AT&T; to Settle Shareholder Suit

AT&T; Corp. on Tuesday said it and a former subsidiary had agreed to pay $100 million to settle a shareholder class-action lawsuit that sought $2.4 billion for allegedly fraudulent financial forecasts.

The deal came nearly three weeks after a trial began in Trenton, N.J., and must be approved by U.S. District Judge Garrett E. Brown Jr. A hearing is set for Feb. 28.

AT&T; said the payment would be split between the company and its former broadband subsidiary, which was sold to Comcast in 2002. AT&T; said it would seek reimbursement from its insurers.

One of the lawyers for the plaintiffs, Peter S. Pearlman, said the lawsuit charged that then-AT&T; Chairman and Chief Executive C. Michael Armstrong knowingly overstated revenue growth for the company’s business division.

“As we have said all along, we categorically deny any wrongdoing by AT&T; or any of its officers and remain confident that we would have been vindicated at the end of this trial,” AT&T; Vice President Edward R. Barillari said.

“But, given the size of the claims compared to the relatively low amount of the settlement,” added Barillari, “the inherent risk and uncertainty of legal proceedings, and the very substantial expense of those proceedings, this settlement is the prudent course for the company.”

The company, the nation’s largest long-distance telephone service, is determining what effect the settlement will have on its recently announced third-quarter earnings, but cannot say when the information will be available, spokesman Bob Nersesian said.

The lawsuit was brought in October 2000 on behalf of those who bought stock from Dec. 6, 1999, to May 1, 2000, according to AT&T; and court records.

Armstrong first made the projection of 9% to 11% growth for 2000 during a conference call with analysts Dec. 6, 1999, and the guidance was repeated until revised downward May 2, 2000, Pearlman said.

“There is no safe-harbor protection for statements that were knowingly falsely made,” Pearlman said. “In our view, and in the view of people testifying for us, there was no basis to make that projection.”

Pearlman had no immediate estimate of the number of individuals and institutions that would qualify as plaintiffs.

Plaintiffs included the New Hampshire Retirement System, which has 72,000 members and beneficiaries, and Local 98 of the International Brotherhood of Electrical Workers in Philadelphia, with about 4,000 members.

Shares of AT&T; rose 20 cents Tuesday to $16.30 on the New York Stock Exchange.