This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. The statements contained in this document that are not purely historical are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including, without limitation, statements regarding our expectations, beliefs, intentions or strategies regarding our business, including, but not limited to, our anticipated declines in revenues from our parallel SCSI products and our serial legacy products sold to our OEM customers, the expected benefits of our recent acquisition of Aristos Logic Corporation, the possibility that we might enter into strategic alliances, partnerships or additional acquisitions in order to scale our business, the expected impact on our future revenues, and the timing of such impact, of our failure to receive design wins for the next generation serial products from a significant customer, the anticipated impact of the restructuring plan we implemented in the first quarter fiscal 2009, the possibility that additional significant charges may be recorded by us in the future in light of an ongoing strategic review of our business by management, the expected gain on extinguishment of debt we expect to record due to our repurchase of our outstanding convertible notes on the open market, the possibility that we might purchase more of these convertible notes on the open market prior to December 2008 when the holders of the convertible notes are expected to exercise their put rights, the potential need to record impairment charges for goodwill, other intangible assets or marketable securities based on current market conditions and our expected liquidity in future periods. We may identify these statements by the use of words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "potential," "predict," "project," "should," "will," "would" and other similar expressions. All forward-looking statements included in this document are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements, except as may otherwise be required by law.

Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth in the "Risk Factors" section and elsewhere in this document. In evaluating our business, current and prospective investors should consider carefully these factors in addition to the other information set forth in this report.

While management believes that the discussion and analysis in this report is adequate for a fair presentation of the information presented, we recommend that you read this discussion and analysis in conjunction with our Annual Report on Form 10-K/A for the fiscal year ended March 31, 2008.

Basis of Presentation

On September 3, 2008, we completed the acquisition of Aristos Logic Corporation, or Aristos, a provider of RAID technology to the data storage industry, pursuant to an Agreement and Plan of Merger dated as of August 27, 2008, or the Merger Agreement, by and among Adaptec, Aristos, Ariel Acquisition Corp., a wholly owned subsidiary of ours, and TPG Ventures, L.P., solely in its capacity as the representative of stockholders of Aristos. The Merger Agreement provided for our acquisition of Aristos through a merger in which Aristos became our wholly-owned subsidiary. The Aristos acquisition was accounted for as a purchase business combination and, accordingly, the results of Aristos have been included in our unaudited condensed consolidated results of operation and financial position from the date of acquisition.

On June 27, 2008, we completed the sale of the Snap Server NAS portion of our former SSG segment, or Snap Server NAS business, to Overland Storage, Inc., or Overland. This business has been accounted for as discontinued operations. Accordingly, we have reclassified the underlying Unaudited Condensed Consolidated Statements of Operations and Cash Flows and related disclosures for all periods presented to reflect the Snap Server NAS business as discontinued operations. These reclassifications had no impact on net income (loss), total assets or total stockholders' equity. Unless otherwise indicated, and other than our Unaudited Condensed Consolidated Balance Sheet at March 31, 2008, the following discussion pertains only to our continuing operations.

We revised our internal organizational structure in conjunction with the sale of our Snap Server NAS business in June 2008. Our former SSG segment provided (1) Snap Server branded file-based NAS storage systems, which were sold to end users through our network of distribution partners, solution providers, e-tailers and VARs, and (2) block-based iSCSI storage solution products. The historical financial results relating to the block-based iSCSI storage solution products of our former SSG segment, which were minimal to our overall financial results, were retained. The remainder of our former SSG segment represented results from discontinued operations. Following the revision to our internal reporting structure, we now operate in one segment.

For your convenience, we have included, in Note 19 to the Notes to the Unaudited Condensed Consolidated Financial Statements, a Glossary that contains a list of
(1) key acronyms commonly used in our industry that are used in this Quarterly Report and (2) accounting rules and regulations that are also referred to in this report. These key acronyms and accounting rules and regulations are listed in alphabetical order.

Overview

In the second quarter of fiscal 2009, our net revenues decreased 16% as compared to the second quarter of fiscal 2008 primarily due to the declining revenue base of our parallel SCSI products. Our net revenues were further impacted by our inability to obtain design wins from our OEM customers, primarily for our next generation serial products. We expect revenues from our parallel SCSI and serial legacy products sold to OEM customers to continue to decline in fiscal 2009. Our gross margins in the second quarter of fiscal 2009 improved to 42% compared to 36% in the second quarter of fiscal 2008 primarily due to improved standard product contributions as a result of our end-to-end supply chain efficiencies. In addition, we experienced favorable product and customer mix during the second quarter of fiscal 2009. Operating expenses decreased in the second quarter of fiscal 2009 as compared to the second quarter of fiscal 2008 primarily as a result of cost reductions and restructuring efforts that were initiated in previous quarters combined with additional attrition in our workforce.

Our future revenue growth is largely dependent on the success of our new and future products, obtaining and fulfilling our obligations on OEM design wins, and growing our market share in the channel. In September 2008, we acquired Aristos for a purchase price of $38.9 million, plus an obligation to pay up to $2.4 million contingent upon the employment of certain Aristos employees. We expect that the acquisition of Aristos will allow us to expand into adjacent RAID segments that we believe provide us with growth opportunities, including blade servers, enterprise-class external storage systems and performance desktops, and will provide us with a strong ASIC roadmap. This acquisition should also enable us to pursue new OEM opportunities and expand our future channel product offerings containing unified serial technologies. For example, in the second quarter of fiscal 2009, we announced a design win from IBM for our RAID Storage Processor technology, which was enabled by the Aristos acquisition. However, we cannot predict the extent to which the potential benefits of this acquisition will offset our declining OEM revenue from both our serial legacy products sold to OEM customers and our parallel SCSI products considering our loss in market share and the potential adverse impact on our business of current economic conditions. We will continue to seek additional growth opportunities beyond those presented by our existing product lines by entering into strategic alliances, partnerships or other acquisitions in order to scale our business. We will also continue to review and evaluate our existing product portfolio, operating structure and markets to determine the future viability of our existing products and market positions.

We expect our selling, marketing and administrative expense to remain relatively flat in the third quarter of fiscal 2009 compared to the second quarter of fiscal 2009, as the expenses we obtained from the Aristos acquisition will offset the anticipated cost savings from our reductions in our workforce. We expect our research and development expense to increase in future periods as we invest further in the development of our technology in order to pursue the opportunities enabled by the Aristos acquisition. We also expect our expenses to increase in future periods as we record amortization expense for the intangible assets from the Aristos acquisition.

In addition, in July 2008, we entered into a three- year strategic development agreement with HCL Technologies Limited, or HCL, to provide product development and engineering services for our product portfolio. Under the terms of the agreement, HCL agreed to employ certain of our former engineering employees, who will work exclusively on our engineering projects. We did not incur any one-time charges in the second quarter of fiscal 2009 in connection with this strategic alliance.

We implemented a restructuring plan in the first quarter of fiscal 2009 that was designed to reduce our operating expenses due to a declining revenue base, streamline our operations and better align our resources with our strategic business objectives. The total cost incurred as of September 26, 2008 for this restructuring plan was $3.4 million, of which $1.8 million was recorded in the first quarter of fiscal 2009 and $1.6 million was recorded in the second quarter of fiscal 2009 in "Restructuring charges" in the Unaudited Condensed Consolidated Statement of Operations. In light of an ongoing strategic review of our business by management, additional significant charges may be recorded by us in the future.

Due to the deterioration of macroeconomic conditions, which has impacted, and will likely continue to impact, information technology spending, we could experience reduced revenue from the sales of our products and services over the next several quarters. If the deterioration of macroeconomic conditions continues to worsen and our business performance declines, we may be required to record impairment charges for goodwill and other intangible assets in the future. Our marketable securities may also decline in value and such decline may be deemed to be other-than-temporary, which would require us to record an impairment charge that would adversely impact our financial results.

Results of Operations

The following table sets forth the items in the Unaudited Condensed Consolidated
Statements of Operations as a percentage of net revenues (references to notes in
the footnotes to this table are to the Notes to Unaudited Condensed Consolidated
Financial Statements appearing in this report):


                                                                     Three-Month Period Ended  Six-Month Period Ended
                                                                   ------------------------  ------------------------
                                                                   September 26,September 28,September 26,September 28,
                                                                    2008 (1)     2007 (2)     2008 (3)     2007 (4)
                                                                   -----------  -----------  -----------  -----------
Net revenues                                                              100 %        100 %        100 %        100 %
Cost of revenues (inclusive of amortization of
    acquisition-related intangible assets)                                 58           64           56           66
                                                                   -----------  -----------  -----------  -----------
    Gross margin                                                           42           36           44           34
                                                                   -----------  -----------  -----------  -----------
Operating expenses:
    Research and development                                               15           25           17           27
    Selling, marketing and administrative                                  28           34           29           36
    Amortization of acquisition-related intangible assets                   0            2            0            1
    Restructuring charges                                                   5           10            5            7
    Other charges (gains)                                                  --            0           --           (8)
                                                                   -----------  -----------  -----------  -----------
        Total operating expenses                                           48           71           51           63
                                                                   -----------  -----------  -----------  -----------
Loss from continuing operations                                            (6)         (35)          (7)         (29)
Interest and other income, net                                             20           21           18           20
Interest expense                                                           (2)          (2)          (2)          (3)
                                                                   -----------  -----------  -----------  -----------
Income (loss) from continuing operations before income taxes               12          (16)           9          (12)
Provision for income taxes                                                  2            1            4            1
                                                                   -----------  -----------  -----------  -----------
Income (loss) from continuing operations, net of taxes                     10          (17)           5          (13)
                                                                   -----------  -----------  -----------  -----------
Discontinued operations, net of taxes
    Loss from discontinued operations, net of taxes                        --           (3)          (1)          (2)
    Income (loss) from disposal of discontinued operations,
        net of taxes                                                       --           (0)           9           (0)
                                                                   -----------  -----------  -----------  -----------
        Income (loss) from discontinued operations, net of taxes           --           (3)           8           (2)
                                                                   -----------  -----------  -----------  -----------
Net income (loss)                                                          10 %        (20)%         13 %        (15)%
                                                                   ===========  ===========  ===========  ===========


____________

The following actions affect the comparability of the data for the periods presented in the above table:

(1) In the second quarter of fiscal 2009, we recorded restructuring charges related to a restructuring plan we implemented in the first quarter of fiscal 2009 and recorded adjustments to previous restructuring plans, incurring restructuring charges of $1.4 million.

(2) In the second quarter of fiscal 2008, we implemented a restructuring plan and recorded adjustments to previous restructuring plans, incurring restructuring charges of $3.4 million.

(3) In the first half of fiscal 2009, we implemented a restructuring plan and recorded adjustments to previous restructuring plans, incurring restructuring charges of $3.2 million.

(4) In the first half of fiscal 2008, we recorded a gain of $6.7 million on the sale of certain properties and implemented two restructuring plans, incurring restructuring charges of $5.0 million.

Net Revenues.



                                              Three-Month Period Ended               Six-Month Period Ended
                                     -------------------------------------   -------------------------------------
                                     September 26, September 28, Percentage  September 26, September 28, Percentage
                                         2008          2007       Change         2008          2007       Change
                                     ------------  ------------  ---------   ------------  ------------  ---------
                                                                (in millions, except percentages)
Net Revenues
                                    $       31.7  $       37.7        (16)% $       63.2  $       73.8        (14)%

Net revenues decreased by $6.0 million and $10.6 million in the second quarter and first half of fiscal 2009, respectively, compared to the corresponding periods of fiscal 2008, primarily due to a decline in sales volume of our parallel SCSI products of $9.3 million and $14.1 million, respectively, and, to a lesser extent, an overall decline in sales volume of our serial products sold to OEM customers of $2.4 million and $5.5 million, respectively, despite the one month of product sales resulting from the acquisition of Aristos. This was partially offset by an increase in average selling prices and sales volumes of our serial products sold to channel customers of $4.4 million and $8.1 million in the second quarter and first half of fiscal 2009, respectively, compared to the corresponding periods of fiscal 2008, due to increased acceptance of these products. The decline in sales volume of our parallel SCSI products was primarily attributable to the industry transition from parallel to serial products, in which we have a lower market share. The decline in sales volume of our serial legacy products sold to OEM customers was primarily attributable to the fact that certain of our OEM customers have moved to other suppliers to obtain next generation serial technologies. We expect net revenues for our parallel SCSI products and serial legacy products sold to OEM customers to continue to decline in future quarters, but expect to gain future opportunities to sell serial products to OEMs as a result of the Aristos acquisition.

                                                                     Three-Month Period Ended  Six-Month Period Ended
                                                                   ------------------------  ------------------------
                                                                   September 26,September 28,September 26,September 28,
                                                                      2008         2007         2008         2007
                                                                   -----------  -----------  -----------  -----------
Geographical Revenues:
North America                                                              30 %         37 %         34 %         39 %
Europe                                                                     33 %         26 %         33 %         27 %
Pacific Rim                                                                37 %         37 %         33 %         34 %
                                                                   -----------  -----------  -----------  -----------
    Total Geographical Revenues                                           100 %        100 %        100 %        100 %
                                                                   ===========  ===========  ===========  ===========

Our North America revenues decreased as a percentage of our total revenues by 7% and 5% in the second quarter and first half of fiscal 2009, respectively, compared to the corresponding periods of fiscal 2008 primarily due to a decline in product sales to our OEM customers and to our customers shifting their third party manufacturing locations from North America to international sites. Our combined international revenues increased as a percentage of our total revenues by 7% and 5% in the second quarter and first half of fiscal 2009, respectively, compared to the corresponding periods of fiscal 2008 primarily due to increased sales and acceptance of our serial products sold to both channel and OEM customers.

A small number of our customers account for a substantial portion of our net revenues, and we expect that a limited number of customers will continue to represent a substantial portion of our net revenues for the foreseeable future. In the second quarter of fiscal 2009, IBM, Bell Micro and Ingram Micro accounted for 36%, 13% and 10% of our total net revenues, respectively. In the second quarter of fiscal 2008, IBM accounted for 39% of our total net revenues. In the first half of fiscal 2009, IBM and Ingram Micro accounted for 35% and 11% of our total net revenues, respectively. In the first half of fiscal 2008, IBM accounted for 41% of our total net revenues.

Gross Margin.



                                              Three-Month Period Ended               Six-Month Period Ended
                                     -------------------------------------   -------------------------------------
                                     September 26, September 28, Percentage  September 26, September 28, Percentage
                                         2008          2007       Change         2008          2007       Change
                                     ------------  ------------  ---------   ------------  ------------  ---------
                                                                (in millions, except percentages)
Gross Profit                        $       13.3  $       13.5         (1)% $       28.0  $       25.0         12 %
Gross Margin                                  42 %          36 %                      44 %          34 %

The improvement in gross margins in the second quarter and first half of fiscal 2009 compared to the corresponding periods of fiscal 2008 was due to improved standard product contributions as a result of our end-to-end supply chain efficiencies. In addition, the improvement in gross margins was also due to the favorable product and customer mix we achieved during the second quarter and first half of fiscal 2009, which was primarily driven by a shift in mix of 12% from OEM to channel customers, with channel customers having higher average margins. Our gross margins, however, were negatively impacted in the second quarter and first half of fiscal 2009 by the amortization of acquisition-related intangible assets of $0.4 million related to the purchased intangible assets for core and existing technologies and backlog from the acquisition of Aristos.

Research and Development Expense.



                                              Three-Month Period Ended               Six-Month Period Ended
                                     -------------------------------------   -------------------------------------
                                     September 26, September 28, Percentage  September 26, September 28, Percentage
                                         2008          2007       Change         2008          2007       Change
                                     ------------  ------------  ---------   ------------  ------------  ---------
                                                                (in millions, except percentages)
Research and development            $        4.9  $        9.4        (48)% $       10.8  $       19.9        (46)%

The decrease in research and development expense in the second quarter and first half of fiscal 2009 compared to the corresponding periods of fiscal 2008 was primarily due to reduced headcount and related expenses as a result of restructuring programs implemented in fiscal 2008 and the first quarter of fiscal 2009, combined with additional attrition in our workforce, which was reflected by a 58% decrease in headcount for employees engaged in research and development. We expect our research and development expense to increase in future periods as we invest further in the development of our technology in order to pursue the opportunities enabled by the Aristos acquisition.

Selling, Marketing and Administrative Expense.



                                              Three-Month Period Ended               Six-Month Period Ended
                                     -------------------------------------   -------------------------------------
                                     September 26, September 28, Percentage  September 26, September 28, Percentage
                                         2008          2007       Change         2008          2007       Change
                                     ------------  ------------  ---------   ------------  ------------  ---------
                                                                (in millions, except percentages)
Selling, marketing and
    administrative                  $        8.8  $       13.0        (32)% $       18.3  $       26.4        (31)%

The decrease in selling, marketing and administrative expense in the second quarter and first half of fiscal 2009 compared to the corresponding periods of fiscal 2008 was primarily a result of reductions in our workforce and infrastructure spending as a result of the restructuring plans we implemented in fiscal 2008 and the first quarter of fiscal 2009, which resulted in a 37% decrease in our average headcount for employees engaged in selling, marketing and administrative functions. We expect our selling, marketing and administrative expense to remain relatively flat in the third quarter of fiscal 2009 compared to the second quarter of fiscal 2009, as the expenses we obtained from the Aristos acquisition will offset the anticipated cost savings from our reductions in our workforce.

Amortization of Acquisition-Related Intangible Assets.



                                              Three-Month Period Ended               Six-Month Period Ended
                                     -------------------------------------   -------------------------------------
                                     September 26, September 28, Percentage  September 26, September 28, Percentage
                                         2008          2007       Change         2008          2007       Change
                                     ------------  ------------  ---------   ------------  ------------  ---------
                                                                (in millions, except percentages)
Amortization of acquisition-related
    intangible assets               $        0.1  $        0.6        (83)% $        0.1  $        1.3        (92)%

Acquisition-related intangible assets include core and existing technologies, customer relationships, trade name and backlog. We amortize the acquisition-related intangible assets over periods which reflect the period in which the economic benefits of the assets are expected to be realized, which is primarily using the straight-line method over their estimated useful lives, ranging from three to sixty months.

The decrease in amortization of acquisition-related intangible assets in the second quarter and first half of fiscal 2009 compared to the corresponding periods of fiscal 2008 was primarily due to the fact that in the fourth quarter of fiscal 2008, we wrote off our intangible assets associated with our acquisition of Elipsan Limited due to a revision in our forecasts that resulted in expected negative long-term cash flows for these assets for the first time. This was offset by one month amortization of purchased intangible assets of $0.1 . . .