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 June 30, 2013

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  þ    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  þ    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  þ 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  þ

As of July 26, 2013, 87,689,000 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 June 30, 2013 and March 31, 2013		1
	Condensed Consolidated Statements of Operations for the three months ended June 30, 2013 and July 1, 2012		2
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended June 30, 2013 and July 1, 2012		3
	Condensed Consolidated Statements of Cash Flows for the three months ended June 30, 2013 and July 1, 2012		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

	June 30, 2013			March 31, 2013
	(Unaudited; In thousands, except share and per share amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	94,552		$	95,532
Marketable securities		337,317			359,974
Accounts receivable, less allowance for doubtful accounts of $1,222 and $1,196 as of June 30, 2013 and March 31, 2013, respectively		69,271			66,135
Inventories		17,108			20,160
Deferred tax assets		13,307			13,036
Other current assets		28,875			24,381
Total current assets		560,430			579,218
Property and equipment, net		94,086			96,336
Goodwill		110,976			110,976
Purchased intangible assets, net		3,748			4,054
Deferred tax assets		25,630			31,992
Other assets		2,496			2,587
	$	797,366		$	825,163
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	26,936		$	29,668
Accrued compensation		22,079			27,453
Accrued taxes		3,217			4,559
Deferred revenue		4,623			4,676
Other current liabilities		14,414			7,651
Total current liabilities		71,269			74,007
Accrued taxes		10,845			10,772
Other liabilities		6,240			6,107
Total liabilities		88,354			90,886
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; 212,982,000 and 212,145,000 shares issued as of June 30, 2013 and March 31, 2013, respectively		213			212
Additional paid-in capital		937,378			932,557
Retained earnings		1,687,287			1,690,337
Accumulated other comprehensive income (loss)		(722	)		1,887
Treasury stock, at cost: 124,599,000 and 122,185,000 shares as of June 30, 2013 and March 31, 2013, respectively		(1,915,144	)		(1,890,716	)
Total stockholders’ equity		709,012			734,277
	$	797,366		$	825,163

See accompanying notes to condensed consolidated financial statements.

1

QLOGIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended
	June 30, 2013			July 1, 2012
	(Unaudited; In thousands, except per share amounts)
Net revenues	$	113,116		$	130,371
Cost of revenues		36,619			43,313
Gross profit		76,497			87,058
Operating expenses:
Engineering and development		40,387			39,458
Sales and marketing		19,413			18,886
General and administrative		7,739			8,673
Special charges		12,033			—
Total operating expenses		79,572			67,017
Operating income (loss)		(3,075	)		20,041
Interest and other income, net		773			1,078
Income (loss) from continuing operations before income taxes		(2,302	)		21,119
Income taxes		748			2,678
Income (loss) from continuing operations		(3,050	)		18,441
Loss from discontinued operations, net of income taxes		—			(55	)
Net income (loss)	$	(3,050	)	$	18,386
Income (loss) from continuing operations per share:
Basic	$	(0.03	)	$	0.19
Diluted	$	(0.03	)	$	0.19
Loss from discontinued operations per share:
Basic	$	—		$	—
Diluted	$	—		$	—
Net income (loss) per share:
Basic	$	(0.03	)	$	0.19
Diluted	$	(0.03	)	$	0.19
Number of shares used in per share calculations:
Basic		89,146			97,405
Diluted		89,146			98,369

See accompanying notes to condensed consolidated financial statements.

2

QLOGIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

	Three Months Ended
	June 30, 2013			July 1, 2012
	(Unaudited; In thousands)
Net income (loss)	$	(3,050	)	$	18,386
Other comprehensive income, net of income taxes:
Changes in fair value of marketable securities:
Changes in unrealized gains		(1,921	)		246
Net realized gains reclassified into earnings		(394	)		(104	)
		(2,315	)		142
Foreign currency translation adjustments		(294	)		(218	)
Total other comprehensive loss		(2,609	)		(76	)
Comprehensive income (loss)	$	(5,659	)	$	18,310

See accompanying notes to condensed consolidated financial statements.

3

QLOGIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended
	June 30, 2013			July 1, 2012
	(Unaudited; In thousands)
Cash flows from operating activities:
Net income (loss)	$	(3,050	)	$	18,386
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		7,806			6,572
Stock-based compensation		8,171			9,277
Deferred income taxes		5,403			(2,254	)
Impairment of property and equipment		2,429			—
Other non-cash items		345			809
Changes in operating assets and liabilities:
Accounts receivable		(3,169	)		(2,224	)
Inventories		3,052			(2,429	)
Other assets		(210	)		(2,240	)
Accounts payable		(289	)		661
Accrued compensation		(5,374	)		(7,895	)
Accrued taxes, net		(5,366	)		3,108
Other liabilities		6,843			5,245
Net cash provided by operating activities		16,591			27,016
Cash flows from investing activities:
Purchases of available-for-sale securities		(89,318	)		(72,440	)
Proceeds from sales and maturities of available-for-sale securities		108,609			65,799
Purchases of property and equipment		(10,111	)		(9,486	)
Net cash provided by (used in) investing activities		9,180			(16,127	)
Cash flows from financing activities:
Proceeds from issuance of common stock under stock-based awards		1,963			2,847
Excess tax benefits from stock-based awards		5			126
Minimum tax withholding paid on behalf of employees for restricted stock units		(4,280	)		(5,349	)
Purchases of treasury stock		(24,428	)		(55,977	)
Payments for credit facility commitment fee		(11	)		—
Net cash used in financing activities		(26,751	)		(58,353	)
Net decrease in cash and cash equivalents		(980	)		(47,464	)
Cash and cash equivalents at beginning of period		95,532			164,516
Cash and cash equivalents at end of period	$	94,552		$	117,052

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 March 31, 2013. The results of operations for the three months ended June 30, 2013 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, marketable 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.

Note 2. Marketable Securities

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

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(In thousands)
June 30, 2013
U.S. government and agency securities	$	92,577	$	130	$	(249	)	$	92,458
Corporate debt obligations		151,342		950		(648	)		151,644
Mortgage-backed securities		53,212		185		(466	)		52,931
Municipal bonds		39,883		17		(211	)		39,689
Other debt securities		600		—		(5	)		595
	$	337,614	$	1,282	$	(1,579	)	$	337,317
March 31, 2013
U.S. government and agency securities	$	113,033	$	327	$	(1	)	$	113,359
Corporate debt obligations		153,460		1,429		(30	)		154,859
Mortgage-backed securities		50,852		473		(44	)		51,281
Municipal bonds		39,661		211		—			39,872
Other debt securities		602		1		—			603
	$	357,608	$	2,441	$	(75	)	$	359,974

The amortized cost and estimated fair value of debt securities as of June 30, 2013, 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	$	91,669	$	91,825
Due after one year through three years		146,200		146,284
Due after three years through five years		58,173		57,246
Due after five years		41,572		41,962
	$	337,614	$	337,317

5

QLOGIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 June 30, 2013 and March 31, 2013.

	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)
June 30, 2013
U.S. government and agency securities	$	39,004	$	(249	)	$	—	$	—		$	39,004	$	(249	)
Corporate debt obligations		70,496		(648	)		—		—			70,496		(648	)
Mortgage-backed securities		33,607		(463	)		373		(3	)		33,980		(466	)
Municipal bonds		28,653		(211	)		—		—			28,653		(211	)
Other debt securities		595		(5	)		—		—			595		(5	)
	$	172,355	$	(1,576	)	$	373	$	(3	)	$	172,728	$	(1,579	)
March 31, 2013
U.S. government and agency securities	$	4,502	$	(1	)	$	—	$	—		$	4,502	$	(1	)
Corporate debt obligations		24,203		(30	)		—		—			24,203		(30	)
Mortgage-backed securities		10,048		(44	)		—		—			10,048		(44	)
	$	38,753	$	(75	)	$	—	$	—		$	38,753	$	(75	)

As of June 30, 2013 and March 31, 2013, 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 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 June 30, 2013 and March 31, 2013, the Company determined that the unrealized losses were temporary in nature and recorded them as a component of accumulated other comprehensive income.

Realized gains and losses reclassified from accumulated other comprehensive income are included in interest and other income, net, in the condensed consolidated statements of operations.

Note 3. Fair Value Measurements

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

6

QLOGIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Assets measured at fair value on a recurring basis as of June 30, 2013 and March 31, 2013 are as follows:

	Fair Value Measurements Using
	Level 1		Level 2		Level 3		Total
	(In thousands)
June 30, 2013
Cash and cash equivalents	$	90,899	$	3,653	$	—	$	94,552
Marketable securities:
U.S. government and agency securities		92,458		—		—		92,458
Corporate debt obligations		—		151,644		—		151,644
Mortgage-backed securities		—		52,931		—		52,931
Municipal bonds		—		39,689		—		39,689
Other debt securities		—		595		—		595
		92,458		244,859		—		337,317
	$	183,357	$	248,512	$	—	$	431,869
March 31, 2013
Cash and cash equivalents	$	95,098	$	434	$	—	$	95,532
Marketable securities:
U.S. government and agency securities		113,359		—		—		113,359
Corporate debt obligations		—		154,859		—		154,859
Mortgage-backed securities		—		51,281		—		51,281
Municipal bonds		—		39,872		—		39,872
Other debt securities		—		603		—		603
		113,359		246,615		—		359,974
	$	208,457	$	247,049	$	—	$	455,506

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 4. Inventories

Components of inventories are as follows:

	June 30, 2013		March 31, 2013
	(In thousands)
Raw materials	$	1,952	$	2,039
Finished goods		15,156		18,121
	$	17,108	$	20,160

Note 5. Stock-Based Compensation

During the three months ended June 30, 2013, the Company granted 1.1 million restricted stock units and options to purchase 0.1 million shares of common stock with weighted average grant date fair values of $9.84 and $3.89 per share, respectively. The restricted stock units included 0.1 million restricted stock units with service and market conditions, which were granted to certain senior executives.

7

QLOGIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

	Three Months Ended
	June 30, 2013		July 1, 2012
	(In thousands)
Cost of revenues	$	584	$	770
Engineering and development		4,351		4,318
Sales and marketing		1,793		1,965
General and administrative		1,443		2,224
	$	8,171	$	9,277

Note 6. Special Charges

In June 2013, the Company commenced a restructuring plan designed to enhance product focus and streamline business operations. The restructuring plan includes a workforce reduction and the consolidation and elimination of certain engineering activities. In connection with this plan, the Company ceased development of future switch application-specific integrated circuits (ASICs). The Company expects to incur between $14 million and $17 million of exit costs associated with this restructuring plan, which consists of between $11 million and $12 million related to workforce reductions and between $3 million and $5 million related to facilities and other costs. The Company expects to substantially complete the restructuring activities during fiscal 2014.

During the three months ended June 30, 2013, the Company recorded special charges of $12.0 million, consisting of $9.6 million of exit costs and $2.4 million of asset impairment charges primarily related to property and equipment. The exit costs include severance and related costs associated with involuntarily terminated employees. Certain employees that were notified of their termination are required to provide services for varying periods in excess of statutory notice periods. Severance costs related to these services are recognized ratably over the estimated requisite service period. Exit costs also include the estimated costs associated with the portion of a facility under a non-cancelable lease that the Company ceased using and other costs.

Activity and liability balances for exit costs, including a liability associated with exit costs related to a portion of the facility the Company ceased using prior to fiscal 2013, are as follows:

	Workforce Reduction			Facilities and  Other			Total
	(In thousands)
Balance as of March 31, 2013	$	—		$	1,771		$	1,771
Charged to costs and expenses		9,086			518			9,604
Payments		(2,640	)		(111	)		(2,751	)
Balance as of June 30, 2013	$	6,446		$	2,178		$	8,624

The unpaid exit costs are expected to be paid over the terms of the related agreements through fiscal 2018. As of June 30, 2013, unpaid exit costs totaling $6.6 million are included in other current liabilities.

Note 7. Income Taxes

The Company’s provision for income taxes from continuing operations was $0.7 million and $2.7 million for the three months ended June 30, 2013 and July 1, 2012, respectively. The provision for income taxes is based on the estimated income for the year, the composition of the estimated income in different tax jurisdictions, and the tax effect, if any, in the applicable quarterly periods of newly enacted tax legislation, resolution of tax audits, changes in uncertain tax positions, and other discrete tax-related items. The allocation of taxable income to domestic and foreign tax jurisdictions impacts the effective tax rate, as the Company’s income tax rate in foreign jurisdictions is generally lower than its income tax rate in the United States.

The Company’s federal consolidated income tax returns for fiscal years 2010 and 2011 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 (Loss) Per Share

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

	Three Months Ended
	June 30, 2013			July 1, 2012
	(In thousands, except per share amounts)
Income (loss) from continuing operations	$	(3,050	)	$	18,441
Shares:
Weighted-average shares outstanding — basic		89,146			97,405
Dilutive potential common shares, using treasury stock method		—			964
Weighted-average shares outstanding — diluted		89,146			98,369
Income (loss) from continuing operations per share:
Basic	$	(0.03	)	$	0.19
Diluted	$	(0.03	)	$	0.19

Stock-based awards, including stock options and restricted stock units, representing 18.5 million and 16.5 million shares of common stock have been excluded from the diluted per share calculations for the three months ended June 30, 2013 and July 1, 2012, 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 server and storage networking 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 two categories – Advanced Connectivity Platforms and Legacy Connectivity Products. Advanced Connectivity Platforms are comprised primarily of adapters and application-specific integrated circuits, or ASICs, for server and storage connectivity applications. Legacy Connectivity Products are comprised primarily of Fibre Channel switch products and 1Gb iSCSI products.

Our products are sold worldwide, primarily to original equipment manufacturers, or OEMs, and distributors. Our customers rely on our various server and storage connectivity 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 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, Huawei Technologies Co. Ltd., Inspur Worldwide Services Ltd., International Business Machines Corporation, Lenovo Group Ltd., NetApp, Inc. and Oracle Corporation.

10

Restructuring Plan

In June 2013, we commenced a restructuring plan designed to enhance product focus and streamline business operations. The restructuring plan included a workforce reduction and the consolidation and elimination of certain engineering activities. In connection with this plan, we ceased development of future switch ASICs. We expect to incur between $14 million and $17 million of exit costs associated with this restructuring plan, which consists of between $11 million and $12 million related to workforce reductions and between $3 million and $5 million related to facilities and other costs. We expect to substantially complete the restructuring activities during fiscal 2014.

Disposition of Business

In February 2012, we completed the sale of the product lines and certain assets associated with our InfiniBand business. As a result of this divestiture, our condensed consolidated statements of operations for all periods present the operations of this 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 2014 is as follows:

• Net revenues were $113.1 million in the first quarter of fiscal 2014 compared to $116.9 million in the fourth quarter of fiscal 2013. Revenue from Advanced Connectivity Platforms was $93.2 million in the first quarter of fiscal 2014 compared to $97.0 million in the fourth quarter of fiscal 2013. Revenue from Legacy Connectivity Products of $19.9 million for the first quarter of fiscal 2014 was consistent with the fourth quarter of fiscal 2013.

• Gross profit as a percentage of net revenues was 67.6% in the first quarter of fiscal 2014 compared to 67.7% in the fourth quarter of fiscal 2013.

• Operating loss was $3.1 million in the first quarter of fiscal 2014 compared to operating income of $10.4 million in the fourth quarter of fiscal 2013. The operating loss in the first quarter of fiscal 2014 included special charges of $12.0 million related to the restructuring plan.

• Loss from continuing operations was $3.1 million, or $0.03 per diluted share, in the first quarter of fiscal 2014 compared to income from continuing operations of $29.6 million, or $0.33 per diluted share, in the fourth quarter of fiscal 2013. Income from continuing operations in the fourth quarter of fiscal 2013 included an income tax benefit of $18.2 million. This tax benefit was the result of adjustments to certain tax positions subject to an Internal Revenue Service examination and the retroactive reinstatement of the federal research tax credit.

• Cash, cash equivalents and marketable securities were $431.9 million as of June 30, 2013 compared to $455.5 million as of March 31, 2013.

• Accounts receivable was $69.3 million as of June 30, 2013 compared to $66.1 million as of March 31, 2013. Days sales outstanding (DSO) in receivables was 56 days as of June 30, 2013.

• Inventories decreased to $17.1 million as of June 30, 2013 from $20.2 million as of March 31, 2013. Our annualized inventory turns were 8.6 turns in the first quarter of fiscal 2014.

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Results of Operations

Net Revenues

We classify our products into two categories - Advanced Connectivity Platforms and Legacy Connectivity Products. We previously classified our products into three categories - Host Products, Network Products and Silicon Products. As a result of the enhanced product focus associated with our restructuring plan, we determined that the new product categories were more aligned with our business going forward. A summary of our net revenues by product category is as follows:

	Three Months Ended
	June 30, 2013			July 1, 2012
	(Dollars in millions)
Net revenues:
Advanced Connectivity Platforms	$	93.2		$	108.1
Legacy Connectivity Products		19.9			22.3
	$	113.1		$	130.4
Percentage of net revenues:
Advanced Connectivity Platforms		82	%		83	%
Legacy Connectivity Products		18			17
		100	%		100	%

Historically, the global marketplace for server and storage connectivity 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.

The United States and other countries around the world have experienced, and are continuing to experience, economic weakness and uncertainty. Economic uncertainty is adversely affecting, and in the future may adversely affect, information technology spending rates, which is negatively impacting our revenue and operating results. Accordingly, it is extremely difficult for us to forecast future sales levels and historical information may not be indicative of future trends.

Net revenues of $113.1 million for the three months ended June 30, 2013 decreased from $130.4 million for the three months ended July 1, 2012. The decrease in net revenues was the result of a $14.9 million, or 14%, decrease in revenue from Advanced Connectivity Platforms and a $2.4 million, or 11%, decrease in revenue from Legacy Connectivity Products. The decrease in revenue from Advanced Connectivity Platforms was primarily due to a 16% decrease in units sold, principally associated with adapters. The decrease in revenue from Legacy Connectivity Products was due to a 16% decrease in units sold, partially offset by a 6% increase in average selling prices of these products. The decrease in units sold was primarily associated with switch products. We expect net revenue from our Legacy Connectivity Products to continue to decline over time. As part of our restructuring plan, we ceased development of future switch ASICs, however, we will continue to sell and support products based on the current generation switch ASICs. In addition, we expect our 1Gb iSCSI products will continue to be replaced with solutions based on current technology.

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 83% and 86% of net revenues during the three months ended June 30, 2013 and July 1, 2012, 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
	June 30, 2013		July 1, 2012
	(In millions)
United States	$	49.1	$	58.5
Asia-Pacific and Japan		38.7		41.2
Europe, Middle East and Africa		20.6		23.4
Rest of world		4.7		7.3
	$	113.1	$	130.4

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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. The United States and China are the only countries that represented 10% or more of net revenues for the periods presented. Net revenues from customers in China were $13.9 million and $18.0 million for the three months ended June 30, 2013 and July 1, 2012, respectively.

Gross Profit

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

	Three Months Ended
	June 30, 2013			July 1, 2012
	(Dollars in millions)
Gross profit	$	76.5		$	87.1
Percentage of net revenues		67.6	%		66.8	%

Gross profit for the three months ended June 30, 2013 decreased $10.6 million, or 12%, from gross profit for the three months ended July 1, 2012. The gross profit percentage for the three months ended June 30, 2013 increased to 67.6% from 66.8% for the corresponding quarter in the prior year. The increase in gross profit percentage was primarily due to a favorable change in 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
	June 30, 2013			July 1, 2012
	(Dollars in millions)
Operating expenses:
Engineering and development	$	40.4		$	39.4
Sales and marketing		19.4			18.9
General and administrative		7.8			8.7
Special charges		12.0			—
	$	79.6		$	67.0
Percentage of net revenues:
Engineering and development		35.7	%		30.3	%
Sales and marketing		17.2			14.5
General and administrative		6.8			6.6
Special charges		10.6			—
		70.3	%		51.4	%

Engineering and Development. Engineering and development expenses consist primarily of compensation and related employee benefit costs, outside service and material costs, occupancy and equipment costs and related computer support costs. During the three months ended June 30, 2013, engineering and development expenses increased to $40.4 million from $39.4 million for the three months ended July 1, 2012. The increase was primarily due to a $2.3 million increase in cash compensation and related employee benefit costs, principally due to an increase in headcount, and a $0.7 million increase in equipment depreciation and maintenance costs, partially offset by a $2.3 million decrease in outside service and material costs related to new product development.

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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 June 30, 2013, sales and marketing expenses increased to $19.4 million from $18.9 million for the three months ended July 1, 2012.

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 $7.8 million for the three months ended June 30, 2013 from $8.7 million for the three months ended July 1, 2012, primarily due to a decrease in stock-based compensation.

Special Charges. During the three months ended June 30, 2013, we recorded special charges of $12.0 million related to our restructuring plan, consisting of $9.6 million of exit costs and $2.4 million of asset impairment charges primarily related to property and equipment. The exit costs include severance and related costs associated with involuntarily terminated employees. Certain employees that were notified of their termination are required to provide services for varying periods in excess of statutory notice periods. Severance costs related to these services are recognized ratably over the estimated requisite service period. Exit costs also include the estimated costs associated with the portion of a facility under a non-cancelable lease that we ceased using and other costs. As we continue our restructuring activities, we expect to record additional special charges during the remainder of fiscal 2014, primarily related to the facility under a non-cancelable lease and severance costs for terminated employees that are required to provide services beyond the statutory notice period.

The unpaid exit costs of $8.6 million as of June 30, 2013 are expected to be paid over the terms of the related agreements through fiscal 2018, including $6.6 million during the next twelve months.

Income Taxes

Income tax expense from continuing operations of $0.7 million for the three months ended June 30, 2013 decreased from $2.7 million for the three months ended July 1, 2012, primarily due to a decrease in income before income taxes, offset by the effect of a stock-based compensation discrete tax-related item.

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 and dispositions, changes to tax laws or regulations, examinations by tax authorities, stock-based compensation, uncertain tax positions and changes in the realizability of deferred tax assets.

Our federal consolidated income tax returns for fiscal years 2010 and 2011 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.

Liquidity and Capital Resources

Our combined balances of cash, cash equivalents and marketable securities decreased to $431.9 million as of June 30, 2013 from $455.5 million as of March 31, 2013. As of June 30, 2013 and March 31, 2013, our international subsidiaries held $322.6 million and $317.1 million, respectively, of our total cash, cash equivalents and marketable securities. These holdings by our international subsidiaries 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.

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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.

Revolving Credit Facility

We have a credit agreement that provides us with a $125 million unsecured revolving credit facility that matures in March 2018. Borrowings under the credit agreement may be used for general corporate purposes, including permitted share repurchases and acquisitions. Under the credit agreement, we may increase the revolving commitments or obtain incremental term loans in an aggregate amount up to an additional $100 million, subject to certain conditions. There were no borrowings outstanding under the credit agreement as of June 30, 2013.

Operating, Investing and Financing Activities

Cash provided by operating activities decreased to $16.6 million for the three months ended June 30, 2013 from $27.0 million for the three months ended July 1, 2012. Operating cash flow for the three months ended June 30, 2013 consisted of our net loss of $3.1 million, net non-cash expenses of $24.2 million and net cash used as a result of changes in operating assets and liabilities of $4.5 million. The changes in operating assets and liabilities included a $5.4 million decrease in accrued compensation and a $5.4 million decrease in accrued taxes, net, partially offset by a $6.8 million increase in other liabilities. The decrease in accrued compensation was primarily due to the timing of payment obligations. The decrease in accrued taxes was primarily due to estimated tax payments remitted during the fiscal quarter. The increase in other liabilities was primarily due to accrued exit costs associated with our restructuring plan.

Cash provided by operating activities of $27.0 million 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 investing activities was $9.2 million for the three months ended June 30, 2013 and consisted of $19.3 million of net sales and maturities of available-for-sale securities, partially offset by $10.1 million of purchases of property and equipment. During the three months ended July 1, 2012, cash used in investing activities was $16.1 million and consisted of $6.6 million of net purchases of available-for-sale securities and $9.5 million of purchases of property and equipment.

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

Cash used in financing activities of $26.8 million for the three months ended June 30, 2013 consisted primarily of our purchase of $24.4 million of common stock under our stock repurchase program and $4.3 million for minimum tax withholdings paid on behalf of employees for restricted stock units that vested during the period, partially offset by $2.0 million of proceeds from the issuance of common stock from stock-based awards. During the three months ended July 1, 2012, cash used in financing activities of $58.4 million 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.

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 June 30, 2013, we had repurchased a total of 124.6 million shares of common stock under our stock repurchase programs for an aggregate purchase price of $1.92 billion. Pursuant to the existing stock repurchase program, we are authorized to repurchase shares with an aggregate cost of up to $34.9 million as of June 30, 2013.

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Contractual Obligations and Commitments

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 June 30, 2013, and their impact on our cash flows in future fiscal years, is as follows:

	2014 (Remaining nine months)		2015		2016		2017		2018		Thereafter		Total
	(In millions)
Operating leases	$	7.0	$	6.0	$	2.3	$	1.9	$	1.9	$	0.2	$	19.3
Non-cancelable purchase obligations		31.3		0.3		—		—		—		—		31.6
Total	$	38.3	$	6.3	$	2.3	$	1.9	$	1.9	$	0.2	$	50.9

The amount of unrecognized tax benefits, including related accrued interest and penalties, was $10.8 million as of June 30, 2013. We are not able to provide a reasonable estimate of the timing of future tax payments related to these obligations.

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, in 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.

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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 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 (i) 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 (ii) 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 are 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. Significant judgment and estimates are required in determining whether a valuation allowance is recorded. In assessing the need for a valuation allowance, we consider all available evidence, including past operating results, estimates of future taxable income, and the feasibility of tax planning strategies. Our estimates and projections require significant judgment and are subject to uncertainty due to various factors, including the economic environment, industry and market conditions, and the length of time of the projections included in the analyses. If our actual results are less favorable than current estimates, or we revise our estimates downward in future analyses, a valuation allowance may be required with a corresponding adjustment to earnings in the period in which such determination is made.

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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.

Marketable Securities

Marketable securities consist of available-for-sale securities and 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.

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.

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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 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 June 30, 2013, 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, 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 June 30, 2013 consists of $337.3 million of securities that are classified as available-for-sale. As of June 30, 2013, we had gross unrealized losses associated with our available-for-sale securities of $1.6 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 principal executive officer and principal 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 principal executive officer and principal 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 principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2013. There was no change in our internal control over financial reporting during our quarter ended June 30, 2013 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 March 31, 2013, 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 March 31, 2013.

Our operating results have been, are being, and may in the future 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. Economic uncertainty is adversely affecting, and in the future may adversely affect, information technology, or IT, spending rates. For example, certain of our large original equipment manufacturer, or OEM, customers are reporting significant weakness in particular markets and geographies. Reductions in IT spending rates have resulted in reduced sales volumes, and could result in lower prices for our products, longer sales cycles, increased inventory provisions and increased production costs, all of which could negatively impact our results of operations.

With the goal of better positioning ourselves to operate in this uncertain environment of economic and market weakness, we announced a restructuring plan in June 2013. The plan is designed to enhance product focus and streamline business operations, including a workforce reduction and the consolidation and elimination of several engineering activities. No assurances can be given that the design and implementation of the Company’s restructuring plan will result in improved financial performance or otherwise achieve the anticipated benefits of such restructuring, including, without limitation, expected cost reductions.

As a result of worldwide economic weakness and uncertainty, it is extremely difficult for us and our customers to forecast future revenue levels based on historical information and trends. In addition, the recent U.S. federal government spending cuts might reduce demand for our products from organizations that receive funding from the U.S. government and could negatively affect macroeconomic conditions in the United States, which could further reduce demand for our products. To the extent that we do not achieve our anticipated level of revenue, our operating results could be adversely affected.

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

We have experienced, are currently experiencing, 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;

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

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

• variations in operating expenses;

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

• our ability to timely produce products that comply with new environmental restrictions or related requirements of our 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.

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

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 or 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.

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

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

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

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

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

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, or entering into exclusive strategic alliances with our major customers, either of which may adversely affect the market acceptance of our products, our ability to enter new markets, or our ability to secure customer design wins. 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 in 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 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 an emerging technology for use in enterprise data centers. The market for 10Gb Ethernet products 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 83% and 86% of net revenues for the three months ended June 30, 2013 and July 1, 2012, respectively. Total revenue from our two largest customers, Hewlett-Packard Company and International Business Machines Corporation, together accounted for 40% or more of net revenues during the three months ended June 30, 2013 and July 1, 2012. 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. Certain of our large OEM customers are reporting weakness in this market. If server sales by our major customers continue to be adversely affected by the IT spending environment or server market factors, demand for our products could decrease further, 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.

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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. Similarly, there is also the potential for a large customer to sell portions of their business that we serve to a company with which we have a limited business relationship. As a result of such transactions, demand for our products could decrease, which could have a material adverse effect on our business, financial condition or results of operations.

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

The markets for networking infrastructure components are highly competitive and are characterized by short product life cycles, price erosion, rapidly changing technology, frequent product performance improvements and evolving industry standards. Due to the diversity of products required in storage, local area and converged networking infrastructure, we compete with many companies. In the traditional enterprise storage Fibre Channel adapter and application-specific integrated circuit, or 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 compete primarily with Emulex Corporation, Broadcom Corporation and Intel Corporation. In the Fibre Channel switch market, 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.

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. Our Chief Executive Officer resigned in May 2013 and we have appointed an interim CEO while we conduct a search for a permanent CEO. During our search for a new CEO, it is important that we retain key personnel. If we lose the services of key personnel, especially during this period of transition, or do not hire or retain other personnel for key positions, including the Chief Executive Officer position, 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, we have periodically 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 equity awards 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, the guidelines of proxy advisory firms relating to stockholder approval of shares available under equity compensation plans and share usage could make it more difficult for us to obtain such approval and therefore 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.

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

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

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

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.

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

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

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

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

• 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 effectively 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 selling products from other suppliers, thus reducing their efforts 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.

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Additionally, our effective tax rate may be impacted by the tax effects of acquisitions, dispositions, changes to tax laws or regulations, examinations by tax authorities, stock-based compensation, uncertain tax positions and changes in the realizability of deferred tax assets. Significant judgment and estimates are required in determining the impact on our effective tax rate related to these items, including whether it is more likely than not that some or all of our deferred tax assets will be realized. Such estimates are subject to uncertainty due to various factors, including the economic environment, industry and market conditions, and the length of time of the projections included in the analyses. If our actual results are less favorable than current estimates, or we revise our estimates downward in future analyses, a valuation allowance may be required related to our deferred tax assets with a corresponding adjustment to earnings in the period in which such determination is made, which could have a material effect on our results of operations.

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. For example, our federal consolidated income tax returns for fiscal years 2010 and 2011 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.

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 57% and 55% of our net revenues for the three months ended June 30, 2013 and July 1, 2012, respectively. We expect that international revenues will continue to account for a significant percentage of our net revenues for the foreseeable future. In addition, we maintain operations in foreign countries and a significant portion of our inventory purchases are from suppliers that are located outside the United States. As a result, we are subject to several risks, which include:

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

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

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

• currency fluctuations;

• overlapping or differing tax structures;

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

• general trade restrictions.

As of June 30, 2013, our international subsidiaries held $322.6 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.

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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 damages 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 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;

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• 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.

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 condition 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 condition 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 June 30, 2013, we held short-term marketable securities totaling $337.3 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 and adversely affect us.

Our business, results of operations or financial condition could be materially and adversely affected if new laws, regulations or standards relating to us or our products are implemented or existing ones are 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. The U.S. Securities and Exchange Commission has also finalized new disclosure requirements relating to the sourcing of so-called conflict minerals from the Democratic Republic of Congo and certain other adjoining countries. Our disclosure will be predicated upon the timely receipt of accurate information from suppliers, who may be unwilling or unable to provide us with the relevant information. As a result, these new requirements could adversely affect our costs, the availability of minerals used in our products and our relationships with customers and suppliers.

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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.

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 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 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

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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.

Our ability to borrow and maintain outstanding borrowings under our credit agreement is subject to certain covenants.

We have a credit agreement that provides us with a $125 million unsecured revolving credit facility that matures in March 2018. Borrowings under the credit agreement may be used for general corporate purposes, including permitted share repurchases and acquisitions. Under the credit agreement, we may increase the revolving commitments or obtain incremental term loans in an aggregate amount up to an additional $100 million, subject to certain conditions. Our ability to borrow under the credit agreement is subject to continued compliance with certain financial and non-financial covenants. In addition, a breach of any of the covenants or other provisions in the credit agreement could result in an event of default, which if not cured or waived, could result in outstanding borrowings becoming immediately due and payable. We may be unable to maintain compliance with these covenants and, if we fail to do so, we may be unable to obtain waivers or amend the covenants. In the event that some or all of our outstanding borrowings is accelerated and becomes immediately due and payable, we may not have the funds to repay, or the ability to refinance, our borrowings. There were no borrowings outstanding under the credit agreement as of June 30, 2013.

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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 2014 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 1, 2013 – April 28, 2013		738,000	$	10.83		738,000	$	51,288,000
April 29, 2013 – May 26, 2013		692,000	$	9.91		692,000	$	44,429,000
May 27, 2013 – June 30, 2013		984,000	$	9.73		984,000	$	34,854,000
		2,414,000	$	10.12		2,414,000	$	34,854,000

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Item 6. Exhibits

Exhibits

Exhibit No.
10.1	Form of Terms and Conditions of Performance Share Award under the QLogic Corporation 2005 Performance Incentive Plan.*
10.2	General Release Agreement, dated May 17, 2013, by and between the Company and Simon Biddiscombe (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed on May 20, 2013).*
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/    JEAN HU
	Jean Hu
	Interim Chief Executive Officer, Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

Date: August 1, 2013

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EXHIBIT INDEX

Exhibit No.
10.1	Form of Terms and Conditions of Performance Share Award under the QLogic Corporation 2005 Performance Incentive Plan.*
10.2	General Release Agreement, dated May 17, 2013, by and between the Company and Simon Biddiscombe (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed on May 20, 2013).*
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(s), (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 the Grantee based on that level of achievement, (iii) [Remaining Vesting terms to be determined at time of grant]. The Performance Objectives approved by the Compensation Committee and the weighting assigned to each objective shall be separately communicated to the Grantee after they are established by the Compensation Committee.

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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. 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.

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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.

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

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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 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

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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 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.

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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.

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.

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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-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, 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
	Interim Chief Executive Officer

Date: August 1, 2013

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 Senior Vice President and Chief Financial Officer

Date: August 1, 2013

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

The undersigned Interim 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 June 30, 2013 (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/ JEAN HU

Jean Hu

Interim Chief Executive Officer,

Senior Vice President and

Chief Financial Officer

Dated: August 1, 2013

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.

XML

Inventories (Tables)

3 Months Ended

Jun. 30, 2013

Inventory Disclosure [Abstract]

Components of Inventories

Components of inventories are as follows:

	June 30, 2013		March 31, 2013
	(In thousands)
Raw materials	$	1,952	$	2,039
Finished goods		15,156		18,121
	$	17,108	$	20,160

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Jun. 30, 2013	Jul. 01, 2012
Income Statement [Abstract]
Net revenues	$ 113,116	$ 130,371
Cost of revenues	36,619	43,313
Gross profit	76,497	87,058
Operating expenses:
Engineering and development	40,387	39,458
Sales and marketing	19,413	18,886
General and administrative	7,739	8,673
Special charges	12,033
Total operating expenses	79,572	67,017
Operating income (loss)	(3,075)	20,041
Interest and other income, net	773	1,078
Income (loss) from continuing operations before income taxes	(2,302)	21,119
Income taxes	748	2,678
Income (loss) from continuing operations	(3,050)	18,441
Loss from discontinued operations, net of income taxes		(55)
Net income (loss)	$ (3,050)	$ 18,386
Income (loss) from continuing operations per share:
Basic	$ (0.03)	$ 0.19
Diluted	$ (0.03)	$ 0.19
Loss from discontinued operations per share:
Basic
Diluted
Net income (loss) per share:
Basic	$ (0.03)	$ 0.19
Diluted	$ (0.03)	$ 0.19
Number of shares used in per share calculations:
Basic	89,146	97,405
Diluted	89,146	98,369

XML

Inventories

3 Months Ended

Jun. 30, 2013

Inventory Disclosure [Abstract]

Inventories

Note 4. Inventories

Components of inventories are as follows:

	June 30, 2013		March 31, 2013
	(In thousands)
Raw materials	$	1,952	$	2,039
Finished goods		15,156		18,121
	$	17,108	$	20,160

XML

Fair Value Measurements - Schedule of Assets Measured at Fair Value on Recurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Mar. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	$ 337,317	$ 359,974
Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	94,552	95,532
Marketable securities	337,317	359,974
Total assets at fair value disclosure	431,869	455,506
U.S. government and agency securities [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	92,458	113,359
Corporate debt obligations [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	151,644	154,859
Mortgage-backed securities [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	52,931	51,281
Municipal bonds [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	39,689	39,872
Other debt securities [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	595	603
Fair Value Measurements Using, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	90,899	95,098
Marketable securities	92,458	113,359
Total assets at fair value disclosure	183,357	208,457
Fair Value Measurements Using, Level 1 [Member] | U.S. government and agency securities [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	92,458	113,359
Fair Value Measurements Using, Level 1 [Member] | Corporate debt obligations [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities
Fair Value Measurements Using, Level 1 [Member] | Mortgage-backed securities [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities
Fair Value Measurements Using, Level 1 [Member] | Municipal bonds [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities
Fair Value Measurements Using, Level 1 [Member] | Other debt securities [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities
Fair Value Measurements Using, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	3,653	434
Marketable securities	244,859	246,615
Total assets at fair value disclosure	248,512	247,049
Fair Value Measurements Using, Level 2 [Member] | U.S. government and agency securities [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities
Fair Value Measurements Using, Level 2 [Member] | Corporate debt obligations [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	151,644	154,859
Fair Value Measurements Using, Level 2 [Member] | Mortgage-backed securities [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	52,931	51,281
Fair Value Measurements Using, Level 2 [Member] | Municipal bonds [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	39,689	39,872
Fair Value Measurements Using, Level 2 [Member] | Other debt securities [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities	595	603
Fair Value Measurements Using, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
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]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities
Fair Value Measurements Using, Level 3 [Member] | Corporate debt obligations [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities
Fair Value Measurements Using, Level 3 [Member] | Mortgage-backed securities [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities
Fair Value Measurements Using, Level 3 [Member] | Municipal bonds [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities
Fair Value Measurements Using, Level 3 [Member] | Other debt securities [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities

XML

Stock-Based Compensation (Tables)

3 Months Ended

Jun. 30, 2013

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Summary of Stock-Based Compensation Expense

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

	Three Months Ended
	June 30, 2013		July 1, 2012
	(In thousands)
Cost of revenues	$	584	$	770
Engineering and development		4,351		4,318
Sales and marketing		1,793		1,965
General and administrative		1,443		2,224
	$	8,171	$	9,277

XML

Stock-Based Compensation - Summary of Stock-Based Compensation Expense (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 30, 2013	Jul. 01, 2012
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 8,171	$ 9,277
Cost of revenues [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	584	770
Engineering and development [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	4,351	4,318
Sales and marketing [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	1,793	1,965
General and administrative [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 1,443	$ 2,224

XML

Stock-Based Compensation - Additional Information (Detail) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended
	Jun. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock options granted, shares	0.1
Weighted average grant date fair values per share, options granted for purchase of common stock	$ 3.89
Restricted stock units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock units granted, shares	1.1
Weighted average grant date fair values per share, restricted stock units granted	$ 9.84
Restricted stock units with service and market conditions [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock units granted, shares	0.1

XML

Income (Loss) Per Share - Computation of Basic and Diluted Income (Loss) Per Share from Continuing Operations (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Jun. 30, 2013	Jul. 01, 2012
Earnings Per Share [Abstract]
Income (loss) from continuing operations	$ (3,050)	$ 18,441
Shares:
Weighted-average shares outstanding - basic	89,146	97,405
Dilutive potential common shares, using treasury stock method		964
Weighted-average shares outstanding - diluted	89,146	98,369
Income (loss) from continuing operations per share:
Basic	$ (0.03)	$ 0.19
Diluted	$ (0.03)	$ 0.19

XML

Inventories - Components of Inventories (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Mar. 31, 2013
Inventory Disclosure [Abstract]
Raw materials	$ 1,952	$ 2,039
Finished goods	15,156	18,121
Total Inventory	$ 17,108	$ 20,160

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 30, 2013	Jul. 01, 2012
Cash flows from operating activities:
Net income (loss)	$ (3,050)	$ 18,386
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	7,806	6,572
Stock-based compensation	8,171	9,277
Deferred income taxes	5,403	(2,254)
Impairment of property and equipment	2,429
Other non-cash items	345	809
Changes in operating assets and liabilities:
Accounts receivable	(3,169)	(2,224)
Inventories	3,052	(2,429)
Other assets	(210)	(2,240)
Accounts payable	(289)	661
Accrued compensation	(5,374)	(7,895)
Accrued taxes, net	(5,366)	3,108
Other liabilities	6,843	5,245
Net cash provided by operating activities	16,591	27,016
Cash flows from investing activities:
Purchases of available-for-sale securities	(89,318)	(72,440)
Proceeds from sales and maturities of available-for-sale securities	108,609	65,799
Purchases of property and equipment	(10,111)	(9,486)
Net cash provided by (used in) investing activities	9,180	(16,127)
Cash flows from financing activities:
Proceeds from issuance of common stock under stock-based awards	1,963	2,847
Excess tax benefits from stock-based awards	5	126
Minimum tax withholding paid on behalf of employees for restricted stock units	(4,280)	(5,349)
Purchases of treasury stock	(24,428)	(55,977)
Payments for credit facility commitment fee	(11)
Net cash used in financing activities	(26,751)	(58,353)
Net decrease in cash and cash equivalents	(980)	(47,464)
Cash and cash equivalents at beginning of period	95,532	164,516
Cash and cash equivalents at end of period	$ 94,552	$ 117,052

XML

Marketable Securities

3 Months Ended

Jun. 30, 2013

Investments Debt And Equity Securities [Abstract]

Marketable Securities

Note 2. Marketable Securities

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

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(In thousands)
June 30, 2013
U.S. government and agency securities	$	92,577	$	130	$	(249	)	$	92,458
Corporate debt obligations		151,342		950		(648	)		151,644
Mortgage-backed securities		53,212		185		(466	)		52,931
Municipal bonds		39,883		17		(211	)		39,689
Other debt securities		600		—		(5	)		595
	$	337,614	$	1,282	$	(1,579	)	$	337,317
March 31, 2013
U.S. government and agency securities	$	113,033	$	327	$	(1	)	$	113,359
Corporate debt obligations		153,460		1,429		(30	)		154,859
Mortgage-backed securities		50,852		473		(44	)		51,281
Municipal bonds		39,661		211		—			39,872
Other debt securities		602		1		—			603
	$	357,608	$	2,441	$	(75	)	$	359,974

The amortized cost and estimated fair value of debt securities as of June 30, 2013, 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	$	91,669	$	91,825
Due after one year through three years		146,200		146,284
Due after three years through five years		58,173		57,246
Due after five years		41,572		41,962
	$	337,614	$	337,317

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 June 30, 2013 and March 31, 2013.

	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)
June 30, 2013
U.S. government and agency securities	$	39,004	$	(249	)	$	—	$	—		$	39,004	$	(249	)
Corporate debt obligations		70,496		(648	)		—		—			70,496		(648	)
Mortgage-backed securities		33,607		(463	)		373		(3	)		33,980		(466	)
Municipal bonds		28,653		(211	)		—		—			28,653		(211	)
Other debt securities		595		(5	)		—		—			595		(5	)
	$	172,355	$	(1,576	)	$	373	$	(3	)	$	172,728	$	(1,579	)
March 31, 2013
U.S. government and agency securities	$	4,502	$	(1	)	$	—	$	—		$	4,502	$	(1	)
Corporate debt obligations		24,203		(30	)		—		—			24,203		(30	)
Mortgage-backed securities		10,048		(44	)		—		—			10,048		(44	)
	$	38,753	$	(75	)	$	—	$	—		$	38,753	$	(75	)

As of June 30, 2013 and March 31, 2013, 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 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 June 30, 2013 and March 31, 2013, the Company determined that the unrealized losses were temporary in nature and recorded them as a component of accumulated other comprehensive income.

Realized gains and losses reclassified from accumulated other comprehensive income are included in interest and other income, net, in the condensed consolidated statements of operations.

XML

Stock-Based Compensation

3 Months Ended

Jun. 30, 2013

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

Note 5. Stock-Based Compensation

During the three months ended June 30, 2013, the Company granted 1.1 million restricted stock units and options to purchase 0.1 million shares of common stock with weighted average grant date fair values of $9.84 and $3.89 per share, respectively. The restricted stock units included 0.1 million restricted stock units with service and market conditions, which were granted to certain senior executives.

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

	Three Months Ended
	June 30, 2013		July 1, 2012
	(In thousands)
Cost of revenues	$	584	$	770
Engineering and development		4,351		4,318
Sales and marketing		1,793		1,965
General and administrative		1,443		2,224
	$	8,171	$	9,277

XML

Fair Value Measurements

3 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 3. Fair Value Measurements

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs that may be used to measure fair value. The first two levels of inputs are considered observable and the last unobservable. 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 June 30, 2013 and March 31, 2013 are as follows:

	Fair Value Measurements Using
	Level 1		Level 2		Level 3		Total
	(In thousands)
June 30, 2013
Cash and cash equivalents	$	90,899	$	3,653	$	—	$	94,552
Marketable securities:
U.S. government and agency securities		92,458		—		—		92,458
Corporate debt obligations		—		151,644		—		151,644
Mortgage-backed securities		—		52,931		—		52,931
Municipal bonds		—		39,689		—		39,689
Other debt securities		—		595		—		595
		92,458		244,859		—		337,317
	$	183,357	$	248,512	$	—	$	431,869
March 31, 2013
Cash and cash equivalents	$	95,098	$	434	$	—	$	95,532
Marketable securities:
U.S. government and agency securities		113,359		—		—		113,359
Corporate debt obligations		—		154,859		—		154,859
Mortgage-backed securities		—		51,281		—		51,281
Municipal bonds		—		39,872		—		39,872
Other debt securities		—		603		—		603
		113,359		246,615		—		359,974
	$	208,457	$	247,049	$	—	$	455,506

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.

XML

Special Charges - Additional Information (Detail) (USD $)	1 Months Ended	3 Months Ended
	Jun. 30, 2013	Jun. 30, 2013
Restructuring Cost and Reserve [Line Items]
Date the company commenced the restructuring plan	Jun. 03, 2013
Date the Company expects to substantially complete the restructuring activities	Mar. 30, 2014
Special charges		$ 12,033,000
Charged to costs and expenses		9,604,000
Asset impairment charges		2,429,000
Unpaid exit costs included in current liabilities	6,600,000	6,600,000
Workforce Reduction [Member]
Restructuring Cost and Reserve [Line Items]
Charged to costs and expenses		9,086,000
Facilities and Other [Member]
Restructuring Cost and Reserve [Line Items]
Charged to costs and expenses		518,000
Minimum [Member]
Restructuring Cost and Reserve [Line Items]
Exit Costs Expected to Incur	14,000,000
Minimum [Member] | Workforce Reduction [Member]
Restructuring Cost and Reserve [Line Items]
Exit Costs Expected to Incur	11,000,000
Minimum [Member] | Facilities and Other [Member]
Restructuring Cost and Reserve [Line Items]
Exit Costs Expected to Incur	3,000,000
Maximum [Member]
Restructuring Cost and Reserve [Line Items]
Exit Costs Expected to Incur	17,000,000
Maximum [Member] | Workforce Reduction [Member]
Restructuring Cost and Reserve [Line Items]
Exit Costs Expected to Incur	12,000,000
Maximum [Member] | Facilities and Other [Member]
Restructuring Cost and Reserve [Line Items]
Exit Costs Expected to Incur	$ 5,000,000

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Income (Loss) Per Share - Additional Information (Detail) In Millions, unless otherwise specified	3 Months Ended
	Jun. 30, 2013	Jul. 01, 2012
Earnings Per Share [Abstract]
Stock-based awards excluded from the diluted per share calculations	18.5	16.5

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2013	Mar. 31, 2013
Statement Of Financial Position [Abstract]
Allowance for doubtful accounts	$ 1,222	$ 1,196
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	212,982,000	212,145,000
Treasury stock, shares	124,599,000	122,185,000

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Income (Loss) Per Share

3 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

Income (Loss) Per Share

Note 8. Income (Loss) Per Share

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

	Three Months Ended
	June 30, 2013			July 1, 2012
	(In thousands, except per share amounts)
Income (loss) from continuing operations	$	(3,050	)	$	18,441
Shares:
Weighted-average shares outstanding — basic		89,146			97,405
Dilutive potential common shares, using treasury stock method		—			964
Weighted-average shares outstanding — diluted		89,146			98,369
Income (loss) from continuing operations per share:
Basic	$	(0.03	)	$	0.19
Diluted	$	(0.03	)	$	0.19

Stock-based awards, including stock options and restricted stock units, representing 18.5 million and 16.5 million shares of common stock have been excluded from the diluted per share calculations for the three months ended June 30, 2013 and July 1, 2012, 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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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 30, 2013	Jul. 01, 2012
Statement Of Other Comprehensive Income [Abstract]
Net income (loss)	$ (3,050)	$ 18,386
Changes in fair value of marketable securities:
Changes in unrealized gains	(1,921)	246
Net realized gains reclassified into earnings	(394)	(104)
Total changes in fair value of marketable securities	(2,315)	142
Foreign currency translation adjustments	(294)	(218)
Total other comprehensive loss	(2,609)	(76)
Comprehensive income (loss)	$ (5,659)	$ 18,310

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Mar. 31, 2013
Current assets:
Cash and cash equivalents	$ 94,552	$ 95,532
Marketable securities	337,317	359,974
Accounts receivable, less allowance for doubtful accounts of $1,222 and $1,196 as of June 30, 2013 and March 31, 2013, respectively	69,271	66,135
Inventories	17,108	20,160
Deferred tax assets	13,307	13,036
Other current assets	28,875	24,381
Total current assets	560,430	579,218
Property and equipment, net	94,086	96,336
Goodwill	110,976	110,976
Purchased intangible assets, net	3,748	4,054
Deferred tax assets	25,630	31,992
Other assets	2,496	2,587
Total assets	797,366	825,163
Current liabilities:
Accounts payable	26,936	29,668
Accrued compensation	22,079	27,453
Accrued taxes	3,217	4,559
Deferred revenue	4,623	4,676
Other current liabilities	14,414	7,651
Total current liabilities	71,269	74,007
Accrued taxes	10,845	10,772
Other liabilities	6,240	6,107
Total liabilities	88,354	90,886
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; 212,982,000 and 212,145,000 shares issued as of June 30, 2013 and March 31, 2013, respectively	213	212
Additional paid-in capital	937,378	932,557
Retained earnings	1,687,287	1,690,337
Accumulated other comprehensive income (loss)	(722)	1,887
Treasury stock, at cost: 124,599,000 and 122,185,000 shares as of June 30, 2013 and March 31, 2013, respectively	(1,915,144)	(1,890,716)
Total stockholders' equity	709,012	734,277
Total liabilities and stockholders' equity	$ 797,366	$ 825,163

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Special Charges - Activity and Liability Balances for Exit Costs (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 30, 2013
Restructuring Cost and Reserve [Line Items]
Beginning Balance	$ 1,771
Charged to costs and expenses	9,604
Payments	(2,751)
Ending Balance	8,624
Workforce Reduction [Member]
Restructuring Cost and Reserve [Line Items]
Beginning Balance
Charged to costs and expenses	9,086
Payments	(2,640)
Ending Balance	6,446
Facilities and Other [Member]
Restructuring Cost and Reserve [Line Items]
Beginning Balance	1,771
Charged to costs and expenses	518
Payments	(111)
Ending Balance	$ 2,178

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Marketable Securities - Schedule of Unrealized Losses by Investment Category (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Mar. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Fair value of less than 12 months	$ 172,355	$ 38,753
Unrealized losses of less than 12 months	(1,576)	(75)
Fair value of 12 months or greater	373
Unrealized losses of 12 months or greater	(3)
Fair value, Total	172,728	38,753
Unrealized losses, Total	(1,579)	(75)
U.S. government and agency securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair value of less than 12 months	39,004	4,502
Unrealized losses of less than 12 months	(249)	(1)
Fair value of 12 months or greater
Unrealized losses of 12 months or greater
Fair value, Total	39,004	4,502
Unrealized losses, Total	(249)	(1)
Corporate debt obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair value of less than 12 months	70,496	24,203
Unrealized losses of less than 12 months	(648)	(30)
Fair value of 12 months or greater
Unrealized losses of 12 months or greater
Fair value, Total	70,496	24,203
Unrealized losses, Total	(648)	(30)
Mortgage-backed securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair value of less than 12 months	33,607	10,048
Unrealized losses of less than 12 months	(463)	(44)
Fair value of 12 months or greater	373
Unrealized losses of 12 months or greater	(3)
Fair value, Total	33,980	10,048
Unrealized losses, Total	(466)	(44)
Municipal bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair value of less than 12 months	28,653
Unrealized losses of less than 12 months	(211)
Fair value of 12 months or greater
Unrealized losses of 12 months or greater
Fair value, Total	28,653
Unrealized losses, Total	(211)
Other debt securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair value of less than 12 months	595
Unrealized losses of less than 12 months	(5)
Fair value of 12 months or greater
Unrealized losses of 12 months or greater
Fair value, Total	595
Unrealized losses, Total	$ (5)

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Income Taxes

3 Months Ended

Jun. 30, 2013

Income Tax Disclosure [Abstract]

Income Taxes

Note 7. Income Taxes

The Company’s provision for income taxes from continuing operations was $0.7 million and $2.7 million for the three months ended June 30, 2013 and July 1, 2012, respectively. The provision for income taxes is based on the estimated income for the year, the composition of the estimated income in different tax jurisdictions, and the tax effect, if any, in the applicable quarterly periods of newly enacted tax legislation, resolution of tax audits, changes in uncertain tax positions, and other discrete tax-related items. The allocation of taxable income to domestic and foreign tax jurisdictions impacts the effective tax rate, as the Company’s income tax rate in foreign jurisdictions is generally lower than its income tax rate in the United States.

The Company’s federal consolidated income tax returns for fiscal years 2010 and 2011 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 Taxes - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 30, 2013	Jul. 01, 2012
Income Tax Disclosure [Abstract]
Provision for income taxes from continuing operations	$ 748	$ 2,678

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Fair Value Measurements (Tables)

3 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

Schedule of Assets Measured at Fair Value on a Recurring Basis

Assets measured at fair value on a recurring basis as of June 30, 2013 and March 31, 2013 are as follows:

	Fair Value Measurements Using
	Level 1		Level 2		Level 3		Total
	(In thousands)
June 30, 2013
Cash and cash equivalents	$	90,899	$	3,653	$	—	$	94,552
Marketable securities:
U.S. government and agency securities		92,458		—		—		92,458
Corporate debt obligations		—		151,644		—		151,644
Mortgage-backed securities		—		52,931		—		52,931
Municipal bonds		—		39,689		—		39,689
Other debt securities		—		595		—		595
		92,458		244,859		—		337,317
	$	183,357	$	248,512	$	—	$	431,869
March 31, 2013
Cash and cash equivalents	$	95,098	$	434	$	—	$	95,532
Marketable securities:
U.S. government and agency securities		113,359		—		—		113,359
Corporate debt obligations		—		154,859		—		154,859
Mortgage-backed securities		—		51,281		—		51,281
Municipal bonds		—		39,872		—		39,872
Other debt securities		—		603		—		603
		113,359		246,615		—		359,974
	$	208,457	$	247,049	$	—	$	455,506

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Special Charges

3 Months Ended

Jun. 30, 2013

Restructuring And Related Activities [Abstract]

Special Charges

Note 6. Special Charges

In June 2013, the Company commenced a restructuring plan designed to enhance product focus and streamline business operations. The restructuring plan includes a workforce reduction and the consolidation and elimination of certain engineering activities. In connection with this plan, the Company ceased development of future switch application-specific integrated circuits (ASICs). The Company expects to incur between $14 million and $17 million of exit costs associated with this restructuring plan, which consists of between $11 million and $12 million related to workforce reductions and between $3 million and $5 million related to facilities and other costs. The Company expects to substantially complete the restructuring activities during fiscal 2014.

During the three months ended June 30, 2013, the Company recorded special charges of $12.0 million, consisting of $9.6 million of exit costs and $2.4 million of asset impairment charges primarily related to property and equipment. The exit costs include severance and related costs associated with involuntarily terminated employees. Certain employees that were notified of their termination are required to provide services for varying periods in excess of statutory notice periods. Severance costs related to these services are recognized ratably over the estimated requisite service period. Exit costs also include the estimated costs associated with the portion of a facility under a non-cancelable lease that the Company ceased using and other costs.

Activity and liability balances for exit costs, including a liability associated with exit costs related to a portion of the facility the Company ceased using prior to fiscal 2013, are as follows:

	Workforce Reduction			Facilities and  Other			Total
	(In thousands)
Balance as of March 31, 2013	$	—		$	1,771		$	1,771
Charged to costs and expenses		9,086			518			9,604
Payments		(2,640	)		(111	)		(2,751	)
Balance as of June 30, 2013	$	6,446		$	2,178		$	8,624

The unpaid exit costs are expected to be paid over the terms of the related agreements through fiscal 2018. As of June 30, 2013, unpaid exit costs totaling $6.6 million are included in other current liabilities.

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Basis of Presentation

3 Months Ended

Jun. 30, 2013

Accounting Policies [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 March 31, 2013. The results of operations for the three months ended June 30, 2013 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, marketable 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.

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Special Charges (Tables)

3 Months Ended

Jun. 30, 2013

Restructuring And Related Activities [Abstract]

Activity and Liability Balances for Exit Costs

Activity and liability balances for exit costs, including a liability associated with exit costs related to a portion of the facility the Company ceased using prior to fiscal 2013, are as follows:

	Workforce Reduction			Facilities and  Other			Total
	(In thousands)
Balance as of March 31, 2013	$	—		$	1,771		$	1,771
Charged to costs and expenses		9,086			518			9,604
Payments		(2,640	)		(111	)		(2,751	)
Balance as of June 30, 2013	$	6,446		$	2,178		$	8,624

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Marketable Securities (Tables)

3 Months Ended

Jun. 30, 2013

Investments Debt And Equity Securities [Abstract]

Schedule of Available-for-Sale 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)
June 30, 2013
U.S. government and agency securities	$	92,577	$	130	$	(249	)	$	92,458
Corporate debt obligations		151,342		950		(648	)		151,644
Mortgage-backed securities		53,212		185		(466	)		52,931
Municipal bonds		39,883		17		(211	)		39,689
Other debt securities		600		—		(5	)		595
	$	337,614	$	1,282	$	(1,579	)	$	337,317
March 31, 2013
U.S. government and agency securities	$	113,033	$	327	$	(1	)	$	113,359
Corporate debt obligations		153,460		1,429		(30	)		154,859
Mortgage-backed securities		50,852		473		(44	)		51,281
Municipal bonds		39,661		211		—			39,872
Other debt securities		602		1		—			603
	$	357,608	$	2,441	$	(75	)	$	359,974

Schedule of Amortized Cost and Estimated Fair Value of Debt Securities

The amortized cost and estimated fair value of debt securities as of June 30, 2013, 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	$	91,669	$	91,825
Due after one year through three years		146,200		146,284
Due after three years through five years		58,173		57,246
Due after five years		41,572		41,962
	$	337,614	$	337,317

Schedule of Unrealized Losses by Investment Category

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 June 30, 2013 and March 31, 2013.

	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)
June 30, 2013
U.S. government and agency securities	$	39,004	$	(249	)	$	—	$	—		$	39,004	$	(249	)
Corporate debt obligations		70,496		(648	)		—		—			70,496		(648	)
Mortgage-backed securities		33,607		(463	)		373		(3	)		33,980		(466	)
Municipal bonds		28,653		(211	)		—		—			28,653		(211	)
Other debt securities		595		(5	)		—		—			595		(5	)
	$	172,355	$	(1,576	)	$	373	$	(3	)	$	172,728	$	(1,579	)
March 31, 2013
U.S. government and agency securities	$	4,502	$	(1	)	$	—	$	—		$	4,502	$	(1	)
Corporate debt obligations		24,203		(30	)		—		—			24,203		(30	)
Mortgage-backed securities		10,048		(44	)		—		—			10,048		(44	)
	$	38,753	$	(75	)	$	—	$	—		$	38,753	$	(75	)

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Marketable Securities - Schedule of Amortized Cost and Estimated Fair Value of Debt Securities (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013
Available For Sale Securities Debt Maturities Fair Value [Abstract]
Due in one year or less, Amortized Cost	$ 91,669
Due after one year through three years, Amortized Cost	146,200
Due after three years through five years, Amortized Cost	58,173
Due after five years, Amortized Cost	41,572
Total amortized cost of debt securities	337,614
Due in one year or less, Estimated Fair Value	91,825
Due after one year through three years, Estimated Fair Value	146,284
Due after three years through five years, Estimated Fair Value	57,246
Due after five years, Estimated Fair Value	41,962
Total estimated fair value of debt securities	$ 337,317

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Income (Loss) Per Share (Tables)

3 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

Computation of Basic and Diluted Income (Loss) Per Share from Continuing Operations

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

	Three Months Ended
	June 30, 2013			July 1, 2012
	(In thousands, except per share amounts)
Income (loss) from continuing operations	$	(3,050	)	$	18,441
Shares:
Weighted-average shares outstanding — basic		89,146			97,405
Dilutive potential common shares, using treasury stock method		—			964
Weighted-average shares outstanding — diluted		89,146			98,369
Income (loss) from continuing operations per share:
Basic	$	(0.03	)	$	0.19
Diluted	$	(0.03	)	$	0.19

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Document and Entity Information	3 Months Ended
	Jun. 30, 2013	Jul. 26, 2013
Document Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2013
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q1
Trading Symbol	QLGC
Entity Registrant Name	QLOGIC CORP
Entity Central Index Key	0000918386
Current Fiscal Year End Date	--03-30
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		87,689,000

XML

Marketable Securities - Schedule of Available-for-Sale Securities (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Mar. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Amortized Cost	$ 337,614	$ 357,608
Available-for-sale securities, Gross Unrealized Gains	1,282	2,441
Available-for-sale securities, Gross Unrealized Losses	(1,579)	(75)
Available-for-sale securities, Estimated Fair Value	337,317	359,974
U.S. government and agency securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Amortized Cost	92,577	113,033
Available-for-sale securities, Gross Unrealized Gains	130	327
Available-for-sale securities, Gross Unrealized Losses	(249)	(1)
Available-for-sale securities, Estimated Fair Value	92,458	113,359
Corporate debt obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Amortized Cost	151,342	153,460
Available-for-sale securities, Gross Unrealized Gains	950	1,429
Available-for-sale securities, Gross Unrealized Losses	(648)	(30)
Available-for-sale securities, Estimated Fair Value	151,644	154,859
Mortgage-backed securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Amortized Cost	53,212	50,852
Available-for-sale securities, Gross Unrealized Gains	185	473
Available-for-sale securities, Gross Unrealized Losses	(466)	(44)
Available-for-sale securities, Estimated Fair Value	52,931	51,281
Municipal bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Amortized Cost	39,883	39,661
Available-for-sale securities, Gross Unrealized Gains	17	211
Available-for-sale securities, Gross Unrealized Losses	(211)
Available-for-sale securities, Estimated Fair Value	39,689	39,872
Other debt securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, Amortized Cost	600	602
Available-for-sale securities, Gross Unrealized Gains		1
Available-for-sale securities, Gross Unrealized Losses	(5)
Available-for-sale securities, Estimated Fair Value	$ 595	$ 603