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

Exhibit 99.1

FOR IMMEDIATE RELEASE

Editor’s Contact:
Christine Flavio
QLogic Corporation
Phone: (650) 934-8057
christine.flavio@qlogic.com

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

QLOGIC REPORTS FOURTH QUARTER
AND FISCAL YEAR 2006 RESULTS
Record Revenue from Continuing Operations

Aliso Viejo, Calif., May 3, 2006 — QLogic Corporation (Nasdaq:QLGC), the leader in Fibre Channel host bus adapters (HBAs), stackable switches and blade server switches today announced its financial results for the fourth quarter and fiscal year ended April 2, 2006.

Net revenue from continuing operations for the fourth quarter of fiscal 2006 was a record $130.5 million and increased 17% from $111.7 million in the comparable quarter last year. During the fourth quarter of fiscal 2006, revenue from SAN Infrastructure Products, which are comprised of HBAs, switches and silicon, was $121.8 million, an increase of 19% from the comparable quarter last year and 1% sequentially.

Income from continuing operations on a GAAP basis for the fourth quarter of fiscal 2006 was $31.4 million, or $0.19 per share on a diluted basis, an increase of 1% from the fourth quarter of last year and a decrease of 1% sequentially.

Net revenue from continuing operations for fiscal 2006 was $494.1 million, up 15% from $428.7 million for fiscal 2005. Income from continuing operations on a GAAP basis for fiscal 2006 was $121.8 million, or $0.70 per share on a diluted basis, an increase of 9% from $111.4 million, or $0.59 per share on a diluted basis, for fiscal 2005.

Net income on a GAAP basis for the fourth quarter of fiscal 2006, including the results from discontinued operations, was $32.5 million, or $0.20 per share on a diluted basis. Net income on a GAAP basis for fiscal 2006, including the results from discontinued operations, was $283.6 million, or $1.63 per share on a diluted basis.

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The Company generated $132.5 million in cash from continuing operations during fiscal 2006. The Company’s balance sheet at the end of fiscal 2006 was highlighted by $665.6 million of cash and short-term investments.

“I am very pleased with QLogic’s fiscal year 2006 performance,” said H.K. Desai, the Company’s chief executive officer and president. “With annual revenue growth for HBAs in excess of 20% and switches in excess of 35%, we are confident that the continued execution of our strategies will support our ongoing growth expectations.”

The Company uses certain non-GAAP measures to supplement financial statements based on GAAP. A summary of these non-GAAP financial measures and a complete reconciliation of each non-GAAP measure to the most directly comparable GAAP measure, as well as a description of the reasons that management believes that these non-GAAP financial measures provide useful information to investors and the additional purposes for which management uses these non-GAAP financial measures is presented in the accompanying financial schedules.

Non-GAAP income from continuing operations for the fourth quarter of fiscal 2006 was $34.5 million, or $0.21 per share on a diluted basis, an increase of 10% sequentially. During fiscal 2006, the Company’s non-GAAP income from continuing operations was $124.7 million, or $0.72 per share on a diluted basis, an increase of 6% from fiscal 2005.

QLogic’s fourth quarter and fiscal 2006 conference call is scheduled for today at 2:30 p.m. Pacific Time (5:30 p.m. Eastern Time). H.K. Desai, chief executive officer and president, and Tony Massetti, senior vice president and chief financial officer, will host the conference call. The call is being webcast live via the Internet at www.qlogic.com and via CCBN. Phone access to participate in the conference call is available at (719) 457-2654, pass code: 7044570.

The financial information that the Company intends to discuss during the conference call will be available on the Company’s website at www.qlogic.com for 12 months following the conference call. A replay of the conference call will be available via webcast for 12 months on the Company’s website at www.qlogic.com. An audio replay of the conference call will also be available through May 17, 2006 at (719) 457-0820 or (888) 203-1112, pass code: 7044570.

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Effects of 2006 Stock Split

All share numbers and per share amounts set forth in this release and the accompanying financial schedules have been adjusted to reflect the Company’s two-for-one stock split effected March 2, 2006 through the payment of a stock dividend to the holders of record of common stock on February 16, 2006.

About QLogic

QLogic is a leading supplier of high performance storage networking solutions including Fibre Channel host bus adapters (HBAs), blade server embedded Fibre Channel switches, Fibre Channel stackable switches, iSCSI HBAs, iSCSI routers and storage services platforms for enabling advanced storage management applications. The Company is also a leading supplier of server networking products including InfiniBand host channel adapters that accelerate cluster performance. QLogic products are delivered to small-to-medium business and large enterprises around the world via its channel partner community. QLogic’s products are also powering solutions from leading companies like Cisco, Dell, EMC, Hitachi Data Systems, HP, IBM, NEC, Network Appliance and Sun Microsystems. QLogic is a member of the S&P 500 Index. For more information go to 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: potential fluctuations in operating results; gross margins that may vary over time; revenues may be affected by changes in IT spending levels; the stock price of the Company may be volatile; the Company’s dependence on the storage area network market; the ability to maintain and gain market or industry acceptance of the Company’s products; the Company’s dependence on a limited number of customers; seasonal fluctuations and uneven sales patterns in orders from customers; the Company’s ability to compete effectively with other companies; declining average unit sales prices of comparable products; a reduction in sales efforts by current distributors; reliance on third party licenses; dependence on sole source and limited source suppliers; the Company’s dependence on relationships with certain silicon chip suppliers; the complexity of the Company’s products; sales fluctuations arising from customer transitions to new products; the uncertainty associated with SOX 404 compliance; environmental compliance costs; terrorist activities and resulting military actions; international, economic, regulatory, political and other risks; uncertain benefits from strategic business combinations; the ability to maintain or expand upon strategic alliances; the strain on resources caused by growth and expansion; the ability to attract and retain key personnel; the decreased effectiveness of equity compensation; difficulties in transitioning to smaller geometry process technologies; the ability to protect proprietary rights; the ability to satisfactorily resolve any infringement claims; changes in tax laws or adverse tax audit results; computer viruses and other tampering with the Company’s computer systems; charter documents and stockholder rights plan that may discourage a business combination; and facilities of the Company and its suppliers and customers are located in areas subject to natural disasters.

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.

QLogic and the QLogic logo are registered trademarks of QLogic Corporation. Other trademarks and registered trademarks are the property of the companies with which they are associated.

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QLOGIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited — in thousands, except per share amounts)

	Three Months Ended						Year Ended
	April 2,		January 1,		April 3,		April 2,		April 3,
	2006		2006		2005		2006		2005
Net revenues	$	130,450	$	129,185	$	111,727	$	494,077	$	428,719
Cost of revenues		38,358		36,900		30,687		144,246		121,074
Gross profit		92,092		92,285		81,040		349,831		307,645
Operating expenses:
Engineering and development		25,180		22,797		20,766		89,753		82,791
Sales and marketing		17,466		16,100		14,602		64,416		54,582
General and administrative		4,851		4,362		3,916		17,295		16,659
Purchased in-process research and development		10,510		—		—		10,510		—
Total operating expenses		58,007		43,259		39,284		181,974		154,032
Operating income		34,085		49,026		41,756		167,857		153,613
Interest and other income		15,246		5,151		5,539		32,627		17,873
Income from continuing operations before income taxes		49,331		54,177		47,295		200,484		171,486
Income taxes		17,957		22,496		16,177		78,653		60,071
Income from continuing operations		31,374		31,681		31,118		121,831		111,415
Income from discontinued operations, net of income taxes		1,175		134,557		15,037		161,757		46,181
Net income	$	32,549	$	166,238	$	46,155	$	283,588	$	157,596
Income from continuing operations per share:
Basic	$	0.19	$	0.20	$	0.17	$	0.71	$	0.60
Diluted	$	0.19	$	0.19	$	0.17	$	0.70	$	0.59
Income from discontinued operations per share:
Basic	$	0.01	$	0.83	$	0.08	$	0.95	$	0.25
Diluted	$	0.01	$	0.83	$	0.08	$	0.93	$	0.25
Net income per share:
Basic	$	0.20	$	1.03	$	0.25	$	1.66	$	0.85
Diluted	$	0.20	$	1.02	$	0.25	$	1.63	$	0.84
Number of shares used in per share calculations:
Basic		161,722		161,317		184,186		171,250		185,024
Diluted		164,378		163,093		187,699		173,467		187,315

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QLOGIC CORPORATION

RECONCILIATION OF GAAP INCOME FROM CONTINUING OPERATIONS
TO NON-GAAP INCOME FROM CONTINUING OPERATIONS

(unaudited — in thousands, except per share amounts)

	Three Months Ended								Year Ended
	April 2,			January 1,			April 3,		April 2,			April 3,
	2006			2006			2005		2006			2005
GAAP income from continuing operations	$	31,374		$	31,681		$	31,118	$	121,831		$	111,415
Items excluded from GAAP income from continuing operations:
Amortization of acquisition related intangible assets included in cost of revenues		201			—			—		201			—
Acquisition related non-cash compensation charges included in:
Engineering and development expenses		256			170			511		426			5,892
Sales and marketing expenses		62			42			—		104			—
Insurance recovery included in general and administrative expenses		—			(700	)		—		(700	)		—
Purchased in-process research and development		10,510			—			—		10,510			—
Gain on sale of shares acquired in the sale of discontinued operations included in interest and other income		(8,463	)		—			—		(8,463	)		—
Income tax effect		578			194			—		772			—
Non-GAAP income from continuing operations	$	34,518		$	31,387		$	31,629	$	124,681		$	117,307
Diluted income from continuing operations per share:
GAAP income from continuing operations	$	0.19		$	0.19		$	0.17	$	0.70		$	0.59
Adjustments		0.02			—			—		0.02			0.04
Non-GAAP income from continuing operations	$	0.21		$	0.19		$	0.17	$	0.72		$	0.63

Non-GAAP Financial Measurements

The non-GAAP financial measurements contained herein are a supplement to the corresponding financial measurements prepared in accordance with generally accepted accounting principles (GAAP). The non-GAAP financial information presented for fiscal 2006 excludes amortization of acquisition related intangible assets, acquisition related non-cash compensation charges, purchased in-process research and development, an insurance recovery received, the gain on sale of shares received as consideration in the sale of the hard disk drive and tape drive controller business and the related income tax effect of these items. The non-GAAP financial information presented for fiscal 2005 excludes acquisition related non-cash compensation charges. Management believes these items are not indicative of the Company’s on-going core operating performance.

The Company has presented non-GAAP income from continuing operations and non-GAAP diluted income from continuing operations per share, on a basis consistent with its historical presentation, to assist investors in understanding the Company’s core income from continuing operations and non-GAAP diluted income from continuing operations per share on an on-going basis. The non-GAAP presentation also enhances comparisons of the Company’s core net profitability with historical periods and comparisons of the Company’s core net

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profitability with the corresponding results for competitors. Management believes that on-going income from continuing operations and diluted income from continuing operations per share are important measures in the evaluation of the Company’s profitability. These non-GAAP financial measures exclude the adjustments described above, and thus provide an overall measure of the Company’s on-going net profitability and related profitability on a diluted per share basis.

Management uses non-GAAP income from continuing operations in its evaluation of the Company’s core after-tax results of operations and trends between fiscal periods and believes that this measure is an important component of its internal performance measurement process. In addition, the Company prepares and maintains its budgets and forecasts for future periods on a basis consistent with this non-GAAP financial measurement.

The non-GAAP financial measurements presented herein have certain limitations in that they do 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.

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QLOGIC CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited — in thousands)

	April 2, 2006			April 3, 2005
ASSETS
Current assets:
Cash and cash equivalents	$	125,192		$	165,644
Short-term investments		540,448			646,694
Accounts receivable, net		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
Stockholders’ equity:
Common stock		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		(560,000	)		(145,001	)
Total stockholders’ equity		859,354			956,183
	$	937,707		$	1,026,340

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QLOGIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited — in thousands)

	Year Ended
	April 2,			April 3,
	2006			2005
Cash flows from operating activities:
Net income	$	283,588		$	157,596
Income from discontinued operations, net of income taxes		(161,757	)		(46,181	)
Income from continuing operations		121,831			111,415
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
Depreciation and amortization		17,898			15,059
Purchased in-process research and development		10,510			—
Deferred income taxes		(4,480	)		(158	)
Tax benefit from issuance of stock under stock plans		5,055			2,441
Stock-based compensation		175			578
Provision for losses on accounts receivable		(366	)		90
Loss on disposal of property and equipment		168			187
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable		(12,513	)		(3,297	)
Inventories		(16,230	)		(2,671	)
Other assets		(5,840	)		(3,572	)
Accounts payable		11,877			3,840
Accrued compensation		3,263			3,528
Income taxes payable		(1,205	)		4,094
Other liabilities		2,405			1,593
Net cash provided by operating activities		132,548			133,127
Cash flows from investing activities:
Purchases of marketable securities		(946,087	)		(672,418	)
Sales and maturities of marketable securities		1,101,680			694,140
Additions to property and equipment		(28,295	)		(22,299	)
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) investing activities		80,088			(4,577	)
Cash flows from financing activities:
Proceeds from issuance of stock under stock plans		27,757			13,735
Purchase of treasury stock		(414,999	)		(85,009	)
Net cash used in financing activities		(387,242	)		(71,274	)
Cash provided by (used in) continuing operations		(174,606	)		57,276
Cash flows from discontinued operations:
Net cash provided by (used in) operating activities		(47,182	)		48,815
Net cash provided by (used in) investing activities, including proceeds from sale		181,336			(3,358	)
Cash provided by discontinued operations		134,154			45,457
Net increase (decrease) in cash and cash equivalents		(40,452	)		102,733
Cash and cash equivalents at beginning of period		165,644			62,911
Cash and cash equivalents at end of period	$	125,192		$	165,644

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QLOGIC CORPORATION

SUPPLEMENTAL FINANCIAL INFORMATION

(unaudited — in thousands)

Net Revenues

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

	Three Months Ended						Year Ended
	April 2,		January 1,		April 3,		April 2,		April 3,
	2006		2006		2005		2006		2005
SAN Infrastructure Products	$	121,845	$	120,402	$	101,985	$	460,050	$	387,922
Management Controllers		7,130		6,050		7,971		27,136		37,003
Other		1,475		2,733		1,771		6,891		3,794
	$	130,450	$	129,185	$	111,727	$	494,077	$	428,719

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						Year Ended
	April 2,		January 1,		April 3,		April 2,		April 3,
	2006		2006		2005		2006		2005
United States	$	72,875	$	68,394	$	60,847	$	271,937	$	227,771
International		57,575		60,791		50,880		222,140		200,948
	$	130,450	$	129,185	$	111,727	$	494,077	$	428,719

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