Vitesse Reports Results for Fourth Quarter and Fiscal Year-end 2001

Camarillo, CA. Vitesse Semiconductor Corporation (NASDAQ: VTSS) ("Vitesse" or the "Company") today reported results for the fourth quarter and fiscal year ended September 30, 2001. Revenues in the fourth quarter of fiscal 2001 were $37.2 million, a decrease of 73% from the $138.0 million in the fourth quarter of fiscal 2000 and a decrease of 38% from the $60.1 million in the third quarter of fiscal 2001. For the year ended September 30, 2001, revenues were $384.1 million, a 13% decrease from the $441.7 million for the year ended September 30, 2000.

Pro forma net loss for the fourth quarter of fiscal 2001, which excludes the amortization of goodwill and deferred compensation and various non-recurring charges discussed below, as well as an extraordinary gain on the extinguishment of debt, was $28.1 million or $0.14 loss per share, compared to pro forma net income of $40.2 million or $0.21 per share in the fourth quarter of fiscal 2000 and pro forma net loss of $11.9 million or $0.06 loss per share in the prior quarter. Pro forma net income for the year ended September 30, 2001 was $26.5 million or $0.14 per share, compared to pro forma net income of $116.9 million or $0.62 per share for the prior year.

In the fourth quarter of fiscal 2001, the Company recorded non-recurring charges in the amount of $9.2 million. These charges consisted of a $8.1 million charge for the impairment of certain fixed assets and a $1.1 million restructuring charge in connection with a workforce reduction and office closures which were initiated in May 2001. The Company also recorded an extraordinary gain on the extinguishment of debt, net of taxes, of $11.9 million upon the repurchase of $118.6 million face value of its subordinated convertible debt for $97.1 million in cash.

In the year ended September 30, 2001, the Company recorded non-recurring charges in the amount of $92.4 million. These charges consisted of a $50.6 million write-off for excess and obsolete inventories (excluding the reversal of the inventory reserve of approximately $9.0 million), a $15.3 million charge for the impairment of certain fixed assets and investments, a $22.9 million charge for the impairment of goodwill related to certain acquisitions and a $3.6 million restructuring charge in connection with a workforce reduction and office closures initiated in May 2001. The Company also recorded an extraordinary gain on the extinguishment of debt, net of taxes, of $19.0 million upon the repurchase of $182.9 million face value of its subordinated convertible debt for $148.8 million in cash.

Vitesse President and CEO, Lou Tomasetta, commented "The last few quarters have been very difficult as the entire industry has suffered through a massive slowdown in end user demand, exacerbated by excess inventories throughout the supply chain. While we don t expect marked improvement in the December quarter, we now believe that demand should begin to slowly improve in calendar 2002. We believe that our large R&D investments in switch and processor products over the last two years will begin to pay dividends and allow us to grow from current levels, even assuming total communication capital expenditures decline in 2002. During the next few quarters, we will continue to reduce costs even as we ramp our optical subsystem manufacturing capacity.

This press release contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our expected financial results for future periods and market acceptance of our products. Our actual results could differ materially from our forward looking statements for a variety of reasons, including, among other things, delays or cancellations of orders by our customers, competition in our markets, difficulties in bringing new products to market and possible future write-downs of assets in connection with acquisitions we have completed. 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, 2000 and our Quarterly Report on Form 10-Q for the three months ended June 30, 2001.

The inventory obsolescence charge is included in cost of revenues, the amortization of deferred compensation is included in engineering and development expenses, the impairment of certain fixed assets is included in selling, general and administrative expenses, the impairment of goodwill and the charge recorded for the workforce reduction and office closures is included in the restructuring charge, and the impairment of certain investments is included in other income, net, in the Statement of Operations above. All periods presented have been retroactively restated to account for the acquisition of SiTera, Inc. which was completed in the third quarter of fiscal 2000 and has been accounted for under the pooling-of-interests method of accounting.

Vitesse Semiconductor Corporation is a leading designer and supplier of innovative, high- performance integrated circuits (ICs) and optical modules used in next generation networking and optical communications equipment. The Company#&39;s products address the needs of Enterprise, Access, Metro, Core, and Optical Transport network equipment manufacturers who demand a robust combination of high-speed, high-service delivery and low-power dissipation in their products. In concert with its broad communications product portfolio, Vitesse also develops ICs for storage area networking and enclosure management. Vitesse is headquartered in Camarillo, California, and operates two fabrication facilities; one in Camarillo and one in Colorado Springs, Colorado. Company and product information is available by calling 1-800-VITESSE.

Contact: Eugene F. Hovanec Vice President, Finance & Chief Financial Officer Vitesse Semiconductor Corporation Tel: (805) 388-3700