QLogic (QLGC) 8-K Results of Operations and Financial Condition

Exhibit 99.1

FOR IMMEDIATE RELEASE

Editor’s Contact:
Gerry Ansel
QLogic Corporation
Phone: (949) 389-7664
gerry.ansel@qlogic.com

Investor’s Contact:
Tony Massetti
QLogic Corporation
Phone: (949) 389-7533
tony.massetti@qlogic.com

QLOGIC REPORTS THIRD QUARTER
RESULTS FOR FISCAL YEAR 2005
Revenues And Net Income Reach Record Levels

Aliso Viejo, Calif., January 19, 2005 – QLogic Corporation (Nasdaq:QLGC), the company that powers storage area networks (SANs), today announced its third quarter financial results for the period ended December 26, 2004.

Net revenues for the third quarter of fiscal 2005 were a record $150.3 million and increased 10% from the $137.1 million reported in the comparable quarter last year. Fibre Channel product revenues for the third quarter of fiscal 2005 were $116.9 million and represented 78% of the Company’s total revenue. Fibre Channel product revenues for the third quarter were up 11% from the comparable quarter last year. Net income on a GAAP basis for the third quarter of fiscal 2005 was a record $43.4 million, or $0.46 per share on a diluted basis, and increased 24% from the $35.0 million, or $0.36 per share on a diluted basis, reported in the third quarter of last year.

During the third quarter of fiscal 2005, net revenues increased 12% sequentially from the $134.6 million reported in the second quarter of fiscal 2005. Fibre Channel product revenues for the third quarter of fiscal 2005 were up 8% sequentially from the second quarter of fiscal 2005. Third quarter net income on a GAAP basis increased 21% from the $35.9 million, or $0.38 per share on a diluted basis, reported in the second quarter of fiscal 2005.

Net revenues for the first nine months of fiscal 2005 were $414.7 million, up 5% from the $395.6 million reported for the same period of fiscal year 2004. Net income on a GAAP basis for the first nine months of

fiscal 2005 was $111.4 million, or $1.19 per share on a diluted basis, an increase of 11% from the $100.8 million, or $1.05 per share on a diluted basis, reported for the same period last year.

The Company uses certain non-GAAP measures to supplement financial statements based on GAAP. A description of the purpose and benefit of such non-GAAP financial information is presented below and a reconciliation between the GAAP and non-GAAP measures is included in the accompanying financial schedules.

Non-GAAP net income for the third quarter of fiscal 2005 was $45.1 million, or $0.48 per share on a diluted basis, and increased 19% from the $37.9 million, or $0.39 per share on a diluted basis, reported in the third quarter of last year. Non-GAAP net income for the third quarter of fiscal 2005 increased 20% sequentially from the $37.7 million, or $0.40 per share on a diluted basis, reported for the second quarter of fiscal 2005.

During the first nine months of fiscal 2005, the Company’s non-GAAP net income was $116.8 million, or $1.25 per share on a diluted basis, an increase of 8% from the $107.7 million, or $1.12 per share on a diluted basis, reported last year.

“We are very pleased with our strong performance during the third quarter and the achievement of both record revenues and net income,” said H.K. Desai, the Company’s chairman, chief executive officer and president. “The growth in our revenues during the third quarter was primarily driven by double digit sequential growth for both HBAs and switches.”

The Company generated $118 million in cash from operations during the first nine months of fiscal 2005 and used $80 million in fiscal 2005 to purchase its common stock pursuant to the Company’s stock repurchase programs. The Company’s balance sheet at the end of the third quarter of fiscal 2005 was highlighted by $768 million of cash and short-term investments.

QLogic’s fiscal 2005 third quarter conference call is scheduled today at 2:30 p.m. Pacific Time (5:30 p.m. Eastern Time). H.K. Desai, chairman of the board, chief executive officer and president, and Tony Massetti, vice president and chief financial officer, will host the conference call. The call is being webcast live via the Internet at www.qlogic.com. Phone access to participate in the conference call is available at (719) 457-2658, pass code: 145765.

The quarterly financial information that the Company intends to discuss during the conference call is included in this press release and will be available on the Company’s website at www.qlogic.com for 12 months following the conference call. To listen to a webcast replay of the conference call, please visit the Investor Relations section of the Company’s website at www.qlogic.com. The webcast replay will be available for 12 months following the conference call. An audio replay of the conference call will also be available through February 2, 2005 by calling (719) 457-0820, pass code: 145765.

Non-GAAP Financial Measurements

The non-GAAP financial measurements contained herein are a supplement to the corresponding financial measurements computed in accordance with generally accepted accounting principles (GAAP). The non-GAAP financial information presented excludes non-cash merger related stock compensation charges and, in fiscal 2004, legal settlements and the related income tax effect. Management believes these charges are not indicative of the on-going costs of the Company’s basic core operating performance. These non-GAAP adjustments directly impact the Company’s engineering and development expenses, general and administrative expenses, total operating expenses, operating income, income before income taxes, income taxes, net income and net income per share amounts in comparison to the corresponding amounts included in the Company’s condensed consolidated statements of operations presented in accordance with GAAP. In order to present the impact of any items excluded from the non-GAAP financial information, the Company has presented a complete reconciliation of each of the non-GAAP measures to the most directly comparable measure calculated in accordance with GAAP in the accompanying financial schedules. The Company has provided these non-GAAP financial measures, on a basis consistent with its historical presentation, to assist investors to better understand the Company’s core operating performance on an on-going basis and to enhance comparisons of its core operating performance with historical periods and the core operating performance of its competitors. Items excluded from non-GAAP financial measurements are also excluded by management in its evaluation of the core operating performance of the Company and in its evaluation of trends between fiscal periods. Management uses each of the non-GAAP financial measures presented in its evaluation of the Company’s core operating performance and believes that such measures are an important element of its internal performance measurement process. In addition, the Company prepares and maintains its budgets and forecasts of future periods on a basis consistent with these non-GAAP financial measurements. Non-GAAP financial information presented herein has certain limitations in that it does not reflect all of the costs associated with the operations of the Company’s business as determined in accordance with GAAP. Therefore, investors should consider non-GAAP measures in addition to, and not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. The non-GAAP information presented by the Company may be different from the non-GAAP measures used by other companies.

Powered by QLogic

Since 1993, over 50 million QLogic products have shipped inside servers, workstations, RAID subsystems, tape libraries, disk and tape drives. These products were delivered to small, medium and large enterprises around the world. Powering solutions from leading companies like Cisco, Dell, EMC, Fujitsu, Hitachi, HP, IBM, NEC, Network Appliance, Quantum, StorageTek and Sun Microsystems, the broad line of QLogic controller chips, host bus adapters, network switches and management software move data from storage devices through the network fabric to servers. A member of the S&P 500 and NASDAQ 100, QLogic was named to the following during fiscal year 2004: (i) Fortune’s 100 Fastest Growing Companies list for the fourth consecutive year; (ii) Forbes’ Best 200 Small Companies for the fifth consecutive year; and (iii) Business Week’s list of 100 Hot Growth Companies. For more information visit www.qlogic.com.

Note: All QLogic-issued press releases appear on the Company’s website (www.qlogic.com). Any announcement that does not appear on the QLogic website has not been issued by QLogic.

Disclaimer - Forward Looking Statements

This press release contains statements relating to future results of the Company (including certain beliefs and projections regarding business trends) that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected or implied in the forward-looking statements. The Company advises readers that these potential risks and uncertainties include, but are not limited to: the volatility of the Company’s stock price; fluctuations in operating results; the dependence on the storage area network market; the ability to maintain and gain market or industry acceptance of the Company’s products; the dependence on a limited number of customers; seasonal fluctuations and uneven sales patterns in orders from customers; the ability to compete effectively with other companies; declining average unit sales prices of comparable products; a reduction in sales efforts by current distributors; the dependence on relationships with certain silicon chip suppliers and other subcontractors; the complexity of the Company’s products; sales fluctuations arising from customer transitions to new products; terrorist activities and resulting military actions; international, economic, regulatory, political and other risks; changes in semiconductor foundry capacity; uncertain benefits from strategic business combinations; the ability to maintain or expand upon strategic alliances; the strain on resources caused by rapid growth and expansion; the ability to attract and retain key personnel; the ability to protect proprietary rights or to satisfactorily resolve any infringement claims; changes in tax laws or adverse tax audit results; decreasing effectiveness of equity compensation in employee retention; charter documents and stockholder rights plan that may discourage a business combination; and facilities located in areas subject to earthquakes.

More detailed information on these and additional factors which could affect the Company’s operating and financial results are described in the Company’s Forms 10-K, 10-Q and other reports, filed or to be filed with the Securities and Exchange Commission. The Company urges all interested parties to read these reports to gain a better understanding of the many business and other risks that the Company faces. The forward-looking statements contained in this press release are made only as of the date hereof, and the Company undertakes no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.

Trademarks and registered trademarks are the property of the companies with which they are associated.

QLOGIC CORPORATION

SUMMARY CONSOLIDATED RESULTS OF OPERATIONS

(unaudited — in thousands, except per share amounts)

Consolidated GAAP Results

	Three Months Ended						Nine Months Ended
	Dec. 26,		Sep. 26,		Dec. 28,		Dec. 26,		Dec. 28,
	2004		2004		2003		2004		2003
Net revenues	$	150,252	$	134,609	$	137,064	$	414,672	$	395,566
Gross profit		104,804		93,436		94,183		288,096		268,317
Operating income		60,805		50,856		52,879		159,949		150,132
Net income		43,356		35,882		34,952		111,441		100,809
Net income per share – diluted		0.46		0.38		0.36		1.19		1.05
Weighted average common shares outstanding – diluted		93,484		93,222		96,823		93,604		96,395

Consolidated Results Including Non-GAAP Adjustments (1)

	Three Months Ended						Nine Months Ended
	Dec. 26,		Sep. 26,		Dec. 28,		Dec. 26,		Dec. 28,
	2004		2004		2003		2004		2003
Net revenues	$	150,252	$	134,609	$	137,064	$	414,672	$	395,566
Gross profit		104,804		93,436		94,183		288,096		268,317
Operating income		62,584		52,635		56,499		165,330		157,756
Net income		45,135		37,661		37,888		116,822		107,749
Net income per share – diluted		0.48		0.40		0.39		1.25		1.12
Weighted average common shares outstanding – diluted		93,484		93,222		96,823		93,604		96,395

(1) For a description of the limitations of relying on non-GAAP financial information, see “Non-GAAP Financial Measurements” above. A complete reconciliation of each of the non-GAAP financial measures to the most comparable GAAP financial measure is presented below.

QLOGIC CORPORATION

SUMMARY CONSOLIDATED RESULTS OF OPERATIONS (continued)

(unaudited — in thousands)

Description of Non-GAAP Adjustments

A summary of the non-GAAP adjustments is as follows:

	Three Months Ended							Nine Months Ended
	Dec. 26,		Sep. 26,		Dec. 28,			Dec. 26,		Dec. 28,
	2004		2004		2003			2004		2003
Merger related stock compensation charges	$	1,779	$	1,779	$	1,870		$	5,381	$	5,874
Legal settlements		—		—		1,750			—		1,750
Pre-tax adjustments		1,779		1,779		3,620			5,381		7,624
Income tax effect		—		—		(684	)		—		(684	)
After-tax non-GAAP adjustments	$	1,779	$	1,779	$	2,936		$	5,381	$	6,940

Non-GAAP Financial Information

In addition to the results presented throughout this document in accordance with generally accepted accounting principles (GAAP), the Company has provided non-GAAP measurements, which present operating results on a basis including certain non-GAAP adjustments. Details of these adjustments are presented in the table above.

QLOGIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited — in thousands, except per share amounts)

	Three Months Ended December 26, 2004							Three Months Ended December 28, 2003
	GAAP		Non-GAAP			Non-GAAP		GAAP		Non-GAAP			Non-GAAP
	Results		Adjustments			Results (1)		Results		Adjustments			Results (1)
Net revenues	$	150,252	$	—		$	150,252	$	137,064	$	—		$	137,064
Cost of revenues		45,448		—			45,448		42,881		—			42,881
Gross profit		104,804		—			104,804		94,183		—			94,183
Operating expenses:
Engineering and development		24,331		(1,779	)		22,552		21,514		(1,870	)		19,644
Sales and marketing		15,166		—			15,166		13,846		—			13,846
General and administrative		4,502		—			4,502		5,944		(1,750	)		4,194
Total operating expenses		43,999		(1,779	)		42,220		41,304		(3,620	)		37,684
Operating income		60,805		1,779			62,584		52,879		3,620			56,499
Interest and other income		4,468		—			4,468		3,495		—			3,495
Income before income taxes		65,273		1,779			67,052		56,374		3,620			59,994
Income taxes		21,917		—			21,917		21,422		684			22,106
Net income	$	43,356	$	1,779		$	45,135	$	34,952	$	2,936		$	37,888
Net income per share:
Basic	$	0.47	$	0.02		$	0.49	$	0.37	$	0.03		$	0.40
Diluted	$	0.46	$	0.02		$	0.48	$	0.36	$	0.03		$	0.39
Number of shares used in per share computations:
Basic		92,157		—			92,157		94,458		—			94,458
Diluted		93,484		—			93,484		96,823		—			96,823

(1) For a description of the limitations of relying on non-GAAP financial information, see “Non-GAAP Financial Measurements” above.

QLOGIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited — in thousands, except per share amounts)

	Three Months Ended December 26, 2004							Three Months Ended September 26, 2004
	GAAP		Non-GAAP			Non-GAAP		GAAP		Non-GAAP			Non-GAAP
	Results		Adjustments			Results (1)		Results		Adjustments			Results (1)
Net revenues	$	150,252	$	—		$	150,252	$	134,609	$	—		$	134,609
Cost of revenues		45,448		—			45,448		41,173		—			41,173
Gross profit		104,804		—			104,804		93,436		—			93,436
Operating expenses:
Engineering and development		24,331		(1,779	)		22,552		24,146		(1,779	)		22,367
Sales and marketing		15,166		—			15,166		14,202		—			14,202
General and administrative		4,502		—			4,502		4,232		—			4,232
Total operating expenses		43,999		(1,779	)		42,220		42,580		(1,779	)		40,801
Operating income		60,805		1,779			62,584		50,856		1,779			52,635
Interest and other income		4,468		—			4,468		4,233		—			4,233
Income before income taxes		65,273		1,779			67,052		55,089		1,779			56,868
Income taxes		21,917		—			21,917		19,207		—			19,207
Net income	$	43,356	$	1,779		$	45,135	$	35,882	$	1,779		$	37,661
Net income per share:
Basic	$	0.47	$	0.02		$	0.49	$	0.39	$	0.02		$	0.41
Diluted	$	0.46	$	0.02		$	0.48	$	0.38	$	0.02		$	0.40
Number of shares used in per share computations:
Basic		92,157		—			92,157		92,485		—			92,485
Diluted		93,484		—			93,484		93,222		—			93,222

(1) For a description of the limitations of relying on non-GAAP financial information, see “Non-GAAP Financial Measurements” above.

QLOGIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited — in thousands, except per share amounts)

	Nine Months Ended December 26, 2004							Nine Months Ended December 28, 2003
	GAAP		Non-GAAP			Non-GAAP		GAAP		Non-GAAP			Non-GAAP
	Results		Adjustments			Results (1)		Results		Adjustments			Results (1)
Net revenues	$	414,672	$	—		$	414,672	$	395,566	$	—		$	395,566
Cost of revenues		126,576		—			126,576		127,249		—			127,249
Gross profit		288,096		—			288,096		268,317		—			268,317
Operating expenses:
Engineering and development		71,632		(5,381	)		66,251		65,731		(5,874	)		59,857
Sales and marketing		43,568		—			43,568		38,011		—			38,011
General and administrative		12,947		—			12,947		14,443		(1,750	)		12,693
Total operating expenses		128,147		(5,381	)		122,766		118,185		(7,624	)		110,561
Operating income		159,949		5,381			165,330		150,132		7,624			157,756
Interest and other income		12,334		—			12,334		12,463		—			12,463
Income before income taxes		172,283		5,381			177,664		162,595		7,624			170,219
Income taxes		60,842		—			60,842		61,786		684			62,470
Net income	$	111,441	$	5,381		$	116,822	$	100,809	$	6,940		$	107,749
Net income per share:
Basic	$	1.20	$	0.06		$	1.26	$	1.07	$	0.07		$	1.14
Diluted	$	1.19	$	0.06		$	1.25	$	1.05	$	0.07		$	1.12
Number of shares used in per share computations:
Basic		92,663		—			92,663		94,252		—			94,252
Diluted		93,604		—			93,604		96,395		—			96,395

(1) For a description of the limitations of relying on non-GAAP financial information, see “Non-GAAP Financial Measurements” above.

QLOGIC CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited — in thousands)

	Dec. 26, 2004		Mar. 28, 2004
ASSETS
Current assets:
Cash and cash equivalents	$	185,847	$	156,593
Short-term investments		582,339		586,441
Accounts receivable, net		76,539		67,355
Inventories		24,309		20,935
Other current assets		29,155		22,256
Total current assets		898,189		853,580
Property and equipment, net		70,654		67,224
Other assets		10,689		7,711
	$	979,532	$	928,515
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	20,466	$	18,570
Accrued compensation		19,612		18,849
Income taxes payable		21,527		10,691
Other liabilities		14,489		12,687
Total current liabilities		76,094		60,797
Total stockholders’ equity		903,438		867,718
	$	979,532	$	928,515

QLOGIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited — in thousands)

	Nine Months Ended
	Dec. 26,			Dec. 28,
	2004			2003
Cash flows from operating activities:
Net income	$	111,441		$	100,809
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		11,152			10,886
Deferred income taxes		(4,422	)		7,398
Tax benefit from issuance of stock under stock plans		1,358			9,620
Amortization of deferred stock-based compensation		472			963
Provision for losses on accounts receivable		414			141
Loss on disposal of property and equipment		245			638
Changes in operating assets and liabilities:
Accounts receivable		(9,598	)		(26,393	)
Inventories		(3,374	)		1,506
Other assets		(5,454	)		1,532
Accounts payable		1,896			(146	)
Accrued compensation		763			(1,930	)
Income taxes payable		10,836			(1,344	)
Other liabilities		1,802			9,406
Net cash provided by operating activities		117,531			113,086
Cash flows from investing activities:
Purchases of marketable securities		(462,442	)		(836,453	)
Sales and maturities of marketable securities		461,379			761,030
Additions to property and equipment		(14,827	)		(15,434	)
Net cash used in investing activities		(15,890	)		(90,857	)
Cash flows from financing activities:
Proceeds from issuance of stock under stock plans		7,622			19,338
Purchase of treasury stock		(80,009	)		(19,545	)
Net cash used in financing activities		(72,387	)		(207	)
Net increase in cash and cash equivalents		29,254			22,022
Cash and cash equivalents at beginning of period		156,593			137,810
Cash and cash equivalents at end of period	$	185,847		$	159,832

QLOGIC CORPORATION

SUPPLEMENTAL FINANCIAL INFORMATION

(unaudited — in thousands)

Net Revenues

A summary of the Company’s revenue components is as follows:

	Three Months Ended						Nine Months Ended
	Dec. 26,		Sep. 26,		Dec. 28,		Dec. 26,		Dec. 28,
	2004		2004		2003		2004		2003
Fibre Channel products	$	116,937	$	108,414	$	105,477	$	330,143	$	298,701
SCSI products		31,376		24,899		29,892		80,358		93,411
Other		1,939		1,296		1,695		4,171		3,454
	$	150,252	$	134,609	$	137,064	$	414,672	$	395,566

Geographic Revenues

Revenues by geographic area are presented based upon the country of destination. Net revenues by geographic area are as follows:

	Three Months Ended						Nine Months Ended
	Dec. 26,		Sep. 26,		Dec. 28,		Dec. 26,		Dec. 28,
	2004		2004		2003		2004		2003
United States	$	61,138	$	54,633	$	59,660	$	169,287	$	174,850
International		89,114		79,976		77,404		245,385		220,716
	$	150,252	$	134,609	$	137,064	$	414,672	$	395,566