UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(RULE 13d-101)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
Net2Phone, Inc.
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(Name of Issuer)
Common Stock, par value $0.01 per share
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(Title of Class of Securities)
64108N10
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(CUSIP Number)
Charles Y. Tanabe, Esq.
Senior Vice President and General Counsel
Liberty Media Corporation
12300 Liberty Boulevard
Englewood, Colorado 80112
(720) 875-5400
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
October 19, 2001
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(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 that is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box [ ].
Note. Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for
other parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 10 Pages)
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*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 the
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)
Cusip No. 64108N10
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1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Liberty Media Corporation
84-1288730
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
2 (b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
WC, OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d)
or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
NUMBER OF ------------------------------------------------------------------------
SHARES BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY ------------------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING ------------------------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
28,896,750*
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
28,896,750*
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [X]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 49.3%**
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14 TYPE OF REPORTING PERSON
HC, CO
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*Represents shares of the Issuer's Common Stock issuable upon conversion of
28,896,750 shares of Class A Common Stock held by NTOP Holdings, L.L.C., a
Delaware limited liability company of which an indirect subsidiary of the
Reporting Person is a member. Each share of Class A Common Stock is convertible
into one share of Common Stock at anytime at the option of the holder without
consideration.
**Percentage calculation is based on a total of 62,078,875 shares outstanding,
consisting of 29,763,375 shares of Common Stock and 32,315,500 shares of Class A
Common Stock, as reported by the Issuer on its Form 10-K for the fiscal year
ended July 31, 2001, filed with the SEC on October 29, 2001. Each share of Class
A Common Stock has two votes per share, each share of Common Stock has one vote
per share and the Class A Common Stock and Common Stock vote together on all
matters. Accordingly, NTOP Holdings, L.L.C. holds approximately 61.2% of the
Issuer's outstanding voting power.
Page 2 of 10 Pages
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
STATEMENT OF
LIBERTY MEDIA CORPORATION
PURSUANT TO SECTION 13(d) OF THE SECURITIES EXCHANGE ACT OF 1934
IN RESPECT OF
NET2PHONE, INC.
ITEM 1. SECURITY AND ISSUER
Liberty Media Corporation, a Delaware corporation ("Liberty" or the
"Reporting Person"), is filing this Statement on Schedule 13D (the "Statement"),
with respect to the Common Stock, par value $0.01 per share (the "Common Stock")
of Net2Phone, Inc. ("Net2Phone" or the "Issuer"), a Delaware corporation. The
Issuer's principal executive offices are located at 520 Broad Street, Newark,
New Jersey 07102.
ITEM 2. IDENTITY AND BACKGROUND
The principal business address of the Reporting Person and each of its
subsidiaries described below is 12300 Liberty Boulevard, Englewood, Colorado
80112.
The Reporting Person is engaged in (i) the production, acquisition and
distribution through all available formats and media of branded entertainment,
educational and informational programming and software, including multimedia
products, (ii) electronic retailing, direct marketing, advertising sales related
to programming services, infomercials and transaction processing, (iii)
international cable television distribution, telephony and programming, (iv)
satellite communications, and (v) investments in wireless domestic telephony and
other technology ventures.
The Reporting Person owns 100% of LMC Capital LLC, a Delaware limited
liability company. LMC Capital LLC owns 100% of Liberty Programming Company LLC,
a Delaware limited liability company. Liberty Programming Company LLC owns a
majority of the outstanding capital stock of LMC Animal Planet, Inc., a Colorado
corporation ("LMC Animal Planet"). As described in Item 3 of this Statement, LMC
Animal Planet, Inc. acquired a membership interest in NTOP Holdings, L.L.C., a
Delaware limited liability company ("NTOP Holdings"), on October 19, 2001. NTOP
Holdings holds 28,896,750 shares of Class A Common Stock, par value $0.01 per
share ("Class A Common Stock"), of the Issuer which are convertible into
28,896,750 shares of Common Stock.
Schedule 1 attached to this Statement contains the following information
concerning each director, executive officer and controlling person of the
Reporting Person: (i) name and residence or business address, (ii) principal
occupation or employment; and (iii) the name, principal business and address of
any corporation or other organization in which such employment is conducted.
Page 3 of 10 Pages
To the knowledge of the Reporting Person, each of the persons named on
Schedule 1 (the "Schedule 1 Persons") is a United States citizen, except for
David J.A. Flowers, who is a Canadian citizen. During the last five years,
neither the Reporting Person nor (to the knowledge of the Reporting Person) any
of the Schedule 1 Persons has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors). During the last five years, neither
the Reporting Person nor (to the knowledge of the Reporting Person) any of the
Schedule 1 Persons has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and, as a result of such
proceeding, is or was 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.
On October 19, 2001, LMC Animal Planet acquired (i) 33 Class A and 97
Class B membership interests of NTOP Holdings from ITelTech, LLC, a subsidiary
of AT&T Corp., and (ii) 2,721,089 shares of Class B Common Stock of IDT
Corporation from AT&T Corp. in exchange for an aggregate of $91,200,00 in cash
and 101 shares of common stock and 913 shares of Series A Voting Preferred Stock
of LMC Animal Planet. LMC Animal Planet obtained the $91,200,000 in cash from
Liberty Programming Company LLC in exchange for 9,120 shares of common stock of
LMC Animal Planet. Liberty Programming Company LLC received the cash as a
contribution to capital from LMC Capital LLC, which received it as a
contribution to capital from Liberty Media Corporation. Liberty Media
Corporation obtained the cash from its available funds.
Immediately prior to the transfer of membership interests by ITelTech to
LMC Animal Planet described above, NTOP Holdings acquired 9,996,750 shares of
Class A Common Stock from IDT Domestic-Union, LLC, an indirect subsidiary of IDT
Corporation, in exchange for 87 Class A-1 and 13 Class B membership interests
and 18,900,000 shares of Class A Common Stock from ITelTech in exchange for 62
Class A and 127 Class B membership interests. Immediately following the
acquisition of its membership interests, and concurrently with the transfer of
membership interests to LMC Animal Planet, ITelTech transferred 30 Class B
membership interests in NTOP Holdings to IDT Investments Inc., an indirect
subsidiary of IDT Corporation, in exchange for $13,531,363 in cash and 3,419
newly issued shares of Series C Preferred Stock of IDT Investments.
ITEM 4. PURPOSE OF TRANSACTION.
The Reporting Person caused LMC Animal Planet to enter into the
transaction described in Item 3 in order to increase its investment in IDT
Corporation and to facilitate the consolidation of voting control of the Issuer
under the management of IDT Corporation. The Reporting Person currently holds
its interest in IDT Corporation and NTOP Holdings (and, indirectly, the Issuer)
for investment purposes. The Reporting Person does not beneficially own any
securities of the Issuer other than through its interest in NTOP Holdings.
The Reporting Person intends to continuously review its investment in
NTOP Holdings and the Issuer, and may in the future (subject to the terms of the
LLC Agreement described in Item 6 and included as an exhibit to this Statement)
determine (i) to acquire additional securities of the Issuer, through open
market purchases, private agreements or otherwise, (ii) to dispose of all or a
portion of its interest in NTOP Holdings or any securities of the Issuer that
may be acquired by it or (iii) to take any other available course of action,
which could involve one or more of the types of transactions or have one or more
of the results described in the next paragraph of this Item 4. Notwithstanding
Page 4 of 10 Pages
anything contained herein, the Reporting Person specifically reserves the right
to change its intention with respect to any or all of such matters. In reaching
any decision as to its course of action (as well as to the specific elements
thereof), the Reporting Person currently expects that it would take into
consideration a variety of factors, including, but not limited to, the
following: the Issuer's business and prospects; other developments concerning
the Issuer and its businesses generally; other business opportunities available
to the Reporting Person; developments with respect to the business of the
Reporting Person; changes in law and government regulations; general economic
conditions; and money and stock market conditions, including the market price of
the securities of the Issuer.
Other than as set forth in this Statement, the Reporting Person has no
present plans or proposals which relate to or would result in:
(a) The acquisition by any person of additional securities of the
Issuer, or the disposition of securities of the Issuer;
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of its subsidiaries;
(c) A sale or transfer of a material amount of assets of the Issuer
or of any of its subsidiaries;
(d) Any change in the present board of directors or management of the
Issuer, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board;
(e) Any material change in the present capitalization or dividend
policy of the Issuer;
(f) Any other material change in the Issuer's business or corporate
structure;
(g) Changes in the Issuer's charter, bylaws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the Issuer by any person;
(h) A class of securities of the Issuer being delisted from a
national securities exchange or ceasing to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
(i) A class of equity securities of the Issuer becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Exchange Act; or
(j) Any action similar to any of those enumerated in this paragraph.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) The Reporting Person does not own any securities of the Issuer
other than through its interest in NTOP Holdings. The Reporting Person may be
deemed to beneficially own the 28,896,750 shares of Class A Common Stock held by
NTOP Holdings (the "Shares"), which are convertible into 28,896,270 shares of
Common Stock. Each share of Class A Common Stock is convertible into one share
of Common Stock at the option of the holder at anytime without consideration.
The Class A Common Stock is entitled to two votes per share and the Common
Page 5 of 10 Pages
Stock is entitled to one vote per share. The Shares represent 49.3% of the
outstanding common stock and 61.2% of the outstanding voting power of the
Issuer, based on a total of 62,078,875 shares outstanding, consisting of
29,763,375 shares of Common Stock and 32,315,500 shares of Class A Common
Stock, as reported by the Issuer on its Form 10-K for the fiscal year ended
July 31, 2001, filed with the SEC on October 29, 2001.
To the knowledge of the Reporting Person, none of the Schedule 1 Persons
beneficially owns any shares of Common Stock, other than Larry E. Romrell, a
director of the Reporting Person, who owns 2000 shares of Common Stock.
(b) NTOP Holdings has the sole power to vote or to direct the voting
of the Shares and the sole power to dispose of, or to direct the disposition of,
the Shares. The Reporting Person does not have sole or shared voting power with
respect to any of the Shares. NTOP Holdings may not dispose of any of the Shares
without the consent of all of its members, including LMC Animal Planet. The
Reporting Person, through its control of LMC Animal Planet, may therefore be
deemed to share dispositive power over the Shares with the other members of NTOP
Holdings: IDT Investments Inc., IDT Domestic-Union, LLC and ITelTech, LLC.
Information on the other members of the NTOP Holdings is provided in a separate
Schedule 13D initially filed by such persons with the SEC on October 25, 2001.
The Reporting Person, for itself and each of its subsidiaries, disclaims
membership in a group with NTOP Holdings, any member thereof or any other person
with respect to the Shares. The filing of this statement shall not be deemed an
admission that the Reporting Person or any of its subsidiaries has beneficial
ownership of any of the Shares.
To the knowledge of the reporting Person, Mr. Romrell has sole voting
and dispositive power over the shares of Common Stock owned by him. The
Reporting Persons disclaims beneficial ownership of all shares held by Mr.
Romrell.
(c) Except for the transaction described in Item 3, no transactions
in any securities of the Issuer have been effected by the Reporting Person or,
to the knowledge of the Reporting Person, by any of the Schedule 1 Persons
during the last 60 days.
(d) None.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
The terms and conditions of the membership interests of NTOP Holdings
are set forth in the Second Amended and Restated Limited Liability Company
Agreement, dated as of October 19, 2001, as amended (the "LLC Agreement"), of
NTOP Holdings (f/k/a Net2Phone Holdings, L.L.C.), by and among AT&T Corp,
ITelTech, LLC, IDT Corporation, IDT Domestic-Union, LLC, IDT Investments Inc.,
Liberty Media Corporation and LMC Animal Planet, Inc. Material terms of the LLC
Agreement related to the Shares include the following:
Limitation on Transfer. NTOP Holdings is not permitted to sell, transfer
(other than a transfer to a wholly-owned subsidiary of NTOP Holdings), pledge or
hypothecate any of the Shares without the consent of all its members.
Page 6 of 10 Pages
Voting. The board of managers of NTOP Holdings shall make all decisions
relating to the casting of votes in respect of the shares on all matters
submitted to a vote of, or seeking the written consent of, the stockholders of
Net2Phone, including the election and removal of directors to the board of
directors of Net2Phone. The holder or holders of a majority of the Class A-1
membership interests of NTOP Holdings (currently IDT Domestic-Union) have the
right to appoint all five managers of NTOP Holdings' board of managers. However,
for so long as LMC Animal Planet owns a majority of the membership interests
owned by it on October 19, 2001, the Class A-1 member or members agree to cause
one nominee selected by LMC Animal Planet to be appointed as a manager of NTOP
Holdings.
Net2Phone Board of Directors. Each of ITelTech and IDT Investments
agreed to (i) assign to NTOP Holdings its rights under a voting agreement, dated
August 11, 2000, under which ItelTech and IDT Investments agreed to vote shares
of Net2Phone held by them in favor of their respective nominees to the board of
directors of Net2Phone and (ii) use its reasonable best efforts to fully
cooperate with each other and with Net2Phone in removing and replacing the
directors of Net2Phone currently designated by ITelTech and in ensuring that the
directors of Net2Phone designated by IDT Investments are elected to Net2Phone's
board of directors.
Distribution upon Liquidation. Upon dissolution of NTOP Holdings and
following payment to all creditors, any member of NTOP Holdings may elect to
receive distributions in kind of Class A Common Stock held directly or
indirectly by NTOP Holdings to be distributed prior to any sale of shares of
Class A Common Stock or any other assets of NTOP Holdings. The number of shares
of Class A Common Stock to be distributed will be determined after the shares
are marked-to-market based on the average (rounded to the nearest 1/10,000) of
the closing prices of the Class A Common Stock during regular trading hours on
the principal market on which shares of Class A Common Stock are then listed or
quoted (whether the NASDAQ National Market, The New York Stock Exchange or
another national securities exchange or association) for the twenty (20) trading
days up to and including such date.
Redemption With Class A Stock. On or after January 1, 2004, the Class
A-1 members and the Class B members of NTOP Holdings may cause NTOP Holdings to
redeem the Class A membership interests held by ITelTech with Class A Common
Stock at the fair market value of the Class A membership interests as determined
in accordance with the LLC Agreement. The number of shares of Class A Common
Stock to be delivered will be determined after the shares are marked-to-market
based on the average (rounded to the nearest 1/10,000) of the closing prices of
the Class A Common Stock during regular trading hours on the principal market on
which shares of Class A Common Stock are then listed or quoted (whether the
NASDAQ National Market, The New York Stock Exchange or another national
securities exchange or association) for the twenty (20) trading days up to and
including such date.
Acquisition of Class A Membership Interests. On or after January 1,
2004, the Class A-1 members and the Class B members of NTOP Holdings may acquire
the Class A membership interests held by ITelTech at the fair market value of
the Class A membership interests, on the terms and conditions provided in the
LLC Agreement.
Put Rights and Call Rights. The members of NTOP Holdings have certain
put rights and call rights with respect to the membership interests of NTOP
Holdings, as provided in the LLC Agreement.
Page 7 of 10 Pages
The foregoing summary of terms of the LLC Agreement is qualified in its
entirety by reference to the full text of the LLC Agreement, a copy of which is
attached as Exhibit 7(a) and is incorporated herein by this reference.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS.
Exhibit No. Description
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7(a) Second Amended and Restated Limited Liability
Company Agreement of NTOP Holdings, L.L.C. (f/k/a
Net2Phone Holdings, L.L.C.) dated October 19, 2001.
7(b) Amendment No. 1 to the Second Amended and Restated
Limited Liability Company Agreement of NTOP
Holdings, L.L.C. (f/k/a Net2Phone Holdings,
L.L.C.) dated October 31, 2001.
Page 8 of 10 Pages
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 6, 2001
LIBERTY MEDIA CORPORATION
By:/s/ Charles Y. Tanabe
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Name: Charles Y. Tanabe
Title: Senior Vice President
Page 9 of 10 Pages
SCHEDULE 1
DIRECTORS AND EXECUTIVE OFFICERS
OF
LIBERTY MEDIA CORPORATION
The name and present principal occupation of each director and executive
officer of Liberty Media Corporation ("Liberty") are set forth below. The
business address for each person listed below is c/o Liberty Media Corporation,
12300 Liberty Boulevard, Englewood, Colorado 80112. All executive officers and
directors listed on this Schedule 1 are United States citizens, except for David
J.A. Flowers, who is a Canadian citizen.
Name Title
---- -----
John C. Malone Chairman of the Board and Director of Liberty
Robert R. Bennett President, Chief Executive Officer and Director of Liberty
Gary S. Howard Executive Vice President, Chief Operating Officer and
Director of Liberty
Donne F. Fisher Director of Liberty; President, Fisher Capital Partners,
Ltd.
Paul A. Gould Director of Liberty; Managing Director of Allen & Company
Incorporated
Jerome H. Kern Director of Liberty; Consultant, Kern Consulting, LLC
Larry E. Romrell Director of Liberty
David J.A. Flowers Senior Vice President and Treasurer of Liberty
Elizabeth M. Markowski Senior Vice President of Liberty
Charles Y. Tanabe Senior Vice President, General Counsel and Secretary of
Liberty
Peter N. Zolintakis Senior Vice President of Liberty
Christopher W. Shean Vice President and Controller of Liberty
Page 10 of 10 Pages
EXHIBIT INDEX
Exhibit No. Description
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7(a) Second Amended and Restated Limited Liability
Company Agreement of NTOP Holdings, L.L.C. (f/k/a
Net2Phone Holdings, L.L.C.) dated October 19, 2001.
7(b) Amendment No. 1 to the Second Amended and Restated
Limited Liability Company Agreement of NTOP
Holdings, L.L.C. (f/k/a Net2Phone Holdings,
L.L.C.) dated October 31, 2001.