8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 21, 2008

QLOGIC CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	0-23298	33-0537669
(State of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

26650 Aliso Viejo Parkway, Aliso Viejo, California	92656
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (949) 389-6000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

EX-99.1

Item 2.02 Results of Operations and Financial Condition

     On October 21, 2008, the Registrant reported the financial results for its fiscal second quarter ended September 28, 2008. A copy of the press release issued by the Registrant concerning the foregoing results is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.

     The information contained herein and in the accompanying exhibit shall not be incorporated by reference into any filings of the Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as shall be expressly set forth by specific reference in such filing. The information in this report, including the exhibit hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that section.

Discussion of Non-GAAP Financial Measures

     In addition to the results presented on a generally accepted accounting principles (GAAP) basis in the accompanying press release, the Registrant has also included certain non-GAAP financial measures. These non-GAAP financial measures include non-GAAP net income and non-GAAP net income per diluted share.

     The Registrant believes that these supplemental non-GAAP financial measures, when presented in conjunction with the corresponding GAAP financial measures, provide useful information to investors and management regarding financial and business trends relating to its financial condition and results of operations. However, non-GAAP financial measures have certain limitations in that they do not reflect all of the costs associated with the operations of the Registrant’s business as determined in accordance with GAAP. Therefore, investors should consider non-GAAP financial measures in addition to, and not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP.

     The Registrant has presented non-GAAP net income and non-GAAP net income per diluted share, on a basis consistent with its historical presentation, to assist investors in understanding the Registrant’s core net income and core net income per diluted share on an on-going basis. These non-GAAP financial measures assist investors in making comparisons of the Registrant’s core net profitability with historical periods. Although the non-GAAP financial measures presented by the Registrant may be different from the non-GAAP financial measures used by other companies, the Registrant believes that these non-GAAP financial measures may also assist investors in making comparisons of the Registrant’s core net profitability with the corresponding results for its competitors. Management also believes that non-GAAP net income and non-GAAP net income per diluted share are important measures in the evaluation of the Registrant’s profitability.

     Management uses non-GAAP net income in its evaluation of the Registrant’s core after-tax results of operations and trends between fiscal periods and believes that this measure is an important component of its internal performance measurement process. In addition, the Registrant prepares and maintains its budgets and forecasts for future periods on a basis consistent with this non-GAAP financial measure. Management believes that providing these non-GAAP financial measures allows investors to view the Registrant’s financial results in the way that management views the financial results.

     The Registrant excludes the following items from its non-GAAP financial measures:

     Stock-based compensation. Stock-based compensation consists of expenses associated with stock options and restricted stock units granted by the Registrant and purchases of common stock under the Registrant’s Employee Stock Purchase Plan. Stock-based compensation is a non-cash expense that varies in amount from period to period as a result of factors that are difficult to predict and are generally outside the control of the Registrant, such as the market price and associated volatility of the Registrant’s common stock. Accordingly, management believes these expenses are not reflective of the Registrant’s core operating expenses and excludes them when assessing its core operating results and from its internal budgets and forecasts.

     Amortization of purchased intangible assets. In connection with acquisitions, the Registrant records purchased intangible assets (consisting primarily of purchased technology and customer relationships) which are amortized over their estimated useful lives. The amortization is a non-cash expense which is not considered by management when assessing the core operating results of the Registrant. The purchased intangible assets and the related amortization can vary significantly based on the size and frequency of acquisitions.

     Acquisition-related stock-based compensation. Acquisition-related stock-based compensation is a non-cash expense related to stock-based performance plans entered into by the Registrant in connection with certain acquisitions. These expenses can vary based on the nature of the related plan associated with an acquisition, as well as the timing of achievement of the underlying performance milestones. Management does not consider acquisition-related stock-based compensation when assessing the core operating results of the Registrant. In addition, acquisition-related stock-based compensation can vary significantly based on the size and frequency of acquisitions, as well as the extent that such performance plans are used.

     Special charges. Special charges include asset impairments and the costs associated with exit or disposal activities, including severance benefits for involuntarily terminated employees, contract cancellation costs and other related charges. Management believes these charges are infrequent in nature and are unrelated to the Registrant’s core business. Accordingly, management does not consider these special charges when assessing the core operating results of the Registrant.

     Impairment of marketable securities. The impairment of marketable securities results from a decline in the fair value of an investment below its cost that is judged to be other-than-temporary. Management believes these charges are infrequent in nature and are unrelated to the Registrant’s core business. Accordingly, management does not consider the impairment of marketable securities when assessing the core operating results of the Registrant.

     Income taxes. Income tax expense is adjusted by the amount of tax benefit or expense (including any valuation allowance related to deferred tax assets) that would result from use of the non-GAAP results instead of the GAAP results when calculating the Registrant’s tax expense. Management believes valuation allowances related to the Registrant’s deferred tax assets associated with non-core assets (i.e., marketable securities) are infrequent in nature and unrelated to the Registrant’s core business. Accordingly, management does not consider valuation allowances related to such deferred tax assets when assessing the core operating results of the Registrant.

     Each of the foregoing items has been excluded from the non-GAAP financial measures presented by the Registrant. Management believes that such exclusion is appropriate since these items are not reflective of the Registrant’s core operating activities and thus excludes them from their internal budgets and forecasts, as well as their assessment of core operating performance.

Item 9.01 Financial Statements and Exhibits

     (d) Exhibits

99.1 Press Release*, dated October 21, 2008, reporting the financial results of QLogic Corporation for its fiscal second quarter ended September 28, 2008.

* The press release is being furnished pursuant to Item 9.01, and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

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 hereunto duly authorized.

	QLOGIC CORPORATION
October 21, 2008	/s/ Simon Biddiscombe
	Simon Biddiscombe
	Senior Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibit
Number	Description of Document
99.1	Press Release, dated October 21, 2008, reporting the financial results of QLogic Corporation for its fiscal second quarter ended September 28, 2008.

EX-99.1

FOR IMMEDIATE RELEASE Exhibit 99.1

Media Contact:

Robin Austin
QLogic Corporation
Phone: (949) 389-6865
robin.austin@qlogic.com

Investor Contact:
Jeanie Herbert
QLogic Corporation
Phone: (949) 389-6343
jeanie.herbert@qlogic.com

QLOGIC REPORTS SECOND QUARTER
RESULTS FOR FISCAL YEAR 2009
Record Revenue Achieved

ALISO VIEJO, Calif., October 21, 2008 — QLogic Corp. (NASDAQ:QLGC), a leading supplier of high performance network infrastructure solutions, today announced its second quarter financial results for the period ended September 28, 2008.

Second Quarter Highlights

• Net revenue increased 22% from the comparable quarter last year to a record $171.2 million.

• Net income: $27.2 million GAAP, $45.2 million non-GAAP.

• Net income per diluted share: $0.20 GAAP, $0.34 non-GAAP.

• Cash generated from operations was $55.2 million.

• $421.0 million in cash and marketable securities as of September 28, 2008.

Financial Results

Net revenue for the second quarter of fiscal 2009 was $171.2 million and increased 22% from $140.3 million in the comparable quarter last year. Revenue from Host Products, which are comprised primarily of Fibre Channel and iSCSI host bus adapters and InfiniBand host channel adapters, was $119.7 million during the second quarter of fiscal 2009 and increased 15% from $104.4 million in the comparable quarter last year. Revenue from Network Products, which are comprised primarily of Fibre Channel and InfiniBand switches, was $29.8 million during the second quarter of fiscal 2009 and increased 36% from $22.0 million in the comparable quarter last year. Revenue from Silicon Products, which are comprised primarily of protocol chips, was $15.7 million during the second quarter of fiscal 2009 and increased 36% from $11.5 million in the comparable quarter last year.

Net income on a GAAP basis for the second quarter of fiscal 2009 was $27.2 million, or $0.20 per diluted share, and increased from $22.6 million, or $0.16 per diluted share for the second quarter of fiscal 2008. Net income on a GAAP basis for the second quarter of fiscal 2009 includes stock-based compensation expense, acquisition-related charges, impairment charges related to marketable securities, and the related income tax effects and valuation allowance on deferred tax assets. Net income on a non-GAAP basis for the second quarter of fiscal 2009 was $45.2 million, or $0.34 per diluted share, and increased from $32.5 million, or $0.22 per diluted share for the second quarter of fiscal 2008.

“We are very pleased with our strong financial performance and record revenue during the second quarter despite significant challenges as a result of the current macro-economic environment,” said H.K. Desai, QLogic’s chief executive officer. “Second quarter highlights include the continued ramp of our 8Gb Fibre Channel HBAs and initial revenue from our FCoE converged network adapters.”

QLogic uses certain non-GAAP financial measures to supplement financial statements based on GAAP. A summary of these non-GAAP financial measures and a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure, as well as a description of the reasons that management believes that these non-GAAP financial measures provide useful information to investors and the additional purposes for which management uses these non-GAAP financial measures is presented in the accompanying financial schedules.

QLogic’s fiscal 2009 second quarter conference call is scheduled for today at 2:30 p.m. Pacific Time (5:30 p.m. Eastern Time). H.K. Desai, chief executive officer, and Simon Biddiscombe, senior vice president and chief financial officer, will host the conference call. The call is being webcast live via the Internet at http://ir.qlogic.com and www.earnings.com. Phone access to participate in the conference call is available at (913) 312-1484, pass code: 5914802.

The financial information that the company intends to discuss during the conference call will be available on the company’s website at http://ir.qlogic.com for twelve months following the conference call. A replay of the conference call will be available via webcast at http://ir.qlogic.com for twelve months.

About QLogic

QLogic is a leading supplier of high performance storage network infrastructure solutions, which include the controller chips, host adapters and fabric switches that are the backbone of storage networks for most Global 2000 corporations. The company delivers a broad and diverse portfolio of products that includes Fibre Channel adapters, blade server embedded Fibre Channel switches, Fibre Channel stackable switches, iSCSI adapters and iSCSI routers. The company is also a leading supplier of InfiniBand switches and InfiniBand host channel adapters for the emerging high performance computing market. QLogic products are delivered to small-to-medium businesses and large enterprises around the world via its channel partner community. QLogic products are also powering solutions from leading companies such as Cisco, Dell, EMC, Hitachi Data Systems, HP, IBM, NetApp and Sun Microsystems. QLogic is a member of the S&P 500 Index.

Disclaimer — Forward Looking Statements

This press release contains statements relating to future results of the company (including certain beliefs and projections regarding business trends) that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected or implied in the forward-looking statements. The company advises readers that these potential risks and uncertainties include, but are not limited to: potential fluctuations in operating results; gross margins that may vary over time; revenues may be affected by changes in IT spending levels; the stock price of the company may be volatile; the company’s dependence on the storage area network market; potential adverse effects of server virtualization technology on the company’s business; potential adverse effects of increased market acceptance of blade servers; the ability to maintain and gain market or industry acceptance of the company’s products; the company’s dependence on a limited number of customers; seasonal fluctuations and uneven sales patterns in orders from customers; the company’s ability to compete effectively with other companies; declining average unit sales prices of comparable products; a reduction in sales efforts by current distributors; dependence on sole source and limited source suppliers; the company’s dependence on relationships with certain silicon chip suppliers; declines in the market value of the company’s marketable securities; the complexity of the company’s products; sales fluctuations arising from customer transitions to new products; environmental compliance costs; international economic, regulatory, political and other risks; uncertain benefits from strategic business combinations; the ability to attract and retain key personnel; difficulties in transitioning to smaller geometry process technologies; the ability to protect proprietary rights; the ability to satisfactorily resolve any infringement claims; reliance on third party technology; the use of “open source” software in the company’s products; changes in the company’s tax provisions or adverse outcomes resulting from examination of its income tax returns; computer viruses and other tampering with the company’s computer systems; and facilities of the company and its suppliers and customers are located in areas subject to natural disasters.

More detailed information on these and additional factors which could affect the company’s operating and financial results are described in the company’s Forms 10-K, 10-Q and other reports filed, or to be filed, with the Securities and Exchange Commission. The company urges all interested parties to read these reports to gain a better understanding of the business and other risks that the company faces. The forward-looking statements contained in this press release are made only as of the date hereof, and the company does not intend to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.

QLogic and the QLogic logo are registered trademarks of QLogic Corporation. Other trademarks and registered trademarks are the property of the companies with which they are associated.

QLOGIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited — in thousands, except per share amounts)

	Three Months Ended					Six Months Ended
	September 28,			September 30,		September 28,			September 30,
	2008			2007		2008			2007
Net revenues	$	171,197		$	140,326	$	339,624		$	280,103
Cost of revenues		55,014			49,013		110,772			99,876
Gross profit		116,183			91,313		228,852			180,227
Operating expenses:
Engineering and development		33,081			33,058		67,448			67,742
Sales and marketing		24,032			20,639		46,977			41,812
General and administrative		9,144			8,804		16,720			16,990
Special charges		—			1,636		—			3,772
Total operating expenses		66,257			64,137		131,145			130,316
Operating income		49,926			27,176		97,707			49,911
Interest and other income (expense), net		(2,015	)		5,753		(476	)		12,019
Income before income taxes		47,911			32,929		97,231			61,930
Income taxes		20,756			10,349		38,429			20,355
Net income	$	27,155		$	22,580	$	58,802		$	41,575
Net income per share:
Basic	$	0.21		$	0.16	$	0.45		$	0.28
Diluted	$	0.20		$	0.16	$	0.44		$	0.28
Number of shares used in per share calculations:
Basic		131,421			144,782		131,985			148,980
Diluted		132,810			145,202		133,149			149,711

QLOGIC CORPORATION

RECONCILIATION OF GAAP NET INCOME TO
NON-GAAP NET INCOME

(unaudited — in thousands, except per share amounts)

	Three Months Ended						Six Months Ended
	September 28,			September 30,			September 28,			September 30,
	2008			2007			2008			2007
GAAP net income	$	27,155		$	22,580		$	58,802		$	41,575
Items excluded from GAAP net income:
Stock-based compensation		7,334			7,817			15,139			16,187
Amortization of purchased intangible assets		6,214			5,056			9,606			9,489
Acquisition-related stock-based compensation		225			(741	)		495			(38	)
Special charges		—			1,636			—			3,772
Impairment of marketable securities		5,045			—			7,743			—
Income taxes		(773	)		(3,878	)		(4,616	)		(8,334	)
Total non-GAAP adjustments		18,045			9,890			28,367			21,076
Non-GAAP net income	$	45,200		$	32,470		$	87,169		$	62,651
Net income per diluted share:
GAAP net income	$	0.20		$	0.16		$	0.44		$	0.28
Adjustments		0.14			0.06			0.21			0.14
Non-GAAP net income	$	0.34		$	0.22		$	0.65		$	0.42

Non-GAAP Financial Measures

The non-GAAP financial measures contained herein are a supplement to the corresponding financial measures prepared in accordance with generally accepted accounting principles (GAAP). The non-GAAP financial measures presented exclude the items summarized in the above table. Management believes that adjustments for these items assist investors in making comparisons of period to period operating results and that these items are not indicative of the company’s on-going core operating performance.

The company has presented non-GAAP net income and non-GAAP net income per diluted share, on a basis consistent with its historical presentation, to assist investors in understanding the company’s core net income and core net income per diluted share on an on-going basis. These non-GAAP financial measures may also assist investors in making comparisons of the company’s core net profitability with historical periods and comparisons of the company’s core net profitability with the corresponding results for competitors. Management believes that non-GAAP net income and non-GAAP net income per diluted share are important measures in the evaluation of the company’s profitability. These non-GAAP financial measures exclude the adjustments described in the above table, and thus provide an overall measure of the company’s on-going net profitability and related profitability on a diluted per share basis.

Management uses non-GAAP net income in its evaluation of the company’s core after-tax results of operations and trends between fiscal periods and believes that this measure is an important component of its internal performance measurement process. In addition, the company prepares and maintains its budgets and forecasts for future periods on a basis consistent with this non-GAAP financial measure. Management believes that providing these non-GAAP financial measures allows investors to view the company’s financial results in the way that management views the financial results.

The non-GAAP financial measures presented herein have certain limitations in that they do not reflect all of the costs associated with the operations of the company’s business as determined in accordance with GAAP. Therefore, investors should consider non-GAAP financial measures in addition to, and not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. The non-GAAP financial measures presented by the company may be different from the non-GAAP financial measures used by other companies.

For additional information on the items excluded from the non-GAAP financial measures and why the company believes that these non-GAAP financial measures provide useful supplemental information to investors, the company refers you to the Form 8-K regarding this release filed today with the Securities and Exchange Commission.

A summary of the non-GAAP adjustments presented in the table above by the financial statement line impacted is as follows:

	Three Months Ended						Six Months Ended
	September 28,			September 30,			September 28,			September 30,
(unaudited — in thousands)	2008			2007			2008			2007
Non-GAAP Adjustments:
Cost of revenues:
Stock-based compensation	$	529		$	491		$	1,008		$	1,065
Amortization of purchased intangible assets		5,375			4,092			7,927			7,310
Acquisition-related stock-based compensation		—			—			—			(24	)
Total cost of revenue adjustments		5,904			4,583			8,935			8,351
Operating expenses:
Engineering and development:
Stock-based compensation		3,677			3,508			7,852			7,280
Amortization of purchased intangible assets		31			78			62			251
Acquisition-related stock-based compensation		220			(748	)		484			(33	)
Sales and marketing:
Stock-based compensation		1,450			1,649			3,015			3,274
Amortization of purchased intangible assets		808			886			1,617			1,928
Acquisition-related stock-based compensation		5			7			11			19
General and administrative:
Stock-based compensation		1,678			2,169			3,264			4,568
Special charges		—			1,636			—			3,772
Total operating expense adjustments		7,869			9,185			16,305			21,059
Interest and other income:
Impairment of marketable securities		5,045			—			7,743			—
Total non-GAAP adjustments before income taxes		18,818			13,768			32,983			29,410
Income taxes		(773	)		(3,878	)		(4,616	)		(8,334	)
Total non-GAAP adjustments	$	18,045		$	9,890		$	28,367		$	21,076

QLOGIC CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited — in thousands)

	September 28, 2008			March 30, 2008
ASSETS
Current assets:
Cash and cash equivalents	$	162,939		$	160,009
Short-term marketable securities		218,310			160,497
Accounts receivable, net		77,926			81,642
Inventories		33,287			27,520
Deferred tax assets		27,389			32,227
Other current assets		10,034			8,925
Total current assets		529,885			470,820
Long-term marketable securities		39,744			55,903
Property and equipment, net		91,645			93,726
Goodwill		118,859			127,409
Purchased intangible assets, net		24,634			34,652
Deferred tax assets		31,685			25,870
Other assets		3,313			2,586
	$	839,765		$	810,966
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	36,927		$	35,643
Accrued compensation		25,318			31,120
Accrued taxes		10,442			5,262
Deferred revenue		7,089			8,693
Other current liabilities		5,836			5,952
Total current liabilities		85,612			86,670
Accrued taxes		48,190			48,163
Deferred revenue		8,029			5,087
Other liabilities		4,832			5,130
Total liabilities		146,663			145,050
Stockholders’ equity:
Common stock		202			200
Additional paid-in capital		695,677			657,893
Retained earnings		1,143,740			1,084,938
Accumulated other comprehensive loss		(3,882	)		(2,530	)
Treasury stock		(1,142,635	)		(1,074,585	)
Total stockholders’ equity		693,102			665,916
	$	839,765		$	810,966

QLOGIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited — in thousands)

	Six Months Ended
	September 28,			September 30,
	2008			2007
Cash flows from operating activities:
Net income	$	58,802		$	41,575
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		16,456			14,964
Stock-based compensation		15,139			16,187
Acquisition-related:
Amortization of purchased intangible assets		9,606			9,489
Stock-based compensation		495			(38	)
Deferred income taxes		8,276			(9,023	)
Impairment of marketable securities		7,743			—
Provision for losses on accounts receivable		56			188
Loss on disposal of property and equipment		175			795
Changes in operating assets and liabilities:
Accounts receivable		3,660			1,149
Inventories		(5,767	)		3,864
Other assets		(2,251	)		365
Accounts payable		(13	)		(1,024	)
Accrued compensation		(4,590	)		(8,439	)
Accrued taxes		5,207			28,548
Deferred revenue		1,338			4,197
Other liabilities		(919	)		(44	)
Net cash provided by operating activities		113,413			102,753
Cash flows from investing activities:
Purchases of marketable securities		(115,344	)		(75,247	)
Sales and maturities of marketable securities		64,307			249,883
Additions to property and equipment		(12,841	)		(15,078	)
Acquisition of business		—			67
Net cash provided by (used in) investing activities		(63,878	)		159,625
Cash flows from financing activities:
Proceeds from issuance of stock under stock plans		20,357			8,631
Tax benefit from issuance of stock under stock plans		583			589
Purchase of treasury stock		(67,545	)		(248,756	)
Net cash used in financing activities		(46,605	)		(239,536	)
Net increase in cash and cash equivalents		2,930			22,842
Cash and cash equivalents at beginning of period		160,009			76,804
Cash and cash equivalents at end of period	$	162,939		$	99,646

QLOGIC CORPORATION

SUPPLEMENTAL FINANCIAL INFORMATION

(unaudited — in thousands)

Net Revenues

A summary of the company’s revenue components is as follows:

	Three Months Ended				Six Months Ended
	September 28,		September 30,		September 28,		September 30,
	2008		2007		2008		2007
Host Products	$	119,667	$	104,436	$	240,317	$	208,644
Network Products		29,786		21,954		59,689		46,406
Silicon Products		15,660		11,494		31,215		21,108
Royalty and Service		6,084		2,442		8,403		3,945
	$	171,197	$	140,326	$	339,624	$	280,103

Geographic Revenues

Revenues by geographic area are presented based upon the country of destination. Net revenues by geographic area are as follows:

	Three Months Ended				Six Months Ended
	September 28,		September 30,		September 28,		September 30,
	2008		2007		2008		2007
United States	$	83,701	$	68,541	$	164,326	$	146,288
Europe, Middle East and Africa		41,987		34,559		83,012		65,182
Asia-Pacific and Japan		36,493		28,814		72,425		51,857
Rest of world		9,016		8,412		19,861		16,776
	$	171,197	$	140,326	$	339,624	$	280,103