ADIC Expects Third Quarter Revenue Will Increase 10-15 Percent as Economic Slowdown Dampens Growth; Profits to be Reduced, Spending Maintained as Opportunities Abound.

Business/High Tech Editors

REDMOND, Wash.--(BUSINESS WIRE)--July 19, 2001

Advanced Digital Information Corporation (Nasdaq:ADIC) today announced that sales for the third quarter ending July 31, 2001 are likely to grow 10-15 percent from the same period last year to $81-$85 million versus earlier estimates of $100 million for the period.

Revenue growth rates are adjusted to reflect combined results for ADIC(R) and its Pathlight Technology subsidiary in both years. Annual sales growth is expected to be 23-29 percent for the quarter when compared to actual ADIC results as originally reported for third period of fiscal 2000.

The Company also reduced sales expectations for the fourth quarter ending October 31 to a range of $85-$95 million from earlier estimates of approximately $112 million. Operating earnings are expected to be approximately breakeven for each quarter before adding other income. Anticipated third quarter earnings estimates exclude the effect of previously disclosed charges of approximately $12 million associated with the acquisition of Pathlight and approximately $16 million associated with a previously announced patent litigation settlement and related legal costs. The after tax cost of the litigation settlement was substantially offset by a reduction in the number of shares issued to purchase Pathlight although the cash payment will be reflected in third quarter results.

"Although ADIC continues to grow at rates significantly faster than most of our peers, we are definitely feeling the effects of customers delaying purchases as a result of the economic slowdown in both the U.S. and Europe. The effect has been about equally noticeable in our branded and OEM businesses which we expect will retain approximately similar proportions of our overall business as they had in the immediately preceding quarter," according to Chairman and Chief Executive Officer Peter van Oppen.

"We continue to identify outstanding opportunities for both our hardware and software technologies in branded and OEM channels," van Oppen said. "Our confidence in the long-term attractiveness of the storage solutions market and our continuing strength relative to our competitors has caused us to reaffirm our spending plans and priorities despite the slower growth in near-term sales. Continued product and market investment in the face of slower growth rates has caused us to reduce our near-term profit expectations but such investment is expected to pay off regardless of moderate economic weakness," he said.

The Company also confirmed that it has begun shipping library products incorporating Pathlight's intelligent connectivity and SAN Management tools to its largest OEM partners. "We may see some re-acceleration of our growth rate as these new products begin to get traction in our branded and OEM channels and our new SCALAR 10K product continues its sales ramp," according to President and Chief Operating Officer Chuck Stonecipher, "But," he cautioned, "economic uncertainty makes it too early to begin forecasting a quick return to our anticipated 35-40 percent growth rates."

The Company expects to release final results for the third quarter after the close of the market on August 15, 2001.

About ADIC

Advanced Digital Information Corporation (Nasdaq:ADIC) is a leading storage solutions provider to the open systems marketplace, offering a broad range of Intelligent Storage(TM) products designed to enhance organizations' abilities to store, protect, manage and use their rapidly growing network data. ADIC products include technology-independent automated storage systems, specialized storage management software, and multiple-protocol storage networking (SAN/NAS) connectivity and management tools. ADIC storage products are available through a worldwide sales force and a global network of resellers and OEMs, including Dell, EMC, Fujitsu-Siemens and IBM.

Further information about ADIC is available at www.adic.com.

This release contains forward-looking statements relating to the Company's future operating results and future products and services that are subject to risks and uncertainties that could cause actual results to differ materially from those projected. The words "expect", "anticipate", and similar expressions identify forward-looking statements, but their absence does not mean that the statement is not forward-looking. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Factors that could affect the Company's actual results include general economic trends, purchase deferrals by customers, technical competition or obsolescence, supply constraints, changes in market pricing and production problems. Reference is made to the Company's Quarterly Report on Form 10-Q for the quarter ended April 30, 2001 for a more detailed description of factors that could affect the Company's actual results. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. The Company undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date of this release or to reflect the occurrence of unanticipated events.

ADIC and Scalar are registered trademarks and Intelligent Storage is a trademark of Advanced Digital Information Corporation. All other product or service marks mentioned in this release should be considered the property of their respective owners.