UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

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

SECURITIES EXCHANGE ACT of 1934

For the fiscal year ended April 3, 2005

Commission File No. 0-23298

QLogic Corporation

(Exact name of registrant as specified in its charter)

(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)

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

      Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     þ

      Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).     Yes þ          No o

      The aggregate market value of the voting stock held by non-affiliates of the Registrant was $2,690,743,910 (based on the closing price for shares of the Registrant’s common stock as reported by The Nasdaq National Market on September 24, 2004).

      As of June 1, 2005, 90,894,686 shares of the Registrant’s common stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

      Portions of the Registrant’s Proxy Statement relating to the Registrant’s 2005 Annual Meeting of Stockholders, to be held on August 23, 2005, are incorporated by reference into Part III of this Form 10-K where indicated.

PART I

Introduction

      QLogic Corporation was organized as a Delaware corporation in 1992. Our principal executive offices are located at 26650 Aliso Viejo Parkway, Aliso Viejo, California 92656, and our telephone number at that location is (949) 389-6000. Our Internet address is www.qlogic.com. Our periodic and current reports, together with any amendments to these reports, are available free of charge on our website as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the Securities and Exchange Commission.

      Unless the context indicates otherwise, “we,” “our,” “us” and the “Company” each refer to QLogic Corporation and its subsidiaries.

      All references to years refer to our fiscal years ended April 3, 2005, March 28, 2004 and March 30, 2003, as applicable, unless the calendar years are specified. All references to share and per share data have been restated to reflect our stock splits.

Overview

      We design and develop storage networking infrastructure components sold to original equipment manufacturers, or OEMs, and distributors. We produce hard disk controller chips, or HDCs, tape controller chips, enclosure management chips, host bus adapters, or HBAs, Fibre Channel blade switches, Fibre Channel stackable switches and other fabric switches that provide the connectivity infrastructure for storage networks. We serve our customers with solutions based on various storage connectivity technologies including Fibre Channel, Small Computer Systems Interface, or SCSI, and Internet SCSI, or iSCSI.

      Our products are sold directly to OEMs and through our authorized distributors. Our customers rely on our storage area network, or SAN, infrastructure technology to deliver storage solutions to information technology professionals in virtually every business sector.

      Our technology is found primarily in server, workstation, storage subsystem and hard disk drive solutions targeted at:

      Our products are incorporated in a large number of solutions from OEM customers, including Cisco Systems, Inc., Dell Computer Corporation, EMC Corporation, Fujitsu Limited, Hitachi, Hewlett-Packard Company, International Business Machines Corporation, Network Appliance, Inc., Quantum Corporation, Storage Technology Corporation, Sun Microsystems, Inc. and many others. For information regarding our major customers and their impact on our revenues, see Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in Part II, Item 7 of this report.

      To ensure interoperability within the SAN, we work closely with independent hardware vendors and software vendors, as well as developers and integrators who create, test, and evaluate complementary storage

networking products. We have key alliance relationships with Cisco Systems, Inc., Microsoft Corporation, VERITAS Software Corporation, Computer Associates International, Inc., Legato Systems, Inc. and McDATA Corporation.

Storage Industry

      According to IDC, 2004 enterprise storage capacity shipments in SANs grew by 69% over 2003 reaching a record 316,200 Terabytes (TBs). The IDC report forecasts that capacity shipped in SANs will increase to over 3,000,000 TBs by 2008.

      The rapid growth in storage requirements is being driven by several key factors. Data retention, as a result of expanding compliance and regulatory requirements, will increasingly drive the capacity needs for businesses of all sizes. Remote replication is an application which will not only increase the demand for capacity but will also expand the requirement for Fibre Channel to iSCSI bridge technology. Disk-based-back-up and virtual disk are two capacity oriented applications that are increasingly popular due to the availability of low-cost, high-capacity Serial Advanced Technology Attachment, or SATA, drives in enterprise storage subsystems. Both applications address compliance related, rapid recovery requirements. Since these applications are much more efficient if shared among many servers, the implementation is likely to be in a shared SAN environment. Rich-media will continue to drive significant capacity expansion throughout the next few years. Digital video, voice and content rich documents are expected to drive demand in both the enterprise and small and medium sized business, or SMB, markets.

New Markets

      While storage capacity and revenue opportunities will continue to expand in North America, storage growth is expected to grow even more rapidly in emerging countries such as Russia, China and India. In a manner analogous to the way emerging countries moved ahead of land line infrastructure by deploying wireless technology, storage implementations in emerging countries will tend to move ahead of older direct attached infrastructures by deploying storage networks from the start. Over the next several years these emerging markets are expected to offer attractive expansion opportunities.

      Another emerging SAN market is the medium sized business. Analysts estimate that the number of medium sized businesses, companies with between 100 and 1,000 employees, exceeds 500,000. Over 90% of these companies still deploy direct attached or server based storage. These companies have the same issues with compliance, replication, recovery and data expansion as do large enterprises. Increasingly these companies are looking to SANs designed for SMBs as a solution. During 2004 and early 2005, SMB specific solutions from Dell, EMC, HP, IBM and Sun have been brought to market. These solutions, along with management software that simplifies the installation and management of SANs, are targeted at this emerging base of SAN prospects. Both Fibre Channel-and iSCSI-based solutions are expected to find acceptance in these markets in the future.

New Technologies

      New technologies are expected to drive new applications which will also drive storage capacity requirements. iSCSI, which has been slow to take-off as a technology, has finally started shipping from major storage vendors. The iSCSI storage subsystems are targeted at the emerging SMB SAN market. Many of these subsystems are expected to be deployed as direct attached storage initially and later converted to SAN as familiarity with the new management capabilities increases.

      We expect server vendors to begin shipping products using Serial Attached SCSI, or SAS, technology in 2006. The advantage of SAS technology in servers is the ability to support both low-cost, high-capacity SATA, as well as performance-oriented SAS hard disk drives.

      In 2005, Fibre Channel 4Gb solutions began entering the market. Based on recent experience with the transition from 1Gb to 2Gb Fibre Channel products, it is expected that 4Gb products will take anywhere from 12 to 18 months to complete the transition.

      Blade servers continue to evolve into higher-performance and more flexible application environments. Based on IDC data from 2004, blade servers continue to be the fastest growing server segment. A large percentage of blade servers are shipped with Fibre Channel technology making Fibre Channel blade switches the fastest growing segment of the Fibre Channel switch market.

Our SAN Solutions

      Our ability to serve the storage industry stems from our highly leveraged product line that addresses virtually every connection point in a SAN infrastructure solution. On the server side of the SAN, we provide enclosure management products, HBA technology on the motherboard (“Fibre Down^tm” technology), baseboard management solutions, and Fibre Channel and iSCSI HBAs. Connecting servers to storage, we provide the network infrastructure with a full suite of Fibre Channel switches. On the storage side of the network, we provide controller chips for redundant array of inexpensive disks, or RAID, storage systems. These include Fibre Channel host port connections and RAID controller to Fibre Channel and SCSI disk drive port connections. In addition, we are an independent designer, developer and supplier of enterprise SCSI and Fibre Channel disk controllers.

      One of our key strategies has been to provide our customers with solutions that simplify their product design requirements. Complete storage networking solutions that are pre-tested and easy to install significantly reduce the critical implementation and time-to-market effort for OEMs. Today, our SAN infrastructure components are found in solutions from most major server and storage OEMs worldwide.

Product Overview

      We design and supply storage network infrastructure components for many of the world’s largest server and storage subsystem manufacturers. We also sell storage network infrastructure solutions through distributor channels. Our products, whether integrated into an OEM system or delivered directly via a distributor, are used by small, medium and large enterprises, and companies that have a variety of information technology environments.

      Our products include our SANblade^tm HBAs and SANbox^tm Fibre Channel Switches. Our Fibre Channel HBAs support SCSI protocol, Internet Protocol, or IP, Virtual Interface, or VI, and FICON protocol. Our iSCSI HBAs support internet SCSI protocol. In addition, we design and supply controller chips used in hard disk drives and tape drives as well as enclosure management and baseboard management chip solutions that monitor the health of the physical environment within a server or storage enclosure.

Sales and Marketing

      We market and distribute our products through OEMs and our direct sales organization supported by field sales and systems engineering personnel. In addition, we utilize a network of independent manufacturers’ representatives and regional and international distributors.

      In national and in certain international markets, we maintain both a direct sales force to serve our large OEM customers and multiple outside representatives that are focused on medium-sized and emerging accounts. We maintain a focused business development and outbound marketing organization to assist, train, equip and augment the sales organizations of our major OEM customers and their respective reseller organizations and partners. In 2004, we opened a sales office in Taiwan to support both customers and partners in the Asia-Pacific region. For information regarding revenue from independent customers by geographic area, see Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in Part II, Item 7 of this report.

      We work with our large peripheral and computer system manufacturer customers during their design cycles. We support these customers with applications and system design support and services, as well as training classes and seminars conducted both in the field and from our offices in Aliso Viejo and Roseville, California, Eden Prairie, Minnesota, and in the United Kingdom.

      Our sales efforts are focused on establishing and developing long-term relationships with our OEM customers. The sales cycle typically begins with one of our product designs being selected as a component in a potential customer’s computer system or data storage peripheral. Then, we work closely with the customer to integrate our components with the customer’s current and next generation products or platforms. The time to product shipment can typically range from six to eighteen months.

      In addition to sales and marketing efforts, we actively participate with industry organizations relating to the development and acceptance of industry standards. We collaborate with peer companies through co-marketing activities, collateral development, joint training, road tours and cooperative testing and certifications. Finally, to ensure and promote multi-vendor interoperation, we maintain interoperability certification programs and testing laboratories.

Engineering and Development

      Our industry is subject to rapid and regular technological change. Our ability to compete depends upon our ability to continually design, develop and introduce new products that take advantage of market opportunities and address emerging standards. Our strategy is to leverage our substantial base of architectural and systems expertise to address a broad range of input/output, or I/ O, and SAN solutions.

      We are engaged in the design and development of Fibre Channel switches; switch components; and iSCSI and Fibre Channel I/ O controllers and HBAs. We also design and develop SCSI, Fibre Channel and SAS hard disk drive controllers and management controllers used in storage peripherals, server enclosures and circuit boards.

      We continue to invest heavily in research and development to expand our capabilities to address the emerging technologies in the rapid evolution of the storage networking industry. During fiscal 2005, 2004 and 2003, we incurred engineering and development expenses of $95.9 million, $87.8 million and $81.3 million, respectively.

Backlog

      Our sales are made primarily pursuant to standard purchase orders for the delivery of products. Because industry practice allows customers to cancel or change orders with limited advance notice, we believe that backlog at any particular date is not a reliable indicator of our future revenue levels.

Competition

      The markets for SAN infrastructure components are highly competitive and characterized by short product life cycles, price erosion, rapidly changing technology, frequent product performance improvements and evolving industry standards. We believe the principal competitive factors in our industry include:

      We believe that we compete favorably with respect to each of these factors

      Due to the broad array of components required in the SAN infrastructure, we compete with several companies. In the Fibre Channel HBA market, our primary competitor is Emulex Corporation. In the

iSCSI HBA market, our primary competitor is Adaptec, Inc. Our switch products compete primarily with Brocade Communications Systems, Inc., Cisco Systems, Inc. and McDATA Corporation.

      There are two markets in the semiconductor controller business. The first market is associated with server and storage controller interfaces. In this market, our primary competitors are Adaptec, Inc., Agilent Technologies, Inc. and LSI Logic Corporation. The second market relates to controllers for enterprise disk drives where our primary competitor is LSI Logic Corporation.

      Finally, our enclosure and baseboard management semiconductor controllers compete primarily with Vitesse Semiconductor Corporation and Hitachi, Ltd.

Manufacturing

      We use outside suppliers and foundries to manufacture our semiconductor chips, HBAs and switches. This approach allows us to avoid the high costs of owning, operating and constantly upgrading wafer fabrication and assembly facilities. As a result, we focus our resources on product design and development, quality assurance, sales and marketing, and supply chain management. Prior to the sale of our semiconductor, switch and HBA products, final tests are performed on the products, including tests required under our ISO 9001 Certification. We also provide fabrication process reliability tests and conduct failure analysis to confirm the integrity of our quality assurance procedures.

      Our semiconductors are currently manufactured by a number of domestic and offshore foundries. Our major semiconductor suppliers are Samsung Semiconductor, Inc., LSI Logic Corporation, Taiwan Semiconductor Manufacturing Company, International Business Machines Corporation and Agere Systems Inc. Most of our products are manufactured using 0.25, 0.18 or 0.13 micron process technology. Newer technologies using 90 nanometer process technologies are currently under development. In the past, we have experienced some difficulties in shifting to smaller geometry process technologies or new manufacturing processes, which resulted in reduced manufacturing yields, delays in product deliveries and increased expenses. We may face similar difficulties, delays and expenses as we continue to transition our products to smaller geometry processes.

      We depend on foundries to allocate a portion of their foundry capacity sufficient to meet our needs and to produce products of acceptable quality and with satisfactory manufacturing yields in a timely manner. These foundries fabricate products for other companies and, in certain cases, manufacture products of their own design. We do not have long-term agreements with any of these foundries; we purchase both wafers and finished chips on a purchase order basis. Therefore, the foundries generally are not obligated to supply products to us for any specific period, in any specific quantity or at any specific price, except as may be provided in a particular purchase order. We work with our existing foundries, and intend to qualify new foundries, as needed, to obtain additional manufacturing capacity. However, there can be no assurance that we will be able to maintain our current foundry relationships or obtain additional capacity.

      We currently purchase our semiconductor products from foundries either in finished form or wafer form. We use subcontractors to assemble our semiconductor products purchased in wafer form, and to assemble our switches and HBA products. In the assembly process for our semiconductor products, the silicon wafers are separated into individual die, which are then assembled into packages and tested. For our HBA products, we use third party suppliers for material procurement and assembly in a turnkey model. Following the assembly of our semiconductor and HBA products, our products are further tested and inspected prior to shipment to our customers. For our switch products, we use third party suppliers for material procurement, management, assembly and test processes.

      Most component parts used in our HBA products are standard off-the-shelf items, which are, or can be, obtained from more than one source. We select suppliers on the basis of technology, manufacturing capacity, quality and cost. Whenever possible and practicable, we strive to have at least two manufacturing locations for each HBA, switch and chip product. Nevertheless, our reliance on third-party manufacturers involves risks, including possible limitations on availability of products due to market abnormalities, geopolitical instability, unavailability of or delays in obtaining access to certain product technologies, and the absence of complete

control over delivery schedules, manufacturing yields and total production costs. The inability of our suppliers to deliver products of acceptable quality and in a timely manner or our inability to procure adequate supplies of our products could have a material adverse effect on our business, financial condition and results of operations.

Intellectual Property

      While we have a number of patents issued and additional patent applications pending in the United States, Canada, Europe and Asia, we rely primarily on our trade secrets, trademarks and copyrights to protect our intellectual property. We attempt to protect our proprietary information through confidentiality agreements and contractual provisions with our customers, suppliers, employees and consultants, and through other security measures. Although we intend to protect our rights vigorously, there can be no assurance that these measures will be successful. In addition, the laws of certain countries in which our products are or may be developed, manufactured or sold, including various countries in Asia, may not protect our products and intellectual property rights to the same extent as the laws of the United States, or at all.

      While our ability to compete may be affected by our ability to protect our intellectual property, we believe our technical expertise and ability to introduce new products on a timely basis at competitive prices will be more important in maintaining our competitive position than protection of our intellectual property.

      We have received notices of claimed infringement of intellectual property rights in the past. There can be no assurance that third parties will not assert additional claims of infringement of intellectual property rights against us with respect to existing and future products. In the event of a patent or other intellectual property dispute, we may be required to expend significant resources to defend such claims, develop non-infringing technology or to obtain licenses to the technology which is the subject of the claim. There can be no assurance that we would be successful in such development or that any such license would be available on commercially reasonable terms, if at all. In the event of litigation to determine the validity of any third party’s claims, such litigation could result in significant expense to us, and divert the efforts of our technical and management personnel, whether or not such litigation is determined in our favor.

Employees

      We had 847 employees as of April 3, 2005. We believe our future prospects will depend, in part, on our ability to continue to attract, train, motivate, retain and manage skilled engineering, sales, marketing and executive personnel. Our employees are not represented by a labor union. We believe that our relations with our employees are good.

      Our principal product development, operations, sales and corporate offices are currently located in four buildings comprising approximately 200,000 square feet in Aliso Viejo, California. We own three of these buildings, and have a five-year lease (expiring in July 2009) for approximately 35,000 square feet of this space. We also lease design centers in Eden Prairie, Minnesota, Austin, Texas and Roseville, California comprising approximately 55,000 square feet, 15,000 square feet and 15,000 square feet, respectively. In April 2005, we entered into a 42-month lease for an operations, sales and postponement facility located near Dublin, Ireland, comprising approximately 20,000 square feet. We also maintain sales offices at various locations in the United States, Europe and Southeast Asia.

      In February 2003, Vixel Corporation filed suit against us in the United States District Court for the District of Delaware (the “First Delaware Action”) alleging infringement of a Vixel patent directed to a method and apparatus for Fibre Channel interconnection of private loop devices. In March 2003, Vixel amended its complaint to add two additional Vixel patents. The suit sought injunctive relief and damages in an unspecified amount.

      In December 2003, we filed suit against Emulex (the new parent company of Vixel) in the United States District Court for the Central District of California (the “California Action”) alleging that Emulex infringed one of our patents related to a digital switch element used in Fibre Channel systems. The suit sought unspecified monetary damages as well as injunctive relief.

      During December 2003, we engaged with Emulex in negotiations to settle the First Delaware Action and the California Action. As a result of those discussions, the parties signed a document entitled “terms of agreement” which the parties intended would outline the basis for a settlement agreement. In late February 2004, Emulex filed suit in the United States District Court for the District of Delaware (the “Second Delaware Action”) asking the Delaware court for declaratory relief that: (i) the patent in dispute in the California Action was invalid and, if the patent was valid, then Emulex did not infringe the patent; and (ii) the “terms of agreement” was a final and binding settlement of the First Delaware Action and the California Action.

      In June 2004, we settled the First Delaware Action, the Second Delaware Action and the California Action, and in connection with that settlement we entered into a license and settlement agreement with Emulex. Under that agreement, (i) we licensed to Emulex the patent in dispute in the California Action; (ii) Emulex licensed to us the patents in dispute in the First Delaware Action; (iii) we made a one-time royalty payment to Emulex and agreed to pay royalties on certain future product sales; and (iv) each party agreed to release all claims against the other and to the dismissal of the pending lawsuits.

      Various lawsuits, claims and proceedings have been or may be instituted against us. The outcome of litigation cannot be predicted with certainty and some lawsuits, claims and proceedings may be disposed of unfavorably to us. Many intellectual property disputes have a risk of injunctive relief and there can be no assurance that a license will be granted. Injunctive relief could have a material adverse effect on our financial condition or results of operations. Based on an evaluation of matters which are pending or asserted, we believe the disposition of such matters will not have a material adverse effect on our financial condition or results of operations.

      No matter was submitted to a vote of security holders during the fourth quarter of fiscal 2005.

PART II

Principal Market and Prices

      Shares of our common stock are traded and quoted on The Nasdaq National Market under the symbol QLGC. The following table sets forth the range of high and low sales prices per share of our common stock for each quarterly period of the two most recent fiscal years as reported on The Nasdaq National Market.

Number of Common Stockholders

      The approximate number of record holders of our common stock was 616 as of June 1, 2005.

Dividends

      We have never paid cash dividends on our common stock and currently have no intention to do so. We currently anticipate that we will retain all of our future earnings for use in the development and expansion of our business and for general corporate purposes. Any determination to pay dividends in the future will be at the discretion of our board of directors and will depend upon our operating results, financial condition and other factors as the board of directors, in its discretion, deems relevant.

Recent Sales of Unregistered Securities

      In January 2005, in connection with our prior acquisition of Little Mountain Group, Inc. (LMG), we issued approximately 179,000 shares of common stock to the former stockholders of LMG. These shares were issued in connection with the achievement of certain performance milestones that were specified at the date of the acquisition. This transaction was exempt from registration under Section 4(2) of the Securities Act of 1933, as amended.

Issuer Purchases of Equity Securities

      On June 30, 2004, we announced a stock repurchase program covering repurchases of up to $100 million of our common stock. This stock repurchase program expires June 30, 2006. Set forth below is information regarding our stock repurchases made during the fourth quarter of fiscal year 2005 under our stock purchase program.

      We had previously purchased 1,312,350 shares under the program.

      We repurchased the remaining amount authorized pursuant to the stock repurchase program, consisting of 1,731,000 shares for an aggregate purchase price of $55.0 million, during the first quarter of fiscal 2006.

      The following selected financial data should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and notes thereto appearing elsewhere in this report.

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

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

Overview

      We design and supply storage network infrastructure components for many of the world’s largest server and storage subsystem manufacturers that ultimately are used by small to medium-sized enterprises and companies that have large information technology environments. We serve customers with solutions based on various storage area network, or SAN, technologies. Our products are currently based on Fibre Channel, Small Computer Systems Interface, or SCSI, and Internet SCSI, or iSCSI, standards and we expect that future products may also be based on technology standards such as Serial Attached SCSI, or SAS. We produce the controller chips, management enclosure chips, host bus adapters, or HBAs and fabric switches that provide the connectivity infrastructure for every size of storage network.

      Our ability to serve the storage industry stems from our highly leveraged product line that addresses virtually every connection point in a SAN infrastructure solution. On the server side of the SAN, we provide enclosure management products, HBA technology on the motherboard (“Fibre Down” technology), baseboard management solutions, Fibre Channel HBAs and iSCSI HBAs. Connecting servers to storage, we provide the network infrastructure with a full suite of Fibre Channel switches. On the storage side of the network, we provide controller chips for redundant array of inexpensive disks, or RAID, storage systems. These include Fibre Channel host port connections and RAID controller to Fibre Channel and SCSI disk drive port connections. In addition, we are an independent designer, developer and supplier of enterprise SCSI and Fibre Channel disk controllers.

      Our products are sold to original equipment manufacturers, or OEMs, and through our authorized distributors. These connectivity solutions are incorporated into a variety of products from OEM customers, including Cisco Systems, Inc., Dell Computer Corporation, EMC Corporation, Fujitsu Limited, Hitachi, Hewlett-Packard Company, International Business Machines Corporation, Network Appliance, Inc., Quantum Corporation, Storage Technology Corporation, Sun Microsystems, Inc. and many others.

      We maintain a fifty-two/fifty-three week fiscal year ending on the Sunday nearest March 31. Fiscal year 2005 comprised fifty-three weeks, with the additional week included in the fourth fiscal quarter. Fiscal years 2004 and 2003 each comprised fifty-two weeks.

      During fiscal 2005, we established new records for annual net revenues and net income. Net revenues during fiscal 2005 of $571.9 million were up 9% from last year; net income of $157.6 million in fiscal 2005 increased 18% from the prior year. The results for fiscal 2005 were highlighted by a 12% increase in Fibre Channel product revenues and an improvement in gross profit percentage of 110 basis points to 69.4%.

      During the fourth quarter of fiscal 2005, our total net revenues increased sequentially by 5% from the third quarter of fiscal 2005. Fibre Channel revenues during the fourth quarter increased 1%. Revenues derived from SCSI products increased 15% sequentially during the fourth quarter due to increased demand for our SCSI chip products. Overall, sales of our hard disk drive controller chips increased by 34% sequentially, including strong growth in both the Fibre Channel and SCSI technologies.

      Our long-term outlook for our core Fibre Channel business remains favorable. Based on a foundation of design wins in existing markets, as well as emerging markets such as the small-to-medium business market, we continue to expect favorable growth momentum for our Fibre Channel products.

      A summary of the key factors and significant events which impacted our financial performance during the fourth quarter of fiscal 2005 are as follows:

RESULTS OF OPERATIONS

Net Revenues

      A summary of the components of our net revenues is as follows: