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Winnersh, Berkshire - Feb. 17, 2006 - ADVANCED DIGITAL INFORMATION CORPORATION (NASDAQ:ADIC) today announced net earnings of $4.4 million, or seven cents per share, on record first quarter revenues of $119.2 million for the period ended January 31, 2006. The Company lost $270,000, or zero cents per share, on sales of $110.8 million during the same period a year ago and earned $6.4 million, or 11 cents per share, on sales of $126.2 million in the immediately preceding fourth quarter.

First quarter net income was up nearly $4.7 million over the same period last year, despite the inclusion of $1.4 million in non-cash stock compensation expense recognised in the period. As a result of new accounting standards, the company began including non-cash stock compensation expense in its results during the just completed quarter. Previous financial periods were not required to be restated to reflect this change.

"We are pleased to report record sales for a first quarter and our second highest quarterly sales ever," said Peter van Oppen, Chair and Chief Executive Officer. "Our new Scalar i500 midrange library, which began shipping in mid-November, is demonstrating significant traction with end-user customers through both our branded and OEM channels," he said. "Clearly, mid-range customers are finding the ADIC iLayer technology offered by the i500 as attractive as have higher-end customers using our hugely successful i2000 enterprise library," according to van Oppen. "The early success of this new product demonstrates further confirmation of our ongoing investment in intelligent storage solutions. The i500 is off to a great start and we are continuing to see strong branded growth in the existing i2000 product as well," he concluded.

Gross profit as a percentage of sales for the period was 29.4 percent, down very slightly from 29.6 percent reported during the same period a year ago and down approximately 250 basis points from the immediately preceding quarter. The sequential change in gross margin percentage is significantly affected by seasonal changes in the mix of OEM and branded business.

OEM revenue, driven by new product launches and the end of the fiscal year of our two largest OEM customers, surged 16 percent sequentially to 42 percent of total sales for the quarter. OEM sales were also approximately 42 percent of sales during first quarter 2005. ADIC branded sales experienced typical first quarter weakness, but were up seven percent over the first quarter of last year and represented 58 percent of total sales. Over half of the sequential decline in branded business reflected the effect of budgeting cycles on Federal Systems business. The Company believes gross margins on similar products are typically significantly lower when sold through OEM channels and that the seasonal mix shift in OEM versus ADIC branded business is the primary cause of the sequential decline in gross margin as a percentage of sales.

Quarterly operating expenses were down $1.7 million, or nearly five percent, sequentially and flat versus the first quarter last year. The sequential decrease reflects the inclusion in fourth quarter operating expenses of $1.3 million in costs related to the closure of facilities and restructuring activities as well as a first quarter reduction in R&D costs associated with the initiation of production shipments of the Scalar(R) i500 library product in November. Comparison of quarterly operating expenses to the same quarter last year demonstrates the benefits of the facilities closure and lower costs in R&D which are offset by higher sales, marketing and administrative expenses in the just completed quarter. Fourth quarter and first quarter 2005 operating expenses also exclude non-cash stock compensation expense, this is included in reported results for first quarter 2006.

Other income reached almost $3 million for the period, up from $1.1 million in first quarter 2005 and $1.3 million in the preceding fourth quarter. First quarter other income includes a gain of $759,000 on the sale of certain marketable securities as well as increases in interest income due to higher rates and higher cash balances. The Company also reported a $594,000 benefit from income taxes during the period as a result of the reversal of a tax allowance related to taxes paid outside the United States, release of a tax contingency related to final resolution of state income tax audits and the tax impact of non-cash stock option expenses.
Total cash and marketable securities reached $265.3 million at the end of the period, up from $252.6 million at the end of the fourth quarter. Net cash provided by operating activities was $15.0 million for the period and there were no shares of common stock repurchased during the period.

First quarter 2006 results are unaudited. Final audited results for fiscal 2005 are available in the Company's Annual Report on Form 10-K which was filed on January 17, 2006.

About ADIC
Advanced Digital Information Corporation (NASDAQ:ADIC) is a leading provider of Intelligent Storage solutions to the open systems marketplace. ADIC is the world's largest supplier of automated tape systems using the drive technologies most often employed for backing up open system, client-server networks. (a) The Company's data management software, storage networking appliances, and disk-based backup and restore solutions provide IT managers innovative tools for storing, managing and protecting their most valuable digital assets in a variety of disk and tape environments. ADIC storage products are available through a worldwide sales force and a global network of resellers, OEMs and partnerships, including Apple, Cray, Dell, EMC, Fujitsu-Siemens, HP, IBM and Sun. Further information about ADIC is available at

(a) Market Share: Gartner Dataquest, Tape Automation Systems Market Shares, 2004, F. Yale, August 2005. ADIC and Scalar are registered trademarks and Intelligent Storage is a trademark of Advanced Digital Information Corporation. All other trade or service marks mentioned in this document should be considered the property of their respective owners.

This release contains forward-looking statements relating to the Company's future products and services and future operating results 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, acceptance of new products, success of new sales channels, technical competition or obsolescence, supply constraints, changes in market pricing, production problems and the Company's ability to complete announced restructurings on schedule. Reference is made to the Company's Annual Report on F
orm 10-K for the year ended October 31, 2005 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.

For interviews, further information or photography please contact:
Hazel Butters or Kate Boulby at Prompt Communications
Tel: 020 8996 1653 / Out of hours: 07780 687813 / kboulby@prompt-communications

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