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UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 10-K


ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES EXCHANGE ACT of 1934


For the fiscal year ended April 3, 2005


Commission File No. 0-23298


QLogic Corporation


(Exact name of registrant as specified in its charter)


|                                                                                              |  |                                               
|--------------------------------------------------------------------------------------------- |  | ----------------------------------------------
|Delaware(State of incorporation)                                                              |  | 33-0537669(I.R.S. Employer Identification No.)
|26650 Aliso Viejo Parkway
    Aliso Viejo, California(Address of principal executive offices) |  | 92656(Zip Code)                               

(949) 389-6000


(Registrants telephone number, including area code)





Securities registered pursuant to Section 12(b) of the
Act:


None


Securities registered pursuant to Section 12(g) of the
Act:


Common Stock, $0.001 Par Value


Series A Junior Participating Preferred Stock,
$0.001 Par Value


(Title of class)





þ o


þ


þ o






DOCUMENTS INCORPORATED BY REFERENCE












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TABLE OF CONTENTS



|                                                        |                                                                                                                      |                                                                          |  |  |  |  |  | 
|------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------ |  |  |  |  |  | 
|PART I                                                 
|                                                        | Item 1. Business                                                                                                    
|                                                        | Item 2. Properties                                                                                                  
|                                                        | Item 3. Legal Proceedings                                                                                           
|                                                        | Item 4. Submission of Matters to a Vote of Security Holders                                                         
|PART II                                                
|                                                        | Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|                                                        | Item 6. Selected Financial Data                                                                                     
|                                                        | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations                       
|                                                        | Item 7a. Quantitative and Qualitative Disclosures About Market Risk                                                 
|                                                        | Item 8. Financial Statements and Supplementary Data                                                                 
|REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|                                                        |                                                                                                                      | CONSOLIDATED BALANCE SHEETS                                             
|                                                        |                                                                                                                      | CONSOLIDATED STATEMENTS OF INCOME                                       
|                                                        |                                                                                                                      | CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME
|                                                        |                                                                                                                      | CONSOLIDATED STATEMENTS OF CASH FLOWS                                   
|                                                        |                                                                                                                      | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                              
|                                                        | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                        
|                                                        | Item 9A. Controls and Procedures                                                                                    
|                                                        | Item 9B. Other Information                                                                                          
|PART III                                               
|                                                        | Item 10. Directors and Executive Officers of the Registrant                                                         
|                                                        | Item 11. Executive Compensation                                                                                     
|                                                        | Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters             
|                                                        | Item 13. Certain Relationships and Related Transactions                                                             
|                                                        | Item 14. Principal Accountant Fees and Services                                                                     
|PART IV                                                
|                                                        | Item 15. Exhibits and Financial Statement Schedules                                                                 
|SIGNATURES                                             
|SCHEDULE II                                            
|EXHIBIT 21.1                                           
|EXHIBIT 23.1                                           
|EXHIBIT 31.1                                           
|EXHIBIT 31.2                                           
|EXHIBIT 32                                             



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PART I







|        |         
|------- | --------
|Item 1. | Business

Introduction








Overview






| |                                    
| | -----------------------------------
| | Customers, Markets and Applications







| |   |                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------
| |  | Small, medium and large enterprises with critical business data
    requirements.                  
|
| |  | Business applications requiring high-performance or networked
    storage solutions, which include:



| |   |                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Data warehousing, data mining and online transaction processing;                                                                                           
|
| |  | Media-rich environments such as film/video, broadcast, medical
    imaging and computer-aided design, or CAD, and computer-aided
    manufacturing, or CAM;
|
| |  | Server clustering, high-speed backup and data replication.                                                                                                 





| |                       
| | ----------------------
| | Alliance Relationships



1



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Storage Industry




.


New Markets






New Technologies








2



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Our SAN Solutions


tm




Product Overview




tm tm


Sales and Marketing








3



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Engineering and Development








Backlog




Competition






| |   |                                              
| | - | ---------------------------------------------
| |  | time-to-market;                              
|
| |  | product quality, reliability and performance;
|
| |  | price;                                       
|
| |  | new product innovation;                      
|
| |  | customer relationships;                      
|
| |  | design capabilities;                         
|
| |  | customer service and technical support; and  
|
| |  | interoperability of SAN components.          





4



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Manufacturing












5



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Intellectual Property








Employees









|        |           
|------- | ----------
|Item 2. | Properties








|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings



6



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



7



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PART II







|        |                                                                                                                     
|------- | --------------------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity, Related
    Stockholder Matters and Issuer Purchases of Equity
    Securities

Principal Market and Prices




|               |  |      |       |  |     |   |       | 
|-------------- |  | ---- | ----- |  | --- | - | ----- | 
|Fiscal 2004    |  | High |       |  | Low |  
|               |  |      |       |  |     |  
|First Quarter  |  | $    | 53.35 |  |     | $ | 36.90 | 
|Second Quarter |  |      | 53.57 |  |     |   | 41.26 | 
|Third Quarter  |  |      | 58.72 |  |     |   | 46.76 | 
|Fourth Quarter |  |      | 53.14 |  |     |   | 40.13 | 

|               |  |              |       |  |     |   |       | 
|-------------- |  | ------------ | ----- |  | --- | - | ----- | 
|               |  | Sales Prices |      
|               |  |              |      
|Fiscal 2005    |  | High         |       |  | Low |  
|               |  |              |       |  |     |  
|First Quarter  |  | $            | 43.00 |  |     | $ | 25.26 | 
|Second Quarter |  |              | 31.46 |  |     |   | 21.44 | 
|Third Quarter  |  |              | 38.39 |  |     |   | 27.35 | 
|Fourth Quarter |  |              | 43.66 |  |     |   | 33.22 | 

Number of Common Stockholders




Dividends




Recent Sales of Unregistered Securities




8



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Issuer Purchases of Equity Securities




|                                     |       |                  |         |         |                |                  |       |                     |                      |  |                      |         |  |   |            |            | 
|------------------------------------ | ----- | ---------------- | ------- | ------- | -------------- | ---------------- | ----- | ------------------- | -------------------- |  | -------------------- | ------- |  | - | ---------- | ---------- | 
|                                     |       |                  |         |         |                | Total Number of  |       |                     | Approximate Dollar   | 
|                                     |       |                  |         |         |                | Shares Purchased |       |                     | Value of Shares that | 
|                                     |       | Total Number of  |         |         | Average Price  |                  |       | as part of Publicly |                      |  | May Yet be Purchased |        
|Period                               |       | Shares Purchased |         |         | Paid per Share |                  |       | Announced Plan      |                      |  | Under the Plan       |        
|                                     |       |                  |         |         |                |                  |       |                     |                      |  |                      |        
|December 27, 2004 - January 23, 2005 |       |                  |        |         |                | $                |      |                     |                      |  |                     |         |  | $ | 60,000,000 |           
|January 24, 2005 - February 20, 2005 |       |                  |        |         |                | $                |      |                     |                      |  |                     |         |  | $ | 60,000,000 |           
|February 21, 2005 - April 3, 2005    |       |                  | 123,950 |         |                | $                | 40.34 |                     |                      |  | 123,950              |         |  | $ | 55,000,000 |           
|                                     |       |                  |         |         |                |                  |       |                     |                      |  |                      |        
|                                     | Total |                  |         | 123,950 |                |                  | $     | 40.34               |                      |  |                      | 123,950 |  |   | $          | 55,000,000 | 
|                                     |       |                  |         |         |                |                  |       |                     |                      |  |                      |        





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|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data



|                                                    |                             |                          |           |        |           |   |         |           |         |   |           |        |         |          |         |        |         |   |         |        |         | 
|--------------------------------------------------- | --------------------------- | ------------------------ | --------- | ------ | --------- | - | ------- | --------- | ------- | - | --------- | ------ | ------- | -------- | ------- | ------ | ------- | - | ------- | ------ | ------- | 
|                                                    |                             | Fiscal Year Ended        |          
|                                                    |                             |                          |          
|                                                    |                             | April 3,                 |           |        | March 28, |   |         | March 30, |         |   | March 31, |        |         | April 1, |        
|                                                    |                             | 2005                     |           |        | 2004      |   |         | 2003      |         |   | 2002      |        |         | 2001     |        
|                                                    |                             |                          |           |        |           |   |         |           |         |   |           |        |         |          |        
|Statement of Operations Data                        |                             |                          |           |        |           |   |         |           |         |   |           |        |         |          |         |        |         |   |         |       
|Net revenues                                        |                             | $                        | 571,903   |        |           | $ | 523,860 |           |         | $ | 440,809   |        |         | $        | 344,189 |        |         | $ | 357,542 |       
|Cost of revenues                                    |                             |                          | 174,824   |        |           |   | 166,294 |           |         |   | 159,370   |        |         |          | 133,005 |        |         |   | 128,739 |       
|                                                    |                             |                          |           |        |           |   |         |           |         |   |           |        |         |          |        
|                                                    |                             | Gross profit             |           |        | 397,079   |   |         |           | 357,566 |   |           |        | 281,439 |          |         |        | 211,184 |   |         |        | 228,803 | 
|                                                    |                             |                          |           |        |           |   |         |           |         |   |           |        |         |          |        
|Operating expenses:                                 |                             |                          |           |        |           |   |         |           |         |   |           |        |         |          |         |        |         |   |         |       
|                                                    | Engineering and development |                          |           | 95,864 |           |   |         | 87,755    |         |   |           | 81,253 |         |          |         | 69,684 |         |   |         | 56,315 |        
|                                                    | Sales and marketing         |                          |           | 59,477 |           |   |         | 52,952    |         |   |           | 44,312 |         |          |         | 38,323 |         |   |         | 36,482 |        
|                                                    | General and administrative  |                          |           | 17,252 |           |   |         | 18,102    |         |   |           | 14,011 |         |          |         | 16,673 |         |   |         | 14,828 |        
|                                                    | Merger and related expenses |                          |           |       |           |   |         |          |         |   |           |       |         |          |         |       |         |   |         | 22,947 |        
|                                                    |                             |                          |           |        |           |   |         |           |         |   |           |        |         |          |        
|                                                    |                             | Total operating expenses |           |        | 172,593   |   |         |           | 158,809 |   |           |        | 139,576 |          |         |        | 124,680 |   |         |        | 130,572 | 
|                                                    |                             |                          |           |        |           |   |         |           |         |   |           |        |         |          |        
|Operating income                                    |                             |                          | 224,486   |        |           |   | 198,757 |           |         |   | 141,863   |        |         |          | 86,504  |        |         |   | 98,231  |       
|Interest and other income                           |                             |                          | 17,873    |        |           |   | 16,844  |           |         |   | 17,356    |        |         |          | 19,036  |        |         |   | 18,706  |       
|                                                    |                             |                          |           |        |           |   |         |           |         |   |           |        |         |          |        
|Income before income taxes                          |                             |                          | 242,359   |        |           |   | 215,601 |           |         |   | 159,219   |        |         |          | 105,540 |        |         |   | 116,937 |       
|Income taxes                                        |                             |                          | 84,763    |        |           |   | 81,928  |           |         |   | 55,746    |        |         |          | 34,814  |        |         |   | 48,168  |       
|                                                    |                             |                          |           |        |           |   |         |           |         |   |           |        |         |          |        
|Net income                                          |                             | $                        | 157,596   |        |           | $ | 133,673 |           |         | $ | 103,473   |        |         | $        | 70,726  |        |         | $ | 68,769  |       
|                                                    |                             |                          |           |        |           |   |         |           |         |   |           |        |         |          |        
|Net income per share:                               |                             |                          |           |        |           |   |         |           |         |   |           |        |         |          |         |        |         |   |         |       
|                                                    | Basic                       |                          | $         | 1.70   |           |   | $       | 1.42      |         |   | $         | 1.11   |         |          | $       | 0.76   |         |   | $       | 0.76   |        
|                                                    |                             |                          |           |        |           |   |         |           |         |   |           |        |         |          |        
|                                                    | Diluted                     |                          | $         | 1.68   |           |   | $       | 1.39      |         |   | $         | 1.09   |         |          | $       | 0.74   |         |   | $       | 0.72   |        
|                                                    |                             |                          |           |        |           |   |         |           |         |   |           |        |         |          |        
|Balance Sheet Data                                  |                             |                          |           |        |           |   |         |           |         |   |           |        |         |          |         |        |         |   |         |       
|Cash and cash equivalents and marketable securities |                             | $                        | 812,338   |        |           | $ | 743,034 |           |         | $ | 643,197   |        |         | $        | 492,546 |        |         | $ | 355,483 |       
|Working capital                                     |                             |                          | 870,698   |        |           |   | 792,783 |           |         |   | 681,496   |        |         |          | 535,612 |        |         |   | 442,702 |       
|Total assets                                        |                             |                          | 1,026,340 |        |           |   | 926,126 |           |         |   | 815,043   |        |         |          | 669,857 |        |         |   | 571,497 |       
|Total stockholders equity                          |                             |                          | 956,183   |        |           |   | 867,718 |           |         |   | 750,735   |        |         |          | 618,983 |        |         |   | 523,702 |       






|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

This Discussion and Analysis of Financial Condition and
Results of Operations should be read in conjunction with our
consolidated financial statements and related notes. This
Discussion and Analysis of Financial Condition and Results of
Operations also contains descriptions of our expectations
regarding future trends affecting our business. These
forward-looking statements and other forward-looking statements
made elsewhere in this report are made in reliance upon safe
harbor provisions of the Private Securities Litigation Reform
Act of 1995. Such forward-looking statements include, without
limitation, descriptions of our expectations regarding future
trends affecting our business and other statements regarding
future events or our objectives, goals, strategies, beliefs and
underlying assumptions that are other than statements of
historical fact. When used in this report, the words
anticipates, believes, can,
continue, could, estimates,
expects, intends, may,
plans, potential, predicts,
should, will and similar expressions or
the negative of such expressions are intended to identify these
forward-looking statements. Our actual results could differ
materially from those anticipated in these forward-looking
statements as a result of several


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factors, including, but not limited to those factors set
forth and discussed under Risk Factors and elsewhere
in this report. In light of the significant uncertainties
inherent in the forward-looking information included in this
report, the inclusion of this information should not be regarded
as a representation by us or any other person that our
objectives or plans will be achieved. We undertake no obligation
to update or revise these forward-looking statements, whether as
a result of new information, future events or otherwise.


Overview












| |                                                                              
| | -----------------------------------------------------------------------------
| | Fiscal Year and Fourth Quarter Financial Highlights and
    Other Information







11



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Net revenues of $157.2 million for the fourth quarter of
    fiscal 2005 increased sequentially by $7.0 million, or 5%,
    from the $150.3 million reported in the third quarter of
    fiscal 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | Gross profit as a percentage of net revenues was 69.3% for the
    fourth quarter of fiscal 2005, declining 50 basis points
    from the 69.8% reported in the third quarter of fiscal 2005.
    This change in our gross profit percentage was attributable to
    product mix. Although we experienced an increase in our gross
    profit percentage for fiscal 2005, we continue to expect
    downward pressure on our gross profit percentage and there can
    be no assurance that we will be able to maintain our gross
    profit percentage consistent with historical trends and it may
    decline in the future.                                                                                  
|
| |  | Operating income as a percentage of net revenues was 41.0% for
    the fourth quarter of fiscal 2005 compared to 40.5% in the third
    quarter of fiscal 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Net income of $46.2 million, or $0.49 per diluted
    share, increased sequentially 6% from the $43.4 million, or
    $0.46 per diluted share, in the third quarter of fiscal
    2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | During the fourth quarter of fiscal 2005, we repurchased
    $5.0 million of our common stock in the open market under
    our corporate stock repurchase program.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | Cash and cash equivalents and short-term investments of
    $812.3 million at April 3, 2005 increased
    $44.2 million from the balance at the end of the third
    quarter of fiscal 2005. During the fourth quarter, we generated
    $60.4 million of cash from operations.                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Working capital of $870.7 million at April 3, 2005
    increased $48.6 million during the fourth quarter primarily
    due to our net income and the related cash generated from
    operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | Accounts receivable was $63.5 million as of April 3,
    2005, compared to $76.5 million at December 26, 2004.
    Days sales outstanding (DSO) in receivables as of
    April 3, 2005 decreased to 40 days from 46 days
    as of December 26, 2004. Our accounts receivable and DSO
    are primarily affected by the linearity of shipments within the
    quarter and collections performance. Based on our
    customers procurement models and our current customer mix,
    we expect that DSO will range between 45 and 55 days during
    fiscal 2006. There can be no assurance that we will be able to
    maintain our DSO consistent with historical trends and it may
    increase in the future.
|
| |  | Inventories were $29.6 million as of April 3, 2005,
    compared to $24.3 million as of December 26, 2004. Our
    annualized inventory turns in the fourth quarter of fiscal 2005
    of 6.0 turns declined from the 7.5 turns in the third
    quarter of fiscal 2005, principally due to the increase in
    inventories related to the buildup to satisfy customer
    requirements, including the expected level of customer demand
    from our hubs at the end of the fourth quarter.                                                                                                                                                                                                                    

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RESULTS OF OPERATIONS


Net Revenues




|                            |                        |                    |   |       |       |   |   |       |       |   |   |       |       |  
|--------------------------- | ---------------------- | ------------------ | - | ----- | ----- | - | - | ----- | ----- | - | - | ----- | ----- | -
|                            |                        | 2005               |   |       | 2004  |   |   | 2003  |      
|                            |                        |                    |   |       |       |   |   |       |      
|                            |                        | (In millions)      |  
|Net revenues:               |                        |                    |   |       |       |   |   |       |       |   |   |      
|                            | Fibre Channel products |                    | $ | 448.4 |       |   | $ | 399.3 |       |   | $ | 305.6 |      
|                            | SCSI products          |                    |   | 116.3 |       |   |   | 118.8 |       |   |   | 132.5 |      
|                            | Other                  |                    |   | 7.2   |       |   |   | 5.8   |       |   |   | 2.7   |      
|                            |                        |                    |   |       |       |   |   |       |      
|                            |                        | Total net revenues |   | $     | 571.9 |   |   | $     | 523.9 |   |   | $     | 440.8 |  
|                            |                        |                    |   |       |       |   |   |       |      
|Percentage of net revenues: |                        |                    |   |       |       |   |   |       |       |   |   |      
|                            | Fibre Channel products |                    |   | 79    | %     |   |   | 76    | %     |   |   | 69    | %    
|                            | SCSI products          |                    |   | 20    |       |   |   | 23    |       |   |   | 30    |      
|                            | Other                  |                    |   | 1     |       |   |   | 1     |       |   |   | 1     |      
|                            |                        |                    |   |       |       |   |   |       |      
|                            |                        | Total net revenues |   |       | 100   | % |   |       | 100   | % |   |       | 100   | %
|                            |                        |                    |   |       |       |   |   |       |      









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|                 |  |      |    |   |      |  |    |      |  |  |    |  
|---------------- |  | ---- | -- | - | ---- |  | -- | ---- |  |  | -- | -
|                 |  | 2005 |    |   | 2004 |  |    | 2003 | 
|                 |  |      |    |   |      |  |    |      | 
|Fujitsu          |  |      | 16 | % |      |  | 14 | %    |  |  | 18 | %
|IBM              |  |      | 12 | % |      |  | *  |      |  |  | *  |  
|Sun Microsystems |  |      | 11 | % |      |  | 15 | %    |  |  | 17 | %
|Hewlett-Packard  |  |      | 11 | % |      |  | *  |      |  |  | *  |  
|Hitachi          |  |      | *  |   |      |  | *  |      |  |  | 11 | %






|  |                               
|- | ------------------------------
|* | Less than 10% of net revenues.







|               |  |               |       |  |      |   |       |      |  |   |       | 
|-------------- |  | ------------- | ----- |  | ---- | - | ----- | ---- |  | - | ----- | 
|               |  | 2005          |       |  | 2004 |   |       | 2003 | 
|               |  |               |       |  |      |   |       |      | 
|               |  | (In millions) |      
|United States  |  | $             | 230.4 |  |      | $ | 231.3 |      |  | $ | 202.1 | 
|Japan          |  |               | 87.4  |  |      |   | 133.2 |      |  |   | 130.1 | 
|United Kingdom |  |               | 54.7  |  |      |   | 57.8  |      |  |   | 31.8  | 
|Rest of world  |  |               | 199.4 |  |      |   | 101.6 |      |  |   | 76.8  | 
|               |  |               |       |  |      |   |       |      | 
|               |  | $             | 571.9 |  |      | $ | 523.9 |      |  | $ | 440.8 | 
|               |  |               |       |  |      |   |       |      | 

Gross Profit




|                           |  |               |       |   |      |   |       |      |  |   |       |  
|-------------------------- |  | ------------- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | -
|                           |  | 2005          |       |   | 2004 |   |       | 2003 | 
|                           |  |               |       |   |      |   |       |      | 
|                           |  | (In millions) |      
|Gross profit               |  | $             | 397.1 |   |      | $ | 357.6 |      |  | $ | 281.4 |  
|Percentage of net revenues |  |               | 69.4  | % |      |   | 68.3  | %    |  |   | 63.8  | %



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Operating Expenses




|                            |                             |                          |   |      |       |   |   |      |       |   |   |      |       |  
|--------------------------- | --------------------------- | ------------------------ | - | ---- | ----- | - | - | ---- | ----- | - | - | ---- | ----- | -
|                            |                             | 2005                     |   |      | 2004  |   |   | 2003 |      
|                            |                             |                          |   |      |       |   |   |      |      
|                            |                             | (In millions)            |  
|Operating expenses:         |                             |                          |   |      |       |   |   |      |       |   |   |     
|                            | Engineering and development |                          | $ | 95.9 |       |   | $ | 87.8 |       |   | $ | 81.3 |      
|                            | Sales and marketing         |                          |   | 59.5 |       |   |   | 52.9 |       |   |   | 44.3 |      
|                            | General and administrative  |                          |   | 17.2 |       |   |   | 18.1 |       |   |   | 14.0 |      
|                            |                             |                          |   |      |       |   |   |      |      
|                            |                             | Total operating expenses |   | $    | 172.6 |   |   | $    | 158.8 |   |   | $    | 139.6 |  
|                            |                             |                          |   |      |       |   |   |      |      
|Percentage of net revenues: |                             |                          |   |      |       |   |   |      |       |   |   |     
|                            | Engineering and development |                          |   | 16.8 | %     |   |   | 16.7 | %     |   |   | 18.4 | %    
|                            | Sales and marketing         |                          |   | 10.4 |       |   |   | 10.1 |       |   |   | 10.1 |      
|                            | General and administrative  |                          |   | 3.0  |       |   |   | 3.5  |       |   |   | 3.2  |      
|                            |                             |                          |   |      |       |   |   |      |      
|                            |                             | Total operating expenses |   |      | 30.2  | % |   |      | 30.3  | % |   |      | 31.7  | %
|                            |                             |                          |   |      |       |   |   |      |      

Engineering and Development.






15



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Sales and Marketing.






General and Administrative.






Non-Operating Income




|                                             |  |               |      |   |      |   |      |      |  |   |      |  
|-------------------------------------------- |  | ------------- | ---- | - | ---- | - | ---- | ---- |  | - | ---- | -
|                                             |  | 2005          |      |   | 2004 |   |      | 2003 | 
|                                             |  |               |      |   |      |   |      |      | 
|                                             |  | (In millions) |     
|Interest income                              |  | $             | 18.5 |   |      | $ | 15.5 |      |  | $ | 17.1 |  
|Gain (loss) on sale of marketable securities |  |               | (0.6 | ) |      |   | 1.1  |      |  |   | 4.2  |  
|Write-down of non-marketable investments     |  |               |     |   |      |   |     |      |  |   | (4.0 | )
|Other                                        |  |               |     |   |      |   | 0.2  |      |  |   | 0.1  |  
|                                             |  |               |      |   |      |   |      |      | 
|                                             |  | $             | 17.9 |   |      | $ | 16.8 |      |  | $ | 17.4 |  
|                                             |  |               |      |   |      |   |      |      | 



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Income Taxes




New Accounting Pronouncement








17



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Liquidity and Capital Resources
















18



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|                                    |       |               |      |      |      |   |     |      |  |   |      |     |  |      |     |     |       |   |     |     |  |   |      |      | 
|----------------------------------- | ----- | ------------- | ---- | ---- | ---- | - | --- | ---- |  | - | ---- | --- |  | ---- | --- | --- | ----- | - | --- | --- |  | - | ---- | ---- | 
|                                    |       | 2006          |      |      | 2007 |   |     | 2008 |  |   | 2009 |     |  | 2010 |     |     | Total |  
|                                    |       |               |      |      |      |   |     |      |  |   |      |     |  |      |     |     |       |  
|                                    |       | (In millions) |     
|Operating leases                    |       | $             | 5.5  |      |      | $ | 4.1 |      |  | $ | 1.4  |     |  | $    | 1.0 |     |       | $ | 0.5 |     |  | $ | 12.5 |     
|Non-cancelable purchase obligations |       |               | 49.6 |      |      |   | 0.1 |      |  |   |     |     |  |      |    |     |       |   |    |     |  |   | 49.7 |     
|                                    |       |               |      |      |      |   |     |      |  |   |      |     |  |      |     |     |       |  
|                                    | Total |               | $    | 55.1 |      |   | $   | 4.2  |  |   | $    | 1.4 |  |      | $   | 1.0 |       |   | $   | 0.5 |  |   | $    | 62.2 | 
|                                    |       |               |      |      |      |   |     |      |  |   |      |     |  |      |     |     |       |  

Critical Accounting Policies and Estimates






| |                                
| | -------------------------------
| | Revenue and Accounts Receivable











19



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| |            
| | -----------
| | Inventories



20



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RISK FACTORS




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






| |   |                                                                                                                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the timing, size and mix of orders from customers;                                                                                                                                                                                                                                                             
|
| |  | gain or loss of significant customers;                                                                                                                                                                                                                                                                         
|
| |  | customer policies pertaining to desired inventory levels of our
    products;                                                                                                                                                                                                                                  
|
| |  | negotiated rebates and extended payment terms;                                                                                                                                                                                                                                                                 
|
| |  | changes in our ability to anticipate in advance the mix of
    customer orders;                                                                                                                                                                                                                                
|
| |  | levels of inventory our customers require us to maintain in our
    inventory hub locations;                                                                                                                                                                                                                   
|
| |  | the time, availability and sale of new products;                                                                                                                                                                                                                                                               
|
| |  | changes in the mix or average selling prices of our products;                                                                                                                                                                                                                                                  
|
| |  | variations in manufacturing capacities, efficiencies and costs;                                                                                                                                                                                                                                                
|
| |  | the availability and cost of components, including silicon chips;                                                                                                                                                                                                                                              
|
| |  | warranty expenses;                                                                                                                                                                                                                                                                                             
|
| |  | variations in product development costs, especially related to
    advanced technologies;                                                                                                                                                                                                                      
|
| |  | variations in operating expenses;                                                                                                                                                                                                                                                                              
|
| |  | adjustments related to product returns;                                                                                                                                                                                                                                                                        
|
| |  | changes in effective income tax rates, including those resulting
    from changes in tax laws;                                                                                                                                                                                                                 
|
| |  | actual events, circumstances, outcomes and amounts differing
    from judgments, assumptions and estimates used in determining
    the value of certain assets (including the amounts of related
    valuation allowances), liabilities and other items reflected in
    our consolidated financial statements;
|
| |  | changes in accounting rules;                                                                                                                                                                                                                                                                                   
|
| |  | changes in our accounting policies;                                                                                                                                                                                                                                                                            
|
| |  | general economic and other conditions affecting the timing of
    customer orders and capital spending; or                                                                                                                                                                                                     
|
| |  | changes in the global economy that impact information technology
    spending.                                                                                                                                                                                                                                 



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We expect gross margin to vary over time, and our recent
level of gross margin may not be sustainable.






| |   |                                                                                        
| | - | ---------------------------------------------------------------------------------------
| |  | changes in customer, geographic or product mix;                                        
|
| |  | introduction of new products, including products with
    price-performance advantages;
|
| |  | our ability to reduce production costs;                                                
|
| |  | entry into new markets;                                                                
|
| |  | sales discounts;                                                                       
|
| |  | increases in material or labor costs;                                                  
|
| |  | excess inventory and inventory holding charges;                                        
|
| |  | increased price competition;                                                           
|
| |  | changes in distribution channels;                                                      
|
| |  | increased warranty costs; and                                                          
|
| |  | how well we execute our business strategy and operating plans.                         

Our revenues may be affected by changes in IT spending
levels.




Our stock price may be volatile which could affect the value
of your investment.






| |   |                                                                                                  
| | - | -------------------------------------------------------------------------------------------------
| |  | announcements concerning our competitors, our customers, or us;                                  
|
| |  | quarterly fluctuations in our operating results;                                                 
|
| |  | differences between our actual operating results and the
    published expectations of analysts; 
|
| |  | introduction of new products or changes in product pricing
    policies by our competitors or us;
|
| |  | conditions in the semiconductor industry;                                                        
|
| |  | changes in market projections by industry forecasters;                                           
|
| |  | changes in estimates of our earnings by industry analysts;                                       
|
| |  | overall market conditions for high technology equities;                                          
|
| |  | rumors or dissemination of false information; and                                                
|
| |  | general economic and geopolitical conditions.                                                    

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Our business is dependent on the continued growth of the SAN
market and if this market does not continue to develop and
expand as we anticipate, our business will suffer.






| |   |                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | educate potential OEM customers, distributors, resellers, system
    integrators, storage service providers and end-user
    organizations about the benefits of SANs;
|
| |  | maintain and enhance our relationships with OEM customers,
    distributors, resellers, system integrators and storage system
    providers;                          
|
| |  | predict and base our products on standards which ultimately
    become industry standards; and                                                                        
|
| |  | achieve interoperability between our products and other SAN
    components from diverse vendors.                                                                      

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






| |   |                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | enhance our current products and develop and introduce in a
    timely manner new products that keep pace with technological
    developments and industry standards;
|
| |  | compete effectively on the basis of price and
    performance; and                                                                                                   
|
| |  | adequately address OEM customer and end-user customer
    requirements and achieve market acceptance.                                                                

tm


We depend on a limited number of customers, and any decrease
in revenue or cash flows from any one of our customers could
adversely affect our results of operations and cause our stock
price to decline.




23



---



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Our business may be subject to seasonal fluctuations and
uneven sales patterns in the future.




Competition within our product markets is intense and
includes numerous established competitors.






24



---



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We expect the pricing of our products to continue to decline,
which could reduce our revenues, gross margins and
profitability.




Our distributors may not adequately distribute our products
and their reseller customers may purchase products from our
competitors, which could negatively affect our operations.






We rely on the availability of third-party licenses.




We are dependent on sole source and limited source suppliers
for certain key components.






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We depend on our relationships with silicon chip suppliers
and other subcontractors, and a loss of any of these
relationships may lead to unpredictable consequences that may
harm our results of operations if alternative supply sources are
not available.








Our products are complex and may contain undetected software
or hardware errors that could lead to an increase in our costs,
reduce our net revenues or damage our reputation.




The migration of our customers toward new products may result
in fluctuations of our operating results.






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If our internal control over financial reporting do not
comply with the requirements of the Sarbanes-Oxley Act, our
business and stock price could be adversely affected.








Environmental compliance costs could adversely affect our net
income.




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Terrorist activities and resulting military actions could
adversely affect our business.




Because we depend on foreign customers and suppliers, we are
subject to international economic, regulatory, political and
other risks that could harm our financial condition and results
of operations.






| |   |                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------
| |  | a greater difficulty of administering and managing our business
    globally;                                                                 
|
| |  | compliance with multiple and potentially conflicting regulatory
    requirements, such as export requirements, tariffs and other
    barriers;
|
| |  | differences in intellectual property protections;                                                                                             
|
| |  | potentially longer accounts receivable cycles;                                                                                                
|
| |  | currency fluctuations;                                                                                                                        
|
| |  | export control restrictions;                                                                                                                  
|
| |  | overlapping or differing tax structures;                                                                                                      
|
| |  | political and economic instability; and                                                                                                       
|
| |  | general trade restrictions.                                                                                                                   



We may engage in mergers, acquisitions and strategic
investments and these activities may adversely affect our
results of operations and stock price.






| |   |                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------
| |  | uncertainties in identifying and pursuing target companies;                                                                  
|
| |  | difficulties in the assimilation of the operations, technologies
    and products of the acquired companies;                 
|
| |  | the diversion of managements attention from other business
    concerns;                                                    
|
| |  | risks associated with entering markets or conducting operations
    with which we have no or limited direct prior experience;

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| |   |                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------
| |  | the potential loss of current customers or failure to retain the
    acquired companys customers; and
|
| |  | the potential loss of key employees of the acquired company.                                          





Our business could be materially and adversely affected as a
result of the risks associated with strategic alliances.






Growth may strain our operations and require that we incur
costs to upgrade our infrastructure.




If we are unable to attract and retain key personnel, we may
not be able to sustain or grow our business.




Decreased effectiveness of equity compensation could
adversely affect our ability to attract and retain employees,
and changes in accounting for equity compensation could
adversely affect earnings.




29



---



##### Table of Contents





We may experience difficulties in transitioning to smaller
geometry process technologies.




Our proprietary rights may be inadequately protected and
difficult to enforce.




Disputes relating to claimed infringement of intellectual
property rights may adversely affect our business.




Changes in income tax laws or adverse outcomes resulting from
examination of our income tax returns could adversely affect our
net income.




30



---



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Computer viruses and other forms of tampering with our
computer systems or servers may disrupt our operations and
adversely affect net income.




Our certificate of incorporation, bylaws and stockholder
rights plan may discourage companies from acquiring us and
offering our stockholders a premium for their stock.




Our facilities and the facilities of third party
manufacturers are located in regions that are subject to
earthquakes and other natural disasters.









|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7a. | Quantitative and Qualitative Disclosures About Market
    Risk







31



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|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data




REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM












Internal Control  Integrated
Framework .








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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM






Internal Control  Integrated
Framework








Internal
Control  Integrated Framework Internal Control  Integrated
Framework .


.








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QLOGIC CORPORATION







CONSOLIDATED BALANCE SHEETS


April 3, 2005 and March 28, 2004


|                                     |                                                                                                                                                                                                       |                            |           |          |         |   |         |         |         | 
|------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | --------- | -------- | ------- | - | ------- | ------- | ------- | 
|                                     |                                                                                                                                                                                                       | 2005                       |           |          | 2004    |  
|                                     |                                                                                                                                                                                                       |                            |           |          |         |  
|                                     |                                                                                                                                                                                                       | (In thousands, except      |          
|                                     |                                                                                                                                                                                                       | share and per share        |          
|                                     |                                                                                                                                                                                                       | amounts)                   |          
|ASSETS                              
|Current assets:                      |                                                                                                                                                                                                       |                            |           |          |         |   |         |        
|                                     | Cash and cash equivalents                                                                                                                                                                             |                            | $         | 165,644  |         |   | $       | 62,911  |        
|                                     | Short-term investments                                                                                                                                                                                |                            |           | 646,694  |         |   |         | 680,123 |        
|                                     | Accounts receivable, less allowance for doubtful accounts of
    $1,445 and $1,372 as of April 3, 2005 and March 28,
    2004, respectively                                                           |                            |           | 63,526   |         |   |         | 67,355  |        
|                                     | Inventories                                                                                                                                                                                           |                            |           | 29,626   |         |   |         | 20,935  |        
|                                     | Other current assets                                                                                                                                                                                  |                            |           | 34,029   |         |   |         | 19,867  |        
|                                     |                                                                                                                                                                                                       |                            |           |          |         |  
|                                     |                                                                                                                                                                                                       | Total current assets       |           |          | 939,519 |   |         |         | 851,191 | 
|Property and equipment, net          |                                                                                                                                                                                                       |                            | 77,464    |          |         |   | 67,224  |        
|Other assets                         |                                                                                                                                                                                                       |                            | 9,357     |          |         |   | 7,711   |        
|                                     |                                                                                                                                                                                                       |                            |           |          |         |  
|                                     |                                                                                                                                                                                                       | $                          | 1,026,340 |          |         | $ | 926,126 |        
|                                     |                                                                                                                                                                                                       |                            |           |          |         |  
|LIABILITIES AND STOCKHOLDERS EQUITY
|Current liabilities:                 |                                                                                                                                                                                                       |                            |           |          |         |   |         |        
|                                     | Accounts payable                                                                                                                                                                                      |                            | $         | 20,186   |         |   | $       | 18,570  |        
|                                     | Accrued compensation                                                                                                                                                                                  |                            |           | 22,259   |         |   |         | 18,849  |        
|                                     | Income taxes payable                                                                                                                                                                                  |                            |           | 17,999   |         |   |         | 8,302   |        
|                                     | Other current liabilities                                                                                                                                                                             |                            |           | 8,377    |         |   |         | 12,687  |        
|                                     |                                                                                                                                                                                                       |                            |           |          |         |  
|                                     |                                                                                                                                                                                                       | Total current liabilities  |           |          | 68,821  |   |         |         | 58,408  | 
|                                     |                                                                                                                                                                                                       |                            |           |          |         |  
|Deferred tax liabilities             |                                                                                                                                                                                                       |                            | 1,336     |          |         |   |        |        
|Commitments and contingencies        |                                                                                                                                                                                                       |                            |           |          |         |   |         |        
|Subsequent event (Note 7)            |                                                                                                                                                                                                       |                            |           |          |         |   |         |        
|Stockholders equity:                |                                                                                                                                                                                                       |                            |           |          |         |   |         |        
|                                     | Preferred stock, $0.001 par value; 1,000,000 shares
    authorized (200,000 shares designated as Series A
    Junior Participating Preferred, $0.001 par value); no
    shares issued and outstanding |                            |           |         |         |   |         |        |        
|                                     | Common stock, $0.001 par value; 500,000,000 shares
    authorized; 96,401,000 and 95,440,000 shares issued at
    April 3, 2005 and March 28, 2004, respectively                                      |                            |           | 96       |         |   |         | 95      |        
|                                     | Additional paid-in capital                                                                                                                                                                            |                            |           | 504,760  |         |   |         | 482,039 |        
|                                     | Retained earnings                                                                                                                                                                                     |                            |           | 599,722  |         |   |         | 442,126 |        
|                                     | Accumulated other comprehensive income (loss)                                                                                                                                                         |                            |           | (3,394   | )       |   |         | 4,028   |        
|                                     | Treasury stock, at cost: 4,192,000 and 1,330,000 shares at
    April 3, 2005 and March 28, 2004, respectively                                                                                         |                            |           | (145,001 | )       |   |         | (59,992 | )      
|                                     | Deferred stock-based compensation                                                                                                                                                                     |                            |           |         |         |   |         | (578    | )      
|                                     |                                                                                                                                                                                                       |                            |           |          |         |  
|                                     |                                                                                                                                                                                                       | Total stockholders equity |           |          | 956,183 |   |         |         | 867,718 | 
|                                     |                                                                                                                                                                                                       |                            |           |          |         |  
|                                     |                                                                                                                                                                                                       | $                          | 1,026,340 |          |         | $ | 926,126 |        
|                                     |                                                                                                                                                                                                       |                            |           |          |         |  



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QLOGIC CORPORATION







CONSOLIDATED STATEMENTS OF INCOME


Years Ended April 3, 2005, March 28, 2004 and
March 30, 2003


|                                                |                             |                           |         |         |         |   |         |         |         |   |         |         |         | 
|----------------------------------------------- | --------------------------- | ------------------------- | ------- | ------- | ------- | - | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                                                |                             | 2005                      |         |         | 2004    |   |         | 2003    |        
|                                                |                             |                           |         |         |         |   |         |         |        
|                                                |                             | (In thousands, except per |        
|                                                |                             | share amounts)            |        
|Gross revenues                                  |                             | $                         | 571,903 |         |         | $ | 523,860 |         |         | $ | 444,037 |        
|Stock-based sales discounts                     |                             |                           |        |         |         |   |        |         |         |   | 3,228   |        
|                                                |                             |                           |         |         |         |   |         |         |        
|Net revenues                                    |                             |                           | 571,903 |         |         |   | 523,860 |         |         |   | 440,809 |        
|Cost of revenues                                |                             |                           | 174,824 |         |         |   | 166,294 |         |         |   | 159,370 |        
|                                                |                             |                           |         |         |         |   |         |         |        
|                                                | Gross profit                |                           |         | 397,079 |         |   |         | 357,566 |         |   |         | 281,439 |        
|                                                |                             |                           |         |         |         |   |         |         |        
|Operating expenses:                             |                             |                           |         |         |         |   |         |         |         |   |         |        
|                                                | Engineering and development |                           |         | 95,864  |         |   |         | 87,755  |         |   |         | 81,253  |        
|                                                | Sales and marketing         |                           |         | 59,477  |         |   |         | 52,952  |         |   |         | 44,312  |        
|                                                | General and administrative  |                           |         | 17,252  |         |   |         | 18,102  |         |   |         | 14,011  |        
|                                                |                             |                           |         |         |         |   |         |         |        
|                                                |                             | Total operating expenses  |         |         | 172,593 |   |         |         | 158,809 |   |         |         | 139,576 | 
|                                                |                             |                           |         |         |         |   |         |         |        
|Operating income                                |                             |                           | 224,486 |         |         |   | 198,757 |         |         |   | 141,863 |        
|Interest and other income, net                  |                             |                           | 17,873  |         |         |   | 16,844  |         |         |   | 17,356  |        
|                                                |                             |                           |         |         |         |   |         |         |        
|Income before income taxes                      |                             |                           | 242,359 |         |         |   | 215,601 |         |         |   | 159,219 |        
|Income taxes                                    |                             |                           | 84,763  |         |         |   | 81,928  |         |         |   | 55,746  |        
|                                                |                             |                           |         |         |         |   |         |         |        
|Net income                                      |                             | $                         | 157,596 |         |         | $ | 133,673 |         |         | $ | 103,473 |        
|                                                |                             |                           |         |         |         |   |         |         |        
|Net income per share:                           |                             |                           |         |         |         |   |         |         |         |   |         |        
|                                                | Basic                       |                           | $       | 1.70    |         |   | $       | 1.42    |         |   | $       | 1.11    |        
|                                                |                             |                           |         |         |         |   |         |         |        
|                                                | Diluted                     |                           | $       | 1.68    |         |   | $       | 1.39    |         |   | $       | 1.09    |        
|                                                |                             |                           |         |         |         |   |         |         |        
|Number of shares used in per share calculation: |                             |                           |         |         |         |   |         |         |         |   |         |        
|                                                | Basic                       |                           |         | 92,512  |         |   |         | 94,281  |         |   |         | 93,469  |        
|                                                |                             |                           |         |         |         |   |         |         |        
|                                                | Diluted                     |                           |         | 93,657  |         |   |         | 96,246  |         |   |         | 95,354  |        
|                                                |                             |                           |         |         |         |   |         |         |        



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QLOGIC CORPORATION







CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY AND
COMPREHENSIVE INCOME


Years Ended April 3, 2005, March 28, 2004 and
March 30, 2003


|                          |                                                                                   |                      |        |        |            |   |         |             |       |               |          |        |        |        |          |          |       |       |             |              |   |               |          |         |   |   |        |       |  |   |         |         |         | 
|------------------------- | --------------------------------------------------------------------------------- | -------------------- | ------ | ------ | ---------- | - | ------- | ----------- | ----- | ------------- | -------- | ------ | ------ | ------ | -------- | -------- | ----- | ----- | ----------- | ------------ | - | ------------- | -------- | ------- | - | - | ------ | ----- |  | - | ------- | ------- | ------- | 
|                          |                                                                                   |                      |        |        |            |   |         | Accumulated |       |               |          |        |        |        |         
|                          |                                                                                   | Common Stock         |        |        |            |   |         |             | Other |               |          |        |        |        |          |         
|                          |                                                                                   |                      |        |        | Additional |   |         |             |       | Comprehensive |          |        |        |        | Deferred |          |       | Total |            
|                          |                                                                                   | Outstanding          |        |        |            |   | Paid-In |             |       | Retained      |          |        | Income |        |          | Treasury |       |       | Stock-Based |              |   | Stockholders |         
|                          |                                                                                   | Shares               |        |        | Amount     |   |         | Capital     |       |               | Earnings |        |        | (Loss) |          |          | Stock |       |             | Compensation |   |               | Equity   |        
|                          |                                                                                   |                      |        |        |            |   |         |             |       |               |          |        |        |        |          |          |       |       |             |              |   |               |          |        
|                          |                                                                                   | (In thousands)       |       
|Balance at March 31, 2002 |                                                                                   |                      | 93,029 |        |            |   | 93      |             |       |               | 417,343  |        |        |        | 204,980  |          |       |       | 245         |              |   |               |         |         |   |   | (3,678 | )     |  |   | 618,983 |        
|                          | Net income                                                                        |                      |        |       |            |   |         |            |       |               |          |       |        |        |          | 103,473  |       |       |             |             |   |               |          |        |   |   |        |      |  |   |         | 103,473 |        
|                          | Change in unrealized gains on investments, net of tax                             |                      |        |       |            |   |         |            |       |               |          |       |        |        |          |         |       |       |             | 4,101        |   |               |          |        |   |   |        |      |  |   |         | 4,101   |        
|                          |                                                                                   |                      |        |        |            |   |         |             |       |               |          |        |        |        |          |          |       |       |             |              |   |               |          |        
|                          |                                                                                   | Comprehensive income |        |        |            |   |         |             |       |               |          |        |        |        |          |          |       |       |             |              |   |               |          |         |   |   |        |       |  |   |         |         | 107,574 | 
|                          | Issuance of common stock under stock plans (including tax
    benefit of $6,037)  |                      |        | 807    |            |   |         | 1           |       |               |          | 17,659 |        |        |          |         |       |       |             |             |   |               |          |        |   |   |        |      |  |   |         | 17,660  |        
|                          | Common stock issued related to business acquisition                               |                      |        | 109    |            |   |         |            |       |               |          | 4,364  |        |        |          |         |       |       |             |             |   |               |          |        |   |   |        |      |  |   |         | 4,364   |        
|                          | Purchase of treasury stock                                                        |                      |        | (91    | )          |   |         |            |       |               |          |       |        |        |          |         |       |       |             |             |   |               |          | (2,978  | ) |   |        |      |  |   |         | (2,978  | )      
|                          | Warrants issued in connection with product sales                                  |                      |        |       |            |   |         |            |       |               |          | 3,228  |        |        |          |         |       |       |             |             |   |               |          |        |   |   |        |      |  |   |         | 3,228   |        
|                          | Amortization of deferred stock-based compensation                                 |                      |        |       |            |   |         |            |       |               |          |       |        |        |          |         |       |       |             |             |   |               |          |        |   |   |        | 1,904 |  |   |         | 1,904   |        
|                          |                                                                                   |                      |        |        |            |   |         |             |       |               |          |        |        |        |          |          |       |       |             |              |   |               |          |        
|Balance at March 30, 2003 |                                                                                   |                      | 93,854 |        |            |   | 94      |             |       |               | 442,594  |        |        |        | 308,453  |          |       |       | 4,346       |              |   |               | (2,978   | )       |   |   | (1,774 | )     |  |   | 750,735 |        
|                          | Net income                                                                        |                      |        |       |            |   |         |            |       |               |          |       |        |        |          | 133,673  |       |       |             |             |   |               |          |        |   |   |        |      |  |   |         | 133,673 |        
|                          | Change in unrealized gains on investments, net of tax                             |                      |        |       |            |   |         |            |       |               |          |       |        |        |          |         |       |       |             | (318         | ) |               |          |        |   |   |        |      |  |   |         | (318    | )      
|                          |                                                                                   |                      |        |        |            |   |         |             |       |               |          |        |        |        |          |          |       |       |             |              |   |               |          |        
|                          |                                                                                   | Comprehensive income |        |        |            |   |         |             |       |               |          |        |        |        |          |          |       |       |             |              |   |               |          |         |   |   |        |       |  |   |         |         | 133,355 | 
|                          | Issuance of common stock under stock plans (including tax
    benefit of $10,640) |                      |        | 1,084  |            |   |         | 1           |       |               |          | 32,899 |        |        |          |         |       |       |             |             |   |               |          |        |   |   |        |      |  |   |         | 32,900  |        
|                          | Common stock issued related to business acquisition                               |                      |        | 131    |            |   |         |            |       |               |          | 6,546  |        |        |          |         |       |       |             |             |   |               |          |        |   |   |        |      |  |   |         | 6,546   |        
|                          | Common stock issued upon exercise of warrants                                     |                      |        | 280    |            |   |         |            |       |               |          |       |        |        |          |         |       |       |             |             |   |               |          |        |   |   |        |      |  |   |         |        |        
|                          | Purchase of treasury stock                                                        |                      |        | (1,239 | )          |   |         |            |       |               |          |       |        |        |          |         |       |       |             |             |   |               |          | (57,014 | ) |   |        |      |  |   |         | (57,014 | )      
|                          | Amortization of deferred stock-based compensation                                 |                      |        |       |            |   |         |            |       |               |          |       |        |        |          |         |       |       |             |             |   |               |          |        |   |   |        | 1,196 |  |   |         | 1,196   |        
|                          |                                                                                   |                      |        |        |            |   |         |             |       |               |          |        |        |        |          |          |       |       |             |              |   |               |          |        
|Balance at March 28, 2004 |                                                                                   |                      | 94,110 |        |            |   | 95      |             |       |               | 482,039  |        |        |        | 442,126  |          |       |       | 4,028       |              |   |               | (59,992  | )       |   |   | (578   | )     |  |   | 867,718 |        
|                          | Net income                                                                        |                      |        |       |            |   |         |            |       |               |          |       |        |        |          | 157,596  |       |       |             |             |   |               |          |        |   |   |        |      |  |   |         | 157,596 |        
|                          | Change in unrealized gains on investments, net of tax                             |                      |        |       |            |   |         |            |       |               |          |       |        |        |          |         |       |       |             | (7,422       | ) |               |          |        |   |   |        |      |  |   |         | (7,422  | )      
|                          |                                                                                   |                      |        |        |            |   |         |             |       |               |          |        |        |        |          |          |       |       |             |              |   |               |          |        
|                          |                                                                                   | Comprehensive income |        |        |            |   |         |             |       |               |          |        |        |        |          |          |       |       |             |              |   |               |          |         |   |   |        |       |  |   |         |         | 150,174 | 
|                          | Issuance of common stock under stock plans (including tax
    benefit of $2,441)  |                      |        | 782    |            |   |         | 1           |       |               |          | 16,175 |        |        |          |         |       |       |             |             |   |               |          |        |   |   |        |      |  |   |         | 16,176  |        
|                          | Common stock issued related to business acquisition                               |                      |        | 179    |            |   |         |            |       |               |          | 6,546  |        |        |          |         |       |       |             |             |   |               |          |        |   |   |        |      |  |   |         | 6,546   |        
|                          | Purchase of treasury stock                                                        |                      |        | (2,862 | )          |   |         |            |       |               |          |       |        |        |          |         |       |       |             |             |   |               |          | (85,009 | ) |   |        |      |  |   |         | (85,009 | )      
|                          | Amortization of deferred stock-based compensation                                 |                      |        |       |            |   |         |            |       |               |          |       |        |        |          |         |       |       |             |             |   |               |          |        |   |   |        | 578   |  |   |         | 578     |        
|                          |                                                                                   |                      |        |        |            |   |         |             |       |               |          |        |        |        |          |          |       |       |             |              |   |               |          |        
|Balance at April 3, 2005  |                                                                                   |                      | 92,209 |        |            | $ | 96      |             |       | $             | 504,760  |        |        | $      | 599,722  |          |       | $     | (3,394      | )            |   | $             | (145,001 | )       |   | $ |       |       |  | $ | 956,183 |        
|                          |                                                                                   |                      |        |        |            |   |         |             |       |               |          |        |        |        |          |          |       |       |             |              |   |               |          |        



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QLOGIC CORPORATION







CONSOLIDATED STATEMENTS OF CASH FLOWS


Years Ended April 3, 2005, March 28, 2004 and
March 30, 2003


|                                                                          |                                                                                       |                                                      |                                                     |          |        |         |         |            |        |          |         |          |        |          |  
|------------------------------------------------------------------------- | ------------------------------------------------------------------------------------- | ---------------------------------------------------- | --------------------------------------------------- | -------- | ------ | ------- | ------- | ---------- | ------ | -------- | ------- | -------- | ------ | -------- | -
|                                                                          |                                                                                       | 2005                                                 |                                                     |          | 2004   |         |         | 2003       |       
|                                                                          |                                                                                       |                                                      |                                                     |          |        |         |         |            |       
|                                                                          |                                                                                       | (In thousands)                                       |                                                    
|Cash flows from operating activities:                                     |                                                                                       |                                                      |                                                     |          |        |         |         |            |        |          |         |         
|                                                                          | Net income                                                                            |                                                      | $                                                   | 157,596  |        |         | $       | 133,673    |        |          | $       | 103,473  |       
|                                                                          | Adjustments to reconcile net income to net cash provided by
    operating activities: |                                                      |                                                     |          |        |         |         |            |        |          |         |          |       
|                                                                          |                                                                                       | Depreciation and amortization                        |                                                     |          | 15,586 |         |         |            | 14,829 |          |         |          | 14,706 |         
|                                                                          |                                                                                       | Deferred income taxes                                |                                                     |          | (1,641 | )       |         |            | 15,433 |          |         |          | 8,155  |         
|                                                                          |                                                                                       | Tax benefit from issuance of stock under stock plans |                                                     |          | 2,441  |         |         |            | 10,640 |          |         |          | 6,037  |         
|                                                                          |                                                                                       | Amortization of deferred stock-based compensation    |                                                     |          | 578    |         |         |            | 1,196  |          |         |          | 1,904  |         
|                                                                          |                                                                                       | Provision for losses on accounts receivable          |                                                     |          | 90     |         |         |            | (450   | )        |         |          | (550   | )       
|                                                                          |                                                                                       | Loss on disposal of property and equipment           |                                                     |          | 187    |         |         |            | 43     |          |         |          | 1,478  |         
|                                                                          |                                                                                       | Stock-based sales discounts                          |                                                     |          |       |         |         |            |       |          |         |          | 3,228  |         
|                                                                          |                                                                                       | Write-down of non-marketable investments             |                                                     |          |       |         |         |            |       |          |         |          | 4,000  |         
|                                                                          |                                                                                       | Changes in assets and liabilities:                   |                                                     |          |        |         |         |            |        |          |         |          |        |         
|                                                                          |                                                                                       |                                                      | Accounts receivable                                 |          |        | 3,739   |         |            |        | (17,211  | )       |          |        | (10,784  | )
|                                                                          |                                                                                       |                                                      | Inventories                                         |          |        | (8,691  | )       |            |        | (1,570   | )       |          |        | 5,393    |  
|                                                                          |                                                                                       |                                                      | Other assets                                        |          |        | (4,902  | )       |            |        | (37      | )       |          |        | (1,229   | )
|                                                                          |                                                                                       |                                                      | Accounts payable                                    |          |        | 1,616   |         |            |        | 3,269    |         |          |        | 276      |  
|                                                                          |                                                                                       |                                                      | Accrued compensation                                |          |        | 3,410   |         |            |        | (3,148   | )       |          |        | 6,855    |  
|                                                                          |                                                                                       |                                                      | Income taxes payable                                |          |        | 9,697   |         |            |        | (8,523   | )       |          |        | 8,388    |  
|                                                                          |                                                                                       |                                                      | Other liabilities                                   |          |        | 2,236   |         |            |        | 9,048    |         |          |        | 3,974    |  
|                                                                          |                                                                                       |                                                      |                                                     |          |        |         |         |            |       
|                                                                          |                                                                                       |                                                      | Net cash provided by operating activities           |          |        | 181,942 |         |            |        | 157,192  |         |          |        | 155,304  |  
|                                                                          |                                                                                       |                                                      |                                                     |          |        |         |         |            |       
|Cash flows from investing activities:                                     |                                                                                       |                                                      |                                                     |          |        |         |         |            |        |          |         |         
|                                                                          | Purchases of marketable securities                                                    |                                                      |                                                     | (672,418 | )      |         |         | (1,054,362 | )      |          |         | (874,844 | )     
|                                                                          | Sales and maturities of marketable securities                                         |                                                      |                                                     | 694,140  |        |         |         | 899,122    |        |          |         | 783,688  |       
|                                                                          | Additions to property and equipment                                                   |                                                      |                                                     | (25,657  | )      |         |         | (22,283    | )      |          |         | (15,704  | )     
|                                                                          | Purchase of other assets                                                              |                                                      |                                                     | (4,000   | )      |         |         |           |        |          |         |         |       
|                                                                          | Acquisition of business, net of cash acquired                                         |                                                      |                                                     |         |        |         |         |           |        |          |         | (1,695   | )     
|                                                                          |                                                                                       |                                                      |                                                     |          |        |         |         |            |       
|                                                                          |                                                                                       |                                                      | Net cash used in investing activities               |          |        | (7,935  | )       |            |        | (177,523 | )       |          |        | (108,555 | )
|                                                                          |                                                                                       |                                                      |                                                     |          |        |         |         |            |       
|Cash flows from financing activities:                                     |                                                                                       |                                                      |                                                     |          |        |         |         |            |        |          |         |         
|                                                                          | Proceeds from issuance of stock under stock plans                                     |                                                      |                                                     | 13,735   |        |         |         | 22,260     |        |          |         | 11,623   |       
|                                                                          | Purchase of treasury stock                                                            |                                                      |                                                     | (85,009  | )      |         |         | (57,014    | )      |          |         | (2,978   | )     
|                                                                          |                                                                                       |                                                      |                                                     |          |        |         |         |            |       
|                                                                          |                                                                                       |                                                      | Net cash provided by (used in) financing activities |          |        | (71,274 | )       |            |        | (34,754  | )       |          |        | 8,645    |  
|                                                                          |                                                                                       |                                                      |                                                     |          |        |         |         |            |       
|Net increase (decrease) in cash and cash equivalents                      |                                                                                       |                                                      | 102,733                                             |          |        |         | (55,085 | )          |        |          | 55,394  |         
|Cash and cash equivalents at beginning of year                            |                                                                                       |                                                      | 62,911                                              |          |        |         | 117,996 |            |        |          | 62,602  |         
|                                                                          |                                                                                       |                                                      |                                                     |          |        |         |         |            |       
|Cash and cash equivalents at end of year                                  |                                                                                       | $                                                    | 165,644                                             |          |        | $       | 62,911  |            |        | $        | 117,996 |         
|                                                                          |                                                                                       |                                                      |                                                     |          |        |         |         |            |       
|Supplemental disclosure of cash flow information:                         |                                                                                       |                                                      |                                                     |          |        |         |         |            |        |          |         |         
|Cash paid during the year for:                                            |                                                                                       |                                                      |                                                     |          |        |         |         |            |        |          |         |         
|                                                                          | Income taxes                                                                          |                                                      | $                                                   | 75,723   |        |         | $       | 64,783     |        |          | $       | 35,370   |       
|                                                                          |                                                                                       |                                                      |                                                     |          |        |         |         |            |       
|Supplemental schedule of non-cash investing and financing
    activities: |                                                                                       |                                                      |                                                     |          |        |         |         |            |        |          |         |         
|                                                                          | Common stock issued in connection with business acquisition                           |                                                      | $                                                   | 6,546    |        |         | $       | 6,546      |        |          | $       | 4,364    |       
|                                                                          |                                                                                       |                                                      |                                                     |          |        |         |         |            |       



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QLOGIC CORPORATION







NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




|        |                                                                           
|------- | --------------------------------------------------------------------------
|Note 1. | Description of Business and Summary of Significant Accounting
    Policies



| |                             
| | ----------------------------
| | General Business Information





| |                                                               
| | --------------------------------------------------------------
| | Principles of Consolidation and Financial Reporting
    Period







| |                      
| | ---------------------
| | Basis of Presentation







| |                 
| | ----------------
| | Use of Estimates





| |                    
| | -------------------
| | Revenue Recognition



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QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                         
| | ------------------------
| | Research and Development





| |             
| | ------------
| | Income Taxes





| |                     
| | --------------------
| | Net Income per Share





| |                             
| | ----------------------------
| | Concentration of Credit Risk



39



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QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                          
| | -------------------------
| | Cash and Cash Equivalents





| |                                      
| | -------------------------------------
| | Marketable Securities and Investments











| |                                
| | -------------------------------
| | Allowance for Doubtful Accounts



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QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |            
| | -----------
| | Inventories





| |                       
| | ----------------------
| | Property and Equipment





| |                                             
| | --------------------------------------------
| | Impairment of Goodwill and Long-Lived Assets









| |         
| | --------
| | Warranty





| |                     
| | --------------------
| | Comprehensive Income



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QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                         
| | ------------------------
| | Stock-Based Compensation





|                                                                                                                                                  |                      |                                 |         |      |      |   |         |      |  |   |         |      | 
|------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------- | ------------------------------- | ------- | ---- | ---- | - | ------- | ---- |  | - | ------- | ---- | 
|                                                                                                                                                  |                      | 2005                            |         |      | 2004 |   |         | 2003 | 
|                                                                                                                                                  |                      |                                 |         |      |      |   |         |      | 
|                                                                                                                                                  |                      | (In thousands, except per share |        
|                                                                                                                                                  |                      | amounts)                        |        
|Net income, as reported                                                                                                                           |                      | $                               | 157,596 |      |      | $ | 133,673 |      |  | $ | 103,473 |     
|Add: Stock-based employee compensation expense included in
    reported net income, net of related tax effects                                    |                      |                                 | 376     |      |      |   | 742     |      |  |   | 1,237   |     
|Deduct: Stock-based employee compensation expense determined
    under the fair value based method for all awards, net of related
    tax effects |                      |                                 | (32,664 | )    |      |   | (35,463 | )    |  |   | (37,613 | )   
|                                                                                                                                                  |                      |                                 |         |      |      |   |         |      | 
|Pro forma net income                                                                                                                              |                      | $                               | 125,308 |      |      | $ | 98,952  |      |  | $ | 67,097  |     
|                                                                                                                                                  |                      |                                 |         |      |      |   |         |      | 
|Net income per share:                                                                                                                             |                      |                                 |         |      |      |   |         |      |  |   |         |     
|                                                                                                                                                  | Basic, as reported   |                                 | $       | 1.70 |      |   | $       | 1.42 |  |   | $       | 1.11 | 
|                                                                                                                                                  | Diluted, as reported |                                 | $       | 1.68 |      |   | $       | 1.39 |  |   | $       | 1.09 | 
|                                                                                                                                                  | Basic, pro forma     |                                 | $       | 1.35 |      |   | $       | 1.05 |  |   | $       | 0.72 | 
|                                                                                                                                                  | Diluted, pro forma   |                                 | $       | 1.34 |      |   | $       | 1.03 |  |   | $       | 0.70 | 



|                        |  |               |       |   |                              |   |       |      |  |   |       |   |  |      |      |   |      |   |       |   |  |   |       |  
|----------------------- |  | ------------- | ----- | - | ---------------------------- | - | ----- | ---- |  | - | ----- | - |  | ---- | ---- | - | ---- | - | ----- | - |  | - | ----- | -
|                        |  | Stock Options |       |   | Employee Stock Purchase Plan |  
|                        |  |               |       |   |                              |  
|                        |  | 2005          |       |   | 2004                         |   |       | 2003 |  |   | 2005  |   |  | 2004 |      |   | 2003 |  
|                        |  |               |       |   |                              |   |       |      |  |   |       |   |  |      |      |   |      |  
|Fair value              |  | $             | 10.52 |   |                              | $ | 20.22 |      |  | $ | 21.13 |   |  | $    | 6.66 |   |      | $ | 10.45 |   |  | $ | 11.71 |  
|Expected volatility     |  |               | 45    | % |                              |   | 50    | %    |  |   | 74    | % |  |      | 43   | % |      |   | 50    | % |  |   | 74    | %
|Risk-free interest rate |  |               | 3.3   | % |                              |   | 2.4   | %    |  |   | 2.5   | % |  |      | 1.5  | % |      |   | 1.0   | % |  |   | 1.6   | %
|Expected life (years)   |  |               | 4.0   |   |                              |   | 4.0   |      |  |   | 4.0   |   |  |      | 0.25 |   |      |   | 0.25  |   |  |   | 0.25  |  
|Dividend yield          |  |               |      |   |                              |   |      |      |  |   |      |   |  |      |     |   |      |   |      |   |  |   |      |  



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QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                           
| | --------------------------
| | Performance-Based Warrants



New Accounting Pronouncements










|        |            
|------- | -----------
|Note 2. | Acquisition



43



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QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|        |                     
|------- | --------------------
|Note 3. | Net Income per Share





|                      |                                                               |                                 |         |        |      |   |         |        |      |   |         |        |      | 
|--------------------- | ------------------------------------------------------------- | ------------------------------- | ------- | ------ | ---- | - | ------- | ------ | ---- | - | ------- | ------ | ---- | 
|                      |                                                               | 2005                            |         |        | 2004 |   |         | 2003   |     
|                      |                                                               |                                 |         |        |      |   |         |        |     
|                      |                                                               | (In thousands, except per share |        
|                      |                                                               | amounts)                        |        
|Net income            |                                                               | $                               | 157,596 |        |      | $ | 133,673 |        |      | $ | 103,473 |       
|                      |                                                               |                                 |         |        |      |   |         |        |     
|Shares:               |                                                               |                                 |         |        |      |   |         |        |      |   |         |       
|                      | Weighted-average shares outstanding  basic                   |                                 |         | 92,512 |      |   |         | 94,281 |      |   |         | 93,469 |     
|                      | Dilutive potential common shares, using treasury stock method |                                 |         | 1,145  |      |   |         | 1,965  |      |   |         | 1,885  |     
|                      |                                                               |                                 |         |        |      |   |         |        |     
|                      | Weighted-average shares outstanding  diluted                 |                                 |         | 93,657 |      |   |         | 96,246 |      |   |         | 95,354 |     
|                      |                                                               |                                 |         |        |      |   |         |        |     
|Net income per share: |                                                               |                                 |         |        |      |   |         |        |      |   |         |       
|                      |                                                               | Basic                           |         | $      | 1.70 |   |         | $      | 1.42 |   |         | $      | 1.11 | 
|                      |                                                               |                                 |         |        |      |   |         |        |     
|                      |                                                               | Diluted                         |         | $      | 1.68 |   |         | $      | 1.39 |   |         | $      | 1.09 | 
|                      |                                                               |                                 |         |        |      |   |         |        |     



44



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QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|        |                      
|------- | ---------------------
|Note 4. | Marketable Securities



|                                            |                                     |                |         |         |            |   |       |            |  |   |            |        |   |   |         |         | 
|------------------------------------------- | ----------------------------------- | -------------- | ------- | ------- | ---------- | - | ----- | ---------- |  | - | ---------- | ------ | - | - | ------- | ------- | 
|                                            |                                     |                |         | Gross   |            |   | Gross |            |  |  
|                                            |                                     | Amortized      |         |         | Unrealized |   |       | Unrealized |  |   | Estimated  |       
|                                            |                                     | Cost           |         |         | Gains      |   |       | Losses     |  |   | Fair Value |       
|                                            |                                     |                |         |         |            |   |       |            |  |   |            |       
|                                            |                                     | (In thousands) |        
|April 3, 2005                               |                                     |                |         |         |            |   |       |            |  |   |            |        |   |   |         |        
|U.S. Government securities                  |                                     | $              | 346,764 |         |            | $ | 62    |            |  | $ | (3,043     | )      |   | $ | 343,783 |        
|Corporate bonds                             |                                     |                | 186,042 |         |            |   | 210   |            |  |   | (1,762     | )      |   |   | 184,490 |        
|Municipal bonds                             |                                     |                | 32,000  |         |            |   |      |            |  |   |           |        |   |   | 32,000  |        
|Other debt securities                       |                                     |                | 90,946  |         |            |   | 12    |            |  |   | (728       | )      |   |   | 90,230  |        
|                                            |                                     |                |         |         |            |   |       |            |  |   |            |       
|                                            | Total debt securities               |                |         | 655,752 |            |   |       | 284        |  |   |            | (5,533 | ) |   |         | 650,503 | 
|Other securities                            |                                     |                | 10,924  |         |            |   |      |            |  |   |           |        |   |   | 10,924  |        
|                                            |                                     |                |         |         |            |   |       |            |  |   |            |       
|                                            | Total available-for-sale securities |                |         | 666,676 |            |   |       | 284        |  |   |            | (5,533 | ) |   |         | 661,427 | 
|Less amounts classified as cash equivalents |                                     |                | 14,733  |         |            |   |      |            |  |   |           |        |   |   | 14,733  |        
|                                            |                                     |                |         |         |            |   |       |            |  |   |            |       
|                                            |                                     | $              | 651,943 |         |            | $ | 284   |            |  | $ | (5,533     | )      |   | $ | 646,694 |        
|                                            |                                     |                |         |         |            |   |       |            |  |   |            |       
|March 28, 2004                              |                                     |                |         |         |            |   |       |            |  |   |            |        |   |   |         |        
|U.S. Government securities                  |                                     | $              | 393,724 |         |            | $ | 3,519 |            |  | $ | (111       | )      |   | $ | 397,132 |        
|Corporate bonds                             |                                     |                | 137,166 |         |            |   | 2,828 |            |  |   | (35        | )      |   |   | 139,959 |        
|Municipal bonds                             |                                     |                | 59,136  |         |            |   | 28    |            |  |   |           |        |   |   | 59,164  |        
|Other debt securities                       |                                     |                | 34,431  |         |            |   | 248   |            |  |   | (16        | )      |   |   | 34,663  |        
|                                            |                                     |                |         |         |            |   |       |            |  |   |            |       
|                                            | Total debt securities               |                |         | 624,457 |            |   |       | 6,623      |  |   |            | (162   | ) |   |         | 630,918 | 
|Other securities                            |                                     |                | 60,950  |         |            |   |      |            |  |   | (3         | )      |   |   | 60,947  |        
|                                            |                                     |                |         |         |            |   |       |            |  |   |            |       
|                                            | Total available-for-sale securities |                |         | 685,407 |            |   |       | 6,623      |  |   |            | (165   | ) |   |         | 691,865 | 
|Less amounts classified as cash equivalents |                                     |                | 11,742  |         |            |   |      |            |  |   |           |        |   |   | 11,742  |        
|                                            |                                     |                |         |         |            |   |       |            |  |   |            |       
|                                            |                                     | $              | 673,665 |         |            | $ | 6,623 |            |  | $ | (165       | )      |   | $ | 680,123 |        
|                                            |                                     |                |         |         |            |   |       |            |  |   |            |       



|                                       |  |                |         |  |            |   |         | 
|-------------------------------------- |  | -------------- | ------- |  | ---------- | - | ------- | 
|                                       |  | Amortized      |         |  | Estimated  |  
|                                       |  | Cost           |         |  | Fair Value |  
|                                       |  |                |         |  |            |  
|                                       |  | (In thousands) |        
|Due in one year or less                |  | $              | 171,829 |  |            | $ | 171,747 | 
|Due after one year through three years |  |                | 277,504 |  |            |   | 274,249 | 
|Due after three years                  |  |                | 206,419 |  |            |   | 204,507 | 
|                                       |  |                |         |  |            |  
|                                       |  | $              | 655,752 |  |            | $ | 650,503 | 
|                                       |  |                |         |  |            |  

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QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                           |       |                     |         |         |                      |   |        |        |   |   |            |       |  |       |     |     |            |   |         |         |  |   |        |        |  
|-------------------------- | ----- | ------------------- | ------- | ------- | -------------------- | - | ------ | ------ | - | - | ---------- | ----- |  | ----- | --- | --- | ---------- | - | ------- | ------- |  | - | ------ | ------ | -
|                           |       | Less Than 12 Months |         |         | 12 Months or Greater |   |        | Total  |  
|                           |       |                     |         |         |                      |   |        |        |  
|                           |       | Fair                |         |         | Unrealized           |   |        | Fair   |   |   | Unrealized |       |  | Fair  |     |     | Unrealized |  
|Description of Securities  |       | Value               |         |         | Losses               |   |        | Value  |   |   | Losses     |       |  | Value |     |     | Losses     |  
|                           |       |                     |         |         |                      |   |        |        |   |   |            |       |  |       |     |     |            |  
|                           |       | (In thousands)      |        
|U.S. Government securities |       | $                   | 243,360 |         |                      | $ | (2,997 | )      |   | $ | 3,478      |       |  | $     | (46 | )   |            | $ | 246,838 |         |  | $ | (3,043 | )     
|Corporate bonds            |       |                     | 151,598 |         |                      |   | (1,743 | )      |   |   | 2,833      |       |  |       | (19 | )   |            |   | 154,431 |         |  |   | (1,762 | )     
|Other debt securities      |       |                     | 50,086  |         |                      |   | (707   | )      |   |   | 1,314      |       |  |       | (21 | )   |            |   | 51,400  |         |  |   | (728   | )     
|                           |       |                     |         |         |                      |   |        |        |   |   |            |       |  |       |     |     |            |  
|                           | Total |                     | $       | 445,044 |                      |   | $      | (5,447 | ) |   | $          | 7,625 |  |       | $   | (86 | )          |   | $       | 452,669 |  |   | $      | (5,533 | )
|                           |       |                     |         |         |                      |   |        |        |   |   |            |       |  |       |     |     |            |  





|        |            
|------- | -----------
|Note 5. | Inventories



|               |  |                |        |  |      |   |        | 
|-------------- |  | -------------- | ------ |  | ---- | - | ------ | 
|               |  | 2005           |        |  | 2004 |  
|               |  |                |        |  |      |  
|               |  | (In thousands) |       
|Raw materials  |  | $              | 11,858 |  |      | $ | 4,024  | 
|Finished goods |  |                | 17,768 |  |      |   | 16,911 | 
|               |  |                |        |  |      |  
|               |  | $              | 29,626 |  |      | $ | 20,935 | 
|               |  |                |        |  |      |  



|        |                       
|------- | ----------------------
|Note 6. | Property and Equipment



|                                               |  |                |         |  |      |   |         | 
|---------------------------------------------- |  | -------------- | ------- |  | ---- | - | ------- | 
|                                               |  | 2005           |         |  | 2004 |  
|                                               |  |                |         |  |      |  
|                                               |  | (In thousands) |        
|Land                                           |  | $              | 11,663  |  |      | $ | 11,663  | 
|Building and improvements                      |  |                | 25,991  |  |      |   | 23,082  | 
|Product and test equipment                     |  |                | 78,403  |  |      |   | 68,805  | 
|Furniture and fixtures                         |  |                | 6,447   |  |      |   | 4,916   | 
|Semiconductor tooling                          |  |                | 13,912  |  |      |   | 11,534  | 
|                                               |  |                |         |  |      |  
|                                               |  |                | 136,416 |  |      |   | 120,000 | 
|Less accumulated depreciation and amortization |  |                | 58,952  |  |      |   | 52,776  | 
|                                               |  |                |         |  |      |  
|                                               |  | $              | 77,464  |  |      | $ | 67,224  | 
|                                               |  |                |         |  |      |  

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QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|        |                     
|------- | --------------------
|Note 7. | Stockholders Equity



| |              
| | -------------
| | Capital Stock





| |               
| | --------------
| | Treasury Stock







| |                        
| | -----------------------
| | Stockholder Rights Plan









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QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|        |            
|------- | -----------
|Note 8. | Stock Plans



| |                             
| | ----------------------------
| | Employee Stock Purchase Plan





| |                             
| | ----------------------------
| | Incentive Compensation Plans









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QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










| |         
| | --------
| | Warrants





| |              
| | -------------
| | Stock Options



|                                 |  |           |        |           |          |   |       |           |           |  |          |   |  |           |       |  |          |  |        |   |  |   |       | 
|-------------------------------- |  | --------- | ------ | --------- | -------- | - | ----- | --------- | --------- |  | -------- | - |  | --------- | ----- |  | -------- |  | ------ | - |  | - | ----- | 
|                                 |  | 2005      |        |           | 2004     |   |       | 2003      |          
|                                 |  |           |        |           |          |   |       |           |          
|                                 |  |           |        | Weighted- |          |   |       |           | Weighted- |  |          |   |  | Weighted- |      
|                                 |  |           |        | Average   |          |   |       |           | Average   |  |          |   |  | Average   |      
|                                 |  | Number of |        |           | Exercise |   |       | Number of |           |  | Exercise |   |  | Number of |       |  | Exercise | 
|                                 |  | Shares    |        |           | Price    |   |       | Shares    |           |  | Price    |   |  | Shares    |       |  | Price    | 
|                                 |  |           |        |           |          |   |       |           |           |  |          |   |  |           |       |  |          | 
|Outstanding at beginning of year |  |           | 12,253 |           |          | $ | 45.77 |           |           |  | 10,844   |   |  | $         | 43.34 |  |          |  | 9,352  |   |  | $ | 42.41 | 
|Granted                          |  |           | 3,960  |           |          |   | 26.67 |           |           |  | 2,830    |   |  |           | 47.78 |  |          |  | 2,924  |   |  |   | 42.00 | 
|Exercised                        |  |           | (549   | )         |          |   | 15.46 |           |           |  | (948     | ) |  |           | 18.57 |  |          |  | (686   | ) |  |   | 11.20 | 
|Cancelled                        |  |           | (1,407 | )         |          |   | 45.59 |           |           |  | (473     | ) |  |           | 56.59 |  |          |  | (746   | ) |  |   | 55.94 | 
|                                 |  |           |        |           |          |   |       |           |           |  |          |   |  |           |       |  |          | 
|Outstanding at end of year       |  |           | 14,257 |           |          |   | 41.65 |           |           |  | 12,253   |   |  |           | 45.77 |  |          |  | 10,844 |   |  |   | 43.34 | 
|                                 |  |           |        |           |          |   |       |           |           |  |          |   |  |           |       |  |          | 
|Exercisable at end of year       |  |           | 7,902  |           |          |   | 47.63 |           |           |  | 6,795    |   |  |           | 45.38 |  |          |  | 5,565  |   |  |   | 40.22 | 
|                                 |  |           |        |           |          |   |       |           |           |  |          |   |  |           |       |  |          | 

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QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                         |  |             |        |           |                |   |           |              |  |  |           |           |  |                |       |  |  |   |       | 
|------------------------ |  | ----------- | ------ | --------- | -------------- | - | --------- | ------------ |  |  | --------- | --------- |  | -------------- | ----- |  |  | - | ----- | 
|                         |  | Outstanding |        |           | Exercisable    |  
|                         |  |             |        |           |                |  
|                         |  |             |        | Weighted- |                |   | Remaining |              |  |  |           | Weighted- | 
|                         |  | Number of   |        |           | Average        |   |           | Contractual  |  |  | Number of |           |  | Average        |      
|Range of Exercise Prices |  | Shares      |        |           | Exercise Price |   |           | Life (Years) |  |  | Shares    |           |  | Exercise Price |      
|                         |  |             |        |           |                |   |           |              |  |  |           |           |  |                |      
|$ 0.00 to $ 30.00        |  |             | 4,210  |           |                | $ | 22.72     |              |  |  | 8.2       |           |  |                | 696   |  |  | $ | 6.90  | 
|30.01 to   40.00         |  |             | 2,235  |           |                |   | 34.47     |              |  |  | 6.0       |           |  |                | 1,664 |  |  |   | 33.85 | 
|40.01 to   50.00         |  |             | 3,632  |           |                |   | 44.75     |              |  |  | 7.5       |           |  |                | 2,096 |  |  |   | 44.94 | 
|50.01 to   60.00         |  |             | 2,352  |           |                |   | 52.82     |              |  |  | 6.8       |           |  |                | 1,618 |  |  |   | 53.59 | 
|60.01 to  151.00         |  |             | 1,828  |           |                |   | 73.50     |              |  |  | 4.9       |           |  |                | 1,828 |  |  |   | 73.50 | 
|                         |  |             |        |           |                |   |           |              |  |  |           |           |  |                |      
|                         |  |             | 14,257 |           |                |   | 41.65     |              |  |  | 7.0       |           |  |                | 7,902 |  |  |   | 47.63 | 
|                         |  |             |        |           |                |   |           |              |  |  |           |           |  |                |      

Note 9. Employee Retirement Savings Plan




Note 10. Interest and Other Income, Net




|                                             |  |                |        |   |      |   |        |      |  |   |        |  
|-------------------------------------------- |  | -------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                             |  | 2005           |        |   | 2004 |   |        | 2003 | 
|                                             |  |                |        |   |      |   |        |      | 
|                                             |  | (In thousands) |       
|Interest income                              |  | $              | 18,530 |   |      | $ | 15,486 |      |  | $ | 17,059 |  
|Gain (loss) on sale of marketable securities |  |                | (655   | ) |      |   | 1,095  |      |  |   | 4,240  |  
|Write-down of non-marketable investments     |  |                |       |   |      |   |       |      |  |   | (4,000 | )
|Other                                        |  |                | (2     | ) |      |   | 263    |      |  |   | 57     |  
|                                             |  |                |        |   |      |   |        |      | 
|                                             |  | $              | 17,873 |   |      | $ | 16,844 |      |  | $ | 17,356 |  
|                                             |  |                |        |   |      |   |        |      | 

Note 11. Commitments and Contingencies




| |       
| | ------
| | Leases



|                                    |  |                |        | 
|----------------------------------- |  | -------------- | ------ | 
|Fiscal Year                         |  |               
|                                    |  |               
|                                    |  | (In thousands) |       
|2006                                |  | $              | 5,497  | 
|2007                                |  |                | 4,147  | 
|2008                                |  |                | 1,401  | 
|2009                                |  |                | 963    | 
|2010                                |  |                | 452    | 
|                                    |  |                |       
|Total future minimum lease payments |  | $              | 12,460 | 
|                                    |  |                |       



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QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |           
| | ----------
| | Litigation















| |                 
| | ----------------
| | Indemnifications



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QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|         |             
|-------- | ------------
|Note 12. | Income Taxes



|              |  |                |         |  |      |   |         |      |  |   |         |  
|------------- |  | -------------- | ------- |  | ---- | - | ------- | ---- |  | - | ------- | -
|              |  | 2005           |         |  | 2004 |   |         | 2003 | 
|              |  |                |         |  |      |   |         |      | 
|              |  | (In thousands) |        
|United States |  | $              | 242,019 |  |      | $ | 216,127 |      |  | $ | 159,276 |  
|Foreign       |  |                | 340     |  |      |   | (526    | )    |  |   | (57     | )
|              |  |                |         |  |      |   |         |      | 
|              |  | $              | 242,359 |  |      | $ | 215,601 |      |  | $ | 159,219 |  
|              |  |                |         |  |      |   |         |      | 



|                           |         |                |        |        |        |   |        |        |        |   |        |        |        | 
|-------------------------- | ------- | -------------- | ------ | ------ | ------ | - | ------ | ------ | ------ | - | ------ | ------ | ------ | 
|                           |         | 2005           |        |        | 2004   |   |        | 2003   |       
|                           |         |                |        |        |        |   |        |        |       
|                           |         | (In thousands) |       
|Current:                   |         |                |        |        |        |   |        |        |        |   |        |       
|                           | Federal |                | $      | 70,330 |        |   | $      | 57,770 |        |   | $      | 42,200 |       
|                           | State   |                |        | 16,060 |        |   |        | 8,896  |        |   |        | 7,609  |       
|                           | Foreign |                |        | 14     |        |   |        | (158   | )      |   |        |       |       
|                           |         |                |        |        |        |   |        |        |       
|                           |         | Total current  |        |        | 86,404 |   |        |        | 66,508 |   |        |        | 49,809 | 
|Deferred:                  |         |                |        |        |        |   |        |        |        |   |        |       
|                           | Federal |                |        | (1,570 | )      |   |        | 13,550 |        |   |        | 6,174  |       
|                           | State   |                |        | (77    | )      |   |        | 1,870  |        |   |        | (237   | )     
|                           | Foreign |                |        | 6      |        |   |        |       |        |   |        |       |       
|                           |         |                |        |        |        |   |        |        |       
|                           |         | Total deferred |        |        | (1,641 | ) |        |        | 15,420 |   |        |        | 5,937  | 
|                           |         |                |        |        |        |   |        |        |       
|Total income tax provision |         | $              | 84,763 |        |        | $ | 81,928 |        |        | $ | 55,746 |       
|                           |         |                |        |        |        |   |        |        |       





|                                                    |  |                |        |   |      |   |        |      |  |   |        |  
|--------------------------------------------------- |  | -------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                    |  | 2005           |        |   | 2004 |   |        | 2003 | 
|                                                    |  |                |        |   |      |   |        |      | 
|                                                    |  | (In thousands) |       
|Expected income tax provision at the statutory rate |  | $              | 84,826 |   |      | $ | 75,460 |      |  | $ | 55,727 |  
|State income taxes, net of federal tax benefit      |  |                | 10,389 |   |      |   | 6,998  |      |  |   | 4,792  |  
|Benefit from research and other credits             |  |                | (1,668 | ) |      |   | (1,759 | )    |  |   | (2,500 | )
|Benefit from export sales                           |  |                | (3,147 | ) |      |   | (3,185 | )    |  |   | (3,465 | )
|Nondeductible business combination related costs    |  |                | 2,119  |   |      |   | 3,841  |      |  |   | 2,246  |  
|Reversal of taxes previously accrued                |  |                | (8,253 | ) |      |   |       |      |  |   |       |  
|Tax exempt income                                   |  |                | (275   | ) |      |   | (161   | )    |  |   | (358   | )
|Other, net                                          |  |                | 772    |   |      |   | 734    |      |  |   | (696   | )
|                                                    |  |                |        |   |      |   |        |      | 
|                                                    |  | $              | 84,763 |   |      | $ | 81,928 |      |  | $ | 55,746 |  
|                                                    |  |                |        |   |      |   |        |      | 

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QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                          |                                                |                                      |   |        |        |  |   |        |        | 
|------------------------- | ---------------------------------------------- | ------------------------------------ | - | ------ | ------ |  | - | ------ | ------ | 
|                          |                                                | 2005                                 |   |        | 2004   | 
|                          |                                                |                                      |   |        |        | 
|                          |                                                | (In thousands)                       |  
|Deferred tax assets:      |                                                |                                      |   |        |        |  |   |       
|                          | Reserves and accruals not currently deductible |                                      | $ | 18,459 |        |  | $ | 14,701 |       
|                          | Net operating loss carryforwards               |                                      |   | 3,822  |        |  |   | 4,675  |       
|                          | State taxes                                    |                                      |   | 4,343  |        |  |   | 2,706  |       
|                          | Acquired in-process technology                 |                                      |   | 1,730  |        |  |   | 1,930  |       
|                          | Research credits                               |                                      |   | 857    |        |  |   | 701    |       
|                          | Property and equipment                         |                                      |   |       |        |  |   | 461    |       
|                          | Unrealized losses on investments               |                                      |   | 1,854  |        |  |   |       |       
|                          | Other                                          |                                      |   | 16     |        |  |   | 278    |       
|                          |                                                |                                      |   |        |        | 
|                          |                                                | Total gross deferred tax assets      |   |        | 31,081 |  |   |        | 25,452 | 
|                          |                                                |                                      |   |        |        | 
|Deferred tax liabilities: |                                                |                                      |   |        |        |  |   |       
|                          | Research and development expenditures          |                                      |   | 5,367  |        |  |   | 4,512  |       
|                          | Property and equipment                         |                                      |   | 1,279  |        |  |   |       |       
|                          | Unrealized gains on investments                |                                      |   |       |        |  |   | 2,389  |       
|                          |                                                |                                      |   |        |        | 
|                          |                                                | Total gross deferred tax liabilities |   |        | 6,646  |  |   |        | 6,901  | 
|                          |                                                |                                      |   |        |        | 
|                          | Net deferred tax assets                        |                                      | $ | 24,435 |        |  | $ | 18,551 |       
|                          |                                                |                                      |   |        |        | 











|         |                                                                    
|-------- | -------------------------------------------------------------------
|Note 13. | Product Revenues, Geographic Revenues and Significant
    Customers



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QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                 
| | ----------------
| | Product Revenues



|                       |  |                |         |  |      |   |         |      |  |   |         | 
|---------------------- |  | -------------- | ------- |  | ---- | - | ------- | ---- |  | - | ------- | 
|                       |  | 2005           |         |  | 2004 |   |         | 2003 | 
|                       |  |                |         |  |      |   |         |      | 
|                       |  | (In thousands) |        
|Fibre Channel products |  | $              | 448,387 |  |      | $ | 399,298 |      |  | $ | 305,630 | 
|SCSI products          |  |                | 116,344 |  |      |   | 118,735 |      |  |   | 132,449 | 
|Other                  |  |                | 7,172   |  |      |   | 5,827   |      |  |   | 2,730   | 
|                       |  |                |         |  |      |   |         |      | 
|                       |  | $              | 571,903 |  |      | $ | 523,860 |      |  | $ | 440,809 | 
|                       |  |                |         |  |      |   |         |      | 



| |                    
| | -------------------
| | Geographic Revenues



|               |  |                |         |  |      |   |         |      |  |   |         | 
|-------------- |  | -------------- | ------- |  | ---- | - | ------- | ---- |  | - | ------- | 
|               |  | 2005           |         |  | 2004 |   |         | 2003 | 
|               |  |                |         |  |      |   |         |      | 
|               |  | (In thousands) |        
|United States  |  | $              | 230,387 |  |      | $ | 231,294 |      |  | $ | 202,119 | 
|Japan          |  |                | 87,406  |  |      |   | 133,190 |      |  |   | 130,152 | 
|United Kingdom |  |                | 54,744  |  |      |   | 57,759  |      |  |   | 31,781  | 
|Rest of world  |  |                | 199,366 |  |      |   | 101,617 |      |  |   | 76,757  | 
|               |  |                |         |  |      |   |         |      | 
|               |  | $              | 571,903 |  |      | $ | 523,860 |      |  | $ | 440,809 | 
|               |  |                |         |  |      |   |         |      | 



| |                      
| | ---------------------
| | Significant Customers



|                 |  |      |    |   |      |  |    |      |  |  |    |  
|---------------- |  | ---- | -- | - | ---- |  | -- | ---- |  |  | -- | -
|                 |  | 2005 |    |   | 2004 |  |    | 2003 | 
|                 |  |      |    |   |      |  |    |      | 
|Fujitsu          |  |      | 16 | % |      |  | 14 | %    |  |  | 18 | %
|IBM              |  |      | 12 | % |      |  | *  |      |  |  | *  |  
|Sun Microsystems |  |      | 11 | % |      |  | 15 | %    |  |  | 17 | %
|Hewlett Packard  |  |      | 11 | % |      |  | *  |      |  |  | *  |  
|Hitachi          |  |      | *  |   |      |  | *  |      |  |  | 11 | %






|  |                               
|- | ------------------------------
|* | Less than 10% of net revenues.

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QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|         |                                        
|-------- | ---------------------------------------
|Note 14. | Condensed Quarterly Results (Unaudited)



|                               |  |                                          |         |  |           |   |         |          |  |   |         |  |  |   |         | 
|------------------------------ |  | ---------------------------------------- | ------- |  | --------- | - | ------- | -------- |  | - | ------- |  |  | - | ------- | 
|                               |  | Three Months Ended                       |        
|                               |  |                                          |        
|                               |  | June                                     |         |  | September |   |         | December |  |   | March   | 
|                               |  |                                          |         |  |           |   |         |          |  |   |         | 
|                               |  | (In thousands, except per share amounts) |        
|Fiscal 2005:                   |  |                                          |         |  |           |   |         |          |  |   |         |  |  |   |         | 
|Net revenues                   |  | $                                        | 129,811 |  |           | $ | 134,609 |          |  | $ | 150,252 |  |  | $ | 157,231 | 
|Gross profit                   |  |                                          | 89,856  |  |           |   | 93,436  |          |  |   | 104,804 |  |  |   | 108,983 | 
|Operating income               |  |                                          | 48,288  |  |           |   | 50,856  |          |  |   | 60,805  |  |  |   | 64,537  | 
|Net income                     |  |                                          | 32,203  |  |           |   | 35,882  |          |  |   | 43,356  |  |  |   | 46,155  | 
|Net income per share  basic   |  |                                          | 0.34    |  |           |   | 0.39    |          |  |   | 0.47    |  |  |   | 0.50    | 
|Net income per share  diluted |  |                                          | 0.34    |  |           |   | 0.38    |          |  |   | 0.46    |  |  |   | 0.49    | 
|                               |  |                                          |         |  |           |   |         |          |  |   |         | 
|Fiscal 2004:                   |  |                                          |         |  |           |   |         |          |  |   |         |  |  |   |         | 
|Net revenues                   |  | $                                        | 126,235 |  |           | $ | 132,267 |          |  | $ | 137,064 |  |  | $ | 128,294 | 
|Gross profit                   |  |                                          | 84,233  |  |           |   | 89,901  |          |  |   | 94,183  |  |  |   | 89,249  | 
|Operating income               |  |                                          | 45,678  |  |           |   | 51,575  |          |  |   | 52,879  |  |  |   | 48,625  | 
|Net income                     |  |                                          | 31,676  |  |           |   | 34,181  |          |  |   | 34,952  |  |  |   | 32,864  | 
|Net income per share  basic   |  |                                          | 0.34    |  |           |   | 0.36    |          |  |   | 0.37    |  |  |   | 0.35    | 
|Net income per share  diluted |  |                                          | 0.33    |  |           |   | 0.35    |          |  |   | 0.36    |  |  |   | 0.34    | 
|                               |  |                                          |         |  |           |   |         |          |  |   |         | 

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|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure








|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Controls
and Procedures




Managements Report on Internal Control Over Financial
Reporting




Internal Control  Integrated
Framework.




Changes in Internal Control over Financial Reporting









|         |                  
|-------- | -----------------
|Item 9B. | Other Information






PART III







|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant



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|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation








|         |                                                                                                   
|-------- | --------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholder Matters












|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions








|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services



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PART IV







|         |                                           
|-------- | ------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules

Consolidated Financial Statements




FINANCIAL STATEMENT INDEX


|                                                                                                                                                      |  |        |    | 
|----------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------ | -- | 
|                                                                                                                                                      |  | Page   |   
|                                                                                                                                                      |  | Number |   
|                                                                                                                                                      |  |        |   
|Reports of Independent Registered Public Accounting Firm                                                                                              |  |        | 32 | 
|Consolidated Balance Sheets as of April 3, 2005 and
    March 28, 2004                                                                                |  |        | 34 | 
|Consolidated Statements of Income for the years ended
    April 3, 2005, March 28, 2004 and March 30, 2003                                            |  |        | 35 | 
|Consolidated Statements of Stockholders Equity and
    Comprehensive Income for the years ended April 3, 2005,
    March 28, 2004 and March 30, 2003 |  |        | 36 | 
|Consolidated Statements of Cash Flows for the years ended
    April 3, 2005, March 28, 2004 and March 30, 2003                                        |  |        | 37 | 
|Notes to Consolidated Financial Statements                                                                                                            |  |        | 38 | 

Financial Statement Schedule








Exhibits




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##### Table of Contents






SIGNATURES






| |                   
| | ------------------
| | QLogic Corporation



| |     |               
| | --- | --------------
| | By: | /s/ H.K. Desai

| |                                      
| | -------------------------------------
| |                                      
| | H.K. Desai                           
| | Chairman of the Board,               
| | Chief Executive Officer and President



POWER OF ATTORNEY






|                                                     |  |                                                                  |  |              |  | 
|---------------------------------------------------- |  | ---------------------------------------------------------------- |  | ------------ |  | 
|Signature                                            |  | Title                                                            |  | Date        
|                                                     |  |                                                                  |  |             
|Principal Executive Officer:                         |  |                                                                  |  |             
|                                                    
|/s/ H.K. DesaiH.K.
    Desai                         |  | Chairman of the Board, Chief
    Executive Officer and President |  | June 9, 2005
|                                                    
|Principal Financial and Accounting Officer:          |  |                                                                  |  |             
|                                                    
|/s/ Anthony J. MassettiAnthony
    J. Massetti       |  | Vice President and
    Chief Financial Officer                   |  | June 9, 2005
|                                                    
|/s/ Joel S. BirnbaumJoel
    S. Birnbaum             |  | Director                                                         |  | June 9, 2005
|                                                    
|/s/ Larry R. CarterLarry
    R. Carter               |  | Director                                                         |  | June 9, 2005
|                                                    
|/s/ James R. FiebigerJames
    R. Fiebiger           |  | Director                                                         |  | June 9, 2005
|                                                    
|/s/ Balakrishnan S.
    IyerBalakrishnan
    S. Iyer |  | Director                                                         |  | June 9, 2005
|                                                    
|/s/ Carol L. MiltnerCarol
    L. Miltner             |  | Director                                                         |  | June 9, 2005
|                                                    
|/s/ George D. WellsGeorge
    D. Wells               |  | Director                                                         |  | June 9, 2005

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SCHEDULE II


QLOGIC CORPORATION


VALUATION AND QUALIFYING ACCOUNTS


|                           |                                 |                |   |            |             |  |             |                  |   |  |            |        |  |  |   |       | 
|-------------------------- | ------------------------------- | -------------- | - | ---------- | ----------- |  | ----------- | ---------------- | - |  | ---------- | ------ |  |  | - | ----- | 
|                           |                                 |                |   | Additions: |             |  |             |                  |  
|                           |                                 |                |   | Charged to |             |  | Deductions: |                  |   | 
|                           |                                 | Balance at     |   |            | Costs and   |  |             | Amounts          |   |  | Balance at |       
|                           |                                 | Beginning of   |   |            | Expenses    |  |             | Written Off, Net |   |  | End of     |       
|                           |                                 | Year           |   |            | or Revenues |  |             | of Recoveries    |   |  | Year       |       
|                           |                                 |                |   |            |             |  |             |                  |   |  |            |       
|                           |                                 | (In thousands) |  
|Year ended April 3, 2005:  |                                 |                |   |            |             |  |             |                  |   |  |            |        |  |  |   |      
|                           | Allowance for doubtful accounts |                | $ | 1,372      |             |  | $           | 90               |   |  | $          | 17     |  |  | $ | 1,445 | 
|                           | Sales returns and allowances    |                | $ | 5,198      |             |  | $           | 18,091           |   |  | $          | 18,056 |  |  | $ | 5,233 | 
|Year ended March 28, 2004: |                                 |                |   |            |             |  |             |                  |   |  |            |        |  |  |   |      
|                           | Allowance for doubtful accounts |                | $ | 2,830      |             |  | $           | (450             | ) |  | $          | 1,008  |  |  | $ | 1,372 | 
|                           | Sales returns and allowances    |                | $ | 8,302      |             |  | $           | 17,035           |   |  | $          | 20,139 |  |  | $ | 5,198 | 
|Year ended March 30, 2003: |                                 |                |   |            |             |  |             |                  |   |  |            |        |  |  |   |      
|                           | Allowance for doubtful accounts |                | $ | 3,429      |             |  | $           | (550             | ) |  | $          | 49     |  |  | $ | 2,830 | 
|                           | Sales returns and allowances    |                | $ | 12,739     |             |  | $           | 10,957           |   |  | $          | 15,394 |  |  | $ | 8,302 | 

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EXHIBIT INDEX


|        |    |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|------- | -- | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|No.     |    | Description
|        |    |            
|        | 3  | .1          |  | Certificate of Incorporation of Emulex Micro Devices
    Corporation, dated November 13, 1992. (incorporated by
    reference to Exhibit 3.1 of the Registrants
    Registration Statement on Form 10 filed on April 3, 1994)                                                                                                                                                                                                                                                                                   
|       
|        | 3  | .2          |  | EMD Incorporation Agreement, dated as of January 1, 1993.
    (incorporated by reference to Exhibit 3.2 of the
    Registrants Registration Statement on Form 10 filed on
    April 3, 1994)                                                                                                                                                                                                                                                                                                                    
|       
|        | 3  | .3          |  | Certificate of Amendment of Certificate of Incorporation, dated
    May 26, 1993. (incorporated by reference to
    Exhibit 3.3 of the Registrants Registration Statement
    on Form 10 filed on April 3, 1994)                                                                                                                                                                                                                                                                                                
|       
|        | 3  | .4          |  | Certificate of Amendment of Certificate of Incorporation, dated
    February 24, 1994. (incorporated by reference to
    Exhibit 3.4 of the Registrants Annual Report on Form
    10-K for the year ended March 30, 2003)                                                                                                                                                                                                                                                                                       
|       
|        | 3  | .5          |  | Certificate of Designation of Rights, Preferences and Privileges
    of Series A Junior Participating Preferred Stock, dated
    June 4, 1996. (incorporated by reference to
    Exhibit 3.5 of the Registrants Annual Report on Form
    10-K for the year ended March 30, 2003)                                                                                                                                                                                                                               
|       
|        | 3  | .6          |  | Certificate of Amendment of Certificate of Incorporation, dated
    February 5, 1999. (incorporated by reference to
    Exhibit 3.6 of the Registrants Annual Report on Form
    10-K for the year ended March 28, 1999)                                                                                                                                                                                                                                                                                        
|       
|        | 3  | .7          |  | Certificate of Amendment of Certificate of Incorporation, dated
    January 4, 2000. (incorporated by reference to
    Exhibit 3.7 of the Registrants Quarterly Report on
    Form 10-Q for the quarter ended December 26, 1999)                                                                                                                                                                                                                                                                                
|       
|        | 3  | .8          |  | Certificate of Amendment of Certificate of Incorporation, dated
    September 28, 2000. (incorporated by reference to
    Exhibit 3.8 of the Registrants Annual Report on Form
    10-K for the year ended March 30, 2003)                                                                                                                                                                                                                                                                                      
|       
|        | 3  | .9          |  | By-Laws of QLogic Corporation. (incorporated by reference to
    Exhibit 3.9 of the Registrants Current Report on Form
    8-K filed on February 24, 2005)                                                                                                                                                                                                                                                                                                                                                      
|       
|        | 4  | .1          |  | Rights Agreement, dated as of June 4, 1996 between QLogic
    Corporation and Harris Trust and Savings Bank, as Rights Agent,
    which includes as Exhibit A thereto a form of the
    Certificate of Designation for Preferred Stock, as
    Exhibit B thereto the form of Rights Certificate and as
    Exhibit C thereto a Summary of Terms of Stockholders Rights
    Plan. (incorporated by reference to Exhibit 2.1 of the
    Registrants Registration Statement on Form 8-A filed on
    June 19, 1996)
|       
|        | 4  | .2          |  | Amendment to Rights Agreement, dated as of November 19,
    1997 between QLogic Corporation and Harris Trust and Savings
    Bank, as Rights Agent. (incorporated by reference to
    Exhibit 2 of the Registrants Registration Statement
    on Form 8-A/A filed on November 25, 1997)                                                                                                                                                                                                                         
|       
|        | 4  | .3          |  | Second Amendment to Rights Agreement, dated as of
    January 24, 2000 between QLogic Corporation and Harris
    Trust and Savings Bank, as Rights Agent. (incorporated by
    reference to Exhibit 3 of the Registrants
    Registration Statement on Form 8-A filed on June 1, 2000)                                                                                                                                                                                                                          
|       
|        | 4  | .4          |  | Third Amendment to Rights Agreement, dated as of January 9,
    2003 between QLogic Corporation and Harris Trust and Savings
    Bank, as Rights Agent. (incorporated by reference to
    Exhibit 4 of the Registrants Registration Statement
    on Form 8-A filed on January 10, 2003)                                                                                                                                                                                                                        
|       
|        | 4  | .5          |  | Fourth Amendment to Rights Agreement, dated as of July 30,
    2004 between QLogic Corporation and Harris Trust and Savings
    Bank, as Rights Agent. (incorporated by reference to
    Exhibit 5 of the Registrants Registration Statement
    on Form 8-A filed on July 30, 2004)                                                                                                                                                                                                                            
|       
|        | 10 | .1          |  | Form of QLogic Corporation Non-Employee Director Stock Option
    Plan, as amended.* (incorporated by reference to
    Exhibit 4.1 of the Registrants Registration Statement
    on Form S-8 filed on February 6, 2004 (File
    No. 333-112572))                                                                                                                                                                                                                                                               
|       
|        | 10 | .2          |  | Form of QLogic Corporation Stock Awards Plan, as amended.*
    (incorporated by reference to Exhibit 4.2 of the
    Registrants Registration Statement on Form S-8 filed
    on February 6, 2004 (File No. 333-112572))                                                                                                                                                                                                                                                                                         
|       
|        | 10 | .3          |  | Form of QLogic Corporation Savings Plan.* (incorporated by
    reference to Exhibit 10.8 of the Registrants
    Registration Statement on Form 10 filed on April 3, 1994)                                                                                                                                                                                                                                                                                                                                       

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|        |    |             |  |                                                                                                                                                                                                                                                                      
|------- | -- | ----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|No.     |    | Description
|        |    |            
|        | 10 | .4          |  | Form of QLogic Corporation Savings Plan Trust.* (incorporated by
    reference to Exhibit 10.9 of the Registrants
    Registration Statement on Form 10 filed on April 3, 1994)                                                                                     
|       
|        | 10 | .5          |  | Form of Indemnification Agreement between QLogic Corporation and
    Directors.* (incorporated by reference to Exhibit 10.11 of
    the Registrants Annual Report on Form 10-K for the year
    ended April 2, 1995)                                                
|       
|        | 10 | .6          |  | Form QLogic Corporation 1998 Employee Stock Purchase Plan.*
    (incorporated by reference to Exhibit 10.15 of the
    Registrants Annual Report on Form 10-K for the year ended
    March 28, 1999)                                                                
|       
|        | 10 | .7          |  | Key Employee Retention Agreement, dated August 4, 1995,
    between QLogic Corporation and Harshad K. Desai.* (incorporated
    by reference to Exhibit 10.7 of the Registrants
    Annual Report on Form 10-K for the year ended March 28,
    2004)               
|       
|        | 21 | .1          |  | Subsidiaries of the Registrant.                                                                                                                                                                                                                                      
|       
|        | 23 | .1          |  | Consent of Independent Registered Public Accounting Firm.                                                                                                                                                                                                            
|       
|        | 31 | .1          |  | Certification of Chief Executive Officer pursuant to
    Rule 13a-14(a) of the Securities Exchange Act of 1934, as
    amended, as adopted pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.                                                            
|       
|        | 31 | .2          |  | Certification of Chief Financial Officer pursuant to
    Rule 13a-14(a) of the Securities Exchange Act of 1934, as
    amended, as adopted pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.                                                            
|       
|        | 32 |             |  | Certification of Chief Executive Officer and Chief Financial
    Officer pursuant to Rule 13a-14(b) of the Securities
    Exchange Act of 1934, as amended, and 18 U.S.C.
    Section 1350, as adopted pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002.






|  |                                                                                                                                                              
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Compensation plan, contract or arrangement required to be filed
    as an exhibit pursuant to applicable rules of the Securities and
    Exchange Commission.

62