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SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

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|/x/ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 
|--- | ----------------------------------------------------------------------------------------
|    | For the quarterly period ended July 31, 2000                                            
|/ / | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
|    | For the transition period from  to                                                      

Commission
file number 0-21103

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ADVANCED DIGITAL INFORMATION CORPORATION

Incorporated under the laws
of the State of Washington

I.R.S. Identification
No. 91-1618616


11431
Willows Road
P.O. Box 97057
Redmond, Washington 98073-9757

(425) 881-8004

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 /x/  No / /

The
total shares of common stock without par value outstanding at the end of the quarter reported is 51,670,901.

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Item 1.  Financial Statements

Advanced Digital Information Corporation

Consolidated Balance Sheets

(In thousands, except for share data)

|                                                                                                                  |                                                                             | October 31,
1999           |         | July 31,
2000 |        
|----------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------- | -------------------------- | ------- | ------------- | -------
|
|Assets                                                                                                            |                                                                             |                            |         |               |        
|Current assets:                                                                                                   |                                                                             |                            |         |               |        
|                                                                                                                  | Cash and cash equivalents                                                   |                            | $       | 156,548       |        
|                                                                                                                  | Accounts receivable, net of allowances of $1,004 in 1999 and $1,581 in 2000 |                            |         | 44,568        |        
|                                                                                                                  | Inventories, net                                                            |                            |         | 33,317        |        
|                                                                                                                  | Marketable equity securities                                                |                            |         | 2,222         |        
|                                                                                                                  | Prepaid expenses and other                                                  |                            |         | 1,063         |        
|                                                                                                                  | Deferred income taxes                                                       |                            |         | 4,664         |        
|                                                                                                                  |                                                                             |                            |         |               |        
|                                                                                                                  |                                                                             | Total current assets       |         |               | 242,382
|Property, plant and equipment, net                                                                                |                                                                             |                            | 8,712   |               |        
|Investment in Crossroads Systems, Inc                                                                             |                                                                             |                            | 185,544 |               |        
|Intangible and other assets and investment in common stock                                                        |                                                                             |                            | 16,336  |               |        
|                                                                                                                  |                                                                             |                            |         |               |        
|                                                                                                                  |                                                                             | $                          | 452,974 |               | $      
|                                                                                                                  |                                                                             |                            |         |               |        
|Liabilities and Shareholders' Equity                                                                              |                                                                             |                            |         |               |        
|Current liabilities:                                                                                              |                                                                             |                            |         |               |        
|                                                                                                                  | Accounts payable                                                            |                            | $       | 20,582        |        
|                                                                                                                  | Accrued liabilities                                                         |                            |         | 11,439        |        
|                                                                                                                  | Income taxes payable                                                        |                            |         | 3,138         |        
|                                                                                                                  | Deferred revenue                                                            |                            |         | 4,105         |        
|                                                                                                                  | Current portion of long-term debt                                           |                            |         | 8,753         |        
|                                                                                                                  |                                                                             |                            |         |               |        
|Total current liabilities                                                                                         |                                                                             |                            | 48,017  |               |        
|Long-term debt                                                                                                    |                                                                             |                            | 1,507   |               |        
|Deferred income taxes                                                                                             |                                                                             |                            | 64,168  |               |        
|Minority interest                                                                                                 |                                                                             |                            | 324     |               |        
|Commitments                                                                                                       |                                                                             |                            |        |               |        
|Shareholders' equity: Preferred stock, no par value; 4,000,000 shares authorized; none issued and outstanding     |                                                                             |                            |        |               |        
|Common stock, no par value; 160,000,000 shares authorized, 51,670,901 issued and outstanding (50,931,534 in 1999) |                                                                             |                            | 191,155 |               |        
|Retained earnings                                                                                                 |                                                                             |                            | 31,227  |               |        
|Accumulated other comprehensive income:                                                                           |                                                                             |                            |         |               |        
|                                                                                                                  | Cumulative translation adjustment                                           |                            |         | (963          | )      
|                                                                                                                  | Unrealized investment gains                                                 |                            |         | 117,539       |        
|                                                                                                                  |                                                                             |                            |         |               |        
|                                                                                                                  |                                                                             | Total shareholders' equity |         |               | 338,958
|                                                                                                                  |                                                                             |                            |         |               |        
|                                                                                                                  |                                                                             | $                          | 452,974 |               | $      
|                                                                                                                  |                                                                             |                            |         |               |        

See
the accompanying notes to these consolidated financial statements.

2

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Advanced Digital Information Corporation

Consolidated Statements of Income

(In thousands, except for per share data)

|                                         |                                              | Three months ended
July 31, |        | Nine months ended
July 31, |  
|---------------------------------------- | -------------------------------------------- | --------------------------- | ------ | -------------------------- | -
|
|
|Net sales                                |                                              | $                           | 57,191 |                            | $
|Cost of sales                            |                                              |                             | 37,075 |                            |  
|                                         |                                              |                             |        |                            |  
|                                         | Gross profit                                 |                             |        | 20,116                     |  
|                                         |                                              |                             |        |                            |  
|Operating expenses:                      |                                              |                             |        |                            |  
|                                         | Selling and administrative                   |                             |        | 9,409                      |  
|                                         | Research and development                     |                             |        | 3,440                      |  
|                                         |                                              |                             |        |                            |  
|                                         |                                              |                             | 12,849 |                            |  
|                                         |                                              |                             |        |                            |  
|Operating profit                         |                                              |                             | 7,267  |                            |  
|                                         |                                              |                             |        |                            |  
|Other income:                            |                                              |                             |        |                            |  
|                                         | Interest income                              |                             |        | 191                        |  
|                                         | Interest expense                             |                             |        | (182                       | )
|                                         | Gain on sale of Crossroads Systems, Inc.     |                             |        |                           |  
|                                         | Gain on sale of marketable equity securities |                             |        | 7                          |  
|                                         | Foreign currency transaction gains (losses)  |                             |        | 117                        |  
|                                         | Other                                        |                             |        | (92                        | )
|                                         |                                              |                             |        |                            |  
|                                         |                                              |                             | 41     |                            |  
|                                         |                                              |                             |        |                            |  
|Income before provision for income taxes |                                              |                             | 7,308  |                            |  
|Minority interest                        |                                              |                             | 98     |                            |  
|Provision for income taxes               |                                              |                             | 2,663  |                            |  
|                                         |                                              |                             |        |                            |  
|Net income                               |                                              | $                           | 4,547  |                            | $
|                                         |                                              |                             |        |                            |  
|Basic net income per share               |                                              | $                           | 0.11   |                            | $
|                                         |                                              |                             |        |                            |  
|Diluted net income per share             |                                              | $                           | 0.11   |                            | $
|                                         |                                              |                             |        |                            |  

See
the accompanying notes to these consolidated financial statements.

3

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Advanced Digital Information Corporation

Consolidated Statements of Cash Flows

(In thousands)

|                                                    |                                                                                             | Nine months ended
July 31,                   |        
|--------------------------------------------------- | ------------------------------------------------------------------------------------------- | -------------------------------------------- | -------
|
|
|Cash flows from operating activities:               |                                                                                             |                                              |        
|                                                    | Net income                                                                                  |                                              | $      
|                                                    | Adjustments to reconcile net income to net cash provided by (used in) operating activities: |                                              |        
|                                                    |                                                                                             | Depreciation and amortization                |        
|                                                    |                                                                                             | Allowance for doubtful accounts receivable   |        
|                                                    |                                                                                             | Allowance for inventory obsolescence         |        
|                                                    |                                                                                             | Gain on sale of marketable equity securities |        
|                                                    |                                                                                             | Deferred income taxes                        |        
|                                                    |                                                                                             | Other                                        |        
|                                                    | Change in assets and liabilities:                                                           |                                              |        
|                                                    |                                                                                             | Accounts receivable                          |        
|                                                    |                                                                                             | Inventories                                  |        
|                                                    |                                                                                             | Prepaid expenses and other                   |        
|                                                    |                                                                                             | Other assets                                 |        
|                                                    |                                                                                             | Accounts payable                             |        
|                                                    |                                                                                             | Accrued liabilities                          |        
|                                                    |                                                                                             | Income taxes payable                         |        
|                                                    |                                                                                             | Deferred revenue                             |        
|                                                    |                                                                                             |                                              |        
|Net cash provided by (used in) operating activities |                                                                                             |                                              | 18,886 
|                                                    |                                                                                             |                                              |        
|Cash flows from investing activities:               |                                                                                             |                                              |        
|                                                    | Purchase of property, plant and equipment                                                   |                                              |        
|                                                    | Investment in marketable equity securities                                                  |                                              |        
|                                                    | Proceeds from sale of marketable equity securities                                          |                                              |        
|                                                    | Acquisition of minority interest                                                            |                                              |        
|                                                    | Other investments in equity securities                                                      |                                              |        
|                                                    |                                                                                             |                                              |        
|Net cash provided by (used in) investing activities |                                                                                             |                                              | (13,640
|                                                    |                                                                                             |                                              |        
|Cash flows from financing activities:               |                                                                                             |                                              |        
|                                                    | Proceeds from short-term and long-term debt                                                 |                                              |        
|                                                    | Repayment of short-term and long-term debt                                                  |                                              |        
|                                                    | Repayment of other long-term liabilities                                                    |                                              |        
|                                                    | Proceeds from issuance of common stock for stock options                                    |                                              |        
|                                                    |                                                                                             |                                              |        
|Net cash provided by (used in) financing activities |                                                                                             |                                              | (1,314 
|                                                    |                                                                                             |                                              |        
|Effect of exchange rate changes on cash             |                                                                                             |                                              | (500   
|                                                    |                                                                                             |                                              |        
|Net increase in cash and cash equivalents           |                                                                                             |                                              | 3,432  
|Cash and cash equivalents at beginning of period    |                                                                                             |                                              | 28,226 
|                                                    |                                                                                             |                                              |        
|Cash and cash equivalents at end of period          |                                                                                             | $                                            | 31,658 
|                                                    |                                                                                             |                                              |        

See
the accompanying notes to these consolidated financial statements.

4

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Advanced Digital Information Corporation

Consolidated Statements of Changes in Shareholders' Equity

Nine months ended July 31, 2000

(In thousands)

(Unaudited)

|                                                           |                                         | Common Stock                                             |  |   |         | Accumulated
Other
Comprehensive
Income (Loss) |   |         |       
|---------------------------------------------------------- | --------------------------------------- | -------------------------------------------------------- |  | - | ------- | --------------------------------------------- | - | ------- | ------
|
|
|Balance at October 31, 1999                                |                                         | 50,932                                                   |  | $ | 191,155 |                                               | $ | 31,227  |       
|Purchases under Stock Purchase Plan                        |                                         | 55                                                       |  |   | 753     |                                               |   |         |       
|Exercise of stock options, including tax benefit of $4,439 |                                         | 684                                                      |  |   | 6,892   |                                               |   |         |       
|Comprehensive income, net of tax:                          |                                         |                                                          |  |   |         |                                               |   |         |       
|                                                           | Net income                              |                                                          |  |   |         |                                               |   |         | 77,334
|                                                           | Unrealized investment gains (losses):   |                                                          |  |   |         |                                               |   |         |       
|                                                           |                                         | Unrealized losses                                        |  |   |         |                                               |   |         |       
|                                                           |                                         | Reclassification adjustment: gain included in net income |  |   |         |                                               |   |         |       
|                                                           | Foreign currency translation adjustment |                                                          |  |   |         |                                               |   |         |       
|                                                           |                                         | Comprehensive income (loss)                              |  |   |         |                                               |   |         |       
|                                                           |                                         |                                                          |  |   |         |                                               |   |         |       
|Balance at July 31, 2000                                   |                                         | 51,671                                                   |  | $ | 198,800 |                                               | $ | 108,561 |       
|                                                           |                                         |                                                          |  |   |         |                                               |   |         |       

See
the accompanying notes to these consolidated financial statements.

5

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Advanced Digital Information Corporation

Notes to Interim Consolidated Financial Statements

July 31, 2000

(Unaudited)

Note 1.  Basis of presentation

The accompanying condensed consolidated financial statements are unaudited and should be read in conjunction with the financial statements included in our
Annual Report on Form 10-K for the year ended October 31, 1999. In our opinion all normal recurring adjustments which are necessary for the
fair presentation of the results for the interim periods are reflected herein. Operating results for the nine-month period ended July 31, 2000, are not necessarily indicative of
results to be expected for a full year.

All
references to the number of shares and per share amounts of our common stock in the accompanying financial statements and these notes have been restated to reflect a
two-for-one stock split effected on March 14, 2000.

Note 2.  Recent accounting pronouncements

In December 1999, the Securities and Exchange Commission released Staff Accounting Bulletin 101, "Revenue Recognition in Financial Statements."
This pronouncement summarizes certain of the SEC staff's views on applying generally accepted accounting principles to revenue recognition. We are required to adopt SAB 101 in the fiscal year ending
October 2001. We do not expect this adoption to have a material impact on our results of operations, financial position or cash flows.

Note 3.  Earnings per share

The following table sets forth the computation of basic and diluted net income per share for the three months and nine months ended July 31, 1999 and
2000:

|                             |                                                                                                       | Three months ended
July 31, |      | Nine months ended
July 31,
|---------------------------- | ----------------------------------------------------------------------------------------------------- | --------------------------- | ---- | --------------------------
|
|Numerator:                   |                                                                                                       |                             |      |                           
|                             | Net income                                                                                            |                             | $    | 4,547                     
|                             |                                                                                                       |                             |      |                           
|Denominator:                 |                                                                                                       |                             |      |                           
|                             | Denominator for basic net income per shareweighted average shares                                    |                             |      | 39,952                    
|                             | Dilutive potential common shares from Team Member (employee) stock options                            |                             |      | 2,099                     
|                             |                                                                                                       |                             |      |                           
|                             | Denominator for diluted net income per shareadjusted weighted average shares and assumed conversions |                             |      | 42,051                    
|                             |                                                                                                       |                             |      |                           
|Basic net income per share   |                                                                                                       | $                           | 0.11 |                           
|                             |                                                                                                       |                             |      |                           
|Diluted net income per share |                                                                                                       | $                           | 0.11 |                           
|                             |                                                                                                       |                             |      |                           

6

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Note 4.  Inventories

Inventory is comprised as follows:

October 31, 1999

July 31, 2000Finished goods

$
13,871

$
16,240Work-in-process


3,892


6,400Raw materials


22,133


34,56439,896


57,204Allowance for inventory obsolescence


(6,579
)

(10,397
)$
33,317

$
46,807


Note 5.  Investment in Crossroads Systems, Inc. and other marketable equity securities

At times we invest in certain marketable equity securities. In accordance with Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," such investments are classified as available-for-sale. Under FAS 115, unrealized investment gains and losses, net of
taxes, are reflected as a net amount in a separate component of shareholders' equity until realized. For the purpose of computing realized gains and losses, costs are identified on a specific
identification basis.

In
August 1997, we purchased an approximately 15% interest in Crossroads for a purchase price of $4,000,000. In October 1999, Crossroads completed an initial public
offering. During the nine months ended July 31, 2000, we sold approximately 30% of our interest in Crossroads, at market prices averaging over $100 per share and resulting in a net gain of
$88,791,000. Of this gain, $14,345,000 was recorded in the third quarter of fiscal 2000. The fair value of the remaining investment is $8,097,000 at July 31, 2000 based upon the market price on
that date of $4.563 per share. The difference between the cost basis and fair value of $5,376,000, net of taxes of $1,882,000, is recorded as an unrealized investment gain.

At
July 31, 2000, the cost basis of other marketable equity securities was $26,769,000 and the fair value was $25,550,000. The difference between the cost basis and fair value
of $1,218,000, net of benefit for
taxes of $426,000 is recorded as an unrealized investment loss. During the current fiscal year, we sold certain marketable equity securities and realized gains of $1,536,000.

Note 6.  Acquisition of minority interest

Effective January 1, 2000, we acquired the 20% minority interest in ADIC/GRAU Storage Systems GmbH & Co. KG for a total purchase price of
$4,765,000 in cash. In connection with the acquisition, we recorded approximately $4,422,000 of goodwill and other intangible assets, with an average useful life of eight years.

7

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Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with our financial statements included in our Annual Report on
Form 10-K for the year ended October 31, 1999. This discussion contains certain forward-looking statements that involve risks and uncertainties, such as statements of our
plans, objectives, expectations and intentions. Such risks are detailed in our Annual Report on Form 10-K and are incorporated herein by reference. Our actual results could differ
materially from those discussed here. We undertake no obligation to publicly release any revisions to these forward-looking statements that may be required to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.

General

We provide hardware and software-based data storage solutions to the open systems marketplace. Our storage solutions integrate into a wide range of rapidly
evolving network computing environments and are designed to enable organizations to organize, protect and retrieve complex mission-critical data. We design, manufacture, sell and support specialized
data storage hardware and software products and provide related services. Currently, we derive substantially all of our revenue from the sale of storage libraries and related service and support. As a
result of our investments in software development, we expect sales of our proprietary software products to increase in the future. We distribute our products primarily through value-added resellers
(VARs), and original equipment manufacturers (OEMs), and we also sell directly to large end users.

Results of Operations

Net Sales.Net sales increased during the third quarter of fiscal 2000 by 15% to $66.0 million from
$57.2 million in the third quarter of fiscal 1999. Net sales for the nine months ended July 31, 2000 were $194.8 million, an increase of 21% from $160.4 million during the
nine months ended July 31, 1999. The increase in both periods was due to increased sales of FastStor and Scalar products, both in branded and OEM business. A reduction in sales of larger
libraries and associated service revenues especially in Europe where large libraries have generally been strongest, offset this increase. Revenue from OEM customers was 21% of total sales in the third
quarter of fiscal 2000 as compared to 17% of total sales
in the third quarter of fiscal 1999. We expect significant revenues associated with major OEM agreements over the next two fiscal quarters.

Gross Profit.Gross profit was $22.1 million or 33% of net sales for the three months ended July 31, 2000
compared to $20.1 million or 35% of net sales for the same period in fiscal 1999. The decrease in percentage of net sales was due in large part to increasing fixed costs and to the reduction in
revenues from sales of large libraries which typically have higher gross margins. For the nine months ended July 31, 2000, gross profit was $68.4 million or 35% of net sales compared to
$54.6 million or 34% of net sales for the same period in fiscal 1999. Increased OEM revenues may have a negative effect on gross margin percentage over the next few quarters.

Selling and Administrative Expenses.Selling and administrative expenses were $13.0 million or 20% of net sales
for the three months ended July 31, 2000 compared to $9.4 million or 16% of net sales for the same period in fiscal 1999. The dollar and percentage increases are due to a combination of
increased sales and administrative personnel both in the headquarters office and in regional offices, and marketing costs associated with our increased efforts to take advantage of new products and
sales channels. We expect to continue increasing spending levels as opportunities are identified.

Research and Development Expenses.Research and development expenses were $4.4 million or 7% of net sales for
the third quarter of fiscal 2000 compared to $3.4 million or 6% of net sales for the third quarter of fiscal 1999. Approximately half of the research and development spending thus far in

8

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fiscal 2000 was related to software-based products that may be incorporated into intelligent peripherals or sold separately. We intend to continue to invest in software development and new hardware
products.

Other Income.Other income was $17.1 million for the third quarter of fiscal 2000 and $97.7 million for
the nine months ended July 31, 2000. These total other income amounts include gain on sales of a portion of our equity interest in Crossroads Systems, Inc. of $14.3 million and
$88.8 million, respectively. The increase in interest income in the three months and nine months ended July 31, 2000, is the result of the investment of cash balances received in the
follow-on stock offering in September 1999 and interest income earned on the additional cash balances received as a result of the sales of marketable equity securities. Interest
expense in fiscal 2000 relates to interest on operating credit lines through a German bank. In fiscal 1999 we incurred interest associated primarily with a bank loan used to finance the acquisition of
EMASS. All U.S. bank debt was paid off during fiscal 1999.

Provision for Income Taxes.Income tax expense for the nine months ended July 31, 2000 was $39.7 million,
an effective tax rate of 34%. The effective tax rate includes taxes paid in various federal, state and international jurisdictions. This compares with income tax expense in fiscal 1999 of
$6.5 million, an effective tax rate of 36%. The large dollar amount of taxes owed in fiscal 2000 is associated with the gain on sale of Crossroads. There are significant deferred tax assets for
net operating loss carryforwards and other temporary differences associated with MountainGate and with subsidiaries acquired in the EMASS transaction. At October 31, 1999 a valuation allowance
had been established on a portion of these deferred tax assets. During the first two quarters of fiscal 2000 we determined that it was more likely than not that we could realize a portion of these
deferred tax assets and consequently reduced the previously established valuation allowance by $850,000. At July 31, 2000 we had a valuation allowance of $2.4 million which, if reduced,
will lower our effective income tax rate in future periods.

Liquidity and Capital Resources

In both fiscal 2000 and fiscal 1999 operating cash was primarily used to fund increases in accounts receivable and inventories and was offset by net income,
depreciation and other allowances and accounts payable. Additionally, cash used in operating activities in fiscal 2000 reflects an increase in income taxes payable of $14.6 million. This
increase is the net of a provision for taxes, less estimated tax payments, including payments made in the U.S. of $22.9 million. Excluding the estimated tax payments made in relation to the
gain on sales of Crossroads, significant cash would have been provided by operating activities for fiscal 2000. In the comparable period of fiscal 1999, cash of $18.9 million was provided by
operating activities.

Cash
flows provided by investing activities were $53.5 million for the first nine months of fiscal 2000, compared to cash flows used in investing activities of
$13.6 million in the first nine months of fiscal 1999. Fiscal 2000 cash flows reflect the proceeds from the sale of Crossroads and other marketable equity securities, as well as investments in
marketable equity securities. Fiscal 1999 uses include $11.0 million associated with two strategic investments. The first was a $4.0 million investment in LiveVault Corporation (formerly
known as Network Integrity, Inc.), a developer of specialized data protection software products. The second investment for $7.0 million was in SkyDesk (formerly known as
@Backup, Inc.), an Internet-based backup and data access service company.

Cash
flows provided by financing activities in the first nine months of fiscal 2000 were $761 thousand. This amount reflects $2.9 million associated with the exercise of
stock options, offset by certain payments of long-term and short-term debt. The tax benefit of such stock option exercises is an element
of cash flows from operating activities. Cash flows provided by financing activities in the first nine months of fiscal 1999 include a partial payment of certain U.S. bank debt of
$14.2 million.

9

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During the first nine months of fiscal 2000, we committed to the worldwide implementation of a fully-integrated Enterprise Resource Planning information system. We anticipate that the
total cost of this project will be approximately $5.0 million of which $2.5 million has been incurred through July 31, 2000. During the period, we also signed a lease for a new
Redmond, Washington facility. The new facility, totaling 78,000 square feet, will provide for increased manufacturing capacity, additional office space, and expanded test and systems engineering labs.

At
July 31, 2000, our cash and cash equivalents totaled $201.7 million, up from $156.5 million at October 31, 1999. Our working capital, the difference
between current assets and current liabilities, was $267.7 million at July 31, 2000, with a ratio of current assets to current liabilities of 5 to 1. Additionally, at July 31,
2000, our investment in Crossroads Systems, Inc. had a market value of $8.1 million. The market for technology stocks is extremely volatile and there is no assurance that we will realize
this value when and if we liquidate the remainder of our investment in Crossroads.

We
believe that our existing cash and cash equivalents, available bank lines of credit, debt capacity and anticipated cash flow from our operating activities will be sufficient to
fund our working capital and capital expenditure needs for at least the next 12 months. We may utilize cash to acquire or invest in businesses, products or technologies that we believe are
strategic. We regularly evaluate other companies and technologies for possible acquisition by us. In addition, we have made and expect to continue to make substantial investments in companies with
whom we have identified potential synergies. However, we have no present commitments or agreements with respect to any material acquisition of other businesses, products or technologies.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk Management

We are exposed to various market risks, including changes in foreign currency rates and interest rates. We may enter into various derivative transactions to
manage certain of these exposures. We do not hold or issue derivative instruments for trading purposes.

The
assets and liabilities of our non-U.S. subsidiaries have functional currencies other than the U.S. dollar and are translated into U.S. dollars at exchange rates in
effect at the balance sheet date. Income and expense items are translated at the average exchange rates prevailing during the period. A 10% depreciation in the U.S. dollar would result in an
approximately $970,000 decrease in income before provision for income taxes for the first nine months of fiscal 2000.

At
July 31, 2000, we had variable rate debt of approximately $5.7 million provided by German banks, and fixed rate debt of $1.3 million, also provided by a German
bank. The fair value of such debt approximates the carrying amount on the consolidated balance sheet at July 31, 2000. We have entered into an interest rate swap agreement on the variable rate
debt, which fixes the interest rate at 4.3%.

10

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## 

PART IIOTHER INFORMATION

|        |  |                                                                                 
|------- |  | --------------------------------------------------------------------------------
|Item 1. |  | Legal Proceedings.                                                              
|        |  | None                                                                            
|Item 2. |  | Changes in Securities.                                                          
|        |  | None                                                                            
|Item 3. |  | Defaults Upon Senior Securities.                                                
|        |  | None                                                                            
|Item 4. |  | Submission of Matters to a Vote of Security Holders.                            
|        |  | None                                                                            
|Item 5. |  | Other information.                                                              
|        |  | None                                                                            
|Item 6. |  | Exhibits and Reports on Form 8-K.                                               
|        |  | No reports on Form 8-K were filed during the fiscal quarter ended July 31, 2000.
|        |  | The following exhibits are filed as part of this report.                        
|        |  |                                                                                 

| |  |      |  |                                                           
| |  | ---- |  | ----------------------------------------------------------
|
| |  | 10.1 |  | Lease Agreement between Laguna South Exchange LLC and ADIC
| |  | 27.1 |  | Financial Data Schedule                                   
| |  |      |  |                                                           

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## 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

|                          |  | ADVANCED DIGITAL INFORMATION CORPORATION                                                                                    
|------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------
|Dated: September 13, 2000 |  | /S/ PETER H. VAN OPPENPeter H. van Oppen, Chairman
and Chief Executive Officer                                              
|September 13, 2000        |  | /S/ JON W. GACEKJon W. Gacek, Senior Vice President
and Chief Financial Officer (Principal
Financial and Accounting Officer)

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