Fusion Restructures Organization, Savings Expected To Be $1.5

Fusion Restructures Organization, Savings Expected To Be $1.5 Million Per Year

  PR Newswire

  NEW YORK, March 31

Expands Sales Organization To Promote Higher Margin Corporate Services

NEW YORK, March 31 /PRNewswire-FirstCall/ -- Fusion Telecommunications
International, Inc. (Amex: FSN) today announced an organizational
restructuring designed to reduce overall corporate headcount and expenses, and
increase the focus on the Company's existing corporate and carrier business
segments.

As part of this restructuring, Fusion will exit the consumer business, which
represents less than two percent of total revenues, and streamline its
operations. The restructuring, along with increased automation and other
efficiency improvements, is expected to result in a 41% reduction in existing
employee headcount over the next 90 days, primarily through the elimination of
consumer sales and support positions. Fusion anticipates that these aggressive
cost-saving measures will save the Company approximately $2.2 million per year
in operating expenses. When combined with an expansion of the corporate sales
organization, as well as automation improvements designed to drive further
efficiencies, net savings for the Company are anticipated to exceed $1.5
million per year. Fusion will incur certain charges and write-downs associated
with the restructuring that are more fully disclosed in its Current Report on
Form 8-K being filed contemporaneously with this press release. Additionally,
at year end, the Company took a $5 million non-cash impairment charge to
goodwill associated with the consumer division.

"We believe that this restructuring, combined with adequate financing, will
reduce our overhead expenses and help increase our focus on solid plans for
revenue growth, moving us closer to achieving our goal to become Adjusted
EBITDA positive during the fourth quarter of this year," said Matthew Rosen,
Chief Executive Officer. "In addition," he added, "it will allow us to
concentrate on delivering worldwide voice and data solutions to the small,
medium, and large enterprises served by our corporate segment, and enhance the
focus on our carrier segment, which now serves over 200 international carrier
customers and vendors."

The refinement in the Company's business strategy is designed to allow it to
better focus on its most profitable product offerings. At the center of this
focus are Fusion's corporate service offerings, which include a comprehensive
portfolio of communications products designed to drive cost savings and
efficiencies - a very timely focus given the challenging economic environment
and the need for all companies to reduce costs.

Since the beginning of the year, Fusion has expanded its corporate sales
organization by adding experienced direct and partner sales personnel, as well
as sales engineering and support resources. These staff additions are expected
to enhance the Company's ability to deliver its corporate products and
services. These offerings are important to the Company, as they are typically
sold under long term contracts averaging nearly three years and provide the
Company with gross margins that are as high as 60% and average over 40%.

Commenting on the increasing focus on corporate customers, Rosen stated, "Our
recent success in attracting corporate customers, combined with the high
margins and longer term commitments we have already experienced in this
segment, supports our increased focus on corporate business. We see this
segment making a positive contribution to this year's financial results, and
we are expanding our direct and indirect corporate sales efforts to help
ensure our success."

In addition to its restructuring activities, Fusion has raised approximately
$4.3 million in new debt and equity financing during the past six months to
support its operations. Although the Company's cash reserves continue to be
very limited, the Company believes it will continue to be able to raise funds
through its existing capital-raising efforts. The Company also continues to
seek a more significant financing in an attempt to ensure the availability of
adequate capital to reach its goal of positive Adjusted EBITDA.

Use of Non-GAAP Financial Measures:

The Company believes that EBITDA (earnings before interest, taxes,
depreciation and amortization) is useful to investors because it is commonly
used in the communications industry to analyze companies on the basis of
operating performance and leverage. The Company also believes that EBITDA
provides investors with a measure of the Company's operational and financial
progress that corresponds with the measurements used by management as a basis
for allocating resources and making other operating decisions. Adjusted EBITDA
provides an adjusted view of EBITDA that takes into account certain
significant nonrecurring transactions, such as impairment losses associated
with divested businesses and forgiveness of debt, which vary significantly
between periods and are not recurring in nature. Although the Company uses
Adjusted EBITDA as one of several financial measures to assess its operating
performance, its use is limited as it excludes certain significant operating
expenses. EBITDA and Adjusted EBITDA are not intended to represent cash flows
for the period presented, nor have they been presented as an alternative to
operating income or as an indicator of operating performance and should not be
considered in isolation or as a substitute for measures of performance
prepared in accordance with Generally Accepted Accounting Principles (GAAP).
Consistent with the SEC Regulation G, the non-GAAP measures in this press
release have been reconciled to the nearest GAAP measure, which can be viewed
under the heading "Reconciliation of Net Income (Loss) to Adjusted EBITDA",
immediately following the Consolidated Statements of Operations included in
this press release.

About Fusion:

Fusion is a new breed of communications carrier, dedicated to providing a full
range of advanced, IP-based voice and data solutions to corporate and carrier
customers worldwide. The Company provides hosted IP-PBX applications, SIP
trunking services, voice traffic termination, private networks, Internet
access and a full suite of enhanced features and services.

For more information, please go to http://www.fusiontel.com.

(Logo: http://www.newscom.com/cgi-bin/prnh/20050705/NYTU073LOGO)

Statements in this Press Release that are not purely historical facts,
including statements regarding Fusion's beliefs, expectations, intentions or
strategies for the future, may be "forward-looking statements" under the
Private Securities Litigation Reform Act of 1995. All forward-looking
statements involve a number of risks and uncertainties that could cause actual
results to differ materially from the plans, intentions, and expectations
reflected in or suggested by the forward-looking statements. Such risks and
uncertainties include, among others, introduction of products in a timely
fashion, market acceptance of new products, cost increases, fluctuations in
and obsolescence of inventory, price and product competition, availability of
labor and materials, development of new third-party products and techniques
that render Fusion's products obsolete, delays in obtaining regulatory
approvals, potential product recalls and litigation. Risk factors, cautionary
statements and other conditions, which could cause Fusion's actual results to
differ from management's current expectations, are contained in Fusion's
filings with the Securities and Exchange Commission and available through
http://www.sec.gov.

    CONTACT:    Philip Turits, Treasurer
                Fusion
                212-201-2407
                pturits@fusiontel.com

                Damon Testaverde, Managing Director
                Network 1 Financial Securities
                732-758-9001
                ddtestaverde@netw1.com

SOURCE Fusion

Website: http://www.fusiontel.com
Contact: Philip Turits, Treasurer, Fusion, +1-212-201-2407,
pturits@fusiontel.com; or Damon Testaverde, Managing Director, Network 1
Financial Securities, +1-732-758-9001, ddtestaverde@netw1.com
 
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