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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. _______)*
APPLIEDTHEORY CORPORATION
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(Name of Issuer)
Common Stock, $.01 per share par value
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(Title of Class of Securities)
03828R 10 4
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(CUSIP Number)
Jeffrey C. Smith with a copy to:
IXC Communications, Inc. Karen C. Goodin, Esq.
1122 Capital of Texas Highway South Riordan & McKinzie
Austin, Texas 600 Anton Boulevard, 18th Floor
(512) 328-1112 Costa Mesa, California 92626
(714) 433-2655
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
October 4, 1999
-------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
NOTE: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copes are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 7
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SCHEDULE 13D
CUSIP NO. 03828R 10 4 PAGE 2 OF 7 PAGES
---------------- ----- -----
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1 NAME OF REPORTING PERSON
S.S. OR IRS. IDENTIFICATION NO. OF ABOVE PERSON
IXC Internet Services, Inc.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
-0-
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NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 5,660,000 (See Item 5)
OWNED BY -------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON -0-
WITH -------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
5,597,684 (See Item 5)
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,920,625 (See Item 5)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
28.0%
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE> 3
SCHEDULE 13D
CUSIP NO. 03828R 10 4 PAGE 3 OF 7 PAGES
---------------- ----- -----
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR IRS. IDENTIFICATION NO. OF ABOVE PERSON
IXC Communications Services, Inc.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
-0-
-------------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 5,660,000 (See Item 5)
OWNED BY -------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON -0-
WITH -------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
5,597,684 (See Item 5)
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,920,625 (See Item 5)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
28.0%
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE> 4
SCHEDULE 13D
CUSIP NO. 03828R 10 4 PAGE 4 OF 7 PAGES
---------------- ----- -----
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR IRS. IDENTIFICATION NO. OF ABOVE PERSON
IXC Communications, Inc.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
-0-
-------------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 5,660,000 (See Item 5)
OWNED BY -------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON -0-
WITH -------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
5,597,684 (See Item 5)
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,920,625 (See Item 5)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
28.0%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE> 5
Item 1. Security and Issuer.
This Schedule 13D relates to the common stock, par value $.01, CUSIP
No. 03828R 10 4 (the "Common Stock"), of AppliedTheory Corporation, a Delaware
corporation (the "Issuer"), having its principal executive offices at 40 Cutter
Mill Road, Suite 405, Great Neck, New York 11021.
Item 2. Identity and Background.
This Schedule 13D is filed by and on behalf of IXC Internet Services,
Inc. ("Internet"), IXC Communications Services, Inc. and IXC Communications,
Inc. (collectively, the "Filing Persons"), each, a Delaware corporation having
its principal address and principal office at 1122 Capital of Texas Highway
South, Austin, Texas 78746. Internet is the record holder of the shares of the
Issuer's Common Stock and a wholly-owned subsidiary of IXC Communications
Services, Inc., which is a wholly-owned subsidiary of IXC Communications, Inc.
During the last five years, none of the Filing Persons has been
convicted in a criminal proceeding (excluding traffic violations and similar
misdemeanors) or were a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
were or are subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
Prior to Issuer's initial public offering, Internet entered into a
stock purchase agreement (the "Stock Purchase Agreement") with the Issuer,
Grumman Hill Investments III, L.P., NYSERNet.net, Inc. and certain stockholders
of the Issuer on August 4, 1998. Pursuant to the Stock Purchase Agreement,
Internet acquired 4,400,000 shares of the Issuer's Common Stock (after giving
effect to stock splits by the Issuer subsequent thereto) at an aggregate
purchase price of approximately $12.9 million. In connection with the Stock
Purchase Agreement, Internet entered into option agreements with certain
stockholders of the Issuer pursuant to which each such stockholder may require
Internet to purchase shares from such stockholder (collectively, "Put Options"),
and Internet may require such stockholders to sell shares to Internet ("Call
Options"), at a purchase price of $2.9372 per share during the period between
September 4, 1999 and October 28, 2000 (the "Put/Call Period").
On or about October 4, 1999, Internet acquired, in the aggregate,
1,197,684 shares of the Issuer's Common Stock pursuant to Put Options exercised
between September 4 and September 28, 1999, at an aggregate purchase price of
$3,503,421.60 paid from Internet's working capital.
Item 4. Purpose of Transaction.
The Issuer's Common Stock has been acquired solely for investment.
(a) Internet has received notice that certain of Issuer's
stockholders have exercised Put Options with respect to an
additional 63,125 shares which Internet is obligated to
purchase. Upon honoring Put Options about which Internet has
received notice, there will remain outstanding 259,816 shares
of Common Stock subject to Put Options and Call Options which
the holders of such Put Options may require Internet to
purchase, or which Internet may require such stockholders to
sell, in the time remaining in the Put/Call Period, which
expires with respect to certain of the shares on October 4,
2000 and with respect to the balance of the shares on October
28, 2000.
(b) Not applicable.
(c) Not applicable.
Page 5 of 7 pages.
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(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g) Not applicable.
(h) Not applicable.
(i) Not applicable.
(j) Not applicable.
Item 5. Interest in Securities of The Issuer.
(a) Each of the Filing Persons may be deemed to beneficially own
5,920,625 shares, or approximately 28.0% of the Issuer's outstanding Common
Stock, including the shares to be purchased pursuant to exercised Put Options
and shares remaining subject to the Call Options, based on the statement in
Issuer's most recent Form 10-Q filed with the Commission on August 16, 1999
that, as of August 1, 1999, there were 21,179,311 shares of Issuer's Common
Stock outstanding.
(b) Each of the Filing Persons may be deemed to have shared dispositive
power with respect to 5,597,684 shares of the Issuer's Common Stock and shared
voting power with respect to 5,660,000 shares of the Issuer's Common Stock,
including 62,316 shares held by NYSERNet.net, Inc. pursuant to the Proxy (as
defined below).
(c) Other than as set forth in this Schedule 13D, no other transactions
by the Filing Persons with respect to the Common Stock of the Issuer were
effected during the past 60 days.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
The Stock Purchase Agreement provides for a grant by NYSERNet.net, Inc.
to Internet of an irrevocable proxy (the "Proxy") in respect of 1,260,000 shares
of Common Stock held by NYSERNet.net, Inc., which amount is correspondingly and
automatically reduced by that number of shares acquired by Internet from Issuer
or Issuer's stockholders during the Put/Call Period. After giving effect to the
automatic reduction of the Proxy by 1,197,684 shares corresponding to the number
of shares acquired to date pursuant to exercised Put Options, Internet currently
exercises voting control over 62,316 shares of Common Stock held by
NYSERNet.net, Inc. pursuant to the Proxy.
After giving effect to the 63,125 shares to be purchased pursuant to
the exercised but unpaid Call Options, there will remain outstanding 259,816
shares of Common Stock subject to Put Options and Call Options which the holders
of such Put Options may require Internet to purchase, or which Internet may
require such stockholders to sell, in the time remaining in the Put/Call Period,
which expires with respect to certain of the shares on October 4, 2000 and with
respect to the balance of the shares on October 28, 2000.
Item 7. Material to Be Filed as Exhibits.
The Filing Persons file as exhibits the following:
Page 6 of 7 pages.
<PAGE> 7
Exhibit 1: Stock Purchase Agreement by and among Internet, Grumman Hill
Investments III, L.P., Issuer, NYSERNet.net, Inc., Richard Mandelbaum, David
Buckel, James Luckett, Denis Martin and Mark Oros dated August 4, 1998
(incorporated by reference to Exhibit 10.01 to Issuer's Form S-1 filed with the
Commission on February 10, 1999).
Exhibit 2: Form of Option Agreements among Issuer, Internet, Grumman
Hill Investments III, L.P. and John Pendray, David Buckel, Charles Baruch, Marc
Bortnicker, Shelley Harrison, James Luckett, Richard Mandelbaum, Denis Martin,
Mark Oros, George Sadowsky and Yechiam Yemini, each dated August 4, 1998 and
among Issuer, Internet, Grumman Hill Investments III, L.P. and Robert Riley,
Bill Owens, Jacqueline A. Owens, Patrick McManus, Stephen Kankus, Barbara J.
DeMong, each dated August 28, 1998 (incorporated by reference to Exhibit 10.03
to Issuer's Form S-1 (File No. 333-72133) filed with the Commission on February
10, 1999).
Exhibit 3: Joint Reporting Agreement dated November 5, 1999 among the
Filing Persons.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: November 5, 1999 IXC INTERNET SERVICES, INC.
/s/ JEFFREY C. SMITH
-------------------------------------
By: Jeffrey C. Smith
Its: Senior Vice President, Chief
Administrative Officer, General
Counsel and Secretary
IXC COMMUNICATIONS SERVICES, INC.
/s/ JEFFREY C. SMITH
-------------------------------------
By: Jeffrey C. Smith
Its: Senior Vice President, Chief
Administrative Officer, General
Counsel and Secretary
IXC COMMUNICATIONS, INC.
/s/ JEFFREY C. SMITH
-------------------------------------
By: Jeffrey C. Smith
Its: Senior Vice President, Chief
Administrative Officer, General
Counsel and Secretary
Page 7 of 7 pages.
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JOINT REPORTING AGREEMENT
In consideration of the mutual covenants herein contained, each of the
parties hereto represents to and agrees with the other party as follows:
1. Such party is eligible to file a statement or statements on
Schedule 13D pertaining to the Common Stock, $.01 par value, of AppliedTheory
Corporation to which this agreement is an exhibit, for filing of the information
contained herein.
2. Such party is responsible for timely filing of such statement and
any amendments thereto and for the completeness and accuracy of the information
concerning such party contained therein, provided that no such party is
responsible for the completeness or accuracy of the information concerning any
other party making the filing, unless such party knows or has reason to believe
that such information is inaccurate.
3. Such party agrees that such statement is filed by and on behalf of
each such party and that any amendment thereto will be filed on behalf of each
such party.
This Joint Reporting Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original instrument, but
all of such counterparts together shall constitute but one agreement.
Dated: November 5, 1999 IXC INTERNET SERVICES, INC.
/s/ JEFFREY C. SMITH
-------------------------------------
By: Jeffrey C. Smith
Its: Senior Vice President,
General Counsel and Secretary
IXC COMMUNICATIONS SERVICES, INC.
/s/ JEFFREY C. SMITH
-------------------------------------
By: Jeffrey C. Smith
Its: Senior Vice President,
General Counsel and Secretary
IXC COMMUNICATIONS, INC.
/s/ JEFFREY C. SMITH
-------------------------------------
By: Jeffrey C. Smith
Its: Senior Vice President,
General Counsel and Secretary
