UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 10-Q

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[X]       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
             SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 26, 2008

OR

[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from ________to _________

Commission file number  0-15071



Adaptec, Inc.



|Delaware                                                       | 94-2748530                             
|-------------------------------------------------------------- | ---------------------------------------
|(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number)

691 S. Milpitas Blvd.
Milpitas, California     95035

(408) 945-8600

N/A(Former name, former address
and former fiscal year, if changed since last report)

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Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file reports), and (2) has been subject to such filing
requirements for the past 90 days.  YES    x NO     ̈

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller
reporting company. See definition of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2
of the Exchange Act. (Check one):

Large accelerated filer      ̈ Accelerated filer    x Non-accelerated filer     ̈ (Do not check if a smaller reporting company)
          Smaller reporting company     ̈

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES     ̈ NO    x The number of shares of Adaptec's common stock outstanding as of January 28, 2009 was 121,797,087.
Note:PDF provided as a courtesy
TABLE OF CONTENTS

|Part I.  | Financial Information |                                                                                      
|-------- | --------------------- | -------------------------------------------------------------------------------------
|         | Item 1.               | Financial Statements:                                                                
|         |                       | Unaudited Condensed Consolidated Statements of Operations                            
|         |                       | Unaudited Condensed Consolidated Balance Sheets                                      
|         |                       | Unaudited Condensed Consolidated Statements of Cash Flows                            
|         |                       | Notes to Unaudited Condensed Consolidated Financial Statements                       
|         | Item 2.               | Management's Discussion and Analysis of Financial Condition and Results of Operations
|         | Item 3.               | Quantitative and Qualitative Disclosures about Market Risk                           
|         | Item 4.               | Controls and Procedures                                                              
|Part II. | Other Information     |                                                                                      
|         | Item 1.               | Legal Proceedings                                                                    
|         | Item 1A.              | Risk Factors                                                                         
|         | Item 4.               | Submission of Matters to a Vote of Security Holders                                  
|         | Item 6.               | Exhibits                                                                             
|         | Signatures            |                                                                                      

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ADAPTEC, INC.
                                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (unaudited)

`Three-Month Period Ended  Nine-Month Period Ended
                                                                   ------------------------  ------------------------
                                                                   December 26, December 28, December 26, December 28,
                                                                      2008         2007         2008         2007
                                                                   -----------  -----------  -----------  -----------
                                                                      (in thousands, except per share amounts)       
Net revenues                                                      $    28,205  $    36,118  $    91,363  $   109,913
Cost of revenues (inclusive of amortization of
    acquisition-related intangible assets)                             17,062       21,058       52,209       69,819
                                                                   -----------  -----------  -----------  -----------
    Gross profit                                                       11,143       15,060       39,154       40,094
                                                                   -----------  -----------  -----------  -----------
Operating expenses:
    Research and development                                            7,781        7,291       18,547       27,142
    Selling, marketing and administrative                               9,388       12,328       27,638       38,750
    Amortization of acquisition-related intangible assets                 325          631          433        1,904
    Restructuring charges                                                 930          706        4,169        5,660
    Other gains                                                            --           --           --       (5,799)
                                                                   -----------  -----------  -----------  -----------
        Total operating expenses                                       18,424       20,956       50,787       67,657
                                                                   -----------  -----------  -----------  -----------
Loss from continuing operations                                        (7,281)      (5,896)     (11,633)     (27,563)
Interest and other income, net                                          3,574        8,838       15,078       23,356
Interest expense                                                         (142)        (805)      (1,459)      (2,774)
                                                                   -----------  -----------  -----------  -----------
Income (loss) from continuing operations before income taxes           (3,849)       2,137        1,986       (6,981)
Benefit from income taxes                                              (3,939)        (792)      (1,369)        (290)
                                                                   -----------  -----------  -----------  -----------
Income (loss) from continuing operations, net of taxes                     90        2,929        3,355       (6,691)
                                                                   -----------  -----------  -----------  -----------
Discontinued operations, net of taxes
    Loss from discontinued operations, net of taxes                      (207)      (1,821)        (941)      (3,324)
    Income (loss) from disposal of discontinued
         operations, net of taxes                                      (1,189)          --        4,605         (144)
                                                                   -----------  -----------  -----------  -----------
        Income (loss) from discontinued operations, net of taxes       (1,396)      (1,821)       3,664       (3,468)
                                                                   -----------  -----------  -----------  -----------
Net income (loss)                                                 $    (1,306) $     1,108  $     7,019  $   (10,159)
                                                                   ===========  ===========  ===========  ===========
Income (loss) per share:
Basic
    Continuing operations                                         $      0.00  $      0.02  $      0.03  $     (0.06)
    Discontinued operations                                       $     (0.01) $     (0.02) $      0.03  $     (0.03)
    Net income (loss)                                             $     (0.01) $      0.01  $      0.06  $     (0.09)
Diluted
    Continuing operations                                         $      0.00  $      0.02  $      0.02  $     (0.06)
    Discontinued operations                                       $     (0.01) $     (0.02) $      0.03  $     (0.03)
    Net income (loss)                                             $     (0.01) $      0.01  $      0.05  $     (0.09)

Shares used in computing income (loss) per share:
    Basic                                                             120,231      118,987      119,702      118,430
    Diluted                                                           120,473      119,622      132,765      118,430`

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

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ADAPTEC, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)

December 26, 2008     March 31, 2008
                                                                              ------------------  ------------------
                                                                                        (in thousands)
Assets
Current assets:
    Cash and cash equivalents                                               $            90,151  $          239,911
    Marketable securities                                                               281,062             386,305
    Restricted marketable securities                                                         --               1,670
    Accounts receivable, net                                                             16,613              23,204
    Inventories                                                                           7,007               9,926
    Prepaid expenses and other current assets                                            22,312              20,407
                                                                              ------------------  ------------------
         Total current assets                                                           417,145             681,423
Property and equipment, net                                                              12,373              13,284
Goodwill                                                                                 16,947                  --
Other intangible assets, net                                                             21,013                  --
Other long-term assets                                                                    8,908               5,380
                                                                              ------------------  ------------------
Total assets                                                                $           476,386  $          700,087
                                                                              ==================  ==================Liabilities and Stockholders' Equity
Current liabilities:
    Accounts payable                                                        $            11,969  $           12,311
    Accrued and other liabilities                                                        18,455              19,128
    3/4% Convertible Senior Subordinated Notes ("3/4% Notes")                             2,005             225,321
                                                                              ------------------  ------------------
        Total current liabilities                                                        32,429             256,760
Other long-term liabilities                                                               5,108               9,335
Deferred income taxes                                                                     9,993               9,896
                                                                              ------------------  ------------------
        Total liabilities                                                                47,530             275,991
                                                                              ------------------  ------------------
Commitments and contingencies (Note 15)
Stockholders' equity:
    Common stock                                                                            122                 121
    Additional paid-in capital                                                          201,597             199,289
    Accumulated other comprehensive income, net of taxes                                  2,425               6,993
    Retained earnings                                                                   224,712             217,693
                                                                              ------------------  ------------------
        Total stockholders' equity                                                      428,856             424,096
                                                                              ------------------  ------------------
Total liabilities and stockholders' equity                                  $           476,386  $          700,087
                                                                              ==================  ==================

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

ADAPTEC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

Nine-Month Period Ended
                                                                             --------------------------------------
                                                                                 December 26,        December 28,
                                                                                    2008                2007
                                                                             ------------------  ------------------
                                                                                       (in thousands)
Cash Flows From Operating Activities:
Net income (loss)                                                           $            7,019  $          (10,159)
Less: income (loss) from discontinued operations, net of taxes                           3,664              (3,468)
                                                                             ------------------  ------------------
Income (loss) from continuing operations, net of taxes                                   3,355              (6,691)
Adjustments to reconcile income (loss) from continuing operations,
    net of taxes, to net cash provided by (used in) operating activities:
    Stock-based compensation expense                                                     2,109               4,212
    Inventory-related charges                                                            1,744               5,342
    Depreciation and amortization                                                        5,477               6,128
    Gain on extinguishment of debt                                                      (1,643)                 --
    Gain on sale of long-lived assets                                                       --              (6,735)
    Other non-cash items                                                                    60                 267
    Changes in assets and liabilities, net of effects from the
        purchase of Aristos                                                             (1,733)             (3,840)
                                                                             ------------------  ------------------
Net Cash Provided by (Used in) Operating Activities of Continuing Operations             9,369              (1,317)
Net Cash Used in Operating Activities of Discontinued Operations                          (358)             (1,402)
                                                                             ------------------  ------------------
Net Cash Provided by (Used in) Operating Activities                                      9,011              (2,719)
                                                                             ------------------  ------------------Cash Flows From Investing Activities:
Purchase of Aristos, net of cash acquired                                              (38,005)                 --
Purchases of property and equipment                                                       (452)               (829)
Proceeds from sale of long-lived assets                                                     --              19,881
Purchases of marketable securities                                                    (195,054)            (70,067)
Sales of marketable securities                                                         235,861             117,962
Maturities of marketable securities                                                     58,921              47,917
Maturities of restricted marketable securities                                           1,688               1,688
                                                                             ------------------  ------------------
Net Cash Provided by Investing Activities of Continuing Operations                      62,959             116,552
Net Cash Provided by (Used in) Investing Activities
    of Discontinued Operations                                                             776                 (58)
                                                                             ------------------  ------------------
Net Cash Flow Provided by Investing Actiivities                                         63,735             116,494
                                                                                                                   Cash Flows From Financing Activities:
Repurchase of 3/4% Notes                                                              (221,380)                 --
Proceeds from issuance of common stock                                                   1,602               3,143
                                                                             ------------------  ------------------
Net Cash Provided by (Used in) Financing Activities                                   (219,778)              3,143
                                                                             ------------------  ------------------
Effect of Foreign Currency Translation on Cash and Cash Equivalents                     (2,728)              1,880
                                                                             ------------------  ------------------
Net Increase (Decrease) in Cash and Cash Equivalents                                  (149,760)            118,798
Cash and Cash Equivalents at Beginning of Period                                       239,911              95,922
                                                                             ------------------  ------------------
Cash and Cash Equivalents at End of Period                                  $           90,151  $          214,720
                                                                             ==================  ==================





See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

ADAPTEC, INC.
                  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                  (unaudited)



1. Basis of Presentation
In the opinion of management, the accompanying Unaudited Condensed Consolidated Interim Financial
Statements ("financial statements") of Adaptec, Inc. and its wholly-owned subsidiaries (collectively,
"Adaptec" or the "Company") have been prepared on a consistent basis with the March 31, 2008 audited
consolidated financial statements and include all adjustments, consisting of only normal recurring adjustments, necessary to fairly state
the information set forth therein. This includes the Company's purchase of Aristos Logic Corporation ("Aristos"), a Delaware
corporation, in September 2008, through a merger in which Aristos became a wholly-owned subsidiary of the Company, as further
discussed in Note 4.  The financial statements have been prepared in accordance with the regulations of the SEC, and, therefore, omit
certain information and footnote disclosure necessary to present the statements in accordance with accounting principles generally
accepted in the United States of America. These financial statements should be read in conjunction with the audited consolidated
financial statements and notes thereto included in the Company's Annual Report on Form 10-K/A for the fiscal year ended
March 31, 2008, which was filed with the SEC on June 16, 2008. The results of operations for the third quarter and first nine
months of fiscal 2009 are not necessarily indicative of the results to be expected for the entire fiscal year.

Certain reclassifications have been made to prior period reported amounts to conform to the current year
presentation, related to the reclassification of discontinued operations as discussed in Note 5 to the financial statements.  These
reclassifications had no impact on net income (loss), total assets or total stockholders' equity.  Unless otherwise indicated, the Notes to
the Unaudited Condensed Consolidated Financial Statements relate to the discussion of the Company's continuing operations.

The glossary of key acronyms used in the Company's industry and accounting rules and regulations
referred to within this Quarterly Report on Form 10-Q is listed in alphabetical order in Note 20.
2. Recent Accounting Pronouncements

In February 2007, the FASB issued SFAS No. 159, which permits companies to choose to
measure certain financial instruments and certain other items at fair value that are not currently required to be measured at fair value.
The standard requires that unrealized gains and losses on items for which the fair value option has been elected be reported in
earnings.   SFAS No. 159 is effective for fiscal years beginning after November 15, 2007, which is the Company's fiscal 2009.  The
adoption of SFAS No. 159 did not have an impact on the Company's consolidated financial statements as the Company did not elect
the fair value option for any of its financial assets and liabilities that were not previously measured at fair value.

In December 2007, the FASB ratified EITF No. 07-1, which defines collaborative arrangements and
establishes reporting and disclosure requirements for transactions between participants in a collaborative arrangement and between
participants in the arrangement and third parties.  EITF No. 07-1 is effective beginning with the Company's fiscal 2009.
The adoption of EITF No. 07-1 did not have an impact on the Company's consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141(R), which establishes the principles
and requirements for how an acquirer in a business combination (1) recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree, (2) recognizes and measures
the goodwill acquired in the business combination or a gain from a bargain purchase and (3) determines what information to
disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination.
 SFAS No. 141(R) is effective beginning with the Company's fiscal 2010.  The impact of the adoption of SFAS No. 141(R)
on the Company's results of operations and financial position will depend on the nature and extent of business combinations that it
completes, if any, in or after fiscal 2010; however, it is expected to change the Company's accounting treatment for any business
combinations completed after this statement is adopted.

In December 2007, the SEC issued SAB 110 to amend the SEC's views discussed in SAB 107 regarding
the use of the "simplified" method in developing an estimate of the expected term of "plain vanilla" share options
in accordance with SFAS No. 123(R).  SAB 110 allows a company, under certain circumstances, to continue to use the
"simplified" method beyond December 31, 2007.  SAB 110 is effective beginning with the Company's fiscal 2009.  As
discussed in Note 8 of the Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K/A for
the fiscal year ended March 31, 2008, the Company has utilized the weighted average for estimating the expected term of its stock
option grants.  The Company did not use the "simplified" method in the first nine months of fiscal 2009.

In December 2007, the FASB issued SFAS No. 160, which changes the accounting and reporting for minority
interests such that minority interests will be recharacterized as non-controlling interests and will be required to be reported as a
component of equity.  SFAS No. 160 further requires that purchases or sales of equity interests that do not result in a change in control
be accounted for as equity transactions and, upon a loss of control, requires the interest sold, as well as any interest retained, to be
recorded at fair value with any gain or loss recognized in earnings.  SFAS No. 160 is effective for fiscal years beginning after December
15, 2008, which will be the Company's fiscal year 2010.  The Company is evaluating the financial impact that SFAS No. 160 will have
but expects that the financial impact, if any, will not be material on its consolidated financial statements.

In February 2008, the FASB issued FSP FAS No. 157-2, which delays the effective date of
SFAS No. 157 for all non-recurring fair value measurements of non-financial assets and non-financial liabilities until fiscal years
beginning after November 15, 2008, which will be the Company's fiscal year 2010.  The Company is currently evaluating the
financial impact that FSP FAS No. 157-2 will have, but expects that the financial impact, if any, will not be material on its consolidated
financial statements.

In April 2008, the FASB issued FSP FAS No. 142-3, which amends the factors to be considered in
determining the useful life of intangible assets.  Its intent is to improve the consistency between the useful life of an intangible asset and
the period of expected cash flows used to measure its fair value.  FSP FAS No. 142-3 is effective for fiscal years beginning after
December 15, 2008, which will be the Company's fiscal year 2010.  The impact of the adoption of FSP FAS No. 142-3 on the
Company's results of operations and financial position will depend on the nature and extent of business combinations that it completes,
if any, in or after fiscal 2010.

In May 2008, the FASB issued FSP APB No. 14-1, which requires issuers of convertible debt that may be
settled wholly or partly in cash when converted to account for the debt and equity components separately.  FSP APB No. 14-1 is
effective for fiscal years beginning after December 15, 2008, which will be the Company's fiscal year 2010, and must be applied
retrospectively to all periods presented.  The Company is evaluating the financial impact that FSP APB No. 14-1 will have on its
consolidated financial statements.

In October 2008, the FASB issued FSP FAS No. 157-3, which clarifies the application of SFAS No. 157 in
a market that is not active and provides an example to illustrate key considerations in determining the fair value of a financial asset
when the market for that financial asset is not active.  FSP FAS No. 157-3 is effective upon its issuance, including prior periods for
which financial statements have not been issued.  The adoption of FSP FAS No. 157-3 did not have a material impact on the
Company's consolidated financial statements.

3. Stock Benefit Plans and Stock-Based Compensation

Stock Benefit Plans

The Company grants stock options and other stock-based awards to employees, directors and consultants
under two equity incentive plans, the 2004 Equity Incentive Plan and the 2006 Director Plan.  In addition, the Company has outstanding
options issued under equity incentive plans that have terminated and equity plans that it assumed in connection with its previous
acquisitions.  For a complete discussion of these plans, please refer to Note 8 of the Notes to Consolidated Financial Statements
included in the Company's Annual Report on Form 10-K/A for the fiscal year ended March 31, 2008.  During the third quarter of fiscal
2009, the Company's stockholders approved the amendment and restatement of its 2004 Equity Incentive Plan at the 2008 Annual
Meeting of Stockholders.  Amendments to the 2004 Equity Incentive Plan included (1) reducing the number of shares available for grant
to 14,500,000; however, the reserve will be proportionately reduced if the Company's Board of Directors chooses to effect a reverse
stock split based on certain exchange ratios approved by the Company's stockholders; (2) removing the 5,000,000 share limitation with
respect to stock-based awards granted at less than fair market value; (3) revising the categories of performance-related goals that may
be applicable to stock-based awards granted under the plan; (4) removing the "single trigger" acceleration of vesting upon a
change in control; and (5) modifying the definition of incumbent directors with respect to the definition of a change of control.

As of December 26, 2008, the Company had an aggregate of 22.3 million shares of its common stock reserved
for issuance under its 2004 Equity Incentive Plan, of which 7.6 million shares were subject to outstanding options and other stock
awards, and 14.7 million shares were available for future grants of options and other stock awards.  As of December 26, 2008,
the Company had an aggregate of 2.1 million shares of its common stock reserved for issuance under its 2006 Director Plan, of which
0.9 million shares were subject to outstanding options and other stock awards, and 1.2 million shares were available for future grants of
options and other stock awards. As of December 26, 2008, the Company had 0.1 million shares of common stock reserved that
were subject to outstanding options under assumed plans.

Stock-Based Compensation

The Company measured and recognized compensation expense for all stock-based awards made to its
employees and directors, including employee stock options, employee stock purchase plans, and other stock-based awards, based on
estimated fair values using a straight-line amortization method over the respective requisite service period of the awards and adjusted it
for estimated forfeitures. Stock-based compensation expense included in the Unaudited Condensed Consolidated Statements of
Operations for the third quarters and first nine months of fiscal 2009 and 2008 was as follows:

Three-Month Period Ended    Nine-Month Period Ended
                                                               --------------------------  --------------------------
                                                               December 26,  December 28,  December 26,  December 28,
                                                                   2008          2007          2008          2007
                                                               ------------  ------------  ------------  ------------
                                                                                 (in thousands)
Stock-based compensation expense by caption:
    Cost of revenues                                          $         83  $        108  $        304  $        280
    Research and development (1)                                       220           724           (46)        1,539
    Selling, marketing and administrative                              639           938         1,851         2,393
                                                               ------------  ------------  ------------  ------------
        Stock-based compensation expense effect on income
            (loss) from continuing operations, net of taxes   $        942  $      1,770  $      2,109  $      4,212
                                                               ============  ============  ============  ============
Stock-based compensation expense by type of award:
    Stock options                                             $        316  $        463  $        784  $      1,729
    Restricted stock awards and restricted stock units                 626         1,274         1,325         2,809
    Employee stock purchase plan (2)                                    --            33            --          (326)
                                                               ------------  ------------  ------------  ------------
        Stock-based compensation expense effect on income
            (loss) from continuing operations, net of taxes   $        942  $      1,770  $      2,109  $      4,212
                                                               ============  ============  ============  ============_______________(1) The Company recorded a credit to the Unaudited Condensed Consolidated Statements of Operations in
first nine months of fiscal 2009 based on a true-up of actual forfeitures on a group of restricted stock awards and restricted stock units
(collectively, "restricted stock") that fully vested prior to the end of the first quarter of fiscal 2009 and in the second quarter of
fiscal 2009.  This was further impacted by the Company's reduction in headcount through reductions in force, the sale of the Snap
Server NAS business and, to a lesser extent, general attrition in the Company's workforce.

(2) The Company recorded a credit to the Unaudited Condensed Consolidated Statements of Operations for
the Company's 1986 Employee Stock Purchase Plan in the first nine months of fiscal 2008 based on (a) actual purchases that occurred
on August 14, 2007 and (b) the fact that no new offering period exists, as the Company's 1986 Employee Stock Purchase Plan expired
in April 2006.


Stock-based compensation expense in the above table does not reflect any significant income tax impact, which
is consistent with the Company's treatment of income or loss from its U.S. operations. For the third quarters and first nine months of
fiscal 2009 and 2008, there was no income tax benefit realized for the tax deductions from option exercises of the share-based
payment arrangements. In addition, there was no stock-based compensation costs capitalized as part of an asset in the third quarters
and first nine months of fiscal 2009 and 2008.

Valuation Assumptions

The Company used the Black-Scholes option pricing model for determining the estimated fair value for
stock options and stock-based awards. The fair value of stock options and other stock-based awards granted in the third quarters and
first nine months of fiscal 2009 and 2008 was estimated using the following weighted-average assumptions:

Three-Month Period Ended    Nine-Month Period Ended
                                                               --------------------------  --------------------------
                                                               December 26,  December 28,  December 26,  December 28,
                                                                   2008          2007          2008          2007
                                                               ------------  ------------  ------------  ------------
    Expected life (in years)                                          4.22          4.27          4.37          4.27
    Risk-free interest rates                                          2.24 %        3.45 %        2.76 %        4.44 %
    Expected volatility                                                 38 %          38 %          38 %          39 %
    Dividend yield                                                      --            --            --            --
    Weighted average fair value:
       Stock options                                          $       1.00  $       1.04  $       1.21  $       1.33
       Restricted stock                                       $       2.84  $       3.36  $       3.46  $       3.49


Stock Benefit Plans Activities

Equity Incentive Plans: A summary of option activity under all of the Company's equity incentive plans as
of December 26, 2008 and changes during the first nine months of fiscal 2009 was as follows:

Weighted
                                                                                             Average
                                                                               Weighted     Remaining
                                                                               Average     Contractual    Aggregate
                                                                               Exercise       Term        Intrinsic
                                                                  Shares        Price        (Years)        Value
                                                               ------------  ------------  ------------  ------------
                                                               (in thousands, except exercise price and contractual terms)
Outstanding at March 31, 2008                                        8,979  $       6.67
    Granted                                                          1,241          3.46
    Exercised                                                         (473)         3.38
    Forfeited and cancelled                                         (3,533)         7.28
                                                               ------------
Outstanding at December 26, 2008                                     6,214  $       5.94          3.97  $        525
                                                               ============  ============  ============  ============

Options vested and expected to vest at December 26, 2008             5,809  $       6.11          3.56  $        457
                                                               ============  ============  ============  ============

Options exercisable at December 26, 2008                             4,323  $       6.95          2.82  $        197
                                                               ============  ============  ============  ============

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying
awards and the price of the Company's common stock on The NASDAQ Global Market for the 1.7 million shares subject to options that
were in-the-money at December 26, 2008. During the first nine months in each of fiscal 2009 and 2008, the aggregate intrinsic value of
options exercised under the Company's equity incentive plans was $0.3 million, determined as of the date of option exercise.  As of
December 26, 2008, the total unamortized stock-based compensation expense related to non-vested stock options, net of estimated
forfeitures, was $2.2 million, and this expense is expected to be recognized over a remaining weighted-average period of 2.17 years.

Restricted Stock: Restricted stock awards and restricted stock units have been granted under the
Company's 2004 Equity Incentive Plan and 2006 Director Plan. The Company's right to repurchase shares of restricted stock lapses
upon vesting, at which time the shares of restricted stock awards are released to the employees or directors.  Restricted stock units are
converted into common stock upon the release to the employees or directors upon vesting.  As of December 26, 2008, there were 1.5
million shares of service-based restricted stock awards and 0.8 million shares of restricted stock units outstanding, all of which are
subject to forfeiture if employment terminates prior to the release of restrictions.  Under the 2004 Equity Incentive Plan, restrictions
generally lapse in one of the following ways: (1) 50% one year from the date of grant and the remainder on the second anniversary of
the grant date; (2) 100% one year from the date of grant; (3) 33-1/3% one year from the date of grant and the remainder on the second
anniversary of the grant date; (4) 66-2/3% one year from the date of grant and the remainder on the second anniversary of the grant
date or (5) upon meeting certain performance criteria after being evaluated over a specified period from the date of grant. Under the
2006 Director Plan, restrictions generally lapse either (1) one year from the date of grant for existing non-employee directors or (2) one
year from the date of grant with respect to one-third of the shares and quarterly thereafter for the next two years for the balance of the
shares for initial grants to new non-employee directors. The cost of these awards, determined to be the fair market value of the shares
at the date of grant, is expensed ratably over the period the restrictions lapse.

A summary of activity for restricted stock as of December 26, 2008 and changes during the first nine months of
fiscal 2009 was as follows:

Weighted
                                                                                             Average
                                                                                            Grant-Date
                                                                                               Fair
                                                                                Shares        Value
                                                                             ------------  ------------
                                                                           (in thousands, except weighted
                                                                           average grant-date fair value)
Nonvested stock at March 31, 2008                                                  1,985  $       3.64
Granted (1)                                                                        2,146          3.46
Vested                                                                            (1,076)         3.70
Forfeited                                                                           (742)         3.64
                                                                             ------------
Nonvested stock at December 26, 2008                                               2,313  $       3.44
                                                                             ============_______________


(1) In the third quarter of fiscal 2009, the Company issued approximately 603,000
restricted stock units with a fair value of $1.7 million on the date of grant.  These restricted stock units will vest over a period of
approximately eighteen months based upon meeting certain performance criteria from the date of grant and will be evaluated on a
quarterly basis.  The Company assessed the probability of these performance criteria being achieved at December 26, 2008 and
recorded stock-based compensation expense of $0.1 million in the third quarter of fiscal 2009.


As of December 26, 2008, the total unrecognized compensation expense related to non-vested restricted stock
that is expected to vest, net of estimated forfeitures, was $5.0 million, and this expense is expected to be recognized over a remaining
weighted-average period of 1.44 years.

4.  Acquisition

On September 3, 2008, the Company completed the acquisition of Aristos, a provider of RAID
technology to the data storage industry, pursuant to an Agreement and Plan of Merger dated as of August 27, 2008 (the "Merger
Agreement") by and among Adaptec, Aristos, Ariel Acquisition Corp., a wholly owned subsidiary of Adaptec, and TPG Ventures,
L.P., solely in its capacity as the representative of stockholders of Aristos.  The Merger Agreement provided for the Company's
acquisition of Aristos through a merger in which Aristos became a wholly-owned subsidiary of the Company.  The acquisition of Aristos
will allow the Company to expand into adjacent RAID markets that the Company believes will provide it with growth opportunities,
including blade servers, enterprise-class external storage systems and performance desktops, and will provide the Company with a
strong ASIC roadmap.  In addition, this acquisition enables the Company to pursue new OEM opportunities and expand its channel
product offerings containing unified serial technologies.

The Company acquired Aristos for a purchase price of approximately $38.9 million, which consisted of: (i)
approximately $28.7 million that was paid to certain Aristos senior preferred stockholders and warrant holders, of which 15%, or
approximately $4.3 million, is being withheld in an escrow account to secure potential indemnification obligations of Aristos
stockholders; (ii) approximately $3.2 million under a management liquidation pool established by Aristos prior to completion of the
merger, which was immediately paid upon closing of the transaction; (iii) payments of approximately $6.2 million to retire and satisfy
certain commercial obligations and payables of Aristos; and (iv) accrued for $0.8 million in direct transaction fees, including legal,
valuation and accounting fees.  A summary of the purchase cost, calculated in accordance with SFAS No. 141, is as follows (in
thousands):

Cash paid to certain Aristos senior preferred
    stockholders and warrant holders, including escrow amount               $           28,727
Cash paid under management liquidation pool                                              3,221
Cash paid to retire and satisfy certain commercial obligations
    and payables of Aristos                                                              6,162
Direct acquisition-related transaction costs                                               800
                                                                             ------------------
      Total purchase price                                                  $           38,910
                                                                             ==================



Aristos Holdback:    A portion of the Aristos acquisition price
totaling $4.3 million was held back (the "Aristos Holdback") in an escrow account to secure potential indemnification
obligations of Aristos stockholders for unknown liabilities that may have existed as of the acquisition date.  The Aristos Holdback is to
be paid in two installments to the former Aristos stockholders during the twelfth and eighteenth months after the acquisition closing
date, except for funds necessary to provide for any pending claims.
Management Liquidation Pool:  Under the Merger Agreement, the Company agreed to pay
certain former employees of Aristos a total of $5.6 million through a management liquidation pool established by Aristos prior to the
completion of the merger.  Of the $5.6 million, $3.2 million was immediately paid upon closing of the transaction and was included in the
purchase price allocation of the cost to acquire Aristos.  The remaining $2.4 million is payable over time, not to exceed twelve months,
contingent upon the continued employment of certain employees with the Company, and will be expensed to the Unaudited Condensed
Consolidated Statements of Operations as earned.  In the third quarter and first nine months of fiscal 2009, the Company recorded
expense of $1.0 million and $1.3 million, respectively, in the Unaudited Condensed Consolidated Statements of Operations related to
the management liquidation pool.

The Aristos acquisition was accounted for as a purchase business combination and, accordingly, the
results of Aristos have been included in the Company's unaudited condensed consolidated results of operation and financial position
from the date of acquisition.  The allocation of the Aristos purchase price to the tangible and identifiable intangible assets acquired and
liabilities assumed is summarized below, and was based on valuation techniques such as the discounted cash flows and weighted
average cost methods used in the high technology industry using assumptions and estimates from management to calculate fair value.

September 26, 2008
                                                                             ------------------
                                                                               (in thousands)

Goodwill                                                                    $           16,947
Other intangible assets:
   Core and existing technologies                                                       18,800
   Customer relationships                                                                3,900
   Backlog                                                                                 340
                                                                             ------------------
      Total other intangible assets                                                     23,040
                                                                             ------------------

Tangible assets acquired and liabilities assumed:
   Cash                                                                                    105
   Accounts receivable                                                                     201
   Inventory                                                                               580
   Prepaid expenses and other current assets                                             1,235
   Property and equipment                                                                  570
                                                                             ------------------
     Total assets acquired                                                               2,691
                                                                             ------------------
   Accounts payable                                                                       (352)
   Current liabilities                                                                  (3,416)
                                                                             ------------------
   Total liabilities assumed                                                            (3,768)
                                                                             ------------------
      Net liabilities assumed                                                           (1,077)
                                                                             ------------------
Total purchase price                                                        $           38,910
                                                                             ==================


The values allocated to core and existing technologies, customer relationships and backlog created as a
result of the acquisition of Aristos will be amortized over estimated useful lives of sixty months, thirty-six months and three months,
respectively, reflecting the period in which the economic benefits of the assets are expected to be realized. The total value allocated to
the acquired other intangible assets as a result of the Aristos acquisition is being amortized over an estimated weighted average useful
life of fifty-five months.  No residual value was estimated for the intangible assets. Goodwill was not expected to be deductible for tax
purposes.

Restructuring:  Restructuring charges associated with an acquisition of a company are
accounted for under EITF No. 95- 3 and are included in the purchase price allocation of the acquired company. During the second
quarter of fiscal 2009, the Company finalized a plan to integrate the Aristos operations, and accordingly, recorded a liability of $0.2
million related to severance and related benefits, which has been reflected in the purchase price.  The Company paid all of the liability
and the plan was completed as of September 26, 2008.

Pro forma financial information:	The following unaudited pro forma financial information
for the third quarter of fiscal 2008 and first nine months of fiscal 2009 and 2008 presents the combined results of the Company and
Aristos, as if the acquisition had occurred at the beginning of each of the periods presented. Accordingly, such pro forma results are not
necessarily indicative of what actually would have occurred had the Aristos acquisition been in effect for the periods presented nor are
they indicative of results that could occur in the future.Certain adjustments have been made to the combined results of operations, including the amortization of acquired other
intangible assets, a reduction to interest income to reflect the cash paid for the acquisition, a reduction to interest expense related to the
Aristos debt and the elimination of the change in fair value of preferred stock warrants, which were extinguished as part of the Merger
Agreement, and the elimination of share-based compensation expense recognized by Aristos, as the Company did not assume any
share-based awards as part of the merger.  The pro forma financial results for the third quarter of fiscal 2008 and first nine months of
fiscal 2009 and 2008 were as follows:

Three-Month
                                                             Period Ended    Nine-Month Period Ended
                                                            -------------  ------------------------
                                                             December 28,  December 26, December 28,
                                                                 2007         2008         2007
                                                             ------------  -----------  -----------
                                                           (in thousands, except per share amounts)
Net revenues                                                $     37,644  $    93,149  $   112,734
                                                             ============  ===========  ===========
Loss from continuing operations, net of taxes               $     (2,482) $    (7,304) $   (24,390)
Income (loss) from discontinued operations, net of taxes          (1,821)       3,664       (3,468)
                                                             ------------  -----------  -----------
Net loss                                                    $     (4,303) $    (3,640) $   (27,858)
                                                             ============  ===========  ===========
Income (loss) per common share:
    Basic and diluted
        Continuing operations                               $      (0.02) $     (0.06) $     (0.21)
        Discontinued operations                             $      (0.02) $      0.03  $     (0.03)
        Net loss                                            $      (0.04) $     (0.03) $     (0.24)

Shares used in computing
   income (loss) per share:
    Basic                                                        118,987      119,702      118,430
    Diluted                                                      118,987      119,702      118,430

5. Business Dispositions

Snap Server NAS business:

On June 27, 2008, the Company entered into an asset purchase agreement with Overland Storage, Inc.
("Overland") for the sale of the Snap Server NAS portion of the Company's former SSG segment ("Snap Server NAS
business") for $3.3 million, of which $2.1 million was received by the Company upon the closing of the transaction and the
remaining $1.2 million is to be received on the twelve-month anniversary of the closing of the transaction.  At December 26, 2008, the
Company established a reserve for the full remaining $1.2 million of this receivable as a result of the financial difficulties Overland has
reported.  Notwithstanding the establishment of this reserve, the Company intends to seek payment in full of this receivable.  Overland
purchased all inventory and fixed assets related to the Snap Server NAS business and assumed service and support liabilities. Under
the terms of the agreement, Overland granted the Company a nonexclusive license to certain intellectual property and the Company
provided Overland limited support services to help ensure a smooth transition. Expenses incurred in the transaction primarily include
approximately $0.5 million for broker, legal and accounting fees.  In addition, the Company accrued $0.1 million for lease obligations.
The Company recorded a gain of $4.6 million on the disposal of the Snap Server NAS business in the first nine months of fiscal 2009 in
"Income (loss) from disposal of discontinued operations, net of taxes," in the Unaudited Condensed Consolidated
Statements of Operations.

Net revenues and the components of loss related to the Snap Server NAS business included in
discontinued operations, which were previously included in the Company's SSG segment, were as follows:

Three-Month Period Ended    Nine-Month Period Ended
                                               --------------------------  ------------------------
                                               December 26,  December 28,  December 26, December 28,
                                                   2008          2007         2008         2007
                                               ------------  ------------  -----------  -----------
                                                                (in thousands)
Net revenues                                  $        105  $      5,044  $     4,413  $    17,610
                                               ============  ============  ===========  ===========
Loss from discontinued operations
    before income taxes                       $       (207) $     (2,300) $      (941) $    (3,800)
Benefit from income taxes                               --          (479)          --         (476)
                                               ------------  ------------  -----------  -----------
Loss from discontinued operations,
    net of taxes                              $       (207) $     (1,821) $      (941) $    (3,324)
                                               ============  ============  ===========  ===========

In the third quarter of fiscal 2009, the Company recorded $0.2 million related to the settlement of certain
claims and accruals that resulted from the sale of the Snap Server NAS business.

The components of net liabilities, at the time of the sale of the Snap Server NAS business, were as
follows:

June 27, 2008
                                                                             ------------------
                                                                               (in thousands)
Inventories                                                                 $            1,466
Accounts receivable, net                                                                  (466)
                                                                             ------------------
   Total current assets of discontinued operations                                       1,000
Fixed Assets                                                                                53
                                                                             ------------------
   Total assets of discontinued operations                                               1,053
                                                                             ------------------

Accrued and other liabilities                                                           (4,067)
                                                                             ------------------
   Total current liabilities of discontinued operations                                 (4,067)
                                                                             ------------------
      Net liabilities of discontinued operations                            $           (3,014)
                                                                             ==================


Accounts receivable and accounts payable on the Unaudited Condensed Consolidated Balance Sheet at
June 27, 2008, related to the Snap Server NAS business, were not included in discontinued operations as the Company retained these
assets and liabilities; however, since Overland assumed service and support liabilities for deferred revenue, deferred margin and
warranty, the Company was relieved of these liabilities as well as certain sales returns and allowances contained in accounts
receivable.

6. Balance Sheet Details

Marketable Securities


The Company's portfolio of marketable securities, including restricted marketable securities, at December 26,
2008 was as follows:

Gross        Gross      Estimated
                                                                 Unrealized   Unrealized      Fair
                                                       Cost         Gains       Losses        Value
                                                    -----------  -----------  -----------  -----------
                                                                     (in thousands)
Available-for-Sale Marketable Securities:
    Short-term deposits                            $    43,966  $        --  $        --       43,966
    Corporate obligations                               96,363          368         (707)      96,024
    United States government securities                 86,405        2,357           --       88,762
    Other debt securities                               99,184          511         (722)      98,973
    Marketable equity securities                         2,510           --           --        2,510
                                                    -----------  -----------  -----------  -----------
Total available-for-sale securities                    328,428        3,236       (1,429)     330,235
Less: amounts classified as cash equivalents            46,653           10           --       46,663
Less: amounts classified in other long-term assets       2,510           --           --        2,510
                                                    -----------  -----------  -----------  -----------
Total                                              $   279,265  $     3,226  $    (1,429)     281,062
                                                    ===========  ===========  ===========  ===========



The Company's investment policy focuses on three objectives:  to preserve capital, to meet liquidity
requirements and to maximize total return.  The Company's investment policy establishes minimum ratings for each classification
of investment and investment concentration is limited in orderto minimize risk, and the policy also limits the
final maturity on any investment and the overall duration of the portfolio.  Given the overall market conditions, the Company
regularly reviews its investment portfolio to ensure adherence to its investment policy and to monitor individual investments for risk
analysis and proper valuation.

The Company has considered all available evidence and determined that the marketable securities in which
unrealized losses were recorded in the first nine months of fiscal 2009 were not deemed to be other-than-temporary. The Company
holds its marketable securities as available-for-sale and marks them to market.  The Company expects to realize the full value of all its
marketable securities upon maturity or sale, as the Company has the intent and believes it has the ability to hold the securities until the
full value is realized. However, the Company cannot provide any assurance that its invested cash, cash equivalents and marketable
securities will not be impacted by adverse conditions in the financial markets, which may require the Company to record an impairment
charge that could adversely impact its financial results.

The Company's portfolio of marketable securities, including restricted marketable securities, at March 31,
2008 was as follows:

`Gross        Gross      Estimated
                                                                 Unrealized   Unrealized      Fair
                                                       Cost         Gains       Losses        Value
                                                    -----------  -----------  -----------  -----------
                                                                     (in thousands)
Available-for-Sale Marketable Securities:                                                             
    Short-term deposits                            $    60,979  $        --  $        --       60,979
    Corporate obligations                              110,543          720         (573)     110,690
    United States government securities                116,920        1,790           (5)     118,705
    Other debt securities                              156,746        1,886          (39)     158,593
                                                    -----------  -----------  -----------  -----------
Total available-for-sale securities                    445,188        4,396         (617)     448,967
Less: amounts classified as cash equivalents            60,992           --           --       60,992
                                                    -----------  -----------  -----------  -----------
Total                                              $   384,196  $     4,396  $      (617)     387,975
                                                    ===========  ===========  ===========  ===========`

Inventories

The components of net inventories at December 26, 2008 and March 31, 2008 were as follows:

`December 26, 2008   March 31, 2008
                                                                             ------------------  ------------------
                                                                                       (in thousands)              
Raw materials                                                               $               40  $              107
Work-in-process                                                                            515                 760
Finished goods                                                                           6,452               9,059
                                                                             ------------------  ------------------
    Inventories                                                             $            7,007  $            9,926
                                                                             ==================  ==================`

Accrued and Other Liabilities

The components of accrued and other liabilities at December 26, 2008 and March 31, 2008 were as
follows:

`December 26, 2008   March 31, 2008
                                                                             ------------------  ------------------
                                                                                       (in thousands)              
Tax related                                                                 $            4,486  $              597
Acquisition related                                                                        463               2,587
Accrued compensation and related taxes                                                   6,643               5,439
Deferred margin                                                                          1,682               1,829
Other                                                                                    5,181               8,676
                                                                             ------------------  ------------------
    Accrued and other liabilities                                           $           18,455  $           19,128
                                                                             ==================  ==================`

Other long-term Liabilities

The components of other long-term liabilities at December 26, 2008 and March 31, 2008 were as
follows:

`December 26, 2008   March 31, 2008
                                                                             ------------------  ------------------
                                                                                       (in thousands)              
Tax related                                                                 $            3,465  $            5,676
Acquisition related                                                                        606               1,027
Deferred margin                                                                             --               1,230
Other                                                                                    1,037               1,402
                                                                             ------------------  ------------------
    Other long-term liabilities                                             $            5,108  $            9,335
                                                                             ==================  ==================`



7. Goodwill and Other Intangible Assets, Net

Goodwill

A reconciliation of the changes to the Company's carrying amount of goodwill for the first nine months
of fiscal 2009 was as follows:

`Total
                                                                             ------------------
                                                                               (in thousands)  
Balance at March 31, 2008                                                   $               --
Goodwill acquired during the period (Note 4)                                            16,947
                                                                             ------------------
Balance at December 26, 2008                                                $           16,947
                                                                             ==================`

Other Intangible Assets, Net

The components of other intangible assets, net, at December 26, 2008 and March 31, 2008 were as
follows:

`December 26, 2008                   March 31, 2008
                                            ----------------------------------  ----------------------------------
                                              Gross                    Net        Gross                    Net
                                             Carrying   Accumulated  Carrying    Carrying   Accumulated  Carrying
                                              Amount    Amortization  Amount      Amount    Amortization  Amount
                                            ----------  ----------  ----------  ----------  ----------  ----------
                                                                              (in thousands)                      
Acquisition-related intangible assets:
    Patents, core and existing technologies$   34,348  $  (16,801) $   17,547  $   43,545  $  (43,545) $       --
    Customer relationships                      4,233        (767)      3,466       1,047      (1,047)         --
    Trade name                                    674        (674)         --      10,774     (10,774)         --
    Backlog                                       340        (340)         --          --          --          --
                                            ----------  ----------  ----------  ----------  ----------  ----------
        Subtotal                               39,595     (18,582)     21,013      55,366     (55,366)         --
Intellectual property assets and warrants      26,992     (26,992)         --      40,242     (40,242)         --
                                            ----------  ----------  ----------  ----------  ----------  ----------
Other intangible assets, net               $   66,587  $  (45,574) $   21,013  $   95,608  $  (95,608) $       --
                                            ==========  ==========  ==========  ==========  ==========  ==========`

Amortization of other intangible assets, net was $1.5 million and $0.6 million in the third quarters of
fiscal 2009 and 2008, respectively.  Amortization of other intangible assets, net was $2.0 million and $3.6 million in the first nine months
of fiscal 2009 and 2008, respectively.  The gross carrying amount of other intangible assets decreased as the Company no longer uses
certain intangible assets with a net book value of zero and have removed them from the Company's records, which was offset by an
increase of $23.0 million due to the acquisition of Aristos (Note 4).

The annual amortization expense of the other intangible assets, net, that existed as of December 26, 2008
is expected to be as follows:

`Estimated
                                                                                Amortization
                                                                                  Expense
                                                                             ------------------
                                                                               (in thousands)  
Fiscal Years:
2009 (remaining three months)                                               $            1,264
2010                                                                                     5,060
2011                                                                                     5,060
2012                                                                                     4,302
2013 and thereafter                                                                      5,327
                                                                             ------------------
Total                                                                       $           21,013
                                                                             ==================`



8. Fair Value Measurements

On April 1, 2008, the Company partially adopted SFAS No. 157, which defines fair value, establishes a
framework and gives guidance regarding the methods used for measuring fair value, and expands disclosures about fair value
measurements.  The partial adoption of SFAS No. 157, which related to all of the Company's recurring fair value measurements of
financial assets and financial liabilities, did not have a material impact on the Company's consolidated financial statements.  The
Company chose to delay the adoption of SFAS No. 157 related to non-recurring fair value measurements of non-financial assets and
non-financial liabilities until its fiscal 2010, in accordance with FSP FAS No. 157-2. For further discussion on FSP FAS No. 157-2,
please refer to Note 2.

SFAS No. 157 defines fair value as the price that would be received for selling an asset or paid to transfer
a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on
the measurement date. SFAS No. 157 establishes a fair value hierarchy, consisting of three levels, which requires an entity to maximize
the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The Company utilizes levels 1 and 2 to value its financial assets and liabilities.  Level 1 instruments use
quoted prices in active markets for identical assets or liabilities while level 2 instruments use quoted prices in markets that are not
active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets
or liabilities. As of December 26, 2008, the Company did not have any assets or liabilities utilizing level 3 to value its financial assets
and liabilities, which is supported by little or no market activity and requires a high level of judgment to determine fair value.

Financial assets measured at fair value on a recurring basis at December 26, 2008 were as follows:

`Fair Value Measurements at
                                                                                       Reporting Date Using
                                                                               -------------------------------------
                                                                                 Quoted Prices
                                                                                   in Active         Significant
                                                                                  Markets for           Other
                                                                                   Identical         Observable
                                                                                    Assets             Inputs
                                                                   Total           (Level 1)          (Level 2)
                                                              ---------------   ---------------    ---------------
                                                                                 (in thousands)                   
Short-term deposits (1)                                      $        87,454   $        87,454   $             --
Corporate obligations (2)                                             96,024                --             96,024
United States government securities (2)                               88,762            88,762                 --
Other debt securities (3)                                             98,973            47,426             51,547
Marketable equity securities (4)                                       2,510                --              2,510
                                                              ---------------   ---------------    ---------------
Total assets                                                 $       373,723   $       223,642   $        150,081
                                                              ===============   ===============    ===============`

_______________

(1)

9. Interest and Other Income, Net

The components of interest and other income, net, for the third quarters and first nine months of fiscal
2009 and 2008 were as follows:

`Three-Month Period Ended    Nine-Month Period Ended
                                                                   ------------------------- ------------------------
                                                                   December 26, December 28, December 26, December 28,
                                                                      2008         2007         2008         2007
                                                                   -----------  -----------  -----------  -----------
                                                                                    (in thousands)                   
Interest income                                                   $     3,421  $     8,342  $    14,016  $    22,059
Realized currency transaction gains (losses)                             (207)         496         (581)       1,174
Gain on repurchase of 3/4% Notes                                          360           --        1,643           --
Other                                                                      --           --           --          123
                                                                   -----------  -----------  -----------  -----------
Interest and other income, net                                    $     3,574  $     8,838  $    15,078  $    23,356
                                                                   ===========  ===========  ===========  ===========`

In the third quarter of fiscal 2009, the Company repurchased $52.5 million in principal amount of its 3/4%
Notes on the open market for an aggregate price of $52.0 million, resulting in a gain on extinguishment of debt of $0.4 million (net of
unamortized debt issuance costs of $0.1 million).  In the first nine months of fiscal 2009, the Company repurchased a total of $191.0
million in principal amount of its 3/4% Notes on the open market for an aggregate price of $188.9 million, resulting in a gain on
extinguishment of debt of $1.7 million (net of unamortized debt issuance costs of $0.4 million).
In addition, the majority of the remaining holders of the 3/4% Notes exercised their put option in December
2008, which required the Company to purchase their 3/4% Notes at a price equal to 100.25% of the principal of the 3/4% Notes,
resulting in the redemption of the 3/4% Notes for an aggregate cost of $32.5 million, plus accrued and unpaid interest.  The
Company redeemed an additional $1.5 million of its 3/4% Notes subsequent to quarter-end as additional holders exercised their put
option.

10. Restructuring Charges

In the first quarter of fiscal 2009, the Company approved and initiated a restructuring plan to (1) reduce its
operating expenses due to a declining revenue base, (2) streamline its operations and (3) better align its resources with its strategic
business objectives. This restructuring plan extended to actions taken through the second quarter of fiscal 2009 and included workforce
reductions in all functions of the organization worldwide and consolidation of its facilities.  The total cost incurred for this restructuring
plan, which was recorded in the first nine months of fiscal 2009, was $3.4 million, of which $3.1 million related to severance and related
benefits and $0.3 million related to vacating certain facilities.

In the third quarter of fiscal 2009, the Company initiated additional actions to minimize expenses as its business
began to be impacted by the deterioration of macroeconomic conditions.   The Company recorded $0.9 million in the third quarter of
fiscal 2009 in "Restructuring charges" in the Unaudited Condensed Consolidated Statement of Operations related to
severance and benefits for employee reductions primarily in sales and marketing.  This restructuring plan is expected to cause us to
incur further charges up to $1.0 million in the fourth quarter of fiscal 2009 as the Company expects to continue to identify and
implement additional cost saving measures pursuant to this plan.

In addition, the Company recorded a net reduction in the restructuring accrual of $0.2 million primarily related to
the estimated loss on the Company's facilities as the lease term for certain facilities has ended and, to a lesser extent, for related
severance benefits as actual costs were lower than anticipated.  This net reduction related to the Company's fiscal years 2008, 2003,
2002 and 2001 restructuring plans as well as a previous acquisition-related restructuring plan. All expenses, including adjustments,
associated with the Company's restructuring plans are included in "Restructuring charges" in the Unaudited Condensed
Consolidated Statements of Operations, which are managed at the corporate level.
For a complete discussion of all restructuring actions that were implemented prior to fiscal 2009, please refer to
Note 10 of the Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K/A for the fiscal year
ended March 31, 2008.

The activity in the restructuring accrual was as follows for the first nine months of fiscal 2009:

`Severance        Other
                                                              and Benefits      Charges         Total
                                                              -------------  -------------  -------------
                                                                             (in thousands)                
Accrual balance at March 31, 2008                            $          21  $       2,778  $       2,799
Q1'09 Restructuring Plan charges                                     3,054            354          3,408
Q3'09 Restructuring Plan charges                                       946             --            946
Accrual Adjustments                                                    (58)          (127)          (185)
Cash paid                                                           (2,983)        (1,125)        (4,108)
                                                              -------------  -------------  -------------
Accrual balance at December 26, 2008                         $         980  $       1,880  $       2,860
                                                              =============  =============  =============`

The Company anticipates that the remaining restructuring severance and benefits balance of $1.0 million at
December 26, 2008 will be substantially paid out by the fourth quarter of fiscal 2009 while the remaining restructuring other charges
balance of $1.9 million, relating primarily to long-term leases, will be paid out through the third quarter of fiscal 2012.  Of the remaining
restructuring accrual balance, $2.2 million was reflected in "Accrued and other liabilities" and $0.6 million was reflected in
"Other long-term liabilities" in the Unaudited Condensed Consolidated Balance Sheets.

The activity in the restructuring accrual was as follows for the first nine months of fiscal 2008:

`Severance        Other
                                                              and Benefits      Charges         Total
                                                              -------------  -------------  -------------
                                                                             (in thousands)                
Accrual balance at March 31, 2007                            $         260  $       2,631  $       2,891
Q1'08 Restructuring Plan charges                                     1,526             --          1,526
Q2'08 Restructuring Plan charges                                     3,798            591          4,389
Accrual Adjustments                                                   (186)           (69)          (255)
Non-cash charges                                                        --            (35)           (35)
Cash paid                                                           (5,015)          (611)        (5,626)
                                                              -------------  -------------  -------------
Accrual balance at December 28, 2007                         $         383  $       2,507  $       2,890
                                                              =============  =============  =============`

11.  Other Gains

In May 2007, the Company completed the sale of three buildings in Milpitas, California that were previously
classified as held for sale, with proceeds aggregating to $19.9 million, which exceeded the Company's carrying value of
$12.5 million. Net of selling costs, the Company recorded a gain of $6.7 million on the sale of the properties in the first nine
months of fiscal 2008, which was included within "Other gains" in the Unaudited Condensed Consolidated Statements of
Operations.

The Company also recorded a charge of $0.8 million related to costs incurred to evaluate strategic options
in the first nine months of fiscal 2008, which was included within "Other gains" in the Unaudited Condensed Consolidated
Statements of Operations.

12.  Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted-average
number of common shares outstanding during the period. Diluted net income (loss) per share gives effect to all potentially dilutive
common shares outstanding during the period, which include certain stock-based awards and warrants, calculated using the treasury
stock method, and convertible notes which are potentially dilutive at certain earnings levels, and are computed using the if-converted
method.

A reconciliation of the numerator and denominator of the basic and diluted income (loss) per share
computations for continuing operations, discontinued operations and net income (loss) was as follows:

`Three-Month Period Ended  Nine-Month Period Ended
                                                                   ------------------------  ------------------------
                                                                   December 26, December 28, December 26, December 28,
                                                                    2008 (1)       2007         2008         2007
                                                                   -----------  -----------  -----------  -----------
                                                                      (in thousands, except per share amounts)
Numerators:                                                                                                          
    Income (loss) from continuing operations, net of taxes - basic$        90  $     2,929  $     3,355  $    (6,691)
    Income (loss) from discontinued operations, net of taxes - basic   (1,396)      (1,821)       3,664       (3,468)
                                                                   -----------  -----------  -----------  -----------
    Net income (loss) - basic                                     $    (1,306) $     1,108  $     7,019  $   (10,159)
                                                                   ===========  ===========  ===========  ===========

Adjustments:
    Adjustment for interest expense on 3/4% Notes, net of taxes   $        --  $        --  $     1,388  $        --
    Adjustment for gain on repurchase of 3/4% Notes, net of taxes          --           --       (1,643)          --
                                                                   -----------  -----------  -----------  -----------
       Total adjustments                                          $        --  $        --  $      (255) $        --
                                                                   ===========  ===========  ===========  ===========

    Adjusted income (loss) from continuing operations,
       net of taxes - diluted                                     $        90  $     2,929  $     3,100  $    (6,691)
    Adjusted income (loss) from discontinued operations,
       net of taxes - diluted                                          (1,396)      (1,821)       3,664       (3,468)
                                                                   -----------  -----------  -----------  -----------
    Adjusted net income (loss) - diluted                          $    (1,306) $     1,108  $     6,764  $   (10,159)
                                                                   ===========  ===========  ===========  ===========



Denominators:                                                                                                        
    Weighted average shares outstanding - basic                       120,231      118,987      119,702      118,430
    Effect of dilutive securities:
        Stock options and other stock-based awards                        242          635          689           --
        3/4% Notes                                                         --           --       12,374           --
                                                                   -----------  -----------  -----------  -----------
    Weighted average shares and potentially dilutive
        common shares outstanding - diluted                           120,473      119,622      132,765      118,430
                                                                   ===========  ===========  ===========  ===========
Income (loss) per share:
    Basic
        Continuing operations                                     $      0.00  $      0.02  $      0.03  $     (0.06)
        Discontinued operations                                   $     (0.01) $     (0.02) $      0.03  $     (0.03)
        Net income (loss)                                         $     (0.01) $      0.01  $      0.06  $     (0.09)
    Diluted
        Continuing operations                                     $      0.00  $      0.02  $      0.03  $     (0.06)
        Discontinued operations                                   $     (0.01) $     (0.02) $      0.03  $     (0.03)
        Net income (loss)                                         $     (0.01) $      0.01  $      0.05  $     (0.09)`

_______________

(1) For presentation purposes, the Company excluded the dilutive effect of the convertible notes, including the
associated interest expense and gain on early extinguishment of debt during the third quarter of fiscal 2009 as the amounts yielded the
same diluted earnings per share calculation.

Diluted loss per share for the first nine months of fiscal
2008 was based only on the weighted-average number of shares outstanding during that period, as the inclusion of any
common stock equivalents would have been anti-dilutive. As a result, the same weighted-average number of common shares
outstanding during that period was used to calculate both the basic and diluted earnings per share.  In addition, certain potential
common shares were excluded from the diluted computation for the third quarters of fiscal 2009 and 2008, and the first nine months of
fiscal 2009 because their inclusion would have been anti-dilutive.  In accordance with SFAS No. 128, the weighted-average number of
common shares used to calculate the diluted earnings per share for income (loss) from continuing operations, net of taxes, during each
of the periods was also used to compute all other reported diluted earnings per share, even though it could result in anti-
dilution.

`Three-Month Period Ended  Nine-Month Period Ended
                                                                   ------------------------  ------------------------
                                                                   December 26, December 28, December 26, December 28,
                                                                      2008         2007         2008         2007
                                                                   -----------  -----------  -----------  -----------
                                                                                   (in thousands)                    
Outstanding employee stock options                                      6,428        8,465        6,808       11,921
Outstanding restricted stock                                                7           --            3        1,640
Warrants(1)                                                             4,244       19,724       12,873       19,724
3/4% Notes                                                              3,744       19,224           --       19,224`

_______________

(1)

13. Comprehensive Income (Loss)

The Company's comprehensive income (loss), net of taxes, which consisted of net income (loss) and
the changes in net unrealized gains (losses) on marketable securities and foreign currency translation adjustments, net of taxes, was as
follows:

`Three-Month Period Ended  Nine-Month Period Ended
                                                                   ------------------------  ------------------------
                                                                   December 26, December 28, December 26, December 28,
                                                                      2008         2007         2008         2007
                                                                   -----------  -----------  -----------  -----------
                                                                                   (in thousands)                    
Net income (loss)                                                 $    (1,306) $     1,108  $     7,019  $   (10,159)
Net unrealized gains (losses) on marketable securities,net of taxes     5,966         (103)      (1,972)         303
Foreign currency translation adjustment, net of taxes                    (664)         631       (2,596)       2,177
                                                                   -----------  -----------  -----------  -----------
Comprehensive income (loss), net of taxes                         $     3,996  $     1,636  $     2,451  $    (7,679)
                                                                   ===========  ===========  ===========  ===========`

The Company has considered all available evidence and determined that the marketable securities in which
unrealized losses were recorded in the first nine months of fiscal 2009 were not deemed to be other-than-temporary. The Company
holds its marketable securities as available-for-sale and marks them to market.  The Company expects to realize the full value of all its
marketable securities upon maturity or sale, as the Company has the intent and believes it has the ability to hold the securities until the
full value is realized. However, the Company cannot provide any assurance that its invested cash, cash equivalents and marketable
securities will not be impacted by adverse conditions in the financial markets, which may require the Company to record an impairment
charge that could adversely impact its financial results.

The components of accumulated other comprehensive income, net of taxes, were as follows:

`December 26, 2008     March 31, 2008
                                                                              ------------------  ------------------
                                                                                        (in thousands)              
Unrealized gains on marketable securities, net of taxes                     $               448  $            2,420
Foreign currency translation, net of taxes                                                1,977               4,573
                                                                              ------------------  ------------------
    Accumulated other comprehensive income, net of taxes                    $             2,425  $            6,993
                                                                              ==================  ==================`

14. Income Taxes

The Company recorded tax benefits of $3.9
million and $1.4 million for the third quarter and first nine months of fiscal 2009, respectively.  The Company recorded tax
benefits of $0.8 million and $0.3 million for the third quarter and first nine months of fiscal 2008, respectively.  Income tax provisions for
interim periods are based on the Company's estimated annual income tax rate for entities that were profitable.  Entities that had
operating losses with no tax benefit were excluded. The estimated annual tax for fiscal years 2009 and 2008 includes foreign taxes
related to the Company's foreign subsidiaries and certain state minimum taxes.  Interest is accrued on prior years' tax disputes and
refund claims as a discrete item each period.  For the third quarter and first nine months of fiscal 2009, the Company's tax provision
included changes in judgment related to uncertain tax positions in both the United States and foreign jurisdictions based on new
information received.

In the third quarter of fiscal 2009, the Company recorded a net tax benefit of $2.2 million for the reversal of
previously accrued liabilities related to a final settlement with the Singapore Tax Authority for fiscal years 1998 through 2000, offset by
amounts accrued for changes in judgment related to Singapore tax audits that are on-going for other years.  The Company has
concluded its ongoing negotiations with the IRS taxing authorities with regard to its tax disputes
for its fiscal years 1994 through 2003 and for the fiscal 2004 through 2006 audit cycle, as discussed
below in Note 15.

In January 2009, the Company received notices from the California Franchise Tax Board as a result of their
review of the Company's amended fiscal years 1994 through 2003 tax returns.  These notices indicated that certain adjustments were
to be made in conjunction with adjustments made on the Company's amended Federal tax returns for those fiscal years, due to
reaching resolutions with the United States taxing authorities on all outstanding audit issues, as further discussed below in Note 15.  As
a result, in the third quarter of fiscal 2009, the Company recorded a favorable tax impact due from the state of California, including
accrued and unpaid interest, of approximately $1.6 million.

As of December 26, 2008, the Company's total gross unrecognized tax benefits were $24.8 million, of
which $6.5 million, if recognized, would affect the effective tax rate. There was
an overall increase of $3.3 million in the Company's gross unrecognized tax benefits in the first nine months of fiscal 2009 due to
changes in judgment related to foreign audits as a result of new information that the Company received in the first nine months of fiscal
2009, offset by benefits from the Singapore audit settlement noted above. This increase in the Company's gross
unrecognized tax benefits was also partially offset by the recording of a receivable of $0.7 million from a third party since the Company
was partially indemnified by the third party for this tax matter and the issue arose in years prior to the Company's acquisition of the
entity under audit.

The Company is subject to U.S. federal income tax as well as income taxes in many U.S. states and
foreign jurisdictions. As of December 26, 2008, fiscal years 2004 onward remained open to examination by the U.S. taxing authorities,
fiscal years 2001 onward remained open to examination in Singapore and in various other foreign jurisdictions.  U.S. tax attributes
generated in tax years 2000 onward also remain subject to adjustment in subsequent audits when they are utilized.  Management
believes that events that could occur in the next 12 months and cause a material change in unrecognized tax benefits include, but are
not limited to, the following:





The calculation of unrecognized tax benefits involves dealing with uncertainties in the application of
complex global tax regulations. Management regularly assesses the Company's tax positions in light of legislative, bilateral tax treaty,
regulatory and judicial developments in the countries in which the Company does business. Management believes that it is reasonably
possible that the gross unrecognized tax benefits will decrease by approximately $3.4 million within the next 12 months due to the
settlement of tax audits in various foreign jurisdictions.

15. Commitments and Contingencies

The Company was previously subject to IRS audits for its fiscal years 1994 through 2003. During the third
quarter of fiscal 2007, the Company reached resolution with the United States taxing authorities on all outstanding audit issues relating
to those fiscal years. However, the Company's tax provision continues to reflect judgment and estimation regarding components of the
settlement such as interest calculations and the application of the settlements to state and local taxing jurisdictions.  Although the
Company believes its tax estimates are reasonable, the ultimate tax outcome may materially differ from the tax amounts recorded in its
Unaudited Condensed Consolidated Financial Statements and may cause a higher effective tax rate that could materially affect its
income tax provision, results of operations or cash flows in the period or periods for which such determination is made. In the first
quarter of fiscal 2009, the IRS concluded its audit of the Company's federal income tax returns for the fiscal 2004 through 2006 audit
cycle. The IRS issued a No Change Report indicating no change to the Company's tax liability; however, the IRS continues to have the
ability to adjust tax attributes relating to these years in subsequent audits. The Company believes that it has provided sufficient tax
provisions for these years and the ultimate outcome of any future IRS audits that include the tax attributes will not have a material
adverse impact on its financial position or results of operations in future periods. However, the Company cannot predict with certainty
how these matters will be resolved and whether it will be required to make additional tax payments.

The Company is a party to other litigation matters and claims, including those related to intellectual property,
which are normal in the course of its operations, and while the results of such litigation matters and claims cannot be predicted with
certainty, the Company believes that the final outcome of such matters will not have a material adverse impact on its financial position
or results of operations. However, because of the nature and inherent uncertainties of litigation, should the outcome of these actions be
unfavorable, the Company's business, financial condition, results of operations and cash flows could be materially and adversely
affected.

In connection with the Company's acquisitions of Aristos and Eurologic, a portion of the respective purchase
prices totaling $4.3 million and $3.8 million, respectively, were held back (the "Holdbacks") to secure potential
indemnification obligations of Aristos and Eurologic stockholders for unknown liabilities that may have existed as of the acquisition
dates.  As of December 26, 2008, the Aristos Holdback of $4.3 million remains outstanding for potential unknown liabilities that may
arise.  In connection with the Eurologic Holdback, the Company paid $2.3 million to the Eurologic shareholders in fiscal 2005 and
retained the remaining $1.5 million for claims the Company asserted against the Eurologic Holdback. In the first nine months of fiscal
2009, the Company entered into a Deed of Indemnity and a written settlement agreement with the Representative of the Eurologic
shareholders, which resolved all of the Company's remaining disputed, outstanding claims against the Eurologic Holdback, resulting in
an additional payment of $1.3 million.  The remaining Eurologic Holdback balance of $0.2 million was retained by the Company and
was recognized as a gain in the first nine months of fiscal 2009 in "Income (loss) from discontinued operations, net of taxes"
in the Unaudited Condensed Consolidated Statement of Operations.



16. Guarantees

Intellectual Property and Other Indemnification Obligations

The Company has entered into agreements with customers and suppliers that include intellectual
property indemnification obligations. These indemnification obligations generally require the Company to compensate the other party for
certain damages and costs incurred as a result of third party intellectual property claims arising from these transactions. In each of
these circumstances, payment by the Company is conditional on the other party making a claim pursuant to the procedures specified in
the particular contract, which procedures typically allow the Company to challenge the other party's claims. Further, the Company's
obligations under these agreements may be limited in terms of time and/or amount, and in some instances, the Company may have
recourse against third parties for certain payments made by it under these agreements. In addition, the Company has agreements
whereby it indemnifies its directors and certain of its officers for certain events or occurrences while the officer or director is, or was,
serving at the Company's request in such capacity. These indemnification agreements are not subject to a maximum loss clause;
however, the Company maintains a Director and Officer insurance policy which may cover all or a portion of the liabilities arising from
its obligation to indemnify its directors and officers.

Product Warranty

The Company provides an accrual for estimated future warranty costs based upon the historical relationship
of warranty costs to sales. The estimated future warranty obligations related to product sales are recorded in the period in which the
related revenue is recognized. The estimated future warranty obligations are affected by sales volume, product failure rates, material
usage and replacement costs incurred in correcting a product failure. If actual product failure rates, material usage or replacement costs
differ from the Company's estimates, revisions to the estimated warranty obligations would be required; however, the Company made
no adjustments to pre-existing warranty accruals in the first nine months of fiscal 2009 and 2008.

A reconciliation of the changes to the Company's warranty accrual for the first nine months of fiscal 2009 and
2008 was as follows:

`Nine-Month Period Ended
                                                                             --------------------------------------
                                                                               December 26,        December 28,
                                                                                    2008                2007
                                                                             ------------------  ------------------
                                                                                        (in thousands)             
Balance at beginning of period                                              $              741  $              950
Warranties provided                                                                        747               2,240
Actual costs incurred                                                                     (834)             (2,210)
Warranty obligations transferred with discontinued operations                             (154)                 --
                                                                             ------------------  ------------------
Balance at end of period                                                    $              500  $              980
                                                                             ==================  ==================`

17. Settlement with Steel Partners, L.L.C. and Steel Partners II, L.P.

On October 26, 2007, the Company, Steel Partners, L.L.C. and Steel Partners II, L.P. (together,
"Steel") entered into an agreement (the "Settlement Agreement") ending the election contest that was to occur at the Company's 2007
Annual Meeting of Stockholders (the "Annual Meeting"). Steel beneficially owned approximately 15% of the Company's common stock
as of December 31, 2007.

In December 2007, the Company held the Annual Meeting, at which the Company's stockholders elected
nine directors to the Company's Board of Directors. Of these nine directors, three of the directors, Jack L. Howard, John J. Quicke and
John Mutch, were nominated for election at the Annual Meeting by the Company pursuant to the terms of the Settlement Agreement.
Steel represented to the Company in the Settlement Agreement that Mr. Howard and Mr. Quicke may be deemed to be affiliates of
Steel under the rules of the Securities Exchange Act of 1934, but that Mr. Mutch was not an affiliate of Steel. The Company
compensated each of these directors, including the two directors who are affiliates of Steel, with equity awards or equity based awards
in amounts that are consistent with the Company's Non-Employee Director Compensation Policy.   As of December 26, 2008, Steel
beneficially owned approximately 19% of the Company's common stock.

18. Segment Reporting

In the first quarter of fiscal 2009, the Company revised its
internal organizational structure in conjunction with the sale of its Snap Server NAS business. The Company's former SSG
segment provided (1) Snap Server branded file-based NAS storage systems, which were sold to end users through its network of
distribution partners, solution providers, e-tailers and VARs, and (2) block-based iSCSI storage solution products. The historical
financial results relating to the block-based iSCSI storage solution products of the Company's former SSG segment, which were
minimal to the Company's overall financial results, were retained.  The remainder of the Company's former SSG segment represented
results from discontinued operations.

Following the revision to its internal reporting structure, the Company operated in one segment, which provides
data protection storage products and currently sells all of the Company's storage technologies, including ASICs, board-level I/O and
RAID controllers, internal enclosures, sub-systems and stand-alone software. The Company sells these products directly to OEMs,
ODMs that supply OEMs, system integrators, VARs and end users through its network of distribution and reseller channels.

19. Supplemental Disclosure of Cash Flows

`Nine-Month Period Ended
                                                                             --------------------------------------
                                                                                December 26,        December 28,
                                                                                    2008                2007
                                                                             ------------------  ------------------
                                                                                       (in thousands)              
Non-cash investing and financing activities:
Unrealized gains (losses) on available-for-sale securities                  $           (1,972) $              303`

20. Glossary

The following is a list of business related acronyms that are contained within this Quarterly Report on
Form 10-Q. They are listed in alphabetical order.

- ASIC: Application Specific Integrated Circuit
- ATA:
- CIFS:
- FTP:
- HTTP:
- I/O:
- IPsec:
- IRS:
- iSCSI:
- NAS:
- NFS:
- ODM:
- OEM:
- PCI:
- PCIe:
- PCI-X:
- RAID:
- SAS:
- SATA:
- SCSI:
- SMI-S:
- SSG:
- VAR:

The following is a list of accounting rules and regulations and related regulatory bodies referred to within this
Quarterly Report on Form 10-Q. They are listed in alphabetical order.

- APB: Accounting Principles Board
- APB Opinion No. 25:
- ARB:
- ARB No. 51:
- EITF:
- EITF No. 95-3:
- EITF No. 07-1:
- FASB:
- FIN:
- FIN 48:
- FSP:
- FSP APB No. 14-1:
- FSP FAS No.
- FSP FAS No.
- FSP FAS No.
- SAB:
- SAB 107:
- SAB 110:

---



Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and
uncertainties. The statements contained in this document that are not purely historical are forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including,
without limitation, statements regarding our expectations, beliefs, intentions or strategies regarding our business, including, but not
limited to, our anticipated declines in revenues from our parallel SCSI products and our serial legacy products sold to our OEM
customers, the expected benefits of our recent acquisition of Aristos Logic Corporation, the possibility that we might enter into strategic
alliances, partnerships or additional acquisitions in order to scale our business, the expected impact on our revenues of our failure to
receive design wins for the next generation serial products from a significant customer, the anticipated impact of the restructuring plan
we implemented in the third quarter fiscal 2009, the possibility that additional significant charges may be recorded by us in the future in
light of an ongoing strategic review of our business by management, the potential need to record impairment charges for goodwill, other
intangible assets or marketable securities based on current market conditions and our expected liquidity in future periods. We may
identify these statements by the use of words such as "anticipate," "believe," "continue,"
"could," "estimate," "expect," "intend," "may," "might,"
"plan," "potential," "predict," "project," "should," "will,"
"would" and other similar expressions. All forward-looking statements included in this document are based on information
available to us on the date hereof, and we assume no obligation to update any such forward-looking statements, except as may
otherwise be required by law.

Our actual results could differ materially from those anticipated in these forward-looking statements as a result
of certain factors, including those set forth in the "Risk Factors" section and elsewhere in this document. In evaluating our
business, current and prospective investors should consider carefully these factors in addition to the other information set forth in this
report.

While management believes that the discussion and analysis in this report is adequate for a fair presentation of
the information presented, we recommend that you read this discussion and analysis in conjunction with our Annual Report on
Form 10-K/A for the fiscal year ended March 31, 2008.

Basis of Presentation

On September 3, 2008, we completed the acquisition of Aristos Logic Corporation, or Aristos, a provider of
RAID technology to the data storage industry, pursuant to an Agreement and Plan of Merger dated as of August 27, 2008, or the
Merger Agreement, by and among Adaptec, Aristos, Ariel Acquisition Corp., a wholly owned subsidiary of ours, and TPG Ventures,
L.P., solely in its capacity as the representative of stockholders of Aristos.  The Merger Agreement provided for our acquisition of
Aristos through a merger in which Aristos became our wholly-owned subsidiary.  The Aristos acquisition was accounted for as a
purchase business combination and, accordingly, the results of Aristos have been included in our unaudited condensed consolidated
results of operation and financial position from the date of acquisition.

On June 27, 2008, we completed the sale of the Snap Server NAS portion of our former SSG segment, or Snap
Server NAS business, to Overland Storage, Inc., or Overland. Accordingly, we have reclassified the underlying Unaudited Condensed
Consolidated Statements of Operations and Cash Flows and related disclosures for all periods presented to reflect the Snap Server
NAS business as discontinued operations.  These reclassifications had no impact on net income (loss), total assets or total
stockholders' equity.  Unless otherwise indicated, the following discussion pertains only to our continuing operations.

We revised our internal organizational structure in conjunction with the sale of our Snap Server NAS
business in June 2008. Our former SSG segment provided (1) Snap Server branded file-based NAS storage systems, which were sold
to end users through our network of distribution partners, solution providers, e-tailers and VARs, and (2) block-based iSCSI storage
solution products. The historical financial results relating to the block-based iSCSI storage solution products of our former SSG
segment, which were minimal to our overall financial results, were retained.  The remainder of our former SSG segment represented
results from discontinued operations.  Following the revision to our internal reporting structure, we now operate in one segment.

For your convenience, we have included, in Note 20 to the Notes to the Unaudited Condensed Consolidated
Financial Statements, a Glossary that contains a list of (1) key acronyms commonly used in our industry that are used in this
Quarterly Report and (2) accounting rules and regulations that are also referred to in this report. These key acronyms and
accounting rules and regulations are listed in alphabetical order.

Overview

In the third quarter of fiscal 2009, our net revenues decreased 22% as compared to the third quarter of
fiscal 2008 primarily due to the declining revenue base of our parallel SCSI products. Our net revenues were further impacted by our
inability to obtain design wins from our OEM customers, primarily for our next generation serial products. We expect revenues from our
parallel SCSI products to continue to decline in future quarters. We also expect revenues from our serial legacy products sold to OEM
customers to significantly decline within the next two to three quarters.  Our gross margins in the third quarter of fiscal 2009 declined to
40% compared to 42% in the third quarter of fiscal 2008 primarily due to the amortization of acquisition-related intangible assets, higher
inventory-related charges and fixed operating costs distributed over lower sales volumes. Operating expenses decreased in the third
quarter of fiscal 2009 as compared to the third quarter of fiscal 2008 primarily as a result of cost reductions and restructuring efforts that
were initiated in previous quarters combined with additional attrition in our workforce, partially offset by expenses incurred from the
acquisition of Aristos. Our operating results for the third quarter and first nine months of fiscal 2009 were positively affected by tax
benefits further discussed below under "Results of Operations - Income Taxes" arising from the resolution of tax disputes
and the adjustment of taxes due in a prior period.

Our future revenue growth is largely dependent on the success of our new and future products, obtaining and
fulfilling our obligations on OEM design wins, and growing our market share in the channel. In September 2008, we acquired Aristos for
a purchase price of $38.9 million, plus an obligation to pay up to $2.4 million contingent upon the employment of certain Aristos
employees.  We expect that the acquisition of Aristos will allow us to expand into adjacent RAID markets that we believe provide us
with growth opportunities, including blade servers, enterprise-class external storage systems and performance desktops, and will
provide us with a strong ASIC roadmap.  This acquisition should also enable us to pursue new OEM opportunities and expand our
future channel product offerings containing unified serial technologies.  For example, in October 2008, we announced a design win from
IBM for our RAID Storage Processor technology, which was enabled by the Aristos acquisition. However, we cannot predict the extent
to which the potential benefits of this acquisition will offset the declining OEM revenue from our serial legacy products and our parallel
SCSI products considering our loss in market share and the potential adverse impact on our business of current economic conditions.
We expect the revenue levels from our serial legacy products sold to OEM customers to significantly decline over the next two to three
quarters.  We will continue to seek additional growth opportunities beyond those presented by our existing product lines by entering into
strategic alliances, partnerships or other acquisitions in order to scale our business. We will also continue to review and evaluate our
existing product portfolio, operating structure and markets to determine the future viability of our existing products and market positions.

We expect our selling, marketing and administrative expense to decline in future periods based on the
anticipated cost savings we expect to obtain from our reductions in our workforce.  We expect our research and development expense
to increase in future periods as we invest further in the development of our technology in order to pursue other opportunities.  We also
expect our expenses to increase in future periods as we record amortization expense for the intangible assets we acquired from the
Aristos acquisition.

In addition, in July 2008, we entered into a three-year
 strategic development agreement with HCL Technologies Limited, or HCL, to provide product development and engineering
services for our product portfolio.  Under the terms of the agreement, HCL agreed to employ certain of our former engineering
employees, who will work exclusively on our engineering projects.



We implemented a restructuring plan in the first quarter of fiscal 2009 that was designed to reduce our
operating expenses due to a declining revenue base, streamline our operations and better align our resources with our strategic
business objectives.  The total cost incurred for this restructuring plan was $3.4 million, which was recorded in the first nine months of
fiscal 2009 in "Restructuring charges" in the Unaudited Condensed Consolidated Statement of Operations.  In the third
quarter of fiscal 2009, we initiated additional actions to minimize expenses as our business began to be impacted by the deterioration of
macroeconomic conditions.  We recorded $0.9 million in the third quarter of fiscal 2009
in "Restructuring charges" in the Unaudited Condensed Consolidated Statement of Operations
related to severance and benefits for employee reductions primarily in sales and marketing. This restructuring plan is
expected to incur further charges up to $1.0 million in the fourth quarter of fiscal 2009 as we expect to continue to identify and
implement additional cost saving measures pursuant to this plan.  In light of an ongoing strategic review of our business by
management, additional significant restructuring or impairment charges may be recorded by us in the future.

Due to the deterioration of macroeconomic conditions, which has impacted, and will likely continue to impact,
information technology spending, we could experience reduced sales of our products and services over the next several quarters.
Further, if the deterioration of macroeconomic conditions continues to worsen and our business performance declines, we may be
required to record impairment charges for goodwill, other intangible assets or long-lived assets in the future.  Our marketable securities
may also decline in value and such decline may be deemed to be other-than-temporary, which would require us to record an
impairment charge that would adversely impact our financial results.

Results of Operations

The following table sets forth the items in the Unaudited Condensed Consolidated Statements of Operations as
a percentage of net revenues (references to notes in the footnotes to this table are to the Notes to Unaudited Condensed Consolidated
Financial Statements appearing in this report):

`Three-Month Period Ended  Nine-Month Period Ended
                                                                   ------------------------  ------------------------
                                                                   December 26, December 28, December 26, December 28,
                                                                    2008 (1)     2007 (2)     2008 (3)     2007 (4)
                                                                   -----------  -----------  -----------  -----------
Net revenues                                                              100 %        100 %        100 %        100 %
Cost of revenues (inclusive of amortization of
    acquisition-related intangible assets)                                 60           58           57           64
                                                                   -----------  -----------  -----------  -----------
    Gross margin                                                           40           42           43           36
                                                                   -----------  -----------  -----------  -----------
Operating expenses:
    Research and development                                               28           20           20           25
    Selling, marketing and administrative                                  33           34           30           35
    Amortization of acquisition-related intangible assets                   1            2            1            1
    Restructuring charges                                                   4            2            5            5
    Other gains                                                            --           --           --           (5)
                                                                   -----------  -----------  -----------  -----------
        Total operating expenses                                           66           58           56           61
                                                                   -----------  -----------  -----------  -----------
Loss from continuing operations                                           (26)         (16)         (13)         (25)
Interest and other income, net                                             13           24           17           21
Interest expense                                                           (1)          (2)          (2)          (2)
                                                                   -----------  -----------  -----------  -----------
Income (loss) from continuing operations before income taxes              (14)           6            2           (6)
Benefit from income taxes                                                 (14)          (2)          (2)          (0)
                                                                   -----------  -----------  -----------  -----------
Income (loss) from continuing operations, net of taxes                      0            8            4           (6)
                                                                   -----------  -----------  -----------  -----------
Discontinued operations, net of taxes
    Loss from discontinued operations, net of taxes                        (1)          (5)          (1)          (3)
    Income (loss) from disposal of discontinued
        operations, net of taxes                                           (4)          --            5           (0)
                                                                   -----------  -----------  -----------  -----------
        Income (loss) from discontinued operations, net of taxes           (5)          (5)           4           (3)
                                                                   -----------  -----------  -----------  -----------
Net income (loss)                                                          (5)%          3 %          8 %         (9)%
                                                                   ===========  ===========  ===========  ===========`

_______________

The following actions affect the comparability of the data for the periods presented in the above table:

(1) In the third quarter of fiscal 2009, we implemented a restructuring plan and recorded adjustments to
previous restructuring plans, incurring restructuring charges of $0.9 million, recorded a gain of $0.4 million on the repurchase of our
3/4% Notes on the open market, which was recorded in "Interest and other income, net," and recorded a tax benefit arising
from the resolution of tax disputes and the adjustment of taxes due in a prior period.

(2) In the third quarter of fiscal 2008, we recorded restructuring charges related to a restructuring plan we
implemented in the second quarter of fiscal 2008 and adjustments to previous restructuring plans, incurring restructuring charges of
$0.7 million.

(3)  In the first nine months of fiscal 2009, we implemented two restructuring plans and recorded
adjustments to previous restructuring plans, incurring restructuring charges of $4.2 million, recorded a gain of $1.7 million on the
repurchase of our 3/4% Notes on the open market, which was recorded in "Interest and other income, net," and recorded a
tax benefit arising from the resolution of tax disputes and the adjustment of taxes due in a prior period.

(4) In the first nine months of fiscal 2008, we recorded a gain of $6.7 million on the sale of certain
properties and implemented two restructuring plans, incurring restructuring charges of $5.7 million.



Net Revenues.

`Three-Month Period Ended               Nine-Month Period Ended
                                     -------------------------------------   -------------------------------------
                                     December 26,  December 28,  Percentage  December 26,  December 28,  Percentage
                                         2008          2007       Change         2008          2007       Change
                                     ------------  ------------  ---------   ------------  ------------  ---------
                                                                (in millions, except percentages)                 
Net Revenues
                                    $       28.2  $       36.1        (22)% $       91.4  $      109.9        (17)%`

Net revenues decreased by $7.9 million and $18.6 million in the third quarter and first nine months of fiscal
2009, respectively, compared to the corresponding periods of fiscal 2008, primarily due to a decline in sales volume of our parallel SCSI
products of $6.4 million and $20.5 million, respectively, and an overall decline in sales volume of our serial products sold to OEM
customers of $1.5 million and $7.0 million, respectively.  This was partially offset by an increase in average selling prices and sales
volumes of our serial products sold to channel customers of $7.3 million in the first nine months of fiscal 2009 compared to the first nine
months of fiscal 2008, due to increased acceptance of these products.  The decline in sales volume of our parallel SCSI products was
primarily attributable to the industry transition from parallel to serial products, in which we have a lower market share.  The decline in
sales volume of our serial legacy products sold to OEM customers was primarily attributable to the fact that certain of our OEM
customers have moved to other suppliers to obtain next generation serial technologies.  We expect net revenues for our parallel SCSI
products to continue to decline in future quarters, and expect net revenues from our serial legacy products sold to OEM customers to
significantly decline within the next two to three quarters.  However, we expect to gain future opportunities to sell serial products to
OEMs, due in part to the Aristos acquisition, but our ability to attract this revenue may be adversely impacted by a reduction in IT
spending as a result of current economic conditions.

`Three-Month Period Ended  Nine-Month Period Ended
                                                                   ------------------------  ------------------------
                                                                   December 26, December 28, December 26, December 28,
                                                                      2008         2007         2008         2007
                                                                   -----------  -----------  -----------  -----------
Geographical Revenues:                                                                                               
North America                                                              38 %         31 %         35 %         37 %
Europe                                                                     29 %         34 %         32 %         29 %
Pacific Rim                                                                33 %         35 %         33 %         34 %
                                                                   -----------  -----------  -----------  -----------
    Total Geographical Revenues                                           100 %        100 %        100 %        100 %
                                                                   ===========  ===========  ===========  ===========`

Our North America revenues increased as a percentage of our total revenues by 7% in the third quarter of fiscal
2009 compared to the third quarter of fiscal 2008 primarily due to increased sales to certain OEM customers of products that we will
cease to provide in future periods. In addition, our combined international revenues decreased as a percentage of our total revenues by
7% in the third quarter of fiscal 2009 compared to the third quarter of fiscal 2008 primarily due to the decline in inventory levels on hand
at our international distributors.

Our North America revenues decreased as a percentage of our total revenues by 2% in the first nine months of
fiscal 2009 compared to the first nine months of fiscal 2008 primarily due to a decline in product sales to our OEM customers and to our
customers shifting their third party manufacturing locations from North America to international sites, and, to a lesser extent, increased
sales and acceptance of our serial products sold to our channel customers at our international locations.

A small number of our customers account for a substantial portion of our net revenues. In the third quarters
of fiscal 2009 and 2008, IBM accounted for 37% and 44% of our total net revenues, respectively.  In the first nine months of fiscal 2009
and 2008, IBM accounted for 36% and 42% of our total net revenues, respectively.

Gross Margin.

`Three-Month Period Ended               Nine-Month Period Ended
                                     -------------------------------------   -------------------------------------
                                     December 26,  December 28,  Percentage  December 26,  December 28,  Percentage
                                         2008          2007       Change         2008          2007       Change
                                     ------------  ------------  ---------   ------------  ------------  ---------
                                                                (in millions, except percentages)                 
Gross Profit                        $       11.1  $       15.1        (26)% $       39.2  $       40.1         (2)%
Gross Margin                                  40 %          42 %                      43 %          36 %`

The decline in gross margins in the third quarter of
fiscal 2009 compared to the third quarter of fiscal 2008 was due to the amortization of acquisition-related intangible assets of $1.2
million related to the purchased intangible assets for core and existing technologies and backlog from the acquisition of Aristos.
Despite our improvement in standard product contributions, we incurred higher inventory-related charges of $1.3 million, primarily
related to our legacy products and a decline in our revenue forecast.  In addition, although our fixed operating costs declined from the
third quarter of fiscal 2009 compared to the third quarter of fiscal 2008, these costs were distributed over lower sales volumes.

The improvement in gross margins in the first nine months of fiscal 2009 compared to the first nine months
of fiscal 2008 was due to improved standard product contributions as a result of our end-to-end supply chain efficiencies.  In addition,
the improvement in gross margins was also due to a shift in revenue mix from OEM to channel customers, with channel customers
having higher average margins, and a favorable product mix in the channel.

Research and Development Expense.

`Three-Month Period Ended               Nine-Month Period Ended
                                     -------------------------------------   -------------------------------------
                                     December 26,  December 28,  Percentage  December 26,  December 28,  Percentage
                                         2008          2007       Change         2008          2007       Change
                                     ------------  ------------  ---------   ------------  ------------  ---------
                                                                (in millions, except percentages)                 
Research and development            $        7.8  $        7.3          7 % $       18.5  $       27.1        (32)%`

The increase in research and development expense in the third quarter of fiscal 2009 compared to the third
quarter of fiscal 2008 was primarily due to costs associated with the development of our technology to achieve new OEM design wins
and to expand our channel offerings.  In addition, we recorded compensation expense of $0.5 million in the third quarter of fiscal 2009
related to the management liquidation pool established for certain former employees of Aristos pursuant to the Merger Agreement.  This
was partially offset by a decrease in compensation expense due to a reduction in headcount as a result of restructuring programs
implemented in fiscal 2008 and the first nine months of fiscal 2009, combined with additional attrition in our workforce.

The decrease in research and development expense in the first nine months of fiscal 2009 compared to the first
nine months of fiscal 2008 was primarily due to reduced headcount and related expenses as a result of
restructuring programs implemented in fiscal 2008 and the first nine months of fiscal 2009, combined with
additional attrition in our workforce, which was reflected by a 55% decrease in headcount for employees engaged in research
and development.  This was partially offset by compensation expense of $0.6 million recorded in the first nine months of fiscal 2009,
related to the management liquidation pool established for certain former employees of Aristos pursuant to the Merger Agreement.  We
expect our research and development expense to increase in future periods as we invest further in the development of our technology
in order to pursue other opportunities.

Selling, Marketing and Administrative Expense.

`Three-Month Period Ended               Nine-Month Period Ended
                                     -------------------------------------   -------------------------------------
                                     December 26,  December 28,  Percentage  December 26,  December 28,  Percentage
                                         2008          2007       Change         2008          2007       Change
                                     ------------  ------------  ---------   ------------  ------------  ---------
                                                                (in millions, except percentages)                 
Selling, marketing and
    administrative                  $        9.4  $       12.3        (24)% $       27.6  $       38.8        (29)%`

The decrease in selling, marketing and administrative expense in the third quarter and first nine months of fiscal
2009 compared to the corresponding periods of fiscal 2008 was primarily a result of reductions in our workforce and infrastructure
spending as a result of the restructuring plans we implemented in fiscal 2008 and the first nine months of fiscal 2009, which resulted in
a 37% decrease in our average headcount for employees engaged in selling, marketing and administrative functions.
This was partially offset by compensation expense of $0.5 million and $0.7 million
recorded in the third quarter and first nine months of fiscal 2009, respectively, related to the management liquidation pool established
for certain former employees of Aristos pursuant to the Merger Agreement. We expect our selling, marketing and
administrative expense to decline in future periods based on the anticipated cost savings we expect to obtain from our reductions in our
workforce.

Amortization of Acquisition-Related Intangible Assets.

`Three-Month Period Ended               Nine-Month Period Ended
                                     -------------------------------------   -------------------------------------
                                     December 26,  December 28,  Percentage  December 26,  December 28,  Percentage
                                         2008          2007       Change         2008          2007       Change
                                     ------------  ------------  ---------   ------------  ------------  ---------
                                                                (in millions, except percentages)                 
Amortization of acquisition-related
    intangible assets               $        0.3  $        0.6        (48)% $        0.4  $        1.9        (77)%`

Acquisition-related intangible assets include core and existing technologies, customer relationships, trade
name and backlog. We amortize the acquisition-related intangible assets over periods which reflect the period in which the economic
benefits of the assets are expected to be realized, which is primarily using the straight-line method over their estimated useful lives,
ranging from three to sixty months.

The decrease in amortization of acquisition-related intangible assets in the third quarter and first nine months of
fiscal 2009 compared to the corresponding periods of fiscal 2008 was primarily due to the fact that in the fourth quarter of fiscal 2008,
we wrote off our intangible assets associated with our acquisition of Elipsan Limited due to a revision in our forecasts that resulted in
expected negative long-term cash flows for these assets for the first time. This was offset by the amortization of purchased intangible
assets from the Aristos acquisition for customer relationships of $0.3 million and $0.4 million, which were recorded in the third quarter
and first nine months of fiscal 2009, respectively.  The amortization of purchased intangible assets from the Aristos acquisition for the
core and existing technologies and backlog were reflected in cost of revenues.

Restructuring Charges.



`Three-Month Period Ended               Nine-Month Period Ended
                                     -------------------------------------   -------------------------------------
                                     December 26,  December 28,  Percentage  December 26,  December 28,  Percentage
                                         2008          2007       Change         2008          2007       Change
                                     ------------  ------------  ---------   ------------  ------------  ---------
                                                                (in millions, except percentages)                 
Restructuring charges               $        0.9  $        0.7         32 % $        4.2  $        5.7        (26)%`

All expenses, including adjustments, associated with our restructuring plans are included in
"Restructuring charges" in the Unaudited Condensed Consolidated Statements of Operations, which are managed at the
corporate level.  For a complete discussion of all restructuring actions that were implemented prior to fiscal 2009, please refer to Note
10 to the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K/A for the fiscal year ended March
31, 2008.

In the first quarter of fiscal 2009, we approved and initiated a restructuring plan to (1) reduce our operating
expenses due to a declining revenue base, (2) streamline our operations and (3) better align our resources with our strategic business
objectives.  This restructuring plan extended to actions taken through the second quarter of fiscal 2009 and included workforce
reductions in all functions of the organization worldwide and consolidation of our facilities.  The total cost incurred for this restructuring
plan, which was recorded in the first nine months of fiscal 2009, was $3.4 million, of which $3.1 million related to severance and related
benefits and $0.3 million related to vacating certain facilities.  We have achieved reductions in our annual operating expenses of
approximately $10.6 million as a result of these actions related to this plan.  Approximately 16%, 39% and 45% of the restructuring cost
savings were reflected as a reduction in cost of revenues, research and development expense, and selling, marketing and
administrative expense, respectively, beginning in the first quarter of fiscal 2009.

In the third quarter of fiscal 2009, we initiated additional actions to minimize expenses as our business began to
be impacted by the deterioration of macroeconomic conditions. We recorded $0.9 million in the third quarter of fiscal 2009 in
"Restructuring charges" in the Unaudited Condensed Consolidated Statement of Operations related to severance and
benefits for employee reductions primarily in sales and marketing. This restructuring plan is expected to cause us to incur further
charges up to $1.0 million in the fourth quarter of fiscal 2009 as we expect to continue to identify and implement additional cost saving
measures pursuant to this plan.  We expect to reduce our annual operating expenses by approximately $2.9 million as a result of the
actions taken in the third quarter of fiscal 2009 related to this plan.   Approximately 7% and 93% of the restructuring cost savings were
reflected as a reduction in research and development expense and selling, marketing and administrative expense, respectively,
beginning in the third quarter of fiscal 2009.

In addition, we recorded a net reduction in the restructuring accrual of $0.2 million primarily related to the
estimated loss on our facilities as the lease term for certain facilities has ended and, to a lesser extent, for related severance benefits as
actual costs were lower than anticipated.  This net reduction related to our fiscal years 2008, 2003, 2002 and 2001 restructuring plans
as well as a previous acquisition-related restructuring plan.



Other Gains.

`Three-Month Period Ended               Nine-Month Period Ended
                                     -------------------------------------   -------------------------------------
                                     December 26,  December 28,  Percentage  December 26,  December 28,  Percentage
                                         2008          2007       Change         2008          2007       Change
                                     ------------  ------------  ---------   ------------  ------------  ---------
                                                                (in millions, except percentages)                 
Other gains                         $         --  $         --         n/a  $         --  $       (5.8)      (100)%`

Other gains primarily consisted of a gain on sale of certain properties.

In May 2007, we completed the sale of three buildings in Milpitas, California that were
previously classified as held for sale, with proceeds aggregating to $19.9 million, which exceeded our carrying value of
$12.5 million. Net of selling costs, we recorded a gain of $6.7 million on the sale of the properties in the first nine months of fiscal
2008, which was included within "Other gains" in the Unaudited Condensed Consolidated Statements of Operations.

We also recorded a charge of $0.8 million related to costs incurred to evaluate strategic options in the first
nine months of fiscal 2008, which was included within "Other gains" in the Unaudited Condensed Consolidated Statements
of Operations.

Interest and Other Income, Net.

`Three-Month Period Ended               Nine-Month Period Ended
                                     -------------------------------------   -------------------------------------
                                     December 26,  December 28,  Percentage  December 26,  December 28,  Percentage
                                         2008          2007       Change         2008          2007       Change
                                     ------------  ------------  ---------   ------------  ------------  ---------
                                                                (in millions, except percentages)                 
Interest and other income, net:
Interest income                     $        3.4  $        8.3        (59)% $       14.0  $       22.1        (36)%
Realized currency transaction
    gains (losses)                          (0.2)          0.5         n/a          (0.6)          1.2         n/a
Gain on redemption of bonds                  0.4            --        100 %          1.7            --        100 %
Other                                         --            --         n/a            --           0.1       (100)%
                                     ------------  ------------              ------------  ------------
    Total interest and other
        income, net                 $        3.6  $        8.8        (60)% $       15.1  $       23.4        (35)%
                                     ============  ============              ============  ============`

Interest and other income, net is primarily attributable to interest income earned on our cash, cash
equivalents and marketable securities, realized gains and losses on marketable securities, gains from the repurchase of our 3/4%
Convertible Senior Notes due 2023, or 3/4% Notes, and fluctuations in foreign currency gains or losses.  The decrease in interest and
other income, net in the third quarter and first nine months of fiscal 2009 compared to the corresponding periods of fiscal 2008 was
primarily due to lower interest rates combined with interest earned on lower average cash balances, which resulted in an overall lower
interest income earned on our cash, cash equivalents and marketable
securities.  This was partially offset by a gain on extinguishment of debt of $0.4 million and $1.7 million (net of unamortized
debt issuance costs) on the repurchase of our 3/4% Notes on the open market in the third quarter and first nine months of fiscal 2009,
respectively.  We expect that our interest income will decline in future periods due to a reduction in our cash, cash equivalents and
marketable securities balances as we used cash for the repurchase of our 3/4% Notes and for the acquisition of Aristos.

Interest Expense.

`Three-Month Period Ended               Nine-Month Period Ended
                                     -------------------------------------   -------------------------------------
                                     December 26,  December 28,  Percentage  December 26,  December 28,  Percentage
                                         2008          2007       Change         2008          2007       Change
                                     ------------  ------------  ---------   ------------  ------------  ---------
                                                                (in millions, except percentages)                 
Interest expense                    $       (0.1) $       (0.8)       (82)% $       (1.5) $       (2.8)       (47)%`

Interest expense is primarily associated with our 3/4% Notes issued in December 2003. The
decrease in interest expense in the third quarter and first nine months of fiscal 2009 compared to the corresponding periods of fiscal
2008 was primarily due to the reduction in the outstanding principal amount of the 3/4% Notes of $85.0 million and $223.5 million,
respectively. We have repurchased all but $2.0 million of our 3/4% Notes as of December 26, 2008 and will not incur significant interest
expense from these notes in future periods.

Income Taxes.

`Three-Month Period Ended               Nine-Month Period Ended
                                     -------------------------------------   -------------------------------------
                                     December 26,  December 28,  Percentage  December 26,  December 28,  Percentage
                                         2008          2007       Change         2008          2007       Change
                                     ------------  ------------  ---------   ------------  ------------  ---------
                                                                (in millions, except percentages)                 
Benefit from income taxes           $       (3.9) $       (0.8)       397 % $       (1.4) $       (0.3)       372 %`

We recorded tax benefits of $3.9 million and $1.4 million for the third quarter and first nine months of fiscal
2009, respectively.  We recorded tax benefits of $0.8 million and $0.3 million for the third quarter and first nine months of fiscal 2008,
respectively.  Income tax provisions for interim periods are based on our estimated annual income tax rate for entities that were
profitable.  Entities that had operating losses with no tax benefit were excluded. The estimated annual tax for fiscal years 2009 and
2008 includes foreign taxes related to our foreign subsidiaries and certain state minimum taxes.  Interest is accrued on prior years' tax
disputes and refund claims as a discrete item each period.  For the third quarter and first nine months of fiscal 2009, our tax provision
included changes in judgment related to uncertain tax positions in both the United States and foreign jurisdictions based on new
information received.

In the third quarter of fiscal 2009, we recorded a net tax benefit of $2.2 million for the reversal of previously
accrued liabilities related to a final settlement with the Singapore Tax Authority for fiscal years 1998 through 2000, offset by amounts
accrued for changes in judgment related to Singapore tax audits that are on-going for other years.  We have concluded our ongoing
negotiations with the IRS taxing authorities with regard to our tax disputes for our fiscal years 1994 through 2003 and for the fiscal 2004
through 2006 audit cycle, as discussed in Note 15 to the Notes to the Unaudited Condensed Consolidated Financial Statements.

In January 2009, we received notices from the California Franchise Tax Board as a result of their review of
our amended fiscal years 1994 through 2003 tax returns.  These notices indicated that certain adjustments were to be made in
conjunction with adjustments made on our amended Federal tax returns for those fiscal years, due to reaching resolutions with the
United States taxing authorities on all outstanding audit issues, as further discussed in Note 15 to the Notes to the Unaudited
Condensed Consolidated Financial Statements.  As a result, in the third quarter of fiscal 2009, we recorded a favorable tax impact due
from the state of California, including accrued and unpaid interest, of approximately $1.6 million.

As of December 26, 2008, our total gross unrecognized tax benefits were $24.8 million, of which $6.5
million, if recognized, would affect the effective tax rate. There was an overall increase of $3.3 million in our gross unrecognized tax
benefits in the first nine months of fiscal 2009 due to changes in judgment related to foreign audits as a result of new information that
we received in the first nine months of fiscal 2009, offset by benefits from the Singapore audit settlement noted above. This increase in
our gross unrecognized tax benefits was also partially offset by the recording of a receivable of $0.7 million from a third party since we
were partially indemnified by the third party for this tax matter and the issue arose in years prior to our acquisition of the entity under
audit.

We are subject to U.S. federal income tax as well as income taxes in many U.S. states and foreign
jurisdictions. As of December 26, 2008, fiscal years 2004 onward remained open to examination by the U.S. taxing authorities, fiscal
years 2001 onward remained open to examination in Singapore and in various other foreign jurisdictions.  U.S. tax attributes generated
in tax years 2000 onward also remain subject to adjustment in subsequent audits when they are utilized.  Management believes that
events that could occur in the next 12 months and cause a material change in unrecognized tax benefits include, but are not limited to,
the following:





The calculation of unrecognized tax benefits involves dealing with uncertainties in the application of
complex global tax regulations. Management regularly assesses our tax positions in light of legislative, bilateral tax treaty, regulatory
and judicial developments in the countries in which we do business. Management believes that it is reasonably possible that the gross
unrecognized tax benefits will decrease by approximately $3.4 million within the next 12 months due to the settlement of tax audits in
various foreign jurisdictions.

Discontinued Operations.

`Three-Month Period Ended               Nine-Month Period Ended
                                     -------------------------------------   -------------------------------------
                                     December 26,  December 28,  Percentage  December 26,  December 28,  Percentage
                                         2008          2007       Change         2008          2007       Change
                                     ------------  ------------  ---------   ------------  ------------  ---------
                                                                (in millions, except percentages)                 
Income (loss) from discontinued
    operations, net of taxes        $       (1.4) $       (1.8)       (23)% $        3.7  $       (3.5)        n/a`

On June 27, 2008, we entered into an asset purchase agreement with Overland for the sale of the Snap
Server NAS business for $3.3 million, of which $2.1 million was received by us upon the closing of the transaction and the remaining
$1.2 million is to be received on the twelve-month anniversary of the closing of the transaction.  At December 26, 2008, we established
a reserve for the full remaining $1.2 million of this receivable as a result of the financial difficulties Overland has reported.
Notwithstanding the establishment of this reserve, we intend to seek payment in full of this receivable.  Overland purchased all
inventory and fixed assets related to the Snap Server NAS business and assumed service and support liabilities. Under the terms of the
agreement, Overland granted us a nonexclusive license to certain intellectual property and we provided Overland limited support
services to help ensure a smooth transition. Expenses incurred in the transaction primarily include approximately $0.5 million for broker,
legal and accounting fees.  In addition, we accrued $0.1 million for lease obligations. We recorded a gain of $4.6 million on the disposal
of the Snap Server NAS business in the first nine months of fiscal 2009 in "Income (loss) from disposal of discontinued
operations, net of taxes," in the Unaudited Condensed Consolidated Statements of Operations and incurred a "Loss from
discontinued operations, net of taxes" of $0.9 million.

Liquidity and Capital Resources

Key Components of Cash Flows

Working Capital:

Working capital decreased by $39.9 million to $384.7 million at December 26, 2008 from $424.7 million at
March 31, 2008.  The decrease in working capital was attributable to a decrease in cash and cash equivalents and marketable
securities of $255.0 million primarily due to the repurchase of our 3/4% Notes for an aggregate price of $221.4 million during the first
nine months of fiscal 2009 and cash paid to acquire Aristos of $38.0 million.

During the first nine months of fiscal 2009, accounts receivable and inventory decreased by $6.6 million and
$2.9 million, respectively, compared to March 31, 2008, primarily due to lower revenue levels, combined with improved efficiencies in
our inventory and operations management.

Operating Activities:

Operating cash activities consist of income (loss) from continuing operations, net of taxes, adjusted for certain
non-cash items and changes in assets and liabilities. Non-cash items primarily consist of gain on the sale of long-lived assets, gain on
the repurchase of the 3/4% Notes, depreciation and amortization of intangible assets, property and equipment, marketable securities
and 3/4% Notes, and stock-based compensation expense in accordance with SFAS No. 123(R).

Net cash provided by operating activities was $9.0 million in the first nine months of fiscal 2009 compared to net
cash used in operating activities of $2.7 million in the first nine months of fiscal 2008.  The improvement in cash provided by operating
activities was primarily due to the fact that we recorded a loss from continuing operations, net of taxes, of $6.7 million in the first nine
months of fiscal 2008 compared to recording income from continuing operations, net of taxes, of $3.4 million in the first nine months of
fiscal 2009.

In addition, we recorded a non-cash charge associated with a gain on the sale of long-lived assets of $6.7
million in the first nine months of fiscal 2008 and changes to working capital assets and liabilities that improved cash provided by
operating activities from continuing operations by $2.1 million, primarily related to improved collection efforts and efficiencies in our
inventory management.  These items were partially offset by a non-cash charge associated with a gain of $1.7 million on the
repurchase of our 3/4% Notes in the first nine months of fiscal 2009.

As our revenues from our parallel SCSI products and our serial legacy products sold to OEM customers are
expected to continue to decline, and the opportunities to sell serial products that incorporate our new technology may be adversely
impacted due to a reduction in IT spending as a result of current economic conditions, we may be unable to manage our expenses to a
level that will allow us to generate positive cash flows in the future.

Investing Activities:

Investing cash activities primarily consist of purchases, sales and maturities of restricted marketable
securities and marketable securities, net cash used to purchase Aristos, proceeds from the sale of long-lived assets and purchases of
property and equipment.  Net cash provided by investing activities was $63.7 million in the first nine months of fiscal 2009 compared to
$116.5 million in the first nine months of fiscal 2008.  The decrease was primarily due to our use of cash to acquire Aristos of $38.0
million, proceeds received in the first nine months of fiscal 2008 from the sale of long-lived assets of $19.9 million and an increase in
purchases of marketable securities of $125.0 million.  This was partially offset by an increase in sales and maturities of marketable
securities of $128.9 million.

Financing Activities:

Financing cash activities consist of the repurchase of our 3/4% Notes and employee stock option exercises.
Net cash used in financing activities was $2.7 million in the first nine month of fiscal 2009 compared to net cash provided by financing
activities of $3.1 million in the first nine months of fiscal 2008.  The use of cash in financing activities was primarily due to the
repurchase of $223.5 million in principal amount of our 3/4% Notes for an aggregate price of $221.4 million.  Cash provided by stock
option exercises declined due to the large number of options held by our employees whose exercise prices were substantially above
the current market value of our common stock, combined with a reduction in our headcount.



Liquidity

At December 26, 2008, we had $371.2 million in cash, cash equivalents and marketable securities,
of which approximately $81.7 million was held by our Singapore and Cayman Islands subsidiaries.  Our available-for-sale securities
included short-term deposits, corporate obligations, other debt securities and United States government securities, and were recorded
on our Unaudited Condensed Consolidated Balance Sheet at fair market value, with their related unrealized gain or loss reflected as a
component of "Accumulated other comprehensive income" in stockholders' equity.  In the first nine months of fiscal 2009,
we did not recognize a material loss on our securities as the unrealized losses incurred were not deemed to be other-than-temporary.
We hold our marketable securities as available-for-sale and mark them to market.  We expect to realize the full value of all our
marketable securities upon maturity or sale, as we have the intent and believe we have the ability to hold the securities until the full
value is realized.  However, we can not provide any assurance that our invested cash, cash equivalents and marketable securities will
not be impacted by adverse conditions in the financial markets, which may require us to record an impairment charge that could
adversely impact our financial results.  In addition, we maintain our cash and marketable securities with certain financial institutions, in
which our balances exceed the limits that are insured by the Federal Deposit Insurance Corporation.  If the underlying financial
institutions fail or other adverse conditions occur in the financial markets, our cash balances may be impacted.

In the fourth quarter of fiscal 2005, we repatriated $360.6 million of undistributed earnings from
Singapore to the United States and incurred a tax liability of $17.6 million. The repatriated amounts will be used to fund a
qualified Domestic Reinvestment Plan, as required by the American Jobs Creation Act of 2004.
We expect that our acquisition of Aristos in the second quarter will be counted against the Domestic
Reinvestment Plan spending.   Based on actual and planned spending through fiscal 2009, we believe we will meet the total spending
requirements of the Domestic Reinvestment Plan in fiscal 2009.



In the first nine months of fiscal 2009, we repurchased a total of $191.0 million in principal amount of our
3/4% Notes on the open market for an aggregate price of $188.9 million, resulting in a gain on extinguishment of debt of $1.7 million
(net of unamortized debt issuance costs of $0.4 million).  In addition, the majority of the remaining holders of the 3/4% Notes exercised
their put option in December 2008, which required us to purchase their 3/4% Notes at a price equal to 100.25% of the principal of the
3/4% Notes, resulting in the redemption of the 3/4% Notes for an aggregate cost of $32.5 million, plus accrued and unpaid interest.  At
December 26, 2008, we had $2.0 million of aggregate principal amount related to our 3/4% Notes that is due in
December 2023.  However, we redeemed an additional $1.5 million of our 3/4% Notes subsequent to quarter-end as additional
holders exercised their put option.

We were previously subject to IRS audits for our fiscal years 1994 through 2003. During
the third quarter of fiscal 2007, we reached resolution with the United States taxing authorities on all outstanding audit issues relating to
those fiscal years. However, our tax provision continues to reflect judgment and estimation regarding components of the settlement
such as interest calculations and the application of the settlements to state and local taxing jurisdictions.  Although we believe our tax
estimates are reasonable, the ultimate tax outcome may materially differ from the tax amounts recorded in our Unaudited Condensed
Consolidated Financial Statements and may cause a higher effective tax rate that could materially affect our income tax provision,
results of operations or cash flows in the period or periods for which such determination is made. In the first quarter of fiscal 2009, the
IRS concluded its audit of our federal income tax returns for the fiscal 2004 through 2006 audit cycle. The IRS issued a No Change
Report indicating no change to our tax liability; however, the IRS continues to have the ability to adjust tax attributes relating to these
years in subsequent audits. We believe that we have provided sufficient tax provisions for these years and the ultimate outcome of any
future IRS audits that include the tax attributes will not have a material adverse impact on our financial position or results of operations
in future periods. However, we cannot predict with certainty how these matters will be resolved and whether we will be required to make
additional tax payments.

We may enter into strategic alliances, partnerships or additional acquisitions that will enable us to better
scale our operations relative to our cost basis. If we are successful in identifying strategic alliances, partnerships or additional
acquisitions, we may be required to use a significant portion of our available cash balances.

As of December 26, 2008, we did not have any material changes to our
contractual obligations that were disclosed in the Liquidity section of our Form 10-K/A for the fiscal year ended March 31, 2008, other
than (1) a strategic development agreement we entered into with HCL in the second quarter of fiscal 2009, which increased our fixed
payment obligations up to $5.3 million through July 2011 and (2) our acquisition of Aristos, resulting in a commitment to pay up to $2.4
million related to a management liquidation pool established by Aristos prior to the completion of the merger, which is payable over
time, not to exceed twelve months, contingent upon the continued employment of certain employees with us.

We believe that liquidity provided by our existing working capital, together with expected cash flows from
operations and available sources of equity and equipment financing, will be sufficient to support our operations through at least the next
twelve months. However, should prevailing economic conditions and/or financial, business and other factors beyond our control
adversely affect our estimates of our future cash requirements; we would be required to fund our cash requirements by alternative
financing. There can be no assurance that additional financing, if needed, would be available on terms acceptable to us or at all.

Recent Accounting Pronouncements

For a discussion on the impact of recently issued accounting pronouncements, please refer to Note 2
to the Notes to the Unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

Critical Accounting Policies

Our critical accounting policies have not changed from our fiscal year ended March 31, 2008, except for adding
the following critical accounting policy:

Goodwill:    Goodwill
is initially recorded when the purchase price paid for an acquired business exceeds the estimated fair value of the net identified tangible
and intangible assets acquired. We perform an annual review in the fourth quarter of each year, or more frequently if indicators of
potential impairment exist, to determine if the recorded goodwill is impaired. Our impairment review process compares the fair value of
our company, as we operate in one segment, to our net book value, including the goodwill. If a determination is made that it is
"more-likely-than-not" that the long-term fair value of our company will remain below our net book value, goodwill should be
tested prior to our annual review.  Indicators that a potential impairment may exist prior to our annual review would include, but are not
limited to, the following:

- a significant decline in the market value of our invested capital, including the market value of our common
stock;
- a continued loss of our executives, principal engineers and other key employees; and
- sustained operating losses.

The calculation of fair value could be negatively impacted depending on changes in the inputs and
assumptions used.  Our fair value estimates are based on assumptions we believe to be reasonable but which are unpredictable and
inherently uncertain and, as a result, actual results may differ from those estimates. To determine the fair value, our review process
uses the discounted cash flows approach and the market approach, which utilizes comparable companies' data. The discounted cash
flow approach uses estimates including the following: forecasted revenues, based on assumed market growth rates and our assumed
market share; estimated costs; expected periods the assets will be utilized; and appropriate discount rates based on the particular
business' weighted average cost of capital. Our estimates of market growth, our market share and costs are based on historical data,
various internal estimates and certain external sources, and are based on assumptions that are consistent with the plans and estimates
we use to manage the underlying business. Our business consists of both established and emerging technologies and our forecasts for
emerging technologies are based upon internal estimates and external sources rather than historical information. We also consider our
market capitalization on the dates of our impairment tests under SFAS No. 142 in determining the fair value of our company.

If the net book value of our company exceeds its implied fair value, goodwill will be considered impaired
and a second step is performed to measure the amount of the impairment loss, if any. We have considered the above factors and noted
that at December 26, 2008, our market value was not significantly lower than our net book value.  We do not believe that a triggering
event for impairment has been identified; therefore, the potential impairment of goodwill was not tested as of December 26, 2008.
However, due to the ongoing uncertainty in market conditions, we will continue to monitor and evaluate the net book value of goodwill in
future periods.  If the deterioration of macroeconomic conditions continues to worsen and if our business performance declines, we may
be required to record impairment charges in the future.  We must also consider whether indicators are present that would require us to
record an impairment charge for our other intangible assets under SFAS No. 144.

For a complete description of what we believe to be the critical accounting policies that affect our more
significant judgments and estimates used in the preparation of our Unaudited Condensed Consolidated Financial Statements, please
refer to Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies in our
Annual Report on Form 10-K/A for the fiscal year ended March 31, 2008.

Acquisitions

On September 3, 2008, we completed the acquisition of Aristos, a provider of RAID technology to the
data storage industry, pursuant to a Merger Agreement by and among Adaptec, Aristos, Ariel Acquisition Corp., a wholly owned
subsidiary of ours, and TPG Ventures, L.P., solely in its capacity as the representative of stockholders of Aristos.  The Merger
Agreement provided for our acquisition of Aristos through a merger in which Aristos became our wholly-owned subsidiary.  The
acquisition of Aristos will allow us to expand into adjacent RAID markets that we believe will provide us with growth opportunities,
including blade servers, enterprise-class external storage systems and performance desktops, and will provide us with a strong ASIC
roadmap.  In addition, this acquisition enables us to pursue new OEM opportunities and expand our channel product offerings
containing unified serial technologies.

We acquired Aristos for a purchase price of approximately $38.9 million, which consisted of: (i)
approximately $28.7 million that was paid to certain Aristos senior preferred stockholders and warrant holders, of which 15%, or
approximately $4.3 million, is being withheld in an escrow account to secure potential indemnification obligations of Aristos
stockholders; (ii) approximately $3.2 million under a management liquidation pool established by Aristos prior to completion of the
merger, which was immediately paid upon closing of the transaction; (iii) payments of approximately $6.2 million to retire and satisfy
certain commercial obligations and payables of Aristos; and (iv) accrued for $0.8 million in direct transaction fees, including legal,
valuation and accounting fees.

Aristos Holdback:    A portion of the Aristos
acquisition price totaling $4.3 million was held back, or the Aristos Holdback, in an escrow account to secure potential indemnification
obligations of Aristos stockholders for unknown liabilities that may have existed as of the acquisition date.  The Aristos Holdback is to
be paid in two installments to the former Aristos stockholders during the twelfth and eighteenth month after the acquisition closing date,
except for funds necessary to provide for any pending claims.

Management Liquidation Pool:  Under the Merger Agreement, we agreed to pay certain former
employees of Aristos a total of $5.6 million through a management liquidation pool established by Aristos prior to the completion of the
merger.  Of the $5.6 million, $3.2 million was immediately paid upon closing of the transaction and was included in the purchase price
allocation of the cost to acquire Aristos.  The remaining $2.4 million is payable over time, not to exceed twelve months, contingent upon
the continued employment of certain employees with us, and will be expensed to the Unaudited Condensed Consolidated Statements
of Operations as earned.  In the third quarter and first nine months of fiscal 2009, we recorded expense of $1.0 million and $1.3 million,
respectively, in the Unaudited Condensed Consolidated Statements of Operations related to the management liquidation pool.

The Aristos acquisition was accounted for as a purchase business combination and, accordingly, the
results of Aristos have been included in our unaudited condensed consolidated results of operation and financial position from the date
of acquisition.  The allocation of the Aristos purchase price to the tangible and identifiable intangible assets acquired and liabilities
assumed was based on valuation techniques such as the discounted cash flows and weighted average cost methods used in the high
technology industry using assumptions and estimates from management to calculate fair value.

Restructuring:  Restructuring charges
associated with an acquisition of a company are accounted for under EITF No. 95- 3 and are included in the purchase price allocation
of the acquired company. During the second quarter of fiscal 2009, we finalized a plan to integrate the Aristos operations, and
accordingly, recorded a liability of $0.2 million related to severance and related benefits, which has been reflected in the purchase price.
We paid all of the liability and the plan was completed as of September 26, 2008.

Dispositions

On June 27, 2008, we entered into an asset purchase agreement with Overland for the sale of the Snap
Server NAS business for $3.3 million, of which $2.1 million was received by us upon the closing of the transaction and the remaining
$1.2 million is to be received on the twelve-month anniversary of the closing of the transaction.  At December 26, 2008, we established
a reserve for the full remaining $1.2 million of this receivable as a result of the financial difficulties Overland has reported.
Notwithstanding the establishment of this reserve, we intend to seek payment in full of this receivable.  Overland purchased all
inventory and fixed assets related to the Snap Server NAS business and assumed service and support liabilities. Under the terms of the
agreement, Overland granted us a nonexclusive license to certain intellectual property and provided Overland limited support services
to help ensure a smooth transition. Expenses incurred in the transaction primarily include approximately $0.5 million for broker, legal
and accounting fees.  In addition, we accrued $0.1 million for lease obligations. We recorded a gain of $4.6 million on the disposal of
the Snap Server NAS business in the first nine months of fiscal 2009 in "Income (loss) from disposal of discontinued operations,
net of taxes," in the Unaudited Condensed Consolidated Statements of Operations.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

For financial market risks related to changes in interest rates, equity price and foreign currency exchange
rates, reference is made to Item 7A: "Quantitative and Qualitative Disclosures About Market Risk" contained in Part II
of our Annual Report on Form 10-K/A for the fiscal year ended March 31, 2008.  Our exposure to market risk has not
changed materially since March 31, 2008.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer
(CEO) and our Chief Financial Officer (CFO), we conducted an evaluation of our disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange
Act of 1934 (Exchange Act)), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon
that evaluation, our CEO and our CFO have concluded that the design and operation of our disclosure controls and procedures were
effective to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act (i) is
recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and
forms and (ii) is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely
decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting (as defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this Quarterly Report on Form
10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

A control system, no matter how well conceived
and operated, can only provide reasonable assurance that the objectives of the control system are met. Further, the
design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered
relative to their costs. Because of these inherent limitations, no evaluation of our disclosure controls and procedures or our
internal control over financial reporting will provide absolute assurance that misstatements due to error or fraud will not occur.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings



We were previously subject to IRS audits for our fiscal years 1994 through 2003. During the third quarter of
fiscal 2007, we reached resolution with the United States taxing authorities on all outstanding audit issues relating to those fiscal years.
However, our tax provision continues to reflect judgment and estimation regarding components of the settlement such as interest
calculations and the application of the settlements to state and local taxing jurisdictions.  Although we believe our tax estimates are
reasonable, the ultimate tax outcome may materially differ from the tax amounts recorded in our Unaudited Condensed Consolidated
Financial Statements and may cause a higher effective tax rate that could materially affect our income tax provision, results of
operations or cash flows in the period or periods for which such determination is made. In the first quarter of fiscal 2009, the IRS
concluded its audit of our federal income tax returns for the fiscal 2004 through 2006 audit cycle. The IRS issued a No Change Report
indicating no change to our tax liability; however, the IRS continues to have the ability to adjust tax attributes relating to these years in
subsequent audits. We believe that we have provided sufficient tax provisions for these years and the ultimate outcome of any future
IRS audits that include the tax attributes will not have a material adverse impact on our financial position or results of operations in
future periods. However, we cannot predict with certainty how these matters will be resolved and whether we will be required to make
additional tax payments.

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Item 1A. Risk Factors

Our business faces significant risks. The risks described below may not be the only risks we face.
Additional risks that we do not yet know of or that we currently think are immaterial may also impair our results of operations and
financial condition.  If any of the events or circumstances described in the following risks actually occurs, our business, financial
condition or results of operations could suffer, and the trading price of our common stock could decline.

Our operating results may be adversely affected by unfavorable economic and market conditions and
the uncertain geopolitical environment.    Economic conditions have recently deteriorated significantly
in many of the countries and regions in which we do business and may remain depressed for the foreseeable future.  Global economic
conditions have been challenged by worldwide liquidity and credit concerns and the related effects on economies around the world.
Continuing adverse global economic conditions in our markets would likely negatively impact our business, which could result in:

- Reduced demand for our products;
- Increased price competition for our products;
- Increased risk of excess and obsolete inventories;
- Increased risk in the collectibility of cash from our customers;
- Increased risk in potential reserves for doubtful accounts and write-offs of accounts receivable; and
- Higher operating costs as a percentage of revenues.

If the global economic crisis causes demand in the server and network storage markets to decline, demand for
our products would also likely be negatively affected.  Some of the factors that could influence demand in the server and network
storage markets include continuing increases in fuel and other energy costs, labor costs, access to credit, consumer confidence and
other macroeconomic factors affecting corporate spending behavior.  It is difficult to predict future server sales growth, if any.  If global
economic conditions remain uncertain or deteriorate further, we may experience material adverse impacts on our business, operating
results and financial condition.

Actions that we have taken and the actions that we are considering could adversely affect our business
and financial results in the short-term, and may not have the long-term beneficial results that we intend. Our management team
continuously reviews and evaluates all aspects of our business, including our product portfolio, our relationships with strategic partners,
our research and development focus and sales and marketing efforts to better scale our operations relative to our cost basis.

The actions that we have taken in the first nine months of fiscal 2009, which include the acquisition of
Aristos, the disposition of our Snap NAS Server business, and the implementation of restructuring plans, and the actions that we are
considering could adversely affect our business and financial results in the short-term, may not have the long-term beneficial results
that we intend and could result in the following:

- Loss of customers;
- Loss of employees;
- Increased dependency on suppliers;
- Supply issues;
- Reduced revenue base;
- Impairment of our assets;
- Increased operating costs;
- Material restructuring charges; and
- Loss of liquidity.

We may sustain losses in our investment portfolio due to adverse changes in the global credit markets.
Global economic conditions have been challenged by slowing growth and the sub-prime debt devaluation crisis, causing
worldwide liquidity and credit concerns.  A substantial portion of our assets consists of our investments in marketable securities that we
hold as available-for-sale and mark them to market.  While there has been a decline in the trading values of certain of the securities in
which we have invested, we have not recognized a material loss on our securities as the unrealized losses incurred were not deemed
to be other-than-temporary.  We expect to realize the full value of all our marketable securities upon maturity or sale, as we have the
intent and believe we have the ability to hold the securities until the full value is realized.  However, we can not provide any assurance
that our invested cash, cash equivalents and marketable securities will not be impacted by adverse conditions in the financial markets,
which may require us to record an impairment charge that could adversely impact our financial results.

If the net book value of our long-lived assets is not recoverable, an impairment loss must
be recognized which would adversely affect our financial results.    Certain events or changes in
circumstances would require us to assess the recoverability of the net book value amount of our long-lived assets. For example, in
fiscal 2008, we recorded an impairment charge of $2.2 million for our intangible assets related to our acquisition of Elipsan
Limited due to a revision in our forecasts that resulted in expected negative long-term cash flows for these assets for the first time.


We do not believe that a triggering event for impairment has been identified as of Decembere 26, 2008; therefore, the potential impairment of goodwill
was not tested as of December 26, 2008.  However, due to the ongoing uncertainty in market conditions, we will continue to monitor
and evaluate our net book value of our long-lived assets in future periods.  If the deterioration of macroeconomic conditions continues
to worsen and if our business performance declines, we may be required to record impairment charges in the future, which could
adversely affect our financial results.

If our design wins do not result in significant sales, our revenues will continue to decline.  A
"design win" occurs when a customer or prospective customer notifies us that our product has been selected to be
integrated within its product.  In October 2008, we announced a design win with IBM for our RAID Storage Processor technology, which
will be implemented into its IBM BladeCenter S product.  The success that we ultimately experience from a design win is largely a factor
of the success of the customer's product into which our product has been integrated.  We have virtually no control over, and sometimes
have very little visibility as to, the success of our customer's products, which is dependent upon a number of factors including current
market conditions.  If our design wins do not result in significant sales, our revenues will continue to decline which could adversely
affect our business.

As our revenue base continues to decline from our current operations, we may choose to exit or divest some or
a substantial portion of our current operations to focus on new opportunities. Our management team continuously reviews and
evaluates our product portfolio, operating structure and markets to determine the future viability of our existing products and market
positions.  We may determine that the infrastructure and expenses necessary to sustain an existing business or product offering is
greater than the potential contribution margin that will be obtainable in the future. As a result, we may determine that it is in our interest
to exit or divest such existing business or product offering.  For example, in the first quarter of fiscal 2009, we sold our Snap Server
NAS business, which was the majority of our segment previously known as SSG, and reclassified all historical costs as discontinued
operations.  In fiscal 2007, we also decided not to invest further in our business related to a previous segment due to OEMs
incorporating other connectivity technologies directly into their products, the increased level of competition entering the market and the
complexities of the retail channel. As a result, we wound down this business throughout fiscal 2007 and exited it at March 31, 2007.
However, we may seek growth opportunities beyond those presented by our existing product lines by entering into strategic alliances,
partnerships or acquisitions in order to scale our business, and we may not succeed in these efforts.

We currently depend on a small number of large OEM customers for a significant portion of our
revenues, and we have been unsuccessful in the past in obtaining designs wins, which will prevent us from sustaining or growing our
revenues from OEM customers.  A small number of large OEMs have historically been responsible for a significant percentage
of our revenues. However, we have failed to secure design wins from these OEM customers in connection with their new products,
which have adversely affected our revenues and will continue to adversely affect our future revenues. For example, in the second
quarter of fiscal 2008, a significant customer notified us that we did not receive design wins for our next generation serial products,
which will have a significant negative impact on our revenues over the next few quarters and we anticipate the revenue levels for these
products beyond the second quarter of fiscal 2010 will be significantly smaller. We have evaluated this portion of our business, and we
are only opportunistically pursuing future business from OEM customers with our current product portfolio, as the future growth
opportunities for our current products are limited.  While we expect to be able to pursue new OEM opportunities for products containing
unified serial technologies as a result of the Aristos acquisition, we cannot predict the extent to which any such sales would offset the
decline in OEM sales from our legacy products.

We depend on a few key customers and the loss of any of them could significantly reduce our net
revenues.  Historically, a small number of our customers have accounted for a significant portion of our net
revenues.  For example, in the first nine months of fiscal 2009, IBM accounted for 36% of our total net revenues, and in the first nine
months of fiscal 2008, IBM accounted for 42% of our total net revenues.  We believe that our major customers continually evaluate
whether or not to purchase products from alternate or additional sources. Additionally, our customers' economic and market conditions
frequently change, and many of our customers may be negatively impacted by the current global economic turmoil. Accordingly, we
cannot assure you that one or more of our major customers will not reduce, delay or eliminate its purchases from us, which would likely
cause our revenues to decline further. For example, in the second quarter of fiscal 2008, a significant customer notified us that we did
not receive design wins for our next generation serial products, which will have a significant negative impact on our revenues over the
next few quarters and we anticipate the revenue levels for these products beyond the second quarter of fiscal 2010 to be significantly
smaller.  As our revenues from our large OEM customers continue to decline, we will be increasingly dependent on our channel
products and customers for future revenue growth. We do not carry credit insurance on our accounts receivables and any difficulty in
collecting outstanding amounts due from our customers, particularly customers that place larger orders or experience financial
difficulties, could adversely affect our revenues and our operating results. Because our sales are made by means of standard purchase
orders rather than long-term contracts, we cannot assure you that these customers will continue to purchase quantities of our products
at current levels, or at all.

In order to execute our strategies, we may enter into strategic alliances with, partner with, invest in
or acquire companies with complementary or strategic products or technologies. Costs associated with these strategic alliances,
investments or acquisitions may adversely affect our results of operations. This impact could be exacerbated if we are unable to
integrate the acquired companies, products or technologies.     We may pursue strategic
transactions, partnerships, investments and acquisitions in order to scale our business as sales of our core parallel products continue to
decline. These may include both strengthening our partnerships in silicon-based technology and broadening our silicon-based
intellectual property to improve our business opportunities. In order to be successful in the strategic alliances, partnerships, investments
or acquisitions that we may enter into or make, we must:

- Conduct strategic alliances, partnerships, investments or acquisitions that enhance our time to market with new products;
- Successfully prevail over competing bidders for target strategic alliances, partnerships, investments or acquisitions at an
acceptable price;
- Invest in companies and technologies that contribute to the profitable growth of our business;
- Integrate acquired operations into our business and maintain uniform standards, controls and procedures;
- Retain the key employees of the acquired operations; and
- Develop the capabilities necessary to exploit newly acquired technologies.



In September 2008, we completed our acquisition of Aristos, a provider of RAID technology to the data storage
industry.  The benefits of this acquisition or any strategic alliances, partnerships, investments or other acquisitions may prove to be less
than anticipated and may not outweigh the costs reported in our financial statements, and we may not obtain the operational leverage
or realize the improvements we intend or desire with the actions we take.

Completing any potential future strategic alliances, partnerships, investments or acquisitions could cause
significant diversions of management time and resources and divert focus from the activities of our current operations. We may
encounter difficulty in integrating and assimilating the operations and personnel of the acquired companies, including those associated
with the Aristos acquisition, into our operations or the acquired technology and rights into our services. We may also lack the
experience or expertise in the new products and markets, which may impair the relationships with customers or suppliers of the
acquired business, including those associated with the Aristos acquisition. The acquisition of new operations may require us to develop
additional internal controls to support these new operations. We may experience material deficiencies or weaknesses in our internal
control over financial reporting as a result of the addition of new operations or due to changes to our internal controls, which could have
a material impact on our results of operations when corrected. Additionally, we may not be successful in overcoming these risks or any
other problems encountered in connection with these or other acquisitions, strategic alliances or investments, which could result in an
adverse impact on our ability to develop or sustain the acquired business.

If we acquire new businesses, products or technologies in the future, we may be required to assume
warranty claims or other contingent liabilities, including liabilities unknown at the time of acquisition, and amortize significant amounts of
other intangible assets and, over time, recognize significant charges for impairment of goodwill, other intangible assets or other losses.

If we consummate any potential future acquisitions in which the consideration consists of our common
stock or other securities, our existing stockholders' ownership may be significantly diluted. If we proceed with any potential future
acquisitions in which the consideration is cash, we may be required to use a substantial portion of our available cash. If we were to use
a substantial portion of our available cash, we might need to repatriate cash from our subsidiaries, which may cause us to incur
additional income taxes at a rate up to 40%, which is our blended (federal and state) statutory rate in the United States. In addition, we
may be required to invest significant resources in order to perform under a strategic alliance or partnership, or to complete an
acquisition or investment, which could adversely affect our results of operations, at least in the short-term, even if we believe the
acquisition, strategic alliance or investment will benefit us in the long-term.

If we are not successful in completing additional acquisitions of or strategic alliances or partnerships
with companies with complementary or strategic products or technologies, our future growth may be hindered. In September
2008, we completed our acquisition of Aristos, a provider of RAID technology to the data storage industry.  In order to scale our
operations relative to our cost basis, we may need to identify additional attractive acquisition, strategic alliance or partnership
candidates and complete a transaction with them. If we fail to identify and complete additional successful acquisitions or strategic
alliances or partnerships, we expect that our revenues will continue to decline and we may be at a competitive disadvantage or we may
be adversely affected by negative market perceptions, any of which may have a material adverse effect on our financial results.

We depend on contract manufacturers and subcontractors, and if they fail to meet our manufacturing
needs, it could delay shipments of our products and result in the loss of customers or revenues and increased manufacturing costs,
which would have an adverse effect on our results.    We rely on contract manufacturers for
manufacturing our products and subcontractors for the assembly and packaging of the integrated circuits included in our products. On
December 23, 2005, we entered into a three-year contract manufacturing agreement with Sanmina-SCI. Under this agreement,
Sanmina-SCI assumed manufacturing operations for the majority of our products.  The transition of the manufacturing facilities did not
go as well as we expected, as Sanmina-SCI experienced material shortages that impacted its ability to meet delivery commitments on a
consistent basis, which negatively impacted our net revenues and operating results in the first quarter of fiscal 2007. We continued to
see an impact in our channel penetration throughout fiscal 2007 as a result of not meeting the demands in the first quarter of fiscal
2007. We must work closely with Sanmina-SCI to ensure that products are delivered on a timely basis. In addition, we must ensure that
Sanmina-SCI continues to provide quality products. If Sanmina-SCI is unwilling or unable to meet our supply needs, including timely
delivery and adherence to standard quality, we could lose customers or revenues and incur increased manufacturing costs, which
would have an adverse effect on our operating results.

Due to the nature of this relationship, and the continuous changes in the prices of components and parts, we
are in ongoing negotiations with Sanmina-SCI concerning product pricing. Any adverse outcome of future disputes concerning product
pricing could adversely impact our gross margins. We have no long-term agreements with our assembly and packaging subcontractors.
We also employ SuperMicro to manufacture certain iSCSI products and Amkor Technology and Advanced Semiconductor Engineering
to final assemble and test operations related to our ASIC products. We cannot assure you that these subcontractors will continue to be
able and willing to meet our requirements. Any significant disruption in supplies from or degradation in the quality of components or
services supplied by these contract manufacturers and subcontractors could delay shipments and result in the loss of customers or
revenues, which could have an adverse effect on our operating results.

Our contract manufacturing agreement with Sanmina-SCI expired in January 2009.  We are currently engaged
in discussions regarding our manufacturing needs with Sanmina-SCI, as well as other contract manufacturers, to ensure that the
contract manufacturer we choose aligns with our future strategic goals.  Factors that we need to consider include, but are not limited to,
transition efforts, meeting our supply needs and providing standard quality products.  If we choose a contract manufacturer that fails to
meet the above factors, it could delay shipments of our products and result in the loss of customers or increased manufacturing costs,
which would have an adverse effect on our operating and financial results.  We continue to purchase our products from Sanmina-SCI
through purchase orders under similar terms of the expired agreement.  Our financial results could be adversely impacted if we do not
secure a contract with Sanmina-SCI or another contract manufacturer in the near future.

Our operations depend on the efforts of our workforce, particularly our executives, principal engineers
and other key employees, the loss of whom could affect the growth and success of our business.    In
order to be successful, we must retain and motivate our executives, our principal engineers and other key employees, including those in
managerial, technical, marketing and information technology support positions. In particular, our product generation efforts depend on
hiring and retaining qualified engineers. Competition for experienced management, technical, marketing and support personnel such as
these remains intense. We must also continue to motivate all of our other employees and keep them focused on our strategies and
goals, which may be particularly difficult due to morale challenges posed by continued workforce reductions, including absorbing
additional responsibilities as we become a smaller company, as well as the uncertainty regarding the outlook of our company as
revenues continue to decline. Each of our employees is an "at-will" employee, and, as a result, any of our employees could
terminate their employment with us at any time without penalty and may seek employment with one or more of our competitors.  The
loss of any of our key employees as well as a high level of attrition from all our other employees could have a significant impact on our
operations.

If we do not meet our expense reduction and cost containment goals, we may have to continue to implement
additional restructuring plans in order to reduce our operating costs.  This may cause us to incur additional material restructuring
charges and result in adverse effects on our employee capacities.    We have implemented several
restructuring plans to reduce our operating costs and recorded related restructuring charges of $4.2 million, $6.3 million, $3.7 million
and $10.4 million in the first nine months of fiscal 2009, and in fiscal years 2008, 2007 and 2006, respectively. These restructuring
plans primarily involved the reduction of our workforce and the closure of certain facilities, which included our manufacturing operations
in Singapore in fiscal 2006. The goals of our restructuring plans that were implemented prior to fiscal 2006 were to support future
growth opportunities, focus on investments that grow revenues and increase operating margins.  Our recent goals involve better
alignment of our cost structure with our anticipated revenue stream and improving our results of operations and cash flow. We have in
the past not realized, and in the future may not realize, the anticipated benefits of the restructuring plans we initiated.  To the extent that
we do not meet our expense reduction goals, we may be required to implement further restructuring plans, which may lead us to incur
material restructuring charges.  Further, our restructuring plans could result in a potential adverse effect on employee capabilities that
could harm our efficiency and our ability to act quickly and effectively in the rapidly changing technology markets in which we sell our
products.

The impact of industry technology transitions and market acceptance of our new products may cause our
revenues to continue to decline. We have experienced a significant decline in our revenues as the industry continues to
transition from parallel to serial connectivity, as the revenues we generate from sales of our serial products has not grown at a fast
enough rate to offset declines in sales of our parallel products.  We expect this trend to continue in future periods. In addition, products
that we may develop may not gain sufficient market acceptance to offset the decline in revenues from certain of our existing products or
otherwise contribute significantly to revenues.  These factors, individually or in the aggregate, could cause our revenues to continue to
decline.

Our dependence on new products may cause our net revenues to fluctuate or
decline.    Our future success significantly depends upon our completing and introducing enhanced
and new products at competitive prices and performance levels in a timely manner. The success of new product introductions depends
on several factors, including the following:

- Designing products to meet customer needs;
- Product costs;
- Timely completion and introduction of new product designs;
- Quality of new products;
- Differentiation of new products from those of our competitors; and
- Market acceptance of our products.

Our product life cycles may be as brief as 12 months. As a result, we believe that we will continue to incur
significant expenditures for research and development in the future. We may fail to identify new product opportunities and may not
develop and bring new products to market in a timely manner. In addition, products or technologies developed by others may render
our products or technologies obsolete or noncompetitive, or our targeted customers may not select our products for design or
integration into their products. The failure of any of our new product development efforts could have an adverse effect on our business
and financial results.

We have introduced RAID-enabled products based on the next generation SATA technology and delivered our
products based on SAS technology to certain major customers for testing and integration. We will not succeed in generating
significant revenues from our new SATA and SAS technology products if the market does not adapt to these new technologies, which
would, over time, adversely affect our net revenues and operating results.

If we lose the cooperation of other hardware and software producers whose products are integral to ours, our
ability to sustain or grow our revenues could be adversely affected.    We must design our products to
operate effectively with a variety of hardware and software products supplied by other manufacturers, including the following:

- I/O and RAID ASICs;
- Microprocessors;
- Peripherals;
- Operating system software;
- Server and desktop motherboards; and
- Enclosures.

We depend on significant cooperation from these manufacturers to achieve our design objectives and develop
products that operate successfully with their products. These companies could, from time to time, elect to make it more difficult for us to
design our products for successful operability with their products. For example, if one or more of these companies were to determine
that as a result of competition or other factors, our products would not be broadly accepted by the markets we target, these companies
may no longer work with us to plan for new products and new generations of our products, which would make it more difficult to
introduce products on a timely basis or at all. Further, some of these companies might decide not to continue to offer products that are
compatible with our technology and our markets could contract. If any of these events were to occur, our revenues and financial results
could be adversely affected.

If we are unable to compete effectively, our net revenues and gross margins could be adversely
affected.    The markets for all of our products are intensely competitive and are characterized by the
following:

- Rapid technological advances;
- Frequent new product introductions;
- Evolving industry standards; and
- Price erosion.

We must continue to enhance our products on a timely basis to keep pace with market demands. If we do not
do so, or if our competition is more effective in developing products that meet the needs of our existing and potential customers, we
may lose market share and not participate in the future growth of our target markets. Revenues for our SATA products sold to our OEM
customers have declined and we expect these revenues to continue to decline, as our products are at the end of their life cycles and
certain of our customers have moved to other suppliers to obtain next generation SATA technologies. We also expect a significant
negative impact on our net revenues from our serial products over the next few quarters and we anticipate the revenue levels for these
products beyond the second quarter of fiscal 2010 to be minimal as a significant customer notified us in the second quarter of fiscal
2008 that we did not receive design wins for our next generation serial products.

Our future revenue growth remains largely dependent on the success of our new products addressing unified
serial technologies and growing our market share in the channel, and our future operating results will be influenced by our ability to
participate in the development of the network storage market in which we face intense competition from other companies that are also
focusing on networked storage products. If we experience an incremental decline in our revenues beyond the declines anticipated, and
we are unable to effectively manage our inventory levels, we may be required to record additional inventory-related charges, which
would adversely impact our gross margins.

We cannot assure you that we will have sufficient resources to accomplish all of the following:

- Satisfy any growth in demand for our products;
- Make timely introductions of new products;
- Compete successfully in the future against existing or potential competitors; or
- Prevent price competition from eroding margins.

We depend on the efforts of our distributors, which if reduced, could result in a loss of sales of our
products in favor of competitive offerings.    We derived approximately 50% of our revenues for the
first nine months of fiscal 2009 from independent distributor and reseller channels. Our financial results could be adversely affected if
our relationships with these distributors or resellers were to deteriorate or if the financial condition of these distributors or resellers were
to decline.  We continue to monitor and evaluate our distributors and may terminate distributor relationships to improve our product
placement or improve distribution channels; however, the termination of a distributor may adversely affect our financial results in the
short term.

Our distributors generally offer a diverse array of products from several different manufacturers. Accordingly, we
are at risk that these distributors may give higher priority to selling products from other suppliers. A reduction in sales efforts by our
current distributors could adversely affect our business and financial results. For example, some of our distributors threatened to stop
selling our products or make pricing of our products non-competitive if we did not agree to absorb their costs to comply with the Waste
Electrical and Electronic Equipment Directive with respect to our products.  Our distributors build inventories in anticipation of future
sales, and if such sales do not occur as rapidly as they anticipate, our distributors will decrease the size of their product orders. If we
decrease our price protection or distributor-incentive programs, our distributors may also decrease their orders from us. In addition, we
have from time to time taken actions to reduce levels of products at distributors and may do so in the future. These actions may affect
our net revenues and negatively affect our financial results.

We currently purchase all of the finished production silicon wafers, chips and other key components
used in our products from suppliers, and if they fail to meet our manufacturing needs, it would delay our production and our product
shipments to customers and negatively affect our operations.    Independent foundries manufacture
to our specifications all of the finished silicon wafers and chips used for our products. We currently purchase finished production silicon
wafers used in our products from Taiwan Semiconductor Manufacturing Company, or TSMC, and purchase finished production chips
from LSI Corporation. In addition, we purchase some of our key components used in our products from sole-source suppliers. The
manufacture of semiconductor devices and other components are sensitive to a wide variety of factors, including the following:

- The availability of raw materials;
- The availability of manufacturing capacity;
- Transition to smaller geometries of semiconductor devices;
- The level of contaminants in the manufacturing environment;
- Impurities in the materials used; and
- The performance of personnel and equipment.

We cannot assure you that manufacturing problems may not occur in the future. A shortage of raw
materials or production capacity could lead our suppliers to allocate available capacity to other customers. Any prolonged inability to
obtain wafers and other key components with competitive performance and cost attributes, adequate yields or timely deliveries would
delay our production and our product shipments, and could have an adverse effect on our business and financial results. We expect
that our suppliers will continually seek to convert their processes for manufacturing wafers and key components to more advanced
process technologies. Such conversions entail inherent technological risks that can affect yields and delivery times. If for any reason
the suppliers we use are unable or unwilling to satisfy our wafer and other key component needs, we will be required to identify and
qualify additional suppliers. Additional suppliers for wafers and other key components may be unavailable, may take significant
amounts of time to qualify or may be unable to satisfy our requirements on a timely basis.

Because our sales are made by means of standard purchase orders rather than long-term contracts, if
demand for our customers' products declines or if our customers do not control their inventories effectively, they may cancel or
reschedule shipments previously ordered from us or reduce their levels of purchases from us.    The
volume and timing of orders received during a quarter are difficult to forecast. Our customers generally order based on their forecasts
and they frequently encounter uncertain and changing demand for their products. If demand falls below such forecasts or if our
customers do not control their inventories effectively, they may cancel or reschedule shipments previously ordered from us. Our
customers have from time to time in the past canceled or rescheduled shipments previously ordered from us, and we cannot assure
you that they will not do so in the future. For example, in the third quarter of fiscal 2007, the demand for our products from certain OEM
customers substantially declined from their initial forecasts, which adversely affected our operating results. As our sales are made by
means of standard purchase orders rather than long-term contracts, we cannot assure you that these customers will continue to
purchase quantities of our products at current levels, or at all. Historically, we have set our operating budget based on forecasts of
future revenues because we do not have significant backlog. Because much of our operating budget is relatively fixed in the short-term,
if revenues do not meet our expectations, then our financial results will be adversely affected.

If we fail to adequately forecast demand for our products, we may incur excess product inventory costs and our
financial results will be adversely affected. As the sales of our products are completed through standard purchase orders rather
than long-term contracts, we provide our contract manufacturer forecasts based on anticipated future demand from our customers. To
the extent that our customers' demands fall below their initial forecast and we are unable to sell the product to another customer, and
because our purchase commitment lead time to manufacture products with the contract manufacturer is longer than the lead time for a
customer to cancel or reschedule an order, we may be exposed to excess product inventory costs and our financial results will be
adversely affected.  For example, in the third quarter of fiscal 2007, we incurred significant inventory-related charges of $7.8 million due
to a significant decline in our revenue stream.

Our operating results have fluctuated in the past, and are likely to continue to fluctuate, and if our future results
are below the expectations of investors or securities analysts, the market price of our common stock would likely decline
significantly.    Our quarterly operating results have fluctuated in the past, and are likely to vary
significantly in the future, based on a number of factors related to our industry and the markets for our products. Factors that are likely
to cause our operating results to fluctuate include those discussed in this Risk Factors section.

Our operating expenses are largely based on anticipated revenues, and a large portion of our expenses,
including facility costs and salaries, are fixed in the short term. As a result, lower than anticipated revenues for any reason could cause
significant variations in our operating results from quarter to quarter.

Due to the factors summarized above, and the other risks described in this section, we believe that you should
not rely on period-to-period comparisons of our financial results as an indication of our future performance. In the event that our
operating results fall below the expectations of securities analysts or investors, the market price of our common stock could decline
substantially.

We may be subject to a higher effective tax rate that could negatively affect our results of operations and
financial position.    We are subject to income and other taxes in the United States and in the foreign
taxing jurisdictions in which we operate.  The determination of our worldwide provision for income taxes and current and deferred tax
assets and liabilities requires judgment and estimation and is subject to audit and redetermination by the taxing authorities.  Although
we believe our tax estimates are reasonable, the following factors could cause our effective tax rate to be materially different than tax
amounts recorded in our consolidated financial statements:

- The jurisdiction in which profits are determined to be earned and taxed;
- Adjustments to estimated taxes upon finalization of various tax returns;
- Changes in available tax credits;
- Changes in share-based compensation expense;
- Changes in tax laws, the interpretation of tax laws either in the United States or abroad or the issuance of new interpretative
accounting guidance related to uncertain transactions and calculations where the tax treatment was previously uncertain; and
- The resolution of issues arising from tax audits with various tax authorities.

The factors noted above may cause a higher effective tax rate that could materially affect our income tax
provision, results of operations or cash flows in the period or periods for which such determination is made.

We held approximately $81.7 million of cash, cash equivalents and marketable securities at our
subsidiaries in Singapore and Cayman Islands at December 26, 2008. During the fourth quarter of fiscal 2005, we repatriated
$360.6 million of cash from Singapore to the United States in connection with the American Jobs Creation Act of 2004 which
provided a one-time deduction of 85% for certain dividends from controlled foreign corporations. If the amount repatriated does not
qualify for the one-time deduction, we could incur additional income taxes at up to the United States federal statutory rate of 35%, which
would negatively affect our results of operations and financial condition.

Our reliance on industry standards and technological changes in the marketplace may cause our net
revenues to fluctuate or decline.    The computer industry is characterized by various, evolving
standards and protocols. We design our products to conform to certain industry standards and protocols such as the following:

Technologies:

- ATA
- CIFS
- Fibre channel
- FTP
- HTTP
- IPsec
- iSCSI
- NFS
- PCI
- PCIe
- PCI-X
- RAID
- SAS
- SATA
- SCSI
- SMI-S

Operating Systems:

- Linux
- Macintosh
- Netware
- OS/2
- UNIX
- Windows

If user acceptance of these standards declines, or if new standards emerge, and if we do not anticipate these
changes and develop new products, these changes could adversely affect our business and financial results.

We are subject to various environmental laws and regulations that could impose substantial costs upon us and
may adversely affect our business.   We may from time to time be subject to various state, federal, and
international laws and regulations governing the environment, including laws regulating the manufacture and distribution of chemical
substances and laws restricting the presence of certain substances in electronics products. For example, the European Parliament
enacted the Restriction of Hazardous Substances, or RoHS, directive, which restricts the sale of new electrical and electronic
equipment containing certain hazardous substances, including lead. We recorded an excess inventory expense of $1.9 million in fiscal
2006 related to the transition of our products to comply with the RoHS directive.  If any of our products that are designated to be RoHS
compliant are deemed to be non-compliant, we may suffer a loss of revenues, be unable to sell affected products in certain markets or
countries and be at a competitive disadvantage.

Similar legislation has been or may be enacted in other jurisdictions and countries.  If our products become non-
compliant with the various environmental laws and regulations, we could incur substantial costs which could negatively affect our
results of operations and financial position.

If we do not provide adequate support during our customers' design and development stage, or if we are
unable to provide such support in a timely manner, we may lose revenues to our
competitors.    Certain of our products are designed to meet our customers' specifications and, to the
extent we are not able to meet these expectations in a timely manner or provide adequate support during our customers' design and
development stage, our customers may choose to buy similar products from another company. If this were to occur, we may lose
revenues and market share to our competitors.

If there is a shortage of components used in our customers' products, our sales may decline, which could
adversely affect our results of operations and financial position.    If our customers are unable to
purchase certain components which are embedded into their products, their demand for our products may decline. In addition, we or
our customers may be impacted by component shortages if components that comply with the RoHS directive are not available. Similar
shortages of components used in our products or our customers' products could adversely affect our net revenues and financial results
in future periods.

Product quality problems could lead to reduced revenues and gross
margins.    We produce highly complex products that incorporate leading-edge technologies,
including both hardware and software. Software often contains "bugs" which can interfere with expected operations. We
cannot assure you that our pre-shipment testing programs will be adequate to detect all defects which might interfere with customer
satisfaction, reduce sales opportunities, or affect our gross margins if the costs of remedying the problems exceed reserves established
for that purpose. An inability to cure a product defect could result in the failure of a product line, and withdrawal, at least temporarily,
from a product or market segment, damage to our reputation, inventory costs, product reengineering expenses, and a material impact
on revenues and gross margins.

Our charter documents and Delaware law contain anti-takeover provisions that could prevent, discourage or
delay a change in control or management, which may affect the price of our common stock. Some provisions of our certificate
of incorporation and bylaws could have the effect of making it more difficult for a potential acquirer to acquire a majority of our
outstanding voting stock. These include completing procedural requirements for stockholders holding 5% of voting shares to take action
by written consent and restricting the ability of stockholders to call special meetings. We are also subject to provisions of
Section 203 of the Delaware General Corporation Law which prohibits us from engaging in any business combination with an
interested stockholder for a period of three years from the date the person became an interested stockholder, unless certain conditions
are met. These restrictions could have the effect of delaying or preventing a change of control or management.

Some of our products contain "open source" software, and any failure to comply with the terms of
one or more of these open source licenses could negatively affect our business.    Some of our
products are distributed with software licensed by its authors or other third parties under so-called "open source" licenses,
including, for example, the GNU General Public License, or GPL, GNU Lesser General Public License, or LGPL, the Mozilla Public
License, the BSD License and the Apache License. Some of those licenses may require as a condition of the license that we make
available source code for modifications or derivative works we create based upon, incorporating, or using the open source software,
that we provide notices with our products, and/or that we license such modifications or derivative works under the terms of a particular
open source license or other license granting third parties certain rights of further use. If an author or other third party that distributes
such open source software were to allege that we had not complied with the conditions of one or more of those open source licenses,
we could be required to incur legal expenses in defending against such allegations, and if our defenses were not successful we could
be enjoined from distribution of the products that contained the open source software and required to either make the source code for
the open source software available, to grant third parties certain rights of further use of our software, or to remove the open source
software from our products, which could disrupt our distribution and sale of some of our products. In addition, if we combine our
proprietary software with open source software in a certain manner, we could under some of the open source licenses, be required to
release the source code of our proprietary software. If an author or other third party that distributes open source software were to obtain
a judgment against us based on allegations that we had not complied with the terms of any such open source licenses, we could also
be subject to liability for copyright infringement damages and breach of contract for our past distribution of such open source software.

Our international operations involve a number of political, economic and other risks that could adversely affect
our ability to sell our products in certain countries, create local economic conditions that reduce demand for our products among our
target markets and expose us to potential disruption in the supply of necessary components.   Our international operations and
sales are subject to political and economic risks, including political instability, currency controls, and changes in import/export
regulations, tariffs and freight rates. Many of our subcontractors are primarily located in Asia and we have sales offices and customers
located throughout Europe, Japan and other countries.  In addition, because our primary wafer supplier, TSMC, is located in
Taiwan, we may be subject to certain risks resulting from political instability in Taiwan, including conflicts between Taiwan and the
People's Republic of China. These and other international risks could result in the creation of political or other non-economic barriers to
our being able to sell our products in certain countries, create local economic conditions that reduce demand for our products among
our target markets, expose us to potential disruption in the supply of necessary components or otherwise adversely affect our ability to
generate revenues and operate effectively.  In addition, the operations of our remote locations are subject to management oversight
and control. If our business practices and corporate controls are not adhered to worldwide, our business and financial results could be
adversely affected.

We depend on third parties to transport our products.    We rely on
independent freight forwarders to move our products between manufacturing plants and our customers. Any transport or delivery
problems because of their errors, or because of unforeseen interruptions in their activities due to factors such as strikes, political
instability, terrorism, natural disasters and accidents, could adversely affect our business, financial condition and results of operations
and ultimately impact our relationship with our customers.

If actual results or events differ materially from those contemplated by us in making estimates and
assumptions, our reported financial condition and results of operations for future periods could be materially
affected.    The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in
the consolidated financial statements and accompanying notes. For example, we have identified key accounting estimates in our
Critical Accounting Policies in our Annual Report on Form 10-K/A for the year ended March 31, 2008 and in this Form 10-Q, which
include revenue recognition, inventory, stock-based compensation, income taxes and goodwill. Furthermore, Note 1 to the
Consolidated Financial Statements in our Annual Report on Form 10-K/A for the year ended March 31, 2008 describes the significant
accounting policies essential to preparing our consolidated financial statements. The preparation of these financial statements requires
estimates and assumptions that affect the reported amounts and disclosures. Although we believe that our judgments and estimates
are appropriate and correct, actual future results may differ materially from our estimates.

If we are unable to protect and enforce our intellectual property rights, we may be unable to compete
effectively.    Although we actively maintain and defend our intellectual property rights, we may be
unable to adequately protect our proprietary rights. In addition, the laws of certain territories in which our products are or may be
developed, manufactured or sold, including Asia and Europe, may not protect our products and intellectual property rights to the same
extent as the laws of the United States. Because we conduct a substantial portion of our operations outside of the United States and
sell to a worldwide customer base, we are more dependent on our ability to protect our intellectual property in international
environments than would be the case if a larger portion of our operations were domestic.

Despite our efforts, we may be unable to prevent third parties from infringing upon or misappropriating our
intellectual property, which could harm our business and ability to compete effectively. We have from time to time discovered counterfeit
copies of our products being manufactured or sold by others. Although we have programs to detect and deter the counterfeiting of our
products, significant availability of counterfeit products could reduce our revenues and damage our reputation and goodwill with
customers.

Third parties may assert infringement claims against us, which may be expensive to defend and could
divert our resources.    From time to time, third parties assert exclusive patent, copyright and other
intellectual property rights to our key technologies, and we expect to continue to receive such claims in the future. The risks of receiving
additional claims from third parties may be increased in periods when we begin to offer product lines employing new technologies
relative to our existing products.

We cannot assure you that third parties will not assert other infringement claims against us, directly or indirectly,
in the future, that assertions by third parties will not result in costly litigation or that we would prevail in such litigation or be able to
license any valid and infringed intellectual property from third parties on commercially reasonable terms. These claims may be asserted
in respect of intellectual property that we own or that we license from others. In addition to claims brought against us by third parties, we
may also bring litigation against others to protect our rights. Intellectual property litigation, regardless of the outcome, could result in
substantial costs to us and diversion of our resources and management time and attention, and could adversely affect our business and
financial results.

We may be required to pay additional federal income taxes which could negatively affect our results of
operations and financial position.     We were previously subject to IRS audits for our fiscal years
1994 through 2003. During the third quarter of fiscal 2007, we reached resolution with the United States taxing authorities relating to
those fiscal years. However, our tax provision continues to reflect judgment and estimation regarding components of the settlement
such as interest calculations and the application of the settlements to state and local taxing jurisdictions.  Although we believe our tax
estimates are reasonable, the ultimate tax outcome may materially differ from the tax amounts recorded in our Unaudited Condensed
Consolidated Financial Statements and may cause a higher effective tax rate that could materially affect our income tax provision,
results of operations or cash flows in the period or periods for which such determination is made. In the first quarter of fiscal 2009, the
IRS concluded its audit of our federal income tax returns for the fiscal 2004 through 2006 audit cycle. The IRS issued a No Change
Report indicating no change to our tax liability; however, the IRS continues to have the ability to adjust tax attributes relating to these
years in subsequent audits. We believe that we have provided sufficient tax provisions for these years and that the ultimate outcome of
any future IRS audits that include the tax attributes will not have a material adverse impact on our financial position or results of
operations in future periods. However, we cannot predict with certainty how these matters will be resolved and whether we will be
required to make additional tax payments.

Future changes in financial accounting standards or practices or existing taxation rules or practices may
cause adverse unexpected revenue fluctuations and affect our reported results of operations.  A change in accounting
standards or practices or a change in existing taxation rules or practices can have a significant effect on our reported results and may
even affect our reporting of transactions completed before the change is effective.  New accounting pronouncements and taxation rules
and varying interpretations of accounting pronouncements and taxation practices have occurred and may occur in the future.  For
example, upon our adoption of FIN 48 on April 1, 2007, we revised our policy in conformity with the liability classification requirements
of FIN 48, which clarifies the accounting for uncertainty in income tax positions.  This interpretation requires that we recognize in our
financial statements the impact of a tax position if that position is more likely than not to be sustained on audit, based on the technical
merits of the position.  At December 26, 2008, we had recorded a net of $5.6 million for uncertain tax positions related to FIN 48,
inclusive of interest and penalties, of which $3.4 million and $2.2 million were reflected in "Accrued and other liabilities" and
"Other long-term liabilities," respectively, and we continue to recognize interest expense for, and or penalties related to,
these uncertain tax positions in the Unaudited Condensed Consolidated Statement of Operations within "Benefit from income
taxes."

We may be engaged in legal proceedings that could cause us to incur unforeseen expenses and could occupy
a significant amount of our management's time and attention.    From time to time we are subject to
litigation or claims that could negatively affect our business operations and financial position. Such disputes could cause us to incur
unforeseen expenses, could occupy a significant amount of our management's time and attention, and could negatively affect our
business operations and financial position.

We are exposed to fluctuations in foreign currency exchange
rates.    Because a significant portion of our business is conducted outside the United States, we face
exposure to adverse movements in foreign currency exchange rates. These exposures may change over time as business practices
evolve and could have an adverse impact on our financial results and cash flows. Historically, our exposures have related to non-dollar-
denominated operating expenses in Europe and Asia. We began Euro-denominated sales to our distribution customers in the European
Union in the fourth quarter of fiscal 2003; however, we switched back to United States dollar-denominated sales to our distribution
customers in the European Union in the fourth quarter of fiscal 2008. An increase in the value of the dollar could increase the real cost
to our customers of our products in markets outside the United States where we sell in dollars, and a weakened dollar could increase
the cost of local operating expenses and procurement.

We hold minority interests in privately held venture funds, and if these venture funds face financial
difficulties in their operations, our investments could be impaired.    We continue to hold minority
interests in privately held venture funds. At December 26, 2008, the carrying value of such investments aggregated $1.4 million.
These investments are inherently risky because these venture funds invest in companies that may still be in the development stage or
depend on third parties for financing to support their ongoing operations. In addition, the markets for the technologies or products of
these companies are typically in the early stages and may never develop. If these companies do not have adequate cash funding to
support their operations, or if they encounter difficulties developing their technologies or products, the venture funds' investments in
these companies may be impaired, which in turn, could result in impairment of our investment in these venture funds. For example, in
the third quarter of fiscal 2009, we recorded a charge of $0.2 million relating to other-than-temporary decline in value of a minority
investment.  The carrying value of these investments is based on quarterly statements we receive from the funds.  The statements are
generally received one quarter in arrears, as more timely valuations are not practical.  Given the recent downturn in equity investments
and current market conditions, we may be required to record an impairment charge against all or a portion of the investments in the
future.  Such an action would adversely affect our financial results.

Changes in securities laws and regulations have increased and may continue to increase our
costs.    Changes in the laws and regulations affecting public companies, including the provisions of
the Sarbanes-Oxley Act of 2002 and rules promulgated by the Securities and Exchange Commission, have increased and may
continue to increase our expenses as we devote resources to respond to their requirements. In particular, we incurred additional
administrative expense to implement Section 404 of the Sarbanes-Oxley Act, which requires management to report on, and our
independent registered public accounting firm to attest to, our internal control over financial reporting.

In addition, the NASDAQ Global Market, on which our common stock is listed, has also adopted comprehensive
rules and regulations relating to corporate governance. These laws, rules and regulations have increased and may continue to increase
the scope, complexity and cost of our corporate governance, reporting and disclosure practices. We also expect these developments
may make it more difficult and more expensive for us to obtain director and officer liability insurance in the future, and we may be
required to accept reduced coverage or incur substantially higher costs to obtain coverage. Further, our board members, Chief
Executive Officer and Chief Financial Officer could face an increased risk of personal liability in connection with the performance of their
duties. As a result, we may have difficultly attracting and retaining qualified board members and executive officers, which would
adversely affect our business.

Internal control deficiencies or weaknesses that are not yet identified could
emerge.    Over time we may identify and correct deficiencies or weaknesses in our internal control
over financial reporting and, where and when appropriate, report on the identification and correction of these deficiencies or
weaknesses. However, the internal control procedures can provide only reasonable, and not absolute, assurance that deficiencies or
weaknesses are identified. Deficiencies or weaknesses that are not yet identified could emerge, and the identification and corrections of
these deficiencies or weaknesses could have a material impact on our results of operations.

Internal control issues that appear minor now may later become material
weaknesses.    We are required to publicly report on deficiencies or weaknesses in our internal
control over financial reporting that meet a materiality standard as required by law and related regulations and interpretations.
Management may, at a point in time, accurately categorize a deficiency or weakness as immaterial or minor and therefore not be
required to publicly report such deficiency or weakness. Such determination, however, does not preclude a change in circumstances
such that the deficiency or weakness could, at a later time, become a material weakness that could have a material impact on our
results of operations.

We may encounter natural disasters, which could cause disruption to our employees or interrupt the
manufacturing process for our products.    Our operations could be subject to natural disasters and
other business disruptions, which could seriously harm our revenues and financial condition and increase our costs and expenses. Our
corporate headquarters are located in California, near major earthquake faults. Additionally, our primary wafer supplier, TSMC, is
located in Taiwan, which has experienced significant earthquakes in the past. A severe earthquake could cause disruption to our
employees or interrupt the manufacturing process, which could affect TSMC's ability to supply wafers to us, which would negatively
affect our business and financial results. The ultimate impact on us and our general infrastructure of being located near major
earthquake faults is unknown, but our net revenues and financial condition and our costs and expenses could be significantly impacted
in the event of a major earthquake.

Manmade problems such as computer viruses or terrorism may disrupt our operations and harm our operating
results.    Despite our implementation of network security measures, our servers are vulnerable to
computer viruses, break-ins and similar disruptions from unauthorized tampering with our computer systems. Any such event could
have an adverse effect on our business, operating results, and financial condition. In addition, the effects of war or acts of terrorism
could have an adverse effect on our business, operating results, and financial condition. In addition, as a company with headquarters
and significant operations located in the United States, we may be impacted by actions against the United States. We are
predominantly uninsured for losses and interruptions caused by terrorist acts and acts of war.

We may experience significant fluctuations in our stock price, which may, in turn, significantly affect the trading
price of our convertible notes.    Our stock has experienced substantial price volatility, particularly as
a result of quarterly variations in our operating results, the published expectations of securities analysts and as a result of
announcements by our competitors and us. In addition, the stock market has experienced significant price and volume fluctuations,
particularly in the last few months, that have affected the market price of many technology companies, in particular, and that have often
been unrelated to the operating performance of such companies. In addition, the price of our securities may also continue to be affected
by general global, economic and market conditions and the cost of operations in one or more of our product markets. While we cannot
predict the individual effect that these factors may have on the price or our securities, these factors, either individually or in the
aggregate, could result in significant variations in the price of our common stock during any given period of time. These fluctuations in
our stock price also impact the price of our outstanding 3/4% Notes, and the likelihood of the 3/4% Notes being converted into our
common stock.

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Item 4. Submission of Matters to a Vote of Security Holders

The Annual Meeting was held on October 23, 2008 at Adaptec's corporate headquarters located in Milpitas,
California. At the Annual Meeting, our stockholders voted on five proposals: (1) the election of nine directors to our Board of Directors,
(2) the approval of the amendment and restatement of our 2004 Equity Incentive Plan, (3) the approval of granting authority to our
Board of Directors and Compensation Committee to grant awards under our 2006 Director Plan to directors that are affiliated with Steel
Partners, (4) approval of granting authority to our Board of Directors to effect a reverse stock split and (5) the ratification of our Audit
Committee's selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for our fiscal year ending
March 31, 2009. Of the total of 120,094,024 shares of our common stock outstanding as of the record date, 112,683,303 shares (94%)
were present or represented by proxy at the Annual Meeting. The table below presents the voting results of election of our Board of
Directors.



|                              | Votes       | Votes Withheld
|----------------------------- | ----------- | --------------
|Jon S. Castor                 | 109,594,975 | 3,088,328     
|Jack L. Howard                | 107,870,521 | 4,812,782     
|Joseph S. Kennedy             | 110,351,399 | 2,331,904     
|Robert J. Loarie              | 109,498,831 | 3,184,472     
|John Mutch                    | 109,497,681 | 3,185,622     
|John J. Quicke                | 109,621,555 | 3,061,748     
|Lawrence J. Ruisi             | 110,274,451 | 2,408,852     
|Subramanian "Sundi" Sundaresh | 110,305,367 | 2,377,936     
|Douglas E. Van Houweling      | 110,355,355 | 2,327,948     

Our stockholders approved the amendment and restatement of our 2004 Equity Incentive Plan.  The proposal
received 91,851,811 affirmative votes, 5,287,328 negative votes, 131,786 abstentions and 15,412,378 broker non-votes.

Our stockholders also approved the granting authority to our Board of Directors and Compensation Committee
to grant awards under our 2006 Director Plan to directors that are affiliated with Steel Partners during the period beginning immediately
following the Annual Meeting and  ending on May 12, 2011.  The proposal received 107,428,779 affirmative votes, 5,010,427 negative
votes, 244,097 abstentions and no broker non-votes.

In addition, our stockholders approved the granting authority to our Board of Directors to amend our certificate
of incorporation at any time prior to our 2009 Annual Meeting of Stockholders to affect a reverse stock split of our common stock for an
exchange ratio of 1-for-3, 1-for-4 or 1-for-5.  The table below presents the voting results on the reverse stock split of our common stock
based on each respective exchange ratios.



|                       | Votes      | Votes Withheld | Abstain   | Broker Non-Vote
|---------------------- | ---------- | -------------- | --------- | ---------------
|                       |            |                |           |                
|1-for-3 exchange ratio | 81,305,437 | 11,745,441     | 4,220,048 | 15,412,377     
|1-for-4 exchange ratio | 81,300,246 | 11,748,884     | 4,221,796 | 15,412,377     
|1-for-5 exchange ratio | 81,267,146 | 11,778,719     | 4,225,061 | 15,412,377     

Our stockholders also ratified and approved the appointment of PricewaterhouseCoopers LLP as our
independent registered public accounting firm for the fiscal year ending March 31, 2009. The proposal received 108,601,947
affirmative votes, 3,819,101 negative votes, 262,255 abstentions and no broker non-votes.



---



Item 6. Exhibits





|Exhibit
No. | Exhibit | Filed with
This 10-Q                                                                                                                                                            | Form | File No. | Filing Date | Exhibit
No. as
Filed
|----------- | ------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---- | -------- | ----------- | --------------------
|10.1        |         | Employment Agreement of Mr. John Noellert, effective as of August 14, 2007                                                                                                      |      | 8-K      | 000-15071   | October 30, 2008    
|10.2        |         | Employment Agreement of Mr. Anil Gupta, effective as of September 3, 2008                                                                                                       |      | 8-K      | 000-15071   | October 30, 2008    
|23.1        |         | Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm                                                                                                     |      | 8-K/A    | 000-15071   | October 21, 2008    
|23.2        |         | Consent of PricewaterhouseCoopers LLP, Independent Accountants                                                                                                                  |      | 8-K/A    | 000-15071   | October 21, 2008    
|99.1        |         | Audited Financial Statements of Aristos Logic Corporation as of September 30, 2007 and September 30, 2006 and
for the years ended September 30, 2007 and 2006 and notes thereto |      | 8-K/A    | 000-15071   | October 21, 2008    
|99.2        |         | Unaudited Condensed Financial Statements of Aristos Logic Corporation as of June 30, 2008 and for the nine-month
periods ended June 30, 2008 and 2007 and notes thereto         |      | 8-K/A    | 000-15071   | October 21, 2008    
|99.3        |         | Unaudited Pro Forma Condensed Combined Financial Statements and notes thereto                                                                                                   |      | 8-K/A    | 000-15071   | October 21, 2008    
|31.1        |         | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                        | X    |          |             |                     
|31.2        |         | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                        | X    |          |             |                     
|32.1        |         | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                        | X    |          |             |                     



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned hereunto duly authorized.

|ADAPTEC, INC. |                                                                       
|------------- | ----------------------------------------------------------------------
|By:           | /s/ MARY L. DOTZ                                                      
|              | Mary L. Dotz                                                          
|              | Chief Financial Officer
(principal financial officer)                 
|By:           | /s/ JOHN M. WESTFIELD                                                 
|              | John M. Westfield                                                     
|              | Vice President and Corporate Controller
(principal accounting officer)

---

EXHIBIT INDEX

|Exhibit
No. | Exhibit | Filed with
This 10-Q                                                                                                                                                            | Form | File No. | Filing Date | Exhibit
No. as
Filed
|----------- | ------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---- | -------- | ----------- | --------------------
|10.1        |         | Employment Agreement of Mr. John Noellert, effective as of August 14, 2007                                                                                                      |      | 8-K      | 000-15071   | October 30, 2008    
|10.2        |         | Employment Agreement of Mr. Anil Gupta, effective as of September 3, 2008                                                                                                       |      | 8-K      | 000-15071   | October 30, 2008    
|23.1        |         | Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm                                                                                                     |      | 8-K/A    | 000-15071   | October 21, 2008    
|23.2        |         | Consent of PricewaterhouseCoopers LLP, Independent Accountants                                                                                                                  |      | 8-K/A    | 000-15071   | October 21, 2008    
|99.1        |         | Audited Financial Statements of Aristos Logic Corporation as of September 30, 2007 and September 30, 2006 and
for the years ended September 30, 2007 and 2006 and notes thereto |      | 8-K/A    | 000-15071   | October 21, 2008    
|99.2        |         | Unaudited Condensed Financial Statements of Aristos Logic Corporation as of June 30, 2008 and for the nine-month
periods ended June 30, 2008 and 2007 and notes thereto         |      | 8-K/A    | 000-15071   | October 21, 2008    
|99.3        |         | Unaudited Pro Forma Condensed Combined Financial Statements and notes thereto                                                                                                   |      | 8-K/A    | 000-15071   | October 21, 2008    
|31.1        |         | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                        | X    |          |             |                     
|31.2        |         | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                        | X    |          |             |                     
|32.1        |         | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                        | X    |          |             |