EX-99 3 a4500629_ex991.txt VITESSE SEMICONDUCTOR EXHIBIT 99.1 Exhibit 99.1 Vitesse Reports Results for Fourth Quarter and Fiscal Year-Ended 2003 CAMARILLO, Calif.--(BUSINESS WIRE)--Oct. 23, 2003--Vitesse Semiconductor Corporation (Nasdaq:VTSS) ("Vitesse" or the "Company") today reported results for the fourth quarter and fiscal year ended September 30, 2003. Revenues on a generally accepted accounting principles (GAAP) basis in the fourth quarter of fiscal 2003 were $42.8 million (which excludes $3.5 million from discontinued operations, as discussed below), compared to $35.6 million in the fourth quarter of fiscal 2002 (which excludes $2.5 million from discontinued operations) and $39.7 million in the third quarter of fiscal 2003 (which excludes $3.4 million from discontinued operations). GAAP revenues for the year ended September 30, 2003 were $156.4 million (which excludes $11.5 million from discontinued operations), compared to $151.7 million in the year ended September 30, 2002 (which excludes $10.6 million from discontinued operations). Pro-forma revenues (which includes revenues from discontinued operations) in the fourth quarter of fiscal 2003 were $46.3 million, an increase of 22% from the $38.1 million in the fourth quarter of fiscal 2002 and an increase of 7% from the $43.2 million in the third quarter of fiscal 2003. Pro-forma revenues for the year ended September 30, 2003 were $167.9 million, an increase of 3% from the $162.4 million in the year ended September 30, 2002. On a GAAP basis, net loss for the fourth quarter of fiscal 2003 was $36.0 million or $0.17 loss per share compared to net income of $3.7 million or $0.02 income per share in the fourth quarter of fiscal 2002 and net loss of $95.0 million or $0.47 loss per share in the third quarter of fiscal 2003. Net loss for the twelve months ended September 30, 2003 was $167.2 million or $0.82 loss per share compared to net loss of $883.5 million or $4.45 loss per share for the twelve months ended September 30, 2002. In the fourth quarter of fiscal 2003, the Company sold its line of optical module products to Avanex Corporation for 1.37 million shares of Avanex stock. In accordance with GAAP, results of operations for the optical module business and the loss on disposal of the related net assets have been recorded as discontinued operations for all periods presented. The net loss for the fourth quarter of fiscal 2003 and the year ended September 30, 2003, includes $1.6 million and $22.1 million, respectively in loss from discontinued operations, net of tax benefit. In the third quarter of fiscal 2003, the Company announced other cost reduction measures including the closure of its 6-inch Gallium Arsenide (GaAs) wafer fabrication facility in Colorado Springs. In connection with these actions, in the fourth quarter of fiscal 2003, the Company recorded a $1.5 million restructuring charge for office closures, severance and benefits, and a $3.1 million charge for the write down of the Colorado Springs facility. The Company also recorded a $5.2 million charge for the write down of certain private equity investments. Additionally, the Company recorded a charge of $3.0 million for in-process research and development in connection with the acquisitions of APT Technologies and Multilink Technology, that were completed during fiscal 2003. Pro-forma net loss for the fourth quarter of fiscal 2003 was $7.1 million or $0.03 loss per share, compared to pro-forma net loss of $18.7 million or $0.09 loss per share in the fourth quarter of fiscal 2002 and pro-forma net loss of $9.1 million or $0.04 loss per share in the prior quarter. Pro-forma net loss for the year ended September 30, 2003 was $40.0 million or $0.20 loss per share, compared to pro-forma net loss of $85.0 million or $0.43 loss per share in the year ended September 30, 2002. Pro forma net loss, as detailed in the attached reconciliation table, excludes the asset impairment and in-process research and development charges detailed above, the amortization of intangible assets and acquisition-related deferred stock-based compensation, other severance and restructuring charges, the write down of investments, tax adjustments, loss from discontinued operations, as well as, in the case of the results for the year ended September 30, 2002 and 2003, an inventory obsolescence charge and gain on extinguishment of debt. Vitesse President and CEO, Lou Tomasetta, commented, "I am pleased to report another quarter of sequential revenue growth. In conjunction with all the measures we have taken to consolidate our operations and reduce costs, this has taken us one step closer towards our near-term goal of achieving profitability. Overall, all of our end markets showed improvement this quarter. While storage has been strong for the past year, we are seeing increased deployment of systems that use our products in metro and enterprise applications. We continue to expect our growth in the near term to be driven by these next-generation systems rather than a recovery in legacy markets." Mr. Tomasetta continued, "We expect that revenues from continuing operations will increase by approximately $5 million to about $48 million in the first quarter of fiscal 2004. We are also forecasting our losses to decline, with our GAAP loss expected to be between $0.06 to $0.09 per share and pro-forma loss (excluding the amortization of intangible assets and acquisition-related deferred stock-based compensation and other severance and restructuring charges) to be $0.01 per share in the first quarter of fiscal 2004." The Company will hold a conference call on October 23, 2003 at 2:00 p.m. PDT. A live web cast of the call will be available on Vitesse's Web site at www.vitesse.com. A replay of the web cast will be available on the Company's Web site after the call. Those without Internet access may listen to a live audio of the call by telephone by calling 1-888-201-8018 (United States and Canada) or 1-706-634-1300 (International). Conference name is "Vitesse Semiconductor Corporation." A telephone replay of the call will be available beginning at 5:00 p.m. PDT on October 23 and will run through October 30, 2003. Dial-in for the telephone replay is 1-706-645-9291, conference passcode is 3123752. About Vitesse Vitesse is a leading designer and manufacturer of innovative silicon solutions used in the networking, communications and storage industries worldwide. Vitesse works to specifically address the requirements of system designers and OEMs by providing high-performance, integrated products that are ideally suited for use in Enterprise, Access, Metro and Core applications. Additional company and product information is available at www.vitesse.com. Forward-Looking Statements This press release contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our future operating results. Our actual results could differ materially from our forward looking statements for a variety of reasons, including among other things, failure of our markets to achieve expected growth, delays or cancellations of orders by our customers, competition in our markets, unexpected expenses or increased expenses associated with bringing new products to market and the discontinuation of certain operations, difficulties in bringing new products to market and possible future write-downs of assets. For a more complete discussion of the risks and uncertainties that may cause our actual results to differ materially from our forward looking statements, please read the reports we file from time to time with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended September 30, 2002, and our Quarterly Report on Form 10-K for the quarter ended June 30, 2003. Vitesse provides pro-forma statement of operations data, revenue, net loss and net loss per share in this press release, as additional information regarding its operating results. The Company believes that the additional pro-forma information is useful to investors for the performance of financial analysis. Management uses this information internally to evaluate its operating performance and the measures are used for planning and forecasting of the Company's future periods. However, pro-forma information is not in accordance with, nor is it a substitute for, GAAP financial information. Please consult the reconciliation table immediately following the pro-forma Statement of Operations for a reconciliation of GAAP results to pro-forma results. VITESSE SEMICONDUCTOR CORPORATION FINANCIAL SUMMARY Statement of Operations - GAAP basis (in thousands except per share data) Three months ended Twelve months ended (unaudited) Sept 30, Sept 30, June 30, Sept 30, Sept 30, 2003 2002 2003 2003 2002 Revenues $ 42,791 $ 35,610 $39,738 $ 156,371 $ 151,738 Costs and expenses: Cost of revenues 17,515 17,151 23,312 73,163 110,155 Engineering and development 30,208 34,766 27,170 110,145 147,272 Selling, general and administrative 12,947 15,174 13,366 54,020 68,161 Restructuring charge 4,611 3,046 49,083 54,030 608,899 In process research and development expense 3,000 -- -- 3,000 -- Amortization of intangible assets 2,408 880 881 5,051 5,158 Loss from continuing operations, before other income & income taxes (27,898) (35,407) (74,074) (143,038) (787,907) Other income (expense), net (5,385) (4,590) (183) (4,631) (1,997) Gain on extinguishment of debt --- 49,169 --- 16,550 66,267 Income (loss) from continuing operations before income taxes (33,283) 9,172 (74,257) (131,119) (723,637) Income tax expense 1,086 1,991 8,004 13,996 139,127 Income (loss) from continuing operations (34,369) 7,181 (82,261) (145,115) (862,764) Loss from discontinued operations, net of tax benefit (1,632) (3,520) (12,732) (22,074) (20,762) Net income (loss) $(36,001) $ 3,661 $(94,993) $(167,189) $(883,526) Net income (loss) per share - diluted: Continuing operations (0.16) 0.04 (0.41) (0.71) (4.34) Discontinued operations (0.01) (0.02) (0.06) (0.11) (0.11) Net income (loss) per share- diluted $ (0.17) $ 0.02 $(0.47) $ (0.82) $ (4.45) Weighted average shares- diluted 208,722 200,416 203,704 203,801 198,608 Condensed Consolidated Balance Sheet Data - GAAP basis (in thousands) Sept. 30, Sept. 30, 2003 2002 Assets: Cash and investments $234,574 $310,240 Accounts receivables, net 35,171 37,153 Inventories, net 24,851 25,045 Prepaid expenses and other current assets 4,457 8,052 Property and equipment, net 92,541 118,737 Restricted long-term deposits 57,101 89,992 Goodwill and intangible assets 194,058 165,802 Assets held for sale --- 29,507 Other assets 22,991 42,731 Total assets $665,744 $827,259 Liabilities and Shareholders' Equity: Accounts payable $ 11,553 $ 8,502 Accrued expenses and other current liabilities 21,492 16,923 Accrued restructuring 29,110 35,527 Accrued interest 257 433 Deferred gain 9,330 8,891 Income taxes payable 1,913 1,123 Liabilities held for sale --- 4,798 Other long-term liabilities 9,259 --- Convertible debt, due March 2005 195,732 263,703 Minority interest 1,590 4,654 Shareholders' equity 385,508 482,705 Total liabilities and shareholders' equity $665,744 $827,259 Supplemental reconciliation of GAAP revenue to unaudited pro-forma revenue: (in thousands except per share data) Three months ended Twelve months ended Sept 30, Sept 30, June 30, Sept 30, Sept 30, 2003 2002 2003 2003 2002 GAAP revenue $ 42,791 $ 35,610 $ 39,738 $ 156,371 $ 151,738 Revenue from discontinued operations 3,522 2,492 3,436 11,500 10,619 Pro-forma revenue $ 46,313 $ 38,102 $ 43,174 $ 167,871 $ 162,357 Supplemental reconciliation of GAAP net loss to unaudited pro-forma net loss: GAAP net income (loss) $(36,001)$ 3,661 $(94,993)$(167,189) $(883,526) Adjustments to net income (loss): Amortization of goodwill and intangibles from acquisitions 2,408 880 881 5,051 5,158 Amortization of deferred compensation 8,989 6,768 5,442 25,453 27,860 Accounts receivable impairment charge --- --- --- --- 3,000 Other investment impairment charge 5,161 5,040 --- 5,161 5,040 Inventory obsolescence charge --- --- 6,808 6,808 30,533 Restructuring charge 1,468 3,046 49,083 2,809 608,899 Fixed asset impairment charge 3,143 --- --- 51,221 --- In process research and development charge 3,000 --- --- 3,000 --- Gain on extinguishment of debt --- (49,169) --- (16,550) (66,267) Discontinued operations 1,632 3,520 12,732 22,074 20,762 Tax adjustment 3,095 7,555 10,904 22,117 163,494 Pro-forma net loss $ (7,105)$(18,699) $ (9,143)$ (40,045) $ (85,047) GAAP net income (loss) per share -diluted $ (0.17)$ 0.02 $ (0.47)$ (0.82) $ (4.45) Adjustment to net loss per share- diluted 0.14 (0.11) 0.43 0.62 4.02 Pro-forma net loss per share- diluted $ (0.03) $ (0.09) $ (0.04)$ (0.20) $ (0.43) Weighted average shares- diluted 208,722 200,077 203,704 203,801 198,608 Pro-forma Statement of Operations (in thousands except per share data) Three months ended Twelve months ended (unaudited) Sept 30, Sept 30, June 30, Sept 30, Sept 30, 2003 2002 2003 2003 2002 Revenues $ 46,313 $ 38,102 $ 43,174 $167,871 $ 162,357 Costs and expenses: Cost of revenues 20,531 19,015 19,898 78,732 86,550 Engineering and development 22,682 31,994 22,987 93,696 139,026 Selling, general and administrative 13,481 15,397 13,753 55,742 66,505 Loss from operations (10,381) (28,304) (13,464) (60,299) (129,724) Other income (expense), net (224) 395 (183) 530 2,788 Loss before income taxes (10,605) (27,909) (13,647) (59,769) (126,936) Income tax benefit (3,500) (9,210) (4,504) (19,724) (41,889) Net loss $ (7,105) $(18,699) $ (9,143) $(40,045) $ (85,047) Weighted average shares - diluted 208,722 200,077 203,704 203,801 198,608 Net loss per share- diluted $ (0.03) $ (0.09) $ (0.04) $ (0.20) $ (0.43) CONTACT: Vitesse Semiconductor Corporation Eugene F. Hovanec, 805-388-3700