##### Table of Contents



---

---

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




---



FORM 10-Q



---



|  |  |                                                                                         
|- |  | ----------------------------------------------------------------------------------------
|x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 
| 
|  |  | For the quarterly period ended July 31, 2002                                            
| 
|  |  | or                                                                                      
| 
|o |  | 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



---



ADVANCED DIGITAL INFORMATION CORPORATION

|                                                       |  |                                              
|------------------------------------------------------ |  | ---------------------------------------------
|Incorporated under the laws
of the State of Washington |  | I.R.S. Employer Identification
No. 91-1618616

11431 Willows Road N.E.
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.

YesxNoo

The total shares of common stock without par value outstanding at the end
of the quarter reported is 62,401,306.



---

---





---

TABLE OF CONTENTS



|                               |                                                                                               |                                                            |  |  |  |  |  | 
|------------------------------ | --------------------------------------------------------------------------------------------- | ---------------------------------------------------------- |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION
|                               | Item 1. Financial Statements                                                                 
|                               |                                                                                               | Consolidated Balance Sheets                               
|                               |                                                                                               | Consolidated Statements of Operations                     
|                               |                                                                                               | Consolidated Statements of Cash Flows                     
|                               |                                                                                               | Consolidated Statements of Changes in Shareholders Equity
|                               |                                                                                               | Notes to Interim Consolidated Financial Statements        
|                               | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                               | Item 3. Quantitative and Qualitative Disclosures About Market Risk Management                
|PART II  OTHER INFORMATION   
|                               | Item 1. Legal Proceedings                                                                    
|                               | Item 2. Changes in Securities                                                                
|                               | Item 3. Defaults Upon Senior Securities                                                      
|                               | Item 4. Submission of Matters to a Vote of Security Holders                                  
|                               | Item 5. Other Information                                                                    
|                               | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                    
|CERTIFICATIONS                
|EXHIBIT 99.1                  
|EXHIBIT 99.2                  



---



##### Table of Contents






PART I  FINANCIAL INFORMATION




Item 1.   Financial Statements

Advanced Digital Information Corporation




Consolidated Balance Sheets


(In thousands, except for share data)


|                                                                                                      |                                                                                                                   |                                      |         |                            |        |             |         |          |        |   |         | 
|----------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | ------------------------------------ | ------- | -------------------------- | ------ | ----------- | ------- | -------- | ------ | - | ------- | 
|                                                                                                      |                                                                                                                   |                                      |         |                            |        | October 31, |         | July 31,
|                                                                                                      |                                                                                                                   |                                      |         |                            |        | 2001        |         | 2002    
|                                                                                                      |                                                                                                                   |                                      |         |                            |        |             |         |         
|Assets                                                                                                |                                                                                                                   |                                      |         |                            |        |             |         |         
|Current assets:                                                                                       |                                                                                                                   |                                      |         |                            |        |             |         |         
|                                                                                                      | Cash and cash equivalents                                                                                         |                                      | $       | 155,274                    |        |             | $       | 131,449  |       
|                                                                                                      | Accounts receivable, net of allowances of $1,752 in 2001
and $2,185 in 2002                                       |                                      |         | 82,451                     |        |             |         | 70,108   |       
|                                                                                                      | Inventories, net                                                                                                  |                                      |         | 42,430                     |        |             |         | 32,779   |       
|                                                                                                      | Short-term marketable securities                                                                                  |                                      |         | 23,352                     |        |             |         | 29,039   |       
|                                                                                                      | Prepaid expenses and other                                                                                        |                                      |         | 1,789                      |        |             |         | 2,395    |       
|                                                                                                      | Income taxes receivable                                                                                           |                                      |         | 9,546                      |        |             |         | 7,951    |       
|                                                                                                      | Deferred income taxes                                                                                             |                                      |         | 10,297                     |        |             |         | 12,587   |       
|                                                                                                      |                                                                                                                   |                                      |         |                            |        |             |         |         
|                                                                                                      |                                                                                                                   |                                      |         | Total current assets       |        |             | 325,139 |          |        |   | 286,308 | 
|Property, plant and equipment, net of accumulated depreciation of
$14,783 in 2001 and $22,517 in 2002 |                                                                                                                   |                                      | 32,017  |                            |        |             | 46,731  |         
|Service parts for maintenance, net of accumulated amortization
of $9,708 in 2001 and $13,807 in 2002  |                                                                                                                   |                                      | 17,149  |                            |        |             | 19,905  |         
|Deferred income taxes                                                                                 |                                                                                                                   |                                      | 7,766   |                            |        |             | 8,505   |         
|Long-term marketable securities                                                                       |                                                                                                                   |                                      | 1,550   |                            |        |             | 15,150  |         
|Investments                                                                                           |                                                                                                                   |                                      | 9,953   |                            |        |             | 11,353  |         
|Intangible and other assets, net of accumulated amortization of
$3,255 in 2001 and $3,538 in 2002     |                                                                                                                   |                                      | 5,796   |                            |        |             | 5,215   |         
|                                                                                                      |                                                                                                                   |                                      |         |                            |        |             |         |         
|                                                                                                      |                                                                                                                   | $                                    | 399,370 |                            |        | $           | 393,167 |         
|                                                                                                      |                                                                                                                   |                                      |         |                            |        |             |         |         
|Liabilities and Shareholders Equity                                                                  |                                                                                                                   |                                      |         |                            |        |             |         |         
|Current liabilities:                                                                                  |                                                                                                                   |                                      |         |                            |        |             |         |         
|                                                                                                      | Accounts payable                                                                                                  |                                      | $       | 38,380                     |        |             | $       | 29,671   |       
|                                                                                                      | Accrued liabilities                                                                                               |                                      |         | 12,573                     |        |             |         | 12,324   |       
|                                                                                                      | Deferred revenue                                                                                                  |                                      |         | 12,772                     |        |             |         | 15,486   |       
|                                                                                                      | Bank line of credit and current portion of long-term debt                                                         |                                      |         | 3,999                      |        |             |         | 2,623    |       
|                                                                                                      |                                                                                                                   |                                      |         |                            |        |             |         |         
|                                                                                                      |                                                                                                                   |                                      |         | Total current liabilities  |        |             | 67,724  |          |        |   | 60,104  | 
|Long-term debt                                                                                        |                                                                                                                   |                                      | 1,170   |                            |        |             | 1,181   |         
|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,
62,401,306 issued and outstanding (61,934,277 in 2001) |                                      |         | 221,399                    |        |             |         | 224,736  |       
|                                                                                                      | Retained earnings                                                                                                 |                                      |         | 106,599                    |        |             |         | 109,373  |       
|                                                                                                      | Accumulated other comprehensive income (loss):                                                                    |                                      |         |                            |        |             |         |          |       
|                                                                                                      |                                                                                                                   | Cumulative translation adjustment    |         |                            | (2,302 | )           |         |          | (2,029 | )
|                                                                                                      |                                                                                                                   | Unrealized investment gains (losses) |         |                            | 4,780  |             |         |          | (198   | )
|                                                                                                      |                                                                                                                   |                                      |         |                            |        |             |         |         
|                                                                                                      |                                                                                                                   |                                      |         | Total shareholders equity |        |             | 330,476 |          |        |   | 331,882 | 
|                                                                                                      |                                                                                                                   |                                      |         |                            |        |             |         |         
|                                                                                                      |                                                                                                                   | $                                    | 399,370 |                            |        | $           | 393,167 |         
|                                                                                                      |                                                                                                                   |                                      |         |                            |        |             |         |         

See the accompanying notes to these consolidated financial statements.

1



---



##### Table of Contents






Advanced Digital Information Corporation
Consolidated Statements of Operations
(In thousands, except for per share data)

|                                                          |                                                  |   |                    |        |                   |   |        |        |      |   |         |        |   |   |         |        |  
|--------------------------------------------------------- | ------------------------------------------------ | - | ------------------ | ------ | ----------------- | - | ------ | ------ | ---- | - | ------- | ------ | - | - | ------- | ------ | -
|                                                          |                                                  |   | Three months ended |        | Nine months ended
|                                                          |                                                  |   | July 31,           |        | July 31,         
|                                                          |                                                  |   |                    |        |                  
|                                                          |                                                  |   | 2001               |        | 2002              |   | 2001   |        | 2002
|                                                          |                                                  |   |                    |        |                   |   |        |        |     
|Net sales                                                 |                                                  | $ | 84,950             |        |                   | $ | 75,999 |        |      | $ | 273,509 |        |   | $ | 253,409 |       
|Cost of sales                                             |                                                  |   | 61,592             |        |                   |   | 53,789 |        |      |   | 192,561 |        |   |   | 186,406 |       
|Pathlight acquisition costs                               |                                                  |   | 4,109              |        |                   |   |       |        |      |   | 4,109   |        |   |   |        |       
|                                                          |                                                  |   |                    |        |                   |   |        |        |      |   |         |        |   |   |         |       
|                                                          | Gross profit                                     |   |                    | 19,249 |                   |   |        | 22,210 |      |   |         | 76,839 |   |   |         | 67,003 |  
|                                                          |                                                  |   |                    |        |                   |   |        |        |      |   |         |        |   |   |         |       
|Operating expenses:                                       |                                                  |   |                    |        |                   |   |        |        |      |   |         |        |   |   |         |       
|                                                          | Selling and administrative                       |   |                    | 15,945 |                   |   |        | 19,221 |      |   |         | 45,539 |   |   |         | 53,044 |  
|                                                          | Research and development                         |   |                    | 7,113  |                   |   |        | 8,196  |      |   |         | 20,155 |   |   |         | 22,266 |  
|                                                          | Crossroads settlement costs                      |   |                    | 16,580 |                   |   |        |       |      |   |         | 16,974 |   |   |         |       |  
|                                                          | Acquisition expenses                             |   |                    | 8,837  |                   |   |        |       |      |   |         | 8,837  |   |   |         | 1,475  |  
|                                                          |                                                  |   |                    |        |                   |   |        |        |      |   |         |        |   |   |         |       
|                                                          |                                                  |   | 48,475             |        |                   |   | 27,417 |        |      |   | 91,505  |        |   |   | 76,785  |       
|                                                          |                                                  |   |                    |        |                   |   |        |        |      |   |         |        |   |   |         |       
|Operating loss                                            |                                                  |   | (29,226            | )      |                   |   | (5,207 | )      |      |   | (14,666 | )      |   |   | (9,782  | )     
|                                                          |                                                  |   |                    |        |                   |   |        |        |      |   |         |        |   |   |         |       
|Other income (expense):                                   |                                                  |   |                    |        |                   |   |        |        |      |   |         |        |   |   |         |       
|                                                          | Interest income                                  |   |                    | 1,611  |                   |   |        | 777    |      |   |         | 6,347  |   |   |         | 2,784  |  
|                                                          | Interest expense                                 |   |                    | (37    | )                 |   |        | (63    | )    |   |         | (210   | ) |   |         | (182   | )
|                                                          | Gain on marketable securities transactions, net  |   |                    | 2,258  |                   |   |        | 38     |      |   |         | 3,371  |   |   |         | 8,217  |  
|                                                          | Foreign currency transaction gains (losses), net |   |                    | 135    |                   |   |        | 835    |      |   |         | (57    | ) |   |         | 916    |  
|                                                          | Other                                            |   |                    |       |                   |   |        | (89    | )    |   |         |       |   |   |         | (28    | )
|                                                          |                                                  |   |                    |        |                   |   |        |        |      |   |         |        |   |   |         |       
|                                                          |                                                  |   | 3,967              |        |                   |   | 1,498  |        |      |   | 9,451   |        |   |   | 11,707  |       
|                                                          |                                                  |   |                    |        |                   |   |        |        |      |   |         |        |   |   |         |       
|Income (loss) before provision (benefit) for
income taxes |                                                  |   | (25,259            | )      |                   |   | (3,709 | )      |      |   | (5,215  | )      |   |   | 1,925   |       
|Provision (benefit) for income taxes                      |                                                  |   | (6,616             | )      |                   |   | (1,594 | )      |      |   | 210     |        |   |   | (849    | )     
|                                                          |                                                  |   |                    |        |                   |   |        |        |      |   |         |        |   |   |         |       
|Net income (loss)                                         |                                                  | $ | (18,643            | )      |                   | $ | (2,115 | )      |      | $ | (5,425  | )      |   | $ | 2,774   |       
|                                                          |                                                  |   |                    |        |                   |   |        |        |      |   |         |        |   |   |         |       
|Basic net income (loss) per share                         |                                                  | $ | (0.30              | )      |                   | $ | (0.03  | )      |      | $ | (0.09   | )      |   | $ | 0.04    |       
|                                                          |                                                  |   |                    |        |                   |   |        |        |      |   |         |        |   |   |         |       
|Diluted net income (loss) per share                       |                                                  | $ | (0.30              | )      |                   | $ | (0.03  | )      |      | $ | (0.09   | )      |   | $ | 0.04    |       
|                                                          |                                                  |   |                    |        |                   |   |        |        |      |   |         |        |   |   |         |       

See the accompanying notes to these consolidated financial statements.

2



---



##### Table of Contents



Advanced Digital Information Corporation




Consolidated Statements of Cash Flows


(In thousands)


|                                                    |                                                                                                    |                                              |         |                   |         |      |         |         |        |  
|--------------------------------------------------- | -------------------------------------------------------------------------------------------------- | -------------------------------------------- | ------- | ----------------- | ------- | ---- | ------- | ------- | ------ | -
|                                                    |                                                                                                    |                                              |         | Nine months ended
|                                                    |                                                                                                    |                                              |         | July 31,         
|                                                    |                                                                                                    |                                              |         |                  
|                                                    |                                                                                                    |                                              |         | 2001              |         | 2002
|                                                    |                                                                                                    |                                              |         |                   |         |     
|Cash from operating activities:                     |                                                                                                    |                                              |         |                   |         |      |         |        
|                                                    | Net income (loss)                                                                                  |                                              | $       | (5,425            | )       |      | $       | 2,774   |       
|                                                    | Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities: |                                              |         |                   |         |      |         |         |       
|                                                    |                                                                                                    | Depreciation and amortization                |         |                   | 8,730   |      |         |         | 11,542 |  
|                                                    |                                                                                                    | Allowance for doubtful accounts receivable   |         |                   | 85      |      |         |         | 802    |  
|                                                    |                                                                                                    | Inventory obsolescence                       |         |                   | 2,828   |      |         |         | 2,907  |  
|                                                    |                                                                                                    | Gain on marketable securities transactions   |         |                   | (3,371  | )    |         |         | (8,217 | )
|                                                    |                                                                                                    | Acquired in-process research and development |         |                   |        |      |         |         | 1,200  |  
|                                                    |                                                                                                    | Deferred income taxes                        |         |                   | (131    | )    |         |         | (327   | )
|                                                    |                                                                                                    | Tax benefit from exercise of stock options   |         |                   | 1,784   |      |         |         | 2,233  |  
|                                                    |                                                                                                    | Other                                        |         |                   | 475     |      |         |         | 3      |  
|                                                    | Change in assets and liabilities:                                                                  |                                              |         |                   |         |      |         |         |       
|                                                    |                                                                                                    | Accounts receivable                          |         |                   | (6,262  | )    |         |         | 10,800 |  
|                                                    |                                                                                                    | Inventories                                  |         |                   | (25,706 | )    |         |         | 7,277  |  
|                                                    |                                                                                                    | Prepaid expenses and other                   |         |                   | (120    | )    |         |         | (562   | )
|                                                    |                                                                                                    | Service parts for maintenance                |         |                   | (7,144  | )    |         |         | (5,533 | )
|                                                    |                                                                                                    | Other assets                                 |         |                   | (4      | )    |         |         | (14    | )
|                                                    |                                                                                                    | Accounts payable                             |         |                   | 7,470   |      |         |         | (4,705 | )
|                                                    |                                                                                                    | Accrued liabilities                          |         |                   | (4,833  | )    |         |         | (670   | )
|                                                    |                                                                                                    | Income taxes receivable                      |         |                   | (15,882 | )    |         |         | 1,816  |  
|                                                    |                                                                                                    | Deferred revenue                             |         |                   | 3,523   |      |         |         | 2,365  |  
|                                                    |                                                                                                    |                                              |         |                   |         |      |         |        
|Net cash provided by (used in) operating activities |                                                                                                    |                                              | (43,983 | )                 |         |      | 23,691  |        
|                                                    |                                                                                                    |                                              |         |                   |         |      |         |        
|                                                   
|                                                   
|                                                   
|                                                   
|Cash from investing activities:                     |                                                                                                    |                                              |         |                   |         |      |         |        
|                                                    | Purchase of property, plant and equipment                                                          |                                              |         | (11,344           | )       |      |         | (21,740 | )     
|                                                    | Purchase of marketable securities                                                                  |                                              |         |                  |         |      |         | (43,727 | )     
|                                                    | Purchase of other investments                                                                      |                                              |         | (500              | )       |      |         | (2,934  | )     
|                                                    | Proceeds from marketable securities transactions                                                   |                                              |         | 14,170            |         |      |         | 20,726  |       
|                                                    |                                                                                                    |                                              |         |                   |         |      |         |        
|Net cash provided by (used in) investing activities |                                                                                                    |                                              | 2,326   |                   |         |      | (47,675 | )      
|                                                    |                                                                                                    |                                              |         |                   |         |      |         |        
|                                                   
|                                                   
|                                                   
|                                                   
|Cash from financing activities:                     |                                                                                                    |                                              |         |                   |         |      |         |        
|                                                    | Repayment of short-term and long-term debt                                                         |                                              |         | (2,106            | )       |      |         | (1,652  | )     
|                                                    | Repurchase of common stock                                                                         |                                              |         |                  |         |      |         | (3,430  | )     
|                                                    | Proceeds from issuance of common stock for stock
options and stock purchase plan                   |                                              |         | 3,162             |         |      |         | 4,534   |       
|                                                    |                                                                                                    |                                              |         |                   |         |      |         |        
|Net cash provided by (used in) financing activities |                                                                                                    |                                              | 1,056   |                   |         |      | (548    | )      
|                                                    |                                                                                                    |                                              |         |                   |         |      |         |        
|Effect of exchange rate changes on cash             |                                                                                                    |                                              | 134     |                   |         |      | 707     |        
|                                                    |                                                                                                    |                                              |         |                   |         |      |         |        
|Net decrease in cash and cash equivalents           |                                                                                                    |                                              | (40,467 | )                 |         |      | (23,825 | )      
|Cash and cash equivalents at beginning of period    |                                                                                                    |                                              | 194,268 |                   |         |      | 155,274 |        
|                                                    |                                                                                                    |                                              |         |                   |         |      |         |        
|Cash and cash equivalents at end of period          |                                                                                                    | $                                            | 153,801 |                   |         | $    | 131,449 |        
|                                                    |                                                                                                    |                                              |         |                   |         |      |         |        

See the accompanying notes to these consolidated financial statements.

3



---



##### Table of Contents






Advanced Digital Information Corporation
Consolidated Statements of Changes in Shareholders Equity
Nine months ended July 31, 2002
(In thousands)

|                                                           |                                                               |                          |                                                                                |   |              |   |          |   |               |   |               |       |       |   |        |     |             |        |         |   |        |   | 
|---------------------------------------------------------- | ------------------------------------------------------------- | ------------------------ | ------------------------------------------------------------------------------ | - | ------------ | - | -------- | - | ------------- | - | ------------- | ----- | ----- | - | ------ | --- | ----------- | ------ | ------- | - | ------ | - | 
|                                                           |                                                               |                          |                                                                                |   |              |   |          |   |               |   |               |       |       |   |        |     | Accumulated |        |         |   |       
|                                                           |                                                               |                          |                                                                                |   | Common Stock |   |          |   |               |   | Other         |       |       |   |       
|                                                           |                                                               |                          |                                                                                |   |              |   | Retained |   | Comprehensive |   |               |       |      
|                                                           |                                                               |                          |                                                                                |   | Shares       |   | Amount   |   | Earnings      |   | Income (Loss) |       | Total
|                                                           |                                                               |                          |                                                                                |   |              |   |          |   |               |   |               |       |      
|Balance at October 31, 2001                                |                                                               |                          | 61,934                                                                         |   |              | $ | 221,399  |   |               | $ | 106,599       |       |       | $ | 2,478  |     |             | $      | 330,476 |  
|Repurchase of common stock                                 |                                                               |                          | (441                                                                           | ) |              |   | (3,430   | ) |               |   |              |       |       |   |       |     |             |        | (3,430  | )
|Purchases under stock purchase plan                        |                                                               |                          | 101                                                                            |   |              |   | 1,042    |   |               |   |              |       |       |   |       |     |             |        | 1,042   |  
|Exercise of stock options, including
tax benefit of $2,233 |                                                               |                          | 756                                                                            |   |              |   | 5,582    |   |               |   |              |       |       |   |       |     |             |        | 5,582   |  
|Exercise of warrants                                       |                                                               |                          | 106                                                                            |   |              |   | 143      |   |               |   |              |       |       |   |       |     |             |        | 143     |  
|Cancellation of Pathlight escrow shares                    |                                                               |                          | (55                                                                            | ) |              |   |         |   |               |   |              |       |       |   |       |     |             |        |        |  
|Comprehensive income:                                      |                                                               |                          |                                                                                |   |              |   |          |   |               |   |               |       |       |   |        |     |             |        |         |  
|                                                           | Net income                                                    |                          |                                                                                |  |              |   |          |  |               |   |               | 2,774 |       |   |        |    |             |        |         |  |       
|                                                           | Unrealized investment gains:                                  |                          |                                                                                |   |              |   |          |   |               |   |               |       |       |   |        |     |             |        |         |   |       
|                                                           |                                                               |                          | Unrealized investment losses,
net of tax of $1,400                             |   |              |  |          |   |               |  |               |       |       |  |        |     |             | (2,601 | )       |   |        |  | 
|                                                           |                                                               |                          | Reclassification adjustment: gain included in net income,
net of tax of $1,280 |   |              |  |          |   |               |  |               |       |       |  |        |     |             | (2,377 | )       |   |        |  | 
|                                                           | Foreign currency translation
adjustment, net of tax of ($147) |                          |                                                                                |  |              |   |          |  |               |   |               |      |       |   |        | 273 |             |        |         |  |       
|                                                           |                                                               | Total comprehensive loss |                                                                                |   |             |   |          |   |              |   |               |       |      |   |        |     |            |        |         |   | (1,931 | )
|                                                           |                                                               |                          |                                                                                |   |              |   |          |   |               |   |               |       |       |   |        |     |             |        |         |  
|Balance at July 31, 2002                                   |                                                               |                          | 62,401                                                                         |   |              | $ | 224,736  |   |               | $ | 109,373       |       |       | $ | (2,227 | )   |             | $      | 331,882 |  
|                                                           |                                                               |                          |                                                                                |   |              |   |          |   |               |   |               |       |       |   |        |     |             |        |         |  

See the accompanying notes to these consolidated financial statements.

4



---



##### Table of Contents






Advanced Digital Information Corporation
Notes to Interim Consolidated Financial Statements
July 31, 2002

Note 1.   Basis of presentation

The accompanying consolidated financial statements are unaudited and
include the accounts of the Company and its subsidiaries. All significant
intercompany transactions, balances and profits have been eliminated in
consolidation.

On May 11, 2001 we acquired Pathlight Technology, Inc. (Pathlight) in a
business combination accounted for as a pooling-of-interests. The consolidated
financial statements have been restated to retroactively combine Pathlight as a
wholly owned subsidiary of ADIC since inception. Certain prior period balances
have been adjusted or reclassified to conform our accounting policies and
current period presentation.

The accompanying 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, 2001. The year-end
balance sheet data was derived from audited financial statements, but does not
include all disclosures required by accounting principles generally accepted in
the United States. 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,
2002, are not necessarily indicative of results to be expected for a full year.

Note 2.   Acquisition of V-Stor

On March 14, 2002, we acquired the intellectual property and assets and
hired the engineering and product management personnel of V-Stor LLC, a
privately held company based in California. V-Stor develops disk-based data
protection products for the open systems market. The V-Stor development effort
includes software that allows disk-based storage to look and act like tape
systems to traditional backup applications in order to allow disk to be
utilized easily in existing data protection systems. The V-Stor technology
will be integrated into new products, including products that combine disk and
tape for backup. Expenses related to our acquisition of V-Stor were $1.5
million for the nine months ended July 31, 2002. These one-time acquisition
charges relate to acquired in-process research and development and compensation
to V-Stor personnel. The acquired technology had not reached technological
feasibility and has no alternative future use. The valuation of the acquired
in-process research and development is based on our estimates and a valuation
by a third-party appraiser.

5



---



##### Table of Contents



Advanced Digital Information Corporation
Notes to Interim Consolidated Financial Statements (Continued)
July 31, 2002

Note 3.   Earnings per share

The following table sets forth the computation of basic and diluted net
income (loss) per share for the three months and nine months ended July 31,
2001 and 2002:

|                                    |                                                                                                                |   |                                           |         |                   |   |       |        |      |   |       |        |   |   |      |        | 
|----------------------------------- | -------------------------------------------------------------------------------------------------------------- | - | ----------------------------------------- | ------- | ----------------- | - | ----- | ------ | ---- | - | ----- | ------ | - | - | ---- | ------ | 
|                                    |                                                                                                                |   | Three months ended                        |         | Nine months ended
|                                    |                                                                                                                |   | July 31,                                  |         | July 31,         
|                                    |                                                                                                                |   |                                           |         |                  
|                                    |                                                                                                                |   | 2001                                      |         | 2002              |   | 2001  |        | 2002
|                                    |                                                                                                                |   |                                           |         |                   |   |       |        |     
|                                    |                                                                                                                |   | (In thousands, except for per share data)
|                                   
|                                   
|                                   
|                                   
|Numerator:                          |                                                                                                                |   |                                           |         |                   |   |       |        |      |   |       |        |   |   |      |       
|                                    | Net income (loss)                                                                                              |   | $                                         | (18,643 | )                 |   | $     | (2,115 | )    |   | $     | (5,425 | ) |   | $    | 2,774  | 
|                                    |                                                                                                                |   |                                           |         |                   |   |       |        |      |   |       |        |   |   |      |       
|Denominator:                        |                                                                                                                |   |                                           |         |                   |   |       |        |      |   |       |        |   |   |      |       
|                                    | Denominator for basic net income (loss) per share 
weighted average shares                                    |   |                                           | 61,331  |                   |   |       | 62,546 |      |   |       | 59,958 |   |   |      | 62,340 | 
|                                    | Dilutive potential common shares from Team
Member (employee) stock options and warrants                        |   |                                           |        |                   |   |       |       |      |   |       |       |   |   |      | 1,414  | 
|                                    |                                                                                                                |   |                                           |         |                   |   |       |        |      |   |       |        |   |   |      |       
|                                    | Denominator for diluted net income (loss) per share 
adjusted weighted average shares and assumed
conversions |   |                                           | 61,331  |                   |   |       | 62,546 |      |   |       | 59,958 |   |   |      | 63,754 | 
|                                    |                                                                                                                |   |                                           |         |                   |   |       |        |      |   |       |        |   |   |      |       
|Basic net income (loss) per share   |                                                                                                                | $ | (0.30                                     | )       |                   | $ | (0.03 | )      |      | $ | (0.09 | )      |   | $ | 0.04 |       
|                                    |                                                                                                                |   |                                           |         |                   |   |       |        |      |   |       |        |   |   |      |       
|Diluted net income (loss) per share |                                                                                                                | $ | (0.30                                     | )       |                   | $ | (0.03 | )      |      | $ | (0.09 | )      |   | $ | 0.04 |       
|                                    |                                                                                                                |   |                                           |         |                   |   |       |        |      |   |       |        |   |   |      |       

Note 4.   Inventories

Inventories are comprised of the following:

|                                     |  |                |        |          |  |   |         |  
|------------------------------------ |  | -------------- | ------ | -------- |  | - | ------- | -
|                                     |  | October 31,    |        | July 31,
|                                     |  | 2001           |        | 2002    
|                                     |  |                |        |         
|                                     |  | (In thousands)
|                                    
|                                    
|                                    
|                                    
|Finished goods                       |  | $              | 23,055 |          |  | $ | 27,062  |  
|Work-in-process                      |  |                | 939    |          |  |   | 692     |  
|Raw materials                        |  |                | 25,824 |          |  |   | 15,775  |  
|                                     |  |                |        |          |  |   |         |  
|                                     |  |                | 49,818 |          |  |   | 43,529  |  
|Allowance for inventory obsolescence |  |                | (7,388 | )        |  |   | (10,750 | )
|                                     |  |                |        |          |  |   |         |  
|                                     |  | $              | 42,430 |          |  | $ | 32,779  |  
|                                     |  |                |        |          |  |   |         |  

6



---



##### Table of Contents



Advanced Digital Information Corporation
Notes to Interim Consolidated Financial Statements (Continued)
July 31, 2002

Note 5.   Investments in marketable securities and other investments

At July 31, 2002, the cost basis of marketable securities was $44,493,000
and the fair value was $44,189,000. Short-term marketable securities had a
cost basis of $29,343,000 and a fair value of $29,039,000, and long-term
marketable securities had a cost basis and fair value of $15,150,0000. The
difference between the cost basis and fair value of $304,000, net of taxes of
$106,000 is recorded as an unrealized investment loss. At July 31, 2002, the
fair value of marketable securities comprised equity securities of $415,000 and
debt securities of $43,774,000. These debt securities consist of
investment-grade government and commercial securities purchased in accordance
with our cash management policy to generate a higher yield than cash
equivalents. The objectives of our cash management policy are safety and
preservation of funds, liquidity sufficient to meet cash flow requirements and
attainment of a market rate of return. During the nine month period ended July
31, 2002, we sold a portion of our marketable securities and realized a gain of
$3,657,000. No marketable securities were sold during the quarter ended July
31, 2002.

During the nine month period ended July 31, 2002 we received cash of
$287,000 related to the sale of calls, a derivative financial instrument that
permits the purchaser of the call to buy a specified marketable security at a
specified price. In accordance with our internal policies, we only sell calls
on marketable securities we already own. For the three month and nine month
periods ended July 31, 2002, we have recorded $38,000 and $4,560,000,
respectively, as a component of our net gain on securities related to call
transactions. This reflects the change in the fair market value of the related
liability during the nine months plus the cash received on current period sales
of calls. We did not hold any calls as of July 31, 2002.

Note 6.   Share repurchase

During the three months ended July 31, 2002, we repurchased 441,000 shares
of our common stock for $3,430,000. A total share repurchase of up to four
million shares has been authorized by our Board of Directors.

Note 7.   Recent accounting pronouncements

In June 2002, the FASB issued Statement of Financial Account Standards
(SFAS) No. 146, Accounting for Costs Associated with Exit or Disposal
Activities. SFAS No. 146 addresses financial accounting and reporting for
costs associated with exit or disposal activities and nullifies EITF Issue No.
94-3. This SFAS requires that a liability for a cost associated with an exit
or disposal activity be recorded at fair value when the liability is incurred.
SFAS No. 146 is effective for exit or disposal activities that are initiated
after December 31, 2002. This accounting pronouncement is not expected to have
a significant impact on our financial position or results of operations.

7



---



##### Table of Contents






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, 2001. 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 for the year ended October 31, 2001 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,
connectivity and management products and related services and support. We
distribute our products primarily through value-added resellers (VARs),
distributors and original equipment manufacturers (OEMs), and also sell
directly to large end users.

The following discussion and analysis has been prepared utilizing the
restated combined financial statements as if Pathlight was a wholly owned
subsidiary of ADIC since inception. The combined information is not
necessarily indicative of the actual results of operations had the acquisition
occurred at the beginning of the periods, nor should it be used to project the
Companys results of operations for any future date or period.

Results of Operations

Net Sales.Net sales during the third quarter of fiscal 2002 were $76.0
million, a decrease of 11% from $85.0 million in the comparable quarter of
fiscal 2001. Net sales for the nine months ended July 31, 2002 were $253.4
million, a decrease of 7% from $273.5 million during the nine months ended July
31, 2001. The decrease in revenue in the third quarter of fiscal 2002 compared
to the third quarter of fiscal 2001 is primarily due to a decline in sales to
our OEM customers, which dropped 18% to $29.6 million during the three months
ended July 31, 2002 from $35.9 million during the comparative quarter in the
prior year. We believe these changes in OEM revenue are reflective of normal
product cycles and current market conditions. The decrease in revenue for the
nine months ended July 31, 2002 compared to the nine months ended July 31, 2001
is primarily due to lower sales to branded customers. For the nine months
ended July 31, 2002 and 2001, branded sales were $138.5 million and $158.7
million, respectively. This decrease in branded sales from the comparable
period in fiscal 2001 is believed to be primarily due to weak economic
conditions affecting branded customers.

Cost of Sales.Cost of sales was $53.8 million and $61.6 million for the
three month periods ended July 31, 2002 and 2001, respectively. During the
nine month periods ended July 31, 2002 and 2001, cost of sales was $186.4
million and $192.6 million, respectively. As a percentage of net sales, cost
of sales was 71% and 73% for the third quarter of 2002 and 2001, respectively.
For the nine month periods ended July 31, 2002 and 2001, cost of sales as a
percentage of net sales was 74% and 70%, respectively. The decrease in cost of
sales as a percentage of net sales during the three months ended July 31, 2002
compared to the three months ended July 31, 2001 is primarily the result of an
improved product mix more heavily weighted toward higher margin products that
include elements of our proprietary

8



---



##### Table of Contents



storage management software and connectivity technology. The shift toward
these types of products also drove the increase in gross margin from 26% during
the second quarter of 2002 to 29% during the third quarter of 2002 on a
decrease in sales of $4.7 million or 6% on a sequential quarter basis. The
increase in cost of sales as a percentage of net sales during the nine months
ended July 31, 2002 compared to the nine months ended July 31, 2001 is
primarily attributable to branded sales, which usually have higher gross
margins, representing a smaller percentage of our net sales during the first
nine months of 2002 compared to 2001. In addition, we have increased our fixed
costs as they relate to infrastructure.

Acquisition Costs.During the quarter ended July 31, 2001, we incurred a
one-time charge reducing gross profit by $4.1 million for the write-off of
certain inventory deemed non-salable due to the Pathlight merger and an accrual
for contractual liability to a third party. In addition, we incurred charges
of $8.8 million, which are included in operating expenses for the quarter ended
July 31, 2001, for investment banker and financial advisory fees, other
professional fees, team member costs which relate to termination of certain
team members with redundant job functions and relocation costs, and other
Pathlight merger related expenses. During the nine months ended July 31, 2002,
we incurred one-time charges of $1.5 million for acquired in-process research
and development and compensation to personnel in connection with our
acquisition of V-Stor.

Selling and Administrative Expenses.Selling and administrative expenses
were $19.2 million or 25% of net sales for the three months ended July 31, 2002
compared to $15.9 million or 19% of net sales for the comparative period in
2001. For the nine month period ended July 31, 2002, selling and
administrative expenses were $53.0 million or 21% of net sales compared to
$45.5 million of 17% of net sales for the same period in fiscal 2001. Selling
and administrative expenses have increased in both absolute dollars and as a
percentage of net sales due to continued efforts to improve our infrastructure
and expand our sales and service channels to support new product offerings.
Increased sales of more complex higher margin products is expected to require
continued growth in selling and administrative costs.

Research and Development Expenses.Research and development expenses were
$8.2 million or 11% of net sales for the third quarter of fiscal 2002 compared
to $7.1 million or 8% of net sales for the third quarter of fiscal 2001.
During the nine months ended July 31, 2002, we incurred research and
development expenses of $22.3 million or 9% of net sales compared to $20.2
million or 7% of net sales for the same period in fiscal 2001. The increases
in absolute dollars in fiscal 2002 reflect our strategy to maintain heavy
investments in software and hardware product development and relate to added
personnel resources and additional spending related to new products. We
believe that significant investments in research and development are required
to remain competitive and to solidify our market position. Further, we believe
the potential for growth in the market for storage solutions is sufficient to
justify continued expansion in our research and development expenses.

Other Income (Expense).Net other income primarily consists of interest
income, gains on marketable securities and foreign currency transaction gains
and losses. Other income was $1.5 million for the third quarter of fiscal 2002
compared to $4.0 million for the third quarter of fiscal 2001. For the nine
months ended July 31, 2002, other income was $11.7 million compared to $9.5
million for the same period in fiscal 2001. The decrease in interest income in
both the three months and nine months ended July 31, 2002 is the result of
lower returns on cash balances from the comparable periods in fiscal 2001.
This decrease in interest income was partially offset by an increase in foreign
currency transaction gains resulting from stronger European currencies. During
the three months ended July 31, 2002 and 2001, other income includes gains on
certain marketable equity securities transactions of $38,000 and $2.3 million,
respectively. These marketable securities gains were $8.2 million and $3.4
million for the nine months ended July 31, 2002 and 2001, respectively.
Interest expense primarily relates to interest on operating credit lines
through a German bank along with a loan payable to a German bank. We expect
other income to decrease in future periods as gains on securities transactions
diminish.

9



---



##### Table of Contents



Provision (Benefit) for Income Taxes.For the three months ended July 31,
2002, income tax benefit was $1.6 million compared to $6.6 million for the
comparable period in fiscal 2001. Income tax benefit was $849,000 for the nine
months ended July 31, 2002 compared to an income tax expense of $210,000 for
the nine months ended July 31, 2001. The effective income tax rates for the
three and nine months ended July 31, 2002 were benefits of 43% and 44%,
respectively. The effective tax rates for the comparable periods in fiscal
2001 were a benefit of 26% and an expense of 4%, respectively. The tax
benefits in fiscal 2002 reflect reduced income relative to estimated research
and development credits, extraterritorial income exclusions and income from
tax-exempt investments. The effective tax rate includes tax expense for
federal and various state and international jurisdictions.

Liquidity and Capital Resources

Cash provided by operating activities was $23.7 million for the nine
months ended July 31, 2002. In the comparable period of fiscal 2001, cash used
in operating activities was $44.0 million. In fiscal 2002, operating cash was
provided by net income, depreciation and amortization, decreases in accounts
receivable and inventories and increases in deferred revenue and was offset by
an increase in service parts for maintenance and a decrease in accounts
payable. In fiscal 2001, operating cash was primarily used to fund the net
loss, increases in accounts receivable, inventories, service parts for
maintenance and income taxes receivable and a decrease in accrued liabilities
and was offset by depreciation and amortization and an increase in accounts
payable.

Cash used in investing activities was $47.7 million for the first nine
months of fiscal 2002. In the comparable period of fiscal 2001, cash provided
by investing activities was $2.3 million. Cash inflows include proceeds from
certain marketable securities transactions of $20.7 million and $14.2 million
for the first nine months of 2002 and 2001, respectively. The nine months
ended July 31, 2002 included the purchase of $43.7 million of investment-grade
marketable debt securities purchased in accordance with our cash management
policy. Investments in property, plant and equipment were $21.7 million and
$11.3 million during the first nine months of fiscal 2002 and 2001,
respectively. Capital expenditures during the first nine months of fiscal 2002
were comprised primarily of computer hardware and software to improve our
infrastructure, leasehold improvements purchased for our new Englewood,
Colorado facility and tooling and equipment related to new product
introductions. Both periods reflect the purchase of other investments in
non-marketable securities, typically in non-public technology businesses.

Cash used in financing activities during the first nine months of fiscal
2002 was $548,000. Cash provided by financing activities was $1.1 million in
the first nine months of fiscal 2001. During the first nine months of fiscal
2002 and 2001, we received proceeds from the exercise of stock options and
purchases under the stock purchase plan of $4.5 million and $3.2 million,
respectively. Offsetting the above proceeds in both periods were certain
payments on bank lines of credit and long-term debt, which were $1.7 million
and $2.1 million during the nine months ended July 31, 2002 and 2001,
respectively. During the first nine months of fiscal 2002, we repurchased
common stock for $3.4 million.

At July 31, 2002, our cash and cash equivalents totaled $131.4 million, a
$23.9 million decrease from $155.3 million at October 31, 2001. Our cash and
cash equivalents and marketable securities totaled $175.6 million and $180.2
million at July 31, 2002 and October 31, 2001, respectively. Our working
capital, the difference between current assets and current liabilities, was
$226.2 million and $257.4 million at July 31, 2002 and October 31, 2001,
respectively. The ratio of current assets to current liabilities was 4.8 to 1
at both July 31, 2002 and October 31, 2001.

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 will continue to
evaluate

10



---



##### Table of Contents



possible acquisitions of, or investments in businesses, products, or
technologies that we believe are strategic, which may require the use of cash.
In addition, we have made and expect to make investments in companies with whom
we have identified potential synergies.

Recent Accounting Pronouncements

In June 2002, the FASB issued Statement of Financial Account Standards
(SFAS) No. 146, Accounting for Costs Associated with Exit or Disposal
Activities. SFAS No. 146 addresses financial accounting and reporting for
costs associated with exit or disposal activities and nullifies EITF Issue No.
94-3. This SFAS requires that a liability for a cost associated with an exit
or disposal activity be recorded at fair value when the liability is incurred.
SFAS No. 146 is effective for exit or disposal activities that are initiated
after December 31, 2002. This accounting pronouncement is not expected to have
a significant impact on our financial position or results of operations.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of
operations is based upon our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements requires us to
make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses and related disclosure of contingent assets
and liabilities. On an on-going basis, we evaluate our estimates, including
those related to customer agreements, sales returns, bad debts, inventories,
warranty costs, investments, intangible assets and income taxes. We base our
estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, the results of which form
the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates under different assumptions or conditions.

We believe the following critical accounting policies affect our more
significant judgments and estimates used in the preparation of our consolidated
financial statements.

We record estimated reductions to revenue for specifically-identified
customer agreements, such as special pricing, price protection, stock rotation
and volume-based incentives, at the time of shipment based upon the expected
rate of occurrence. If market conditions were to decline, we may take actions
to enter into more of these agreements, possibly resulting in an incremental
reduction of revenue at the time the incentive is offered.

We record an allowance for sales returns for our estimates of expected
customer product returns. Should actual return rates differ from our
estimates, revisions to our sales return allowance may be necessary.

We maintain an allowance for doubtful accounts for estimated losses
resulting from the inability of our customers to make required payments. If the
financial condition of our customers were to deteriorate, resulting in an
impairment of their ability to make payments, additional allowances may be
required.

We evaluate our inventory and record a provision for estimated
obsolescence or unmarketable inventory equal to the difference between the cost
of inventory and the estimated market value based upon assumptions about future
demand and market conditions. If technology rapidly changes or actual market
conditions are less favorable than those projected by management, additional
inventory write-downs may be required.

11



---



##### Table of Contents



We provide for the estimated cost of product warranties at the time
revenue is recognized. While we engage in extensive product quality programs
and processes, including actively monitoring and evaluating the quality of our
component suppliers, our warranty obligation is affected by product failure
rates, material usage and service delivery costs incurred in correcting a
product failure. Should actual product failure rates, material usage or service
delivery costs differ from our estimates, revisions to the estimated warranty
liability would be required.

We hold equity interests in both publicly traded and private companies
having operations or technology in areas within our strategic focus. The
publicly traded companies may have highly volatile share prices. We also hold
investment-grade marketable debt securities in government and commercial
entities. We record an investment impairment charge when we obtain specific
information that causes us to believe an investment has experienced a decline
in value that is other than temporary. Future adverse changes in market
conditions or poor operating results of underlying investments could result in
losses or an inability to recover the carrying value of the investments that
may not be reflected in an investments current carrying value, thereby
possibly requiring an impairment charge in the future.

We assess the impairment of identifiable intangibles and goodwill whenever
events or changes in circumstances indicate that the carrying value may not be
recoverable. We record an impairment charge when we determine that the
carrying value of intangibles and goodwill may not be recoverable. Upon
implementation of SFAS No. 142, Goodwill and Other Intangible Assets at the
beginning of fiscal 2003, we will cease to amortize goodwill. In lieu of
amortization, we are required to perform an initial impairment review of our
goodwill in fiscal 2003 and an annual impairment review thereafter. We expect
to complete our initial review during the first quarter of fiscal 2003. We
currently do not expect to record an impairment charge upon completion of the
initial impairment review. However, there can be no assurance that at the time
the review is completed a material impairment charge will not be recorded.

We do not currently record a valuation allowance to reduce our deferred
tax assets because we believe that the assets are more likely than not to be
realized. While we have considered future taxable income and ongoing prudent
and feasible tax planning strategies in assessing the need for a valuation
allowance, in the event we were to determine that we would not be able to
realize all or part of our net deferred tax asset in the future, an adjustment
to the deferred tax asset would be charged to income in the period such
determination was made.




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.

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 or appreciation in the U.S. dollar would have
resulted in an approximately $1.2
million increase or decrease, respectively, in income before provision for income taxes for the first nine
months of fiscal 2002. Such a change in income would have resulted
from applying a different exchange rate to translate and revalue the
financial statements of our non-U.S. subsidiaries.

At July 31, 2002, we had variable rate debt of approximately $2.5 million
provided by German banks, and fixed rate debt of $1.2 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, 2002. We have entered into an
interest rate swap agreement on the variable rate debt, which fixes the
interest rate for $2.0 million of the balance at 4.3% through November 2003.
Interest on the fixed rate debt is 4.4%.

12



---



##### Table of Contents






PART II  OTHER INFORMATION




Item 1.   Legal Proceedings

No material pending litigation.




Item 2.   Changes in Securities

In connection with ADICs acquisition of Pathlight Technology, Inc.
(Pathlight) on May 11, 2001, ADIC assumed all outstanding warrants to
purchase shares of common stock of Pathlight. Accordingly, after applying the
applicable conversion ratio to the outstanding Pathlight warrants, ADIC assumed
warrants providing for the issuance of an aggregate of 308,291 shares of ADIC
common stock at prices ranging from $1.235 to $7.401 per share (the Assumed
Warrants). All of the Assumed Warrants contained provisions permitting net
exercise. At July 31, 2002, 33,582 of the Assumed Warrants remain outstanding.

The shares of common stock issuable by ADIC upon exercise of the Assumed
Warrants have not been registered under the Securities Act of 1933, as amended,
and have been issued upon exercise of Assumed Warrants in reliance on the
exemption from registration provided by Section 4(2) of the Securities Act, on
the basis that the Assumed Warrants were issued to, and are held by, a limited
number of accredited investors. The following table sets forth information
with respect to unregistered shares of ADIC common stock that were issued upon
exercise of Assumed Warrants during the quarter ended July 31, 2002:

|        |  |                                |  |                    |        |           |  |                  |        | 
|------- |  | ------------------------------ |  | ------------------ | ------ | --------- |  | ---------------- | ------ | 
|Date of |  |                                |  |                    |        |           |  | Number of Shares
|Sale    |  | Purchaser                      |  | Consideration Paid |        | Purchased
|        |  |                                |  |                    |        |          
|6/25/02 |  | Banc Boston(1)                 |  | $                  | 18,011 |           |  |                  | 5,342  | 
|7/03/02 |  | Empire State Development/SBTIF |  | $                  | 49,981 |           |  |                  | 40,536 | 
|        |  |                                |  |                    |        |           |  |                  |        | 
|        |  |                                |  | $                  | 67,992 |           |  |                  | 45,878 | 
|        |  |                                |  |                    |        |           |  |                  |        | 

(1)  Assumed Warrants were exercised using the net exercise provision.
Shares were withheld in payment of the aggregate exercise price. The amount
shown in the consideration paid column is based on the fair value of ADIC
Common Stock on the date of exercise. For Banc Boston, an Assumed Warrant for
7,606 shares was exercised with 2,264 shares withheld.




Item 3.   Defaults Upon Senior Securities

None.




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

None.




Item 5.   Other Information

None.

13



---



##### Table of Contents






Item 6.   Exhibits and Reports on Form 8-K

Exhibit 99.1  Certification of Peter H. van Oppen, Chairman and Chief
Executive Officer of Advanced Digital Information Corporation, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.

Exhibit 99.2  Certification of Jon W. Gacek, Senior Vice President and
Chief Financial Officer of Advanced Digital Information Corporation, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.

No reports on Form 8-K were filed.

14



---



##### Table of Contents






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 16, 2002 | /s/                                      | PETER H. VAN OPPEN                                                                                          
|                          |                                         
|                          |                                          | Peter H. van Oppen, Chairman
and Chief Executive Officer                                                    
|                         
|Dated: September 16, 2002 | /s/                                      | JON W. GACEK                                                                                                
|                          |                                         
|                          |                                          | Jon W. Gacek, Senior Vice President
and Chief Financial Officer (Principal
Financial and Accounting Officer)

15



---



##### Table of Contents






CERTIFICATIONS

I, Peter H. van Oppen, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Advanced Digital
Information Corporation;

2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

|                          |     |                                                         
|------------------------- | --- | --------------------------------------------------------
|Dated: September 16, 2002 | /s/ | PETER H. VAN OPPEN                                      
|                          |    
|                          |     | Peter H. van Oppen, Chairman
and Chief Executive Officer

16



---



##### Table of Contents



CERTIFICATIONS

I, Jon W. Gacek, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Advanced Digital
Information Corporation;

2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

|                          |     |                                                                                                             
|------------------------- | --- | ------------------------------------------------------------------------------------------------------------
|Dated: September 16, 2002 | /s/ | JON W. GACEK                                                                                                
|                          |    
|                          |     | Jon W. Gacek, Senior Vice President
and Chief Financial Officer (Principal
Financial and Accounting Officer)

17