Vitesse Reports First Quarter Fiscal Year 2014 Results

We provide non-GAAP measures of non-GAAP operating expenses, non-GAAP income (loss) from operations and non-GAAP net income (loss) as a supplement to financial results based on GAAP operating expenses, 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 operating expenses from GAAP operating expenses, we exclude stock-based compensation charges and amortization of intangible assets. In deriving non-GAAP income (loss) from operations from GAAP income (loss) from operations, we exclude stock-based compensation charges and amortization of intangible assets. In deriving non-GAAP net income (loss) from GAAP net income (loss), we further exclude loss on extinguishment of debt and gain on the embedded derivative. Stock-based compensation charges, amortization of intangible assets, loss on extinguishment of debt, and gain on the embedded derivative represent charges that recur in amounts unrelated to the Company's operations.

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 operating expenses, 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, operating expenses, 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, loss on extinguishment of debt, and the change in the fair value of our embedded derivatives, please see our Form 10-Q for the quarterly period ended December 31, 2013 and Form 10-K for the year ended September 30, 2013.

                                                                            
                                                                            
                     VITESSE SEMICONDUCTOR CORPORATION                      
                   UNAUDITED CONSOLIDATED BALANCE SHEETS                    
                                                                            
                                             December 31,    September 30,  
                                                 2013             2013      
                                           ---------------  --------------- 
                                           (in thousands, except par value) 
                  ASSETS                                                    
Current assets:                                                             
  Cash                                     $        48,355  $        68,863 
  Accounts receivable, net                          11,406            9,807 
  Inventory, net                                    12,544           10,692 
  Prepaid expenses and other current                                        
   assets                                            2,946            1,897 
                                           ---------------  --------------- 
    Total current assets                            75,251           91,259 
  Property, plant and equipment, net                 3,559            3,107 
  Other intangible assets, net                       1,169               1,170  
    Other  assets                                                                              3,372                        3,425  
                                                                                      ---------------    ---------------  
                                                                                      $                83,351    $                98,961  
                                                                                      ===============    ===============  
                                        LIABILITIES  AND  STOCKHOLDERS'  EQUITY                                        
Current  liabilities:                                                                                                                
    Accounts  payable                                                  $                  9,449    $                  7,436  
    Accrued  expenses  and  other  current                                                                                
      liabilities                                                                            11,422                      12,245  
    Current  portion  of  debt,  net                                            31,694                                -  
    Deferred  revenue                                                                      2,728                        2,215  
                                                                                      ---------------    ---------------  
        Total  current  liabilities                                              55,293                      21,896  
    Other  long-term  liabilities                                                    374                            407  
    Long-term  debt,  net                                                              16,163                      16,366  
    Convertible  subordinated  debt,  net                                          -                      44,384  
                                                                                      ---------------    ---------------  
        Total  liabilities                                                              71,830                      83,053  
                                                                                      ---------------    ---------------  
                                                                                                                                                        
Stockholders'  equity:                                                                                                              
    Preferred  stock,  $0.01  par  value:  10,000                                                                    
      shares  authorized;  no  shares  issued  or                                                                      
      outstanding                                                                                      -                                -  
    Common  stock,  $0.01  par  value:  250,000                                                                        
      shares  authorized;  57,829  and  57,545                                                                          
      shares  outstanding  at  December  31,  2013                                                                    
      and  September  30,  2013,  respectively                                578                            575  
    Additional  paid-in-capital                                          1,892,642                1,891,661  
    Accumulated  deficit                                                      (1,881,699)            (1,876,328)
                                                                                      ---------------    ---------------  
        Total  stockholders'  equity                                            11,521                      15,908  
                                                                                      ---------------    ---------------  
                                                                                      $                83,351    $                98,961  
                                                                                      ===============    ===============  
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
                                          VITESSE  SEMICONDUCTOR  CORPORATION                                            
                            UNAUDITED  CONSOLIDATED  STATEMENTS  OF  OPERATIONS                              
                                                                                                                                                        
                                                                                        Three  Months  Ended  December  31,  
                                                                                      --------------------------------  
                                                                                                  2013                          2012            
                                                                                      ---------------    ---------------  
                                                                                        (in  thousands,  except  per  share  
                                                                                                                  data)                            
Net  revenues:                                                                                                                              
    Product  revenues                                                  $                24,863    $                23,905  
    Intellectual  property  revenues                                          2,220                        1,822  
                                                                                      ---------------    ---------------  
        Net  revenues                                                                        27,083                      25,727  
                                                                                      ---------------    ---------------  
Costs  and  expenses:                                                                                                                  
    Cost  of  product  revenues                                                    10,676                      10,975  
    Engineering,  research  and  development                          10,679                      10,504  
    Selling,  general  and  administrative                                7,854                        7,970  
    Amortization  of  intangible  assets                                          88                              97  
                                                                                      ---------------    ---------------  
        Costs  and  expenses                                                            29,297                      29,546  
                                                                                      ---------------    ---------------  
Loss  from  operations                                                                (2,214)                    (3,819)
Other  expense  (income)  :                                                                                                        
    Interest  expense,  net                                                            1,704                        1,970  
    Gain  on  compound  embedded  derivative                                      -                          (803)
    Loss  on  extinguishment  of  debt                                          1,594                                -  
    Other  expense  (income),  net                                                      61                            (31)
                                                                                      ---------------    ---------------  
        Other  expense,  net                                                              3,359                        1,136  
                                                                                      ---------------    ---------------  
Loss  before  income  tax  (benefit)  provision                    (5,573)                    (4,955)
Income  tax  provision  (benefit)                                                (202)                            77  
                                                                                      ---------------    ---------------  
Net  loss                                                                      $                (5,371)  $                (5,032)
                                                                                      ===============    ===============  
                                                                                                                                                        
Net  loss  per  common  share  -  basic  and                                                                              
  diluted                                                                      $                  (0.09)  $                  (0.18)
Weighted  average  common  shares  outstanding                                                                    
  -  basic  and  diluted                                                                57,610                      28,059  
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
                                          VITESSE  SEMICONDUCTOR  CORPORATION                                            
                UNAUDITED  RECONCILIATION  OF  GAAP  RESULTS  TO  NON-GAAP  RESULTS                
                                                                                                                                                        
                                                                                                Three  Months  Ended                    
                                                                            -------------------------------------  
                                                                                December          December        September    
                                                                                31,  2013          31,  2012          30,  2013    
                                                                            -----------    -----------    -----------  
                                                                            (in  thousands,  except  per  share  data)  
                                                                                                                                                        
UNAUDITED  RECONCILIATION  OF  GAAP  NET  LOSS  TO  NON-GAAP  NET  LOSS                            
                                                                                                                                                        
GAAP  net  loss                                                  $        (5,371)  $        (5,032)  $        (5,765)
                                                                            -----------    -----------    -----------  
                                                                                                                                                        
Adjustments:                                                                                                                                
Stock-based  compensation  charges                        1,265                1,143                1,091  
Amortization  of  intangible  assets                            88                      97                      81  
Gain  on  compound  embedded  derivative                        -                  (803)                      -  
Loss  on  extinguishment  of  debt                            1,594                        -                        -  
                                                                            -----------    -----------    -----------  
Total  GAAP  to  non-GAAP  adjustments                    2,947                    437                1,172  
                                                                                                                                                        
                                                                            -----------    -----------    -----------  
Non-GAAP  net  loss                                          $        (2,424)  $        (4,595)  $        (4,593)
                                                                            ===========    ===========    ===========  
                                                                                                                                                        
Net  loss  per  common  share  -  basic  and                                                                              
  diluted:                                                                                                                                      
GAAP  net  loss  per  common  share                $          (0.09)  $          (0.18)  $          (0.10)
Adjustments                                                                    0.05                  0.02                  0.02  
                                                                            -----------    -----------    -----------  
Non-GAAP  net  loss  per  common  share        $          (0.04)  $          (0.16)  $          (0.08)
                                                                            ===========    ===========    ===========  
                                                                                                                                                        
                                                                                                                                                        
UNAUDITED  RECONCILIATION  OF  GAAP  LOSS  FROM  OPERATIONS  TO  NON-GAAP  LOSS  FROM  
  OPERATIONS                                                                                                                                  
                                                                                                                                                        
GAAP  loss  from  operations                          $        (2,214)  $        (3,819)  $        (3,492)
                                                                            -----------    -----------    -----------  
Adjustments:                                                                                                                                
Stock-based  compensation  charges                        1,265                1,143                1,091  
Amortization  of  intangible  assets                            88                      97                      81  
                                                                            -----------    -----------    -----------  
Total  GAAP  to  non-GAAP  adjustments                    1,353                1,240                1,172  
                                                                                                                                                        
                                                                            -----------    -----------    -----------  
Non-GAAP  loss  from  operations                  $            (861)  $        (2,579)  $        (2,320)
                                                                            ===========    ===========    ===========  
                                                                                                                                                        
                                                                                                                                                        
UNAUDITED  RECONCILIATION  OF  GAAP  OPERATING  EXPENSES  TO  NON-GAAP  OPERATING      
  EXPENSES                                                                                                                                      
                                                                                                                                                        
GAAP  operating  expenses:                                                                                                        
Engineering,  research  and  development  $        10,679    $        10,504    $          9,940  
Selling,  general  and  administrative                  7,854                7,970                7,593  
Amortization  of  intangible  assets                            88                      97                      81  
                                                                            -----------    -----------    -----------  
Total  GAAP  operating  expenses                            18,621              18,571              17,614  
Adjustments:                                                                                                                                
Stock-based  compensation  charges                        1,081                    989                    939  
Amortization  of  intangible  assets                            88                      97                      81  
                                                                            -----------    -----------    -----------  
Total  GAAP  to  non-GAAP  adjustments                    1,169                1,086                1,020  
                                                                                                                                                        
                                                                            -----------    -----------    -----------  
Non-GAAP  operating  expenses                      $        17,452    $        17,485    $        16,594  
                                                                            ===========    ===========    ===========  
 




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