Bond Williamson Group 7.875% ( US969457BG47 ) in USD

Williamson Group

100 % ⇌

United States

US969457BG47 ( in USD )

7.875% per year ( payment 2 times a year)

01/09/2021 - Bond has expired

Prospectus brochure of the bond Williams Companies US969457BG47 in USD 7.875%, expired

1 000 USD

750 000 000 USD

969457BG4

N/A

Williams Companies is a Tulsa, Oklahoma-based energy infrastructure company focused on natural gas transportation, processing, and storage, as well as natural gas liquids (NGL) fractionation and transportation.

The Bond issued by Williamson Group ( United States ) , in USD, with the ISIN code US969457BG47, pays a coupon of 7.875% per year.
The coupons are paid 2 times per year and the Bond maturity is 01/09/2021

-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: [email protected]
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<SEC-DOCUMENT>0000950134-01-505633.txt : 20010820
<SEC-HEADER>0000950134-01-505633.hdr.sgml : 20010820
ACCESSION NUMBER:
0000950134-01-505633
CONFORMED SUBMISSION TYPE:
424B5
PUBLIC DOCUMENT COUNT:
1
FILED AS OF DATE:
20010817
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME:
WILLIAMS COMPANIES INC
CENTRAL INDEX KEY:
0000107263
STANDARD INDUSTRIAL CLASSIFICATION:
NATURAL GAS TRANSMISSION [4922]
IRS NUMBER:
730569878
STATE OF INCORPORATION:
DE
FISCAL YEAR END:
1231
FILING VALUES:
FORM TYPE:
424B5
SEC ACT:
1933 Act
SEC FILE NUMBER:
333-63724
FILM NUMBER:
1717672
BUSINESS ADDRESS:
STREET 1:
ONE WILLIAMS CTR
CITY:
TULSA
STATE:
OK
ZIP:
74172
BUSINESS PHONE:
9185732000
MAIL ADDRESS:
STREET 1:
ONE WILLIAM CENTER
CITY:
TULSA
STATE:
OK
ZIP:
74172
FORMER COMPANY:
FORMER CONFORMED NAME:
WILLIAMS BROTHERS COMPANIES
DATE OF NAME CHANGE:
19710817
</SEC-HEADER>
<DOCUMENT>
<TYPE>424B5
<SEQUENCE>1
<FILENAME>d89866be424b5.txt
<DESCRIPTION>PROSPECTUS - FILE NO. 333-63724
<TEXT>
<PAGE> 1
Filed Pursuant to Rule 424(b)(5)
PROSPECTUS SUPPLEMENT Registration No. 333-63724
(To prospectus dated July 6, 2001)
$1,500,000,000
[WILLIAMS LOGO]
THE WILLIAMS COMPANIES, INC.
$750,000,000 7.125% NOTES DUE SEPTEMBER 1, 2011
$750,000,000 7.875% NOTES DUE SEPTEMBER 1, 2021
- --------------------------------------------------------------------------------
This is a public offering by The Williams Companies, Inc. of $750,000,000 of
7.125% notes due September 1, 2011 and $750,000,000 of 7.875% notes due
September 1, 2021.
Interest on the notes is payable March 1 and September 1 of each year, beginning
March 1, 2002. Williams may redeem some or all of the notes, at any time, at the
"make-whole" prices described in this prospectus supplement. The notes have no
sinking fund provisions.
AN INVESTMENT IN THE NOTES INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE
S-3.
<Table>

<Caption>
PUBLIC UNDERWRITING NET PROCEEDS
OFFERING PRICE DISCOUNT TO WILLIAMS
-------------- ------------ ------------
<S> <C> <C> <C>
Per 7.125% note due 2011.................................... 99.707% .650% 99.057%
Total....................................................... $747,802,500 $4,875,000 $742,927,500
Per 7.875% note due 2021.................................... 99.846% .875% 98.971%
Total....................................................... $748,845,000 $6,562,500 $742,282,500
</Table>
Neither the Securities and Exchange Commission nor any other regulatory body has
approved or disapproved of these securities or passed upon the accuracy or
adequacy of this prospectus supplement or the accompanying prospectus. Any
representation to the contrary is a criminal offense.
The notes should be delivered on or about August 21, 2001 through the book-entry
facilities of The Depository Trust Company.
- --------------------------------------------------------------------------------
Joint Book-Running Managers
LEHMAN BROTHERS MERRILL LYNCH & CO. SALOMON SMITH BARNEY
Co-Managers
BANC OF AMERICA SECURITIES LLC
BANC ONE CAPITAL MARKETS, INC.
BARCLAYS CAPITAL
BNP PARIBAS
COMMERZBANK CAPITAL MARKETS CORP.
CREDIT LYONNAIS SECURITIES
FLEET SECURITIES, INC.
KBC FINANCIAL PRODUCTS
RBC DOMINION SECURITIES CORPORATION
SCOTIA CAPITAL
SUNTRUST ROBINSON HUMPHREY
TD SECURITIES
THE WILLIAMS CAPITAL GROUP, L.P.
AUGUST 16, 2001
<PAGE> 2
You should rely only on the information contained or incorporated by
reference in this prospectus supplement or the accompanying prospectus. No one
has been authorized to provide you with different information. If anyone
provides you with different or inconsistent information, you should not rely on
it. You should not assume that the information contained in this prospectus
supplement or the accompanying prospectus or the documents incorporated by
reference are accurate as of any date other than the date of such information.
Our business, financial condition, results of operations and prospects may have
changed since these dates. We are not making an offer of these notes in any
state where the offer is not permitted.
---------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<Table>
<Caption>
PAGE
----
<S> <C>
Risk Factors................................................ S-3
Recent Developments......................................... S-7
Ratio of Earnings to Fixed Charges.......................... S-7
Use of Proceeds............................................. S-8
Description of Notes........................................ S-8
Underwriting................................................ S-11
Legal Matters............................................... S-12
PROSPECTUS
Where You Can Find More Information......................... 1
Incorporation of Certain Documents by Reference............. 1
The Williams Companies, Inc. ............................... 2
Use of Proceeds............................................. 4
Ratios of Earnings to Combined Fixed Charges and Preferred
Stock Dividend Requirements............................... 4
Description of Debt Securities.............................. 4
Limitations on Issuance of Bearer Debt Securities........... 15
Description of Preferred Stock.............................. 15
Description of Common Stock................................. 20
Plan of Distribution........................................ 21
Experts..................................................... 22

Legal Matters............................................... 22
</Table>
S-2
<PAGE> 3
RISK FACTORS
In addition to the other information contained in or incorporated by
reference into this prospectus supplement, you should carefully consider the
following risk factors in deciding whether to make an investment in the notes.
PRICING REGULATIONS FOR POWER SOLD IN CALIFORNIA AND THE WESTERN UNITED STATES
MAY ADVERSELY AFFECT WILLIAMS' PROFITABILITY.
The prices that Williams charges for power in California markets have been
challenged in various proceedings, including before the Federal Energy
Regulatory Commission, or the "FERC." In December 2000, the FERC issued an order
which provided that for the period between October 2, 2000 and December 31,
2002, it may order refunds from Williams and other similarly situated companies
if the FERC finds that the wholesale markets in California are unable to produce
competitive, just and reasonable prices, or that market power or other
individual seller conduct is exercised to produce an unjust and unreasonable
rate. Beginning on March 9, 2001, the FERC issued a series of orders directing
Williams and other similarly situated companies to provide refunds for any
prices charged in excess of FERC established proxy prices from January 1, 2001
to May 29, 2001 or to provide justification for the prices charged during those
months. According to the FERC, Williams' total potential refund liability for
this period is approximately $30 million. Commencing May 29, 2001, a new
prospective proxy price methodology was established that was further adjusted by
an order of June 19, 2001. Williams has filed justification for its prices with
the FERC and calculated its refund liability under the methodology used by the
FERC to compute refund amounts at approximately $11 million. However, in its
FERC filings, Williams continues its objections to refunds in any amount. No
assurances can be given that the FERC will not seek refunds of additional
amounts for the period commencing October 2, 2000 forward. A FERC Administrative
Law Judge held extensive settlement discussions regarding refunds and after
failing to reach a settlement, recommended a refund methodology to the FERC. On
July 25, 2001, the FERC adopted, to a significant extent, the judge's
methodology. This methodology would result in a Williams refund liability that
is not expected to have a material financial impact on Williams. However, there
can be no assurance that Williams' refund exposure will not have such an adverse
impact. Certain parties have also asked the FERC to revoke Williams' authority
to sell power from California-based generating units at market-based rates; to
limit Williams to cost-based rates for future sales from such units; and to
order refunds of excessive rates, with interest, back to May 1, 2000, and
possibly earlier. Although Williams believes these requests are ill-founded and
will be rejected by the FERC, there can be no assurance of such action.
In an order issued June 19, 2001, the FERC has implemented a price
mitigation and market monitoring plan for wholesale power sales by all suppliers
of electricity, including Williams, in spot markets for a region that includes
California and ten other western states (the "Western Systems Coordinating
Council," or "WSCC"). In general, the plan, which will be in effect from June
20, 2001 through September 30, 2002, establishes a market clearing price for
spot sales in all hours of the day that is based on the bid of the highest-cost
gas-fired California generating unit that is needed to serve the California
Independent System Operator's load. When generation operating reserves fall
below 7% in California (a "reserve deficiency period"), absent cost based
justification for a higher price, the maximum price that Williams may charge for
wholesale spot sales in the WSCC is the market clearing price. When generation
operating reserves rise to 7% or above in California, absent cost based
justification for a higher price, Williams' maximum price will be limited to 85%
of the highest hourly price that was in effect during the most recent reserve
deficiency period. At this time, Williams does not believe that this price
mitigation plan will result in a material adverse effect on its results of
operations or its financial condition. However, there can be no assurance that
this plan will not have such an adverse impact.
CREDIT EXPOSURE IN CALIFORNIA MAY ADVERSELY AFFECT WILLIAMS' PROFITABILITY.
Through a long-term contractual relationship with affiliates of AES Corp.,
Williams has marketing rights to nearly 4,000 megawatts of generation capacity
in the Los Angeles basin. Williams sells much of
S-3
<PAGE> 4
this capacity on a forward basis through contracts with various counterparties.
The remainder of its available capacity is sold in the spot and short term
market primarily through the California Independent System Operator. In the past
year, tight supply and increased demand has resulted in higher wholesale power
prices to California utilities. At the same time, two of the three major
utilities have been operating under a retail rate freeze. As a result, there has
been significant underrecovery of costs by the utilities, one of which, Pacific
Gas & Electric, has filed for bankruptcy protection. In addition, Southern

California Edison has engaged in talks with the State of California regarding
various arrangements that could prevent its bankruptcy. At this time, Williams
does not believe that its credit exposure to the California utilities would
result in a material adverse effect on its results of operations or financial
condition. However, there can be no assurance that Williams' credit exposure
will not have such an adverse impact.
CLASS ACTION LAWSUITS AND FEDERAL AND STATE INITIATIVES, INVESTIGATIONS AND
PROCEEDINGS RELATING TO WILLIAMS' ACTIVITIES IN CALIFORNIA MAY ADVERSELY AFFECT
WILLIAMS' PROFITABILITY.
A number of federal and state initiatives addressing the issues of the
California electric power industry are also ongoing and may result in
restructuring of various markets in California and elsewhere. Discussions in
California and other states have ranged from threats of re-regulation to
suspension of plans to move forward with deregulation. Allegations have also
been made that the wholesale price increases resulted from the exercise of
market power and collusion of the power generators and sellers, such as
Williams. These allegations have resulted in multiple state and federal
investigations as well as the filing of class-action lawsuits in which Williams
is a named defendant. In May 2001, the Department of Justice commenced an
antitrust investigation relating to an agreement between a subsidiary of
Williams and AES Southland alleging that the agreement limits the expansion of
electric generating capacity at or near the AES Southland plants that are
subject to a long-term tolling agreement between Williams and AES. In connection
with that investigation, the Department of Justice issued a Civil Investigative
Demand to Williams requesting answers to certain interrogatories and the
production of documents. Williams is cooperating with the investigation. Most of
these initiatives, investigations and proceedings are in their preliminary
stages and their likely outcome cannot be estimated. There can be no assurance
that these initiatives, investigations and proceedings will not have an adverse
effect on Williams' results of operations or financial condition.
WILLIAMS' BUSINESS WILL BE IMPACTED BY THE LEVEL OF ACTIVITY IN THE OIL AND GAS
INDUSTRY, WHICH IS SIGNIFICANTLY AFFECTED BY VOLATILE OIL AND GAS PRICES.
Williams' business is impacted by the level of activity in oil and gas
exploration, development and production in markets worldwide. Oil and gas
prices, market expectations of potential changes in these prices and a variety
of political and economic factors significantly affect this level of activity.
Oil and gas prices are extremely volatile and are affected by numerous factors,
including:
- worldwide demand for oil and gas;
- the ability of the Organization of Petroleum Exporting Countries,
commonly called "OPEC," to set and maintain production levels and
pricing;
- the level of production in non-OPEC countries; and
- the policies of the various governments regarding exploration and
development of their oil and gas reserves.
WILLIAMS' OPERATIONS ARE SUBJECT TO OPERATIONAL HAZARDS, UNINSURED RISKS AND
ENVIRONMENTAL RISKS.
Williams' exploration, production, transportation, gathering, refining and
processing operations are subject to the inherent risks normally associated with
those operations, including explosions, pollution, release of toxic substances,
fires and other hazards, each of which could result in damage to or destruction
of Williams' facilities or damage to persons and property. If any of these
events were to occur, Williams could suffer substantial losses. Although
Williams maintains insurance against these types of risks to the
S-4
<PAGE> 5
extent and in amounts that it believes are reasonable, its financial condition
and operations could be adversely affected if a significant event occurs that is
not fully covered by insurance.
Williams' current and former operations also involve management of
regulated materials and are subject to various environmental laws and
regulations. Certain of Williams' subsidiaries have been identified as
potentially responsible parties at hazardous materials disposal sites under the
federal environmental laws, and have incurred, or are alleged to have incurred,
various other hazardous materials removal and remediation obligations under
environmental laws. Further, certain of Williams' subsidiaries are currently
negotiating settlements with the U.S. Department of Justice and the U.S.
Environmental Protection Agency with respect to their waste management practices
and air contamination at one of Williams' gas processing plants. It is not
possible for Williams to estimate reliably the amount and timing of all future
expenditures related to environmental matters.

WILLIAMS MAY BE SUBJECT TO LIABILITIES PERTAINING TO ITS SPUN-OFF
TELECOMMUNICATIONS BUSINESS UNIT.
In April 2001, Williams spun off Williams Communications Group, Inc., its
telecommunications unit, which was subject to certain lawsuits and settlement
negotiations, including claims for damages, indemnification for royalties and
other contractual claims by third parties. Further, the unit was subject to a
putative class action brought on behalf of all landowners on whose property the
plaintiffs have alleged Williams' former telecommunications unit installed
fiber-optic cable without the permission of the landowner. Another potential
putative class action may challenge the unit's railroad or pipeline rights of
way. Williams cannot be certain that this purported class action and other
purported class actions against its former telecommunications unit, if
successfully brought against Williams, will not have a significant adverse
impact on Williams' business. However, in connection with the spin-off, the
telecommunications unit agreed to indemnify Williams for all liabilities arising
out of the unit's businesses, operations or assets, which should reduce the
ultimate impact on Williams.
In addition, Williams is providing indirect credit support for $1.4 billion
of Williams Communication's structured notes through a commitment to issue
Williams' equity in the event of a Williams Communications default, or to the
extent proceeds from Williams Communications' refinancing or remarketing of
certain structured notes prior to March 2004 produces proceeds of less than $1.4
billion. The ability of Williams Communications to make payments on the notes is
dependent on its ability to raise additional capital and its subsidiaries'
ability to dividend cash to Williams Communications. Williams Communications,
however, is obligated to reimburse Williams for any payment Williams may be
required to make in connection with these notes.
WILLIAMS AND BARRETT MAY NOT BE ABLE TO SUCCESSFULLY INTEGRATE THEIR OPERATIONS
AND MAY NOT REALIZE ANTICIPATED BENEFITS OF THE MERGER.
On August 2, 2001, a subsidiary of Williams merged with Barrett Resources
Corporation, a Delaware corporation headquartered in Denver, Colorado which is
engaged in the exploration and production of oil and natural gas. The merger
involves integration of two large companies that previously have operated
independently. As a result, the merger will present challenges to management,
including the integration of the operations, systems, technologies and personnel
of the two companies, and special risks, including possible unanticipated
liabilities, unanticipated costs, diversion of management's attention,
operational interruptions and the loss of key employees, customers or suppliers.
The difficulties Williams' management encounters in the transition and
integration processes could have an adverse effect on the revenues, levels of
expenses and operating results of the combined company. As a result, the
anticipated benefits of the merger may not be realized.
WILLIAMS DEPENDS ON PAYMENTS FROM ITS SUBSIDIARIES.
Williams is a holding company and conducts substantially all of its
operations through subsidiaries. Williams performs management, legal, financial,
tax, consulting, administrative and other services for its subsidiaries.
Williams' principal sources of cash are from external financings, dividends and
advances from
S-5
<PAGE> 6
its subsidiaries, investments, payments by subsidiaries for services rendered,
and interest payments from subsidiaries on cash advances. The amount of
dividends available to Williams from subsidiaries largely depends upon each
subsidiary's earnings and operating capital requirements. The terms of some of
Williams' subsidiaries' borrowing arrangements limit the transfer of funds to
Williams. In addition, the ability of Williams' subsidiaries to make any
payments to Williams will depend on the subsidiaries' earnings, business and tax
considerations, and legal restrictions.
CLAIMS OF HOLDERS RANK JUNIOR TO THOSE OF CREDITORS OF WILLIAMS' SUBSIDIARIES.
As a result of the holding company structure, the notes will effectively
rank junior to all existing and future debt, trade payables and other
liabilities of Williams' subsidiaries. Any right of Williams and its creditors
to participate in the assets of any of Williams' subsidiaries upon any
liquidation or reorganization of any such subsidiary will be subject to the
prior claims of that subsidiary's creditors, including trade creditors, except
to the extent that Williams may itself be a creditor of such a subsidiary.
S-6
<PAGE> 7
RECENT DEVELOPMENTS
On May 2, 2001, Williams made an offer to purchase Barrett Resources
Corporation, a Delaware corporation headquartered in Denver, Colorado which is
engaged in the exploration and production of oil and natural gas. On May 7,

2001, Williams and Barrett entered into a Merger Agreement pursuant to which
Williams purchased 50% of Barrett's outstanding common stock in a cash tender
offer for $73 per share, followed by a merger with Barrett in which each
remaining outstanding share of common stock of Barrett was converted into the
right to receive 1.767 shares of common stock of Williams. Williams completed
the cash tender offer in June 2001. A special meeting of Barrett's shareholders
approved the merger on August 2, 2001, and the merger was completed later that
day.
RATIO OF EARNINGS TO FIXED CHARGES
<Table>
<Caption>
SIX
MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------- ---------
1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ---------
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges........ 2.63 2.36 1.70 1.86 2.98 3.82
</Table>
For purposes of computing these ratios, earnings means income (loss) from
continuing operations before:
- income taxes;
- extraordinary gain (loss);
- minority interest in income (loss) and preferred returns of
consolidated subsidiaries;
- interest expense, net of interest capitalized;
- interest expense of 50 percent-owned companies;
- that portion of rental expense that we believe to represent an
interest factor;
- adjustment to equity earnings to exclude equity investments with
losses; and
- adjustment to equity earnings to reflect actual distributions from
equity investments.
Fixed charges means the sum of the following:
- interest expense;
- that portion of rental expense that we believe to represent an
interest factor;
- pretax effect of dividends on preferred stock of Williams (1999 and
prior);
- pretax effect of dividends or preferred stock and other preferred
returns of consolidated subsidiaries; and
- interest expense of 50 percent-owned companies.
S-7
<PAGE> 8
USE OF PROCEEDS
Our net proceeds from the sale of our notes are estimated at $1,484,990,000
after the deduction of the underwriting discount and estimated expenses payable
by us. We intend to use most of the net proceeds of this offering to prepay the
loans made to us pursuant to a credit agreement dated as of June 11, 2001.
Aggregate outstanding loans under the credit agreement were $1,230 million on
the date of this prospectus supplement. We will use the remaining net proceeds
for our general corporate purposes. Affiliates of Lehman Brothers Inc., Merrill
Lynch, Pierce, Fenner & Smith Incorporated and Salomon Smith Barney Inc. are the
only lenders under the credit agreement. See "Underwriting". These loans
currently bear interest at a variable rate based on one-month London interbank
offered rate (LIBOR) for U.S. dollar deposits plus 0.875% and will mature on
November 27, 2001, unless earlier prepaid. The proceeds from these loans were
used to purchase shares of Barrett pursuant to the cash tender offer. See
"Recent Developments".
DESCRIPTION OF NOTES
The following description of the particular terms of our 7.125% notes due

2011 and our 7.875% notes due 2021 should be read in conjunction with the
statements under "Description of Debt Securities" in the prospectus dated July
6, 2001. If this summary differs in any way from the "Description of Debt
Securities" in the prospectus, you should rely on this summary. This summary of
the notes is qualified in its entirety by reference to the senior indenture
referred to in the prospectus.
GENERAL
The 7.125% notes will be limited initially to $750,000,000 in aggregate
principal amount and the 7.875% notes will be limited initially to $750,000,000
in aggregate principal amount. The notes will be issued in denominations of
$1,000 and integral multiples of $1,000 and will bear interest from August 21,
2001 at the respective annual rates set forth on the cover page of this
prospectus supplement. The 7.125% notes will mature on September 1, 2011 and the
7.875% notes will mature on September 1, 2021. Interest will be payable
semi-annually on March 1 and September 1, commencing March 1, 2002, to the
holders of record of our notes on the preceding February 15 and August 15,
respectively. The notes will be issued in book-entry form. See "Description of
Debt Securities -- Registered Global Securities" in the prospectus.
We may, from time to time, without the consent of the existing holders of
the notes, issue additional notes under the indenture having the same terms as
these notes in all respects, except for issue date, issue price and the initial
interest payment date. Any such additional notes will be consolidated with and
form a single series with the applicable notes being offered by this prospectus
supplement.
The notes have no sinking fund provisions.
REDEMPTION
The notes will be redeemable as a whole or in part, at our option, at any
time at a redemption price equal to the greater of (1) 100% of the principal
amount of the notes to be redeemed and (2) 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 25 basis
points in the case of the 7.125% notes and 30 basis points in the case of the
7.875% notes, 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.
S-8
<PAGE> 9
"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 notes to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such notes.
"Comparable Treasury Price" means, with respect to any redemption date, (1)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (2) if such release (or any successor release) is not
published or does not contain such prices on such business day, (A) the average
of the Reference Treasury Dealer Quotations for such redemption date, after
excluding the highest and lowest such Reference Treasury Dealer Quotations, or
(B) if we obtain fewer than four such Reference Treasury Dealer Quotations, the
average of all such Quotations.
"Independent Investment Banker" means one of the Reference Treasury Dealers
appointed by us.
"Reference Treasury Dealer" means each of Lehman Brothers Inc., Merrill
Lynch, Pierce, Fenner & Smith Incorporated and Salomon Smith Barney Inc. and
their respective successors and, at our option, additional primary U.S.
Government securities dealers ("Primary Treasury Dealers"); provided, however,
that if any of the foregoing shall cease to be a Primary Treasury Dealer, we
shall substitute another nationally recognized investment banking firm that is a
Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
us, of the bid and asked prices for the Comparable Treasury Issue (expressed in

each case as a percentage of its principal amount) quoted in writing to us by
such Reference Treasury Dealer at 5:00 p.m. on the third business day preceding
such redemption date.
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 notes to be redeemed.
Unless we default in payment of the redemption price, on and after the
redemption date interest will cease to accrue on the notes or portions thereof
called for redemption.
BOOK-ENTRY SYSTEM
The notes will be issued in the form of one or more global notes (the
"Global Notes") in the aggregate principal amount of the notes, which will be
registered in the name of Cede & Co., as nominee of The Depository Trust Company
("DTC"). 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 us 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 deposit with DTC and facilitates the settlement of
transactions among its participants in such securities, through electronic
computerized book-entry changes in participants' accounts, thereby
eliminating the need for physical movement of securities certificates.
DTC's participants include securities brokers and dealers (including the
underwriters), banks, trust companies, clearing corporations, and certain
other organizations, some of whom (and/or their representatives) own DTC.
Access to the DTC system is also available to others, such as banks,
brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
S-9
<PAGE> 10
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 (a "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
Global Notes 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. We
expect 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. We also expect
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, us 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 us or the
Trustee. In addition, we 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 we believe to be reliable (including DTC),
but we take no responsibility for the accuracy of such information.
Neither we, 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 us in immediately available
funds.
For other terms of the notes, see "Description of Debt Securities" in the
accompanying prospectus.
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<PAGE> 11
DEFEASANCE
The notes will be subject to defeasance and discharge and to defeasance of
certain obligations as described under "Description of Debt
Securities -- Discharge, Defeasance and Covenant Defeasance" in the prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement
relating to the notes, we have agreed to sell to the underwriters listed below,
and each of the underwriters has severally agreed to purchase, the aggregate
principal amount of the notes set forth opposite its name below:
<Table>
<Caption>
PRINCIPAL AMOUNT PRINCIPAL AMOUNT
UNDERWRITER OF 7.125% NOTES OF 7.875% NOTES
- ----------- ---------------- ----------------
<S> <C> <C>
Lehman Brothers Inc. ................................. $225,625,000 $225,625,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated.... 225,625,000 225,625,000
Salomon Smith Barney Inc. ............................ 225,625,000 225,625,000
Banc of America Securities LLC........................ 5,625,000 5,625,000
Banc One Capital Markets, Inc. ....................... 5,625,000 5,625,000
Barclays Capital Inc. ................................ 5,625,000 5,625,000
BNP Paribas Securities Corp. ......................... 5,625,000 5,625,000
Commerzbank Capital Markets Corp. .................... 5,625,000 5,625,000
Credit Lyonnais Securities (USA) Inc. ................ 5,625,000 5,625,000
Fleet Securities, Inc. ............................... 5,625,000 5,625,000
KBC Financial Products USA Inc. ...................... 5,625,000 5,625,000
RBC Dominion Securities Corporation................... 5,625,000 5,625,000
Scotia Capital (USA) Inc. ............................ 5,625,000 5,625,000
SunTrust Capital Markets, Inc. ....................... 5,625,000 5,625,000
TD Securities (USA) Inc. ............................. 5,625,000 5,625,000
The Williams Capital Group, L.P. ..................... 5,625,000 5,625,000
------------ ------------
Total....................................... $750,000,000 $750,000,000
============ ============
</Table>
The several underwriters have agreed, subject to the terms and conditions
included in the underwriting agreement, to purchase all of the notes being sold
pursuant to such agreement if any of the notes being sold pursuant to such
agreement are purchased.
The underwriters propose to offer the notes to the public at the respective
public offering prices set forth on the cover page of this prospectus supplement
and to certain dealers at such price less a concession not in excess of .400% of
the principal amount of the 7.125% notes and .500% of the principal amount of

the 7.875% notes. The underwriters may allow, and such dealers may reallow, a
concession to certain other dealers not in excess of .200% of the principal
amount of the 7.125% notes and .250% of the principal amount of the 7.875%
notes. After the public offering of the notes, the public offering price 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 us and our affiliates. In particular, affiliates of Lehman Brothers
Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Salomon Smith
Barney Inc. are the only lenders under one of our credit agreements and most of
the proceeds of this offering will be used to repay the loans under that credit
agreement. Aggregate outstanding loans under the credit agreement were $1,230
million on the date of this prospectus supplement. See "Use of Proceeds".
Because more than ten percent of the net proceeds of this offering will be paid
to members or affiliates of members of the National Association of Securities
Dealers, Inc. participating in this offering, this offering will be conducted in
accordance with NASD Conduct Rule 2710(c)(8). Banc One Capital Markets, Inc. is
an affiliate of the Trustee.
S-11
<PAGE> 12
We have 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 of any of those liabilities.
In connection with this offering, the underwriters may engage in
transactions that stabilize, maintain or otherwise affect the market price of
the notes. Such transactions may include overallotment, stabilizing transactions
and syndicate covering transactions. 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 preventing or retarding a decline in the market price of the
notes which the offering is in progress. 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 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.
The notes are new series of securities with no established trading market.
We have been advised by the underwriters that they presently intend to make a
market in the notes, although they are under no obligation to do so and may
discontinue any market-making activities at any time without any notice. No
assurance can be given as to the liquidity of the trading market for the notes
or that an active public market for the notes will develop. If an active public
trading market for the notes does not develop, the market price and liquidity of
the notes may be adversely affected.
We estimate that we will spend $220,000 for fees and expenses (other than
underwriting discounts and commissions) associated with the offering of the
notes.
LEGAL MATTERS
Certain legal matters in connection with the notes will be passed upon for
us 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.
Davis Polk & Wardwell has from time to time represented, and may continue to
represent, us and our affiliates in certain legal matters. As of the date of
this prospectus supplement, Mr. von Glahn beneficially owns approximately
149,138 shares of our common stock and also has exercisable options to purchase
an additional 147,600 shares of our common stock.
S-12
<PAGE> 13
PROSPECTUS
THE WILLIAMS COMPANIES, INC.
$1,924,056,250
DEBT SECURITIES,
PREFERRED STOCK AND
COMMON STOCK
- --------------------------------------------------------------------------------
We will provide the specific terms of each series or issue of securities in
supplements to this prospectus. You should read this prospectus and the