Fusion Reports Fourth Quarter and Full Year 2008 Results

Fusion Reports Fourth Quarter and Full Year 2008 Results

  PR Newswire

  NEW YORK, March 31

NEW YORK, March 31 /PRNewswire-FirstCall/ -- Fusion (Amex: FSN) today
announced financial results for the quarter and full year ended December 31,
2008.

Recent Highlights:

    --  Full Year 2008 Consolidated Revenues were $50.6 million, compared to
        $55.0 million for full year 2007;
    --  Adjusted EBITDA loss for 2008 full year and fourth quarter increased
        2.2% over 2007 full year and 19.1% over 2007 fourth quarter, but
        improved for second consecutive quarter;
    --  Raised $6.8 million in debt and equity financing in full year 2008;
    --  Revenues from corporate customers increased 39% over prior quarter;
    --  Selling, General and Administrative costs improved for the third
        consecutive quarter, and improved 3.4% compared to full year 2007;

    --  Company appealed notice of intent to de-list Fusion stock by NYSE Amex
        to Appeals Panel at Hearing on March 25, 2009; Company received notice
        from the Appeals Panel on March 30, 2009 that it had been granted a
        sixty day extension.

Fusion reported Consolidated Revenues of $50.6 million and $13.1 million for
the year and quarter ended December 31, 2008, respectively. This represented a
decrease of 8.1% and 10.9% compared to revenues of $55.0 million and $14.7
million for the year and quarter ended December 31, 2007. The decrease over
the prior year was primarily attributable to a decrease in the carrier
segment, which was due in large part to lower traffic volumes resulting from
the challenging economic environment, as well as normally expected variations
in traffic.

Consolidated Gross Margin decreased slightly to 6.5% for the year and 6.3% for
the fourth quarter of 2008, compared to 7.7% for the year and 7.6% for the
fourth quarter of 2007.

Although overall results were lower than anticipated due to the reasons
indicated above, fourth quarter revenue for the corporate division increased
by 39% compared to the prior quarter and nearly 400% when compared to the
fourth quarter of 2007. The fourth quarter was our fourth successive quarter
of growth in both revenue and margin in the corporate division. The average
monthly charge per customer increased by 16% and the total contract value of
our existing customer base increased by more than 60%.

Selling, General and Administrative costs improved for the third consecutive
quarter, and represented a 3.4% decrease for 2008 compared to 2007. It was
also a 2.4% improvement for the fourth quarter of 2008 over 2007. The
improvement was primarily attributable to the Company's continuing focus on
cost-containment and maximizing infrastructure efficiencies. 2008 results also
included $0.1 million in one-time costs associated with the consumer business.
Excluding this additional expense, the year over year improvement would have
been 4.2%.

For the year ended December 31, 2008, Adjusted EBITDA loss (earnings before
interest, taxes, depreciation, amortization, and specific non-recurring and
non-cash adjustments) increased $0.2 million, or 2.2%, to ($7.6) million,
compared to Adjusted EBITDA of ($7.4) million for the year ended 2007.

Fusion also reported an increase in Net Loss in the year ended December 31,
2008 compared to the year ended December 31, 2007. For 2008, Fusion reported a
Net Loss of ($15.6) million, and a Net Loss applicable to Common Stockholders
of ($16.2 million) or ($0.44) per share compared to a Net Loss of ($12.7)
million, and a Net Loss applicable to Common Stockholders of ($13.2) million
or ($0.48) per share during the year ended December 31, 2007.

As of December 31, 2008, the Company had current assets of $4.1 million
compared to $6.3 million as of December 31, 2007. The decrease was primarily a
result of a decrease in Accounts Receivable due to early receipt in the first
quarter of 2008 of certain receivables. Total Liabilities and Stockholders'
equity (deficit) at December 31, 2008 was a ($4.8) million deficit, compared
to $6.7 million in equity as of December 31, 2007. The primary reasons for the
change were the $5.1 million impairment primarily associated with the exit in
the Consumer segment, as well as the Net Loss from Operations in 2008 of $10.5
million, offset by additional equity investments of $3.5 million.

As required by Amex Company Guide Section 610(b), the Company also disclosed
that financial statements for the fiscal year ended December 31, 2008, again
contained a going concern qualification from its independent accounting firm,
Rothstein, Kass and Company, P.C.

Commenting on the results, Matthew Rosen, Chief Executive Officer of Fusion,
said, "The fourth quarter of 2008, and the year in general, were challenging
for Fusion, and for virtually all companies having to deal with the realities
of an uncertain and struggling economy. While our business was impacted by
lower traffic volumes and a slowing of both the sales cycles and the
availability of investment capital, we ultimately believe that the economic
situation will benefit us in the long term, as we are able to provide
communications services that assist companies in reducing their costs without
compromising on quality. To reach our goal of positive Adjusted EBITDA prior
to the end of 2009, in addition to our continuing efforts to work on adequate
financing, we have maximized our operational efficiencies, reduced cash
requirements and increased our focus on growing our higher margin corporate
business."

Expanding on Mr. Rosen's comments, Don Hutchins, President and Chief Operating
Officer of Fusion, said, "We believe that the major progress we have seen in
direct and partner corporate sales will continue, and we anticipate a
significant increase in future revenues from this division. Additionally, we
expect to increase our focus on the carrier segment that now serves over 200
international customers and vendors, allowing for significant growth. Improved
operating efficiencies, increased automation of key processes and systems, as
well as other aggressive, cost-cutting measures will help to improve results,
and play a significant role in Fusion's future success."

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.

Earnings Conference call

The Company will host a conference call to discuss its financial results at
10:00 A.M. ET today. The conference call can be accessed by dialing (877)
879-6201. A replay of the call will be available through Friday, April 3,
2009. To listen to the replay, please call (888) 203-1112 (Domestic) or (719)
457-0820 (International). To access the replay, users will need to enter the
following passcode: 5643166. The call will be available live on the Internet
at http://www.fusiontel.com. The online archive of the web cast will be
available for one year following the call.

(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, securing necessary funding 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.



       FUSION TELECOMMUNICATIONS INTERNATIONAL, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET


                                  December 31, 2008  December 31, 2007
                                  -----------------  -----------------
    ASSETS
    Current assets
      Cash and cash equivalents            $458,246           $114,817
      Accounts receivable, net
       of allowance                       3,330,908          5,545,408
      Prepaid expenses and other
       current assets                       329,968            481,556
      Assets held for sale                        -            129,231
                                                ---            -------
        Total current assets              4,119,122          6,271,012
                                          ---------          ---------

    Property and equipment, net           3,941,528          5,425,846
                                          ---------          ---------

    Other assets
      Security deposits                      51,760             66,638
      Restricted cash                       416,566            416,566
      Goodwill                                    -            964,557
      Intangible assets, net                810,908          4,892,215
      Other assets                          123,440             91,455
                                            -------             ------
        Total other assets                1,402,674          6,431,431
                                          ---------          ---------
    TOTAL ASSETS                         $9,463,324        $18,128,289
                                         ==========        ===========

    LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
    Current Liabilities
      Long-term debt, current
       portion                           $2,362,992           $566,567
      Capital and equipment
       financing lease
       obligations, current
       portion                              122,960            233,759
      Accounts payable and
       accrued expenses                  10,283,207          9,663,325
      Liabilities of
       discontinued operations               13,313             15,829
                                             ------             ------
        Total current liabilities        12,782,472         10,479,480
                                         ----------         ----------

    Long-term liabilities
      Other long-term liabilities         1,445,431            953,626
                                          ---------            -------
        Total long-term
         liabilities                      1,445,431            953,626
                                          ---------            -------

    Stockholders' equity
      Preferred stock, Class A-
       1, A-2, A-3 & A-4                         80                 80
      Common stock                          457,500            299,078
      Capital in excess of par
       value                            124,384,568        120,402,691
      Accumulated deficit              (129,606,727)      (114,006,666)
                                       ------------       ------------
        Total stockholders'
         equity                          (4,764,579)         6,695,183
                                         ----------          ---------

    TOTAL LIABILITIES AND
     STOCKHOLDERS' EQUITY                $9,463,324        $18,128,289
                                         ==========        ===========



             FUSION TELECOMMUNICATIONS INTERNATIONAL, INC. AND SUBSIDIARIES
                          CONSOLIDATED STATEMENT OF OPERATIONS

                                 Three Months Ended          Fiscal Year Ended
                                    December 31,               December 31,
                                    ------------               ------------
                                 2008         2007          2008          2007
                                 ----         ----          ----          ----

    Revenues              $13,113,284  $14,717,018   $50,559,371   $55,023,860
    Operating
     expenses:
      Cost of
       revenues            12,283,694   13,604,176    47,253,807    50,797,354
      Depreciation
       and
       amortization           488,179      460,303     1,882,959     1,709,040
      Loss on
       Impairment           5,143,231    4,006,664     5,143,231     4,006,664
      Selling, general
       and
       administrative
       expenses             2,822,694    2,891,905    12,056,007    12,484,485
      Advertising
       and
       Marketing               24,113        5,322       108,086       146,471
                               ------        -----       -------       -------
           Total
            operating
            expenses       20,761,911   20,968,370    66,444,090    69,144,014
                           ----------   ----------    ----------    ----------
    Operating
     loss                 (7,648,627)  (6,251,352)  (15,884,719)  (14,120,154)

    Other
     income
     (expense)
      Interest
       income
       (expense),
       net                  (121,649)      (6,743)     (316,284)      (17,043)
      Gain (loss) on
       debt
       forgiveness                 -      618,885       659,991       618,885
      Gain (loss)
       on sale of
       investment
       in Estel                    -            -             -        937,578
      Loss from
       investment in
       Estel                       -            -             -       (60,000)
      Other                   (1,101)     (48,612)      (59,049)      (27,536)
                               ------      -------       -------       -------
         Total other
          income
          (expense)          (122,750)     563,530       284,658     1,451,884
                             --------      -------       -------     ---------
    Loss from
     continuing
     operations           (7,771,377)  (5,687,822)  (15,600,061)  (12,668,270)

    Income (loss)
     from
     discontinued
     operations                     -            -             -             -
                                  ---          ---           ---           ---

    Net loss             $(7,771,377) $(5,687,822) $(15,600,061) $(12,668,270)
                          ===========  ===========  ============  ============

    Losses
     applicable to
     common
     stockholders
      Loss from
       continuing
       operations        $(7,771,377) $(5,687,822) $(15,600,061) $(12,668,270)
      Preferred
       stock
       dividends
       in arrears           (161,214)    (572,087)     (641,352)     (572,087)
                             --------     --------      --------      --------
    Net loss
     applicable to
     common
     stockholders
      from
       continuing
       operations         (7,932,591)  (6,259,909)  (16,241,413)  (13,240,357)
      Income from
       discontinued
       operations                   -            -             -             -
                                  ---          ---           ---           ---
    Net loss
     applicable to
     common
     stockholders        $(7,932,591) $(6,259,909) $(16,241,413) $(13,240,357)
                         ===========  ===========  ============  ============

    Basic and
     diluted
     net loss
     per
     common
     share:
      Loss from
       continuing
       operations             $(0.18)      $(0.22)       $(0.44)       $(0.48)
      Income (loss)
       from
       discontinued
       operations                   -            -             -             -
                                  ---          ---           ---           ---
    Net loss
     applicable to
     common
     stockholders             $(0.18)      $(0.22)       $(0.44)       $(0.48)
                               ======       ======        ======        ======

    Weighted
     average
     shares
     outstanding
      Basic and
       diluted             42,924,966   28,360,155    37,274,411    27,314,196
                           ==========   ==========    ==========    ==========



          FUSION TELECOMMUNICATIONS INTERNATIONAL, INC. AND SUBSIDIARIES

                  RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA


                              Three Months Ended          Fiscal Year Ended
                                 December 31,               December 31,
                                 ------------               ------------
                               2008         2007          2008          2007
                               ----         ----          ----          ----

    Net loss            $(7,771,377) $(5,687,822) $(15,600,061) $(12,668,270)

    Income from
     discontinued
     operations                   -            -             -             -
                                ---          ---           ---           ---
    Loss from
     continuing
     operations          (7,771,377)  (5,687,822)  (15,600,061)  (12,668,270)
    Adjustments:
    Interest
     (income)
     expense, net           121,649        6,743       316,284        17,043
    Depreciation and
     amortization           488,179      460,303     1,882,959     1,709,040
                            -------      -------     ---------     ---------
    EBITDA               (7,161,549)  (5,220,776)  (13,400,818)  (10,942,187)
    Adjustments:
    (Gain) loss on
     settlements
     of debt                      -     (618,885)     (659,991)     (618,885)
    (Gain)/loss on
     disposal of
     fixed assets                 -      115,566        59,158       105,807
    (Gain) loss on
     sales of
     investment in
     Estel                        -            -             -      (937,578)
    Loss on
     impairment           5,143,231    4,006,664     5,143,231     4,006,664
    Communication
     charges                                           353,491
    Other taxes              37,401      112,303       289,923       410,475
    Other                                                  537
    Non cash
     compensation           174,873       88,650       617,499       544,417
                            -------       ------       -------       -------
    Adjusted EBITDA     $(1,806,044) $(1,516,478)  $(7,596,970)  $(7,431,287)
                        ===========  ===========   ===========   ===========


    FUSION       Philip Turits
    CONTACT:     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 of Fusion, +1-212-201-2407, pturits@fusiontel.com; or
Damon Testaverde, Managing Director of Network 1 Financial Securities,
+1-732-758-9001, ddtestaverde@netw1.com
 
Press spacebar to pause and continue. Press esc to stop.