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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




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FORM 10-Q



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|  |  |                                                                                         
|- |  | ----------------------------------------------------------------------------------------
|x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) 
OF THE SECURITIES EXCHANGE ACT OF 1934
|  |  |                                                                                         
|  |  | For the quarterly period ended April 30, 2003                                           

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 |  | I.R.S. Employer Identification
|of the State of Washington  |  | 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.

Yes x   No o

Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2)

Yes x   No o

The total shares of common stock without par value outstanding at the end
of the quarter reported is 62,482,670.



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TABLE OF CONTENTS



|                               |                                                                                               |  |  |  |  |  |  | 
|------------------------------ | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION
|                               | Item 1. 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                           
|                               | Item 4. Controls and Procedures                                                              
|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                  



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PART I  FINANCIAL INFORMATION




Item 1. Financial Statements

Advanced Digital Information Corporation
Consolidated Balance Sheets
(In thousands, except for share data)

|                                                                                                      |                                                                                                                   |                                      |                      |                                      |        |             |         |           |      |         |         | 
|----------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | ------------------------------------ | -------------------- | ------------------------------------ | ------ | ----------- | ------- | --------- | ---- | ------- | ------- | 
|                                                                                                      |                                                                                                                   |                                      |                      |                                      |        | October 31, |         | April 30,
|                                                                                                      |                                                                                                                   |                                      |                      |                                      |        | 2002        |         | 2003     
|                                                                                                      |                                                                                                                   |                                      |                      |                                      |        |             |         |          
|                                                                                                      |                                                                                                                   |                                      |                      | Assets                               |        |             |         |           |      |         |         | 
|Current assets:                                                                                       |                                                                                                                   |                                      |                      |                                      |        |             |         |          
|                                                                                                      | Cash and cash equivalents                                                                                         |                                      | $                    | 150,741                              |        |             | $       | 159,357   |     
|                                                                                                      | Accounts receivable, net of allowances of $1,379 in 2002
and $1,650 in 2003                                       |                                      |                      | 71,383                               |        |             |         | 87,382    |     
|                                                                                                      | Inventories, net                                                                                                  |                                      |                      | 32,296                               |        |             |         | 37,024    |     
|                                                                                                      | Short-term marketable securities                                                                                  |                                      |                      | 24,878                               |        |             |         | 23,848    |     
|                                                                                                      | Prepaid expenses and other                                                                                        |                                      |                      | 2,245                                |        |             |         | 2,844     |     
|                                                                                                      | Income taxes receivable                                                                                           |                                      |                      | 6,305                                |        |             |         | 5,065     |     
|                                                                                                      | Deferred income taxes                                                                                             |                                      |                      | 13,250                               |        |             |         | 13,055    |     
|                                                                                                      |                                                                                                                   |                                      |                      |                                      |        |             |         |           |     
|                                                                                                      |                                                                                                                   |                                      | Total current assets |                                      |        | 301,098     |         |           |      | 328,575 |        
|Property, plant and equipment, net of accumulated depreciation of
$20,672 in 2002 and $28,950 in 2003 |                                                                                                                   |                                      | 48,722               |                                      |        |             | 49,104  |          
|Service parts for maintenance, net of accumulated amortization
of $15,545 in 2002 and $18,726 in 2003 |                                                                                                                   |                                      | 22,936               |                                      |        |             | 24,753  |          
|Deferred income taxes                                                                                 |                                                                                                                   |                                      | 3,347                |                                      |        |             | 3,329   |          
|Long-term marketable securities                                                                       |                                                                                                                   |                                      | 7,221                |                                      |        |             | 7,218   |          
|Investments                                                                                           |                                                                                                                   |                                      | 10,928               |                                      |        |             | 3,228   |          
|Intangible and other assets, net of accumulated amortization of
$3,869 in 2002 and $4,205 in 2003     |                                                                                                                   |                                      | 4,885                |                                      |        |             | 4,559   |          
|                                                                                                      |                                                                                                                   |                                      |                      |                                      |        |             |         |           |     
|                                                                                                      |                                                                                                                   | $                                    | 399,137              |                                      |        | $           | 420,766 |          
|                                                                                                      |                                                                                                                   |                                      |                      |                                      |        |             |         |           |     
|                                                                                                      |                                                                                                                   |                                      |                      | Liabilities and Shareholders Equity |        |             |         |           |      |         |         | 
|Current liabilities:                                                                                  |                                                                                                                   |                                      |                      |                                      |        |             |         |          
|                                                                                                      | Accounts payable                                                                                                  |                                      | $                    | 35,126                               |        |             | $       | 40,897    |     
|                                                                                                      | Accrued liabilities                                                                                               |                                      |                      | 11,668                               |        |             |         | 16,458    |     
|                                                                                                      | Deferred revenue                                                                                                  |                                      |                      | 20,343                               |        |             |         | 23,217    |     
|                                                                                                      | Bank lines of credit and current portion of long-term debt                                                        |                                      |                      | 2,282                                |        |             |         | 1,913     |     
|                                                                                                      |                                                                                                                   |                                      |                      |                                      |        |             |         |           |     
|                                                                                                      |                                                                                                                   |                                      |                      | Total current liabilities            |        |             | 69,419  |           |      |         | 82,485  | 
|Long-term debt                                                                                        |                                                                                                                   |                                      | 984                  |                                      |        |             | 1,018   |          
|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,
62,482,670 issued and outstanding (61,874,990 in 2002) |                                      |                      | 222,687                              |        |             |         | 225,438   |     
|                                                                                                      | Retained earnings                                                                                                 |                                      |                      | 108,159                              |        |             |         | 112,264   |     
|                                                                                                      | Accumulated other comprehensive income (loss):                                                                    |                                      |                      |                                      |        |             |         |           |     
|                                                                                                      |                                                                                                                   | Cumulative translation adjustment    |                      |                                      | (1,887 | )           |         |           | (770 | )      
|                                                                                                      |                                                                                                                   | Unrealized investment gains (losses) |                      |                                      | (225   | )           |         |           | 331  |        
|                                                                                                      |                                                                                                                   |                                      |                      |                                      |        |             |         |           |     
|                                                                                                      |                                                                                                                   |                                      |                      | Total shareholders equity           |        |             | 328,734 |           |      |         | 337,263 | 
|                                                                                                      |                                                                                                                   |                                      |                      |                                      |        |             |         |           |     
|                                                                                                      |                                                                                                                   | $                                    | 399,137              |                                      |        | $           | 420,766 |          
|                                                                                                      |                                                                                                                   |                                      |                      |                                      |        |             |         |           |     

See the accompanying notes to these consolidated financial statements.

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

|                                         |                                         |   |                    |        |                  |   |         |        |      |   |         |        |   |   |         |        |  
|---------------------------------------- | --------------------------------------- | - | ------------------ | ------ | ---------------- | - | ------- | ------ | ---- | - | ------- | ------ | - | - | ------- | ------ | -
|                                         |                                         |   | Three months ended |        | Six months ended
|                                         |                                         |   | April 30,          |        | April 30,       
|                                         |                                         |   |                    |        |                 
|                                         |                                         |   | 2002               |        | 2003             |   | 2002    |        | 2003
|                                         |                                         |   |                    |        |                  |   |         |        |     
|Net sales                                |                                         | $ | 80,687             |        |                  | $ | 100,642 |        |      | $ | 177,410 |        |   | $ | 197,738 |       
|Cost of sales                            |                                         |   | 59,696             |        |                  |   | 67,728  |        |      |   | 132,617 |        |   |   | 134,968 |       
|                                         |                                         |   |                    |        |                  |   |         |        |      |   |         |        |   |   |         |       
|                                         | Gross profit                            |   |                    | 20,991 |                  |   |         | 32,914 |      |   |         | 44,793 |   |   |         | 62,770 |  
|                                         |                                         |   |                    |        |                  |   |         |        |      |   |         |        |   |   |         |       
|Operating expenses:                      |                                         |   |                    |        |                  |   |         |        |      |   |         |        |   |   |         |       
|                                         | Sales and marketing                     |   |                    | 11,958 |                  |   |         | 14,516 |      |   |         | 22,884 |   |   |         | 27,657 |  
|                                         | General and administrative              |   |                    | 5,527  |                  |   |         | 6,172  |      |   |         | 10,939 |   |   |         | 12,147 |  
|                                         | Research and development                |   |                    | 7,269  |                  |   |         | 9,967  |      |   |         | 14,070 |   |   |         | 20,271 |  
|                                         | Acquisition expenses                    |   |                    | 1,475  |                  |   |         |       |      |   |         | 1,475  |   |   |         |       |  
|                                         |                                         |   |                    |        |                  |   |         |        |      |   |         |        |   |   |         |       
|                                         |                                         |   | 26,229             |        |                  |   | 30,655  |        |      |   | 49,368  |        |   |   | 60,075  |       
|                                         |                                         |   |                    |        |                  |   |         |        |      |   |         |        |   |   |         |       
|Operating profit (loss)                  |                                         |   | (5,238             | )      |                  |   | 2,259   |        |      |   | (4,575  | )      |   |   | 2,695   |       
|                                         |                                         |   |                    |        |                  |   |         |        |      |   |         |        |   |   |         |       
|Other income (expense):                  |                                         |   |                    |        |                  |   |         |        |      |   |         |        |   |   |         |       
|                                         | Interest income                         |   |                    | 961    |                  |   |         | 585    |      |   |         | 2,007  |   |   |         | 1,236  |  
|                                         | Interest expense                        |   |                    | (59    | )                |   |         | (40    | )    |   |         | (119   | ) |   |         | (91    | )
|                                         | Gain on securities transactions, net    |   |                    | 5,935  |                  |   |         | 700    |      |   |         | 8,179  |   |   |         | 1,412  |  
|                                         | Foreign currency transaction gains, net |   |                    | 360    |                  |   |         | 209    |      |   |         | 81     |   |   |         | 1,171  |  
|                                         | Other                                   |   |                    | 69     |                  |   |         | (28    | )    |   |         | 61     |   |   |         | (123   | )
|                                         |                                         |   |                    |        |                  |   |         |        |      |   |         |        |   |   |         |       
|                                         |                                         |   | 7,266              |        |                  |   | 1,426   |        |      |   | 10,209  |        |   |   | 3,605   |       
|                                         |                                         |   |                    |        |                  |   |         |        |      |   |         |        |   |   |         |       
|Income before provision for income taxes |                                         |   | 2,028              |        |                  |   | 3,685   |        |      |   | 5,634   |        |   |   | 6,300   |       
|Provision (benefit) for income taxes     |                                         |   | (479               | )      |                  |   | 1,266   |        |      |   | 745     |        |   |   | 2,195   |       
|                                         |                                         |   |                    |        |                  |   |         |        |      |   |         |        |   |   |         |       
|Net income                               |                                         | $ | 2,507              |        |                  | $ | 2,419   |        |      | $ | 4,889   |        |   | $ | 4,105   |       
|                                         |                                         |   |                    |        |                  |   |         |        |      |   |         |        |   |   |         |       
|Basic net income per share               |                                         | $ | 0.04               |        |                  | $ | 0.04    |        |      | $ | 0.08    |        |   | $ | 0.07    |       
|                                         |                                         |   |                    |        |                  |   |         |        |      |   |         |        |   |   |         |       
|Diluted net income per share             |                                         | $ | 0.04               |        |                  | $ | 0.04    |        |      | $ | 0.08    |        |   | $ | 0.07    |       
|                                         |                                         |   |                    |        |                  |   |         |        |      |   |         |        |   |   |         |       

See the accompanying notes to these consolidated financial statements.

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Advanced Digital Information Corporation
Consolidated Statements of Cash Flows
(In thousands)

|                                                 |                                                                                                  |                                              |         |                  |        |      |         |        |         |  
|------------------------------------------------ | ------------------------------------------------------------------------------------------------ | -------------------------------------------- | ------- | ---------------- | ------ | ---- | ------- | ------ | ------- | -
|                                                 |                                                                                                  |                                              |         | Six months ended
|                                                 |                                                                                                  |                                              |         | April 30,       
|                                                 |                                                                                                  |                                              |         |                 
|                                                 |                                                                                                  |                                              |         | 2002             |        | 2003
|                                                 |                                                                                                  |                                              |         |                  |        |     
|Cash flows from operating activities:            |                                                                                                  |                                              |         |                  |        |      |         |       
|                                                 | Net income                                                                                       |                                              | $       | 4,889            |        |      | $       | 4,105  |        
|                                                 | Adjustments to reconcile net income to net cash
provided by operating activities:                |                                              |         |                  |        |      |         |        |        
|                                                 |                                                                                                  | Depreciation and amortization                |         |                  | 7,377  |      |         |        | 10,096  |  
|                                                 |                                                                                                  | Allowance for doubtful accounts receivable   |         |                  | 330    |      |         |        | 494     |  
|                                                 |                                                                                                  | Inventory obsolescence                       |         |                  | 1,948  |      |         |        | 2,962   |  
|                                                 |                                                                                                  | Gain on securities transactions              |         |                  | (8,179 | )    |         |        | (1,412  | )
|                                                 |                                                                                                  | Acquired in-process research and development |         |                  | 1,200  |      |         |        |        |  
|                                                 |                                                                                                  | Deferred income taxes                        |         |                  | (304   | )    |         |        | (54     | )
|                                                 |                                                                                                  | Tax benefit from exercise of stock options   |         |                  | 2,029  |      |         |        | 587     |  
|                                                 |                                                                                                  | Other                                        |         |                  | 12     |      |         |        | 27      |  
|                                                 | Change in assets and liabilities:                                                                |                                              |         |                  |        |      |         |        |        
|                                                 |                                                                                                  | Accounts receivable                          |         |                  | 280    |      |         |        | (17,013 | )
|                                                 |                                                                                                  | Inventories                                  |         |                  | 8,306  |      |         |        | (7,425  | )
|                                                 |                                                                                                  | Prepaid expenses and other assets            |         |                  | 190    |      |         |        | (544    | )
|                                                 |                                                                                                  | Income taxes receivable                      |         |                  | 3,649  |      |         |        | 1,268   |  
|                                                 |                                                                                                  | Service parts for maintenance                |         |                  | (4,063 | )    |         |        | (3,548  | )
|                                                 |                                                                                                  | Accounts payable                             |         |                  | 750    |      |         |        | 5,245   |  
|                                                 |                                                                                                  | Accrued liabilities                          |         |                  | (51    | )    |         |        | 4,183   |  
|                                                 |                                                                                                  | Deferred revenue                             |         |                  | 130    |      |         |        | 2,364   |  
|                                                 |                                                                                                  |                                              |         |                  |        |      |         |        |        
|Net cash provided by operating activities        |                                                                                                  |                                              | 18,493  |                  |        |      | 1,335   |       
|                                                 |                                                                                                  |                                              |         |                  |        |      |         |        |        
|Cash flows from investing activities:            |                                                                                                  |                                              |         |                  |        |      |         |       
|                                                 | Purchase of property, plant and equipment                                                        |                                              |         | (15,624          | )      |      |         | (6,442 | )      
|                                                 | Purchase of marketable securities                                                                |                                              |         |                 |        |      |         | (2,352 | )      
|                                                 | Proceeds from securities transactions                                                            |                                              |         | 20,726           |        |      |         | 13,352 |        
|                                                 | Purchase of other investments                                                                    |                                              |         | (2,900           | )      |      |         |       |        
|                                                 |                                                                                                  |                                              |         |                  |        |      |         |        |        
|Net cash provided by investing activities        |                                                                                                  |                                              | 2,202   |                  |        |      | 4,558   |       
|                                                 |                                                                                                  |                                              |         |                  |        |      |         |        |        
|Cash flows from financing activities:            |                                                                                                  |                                              |         |                  |        |      |         |       
|                                                 | Repayment of bank lines of credit and long-term debt                                             |                                              |         | (1,078           | )      |      |         | (1,510 | )      
|                                                 | Proceeds from short-term borrowings                                                              |                                              |         |                 |        |      |         | 781    |        
|                                                 | Repurchase of common stock                                                                       |                                              |         |                 |        |      |         | (697   | )      
|                                                 | Proceeds from issuance of common stock for stock
options, stock warrants and Stock Purchase Plan |                                              |         | 3,935            |        |      |         | 2,861  |        
|                                                 |                                                                                                  |                                              |         |                  |        |      |         |        |        
|Net cash provided by financing activities        |                                                                                                  |                                              | 2,857   |                  |        |      | 1,435   |       
|                                                 |                                                                                                  |                                              |         |                  |        |      |         |        |        
|Effect of exchange rate changes on cash          |                                                                                                  |                                              | 51      |                  |        |      | 1,288   |       
|                                                 |                                                                                                  |                                              |         |                  |        |      |         |        |        
|Net increase in cash and cash equivalents        |                                                                                                  |                                              | 23,603  |                  |        |      | 8,616   |       
|Cash and cash equivalents at beginning of period |                                                                                                  |                                              | 155,274 |                  |        |      | 150,741 |       
|                                                 |                                                                                                  |                                              |         |                  |        |      |         |        |        
|Cash and cash equivalents at end of period       |                                                                                                  | $                                            | 178,877 |                  |        | $    | 159,357 |       
|                                                 |                                                                                                  |                                              |         |                  |        |      |         |        |        

See the accompanying notes to these consolidated financial statements.

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Advanced Digital Information Corporation
Consolidated Statements of Changes in Shareholders Equity
Six months ended April 30, 2003
(In thousands)

|                                                         |                                                                       |  |                                                                                             |   |              |   |          |   |               |   |               |       |       |   |        |       |             |     |         |   |  |       | 
|-------------------------------------------------------- | --------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------- | - | ------------ | - | -------- | - | ------------- | - | ------------- | ----- | ----- | - | ------ | ----- | ----------- | --- | ------- | - |  | ----- | 
|                                                         |                                                                       |  |                                                                                             |   |              |   |          |   |               |   |               |       |       |   |        |       | Accumulated |     |         |   | 
|                                                         |                                                                       |  |                                                                                             |   | Common stock |   |          |   |               |   | Other         |       |       |   |       
|                                                         |                                                                       |  |                                                                                             |   |              |   | Retained |   | Comprehensive |   |               |       |      
|                                                         |                                                                       |  |                                                                                             |   | Shares       |   | Amount   |   | Earnings      |   | Income (Loss) |       | Total
|                                                         |                                                                       |  |                                                                                             |   |              |   |          |   |               |   |               |       |      
|Balance at October 31, 2002                              |                                                                       |  | 61,875                                                                                      |   |              | $ | 222,687  |   |               | $ | 108,159       |       |       | $ | (2,112 | )     |             | $   | 328,734 |  
|Shares repurchased                                       |                                                                       |  | (113                                                                                        | ) |              |   | (697     | ) |               |   |              |       |       |   |       |       |             |     | (697    | )
|Purchases under Stock Purchase Plan                      |                                                                       |  | 240                                                                                         |   |              |   | 1,129    |   |               |   |              |       |       |   |       |       |             |     | 1,129   |  
|Exercise of stock options,
including tax benefit of $587 |                                                                       |  | 481                                                                                         |   |              |   | 2,319    |   |               |   |              |       |       |   |       |       |             |     | 2,319   |  
|Comprehensive income:                                    |                                                                       |  |                                                                                             |   |              |   |          |   |               |   |               |       |       |   |        |       |             |     |         |  
|                                                         | Net income                                                            |  |                                                                                             |  |              |   |          |  |               |   |               | 4,105 |       |   |        |      |             |     |         |  | 
|                                                         | Change in unrealized
investment gains:                                |  |                                                                                             |   |              |   |          |   |               |   |               |       |       |   |        |       |             |     |         |   | 
|                                                         |                                                                       |  | Unrealized investment
gains, net of tax of $212                                             |   |              |  |          |   |               |  |               |       |       |  |        |       |             | 394 |         |   |  |      | 
|                                                         |                                                                       |  | Reclassification adjustment
for investment losses
included in net income, net
of tax of $87 |   |              |  |          |   |               |  |               |       |       |  |        |       |             | 162 |         |   |  |      | 
|                                                         | Change in foreign currency
translation
adjustment, net of tax of $601 |  |                                                                                             |  |              |   |          |  |               |   |               |      |       |   |        | 1,117 |             |     |         |  | 
|                                                         |                                                                       |  | Total comprehensive income                                                                  |   |              |  |          |   |               |  |               |       |       |  |        |       |             |    |         |   |  | 5,778 | 
|                                                         |                                                                       |  |                                                                                             |   |              |   |          |   |               |   |               |       |       |   |        |       |             |     |         |  
|Balance at April 30, 2003                                |                                                                       |  | 62,483                                                                                      |   |              | $ | 225,438  |   |               | $ | 112,264       |       |       | $ | (439   | )     |             | $   | 337,263 |  
|                                                         |                                                                       |  |                                                                                             |   |              |   |          |   |               |   |               |       |       |   |        |       |             |     |         |  

See the accompanying notes to these consolidated financial statements.

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Advanced Digital Information Corporation
Notes to Interim Consolidated Financial Statements
April 30, 2003

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. Certain prior period balances have been adjusted or
reclassified to conform to current period presentation. These
reclassifications have no effect on net income, shareholders equity or cash
flows as previously presented.

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, 2002. The year-end
balance sheet data was derived from audited financial statements, but does not
include all disclosures required by generally accepted accounting principles.
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 three and six month periods ended April 30, 2003 are
not necessarily indicative of results to be expected for a full year.

Note 2. Stock-based compensation plans

Stock-based compensation plans are accounted for using the intrinsic value
method prescribed in Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees and related interpretations. No stock-based
compensation cost is reflected in net income, as all stock options granted
under those plans had an exercise price equal to the market value of the
underlying common stock on the date of grant. Had compensation cost for the
plans been determined based on the fair value at the grant dates for awards
under those plans consistent with the method of Statement of Financial
Accounting Standards No. 123, Accounting for Stock-Based Compensation, our
net income and basic and diluted net income per share would have been reduced
to the pro forma amounts indicated below:

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Advanced Digital Information Corporation
Notes to Interim Consolidated Financial Statements (Continued)
April 30, 2003

|                                                                                                                   |             |   |        |                                           |  |                  |        |      |  |      |        |       |   |   |        |      |  | 
|------------------------------------------------------------------------------------------------------------------ | ----------- | - | ------ | ----------------------------------------- |  | ---------------- | ------ | ---- |  | ---- | ------ | ----- | - | - | ------ | ---- |  | 
|                                                                                                                   |             |   |        | Three months ended                        |  | Six months ended
|                                                                                                                   |             |   |        | April 30,                                 |  | April 30,       
|                                                                                                                   |             |   |        |                                           |  |                 
|                                                                                                                   |             |   |        | 2002                                      |  | 2003             |        | 2002 |  | 2003
|                                                                                                                   |             |   |        |                                           |  |                  |        |      |  |     
|                                                                                                                   |             |   |        | (In thousands, except for per share data)
|Net income, as reported                                                                                            |             | $ | 2,507  |                                           |  | $                | 2,419  |      |  | $    | 4,889  |       |   | $ | 4,105  |     
|Deduct: total stock-based
compensation expense determined
under fair value based method for
all awards, net of tax |             |   | (2,668 | )                                         |  |                  | (1,611 | )    |  |      | (5,260 | )     |   |   | (3,581 | )   
|                                                                                                                   |             |   |        |                                           |  |                  |        |      |  |      |        |       |   |   |        |     
|Pro forma net income (loss)                                                                                        |             | $ | (161   | )                                         |  | $                | 808    |      |  | $    | (371   | )     |   | $ | 524    |     
|                                                                                                                   |             |   |        |                                           |  |                  |        |      |  |      |        |       |   |   |        |     
|Basic net income (loss) per share:                                                                                 |             |   |        |                                           |  |                  |        |      |  |      |        |       |   |   |        |     
|                                                                                                                   | As reported |   | $      | 0.04                                      |  |                  | $      | 0.04 |  |      | $      | 0.08  |   |   | $      | 0.07 | 
|                                                                                                                   |             |   |        |                                           |  |                  |        |      |  |      |        |       |   |   |        |     
|                                                                                                                   | Pro forma   |   | $      | 0.00                                      |  |                  | $      | 0.01 |  |      | $      | (0.01 | ) |   | $      | 0.01 | 
|                                                                                                                   |             |   |        |                                           |  |                  |        |      |  |      |        |       |   |   |        |     
|Diluted net income (loss) per share:                                                                               |             |   |        |                                           |  |                  |        |      |  |      |        |       |   |   |        |     
|                                                                                                                   | As reported |   | $      | 0.04                                      |  |                  | $      | 0.04 |  |      | $      | 0.08  |   |   | $      | 0.07 | 
|                                                                                                                   |             |   |        |                                           |  |                  |        |      |  |      |        |       |   |   |        |     
|                                                                                                                   | Pro forma   |   | $      | 0.00                                      |  |                  | $      | 0.01 |  |      | $      | (0.01 | ) |   | $      | 0.01 | 
|                                                                                                                   |             |   |        |                                           |  |                  |        |      |  |      |        |       |   |   |        |     

The value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model using the following weighted average
assumptions:

|                                          |  |                    |      |                  |  |      |      |      |  |  |      |   |  |  |      |  
|----------------------------------------- |  | ------------------ | ---- | ---------------- |  | ---- | ---- | ---- |  |  | ---- | - |  |  | ---- | -
|                                          |  | Three months ended |      | Six months ended
|                                          |  | April 30,          |      | April 30,       
|                                          |  |                    |      |                 
|                                          |  | 2002               |      | 2003             |  | 2002 |      | 2003
|                                          |  |                    |      |                  |  |      |      |     
|Weighted average risk free interest rates |  |                    | 4.17 | %                |  |      | 3.13 | %    |  |  | 4.07 | % |  |  | 3.28 | %
|Expected dividend yield                   |  |                    | 0    | %                |  |      | 0    | %    |  |  | 0    | % |  |  | 0    | %
|Expected volatility                       |  |                    | 84   | %                |  |      | 103  | %    |  |  | 84   | % |  |  | 103  | %
|Expected lives (in years)                 |  |                    | 4.0  |                  |  |      | 6.0  |      |  |  | 4.0  |   |  |  | 6.0  |  

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Advanced Digital Information Corporation
Notes to Interim Consolidated Financial Statements (Continued)
April 30, 2003

Note 3. Earnings per share

The following table sets forth the computation of basic and diluted net
income per share for the three and six months ended April 30, 2002 and 2003:

|                             |                                                                                                         |   |                                           |        |                  |   |      |        |      |   |      |        |  |   |      |        | 
|---------------------------- | ------------------------------------------------------------------------------------------------------- | - | ----------------------------------------- | ------ | ---------------- | - | ---- | ------ | ---- | - | ---- | ------ |  | - | ---- | ------ | 
|                             |                                                                                                         |   | Three months ended                        |        | Six months ended
|                             |                                                                                                         |   | April 30,                                 |        | April 30,       
|                             |                                                                                                         |   |                                           |        |                 
|                             |                                                                                                         |   | 2002                                      |        | 2003             |   | 2002 |        | 2003
|                             |                                                                                                         |   |                                           |        |                  |   |      |        |     
|                             |                                                                                                         |   | (In thousands, except for per share data)
|Numerator:                   |                                                                                                         |   |                                           |        |                  |   |      |        |      |   |      |        |  |   |      |       
|                             | Net income                                                                                              |   | $                                         | 2,507  |                  |   | $    | 2,419  |      |   | $    | 4,889  |  |   | $    | 4,105  | 
|                             |                                                                                                         |   |                                           |        |                  |   |      |        |      |   |      |        |  |   |      |        | 
|Denominator:                 |                                                                                                         |   |                                           |        |                  |   |      |        |      |   |      |        |  |   |      |       
|                             | Denominator for basic net income per share 
weighted average shares                                    |   |                                           | 62,396 |                  |   |      | 62,343 |      |   |      | 62,235 |  |   |      | 62,105 | 
|                             | Dilutive potential common shares from Team
Member (employee) stock options and warrants                 |   |                                           | 1,428  |                  |   |      | 730    |      |   |      | 1,724  |  |   |      | 773    | 
|                             |                                                                                                         |   |                                           |        |                  |   |      |        |      |   |      |        |  |   |      |        | 
|                             | Denominator for diluted net income per share 
adjusted weighted average shares and assumed
conversions |   |                                           | 63,824 |                  |   |      | 63,073 |      |   |      | 63,959 |  |   |      | 62,878 | 
|                             |                                                                                                         |   |                                           |        |                  |   |      |        |      |   |      |        |  |   |      |        | 
|Basic net income per share   |                                                                                                         | $ | 0.04                                      |        |                  | $ | 0.04 |        |      | $ | 0.08 |        |  | $ | 0.07 |       
|                             |                                                                                                         |   |                                           |        |                  |   |      |        |      |   |      |        |  |   |      |        | 
|Diluted net income per share |                                                                                                         | $ | 0.04                                      |        |                  | $ | 0.04 |        |      | $ | 0.08 |        |  | $ | 0.07 |       
|                             |                                                                                                         |   |                                           |        |                  |   |      |        |      |   |      |        |  |   |      |        | 

Note 4. Inventories

Inventories are comprised of the following:

|                                     |  |                |         |           |  |   |         |  
|------------------------------------ |  | -------------- | ------- | --------- |  | - | ------- | -
|                                     |  | October 31,    |         | April 30,
|                                     |  | 2002           |         | 2003     
|                                     |  |                |         |          
|                                     |  | (In thousands)
|Finished goods                       |  | $              | 26,225  |           |  | $ | 29,142  |  
|Work-in-process                      |  |                | 140     |           |  |   | 337     |  
|Raw materials                        |  |                | 16,644  |           |  |   | 21,399  |  
|                                     |  |                |         |           |  |   |         |  
|                                     |  |                | 43,009  |           |  |   | 50,878  |  
|Allowance for inventory obsolescence |  |                | (10,713 | )         |  |   | (13,854 | )
|                                     |  |                |         |           |  |   |         |  
|                                     |  | $              | 32,296  |           |  | $ | 37,024  |  
|                                     |  |                |         |           |  |   |         |  

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Advanced Digital Information Corporation
Notes to Interim Consolidated Financial Statements (Continued)
April 30, 2003

Note 5. Investments in marketable securities and other investments

At April 30, 2003, the cost basis of the marketable securities we held was
$30,558,000 and the fair value was $31,066,000. The difference between the
cost basis and fair value of $508,000, net of taxes of $177,000 is recorded as
an unrealized investment gain. At April 30, 2003, the fair value of marketable
securities comprised equity securities of $3,019,000 and debt securities of
$28,047,000. The equity securities consist of stock in a U.S. company that
operates in an area within our strategic focus. The 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. Consistent with our investment policy, investment maturities do
not exceed 24 months at the date of purchase. 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 three months ended April 30, 2002 and 2003, we sold a portion of our
marketable securities and realized gains of $1,985,000 and $700,000,
respectively. During the six month periods ended April 30, 2002 and 2003,
sales of marketable securities resulted in gains of $3,657,000 and $637,000,
respectively.

From time to time, we make other strategic investments that are accounted
for under the cost method. In November 2002, one of these investments was
converted to cash and marketable equity securities with a combined value of
$8,351,000, and we recorded a gain on securities transactions of $651,000. In
December 2002, we received additional shares of marketable equity securities
under an earnout provision and recorded an additional gain on securities
transactions of $124,000.

During the six month period ended April 30, 2002 we received cash of
$287,000 related to the sale of derivative financial instruments on certain
marketable equity securities held by us. We recorded a liability of $38,000 at
April 30, 2002, which represented the fair value of the derivative financial
instruments at that time. We recognized a gain on securities transactions of
$3,950,000 and $4,522,000, respectively, during the three and six month periods
ended April 30, 2002 to reflect the change in the fair value of the related
liability during the period plus the cash received on sales of derivatives
during the period.

Note 6. Intangible and other assets

On November 1, 2002, we adopted Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible Assets which requires us to
discontinue amortization of goodwill. As required by SFAS 142, intangible
assets that do not meet the criteria for recognition apart from goodwill must
be reclassified. In applying these criteria, we transferred net assembled
workforce from intangible assets to goodwill in the first quarter of fiscal
2003. During the first quarter, we completed the assessment for impairment of
goodwill required upon implementation of SFAS 142 and concluded that goodwill
was not impaired. We are required to perform goodwill impairment tests on an
annual basis or when indicators of impairment exist. We plan to perform our
annual goodwill impairment test in the third quarter of each fiscal year,
including 2003. There can be no assurance that future goodwill impairment
tests will not result in a charge to earnings.

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Advanced Digital Information Corporation
Notes to Interim Consolidated Financial Statements (Continued)
April 30, 2003

The following table presents net income and net income per share for the
three and six months ended April 30, 2002 and 2003 on a pro forma basis as if
SFAS 142 had been adopted on November 1, 2001:

|                                                                               |             |   |       |                                           |  |                  |       |      |  |      |       |      |  |   |       |      |  | 
|------------------------------------------------------------------------------ | ----------- | - | ----- | ----------------------------------------- |  | ---------------- | ----- | ---- |  | ---- | ----- | ---- |  | - | ----- | ---- |  | 
|                                                                               |             |   |       | Three months ended                        |  | Six months ended
|                                                                               |             |   |       | April 30,                                 |  | April 30,       
|                                                                               |             |   |       |                                           |  |                 
|                                                                               |             |   |       | 2002                                      |  | 2003             |       | 2002 |  | 2003
|                                                                               |             |   |       |                                           |  |                  |       |      |  |     
|                                                                               |             |   |       | (In thousands, except for per share data)
|Net income, as reported                                                        |             | $ | 2,507 |                                           |  | $                | 2,419 |      |  | $    | 4,889 |      |  | $ | 4,105 |     
|Add back: amortization of
goodwill (including
assembled workforce), net of
tax |             |   | 71    |                                           |  |                  |      |      |  |      | 141   |      |  |   |      |     
|                                                                               |             |   |       |                                           |  |                  |       |      |  |      |       |      |  |   |       |     
|Pro forma net income                                                           |             | $ | 2,578 |                                           |  | $                | 2,419 |      |  | $    | 5,030 |      |  | $ | 4,105 |     
|                                                                               |             |   |       |                                           |  |                  |       |      |  |      |       |      |  |   |       |     
|Basic net income per share:                                                    |             |   |       |                                           |  |                  |       |      |  |      |       |      |  |   |       |     
|                                                                               | As reported |   | $     | 0.04                                      |  |                  | $     | 0.04 |  |      | $     | 0.08 |  |   | $     | 0.07 | 
|                                                                               |             |   |       |                                           |  |                  |       |      |  |      |       |      |  |   |       |     
|                                                                               | Pro forma   |   | $     | 0.04                                      |  |                  | $     | 0.04 |  |      | $     | 0.08 |  |   | $     | 0.07 | 
|                                                                               |             |   |       |                                           |  |                  |       |      |  |      |       |      |  |   |       |     
|Diluted net income per share:                                                  |             |   |       |                                           |  |                  |       |      |  |      |       |      |  |   |       |     
|                                                                               | As reported |   | $     | 0.04                                      |  |                  | $     | 0.04 |  |      | $     | 0.08 |  |   | $     | 0.07 | 
|                                                                               |             |   |       |                                           |  |                  |       |      |  |      |       |      |  |   |       |     
|                                                                               | Pro forma   |   | $     | 0.04                                      |  |                  | $     | 0.04 |  |      | $     | 0.08 |  |   | $     | 0.07 | 
|                                                                               |             |   |       |                                           |  |                  |       |      |  |      |       |      |  |   |       |     

Intangible and other assets consists of the following:

|                       |  |                  |       |                |  |                |        |        |  |              |       |                |  |   |       |  |  |   |        |   |  |   |       | 
|---------------------- |  | ---------------- | ----- | -------------- |  | -------------- | ------ | ------ |  | ------------ | ----- | -------------- |  | - | ----- |  |  | - | ------ | - |  | - | ----- | 
|                       |  | October 31, 2002 |       | April 30, 2003
|                       |  |                  |       |               
|                       |  | Gross            |       | Accumulated    |  |                |        |        |  | Gross        |       | Accumulated    |  |   |       | 
|                       |  | Amount           |       | amortization   |  | Net amount     |        | amount |  | amortization |       | Net amount    
|                       |  |                  |       |                |  |                |        |        |  |              |       |               
|                       |  |                  |       |                |  | (In thousands) |        |        |  |              |       | (In thousands) |  |   |       | 
|Developed technology   |  | $                | 980   |                |  | $              | (925   | )      |  | $            | 55    |                |  | $ | 980   |  |  | $ | (980   | ) |  | $ |      | 
|Core technology        |  |                  | 3,804 |                |  |                | (1,675 | )      |  |              | 2,129 |                |  |   | 3,804 |  |  |   | (1,947 | ) |  |   | 1,857 | 
|Assembled workforce    |  |                  | 147   |                |  |                | (139   | )      |  |              | 8     |                |  |   |      |  |  |   |       |   |  |   |      | 
|Non-compete agreements |  |                  | 50    |                |  |                | (12    | )      |  |              | 38    |                |  |   | 50    |  |  |   | (21    | ) |  |   | 29    | 
|Goodwill               |  |                  | 3,706 |                |  |                | (1,118 | )      |  |              | 2,588 |                |  |   | 3,853 |  |  |   | (1,257 | ) |  |   | 2,596 | 
|Other assets           |  |                  | 67    |                |  |                |       |        |  |              | 67    |                |  |   | 77    |  |  |   |       |   |  |   | 77    | 
|                       |  |                  |       |                |  |                |        |        |  |              |       |                |  |   |       |  |  |   |        |   |  |   |       | 
|                       |  | $                | 8,754 |                |  | $              | (3,869 | )      |  | $            | 4,885 |                |  | $ | 8,764 |  |  | $ | (4,205 | ) |  | $ | 4,559 | 
|                       |  |                  |       |                |  |                |        |        |  |              |       |                |  |   |       |  |  |   |        |   |  |   |       | 

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Advanced Digital Information Corporation
Notes to Interim Consolidated Financial Statements (Continued)
April 30, 2003

During the three and six month periods ended April 30, 2003, we recorded
intangible amortization expense of $141,000 and $336,000, respectively. During
the comparable periods in fiscal 2002, intangible amortization expense was
$327,000 and $653,000, respectively. Total expected future amortization
related to intangible assets is provided in the following table:

|                                  |  |                |     | 
|--------------------------------- |  | -------------- | --- | 
|                                  |  | Amortization  
|                                  |  |               
|                                  |  | (In thousands)
|Six months ended October 31, 2003 |  | $              | 282 | 
|Fiscal year 2004                  |  | $              | 562 | 
|Fiscal year 2005                  |  | $              | 543 | 
|Fiscal year 2006                  |  | $              | 499 | 

Note 7. Guarantees

In November 2002, the FASB issued FASB Interpretation No. 45, Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others. FIN 45 requires that a liability be
recorded in the guarantors balance sheet upon issuance of the guarantee. In
addition, FIN 45 requires disclosures about the guarantees that a company has
issued, including a rollforward of the companys product warranty liabilities.
We are required to apply the recognition provisions of FIN 45 prospectively to
any guarantees issued after December 31, 2002. The disclosure provisions of
FIN 45 were effective for us during the first quarter of fiscal 2003 and are
included below. We do not expect the provisions of FIN 45 to have a
significant impact on our financial position or results of operations.

For our products, parts and labor are covered under warranty for periods
between three months and three years. A provision for labor costs related to
warranty expense is recorded when revenue is recognized. We hold service parts
for maintenance that are used to service our warranties and extended service
contracts. The cost of these parts is amortized over their estimated useful
lives, which range from three to seven years. With respect to drives and tapes
used in our products but manufactured by a third party, we provide to the
customer a warranty on such drives and tapes that is substantially equivalent
to the warranty provided by the manufacturer.

Changes in our accrued warranty balance for the six months ended April 30,
2003 are as follows:

|                               |  |   |        |  
|------------------------------ |  | - | ------ | -
|Balance at October 31, 2002    |  | $ | 4,225  |  
|Accruals for warranties issued |  |   | 2,918  |  
|Settlements during the period  |  |   | (2,043 | )
|                               |  |   |        |  
|Balance at April 30, 2003      |  | $ | 5,100  |  
|                               |  |   |        |  

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Advanced Digital Information Corporation
Notes to Interim Consolidated Financial Statements (Continued)
April 30, 2003

Note 8. Recent accounting pronouncements

In December 2002, the FASB issued Statement of Financial Accounting
Standards No. 148, Accounting for Stock-Based Compensation  Transition and
Disclosure. SFAS 148 amends SFAS 123, Accounting for Stock-Based
Compensation, to provide alternative methods of transition for an
entity that voluntarily changes to the fair value based method of accounting
for stock-based compensation. It also amends the disclosure provisions of that
statement. The disclosure provisions of this statement are effective for us
beginning in the second quarter of fiscal 2003, and the required disclosures
are included in Note 2. We do not currently have plans to change to the fair
value method of accounting for our stock-based compensation, but we will
reassess our plans during the fourth quarter of fiscal 2003 to determine
whether we will change to the fair value method during fiscal 2004.

In November 2002, the EITF reached a consensus on Issue No. 00-21,
Revenue Arrangements with Multiple Deliverables. EITF 00-21 provides
guidance on how to account for arrangements that involve the delivery or
performance of multiple products, services or rights to use assets. The
provisions of EITF 00-21 will apply to revenue arrangements entered into in
interim periods beginning after June 15, 2003. We are currently evaluating the
impact EITF 00-21 will have, if any, on our financial position or results of
operations.

In January 2003, the FASB issued FASB Interpretation No. 46,
Consolidation of Variable Interest Entities. FIN 46 provides guidance on how
to identify a variable interest entity (VIE) and determine when the assets,
liabilities and results of operations of a VIE need to be included in a
companys financial statements. FIN 46 also requires additional disclosures by
primary beneficiaries and other significant variable interest holders in a VIE.
The provisions of FIN 46 are effective immediately for all VIEs created after
January 31, 2003. For VIEs created before February 1, 2003, the provisions of
FIN 46 must be adopted at the beginning of the first interim period beginning
after June 15, 2003. This accounting pronouncement is not expected to have a
significant impact on our financial position or results of operations.

In May 2003, the FASB issued Statement of Financial Accounting Standards
No. 150, Accounting for Certain Financial Instruments with Characteristics of
both Liabilities and Equity. SFAS 150 requires that certain financial
instruments that, under previous guidance, could be accounted for as equity,
now be classified as liabilities. These financial instruments include
mandatorily redeemable shares, instruments that do or may require the issuer to
buy back some of its shares in exchange for cash or other assets and certain
obligations that can be settled with shares. SFAS 150 also requires additional
disclosures about alternative ways of settling these types of instruments and
the capital structure of entities. Most of the provisions of SFAS 150 are
effective for all financial instruments entered into or modified after May 31,
2003, and otherwise are effective at the beginning of the first interim period
beginning after June 15, 2003. This accounting pronouncement is not expected
to have a significant impact on our financial position or results of
operations.

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

The following discussion and analysis should be read in conjunction with
our financial statements and the information about our critical accounting
estimates included in our Annual Report on Form 10-K for the year ended October
31, 2002. 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, 2002 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 certain end users.

Results of Operations

Net Sales.Net sales increased during the second quarter of fiscal 2003
to $100.6 million, an increase of 25% from $80.7 million in the comparable
quarter of fiscal 2002. Net sales for the six months ended April 30, 2003 were
$197.7 million, an increase of 11% from $177.4 million during the six months
ended April 30, 2002. The increase in both comparison periods is due to higher
sales to both branded and OEM customers. Revenue from branded customers
increased 27% in the second quarter of fiscal 2003 from the comparable quarter
of fiscal 2002, and OEM sales increased 22% between the comparable quarters.
OEM sales remained a constant 45% of net sales during the second quarters of
both fiscal 2003 and 2002. During the six months ended April 30, 2003, branded
sales increased 15% over the comparative period in fiscal 2002. OEM revenue
increased 7% during the six months ended April 30, 2003 compared to the six
months ended April 30, 2002. Branded sales to customers outside of the United
States were particularly strong, increasing 53% in the second quarter of fiscal
2003 compared to fiscal 2002 and 47% during the six months ended April 30, 2003
compared to 2002. Higher software and services revenue also contributed to the
increases in net sales.

Intelligent Storage Solutions (ISS), which include elements of our
software and connectivity technology and are sold through both branded and OEM
sales channels, represented 38% of sales in the second quarter of fiscal 2003
compared to 29% of sales during the second quarter of fiscal 2002. ISS related
sales comprised 40% and 25% of sales during the first six months of fiscal 2003
and 2002, respectively. We believe that an increasing proportion of ISS sales,
whether sold on a branded or OEM basis, will generally result in the likelihood
of increasing gross margins as a percentage of sales, although this expected
correlation may be overshadowed in any particular period by the specific mix of
ISS products or other factors.

Gross Profit.Gross profit was $32.9 million or 33% of net sales for the
three months ended April 30, 2003 compared to $21.0 million or 26% of net sales
for the same period in fiscal 2002. For the six months ended April 30, 2003,
gross profit was $62.8 million or 32% of net sales compared to $44.8

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million or 25% of net sales for the same period in fiscal 2002. The
increase in gross profit is primarily a result of the increase in sales of
software and other higher-margin enterprise-level products.

Sales and Marketing Expenses.Sales and marketing expenses were $14.5
million or 14% of net sales for the three months ended April 30, 2003 compared
to $12.0 million or 15% of net sales for the same period in fiscal 2002. For
the six month period ended April 30, 2003, sales and marketing expenses were
$27.7 million or 14% of net sales compared to $22.9 million or 13% of net sales
for the same period in fiscal 2002. Sales and marketing expenses have
increased in absolute dollars due to continued efforts to expand our sales and
services channels to support new product offerings and improve market
penetration with our more complex enterprise-level products. We expect sales
and marketing expenditures to increase moderately during the balance of fiscal
2003 as we continue to expand our sales channels.

General and Administrative Expenses.General and administrative expenses
were $6.2 million or 6% of net sales for the three months ended April 30, 2003
compared to $5.5 million or 7% of net sales for the same period in fiscal 2002.
For the six month period ended April 30, 2003, general and administrative
expenses were $12.1 million or 6% of net sales compared to $10.9 million or 6%
of net sales for the same period in fiscal 2002. General and administrative
expenses have increased in absolute dollars due to continued investments in our
infrastructure, including our global information system. We expect very modest
growth in general and administrative expenses during the remainder of fiscal
2003.

Research and Development Expenses.Research and development expenses were
$10.0 million or 10% of net sales for the second quarter of fiscal 2003
compared to $7.3 million or 9% of net sales for the second quarter of fiscal
2002. During the six months ended April 30, 2003, we incurred research and
development expenses of $20.3 million or 10% of net sales compared to $14.1
million or 8% of net sales for the same period in fiscal 2002. These increases
reflect our strategy to maintain heavy investments in software and connectivity
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 in intelligent storage solutions. We expect moderate growth in
research and development expenses during the remainder of fiscal 2003 as we
continue to invest in new product development.

Acquisition Expenses.Expenses related to our acquisition of V-Stor were
$1.5 million for the three and six month periods ended April 30, 2002. These
one-time acquisition charges related to acquired in-process research and
development and compensation to V-Stor personnel.

Other Income.Other income primarily consists of interest income, net
gain on securities transactions and net foreign currency transaction gains.
Other income was $1.4 million for the second quarter of fiscal 2003 compared to
$7.3 million for the second quarter of fiscal 2002. For the six months ended
April 30, 2003, other income was $3.6 million compared to $10.2 million for the
same period in fiscal 2002. Other income during the three months ended April
30, 2003 and 2002 included a gain on securities transactions of $700,000 and
$5.9 million, respectively. The gain on securities transactions during the six
month period ended April 30, 2003 and 2002 was $1.4 million and $8.2 million,
respectively. The gains realized in fiscal 2003 primarily relate to conversion
of one of our investments in a private company to cash and marketable equity
securities and subsequent sale of a portion of those securities. The gains
realized in fiscal 2002 consisted of gains from the sale of derivative
financial instruments on securities held for investment as well as the sale of
marketable securities. Interest income was $585,000 and $961,000 during the
second quarter of fiscal 2003 and 2002, respectively, and $1.2 million and $2.0
million during the first six months of fiscal 2003 and 2002, respectively. The
decrease in interest income is the result of lower returns on cash and
investment balances. Foreign currency transaction gains were $209,000 and
$360,000 during the second quarter of fiscal 2003 and 2002,

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respectively, and $1.2 million and $81,000 during the first six months of
fiscal 2003 and 2002, respectively. These gains are the result of the
strengthening of the Euro during the periods. The significant increase in
foreign currency transaction gains during the six months ended April
30, 2003 compared to 2002 is due to the fact that the Euro strengthened more
than 10% over the dollar during the first six months of fiscal 2003, compared
to remaining almost flat during the first six months of fiscal 2002. Interest
expense in all periods primarily relates to interest on operating credit lines
through two German banks along with a loan payable to a German bank.

Provision (Benefit) for Income Taxes.For the three months ended April
30, 2003, income tax expense was $1.3 million compared to income tax benefit of
$479,000 for the comparable period in fiscal 2002. Income tax expense was $2.2
million for the six months ended April 30, 2003 compared to $745,000 for the
six months ended April 30, 2002. The effective income tax rates for the three
and six months ended April 30, 2003 were 34% and 35%, respectively. The
effective tax rates for the comparable periods in fiscal 2002 were (24)% and
13%, respectively. Our effective tax rate is based on estimates and
assumptions relating to future events. Actual results could differ from those
estimates. In fiscal 2002, taxes paid in various federal, state and
international jurisdictions were exceeded by the tax benefits of our credit for
research and development spending, our extraterritorial income exclusion and
non-taxable interest income. The effective tax rate includes tax expense for
various federal, state and international jurisdictions.

Liquidity and Capital Resources

Cash flows provided by operating activities were $1.3 million and $18.5
million for the six months ended April 30, 2003 and 2002, respectively. During
the first six months of fiscal 2003, operating cash was primarily provided by
net income, depreciation and amortization and increases in accounts payable and
accrued liabilities, which were offset by increases in accounts receivable and
inventories. Accounts receivable increased primarily due to increased sales,
and inventories increased as we launched both new products and existing
products into new channels. Accounts payable and accrued liabilities increased
primarily due to the timing of payments. During the first six months of fiscal
2002, operating cash was primarily provided by net income, depreciation and
amortization and decreases in inventories and income taxes receivable, which
were offset by an increase in service parts for maintenance. In addition,
gains on securities transactions were included as a component of cash flow
provided by operating activities. Inventories decreased as we entered into
certain vendor-managed inventory programs, under which ownership transfers at
the time we take possession of inventory in the manufacturing process. Service
parts for maintenance increased in order to support new product offerings as
well as maintain our increasing installed base of existing solutions.

Cash flows provided by investing activities were $4.6 million and $2.2
million for the first six months of fiscal 2003 and 2002, respectively. Cash
flows include proceeds from certain securities transactions of $13.4 million
and $20.7 million for first six months of 2003 and 2002, respectively. These
proceeds were partially offset by purchases of marketable securities of $2.4
million during the first six months of fiscal 2003 and a $2.9 million
investment in non-marketable securities during the first six months of fiscal
2002. Investments in property, plant and equipment were $6.4 million and $15.6
million during the first six months of fiscal 2003 and 2002, respectively.
Capital expenditures during the first six months of fiscal 2003 and 2002 were
comprised primarily of computer hardware and software for our global
information technology infrastructure and tooling and equipment related to new
product introductions. Capital expenditures during the first six months of
fiscal 2002 also included leasehold improvements for our Englewood, Colorado
facility.

Cash flows provided by financing activities during the first six months of
fiscal 2003 were $1.4 million, compared to $2.9 million during the first six
months of fiscal 2002. We repurchased $697,000 of

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our common stock during the six months ended April 30, 2003. During the
first six months of fiscal 2003 and 2002, we received proceeds from the
issuance of common stock under our Stock Purchase Plan and the exercise of
stock options and warrants of $2.9 million and $3.9 million, respectively.
Offsetting the above proceeds in both periods were certain payments on bank
lines of credit and long-term debt, which were $1.5 million and $1.1 million
during the first six months of fiscal 2003 and 2002, respectively. During the
first six months of fiscal 2003, we borrowed an additional $781,000 from two
German banks.

At April 30, 2003, our cash and cash equivalents totaled $159.4 million, a
$8.6 million increase from $150.7 million at October 31, 2002. Our cash
equivalents and marketable securities totaled $190.4 million and $182.8 million
at April 30, 2003 and October 31, 2002, respectively. Our working capital, the
difference between current assets and current liabilities, was $246.1 million
and $231.7 million at April 30, 2003 and October 31, 2002, respectively. The
ratio of current assets to current liabilities was 4.0 to 1 and 4.3 to 1 at
April 30, 2003 and October 31, 2002, respectively.

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 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 continue to make investments in
companies with whom we have identified potential synergies.

Recent Accounting Pronouncements

In December 2002, the FASB issued Statement of Financial Accounting
Standards No. 148, Accounting for Stock-Based Compensation  Transition and
Disclosure. SFAS 148 amends SFAS 123, Accounting for Stock-Based
Compensation, to provide alternative methods of transition for an entity that
voluntarily changes to the fair value based method of accounting for
stock-based compensation. It also amends the disclosure provisions of that
statement. The disclosure provisions of this statement are effective for us
beginning in the second quarter of fiscal 2003, and the required disclosures
are included in Note 2. We do not currently have plans to change to the fair
value method of accounting for our stock-based compensation, but we will
reassess our plans during the fourth quarter of fiscal 2003 to determine
whether we will change to the fair value method during fiscal 2004.

In November 2002, the EITF reached a consensus on Issue No. 00-21,
Revenue Arrangements with Multiple Deliverables. EITF 00-21 provides
guidance on how to account for arrangements that involve the delivery or
performance of multiple products, services or rights to use assets. The
provisions of EITF 00-21 will apply to revenue arrangements entered into in
interim periods beginning after June 15, 2003. We are currently evaluating the
impact EITF 00-21 will have, if any, on our financial position or results of
operations.

In January 2003, the FASB issued FASB Interpretation No. 46,
Consolidation of Variable Interest Entities. FIN 46 provides guidance on how
to identify a variable interest entity (VIE) and determine when the assets,
liabilities and results of operations of a VIE need to be included in a
companys financial statements. FIN 46 also requires additional disclosures by
primary beneficiaries and other significant variable interest holders in a VIE.
The provisions of FIN 46 are effective immediately for all VIEs created after
January 31, 2003. For VIEs created before February 1, 2003, the provisions of
FIN 46 must be adopted at the beginning of the first interim period beginning
after June 15, 2003. This accounting pronouncement is not expected to have a
significant impact on our financial position or results of operations.

In May 2003, the FASB issued Statement of Financial Accounting Standards
No. 150,

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Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity. SFAS 150 requires that certain financial instruments
that, under previous guidance, could be accounted for as equity, now be
classified as liabilities. These financial instruments include mandatorily
redeemable shares, instruments that do or may require the issuer to buy back
some of its shares in exchange for cash or other assets and certain obligations
that can be settled with shares. SFAS 150 also requires additional disclosures
about alternative ways of settling these types of instruments and the capital
structure of entities. Most of the provisions of SFAS 150 are effective for
all financial instruments entered into or modified after May 31, 2003, and
otherwise are effective at the beginning of the first interim period beginning
after June 15, 2003. This accounting pronouncement is not expected to have a
significant impact on our financial position or results of operations.

Critical Accounting Estimates

The preparation of our financial statements requires us to make estimates
and judgments. The critical accounting policies that affect our more
significant estimates and judgments are disclosed in our Annual Report on Form
10-K for the year ended October 31, 2002. New critical accounting policies are
disclosed below.

As a result of adopting Statement of Financial Accounting Standards No.
142, Goodwill and Other Intangible Assets, on November 1, 2002, we
discontinued the amortization of goodwill. Instead, goodwill was reviewed for
impairment upon adoption of SFAS 142 and will be reviewed annually thereafter,
or more frequently when indicators of impairment are present. We did not
record an impairment charge based on this initial review. Other intangible
assets are carried and reported at acquisition cost, net of accumulated
amortization subsequent to acquisition. The acquisition cost is amortized over
the estimated useful lives of the assets, which range from two to ten years.
Intangible assets are reviewed for impairment whenever events or circumstances
indicate impairment might exist, or at least annually. The determination of
the net carrying value of goodwill and intangible assets and the extent to
which, if any, there is impairment are dependent on material estimates and
judgments on our part, including the useful life over which the intangible
assets are to be amortized, and the estimates of the value of future net cash
flows, which are based upon further estimates of future revenues, expenses and
operating margins.




Item 3. Quantitative and Qualitative Disclosures About Market Risk

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% appreciation in the U.S. dollar as of April 30, 2003 would have resulted in
an approximately $2.3 million decrease in income before provision for income
taxes during the first six months of fiscal 2003. 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 April 30, 2003, we had variable rate debt of approximately $1.7 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 April 30, 2003. We have entered into an
interest rate swap agreement on the variable rate debt, which fixes the
interest rate at 4.3% through November 2003. Interest on the fixed rate debt
is 4.4%.

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Item 4. Controls and Procedures

We maintain a set of disclosure controls and procedures and internal
controls designed to ensure that information required to be disclosed in
filings pursuant to the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commissions rules and forms.

Our chief executive officer and our chief financial officer have evaluated
our disclosure controls and procedures within 90 days before the filing of this
quarterly report, and they have determined that our disclosure controls and
procedures are effective.

Subsequent to our evaluation, there were no significant changes in our
internal controls or other factors that could significantly affect internal
controls, including any corrective actions with regard to significant
deficiencies and material weaknesses.

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PART II  OTHER INFORMATION




Item 1. Legal Proceedings

No material pending litigation.




Item 2. Changes in Securities

None.




Item 3. Defaults Upon Senior Securities

None.




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

At its annual meeting on March 11, 2003 duly called and with proxies
solicited, 56,207,248 shares were represented in person or by proxy
constituting 90.07 percent of the outstanding shares. There were 62,401,306
shares of the Companys common stock outstanding and entitled to vote at the
annual meeting.



| | i. |  | The proposal to amend the Advanced Digital
Information Corporation 1999 Stock Incentive Compensation Plan
was approved. It received the following votes (there were no
broker non-votes):
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|        |  |       |            |             |  |                  |       |  
|------- |  | ----- | ---------- | ----------- |  | ---------------- | ----- | -
|        |  |       |            |             |  | Percent of Votes
|        |  | Votes |            | For/Against
|        |  |       |            |            
|For     |  |       | 49,794,702 |             |  |                  | 88.92 | %
|Against |  |       | 6,204,445  |             |  |                  | 11.08 | %
|Abstain |  |       | 208,101    |             |  |                  |      |  



| | ii. |  | Two directors were reelected to the Board, each to hold
office for three-year terms. The nominees received the following
votes (there were no broker non-votes):
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

|                          |  |                 |            |                 |  |  |           | 
|------------------------- |  | --------------- | ---------- | --------------- |  |  | --------- | 
|                          |  | Number of Votes |            | Number of Votes
|Nominee                   |  | For             |            | Withheld       
|                          |  |                 |            |                
|Christopher T. Bayley     |  |                 | 53,228,597 |                 |  |  | 2,978,651 | 
|Frank M. (Pete) Higgins |  |                 | 54,200,465 |                 |  |  | 2,006,783 | 

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Tom A. Alberg, John W. Stanton, Peter H. van Oppen and Walter F. Walker
had continuing terms as directors.




Item 5. Other Information

None.




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 during the quarter ended April 30, 2003.

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SIGNATURES

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

|                     |  |                                                                                                                             
|-------------------- |  | ----------------------------------------------------------------------------------------------------------------------------
|                     |  | ADVANCED DIGITAL INFORMATION
CORPORATION                                                                                    
|                     |  |                                                                                                                             
|Dated: June 16, 2003 |  | PETER H. VAN OPPEN                                                                                                          
|                     |  |                                                                                                                             
|                     |  | Peter H. van Oppen, Chairman
        and Chief Executive Officer                                                            
|                     |  |                                                                                                                             
|Dated: June 16, 2003 |  | JON W. GACEK                                                                                                                
|                     |  |                                                                                                                             
|                     |  | Jon W. Gacek, Senior Vice President
        and Chief Financial Officer (Principal
        Financial and Accounting Officer)

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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;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:



| |                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;



| |                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b) evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the Evaluation Date); and



| |                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5.     The registrants other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):



| |                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants ability
to record, process, summarize and report financial data and have
identified for the registrants auditors any material weaknesses in
internal controls; and



| |                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants internal
controls; and

6.     The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|                     |  |                             
|-------------------- |  | ----------------------------
|Dated: June 16, 2003 |  | PETER H. VAN OPPEN          
|                     | 
|                     |  | Peter H. van Oppen, Chairman
|                     |  | and Chief Executive Officer 

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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;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:



| |                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;



| |                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b) evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the Evaluation Date); and



| |                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5.     The registrants other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):



| |                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants ability
to record, process, summarize and report financial data and have
identified for the registrants auditors any material weaknesses in
internal controls; and



| |                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants internal
controls; and

6.     The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|                     |  |                                       
|-------------------- |  | --------------------------------------
|Dated: June 16, 2003 |  | JON W. GACEK                          
|                     | 
|                     |  | Jon W. Gacek, Senior Vice President   
|                     |  | and Chief Financial Officer (Principal
|                     |  | Financial and Accounting Officer)     

22