Vitesse Reports Third Quarter Fiscal Year 2013 Results

We provide non-GAAP measures of non-GAAP income (loss) from operations and non-GAAP net income (loss) as a supplement to financial results based on GAAP income (loss) from operations and GAAP net income (loss). The Company believes that the additional non-GAAP measures are useful to investors for the purpose of financial analysis. We believe the presentation of non-GAAP measures provides investors with additional insight into underlying operating results and prospects for the future by excluding gains, losses and other charges that are considered by management to be outside of the Company's core operating results. Management uses these measures internally to evaluate the Company's in-period operating performance before taking into account these non-operating gains, losses and charges. In addition, the measures are used for planning and forecasting of the Company's performance in future periods.

In deriving non-GAAP income (loss) from operations from GAAP income (loss) from operations, we exclude stock-based compensation charges, amortization of intangible assets, as well as restructuring and impairment charges. In deriving non-GAAP net income (loss) from GAAP net income (loss), we further exclude gain or loss on the embedded derivative and loss on extinguishment of debt. Stock-based compensation charges, amortization of intangible assets, gain or loss on the embedded derivative and loss on extinguishment of debt represent charges that recur in amounts unrelated to the Company's operations. Restructuring and impairment costs relate to strategic initiatives that result in short term increases in costs that end with the fulfillment of the initiative and cost reductions in future periods.

The non-GAAP financial measures we provide have certain limitations because they do not reflect all of the costs associated with the operation of our business as determined in accordance with GAAP. Non-GAAP income (loss) from operations and Non-GAAP net income (loss) are in addition to, and are not a substitute for or superior to, income (loss) from operations and net income (loss), which are prepared in accordance with GAAP and may be different from non-GAAP measures used by other companies. A detailed reconciliation of the non-GAAP measures to the most directly comparable GAAP measure is set forth below. Investors are encouraged to review these reconciliations to appropriately incorporate the non-GAAP measures and the limitations of these measures into their analyses. For complete information on stock-based compensation, amortization of intangible assets, restructuring and impairment charges, and the change in the fair value of our embedded derivatives, please see our Form 10-K for the year ended September 30, 2012.

                                                                            
                                                                            
                                                                            
                     VITESSE SEMICONDUCTOR CORPORATION                      
                   UNAUDITED CONSOLIDATED BALANCE SHEETS                    
                                                                            
                                                                            
                                                  June 31,    September 30, 
                                                    2013           2012     
                                               -------------  ------------- 
                                                 (in thousands, except par  
                                                          value)            
                    ASSETS                                                  
                                                                            
Current assets:                                                             
  Cash                                         $      71,335  $      23,891 
  Accounts receivable, net                            10,404          9,403 
  Inventory, net                                                                  11,881                  12,060  
    Prepaid  expenses  and  other  current  assets                        3,193                    2,125  
                                                                                              -------------    -------------  
        Total  current  assets                                                            96,813                  47,479  
    Property,  plant  and  equipment,  net                                      2,793                    3,832  
    Other  intangible  assets,  net                                                  1,251                    1,175  
    Other  assets                                                                                  3,700                    4,130  
                                                                                              -------------    -------------  
                                                                                              $          104,557    $            56,616  
                                                                                              =============    =============  
                                                                                                                                                        
                              LIABILITIES  AND  STOCKHOLDERS'  EQUITY  (DEFICIT)                              
Current  liabilities:                                                                                                                
    Accounts  payable                                                          $              8,365    $              5,726  
    Accrued  expenses  and  other  current                                                                                
      liabilities                                                                                13,111                  12,188  
    Current  portion  of  debt,  net                                                  7,967                            -  
    Deferred  revenue                                                                          2,758                        871  
                                                                                              -------------    -------------  
        Total  current  liabilities                                                  32,201                  18,785  
    Other  long-term  liabilities                                                        410                        574  
    Long-term  debt,  net                                                                    8,259                  15,852  
    Compound  embedded  derivative                                                          -                    2,899  
    Convertible  subordinated  debt,  net                                    43,907                  42,521  
                                                                                              -------------    -------------  
        Total  liabilities                                                                  84,777                  80,631  
                                                                                              -------------    -------------  
                                                                                                                                                        
Stockholders'  equity  (deficit):                                                                                          
    Preferred  stock,  $0.01  par  value:  10,000                                                                    
      shares  authorized;  Series  B  Non  Cumulative,                                                            
      Convertible,  135  shares  outstanding  at  June                                                            
      30,  2013  and  September  30,  2012,                                                                                  
      respectively                                                                                        1                            1  
    Common  stock,  $0.01  par  value:  250,000                                                                        
      shares  authorized;  56,406  and  25,812  shares                                                            
      outstanding  at  June  30,  2013  and  September                                                              
      30,  2012,  respectively                                                                564                        258  
    Additional  paid-in-capital                                              1,889,778            1,829,976  
    Accumulated  deficit                                                          (1,870,563)        (1,854,250)
                                                                                              -------------    -------------  
        Total  stockholders'  equity  (deficit)                            19,780                (24,015)
                                                                                              -------------    -------------  
                                                                                              $          104,557    $            56,616  
                                                                                              =============    =============  
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
                                          VITESSE  SEMICONDUCTOR  CORPORATION                                            
                            UNAUDITED  CONSOLIDATED  STATEMENTS  OF  OPERATIONS                              
                                                                                                                                                        
                                                                                                                                                        
                                                                    Three  Months  Ended          Nine  Months  Ended    
                                                                              June  30,                            June  30,              
                                                                  --------------------    --------------------  
                                                                        2013              2012              2013              2012      
                                                                  ---------    ---------    ---------    ---------  
                                                                        (in  thousands,  except  per  share  data)      
Net  revenues:                                                                                                                              
    Product  revenues                              $    26,285    $    25,730    $    74,879    $    81,867  
    Intellectual  property  revenues              133            4,557            2,019            8,148  
                                                                  ---------    ---------    ---------    ---------  
        Net  revenues                                        26,418          30,287          76,898          90,015  
                                                                  ---------    ---------    ---------    ---------  
Costs  and  expenses:                                                                                                                  
    Cost  of  product  revenues                    11,666          11,270          34,010          34,028  
    Engineering,  research  and                                                                                                  
      development                                            11,706          10,513          31,987          32,518  
    Selling,  general  and                                                                                                            
      administrative                                        7,257            6,296          22,617          22,131  
    Amortization  of  intangible                                                                                                
      assets                                                              80                  88                266                234  
                                                                  ---------    ---------    ---------    ---------  
        Costs  and  expenses                            30,709          28,167          88,880          88,911  
                                                                  ---------    ---------    ---------    ---------  
(Loss)  income  from  operations              (4,291)          2,120        (11,982)          1,104  
Other  expense  (income):                                                                                                          
    Interest  expense,  net                            1,983            1,950            5,919            5,823  
    Gain  on  compound  embedded                                                                                                  
      derivative                                                        -          (5,755)            (803)        (3,773)
    Other  expense  (income),  net                      31                (20)                  5                  21  
                                                                  ---------    ---------    ---------    ---------  
        Other  expense  (income),  net            2,014          (3,825)          5,121            2,071  
                                                                  ---------    ---------    ---------    ---------  
(Loss)  income  before  income  tax                                                                                          
  expense  (benefit)                                    (6,305)          5,945        (17,103)            (967)
Income  tax  expense  (benefit)                      129            1,234              (790)          1,363  
                                                                  ---------    ---------    ---------    ---------  
Net  (loss)  income                                $    (6,434)  $      4,711    $  (16,313)  $    (2,330)
                                                                  =========    =========    =========    =========  
                                                                                                                                                        
Net  (loss)  income  per  common                                                                                                
  share  --  basic                                    $      (0.17)  $        0.18    $      (0.47)  $      (0.09)
Net  (loss)  income  per  common                                                                                                
  share  -  diluted                                  $      (0.17)  $        0.16    $      (0.47)  $      (0.09)
Weighted  average  shares                                                                                                          
  outstanding-  basic                                  38,630          25,302          34,601          24,951  
Weighted  average  shares                                                                                                          
  outstanding-  diluted                              38,630          38,413          34,601          24,951  
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
                                          VITESSE  SEMICONDUCTOR  CORPORATION                                            
    UNAUDITED  RECONCILIATION  OF  GAAP  NET  (LOSS)  INCOME  TO  NON-GAAP  NET  LOSS      
                                                                                                                                                        
                                                                    Three  Months  Ended          Nine  Months  Ended    
                                                                              June  30,                            June  30,              
                                                                  --------------------    --------------------  
                                                                        2013              2012              2013              2012      
                                                                  ---------    ---------    ---------    ---------  
                                                                        (in  thousands,  except  per  share  data)      
                                                                                                                                                        
GAAP  net  (loss)  income                      $    (6,434)  $      4,711    $  (16,313)  $    (2,330)
                                                                  ---------    ---------    ---------    ---------  
                                                                                                                                                        
Adjustments:                                                                                                                                
Stock-based  compensation  charges          1,156            1,092            3,305            3,301  
Amortization  of  intangible                                                                                                    
  assets                                                                  80                  88                266                234  
Restructuring  and  impairment                                                                                                
  charges                                                                  -                    4                  53                  36  
Gain  on  compound  embedded                                                                                                      
  derivative                                                            -          (5,755)            (803)        (3,773)
                                                                  ---------    ---------    ---------    ---------  
Total  GAAP  to  non-GAAP                                                                                                            
  adjustments                                                  1,236          (4,571)          2,821              (202)
                                                                  ---------    ---------    ---------    ---------  
Non-GAAP  net  (loss)  income              $    (5,198)  $          140    $  (13,492)  $    (2,532)
                                                                  =========    =========    =========    =========  
                                                                                                                                                        
Net  (loss)  income  per  common                                                                                                
  share                                                                                                                                            
Basic:                                                                                                                                            
GAAP  net  (loss)  income                      $      (0.17)  $        0.18    $      (0.47)  $      (0.09)
Adjustments  *                                                  0.04            (0.18)            0.08            (0.01)
                                                                  ---------    ---------    ---------    ---------  
Non-GAAP  net  (loss)  income              $      (0.13)  $              -    $      (0.39)  $      (0.10)
                                                                  =========    =========    =========    =========  
                                                                                                                                                        
Net  (loss)  income  per  common                                                                                                
  share                                                                                                                                            
Diluted:                                                                                                                                        
GAAP  net  (loss)  income                      $      (0.17)  $        0.16    $      (0.47)  $      (0.09)
Adjustments  *                                                  0.04            (0.16)            0.08            (0.01)
                                                                  ---------    ---------    ---------    ---------  
Non-GAAP  net  (loss)  income              $      (0.13)  $              -    $      (0.39)  $      (0.10)
                                                                  =========    =========    =========    =========  
                                                                                                                                                        
  UNAUDITED  RECONCILIATION  OF  GAAP  (LOSS)  INCOME  FROM  OPERATIONSTO  NON-GAAP    
                                              (LOSS)  INCOME  FROM  OPERATIONS                                                
                                                                                                                                                        
GAAP  (loss)  income  from                                                                                                          
  operations                                            $    (4,291)  $      2,120    $  (11,982)  $      1,104  
                                                                  ---------    ---------    ---------    ---------  
Adjustments:                                                                                                                                
Stock-based  compensation  charges          1,156            1,092            3,305            3,301  
Amortization  of  intangible                                                                                                    
  assets                                                                  80                  88                266                234  
Restructuring  and  impairment                                                                                                
  charges                                                                  -                    4                  53                  36  
                                                                  ---------    ---------    ---------    ---------  
Total  GAAP  to  non-GAAP                                                                                                            
  adjustments                                                  1,236            1,184            3,624            3,571  
                                                                                                                                                        
                                                                  ---------    ---------    ---------    ---------  
Non-GAAP  (loss)  income  from                                                                                                  
  operations                                            $    (3,055)  $      3,304    $    (8,358)  $      4,675  
                                                                  =========    =========    =========    =========  
                                                                                                                                                        
*  Included  in  the  adjustments  are  calculations  required  by  the  two  class        
    method  relative  to  participation  rights  of  our  preferred  shares.                    
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
 




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