8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 28, 2012

VITESSE SEMICONDUCTOR CORPORATION

(Exact name of issuer as specified in its charter)

Delaware

(State or other jurisdiction of incorporation)

1-31614	77-0138960
(Commission File Number)	(IRS Employer Identification No.)

741 Calle Plano

Camarillo, California 93012

(Address of Principal Executive Offices)

Registrant’s telephone number, including area code (805) 388-3700

N/A

(Former Name or Former Address, if Changed Since Last Report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02              Results of Operations and Financial Condition

On December 4, 2012, Vitesse Semiconductor Corporation (the “Company”) issued a press release reporting its financial results for the quarter and fiscal year ended September 30, 2012.  A copy of the press release issued by the Company is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The Company will host a conference call today at 1:30 p.m. Pacific Time/4:30 p.m. Eastern Time. To participate, dial 1-888-438-5535 (U.S. toll-free) approximately 10 minutes before the conference call is scheduled to begin, and provide the passcode 8148011. International callers should dial 1-719-457-1035. The conference call may also be accessed by means of a live audio webcast on our website at www.vitesse.com/events.com. The playback of the conference call will be available approximately two hours after the call concludes and will be accessible on the Vitesse corporate web site or by calling 1-877-870-5176 (U.S. toll-free) or 1-858-384-5517 (international) and entering the passcode 8148011. The audio replay will be available for seven days.

The information in Item 2.02 of this Current Report on Form 8-K and Exhibit 99.1 attached hereto shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of such section, nor shall such information or exhibit be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

2013 Executive Bonus Plan

On November 28, 2012, the Company's Board of Directors adopted the Fiscal Year 2013 Executive Bonus Plan (the “Plan”) to provide members of the executive staff of the Corporation with the opportunity to earn incentive bonuses based on 1) the Company's attainment of specific financial performance objectives for the fiscal year and 2) the executive's achievement of designated personal goals. Awards under the Plan may be made only to “Eligible Persons,” which is defined to be any “officer,” as that term is defined in Rule 16a-1(f) under the Securities Exchange Act of 1934 (except the President/Chief Executive Officer), and any vice-president who is a member of the Company's executive staff. Any bonus for employees who become “Eligible Persons” after the beginning of fiscal year 2013 will be prorated.

A participant's bonus under the Plan will be based on the Company achieving a certain level of Adjusted EBITDA (as defined below) during the fiscal year and upon the participant achieving certain individual personal goals established by the Chief Executive Officer of the Company. A participant's bonus will be an amount equal to (a) times (b) times (c), where (a) equals the participant's Base Salary, (b) equals a specified percentage of the participant's salary that would be payable if the participant achieved 100% of his or her personal goals and the Company achieved an amount of Adjusted EBITDA specified in the Plan and (c) equals the percentage of personal goals achieved by the participant. Whether a participant has attained a personal goal in whole or in part shall be determined by the Chief Executive Officer of the Company in his or her sole discretion.

Bonus payments, if earned, will be paid by the end of the first quarter of Fiscal Year 2014, or as soon as practicable after determination and certification of the actual financial performance levels for the year and grant of approval by the Compensation Committee of the Board of Directors of the Company in a duly held meeting, but, in no event, later than March 15, 2014. A participant's right to receive a bonus will become vested if the participant is continuously employed by the Company without performance deficiencies until September 30, 2013.

“Adjusted EBITDA” is defined under the Plan as net income before interest, expenses for taxes, depreciation, amortization, deferred stock compensation, and non-recurring professional fees. The Administrator may, from time-to-time, make other exceptions to the definition as it deems appropriate with respect to unusual or non-recurring events such as balance sheet adjustments, mergers, acquisitions, and divestitures.

The Chief Executive Officer has the authority to propose additional bonus amounts above those provided for in the plan for the consideration of, and approval by, the Compensation Committee and will be responsible to ensure that estimated bonuses, including any proposed amounts above the amounts indicated in the Plan, not yet approved by the Compensation Committee, are accounted for in accordance with generally accepted accounting principles.

Item 9.01 - Financial Statements and Exhibits

(d)    Exhibits.

The following exhibits are filed herewith:

Exhibit Number	Description
99.1	Press Release issued by Vitesse Semiconductor Corporation, dated December 4, 2012.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated:	December 4, 2012
		VITESSE SEMICONDUCTOR CORPORATION
		By:	/s/ MARTIN S. McDERMUT
			Martin S. McDermut
			Chief Financial Officer

EX-99.1

Exhibit 99.1

Company Contact:	Agency Contact:
Marty McDermut	Cathy Mattison
Vitesse	LHA
+1.805.388.3700	+1.415.433.3777
invest@vitesse.com	VTSS@lhai.com

Vitesse Reports Operating Profitability for the Fourth Quarter and

Fiscal Year 2012

• Grew new product revenue 19% sequentially and 111% year-to-year

• Increased operating income more than $12 million year-to-year

• Increased cash balance 38% year-to-year to $23.9 million at September 30, 2012

• Accomplished strategic objectives set for fiscal year 2012

CAMARILLO, Calif. ─ Dec. 4, 2012 ─ Vitesse Semiconductor Corporation (NASDAQ: VTSS), a leading provider of advanced IC solutions for Carrier and Enterprise networks, reported its financial results for the fourth quarter and fiscal year 2012, ended September 30, 2012.

“Vitesse achieved our goal of operating profitability in the fourth quarter and for fiscal year 2012,” said Chris Gardner, CEO of Vitesse. “In 2012, we demonstrated organizational agility in a tough market environment and increased operating income by over $12 million compared to 2011. We improved our financial leverage, reducing overall year-over-year operating expenses by 27%, and increased our cash position by nearly $7 million, or 38%. In addition, our continued investment in R&D allowed us to dramatically scale our product feature set and capabilities to meet evolving market needs. The introduction of Vitesse's patented VeriTime™ synchronization technology for 4G/LTE drove growth in our new product portfolio and reinforced our product leadership.

“In fiscal year 2012, Vitesse's total new product revenue increased 111% from fiscal year 2011. Looking ahead, these new products will drive our growth. In the last two years, we captured over 600 design wins with an estimated lifetime revenue of $500 million. Nearly 50 percent of our design wins were in the new IP Edge market, particularly Mobile Access, capturing multiple wins with nine of the market share leaders. We continue to expect revenues from our new products to double from 2012 to 2013 and double again in 2014.”

Fourth Quarter Fiscal Year 2012 Financial Results Summary

• Total net revenues were $29.5 million, compared to $30.3 million in the third quarter of fiscal year 2012 and $30.3 million in the fourth quarter of fiscal year 2011.

◦ Product revenues were $28.1 million compared to $25.7 million in the third quarter of fiscal year 2012 and $28.9 million in the fourth quarter of fiscal year 2011.

◦ The product lines contributed the following as a percentage of product revenue as compared to the third quarter of fiscal year 2012:

▪ Carrier networking products: 51.6% versus 45.1%

▪ Enterprise networking products: 45.6% versus 52.6%

▪ Core Carrier and Enterprise networking products: 97.2% versus 97.7%

▪ Non-core products: 2.8% versus 2.3%

◦ Intellectual property revenues totaled $1.4 million, compared to $4.6 million in the third quarter of fiscal year 2012 and $1.5 million in the fourth quarter of fiscal year 2011.

• Product margins were 55.9% compared to 56.2% in the third quarter of fiscal year 2012 and 55.3% in the fourth quarter of fiscal year 2011.

• Operating expenses were $16.6 million compared to $16.9 million in the third quarter of fiscal year 2012 and $25.9 million in the fourth quarter of fiscal year 2011. Included in operating expenses for the fourth quarter of fiscal year 2012 and the fourth quarter of fiscal year 2011 are restructuring and impairment charges of $1.5 million credit and $3.1 million, respectively.

• Operating income was $531,000 compared to operating income of $2.1 million in the third quarter of fiscal year 2012 and an operating loss of $8.5 million in the fourth quarter of fiscal year 2011.

• Non-GAAP operating income was $308,000 compared to $3.3 million in the third quarter of fiscal year 2012 and non-GAAP operating loss of $4.7 million in the fourth quarter of fiscal year 2011.

• Net income was $1.2 million, or $0.05 per basic and per fully diluted share. This compares to net income of $4.7 million, or $0.18 per basic and $0.16 per fully diluted share, in the third quarter of fiscal year 2012; and net loss of $4.6 million, or $0.19 per basic share and fully diluted share, in the fourth quarter of fiscal year 2011.

• Non-GAAP net loss was $130,000, or breakeven per basic and fully diluted share, compared to non-GAAP net income of $140,000, or breakeven per basic and fully diluted share, for the third quarter of fiscal year 2012; and non-GAAP net loss of $6.0 million, or $0.25 per basic and fully diluted share, in the fourth quarter of fiscal year 2011.

Fiscal Year 2012 Financial Results Summary

• Total net revenues for fiscal year 2012 were $119.5 million, a decrease of 15.2% compared with $141.0 million reported for fiscal year 2011.

◦ Product revenues were $109.9 million, a 17.2% decline from $132.7 million in fiscal year 2011.

◦ The product lines contributed the following as a percent of fiscal year 2012 product revenue as compared to the fiscal year 2011:

▪ Carrier networking products: 43.4% versus 46.5%

▪ Enterprise networking products: 49.0% versus 48.8%

▪ Core Carrier and Enterprise networking products: 92.4% versus 95.3%

▪ Non-core products: 7.6% versus 4.7%

◦ Intellectual property revenues were $9.6 million, an increase of 16.3% compared with $8.2 million in fiscal year 2011.

• Product margins were 57.8% in fiscal year 2012 compared to 59.6% in the prior year.

• Operating expenses were $71.4 million compared to $98.2 million in fiscal year 2011. Included in operating expenses for fiscal year 2012 and fiscal year 2011 are restructuring and impairment charges of $1.4 million credit and $3.7 million, respectively.

• Income from operations was $1.6 million compared with a loss from operations of $10.9 million in fiscal year 2011.

• Non-GAAP income from operations was $5.0 million compared with non-GAAP loss from operations of $3.8 million in fiscal year 2011.

• Net loss was $1.1 million, or $0.04 per share, in fiscal year 2012, compared with a net loss of $14.8 million, or $0.61 per share, in fiscal year 2011.

• Non-GAAP net loss was $2.7 million, or $0.10 per share, in fiscal year 2012 compared with a non-GAAP net loss was $11.5 million, or $0.47 per share, in fiscal year 2011.

Balance Sheet Data at September 30, 2012 as Compared to September 30, 2011

• Cash balance increased to $23.9 million, compared to $17.3 million;

• Accounts receivable totaled $9.4 million, compared to $9.6 million;

• Inventory totaled $12.1 million, compared to $20.9 million; and

• Working capital increased to $28.7 million, compared to $26.7 million.

Financial Outlook

For the first quarter of fiscal year 2013, ending December 31, 2012, Vitesse expects revenues to be in the range of $25.0 million to $27.0 million and product margins are expected to be between 54% and 57%. Operating expenses are expected to be between $18.0 million and $19.0 million.

The Company's long-term operating model, which assumes a quarterly-revenue run rate of $43 million or more, and is stated as a percentage of product revenue, targets:

• Gross Margin:57 to 62 percent

• R&D Expense:25 to 28 percent

• SG&A Expense:15 to 19 percent

• Income from Operations:12 to 18 percent

• EBITDA:15 to 21 percent

• Inventory Turns:5 times annually

• Accounts Payable and Receivable:In line with normal industry levels

The Company defines EBITDA as earnings before interest, taxes, depreciation, and amortization. Management uses EBITDA measures internally to evaluate the Company's operating performance before charges that are considered by management to be outside of the Company's core operating results. In addition, the measures are used for planning and forecasting of the Company's future periods.

December 4, 2012 Conference Call Information

A conference call is scheduled for today, December 4, 2012, at 1:30 p.m. Pacific Time / 4:30 p.m. Eastern Time to report financial results for the fourth quarter and fiscal year 2012.

To listen to the conference call via telephone, dial 888.438.5535 (U.S. toll-free) or

719.457.1035 (International) and provide the passcode 8148011. Participants should dial in at least 10 minutes prior to the start of the call. To listen via the Internet, the webcast can be accessed through the investor section of the Vitesse corporate web site at investor.vitesse.com/events.com.

The playback of the conference call will be available approximately two hours after the call concludes and will be accessible on the Vitesse corporate web site or by calling 877.870.5176 (U.S. toll-free) or 858.384.5517 (International) and entering the passcode 8148011. The audio replay will be available for seven days.

About Vitesse

Vitesse (NASDAQ: VTSS) designs a diverse portfolio of high-performance semiconductor solutions for Carrier and Enterprise networks worldwide. Vitesse products enable the fastest-growing network infrastructure markets including Mobile Access/IP Edge, Cloud Computing and SMB/SME Enterprise Networking. Visit www.vitesse.com or follow us on Twitter @VitesseSemi.

###

Vitesse is a registered trademark and VeriTime is a trademark of Vitesse Semiconductor Corporation in the United States and other jurisdictions. All other trademarks or registered trademarks mentioned herein are the property of their respective holders.

VTSS-F

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 that 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. Examples of forward-looking statements in this release include the Company's financial outlook for its first fiscal quarter of 2013, , the Company's long-term operating model, projected revenues from design wins and anticipated revenue growth. 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. Factors and uncertainties that could affect the Company's forward-looking statements include, among other things: identification of feasible new product initiatives, management of R&D efforts and the resulting successful development of new products and product platforms; acceptance by customers of the Company's products; reliance on key suppliers; rapid technological change in the industries in which the Company operates; and competitive factors, including pricing pressures and the introduction by others of new products with similar or better functionality than the Company's products. These and other risks are more fully described in the Company's filings with the Securities and Exchange Commission, including the Company's most recently filed Annual Report on Form 10-K and Quarterly Report on Form 10-Q, which should be read in conjunction herewith for a further discussion of important factors that could cause actual results to differ materially from those in the forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Non-GAAP Measures

A non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP measures are not in accordance with, nor are they a substitute for, GAAP measures. Other companies may use different non-GAAP measures and presentation of 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 from operations and GAAP net income. 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

CONSOLIDATED BALANCE SHEETS

	September 30, 2012			September 30, 2011
	(in thousands, except par value)
ASSETS
Current assets:
Cash	$	23,891		$	17,318
Accounts receivable, net	9,403			9,591
Inventory, net	12,060			20,857
Prepaid expenses and other current assets	2,125			2,443
Total current assets	47,479			50,209
Property, plant and equipment, net	3,832			5,934
Other intangible assets, net	1,175			1,781
Other assets	4,130			3,070
	$	56,616		$	60,994
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	5,726		$	5,198
Accrued expenses and other current liabilities	12,188			14,474
Deferred revenue	871			3,878
Current portion of capital leases	—			—
Total current liabilities	18,785			23,550
Other long-term liabilities	574			1,927
Long-term debt, net	15,852			15,444
Compound embedded derivative	2,899			7,796
Convertible subordinated debt, net	42,521			40,736
Total liabilities	80,631			89,453
Commitments and contingencies, See note 12
Stockholders' deficit:
Preferred stock, $0.01 par value: 10,000 shares authorized; Series B Non Cumulative, Convertible, 135 shares outstanding at September 30, 2012 and 2011, respectively	1			1
Common stock, $0.01 par value: 250,000 shares authorized; 25,812 and 24,471 shares outstanding at September 30, 2012 and 2011, respectively	258			245
Additional paid-in-capital	1,829,976			1,824,433
Accumulated deficit	(1,854,250		)	(1,853,138		)
Total stockholders' deficit	(24,015		)	(28,459		)
	$	56,616		$	60,994

VITESSE SEMICONDUCTOR CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months ended September 30,						Twelve Months ended September 30,
	2012			2011			2012			2011
Net revenues:	(in thousands, except per share data)
Product revenues	$	28,053		$	28,887		$	109,920		$	132,742
Intellectual property revenues	1,415			1,453			9,563			8,225
Net revenues	29,468			30,340			119,483			140,967
Costs and expenses:
Cost of product revenues	12,379			12,898			46,407			53,674
Engineering, research and development	10,195			11,408			42,713			52,990
Selling, general and administrative	7,727			11,341			29,822			41,233
Restructuring and impairment	(1,460		)	3,102			(1,424		)	3,656
Amortization of intangible assets	96			61			330			348
Costs and expenses	28,937			38,810			117,848			151,901
Income (loss) from operations	531			(8,470		)	1,635			(10,934		)
Other expense (income):
Interest expense, net	1,956			1,970			7,778			8,456
Gain on compound embedded derivative	(1,124		)	(5,189		)	(4,897		)	(7,680		)
Loss on extinguishment of debt	—			—			—			3,874
Other expense (income), net	19			(121		)	40			(153		)
Other expense (income), net	851			(3,340		)	2,921			4,497
Loss before income tax benefit	(320		)	(5,130		)	(1,286		)	(15,431		)
Income tax benefit	(1,537		)	(541		)	(174		)	(619		)
Net income (loss)	$	1,217		$	(4,589	)	$	(1,112	)	$	(14,812	)
Net income (loss) per common share:
Basic	$	0.05		$	(0.19	)	$	(0.04	)	$	(0.61	)
Diluted	$	0.05		$	(0.19	)	$	(0.04	)	$	(0.61	)
Weighted average shares outstanding:
Basic	25,628			24,463			25,121			24,315
Diluted	26,513			24,463			25,121			24,315

VITESSE SEMICONDUCTOR CORPORATION

UNAUDITED RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET LOSS

	Three Months Ended September 30,						Twelve Months Ended September 30,
	2012			2011			2012			2011
	(in thousands, except per share data)
Net income (loss)	$	1,217		$	(4,589	)	$	(1,112	)	$	(14,812	)
Adjustments:
Stock-based compensation charges	1,141			618			4,442			3,152
Amortization of intangible assets	96			61			330			348
Restructuring and impairment charges	(1,460		)	3,102			(1,424		)	3,656
(Gain) loss on compound embedded derivative	(1,124		)	(5,189		)	(4,897		)	(7,680		)
Loss on extinguishment of debt	—			—			—			3,874
Total GAAP to non-GAAP adjustments	(1,347		)	(1,408		)	(1,549		)	3,350
Non-GAAP net loss	$	(130	)	$	(5,997	)	$	(2,661	)	$	(11,462	)
Net income (loss) per common share
Basic:
GAAP net income (loss)	$	0.05		$	(0.19	)	$	(0.04	)	$	(0.61	)
Adjustments *	(0.05		)	(0.06		)	(0.06		)	0.14
Non-GAAP net income (loss)	$	—		$	(0.25	)	$	(0.10	)	$	(0.47	)
Diluted:
GAAP net income (loss)	$	0.05		$	(0.19	)	$	(0.04	)	$	(0.61	)
Adjustments *	(0.05		)	(0.06		)	(0.06		)	0.14
Non-GAAP net income (loss)	$	—		$	(0.25	)	$	(0.10	)	$	(0.47	)

UNAUDITED RECONCILIATION OF GAAP INCOME (LOSS) FROM OPERATIONS

TO NON-GAAP INCOME FROM OPERATIONS

GAAP income (loss) from operations	$	531		$	(8,470	)	$	1,635		$	(10,934	)
Adjustments:
Stock-based compensation charges	1,141			618			4,442			3,152
Amortization of intangible assets	96			61			330			348
Restructuring and impairment	(1,460		)	3,102			(1,424		)	3,656
Total GAAP to non-GAAP adjustments	(223		)	3,781			3,348			7,156
Non-GAAP income (loss) from operations	$	308		$	(4,689	)	$	4,983		$	(3,778	)

___________________________________

* Included in the adjustments are calculations required by the two class method relative to participation rights of our preferred shares.