Vitesse Reports Results for Fourth Quarter and Fiscal Year Ended 2005

In the fourth quarter of fiscal 2005, the Company was required torecord a non-cash asset impairment charge in the amount of $49.4million in accordance with SFAS No. 144, Accounting for the Impairmentor Disposal of Long-Lived Assets. This charge represents thewrite-down of the book values of several assets to their fair marketvalues. Additionally, the Company wrote down certain inventories andincreased its inventory reserves in the fourth quarter of fiscal 2005,resulting in a charge of $5.3 million that is included in cost ofrevenues.

On a generally accepted accounting principles (GAAP) basis, netloss for the fourth quarter of fiscal 2005 was $68.9 million, or $0.32loss per share, compared to net loss of $3.1 million, or $0.01 lossper share, in the fourth quarter of fiscal 2004 and net loss of $11.8million, or $0.05 loss per share, in the third quarter of fiscal 2005.Net loss for the year ended September 30, 2005 was $126.9 million, or$0.59 loss per share, compared to net loss of $33.1 million, or $0.15loss per share, for the year ended September 30, 2004.

Non-GAAP net loss for the fourth quarter of fiscal 2005 was $9.4million, or $0.04 loss per share, compared to non-GAAP net loss of$3.9 million, or $0.02 loss per share, in the fourth quarter of fiscal2004, and non-GAAP net loss of $7.2 million, or $0.03 loss per share,in the third quarter of fiscal 2005. Non-GAAP net loss for the yearended September 30, 2005 was $35.5 million, or $0.16 loss per share,compared to non-GAAP net income of $1.2 million, or $0.01 income pershare, for the year ended September 30, 2004. Non-GAAP results for allperiods presented exclude certain non-cash expenses includingamortization of intangible assets, acquisition-related deferredstock-based compensation, employee stock purchase plan compensation,investment impairment charges, in process research and developmentcharges, restructuring charges, inventory write-downs, and fixed assetimpairment charges, and include an adjustment to income taxes.Excluded unusual cash items consist of acquisition-related othercompensation expense, and the gain on sale of certain fixed assets.

Vitesse's President and CEO, Lou Tomasetta, said, "As we hadannounced earlier this month, our revenues declined 5% sequentiallydue to softness in demand for our storage products that we saw towardsthe end of the quarter, as well as a delay by our customers in theramp of SAS-based storage systems caused in turn by delays in theavailability of next-generation processors.

"During the quarter we continued to gain market share in ourEthernet business as we showed another quarter of double-digitsequential growth in this market. Finally, we took additionalcost-cutting measures in October that will decrease our breakevenpoint. Overall, we remain well positioned in our markets and expect toresume top line growth this quarter."

Conference Call Information

The Company will hold a conference call on October 27, 2005 at2:00 p.m. PDT. A live web cast of the call will be available onVitesse's web site at www.vitesse.com. Those without Internet accessmay listen to the live conference call by dialing 1-800-450-5178(United States and Canada) or 1-706-679-4116 (International).Conference name is "Vitesse Semiconductor Corporation." A replay ofthe web cast will be available on the Company's web site after thecall. A telephone replay of the conference call will be available forseven days, beginning on October 27, 2005 at 4:00 p.m. PDT. Thedial-in number for the telephone replay is 1-706-645-9291, conferenceID number 1369446.

About Vitesse

Vitesse designs, develops and markets a diverse portfolio ofhigh-performance, cost-competitive semiconductor solutions forcommunications and storage networks worldwide. Engineering excellenceand dedicated customer service distinguish Vitesse as an industryleader in Gigabit Ethernet LAN, Ethernet-over-SONET, AdvancedSwitching, Fibre Channel, Serial Attached SCSI, Optical Transport, andother applications. Vitesse innovation empowers customers to deliversuperior products for Enterprise, Access, Metro and Core applications.Additional company and product information is available atwww.vitesse.com.

Forward-Looking Statements

This press release contains forward looking statements within themeaning of the Private Securities Litigation Reform Act of 1995,including statements regarding our future operating results and themarkets for our products. Our actual results could differ materiallyfrom our forward looking statements for a variety of reasons,including among other things, failure of our markets to achieveexpected growth, delays or cancellations of orders by our customers,competition in our markets, unexpected expenses or increased expensesassociated with bringing new products to market and thediscontinuation of certain operations, difficulties in bringing newproducts to market, costs associated with the integration ofacquisitions, and possible future write-downs of assets. For a morecomplete discussion of the risks and uncertainties that may cause ouractual results to differ materially from our forward lookingstatements, please read the reports we file from time to time with theSecurities and Exchange Commission, including our Annual Report onForm 10-K for the year ended September 30, 2004 and our QuarterlyReport on Form 10-Q for the quarter ended June 30, 2005.

Non-GAAP Financial Measures

We provide non-GAAP statements of operations data and net incomeand loss in addition to our GAAP financial information. We believethat it is useful to provide financial analysts and investors withspecific detail on expenses and gains that are either non-cash innature or unusual. We believe that the elimination of non-cash itemsand unusual gains and losses, as reflected in our non-GAAP informationprovided in our filings, is helpful to analysts and investors who maywish to use some or all of this information to analyze our currentperformance, prospects and valuation. Similarly, our management usesthe non-GAAP information internally to evaluate our operatingperformance and in formulating our budget for future periods.

For the three months and twelve months ended September 30, 2005and 2004, we have excluded several items from our non-GAAP net income(loss) figures. Excluded non-cash expenses consist of amortization ofintangible assets, acquisition-related deferred stock-basedcompensation, employee stock purchase plan compensation, investmentimpairment charges, in process research and development charges,restructuring charges, inventory write-downs, and fixed assetimpairment charges. Excluded unusual cash items consist ofacquisition-related other compensation expense, and the gain on saleof fixed assets recorded in the quarter ended June 30, 2004.

In addition to the adjustments discussed above, we also apply anon-GAAP tax rate to our non-GAAP income before taxes, whichrepresents an expected long-term target rate based on various taxplanning strategies that we have implemented in the past and that weexpect to continue to implement in the future. This rate also assumesa certain mix of foreign shipments based on historical and expectedtrends, which may result in a shifting of income to lower taxjurisdictions. The non-GAAP tax rate does not take into account thevarious loss carryforwards, tax credits and reversal of the valuationallowance on the deferred tax assets which may result in a reducedGAAP tax rate. Our GAAP tax rate is expected to be significantly lowerthan this non-GAAP rate at least through fiscal 2006.

Although we believe our non-GAAP measures provide usefulinformation, these measures are not prepared in accordance with GAAP,and are not a substitute for our GAAP financial information. Pleaseconsult the reconciliation table immediately following the GAAPStatement of Operations for a reconciliation of GAAP results tonon-GAAP results. For complete information on the non-cash expensesand unusual charges and gains eliminated from our GAAP results, pleasesee our financial statements and "Management's Discussion and Analysisof Results of Operations and Financial Condition" that will beincluded in the periodic report we expect to file with the SEC withrespect to the financial periods discussed herein.

VITESSE SEMICONDUCTOR CORPORATION
FINANCIAL SUMMARY

Statement of Operations - GAAP basis (unaudited)
(in thousands except per share data)


Three Months Ended Year Ended
---------------------------- --------------------
Sept 30, Sept 30, June 30, Sept 30, Sept 30,
2005 2004 2005 2005 2004
-------------------------------------------------

Revenues $48,190 $52,012 $50,971 $190,778 $218,775
Costs and expenses:
Cost of revenues 27,416 20,450 22,415 91,143 78,720
Engineering and
development 24,736 25,089 24,775 101,443 108,533
Selling, general
and administrative 13,312 12,322 12,725 50,127 47,356
Restructuring
charge -- -- 65 10,475 886
Impairment of long-
lived assets 49,413 -- -- 50,553 --
Employee stock
purchase plan
compensation -- (4,668) -- 527 5,420
In process research
and development -- -- -- -- 3,700
Amortization of
intangible assets 2,302 2,377 2,331 9,345 8,902
--------- -------- --------- ---------- ---------
Loss from operations,
before other expense
and income taxes (68,989) (3,558) (11,340) (122,835) (34,742)
Other income
(expense), net (260) (476) (456) (3,976) 1,017
Loss on extinguishment
of debt -- (191) -- -- (191)
--------- -------- --------- ---------- ---------
Loss from operations,
before income taxes (69,249) (4,225) (11,796) (126,811) (33,916)
Income tax expense
(benefit) (319) (1,121) 40 68 (851)
--------- -------- --------- ---------- ---------
Net loss ($68,930) ($3,104) ($11,836) ($126,879) ($33,065)
========= ======== ========= ========== =========
Net loss per share--
diluted ($0.32) ($0.01) ($0.05) ($0.59) ($0.15)
========= ======== ========= ========== =========
Weighted average
shares--diluted 218,546 216,872 216,607 216,130 215,726
========= ======== ========= ========== =========



Condensed Consolidated Balance Sheet Data -- GAAP basis
----------------------------------------------------------------------
(in thousands) Sept 30, June 30, Sept 30,
2005 2005 2004
----------- ----------- ---------
(unaudited) (unaudited)
Assets:
------------------------------------
Cash and investments $32,000 $34,104 $183,125
Accounts receivables, net 30,403 33,375 36,447
Inventories, net 35,158 40,764 41,162
Prepaid expenses and other current
assets 7,485 7,686 9,524
Restricted cash 8 814 6,600
Property and equipment, net 58,074 109,825 74,403
Restricted deposits 0 0 48,217
Goodwill and intangible assets 238,916 240,944 243,092
Other assets 9,292 10,583 16,448
----------- ----------- ---------
Total assets $411,336 $478,095 $659,018
=========== =========== =========

Liabilities and Shareholders' Equity:
------------------------------------
Accounts payable $20,188 $17,881 $17,789
Accrued expenses and other current
liabilities 27,472 31,451 25,077
Accrued restructuring 2,020 3,126 13,553
Accrued interest 725 530 267
Deferred gain 4,319 4,319 5,210
Income taxes payable 699 1,784 1,511
Other long-term liabilities 3,916 1,146 1,146
Convertible debt, due March 2005 0 0 132,746
Convertible debt, due October 2024 96,700 96,700 90,000
Minority interest 772 772 1,481
Shareholders' equity 254,525 320,386 370,238
----------- ----------- ---------
Total liabilities and
shareholders' equity $411,336 $478,095 $659,018
=========== =========== =========


VITESSE SEMICONDUCTOR CORPORATION
FINANCIAL SUMMARY

Reconciliation of GAAP net loss to non- GAAP net income (loss):
(in thousands except per share data)

Three Months Ended Year Ended
---------------------------- --------------------
Sept 30, Sept 30, June 30, Sept 30, Sept 30,
2005 2004 2005 2005 2004
-------------------------------------------------

GAAP net loss ($68,930) ($3,104) ($11,836) ($126,879) ($33,065)
Adjustments to net
loss:
Amortization of
intangibles(1) 2,302 2,377 2,331 9,345 8,902
Amortization of
deferred
compensation(2) 32 1,406 149 1,499 17,993
Other compensation
expense(3) 152 263 114 1,403 1,756
Employee stock
purchase plan
compensation(4) - (4,668) - 527 5,420
Investment
impairment charge(5) (9) - (73) 2,214 119
In process research and
development charge(6) - - - - 3,700
Restructuring charge(7) - - 65 10,475 886
Gain on sale of
fixed assets(8) - - - - (3,235)
Loss on extinguishment
of debt(9) - 191 - - 191
Net gain on termination of
swap related to
extinguishement
of debt(9) - (296) - - (296)
Inventory
obsolescence
charge(10) 5,261 - - 5,261 -
Impairement of
long-lived
assets(11) 49,413 - - 49,413 -
Fixed asset
impairment
charge(12) - - - 1,140 -
Income taxes(13) 2,343 (32) 2,066 10,087 (1,185)
--------- -------- --------- ---------- ---------
Non-GAAP net income
(loss) ($9,436) ($3,863) ($7,184) ($35,515) $1,186
========= ======== ========= ========== =========

GAAP net loss per
share--diluted ($0.32) ($0.01) ($0.05) ($0.59) ($0.15)
Adjustment to net
loss per share--
diluted 0.28 (0.01) 0.02 0.43 $0.16
--------- -------- --------- ---------- ---------
Non-GAAP net income
(loss) per share
--diluted ($0.04) ($0.02) ($0.03) ($0.16) $0.01
========= ======== ========= ========== =========
Shares used to
calculate non-GAAP net
income (loss) per
share--diluted 218,546 216,872 216,607 216,130 216,648
========= ======== ========= ========== =========


Non-GAAP Adjustments:
The GAAP net loss has been adjusted to reflect the following:

(1) The elimination of the non-cash amortization of identifiable
intangible assets associated with purchase acquisitions.
(2) The elimination of the non-cash amortization of deferred
compensation expense associated with stock options issued in purchase
transactions, which amounts are included under engineering and
development expense.
(3) The elimination of other compensation expense related to
purchase transactions, which amounts are included under engineering
and development expense.
(4) The elimination of the non-cash charge for employee stock
purchase plan compensation that was recorded under the variable method
of accounting in accordance with Emerging Issues Task Force 97-12,
Accounting for Increased Share Authorizations in an IRS Section 423
Employee Stock Purchase Plan under APB Opinion No. 25. This amount can
vary significantly based on changes in future stock price and levels
of employee participation.
(5) The elimination of long-term investment impairment charges,
which amounts are included under other expenses, net.
(6) The elimination of the non-cash in process research and
development charge associated with our acquisition of Cicada.
(7) The elimination of a restructuring charge for excess
facilities, severance expense, and fixed asset impairment.
(8) The elimination of the gain on sale of certain test equipment.
(9) The elimination of loss on early termination of long-term
debt, and related net gain on termination of swap related to same
debt.
(10) The elimination of a charge related to increasing inventory
obsolescence reserves which amount is included in cost of revenues.
(11) The elimination of a long-lived asset impairment charge
recorded in accordance with FASB 144, Accounting for the Impairment or
Disposal of Long-Lived Assets.
(12) The elimination of a fixed asset impairment charge related to
leased manufacturing equipment.
(13) The income tax adjustment from a GAAP rate to a non-GAAP rate
of 22%, which represents an expected long-term target rate based on
various tax planning strategies that the Company has implemented in
the past and plans to continue in the future. This adjustment is
included in income tax expense (benefit) for each of the periods
presented. The non-GAAP tax rate does not take into account the
various loss carry forwards, tax credits and reversal of the valuation
allowance on the deferred tax assets which may result in a different
GAAP tax rate.