“Vitesse has emerged from some very formidable times as a stronger and profitable business. We have taken concrete steps to improve our strategic direction, product execution, operational efficiency, and customer loyalty,” said Chris Gardner, chief executive officer of Vitesse. “The results are a dramatic three-year trend of improved operational and financial performance. During this time, we have strengthened substantially every financial metric including: revenue, margins, operating income, net income, net debt, and cash. While we still have some challenges ahead, we now have a sound base on which to build, and we remain as committed as ever to improving shareholder value.”
Recap of Fiscal Year 2008 Results
As discussed in greater detail in the Company’s fiscal year 2008 Form 10-K, Vitesse announces fiscal year 2008 highlights as follows:
- Net revenues in fiscal year 2008 were $228.5 million, an increase of 3% compared with the $221.9 million reported for fiscal year 2007;
- Revenue for the licensing of intellectual property was $10.0 million in fiscal year 2008;
- Cost of revenues for fiscal year 2008 was $106.3 million, or 47% of revenues, a decrease from $113.8 million, or 51% of revenues for fiscal year ended 2007;
- Income from operations in fiscal year 2008 was $8.4 million compared to a loss from operations of $1.8 million for fiscal year 2007. Income from operations in fiscal year 2008 includes charges of $10.8 million related to professional fees associated with the completion of its internal accounting investigation, actions to improve internal controls and preparation of its financial statements. The fiscal year 2007 loss from operations included the same professional charges totaling $13.6 million;
- Net income for fiscal year 2008 was $16.6 million, or $0.07 net income per share, compared to net loss of $21.6 million, or $0.10 loss per share, for fiscal year 2007; and
- Cash position as of September 30, 2008 was $36.7 million.
Investors should review these financial results in conjunction with the more comprehensive information regarding the Company’s results of operations and financial condition included in its fiscal year 2008 Form 10-K.
Conference Call Information
A conference call is scheduled for Tuesday, January 6, 2009, at 8:00 a.m. Eastern Time. To listen to the conference call via telephone, dial 800-450-5178 (U.S. toll-free) or 706-679-6171 (International) and provide the passcode 79385488. Participants should dial in at least 10 minutes prior to the start of the call. The Company will also broadcast the conference call via a webcast over the internet. To listen to the webcast, please visit the investors section of the Vitesse website at www.vitesse.com. The call will be recorded and available for replay until Tuesday, January 13, 2009. To access the audio replay, dial 800-642-1687 (U.S. toll-free) or 706-645-9291 (International) and provide the passcode 79385488.
Investor Conference Participation
Vitesse will participate in the 11th Annual Needham & Company Growth Stock Conference, January 6 – 8, 2009. Representing Vitesse at this event will be Chris Gardner, CEO, and Rich Yonker, CFO. They will present on Wednesday, January 7, 2009 at 3:30 pm Eastern Time. The presentation will be webcast. To listen to the webcast, view the investor section of the Company’s web site: www.vitesse.com.
About Vitesse
Vitesse designs, develops and markets a diverse portfolio of high-performance, cost-competitive semiconductor solutions for Carrier and Enterprise networks worldwide. Engineering excellence and dedicated customer service distinguish Vitesse as an industry leader in Gigabit Ethernet LAN, Ethernet-over-SONET, Fibre Channel, Optical Transport, and other applications. Vitesse innovation empowers customers to deliver superior products for Enterprise, Access, Metro, and Core applications. Additional company and product information is available at www.vitesse.com.
Vitesse is registered trademark in the United States and/or other jurisdictions of Vitesse Semiconductor Corporation. All other trademarks or registered trademarks mentioned herein are the property of their respective holders.
Cautions Regarding Forward Looking Statements:
All statements included or incorporated by reference in this release and the related conference call for analysts and investors, other than statements or characterizations of historical fact, are forward-looking statements. These forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current facts. These forward-looking statements are based on our current expectations, estimates and projections about our business and industry, management's beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” and similar terms, and variations or negatives of these words. Forward-looking statements are not guarantees of future performance and the Company’s actual results may differ significantly from the results discussed in the forward-looking statements.
| CONSOLIDATED BALANCE SHEETS | ||||||||||||||
| September 30, | ||||||||||||||
| 2008 | 2007 | |||||||||||||
| (in thousands, except share data) | ||||||||||||||
| ASSETS | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | 36,722 | $ | 25,976 | ||||||||||
| Short-term investments | - | 7,600 | ||||||||||||
| Accounts receivable, net | 6,307 | 7,146 | ||||||||||||
| Inventory | 37,466 | 33,728 | ||||||||||||
| Assets held for sale | 3,164 | 35,472 | ||||||||||||
| Restricted cash | 592 | 2,147 | ||||||||||||
| Prepaid expenses and other current assets | 4,011 | 6,188 | ||||||||||||
| Total current assets | 88,262 | 118,257 | ||||||||||||
| Property, plant and equipment, net | 8,084 | 9,286 | ||||||||||||
| Goodwill | 191,418 | 191,418 | ||||||||||||
| Other intangible assets, net | 913 | 3,295 | ||||||||||||
| Other assets | 3,600 | 5,092 | ||||||||||||
| $ | 292,277 | $ | 327,348 | |||||||||||
| LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS' EQUITY | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Accounts payable | 16,101 | $ | 14,988 | |||||||||||
| Accrued expenses and other current liabilities | 20,242 | 25,785 | ||||||||||||
| Liabilities held for sale | - | 372 | ||||||||||||
| Deferred revenue | 2,721 | 21,825 | ||||||||||||
| Total current liabilities | 39,064 | 62,970 | ||||||||||||
| Other long-term liabilities | 1,564 | 1,728 | ||||||||||||
| Long-term debt, net of discount | 29,423 | 58,418 | ||||||||||||
| Convertible subordinated debt | 96,700 | 96,700 | ||||||||||||
| Total liabilities | 166,751 | 219,816 | ||||||||||||
| Minority interest | 165 | 1,289 | ||||||||||||
|
Commitments and contingencies (See Note 12 in Form 10-K for details.) |
||||||||||||||
| Shareholders' equity: | ||||||||||||||
| Preferred stock, $0.01 par value. 10,000,000 shares authorized; none outstanding | - | - | ||||||||||||
| Common stock, $.01 par value. 500,000,000 shares authorized; 226,205,580 and 223,555,580 shares outstanding in 2008 and 2007, respectively | 2,267 | 2,240 | ||||||||||||
| Additional paid-in-capital | 1,747,324 | 1,741,048 | ||||||||||||
| Accumulated other comprehensive income | - | 3,739 | ||||||||||||
| Accumulated deficit | (1,624,230 | ) | (1,640,784 | ) | ||||||||||
| Total shareholders' equity | 125,361 | 106,243 | ||||||||||||
| $ | 292,277 | $ | 327,348 | |||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||
| Fiscal Year Ended September 30, | ||||||||||||||
| 2008 | 2007 | |||||||||||||
| (in thousands, except per share data) | ||||||||||||||
| Product revenues | $ | 218,536 | $ | 221,948 | ||||||||||
| Licensing revenues | 10,000 | - | ||||||||||||
| Revenues | 228,536 |
|
221,948 | |||||||||||
| Costs and expenses: | ||||||||||||||
| Cost of revenues | 106,344 | 113,754 | ||||||||||||
| Engineering, research and development | 49,982 | 47,199 | ||||||||||||
| Selling, general and administrative (including gain on sale of fixed assets of $3.2 million in 2008) | 50,557 | 42,459 | ||||||||||||
| Accounting remediation & reconstruction expense & litigation costs | 10,761 | 13,558 | ||||||||||||
| Amortization of intangible assets | 2,514 | 6,777 | ||||||||||||
| Costs and expenses | 220,158 | 223,747 | ||||||||||||
| Income (loss) from operations | 8,378 | (1,799 | ) | |||||||||||
| Other income (expense): | ||||||||||||||
| Interest expense, net | (3,868 | ) | (2,580 | ) | ||||||||||
| Loss on extinguishment of debt | - | (1,977 | ) | |||||||||||
| Other income, net | 4,882 | 1,755 | ||||||||||||
| Other income (expense), net | 1,014 | (2,802 | ) | |||||||||||
| Income tax expense | 1,222 | 224 | ||||||||||||
| Minority interest in earnings of consolidated subsidiary | (660 | ) | - | |||||||||||
| Income (loss) from continuing operations before discontinued operations | 7,510 | (4,825 | ) | |||||||||||
| Discontinued operations | ||||||||||||||
| Income (loss) from discontinued operations, net of tax of $997 and gain on sale of $21,500 in 2008 | 9,044 | (16,822 | ) | |||||||||||
| Net income (loss) | $ | 16,554 | $ | (21,647 | ) | |||||||||
| Basic and diluted income (loss) per share: | ||||||||||||||
| Continuing operations | $ | 0.03 | $ | (0.02 | ) | |||||||||
| Discontinued operations | 0.04 | (0.08 | ) | |||||||||||
| Net income (loss) per share | $ | 0.07 | $ | (0.10 | ) | |||||||||
| Weighted average shares outstanding: | ||||||||||||||
| Basic and diluted | 223,614 | 223,556 | ||||||||||||
Contact:
Editorial Contact:
Vitesse Semiconductor Corporation
Rich
Yonker, +1-800-388-3700