<PAGE> 1
Filed Pursuant to Rule 424(b)(2)
Registration No. 333-71167
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED FEBRUARY 26, 1999) [AT&T LOGO]
$8,000,000,000
AT&T CORP.
$2,000,000,000 5.625% NOTES DUE 2004
$3,000,000,000 6.000% NOTES DUE 2009
$3,000,000,000 6.500% NOTES DUE 2029
------------------
The 2004 notes will mature on March 15, 2004, the 2009 notes will mature on
March 15, 2009, and the 2029 notes will mature on March 15, 2029. Interest on
the notes is payable semiannually on September 15 and March 15, beginning
September 15, 1999. We may redeem some or all of the notes at any time. We
describe the redemption price under the heading "Description of the Notes --
Optional Redemption" on page S-9 of this prospectus supplement.
AT&T has applied to have the notes listed on the New York Stock Exchange
and the Luxembourg Stock Exchange.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement or the related prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
------------------
<TABLE>
<CAPTION>
PUBLIC OFFERING UNDERWRITING PROCEEDS TO
PRICE DISCOUNT AT&T
--------------- -------------- --------------
<S> <C> <C> <C>
Per 2004 Note 99.532% 0.350% 99.182%
Total $1,990,640,000 $7,000,000 $1,983,640,000
Per 2009 Note 99.765% 0.450% 99.315%
Total $2,992,950,000 $13,500,000 $2,979,450,000
Per 2029 Note 98.936% 0.875% 98.061%
Total $2,968,080,000 $26,250,000 $2,941,830,000
-------------- -------------- --------------
Combined Total $7,951,670,000 $46,750,000 $7,904,920,000
(before expenses)
</TABLE>
Interest on the notes will accrue from March 26, 1999 to the date of
delivery.
------------------
The underwriters are offering the notes subject to various conditions. The
underwriters expect to deliver the notes, in book-entry form only, to purchasers
through The Depository Trust Company, Cedelbank or the Euroclear System, as the
case may be, on or about March 26, 1999.
------------------
JOINT BOOK-RUNNING MANAGERS
MERRILL LYNCH & CO. SALOMON SMITH BARNEY
BLAYLOCK & PARTNERS, L.P.
BNY CAPITAL MARKETS, INC.
CHASE SECURITIES INC.
DEUTSCHE BANK SECURITIES
FIRST CHICAGO CAPITAL MARKETS, INC.
LEHMAN BROTHERS
J.P. MORGAN & CO.
NATIONSBANC MONTGOMERY
SECURITIES LLC
March 23, 1999
<PAGE> 2
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. WE HAVE NOT, AND THE
UNDERWRITERS HAVE NOT, AUTHORIZED ANY OTHER PERSON TO PROVIDE YOU WITH DIFFERENT
INFORMATION. IF ANYONE PROVIDES YOU WITH DIFFERENT OR INCONSISTENT INFORMATION,
YOU SHOULD NOT RELY ON IT. WE ARE NOT, AND THE UNDERWRITERS ARE NOT, MAKING AN
OFFER TO SELL THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS
NOT PERMITTED. YOU SHOULD ASSUME THAT THE INFORMATION APPEARING IN THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS, AS WELL AS INFORMATION WE PREVIOUSLY
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND INCORPORATED BY REFERENCE,
IS ACCURATE AS OF THE DATE ON THE FRONT COVER OF THIS PROSPECTUS SUPPLEMENT
ONLY. OUR BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS AND PROSPECTS MAY
HAVE CHANGED SINCE THAT DATE.
---------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AT&T Corp. ................................................. S-3
Strategic Overview.......................................... S-3
Summary Historical and Pro Forma Financial Data............. S-5
Ratio of Earnings to Fixed Charges.......................... S-8
Use of Proceeds............................................. S-8
Description of the Notes.................................... S-8
Clearing and Settlement..................................... S-15
United States Tax Considerations............................ S-16
Underwriting................................................ S-19
Legal Opinions.............................................. S-21
Experts..................................................... S-22
Special Note Regarding Forward-Looking Statements........... S-23
Where You Can Find More Information......................... S-23
General Information......................................... S-24
</TABLE>
PROSPECTUS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
About this Prospectus....................................... 2
Where You Can Find More Information......................... 2
AT&T Corp. ................................................. 3
Use of Proceeds............................................. 4
Ratio of Earnings to Fixed Charges.......................... 4
Description of Debt Securities.............................. 5
Description of the Warrants................................. 9
Plan of Distribution........................................ 10
Legal Opinions.............................................. 11
Experts..................................................... 11
Glossary.................................................... 13
</TABLE>
The Luxembourg Stock Exchange takes no responsibility for the contents of
this document, makes no representation as to its accuracy or completeness and
expressly disclaims any liability whatsoever for any loss howsoever arising from
or in reliance upon the whole or any part of the contents of this prospectus
supplement and related prospectus.
In this prospectus supplement "we," "our," "us," and "AT&T" refer to AT&T
Corp. and its consolidated subsidiaries.
S-2
<PAGE> 3
AT&T CORP.
AT&T is among the world's communications leaders, providing voice, data and
video services to large and small businesses, consumers and government agencies.
We provide regional, domestic, international, local and Internet communication
services, including cellular telephone and other wireless services. We segment
our results by primary lines of business: business services, consumer services
and wireless services. A fourth category, other and corporate, includes the
results of other units and our corporate cost centers.
Business Services. Our business services segment offers a variety of long
distance voice and data services, including domestic and international, inbound
and outbound, inter- and intra-LATA toll services, calling card and
operator-handled services, and other network enabled services, to business
customers. In addition, the business services segment provides local services,
Web hosting and other electronic commerce services.
Consumer Services. Our consumer services segment provides long distance
services to residential customers. These services include domestic and
international long distance services, inter- and intra-LATA toll services,
calling card and operator-handled calling services, and prepaid calling cards.
In addition, local service is offered on a limited basis.
Wireless Services. Our wireless services segment offers wireless voice
services and products to customers in 850 MHz markets and newer 1900 MHz markets
as well as wireless data services. AT&T Wireless Services is the largest
wireless service provider in the United States, based on domestic revenues, and
has the greatest number of digital wireless customers.
Other and Corporate. This group reflects the results of AT&T Solutions,
our outsourcing, network-management and professional-services business; local
services including Teleport Communications Group Inc. ("TCG"); international
operations and ventures; AT&T WorldNet Service, our Internet access services
business; and corporate overhead.
We were incorporated in 1885 under the laws of the State of New York and
have our principal executive offices at 32 Avenue of the Americas, New York, New
York 10013-2412. Our telephone number is 212-387-5400. Internet users can access
information about us and our services at www.att.com. Our web site is not part
of this prospectus supplement.
STRATEGIC OVERVIEW
AT&T's strategy is to grow by investing in network facilities to provide
advanced, end-to-end communications services directly to our customers, without
relying on the networks of other companies. We are moving from the long distance
business to the any-distance business, from a domestic carrier to a global
company, and from a local cellular provider to a national digital wireless
leader. We are investing in Internet protocol, or IP, networks that will carry
voice and data traffic together at a lower cost than circuit-switched networks.
We are also investing in broadband connections -- high-capacity, high-speed
links to homes and businesses -- in order to deliver integrated voice, video and
data services to our customers.
RECENT STRATEGIC INITIATIVES
TCG Merger. We began 1998 by announcing our $11 billion merger with TCG,
the largest competitive local exchange carrier in the United States. Our merger
with TCG, completed in July 1998, gives us local network facilities to reach
business customers in over 80 U.S. markets.
TCI Merger. We gained broadband connections to one third of U.S.
households through our merger with Tele-Communications, Inc. ("TCI"), which we
announced in June 1998. In completing the merger on March 9, 1999, AT&T issued
approximately 439 million shares of common stock for TCI Group shares, resulting
in a total transaction value at the time of the closing of approximately $55
billion. In addition, as part of the transaction TCI combined Liberty Media
Group, its programming arm, and TCI Ventures Group, its technology investments
unit, to form the new Liberty Media Group. In connection with the closing, the
shareholders of TCI's Liberty Media Group and TCI Ventures Group were issued a
separate tracking stock by AT&T.
Through the TCI Group, TCI engages principally in the construction,
acquisition, ownership and operation of cable television systems. Through the
new Liberty Media Group, TCI engages principally in the provision of
satellite-delivered video entertainment, information and home shopping program
services to various video distribution media, principally cable television
systems.
S-3
<PAGE> 4
BT Joint Venture. In July 1998, we conceived a 50/50 joint venture with
British Telecommunications plc to build a 100-economic centers global IP network
which is designed to become a leading carrier of global communications traffic.
The venture, which will combine certain transborder assets and operations of
each company, is subject to certain conditions but is expected to be completed
by mid-1999.
IBM Global Network Acquisition. In December 1998, we agreed to acquire the
global network business of IBM for $5 billion. In addition, IBM will outsource a
significant portion of its global networking needs to us and we will outsource
certain applications processing and data center management operations to IBM.
With more than 1,300 dial-up points of presence and dedicated access from more
than 850 cities in 59 countries, the global network business serves the
networking needs of several hundred large global companies, tens of thousands of
mid-sized businesses and more than one million individual Internet users. We
expect the acquisition to be completed by mid-1999, subject to the approval of
U.S. and foreign regulatory authorities.
Expanded Wireless Footprint. We continued the expansion of our national
digital wireless business. We invested over $1 billion in capital, assumed
management control of our joint venture in Los Angeles and agreed to acquire
Vanguard Cellular Systems, one of the largest independent cellular telephone
operators in the United States covering a population of approximately 6.6
million. The Vanguard acquisition supports AT&T's efforts to reduce roaming
rates by permitting AT&T to increase its wireless service area and fill a
strategic gap in its wireless footprint in the eastern United States.
Cable Joint Ventures. Early in 1999, we announced a joint venture with
Time Warner, Inc. as well as joint ventures with five TCI affiliates that
together with TCI will extend our cable telephony business to over 40 million
homes.
The Time Warner joint venture will offer AT&T-branded cable telephony
service to residential and small business customers over Time Warner's existing
cable television systems in 33 states. The two companies also agreed to jointly
market communications services and to develop other broadband communications
services, such as video telephony. Under the terms of the agreement, we will own
77.5% of the joint venture and Time Warner will own 22.5%. The joint venture
will acquire exclusive rights to offer residential and small business telephony
services over Time Warner's cable systems for 20 years. In return, the joint
venture will make a payment to Time Warner per home passed as it upgrades its
systems to support two-way communications as well as a monthly fee per telephony
subscriber, with guaranteed minimum penetration levels. We will fund the
venture's negative cash flow and be responsible for the venture's capital
expenditures, including the cost of powering the system, and, as customers sign
up for the service, the cost of adding communications equipment to cable nodes
and in customers' homes. We expect to close the joint venture in 1999. The
transaction is subject to certain conditions, including definitive documentation
and various approvals.
The TCI affiliate joint ventures will offer customers new communications
services that feature multiple phone lines per household, along with options
such as conference calling, call waiting, call forwarding and individual message
centers for family members. AT&T, which expects to own 51% of each of these
joint ventures, will have long-term exclusive rights to offer communications
services over the systems of each of the five operators in return for one-time
payments to be made when the systems meet certain performance milestones and
ongoing monthly telephony subscriber payments. The joint ventures are expected
to be finalized by mid 1999 and to begin commercial operations in 2000.
OTHER RECENT DEVELOPMENTS
On March 17, 1999, our Board of Directors declared a three for two split of
our common stock, payable on April 15, 1999, to AT&T common shareowners of
record on March 31, 1999.
On March 4, 1999, AT&T Canada Corp. announced an agreement with MetroNet
Communications that has the potential to significantly enhance our operations in
Canada. MetroNet Communications is Canada's first national provider of local
telecommunications services and the country's largest competitive local exchange
carrier. The transaction is subject to certain conditions, including definitive
documentation and various approvals.
In March 1999, we completed the $4 billion share repurchase program
announced on January 8, 1999. We repurchased approximately 47 million shares of
our common stock through this program.
S-4
<PAGE> 5
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
SELECTED HISTORICAL FINANCIAL INFORMATION
We are providing or incorporating by reference in this prospectus
supplement selected historical financial information for AT&T and TCI. We
derived this information from audited and unaudited financial statements of AT&T
and TCI for the periods presented. The information is only a summary and you
should read it together with the financial information included or incorporated
by reference to this prospectus supplement. See "Where You Can Find More
Information" on page 3 of the prospectus.
AT&T
In the table below, we provide you with our selected historical
consolidated financial data. We prepared this information using our consolidated
financial statements as of the dates indicated and for each of the fiscal years
in the five-year period ended December 31, 1998. We derived the consolidated
income statement data below for each of the three years ended December 31, 1998
and the consolidated balance sheet data at December 31, 1998 and 1997 from
financial statements audited by PricewaterhouseCoopers LLP, independent
accountants. We derived the remaining data from unaudited consolidated financial
statements.
<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------------
1998(1) 1997 1996 1995(2) 1994
------- ------- ------- ------- -------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues............................... $53,223 $51,577 $50,688 $48,449 $46,063
Operating income....................... 7,487 6,836 8,709 5,169 7,393
Income from continuing operations...... 5,235 4,249 5,458 2,981 4,230
Weighed average common shares and
potential common shares
(millions).......................... 1,800 1,789 1,767 1,741 1,714
Cash dividends declared per common
share............................... 1.32 1.32 1.32 1.32 1.32
BALANCE SHEET DATA:
Cash and cash equivalents.............. $ 3,160 $ 318 $ 196 $ NA(3) $ NA(3)
Total assets........................... 59,550 61,095 57,348 62,864 57,817
Short-term debt........................ 1,171 4,085 2,473 12,168 9,582
Long-term debt, including capital
leases.............................. 5,556 7,857 8,878 8,913 9,138
Shareowners' equity.................... 25,522 23,678 21,092 17,400 18,100
</TABLE>
- ---------------
(1) 1998 income from continuing operations includes $1.0 billion of
nonoperational items, including restructuring and other charges as well as
benefits from gains on sales and the adoption of a new accounting standard.
(2) 1995 income from continuing operations includes $2.0 billion of
restructuring and other charges.
(3) AT&T did not restate its cash and cash equivalents for 1994 and 1995 to
reflect the TCG merger.
S-5
<PAGE> 6
TCI
In the table below, we provide you with TCI's selected historical
consolidated financial data. We prepared this information using TCI's
consolidated financial statements as of the dates indicated and for each of the
fiscal years in the five-year period ended December 31, 1998. We derived the
consolidated income statement data below for each of the three years ended
December 31, 1998 and the consolidated balance sheet data at December 31, 1998
and 1997 from financial statements audited by KPMG LLP, independent accountants.
We derived the remaining data from unaudited consolidated financial statements.
This data is provided solely as a convenience and includes the results of
the new Liberty Media Group which are consolidated in the TCI financial
statements. New Liberty Media Group will be accounted for as an equity
investment by AT&T. See "Selected Pro Forma Condensed Financial Information."
<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1998 1997 1996 1995 1994
------------- ------- ------- ------- -------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues..................................... $ 7,351 $ 7,570 $ 8,022 $ 6,506 $ 4,682
Operating income (loss)...................... (59) 849 632 542 788
Net income (loss)............................ 1,943 (561) 292 (183) 91
Cash dividends declared per common share..... 0 0 0 0 0
BALANCE SHEET DATA:
Cash and cash equivalents(1)................. $ 419 $ 244 $ 444 $ 118 $ 74
Total assets................................. 41,851 32,477 30,169 25,429 19,148
Total debt, including capital leases......... 14,052 15,250 14,926 13,211 11,162
Shareowners' equity.......................... 10,868 4,506 4,178 4,461 2,578
</TABLE>
- ---------------
(1) TCI generally uses all available cash to repay debt. Accordingly, TCI's
cash and cash equivalent balances are comprised primarily of the cash and
cash equivalent balances of certain of TCI's majority-owned subsidiaries.
Such cash and cash equivalent balances are intended to be applied to the
liquidity requirements of such majority-owned subsidiaries and it is not
anticipated that any portion of such cash and cash equivalent balances
would be distributed or otherwise made available to TCI.
SELECTED PRO FORMA CONDENSED FINANCIAL INFORMATION
On March 9, 1999, the merger with TCI closed, with each share of TCI Group
Series A common stock converted into 0.7757 shares of AT&T common stock and each
share of TCI Group Series B stock converted into 0.8533 shares of AT&T common
stock. In addition, the shareowners of TCI's Liberty Media Group and TCI
Ventures Group were issued a separate new Liberty Media Group tracking stock by
AT&T. Although the new Liberty Media Group is a 100% owned subsidiary of AT&T,
it will be accounted for as an equity investment since AT&T does not have a
controlling financial interest in its operations. In addition, as a tracking
stock, all of its earnings or losses are excluded from the earnings available to
the holders of AT&T common stock. AT&T has no obligation to provide financial
support to, or otherwise assist, the new Liberty Media Group. In addition, the
new Liberty Media Group may not incur debt which:
- has recourse to any member or assets of AT&T; or
- exceeds 25% of its total capitalization (other than refinancing of
existing debt) if such excess debt would adversely affect the credit
rating of AT&T.
In the table below, we provide you with unaudited selected pro forma
condensed financial information for AT&T as if the TCI merger, certain
merger-related asset transfers and the charter amendments relating to the
combination of Liberty Media Group and TCI Ventures Group had been completed on
January 1, 1998 for income statement purposes and on December 31, 1998 for
balance sheet purposes. The pro forma financial information was prepared using
the purchase method of accounting with AT&T treated as acquiror.
S-6
<PAGE> 7
This unaudited selected pro forma information reflects certain assumptions
including the following: (a) $9.5 billion of additional borrowings and related
interest expense to fund the merger-related asset transfers and share repurchase
program at a mix of 20% short term and 80% long term; and (b) preliminary
allocation of the purchase price to TCI assets and liabilities. This allocation
is subject to the completion of a study, undertaken by AT&T, to determine the
fair value of certain of TCI's assets and liabilities. Upon completion of this
study, AT&T will make appropriate purchase accounting adjustments.
This unaudited selected pro forma condensed financial information should be
read in conjunction with the separate historical financial statements and
accompanying notes of AT&T and TCI that are incorporated by reference in the
prospectus supplement. You should not rely on the unaudited selected pro forma
financial information as an indication of the results of operations or financial
position that would have been achieved if the TCI merger, certain merger-related
asset transfers and the charter amendments relating to the combination of
Liberty Media Group and TCI Ventures Group had taken place earlier or of the
results of operations or financial position of AT&T after the completion of such
transactions.
<TABLE>
<CAPTION>
AT OR FOR THE
YEAR ENDED
DECEMBER 31, 1998
-----------------
(IN MILLIONS)
<S> <C>
INCOME STATEMENT DATA:
Revenues.................................................. $ 59,426
Income from continuing operations(1)...................... 3,989
Income from continuing operation available to the AT&T
common shareholder(2).................................. 3,764
Weighted-average AT&T common shares....................... 2,093
Weighted-average AT&T common shares and potential common
shares................................................. 2,174
BALANCE SHEET DATA:
Cash and cash equivalents................................. $ 3,505
Total assets(3)........................................... 138,098
Short-term debt........................................... 4,010
Long-term debt, including capital leases.................. 24,870
Shareowners' equity - AT&T................................ 44,514
Shareowners' equity - Liberty Media Group................. 23,351
</TABLE>
- ---------------
(1) Income from continuing operations after dividend requirements on preferred
stock.
(2) Income from continuing operations available to the AT&T common shareholder
excludes the results of the new Liberty Media Group.
(3) Includes goodwill associated with the TCI merger.
S-7
<PAGE> 8
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our unaudited historical ratios of earnings
to fixed charges.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1998 1997 1996 1995 1994
- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C>
10.6 9.1 11.1 7.9 10.1
</TABLE>
For the purpose of calculating the ratio:
- earnings have been calculated by adding fixed charges to income before
income taxes, and by deducting therefrom interest capitalized during the
period and our share of the undistributed income in
less-than-fifty-percent-owned affiliates; and
- fixed charges comprise total interest, including capitalized interest,
and the portion of rental expense representative of the interest factor.
USE OF PROCEEDS
Our net proceeds from the sale of the notes after deducting expenses are
estimated to be $7,903,020,000 and are expected to be applied towards refunding
commercial paper and general corporate purposes.
DESCRIPTION OF THE NOTES
The following description of the particular terms of the 5.625% notes due
2004 (the "2004 Notes"), the 6.000% notes due 2009 (the "2009 Notes") and the
6.500% notes due 2029 (the "2029 Notes", and collectively with the 2004 Notes
and the 2009 Notes, the "Notes") should be read in conjunction with the
statements under "Description of the Notes" in the prospectus dated February 26,
1999. If this summary differs in any way from the "Description of the Notes" in
the prospectus, you should rely on this summary.
GENERAL
Our Notes will be issued under an indenture, dated as of September 7, 1990,
between us and The Bank of New York, as trustee (the "Trustee"), as amended by
the First Supplemental Indenture, dated as of October 30, 1992, between us and
the Trustee (such indenture, as amended, including the provisions deemed a part
thereof, or superseding provisions thereof, pursuant to the Trust Indenture
Reform Act of 1990 (P.L. 101-550), being hereinafter referred to as the
"Indenture"), and constitute a separate series under the Indenture. The 2004
Notes will bear interest at the rate of 5.625% per annum and will mature on
March 15, 2004. The 2009 Notes will bear interest at the rate of 6.000% per
annum and will mature on March 15, 2009. The 2029 Notes will bear interest at
the rate of 6.500% per annum and will mature on March 15, 2029. We will issue
our Notes in fully registered form only and in denominations of $1,000 and
integral multiples thereof.
We may issue definitive Notes in the limited circumstances set forth in
"Description of the Notes -- Book-Entry System" below. If we issue definitive
Notes, principal of and interest on our Notes will be payable in the manner
described below, the transfer of our Notes will be registrable, and our Notes
will be exchangeable for Notes bearing identical terms and provisions, at the
office of The Bank of New York, our paying agent (the "Paying Agent," which term
includes any successor paying agent) and registrar for our Notes (the
"Registrar," which term includes any successor registrar), currently located at
101 Barclay Street, New York, NY 10286 and at the office of Banque Generale du
Luxembourg S.A. as the Luxembourg paying agent (the "Luxembourg Paying Agent"),
currently located at 50, Avenue J.F. Kennedy, L-2951, Luxembourg; provided, that
payment of interest, other than interest at maturity or upon redemption, may be
made by check mailed to the address of the person entitled to the interest as it
appears on the security register at the close of business on the regular record
date corresponding to the relevant interest payment date. Notwithstanding the
foregoing, (1) the Depositary (as defined) as holder
S-8
<PAGE> 9
of our Notes or (2) a holder of more than $5 million in aggregate principal
amount of Notes in definitive form, can require the Paying Agent to make
payments of interest, other than interest due at maturity or upon redemption, by
wire transfer of immediately available funds into an account maintained by the
holder in the United States, by sending appropriate wire transfer instructions
as long as the Paying Agent receives the instructions not less than ten days
prior to the applicable interest payment date. The principal and interest
payable in U.S. dollars on a Note at maturity or upon redemption will be paid by
wire transfer of immediately available funds against presentation of a Note at
the office of the Paying Agent or the Luxembourg Paying Agent.
We will pay interest on our Notes in arrears on each September 15 and March
15, beginning September 15, 1999, to the persons in whose names our Notes are
registered at the close of business on September 1 and March 1 preceding the
respective interest payment date, at the respective annual rates set forth on
the cover page of this prospectus supplement.
OPTIONAL REDEMPTION
Our Notes will be redeemable, as a whole or in part, at our option, at any
time or from time to time, on at least 30 days, but not more than 60 days, prior
notice mailed to the registered address of each holder of our Notes. The
redemption prices will be equal to the greater of (1) 100% of the principal
amount of the Notes to be redeemed or (2) the sum of the present values of the
Remaining Scheduled Payments (as defined below) discounted, on a semiannual
basis (assuming a 360-day year consisting of twelve 30-day months), at a rate
equal to the sum of the Treasury Rate (as defined below) and:
- 10 basis points for the 2004 Notes
- 15 basis points for the 2009 Notes
- 20 basis points for the 2029 Notes
In the case of each of clause (1) and (2), accrued interest will be payable
to the redemption date.
"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 2004 Notes, the 2009 Notes, or the 2029 Notes, as the
case may be, 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. "Independent Investment Banker" means one of the Reference Treasury
Dealers appointed by us.
"Comparable Treasury Price" means, with respect to any redemption date, (1)
the average of the Reference Treasury Dealer Quotations for such redemption date
after excluding the highest and lowest of such Reference Treasury Dealer
Quotations, or (2) if the Trustee obtains fewer than five 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 Trustee, 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 Trustee
by such Reference Treasury Dealer at 3:30 p.m., New York City time, on the third
business day preceding such redemption date.
"Reference Treasury Dealer" means each of Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Salomon Smith Barney Inc., Chase Securities Inc., Deutsche
Bank Securities Inc., First Chicago Capital Markets, Inc., Lehman Brothers Inc.,
J.P. Morgan Securities Inc. and NationsBanc Montgomery Securities LLC and their
respective successors. If any of the foregoing shall cease to be a primary U.S.
S-9
<PAGE> 10
Government securities dealer (a "Primary Treasury Dealer"), we shall substitute
another nationally recognized investment banking firm that is a Primary Treasury
Dealer.
"Remaining Scheduled Payments" means, with respect to each Note to be
redeemed, the remaining scheduled payments of principal of and interest on such
Note that would be due after the related redemption date but for such
redemption. If such redemption date is not an interest payment date with respect
to such Note, the amount of the next succeeding scheduled interest payment on
such Note will be reduced by the amount of interest accrued on such Note to such
redemption date.
On and after the redemption date, interest will cease to accrue on the
Notes or any portion of the Notes called for redemption (unless we default in
the payment of the redemption price and accrued interest). On or before the
redemption date, we will deposit with a paying agent (or the Trustee) money
sufficient to pay the redemption price of and accrued interest on the Notes to
be redeemed on such date. If less than all of the Notes of any series are to be
redeemed, the Notes to be redeemed shall be selected by the Trustee by such
method as the Trustee shall deem fair and appropriate.
BOOK-ENTRY SYSTEM
Our Notes will be issued in the form of one or more fully registered global
notes ("Global Notes") which will be deposited with, or on behalf of The
Depository Trust Company ("DTC" or the "Depositary") as the depositary, and
registered in the name of Cede & Co., DTC's nominee. Beneficial interests in the
Global Notes will be represented through book-entry accounts of financial
institutions acting on behalf of beneficial owners as direct and indirect
participants in DTC (a "participant"). Investors may elect to hold interests in
the Global Notes through either DTC (in the United States) or Cedelbank or
Morgan Guaranty Trust Company of New York, Brussels Office, as operator of
Euroclear (in Europe) if they are participants of such systems, or indirectly
through organizations which are participants in such systems. Cedelbank and
Euroclear will hold interests on behalf of their participants through customers'
securities accounts in Cedelbank's and Euroclear's names on the books of their
respective depositaries, which in turn will hold such interests in customers'
securities accounts in the names of their respective depositaries (the "U.S.
Depositaries") on the books of DTC. Citibank, N.A. will act as the U.S.
Depositary for Cedelbank and The Chase Manhattan Bank will act as the U.S.
Depositary for Euroclear. Except under circumstances described below, our Notes
will not be issuable in definitive form. The laws of some states require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to transfer
beneficial interests in the Global Notes.
So long as the Depositary or its nominee is the registered owner of the
Global Notes, the Depositary or such nominee, as the case may be, will be
considered the sole owner or holder of our Notes represented by the Global Notes
for all purposes under the Indenture. Except as provided below, owners of
beneficial interests in the Global Notes will not be entitled to have Notes
represented by the Global Notes registered in their names, will not receive or
be entitled to receive physical delivery of Notes in definitive form and will
not be considered the owners or holders thereof under the Indenture.
Principal and interest payments on Notes registered in the name of the
Depositary or its nominee will be made to the Depositary or its nominee, as the
case may be, as the registered owner of the Global Notes. None of we, the
Trustee, any paying agent or registrar for our Notes will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial interests in the Global Notes or for
maintaining, supervising or reviewing any records relating to such beneficial
interests.
We expect that the Depositary for our Notes or its nominee, upon receipt of
any payment of principal or interest, will credit the participants' accounts
with payments in amounts proportionate to their respective beneficial interests
in the principal amount of the Global Notes as shown on the records of the
Depositary or its nominee. We also expect that payments by participants to
owners of beneficial interest in the Global Notes held through such participants
will be governed by standing instructions and customary practices, as is now 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
participants.
S-10
<PAGE> 11
If the Depositary is at any time unwilling or unable to continue as
depositary and a successor Depositary is not appointed by us within 90 days, we
will issue Notes in definitive form in exchange for the Global Notes. In
addition, we may at any time and in our sole discretion determine not to have
our Notes represented by the Global Notes and, in such event, will issue our
Notes in definitive form in exchange for the Global Notes. In any such instance,
an owner of a beneficial interest in the Global Notes will be entitled to
physical delivery in definitive form of Notes represented by the Global Notes
equal in principal amount to such beneficial interest and to have such Notes
registered in its name. Notes so issued in definitive form will be issued as
registered Notes in denominations of $1,000 and integral multiples thereof,
unless otherwise specified by us. Our definitive Notes can be transferred by
presentation for registration to the Registrar at its New York or Luxembourg
offices and must be duly endorsed by the holder or his attorney duly authorized
in writing, or accompanied by a written instrument or instruments of transfer in
form satisfactory to us or the Trustee duly executed by the holder or his
attorney duly authorized in writing. We may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any exchange or registration of transfer of definitive Notes.
The Depositary has advised us as follows: the Depositary is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of 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. The Depositary holds securities deposited with it by its
participants and facilitates the settlement of transactions among its
participants in such securities through electronic computerized 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.
The Depositary has also advised us that the Depositary's management is
aware that some computer applications, systems, and the like for processing data
("Systems") that are dependent upon calendar dates, including dates before, on
and after January 1, 2000, may encounter "Year 2000 problems." The Depositary
has informed participants and other members of the financial community that it
has developed and is implementing a program so that its Systems, as the same
relate to the timely payment of distributions (including principal and income
payments) to securityholders, book-entry deliveries, and settlement of trades
within DTC ("DTC Services"), continue to function appropriately. This program
includes a technical assessment and a remediation plan, each of which is
complete. Additionally, the Depositary's plan includes a testing phase, which is
expected to be completed within appropriate time frames. However, the
Depositary's ability to perform its services properly is also dependent upon
other parties, including but not limited to issuers and their agents, as well as
third party vendors from whom the Depositary licenses software and hardware, and
third party vendors on whom the Depositary relies for information or the
provision of services, including telecommunication and electrical utility
service providers, among others. The Depositary has informed the financial
community that it is contacting, and will continue to contact, third party
vendors from whom the Depositary acquires services to impress upon them the
importance of such services being Year 2000 compliant, and to determine the
extent of their efforts for Year 2000 remediation and, as appropriate, testing
of their services. In addition, DTC is in the process of developing such
contingency plans as it deems appropriate.
According to the Depositary, the foregoing information with respect to the
Depositary has been provided to the financial community for informational
purposes only and is not intended to serve as a representation, warranty or
contract modification of any kind.
Cedelbank has advised us that it is incorporated under the laws of
Luxembourg as a professional depositary. Cedelbank holds securities for its
customers ("Cedelbank Customers") and facilitates the clearance and settlement
of securities transactions between Cedelbank Customers through electronic book-
S-11
<PAGE> 12
entry changes in accounts of Cedelbank Customers, thereby eliminating the need
for physical movement of certificates. Cedelbank provides to Cedelbank
Customers, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. Cedelbank interfaces with domestic markets in several
countries. As a bank, Cedelbank is subject to regulation by the Luxembourg
Commission for the Supervision of the Financial Sector (Commission de
Surveillance du Secteur Financier). Cedelbank Customers are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations and may include the underwriters. Indirect access to Cedelbank is
also available to others, such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Cedelbank
Customer either directly or indirectly.
Distributions with respect to our Notes held beneficially through Cedelbank
will be credited to cash accounts of Cedelbank Customers in accordance with its
rules and procedures, to the extent received by the U.S. Depositary for
Cedelbank.
Euroclear has advised us that it was created in 1968 to hold securities for
participants of Euroclear ("Euroclear Participants") and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Euroclear includes various other services, including
securities lending and borrowing and interfaces with domestic markets in several
countries. Euroclear is operated by the Brussels, Belgium office of Morgan
Guaranty Trust Company of New York (the "Euroclear Operator"), under contract
with Euroclear Clearance Systems S.C., a Belgian cooperative corporation (the
"Cooperative"). All operations are conducted by the Euroclear Operator, and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for Euroclear on behalf of Euroclear Participants. Euroclear Participants
include banks (including central banks), securities brokers and dealers and
other professional financial intermediaries and may include the underwriters.
Indirect access to Euroclear is also available to other firms that clear through
or maintain a custodial relationship with a Euroclear Participant, either
directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System, and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear, and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions with respect to our Notes held beneficially through Euroclear
will be credited to the cash accounts of Euroclear Participants in accordance
with the Terms and Conditions, to the extent received by the U.S. Depositary for
Euroclear.
Euroclear has also advised us that investors that acquire, hold and
transfer interests in our Notes by book-entry through accounts with the
Euroclear Operator or any other securities intermediary are subject to the laws
and contractual provisions governing their relationship with their intermediary,
as well as the laws and contractual provisions governing the relationship
between such an intermediary and each other intermediary, if any, standing
between themselves and our Global Notes.
S-12
<PAGE> 13
Under Belgian law, the Euroclear Operator is required to pass on the
benefits of ownership in any interests in securities on deposit with it (such as
dividends, voting rights and other entitlements) to any person credited with
such interests in securities on its records.
We have appointed Banque Generale du Luxembourg as the Luxembourg Paying
Agent. We will maintain a paying and transfer agent in Luxembourg as long as our
Notes are listed on the Luxembourg Stock Exchange. For as long as our Notes are
listed on the Luxembourg Stock Exchange, we will publish any changes as to the
identity or location of the Luxembourg Paying Agent in a leading daily newspaper
in Luxembourg, which is expected to be the Luxemburger Wort.
PAYMENT OF ADDITIONAL AMOUNTS
We will, subject to the exceptions and limitations set forth below, pay as
additional interest on our Notes such additional amounts as are necessary so
that the net payment by us or a paying agent of the principal of and interest on
our Notes to a person that is not a United States Holder (as defined below),
after deduction for any present or future tax, assessment or governmental charge
of the United States or a political subdivision or taxing authority thereof or
therein, imposed by withholding with respect to the payment, will not be less
than the amount that would have been payable in respect of our Notes had no such
withholding or deduction been required.
Our obligation to pay additional amounts shall not apply:
(1) to a tax, assessment or governmental charge that is imposed or
withheld solely because the holder, or a fiduciary, settlor, beneficiary,
member or shareholder of the holder if the holder is an estate, trust,
partnership or corporation, or a person holding a power over an estate or
trust administered by a fiduciary holder:
(a) is or was present or engaged in trade or business in the United
States or has or had a permanent establishment in the United States;
(b) has a current or former relationship with the United States,
including a relationship as a citizen or resident thereof;
(c) is or has been a foreign or domestic personal holding company,
a passive foreign investment company or a controlled foreign corporation
with respect to the United States or a corporation that has accumulated
earnings to avoid United States federal income tax; or
(d) is or was a "10-percent shareholder" of AT&T as defined in
section 871(h)(3) of the United States Internal Revenue Code or any
successor provision;
(2) to any holder that is not the sole beneficial owner of our Notes,
or a portion thereof, or that is a fiduciary or partnership, but only to
the extent that the beneficial owner, a beneficiary or settlor with respect
to the fiduciary, or a member of the partnership would not have been
entitled to the payment of an additional amount had such beneficial owner,
beneficiary, settlor or member received directly its beneficial or
distributive share of the payment;
(3) to a tax, assessment or governmental charge that is imposed or
withheld solely because the holder or any other person failed to comply
with certification, identification or information reporting requirements
concerning the nationality, residence, identity or connection with the
United States of the holder or beneficial owner of our Notes, if compliance
is required by statute, by regulation of the United States Treasury
Department or by an applicable income tax treaty to which the United States
is a party as a precondition to exemption from such tax, assessment or
other governmental charge;
(4) to a tax, assessment or governmental charge that is imposed other
than by withholding by AT&T or a paying agent from the payment;
(5) to a tax, assessment or governmental charge that is imposed or
withheld solely because of a change in law, regulation, or administrative
or judicial interpretation that becomes effective more than 15 days after
the payment becomes due or is duly provided for, whichever occurs later;
S-13
<PAGE> 14
(6) to an estate, inheritance, gift, sales, excise, transfer, wealth
or personal property tax or a similar tax, assessment or governmental
charge;
(7) to any tax, assessment or other governmental charge any paying
agent must withhold from any payment of principal of or interest on any
Note, if such payment can be made without such withholding by any other
paying agent; or
(8) in the case of any combination of the above items.
Our Notes are subject in all cases to any tax, fiscal or other law or
regulation or administrative or judicial interpretation applicable. Except as
specifically provided under this heading "Payment of Additional Amounts" and
under the heading "-- Redemption Upon a Tax Event," we do not have to make any
payment with respect to any tax, assessment or governmental charge imposed by
any government or a political subdivision or taxing authority.
REDEMPTION UPON A TAX EVENT
If (a) we become or will become obligated to pay additional amounts as
described herein under the heading "-- Payment of Additional Amounts" as a
result of any change in, or amendment to, the laws (or any regulations or
rulings promulgated thereunder) of the United States (or any political
subdivision or taxing authority thereof or therein), or any change in, or
amendments to, any official position regarding the application or interpretation
of such laws, regulations or rulings, which change or amendment is announced or
becomes effective on or after the date of this prospectus supplement, or (b) a
taxing authority of the United States takes an action on or after the date of
this prospectus supplement, whether or not with respect to us or any of our
affiliates, that results in a substantial probability that we will or may be
required to pay such additional amounts, then we may, at our option, redeem, as
a whole, but not in part, our Notes on any interest payment date on not less
than 30 nor more than 60 calendar days' prior notice, at a redemption price
equal to 100% of their principal amount, together with interest accrued thereon
to the date fixed for redemption; provided that we determine, in our business
judgment, that the obligation to pay such additional amounts cannot be avoided
by the use of reasonable measures available to us, not including substitution of
the obligor under our Notes. No redemption pursuant to (b) above may be made
unless we shall have received an opinion of independent counsel to the effect
that an act taken by a taxing authority of the United States results in a
substantial probability that we will or may be required to pay the additional
amounts described herein under the heading "-- Payment of Additional Amounts"
and we shall have delivered to the Trustee a certificate, signed by a duly
authorized officer stating, that based on such opinion we are entitled to redeem
our Notes pursuant to their terms.
FURTHER ISSUES
We may from time to time, without notice to or the consent of the
registered holders of the Notes, create and issue further notes ranking equally
and ratably with the Notes in all respects (or in all respects except for the
payment of interest accruing prior to the issue date of such further notes or
except for the first payment of interest following the issue date of such
further notes) and so that such further notes shall be consolidated and form a
single series with the Notes and shall have the same terms as to status,
redemption or otherwise as the Notes. Any further notes shall be issued subject
to an agreement supplemental to the Indenture.
NOTICES
Notices to holders of our Notes will be published in authorized newspapers
in The City of New York, in London, and, so long as our Notes are listed on the
Luxembourg Stock Exchange, in Luxembourg. It is expected that publication will
be made in The City of New York in The Wall Street Journal, in London in the
Financial Times and in Luxembourg in the Luxemburger Wort. We will be deemed to
have given such notice on the date of each publication or, if published more
than once, on the date of the first such publication.
S-14
<PAGE> 15
CLEARING AND SETTLEMENT
Initial settlement for our Notes will be made in immediately available
funds. Secondary market trading between DTC participants will occur in the
ordinary way in accordance with DTC rules and will be settled in immediately
available funds using the Depositary's Same-Day Funds Settlement System.
Secondary market trading between Cedelbank Customers and/or Euroclear
Participants will occur in the ordinary way in accordance with the applicable
rules and operating procedures of Cedelbank and Euroclear and will be settled
using the procedures applicable to conventional eurobonds in immediately
available funds.
Cross-market transfers between persons holding directly or indirectly
through DTC on the one hand, and directly or indirectly through Cedelbank
Customers or Euroclear Participants, on the other, will be effected in DTC in
accordance with DTC rules on behalf of the relevant European international
clearing system by the U.S. Depositary; however, such cross-market transactions
will require delivery of instructions to the relevant European international
clearing system by the counterparty in such system in accordance with its rules
and procedures and within its established deadlines (European time). The
relevant European international clearing system will, if the transaction meets
its settlement requirements, deliver instructions to the U.S. Depositary to take
action to effect final settlement on its behalf by delivering or receiving our
Notes in DTC, and making or receiving payment in accordance with normal
procedures for same-day funds settlement applicable to DTC. Cedelbank Customers
and Euroclear Participants may not deliver instructions directly to their
respective U.S. Depositaries.
Because of time-zone differences, credits of our Notes received in
Cedelbank or Euroclear as a result of a transaction with a DTC participant will
be made during subsequent securities settlement processing and dated the
business day following DTC settlement date. Such credits or any transactions in
our Notes settled during such processing will be reported to the relevant
Cedelbank Customers or Euroclear Participants on such business day. Cash
received in Cedelbank or Euroclear as a result of sales of our Notes by or
through a Cedelbank Customer or a Euroclear Participant to a DTC participant
will be received with value on the DTC settlement date but will be available in
the relevant Cedelbank or Euroclear cash account only as of the business day
following settlement in DTC.
Although DTC, Cedelbank and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of our Notes among participants of
DTC, Cedelbank and Euroclear, they are under no obligation to perform or
continue to perform such procedures and such procedures may be discontinued at
any time.
S-15
<PAGE> 16
UNITED STATES TAX CONSIDERATIONS
In the opinion of Ephraim M. Brecher, Vice President-Taxes and Tax Counsel
of AT&T, the following statements describe the material United States federal
income tax consequences of the ownership and disposition of Notes to initial
holders of the Notes purchasing the Notes at the public offering price set forth
on the cover page of this prospectus supplement. These statements are based on
the Internal Revenue Code of 1986, as amended to the date hereof (the "Code"),
administrative pronouncements, judicial decisions and existing and proposed
Treasury Regulations, and interpretations of the foregoing, changes to any of
which subsequent to the date of this Prospectus Supplement may affect the tax
consequences described herein. These statements address only the tax
consequences to initial holders holding Notes as capital assets within the
meaning of section 1221 of the Code. They do not discuss all of the tax
consequences that may be relevant to holders in light of their particular
circumstances or to holders subject to special rules, such as certain financial
institutions, insurance companies, dealers in securities or foreign currencies,
United States Holders (as defined below) whose functional currency (as defined
in Code Section 985) is not the U.S. dollar, persons holding Notes in connection
with a hedging transaction, "straddle", conversion transaction or other
integrated transaction, traders in securities that elect to mark to market,
holders liable for alternative minimum tax or persons who have ceased to be
United States citizens or to be taxed as resident aliens. Persons considering
the purchase of the Notes should consult their tax advisors concerning the
application of United States federal income tax laws, as well as the laws of any
state, local or foreign taxing jurisdictions, to their particular situations.
As used herein, a "United States Holder" of a Note means a beneficial owner
that is for United States federal income tax purposes: (a) a citizen or resident
of the United States, (b) a corporation, partnership or other entity created or
organized in or under the laws of the United States or of any political
subdivision thereof, (c) an estate or trust the income of which is subject to
United States federal income taxation regardless of its source or (d) any other
person whose income from a Note is effectively connected with the conduct of a
United States trade or business.
As used herein, the term "United States Alien Holder" means a beneficial
owner of a Note that is, for United States federal income tax purposes, (a) a
nonresident alien individual, (b) a foreign corporation, (c) a nonresident alien
fiduciary of a foreign estate or trust or (d) a foreign partnership one or more
of the members of which is a nonresident alien individual, a foreign corporation
or a nonresident alien fiduciary of a foreign estate or trust.
TAX CONSEQUENCES TO UNITED STATES HOLDERS
Payments of Interest
Interest on a Note will generally be taxable to a United States Holder as
ordinary interest income at the time it accrues or is received in accordance
with the United States Holder's method of accounting for federal income tax
purposes.
Sale, Exchange or Retirement
Upon the sale, exchange or retirement of a Note, a United States Holder
will recognize gain or loss equal to the difference between the amount realized
on the sale, exchange or retirement of the Note and the holder's adjusted tax
basis in the Note. A United States Holder's adjusted tax basis in a Note will
equal the cost of the Note to such Holder. The amount realized excludes any
amounts attributable to unpaid qualified stated interest accrued between
interest payment dates and not previously included in income, which will be
includible in income as interest in accordance with the U.S. Holder's method of
accounting. Such gain or loss will be capital gain or loss and will be long-term
capital gain or loss if at the time of the sale, exchange or retirement the Note
has been held for more than one year. Under current law, the excess of net
long-term capital gains over net short-term capital losses is taxed at a lower
rate than ordinary income for certain non-corporate taxpayers. The distinction
between capital gain or loss and ordinary income or loss is also relevant for
purposes of, among other things, the limitations on the deductibility of capital
losses.
S-16
<PAGE> 17
TAX CONSEQUENCES TO UNITED STATES ALIEN HOLDERS
Under present United States federal tax law, and subject to the discussion
below concerning backup withholding:
(a) payments of principal, interest and premium on the Notes by AT&T
or its paying agent to any United States Alien Holder will be exempt from
the 30% United States federal withholding tax, provided that (i) such
Holder does not own, actually or constructively, 10% or more of the total
combined voting power of all classes of stock of AT&T entitled to vote,
(ii) such Holder is not a controlled foreign corporation related, directly
or indirectly, to AT&T through stock ownership, and (iii) the statement
requirement set forth in section 871(h) or section 881(c) of the Code has
been fulfilled with respect to the beneficial owner, as discussed below;
(b) a United States Alien Holder of a Note will not be subject to
United States federal income tax on gain realized on the sale, exchange or
retirement of such Note, unless (i) such Holder is an individual who is
present in the United States for 183 days or more in the taxable year of
the disposition, and either the gain is attributable to an office or other
fixed place of business maintained by such individual in the United States
or, generally, such individual has a "tax home" in the United States or
(ii) such gain is effectively connected with the Holder's conduct of a
trade or business in the United States; and
(c) a Note held by an individual who is not, for United States estate
tax purposes, a resident or citizen of the United States at the time of his
death will not be subject to United States federal estate tax, provided
that the individual does not own, actually or constructively, 10% or more
of the total combined voting power of all classes of stock of AT&T entitled
to vote and, at the time of such individual's death, payments with respect
to such Note would not have been effectively connected to the conduct by
such individual of a trade or business in the United States.
The certification requirement referred to in subparagraph (a) will be
fulfilled if the beneficial owner of a Note certifies on IRS Form W-8, under
penalties of perjury, that it is not a United States person and provides its
name and address, and (i) such beneficial owner files such Form W-8 with the
withholding agent or (ii) in the case of a Note held on behalf of the beneficial
owners by a securities clearing organization, bank or other financial
institution holding customers' securities in the ordinary course of its trade or
business, such financial institution files with the withholding agent a
statement that it has received the Form W-8 from the Holder and furnishes the
withholding agent with a copy thereof. With respect to Notes held by a foreign
partnership, under current law, the Form W-8 may be provided by the foreign
partnership. However, unless a foreign partnership has entered into a
withholding agreement with the IRS, for interest and disposition proceeds paid
with respect to a Note after December 31, 1999, the foreign partnership will be
required (and may be permitted earlier), in addition to providing an
intermediary Form W-8, to attach an appropriate certification by each partner.
Prospective investors, including foreign partnerships and their partners, should
consult their tax advisers regarding possible additional reporting requirements.
If a United States Alien Holder of a Note is engaged in a trade or business
in the United States, and if interest on the Note (or gain realized on its sale,
exchange or other disposition) is effectively connected with the conduct of such
trade or business, the United States Alien Holder, although exempt from the
withholding tax discussed in the preceding paragraphs, will be subject to
regular United States income tax on such effectively connected income, generally
in the same manner as if it were a United States Holder. See "Tax Consequences
to United States Holders" above. In lieu of the certificate described in the
preceding paragraph, such a Holder will be required to provide to the
withholding agent a properly executed IRS Form 4224 (or, by January 1, 2000, a
Form W-8) to claim an exemption from withholding tax. In addition, if such
United States Alien Holder is a foreign corporation, it may be subject to a 30%
branch profits tax (unless reduced or eliminated by an applicable treaty) on its
earnings and profits for the taxable year attributable to such effectively
connected income, subject to certain adjustments.
S-17
<PAGE> 18
BACKUP WITHHOLDING AND INFORMATION REPORTING
Under current United States federal income tax law, information reporting
requirements apply to certain payments of principal, premium and interest made
to, and to the proceeds of sales before maturity by, non-corporate United States
Holders. In addition, a 31% backup withholding tax will apply if the non-
corporate United States Holder (i) fails to furnish its Taxpayer Identification
Number ("TIN") which, for an individual, is his Social Security Number, (ii)
furnishes an incorrect TIN, (iii) is notified by the IRS that it has failed to
properly report payments of interest and dividends, or (iv) under certain
circumstances, fails to certify, under penalty of perjury, that it has furnished
a correct TIN and has not been notified by the IRS that it is subject to backup
withholding for failure to report interest and dividend payments. Holders should
consult their tax advisers regarding their qualification for exemption from
backup withholding and the procedure for obtaining such an exemption if
applicable.
Backup withholding will not apply to payments made on a Note if the
certifications required by Sections 871(h) and 881(c) as described above are
received, provided that AT&T or its paying agent, as the case may be, does not
have actual knowledge that the payee is a United States person.
Under current Treasury Regulations, payments on the sale, exchange or other
disposition of a Note made to or through a foreign office of a broker generally
will not be subject to backup withholding. However, if such broker is (i) a
United States person, (ii) a controlled foreign corporation for United States
federal income tax purposes, (iii) a foreign person 50% or more of whose gross
income is effectively connected with a United States trade or business for a
specified three-year period or (iv) in the case of payments made after December
31, 1999, a foreign partnership with certain connections to the United States,
then information reporting will be required unless the broker has in its records
documentary evidence that the beneficial owner is not a United States person and
certain other conditions are met or the beneficial owner otherwise establishes
an exemption. Backup withholding may apply to any payment that such broker is
required to report if the broker has actual knowledge that the payee is a United
States person. Payments to or through the United States office of a broker will
be subject to backup withholding and information reporting unless the Holder
certifies, under penalties of perjury, that it is not a United States person or
otherwise establishes an exemption.
United States Alien Holders of Notes should consult their tax advisers
regarding the application of information reporting and backup withholding in
their particular situations, the availability of an exemption therefrom, and the
procedure for obtaining such an exemption, if available. Any amounts withheld
from a payment to a United States Alien Holder under the backup withholding
rules will be allowed as a credit against such Holder's United States federal
income tax liability and may entitle such Holder to a refund, provided that the
required information is furnished to the IRS.
S-18
<PAGE> 19
UNDERWRITING
Subject to the terms and conditions stated in the underwriting agreement
dated the date hereof, each underwriter named below has severally agreed to
purchase, and we have agreed to sell to such underwriter, the principal amount
of Notes set forth opposite the name of such underwriter.
<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT OF AMOUNT OF AMOUNT OF
NAME 2004 NOTES 2009 NOTES 2029 NOTES
- ---- -------------- -------------- --------------
<S> <C> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.............. $ 780,000,000 $1,170,000,000 $1,170,000,000
Salomon Smith Barney Inc. ............. 780,000,000 1,170,000,000 1,170,000,000
Blaylock & Partners, L.P. ............. 55,000,000 82,500,000 82,500,000
BNY Capital Markets, Inc. ............. 55,000,000 82,500,000 82,500,000
Chase Securities Inc. ................. 55,000,000 82,500,000 82,500,000
Deutsche Bank Securities Inc. ......... 55,000,000 82,500,000 82,500,000
First Chicago Capital Markets, Inc. ... 55,000,000 82,500,000 82,500,000
Lehman Brothers Inc. .................. 55,000,000 82,500,000 82,500,000
J.P. Morgan Securities Inc. ........... 55,000,000 82,500,000 82,500,000
NationsBanc Montgomery Securities
LLC.................................. 55,000,000 82,500,000 82,500,000
-------------- -------------- --------------
Total............................. $2,000,000,000 $3,000,000,000 $3,000,000,000
============== ============== ==============
</TABLE>
The underwriting agreement provides that the obligations of the several
underwriters to purchase the Notes included in this offering are subject to
approval of certain legal matters by counsel and to certain other conditions.
The underwriters are obligated to purchase all the Notes if they purchase any of
the Notes.
AT&T has been advised by the underwriters, for whom Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Salomon Smith Barney Inc. are acting as
representatives, that they propose to offer some of the Notes directly to the
public at the public offering prices set forth on the cover page of this
prospectus supplement and some of the Notes to certain dealers at the public
offering price less a concession not in excess of:
- .200% of the principal amount in the case of the 2004 Notes
- .275% of the principal amount in the case of the 2009 Notes
- .500% of the principal amount in the case of the 2029 Notes
The underwriters may allow, and such dealers may reallow, a concession to
certain other dealers not in excess of:
- .175% of the principal amount in the case of the 2004 Notes
- .250% of the principal amount in the case of the 2009 Notes
- .250% of the principal amount in the case of the 2029 Notes
After the initial offering of the Notes to the public, the public offering
prices and such concessions may be changed by the representatives.
S-19
<PAGE> 20
The following table shows the underwriting discounts and commissions to be
paid to the underwriters by AT&T in connection with the offering (expressed as a
percentage of the principal amount of the Notes):
<TABLE>
<CAPTION>
NOTES UNDERWRITING DISCOUNT
- ----- ----------------------
<S> <C>
Per 2004 Note............................................... .350%
Per 2009 Note............................................... .450%
Per 2029 Note............................................... .875%
</TABLE>
In addition to underwriting discounts, AT&T estimates it will incur
expenses of approximately $2,400,000 in connection with the offering of the
Notes. The underwriters will reimburse AT&T for $500,000 of these expenses.
Purchasers of our Notes may be required to pay stamp taxes and other
charges in accordance with the laws and practices of the country of purchase in
addition to the issue price set forth on the cover page hereof.
Our Notes are a new issue of securities with no established trading market.
We have been advised by the underwriters that they intend to make a market in
our Notes, but they are not obligated to do so and may discontinue such market
making at any time without notice. No assurance can be given as to the liquidity
of the trading market for our Notes.
In connection with the offering, Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Salomon Smith Barney Inc., on behalf of the underwriters, may
purchase and sell Notes in the open market. These transactions may include
over-allotment, syndicate covering transactions and stabilizing transactions.
Over-allotment involves syndicate sales of Notes in excess of the principal
amount of Notes to be purchased by the underwriters in the offering, which
creates a syndicate short position. Syndicate covering transactions involve
purchases of the Notes in the open market after the distribution has been
completed in order to cover syndicate short positions. Stabilizing transactions
consist of certain bids or purchases of Notes made for the purpose of preventing
or retarding a decline in the market price of the Notes while the offering is in
progress.
The underwriters also may impose a penalty bid. Penalty bids permit the
underwriters to reclaim a selling concession from a syndicate member when
Merrill Lynch, Pierce, Fenner & Smith Incorporated and Salomon Smith Barney
Inc., in covering syndicate short positions or making stabilizing purchases,
repurchase Notes originally sold by that syndicate member.
Any of these activities may cause the price of the Notes to be higher than
the price that otherwise would exist in the open market in the absence of such
transactions. These transactions may be effected in the over-the-counter market
or otherwise and, if commenced, may be discontinued at any time.
AT&T has agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, or to contribute to
payments the underwriters may be required to make in respect of any of those
liabilities.
In the ordinary course of their respective businesses, the underwriters and
their respective affiliates have engaged, and may in the future engage, in
commercial banking, general financing and/or investment banking transactions
with us and certain of our affiliates.
OFFERING RESTRICTIONS
General
Our Notes are offered for sale in the United States and in jurisdictions
outside the United States, subject to applicable law.
Each of the underwriters has agreed that it will not offer, sell or deliver
any of our Notes, directly or indirectly, or distribute this prospectus
supplement or the accompanying prospectus or any other offering
S-20
<PAGE> 21
material relating to our Notes, in or from any jurisdiction except under
circumstances that will to the best knowledge and belief of such underwriter
result in compliance with the applicable laws and regulations thereof and which
will not impose any obligations on us except as set forth in the underwriting
agreement.
United Kingdom
Each underwriter has represented and agreed that it and each of its
affiliates:
(1) has not offered or sold and, prior to the expiry of the period of six
months from the time of closing, will not offer or sell any Notes to
persons in the United Kingdom except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their
businesses or otherwise in circumstances which have not resulted and
will not result in an offer to the public in the United Kingdom within
the meaning of the Public Offers of Securities Regulations 1995;
(2) has complied and will comply with all applicable provisions of the
Financial Services Act 1986 with respect to anything done by it in
relation to the Notes in, from or otherwise involving the United
Kingdom; and
(3) has only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the issue
of the Notes to a person who is of a kind described in Article 11(3) of
the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996 or is a person to whom such documents may
otherwise lawfully be issued or passed on.
Japan
The Notes have not been and will not be registered under the Securities and
Exchange Law of Japan and each of the underwriters and each of its affiliates
has represented and agreed that it has not offered or sold, and it will not
offer or sell, directly or indirectly, any of the Notes in or to residents of
Japan or to any persons for reoffering or resale, directly or indirectly in
Japan or to any resident of Japan, except pursuant to an exemption from the
registration requirements of the Securities and Exchange Law available
thereunder and in compliance with the other relevant laws and regulations of
Japan.
Hong Kong
Each of the underwriters and each of its affiliates has represented and
agreed that it has not offered or sold, and it will not offer or sell, the Notes
by means of any document to persons in Hong Kong other than persons whose
ordinary business it is to buy or sell shares or debentures, whether as
principal or agent, or otherwise in circumstances which do not constitute an
offer to the public within the meaning of the Hong Kong Companies Ordinance
(Chapter 32 of the Laws of Hong Kong).
LEGAL OPINIONS
Robert S. Feit, General Attorney and Assistant Secretary of AT&T, is
passing upon the legality of our Notes for us. As of March 1, 1999, Mr. Feit
owned 3,073 of our common shares (including restricted shares) and had options
to purchase an additional 17,500 of our shares.
Davis Polk & Wardwell of New York City is passing upon the legality of our
Notes for the underwriters. Such firm from time to time acts as counsel for us.
S-21
<PAGE> 22
EXPERTS
The consolidated balance sheets of AT&T as of December 31, 1998 and 1997
and the consolidated statements of income, changes in shareowners' equity and
cash flows for each of the three years in the period ended December 31, 1998,
incorporated by reference in the registration statement, have been incorporated
herein in reliance on the report of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of that firm as experts in accounting and
auditing.
The consolidated balance sheets of Tele-Communications, Inc. and
subsidiaries as of December 31, 1998 and 1997, and the related consolidated
statements of operations and comprehensive earnings, stockholders' equity, and
cash flows for each of the years in the three-year period ended December 31,
1998, which appear in the Current Report on Form 8-K, dated March 19, 1999, of
AT&T, have been incorporated by reference herein in reliance upon the report,
dated March 9, 1999, of KPMG LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
The combined balance sheets of Liberty/Ventures Group as of December 31,
1998 and 1997, and the related combined statements of operations and
comprehensive earnings, equity, and cash flows for each of the years in the
three-year period ended December 31, 1998, which appear in the Current Report on
Form 8-K, dated March 19, 1999, of AT&T have been incorporated by reference
herein in reliance upon the report, dated March 9, 1999, of KPMG LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
S-22
<PAGE> 23
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements in this prospectus supplement that are not historical facts are
hereby identified as "forward-looking statements" for the purpose of the safe
harbor provided by Section 21E of the Exchange Act and Section 27A of the
Securities Act. Such forward-looking statements are necessarily estimates
reflecting the best judgment of the senior management of AT&T and TCI and
involve a number of risks and uncertainties that could cause actual results to
differ materially from those suggested by the forward-looking statements. Such
forward-looking statements should, therefor, be considered in light of various
important factors.
The words "estimate," "project," "intend," "expect," "believe" and similar
expressions are intended to identify forward-looking statements. These
forward-looking statements are found at various places throughout this
prospectus supplement and the other documents incorporated herein by reference,
including, but not limited to, the December 31, 1998 Annual Report on Form 10-K
of AT&T (including any amendments thereto) and TCI's financial results for the
period ended December 31, 1998 (filed in AT&T's Form 8-K on March 22, 1997).
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date thereof. Neither AT&T nor TCI
undertakes any obligation to publicly release any revisions to these
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
WHERE YOU CAN FIND MORE INFORMATION
The SEC allows us to incorporate by reference the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. We incorporate by reference the documents listed below:
- Annual Report on Form 10-K for the year ended December 31, 1998, as
amended on March 23, 1999
- Current Report on Form 8-K filed on March 22, 1999 except as to the
Management's Discussion and Analysis of Financial Condition and Results
of Operation in Exhibit 99.1.
You may request a copy of these filings, at no cost, by writing or
telephoning us at our principal executive offices at the following address:
AT&T Corp.
23 Avenue of the Americas
New York, NY 10013-2412
Attn.: Secretary's Department, AT&T, Room 2420E
(212) 387-5400
S-23
<PAGE> 24
GENERAL INFORMATION
Application has been made to list our Notes on the Luxembourg Stock
Exchange. In connection with the listing application, the Certificate of
Incorporation and the By-Laws of AT&T and a legal notice relating to the
issuance of our Notes have been deposited prior to listing with Greffier en Chef
du Tribunal d'Arrondissement de et a Luxembourg, where copies thereof may be
obtained upon request. Copies of the above documents together with this
prospectus supplement, the accompanying prospectus, the Indenture and AT&T's
current annual and quarterly reports, as well as all future annual reports and
quarterly reports, so long as any of our Notes are outstanding, will be made
available at the main office of Banque Generale du Luxembourg S.A. in
Luxembourg. Banque Generale du Luxembourg S.A. will act as intermediary between
the Luxembourg Stock Exchange and AT&T and the holders of our Notes. In
addition, copies of the annual reports and quarterly reports of AT&T may be
obtained free of charge at such office.
Our 2004 Notes have been assigned Euroclear and Cedel Common Code No.
9611339, International Security Identification Number (ISIN) US001957AU39 and
CUSIP No. 001957AU3.
Our 2009 Notes have been assigned Euroclear and Cedel Common Code No.
9611347, International Security Identification Number (ISIN) US001957AV12 and
CUSIP No. 001957AV1.
Our 2029 Notes have been assigned Euroclear and Cedel Common Code No.
9611355, International Security Identification Number (ISIN) US001957AW94 and
CUSIP No. 001957AW9.
S-24
<PAGE> 25
PROSPECTUS
- ---------------
AT&T CORP.
$13,080,000,000
DEBT SECURITIES
DEBT WARRANTS
----------------------
We will provide specific terms of these securities in supplements to this
prospectus. You should read this prospectus and any supplement carefully before
you invest.
We may list the securities on the New York Stock Exchange.
----------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS FEBRUARY 26, 1999.
<PAGE> 26
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
SEC utilizing a shelf registration process. Under this shelf process, we may
sell any combination of the securities described in this prospectus in one or
more offerings up to a total dollar amount of $13,080,000,000. This prospectus
provides you with a general description of the securities we may offer. Each
time we sell securities, we will provide a prospectus supplement that will
contain specific information about the terms of that offering. The prospectus
supplement may also add, update or change information contained in this
prospectus. You should read both this prospectus and any prospectus supplement
together with additional information described under the heading Where You Can
Find More Information.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and copy
any document we file 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.
The SEC allows us to incorporate by reference the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is an
important part of this prospectus, and information that we file later with the
SEC will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings we make with the SEC
under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934
until we sell all of the securities:
- Annual Report on Form 10-K for the year ended December 31, 1997;
- Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998,
June 30, 1998 and September 30, 1998, as amended on January 8, 1999;
- Current Reports on Form 8-K filed on January 16, 1998, March 2, 1998,
July 6, 1998, October 16, 1998, as amended on January 8, 1999, October
21, 1998, December 8, 1998, January 8, 1999, and January 25, 1999; and
- Proxy Statement dated January 8, 1999.
We also incorporate by reference certain documents which
Tele-Communications, Inc. has filed with the SEC:
- Annual Report on Form 10-K for the year ended December 31, 1997, as
amended on January 7, 1999 and January 12, 1999; and
- Current Report on Form 8-K filed on January 7, 1999, as amended on
January 11, 1999.
You may request a copy of these filings, at no cost, by writing or
telephoning us at our principal executive offices at the following address:
AT&T Corp.
32 Avenue of the Americas
New York New York 10013-2412
Attn.: Secretary's Department, AT&T, Room 2420E
(212) 387-5400
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We are not making an
offer of these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front of these
documents.
2
<PAGE> 27
We have filed exhibits with this registration statement that include the
form of proposed underwriting agreement and indenture. You should read the
exhibits carefully for provisions that may be important to you.
AT&T CORP.
AT&T Corp., a New York corporation, is among the world's communications
leaders, providing voice, data and video telecommunications services to large
and small businesses, consumers and government entities. AT&T and its
subsidiaries furnish regional, domestic, international, local and Internet
communication transmission services, including cellular telephone and other
wireless services. AT&T also provides billing, directory and calling card
services to support its communications business.
On June 24, 1998, AT&T announced that it has agreed to acquire
Tele-Communications, Inc. through a merger. In connection with the TCI
transaction, AT&T will issue:
- 0.7757 AT&T shares for each share of TCI Group Series A tracking stock,
- 0.8533 AT&T shares for each share of TCI Group Series B tracking stock,
- one share of newly created AT&T Liberty Media Group Class A or Class B
tracking stock for each share of the corresponding series of Liberty
Media Group Class A or Class B tracking stock, and
- a cash payment in lieu of any fractional AT&T share.
In the merger, AT&T will also exchange AT&T shares or AT&T Liberty Media
Group common stock for shares of TCI convertible preferred stock.
TCI, through its subsidiaries and affiliates, engages principally in the
construction, acquisition, ownership and operation of cable television systems
and the provision of satellite-delivered video entertainment, information and
home shopping program services to various video distribution media, principally
cable television systems. TCI common stock is currently divided into three
groups, with each group intended to reflect the separate performance of a
specified group of assets and businesses of TCI:
- TCI Group tracking stock is intended to reflect the separate performance
of the TCI Group, which consists primarily of TCI's domestic cable and
telecommunications businesses,
- Liberty Media Group tracking stock is intended to reflect the separate
performance of the Liberty Media Group, which consists primarily of TCI's
programming assets, and
- TCI Ventures Group tracking stock is intended to reflect the separate
performance of the TCI Ventures Group, which is comprised of TCI's
principal international assets and businesses and substantially all of
TCI's non-cable and non-programming assets.
Following the TCI transaction, AT&T common stock will be divided into two
groups, with each group intended to reflect the separate performance of a
specified group of assets and businesses of AT&T:
- AT&T common stock, par value $1.00 per share, which is intended to
reflect the performance of the AT&T Common Stock Group, which will
consist of the combined AT&T and the TCI Group, and
- Liberty Media Group tracking stock, which is intended to reflect the
performance of the Liberty Media Group, which will consist of all of the
businesses conducted by the current Liberty Media Group and the current
TCI Ventures Group after giving effect to certain asset transfers from
the TCI Ventures Group to the TCI Group that were negotiated in
connection with the TCI transaction.
The TCI transaction is subject to approval by AT&T shareholders and TCI
shareholders, as well as to certain other conditions. Assuming satisfaction of
such conditions, the TCI transaction is expected to be completed in the first
quarter of 1999.
3
<PAGE> 28
For more information regarding the TCI transaction, reference is made to
the Proxy Statement/ Prospectus we filed with the SEC, Registration No.
333-70279, a copy of which is available to you upon request. See Where You Can
Find More Information.
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. Our telephone number is 212-387-5400. Internet users can obtain
information about AT&T and its services at http://www.att.com.
All references to us in this prospectus include AT&T, its subsidiaries, and
TCI, unless the context requires otherwise.
USE OF PROCEEDS
We will use the net proceeds from the sale of the offered securities for
general corporate purposes including capital expenditures, repayment and
refinancing of debt and acquisitions of licenses, assets, and businesses. The
amount and timing of the sales of securities will depend on market conditions
and the availability of other funds to us.
RATIO OF EARNINGS TO FIXED CHARGES
Our ratio of earnings to fixed charges for each of the periods ended is as
follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
- ------------------- -------------------------------------------------------------------------------------------------------
(UNAUDITED) (UNAUDITED)
- ------------------- -------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
- ------------------- ------------------- ------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C> <C>
8.3 9.1 11.1 7.9 10.1 7.1
</TABLE>
This ratio shows the coverage of earnings before income taxes to fixed
charges, which consist primarily of interest and debt expense.
For the purpose of calculating the ratio of earnings to fixed charges, we
calculate earnings by adding fixed charges to income before income taxes, and by
deducting both interest capitalized during the period and AT&T's share of the
undistributed income in less-than-fifty-percent-owned affiliates. By fixed
charges we mean total interest, including capitalized interest, and a portion of
rentals, which we believe is representative of the interest factor of our rental
expense.
4
<PAGE> 29
DESCRIPTION OF DEBT SECURITIES
The debt securities covered by this prospectus will be our direct unsecured
obligations. The debt securities will be issued in one or more series under an
indenture between us and The Bank of New York, as Trustee.
This prospectus briefly outlines the main indenture provisions. The
indenture has been filed as an exhibit to the registration statement and you
should read the indenture for provisions that may be important to you.
In the summary below, we have included references to section numbers of the
indenture so that you can easily locate these provisions.
GENERAL
The debt securities will rank equally with all of our other unsecured and
unsubordinated debt. The indenture does not limit the amount of debt we may
issue under the indenture or otherwise. We may issue the debt securities in one
or more series with the same or various maturities, at a price of 100% of their
principal amount or at a premium or a discount.
The prospectus supplement relating to any series of debt securities being
offered will include specific terms relating to the offering. These terms will
include some or all of the following:
- The total principal amount of the debt securities
- The percentage of the principal amount at which the debt securities will
be issued
- The date or dates on which principal will be payable and whether the debt
securities will be payable on demand on any date
- The interest rate or rates and the method for calculating the interest
rate
- The interest payment dates
- Optional or mandatory redemption terms
- Authorized denominations
- The currency in which the debt securities will be denominated
- Whether the principal of and any premium or interest is payable in a
different currency than the currency in which the debt securities are
denominated, including a currency other than U.S. dollars
- The manner in which any payments of principal of and any premium or
interest will be calculated, if the payment will be based on an index or
formula
- Whether the debt securities are to be issued as individual certificates
to each holder or in the form of global securities held by a depositary
on behalf of holders or in uncertificated form
- Whether the debt securities will be issued as registered securities or as
bearer securities
- Information describing any book-entry features
- Whether and under what circumstances we will pay additional amounts on
any debt securities held by a person who is not a United States person
for tax purposes and whether we can redeem the debt securities if we have
to pay additional amounts
- Any other terms
We may issue debt securities of any series as registered securities or
bearer securities or both. In addition, we may issue uncertificated securities.
Unless we state otherwise in a prospectus supplement, we will not offer, sell or
deliver any bearer debt securities, including any bearer securities issued in
temporary or permanent global form, to any United States person. By United
States person we mean a citizen or
5
<PAGE> 30
resident of the United States, a corporation, partnership or other entity
created or organized in or under the laws of the United States or of any of its
political subdivisions, or an estate or trust whose income is subject to United
States federal income taxation regardless of its source.
PAYMENT AND TRANSFER
Unless we state otherwise in a prospectus supplement, we will make
principal and interest payments at the office of the paying agent or agents we
name in the prospectus supplement or by mailing a check to you at the address we
have for you in the register. We will pay interest on bearer securities when you
present and surrender the interest coupon for that interest payment at the
office of our paying agent located outside the United States.
Bearer securities and coupons are transferable by delivery. Unless we
describe other procedures in a prospectus supplement, you will be able to
transfer registered debt securities at the office of the transfer agent or
agents we name in the prospectus supplement.
You may also exchange registered debt securities at the office of the
transfer agent for an equal aggregate principal amount of registered debt
securities of the same series having the same maturity date, interest rate and
other terms as long as the debt securities are issued in authorized
denominations. A prospectus supplement will describe the procedures for
exchanging bearer debt securities, if applicable. Registered debt securities can
never be exchanged for bearer debt securities.
Neither AT&T nor the Trustee will impose any service charge for any
transfer or exchange of a debt security, however, we may ask you to pay any
taxes or other governmental charges in connection with a transfer or exchange of
debt securities.
Unless we indicate otherwise in a prospectus supplement, we will issue debt
securities only in denominations of $25,000 and integral multiples of $1,000
over $25,000. If we issue debt securities in a foreign currency, we will specify
the authorized denominations in the prospectus supplement.
If we issue original issue discount debt securities, we will describe the
special United States federal income tax and other considerations of a purchase
of original issue discount debt securities in the prospectus supplement.
Original issue discount debt securities are securities that are issued at a
substantial discount below their principal amount because they pay no interest
or pay interest that is below market rates at the time of issuance.
COVENANTS
We have agreed to some restrictions on our activities for the benefit of
holders of the debt securities. The restrictive covenants summarized below will
apply, unless the covenants are waived or amended, so long as any of the debt
securities are outstanding. The prospectus supplement may contain different
covenants. We have provided a Glossary at the end of this prospectus to define
the capitalized words used in describing the covenants. In the covenants, all
references to us mean AT&T Corp. only.
Limitation on Secured Indebtedness. We have agreed that we will not, and
we will not permit any of our Restricted Subsidiaries to, create, assume, incur
or guarantee any Secured Indebtedness unless we secure these debt securities to
the same extent as such Secured Indebtedness. However, we may incur Secured
Indebtedness without securing these debt securities if, immediately after
incurring the Secured Indebtedness, the aggregate amount of all Secured
Indebtedness and the discounted present value of all net rentals payable under
leases entered into in connection with sale and leaseback transactions would not
exceed 10% of Consolidated Net Tangible Assets. The aggregate amount of all
Secured Indebtedness in the preceding sentence excludes Secured Indebtedness
which is secured to the same extent as these debt securities and Secured
Indebtedness that is being repaid concurrently. (Section 4.03).
Limitation on Sale and Leaseback Transactions. We have agreed that we will
not, and we will not permit any of our Restricted Subsidiaries to, enter into
any lease longer than three years, excluding leases
6
<PAGE> 31
of newly acquired, improved or constructed property, covering any Principal
Property of AT&T or any Restricted Subsidiary that is sold to any other person
in connection with such lease, unless either
- immediately thereafter, the sum of
- the discounted present value of all net rentals payable under all such
leases entered into after April 1, 1986 (except for any lease entered
into by a Restricted Subsidiary before it became a Restricted
Subsidiary) and
- the aggregate amount of all Secured Indebtedness, excluding Secured
Indebtedness which is secured to the same extent as these debt
securities
does not exceed 10% of Consolidated Net Tangible Assets, or
- an amount equal to the greater of
- the net proceeds to AT&T or a Restricted Subsidiary from such sale and
- the discounted present value of all net rentals payable thereunder,
is used within 180 days to retire long-term debt of AT&T or a Restricted
Subsidiary. However, debt which is subordinate to these debt securities or
which is owed to AT&T or a Restricted Subsidiary may not be retired.
(Section 4.04)
CONSOLIDATION, MERGER OR SALE
We have agreed not to consolidate with or merge into any other corporation
or convey or transfer substantially all of our properties and assets to any
person, unless
- that person is authorized to acquire and operate our property and
- the successor corporation expressly assumes by a supplemental indenture
the due and punctual payment of the principal of and any premium or any
interest on all the debt securities and the performance of every covenant
in the indenture that we would otherwise have to perform. (Section 5.01)
MODIFICATION OF THE INDENTURE
Under the indenture, our rights and obligations and the rights of the
holders may be modified if the holders of a majority in aggregate principal
amount of the outstanding debt securities of each series affected by the
modification consent to it. No modification of the principal or interest payment
terms, and no modification reducing the percentage required for modifications,
is effective against any holder without its consent. (Sections 9.01 & 9.02.)
EVENTS OF DEFAULT
When we use the term Event of Default in the indenture, here are some
examples of what we mean.
Unless otherwise specified in a prospectus supplement, an Event of Default
with respect to a series of debt securities occurs if:
- we fail to pay the principal or any premium on any debt security when due
- we fail to pay interest when due on any debt security for 90 days
- we fail to perform any other covenant in the indenture and this failure
continues for 90 days after we receive written notice of it from the
Trustee or from the holders of 25% in principal amount of the outstanding
debt securities of such series or
- we or a court take certain actions relating to the bankruptcy, insolvency
or reorganization of our company for the benefit of our creditors
7
<PAGE> 32
The supplemental indenture or the form of security for a particular series
of debt securities may include additional Events of Default or changes to the
Events of Default described above. For the Events of Default applicable to a
particular series of debt securities, see the prospectus supplement relating to
such series.
A default under our other indebtedness will not be a default under the
indenture, and a default under one series of debt securities under the indenture
will not necessarily be a default under another series.
The Trustee may withhold notice to the holders of debt securities of any
default, except in the payment of principal or interest, if it considers such
withholding of notice to be in the best interests of the holders. By default we
mean any event which is an Event of Default described above or would be an Event
of Default but for the giving of notice or the passage of time. (Section 7.05)
If an Event of Default for any series of debt securities occurs and
continues, the Trustee or the holders of at least 25% in aggregate principal
amount of the debt securities of the series may require us to repay immediately:
- the entire principal of the debt securities of such series or
- if the debt securities are original issue discount securities, such
portion of the principal as may be described in the applicable prospectus
supplement. (Section 6.01)
The holders of a majority of the aggregate principal amount of the debt
securities of the affected series can rescind this accelerated payment
requirement or waive any past default or Event of Default or allow us to not
comply with any provision of the indenture. However, among other things, they
cannot waive a default in payment of principal of, premium, if any, or interest
on, any of the debt securities of such series. (Sections 6.01 and 6.06)
Other than its duties in case of a default, the Trustee is not obligated to
exercise any of its rights or powers under the indenture at the request, order
or direction of any holders, unless the holders offer the Trustee reasonable
indemnity. (Section 7.01) If they provide this reasonable indemnity, the holders
of a majority in principal amount of any series of debt securities may, subject
to certain limitations, direct the time, method and place of conducting any
proceeding or any remedy available to the Trustee, or exercising any power
conferred upon the Trustee, for any series of debt securities. (Section 6.06)
We are not required to provide the Trustee with any certificate or other
document saying that we are in compliance with the indenture or that there are
no defaults.
DEFEASANCE
When we use the term defeasance, we mean discharge from some or all of our
obligations under the indenture. If we deposit with the Trustee sufficient cash
or government securities to pay the principal, interest, any premium and any
other sums due to the stated maturity date or a redemption date of the debt
securities of a particular series, then at our option:
- we will be discharged from our obligations with respect to the debt
securities of such series or
- we will no longer be under any obligation to comply with certain
restrictive covenants under the indenture, and certain Events of Default
will no longer apply to us
If this happens, the holders of the debt securities of the affected series
will not be entitled to the benefits of the indenture except for registration of
transfer and exchange of debt securities and replacement of lost, stolen or
mutilated debt securities. Such holders may look only to such deposited funds or
obligations for payment.
We must deliver to the Trustee an opinion of counsel to the effect that the
deposit and related defeasance would not cause the holders of the debt
securities to recognize income, gain or loss for Federal income tax purposes. We
must also deliver a ruling to such effect received from or published by the
8
<PAGE> 33
United States Internal Revenue Service if we are discharged from our obligations
with respect to the debt securities.
CONCERNING THE TRUSTEE
The Trustee has loaned money to us and provided other services to us in the
past and may do so in the future as a part of its regular business.
DESCRIPTION OF THE WARRANTS
If indicated in a prospectus supplement, we may issue warrants to purchase
debt securities, either attached to a different series of debt securities or as
a separate offering. Warrants will be issued under a warrant agreement between
us and a bank acting as warrant agent.
This prospectus briefly outlines some of the terms of the warrant
agreement, which has been filed as an exhibit to the registration statement. You
should read the warrant agreement for provisions, summarized below, that may be
important to you.
GENERAL
The prospectus supplement relating to a series of warrants will include the
specific terms of the series, as follows:
- The offering price and currency
- The date on which the right to exercise the warrants will commence and
the date this right will expire
- If the warrants are not continuously exercisable, the specific date or
dates on which they can be exercised
- Whether the warrants will be issued in individual certificates to holders
or in the form of global securities held by a depositary on behalf of
holders
- The terms of the debt securities which holders of warrants can purchase
and the price to be paid to us on such exercise
- If the debt securities that can be purchased will be issued in bearer
form, any restrictions applicable to such a purchase
- If warrants are issued together with a series of debt securities, the
name of such securities, their terms, the number of warrants accompanying
each security, and the date the warrants and securities will become
separately transferable
- Any special tax implications of the warrants or their exercise
- Any other specific terms of the warrants
TRANSFERS AND EXCHANGES
A holder will be able to exchange warrant certificates for new warrant
certificates of different denominations, or to transfer warrants, at the
corporate trust office of the warrant agent or any other office indicated in the
prospectus supplement. Prior to exercise, holders of warrants will have none of
the rights of holders of the underlying debt securities.
EXERCISE
Holders will be able to exercise warrants up to 5:00 P.M. New York City
time on the date set forth in the prospectus supplement as the expiration date.
After this time, unless we have extended it, the unexercised warrants will be
void.
9
<PAGE> 34
Holders of warrants may exercise them by delivering to the warrant agent at
its corporate trust office the following:
- Warrant certificates properly completed
- Payment of the exercise price.
As soon as practicable after such delivery, we will issue and deliver to
the indicated holder the debt securities purchasable upon exercise. If a holder
does not exercise all the warrants represented by a particular certificate, we
will also issue a new certificate for the remaining number of warrants.
CONCERNING THE WARRANT AGENT
The warrant agent will act solely for us in connection with the warrants
and will not assume any fiduciary obligation to a warrant holder.
PLAN OF DISTRIBUTION
We may sell the offered securities (a) through underwriters or dealers; (b)
through agents; or (c) directly to one or more purchasers.
SALE THROUGH UNDERWRITERS
If we use underwriters in the sale, such underwriters will acquire the debt
securities for their own account. The underwriters may resell the securities in
one or more transactions, including negotiated transactions at a fixed public
offering price or at varying prices determined at the time of sale. The
obligations of the underwriters to purchase the securities will be subject to
certain conditions. The underwriters will be obligated to purchase all the
securities of the series offered if any of the securities are purchased. The
underwriters may change from time to time any initial public offering price and
any discounts or concessions allowed or re-allowed or paid to dealers.
SALE THROUGH AGENTS
We may sell offered securities through agents designated by us. Unless
indicated in the prospectus supplement, the agents have agreed to use their
reasonable best efforts to solicit purchases for the period of their
appointment.
DIRECT SALES
We also may sell offered securities directly. In this case, no underwriters
or agents would be involved.
DELAYED DELIVERY CONTRACTS
We may authorize underwriters or agents to solicit offers by certain
institutions to purchase offered securities pursuant to delayed delivery
contracts, with the following features:
- The contracts provide for purchase of the securities at the public
offering price but at a specified later date
- Purchase of securities at the closing of such contracts is conditioned
solely on the purchase being permissible under laws applicable to the
purchasing institution
- The contracts and purchasing institutions are subject to our approval
- We will pay disclosed commissions to underwriters or agents if we accept
any contract
10
<PAGE> 35
GENERAL INFORMATION
Underwriters, dealers and agents that participate in the distribution of
the offered securities may be underwriters as defined in the Securities Act of
1933. Any discount or commissions received by them from us and any profit on the
resale of the offered securities by them may be treated as underwriting
discounts and commissions under the Securities Act. We will identify any
underwriters or agents, and describe their compensation, in a prospectus
supplement.
We may have agreements with the underwriters, dealers and agents to
indemnify them against certain civil liabilities, including liabilities under
the Act. We may also have agreements to contribute with respect to payments
which the underwriters, dealers or agents may be required to make. Underwriters,
dealers and agents may engage in transactions with, or perform services for, us
or our subsidiaries in the ordinary course of their businesses.
LEGAL OPINIONS
Robert S. Feit, who is our General Attorney and Assistant Secretary, will
issue an opinion about the legality of the offered securities for us. Davis Polk
& Wardwell of New York City will issue such an opinion on behalf of any agent,
underwriter or dealer. Davis Polk & Wardwell from time to time acts as counsel
for us or our subsidiary companies.
EXPERTS
The consolidated balance sheets of AT&T as of December 31, 1997 and 1996
and the consolidated statements of income, changes in shareowners' equity and
cash flows for each of the three years in the period ended December 31, 1997,
incorporated by reference in this Form S-3, have been incorporated herein in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of that firm as experts in accounting and auditing.
The consolidated balance sheets of Tele-Communications, Inc., and
subsidiaries as of December 31, 1997 and 1996, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1997, and the related
financial statement schedules, which appear in the December 31, 1997 Annual
Report on Form 10-K, as amended by Form 10-K/A (Amendment No. 2), of
Tele-Communications, Inc. have been incorporated by reference herein in reliance
upon the reports, dated March 20, 1998, except for note 19 which is as of
January 6, 1999, of KPMG LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing. The reports refer to a restatement of the
consolidated financial statements and related financial statement schedules as
of December 31, 1997 and for the year then ended.
The combined balance sheets of TCI Group as of December 31, 1997 and 1996,
and the related combined statements of operations, equity (deficit), and cash
flows for each of the years in the three-year period ended December 31, 1997,
which report appears in the December 31, 1997 Annual Report on Form 10-K, as
amended by Form 10-K/A (Amendment No. 2), of Tele-Communications, Inc. have been
incorporated by reference herein in reliance upon the report, dated March 20,
1998, of KPMG LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing. The report of KPMG LLP covering the combined financial statements
above refers to the effects of not consolidating the TCI Group's interest in the
Liberty Media Group and the TCI Ventures Group for all periods that the TCI
Group has an interest in the Liberty Media Group and the TCI Ventures Group,
respectively.
The combined balance sheets of Liberty/Ventures Group as of December 31,
1997 and 1996, and the related combined statements of operations, equity, and
cash flows for each of the years in the three-year period ended December 31,
1997, which report appears in the Current Report on Form 8-K, as amended by Form
8-K/A (Amendment No. 1), dated January 7, 1999, of Tele-Communications, Inc.,
have been
11
<PAGE> 36
incorporated by reference herein in reliance upon the report, dated March 20,
1998, except for notes 2 and 14, which are as of September 14, 1998, and January
6, 1999, respectively, of KPMG LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm of experts
in accounting and auditing. The report refers to a restatement of the combined
financial statements as of December 31, 1997 and for the year then ended.
The combined balance sheets of Liberty Media Group as of December 31, 1997
and 1996, and the related combined statements of operations, equity, and cash
flows for each of the years in the three-year period ended December 31, 1997,
which report appears in the December 31, 1997 Annual Report on Form 10-K, as
amended by Form 10-K/A (Amendment No. 2), of Tele-Communications, Inc., have
been incorporated by reference herein in reliance upon the report, dated March
20, 1998, of KPMG LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
The combined balance sheets of TCI Ventures Group as of December 31, 1997
and 1996, and the related combined statements of operations, equity, and cash
flows for each of the years in the three-year period ended December 31, 1997,
which report appears in the December 31, 1997 Annual Report on Form 10-K, as
amended by Form 10-K/A (Amendment No. 2), of Tele-Communications, Inc., have
been incorporated by reference herein in reliance upon the report, dated March
20, 1998, except for note 18 which is as of January 6, 1999, of KPMG LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing. The
report refers to a restatement of the combined financial statements as of
December 31, 1997 and for the year then ended.
The consolidated balance sheet of Telewest Communications plc and
subsidiaries as of December 31, 1997 and 1996, and the related consolidated
statements of operations and cash flows for each of the years in the three-year
period ended December 31, 1997, which report appears in the December 31, 1997
Annual Report on Form 10-K, as amended by Form 10-K/A (Amendment No. 2), of
Tele-Communications, Inc., have been incorporated by reference herein in
reliance upon the report, dated March 19, 1998, of KPMG Audit Plc, chartered
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
The consolidated balance sheets of Cablevision Systems Corporation and
subsidiaries as of December 31, 1996 and 1995, and the related consolidated
statements of operations, stockholders' deficiency and cash flows for each of
the years in the three-year period ended December 31, 1996, and the related
financial statement schedule, which reports appear in the Current Report on Form
8-K, as amended by Form 8-K/A, (Amendment No. 2) of Tele-Communications, Inc.,
dated March 6, 1998, have been incorporated by reference herein in reliance upon
the report, dated April 1, 1997, of KPMG LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
The consolidated balance sheets of Sprint Spectrum Holding Company, L.P.
and subsidiaries as of December 31, 1997 and 1996 and the related consolidated
statements of operations, changes in partners' capital and cash flows for each
of the three years in the period ended December 31, 1997, which appear in the
Annual Report on Form 10-K, as amended by Form 10-K/A (Amendment No. 2), of
Tele-Communications, Inc. for the year ended December 31, 1997, incorporated in
this Prospectus by reference, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report (which expresses an unqualified
opinion and includes an explanatory paragraph referring to the emergence from
the development stage), which is incorporated herein by reference, and has been
so incorporated in reliance upon the report of said firm given their authority
as experts in accounting and auditing.
12
<PAGE> 37
GLOSSARY
We have used the following definitions in describing the restrictive
covenants that we have agreed to in the indenture. We describe these restrictive
covenants in this prospectus under Description of the Debt Securities. You can
also find the precise legal definitions of these terms in Section 1.01 of the
indenture.
"Secured Indebtedness" means:
- indebtedness of AT&T or any Restricted Subsidiary secured by any lien
upon any Principal Property or the stock or indebtedness of a Restricted
Subsidiary or
- any conditional sale or other title retention agreement covering any
Principal Property or Restricted Subsidiary but does not include any
indebtedness secured by any lien or any conditional sale or other title
retention agreement:
- outstanding on April 1, 1986
- incurred or entered into after April 1, 1986 to finance the
acquisition, improvement or construction of such property and either
secured by purchase money mortgages or liens placed on such property
within 180 days of acquisition, improvement or construction
- on Principal Property or the stock or indebtedness of Restricted
Subsidiaries and existing at the time of acquisition of the property,
stock or indebtedness
- owing to AT&T or any other Restricted Subsidiary
- existing at the time a corporation becomes a Restricted Subsidiary
- incurred to finance the acquisition or construction of property in
favor of any country or any of its political subdivisions and
- replacing, extending or renewing any such indebtedness (to the extent
such indebtedness is not increased).
"Principal Property" means land, land improvements, buildings and
associated factory, laboratory, office and switching equipment (excluding all
products marketed by AT&T or any of its subsidiaries) constituting a
manufacturing, development, warehouse, service, office or operating facility
owned by or leased to AT&T or a Restricted Subsidiary, located within the United
States and having an acquisition cost plus capitalized improvements in excess of
.25 per cent of Consolidated Net Tangible Assets as of the date of such
determination, other than any such property financed through the issuance of
tax-exempt governmental obligations, or which the Board of Directors determines
is not of material importance to AT&T and its Restricted Subsidiaries taken as a
whole, or in which the interest of AT&T and all its subsidiaries does not exceed
50%.
"Consolidated Net Tangible Assets" means the total assets of AT&T and its
subsidiaries, less current liabilities and certain intangible assets (other than
product development costs).
"Restricted Subsidiary" means any subsidiary of AT&T which has
substantially all its property in the United States, which owns or is a lessee
of any Principal Property and in which the investment of AT&T and all its
subsidiaries exceeds .25 per cent of Consolidated Net Tangible Assets as of the
date of such determination, other than certain financing subsidiaries and
subsidiaries formed or acquired after April 1, 1986 for the purpose of acquiring
the business or assets of another person and that do not acquire all or any
substantial part of the business or assets of AT&T or any Restricted Subsidiary.
In addition, the Board of Directors of AT&T may designate any other subsidiary
as a Restricted Subsidiary.
13
<PAGE> 38
PRINCIPAL OFFICES OF
AT&T CORP.
32 Avenue of the Americas
New York, New York 10013
TRUSTEE
THE BANK OF NEW YORK
101 Barclay Street
New York, New York 10286
LUXEMBOURG STOCK EXCHANGE LISTING AGENT
AND LUXEMBOURG PAYING AND TRANSFER AGENT
BANQUE GENERALE DU LUXEMBOURG S.A.
50, Avenue J.F. Kennedy
L-2951 Luxembourg, Luxembourg
LEGAL ADVISERS
To AT&T Corp.
as to United States Law
Robert S. Feit
General Attorney
AT&T Corp.
295 North Maple Avenue
Basking Ridge, New Jersey 07920
To the Underwriters
as to United States Law
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
AUDITORS TO AT&T CORP.
PRICEWATERHOUSECOOPERS LLP
1301 Avenue of the Americas
New York, New York 10019
