CAMARILLO, Calif.--(BUSINESS WIRE)--Dec. 14, 2009--
Vitesse Semiconductor Corporation (Pink Sheets:VTSS), a leading provider
of advanced IC solutions for Carrier and Enterprise networks, today
reported its audited financial results for the fourth quarter and fiscal
year ended September 30, 2009.
Recent Operating and Financial Highlights
-
Completed debt restructuring transaction, closed in October 2009,
resulting in a significantly improved balance sheet and operating
flexibility in fiscal 2010.
-
Reported net revenues of $168.2 million in fiscal year 2009 compared
with $228.5 million in fiscal year 2008, reflecting weak global
economic conditions and cyclical industry downturn.
-
Generated positive cash flow from operations of $19.2 million in
fiscal year 2009, compared with negative cash flow from operations of
$22.6 million in fiscal year 2008.
-
Reported a net loss of $194.0 million in fiscal year 2009, compared
with net income of $16.6 million in fiscal year 2008. 2009 results
include non-cash expenses of $191.4 million for goodwill impairment
and a $12.2 million fair value adjustment to our derivative liability.
-
Introduced 16 new products, exceeding 2009 target of 12.
CEO Commentary
“While 2009 was a challenging year for Vitesse, and for the industry as
a whole, we delivered on the majority of our key goals,” said Chris
Gardner, CEO of Vitesse. “Importantly, we resolved our debt issues with
the completion of our debt restructuring in October, and move forward
with a stronger balance sheet. We generated positive cash flow from
operations in 2009 in spite of lower than expected revenue. We also took
aggressive action to improve our operations and reduce operating
expenses, while continuing our investment level in R&D.”
“Market conditions are beginning to improve and Vitesse is well
positioned for 2010 with improved financial stability and a particularly
strong new product cycle. In the coming year, we will focus on
optimizing the value of our operations by continuing to invest in R&D
and by transitioning our Camarillo, California test facility to our
subcontractors in Asia. We believe these investments will position
Vitesse for improved operating efficiencies and returns in 2011 and
beyond,” Mr. Gardner concluded.
Fiscal Year 2009 Financial Results Summary
Net revenues for the fiscal year 2009 were $168.2 million, a decline of
26.4% compared with $228.5 million reported in fiscal year 2008. Product
revenues were $154.9 million, a 29.1% decrease from prior year.
Licensing revenues were $13.3 million, a 32.5% increase from the prior
year. Core product revenues for fiscal year 2009 were $129.4 million, a
decline of 23.7% from 2008. Non-core product revenues for fiscal year
2009 were $25.6 million, a decline of 47.9% from fiscal year 2008.
Cost of revenues decreased $27.9 million to $78.4 million in fiscal year
2009 compared with $106.3 million in fiscal year 2008. Engineering,
research and development (R&D) expenses were $45.7 million for fiscal
year 2009, compared with $50.0 million in fiscal year 2008, a decrease
of $4.3 million or 8.6%. Selling, general and administrative expenses
were $40.2 million for fiscal year 2009, compared to $50.6 million in
fiscal year 2008.
Loss from operations was $179.0 million in fiscal 2009, compared with
operating income of $8.4 million for fiscal year 2008. The Company’s net
loss was $194.0 million, or $0.85 per share, compared with net income of
$16.6 million, or $0.07 per share, for fiscal year 2008.
Balance Sheet Overview
Cash and cash equivalents totaled $57.5 million at September 30, 2009,
an increase of $20.8 million from September 30, 2008. Inventory
at September 30, 2009 totaled $18.8 million, a decrease of $18.7 million
from September 30, 2008.
Fourth Quarter 2009 Financial Results Summary
Net revenues for the fourth quarter of fiscal year 2009 were $39.2
million, a decrease of 40.0% compared with $65.4 million reported for
the fourth quarter of 2008 and a decrease of 12.2% compared with $44.6
million in the third quarter of fiscal year 2009. Product revenues were
$39.2 million, a 29.2% decrease from the same quarter in 2008, and a
7.8% increase over $36.4 million reported for the third quarter of
fiscal year 2009. Revenue for the fourth quarter of 2009 did not include
any licensing revenues. Licensing revenues in the fourth quarter of 2008
and third quarter of 2009 were $10.0 million and $8.3 million,
respectively.
Cost of revenues decreased $5.9 million to $20.5 million in the fourth
quarter of 2009 compared with $26.4 million for the same quarter in
2008. As a percentage of product revenues, cost of product revenues
increased from 47.6% in the fourth quarter of fiscal year 2008, to 52.2%
in the quarter ended September 30, 2009. R&D expenses were $12.0 million
for the fourth quarter of 2009, compared with $12.4 million a year ago,
a decrease of $0.4 million or 3.5%. Selling, general and administrative
expenses were $8.5 million for the fourth quarter of 2009 compared to
$12.8 million in the fourth quarter of 2008.
Loss from operations was $1.8 million in the fourth quarter of 2009
compared with operating income of $11.5 million in the fourth quarter of
2008. The Company’s fourth quarter net loss was $9.5 million, or $0.04
per share, compared with net income of $10.2 million, or $0.04 per
share, in the year-ago quarter.
Fourth Quarter 2009 New Product Introductions
Vitesse introduced three new products in the fourth quarter of fiscal
year 2009:
VSC3144-11:
Availability of this breakthrough 11.5 Gbps 144x144 crosspoint switch
enables a dramatic 40% bandwidth improvement in switches used in Carrier
and Enterprise networking environments and achieves an industry best
1.656 Tbps switching capacity.
VSC3316:
Another innovation to its industry-leading signal integrity portfolio,
the VSC3316
is a new 16-port asynchronous crosspoint switch with enhanced FlexEQ™
signal equalization capabilities.
VSC8486-11: Extending its offering of industry-leading VSC8486 10
Gbps XAUI to XFI LAN/WAN transceivers with a highly integrated,
next-generation device, the VSC8486-11 features synchronous
Ethernet clocking and delivers superior high-speed signals for XFP
and SFP+ module-based Carrier Ethernet equipment.
Outlook and Goals
Vitesse expects to see a continued industry recovery and resumed top
line growth in 2010. As such, the Company intends to make investments in
the first half of the year that will position it for growth in 2011 and
beyond. In 2010, Vitesse plans to increase product introductions to an
average of six per quarter from three per quarter in 2009 and to
transition its California test facility to its subcontractors in Asia.
The Company also plans to continue to generate positive cash flow from
operations. The Company has not changed its long-term operating targets
which call for the following as a percentage of revenue: gross margin of
55% to 60%, R&D of 25% to 28%, SG&A of 11% to 14%, income from
operations of 11% to 16% and EBITDA of 17% to 22%. Further, the Company
is targeting annual inventory turns of five times and accounts payable
and accounts receivable in line with normal industry levels.
Conference Call Information
A conference call is scheduled for Monday, December 14, 2009 at 1:30
p.m. Pacific Time/4:30 p.m. Eastern Time. To listen to the conference
call via telephone, dial 800-450-5178 (U.S. toll-free) or 706-679-6171
(International) and provide the passcode 43131353. Participants should
dial in at least 10 minutes prior to the start of the call. The Company
will also broadcast the conference call via a webcast over the internet.
To listen via the Internet, the webcast can be accessed through the
Vitesse corporate web site at www.vitesse.com.
The call will be recorded and available for replay until Monday,
December 21, 2009. To access the audio replay, dial 800-642-1687 (U.S.
toll-free) or 706-645-9291 (International) and entering the passcode
43131353.
Investor Conference Participation
Vitesse will participate in the 12th Annual Needham & Company Growth
Stock Conference, January 12 - 14, 2010. Representing Vitesse at this
event will be Chris Gardner, CEO, and Rich Yonker, CFO. They will
present on Thursday, January 14, 2010 at 1:50 p.m. Eastern Time. The
presentation will be webcast. To listen to the webcast, view the
investor section of the Company's web site: www.vitesse.com.
About Vitesse
Vitesse designs, develops and markets a diverse portfolio of
high-performance, cost-competitive semiconductor solutions for Carrier
and Enterprise networks worldwide. Engineering excellence and dedicated
customer service distinguish Vitesse as an industry leader in Gigabit
Ethernet LAN, Ethernet-over-SONET, Fibre Channel, Serial Attached SCSI,
Optical Transport, and other applications. Additional company and
product information is available at www.vitesse.com.
Vitesse is a registered trademark in the United States and/or other
jurisdictions of Vitesse Semiconductor Corporation. All other trademarks
or registered trademarks mentioned herein are the property of their
respective holders.
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. These forward-looking statements provide current
expectations of future events based on certain assumptions and include
any statement that does not directly relate to any historical or current
facts. These forward-looking statements 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. 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.
|
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
|
|
2009
|
|
2008
|
|
|
|
|
|
(in thousands, except share data)
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
57,544
|
|
|
$
|
36,722
|
|
|
|
Accounts receivable, net
|
|
|
11,369
|
|
|
|
6,307
|
|
|
|
Inventory
|
|
|
18,809
|
|
|
|
37,466
|
|
|
|
Assets held for sale
|
|
|
-
|
|
|
|
3,164
|
|
|
|
Restricted cash
|
|
|
398
|
|
|
|
592
|
|
|
|
Prepaid expenses and other current assets
|
|
|
4,956
|
|
|
|
4,011
|
|
|
|
|
Total current assets
|
|
|
93,076
|
|
|
|
88,262
|
|
|
Property, plant and equipment, net
|
|
|
7,874
|
|
|
|
8,084
|
|
|
Goodwill
|
|
|
-
|
|
|
|
191,418
|
|
|
Other intangible assets, net
|
|
|
1,541
|
|
|
|
913
|
|
|
Other assets
|
|
|
3,077
|
|
|
|
3,600
|
|
|
|
|
|
|
$
|
105,568
|
|
|
$
|
292,277
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS' (DEFICIT) EQUITY
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
|
14,191
|
|
|
$
|
16,101
|
|
|
|
Accrued expenses and other current liabilities
|
|
|
10,887
|
|
|
|
20,242
|
|
|
|
Derivative liability
|
|
|
12,209
|
|
|
|
-
|
|
|
|
Deferred revenue
|
|
|
1,156
|
|
|
|
2,721
|
|
|
|
Current portion of debt and capital leases
|
|
|
5,236
|
|
|
|
-
|
|
|
|
Convertible subordinated debt
|
|
|
10,000
|
|
|
|
-
|
|
|
|
|
Total current liabilities
|
|
|
53,679
|
|
|
|
39,064
|
|
|
|
|
|
|
|
|
|
|
Other long-term liabilities
|
|
|
1,810
|
|
|
|
1,564
|
|
|
Long-term debt, net of discount
|
|
|
24,652
|
|
|
|
29,423
|
|
|
Convertible subordinated debt
|
|
|
86,700
|
|
|
|
96,700
|
|
|
|
|
Total liabilities
|
|
|
166,841
|
|
|
|
166,751
|
|
|
Minority interest
|
|
|
86
|
|
|
|
165
|
|
|
Commitments and contingencies
|
|
|
|
|
|
Shareholders' (deficit) equity:
|
|
|
|
|
|
|
Preferred stock, $0.01 par value. 10,000,000 shares authorized; none
outstanding
|
|
|
-
|
|
|
|
-
|
|
|
|
Common stock, $.01 par value. 500,000,000 shares authorized;
230,905,580 and 226,205,580 shares outstanding
at September
30, 2009 and 2008, respectively
|
|
|
2,314
|
|
|
|
2,267
|
|
|
|
Additional paid-in-capital
|
|
|
1,754,598
|
|
|
|
1,747,324
|
|
|
|
Accumulated other comprehensive income
|
|
|
-
|
|
|
|
-
|
|
|
|
Accumulated deficit
|
|
|
(1,818,271
|
)
|
|
|
(1,624,230
|
)
|
|
|
|
Total shareholders' (deficit) equity
|
|
|
(61,359
|
)
|
|
|
125,361
|
|
|
|
|
|
|
$
|
105,568
|
|
|
$
|
292,277
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
|
Twelve Months Ended September 30,
|
|
|
|
|
|
2009
|
|
2008
|
|
|
|
|
2009
|
|
2008
|
|
|
|
|
|
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
Product revenues
|
|
$
|
39,184
|
|
|
$
|
55,360
|
|
|
|
|
|
$
|
154,927
|
|
|
$
|
218,536
|
|
|
Intellectual property revenues
|
|
|
-
|
|
|
|
10,000
|
|
|
|
|
|
|
13,250
|
|
|
|
10,000
|
|
|
|
Net revenues
|
|
|
39,184
|
|
|
|
65,360
|
|
|
|
|
|
|
168,177
|
|
|
|
228,536
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
|
|
|
20,457
|
|
|
|
26,367
|
|
|
|
|
|
|
78,414
|
|
|
|
106,344
|
|
|
|
Engineering, research and development
|
|
|
11,964
|
|
|
|
12,398
|
|
|
|
|
|
|
45,685
|
|
|
|
49,982
|
|
|
|
Selling, general and administrative
|
|
|
8,467
|
|
|
|
12,799
|
|
|
|
|
|
|
40,227
|
|
|
|
50,557
|
|
|
|
Accounting remediation & reconstruction expense and litigation costs
|
|
|
(179
|
)
|
|
|
1,948
|
|
|
|
|
|
|
(9,922
|
)
|
|
|
10,761
|
|
|
|
Goodwill impairment
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
191,418
|
|
|
|
-
|
|
|
|
Amortization of intangible assets
|
|
|
292
|
|
|
|
310
|
|
|
|
|
|
|
1,360
|
|
|
|
2,514
|
|
|
|
|
Costs and expenses
|
|
|
41,001
|
|
|
|
53,822
|
|
|
|
|
|
|
347,182
|
|
|
|
220,158
|
|
|
(Loss) income from operations
|
|
|
(1,817
|
)
|
|
|
11,538
|
|
|
|
|
|
|
(179,005
|
)
|
|
|
8,378
|
|
|
Other (expense) income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
(8,759
|
)
|
|
|
(1,162
|
)
|
|
|
|
|
|
(16,862
|
)
|
|
|
(3,868
|
)
|
|
Loss on extinguishment of debt
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
Other income, net
|
|
|
244
|
|
|
|
646
|
|
|
|
|
|
|
223
|
|
|
|
4,882
|
|
|
|
Other (expense) income, net
|
|
|
(8,515
|
)
|
|
|
(516
|
)
|
|
|
|
|
|
(16,639
|
)
|
|
|
1,014
|
|
|
Income tax (benefit) expense
|
|
|
(851
|
)
|
|
|
1,768
|
|
|
|
|
|
|
(1,451
|
)
|
|
|
1,222
|
|
|
Minority interest in loss (earnings) of consolidated subsidiary
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
81
|
|
|
|
(660
|
)
|
|
(Loss) income from continuing operations before discontinued
operations
|
|
|
(9,479
|
)
|
|
|
9,254
|
|
|
|
|
|
|
(194,112
|
)
|
|
|
7,510
|
|
|
Discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations, net of tax of $997 and
gain on sale of $21,500 in 2008
|
|
|
-
|
|
|
|
943
|
|
|
|
|
|
|
71
|
|
|
|
9,044
|
|
|
Net (loss) income
|
|
$
|
(9,479
|
)
|
|
$
|
10,197
|
|
|
|
|
|
$
|
(194,041
|
)
|
|
$
|
16,553
|
|
|
Basic (loss) income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
(0.04
|
)
|
|
|
0.04
|
|
|
|
|
|
|
(0.85
|
)
|
|
|
0.03
|
|
|
|
Discontinued operations
|
|
|
0.00
|
|
|
|
0.01
|
|
|
|
|
|
|
0.00
|
|
|
|
0.04
|
|
|
|
|
Net (loss) income
|
|
$
|
(0.04
|
)
|
|
$
|
0.05
|
|
|
|
|
|
$
|
(0.85
|
)
|
|
$
|
0.07
|
|
|
Diluted (loss) income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
(0.04
|
)
|
|
|
0.04
|
|
|
|
|
|
|
(0.85
|
)
|
|
|
0.03
|
|
|
|
Discontinued operations
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
|
|
|
0.00
|
|
|
|
0.04
|
|
|
|
|
Net (loss) income
|
|
$
|
(0.04
|
)
|
|
$
|
0.04
|
|
|
|
|
|
$
|
(0.85
|
)
|
|
$
|
0.07
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
230,906
|
|
|
|
223,786
|
|
|
|
|
|
|
229,554
|
|
|
|
223,614
|
|
|
Diluted
|
|
|
230,906
|
|
|
|
261,767
|
|
|
|
|
|
|
229,554
|
|
|
|
223,614
|
|
Source: Vitesse Semiconductor Corporation
Vitesse
Rich Yonker, +1-805-388-3700
invest@vitesse.com
|
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