Digi International Reports Fourth Fiscal Quarter and Full Year 2009 Results

http://www.businesswire.com/news/home/20091029006371/en

MINNEAPOLIS--(Business Wire)--
Digi International Inc. (NASDAQ: DGII, www.digi.com)

Financial highlights for the quarter and fiscal year ended September 30, 2009
include:

* Digi reported revenue of $40.0 million for the fourth quarter of fiscal 2009
compared to $50.4 million in revenue for the fourth quarter of fiscal 2008, a
decrease of $10.4 million, or 20.6%. Revenue for the year ended September 30,
2009 (fiscal 2009) was $165.9 million compared to $185.1 million for the year
ended September 30, 2008 (fiscal 2008), a decrease of $19.2 million, or 10.3%.
* Earnings before taxes, depreciation, and amortization were $3.5 million for
the fourth quarter of fiscal 2009, or 8.8% of revenue, and $14.3 million, or
8.6% of revenue, for fiscal 2009.
* Digi generated cash from operations of $11.4 million for the fourth quarter of
fiscal 2009 and $15.7 million for fiscal 2009.
* Digi`s cash and cash equivalents and marketable securities balance, including
long-term marketable securities, was $75.8 million at September 30, 2009, an
increase of $8.9 million over the cash and cash equivalents and marketable
securities balance at June 30, 2009 and an increase of $2.1 million over the
comparable balance at September 30, 2008. Digi re-purchased 893,162 shares of
stock during fiscal 2009 for $6.6 million, and spent approximately $3.0 million
for the acquisition of substantially all of the assets of MobiApps Holdings
Private Limited (MobiApps).
* Digi maintained a strong balance sheet throughout fiscal 2009. The current
ratio at September 30, 2009 was 7.4 to 1 compared to 6.4 to 1 at September 30,
2008.

"Although our fiscal 2009 financial results were challenged by the current
worldwide economic environment, we are nonetheless pleased to report our
twenty-seventh consecutive quarter of profitability, a very strong balance
sheet, and the strengthening of the company`s product position in 2009," said
Joe Dunsmore, Digi's Chief Executive Officer. "This year Digi introduced 21 new
products, entered the satellite M2M market with the acquisition of MobiApps,
partnered with several leaders in the Smart Grid sector to bring cutting-edge
technology to energy suppliers and consumers, and was chosen for inclusion in a
new NASDAQ Smart Grid Infrastructure Index."

Below is a table setting forth certain GAAP and Non-GAAP results:

GAAP Results
(in thousands, except per share amounts) Q4 2009 Q4 2008 FY 2009 FY 2008
Net Sales $40,012 $50,417 $165,928 $185,056
Operating Income $1,103 $5,133 $3,070 $16,015
Net Income $959 $3,599 $4,083 $12,351
Net Income per Diluted Share $0.04 $0.14 $0.16 $0.47

Non-GAAP Results
(in thousands, except per share amounts) Q4 2009 Q4 2008 FY 2009 FY 2008
Net Sales $40,012 $50,417 $165,928 $185,056
Operating Income $1,103 $5,133 $5,023 (1) $18,260 (1)
Net Income $686 (1) $4,033 (1) $4,790 (1) $14,633 (1)
Net Income per Diluted Share $0.03 (1) $0.16 (1) $0.19 (1) $0.56 (1)

(1) A table with a detailed reconciliation between GAAP operating income to non-GAAP operating income and GAAP net income and net income per diluted share to non-GAAP net income and net income per diluted share is provided later in this earnings release.

Business Results for the Three Months Ended September 30, 2009

Digi reported revenue of $40.0 million for the fourth fiscal quarter of 2009
compared to $50.4 million for the fourth fiscal quarter of 2008, a decrease of
$10.4 million, or 20.6%.

Revenue from embedded products in the fourth fiscal quarter of 2009 was $18.8
million compared to $23.5 million in the fourth fiscal quarter of 2008, a
decrease of $4.7 million, or 19.9%. Revenue from non-embedded products was $21.2
million in the fourth fiscal quarter of 2009 compared to $26.9 million in the
fourth fiscal quarter of 2008, a decrease of $5.7 million, or 21.3%. The
strengthening of the US dollar compared to the Euro and UK pound sterling in the
fourth fiscal quarter of 2009 compared to the same quarter a year ago had an
unfavorable impact on revenue of $0.3 million.

Revenue by geographic region is shown below:

Revenue by Geographic Region
(in thousands of dollars)

Q4 FY 2009 Q4 FY 2008 FY 2009 FY 2008

EMEA (Europe, Middle East and Africa) $ 10,662 (1) $ 14,524 (1) $ 56,018 (1) $ 52,956 (1)

Latin America 1,165 1,324 3,624 5,092

North America 24,208 (2),(3) 29,122 (2) 90,708 (2),(3) 107,336 (2)

Asia Pacific 3,977 (3) 5,447 (3) 15,578 (3) 19,672 (3)

Total revenue $ 40,012 $ 50,417 $ 165,928 $ 185,056

(1) Includes Sarian revenue of $2.0 million and $16.2 million for the three and twelve months ended September 30, 2009, respectively. Also includes Sarian revenue of $3.3 million and $5.7 million for the three and twelve months ended September 30, 2008, from date of acquisition on April 28, 2008.
(2) Includes Spectrum revenue of $1.4 million and $4.5 million for the three and twelve months ended September 30, 2009, respectively. Also includes Spectrum revenue of $0.8 million for both the three and twelve months ended September 30, 2008, from date of acquisition on July 23, 2008.
(3) Includes MobiApps revenue of $0.1 million in North America and $0.2 million in Asia Pacific for the three months ended September 30, 2009. Includes MobiApps revenue of $0.1 million in North America and $0.3 million in Asia Pacific from date of acquisition on June 8, 2009.

Gross profit was $19.4 million in the fourth fiscal quarter of 2009 compared to
$25.9 million in the same period in the prior year. The gross margin was 48.5%
in the fourth fiscal quarter of 2009 compared to 51.5% in the fourth fiscal
quarter of 2008, a decline of 3.0 percentage points. The gross margin was lower
in the fourth fiscal quarter of 2009 than in the comparable period a year ago
due to unfavorable product mix within both the embedded and non-embedded
products.

Total operating expenses in the fourth fiscal quarter of 2009 were $18.3
million, or 45.8 % of revenue, compared to $20.8 million, or 41.3% of revenue,
in the fourth fiscal quarter of 2008. The decrease in operating expenses in the
fourth fiscal quarter of 2009 compared to the same quarter in the prior year is
primarily due to savings from the restructuring plan announced in the third
quarter of fiscal 2009 and the elimination of the incentive compensation program
for fiscal 2009, offset partially by incremental ongoing operating expenses for
Spectrum and MobiApps.

Net income was $1.0 million in the fourth fiscal quarter of 2009, or $0.04 per
fully diluted share, compared to $3.6 million, or $0.14 per fully diluted share,
in the fourth fiscal quarter of 2008. Non-GAAP net income and net income per
fully diluted share for the fourth fiscal quarter of 2009 and 2008 were $0.7
million, or $0.03 per fully diluted share, and $4.0 million, or $0.16 per fully
diluted share, respectively, as detailed elsewhere in this earnings release.

Business Results for the Twelve Months Ended September 30, 2009

For the twelve months ended September 30, 2009 (fiscal 2009), Digi reported
revenue of $165.9 million compared to revenue of $185.1 million for the twelve
months ended September 30, 2008 (fiscal 2008), a decrease of $19.2 million, or
10.3%. Revenue from embedded products in fiscal 2009 was $74.7 million compared
to $86.6 million in fiscal 2008, a decrease of $11.9 million, or 13.8 %. Revenue
from non-embedded products was $91.2 million in fiscal 2009 compared to $98.5
million in fiscal 2008, a decrease of $7.3 million, or 7.3%. Revenue from
embedded products in fiscal 2009 includes $4.5 million of Spectrum revenue and
$0.4 million of MobiApps revenue. Revenue from embedded products in fiscal 2008
includes $0.8 million of Spectrum revenue from date of acquisition. Revenue from
non-embedded products includes Sarian-branded revenue of $16.2 million and $5.7
million for fiscal 2009 and fiscal 2008, respectively.

For the twelve months ended September 30, 2009, Digi reported net income of $4.1
million, or $0.16 per fully diluted share, compared to net income for the twelve
months ended September 30, 2008, of $12.4 million, or $0.47 per fully diluted
share. Net income for fiscal 2009 was reduced by the charge for restructuring
expenses of $1.9 million, net of tax, or $0.07 per fully diluted share, offset
partially by tax benefits of $1.2 million, or $0.05 per fully diluted share,
resulting from the reversal of tax reserves associated with the extension of the
research and development credit, the resolution of certain state tax matters,
and the closing of a prior tax year. Net income for fiscal 2008 was reduced by
the charge for in-process research and development and other expenses associated
with the acquisition of Sarian of $2.1 million, or $0.08 per fully diluted share
and the write-down of an impaired investment of $0.7 million, or $0.03 per fully
diluted share, partially offset by a tax benefit of $0.5 million, or $0.02 per
fully diluted share, resulting from the reversal of tax reserves associated with
the closure of a prior tax year.

Digi`s cash and cash equivalents and marketable securities balance, including
long-term marketable securities, was $75.8 million at September 30, 2009, an
increase of $8.9 million over the cash and cash equivalents and marketable
securities balance at June 30, 2009, and an increase of $2.1 million over the
comparable balance at September 30, 2008. Digi re-purchased 893,162 shares of
stock during fiscal 2009 for $6.6 million and spent approximately $3.0 million
for the acquisition of substantially all of the assets of MobiApps. Please refer
to the Condensed Consolidated Statement of Cash Flows included in this earnings
release for additional cash flow details. At September 30, 2009, Digi`s current
ratio was 7.4 to 1 compared to 6.4 to 1 at September 30, 2008.

Fiscal 2009 Business Highlights:

Recognition

* Digi was chosen to be included in the NASDAQ OMX Clean Edge Smart Grid
Infrastructure Index (NASDAQ:QGRD), a new benchmark for the smart grid and
electric infrastructure sector. The NASDAQ OMX Clean Edge Smart Grid
Infrastructure Index is a modified market-capitalization index and includes
companies that are primarily involved in electric grid; electric meters, devices
and networks; energy storage and management; and enabling software used by the
smart grid and electric infrastructure sector. The index enables investors to
"easily track companies that are working diligently to help fully implement an
energy grid that is more efficient, cleaner and resilient."
* Fortune Small Business named Digi International one of "America`s 100 Fastest
Growing Small Public Companies." As a group, FSB 100 companies outperformed the
stock market by a wide margin, posting an average annual return of 9.8% for the
year ended May 31, 2009, compared with an annual loss of 28.6% for the Russell
Microcap Growth Index. In the July/August 2009 edition of the magazine, the
editors wrote, "In good times the FSB 100 constitutes an elite group of small
public companies: the best of the best, measured by revenue growth and stock
performance over the past three years. But in this Great Recession, their
performance is nothing short of miraculous."

Key Partnerships and Customer Relationships

* Digi signed a partner agreement with XATA Corporation (NASDAQ: XATA), the
expert in fleet operations optimization. Under the agreement, Digi will deliver
iDigi, a range of its cellular and satellite communications products and
services, to meet XATA`s technology and connectivity needs for the for-hire and
private fleet trucking marketplaces. The relationship is expected to expand over
time, as XATA enhances its portfolio of communications, navigation and fleet
performance software applications and Digi enables XATA`s increased in-cab
computing capacity.
* Addressing the increasing government demand for and support of smart grid
technology, Digi partnered with leaders in the smart grid industry, such as
Itron and Heliodyne, to supply Digi technology for smart grid applications in
the remote monitoring and control of distribution automation (DA) devices, and
solar water heating systems, to name a few. Such a modernized electricity
network is a way of addressing energy independence, global warming and emergency
resilience issues and is aimed at saving energy, reducing costs and increasing
reliability and transparency in delivering electricity from suppliers to
consumers using digital technology.
* Verizon Wireless chose Digi to provide a wireless broadband backup solution
for Verizon Wireless communications stores. The Digi solution is being deployed
at 300 Verizon Wireless communications stores across the US.

iDigi Bundled Wireless Solutions

* Digi introduced iDigi Energy, a wireless M2M solution bundle optimized for
energy services providers. The energy solution bundle includes the hardware,
hosted software and services necessary to accelerate Smart Energy deployments.
iDigi Energy lowers the barriers for companies to build robust, next generation
information services by removing the complexities of remote device
communication.
* Digi announced the launch of the ZigBee Smart Energy Certified ESP Gateway,
built upon the industry's first ZigBee Smart Energy ready module. As a device
communication standard for home area networks (HANs) selected by the U.S.
Department of Energy, the ZigBee Smart Energy Profile enables utilities to
intelligently manage energy loads, monitor energy use and optimize consumption.
* Digi also introduced iDigi Tank, a wireless M2M solutions bundle optimized for
storage tank monitoring. iDigi Tank includes the hardware, hosted software, and
services necessary to quickly and easily build applications for connecting
remote tanks of liquids, solids, and gases.

Wireless Acquisition

* Digi entered the satellite M2M market with the acquisition of MobiApps assets
in June 2009, a purchase that positions Digi with satellite products and
technologies that complement its wireless M2M strategy and gives the company a
strong presence in India.

Digi Innovation

* Fiscal year 2009 marked another year of innovation for Digi with 21 new
product launches, 14 of which were for wireless products.

Reconciliation Tables:

Reconciliation of GAAP Operating Income to Non-GAAP Operating Income

Three months ended September 30, Twelve months ended September 30,

(Dollars in thousands) 2009 % of net sales 2008 % of net sales 2009 % of net sales 2008 % of net sales

Operating income (GAAP basis) $ 1,103 2.8 % $ 5,133 10.2 % $ 3,070 1.9 % $ 16,015 8.7 %

Restructuring expenses - - - - 1,953 1.2 % - -

In-process research and development and other acquisition-related expenses included in cost of sales and total operating expenses - - - - - - 2,245 1.2 %

Operating income excluding restructuring expenses and in-process research and development and other acquisition-related expenses (Non-GAAP basis) $ 1,103 2.8 % $ 5,133 10.2 % $ 5,023 3.0 % * $ 18,260 9.9 %

* percentages presented may not add due to rounded numbers.

Reconciliation of GAAP Net Income and Net Income per Diluted Share to Non-GAAP Net Income and Net Income per Diluted Share

Three months ended September 30, Twelve months ended September 30,
(Dollars in thousands, except per share amounts) 2009 2008 2009 2008

Net income and net income per common share, diluted (GAAP basis) $ 959 $ 0.04 $ 3,599 $ 0.14 $ 4,083 $ 0.16 $ 12,351 $ 0.47

Restructuring expenses, net of taxes - - - - 1,863 0.07 - -

In-process research and development and other acquisition-related expenses included in cost of sales and total operating expenses, net of taxes - - - - - - 2,125 0.08

Writedown of an impaired investment, net of taxes - - 743 0.03 - - 663 0.03

Reversal of tax reserves and other discrete tax benefits (273 ) (0.01 ) (309 ) (0.01 ) (1,156 ) (0.05 ) (506 ) (0.02 )

Net income and net income per common share, diluted, adjusted for restructuring expenses, net of taxes, in-process research and development and other acquisition-related expenses, net of taxes, writedown of an impaired investment, net of taxes, and reversal of tax reserves and other discrete tax benefits (Non-GAAP basis) $ 686 $ 0.03 $ 4,033 $ 0.16 $ 4,790 $ 0.19 * $ 14,633 $ 0.56

* earnings per share presented are calculated by line item and certain amounts may not add due to use of rounded numbers

Reconciliation of Income before Income Taxes to Earnings before Taxes, Depreciation and Amortization

(dollars in thousands) Three months ended September 30, 2009 % of net sales Twelve months ended September 30, 2009 % of net sales
Net sales $ 40,012 100.0% $ 165,928 100.0%

Income before income taxes $ 894 2.2% $ 4,282 2.6%

Depreciation and amortization 2,627 6.6% 10,057 6.1%

Earnings before taxes, depreciation, and amortization $ 3,521 8.8% $ 14,339 8.6% *

*Percentages presented may not add due to use of rounded numbers.

Guidance

Digi projects revenue in a range of $40 million to $44 million for the first
fiscal quarter of 2010, and net income per fully diluted share in a range of
$0.02 to $0.08.

For the full year fiscal 2010, Digi projects revenue in a range of $165 million
to $190 million, or an increase of 0% to 14.5% over fiscal year 2009. Digi
projects net income per fully diluted share to be in a range of $0.16 to $0.42.

Fourth Quarter and Year-End 2009 Conference Call Details

Digi`s management will discuss the fourth quarter and year-end results, on
Thursday, October 29, 2009, after market close at 5:00 p.m. EDT (4:00 p.m. CDT).
To join the call, please dial (866) 783-2145 and enter pass code 49615082.
International participants may access the call by dialing (857) 350-1604 and
entering pass code 49615082. A replay will be available two hours after the
completion of the call, and for one week following the call, by dialing (888)
286-8010 for domestic participants or (617) 801-6888 for international
participants and entering access code 36829880 when prompted. Participants may
also access a live webcast of the conference call through the investor relations
section of Digi's website, www.digi.com.

About Digi International

Digi International is making wireless M2M easy by developing reliable products
and solutions to connect and securely manage local or remote electronic devices
over the network or via the Web. Digi offers the highest levels of performance,
flexibility and quality, and markets its products through a global network of
distributors and resellers, systems integrators and original equipment
manufacturers (OEMs). For more information, visit Digi's Web site at
www.digi.com, or call 877-912-3444.

For more news and information on Digi International Inc., please visit
www.IRGnews.com/coi/DGII where you can find the CEO`s video, a fact sheet on the
company, investor presentations, and more.

Forward-Looking Statements

This press release contains statements that constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended,
which generally can be identified by the use of forward-looking terminology such
as "anticipate," "believe," "target," "estimate," "may," "will," "expect,"
"plan," "project," "should," or "continue" or the negative thereof or other
variations thereon or similar terminology. Such statements are based on
information available to management as of the time of such statements and relate
to, among other things, expectations of the business environment in which the
Company operates, projections of future performance, perceived opportunities in
the market and statements regarding the Company's mission and vision. Such
statements are not guarantees of future performance and involve certain risks,
uncertainties and assumptions, including risks related to the highly competitive
market in which the Company operates, rapid changes in technologies that may
displace products sold by the Company, declining prices of networking products,
the Company's reliance on distributors, delays in the Company's product
development efforts, uncertainty in consumer acceptance of the Company's
products, continued or increasing weakness in North America and developing
weakness in other regions due to changes in economic conditions, the current
uncertainty in global economic conditions which could negatively affect product
demand, the recent financial crises affecting the banking system and financial
markets which could negatively impact the financial solvency of the Company`s
customers and suppliers, the extreme volatility in fixed income, credit and
equity markets which could result in actual amounts realized on the Company`s
debt securities or other investments that differ significantly from current
market values, the ability to achieve the anticipated benefits and synergies
associated with acquisitions, and changes in the Company's level of revenue or
profitability. These and other risks, uncertainties and assumptions identified
from time to time in the Company's filings with the Securities and Exchange
Commission, including without limitation, its annual report on Form 10-K for the
year ended September 30, 2008 and its quarterly reports on Form 10-Q, could
cause the Company's future results to differ materially from those expressed in
any forward-looking statements made by or on behalf of the Company. Many of such
factors are beyond the Company's ability to control or predict. These
forward-looking statements speak only as of the date for which they are made.
The Company disclaims any intent or obligation to update publicly any
forward-looking statements, whether as a result of new information, future
events or otherwise.

This release includes non-GAAP operating income, earnings before taxes,
depreciation and amortization(EBTDA), net income and earnings per diluted share
data.

Management understands that there are material limitations on the use of
non-GAAP measures.Non-GAAP measures are not substitutes for GAAP measures, such
as operating income, income before income taxes, or net income, for the purpose
of analyzing financial performance.The disclosure of these measures does not
reflect all charges and gains that were actually recognized by the Company.These
non-GAAP measures are not in accordance with, or an alternative for measures
prepared in accordance with, generally accepted accounting principles and may be
different from non-GAAP measures used by other companies.In addition, these
non-GAAP measures are not based on any comprehensive set of accounting rules or
principles.Digi believes that non-GAAP measures have limitations in that they do
not reflect all of the amounts associated with Digi`s results of operations as
determined in accordance with GAAP and that these measures should only be used
to evaluate Digi`s results of operations in conjunction with the corresponding
GAAP measures.Additionally, management understands that EBTDA does not reflect
the Company`s cash expenditures, the cash requirements for the replacement of
depreciated and amortized assets, or changes in or cash requirements for the
Company`s working capital needs.

Digi believes that providing operating income and net income and earnings per
diluted share exclusive of the impact of restructuring expenses, in-process
research and development and other acquisition-related expenses, the write down
of impaired investments, and the impact of the reversal of tax reserves and
other discrete tax benefits permits investors to compare results with prior
periods that did not include these items.Management uses the aforementioned
non-GAAP measures to monitor and evaluate ongoing operating results and trends
and to gain an understanding of the comparative operating performance of the
Company.In addition, shareholders in the Company have expressed an interest in
seeing financial performance measures exclusive of the impact of decisions
relating to restructuring charges, acquisitions, investments and taxes, which
while important, are not central to the core operations of Digi`s
business.Additionally, management believes that the presentation of EBTDA as a
percentage of net sales is useful to investors because it provides a reliable
and consistent approach to measuring the Company`s performance from year to year
and in assessing the Company`s performance against other companies.Management
believes that such information helps investors compare operating results and
corporate performance exclusive of the impact of the Company`s capital structure
and the method by which assets were acquired.EBTDA is also used by management as
a metric for executive compensation, as well as incentive compensation for the
rest of the employee base, and it is monitored quarterly for these purposes.

Investor Contacts:

S. (Kris) Krishnan
Digi International
11001 Bren Road East
Minnetonka, MN 55343
952-912-3125
Email: S. (Kris) Krishnan

Erika Moran
The Investor Relations Group
11 Stone Street - 5th Floor
New York, NY 10004
212-825-3210
Email: The Investor Relations Group

For more information, visit Digi's Web site at www.digi.com, or call
877-912-3444 (U.S.) or 952-912-3444 (International).

Digi International Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)

Three months ended September 30, Twelve months ended September 30,

2009 2008 2009 2008
Net sales $ 40,012 $ 50,417 $ 165,928 $ 185,056
Cost of sales (exclusive of amortization of purchased and core technology shown separately below) 19,507 23,367 80,470 83,096
Amortization of purchased and core technology 1,094 1,110 4,193 4,091
Gross profit 19,411 25,940 81,265 97,869

Operating expenses:
Sales and marketing 8,079 9,666 35,304 36,879
Research and development 6,388 6,927 26,381 27,040
General and administrative 3,125 3,639 11,785 13,705
Intangibles amortization 716 575 2,772 2,330
Restructuring costs - - 1,953 -
In-process research and development - - - 1,900
Total operating expenses 18,308 20,807 78,195 81,854

Operating income 1,103 5,133 3,070 16,015

Other (expense) income:
Interest income, net 92 645 1,149 3,405
Other (expense) income (301 ) (860 ) 63 (505 )
Total other (expense) income (209 ) (215 ) 1,212 2,900

Income before income taxes 894 4,918 4,282 18,915
Income tax (benefit) provision (65 ) 1,319 199 6,564

Net income $ 959 $ 3,599 $ 4,083 $ 12,351

Net income per common share, basic $ 0.04 $ 0.14 $ 0.16 $ 0.48

Net income per common share, diluted $ 0.04 $ 0.14 $ 0.16 $ 0.47

Weighted average common shares, basic 24,662 25,585 24,901 25,659

Weighted average common shares, diluted 24,981 26,002 25,183 26,242

Digi International Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)

September 30, 2009 September 30, 2008
ASSETS

Current assets:
Cash and cash equivalents $ 48,434 $ 14,176
Marketable securities 22,311 59,337
Accounts receivable, net 19,032 24,310
Inventories 26,619 30,240
Deferred tax assets 2,415 2,100
Other 3,844 3,006
Total current assets 122,655 133,169

Marketable securities 5,063 179
Property, equipment and improvements, net 16,678 16,255
Identifiable intangible assets, net 26,877 34,032
Goodwill 86,558 86,578
Deferred tax assets 440 553
Other 677 650

Total assets $ 258,948 $ 271,416

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable $ 5,567 $ 10,343
Accrued compensation 3,275 5,981
Accrued warranty 970 1,214
Deferred payment on acquisition 2,966 -
Restructuring 721 -
Other 3,035 3,395
Total current liabilities 16,534 20,933

Deferred tax liabilities 4,331 7,582
Income taxes payable 4,893 4,358
Deferred payment on acquisition 2,812 5,575
Other noncurrent liabilities 792 1,034

Total liabilities 29,362 39,482

Total stockholders' equity 229,586 231,934

Total liabilities and stockholders' equity $ 258,948 $ 271,416

Digi International Inc.
Condensed Consolidated Statement of Cash Flows
(In thousands)
(Unaudited)

Three months ended Twelve months ended
September 30, 2009 September 30, 2009
Operating activities:
Net income $ 959 $ 4,083
Adjustments to reconcile net income to net cash provided by operations
Depreciation of property, equipment and improvements 682 2,581
Amortization of identifiable intangible assets and other assets 1,945 7,476
Excess tax benefits from stock-based compensation (36 ) (80 )
Stock-based compensation 828 3,518
Deferred income taxes (793 ) (3,139 )
Restructuring (798 ) 721
Other 453 386
Changes in operating assets and liabilities 8,173 140
Net cash provided by operating activities 11,413 15,686

Investing activities:
Purchase of marketable securities (8,874 ) (30,489 )
Proceeds from maturities of marketable securities 17,349 62,624
Acquisition of MobiApps, net of cash acquired (17 ) (2,986 )
Purchase of property, equipment, improvements and certain other intangible assets (1,536 ) (3,863 )
Net cash provided by investing activities 6,922 25,286

Financing activities:
Payments on capital lease obligations (25 ) (336 )
Excess tax benefits from stock-based compensation 36 80
Purchase of treasury stock - (6,576 )
Proceeds from stock option plan transactions 298 423
Proceeds from employee stock purchase plan transactions 195 982
Net cash provided by (used in) financing activities 504 (5,427 )

Effect of exchange rate changes on cash and cash equivalents (76 ) (1,287 )
Net increase in cash and cash equivalents 18,763 34,258
Cash and cash equivalents, beginning of period 29,671 14,176
Cash and cash equivalents, end of period $ 48,434 $ 48,434

Investors:
Digi International
S. (Kris) Krishnan, 952-912-3125
Email: S. (Kris) Krishnan
OR
The Investor Relations Group
Erika Moran, 212-825-3210
Email: The Investor Relations Group

Copyright Business Wire 2009