The Williams Companies, Inc. (WMB) 8-K Williams Reports First-Quarter 2004 Results

Exhibit 99.2

Reconciliation of Income (Loss) from Continuing Operations to Recurring Earnings
(UNAUDITED)

	2003															2004
(Dollars in millions, except for per-share amounts)	1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			Year			1st Qtr
Income (loss) from continuing operations(1)	$	(39.3	)	$	116.2		$	22.8		$	(84.5	)	$	15.2		$	5.4
Preferred stock dividends		6.8			22.7			—			—			29.5			—
Income (loss) from continuing operations available to common stockholders	$	(46.1	)	$	93.5		$	22.8		$	(84.5	)	$	(14.3	)	$	5.4
Income (loss) from continuing operations — diluted earnings per share	$	(0.09	)	$	0.18		$	0.04		$	(0.16	)	$	(0.03	)	$	0.01
Nonrecurring items:
Power
Accelerated compensation expense associated with workforce reductions		11.8			—			—			—			11.8			—
Severance accrual		—			0.6			—			—			0.6			—
Loss accrual for regulatory issues(2)		—			20.0			—			—			20.0			—
Prior period item correction(3)		—			(105.0	)		—			(12.0	)		(117.0	)		—
Gain on sale of Jackson EMC power contracts		—			(175.0	)		(13.0	)		—			(188.0	)		—
Gain on sale of crude contracts and pipeline		—			(7.1	)		—			—			(7.1	)		—
Gain on sale of eSpeed stock		—			—			(13.5	)		—			(13.5	)		—
Impairment of goodwill(2)		—			—			—			45.0			45.0			—
Hazelton impairment		—			—			—			44.1			44.1			—
California rate refund and other accrual adjustments(4)		—			—			—			33.3			33.3			—
Total Power nonrecurring items		11.8			(266.5	)		(26.5	)		110.4			(170.8	)		—
Gas Pipeline
Write-off of Oneline information system project		—			25.5			—			0.1			25.6			—
Severance accrual		—			0.9			—			—			0.9			—
Total Gas Pipeline nonrecurring items		—			26.4			—			0.1			26.5			—
Exploration & Production
Gain on sale of certain E&P properties		—			(91.5	)		—			—			(91.5	)		—
Total Exploration & Production nonrecurring items		—			(91.5	)		—			—			(91.5	)		—
Midstream Gas & Liquids
Impairment of investment in Aux Sable		—			8.5			5.6			—			14.1			—
La Maquina depreciable life adjustment		—			—			4.2			—			4.2			—
Gain on sale of West Texas LPG Pipeline, L.P.		—			—			(11.0	)		—			(11.0	)		—
Impairment of Canadian assets		—			—			—			41.7			41.7			—
Gain on sale of wholesale propane		—			—			—			(16.2	)		(16.2	)		—
Total Midstream Gas & Liquids nonrecurring items		—			8.5			(1.2	)		25.5			32.8			—
Other
Impairment of Longhorn and Aspen project(5)		—			49.6			—			—			49.6			—
Gain on sale of butane blending inventory		—			—			(9.2	)		—			(9.2	)		—
Longhorn recapitalization fee		—			—			—			—			—			6.5
Total Other nonrecurring items		—			49.6			(9.2	)		—			40.4			6.5
Nonrecurring items included in segment profit (loss)		11.8			(273.5	)		(36.9	)		136.0			(162.6	)		6.5
Nonrecurring items below segment profit (loss)
Convertible preferred stock dividends(2) (Preferred stock dividends — Corporate)		—			13.8			—			—			13.8			—
Impairment of cost-based investments(2) (Investing income (loss) — Various)		—			19.1			2.3			—			21.4			—
Severance accrual (General corporate expenses)		—			3.0			—			—			3.0			—
Impairment of Algar Telecom investment (Investing income (loss) — International)		12.0			—			1.2			—			13.2			—
Write-off of capitalized debt expense (Interest accrued — Corporate)		—			14.5			—			—			14.5			—
Debt tender offer premiums and adjustments (Other income (expense) — net — Corporate)		—			—			—			66.8			66.8			—
		12.0			50.4			3.5			66.8			132.7			—
Total nonrecurring items		23.8			(223.1	)		(33.4	)		202.8			(29.9	)		6.5
Tax effect for above items		9.1			(113.3	)		(13.7	)		56.7			(61.2	)		2.5
Recurring income (loss) from continuing operations	$	(31.4	)	$	(16.3	)	$	3.1		$	61.6		$	17.0		$	9.4
Recurring diluted earnings per common share	$	(0.06	)	$	(0.03	)	$	0.01		$	0.12		$	0.03		$	0.02
Weighted-average shares — diluted (thousands)		517,652			534,839			524,711			518,502			518,137			525,752

(1)	Includes $126.8 million positive valuation adjustment associated with agreement to terminate contract with Allegheny in second quarter 2003.
(2)	No tax benefit
(3)	Power recognized $80.7 million of revenue in the second quarter of 2003 from a correction of the accounting treatment previously applied to certain third party derivative contracts during 2002 and 2001. Results for 2003 include $117 million of revenue related to these prior period items, of which $24 million was recorded prior to the second quarter correction, and $12 million was subsequently reported in the fourth quarter.
(4)	For $5.6 million, no tax benefit
(5)	For $20.2 million, no tax benefit