Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
April 23, 2009 Date of report (date of earliest event reported)
Digi International Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 1-34033 | 41-1532464 | ||
| (State of Incorporation) | (Commission file number) | (I.R.S. Employer Identification No.) |
| 11001 Bren Road East, Minnetonka, Minnesota | 55343 | |
| (Address of principal executive offices) | (Zip Code) |
Telephone Number: (952) 912-3444
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
TABLE OF CONTENTS
| Item 2.02 Results of Operations and Financial Condition. | ||||||||
| lItem 9.01 Financial Statements and Exhibits. | ||||||||
| SIGNATURES | ||||||||
| EXHIBIT INDEX | ||||||||
| EX-99.1 | ||||||||
Table of Contents
Item 2.02 Results of Operations and Financial Condition.
On April 23, 2009, Digi International Inc. (the “Company”) reported its financial results for
the second quarter of fiscal 2009. See the Company’s press release dated April 23, 2009, which is
furnished as Exhibit 99.1 and incorporated by reference in this Current Report on Form 8-K.
NON-GAAP FINANCIAL MEASURES
The press release furnished as Exhibit 99.1 and certain information the Company intends to
disclose on the conference call include certain non-GAAP financial measures. These measures include
earnings before taxes, depreciation, amortization (“EBTDA”) and historical and projected net income and net income per
diluted share exclusive of the impact certain non-recurring items. The non-recurring items consist
of discrete tax benefits and projected restructuring expenses. The reconciliation of the EBTDA measure to the most directly comparable
GAAP financial measure is included below. The reconciliations of the net income and net income per
diluted share measures to the most directly comparable GAAP financial measures are provided in the
press release.
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 net income, for the purpose of
analyzing financial performance. 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. 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. Management believes that non-GAAP
measures have limitations in that they do not reflect all of the amounts associated with the
Company’s results of operations as determined in accordance with GAAP and that these measures
should only be used to evaluate the Company’s results of operations in conjunction with the
corresponding GAAP measures.
Management believes that providing historical and projected net income and net income per diluted share exclusive of
the impact of non-recurring items permits investors to compare results with prior periods that did
not include these items. Additionally, the 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. 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 taxes and other discrete items, such
as the projected restructuring charge, which while important are not central to
the core operations of the Company’s business.
Reconciliation of Income before Income Taxes to Earnings before Taxes,
Depreciation and Amortization
(in thousands of dollars and as a percent of Net Sales)
Depreciation and Amortization
(in thousands of dollars and as a percent of Net Sales)
| For the three | ||||||||
| months ended | ||||||||
| March 31, 2009 | % of net sales | |||||||
Net sales |
$ | 40,085 | 100.0 | % | ||||
Income before income taxes |
$ | 994 | 2.5 | % | ||||
Depreciation and amortization |
2,421 | 6.0 | % | |||||
Earnings before taxes, depreciation, and amortization |
$ | 3,415 | 8.5 | % | ||||
2
Table of Contents
Item 9.01 Financial Statements and Exhibits.
The following Exhibit is furnished herewith:
| 99.1 | Press Release dated April 23, 2009, announcing financial results for the second quarter of fiscal 2009. |
3
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: April 23, 2009
| DIGI INTERNATIONAL INC. |
||||
| By: | /s/ Subramanian Krishnan | |||
| Subramanian Krishnan | ||||
| Senior Vice President, Chief Financial Officer and Treasurer | ||||
4
Table of Contents
EXHIBIT INDEX
| No. | Exhibit | Manner of Filing | ||
99.1
|
Press Release dated April 23, 2009, announcing financial results for the second quarter of fiscal 2009. | Filed Electronically |
5
Exhibit 99.1
Digi International Reports Second Fiscal Quarter 2009 Results
Announces Business Restructuring to Increase Focus on Wireless Solutions and Improve Profitability
Meets
Street consensus of $0.03 per share profitability
(Minneapolis, MN, April 23, 2009) — Digi International® Inc. (NASDAQ: DGII, www.digi.com) reported
revenue of $40.1 million for the second fiscal quarter of 2009, compared with $43.1 million for the
second fiscal quarter of 2008, a decrease of $3.0 million, or 6.9%. Digi reported net income for
the twenty-fifth consecutive quarter, and met both revenue and earnings per share guidance for the
second quarter of fiscal 2009.
Below is a table setting forth certain GAAP and Non-GAAP results:
| GAAP Results | ||||||||||||||||
| (in thousands, except per share amounts) | Q2 2009 | Q2 2008 | YTD 2009 | YTD 2008 | ||||||||||||
Net Sales |
$ | 40,085 | $ | 43,070 | $ | 81,446 | $ | 87,644 | ||||||||
Operating Income |
$ | 599 | $ | 3,673 | $ | 1,365 | $ | 8,252 | ||||||||
Net Income |
$ | 715 | $ | 3,097 | $ | 1,731 | $ | 6,767 | ||||||||
Net Income per
Diluted Share |
$ | 0.03 | $ | 0.12 | $ | 0.07 | $ | 0.26 | ||||||||
| Non-GAAP Results | ||||||||||||||||
| (in thousands, except per share amounts) | Q2 2009 | Q2 2008 | YTD 2009 | YTD 2008 | ||||||||||||
Operating Income |
$ | 599 | $ | 3,673 | $ | 1,365 | $ | 8,252 | ||||||||
Net Income |
$ | 671 | (1) | $ | 3,097 | $ | 1,317 | (2) | $ | 6,767 | ||||||
Net Income per
Diluted Share |
$ | 0.03 | (1) | $ | 0.12 | $ | 0.05 | (2) | $ | 0.26 | ||||||
| (1) | Non-GAAP net income and net income per diluted share for the second fiscal quarter of 2009 exclude a tax benefit of $43,692 for the reversal of tax reserves due to the resolution of a state tax matter. | |
| (2) | Non-GAAP net income and net income per diluted share for the first six months of fiscal 2009 exclude a tax benefit of $370,499 due to the extension in the first quarter of fiscal 2009 of the income tax credit for research and development for the last three quarters of fiscal 2008, and a tax benefit of $43,692 for the reversal of tax reserves due to the resolution of a state tax matter. |
“Digi has continued to invest aggressively in technology and innovation through this downturn,”
said Joseph Dunsmore, Digi’s CEO. “During the quarter we announced the rollout of the most
strategic initiative since I’ve
been at Digi. The iDigi Energy solution bundle is our first in what will become a series of iDigi
solution bundles that make wireless M2M fast, easy, and inexpensive.”
Digi International Reports Second Fiscal Quarter 2009 Results
Business Results for the Three and Six Months Ended March 31, 2009
Revenue from embedded products in the second fiscal quarter of 2009 was $17.4 million compared to
$21.7 million in the second fiscal quarter of 2008, a decrease of $4.3 million, or 20.0%. Revenue
from non-embedded products was $22.7 million in the second fiscal quarter of 2009 compared to $21.4
million in the second fiscal quarter of 2008, an increase of $1.3 million, or 6.4%. Revenue from
embedded products includes $1.2 million of Spectrum revenue in the second fiscal quarter of 2009.
Revenue from non-embedded products includes Sarian-branded revenue of $5.0 million for the second
fiscal quarter of 2009. Sarian Systems, Ltd. and Spectrum Design Solutions, Inc. were acquired in
April 2008 and July 2008, respectively. The strengthening of the U.S. dollar compared to the Euro
and UK pound sterling had an unfavorable impact on revenue of $2.7 million in the second fiscal
quarter of 2009 compared to the second fiscal quarter of 2008.
Revenue by geographic region is shown below:
| Revenue by Geographic Region | ||||||||||||||||
| (in thousands) | ||||||||||||||||
| Q2 2009 | Q2 2008 | YTD 2009 | YTD 2008 | |||||||||||||
EMEA (Europe, Middle East
and Africa) |
$ | 14,934 | (1) | $ | 12,785 | $ | 28,262 | (1) | $ | 23,929 | ||||||
Latin America |
651 | 1,705 | 1,705 | 2,482 | ||||||||||||
North America |
20,724 | (2) | 23,959 | 43,869 | (2) | 52,083 | ||||||||||
Asia Pacific |
3,776 | 4,621 | 7,610 | 9,150 | ||||||||||||
Total revenue |
$ | 40,085 | $ | 43,070 | $ | 81,446 | $ | 87,644 | ||||||||
| (1) | Includes Sarian revenue of $5.0 million and $8.1 million for the three and six months ended March 31, 2009, respectively. | |
| (2) | Includes Spectrum revenue of $1.2 million and $2.2 million for the three and six months ended March 31, 2009, respectively. |
Gross profit was $19.2 million in the second fiscal quarter of 2009 compared to $23.2 million in
the same period in the prior year. The gross margin was 47.8% in the second fiscal quarter of 2009
compared to 53.8% in the second fiscal quarter of 2008. The gross margin was lower in the second
fiscal quarter of 2009 than in the comparable period a year ago due to unfavorable product mix
within primarily the non-embedded products, including sales of Sarian non-embedded products which
provide lower gross profit margins. The
strengthening of the U.S. dollar compared to the Euro and UK pound sterling had an unfavorable
impact on gross margin of approximately 1.1% in the second quarter of fiscal 2009 compared to the
comparable year ago quarter.
Total operating expenses in the second fiscal quarter of 2009 were $18.6 million, or 46.3% of
revenue, compared to $19.5 million, or 45.3% of revenue, in the second fiscal quarter of 2008. The
decrease in operating expenses in the second fiscal quarter of 2009 compared to the same quarter in
the prior year is primarily due to the elimination of all incentive compensation previously accrued
for fiscal 2009, since this program was eliminated for the entire fiscal year. Effective cost management offset the incremental ongoing operating expenses for
Sarian and Spectrum.
Digi International Reports Second Fiscal Quarter 2009 Results
Total other income, net decreased by $0.6 million in the second fiscal quarter of 2009 compared to
the same quarter in the prior year primarily due to lower interest yields on cash equivalents and
marketable securities.
Reported net income was $0.7 million in the second fiscal quarter of 2009, or $0.03 per diluted
share, compared to $3.1 million, or $0.12 per diluted share, in the second fiscal quarter of 2008.
Non-GAAP net income and net income per diluted share for the second fiscal quarter of 2009 were
also $0.7 million, or $0.03 per diluted share, as detailed later in this earnings release.
For the six months ended March 31, 2009, Digi reported revenue of $81.4 million compared to revenue
of $87.6 million for the six months ended March 31, 2008, a decrease of $6.2 million, or 7.1%.
Revenue from embedded products for the first six months of fiscal 2009 was $35.4 million compared
to $42.4 million in the first six months of fiscal 2008, a decrease of $7.0 million, or 16.6%.
Revenue from non-embedded products was $46.0 million in the first six months of fiscal 2009
compared to $45.2 million in the first six months of fiscal 2008, an increase of $0.8 million, or
1.9%. Revenue from embedded products includes $2.2 million of Spectrum revenue in the first six
months of fiscal 2009. Revenue from non-embedded products includes Sarian-branded revenue of $8.1
million for the first six months of fiscal 2009. The strengthening of the U.S. dollar compared to
the Euro and UK pound sterling had an unfavorable impact on revenue of $4.1 million for the first
six months of fiscal 2009 compared to the first six months of fiscal 2008.
For the six months ended March 31, 2009, Digi reported net income of $1.7 million, or $0.07 per
diluted share, compared to net income for the six months ended March 31, 2008 of $6.8 million, or
$0.26 per diluted share. Net income benefited by $0.4 million, or $0.02 per diluted share, during
the first six months of fiscal 2009 as a result of a retroactive benefit from the extension of the
research and development credit and the reversal of tax reserves due to the resolution of a state
tax matter.
Digi’s cash and cash equivalents and marketable securities balance, including long-term marketable
securities, was $63.6 million at March 31, 2009, a decrease of $6.6 million from December 31, 2008.
Digi re-purchased 834,190 shares of stock in the second quarter of fiscal 2009 for $6.1 million.
Please refer to the Condensed Consolidated Statements of Cash Flows which is included in this
earnings release for additional cash flow details. At March 31, 2009, Digi’s current ratio was 6.4
to 1 compared to 6.7 to 1 at December 31, 2008.
Business Restructuring to Increase Focus on Wireless and iDigi Solutions and Improve
Profitability
With the increasing importance of wireless and the introduction of the iDigi brand, Digi today
announced a restructuring of its operations. This restructuring will increase the focus of Digi’s
business to wireless and
from individual hardware products to solutions that include hardware, software, and services, in
addition to improving profitability. To aggressively focus on these strategic business
initiatives, Digi is shifting more resources to wireless and solutions initiatives, closing an
engineering location in Long Beach, California, and relocating and consolidating the manufacturing
function located in Davis, California to Digi’s corporate headquarters located in Minneapolis,
Minnesota. The restructuring will result in a workforce reduction of 87 positions, or 13% of Digi’s
total workforce.
Digi expects to record a pre-tax charge of $2.0 million during the third fiscal quarter of 2009
related to the restructuring of its operations. The restructuring charge is expected to reduce
earnings per diluted share in the third quarter of fiscal 2009 by approximately $0.05. Digi
expects quarterly pre-tax savings as a result of
Digi International Reports Second Fiscal Quarter 2009 Results
these initiatives of approximately $0.7 million
and $1.0 million in the third and fourth quarters of fiscal 2009, respectively. Digi anticipates
quarterly pre-tax expense savings of approximately $1.4 million in fiscal year 2010 as a result of
these initiatives.
Second Fiscal Quarter 2009 Business Highlights:
| • | In spite of the challenging economy, Digi’s wireless revenue grew over 49% from the second fiscal quarter of 2008. With wireless revenue now reaching 35% of revenue, Digi’s wireless initiatives continue to build momentum. | ||
| • | 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. | ||
| • | Further expanding upon the new iDigi platform, the company introduced three new iDigi development kits that make it fast, easy and inexpensive to develop wireless applications. | ||
| • | Digi announced a green design contest to promote the development of sustainable applications. Contestants use one of three new iDigi wireless development kits to create environmentally beneficial designs. | ||
| • | Digi partnered with Itron to develop smart grid applications, further expanding upon Digi’s comprehensive family of Drop-in Networking connectivity solutions. The partnership enables utilities to remotely monitor and control distribution automation (DA) devices utilizing OpenWay, an advanced metering infrastructure (AMI) network by Itron. |
Reconciliation Table:
Reconciliation of GAAP Net Income and Net Income per Diluted Share to Non-
GAAP Net Income and Net Income per Diluted Share
GAAP Net Income and Net Income per Diluted Share
| Three months ended March 31, | Six months ended March 31, | |||||||||||||||||||||||||||||||
| (In thousands, except per share amounts) | 2009 | 2008 | 2009 | 2008 | ||||||||||||||||||||||||||||
Net income and net income per common
share, diluted (GAAP basis) |
$ | 715 | $ | 0.03 | $ | 3,097 | $ | 0.12 | $ | 1,731 | $ | 0.07 | $ | 6,767 | $ | 0.26 | ||||||||||||||||
Reversal of tax reserves and discrete
tax benefits |
(44 | ) | (0.00 | ) | — | — | (414 | ) | (0.02 | ) | — | — | ||||||||||||||||||||
Net income and net income per common
share, diluted, adjusted for reversal
of tax reserves and discrete tax
benefits (Non-GAAP basis) |
$ | 671 | $ | 0.03 | $ | 3,097 | $ | 0.12 | $ | 1,317 | $ | 0.05 | $ | 6,767 | $ | 0.26 | ||||||||||||||||
Digi International Reports Second Fiscal Quarter 2009 Results
Fiscal 2009 Guidance
Digi expects revenue for the third fiscal quarter of 2009 in a range of $42 million to $48 million,
and net income per diluted share in a range of $0.01 to $0.06. Non-GAAP net income per diluted
share, excluding the impact of the restructuring charge, is projected to be in a range of $0.06 to
$0.11. Digi projects annual revenue in a range of $165 million to $175 million. Digi projects
annual GAAP net income per diluted share to be in a range of $0.11 to $0.22. Annual non-GAAP net
income per diluted share, excluding the impact of the restructuring charge and the reversal of tax
reserves and other discrete tax benefits, is projected to be in a range of $0.16 to $0.26.
Reconciliation of Guidance for Reported Net Income per Diluted Share to Net Income per Diluted Share, Excluding
Restructuring Expenses and Reversal of Tax Reserves and Other Discrete Tax Benefits
Restructuring Expenses and Reversal of Tax Reserves and Other Discrete Tax Benefits
| For the three months ended | For the twelve months ended | |||||||||||||||
| June 30, 2009 | September 30, 2009 | |||||||||||||||
| (In thousands, except per share amounts) | Low | High | Low | High | ||||||||||||
Projected net income per common share,
diluted (GAAP basis) |
$ | 0.01 | $ | 0.06 | $ | 0.11 | $ | 0.22 | ||||||||
Projected restructuring expenses
included in operating expenses, net of
tax |
0.05 | 0.05 | 0.06 | 0.05 | ||||||||||||
Projected reversal of tax reserves and
other discrete tax benefits |
— | — | (0.02 | ) | (0.02 | ) | ||||||||||
Projected net income per diluted common
share, adjusted for projected
restructuring expenses, net of taxes,
and projected reversal of tax reserves
and other discrete tax benefits
(Non-GAAP basis) |
$ | 0.06 | $ | 0.11 | $ | 0.16 | $ | 0.26 | ||||||||
Second Fiscal Quarter 2009 Conference Call Details
Digi invites all those interested in hearing management’s discussion of its quarter, on Thursday,
April 23, 2009 after market close at 5:00 p.m. ET (4:00 p.m. CT), to join the call by dialing (866)
831-6270 and entering passcode 96534234. International participants may access the call by dialing
(617) 213-8858 and entering passcode 96534234. 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 82982516
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, based in Minneapolis, is the leader in device networking for business. Digi
develops reliable products and technologies that enable companies to connect and securely manage
local or remote electronic devices over the network or via the web.
Digi International Reports Second Fiscal Quarter 2009 Results
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 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,
the estimated expenses and risks associated with restructuring of the company’s operations, and the
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 historical and projected non-GAAP net income and net income per diluted share
data.
Digi understands that there are material limitations on the use of non-GAAP measures.
Non-GAAP measures are not substitutes for GAAP measures, such as 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.
Digi believes that providing historical and projected net income and net income per diluted share
exclusive of the impact of projected restructuring charges and reversals of tax reserves and
discrete tax benefits permits
Digi International Reports Second Fiscal Quarter 2009 Results
investors to compare results with prior periods that did not include these items. Digi 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 taxes and other discrete items, such as the
projected restructuring charge, which while important, are not central to the core operations of
Digi’s business.
Investor Contacts:
S. (Kris) Krishnan
Digi International
952-912-3125
Email: s_krishnan@digi.com
S. (Kris) Krishnan
Digi International
952-912-3125
Email: s_krishnan@digi.com
Erika Moran
The Investor Relations Group
212-825-3210
Email: mail@investorrelationsgroup.com
The Investor Relations Group
212-825-3210
Email: mail@investorrelationsgroup.com
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 Reports Second Fiscal Quarter 2009 Results
Digi International Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
| Three months ended March 31, | Six months ended March 31, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
Net sales |
$ | 40,085 | $ | 43,070 | $ | 81,446 | $ | 87,644 | ||||||||
Cost of sales (exclusive of amortization of
purchased
and core technology shown separately below) |
19,908 | 18,986 | 38,977 | 38,529 | ||||||||||||
Amortization of purchased and core technology |
1,008 | 907 | 2,052 | 2,043 | ||||||||||||
Gross profit |
19,169 | 23,177 | 40,417 | 47,072 | ||||||||||||
Operating expenses: |
||||||||||||||||
Sales and marketing |
8,976 | 9,034 | 18,601 | 17,720 | ||||||||||||
Research and development |
6,196 | 6,529 | 13,170 | 13,118 | ||||||||||||
General and administrative |
2,724 | 3,345 | 5,917 | 6,717 | ||||||||||||
Intangibles amortization |
674 | 596 | 1,364 | 1,265 | ||||||||||||
Total operating expenses |
18,570 | 19,504 | 39,052 | 38,820 | ||||||||||||
Operating income |
599 | 3,673 | 1,365 | 8,252 | ||||||||||||
Other income (expense): |
||||||||||||||||
Interest income, net |
354 | 1,008 | 849 | 2,048 | ||||||||||||
Other income (expense) |
41 | (19 | ) | (195 | ) | — | ||||||||||
Total other income, net |
395 | 989 | 654 | 2,048 | ||||||||||||
Income before income taxes |
994 | 4,662 | 2,019 | 10,300 | ||||||||||||
Income tax provision |
279 | 1,565 | 288 | 3,533 | ||||||||||||
Net income |
$ | 715 | $ | 3,097 | $ | 1,731 | $ | 6,767 | ||||||||
Net income per common share, basic |
$ | 0.03 | $ | 0.12 | $ | 0.07 | $ | 0.26 | ||||||||
Net income per common share, diluted |
$ | 0.03 | $ | 0.12 | $ | 0.07 | $ | 0.26 | ||||||||
Weighted average common shares, basic |
24,953 | 25,714 | 25,169 | 25,666 | ||||||||||||
Weighted average common shares, diluted |
25,195 | 26,312 | 25,439 | 26,479 | ||||||||||||
Digi International Reports Second Fiscal Quarter 2009 Results
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
(In thousands)
(Unaudited)
| March 31, 2009 | September 30, 2008 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 28,541 | $ | 14,176 | ||||
Marketable securities |
32,589 | 59,337 | ||||||
Accounts receivable, net |
20,762 | 24,310 | ||||||
Inventories |
34,212 | 30,240 | ||||||
Deferred tax assets |
2,098 | 2,100 | ||||||
Income taxes receivable |
608 | — | ||||||
Other |
2,652 | 3,006 | ||||||
Total current assets |
121,462 | 133,169 | ||||||
Marketable securities |
2,507 | 179 | ||||||
Property, equipment and improvements, net |
16,304 | 16,255 | ||||||
Identifiable intangible assets, net |
28,293 | 34,032 | ||||||
Goodwill |
83,122 | 86,578 | ||||||
Deferred tax assets |
539 | 553 | ||||||
Other |
652 | 650 | ||||||
Total assets |
$ | 252,879 | $ | 271,416 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Current liabilities: |
||||||||
Capital lease obligations, current portion |
$ | 204 | $ | 267 | ||||
Accounts payable |
8,033 | 10,343 | ||||||
Accrued compensation |
3,840 | 5,981 | ||||||
Accrued warranty |
1,143 | 1,214 | ||||||
Deferred payment on acquisition |
2,913 | — | ||||||
Other accrued expenses |
2,910 | 2,946 | ||||||
Income taxes payable |
— | 182 | ||||||
Total current liabilities |
19,043 | 20,933 | ||||||
Capital lease obligations, net of current portion |
2 | 78 | ||||||
Deferred tax liabilities |
5,387 | 7,582 | ||||||
Income taxes payable |
4,780 | 4,358 | ||||||
Deferred payment on acquisition |
2,762 | 5,575 | ||||||
Other noncurrent liabilities |
791 | 956 | ||||||
Total liabilities |
32,765 | 39,482 | ||||||
Total stockholders’ equity |
220,114 | 231,934 | ||||||
Total liabilities and stockholders’ equity |
$ | 252,879 | $ | 271,416 | ||||
Digi International Reports Second Fiscal Quarter 2009 Results
Digi International Inc.
Condensed Consolidated Statement of Cash Flows
(In thousands)
(Unaudited)
Condensed Consolidated Statement of Cash Flows
(In thousands)
(Unaudited)
| Three months ended | Six months ended | |||||||
| March 31, 2009 | March 31, 2009 | |||||||
Operating activities: |
||||||||
Net income |
$ | 715 | $ | 1,731 | ||||
Adjustments to reconcile net income to net cash provided by operations |
||||||||
Depreciation of property, equipment and improvements |
613 | 1,203 | ||||||
Amortization of identifiable intangible assets and other assets |
1,808 | 3,662 | ||||||
Excess tax benefits from stock-based compensation |
(40 | ) | (42 | ) | ||||
Stock-based compensation |
874 | 1,842 | ||||||
Deferred income taxes |
(704 | ) | (1,540 | ) | ||||
Other |
(72 | ) | 40 | |||||
Changes in operating assets and liabilities |
(2,006 | ) | (7,694 | ) | ||||
Net cash provided by (used in) operating activities |
1,188 | (798 | ) | |||||
Investing activities: |
||||||||
Purchase of marketable securities |
(3,474 | ) | (7,647 | ) | ||||
Proceeds from maturities of marketable securities |
15,999 | 32,063 | ||||||
Purchase of property, equipment, improvements and certain
other intangible assets |
(823 | ) | (1,666 | ) | ||||
Net cash provided by investing activities |
11,702 | 22,750 | ||||||
Financing activities: |
||||||||
Payments on capital lease obligations |
(70 | ) | (139 | ) | ||||
Excess tax benefits from stock-based compensation |
40 | 42 | ||||||
Purchase of treasury stock |
(6,150 | ) | (6,150 | ) | ||||
Proceeds from stock option plan transactions |
65 | 120 | ||||||
Proceeds from employee stock purchase plan transactions |
220 | 529 | ||||||
Net cash used in financing activities |
(5,895 | ) | (5,598 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents |
(1,086 | ) | (1,989 | ) | ||||
Net increase in cash and cash equivalents |
5,909 | 14,365 | ||||||
Cash and cash equivalents, beginning of period |
22,632 | 14,176 | ||||||
Cash and cash equivalents, end of period |
$ | 28,541 | $ | 28,541 | ||||