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 1, 2012

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 the 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 27, 2012, 94,268,000 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 1, 2012 and April 1, 2012		1
	Condensed Consolidated Statements of Income for the three months ended July 1, 2012 and July 3, 2011		2
	Condensed Consolidated Statements of Comprehensive Income for the three months ended July 1, 2012 and July 3, 2011		3
	Condensed Consolidated Statements of Cash Flows for the three months ended July 1, 2012 and July 3, 2011		4
	Notes to Condensed Consolidated Financial Statements		5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		10
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		19
Item 4.	Controls and Procedures		19
	PART II. OTHER INFORMATION
Item 1A.	Risk Factors		20
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		32
Item 6.	Exhibits		33
	Signatures		34

i

PART I.

FINANCIAL INFORMATION

Item 1. Financial Statements

QLOGIC CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

	July 1, 2012			April 1, 2012
	(Unaudited; In thousands, except share and per share amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	117,052		$	164,516
Marketable securities		379,290			373,439
Accounts receivable, less allowance for doubtful accounts of $1,474 and $1,446 as of July 1, 2012 and April 1, 2012, respectively		78,784			76,588
Inventories		22,153			19,724
Deferred tax assets		16,510			16,780
Other current assets		35,523			35,842
Total current assets		649,312			686,889
Property and equipment, net		81,787			78,010
Goodwill		110,976			110,976
Purchased intangible assets, net		4,971			5,277
Deferred tax assets		32,190			30,558
Other assets		1,556			1,708
	$	880,792		$	913,418
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	35,441		$	34,198
Accrued compensation		20,431			28,326
Accrued taxes		2,362			2,799
Deferred revenue		6,235			6,504
Other current liabilities		15,506			9,390
Total current liabilities		79,975			81,217
Accrued taxes		65,710			64,853
Other liabilities		7,656			7,505
Total liabilities		153,341			153,575
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; 211,466,000 and 210,688,000 shares issued as of July 1, 2012 and April 1, 2012, respectively		211			211
Additional paid-in capital		907,762			901,734
Retained earnings		1,635,587			1,617,201
Accumulated other comprehensive income		957			1,033
Treasury stock, at cost: 115,718,000 and 111,911,000 shares as of July 1, 2012 and April 1, 2012, respectively		(1,817,066	)		(1,760,336	)
Total stockholders’ equity		727,451			759,843
	$	880,792		$	913,418

See accompanying notes to condensed consolidated financial statements.

1

QLOGIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended
	July 1, 2012			July 3, 2011
	(Unaudited; In thousands, except per share amounts)
Net revenues	$	130,371		$	144,481
Cost of revenues		43,313			44,868
Gross profit		87,058			99,613
Operating expenses:
Engineering and development		39,458			34,852
Sales and marketing		18,886			19,721
General and administrative		8,673			9,163
Total operating expenses		67,017			63,736
Operating income		20,041			35,877
Interest and other income, net		1,078			1,048
Income from continuing operations before income taxes		21,119			36,925
Income taxes		2,678			2,729
Income from continuing operations		18,441			34,196
Loss from discontinued operations, net of income taxes		(55	)		(1,770	)
Net income	$	18,386		$	32,426
Income from continuing operations per share:
Basic	$	0.19		$	0.33
Diluted	$	0.19		$	0.32
Loss from discontinued operations per share:
Basic	$	—		$	(0.02	)
Diluted	$	—		$	(0.01	)
Net income per share:
Basic	$	0.19		$	0.31
Diluted	$	0.19		$	0.31
Number of shares used in per share calculations:
Basic		97,405			104,679
Diluted		98,369			105,789

See accompanying notes to condensed consolidated financial statements.

2

QLOGIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Three Months Ended
	July 1, 2012			July 3, 2011
	(Unaudited; In thousands)
Net income	$	18,386		$	32,426
Other comprehensive income, net of income taxes:
Changes in unrealized gains on marketable securities		142			424
Foreign currency translation adjustments		(218	)		43
Total other comprehensive income (loss)		(76	)		467
Comprehensive income	$	18,310		$	32,893

See accompanying notes to condensed consolidated financial statements.

3

QLOGIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended
	July 1, 2012			July 3, 2011
	(Unaudited; In thousands)
Cash flows from operating activities:
Net income	$	18,386		$	32,426
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		6,572			8,131
Stock-based compensation		9,277			9,667
Deferred income taxes		(2,254	)		3,124
Other non-cash items		809			821
Changes in operating assets and liabilities:
Accounts receivable		(2,224	)		(9,101	)
Inventories		(2,429	)		916
Other assets		(2,240	)		(1,854	)
Accounts payable		661			539
Accrued compensation		(7,895	)		(4,674	)
Accrued taxes		3,108			(1,340	)
Deferred revenue		(266	)		(596	)
Other liabilities		5,511			2,254
Net cash provided by operating activities		27,016			40,313
Cash flows from investing activities:
Purchases of available-for-sale securities		(72,440	)		(133,619	)
Proceeds from sales and maturities of available-for-sale securities		65,799			60,171
Purchases of property and equipment		(9,486	)		(8,982	)
Net cash used in investing activities		(16,127	)		(82,430	)
Cash flows from financing activities:
Proceeds from issuance of common stock under stock-based awards		2,847			7,553
Excess tax benefits from stock-based awards		126			538
Minimum tax withholding paid on behalf of employees for restricted stock units		(5,349	)		(5,259	)
Purchases of treasury stock		(55,977	)		(18,693	)
Net cash used in financing activities		(58,353	)		(15,861	)
Net decrease in cash and cash equivalents		(47,464	)		(57,978	)
Cash and cash equivalents at beginning of period		164,516			147,780
Cash and cash equivalents at end of period	$	117,052		$	89,802

See accompanying notes to condensed consolidated financial statements.

4

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 1, 2012. The results of operations for the three months ended July 1, 2012 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.

Certain immaterial reclassifications have been made to prior year amounts to conform to the current year presentation.

Recently Adopted Accounting Standards

In June 2011, the Financial Accounting Standards Board issued an accounting standards update regarding the presentation of comprehensive income. Presentation of the components of net income, the components of other comprehensive income and total comprehensive income is required in either a single continuous statement of comprehensive income or in two separate consecutive statements. The Company adopted this standard beginning in the first quarter of fiscal 2013 on a retrospective basis, as reflected in the condensed consolidated statements of comprehensive income.

Note 2. Discontinued Operations

On February 29, 2012, the Company completed the sale of the product lines and certain assets associated with its InfiniBand business (the IB Business). The IB Business meets the criteria to be presented as discontinued operations. As a result of this divestiture, the Company’s condensed consolidated financial statements for all periods present the operations of the IB Business as discontinued operations.

Loss from discontinued operations consists of direct revenues and direct expenses of the IB Business, including cost of revenues, as well as other fixed and allocated costs to the extent that such costs were eliminated as a result of the transaction. General corporate overhead costs have not been allocated to discontinued operations. A summary of the operating results of the IB Business included in discontinued operations in the condensed consolidated statements of income is as follows:

	Three Months Ended
	July 1, 2012			July 3, 2011
	(In thousands)
Net revenues	$	319		$	7,141
Loss from operations before income taxes	$	(89	)	$	(3,232	)

5

QLOGIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 3. 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 1, 2012
U.S. government and agency securities	$	130,273	$	286	$	(28	)	$	130,531
Corporate debt obligations		170,682		1,014		(116	)		171,580
Asset and mortgage-backed securities		48,817		352		(72	)		49,097
Municipal bonds		28,053		50		(21	)		28,082
	$	377,825	$	1,702	$	(237	)	$	379,290
April 1, 2012
U.S. government and agency securities	$	141,680	$	257	$	(78	)	$	141,859
Corporate debt obligations		166,763		1,071		(166	)		167,668
Asset and mortgage-backed securities		46,395		272		(73	)		46,594
Municipal bonds		16,548		22		(2	)		16,568
Other debt securities		750		—		—			750
	$	372,136	$	1,622	$	(319	)	$	373,439

The amortized cost and estimated fair value of debt securities as of July 1, 2012, 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	$	86,736	$	86,765
Due after one year through three years		208,834		209,525
Due after three years through five years		32,593		32,745
Due after five years		49,662		50,255
	$	377,825	$	379,290

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 1, 2012 and April 1, 2012.

	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 1, 2012
U.S. government and agency securities	$	39,355	$	(28	)	$	—	$	—		$	39,355	$	(28	)
Corporate debt obligations		57,548		(113	)		1,664		(3	)		59,212		(116	)
Asset and mortgage-backed securities		17,183		(64	)		321		(8	)		17,504		(72	)
Municipal bonds		9,737		(21	)		—		—			9,737		(21	)
	$	123,823	$	(226	)	$	1,985	$	(11	)	$	125,808	$	(237	)
April 1, 2012
U.S. government and agency securities	$	76,239	$	(78	)	$	—	$	—		$	76,239	$	(78	)
Corporate debt obligations		66,997		(166	)		—		—			66,997		(166	)
Asset and mortgage-backed securities		12,996		(69	)		139		(4	)		13,135		(73	)
Municipal bonds		1,978		(2	)		—		—			1,978		(2	)
	$	158,210	$	(315	)	$	139	$	(4	)	$	158,349	$	(319	)

6

QLOGIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of July 1, 2012 and April 1, 2012, the fair value of certain of the Company’s available-for-sale securities was less than their cost basis. Management reviewed various factors in determining whether to recognize an impairment charge related to these unrealized losses, including the current financial and credit market environment, the financial condition and near-term prospects of the issuer of the investment security, the magnitude of the unrealized loss compared to the cost of the investment, the length of time the investment had been in a loss position and the Company’s intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery of market value. As of July 1, 2012 and April 1, 2012, the Company determined that the unrealized losses were temporary in nature and recorded them as a component of accumulated other comprehensive income.

Note 4. 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 1, 2012 and April 1, 2012 are as follows:

	Fair Value Measurements Using
	Level 1		Level 2		Level 3		Total
	(In thousands)
July 1, 2012
Cash and cash equivalents	$	116,802	$	250	$	—	$	117,052
Marketable securities:
U.S. government and agency securities		130,531		—		—		130,531
Corporate debt obligations		—		171,580		—		171,580
Asset and mortgage-backed securities		—		49,097		—		49,097
Municipal bonds		—		28,082		—		28,082
		130,531		248,759		—		379,290
	$	247,333	$	249,009	$	—	$	496,342
April 1, 2012
Cash and cash equivalents	$	162,266	$	2,250	$	—	$	164,516
Marketable securities:
U.S. government and agency securities		141,859		—		—		141,859
Corporate debt obligations		—		167,668		—		167,668
Asset and mortgage-backed securities		—		46,594		—		46,594
Municipal bonds		—		16,568		—		16,568
Other debt securities		—		750		—		750
		141,859		231,580		—		373,439
	$	304,125	$	233,830	$	—	$	537,955

7

QLOGIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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. The Company obtained documentation from the pricing service as to the methodology and summary of inputs used for the various types of securities. The pricing service maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs. These observable inputs include reported trades and broker/dealer quotes of the same or similar securities, issuer credit spreads, benchmark securities and other observable inputs. The Company compares valuation information from the pricing service with other pricing sources to validate the reasonableness of the valuations.

Note 5. Inventories

Components of inventories are as follows:

	July 1, 2012		April 1, 2012
	(In thousands)
Raw materials	$	2,946	$	3,743
Finished goods		19,207		15,981
	$	22,153	$	19,724

Note 6. Stock-Based Compensation

During the three months ended July 1, 2012, the Company granted options to purchase 1.2 million shares of common stock and 1.6 million restricted stock units with weighted average grant date fair values of $5.05 and $13.93 per share, respectively. The restricted stock units included 0.2 million restricted stock units with service conditions and either a performance or market condition, which were granted 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 1, 2012		July 3, 2011
	(In thousands)
Cost of revenues	$	770	$	741
Engineering and development		4,318		4,396
Sales and marketing		1,965		1,682
General and administrative		2,224		2,371
Total continuing operations		9,277		9,190
Discontinued operations		—		477
	$	9,277	$	9,667

Note 7. Income Taxes

The Company’s provision for income taxes from continuing operations was $2.7 million for each of the three month periods ended July 1, 2012 and July 3, 2011.

The effective tax rate from continuing operations was 13% and 7% for the three months ended July 1, 2012 and July 3, 2011, 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. In addition, 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 certain 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.

8

QLOGIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 8. Income Per Share

The following table sets forth the computation of basic and diluted income from continuing operations per share:

	Three Months Ended
	July 1, 2012		July 3, 2011
	(In thousands, except per share amounts)
Income from continuing operations	$	18,441	$	34,196
Shares:
Weighted-average shares outstanding – basic		97,405		104,679
Dilutive potential common shares, using treasury stock method		964		1,110
Weighted-average shares outstanding – diluted		98,369		105,789
Income from continuing operations per share:
Basic	$	0.19	$	0.33
Diluted	$	0.19	$	0.32

Stock-based awards, including stock options and restricted stock units, representing 16.5 million and 14.4 million shares of common stock have been excluded from the diluted per share calculations for the three months ended July 1, 2012 and July 3, 2011, respectively. These stock-based awards have been excluded from the diluted per share calculations because their effect would have been antidilutive.

9

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 products that provide, enhance and manage computer data communication. These products facilitate the rapid transfer of data and enable efficient resource sharing between servers, networks and storage. Our products are used in enterprise data centers, cloud computing, Web 2.0 and other environments dependent on high performance, reliable data networking.

Our products are based primarily on Fibre Channel and Ethernet technologies and are used in connection with storage networks, local area networks, and converged networks. Storage networks are used to provide data across enterprise environments. Fibre Channel is currently the dominant technology for enterprise storage networking. Local area networks, or LANs, are used to provide workstation-to-server, server-to-server, and server-to-storage connectivity using Ethernet. 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 LANs, using Ethernet speeds of 10Gb per second and greater. Fibre Channel over Ethernet, or FCoE, is a converged networking technology that uses an Ethernet LAN for both storage and local area data transmission, thus combining the benefits of Fibre Channel technology with the pervasiveness of Ethernet-based networks. Similarly, Internet Small Computer System Interface, or iSCSI, is an alternative to FCoE, also providing storage over Ethernet capabilities. Our converged products can operate individually as 10Gb Ethernet network products, FCoE products, iSCSI products, or in combination as multi-protocol products.

We classify our products into three broad categories: Host Products, Network Products and Silicon Products. Host Products consist of Fibre Channel adapters, iSCSI adapters, FCoE converged network adapters, and 10Gb Ethernet adapters. Network Products consist of blade, edge and high-port count modular-chassis Fibre Channel switches, Fibre Channel virtualized pass-through modules, universal access point switches, Enhanced Ethernet pass-through modules and storage routers. Silicon Products consist of Fibre Channel controllers, iSCSI controllers, converged network controllers, Ethernet controllers, converged switch controllers, and converged LAN on Motherboard, or cLOM, controllers.

Our adaptive convergence strategy, or Adaptive Convergence, is to design and supply networking infrastructure connectivity products for server, fabric, and storage to provide optimal flexibility and utility for our customers. Adaptive Convergence embodies multi-protocol functionality within a single product, support for widely used operating systems and virtualization environments, a broad range of hardware platforms, and multiple physical form-factors.

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 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 server and storage system OEM customers, including Cisco Systems, Inc., Dell Inc., EMC Corporation, Fujitsu Ltd., Hewlett-Packard Company, International Business Machines Corporation, NetApp, Inc. and Oracle Corporation.

10

Disposition of Business

In February 2012, we completed the sale of the product lines and certain assets associated with our InfiniBand business (the IB Business). As a result of this divestiture, our condensed consolidated statements of income for all periods present the operations of the IB Business as discontinued operations. The following discussion and analysis is based on our continuing operations and excludes any results or discussion of our discontinued operations.

First Quarter Financial Highlights and Other Information

A summary of our financial performance during the first quarter of fiscal 2013 is as follows:

• Net revenues were $130.4 million in the first quarter of fiscal 2013 compared to $135.1 million in the fourth quarter of fiscal 2012. Revenues from Host Products were $101.1 million for the first quarter of fiscal 2013 compared to $105.6 million in the fourth quarter of fiscal 2012. Revenues from Network Products were $19.5 million for the first quarter of fiscal 2013 compared to $16.4 million in the fourth quarter of fiscal 2012. Revenues from Silicon Products were $9.8 million for the first quarter of fiscal 2013 compared to $13.1 million in the fourth quarter of fiscal 2012.

• Gross profit as a percentage of net revenues was 66.8% for the first quarter of fiscal 2013 compared to 67.6% in the fourth quarter of fiscal 2012.

• Operating income as a percentage of net revenues for the first quarter of fiscal 2013 was 15.4% compared to 21.4% in the fourth quarter of fiscal 2012.

• Income from continuing operations was $18.4 million, or $0.19 per diluted share, in the first quarter of fiscal 2013 compared to $29.5 million, or $0.29 per diluted share, in the fourth quarter of fiscal 2012.

• Cash, cash equivalents and marketable securities was $496.3 million as of July 1, 2012 compared to $538.0 million as of April 1, 2012.

• Accounts receivable was $78.8 million as of July 1, 2012 compared to $76.6 million as of April 1, 2012. Days sales outstanding (DSO) in receivables was 55 days as of July 1, 2012.

• Inventories were $22.2 million as of July 1, 2012 compared to $19.7 million as of April 1, 2012. Our annualized inventory turns were 7.8 turns in the first quarter of fiscal 2013.

Results of Operations

Net Revenues

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

	Three Months Ended
	July 1, 2012			July 3, 2011
	(Dollars in millions)
Net revenues:
Host Products	$	101.1		$	108.9
Network Products		19.5			18.7
Silicon Products		9.8			16.9
	$	130.4		$	144.5
Percentage of net revenues:
Host Products		77	%		75	%
Network Products		15			13
Silicon Products		8			12
		100	%		100	%

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Historically, the global marketplace for network infrastructure solutions has expanded in response to the information requirements of enterprise data centers, cloud computing, Web 2.0 and other environments dependent on high performance, reliable data 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 on a like-for-like product comparison basis.

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 from the sale of Host Products, Network Products and Silicon Products. Net revenues of $130.4 million for the three months ended July 1, 2012 decreased from $144.5 million for the three months ended July 3, 2011. The decrease in net revenues was primarily the result of a $7.8 million, or 7%, decrease in revenue from Host Products and a $7.1 million, or 42%, decrease in revenue from Silicon Products. The decrease in revenue from Host Products was due to a 4% decrease in the quantity of adapters sold and a 3% decrease in the average selling price of these adapters. The decrease in revenue from Silicon Products was primarily due to a 39% decrease in the quantity of chips sold. This percentage decrease was primarily attributable to a spike in revenue from Silicon Products during the three months ended July 3, 2011. Revenue from Silicon Products can vary from quarter to quarter based on the purchasing cycles of our customers.

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 86% and 88% of net revenues during the three months ended July 1, 2012 and July 3, 2011, 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 1, 2012		July 3, 2011
	(In millions)
United States	$	58.5	$	65.2
Asia-Pacific and Japan		41.2		44.0
Europe, Middle East and Africa		23.4		27.4
Rest of world		7.3		7.9
	$	130.4	$	144.5

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 $18.0 million and $17.1 million for the three months ended July 1, 2012 and July 3, 2011, respectively.

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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 1, 2012			July 3, 2011
	(Dollars in millions)
Gross profit	$	87.1		$	99.6
Percentage of net revenues		66.8	%		68.9	%

Gross profit for the three months ended July 1, 2012 decreased $12.5 million, or 13%, from gross profit for the three months ended July 3, 2011. The gross profit percentage for the three months ended July 1, 2012 was 66.8% compared to 68.9% for the corresponding quarter in the prior year. The decrease in gross profit percentage was primarily due to an unfavorable product mix.

Our ability to maintain our current gross profit percentage may 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, our gross profit percentage may decline in future periods.

Operating Expenses

Our operating expenses are summarized in the following table:

	Three Months Ended
	July 1, 2012			July 3, 2011
	(Dollars in millions)
Operating expenses:
Engineering and development	$	39.4		$	34.8
Sales and marketing		18.9			19.7
General and administrative		8.7			9.2
	$	67.0		$	63.7
Percentage of net revenues:
Engineering and development		30.3	%		24.1	%
Sales and marketing		14.5			13.7
General and administrative		6.6			6.3
		51.4	%		44.1	%

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 1, 2012, engineering and development expenses increased to $39.4 million from $34.8 million for the three months ended July 3, 2011. The increase was primarily due to a $2.5 million increase in service and material costs related to new product development and a $1.5 million increase in cash compensation and related employee benefit costs, principally 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. During the three months ended July 1, 2012, sales and marketing expenses decreased to $18.9 million from $19.7 million for the three months ended July 3, 2011. The decrease was primarily due to a decrease in promotional costs, including the costs for certain sales and marketing programs.

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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 decreased to $8.7 million for the three months ended July 1, 2012 from $9.2 million for the three months ended July 3, 2011.

Income Taxes

Our provision for income taxes from continuing operations was $2.7 million for each of the three month periods ended July 1, 2012 and July 3, 2011.

Our effective tax rate from continuing operations was 13% and 7% for the three months ended July 1, 2012 and July 3, 2011, respectively. 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 certain state income tax examinations.

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, dispositions, 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 decreased to $496.3 million as of July 1, 2012 from $538.0 million as of April 1, 2012. As of July 1, 2012 and April 1, 2012, our international subsidiaries held $371.4 million and $351.0 million, respectively, of our total cash, cash equivalents and marketable securities. These holdings by our international subsidiaries as of July 1, 2012 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. We currently intend to reinvest the funds held outside of the United States in our international operations and, as a result, do not intend to repatriate these funds. Should we decide to repatriate funds 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 decreased to $27.0 million for the three months ended July 1, 2012 from $40.3 million for the three months ended July 3, 2011. Operating cash flow for the three months ended July 1, 2012 consisted of our net income of $18.4 million and net non-cash expenses of $14.4 million, partially offset by net cash used as a result of changes in operating assets and liabilities of $5.8 million. The changes in operating assets and liabilities included a $7.9 million decrease in accrued compensation, which was primarily due to the timing of payment obligations.

Cash provided by operating activities of $40.3 million 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.

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Cash used in investing activities was $16.1 million for the three months ended July 1, 2012 and consisted of $6.6 million of net purchases of available-for-sale securities and $9.5 million of purchases of property and equipment. During the three months ended July 3, 2011, cash used in investing activities was $82.4 million and consisted primarily of $73.4 million of net purchases of available-for-sale securities and $9.0 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 $58.4 million for the three months ended July 1, 2012 consisted of our purchase of $56.0 million of common stock under our stock repurchase program and $5.4 million for minimum tax withholdings paid on behalf of employees for restricted stock units that vested during the period, partially offset by $3.0 million of proceeds from the issuance of common stock and excess tax benefits from stock-based awards. During the three months ended July 3, 2011, cash used in financing activities of $15.9 million consisted of our purchase of $18.7 million of common stock under our stock repurchase programs 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.

Since fiscal 2003, we have had various stock repurchase programs that authorized the purchase of up to $1.95 billion of our outstanding common stock. As of July 1, 2012, we had repurchased a total of 115.7 million shares of common stock under our stock repurchase programs for an aggregate purchase price of $1.82 billion. Pursuant to the existing stock repurchase program, we are authorized to repurchase shares with an aggregate cost of up to $132.9 million as of July 1, 2012.

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 1, 2012, and their impact on our cash flows in future fiscal years, is as follows:

	2013 (Remaining nine months)		2014		2015		2016		2017		Thereafter		Total
	(In millions)
Operating leases	$	6.9	$	8.6	$	5.5	$	1.9	$	1.9	$	2.1	$	26.9
Non-cancelable purchase obligations		39.8		—		—		—		—		—		39.8
Total	$	46.7	$	8.6	$	5.5	$	1.9	$	1.9	$	2.1	$	66.7

The amount of unrecognized tax benefits, including related accrued interest and penalties, was $65.7 million as of July 1, 2012. 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 the 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, we determine 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 unrealized 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 goodwill with the carrying amount of that goodwill. We perform the annual test for impairment as of the first day of our fourth fiscal 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 estimates used in future impairment analyses are lower than current estimates, 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.

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 1, 2012, 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 1, 2012 consists of $379.3 million of securities that are classified as available-for-sale. As of July 1, 2012, 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 1, 2012. There was no change in our internal control over financial reporting during our quarter ended July 1, 2012 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 1, 2012, 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 1, 2012.

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

The United States and other countries around the world have experienced, and are continuing to experience, economic weakness and uncertainty, including unfavorable economic conditions resulting from the ongoing debt crisis in certain countries in the European Union. 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;

• the timing of server refresh cycles;

• 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;

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

• 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;

• 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;

• increased warranty costs; and

• acquisitions and dispositions of businesses or product lines.

A decrease in our gross margin could adversely affect the market price of our common stock.

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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, which could have a material adverse impact on investor confidence and employee retention.

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, local area 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.

If we are not successful in any or all of these items, our business and results of operations could be materially and adversely affected.

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;

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

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

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, or 10Gb Ethernet 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 engineering, sales and marketing resources to dedicate to developing and penetrating the market than we do. An inability to maintain, or build on, our market share in the Fibre Channel, converged or 10Gb Ethernet 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 86% and 88% of net revenues for the three months ended July 1, 2012 and July 3, 2011, respectively. Total revenue from our two largest customers, Hewlett-Packard Company and International Business Machines Corporation, together accounted for over 40% of net revenues during the three months ended July 1, 2012 and July 3, 2011. We are also subject to credit risk associated with the concentration of our accounts receivable.

A significant portion of the products we sell are incorporated into servers manufactured by our major customers. If server sales by our major customers are adversely affected by the IT spending environment or server market factors, demand for our products could decrease, which could have a material adverse effect on our business, financial condition or results of operations.

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. Customers typically incorporate our products into complex devices and systems, which creates supply chain cross-dependencies. Accordingly, supply chain disruptions affecting components of our customers’ devices and/or systems could negatively impact the demand for our products, even if the supply of our products is not directly affected. 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.

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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, local area and converged networking infrastructure, we compete with many companies. In the traditional enterprise storage Fibre Channel adapter and ASIC markets, our primary competitor is Emulex Corporation. In the 10Gb Ethernet adapter and ASIC markets, which include converged networking products such as FCoE and Internet Small Computer Systems Interface, or iSCSI, we primarily compete with Emulex Corporation, 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. 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, local area 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, or if our competitors introduce new products that are more successful than ours in the marketplace, 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, any of which could materially and adversely affect our operating results.

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. 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

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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, natural disasters 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 qualify the manufacturing line for the product. 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 Messrs. Biddiscombe and Desai are particularly important to our business. If we lose the services of Messrs. Biddiscombe or 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. 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, restricted stock units and our employee stock purchase program 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.

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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;

• 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 our 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 typically account for 20% or less 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 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, dispositions, examinations by tax authorities, stock-based compensation, uncertain tax positions and newly enacted tax legislation. 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 55% of our net revenues for each of the three month periods ended July 1, 2012 and July 3, 2011. 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 1, 2012, our international subsidiaries held $371.4 million 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.

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

In addition, as a result of a natural disaster, 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, thereby negatively impacting the demand for our products even if the supply of our products is not directly affected by the natural disaster. For example, the earthquake, tsunami and related events that occurred in Japan in March 2011, and the extensive flooding that occurred in Thailand beginning in October 2011, caused widespread destruction in regions that include suppliers of components for many technology companies.

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

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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, divestitures 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;

• 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.

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Further, we may never realize the perceived benefits of a business combination or divestiture. 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. Divestitures involve risks, such as difficulty splitting up businesses, distracting employees, potential loss of revenue and negatively impacting margins, and potentially disrupting customer relationships. In addition, our effective tax rate for future periods could be negatively impacted by acquisitions or divestitures.

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 1, 2012, we held short-term marketable securities totaling $379.3 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.

Changes in and compliance with regulations could materially adversely affect us.

Our business, results of operations or financial condition could be materially adversely affected if laws, regulations or standards relating to us or our products are newly implemented or changed. In addition, our compliance with existing regulations may have a material adverse impact on us. For example, in July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, was enacted. There are significant corporate governance and executive compensation related provisions in the Dodd-Frank Act that require the U.S. Securities and Exchange Commission to adopt additional rules and regulations in these areas such as “say on pay” and proxy access. The U.S. Securities and Exchange Commission has also proposed new disclosure requirements relating to the sourcing of certain minerals from the Democratic Republic of Congo and certain other adjoining countries. When these new requirements are in effect, they could adversely affect our costs, the availability of minerals used in our products and our relationships with customers and suppliers.

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.

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 have 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.

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.

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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.

System security risks, data protection breaches and cyber-attacks could disrupt our internal operations, and any such disruption could reduce our expected revenues, increase our expenses, damage our reputation and adversely affect our stock price.

Experienced computer programmers and hackers may be able to penetrate our network and misappropriate or compromise our confidential information or that of third parties, create system disruptions or cause shutdowns. Computer programmers and hackers also may be able to develop and deploy viruses, worms, and other malicious software programs that attack our products or otherwise exploit any security vulnerabilities of our products. In addition, sophisticated hardware and operating system software and applications that we produce or procure from third parties may contain defects in design or manufacture, including “bugs” and other problems that could unexpectedly interfere with the operation of the system. The costs to us to eliminate or alleviate cyber or other security problems, bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant and, if our efforts to address these problems are not successful, this could result in interruptions, delays, cessation of service and loss of existing or potential customers that may impede our sales, manufacturing, distribution or other critical functions.

We manage and store various proprietary information and sensitive or confidential data relating to our business. We have also outsourced a number of our business functions to third party contractors. Breaches of our or our third party contractors’ security measures or the accidental loss, inadvertent disclosure or unapproved dissemination of proprietary information or sensitive or confidential data about us or our customers, including the potential loss or disclosure of such information or data as a result of fraud, trickery or other forms of deception, could expose us or our customers to a risk of loss or misuse of this information, result in litigation and potential liability for us, damage our brand and reputation or otherwise harm our business. In addition, the cost and operational consequences of implementing further data protection measures could be significant.

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Issues arising during the upgrade of our enterprise resource planning system could affect our operating results and ability to manage our business effectively.

We are in the process of upgrading our enterprise resource planning computer system to enhance operating efficiencies and provide more effective management of our business operations. We are investing significant financial and personnel resources into this project. However, there is no assurance that the design will meet our current and future business needs or that it will operate as designed. We are heavily dependent on these computer systems, and any significant failure or delay in the system upgrade, if encountered, could cause a substantial interruption to our business, which could result in an adverse impact on our results of operations and financial condition.

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

In November 2011, our Board of Directors approved a 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 2013 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 2, 2012 – April 29, 2012		843,600	$	16.89		843,600	$	175,415,000
April 30, 2012 – May 27, 2012		1,224,300	$	15.11		1,224,300	$	156,916,000
May 28, 2012 – July 1, 2012		1,739,500	$	13.79		1,739,500	$	132,932,000
		3,807,400	$	14.90		3,807,400	$	132,932,000

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Item 6.    Exhibits

Exhibits

Exhibit No.
10.1	Terms and Conditions of Performance Share Award under the QLogic Corporation 2005 Performance Incentive Plan.*
10.2	Non-Employee Director Equity Award Program under the QLogic Corporation 2005 Performance Incentive Plan Amended and Restated Effective June 4, 2012.*
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.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

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

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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 2, 2012

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EXHIBIT INDEX

Exhibit No.
10.1	Terms and Conditions of Performance Share Award under the QLogic Corporation 2005 Performance Incentive Plan.*
10.2	Non-Employee Director Equity Award Program under the QLogic Corporation 2005 Performance Incentive Plan Amended and Restated Effective June 4, 2012.*
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.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

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

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EX-10.1

Exhibit 10.1

QLOGIC CORPORATION

2005 PERFORMANCE INCENTIVE PLAN

TERMS AND CONDITIONS OF PERFORMANCE SHARES

1. General.

Subject to these Terms and Conditions of Performance Shares (these “Terms”) and the QLogic Corporation 2005 Performance Incentive Plan (including any applicable sub-plan, the “Plan”), QLogic Corporation (including its Subsidiaries, 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 and to adjustment based on the level of achievement under, and as specified in, the Performance Objectives) (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 be earned or vest until the Compensation Committee of the Board of Directors (“Compensation Committee”) has approved a calculation of the level of achievement for each of the performance objectives (the “Performance Objectives”) for the applicable fiscal year, (ii) once the Compensation Committee has approved the level of achievement under each of the Performance Objectives, the Compensation Committee shall approve the related number of Performance Shares earned by each Grantee based on that level of achievement, (iii) Twenty-Five Percent (25%) of the total number of Performance Shares earned by each Grantee shall vest on the later of (x) the first anniversary of the Award Date and (y) the date the Compensation Committee approves the calculations set forth in clauses (i) and (ii) of this Section 2 (the “Initial Vesting Date”), and (iv)

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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 earned by each Grantee on the second, third and fourth anniversaries of the Award Date. The Performance 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, and including any other terms and conditions of the Award. 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, 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, interferes in any way with the right of the Corporation at any time to terminate such employment or service, or affects the right of the Corporation to increase or decrease the Grantee’s other compensation. In jurisdictions that do not recognize an at will employment relationship, the prior sentence is subject to Grantee’s contract of employment and applicable law.

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.

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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 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. (“UBS”) 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 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 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 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 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.

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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, regardless of the reason for the termination of the Grantee’s employment with the Corporation, 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; provided, that the employment relationship shall not be considered terminated in the case of any statutory leave.

7. Restrictions on Transfer.

Subject to applicable law, 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, transfer and processing, in electronic or other form, of Grantee’s personal data as described in this document by and among, as applicable, the Corporation or its affiliates (or their agents) for the exclusive purpose of implementing, administering and managing Grantee’s participation in the Plan.

Grantee further understands that the Corporation or its affiliates (or their agents) 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

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may not have the same level of data privacy laws and protections as 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 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 to terminate Grantee’s employment relationship at any time with or without cause (subject to Grantee’s contract of employment, if one exists, and applicable law); (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 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 whether such compensation is claimed by way of damages for wrongful dismissal or other breach of contract or by way of compensation for loss of office or employment or otherwise howsoever. Grantee irrevocably releases the Corporation and its affiliates from any such claim that may arise and Grantee shall not be entitled to any compensation or damages whatsoever or however described by reason of any termination, withdrawal or alteration of rights or expectations under the Plan.

11. Clawback Policy.

Notwithstanding anything else contained herein or in the Plan to the contrary, but subject to applicable law, 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

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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 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 Grantee’s place of work, 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 by pre-paid post/mail shall be enclosed in a properly sealed envelope addressed as aforesaid. Any such notice shall be given only when received, but if the Grantee is no longer employed by the Corporation, shall be deemed to have been duly given five business days after the date posted/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 and executed in accordance with the laws of the State of Delaware without regard to conflict of law principles thereunder.

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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.

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EX-10.2

Exhibit 10.2

QLOGIC CORPORATION

2005 PERFORMANCE INCENTIVE PLAN

NON-EMPLOYEE DIRECTOR EQUITY AWARD PROGRAM

(Amended and Restated Effective June 4, 2012)

1. Establishment; Purpose

This Non-Employee Director Equity Award Program (this “Program”) is adopted under, and any shares of Common Stock issued with respect to awards granted under this Program after the date of its adoption shall be charged against the applicable share limits of, the QLogic Corporation 2005 Performance Incentive Plan (the “Plan”). The purpose of this Program is to promote the success of the Corporation and the interests of its stockholders by providing members of the Board who are not officers or employees of the Corporation or one of its Subsidiaries (“Non-Employee Directors”) an opportunity to acquire an ownership interest in the Corporation and more closely aligning the interests of Non-Employee Directors and stockholders. This Program shall be effective as of the date of its adoption by the Board, and certain Plan amendments were approved by the Corporation’s stockholders at the Corporation’s 2008 annual meeting (the “2008 Annual Meeting”) (including, without limitation, the deletion of the automatic director grant provisions of the Plan set forth in Appendix A thereof). Except as otherwise expressly provided herein, the provisions of the Plan shall govern all awards made pursuant to this Program. Capitalized terms are defined in the Plan if not defined herein.

2. Participation

Equity award grants under this Program (each such award, a “Director Award”) shall be made only to Non-Employee Directors who have not, within three (3) years immediately preceding the applicable date of such grant, received any stock option, stock bonus, stock appreciation right or other similar stock award from the Corporation or any of its Subsidiaries, except as provided by this Program or pursuant to Appendix A of the Plan prior to the 2008 Annual Meeting (an “Eligible Director”).

3. Equity Award Grants

3.1 Initial Award Grant. If any person who is not then an officer or employee of the Corporation shall first become a Non-Employee Director on or after the date of the 2008 Annual Meeting, there shall be granted automatically to such person on such date a Director Award on the terms set forth below (the “Initial Grant”); provided that no such Initial Grant shall be made to any Non-Employee Director who does not then qualify as an Eligible Director.

3.2 Subsequent Annual Award Grants. Subject to Section 3.3, there shall be granted automatically at the close of business on the date of the first annual meeting of stockholders of the Corporation each year at which the members of the Board are elected

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or reelected (each such date, an “Annual Meeting Date”), a Director Award on the terms set forth below to each Eligible Director who is re-elected as a director of the Corporation at such meeting (each, an “Annual Grant”).

3.3 Proration of Annual Grants. If a period of less than twelve (12) months has elapsed between (i) the date that a Non-Employee Director first received a Director Award pursuant to Section 3.1 above or, prior to the date of the 2008 Annual Meeting, pursuant to Section A.2(a) of Appendix A of the Plan (the date of grant of any such award, an “Initial Award Date”) and (ii) the Annual Meeting Date, then the number of shares of Common Stock subject to any Annual Grant granted to an Eligible Director pursuant to Section 3.2 shall be prorated by multiplying (x) the number of such shares or units, as applicable, subject to such Annual Grant (as determined under Section 4 below), by (y) a fraction, the numerator of which shall be the number of days from and including the Initial Award Date through and including the Annual Meeting Date, and the denominator of which shall be the number of days since the last annual meeting of stockholders at which the members of the Board were elected or reelected preceding the Annual Meeting Date through and including the Annual Meeting Date (but in no event shall such fraction be greater than one (1)).

3.4 Maximum Number of Shares. Notwithstanding any other provision herein or in the Plan, Director Awards hereunder that would otherwise exceed any applicable share limit of Section 4.2 of the Plan shall be prorated within such limitation.

4. Determination of Grant Levels

4.1 Board or Administrator Approval. In each calendar year during the term of the Plan, commencing in 2008, the Board or the Administrator (which, if appointed for purposes of this Program, must be a committee of the Board) will determine, on or prior to the Annual Meeting Date for such calendar year, the grant levels for the Director Awards to be made to Non-Employee Directors under this Program for the period commencing on such Annual Meeting Date and ending on the day before the next succeeding Annual Meeting Date (the “Director Grant Period”). The action of the Board or the Administrator, as applicable, shall set forth its approval of such Annual Grants and any Initial Grants that may be made during the Director Grant Period commencing on such Annual Meeting Date and shall set forth each determination required to be made pursuant to Section 4.2.

4.2 Types of Awards and Grant Levels. Each Initial Grant made pursuant to this Program shall consist of a nonqualified stock option. Each Annual Grant made pursuant to this Program shall consist of a nonqualified stock option and an award of restricted stock units. If a Non-Employee Director who is serving as Chairman of the Board is entitled to an Annual Grant under Section 3.2, the grant levels for such grant will be determined independently from the Annual Grant levels determined for the other Non-Employee Directors as provided below in this Section 4.2. The number of shares of Common Stock subject to each Initial Grant and Annual Grant shall be determined as follows:

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• The value of equity awards granted to non-employee directors of each of a peer group of companies for the Corporation selected by the Board or the Administrator for the applicable year (the “Peer Group”) will be determined by the Board or Administrator (with options and similar awards granted by such companies being valued as of the date of grant of the respective award using a Black – Scholes or similar valuation model and with restricted stock units and similar awards granted by such companies being valued as of the date of grant of the respective award based on the closing market price on that date of grant of the shares subject to the award), with separate determinations being made each year for the value of equity awards granted to non-employee directors generally, the value of equity awards granted to non-employee directors serving as Chairman of the Board (or equivalent title), and the value of equity awards granted to newly elected or appointed non-employee directors. The Board or the Administrator will determine each year (i) a target amount (expressed in dollars) for the Corporation’s Non-Employee Directors not serving as Chairman of the Board (or equivalent title); (ii) if a Non-Employee Director is then serving as Chairman of the Board (or equivalent title), a target amount (expressed in dollars) for the Corporation’s Chairman of the Board; and (iii) a target amount (expressed in dollars) for any newly elected or appointed Non-Employee Director (each, a “Target Amount”). The Target Amount determined for new Non-Employee Directors under clause (iii) above shall apply to any Non-Employee Director newly elected or appointed to the Board during the applicable Director Grant Period identified in Section 4.1. The Board or the Administrator, as applicable, will have discretion to make appropriate adjustments in the data for the Peer Group and/or the Target Amounts as necessary to carry out the intent of these provisions (which may include, without limitation, adjustments to mitigate the effects of extraordinary one-time grants made by Peer Group members, extraordinary changes in the time commitments of directors, differences in the timing or frequency of grants, unusual grant terms or types of awards not contemplated, or similar circumstances).

• In the case of an Initial Grant, 50% of the Target Amount for any newly elected or appointed Non – Employee Director will be delivered in the form of a nonqualified stock option and 50% of the Target Amount for any newly elected or appointed Non – Employee Director will be delivered in the form of an award of restricted stock units. In the case of an Annual Grant, the Target Amount so determined will be allocated so that 70% of the applicable Target Amount will be delivered in the form of an award of restricted stock units and 30% of the applicable Target Amount will be delivered in the form of a nonqualified stock option. The number of shares of Common Stock that will be subject to any such restricted stock unit award will equal (i) the dollar value of the portion of the applicable Target Amount to be granted in the form of such restricted stock unit award, divided by (ii) the fair market value of a share of Common Stock on the

3

applicable Annual Meeting Date. The number of shares of Common Stock that will be subject to any such nonqualified stock option will equal (x) the dollar value of the portion of the applicable Target Amount to be granted in the form of such nonqualified stock option, divided by (y) the per-share fair value of the option on the applicable Annual Meeting Date (based on the Black – Scholes or similar valuation method and assumptions then generally used by the Corporation in valuing its options for financial statement purposes).

5. Terms of Options

The purchase price per share of the Common Stock covered by each stock option granted pursuant to this Program shall be 100% of the fair market value (as that term is defined in Section 5.6 of the Plan) of the Common Stock on the date of grant of the option. The exercise price of any stock option granted under this Program shall be paid in full at the time of each purchase in any of the following methods (or combination thereof): (i) cash, check payable to the order of the Corporation, or electronic funds transfer, (ii) subject to compliance with all applicable laws, rules and regulations, and subject to such procedures as the Administrator may adopt, the delivery of previously owned shares of Common Stock or pursuant to a “cashless exercise” with a third party who provides financing for the purposes of (or who otherwise facilitates) the purchase or exercise of awards. Shares of Common Stock used to satisfy the exercise price of an option shall be valued at their fair market value on the date of exercise. Each stock option granted under this Program and all rights or obligations thereunder shall commence on the date of grant of the award and expire no later than ten years thereafter, subject to earlier termination as provided in Section 8 below.

6. Payment of Restricted Stock Units

Restricted stock units granted pursuant to this Program shall be payable in an equivalent number of shares of Common Stock as soon as practicable after (and in all events within two and one-half months after) such units vest in accordance with Section 7.

7. Vesting of Equity Awards

Subject to earlier termination as provided in Section 8 below, each nonqualified stock option and each award of restricted stock units granted under this Program shall become vested in the following manner:

• Each Initial Grant granted under this Program shall become vested as to one-third (1/3) of the total number of shares of Common Stock subject to the option on each of the first, second and third anniversaries of the date of grant; and

• Each Annual Grant granted under this Program shall become vested as to the total number of shares of Common Stock subject to the option or restricted stock unit award, as applicable, on the earlier of (i) the day prior

4

to the annual meeting of the Corporation’s stockholders that occurs in the calendar year following the calendar year in which the award is granted or (ii) the first anniversary of the date of grant.

8. Termination of Directorship

If an Eligible Director’s services as a member of the Board terminate for any reason, (a) any portion of a stock option granted pursuant to this Program which is not then vested and exercisable shall immediately terminate, and any portion of such option which is then vested and exercisable may be exercised within a period of one (1) year after the date of such termination, or until the expiration of the option or termination of the option pursuant to Section 7.4 of the Plan, whichever first occurs, and (b) any portion of a restricted stock unit award granted pursuant to this Program which is not then vested shall terminate as of the date of such Eligible Director’s termination of service.

9. Plan Provisions; Award Agreement; Amendments; Administration

Each equity award granted under this Program shall otherwise be subject to the terms of the Plan (including, without limitation, the provisions of Section 7.1 of the Plan respecting adjustments to awards that are outstanding as of the date of an event contemplated therein and Section 7.4 of the Plan respecting early termination of outstanding awards). Each award granted hereunder shall be evidenced by a written award agreement in the form approved by the Board or the Compensation Committee of the Board for use in evidencing equity award grants made pursuant to this Program. The Board may from time to time amend this Program without stockholder approval; provided that no such amendment shall materially and adversely affect the rights of a Non-Employee Director as to an option granted under this Program before the adoption of such amendment. This Program does not limit the Board’s authority to make other, discretionary award grants to Non-Employee Directors pursuant to the Plan. The Plan Administrator’s power and authority to construe and interpret the Plan and awards thereunder pursuant to Section 3.2 of the Plan shall extend to this Program and awards granted hereunder. As provided in Section 3.3 of the Plan, any action taken by, or inaction of, the Administrator relating or pursuant to this Program and within its authority or under applicable law shall be within the absolute discretion of that entity or body and shall be conclusive and binding upon all persons.

5

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 2, 2012

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 2, 2012

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 1, 2012 (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 2, 2012

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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Marketable Securities (Details 2) (USD $) In Thousands, unless otherwise specified	Jul. 01, 2012	Apr. 01, 2012
Schedule of Unrealized Losses by Investment Category
Fair value of less than 12 months	$ 123,823	$ 158,210
Unrealized losses of less than 12 months	(226)	(315)
Fair Value of 12 months or greater	1,985	139
Unrealized losses of 12 months or Greater	(11)	(4)
Fair value, Total	125,808	158,349
Unrealized losses, Total	(237)	(319)
U.S. Government and agency securities [Member]
Schedule of Unrealized Losses by Investment Category
Fair value of less than 12 months	39,355	76,239
Unrealized losses of less than 12 months	(28)	(78)
Fair value, Total	39,355	76,239
Unrealized losses, Total	(28)	(78)
Corporate debt obligations [Member]
Schedule of Unrealized Losses by Investment Category
Fair value of less than 12 months	57,548	66,997
Unrealized losses of less than 12 months	(113)	(166)
Fair Value of 12 months or greater	1,664
Unrealized losses of 12 months or Greater	(3)
Fair value, Total	59,212	66,997
Unrealized losses, Total	(116)	(166)
Asset and mortgage-backed securities [Member]
Schedule of Unrealized Losses by Investment Category
Fair value of less than 12 months	17,183	12,996
Unrealized losses of less than 12 months	(64)	(69)
Fair Value of 12 months or greater	321	139
Unrealized losses of 12 months or Greater	(8)	(4)
Fair value, Total	17,504	13,135
Unrealized losses, Total	(72)	(73)
Municipal bonds [Member]
Schedule of Unrealized Losses by Investment Category
Fair value of less than 12 months	9,737	1,978
Unrealized losses of less than 12 months	(21)	(2)
Fair value, Total	9,737	1,978
Unrealized losses, Total	$ (21)	$ (2)

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Marketable Securities

3 Months Ended

Jul. 01, 2012

Marketable Securities [Abstract]

Marketable Securities

Note 3. 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 1, 2012
U.S. government and agency securities	$	130,273	$	286	$	(28	)	$	130,531
Corporate debt obligations		170,682		1,014		(116	)		171,580
Asset and mortgage-backed securities		48,817		352		(72	)		49,097
Municipal bonds		28,053		50		(21	)		28,082
	$	377,825	$	1,702	$	(237	)	$	379,290
April 1, 2012
U.S. government and agency securities	$	141,680	$	257	$	(78	)	$	141,859
Corporate debt obligations		166,763		1,071		(166	)		167,668
Asset and mortgage-backed securities		46,395		272		(73	)		46,594
Municipal bonds		16,548		22		(2	)		16,568
Other debt securities		750		—		—			750
	$	372,136	$	1,622	$	(319	)	$	373,439

The amortized cost and estimated fair value of debt securities as of July 1, 2012, 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	$	86,736	$	86,765
Due after one year through three years		208,834		209,525
Due after three years through five years		32,593		32,745
Due after five years		49,662		50,255
	$	377,825	$	379,290

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 1, 2012 and April 1, 2012.

	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 1, 2012
U.S. government and agency securities	$	39,355	$	(28	)	$	—	$	—		$	39,355	$	(28	)
Corporate debt obligations		57,548		(113	)		1,664		(3	)		59,212		(116	)
Asset and mortgage-backed securities		17,183		(64	)		321		(8	)		17,504		(72	)
Municipal bonds		9,737		(21	)		—		—			9,737		(21	)
	$	123,823	$	(226	)	$	1,985	$	(11	)	$	125,808	$	(237	)
April 1, 2012
U.S. government and agency securities	$	76,239	$	(78	)	$	—	$	—		$	76,239	$	(78	)
Corporate debt obligations		66,997		(166	)		—		—			66,997		(166	)
Asset and mortgage-backed securities		12,996		(69	)		139		(4	)		13,135		(73	)
Municipal bonds		1,978		(2	)		—		—			1,978		(2	)
	$	158,210	$	(315	)	$	139	$	(4	)	$	158,349	$	(319	)

As of July 1, 2012 and April 1, 2012, the fair value of certain of the Company’s available-for-sale securities was less than their cost basis. Management reviewed various factors in determining whether to recognize an impairment charge related to these unrealized losses, including the current financial and credit market environment, the financial condition and near-term prospects of the issuer of the investment security, the magnitude of the unrealized loss compared to the cost of the investment, the length of time the investment had been in a loss position and the Company’s intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery of market value. As of July 1, 2012 and April 1, 2012, the Company determined that the unrealized losses were temporary in nature and recorded them as a component of accumulated other comprehensive income.

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Stock-Based Compensation (Details Textual) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended
	Jul. 01, 2012
Stock-Based Compensation (Additional Textual) [Abstract]
Stock options granted, shares	1.2
Weighted average grant date fair values per share, options granted for purchase of common stock	$ 5.05
Restricted Stock Units (RSUs) [Member]
Stock-Based Compensation (Textual) [Abstract]
Restricted stock units granted, shares	1.6
Weighted average grant date fair values per share, restricted stock units granted	$ 13.93
Restricted Stock Units with Service Conditions and either a Performance or Market Condition [Member]
Stock-Based Compensation (Textual) [Abstract]
Restricted stock units granted, shares	0.2

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Stock-Based Compensation (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jul. 01, 2012	Jul. 03, 2011
Summary of stock-based compensation expense
Stock-based compensation expense	$ 9,277	$ 9,667
Total continuing operations [Member]
Summary of stock-based compensation expense
Stock-based compensation expense	9,277	9,190
Cost of revenues [Member]
Summary of stock-based compensation expense
Stock-based compensation expense	770	741
Engineering and development [Member]
Summary of stock-based compensation expense
Stock-based compensation expense	4,318	4,396
Sales and marketing [Member]
Summary of stock-based compensation expense
Stock-based compensation expense	1,965	1,682
General and administrative [Member]
Summary of stock-based compensation expense
Stock-based compensation expense	2,224	2,371
Discontinued operations [Member]
Summary of stock-based compensation expense
Stock-based compensation expense		$ 477

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Income Taxes (Details Textual) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jul. 01, 2012	Jul. 03, 2011
Income Taxes (Textual) [Abstract]
Provision for income taxes from continuing operations	$ 2,678	$ 2,729
Effective tax rate from continuing operations	13.00%	7.00%

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Income Per Share (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Jul. 01, 2012	Jul. 03, 2011
Income Per Share [Abstract]
Income from continuing operations	$ 18,441	$ 34,196
Shares:
Weighted-average shares outstanding - basic	97,405	104,679
Dilutive potential common shares, using treasury stock method	964	1,110
Weighted-average shares outstanding - diluted	98,369	105,789
Income from continuing operations per share:
Basic	$ 0.19	$ 0.33
Diluted	$ 0.19	$ 0.32

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Discontinued Operations

3 Months Ended

Jul. 01, 2012

Discontinued Operations [Abstract]

Discontinued Operations

Note 2. Discontinued Operations

On February 29, 2012, the Company completed the sale of the product lines and certain assets associated with its InfiniBand business (the IB Business). The IB Business meets the criteria to be presented as discontinued operations. As a result of this divestiture, the Company’s condensed consolidated financial statements for all periods present the operations of the IB Business as discontinued operations.

Loss from discontinued operations consists of direct revenues and direct expenses of the IB Business, including cost of revenues, as well as other fixed and allocated costs to the extent that such costs were eliminated as a result of the transaction. General corporate overhead costs have not been allocated to discontinued operations. A summary of the operating results of the IB Business included in discontinued operations in the condensed consolidated statements of income is as follows:

	Three Months Ended
	July 1, 2012			July 3, 2011
	(In thousands)
Net revenues	$	319		$	7,141
Loss from operations before income taxes	$	(89	)	$	(3,232	)

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Income Per Share (Details Textual) In Millions, unless otherwise specified	3 Months Ended
	Jul. 01, 2012	Jul. 03, 2011
Income Per Share (Textual) [Abstract]
Stock-based awards excluded from the diluted per share calculations	16.5	14.4

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Condensed Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Jul. 01, 2012	Apr. 01, 2012
Current assets:
Cash and cash equivalents	$ 117,052	$ 164,516
Marketable securities	379,290	373,439
Accounts receivable, less allowance for doubtful accounts of $1,474 and $1,446 as of July 1, 2012 and April 1, 2012, respectively	78,784	76,588
Inventories	22,153	19,724
Deferred tax assets	16,510	16,780
Other current assets	35,523	35,842
Total current assets	649,312	686,889
Property and equipment, net	81,787	78,010
Goodwill	110,976	110,976
Purchased intangible assets, net	4,971	5,277
Deferred tax assets	32,190	30,558
Other assets	1,556	1,708
Total assets	880,792	913,418
Current liabilities:
Accounts payable	35,441	34,198
Accrued compensation	20,431	28,326
Accrued taxes	2,362	2,799
Deferred revenue	6,235	6,504
Other current liabilities	15,506	9,390
Total current liabilities	79,975	81,217
Accrued taxes	65,710	64,853
Other liabilities	7,656	7,505
Total liabilities	153,341	153,575
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; 211,466,000 and 210,688,000 shares issued as of July 1, 2012 and April 1, 2012, respectively	211	211
Additional paid-in capital	907,762	901,734
Retained earnings	1,635,587	1,617,201
Accumulated other comprehensive income	957	1,033
Treasury stock, at cost: 115,718,000 and 111,911,000 shares as of July 1, 2012 and April 1, 2012, respectively	(1,817,066)	(1,760,336)
Total stockholders' equity	727,451	759,843
Total liabilities and stockholders' equity	$ 880,792	$ 913,418

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jul. 01, 2012	Jul. 03, 2011
Cash flows from operating activities:
Net income	$ 18,386	$ 32,426
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	6,572	8,131
Stock-based compensation	9,277	9,667
Deferred income taxes	(2,254)	3,124
Other non-cash items	809	821
Changes in operating assets and liabilities:
Accounts receivable	(2,224)	(9,101)
Inventories	(2,429)	916
Other assets	(2,240)	(1,854)
Accounts payable	661	539
Accrued compensation	(7,895)	(4,674)
Accrued taxes	3,108	(1,340)
Deferred revenue	(266)	(596)
Other liabilities	5,511	2,254
Net cash provided by operating activities	27,016	40,313
Cash flows from investing activities:
Purchases of available-for-sale securities	(72,440)	(133,619)
Proceeds from sales and maturities of available-for-sale securities	65,799	60,171
Purchases of property and equipment	(9,486)	(8,982)
Net cash used in investing activities	(16,127)	(82,430)
Cash flows from financing activities:
Proceeds from issuance of common stock under stock-based awards	2,847	7,553
Excess tax benefits from stock-based awards	126	538
Minimum tax withholding paid on behalf of employees for restricted stock units	(5,349)	(5,259)
Purchases of treasury stock	(55,977)	(18,693)
Net cash used in financing activities	(58,353)	(15,861)
Net decrease in cash and cash equivalents	(47,464)	(57,978)
Cash and cash equivalents at beginning of period	164,516	147,780
Cash and cash equivalents at end of period	$ 117,052	$ 89,802

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Discontinued Operations (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jul. 01, 2012	Jul. 03, 2011
Summary of operating results of the IB Business included in discontinued operations in the condensed consolidated statements of income
Net revenues	$ 319	$ 7,141
Loss from operations before income taxes	$ (89)	$ (3,232)

XML

Marketable Securities (Details 1) (USD $) In Thousands, unless otherwise specified	Jul. 01, 2012
Schedule of Amortized Cost and Estimated Fair Value of Debt Securities
Due in one year or less, Amortized Cost	$ 86,736
Due after one year through three years, Amortized Cost	208,834
Due after three years through five years, Amortized Cost	32,593
Due after five years, Amortized Cost	49,662
Total amortized cost of debt securities	377,825
Due in one year or less, Estimated Fair Value	86,765
Due after one year through three years, Estimated Fair Value	209,525
Due after three years through five years, Estimated Fair Value	32,745
Due after five years, Estimated Fair Value	50,255
Total estimated fair value of debt securities	$ 379,290

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Basis of Presentation

3 Months Ended

Jul. 01, 2012

Basis of Presentation [Abstract]

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 1, 2012. The results of operations for the three months ended July 1, 2012 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.

Certain immaterial reclassifications have been made to prior year amounts to conform to the current year presentation.

Recently Adopted Accounting Standards

In June 2011, the Financial Accounting Standards Board issued an accounting standards update regarding the presentation of comprehensive income. Presentation of the components of net income, the components of other comprehensive income and total comprehensive income is required in either a single continuous statement of comprehensive income or in two separate consecutive statements. The Company adopted this standard beginning in the first quarter of fiscal 2013 on a retrospective basis, as reflected in the condensed consolidated statements of comprehensive income.

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Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jul. 01, 2012	Apr. 01, 2012
Condensed Consolidated Balance Sheets [Abstract]
Allowance for doubtful accounts	$ 1,474	$ 1,446
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	211,466,000	210,688,000
Treasury stock, shares	115,718,000	111,911,000

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Marketable Securities (Tables)

3 Months Ended

Jul. 01, 2012

Marketable Securities [Abstract]

Schedule of Available-For-Sale Securities

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(In thousands)
July 1, 2012
U.S. government and agency securities	$	130,273	$	286	$	(28	)	$	130,531
Corporate debt obligations		170,682		1,014		(116	)		171,580
Asset and mortgage-backed securities		48,817		352		(72	)		49,097
Municipal bonds		28,053		50		(21	)		28,082
	$	377,825	$	1,702	$	(237	)	$	379,290
April 1, 2012
U.S. government and agency securities	$	141,680	$	257	$	(78	)	$	141,859
Corporate debt obligations		166,763		1,071		(166	)		167,668
Asset and mortgage-backed securities		46,395		272		(73	)		46,594
Municipal bonds		16,548		22		(2	)		16,568
Other debt securities		750		—		—			750
	$	372,136	$	1,622	$	(319	)	$	373,439

Schedule of Amortized Cost and Estimated Fair Value of Debt Securities

	Amortized Cost		Estimated Fair Value
	(In thousands)
Due in one year or less	$	86,736	$	86,765
Due after one year through three years		208,834		209,525
Due after three years through five years		32,593		32,745
Due after five years		49,662		50,255
	$	377,825	$	379,290

Schedule of Unrealized Losses by Investment Company

	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 1, 2012
U.S. government and agency securities	$	39,355	$	(28	)	$	—	$	—		$	39,355	$	(28	)
Corporate debt obligations		57,548		(113	)		1,664		(3	)		59,212		(116	)
Asset and mortgage-backed securities		17,183		(64	)		321		(8	)		17,504		(72	)
Municipal bonds		9,737		(21	)		—		—			9,737		(21	)
	$	123,823	$	(226	)	$	1,985	$	(11	)	$	125,808	$	(237	)
April 1, 2012
U.S. government and agency securities	$	76,239	$	(78	)	$	—	$	—		$	76,239	$	(78	)
Corporate debt obligations		66,997		(166	)		—		—			66,997		(166	)
Asset and mortgage-backed securities		12,996		(69	)		139		(4	)		13,135		(73	)
Municipal bonds		1,978		(2	)		—		—			1,978		(2	)
	$	158,210	$	(315	)	$	139	$	(4	)	$	158,349	$	(319	)

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Document and Entity Information	3 Months Ended
	Jul. 01, 2012	Jul. 27, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	QLOGIC CORP
Entity Central Index Key	0000918386
Document Type	10-Q
Document Period End Date	Jul. 01, 2012
Amendment Flag	false
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--03-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		94,268,000

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Fair Value Measurements (Tables)

3 Months Ended

Jul. 01, 2012

Fair Value Measurements [Abstract]

Schedule of Assets Measured at Fair Value of Debt Securities

	Fair Value Measurements Using
	Level 1		Level 2		Level 3		Total
	(In thousands)
July 1, 2012
Cash and cash equivalents	$	116,802	$	250	$	—	$	117,052
Marketable securities:
U.S. government and agency securities		130,531		—		—		130,531
Corporate debt obligations		—		171,580		—		171,580
Asset and mortgage-backed securities		—		49,097		—		49,097
Municipal bonds		—		28,082		—		28,082
		130,531		248,759		—		379,290
	$	247,333	$	249,009	$	—	$	496,342
April 1, 2012
Cash and cash equivalents	$	162,266	$	2,250	$	—	$	164,516
Marketable securities:
U.S. government and agency securities		141,859		—		—		141,859
Corporate debt obligations		—		167,668		—		167,668
Asset and mortgage-backed securities		—		46,594		—		46,594
Municipal bonds		—		16,568		—		16,568
Other debt securities		—		750		—		750
		141,859		231,580		—		373,439
	$	304,125	$	233,830	$	—	$	537,955

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Condensed Consolidated Statements of Income (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Jul. 01, 2012	Jul. 03, 2011
Condensed Consolidated Statements of Income [Abstract]
Net revenues	$ 130,371	$ 144,481
Cost of revenues	43,313	44,868
Gross profit	87,058	99,613
Operating expenses:
Engineering and development	39,458	34,852
Sales and marketing	18,886	19,721
General and administrative	8,673	9,163
Total operating expenses	67,017	63,736
Operating income	20,041	35,877
Interest and other income, net	1,078	1,048
Income from continuing operations before income taxes	21,119	36,925
Income taxes	2,678	2,729
Income from continuing operations	18,441	34,196
Loss from discontinued operations, net of income taxes	(55)	(1,770)
Net income	$ 18,386	$ 32,426
Income from continuing operations per share:
Basic	$ 0.19	$ 0.33
Diluted	$ 0.19	$ 0.32
Loss from discontinued operations per share:
Basic		$ (0.02)
Diluted		$ (0.01)
Net income per share:
Basic	$ 0.19	$ 0.31
Diluted	$ 0.19	$ 0.31
Number of shares used in per share calculations:
Basic	97,405	104,679
Diluted	98,369	105,789

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Stock-Based Compensation

3 Months Ended

Jul. 01, 2012

Stock-Based Compensation [Abstract]

Stock-Based Compensation

Note 6. Stock-Based Compensation

During the three months ended July 1, 2012, the Company granted options to purchase 1.2 million shares of common stock and 1.6 million restricted stock units with weighted average grant date fair values of $5.05 and $13.93 per share, respectively. The restricted stock units included 0.2 million restricted stock units with service conditions and either a performance or market condition, which were granted 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 1, 2012		July 3, 2011
	(In thousands)
Cost of revenues	$	770	$	741
Engineering and development		4,318		4,396
Sales and marketing		1,965		1,682
General and administrative		2,224		2,371
Total continuing operations		9,277		9,190
Discontinued operations		—		477
	$	9,277	$	9,667

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Inventories

3 Months Ended

Jul. 01, 2012

Inventories [Abstract]

Inventories

Note 5. Inventories

Components of inventories are as follows:

	July 1, 2012		April 1, 2012
	(In thousands)
Raw materials	$	2,946	$	3,743
Finished goods		19,207		15,981
	$	22,153	$	19,724

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Marketable Securities (Details) (USD $) In Thousands, unless otherwise specified	Jul. 01, 2012	Apr. 01, 2012
Schedule of Available-For-Sale Securities
Available-for-sale securities, Amortized Cost	$ 377,825	$ 372,136
Available-for-sale securities, Gross Unrealized Gains	1,702	1,622
Available-for-sale securities, Gross Unrealized Losses	(237)	(319)
Available-for-sale securities, Estimated Fair Value	379,290	373,439
U.S. Government and agency securities [Member]
Schedule of Available-For-Sale Securities
Available-for-sale securities, Amortized Cost	130,273	141,680
Available-for-sale securities, Gross Unrealized Gains	286	257
Available-for-sale securities, Gross Unrealized Losses	(28)	(78)
Available-for-sale securities, Estimated Fair Value	130,531	141,859
Corporate debt obligations [Member]
Schedule of Available-For-Sale Securities
Available-for-sale securities, Amortized Cost	170,682	166,763
Available-for-sale securities, Gross Unrealized Gains	1,014	1,071
Available-for-sale securities, Gross Unrealized Losses	(116)	(166)
Available-for-sale securities, Estimated Fair Value	171,580	167,668
Asset and mortgage-backed securities [Member]
Schedule of Available-For-Sale Securities
Available-for-sale securities, Amortized Cost	48,817	46,395
Available-for-sale securities, Gross Unrealized Gains	352	272
Available-for-sale securities, Gross Unrealized Losses	(72)	(73)
Available-for-sale securities, Estimated Fair Value	49,097	46,594
Municipal bonds [Member]
Schedule of Available-For-Sale Securities
Available-for-sale securities, Amortized Cost	28,053	16,548
Available-for-sale securities, Gross Unrealized Gains	50	22
Available-for-sale securities, Gross Unrealized Losses	(21)	(2)
Available-for-sale securities, Estimated Fair Value	28,082	16,568
Other debt securities [Member]
Schedule of Available-For-Sale Securities
Available-for-sale securities, Amortized Cost		750
Available-for-sale securities, Estimated Fair Value		$ 750

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Inventories (Tables)

3 Months Ended

Jul. 01, 2012

Inventories [Abstract]

Components of Inventories

	July 1, 2012		April 1, 2012
	(In thousands)
Raw materials	$	2,946	$	3,743
Finished goods		19,207		15,981
	$	22,153	$	19,724

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Basis of Presentation (Policies)

3 Months Ended

Jul. 01, 2012

Basis of Presentation [Abstract]

Recently Adopted Accounting Standards

Recently Adopted Accounting Standards

In June 2011, the Financial Accounting Standards Board issued an accounting standards update regarding the presentation of comprehensive income. Presentation of the components of net income, the components of other comprehensive income and total comprehensive income is required in either a single continuous statement of comprehensive income or in two separate consecutive statements. The Company adopted this standard beginning in the first quarter of fiscal 2013 on a retrospective basis, as reflected in the condensed consolidated statements of comprehensive income.

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Income Taxes

3 Months Ended

Jul. 01, 2012

Income Taxes [Abstract]

Income Taxes

Note 7. Income Taxes

The Company’s provision for income taxes from continuing operations was $2.7 million for each of the three month periods ended July 1, 2012 and July 3, 2011.

The effective tax rate from continuing operations was 13% and 7% for the three months ended July 1, 2012 and July 3, 2011, 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. In addition, 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 certain 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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Income Per Share

3 Months Ended

Jul. 01, 2012

Income Per Share [Abstract]

Income Per Share

Note 8. Income Per Share

The following table sets forth the computation of basic and diluted income from continuing operations per share:

	Three Months Ended
	July 1, 2012		July 3, 2011
	(In thousands, except per share amounts)
Income from continuing operations	$	18,441	$	34,196
Shares:
Weighted-average shares outstanding – basic		97,405		104,679
Dilutive potential common shares, using treasury stock method		964		1,110
Weighted-average shares outstanding – diluted		98,369		105,789
Income from continuing operations per share:
Basic	$	0.19	$	0.33
Diluted	$	0.19	$	0.32

Stock-based awards, including stock options and restricted stock units, representing 16.5 million and 14.4 million shares of common stock have been excluded from the diluted per share calculations for the three months ended July 1, 2012 and July 3, 2011, respectively. These stock-based awards have been excluded from the diluted per share calculations because their effect would have been antidilutive.

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Discontinued Operations (Tables)

3 Months Ended

Jul. 01, 2012

Discontinued Operations [Abstract]

Summary of operating results of Business included in discontinued operations

	Three Months Ended
	July 1, 2012			July 3, 2011
	(In thousands)
Net revenues	$	319		$	7,141
Loss from operations before income taxes	$	(89	)	$	(3,232	)

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Income Per Share (Tables)

3 Months Ended

Jul. 01, 2012

Income Per Share [Abstract]

Computation of basic and diluted income per share from continuing operations

	Three Months Ended
	July 1, 2012		July 3, 2011
	(In thousands, except per share amounts)
Income from continuing operations	$	18,441	$	34,196
Shares:
Weighted-average shares outstanding – basic		97,405		104,679
Dilutive potential common shares, using treasury stock method		964		1,110
Weighted-average shares outstanding – diluted		98,369		105,789
Income from continuing operations per share:
Basic	$	0.19	$	0.33
Diluted	$	0.19	$	0.32

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Fair Value Measurements (Details) (USD $) In Thousands, unless otherwise specified	Jul. 01, 2012	Apr. 01, 2012
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities	$ 379,290	$ 373,439
Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Cash and cash equivalents	117,052	164,516
Marketable securities	379,290	373,439
Total assets at fair value disclosure	496,342	537,955
U.S. Government and agency securities [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities	130,531	141,859
Corporate debt obligations [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities	171,580	167,668
Asset and mortgage-backed securities [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities	49,097	46,594
Municipal bonds [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities	28,082	16,568
Other debt securities [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities		750
Fair Value Measurements Using, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Cash and cash equivalents	116,802	162,266
Marketable securities	130,531	141,859
Total assets at fair value disclosure	247,333	304,125
Fair Value Measurements Using, Level 1 [Member] | U.S. Government and agency securities [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities	130,531	141,859
Fair Value Measurements Using, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Cash and cash equivalents	250	2,250
Marketable securities	248,759	231,580
Total assets at fair value disclosure	249,009	233,830
Fair Value Measurements Using, Level 2 [Member] | Corporate debt obligations [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities	171,580	167,668
Fair Value Measurements Using, Level 2 [Member] | Asset and mortgage-backed securities [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities	49,097	46,594
Fair Value Measurements Using, Level 2 [Member] | Municipal bonds [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities	28,082	16,568
Fair Value Measurements Using, Level 2 [Member] | Other debt securities [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities		750
Fair Value Measurements Using, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Cash and cash equivalents
Marketable securities
Total assets at fair value disclosure
Fair Value Measurements Using, Level 3 [Member] | U.S. Government and agency securities [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities
Fair Value Measurements Using, Level 3 [Member] | Corporate debt obligations [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities
Fair Value Measurements Using, Level 3 [Member] | Asset and mortgage-backed securities [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities
Fair Value Measurements Using, Level 3 [Member] | Municipal bonds [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities
Fair Value Measurements Using, Level 3 [Member] | Other debt securities [Member] | Fair Value, Measurements, Recurring [Member]
Schedule of Assets Measured at Fair Value on a Recurring Basis
Marketable securities

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Condensed Consolidated Statements of Comprehensive Income (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jul. 01, 2012	Jul. 03, 2011
Condensed Consolidated Statements of Comprehensive Income [Abstract]
Net income	$ 18,386	$ 32,426
Other comprehensive income, net of income taxes:
Changes in unrealized gains on marketable securities	142	424
Foreign currency translation adjustments	(218)	43
Total other comprehensive income (loss)	(76)	467
Comprehensive income	$ 18,310	$ 32,893

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Fair Value Measurements

3 Months Ended

Jul. 01, 2012

Fair Value Measurements [Abstract]

Fair Value Measurements

Note 4. 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 1, 2012 and April 1, 2012 are as follows:

	Fair Value Measurements Using
	Level 1		Level 2		Level 3		Total
	(In thousands)
July 1, 2012
Cash and cash equivalents	$	116,802	$	250	$	—	$	117,052
Marketable securities:
U.S. government and agency securities		130,531		—		—		130,531
Corporate debt obligations		—		171,580		—		171,580
Asset and mortgage-backed securities		—		49,097		—		49,097
Municipal bonds		—		28,082		—		28,082
		130,531		248,759		—		379,290
	$	247,333	$	249,009	$	—	$	496,342
April 1, 2012
Cash and cash equivalents	$	162,266	$	2,250	$	—	$	164,516
Marketable securities:
U.S. government and agency securities		141,859		—		—		141,859
Corporate debt obligations		—		167,668		—		167,668
Asset and mortgage-backed securities		—		46,594		—		46,594
Municipal bonds		—		16,568		—		16,568
Other debt securities		—		750		—		750
		141,859		231,580		—		373,439
	$	304,125	$	233,830	$	—	$	537,955

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. The Company obtained documentation from the pricing service as to the methodology and summary of inputs used for the various types of securities. The pricing service maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs. These observable inputs include reported trades and broker/dealer quotes of the same or similar securities, issuer credit spreads, benchmark securities and other observable inputs. The Company compares valuation information from the pricing service with other pricing sources to validate the reasonableness of the valuations.

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Inventories (Details) (USD $) In Thousands, unless otherwise specified	Jul. 01, 2012	Apr. 01, 2012
Components of inventories
Raw materials	$ 2,946	$ 3,743
Finished goods	19,207	15,981
Inventory, net, total	$ 22,153	$ 19,724

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Stock-Based Compensation (Tables)

3 Months Ended

Jul. 01, 2012

Stock-Based Compensation [Abstract]

Summary of Stock-Based Compensation Expense

	Three Months Ended
	July 1, 2012		July 3, 2011
	(In thousands)
Cost of revenues	$	770	$	741
Engineering and development		4,318		4,396
Sales and marketing		1,965		1,682
General and administrative		2,224		2,371
Total continuing operations		9,277		9,190
Discontinued operations		—		477
	$	9,277	$	9,667