<PAGE> 1
Filed Pursuant to Rule 424(b)(2)
Registration No. 333-53511
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JUNE 10, 1998)
$625,000,000
THE WILLIAMS COMPANIES, INC.
$350,000,000 6.20% NOTES DUE 2002
$275,000,000 6.50% NOTES DUE 2006 LOGO
------------------------
Interest on the 6.20% Notes due August 1, 2002 (the "2002 Notes") and the
6.50% Notes due August 1, 2006 (the "2006 Notes" and collectively with the 2002
Notes, the "Notes") is payable semi-annually on February 1 and August 1 of each
year, beginning on February 1, 1999. The 2002 Notes are not subject to
redemption. The 2006 Notes are subject to redemption, at any time at the option
of the Company, in whole or in part, at the redemption price set forth in this
Prospectus Supplement. The Notes have no sinking fund provisions. The 2002 Notes
mature on August 1, 2002, and the 2006 Notes mature on August 1, 2006.
The 2002 Notes and 2006 Notes will each be represented by a Global Note
registered in the name of the nominee of the Depository Trust Company ("DTC"),
which will act as the Depository (the "Depository"). Beneficial interests in
each Global Note will be shown on, and transfers thereof will be effected only
through, records maintained by the Depository and, with respect to the
beneficial owners' interests, by the Depository's participants. Except as
described in the Prospectus, Notes in definitive form will not be issued.
Settlement for the Notes will be in same-day funds. See "Description of
Notes -- Book-Entry System."
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) THE COMPANY(3)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per 2002 Note..................... 99.842% 0.500% 99.342%
Total............................. $349,447,000 $1,750,000 $347,697,000
- -------------------------------------------------------------------------------------------------------------
Per 2006 Note..................... 99.956% 0.625% 99.331%
Total............................. $274,879,000 $1,718,750 $273,160,250
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest, if any, from July 28, 1998.
(2) The Company has agreed to indemnify the several Underwriters against certain
liabilities under the Securities Act of 1933. See "Underwriting."
(3) Before deducting expenses payable by the Company estimated at $500,000.
------------------------
The Notes are being offered by Lehman Brothers Inc., Merrill Lynch, Pierce,
Fenner & Smith Incorporated, and Salomon Brothers Inc (collectively the
"Underwriters"), subject to prior sale, when, as and if delivered to and
accepted by the Underwriters, subject to approval of certain legal matters by
counsel for the Underwriters and certain other conditions. The Underwriters
reserve the right to withdraw, cancel or modify such offer and reject orders in
whole or in part. It is expected that delivery of the Notes will be made in New
York, New York on or about July 28, 1998.
------------------------
LEHMAN BROTHERS MERRILL LYNCH & CO. SALOMON SMITH BARNEY
(JOINT LEAD/JOINT BOOK MANAGERS)
------------------------
The date of this Prospectus Supplement is July 23, 1998.
<PAGE> 2
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES, INCLUDING
OVERALLOTMENT, STABILIZING TRANSACTIONS AND SYNDICATE SHORT COVERING
TRANSACTIONS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
In addition to the documents incorporated by reference in the Prospectus
dated June 10, 1998, the Company's Current Report on Form 8-K filed on July 22,
1998, is incorporated by reference herein.
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the Notes
are estimated at $620,357,250 after the deduction of the underwriting discount
and of the estimated expenses payable by the Company. The Company intends to use
the net proceeds of this offering for general corporate purposes, including the
repayment of outstanding debt.
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered
hereby (referred to herein as the "Notes" and in the Prospectus as the "Debt
Securities") supplements, and to the extent inconsistent therewith, replaces,
the description of the general terms and provisions of the Debt Securities set
forth in the Prospectus, to which description reference is hereby made. The
following summary of the Notes is qualified in its entirety by reference to the
Indenture referred to in the Prospectus.
GENERAL
The 2002 Notes will be limited to $350,000,000 in aggregate principal
amount. The 2006 Notes will be limited to $275,000,000 in aggregate principal
amount. The Notes will be issued in denominations of $1,000 and integral
multiples of $1,000, will bear interest from July 28, 1998, at the annual rates
set forth on the cover page of this Prospectus Supplement, and will mature in
the case of the 2002 Notes on August 1, 2002 and in the case of the 2006 Notes
on August 1, 2006. Interest will be payable semi-annually on February 1 and
August 1, commencing February 1, 1999, to the holders of record of the Notes on
the preceding January 15 and July 15 respectively. Each series of Notes will be
issued in book-entry form. See "Description of Debt Securities -- Registered
Global Securities" in the Prospectus.
The Notes have no sinking fund provisions.
REDEMPTION
The 2002 Notes are not subject to redemption.
The 2006 Notes will be redeemable as a whole or in part, at the option of
the Company at any time at a redemption price equal to the greater of (i) 100%
of the principal amount of such 2006 Notes and (ii) the sum of the present
values of the remaining scheduled payments of principal and interest thereon
discounted to the redemption date on a semiannual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Treasury Rate as defined below, plus
15 basis points, plus in each case accrued interest thereon to the date of
redemption.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the 2006 Notes to be redeemed
S-2
<PAGE> 3
that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities
of comparable maturity to the remaining term of such 2006 Notes. "Independent
Investment Banker" means one of the Reference Treasury Dealers appointed by the
Company.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such business day, (A) the average
of the Reference Treasury Dealer Quotations for such redemption date, after
excluding the highest and lowest such Reference Treasury Dealer Quotations, or
(B) if the Company obtains fewer than four such Reference Treasury Dealer
Quotations, the average of all such Quotations. "Reference Treasury Dealer
Quotations" means, with respect to each Reference Treasury Dealer and any
redemption date, the average, as determined by the Company, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a percentage
of its principal amount) quoted in writing to the Company by such Reference
Treasury Dealer at 5:00 p.m. on the third business day preceding such redemption
date.
"Reference Treasury Dealer" means each of Lehman Brothers Inc., Merrill
Lynch, Pierce, Fenner & Smith Incorporated and Salomon Brothers Inc and their
respective successors and, at the option of the Company, additional Primary
Treasury Dealers; provided, however, that if any of the foregoing shall cease to
be a primary U.S. Government securities dealer in New York City (a "Primary
Treasury Dealer"), the Company shall substitute therefor another Primary
Treasury Dealer.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of 2006 Notes to be redeemed.
Unless the Company defaults in payment of the redemption price, on and
after the redemption date interest will cease to accrue on the 2006 Notes or
portions thereof called for redemption.
BOOK-ENTRY SYSTEMS
Each of the 2002 Notes and the 2006 Notes will be issued in fully
registered form in the name of Cede & Co., as nominee of DTC. One or more fully
registered certificates will be issued as Global Notes for the 2002 Notes in the
aggregate principal amount of the 2002 Notes, and one or more fully registered
certificates will be issued as Global Notes for the 2006 Notes in the aggregate
principal amount of the 2006 Notes. Such Global Notes will be deposited with DTC
and may not be transferred except as a whole by DTC to a nominee of DTC or by a
nominee of DTC to DTC or another nominee of DTC or by DTC or any nominee to a
successor of DTC or a nominee of such successor.
DTC has advised the Company and the Underwriters as follows:
DTC is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" under the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of Section 17A
of the Securities Exchange Act of 1934, as amended. DTC holds
securities that its participants ("Participants") deposit with DTC.
DTC also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities,
through electronic computerized book-entry changes in Participants'
accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants include securities
brokers and dealers, banks, trust companies, clearing corporations,
and certain other organizations. DTC is owned by a number of its
Direct Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to
others such as securities brokers and dealers, banks, and trust
companies that clear through or maintain a custodial relationship with
a Direct Participant, either directly or indirectly ("Indirect
S-3
<PAGE> 4
Participants"). The rules applicable to DTC and its Participants are on
file with the Securities and Exchange Commission.
Purchases of Notes under the DTC system must be made by or
through Direct Participants, which will receive a credit for the Notes
on DTC's records. The ownership of interest of each actual purchaser
of Notes ("Beneficial Owner") is in turn to be recorded on the Direct
and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchase, but Beneficial Owners
are expected to receive written confirmations providing details of the
transaction, as well as periodic statements of their holdings, from
the Direct and Indirect Participant through which the Beneficial Owner
entered into the transaction. Transfers of ownership interests in the
Notes are to be accomplished by entries made on the books of
Participants acting on behalf of Beneficial Owners. Beneficial Owners
will not receive certificates representing their ownership interests
in the Notes, except in the event that use of the book-entry system
for the Notes is discontinued.
To facilitate subsequent transfers, all Notes deposited by
Participants with DTC are registered in the name of DTC's partnership
nominee, Cede & Co. The deposit of Notes with DTC and their
registration in the name of Cede & Co. effect no change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of the
Notes; DTC's records reflect only the identity of the Direct
Participants to whose accounts such Notes are credited, which may or
may not be the Beneficial Owners. The Participants will remain
responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by
Direct Participants and Indirect Participants to Beneficial Owners
will be governed by arrangements among them, subject to any statutory
or regulatory requirements as may be in effect from time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to
the Global Notes. Under its usual procedures DTC mails an Omnibus
Proxy to Issuer as soon as possible after the record date. The Omnibus
Proxy assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the Securities are credited on the
record date (identified in the listing attached to the Omnibus Proxy).
Principal and interest payments on the Global Notes will be made
to DTC. The Company expects that DTC, upon receipt of any payment of
principal or interest in respect of a Global Note, will credit
immediately Participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the
principal amount of such Global Note as shown on DTC's records. The
Company also expects that payments by Participants to Beneficial
Owners will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of
customers in bearer form or registered in "street name", and will be
the responsibility of such Participant and not of DTC, the Company or
the Trustee, subject to any statutory or regulatory requirements as
may be in effect from time to time.
DTC may discontinue providing its service as securities
depositary with respect to the Notes at any time by giving reasonable
notice to the Company or the Trustee. In addition, the Company may
decide to discontinue use of the system of book-entry transfers
through DTC (or a successor securities depositary). Under such
circumstances, if a successor securities depositary is not obtained,
Note certificates in fully registered form are required to be printed
and delivered to Beneficial Owners of the Global Notes representing
such Notes.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company believes to be reliable
(including DTC), but the Company takes no responsibility for the accuracy
thereof.
S-4
<PAGE> 5
Neither the Company, the Trustee nor the Underwriters will have any
responsibility or obligation to Participants, or the persons for whom they act
as nominees, with respect to the accuracy of the records of DTC, its nominee or
any Participant with respect to any ownership interest in the Notes, or payments
to, or the providing of notice to Participants or Beneficial Owners.
The Notes will trade in DTC's Same-Day Funds Settlement System and
secondary market trading activity in the Notes will, therefore, settle in
immediately available funds. All applicable payments of principal and interest
on the Notes issued as Global Notes will be made by the Company in immediately
available funds.
For other terms of the Notes, see "Description of Debt Securities" in the
accompanying Prospectus.
DEFEASANCE
The Notes will be subject to defeasance and discharge and to defeasance of
certain obligations as described under "Description of Securities -- Defeasance"
in the Prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
(the "Underwriting Agreement"), dated July 23, 1998, among the Company and the
several Underwriters named below (the "Underwriters"), the Company has agreed to
sell to the Underwriters and the Underwriters have severally agreed to purchase
from the Company, the following respective principal amounts of Notes:
<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL
AMOUNT OF AMOUNT OF
UNDERWRITER THE 2002 NOTES THE 2006 NOTES
----------- -------------- --------------
<S> <C> <C>
Lehman Brothers Inc. ................................... $116,667,000 $ 91,667,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated...... 116,667,000 91,667,000
Salomon Brothers Inc ................................... 116,666,000 91,666,000
------------ ------------
Total...................................... $350,000,000 $275,000,000
============ ============
</TABLE>
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all of the Notes offered
hereby if any of the Notes are purchased.
The Company has been advised by the Underwriters that the Underwriters
propose to offer the Notes to the public initially at the offering prices set
forth on the cover page of this Prospectus Supplement, and to certain dealers
initially at such price less a discount not in excess of 0.30% of the principal
amount of the 2002 Notes and 0.375% of the principal amount of the 2006 Notes.
The Underwriters may allow, and such dealers may reallow, a concession to
certain other dealers not in excess of 0.25% of the principal amount of the 2002
Notes and 0.25% of the principal amount of the 2006 Notes. After the initial
offering of the Notes to the public, the public offering prices and such
concessions may be changed.
The Underwriters and their affiliates have in the past and may in the
future provide investment banking, general financing and banking or other
services to the Company and its affiliates.
The Company has agreed to indemnify the Underwriters against certain civil
liabilities, including liabilities under the Securities Act of 1933, as amended,
and to contribute to payments which the Underwriters might be required to make
in respect thereof.
In connection with the offering and sale of the Notes, the Underwriters,
may engage in overallotment, stabilizing transactions and syndicate covering
transactions in accordance with Regulation M under the Exchange Act.
Overallotment involves sales in excess of the offering size, which creates a
short position for the Underwriters. Stabilizing transactions permit bids to
purchase the Notes in the open market for the purpose of pegging, fixing or
maintaining the price of the Notes. Syndicate covering transactions involve
purchases of the Notes in the open market after the distribution has been
completed in order to cover short positions. Such
S-5
<PAGE> 6
stabilizing transactions and syndicate covering transactions may cause the
prices of the Notes to be higher than they would otherwise be in the absence of
such transactions. Such activities, if commenced, may be discontinued at any
time.
Each of the 2002 Notes and the 2006 Notes is a new series of securities
with no established trading market. The Underwriters have advised the Company
that they intend to make a market in each series of Notes, but are under no
obligation to do so and such market making may be terminated at any time without
notice. Therefore, no assurance can be given as to the liquidity of, or the
trading market for, the Notes.
LEGAL MATTERS
Certain legal matters in connection with the Notes will be passed upon for
the Company by William G. von Glahn, Senior Vice President and General Counsel
of the Company, and for the Underwriters by Davis Polk & Wardwell, New York, New
York. Mr. von Glahn beneficially owns approximately 70,495 shares of the
Company's Common Stock and also has exercisable options to purchase an
additional 134,904 shares of the Company's Common Stock. Pursuant to its By-laws
and an indemnity agreement, the Company is required to indemnify Mr. von Glahn
to the fullest extent permitted by Delaware law against any expenses actually
and reasonably incurred by him in connection with any action, suit or proceeding
in which he is made party by reason of his being an officer of the Company. The
Company also maintains directors' and officers' liability insurance under which
Mr. von Glahn is insured against certain expenses and liabilities.
S-6
<PAGE> 7
PROSPECTUS
THE WILLIAMS COMPANIES, INC.
DEBT SECURITIES AND
PREFERRED STOCK
---------------------
The Williams Companies, Inc. (the "Company") may offer and sell from time
to time (a) unsecured debentures, notes or other evidences of indebtedness
("Debt Securities"), and (b) shares of its Preferred Stock, $1.00 par value per
share ("Preferred Stock" and collectively with Debt Securities, the
"Securities") with an initial offering price not to exceed $600,000,000 in the
aggregate (or the equivalent in foreign denominated currency or units based on
or related to currencies, including European Currency Units). All specific terms
of the offering and sale of the Securities, including the specific (a)
designation, rights and restrictions and whether the Debt Securities are senior
or subordinated, the currencies or composite currencies in which the Debt
Securities are denominated, the aggregate principal amount, the maturity, rate
and time of payment of interest, and any conversion, exchange, redemption or
sinking fund provisions, (b) designation, rights, preferences, privileges and
restrictions of Preferred Stock, including dividend rate or rates/or methods of
ascertaining the same, dividend payment dates, voting rights, liquidation
preference, and any conversion, exchange or redemption or sinking fund
provisions, and (c) initial public offering price, listing on any securities
exchange, and the agents, dealers or underwriters, if any, to be utilized in
connection with the sale of the Securities, will be set forth in an accompanying
Prospectus Supplement (the "Prospectus Supplement"). The Securities may be sold
for U.S. dollars, foreign denominated currency or currency units; principal of
and any interest may likewise be payable in U.S. dollars, foreign denominated
currency or currency units -- in each case, as the Company specifically
designates. The managing underwriters with respect to each series sold to or
through underwriters will be named in the Prospectus Supplement.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
The Securities may be offered through dealers, through underwriters or
through agents designated from time to time as set forth in the Prospectus
Supplement. Net proceeds to the Company will be the purchase price in the case
of a dealer, the public offering price less discount in the case of an
underwriter or the purchase price less commission in the case of an agent -- in
each case, less other expenses attributable to issuance and distribution. See
"Plan of Distribution" for possible indemnification arrangements for dealers,
underwriters and agents.
This Prospectus does not constitute an offer to sell or the solicitation of
an offer to buy any of the securities other than the Securities described in the
accompanying Prospectus Supplement.
The date of this Prospectus is June 10, 1998
<PAGE> 8
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") in Washington, D.C., a Registration Statement on Form S-3 under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the Securities offered hereby. Certain portions of the Registration Statement
have not been included in this Prospectus as permitted by the Commission's rules
and regulations. For further information, reference is made to the Registration
Statement and the exhibits thereto. The Company is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports and other information with the
Commission. The Registration Statement (with exhibits), as well as such reports
and other information filed by the Company with the Commission, can be inspected
and copied at the public reference facilities maintained by the Commission at
its principal offices at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549 and its regional offices at Northwest Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and 7 World Trade
Center, Suite 1300, New York, New York 10048, or from the Commission's worldwide
web site at http://www.sec.gov. Copies of such material can be obtained at
prescribed rates from the Public Reference Section of the Commission at its
principal office at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549.
---------------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY UNDERWRITER, DEALER OR AGENT. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY THE SECURITIES IN ANY JURISDICTION TO ANY PERSON
TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION.
---------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1997, ("Form 10-K"), the Company's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 1998, and the Company's Current Reports on Form
8-K dated February 22, 1998, April 27, 1998 and May 18, 1998, filed by the
Company with the Commission under the Exchange Act are incorporated by
reference.
All documents filed by the Company pursuant to Section 13, 14 or 15(d) of
the Exchange Act after the date of this Prospectus and prior to the termination
of this offering shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated by reference in this
Prospectus shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement in this Prospectus or in any
subsequently filed document that also is or is deemed to be incorporated by
reference modifies or replaces such statement.
The Company undertakes to provide without charge to each person to whom a
copy of this Prospectus has been delivered, upon the written or oral request of
any such person, a copy of any or all of the documents incorporated by reference
herein, other than exhibits to such documents, unless such exhibits are
specifically incorporated by reference into the information that this Prospectus
incorporates. Written or oral requests for such copies should be directed to:
The Williams Companies, Inc., One Williams Center, Tulsa, Oklahoma 74172,
Attention: Corporate Secretary, (918) 573-2000.
REPORTS TO HOLDERS OF DEBT SECURITIES
The Company is not required to publish annual and quarterly reports to
holders of Debt Securities. The Company's annual report on Form 10-K containing
audited financial statements will be provided to holders of Debt Securities upon
request.
---------------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE DEBT SECURITIES.
SPECIFICALLY, THE UNDERWRITERS, IF ANY, MAY OVERALLOT IN CONNECTION WITH THE
OFFERING, AND MAY BID FOR, AND PURCHASE, THE SECURITIES IN THE OPEN MARKET.
2
<PAGE> 9
THE COMPANY
The Company was originally incorporated under the laws of the State of
Nevada in 1949 and was reincorporated under the laws of the State of Delaware in
1987. The Company maintains its principal executive offices at One Williams
Center, Tulsa, Oklahoma 74172 (telephone (918) 573-2000). Unless the context
otherwise requires, references to the Company herein include subsidiaries of the
Company.
The Company, through subsidiaries, engages in the transportation and sale
of natural gas and related activities; natural gas gathering, processing, and
treating activities; the transportation and terminaling of natural gas liquids
("NGLs"), anhydrous ammonia, crude oil and petroleum products; hydrocarbon
exploration and production activities; the production and marketing of ethanol;
the refining of crude oil; NGL storage; energy commodity marketing and trading;
and the marketing of motor fuel and merchandise through convenience store
operations and provides a variety of other products and services, including
price risk management services, to the energy industry. The Company's
communications subsidiaries offer: data-, voice-and video-related products and
services; advertising distribution services-; video services and other
multimedia services for the broadcast industry; enhanced facsimile and audio-
and video-conferencing services for businesses; customer-premise voice and data
equipment, including installation, maintenance, and integration; and network
integration and management services nationwide. The Company also has investments
in the equity of certain other companies.
The Company conducts substantially all of its operations through
subsidiaries. The Company performs management, legal, financial, tax,
consultative, administrative and other services for its subsidiaries. The
Company's principal sources of cash are from external financings, dividends and
advances from its subsidiaries, investments, payments by subsidiaries for
services rendered and interest payments from subsidiaries on cash advances. The
amount of dividends available to the Company from subsidiaries largely depends
upon each subsidiary's earnings and operating capital requirements. The terms of
certain subsidiaries' borrowing arrangements limit the transfer of funds to the
Company.
USE OF PROCEEDS
Unless otherwise indicated in the applicable Prospectus Supplement, the net
proceeds from the sale of the Securities will be used for general corporate
purposes, including repayment of outstanding debt. The Company anticipates that
it will raise additional funds from time to time through debt financings,
including borrowings under its bank Credit Agreement.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDEND REQUIREMENTS
The following table represents the Company's consolidated ratio of earnings
to combined fixed charges and preferred stock dividend requirements for the
periods shown.
<TABLE>
<CAPTION>
THREE MONTHS YEAR ENDED DECEMBER 31,
ENDED --------------------------------
MARCH 31, 1998 1997 1996 1995 1994 1993
- -------------- --------------------------------
<S> <C> <C> <C> <C> <C>
1.82 2.32 2.58 2.15 2.21 2.62
</TABLE>
For the purpose of this ratio: (i) earnings consist of income from
continuing operations before fixed charges, minority interest expense and income
taxes for the Company, its majority-owned subsidiaries and its proportionate
share of 50 percent-owned companies, less undistributed earnings of less than 50
percent-owned companies and (ii) fixed charges consist of interest and debt
expense on all indebtedness (without reduction of interest capitalized) and that
portion of rental payments on operating leases estimated to represent an
interest factor, plus the pretax effect of preferred dividends of the Company
and its subsidiaries.
3
<PAGE> 10
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF THE COMPANY
The following selected income statement data for the three months ended
March 31, 1998, and balance sheet data for March 31, 1998, have been derived
from the Company's unaudited consolidated financial statements included in the
Company's quarterly report on Form 10-Q for the quarter ended March 31, 1998,
incorporated herein by reference. The following selected income statement data
for the years 1997, 1996, and 1995 and balance sheet data for 1997 and 1996 have
been derived from the Company's audited consolidated financial statements for
the three years ended December 31, 1997 appearing in the Form 8-K dated May 18,
1998, and incorporated herein by reference. The income statement data for the
years 1994 and 1993 and balance sheet data for 1995, 1994 and 1993 have been
derived from the Company's financial records. The selected historical
consolidated financial data shown below reflects the combined operations and
financial position of The Williams Companies, Inc. and MAPCO Inc. as a result of
the March 28, 1998 merger. Such merger was accounted for as a pooling of
interests. The selected historical consolidated financial data shown below
should be read in conjunction with such financial statements of the Company and
related notes.
<TABLE>
<CAPTION>
THREE
MONTHS
ENDED YEAR ENDED DECEMBER 31,
MARCH 31, -----------------------------------------------------------
1998 1997(1) 1996 1995(2) 1994 1993
--------- --------- --------- --------- -------- --------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total revenues.......................... $ 1,959.8 $ 8,241.6 $ 6,842.9 $ 5,655.0 $4,357.9 $4,067.3
Income from continuing operations....... 72.9(4) 453.7(5) 492.5(6) 363.6(7) 215.1(8) 277.2(9)
Income from discontinued
operations(3)......................... -- (6.3) (32.7) 1,029.3 122.9 81.6
Extraordinary loss(10).................. (4.8) (79.1) -- -- (12.2) --
Net income.............................. 68.1 368.3 459.8 1,392.9 325.8 358.8
PER SHARE DATA:
Diluted earnings per share:
Income from continuing operations..... .17 1.05 1.14 .86 .51 .65
Income from discontinued operations... -- (.01) (.08) 2.49 .30 .20
Extraordinary loss.................... (.01) (.19) -- -- (.03) --
Net income............................ .16 .85 1.06 3.35 .78 .85
Cash dividends per common share(11)..... .15 .54 .47 .36 .28 .26
BALANCE SHEET DATA:
Property, plant and equipment --
net.................................. 11,750.0 11,536.8 10,743.2 9,326.7 4,324.6 4,771.2
Total assets............................ 16,413.3 16,277.6 14,589.5 12,843.9 7,341.7 6,933.2
Long-term debt.......................... 5,416.2 5,351.5 4,985.3 3,675.0 2,028.7 2,190.3
Stockholders' equity.................... $ 4,346.6 $ 4,232.6 $ 4,014.8 $ 3,819.6 $2,118.3 $2,288.5
RATIO OF EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED STOCK DIVIDEND
REQUIREMENTS(12)...................... 1.82 2.32 2.58 2.15 2.21 2.62
</TABLE>
- ---------------
(1) On April 30, 1997, the Company and Northern Telecom combined their customer
premise operations into a limited liability company, Williams
Communications Solutions, LLC (the "LLC"). The Company owns a 70 percent
interest in the LLC. Operating results of the LLC are included in the
Company's operating results beginning May 1, 1997.
(2) On January 18, 1995, the Company acquired 60 percent of the outstanding
common stock of Transco Energy Company ("Transco") in a cash tender offer.
On May 1, 1995, the remaining 40 percent of Transco's outstanding common
stock was acquired through a merger, which involved the exchange of
4
<PAGE> 11
the remaining Transco common stock for approximately 31.2 million shares of
the Company's common stock.
(3) In the third quarter of 1994, the Company signed a definitive agreement to
enter into the sale of its network services operations (the "WNS Sale"). On
January 5, 1995, the Company consummated the transaction, and the gain from
the sale was reported as discontinued operations in the 1995 first quarter
consolidated financial statements. On September 10, 1996, the Company sold
substantially all of the net assets of the MAPCO coal business to Alliance
Coal Corporation (Alliance). The selected historical consolidated financial
data has been prepared to present operating results of the operations sold
in the WNS Sale and to Alliance as discontinued operations. For additional
information see Note 3 of the Notes to Consolidated Financial Statements of
the Company appearing in the Form 8-K dated May 18, 1998, and incorporated
herein by reference.
(4) Includes pretax merger-related costs of $59 million. For additional
information see Note 4 of the Notes to Unaudited Consolidated Financial
Statements of the Company appearing in the Form 10-Q for the quarter ended
March 31, 1998, and incorporated herein by reference.
(5) Includes an after-tax gain on sale of interest in subsidiary of $44.5
million and a $66 million pretax gain on the sale of assets. See Notes 2
and 6 of the Notes to Consolidated Financial Statements appearing in the
Form 8-K dated May 18, 1998, and incorporated herein by reference.
(6) Includes pretax gains on sales of assets totalling $36.5 million. See Note
6 of the Notes to Consolidated Financial Statements of the Company
appearing in the Form 8-K dated May 18, 1998, and incorporated herein by
reference. Also includes a pretax gain of $20 million from the property
insurance coverage associated with construction of replacement gathering
facilities.
(7) Includes a pretax loss on sale of an investment of $12.6 million and a
$41.4 million pretax write-off of project costs. See Note 6 of the Notes to
Consolidated Financial Statements of the Company appearing in the Form 8-K
dated May 18, 1998, and incorporated herein by reference.
(8) Includes a pretax charge of $68.7 million related to the settlement of a
dispute with the State of Alaska relative to royalty oil purchase
agreements.
(9) Includes a pretax gain of $51.6 million from the sale of 6.1 million units
in the Williams Coal Seam Gas Royalty Trust and a pretax gain of $45.9
million from the sale of the intrastate natural gas pipeline system and
other related assets in Louisiana.
(10) The extraordinary losses relate to the early extinguishment of debt.
(11) Reflects historical per-share dividends of The Williams Companies, Inc.
without adjustment for the merger with MAPCO in 1998.
(12) For the purpose of this ratio (i) earnings consist of income from
continuing operations before fixed charges, minority interest expense and
income taxes for the Company, its majority-owned subsidiaries and its
proportionate share of 50 percent-owned companies, less undistributed
earnings of less than 50 percent-owned companies; and (ii) fixed charges
consist of interest and debt expense on all indebtedness (without reduction
of interest capitalized) and that portion of rental payments on operating
leases estimated to represent an interest factor, plus the pretax effect of
preferred dividends of the Company and its subsidiaries.
5
<PAGE> 12
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will constitute either senior or subordinated debt of
the Company and will be issued, in the case of Debt Securities that will be
senior debt, under an indenture (the "Senior Debt Indenture"), between the
Company and First National Bank of Chicago, as Trustee, and, in the case of Debt
Securities that will be subordinated debt, under an indenture (the "Subordinated
Debt Indenture"), between the Company and First National Bank of Chicago, as
Trustee. The Senior Debt Indenture and the Subordinated Debt Indenture are
sometimes hereinafter referred to individually as an "Indenture" and
collectively as the "Indentures." First National Bank of Chicago is hereinafter
referred to as the "Trustee." The forms of the Indentures are filed as exhibits
to the Registration Statement. The following summaries of certain provisions of
the Indentures and the Debt Securities do not purport to be complete and such
summaries are subject to the detailed provisions of the applicable Indenture to
which reference is hereby made for a full description of such provisions,
including the definition of certain terms used herein, and for other information
regarding the Debt Securities. Numerical references in parentheses below are to
sections in the applicable Indenture. Wherever particular sections or defined
terms of the applicable Indenture are referred to, such sections or defined
terms are incorporated herein by reference as part of the statement made, and
the statement is qualified in its entirety by such reference. The Indentures are
substantially identical, except for the provisions relating to subordination and
the Company's limitation on liens. See "Subordinated Debt" and "Certain
Covenants of the Company." Neither Indenture contains any covenants or
provisions which affords debt holders protection in the event of a highly
leveraged transaction.
CERTAIN DEFINITIONS
Certain terms defined in Article One of the Senior Debt Indenture are
summarized as follows:
"Consolidated Funded Indebtedness" means the aggregate of all
outstanding Funded Indebtedness of the Company and its consolidated
Subsidiaries, determined on a consolidated basis in accordance with
generally accepted accounting principles.
"Consolidated Net Tangible Assets" means the total assets appearing on
a consolidated balance sheet of the Company and its consolidated
Subsidiaries less, in general: (i) intangible assets; (ii) current and
accrued liabilities (other than Consolidated Funded Indebtedness and
capitalized rentals or leases), deferred credits, deferred gains and
deferred income; (iii) reserves; (iv) advances to finance oil or natural
gas exploration and development to the extent that the indebtedness related
thereto is excluded from Funded Indebtedness; (v) an amount equal to the
amount excluded from Funded Indebtedness representing "production payment"
financing of oil or natural gas exploration and development; and (vi)
minority stockholder interests.
"Funded Indebtedness" means any Indebtedness which matures more than
one year after the date as of which Funded Indebtedness is being determined
less any such Indebtedness as will be retired through or by means of any
deposit or payment required to be made within one year from such date under
any prepayment provision, sinking fund, purchase fund or otherwise;
provided, however, that such term shall not include Indebtedness of the
Company or any of its Subsidiaries incurred to finance outstanding advances
to others to finance oil or natural gas exploration and development to the
extent that the latter are not in default in their obligations to the
Company or such Subsidiary, nor shall such term include Indebtedness of the
Company or any of its Subsidiaries incurred to finance oil or natural gas
exploration and development by means commonly referred to as a "production
payment" to the extent that the Company or any of its Subsidiaries have not
guaranteed the repayment of the production payment.
"Holder" means, in general, a Person in whose name the Securities are
registered, or, if not registered, the bearer thereof.
"Indebtedness" means indebtedness which is for money borrowed from
others.
"Person" means any individual, corporation, limited liability company,
limited partnership, partnership, joint venture, association, joint stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.
6
<PAGE> 13
"Subsidiary" means any corporation at least a majority of the
outstanding securities of which having ordinary voting power shall be owned
by the Company and/or another Subsidiary or Subsidiaries.
GENERAL
Neither of the Indentures limits the amount of Debt Securities, debentures,
notes or other evidences of indebtedness that may be issued by the Company or
any of its Subsidiaries. The Debt Securities will be unsecured senior or
subordinated obligations of the Company. All of the operating assets of the
Company and its Subsidiaries are owned by its Subsidiaries. Therefore, the
Company's rights and the rights of its creditors, including Holders of Debt
Securities, to participate in the assets of any Subsidiary upon the latter's
liquidation or recapitalization will be subject to the prior claims of the
Subsidiary's creditors, except to the extent that the Company may itself be a
creditor with recognized claims against the Subsidiary. The ability of the
Company to pay principal of and interest on the Debt Securities is, to a large
extent, dependent upon the receipt by it of dividends or other payments from its
Subsidiaries.
The Indentures provide that Debt Securities may be issued from time to time
in one or more series and may be denominated and payable in foreign currencies
or units based on or relating to foreign currencies, including European Currency
Units. Special United States federal income tax considerations applicable to any
Debt Securities so denominated are described in the relevant Prospectus
Supplement.
Reference is made to the Prospectus Supplement for the following terms of
and information relating to the Debt Securities (to the extent such terms are
applicable to such Debt Securities): (i) classification as senior or
subordinated Debt Securities, the specific designation, aggregate principal
amount, purchase price and denomination; (ii) currency or units based on or
relating to currencies in which such Debt Securities are denominated and/or in
which principal, premium, if any, and/or any interest will or may be payable;
(iii) any date of maturity; (iv) interest rate or rates (or method by which such
rate will be determined), if any; (v) the dates on which any such interest will
be payable; (vi) the place or places where the principal of and interest, if
any, on the Debt Securities will be payable; (vii) any redemption or sinking
fund provisions; (viii) whether the Debt Securities will be issuable in
registered or bearer form or both and, if Debt Securities in bearer form are
issuable, restrictions applicable to the exchange of one form for another and to
the offer, sale and delivery of Debt Securities in bearer form; (ix) any
applicable United States federal income tax consequences, including whether and
under what circumstances the Company will pay additional amounts on Debt
Securities held by a Person who is not a U.S. Person (as defined in the
Prospectus Supplement) in respect of any tax, assessment or governmental charge
withheld or deducted, and if so, whether the Company will have the option to
redeem such Debt Securities rather than pay such additional amounts; and (x) any
other specific terms of the Debt Securities, including any additional events of
default or covenants provided for with respect to such Debt Securities, and any
terms which may be required by or advisable under United States laws or
regulations.
Debt Securities may be presented for exchange, and registered Debt
Securities may be presented for transfer in the manner, at the places and
subject to the restrictions set forth in the Debt Securities and the Prospectus
Supplement. Such services will be provided without charge, other than any tax or
other governmental charge payable in connection therewith, but subject to the
limitations provided in the applicable Indenture. Debt Securities in bearer form
and the coupons, if any, appertaining thereto will be transferable by delivery.
Debt Securities that bear interest will do so at a fixed rate or a floating
rate. Debt Securities bearing no interest or interest at a rate that at the time
of issuance is below the prevailing market rate will be sold at a discount below
their stated principal amount. Special United States federal income tax
considerations applicable to any such discounted Debt Securities or to certain
Debt Securities issued at par which are treated as having been issued at a
discount for United States federal income tax purposes will be described in the
relevant Prospectus Supplement.
REGISTERED GLOBAL SECURITIES
The registered Debt Securities of a series may be issued in the form of one
or more fully registered global Securities (a "Registered Global Security") that
will be deposited with a depositary (the "Depositary"), or
7
<PAGE> 14
with a nominee for a Depositary identified in the Prospectus Supplement relating
to such series. In such case, one or more Registered Global Securities will be
issued in a denomination or aggregate denominations equal to the portion of the
aggregate principal amount of outstanding registered Debt Securities of the
series to be represented by such Registered Global Security or Securities.
Unless and until it is exchanged in whole or in part for Debt Securities in
definitive registered form, a Registered Global Security may not be transferred
except as a whole by the Depositary for such Registered Global Security to a
nominee of such Depositary or by a nominee of such Depositary to such Depositary
or another nominee of such Depositary or by such Depositary or any such nominee
to a successor of such Depositary or a nominee of such successor.
The specific terms of the depositary arrangement with respect to any
portion of a series of Debt Securities to be represented by a Registered Global
Security will be described in the Prospectus Supplement relating to such series.
The Company anticipates that the following provisions will apply to all
depositary arrangements.
Upon the issuance of a Registered Global Security, the Depositary for such
Registered Global Security will credit, on its book-entry registration and
transfer system, the respective principal amounts of the Debt Securities
represented by such Registered Global Security to the accounts of Persons that
have accounts with such Depositary ("participants"). The accounts to be credited
shall be designated by any underwriters or agents participating in the
distribution of such Debt Securities. Ownership of beneficial interests in a
Registered Global Security will be limited to participants or Persons that may
hold interests through participants. Ownership of beneficial interests in such
Registered Global Security will be shown on, and the transfer of that ownership
will be effected only through, records maintained by the Depositary for such
Registered Global Security (with respect to interests of participants) or by
participants or Persons that hold through participants (with respect to
interests of Persons other than participants). So long as the Depositary for a
Registered Global Security, or its nominee, is the registered owner of such
Registered Global Security, such Depositary or such nominee, as the case may be,
will be considered the sole owner or Holder of the Debt Securities represented
by such Registered Global Security for all purposes under the applicable
Indenture. Except as set forth below, owners of beneficial interests in a
Registered Global Security will not be entitled to have the Debt Securities
represented by such Registered Global Security registered in their names, will
not receive or be entitled to receive physical delivery of such Debt Securities
in definitive form and will not be considered the owners or Holders thereof
under the applicable Indenture.
Principal, premium, if any, and interest payments on Debt Securities
represented by a Registered Global Security registered in the name of a
Depositary or its nominee will be made to such Depositary or its nominee, as the
case may be, as the registered owner of such Registered Global Security. None of
the Company, the Trustees or any paying agent for such Debt Securities will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in such Registered
Global Security or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
The Company expects that the Depositary for any Debt Securities represented
by a Registered Global Security, upon receipt of any payment of principal,
premium or interest, will immediately credit participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such Registered Global Security as shown on the records
of such Depositary. The Company also expects that payments by participants to
owners of beneficial interests in such Registered Global Security held through
such participants will be governed by standing instructions and customary
practices, as is now the case with the securities held for the accounts of
customers registered in "street names" and will be the responsibility of such
participants.
If the Depositary for any Debt Securities represented by a Registered
Global Security is at any time unwilling or unable to continue as Depositary and
a successor Depositary is not appointed by the Company within ninety days, the
Company will issue such Debt Securities in definitive form in exchange for such
Registered Global Security. In addition, the Company may at any time and in its
sole discretion determine not to have any of the Debt Securities of a series
represented by one or more Registered Global Securities and, in such event, will
issue Debt Securities of such series in definitive form in exchange for all of
the Registered Global Security or Securities representing such Debt Securities.
8
<PAGE> 15
SENIOR DEBT
The Debt Securities and any coupons appertaining thereto (the "Coupons")
that will constitute part of the senior debt of the Company will be issued under
the Senior Debt Indenture and will rank equally and pari passu with all other
unsecured and unsubordinated debt of the Company.
SUBORDINATED DEBT
The Debt Securities and Coupons that will constitute part of the
subordinated debt of the Company will be issued under the Subordinated Debt
Indenture and will be subordinate and junior in right of payment, to the extent
and in the manner set forth in the Subordinated Debt Indenture, to all "Senior
Indebtedness" of the Company. The Subordinated Debt Indenture defines "Senior
Indebtedness" as obligations (other than nonrecourse obligations, the
subordinated Debt Securities or any other obligations specifically designated as
being subordinate in right of payment to Senior Indebtedness) of, or guaranteed
or assumed by, the Company for borrowed money or evidenced by bonds, debentures,
notes or other similar instruments, and amendments, renewals, extensions,
modifications and refundings of any such indebtedness or obligation.
(Subordinated Debt Indenture, Section 1.1)
In general, in the event (a) of any insolvency or bankruptcy proceedings,
or any receivership, liquidation, reorganization or other similar proceedings in
respect of the Company or a substantial part of its property or (b) that (i) a
default shall have occurred with respect to the payment of principal, premium,
if any, or interest on or other monetary amounts due and payable on any Senior
Indebtedness or (ii) there shall have occurred an event of default (other than a
default in the payment of principal, premium, if any, or interest, or other
monetary amounts due and payable) with respect to any Senior Indebtedness, as
defined therein or in the instrument under which the same is outstanding,
permitting the holder or holders thereof to accelerate the maturity thereof
(with notice or lapse of time, or both), and such event of default shall have
continued beyond the period of grace, if any, in respect thereof, and such event
of default shall not have been cured or waived or shall not have ceased to
exist, or (c) that the principal of and accrued interest on any series of the
subordinated Debt Securities shall have been declared due and payable upon an
event of default pursuant to Section 5.1 of the Subordinated Debt Indenture and
such declaration shall not have been rescinded and annulled as provided therein,
then the holders of all Senior Indebtedness shall first be entitled to receive
payment of the full amount unpaid thereon, or provision shall be made for such
payment in money or money's worth, before the Holders of any of the subordinated
Debt Securities or Coupons are entitled to receive a payment on account of the
principal or interest on the indebtedness evidenced by such subordinated Debt
Securities (Subordinated Debt Indenture, Section 13.1) If this Prospectus is
being delivered in connection with a series of subordinated Debt Securities, the
accompanying Prospectus Supplement or the information incorporated herein by
reference will set forth the approximate amount of Senior Indebtedness
outstanding as of the end of the most recent fiscal quarter.
CERTAIN COVENANTS OF THE COMPANY
Liens. The Senior Debt Indenture provides that, subject to certain
exceptions, the Company will not, nor will it permit any Subsidiary to, issue,
assume or guarantee any Indebtedness secured by a mortgage, pledge, lien,
security interest or encumbrance ("mortgage"), upon any of its properties
without effectively providing that the senior Debt Securities issued thereunder
shall be equally and ratably secured with such Indebtedness. Among the
exceptions are certain purchase money mortgages; certain preexisting mortgages
on any property acquired or constructed by the Company or a Subsidiary and
certain mortgages created within one year after completion of such acquisition
or construction; certain mortgages created on any contract for the sale of
products or services related to the operation or use of any property acquired or
constructed within one year after completion of such acquisition or
construction; mortgages on property of a Subsidiary existing at the time it
became a Subsidiary of the Company; and mortgages, other than as specifically
excepted, in an aggregate amount which, at the time of, and after giving effect
to, the incurrence does not exceed 5 percent of the Consolidated Net Tangible
Assets. (Senior Debt Indenture, Section 3.6)
9
<PAGE> 16
Consolidation, Merger, Conveyance of Assets. Each Indenture provides, in
general, that the Company will not consolidate with or merge into any other
entity or convey, transfer or lease its properties and assets substantially as
an entirety to any Person, unless the corporation limited liability company,
limited partnership, joint stock company, or trust formed by such consolidation
or into which the Company is merged or the Person which acquires such assets
shall expressly assume the Company's obligations under such Indenture and the
Debt Securities issued thereunder and immediately after giving effect to such
transaction, no event of default, and no event which, after notice or lapse of
time or both, would become an event of default, shall have happened and be
continuing. (Section 9.1)
Event Risk. Except for the limitations on Liens described above, neither
Indenture nor the Debt Securities contains any covenants or other provisions
designed to afford holders of the Debt Securities protection in the event of a
highly leveraged transaction involving the Company.
EVENTS OF DEFAULT
In general, an Event of Default is defined under each Indenture with
respect to Debt Securities of any series issued under such Indenture as being:
(a) default in payment of any principal of the Debt Securities of such series,
either at maturity, upon any redemption, by declaration or otherwise; (b)
default for 30 days in payment of any interest on any Debt Securities of such
series unless otherwise provided; (c) default for 90 days after written notice
in the observance or performance of any covenant or warranty in the Debt
Securities of such series or such Indenture other than a covenant a default in
whose performance, or whose breach, is dealt with otherwise below or, if certain
conditions are met, the Events of Default described in this clause (c) are the
result of changes in generally accepted accounting principles; or (d) certain
events of bankruptcy, insolvency or reorganization of the Company. (Section 5.1)
In general, each Indenture provides that, (a) if an Event of Default
described in clauses (a), (b) or (c) above (if the Event of Default under clause
(c) is with respect to less than all series of Debt Securities then outstanding)
occurs, the Trustee or the Holders of not less than 25 percent in principal
amount of the Debt Securities of each affected series (treated as one class)
issued under such Indenture and then outstanding may then declare the entire
principal of all Debt Securities of each such affected series and interest
accrued thereon to be due and payable immediately and (b) if an Event of Default
due to a default described in clause (c) above which is applicable to all series
of Debt Securities then outstanding or due to certain events of bankruptcy,
insolvency and reorganization of the Company, shall have occurred and be
continuing, the Trustee or the Holders of not less than 25 percent in principal
amount of all Debt Securities issued under such Indenture and then outstanding
(treated as one class) may declare the entire principal of all such Debt
Securities and interest accrued thereon to be due and payable immediately, but
upon certain conditions such declarations may be annulled and past defaults may
be waived (except a continuing default in payment of principal of, premium, if
any, or interest on such Debt Securities) by the holders of a majority in
aggregate principal amount of the Debt Securities of all such affected series
then outstanding. (Sections 5.1 and 5.10)
Each Indenture contains a provision entitling the Trustee, subject to the
duty of the Trustee during a default to act with the required standard of care,
to be indemnified by the Holders of Debt Securities (treated as one class)
issued under such Indenture before proceeding, at the request of such Holders,
to exercise any right or power under such Indenture. (Section 6.2) Subject to
such provisions in each Indenture for the indemnification of the Trustee and
certain other limitations, the Holders of a majority in aggregate principal
amount of the outstanding Debt Securities of each series affected (treated as
one class) issued under such Indenture may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee. (Section 5.9)
In general, each Indenture provides that no Holder of Debt Securities
issued under such Indenture may institute any action against the Company under
such Indenture (except actions for payment of principal or interest on or after
the due date provided) unless such Holder previously shall have given to the
Trustee written notice of default and continuance thereof and unless the Holders
of not less than 25 percent in principal amount of the Debt Securities of each
affected series (treated as one class) issued under such
10
<PAGE> 17
Indenture and then outstanding shall have requested the Trustee to institute
such action and shall have offered the Trustee reasonable indemnity and the
Trustee shall not have instituted such action within 60 days of such request and
the Trustee shall not have received direction inconsistent with such written
request by the Holders of a majority in principal amount of the Debt Securities
of each affected series (treated as one class) issued under such Indenture and
then outstanding. (Sections 5.6, 5.7 and 5.9)
Each Indenture contains a covenant that the Company will file annually with
the Trustee a certificate of no default or a certificate specifying any default
that exists. (Section 3.5)
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Company can discharge or defease its obligations under each Indenture
as set forth below. (Section 10.1)
Under terms satisfactory to the Trustee, the Company may discharge certain
obligations to Holders of any series of Debt Securities issued under such
Indenture which have not already been delivered to the Trustee for cancellation
and which have either become due and payable or are by their terms due and
payable within one year (or scheduled for redemption within one year) by
irrevocably depositing with the Trustee cash or, in the case of Debt Securities
payable only in U.S. dollars, U.S. Government Obligations (as defined in such
Indenture) as trust funds in an amount certified to be sufficient to pay at
maturity (or upon redemption) the principal of and interest on such Debt
Securities.
The Company may also, upon satisfaction of the conditions listed below,
discharge certain obligations to Holders of any series of Debt Securities issued
under such Indenture at any time ("defeasance"). Under terms satisfactory to the
Trustee, the Company may instead be released with respect to any outstanding
series of Debt Securities issued under the relevant Indenture from the
obligations imposed by Sections 3.6 and 9.1, in the case of the Senior Debt
Indenture, and Section 9.1, in the case of the Subordinated Debt Indenture
(which contain the covenants described above limiting liens and consolidations,
mergers and conveyances of assets), and omit to comply with such Sections
without creating an Event of Default ("covenant defeasance"). Defeasance or
covenant defeasance may be effected only if, among other things: (i) the Company
irrevocably deposits with the Trustee cash or, in the case of Debt Securities
payable only in U.S. dollars, U.S. Government Obligations, as trust funds in an
amount certified to be sufficient to pay at maturity (or upon redemption) the
principal of and interest on all outstanding Debt Securities of such series
issued under such Indenture; (ii) the Company delivers to the Trustee an opinion
of counsel to the effect that the Holders of such series of Debt Securities will
not recognize income, gain or loss for United States federal income tax purposes
as a result of such defeasance or covenant defeasance and will be subject to
United States federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if defeasance or covenant defeasance
had not occurred (in the case of a defeasance, such opinion must be based on a
ruling of the Internal Revenue Service or a change in United States federal
income tax law occurring after the date of such Indenture, since such a result
would not occur under current tax law); and (iii) in the case of the
Subordinated Debt Indenture (a) no event or condition shall exist that, pursuant
to certain provisions described under "Subordinated Debt" above, would prevent
the Company from making payments of principal of or interest on the subordinated
Debt Securities at the date of the irrevocable deposit referred to above or at
any time during the period ending on the 91st day after such deposit date and
(b) the Company delivers to the Trustee for the Subordinated Debt Indenture an
opinion of counsel to the effect that (1) the trust funds will not be subject to
any rights of holders of Senior Indebtedness and (2) after the 91st day
following the deposit, the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally, except that, if a court were to rule under any such
law in any case or proceeding that the trust funds remained property of the
Company, then no opinion is given as to the effect of such laws on the trust
funds except as set forth in the Subordinated Indenture relating to (i)
Trustee's valid and perfected security interest in such trust funds; (ii)
adequate protection of holders of the Subordinated Debt Securities interests in
such trust funds; and (iii) no prior rights of holders of Senior Debt Securities
in property or interests granted to the Trustee or holders of the Subordinated
Debt Securities in exchange for or with respect to such trust funds.
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<PAGE> 18
MODIFICATION OF THE INDENTURES
Each Indenture provides that the Company and the Trustee may enter into
supplemental indentures (which conform to the provisions of the Trust Indenture
Act of 1939) without the consent of the Holders to, in general: (a) secure any
Debt Securities; (b) evidence the assumption by a successor Person of the
obligations of the Company; (c) add further covenants for the protection of the
Holders; (d) cure any ambiguity or correct any inconsistency in such Indenture,
so long as such action will not adversely affect the interests of the Holders;
(e) establish the form or terms of Debt Securities of any series; and (f)
evidence the acceptance of appointment by a successor trustee. (Section 8.1)
Each Indenture also contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than the majority in
principal amount of Debt Securities of each series issued under such Indenture
then outstanding and affected (voting as one class) to, in general, add any
provisions to, or change in any manner or eliminate any of the provisions of,
such Indenture or modify in any manner the rights of the Holders of the Debt
Securities of each series so affected; provided that such changes conform to
provisions of the Trust Indenture Act of 1939 and provided that the Company and
the Trustee may not, without the consent of each Holder of outstanding Debt
Securities affected thereby, (a) extend the final maturity of the principal of
any Debt Securities, or reduce the principal amount thereof or reduce the rate
or extend the time of payment of interest thereon, or reduce any amount payable
on redemption thereof or change the currency in which the principal thereof
(including any amount in respect of original issue discount) or interest thereon
is payable, or reduce the amount of any original issue discount security payable
upon acceleration or provable in bankruptcy or alter certain provisions of such
Indenture relating to Debt Securities not denominated in U.S. dollars or for
which conversion to another currency is required to satisfy the judgment of any
court, or impair the right to institute suit for the enforcement of any payment
on any Debt Securities when due or (b) reduce the aforesaid percentage in
principal amount of Debt Securities of any series issued under such Indenture,
the consent of the Holders of which is required for any such modification.
(Section 8.2)
The Subordinated Debt Indenture may not be amended to alter the
subordination of any outstanding subordinated Debt Securities without the
consent of each Holder of Senior Indebtedness then outstanding that would be
adversely affected thereby. (Subordinated Debt Indenture, Section 8.6)
CONCERNING THE TRUSTEE
The Trustee is one of a number of banks with which the Company, its parent
and its Subsidiaries maintain ordinary banking relationships and with which the
Company and its Subsidiaries and Affiliates maintain credit facilities.
LIMITATIONS ON ISSUANCE OF BEARER DEBT SECURITIES
Except as may otherwise be provided in the Prospectus Supplement applicable
thereto, in compliance with United States federal income tax laws and
regulations, Debt Securities that are Bearer Debt Securities (including Debt
Securities in global form) will not be offered, sold, resold or delivered,
directly or indirectly, in connection with their original issuance, at any time,
in the United States or to United States persons (as defined below) other than
to offices located outside the United States of United States financial
institutions (as defined in United States Treasury Regulations Section
1.165-12(c)(1)(v)) that are purchasing for their own account or for the account
of a customer and that agree in writing to comply with the requirements of
Sections 165(j)(3)(A), (B) or (C) of the Internal Revenue Code and the
regulations thereunder. Any underwriters, agents and dealers participating in
the offerings of Bearer Debt Securities, directly or indirectly, must agree that
they will not, in connection with the original issuance of any Bearer Debt
Securities or during the period set forth in the Prospectus Supplement following
the original issuance of such Bearer Debt Securities offer, sell, resell or
deliver, directly or indirectly, any Bearer Debt Securities in the United States
or to United States persons (other than the financial institutions described
above). In addition, any such underwriters, agents and dealers must agree to
send a written confirmation to each purchaser from or through it of Bearer Debt
Securities in connection with their original issuance or during the period set
forth in the Prospectus Supplement following the original issuance of such
Bearer Debt Securities in every case confirming
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<PAGE> 19
that such purchaser represents that it is not a United States person or, if it
is a United States person, that it is a financial institution described above
purchasing for its own account or the account of a customer and, if such person
is a dealer, that it will send similar confirmations to purchasers from it.
Bearer Debt Securities (other than temporary global Debt Securities) and
any Coupons appertaining thereto will bear a legend substantially to the
following effect: "Any United States person who holds this obligation will be
subject to limitations under the United States federal income tax laws,
including the limitations provided in Sections 165(j) and 1287(a) of the
Internal Revenue Code." The sections referred to in such legend provide that a
United States person (other than a United States financial institution described
above or United States person holding through such a financial institution) who
holds a Bearer Debt Security or Coupon will not be allowed to deduct any loss
realized on the sale, exchange or redemption of such Bearer Debt Security and
any gain (which might otherwise be characterized as capital gain) recognized on
such sale, exchange or redemption will be treated as ordinary income.
As used herein, "United States person" means a citizen, national or
resident of the United States, a corporation, partnership or other entity
created or organized in or under the laws of the United States or any political
subdivision thereof, or an estate or trust the income of which is subject to
United States federal income taxation regardless of its source.
DESCRIPTION OF PREFERRED STOCK
Under the Company's Certificate of Incorporation, as amended, the Company
is authorized to issue up to 30,000,000 shares of Preferred Stock, par value
$1.00 per share, in one or more series. At March 31, 1998, approximately two
million one hundred thousand (2,100,000) shares of Preferred Stock were
outstanding. The following description of Preferred Stock sets forth certain
general terms and provisions of the series of Preferred Stock to which any
Prospectus Supplement may relate. Certain other terms of a particular series of
Preferred Stock will be described in the Prospectus Supplement relating to such
series of Preferred Stock. If so indicated in the Prospectus Supplement relating
thereto, the terms of any such series of Preferred Stock may differ from the
terms set forth below. The description of Preferred Stock set forth below and
the description of the terms of a particular series of Preferred Stock set forth
in the Prospectus Supplement thereto do not purport to be complete and are
qualified in their entirety by reference to the Certificate of Incorporation and
to the certificate of designation relating to that series.
The rights of the holders of each series of Preferred Stock will be
subordinate to those of the Company's general creditors.
GENERAL
The designations, preferences and relative, participating, optional and
other special rights, and the qualifications, limitations and restrictions
thereof, of the Preferred Stock of each series shall be such as are stated and
expressed in the Certificate of Incorporation and, to the extent not stated and
expressed therein, shall be such as may be fixed by the certificate of
designation relating to such series. A Prospectus Supplement, relating to each
series, shall specify the terms of the Preferred Stock as follows:
(a) the distinctive designation of such series and the number of
shares which shall constitute such series;
(b) the rate of dividends, if any, payable on shares of such series,
the dates, if any, from which such dividends shall accrue, the dates when
such dividends shall be payable, and whether such dividends shall be
cumulative or noncumulative;
(c) the amounts which the holders of the Preferred Stock of such
series shall be entitled to be paid in the event of a voluntary or
involuntary liquidation, dissolution or winding up of the Company;
(d) whether or not the Preferred Stock of such series shall be
redeemable and at what times and under what conditions and the amount or
amounts payable thereon in the event of redemption; and
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<PAGE> 20
(e) may, in a manner not inconsistent with the provisions of the
Certificate of Incorporation, (i) limit the number of shares of such series
which may be issued; (ii) provide for a sinking fund for the purchase or
redemption or a purchase fund for the purchase of shares of such series and
the terms and provisions governing the operation of any such fund and the
status as to reissue of shares of Preferred Stock purchased or otherwise
reacquired or redeemed or retired through the operation thereof; (iii)
grant voting rights to the holder of shares of such series, in addition to
and not inconsistent with those granted by the Certificate of Incorporation
to the holders of Preferred Stock; (iv) impose conditions or restrictions
upon the creation of indebtedness of the Company or upon the issue of
additional Preferred Stock or other capital stock ranking equally therewith
or prior thereto as to dividends or distribution of assets on liquidation;
(v) impose conditions or restrictions upon the payment of dividends upon,
or the making of other distributions to, or the acquisition of, junior
stock; (vi) grant to the holders of the Preferred Stock of such series the
right to convert such stock into shares of another series or class of
capital stock; and (vii) grant such other special rights to the holders of
shares of such series as the Board of Directors may determine and as shall
not be inconsistent with the provisions of the Certificate of
Incorporation.
DIVIDENDS
Subject to any limitations specified in the certificate of designation
providing for the issuance thereof, the holders of the Preferred Stock of any
series shall be entitled to receive, when and as declared by the Board of
Directors, preferential dividends in cash, at the rate per annum, if any, fixed
for such series, payable on such dates as may be specified in the certificate of
designation providing for the issuance of Preferred Stock of such series, to
stockholders of record on a date, preceding each such dividend payment date,
fixed for the purpose by the Board of Directors in advance of payment of each
particular dividend. Each share of Preferred Stock shall rank on a parity with
each other share of Preferred Stock, irrespective of series, with respect to
preferential dividends accrued on the shares of such series, and no dividend
shall be declared or paid or set apart for payment for the Preferred Stock of
any series unless at the same time a dividend in like proportion to the
dividends accrued upon the Preferred Stock of each other series shall be
declared or paid or set apart for payment, as the case may be, on Preferred
Stock of each other series then outstanding; but this does not prevent the
authorization or issuance of one or more series of Preferred Stock bearing
dividends subject to contingencies as to the existence or amount of earnings of
the Company during one or more fiscal periods, or as to other events, to which
dividends on other series of Preferred Stock are not subject.
So long as any shares of Preferred Stock shall remain outstanding, in no
event shall any dividends whatsoever, whether in cash, stock or otherwise, be
paid or declared, or any distribution be made on any class of junior stock, nor
shall any shares of Preferred Stock (subject to certain limited exceptions) or
junior stock be purchased, retired or otherwise acquired for a valuable
consideration by the Company, unless all dividends accrued on outstanding shares
of Preferred Stock for all past dividend periods shall have been paid, or
declared and a sum sufficient for the payment thereof set apart.
The ability of the Company, as a holding company, to pay dividends on the
Preferred Stock will depend upon the payment of dividends, interest or other
charges by subsidiaries to it. Debt instruments of certain subsidiaries of the
Company limit the amount of payments to the Company which could affect the
amount of funds available to the Company to pay dividends on the Preferred
Stock.
First Chicago Trust Company of New York is the registrar, transfer agent
and dividend disbursing agent for the shares of the Preferred Stock.
REDEMPTION
The Company, at the option of the Board of Directors, may redeem all or any
part of the Preferred Stock of any series which by its terms is redeemable, at
the time or times and on the terms and conditions fixed for such series, upon
notice duly given in the manner provided in the certificate of designation
providing for such series, by paying therefor in cash the sum fixed for such
series, together, in each case, with an amount equal to accrued and unpaid
dividends thereon. The certificate of designation providing for a series subject
to
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<PAGE> 21
redemption may provide that when notice of redemption of all or part of the
shares of such series shall have been given, and the redemption price of such
shares, together with accrued dividends to the date fixed as the redemption
date, has been set aside by the Company, or deposited with a suitable
depositary, for the pro rata benefit of the holders of the shares called for
redemption, then the shares so called shall no longer be deemed outstanding, and
all rights with respect to such shares, including the accrual of further
dividends, other than the right to receive the redemption price of such shares
without interest, shall cease.
VOTING RIGHTS
Except as stated herein or expressly provided by law or except as may be
provided for any series of Preferred Stock by the certificate of designation
relating thereto, the Preferred Stock shall have no right or power to vote on
any question or in any proceeding or to be represented at or to receive notice
of any meeting of stockholders. On any matters on which the holders of the
Preferred Stock or any series thereof shall be entitled to vote separately as a
class or series, they shall be entitled to one vote for each share held.
So long as any shares of Preferred Stock are outstanding, the Company shall
not, without the consent of the holders of at least a majority of the number of
shares of the Preferred Stock at the time outstanding, given in person or by
proxy, either in writing or by vote at any annual meeting, or any special
meeting called for the purpose, purchase, redeem or otherwise acquire for value
any shares of the Preferred Stock or of any other stock ranking on a parity with
the Preferred Stock in respect of dividends or distribution of assets on
liquidation during the continuance of any default in the payment of dividends on
the Preferred Stock.
LIQUIDATION RIGHTS
In the event of any liquidation, dissolution or winding up of the affairs
of the Company, voluntary or involuntary, then, before any distribution or
payment can be made to the holders of any class of stock of the Company ranking
junior to the Preferred Stock as to dividends or distribution of assets on
liquidation, the holders of the Preferred Stock of the respective series shall
be entitled to be paid in full the respective amount fixed, with respect to
liquidation, dissolution or winding up, voluntary or involuntary, as the case
may be, in the certificate of designation providing for the issue of shares of
such series, plus a sum equal to all accrued and unpaid dividends thereon to the
date of payment thereof. After such payment shall have been made in full to the
holders of the Preferred Stock, the remaining assets and funds of the Company
shall be distributed among the holders of the stocks of the Company ranking
junior to the Preferred Stock according to their respective rights. In the event
that the assets of the Company available for distribution to holders of
Preferred Stock shall not be sufficient to make the payment herein required to
be made in full, such assets shall be distributed to the holders of the
respective shares of Preferred Stock pro rata in proportion to the amounts
payable upon each share thereof.
PLAN OF DISTRIBUTION
The Company may sell the Securities in the following ways: (i) through
agents; (ii) through underwriters; (iii) through dealers; and (iv) directly to
purchasers.
Offers to purchase the Securities may be solicited by agents designated by
the Company from time to time. Any such agent, who may be deemed to be an
underwriter as that term is defined in the Securities Act, involved in the offer
or sale of the Securities in respect of which this Prospectus is delivered will
be named, and any commissions payable by the Company to such agent set forth, in
the Prospectus Supplement. Unless otherwise indicated in the Prospectus
Supplement, any such agent will be acting on a best efforts basis for the period
of its appointment.
If any underwriters are utilized in the sale, the Company will enter into
an underwriting agreement with such underwriters at the time of sale to them and
the names of the underwriters and the terms of the transaction will be set forth
in the Prospectus Supplement, which will be used by the underwriters to make
resales to the public of the Securities in respect of which this Prospectus is
delivered.
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<PAGE> 22
If a dealer is utilized in the sale of the Securities in respect of which
this Prospectus is delivered, the Company will sell such Securities to the
dealer, as principal. The dealer may then resell such Securities to the public
at varying prices to be determined by such dealer at the time of resale.
Agents, dealers and underwriters may be entitled under agreements entered
into with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments which such agents, dealers or underwriters may be
required to make in respect thereof. Agents, dealers and underwriters may be
customers of, engage in transactions with, or perform services for the Company
in the ordinary course of business.
The Securities may also be offered and sold, if so indicated in the
Prospectus Supplement, in connection with a remarketing upon their purchase, in
accordance with a redemption or repayment pursuant to their terms, or otherwise,
by one or more firms ("remarketing firms"), acting as principals for their own
accounts or as agents for the Company. Any remarketing firm will be identified
and the terms of its agreement, if any, with the Company and its compensation
will be described in the Prospectus Supplement. Remarketing firms may be deemed
to be underwriters in connection with the Securities remarketed thereby.
Remarketing firms may be entitled under agreements which may be entered into
with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, and may be
customers of, engage in transactions with or perform services for the Company in
the ordinary course of business.
If so indicated in the Prospectus Supplement, the Company will authorize
agents and underwriters or dealers to solicit offers by certain purchasers to
purchase the Securities from the Company at the public offering price set forth
in the Prospectus Supplement pursuant to delayed delivery contracts providing
for payment and delivery on a specified date in the future. Such contracts will
be subject to only those conditions set forth in the Prospectus Supplement, and
the Prospectus Supplement will set forth the commission payable for solicitation
of such offers.
Each series of Offered Debt Securities will be a new issue of securities
and will have no established trading market. Such Offered Debt Securities may or
may not be listed on a national securities exchange. No assurance can be given
as to the liquidity of or the existence of trading markets for any Offered Debt
Securities.
EXPERTS
The consolidated financial statements and schedule of the Company appearing
in the Company's Current Report on Form 8-K dated May 18, 1998, for the three
years ended December 31, 1997, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference, which is based in part on the report of
Deloitte & Touche LLP, independent auditors (which report expresses an
unqualified opinion and includes explanatory paragraphs relating to certain
litigation to which MAPCO, Inc. is a defendant and the change in its method of
accounting for business process reengineering activities to conform to the
consensus reached by the Emerging Issues Task Force in Issue No. 97-13). Such
consolidated financial statements and schedule are incorporated herein by
reference in reliance upon such reports given upon the authority of such firms
as experts in accounting and auditing.
The consolidated financial statements and schedules of the Company included
in or incorporated by reference in any documents filed pursuant to Section 13,
14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to
the termination of the offering will be so included or incorporated by reference
in reliance upon the reports of independent auditors pertaining to such
financial statements (to the extent covered by consents filed with the
Securities and Exchange Commission) given upon the authority of such independent
auditors as experts in accounting and auditing.
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<PAGE> 23
LEGAL MATTERS
Certain legal matters in connection with the Securities offered hereby will
be passed upon for the Company by William G. von Glahn, Senior Vice President
and General Counsel of the Company, and for the Underwriters by Davis Polk &
Wardwell, New York, New York. Mr. von Glahn beneficially owns approximately
70,495 shares of the Company's Common Stock and also has exercisable options to
purchase an additional 134,904 shares of the Company's Common Stock. Pursuant to
its By-laws, the Company is required to indemnify Mr. von Glahn to the fullest
extent permitted by Delaware law against any expenses actually and reasonably
incurred by him in connection with any action, suit or proceeding in which he is
made party by reason of his being an officer of the Company. The Company also
maintains directors' and officers' liability insurance under which Mr. von Glahn
is insured against certain expenses and liabilities.
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NO DEALER, SALESPERSON, OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
Incorporation of Certain Documents by
Reference........................... S-2
Use of Proceeds....................... S-2
Description of Notes.................. S-2
Underwriting.......................... S-5
Legal Matters......................... S-6
PROSPECTUS
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
Reports to Holders of Debt
Securities.......................... 2
The Company........................... 3
Use of Proceeds....................... 3
Ratio of Earnings to Fixed Charges and
Preferred Stock Dividend
Requirements........................ 3
Selected Financial Data............... 4
Description of Debt Securities........ 6
Limitations on Issuance of Bearer Debt
Securities.......................... 12
Description of Preferred Stock........ 13
Plan of Distribution.................. 15
Experts............................... 16
Legal Matters......................... 17
</TABLE>
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LOGO
THE WILLIAMS
COMPANIES, INC.
$625,000,000
$350,000,000
6.20% NOTES DUE 2002
$275,000,000
6.50% NOTES DUE 2006
--------------------------
PROSPECTUS SUPPLEMENT
--------------------------
LEHMAN BROTHERS
MERRILL LYNCH & CO.
SALOMON SMITH BARNEY
DATED JULY 23, 1998
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