<PAGE>
 
                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                   FORM 10-Q

               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
                    OF THE SECURITIES EXCHANGE ACT OF 1934
                        For the quarterly period ended
                               December 31, 1998

                                      or

               TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
                    OF THE SECURITIES EXCHANGE ACT OF 1934
                For the transition period from ...... to ......

                        Commission file number 0-19654


--------------------------------------------------------------------------------

                       VITESSE SEMICONDUCTOR CORPORATION
             (Exact name of registrant as specified in its charter)

--------------------------------------------------------------------------------


           DELAWARE                                     77-0138960
  (State or other jurisdiction of                    (I.R.S. Employer
  incorporation or organization)                     Identification No.)


                                741 CALLE PLANO
                             CAMARILLO, CA  93012
                   (Address of principal executive offices)
                                (805) 388-3700
             (Registrant's telephone number, including area code)

                               ___________________


     INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS:  YES  (  )  NO  (    ).

     AS OF DECEMBER 31, 1998, THERE WERE 74,353,845 SHARES OF $0.01 PAR VALUE
COMMON STOCK OUTSTANDING.


================================================================================
<PAGE>
 
                       VITESSE SEMICONDUCTOR CORPORATION

                               TABLE OF CONTENTS
                               -----------------

<TABLE> 
<CAPTION> 
                                                                                Page Number
<S>                                                                             <C>  
PART I       FINANCIAL INFORMATION
 
   Item 1    Financial Statements:
 
             Condensed Consolidated Balance Sheets as of December 31, 1998            2
             and September 30, 1998
 
             Condensed Consolidated Statements of Operations for the Three            3
             Months ended December 31, 1998 and December 31, 1997
 
             Condensed Consolidated Statements of Cash Flows for the Three            4
             Months ended December 31, 1998 and December 31, 1997
 
             Notes to Condensed Consolidated Financial Statements                     5
 
   Item 2    Management's Discussion and Analysis of                                  6
             Financial Condition and Results of Operations
 
PART II      OTHER INFORMATION
 
   Item 6    Exhibits and Reports on Form 8-K                                        13
</TABLE>

                                       1
<PAGE>
 
                                     PART I
                             FINANCIAL INFORMATION
                       VITESSE SEMICONDUCTOR CORPORATION
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                       (in thousands, except share data)

<TABLE> 
<CAPTION> 
                                                       Dec. 31, 1998  Sept. 30, 1998
                                                       -------------  --------------
                                                        (Unaudited)
                                     ASSETS
<S>                                                    <C>            <C>         
Current assets:                                             $ 82,414      $ 70,684
 Cash and cash equivalents                                    82,780        91,610
 Short-term investments                                       45,507        39,953
 Accounts receivable, net                                     17,993        16,795
 Inventories, net                                              3,319         3,008
   Prepaid expenses                                           20,982        20,982
 Deferred tax asset                                         --------      --------
                                                             252,995       243,032
  Total current assets                                      --------      --------
                                                              60,964        56,455
Property and equipment, net                                   68,471        68,704
Restricted long-term deposits                                 15,706           220
Intangible and other assets                                 --------      --------
                                                            $398,136      $368,411
                                                            ========      ======== 
                                 
                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
 Accounts payable                                           $ 12,789      $ 13,898
 Accrued expenses and other current liabilities               12,169         9,481
 Income taxes payable                                         10,972         4,199
 Capital lease obligations                                       102           145
                                                            --------      --------
     Total current liabilities                                36,032        27,723
                                                            --------      --------
Other liabilities                                              2,730           ---
Shareholders' equity:                                                             
 Common stock, $.01 par value. Authorized 100,000,000                             
  shares; issued and outstanding 74,353,845 shares on                             
  Dec. 31, 1998, and 73,788,136 shares on Sept. 30, 1998         744           738
 Additional paid-in capital                                  302,745       299,503
 Retained earnings                                            55,885        40,447
                                                            --------      --------
     Shareholders' equity                                    359,374       340,688
                                                            --------      --------
                                                            $398,136      $368,411
                                                            ========      ======== 
</TABLE>

See accompanying Notes to Condensed Consolidated Financial Statements.

                                       2
<PAGE>
 
                       VITESSE SEMICONDUCTOR CORPORATION
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)
                (in thousands, except share and per share data)

<TABLE>
<CAPTION>
                                          Dec. 31, 1998  Dec. 31, 1997
                                          -------------  -------------
<S>                                       <C>            <C>
Revenues                                    $    60,179    $    34,701
                                            -----------    -----------
 
Costs and expenses:
 Cost of revenues                                22,961         14,194
 Engineering, research & development              9,565          5,555
 Selling, general & administrative                7,019          4,262
                                            -----------    -----------
     Total costs and expenses                    39,545         24,011
                                            -----------    -----------
 
Income from operations                           20,634         10,690
 
Other income, net                                 2,409          2,283
                                            -----------    -----------
 
Income before income taxes                       23,043         12,973
Income taxes                                      7,605          2,594
                                            -----------    -----------
 
Net income                                  $    15,438    $    10,379
                                            ===========    ===========
 
Net income per share:
 Basic                                            $0.21          $0.14
                                            ===========    ===========
 Diluted                                          $0.19          $0.13
                                            ===========    ===========
 
Shares used in per share computations:
   Basic                                     74,040,681     71,905,428
                                            ===========    ===========
   Diluted                                   80,904,968     78,116,052
                                            ===========    ===========
</TABLE>



See accompanying Notes to Condensed Consolidated Financial Statements.

                                       3
<PAGE>
 
                       VITESSE SEMICONDUCTOR CORPORATION
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)
                                (in thousands)

<TABLE>
<CAPTION>
                                                                          Three Months Ended
                                                                    ------------------------------
                                                                    Dec. 31, 1998   Dec. 31, 1997
                                                                    --------------  --------------
<S>                                                                 <C>             <C>
Cash flows from operating activities:
Net income                                                               $ 15,438        $ 10,379
Adjustments to reconcile net income to net cash
provided by operating activities:
 Depreciation and amortization                                              4,834           2,786
Change in assets and liabilities:
  (Increase) decrease in:
   Accounts receivable, net                                                (5,554)         (2,696)
   Inventories                                                             (1,198)           (782)
   Prepaid expenses                                                          (311)           (810)
   Other assets                                                               ---             213
  Increase (decrease) in:
   Accounts payable                                                        (1,109)          1,044
   Accrued expenses and other current liabilities                           2,688             386
   Income taxes payable                                                     6,773           2,594
                                                                         --------        --------
     Net cash provided by operating activities                             21,561          13,114
                                                                         --------        --------
 
Cash flows from investing activities:
 Short-term investments                                                     8,830          48,255
 Capital expenditures                                                      (9,218)         (4,705)
 Restricted long-term deposit                                                 233         (13,113)
 Payment for purchase of company                                          (13,040)            ---
                                                                         --------        --------
     Net cash (used in) provided by investing activities                  (13,195)         30,437
                                                                         --------        --------
 
Cash flows from financing activities:
 Principal payments under capital lease obligations & term loans              (43)           (131)
 Proceeds from issuance of common stock, net                                3,407             300
                                                                         --------        --------
     Net cash provided by financing activities                              3,364             169
                                                                         --------        --------
 
     Net increase in cash & cash equivalents                               11,730          43,720
Cash & cash equivalents at beginning of period                             70,684          97,358
                                                                         --------        --------
Cash & cash equivalents at end of period                                 $ 82,414        $141,078
                                                                         ========        ========
 
Supplemental disclosures of cash flow information:
 Cash paid during the period for:
  Interest                                                               $      4        $      6
                                                                         ========        ========
  Income taxes                                                           $    832        $    ---
                                                                         ========        ========
 </TABLE>


See accompanying Notes to Condensed Consolidated Financial Statements.

                                       4
<PAGE>
 
                       VITESSE SEMICONDUCTOR CORPORATION
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.  BASIS OF PRESENTATION

   The accompanying condensed consolidated financial statements are unaudited
and include the accounts of Vitesse Semiconductor Corporation and its
subsidiaries (the "Company").  All intercompany accounts and transactions have
been eliminated.  In management's opinion, all adjustments (consisting only of
normal recurring accruals) which are necessary for a fair presentation of
financial condition and results of operations are reflected in the attached
interim financial statements.  This report should be read in conjunction with
the audited financial statements presented in the 1998 Annual Report. Footnotes
and other disclosures which would substantially duplicate the disclosures in the
Company's audited financial statements for fiscal year 1998 contained in the
Annual Report have been omitted.  The interim financial information herein is
not necessarily representative of the results to be expected for any subsequent
period.

   Where necessary, prior periods' information has been reclassified to conform
to the current period condensed consolidated financial statement presentation.

   On April 21, 1998, the Board of Directors approved a 2 for 1 stock split of
the Company's Common Stock that was effected on May 26, 1998.  All references to
the number of common shares, weighted average number of common shares and per
share data for all periods presented have been adjusted to reflect the stock
split.

   The Company has adopted SFAS No. 128,"Earnings Per Share."  The Company's
financial statements for December 31, 1998 and for comparable prior periods
presented include the disclosures required by SFAS No. 128.


NOTE 2.  BUSINESS COMBINATIONS

   On November 25, 1998 the Company acquired all of the equity interests of
Vermont Scientific Technologies, Inc. (VTEK) for $13.0 million cash and $2.7
million in notes payable. VTEK provides integrated circuit design services
primarily in the telecommunications industry. In conjunction with the
transaction, the company recorded goodwill and other identifiable intangibles
with useful lives ranging from 5 to 15 years. The transaction is being accounted
for as a purchase. Accordingly, the operations of VTEK are included from the
date of acquisition. VTEK is not a significant subsidiary, and therefore
proforma data is not presented herein.


NOTE 3.  SUBSEQUENT EVENT

   On January 21, 1999, the Company completed the acquisition of all of the
equity interests of Serano Systems Corporation (Serano) by issuing 327,628
shares of the Company's common stock. Serano is a leader in enclosure platform
management solutions for Fibre Channel and SCSI server and storage subsystems.
The transaction will be accounted for under the pooling of interests method.

                                       5
<PAGE>
 
                     MANAGEMENT'S DISCUSSION AND ANALYSIS
               OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

   The information set forth in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" below includes "forward looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act"), in particular, in "Results of Operations--
Revenues and Income Taxes," and in "Liquidity and Capital Resources--Investing
and Financing Activities," and is subject to the safe harbor created by that
section.  Factors that realistically could cause results to differ materially
from those projected in the forward looking statements are set forth below in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Risk Factors."

RESULTS OF OPERATIONS

   Revenues

   Total revenues in the first quarter of fiscal 1999 were $60.2 million, a 73%
increase over the $34.7 million recorded in the first quarter of fiscal 1998 and
a 11% increase over the $54.1 million recorded in the prior quarter.  The
increase in total revenues was due to an increase in the number of units shipped
to customers in the communications and ATE markets.

   Cost of Revenues

   Cost of revenues as a percentage of total revenues in the first quarter of
fiscal 1999 was 38.2% compared to 40.9% in the first quarter of fiscal 1998 and
38.8% in the prior quarter.  The decrease in cost of revenues as a percentage of
total revenues resulted primarily from a reduction in per unit costs associated
with increased utilization of the Company's Camarillo and Colorado Springs wafer
fabrication facilities, as well as improved yields at both facilities.

   The Company's manufacturing yields vary significantly among products,
depending on a particular IC's complexity and the Company's experience in
manufacturing it.  Historically, the Company has experienced difficulties
achieving acceptable yields on some ICs, which  has resulted in shipment delays.
The Company's overall yields are lower than yields experienced in a silicon
process because of the large number of different products manufactured in
limited volume and because the Company's H-GaAs process technology is
significantly less developed.  The Company expects that many of its current and
future products may never be produced in volume.

   Regardless of the process technology used, the fabrication of semiconductors
is a highly complex and precise process.  Defects in masks, impurities in the
materials used, contamination of the manufacturing environment, equipment
failure and other difficulties in the fabrication process can cause a
substantial percentage of wafers to be rejected or numerous die on each wafer to
be nonfunctional.

   Because the majority of the Company's costs of manufacturing are relatively
fixed, maintenance of the number of shippable die per wafer is critical to the
Company's results of operations.  Yield decreases can result in substantially
higher unit costs and may result in reduced gross profit and net income.  There
can be no assurance that the Company will not suffer 

                                       6
<PAGE>
 
periodic yield problems in connection with new or existing products which could
cause the Company's business, operating results and financial condition to be
materially adversely affected.

   Inventory is valued at the lower of cost or market.  Because allocable
manufacturing costs can be high, new product inventory is often valued at
market.  In addition, a portion of work-in-process inventory consists of wafers
in various stages of fabrication.  Consequently, the Company estimates yields
per wafer in order to estimate the value of inventory.  If yields are materially
different than projected, work-in-process inventory may need to be revalued.
There can be no assurance that such adjustments will not occur in the future and
have a material adverse effect on the Company's results of operations.

   Engineering, Research and Development Costs

   Engineering, research and development expenses were $9.6 million in the first
quarter of fiscal 1999 compared to $5.6 million in the first quarter of fiscal
1998 and $8.5 million in the prior quarter.  The increases were principally due
to increased headcount and higher costs to support the Company's continuing
efforts to develop new products.  As a percentage of total revenues,
engineering, research and development costs were 16% in each of the first
quarters of 1999 and 1998.  The Company's engineering, research and development
costs are expensed as incurred.

   Selling, General and Administrative Expenses

   Selling, general and administrative expenses (SG&A) were $7.0 million in the
first quarter of 1999, compared to $4.3 million in the first quarter of 1998 and
$6.3 million in the prior quarter. The increase in SG&A expenses was due to
increased headcount, higher commissions earned by sales representatives
resulting from increased sales, and increased advertising costs.  As a
percentage of total revenues, SG&A expenses decreased to 11.7% in the first
quarter of 1999 from 12.3% in the first quarter of 1998 and was unchanged from
the prior quarter.  The decrease from the first quarter of 1998 was the result
of the Company's revenues growing faster than SG&A expenses.

   Other Income, Net

   Other income consists of interest income, net of interest and other expenses.
Other income increased to $2.4 million in the first quarter of fiscal 1999 from
$2.3 million in the first quarter of 1998 and in the prior quarter due to higher
average cash, short-term investments and long-term deposit balances.

   Income Taxes

   The Company recorded a provision for income taxes in the amount of $7.6
million in the first quarter of fiscal 1999 and $2.6 million in the first
quarter of fiscal 1998, representing an effective rate of 33% and 20%
respectively.  The increase in the effective tax rate is due to the full
utilization in previous years of available net operating loss carryforwards.
The Company expects the effective tax rate to be 33% in fiscal 1999.

                                       7
<PAGE>
 
LIQUIDITY AND CAPITAL RESOURCES

   Operating Activities

   The Company generated $21.6 million and $13.1 million from operating
activities in the first quarters of 1999 and 1998, respectively.  The increase
in cash flow from operations was principally due to an improvement in
profitability.

   Investing Activities

   Capital expenditures, principally for manufacturing and test equipment, were
$9.2 million in the first quarter of fiscal 1999 compared to $4.7 million in the
first quarter of fiscal 1998.  The Company intends to continue investing in
manufacturing, test and engineering equipment.  Additionally, as discussed in
Note 2 above, the Company paid $13.0 million in cash for the purchase of VTEK
during the first quarter of fiscal 1999.

   Financing Activities

   In the first quarter of fiscal 1999, the Company generated $3.4 million of
cash from financing activities primarily from the proceeds from the issuance of
common stock.

   Management believes that the Company's cash and cash equivalents, short-tem
investments, cash flow from operations are adequate to finance its planned
growth and operating needs for the next 12 months.

IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS

   In June 1997, the Financial Accounting Standards Board issued SFAS No.
130,"Reporting Comprehensive Income."  SFAS No. 130 establishes standards for
reporting and display of comprehensive income and its components in a full set
of general-purpose financial statements.  SFAS No. 130 is effective for fiscal
years beginning after December 15, 1997.  The Company has determined that the
impact of adopting the standard will not be material to the financial position
or results of operations of the Company.

   In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,"
Disclosures about Segments of an Enterprise and Related Information." SFAS No. 
131 establishes standards for reporting of operating segment information in
annual financial statements and in interim financial reports issued to
shareholders. SFAS No. 131 is effective for fiscal years beginning after
December 15, 1997. Adoption of this standard will only result in additional
disclosures.

                                       8
<PAGE>
 
                  FACTORS AFFECTING FUTURE OPERATING RESULTS

CUSTOMER AND INDUSTRY CONCENTRATION

   The Company is, and intends to continue, focusing its sales efforts on a
relatively small number of companies in the communications and ATE markets that
require high performance ICs.  Certain of these companies are also competitors
of Vitesse.

VARIABILITY OF QUARTERLY RESULTS

   The Company's quarterly results of operations have varied significantly in
the past and may continue to do so in the future.  These variations have been
due to a number of factors, including: the loss of major customers; variations
in manufacturing yields; the timing and level of new product and process
development costs; changes in inventory levels; changes in the type and mix of
products being sold; changes in manufacturing capacity and variations in the
utilization of this capacity; and customer design changes, delays or
cancellations.  From time to time the Company has also incurred significant new
product and process development costs due to the Company's policy of expensing
costs as incurred relating to the manufacture of new products and the
development of new process technologies.  There can be no assurance that the
Company will not incur such charges or experience revenue declines in the
future.

MANUFACTURING CAPACITY LIMITATIONS; NEW PRODUCTION FACILITY

   During fiscal 1998, the Company began volume commercial production at its
six-inch wafer fabrication facility in Colorado Springs, Colorado.  The facility
includes a 10,000 square-foot Class 1 clean room with the capacity for future
expansion to 15,000 square feet.  The successful continued operation of the new
wafer fabrication facility, as well as the Company's overall production
operations, will be subject to numerous risks.  The Company has limited
experience with the operation of equipment or the processes involved in
producing finished six-inch wafers. The Company does not have excess production
capacity at its Camarillo facility to offset any failure of the new facility to
meet planned production goals.  As a result of these and other factors, the
failure of the Company to continue successful operation of the new wafer
fabrication facility could have a material adverse effect on its business,
operating results or financial condition.   The Company will also have to
effectively coordinate and manage the Colorado Springs and Camarillo facilities
to successfully meet its overall production goals.  The Company has limited
experience in coordinating and managing full-scale production facilities which
are located at different sites.  The failure to successfully coordinate and
manage the two sites could adversely affect the Company's overall production and
could have a material adverse effect on its business, operating results or
financial condition.

COMPETITION

   The high-performance semiconductor market is highly competitive and subject
to rapid technological change, price erosion and heightened international
competition.  The communications and ATE industries, which are primary target
markets for the Company, are also becoming intensely competitive because of
deregulation and heightened international competition, among other factors.  The
Company currently competes against other GaAs-based fabrication operations of
systems companies, such as Rockwell, and Silicon IC manufacturers 

                                       9
<PAGE>
 
employing ECL and BiCMOS technologies such as Fujitsu, Hewlett Packard,
Motorola, National Semiconductor, Texas Instruments and Applied Micro Circuits
Corporation. Many of these companies have significantly greater financial,
technical, manufacturing and marketing resources than the Company. In addition,
in lower-frequency applications, the Company faces increasing competition from
CMOS-based products, particularly as the performance of such products continues
to improve.

   Competition in the Company's markets for high-performance ICs is primarily
based on price/performance, product quality and the ability to deliver products
in a timely fashion.  Some prospective customers may be reluctant to adopt
Vitesse's products because of perceived risks relating to GaAs technology.  In
addition, product qualification is typically a lengthy process and certain
prospective customers may be unwilling to invest the time or incur the costs
necessary to qualify suppliers such as the Company.  Prospective customers may
also have concerns about the relative speed, complexity and power advantages of
the Company's products compared to more familiar ECL of BiCMOS semiconductors or
about the risks associated with relying on a relatively small company for a
critical sole-sourced component.

ASIAN ECONOMIC ISSUES

   The Company's international business is subject to risks customarily
encountered in foreign operations, including the recent financial turmoil in
Asia.  Although management believes that the financial turmoil in Asia will not
have a material impact on the financial statements, there can be no assurance
that the Company will not be affected by such economic issues in Asia.

PRODUCT AND PROCESS DEVELOPMENT AND TECHNOLOGICAL CHANGE

   The market for the Company's products is characterized by rapid changes in
both product and process technologies.  The Company believes that its future
success will depend, in part, upon its ability to continue to improve its
product and process technologies and develop new technologies in order to
maintain its competitive position, to adapt its products and processes to
technological changes and to adopt emerging industry standards.  There can be no
assurance that the Company will be able to improve its product and process
technologies and develop new technologies in a timely manner or that such
improvements or developments will result in products that achieve market
acceptance.  The failure to successfully improve its existing technologies or
develop new technologies in a timely manner could adversely affect the Company's
business, operating results and financial condition.

DEPENDENCE ON THIRD PARTIES

   The Company depends upon third parties for performing certain processes and
providing a variety of components and materials necessary for the production of
its H-GaAs ICs.  A majority of the Company's ICs are packaged in plastic by
third parties since the Company has no internal capability to perform such
plastic packaging.  The balance of the Company's ICs are packaged in its
Camarillo facility using customized ceramic packaging which is presently sole
sourced. Other components and materials for H-GaAs ICs are available from only a
limited number of sources.  The inability to obtain sufficient sole- or limited-
source services or components as required could 

                                       10
<PAGE>
 
result in delays or reductions in product shipments which could adversely affect
the Company's business, operating results and financial condition.

ENVIRONMENTAL REGULATIONS

   The Company is subject to a variety of federal, state and local governmental
regulations related to the use, storage, discharge and disposal of toxic,
volatile or otherwise hazardous chemicals used in its manufacturing process.
Any failure to comply with present or future regulations could result in the
imposition of fines on the Company, the suspension of production or a cessation
of operations.  In addition, such regulations could restrict the Company's
ability to expand its facilities at its present location or could require the
Company to acquire costly equipment or to incur other significant expenses to
comply with environmental regulations or to clean up prior discharges.

MANAGEMENT OF GROWTH

   The management of the Company's growth requires qualified personnel and
systems.  In particular, the operation of the Company's wafer fabrication
facility in Colorado Springs and its integration with the Company's Camarillo
facility requires significant management, technical and administrative
resources.  There can be no assurance that the Company will be able to manage
its growth or effectively integrate its Colorado Springs wafer fabrication
facility, and failure to do so could have a material adverse effect on the
Company's business, operating results or financial condition.

DEPENDENCE ON KEY PERSONNEL

   The Company's success depends in part upon attracting and retaining the
services of its managerial and technical personnel.  The competition for
qualified personnel is intense.  There can be no assurance that the Company can
retain its key managerial and technical employees or that it can attract,
assimilate or retain other skilled technical personnel in the future, and
failure to do so could have a material adverse effect on the Company's business,
operating results or financial condition.

YEAR 2000

   The "Year 2000 Issue" is the result of computer programs being written using
two digits rather than four to define the applicable year.  This can affect both
information technology (IT) and non-IT systems, as non-IT systems typically
include embedded technology such as microcontrollers.

   The Company is evaluating and addressing Year 2000 issues associated with its
IT and non-IT systems.  Many of the IT and non-IT systems are compliant.  Other
systems, which have been identified as noncompliant, are planned to be replaced
or upgraded.  Certain non-IT systems in Vitesse's manufacturing facility have
not been fully evaluated for Year 2000 compliance.  The Company anticipates that
remediation and testing will be substantially complete not later than July 1999
at a cost not material to the consolidated financial statements.
 

                                       11
<PAGE>
 
   The Company's products have no specific date functions or date dependencies
and will operate according to specifications through the Year 2000 date rollover
and thereafter.
 
   The Company may also be affected by customer or supplier Year 2000 issues.
The Company has contacted critical suppliers of products and services to
determine that the suppliers' operations and the products and services they
provide are Year 2000 compliant, or to monitor their progress toward Year 2000
compliance.  Based on inquiries made, the Company does not anticipate any
interruptions in services provided by critical suppliers.

   Management believes that Year 2000 issues will not materially impact the
Company's business, operating results or financial condition. The most likely
worst case would be minor delays in production and shipments. The Company has
not yet fully developed contingency plans to address any failure of its Year
2000 risk assessment plan to identify and fully remediate any significant risk
to its ongoing operations. Development of contingency plans is in progress and
will be completed by July 1999.

   The information set forth above and elsewhere in this quarterly report
relating to year 2000 issues constitutes a "Year 2000 Readiness Disclosure," as
such term is defined by the Year 2000 Information and Readiness Disclosure Act
of 1998, enacted October 19, 1998 (Public Law 105-271, 112 State 2386).

                                       12
<PAGE>
 
                                    PART II
                               OTHER INFORMATION


ITEM 6.  EXHIBITS & REPORTS ON FORM 8-K

    (A)  EXHIBITS
 
         Exhibit 27 Financial Data Schedule.

    (B)  REPORTS ON FORM 8-K

         None.

                                       13
<PAGE>
 
                                  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 thereunto duly authorized.



                           VITESSE SEMICONDUCTOR CORPORATION


February 11, 1999            By: /s/ Eugene F. Hovanec
                                 ---------------------------
                                 Eugene F. Hovanec
                                 Vice President, Finance and
                                 Chief Financial Officer

                                       14