Z-Tel Cuts 150 Jobs

TAMPA, Fla. -- Z-Tel Technologies, Inc. (Nasdaq/SC:ZTEL), today announced that it reduced its workforce by approximately 150 employees, lowering its payroll expense by more than 25%.

Trey Davis, Z-Tel's Acting Chief Executive Officer, commented, "Today's announcement is a direct result of the previously discussed transition Z-Tel is undergoing to become a facilities-based provider of voice, data and broadband services. As a result of this transition, we are streamlining the Company due to our reduced need for continuing significant investments in new technology and software development. We expect this workforce reduction to produce approximately $12 million in annual compensation savings, as well as additional savings in occupancy expenses as we consolidate certain of our operations in Atlanta and Tampa into our facility in Atmore, Alabama. These and other savings will contribute to our ongoing efforts to produce positive cash flow. We expect to incur a charge for the third quarter of 2004 related to the reduction of approximately $2.5 million, and we will continue a thorough, company-wide evaluation of our other ongoing operating expenses."

Z-Tel Technologies Inc.