The Williams Companies, Inc. (WMB) 8-K Williams Reports Third-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 *			2nd Qtr*			3rd Qtr		4th Qtr		Year
Income (loss) from continuing operations(1)		($43.1	)	$	113.7		$	20.0			($62.4	)	$	28.2			($1.5	)		($18.0	)	$	16.1	$	0.0		($3.4	)
Preferred stock dividends		6.8			22.7			—			—			29.5			—			—			—		—		—
Income (loss) from continuing operations available to common stockholders		($49.9	)	$	91.0		$	20.0			($62.4	)		($1.3	)		($1.5	)		($18.0	)	$	16.1	$	0.0		($3.4	)
Income (loss) from continuing operations — diluted earnings per share		($0.10	)	$	0.17		$	0.04			($0.12	)		($0.01	)	$	—			($0.03	)	$	0.03	#DIV/0!			($0.01	)
Nonrecurring items:
Power
Accelerated compensation expense associated with workforce reductions		11.8			—			—			—			11.8			—			—			—		—		—
Severance accrual		—			0.6			—			—			0.6			—			—			—		—		—
Impairment of investment in Aux Sable		—			8.5			5.6			—			14.1			—			—			—		—		—
Loss accrual for regulatory issues(2)		—			20.0			—			—			20.0			—			—			—		—		—
Prior period item correction(3)		(13.7	)		(93.1	)		(1.0	)		(9.0	)		(116.8	)		—			—			—		—		—
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		(1.9	)		(246.1	)		(21.9	)		113.4			(156.5	)		—			—			—		—		—
Gas Pipeline
Write-off of Oneline information system project		—			25.5			—			0.1			25.6			—			—			—		—		—
Severance accrual		—			0.9			—			—			0.9			—			—							—
Write-off of previously-capitalized costs — idled segment of Northwest’s pipeline		—			—			—			—			—			—			9.0							9.0
Total Gas Pipeline nonrecurring items		—			26.4			—			0.1			26.5			—			9.0			—		—		9.0
Exploration & Production
Gain on sale of certain E&P properties		—			(91.5	)		—			—			(91.5	)		—			—			—		—		—
Loss provision related to an ownership dispute		—			—			—			—			—			—			11.3			—		—		11.3
Total Exploration & Production nonrecurring items		—			(91.5	)		—			—			(91.5	)		—			11.3			—		—		11.3
Midstream Gas & Liquids
La Maquina depreciable life adjustment		—			—			4.2			—			4.2			—			—			6.4		—		6.4
Gain on sale of West Texas LPG Pipeline, L.P.		—			—			(11.0	)		—			(11.0	)		—			—			—		—		—
Gain on sale of wholesale propane		—			—			—			(16.2	)		(16.2	)		—			—			—				—
Devil’s Tower revenue correction		—			—			—			—			—			—			(16.5	)		16.5				—
Total Midstream Gas & Liquids nonrecurring items		—			—			(6.8	)		(16.2	)		(23.0	)		—			(16.5	)		22.9		—		6.4
Other
Impairment of Longhorn and Aspen project(5)		—			49.6			—			—			49.6			—			10.8			—		—		10.8
Gain on sale of butane blending inventory		—			—			(9.2	)		—			(9.2	)		—			—							—
Longhorn recapitalization fee		—			—			—			—			—			6.5			—			—		—		6.5
Total Other nonrecurring items		—			49.6			(9.2	)		—			40.4			6.5			10.8			—		—		17.3
Nonrecurring items included in segment profit (loss)		(1.9	)		(261.6	)		(37.9	)		97.3			(204.1	)		6.5			14.6			22.9		—		44.0
Nonrecurring items below segment profit (loss)
Convertible preferred stock dividends(2)(Preferred stock dividends — Corporate)		—			13.8			—			—			13.8			—			—			—		—		—
Impairment of cost-based investments(6) (Investing income (loss) -Various)		—			19.1			2.3			—			21.4			—			—			15.7		—		15.7
Severance accrual (General corporate expenses)		—			3.0			—			—			3.0			—			—			—		—		—
Impairment of Algar Telecom investment (Investing income (loss) — Other)		12.0			—			1.2			—			13.2			—			—			—		—		—
Write-off of capitalized debt expense (Interest accrued — Corporate)		—			14.5			—			—			14.5			—			3.8			—		—		3.8
Premiums, fees and expenses related to the debt repurchase and debt tender offer (Other income (expense) — net — Corporate and Exploration & Production)		—			—			—			66.8			66.8			—			96.7			155.1		—		251.8
Loss provision related to an ownership dispute — interest component (Interest accrued — Exploration & Production)		—			—			—			—			—			—			1.9			—				1.9
		12.0			50.4			3.5			66.8			132.7			—			102.4			170.8		—		273.2
Total nonrecurring items		10.1			(211.2	)		(34.4	)		164.1			(71.4	)		6.5			117.0			193.7		—		317.2
Tax effect for above items		3.9			(108.7	)		(14.0	)		43.4			(75.5	)		2.5			44.8			74.1		—		121.3
Recurring income (loss) from continuing operations available to common stockholders		($43.7	)		($11.5	)		($0.4	)	$	58.3		$	2.8		$	2.5		$	54.2		$	135.7	$	0.0	$	192.5
Recurring diluted earnings per common share		($0.08	)		($0.02	)	$	—		$	0.11		$	0.01		$	—		$	0.10		$	0.26	#DIV/0!		$	0.37
Weighted-average shares — diluted (thousands)		517,652			534,839			524,711			518,502			518,137			525,752			521,698			529,525		0		521,438

(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 $116.8 million of revenue in 2003 from a correction of the accounting treatment previously applied to certain third party derivative contracts during 2002 and 2001.
(4)	For $5.6 million, no tax benefit.
(5)	For $20.2 million, no tax benefit in 2nd Qtr 2003.
(6)	For $21.4 million in 2003, no tax benefit.

* Amounts have been restated from 2nd quarter 2004 to reflect the transfer of our equity method investment in Aux Sable from our Midstream segment to our Power segment.

Note: The sum of earnings (loss) per share for the quarters may not equal the total earnings (loss) per share for the year due to changes in the weighted-average number of common shares outstanding.