10-Q

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 July 3, 2011

Commission file number 0-23298

QLogic Corporation

(Exact name of registrant as specified in its charter)

Delaware	33-0537669
(State of incorporation)	(I.R.S. Employer Identification No.)

26650 Aliso Viejo Parkway

Aliso Viejo, California 92656

(Address of principal executive office and zip code)

(949) 389-6000

(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 (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	¨		Non-accelerated filer	¨	Smaller reporting company	¨
				(Do not check if a smaller reporting company)

Indicate by check mark whether the Registrant is a shell company (as  defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of July 29, 2011, 103,940,000 shares of the Registrant’s common stock were outstanding.

QLOGIC CORPORATION

INDEX

		Page
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements:
	Condensed Consolidated Balance Sheets as of July 3, 2011 and April 3, 2011		1
	Condensed Consolidated Statements of Income for the three months ended July 3, 2011 and June 27, 2010		2
	Condensed Consolidated Statements of Cash Flows for the three months ended July 3, 2011 and June 27, 2010		3
	Notes to Condensed Consolidated Financial Statements		4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		9
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		18
Item 4.	Controls and Procedures		18
	PART II. OTHER INFORMATION
Item 1A.	Risk Factors		19
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		30
Item 6.	Exhibits		31
	Signatures		32

i

PART I.

FINANCIAL INFORMATION

Item 1. Financial Statements

QLOGIC CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

	July 3, 2011			April 3, 2011
	(Unaudited; In thousands,
	except share and per
	share amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	89,802		$	147,780
Marketable securities		309,926			236,296
Accounts receivable, less allowance for doubtful accounts of $1,652 and $1,536 as of July 3, 2011 and April 3, 2011, respectively		79,110			70,134
Inventories		26,015			26,931
Deferred tax assets		17,315			17,754
Other current assets		21,270			20,753
Total current assets		543,438			519,648
Property and equipment, net		81,506			77,134
Goodwill		119,748			119,748
Purchased intangible assets, net		12,148			12,694
Deferred tax assets		22,420			25,333
Other assets		2,419			2,650
	$	781,679		$	757,207
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	38,353		$	34,816
Accrued compensation		21,184			25,858
Accrued taxes		5,924			6,012
Deferred revenue		10,172			10,431
Other current liabilities		7,916			5,221
Total current liabilities		83,549			82,338
Accrued taxes		60,038			62,565
Deferred revenue		4,832			5,169
Other liabilities		6,280			5,971
Total liabilities		154,699			156,043
Stockholders’ equity:
Preferred stock, $0.001 par value; 1,000,000 shares authorized; no shares issued and outstanding		—			—
Common stock, $0.001 par value; 500,000,000 shares authorized; 209,016,000 and 208,042,000 shares issued as of July 3, 2011 and April 3, 2011, respectively		209			208
Additional paid-in capital		856,911			844,546
Retained earnings		1,420,191			1,387,765
Accumulated other comprehensive income		1,081			614
Treasury stock, at cost: 104,504,000 and 103,325,000 shares as of July 3, 2011 and April 3, 2011, respectively		(1,651,412	)		(1,631,969	)
Total stockholders’ equity		626,980			601,164
	$	781,679		$	757,207

See accompanying notes to condensed consolidated financial statements.

1

QLOGIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended
	July 3, 2011		June 27, 2010
	(Unaudited; In thousands, except per share amounts)
Net revenues	$	151,622	$	142,609
Cost of revenues		50,859		49,701
Gross profit		100,763		92,908
Operating expenses:
Engineering and development		37,692		34,709
Sales and marketing		21,263		20,430
General and administrative		9,163		8,468
Special charges		—		931
Total operating expenses		68,118		64,538
Operating income		32,645		28,370
Interest and other income, net		1,048		1,676
Income before income taxes		33,693		30,046
Income taxes		1,267		4,597
Net income	$	32,426	$	25,449
Net income per share:
Basic	$	0.31	$	0.23
Diluted	$	0.31	$	0.22
Number of shares used in per share calculations:
Basic		104,679		111,425
Diluted		105,789		113,730

See accompanying notes to condensed consolidated financial statements.

2

QLOGIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended
	July 3, 2011			June 27, 2010
	(Unaudited; In thousands)
Cash flows from operating activities:
Net income	$	32,426		$	25,449
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		6,975			8,066
Stock-based compensation		9,667			10,323
Amortization of acquisition-related intangible assets		1,156			1,156
Deferred income taxes		3,124			6,584
Net gains on investment securities		(390	)		(711	)
Other non-cash items		1,211			(5	)
Changes in operating assets and liabilities:
Accounts receivable		(9,101	)		(1,247	)
Inventories		916			(5,003	)
Other assets		(1,854	)		76
Accounts payable		539			(687	)
Accrued compensation		(4,674	)		(5,546	)
Accrued taxes		(1,340	)		(6,155	)
Deferred revenue		(596	)		(144	)
Other liabilities		2,254			(1,511	)
Net cash provided by operating activities		40,313			30,645
Cash flows from investing activities:
Purchases of available-for-sale securities		(133,619	)		(34,604	)
Proceeds from sales and maturities of available-for-sale securities		60,171			45,657
Proceeds from disposition of trading securities		—			9,350
Distributions from other investment securities		—			293
Purchases of property and equipment		(8,982	)		(5,297	)
Net cash provided by (used in) investing activities		(82,430	)		15,399
Cash flows from financing activities:
Proceeds from issuance of common stock under stock-based awards		7,553			4,555
Excess tax benefits from stock-based awards		538			1,029
Minimum tax withholding paid on behalf of employees for restricted stock units		(5,259	)		(5,861	)
Purchases of treasury stock		(18,693	)		(53,122	)
Net cash used in financing activities		(15,861	)		(53,399	)
Net decrease in cash and cash equivalents		(57,978	)		(7,355	)
Cash and cash equivalents at beginning of period		147,780			190,308
Cash and cash equivalents at end of period	$	89,802		$	182,953

See accompanying notes to condensed consolidated financial statements.

3

QLOGIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Basis of Presentation

In the opinion of management of QLogic Corporation (QLogic or the Company), the accompanying unaudited condensed consolidated financial statements contain all normal recurring accruals and adjustments necessary to present fairly the Company’s consolidated financial position, results of operations and cash flows. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended April 3, 2011. The results of operations for the three months ended July 3, 2011 are not necessarily indicative of the results that may be expected for the entire fiscal year. The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates that affect the amounts reported in the Company’s consolidated financial statements and accompanying notes. The Company evaluates its estimates on an ongoing basis using historical experience and other factors, including the current economic environment. Among the significant estimates affecting the consolidated financial statements are those related to revenue recognition, stock-based compensation, income taxes, investment securities, inventories, goodwill and long-lived assets. The actual results experienced by the Company could differ materially from management’s estimates.

Recently Adopted Accounting Standards

In September 2009, the Financial Accounting Standards Board reached a consensus on Accounting Standards Update (ASU) 2009-13, “Revenue Recognition (Topic 605) — Multiple-Deliverable Revenue Arrangements” and ASU 2009-14, “Software (Topic 985) — Certain Revenue Arrangements That Include Software Elements.” ASU 2009-13 modifies the requirements that must be met for an entity to recognize revenue from the sale of a delivered item that is part of a multiple-element arrangement when other items have not yet been delivered. ASU 2009-13 establishes a selling price hierarchy that allows for the use of an estimated selling price to determine the allocation of arrangement consideration to a deliverable in a multiple-element arrangement where neither vendor-specific objective evidence nor third-party evidence is available for that deliverable. Overall arrangement consideration is allocated at the inception of the arrangement to all deliverables based on their relative selling prices. The residual method of allocating arrangement consideration has been eliminated. ASU 2009-14 modifies the software revenue recognition guidance to exclude from its scope tangible products that contain both software and non-software components that function together to deliver a product’s essential functionality. The Company adopted the provisions of these standards beginning in the first quarter of fiscal 2012 on a prospective basis. The adoption of these standards did not have a material impact on the Company’s condensed consolidated financial statements.

Note 2. Marketable Securities

The Company’s portfolio of available-for-sale marketable securities consists of the following:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(In thousands)
July 3, 2011
U.S. government and agency securities	$	71,580	$	148	$	(22	)	$	71,706
Corporate debt obligations		184,067		1,115		(145	)		185,037
Asset and mortgage-backed securities		29,159		313		(67	)		29,405
Municipal bonds		22,099		32		(4	)		22,127
Non-U.S. government and agency securities		1,651		—		—			1,651
	$	308,556	$	1,608	$	(238	)	$	309,926
April 3, 2011
U.S. government and agency securities	$	55,875	$	94	$	(216	)	$	55,753
Corporate debt obligations		137,706		1,012		(282	)		138,436
Asset and mortgage-backed securities		22,249		293		(52	)		22,490
Municipal bonds		17,941		10		(10	)		17,941
Non-U.S. government and agency securities		1,676		—		—			1,676
	$	235,447	$	1,409	$	(560	)	$	236,296

4

QLOGIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The amortized cost and estimated fair value of debt securities as of July 3, 2011, by contractual maturity, are presented below. Expected maturities will differ from contractual maturities because the issuers of securities may have the right to repay obligations without prepayment penalties. Certain debt instruments, although possessing a contractual maturity greater than one year, are classified as short-term marketable securities based on their ability to be traded on active markets and availability for current operations.

	Amortized Cost		Estimated Fair Value
	(In thousands)
Due in one year or less	$	121,395	$	121,762
Due after one year through three years		128,945		129,674
Due after three years through five years		15,676		15,708
Due after five years		42,540		42,782
	$	308,556	$	309,926

The following table presents the Company’s marketable securities with unrealized losses by investment category and length of time that individual securities have been in a continuous unrealized loss position as of July 3, 2011 and April 3, 2011.

	Less Than 12 Months					12 Months or Greater				Total
Description of Securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)
July 3, 2011
U.S. government and agency securities	$	23,576	$	(22	)	$	—	$	—	$	23,576	$	(22	)
Corporate debt obligations		56,756		(145	)		—		—		56,756		(145	)
Asset and mortgage-backed securities		11,479		(67	)		—		—		11,479		(67	)
Municipal bonds		1,247		(4	)		—		—		1,247		(4	)
	$	93,058	$	(238	)	$	—	$	—	$	93,058	$	(238	)
April 3, 2011
U.S. government and agency securities	$	25,712	$	(216	)	$	—	$	—	$	25,712	$	(216	)
Corporate debt obligations		60,595		(282	)		—		—		60,595		(282	)
Asset and mortgage-backed securities		7,991		(52	)		—		—		7,991		(52	)
Municipal bonds		1,866		(10	)		—		—		1,866		(10	)
	$	96,164	$	(560	)	$	—	$	—	$	96,164	$	(560	)

Note 3. Fair Value Measurements

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. A description of the three levels of inputs is as follows:

• Level 1 – Quoted prices in active markets for identical assets or liabilities.

• Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

5

QLOGIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Assets measured at fair value on a recurring basis as of July 3, 2011 and April 3, 2011 are as follows:

	Fair Value Measurements Using
	Level 1		Level 2		Level 3		Total
	(In thousands)
July 3, 2011
Cash and cash equivalents	$	82,046	$	7,756	$	—	$	89,802
Marketable securities:
U.S. government and agency securities		71,706		—		—		71,706
Corporate debt obligations		—		185,037		—		185,037
Asset and mortgage-backed securities		—		29,405		—		29,405
Municipal bonds		—		22,127		—		22,127
Non-U.S. government and agency securities		—		1,651		—		1,651
		71,706		238,220		—		309,926
	$	153,752	$	245,976	$	—	$	399,728
April 3, 2011
Cash and cash equivalents	$	146,281	$	1,499	$	—	$	147,780
Marketable securities:
U.S. government and agency securities		55,753		—		—		55,753
Corporate debt obligations		—		138,436		—		138,436
Asset and mortgage-backed securities		—		22,490		—		22,490
Municipal bonds		—		17,941		—		17,941
Non-U.S. government and agency securities		—		1,676		—		1,676
		55,753		180,543		—		236,296
	$	202,034	$	182,042	$	—	$	384,076

The Company’s investments classified within Level 2 were primarily valued based on valuations obtained from a third-party pricing service. To estimate fair value, the pricing service utilizes industry standard valuation models, including both income and market-based approaches for which all significant inputs are observable either directly or indirectly. These inputs include reported trades and broker/dealer quotes of the same or similar securities, issuer credit spreads, benchmark securities and other observable inputs.

Note 4. Inventories

Components of inventories are as follows:

	July 3, 2011		April 3, 2011
	(In thousands)
Raw materials	$	6,382	$	5,702
Finished goods		19,633		21,229
	$	26,015	$	26,931

Note 5. Stock-Based Compensation

During the three months ended July 3, 2011, the Company granted options to purchase 1.4 million shares of common stock and 1.4 million restricted stock units with weighted average grant date fair values of $5.83 and $15.71 per share, respectively, and also granted 0.2 million restricted stock units with performance conditions to certain senior executives.

6

QLOGIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

A summary of stock-based compensation expense, by functional line item in the condensed consolidated statements of income, is as follows:

	Three Months Ended
	July 3, 2011		June 27, 2010
	(In thousands)
Cost of revenues	$	808	$	734
Engineering and development		4,631		5,007
Sales and marketing		1,857		2,113
General and administrative		2,371		2,469
	$	9,667	$	10,323

Note 6. Income Taxes

The Company’s provision for income taxes was $1.3 million and $4.6 million for the three months ended July 3, 2011 and June 27, 2010, respectively.

The effective tax rate was 4% and 15% for the three months ended July 3, 2011 and June 27, 2010, respectively. The effective tax rate is based upon the estimated income for the year, the composition of the estimated income in different tax jurisdictions, and the tax effect, if any, in the applicable quarterly periods of newly enacted tax legislation, resolution of tax audits, changes in uncertain tax positions, and other discrete tax related items. The allocation of taxable income to domestic and foreign tax jurisdictions impacts the effective tax rate, as the Company’s income tax rate in foreign jurisdictions is generally lower than its income tax rate in the United States.

The effective tax rate for the three months ended July 3, 2011 was favorably impacted by certain discrete tax related items, principally the resolution of state income tax examinations.

The Company’s federal consolidated income tax returns for fiscal years 2008 and 2009 are currently under examination by the Internal Revenue Service. Management does not believe that the results of these examinations will have a material impact on the Company’s financial condition or results of operations.

Note 7. Net Income Per Share

The following table sets forth the computation of basic and diluted net income per share:

	Three Months Ended
	July 3, 2011		June 27, 2010
	(In thousands, except per share amounts)
Net income	$	32,426	$	25,449
Shares:
Weighted-average shares outstanding — basic		104,679		111,425
Dilutive potential common shares, using treasury stock method		1,110		2,305
Weighted-average shares outstanding — diluted		105,789		113,730
Net income per share:
Basic	$	0.31	$	0.23
Diluted	$	0.31	$	0.22

Stock-based awards, including stock options and restricted stock units, representing 14.4 million and 11.3 million shares of common stock have been excluded from the diluted net income per share calculations for the three months ended July 3, 2011 and June 27, 2010, respectively. These stock-based awards have been excluded from the diluted net income per share calculations because their effect would have been antidilutive.

7

QLOGIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 8. Comprehensive Income

Components of comprehensive income are as follows:

	Three Months Ended
	July 3, 2011		June 27, 2010
	(In thousands)
Net income	$	32,426	$	25,449
Other comprehensive income:
Change in unrealized gains on marketable securities, net of income taxes		467		147
	$	32,893	$	25,596

8

Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes. In this discussion and elsewhere in this report, we make forward-looking statements. These forward-looking statements are made in reliance upon safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, without limitation, descriptions of our expectations regarding future trends affecting our business and other statements regarding future events or our objectives, goals, strategies, beliefs and underlying assumptions that are other than statements of historical fact. When used in this report, the words “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should,” “will” and similar expressions, or the negative of such expressions, are intended to identify these forward-looking statements. Statements concerning current conditions may also be forward-looking if they imply a continuation of current conditions. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of several factors, including, but not limited to those factors set forth and discussed in Part II, Item 1A “Risk Factors” and elsewhere in this report. In light of the significant uncertainties inherent in the forward-looking information included in this report, the inclusion of this information should not be regarded as a representation by us or any other person that our objectives or plans will be achieved. You are cautioned, therefore, not to place undue reliance on these forward-looking statements, which are made only as of the date of this report. We undertake no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.

Overview

We design and supply high performance network infrastructure connectivity products that provide, enhance and manage computer data communication. These products facilitate the rapid transfer of data and enable efficient resource sharing between servers and storage devices. Our products are used in enterprise data centers, cloud computing and other environments dependent on high performance, reliable networking.

Our products are used in connection with three distinct types of networks: Storage Networks, High Performance Computing, or HPC, Networks, and Converged Networks. Storage Networks are used to provide critical data across enterprise environments and primarily use Fibre Channel technology. HPC Networks facilitate advanced parallel processing over multiple servers and typically are used for applications where very large amounts of data must be processed quickly and efficiently. The HPC Network products that we sell are based on InfiniBand^® technology. Converged Networks are designed to address the evolving data center by consolidating and unifying various classes of connectivity and networks, such as storage area networks and local area networks, using Ethernet speeds of 10Gb and greater. For example, Fibre Channel over Ethernet, or FCoE, uses an enhanced Ethernet network for both Fibre Channel storage and Ethernet data transmission, thus combining the benefits of Fibre Channel technology with the pervasiveness of Ethernet networks used by most local area networks.

We classify our products into three broad categories: Host Products, Network Products and Silicon Products. Host Products consist of Fibre Channel and Internet Small Computer Systems Interface, or iSCSI, host bus adapters; InfiniBand host channel adapters; and converged network adapters, which consist of adapters based on 10Gb Ethernet connectivity. Network Products consist of Fibre Channel switches, including stackable edge switches, bladed switches, virtualized pass-through modules, and high-port count modular-chassis switches; InfiniBand switches, including high-end multi-protocol directors, edge and bladed switches; Enhanced Ethernet pass-through modules; and storage routers for bridging Fibre Channel, FCoE and iSCSI networks, and migrating data between storage devices. Silicon Products consist of Fibre Channel controllers, iSCSI controllers, converged network controllers and Ethernet controllers.

Our products are sold worldwide, primarily to original equipment manufacturers, or OEMs, and distributors. Our customers rely on our various networking infrastructure products to deliver solutions to information technology professionals in virtually every business sector. Our products are found primarily in server, workstation, network and storage subsystem solutions that are used by small, medium and large enterprises with critical business data requirements. These products are incorporated in solutions from a number of storage system and computer system OEM customers, including Cisco Systems, Inc., Dell Inc., EMC Corporation, Hewlett-Packard Company, International Business Machines Corporation, NetApp, Inc., Oracle Corporation and many others.

9

First Quarter Financial Highlights and Other Information

A summary of our financial performance during the first quarter of fiscal 2012 is as follows:

• Net revenues were $151.6 million in the first quarter of fiscal 2012 compared to $152.3 million in the fourth quarter of fiscal 2011. Revenues from Host Products of $109.8 million increased sequentially by $0.7 million from $109.1 million in the fourth quarter of fiscal 2011 and revenues from Silicon Products of $16.8 million increased sequentially by $0.7 million from $16.1 million in the fourth quarter of fiscal 2011. Revenues from Network Products were $21.9 million in the first quarter of fiscal 2012 compared to $24.3 million in the fourth quarter of fiscal 2011. Fiscal year 2011 was comprised of 53 weeks and included a fourteenth week in the fourth quarter.

• Gross profit as a percentage of net revenues was 66.5% for the first quarter of fiscal 2012 compared to 66.6% in the fourth quarter of fiscal 2011.

• Operating income as a percentage of net revenues for the first quarter of fiscal 2012 was 21.5% compared to 23.6% in the fourth quarter of fiscal 2011.

• Net income was $32.4 million, or $0.31 per diluted share, in the first quarter of fiscal 2012 compared to $33.3 million, or $0.31 per diluted share, in the fourth quarter of fiscal 2011.

• Cash, cash equivalents and marketable securities increased to $399.7 million as of July 3, 2011 from $384.1 million as of April 3, 2011.

• Accounts receivable was $79.1 million as of July 3, 2011 compared to $70.1 million as of April 3, 2011. Days sales outstanding (DSO) in receivables was 47 days as of July 3, 2011 compared to 45 days as of April 3, 2011.

• Inventories decreased to $26.0 million as of July 3, 2011 from $26.9 million as of April 3, 2011. Our annualized inventory turns increased to 7.8 turns in the first quarter of fiscal 2012 from 7.0 turns in the fourth quarter of fiscal 2011.

Results of Operations

Net Revenues

A summary of our net revenues by product category is as follows:

	Three Months Ended
	July 3, 2011			June 27, 2010
	(Dollars in millions)
Net revenues:
Host Products	$	109.8		$	102.5
Network Products		21.9			25.6
Silicon Products		16.8			11.9
Service and other		3.1			2.6
	$	151.6		$	142.6
Percentage of net revenues:
Host Products		72	%		72	%
Network Products		15			18
Silicon Products		11			8
Service and other		2			2
		100	%		100	%

Historically, the global marketplace for network infrastructure solutions has expanded in response to the information requirements of enterprise data centers, cloud computing and other environments dependent on high performance, reliable networking. The markets we serve have been characterized by rapid advances in technology and related product performance, which has generally resulted in declining average selling prices over time. In general, our revenues have been favorably affected by increases in units sold as a result of market expansion and the release of new products. The favorable effect on our revenues as a result of increases in volume has been partially offset by the impact of declining average selling prices.

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The United States and other countries around the world have experienced, and may continue to experience, economic weakness and uncertainty. Economic uncertainty has adversely affected, and in the future may adversely affect, information technology spending rates. Accordingly, it is extremely difficult for us to forecast future sales levels and historical information may not be indicative of future trends.

Our net revenues are derived primarily from the sale of Host Products, Network Products and Silicon Products. Net revenues increased 6% to $151.6 million for the three months ended July 3, 2011 from $142.6 million for the three months ended June 27, 2010. The increase in net revenue was primarily the result of a $7.3 million, or 7%, increase in revenue from Host Products and a $4.9 million, or 42%, increase in revenue from Silicon Products, partially offset by a $3.7 million, or 15%, decrease in revenue from Network Products. The increase in revenue from Host Products was primarily due to an increase in the quantity of adapters sold. The increase in revenue from Silicon Products was primarily due to an increase in the quantity of chips sold. The decrease in revenue from Network Products was primarily due to a 10% decrease in the quantity of switches sold and a 9% decrease in the average selling prices of these switches. Net revenues for the three months ended July 3, 2011 included $3.1 million of service and other revenues compared with $2.6 million of service and other revenues for the three months ended June 27, 2010. We do not expect service and other revenues to be significant to our overall revenues.

A small number of our customers account for a substantial portion of our net revenues, and we expect that a small number of customers will continue to represent a substantial portion of our net revenues for the foreseeable future. Our top ten customers accounted for 88% and 83% of net revenues during the three months ended July 3, 2011 and June 27, 2010, respectively.

We believe our major customers continually evaluate whether or not to purchase products from alternative or additional sources. Accordingly, there can be no assurance that a major customer will not reduce, delay or eliminate its purchases from us. Any such reduction, delay or loss of purchases could have a material adverse effect on our business, financial condition or results of operations.

Net revenues by geographic area are as follows:

	Three Months Ended
	July 3, 2011		June 27, 2010
	(In millions)
United States	$	69.7	$	64.0
Asia-Pacific and Japan		45.5		39.0
Europe, Middle East and Africa		28.7		32.1
Rest of world		7.7		7.5
	$	151.6	$	142.6

Revenues by geographic area are presented based upon the ship-to location of the customer, which is not necessarily indicative of the location of the ultimate end-user of our products. No individual country other than the United States and China represented 10% or more of net revenues for the periods presented. Net revenues from customers in China were $17.9 million and $21.4 million for the three months ended July 3, 2011 and June 27, 2010, respectively.

Gross Profit

Gross profit represents net revenues less cost of revenues. Cost of revenues consists primarily of the cost of purchased products, assembly and test services; costs associated with product procurement, inventory management, logistics and product quality; and the amortization of purchased intangible assets. A summary of our gross profit and related percentage of net revenues is as follows:

	Three Months Ended
	July 3, 2011			June 27, 2010
	(Dollars in millions)
Gross profit	$	100.8		$	92.9
Percentage of net revenues		66.5	%		65.1	%

Gross profit for the three months ended July 3, 2011 increased $7.9 million, or 8%, from gross profit for the three months ended June 27, 2010. The gross profit percentage for the three months ended July 3, 2011 was 66.5% and increased from 65.1% for the corresponding period in the prior year. The increase in gross profit percentage was primarily due to a favorable change in product mix.

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Our ability to maintain our current gross profit percentage can be significantly affected by factors such as manufacturing volumes over which fixed costs are absorbed, sales discounts and customer incentives, component costs, the mix of products shipped, the transition to new products, competitive price pressures, the timeliness of volume shipments of new products, our ability to achieve manufacturing cost reductions, and amortization and impairments of purchased intangible assets. We anticipate that it will continue to be difficult to reduce manufacturing costs. As a result of these and other factors, it may be difficult to maintain our gross profit percentage consistent with historical periods and it may decline in the future.

Operating Expenses

Our operating expenses are summarized in the following table:

	Three Months Ended
	July 3, 2011			June 27, 2010
	(Dollars in millions)
Operating expenses:
Engineering and development	$	37.7		$	34.7
Sales and marketing		21.3			20.4
General and administrative		9.1			8.5
Special charges		—			0.9
	$	68.1		$	64.5
Percentage of net revenues:
Engineering and development		24.9	%		24.4	%
Sales and marketing		14.0			14.3
General and administrative		6.0			5.9
Special charges		—			0.7
		44.9	%		45.3	%

Engineering and Development. Engineering and development expenses consist primarily of compensation and related employee benefit costs, service and material costs, occupancy and equipment costs and related computer support costs. During the three months ended July 3, 2011, engineering and development expenses increased to $37.7 million from $34.7 million for the three months ended June 27, 2010. The increase was primarily due to a $2.9 million increase in cash compensation and related employee benefit costs, primarily due to an increase in headcount related to our planned incremental investments to drive future revenue growth.

We believe continued investments in engineering and development activities are critical to achieving future design wins, expansion of our customer base and revenue growth opportunities.

Sales and Marketing. Sales and marketing expenses consist primarily of compensation and related employee benefit costs, sales commissions, promotional activities and travel for sales and marketing personnel. Sales and marketing expenses increased to $21.3 million for the three months ended July 3, 2011 from $20.4 million for the three months ended June 27, 2010. The increase in sales and marketing expenses was primarily due to a $0.8 million increase in cash compensation and related employee benefit costs, primarily due to an increase in headcount.

We believe continued investments in our sales and marketing organizational infrastructure and related marketing programs are critical to the success of our strategy of expanding our customer base and enhancing relationships with our existing customers.

General and Administrative. General and administrative expenses consist primarily of compensation and related employee benefit costs for executive, finance, accounting, human resources, legal and information technology personnel. Non-compensation components of general and administrative expenses include accounting, legal and other professional fees, facilities expenses and other corporate expenses. General and administrative expenses increased to $9.1 million for the three months ended July 3, 2011 from $8.5 million for the three months ended June 27, 2010. The increase in general and administrative expenses was primarily due to a $0.5 million increase in cash compensation and related employee benefit costs.

Special Charges. During the three months ended June 27, 2010, we recorded special charges of $0.9 million consisting of exit costs associated with severance benefits for involuntarily terminated employees, primarily related to the consolidation of certain engineering functions.

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Interest and Other Income, Net

Components of our interest and other income, net, are as follows:

	Three Months Ended
	July 3, 2011			June 27, 2010
	(In millions)
Interest income	$	0.8		$	1.0
Net gains on investment securities		0.4			0.7
Other		(0.2	)		—
	$	1.0		$	1.7

Income Taxes

Our provision for income taxes was $1.3 million and $4.6 million for the three months ended July 3, 2011 and June 27, 2010, respectively.

Our effective tax rate was 4% and 15% for the three months ended July 3, 2011 and June 27, 2010, respectively. The decrease in our effective tax rate for the three months ended July 3, 2011 as compared to the three months ended June 27, 2010 was primarily due to the benefit from certain discrete tax related items, principally the resolution of state income tax examinations. We expect the annual effective tax rate for fiscal 2012 to be approximately 11%.

Our federal consolidated income tax returns for fiscal years 2008 and 2009 are currently under examination by the Internal Revenue Service. We do not believe that the results of these examinations will have a material impact on our financial condition or results of operations.

Given the global scope of our operations, and the complexity of global tax and transfer pricing rules and regulations, it is difficult to estimate earnings within each tax jurisdiction. If actual earnings within each tax jurisdiction differ materially from our estimates, we may not achieve our expected effective tax rate. Additionally, our effective tax rate may be impacted by other items including the tax effects of acquisitions, newly enacted tax legislation, examinations by tax authorities, stock-based compensation and uncertain tax positions.

Liquidity and Capital Resources

Our combined balances of cash, cash equivalents and marketable securities increased to $399.7 million as of July 3, 2011 from $384.1 million as of April 3, 2011. As of July 3, 2011 and April 3, 2011, our international subsidiaries held 69% and 67%, respectively, of our total cash, cash equivalents and marketable securities. These holdings by our international subsidiaries as of July 3, 2011 consisted primarily of debt securities due from U.S. issuers, including the U.S. government and related agencies, and U.S. dollar denominated cash and money market funds. Certain foreign regulations could impact our ability to transfer funds to the United States. Additionally, should we decide to repatriate cash held outside of the United States, we may incur a significant tax obligation.

We believe that existing cash, cash equivalents, marketable securities and expected cash flow from operations will provide sufficient funds to finance our operations for at least the next twelve months. However, it is possible that we may need to supplement our existing sources of liquidity to finance our activities beyond the next twelve months or for the future acquisition of businesses, products or technologies and there can be no assurance that sources of liquidity will be available to us at that time.

Cash provided by operating activities increased to $40.3 million for the three months ended July 3, 2011 from $30.6 million for the three months ended June 27, 2010. Operating cash flow for the three months ended July 3, 2011 consisted of our net income of $32.4 million and net non-cash expenses of $21.7 million, partially offset by net cash used as a result of changes in operating assets and liabilities of $13.8 million. The changes in operating assets and liabilities included a $9.1 million increase in accounts receivable and a $4.7 million decrease in accrued compensation. The increase in accounts receivable was primarily due to the timing of cash collections and an increase in net revenues. The decrease in accrued compensation was primarily due to the timing of payment obligations.

Cash provided by operating activities of $30.6 million for the three months ended June 27, 2010 consisted of our net income of $25.4 million and net non-cash expenses of $25.4 million, partially offset by net cash used as a result of changes in operating assets

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and liabilities of $20.2 million. The changes in operating assets and liabilities included a $6.2 million decrease in accrued taxes, a $5.5 million decrease in accrued compensation and a $5.0 million increase in inventories. The decreases in accrued taxes and accrued compensation were primarily due to the timing of payment obligations. The increase in inventories was due to advanced purchases of silicon chips to maintain flexibility due to long lead times for these products.

Cash used in investing activities was $82.4 million for the three months ended July 3, 2011 and consisted of $73.4 million of net purchases of available-for-sale securities and $9.0 million of purchases of property and equipment. During the three months ended June 27, 2010, cash provided by investing activities was $15.4 million and consisted primarily of $11.1 million of net proceeds from sales and maturities of available-for-sale securities and $9.3 million of proceeds from the disposition of trading securities at par value, partially offset by $5.3 million of purchases of property and equipment.

As our business grows, we expect capital expenditures to increase in the future as we continue to invest in machinery and equipment, more costly engineering and production tools for new technologies, and enhancements to our corporate information technology infrastructure.

Cash used in financing activities of $15.9 million for the three months ended July 3, 2011 consisted of our purchase of $18.7 million of common stock under our stock repurchase program and $5.3 million for minimum tax withholdings paid on behalf of employees for restricted stock units that vested during the period, partially offset by $8.1 million of proceeds from the issuance of common stock and excess tax benefits from stock-based awards. During the three months ended June 27, 2010, cash used in financing activities of $53.4 million consisted of our purchase of $53.1 million of common stock under our stock repurchase program and $5.9 million for minimum tax withholdings paid on behalf of employees for restricted stock units that vested during the period, partially offset by $5.6 million of proceeds from the issuance of common stock and excess tax benefits from stock-based awards.

Since fiscal 2003, we have had various stock repurchase programs that authorized the purchase of up to $1.75 billion of our outstanding common stock, including a program approved in August 2010 authorizing the repurchase of up to $200 million of our outstanding common stock. As of July 3, 2011, we had repurchased a total of 104.5 million shares of our common stock under our stock repurchase programs for an aggregate purchase price of $1.65 billion. During the three months ended July 3, 2011, we repurchased 1.2 million shares for an aggregate purchase price of $19.4 million. Pursuant to the existing stock repurchase program, we are authorized to repurchase shares with an aggregate cost of up to $98.6 million as of July 3, 2011.

We have certain contractual obligations and commitments to make future payments in the form of non-cancelable purchase orders to our suppliers and commitments under operating lease arrangements. A summary of our contractual obligations as of July 3, 2011, and their impact on our cash flows in future fiscal years, is as follows:

	2012 (Remaining nine months)		2013		2014		2015		2016		Thereafter		Total
	(In millions)
Operating leases	$	5.3	$	4.6	$	4.1	$	3.1	$	1.9	$	4.1	$	23.1
Non-cancelable purchase obligations		45.2		0.2		—		—		—		—		45.4
Total	$	50.5	$	4.8	$	4.1	$	3.1	$	1.9	$	4.1	$	68.5

The amount of unrecognized tax benefits, including related accrued interest and penalties, was $60.0 million as of July 3, 2011. We are not able to provide a reasonable estimate of the timing of future tax payments related to these obligations.

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Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires us to make estimates and judgments that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net revenues and expenses during the reporting period. We base our estimates on historical experience and on various other factors that we believe to be reasonable under the circumstances, including the current economic environment, the results of which form the basis for making judgments about the carrying values of assets and liabilities. We believe the accounting policies described below to be our most critical accounting policies. These accounting policies are affected significantly by judgments, assumptions and estimates used in the preparation of the financial statements and actual results could differ materially from the amounts reported based on these policies.

Revenue Recognition

We recognize revenue from product sales when all of the following fundamental criteria are met: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred, (iii) the price to the customer is fixed or determinable and (iv) collection of the resulting accounts receivable is reasonably assured.

For all sales, we use a binding purchase order or a signed agreement as evidence of an arrangement. Delivery occurs when goods are shipped and title and risk of loss transfer to the customer, in accordance with the terms specified in the arrangement with the customer. The customer’s obligation to pay and the payment terms are set at the time of delivery and are not dependent on the subsequent resale of our product. However, certain of our sales are made to distributors under agreements that contain a limited right to return unsold product and price protection provisions. These return rights and price protection provisions limit our ability to reasonably estimate product returns and the final price of the inventory sold to distributors. As a result, the price to the customer is not fixed or determinable at the time products are delivered to distributors. Accordingly, we recognize revenue from these distributors based on the sell-through method using inventory information provided by the distributor. At times, we provide standard incentive programs to our customers. We account for our competitive pricing incentives and rebates as a reduction of revenue in the period the related revenue is recorded based on the specific program criteria and historical experience. In addition, we record provisions against revenue and cost of revenue for estimated product returns in the same period that revenue is recognized. These provisions are based on historical experience as well as specifically identified product returns. Service and other revenue is recognized when earned and receipt is reasonably assured.

For those sales that include multiple deliverables, we allocate revenue based on the relative selling price of the individual components. When more than one element, such as hardware and services, are contained in a single arrangement, we allocate revenue between the elements based on each element’s relative selling price, provided that each element meets the criteria for treatment as a separate unit of accounting. When applying the relative selling price method, the company determines the selling price for each deliverable using vendor-specific objective evidence (VSOE) of the selling price, if it exists. In order to establish VSOE of the selling price, we must regularly sell the product and/or service on a standalone basis with a substantial majority of the sales priced within a relatively narrow range. If VSOE of the selling price cannot be determined, we then consider third party evidence (TPE) of the selling price. Generally, we are not able to determine TPE due to the lack of similar products and services sold by other companies within the industry. If neither VSOE nor TPE exists, we determine the estimated selling price based on multiple factors including, but not limited to, cost, gross margin, market conditions and pricing practices. Revenue allocated to each element is then recognized when the basic revenue recognition criteria is met for each deliverable.

We sell certain software products and related post-contract customer support. We recognize revenue from software products when all of the following fundamental criteria are met: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred, (iii) the price to the customer is fixed or determinable and (iv) collection of the resulting accounts receivable is probable. Revenue is allocated to undelivered elements based upon VSOE of the fair value of the element. VSOE of the fair value is based upon the price charged when the element is sold separately. Revenue allocated to each element is then recognized when the basic revenue recognition criteria are met for each element. If we are unable to determine VSOE of fair value for an undelivered element, the entire amount of revenue from the arrangement is deferred and recognized over the service period or when all elements have been delivered.

Stock-Based Compensation

We recognize compensation expense for all stock-based awards made to employees and non-employee directors, including stock options, restricted stock units and stock purchases under our Employee Stock Purchase Plan (the ESPP), based on estimated fair values on the measurement date, which is generally the date of grant. Stock-based compensation is recognized for the portion of the

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award that is ultimately expected to vest. Forfeitures are estimated at the time of grant based on historical trends and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. We recognize stock-based compensation expense for awards that are subject to only a service condition on a straight-line basis over the requisite service period for the entire award, which is the vesting period for stock options and restricted stock units, and the offering period for the ESPP. For all other stock-based awards, stock-based compensation is recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award. The determination of fair value of stock-based awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, our expected stock price volatility over the term of the awards and actual and projected employee stock option exercise behaviors. In estimating expected stock price volatility, we use a combination of both historical volatility, calculated based on the daily closing prices of our common stock over a period equal to the expected term of the option, and implied volatility, utilizing market data of actively traded options on our common stock. We believe that the historical volatility of the price of our common stock over the expected term of the option is a strong indicator of the expected future volatility. We also believe that implied volatility takes into consideration market expectations of how future volatility will differ from historical volatility. Accordingly, we believe a combination of both historical and implied volatility provides the best estimate of the future volatility of the market price of our common stock. Changes in the subjective assumptions can materially affect the estimated fair value of stock-based awards.

Income Taxes

We utilize the asset and liability method of accounting for income taxes. Income tax positions taken or expected to be taken in a tax return should be recognized in the first reporting period that it is more likely than not the tax position will be sustained upon examination. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. Previously recognized income tax positions that fail to meet the recognition threshold in a subsequent period are derecognized in that period. Differences between actual results and our assumptions, or changes in our assumptions in future periods, are recorded in the period they become known. We record potential accrued interest and penalties related to unrecognized tax benefits in income tax expense.

Deferred income taxes are recognized for the future tax consequences of temporary differences using enacted statutory tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Temporary differences include the difference between the financial statement carrying amounts and the tax bases of existing assets and liabilities and operating loss and tax credit carryforwards. The effect on deferred taxes of a change in tax rates is recognized in earnings in the period that includes the enactment date.

A valuation allowance is recorded when it is more likely than not that some or all of a deferred tax asset will not be realized. An adjustment to earnings would occur if we determine that we are able to realize a different amount of our deferred tax assets than currently expected.

As a multinational corporation, we are subject to complex tax laws and regulations in various jurisdictions. The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws themselves are subject to change as a result of changes in fiscal policy, changes in legislation, evolution of regulations and court rulings. Therefore, the actual liability for U.S. or foreign taxes may be materially different from our estimates, which could result in the need to record additional liabilities or potentially to reverse previously recorded tax liabilities. Differences between actual results and our assumptions, or changes in our assumptions in future periods, are recorded in the period they become known.

Investment Securities

Investment securities include available-for-sale securities, trading securities and other investment securities. Our investment securities are classified in the consolidated balance sheets based on the nature of the security and the availability for use in current operations.

Available-for-sale securities are recorded at fair value, based on quoted market prices or other observable inputs. Unrealized gains and losses, net of related income taxes, on available-for-sale securities are excluded from earnings and reported as a separate component of accumulated other comprehensive income until realized.

Trading securities are recorded at fair value with unrealized holding gains and losses included in earnings and reported in interest and other income, net. In the absence of quoted market prices, these securities are valued based on an income approach using an estimate of future cash flows.

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Other investment securities are accounted for under the cost method and recorded at the lower of fair value or cost.

We recognize an impairment charge on available-for-sale securities when the decline in the fair value of an investment below its cost basis is judged to be other-than-temporary. If we intend to sell the security or it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss, we would recognize the entire impairment in earnings. If we do not intend to sell the security and it is not more likely than not that we will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss, the other-than-temporary impairment is separated into (a) the amount representing the credit loss and (b) the amount related to all other factors. The amount of the other-than-temporary impairment related to the credit loss is recognized in earnings. The amount of the other-than-temporary impairment related to other factors is recognized in other comprehensive income, net of applicable taxes. Significant judgment is required in determining the fair value of investment securities in inactive markets as well as determining when declines in fair value constitute an other-than-temporary impairment and the portion of any impairment that is due to a credit loss. We consider various factors in determining whether to recognize an impairment charge, including the current financial and credit market environment, the financial condition and near-term prospects of the issuer of the security, the magnitude of the loss compared to the cost of the investment, the length of time the investment has been in a loss position and our intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery of market value.

Realized gains or losses are determined on a specific identification basis and reported in interest and other income, net, as incurred.

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or market. We write down the carrying value of our inventory to estimated net realizable value for estimated excess and obsolete inventory based upon assumptions about future demand and market conditions. These assumptions are based on economic conditions and trends (both current and projected), anticipated customer demand and acceptance of our current products, expected future products and other assumptions. If actual market conditions are less favorable than those projected by management, additional write-downs may be required. Once we write down the carrying value of inventory, a new cost basis is established. Subsequent changes in facts and circumstances do not result in an increase in the newly established cost basis.

Goodwill and Other Intangible Assets

Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the net tangible and intangible assets acquired. The amounts and useful lives assigned to intangible assets acquired, other than goodwill, impact the amount and timing of future amortization. The amount assigned to in-process research and development is capitalized and accounted for as an indefinite-lived intangible asset until the underlying projects are completed or abandoned.

Goodwill is not amortized but instead is tested at least annually for impairment, or more frequently when events or changes in circumstances indicate a potential impairment, by comparing the carrying value to the fair value of the reporting unit to which the goodwill is assigned. A two-step test is used to identify the potential impairment and to measure the amount of impairment, if any. The first step is to compare the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit is less than its carrying amount, goodwill is considered impaired and the loss is measured by performing step two. Under step two, the impairment loss is measured by comparing the implied fair value of the reporting unit with the carrying amount of goodwill. We perform the annual test for impairment as of the first day of our fiscal fourth quarter.

The initial recording and subsequent evaluation for impairment of goodwill and purchased intangible assets requires the use of significant management judgment regarding the forecasts of future operating results. It is possible that our business plans may change and our estimates used may prove to be inaccurate. If our actual results, or the plans and estimates used in future impairment analyses, are lower than current estimates used, we could incur impairment charges.

Long-Lived Assets

Long-lived assets, including property and equipment and purchased intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Significant judgment is required in determining whether a potential indicator of impairment of our long-lived assets exists. Recoverability of assets to be held and used is measured by the comparison of the carrying amount of an asset or asset group to future undiscounted net cash flows expected to be generated by the asset or asset group. If such an asset or asset group is considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset or asset group exceeds the fair

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value of the asset or asset group. Assets to be disposed of are reported at the lower of their carrying amount or fair value less costs to sell. Estimating future net cash flows and determining proper asset groupings for the purpose of this impairment test requires the use of significant management judgment. If our actual results, or estimates used in future impairment analyses, are lower than our current estimates, we could incur impairment charges.

Recently Issued Accounting Standards Not Yet Effective

In May 2011, the Financial Accounting Standards Board (FASB) issued additional guidance on fair value measurements that clarifies the application of existing guidance and disclosure requirements, changes certain fair value measurement principles and requires additional disclosures about fair value measurements. The updated guidance is effective prospectively for interim and annual periods beginning after December 15, 2011. The adoption of this guidance will not have a material impact on our consolidated financial statements.

In June 2011, the FASB issued guidance regarding the presentation of comprehensive income. The new standard requires the presentation of the components of net income, the components of other comprehensive income and total comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The new standard also requires presentation of adjustments for items that are reclassified from other comprehensive income to net income in the statement where the components of net income and the components of other comprehensive income are presented. The updated guidance is effective retrospectively for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011. The adoption of this guidance will not have a material impact on our consolidated financial statements.

Item 3.     Quantitative and Qualitative Disclosures About Market Risk

Our cash and cash equivalents are not subject to significant interest rate risk due to the short maturities of these instruments. As of July 3, 2011, the carrying value of our cash and cash equivalents approximates fair value.

We maintain a portfolio of marketable securities consisting primarily of U.S. government and agency securities, corporate debt obligations, asset and mortgage-backed securities and municipal bonds, the majority of which have remaining terms of three years or less. We are exposed to fluctuations in interest rates as movements in interest rates can result in changes in the market value of our investments in debt securities. However, due to the short-term expected duration of our portfolio of marketable securities, we do not believe that we are subject to material interest rate risk.

In accordance with our investment guidelines, we only invest in instruments with high credit quality ratings and we limit our exposure to any one issuer or type of investment. Our portfolio of marketable securities as of July 3, 2011 consists of $309.9 million of securities that are classified as available-for-sale. As of July 3, 2011, we had gross unrealized losses associated with our available-for-sale securities of $0.2 million that were determined by management to be temporary in nature.

We do not use derivative financial instruments.

Item 4.     Controls and Procedures

We maintain disclosure controls and procedures to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934, as amended, (i) is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and (ii) is accumulated and communicated to our management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Our management evaluated, with the participation of our chief executive officer and chief financial officer, the effectiveness of our disclosure controls and procedures, as such term is defined under Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of July 3, 2011. There was no change in our internal control over financial reporting during our quarter ended July 3, 2011 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II.

OTHER INFORMATION

Item 1A.    Risk Factors

We have updated the risk factors discussed in Item 1A of our Annual Report on Form 10-K for the year ended April 3, 2011, as set forth below. We do not believe any of the updates constitute material changes from the risk factors previously discussed in our Annual Report on Form 10-K for the year ended April 3, 2011.

Our operating results may be adversely affected by unfavorable economic conditions.

The United States and other countries around the world have experienced, and may continue to experience, economic weakness and uncertainty. Economic uncertainty has adversely affected, and in the future may adversely affect, information technology, or IT, spending rates. Reductions in IT spending rates could result in reduced sales volumes, lower prices for our products, longer sales cycles, increased inventory provisions and increased production costs, which could negatively impact our results of operations.

As a result of worldwide economic uncertainty, it is extremely difficult for us and our customers to forecast future revenue levels based on historical information and trends. Portions of our expenses are fixed and others are tied to expected levels of revenue. To the extent that we do not achieve our anticipated level of revenue, our operating results could be adversely affected until such expenses are reduced to an appropriate level. We may not be able to identify and implement appropriate cost savings in a timely manner.

Our operating results may fluctuate in future periods, which could cause our stock price to decline.

We have experienced, and expect to experience in future periods, fluctuations in sales and operating results from quarter to quarter. In addition, there can be no assurance that we will maintain our current gross margins or profitability in the future. A significant portion of our net revenues in each fiscal quarter results from orders booked in that quarter. Orders placed by major customers are typically based on their forecasted sales and inventory levels for our products.

Fluctuations in our quarterly operating results may also be the result of:

• the timing, size and mix of orders from customers;

• gain or loss of significant customers;

• industry consolidation among both our competitors and our customers;

• customer policies pertaining to desired inventory levels of our products;

• sales discounts and customer incentives;

• the availability and sale of new products;

• changes in our average selling prices;

• variations in manufacturing capacities, efficiencies and costs;

• the availability and cost of components, including silicon chips;

• variations in product development costs, especially related to advanced technologies;

• variations in operating expenses;

• changes in effective income tax rates, including those resulting from changes in tax laws;

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• our ability to timely produce products that comply with new environmental restrictions or related requirements of our original equipment manufacturer, or OEM, customers;

• actual events, circumstances, outcomes and amounts differing from judgments, assumptions and estimates used in determining the value of certain assets (including the amounts of related valuation allowances), liabilities and other items reflected in our consolidated financial statements;

• the timing of revenue recognition and revenue deferrals;

• gains or losses related to our marketable securities; or

• changes in accounting rules or our accounting policies.

In addition, our quarterly results of operations are influenced by competitive factors, including the pricing and availability of our products and our competitors’ products. Furthermore, communications regarding new products and technologies could cause our customers to defer or cancel purchases of our products. Order deferrals by our customers, delays in our introduction of new products, and longer than anticipated design-in cycles for our products have in the past adversely affected our quarterly results of operations. Due to these factors, as well as other unanticipated factors, it is likely that in some future quarter or quarters our operating results will be below the expectations of public market analysts or investors, and as a result, the price of our common stock could significantly decrease.

We expect gross margin to vary over time and our recent level of gross margin may not be sustainable.

Our recent level of gross margin may not be sustainable and may be adversely affected by numerous factors, including:

• changes in product mix;

• transitions to products based on emerging technologies, such as 10Gb Ethernet, which may have lower gross margins;

• changes in manufacturing volumes over which fixed costs are absorbed;

• increased price competition;

• introduction of new products by us or our competitors, including products with advantages in price, performance or features;

• our inability to reduce manufacturing-related or component costs;

• entry into new markets or the acquisition of new businesses;

• amortization and impairments of purchased intangible assets;

• sales discounts and customer incentives;

• increases in material, labor or overhead costs;

• excess inventory and inventory holding charges;

• changes in distribution channels; and

• increased warranty costs.

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Our stock price may be volatile.

The market price of our common stock has fluctuated substantially, and there can be no assurance that such volatility will not continue. Several factors could impact our stock price including, but not limited to:

• differences between our actual revenues and operating results and the published expectations of public market analysts;

• quarterly fluctuations in our revenues and operating results;

• introduction of new products or changes in product pricing policies by our competitors or us;

• conditions in the markets in which we operate;

• changes in market projections by industry forecasters;

• changes in estimates of our earnings or rating upgrades/downgrades of our stock by public market analysts;

• operating results or forecasts of our major customers or competitors;

• rumors or dissemination of false information; and

• general economic and geopolitical conditions.

In addition, stock markets have experienced extreme price and volume volatility in recent years and stock prices of technology companies have been especially volatile. This volatility has had a substantial effect on the market prices of securities of many public companies for reasons frequently unrelated to the operating performance of the specific companies. These broad market fluctuations could adversely affect the market price of our common stock.

Our business is dependent, in large part, on the continued growth of the networking markets that we serve and if these markets do not continue to develop, our business will suffer.

Our products are used in storage, high performance computing, or HPC, and converged networks, and therefore our business is dependent on these markets. Our success in generating revenue in these markets will depend on, among other things, our ability to:

• educate potential OEM customers, distributors, resellers, system integrators, storage system providers and end-user organizations about the benefits of our products;

• maintain and enhance our relationships with OEM customers, distributors, resellers, system integrators and storage system providers;

• predict and base our products on standards that ultimately become industry standards; and

• achieve and maintain interoperability between our products and other equipment and components from diverse vendors.

Our financial condition will be materially harmed if we do not maintain and gain market acceptance of our products.

The markets in which we compete involve rapidly changing technology, evolving industry standards and continuing improvements in products and services. Our future success depends, in part, on our ability to:

• enhance our current products and develop and introduce, in a timely manner, new products that keep pace with technological developments and industry standards;

• compete effectively on the basis of price and performance; and

• adequately address OEM and end-user customer requirements and achieve market acceptance.

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We believe that to remain competitive, we will need to continue to develop new products and enter new markets, which will require significant investment. Our competitors may be developing alternative technologies, which may adversely affect the market acceptance of our products. Although we continue to explore and develop products based on new technologies, a substantial portion of our revenues is generated today from Fibre Channel technology. If alternative technologies are adopted by the industry, we may not be able to develop products for these technologies in a timely manner. Further, even if alternative technologies do augment Fibre Channel revenues, our products may not be fully developed in time to be accepted by our customers. Even if our new products are developed on time, we may not be able to manufacture them at competitive prices or in sufficient volumes.

Some of our products are based on Fibre Channel over Ethernet, or FCoE, 10Gb Ethernet or InfiniBand technologies. FCoE is a relatively new converged networking technology that provides a unified storage and data network over Enhanced Ethernet, while preserving the investment by end users in their existing Fibre Channel infrastructure and storage. As with most emerging technologies, it is expected that the market for FCoE will take a number of years to fully develop and mature. We expect products based on FCoE to supplement, and perhaps replace, certain products based on Fibre Channel technology. 10Gb Ethernet is a developing technology for use in enterprise data centers. This emerging market includes well-established participants who have significantly more sales and marketing resources to dedicate to developing and penetrating the market than we do. InfiniBand is currently used primarily in high performance computing environments, and may not be adopted at the rate or to the extent that we anticipate, or the market may not materialize at all. An inability to maintain, or build on, our market share in the Fibre Channel, converged, 10Gb Ethernet or InfiniBand markets, or the failure of these markets to expand, could have a material adverse effect on our business or results of operations.

We depend on a small number of customers and any decrease in revenues from any one of our major customers could adversely affect our results of operations and cause our stock price to decline.

A small number of customers account for a substantial portion of our net revenues, and we expect that a small number of customers will continue to represent a substantial portion of our net revenues in the foreseeable future. Our top ten customers accounted for 88% and 83% of net revenues for the three months ended July 3, 2011 and June 27, 2010, respectively. Total revenue from our two largest customers, Hewlett-Packard Company and International Business Machines Corporation, accounted for over 40% of net revenues during the three months ended July 3, 2011 and June 27, 2010. We are also subject to credit risk associated with the concentration of our accounts receivable.

Our customers generally order products through written purchase orders instead of long-term supply contracts and, therefore, are generally not obligated to purchase products from us for any extended period. Major customers also have significant leverage over us and may attempt to change the sales terms, including pricing, customer incentives and payment terms, or insist that we undertake or fund significant aspects of the design, qualification and testing that our customers have typically been responsible for, either of which could have a material adverse effect on our business, financial condition or results of operations. As our OEM customers are pressured to reduce prices as a result of competitive factors, we may be required to contractually commit to price reductions for our products before we know how, or if, cost reductions can be achieved. If we are unable to achieve these cost reductions, our gross margins could decline and such a decline could have a material adverse effect on our business, financial condition or results of operations.

The ongoing consolidation in the technology industry could adversely impact our business. There is the potential for some of our customers to merge with or acquire one or more of our other customers. There is also a potential that one of our large customers could acquire one of our current competitors. In either case, demand for our products could decrease as a result of such industry consolidation, which could have a material adverse effect on our business, financial condition or results of operations.

Competition within the markets for products such as ours is intense and includes various established competitors.

The markets for networking infrastructure components are highly competitive and are characterized by short product life cycles, price erosion, rapidly changing technology, frequent product performance improvements and evolving industry standards. Due to the diversity of products required in storage, HPC and converged networking infrastructure, we compete with many companies. In the traditional enterprise storage Fibre Channel adapter market, our primary competitor is Emulex Corporation, with Brocade Communications Systems, Inc. also participating. In the Internet Small Computer Systems Interface, or iSCSI, adapter market, our primary competitor is Broadcom Corporation and we also compete indirectly with companies offering software initiator solutions. In the 10Gb Ethernet adapter market, which includes converged networking products, we compete with Emulex Corporation, Brocade Communications Systems, Inc., Broadcom Corporation and Intel Corporation. In the Fibre Channel switch and storage router markets, we compete primarily with Brocade Communications Systems, Inc. and Cisco Systems, Inc. In the InfiniBand adapter and

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switch markets, we compete primarily with Mellanox Technologies, Ltd. We may also compete with some of our server and storage systems customers, some of which have the capability to develop products comparable to those we offer.

We need to continue to develop products appropriate to our markets to remain competitive as our competitors continue to introduce products with improved features. While we continue to devote significant resources to engineering and development, these efforts may not be successful or competitive products may not be developed and introduced in a timely manner. In addition, while relatively few competitors offer a full range of storage, HPC and converged networking infrastructure products, additional domestic and foreign manufacturers may increase their presence in these markets either through the development of new products or through industry consolidation. We may not be able to compete successfully against these or other competitors. If we are unable to design, develop or introduce competitive new products on a timely basis, our future operating results may be materially and adversely affected.

Our products are complex and may contain undetected software or hardware errors that could lead to an increase in our costs, reduce our net revenues or damage our reputation.

Our products are complex and may contain undetected software or hardware errors when first introduced or as newer versions are released. We are also exposed to risks associated with latent defects in existing products and to risks that components purchased from third-party subcontractors and incorporated into our products may not meet our specifications or may otherwise fail prematurely. From time to time, we have found errors in existing, new or enhanced products. In addition, our products are frequently combined with other products, including software, from other vendors, and these products often need to interface with existing networks, each of which have different specifications and utilize multiple protocol standards. As a result, when problems occur, it may be difficult to identify the source of the problem. The occurrence of hardware or software errors could adversely affect the sales of our products, cause us to incur significant warranty and repair costs, divert the attention of our engineering personnel from our product development efforts and cause significant customer relations problems.

We expect the pricing of our products to continue to decline, which could reduce our revenues, gross margins and profitability.

We expect the average unit prices of our products (on a like-for-like product comparison basis) to decline in the future as a result of competitive pricing pressures, increased sales discounts and customer incentives, new product introductions by us or our competitors, or other factors. If we are unable to offset these factors by increasing sales volumes or reducing product manufacturing costs, our total revenues and gross margins may decline. In addition, we must develop and introduce new products and product enhancements. Moreover, most of our expenses are fixed in the short-term or incurred in advance of receipt of corresponding revenues. As a result, we may not be able to decrease our spending to offset any unexpected shortfall in revenues. If this occurs, our revenues, gross margins and profitability could decline.

We are dependent on sole source and limited source suppliers for certain key components.

Certain key components used in the manufacture of our products are purchased from single or limited sources. Application-specific integrated circuits, or ASICs, are purchased from single sources and other key components such as microprocessors, logic chips, power supplies and programmable logic devices are purchased from limited sources. If one of these suppliers experiences an interruption in its ability to supply our needs, or chooses to sever its relationship with us, we may be unable to produce certain of our products, which could result in the loss of customers and have a material adverse effect on our results of operations.

We are dependent on worldwide third-party subcontractors and contract manufacturers.

Third-party subcontractors located outside the United States assemble and test certain products for us. To the extent that we rely on third-party subcontractors to perform these functions, we will not be able to directly control product delivery schedules and quality assurance. This lack of control may result in product shortages or quality assurance problems that could delay shipments of products or increase manufacturing, assembly, testing or other costs. If a subcontractor experiences capacity constraints or financial difficulties, suffers damage to its facilities, experiences power outages or any other disruption of assembly or testing capacity, we may not be able to obtain alternative assembly and testing services in a timely manner.

In addition, the loss of any of our major third-party contract manufacturers could significantly impact our ability to produce products for an indefinite period of time. Qualifying a new contract manufacturer and commencing volume production is a lengthy and expensive process. Some customers will not purchase any products, other than a limited number of evaluation units, until they

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qualify the manufacturing line for the product, and we may not always be able to satisfy the qualification requirements of these customers. If we are required to change a contract manufacturer or if a contract manufacturer experiences delays, disruptions, capacity constraints, component parts shortages or quality control problems in its manufacturing operations, shipment of our products to our customers could be delayed, resulting in loss or postponement of revenues and potential harm to our competitive position and relationships with customers.

If we are unable to attract and retain key personnel, we may not be able to sustain or grow our business.

Our future success largely depends on our key engineering, sales, marketing and executive personnel, including highly skilled semiconductor design personnel and software developers, as well as Simon Biddiscombe, our Chief Executive Officer, and H.K. Desai, our Executive Chairman. Our retention of both Mr. Biddiscombe and Mr. Desai are particularly important to our business. If we lose the services of Mr. Biddiscombe, Mr. Desai or other key personnel, or do not hire or retain other personnel for key positions, our business could be adversely affected.

We believe that the market for key personnel in the industries in which we compete is highly competitive. In particular, periodically we have experienced difficulty in attracting and retaining qualified engineers and other technical personnel and anticipate that competition for such personnel will increase in the future. For example, the market for qualified technical personnel within India has become extremely competitive, resulting in significant wage inflation. Our recent implementation of various cost-saving measures, as well as past reductions in force, could negatively impact employee morale and potentially make attracting and retaining qualified employees more difficult in the future. As a result, we may not be able to attract and retain key personnel with the skills and expertise necessary to develop new products in the future or to manage our business, both in the United States and abroad.

We have historically used stock options and other forms of stock-based compensation as key components of our total employee compensation program in order to align employees’ interests with the interests of our stockholders, encourage retention of key personnel, and provide competitive compensation packages. However, applicable stock exchange listing standards relating to obtaining stockholder approval of equity compensation plans could make it more difficult or expensive for us to grant stock-based awards to employees in the future, which may result in changes in our stock-based compensation strategy. These and other developments relating to the provision of stock-based compensation to employees could make it more difficult to attract, retain and motivate key personnel.

The migration of our customers toward new products could adversely affect our results of operations.

As new or enhanced products are introduced, we must successfully manage the transition from older products in order to minimize the effects of product inventories that may become excess and obsolete, as well as ensure that sufficient supplies of new products can be delivered to meet customer demand. Our failure to manage the transition to newer products in the future or to develop and successfully introduce new products and product enhancements could adversely affect our business or results of operations. In addition, our customers are demanding a higher level of customization for new products, which prevents us from fully leveraging our product design work and adds to our new product development costs. When we introduce new products and product enhancements, we face additional risks relating to product transitions, including risks relating to forecasting demand. Any such adverse event or increased costs could have a material adverse effect on our business, financial condition or results of operations.

Historically, the technology industry has developed higher performance ASICs, which create chip-level solutions that replace selected board-level or box-level solutions at a significantly lower average selling price. We have previously offered ASICs to customers for certain applications that have effectively resulted in a lower-priced solution when compared to an adapter solution. This transition to ASICs may also occur with respect to other current and future products. The result of this transition may have an adverse effect on our business, financial condition or results of operations. In the future, a similar adverse effect to our business could occur if there were rapid shifts in customer purchases from our midrange networking infrastructure products to lower-cost products.

Our business is subject to seasonal fluctuations and uneven sales patterns.

A large percentage of our products are sold to customers who experience seasonality and uneven sales patterns in their businesses. As a result, we experience similar seasonality and uneven sales patterns. We believe this uneven sales pattern is a result of many factors including:

• the tendency of our customers to close a disproportionate percentage of their sales transactions in the last month, weeks and days of each quarter;

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• spikes in sales during the fourth quarter of each calendar year that some of our customers experience; and

• differences between our quarterly fiscal periods and the fiscal periods of our customers.

In addition, because our customers require us to maintain products at hub locations near their facilities, it is difficult for us to predict sales trends. Our uneven sales pattern also makes it extremely difficult to predict the demand of our customers and adjust manufacturing capacity accordingly. If we predict demand that is substantially greater than actual customer orders, we will have excess inventory. Alternatively, if customer orders substantially exceed predicted demand, the ability to assemble, test and ship orders received in the last weeks and days of each quarter may be limited, or at an increased cost, which could have a material adverse effect on quarterly revenues and earnings.

Our distributors may not adequately stock and sell our products and their reseller customers may purchase products from our competitors, which could negatively affect our results of operations.

Our distributors, which account for less than 30% of our net revenues, generally offer a diverse array of products from several different manufacturers and suppliers. Accordingly, we are at risk that these distributors may give higher priority to stocking and selling products from other suppliers, thus reducing their efforts and ability to sell our products. A reduction in sales efforts by our current distributors could materially and adversely impact our business or results of operations. In addition, if we decrease our distributor-incentive programs (i.e., competitive pricing and rebates), our distributors may decrease the amount of product purchased from us. This could result in a change of business behavior, and distributors may decide to decrease the amount of product held and reduce their inventory levels, which could impact availability of our products to their customers.

As a result of these factors regarding our distributors or other unrelated factors, the reseller customers of our distributors could decide to purchase products developed and manufactured by our competitors. Any loss of demand for our products by value-added resellers and system integrators could have a material adverse effect on our business or results of operations.

Unanticipated changes in our tax provisions or adverse outcomes resulting from examination of our income tax returns could adversely affect our results of operations.

We are subject to income taxes in the United States and various foreign jurisdictions. Our effective tax rate has been and could in the future be adversely affected by changes in tax laws or interpretations of those tax laws, by changes in the mix of earnings in countries with differing statutory tax rates, or by changes in the valuation of our deferred tax assets and liabilities. Our effective tax rate is also affected by intercompany transactions for licenses, services, funding and other items. Given the global scope of our operations, and the complexity of global tax and transfer pricing rules and regulations, it is difficult to estimate earnings within each tax jurisdiction. If actual earnings within a tax jurisdiction differ materially from our estimates, we may not achieve our expected effective tax rate. Additionally, our effective tax rate may be impacted by the tax effects of acquisitions, examinations by tax authorities, stock-based compensation, uncertain tax positions and newly enacted tax legislation. For example, proposed changes to certain U.S. tax rules for U.S. corporations doing business outside the United States include limiting the ability of U.S. corporations to deduct certain expenses attributable to offshore earnings, modifying the foreign tax credit rules and accelerating taxes related to certain transfers of intangible assets offshore. Although the scope of the proposed changes is unclear, it is possible that these or other changes in the U.S. tax laws could increase our effective tax rate and adversely affect our profitability. Finally, we are subject to examination of our income tax returns by the United States Internal Revenue Service (IRS) and other tax authorities, which may result in the assessment of additional income taxes. Our federal consolidated income tax returns for fiscal years 2008 and 2009 are currently under examination by the IRS. We regularly assess the likelihood of adverse outcomes resulting from examinations to determine the adequacy of our provisions for income taxes. However, unanticipated outcomes from examinations could have a material adverse effect on our financial condition or results of operations.

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Because we have operations in foreign countries and depend on foreign customers and suppliers, we are subject to international economic, currency, regulatory, political and other risks that could harm our business, financial condition and results of operations.

International revenues accounted for 54% and 55% of our net revenues for the three months ended July 3, 2011 and June 27, 2010, respectively. We expect that international revenues will continue to account for a significant percentage of our net revenues for the foreseeable future. In addition, we maintain operations in foreign countries and a significant portion of our inventory purchases are from suppliers that are located outside the United States. As a result, we are subject to several risks, which include:

• a greater difficulty of administering and managing our business globally;

• compliance with multiple, and potentially conflicting, regulatory requirements, such as import or export requirements, tariffs and other barriers;

• less effective intellectual property protections outside of the United States;

• currency fluctuations;

• overlapping or differing tax structures;

• political and economic instability, including terrorism and war; and

• general trade restrictions.

As of July 3, 2011, our international subsidiaries held 69% of our total cash, cash equivalents and marketable securities. These holdings by our international subsidiaries consist primarily of debt securities due from U.S. issuers, including the U.S. government and related agencies, and U.S. dollar denominated cash and money market funds. Certain foreign regulations could impact our ability to transfer funds to the United States. Additionally, should we decide to repatriate cash held outside of the United States, we may incur a significant tax obligation.

Our international sales are invoiced in U.S. dollars and, accordingly, if the relative value of the U.S. dollar in comparison to the currency of our foreign customers should increase, the resulting effective price increase of our products to such foreign customers could result in decreased sales. In addition, a significant portion of our inventory is purchased from international suppliers, who invoice us in U.S. dollars. If the relative value of the U.S. dollar in comparison to the currency of our foreign suppliers should decrease, our suppliers may increase prices, which could result in a decline of our gross margin. Any of the foregoing factors could have a material adverse effect on our business, financial condition or results of operations.

In addition, we and our customers are subject to various import and export regulations of the United States government and other countries. Certain government export regulations apply to the encryption or other features contained in some of our products. Changes in or violations of any such import or export regulations could materially and adversely affect our business, financial condition or results of operations.

Moreover, in many foreign countries, particularly in those with developing economies, it is common to engage in business practices that are prohibited by regulations applicable to us, such as the Foreign Corrupt Practices Act and other anti-bribery laws. Although we implement policies and procedures designed to ensure compliance with these laws, our employees, contractors and agents, as well as those companies to which we outsource certain of our business operations, may take actions in violation of our policies. Any such violation, even if prohibited by our policies, could have a material adverse effect on our business, financial condition or results of operations.

Our facilities and the facilities of our suppliers and customers are located in regions that are subject to natural disasters.

Our California facilities, including our principal executive offices, our principal design facilities and our critical business operations, are located near major earthquake faults. We are not specifically insured for earthquakes or other natural disasters. Any personal injury or damage to the facilities as a result of such occurrences could have a material adverse effect on our business, results of operations or financial condition. Additionally, we have operations, suppliers and customers in regions which have historically

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experienced natural disasters. Any earthquake or other natural disaster, including a hurricane, volcanic eruption, tsunami or fire, affecting any of these regions could adversely affect our business, results of operations and financial condition.

Specifically, the earthquake, tsunami and related events that occurred in Japan in March 2011 have caused widespread destruction in a region that includes suppliers of components for many technology companies. Although we do not source any critical components directly from this region, we have carefully evaluated the potential impact of these events on our supply chain and have taken proactive steps to mitigate any potential supply risk exposures. While we will continue to closely monitor this situation, we currently do not expect to have any disruptions to our supply chain that would adversely impact our results of operations. In addition, our major customers may face shortages of components that could negatively impact their ability to build the servers and data center devices into which our products are integrated. While none of our major customers have advised us of any supply constraints that would materially impact their purchases of our products, we continue to closely monitor their product demand. If the impact on our supply chain or customer demand as a result of this disaster is significantly different than our current expectation, our business, results of operations and financial condition could be adversely affected.

Our proprietary rights may be inadequately protected and difficult to enforce.

In some jurisdictions, we have patent protection on certain aspects of our technology. However, we rely primarily on trade secrets, trademarks, copyrights and contractual provisions to protect our proprietary rights. There can be no assurance that these protections will be adequate to protect our proprietary rights, that others will not independently develop or otherwise acquire equivalent or superior technology, or that we can maintain such technology as trade secrets. There also can be no assurance that any patents we possess will not be invalidated, circumvented or challenged. We have taken steps in several jurisdictions to enforce our trademarks against third parties. No assurances can be given that we will ultimately be successful in protecting our trademarks. The laws of certain countries in which our products are or may be developed, manufactured or sold, including various countries in Asia, may not protect our products and intellectual property rights to the same extent as the laws of the United States, or at all. If we fail to protect our intellectual property rights, our business could be negatively impacted.

Disputes relating to claimed infringement of intellectual property rights may adversely affect our business.

We have in the past received notices of claimed infringement of intellectual property rights and been involved in intellectual property litigation. There can be no assurance that third parties will not assert future claims of infringement of intellectual property rights against us, or against customers who we are contractually obligated to indemnify, with respect to existing and future products. In addition, our supply of silicon chips and other components can also be interrupted by intellectual property infringement claims against our suppliers.

Individuals and groups are purchasing intellectual property assets for the sole purpose of making claims of infringement and attempting to extract settlements from companies such as ours. Although patent and intellectual property disputes may be settled through licensing or similar arrangements, costs associated with these arrangements may be substantial and the necessary licenses or similar arrangements may not be available to us on satisfactory terms, or at all. As a result, we could be prevented from manufacturing and selling some of our products. In addition, if we litigate these kinds of claims, the litigation could be expensive, time consuming and could divert management’s attention from other matters and there is no guarantee we would prevail. Our business could suffer regardless of the outcome of the litigation.

We may engage in mergers, acquisitions and strategic investments and these activities could adversely affect our results of operations and stock price.

Our future growth may depend in part on our ability to identify and acquire complementary businesses, technologies or product lines that are compatible with our existing business. Mergers and acquisitions involve numerous risks, including:

• the failure of markets for the products of acquired companies to develop as expected;

• uncertainties in identifying and pursuing target companies;

• difficulties in assimilating the operations, technologies and products of the acquired companies;

• the existence of unknown defects in acquired companies’ products or assets that may not be identified due to the inherent limitations involved in the due diligence process of an acquisition;

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• the diversion of management’s attention from other business concerns;

• risks associated with entering markets or conducting operations with which we have no or limited direct prior experience;

• risks associated with assuming the legal obligations of acquired companies;

• risks related to the effect that acquired companies’ internal control processes might have on our financial reporting and management’s report on our internal control over financial reporting;

• the potential loss of, or impairment of our relationships with, current customers or failure to retain the acquired companies’ customers;

• the potential loss of key employees of acquired companies; and

• the incurrence of significant exit charges if products or technologies acquired in business combinations are unsuccessful.

Further, we may never realize the perceived benefits of a business combination. Acquisitions by us could negatively impact gross margins or dilute stockholders’ investment and cause us to incur debt, contingent liabilities and amortization/impairment charges related to intangible assets, all of which could materially and adversely affect our financial position or results of operations. In addition, our effective tax rate for future periods could be negatively impacted by mergers and acquisitions.

We have made, and could make in the future, investments in technology companies, including privately-held companies in a development stage. Many of these private equity investments are inherently risky because the companies’ businesses may never develop, and we may incur losses related to these investments. In addition, we may be required to write down the carrying value of these investments to reflect other-than-temporary declines in their value, which could have a material adverse effect on our financial position and results of operations.

Our portfolio of marketable securities could experience a decline in market value, which could materially and adversely affect our financial results.

As of July 3, 2011, we held short-term marketable securities totaling $309.9 million. We invest in debt securities, the majority of which are high investment grade, and we limit the exposure to credit risk through diversification and investment in highly-rated securities. However, investing in highly-rated securities does not entirely mitigate the risk of potential declines in market value. For example, in the past we have recorded impairment charges related to investment securities, including securities issued by companies in the financial services sector that had previously been rated AA or higher. A deterioration in the economy, including tightening of credit markets or significant volatility in interest rates, could cause declines in value of our marketable securities or could impact the liquidity of the portfolio. If market conditions deteriorate significantly, our results of operations or financial condition could be materially and adversely affected.

Environmental compliance costs could adversely affect our results of operations.

We are subject to various federal, state, local and foreign laws concerning environmental protection, including laws addressing the discharge of pollutants into the environment, the management and disposal of hazardous substances and wastes, the cleanup of contaminated sites, the content of our products and the recycling, treatment and disposal of our products. In particular, we face increasing complexity in our product design and procurement operations as we adjust to new and future requirements relating to the chemical and material composition of our products, their safe use, the energy consumption associated with those products and product take-back legislation (i.e., legislation that makes producers of electrical goods financially responsible for specified collection, recycling, treatment and disposal of past and future covered products). We could incur substantial costs, our products could be restricted from entering certain jurisdictions, and we could face other sanctions, if we were to violate or become liable under environmental laws or if our products become non-compliant with environmental laws. Our potential exposure includes fines and civil or criminal sanctions, third-party property damage or personal injury claims, and clean up costs. Further, liability under some environmental laws relating to contaminated sites can be imposed retroactively, on a joint and several basis, and without any finding of noncompliance or fault. The amount and timing of costs under environmental laws are difficult to predict and could have a material adverse effect on our results of operations.

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Our business could be materially adversely affected by changes in regulations or standards regarding energy use of our products.

We continually seek ways to increase the energy efficiency of our products. Recent analyses have estimated the amount of global carbon emissions that are due to information technology products. As a result, governmental and non-governmental organizations have turned their attention to development of regulations and standards to drive technological improvements and reduce the amount of carbon emissions. There is a risk that these regulations or standards, once developed, will not fully address the complexity of the technology developed by the IT industry or will favor certain technological approaches that we do not currently utilize. Depending on the regulations or standards that are ultimately adopted, compliance could adversely affect our business, results of operations or financial condition.

We may experience difficulties in transitioning to smaller geometry process technologies.

We expect to continue to transition our semiconductor products to increasingly smaller line width geometries. This transition requires us to modify the manufacturing processes for our products and to redesign some products as well as standard cells and other integrated circuit designs that we may use in multiple products. We periodically evaluate the benefits, on a product-by-product basis, of migrating to smaller geometry process technologies. In the past, we have experienced some difficulties in shifting to smaller geometry process technologies or new manufacturing processes, which resulted in reduced manufacturing yields, delays in product deliveries and increased expenses. We may face similar difficulties, delays and expenses as we continue to transition our products to smaller geometry processes.

If we fail to carefully manage the use of “open source” software in our products, we may be required to license key portions of our products on a royalty-free basis or expose key parts of our source code.

Certain of our software may be derived from “open source” software that is generally made available to the public by its authors and/or other third parties. Such open source software is often made available to us under licenses, such as the GNU General Public License (GPL), that impose certain obligations on us in the event we were to distribute derivative works of the open source software. These obligations may require us to make source code for the derivative works available to the public, and/or license such derivative works under a particular type of license, rather than the forms of licenses customarily used to protect our intellectual property. In the event the copyright holder of any open source software were to successfully establish in court that we had not complied with the terms of a license for a particular work, we could be required to release the source code of that work to the public and/or stop distributing that work.

Computer viruses and other forms of tampering with our computer systems or servers may disrupt our operations and adversely affect our business.

Despite our implementation of network security measures and anti-virus defenses, our servers are vulnerable to computer viruses, break-ins and similar disruptions from unauthorized tampering with our computer systems. Any such event could have a material adverse effect on our business, results of operations or financial condition.

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Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds

In August 2010, our Board of Directors approved a program (the August 2010 Program) to repurchase up to $200 million of our common stock over a two-year period. Set forth below is information regarding our stock repurchases made during the first quarter of fiscal 2012 under this program.

Period	Total Number of Shares  Purchased		Average Price Paid per  Share		Total Number of Shares  Purchased as Part of Publicly Announced Plan		Approximate Dollar Value  of Shares that May Yet be Purchased Under the Plan
April 4, 2011 – May 1, 2011		267,400	$	17.70		267,400	$	113,298,000
May 2, 2011– May 29, 2011		291,400	$	17.09		291,400	$	108,317,000
May 30, 2011 – July 3, 2011		620,800	$	15.67		620,800	$	98,588,000
		1,179,600	$	16.48		1,179,600	$	98,588,000

Prior to the first quarter of fiscal 2012, we purchased 4.8 million shares under the August 2010 Program for an aggregate purchase price of $82.0 million.

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Item 6.    Exhibits

Exhibits

Exhibit No.
10.1	Terms and Conditions of Stock Unit Award under the QLogic Corporation 2005 Performance Incentive Plan, Amended and Restated Effective February 10, 2011.*
10.2	Terms and Conditions of FY2012 Performance Share Award under the QLogic Corporation 2005 Performance Incentive Plan.*
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document**
101.SCH	XBRL Taxonomy Extension Schema Document**
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document**
101.LAB	XBRL Taxonomy Extension Label Linkbase Document**
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document**
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document**

* Compensation plan, contract or arrangement required to be filed as an exhibit pursuant to applicable rules of the Securities and Exchange Commission.

** XBRL (Extensible Business Reporting Language) information is furnished and not filed herewith, is not a part of a registration statement or Prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

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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.

QLOGIC CORPORATION
By:	/s/ SIMON BIDDISCOMBE
	Simon Biddiscombe
	President and
	Chief Executive Officer

By:	/s/ JEAN HU
	Jean Hu
	Senior Vice President and
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

Date: August 4, 2011

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EXHIBIT INDEX

Exhibit No.
10.1	Terms and Conditions of Stock Unit Award under the QLogic Corporation 2005 Performance Incentive Plan, Amended and Restated Effective February 10, 2011.*
10.2	Terms and Conditions of FY2012 Performance Share Award under the QLogic Corporation 2005 Performance Incentive Plan.*
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document**
101.SCH	XBRL Taxonomy Extension Schema Document**
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document**
101.LAB	XBRL Taxonomy Extension Label Linkbase Document**
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document**
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document**

* Compensation plan, contract or arrangement required to be filed as an exhibit pursuant to applicable rules of the Securities and Exchange Commission.

** XBRL (Extensible Business Reporting Language) information is furnished and not filed herewith, is not a part of a registration statement or Prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

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EX-10.1

Exhibit 10.1

QLOGIC CORPORATION

2005 PERFORMANCE INCENTIVE PLAN

TERMS AND CONDITIONS OF STOCK UNIT AWARD

1. General.

Subject to these Terms and Conditions of Stock Unit Award (these “Terms”) and the QLogic Corporation 2005 Performance Incentive Plan (the “Plan”), QLogic Corporation (the “Corporation”) has granted to the Grantee (as defined below) a credit of stock units under the Plan (the “Stock Unit Award” or “Award”) with respect to the number of stock units provided in the Notice of Grant Agreement (“Grant Notice”) corresponding to that particular Award grant (subject to adjustment as provided in Section 7.1 of the Plan) (the “Stock Units”). As used herein, the term “stock unit” means a non-voting unit of measurement which is deemed for bookkeeping purposes to be equivalent to one outstanding share of the Corporation’s Common Stock (subject to adjustment as provided in Section 7.1 of the Plan) solely for purposes of the Plan and these Terms. The recipient of the Award identified in the Grant Notice is referred to as the “Grantee.” The effective date of grant of the Award as set forth on the Grants tab on the CEFS website (www.ubs.com/cefs/qlgc) is referred to as the “Award Date.” Capitalized terms are defined in the Plan if not defined herein. The Award has been granted to the Grantee in addition to, and not in lieu of, any other form of compensation otherwise payable or to be paid to the Grantee. The Stock Units shall be used solely as a device for the determination of the payment to eventually be made to the Participant if such Stock Units vest pursuant to Section 2. The Stock Units shall not be treated as property or as a trust fund of any kind.

The Grant Notice and these Terms are collectively referred to as the “Stock Unit Award Agreement” applicable to the Stock Units, or this “Stock Unit Award Agreement.”

2. Vesting.

Subject to adjustment under Section 7.1 of the Plan and further subject to early termination under Section 6 of these Terms, the Award shall vest and become non-forfeitable with respect to twenty-five (25%) of the total number of Stock Units on each of the first, second, third and fourth anniversaries of the Award Date.

3. Continuance of Employment/Service Required; No Employment/Service Commitment.

The vesting schedule requires continued employment or service through each applicable vesting date as a condition to the vesting of the applicable installment of the Award and the rights and benefits under this Stock Unit Award Agreement. Employment or service for only a portion of the vesting period, even if a substantial portion, will not entitle the Grantee to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a termination of employment or services as provided in Section 6 below or under the Plan.

Nothing contained in this Stock Unit Award Agreement or the Plan constitutes a continued employment or service commitment by the Corporation or any of its Subsidiaries, affects the Grantee’s status, if he or she is an employee, as an employee at will who is subject to termination without cause, confers upon the Grantee any right to remain employed by or in

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service to the Corporation or any Subsidiary, interferes in any way with the right of the Corporation or any Subsidiary at any time to terminate such employment or service, or affects the right of the Corporation or any Subsidiary to increase or decrease the Grantee’s other compensation.

4. Dividend and Voting Rights.

The Grantee shall have no rights as a stockholder of the Corporation, no dividend rights and no voting rights with respect to the Stock Units and any shares of Common Stock underlying or issuable in respect of such Stock Units until such shares of Common Stock are actually issued to and held of record by the Grantee. No adjustments will be made for dividends or other rights of a holder for which the record date is prior to the date of issuance of the stock certificate.

5. Crediting of Vested Stock Unit Awards; Tax Withholding.

5.1 Crediting of Vested Stock Unit Awards.

On or as soon as administratively practical following each vesting of the applicable portion of the total Award pursuant to Section 2 (and in all events not later than two and one-half months after the vesting date), the Corporation shall deliver to the Grantee a number of shares of Common Stock (either by delivering one or more certificates for such shares or by entering such shares in book entry form, as determined by the Corporation in its discretion) equal to the number of Stock Units subject to this Award that vest on the applicable vesting date, unless such Stock Units terminate prior to the given vesting date pursuant to Section 6. The Corporation’s obligation to deliver or credit shares of Common Stock with respect to vested Stock Units is subject to the condition precedent that the Grantee or other person entitled under the Plan to receive any shares with respect to the vested Stock Units (a) deliver to the Corporation any representations or other documents or assurances required pursuant to Section 8.1 of the Plan and (b) make arrangements satisfactory to the Corporation to pay or otherwise satisfy the tax withholding requirements with respect to the vested Stock Units. The Grantee shall have no further rights with respect to any Stock Units that are paid or that terminate pursuant to Section 6.

The Corporation has established a web – based system for managing Stock Unit Awards. Currently, UBS Financial Services, Inc. manages Stock Unit Awards. In the event that the Grantee wishes to sell shares of Common Stock granted pursuant to a vested Stock Unit Award, the Grantee must contact UBS either by logging on to the UBS OneSource website (http://www.ubs.com/onesource/qlgc) or by calling the UBS Call Center at 1-866-756-4421. UBS will request from the Grantee information regarding the Common Stock to be sold and the order type.

5.2 Responsibility for Taxes. The ultimate liability for any and all tax, social insurance and payroll tax withholding legally payable by an employee under applicable law (including without limitation laws of foreign jurisdictions)(“Tax-Related Items”) is and remains Grantee’s responsibility and liability and the Corporation (a) makes no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Award, including the grant or vesting of the Award and the subsequent sale of the shares of

2

Common Stock subject to the Award; and (b) does not commit to structure the terms of the grant or any aspect of the Award to reduce or eliminate Grantee’s liability for Tax-Related Items.

Upon the granting of a Stock Unit Awards or the vesting of shares of the Common Stock in respect of the Stock Unit Awards, the Corporation (or the Subsidiary last employing the Grantee) shall have the right at its option to (a) require the Grantee to pay or provide for payment in cash of the amount of any taxes that the Corporation or the Subsidiary may be required to withhold with respect to such payment and/or distribution, or (b) deduct from any amount payable to the Grantee the amount of any taxes which the Corporation or the Subsidiary may be required to withhold with respect to such payment and/or distribution. In any case where a tax is required to be withheld in connection with Stock Unit Awards or the delivery of shares of Common Stock under this Stock Unit Award Agreement, the Administrator may, in its sole discretion, direct the Corporation or the Subsidiary to reduce the number of Stock Unit Awards or shares to be delivered by (or otherwise reacquire) the appropriate number of whole shares, valued at their then fair market value (with the “fair market value” of such shares determined in accordance with the applicable provisions of the Plan), to satisfy such withholding obligation at the minimum applicable withholding rates. Alternatively, or in addition, if permissible under local law, the Corporation may sell or arrange for the sale of shares of Common Stock that Grantee is due to acquire to meet the minimum withholding obligations for Tax-Related Items. Finally, Grantee shall pay to the Corporation any amount of any Tax-Related Items that the Corporation may be required to withhold as a result of Grantee’s participation in the Plan or Grantee’s purchase of shares of Common Stock that cannot be satisfied by the means previously described.

6. Early Termination of Award.

The Grantee’s Stock Units shall terminate to the extent such units have not become vested prior to the first date the Grantee is no longer employed by the Corporation or one of its Subsidiaries, regardless of the reason for the termination of the Grantee’s employment with the Corporation or a Subsidiary, whether with or without cause, voluntarily or involuntarily. If the Grantee is employed by a Subsidiary and that entity ceases to be a Subsidiary, such event shall be deemed to be a termination of employment of the Grantee for purposes of this Agreement, unless the Grantee otherwise continues to be employed by the Corporation or another of its Subsidiaries following such event. If any unvested Stock Units are terminated hereunder, such Stock Units shall automatically terminate and be cancelled as of the applicable termination date without payment of any consideration by the Corporation and without any other action by the Grantee, or the Grantee’s beneficiary or personal representative, as the case may be. The Administrator shall be the sole judge of whether the Grantee continues to render employment or services for purposes of this Stock Unit Award Agreement.

7. Restrictions on Transfer.

Neither the Stock Unit Award, nor any interest therein or amount or shares payable in respect thereof may be sold, assigned, transferred, pledged or otherwise disposed of, alienated or encumbered, either voluntarily or involuntarily. The transfer restrictions in the preceding sentence shall not apply to (a) transfers to the Corporation, or (b) transfers by will or the laws of descent and distribution.

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8. Adjustment.

Upon the occurrence of certain events relating to the Corporation’s stock contemplated by Section 7.1 of the Plan, the Administrator shall make adjustments if appropriate in the number of Stock Units then outstanding and the number and kind of securities that may be issued in respect of the Stock Unit Award.

9. Data Privacy Consent.

Grantee explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Grantee’s personal data as described in this document by and among, as applicable, the Corporation, its Subsidiaries, or affiliates for the exclusive purpose of implementing, administering and managing Grantee’s participation in the Plan.

Grantee further understands that the Corporation, its Subsidiaries or affiliates hold certain personal information about Grantee, including, but not limited to, Grantee’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock held in the Corporation and details of all Awards or other entitlements to shares of Common Stock awarded, canceled, exercised, vested, unvested or outstanding in Grantee’s favor, for the purpose of implementing, administering and managing the Plan (“Data”). Grantee understands that Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in Grantee’s country, or elsewhere, and that the recipient’s country may have different data privacy laws and protections than Grantee’s country. Grantee authorizes the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing Grantee’s participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom Grantee may elect to deposit any shares of Common Stock acquired upon vesting of the Award. Grantee understands that Data will be held only as long as is necessary to implement, administer and manage Grantee’s participation in the Plan. Grantee understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or withdraw the consents herein by contacting the Corporation’s human resources department. Grantee understands that withdrawal of consent may affect Grantee’s ability to exercise or realize benefits from the Award.

10. Nature of Grant.

In accepting the grant of the Award, Grantee acknowledges that: (i) the Plan is established voluntarily by the Corporation, it is discretionary in nature and it may be modified, suspended or terminated by the Corporation at any time, as provided in the Plan and these Terms; (ii) the grant of the Award is voluntary and occasional and does not create any contractual or other right to receive future grants of stock units, or benefits in lieu of stock units even if stock units have been granted repeatedly in the past; (iii) all decisions with respect to future grants will be at the sole discretion of the Corporation; (iv) Grantee’s participation in the Plan shall not create a right to further employment and shall not interfere with the ability of the Corporation or its subsidiaries to terminate Grantee’s employment relationship at any time with or without cause; (v) Grantee’s participation in the Plan is voluntary; (vi) in the event that

4

Grantee is not an employee of the Corporation, the Award grant will not be interpreted to form an employment contract or relationship with the Corporation, and furthermore, the Award grant will not be interpreted to form an employment contract with the Corporation and any of its Subsidiaries or affiliates; (vii) the future value of the underlying shares of Common Stock is unknown and cannot be predicted with certainty; (viii) if Grantee vests in his or her Award and shares of Common Stock are no longer restricted, the value of those shares of Common Stock acquired upon vesting may increase or decrease in value, even below the price at which such Award was originally granted; and (ix) no claim or entitlement to compensation or damages arises from termination of the Award or diminution in value of the Award or shares of Common Stock acquired pursuant to the Award and Grantee irrevocably releases the Corporation and its Subsidiaries and affiliates from any such claim that may arise.

11. Clawback Policy.

Notwithstanding anything else contained herein or in the Plan to the contrary, this Option Agreement is subject to the Company’s clawback policy, as well as the “clawback” provisions of applicable law, rules and regulations, as each may be adopted and in effect from time to time (collectively, the “Clawback Policy”). The provisions of the Clawback Policy are in addition to (and not in lieu of) any rights to repayment the Company may have under Section 304 of the Sarbanes-Oxley Act of 2002 and other applicable laws.

12. Notices.

Any notice to be given under the terms of this Stock Unit Award Agreement shall be in writing and addressed to the Corporation at its principal office to the attention of the Secretary, and to the Grantee at the address last reflected on the Corporation’s payroll records, or at such other address as either party may hereafter designate in writing to the other. Any such notice shall be delivered in person or shall be enclosed in a properly sealed envelope addressed as aforesaid, registered or certified, and deposited (postage and registry or certification fee prepaid) in a post office or branch post office regularly maintained by the United States Government. Any such notice shall be given only when received, but if the Grantee is no longer employed by the Corporation or a Subsidiary, shall be deemed to have been duly given five business days after the date mailed in accordance with the foregoing provisions of this Section 11.

13. Plan.

The Award and all rights of the Grantee under this Stock Unit Award Agreement are subject to the terms and conditions of the Plan, incorporated herein by this reference. The Grantee agrees to be bound by the terms of the Plan and this Stock Unit Award Agreement. The Grantee acknowledges having read and understanding the Plan and this Stock Unit Award Agreement. Unless otherwise expressly provided in other sections of this Stock Unit Award Agreement, provisions of the Plan that confer discretionary authority on the Board or the Administrator do not and shall not be deemed to create any rights in the Grantee unless such rights are expressly set forth herein or are otherwise in the sole discretion of the Board or the Administrator so conferred by appropriate action of the Board or the Administrator under the Plan after the date hereof.

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14. Entire Agreement.

This Stock Unit Award Agreement and the Plan together constitute the entire agreement and supersede all prior understandings and agreements, written or oral, of the parties hereto with respect to the subject matter hereof. The Plan and this Stock Unit Award Agreement may be amended pursuant to Section 8.6 of the Plan. Such amendment must be in writing and signed by the Corporation. The Corporation may, however, unilaterally waive any provision hereof in writing to the extent such waiver does not adversely affect the interests of the Grantee hereunder, but no such waiver shall operate as or be construed to be a subsequent waiver of the same provision or a waiver of any other provision hereof.

15. Governing Law.

This Stock Unit Award Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware without regard to conflict of law principles thereunder.

16. Effect of this Agreement.

Subject to the Corporation’s right to terminate the Award pursuant to Section 7.4 of the Plan, this Stock Unit Award Agreement shall be assumed by, be binding upon and inure to the benefit of any successor or successors to the Corporation.

17. Limitation on Participant’s Rights.

Participation in the Plan confers no rights or interests other than as herein provided. This Stock Unit Award Agreement creates only a contractual obligation on the part of the Corporation as to amounts payable and shall not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. The Grantee shall have only the rights of a general unsecured creditor of the Corporation with respect to amounts credited and benefits payable, if any, with respect to the Stock Units, and rights no greater than the right to receive the Common Stock as a general unsecured creditor with respect to Stock Units, as and when payable hereunder.

18. Section Headings.

The section headings of this Stock Unit Award Agreement are for convenience of reference only and shall not be deemed to alter or affect any provision hereof.

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19. Construction.

It is intended that the terms of the Award will not result in the imposition of any tax liability pursuant to Section 409A of the Code. The Stock Unit Award Agreement shall be construed and interpreted consistent with that intent.

20. Acceptance.

In accepting the grant of the Award, Grantee acknowledges receipt of a copy of the Plan, the Grant Notice and these Terms. Grantee has read and understands the terms and provisions thereof, and has accepted the Award subject to all terms and conditions of the Plan, the Grant Notice and these Terms. Grantee acknowledges that there may be adverse tax consequences upon vesting of the Award or disposition of the shares of Common Stock acquired upon vesting of the Award and that Grantee should consult a tax adviser prior to such exercise or disposition.

7

EX-10.2

Exhibit 10.2

QLOGIC CORPORATION

2005 PERFORMANCE INCENTIVE PLAN

TERMS AND CONDITIONS OF FY2012 PERFORMANCE SHARES

1. General.

Subject to these Terms and Conditions of Performance Shares (these “Terms”) and the QLogic Corporation 2005 Performance Incentive Plan (the “Plan”), QLogic Corporation (the “Corporation”) has granted to the Grantee (as defined below) a credit of performance shares under the Plan (the “Performance Share Award” or “Award”) with respect to the number of performance shares provided in the Notice of Grant Agreement (“Grant Notice”) corresponding to that particular Award grant (subject to adjustment as provided in Section 7.1 of the Plan) (the “Performance Shares”). As used herein, the term “performance shares” means a non-voting unit of measurement which is deemed for bookkeeping purposes to be equivalent to one outstanding share of the Corporation’s Common Stock (subject to adjustment as provided in Section 7.1 of the Plan) solely for purposes of the Plan and these Terms. The recipient of the Award identified in the Grant Notice is referred to as the “Grantee.” The effective date of grant of the Award as set forth on the Grants tab on the CEFS website (www.ubs.com/cefs/qlgc) is referred to as the “Award Date.” Capitalized terms are defined in the Plan if not defined herein. The Award has been granted to the Grantee in addition to, and not in lieu of, any other form of compensation otherwise payable or to be paid to the Grantee. The Performance Shares shall be used solely as a device for the determination of the payment to eventually be made to the Participant if such Performance Shares vest pursuant to Section 2. The Performance Shares shall not be treated as property or as a trust fund of any kind.

The Grant Notice and these Terms are collectively referred to as the “Performance Share Award Agreement” applicable to the Performance Shares, or this “Performance Share Award Agreement.”

2. Vesting.

Subject to adjustment under Section 7.1 of the Plan and further subject to early termination under Section 6 of these Terms, the Award shall vest and become non-forfeitable as follows: (i) no portion of the Performance Share Award shall vest until the Compensation Committee of the Board of Directors (“Compensation Committee”) has determined that Grantee’s Management Objectives for Fiscal Year 2012 (“Grantee’s Management Objectives”) have been achieved during Fiscal Year 2012, (ii) if the Compensation Committee determines that Grantee’s Management Objectives were achieved at less than the 100% achievement level, the number of Performance Shares shall be reduced to a number of Performance Shares equal to the initial number of Performance Shares under the Award multiplied by the percentage actual achievement level as determined by the Compensation Committee, (iii) Twenty-Five Percent (25%) of the total number of Performance Shares set forth in the Award (or any reduced number of Performance Shares pursuant to clause (ii) of this Section 2) shall vest on the later of (x) the first anniversary of the Award Date and (y) the date the Compensation Committee makes the determination set forth in clause (i) of this Section 2 (the “Initial Vesting Date”), and (iv) after the Initial Vesting Date, the remaining unvested Performance Shares shall vest with respect to twenty-five percent (25%) of the total number of Performance Shares set forth in the Award (or

1

any reduced number of Performance Shares pursuant to clause (ii) of this Section 2) shall vest on the second, third and fourth anniversaries of the Award Date. Grantee’s Management Objectives shall be set forth in a separate written document identifying the objectives approved by the Compensation Committee and assigning a weighting to each objective. This separate document is incorporated by reference into these Terms and becomes an integral part hereof.

3. Continuance of Employment/Service Required; No Employment/Service Commitment.

The vesting schedule requires continued employment or service through each applicable vesting date as a condition to the vesting of the applicable installment of the Award and the rights and benefits under this Performance Share Award Agreement. Employment or service for only a portion of the vesting period, even if a substantial portion, will not entitle the Grantee to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a termination of employment or services as provided in Section 6 below or under the Plan.

Nothing contained in this Performance Share Award Agreement or the Plan constitutes a continued employment or service commitment by the Corporation or any of its Subsidiaries, affects the Grantee’s status, if he or she is an employee, as an employee at will who is subject to termination without cause, confers upon the Grantee any right to remain employed by or in service to the Corporation or any Subsidiary, interferes in any way with the right of the Corporation or any Subsidiary at any time to terminate such employment or service, or affects the right of the Corporation or any Subsidiary to increase or decrease the Grantee’s other compensation.

4. Dividend and Voting Rights.

The Grantee shall have no rights as a stockholder of the Corporation, no dividend rights and no voting rights with respect to the Performance Shares and any shares of Common Stock underlying or issuable in respect of such Performance Shares until such shares of Common Stock are actually issued to and held of record by the Grantee. No adjustments will be made for dividends or other rights of a holder for which the record date is prior to the date of issuance of the stock certificate.

5. Crediting of Vested Performance Share Awards; Tax Withholding.

5.1 Crediting of Vested Performance Share Awards.

On or as soon as administratively practical following each vesting of the applicable portion of the Award pursuant to Section 2 (and in all events not later than two and one-half months after the vesting date), the Corporation shall deliver to the Grantee a number of shares of Common Stock (either by delivering one or more certificates for such shares or by entering such shares in book entry form, as determined by the Corporation in its discretion) equal to the number of Performance Shares subject to this Award that vest on the applicable vesting date, unless such Performance Shares terminate prior to the given vesting date pursuant to Section 6. The Corporation’s obligation to deliver or credit shares of Common Stock with respect to vested Performance Shares is subject to the condition precedent that the Grantee or other person entitled

2

under the Plan to receive any shares with respect to the vested Performance Shares (a) deliver to the Corporation any representations or other documents or assurances required pursuant to Section 8.1 of the Plan and (b) make arrangements satisfactory to the Corporation to pay or otherwise satisfy the tax withholding requirements with respect to the vested Performance Shares. The Grantee shall have no further rights with respect to any Performance Shares that are paid or that terminate pursuant to Section 6.

The Corporation has established a web – based system for managing Performance Share Awards. Currently, UBS Financial Services, Inc. manages Performance Share Awards. In the event that the Grantee wishes to sell shares of Common Stock granted pursuant to a vested Performance Share Award, the Grantee must contact UBS either by logging on to the UBS OneSource website (http://www.ubs.com/onesource/qlgc) or by calling the UBS Call Center at 1-866-756-4421. UBS will request from the Grantee information regarding the Common Stock to be sold and the order type.

5.2 Responsibility for Taxes. The ultimate liability for any and all tax, social insurance and payroll tax withholding legally payable by an employee under applicable law (including without limitation laws of foreign jurisdictions)(“Tax-Related Items”) is and remains Grantee’s responsibility and liability and the Corporation (a) makes no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Award, including the grant or vesting of the Award and the subsequent sale of the shares of Common Stock subject to the Award; and (b) does not commit to structure the terms of the grant or any aspect of the Award to reduce or eliminate Grantee’s liability for Tax-Related Items.

Upon the granting of Performance Share Awards or the vesting of shares of the Common Stock in respect of Performance Share Awards, the Corporation (or the Subsidiary last employing the Grantee) shall have the right at its option to (a) require the Grantee to pay or provide for payment in cash of the amount of any taxes that the Corporation or the Subsidiary may be required to withhold with respect to such payment and/or distribution, or (b) deduct from any amount payable to the Grantee the amount of any taxes which the Corporation or the Subsidiary may be required to withhold with respect to such payment and/or distribution. In any case where a tax is required to be withheld in connection with Performance Share Awards or the delivery of shares of Common Stock under this Performance Share Award Agreement, the Administrator may, in its sole discretion, direct the Corporation or the Subsidiary to reduce the number of Performance Share Awards or shares to be delivered by (or otherwise reacquire) the appropriate number of whole shares, valued at their then fair market value (with the “fair market value” of such shares determined in accordance with the applicable provisions of the Plan), to satisfy such withholding obligation at the minimum applicable withholding rates. Alternatively, or in addition, if permissible under local law, the Corporation may sell or arrange for the sale of shares of Common Stock that Grantee is due to acquire to meet the minimum withholding obligations for Tax-Related Items. Finally, Grantee shall pay to the Corporation any amount of any Tax-Related Items that the Corporation may be required to withhold as a result of Grantee’s participation in the Plan or Grantee’s purchase of shares of Common Stock that cannot be satisfied by the means previously described.

3

6. Early Termination of Award.

The Grantee’s Performance Shares shall terminate to the extent such units have not become vested prior to the first date the Grantee is no longer employed by the Corporation or one of its Subsidiaries, regardless of the reason for the termination of the Grantee’s employment with the Corporation or a Subsidiary, whether with or without cause, voluntarily or involuntarily. If the Grantee is employed by a Subsidiary and that entity ceases to be a Subsidiary, such event shall be deemed to be a termination of employment of the Grantee for purposes of this Agreement, unless the Grantee otherwise continues to be employed by the Corporation or another of its Subsidiaries following such event. If any unvested Performance Shares are terminated hereunder, such Performance Shares shall automatically terminate and be cancelled as of the applicable termination date without payment of any consideration by the Corporation and without any other action by the Grantee, or the Grantee’s beneficiary or personal representative, as the case may be. The Administrator shall be the sole judge of whether the Grantee continues to render employment or services for purposes of this Performance Share Award Agreement.

7. Restrictions on Transfer.

Neither the Performance Share Award, nor any interest therein or amount or shares payable in respect thereof may be sold, assigned, transferred, pledged or otherwise disposed of, alienated or encumbered, either voluntarily or involuntarily. The transfer restrictions in the preceding sentence shall not apply to (a) transfers to the Corporation, or (b) transfers by will or the laws of descent and distribution.

8. Adjustment.

Upon the occurrence of certain events relating to the Corporation’s stock contemplated by Section 7.1 of the Plan, the Administrator shall make adjustments if appropriate in the number of Performance Shares then outstanding and the number and kind of securities that may be issued in respect of the Performance Share Award.

9. Data Privacy Consent.

Grantee explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Grantee’s personal data as described in this document by and among, as applicable, the Corporation, its Subsidiaries, or affiliates for the exclusive purpose of implementing, administering and managing Grantee’s participation in the Plan.

Grantee further understands that the Corporation, its Subsidiaries or affiliates hold certain personal information about Grantee, including, but not limited to, Grantee’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock held in the Corporation and details of all Awards or other entitlements to shares of Common Stock awarded, canceled, exercised, vested, unvested or outstanding in Grantee’s favor, for the purpose of implementing, administering and managing the Plan (“Data”). Grantee understands that Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in Grantee’s country, or elsewhere, and that the recipient’s country may have different data privacy laws and protections than Grantee’s country. Grantee authorizes the recipients to

4

receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing Grantee’s participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom Grantee may elect to deposit any shares of Common Stock acquired upon vesting of the Award. Grantee understands that Data will be held only as long as is necessary to implement, administer and manage Grantee’s participation in the Plan. Grantee understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or withdraw the consents herein by contacting the Corporation’s human resources department. Grantee understands that withdrawal of consent may affect Grantee’s ability to exercise or realize benefits from the Award.

10. Nature of Grant.

In accepting the grant of the Award, Grantee acknowledges that: (i) the Plan is established voluntarily by the Corporation, it is discretionary in nature and it may be modified, suspended or terminated by the Corporation at any time, as provided in the Plan and these Terms; (ii) the grant of the Award is voluntary and occasional and does not create any contractual or other right to receive future grants of performance shares, or benefits in lieu of performance shares even if performance shares have been granted repeatedly in the past; (iii) all decisions with respect to future grants will be at the sole discretion of the Corporation; (iv) Grantee’s participation in the Plan shall not create a right to further employment and shall not interfere with the ability of the Corporation or its subsidiaries to terminate Grantee’s employment relationship at any time with or without cause; (v) Grantee’s participation in the Plan is voluntary; (vi) in the event that Grantee is not an employee of the Corporation, the Award grant will not be interpreted to form an employment contract or relationship with the Corporation, and furthermore, the Award grant will not be interpreted to form an employment contract with the Corporation and any of its Subsidiaries or affiliates; (vii) the future value of the underlying shares of Common Stock is unknown and cannot be predicted with certainty; (viii) if Grantee vests in his or her Award and shares of Common Stock are no longer restricted, the value of those shares of Common Stock acquired upon vesting may increase or decrease in value, even below the price at which such Award was originally granted; and (ix) no claim or entitlement to compensation or damages arises from termination of the Award or diminution in value of the Award or shares of Common Stock acquired pursuant to the Award and Grantee irrevocably releases the Corporation and its Subsidiaries and affiliates from any such claim that may arise.

11. Clawback Policy.

Notwithstanding anything else contained herein or in the Plan to the contrary, this Performance Share Agreement is subject to the Company’s clawback policy, as well as the “clawback” provisions of applicable law, rules and regulations, as each may be adopted and in effect from time to time (collectively, the “Clawback Policy”). The provisions of the Clawback Policy are in addition to (and not in lieu of) any rights to repayment the Company may have under Section 304 of the Sarbanes-Oxley Act of 2002 and other applicable laws.

5

12. Notices.

Any notice to be given under the terms of this Performance Share Award Agreement shall be in writing and addressed to the Corporation at its principal office to the attention of the Secretary, and to the Grantee at the address last reflected on the Corporation’s payroll records, or at such other address as either party may hereafter designate in writing to the other. Any such notice shall be delivered in person or shall be enclosed in a properly sealed envelope addressed as aforesaid, registered or certified, and deposited (postage and registry or certification fee prepaid) in a post office or branch post office regularly maintained by the United States Government. Any such notice shall be given only when received, but if the Grantee is no longer employed by the Corporation or a Subsidiary, shall be deemed to have been duly given five business days after the date mailed in accordance with the foregoing provisions of this Section 12.

13. Plan.

The Award and all rights of the Grantee under this Performance Share Award Agreement are subject to the terms and conditions of the Plan, incorporated herein by this reference. The Grantee agrees to be bound by the terms of the Plan and this Performance Share Award Agreement. The Grantee acknowledges having read and understanding the Plan and this Performance Share Award Agreement. Unless otherwise expressly provided in other sections of this Performance Share Award Agreement, provisions of the Plan that confer discretionary authority on the Board or the Administrator do not and shall not be deemed to create any rights in the Grantee unless such rights are expressly set forth herein or are otherwise in the sole discretion of the Board or the Administrator so conferred by appropriate action of the Board or the Administrator under the Plan after the date hereof.

14. Entire Agreement.

This Performance Share Award Agreement and the Plan together constitute the entire agreement and supersede all prior understandings and agreements, written or oral, of the parties hereto with respect to the subject matter hereof. The Plan and this Performance Share Award Agreement may be amended pursuant to Section 8.6 of the Plan. Such amendment must be in writing and signed by the Corporation. The Corporation may, however, unilaterally waive any provision hereof in writing to the extent such waiver does not adversely affect the interests of the Grantee hereunder, but no such waiver shall operate as or be construed to be a subsequent waiver of the same provision or a waiver of any other provision hereof.

15. Governing Law.

This Performance Share Award Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware without regard to conflict of law principles thereunder.

6

16. Effect of this Agreement.

Subject to the Corporation’s right to terminate the Award pursuant to Section 7.4 of the Plan, this Performance Share Award Agreement shall be assumed by, be binding upon and inure to the benefit of any successor or successors to the Corporation.

17. Limitation on Participant’s Rights.

Participation in the Plan confers no rights or interests other than as herein provided. This Performance Share Award Agreement creates only a contractual obligation on the part of the Corporation as to amounts payable and shall not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. The Grantee shall have only the rights of a general unsecured creditor of the Corporation with respect to amounts credited and benefits payable, if any, with respect to the Performance Shares, and rights no greater than the right to receive the Common Stock as a general unsecured creditor with respect to Performance Shares, as and when payable hereunder.

18. Section Headings.

The section headings of this Performance Share Award Agreement are for convenience of reference only and shall not be deemed to alter or affect any provision hereof.

19. Construction.

It is intended that the terms of the Award will not result in the imposition of any tax liability pursuant to Section 409A of the Code. The Performance Share Award Agreement shall be construed and interpreted consistent with that intent.

20. Acceptance.

In accepting the grant of the Award, Grantee acknowledges receipt of a copy of the Plan, the Grant Notice and these Terms. Grantee has read and understands the terms and provisions thereof, and has accepted the Award subject to all terms and conditions of the Plan, the Grant Notice and these Terms. Grantee acknowledges that there may be adverse tax consequences upon vesting of the Award or disposition of the shares of Common Stock acquired upon vesting of the Award and that Grantee should consult a tax adviser prior to such exercise or disposition.

7

EX-31.1

EXHIBIT 31.1

Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934,

as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Simon Biddiscombe, certify that:

1. I have reviewed this quarterly report on Form 10-Q of QLogic Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ SIMON BIDDISCOMBE
	Simon Biddiscombe
	Chief Executive Officer

Date: August 4, 2011

EX-31.2

EXHIBIT 31.2

Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934,

as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Jean Hu, certify that:

1. I have reviewed this quarterly report on Form 10-Q of QLogic Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ JEAN HU
	Jean Hu
	Chief Financial Officer

Date: August 4, 2011

EX-32

EXHIBIT 32

Certification pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934,

as amended, and 18 U.S.C. Section 1350, as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

Each of the undersigned, the Chief Executive Officer and Chief Financial Officer of QLogic Corporation (the “Company”), hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Quarterly Report on Form 10-Q of the Company for the quarter ended July 3, 2011 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ SIMON BIDDISCOMBE

Simon Biddiscombe

Chief Executive Officer

/s/ JEAN HU

Jean Hu

Chief Financial Officer

Dated: August 4, 2011

The foregoing certification is being furnished to the Securities and Exchange Commission pursuant to 18 U.S.C. Section 1350. It is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and it is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, except to the extent that the Company specifically incorporates it by reference and regardless of any general incorporation language in such filing.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data	Jul. 03, 2011	Apr. 03, 2011
Current assets:
Allowance for doubtful accounts	$ 1,652	$ 1,536
Stockholders' equity:
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	209,016,000	208,042,000
Treasury stock, shares	104,504,000	103,325,000

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Condensed Consolidated Statements Of Income (USD $) In Thousands, except Per Share data	3 Months Ended
	Jul. 03, 2011	Jun. 27, 2010
Condensed Consolidated Statements Of Income
Net revenues	$ 151,622	$ 142,609
Cost of revenues	50,859	49,701
Gross profit	100,763	92,908
Operating expenses:
Engineering and development	37,692	34,709
Sales and marketing	21,263	20,430
General and administrative	9,163	8,468
Special charges		931
Total operating expenses	68,118	64,538
Operating income	32,645	28,370
Interest and other income, net	1,048	1,676
Income before income taxes	33,693	30,046
Income taxes	1,267	4,597
Net income	$ 32,426	$ 25,449
Net income per share:
Basic	$ 0.31	$ 0.23
Diluted	$ 0.31	$ 0.22
Number of shares used in per share calculations:
Basic	104,679	111,425
Diluted	105,789	113,730

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Fair Value Measurements (Schedule Of Assets Measured At Fair Value On A Recurring Basis) (Details) (USD $) In Thousands	Jul. 03, 2011	Apr. 03, 2011
Marketable securities	$ 309,926	$ 236,296
U.S. Government And Agency Securities [Member] | Fair Value Measurements Using, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Marketable securities	71,706	55,753
Fair Value Measurements Using, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Cash and cash equivalents	82,046	146,281
Marketable securities	71,706	55,753
Total assets at fair value disclosure	153,752	202,034
U.S. Government And Agency Securities [Member] | Fair Value Measurements Using, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Marketable securities
Corporate Debt Obligations [Member] | Fair Value Measurements Using, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Marketable securities	185,037	138,436
Asset And Mortgage-Backed Securities [Member] | Fair Value Measurements Using, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Marketable securities	29,405	22,490
Municipal Bonds [Member] | Fair Value Measurements Using, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Marketable securities	22,127	17,941
Non-U.S. Government And Agency Securities [Member] | Fair Value Measurements Using, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Marketable securities	1,651	1,676
Fair Value Measurements Using, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Cash and cash equivalents	7,756	1,499
Marketable securities	238,220	180,543
Total assets at fair value disclosure	245,976	182,042
U.S. Government And Agency Securities [Member]
Marketable securities	71,706	55,753
U.S. Government And Agency Securities [Member] | Fair Value, Measurements, Recurring [Member]
Marketable securities	71,706	55,753
Corporate Debt Obligations [Member]
Marketable securities	185,037	138,436
Corporate Debt Obligations [Member] | Fair Value, Measurements, Recurring [Member]
Marketable securities	185,037	138,436
Asset And Mortgage-Backed Securities [Member]
Marketable securities	29,405	22,490
Asset And Mortgage-Backed Securities [Member] | Fair Value, Measurements, Recurring [Member]
Marketable securities	29,405	22,490
Municipal Bonds [Member]
Marketable securities	22,127	17,941
Municipal Bonds [Member] | Fair Value, Measurements, Recurring [Member]
Marketable securities	22,127	17,941
Non-U.S. Government And Agency Securities [Member]
Marketable securities	1,651	1,676
Non-U.S. Government And Agency Securities [Member] | Fair Value, Measurements, Recurring [Member]
Marketable securities	1,651	1,676
Fair Value, Measurements, Recurring [Member]
Cash and cash equivalents	89,802	147,780
Marketable securities	309,926	236,296
Total assets at fair value disclosure	$ 399,728	$ 384,076

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Document And Entity Information (USD $)	3 Months Ended
	Jul. 03, 2011	Jul. 29, 2011	Sep. 24, 2010
Document And Entity Information
Entity Registrant Name	QLOGIC CORP
Entity Central Index Key	0000918386
Document Type	10-Q
Document Period End Date	Jul. 03, 2011
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--04-01
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 1,798,435,000
Entity Common Stock, Shares Outstanding		103,940,000

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Stock-Based Compensation (Summary Of Stock-Based Compensation Expense) (Details) (USD $) In Thousands	3 Months Ended
	Jul. 03, 2011	Jun. 27, 2010
Stock-based compensation expense	$ 9,667	$ 10,323
Cost Of Revenues [Member]
Stock-based compensation expense	808	734
Engineering And Development [Member]
Stock-based compensation expense	4,631	5,007
Sales And Marketing [Member]
Stock-based compensation expense	1,857	2,113
General And Administrative [Member]
Stock-based compensation expense	$ 2,371	$ 2,469

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Net Income Per Share

3 Months Ended

Jul. 03, 2011

Net Income Per Share

Net Income Per Share

Note 7. Net Income Per Share

The following table sets forth the computation of basic and diluted net income per share:

	Three Months Ended
	July 3, 2011		June 27, 2010
	(In thousands, except per share amounts)
Net income	$	32,426	$	25,449
Shares:
Weighted-average shares outstanding — basic		104,679		111,425
Dilutive potential common shares, using treasury stock method		1,110		2,305
Weighted-average shares outstanding — diluted		105,789		113,730
Net income per share:
Basic	$	0.31	$	0.23
Diluted	$	0.31	$	0.22

Stock-based awards, including stock options and restricted stock units, representing 14.4 million and 11.3 million shares of common stock have been excluded from the diluted net income per share calculations for the three months ended July 3, 2011 and June 27, 2010, respectively. These stock-based awards have been excluded from the diluted net income per share calculations because their effect would have been antidilutive.

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Income Taxes (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jul. 03, 2011	Jun. 27, 2010
Income Taxes
Provision for income taxes	$ 1,267	$ 4,597
Effective income tax rate	4.00%	15.00%

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Stock-Based Compensation (Narrative) (Details) (USD $) In Millions, except Per Share data	3 Months Ended
	Jul. 03, 2011
Stock options granted, shares	1.4
Weighted average grant date fair values per share, options granted for purchase of common stock	$ 5.83
Weighted average grant date fair values per share, restricted stock units granted	$ 15.71
Restricted Stock Units (RSUs) [Member]
Restricted stock units granted, shares	1.4
Restricted Stock Units With Performance Conditions [Member]
Restricted stock units granted, shares	0.2

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Stock-Based Compensation (Tables)

3 Months Ended

Jul. 03, 2011

Stock-Based Compensation

Summary Of Stock-Based Compensation Expense

	Three Months Ended
	July 3, 2011		June 27, 2010
	(In thousands)
Cost of revenues	$	808	$	734
Engineering and development		4,631		5,007
Sales and marketing		1,857		2,113
General and administrative		2,371		2,469
	$	9,667	$	10,323

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Fair Value Measurements

3 Months Ended

Jul. 03, 2011

Fair Value Measurements

Fair Value Measurements

Note 3. Fair Value Measurements

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. A description of the three levels of inputs is as follows:

• Level 1 – Quoted prices in active markets for identical assets or liabilities.

• Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Assets measured at fair value on a recurring basis as of July 3, 2011 and April 3, 2011 are as follows:

	Fair Value Measurements Using
	Level 1		Level 2		Level 3		Total
	(In thousands)
July 3, 2011
Cash and cash equivalents	$	82,046	$	7,756	$	—	$	89,802
Marketable securities:
U.S. government and agency securities		71,706		—		—		71,706
Corporate debt obligations		—		185,037		—		185,037
Asset and mortgage-backed securities		—		29,405		—		29,405
Municipal bonds		—		22,127		—		22,127
Non-U.S. government and agency securities		—		1,651		—		1,651
		71,706		238,220		—		309,926
	$	153,752	$	245,976	$	—	$	399,728
April 3, 2011
Cash and cash equivalents	$	146,281	$	1,499	$	—	$	147,780
Marketable securities:
U.S. government and agency securities		55,753		—		—		55,753
Corporate debt obligations		—		138,436		—		138,436
Asset and mortgage-backed securities		—		22,490		—		22,490
Municipal bonds		—		17,941		—		17,941
Non-U.S. government and agency securities		—		1,676		—		1,676
		55,753		180,543		—		236,296
	$	202,034	$	182,042	$	—	$	384,076

The Company's investments classified within Level 2 were primarily valued based on valuations obtained from a third-party pricing service. To estimate fair value, the pricing service utilizes industry standard valuation models, including both income and market-based approaches for which all significant inputs are observable either directly or indirectly. These inputs include reported trades and broker/dealer quotes of the same or similar securities, issuer credit spreads, benchmark securities and other observable inputs.

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Marketable Securities (Tables)

3 Months Ended

Jul. 03, 2011

Marketable Securities

Schedule Of Available-For-Sale Securities

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(In thousands)
July 3, 2011
U.S. government and agency securities	$	71,580	$	148	$	(22	)	$	71,706
Corporate debt obligations		184,067		1,115		(145	)		185,037
Asset and mortgage-backed securities		29,159		313		(67	)		29,405
Municipal bonds		22,099		32		(4	)		22,127
Non-U.S. government and agency securities		1,651		—		—			1,651
	$	308,556	$	1,608	$	(238	)	$	309,926
April 3, 2011
U.S. government and agency securities	$	55,875	$	94	$	(216	)	$	55,753
Corporate debt obligations		137,706		1,012		(282	)		138,436
Asset and mortgage-backed securities		22,249		293		(52	)		22,490
Municipal bonds		17,941		10		(10	)		17,941
Non-U.S. government and agency securities		1,676		—		—			1,676
	$	235,447	$	1,409	$	(560	)	$	236,296

Schedule Of Amortized Cost And Estimated Fair Value Of Debt Securities

	Amortized Cost		Estimated Fair Value
	(In thousands)
Due in one year or less	$	121,395	$	121,762
Due after one year through three years		128,945		129,674
Due after three years through five years		15,676		15,708
Due after five years		42,540		42,782
	$	308,556	$	309,926

Schedule Of Unrealized Losses By Investment Category

	Less Than 12 Months					12 Months or Greater				Total
Description of Securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)
July 3, 2011
U.S. government and agency securities	$	23,576	$	(22	)	$	—	$	—	$	23,576	$	(22	)
Corporate debt obligations		56,756		(145	)		—		—		56,756		(145	)
Asset and mortgage-backed securities		11,479		(67	)		—		—		11,479		(67	)
Municipal bonds		1,247		(4	)		—		—		1,247		(4	)
	$	93,058	$	(238	)	$	—	$	—	$	93,058	$	(238	)
April 3, 2011
U.S. government and agency securities	$	25,712	$	(216	)	$	—	$	—	$	25,712	$	(216	)
Corporate debt obligations		60,595		(282	)		—		—		60,595		(282	)
Asset and mortgage-backed securities		7,991		(52	)		—		—		7,991		(52	)
Municipal bonds		1,866		(10	)		—		—		1,866		(10	)
	$	96,164	$	(560	)	$	—	$	—	$	96,164	$	(560	)

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Comprehensive Income (Tables)

3 Months Ended

Jul. 03, 2011

Comprehensive Income

Components Of Comprehensive Income

	Three Months Ended
	July 3, 2011		June 27, 2010
	(In thousands)
Net income	$	32,426	$	25,449
Other comprehensive income:
Change in unrealized gains on marketable securities, net of income taxes		467		147
	$	32,893	$	25,596

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Fair Value Measurements (Tables)

3 Months Ended

Jul. 03, 2011

Fair Value Measurements

Schedule Of Assets Measured At Fair Value On A Recurring Basis

	Fair Value Measurements Using
	Level 1		Level 2		Level 3		Total
	(In thousands)
July 3, 2011
Cash and cash equivalents	$	82,046	$	7,756	$	—	$	89,802
Marketable securities:
U.S. government and agency securities		71,706		—		—		71,706
Corporate debt obligations		—		185,037		—		185,037
Asset and mortgage-backed securities		—		29,405		—		29,405
Municipal bonds		—		22,127		—		22,127
Non-U.S. government and agency securities		—		1,651		—		1,651
		71,706		238,220		—		309,926
	$	153,752	$	245,976	$	—	$	399,728
April 3, 2011
Cash and cash equivalents	$	146,281	$	1,499	$	—	$	147,780
Marketable securities:
U.S. government and agency securities		55,753		—		—		55,753
Corporate debt obligations		—		138,436		—		138,436
Asset and mortgage-backed securities		—		22,490		—		22,490
Municipal bonds		—		17,941		—		17,941
Non-U.S. government and agency securities		—		1,676		—		1,676
		55,753		180,543		—		236,296
	$	202,034	$	182,042	$	—	$	384,076

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Comprehensive Income

3 Months Ended

Jul. 03, 2011

Comprehensive Income

Comprehensive Income

Note 8. Comprehensive Income

Components of comprehensive income are as follows:

	Three Months Ended
	July 3, 2011		June 27, 2010
	(In thousands)
Net income	$	32,426	$	25,449
Other comprehensive income:
Change in unrealized gains on marketable securities, net of income taxes		467		147
	$	32,893	$	25,596

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Basis Of Presentation

3 Months Ended

Jul. 03, 2011

Basis Of Presentation

Basis Of Presentation

Note 1. Basis of Presentation

In the opinion of management of QLogic Corporation (QLogic or the Company), the accompanying unaudited condensed consolidated financial statements contain all normal recurring accruals and adjustments necessary to present fairly the Company's consolidated financial position, results of operations and cash flows. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended April 3, 2011. The results of operations for the three months ended July 3, 2011 are not necessarily indicative of the results that may be expected for the entire fiscal year. The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates that affect the amounts reported in the Company's consolidated financial statements and accompanying notes. The Company evaluates its estimates on an ongoing basis using historical experience and other factors, including the current economic environment. Among the significant estimates affecting the consolidated financial statements are those related to revenue recognition, stock-based compensation, income taxes, investment securities, inventories, goodwill and long-lived assets. The actual results experienced by the Company could differ materially from management's estimates.

Recently Adopted Accounting Standards

In September 2009, the Financial Accounting Standards Board reached a consensus on Accounting Standards Update (ASU) 2009-13, "Revenue Recognition (Topic 605) — Multiple-Deliverable Revenue Arrangements" and ASU 2009-14, "Software (Topic 985) — Certain Revenue Arrangements That Include Software Elements." ASU 2009-13 modifies the requirements that must be met for an entity to recognize revenue from the sale of a delivered item that is part of a multiple-element arrangement when other items have not yet been delivered. ASU 2009-13 establishes a selling price hierarchy that allows for the use of an estimated selling price to determine the allocation of arrangement consideration to a deliverable in a multiple-element arrangement where neither vendor-specific objective evidence nor third-party evidence is available for that deliverable. Overall arrangement consideration is allocated at the inception of the arrangement to all deliverables based on their relative selling prices. The residual method of allocating arrangement consideration has been eliminated. ASU 2009-14 modifies the software revenue recognition guidance to exclude from its scope tangible products that contain both software and non-software components that function together to deliver a product's essential functionality. The Company adopted the provisions of these standards beginning in the first quarter of fiscal 2012 on a prospective basis. The adoption of these standards did not have a material impact on the Company's condensed consolidated financial statements.

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Inventories

3 Months Ended

Jul. 03, 2011

Inventories

Inventories

Note 4. Inventories

Components of inventories are as follows:

	July 3, 2011		April 3, 2011
	(In thousands)
Raw materials	$	6,382	$	5,702
Finished goods		19,633		21,229
	$	26,015	$	26,931

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Stock-Based Compensation

3 Months Ended

Jul. 03, 2011

Stock-Based Compensation

Stock-Based Compensation

Note 5. Stock-Based Compensation

During the three months ended July 3, 2011, the Company granted options to purchase 1.4 million shares of common stock and 1.4 million restricted stock units with weighted average grant date fair values of $5.83 and $15.71 per share, respectively, and also granted 0.2 million restricted stock units with performance conditions to certain senior executives.

A summary of stock-based compensation expense, by functional line item in the condensed consolidated statements of income, is as follows:

	Three Months Ended
	July 3, 2011		June 27, 2010
	(In thousands)
Cost of revenues	$	808	$	734
Engineering and development		4,631		5,007
Sales and marketing		1,857		2,113
General and administrative		2,371		2,469
	$	9,667	$	10,323

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Net Income Per Share (Details) (USD $) In Thousands, except Share data	3 Months Ended
	Jul. 03, 2011	Jun. 27, 2010
Net Income Per Share
Net income	$ 32,426	$ 25,449
Weighted-average shares outstanding - basic	104,679,000	111,425,000
Dilutive potential common shares, using treasury stock method	1,110,000	2,305,000
Weighted-average shares outstanding - diluted	105,789,000	113,730,000
Basic	$ 0.31	$ 0.23
Diluted	$ 0.31	$ 0.22
Stock-based awards excluded from the diluted net income per share	14,400,000	11,300,000

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Net Income Per Share (Tables)

3 Months Ended

Jul. 03, 2011

Net Income Per Share

Schedule Of Computation Of Basic And Diluted Net Income Per Share

	Three Months Ended
	July 3, 2011		June 27, 2010
	(In thousands, except per share amounts)
Net income	$	32,426	$	25,449
Shares:
Weighted-average shares outstanding — basic		104,679		111,425
Dilutive potential common shares, using treasury stock method		1,110		2,305
Weighted-average shares outstanding — diluted		105,789		113,730
Net income per share:
Basic	$	0.31	$	0.23
Diluted	$	0.31	$	0.22

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Income Taxes

3 Months Ended

Jul. 03, 2011

Income Taxes

Income Taxes

Note 6. Income Taxes

The Company's provision for income taxes was $1.3 million and $4.6 million for the three months ended July 3, 2011 and June 27, 2010, respectively.

The effective tax rate was 4% and 15% for the three months ended July 3, 2011 and June 27, 2010, respectively. The effective tax rate is based upon the estimated income for the year, the composition of the estimated income in different tax jurisdictions, and the tax effect, if any, in the applicable quarterly periods of newly enacted tax legislation, resolution of tax audits, changes in uncertain tax positions, and other discrete tax related items. The allocation of taxable income to domestic and foreign tax jurisdictions impacts the effective tax rate, as the Company's income tax rate in foreign jurisdictions is generally lower than its income tax rate in the United States.

The effective tax rate for the three months ended July 3, 2011 was favorably impacted by certain discrete tax related items, principally the resolution of state income tax examinations.

The Company's federal consolidated income tax returns for fiscal years 2008 and 2009 are currently under examination by the Internal Revenue Service. Management does not believe that the results of these examinations will have a material impact on the Company's financial condition or results of operations.

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Marketable Securities (Schedule Of Amortized Cost And Estimated Fair Value Of Debt Securities) (Details) (USD $) In Thousands	Jul. 03, 2011
Marketable Securities
Due in one year or less, Amortized Cost	$ 121,395
Due after one year through three years, Amortized Cost	128,945
Due after three years through five years, Amortized Cost	15,676
Due after five years, Amortized Cost	42,540
Total amortized cost of debt securities	308,556
Due in one year or less, Estimated Fair Value	121,762
Due after one year through three years, Estimated Fair Value	129,674
Due after three years through five years, Estimated Fair Value	15,708
Due after five years, Estimated Fair Value	42,782
Total estimated fair value of debt securities	$ 309,926

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Comprehensive Income (Components Of Comprehensive Income) (Details) (USD $) In Thousands	3 Months Ended
	Jul. 03, 2011	Jun. 27, 2010
Comprehensive Income
Net income	$ 32,426	$ 25,449
Change in unrealized gains on marketable securities, net of income taxes	467	147
Total comprehensive income	$ 32,893	$ 25,596

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Condensed Consolidated Statements Of Cash Flows (USD $) In Thousands	3 Months Ended
	Jul. 03, 2011	Jun. 27, 2010
Cash flows from operating activities:
Net income	$ 32,426	$ 25,449
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	6,975	8,066
Stock-based compensation	9,667	10,323
Amortization of acquisition-related intangible assets	1,156	1,156
Deferred income taxes	3,124	6,584
Net gains on investment securities	(390)	(711)
Other non-cash items	1,211	(5)
Changes in operating assets and liabilities:
Accounts receivable	(9,101)	(1,247)
Inventories	916	(5,003)
Other assets	(1,854)	76
Accounts payable	539	(687)
Accrued compensation	(4,674)	(5,546)
Accrued taxes	(1,340)	(6,155)
Deferred revenue	(596)	(144)
Other liabilities	2,254	(1,511)
Net cash provided by operating activities	40,313	30,645
Cash flows from investing activities:
Purchases of available-for-sale securities	(133,619)	(34,604)
Proceeds from sales and maturities of available-for-sale securities	60,171	45,657
Proceeds from disposition of trading securities		9,350
Distributions from other investment securities		293
Purchases of property and equipment	(8,982)	(5,297)
Net cash provided by (used in) investing activities	(82,430)	15,399
Cash flows from financing activities:
Proceeds from issuance of common stock under stock-based awards	7,553	4,555
Excess tax benefits from stock-based awards	538	1,029
Minimum tax withholding paid on behalf of employees for restricted stock units	(5,259)	(5,861)
Purchases of treasury stock	(18,693)	(53,122)
Net cash used in financing activities	(15,861)	(53,399)
Net decrease in cash and cash equivalents	(57,978)	(7,355)
Cash and cash equivalents at beginning of period	147,780	190,308
Cash and cash equivalents at end of period	$ 89,802	$ 182,953

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Marketable Securities (Schedule Of Unrealized Losses By Investment Category) (Details) (USD $) In Thousands	Jul. 03, 2011	Apr. 03, 2011
Fair value of less than 12 months investment	$ 93,058	$ 96,164
Unrealized losses of less than 12 months investment	(238)	(560)
Fair value, Total	93,058	96,164
Unrealized losses, Total	(238)	(560)
U.S. Government And Agency Securities [Member]
Fair value of less than 12 months investment	23,576	25,712
Unrealized losses of less than 12 months investment	(22)	(216)
Fair value, Total	23,576	25,712
Unrealized losses, Total	(22)	(216)
Corporate Debt Obligations [Member]
Fair value of less than 12 months investment	56,756	60,595
Unrealized losses of less than 12 months investment	(145)	(282)
Fair value, Total	56,756	60,595
Unrealized losses, Total	(145)	(282)
Asset And Mortgage-Backed Securities [Member]
Fair value of less than 12 months investment	11,479	7,991
Unrealized losses of less than 12 months investment	(67)	(52)
Fair value, Total	11,479	7,991
Unrealized losses, Total	(67)	(52)
Municipal Bonds [Member]
Fair value of less than 12 months investment	1,247	1,866
Unrealized losses of less than 12 months investment	(4)	(10)
Fair value, Total	1,247	1,866
Unrealized losses, Total	$ (4)	$ (10)

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Inventories (Components Of Inventories) (Details) (USD $) In Thousands	Jul. 03, 2011	Apr. 03, 2011
Inventories
Raw materials	$ 6,382	$ 5,702
Finished goods	19,633	21,229
Inventory, net, Total	$ 26,015	$ 26,931

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Marketable Securities

3 Months Ended

Jul. 03, 2011

Marketable Securities

Marketable Securities

Note 2. Marketable Securities

The Company's portfolio of available-for-sale marketable securities consists of the following:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(In thousands)
July 3, 2011
U.S. government and agency securities	$	71,580	$	148	$	(22	)	$	71,706
Corporate debt obligations		184,067		1,115		(145	)		185,037
Asset and mortgage-backed securities		29,159		313		(67	)		29,405
Municipal bonds		22,099		32		(4	)		22,127
Non-U.S. government and agency securities		1,651		—		—			1,651
	$	308,556	$	1,608	$	(238	)	$	309,926
April 3, 2011
U.S. government and agency securities	$	55,875	$	94	$	(216	)	$	55,753
Corporate debt obligations		137,706		1,012		(282	)		138,436
Asset and mortgage-backed securities		22,249		293		(52	)		22,490
Municipal bonds		17,941		10		(10	)		17,941
Non-U.S. government and agency securities		1,676		—		—			1,676
	$	235,447	$	1,409	$	(560	)	$	236,296

The amortized cost and estimated fair value of debt securities as of July 3, 2011, by contractual maturity, are presented below. Expected maturities will differ from contractual maturities because the issuers of securities may have the right to repay obligations without prepayment penalties. Certain debt instruments, although possessing a contractual maturity greater than one year, are classified as short-term marketable securities based on their ability to be traded on active markets and availability for current operations.

	Amortized Cost		Estimated Fair Value
	(In thousands)
Due in one year or less	$	121,395	$	121,762
Due after one year through three years		128,945		129,674
Due after three years through five years		15,676		15,708
Due after five years		42,540		42,782
	$	308,556	$	309,926

The following table presents the Company's marketable securities with unrealized losses by investment category and length of time that individual securities have been in a continuous unrealized loss position as of July 3, 2011 and April 3, 2011.

	Less Than 12 Months					12 Months or Greater				Total
Description of Securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)
July 3, 2011
U.S. government and agency securities	$	23,576	$	(22	)	$	—	$	—	$	23,576	$	(22	)
Corporate debt obligations		56,756		(145	)		—		—		56,756		(145	)
Asset and mortgage-backed securities		11,479		(67	)		—		—		11,479		(67	)
Municipal bonds		1,247		(4	)		—		—		1,247		(4	)
	$	93,058	$	(238	)	$	—	$	—	$	93,058	$	(238	)
April 3, 2011
U.S. government and agency securities	$	25,712	$	(216	)	$	—	$	—	$	25,712	$	(216	)
Corporate debt obligations		60,595		(282	)		—		—		60,595		(282	)
Asset and mortgage-backed securities		7,991		(52	)		—		—		7,991		(52	)
Municipal bonds		1,866		(10	)		—		—		1,866		(10	)
	$	96,164	$	(560	)	$	—	$	—	$	96,164	$	(560	)

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Inventories (Tables)

3 Months Ended

Jul. 03, 2011

Inventories

Components Of Inventories

	July 3, 2011		April 3, 2011
	(In thousands)
Raw materials	$	6,382	$	5,702
Finished goods		19,633		21,229
	$	26,015	$	26,931

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Marketable Securities (Schedule Of Available-For-Sale Securities) (Details) (USD $) In Thousands	Jul. 03, 2011	Apr. 03, 2011
Available-for-sale Securities, Amortized Cost	$ 308,556	$ 235,447
Available-for-sale Securities, Gross Unrealized Gains	1,608	1,409
Available-for-sale Securities, Gross Unrealized Losses	(238)	(560)
Available-for-sale Securities, Estimated Fair Value	309,926	236,296
U.S. Government And Agency Securities [Member]
Available-for-sale Securities, Amortized Cost	71,580	55,875
Available-for-sale Securities, Gross Unrealized Gains	148	94
Available-for-sale Securities, Gross Unrealized Losses	(22)	(216)
Available-for-sale Securities, Estimated Fair Value	71,706	55,753
Corporate Debt Obligations [Member]
Available-for-sale Securities, Amortized Cost	184,067	137,706
Available-for-sale Securities, Gross Unrealized Gains	1,115	1,012
Available-for-sale Securities, Gross Unrealized Losses	(145)	(282)
Available-for-sale Securities, Estimated Fair Value	185,037	138,436
Asset And Mortgage-Backed Securities [Member]
Available-for-sale Securities, Amortized Cost	29,159	22,249
Available-for-sale Securities, Gross Unrealized Gains	313	293
Available-for-sale Securities, Gross Unrealized Losses	(67)	(52)
Available-for-sale Securities, Estimated Fair Value	29,405	22,490
Municipal Bonds [Member]
Available-for-sale Securities, Amortized Cost	22,099	17,941
Available-for-sale Securities, Gross Unrealized Gains	32	10
Available-for-sale Securities, Gross Unrealized Losses	(4)	(10)
Available-for-sale Securities, Estimated Fair Value	22,127	17,941
Non-U.S. Government And Agency Securities [Member]
Available-for-sale Securities, Amortized Cost	1,651	1,676
Available-for-sale Securities, Estimated Fair Value	$ 1,651	$ 1,676

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Condensed Consolidated Balance Sheets (USD $) In Thousands	Jul. 03, 2011	Apr. 03, 2011
Current assets:
Cash and cash equivalents	$ 89,802	$ 147,780
Marketable securities	309,926	236,296
Accounts receivable, less allowance for doubtful accounts of $1,652 and $1,536 as of July 3, 2011 and April 3, 2011, respectively	79,110	70,134
Inventories	26,015	26,931
Deferred tax assets	17,315	17,754
Other current assets	21,270	20,753
Total current assets	543,438	519,648
Property and equipment, net	81,506	77,134
Goodwill	119,748	119,748
Purchased intangible assets, net	12,148	12,694
Deferred tax assets	22,420	25,333
Other assets	2,419	2,650
Total assets	781,679	757,207
Current liabilities:
Accounts payable	38,353	34,816
Accrued compensation	21,184	25,858
Accrued taxes	5,924	6,012
Deferred revenue	10,172	10,431
Other current liabilities	7,916	5,221
Total current liabilities	83,549	82,338
Accrued taxes	60,038	62,565
Deferred revenue	4,832	5,169
Other liabilities	6,280	5,971
Total liabilities	154,699	156,043
Stockholders' equity:
Preferred stock, $0.001 par value; 1,000,000 shares authorized; no shares issued and outstanding
Common stock, $0.001 par value; 500,000,000 shares authorized; 209,016,000 and 208,042,000 shares issued as of July 3, 2011 and April 3, 2011, respectively	209	208
Additional paid-in capital	856,911	844,546
Retained earnings	1,420,191	1,387,765
Accumulated other comprehensive income	1,081	614
Treasury stock, at cost: 104,504,000 and 103,325,000 shares as of July 3, 2011 and April 3, 2011, respectively	(1,651,412)	(1,631,969)
Total stockholders' equity	626,980	601,164
Total liabilities and stockholders' equity	$ 781,679	$ 757,207