As filed with the Securities and Exchange Commission on June 2, 2004

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

~~WASHINGTON~~Washington, D.C. DC 20549

FORM 8-K

CURRENT REPORT

~~Pursuant to~~PURSUANT ~~Section~~TO SECTION 13 orOR 15(d) OF ofTHE ~~the~~SECURITIES ~~Securities~~EXCHANGE ~~Exchange~~ACT ~~Act~~OF of 1934

Date of ~~report~~Report (Date of earliest event reported): ~~April 14~~June 1, 2004

ALLEGIANCE TELECOM, INC.

(~~EXACT~~Exact ~~NAME~~Name OFof ~~REGISTRANT~~Registrant ASas ~~SPECIFIED~~Specified ~~IN ITS CHARTER~~in Charter)

Delaware	0-24509	75-2721491
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)
(State or Other Jurisdiction of Incorporation)	(Commission File No.)	(I.R.S. Employer Identification No.)
9201 North Central Expressway Dallas, Texas 75231
9201 North Central Expressway Dallas, Texas 75231 214/261-7100
(Address of Principal Executive Offices, including Zip Code)
(Address of Principal Executive Offices) (Zip Code) (Registrant’s telephone number including area code)
(214) 261-7100
Not applicable
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

~~Item~~ITEM 57. ~~Other Events~~EXHIBITS.

On May 14, 2003, Allegiance Telecom, Inc. and all of its direct and indirect subsidiaries (collectively, “Allegiance”) filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”).

(c)	The following exhibit is furnished as part of this report:

	Exhibit 99.1	Operating Statement

~~Sale~~ITEM of9. ~~Certain~~REGULATION ~~Assets~~FD ~~to XO Communications, Inc~~DISCLOSURE.

OnOperating February 12 and 13, 2004, Allegiance conducted an auction for its assets in which XO Communications, Inc. (“XO”) was selected as the winning bidder. On February 18, 2004, Allegiance entered into an Asset Purchase Agreement with XO and the Bankruptcy Court approved the XO Asset Purchase Agreement on February 20, 2004. Under the terms of the XO Asset Purchase Agreement, XO agreed to purchase, for approximately $311 million in cash and approximately 45.38 million shares of XO common stock, substantially all of the assets of Allegiance Telecom and its subsidiaries, except for Allegiance’s customer premises equipment sales and maintenance business operated under the name of Shared Technologies, its dedicated dial up access services business operated under an agreement with Level 3 Communications, its shared hosting business and certain other Allegiance assets and operations.Statement

On ~~April 14~~June 1, 2004, ~~pursuant~~Allegiance ~~to the terms of the XO Asset Purchase Agreement~~Telecom, ~~Allegiance~~Inc. and XOall ~~closed~~of ~~this~~its ~~sale transaction~~subsidiaries ~~into~~ (the “~~escrow.~~Company” On) ~~the~~filed ~~same~~their ~~date, Allegiance~~monthly ~~announced~~operating ~~that~~statement itfor ~~had~~the ~~entered~~month ~~into~~of April 2004 an(the “Operating ~~Agreement~~Statement”) with ~~XO that will allow XO to operate~~ the ~~Allegiance~~U.S. ~~assets~~Bankruptcy XOCourt ~~is acquiring subject to~~for ~~Allegiance’s consent and in accordance with applicable law, regulations, and~~ ~~tariffs; such Operating Agreement is in place until~~ the ~~final~~Southern ~~closing~~District of ~~the transactions~~New ~~contemplated by the XO Asset Purchase Agreement~~York. A copy of the ~~related~~Operating ~~press~~Statement ~~release~~ is ~~included~~ ~~herein~~attached hereto as Exhibit 99.1~~. The final~~ ~~closing~~and ~~of this transaction remains subject to, among other things,~~is ~~approval by the Bankruptcy Court of Allegiance’s plan of reorganization under~~ ~~Chapter~~incorporated 11in ofits ~~the~~entirety ~~United~~herein ~~States~~by ~~Bankruptcy Code~~reference.

~~Settlement~~The ~~Agreement~~Operating Statement is in a format prescribed by the applicable ~~and~~ bankruptcy ~~Sale~~laws. The Company cautions readers not to place undue reliance upon the information contained in the Operating Statement. The information in the Operating Statement has been prepared in accordance with accounting standards generally accepted in the United States of America for interim reporting. Certain ~~Assets~~information toand ~~Level~~footnote 3disclosures ~~Communications~~required by accounting principles generally accepted in the United States of America have been condensed or omitted for purposes of this Operating Statement. There can be no assurance that the Operating Statement is complete, ~~LLC~~and the Company undertakes no obligation to update or revise this Statement. The Operating Statement has not been audited or reviewed by independent accountants.

OnThe ~~February~~unaudited ~~27,~~information ~~2004,~~in ~~Allegiance entered into an Amended and Restated Confidential Settlement Agreement and Mutual Release (~~the ~~“Settlement~~Operating ~~Agreement”)~~Statement ~~with~~is ~~Level~~subject ~~3 Communications, LLC (“Level 3”) and XO under which, among other things, Allegiance agreed~~ to ~~terminate its~~ ~~dedicated~~ further ~~dial-up~~review ~~services~~and ~~contract~~potential ~~with~~adjustments ~~Level~~and ~~3. On~~are ~~April~~not 6,necessarily ~~2004,~~indicative ~~the Bankruptcy Court entered an amended order~~of ~~approving~~ the ~~Settlement~~results ~~Agreement. The Settlement~~that ~~Agreement~~may ~~provides,~~be ~~among~~expected ~~other things,~~ for atthe ~~consummation:~~quarter ~~Level~~ending ~~3 to pay Allegiance $54 million at closing; Level 3 to reimburse Allegiance for amounts paid by Allegiance to KMC Telecom since February 1~~June 30, 2004 ~~and additional~~or ~~amounts intended to reimburse Allegiance for expenses associated with operating~~ the ~~dial-up~~year ~~access~~ending ~~business for Level 3 since February 1~~December 31, 2004 ~~and on a going~~. ~~forward basis; Allegiance to pay Level 3 an amount equal to all reciprocal~~ ~~compensation~~In ~~related to traffic under the agreement from February 1~~addition, ~~2004 until~~ the ~~closing~~Operating ~~under~~Statement ~~the~~contains ~~Settlement~~information ~~Agreement;~~for ~~the termination of the agreement~~periods ~~under~~ which ~~Allegiance~~may ~~provides~~be ~~Level~~shorter 3or ~~with~~otherwise ~~dedicated~~different ~~dial-up~~from ~~access~~those ~~services; the~~contained ~~transfer~~in of the ~~dedicated~~Company’s reports ~~physical~~pursuant ~~assets used by Allegiance~~ to ~~provide~~ the ~~dial-up~~ ~~access~~Securities ~~services~~Exchange toAct ~~Level~~of 3;1934, ~~and~~as aamended ~~significant reduction~~ (~~and ultimate~~the ~~cessation) of revenues to Allegiance under this service agreement on a~~ ~~going-forward~~“Exchange ~~basis~~Act”). ~~The~~ ~~Settlement Agreement~~Accordingly, ~~also~~the ~~provides that Allegiance will retain a continuing obligation to~~substance ~~provide~~ and ~~certain~~format ~~termination~~of ~~assistance~~the ~~services~~Operating ~~to Level 3 and that XO will~~Statement ~~assume~~ does ~~this~~not ~~obligation~~allow ~~after~~for ~~the~~meaningful ~~closing~~comparison ~~under~~with the XOCompany’s ~~Asset~~regular ~~Purchase~~publicly ~~Agreement. On April 19, 2004,~~ ~~Allegiance~~disclosed ~~and~~consolidated ~~Level~~financial 3statements. ~~closed~~Results ~~the~~set ~~initial~~forth ~~transactions~~in ~~contemplated by~~ the ~~Settlement~~ Operating ~~Agreement~~Statement ~~including~~should ~~the~~not ~~payment~~be ofviewed ~~$54~~as ~~million~~indicative ~~by Level 3 to Allegiance. A copy~~ of ~~the~~future ~~related press release is included herein as Exhibit 99~~results.2.

~~The~~Limitation ~~exhibits described below are incorporated~~on ~~herein~~ Incorporation by ~~reference.~~Reference

In accordance with general instruction B.2 of Form 8-K, the Operating Statement and other information in this report (including exhibits) is furnished pursuant to Item 79 and shall not be deemed to be “filed” for the purposes of Section 18 of the Exchange Act, or otherwise subject to liabilities of that Section, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as expressly set forth in such filing. ~~Exhibits~~This report will not be deemed an admission as to the materiality of any information in the report that is required to be disclosed solely by Regulation FD.

10.1 Asset Purchase Agreement, dated February 18, 2004, by and among Allegiance Telecom, Inc., Allegiance Telecom Company Worldwide and XO Communications, Inc. (incorporated herein by reference from Exhibit 10.39 of Allegiance Telecom, Inc.’s Form 10-K for the year ended December 31, 2003).2

~~10.2 Amendment No. 1 to Asset Purchase Agreement, dated April 13, 2004, by and among Allegiance Telecom, Inc., Allegiance Telecom Company Worldwide and XO Communications, Inc.~~SIGNATURES

~~10.3 Operating~~Pursuant ~~Agreement,~~to ~~dated April~~the ~~13,~~requirements ~~2004,~~of bythe ~~and~~Securities ~~among~~Exchange ~~Allegiance~~Act ~~Telecom,~~of ~~Inc.~~1934, the ~~Allegiance~~registrant ~~Telecom~~has duly caused this report to be signed on its behalf by the ~~Company~~ undersigned ~~Worldwide~~hereunto ~~and~~duly XOauthorized ~~Communications~~on June 2, ~~Inc~~2004.

~~99.1 Allegiance~~ALLEGIANCE ~~Telecom~~TELECOM, ~~Inc~~INC. ~~Press~~ ~~Release~~By ~~dated~~/s/ ~~April~~Mark ~~14,~~B. ~~2004~~Tresnowski Mark B. Tresnowski Executive Vice President, General Counsel and Secretary

~~99.2 Allegiance Telecom, Inc.~~EXHIBIT ~~Press Release dated April 20, 2004.~~ INDEX

EXHIBIT NO.		DESCRIPTION

99.1		Operating Statement

~~SIGNATURES~~3

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized on April 21, 2004.

ALLEGIANCE TELECOM, INC. /s/ Mark B. Tresnowski By: Mark B. Tresnowski Its: Executive Vice President, General Counsel and Secretary

EXHIBIT INDEX

10.2 Amendment No. 1 to Asset Purchase Agreement, dated April 13, 2004, by and among Allegiance Telecom, Inc., Allegiance Telecom Company Worldwide and XO Communications, Inc.

10.3 Operating Agreement, dated April 13, 2004, by and among Allegiance Telecom, Inc., Allegiance Telecom Company Worldwide and XO Communications, Inc.

99.1 Allegiance Telecom, Inc. Press Release dated April 14, 2004.

99.2 Allegiance Telecom, Inc. Press Release dated April 20, 2004.

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