Fusion Restructures Organization, Savings Expected To Be $1.5 Million Per Year
March 31 2009 - 9:20AM
PR Newswire (US)
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 Damon Testaverde, Managing Director Network 1
Financial Securities 732-758-9001
http://www.newscom.com/cgi-bin/prnh/20050705/NYTU073LOGODATASOURCE:
Fusion CONTACT: Philip Turits, Treasurer, Fusion, +1-212-201-2407,
; or Damon Testaverde, Managing Director, Network 1 Financial
Securities, +1-732-758-9001, Web Site: http://www.fusiontel.com/
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