AT&T CORP
424B3, 1998-05-13
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)
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PROSPECTUS

Shareowner Dividend Reinvestment and Stock Purchase Plan

The Shareowner  Dividend  Reinvestment and Stock Purchase Plan ("Plan") provides
owners of common  shares of AT&T  Corp.  ("AT&T")  with a  convenient  method of
purchasing additional shares.

Cash  dividends  on  shares  held  in  a  participant's   Plan  account  may  be
automatically  reinvested to purchase additional common shares.  Under the Plan,
additional shares may also be purchased with supplemental cash.

At the option of AT&T,  shares  purchased by  reinvestment  of dividends or with
supplemental  cash  under  the Plan may be  purchased  in the open  market by an
independent agent, may be newly issued shares, or a combination of both.

The price of common shares  purchased from AT&T will be the average of the daily
high and low sale  prices  of  shares  traded  on the New  York  Stock  Exchange
("NYSE") for the period of five trading  days ending on the purchase  date.  The
price of common  shares  purchased in the open market will be the average  price
paid by the independent agent to obtain them.

AT&T trades on the NYSE under the ticker symbol "T".

NEITHER   THE    SECURITIES    AND   EXCHANGE    COMMISSION    NOR   ANY   STATE
SECURITIESCOMMISSION  HAS APPROVED OR DISAPPROVED OF THESE  SECURITIES OR PASSED
UPON THE  ADEQUACY OR  ACCURACY OF THIS  PROSPECTUS.  ANY  REPRESENTATON  TO THE
CONTRARY IS A CRIMINAL OFFENSE.

Dated May 1, 1998


<PAGE>


Table of Contents

                                            Page
The Company                                     i
Summary of Plan                                 1
         Highlights                             1
         Features & Benefits                    2
Provisions of the Plan                          3
         Plan Forms                             3
         How to Enroll                          3
         Dividend Reinvestment Options          3
         Cash Purchase Options                  6
         Price of Shares                       10
         Costs                                 11
         Certificate Issuance                  12
         Statement of Account                  13
         Withdrawal of Shares                  14
         Sale or Transfer of Shares            15
         Termination                           16
         Change of Address                     18
         Tax Consequences                      19
Where You Can Find More Information            21
Incorporation of Documents
by Reference                                   22
Use of Proceeds                                24
Description of Common Shares of AT&T           25
Certain Preferential Rights of Holders
of Preferred Shares                            25
Experts                                        26
Legal Opinion                                  26
Indemnification of Directors and Officers      26


THE COMPANY

AT&T was  incorporated  in 1885  under the laws of the State of New York and has
its principal executive offices at 32 Avenue of the Americas, New York, New York
10013-2412, telephone number 212-387-5400.


                                       i

<PAGE>



How To Reach Us

For  information  about  the  Plan,  to  request  Plan  forms or  copies of this
prospectus visit the AT&T website at http://www.att.com/ir

or call Boston EquiServe toll free:

1-800-348-8288

Outside the continental United States,
call collect 781-575-3777

Persons using a telecommunications device for the deaf (TDD),
call 1-800-822-2794

All correspondence concerning the Plan should be mailed to:

AT&T
c/o Boston EquiServe
P.O. Box 8035
Boston, MA 02266-8035

Please  include  your  account  number  on all  correspondence,  checks or money
orders,  together  with a  telephone  number  where  you can be  reached  during
business hours.

To remit supplemental cash payments:

Send a check or money order payable to AT&T in U.S. dollars to:

AT&T
c/o Boston EquiServe
P.O. Box 370042
Boston, MA 02241-0742

                                       ii

<PAGE>


SUMMARY OF THE PLAN

Highlights

This prospectus  describes the AT&T Shareowner  Dividend  Reinvestment and Stock
Purchase Plan, including amendments that are effective June 1, 1998. The Plan is
available to shareowners who own shares of AT&T common stock registered directly
with AT&T.

If your AT&T shares are being held by your broker, you may enroll in the Plan by
having your shares  transferred  from your broker to you. If you do not own AT&T
shares at this time,  you would need to  purchase  your  initial  shares  from a
broker and have the shares transferred to you.

The Plan offers convenient  reinvestment options you may select to automatically
increase the number of AT&T common shares you own,  including the  investment of
interest and dividends paid on other AT&T securities. As a Plan participant, you
may also purchase  additional shares with cash. In either case you automatically
receive, at the discretion of AT&T, newly issued shares, shares purchased in the
open market by an independent agent, or a combination of both.

AT&T may change,  suspend or  terminate  the Plan at any time.  You will receive
written  notification of any significant  changes as long as you are enrolled in
the Plan.


Plan Administrator

AT&T has  designated its  shareowner  services  agent,  Boston  EquiServe  Trust
Company,  N.A., as Plan  Administrator to keep records,  send statements of your
account and perform other duties relating to the Plan.

Participation in the Plan is voluntary. You may enroll or end your participation
any time you wish. Please read the information in this prospectus  carefully and
keep it for future reference.

Features and Benefits

Reinvest all or part of your dividends, conveniently and economically
- - Purchase additional shares with cash, as often as weekly ($100 min. - $250,000
  annual  max.)
- - Utilize  electronic  funds  transfer  from  your  bank  account for  automatic
  monthly purchases of shares
- - Sell your shares with a simple phone call
- - Deposit share  certificates  in safekeeping (for shares  enrolled in the Plan)
- - Track your purchases with simple statements
- - Enroll or change your Plan options by  phone
- - Pay  no  brokerage   commissions  on  share  purchases
- - Start  your participation with as little as one share
- - Build your investment systematically


<PAGE>


PROVISIONS OF THE PLAN

The following is a statement of the provisions of the Plan.

Plan Forms

All required forms are available on the AT&T website at http://www.att.com/ir or
from the Plan Administrator by calling 1-800-348-8288.

Please refer to page ii for additional contact information.

1. How do I enroll in the Plan?

How to Enroll

If you own at least  one  share*  of AT&T  common  stock,  you are  eligible  to
participate in the Plan. Complete and sign an Enrollment  Authorization Form and
mail it along with your  certificate(s)  for  safekeeping to the address on page
ii,  or  call  the  Plan  Administrator.  If you  prefer,  you may  retain  your
certificate(s).  You will receive an  enrollment  confirmation  at the option of
AT&T.

*Shares registered in your name and not in the name of a broker or bank.

2. What dividend reinvestment options are available to me?

Dividend Reinvestment Options

You may acquire  additional common shares under the Plan by participating in one
of the following reinvestment options:

Full dividend reinvestment
The Plan  provides  the  opportunity  to  purchase  additional  AT&T  shares  by
investing  the  dividends  on all the shares you own.  Instead of sending  you a
dividend  check,  the Plan  Administrator  will use your  dividend  to  purchase
additional  shares of common stock and credit  whole  shares and any  fractional
share  to your  account.  Future  dividends  will be  calculated  on your  total
holdings  of both whole  shares  and any  fractional  share,  for as long as you
participate in the Plan.

Partial Dividend Reinvestment
You  may  reinvest  dividends  on a  partial  number  of the  shares  you own by
enrolling  some shares in the Plan and  continuing to receive cash  dividends on
the remaining shares.

3. When will the reinvestment of my dividends begin?

When Reinvestment Begins

Your dividends will be reinvested with the first dividend payment following your
enrollment,  provided  there  is  sufficient  time for  processing  prior to the
dividend  record date.  Historically,  dividend  record dates have been the last
business day of March, June,  September and December.  Otherwise,  your dividend
reinvestment  participation  will be deferred  until the next  dividend  payment
cycle.

<PAGE>

4. When will  shares  purchased  with  reinvested  dividends  be  credited to my
account?

Crediting of Plan Accounts

When shares are purchased from AT&T,  shares will be credited to your account on
the dividend  payment  date.  When shares are purchased in the open market by an
independent  agent,  shares  will be credited  to your  account on the  dividend
payment  date,  or  on  the  date  the  independent   agent  notifies  the  Plan
Administrator  that the purchase of shares is completed,  if the purchase period
extends  beyond the dividend  payment date. The date that shares are credited to
your account is considered the purchase date.

The independent  agent will be obligated to purchase shares  promptly.  However,
purchases  may be made  beginning on the 5th trading day  preceding any dividend
payment  date and  will be  completed  by the 10th  trading  day  following  the
dividend payment date.

5. How do I change my options?

To Change Options

You  may  change  your  reinvestment  option  at  anytime  by  submitting  a new
Enrollment Authorization Form, or by calling the Plan Administrator.

6. How can I purchase additional shares?

Cash Purchase Options

In addition to your dividend  reinvestment  options, you may purchase additional
shares under the Plan with cash. This can be done by:

oMailing a check or money order for at least $100 at any time -- purchases  will
be  made  during  the  following  week  oAuthorizing  monthly  electronic  funds
transfers  from your bank  account  oReinvesting  interest or dividends on other
AT&T securities

Specific instructions for each option are described in questions 7, 8 and 9.

Minimum and Maximum Investment

Each check,  money order or electronic funds transfer must be at least $100, and
the total amount of any optional  payments must not be more than $250,000 during
any  calendar  year.  The  calendar  year  limitation  is based on when the Plan
Administrator  receives the cash payments and not when they are used to purchase
shares.  Cash  payments in excess of $250,000 or less than $100 will be refunded
or returned, without interest.

Insufficient Funds

If the Plan  Administrator  receives  a cash  payment  that is  returned  due to
insufficient  funds, any shares purchased in anticipation of receiving the funds
will be removed from your account and sold. If the net proceeds from the sale of
the shares are insufficient to satisfy the balance of uncollected  amounts,  the
Plan  Administrator  may sell  additional  shares from your account as needed to
satisfy the  uncollected  balance.  In addition,  an  insufficient  funds fee of
$25.00 will be  charged.  The Plan  Administrator  may place a hold on your Plan
account until the fee is received from you, or may sell shares from your account
to satisfy the amount.

<PAGE>

7. How do I purchase shares with a cash payment?

Cash Purchase

You may send a check or money order, payable to AT&T in U.S. dollars, along with
a signed authorization or Supplemental Payment Form to the Plan Administrator. A
statement for each cash payment will be sent to you together with a Supplemental
Payment  Form you may use to make  another  payment.  Please be sure to indicate
your account number on the face of the check or money order.

Checks or money orders must be mailed to AT&T, c/o Boston  EquiServe,  P. O. Box
370042,  Boston, MA 02241-0742.  Delivery to any other address and/or failure to
use the proper form will not be  considered a valid  delivery.  Neither AT&T nor
the Plan  Administrator  is  responsible  for cash  payments  mailed to  another
address.  Please  note that  postdated  checks  cannot be  accepted  toward  the
purchase  of shares.  All checks  will be  processed  as they are  received  and
interest will not be paid on cash held prior to the purchase date.

8. How can I take  advantage of  electronic  funds  transfer of cash to purchase
shares?

Electronic Funds Transfer

You may make monthly cash  payments for share  purchases  via  electronic  funds
transfer  by  instructing  the  Plan  Administrator  to  arrange  for  automatic
deductions from your account at a qualified financial  institution in the United
States.  Simply complete,  sign and return an Automatic Debit Authorization Form
to the Plan  Administrator.  Automatic  debits must be at least $100 per payment
and cannot exceed $250,000 in a calendar year. Your bank account will be debited
on the 25th of each month (or the  preceding  business  day if the 25th is not a
business  day).  The  purchase  and  crediting  of your  account will be made in
accordance with the weekly cash purchase schedule (see Question 10).

You can change or stop the automatic  payments by completing and returning a new
form.


9. How do I use  interest  or  dividends  on other AT&T  securities  to purchase
common shares?

Reinvestment of Interest & Dividends on Other AT&T Securities

If you are  enrolled in the Plan and are a holder of record of AT&T  debentures,
bonds,  notes or preferred  shares (if such shares are issued in the future) you
may  automatically  reinvest the interest and dividends paid on these securities
to acquire  additional AT&T common shares.  Simply return the completed Interest
Payment Dividend  Reinvestment Form and/or Preferred Dividend  Reinvestment Form
to the Plan Administrator.

Interest or preferred  dividends are considered  cash payments and, as such, are
subject to the $100  minimum and  $250,000  yearly  maximum  investment  limits.
Interest and preferred share  dividends,  payable on the first day of the month,
will be reinvested during the next week's purchase  schedule.  Purchases will be
shown on your next Statement of Account.

10. If I choose to acquire  additional shares with cash payments when will these
shares be purchased and credited to my account?

<PAGE>

Timing of Shares Purchased with Cash

Funds  received  by  Friday of each week  will be used to  purchase  shares  the
following week. The shares  purchased each week will be credited to your account
on the third trading day following the purchase date.  When shares are purchased
from AT&T, the purchase date will be each Tuesday.  When shares are purchased in
the open  market,  an  independent  agent may  purchase the shares over a period
beginning  each  Tuesday  (or the  next  trading  day if the NYSE is  closed  on
Tuesday) and ending on Friday of the same week. In this case,  the purchase date
will be the last date shares are purchased by the independent agent.

11. At what price will common shares be purchased under the Plan?

Price of Shares

The price of common  shares  purchased in market  transactions  under either the
dividend  reinvestment or cash purchase option will be the average price paid by
the independent agent to obtain them.

The price of shares  purchased  from AT&T under the Plan will be the  average of
the daily high and low sale prices for AT&T common shares traded on the NYSE for
five trading days ending on the purchase  date (or a period of five trading days
immediately  preceding the purchase date if the NYSE is closed on that date). If
there is no trading of the shares on the NYSE for a  substantial  period of time
during any  trading day in the period,  AT&T will  determine  the price based on
market  quotations it believes are  appropriate.  No shares will be sold by AT&T
under the Plan for less than the par value of each share.

12. Are there any costs involved to participate in the Plan?

Costs

Depending on the option you select, the following  transaction fees are deducted
from the amount to be  invested  (in the case of dividend  reinvestment  or cash
purchases) or from the proceeds of any sale of shares:  oDividend Reinvestment -
$1.00 or 10% of the total investment you make,  whichever is less oCash purchase
of  additional  shares-  $5.00 per purchase oFor each sale of shares held in the
Plan,  there is a fee of $20.00  per  sale.  This fee  applies  to the sale of a
portion or all of the shares held in the Plan

AT&T pays all  brokerage  commissions  for  purchases  of shares.  However,  the
Internal  Revenue  Service   considers  such  fees  to  be  dividend  income  to
participants.

13. How many common shares will I receive?

Number of Shares Purchased

The number of whole shares and any fractional  share  (computed to three decimal
places)  credited to your account  will be based on how much you are  investing,
minus  applicable  fees,  divided  by the  purchase  price of the  shares.  This
calculation applies to shares purchased with cash or reinvested dividends.

14. Will I be sent certificates for the additional common shares purchased under
the Plan?

<PAGE>

Certificate Issuance

For your  convenience  and to  protect  against  loss,  destruction,  or  theft,
certificates  will not be issued  automatically  for shares  purchased under the
Plan.

However,  if you wish,  you may  request  certificates  for any  number of whole
shares held in your Plan account.  Certificates  will be issued within two weeks
after receipt of a telephone or written  request,  signed by you (or, if a joint
registration, by at least one person). Any remaining whole shares and fractional
share will continue to be held in your account.  A certificate  for a fractional
share will not be issued under any circumstances.

Shares held in a Plan  account  may not be pledged as security  for payment of a
debt or other obligation.  If you wish to pledge shares, you must request that a
certificate be issued in your name.

An  institution  that is  required  by law to maintain  physical  possession  of
certificates   may  make  special   arrangements   regarding   the  issuance  of
certificates. Such requests should be mailed to the Plan Administrator.

15. In whose name will certificates be registered when issued?

Certificate Registration

Unless you request a change,  certificates will be registered in the name of the
person(s) enrolled in the Plan. To change the name(s) on the certificate, please
call  the  Plan   Administrator,   or  access  the  AT&T  website  for  transfer
instructions.

16. How will I keep track of my account activities?

Statement of Account

A  Statement  of  Account  will  be  sent  to  you   periodically  by  the  Plan
Administrator showing amounts invested,  purchase prices, shares purchased, fees
and other information for the year to date. An additional statement will also be
issued if you purchase  shares with cash payments,  withdraw shares or terminate
your  participation in the Plan during a month in which a periodic  statement is
not issued.  All shares held in the Plan, in certificate  form or in safekeeping
with the Plan Administrator,  or its nominee, will be shown on your Statement of
Account.

Other   materials   you  will  receive   include  the  Plan   prospectus,   plus
communications  sent to every registered  shareowner,  including the AT&T Annual
Report,  Notice  of Annual  Meeting  and Proxy  Statement,  as well as  periodic
reports  that AT&T may  issue.  If you do not wish to receive  these  additional
materials please contact
the Plan Administrator.

17. Do I need to keep my statements?

Statement Retention

Yes. The statements you receive reflect the purchase price of your shares.  This
price is needed to  determine  your tax  basis.  It is  important  to retain the
statements for income tax purposes.

18. If I wish to  withdraw  some of my shares  from the Plan,  may I continue to
participate in the Plan?

<PAGE>

Withdrawal of Shares From the Plan

Yes. You may request a  withdrawal  of any number of whole shares from the Plan,
at any time,  by simply  notifying  the Plan  Administrator  by  telephone or in
writing.  Without  cost to you, a  certificate  will be issued for the number of
whole shares requested. The remaining whole shares and any fractional share will
be retained in your account as long as you participate in the Plan. To remain in
the Plan you must keep at least one whole share enrolled in the Plan.

19. Can I sell or transfer some of my shares while participating in the Plan?

Sale or Transfer of Shares

Yes.  You can sell or transfer  some of the shares you have  accumulated  in the
Plan by  calling  or by  sending a written  request  to the Plan  Administrator.
However,  you must  leave at least  one  whole  share in the Plan if you wish to
continue your participation. AT&T will continue to reinvest the dividends on the
remainder  of the  shares  enrolled  in the  Plan and you may  continue  to make
supplemental cash purchases.  If you wish to transfer shares, you need to obtain
and complete transfer  instructions and mail them to the Plan Administrator.  If
you wish to  sell,  the Plan  Administrator  will  sell  your  shares,  using an
independent broker, as soon as is practicable after receipt of your request.

If you are selling your shares, you should be aware that share prices might fall
during  the  period  between  the  request  for sale,  its  receipt  by the Plan
Administrator  and the  ultimate  sale on the open  market.  This is risk  borne
solely by you and should be carefully evaluated.

Please  understand that the Plan  Administrator is not a broker and,  therefore,
cannot accept instructions to sell on a particular day or at a particular price.
If you prefer to have control over the exact price and timing of your sale,  you
will need to withdraw the shares you wish to sell and conduct  that  transaction
through a broker of your choice.

A fee will be  deducted  to cover  processing  costs for the sale of shares (see
Question 12).

20. How do I terminate my participation in the Plan?

Termination

When you wish to terminate your  participation in the Plan, you may call or send
a written  request  to the Plan  Administrator  who will  issue,  at no cost,  a
certificate for whole shares held in your account. A check will be issued to you
for any fractional share and your Plan account will be closed.

To terminate your participation  prior to a specific dividend payment,  the Plan
Administrator  must receive  your  request not later than the last  business day
preceding the dividend payment date.

Termination and Sale

You may also instruct the Plan  Administrator to terminate your participation in
the Plan,  sell your shares and send the  proceeds to you.  See  Question 19 for
sale instructions.

<PAGE>

Processing

If your  termination  or  termination  and sale  request  is  received  during a
dividend  payment  cycle,  your request will be  processed  after your  dividend
shares are credited to your Plan account.  Terminations  of either type will not
be processed between the dividend payment date and the date your dividend shares
are  credited  to your  account.  Normally,  this  period  does not exceed  five
business days; however, it may be as many as ten business days.

21. If AT&T has a rights offering, how will my entitlement be computed?

Rights Offering

Your  entitlement  will be  based  on your  total  holdings.  However,  a rights
certificate will be issued for the number of whole shares only.  Rights based on
a fraction of a share will be sold and a check for the net proceeds will be sent
to you.

22. How will my Plan account be affected if AT&T declares a stock split or stock
dividends?

Stock Split or Stock Dividend

If your shares are being held in safekeeping by the Plan Administrator, Dividend
your account will be credited with the appropriate  number of shares distributed
as a result of a stock dividend or stock split on the distribution  date. If you
hold share certificates,  additional  certificates will be mailed to you for the
shares distributed.


23. How will I vote my shares at shareowners meetings?

Voting

One  card  will  be  mailed  to  you  covering  all  shares  held  by  the  Plan
Administrator,  as well as any other shares for which you hold a certificate(s).
This card will be either a proxy voting card for certificate shares, or a voting
instruction card for shares held by the Plan Administrator. Whole shares will be
voted in  accordance  with  instructions  given on the proxy  voting/instruction
card. A fractional share will not be voted in any case.

You may vote your shares by mail, by telephone or on the Internet. If you do not
return  your card or vote by  telephone  or  Internet,  your  shares will not be
voted.

24. Might the Plan be changed or discontinued?

Plan Changes

AT&T may change,  suspend or  terminate  the Plan at any time.  You will receive
notification of any significant changes as long as you participate in the Plan.

25. Who do I notify if my address changes?

<PAGE>

Change of Address

The Plan Administrator  should be notified immediately of any change of address.
You may also change your address on the AT&T website.

Most  states  have laws  regarding  abandoned  property  that  require  the Plan
Administrator,  on behalf of AT&T,  to turn over to the states all Plan  account
holdings of owners who cannot be located. It is your responsibility to have your
current address on file with the Plan Administrator.

26. What are the Federal income tax consequences relating to my participation in
the Plan?

Tax Consequences

AT&T  believes  that the  following  summarizes  the  U.S.  Federal  income  tax
consequences of participation in the Plan. You are urged to consult your own tax
advisor to determine the particular tax  consequences of your  participation  in
the Plan and the subsequent sale of your shares.

Taxable Dividend Income

In the case of shares  purchased  in open market  transactions  with  reinvested
dividends,  you will have  reportable  dividend income in an amount equal to the
cash dividend declared plus any brokerage fees paid by AT&T.

In the case of shares  purchased from AT&T with reinvested  dividends,  you will
have  reportable  dividend income in an amount equal to the fair market value of
the shares you receive. For these purposes, the fair market value will generally
be the average of the high and low price of the shares traded on the NYSE on the
dividend payment date.

If  additional  shares are  purchased  in open  market  transactions  with cash,
interest  from debt  securities  or preferred  shares  dividends,  you will have
reportable  dividend  income in an amount  equal to the  brokerage  fees paid by
AT&T. If such  consideration  is used to purchase shares from AT&T, you may have
additional reportable dividend income to the extent the fair market value of the
shares on the date of purchase exceeds the actual cost of purchase.

Tax Basis

Your tax basis in shares acquired with reinvested dividends will generally equal
the amount treated as a dividend.  Your tax basis in shares  acquired with cash,
interest from debt  securities,  or preferred  shares  dividends  will generally
equal the amount  invested in the shares,  increased by any additional  dividend
amount recognized on the purchase of such shares.

Holding Period

Your  holding  period for shares  acquired  under the Plan will begin on the day
such shares are credited to your account.

Gain or Loss on Sale of Shares

You will  generally not realize gain or loss upon  withdrawal of shares from the
Plan in certificate form. Gain or loss will generally be realized on the sale of
shares in the Plan in an amount equal to the difference  between the proceeds of
the sale and the tax basis in such shares.

<PAGE>

Withholding Taxes

In the case of certain foreign shareowners and Plan participants whose dividends
are subject to backup  withholding,  the tax required to be withheld will reduce
the amount available for reinvestment.

27. What are the  responsibilities  of AT&T and the Plan Administrator under the
Plan?

Responsibilities

Neither AT&T nor the Plan  Administrator  is liable for any action taken in good
faith or for failure to act in good faith.  This includes,  without  limitation,
any claim of liability  arising  from  failure to terminate an account  prior to
receipt of a notice in writing of a participant's death.

Please be aware that neither AT&T nor the Plan Administrator can assure you of a
profit or protect you against a loss on shares purchased under the Plan.

Although the Plan contemplates the continuation of quarterly  dividend payments,
the payment of future dividends will depend upon future earnings,  the financial
condition of AT&T and other factors.


WHERE YOU CAN FIND MORE INFORMATION

AT&T files annual,  quarterly and special  reports,  proxy  statements and other
information with the Securities Exchange  Commission  ("SEC").  You may read and
copy any reports,  statements or other  information that AT&T files with the SEC
at the SEC's public reference rooms in Washington,  D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public  reference  rooms.  These SEC  filings are also  available  to the
public from commercial  document  retrieval services and at the Internet website
maintained by the SEC at  http://www.sec.gov/.  Reports,  proxy  statements  and
other information  should also be available for inspection at the offices of the
NYSE.

INCORPORATION OF DOCUMENTS BY REFERENCE

The  SEC  allows  AT&T to  "incorporate  by  reference"  information  into  this
prospectus,  which means that AT&T can disclose important  information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is considered part of this prospectus,  except for any
information superseded by information contained directly in this prospectus,  or
in later filed documents incorporated by reference in this prospectus.

This  prospectus  incorporates  by reference  the documents set forth below that
AT&T has  previously  filed  with the SEC (File  No.  1-1105).  These  documents
contain important information about AT&T and its finances. Some of these filings
have been amended by later filings, which are also listed.

Filings               Period or Date of Report
Annual Report on      Year ended
Form 10-K             December 31, 1997

Current Reports       January 8 and
on Form 8-K           March 2, 1998

<PAGE>

This prospectus also incorporates by reference  additional documents that may be
filed with the SEC after the date of this  prospectus and during the period that
AT&T continues the Plan. These include periodic reports,  such as Annual Reports
on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as
well as proxy  statements.  Any document listed above or  subsequently  filed by
AT&T in each year  during  which AT&T  operates  the Plan prior to the filing by
AT&T  of  its  Annual  Report  on  Form10-K  covering  such  year  is no  longer
incorporated by reference in, or considered part of this  prospectus,  after the
filing of such Annual Report on Form 10-K.

AT&T may have sent you some of the documents  incorporated  by reference in this
prospectus,  but you can obtain any of them through  AT&T,  the SEC or the SEC's
Internet  website as described  above.  Documents  incorporated by reference are
available from AT&T without charge, excluding all exhibits,  except that if AT&T
has specifically  incorporated by reference an exhibit in this  prospectus,  the
exhibit  will  also  be  available  without  charge.  You may  obtain  documents
incorporated   by  reference  in  this  prospectus  from  the  AT&T  website  at
http://www.att.com/ir or from AT&T, c/o Boston EquiServe, P.O. Box 8035, Boston,
MA 02266-8035 (telephone number 800-348-8288).

You should rely only on the  information  contained or incorporated by reference
in  this  prospectus.  AT&T  has not  authorized  anyone  to  provide  you  with
information that is different from what is contained in this prospectus.

This prospectus is dated May 1, 1998. You should not assume that the information
contained  in this  prospectus  is accurate as of any date other than that date.
Neither the mailing of this  prospectus  to you nor the  issuance of AT&T common
shares under the Plan creates any implication to the contrary.

This  prospectus  does 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.

USE OF PROCEEDS

AT&T does not know either the number of shares,  if any, that it ultimately will
issue under the Plan or the prices at which shares will be sold. When shares are
purchased  from  AT&T,  proceeds  from such  sales are  intended  to be used for
capital  expenditures,  advances to subsidiary  companies,  equity investment in
such companies, toward repayment of debt and for general corporate purposes.

DESCRIPTION OF COMMON SHARES OF AT&T

The following descriptions are summarized from the provisions of the certificate
of incorporation of AT&T, as amended.

All common  shares (par value $1 per share) of AT&T are entitled to  participate
equally in dividends.  Each shareowner has one vote for each share registered in
the shareowner's name. All common shares would rank equally on liquidation,  and
common shares  including common shares offered under the Plan are fully paid and
nonassessable by AT&T. Holders of common shares have no pre-emptive rights.

AT&T is  authorized  to issue  new  common  shares  under  the Plan and  various
employee benefit plans of AT&T and its subsidiaries.

<PAGE>

CERTAIN PREFERENTIAL RIGHTS OF HOLDERS OF PREFERRED SHARES

AT&T's  authorized  capital  includes a class of 100,000,000  preferred  shares,
issuable in series,  cumulative as to dividends and having an authorized maximum
liquidation preference of $8,000,000,000. The preferred shares rank prior to the
common  shares both as to dividends and on  liquidation.  There are no preferred
shares  issued and  outstanding.  AT&T's  Board of Directors  is  authorized  to
establish the number of shares,  designations,  relative rights,  preference and
limitations,  including  voting and conversion  rights,  of any future series of
preferred shares.

EXPERTS

The  consolidated  financial  statements and  consolidated  financial  statement
schedules of AT&T and its subsidiaries  incorporated by reference or included in
the Annual Report on Form 10-K for the year ended  December  31,1997,  have been
incorporated herein in reliance on the reports of Coopers & Lybrand, independent
auditors,  given on the  authority  of that firm as  experts in  accounting  and
auditing.


LEGAL OPINION

The  legality  of the AT&T  common  shares to be issued  under the Plan is being
passed upon for AT&T by Marilyn Wasser, Vice President Law and Secretary of AT&T
who as of March 31, 1998,  owned 2,171  common  shares of AT&T and had rights to
acquire 70,093 additional common shares of AT&T.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

Pursuant to the  statutes  of the State of New York,  a director or officer of a
corporation is entitled,  under specified  circumstances,  to indemnification by
the corporation against reasonable expenses, including attorney's fees, incurred
by him in connection with the defense of a civil or criminal proceeding to which
he has been made,  or  threatened to be made, a party by reason of the fact that
he was such director or officer. In certain circumstances, indemnity is provided
against   judgments,   fines  and  amounts  paid  in  settlement.   In  general,
indemnification  is available where the director or officer acted in good faith,
for a  purpose  he  reasonably  believed  to be in  the  best  interests  of the
corporation.  Specific court  approval is required in some cases.  The foregoing
statement is subject to the detailed  provisions of Sections 715, 717, and 721 -
725 of the New York Business Corporation Law ("BCL").

The AT&T  By-laws  provide  that  AT&T is  authorized,  by (i) a  resolution  of
shareholders, (ii) a resolution of directors or (iii) an agreement providing for
such  indemnification,  to the fullest  extent  permitted by applicable  law, to
provide indemnification and to advance expenses to its directors and officers in
respect of claims,  actions,  suits or  proceedings  based upon,  arising  from,
relating to or by reason of the fact that any such director or officer serves or
served in such capacity with AT&T or at the request of AT&T in any capacity with
any other enterprise.

AT&T has entered into contracts with its officers and directors, pursuant to the
provisions  of BCL Section 721, by which it will be obligated to indemnify  such
persons,  to the fullest extent  permitted by the BCL, against  expenses,  fees,
judgments,  fines and amounts paid in settlement in connection  with any present
or future threatened,  pending or completed action,  suit or proceeding based in
anyway  upon or related to the fact that such  person was an officer or director

<PAGE>

of AT&T or, at the  request of AT&T,  an  officer,  director  or other  partner,
agent,   employee   or   trustee   of  another   enterprise.   The   contractual
indemnification so provided will not extend to any situation where a judgment or
other final  adjudication  adverse to such person establishes that his acts were
committed in bad faith or were the result of active and deliberate dishonesty or
that the reinured to such person a financial profit or other advantage.

Insofar as indemnification  for liabilities  arising under the Securities Act of
1933, as amended, (the "Act") may be permitted to directors and officers of AT&T
pursuant to the foregoing BCL provisions,  the indemnity contract, or otherwise,
AT&T has been  advised  that in the opinion of the SEC such  indemnification  is
against public policy as expressed in the Act and is, therefore, unenforceable.

The  directors   and  officers  of  AT&T  are  covered  by  insurance   policies
indemnifying  against certain  liabilities arising under the Act, which might be
incurred by them in such capacities.


(C) AT&T 1998
Printed on recycled paper.
ATT-PROS-598




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