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Form Type 424(b)(2) and (c)
File No. 33-63495
PROSPECTUS SUPPLEMENT
(To Prospectus Dated January 29, 1996)
$250,000,000
WILLIAMS HOLDINGS OF DELAWARE, INC.
6 1/4% SENIOR DEBENTURES DUE 2006
The 6 1/4% Senior Debentures due 2006 (the "Debentures") will mature on February
1, 2006. Interest on the Debentures is payable on February 1 and August 1 of
each year, commencing August 1, 1996. The Debentures may be redeemed at the
option of Williams Holdings of Delaware, Inc. (the "Company") at any time, in
whole or in part, at a redemption price equal to the greater of (i) 100% of the
principal amount of such Debentures and (ii) the sum of the present values of
the remaining scheduled payments of principal and interest thereon discounted to
the date of redemption on a semiannual basis at the Treasury Rate plus 15 basis
points, plus in each case accrued interest thereon to the date of redemption.
The Debentures do not provide for any sinking fund.
The Debentures offered hereby will be represented by one or more Global
Securities representing Book-Entry Securities and will be registered in the name
of Cede & Co., the nominee of The Depository Trust Company, which will act as
Depositary. Beneficial interest in Book-Entry Securities will be shown on, and
transfers thereof will be effected only through, records maintained by the
Depositary and its participants. Except as described in the accompanying
Prospectus under "Description of Debt Securities -- Registered Global
Securities," Debentures in certificated form will not be issued in exchange for
the Global Securities. Settlement for the Debentures will be made in immediately
available funds. The Debentures will trade in the Depositary's Same-Day Funds
Settlement System until maturity, and secondary market trading activity for the
Debentures will therefore settle in immediately available funds. All payments of
principal and interest will be made by the Company in immediately available
funds. See "Description of Debentures -- Same Day Funds Settlement System and
Payment" in this Prospectus Supplement and "Description of Debt Securities" in
the accompanying Prospectus.
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 ACCOMPANYING
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
Per Debenture.......................... 99.479% 0.65% 98.829%
Total.................................. $248,697,500 $1,625,000 $247,072,500
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(1) Plus accrued interest, if any, from February 1, 1996 to date of delivery.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities including liabilities under the Securities Act of 1933.
(3) Before deduction of expenses payable by the Company estimated at $430,000.
The Debentures are offered subject to receipt and acceptance by the
Underwriters, to prior sale and to the Underwriters' right to reject any order
in whole or in part and to withdraw, cancel or modify the offer without notice.
It is expected that delivery of the Debentures will be made in book-entry form
through the facilities of The Depository Trust Company on or about February 5,
1996.
SALOMON BROTHERS INC
CITICORP SECURITIES, INC.
SMITH BARNEY INC.
The date of this Prospectus Supplement is January 31, 1996.
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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEBENTURES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
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THE COMPANY
OVERVIEW
Williams Holdings of Delaware, Inc., incorporated under the laws of the
State of Delaware in July 1994, is a wholly-owned subsidiary of The Williams
Companies, Inc. ("Williams"). Williams established the Company to be a holding
company for its assets other than its interstate natural gas pipelines and
related assets. Virtually all of the Company's assets have been transferred to
the Company by Williams since January 1, 1995, and were previously operated by
subsidiaries of Williams.
The Company owns all of the capital stock of four entities in the energy
industry and two entities in the telecommunications industry. The Company's
energy subsidiaries are engaged in natural gas gathering, processing and
production, the transportation of petroleum products, natural gas trading
activities, natural gas liquids marketing and provides a variety of other
products and services to the energy industry. The Company's telecommunications
subsidiaries offer data, voice and video-related products and services and
customer premise equipment nationwide. The Company also has certain other equity
investments.
As indicated, substantially all of the Company's operations are conducted
through subsidiaries. Williams performs management, legal, financial, tax,
consultative, administrative and other services for the Company and its
subsidiaries. The Company's principal sources of cash will be from external
financings, dividends and advances from its subsidiaries, advances from
Williams, investments and interest payments from subsidiaries and Williams on
cash advances. The amount of dividends available to the Company from
subsidiaries largely depends on each subsidiary's earnings and capital
requirements. Certain subsidiaries' debt instruments with outside lenders limit
the amount of dividend payments and advances to the Company.
WILLIAMS FIELD SERVICES GROUP, INC. (WILLIAMS FIELD SERVICES)
Williams Field Services, through subsidiaries, owns and/or operates both
regulated and nonregulated natural gas gathering and processing facilities and
owns and operates natural gas leasehold properties. In 1994 and 1993, gathering
and processing activities represented 89 percent and 88 percent, respectively,
of Williams Field Services' operating profit. Natural gas production represented
the balance.
Williams Field Services, through subsidiaries, owns and operates natural
gas gathering and processing facilities located in the San Juan Basin in
northwestern New Mexico and southwestern Colorado, southwestern Wyoming, and the
Rocky Mountains of Utah and Colorado. Williams Field Services, through
subsidiaries, also operates natural gas gathering and processing facilities
located in the Texas Panhandle and the Hugoton Basin in northwest Oklahoma and
southwest Kansas which are owned by Williams Natural Gas, an affiliated company,
but which are the subject of applications for orders permitting abandonment so
the facilities can be transferred to Williams Field Services. Gathering services
provided include the gathering of gas and the treating of coal seam gas. The
operating information below includes operations attributed to the facilities
when they were owned and operated by affiliated entities but do not include
operations for facilities currently owned by Williams Natural Gas but operated
by Williams Field Services.
Williams Field Services' facilities consist of approximately 4,000 miles of
gathering pipelines, three gas treating plants and ten gas processing plants
(one of which is 13 percent owned and one of which is 66 percent owned) which
have an aggregate daily inlet capacity of 2.3 Bcf of gas. Gathering and
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processing customers have direct access to interstate pipelines, including
affiliated pipelines, which provide access to multiple markets.
During 1994, Williams Field Services gathered natural gas for 117
customers. The two largest gathering customers accounted for approximately 27
percent and 13 percent, respectively, of total gathered volumes. During 1994,
natural gas was processed for a total of 108 customers. The three largest
customers accounted for approximately 22 percent, 14 percent and 12 percent,
respectively, of total processed volumes. No other customer accounted for more
than 10 percent of gathered or processed volumes. Williams Field Services'
gathering and processing agreements with large customers are generally long-term
agreements with various expiration dates. These long-term agreements account for
the majority of the gas gathered and processed by Williams Field Services.
Liquids extracted at the processing plants are ethane, propane, butane and
natural gasoline. Liquid products retained by Williams Field Services are
marketed by an affiliate for a fee. During 1994, liquid products were sold to a
total of 20 customers under short-term contracts. The three largest customers
accounted for approximately 33 percent, 13 percent and 10 percent, respectively,
of total liquid products volumes sold. No other customer accounted for more than
10 percent of volumes sold.
Operating Statistics. The following table summarizes gathering, processing
and natural gas liquid volumes for the periods indicated:
1994 1993 1992
---- ---- ----
Gas volumes (TBtu, except where noted):
Gathering............................................ 679 588 471
Processing........................................... 392 323 * 283 *
Natural gas liquid sales (millions of gallons)....... 281 295 278
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* Restated to exclude treating volumes.
Williams Field Services, through a subsidiary, owns and operates producing
gas leasehold properties in the San Juan Basin.
Gas Reserves. As of December 31, 1994, 1993 and 1992, Williams Field
Services had proved developed natural gas reserves of 269 Bcf, 229 Bcf and 352
Bcf, respectively, and proved undeveloped reserves of 220 Bcf, 319 Bcf and 287
Bcf, respectively. As discussed below, Williams Field Services conveyed gas
reserves to the Williams Coal Seam Gas Royalty Trust in 1993. No major discovery
or other favorable or adverse event has caused a significant change in estimated
gas reserves since year end.
Customers and Operations. As of December 31, 1994, the gross and net
developed leasehold acres owned by Williams Field Services totaled 228,863 and
98,716, respectively, and the gross and net undeveloped acres owned were 29,369
and 13,669, respectively. As of such date, Williams Field Services owned
interests in 2,682 gross producing wells (369 net) on its leasehold lands. The
following table summarizes drilling activity for the periods indicated:
DEVELOPMENT
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COMPLETED GROSS NET
DURING WELLS WELLS
--------- ----- -----
1994....................................................... 66 19
1993....................................................... 39 5
1992....................................................... 95 11
The majority of Williams Field Services' gas production is currently being
sold in the spot market at market prices. Total net production sold during 1994,
1993 and 1992 was 22.6 TBtu, 16.3 TBtu and 23.4 TBtu, respectively. The average
production costs per MMBtu of gas produced were $.14, $.17 and $.17 in 1994,
1993 and 1992, respectively. The average sales price per MMBtu was $1.21, $1.44
and $1.14, respectively, for the same periods.
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WILLIAMS ENERGY SERVICES COMPANY (WESCO)
WESCO, through subsidiaries, offers a full range of products and services
to energy markets throughout North America. WESCO's core business includes
natural gas trading activities, energy-related risk management products and
services and computer-based information products. WESCO was incorporated in
1993.
NATURAL GAS TRADING
WESCO includes certain natural gas trading operations formerly conducted by
Transco as well as third party trading activities managed by an affiliate. WESCO
trades natural gas throughout North America, primarily serving local
distribution company markets in the eastern and midwestern United States. The
Operating Statistics presented below represent only previously existing
Williams' financial trading services coupled with third party trading services
provided by an affiliate and do not include operations previously conducted by
Transco.
WESCO serves a customer base of approximately 800 companies across its
natural gas trading operations, with the majority of revenues derived from sales
to approximately 75 local distribution companies under long-term contracts
extending through the year 2002 with variable volume commitments. The balance of
revenues arises from sales to end users under one- to two-year renewable terms,
coupled with sales to other gas marketers and traders occurring under spot, or
short-term agreements. No single customer accounts for more than 10 percent of
natural gas sales volumes. WESCO's gas trading activities are conducted on both
interstate and intrastate pipelines, with most sales activity coordinated with
transportation along pipeline systems owned by Williams.
FINANCIAL TRADING SERVICES
WESCO offers financial instruments and derivatives to producers and
consumers of energy as well as to financial entities participating in energy
price-risk management. WESCO also enters into energy-related financial
instruments to hedge against market price fluctuations associated with inventory
positions as well as natural gas sales and purchase commitments. The customer
base for these activities is comprised of other gas marketing companies,
energy-based entities and brokerages trading in energy commodities.
INFORMATION PRODUCTS
WESCO markets various computer-based trading and trader-match services
including Chalkboard, an electronic trader-match system for buyers and sellers
of liquid fuels, crude oil and refined products; Streamline, a physical cash
forward gas trading system located at five major U.S. hubs; and Capacity
Central, a natural gas pipeline capacity information system. These products are
utilized primarily by a customer base of approximately 181 energy-based
companies under short term service commitments. The information products
architecture was developed in 1993 and introduced to the marketplace in 1994.
These activities have not been profitable to date as costs of establishing
marketing liquidity and product usage still outpace the returns from this
developing market. Development efforts are also underway for a computer-based
electricity trader-match system.
Effective January 1, 1996, Streamline and Capacity Central were contributed
to a limited liability company along with the energy-related information
services of Panhandle Eastern Corporation's PanEnergy subsidiary. The new entity
is owned equally by WESCO and PanEnergy.
OPERATING STATISTICS (DOLLARS IN MILLIONS, VOLUMES IN TBTU)
1994 1993 1992
---- ---- ----
Operating profit (loss)............................................ $ .5 $ 7.9 $(2.6)
Natural gas sales volumes (physical)............................... 145.3 151.5 223.9
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PRODUCER SERVICES
WESCO entered into a $100 million production payment credit facility with
NationsBank in August 1995, enabling joint participation with producers in oil
and gas reserve acquisitions, development and monetization. In addition, the
available production volumes outside of the facility are marketed by WESCO.
Transactions totaling $7.3 million have been consummated under the facility
since its establishment.
WILLIAMS PIPE LINE COMPANY (WILLIAMS PIPE LINE)
Williams Pipe Line operates a petroleum products pipeline system which
covers an eleven-state area extending from Oklahoma in the south to North Dakota
and Minnesota in the north and Illinois in the east. The system is operated as a
common carrier offering transportation and terminalling services on a
nondiscriminatory basis under published tariffs. The system transports crude oil
and products, including gasolines, distillates, aviation fuels and LP-gases.
On September 30, 1994, Williams Pipe Line acquired 114 miles of pipeline in
Kansas, Missouri and Illinois from ARCO Pipe Line Company. In a related
transaction, Williams Pipe Line added a new offline delivery connection to serve
markets in northern Missouri and southern Iowa.
SHIPPERS AND PIPELINE SYSTEM
At December 31, 1994, the system traversed approximately 7,000 miles of
right-of-way and included over 9,200 miles of pipeline in various sizes up to 16
inches in diameter. The system includes 81 pumping stations, 23 million barrels
of storage capacity and 47 delivery terminals. The terminals are equipped to
deliver refined products into tank trucks and tank cars. The maximum number of
barrels which the system can transport per day depends upon the operating
balance achieved at a given time between various segments of the system. Since
the balance is dependent upon the mix of products to be shipped and the demand
levels at the various delivery points, the exact capacity of the system cannot
be stated.
The operating statistics set forth below relate to the system's operations
for the periods indicated:
1994 1993 1992
-------- -------- --------
Shipments (thousands of barrels):
Refined products:
Gasolines...................................... 120,682 109,841 92,643
Distillates.................................... 61,129 51,508 45,920
Aviation fuels................................. 9,523 11,123 11,180
LP-Gases.......................................... 10,849 9,778 11,362
Crude oil......................................... 1,062 3,388 4,481
------- ------- -------
Total shipments........................... 203,245 185,638 165,586
======= ======= =======
Daily average (thousands of barrels).............. 557 509 454
Average haul (miles).............................. 284 279 295
Barrel miles (millions)........................... 57,631 51,821 48,825
Revenues (millions):
Transportation.................................... $ 168.0 $ 153.0 $ 137.7
Nontransportation................................. 41.7 26.3 10.8
------- ------- -------
Total revenues............................ $ 209.7 $ 179.3 $ 148.5
======= ======= =======
Average transportation revenue per barrel......... $.83 $.82 $.83
On December 1, 1993, Williams Pipe Line acquired a 300-mile pipeline, two
loading terminals and related storage from Sun Pipe Line Company. The pipeline
connects to Williams Pipe Line's systems in Oklahoma and adds a portion of
Arkansas to its market. Volumes originating on this system accounted for
approximately 10 percent of the shipments and transportation revenues in 1994.
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In 1994, 75 shippers transported volumes through the system. The seven
largest shippers accounted for 55 percent of transportation revenues. The
highest revenue-producing shipper accounted for approximately 11 percent of
transportation revenues in 1994. Nontransportation activities accounted for 20
percent of total revenues in 1994. The increase in nontransportation revenues is
primarily due to expanded gas liquids and fractionator operations.
As of December 31, 1994, Williams Pipe Line was directly connected to, and
received products from, 11 operating refineries reported to have an aggregate
crude oil refining capacity of approximately 888,000 barrels per day. Eight of
these refineries are located in Kansas and Oklahoma, two in Minnesota and one in
Wisconsin. The system also received products through connecting pipelines from
other refineries located in Illinois, Indiana, Kansas, Louisiana, Montana, North
Dakota, Oklahoma and Texas. Crude oil is received through connections in Kansas
and Oklahoma. The refineries, which are connected directly or indirectly to the
system, have access to a broad range of crude oil producing areas, including
foreign sources. LP-gases are transported from gas producing and storage areas
in central Kansas through connecting pipelines in Iowa, Kansas, Missouri and
Illinois. In addition to making deliveries to company-owned terminals, the
system delivers products to third-party terminals and connecting pipelines.
The refining industry continues to be affected by environmental regulations
and changing crude supply patterns. The industry's response to environmental
regulations and changing supply patterns will directly affect volumes and
products shipped on the Williams Pipe Line system. EPA regulations, driven by
the Clean Air Act, require refiners to change the composition of fuel
manufactured. A pipeline's ability to respond to the effects of regulation and
changing supply patterns will determine its ability to maintain and capture new
market shares. Williams Pipe Line has successfully responded to changes in
diesel fuel composition and product supply and has adapted to new gasoline
additive requirements. Reformulated gasoline regulations have not yet
significantly affected Williams Pipe Line. Williams Pipe Line will continue to
position itself to respond to changing regulations and supply patterns, but it
is not possible to predict how future changes in the marketplace will affect
Williams Pipe Line's market areas.
WILLIAMS ENERGY VENTURES, INC. (WILLIAMS ENERGY VENTURES)
Another subsidiary of the Company, Williams Energy Ventures, is combined
for financial reporting purposes with Williams Pipe Line. Williams Energy
Ventures is engaged in the manufacturing and marketing of petroleum products and
oxygenates. Williams Energy Ventures also owns an approximate 70 percent
interest in a 25 million gallon per year ethanol plant in Nebraska that began
operations in November 1995. Williams Energy Ventures operates the facility and
markets the fuel ethanol output. In addition, on August 1, 1995, Williams Energy
Ventures purchased Pekin Energy Company in Pekin, Illinois for $167 million. The
Pekin Energy facility produces 100 million gallons annually of fuel-grade and
industrial ethanol and various coproducts.
WILLIAMS TELECOMMUNICATIONS SYSTEMS, INC. (WILTEL)
WilTel provides data, voice and video communications products and services
to a wide variety of customers nationally. WilTel is strategically positioned in
the marketplace with more than 100 sales and service locations throughout the
United States, over 2,700 employees and over 1,300 stocked service vehicles.
WilTel employs more than 1,300 technicians and more than 400 sales
representatives and sales support personnel to serve an estimated 30,000
commercial, governmental and institutional customers. WilTel's customer base
ranges from Fortune 500 corporations and the Federal Government to small
privately-owned entities.
WilTel offers its customers a full array of network interconnect products
including digital key systems (generally designed for voice applications with
fewer than 100 lines), private branch exchange (PBX) systems (generally designed
for voice applications with greater than 100 lines), voice processing systems,
interactive voice response systems, automatic call distribution applications,
call accounting systems, network monitoring and management systems, desktop
video, routers, channel banks, intelli-
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gent hubs and cabling for all voice and data applications. WilTel's services
also include the design, configuration and installation of voice and data
networks and the management of customers' telecommunications operations and
facilities. In addition, WilTel possesses multicustomer service capabilities,
including three specialized functions that provide customers with on-line order
entry and trouble reporting services, advanced technical assistance and
training. Other service capabilities include Local Area Network and PBX remote
monitoring and toll fraud detection.
In 1994, WilTel derived approximately 67 percent of its revenues from its
existing customer base and approximately 33 percent from the sale of new
telecommunications systems. The distribution of revenues for the periods
indicated are shown in the following table:
1994 1993 1992
---- ---- ----
REVENUES:
New System Sales...................................... 33% 39% 41%
System Modifications.................................. 36% 30% 28%
Maintenance........................................... 24% 23% 25%
Other................................................. 7% 8% 6%
The 1994 decrease in the percentage of revenue derived from the sale of new
telecommunications systems was attributed to the March 1994, acquisition of
BellSouth's customer premise equipment sales and service operations in 29 states
outside of BellSouth's local operating region in the nine southeastern most
states, and the October 1994, acquisition of Jackson Voice Data, a New York
City-based customer premise equipment company. The acquired companies generated
the vast majority of their revenue from their existing customer bases. The
acquisition of these businesses has allowed WilTel to capitalize on its existing
infrastructure, strengthen its national market presence and geographic customer
density and has provided more diversity in product offerings.
Although the percentage of revenue attributable to new system sales
continues to decline relative to total revenue, year end revenue backlog
continues to increase. Estimated year end revenue backlog balances, comprised of
new system sales and major system upgrades, were as follows: $92 million in
1994, $52 million in 1993 and $39 million in 1992.
The total number of ports maintained and served by WilTel at the end of
1994 increased to 4.1 million. The bulk of the increase from prior years is
attributable to the acquisitions of the BellSouth and Jackson Voice Data
customer bases. The two acquisitions contributed in excess of 1.0 million ports
to the total WilTel count. A port is defined as an electronic address resident
in a customer's PBX or key system that supports a station, trunk or data port.
The year end port counts were as follows: 4.1 million in 1994, 2.7 million in
1993 and 2.6 million in 1992.
WilTel's three largest suppliers accounted for 91 percent of equipment sold
in 1994. A single manufacturer supplied 80 percent of all equipment sold. In
this case, WilTel is the largest distributor of certain of this company's
products. About 70 percent of WilTel's active customer base consists of this
manufacturer's products. The distribution agreement with this supplier is
scheduled to expire in 1997. This agreement is expected to be renewed upon
expiration. Management believes there is minimal risk as to the availability of
product from suppliers.
THE WILTECH GROUP, INC. (WILTECH)
WilTech, through subsidiaries, seeks to develop growth opportunities in the
telecommunications and technology industries. WilTech currently conducts its
business through two principal operating subsidiaries, Vyvx, Inc. and Williams
Knowledge Systems, Inc. In November 1995, WilTech acquired a 22 percent interest
in ITC, A Worldwide Telecommunications Company. The investment is expected to
expand WilTech's offerings in the videoconferencing, teleconferencing and
enhanced fax services markets. The total cost of the ITC investment, together
with the ICG Wireless and NUS Training acquisitions discussed below, is
approximately $50 million.
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VYVX, INC. (VYVX)
Vyvx offers private line fiber-optic television transmission services
nationwide. It provides private line broadcast-quality, fiber-optic television
transmission services as an alternative to satellite and microwave television
transmissions. Vyvx primarily provides backhaul transmission of news and other
programming between two or more customer locations. For example, the Vyvx
network is used for the broadcast coverage of major professional sporting
events. Vyvx's customers include all of the major broadcast and cable networks.
Vyvx also provides videoconferencing/business television services.
Vyvx has announced the acquisition of four teleports (including satellite
earth station facilities) from ICG Wireless Services. The teleports are located
in Atlanta, Denver, Los Angeles and New York (Carteret, N.J.). The acquisition
will enable Vyvx to provide both fiber-optic backhaul and satellite distribution
services. The acquisition, which is subject to certain conditions, including the
receipt of regulatory approvals, is expected to close in the first quarter of
1996.
Regulatory Matters. Vyvx is subject to FCC regulations as a common carrier
with regard to certain of its existing and future transmission services and is
subject to the laws of certain states governing public utilities. Operation of
to-be acquired satellite earth stations and certain other related transmission
facilities are also subject to FCC licensing and other regulations. These
regulations do not have a significant impact on Vyvx's operations.
Competition. Competition for Vyvx's fiber-optic television transmission
operations is derived primarily from companies offering video transmission
services by means of satellite facilities and to a lesser degree from companies
offering transmission services via microwave facilities or fiber-optic cable.
Pending telecommunications reform legislation passed by both Houses of
Congress would increase competition in the long distance market by significantly
liberalizing current restrictions on market entry. In particular, Regional Bell
Operating Companies would be permitted to provide long distance services,
including, but not limited to, video transmission services, subject to certain
restrictions and conditions precedent. Moreover, public utilities would be
permitted to provide telecommunications services, including long distance
services, through separate subsidiaries. Whether and to what extent this reform
legislation will be enacted, and any impact it may have on Vyvx, cannot be
predicted at this time.
Ownership of Property. Vyvx's fiber-optic transmission facilities are owned
in part and leased in part. Vyvx carries signals by means of its own fiber-optic
facilities, as well as carrying signals over fiber-optic facilities leased from
third party interexchange carriers and the various local exchange carriers.
Environmental Matters. Vyvx is subject to federal, state and local laws and
regulations relating to the environmental aspects of its business. Management
believes that Vyvx's operations are in substantial compliance with existing
environmental legal requirements. Management expects that compliance with such
existing environmental legal requirements will not have a material adverse
effect on the capital expenditures, earnings and competitive position of Vyvx.
WILLIAMS KNOWLEDGE SYSTEMS, INC. (WILLIAMS KNOWLEDGE SYSTEMS)
Williams Knowledge Systems provides computer-based operator training
primarily to the energy industry. Williams Knowledge Systems has licensing
agreements with over 150 customers in the oil and gas pipeline, terminal and
trucking industries.
In October 1995, Williams Knowledge Systems acquired NUS Training
Corporation. This acquisition gives Williams Knowledge Systems a large library
of video-based and multimedia training products for the chemical, refining and
utility industries plus an expanded customer base and sales force.
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RECENT DEVELOPMENTS
On January 18, 1995, Williams acquired 60 percent of Transco Energy Company
("Transco"), in a cash tender offer. The remaining 40 percent of Transco's stock
was acquired through a merger, effective May 1, 1995. Also effective May 1,
1995, Williams transferred to the Company certain natural gas gathering,
processing and marketing assets, as well as certain other assets, previously
owned by Transco.
The Company is in the process of selling or liquidating certain assets
received from Transco. The largest of these assets, Transco Coal Company, was
sold in June 1995 for $65 million in cash and up to $23 million in preferred
stock of the purchaser. Sales of the remaining noncore companies or assets are
not expected to result in material proceeds to the Company.
In the third quarter of 1994, the Company entered into an agreement with
LDDS Communications, Inc. to sell its telecommunications network services
operations for $2.5 billion in cash. On January 5, 1995, the Company closed the
transaction. The gain from the sale was reported as discontinued operations in
the 1995 first quarter financial statements. See Note 2 of the Notes to Audited
Consolidated Financial Statements of the Company.
USE OF PROCEEDS
The Company intends to apply the net proceeds from the sale of the
Debentures to repay borrowings incurred since September 30, 1995 of
approximately $150 million on the Company's revolving credit facility, with the
remainder available for general corporate purposes, including capital
expenditures of the Company. The proceeds from such revolving credit facility
were used for capital expenditures of the Company.
CAPITALIZATION
The following table sets forth the consolidated debt and stockholder's
equity of the Company at September 30, 1995, and as adjusted to give effect to
the issuance of debt securities under this Prospectus Supplement and the
accompanying Prospectus. The financial data at September 30, 1995, in the
following table are derived from the Company's consolidated financial statements
at September 30, 1995, included in the Company's Form 10/A Amendment No. 2,
which is incorporated herein by reference. See "Incorporation by Reference" in
the Prospectus.
SEPTEMBER 30, 1995
--------------------------
HISTORICAL AS ADJUSTED
---------- -----------
(IN MILLIONS)
Short-term debt:
Long-term debt due within one year........................ $ 12.8 $ 12.8
========= =========
Long-term debt:
Debentures................................................ -- 250.0
Affiliates................................................ 1.0 1.0
Other..................................................... 124.0 124.0
--------- ---------
Total long-term debt.............................. 125.0 375.0
--------- ---------
Stockholder's equity:
Common stock.............................................. -- --
Capital in excess of par value............................ 1,683.4 1,683.4
Retained earnings......................................... 413.5 413.5
Net unrealized gain on non-current marketable
securities............................................. 37.6 37.6
--------- ---------
Total stockholder's equity........................ 2,134.5 2,134.5
--------- ---------
Total capitalization.............................. $ 2,259.5 $ 2,509.5
========= =========
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DESCRIPTION OF DEBENTURES
The following description of the particular terms of the Debentures offered
hereby (referred to in the accompanying Prospectus as "Debt Securities")
supplements, and to the extent inconsistent therewith supersedes, the
description of the general terms and provisions of Debt Securities set forth in
the Prospectus, to which description reference is hereby made. Capitalized terms
not otherwise defined herein shall have the meanings given to them in the
accompanying Prospectus.
GENERAL
The Debentures will be issued under the Senior Debt Indenture and will be
limited to $250,000,000 aggregate principal amount. The Debentures will bear
interest at the rate per annum shown on the cover of this Prospectus Supplement
from February 1, 1996 or from the most recent Interest Payment Date to which
Interest has been paid or provided for, payable semiannually on February 1 and
August 1 of each year, commencing August 1 1996, to the person in whose name a
Debenture (or any predecessor Debenture) is registered at the close of business
on the January 15 or July 15, as the case may be, next preceding such Interest
Payment Date. The Debentures will mature on February 1, 2006.
The Debentures will not be subject to any sinking fund.
The Debentures will constitute senior debt of the Company and will rank
equally and pari passu with all other unsecured and unsubordinated debt of the
Company.
OPTIONAL REDEMPTION
The Debentures 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 Debentures 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 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 Debentures 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 Debentures. "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
S-10
11
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 Salomon Brothers Inc, Citicorp
Securities, Inc., Smith Barney Inc. and their respective successors; 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 Debentures 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 Debentures or
portions thereof called for redemption.
BOOK-ENTRY SYSTEM
Except as described in the Prospectus under "Description of Debt
Securities -- Registered Global Securities," owners of beneficial interests in a
Global Security will not be considered the Holders thereof and will not be
entitled to receive physical delivery of Debentures in definitive form, and no
Global Security will be exchangeable except for another Global Security of like
denomination and terms to be registered in the name of the Depositary or its
nominee.
The Depositary has advised the Company that the Depositary is a
limited-purpose trust company organized under the laws of the State of New York,
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 under the Securities Exchange Act of 1934, as amended. The Depositary
was created to hold the securities of its participants and to facilitate the
clearance and settlement of securities transactions among its participants in
such securities through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of securities
certificates. The Depositary'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 the Depositary. Access to the Depositary's book-entry
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. Persons who are not participants may
beneficially own securities held by the Depositary only through participants.
SAME-DAY FUNDS SETTLEMENT SYSTEM AND PAYMENT
Settlement for the Debentures will be made by the Underwriters in
immediately available funds. All payments of principal and interest will be made
by the Company in immediately available funds.
Secondary trading in long-term notes of corporate issuers is generally
settled in clearinghouse or next-day funds. In contrast, the Debentures will
trade in the Depositary's Same-Day Funds Settlement System until maturity, and
secondary market trading activity in the Debentures will therefore be required
by the Depositary to settle in immediately available funds. No assurance can be
given as to the effect, if any, of settlement in immediately available funds on
trading activity in the Debentures.
S-11
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UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement,
dated January 31, 1996, between the Company and the Underwriters (the
"Underwriting Agreement"), the Company has agreed to sell to each of the
Underwriters, and each of the Underwriters has severally agreed to purchase from
the Company, the principal amount of the Debentures set forth opposite its name
below.
PRINCIPAL
UNDERWRITER AMOUNT OF DEBENTURES
---------------------------------------------------------------- --------------------
Salomon Brothers Inc ........................................... $ 83,334,000
Citicorp Securities, Inc. ...................................... 83,333,000
Smith Barney Inc. .............................................. 83,333,000
------------
Total................................................. $250,000,000
============
In the Underwriting Agreement, the several Underwriters have agreed,
subject to the terms and conditions set forth therein, to purchase all the
Debentures offered hereby if any of the Debentures are purchased.
The Underwriters have advised the Company that they propose initially to
offer the Debentures to the public at the public offering price set forth on the
cover page of this Prospectus Supplement and to certain dealers at such price
less a concession not in excess of 0.40% of the principal amount of the
Debentures. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of 0.25% of the principal amount of the Debentures to
certain other dealers. After the initial public offering, the public offering
price and such concession may be changed.
The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended, or contribute to payments the Underwriters may be required to make in
respect thereof.
The Debentures will not have an established trading market when issued. The
Company has been advised by the Underwriters that they intend to make a market
in the Debentures, but the Underwriters are not obligated to do so and may
discontinue making a market in the Debentures at any time without notice. The
Company currently has no intention to list the Debentures on any securities
exchange, and there can be no assurance given as to the development or liquidity
of a trading market for the Debentures.
In the ordinary course of their respective businesses, certain of the
Underwriters and their respective affiliates have engaged in and may in the
future engage in commercial and investment banking activities with the Company
and its affiliates. Citibank, N.A., an affiliate of Citicorp Securities, Inc. is
trustee for the Debentures.
LEGAL MATTERS
Certain legal matters with respect to the Debentures are being passed upon
for the Company by J. Furman Lewis, Senior Vice President and General Counsel of
Williams, the parent of the Company, and for the Underwriters by Skadden, Arps,
Slate, Meagher & Flom, New York, New York. Mr. Lewis beneficially owns
approximately 31,897 shares of Williams' Common Stock and also has exercisable
options to purchase an additional 73,156 shares of Williams' Common Stock.
Pursuant to their By-Laws, the Company and Williams are required to indemnify
Mr. Lewis 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
Williams. The Company, through Williams, also maintains directors' and officers'
liability insurance under which Mr. Lewis is insured against certain expenses
and liabilities. Skadden, Arps, Slate, Meagher & Flom has from time to time
rendered legal advisory services to Williams and its affiliates.
S-12
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NO DEALER, SALES PERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS, IN CONNECTION WITH THE OFFER CONTAINED
IN THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR BY ANY OF THE UNDERWRITERS. NEITHER THE DELIVERY OF
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER AND
THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE OF THIS PROSPECTUS
SUPPLEMENT. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN
OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUPPLEMENT
The Company........................... S-2
Recent Developments................... S-9
Use of Proceeds....................... S-9
Capitalization........................ S-9
Description of Debentures............. S-10
Underwriting.......................... S-12
Legal Matters......................... S-12
PROSPECTUS
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
Reports to Holders of Debt
Securities.......................... 2
The Company........................... 3
Recent Developments................... 3
Use of Proceeds....................... 4
Ratio of Earnings to Fixed Charges.... 4
Selected Historical Consolidated
Financial Data of the Company....... 5
Description of Debt Securities........ 6
Limitations on Issuance of Bearer Debt
Securities.......................... 12
Plan of Distribution.................. 13
Experts............................... 14
Legal Matters......................... 14
$250,000,000
WILLIAMS HOLDINGS OF
DELAWARE, INC.
6 1/4% SENIOR DEBENTURES DUE 2006
SALOMON BROTHERS INC
CITICORP SECURITIES, INC.
SMITH BARNEY INC.
PROSPECTUS SUPPLEMENT
DATED JANUARY 31, 1996