##### Table of Contents









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 2, 2006


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


o þ


þ o


S-K 10-K 10-K. o


12b-2


|                           |                      |                         
|-------------------------- | -------------------- | ------------------------
|Large accelerated filer  þ | Accelerated filer  o | Non-accelerated filer  o

12b-2 o þ






DOCUMENTS INCORPORATED BY REFERENCE


10-K










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TABLE OF CONTENTS



|                          |                                                                                                                      |                                                                          |  |  |  |  |  | 
|------------------------- | -------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------ |  |  |  |  |  | 
|PART I                   
|                          | Item 1. Business                                                                                                    
|                          | Item 1A. Risk Factors                                                                                               
|                          | Item 1B. Unresolved Staff Comments                                                                                  
|                          | 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                                                                 
|FINANCIAL STATEMENT INDEX
|SIGNATURES               
|SCHEDULE II              
|EXHIBIT INDEX            
|EXHIBIT 10.11            
|EXHIBIT 21.1             
|EXHIBIT 23.1             
|EXHIBIT 31.1             
|EXHIBIT 31.2             
|EXHIBIT 32               



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PART I







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

Introduction


389-6000.








Overview


®




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







| |   |                                                                                             
| | - | --------------------------------------------------------------------------------------------
| |  | Small, medium and large enterprises with critical business data
    requirements.           
|
| |  | Business applications requiring high-performance interconnect
    infrastructure, including:



| |   |                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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;                                                                                                 
|
| |  | Research and scientific applications.                                                                                                                      

1



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



Storage Industry




-back-up


New Opportunities








2



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New Technologies










Our SAN Solutions


tm


time-to


Our Server Fabric Solutions




Product Overview




® ® ®


3



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Sales and Marketing












Engineering and Development








Backlog


just-in


4



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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.          





Manufacturing








5



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off-the


Intellectual Property








Environment




6



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Employees









|         |             
|-------- | ------------
|Item 1A. | Risk Factors



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






| |   |                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------
| |  | the timing, size and mix of orders from customers;                                                                                          
|
| |  | gain or loss of significant customers;                                                                                                      
|
| |  | 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;                                              
|
| |  | our ability to timely produce products that comply with new
    environmental restrictions or related requirements of our OEM
    customers;

7



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| |   |                                                                                                                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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, such as the change requiring the
    recording of compensation expense for employee stock options and
    other stock-based awards commencing in the first quarter of our
    2007 fiscal year;                                                                                   
|
| |  | changes in our accounting policies;                                                                                                                                                                                                                                                                            
|
| |  | increases in energy costs;                                                                                                                                                                                                                                                                                     
|
| |  | 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.                                                                                                                                                                                                                                 



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






| |   |                                                                                        
| | - | ---------------------------------------------------------------------------------------
| |  | increased price competition;                                                           
|
| |  | 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;                                        
|
| |  | 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.




8



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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.                                                    



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;

9



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| |   |                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------
| |  | compete effectively on the basis of price and
    performance; and                                   
|
| |  | adequately address OEM customer and end-user customer
    requirements and achieve market acceptance.



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.






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




10



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






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




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






11



---



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






We depend on our relationships with silicon chip suppliers
and 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.




ramp-up




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




12



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






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








13



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Environmental compliance costs could adversely affect our net
income.








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




14



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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 existence of unknown defects in acquired companies
    products or assets that may not be identified due to the
    inherent limitations involved in the due diligence process of an
    acquisition;
|
| |  | the diversion of managements attention from other business
    concerns;                                                                                                                                 
|
| |  | the failure of markets for the products of acquired companies to
    develop as expected;                                                                                                                 
|
| |  | risks associated with entering markets or conducting operations
    with which we have no or limited direct prior experience;                                                                             
|
| |  | risks associated with assuming the legal obligations of acquired
    companies;                                                                                                                           

15



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| |   |                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | risks related to the effect that acquired companies
    internal control processes might have on our financial reporting
    and managements report on our internal control over
    financial reporting;
|
| |  | the potential loss of current customers or failure to retain
    acquired companies customers;                                                                                                            
|
| |  | the potential loss of key employees of acquired
    companies; and                                                                                                                                         
|
| |  | the incurrence of significant exit charges if products acquired
    in business combinations are unsuccessful.                                                                                             





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




Beginning with fiscal 2007, we are required to recognize
compensation expense related to employee stock options and our
employee stock purchase plan. There is no assurance that the
expense that we are required to recognize measures accurately
the value of our share-based payment awards, and the recognition
of this expense could cause the trading price of our common
stock to decline.




16



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Decreased effectiveness of equity compensation could
adversely affect our ability to attract and retain employees.




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.




17



---



##### Table of Contents





Unavailability of third-party licenses could adversely affect
our business.




If we fail to carefully manage the use of open
source software in our products, we may be required to
license key portions of our products on a royalty free basis or
expose key parts of source code.




Unanticipated changes in our tax provisions or adverse
outcomes resulting from examination of our income tax returns
could adversely affect our net income.






18



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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 our suppliers and
customers are located in regions that are subject to natural
disasters.









|         |                          
|-------- | -------------------------
|Item 1B. | Unresolved Staff Comments








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



19



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








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



20



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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




|               |  |              |       |  |     |   |       | 
|-------------- |  | ------------ | ----- |  | --- | - | ----- | 
|               |  | Sales Prices |      
|               |  |              |      
|Fiscal 2005    |  | High         |       |  | Low |  
|               |  |              |       |  |     |  
|First Quarter  |  | $            | 21.50 |  |     | $ | 12.63 | 
|Second Quarter |  |              | 15.73 |  |     |   | 10.72 | 
|Third Quarter  |  |              | 19.19 |  |     |   | 13.67 | 
|Fourth Quarter |  |              | 21.83 |  |     |   | 16.61 | 

|               |  |              |       |  |     |   |       | 
|-------------- |  | ------------ | ----- |  | --- | - | ----- | 
|               |  | Sales Prices |      
|               |  |              |      
|Fiscal 2006    |  | High         |       |  | Low |  
|               |  |              |       |  |     |  
|First Quarter  |  | $            | 20.74 |  |     | $ | 14.58 | 
|Second Quarter |  |              | 17.94 |  |     |   | 15.28 | 
|Third Quarter  |  |              | 17.15 |  |     |   | 14.10 | 
|Fourth Quarter |  |              | 21.44 |  |     |   | 15.93 | 

Number of Common Stockholders




Dividends




Recent Sales of Unregistered Securities




Issuer Purchases of Equity Securities






21



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



|                                                         |                                               |                          |         |        |          |   |           |           |         |   |           |        |         |           |         |        |         |   |         |        |         | 
|-------------------------------------------------------- | --------------------------------------------- | ------------------------ | ------- | ------ | -------- | - | --------- | --------- | ------- | - | --------- | ------ | ------- | --------- | ------- | ------ | ------- | - | ------- | ------ | ------- | 
|                                                         |                                               | Fiscal Year Ended(1)(2)  |        
|                                                         |                                               |                          |        
|                                                         |                                               | April 2,                 |         |        | April 3, |   |           | March 28, |         |   | March 30, |        |         | March 31, |        
|                                                         |                                               | 2006                     |         |        | 2005     |   |           | 2004      |         |   | 2003      |        |         | 2002      |        
|                                                         |                                               |                          |         |        |          |   |           |           |         |   |           |        |         |           |        
|Statement of Operations Data                             |                                               |                          |         |        |          |   |           |           |         |   |           |        |         |           |         |        |         |   |         |       
|Net revenues                                             |                                               | $                        | 494,077 |        |          | $ | 428,719   |           |         | $ | 387,156   |        |         | $         | 301,788 |        |         | $ | 247,047 |       
|Cost of revenues                                         |                                               |                          | 144,246 |        |          |   | 121,074   |           |         |   | 115,297   |        |         |           | 107,073 |        |         |   | 98,923  |       
|                                                         |                                               |                          |         |        |          |   |           |           |         |   |           |        |         |           |        
|                                                         |                                               | Gross profit             |         |        | 349,831  |   |           |           | 307,645 |   |           |        | 271,859 |           |         |        | 194,715 |   |         |        | 148,124 | 
|                                                         |                                               |                          |         |        |          |   |           |           |         |   |           |        |         |           |        
|Operating expenses:                                      |                                               |                          |         |        |          |   |           |           |         |   |           |        |         |           |         |        |         |   |         |       
|                                                         | Engineering and development                   |                          |         | 89,753 |          |   |           | 82,791    |         |   |           | 75,893 |         |           |         | 65,886 |         |   |         | 59,133 |        
|                                                         | Sales and marketing                           |                          |         | 64,416 |          |   |           | 54,582    |         |   |           | 48,449 |         |           |         | 39,780 |         |   |         | 34,867 |        
|                                                         | General and administrative                    |                          |         | 17,295 |          |   |           | 16,659    |         |   |           | 18,102 |         |           |         | 14,011 |         |   |         | 16,673 |        
|                                                         | Purchased in-process research and development |                          |         | 10,510 |          |   |           |          |         |   |           |       |         |           |         |       |         |   |         |       |        
|                                                         |                                               |                          |         |        |          |   |           |           |         |   |           |        |         |           |        
|                                                         |                                               | Total operating expenses |         |        | 181,974  |   |           |           | 154,032 |   |           |        | 142,444 |           |         |        | 119,677 |   |         |        | 110,673 | 
|                                                         |                                               |                          |         |        |          |   |           |           |         |   |           |        |         |           |        
|Operating income                                         |                                               |                          | 167,857 |        |          |   | 153,613   |           |         |   | 129,415   |        |         |           | 75,038  |        |         |   | 37,451  |       
|Interest and other income, net                           |                                               |                          | 32,627  |        |          |   | 17,873    |           |         |   | 16,844    |        |         |           | 17,356  |        |         |   | 19,036  |       
|                                                         |                                               |                          |         |        |          |   |           |           |         |   |           |        |         |           |        
|Income from continuing operations before income taxes    |                                               |                          | 200,484 |        |          |   | 171,486   |           |         |   | 146,259   |        |         |           | 92,394  |        |         |   | 56,487  |       
|Income taxes                                             |                                               |                          | 78,653  |        |          |   | 60,071    |           |         |   | 57,698    |        |         |           | 35,865  |        |         |   | 16,758  |       
|                                                         |                                               |                          |         |        |          |   |           |           |         |   |           |        |         |           |        
|Income from continuing operations                        |                                               |                          | 121,831 |        |          |   | 111,415   |           |         |   | 88,561    |        |         |           | 56,529  |        |         |   | 39,729  |       
|Income from discontinued operations, net of income taxes |                                               |                          | 161,757 |        |          |   | 46,181    |           |         |   | 45,112    |        |         |           | 46,944  |        |         |   | 30,997  |       
|                                                         |                                               |                          |         |        |          |   |           |           |         |   |           |        |         |           |        
|Net income                                               |                                               | $                        | 283,588 |        |          | $ | 157,596   |           |         | $ | 133,673   |        |         | $         | 103,473 |        |         | $ | 70,726  |       
|                                                         |                                               |                          |         |        |          |   |           |           |         |   |           |        |         |           |        
|Income from continuing operations per share:             |                                               |                          |         |        |          |   |           |           |         |   |           |        |         |           |         |        |         |   |         |       
|                                                         | Basic                                         |                          | $       | 0.71   |          |   | $         | 0.60      |         |   | $         | 0.47   |         |           | $       | 0.30   |         |   | $       | 0.21   |        
|                                                         |                                               |                          |         |        |          |   |           |           |         |   |           |        |         |           |        
|                                                         | Diluted                                       |                          | $       | 0.70   |          |   | $         | 0.59      |         |   | $         | 0.46   |         |           | $       | 0.30   |         |   | $       | 0.21   |        
|                                                         |                                               |                          |         |        |          |   |           |           |         |   |           |        |         |           |        
|Income from discontinued operations per share:           |                                               |                          |         |        |          |   |           |           |         |   |           |        |         |           |         |        |         |   |         |       
|                                                         | Basic                                         |                          | $       | 0.95   |          |   | $         | 0.25      |         |   | $         | 0.24   |         |           | $       | 0.25   |         |   | $       | 0.17   |        
|                                                         |                                               |                          |         |        |          |   |           |           |         |   |           |        |         |           |        
|                                                         | Diluted                                       |                          | $       | 0.93   |          |   | $         | 0.25      |         |   | $         | 0.23   |         |           | $       | 0.24   |         |   | $       | 0.16   |        
|                                                         |                                               |                          |         |        |          |   |           |           |         |   |           |        |         |           |        
|Net income per share:                                    |                                               |                          |         |        |          |   |           |           |         |   |           |        |         |           |         |        |         |   |         |       
|                                                         | Basic                                         |                          | $       | 1.66   |          |   | $         | 0.85      |         |   | $         | 0.71   |         |           | $       | 0.55   |         |   | $       | 0.38   |        
|                                                         |                                               |                          |         |        |          |   |           |           |         |   |           |        |         |           |        
|                                                         | Diluted                                       |                          | $       | 1.63   |          |   | $         | 0.84      |         |   | $         | 0.69   |         |           | $       | 0.54   |         |   | $       | 0.37   |        
|                                                         |                                               |                          |         |        |          |   |           |           |         |   |           |        |         |           |        
|Balance Sheet Data                                       |                                               |                          |         |        |          |   |           |           |         |   |           |        |         |           |         |        |         |   |         |       
|Cash and cash equivalents and short-term investments     |                                               | $                        | 665,640 |        |          | $ | 812,338   |           |         | $ | 743,034   |        |         | $         | 643,197 |        |         | $ | 492,546 |       
|Total assets                                             |                                               |                          | 937,707 |        |          |   | 1,026,340 |           |         |   | 926,126   |        |         |           | 815,043 |        |         |   | 669,857 |       
|Total stockholders equity                               |                                               |                          | 859,354 |        |          |   | 956,183   |           |         |   | 867,718   |        |         |           | 750,735 |        |         |   | 618,983 |       






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

22



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

This Managements Discussion and Analysis of Financial
Condition and Results of Operations should be read in
conjunction with our audited consolidated financial statements
and related notes. This Managements 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 factors, including, but not
limited to those factors set forth and discussed in Part I,
Item 1A Risk Factors and elsewhere in this
report. In light of the significant uncertainties inherent in
the forward-looking information included in this report, the
inclusion of this information should not be regarded as a
representation by us or any other person that our objectives or
plans will be achieved. We undertake no obligation to update or
revise these forward-looking statements, whether as a result of
new information, future events or otherwise.


Overview




tm








| |                              
| | -----------------------------
| | Acquisitions and Dispositions



23



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





24



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configure-on








| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Net revenues of $130.5 million for the fourth quarter of
    fiscal 2006 increased sequentially by $1.3 million, or 1%,
    from $129.2 million in the third quarter of fiscal 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | Gross profit as a percentage of net revenues was 70.6% in the
    fourth quarter, a decrease from 71.4% for the third quarter of
    fiscal 2006. We continue to expect downward pressure on our
    gross profit percentage as a result of changes in product and
    technology mix, as well as declining average selling prices.
    There can be no assurance that we will be able to maintain our
    gross profit percentage consistent with historical trends and it
    may decline in the future.                                                                                                                                                                                        
|
| |  | Operating income as a percentage of net revenues was 26.1% for
    the fourth quarter of fiscal 2006, compared to 38.0% in the
    third quarter of fiscal 2006. Operating income for the fourth
    quarter was impacted by a $10.5 million charge for
    purchased in-process research and development related to our
    acquisition of Troika.                                                                                                                                                                                                                                                                                                                                               
|
| |  | Income from continuing operations was $31.4 million, or
    $0.19 per diluted share, in the fourth quarter of fiscal
    2006 and decreased slightly from the $31.7 million, or
    $0.19 per diluted share, reported in the third quarter of
    fiscal 2006. Income from continuing operations was impacted by
    the purchased in-process research and development charge noted
    above, which was partially offset by an $8.5 million gain
    on the sale of a portion of the shares of Marvell common stock
    acquired as part of the sale of our hard disk drive controller
    and tape drive controller business.                                                                   
|
| |  | Cash and cash equivalents and short-term investments of
    $665.6 million at April 2, 2006 decreased
    $53.1 million from $718.7 million at the end of the
    third quarter of fiscal 2006 primarily due to income tax
    payments related to the gain on sale of our hard disk drive
    controller and tape drive controller business. During the fourth
    quarter of fiscal 2006, we generated $27.6 million of cash
    from continuing operating activities.                                                                                                                                                                                                                          
|
| |  | Accounts receivable was $67.6 million as of April 2,
    2006, compared to $70.5 million as of January 1, 2006.
    Days sales outstanding (DSO) in receivables as of
    April 2, 2006 decreased to 47 days from 50 days
    as of January 1, 2006. Our accounts receivable and DSO are
    primarily affected by linearity of shipments within the quarter
    and collections performance. Based on our customers
    procurement models and our current customer mix, we expect that
    DSO in the future will range from 45 to 55 days. There can
    be no assurance that we will be able to maintain our DSO
    consistent with historical trends and it may increase in the
    future.
|
| |  | Inventories were $39.4 million as of April 2, 2006,
    compared to $29.8 million as of January 1, 2006. Our
    annualized inventory turns in the fourth quarter of fiscal 2006
    of 3.9 turns decreased from the 5.0 turns in the third quarter
    of fiscal 2006. The increase in inventories was principally due
    to our customers slower than expected transition to new or
    enhanced HBA products, including RoHS-compliant products.                                                                                                                                                                                                                                             

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RESULTS OF OPERATIONS


Net Revenues




|                            |                             |                    |   |       |       |   |   |       |       |   |   |       |       |  
|--------------------------- | --------------------------- | ------------------ | - | ----- | ----- | - | - | ----- | ----- | - | - | ----- | ----- | -
|                            |                             | 2006               |   |       | 2005  |   |   | 2004  |      
|                            |                             |                    |   |       |       |   |   |       |      
|                            |                             | (In millions)      |  
|Net revenues:               |                             |                    |   |       |       |   |   |       |       |   |   |      
|                            | SAN Infrastructure Products |                    | $ | 460.1 |       |   | $ | 387.9 |       |   | $ | 335.6 |      
|                            | Management Controllers      |                    |   | 27.1  |       |   |   | 37.0  |       |   |   | 46.8  |      
|                            | Other                       |                    |   | 6.9   |       |   |   | 3.8   |       |   |   | 4.8   |      
|                            |                             |                    |   |       |       |   |   |       |      
|                            |                             | Total net revenues |   | $     | 494.1 |   |   | $     | 428.7 |   |   | $     | 387.2 |  
|                            |                             |                    |   |       |       |   |   |       |      
|Percentage of net revenues: |                             |                    |   |       |       |   |   |       |       |   |   |      
|                            | SAN Infrastructure Products |                    |   | 93    | %     |   |   | 90    | %     |   |   | 87    | %    
|                            | Management Controllers      |                    |   | 6     |       |   |   | 9     |       |   |   | 12    |      
|                            | Other                       |                    |   | 1     |       |   |   | 1     |       |   |   | 1     |      
|                            |                             |                    |   |       |       |   |   |       |      
|                            |                             | Total net revenues |   |       | 100   | % |   |       | 100   | % |   |       | 100   | %
|                            |                             |                    |   |       |       |   |   |       |      









26



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|                 |  |      |     |  |      |  |     |      |  |  |     | 
|---------------- |  | ---- | --- |  | ---- |  | --- | ---- |  |  | --- | 
|                 |  | 2006 |     |  | 2005 |  |     | 2004 | 
|                 |  |      |     |  |      |  |     |      | 
|IBM              |  |      | 15% |  |      |  | 15% |      |  |  | 12% | 
|Hewlett-Packard  |  |      | 15% |  |      |  | 14% |      |  |  | 11% | 
|Sun Microsystems |  |      | 12% |  |      |  | 15% |      |  |  | 21% | 
|Dell Computer    |  |      | *   |  |      |  | 10% |      |  |  | 10% | 






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





|                               |  |               |       |  |      |   |       |      |  |   |       | 
|------------------------------ |  | ------------- | ----- |  | ---- | - | ----- | ---- |  | - | ----- | 
|                               |  | 2006          |       |  | 2005 |   |       | 2004 | 
|                               |  |               |       |  |      |   |       |      | 
|                               |  | (In millions) |      
|United States                  |  | $             | 271.9 |  |      | $ | 227.8 |      |  | $ | 228.3 | 
|Europe, Middle East and Africa |  |               | 111.0 |  |      |   | 94.6  |      |  |   | 74.9  | 
|Asia-Pacific and Japan         |  |               | 108.2 |  |      |   | 101.5 |      |  |   | 81.2  | 
|Rest of world                  |  |               | 3.0   |  |      |   | 4.8   |      |  |   | 2.8   | 
|                               |  |               |       |  |      |   |       |      | 
|                               |  | $             | 494.1 |  |      | $ | 428.7 |      |  | $ | 387.2 | 
|                               |  |               |       |  |      |   |       |      | 

Gross Profit




|                           |  |               |       |   |      |   |       |      |  |   |       |  
|-------------------------- |  | ------------- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | -
|                           |  | 2006          |       |   | 2005 |   |       | 2004 | 
|                           |  |               |       |   |      |   |       |      | 
|                           |  | (In millions) |      
|Gross profit               |  | $             | 349.8 |   |      | $ | 307.6 |      |  | $ | 271.9 |  
|Percentage of net revenues |  |               | 70.8  | % |      |   | 71.8  | %    |  |   | 70.2  | %







27



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Operating Expenses




|                            |                                               |                          |   |      |       |   |   |      |       |   |   |      |       |  
|--------------------------- | --------------------------------------------- | ------------------------ | - | ---- | ----- | - | - | ---- | ----- | - | - | ---- | ----- | -
|                            |                                               | 2006                     |   |      | 2005  |   |   | 2004 |      
|                            |                                               |                          |   |      |       |   |   |      |      
|                            |                                               | (In millions)            |  
|Operating expenses:         |                                               |                          |   |      |       |   |   |      |       |   |   |     
|                            | Engineering and development                   |                          | $ | 89.8 |       |   | $ | 82.8 |       |   | $ | 75.9 |      
|                            | Sales and marketing                           |                          |   | 64.4 |       |   |   | 54.5 |       |   |   | 48.4 |      
|                            | General and administrative                    |                          |   | 17.3 |       |   |   | 16.7 |       |   |   | 18.1 |      
|                            | Purchased in-process research and development |                          |   | 10.5 |       |   |   |     |       |   |   |     |      
|                            |                                               |                          |   |      |       |   |   |      |      
|                            |                                               | Total operating expenses |   | $    | 182.0 |   |   | $    | 154.0 |   |   | $    | 142.4 |  
|                            |                                               |                          |   |      |       |   |   |      |      
|Percentage of net revenues: |                                               |                          |   |      |       |   |   |      |       |   |   |     
|                            | Engineering and development                   |                          |   | 18.2 | %     |   |   | 19.3 | %     |   |   | 19.6 | %    
|                            | Sales and marketing                           |                          |   | 13.0 |       |   |   | 12.7 |       |   |   | 12.5 |      
|                            | General and administrative                    |                          |   | 3.5  |       |   |   | 3.9  |       |   |   | 4.7  |      
|                            | Purchased in-process research and development |                          |   | 2.1  |       |   |   |     |       |   |   |     |      
|                            |                                               |                          |   |      |       |   |   |      |      
|                            |                                               | Total operating expenses |   |      | 36.8  | % |   |      | 35.9  | % |   |      | 36.8  | %
|                            |                                               |                          |   |      |       |   |   |      |      

Engineering and Development.






28



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Sales and Marketing.






General and Administrative.




Purchased In-Process Research and Development.




29



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Non-Operating Income




|                                             |  |               |      |  |      |   |      |      |  |   |      | 
|-------------------------------------------- |  | ------------- | ---- |  | ---- | - | ---- | ---- |  | - | ---- | 
|                                             |  | 2006          |      |  | 2005 |   |      | 2004 | 
|                                             |  |               |      |  |      |   |      |      | 
|                                             |  | (In millions) |     
|Interest income                              |  | $             | 25.8 |  |      | $ | 18.5 |      |  | $ | 15.5 | 
|Gain (loss) on sale of marketable securities |  |               | 6.8  |  |      |   | (0.6 | )    |  |   | 1.1  | 
|Other                                        |  |               |     |  |      |   |     |      |  |   | 0.2  | 
|                                             |  |               |      |  |      |   |      |      | 
|                                             |  | $             | 32.6 |  |      | $ | 17.9 |      |  | $ | 16.8 | 
|                                             |  |               |      |  |      |   |      |      | 





Income Taxes






Discontinued Operations




30



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|                                                             |  |               |       |  |      |   |       |      |  |   |       | 
|------------------------------------------------------------ |  | ------------- | ----- |  | ---- | - | ----- | ---- |  | - | ----- | 
|                                                             |  | 2006          |       |  | 2005 |   |       | 2004 | 
|                                                             |  |               |       |  |      |   |       |      | 
|                                                             |  | (In millions) |      
|Net revenues                                                 |  | $             | 94.6  |  |      | $ | 143.2 |      |  | $ | 136.7 | 
|                                                             |  |               |       |  |      |   |       |      | 
|Income from discontinued operations, net of income taxes     |  | $             | 29.8  |  |      | $ | 46.2  |      |  | $ | 45.1  | 
|                                                             |  |               |       |  |      |   |       |      | 
|Gain on sale of discontinued operations, net of income taxes |  | $             | 131.9 |  |      | $ |      |      |  | $ |      | 
|                                                             |  |               |       |  |      |   |       |      | 



Liquidity and Capital Resources








31



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|                                    |       |               |      |      |      |   |     |      |  |   |      |     |  |      |     |     |            |   |     |       |  |   |     |     |  |   |      |      | 
|----------------------------------- | ----- | ------------- | ---- | ---- | ---- | - | --- | ---- |  | - | ---- | --- |  | ---- | --- | --- | ---------- | - | --- | ----- |  | - | --- | --- |  | - | ---- | ---- | 
|                                    |       | 2007          |      |      | 2008 |   |     | 2009 |  |   | 2010 |     |  | 2011 |     |     | Thereafter |   |     | Total | 
|                                    |       |               |      |      |      |   |     |      |  |   |      |     |  |      |     |     |            |   |     |       | 
|                                    |       | (In millions) |     
|Operating leases                    |       | $             | 5.3  |      |      | $ | 2.5 |      |  | $ | 1.6  |     |  | $    | 0.8 |     |            | $ | 0.7 |       |  | $ | 0.3 |     |  | $ | 11.2 |     
|Non-cancelable purchase obligations |       |               | 46.4 |      |      |   |    |      |  |   |     |     |  |      |    |     |            |   |    |       |  |   |    |     |  |   | 46.4 |     
|                                    |       |               |      |      |      |   |     |      |  |   |      |     |  |      |     |     |            |   |     |       | 
|                                    | Total |               | $    | 51.7 |      |   | $   | 2.5  |  |   | $    | 1.6 |  |      | $   | 0.8 |            |   | $   | 0.7   |  |   | $   | 0.3 |  |   | $    | 57.6 | 
|                                    |       |               |      |      |      |   |     |      |  |   |      |     |  |      |     |     |            |   |     |       | 

Critical Accounting Policies and Estimates






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



32



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00-21,








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

first-in,




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



33



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##### Table of Contents









New Accounting Pronouncements










34



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115-1/ 124-1,







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







35



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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 2, 2006 and April 3, 2005


|                                                    |                                                                                                                                                                                                       |                            |         |          |         |   |           |          |         | 
|--------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------- | -------- | ------- | - | --------- | -------- | ------- | 
|                                                    |                                                                                                                                                                                                       | 2006                       |         |          | 2005    |  
|                                                    |                                                                                                                                                                                                       |                            |         |          |         |  
|                                                    |                                                                                                                                                                                                       | (In thousands, except      |        
|                                                    |                                                                                                                                                                                                       | share and per share        |        
|                                                    |                                                                                                                                                                                                       | amounts)                   |        
|ASSETS                                             
|Current assets:                                     |                                                                                                                                                                                                       |                            |         |          |         |   |           |         
|                                                    | Cash and cash equivalents                                                                                                                                                                             |                            | $       | 125,192  |         |   | $         | 165,644  |        
|                                                    | Short-term investments                                                                                                                                                                                |                            |         | 540,448  |         |   |           | 646,694  |        
|                                                    | Accounts receivable, less allowance for doubtful accounts of
    $1,239 and $1,311 as of April 2, 2006 and April 3,
    2005, respectively                                                            |                            |         | 67,571   |         |   |           | 54,245   |        
|                                                    | Inventories                                                                                                                                                                                           |                            |         | 39,440   |         |   |           | 22,661   |        
|                                                    | Other current assets                                                                                                                                                                                  |                            |         | 46,441   |         |   |           | 32,699   |        
|                                                    | Current assets related to discontinued operations                                                                                                                                                     |                            |         |         |         |   |           | 17,576   |        
|                                                    |                                                                                                                                                                                                       |                            |         |          |         |  
|                                                    |                                                                                                                                                                                                       | Total current assets       |         |          | 819,092 |   |           |          | 939,519 | 
|Property and equipment, net                         |                                                                                                                                                                                                       |                            | 82,630  |          |         |   | 71,322    |         
|Goodwill and other intangible assets                |                                                                                                                                                                                                       |                            | 32,679  |          |         |   | 8,518     |         
|Other assets                                        |                                                                                                                                                                                                       |                            | 3,306   |          |         |   | 527       |         
|Long-term assets related to discontinued operations |                                                                                                                                                                                                       |                            |        |          |         |   | 6,454     |         
|                                                    |                                                                                                                                                                                                       |                            |         |          |         |  
|                                                    |                                                                                                                                                                                                       | $                          | 937,707 |          |         | $ | 1,026,340 |         
|                                                    |                                                                                                                                                                                                       |                            |         |          |         |  
|LIABILITIES AND STOCKHOLDERS EQUITY               
|Current liabilities:                                |                                                                                                                                                                                                       |                            |         |          |         |   |           |         
|                                                    | Accounts payable                                                                                                                                                                                      |                            | $       | 32,160   |         |   | $         | 19,975   |        
|                                                    | Accrued compensation                                                                                                                                                                                  |                            |         | 22,990   |         |   |           | 19,629   |        
|                                                    | Income taxes payable                                                                                                                                                                                  |                            |         | 12,920   |         |   |           | 17,999   |        
|                                                    | Other current liabilities                                                                                                                                                                             |                            |         | 10,283   |         |   |           | 7,444    |        
|                                                    | Current liabilities related to discontinued operations                                                                                                                                                |                            |         |         |         |   |           | 3,774    |        
|                                                    |                                                                                                                                                                                                       |                            |         |          |         |  
|                                                    |                                                                                                                                                                                                       | Total current liabilities  |         |          | 78,353  |   |           |          | 68,821  | 
|Deferred tax liabilities                            |                                                                                                                                                                                                       |                            |        |          |         |   | 1,336     |         
|                                                    |                                                                                                                                                                                                       |                            |         |          |         |  
|                                                    |                                                                                                                                                                                                       | Total liabilities          |         |          | 78,353  |   |           |          | 70,157  | 
|                                                    |                                                                                                                                                                                                       |                            |         |          |         |  
|Commitments and contingencies                       |                                                                                                                                                                                                       |                            |         |          |         |   |           |         
|Subsequent events (Notes 7 and 14)                  |                                                                                                                                                                                                       |                            |         |          |         |   |           |         
|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; 195,289,000 and 192,801,000 shares issued at
    April 2, 2006 and April 3, 2005, respectively                                     |                            |         | 195      |         |   |           | 193      |        
|                                                    | Additional paid-in capital                                                                                                                                                                            |                            |         | 537,648  |         |   |           | 504,663  |        
|                                                    | Retained earnings                                                                                                                                                                                     |                            |         | 883,310  |         |   |           | 599,722  |        
|                                                    | Accumulated other comprehensive loss                                                                                                                                                                  |                            |         | (1,799   | )       |   |           | (3,394   | )      
|                                                    | Treasury stock, at cost: 33,197,000 and 8,384,000 shares at
    April 2, 2006 and April 3, 2005, respectively                                                                                         |                            |         | (560,000 | )       |   |           | (145,001 | )      
|                                                    |                                                                                                                                                                                                       |                            |         |          |         |  
|                                                    |                                                                                                                                                                                                       | Total stockholders equity |         |          | 859,354 |   |           |          | 956,183 | 
|                                                    |                                                                                                                                                                                                       |                            |         |          |         |  
|                                                    |                                                                                                                                                                                                       | $                          | 937,707 |          |         | $ | 1,026,340 |         
|                                                    |                                                                                                                                                                                                       |                            |         |          |         |  



38



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QLOGIC CORPORATION







CONSOLIDATED STATEMENTS OF INCOME


Years Ended April 2, 2006, April 3, 2005 and
March 28, 2004


|                                                      |                                               |                           |         |         |         |   |         |         |         |   |         |         |         | 
|----------------------------------------------------- | --------------------------------------------- | ------------------------- | ------- | ------- | ------- | - | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                                                      |                                               | 2006                      |         |         | 2005    |   |         | 2004    |        
|                                                      |                                               |                           |         |         |         |   |         |         |        
|                                                      |                                               | (In thousands, except per |        
|                                                      |                                               | share amounts)            |        
|Net revenues                                          |                                               | $                         | 494,077 |         |         | $ | 428,719 |         |         | $ | 387,156 |        
|Cost of revenues                                      |                                               |                           | 144,246 |         |         |   | 121,074 |         |         |   | 115,297 |        
|                                                      |                                               |                           |         |         |         |   |         |         |        
|                                                      | Gross profit                                  |                           |         | 349,831 |         |   |         | 307,645 |         |   |         | 271,859 |        
|                                                      |                                               |                           |         |         |         |   |         |         |        
|Operating expenses:                                   |                                               |                           |         |         |         |   |         |         |         |   |         |        
|                                                      | Engineering and development                   |                           |         | 89,753  |         |   |         | 82,791  |         |   |         | 75,893  |        
|                                                      | Sales and marketing                           |                           |         | 64,416  |         |   |         | 54,582  |         |   |         | 48,449  |        
|                                                      | General and administrative                    |                           |         | 17,295  |         |   |         | 16,659  |         |   |         | 18,102  |        
|                                                      | Purchased in-process research and development |                           |         | 10,510  |         |   |         |        |         |   |         |        |        
|                                                      |                                               |                           |         |         |         |   |         |         |        
|                                                      |                                               | Total operating expenses  |         |         | 181,974 |   |         |         | 154,032 |   |         |         | 142,444 | 
|                                                      |                                               |                           |         |         |         |   |         |         |        
|Operating income                                      |                                               |                           | 167,857 |         |         |   | 153,613 |         |         |   | 129,415 |        
|Interest and other income, net                        |                                               |                           | 32,627  |         |         |   | 17,873  |         |         |   | 16,844  |        
|                                                      |                                               |                           |         |         |         |   |         |         |        
|Income from continuing operations before income taxes |                                               |                           | 200,484 |         |         |   | 171,486 |         |         |   | 146,259 |        
|Income taxes                                          |                                               |                           | 78,653  |         |         |   | 60,071  |         |         |   | 57,698  |        
|                                                      |                                               |                           |         |         |         |   |         |         |        
|Income from continuing operations                     |                                               |                           | 121,831 |         |         |   | 111,415 |         |         |   | 88,561  |        
|                                                      |                                               |                           |         |         |         |   |         |         |        
|Discontinued operations:                              |                                               |                           |         |         |         |   |         |         |         |   |         |        
|                                                      | Income from operations, net of income taxes   |                           |         | 29,816  |         |   |         | 46,181  |         |   |         | 45,112  |        
|                                                      | Gain on sale, net of income taxes             |                           |         | 131,941 |         |   |         |        |         |   |         |        |        
|                                                      |                                               |                           |         |         |         |   |         |         |        
|Income from discontinued operations                   |                                               |                           | 161,757 |         |         |   | 46,181  |         |         |   | 45,112  |        
|                                                      |                                               |                           |         |         |         |   |         |         |        
|Net income                                            |                                               | $                         | 283,588 |         |         | $ | 157,596 |         |         | $ | 133,673 |        
|                                                      |                                               |                           |         |         |         |   |         |         |        
|Income from continuing operations per share:          |                                               |                           |         |         |         |   |         |         |         |   |         |        
|                                                      | Basic                                         |                           | $       | 0.71    |         |   | $       | 0.60    |         |   | $       | 0.47    |        
|                                                      |                                               |                           |         |         |         |   |         |         |        
|                                                      | Diluted                                       |                           | $       | 0.70    |         |   | $       | 0.59    |         |   | $       | 0.46    |        
|                                                      |                                               |                           |         |         |         |   |         |         |        
|Income from discontinued operations per share:        |                                               |                           |         |         |         |   |         |         |         |   |         |        
|                                                      | Basic                                         |                           | $       | 0.95    |         |   | $       | 0.25    |         |   | $       | 0.24    |        
|                                                      |                                               |                           |         |         |         |   |         |         |        
|                                                      | Diluted                                       |                           | $       | 0.93    |         |   | $       | 0.25    |         |   | $       | 0.23    |        
|                                                      |                                               |                           |         |         |         |   |         |         |        
|Net income per share:                                 |                                               |                           |         |         |         |   |         |         |         |   |         |        
|                                                      | Basic                                         |                           | $       | 1.66    |         |   | $       | 0.85    |         |   | $       | 0.71    |        
|                                                      |                                               |                           |         |         |         |   |         |         |        
|                                                      | Diluted                                       |                           | $       | 1.63    |         |   | $       | 0.84    |         |   | $       | 0.69    |        
|                                                      |                                               |                           |         |         |         |   |         |         |        
|Number of shares used in per share calculations:      |                                               |                           |         |         |         |   |         |         |         |   |         |        
|                                                      | Basic                                         |                           |         | 171,250 |         |   |         | 185,024 |         |   |         | 188,562 |        
|                                                      |                                               |                           |         |         |         |   |         |         |        
|                                                      | Diluted                                       |                           |         | 173,467 |         |   |         | 187,315 |         |   |         | 192,492 |        
|                                                      |                                               |                           |         |         |         |   |         |         |        



39



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##### Table of Contents



QLOGIC CORPORATION







CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY AND
COMPREHENSIVE INCOME


Years Ended April 2, 2006, April 3, 2005 and
March 28, 2004


|                          |                                                                                   |                      |         |         |            |   |         |             |       |               |          |         |        |        |          |          |       |       |             |              |   |               |          |          |   |   |        |       |  |   |         |          |         | 
|------------------------- | --------------------------------------------------------------------------------- | -------------------- | ------- | ------- | ---------- | - | ------- | ----------- | ----- | ------------- | -------- | ------- | ------ | ------ | -------- | -------- | ----- | ----- | ----------- | ------------ | - | ------------- | -------- | -------- | - | - | ------ | ----- |  | - | ------- | -------- | ------- | 
|                          |                                                                                   |                      |         |         |            |   |         | 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 30, 2003 |                                                                                   |                      | 187,708 |         |            | $ | 188     |             |       | $             | 442,500  |         |        | $      | 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) |                      |         | 2,168   |            |   |         | 3           |       |               |          | 32,897  |        |        |          |         |       |       |             |             |   |               |          |         |   |   |        |      |  |   |         | 32,900   |        
|                          | Common stock issued related to business acquisition                               |                      |         | 262     |            |   |         |            |       |               |          | 6,546   |        |        |          |         |       |       |             |             |   |               |          |         |   |   |        |      |  |   |         | 6,546    |        
|                          | Common stock issued upon exercise of warrants                                     |                      |         | 560     |            |   |         |            |       |               |          |        |        |        |          |         |       |       |             |             |   |               |          |         |   |   |        |      |  |   |         |         |        
|                          | Purchase of treasury stock                                                        |                      |         | (2,478  | )          |   |         |            |       |               |          |        |        |        |          |         |       |       |             |             |   |               |          | (57,014  | ) |   |        |      |  |   |         | (57,014  | )      
|                          | Amortization of deferred stock-based compensation                                 |                      |         |        |            |   |         |            |       |               |          |        |        |        |          |         |       |       |             |             |   |               |          |         |   |   |        | 1,196 |  |   |         | 1,196    |        
|                          |                                                                                   |                      |         |         |            |   |         |             |       |               |          |         |        |        |          |          |       |       |             |              |   |               |          |         
|Balance at March 28, 2004 |                                                                                   |                      | 188,220 |         |            |   | 191     |             |       |               | 481,943  |         |        |        | 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)  |                      |         | 1,564   |            |   |         | 2           |       |               |          | 16,174  |        |        |          |         |       |       |             |             |   |               |          |         |   |   |        |      |  |   |         | 16,176   |        
|                          | Common stock issued related to business acquisition                               |                      |         | 357     |            |   |         |            |       |               |          | 6,546   |        |        |          |         |       |       |             |             |   |               |          |         |   |   |        |      |  |   |         | 6,546    |        
|                          | Purchase of treasury stock                                                        |                      |         | (5,724  | )          |   |         |            |       |               |          |        |        |        |          |         |       |       |             |             |   |               |          | (85,009  | ) |   |        |      |  |   |         | (85,009  | )      
|                          | Amortization of deferred stock-based compensation                                 |                      |         |        |            |   |         |            |       |               |          |        |        |        |          |         |       |       |             |             |   |               |          |         |   |   |        | 578   |  |   |         | 578      |        
|                          |                                                                                   |                      |         |         |            |   |         |             |       |               |          |         |        |        |          |          |       |       |             |              |   |               |          |         
|Balance at April 3, 2005  |                                                                                   |                      | 184,417 |         |            |   | 193     |             |       |               | 504,663  |         |        |        | 599,722  |          |       |       | (3,394      | )            |   |               | (145,001 | )        |   |   |       |       |  |   | 956,183 |         
|                          | Net income                                                                        |                      |         |        |            |   |         |            |       |               |          |        |        |        |          | 283,588  |       |       |             |             |   |               |          |         |   |   |        |      |  |   |         | 283,588  |        
|                          | Change in unrealized gains on investments, net of tax                             |                      |         |        |            |   |         |            |       |               |          |        |        |        |          |         |       |       |             | 1,595        |   |               |          |         |   |   |        |      |  |   |         | 1,595    |        
|                          |                                                                                   |                      |         |         |            |   |         |             |       |               |          |         |        |        |          |          |       |       |             |              |   |               |          |         
|                          | Comprehensive income                                                              |                      |         |        |            |   |         |            |       |               |          |        |        |        |          |         |       |       |             |             |   |               |          |         |   |   |        |      |  |   |         | 285,183  |        
|                          | Issuance of common stock under stock plans (including tax
    benefit of $5,055)  |                      |         | 2,488   |            |   |         | 2           |       |               |          | 32,985  |        |        |          |         |       |       |             |             |   |               |          |         |   |   |        |      |  |   |         | 32,987   |        
|                          | Purchase of treasury stock                                                        |                      |         | (24,813 | )          |   |         |            |       |               |          |        |        |        |          |         |       |       |             |             |   |               |          | (414,999 | ) |   |        |      |  |   |         | (414,999 | )      
|                          |                                                                                   |                      |         |         |            |   |         |             |       |               |          |         |        |        |          |          |       |       |             |              |   |               |          |         
|                          | Balance at April 2, 2006                                                          |                      |         | 162,092 |            |   | $       | 195         |       |               | $        | 537,648 |        |        | $        | 883,310  |       |       | $           | (1,799       | ) |               | $        | (560,000 | ) |   | $      |      |  |   | $       | 859,354  |        
|                          |                                                                                   |                      |         |         |            |   |         |             |       |               |          |         |        |        |          |          |       |       |             |              |   |               |          |         



40



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##### Table of Contents



QLOGIC CORPORATION







CONSOLIDATED STATEMENTS OF CASH FLOWS


Years Ended April 2, 2006, April 3, 2005 and
March 28, 2004


|                                                     |                                                                                                                         |                                                                  |                                                                |           |          |          |         |          |         |         |         |            |         |          |  
|---------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------- | -------------------------------------------------------------- | --------- | -------- | -------- | ------- | -------- | ------- | ------- | ------- | ---------- | ------- | -------- | -
|                                                     |                                                                                                                         | 2006                                                             |                                                                |           | 2005     |          |         | 2004     |        
|                                                     |                                                                                                                         |                                                                  |                                                                |           |          |          |         |          |        
|                                                     |                                                                                                                         | (In thousands)                                                   |                                                               
|Cash flows from operating activities:                |                                                                                                                         |                                                                  |                                                                |           |          |          |         |          |         |         |         |           
|                                                     | Net income                                                                                                              |                                                                  | $                                                              | 283,588   |          |          | $       | 157,596  |         |         | $       | 133,673    |        
|                                                     |                                                                                                                         | Income from discontinued operations, net of income taxes         |                                                                |           | (29,816  | )        |         |          | (46,181 | )       |         |            | (45,112 | )       
|                                                     |                                                                                                                         | Gain on sale of discontinued operations, net of income taxes     |                                                                |           | (131,941 | )        |         |          |        |         |         |            |        |         
|                                                     |                                                                                                                         |                                                                  |                                                                |           |          |          |         |          |        
|                                                     | Income from continuing operations                                                                                       |                                                                  |                                                                | 121,831   |          |          |         | 111,415  |         |         |         | 88,561     |        
|                                                     | Adjustments to reconcile income from continuing operations to
    net cash provided by continuing operating activities: |                                                                  |                                                                |           |          |          |         |          |         |         |         |            |        
|                                                     |                                                                                                                         | Depreciation and amortization                                    |                                                                |           | 17,898   |          |         |          | 15,059  |         |         |            | 14,483  |         
|                                                     |                                                                                                                         | Purchased in-process research and development                    |                                                                |           | 10,510   |          |         |          |        |         |         |            |        |         
|                                                     |                                                                                                                         | Deferred income taxes                                            |                                                                |           | (4,480   | )        |         |          | (158    | )       |         |            | 13,742  |         
|                                                     |                                                                                                                         | Tax benefit from issuance of stock under stock plans             |                                                                |           | 5,055    |          |         |          | 2,441   |         |         |            | 10,640  |         
|                                                     |                                                                                                                         | Stock-based compensation                                         |                                                                |           | 175      |          |         |          | 578     |         |         |            | 1,196   |         
|                                                     |                                                                                                                         | Provision for losses on accounts receivable                      |                                                                |           | (54      | )        |         |          | 215     |         |         |            | 49      |         
|                                                     |                                                                                                                         | Loss on disposal of property and equipment                       |                                                                |           | 168      |          |         |          | 187     |         |         |            | 43      |         
|                                                     |                                                                                                                         | Changes in operating assets and liabilities, net of acquisition: |                                                                |           |          |          |         |          |         |         |         |            |         |         
|                                                     |                                                                                                                         |                                                                  | Accounts receivable                                            |           |          | (12,825  | )       |          |         | (3,422  | )       |            |         | (17,099  | )
|                                                     |                                                                                                                         |                                                                  | Inventories                                                    |           |          | (16,230  | )       |          |         | (2,671  | )       |            |         | (2,024   | )
|                                                     |                                                                                                                         |                                                                  | Other assets                                                   |           |          | (5,840   | )       |          |         | (3,572  | )       |            |         | (37      | )
|                                                     |                                                                                                                         |                                                                  | Accounts payable                                               |           |          | 11,877   |         |          |         | 3,840   |         |            |         | 2,972    |  
|                                                     |                                                                                                                         |                                                                  | Accrued compensation                                           |           |          | 3,263    |         |          |         | 3,528   |         |            |         | (2,009   | )
|                                                     |                                                                                                                         |                                                                  | Income taxes payable                                           |           |          | (1,205   | )       |          |         | 4,094   |         |            |         | (2,630   | )
|                                                     |                                                                                                                         |                                                                  | Other liabilities                                              |           |          | 2,405    |         |          |         | 1,593   |         |            |         | 9,257    |  
|                                                     |                                                                                                                         |                                                                  |                                                                |           |          |          |         |          |        
|                                                     |                                                                                                                         |                                                                  | Net cash provided by continuing operating activities           |           |          | 132,548  |         |          |         | 133,127 |         |            |         | 117,144  |  
|                                                     |                                                                                                                         |                                                                  |                                                                |           |          |          |         |          |        
|Cash flows from investing activities:                |                                                                                                                         |                                                                  |                                                                |           |          |          |         |          |         |         |         |           
|                                                     | Purchases of marketable securities                                                                                      |                                                                  |                                                                | (946,087  | )        |          |         | (672,418 | )       |         |         | (1,054,362 | )      
|                                                     | Sales and maturities of marketable securities                                                                           |                                                                  |                                                                | 1,101,680 |          |          |         | 694,140  |         |         |         | 899,122    |        
|                                                     | Additions to property and equipment                                                                                     |                                                                  |                                                                | (28,295   | )        |          |         | (22,299  | )       |         |         | (20,571    | )      
|                                                     | Acquisition of business, net of cash acquired                                                                           |                                                                  |                                                                | (35,210   | )        |          |         |         |         |         |         |           |        
|                                                     | Restricted cash placed in escrow                                                                                        |                                                                  |                                                                | (12,000   | )        |          |         |         |         |         |         |           |        
|                                                     | Purchase of other assets                                                                                                |                                                                  |                                                                |          |          |          |         | (4,000   | )       |         |         |           |        
|                                                     |                                                                                                                         |                                                                  |                                                                |           |          |          |         |          |        
|                                                     |                                                                                                                         |                                                                  | Net cash provided by (used in) continuing investing activities |           |          | 80,088   |         |          |         | (4,577  | )       |            |         | (175,811 | )
|                                                     |                                                                                                                         |                                                                  |                                                                |           |          |          |         |          |        
|Cash flows from financing activities:                |                                                                                                                         |                                                                  |                                                                |           |          |          |         |          |         |         |         |           
|                                                     | Proceeds from issuance of stock under stock plans                                                                       |                                                                  |                                                                | 27,757    |          |          |         | 13,735   |         |         |         | 22,260     |        
|                                                     | Purchase of treasury stock                                                                                              |                                                                  |                                                                | (414,999  | )        |          |         | (85,009  | )       |         |         | (57,014    | )      
|                                                     |                                                                                                                         |                                                                  |                                                                |           |          |          |         |          |        
|                                                     |                                                                                                                         |                                                                  | Net cash used in continuing financing activities               |           |          | (387,242 | )       |          |         | (71,274 | )       |            |         | (34,754  | )
|                                                     |                                                                                                                         |                                                                  |                                                                |           |          |          |         |          |        
|Net cash provided by (used in) continuing operations |                                                                                                                         |                                                                  | (174,606                                                       | )         |          |          | 57,276  |          |         |         | (93,421 | )         
|                                                     |                                                                                                                         |                                                                  |                                                                |           |          |          |         |          |        
|Cash flows from discontinued operations:             |                                                                                                                         |                                                                  |                                                                |           |          |          |         |          |         |         |         |           
|                                                     | Net cash provided by (used in) operating activities                                                                     |                                                                  |                                                                | (47,182   | )        |          |         | 48,815   |         |         |         | 40,048     |        
|                                                     | Net cash provided by (used in) investing activities, including
    proceeds from sale                                   |                                                                  |                                                                | 181,336   |          |          |         | (3,358   | )       |         |         | (1,712     | )      
|                                                     |                                                                                                                         |                                                                  |                                                                |           |          |          |         |          |        
|                                                     |                                                                                                                         | Cash provided by discontinued operations                         |                                                                |           | 134,154  |          |         |          | 45,457  |         |         |            | 38,336  |         
|                                                     |                                                                                                                         |                                                                  |                                                                |           |          |          |         |          |        
|Net increase (decrease) in cash and cash equivalents |                                                                                                                         |                                                                  | (40,452                                                        | )         |          |          | 102,733 |          |         |         | (55,085 | )         
|Cash and cash equivalents at beginning of year       |                                                                                                                         |                                                                  | 165,644                                                        |           |          |          | 62,911  |          |         |         | 117,996 |           
|                                                     |                                                                                                                         |                                                                  |                                                                |           |          |          |         |          |        
|Cash and cash equivalents at end of year             |                                                                                                                         | $                                                                | 125,192                                                        |           |          | $        | 165,644 |          |         | $       | 62,911  |           
|                                                     |                                                                                                                         |                                                                  |                                                                |           |          |          |         |          |        
|Supplemental disclosure of cash flow information:    |                                                                                                                         |                                                                  |                                                                |           |          |          |         |          |         |         |         |           
|Cash paid during the year for:                       |                                                                                                                         |                                                                  |                                                                |           |          |          |         |          |         |         |         |           
|                                                     | Income taxes                                                                                                            |                                                                  | $                                                              | 180,641   |          |          | $       | 75,723   |         |         | $       | 64,783     |        
|                                                     |                                                                                                                         |                                                                  |                                                                |           |          |          |         |          |        



41



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##### Table of Contents



QLOGIC CORPORATION







NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




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



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





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







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









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





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



42



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##### Table of Contents



QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




00-21,




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





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





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



43



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##### Table of Contents



QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




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







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





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







| |                                                            
| | -----------------------------------------------------------
| | Accounts Receivable and Allowance for Doubtful
    Accounts



44



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##### Table of Contents



QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




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

(first-in,




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





| |                                     
| | ------------------------------------
| | Goodwill and Other Intangible Assets











| |                  
| | -----------------
| | Long-Lived Assets





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



45



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##### Table of Contents



QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






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





| |                             
| | ----------------------------
| | Foreign Currency Translation





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



46



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##### Table of Contents



QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                                                                                                                  |                      |                                 |         |      |      |   |         |      |  |   |         |      | 
|------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------- | ------------------------------- | ------- | ---- | ---- | - | ------- | ---- |  | - | ------- | ---- | 
|                                                                                                                                                  |                      | 2006                            |         |      | 2005 |   |         | 2004 | 
|                                                                                                                                                  |                      |                                 |         |      |      |   |         |      | 
|                                                                                                                                                  |                      | (In thousands, except per share |        
|                                                                                                                                                  |                      | amounts)                        |        
|Net income, as reported                                                                                                                           |                      | $                               | 283,588 |      |      | $ | 157,596 |      |  | $ | 133,673 |     
|Add: Stock-based employee compensation expense included in
    reported net income, net of related tax effects                                    |                      |                                 | 105     |      |      |   | 376     |      |  |   | 742     |     
|Deduct: Stock-based employee compensation expense determined
    under the fair value based method for all awards, net of related
    tax effects |                      |                                 | (31,477 | )    |      |   | (32,664 | )    |  |   | (35,463 | )   
|                                                                                                                                                  |                      |                                 |         |      |      |   |         |      | 
|Pro forma net income                                                                                                                              |                      | $                               | 252,216 |      |      | $ | 125,308 |      |  | $ | 98,952  |     
|                                                                                                                                                  |                      |                                 |         |      |      |   |         |      | 
|Net income per share:                                                                                                                             |                      |                                 |         |      |      |   |         |      |  |   |         |     
|                                                                                                                                                  | Basic, as reported   |                                 | $       | 1.66 |      |   | $       | 0.85 |  |   | $       | 0.71 | 
|                                                                                                                                                  | Diluted, as reported |                                 | $       | 1.63 |      |   | $       | 0.84 |  |   | $       | 0.69 | 
|                                                                                                                                                  | Basic, pro forma     |                                 | $       | 1.47 |      |   | $       | 0.68 |  |   | $       | 0.52 | 
|                                                                                                                                                  | Diluted, pro forma   |                                 | $       | 1.45 |      |   | $       | 0.67 |  |   | $       | 0.51 | 



|                        |  |               |      |   |                              |   |      |      |  |   |       |   |  |      |      |   |      |   |      |   |  |   |      |  
|----------------------- |  | ------------- | ---- | - | ---------------------------- | - | ---- | ---- |  | - | ----- | - |  | ---- | ---- | - | ---- | - | ---- | - |  | - | ---- | -
|                        |  | Stock Options |      |   | Employee Stock Purchase Plan |  
|                        |  |               |      |   |                              |  
|                        |  | 2006          |      |   | 2005                         |   |      | 2004 |  |   | 2006  |   |  | 2005 |      |   | 2004 |  
|                        |  |               |      |   |                              |   |      |      |  |   |       |   |  |      |      |   |      |  
|Fair value              |  | $             | 6.35 |   |                              | $ | 5.26 |      |  | $ | 10.11 |   |  | $    | 3.54 |   |      | $ | 3.33 |   |  | $ | 5.23 |  
|Expected volatility     |  |               | 46   | % |                              |   | 45   | %    |  |   | 50    | % |  |      | 34   | % |      |   | 43   | % |  |   | 50   | %
|Risk-free interest rate |  |               | 4.3  | % |                              |   | 3.3  | %    |  |   | 2.4   | % |  |      | 3.2  | % |      |   | 1.5  | % |  |   | 1.0  | %
|Expected life (years)   |  |               | 4.0  |   |                              |   | 4.0  |      |  |   | 4.0   |   |  |      | 0.25 |   |      |   | 0.25 |   |  |   | 0.25 |  
|Dividend yield          |  |               |     |   |                              |   |     |      |  |   |      |   |  |      |     |   |      |   |     |   |  |   |     |  



out-of




47



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##### Table of Contents



QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






New Accounting Pronouncements










48



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##### Table of Contents



QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


115-1/FAS 124-1,




|        |                              
|------- | -----------------------------
|Note 2. | Acquisitions and Dispositions



| |                                                                          
| | -------------------------------------------------------------------------
| | Sale of Hard Disk Drive Controller and Tape Drive
    Controller Business

available-for




49



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##### Table of Contents



QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                            |  |                |         |  |      |   |         |      |  |   |         | 
|------------------------------------------- |  | -------------- | ------- |  | ---- | - | ------- | ---- |  | - | ------- | 
|                                            |  | 2006           |         |  | 2005 |   |         | 2004 | 
|                                            |  |                |         |  |      |   |         |      | 
|                                            |  | (In thousands) |        
|Net revenues                                |  | $              | 94,632  |  |      | $ | 143,184 |      |  | $ | 136,704 | 
|                                            |  |                |         |  |      |   |         |      | 
|Income from operations before income taxes  |  | $              | 48,234  |  |      | $ | 70,873  |      |  | $ | 69,342  | 
|Income taxes                                |  |                | 18,418  |  |      |   | 24,692  |      |  |   | 24,230  | 
|                                            |  |                |         |  |      |   |         |      | 
|Income from operations, net of income taxes |  | $              | 29,816  |  |      | $ | 46,181  |      |  | $ | 45,112  | 
|                                            |  |                |         |  |      |   |         |      | 
|Gain from sale before income taxes          |  | $              | 213,443 |  |      | $ |        |      |  | $ |        | 
|Income taxes                                |  |                | 81,502  |  |      |   |        |      |  |   |        | 
|                                            |  |                |         |  |      |   |         |      | 
|Gain on sale, net of income taxes           |  | $              | 131,941 |  |      | $ |        |      |  | $ |        | 
|                                            |  |                |         |  |      |   |         |      | 





| |                
| | ---------------
| | Troika Networks





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##### Table of Contents



QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








| |                      
| | ---------------------
| | Little Mountain Group





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





|                      |                                                               |                                 |         |         |      |   |         |         |      |   |         |         |      | 
|--------------------- | ------------------------------------------------------------- | ------------------------------- | ------- | ------- | ---- | - | ------- | ------- | ---- | - | ------- | ------- | ---- | 
|                      |                                                               | 2006                            |         |         | 2005 |   |         | 2004    |     
|                      |                                                               |                                 |         |         |      |   |         |         |     
|                      |                                                               | (In thousands, except per share |        
|                      |                                                               | amounts)                        |        
|Net income            |                                                               | $                               | 283,588 |         |      | $ | 157,596 |         |      | $ | 133,673 |        
|                      |                                                               |                                 |         |         |      |   |         |         |     
|Shares:               |                                                               |                                 |         |         |      |   |         |         |      |   |         |        
|                      | Weighted-average shares outstanding  basic                   |                                 |         | 171,250 |      |   |         | 185,024 |      |   |         | 188,562 |     
|                      | Dilutive potential common shares, using treasury stock method |                                 |         | 2,217   |      |   |         | 2,291   |      |   |         | 3,930   |     
|                      |                                                               |                                 |         |         |      |   |         |         |     
|                      | Weighted-average shares outstanding  diluted                 |                                 |         | 173,467 |      |   |         | 187,315 |      |   |         | 192,492 |     
|                      |                                                               |                                 |         |         |      |   |         |         |     
|Net income per share: |                                                               |                                 |         |         |      |   |         |         |      |   |         |        
|                      |                                                               | Basic                           |         | $       | 1.66 |   |         | $       | 0.85 |   |         | $       | 0.71 | 
|                      |                                                               |                                 |         |         |      |   |         |         |     
|                      |                                                               | Diluted                         |         | $       | 1.63 |   |         | $       | 0.84 |   |         | $       | 0.69 | 
|                      |                                                               |                                 |         |         |      |   |         |         |     



51



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##### Table of Contents



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 2, 2006                               |                                     |                |         |         |            |   |       |            |  |   |            |        |   |   |         |        
|U.S. Government securities                  |                                     | $              | 154,033 |         |            | $ |      |            |  | $ | (2,851     | )      |   | $ | 151,182 |        
|Corporate bonds                             |                                     |                | 128,430 |         |            |   | 8     |            |  |   | (2,005     | )      |   |   | 126,433 |        
|Municipal bonds                             |                                     |                | 108,734 |         |            |   |      |            |  |   |           |        |   |   | 108,734 |        
|Asset and mortgage backed securities        |                                     |                | 42,808  |         |            |   |      |            |  |   | (844       | )      |   |   | 41,964  |        
|Other debt securities                       |                                     |                | 106,199 |         |            |   |      |            |  |   | (12        | )      |   |   | 106,187 |        
|                                            |                                     |                |         |         |            |   |       |            |  |   |            |       
|                                            | Total debt securities               |                |         | 540,204 |            |   |       | 8          |  |   |            | (5,712 | ) |   |         | 534,500 | 
|Auction rate securities                     |                                     |                | 64,300  |         |            |   |      |            |  |   |           |        |   |   | 64,300  |        
|Common stock  Marvell (see Note 2)         |                                     |                | 21,808  |         |            |   | 2,807 |            |  |   |           |        |   |   | 24,615  |        
|                                            |                                     |                |         |         |            |   |       |            |  |   |            |       
|                                            | Total available-for-sale securities |                |         | 626,312 |            |   |       | 2,815      |  |   |            | (5,712 | ) |   |         | 623,415 | 
|Less amounts classified as cash equivalents |                                     |                | 82,967  |         |            |   |      |            |  |   |           |        |   |   | 82,967  |        
|                                            |                                     |                |         |         |            |   |       |            |  |   |            |       
|                                            |                                     | $              | 543,345 |         |            | $ | 2,815 |            |  | $ | (5,712     | )      |   | $ | 540,448 |        
|                                            |                                     |                |         |         |            |   |       |            |  |   |            |       
|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  |        
|Asset and mortgage backed securities        |                                     |                | 53,258  |         |            |   | 1     |            |  |   | (728       | )      |   |   | 52,531  |        
|Other debt securities                       |                                     |                | 37,688  |         |            |   | 11    |            |  |   |           |        |   |   | 37,699  |        
|                                            |                                     |                |         |         |            |   |       |            |  |   |            |       
|                                            | Total debt securities               |                |         | 655,752 |            |   |       | 284        |  |   |            | (5,533 | ) |   |         | 650,503 | 
|Auction rate 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 |        
|                                            |                                     |                |         |         |            |   |       |            |  |   |            |       



52



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QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                         |  |                |         |  |            |   |         | 
|---------------------------------------- |  | -------------- | ------- |  | ---------- | - | ------- | 
|                                         |  | Amortized      |         |  | Estimated  |  
|                                         |  | Cost           |         |  | Fair Value |  
|                                         |  |                |         |  |            |  
|                                         |  | (In thousands) |        
|Due in one year or less                  |  | $              | 149,751 |  |            | $ | 149,691 | 
|Due after one year through three years   |  |                | 147,878 |  |            |   | 145,468 | 
|Due after three years through five years |  |                | 74,554  |  |            |   | 72,901  | 
|Due after five years                     |  |                | 168,021 |  |            |   | 166,440 | 
|                                         |  |                |         |  |            |  
|                                         |  | $              | 540,204 |  |            | $ | 534,500 | 
|                                         |  |                |         |  |            |  



|                                     |       |                     |         |         |                      |   |        |        |   |   |            |         |  |       |        |        |            |   |         |         |  |   |        |        |  
|------------------------------------ | ----- | ------------------- | ------- | ------- | -------------------- | - | ------ | ------ | - | - | ---------- | ------- |  | ----- | ------ | ------ | ---------- | - | ------- | ------- |  | - | ------ | ------ | -
|                                     |       | 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)      |        
|April 2, 2006                        |       |                     |         |         |                      |   |        |        |   |   |            |         |  |       |        |        |            |   |         |         |  |   |        |       
|U.S. Government securities           |       | $                   | 49,294  |         |                      | $ | (652   | )      |   | $ | 83,654     |         |  | $     | (2,199 | )      |            | $ | 132,948 |         |  | $ | (2,851 | )     
|Corporate bonds                      |       |                     | 60,278  |         |                      |   | (539   | )      |   |   | 56,312     |         |  |       | (1,466 | )      |            |   | 116,590 |         |  |   | (2,005 | )     
|Asset and mortgage backed securities |       |                     | 12,045  |         |                      |   | (99    | )      |   |   | 28,888     |         |  |       | (745   | )      |            |   | 40,933  |         |  |   | (844   | )     
|Other debt securities                |       |                     | 7,339   |         |                      |   | (12    | )      |   |   |           |         |  |       |       |        |            |   | 7,339   |         |  |   | (12    | )     
|                                     |       |                     |         |         |                      |   |        |        |   |   |            |         |  |       |        |        |            |  
|                                     | Total |                     | $       | 128,956 |                      |   | $      | (1,302 | ) |   | $          | 168,854 |  |       | $      | (4,410 | )          |   | $       | 297,810 |  |   | $      | (5,712 | )
|                                     |       |                     |         |         |                      |   |        |        |   |   |            |         |  |       |        |        |            |  
|April 3, 2005                        |       |                     |         |         |                      |   |        |        |   |   |            |         |  |       |        |        |            |   |         |         |  |   |        |       
|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 | )     
|Asset and mortgage backed securities |       |                     | 50,086  |         |                      |   | (707   | )      |   |   | 1,314      |         |  |       | (21    | )      |            |   | 51,400  |         |  |   | (728   | )     
|                                     |       |                     |         |         |                      |   |        |        |   |   |            |         |  |       |        |        |            |  
|                                     | Total |                     | $       | 445,044 |                      |   | $      | (5,447 | ) |   | $          | 7,625   |  |       | $      | (86    | )          |   | $       | 452,669 |  |   | $      | (5,533 | )
|                                     |       |                     |         |         |                      |   |        |        |   |   |            |         |  |       |        |        |            |  



53



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##### Table of Contents



QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




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



|               |  |                |        |  |      |   |        | 
|-------------- |  | -------------- | ------ |  | ---- | - | ------ | 
|               |  | 2006           |        |  | 2005 |  
|               |  |                |        |  |      |  
|               |  | (In thousands) |       
|Raw materials  |  | $              | 13,810 |  |      | $ | 9,024  | 
|Finished goods |  |                | 25,630 |  |      |   | 13,637 | 
|               |  |                |        |  |      |  
|               |  | $              | 39,440 |  |      | $ | 22,661 | 
|               |  |                |        |  |      |  



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



|                                               |  |                |         |  |      |   |         | 
|---------------------------------------------- |  | -------------- | ------- |  | ---- | - | ------- | 
|                                               |  | 2006           |         |  | 2005 |  
|                                               |  |                |         |  |      |  
|                                               |  | (In thousands) |        
|Land                                           |  | $              | 11,663  |  |      | $ | 11,663  | 
|Building and improvements                      |  |                | 27,357  |  |      |   | 24,449  | 
|Production and test equipment                  |  |                | 102,856 |  |      |   | 85,367  | 
|Furniture and fixtures                         |  |                | 6,884   |  |      |   | 5,661   | 
|                                               |  |                |         |  |      |  
|                                               |  |                | 148,760 |  |      |   | 127,140 | 
|Less accumulated depreciation and amortization |  |                | 66,130  |  |      |   | 55,818  | 
|                                               |  |                |         |  |      |  
|                                               |  | $              | 82,630  |  |      | $ | 71,322  | 
|                                               |  |                |         |  |      |  



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



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





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





54



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##### Table of Contents



QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










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













55



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##### Table of Contents



QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




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



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





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













56



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##### Table of Contents



QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




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



|                                 |  |           |        |           |          |   |       |           |           |  |          |   |  |           |       |  |          |  |        |   |  |   |       | 
|-------------------------------- |  | --------- | ------ | --------- | -------- | - | ----- | --------- | --------- |  | -------- | - |  | --------- | ----- |  | -------- |  | ------ | - |  | - | ----- | 
|                                 |  | 2006      |        |           | 2005     |   |       | 2004      |          
|                                 |  |           |        |           |          |   |       |           |          
|                                 |  |           |        | 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 |  |           | 28,514 |           |          | $ | 20.83 |           |           |  | 24,506   |   |  | $         | 22.89 |  |          |  | 21,688 |   |  | $ | 21.67 | 
|Granted                          |  |           | 2,757  |           |          |   | 16.57 |           |           |  | 7,920    |   |  |           | 13.34 |  |          |  | 5,660  |   |  |   | 23.89 | 
|Exercised                        |  |           | (2,057 | )         |          |   | 10.73 |           |           |  | (1,098   | ) |  |           | 7.73  |  |          |  | (1,896 | ) |  |   | 9.29  | 
|Cancelled                        |  |           | (4,360 | )         |          |   | 22.48 |           |           |  | (2,814   | ) |  |           | 22.80 |  |          |  | (946   | ) |  |   | 28.30 | 
|                                 |  |           |        |           |          |   |       |           |           |  |          |   |  |           |       |  |          | 
|Outstanding at end of year       |  |           | 24,854 |           |          |   | 20.90 |           |           |  | 28,514   |   |  |           | 20.83 |  |          |  | 24,506 |   |  |   | 22.89 | 
|                                 |  |           |        |           |          |   |       |           |           |  |          |   |  |           |       |  |          | 
|Exercisable at end of year       |  |           | 17,523 |           |          |   | 23.22 |           |           |  | 15,804   |   |  |           | 23.82 |  |          |  | 13,590 |   |  |   | 22.69 | 
|                                 |  |           |        |           |          |   |       |           |           |  |          |   |  |           |       |  |          | 



|                         |  |             |        |           |                |   |           |              |  |  |           |           |  |                |        |  |  |   |       | 
|------------------------ |  | ----------- | ------ | --------- | -------------- | - | --------- | ------------ |  |  | --------- | --------- |  | -------------- | ------ |  |  | - | ----- | 
|                         |  | Outstanding |        |           | Exercisable    |  
|                         |  |             |        |           |                |  
|                         |  |             |        | Weighted- |                |   | Remaining |              |  |  |           | Weighted- | 
|                         |  | Number of   |        |           | Average        |   |           | Contractual  |  |  | Number    |           |  | Average        |       
|Range of Exercise Prices |  | Shares      |        |           | Exercise Price |   |           | Life (Years) |  |  | of Shares |           |  | Exercise Price |       
|                         |  |             |        |           |                |   |           |              |  |  |           |           |  |                |       
|$0.00 to $15.00          |  |             | 6,115  |           |                | $ | 11.96     |              |  |  | 7.7       |           |  |                | 2,564  |  |  | $ | 10.59 | 
|15.01 to 20.00           |  |             | 5,973  |           |                |   | 16.97     |              |  |  | 7.1       |           |  |                | 3,018  |  |  |   | 17.21 | 
|20.01 to 24.00           |  |             | 3,792  |           |                |   | 21.38     |              |  |  | 6.8       |           |  |                | 2,968  |  |  |   | 21.51 | 
|24.01 to 30.00           |  |             | 5,955  |           |                |   | 25.63     |              |  |  | 6.2       |           |  |                | 5,955  |  |  |   | 25.63 | 
|30.01 to 75.50           |  |             | 3,019  |           |                |   | 36.87     |              |  |  | 4.2       |           |  |                | 3,019  |  |  |   | 36.87 | 
|                         |  |             |        |           |                |   |           |              |  |  |           |           |  |                |       
|                         |  |             | 24,854 |           |                |   | 20.90     |              |  |  | 6.6       |           |  |                | 17,523 |  |  |   | 23.22 | 
|                         |  |             |        |           |                |   |           |              |  |  |           |           |  |                |       



|        |                                 
|------- | --------------------------------
|Note 9. | Employee Retirement Savings Plan





|         |                          
|-------- | -------------------------
|Note 10. | Interest and Other Income



|                                             |  |                |        |   |      |   |        |      |  |   |        | 
|-------------------------------------------- |  | -------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | 
|                                             |  | 2006           |        |   | 2005 |   |        | 2004 | 
|                                             |  |                |        |   |      |   |        |      | 
|                                             |  | (In thousands) |       
|Interest income                              |  | $              | 25,818 |   |      | $ | 18,530 |      |  | $ | 15,486 | 
|Gain (loss) on sale of marketable securities |  |                | 6,814  |   |      |   | (655   | )    |  |   | 1,095  | 
|Other                                        |  |                | (5     | ) |      |   | (2     | )    |  |   | 263    | 
|                                             |  |                |        |   |      |   |        |      | 
|                                             |  | $              | 32,627 |   |      | $ | 17,873 |      |  | $ | 16,844 | 
|                                             |  |                |        |   |      |   |        |      | 

57



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##### Table of Contents



QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|         |                              
|-------- | -----------------------------
|Note 11. | Commitments and Contingencies



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



|                                    |  |                |        | 
|----------------------------------- |  | -------------- | ------ | 
|Fiscal Year                         |  |               
|                                    |  |               
|                                    |  | (In thousands) |       
|2007                                |  | $              | 5,266  | 
|2008                                |  |                | 2,531  | 
|2009                                |  |                | 1,580  | 
|2010                                |  |                | 785    | 
|2011                                |  |                | 689    | 
|Thereafter                          |  |                | 347    | 
|                                    |  |                |       
|Total future minimum lease payments |  | $              | 11,198 | 
|                                    |  |                |       





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





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





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



|              |  |                |         |   |      |   |         |      |  |   |         |  
|------------- |  | -------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|              |  | 2006           |         |   | 2005 |   |         | 2004 | 
|              |  |                |         |   |      |   |         |      | 
|              |  | (In thousands) |        
|United States |  | $              | 220,872 |   |      | $ | 171,146 |      |  | $ | 146,785 |  
|Foreign       |  |                | (20,388 | ) |      |   | 340     |      |  |   | (526    | )
|              |  |                |         |   |      |   |         |      | 
|              |  | $              | 200,484 |   |      | $ | 171,486 |      |  | $ | 146,259 |  
|              |  |                |         |   |      |   |         |      | 

58



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##### Table of Contents



QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                           |         |                |        |        |        |   |        |        |        |   |        |        |        | 
|-------------------------- | ------- | -------------- | ------ | ------ | ------ | - | ------ | ------ | ------ | - | ------ | ------ | ------ | 
|                           |         | 2006           |        |        | 2005   |   |        | 2004   |       
|                           |         |                |        |        |        |   |        |        |       
|                           |         | (In thousands) |       
|Current:                   |         |                |        |        |        |   |        |        |        |   |        |       
|                           | Federal |                | $      | 76,295 |        |   | $      | 48,260 |        |   | $      | 38,483 |       
|                           | State   |                |        | 6,485  |        |   |        | 11,991 |        |   |        | 5,595  |       
|                           | Foreign |                |        | 257    |        |   |        | 14     |        |   |        | (158   | )     
|                           |         |                |        |        |        |   |        |        |       
|                           |         | Total current  |        |        | 83,037 |   |        |        | 60,265 |   |        |        | 43,920 | 
|Deferred:                  |         |                |        |        |        |   |        |        |        |   |        |       
|                           | Federal |                |        | (4,029 | )      |   |        | (210   | )      |   |        | 12,036 |       
|                           | State   |                |        | (434   | )      |   |        | 10     |        |   |        | 1,742  |       
|                           | Foreign |                |        | 79     |        |   |        | 6      |        |   |        |       |       
|                           |         |                |        |        |        |   |        |        |       
|                           |         | Total deferred |        |        | (4,384 | ) |        |        | (194   | ) |        |        | 13,778 | 
|                           |         |                |        |        |        |   |        |        |       
|Total income tax provision |         | $              | 78,653 |        |        | $ | 60,071 |        |        | $ | 57,698 |       
|                           |         |                |        |        |        |   |        |        |       



|                        |  |                |         |  |      |   |        |      |  |   |        | 
|----------------------- |  | -------------- | ------- |  | ---- | - | ------ | ---- |  | - | ------ | 
|                        |  | 2006           |         |  | 2005 |   |        | 2004 | 
|                        |  |                |         |  |      |   |        |      | 
|                        |  | (In thousands) |        
|Continuing operations   |  | $              | 78,653  |  |      | $ | 60,071 |      |  | $ | 57,698 | 
|Discontinued operations |  |                | 99,920  |  |      |   | 24,692 |      |  |   | 24,230 | 
|                        |  |                |         |  |      |   |        |      | 
|                        |  | $              | 178,573 |  |      | $ | 84,763 |      |  | $ | 81,928 | 
|                        |  |                |         |  |      |   |        |      | 



59



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QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                    |  |                |        |   |      |   |        |      |  |   |        |  
|--------------------------------------------------- |  | -------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                    |  | 2006           |        |   | 2005 |   |        | 2004 | 
|                                                    |  |                |        |   |      |   |        |      | 
|                                                    |  | (In thousands) |       
|Expected income tax provision at the statutory rate |  | $              | 70,169 |   |      | $ | 60,020 |      |  | $ | 51,191 |  
|State income taxes, net of federal tax benefit      |  |                | 3,933  |   |      |   | 7,801  |      |  |   | 4,769  |  
|Foreign losses at other than U.S. tax rates         |  |                | 6,729  |   |      |   |       |      |  |   |       |  
|Benefit from export sales                           |  |                | (1,963 | ) |      |   | (1,738 | )    |  |   | (1,724 | )
|Benefit from research and other credits             |  |                | (857   | ) |      |   | (660   | )    |  |   | (1,380 | )
|Tax exempt income                                   |  |                | (91    | ) |      |   | (275   | )    |  |   | (161   | )
|Nondeductible business combination related costs    |  |                |       |   |      |   | 2,119  |      |  |   | 3,841  |  
|Reversal of taxes previously accrued                |  |                |       |   |      |   | (7,581 | )    |  |   |       |  
|Other, net                                          |  |                | 733    |   |      |   | 385    |      |  |   | 1,162  |  
|                                                    |  |                |        |   |      |   |        |      | 
|                                                    |  | $              | 78,653 |   |      | $ | 60,071 |      |  | $ | 57,698 |  
|                                                    |  |                |        |   |      |   |        |      | 



|                          |                                                |                                      |   |        |        |  |   |        |        | 
|------------------------- | ---------------------------------------------- | ------------------------------------ | - | ------ | ------ |  | - | ------ | ------ | 
|                          |                                                | 2006                                 |   |        | 2005   | 
|                          |                                                |                                      |   |        |        | 
|                          |                                                | (In thousands)                       |  
|Deferred tax assets:      |                                                |                                      |   |        |        |  |   |       
|                          | Reserves and accruals not currently deductible |                                      | $ | 13,822 |        |  | $ | 18,459 |       
|                          | State taxes                                    |                                      |   | 7,654  |        |  |   | 4,343  |       
|                          | Purchased in-process technology                |                                      |   | 3,713  |        |  |   | 1,730  |       
|                          | Net operating loss carryforwards               |                                      |   | 2,886  |        |  |   | 3,822  |       
|                          | Capital loss carryforwards                     |                                      |   | 2,050  |        |  |   | 1,157  |       
|                          | Unrealized losses on investments               |                                      |   | 1,135  |        |  |   | 1,854  |       
|                          | Research credits                               |                                      |   | 1,013  |        |  |   | 857    |       
|                          | Other                                          |                                      |   |       |        |  |   | 16     |       
|                          |                                                |                                      |   |        |        | 
|                          |                                                | Total gross deferred tax assets      |   |        | 32,273 |  |   |        | 32,238 | 
|                          |                                                |                                      |   |        |        | 
|Deferred tax liabilities: |                                                |                                      |   |        |        |  |   |       
|                          | Research and development expenditures          |                                      |   | 4,055  |        |  |   | 5,367  |       
|                          | Property and equipment                         |                                      |   | 2,603  |        |  |   | 2,436  |       
|                          |                                                |                                      |   |        |        | 
|                          |                                                | Total gross deferred tax liabilities |   |        | 6,658  |  |   |        | 7,803  | 
|                          |                                                |                                      |   |        |        | 
|                          | Net deferred tax assets                        |                                      | $ | 25,615 |        |  | $ | 24,435 |       
|                          |                                                |                                      |   |        |        | 



60



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QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










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





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



|                            |  |                |         |  |      |   |         |      |  |   |         | 
|--------------------------- |  | -------------- | ------- |  | ---- | - | ------- | ---- |  | - | ------- | 
|                            |  | 2006           |         |  | 2005 |   |         | 2004 | 
|                            |  |                |         |  |      |   |         |      | 
|                            |  | (In thousands) |        
|SAN Infrastructure Products |  | $              | 460,050 |  |      | $ | 387,922 |      |  | $ | 335,632 | 
|Management Controllers      |  |                | 27,136  |  |      |   | 37,003  |      |  |   | 46,781  | 
|Other                       |  |                | 6,891   |  |      |   | 3,794   |      |  |   | 4,743   | 
|                            |  |                |         |  |      |   |         |      | 
|                            |  | $              | 494,077 |  |      | $ | 428,719 |      |  | $ | 387,156 | 
|                            |  |                |         |  |      |   |         |      | 



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



|                               |  |                |         |  |      |   |         |      |  |   |         | 
|------------------------------ |  | -------------- | ------- |  | ---- | - | ------- | ---- |  | - | ------- | 
|                               |  | 2006           |         |  | 2005 |   |         | 2004 | 
|                               |  |                |         |  |      |   |         |      | 
|                               |  | (In thousands) |        
|United States                  |  | $              | 271,937 |  |      | $ | 227,771 |      |  | $ | 228,349 | 
|Europe, Middle East and Africa |  |                | 111,000 |  |      |   | 94,578  |      |  |   | 74,867  | 
|Asia-Pacific and Japan         |  |                | 108,166 |  |      |   | 101,530 |      |  |   | 81,168  | 
|Rest of world                  |  |                | 2,974   |  |      |   | 4,840   |      |  |   | 2,772   | 
|                               |  |                |         |  |      |   |         |      | 
|                               |  | $              | 494,077 |  |      | $ | 428,719 |      |  | $ | 387,156 | 
|                               |  |                |         |  |      |   |         |      | 

61



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QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




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



|                 |  |      |    |   |      |  |    |      |  |  |    |  
|---------------- |  | ---- | -- | - | ---- |  | -- | ---- |  |  | -- | -
|                 |  | 2006 |    |   | 2005 |  |    | 2004 | 
|                 |  |      |    |   |      |  |    |      | 
|IBM              |  |      | 15 | % |      |  | 15 | %    |  |  | 12 | %
|Hewlett Packard  |  |      | 15 | % |      |  | 14 | %    |  |  | 11 | %
|Sun Microsystems |  |      | 12 | % |      |  | 15 | %    |  |  | 21 | %
|Dell Computers   |  |      | *  |   |      |  | 10 | %    |  |  | 10 | %






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



|         |                 
|-------- | ----------------
|Note 14. | Subsequent Event







62



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##### Table of Contents



QLOGIC CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|         |                                        
|-------- | ---------------------------------------
|Note 15. | Condensed Quarterly Results (Unaudited)



|                                             |         |                                          |         |      |           |   |         |          |  |   |         |      |  |   |         |      | 
|-------------------------------------------- | ------- | ---------------------------------------- | ------- | ---- | --------- | - | ------- | -------- |  | - | ------- | ---- |  | - | ------- | ---- | 
|                                             |         | Three Months Ended(1)(2)                 |        
|                                             |         |                                          |        
|                                             |         | June                                     |         |      | September |   |         | December |  |   | March   |     
|                                             |         |                                          |         |      |           |   |         |          |  |   |         |     
|                                             |         | (In thousands, except per share amounts) |        
|Fiscal 2006:                                 |         |                                          |         |      |           |   |         |          |  |   |         |      |  |   |         |     
|Net revenues                                 |         | $                                        | 115,430 |      |           | $ | 119,012 |          |  | $ | 129,185 |      |  | $ | 130,450 |     
|Gross profit                                 |         |                                          | 81,437  |      |           |   | 84,017  |          |  |   | 92,285  |      |  |   | 92,092  |     
|Operating income                             |         |                                          | 41,953  |      |           |   | 42,793  |          |  |   | 49,026  |      |  |   | 34,085  |     
|Income from continuing operations            |         |                                          | 28,286  |      |           |   | 30,490  |          |  |   | 31,681  |      |  |   | 31,374  |     
|Net income                                   |         |                                          | 41,777  |      |           |   | 43,024  |          |  |   | 166,238 |      |  |   | 32,549  |     
|Income from continuing operations per share: |         |                                          |         |      |           |   |         |          |  |   |         |      |  |   |         |     
|                                             | Basic   |                                          |         | 0.15 |           |   |         | 0.17     |  |   |         | 0.20 |  |   |         | 0.19 | 
|                                             | Diluted |                                          |         | 0.15 |           |   |         | 0.17     |  |   |         | 0.19 |  |   |         | 0.19 | 
|Net income per share:                        |         |                                          |         |      |           |   |         |          |  |   |         |      |  |   |         |     
|                                             | Basic   |                                          |         | 0.23 |           |   |         | 0.24     |  |   |         | 1.03 |  |   |         | 0.20 | 
|                                             | Diluted |                                          |         | 0.23 |           |   |         | 0.24     |  |   |         | 1.02 |  |   |         | 0.20 | 
|                                             |         |                                          |         |      |           |   |         |          |  |   |         |     
|Fiscal 2005:                                 |         |                                          |         |      |           |   |         |          |  |   |         |      |  |   |         |     
|Net revenues                                 |         | $                                        | 98,670  |      |           | $ | 102,281 |          |  | $ | 116,041 |      |  | $ | 111,727 |     
|Gross profit                                 |         |                                          | 70,515  |      |           |   | 73,011  |          |  |   | 83,079  |      |  |   | 81,040  |     
|Operating income                             |         |                                          | 33,249  |      |           |   | 34,797  |          |  |   | 43,811  |      |  |   | 41,756  |     
|Income from continuing operations            |         |                                          | 22,855  |      |           |   | 25,400  |          |  |   | 32,042  |      |  |   | 31,118  |     
|Net income                                   |         |                                          | 32,203  |      |           |   | 35,882  |          |  |   | 43,356  |      |  |   | 46,155  |     
|Income from continuing operations per share: |         |                                          |         |      |           |   |         |          |  |   |         |      |  |   |         |     
|                                             | Basic   |                                          |         | 0.12 |           |   |         | 0.14     |  |   |         | 0.17 |  |   |         | 0.17 | 
|                                             | Diluted |                                          |         | 0.12 |           |   |         | 0.14     |  |   |         | 0.17 |  |   |         | 0.17 | 
|Net income per share:                        |         |                                          |         |      |           |   |         |          |  |   |         |      |  |   |         |     
|                                             | Basic   |                                          |         | 0.17 |           |   |         | 0.19     |  |   |         | 0.24 |  |   |         | 0.25 | 
|                                             | Diluted |                                          |         | 0.17 |           |   |         | 0.19     |  |   |         | 0.23 |  |   |         | 0.25 | 
|                                             |         |                                          |         |      |           |   |         |          |  |   |         |     






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

63



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##### Table of Contents








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








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

Conclusion Regarding the Effectiveness of Disclosure Controls
and Procedures


13a-15(e)


Managements Report on Internal Control Over Financial
Reporting


13a-15(f)


Internal Control  Integrated
Framework




Changes in Internal Control over Financial Reporting


13a-15(f)





Item 9B. Other Information







PART III







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



64



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##### Table of Contents












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








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












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








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



65



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##### Table of Contents






PART IV







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

Consolidated Financial Statements







FINANCIAL STATEMENT INDEX


|                                                                                                                                                     |  |        |    | 
|---------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------ | -- | 
|                                                                                                                                                     |  | Page   |   
|                                                                                                                                                     |  | Number |   
|                                                                                                                                                     |  |        |   
|Reports of Independent Registered Public Accounting Firm                                                                                             |  |        | 36 | 
|Consolidated Balance Sheets as of April 2, 2006 and
    April 3, 2005                                                                                |  |        | 38 | 
|Consolidated Statements of Income for the years ended
    April 2, 2006, April 3, 2005 and March 28, 2004                                            |  |        | 39 | 
|Consolidated Statements of Stockholders Equity and
    Comprehensive Income for the years ended April 2, 2006,
    April 3, 2005 and March 28, 2004 |  |        | 40 | 
|Consolidated Statements of Cash Flows for the years ended
    April 2, 2006, April 3, 2005 and March 28, 2004                                        |  |        | 41 | 
|Notes to Consolidated Financial Statements                                                                                                           |  |        | 42 | 

Financial Statement Schedule








Exhibits




66



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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


attorney-in 10-K.




|                                                 |  |                                                                  |  |              |  | 
|------------------------------------------------ |  | ---------------------------------------------------------------- |  | ------------ |  | 
|Signature                                        |  | Title                                                            |  | Date        
|                                                 |  |                                                                  |  |             
|                                                
|Principal Executive Officer:                     |  |                                                                  |  |             
|                                                
|/s/ H.K. DesaiH.K. Desai                         |  | Chairman of the Board, Chief
    Executive Officer and President |  | June 1, 2006
|                                                
|Principal Financial and Accounting Officer:      |  |                                                                  |  |             
|                                                
|/s/ Anthony J. MassettiAnthony J. Massetti       |  | Senior Vice President and
    Chief Financial Officer            |  | June 1, 2006
|                                                
|/s/ Joel S. BirnbaumJoel S. Birnbaum             |  | Director                                                         |  | June 1, 2006
|                                                
|/s/ Larry R. CarterLarry R. Carter               |  | Director                                                         |  | June 1, 2006
|                                                
|/s/ James R. FiebigerJames R. Fiebiger           |  | Director                                                         |  | June 1, 2006
|                                                
|/s/ Balakrishnan S.
    IyerBalakrishnan S. Iyer |  | Director                                                         |  | June 1, 2006
|                                                
|/s/ Carol L. MiltnerCarol L. Miltner             |  | Director                                                         |  | June 1, 2006
|                                                
|/s/ George D. WellsGeorge D. Wells               |  | Director                                                         |  | June 1, 2006

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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) |  
|Continuing Operations:                    |                                 |                |   |            |             |  |             |                  |   |  |            |        |  |  |   |      
|Year ended April 2, 2006:                 |                                 |                |   |            |             |  |             |                  |   |  |            |        |  |  |   |      
|                                          | Allowance for doubtful accounts |                | $ | 1,311      |             |  | $           | (54              | ) |  | $          | 18     |  |  | $ | 1,239 | 
|                                          | Sales returns and allowances    |                | $ | 4,828      |             |  | $           | 16,566           |   |  | $          | 17,292 |  |  | $ | 4,102 | 
|Year ended April 3, 2005:                 |                                 |                |   |            |             |  |             |                  |   |  |            |        |  |  |   |      
|                                          | Allowance for doubtful accounts |                | $ | 1,113      |             |  | $           | 215              |   |  | $          | 17     |  |  | $ | 1,311 | 
|                                          | Sales returns and allowances    |                | $ | 3,965      |             |  | $           | 17,705           |   |  | $          | 16,842 |  |  | $ | 4,828 | 
|Year ended March 28, 2004:                |                                 |                |   |            |             |  |             |                  |   |  |            |        |  |  |   |      
|                                          | Allowance for doubtful accounts |                | $ | 2,072      |             |  | $           | 49               |   |  | $          | 1,008  |  |  | $ | 1,113 | 
|                                          | Sales returns and allowances    |                | $ | 6,189      |             |  | $           | 15,320           |   |  | $          | 17,544 |  |  | $ | 3,965 | 
|                                         
|Total, including Discontinued Operations: |                                 |                |   |            |             |  |             |                  |   |  |            |        |  |  |   |      
|Year ended April 2, 2006:                 |                                 |                |   |            |             |  |             |                  |   |  |            |        |  |  |   |      
|                                          | Allowance for doubtful accounts |                | $ | 1,445      |             |  | $           | (188             | ) |  | $          | 18     |  |  | $ | 1,239 | 
|                                          | Sales returns and allowances    |                | $ | 5,233      |             |  | $           | 16,802           |   |  | $          | 17,933 |  |  | $ | 4,102 | 
|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 | 

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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/A filed on February 15,
    1994)                                                                                                                                                                                                                                                                        
|       
|        | 3  | .2          |  | EMD Incorporation Agreement, dated as of January 1, 1993.
    (incorporated by reference to Exhibit 3.2 of the
    Registrants Registration Statement on Form 10/A filed on
    February 15, 1994)                                                                                                                                                                                                                                                                                                             
|       
|        | 3  | .3          |  | Certificate of Amendment of Certificate of Incorporation, dated
    May 26, 1993. (incorporated by reference to
    Exhibit 3.3 of the Registrants Registration Statement
    on Form 10/A filed on February 15, 1994)                                                                                                                                                                                                                                                                                         
|       
|        | 3  | .4          |  | Certificate of Amendment of Certificate of Incorporation, dated
    February 24, 1994. (incorporated by reference to
    Exhibit 3.4 of the Registrants Annual Report on
    Form 10-K for the year ended March 30, 2003)                                                                                                                                                                                                                                                                                      
|       
|        | 3  | .5          |  | Certificate of Designation of Rights, Preferences and Privileges
    of Series A Junior Participating Preferred Stock, dated
    June 4, 1996. (incorporated by reference to
    Exhibit 3.5 of the Registrants Annual Report on
    Form 10-K for the year ended March 30, 2003)                                                                                                                                                                                                                              
|       
|        | 3  | .6          |  | Certificate of Amendment of Certificate of Incorporation, dated
    February 5, 1999. (incorporated by reference to
    Exhibit 3.6 of the Registrants Annual Report on
    Form 10-K for the year ended March 28, 1999)                                                                                                                                                                                                                                                                                       
|       
|        | 3  | .7          |  | Certificate of Amendment of Certificate of Incorporation, dated
    January 4, 2000. (incorporated by reference to
    Exhibit 3.7 of the Registrants Quarterly Report on
    Form 10-Q for the quarter ended December 26, 1999)                                                                                                                                                                                                                                                                               
|       
|        | 3  | .8          |  | Certificate of Amendment of Certificate of Incorporation, dated
    September 28, 2000. (incorporated by reference to
    Exhibit 3.8 of the Registrants Annual Report on
    Form 10-K for the year ended March 30, 2003)                                                                                                                                                                                                                                                                                     
|       
|        | 3  | .9          |  | By-Laws of QLogic Corporation. (incorporated by reference to
    Exhibit 3.9 of the Registrants Current Report on
    Form 8-K filed on February 24, 2005)                                                                                                                                                                                                                                                                                                                                                     
|       
|        | 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 Shareholder 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/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/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/A filed on July 30, 2004)                                                                                                                                                                                                                         
|       
|        | 10 | .1          |  | QLogic Corporation Non-Employee Director Stock Option Plan, as
    amended.* (incorporated by reference to Exhibit 4.1 of the
    Registrants Registration Statement on Form S-8 filed
    on February 6, 2004 (File No. 333-112572))                                                                                                                                                                                                                                                                          
|       
|        | 10 | .2          |  | QLogic Corporation Stock Awards Plan, as amended.* (incorporated
    by reference to Exhibit 4.2 of the Registrants
    Registration Statement on Form S-8 filed on
    February 6, 2004 (File No. 333-112572))                                                                                                                                                                                                                                                                                                

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|        |    |             |  |                                                                                                                                                                                                                                                                                                                                         
|------- | -- | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|No.     |    | Description
|        |    |            
|        | 10 | .3          |  | QLogic Corporation Savings Plan.* (incorporated by reference to
    Exhibit 10.8 of the Registrants Registration
    Statement on Form 10/A filed on February 15, 1994)                                                                                                                                                                
|       
|        | 10 | .4          |  | QLogic Corporation Savings Plan Trust.* (incorporated by
    reference to Exhibit 10.9 of the Registrants
    Registration Statement on Form 10/A filed on February 15,
    1994)                                                                                                                                                      
|       
|        | 10 | .5          |  | Form of Indemnification Agreement between QLogic Corporation and
    Directors and Executive Officers.* (incorporated by reference to
    Exhibit 10.1 of the Registrants Current Report on
    Form 8-K filed on April 7, 2006)                                                                                                       
|       
|        | 10 | .6          |  | QLogic Corporation 1998 Employee Stock Purchase Plan, Amended
    and Restated Effective June 9, 2005.* (incorporated by
    reference to Exhibit 10.1 of the Registrants
    Quarterly Report on Form 10-Q for the quarter ended
    July 3, 2005)                                                                                    
|       
|        | 10 | .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)                                                                                  
|       
|        | 10 | .8          |  | QLogic Corporation 2005 Performance Incentive Plan.*
    (incorporated by reference to Exhibit 10.1 of the
    Registrants Quarterly Report on Form 10-Q for the
    quarter ended October 2, 2005)                                                                                                                                    
|       
|        | 10 | .9          |  | Asset Purchase Agreement dated August 29, 2005, by and
    between QLogic Corporation, Marvell Technology Group Ltd., and
    Marvell International Ltd. (incorporated by reference to
    Exhibit 2.1 of the Registrants Current Report on
    Form 8-K filed on September 2, 2005)                                                   
|       
|        | 10 | .10         |  | Merger Agreement, dated as of February 15, 2006, by and
    among QLogic Corporation, PS Merger Sub, Inc., PathScale, Inc.,
    and a representative of the holders of capital stock of
    PathScale, Inc. (incorporated by reference to Exhibit 2.1
    of the Registrants Current Report on Form 8-K filed
    on February 17, 2006)
|       
|        | 10 | .11         |  | First Amendment to QLogic Corporation 2005 Performance Incentive
    Plan, dated as of June 1, 2006.*                                                                                                                                                                                                                                   
|       
|        | 21 | .1          |  | Subsidiaries of the Registrant.                                                                                                                                                                                                                                                                                                         
|       
|        | 23 | .1          |  | Consent of Independent Registered Public Accounting Firm.                                                                                                                                                                                                                                                                               
|       
|        | 24 |             |  | Power of Attorney (included on signature page).                                                                                                                                                                                                                                                                                         
|       
|        | 31 | .1          |  | Certification of Chief Executive Officer pursuant to
    Rule 13a-14(a) of the Securities Exchange Act of 1934, as
    amended, as adopted pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.                                                                                                                               
|       
|        | 31 | .2          |  | Certification of Chief Financial Officer pursuant to
    Rule 13a-14(a) of the Securities Exchange Act of 1934, as
    amended, as adopted pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.                                                                                                                               
|       
|        | 32 |             |  | Certification of Chief Executive Officer and Chief Financial
    Officer pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                  






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

70