##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 For the quarterly period ended April 1, 2007
 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
  þ o o
 o þ




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##### 



PAGEPart I FINANCIAL INFORMATIONItem 1 Financial Statements (unaudited)Condensed Consolidated Balance Sheets April 1, 2007, and July 2, 2006
    
    
    2Condensed Consolidated Statements of Income Three and Nine months ended April 1, 2007, and April 2, 2006
    
    
    3Condensed Consolidated Statements of Cash Flows Nine months ended April 1, 2007, and April 2, 2006
    
    
    4Notes to Condensed Consolidated Financial Statements
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    17Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    31Item 4. Controls and Procedures
    
    
    31Part II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    31Item 1A. Risk Factors
    
    
    32Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    45Item 6. Exhibits
    
    
    46Signatures
    
    
    47EXHIBIT 31AEXHIBIT 31BEXHIBIT 32
  1




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
  
   April 1,
    
    
    July 2,2007
    
    
    2006AssetsCurrent assets:Cash and cash equivalents
    
    $
    70,107
    
    
    $
    224,292Investments
    
    
    195,547
    
    
    
    367,054Accounts and other receivables, net of allowance for doubtful accounts of
$1,903 and $1,908 as of April 1, 2007 and July 2, 2006, respectively
    
    
    60,207
    
    
    
    61,362Inventories, net
    
    
    27,702
    
    
    
    22,414Prepaid expenses and other assets
    
    
    5,256
    
    
    
    4,618Deferred income taxes
    
    
    26,313
    
    
    
    27,814Total current assets
    
    
    385,132
    
    
    
    707,554Property and equipment, net
    
    
    63,804
    
    
    
    66,951Investments
    
    
    9,013
    
    
    
    7,103Goodwill
    
    
    63,801
    
    
    
    Intangible assets, net
    
    
    117,425
    
    
    
    77,765Deferred income taxes
    
    
    
    
    
    
    352Other assets
    
    
    24,988
    
    
    
    432Total assets
    
    $
    664,163
    
    
    $
    860,157Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    25,411
    
    
    $
    17,847Accrued liabilities
    
    
    29,004
    
    
    
    21,910Income taxes payable
    
    
    24,425
    
    
    
    27,630Current portion of convertible subordinated notes and capital lease obligation
    
    
    16
    
    
    
    235,177Total current liabilities
    
    
    78,856
    
    
    
    302,564Other liabilities
    
    
    607
    
    
    
    680Capital lease obligation, net of current portion
    
    
    61
    
    
    
    Deferred income taxes
    
    
    2,903
    
    
    
    Total liabilities
    
    
    82,427
    
    
    
    303,244Commitments and contingencies (note 7)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; 85,852,569 and
84,455,809 issued at April 1, 2007 and July 2, 2006, respectively
    
    
    8,585
    
    
    
    8,446Additional paid-in capital
    
    
    1,026,339
    
    
    
    979,893Accumulated deficit
    
    
    (415,144
    )
    
    
    (431,416
    )Accumulated other comprehensive income (loss)
    
    
    6
    
    
    
    (10
    )Treasury stock, at cost; 2,089,278 and zero shares at April 1, 2007 and July
2, 2006, respectively
    
    
    (38,050
    )
    
    
    Total stockholders equity
    
    
    581,736
    
    
    
    556,913Total liabilities and stockholders equity
    
    $
    664,163
    
    
    $
    860,157
  2




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedApril 1,
    
    
    April 2,
    
    
    April 1,
    
    
    April 2,2007
    
    
    2006
    
    
    2007
    
    
    2006Net revenues
    
    $
    120,211
    
    
    $
    89,295
    
    
    $
    343,919
    
    
    $
    303,942Cost of sales
    
    
    49,626
    
    
    
    35,923
    
    
    
    146,353
    
    
    
    123,084Gross profit
    
    
    70,585
    
    
    
    53,372
    
    
    
    197,566
    
    
    
    180,858Operating expenses:Engineering and development
    
    
    31,610
    
    
    
    21,726
    
    
    
    86,487
    
    
    
    65,916Selling and marketing
    
    
    12,891
    
    
    
    9,151
    
    
    
    35,027
    
    
    
    26,362General and administrative
    
    
    7,812
    
    
    
    5,468
    
    
    
    21,830
    
    
    
    17,316Amortization of other intangible assets
    
    
    2,563
    
    
    
    2,686
    
    
    
    9,551
    
    
    
    8,143Impairment of other intangible assets
    
    
    2,001
    
    
    
    
    
    
    
    2,001
    
    
    
    In-process research and development
    
    
    (814
    )
    
    
    
    
    
    
    19,825
    
    
    
    Total operating expenses
    
    
    56,063
    
    
    
    39,031
    
    
    
    174,721
    
    
    
    117,737Operating income
    
    
    14,522
    
    
    
    14,341
    
    
    
    22,845
    
    
    
    63,121Nonoperating income, net:Interest income
    
    
    3,655
    
    
    
    5,881
    
    
    
    16,528
    
    
    
    14,419Interest expense
    
    
    (41
    )
    
    
    (620
    )
    
    
    (1,185
    )
    
    
    (1,866
    )Other income, net
    
    
    21
    
    
    
    52
    
    
    
    1,016
    
    
    
    32Total nonoperating income, net
    
    
    3,635
    
    
    
    5,313
    
    
    
    16,359
    
    
    
    12,585Income before income taxes
    
    
    18,157
    
    
    
    19,654
    
    
    
    39,204
    
    
    
    75,706Income tax provision
    
    
    6,771
    
    
    
    8,061
    
    
    
    22,932
    
    
    
    30,468Net income
    
    $
    11,386
    
    
    $
    11,593
    
    
    $
    16,272
    
    
    $
    45,238Net income per share:Basic
    
    $
    0.13
    
    
    $
    0.14
    
    
    $
    0.19
    
    
    $
    0.54Diluted
    
    $
    0.13
    
    
    $
    0.13
    
    
    $
    0.19
    
    
    $
    0.51Number of shares used in per share computations:Basic
    
    
    84,667
    
    
    
    84,075
    
    
    
    84,796
    
    
    
    83,764Diluted
    
    
    86,734
    
    
    
    91,304
    
    
    
    86,750
    
    
    
    91,171
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##### Table of Contents



Nine Months EndedApril 1,
    
    
    April 2,2007
    
    
    2006Cash flows from operating activities:Net income
    
    $
    16,272
    
    
    $
    45,238Adjustments to reconcile net income to net cash provided by operating
activities:Depreciation and amortization of property and equipment
    
    
    13,188
    
    
    
    12,162Amortization of discount on convertible subordinated notes
    
    
    823
    
    
    
    1,347Share-based compensation expense
    
    
    21,327
    
    
    
    15,433Amortization of other intangible assets
    
    
    28,072
    
    
    
    19,083In-process research and development
    
    
    19,825
    
    
    
    Impairment of other intangible assets
    
    
    2,001
    
    
    
    Loss on disposal of property and equipment
    
    
    180
    
    
    
    61Deferred income taxes
    
    
    (4,283
    )
    
    
    745Excess tax benefit from share-based compensation
    
    
    (2,009
    )
    
    
    (3,206
    )Changes in assets and liabilities:Accounts and other receivables
    
    
    3,722
    
    
    
    (9,224
    )Inventories
    
    
    (1,040
    )
    
    
    6,026Prepaid expenses and other assets
    
    
    (608
    )
    
    
    (747
    )Accounts payable, accrued liabilities, and other liabilities
    
    
    7,272
    
    
    
    (9,807
    )Income taxes payable
    
    
    831
    
    
    
    9,321Net cash provided by operating activities
    
    
    105,573
    
    
    
    86,432Cash flows from investing activities:Proceeds from sale of property and equipment
    
    
    16
    
    
    
    3Additions to property and equipment
    
    
    (8,212
    )
    
    
    (10,843
    )Purchases of investments
    
    
    (1,803,746
    )
    
    
    (1,722,416
    )Maturities of investments
    
    
    1,978,318
    
    
    
    1,651,456Investment in privately-held company
    
    
    (4,975
    )
    
    
    Payments for purchase of Sierra Logic, Inc., net of cash acquired of $5,192
    
    
    (134,188
    )
    
    
    Restricted cash placed in escrow related to Sierra Logic, Inc. acquisition
    
    
    (24,316
    )
    
    
    Net cash provided by (used in) investing activities
    
    
    2,897
    
    
    
    (81,800
    )Cash flows from financing activities:Retirement of convertible subordinated notes
    
    
    (236,000
    )
    
    
    Retirement of debt assumed in conjunction with Sierra Logic, Inc. acquisition
    
    
    (3,425
    )
    
    
    Proceeds from issuance of common stock under stock plans
    
    
    12,801
    
    
    
    10,842Excess tax benefit from share-based compensation expense
    
    
    2,009
    
    
    
    3,206Purchase of treasury stock
    
    
    (38,050
    )
    
    
    Net cash (used in) provided by financing activities
    
    
    (262,665
    )
    
    
    14,048Effect of exchange rates on cash and cash equivalents
    
    
    10
    
    
    
    Net (decrease) increase in cash and cash equivalents
    
    
    (154,185
    )
    
    
    18,680Cash and cash equivalents at beginning of period
    
    
    224,292
    
    
    
    120,317Cash and cash equivalents at end of period
    
    $
    70,107
    
    
    $
    138,997Supplemental disclosures:Cash paid during the period for:Interest
    
    $
    342
    
    
    $
    297Income taxes
    
    
    26,427
    
    
    
    20,698Non-cash investing and financing activities:Purchases of property and equipment not paid during the period included
in the accounts payable balance on the Companys condensed consolidated
balance sheet
    
    $
    875
    
    
    
    Direct acquisition costs not paid during the period included in the
accounts payable balance on the Companys condensed consolidated balance
sheet
    
    
    193
    
    
    
    Additions to property and equipment under capital lease obligations
    
    
    77
    
    
    
    
  4




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##### Table of Contents



1.
    
    Basis of Presentation
  Recently Issued Accounting Standards
    2.
    
    Business Combinations
 Sierra Logic, Inc.
  5




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##### Table of Contents



(in thousands)Current and other assets
    
    $
    13,569Property and equipment
    
    
    1,159Acquired IPR&D
    
    
    22,400Intangible assets
    
    
    71,300Goodwill
    
    
    63,801Total assets acquired
    
    
    172,229Current liabilities
    
    
    (10,748
    )Noncurrent deferred tax liability
    
    
    (13,640
    )Total liabilities assumed
    
    
    (24,388
    )Net assets acquired
    
    $
    147,841
     6




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##### Table of Contents



Developed technology
    
    5 yearsCustomer relationships
    
    5 yearsBacklog
    
    3 monthsWeighted-average amortization period
    
    5 years
      7




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedApril 1,
    
    
    April 2,
    
    
    April 1,
    
    
    April 2,2007
    
    
    2006
    
    
    2007
    
    
    2006(in thousands, except per share data)Net revenues
    
    $
    120,211
    
    
    $
    95,140
    
    
    $
    351,352
    
    
    $
    320,433Net income
    
    $
    11,386
    
    
    $
    6,810
    
    
    $
    12,770
    
    
    $
    32,088Net income per basic share
    
    $
    0.13
    
    
    $
    0.08
    
    
    $
    0.15
    
    
    $
    0.38Net income per diluted share
    
    $
    0.13
    
    
    $
    0.07
    
    
    $
    0.15
    
    
    $
    0.35
 Aarohi Communications, Inc.
    3.
    
    Inventories, net
  April 1,
    
    
    July 2,2007
    
    
    2006(in thousands)Raw materials
    
    $
    5,900
    
    
    $
    5,038Finished goods
    
    
    21,802
    
    
    
    17,376$
    27,702
    
    
    $
    22,414
 4.
    
    Goodwill and Intangible assets, net
 Goodwill
 8




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##### Table of Contents



CarryingAmount(in thousands)Goodwill, as of July 2, 2006
    
    $
    Sierra Logic, Inc. acquisition goodwill
    
    
    60,727Purchase price allocation refinements and excess tax benefit, net
    
    
    3,074Goodwill, as of April 1, 2007
    
    $
    63,801
  April 1,
    
    
    July 2,2007
    
    
    2006(in thousands)Intangible assets subject to amortization:Core technology and patents
    
    $
    98,037
    
    
    $
    99,070Accumulated amortization, core technology and patents
    
    
    (63,753
    )
    
    
    (53,440
    )Developed technology
    
    
    82,761
    
    
    
    14,405Accumulated amortization, developed technology
    
    
    (15,516
    )
    
    
    (6,223
    )Customer relationships
    
    
    38,418
    
    
    
    40,264Accumulated amortization, customer relationships
    
    
    (25,319
    )
    
    
    (19,828
    )Tradename
    
    
    4,925
    
    
    
    4,941Accumulated amortization, tradename
    
    
    (2,374
    )
    
    
    (1,856
    )Covenants not-to-compete
    
    
    3,578
    
    
    
    3,064Accumulated amortization, covenants not-to-compete
    
    
    (3,332
    )
    
    
    (2,632
    )Backlog
    
    
    1,300
    
    
    
    Accumulated amortization, backlog
    
    
    (1,300
    )
    
    
    $
    117,425
    
    
    $
    77,765
    9




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##### Table of Contents



2007 (remaining 3 months)
    
    $
    9,8162008
    
    
    35,7252009
    
    
    26,5752010
    
    
    23,2542011
    
    
    18,555Thereafter
    
    
    3,500$
    117,425
 5.
    
    Accrued Liabilities
  April 1,
    
    July 2,2007
    
    2006(in thousands)Payroll and related costs
    
    $
    14,145
    
    
    $
    8,546Warranty reserves
    
    
    3,600
    
    
    
    2,949Deferred revenue and accrued rebates
    
    
    6,263
    
    
    
    4,478Accrued advertising and promotions
    
    
    1,213
    
    
    
    1,463Accrued property, sales, and franchise taxes
    
    
    1,567
    
    
    
    1,336Other
    
    
    2,216
    
    
    
    3,138$
    29,004
    
    
    $
    21,910
  Three Months Ended
    
    
    Nine Months EndedApril 1,
    
    
    April 2,
    
    
    April 1,
    
    
    April 2,2007
    
    
    2006
    
    
    2007
    
    
    2006(in thousands)
    
    
    (in thousands)Balance at beginning of period
    
    $
    3,855
    
    
    $
    3,246
    
    
    $
    2,949
    
    
    $
    4,085Accrual for warranties issued
    
    
    534
    
    
    
    784
    
    
    
    2,908
    
    
    
    2,036Changes to pre-existing warranties
(including changes in estimates)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Settlements made (in cash or in kind)
    
    
    (789
    )
    
    
    (965
    )
    
    
    (2,257
    )
    
    
    (3,056
    )Balance at end of period
    
    $
    3,600
    
    
    $
    3,065
    
    
    $
    3,600
    
    
    $
    3,065
 6.
    
    Convertible Subordinated Notes
    10




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Commitments and Contingencies
 Litigation
     11




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##### Table of Contents



Other Commitments and ContingenciesThe Company has entered into various agreements for purchases of inventory. As of April 1, 2007,
the Companys purchase obligation associated primarily with inventory was approximately $39.4
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. As of April 1, 2007, there are no known unresolved claims
for indemnification related liability against the Company.8.
    
    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. Since
the December 5, 2006 authorization date to the quarter ended April 1, 2007, the Company
repurchased approximately 2.1 million shares of its common stock under this program for an
aggregate purchase price of approximately $38.1 million or an average of $18.21 per share.
Since April 1, 2007, the Company has not purchased any additional shares of its common stock
under this program.Repurchased shares have been recorded as treasury stock under the cost method and will be held
until the Companys Board of Directors designates that these shares be retired or used for other
purposes.9.
    
    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 model requires subjective assumptions, including future stock price volatility
and expected time until exercise, which affect the calculated fair value on the grant date.At April 1, 2007, the Company had five stock-based plans for employees and directors that are
open for future grant awards. In addition, the Company had six stock-based plans, including four
plans assumed in connection with prior acquisitions, that are all closed for future grants.In connection with the acquisition of Aarohi, the Company assumed the Aarohi Communications,
Inc. 2001 Stock Option Plan (the Aarohi Plan). The options assumed were replaced with Emulex
options based on the acquisition exchange ratio and continue to be subject to the terms of the
Aarohi Plan. The options have a life of up to 10 years, typically vest over 4 years with 25%
after the first year and monthly thereafter, and include a provision that the option holder may
elect at any time to exercise the option prior to the full vesting of the option. Unvested
shares purchased are subject to a repurchase provision which grants the Company the right of
first refusal to repurchase such shares at the original exercise price. Under the Aarohi Plan, 199,286 shares are available
for future award grants.In connection with the acquisition of Sierra Logic, the Company assumed the Sierra Logic, Inc.
2001 Stock Option Plan (the Sierra Logic Plan). The options were replaced with Emulex options
based on the acquisition exchange ratio and continue to be subject to the terms of the Sierra
Logic Plan. The options have a life of up to 10 years, generally vest over a 4 year period, and
include a provision that the option holder may elect at any time to exercise the option prior to
the full vesting of the option. As part of the purchase agreement, unvested shares purchased
early were settled with cash following the same vesting schedule as the originally granted
option. Under the Sierra Logic Plan, 20,734 shares are available for future award grants.Under the Employee Stock Purchase Plan (Purchase Plan), 777,219 shares are available for future
grant awards. Under the 2005 Equity Incentive Plan, 2,493,811 shares are available for future
award grants, which includes 1,500,000 shares approved by the Companys stockholders on November
30, 2006,
 12




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##### Table of Contents



Three Months
    
    
    Three MonthsEnded
    
    
    Ended
    
    
    Nine Months Ended
    
    
    Nine Months EndedApril 1,
    
    
    April 2,
    
    
    April 1,
    
    
    April 2,2007
    
    
    2006
    
    
    2007
    
    
    2006(in thousands)Total cost of
stock-based plans during the
period
    
    $
    7,734
    
    
    $
    4,897
    
    
    $
    21,352
    
    
    $
    15,664Amounts capitalized
in inventory during
the period
    
    
    (160
    )
    
    
    (231
    )
    
    
    (491
    )
    
    
    (513
    )Amounts recognized
in income for
amounts previously
capitalized in
inventory
    
    
    210
    
    
    
    128
    
    
    
    466
    
    
    
    282Amounts charged
against income,
before income tax
benefit
    
    $
    7,784
    
    
    $
    4,794
    
    
    $
    21,327
    
    
    $
    15,433Amount of related
income tax benefit
recognized in
income
    
    $
    2,092
    
    
    $
    925
    
    
    $
    5,706
    
    
    $
    3,129
  13




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##### Table of Contents



All Other Plans
    
    Purchase PlanThree Months
    
    Nine Months
    
    Three Months
    
    Nine MonthsExpected volatility
    
    
    31% - 33
    %
    
    
    31% - 38
    %
    
    
    29
    %
    
    
    29% - 31
    %Weighted average expected volatility
    
    
    32
    %
    
    
    34
    %
    
    
    29
    %
    
    
    30
    %Expected dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expected term (in years)
    
    
    1.7 - 4.4
    
    
    
    1.4 - 4.4
    
    
    
    0.2 - 0.5
    
    
    
    0.2 - 0.5Weighted average expected term (in years)
    
    
    3.25
    
    
    
    3.22
    
    
    
    0.48
    
    
    
    0.49Risk-free rate
    
    
    4.51% - 4.57
    %
    
    
    4.51%-4.78
    %
    
    
    5.08
    %
    
    
    5.01%-5.08
    %
 14




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##### Table of Contents



WeightedAverage
    
    
    AggregateWeighted
    
    
    Remaining
    
    
    IntrinsicAverage
    
    
    Contractual
    
    
    ValueOptions
    
    
    Exercise Price
    
    
    Term (years)
    
    
    (in millions)Balance, July 2, 2006
    
    
    14,612,882
    
    
    $
    22.06Granted
    
    
    1,803,550
    
    
    
    13.24Exercised
    
    
    1,152,647
    
    
    
    7.94Canceled
    
    
    718,177
    
    
    
    47.65Forfeited
    
    
    121,583
    
    
    
    16.63Balance, April 1, 2007
    
    
    14,424,025
    
    
    $
    20.86
    
    
    
    5.13
    
    
    $
    34.3Exercisable, April 1, 2007
    
    
    10,621,103
    
    
    $
    22.24
    
    
    
    4.82
    
    
    $
    25.6
  WeightedAverage GrantNumber of
    
    
    Date FairShares
    
    
    ValueOutstanding and unvested at July 2, 2006
    
    
    305,000
    
    
    
    $17.98Granted
    
    
    1,157,726
    
    
    
    18.28Vested
    
    
    
    
    
    
    Canceled
    
    
    24,100
    
    
    
    18.31Outstanding and unvested at April 1, 2007
    
    
    1,438,626
    
    
    
    $18.22
     15




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##### Table of Contents



10.
    
    Net Income per ShareBasic net income per share for the three and nine months ended April 1, 2007 and April 2, 2006,
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 adjusted 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 option plans and convertible subordinated notes had been issued. The
dilutive effect of outstanding stock options is reflected in diluted net income per share by
application of the treasury stock method. The dilutive effect of convertible subordinated notes
is reflected in diluted net income per share by application of the if-converted method. The
following table sets forth the computation of basic and diluted net income per share:
 Three Months Ended
    
    Nine Months EndedApril 1,
    
    April 2,
    
    April 1,
    
    April 2,2007
    
    2006
    
    2007
    
    2006(in thousands, except per
    
    (in thousands, except pershare data)
    
    share data)Numerator:Net income
    
    $
    11,386
    
    
    $
    11,593
    
    
    $
    16,272
    
    
    $
    45,238Adjustment for interest expense on
convertible subordinated notes, net of
tax
    
    
    
    
    
    
    366
    
    
    
    
    
    
    
    1,115Numerator for diluted net income per share
    
    $
    11,386
    
    
    $
    11,959
    
    
    $
    16,272
    
    
    $
    46,353Denominator:Denominator for basic net income per
share weighted average shares
outstanding
    
    
    84,667
    
    
    
    84,075
    
    
    
    84,796
    
    
    
    83,764Effect of dilutive securities:Dilutive options outstanding and
restricted stock
    
    
    2,067
    
    
    
    1,766
    
    
    
    1,954
    
    
    
    1,944Dilutive common shares from assumed
conversion of convertible subordinated
notes
    
    
    
    
    
    
    5,463
    
    
    
    
    
    
    
    5,463Denominator for diluted net income per
share  adjusted weighted average shares
outstanding
    
    
    86,734
    
    
    
    91,304
    
    
    
    86,750
    
    
    
    91,171Basic net income per share
    
    $
    0.13
    
    
    $
    0.14
    
    
    $
    0.19
    
    
    $
    0.54Diluted net income per share
    
    $
    0.13
    
    
    $
    0.13
    
    
    $
    0.19
    
    
    $
    0.51Antidilutive options excluded from the
computations
    
    
    9,668
    
    
    
    9,640
    
    
    
    9,518
    
    
    
    9,028Average market price of common stock
    
    $
    18.23
    
    
    $
    18.62
    
    
    $
    18.08
    
    
    $
    19.35
 The antidilutive options were excluded from the computation of diluted net income per share
because the options exercise price was greater than the average market price of the common shares during the periods presented.
 16




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward-Looking Statements
   17




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##### Table of Contents



Executive Overview
    www.emulex.com
 18




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##### Table of Contents



Convertible Subordinated Notes Offering
    Stock Repurchase Program
  19




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##### Table of Contents



Results of Operations
  Percentage of Net Revenues
    
    
    Percentage of Net RevenuesThree months ended
    
    
    Nine months endedApril 1,
    
    
    April 2,
    
    
    April 1,
    
    
    April 2,2007
    
    
    2006
    
    
    2007
    
    
    2006Net revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    41.3
    
    
    
    40.2
    
    
    
    42.6
    
    
    
    40.5Gross profit
    
    
    58.7
    
    
    
    59.8
    
    
    
    57.4
    
    
    
    59.5Operating expenses:Engineering and
development
    
    
    26.3
    
    
    
    24.3
    
    
    
    25.1
    
    
    
    21.7Selling and
marketing
    
    
    10.7
    
    
    
    10.3
    
    
    
    10.2
    
    
    
    8.6General and
administrative
    
    
    6.5
    
    
    
    6.1
    
    
    
    6.3
    
    
    
    5.7Amortization of other
intangible assets
    
    
    2.1
    
    
    
    3.0
    
    
    
    2.8
    
    
    
    2.7Impairment of other
intangible assets
    
    
    1.7
    
    
    
    
    
    
    
    0.6
    
    
    
    In-process research
and development
    
    
    (0.7
    )
    
    
    
    
    
    
    5.8
    
    
    
    Total operating
expenses
    
    
    46.6
    
    
    
    43.7
    
    
    
    50.8
    
    
    
    38.7Operating income
    
    
    12.1
    
    
    
    16.1
    
    
    
    6.6
    
    
    
    20.8Nonoperating income, net:Interest income
    
    
    3.0
    
    
    
    6.6
    
    
    
    4.8
    
    
    
    4.7Interest expense
    
    
    
    
    
    
    (0.7
    )
    
    
    (0.3
    )
    
    
    (0.6
    )Other income, net
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    Total
nonoperating
income, net
    
    
    3.0
    
    
    
    5.9
    
    
    
    4.8
    
    
    
    4.1Income before income
taxes
    
    
    15.1
    
    
    
    22.0
    
    
    
    11.4
    
    
    
    24.9Income tax provision
    
    
    5.6
    
    
    
    9.0
    
    
    
    6.7
    
    
    
    10.0Net income
    
    
    9.5
    %
    
    
    13.0
    %
    
    
    4.7
    %
    
    
    14.9
    %
 Three months ended April 1, 2007, compared to three months ended April 2, 2006
 Net Revenues.
 20




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Net Revenues by Product LineThree Months
    
    
    
    
    
    Three MonthsEnded
    
    Percentage
    
    Ended
    
    PercentageApril 1,
    
    of Net
    
    April 2,
    
    of Net
    
    Increase/
    
    Percentage(in thousands)
    
    2007
    
    Revenues
    
    2006
    
    Revenues
    
    (Decrease)
    
    ChangeHost Server Products
    
    $
    87,017
    
    
    
    73
    %
    
    $
    73,239
    
    
    
    82
    %
    
    $
    13,778
    
    
    
    19
    %Embedded Storage Products
    
    
    32,889
    
    
    
    27
    %
    
    
    15,387
    
    
    
    17
    %
    
    
    17,502
    
    
    
    114
    %Intelligent Network Products
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    305
    
    
    
    
    
    
    
    669
    
    
    
    1
    %
    
    
    (364
    )
    
    
    (54
    %)Total net revenues
    
    $
    120,211
    
    
    
    100
    %
    
    $
    89,295
    
    
    
    100
    %
    
    $
    30,916
    
    
    
    35
    %
     Net Revenues by Major CustomersDirect Revenues
    
    Total Direct and Indirect Revenues (2)Three Months
    
    Three Months
    
    Three Months
    
    Three MonthsEnded
    
    Ended
    
    Ended
    
    EndedApril 1, 2007
    
    April 2, 2006
    
    April 1, 2007
    
    April 2, 2006Net revenue percentage (1) :OEM:EMC
    
    
    
    
    
    
    
    
    
    
    17
    %
    
    
    20
    %Hewlett-Packard
    
    
    13
    %
    
    
    12
    %
    
    
    13
    %
    
    
    12
    %IBM
    
    
    20
    %
    
    
    31
    %
    
    
    25
    %
    
    
    31
    %Other:Info X
    
    
    16
    %
    
    
    19
    %
    
    
    
    
    
    
    
 
 (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.  21




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##### Table of Contents



Net Revenues by Sales ChannelThree Months
    
    
    
    
    
    Three MonthsEnded
    
    Percentage
    
    Ended
    
    PercentageApril 1,
    
    of Net
    
    April 2,
    
    of Net
    
    
    
    
    
    Percentage(in thousands)
    
    2007
    
    Revenues
    
    2006
    
    Revenues
    
    Increase
    
    ChangeOEM
    
    $
    87,249
    
    
    
    73
    %
    
    $
    58,816
    
    
    
    66
    %
    
    $
    28,433
    
    
    
    48
    %Distribution
    
    
    32,753
    
    
    
    27
    %
    
    
    30,428
    
    
    
    34
    %
    
    
    2,325
    
    
    
    8
    %Other
    
    
    209
    
    
    
    
    
    
    
    51
    
    
    
    
    
    
    
    158
    
    
    
    310
    %Total net
Revenues
    
    $
    120,211
    
    
    
    100
    %
    
    $
    89,295
    
    
    
    100
    %
    
    $
    30,916
    
    
    
    35
    %
   Net Domestic and International RevenuesThree Months
    
    
    
    
    
    Three MonthsEnded
    
    Percentage
    
    Ended
    
    PercentageApril 1,
    
    of Net
    
    April 2,
    
    of Net
    
    
    
    
    
    Percentage(in thousands)
    
    2007
    
    Revenues
    
    2006
    
    Revenues
    
    Increase
    
    ChangeDomestic
    
    $
    53,110
    
    
    
    44
    %
    
    $
    48,065
    
    
    
    54
    %
    
    $
    5,045
    
    
    
    11
    %Pacific Rim
    
    
    21,929
    
    
    
    18
    %
    
    
    12,723
    
    
    
    14
    %
    
    
    9,206
    
    
    
    72
    %Europe and rest of the world
    
    
    45,172
    
    
    
    38
    %
    
    
    28,507
    
    
    
    32
    %
    
    
    16,665
    
    
    
    58
    %Total net revenues
    
    $
    120,211
    
    
    
    100
    %
    
    $
    89,295
    
    
    
    100
    %
    
    $
    30,916
    
    
    
    35
    %
  Gross Profit.
 22




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##### Table of Contents



Engineering and Development.
 Selling and Marketing.
 General and Administrative.
 Amortization of Other Intangible Assets.
 23




---



##### Table of Contents



Impairment of Other Intangible Assets.
 In-Process Research and Development (IPR&D).
 Nonoperating Income, net.
 Income Taxes
 Nine months ended April 1, 2007, compared to nine months ended April 2, 2006
 Net Revenues.
  Net Revenues by Product LineNine Months
    
    
    
    
    
    
    Nine MonthsEnded
    
    
    Percentage
    
    
    Ended
    
    
    PercentageApril 1,
    
    
    of Net
    
    
    April 2,
    
    
    of Net
    
    
    Increase/
    
    
    Percentage(in thousands)
    
    2007
    
    
    Revenues
    
    
    2006
    
    
    Revenues
    
    
    (Decrease)
    
    
    ChangeHost Server Products
    
    $
    263,779
    
    
    
    77
    %
    
    $
    256,632
    
    
    
    84
    %
    
    $
    7,147
    
    
    
    3
    %Embedded Storage Products
    
    
    78,985
    
    
    
    23
    %
    
    
    44,920
    
    
    
    15
    %
    
    
    34,065
    
    
    
    76
    %Intelligent Network Products
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    1,155
    
    
    
    
    
    
    
    2,390
    
    
    
    1
    %
    
    
    (1,235
    )
    
    
    (52
    %)Total net revenues
    
    $
    343,919
    
    
    
    100
    %
    
    $
    303,942
    
    
    
    100
    %
    
    $
    39,977
    
    
    
    13
    %
  24




---



##### Table of Contents



Net Revenues by Major CustomersDirect Revenues
    
    Total Direct and Indirect Revenues (2)Nine Months
    
    Nine Months
    
    Nine Months
    
    Nine MonthsEnded
    
    Ended
    
    Ended
    
    EndedApril 1, 2007
    
    April 2, 2006
    
    April 1, 2007
    
    April 2, 2006Net revenue percentage (1):OEM:EMC
    
    
    
    
    
    
    
    
    
    
    17
    %
    
    
    24
    %Hewlett-Packard
    
    
    13
    %
    
    
    10
    %
    
    
    13
    %
    
    
    10
    %IBM
    
    
    23
    %
    
    
    30
    %
    
    
    25
    %
    
    
    30
    %Other:Info X
    
    
    17
    %
    
    
    22
    %
    
    
    
    
    
    
    
 
 (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 ChannelNine MonthsEnded
    
    Percentage
    
    Nine Months Ended
    
    PercentageApril 1,
    
    of Net
    
    April 2,
    
    of Net
    
    Increase/
    
    Percentage(in thousands)
    
    2007
    
    Revenues
    
    2006
    
    Revenues
    
    (Decrease)
    
    ChangeOEM
    
    $
    245,492
    
    
    
    71
    %
    
    $
    192,179
    
    
    
    63
    %
    
    $
    53,313
    
    
    
    28
    %Distribution
    
    
    98,115
    
    
    
    29
    %
    
    
    111,609
    
    
    
    37
    %
    
    
    (13,494
    )
    
    
    (12
    %)Other
    
    
    312
    
    
    
    
    
    
    
    154
    
    
    
    
    
    
    
    158
    
    
    
    103
    %Total net revenues
    
    $
    343,919
    
    
    
    100
    %
    
    $
    303,942
    
    
    
    100
    %
    
    $
    39,977
    
    
    
    13
    %
  25




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##### Table of Contents



Net Domestic and International RevenuesNine Months
    
    
    
    
    
    Nine MonthsEnded
    
    Percentage
    
    Ended
    
    PercentageApril 1,
    
    of Net
    
    April 2,
    
    of Net
    
    Increase/
    
    Percentage(in thousands)
    
    2007
    
    Revenues
    
    2006
    
    Revenues
    
    (Decrease)
    
    ChangeDomestic
    
    $
    157,910
    
    
    
    46
    %
    
    $
    164,208
    
    
    
    54
    %
        
    ($
    6,298
    )
    
    
    (4
    %)Pacific Rim
    
    
    54,521
    
    
    
    16
    %
    
    
    41,680
    
    
    
    14
    %
    
    
    12,841
    
    
    
    31
    %Europe and rest of the world
    
    
    131,488
    
    
    
    38
    %
    
    
    98,054
    
    
    
    32
    %
    
    
    33,434
    
    
    
    34
    %Total net revenues
    
    $
    343,919
    
    
    
    100
    %
    
    $
    303,942
    
    
    
    100
    %
    
    $
    39,977
    
    
    
    13
    %
  Gross Profit.
 Engineering and Development.
 Selling and Marketing.
 26




---



##### Table of Contents



General and Administrative.
 Amortization of Other Intangible Assets.
 Impairment of Other Intangible Assets.
 In-Process Research and Development.
 Nonoperating Income, net.
 Income Taxes
 27




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##### Table of Contents



Critical Accounting Policies
   Revenue Recognition.
   Warranty.
 Allowance for Doubtful Accounts
 28




---



##### Table of Contents



Intangible assets and Other Long-Lived Assets
 Inventories
 Goodwill
  Income Taxes
 Treasury Stock
  Stock-Based Compensation
 29




---



##### Table of Contents



Liquidity and Capital Resources
       30




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##### Table of Contents



Contractual Obligations
  Payments Due by Period(in thousands)RemainingTotal
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    ThereafterLeases
    
    $
    12,637
    
    
    $
    884
    
    
    $
    2,810
    
    
    $
    2,677
    
    
    $
    2,619
    
    
    $
    2,666
    
    
    $
    981Purchase commitments
    
    
    39,414
    
    
    
    36,204
    
    
    
    1,605
    
    
    
    1,605
    
    
    
    
    
    
    
    
    
    
    
    Other commitments
    
    
    1,189
    
    
    
    1,189
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    53,240
    
    
    $
    38,277
    
    
    $
    4,415
    
    
    $
    4,282
    
    
    $
    2,619
    
    
    $
    2,666
    
    
    $
    981
 
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
 Interest Rate Sensitivity
  
 Item 4. Controls and Procedures
   
 PART II: OTHER INFORMATION
 
 Item 1. Legal Proceedings
 Litigation
  31




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##### Table of Contents



Item 1A. Risk Factors
  Our acquisition of Aarohi Communications, Inc. on May 1, 2006, and of Sierra Logic, Inc. on
October 2, 2006, involve numerous risks which may have a material adverse effect on our business
and operating results.
  
    
    difficulties and expenses in assimilating and retaining employees, including
integrating teams that have not previously worked together;
 32




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##### Table of Contents




    
    difficulties in creating and maintaining uniform standards, controls, procedures, and
policies;
    
    different geographic locations of the principal operations of Emulex, Aarohi and Sierra
Logic and difficulties relating to management of the former Aarohi operations and personnel
in India;
    
    currency conversion exposure for payroll and other expenses of Aarohis principal
product development facility in Bengalooru, India;
    
    difficulties in attaining cost efficiencies in Aarohis product development facility in Bengalooru, India;
    
    potential adverse reactions of existing customers and strategic relationship partners; and
    
    difficulties with integrating acquired technology into our existing technology in a
timely and efficient manner that would allow us to fully realize the benefits of this
acquisition.
   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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##### Table of Contents



Because a significant portion of our revenues are 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.
    34




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##### Table of Contents



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.
   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 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 growth;
    
    fluctuations in product development, procurement, resource utilization and other operating expenses;
    
    component shortages;
 35




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##### Table of Contents




    
    reduced demand from our customers if there is a shortage of, or difficulties in
acquiring, components or other products, such as Fibre Channel or SATA disk drives and
optical modules, used in conjunction with our products in the deployment of systems;
    
    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 and slower than expected market growth, 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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We have experienced losses in our history and may experience losses in our future that may
adversely affect our stock price and financial condition.
  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.
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Advancement of storage disk capacity technology may not allow for additional revenue growth.
  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 software, firmware, and hardware;
    
    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.
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TM
 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 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, including implementation of European Union Directives 2002/95/EC
(RoHS) and 2002/96/EC (WEEE), with the RoHS directive limiting the concentration of certain
materials (lead, chromium, etc.) that may be contained in electronic products placed on the
European market after July 1, 2006, and the WEEE directive requiring certain recycling
markings and recycling procedures for electronic products placed on the European market
after August 13, 2005;
    
    difficulties associated with foreign operations; and
    
    market shortages.
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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.
  40




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The inability or increased cost of attracting, motivating, or retaining key managerial and
technical personnel could adversely affect our business.
  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;
    
    costs and risks of localizing products for foreign 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, due to international production;
    
    general economic and social conditions within foreign countries;
    
    taxation in multiple jurisdictions; and
    
    political instability, war or terrorism.
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Potential acquisitions or strategic investments may be more costly or less profitable than
anticipated and may adversely affect the price of our common stock.
  
    
    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;
    
    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.
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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;
    
    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.
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Our shareholder rights plan, certificate of incorporation and Delaware law could adversely affect
the performance of our stock.
  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;
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##### Table of Contents




    
    develop new products or services;
    
    repay outstanding indebtedness; and
    
    respond to unanticipated competitive pressures.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   Issuer Purchases of Equity Securities
 Total Number ofShares Purchased as
    
    Approximate Dollar Value ofTotal Number
    
    Average
    
    Part of Publicly
    
    Shares that May Yet Beof Shares
    
    Price Paid
    
    Announced Plans
    
    Purchased under the PlansPeriod
    
    Purchased
    
    per Share
    
    or Programs
    
    or ProgramsMonth #1 (January
29, to February 25,
2007)
    
    
    1,373,616
    
    
    $
    17.98
    
    
    
    1,373,616
    
    
    $
    125,298,537Month #2 (February
26, to April 1,
2007)
    
    
    715,662
    
    
    $
    18.65
    
    
    
    715,662
    
    
    $
    111,949,953Total
    
    
    2,089,278
    
    
    $
    18.21
    
    
    
    2,089,278
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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 30, 2005).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 PresidentBy:
    /s/ Michael J. RockenbachMichael J. RockenbachExecutive Vice President and Chief Financial
Officer
 (Principal Financial and Chief Accounting
Officer) 47




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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 30, 2005).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.
 48