1



                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q
                                   (Mark One)

              ( X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                      For the quarter ended March 31, 2002

                                       OR

              ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
           Or the transition period from ___________ to ______________



                           Commission File No. 0-10394


                              DATA I/O CORPORATION
             (Exact name of registrant as specified in its charter)





                 Washington                          91-0864123

      (State or other jurisdiction of            (I.R.S. Employer
       incorporation or organization)            Identification No.)



               10525 Willows Road N.E., Redmond, Washington, 98052
               (Address of principal executive offices, Zip Code)


                                 (425) 881-6444
              (Registrant's telephone number, including area code)



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


7,664,408  shares of no par value of the  Registrant's  Common Stock were issued
and outstanding as of May 06, 2002.

<PAGE>

                              DATA I/O CORPORATION

                                    FORM 10-Q
                      For the Quarter Ended March 31, 2002

                                      INDEX


Part I - Financial Information                                           Page

     Item 1.    Financial Statements(unaudited)                            3

     Item 2.    Management's Discussion and Analysis of
                Financial Condition and Results of Operations              9

     Item 3     Quantitative And Qualitative Disclosures
                about Market Risk                                         13

Part II - Other Information

     Item 1.    Legal Proceedings                                         13

     Item 2.    Changes in Securities and Use of Proceeds                 13

     Item 3.    Defaults Upon Senior Securities                           13

     Item 4.    Submission of Matters to a Vote of Security Holders       13

     Item 5.    Other Information                                         13

     Item 6.    Exhibits and Reports on Form 8-K                          13


Signatures                                                                17






<PAGE>


PART I - FINANCIAL INFORMATION

Item 1.           Financial Statements

                              DATA I/O CORPORATION

                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------
                                                                                    Mar. 31,                Dec. 31,
                                                                                      2002                    2001
-----------------------------------------------------------------------------------------------------------------------
(in thousands, except share data)                                                  (unaudited)
<S>                                                                                <C>                     <C>

ASSETS
CURRENT ASSETS:
     Cash and cash equivalents                                                       $  3,117               $  2,656
     Marketable securities                                                              2,060                  3,236
     Trade accounts receivable, less allowance for
        doubtful accounts of $372 and $350                                              5,270                  5,666
     Inventories                                                                        6,075                  6,388
     Other current assets                                                                 551                    485
                                                                                   -----------            -------------
        TOTAL CURRENT ASSETS                                                           17,073                 18,431

Property and equipment - net                                                            1,547                  1,741
Other assets                                                                              148                    168
                                                                                   -----------            -------------
        TOTAL ASSETS                                                                  $18,768                $20,340
                                                                                   ===========            =============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
     Accounts payable                                                                $  1,385               $  1,599
     Accrued compensation                                                                 771                    848
     Deferred revenue                                                                   1,745                  1,686
     Other accrued liabilities                                                          1,692                  1,871
     Accrued costs of business restructuring                                               63                     88
     Income taxes payable                                                                 371                    329
                                                                                   -----------            -------------
        TOTAL CURRENT LIABILITIES                                                       6,027                  6,421

Deferred gain on sale of property                                                       1,682                  1,765
                                                                                   -----------            -------------
        TOTAL LIABILITIES                                                               7,709                  8,186

COMMITMENTS
                                                                                            -                      -
STOCKHOLDERS' EQUITY:
     Preferred stock -
        Authorized, 5,000,000 shares, including
           200,000 shares of Series A Junior Participating
        Issued and outstanding, none                                                        -                      -
     Common stock, at stated value -
        Authorized, 30,000,000 shares
        Issued and outstanding, 7,664,408
           and 7,613,754 shares                                                        18,577                 18,500
     Accumulated losses                                                                (7,519)               ( 6,173)
     Accumulated other comprehensive income (loss)                                          1                   (173)
                                                                                   -----------            -------------
        TOTAL STOCKHOLDERS' EQUITY                                                     11,059                 12,154
                                                                                   -----------            -------------
        TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                    $18,768                $20,340
                                                                                   ===========            =============

See notes to consolidated financial statements.
</TABLE>


<PAGE>


                              DATA I/O CORPORATION

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
                                                                                               Mar. 31,           Mar. 31,
For the quarters ended                                                                           2002               2001
-----------------------------------------------------------------------------------------------------------------------------
(in thousands, except per share data)
<S>                                                                                           <C>                <C>
Net sales                                                                                        $5,390             $7,883
Cost of goods sold                                                                                2,887              5,147
                                                                                              ------------       ------------
Gross margin                                                                                      2,503              2,736

Operating expenses:
     Research and development                                                                     1,308              1,939
     Selling, general and administrative                                                          2,295              2,996
                                                                                              ------------       ------------
          Total operating expenses                                                                3,603              4,935

                                                                                              ------------       ------------
          Operating loss                                                                         (1,100)            (2,199)

Non-operating income (expense):
     Interest income                                                                                 26                 65
     Interest expense                                                                                (3)                (7)
     Foreign currency exchange                                                                                          (6)
                                                                                                    (55)
                                                                                              ------------       ------------
          Total non-operating income (expense)                                                      (32)                52

                                                                                              ------------       ------------
      Loss from operations before income taxes                                                   (1,132)            (2,147)

Income tax expense                                                                                   23                  2
                                                                                              ------------       ------------

Net loss                                                                                        ($1,155)           ($2,149)
                                                                                              ============       ============

Basic and diluted loss per share:
     Total basic and diluted loss per share                                                      ($0.15)            ($0.28)
                                                                                              ============       ============

Weighted average and potential shares outstanding                                                 7,649              7,560
                                                                                              ============       ============

See notes to consolidated financial statements.

</TABLE>

<PAGE>


                              DATA I/O CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
                                                                                                Mar. 31,           Mar, 31
For the quarters ended                                                                            2002              2001
------------------------------------------------------------------------------------------------------------------------------
(in thousands)
<S>                                                                                             <C>               <C>
OPERATING ACTIVITIES:
     Loss from operations                                                                        ($1,155)         ($2,149)
     Adjustments to reconcile loss from operations
       to net cash used in operating activities:
       Depreciation and amortization                                                                 277              597
       Net loss on dispositions                                                                      232               74
       Deferred revenue                                                                               59              162
       Amortization of deferred gain on sale                                                         (83)             (82)
       Net change in:
          Trade accounts receivable                                                                  395            1,307
          Inventories                                                                                312            1,005
          Recoverable income taxes                                                                    -                18
          Other current assets                                                                       (65)              85
          Accrued cost of business restructuring                                                     (25)             (15)
          Accounts payable and accrued liabilities                                                  (427)          (1,212)
                                                                                               -----------      --------------
          Cash used in operating activities                                                         (480)            (210)

INVESTING ACTIVITIES:
     Additions to property and equipment                                                            (295)            (413)
     Net from purchase and sale of marketable securities                                           1,175             (310)
                                                                                               -----------      --------------
       Cash provided by (used in) investing activities                                               880             (723)

FINANCING ACTIVITIES:
     Sale of common stock                                                                             69              115
     Proceeds from exercise of stock options                                                           7                -
                                                                                               -----------      --------------
       Cash provided by financing activities                                                          76              115
                                                                                               -----------      --------------
Increase (decrease) in cash and cash equivalents                                                     476             (818)

Effects of exchange rate changes on cash                                                             (15)             (77)
Cash and cash equivalents at beginning of quarter                                                  2,656            3,133
                                                                                               -----------      --------------
Cash and cash equivalents at end of quarter                                                       $3,117           $2,238
                                                                                               ===========      ==============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
     Interest                                                                                         $3               $8
     Income taxes                                                                                    $23               $2

See notes to consolidated financial statements.

</TABLE>

<PAGE>


                              DATA I/O CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


NOTE 1 - FINANCIAL  STATEMENT  PREPARATION

The  financial  statements  as of March 31, 2002 and March 31,  2001,  have been
prepared by the Company  pursuant to the rules and regulations of the Securities
and Exchange  Commission  (SEC).  These  statements  are  unaudited  but, in the
opinion of management,  include all adjustments  (consisting of normal recurring
adjustments  and  accruals)  necessary  to present  fairly the  results  for the
periods presented.  The balance sheet at December 31, 2001 has been derived from
the audited financial  statements at that date. Certain information and footnote
disclosures  normally  included in financial  statements  prepared in accordance
with  accounting  principles  generally  accepted in the United States have been
condensed  or  omitted  pursuant  to such SEC rules and  regulations.  Operating
results for the quarter ended March 31, 2002 are not  necessarily  indicative of
the results  that may be expected for the year ending  December 31, 2002.  These
financial  statements  should be read in  conjunction  with the  annual  audited
financial  statements and the accompanying  notes included in the Company's Form
10-K for the year ended December 31, 2001.

NOTE 2 - INVENTORIES

Inventories consisted of the following components (in thousands):

                                            Mar. 31,                  Dec. 31,
                                              2002                      2001
                                      ----------------          ----------------
                  Raw material              $3,004                    $3,588
                  Work-in-process            1,484                     1,354
                  Finished goods             1,587                     1,446
                                      ----------------          ----------------
                                            $6,075                    $6,388
                                      ================          ================

During the first  quarter,  $250,000  was  charged to the reserve for excess and
obsolete inventory. The total reserve was higher by $173,000 at quarter-end,  as
some materials previously reserved for were disposed of during the quarter.

NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following components (in thousands):

                                            Mar. 31,                  Dec. 31,
                                             2002                      2001
                                       ----------------         ----------------

Leasehold improvements                    $   232                   $   229
Equipment                                  11,990                    12,188
                                       ----------------         ----------------
                                           12,222                    12,417
Less accumulated depreciation              10,675                    10,676
                                       ----------------         ----------------
Property and equipment - net              $ 1,547                   $ 1,741
                                       ================         ================


NOTE 4 - BUSINESS RESTRUCTURING PROGRESS

In the second quarter of 2001, the Company  recorded a  restructuring  charge of
$460,000  associated with actions taken to reduce the Company's  breakeven point
and realign the Company with growth activities.  This operational  repositioning
was mandated by the impact  which the  economic  slowdown and decline in capital
spending  across a high  number of  customer  groups had on  general  demand for
programming  equipment.

The  Company's  second  quarter   repositioning   included  the  following  four
components:  a reduction in the Company's  global  workforce of approximately 40
persons or 20% of the  workforce;  discontinuance  or  reallocation  of numerous
projects  and  activities  not  essential  to  the  Company's  long-term  goals;
streamlining of activities to decrease discretionary marketing, distribution and
promotional  expenses;  and  consolidation  of  numerous  functions  across  the
organization  to create a team  which was more  productive  and able to  respond
faster to global customer needs.

On July 12, 2001, during its third quarter,  the Company announced that it would
take further strategic actions to reduce its breakeven point, which included the
following  actions:  closure of a facility in Germany  moving its  operations to
other  locations  within the  Company;  combining  the  Company's  four  product
families  into two business  groups;  consolidating  service  groups  across the
organization  to create a team more  responsive to global  customer  needs;  and
targeting  certain other expense  reductions for the third quarter,  including a
closure of the company's  Redmond facility for one week. A restructuring  charge
of $499,000 was recorded in the third  quarter.

In the fourth quarter of 2001, the Company reduced its staff by 29 persons.  The
actions  taken were meant to reduce the Company's  breakeven  point and bring it
closer to forecasted revenues, and to maintain the cash position of the Company.
The Company incurred restructuring costs of $252,000 during the fourth quarter.

At March 31, 2002 all  restructuring  expenses  associated  with the  activities
detailed above had been paid except for approximately $63,000.

An analysis of the restructuring is as follows (in thousands):
<TABLE>
<CAPTION>

                                                          Reserve           .            2002          Reserve
                                                         Balance at        2002       Payments/       Balance at
 Description                                           Dec. 31, 2001     Expenses    Write-offs      Mar. 31, 2002
 --------------                                       ----------------- -----------  ------------- ------------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>
 Downsizing U.S. Operations:
  Employee severance                                      $   4           $   -         $   -            $   4
  Redmond facility consolidation                             46               -            14               32
  Consulting and legal expenses                              19               -             -               19
 Downsizing Foreign Operations                               19               -            11                8
                                                      ----------------- -----------  ------------- ------------------
 Total                                                    $  88           $   -        $   25          $    63
                                                      ================= ===========  ============= ==================
</TABLE>

NOTE 5 - EARNINGS PER SHARE

Basic  earnings/(loss)  per share exclude any dilutive effects of stock options.
Basic  earnings/(loss) per share are computed using the weighted-average  number
of common shares  outstanding  during the period.  Diluted  earnings/(loss)  per
share are computed using the weighted-average number of common shares and common
stock equivalent shares outstanding  during the period.  Common stock equivalent
shares are excluded from the computation if their effect is antidilutive.

The following table sets forth the computation of basic and diluted earnings per
share (in thousands except per share data):
<TABLE>
<CAPTION>

                                                                                   For the first quarter
                                                                                   2002             2001
                                                                               -------------    -------------
<S>                                                                               <C>              <C>
      Numerator for basic and diluted earnings (loss) per share:
           Net loss                                                                ($1,155)         ($2,149)
                                                                               =============    =============
      Denominator:
           Denominator for basic earnings per share -
               weighted-average shares                                               7,649             7,560
           Employee stock options (1)                                                   -                -
                                                                               -------------    -------------
           Denominator for diluted earnings per share -
               adjusted weighted-average shares and
               assumed conversion of stock options                                   7,649            7,560
                                                                               =============    =============
      Basic and diluted earnings (loss) per share
           Total basic and diluted earnings (loss) per share                       ($0.15)          ($0.28)
                                                                               =============    =============


(1)      Excludes 1,590 and 73,258 employee stock options which were antidilutive in the first quarter of 2002 and 2001.
</TABLE>

NOTE 6 - ACCOUNTING FOR INCOME TAXES

The Company's effective tax rate for the first quarter of 2002 and 2001 differed
from the statutory 34% tax rate  primarily due to operating  losses for which no
tax benefit was recorded. The tax valuation allowance increased by approximately
$498,000  during the  quarter  ended  March 31,  2002.  As of March 31, 2002 the
Company has a valuation allowance of $9,465,000.


NOTE 7 - COMPREHENSIVE INCOME (LOSS)

During the first quarter of 2002 and 2001 total comprehensive  income (loss) was
comprised of the following (in thousands):

                                                        For the first quarter
                                                        2002             2001
                                                  ------------     ------------
   Net loss                                           ($1,155)         ($2,149)
   Foreign currency translation gain (loss)                11               (2)
                                                  ------------ --- -------------
                  Total comprehensive loss            ($1,144)         ($2,151)
                                                  ============     =============


NOTE 8 - CHANGE IN FISCAL YEAR

Prior to 2001, the Company reported on a fifty-two,  fifty-three week basis. The
last  reporting  period using this fiscal period was the year ended December 28,
2000. The Company's  Board Of Directors  approved a resolution on March 12, 2001
to change the Company's reporting period to a calendar year and calendar quarter
basis  effective  for the then current  fiscal year.  The first  quarter of 2001
covered the period December 29, 2000 to March 31, 2001.

NOTE 9 - FOREIGN CURRENCY TRANSLATION AND DERIVATIVES

Assets and  liabilities of foreign  subsidiaries  are translated at the exchange
rate on the  balance  sheet  date.  Revenues,  costs  and  expenses  of  foreign
subsidiaries are translated at average rates of exchange  prevailing  during the
year.  Translation  adjustments  resulting  from this  process  are  charged  or
credited to stockholders'  equity,  net of taxes.  Realized and unrealized gains
and losses resulting from the effects of changes in exchange rates on assets and
liabilities  denominated  in foreign  currencies  are included in  non-operating
expense as foreign currency transaction gains and losses.

In June 1998, the Company  adopted SFAS No. 133,  Accounting for Derivatives and
Hedging  Activities.   This  statement  establishes   accounting  and  reporting
standards for derivative  instruments and requires recognition of derivatives as
assets or liabilities in the statement of financial  position and measurement of
those  instruments  at fair value.  The adoption of this standard by the Company
did not materially impact its consolidated financial statements.

The Company utilizes forward foreign exchange  contracts to reduce the impact of
foreign currency exchange rate risks where natural hedging  strategies cannot be
effectively employed. All hedging instruments held by the Company are fair value
hedges.  Generally,  these  contracts  have  maturities  less  than one year and
require the Company to exchange foreign currencies for U.S. dollars at maturity.
The change in fair value of the open hedge  contracts as of March 31, 2002 is an
unrealized  loss of $12,000 and is  included in accounts  payable on the balance
sheet.

The Company does not hold or issue derivative financial  instruments for trading
purposes.  The purpose of the Company's hedging activities is to reduce the risk
that the valuation of the underlying  assets,  liabilities and firm  commitments
will  be  adversely  affected  by  changes  in  exchange  rates.  The  Company's
derivative  activities do not create foreign currency exchange rate risk because
fluctuations  in the value of the  instruments  used for  hedging  purposes  are
offset by fluctuations in the value of the underlying exposures being hedged.

NOTE 10 - NEW ACCOUNTING PRONOUNCEMENTS

In June 2001,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial Accounting Standards No. 142 (SFAS 142), Goodwill and Other Intangible
Assets.  The  provisions  of SFAS 142 are required to be applied  starting  with
fiscal  years  beginning  after  December 15,  2001,  with  earlier  application
permitted for entities with fiscal years beginning after March 15, 2001 provided
that the first interim financial statements have not been previously issued. The
statement is required to be applied at the beginning of the entity's fiscal year
and to be applied to all goodwill and other intangible  assets recognized in its
financial  statements  to that date.  The Company has  evaluated  the  potential
effect of the initial application of the SFAS 142 on its consolidated  financial
statements  and  its  implementation  did  not  have a  material  impact  on the
Company's consolidated financial statements.

In October 2001, the Financial  Accounting  Standards Board issued  Statement of
Financial Accounting Standard No. 144 (SFAS 144),  Accounting for the Impairment
or Disposal of Long-Lived Assets.  SFAS 144 supersedes SFAS 121,  Accounting for
the  Impairment of Long-Lived  Assets to Be Disposed Of, and the  accounting and
reporting  provisions  of APB Opinion 30,  Reporting the Results of Operations -
Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary,
Unusual and Infrequently  Occurring Events and  Transactions,  for segments of a
business to be disposed of. SFAS is effective for fiscal years  beginning  after
December  15,  2001.  The  Company  has  evaluated  the  effect  of the  initial
application  of the SFAS 144 on its  consolidated  financial  statements and its
implementation  did not have a  material  impact on the  Company's  consolidated
financial statements.

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

General

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes  forward-looking  statements  within
the meaning of the Private  Securities  Litigation  Reform Act of 1995. This Act
provides a "safe harbor" for  forward-looking  statements to encourage companies
to provide  prospective  information  about  themselves as long as they identify
these statements as forward looking and provide meaningful cautionary statements
identifying important factors that could cause actual results to differ from the
projected results.  All statements other than statements of historical fact made
in this  Quarterly  Report  on Form 10-Q are  forward  looking.  In  particular,
statements herein regarding industry prospects;  future results of operations or
financial  position;  integration of acquired  products and  operations;  market
acceptance of the Company's newly introduced or upgraded products;  development,
introduction  and  shipment of new  products;  and any other  guidance on future
periods  are  forward-looking  statements.  Forward-looking  statements  reflect
management's  current expectations and are inherently  uncertain.  The Company's
actual results may differ  significantly  from  management's  expectations.  The
following  discussion  and discussion  under the caption  "Business - Cautionary
Factors That May Affect Future Results" in Item 1 in the Company's Annual report
on Form 10-K for the year ended  December 31, 2001,  describe some, but not all,
of the factors that could cause these differences.

Results of Operations
<TABLE>
<CAPTION>

Net Sales

 (in thousands)                                               First Quarter                                First Quarter

 Net Sales by Product Line:                                       2002                   Change                 2001
 ----------------------------------------------------------------------------------------------------    -------------------
<S>                                                          <C>                        <C>                    <C>

 Non-automated programming systems                               $2,635                (43.8)%                $4,690

 Automated programming systems                                    2,755                (13.7)%                 3,193
                                                            ------------------    -------------------    -------------------

 Total Net Sales                                                 $5,390                (31.6)%                $7,883
                                                            ==================    ===================    ===================


 Net Sales by location:

    United States                                                $1,789                (38.7)%               $2,920

       % of total                                                 33.2%                                       37.0%

    International                                                $3,601                (27.4)%               $4,963

       % of total                                                 66.8%                                       63.0%
 ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

Revenues for the first quarter of 2002  decreased $2.5 million or 31.6% compared
to the  first  quarter  of  2001.  Sales  were  lower  for  both  automated  and
non-automated programming systems. The decline in revenues is due to a reduction
in orders for  programming  equipment  that the  Company  believes is due to the
continued  general  economic  sluggishness of the  electronics  industry and the
capital  equipment  market in  particular.  The  Company  believes  its  largest
customer  group,  the  wireless  handset  manufacturers,  as  well  as  contract
manufacturers and other sectors of the electronics  industry,  continue to defer
capital equipment purchases.

The Company  released its new FlashPAK  product and began shipping it at the end
of the first quarter.  This is a desk top  programmer  designed to program flash
memory chips.  This is an element of the Company's  "connected  strategy".  This
strategy  focuses on  simplifying  the  movement of the  customers  intellectual
property all through the design and production process.

GROSS MARGIN
<TABLE>
<CAPTION>
<S>                                                                <C>                  <C>                   <C>

Gross Margin                                                        $2,503               (8.5)%                $2,736

Percentage of net sales                                              46.4%                                      34.7%
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

Gross margin dollars only  decreased 8.5% on a 31.6% revenue  decline during the
first  quarter  of 2002  versus  the same  quarter  in 2001.  Gross  Margin as a
percentage of sales  actually  increased  11.7  percent.  This increase in gross
margin percentage  reflects the  restructuring  efforts of the past year and the
effects of the Company's lean manufacturing efforts.

Research and Development
<TABLE>
<CAPTION>

  (in thousands)                                                First Quarter                              First Quarter
                                                                     2002                Change                2001
 --------------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>                   <C>                 <C>
 Research and development                                           $1,308               (32.5)%              $1,939

 Percentage of net sales                                             24.3%                                     24.6%
 --------------------------------------------------------------------------------------------------------------------------
</TABLE>


The decrease in research and development  spending for the first quarter of 2002
as compared to the first  quarter of 2001  reflects  lower  headcount  and lower
development spending.

Selling, General and Administrative
<TABLE>
<CAPTION>
 (in thousands)                                                 First Quarter                              First Quarter
                                                                     2002                Change                2001
 --------------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>                  <C>                  <C>
 Selling, general & administrative                                  $2,295                (23.4)%              $2,996

 Percentage of net sales                                             42.6%                                     38.0%
 --------------------------------------------------------------------------------------------------------------------------
</TABLE>

The  decrease  in Selling,  General  and  Administrative  expense  reflects  the
restructure  related spending reductions that the Company has made over the last
12 months.  This reflects  lower costs for salaries and  benefits,  advertising,
commissions, supplies and outside services.

Interest
<TABLE>
<CAPTION>
  (in thousands)                                                First Quarter                              First Quarter
                                                                     2002                 Change                2001
 --------------------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>                 <C>                    <C>
 Interest income                                                     $26                 (60.0)%                $65

 Interest expense                                                    $ 3                 (57.1)%                $ 7
 --------------------------------------------------------------------------------------------------------------------------
</TABLE>

The decrease in interest income for the first quarter of 2002 as compared to the
first  quarter of 2001 is due to the  decrease  in cash,  cash  equivalents  and
marketable  securities,  due primarily to the funding of operating losses during
the past year and the effect of lower interest rates.

Income Taxes
<TABLE>
<CAPTION>
 (in thousands)                                                 First Quarter                              First Quarter
                                                                     2002                                      2001
 --------------------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>                                        <C>
 Income tax expense                                                  $23                                        $2

 Effective tax rate                                                   NA                                       0.1%
 --------------------------------------------------------------------------------------------------------------------------
</TABLE>

Tax expense  recorded for the first  quarter of 2002 and 2001 was due to foreign
taxes. Tax valuation  reserves  increased by  approximately  $498,000 during the
quarter. As of March 31, 2002 the Company has valuation reserves of $9,465,000.


Financial Condition
<TABLE>
<CAPTION>
Liquidity and Capital Resources
                                                                    Mar. 31                                   Dec. 31,
(in thousands)                                                        2002                Change                2001
<S>                                                                <C>                    <C>                <C>
------------------------------------------------------------- --------------------- -------------------- -------------------
Working capital                                                     $11,046               ($964)              $12,010
------------------------------------------------------------- --------------------- -------------------- -------------------
</TABLE>

Working capital decreased during the first quarter of 2002 due to funding of the
loss  for  the  quarter.  Cash,  cash  equivalents  and  marketable  securities,
decreased $715,000 during the quarter. Accounts receivable decreased by $396,000
and the inventory balance declined $313,000.  As of March 31, 2002 and 2001, the
Company had no debt outstanding.

The Company  estimates  that capital  expenditures  for  property and  equipment
during the  remainder  of 2002 will be between  $500,000 and $1.0  million.  The
Company's  future  capital  requirements  will  depend  on a number  of  factors
including;  costs associated with R&D, successful launch of new products and the
potential use of funds for strategic purposes. Capital expenditures are expected
to be funded from  existing  and  internally  generated  funds or may be leased.
Management  believes that the Company has sufficient  working capital  available
under its operating plan to fund its operations and capital  requirements for at
least 12 months.  The Company  established  a foreign  line of credit for 50,000
Euros in February 2002.

RESTRUCTURING

In the second quarter of 2001, the Company  recorded a  restructuring  charge of
$460,000  associated with actions taken to reduce the Company's  breakeven point
and  realign  the  Company  with  its  growth   activities.   This   operational
repositioning  was  mandated  by the  impact of the  economic  slowdown  and the
decline in  capital  spending  across a high  number of  customer  groups had on
general demand for programming equipment.

The  Company's  second  quarter   repositioning   included  the  following  four
components:  a reduction in the Company's  global  workforce of approximately 40
persons or 20% of the  workforce;  discontinuance  or  reallocation  of numerous
projects  and  activities  not  essential  to  the  Company's  long-term  goals;
streamlining of activities to decrease discretionary marketing, distribution and
promotional  expenses;  and  consolidation  of  numerous  functions  across  the
organization  to create a team  which was more  productive  and able to  respond
faster to global customer needs.

On July 12, 2001, during its third quarter,  the Company announced that it would
take further strategic actions to reduce its breakeven point, which included the
following actions: closure of a facility in Germany and moving its operations to
other  locations  within the  Company;  combining  the  Company's  four  product
families  into two business  groups;  consolidating  service  groups  across the
organization  to create a team more  responsive to global  customer  needs;  and
targeting  certain other expense  reductions for the third quarter,  including a
closure of the Company's  Redmond facility for one week. A restructuring  charge
of $499,000 was recorded in the third quarter.

In the fourth quarter of 2001, the Company reduced its staff by an additional 29
persons.  The actions taken were meant to further reduce the Company's breakeven
point and  bring it closer to  forecasted  revenues,  and to  maintain  the cash
position of the Company.  The Company incurred  restructuring  costs of $252,000
during the fourth quarter.

At March 31, 2002, all  restructuring  expenses  associated  with the activities
detailed above were paid except for approximately  $63,000,  which was primarily
associated with facility consolidation, and consulting and legal fees.

<PAGE>

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

The Company  currently uses only foreign currency hedge derivative  instruments,
which,  at a given date,  are not material.  However,  the Company is exposed to
interest rate risks.  The Company  generally  invests in  high-grade  commercial
paper with original  maturity  dates of twelve  months or less and  conservative
money  market  funds to  minimize  its  exposure  to  interest  rate risk on its
marketable  securities,  which are classified as  available-for-sale as of March
31,  2002 and  December  31,  2001.  The Company  believes  that the market risk
arising from holdings of its financial instruments is not material.

PART II - OTHER INFORMATION


Item 1.           Legal Proceedings

                  None

Item 2.           Changes in Securities and Use of Proceeds

                  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

(a)      Exhibits

The following list is a subset of the list of exhibits described below and
contains all compensatory plans, contracts or arrangements in which any director
or executive officer of the Company is a participant, unless the method of
allocation of benefits thereunder is the same for management and non-management
participants:

(1)  Amended and Restated 1982 Employee Stock Purchase Plan. See Exhibit 10.7.

(2)  Retirement Plan and Trust Agreement. See Exhibit 10.2, 10.3, 10.4, 10.11,
     10.14, 10.15, and 10.16.

(3)  Summary of Management Incentive Compensation Plan. See Exhibit 10.12.

(4)  Amended and Restated 1983 Stock Appreciation Rights Plan. See Exhibit 10.1.

(5)  Amended and Restated 1986 Stock Option Plan. See Exhibit 10.19.

(6)  Form of Change in Control Agreements. See Exhibit 10.5.

(7)  1996 Director Fee Plan. See Exhibit 10.6 and 10.17.

(8)  Letter Agreement with Frederick R. Hume. See Exhibit 10.21.

(9)  Letter Agreement with Irene Bjorklund. See Exhibit 10.25.

       3    Articles of Incorporation:

            3.1   The Company's restated Articles of Incorporation filed
                   November 2, 1987 (Incorporated by reference to Exhibit 3.1
                   of the Company's 1987 Annual Report on Form 10-K (File No.
                   0-10394)).

            3.2   The Company's Bylaws as amended and restated as of March 2001.
                  (Incorporated by reference to the Company's 2001 Annual Report
                  on Form 10-K (File No. 0-10394)).

            3.3    Certificate of Designation, Preferences and Rights of
                   Series A Junior Participating Preferred Stock
                   (Incorporated by reference to Exhibit 1 of the Company's
                   Registration Statement on Form 8-A filed March 13, 1998
                   (File No. 0-10394)).

       4    Instruments Defining the Rights of Security Holders,
            Including Indentures:

            4.1    Rights Agreement, dated as of April 4, 1998, between
                   Data I/O Corporation and ChaseMellon Shareholder Services,
                   L.L.C. as Rights Agent, which includes: as Exhibit A
                   thereto, the Form of Right Certificate; and, as Exhibit B
                   thereto, the Summary of Rights to Purchase Series A Junior
                   Participating Preferred Stock (Incorporated by reference
                   to the Company's Current Report on Form 8-K filed on March
                   13, 1998).

            4.2    Rights Agreement, dated as of March 31, 1988, between
                   Data I/O Corporation and First Jersey National Bank, as
                   Rights Agent, as amended by Amendment No. 1 thereto, dated
                   as of May 28, 1992 and Amendment No. 2 thereto, dated as of
                   July 16, 1997 (Incorporated by reference to the Company's
                   Report on Form 8-K filed on March 13, 1998).

            4.3    Amendment No. 1, dated as of February 10, 1999, to Rights
                   Agreement, dated as of April 4, 1998, between Data I/O
                   Corporation and ChaseMellon Shareholder Services, L.L.C. as
                   Rights Agent (Incorporated by reference to Exhibit 4.1 of
                   the Company's Form 8-A/A dated February 10, 1999).

       10   Material Contracts:

            10.1   Amended and Restated 1983 Stock Appreciation Rights Plan
                   dated February 3, 1993 (Incorporated by reference to
                   Exhibit 10.23 of the Company's 1992 Annual Report on
                   Form 10-K  (File No. 0-10394)).

            10.2   Amended and Restated Retirement Plan and Trust Agreement.
                   (Incorporated by reference to Exhibit 10.26 of the Company's
                   1993 Annual Report on Form 10-K (File No. 0-10394)).

           10.3   First Amendment to the Data I/O Tax Deferred Retirement Plan
                  (Incorporated by reference to Exhibit 10.21 of the Company's
                  1994 Annual Report on Form 10-K (File No. 0-10394)).

           10.4   Second Amendment to the Data I/O Tax Deferred Retirement Plan
                  (Incorporated by reference to Exhibit 10.26 of the Company's
                  1995 Annual Report on Form 10-K (File No. 0-10394)).

           10.5   Form of Change in Control Agreements (Incorporated by
                  reference to Exhibit 10.20 of the Company's 1994 Annual Report
                  on Form 10-K (File No. 0-10394)).

           10.6   Data I/O Corporation 1996 Director Fee Plan (Incorporated
                  by reference to Exhibit 10.27 of the Company's 1995 Annual
                  Report on Form 10K (File No. 0-10394)).

           10.7   Data I/O Corporation 1982 Employee Stock Purchase Plan
                  Amended and Restated December 11, 1996 (Incorporated by
                  reference to Exhibit 10.1 to the Company's Registration
                  Statement of Form S-8 (File No. 333-20657, filed
                  January 29, 1997)).

           10.8   Purchase and Sale Agreement dated as of July 9, 1996
                  (Relating to the sale of Data I/O Corporation's
                  headquarters property in Redmond, Washington consisting of
                  approximately 79 acres of land and an approximately 96,000
                  square foot building. (Portions of this exhibit have been
                  omitted pursuant to an application for an order granting
                  confidential treatment. The omitted portions have been
                  separately filed with the Commission) (Incorporated by
                  reference to Exhibit 10.32 of the Company's 1996 Annual
                  Report on Form 10-K (File No. 0-10394)).

           10.9   Letter dated as of December 20, 1996, First Amendment and
                  extension of the Closing Date under that certain Purchase
                  and Sale Agreement dated as of July 9, 1996. (Portions of
                  this exhibit have been omitted pursuant to an application
                  for an order granting confidential treatment. The omitted
                  portions have been separately filed with the Commission)
                  (Incorporated by reference to Exhibit 10.33 of the
                  Company's 1996 Annual Report on Form 10-K (File No.
                  0-10394)).

           10.10  Letter dated as of February 17, 1997, Second Amendment and
                  extension of the Closing Date under that certain Purchase
                  and Sale Agreement dated as of July 9, 1996. (Portions of
                  this exhibit have been omitted pursuant to an application
                  for an order granting confidential treatment. The omitted
                  portions have been separately filed with the Commission)
                  (Incorporated by reference to Exhibit 10.34 of the
                  Company's 1996 Annual Report on Form 10-K (File No. 0-10394)).

           10.11  Third Amendment to the Data I/O Tax Deferred Retirement Plan
                  (Incorporated by reference to Exhibit 10.35 of the Company's
                  1996 Annual Report on Form 10-K (File No. 0-10394)).

           10.12  Amended and Restated Management Incentive Compensation Plan
                  dated January 1, 1997 (Incorporated by reference to
                  Exhibit 10.25 of the Company's 1997 Annual Report on
                  Form 10-K (File No. 0-10394)).

           10.13  Amended and Restated Performance Bonus Plan dated
                  January 1, 1997 (Incorporated by reference to Exhibit 10.26
                  of the Company's 1997 Annual Report on Form 10-K
                  (File No. 0-10394)).

           10.14  Fourth Amendment to the Data I/O Tax Deferred Retirement Plan
                  (Incorporated by reference to Exhibit 10.27 of the Company's
                  1997 Annual Report on Form 10-K (File No. 0-10394)).

           10.15  Fifth Amendment to the Data I/O Tax Deferred Retirement Plan
                  (Incorporated by reference to Exhibit 10.28 of the Company's
                  1997 Annual Report on Form 10-K (File No. 0-10394)).

           10.16  Sixth Amendment to the Data I/O Tax Deferred Retirement Plan
                  (Incorporated by reference to Exhibit 10.29 of the Company's
                  1997 Annual Report on Form 10-K (File No. 0-10394)).

           10.17  Amended and Restated Data I/O Corporation 1996 Director Fee
                  Plan (Incorporated by reference to Exhibit 10.32 of the
                  Company's 1997 Annual Report on Form 10-K (File No. 0-10394)).

           10.18  Amended and Restated Data I/O Corporation 1996 Director Fee
                  Plan (Incorporated by reference to Exhibit 10.32 of the
                  Company's 1997 Annual Report on 10-K (File No. 0-10394)).

           10.19  Amended and Restated 1986 Stock Option Plan dated May 12,
                  1998 (Incorporated by reference to Exhibit 10.37 of the
                  Company's 1998 Annual Report on Form 10-K (File No. 0-10394)).

           10.20  Sublease dated December 22, 1999 between Data I/O
                  Corporation and Imandi.com, Inc. (Incorporated by
                  reference to Exhibit 10.34 of the Company's 1999 Annual
                  Report on Form 10-K (File No. 0-10394)).

          10.21  Letter Agreement with Fred R. Hume dated January 29, 1999.
                 (Incorporated by reference to Exhibit 10.35 of the
                 Company's 1999 Annual Report on Form 10-K (File 0-10394)).

          10.22  Letter Agreement dated May 28, 1999, among Data I/O
                 Corporation, JTAG Technologies B.V., and JTAG Holding B.V.
                 (Incorporated by referece to Exhibit 10.36 of the Company's
                 1999 Annual Report on Form 10-K (File No. 0-10394)).

          10.23  Amended and Restated 2000 Stock Compensation Incentive
                 Plan dated May 19, 2000. (Incorporated by reference to the
                 Company's 2000 Proxy Statement dated March 27, 2000.)

          10.24  Amended and Restated 1982 Employee Stock Purchase Plan dated
                 May 16,2001 (Incorporated by reference to the Company's 2001
                 Proxy Statement dated March 28, 2001.)

          10.25  Letter Agreement with Irene Bjorklund dated March 13, 2001
                 (Incorporated by reference to Exhibit 10.25 of the Company's
                 2001 Annual Report on Form 10-K (File No. 0-10394)

          16.1   Letter regarding change in certifying accountant (Incorporated
                 by reference to Exhibit 16.1 of the Company's Form 8-K filed
                 on November 21, 2001.)


          (b)      Reports on Form 8-K
                          None

                                    .

SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) 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.



                                           DATA I/O CORPORATION
                                                (REGISTRANT)
DATED:   May 10, 2002



                                           By://S//Joel S. Hatlen
                                                Joel S. Hatlen
                                           Vice President - Finance
                                           Chief Financial Officer
                                           Secretary and Treasurer