined in the Indenture and includes, in general terms, any senior or senior subordinated indebtedness that by its terms expressly provides that it is “designated senior indebtedness” for purposes of the Indenture.

As of September 30, 2005, Williams had approximately $7.72 billion of senior and senior subordinated debt, including approximately $2.33 billion of subsidiary debt other than intercompany indebtedness, trade payables and other liabilities of Williams’ subsidiaries. As of September 30, 2005, Williams also had approximately $1.71 billion in letters of credit outstanding. Neither Williams nor Williams’ subsidiaries are prohibited from incurring debt, including senior indebtedness, under the Indenture. Williams may from time to time incur additional debt, including senior indebtedness. Williams’ subsidiaries may also from time to time incur additional debt and liabilities.

Williams is obligated to pay reasonable compensation to the trustee and to indemnify the trustee against certain losses, liabilities or expenses incurred by the trustee in connection with its duties relating to the Debentures. The trustee’s claims for these payments will generally be senior to those of Holders in respect of all funds collected or held by the trustee.

Restrictions on Certain Payments

Williams has agreed that if:


	•	an event has occurred that with the giving of notice or the lapse of time, or both, would constitute an event of default and Williams has not taken commercially reasonable steps to cure the event, referred to herein as a “potential event of default”; or

	•	~~obtain a properly completed power from~~Williams has given notice of its intention to begin an interest deferral period, as described under “— Option to Extend Interest Payment Period” and has not rescinded the ~~registered holder of your Income PACS.~~notice, or any deferral period is continuing;

~~The transfer~~

then Williams will not and will not permit any of ~~registered ownership may take considerable time and may not be completed prior~~its subsidiaries to ~~the expiration date~~do any of the ~~exchange offer.~~


	~~How to tender generally~~

~~To participate in the exchange offer,~~following each referred to herein as a ~~holder must:~~

“Restricted Payment”:


	•	~~comply~~declare or pay any dividends on, make distributions regarding, or redeem, purchase, acquire or make a liquidation payment with respect to, any of the capital stock of Williams, other than:


	(1) purchases of the capital stock of Williams in connection with employee or agent benefit plans or under any dividend reinvestment plan;

	(2) in connection with the ~~automated tender offer program procedures~~reclassifications of ~~DTC described below;~~any class or series of Williams’ capital stock, or the exchange or conversion of one class or series of Williams’ capital stock for or into another class or series of its capital stock;


	(3) the purchase of fractional interests in shares of Williams’ capital stock in connection with the conversion or exchange provisions of that capital stock or the security being converted or exchanged;

	(4) dividends or distributions in Williams’ capital stock, or options, warrants or rights to acquire capital stock, or repurchases or redemptions of capital stock solely from the issuance or exchange of capital stock;

	(5) any declaration of a dividend in connection with the implementation of a shareholders’ rights plan, or issuances of stock under any such plan in the future, or redemptions or repurchases of any such rights pursuant to any such shareholders’ rights plan; or

	•	~~complete, sign and date~~ (6) repurchases of Common Stock in connection with acquisitions of businesses made by Williams or any of its subsidiaries, which repurchases are made in connection with the ~~letter~~satisfaction of ~~transmittal, or a facsimile~~indemnification obligations of the ~~letter~~sellers of ~~transmittal;~~such businesses;


	•	~~have~~make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities, including other Debentures, issued by Williams that rank equally with or junior to the ~~signature on the letter of transmittal guaranteed if the letter of transmittal so requires;~~Debentures; and

	•	~~mail~~make any guarantee payments with respect to any guarantee by Williams of the debt securities, including other guarantees, of any of its subsidiaries, if such guarantee ranks equally with or ~~deliver the letter of transmittal or facsimile~~junior in interest to the ~~exchange agent prior to the expiration date of the exchange offer.~~Debentures.

~~In addition, either:~~

Notwithstanding the foregoing, Restricted Payments shall not include payments or distributions of any kind made by Williams, directly or indirectly, to Williams Gas Pipeline Company, LLC, or any of its direct or indirect subsidiaries, or to any successor company established by Williams to own or manage its natural gas pipelines and related assets, or any of such successor company’s direct or indirect subsidiaries.

Merger and Sale of Assets by Williams

The Indenture provides that Williams may not consolidate with or merge with or into any other person or sell, convey, transfer or lease its properties and assets substantially as an entirety to another person, unless among other items:


	•	Williams is the surviving person, or the resulting, surviving or transferee person, if other than Williams, is organized and existing under the laws of the United States, any state thereof or the District of Columbia;

	•	the ~~exchange agent must receive~~resulting, surviving or transferee person assumes all of Williams’ obligations under the ~~Income PACS along~~Debentures and the Indenture;

	•	after giving effect to such transaction, there is no event of default, and no event which, after notice or passage of time or both, would become an event of default; and

	•	Williams has delivered to the trustee an officers’ certificate and an opinion of counsel each stating that such consolidation, merger, sale, conveyance, transfer or lease complies with these requirements.

When such a person assumes Williams’ obligations in such circumstances, subject to certain exceptions, Williams shall be discharged from all obligations under the Debentures and the Indenture.

Events of Default; Notice and Waiver

The Indenture provides that any one or more of the following described events, which has occurred and is continuing, constitutes an “Event of Default” with respect to the Debentures:


	•	failure for 30 days to pay interest or liquidated damages on the Debentures when due, whether or not the payment is prohibited by subordination provisions, provided that a valid extension of the interest payment period by Williams shall not constitute a default in the payment of interest for this purpose;


	•	failure to pay principal of or premium, if any, on the Debentures when due whether at maturity, by declaration or otherwise, whether or not the payment is prohibited by subordination provisions;

	•	default in Williams’ obligation to convert the Debentures into shares of its Common Stock upon exercise of a Holder’s conversion right;

	•	default in Williams’ obligation to repurchase the Debentures at the option of a Holder upon a change of control, whether or not the payment is prohibited by subordination provisions;

	•	default in Williams’ obligation to redeem the Debentures after it has exercised its option to redeem, whether or not the payment is prohibited by subordination provisions;

	•	failure to observe or perform any other covenant contained in the Indenture for 90 days after written notice to Williams from the trustee or the Holders of at least 25% in principal amount of the outstanding Debentures;

	•	failure to pay at final stated maturity, giving effect to any applicable grace periods and any extensions thereof, the principal amount of any other junior subordinated indebtedness of Williams or the acceleration of the final stated maturity of any such other junior subordinated indebtedness, which acceleration is not rescinded, annulled or otherwise cured within 90 days of receipt by Williams of notice from the Holders thereof of any such acceleration, if the aggregate principal amount of such indebtedness, together with the ~~letter~~principal amount of ~~transmittal prior~~any other such junior subordinated indebtedness in default for failure to pay principal at final stated maturity or which has been accelerated (in each case with respect to which the ~~expiration date of the exchange offer;~~90-day period described above has elapsed), aggregates $250 million or more at any time; 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 belowcertain events involving Williams’ bankruptcy, insolvency or ~~a properly transmitted agent’s message.~~reorganization.

~~To be validly tendered,~~

If an event of default occurs and continues, the ~~exchange agent must receive any physical delivery~~trustee or the Holders of at least 25% in principal amount of the ~~letter of transmittal~~outstanding Debentures may declare the principal, premium, if any, and ~~other required documents at its address indicated~~accrued and unpaid interest, including liquidated damages, if any, on the ~~cover page~~outstanding Debentures to be immediately due and payable. In case of certain events of bankruptcy or insolvency involving Williams, the principal, premium, if any, and accrued and unpaid interest, including liquidated damages, if any, on the Debentures will automatically become due and payable. However, if Williams cures all defaults, except the nonpayment of principal, premium, if any, interest, including liquidated damages, if any, that became due as a result of the ~~letter~~acceleration, and meet certain other conditions, with certain exceptions, this declaration may be cancelled and the Holders of ~~transmittal.~~a majority of the principal amount of outstanding Debentures may waive these past defaults.

The ~~exchange agent must receive such documents prior~~Holders of a majority of outstanding Debentures will have the right to direct the time, method and place of any proceedings for any remedy available to the ~~expiration date~~trustee, subject to limitations specified in the Indenture.

No Holder of the ~~exchange offer.~~

~~The tender by a holder that is not withdrawn prior to~~Debentures may pursue any remedy under 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 andIndenture, except 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.


	~~Signatures and signature guarantees~~

~~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~~case 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~~default in the ~~United States,~~payment of principal, premium, if any, or ~~an “eligible guarantor institution” within~~interest, including liquidated damages, if any, on the ~~meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934. In addition, such entity must be a member of~~

Debentures, unless:

~~one of the recognized signature guarantee programs identified in the letter of transmittal. Signature guarantees are not required, however, if the Income PACS are tendered:~~

• bythe Holder has given the trustee written notice of an event of default;
• the Holders of at least 25% in principal amount of outstanding Debentures make a ~~registered holder who has signed~~written request, and offer reasonable indemnity, to the ~~letter~~trustee to pursue the remedy;
• the trustee does not receive an inconsistent direction from the Holders of ~~transmittal~~a majority in principal amount of the Debentures;
• the Holder or Holders have offered reasonable security or indemnity to the trustee against any costs, liability or expense of the trustee; and
• the ~~exchange consideration~~trustee fails to ~~be received~~comply with the request within 60 days after receipt of the request and offer of indemnity.

Williams is required to file annually with the trustee a certificate as to whether or not Williams is in compliance with all the conditions and covenants under the Indenture.

Modification and Amendment

The consent of the Holders of a majority in principal amount of the outstanding Debentures is required to modify or amend the Indenture. However, a modification or amendment requires the consent of the Holder of each outstanding Debenture if it would:


	•	extend the fixed maturity of any Debenture;

	•	reduce the rate or extend the time for payment of interest, including liquidated damages, if any, of any Debenture;

	•	reduce the principal amount or premium of any Debenture;

	•	reduce any amount payable upon redemption or repurchase of any Debenture;

	•	adversely change Williams’ obligation to redeem any Debenture on a redemption date;

	•	adversely change Williams’ obligation to repurchase any Debenture upon a change of control;

	•	impair the right of a Holder to institute suit for payment on any Debenture;

	•	change the currency in which any Debenture is payable;

	•	impair the ~~exchange offer is~~right of a Holder to ~~be issued directly~~convert any Debenture or reduce the number of common shares or any other property receivable upon conversion;

	•	reduce the quorum or voting requirements under the Indenture;

	•	subject to ~~such registered holder and such holder has not completed~~specified exceptions, modify certain of the ~~box entitled “Special Issuance Instructions”~~provisions of the Indenture relating to modification or ~~“Special Delivery Instructions” on~~waiver of provisions of the ~~letter of transmittal;~~Indenture; or

	•	reduce the percentage of Debentures required for ~~the account of a member firm of a registered national securities exchange or~~consent to any modification 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.~~Indenture.


	~~When you need endorsements or powers of attorney~~

~~If the letter of transmittal~~Williams 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 orpermitted to modify certain provisions of the ~~National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in~~Indenture without 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.


	~~Tendering through DTC’s automated tender offer program~~

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 acceptanceconsent 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~~Holders of the ~~book-entry confirmation, to the effect that:~~

Debentures, including to:


	•	~~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;~~secure any Debentures;

	•	evidence the assumption of Williams’ obligations by a successor person;

	•	add covenants for the protection of the Holders of Debentures;

	•	cure any ambiguity or correct any inconsistency in the Indenture, so long as such ~~participant has received and agrees to be bound by~~action will not adversely affect the interests of Holders;

	•	establish the forms or terms of the ~~letter~~Debentures;

	•	evidence the acceptance of ~~transmittal;~~appointment by a successor trustee; and

	•	make other changes to the ~~agreement may be enforced against~~Indenture or forms or terms of the Debentures, provided no such ~~participant.~~change individually or in the aggregate with all other such changes has or will have a material adverse effect on the interests of the Holders of the Debentures.

~~Determination of Validity~~

~~We will determine in our sole discretion all questions as to the validity, form, eligibility, including time of receipt,~~Form, Denomination 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

Registration

nor any other person will have any duty to give notification of any defects or irregularities nor will any of them incur any liability for failure to give such notification. Tenders of Income PACS will not be considered to have been made until any defects or irregularities have been cured or waived. Any Income PACS received by the exchange agent that The Debentures are not validly tendered and as to which the defects or irregularities have not been cured or waived will be returned promptly by the exchange agent to the tendering owners, unless otherwise provided in the letter of transmittal, promptly following the expiration date of the exchange offer.issued:

~~Withdrawals of Tenders~~

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;~~in fully registered form;

	•	~~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;~~without interest coupons; and

	•	~~be signed by the holder~~ in ~~the same manner as the original signature on the letter~~denominations of ~~transmittal by which the Income PACS were tendered, including any required signature guarantees, or be accompanied by documents~~$50 principal amount and integral multiples 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.~~$50.

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.

~~Acceptance; Exchange of Income PACS~~

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

4145

~~tendered Income PACS~~Global Debenture, Book-Entry Form

Debentures are evidenced by one or defectively tendered Income PACS with respect to which we have waived such defect, when, as and if we give oral, confirmed in writing, or written notice of such acceptance to the exchange agent. We will pay for Income PACS accepted for exchange by us pursuant to the exchange offer by depositing the exchange considerationmore global debentures deposited with the ~~exchange agent.~~trustee as custodian for The ~~exchange agent will act~~Depository Trust Company which Williams refers to herein as ~~your agent for~~ the ~~purpose~~“DTC”, and registered in the name of ~~receiving consideration from us and transmitting~~Cede & Co. as DTC’s nominee. Record ownership of the global debentures may be transferred, in whole or in part, only to another nominee of DTC or to a successor of DTC or its nominee, except as set forth below. A Holder may hold its interests in the global debentures directly through DTC if such ~~consideration to you.~~

~~In all cases, payment for Income PACS accepted for exchange by us pursuant to the exchange offer~~Holder is a participant in DTC, or indirectly through organizations which are direct DTC participants if such Holder is not a participant in DTC. Transfers between direct DTC participants will be ~~made,~~effected in the ordinary way in accordance with DTC’s rules and ~~delivered, promptly after~~will be settled in same-day funds. Holders may also beneficially own interests in the ~~expiration date~~global debentures held by DTC through certain banks, brokers, dealers, trust companies and other parties that clear through or maintain a custodial relationship with a direct DTC participant, either directly or indirectly.

So long as Cede & Co., as nominee of DTC, is the registered owner of the ~~exchange offer and assuming receipt by~~global debentures, Cede & Co. for all purposes will be considered the ~~exchange agent of:~~

sole Holder of the global debentures. Except as provided below, owners of beneficial interests in the global debentures:


	•	~~timely confirmation of a book-entry transfer of the Income PACS into the exchange agent’s account at DTC, pursuant~~will not be entitled to ~~the procedures set forth~~have certificates registered in ~~“— Procedures for Tendering Income PACS — Tendering through DTC’s automated tender offer program” above;~~their names;

	•	~~a properly completed and duly signed letter~~will not receive or be entitled to receive physical delivery of ~~transmittal, or facsimile copy, or a properly transmitted agent’s message;~~certificates in definitive form; and

	•	~~any other documents required by~~will not be considered Holders of the ~~letter of transmittal.~~global debentures.

~~If we do not accept any Income PACS tendered for exchange pursuant~~

The laws of some states require that certain persons take physical delivery of securities in definitive form. Consequently, the ability of an owner of a beneficial interest in a global security to transfer 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~~beneficial interest ~~on the exchange consideration regardless of any delay in making such payment.~~

~~Return of Unaccepted Income PACS~~

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~~global security 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.~~

~~Compliance With State Securities Laws~~

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.

~~Foreign Securities Matters~~

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 this exchange offer prospectus or any other material relating to us or our shares of 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 neither this exchange offer prospectus nor any other offering material or advertisements in connection with our shares of common stockpersons may be distributed or published, in or from any country or jurisdiction except in compliance with any applicable rules and regulations of any such country or jurisdiction. This exchange offer prospectus does not constitute an offer to sell or 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

limited.

~~themselves about and to observe any restrictions relating to this exchange offer,~~Information Concerning the ~~distribution of this exchange offer prospectus, and the resale of the shares of common stock.~~Trustee

~~Exchange Agent~~

Williams has appointed JPMorgan Chase Bank, ~~has been appointed~~National Association, the trustee under the Indenture, as ~~the exchange~~paying agent, conversion agent, convertible debenture registrar and custodian for the ~~exchange offer. We have agreed~~Debentures. The trustee or its affiliates may also provide banking and other services to ~~pay~~Williams in the ~~exchange agent reasonable and customary fees for its services. All executed letters~~ordinary course of ~~transmittal and any other required documents should be sent or delivered to the exchange agent at the address set forth~~their business.

The Indenture contains certain limitations on the ~~back cover of this exchange offer prospectus. Delivery of a letter of transmittal to an address or transmission~~rights of the ~~letter~~trustee, if it or any of ~~transmittal via facsimile~~its affiliates is then Williams’ creditor, to obtain payment of claims in certain cases or to realize on certain property received on any claim as security or otherwise. The trustee and its affiliates will be permitted to engage in other ~~than as set forth on the back cover of this exchange offer prospectus does not constitute a valid delivery of the letter of transmittal.~~

~~Information Agent~~

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.

~~Dealer Managers~~

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 connectiontransactions 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,~~Williams. However, 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, an affiliate of J.P. Morgan Securities Inc., is the purchase contract agent for the Income PACS and~~ the trustee ~~of the notes forming~~or any affiliate continues to have any conflicting interest and 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).

~~Fees and Expenses~~

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

solicitations may be made by facsimile, telephone or in person by the dealer managers and information agent, as well as by officers and regular employees of ours and those of our affiliates. We will also pay the exchange agent and the information agent reasonable and customary fees for their services and will reimburse them for their reasonable out-of-pocket expenses. We will indemnify each of the exchange agent, the dealer managers and the information agent against certain liabilities and expenses in connection therewith, including liabilities under the federal securities laws.

~~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~~default occurs with respect to the ~~tender of Income PACS by a holder unless~~Debentures, the ~~letter of transmittal accompanying~~trustee must eliminate such ~~tender designates such soliciting dealer. No such fee~~conflict or resign.

Governing Law

The Debentures and the Indenture 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 heldgoverned 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~~

~~if it is a foreign broker or dealer not eligible for membership in the NASD, it has agreed to conform to the NASD’s Rules of Fair Practice in making solicitations.~~

~~Transfer Taxes~~

~~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, 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 tendering holder.

~~No Appraisal Rights~~

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

~~Accounting Treatment~~

As consideration for the exchange of 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 (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.

~~Subsequent Repurchases of Income PACS; Discharge of Notes~~

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, 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 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 trusteeconstrued in accordance with, the ~~terms~~laws of the ~~indenture.~~State of New York.

4546

~~COMPARISON~~DESCRIPTION OF ~~RIGHTS BETWEEN THE INCOME PACS AND OUR COMMON~~CAPITAL STOCK

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.

~~Ranking~~

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.

~~Governing Document~~

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

Under Williams’ certificate of incorporation, as ~~supplemented, and bylaws.~~

~~Payments~~

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.

~~Redemption~~

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.

~~Listing~~

~~The Income PACS are listed and traded on the New York Stock Exchange under the symbol “WMB PrI,” and our common stock~~amended, Williams 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.~~

~~Voting Rights~~

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.

~~Maturity~~

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.

~~DESCRIPTION OF CAPITAL STOCK~~

~~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. See “Outstanding Preferred Stock” below. As of the date of this prospectus, ~~we are~~Williams is authorized to issue up to 960,000,000 shares of ~~common stock, par value $1.00 per share.~~Common Stock. As of ~~October 6, 2004, we~~December 15, 2005, Williams had ~~517,455,520~~589,042,687 issued and outstanding shares of ~~common stock.~~Common Stock. In addition, ~~as of October 6, 2004, 26,568,497~~at December 15, 2005, options to purchase 20,504,005 shares of ~~common stock~~Common Stock were ~~subject to options or deferred rights~~ outstanding under various stock and compensation incentive plans. On May 15, 2003, Williams’ shareholders approved an amendment to Williams’ 2002 Incentive Plan that allows Williams to commence a one-time only stock option exchange program in which any eligible employee will be given an opportunity to exchange certain outstanding options for a proportionately lesser number of options at a lower exercise price. The program excludes Williams’ directors, executive officers, andnon-U.S. citizen employees working outside the U.S. Williams has the authority, in Williams’ sole discretion, to determine whether and when the exchange program will commence, and to postpone the exchange program for any reason. The number of shares of Common Stock which the Holders of these purchase contracts are required to purchase is subject to adjustment based on the market value of Common Stock. The outstanding shares of Common Stock are fully paid and nonassessable. The holders of ~~our common stock~~Common Stock are not entitled to preemptive or redemption rights. Shares of ~~our common stock~~Common Stock are not convertible into shares of any other class of capital stock. Computershare Limited, formerly EquiServe Trust Company, N.A. (“Computershare”), is the transfer agent and registrar for ~~our common stock.~~Common Stock.

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


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

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

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

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

~~We are~~

Williams is a Delaware corporation and ~~are~~is 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~~the board of directors of Williams 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~~the voting stock of Williams 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~~Williams’ board of directors and authorized at a meeting of stockholders by the affirmative vote of the holders of a least 66 ~~2/3%~~²/3% of ~~our~~the outstanding voting stock of Williams (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.

Dividends~~Dividends~~

The holders of ~~our common stock~~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.

Voting Rights

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

Rights Upon Liquidation

In the event of ~~our~~Williams’ voluntary or involuntary liquidation, dissolution, or winding ~~up,~~up. the holders of ~~our common stock~~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.

Preferred Stock Purchase Rights

In the event that a person or group acquires beneficial ownership of 15% or more of ~~our~~Williams’ outstanding ~~common stock~~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~~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~~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 or the expiration date as defined in the amended and restated rights agreement, ~~or the expiration date~~a Section 13 Event 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,occurs, each right becomes exercisable and each right will entitle its holder to receive ~~common stock~~Common Stock of the ~~acquiring person~~principal party having a value equal to two times the exercise price of the right.

A Section 13 Event is where Williams either (a) engages in a merger or other business combination in which Williams is not the surviving corporation, (b) engages in a merger or other business combination in which Williams is the surviving corporation but all or a part of Williams’ Common Stock is changed or exchanged, or (c) sells or transfers 50% or more of Williams’ assets, cash flow or earning power.

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~~Williams’ Board 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, weWilliams 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~~Williams’ preferred stock as to the payment of dividends and the distribution of assets unless the terms of the series specify otherwise. ~~You~~Holders should refer to the applicable provisions of the amended and restated rights agreement, which weWilliams filed with the SEC as Exhibit 4.1 to ~~our~~Williams’ Current Report onForm 8-K filed September 21, 2004.

5049

~~DESCRIPTION OF FELINE PACS~~MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

The ~~summary~~following discussion sets forth the opinion of counsel to the Company, Gibson, Dunn & Crutcher LLP, regarding the material U.S. federal income tax consequences of conversion pursuant to the Offer. This discussion deals only with Debentures and Common Stock held as capital assets (generally, property held for investment) by a beneficial owner.

This discussion is based on the Internal Revenue Code of 1986, as amended (the “Code”), the Treasury regulations promulgated under the Code and administrative and judicial interpretations, all as in effect on the date hereof. These income tax laws, regulations and interpretations, however, may change at any time, possibly with retroactive effect. This discussion does not address the effect of any U.S. federal estate and gift tax laws, or any state, local or foreign tax laws.

As used herein, a “U.S. Holder” is a beneficial owner of Debentures that is one 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~~following for ~~the definitive terms and conditions of the FELINE PACS.~~

U.S. federal income tax purposes:

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.

~~Each Income PACS consists of a unit comprising:~~

~~(1) a purchase contract pursuant to which~~

• 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 “Descriptiona citizen or resident of the ~~Purchase Contracts — Purchase of Common Stock,” and~~United States;

• 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

~~(2) either~~

• a ~~note having a principal amount equal to the stated amount of $25,~~corporation, 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.

~~Creating Growth 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, 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 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 which substitution is being made. This substitution will create Growth PACS, and the applicable notes will be released to the holder. The

Treasury security will be substituted for the notes and will be pledged to the collateral agent to secure the holder’s obligation to purchase our common stock under the related purchase contract. The related notes released to the holder thereafter will trade separately from the resulting Growth PACS.

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 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:~~

~~(1) a purchase contract pursuant to which~~

• 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.

~~Recreating Income PACS~~

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 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.

~~For example, to create 40 Income PACS, the Growth PACS holder will:~~

• ~~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.~~

~~Current Payments~~

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 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.

~~Voting and Certain Other Rights~~

~~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.

~~DESCRIPTION OF THE PURCHASE CONTRACTS~~

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.

~~Purchase of Common Stock~~

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 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.

~~On the business day immediately preceding February 16, 2005, unless:~~

• 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,~~

~~then~~

• ~~in the case of Income PACS, unless the Treasury portfolio has replaced the notes~~ other entity treated as a ~~component of the Income PACS as the result of a successful remarketing of the notes~~corporation for U.S. federal income tax purposes, created 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~~organized 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 holder.

~~Remarketing~~

Pursuant to the remarketing agreement and subject to the terms of the 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 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 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 be~~The 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 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.

~~Early Settlement Upon Cash Merger~~

~~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~~

merger, then on or after the date of the cash merger each holder of the FELINE PACS will have the right to accelerate and settle the related purchase contract at the settlement rate in effect immediately before the cash merger, provided that at such time, if so required under the U.S. federal securities laws there is in effect a registration statement covering any securities to be delivered in respect of the purchase contracts being settled. We refer to this right as the “merger early settlement right.” We will provide each of the holders with a notice of the completion of a cash merger within five business days thereof. The notice will specify the early settlement date, which shall be ten days after the date of the notice. The notice will set forth, among other things, the formula for determining the applicable settlement rate and the amount of the cash, securities and other consideration receivable by the holder upon settlement. To exercise the merger early settlement right, a holder of Income PACS must deliver to the purchase contract agent, not later than one business day before the early settlement date, the certificate evidencing the holder’s FELINE PACS, if the FELINE PACS are held in certificated form, and payment of the applicable purchase price in the form of a certified or cashier’s check. If a holder of Income PACS exercises the merger early settlement right, we will deliver to such holder on the early settlement date the kind and amount of securities, cash or other property that such holder would have been entitled to receive if such holder had settled the purchase contract immediately before the cash merger at the settlement rate in effect at such time, determined using the average of the closing prices per share of the common stock on each of the twenty consecutive trading days ending on the third trading day immediately preceding the date of the cash merger. A holder of Income PACS will also receive the notes or Treasury securities or applicable ownership interests in the Treasury portfolio underlying the FELINE PACS. A holder’s receipt of the applicable ownership interests in the Treasury portfolio will be subject to the purchase contract agent’s disposition of the subject securities for cash and the payment of the cash to such holder to the extent that such holder would otherwise have been entitled to receive less than $1,000 principal amount at maturity of any security. If a holder of Income PACS does not elect to exercise such holder’s merger early settlement right, such holder’s FELINE PACS will remain outstanding and subject to normal settlement on the settlement date. We have agreed that, if required under the U.S. federal securities laws, we will use our best efforts to (1) have in effect a registration statement covering any securities to be delivered in respect of the purchase contracts being settled and (2) provide a prospectus in connection therewith, in each case in a form that may be used in connection with the early settlement upon a cash merger.

~~Notice to Settle With 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 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~~

~~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~~

for any period will be computed on the basis of a 360-day year of twelve 30-day months. Contract adjustment payments began to accrue from January 14, 2002 and are payable quarterly in arrears on February 16, May 16, August 16 and November 16 of each year, commencing May 16, 2002.

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 contract adjustment payments are subordinated and junior in right of payment to our obligations under any of our senior indebtedness.~~

~~Option to Defer Contract Adjustment Payments~~

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.

~~Anti-Dilution Adjustments~~

~~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 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.~~

~~Termination~~

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 and Pledge Agreement~~

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 purchase contract agreement and the pledge agreement, each holder of Income PACS, unless 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, 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 pledged securities other than our security interest.

Unless (i) the purchase contracts have terminated prior to February 16, 2005, (ii) the related pledged securities have been transferred to the purchase contract agent for distribution to the holders, and (iii) a holder fails to present and surrender the FELINE PACS certificate evidencing the holder’s Income PACS or Growth PACS to the 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 related Income PACS or Growth PACS are registered at the close of business on the record date immediately preceding the date of payment.

~~DESCRIPTION OF THE NOTES~~

~~General~~

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 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.

~~Interest~~

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 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 for U.S. federal income tax purposes.

The applicable interest rate on the 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

remarketing of the notes on that date fails. If the remarketing of the notes on that date fails, the interest rate on the notes will not be reset at that time. However, in these circumstances, the interest rate on the notes outstanding on and after November 16, 2004 will be reset on the third business day immediately preceding February 16, 2005 to the reset rate described below, unless the remarketing of the notes on that date also fails, in which case the interest rate will not be reset.

~~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.~~

~~Market Rate Reset~~

The reset rate will be equal to the sum of the reset spread and the 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 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 of the United States, as agreed upon by us and the 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 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 be~~The 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.

~~Optional Remarketing~~

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.

~~Put Option Upon a Failed Remarketing~~

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.

~~Tax Event Redemption~~

If a tax event occurs and is continuing, we may, at our option, redeem the notes in whole, but not in part, at any time at a price, which we refer to as the redemption price, equal to, for each note, the 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,~~of the United States;

• ~~any amendment~~an estate the income of which is subject to ~~or change in an interpretation or application~~U.S. federal income taxation regardless of ~~any such laws or regulations by any legislative body, court, governmental agency or regulatory authority,~~its source; or

• ~~any interpretation~~a trust if it (1) is subject to the primary supervision of a court within the United States and one or ~~pronouncement that provides for~~more United States persons have the authority to control all substantial decisions of the trust, or (2) has a ~~position with respect~~valid election in effect under applicable Treasury regulations to ~~any such laws or regulations that differs from the generally accepted position on January 7, 2002,~~
be treated as a United States person.

A~~which amendment, change or proposed change~~“non-U.S. Holder” 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~~a beneficial owner 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 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 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 note and a fraction whose numerator is the Treasury portfolio purchase price and whose denominator is the aggregate principal 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 for the purchase of the Treasury portfolio for settlement on the 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 any redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each registered holder of notes to be redeemed at its registered address. Unless we default in payment of the redemption price, on and after the redemption date interest shall cease to accrue on the notes. In the event any notes are called for redemption, neither we nor the trustee will be required to register the transfer of or exchange the notes to be redeemed.

~~MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES~~

�� In the opinion of White & Case LLP, special tax counsel to Williams, the following statements 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 Income PACS, to the extent that they constitute a description of the tax laws and regulations of the United States, are correct in all material respects and constitute the opinion of White & Case LLP regarding such matters. The following addresses the material U.S. federal income tax consequences of the 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 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 such holder’s particular situation. Such opinion does not address all of the tax consequences that may be relevant to holders that may be subject to special tax treatment 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 currencyDebentures who is not ~~the~~a U.S. ~~dollar. In addition, such opinion does~~Holder, and is not address any aspect of state, local, or foreign tax laws. Such opinion is based on the U.S. federal income tax laws, regulations, rulings and decisions in effect as of the date of this exchange offer prospectus, which are subject to change or differing interpretations, possibly on a retroactive 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 YOUR OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO YOU OF EXCHANGING YOUR INCOME PACS IN THE EXCHANGE OFFER, INCLUDING THE APPLICATION AND EFFECT OF U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS TO YOUR PARTICULAR CIRCUMSTANCES.

For purposes of this opinion, the term “U.S. person” means: (1) a person who is a citizen or resident of the United States; (2) a corporation created or organized in or under the laws of the United States or any state thereof or the District of Columbia; (3) an estate the income of which is subject to U.S. federal income 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 such trust and one or more U.S. persons have the authority to control all substantial decisions of such trust or (b) such trust has in effect a valid election to be treated as a domestic trust for U.S. federal income tax purposes.

If a partnership ~~(including an~~(or other entity treated as a partnership for U.S. federal income tax purposes) ~~holds Income PACS,~~. If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of the Debentures or Common Stock, 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~~beneficial owner that is a ~~partner of~~partnership and partners in such a partnership ~~holding Income PACS~~ should ~~consult with its tax advisors with respect to the tax treatment of participation in the exchange offer.~~

~~Applicable Federal Income Tax Treatment of Income PACS — In General~~

We have treated each Income PACS you own as a unit consisting of two components — a note and a purchase contract — which, together, constitute an Income PACS. Your initial purchase price for each Income PACS was allocated between the 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 fair market value of each purchase contract as $0. If you acquired Income PACS in the original issuance, our reporting position was binding on you (but not on the

Internal Revenue Service (“IRS”)) with respect to such Income PACS unless you explicitly disclosed a contrary position on a statement attached to your timely filed U.S. federal income tax return for the taxable year in which such Income PACS were acquired. If you acquired an Income PACS through a purchase in the secondary market, your purchase price should have been similarly allocated between the note and the purchase contract in proportion to the fair market values of the two components at the time of your purchase.

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, 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 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 of the acquisition and ownership of Income PACS has been consistent with our treatment as outlined above.

~~Federal Income Tax Treatment of Participation in the Exchange~~

On August 17, 2004, we received a private letter ruling from the IRS regarding the tax consequences to us from an exchange 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 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 treat and to characterize the exchange as a transaction that does not constitute a tax-free reorganization under the Code in 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 loss equal to the difference between the adjusted issue price of the note as of the date of the exchange and the holder’s adjusted basis in the 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 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 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 advisoradvisors regarding the U.S. federal income tax consequences of the ~~settlement~~conversion pursuant to the Offer and the ownership and disposition of Common Stock.

This discussion does not describe all of the ~~purchase contract~~U.S. federal income tax consequences that may be relevant to you in light of your particular circumstances. In addition, this discussion does not address all the tax consequences that may be relevant to beneficial owners that are subject to special tax treatment, such as:

Because of the absence of legal authority directly addressing the U.S. federal income tax consequences of conversion pursuant to the Offer, no assurance can be given that the Internal Revenue Service (the “IRS”) or the courts will agree with the tax consequences as described herein. Although the following discussion describes the material federal income tax consequences of conversion pursuant to the Offer, such consequences to each Holder may depend on each Holder’s particular facts and circumstances. You should consult your own tax advisor regarding the tax consequences to you of conversion pursuant to the Offer and of the ownership of Common Stock in light of your particular facts and circumstances, including the tax consequences under ~~such circumstances.~~state, local, foreign and other tax laws.

Treatment of Accrued Interest

Because of the right to extend the interest period on the Debentures, all of the stated interest payments on the Debentures were required to be included in the income of the Holders as “original issue discount” (“OID”). Therefore, Holders who accept the Offer will be required to include in income for the current taxable year OID equal to interest accrued up to the Settlement Date. A Holder’s tax basis in the Debentures is increased by OID included in income and is reduced by the payments of cash received for stated interest, including any cash payments received as part of the Conversion Consideration for interest accrued since the last interest payment date. Holders who acquired their Debentures at prices higher or lower than the adjusted issue price of the Debentures at such time should consult their tax advisors regarding the proper treatment of any acquisition premium or market discount with respect to their Debentures.

U.S. Federal Income Tax Consequences of Conversion pursuant to the Offer

In the opinion of ~~White~~Gibson, Dunn & ~~Case~~Crutcher LLP, counsel to Williams, the surrender of the Debentures in exchange for the Conversion Consideration and Common Stock (which is sometimes referred to below as the “Conversion”) should be treated for U.S. federal income tax purposes as a ~~holder’s basis~~“recapitalization” under Section 368(a)(1)(E) of the Code. Because of the absence of legal authority directly on point, this conclusion is not free from doubt. Assuming that the Conversion is treated as a “recapitalization,” a Holder that converts the Debentures pursuant to the Offer will recognize capital gain in ~~a share of our common stock received on the exchange of~~ an ~~Income PACS will be~~amount equal to the lesser of (1) the Conversion Consideration (other than any amount attributable to accrued interest) and (2) the excess of the fair market value of the ~~share on~~Common Stock (including fractional shares) and the ~~date~~Conversion Consideration received in the Conversion (other than any amount attributable to accrued interest) over the beneficial owner’s adjusted tax basis in the Debentures surrendered in the exchange. Such gain will be long-term capital gain if the Debentures have been held for more than one year at the time of Conversion. The tax basis of the ~~exchange.~~Common Stock (including fractional shares) received upon Conversion will be the same as the tax basis of the Debentures surrendered, increased by the amount of gain recognized, if any, and reduced by the amount of the Conversion Consideration (to the extent not attributable to accrued interest). The holding period ~~for the share of our common stock received in the exchange will begin on the day following the holder’s acquisition~~ of 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 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 cashCommon Stock received in the exchange by Income PACS unit holders. If the exchange of an Income PACS were characterized in this manner, no loss 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, andwill include the holding period of the Debentures surrendered. A Holder will generally recognize capital gain on the receipt of cash in lieu of a fractional share of Common Stock as if such ~~stock would include~~fractional share had been issued and then redeemed by the ~~period~~Company.

No statutory, administrative or judicial authority directly addresses the ~~holder held~~U.S. federal income tax consequences of conversion pursuant to the ~~notes.~~

~~Again~~Offer. Therefore, the IRS may take the position that the Conversion is not a recapitalization. Instead, for example, the IRS could take the position that the Conversion is a conversion of the Debentures pursuant to their terms, and that the Conversion Consideration must be recognized as ordinary income (other than interest) in ~~the alternative,~~its entirety. In such case, the exchange of ~~Income PACS in~~Debentures for Common Stock pursuant to the ~~exchange offer could possibly~~Conversion would not be ~~treated~~taxable, but the Conversion Consideration would be taxable as ~~the cash settlement of the purchase contract and a recapitalization in which the notes are~~

ordinary income.

~~redeemed for shares of our common stock and an amount of cash such that the total consideration for the notes equals~~

Holders who acquired their Debentures at prices below the adjusted issue price of the ~~notes. If~~Debentures at such time may recognize ordinary income with respect to all or a portion of the ~~exchange of an Income PACS were characterized in this manner, no loss could be recognized by an exchanging holder~~cash received equal to accrued market discount with respect to the ~~redemption~~Debentures. Such Holders should consult their own advisors regarding the treatment of ~~the note, the holder could recognize a capital loss with respect to the cash settlement~~accrued market discount in light of the purchase contract, 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,their particular facts and ~~the holding period of such stock would include the period the holder held the notes.~~circumstances.

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

If, consistent with the opinion of Gibson, Dunn & Crutcher LLP, the Conversion constitutes a ~~copy.~~“recapitalization” for U.S. federal income tax purposes, the receipt of Conversion Consideration (other than the amount paid for accrued interest, which is subject to the rules described above under “Payment of Accrued Interest”) by anon-U.S. Holder generally will not be subject to U.S. federal income or withholding tax unless:

If, instead, the Conversion is treated for U.S. federal income tax purposes as a conversion of the Debentures into Common Stock, and the Conversion Consideration is treated as ordinary income that is not ~~intend~~interest, anon-U.S. Holder may be subject to tax on the receipt of the Conversion Consideration and the Company may be required to withhold ~~on amounts received~~taxes from such payment. Because of this uncertainty, the Company intends to withhold 30% of the Conversion Consideration paid tonon-U.S. Holders and to pay such withheld amount to the IRS unless the Holder qualifies for an exemption from, or reduction of, withholding tax

pursuant to an income tax treaty or because such amount is effectively connected with the conduct of a trade business by thenon-U.S. Holder in the ~~exchange offer that are allocable~~United States. See “— Information Reporting and Tax Withholding —Non-U.S. Holders”.Non-U.S. Holders should consult their own tax advisors regarding the application of the withholding tax rules to their particular circumstances, including the possibility of filing a claim for a refund of tax withheld on the Conversion Consideration.

An individualnon-U.S. Holder who converts Debentures into Common Stock and deceases while holding such stock will be subject to the ~~notes if these requirements are met.~~

U.S. ~~withholding~~federal estate tax. The estate tax generally ~~will apply at a rate~~applies to the fair market value of ~~30 percent on dividends paid on~~ the shares of ~~our common stock received as part~~Common Stock held at the time of death.Non-U.S. holders should consult with their tax advisors regarding the application of the ~~exchange. However,~~estate tax to their particular facts.

Information Reporting and Tax Withholding

In general, the Company is subject to reporting requirements with respect to payments to you of the Conversion Consideration unless you are an exempt recipient such as a corporation. A backup withholding tax will apply to such payments if you fail to provide a taxpayer identification number, a certification of exempt status, or otherwise fail to comply with applicable information reporting requirements. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against your U.S. federal income tax ~~treaty applies, you may be eligible for~~liability provided the required information is furnished to the IRS in a ~~reduced rate~~timely manner.

The Company will report to the IRS the payment of ~~withholding. Dividends on our common stock that are~~the Conversion Consideration to anon-U.S. Holder as income other than interest. As stated above under “— Conversion Pursuant to the Conversion Offer,” the Company intends to withhold 30% of the Conversion Consideration paid tonon-U.S. Holders and pay such amount to the IRS unless an exemption or reduction applies. In order to claim an exemption from, or reduction of, such withholding tax, thenon-U.S. Holder must deliver a properly executed IRS Form W-8ECI (or successor form) with respect to amounts 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 tax, but instead are subject to U.S. federal income tax on a net basis, as described below. In order to claim any such exemption or ~~reduction in the 30 percent withholding tax, you should provide a properly executed~~ IRS Form W-8BEN (or ~~a suitable substitute~~successor form) ~~claiming a reduction of or~~with respect to an exemption ~~from withholding~~or reduction under ~~an applicable~~a treaty.Non-U.S. Holders should consult with their tax ~~treaty or IRS Form W-8ECI (or~~advisors regarding the availability and procedures for a ~~suitable substitute form) stating that~~refund of such ~~payments are not subject to~~ withholding tax ~~because they are effectively connected with your conduct~~from the IRS.

INTERESTS OF DIRECTORS AND OFFICERS IN THE TRANSACTION

Williams is not aware of ~~a trade~~any of its directors, officers, principal stockholders or ~~business~~affiliates that own Debentures or will be surrendering Debentures for conversion pursuant to the Offer. Neither Williams, nor any of its subsidiaries nor, to the best of its knowledge, any of the its directors or executive officers, nor any affiliates of any of the foregoing, have engaged in any transactions in the ~~United States.~~Debentures during the 60 business days prior to the date hereof.

~~traded on an established market, you would generally not~~term debt securities issued by Williams in public and private offerings and will likely continue to do so from time to time.

The Dealer Managers may from time to time hold Debentures, shares of Common Stock and other securities of Williams in their proprietary accounts, and, to the extent they own Debentures in these accounts at the time of the Offer, the Dealer Managers may surrender such Debentures for conversion pursuant to the Offer. During the course of the Offer, the Dealer Managers may trade shares of Common Stock or effect transactions in other securities of Williams for their own accounts or for the accounts of their customers. As a result, the Dealer Managers may hold a long or short position in the Common Stock or other securities of Williams.

INFORMATION AGENT

D.F. King & Co., Inc. has been appointed as the Information Agent for the Offer. Williams has agreed to pay the Information Agent reasonable and customary fees for its services and will reimburse the Information Agent for its reasonableout-of-pocket expenses. All requests for assistance in connection with the Offer or for additional copies of this Conversion Offer Prospectus or related materials should be ~~subject~~directed to ~~U.S. federal income tax~~the Information Agent at 48 Wall Street, #42, New York, New York 10005, telephone number (212) 269-5550 (collect) or (800) 848-2998 (toll free).

CONVERSION AGENT

JPMorgan Chase Bank, National Association, has been appointed Conversion Agent for the Offer. Williams has agreed to pay the Conversion Agent reasonable and customary fees for its services and will reimburse the Conversion Agent for its reasonableout-of-pocket expenses. All completed Letters of Transmittal should be directed to the Conversion Agent at the address set forth on the ~~disposition~~back cover of ~~our common stock~~this Conversion Offer Prospectus. JPMorgan Chase Bank, National Association, is the trustee under ~~this rule if you held (at all times during~~ the ~~shorter~~indenture under which the Debentures were issued and has in the past and may in the future receive customary compensation for such services. JPMorgan Chase Bank, National Association, also provides trustee and commercial and investment banking services to Williams from time to time.

FEES AND EXPENSES

Williams will bear the fees and expenses relating to the Offer. Williams is making the principal solicitation by mail and overnight courier. However, where permitted by applicable law, additional solicitations may be made by facsimile, telephone, email or in person by the Dealer Managers and Information Agent, as well as by officers and regular employees of Williams and those of its affiliates. Williams will also pay the Conversion Agent and the Information Agent reasonable and customary fees for their services and will reimburse them for their reasonableout-of-pocket expenses. Williams will indemnify each of the ~~five year period preceding~~Conversion Agent, the ~~date of disposition or your holding period) less than five percent~~Dealer Managers and the Information Agent against certain liabilities and expenses in connection with the Offer, including liabilities under the federal securities laws.

The validity of the ~~total outstanding shares of our common stock.~~

~~CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS~~EXPERTS

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 release publicly any revisions to any forward-looking statements to reflect events or circumstances in the future or to reflect the occurrence of unanticipated events, except as required by law.

~~LEGAL MATTERS~~

The validity of the common stock to be issued in the exchange offer will be passed upon for us by James J. Bender, Senior Vice President and General Counsel of 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 October 6, 2004, Mr. Bender was the beneficial holder of 50,000 shares of our common stock. Mr. Bender is a participant in our stock option plan and various other employee benefit plans offered to our employees.

~~EXPERTS~~

The consolidated financial statements of Williams as of December 31, 2004 and 2003, and for each of the three years in the period ended December 31, 2004 (including the schedule appearing therein), and Williams’ management’s assessment of ~~The Williams Companies, Inc.~~the effectiveness of internal control over financial reporting as of December 31, 2004, appearing in its ~~current report~~Annual Report onForm ~~8-K dated June 1,~~10-K for the year ended December 31, 2004, ~~and filed with the Securities and Exchange Commission on September 16, 2004,~~as amended, have been audited by Ernst & Young LLP, independent registered public accounting firm, as ~~set forth~~stated in their ~~report~~reports thereon ~~included therein~~ and incorporated by reference herein. Such consolidated financial statements and ~~schedule are incorporated by reference herein. Such consolidated financial statements and schedule~~management’s assessment are incorporated herein by reference in reliance upon such ~~report~~reports given on the authority of such firm as experts in accounting and auditing.

Approximately ~~98%~~99% of ~~our~~Williams’ year-end ~~2003~~2004 U.S. proved reserves estimates included in ~~our annual report on Form 10-K for the year ended December 31, 2003, as amended,~~its Annual Report, which is incorporated by reference into this ~~exchange offer prospectus,~~Conversion 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.

Williams is not aware of any jurisdiction in which the making of the Offer is not in compliance with applicable law. If Williams becomes aware of any jurisdiction in which the making of the Offer would not be in compliance with applicable law, Williams will make a good faith effort to comply with any such law. If, after such good faith effort, Williams cannot comply with any such law, the Offer will not be made to (nor will surrenders of Debentures for conversion in connection with the Offer be accepted from or on behalf of) the owners of Debentures subject to any such law with respect to the Offer.

Pursuant toRule 13e-4 of the General Rules and Regulations under the Exchange Act, Williams has filed with the Commission an Issuer Tender Offer Statement on Schedule TO which contains additional information with respect to the Offer. Such Schedule TO, including the exhibits and any amendments thereto, may be examined, and copies may be obtained, at the same places and in the same manner as is set forth under the caption “Available Information.”

No dealer, salesperson or other person has been authorized to give any information or to make any representation not contained in this Conversion Offer Prospectus and, if given or made, such information or representation may not be relied upon as having been authorized by Williams or the Dealer Managers.

Completed Letters of Transmittal and any other ~~information~~documents required in connection with the Securities and Exchange Commission, which we refer to in this exchange offer prospectus as the SEC. You may read and copy any reports or other information that we file with the SEC at the SEC’s public reference room located at 450 Fifth Street, N.W., Washington D.C. 20549. You may also receive copiessurrenders of ~~these documents upon payment of a duplicating fee, by calling the SEC at 1-800-SEC-0330. Our filings are also available~~Debentures for conversion should be directed to the ~~public on the SEC’s web site at~~~~http://www.sec.gov.~~~~You may also inspect our SEC reports on our web site at~~~~http://www.williams.com.~~~~We do not intend for information in our web site to be part of this exchange offer prospectus.~~

We are incorporating by reference into this exchange offer prospectus information we file with the SEC, which means we are disclosing important information to you by referring you to those documents. The information 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:

~~1. annual report on Form 10-K for the fiscal year ended December 31, 2003;~~

~~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 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 (excluding those filings made under 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. The file number for the documents we file, or have filed, 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 telephoning or writing usConversion Agent at the 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.~~

The ~~Williams Companies, Inc.~~

~~Investor Relations~~

~~One Williams Center~~

~~Tulsa, Oklahoma 74172~~

~~Telephone Number: (918) 573-2000~~

~~The exchange agent~~Conversion Agent for the ~~exchange offer~~Offer is:

~~(212) 623-6167~~ Any requests for assistance in connection with the Offer or for additional copies of this Conversion Offer Prospectus or related materials may be directed to the Information Agent at the address or telephone numbers set forth below. A Holder may also contact such Holder’s broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Offer.

The ~~information agent~~Information Agent for the ~~exchange offer~~Offer is:

48 Wall Street, ~~22nd Floor~~#42

New York, ~~New York~~NY 10005

Banks and Brokers, Call Collect:

All ~~Other~~Others Call Toll Free:

Any questions relating to the Offer may be directed to either of the Dealer Managers at the respective addresses and telephone numbers set forth below.

The ~~dealer managers~~Dealer Managers for the ~~exchange offer~~Offer are:
~~Lead Dealer Manager~~
~~Merrill Lynch & Co.~~
~~World Financial Center — North Tower~~
~~New York, New York 10080~~
~~Attn: Liability Management Group~~
~~Call Toll-Free: 1-888-654-8637~~
~~or Call: 212-449-4914 (collect)~~
~~Dealer Managers~~

~~Citigroup~~Lehman Brothers ~~Banc of America Securities LLC~~Merrill Lynch & Co.
745 Seventh Avenue, 3rd Floor
New York, New York 10019
Attention: Liability Management Group
(212) 526-0111 (collect)
(800) 443-0892 (toll free) 4 World Financial Center, 7th Floor
New York, New York 10080
Attention: Liability Management Group
(212) 449-4914 (collect)
(800) 654-8637 (toll free)
Additional copies of this exchange offer prospectus, the letter of transmittal or other exchange offer materials may be obtained from the information agent and will be furnished at our expense. Questions and requests for assistance or additional copies hereof or the letter of transmittal should be directed to the information agent.
~~Questions and requests for information regarding the terms of the exchange offer should be directed to the lead dealer manager.~~
PART II

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’ 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,~~bylaw, 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~~

Exhibit No. Description
1 .1* Form of Dealer Manager Agreement
4 .1* Restated Certificate of Incorporation of The Williams Companies, Inc., as amended through August 3, 2004
4 .2* Certificate of Designation of Series A Junior Participating Preferred Stock (incorporated herein by reference to Exhibit 4.1 to this registration statement)
4 .3* Restated By-laws, as amended through September 15, 2004
4 .4* Amended and Restated Rights Agreement between The Williams Companies, Inc. and First Chicago Trust Company of New York (incorporated herein by reference to Exhibit 4.1 of registrant’s current report on Form 8-K filed September 21, 2004)
4 .5* Form of Senior Debt Indenture between The Williams Companies, Inc. and JPMorgan Chase Bank (as successor trustee to Bank One Trust Company, National Association (successor in interest to the First National Bank of Chicago)), as Trustee (incorporated herein by reference to Exhibit 4.1 to the Form S-3 (Registration No. 333-35099) filed on September 8, 1997).
4 .6* Sixth Supplemental Indenture dated January 14, 2002, between The Williams Companies, Inc. and JPMorgan Chase Bank (as successor trustee to Bank One Trust Company, National Association (successor in interest to the First National Bank of Chicago)), as Trustee (incorporated herein by reference to Exhibit 4.1 of registrant’s current report on Form 8-K filed on January 23, 2002).
5 .1 Opinion of James J. Bender, Esq
8 .1 Tax Opinion of White & Case LLP
23 .1 Consent of Ernst & Young LLP, independent registered public accounting firm
23 .2 Consent of James J. Bender, Esq. (included in Exhibit 5.1 to this registration statement)
23 .3 Consent of White & Case LLP (included in Exhibit 8.1 to this registration statement)
23 .4* Consent of Independent Petroleum Engineers and Geologists, Netherland, Sewell & Associates, Inc.
23 .5* Consent of Independent Petroleum Engineers and Geologists, Miller and Lents, LTD.
~~II-1~~

Exhibit No. Description
24 .1 Power of Attorney
99 .1 Form of Letter of Transmittal
99 .2* Form of Letter to Registered Holders and Depository Trust Company Participants
99 .3* Form of Letter to Clients
99 .4* Form of Letter to Holders of FELINE PACS
* Item 21. ~~Indicates exhibit previously filed with the Securities~~Exhibits and ~~Exchange Commission and incorporated herein by reference. Exhibits filed with periodic or current reports of The Williams Companies, Inc. were filed under Commission File No. 001-04174.~~Financial Statement Schedules
(a) Exhibits
      See the Exhibit Index attached to this registration statement and incorporated herein by reference.
Item 22. Undertakings
~~(a)~~      The undersigned registrant hereby undertakes:
      1. To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
      i. To include any prospectus required by section 10(a)(3) of the Securities Act of ~~1933;~~
1933.

      ii. To reflect in the ~~prospectus~~Conversion Offer Prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration ~~statement; and~~
statement.

      iii. To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
      2. That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities
II-1
offered therein, and the offering of such securities at that time shall be deemed to be the initialbona fideoffering thereof.
      3. To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
      4. To respond to requests for information that is incorporated by reference into the conversion offer pursuant to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.
      5. To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired or involved therein, that was not the subject of and included in the registration statement when it became effective.
      6. That for the purposes of determining any liability under the Securities Act, each filing of the registrant’s annual report pursuant to Section 13(a) or 15(d) of the Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initialbona fideoffering thereof.
(b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial~~bona fideoffering thereof.~~
~~(c)~~      Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the ~~foregoing~~ provisions referred to in Item 20 hereof, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange
~~II-2~~
Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the ~~Securities~~ Act ~~of 1933~~ and will be governed by the final adjudication of such issue.
(d) The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.
(e) The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.
~~II-3~~II-2
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly caused this Amendment No. 1 to the registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Tulsa, state of Oklahoma on ~~October 8, 2004.~~December 29, 2005.
THE WILLIAMS COMPANIES, INC.
By: /s/ ~~BRIAN~~Brian K. ~~SHORE~~Shore

Name: Brian K. Shore
Title: Secretary
Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1 to the registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature Title Date
~~Signature~~ ~~Title~~ ~~Date~~

*
Steven J. Malcolm President, Chief Executive Officer and Chairman of the Board of Directors
~~(Principal~~ (Principal Executive Officer) ~~October 8, 2004~~December 29, 2005

*
Donald R. Chappel Senior Vice President and Chief Financial Officer
~~(Principal~~ (Principal Financial Officer) ~~October 8, 2004~~December 29, 2005

*
~~Gary R. Belitz~~Ted Timmermans Controller
~~(Principal~~ (Principal Accounting Officer) ~~October 8, 2004~~December 29, 2005

*
~~Hugh M. Chapman~~Irl Engelhardt Director ~~October 8, 2004~~December 29, 2005

*
William ~~E. Green~~R. Granberry Director ~~October 8, 2004~~December 29, 2005

*
~~W.R. Howell~~William E. Green Director ~~October 8, 2004~~December 29, 2005

*
~~Charles M. Lillis~~Juanita H. Hinshaw Director ~~October 8, 2004~~December 29, 2005

*
~~George A. Lorch~~W.R. Howell Director ~~October 8, 2004~~December 29, 2005

*
~~William G. Lowrie~~Charles M. Lillis Director ~~October 8, 2004~~December 29, 2005

*
~~Frank T. MacInnis~~George A. Lorch Director ~~October 8, 2004~~December 29, 2005
~~II-4~~II-3

Signature Title Date
~~Signature~~ ~~Title~~ ~~Date~~

*
~~Janice D. Stoney~~William G. Lowrie Director ~~October 8, 2004~~December 29, 2005

*
~~Joseph H. Williams~~Frank T. MacInnis Director ~~October 8, 2004~~December 29, 2005
*
Janice D. Stoney Director December 29, 2005
*
Joseph H. Williams Director December 29, 2005

*By: /s/~~/s/ BRIAN~~Brian K. ~~SHORE~~Shore
Name:    Brian K. Shore
As Attorney-In-Fact
~~II-5~~II-4
Exhibits

Exhibit No. Description
1 .1* Form of Dealer Manager Agreement
4 .1* Restated Certificate of Incorporation of The Williams Companies, Inc., as amended through August 3, 2004
4 .2* Certificate of Designation of Series A Junior Participating Preferred Stock (incorporated herein by reference to Exhibit 4.1 to this registration statement)
4 .3* Restated By-laws, as amended through September 15, 2004
4 .4* Amended and Restated Rights Agreement between The Williams Companies, Inc. and First Chicago Trust Company of New York (incorporated herein by reference to Exhibit 4.1 of registrant’s current report on Form 8-K filed September 21, 2004)
4 .5* Form of Senior Debt Indenture between The Williams Companies, Inc. and JPMorgan Chase Bank (as successor trustee to Bank One Trust Company, National Association (successor in interest to the First National Bank of Chicago)), as Trustee (incorporated herein by reference to Exhibit 4.1 to the Form S-3 (Registration No. 333-35099) filed on September 8, 1997).
4 .6* Sixth Supplemental Indenture dated January 14, 2002, between The Williams Companies, Inc. and JPMorgan Chase Bank (as successor trustee to Bank One Trust Company, National Association (successor in interest to the First National Bank of Chicago)), as Trustee (incorporated herein by reference to Exhibit 4.1 of registrant’s current report on Form 8-K filed on January 23, 2002).
5 .1 Opinion of James J. Bender, Esq
8 .1 Tax Opinion of White & Case LLP
23 .1 Consent of Ernst & Young LLP, independent registered public accounting firm
23 .2 Consent of James J. Bender, Esq. (included in Exhibit 5.1 to this registration statement)
23 .3 Consent of White & Case LLP (included in Exhibit 8.1 to this registration statement)
23 .4* Consent of Independent Petroleum Engineers and Geologists, Netherland, Sewell & Associates, Inc.
23 .5* Consent of Independent Petroleum Engineers and Geologists, Miller and Lents, LTD.
24 .1 Power of Attorney
99 .1 Form of Letter of Transmittal
99 .2* Form of Letter to Registered Holders and Depository Trust Company Participants
99 .3* Form of Letter to Clients
99 .4* Form of Letter to Holders of FELINE PACS

Exhibit No. Description

1 .1 Form of Dealer Manager Agreement (originally filed November 17, 2005)

4 .1 Restated Certificate of Incorporation of The Williams Companies, Inc., as supplemented (incorporated herein by reference to Exhibit 3.1 of registrant’s annual report on Form 10-K for the fiscal year ended December 31, 2004)

4 .2 Certificate of Designation of Series A Junior Participating Preferred Stock (included in Exhibit 4.1 to this registration statement)

4 .3 Restated By-laws (incorporated herein by reference to Exhibit 3.1 of registrant’s current report on Form 8-K filed September 21, 2004)

4 .4 Amended and Restated Rights Agreement between The Williams Companies, Inc. and First Chicago Trust Company of New York (incorporated herein by reference to Exhibit 4.1 of registrant’s current report on Form 8-K filed September 21, 2004)

5 .1 Opinion of Gibson, Dunn & Crutcher (originally filed November 17, 2005)

8 .1* Tax Opinion of Gibson, Dunn & Crutcher

12 .1 Statement of Computation of Ratio of Earnings to Fixed Charges (originally filed November 17, 2005)

23 .1* Consent of Ernst & Young LLP, independent auditors

23 .2 Consent of Gibson, Dunn & Crutcher (included in Exhibit 5.1 to this registration statement) (originally filed November 17, 2005)

23 .3* Consent of Gibson, Dunn & Crutcher re: tax matters (included in Exhibit 8.1 to this registration statement)

23 .4 Consent of Independent Petroleum Engineers and Geologists, Netherland, Sewell & Associates, Inc. (originally filed November 17, 2005)

23 .5 Consent of Independent Petroleum Engineers and Geologists, Miller and Lents, LTD (originally filed November 17, 2005)

24 .1 Power of Attorney (originally filed November 17, 2005)

99 .1* Amendment No. 1 to the Form of Letter of Transmittal
* Indicates exhibit previously filed with the Securities and Exchange Commission and incorporated herein by reference. Exhibits filed with periodic or current reports of The Williams Companies, Inc. were filed under Commission No. 001-04174.Filed herewith


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


	Page

~~Questions and Answers About the Exchange Offer~~AVAILABLE INFORMATION		i
INCORPORATION BY REFERENCE		i
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS		iv
SUMMARY		1
~~Summary~~RISK FACTORS		86
~~Risk Factors~~QUESTIONS AND ANSWERS ABOUT THE OFFER		1519
~~Use of Proceeds~~PRICE RANGE OF COMMON STOCK		3024
~~Market for Common Stock and Income PACS~~USE OF PROCEEDS		3024
~~Selected Historical Consolidated Financial Data~~BOOK VALUE PER COMMON SHARE		3124
~~The Exchange Offer~~SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA		3425
~~Comparison of Rights between the Income PACS and Our Common Stock~~TERMS OF THE OFFER		4627
~~Description of Capital Stock~~DESCRIPTION OF DEBENTURES		4833
~~Description of FELINE PACS~~DESCRIPTION OF CAPITAL STOCK		5147
~~Description of the Purchase Contracts~~MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES		50
INTERESTS OF DIRECTORS AND OFFICERS IN THE TRANSACTION		53
DEALER MANAGERS		53
INFORMATION AGENT		54
~~Description of the Notes~~CONVERSION AGENT		6154
~~Material U.S. Federal Income Tax Consequences~~FEES AND EXPENSES		6554
~~Cautionary Statement Regarding Forward-Looking Statements~~LEGAL MATTERS		7154
~~Legal Matters~~EXPERTS		7155
~~Experts~~MISCELLANEOUS		71
~~Where You Can Find More Information~~		7255
~~Opinion of James J. Bender, Esq~~EX-8.1: TAX OPINION OF GIBSON, DUNN & CRUTCHER
~~Tax Opinion of White~~EX-23.1: CONSENT OF ERNST & ~~Case~~YOUNG LLP
~~Consent of Ernst & Young LLP~~
~~Power of Attorney~~
~~Form Letter of Transmittal~~EX-99.1: AMENDMENT NO. 1 TO THE FORM OF LETTER OF TRANSMITTAL


		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~~Settlement Date		The ~~exchange offer will expire at~~“Settlement Date” in respect of any Debentures that are validly surrendered for conversion prior to 5:00 p.m., New York City time, on ~~October 18, 2004, unless extended or earlier terminated by us.~~the Expiration Date is expected to be promptly following the Expiration Date.


~~Proration of Tendered Income PACS~~How to Surrender Debentures		~~If more than an aggregate of 43,900,000 Income PACS are validly tendered and not withdrawn prior to the expiration date~~See “Terms 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~~Offer — Procedure for Surrendering Debentures.” For further information, call the ~~tendering holders. If we determine that there is any likelihood that~~Information Agent or the ~~New York Stock Exchange continued-listing condition may not be met, we may accept a pro rata amount of~~Conversion Agent at the ~~Income PACS tendered in the exchange offer to ensure that the Income PACS continue to be listed~~respective telephone numbers set forth 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~~back cover 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.~~


~~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~~commercial bank, trust company 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.assistance.


Withdrawal and Revocation Rights		Debentures may be validly withdrawn at any time up until 5:00 p.m., New York City time, on the Expiration Date. In the event of a termination of the Offer, which can only occur if a condition to the Offer is not satisfied, the Debentures surrendered pursuant to the Offer will be promptly returned to the surrendering Holders.


Purpose of the Offer		The purpose of the Offer is to induce the conversion of any and all of the outstanding Debentures to Common Stock. Williams believes that the issuance of Common Stock upon conversion of the Debentures will strengthen Williams’ capitalization by reducing long-term debt.

Certain Conditions Precedent to the Offer		Williams’ obligation to pay the Conversion Consideration in respect of Debentures validly surrendered for conversion pursuant to the Offer is conditioned upon the satisfaction of the General Conditions. See “Terms of the Offer — Conditions to the Offer.”


Gibson, Dunn & Crutcher LLP 1801 California Street, Suite 4100 Denver, Colorado 80202-2641 (303) 298-5700 Attention: Richard M. Russo, Esq. ~~Gibson, Dunn & Crutcher LLP~~ ~~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~~ ~~450 Lexington Avenue~~ ~~New York, New York 10017~~ ~~(212) 450-4000~~ ~~Attention: Marlene Alva, Esq.~~


~~Citigroup~~Lehman Brothers	~~Banc of America Securities LLC~~Merrill Lynch & Co.


	•	~~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.”~~


	•	to waive any and all conditions to the Offer;


	•	to extend the Offer;



	•	to terminate the Offer, but only if any condition to the Offer is not satisfied (see “Terms of the Offer — Conditions to the Offer”); or


	•	otherwise to amend the Offer in any respect.


	•	amounts and nature of future capital expenditures;

	•	expansion and growth of Williams’ business and operations;

	•	business strategy;

	•	estimates of proved gas and oil reserves;

	•	reserve potential;

	•	development drilling potential;

	•	cash flow from operations; and

	•	power and gas prices and demand.


	•	general economic and market conditions;

	•	changes in laws or regulations;

	•	continued availability of capital and financing; and

	•	other factors, most of which are beyond Williams’ control.


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


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

Dealer Managers		~~Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets~~Lehman Brothers Inc. and ~~Banc~~Merrill & Co. are the Dealer Managers for the Offer. Their respective addresses and telephone numbers are set forth on the back cover of ~~America Securities LLC.~~this Conversion Offer Prospectus.

Information Agent		D.F. King & Co., Inc. is the Information Agent for the Offer. Its address and telephone number are set forth on the back cover of this Conversion Offer Prospectus.

~~Exchange~~Conversion Agent		JPMorgan Chase Bank, National Association is the Conversion Agent for the Offer. Its address and telephone number are set forth on the back cover of this Conversion Offer Prospectus.

Regulatory Approvals		Williams is not aware of any other material regulatory approvals necessary to complete the Offer, other than the obligation to file a Schedule TO with the Securities and Exchange Commission and otherwise comply with applicable securities laws.
~~Market-Trading~~
No Appraisal Rights		~~The Income PACS~~No appraisal rights are ~~listed on~~available to the ~~New York Stock Exchange under~~Holders in connection with 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.
Offer.

Further Information		~~If you have questions regarding the exchange offer, please contact the lead dealer manager. If you have questions regarding the procedures~~Any requests for ~~tendering in the exchange offer or require~~ assistance in ~~tendering your Income PACS, please contact~~connection with the ~~information agent. If you would like~~Offer or for additional copies of this ~~exchange offer prospectus, our annual, quarterly,~~Conversion Offer Prospectus or related materials should be directed to the Information Agent. Any questions regarding the Offer should be directed to any of the Dealer Managers. Contact information for the Information Agent 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~~Dealer Managers is set forth on the back cover of this ~~exchange offer prospectus.~~Conversion Offer Prospectus. Beneficial owners may also contact their brokers, dealers, commercial banks, trust companies or other nominees through which they hold the Debentures with questions and requests for assistance.


	*If you do not convert your Debentures, Debentures you retain may become less liquid as a result of the Offer.*


	Upon consummation of the Offer, Holders who surrender Debentures for conversion pursuant to the Offer will lose their rights under the Debentures, including their rights to future interest and principal payments with respect to their Debentures and their rights as a creditor of Williams.


	Although Williams has regularly paid dividends on the Common Stock, there is no assurance that dividends will be paid in the future, or that, if paid, dividends would be paid in the same amount or with the same frequency as in the past.


	*The value of the ~~common stock that you receive will decline if the market price of our common stock declines.~~Common Stock may fluctuate.*


	•	~~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.~~


	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 forgo the possibility of being relieved of your obligation to purchase our common stock under the terms of the purchase contract forming part of your Income PACS.


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


	*~~Certain aspects of~~Williams may redeem the ~~U.S. federal income tax consequences of exchanging the Income PACS are unclear.~~Debentures, at its option, on or after June 1, 2010.*


	~~Income PACS~~Williams’ Board of Directors has not made a recommendation with regard to whether you should surrender your Debentures for conversion, and Williams has not obtained a third-party determination that ~~you continue~~the Offer is fair to ~~hold after~~Holders of the ~~exchange offer are expected to become less liquid following the exchange offer.~~Debentures.


	*~~If you do not participate in~~Williams will withhold 30% of the ~~exchange offer, you will have no rights as a common stockholder.~~Conversion Consideration payable to non-U.S. Holders.*


	*~~If you do not participate in the exchange offer, your pledged securities will remain encumbered.~~*


	*~~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.~~*


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


	*~~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~~Williams’ risk measurement and hedging activities might not prevent losses.*


	•	~~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.~~


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


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


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


	Because weWilliams no longer ~~maintain~~maintains investment grade credit ratings, ~~our~~its counterparties have required usWilliams to provide higher amounts of credit support, which raises ~~our~~its cost of doing business.