##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 
 (Mark One)
 þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended March 30, 2008
 OR
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 Commission File No. 001-31353
 EMULEX CORPORATION
 (Exact name of registrant as specified in its charter)
 Delaware
    
    51-0300558(State or other jurisdiction
    
    (I.R.S Employerof incorporation or organization)
    
    Identification No.)
 3333 Susan StreetCosta Mesa, California
    
    92626(Address of principal executive offices)
    
    (Zip Code)
 (714) 662-5600  Registrants telephone number, including area code
 
 þ o
  Large accelerated filer: þ
    
    Accelerated filer: o
    
    Non-accelerated filer: o
    
    Smaller reporting company: o(Do not check if a smaller reporting company)
 o þ




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##### 



PAGEPart I. FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited)Condensed Consolidated Balance Sheets March 30, 2008 and July 1, 2007
    
    
    2Condensed Consolidated Statements of Income Three and Nine months ended March 30, 2008 and April 1, 2007
    
    
    3Condensed Consolidated Statements of Cash Flows Nine months ended March 30, 2008 and April 1, 2007
    
    
    4Notes to Condensed Consolidated Financial Statements
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    31Item 4. Controls and Procedures
    
    
    31Part II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    32Item 1A. Risk Factors
    
    
    33Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    44Item 6. Exhibits
    
    
    45Signatures
    
    
    46EXHIBIT 31.AEXHIBIT 31.BEXHIBIT 32
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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
  
   March 30,
    
    
    July 1,2008
    
    
    2007AssetsCurrent assets:Cash and cash equivalents
    
    $
    172,448
    
    
    $
    69,036Investments
    
    
    159,454
    
    
    
    202,288Accounts and other receivables, net of allowance for doubtful accounts of $1,852 and $1,902 as of March 30, 2008 and July 1, 2007, respectively
    
    
    67,467
    
    
    
    67,529Inventories
    
    
    15,706
    
    
    
    28,973Prepaid expenses
    
    
    10,529
    
    
    
    4,114Deferred income taxes
    
    
    21,972
    
    
    
    27,114Total current assets
    
    
    447,576
    
    
    
    399,054Property and equipment, net
    
    
    68,707
    
    
    
    64,294Investments
    
    
    152
    
    
    
    Goodwill
    
    
    75,704
    
    
    
    62,347Intangible assets, net
    
    
    74,125
    
    
    
    108,342Deferred income taxes
    
    
    6,603
    
    
    
    Other assets
    
    
    16,496
    
    
    
    25,440Total assets
    
    $
    689,363
    
    
    $
    659,477Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    17,479
    
    
    $
    19,761Accrued liabilities
    
    
    30,062
    
    
    
    29,483Income taxes payable
    
    
    1
    
    
    
    21,285Total current liabilities
    
    
    47,542
    
    
    
    70,529Other liabilities
    
    
    3,053
    
    
    
    802Deferred income taxes
    
    
    
    
    
    
    6,239Accrued taxes
    
    
    21,460
    
    
    
    Total liabilities
    
    
    72,055
    
    
    
    77,570Commitments and contingencies (Note 6)Subsequent event (Note 2)Stockholders equity:Preferred stock, $0.01 par value; 1,000,000 shares authorized (150,000 shares designated as Series A Junior Participating Preferred Stock);
none issued and outstanding
    
    
    
    
    
    
    Common stock, $0.10 par value; 240,000,000 shares authorized; 87,817,311 and 86,906,540 issued at March 30, 2008 and July 1, 2007, respectively
    
    
    8,782
    
    
    
    8,691Additional paid-in capital
    
    
    1,071,783
    
    
    
    1,045,221Accumulated deficit
    
    
    (353,207
    )
    
    
    (401,982
    )Accumulated other comprehensive income
    
    
    37
    
    
    
    64Treasury stock, at cost; 5,660,337 and 3,589,278 shares at March 30, 2008 and July 1, 2007, respectively
    
    
    (110,087
    )
    
    
    (70,087
    )Total stockholders equity
    
    
    617,308
    
    
    
    581,907Total liabilities and stockholders equity
    
    $
    689,363
    
    
    $
    659,477
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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedMarch 30,
    
    
    April 1,
    
    
    March 30,
    
    
    April 1,2008
    
    
    2007
    
    
    2008
    
    
    2007Net revenues
    
    $
    127,846
    
    
    $
    120,211
    
    
    $
    375,538
    
    
    $
    343,919Cost of sales
    
    
    47,817
    
    
    
    49,626
    
    
    
    145,840
    
    
    
    146,353Gross profit
    
    
    80,029
    
    
    
    70,585
    
    
    
    229,698
    
    
    
    197,566Operating expenses:Engineering and development
    
    
    33,031
    
    
    
    31,610
    
    
    
    95,795
    
    
    
    86,487Selling and marketing
    
    
    15,613
    
    
    
    12,891
    
    
    
    42,257
    
    
    
    35,027General and administrative
    
    
    9,657
    
    
    
    7,812
    
    
    
    27,034
    
    
    
    21,830Amortization of other intangible assets
    
    
    2,253
    
    
    
    2,563
    
    
    
    7,171
    
    
    
    9,551Impairment of other intangible assets
    
    
    
    
    
    
    2,001
    
    
    
    
    
    
    
    2,001In-process research and development
    
    
    
    
    
    
    (814
    )
    
    
    
    
    
    
    19,825Total operating expenses
    
    
    60,554
    
    
    
    56,063
    
    
    
    172,257
    
    
    
    174,721Operating income
    
    
    19,475
    
    
    
    14,522
    
    
    
    57,441
    
    
    
    22,845Nonoperating income, net:Interest income
    
    
    2,858
    
    
    
    3,655
    
    
    
    9,654
    
    
    
    16,528Interest expense
    
    
    (14
    )
    
    
    (41
    )
    
    
    (25
    )
    
    
    (1,185
    )Other income, net
    
    
    8
    
    
    
    21
    
    
    
    69
    
    
    
    1,016Total nonoperating income, net
    
    
    2,852
    
    
    
    3,635
    
    
    
    9,698
    
    
    
    16,359Income before income taxes
    
    
    22,327
    
    
    
    18,157
    
    
    
    67,139
    
    
    
    39,204Income tax provision
    
    
    6,806
    
    
    
    6,771
    
    
    
    23,803
    
    
    
    22,932Net income
    
    $
    15,521
    
    
    $
    11,386
    
    
    $
    43,336
    
    
    $
    16,272Net income per share:Basic
    
    $
    0.19
    
    
    $
    0.13
    
    
    $
    0.53
    
    
    $
    0.19Diluted
    
    $
    0.19
    
    
    $
    0.13
    
    
    $
    0.52
    
    
    $
    0.19Number of shares used in per share computations:Basic
    
    
    82,119
    
    
    
    84,667
    
    
    
    82,152
    
    
    
    84,796Diluted
    
    
    83,712
    
    
    
    86,734
    
    
    
    84,103
    
    
    
    86,750
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Nine Months EndedMarch 30,
    
    
    April 1,2008
    
    
    2007Cash flows from operating activities:Net income
    
    $
    43,336
    
    
    $
    16,272Adjustments to reconcile net income to net cash provided by operating
activities:Depreciation and amortization of property and equipment
    
    
    14,049
    
    
    
    13,188Amortization of discount on convertible subordinated notes
    
    
    
    
    
    
    823Share-based compensation expense
    
    
    21,122
    
    
    
    21,327Amortization of intangible assets
    
    
    25,482
    
    
    
    28,072In-process research and development
    
    
    
    
    
    
    19,825Impairment of intangible assets
    
    
    3,097
    
    
    
    2,001Loss on disposal of property and equipment
    
    
    116
    
    
    
    180Deferred income taxes
    
    
    (5,864
    )
    
    
    (4,283
    )Excess tax benefit from share-based compensation
    
    
    (1,252
    )
    
    
    (2,009
    )Foreign currency adjustments
    
    
    (75
    )
    
    
    (166
    )Changes in assets and liabilities:Accounts and other receivables
    
    
    62
    
    
    
    3,722Inventories
    
    
    13,231
    
    
    
    (1,040
    )Prepaid expenses and other assets
    
    
    (7,108
    )
    
    
    (608
    )Accounts payable, accrued liabilities, and other liabilities
    
    
    (126
    )
    
    
    7,438Accrued taxes
    
    
    573
    
    
    
    Income taxes payable
    
    
    8,469
    
    
    
    831Net cash provided by operating activities
    
    
    115,112
    
    
    
    105,573Cash flows from investing activities:Net proceeds from sale of property and equipment
    
    
    20
    
    
    
    16Additions to property and equipment
    
    
    (18,538
    )
    
    
    (8,212
    )Purchases of investments
    
    
    (687,706
    )
    
    
    (1,803,746
    )Maturities of investments
    
    
    730,388
    
    
    
    1,978,318Investment in privately-held company
    
    
    (2,500
    )
    
    
    (4,975
    )Payments for purchase of Sierra Logic, Inc., net of cash acquired
    
    
    
    
    
    
    (134,188
    )Restricted cash placed in escrow related to Sierra Logic, Inc. acquisition
    
    
    
    
    
    
    (24,316
    )Net cash provided by investing activities
    
    
    21,664
    
    
    
    2,897Cash flows from financing activities:Retirement of convertible subordinated notes
    
    
    
    
    
    
    (236,000
    )Retirement of debt assumed in conjunction with Sierra Logic, Inc. acquisition
    
    
    
    
    
    
    (3,425
    )Repurchase of common stock
    
    
    (40,000
    )
    
    
    (38,050
    )Tax withholding payments reimbursed by common stock
    
    
    (2,338
    )
    
    
    Proceeds from issuance of common stock under stock plans
    
    
    7,731
    
    
    
    12,801Excess tax benefit from share-based compensation expense
    
    
    1,252
    
    
    
    2,009Net cash used in financing activities
    
    
    (33,355
    )
    
    
    (262,665
    )Effect of exchange rates on cash and cash equivalents
    
    
    (9
    )
    
    
    10Net increase (decrease) in cash and cash equivalents
    
    
    103,412
    
    
    
    (154,185
    )Cash and cash equivalents at beginning of period
    
    
    69,036
    
    
    
    224,292Cash and cash equivalents at end of period
    
    $
    172,448
    
    
    $
    70,107
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1.
    
    Basis of PresentationIn the opinion of management of Emulex Corporation (Emulex or the Company), the accompanying
unaudited condensed consolidated financial statements contain all adjustments (which are normal
recurring accruals) necessary to present fairly the Companys consolidated financial position,
results of operations, and cash flows. Interim results for the three and nine months ended March
30, 2008, are not necessarily indicative of the results that may be expected for the fiscal year
ending June 29, 2008. The accompanying condensed consolidated interim financial statements
should be read in conjunction with the Companys Annual Report on Form 10-K for the fiscal year
ended July 1, 2007.Certain reclassifications have been made to prior period amounts to conform to the current
periods presentation.Supplemental Cash Flow Information
 Nine Months EndedMarch 30,
    
    April 1,2008
    
    2007Cash paid during the period for:Interest
    
    
    $
    25
    
    
    $
    342Income taxes
    
    
    $
    25,360
    
    
    $
    26,427Non-cash activities:Additional goodwill resulting from escrow release as required by
the Sierra Logic, Inc. acquisition agreement
    
    
    $
    12,138
    
    
    $
    Capital
expenditures included in accounts payable on the Companys
condensed consolidated balance sheets
    
    
    $
    78
    
    
    $
    875Direct acquisition costs not paid during the period included in
the accounts payable balance on the Companys condensed
consolidated balance sheet
    
    
    $
    
    
    
    $
    193Additions to property and equipment under capital lease obligations
    
    
    $
    
    
    
    $
    77
 Recently Adopted Accounting StandardThe Company adopted Financial Accounting Standards Board (FASB) Interpretation No. 48,
Accounting for Uncertainty in Income Taxes (FIN 48), during the nine months ended March 30,
2008. See Note 9.Recently Issued Accounting StandardsIn September 2006, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 157,
Fair Value Measurements. This statement defines fair value, establishes a framework for
measuring fair value and expands disclosure of fair value measurements. SFAS No. 157 applies
under other accounting pronouncements that require or permit fair value measurements and
accordingly, does not require any new fair value measurements. SFAS No. 157 is effective for
financial statements issued for fiscal years beginning after November 15, 2007, which is the
Companys fiscal year beginning June 30, 2008. The Company is in the process of studying the
potential financial statement impact of the adoption of SFAS No. 157.In February 2007, the FASB issued SFAS No. 159, Fair Value Option for Financial Assets and
Financial Liabilities  Including an amendment of FASB Statement No. 115. SFAS No. 159 expands
the use of fair value accounting but does not affect existing standards which require assets or
liabilities to be carried at fair value. Under SFAS No. 159, a company may elect to use fair
value to measure certain financial assets and liabilities. The fair value election is
irrevocable and generally made on an instrument-by-instrument basis, even if a company has
similar instruments that it elects not to measure based on fair value. At the adoption date,
unrealized gains and losses on existing items for which fair value has been elected are reported
as a cumulative adjustment to beginning retained earnings. Subsequent to the adoption of SFAS
No. 159, changes in fair value
are recognized in earnings. SFAS No. 159 is effective for fiscal years beginning after November
15, 2007, which is the Companys fiscal year beginning June 30, 2008. The Company is in the
process of studying the potential financial statement impact of the adoption of SFAS No. 159.
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In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (SFAS No.
141R). SFAS No. 141R will significantly change the accounting for business combinations in a
number of areas including the treatment of contingent consideration, contingencies, acquisition
costs, in-process research and development, and restructuring costs. In addition, under SFAS No.
141R, changes in deferred tax asset valuation allowances and acquired income tax uncertainties
in a business combination after the measurement period will impact income taxes. SFAS No. 141R
is effective for fiscal years beginning after December 15, 2008, which is the Companys fiscal
year beginning June 29, 2009, and will impact the accounting for any business combinations
entered into after the effective date.In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated
Financial Statements, an amendment of Accounting Research Bulletin (ARB) No. 51, which changes
the accounting and reporting for minority interests. Minority interests will be recharacterized
as noncontrolling interests and will be reported as a component of equity separate from the
parents equity, and purchases or sales of equity interests that do not result in a change in
control will be accounted for as equity transactions. In addition, net income attributable to
the noncontrolling interest will be included in consolidated net income on the face of the
income statement and, upon a loss of control, the interest sold, as well as any interest
retained, will be recorded at fair value with any gain or loss recognized in earnings. SFAS No.
160 will apply prospectively, except for the presentation and disclosure requirements, which
will apply retrospectively. SFAS No. 160 is effective for periods beginning on or after December
15, 2008 and will impact the accounting for noncontrolling interests after the effective date.In December 2007, the Emerging Issues Task Force (EITF) reached a consensus on EITF Issue No.
07-1, Accounting for Collaborative Arrangements (EITF No. 07-1), that prohibits companies from
applying the equity method of accounting to activities performed outside a separate legal entity
by a virtual joint venture. Instead, revenues and costs incurred with third parties in
connection with the collaborative arrangement should be presented gross or net by the
collaborators based on the criteria in EITF Issue No. 99-19, Reporting Revenue Gross as a
Principal versus Net as an Agent, and other applicable accounting literature. The consensus
should be applied to collaborative arrangements in existence at the date of adoption using a
modified retrospective method that requires reclassification in all periods presented for those
arrangements still in effect at the transition date, unless that application is impracticable.
The consensus is effective for fiscal years beginning after December 15, 2008, which is the
Companys fiscal year beginning June 29, 2009. The Company is in the process of studying the
potential financial statement impact of adopting EITF No. 07-1.2.
    
    Business CombinationOn October 2, 2006, the Company acquired 100% of the outstanding common shares of Sierra Logic,
Inc. (Sierra Logic), a privately-held supplier of embedded products for storage networking
equipment located in Roseville, California. The Company accounted for the acquisition using the
purchase method of accounting in accordance with SFAS No. 141, Business Combinations. The
aggregate purchase price to date is approximately $159.2 million, which includes approximately
$12.1 million released from escrow during the three months ended September 30, 2007, in
accordance with the acquisition agreement, and approximately $8.3 million in unvested stock,
which was issued upon acquisition and is being recognized as post-acquisition compensation
expense. Approximately $12.1 million remains in escrow and is deemed to be contingent
consideration, which is included in other assets. The contingent consideration relates to
certain standard representations and warranties defined in the escrow agreement and are expected
to be resolved within 18 months from the acquisition date. The Company has allocated the
purchase price to the assets acquired and liabilities assumed at estimated fair values. The
excess of the purchase price over the aggregate fair values was recorded as goodwill. The final
purchase price allocation, other than the approximately $12.1 million in escrow and deemed
contingent consideration noted above, has been recorded during the nine months ended March 30,
2008.On April 10, 2008, the Company released the remaining approximately $12.1 million in escrow in
accordance with the escrow agreement.
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3.
    
    InventoriesInventories are summarized as follows:
 March 30,
    
    
    July 1,2008
    
    
    2007(in thousands)Raw
materials
    
    $
    3,040
    
    
    $
    11,128Finished goods
    
    
    12,666
    
    
    
    17,845$
    15,706
    
    
    $
    28,973
 Goodwill and Intangible assets, net
  CarryingAmount(in thousands)Goodwill, as of July 1, 2007
    
    $
    62,347Escrow release as required by Sierra Logic acquisition agreement
    
    
    12,138Purchase price allocation refinements
    
    
    1,219Goodwill, as of March 30, 2008
    
    $
    75,704
 Purchase price allocation refinements are mainly tax adjustments related to Sierra Logic
acquisition.Intangible assets, net, are as follows:
 March 30,
    
    
    July 1,2008
    
    
    2007(in thousands)Intangible assets subject to amortization:Core technology and patents
    
    $
    92,276
    
    
    $
    95,471Accumulated amortization, core technology and patents
    
    
    (73,912
    )
    
    
    (65,347
    )Developed technology
    
    
    77,313
    
    
    
    81,982Accumulated amortization, developed technology
    
    
    (29,362
    )
    
    
    (19,731
    )Customer relationships
    
    
    38,676
    
    
    
    40,608Accumulated amortization, customer relationships
    
    
    (32,499
    )
    
    
    (27,170
    )Tradename
    
    
    4,643
    
    
    
    4,896Accumulated amortization, tradename
    
    
    (3,010
    )
    
    
    (2,546
    )Covenants not-to-compete
    
    
    516
    
    
    
    3,575Accumulated amortization, covenants not-to-compete
    
    
    (516
    )
    
    
    (3,396
    )$
    74,125
    
    
    $
    108,342
 During the three months ended September 30, 2007, an impairment charge of approximately $3.1
million was recorded in accordance with SFAS No. 144, Accounting for the Impairment or Disposal
of Long-Lived Assets (SFAS No. 144). The impairment charge was related to a developed
technology intangible asset acquired from Aarohi Communications, Inc. (Aarohi). The initial
value ascribed to this developed technology intangible asset was based primarily on forecasted
revenues from products which the Company decided, during the three months ended September 30,
2007, to no longer place into production. The Company recorded the impairment charge to reduce
the carrying value of this developed technology intangible asset to the estimated fair value of
zero. This impairment charge was recorded in cost of sales in the accompanying condensed
consolidated statements of income.The intangible assets subject to amortization are being amortized on a straight-line basis over
original lives ranging from approximately two to seven years. Aggregated amortization expense
for intangible assets for the three months ended March 30, 2008 and April 1, 2007, was
approximately $7.9 million and $9.9 million, respectively. Aggregated amortization expense for
intangible assets for the nine months ended March 30, 2008 and April 1, 2007, was approximately
$25.5 million and $28.1 million, respectively.
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Amortization expense of approximately $5.6 million and $7.3 million related to core and
developed technology is included in cost of sales in the accompanying condensed consolidated
statements of income for the three months ended March 30, 2008 and April 1, 2007, respectively.
Amortization expense related to core and developed technology included in cost of sales for the
nine months ended March 30, 2008 and April 1, 2007, was approximately $18.3 million and $18.5
million, respectively.The following table presents the estimated future aggregated amortization expense of intangible
assets as of March 30, 2008 (in thousands):
 2008 (remaining 3 months)
    
    $
    6,8192009
    
    
    24,2702010
    
    
    21,7252011
    
    
    17,7262012
    
    
    3,585Thereafter
    
    
    $
    74,125
 5.
    
    Accrued LiabilitiesComponents of accrued liabilities are as follows:
 March 30,
    
    
    July 1,2008
    
    
    2007(in thousands)Payroll and related costs
    
    $
    14,897
    
    
    $
    15,879Employee stock purchase plan contributions
    
    
    2,560
    
    
    
    1,256Warranty liability
    
    
    4,065
    
    
    
    3,832Deferred revenue and accrued rebates
    
    
    5,260
    
    
    
    3,724Accrued advertising and promotions
    
    
    1,278
    
    
    
    839Accrued property, sales, and franchise taxes
    
    
    915
    
    
    
    1,710Other
    
    
    1,087
    
    
    
    2,243$
    30,062
    
    
    $
    29,483
 The Company provides a warranty of between one and five years on its products. The Company
records a provision for estimated warranty-related costs at the time of sale based on historical
product return rates and the Companys estimates of expected future costs of fulfilling its
warranty obligations. Changes to the warranty liability were:
 Three Months Ended
    
    
    Nine Months EndedMarch 30,
    
    
    April 1,
    
    
    March 30,
    
    
    April 1,2008
    
    
    2007
    
    
    2008
    
    
    2007(in thousands)
    
    
    (in thousands)Balance at beginning of period
    
    $
    3,773
    
    
    $
    3,855
    
    
    $
    3,832
    
    
    $
    2,949Accrual for warranties issued
    
    
    831
    
    
    
    534
    
    
    
    2,328
    
    
    
    2,908Changes to pre-existing warranties
(including changes in estimates)
    
    
    (349
    )
    
    
    
    
    
    
    (1,001
    )
    
    
    Settlements made (in cash or in kind)
    
    
    (190
    )
    
    
    (789
    )
    
    
    (1,094
    )
    
    
    (2,257
    )Balance at end of period
    
    $
    4,065
    
    
    $
    3,600
    
    
    $
    4,065
    
    
    $
    3,600
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6.
    
    Commitments and ContingenciesLitigationOn November 15, 2001, prior to the Companys acquisition of Vixel Corporation, a securities
class action was filed in the United States District Court in the Southern District of New York
as Case No. 01 CIV. 10053 (SAS), Master File No. 21 MC92 (SAS) against Vixel and two of its
officers and directors (one of which is James M. McCluney, the Companys current Chief Executive
Officer and President) and certain underwriters who participated in the Vixel initial public
offering in late 1999. The amended complaint alleges violations under Section 10(b) of the
Exchange Act and Section 11 of the Securities Act and seeks unspecified damages on behalf of
persons who purchased Vixel stock during the period October 1, 1999 through December 6, 2000. In
October 2002, the parties agreed to toll the statute of limitations with respect to Vixels
officers and directors until September 30, 2003, and on the basis of this agreement, Vixels
officers and directors were dismissed from the lawsuit without prejudice. During June 2003,
Vixel and the other issuer defendants in the action reached a tentative settlement with the
plaintiffs that would, among other things, result in the dismissal with prejudice of all claims
against the defendants and their officers and directors. In connection with the possible
settlement, those officers and directors who had entered tolling agreements with the plaintiffs
agreed to extend those agreements so that they would not expire prior to any settlement being
finalized. Although Vixel approved this settlement proposal in principle, it remained subject to
a number of procedural conditions, as well as formal approval by the court. On August 31, 2005,
a Preliminary Order In Connection With Settlement Proceedings was issued by the court which
among other items, set a date for a Settlement Fairness Hearing held on April 24, 2006, and the
form of notice to the Settlement Classes of the Issuers Settlement Stipulation. In December
2005, the settlement notices authorized by the court were sent to former Vixel stockholders and
the web site www.iposecuritieslitigation.com was created for claimants, as well as a March 24,
2006 objection deadline. At the Settlement Fairness Hearing held on April 24, 2006, the court
raised the following primary issues: (1) the (possible) change in value of the settlement since
preliminary approval, and whether the benefits of the settlement should be evaluated at the time
of approval or at the time of negotiation; (2) how the class certification argument before the
Second Circuit Court of Appeals could or would affect the fairness of the settlement; (3) how to
evaluate the intangible benefits of the settlement to the class members; and (4) how to value
the $1 billion guarantee (for the consolidated litigation involving Vixel and 297 other Issuers)
by insurers in the stipulation and agreement of settlement in light of the underwriters
potential future settlements. The Court did not rule on April 24, 2006 on the motion for final
approval or objections. On June 6, 2006, the Second Circuit Court of Appeals held oral arguments
on the appeal by the underwriters of Judge Scheindlins class certification decision. On or
about July 17, 2006, Emulex assigned to the class action plaintiffs any IPO claims that Emulex
(Vixel) had against RBC Dain Rauscher in the IPO litigation, as required by the settlement
agreement. On December 5, 2006, the Second Circuit Court of Appeals issued a decision reversing
Judge Scheindlins class certification decision. On December 14, 2006, Judge Scheindlin issued
an order to stay all proceedings pending a decision from the Second Circuit on whether it will
hear further argument. On about January 6, 2007, Emulex assigned to the class action plaintiffs
any IPO claims that Emulex (Vixel) had against The Bear Stearns Companies Inc. and Bear Stearns
& Co. Inc. in the IPO litigation, as required by the settlement agreement. On April 6, 2007, the
Second Circuit denied the plaintiffs petition for rehearing of the decision denying class
certification. During April 2007, counsel for Emulex and other Issuers informed Judge Scheindlin
that, in light of the Second Circuit opinion, the settlement agreement could not be approved
because the defined settlement class, like the litigation class, did not meet the Second Circuit
requirements for certification. Judge Scheindlin held a conference on May 30, 2007 to consider
issues relating to the class definitions, the statute of limitations, settlement, and discovery.
On June 25, 2007, Judge Scheindlin signed a Stipulation and Order submitted by the parties which
terminated the June 10, 2004 Stipulation and Agreement of Settlement with Defendant Issuers and
Individuals. On June 26, 2007, a document production request from the plaintiffs to all 298
issuers (including Vixel) was received, covering documents from each issuers inception through
December 31, 2001. In September 2007, due to the expiration of the tolling agreements, those
officers and directors who had entered tolling agreements with the plaintiffs agreed to extend
those agreements until August 27, 2010. On December 19, 2007, the issuers and their respective
insurers entered into an Insurers-Insureds Agreement (replacing an earlier agreement), which
provides for the insurers to pay for certain defense costs under applicable issurer insurance
policies. On December 21, 2007, issuer defendants filed an opposition to plaintiffs motion for
class certification of certain focus cases. On March 26, 2008, defendants motion to dismiss was
denied except to certain claims by plaintiffs who did not suffer damages or whose claims were
time barred.
 9




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##### Table of Contents



In addition to the ongoing litigation discussed above, the Company is involved in various claims
and legal actions arising in the ordinary course of business. In the opinion of management, the
ultimate disposition of the open matters will not have a material adverse effect on the
Companys consolidated financial position, results of operations or liquidity.Other Commitments and ContingenciesThe Company has entered into various agreements for purchases of inventory. As of March 30,
2008, the Companys purchase obligation associated primarily with inventory was approximately
$43.5 million.In addition, the Company provides limited indemnification in selected circumstances within its
various customer contracts whereby the Company indemnifies the parties to whom it sells its
products with respect to the Companys product infringement of certain intellectual property,
and in some limited cases against bodily injury or damage to real or tangible personal property
caused by a defective Company product. It is not possible to predict the maximum potential
amount of future payments under these or similar agreements, due to the conditional nature of
the Companys obligations and the unique facts and circumstances involved in each particular
agreement.7.
    
    Treasury StockOn December 5, 2006, the Companys Board of Directors authorized the repurchase of up to $150
million of its outstanding common stock over the next two years. The Company may repurchase
shares from time-to-time in open market purchases or privately negotiated transactions. The
share repurchases will be financed by available cash balances and cash from operations. For the
nine months ended March 30, 2008, the Company has repurchased 2,071,059 shares of its common
stock under this program for an aggregate purchase price of approximately $40.0 million for an
average of $19.31 per share. Approximately $39.9 million is available under this program as of
March 30, 2008.8.
    
    Stock-Based CompensationSFAS No. 123R, Share-Based Payment (SFAS No. 123R), requires that the compensation cost
related to share-based payment transactions, measured based on the fair value of the equity or
liability instruments issued, be recognized in the financial statements. The Company adopted
SFAS No. 123R at the beginning of fiscal year 2006. Determining the fair value of options using
the Black-Scholes-Merton (Black-Scholes) model requires subjective assumptions, including future
stock price volatility and expected time until exercise, which affect the calculated fair value
on the grant date.As of March 30, 2008, the Company had three stock-based plans for employees and directors that
are open for future grant awards, the 2005 Equity Incentive Plan (Equity Incentive Plan), the
1997 Stock Award Plan for Non-Employee Directors (Director Plan), and the Emulex Corporation
Employee Stock Purchase Plan (Purchase Plan). In addition, the Company had eight stock-based
plans, including six plans assumed in connection with prior acquisitions, the Sierra Logic, Inc.
2001 Stock Option Plan, the Aarohi Communications, Inc. 2001 Stock Option Plan, the Vixel
Corporation Amended and Restated 1995 Stock Option Plan, the Vixel Corporation 1999 Equity
Incentive Plan, the Vixel Corporation 2000 Non-Officer Equity Incentive Plan, and the Giganet,
Inc. 1995 Stock Option Plan (such eight plans known as All Other Plans), each of which is closed
for future grants but has options outstanding. Available for future awards are 1,928,901 shares
under the Equity Incentive Plan, 255,000 shares under the Director Plan, and 636,237 shares
under the Purchase Plan.
 10




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##### Table of Contents



Aggregate amounts recognized in the condensed consolidated financial statements with respect to
these plans are as follows:
 Three Months Ended
    
    
    Three Months Ended
    
    
    Nine Months Ended
    
    
    Nine Months EndedMarch 30,
    
    
    April 1,
    
    
    March 30,
    
    
    April 1,2008
    
    
    2007
    
    
    2008
    
    
    2007(in thousands)Total cost of
stock-based payment
plans during the
period
    
    $
    7,037
    
    
    $
    7,734
    
    
    $
    21,087
    
    
    $
    21,352Amounts capitalized
in inventory during
the period
    
    
    (126
    )
    
    
    (160
    )
    
    
    (402
    )
    
    
    (491
    )Amounts recognized
in income for
amounts previously
capitalized in
inventory
    
    
    120
    
    
    
    210
    
    
    
    437
    
    
    
    466Amounts charged
against income,
before income tax
benefit
    
    $
    7,031
    
    
    $
    7,784
    
    
    $
    21,122
    
    
    $
    21,327Amount of related
income tax benefit
recognized in
income
    
    $
    1,799
    
    
    $
    2,092
    
    
    $
    5,412
    
    
    $
    5,706
   Three Months Ended
    
    Nine Months EndedMarch 30,
    
    April 1,
    
    March 30,
    
    April 1,2008
    
    2007
    
    2008
    
    2007Expected volatility
    
    20%  21%
    
    31%  33%
    
    20%  37%
    
    31%  38%Weighted average expected volatility
    
    20%
    
    32%
    
    29%
    
    34%Expected dividends
    
    
    
    
    
    
    
    Expected term (in years)
    
    2.4  4.4
    
    1.7  4.4
    
    2.4  4.4
    
    1.4  4.4Weighted average expected term
(in years)
    
    3.25
    
    3.25
    
    3.25
    
    3.22Risk-free rate
    
    1.75%  2.24%
    
    4.51%  4.57%
    
    1.75%  4.17%
    
    4.51%  4.78%
  Three Months Ended
    
    Nine Months EndedMarch 30,
    
    April 1,
    
    March 30,
    
    April 1,2008
    
    2007
    
    2008
    
    2007Expected volatility
    
    32%
    
    29%
    
    32%
    
    29% 31%Weighted average expected volatility
    
    32%
    
    29%
    
    32%
    
    30%Expected dividends
    
    
    
    
    
    
    
    Expected term (in years)
    
    0.5
    
    0.2  0.5
    
    0.5
    
    0.2  0.5Weighted average expected term (in years)
    
    0.5
    
    0.48
    
    0.5
    
    0.49Risk-free rate
    
    4.08%
    
    5.08%
    
    4.08%
    
    5.01% 5.08%
 11




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##### Table of Contents



WeightedAverageWeighted
    
    Remaining
    
    AggregateAverage
    
    Contractual
    
    IntrinsicOptions
    
    Exercise Price
    
    Term
    
    Value(in years)
    
    (in millions)Options outstanding at July 1, 2007
    
    
    13,512,649
    
    
    $
    21.66Options granted
    
    
    1,357,850
    
    
    $
    16.32Options exercised
    
    
    (543,717
    )
    
    $
    10.23Options canceled
    
    
    (97,481
    )
    
    $
    26.78Options forfeited
    
    
    (87,763
    )
    
    $
    18.43Options outstanding at March 30, 2008
    
    
    14,141,538
    
    
    $
    21.57
    
    
    
    4.31
    
    
    $
    16.5Options vested and expected to vest at March 30, 2008
    
    
    13,734,754
    
    
    $
    21.71
    
    
    
    4.28
    
    
    $
    16.1Options exercisable at March 30, 2008
    
    
    10,979,597
    
    
    $
    22.91
    
    
    
    4.03
    
    
    $
    13.5
  WeightedAverage GrantNumber of
    
    Date FairAwards
    
    ValueAwards outstanding and unvested at July 1, 2007
    
    
    1,314,776
    
    
    $
    18.22Awards granted
    
    
    1,092,675
    
    
    $
    18.73Awards vested
    
    
    (351,136
    )
    
    $
    18.35Awards forfeited
    
    
    (10,850
    )
    
    $
    18.51Awards outstanding and unvested at March 30, 2008
    
    
    2,045,465
    
    
    $
    18.47
 As of March 30, 2008, there was approximately $25.2 million of total unrecognized compensation
cost related to nonvested share-based compensation arrangements granted under the plans. That
cost is expected to be recognized over a weighted-average period of approximately 1.24 years.The weighted average grant date fair value of options granted during the nine months ended March
30, 2008 and April 1, 2007 was approximately $3.94 and $4.44, respectively. The weighted average
grant date fair value of unvested stock awards granted during the nine months ended March 30,
2008 and April 1, 2007 was approximately $18.73 and $18.28, respectively. The total intrinsic
value of stock options exercised during the nine months ended March 30, 2008 and April 1, 2007
was approximately $5.3 million and $13.0 million, respectively. The total fair value of unvested
stock awards vested during the nine months ended March 30, 2008 was approximately $6.5 million
and there were no awards vested during the nine months ended April 1, 2007.Cash received from stock option exercises and shares purchased under the Purchase Plan and under
stock-based plans for the nine months ended March 30, 2008 and April 1, 2007 were approximately
$7.7 million and $12.8 million, respectively. The actual tax benefit realized for the tax
deductions from option exercise of stock-based plans was approximately $4.5 million and $4.9
million for the nine months ended March 30, 2008 and April 1, 2007, respectively.As of March 30, 2008, we anticipate that the number of shares authorized under the Equity
Incentive Plan, the Director Plan, the Purchase Plan, and All Other Plans are sufficient to
cover future stock option exercises and shares that will be purchased during the next six month
option period from May 1, 2008 to October 31, 2008 under the Purchase Plan.9.
    
    Income TaxesIn July 2006, the FASB issued FIN 48. FIN 48 prescribes a comprehensive model for how a company
should recognize, measure, present, and disclose in its financial statements uncertain tax
positions that the company has taken or expects to take on a tax return.
 12




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##### Table of Contents



FIN 48 states that a tax benefit from an uncertain tax position may be recognized only if it is
more likely than not that the position is sustainable, based on its technical merits. The tax
benefit of a qualifying position is the largest amount of tax benefit that is greater than 50
percent likely of being realized upon settlement with a taxing authority having full knowledge
of all relevant information.A tax benefit from an uncertain position was previously recognized if it was probable of being
sustained. Under FIN 48, the liability for unrecognized tax benefits is classified as noncurrent
unless the liability is expected to be settled in cash within 12 months of the reporting date.
FIN 48 was effective for the Company as of July 2, 2007, the beginning of the current fiscal
year.In connection with the Companys adoption of FIN 48, as of July 2, 2007, the Company recorded a
net increase to retained earnings of approximately $5.4 million related to the measurement of
uncertain tax positions the Company had taken. In addition, the Company recorded a decrease to
additional paid-in-capital of approximately $3.1 million associated with uncertain tax positions
related to stock options. Furthermore, the Company recorded a net decrease to goodwill,
identifiable intangibles, and associated deferred tax liabilities of approximately $2.9 million.
The Company reclassified tax liabilities from income taxes payable to accrued taxes upon
adoption of FIN 48.As of March 30, 2008, the Company had total unrecognized tax benefits of approximately $21.5
million compared to approximately $24.7 million immediately after the adoption of FIN 48 on July
2, 2007. If fully recognized, approximately $15.3 million of the $21.5 million would impact the
Companys effective tax rate. During the nine months ended March 30, 2008, income tax expense
decreased by approximately $2.8 million mainly due to the
release of FIN 48 liabilities primarily as a result of
the expiration of the statute of limitations. The Company does not expect that the liability for
unrecognized tax benefits will change significantly within the next 12 months.The audit of the Companys fiscal 2004 Federal income tax return was completed in a prior fiscal
year. The Companys Federal income tax returns for fiscal years 2005 to 2007 and California
income tax returns from fiscal years 2003 to 2007 are open as the statute of limitations have
not yet expired. The Company is currently under audit by various state taxing authorities, but
not any foreign taxing authorities. The Company does not believe that the resolution of these
audits will have a material effect on its financial statements.The Company recognizes accrued interest and penalties related to unrecognized tax benefits in
income tax expense. The Company had accrued approximately $0.8 million in interest and penalties
related to unrecognized tax benefits accrued as of March 30, 2008 and approximately $0.7 million
as of July 2, 2007 (post FIN 48 adoption).10.
    
    Net Income Per ShareBasic net income per share for the three and nine months ended March 30, 2008 and April 1, 2007,
was computed by dividing net income by the weighted average number of common shares outstanding
during the period.Diluted net income per share was computed by dividing net income by the weighted average number
of common shares outstanding during the period increased to include, if dilutive, the number of
additional common shares that would be outstanding if the dilutive potential common shares from
stock-based plans and convertible subordinated notes had been issued. The dilutive effect of
outstanding stock options and stock awards is reflected in diluted net income per share by
application of the treasury stock method. The following table sets forth the computation of
basic and diluted net income per share:
 13




---



##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedMarch 30,
    
    
    April 1,
    
    
    March 30,
    
    
    April 1,2008
    
    
    2007
    
    
    2008
    
    
    2007(in thousands, except per
    
    
    (in thousands, except pershare data)
    
    
    share data)Numerator  Net income
    
    $
    15,521
    
    
    $
    11,386
    
    
    $
    43,336
    
    
    $
    16,272Denominator:Denominator
for basic net income per share  weighted average shares outstanding
    
    
    82,119
    
    
    
    84,667
    
    
    
    82,152
    
    
    
    84,796Effect of dilutive securities:Dilutive options outstanding, unvested stock
and ESPP
    
    
    1,593
    
    
    
    2,067
    
    
    
    1,951
    
    
    
    1,954Denominator
for diluted net income per share  adjusted weighted average shares outstanding
    
    
    83,712
    
    
    
    86,734
    
    
    
    84,103
    
    
    
    86,750Basic net income per share
    
    $
    0.19
    
    
    $
    0.13
    
    
    $
    0.53
    
    
    $
    0.19Diluted net income per share
    
    $
    0.19
    
    
    $
    0.13
    
    
    $
    0.52
    
    
    $
    0.19Antidilutive options excluded from the computations
    
    
    11,016
    
    
    
    9,668
    
    
    
    9,892
    
    
    
    9,518Average market price of common stock
    
    $
    15.32
    
    
    $
    18.23
    
    
    $
    17.99
    
    
    $
    18.08
  14




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward-Looking Statements
   15




---



##### Table of Contents



Executive Overview
     www.emulex.com
 16




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##### Table of Contents



Results of Operations
  Percentage of Net Revenues
    
    Percentage of Net RevenuesThree Months Ended
    
    Nine Months EndedMarch 30,
    
    April 1,
    
    March 30,
    
    April 1,2008
    
    2007
    
    2008
    
    2007Net revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    37.4
    
    
    
    41.3
    
    
    
    38.8
    
    
    
    42.6Gross profit
    
    
    62.6
    
    
    
    58.7
    
    
    
    61.2
    
    
    
    57.4Operating expenses:Engineering and
development
    
    
    25.8
    
    
    
    26.3
    
    
    
    25.5
    
    
    
    25.1Selling and marketing
    
    
    12.2
    
    
    
    10.7
    
    
    
    11.3
    
    
    
    10.2General and
administrative
    
    
    7.6
    
    
    
    6.5
    
    
    
    7.2
    
    
    
    6.3Amortization of other
intangible assets
    
    
    1.8
    
    
    
    2.1
    
    
    
    1.9
    
    
    
    2.8Impairment of other
intangible assets
    
    
    
    
    
    
    1.7
    
    
    
    
    
    
    
    0.6In-process research
and development
    
    
    
    
    
    
    (0.7
    )
    
    
    
    
    
    
    5.8Total operating
expenses
    
    
    47.4
    
    
    
    46.6
    
    
    
    45.9
    
    
    
    50.8Operating income
    
    
    15.2
    
    
    
    12.1
    
    
    
    15.3
    
    
    
    6.6Nonoperating income, net:Interest income
    
    
    2.2
    
    
    
    3.0
    
    
    
    2.6
    
    
    
    4.8Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.3
    )Other income, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.3Total nonoperating
income, net
    
    
    2.2
    
    
    
    3.0
    
    
    
    2.6
    
    
    
    4.8Income before income taxes
    
    
    17.4
    
    
    
    15.1
    
    
    
    17.9
    
    
    
    11.4Income tax provision
    
    
    5.3
    
    
    
    5.6
    
    
    
    6.4
    
    
    
    6.7Net income
    
    
    12.1
    %
    
    
    9.5
    %
    
    
    11.5
    %
    
    
    4.7
    %
 Three months ended March 30, 2008, compared to three months ended April 1, 2007
 Net Revenues.
 Net Revenues by Product Line
  Net Revenues by Product LineThree Months
    
    
    
    
    
    Three MonthsEnded
    
    Percentage
    
    Ended
    
    PercentageMarch 30,
    
    of Net
    
    April 1,
    
    of Net
    
    Increase/
    
    Percentage(in thousands)
    
    2008
    
    Revenues
    
    2007
    
    Revenues
    
    (Decrease)
    
    ChangeHost Server Products
    
    $
    85,083
    
    
    
    67
    %
    
    $
    87,017
    
    
    
    73
    %
    
    $
    (1,934
    )
    
    
    (2
    %)Embedded Storage Products
    
    
    42,493
    
    
    
    33
    %
    
    
    32,889
    
    
    
    27
    %
    
    
    9,604
    
    
    
    29
    %Intelligent Network Products
    
    
    131
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    131
    
    
    nmOther
    
    
    139
    
    
    
    
    
    
    
    305
    
    
    
    
    
    
    
    (166
    )
    
    
    (54
    %)Total net revenues
    
    $
    127,846
    
    
    
    100
    %
    
    $
    120,211
    
    
    
    100
    %
    
    $
    7,635
    
    
    
    6
    %
 
  17




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##### Table of Contents



Net Revenues by Major Customers
  Net Revenues by Major CustomersDirect Revenues
    
    Total Direct and Indirect Revenues (2)Three Months
    
    Three Months
    
    Three Months
    
    Three MonthsEnded
    
    Ended
    
    Ended
    
    EndedMarch 30, 2008
    
    April 1, 2007
    
    March 30, 2008
    
    April 1, 2007Net revenue percentage (1):OEM:EMC
    
    
    
    
    
    
    
    
    
    
    16
    %
    
    
    17
    %Hewlett-Packard
    
    
    14
    %
    
    
    13
    %
    
    
    14
    %
    
    
    13
    %IBM
    
    
    17
    %
    
    
    20
    %
    
    
    25
    %
    
    
    25
    %Other:Info X
    
    
    11
    %
    
    
    16
    %
    
    
    
    
    
    
    
 
 (1)
    
    Amounts less than 10% are not presented.(2)
    
    Customer-specific models purchased or marketed indirectly through distributors, resellers,
and other third parties are included with the OEMs revenues in these columns rather than as
revenue for the distributors, resellers or other third parties.  Net Revenues by Sales Channel
  18




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##### Table of Contents



Net Revenues by Sales ChannelThree MonthsEnded
    
    Percentage
    
    Three Months Ended
    
    PercentageMarch 30,
    
    of Net
    
    April 1,
    
    of Net
    
    Increase/
    
    Percentage(in thousands)
    
    2008
    
    Revenues
    
    2007
    
    Revenues
    
    (Decrease)
    
    ChangeOEM
    
    $
    99,221
    
    
    
    78
    %
    
    $
    87,249
    
    
    
    73
    %
    
    $
    11,972
    
    
    
    14
    %Distribution
    
    
    28,626
    
    
    
    22
    %
    
    
    32,753
    
    
    
    27
    %
    
    
    (4,127
    )
    
    
    (13
    %)Other
    
    
    (1
    )
    
    
    
    
    
    
    209
    
    
    
    
    
    
    
    (210
    )
    
    nmTotal net revenues
    
    $
    127,846
    
    
    
    100
    %
    
    $
    120,211
    
    
    
    100
    %
    
    $
    7,635
    
    
    
    6
    %
 
  Net Revenues by Geographic Territory
  Net Domestic and International RevenuesThree Months
    
    
    
    
    
    Three MonthsEnded
    
    Percentage
    
    Ended
    
    PercentageMarch 30,
    
    of net
    
    April 1,
    
    of Net
    
    Increase/
    
    Percentage(in thousands)
    
    2008
    
    Revenues
    
    2007
    
    Revenues
    
    (Decrease)
    
    ChangeDomestic
    
    $
    49,357
    
    
    
    39
    %
    
    $
    53,110
    
    
    
    44
    %
    
    $
    (3,753
    )
    
    
    (7
    %)Pacific Rim
    
    
    32,596
    
    
    
    25
    %
    
    
    21,929
    
    
    
    18
    %
    
    
    10,667
    
    
    
    49
    %Europe and rest of the world
    
    
    45,893
    
    
    
    36
    %
    
    
    45,172
    
    
    
    38
    %
    
    
    721
    
    
    
    2
    %Total net revenues
    
    $
    127,846
    
    
    
    100
    %
    
    $
    120,211
    
    
    
    100
    %
    
    $
    7,635
    
    
    
    6
    %
  Gross Profit.
 Gross ProfitThree Months
    
    
    
    Three MonthsEnded March
    
    Percentage of
    
    Ended April
    
    Percentage of
    
    Increase/
    
    Percentage30, 2008
    
    Net Revenues
    
    1, 2007
    
    Net Revenues
    
    (Decrease)
    
    Points Change$80,029
    
    63%
    
    $70,585
    
    59%
    
    $9,444
    
    4%
 19




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##### Table of Contents



Engineering and Development.
 Engineering and DevelopmentThree Months
    
    
    
    Three MonthsEnded March
    
    Percentage of
    
    Ended April
    
    Percentage of
    
    Increase/
    
    Percentage30, 2008
    
    Net Revenues
    
    1, 2007
    
    Net Revenues
    
    (Decrease)
    
    Points Change$33,031
    
    26%
    
    $31,610
    
    26%
    
    $1,421
    
    
  Selling and Marketing.
 Selling and MarketingThree Months Ended
    
    Percentage of Net
    
    Three Months Ended
    
    Percentage of Net
    
    
    
    Percentage PointsMarch 30, 2008
    
    Revenues
    
    April 1, 2007
    
    Revenues
    
    Increase/ (Decrease)
    
    Change$15,613
    
    12%
    
    $12,891
    
    11%
    
    $2,722
    
    1%
  20




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##### Table of Contents



General and Administrative.
 General and AdministrativeThree Months Ended
    
    Percentage of Net
    
    Three Months Ended
    
    Percentage of Net
    
    
    
    Percentage PointsMarch 30, 2008
    
    Revenues
    
    April 1, 2007
    
    Revenues
    
    Increase/ (Decrease)
    
    Change$9,657
    
    8%
    
    $7,812
    
    6%
    
    $1,845
    
    1%
  Amortization of Other Intangible Assets.
 Amortization of Other Intangible AssetsThree Months Ended
    
    Percentage of Net
    
    Three Months Ended
    
    Percentage of Net
    
    
    
    Percentage PointsMarch 30, 2008
    
    Revenues
    
    April 1, 2007
    
    Revenues
    
    Increase/ (Decrease)
    
    Change$2,253
    
    2%
    
    $2,563
    
    2%
    
    $(310)
    
    
  Impairment of Other Intangible Assets.
 Impairment of Other Intangible AssetsThree Months Ended
    
    Percentage of Net
    
    Three Months Ended
    
    Percentage of Net
    
    
    
    Percentage PointsMarch 30, 2008
    
    Revenues
    
    April 1, 2007
    
    Revenues
    
    Increase/ (Decrease)
    
    Change$
    
    
    
    $2,001
    
    2%
    
    $(2,001)
    
    (2%)
  In-Process Research and Development.
 In-Process Research and DevelopmentThree Months Ended
    
    Percentage of Net
    
    Three Months Ended
    
    Percentage of Net
    
    
    
    Percentage PointsMarch 30, 2008
    
    Revenues
    
    April 1, 2007
    
    Revenues
    
    Increase/ (Decrease)
    
    Change$
    
    
    
    $(814)
    
    (1%)
    
    $814
    
    1%
  21




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Nonoperating Income, net.
 Nonoperating Income, netThree Months Ended
    
    Percentage of Net
    
    Three Months Ended
    
    Percentage of Net
    
    
    
    Percentage PointsMarch 30, 2008
    
    Revenues
    
    April 1, 2007
    
    Revenues
    
    Increase/ (Decrease)
    
    Change$2,852
    
    2%
    
    $3,635
    
    3%
    
    $(783)
    
    (1%)
  Income Taxes
 Income TaxesThree Months Ended
    
    Percentage of Net
    
    Three Months Ended
    
    Percentage of Net
    
    
    
    Percentage PointsMarch 30, 2008
    
    Revenues
    
    April 1, 2007
    
    Revenues
    
    Increase/ (Decrease)
    
    Change$6,806
    
    5%
    
    $6,771
    
    6%
    
    $35
    
    (1%)
  Nine months ended March 30, 2008, compared to nine months ended April 1, 2007
 Net Revenues.
 Net Revenues by Product Line
  Net Revenues by Product LineNine Months
    
    
    
    
    
    Nine MonthsEnded
    
    Percentage
    
    Ended
    
    PercentageMarch 30,
    
    of Net
    
    April 1,
    
    of Net
    
    Increase/
    
    Percentage(in thousands)
    
    2008
    
    Revenues
    
    2007
    
    Revenues
    
    (Decrease)
    
    ChangeHost Server Products
    
    $
    268,286
    
    
    
    72
    %
    
    $
    263,779
    
    
    
    77
    %
    
    $
    4,507
    
    
    
    2
    %Embedded Storage Products
    
    
    106,564
    
    
    
    28
    %
    
    
    78,985
    
    
    
    23
    %
    
    
    27,579
    
    
    
    35
    %Intelligent Network Products
    
    
    251
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    251
    
    
    nmOther
    
    
    437
    
    
    
    
    
    
    
    1,155
    
    
    
    
    
    
    
    (718
    )
    
    
    (62
    %)Total net revenues
    
    $
    375,538
    
    
    
    100
    %
    
    $
    343,919
    
    
    
    100
    %
    
    $
    31,619
    
    
    
    9
    %
 
  22




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Net Revenues by Major Customers
  Net Revenues by Major CustomersDirect Revenues
    
    Total Direct and Indirect Revenues (2)Nine Months
    
    Nine Months
    
    Nine Months
    
    Nine MonthsEnded
    
    Ended
    
    Ended
    
    EndedMarch 30, 2008
    
    April 1, 2007
    
    March 30, 2008
    
    April 1, 2007Net revenue percentage (1):OEM:EMC
    
    
    
    
    
    
    
    
    
    
    19
    %
    
    
    17
    %Hewlett-Packard
    
    
    14
    %
    
    
    13
    %
    
    
    14
    %
    
    
    13
    %IBM
    
    
    20
    %
    
    
    23
    %
    
    
    28
    %
    
    
    25
    %Other:Info X
    
    
    15
    %
    
    
    17
    %
    
    
    
    
    
    
    
 
 (1)
    
    Amounts less than 10% are not presented.(2)
    
    Customer-specific models purchased or marketed indirectly through distributors, resellers,
and other third parties are included with the OEMs revenues in these columns rather than as
revenue for the distributors, resellers or other third parties.  Net Revenues by Sales Channel
  Net Revenues by Sales ChannelNine MonthsEnded
    
    Percentage
    
    Nine Months Ended
    
    PercentageMarch 30,
    
    of Net
    
    April 1,
    
    of Net
    
    Increase/
    
    Percentage(in thousands)
    
    2008
    
    Revenues
    
    2007
    
    Revenues
    
    (Decrease)
    
    ChangeOEM
    
    $
    278,100
    
    
    
    74
    %
    
    $
    245,492
    
    
    
    71
    %
    
    $
    32,608
    
    
    
    13
    %Distribution
    
    
    97,099
    
    
    
    26
    %
    
    
    98,115
    
    
    
    29
    %
    
    
    (1,016
    )
    
    
    (1
    %)Other
    
    
    339
    
    
    
    
    
    
    
    312
    
    
    
    
    
    
    
    27
    
    
    
    9
    %Total net revenues
    
    $
    375,538
    
    
    
    100
    %
    
    $
    343,919
    
    
    
    100
    %
    
    $
    31,619
    
    
    
    9
    %
 23




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##### Table of Contents



Net Revenues by Geographic Territory
  Net Domestic and International RevenuesNine Months
    
    
    
    
    
    Nine MonthsEnded
    
    Percentage
    
    Ended
    
    PercentageMarch 30,
    
    of Net
    
    April 1,
    
    of Net
    
    Increase/
    
    Percentage(in thousands)
    
    2008
    
    Revenues
    
    2007
    
    Revenues
    
    (Decrease)
    
    ChangeDomestic
    
    $
    151,009
    
    
    
    40
    %
    
    $
    157,910
    
    
    
    46
    %
    
    $
    (6,901
    )
    
    
    (4
    %)Pacific Rim
    
    
    96,907
    
    
    
    26
    %
    
    
    54,521
    
    
    
    16
    %
    
    
    42,386
    
    
    
    78
    %Europe and rest of the world
    
    
    127,622
    
    
    
    34
    %
    
    
    131,488
    
    
    
    38
    %
    
    
    (3,866
    )
    
    
    (3
    %)Total net revenues
    
    $
    375,538
    
    
    
    100
    %
    
    $
    343,919
    
    
    
    100
    %
    
    $
    31,619
    
    
    
    9
    %
  Gross Profit.
 Gross ProfitNine Months Ended
    
    Percentage of Net
    
    Nine Months Ended
    
    Percentage of Net
    
    
    
    Percentage PointsMarch 30, 2008
    
    Revenues
    
    April 1, 2007
    
    Revenues
    
    Increase/ (Decrease)
    
    Change$229,698
    
    61%
    
    $197,566
    
    57%
    
    $32,132
    
    4%
  24




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Engineering and Development.
 Engineering and DevelopmentNine Months Ended
    
    Percentage of Net
    
    Nine Months Ended
    
    Percentage of Net
    
    
    
    Percentage PointsMarch 30, 2008
    
    Revenues
    
    April 1, 2007
    
    Revenues
    
    Increase/ (Decrease)
    
    Change$95,795
    
    26%
    
    $86,487
    
    25%
    
    $9,308
    
    
  Selling and Marketing.
 Selling and MarketingNine Months Ended
    
    Percentage of Net
    
    Nine Months Ended
    
    Percentage of Net
    
    
    
    Percentage PointsMarch 30, 2008
    
    Revenues
    
    April 1, 2007
    
    Revenues
    
    Increase/ (Decrease)
    
    Change$42,257
    
    11%
    
    $35,027
    
    10%
    
    $7,230
    
    1%
  General and Administrative.
 General and AdministrativeNine Months Ended
    
    Percentage of Net
    
    Nine Months Ended
    
    Percentage of Net
    
    
    
    Percentage PointsMarch 30, 2008
    
    Revenues
    
    April 1, 2007
    
    Revenues
    
    Increase/ (Decrease)
    
    Change$27,034
    
    7%
    
    $21,830
    
    6%
    
    $5,204
    
    1%
 25




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##### Table of Contents



Amortization of Other Intangible Assets.
 Amortization of Other Intangible AssetsNine Months Ended
    
    Percentage of Net
    
    Nine Months Ended
    
    Percentage of Net
    
    
    
    Percentage PointsMarch 30, 2008
    
    Revenues
    
    April 1, 2007
    
    Revenues
    
    Increase/ (Decrease)
    
    Change$7,171
    
    2%
    
    $9,551
    
    3%
    
    $(2,380)
    
    (1%)
  Impairment of Other Intangible Assets.
 Impairment of Other Intangible AssetsNine Months Ended
    
    Percentage of Net
    
    Nine Months Ended
    
    Percentage of Net
    
    
    
    Percentage PointsMarch 30, 2008
    
    Revenues
    
    April 1, 2007
    
    Revenues
    
    Increase/ (Decrease)
    
    Change$
    
    
    
    $2,001
    
    1%
    
    $(2,001)
    
    (1%)
  In-Process Research and Development.
 In-Process Research and DevelopmentNine Months Ended
    
    Percentage of Net
    
    Nine Months Ended
    
    Percentage of Net
    
    
    
    Percentage PointsMarch 30, 2008
    
    Revenues
    
    April 1, 2007
    
    Revenues
    
    Increase/ (Decrease)
    
    Change$
    
    
    
    $19,825
    
    6%
    
    $(19,825)
    
    (6%)
  Nonoperating Income, net.
 Nonoperating Income, netNine Months Ended
    
    Percentage of Net
    
    Nine Months Ended
    
    Percentage of Net
    
    
    
    Percentage PointsMarch 30, 2008
    
    Revenues
    
    April 1, 2007
    
    Revenues
    
    Increase/ (Decrease)
    
    Change$9,698
    
    3%
    
    $16,359
    
    5%
    
    $(6,661)
    
    (2%)
 26




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##### Table of Contents



Income Taxes
 Income TaxesNine Months Ended
    
    Percentage of Net
    
    Nine Months Ended
    
    Percentage of Net
    
    
    
    Percentage PointsMarch 30, 2008
    
    Revenues
    
    April 1, 2007
    
    Revenues
    
    Increase/ (Decrease)
    
    Change$23,803
    
    6%
    
    $22,932
    
    7%
    
    $871
    
    
  Critical Accounting Policies
   Revenue Recognition.
 27




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##### Table of Contents



Warranty.
 Allowance for Doubtful Accounts
 Intangible Assets and Other Long-Lived Assets
 Inventories
 Goodwill
  Income Taxes
 28




---



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Stock-Based Compensation
 Recently Issued Accounting Standards
    29




---



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Liquidity and Capital Resources
     30




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##### Table of Contents



Payments Due by Period(in thousands)RemainingTotal
    
    2008
    
    2009
    
    2010
    
    2011
    
    2012
    
    ThereafterLeases (1)
    
    $
    22,541
    
    
    $
    1,255
    
    
    $
    5,067
    
    
    $
    5,492
    
    
    $
    5,458
    
    
    $
    3,998
    
    
    $
    1,271Purchase commitments
    
    
    43,488
    
    
    
    38,965
    
    
    
    2,772
    
    
    
    1,167
    
    
    
    584
    
    
    
    
    
    
    
    Other commitments (2)
    
    
    9,105
    
    
    
    7,532
    
    
    
    682
    
    
    
    519
    
    
    
    369
    
    
    
    3
    
    
    
    Total
    
    $
    75,134
    
    
    $
    47,752
    
    
    $
    8,521
    
    
    $
    7,178
    
    
    $
    6,411
    
    
    $
    4,001
    
    
    $
    1,271
 
 (1)
    
    Lease payments include common area maintenance (CAM) charges.(2)
    
    Consists primarily of commitments to purchase non-recurring engineering services but excludes
approximately $21.5 million of unrecognized tax benefits under FIN 48 for which we cannot make
a reasonably reliable estimate of the period of payment. See Note 9 to our condensed
consolidated financial statements. 
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
   
 Item 4. Controls and Procedures
  31




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PART II: OTHER INFORMATION
 
 Item 1. Legal Proceedings
 Litigation
    32




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##### Table of Contents



Item 1A. Risk Factors
  Our markets are highly competitive and our business and results of operations may be adversely
affected by entry of new competitors into the markets, aggressive pricing, and the introduction or
expansion of competitive products and technologies.
  A downturn in information technology spending in general, or spending on computer and storage
systems in particular, could adversely affect our revenues and results of operations.
  A significant portion of our business depends upon the continued growth of the storage networking
market, and our business will be adversely affected if such growth does not occur or occurs more
slowly than we anticipate.
  33




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Because a significant portion of our revenues is generated from sales to a limited number of
customers, none of which are the subject of exclusive or long-term contracts, the loss of one or
more of these customers, or our customers failure to make timely payments to us, could adversely
affect our business.
    Our operating results are difficult to forecast and could be adversely affected by many factors,
and our stock price may decline if our results fail to meet expectations.
  
    
    changes in the size, mix, timing and terms of OEM and/or other customer orders;
    
    changes in the sales and deployment cycles for our products and/or desired inventory
levels for our products;
    
    acquisitions or strategic investments by our customers, competitors or us;
    
    timing and market acceptance of new or enhanced product introductions by us, our OEM
customers and/or competitors;
    
    market share losses or difficulty in gaining incremental market share;
    
    fluctuations in product development, procurement, resource utilization and other
operating expenses;
    
    component shortages;
    
    reduced demand from our customers if there is a shortage of, or difficulties in
acquiring, components or other products, such as Fibre Channel or serial advanced
technology attachment (SATA) disk drives and optical modules, used in conjunction with our
products in the deployment of systems;
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##### Table of Contents




    
    inability of our electronics manufacturing service providers to produce and distribute
our products in a timely fashion;
    
    difficulties with updates, changes or additions to our information technology systems;
    
    breaches of our network security, including viruses;
    
    changes in general social and economic conditions, including but not limited to natural
disasters, terrorism, public health crises, slower than expected market growth, reduced
economic activity, delayed economic recovery, loss of consumer confidence, increased energy
costs, adverse business conditions and liquidity concerns, concerns about inflation or
deflation, recession, and reduced business profits and capital spending, with resulting
changes in customer technology budgeting and spending;
    
    changes in technology, industry standards or consumer preferences;
    
    seasonality; and
    
    changes in our accounting or other policies resulting from the adoption of new laws,
regulations or pronouncements.
  Our relatively small backlog of unfilled orders, possible customer delays or deferrals and our
tendency to generate a large percentage of our quarterly sales near the end of the quarter
contribute to possible fluctuations in our operating results that could have an adverse impact on
our results of operations and stock price.
  Our industry is subject to rapid technological change and we must keep pace with the changes to
successfully compete.
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The migration of our customers toward newer product platforms may have a significant adverse
effect.
  Any failure of our OEM customers to keep up with rapid technological change and successfully market
and sell systems that incorporate new technologies could adversely affect our business.
  Rapid changes in the evolution of technology, including the unexpected extent or timing of the
transition from HBA solutions or embedded switch box solutions to lower priced ASIC solutions,
could adversely affect our business.
  If customers elect to utilize lower end HBAs in higher end environments or applications, our
business could be negatively affected.
  Advancement of storage device capacity technology may not allow for additional revenue growth.
  36




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A decrease in the average unit selling prices and/or an increase in the manufactured cost of our
products could adversely affect our revenue, gross margins and financial performance.
  Delays in product development could adversely affect our business.
  
    
    difficulties in hiring and retaining necessary employees and independent contractors;
    
    difficulties in reallocating engineering resources and other resource limitations;
    
    unanticipated engineering or manufacturing complexity, including from third party
suppliers of intellectual property such as foundries of our ASICs;
    
    undetected errors or failures in our products;
    
    changing OEM product specifications;
    
    delays in the acceptance or shipment of products by OEM customers; and
    
    changing market or competitive product requirements.
  Our joint development activities may result in products that are not commercially successful or
that are not available in a timely fashion.
  37




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##### Table of Contents



A change in our business relationships with our third party suppliers or our electronics
manufacturing service providers could adversely affect our business.
  
    
    discontinued production by a supplier;
    
    required long-term purchase commitments;
    
    undetected errors, failures or production quality issues, including projected failures
that may exceed epidemic failure rates specified in agreements with our customers or that
may require us to make concessions or accommodations for continuing customer relationships;
    
    timeliness of product delivery;
    
    sole sourcing and components made by a small number of suppliers, including the
inability to obtain components and finished goods at reasonable cost from such sources and
suppliers;
    
    financial stability and viability of our suppliers and electronics manufacturing
service (EMS) providers;
    
    changes in business strategies of our suppliers and EMS providers;
    
    increases in manufacturing costs due to lower volumes or more complex manufacturing
process than anticipated;
    
    disruption in shipping channels;
    
    natural disasters;
    
    inability or unwillingness of our suppliers or EMS providers to continue their business
with us;
    
    environmental, tax or legislative changes in the location where our products are
produced or delivered;
    
    difficulties associated with international operations; and
    
    market shortages.
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##### Table of Contents



If our intellectual property protections are inadequate, it could adversely affect our business.
    Third party claims of intellectual property infringement could adversely affect our business.
   The inability or increased cost of attracting, motivating, or retaining key managerial and
technical personnel could adversely affect our business.
  39




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##### Table of Contents



Our international business activities subject us to risks that could adversely affect our business.
  
    
    imposition of or changes in governmental controls, taxes, tariffs, trade restrictions,
and regulatory requirements to our current or future operations;
    
    costs and risks of localizing products for international countries;
    
    longer accounts receivable payment cycles;
    
    changes in the value of local currencies relative to our functional currency;
    
    import and export restrictions;
    
    loss of tax benefits or increases in tax expenses;
    
    general economic and social conditions within international countries;
    
    taxation in multiple jurisdictions; and
    
    political instability, war or terrorism.
  Potential acquisitions or strategic investments may be more costly or less profitable than
anticipated and may adversely affect the price of our common stock.
  40




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##### Table of Contents




    
    difficulties in the assimilation of the operations, technologies, products, and
personnel of the acquired company;
    
    purchased technology that is not adopted by customers in the way or the time frame we
anticipated;
    
    diversion of managements attention from other business concerns;
    
    risks of entering markets in which we have limited or no prior experience;
    
    risks associated with assuming the legal obligations of the acquired company;
    
    minority interest in a company, resulting from a strategic investment, that could have
an impact on our results;
    
    risks related to the effect that the acquired companys internal control processes
might have on our financial reporting and managements report on our internal controls over
financial reporting;
    
    potential loss of key employees of the company we invested in or acquired;
    
    risks related to companies we invest in not being able to secure additional funding,
obtain favorable investment terms for future financings, or to take advantage of liquidity
events such as initial public offerings, mergers, and private sales;
    
    there may exist unknown defects of an acquired companys products or assets that may
not be identified due to the inherent limitations involved in the due diligence process of
an acquisition; and
    
    changes in generally accepted accounting principles regarding the accounting treatment
for acquisitions to less favorable treatment than is currently allowed.
  Our stock price is volatile, which has and may result in lawsuits against us and our officers and
directors.
  
    
    quarterly variations in customer demand and operating results;
    
    announcements of new products by us or our competitors;
    
    the gain or loss of significant customers or design wins;
    
    changes in analysts earnings estimates;
    
    changes in analyst recommendations, price targets, or other parameters that may not be
related to earnings estimates;
    
    rumors or dissemination of false information;
    
    pricing pressures;
    
    short selling of our common stock;
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##### Table of Contents




    
    general conditions in the computer, storage, or communications markets; and
    
    events affecting other companies that investors deem to be comparable to us.
  Terrorist activities and resulting military and other actions could adversely affect our business.
  Our corporate offices and principal product development facilities are located in regions that are
subject to earthquakes and other natural disasters.
   Our shareholder rights plan, certificate of incorporation and Delaware law could adversely affect
the performance of our stock.
  42




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##### Table of Contents



Our system of internal controls may be inadequate.
  Changes in laws, regulations, and financial accounting standards may affect our reported results of
operations.
  The final determination of our income tax liability may be materially different from our income tax
provisions and accruals.
  We may need additional capital in the future and such additional financing may not be available on
favorable terms.
  
    
    take advantage of unanticipated opportunities, including more rapid international
expansion or acquisitions of complementary businesses or technologies;
    
    develop new products or services;
    
    repay outstanding indebtedness; and
    
    respond to unanticipated competitive pressures.
  43




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##### Table of Contents



Global warming issues may cause us to alter the way we conduct our business.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   Issuer Purchases of Equity Securities
 Total Number of
    
    Approximate DollarShares Purchased as
    
    Value of SharesTotal Number
    
    Average
    
    Part of Publicly
    
    that May Yet Beof Shares
    
    Price Paid
    
    Announced Plans
    
    Purchased under thePeriod
    
    Purchased
    
    per Share
    
    Or Programs
    
    Plans or ProgramsDecember 31, 2007  January 27, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    39,913,000January 28  February 24, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    39,913,000February 25  March 30, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    39,913,000Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    39,913,000
 44




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##### Table of Contents



Item 6. Exhibits
 Exhibit 3.1
    
    Certificate of Incorporation, as amended (incorporated by
reference to Exhibit 3.1 to the Companys 1997 Annual Report
on Form 10-K).Exhibit 3.2
    
    Certificate of Amendment of Certificate of Incorporation of
the Company (incorporated by reference to Exhibit 3.4 to the
Companys Quarterly Report on Form 10-Q for the quarterly
period ended December 31, 2000).Exhibit 3.3
    
    Amended and restated Bylaws of the Company (incorporated by
reference to Exhibit 3.1 to the Companys Current Report on
Form 8-K filed on August 29, 2007).Exhibit 3.4
    
    Certificate of Designations of Series A Junior Participating
Preferred Stock (incorporated by reference to Exhibit 4 to the
Companys Current Report on Form 8-K filed February 2, 1989).Exhibit 4.1
    
    Rights Agreement dated January 19, 1989, as amended
(incorporated by reference to Exhibit 4 to the Companys
Current Report on Form 8-K filed February 2, 1989).Exhibit 4.2
    
    Certificate regarding extension of Final Expiration Date of
Rights Agreement dated January 18, 1999 (incorporated by
reference to Exhibit 4.2 of Amendment No. 2 to the
Registration Statement on Form S-3, filed on May 17, 1999).Exhibit 31A
    
    Certification of the Principal Executive Officer Pursuant to
17 CFR 240.13a-14(a), as Adopted Pursuant to § 302 of the
Sarbanes-Oxley Act of 2002.Exhibit 31B
    
    Certification of the Principal Financial Officer Pursuant to
17 CFR 240.13a-14(a), as Adopted Pursuant to § 302 of the
Sarbanes-Oxley Act of 2002.Exhibit 32
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to § 906 of the Sarbanes-Oxley Act of 2002.
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##### Table of Contents



SIGNATURES
   EMULEX CORPORATIONBy:
    /s/ James M. McCluneyJames M. McCluneyChief Executive Officer and President By:
    /s/ Michael J. RockenbachMichael J. RockenbachExecutive Vice President and Chief Financial Officer(Principal Financial and Chief Accounting Officer) 46




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##### Table of Contents



Exhibit 3.1
    
    Certificate of Incorporation, as amended (incorporated by
reference to Exhibit 3.1 to the Companys 1997 Annual Report
on Form 10-K).Exhibit 3.2
    
    Certificate of Amendment of Certificate of Incorporation of
the Company (incorporated by reference to Exhibit 3.4 to the
Companys Quarterly Report on Form 10-Q for the quarterly
period ended December 31, 2000).Exhibit 3.3
    
    Amended and restated Bylaws of the Company (incorporated by
reference to Exhibit 3.1 to the Companys Current Report on
Form 8-K filed on August 29, 2007).Exhibit 3.4
    
    Certificate of Designations of Series A Junior Participating
Preferred Stock (incorporated by reference to Exhibit 4 to the
Companys Current Report on Form 8-K filed February 2, 1989).Exhibit 4.1
    
    Rights Agreement dated January 19, 1989, as amended
(incorporated by reference to Exhibit 4 to the Companys
Current Report on Form 8-K filed February 2, 1989).Exhibit 4.2
    
    Certificate regarding extension of Final Expiration Date of
Rights Agreement dated January 18, 1999 (incorporated by
reference to Exhibit 4.2 of Amendment No. 2 to the
Registration Statement on Form S-3, filed on May 17, 1999).Exhibit 31A
    
    Certification of the Principal Executive Officer Pursuant to
17 CFR 240.13a-14(a), as Adopted Pursuant to § 302 of the
Sarbanes-Oxley Act of 2002.Exhibit 31B
    
    Certification of the Principal Financial Officer Pursuant to
17 CFR 240.13a-14(a), as Adopted Pursuant to § 302 of the
Sarbanes-Oxley Act of 2002.Exhibit 32
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to § 906 of the Sarbanes-Oxley Act of 2002.
 47