##### Table of Contents



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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 July 31, 2001                                            
|     
|[   ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
|     
|      | For the transition period from           to                                             

Commission file number 0-21103



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ADVANCED DIGITAL INFORMATION CORPORATION

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

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

(425) 881-8004

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes  [X]     No  [   ]

The total shares of common stock without par value outstanding at the end
of the quarter reported is 61,496,335.



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TABLE OF CONTENTS



|                             |                                                                                               |                                                            |  |  |  |  |  | 
|---------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------------- |  |  |  |  |  | 
|PART IFINANCIAL INFORMATION
|                             | Item 1. Financial Statements                                                                 
|                             |                                                                                               | Consolidated Balance Sheets                               
|                             |                                                                                               | Consolidated Statements of Operations                     
|                             |                                                                                               | Consolidated Statements of Cash Flows                     
|                             |                                                                                               | Consolidated Statements of Changes in Shareholders Equity
|                             |                                                                                               | Notes to Interim Consolidated Financial Statements        
|                             | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                             | Item 3. Quantitative and Qualitative Disclosures about Market Risk Management                
|PART II  OTHER INFORMATION 
|                             | Item 1. Legal Proceedings.                                                                   
|                             | Item 2. Changes in Securities.                                                               
|                             | Item 3. Defaults Upon Senior Securities.                                                     
|                             | Item 4. Submission of Matters to a Vote of Security Holders.                                 
|                             | Item 5. Other Information.                                                                   
|                             | Item 6. Exhibits and Reports on Form 8-K.                                                    
|SIGNATURES                  
|EXHIBIT 10.1                




PART IFINANCIAL INFORMATION




Item 1. Financial Statements




Advanced Digital Information Corporation

Consolidated Balance Sheets

(In thousands, except for share data)

|                                            |                                                                                                                   |                                      |                      |                            |        |             |         |          |        |             |         | 
|------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | ------------------------------------ | -------------------- | -------------------------- | ------ | ----------- | ------- | -------- | ------ | ----------- | ------- | 
|                                            |                                                                                                                   |                                      |                      |                            |        | October 31, |         | July 31,
|                                            |                                                                                                                   |                                      |                      |                            |        | 2000        |         | 2001    
|                                            |                                                                                                                   |                                      |                      |                            |        |             |         |         
|                                            |                                                                                                                   |                                      |                      |                            |        |             |         |          |        | (Unaudited)
|Assets                                      |                                                                                                                   |                                      |                      |                            |        |             |        
|                                           
|                                           
|                                           
|                                           
|Current assets:                             |                                                                                                                   |                                      |                      |                            |        |             |         |         
|                                           
|                                           
|                                           
|                                           
|                                            | Cash and cash equivalents                                                                                         |                                      | $                    | 194,268                    |        |             | $       | 153,801  |       
|                                           
|                                           
|                                           
|                                           
|                                            | Accounts receivable, net of allowances of $1,864 in 2000
and $1,547 in 2001                                       |                                      |                      | 70,092                     |        |             |         | 76,588   |       
|                                           
|                                           
|                                           
|                                           
|                                            | Inventories, net                                                                                                  |                                      |                      | 37,963                     |        |             |         | 60,720   |       
|                                           
|                                           
|                                           
|                                           
|                                            | Marketable equity securities                                                                                      |                                      |                      | 19,349                     |        |             |         | 17,131   |       
|                                           
|                                           
|                                           
|                                           
|                                            | Prepaid expenses and other                                                                                        |                                      |                      | 1,726                      |        |             |         | 1,853    |       
|                                           
|                                           
|                                           
|                                           
|                                            | Income taxes receivable                                                                                           |                                      |                      |                           |        |             |         | 7,298    |       
|                                           
|                                           
|                                           
|                                           
|                                            | Deferred income taxes                                                                                             |                                      |                      | 10,103                     |        |             |         | 7,603    |       
|                                            |                                                                                                                   |                                      |                      |                            |        |             |         |         
|                                            |                                                                                                                   |                                      | Total current assets |                            |        | 333,501     |         |          |        | 324,994     |        
|                                           
|                                           
|                                           
|                                           
|Property, plant and equipment, net          |                                                                                                                   |                                      | 19,419               |                            |        |             | 27,218  |         
|                                           
|                                           
|                                           
|                                           
|Service parts for maintenance, net          |                                                                                                                   |                                      | 10,523               |                            |        |             | 14,468  |         
|                                           
|                                           
|                                           
|                                           
|Deferred income taxes                       |                                                                                                                   |                                      | 6,130                |                            |        |             | 7,897   |         
|                                           
|                                           
|                                           
|                                           
|Investments                                 |                                                                                                                   |                                      | 20,972               |                            |        |             | 19,328  |         
|                                           
|                                           
|                                           
|                                           
|Intangible and other assets                 |                                                                                                                   |                                      | 8,700                |                            |        |             | 7,361   |         
|                                            |                                                                                                                   |                                      |                      |                            |        |             |         |         
|                                            |                                                                                                                   | $                                    | 399,245              |                            |        | $           | 401,266 |         
|                                            |                                                                                                                   |                                      |                      |                            |        |             |         |         
|Liabilities and Shareholders Equity        |                                                                                                                   |                                      |                      |                            |        |             |        
|                                           
|                                           
|                                           
|                                           
|Current liabilities:                        |                                                                                                                   |                                      |                      |                            |        |             |         |         
|                                           
|                                           
|                                           
|                                           
|                                            | Accounts payable                                                                                                  |                                      | $                    | 33,639                     |        |             | $       | 41,190   |       
|                                           
|                                           
|                                           
|                                           
|                                            | Accrued liabilities                                                                                               |                                      |                      | 16,817                     |        |             |         | 13,295   |       
|                                           
|                                           
|                                           
|                                           
|                                            | Income taxes payable                                                                                              |                                      |                      | 7,465                      |        |             |         |         |       
|                                           
|                                           
|                                           
|                                           
|                                            | Deferred revenue                                                                                                  |                                      |                      | 8,257                      |        |             |         | 11,505   |       
|                                           
|                                           
|                                           
|                                           
|                                            | Bank line of credit, current portion of long-term debt
and capital lease obligation                               |                                      |                      | 5,302                      |        |             |         | 3,835    |       
|                                            |                                                                                                                   |                                      |                      |                            |        |             |         |         
|                                            |                                                                                                                   |                                      |                      | Total current liabilities  |        |             | 71,480  |          |        |             | 69,825  | 
|                                           
|                                           
|                                           
|                                           
|Long-term debt and capital lease obligation |                                                                                                                   |                                      | 1,279                |                            |        |             | 1,172   |         
|                                           
|                                           
|                                           
|                                           
|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,
61,496,335 issued and outstanding (59,028,293 in 2000) |                                      |                      | 214,876                    |        |             |         | 220,119  |       
|                                           
|                                           
|                                           
|                                           
|                                            | Retained earnings                                                                                                 |                                      |                      | 117,431                    |        |             |         | 112,006  |       
|                                           
|                                           
|                                           
|                                           
|                                            | Accumulated other comprehensive income (loss):                                                                    |                                      |                      |                            |        |             |         |          |       
|                                           
|                                           
|                                           
|                                           
|                                            |                                                                                                                   | Cumulative translation adjustment    |                      |                            | (2,755 | )           |         |          | (2,446 | )          
|                                           
|                                           
|                                           
|                                           
|                                            |                                                                                                                   | Unrealized investment gains (losses) |                      |                            | (3,066 | )           |         |          | 590    |            
|                                            |                                                                                                                   |                                      |                      |                            |        |             |         |         
|                                            |                                                                                                                   |                                      |                      | Total shareholders equity |        |             | 326,486 |          |        |             | 330,269 | 
|                                            |                                                                                                                   |                                      |                      |                            |        |             |         |         
|                                            |                                                                                                                   | $                                    | 399,245              |                            |        | $           | 401,266 |         
|                                            |                                                                                                                   |                                      |                      |                            |        |             |         |         

See the accompanying notes to these consolidated financial statements.

1



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##### Table of Contents






Advanced Digital Information Corporation

Consolidated Statements of Operations

(In thousands, except for per share data)

|                                                |                                                   |   |                    |        |                   |   |         |        |      |   |         |        |   |   |         |        |  
|----------------------------------------------- | ------------------------------------------------- | - | ------------------ | ------ | ----------------- | - | ------- | ------ | ---- | - | ------- | ------ | - | - | ------- | ------ | -
|                                                |                                                   |   | Three months ended |        | Nine months ended
|                                                |                                                   |   | July 31,           |        | July 31,         
|                                                |                                                   |   |                    |        |                  
|                                                |                                                   |   | 2000               |        | 2001              |   | 2000    |        | 2001
|                                                |                                                   |   |                    |        |                   |   |         |        |     
|                                                |                                                   |   | (Unaudited)       
|Net sales                                       |                                                   | $ | 73,402             |        |                   | $ | 84,950  |        |      | $ | 206,125 |        |   | $ | 273,509 |       
|                                               
|                                               
|                                               
|                                               
|Cost of sales                                   |                                                   |   | 47,344             |        |                   |   | 61,592  |        |      |   | 131,728 |        |   |   | 192,561 |       
|                                               
|                                               
|                                               
|                                               
|Pathlight acquisition costs                     |                                                   |   |                   |        |                   |   | 4,109   |        |      |   |        |        |   |   | 4,109   |       
|                                                |                                                   |   |                    |        |                   |   |         |        |      |   |         |        |   |   |         |       
|                                                | Gross profit                                      |   |                    | 26,058 |                   |   |         | 19,249 |      |   |         | 74,397 |   |   |         | 76,839 |  
|                                                |                                                   |   |                    |        |                   |   |         |        |      |   |         |        |   |   |         |       
|Operating expenses:                             |                                                   |   |                    |        |                   |   |         |        |      |   |         |        |   |   |         |       
|                                               
|                                               
|                                               
|                                               
|                                                | Selling and administrative                        |   |                    | 14,004 |                   |   |         | 15,945 |      |   |         | 38,790 |   |   |         | 45,539 |  
|                                               
|                                               
|                                               
|                                               
|                                                | Research and development                          |   |                    | 5,066  |                   |   |         | 7,113  |      |   |         | 14,432 |   |   |         | 20,155 |  
|                                               
|                                               
|                                               
|                                               
|                                                | Crossroads settlement costs                       |   |                    | 165    |                   |   |         | 16,580 |      |   |         | 165    |   |   |         | 16,974 |  
|                                               
|                                               
|                                               
|                                               
|                                                | Pathlight acquisition costs                       |   |                    |       |                   |   |         | 8,837  |      |   |         |       |   |   |         | 8,837  |  
|                                                |                                                   |   |                    |        |                   |   |         |        |      |   |         |        |   |   |         |       
|                                                |                                                   |   | 19,235             |        |                   |   | 48,475  |        |      |   | 53,387  |        |   |   | 91,505  |       
|                                                |                                                   |   |                    |        |                   |   |         |        |      |   |         |        |   |   |         |       
|Operating profit (loss)                         |                                                   |   | 6,823              |        |                   |   | (29,226 | )      |      |   | 21,010  |        |   |   | (14,666 | )     
|                                                |                                                   |   |                    |        |                   |   |         |        |      |   |         |        |   |   |         |       
|Other income (expense):                         |                                                   |   |                    |        |                   |   |         |        |      |   |         |        |   |   |         |       
|                                               
|                                               
|                                               
|                                               
|                                                | Interest income                                   |   |                    | 3,085  |                   |   |         | 1,611  |      |   |         | 7,820  |   |   |         | 6,347  |  
|                                               
|                                               
|                                               
|                                               
|                                                | Interest expense                                  |   |                    | (103   | )                 |   |         | (37    | )    |   |         | (303   | ) |   |         | (210   | )
|                                               
|                                               
|                                               
|                                               
|                                                | Gain on sale of Crossroads Systems, Inc.          |   |                    | 14,345 |                   |   |         |       |      |   |         | 88,791 |   |   |         |       |  
|                                               
|                                               
|                                               
|                                               
|                                                | Gain on marketable equity securities transactions |   |                    |       |                   |   |         | 2,258  |      |   |         | 1,536  |   |   |         | 3,371  |  
|                                               
|                                               
|                                               
|                                               
|                                                | Foreign currency transaction gains (losses), net  |   |                    | (80    | )                 |   |         | 135    |      |   |         | (20    | ) |   |         | (57    | )
|                                                |                                                   |   |                    |        |                   |   |         |        |      |   |         |        |   |   |         |       
|                                                |                                                   |   | 17,247             |        |                   |   | 3,967   |        |      |   | 97,824  |        |   |   | 9,451   |       
|                                                |                                                   |   |                    |        |                   |   |         |        |      |   |         |        |   |   |         |       
|Income (loss) before provision for income taxes |                                                   |   | 24,070             |        |                   |   | (25,259 | )      |      |   | 118,834 |        |   |   | (5,215  | )     
|                                               
|                                               
|                                               
|                                               
|Provision (benefit) for income taxes            |                                                   |   | 7,631              |        |                   |   | (6,616  | )      |      |   | 39,740  |        |   |   | 210     |       
|                                               
|                                               
|                                               
|                                               
|Minority interest                               |                                                   |   |                   |        |                   |   |        |        |      |   | 18      |        |   |   |        |       
|                                                |                                                   |   |                    |        |                   |   |         |        |      |   |         |        |   |   |         |       
|Net income (loss)                               |                                                   | $ | 16,439             |        |                   | $ | (18,643 | )      |      | $ | 79,076  |        |   | $ | (5,425  | )     
|                                                |                                                   |   |                    |        |                   |   |         |        |      |   |         |        |   |   |         |       
|Basic net income (loss) per share               |                                                   | $ | 0.28               |        |                   | $ | (0.30   | )      |      | $ | 1.35    |        |   | $ | (0.09   | )     
|                                                |                                                   |   |                    |        |                   |   |         |        |      |   |         |        |   |   |         |       
|Diluted net income (loss) per share             |                                                   | $ | 0.26               |        |                   | $ | (0.30   | )      |      | $ | 1.25    |        |   | $ | (0.09   | )     
|                                                |                                                   |   |                    |        |                   |   |         |        |      |   |         |        |   |   |         |       

See the accompanying notes to these consolidated financial statements.

2



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##### Table of Contents






Advanced Digital Information Corporation

Consolidated Statements of Cash Flows

(In thousands)

|                                                     |                                                                                      |                                                       |         |                   |         |      |         |         |         |  
|---------------------------------------------------- | ------------------------------------------------------------------------------------ | ----------------------------------------------------- | ------- | ----------------- | ------- | ---- | ------- | ------- | ------- | -
|                                                     |                                                                                      |                                                       |         | Nine months ended
|                                                     |                                                                                      |                                                       |         | July 31,         
|                                                     |                                                                                      |                                                       |         |                  
|                                                     |                                                                                      |                                                       |         | 2000              |         | 2001
|                                                     |                                                                                      |                                                       |         |                   |         |     
|                                                     |                                                                                      |                                                       |         | (Unaudited)      
|Cash flows from operating activities:                |                                                                                      |                                                       |         |                   |         |      |         |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Net income (loss)                                                                    |                                                       | $       | 79,076            |         |      | $       | (5,425  | )      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Adjustments to reconcile net income (loss) to net cash
used in operating activities: |                                                       |         |                   |         |      |         |         |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                      | Depreciation and amortization                         |         |                   | 3,808   |      |         |         | 5,109   |  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                      | Allowance for doubtful accounts receivable            |         |                   | 970     |      |         |         | 85      |  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                      | Inventory obsolescence and service parts depreciation |         |                   | 4,832   |      |         |         | 6,449   |  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                      | Gain on marketable equity securities transactions     |         |                   | (90,327 | )    |         |         | (3,371  | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                      | Deferred income taxes                                 |         |                   | (993    | )    |         |         | (131    | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                      | Other                                                 |         |                   | 160     |      |         |         | 475     |  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Change in assets and liabilities:                                                    |                                                       |         |                   |         |      |         |         |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                      | Accounts receivable                                   |         |                   | (13,995 | )    |         |         | (6,262  | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                      | Inventories                                           |         |                   | (17,046 | )    |         |         | (25,706 | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                      | Prepaid expenses and other                            |         |                   | (380    | )    |         |         | (120    | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                      | Service parts for maintenance                         |         |                   | (2,522  | )    |         |         | (7,144  | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                      | Other assets                                          |         |                   | 12      |      |         |         | (4      | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                      | Accounts payable                                      |         |                   | 9,829   |      |         |         | 7,470   |  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                      | Accrued liabilities                                   |         |                   | 1,231   |      |         |         | (4,833  | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                      | Income taxes payable                                  |         |                   | 10,001  |      |         |         | (14,098 | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                      | Deferred revenue                                      |         |                   | 3,146   |      |         |         | 3,523   |  
|                                                     |                                                                                      |                                                       |         |                   |         |      |         |         |        
|Net cash used in operating activities                |                                                                                      |                                                       | (12,198 | )                 |         |      | (43,983 | )      
|                                                     |                                                                                      |                                                       |         |                   |         |      |         |         |        
|Cash flows from investing activities:                |                                                                                      |                                                       |         |                   |         |      |         |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Purchase of property, plant and equipment                                            |                                                       |         | (7,790            | )       |      |         | (11,344 | )      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Investment in marketable equity securities                                           |                                                       |         | (26,769           | )       |      |         |        |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Other investments                                                                    |                                                       |         | (1,822            | )       |      |         | (500    | )      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Proceeds from marketable equity securities transactions                              |                                                       |         | 94,292            |         |      |         | 14,170  |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Acquisition of minority interest                                                     |                                                       |         | (4,765            | )       |      |         |        |        
|                                                     |                                                                                      |                                                       |         |                   |         |      |         |         |        
|Net cash provided by investing activities            |                                                                                      |                                                       | 53,146  |                   |         |      | 2,326   |        
|                                                     |                                                                                      |                                                       |         |                   |         |      |         |         |        
|Cash flows from financing activities:                |                                                                                      |                                                       |         |                   |         |      |         |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Repayment of bank line of credit, long-term debt and
capital lease obligation        |                                                       |         | (2,198            | )       |      |         | (2,106  | )      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Proceeds from issuance of common stock, stock options
and stock purchase plan        |                                                       |         | 12,709            |         |      |         | 3,162   |        
|                                                     |                                                                                      |                                                       |         |                   |         |      |         |         |        
|Net cash provided by financing activities            |                                                                                      |                                                       | 10,511  |                   |         |      | 1,056   |        
|                                                     |                                                                                      |                                                       |         |                   |         |      |         |         |        
|Effect of exchange rate changes on cash              |                                                                                      |                                                       | (763    | )                 |         |      | 134     |        
|                                                     |                                                                                      |                                                       |         |                   |         |      |         |         |        
|Net increase (decrease) in cash and cash equivalents |                                                                                      |                                                       | 50,696  |                   |         |      | (40,467 | )      
|                                                    
|                                                    
|                                                    
|                                                    
|Cash and cash equivalents at beginning of period     |                                                                                      |                                                       | 157,455 |                   |         |      | 194,268 |        
|                                                     |                                                                                      |                                                       |         |                   |         |      |         |         |        
|Cash and cash equivalents at end of period           |                                                                                      | $                                                     | 208,151 |                   |         | $    | 153,801 |        
|                                                     |                                                                                      |                                                       |         |                   |         |      |         |         |        

See the accompanying notes to these consolidated financial statements.

3



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##### Table of Contents






Advanced Digital Information Corporation

Consolidated Statements of Changes in Shareholders Equity

Nine months ended July 31, 2001

(In thousands)

(Unaudited)

|                                                           |                                         |                          |                                                        |   |              |   |          |   |               |   |               |        |       |   |        |     |             |       |         |   |        |   | 
|---------------------------------------------------------- | --------------------------------------- | ------------------------ | ------------------------------------------------------ | - | ------------ | - | -------- | - | ------------- | - | ------------- | ------ | ----- | - | ------ | --- | ----------- | ----- | ------- | - | ------ | - | 
|                                                           |                                         |                          |                                                        |   |              |   |          |   |               |   |               |        |       |   |        |     | Accumulated |       |         |   |       
|                                                           |                                         |                          |                                                        |   | Common Stock |   |          |   |               |   | Other         |        |       |   |       
|                                                           |                                         |                          |                                                        |   |              |   | Retained |   | Comprehensive |   |               |        |      
|                                                           |                                         |                          |                                                        |   | Shares       |   | Amount   |   | Earnings      |   | Income (Loss) |        | Total
|                                                           |                                         |                          |                                                        |   |              |   |          |   |               |   |               |        |      
|Balance at October 31, 2000                                |                                         |                          | 59,028                                                 |   |              | $ | 214,876  |   |               | $ | 117,431       |        |       | $ | (5,821 | )   |             | $     | 326,486 |  
|                                                          
|                                                          
|                                                          
|                                                          
|Purchases under Stock Purchase Plan                        |                                         |                          | 77                                                     |   |              |   | 1,009    |   |               |   |              |        |       |   |       |     |             |       | 1,009   |  
|                                                          
|                                                          
|                                                          
|                                                          
|Exercise of stock options,
including tax benefit of $1,784 |                                         |                          | 2,179                                                  |   |              |   | 3,785    |   |               |   |              |        |       |   |       |     |             |       | 3,785   |  
|                                                          
|                                                          
|                                                          
|                                                          
|Exercise of warrants                                       |                                         |                          | 152                                                    |   |              |   | 152      |   |               |   |              |        |       |   |       |     |             |       | 152     |  
|                                                          
|                                                          
|                                                          
|                                                          
|Other equity transactions                                  |                                         |                          | 60                                                     |   |              |   | 297      |   |               |   |               |        |       |   |        |     |             |       | 297     |  
|                                                          
|                                                          
|                                                          
|                                                          
|Comprehensive loss:                                        |                                         |                          |                                                        |   |              |   |          |   |               |   |               |        |       |   |        |     |             |       |         |  
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Net loss                                |                          |                                                        |  |              |   |          |  |               |   |               | (5,425 | )     |   |        |    |             |       |         |  |       
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Unrealized investment gains:            |                          |                                                        |   |              |   |          |   |               |   |               |        |       |   |        |     |             |       |         |   |       
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                         |                          | Unrealized investment gains                            |   |              |  |          |   |               |  |               |        |       |  |        |     |             | 4,364 |         |   |        |  | 
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                         |                          | Reclassification
adjustment: gain included
in net loss |   |              |   |          |   |               |   |               |        |       |   |        |     |             | (708  | )       |   |        |   | 
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Foreign currency translation
adjustment |                          |                                                        |  |              |   |          |  |               |   |               |       |       |   |        | 309 |             |       |         |  |       
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                         | Total comprehensive loss |                                                        |   |             |   |          |   |              |   |               |        |      |   |        |     |            |       |         |   | (1,460 | )
|                                                           |                                         |                          |                                                        |   |              |   |          |   |               |   |               |        |       |   |        |     |             |       |         |  
|Balance at July 31, 2001                                   |                                         |                          | 61,496                                                 |   |              | $ | 220,119  |   |               | $ | 112,006       |        |       | $ | (1,856 | )   |             | $     | 330,269 |  
|                                                           |                                         |                          |                                                        |   |              |   |          |   |               |   |               |        |       |   |        |     |             |       |         |  

See the accompanying notes to these consolidated financial statements.

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Advanced Digital Information Corporation

Notes to Interim Consolidated Financial Statements

July 31, 2001

(Unaudited)

Note 1. Basis of presentation

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

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

The accompanying condensed consolidated financial statements are restated
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, 2000. The Annual
Report on Form 10-K for the year ended October 31, 2000 was not restated to
reflect the acquisition of Pathlight. In our opinion all normal recurring
adjustments which are necessary for the fair presentation of the results for
the interim periods are reflected herein. Operating results for the nine-month
period ended July 31, 2001, are not necessarily indicative of results to be
expected for a full year.

Note 2. Acquisition of Pathlight Technology

On May 11, 2001, we acquired Pathlight Technology, Inc., a privately held
company based in Ithaca, New York, through a merger of a wholly owned
subsidiary with Pathlight. Pathlight supplies products consisting of
proprietary hardware and software that allow users to deploy advanced
enterprise data storage systems called Storage Area Networks or SANs. SANs are
used to solve the growing problem of providing organizations with efficient
enterprise-wide access to electronic information. Under the terms of the
acquisition, which was accounted for as a pooling-of-interests, we exchanged
10.3 million shares of ADIC common stock for all of the outstanding stock,
warrants and stock options of Pathlight. The 10.3 million shares were reduced
by approximately 500,000 shares, which were returned to us and canceled in
connection with the settlement of certain litigation contingencies.

The condensed consolidated financial statements for the three and nine
month periods ended July 31, 2001 include Pathlight acquisition costs of $4.1
million included in cost of sales and $8.8 million included in operating
expenses. The costs include investment banking and financial advisory
fees, other professional fees, team member costs which relate to termination of
certain team members with redundant job functions and relocation cost,
write-off of certain inventory deemed non-salable due to the merger, accrual
for contractual liability to a third party and other merger related expenses. In addition, operating expenses include Crossroads settlement costs
of $16.6 million and $17.0 million during the three and nine month periods
ended July 31, 2001, respectively. The condensed financial statements and the accompanying notes reflect our
financial position and the results of operations as if Pathlight was a wholly
owned subsidiary of ADIC since inception.

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Advanced Digital Information Corporation

Notes to Interim Consolidated Financial Statements (Continued)

July 31, 2001

(Unaudited)

Note 3. Recent accounting pronouncements

In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS
No. 141, Business Combinations. This statement requires the use of the
purchase method of accounting for all business combinations initiated after
June 30, 2001, establishes specific criteria for the recognition of intangible
assets separately from goodwill, and requires unallocated negative goodwill to
be written off
immediately as an extraordinary gain.

In July 2001, the FASB also issued SFAS No. 142, Goodwill and Other
Intangible Assets. This statement primarily addresses the accounting for
goodwill and intangible assets subsequent to their acquisition. SFAS No. 142
requires that goodwill and indefinite lived intangible assets no longer be
amortized, that goodwill be tested for impairment at least annually, and that
the amortization period of intangible assets with finite lives no longer be
limited to forty years. SFAS No. 142 is required to be adopted for the
Companys financial statements for the year ending October 31, 2003. The
adoption of this statement is not currently anticipated to have a material
impact on our financial position or results of operations.

Note 4. Earnings per share

The following table sets forth the computation of basic and diluted net
income (loss) per share for the three months and nine months ended July 31,
2000 and 2001. For the three and nine month periods ended July 31, 2001,
common stock equivalent shares of 2.3 million and 3.1 million, respectively,
are not included in the computation of diluted net income (loss) per share
because they are antidilutive.

|                                    |                                                                                                               |   |                                           |        |                   |   |       |         |      |   |      |        |  |   |       |        |  
|----------------------------------- | ------------------------------------------------------------------------------------------------------------- | - | ----------------------------------------- | ------ | ----------------- | - | ----- | ------- | ---- | - | ---- | ------ |  | - | ----- | ------ | -
|                                    |                                                                                                               |   | Three months ended                        |        | Nine months ended
|                                    |                                                                                                               |   | July 31,                                  |        | July 31,         
|                                    |                                                                                                               |   |                                           |        |                  
|                                    |                                                                                                               |   | 2000                                      |        | 2001              |   | 2000  |         | 2001
|                                    |                                                                                                               |   |                                           |        |                   |   |       |         |     
|                                    |                                                                                                               |   | (In thousands, except for per share data)
|Numerator:                          |                                                                                                               |   |                                           |        |                   |   |       |         |      |   |      |        |  |   |       |       
|                                   
|                                   
|                                   
|                                   
|                                    | Net income (loss)                                                                                             |   | $                                         | 16,439 |                   |   | $     | (18,643 | )    |   | $    | 79,076 |  |   | $     | (5,425 | )
|                                    |                                                                                                               |   |                                           |        |                   |   |       |         |      |   |      |        |  |   |       |        |  
|Denominator:                        |                                                                                                               |   |                                           |        |                   |   |       |         |      |   |      |        |  |   |       |       
|                                   
|                                   
|                                   
|                                   
|                                    | Denominator for basic net income (loss) per share
weighted average shares                                    |   |                                           | 58,837 |                   |   |       | 61,331  |      |   |      | 58,625 |  |   |       | 59,958 |  
|                                   
|                                   
|                                   
|                                   
|                                    | Dilutive potential common shares from Team
Member (employee) stock options and warrants                       |   |                                           | 4,190  |                   |   |       |        |      |   |      | 4,734  |  |   |       |       |  
|                                    |                                                                                                               |   |                                           |        |                   |   |       |         |      |   |      |        |  |   |       |        |  
|                                    | Denominator for diluted net income (loss) per share
adjusted weighted average shares and assumed
conversions |   |                                           | 63,027 |                   |   |       | 61,331  |      |   |      | 63,359 |  |   |       | 59,958 |  
|                                    |                                                                                                               |   |                                           |        |                   |   |       |         |      |   |      |        |  |   |       |        |  
|Basic net income (loss) per share   |                                                                                                               | $ | 0.28                                      |        |                   | $ | (0.30 | )       |      | $ | 1.35 |        |  | $ | (0.09 | )     
|                                    |                                                                                                               |   |                                           |        |                   |   |       |         |      |   |      |        |  |   |       |        |  
|Diluted net income (loss) per share |                                                                                                               | $ | 0.26                                      |        |                   | $ | (0.30 | )       |      | $ | 1.25 |        |  | $ | (0.09 | )     
|                                    |                                                                                                               |   |                                           |        |                   |   |       |         |      |   |      |        |  |   |       |        |  

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Advanced Digital Information Corporation

Notes to Interim Consolidated Financial Statements (Continued)

July 31, 2001

(Unaudited)

Note 5. Inventories

Inventories comprise the following:

|                                     |  |                |        |          |  |   |        |  
|------------------------------------ |  | -------------- | ------ | -------- |  | - | ------ | -
|                                     |  | October 31,    |        | July 31,
|                                     |  | 2000           |        | 2001    
|                                     |  |                |        |         
|                                     |  | (In thousands)
|Finished goods                       |  | $              | 16,355 |          |  | $ | 31,230 |  
|                                    
|                                    
|                                    
|                                    
|Work-in-process                      |  |                | 1,637  |          |  |   | 2,098  |  
|                                    
|                                    
|                                    
|                                    
|Raw materials                        |  |                | 26,001 |          |  |   | 36,664 |  
|                                     |  |                |        |          |  |   |        |  
|                                     |  |                | 43,993 |          |  |   | 69,992 |  
|                                    
|                                    
|                                    
|                                    
|Allowance for inventory obsolescence |  |                | (6,030 | )        |  |   | (9,272 | )
|                                     |  |                |        |          |  |   |        |  
|                                     |  | $              | 37,963 |          |  | $ | 60,720 |  
|                                     |  |                |        |          |  |   |        |  

Note 6. Investments in marketable equity securities and other investments

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

At July 31, 2001, we held marketable equity securities with a fair market
value of $17,131,000 and a cost basis of $16,782,000. The securities are
included as a current asset on our financial statements. The difference
between the cost basis and fair value, net of taxes, is recorded as a $227,000
unrealized investment gain. During the three month period ended July 31, 2001,
we sold a portion of these marketable equity securities and realized a gain of
$1,089,000.

The fair value of our investment in Crossroads Systems, Inc. is
$1,325,000. At July 31, 2001, the difference between the cost basis and fair
value was $558,000. This amount, net of taxes, is recorded as an unrealized
investment gain of $363,000.

During the three months and nine months ended July 31, 2001 we realized
gains on certain marketable equity securities transactions of $1,169,000 and
$2,282,000, respectively. We have recorded the gain in conformance with SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities.

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

The following discussion and analysis should be read in conjunction with
our financial statements included in our Annual Report on Form 10-K for the
year ended October 31, 2000. Please note that the Annual Report on Form 10-K
for the year ended October 31, 2000 was not restated to reflect the acquisition
of Pathlight, whereas the following discussion is based on the restated
financial results. 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
Quarterly Report on Form 10-Q for the quarter ended April 30, 2001 and are
incorporated herein by reference. Our actual results could differ materially
from those discussed here. We undertake no obligation to publicly release any
revisions to these forward-looking statements that may be required to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.

General

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

On May 11, 2001, we acquired Pathlight Technology, Inc., a privately held
company based in Ithaca, New York, through a merger of a wholly owned
subsidiary with Pathlight. Pathlight supplies products consisting of
proprietary hardware and software that allow users to deploy advanced
enterprise data storage systems called Storage Area Networks or SANs. SANs are
used to solve the growing problem of providing organizations with efficient
enterprise-wide access to electronic information. Under the terms of the
acquisition, which was accounted for as a pooling-of-interests, we exchanged
10.3 million shares of ADIC common stock for all of the outstanding stock,
warrants and stock options of Pathlight. The 10.3 million shares were reduced
by approximately 500,000 shares, which were returned to us and canceled in
connection with the settlement of certain litigation contingencies.

The condensed consolidated financial statements for the three and nine
month periods ended July 31, 2001 include Pathlight acquisition costs of $4.1
million included in cost of sales and $8.8 million included in operating
expenses. The costs include investment banking and financial
advisory fees, other professional fees, team member costs which relate to
termination of certain team members with redundant job functions and relocation
cost, write-off of certain inventory deemed non-salable due to the merger,
accrual for contractual liability to a third party and other merger related
expenses. In addition, operating expenses include Crossroads settlement costs
of $16.6 million and $17.0 million during the three and nine month periods
ended July 31, 2001, respectively.

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

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##### Table of Contents



Results of Operations

Net Sales.Net sales increased during the third quarter of fiscal 2001 to
$85.0 million, an increase of 16% from $73.4 million in the comparable quarter
of fiscal 2000. Net sales for the nine months ended July 31, 2001 and 2000
were $273.5 million and $206.1 million, respectively. For the nine months
ended July 31, 2001 net sales increased 33% over the comparable period in
fiscal 2000. The increase in both comparison periods in fiscal 2001 was
primarily due to increased sales to our OEM customers. For the nine months
ended July 31, 2001 and 2000, OEM sales comprised 41% and 20% of total sales,
respectively. The growth in OEM sales is primarily a result of a significant
ramp in sales to a relatively new OEM customer and new products being sold to
existing OEM customers, which were not included in the comparable periods in
2000. Sales to our other OEM customers have increased 22% for the nine months
ended July 31, 2001 compared to the same period in 2000.

Cost of Sales.Cost of sales were $61.6 million and $47.3 million for the
three month periods ended July 31, 2001 and 2000, respectively. During the
nine month periods ended July 31, 2001 and 2000, cost of sales were $192.6
million and $131.7 million, respectively. As a percentage of net sales, cost
of sales was 73% and 64% for the third quarter 2001 and 2000, respectively.
For the nine month periods ended July 31, 2001 and 2000, cost of sales as a
percentage of net sales was 70% and 64%, respectively. The increase in cost of
sales as a percentage of net sales is primarily attributable to lower volumes
than anticipated. In addition, OEM sales, which usually have lower gross
margins, represented a greater percentage of our total sales in fiscal 2001
compared to fiscal 2000.

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

Selling and Administrative Expenses.Selling and administrative expenses
were $15.9 million or 19% of net sales for the three months ended July 31, 2001
compared to $14.0 million or 19% of net sales for the same period in fiscal
2000. For the nine month period ended July 31, 2001, selling and
administrative expenses were $45.5 million or 17% of net sales compared to
$38.8 million or 19% of net sales for the same period in fiscal 2000. Selling
and administrative expenses have increased in absolute dollars due to an
increase in costs associated with the launching of new products and continued
efforts to penetrate new sales channels. As a percentage of net sales they
have remained fairly constant or decreased due to the increase in OEM sales,
which generally have lower related sales and marketing costs. We expect to
increase selling and administrative expenditures to support new product
offerings and expand our sales organization.

Research and Development Expenses.Research and development expenses
increased to $7.1 million for the third quarter of fiscal 2001 compared to $5.1
million for the third quarter of fiscal 2000. During the nine months ended
July 31, 2001 we incurred research and development expenses of $20.2 million
compared to $14.4 million for the same period in fiscal 2000. Research and
development expenses increased 40% during both the three month and nine month
periods ended July 31, 2001 over comparable periods in fiscal 2000. As a
percentage of net sales during the third quarter, research and

9



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##### Table of Contents



development expenses were 8% and 7% for 2001 and 2000, respectively. For
both years research and development spending remained at 7% of net sales during
the nine month periods. We intend to continue to increase our investment in
research and development to solidify our market position in intelligent storage
solutions. We believe that significant investments in research and development
are required to remain competitive. Consequently, we expect to incur increased
research and development expenses both in absolute dollars and as a percentage
of sales in future periods.

Crossroads Settlement Costs.For the three month and nine month periods
ended July 31, 2001 we incurred $16.6 million and $17.0 million in settlement
costs, respectively. The costs include payment to Crossroads for a settlement
agreement related to litigation brought against Pathlight, associated legal
fees and other settlement related costs. The litigation was pending against
Pathlight prior to our merger. In connection with the settlement,
approximately 500,000 shares that were held in escrow were returned to ADIC and
canceled.

Other Income (Expense).Other income was $4.0 million for the third
quarter of fiscal 2001 and $17.2 million for the third quarter of fiscal 2000.
For the nine months ended July 31, 2001, other income was $9.5 million compared
to $97.8 million for the same period in fiscal 2000. The decrease in interest
income in both the three months and nine months ended July 31, 2001, is the
result of a reduction of our cash balances which were used to pay acquisition
and litigation costs associated with the Pathlight merger and also to fund
increases in accounts receivable, inventories, service parts for maintenance
and a decrease in taxes payable. Interest expense relates to interest on
operating credit lines through a German bank and capital lease obligations.
During the three months and nine months ended July 31, 2001, other income
includes gains of $2.3 million and $3.4 million, respectively, on certain
marketable equity securities transactions. During the three months and nine
months ended July 31, 2000 other income included a gain of $14.3 million and
$88.8 million, respectively, on the sale of a portion of our equity interest in
Crossroads Systems, Inc.

Provision (Benefit) for Income Taxes.For the three months ended July 31,
2001 and 2000, the provision (benefit) for income taxes was $(6.6) million and
$7.6 million, respectively. Our effective income tax rate was (26)% for the
third quarter of 2001 as compared to 32% in the comparable period of fiscal
2000. The decrease in the effective income tax rate in fiscal 2001 is due to
certain one-time costs related to the acquisition of Pathlight, which are not
deductible.

Liquidity and Capital Resources

Cash flows used in operating activities were $44.0 million for the nine
months ended July 31, 2001, and $12.2 million for the same period in fiscal
2000. In fiscal 2001, operating cash was used for payment of nonrecurring
charges related to the Crossroads settlement costs and the Pathlight
acquisition costs of $16.1 million and $2.7 million, respectively. In
addition, we used operating cash to fund increases in accounts receivable,
inventories and service parts for maintenance along with decreases in accrued
liabilities and income taxes payable, and was offset by depreciation, other
allowances and an increase in accounts payable and deferred revenue. The
increase in inventory since the end of fiscal 2000 is primarily the result of
the additional inventory requirements necessary to support our OEM customers,
new ADIC branded product launches and sales growth. In addition, service parts
for maintenance have increased in order to continue to maintain our existing
installed base of solutions. In fiscal 2000, operating cash was used to fund
increases in accounts receivable and inventories and was offset primarily by
net income and growth in accounts payable and income taxes payable.

Cash flows provided by investing activities were $2.3 million for the
first nine months of fiscal 2001. In the comparable period of fiscal 2000,
investing activities provided cash of $53.1 million. In fiscal 2001, cash
flows include proceeds from certain marketable equity securities transactions.
Fiscal

10



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##### Table of Contents



2000 reflects the proceeds from the sale of Crossroads and other
marketable equity securities, and is partially offset by additional investments
in marketable equity securities. Both periods reflect investments in property,
plant and equipment. Capital expenditures have generally been comprised of
purchases of computer hardware and software as well as manufacturing and
engineering equipment.

Cash flows provided by financing activities during the first nine months
of fiscal 2001 were $1.1 million, compared to $10.5 million provided during the
same period of fiscal 2000. During the first nine months of fiscal 2001,
proceeds from the exercise of stock options were $3.2 million, while the same
period of fiscal 2000 included proceeds of $12.7 million. Offsetting the above
proceeds in both periods were certain payments on a bank line of credit,
long-term debt and capital lease obligations.

At July 31, 2001, our cash and cash equivalents totaled $153.8 million,
down from $194.3 million at October 31, 2000. Our working capital, the
difference between current assets and current liabilities, was $255.2 million
and $262.0 million at July 31, 2001 and October 31, 2000, respectively. The
ratio of current assets to current liabilities for both periods was 4.7 to 1.
During the quarter we committed to new building leases in Englewood, Colorado
and Ithaca, New York.

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 are complementary to those of the Company, which may require
the use of cash.




Item 3. Quantitative and Qualitative Disclosures about Market Risk Management

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

The assets and liabilities of our non-U.S. subsidiaries have functional
currencies other than the U.S. dollar and are translated into U.S. dollars at
exchange rates in effect at the balance sheet date. Income and expense items
are translated at the average exchange rates prevailing during the period. A
10% depreciation in the U.S. dollar would result in an approximately $400,000
increase in income before provision for income taxes for the first nine months
of fiscal 2001.

At July 31, 2001, we had variable rate debt of approximately $3.6 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 sheets at July 31, 2001. 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%.

11



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##### Table of Contents






PART II  OTHER INFORMATION




Item 1. Legal Proceedings.

No material pending litigation.




Item 2. Changes in Securities.

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

The shares of common stock issuable by ADIC upon exercise of the Assumed
Warrants have not been registered under the Securities Act of 1933, as amended,
and have been issued upon exercise of Assumed Warrants in reliance on the
exemption from registration provided by Section 4(2) of the Securities Act, on
the basis that the Assumed Warrants were issued to, and are held by, a limited
number of accredited investors. The following table sets forth information
with respect to unregistered shares of ADIC common stock that were issued upon
exercise of Assumed Warrants during the quarter ended July 31, 2001:

|        |         |           |  |                                             |  |           |         |  |  |           |         | 
|------- | ------- | --------- |  | ------------------------------------------- |  | --------- | ------- |  |  | --------- | ------- | 
|        |         |           |  |                                             |  |           |         |  |  | Number of
|Date of |         |           |  | Consideration                               |  | Shares   
|Sale    |         | Purchaser |  | Paid                                        |  | Purchased
|        |         |           |  |                                             |  |          
|        | 5/15/01 |           |  | Hudson Venture Partners, L.P. (1)           |  | $         | 83,777  |  |  |           | 31,573  | 
|       
|       
|       
|       
|        | 6/11/01 |           |  | Charles DeRose (1)                          |  | $         | 3,749   |  |  |           | 1,385   | 
|       
|       
|       
|       
|        | 6/14/01 |           |  | Fred Martin, III                            |  | $         | 1,499   |  |  |           | 633     | 
|       
|       
|       
|       
|        | 6/14/01 |           |  | Corporate Venture Partners, L.P. (1)        |  | $         | 32,487  |  |  |           | 21,507  | 
|       
|       
|       
|       
|        | 6/21/01 |           |  | Arthur Shull                                |  | $         | 8,021   |  |  |           | 3,590   | 
|       
|       
|       
|       
|        | 6/21/01 |           |  | Fred Widding                                |  | $         | 8,021   |  |  |           | 3,590   | 
|       
|       
|       
|       
|        | 6/22/01 |           |  | Henry Bartels                               |  | $         | 4,997   |  |  |           | 4,053   | 
|       
|       
|       
|       
|        | 6/22/01 |           |  | Philip Bartels                              |  | $         | 4,997   |  |  |           | 4,053   | 
|       
|       
|       
|       
|        | 6/22/01 |           |  | Marlene Barken                              |  | $         | 3,749   |  |  |           | 1,583   | 
|       
|       
|       
|       
|        | 6/22/01 |           |  | Cutting Cars of Ithaca                      |  | $         | 3,749   |  |  |           | 1,583   | 
|       
|       
|       
|       
|        | 6/22/01 |           |  | R. Davis and Marion Cutting                 |  | $         | 2,996   |  |  |           | 1,266   | 
|       
|       
|       
|       
|        | 6/22/01 |           |  | John Marcham                                |  | $         | 1,499   |  |  |           | 633     | 
|       
|       
|       
|       
|        | 6/27/01 |           |  | David Ahlers                                |  | $         | 3,749   |  |  |           | 1,583   | 
|       
|       
|       
|       
|        | 6/27/01 |           |  | Cayuga Venture Fund                         |  | $         | 39,987  |  |  |           | 26,601  | 
|       
|       
|       
|       
|        | 6/28/01 |           |  | Onondaga Venture Capital Fund, Inc          |  | $         | 57,478  |  |  |           | 43,702  | 
|       
|       
|       
|       
|        | 7/05/01 |           |  | Integrated Acquisition and Development
Corp |  | $         | 7,497   |  |  |           | 3,166   | 
|       
|       
|       
|       
|        | 7/05/01 |           |  | James Billings                              |  | $         | 3,749   |  |  |           | 1,583   | 
|        |         |           |  |                                             |  |           |         |  |  |           |         | 
|        |         |           |  |                                             |  | $         | 272,001 |  |  |           | 152,084 | 
|        |         |           |  |                                             |  |           |         |  |  |           |         | 



---

|(1) |  | Assumed Warrants were exercised using the net exercise provision.
Shares were withheld in payment of the aggregate exercise price. The amount
shown in the consideration paid column is based on
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| |  | the fair value of ADIC Common Stock on the date of exercise. For Hudson
Venture Partners, L.P., an Assumed Warrant for 35,379 shares was exercised with
3,806 shares withheld; with respect to Charles DeRose, an Assumed Warrant for
1,583 shares was exercised with 198 shares withheld; with respect to Corporate
Venture Partners, L.P. an Assumed Warrant for 23,434 shares was exercised with
1,927 shares withheld.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




Item 3. Defaults Upon Senior Securities.

None.




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

None.




Item 5. Other Information.

None.




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

(a)  Exhibits

| |                |  |             |  |                                                                                             
| | -------------- |  | ----------- |  | --------------------------------------------------------------------------------------------
| | Exhibit Number |  | Description
| |                |  |            
| | 10.1           |  |             |  | Lease Agreement between Opus Northwest LLC and ADIC dated
July 2, 2001 (Englewood, Colorado)

(b)  Reports on Form 8-K



| | On May 25, 2001, we filed a report under Item 5 of Form 8-K relating to
the May 11, 2001 acquisition of Pathlight Technology, Inc. through a
merger of a wholly owned subsidiary of ADIC with and into Pathlight. The
merger was accounted for as a pooling-of-interests.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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##### Table of Contents






SIGNATURES

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



| | ADVANCED DIGITAL INFORMATION CORPORATION
| | ----------------------------------------



|Dated: September 12, 2001 | /s/   PETER H. VAN OPPEN
        Peter H. van Oppen, Chairman
        and Chief Executive Officer
|------------------------- | -------------------------------------------------------------------------------------------------



|Dated: September 12, 2001 | /s/   JON W. GACEK
        Jon W. Gacek, Senior Vice President
        and Chief Financial Officer (Principal
        Financial and Accounting Officer)
|------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------

14