##### Table of Contents



UNITED
    STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
    20549
    Form 10-K
  ANNUAL REPORT PURSUANT TO
    SECTION 13 OR 15(d) OF THE
 SECURITIES EXCHANGE ACT of
    1934
  For the fiscal year ended April 1, 2007
  Commission File
    No. 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
    offices)

(Zip
    Code)   (949) 389-6000
 (Registrants telephone
    number, including area code)
      Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, $0.001 Par
    Value

The NASDAQ Stock Market,
    LLC   Securities registered pursuant to Section 12(g) of the
    Act:
 None
 (Title of class)
    þ o
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
 þ o o
  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K




---



TABLE OF CONTENTS  PART IItem 1. BusinessItem 1A. Risk FactorsItem 1B. Unresolved Staff CommentsItem 2. PropertiesItem 3. Legal ProceedingsItem 4. Submission of Matters to a Vote of Security HoldersPART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesItem 6. Selected Financial DataItem 7. Managements Discussion and Analysis of Financial Condition and Results of OperationsRESULTS OF OPERATIONSItem 7a. Quantitative and Qualitative Disclosures About Market RiskItem 8. Financial Statements and Supplementary DataItem 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 9A. Controls and ProceduresItem 9B. Other InformationPART IIIItem 10. Directors, Executive Officers and Corporate GovernanceItem 11. Executive CompensationItem 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersItem 13. Certain Relationships and Related Transactions, and Director IndependenceItem 14. Principal Accountant Fees and ServicesPART IVItem 15. Exhibits and Financial Statement SchedulesFINANCIAL STATEMENT INDEXSIGNATURESEXHIBIT 21.1EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32    Table of Contents  
 PART I
 
  Item 1.
    Business  Introduction
  (949) 389-6000. Form 10-K, Form 10-Q Form 8-K,
      Overview
  ®
  Customers,
    Markets and Applications
      
    Data warehousing, data mining and online transaction processing;
    Media-rich environments such as film/video, broadcast, medical
    imaging, computer-aided design, or CAD, and computer-aided
    manufacturing, or CAM;
    Server clustering, high-speed backup and data
    replication; and
    Research and scientific applications.   1




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Our SAN
    Solutions
    time-to-market
  Our
    Server Fabric Solutions
    Sales and
    Marketing
           2




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Engineering
    and Development
        Backlog
  just-in-time
  Competition
    
    time-to-market;
    product quality, reliability and performance;
    price;
    new product innovation;
    customer relationships;
    design capabilities;
    customer service and technical support; and
    interoperability of components in the SAN and server fabric
    infrastructure.     3




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Manufacturing
          off-the-shelf
  Intellectual
    Property
   4




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Environment
      Employees
   
  Item 1A.
    Risk
    Factors    Our
    operating results may fluctuate in future periods, which could
    cause our stock price to decline.
    
    the timing, size and mix of orders from customers;
    gain or loss of significant customers; 5




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
    customer policies pertaining to desired inventory levels of our
    products;
    negotiated rebates and extended payment terms;
    changes in our ability to anticipate in advance the mix of
    customer orders;
    levels of inventory our customers require us to maintain in our
    inventory hub locations;
    the time, availability and sale of new products;
    shifts or changes in technology;
    changes in the mix or average selling prices of our products;
    variations in manufacturing capacities, efficiencies and costs;
    the availability and cost of components, including silicon chips;
    variations in product development costs, especially related to
    advanced technologies;
    variations in operating expenses;
    changes in effective income tax rates, including those resulting
    from changes in tax laws;
    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;
    changes in accounting rules;
    changes in our accounting policies;
    general economic and other conditions affecting the timing of
    customer orders and capital spending; or
    changes in the global economy that impact information
    technology, or IT, spending.    We expect
    gross margin to vary over time, and our recent level of gross
    margin may not be sustainable.
    
    changes in product mix;
    increased price competition;
    introduction of new products by us or our competitors, including
    products with price-performance advantages;
    our inability to reduce production or component costs;
    entry into new markets or the acquisition of new businesses; 6




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
    sales discounts;
    increases in material or labor costs;
    excess inventory and inventory holding charges;
    changes in distribution channels;
    increased warranty costs; and
    how well we execute our business strategy and operating plans.  Our
    revenues may be affected by changes in IT spending
    levels.
    Our stock
    price may be volatile.
    
    differences between our actual operating results and the
    published expectations of analysts;
    quarterly fluctuations in our 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 by industry analysts;
    overall market conditions for high technology equities;
    rumors or dissemination of false information; and
    general economic and geopolitical conditions.    Our
    business is dependent on the continued growth of the SAN market
    and if this market does not continue to develop and expand as we
    anticipate, our business will suffer.
    
    educate potential OEM customers, distributors, resellers, system
    integrators, storage service providers and end-user
    organizations about the benefits of SANs; 7




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
    maintain and enhance our relationships with OEM customers,
    distributors, resellers, system integrators and storage system
    providers;
    predict and base our products on standards which ultimately
    become industry standards; and
    achieve interoperability between our products and other SAN
    components from diverse vendors.  Our
    financial condition will be materially harmed if we do not
    maintain and gain market or industry acceptance of our
    products.
    
    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 depend
    on a limited number of customers, and any decrease in revenues
    or cash flows from any one of our major customers could
    adversely affect our results of operations and cause our stock
    price to decline.
      Our
    business may be subject to seasonal fluctuations and uneven
    sales patterns in the future.
    
    the tendency of our customers to close a disproportionate
    percentage of their sales transactions in the last month, weeks
    and days of each quarter; 8




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
    spikes in sales during the fourth quarter of each calendar year
    that some of our customers experience; and
    differences between our quarterly fiscal periods and the fiscal
    quarters of our customers.    Competition
    within our product markets is intense and includes various
    established competitors.
      We expect
    the pricing of our products to continue to decline, which could
    reduce our revenues, gross margins and profitability.
    Our
    distributors may not adequately distribute our products and
    their reseller customers may purchase products from our
    competitors, which could negatively affect our
    operations.
   9




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We are
    dependent on sole source and limited source suppliers for
    certain key components.
          We depend
    on our relationships with silicon chip suppliers and a loss of
    any of these relationships may lead to unpredictable
    consequences that may harm our results of operations if
    alternative supply sources are not available.
     10




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ramp-up
      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.
    The
    migration of our customers toward new products may result in
    fluctuations of our operating results.
      Environmental
    compliance costs could adversely affect our net
    income.
     11




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Because
    we 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.
    
    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;
    potentially longer accounts receivable cycles;
    currency fluctuations;
    overlapping or differing tax structures;
    political and economic instability, including terrorism and
    war; and
    general trade restrictions.     12




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We may
    engage in mergers, acquisitions and strategic investments and
    these activities may adversely affect our results of operations
    and stock price.
    
    the failure of markets for the products of acquired companies to
    develop as expected;
    uncertainties in identifying and pursuing target companies;
    difficulties in the assimilation of the operations, technologies
    and products of the acquired companies;
    the existence of unknown defects in acquired companies
    products or assets that may not be identified due to the
    inherent limitations involved in the due diligence process of an
    acquisition;
    the diversion of managements attention from other business
    concerns;
    risks associated with entering markets or conducting operations
    with which we have no or limited direct prior experience;
    risks associated with assuming the legal obligations of acquired
    companies;
    risks related to the effect that acquired companies
    internal control processes might have on our financial reporting
    and managements report on our internal control over
    financial reporting;
    the potential loss of, or impairment of our relationships with,
    current customers or failure to retain the acquired
    companies customers;
    the potential loss of key employees of acquired
    companies; and
    the incurrence of significant exit charges if products acquired
    in business combinations are unsuccessful.    other-than-temporary
   13




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If we are
    unable to attract and retain key personnel, we may not be able
    to sustain or grow our business.
      We may
    experience difficulties in transitioning to smaller geometry
    process technologies.
  product-by-product
  Our
    proprietary rights may be inadequately protected and difficult
    to enforce.
   14




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Disputes
    relating to claimed infringement of intellectual property rights
    may adversely affect our business.
    Dependance
    on third-party technology could adversely affect our
    business.
    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 source code.
  and/or and/or and/or
  Unanticipated
    changes in our tax provisions or adverse outcomes resulting from
    examination of our income tax returns could adversely affect our
    net income.
   15




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Computer
    viruses and other forms of tampering with our computer systems
    or servers may disrupt our operations and adversely affect net
    income.
    Our
    facilities and the facilities of our suppliers and customers are
    located in regions that are subject to natural
    disasters.
   
  Item 1B.
    Unresolved
    Staff Comments   
  Item 2.
    Properties   
  Item 3.
    Legal
    Proceedings   
  Item 4.
    Submission
    of Matters to a Vote of Security Holders   16




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PART II
 
  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Principal
    Market and Prices
  two-for-one
  Sales PricesFiscal 2007

High


LowFirst Quarter

$
21.62


$
16.68Second Quarter


19.50



15.86Third Quarter


22.94



18.55Fourth Quarter


22.46



16.51   Sales PricesFiscal 2006

High


LowFirst Quarter

$
20.74


$
14.58Second Quarter


17.94



15.28Third Quarter


17.15



14.10Fourth Quarter


21.44



15.93   Number of
    Common Stockholders
    Dividends
    Recent
    Sales of Unregistered Securities
    Issuer
    Purchases of Equity Securities
    Total Number of


Approximate DollarShares Purchased


Value of Shares thatTotal Number of


Average Price


as Part of Publicly


May Yet be PurchasedPeriod

Shares Purchased


Paid per Share


Announced Plan


Under the PlanJanuary 1, 2007 
    January 28, 2007


461,015


$
19.21



461,015


$
95,526,000January 29, 2007 
    February 25, 2007


2,069,815


$
18.36



2,069,815


$
57,531,000February 26, 2007 
    April 1, 2007


1,790,556


$
17.10



1,790,556


$
26,921,000Total


4,321,386


$
17.93



4,321,386


$
26,921,000  17




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Equity
    Compensation Plan Information
    
    QLogic Corporation 2005 Performance Incentive Plan
    QLogic Corporation 1998 Employee Stock Purchase Plan (ESPP)
    QLogic Corporation Stock Awards Plan
    QLogic Corporation Non-Employee Director Stock Option Plan      Number of SecuritiesRemaining Availablefor Future IssuanceNumber of Securities to be





Under EquityIssued Upon Exercise of


Weighted-Average


Compensation PlansOutstanding Options,


Exercise Price of


as of April 1, 2007Warrants and Rights


Outstanding Options,


(Excluding Securitiesas of April 1, 2007


Warrants and Rights


Reflected in Column (a))Plan Category

(a)


(b)


(c)Equity compensation plans approved
    by security holders


26,319,439
(1)

$
20.97
(2)


13,205,697
(3)Equity compensation plans not
    approved by security holders










Total


26,319,439


$
20.97



13,205,697     (1)
    
    Of these shares, 25,380,599 were subject to outstanding stock
    options and 938,840 were subject to outstanding awards of
    restricted stock units. This number does not include options
    outstanding under the ESPP for the offering period in progress
    on April 1, 2007 as the number of shares subject to those
    options is indeterminable until the end of the offering period.
    This number also does not include options to purchase an
    aggregate of 746,105 shares, at a weighted-average exercise
    price of $22.60, granted under plans assumed in connection with
    certain acquisition transactions. No additional awards may be
    granted under these assumed plans.(2)
    
    This calculation does not reflect options outstanding under the
    ESPP for the offering period in progress on April 1, 2007
    as the exercise price of those options is not determinable until
    the end of the offering period and does not reflect the
    outstanding restricted stock units.(3)
    
    Of these shares, 10,720,623 were available for additional award
    grants under the 2005 Performance Incentive Plan and 2,485,074
    were available for additional purchases under the ESPP. The
    shares available for awards under the 2005 Performance Incentive
    Plan are, subject to certain other limits of the 2005
    Performance Incentive Plan, generally available for any type of
    award authorized under the 2005 Performance Incentive Plan
    including stock options, stock appreciation rights, restricted
    stock awards, unrestricted stock awards, deferred stock awards,
    performance unit awards and other stock-based awards. 18




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Stockholder
    Return Performance Presentation
      COMPARISON
    OF 5 YEAR CUMULATIVE TOTAL RETURNS*
    AMONG QLOGIC CORPORATION, THE STANDARD & POORS
    500 INDEX
    AND THE NASDAQ COMPUTER INDEX
  
  Cumulative Total Return3/31/02

3/30/03

3/28/04

4/3/05

4/2/06

4/1/07QLogic Corporation

$
100.00


$
77.18


$
84.67


$
81.42


$
78.15


$
68.66S&P 500 Index


100.00



75.24



101.66



108.47



121.19



135.52NASDAQ Computer Index


100.00



64.58



91.42



92.54



105.14



110.83   
 19




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Item 6.
    Selected
    Financial Data    Fiscal Year Ended(1)(2)April 1,


April 2,


April 3,


March 28,


March 30,2007


2006


2005


2004


2003(In thousands, except per share amounts)Statement of Operations
    DataNet revenues

$
586,697


$
494,077


$
428,719


$
387,156


$
301,788Cost of revenues


191,982



144,246



121,074



115,297



107,073Gross profit


394,715



349,831



307,645



271,859



194,715Operating expenses:Engineering and development


135,315



89,753



82,791



75,893



65,886Sales and marketing


86,731



64,416



54,582



48,449



39,780General and administrative


31,044



17,295



16,659



18,102



14,011Purchased in-process research and
    development


3,710



10,510











Total operating expenses


256,800



181,974



154,032



142,444



119,677Operating income


137,915



167,857



153,613



129,415



75,038Interest and other income, net


16,872



32,627



17,873



16,844



17,356Income from continuing operations
    before income taxes


154,787



200,484



171,486



146,259



92,394Income taxes


49,369



78,653



60,071



57,698



35,865Income from continuing operations


105,418



121,831



111,415



88,561



56,529Income from discontinued
    operations, net of income taxes






161,757



46,181



45,112



46,944Net income

$
105,418


$
283,588


$
157,596


$
133,673


$
103,473Income from continuing operations
    per share:Basic

$
0.66


$
0.71


$
0.60


$
0.47


$
0.30Diluted

$
0.66


$
0.70


$
0.59


$
0.46


$
0.30Income from discontinued
    operations per share:Basic

$



$
0.95


$
0.25


$
0.24


$
0.25Diluted

$



$
0.93


$
0.25


$
0.23


$
0.24Net income per share:Basic

$
0.66


$
1.66


$
0.85


$
0.71


$
0.55Diluted

$
0.66


$
1.63


$
0.84


$
0.69


$
0.54Balance Sheet DataCash and cash equivalents and
    short-term marketable securities

$
543,922


$
665,640


$
812,338


$
743,034


$
643,197Total assets


971,359



937,707



1,026,340



926,126



815,043Total stockholders equity


874,531



859,354



956,183



867,718



750,735     (1)
    
    The statement of operations data for all periods presented
    reflects the operating results of the hard disk drive controller
    and tape drive controller business as discontinued operations.(2)
    
    The per share amounts for all periods presented reflect the
    effects of the
    two-for-one
    split of our common stock in March 2006. 20




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Item 7.
    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 audited consolidated financial statements
    and related notes. This discussion also contains descriptions of
    our expectations regarding future trends affecting our business.
    These forward-looking statements and other forward-looking
    statements made elsewhere in this report 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. 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 I, 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. We
    undertake no obligation to update or revise these
    forward-looking statements, whether as a result of new
    information, future events or otherwise.
  Overview
  ®
      Business
    Combinations
  SilverStorm
    Technologies
  end-to-end,
 21




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PathScale
          Troika
    Networks
   22




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Stock-Based
    Compensation
      (In millions)Cost of revenues

$
1.9Engineering and development


11.2Sales and marketing


8.2General and administrative


9.0$
30.3       Discontinued
    Operations
    Fiscal
    Year and Fourth Quarter Financial Highlights and Other
    Information
   23




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
    Net revenues of $147.1 million for the fourth quarter of
    fiscal 2007 increased by $16.6 million, or 13%, from
    $130.5 million in the fourth quarter of fiscal 2006.
    Revenues from SAN Infrastructure Products during the fourth
    quarter increased 18% from the comparable quarter in the prior
    year and represented 97% of our total net revenues.
    Gross profit as a percentage of net revenues was 64.5% in the
    fourth quarter, a decrease from 70.6% for the fourth quarter of
    fiscal 2006. We continue to expect downward pressure on our
    gross profit percentage primarily as a result of changes in
    product and technology mix, as well as declining average selling
    prices. There can be no assurance that we will be able to
    maintain our gross profit percentage consistent with historical
    periods and it may decline in the future.
    Operating income as a percentage of net revenues was 18.3% for
    the fourth quarter of fiscal 2007, compared to 26.1% during the
    fourth quarter of fiscal 2006. Operating income for the fourth
    quarter was impacted by stock-based compensation charges of
    $9.0 million, amortization of purchased intangible assets
    related to our acquisitions of $5.0 million and purchased
    in-process research and development charges of $1.8 million.
    Income from continuing operations was $18.4 million, or
    $0.12 per diluted share, in the fourth quarter of fiscal
    2007 and decreased from $31.4 million, or $0.19 per
    diluted share, reported in the fourth quarter of fiscal 2006.
    Income from continuing operations included stock-based
    compensation expense, acquisition-related charges, impairment
    charges related to marketable securities, and the related income
    tax effects, totaling $16.8 million for the fourth quarter
    of fiscal 2007. During the fourth quarter of fiscal 2006, income
    from continuing operations included acquisition-related charges,
    the gain on sale of shares acquired in the sale of discontinued
    operations, and the related income tax effects, totaling
    $3.1 million.
    Cash, cash equivalents and marketable securities of
    $543.9 million at April 1, 2007 decreased
    $121.7 million from $665.6 million at April 2,
    2006. This decrease is primarily due to repurchases of our
    common stock and cash paid for acquisitions, partially offset by
    cash flow from operations. During the fourth quarter of fiscal
    2007, we generated $70.4 million of cash from continuing
    operations.
    Accounts receivable was $73.5 million as of April 1,
    2007, compared to $67.6 million as of April 2, 2006.
    Days sales outstanding (DSO) in receivables as of April 1,
    2007 decreased to 45 days from 47 days as of
    April 2, 2006. Our accounts receivable and DSO are
    primarily affected by linearity of shipments within the quarter
    and collections performance. Based on our customers
    procurement models and our current customer mix, we expect that
    DSO in the future will range from 45 to 55 days. There can
    be no assurance that we will be able to maintain our DSO
    consistent with historical periods and it may increase in the
    future.
    Inventories were $38.9 million as of April 1, 2007,
    compared to $39.4 million as of April 2, 2006. Our
    annualized inventory turns in the fourth quarter of fiscal 2007
    of 5.4 turns increased from the 3.9 turns in the fourth quarter
    of fiscal 2006. 24




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##### Table of Contents



RESULTS
    OF OPERATIONS
  Net
    Revenues
    2007


2006


2005(Dollars in millions)Net revenues:SAN Infrastructure Products

$
558.4


$
460.1


$
387.9Management Controllers


16.1



27.1



37.0Other


12.2



6.9



3.8Total net revenues

$
586.7


$
494.1


$
428.7Percentage of net revenues:SAN Infrastructure Products


95
%


93
%


90
%Management Controllers


3



6



9Other


2



1



1Total net revenues


100
%


100
%


100
%       year-to-year
 25




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##### Table of Contents



2007


2006


2005IBM


17
%


15
%


15
%Hewlett-Packard


16
%


15
%


14
%Sun Microsystems


12
%


12
%


15
%Dell



*



*


10
%     *
    
    Less than 10% of net revenues.      2007


2006


2005(In millions)United States

$
314.3


$
271.9


$
227.8Europe, Middle East and Africa


132.0



111.0



94.6Asia-Pacific and Japan


111.1



108.2



101.5Rest of world


29.3



3.0



4.8$
586.7


$
494.1


$
428.7   Gross
    Profit
    2007


2006


2005(Dollars in millions)Gross profit

$
394.7


$
349.8


$
307.6Percentage of net revenues


67.3
%


70.8
%


71.8
%  26




---



##### Table of Contents



Operating
    Expenses
    2007


2006


2005(Dollars in millions)Operating expenses:Engineering and development

$
135.3


$
89.8


$
82.8Sales and marketing


86.8



64.4



54.5General and administrative


31.0



17.3



16.7Purchased in-process research and
    development


3.7



10.5



Total operating expenses

$
256.8


$
182.0


$
154.0Percentage of net revenues:Engineering and development


23.1
%


18.2
%


19.3
%Sales and marketing


14.8



13.0



12.7General and administrative


5.3



3.5



3.9Purchased in-process research and
    development


0.6



2.1



Total operating expenses


43.8
%


36.8
%


35.9
%   Engineering and Development.
   27




---



##### Table of Contents



Sales and Marketing.
      General and Administrative.
      Purchased In-Process Research and
    Development.
 28




---



##### Table of Contents



50-60%
  Interest
    and Other Income, Net
    2007


2006


2005(In millions)Interest income

$
25.7


$
25.8


$
18.5Gain on sales of marketable
    securities


0.2



8.8



0.9Loss on sales of marketable
    securities


(1.8
)


(2.0
)


(1.5
)Impairment of marketable securities


(8.1
)






Other


0.9







$
16.9


$
32.6


$
17.9   other-than-temporary
    Income
    Taxes
   29




---



##### Table of Contents



Discontinued
    Operations
      2007


2006


2005(In millions)Net revenues

$



$
94.6


$
143.2Income from discontinued
    operations, net of income taxes

$



$
29.8


$
46.2Gain on sale of discontinued
    operations, net of income taxes

$



$
131.9


$
     Liquidity
    and Capital Resources
     30




---



##### Table of Contents



2008


2009


2010


2011


2012


Thereafter


Total(In millions)Operating leases

$
4.0


$
2.7


$
1.7


$
0.9


$
0.6


$
0.2


$
10.1Non-cancelable purchase obligations


43.9























43.9Total

$
47.9


$
2.7


$
1.7


$
0.9


$
0.6


$
0.2


$
54.0    31




---



##### Table of Contents



Critical
    Accounting Policies and Estimates
    Revenue
    Recognition
    No. 01-9,
  No. 00-21,
  97-2,
 32




---



##### Table of Contents



Inventories
  (first-in,
    Income
    Taxes
       33




---



##### Table of Contents



Stock-Based
    Compensation
        Goodwill
       34




---



##### Table of Contents



Long-Lived
    Assets
    Recent
    Accounting Pronouncements
      instrument-by-instrument
 
  Item 7a.
    Quantitative
    and Qualitative Disclosures About Market Risk       35




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM           Share-Based
    Payment
  Internal Control  Integrated
    Framework .
  
    36




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
     , Internal Control  Integrated
    Framework
        Internal
    Control  Integrated Framework Internal Control  Integrated
    Framework .
    .
  
    37




---



##### Table of Contents



QLOGIC
    CORPORATION
  CONSOLIDATED BALANCE SHEETS
 April 1, 2007 and April 2, 2006
  2007


2006(In thousands, except share and per share amounts)ASSETSCurrent assets:Cash and cash equivalents

$
76,804


$
125,192Short-term marketable securities


467,118



540,448Accounts receivable, less
    allowance for doubtful accounts of $1,075 and $1,239 as of
    April 1, 2007 and April 2, 2006, respectively


73,538



67,571Inventories


38,935



39,440Other current assets


40,758



46,441Total current assets


697,153



819,092Property and equipment, net


90,913



82,630Goodwill


102,910



24,725Purchased intangible assets, net


55,093



7,954Other assets


25,290



3,306$
971,359


$
937,707LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
29,280


$
32,160Accrued compensation


34,483



23,520Income taxes payable


15,729



12,920Deferred revenue


7,368



3,662Other current liabilities


7,674



6,091Total current liabilities


94,534



78,353Deferred tax liabilities


2,294



Total liabilities


96,828



78,353Commitments and contingenciesSubsequent events
    (Note 9)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; 197,907,000 and
    195,289,000 shares issued at April 1, 2007 and
    April 2, 2006, respectively


198



195Additional paid-in capital


608,515



537,648Retained earnings


988,728



883,310Accumulated other comprehensive
    income (loss)


169



(1,799
)Treasury stock, at cost:
    42,490,000 and 33,197,000 shares at April 1, 2007 and
    April 2, 2006, respectively


(723,079
)


(560,000
)Total stockholders equity


874,531



859,354$
971,359


$
937,707    38




---



##### Table of Contents



QLOGIC
    CORPORATION
  CONSOLIDATED STATEMENTS OF INCOME
 Years Ended April 1, 2007, April 2, 2006 and
    April 3, 2005
  2007


2006


2005(In thousands, except pershare amounts)Net revenues

$
586,697


$
494,077


$
428,719Cost of revenues


191,982



144,246



121,074Gross profit


394,715



349,831



307,645Operating expenses:Engineering and development


135,315



89,753



82,791Sales and marketing


86,731



64,416



54,582General and administrative


31,044



17,295



16,659Purchased in-process research and
    development


3,710



10,510



Total operating expenses


256,800



181,974



154,032Operating income


137,915



167,857



153,613Interest and other income, net


16,872



32,627



17,873Income from continuing operations
    before income taxes


154,787



200,484



171,486Income taxes


49,369



78,653



60,071Income from continuing operations


105,418



121,831



111,415Discontinued operations:Income from operations, net of
    income taxes






29,816



46,181Gain on sale, net of income taxes






131,941



Income from discontinued operations






161,757



46,181Net income

$
105,418


$
283,588


$
157,596Income from continuing operations
    per share:Basic

$
0.66


$
0.71


$
0.60Diluted

$
0.66


$
0.70


$
0.59Income from discontinued
    operations per share:Basic

$



$
0.95


$
0.25Diluted

$



$
0.93


$
0.25Net income per share:Basic

$
0.66


$
1.66


$
0.85Diluted

$
0.66


$
1.63


$
0.84Number of shares used in per share
    calculations:Basic


159,081



171,250



185,024Diluted


160,680



173,467



187,315    39




---



##### Table of Contents



QLOGIC
    CORPORATION
  CONSOLIDATED STATEMENTS OF STOCKHOLDERS
    EQUITY AND COMPREHENSIVE INCOME
 Years Ended April 1, 2007, April 2, 2006 and
    April 3, 2005
  AccumulatedOtherCommon Stock


Additional





Comprehensive





Deferred


TotalOutstanding





Paid-In


Retained


Income


Treasury


Stock-Based


StockholdersShares


Amount


Capital


Earnings


(Loss)


Stock


Compensation


Equity(In thousands)Balance at March 28, 2004


188,220


$
191


$
481,943


$
442,126


$
4,028


$
(59,992
)

$
(578
)

$
867,718Net income














157,596















157,596Change in unrealized gains on
    investments, net of tax


















(7,422
)










(7,422
)Comprehensive income






























150,174Issuance of common stock under
    stock plans (including tax benefit of $2,441)


1,564



2



16,174



















16,176Common stock issued related to
    business acquisition


357







6,546



















6,546Purchase of treasury stock


(5,724
)


















(85,009
)






(85,009
)Amortization of deferred
    stock-based compensation


























578



578Balance at April 3, 2005


184,417



193



504,663



599,722



(3,394
)


(145,001
)






956,183Net income














283,588















283,588Change in unrealized gains on
    investments, net of tax


















1,595











1,595Comprehensive income






























285,183Issuance of common stock under
    stock plans (including tax benefit of $5,055)


2,488



2



32,985



















32,987Purchase of treasury stock


(24,813
)


















(414,999
)






(414,999
)Balance at April 2, 2006


162,092



195



537,648



883,310



(1,799
)


(560,000
)






859,354Net income














105,418















105,418Change in unrealized gains on
    investments, net of tax


















1,968











1,968Comprehensive income






























107,386Issuance of common stock under
    stock plans (including tax benefit of $5,816)


2,578



3



39,516



















39,519Stock-based compensation expense
    related to stock options, restricted stock units and employee
    stock purchases










30,279



















30,279Common stock issued related to
    business acquisitions


40







1,072



















1,072Purchase of treasury stock


(9,293
)


















(163,079
)






(163,079
)Balance at April 1, 2007


155,417


$
198


$
608,515


$
988,728


$
169


$
(723,079
)

$



$
874,531    40




---



##### Table of Contents



QLOGIC
    CORPORATION
  CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended April 1, 2007, April 2, 2006 and
    April 3, 2005
  2007


2006


2005(In thousands)Cash flows from operating
    activities:Net income

$
105,418


$
283,588


$
157,596Income from discontinued
    operations, net of income taxes






(29,816
)


(46,181
)Gain on sale of discontinued
    operations, net of income taxes






(131,941
)


Income from continuing operations


105,418



121,831



111,415Adjustments to reconcile income
    from continuing operations to net cash provided by continuing
    operating activities:Depreciation and amortization


27,554



17,697



15,059Stock-based compensation


30,279



175



Acquisition-related:Amortization of purchased
    intangible assets


12,940



201



Stock-based compensation


9,092



530



5,892Purchased in-process research and
    development


3,710



10,510



Deferred income taxes


(4,154
)


(4,480
)


(158
)Provision for losses on accounts
    receivable


30



(54
)


215Loss on disposal of property and
    equipment


214



168



187Impairment of marketable securities


8,094







Tax benefit from issuance of stock
    under stock plans






5,055



2,441Changes in operating assets and
    liabilities, net of acquisitions:Accounts receivable


(2,275
)


(12,825
)


(3,422
)Inventories


2,771



(16,230
)


(2,671
)Other assets


(1,906
)


(5,840
)


(3,572
)Accounts payable


(7,401
)


11,877



3,840Accrued compensation


2,264



3,263



(1,786
)Income taxes payable


2,809



(1,205
)


4,094Deferred revenue


3,706



2,166



217Other liabilities


(2,076
)


(291
)


1,376Net cash provided by continuing
    operating activities


191,069



132,548



133,127Cash flows from investing
    activities:Purchases of marketable securities


(298,220
)


(946,087
)


(672,418
)Sales and maturities of marketable
    securities


366,677



1,101,680



694,140Additions to property and equipment


(31,708
)


(28,295
)


(22,299
)Acquisition of businesses, net of
    cash acquired


(142,521
)


(35,210
)


Restricted cash placed in escrow


(24,000
)


(12,000
)


Restricted cash received from escrow


12,508







Purchase of other assets










(4,000
)Net cash provided by (used in)
    continuing investing activities


(117,264
)


80,088



(4,577
)Cash flows from financing
    activities:Proceeds from issuance of stock
    under stock plans


33,703



27,757



13,735Tax benefit from issuance of stock
    under stock plans


5,816







Payoff of line of credit assumed in
    acquisition


(1,632
)






Purchase of treasury stock


(160,080
)


(414,999
)


(85,009
)Net cash used in continuing
    financing activities


(122,193
)


(387,242
)


(71,274
)Net cash provided by (used in)
    continuing operations


(48,388
)


(174,606
)


57,276Cash flows from discontinued
    operations:Net cash provided by (used in)
    operating activities






(47,182
)


48,815Net cash provided by (used in)
    investing activities, including proceeds from sale






181,336



(3,358
)Cash provided by discontinued
    operations






134,154



45,457Net increase (decrease) in cash and
    cash equivalents


(48,388
)


(40,452
)


102,733Cash and cash equivalents at
    beginning of year


125,192



165,644



62,911Cash and cash equivalents at end of
    year

$
76,804


$
125,192


$
165,644Supplemental disclosure of cash
    flow information:Cash paid during the year for:Income taxes

$
47,552


$
180,641


$
75,723    41




---



##### Table of Contents



QLOGIC
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  Note 1.
    Description
    of Business and Summary of Significant Accounting
    Policies  General
    Business Information
  ®
  Principles
    of Consolidation and Financial Reporting Period
      Basis
    of Presentation
    two-for-one
  Use of
    Estimates
   42




---



##### Table of Contents



QLOGIC
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Revenue
    Recognition
    No. 01-9,
  No. 00-21,
  97-2,
    Research
    and Development
   43




---



##### Table of Contents



QLOGIC
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Advertising
    Costs
    Income
    Taxes
    Net
    Income per Share
    Concentration
    of Credit Risk
      Cash
    and Cash Equivalents
    Marketable
    Securities and Investments
   44




---



##### Table of Contents



QLOGIC
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  available-for-sale
  other-than-temporary.
  other-than-temporary
  Accounts
    Receivable and Allowance for Doubtful Accounts
    Inventories
  (first-in,
  Property
    and Equipment
    Goodwill
     45




---



##### Table of Contents



QLOGIC
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Long-Lived
    Assets
      Warranty
    Comprehensive
    Income
  available-for-sale
  Foreign
    Currency Translation
    Stock-Based
    Compensation
   46




---



##### Table of Contents



QLOGIC
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Recent
    Accounting Pronouncements
         47




---



##### Table of Contents



QLOGIC
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  instrument-by-instrument
  Note 2.
    Business
    Combinations  SilverStorm
    Technologies
  end-to-end,
    (In thousands)Cash

$
538Accounts receivable


3,455Inventories


2,109Property and equipment


430Goodwill


33,348Identifiable intangible assets


24,800Other assets


134Accounts payable and accrued
    expenses


(4,422
)Line of credit


(1,632
)Deferred tax liabilities


(9,636
)In-process research and development


1,800Total preliminary purchase price
    allocation

$
50,924  48




---



##### Table of Contents



QLOGIC
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    WeightedAverageUseful Lives(Years)


Amount(Dollars in thousands)Intangible Assets:Core/developed technology


5


$
14,600Customer relationships


3



9,700Other


2.5



500$
24,800       PathScale
       49




---



##### Table of Contents



QLOGIC
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (In thousands)Cash

$
3,096Accounts receivable


267Other current assets


801Property and equipment


1,315Deferred tax asset


6,749Goodwill


52,826Identifiable intangible assets


30,100Other assets


255Accrued compensation


(412
)Other current liabilities


(1,109
)In-process research and development


1,600Total purchase price allocation

$
95,488     WeightedAverageUseful Lives(Years)


Amount(Dollars in thousands)Intangible Assets:Core/developed technology


4.5


$
28,400Customer relationships


3



700Other


2.6



1,000$
30,100       Troika
    Networks
   50




---



##### Table of Contents



QLOGIC
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Little
    Mountain Group
    Purchased
    In-Process Research and Development
       51




---



##### Table of Contents



QLOGIC
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 3.
    Discontinued
    Operations  two-for-one available-for-sale
      2007


2006


2005(In thousands)Net revenues

$



$
94,632


$
143,184Income from operations before
    income taxes

$



$
48,234


$
70,873Income taxes






18,418



24,692Income from operations, net of
    income taxes

$



$
29,816


$
46,181Gain on sale before income taxes

$



$
213,443


$
Income taxes






81,502



Gain on sale, net of income taxes

$



$
131,941


$
    52




---



##### Table of Contents



QLOGIC
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 4.
    Income
    per Share    2007


2006


2005(In thousands, except per share amounts)Income from continuing operations

$
105,418


$
121,831


$
111,415Shares:Weighted-average shares
    outstanding  basic


159,081



171,250



185,024Dilutive potential common shares,
    using treasury stock method


1,599



2,217



2,291Weighted-average shares
    outstanding  diluted


160,680



173,467



187,315Income from continuing operations
    per share:Basic

$
0.66


$
0.71


$
0.60Diluted

$
0.66


$
0.70


$
0.59    53




---



##### Table of Contents



QLOGIC
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 5.
    Marketable
    Securities  available-for-sale
  Gross


GrossAmortized


Unrealized


Unrealized


EstimatedCost


Gains


Losses


Fair Value(In thousands)April 1, 2007Corporate bonds

$
190,351


$
88


$



$
190,439U.S. Government securities


127,677



151







127,828Asset and mortgage backed
    securities


49,875



85







49,960Municipal bonds


23,439











23,439Other debt securities


10,141











10,141Total debt securities


401,483



324







401,807Auction rate preferred securities


50,014











50,014Publicly-traded common stock (see
    Note 3)


15,297











15,297Total
    available-for-sale
    securities

$
466,794


$
324


$



$
467,118April 2, 2006Corporate bonds

$
128,430


$
8


$
(2,005
)

$
126,433U.S. Government securities


154,033







(2,851
)


151,182Asset and mortgage backed
    securities


42,808







(844
)


41,964Municipal bonds


108,734











108,734Other debt securities


23,232







(12
)


23,220Total debt securities


457,237



8



(5,712
)


451,533Auction rate preferred securities


64,300











64,300Publicly-traded common stock (see
    Note 3)


21,808



2,807







24,615Total
    available-for-sale
    securities

$
543,345


$
2,815


$
(5,712
)

$
540,448     Amortized


EstimatedCost


Fair Value(In thousands)Due in one year or less

$
121,205


$
121,219Due after one year through three
    years


142,586



142,741Due after three years through five
    years


47,665



47,702Due after five years


90,027



90,145$
401,483


$
401,807    54




---



##### Table of Contents



QLOGIC
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  other-than-temporary
    Less Than 12 Months


12 Months or Greater


TotalFair


Unrealized


Fair


Unrealized


Fair


UnrealizedDescription of Securities

Value


Losses


Value


Losses


Value


Losses(In thousands)April 2,
    2006Corporate bonds

$
60,278


$
(539
)

$
56,312


$
(1,466
)

$
116,590


$
(2,005
)U.S. Government securities


49,294



(652
)


83,654



(2,199
)


132,948



(2,851
)Asset and mortgage backed
    securities


12,045



(99
)


28,888



(745
)


40,933



(844
)Other debt securities


7,339



(12
)










7,339



(12
)Total

$
128,956


$
(1,302
)

$
168,854


$
(4,410
)

$
297,810


$
(5,712
)     Note 6.
    Inventories    2007


2006(In thousands)Raw materials

$
5,937


$
13,810Finished goods


32,998



25,630$
38,935


$
39,440   Note 7.
    Property
    and Equipment    2007


2006(In thousands)Land

$
11,663


$
11,663Buildings and improvements


31,370



27,357Production and test equipment


124,890



102,856Furniture and fixtures


7,349



6,884175,272



148,760Less accumulated depreciation and
    amortization


84,359



66,130$
90,913


$
82,630  55




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##### Table of Contents



QLOGIC
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 8.
    Goodwill
    and Purchased Intangible Assets  Goodwill
    April 2,





April 1,2006


Activity


2007(In thousands)AcquisitionPathScale

$



$
52,826


$
52,826SilverStorm






33,348



33,348Troika


20,651



(7,989
)


12,662Other


4,074







4,074$
24,725


$
78,185


$
102,910   Purchased
    Intangible Assets
    April 1, 2007


April 2, 2006Gross





Net


Gross





NetCarrying


Accumulated


Carrying


Carrying


Accumulated


CarryingValue


Amortization


Value


Value


Amortization


Value(In thousands)Acquisition-related
    intangibles:Core/developed technology

$
54,300


$
11,138


$
43,162


$
3,610


$
201


$
3,409Customer relationships


10,400



1,581



8,819











Other


1,400



322



1,078











66,100



13,041



53,059



3,610



201



3,409Other purchased
    intangibles:Technology-related


2,596



562



2,034



4,102



1,024



3,078Other














2,000



533



1,4672,596



562



2,034



6,102



1,557



4,545$
68,696


$
13,603


$
55,093


$
9,712


$
1,758


$
7,954     2007


2006


2005(In thousands)Cost of revenues

$
13,087


$
738


$
167Engineering and development


267







Sales and marketing


2,692



667



222$
16,046


$
1,405


$
389  56




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##### Table of Contents



QLOGIC
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Fiscal(In thousands)2008

$
16,8562009


15,4682010


12,1872011


8,8792012


1,703$
55,093   Note 9.
    Stockholders
    Equity  Capital
    Stock
    Treasury
    Stock
        Stockholder
    Rights Plan
   57




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##### Table of Contents



QLOGIC
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 10.
    Stock-Based
    Compensation  Employee
    Stock Purchase Plan
    Stock
    Incentive Compensation Plans
                 58




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##### Table of Contents



QLOGIC
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Weighted-Weighted-


AverageAverage


Remaining


AggregateNumber of


Exercise


Contractual


IntrinsicShares


Price


Term (Years)


Value(In thousands)








(In thousands)Outstanding at beginning of period


24,854


$
20.90Options assumed as part of
    acquisition


308



3.00Granted


4,512



18.50Exercised


(2,173
)


12.64Forfeited (cancelled pre-vesting)


(884
)


15.73Expired (cancelled post-vesting)


(490
)


27.44Outstanding at end of period


26,127


$
21.01



6.1


$
26,790Vested and expected to vest at end
    of period


24,941


$
21.20



6.0


$
25,716Exercisable at end of period


17,926


$
22.99



5.1


$
16,629     Weighted-AverageNumber of


Grant DateShares


Fair Value(In thousands)Outstanding and unvested at
    beginning of period





$
Granted


968



18.82Vested






Cancelled


(29
)


18.09Outstanding and unvested at end of
    period


939


$
18.84   Stock-Based
    Compensation Expense
    (In thousands)Cost of revenues

$
1,897Engineering and development


11,190Sales and marketing


8,155General and administrative


9,037$
30,279    59




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##### Table of Contents



QLOGIC
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       EmployeeStock


Stock PurchaseOptions


PlanFair value

$
8.31


$
4.09Expected volatility


46
%


29
%Risk-free interest rate


4.9
%


5.0
%Expected life (years)


5.0



0.25Dividend yield






               Pro
    Forma Information Under SFAS No. 123 for Periods Prior
    to Fiscal 2007
   60




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##### Table of Contents



QLOGIC
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     2006


2005(In thousands, except per share amounts)Net income, as reported

$
283,588


$
157,596Add: Stock-based employee
    compensation expense included in reported net income, net of
    related tax effects


105



376Deduct: Stock-based employee
    compensation expense determined under the fair value based
    method for all awards, net of related tax effects


(31,477
)


(32,664
)Pro forma net income

$
252,216


$
125,308Net income per share:Basic, as reported

$
1.66


$
0.85Diluted, as reported

$
1.63


$
0.84Basic, pro forma

$
1.47


$
0.68Diluted, pro forma

$
1.45


$
0.67     Employee StockStock Options


Purchase Plan2006


2005


2006


2005Fair value

$
6.35


$
5.26


$
3.54


$
3.33Expected volatility


46
%


45
%


34
%


43
%Risk-free interest rate


4.3
%


3.3
%


3.2
%


1.5
%Expected life (years)


4.0



4.0



0.25



0.25Dividend yield














   out-of-the-money
     61




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##### Table of Contents



QLOGIC
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note 11.
    Employee
    Retirement Savings Plan    Note 12.
    Interest
    and Other Income, net    2007


2006


2005(In thousands)Interest income

$
25,713


$
25,818


$
18,530Gain on sales of marketable
    securities


191



8,766



934Loss on sales of marketable
    securities


(1,853
)


(1,952
)


(1,589
)Impairment of marketable securities


(8,094
)






Other


915



(5
)


(2
)$
16,872


$
32,627


$
17,873   Note 13.
    Commitments
    and Contingencies  Leases
    Fiscal Year(In thousands)2008

$
4,0262009


2,7122010


1,7462011


9232012


585Thereafter


142Total future minimum lease payments

$
10,134      62




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##### Table of Contents



QLOGIC
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Litigation
    Indemnifications
    Note 14.
    Income
    Taxes    2007


2006


2005(In thousands)United States

$
102,603


$
220,872


$
171,146Foreign


52,184



(20,388
)


340$
154,787


$
200,484


$
171,486     2007


2006


2005(In thousands)Current:Federal

$
45,618


$
76,295


$
48,260State


4,032



6,485



11,991Foreign


3,996



257



14Total current


53,646



83,037



60,265Deferred:Federal


(3,067
)


(4,029
)


(210
)State


(331
)


(434
)


10Foreign


(879
)


79



6Total deferred


(4,277
)


(4,384
)


(194
)Total income taxes from continuing
    operations

$
49,369


$
78,653


$
60,071  63




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##### Table of Contents



QLOGIC
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2007


2006


2005(In thousands)Continuing operations

$
49,369


$
78,653


$
60,071Discontinued operations






99,920



24,692$
49,369


$
178,573


$
84,763       2007


2006


2005(In thousands)Expected income tax provision at
    the statutory rate

$
54,175


$
70,169


$
60,020State income taxes, net of federal
    tax benefit


2,406



3,933



7,801Foreign income at other than
    U.S. tax rates


(10,400
)


6,729



Benefit from export sales


(269
)


(1,963
)


(1,738
)Benefit from research and other
    credits


(1,772
)


(857
)


(660
)Nondeductible business combination
    related costs


1,190







2,119Stock-based compensation


5,469



61



Reversal of taxes previously
    accrued


(3,920
)






(7,581
)Other, net


2,490



581



110$
49,369


$
78,653


$
60,071  64




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##### Table of Contents



QLOGIC
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2007


2006(In thousands)Deferred tax assets:Reserves and accruals not
    currently deductible

$
20,833


$
13,822State income taxes


1,301



7,654Purchased in-process research and
    development


3,678



3,713Net operating loss carryforwards


12,951



2,886Capital loss carryforwards


1,812



2,050Unrealized losses on marketable
    securities






2,235Research credits


2,789



1,013Property and equipment


621



Stock-based compensation


4,824



Total gross deferred tax assets


48,809



33,373Deferred tax liabilities:Research and development
    expenditures


5,594



4,055Purchased intangible assets


17,470



Unrealized gains on marketable
    securities


124



1,100Property and equipment






2,603Total gross deferred tax
    liabilities


23,188



7,758Net deferred tax assets

$
25,621


$
25,615     2007


2006(In thousands)Current assets

$
27,866


$
23,423Noncurrent assets


49



2,192Noncurrent liabilities


(2,294
)


Net deferred tax assets

$
25,621


$
25,615        65




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##### Table of Contents



QLOGIC
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Note 15.
    Product
    Revenues, Geographic Revenues and Significant
    Customers    Product
    Revenues
    2007


2006


2005(In thousands)SAN Infrastructure Products

$
558,399


$
460,050


$
387,922Management Controllers


16,098



27,136



37,003Other


12,200



6,891



3,794$
586,697


$
494,077


$
428,719   Geographic
    Revenues
    2007


2006


2005(In thousands)United States

$
314,300


$
271,937


$
227,771Europe, Middle East and Africa


131,954



111,000



94,578Asia-Pacific and Japan


111,130



108,166



101,530Rest of world


29,313



2,974



4,840$
586,697


$
494,077


$
428,719  66




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##### Table of Contents



QLOGIC
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Significant
    Customers
    2007


2006


2005IBM


17
%


15
%


15
%Hewlett-Packard


16
%


15
%


14
%Sun Microsystems


12
%


12
%


15
%Dell



*



*


10
%     *
    
    Less than 10% of net revenues.  Note 16.
    Condensed
    Quarterly Results (Unaudited)    Three Months Ended(1)June


September


December


March(In thousands, except per share amounts)Fiscal 2007:Net revenues

$
136,692


$
145,298


$
157,611


$
147,096Gross profit


93,372



99,542



106,913



94,888Operating income


27,699



39,221



44,086



26,909Net income


21,076



30,447



35,454



18,441Net income per share:Basic


0.13



0.19



0.22



0.12Diluted


0.13



0.19



0.22



0.12Fiscal 2006:Net revenues

$
115,430


$
119,012


$
129,185


$
130,450Gross profit


81,437



84,017



92,285



92,092Operating income


41,953



42,793



49,026



34,085Income from continuing operations


28,286



30,490



31,681



31,374Net income


41,777



43,024



166,238



32,549Income from continuing operations
    per share:Basic


0.15



0.17



0.20



0.19Diluted


0.15



0.17



0.19



0.19Net income per share:Basic


0.23



0.24



1.03



0.20Diluted


0.23



0.24



1.02



0.20     (1)
    
    The statement of operations data for fiscal 2006 reflects the
    operating results of the hard disk drive controller and tape
    drive controller business as discontinued operations. 67




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##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure   
  Item 9A.
    Controls
    and Procedures  Conclusion
    Regarding the Effectiveness of Disclosure Controls and
    Procedures
  Rule 13a-15(e)
  Managements
    Report on Internal Control Over Financial Reporting
  Rule 13a-15(f)
  Internal Control  Integrated
    Framework.
    Changes
    in Internal Control over Financial Reporting
  Rule 13a-15(f)
 
  Item 9B.
    Other
    Information   
  PART III
 
  Item 10.
    Directors,
    Executive Officers and Corporate Governance   68




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##### Table of Contents



Item 11.
    Executive
    Compensation   
  Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters     
  Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence   
  Item 14.
    Principal
    Accountant Fees and Services   69




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##### Table of Contents



PART IV
 
  Item 15.
    Exhibits
    and Financial Statement Schedules  Consolidated Financial Statements
   
  FINANCIAL
    STATEMENT INDEX
  PageNumberReports of Independent Registered
    Public Accounting Firm


36Consolidated Balance Sheets as of
    April 1, 2007 and April 2, 2006


38Consolidated Statements of Income
    for the years ended April 1, 2007, April 2, 2006 and
    April 3, 2005


39Consolidated Statements of
    Stockholders Equity and Comprehensive Income for the years
    ended April 1, 2007, April 2, 2006 and April 3,
    2005


40Consolidated Statements of Cash
    Flows for the years ended April 1, 2007, April 2, 2006
    and April 3, 2005


41Notes to Consolidated Financial
    Statements


42   Financial Statement Schedule
        Exhibits
   70




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##### Table of Contents



SIGNATURES
      By:
    /s/  H.K.
    Desai   Chairman of the Board and
 Chief Executive Officer
    POWER OF
    ATTORNEY
  and/or attorney-in-fact, and/or Form 10-K.
    Signature

Title

DatePrincipal Executive
    Officer:/s/  H.K.
    DesaiH.K.
    Desai

Chairman of the Board and
    Chief Executive Officer

May 24, 2007Principal Financial and
    Accounting Officer:/s/  Anthony
    J. MassettiAnthony
    J. Massetti

Senior Vice President and
    Chief Financial Officer

May 24, 2007/s/  Joel
    S. BirnbaumJoel
    S. Birnbaum

Director

May 24, 2007/s/  Larry
    R. CarterLarry
    R. Carter

Director

May 24, 2007/s/  James
    R. FiebigerJames
    R. Fiebiger

Director

May 24, 2007/s/  Balakrishnan
    S. IyerBalakrishnan
    S. Iyer

Director

May 24, 2007/s/  Carol
    L. MiltnerCarol
    L. Miltner

Director

May 24, 2007/s/  George
    D. WellsGeorge
    D. Wells

Director

May 24, 2007  71




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##### Table of Contents



SCHEDULE II
  QLOGIC
    CORPORATION
    VALUATION AND QUALIFYING ACCOUNTS
  Additions:Charged to


Deductions:Balance at


Costs and


Amounts


Balance atBeginning of


Expenses


Written Off, Net


End ofYear


or Revenues


of Recoveries


Year(In thousands)Continuing
    Operations:Year ended April 1,
    2007:Allowance for doubtful accounts

$
1,239


$
30


$
194


$
1,075Sales returns and allowances

$
4,102


$
26,503


$
25,386


$
5,219Year ended April 2,
    2006:Allowance for doubtful accounts

$
1,311


$
(54
)

$
18


$
1,239Sales returns and allowances

$
4,828


$
16,566


$
17,292


$
4,102Year ended April 3,
    2005:Allowance for doubtful accounts

$
1,113


$
215


$
17


$
1,311Sales returns and allowances

$
3,965


$
17,705


$
16,842


$
4,828Total, including
    Discontinued Operations:Year ended April 1,
    2007:Allowance for doubtful accounts

$
1,239


$
30


$
194


$
1,075Sales returns and allowances

$
4,102


$
26,503


$
25,386


$
5,219Year ended April 2,
    2006:Allowance for doubtful accounts

$
1,445


$
(188
)

$
18


$
1,239Sales returns and allowances

$
5,233


$
16,802


$
17,933


$
4,102Year ended April 3,
    2005:Allowance for doubtful accounts

$
1,372


$
90


$
17


$
1,445Sales returns and allowances

$
5,198


$
18,091


$
18,056


$
5,233  72




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##### Table of Contents



EXHIBIT INDEX
  ExhibitNo.

Description3
.1

Certificate of Incorporation of
    Emulex Micro Devices Corporation, dated November 13, 1992.
    (incorporated by reference to Exhibit 3.1 of the
    Registrants Registration Statement on
    Form 10/A
    filed on February 15, 1994)3
.2

EMD Incorporation Agreement, dated
    as of January 1, 1993. (incorporated by reference to
    Exhibit 3.2 of the Registrants Registration Statement
    on
    Form 10/A
    filed on February 15, 1994)3
.3

Certificate of Amendment of
    Certificate of Incorporation, dated May 26, 1993.
    (incorporated by reference to Exhibit 3.3 of the
    Registrants Registration Statement on
    Form 10/A
    filed on February 15, 1994)3
.4

Certificate of Amendment of
    Certificate of Incorporation, dated February 24, 1994.
    (incorporated by reference to Exhibit 3.4 of the
    Registrants Annual Report on
    Form 10-K
    for the year ended March 30, 2003)3
.5

Certificate of Designation of
    Rights, Preferences and Privileges of Series A Junior
    Participating Preferred Stock, dated June 4, 1996.
    (incorporated by reference to Exhibit 3.5 of the
    Registrants Annual Report on
    Form 10-K
    for the year ended March 30, 2003)3
.6

Certificate of Amendment of
    Certificate of Incorporation, dated February 5, 1999.
    (incorporated by reference to Exhibit 3.6 of the
    Registrants Annual Report on
    Form 10-K
    for the year ended March 28, 1999)3
.7

Certificate of Amendment of
    Certificate of Incorporation, dated January 4, 2000.
    (incorporated by reference to Exhibit 3.7 of the
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended December 26, 1999)3
.8

Certificate of Amendment of
    Certificate of Incorporation, dated September 28, 2000.
    (incorporated by reference to Exhibit 3.8 of the
    Registrants Annual Report on
    Form 10-K
    for the year ended March 30, 2003)3
.9

By-Laws of QLogic Corporation.
    (incorporated by reference to Exhibit 3.9 of the
    Registrants Current Report on
    Form 8-K
    filed on February 24, 2005)10
.1

QLogic Corporation Non-Employee
    Director Stock Option Plan, as amended.* (incorporated by
    reference to Exhibit 4.1 of the Registrants
    Registration Statement on
    Form S-8
    filed on February 6, 2004 (File
    No. 333-112572))10
.2

QLogic Corporation Stock Awards
    Plan, as amended.* (incorporated by reference to
    Exhibit 4.2 of the Registrants Registration Statement
    on
    Form S-8
    filed on February 6, 2004 (File
    No. 333-112572))10
.3

Form of Indemnification Agreement
    between QLogic Corporation and Directors and Executive
    Officers.* (incorporated by reference to Exhibit 10.1 of
    the Registrants Current Report on
    Form 8-K
    filed on April 7, 2006)10
.4

QLogic Corporation 1998 Employee
    Stock Purchase Plan, Amended and Restated Effective June 9,
    2005.* (incorporated by reference to Exhibit 10.1 of the
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended July 3, 2005)10
.5

QLogic Corporation 2005
    Performance Incentive Plan.* (incorporated by reference to
    Exhibit 10.1 of the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended October 2, 2005)10
.6

First Amendment to QLogic
    Corporation 2005 Performance Incentive Plan, dated as of
    June 1, 2006.* (incorporated by reference to
    Exhibit 10.11 of the Registrants Annual Report on
    Form 10-K
    for the year ended April 2, 2006)10
.7

Second Amendment to QLogic
    Corporation 2005 Performance Incentive Plan.* (incorporated by
    reference to Exhibit 10.1 of the Registrants
    Quarterly Report on
    Form 10-Q
    for the quarter ended October 1, 2006)10
.8

Merger Agreement, dated as of
    February 15, 2006, by and among QLogic Corporation, PS
    Merger Sub, Inc., PathScale, Inc., and a representative of the
    holders of capital stock of PathScale, Inc. (incorporated by
    reference to Exhibit 2.1 of the Registrants Current
    Report on
    Form 8-K
    filed on February 17, 2006)10
.9

Terms and Conditions of
    Nonqualified Stock Option under the QLogic Corporation 2005
    Performance Incentive Plan.* (incorporated by reference to
    Exhibit 10.1 of the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended July 2, 2006) 73




---



##### Table of Contents



ExhibitNo.

Description10
.10

Terms and Conditions of Incentive
    Stock Option under the QLogic Corporation 2005 Performance
    Incentive Plan.* (incorporated by reference to Exhibit 10.2
    of the Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended July 2, 2006)10
.11

Terms and Conditions of Stock Unit
    Award under the QLogic Corporation 2005 Performance Incentive
    Plan.* (incorporated by reference to Exhibit 10.3 of the
    Registrants Quarterly Report on
    Form 10-Q
    for the quarter ended July 2, 2006)10
.12

Change in Control Severance
    Agreement between QLogic Corporation and H.K. Desai.*
    (incorporated by reference to Exhibit 10.1 of the
    Registrants Current Report on
    Form 8-K
    filed on November 13, 2006)10
.13

Change in Control Severance
    Agreement between QLogic Corporation and Anthony J. Massetti.*
    (incorporated by reference to Exhibit 10.2 of the
    Registrants Current Report on
    Form 8-K
    filed on November 13, 2006)10
.14

Employment Agreement, dated
    April 19, 2007, between QLogic Corporation and Jeff Benck.*
    (incorporated by reference to Exhibit 10.1 of the
    Registrants Current Report on
    Form 8-K
    filed on April 25, 2007)21
.1

Subsidiaries of the Registrant23
.1

Consent of Independent Registered
    Public Accounting Firm.24


Power of Attorney (included on
    signature page)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 18 U.S.C.
    Section 1350, as adopted pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002.     *
    
    Compensation plan, contract or arrangement required to be filed
    as an exhibit pursuant to applicable rules of the Securities and
    Exchange Commission. 74