Digi International Reports 11.9% Revenue Increase for Fourth Fiscal Quarter of 2008 Compared to Fourth
Fiscal Quarter of 2007
MINNEAPOLIS, Minn., Oct. 31 /Xinhua-PRNewswire-AsiaNet/ --
Exceeds Street Consensus Revenue and Earnings Per Share Estimates for Fourth Quarter and Fiscal Year 2008
Digi International(R) Inc. (Nasdaq: DGII, http://www.digi.com ) reported revenue of $50.4 million for the fourth
fiscal quarter of 2008, compared with $45.1 million for the fourth fiscal quarter of 2007, an increase of $5.3 million,
or 11.9%. Sarian Systems, Ltd. was acquired on April 28, 2008; revenue from Sarian-branded products was $3.3
million for the fourth fiscal quarter of 2008. Spectrum Design Solutions, Inc. was acquired on July 23, 2008;
revenue from Spectrum was $0.8 million for the fourth fiscal quarter of 2008 from date of acquisition.
Digi reported revenue of $185.1 million for the fiscal year ended September 30, 2008, compared to $173.3
million for the fiscal year ended September 30, 2007, an increase of $11.8 million, or 6.8%. Sarian and Spectrum
contributed $5.7 million and $0.8 million respectively from their dates of acquisition.
"I am very proud of the Digi team's strong finish to a year that has provided external challenges that were
unforeseen entering fiscal 2008," said Joseph Dunsmore, Digi's CEO. "Digi is financially strong and very well
positioned to take market share in fiscal 2009, regardless of broader economic conditions. "
Revenue from embedded products in the fourth fiscal quarter of 2008 was $23.5 million compared to $20.6
million in the fourth fiscal quarter of 2007, an increase of $2.9 million, or 14.4%. Revenue from non-embedded
products was $26.9 million in the fourth fiscal quarter of 2008 compared to $24.5 million in the fourth fiscal quarter
of 2007, an increase of 2.4 million, or 9.7%. Revenue from embedded products includes all Spectrum revenue of
$0.8 million from date of acquisition. Revenue from non-embedded products includes all Sarian-branded revenue
of $3.3 million for the fourth fiscal quarter of 2008.
Revenue in North America was $29.1 million in the fourth fiscal quarter of 2008, including all Spectrum revenue
of $0.8 million, compared to $28.5 million in the fourth fiscal quarter of 2007 an increase of $0.6 million, or 2.3%.
Revenue in Europe was $14.5 million in the fourth fiscal quarter of 2008, including all Sarian-branded revenue of
$3.3 million, compared to $10.8 million in the comparable quarter a year ago, an increase of $3.7 million, or
34.1%. Revenue in the Asia Pacific region was $5.5 million in the fourth fiscal quarter of 2008, compared to $4.6
million in the fourth fiscal quarter of 2007, an increase of $0.9 million, or 19.3%. Latin American revenue was
$1.3 million in the fourth fiscal quarter of 2008, compared to $1.2 million in the comparable quarter a year ago, an
increase of $0.1 million, or 10.8%.
Gross profit was higher in the fourth fiscal quarter of 2008 compared to the same period in the prior year by
$2.1 million, or 8.9%. The gross margin was 51.5% in the fourth fiscal quarter of 2008 compared to 52.8 % in the
fourth fiscal quarter of 2007. The gross margin was lower in the fourth fiscal quarter of 2008 than in the
comparable period a year ago due to unfavorable product mix within both the embedded and non-embedded
products, including sales of Sarian non-embedded products which provide lower gross profit margins.
Total operating expenses in the fourth fiscal quarter of 2008 were $20.6 million, or 41.0% of revenue,
compared to $17.6 million, or 39.1% of revenue, in the fourth fiscal quarter of 2007. The increase in operating
expenses in the fourth fiscal quarter of 2008 compared to the same quarter in the prior year is primarily due to
incremental ongoing operating expenses for Sarian and Spectrum from their respective dates of acquisition as
well as incremental operating expenses for sales, marketing and engineering as a result of Digi's Drop-In
Networking initiative.
Digi reported operating income of $5.3 million, or 10.5% of net sales, in the fourth fiscal quarter of 2008
compared to $6.2 million, or 13.8% of net sales, in the fourth fiscal quarter of 2007.
Digi's investment portfolio included an investment in a bond issued by Lehman Brothers in the amount of $1.2
million. During the fourth fiscal quarter of 2008, Digi recorded a pre-tax, other than temporary impairment of $1.0
million which reduced net income by $0.7 million, after tax. This reflected the estimated permanent decline in
value of this security precipitated by the bankruptcy of the security's issuer. The charge reduced earnings per
diluted share for the fourth fiscal quarter and full year fiscal 2008 by $0.03.
GAAP net income was $3.6 million in the fourth fiscal quarter of 2008, or $0.14 per diluted share, compared to
$5.6 million, or $0.21 per diluted share, in the fourth fiscal quarter of 2007. Non-GAAP net income and net
income per diluted share for the fourth fiscal quarter of 2008 were $4.0 million, or $0.16 per diluted share,
compared to $4.7 million, or $0.18 per diluted share for the fourth quarter of fiscal 2007. Please refer to the
detailed reconciliation tables which reconcile GAAP net income and net income per diluted share to non-GAAP
net income and net income per diluted share.
Reconciliation Tables
Results for Fiscal Year Ended September 30, 2008
For the fiscal year ended September 30, 2008, Digi reported revenue of $185.1 million compared to revenue of
$173.3 million for the fiscal year ended September 30, 2007, an increase of $11.8 million or 6.8%. Revenue from
embedded products in fiscal 2008 was $86.6 million, including all Spectrum revenue of $0.8 million from date of
acquisition, compared to $74.4 million in fiscal 2007, an increase of $12.2 million, or 16.4%. Revenue from non-
embedded products, including Sarian-branded products revenue of $5.7 million from date of acquisition, was
$98.5 million in fiscal 2008, compared to $98.9 million in the comparable period in 2007, a decrease of $0.4
million, or 0.4%.
Revenue in North America was $107.3 million in fiscal 2008, including revenue from Spectrum of $0.8 million
from date of acquisition, compared to $112.0 million in the same period a year ago, a decrease of $4.7 million, or
4.2%. Revenue in Europe, including all Sarian-branded products revenue of $5.7 million from date of acquisition,
was $53.0 million for fiscal 2008 compared to $41.4 million in the comparable period a year ago, an increase of
$11.6 million, or 28.0%. Revenue in the Asia Pacific region was $19.7 million in fiscal 2008 compared to $15.6
million in fiscal 2007, an increase of $4.1 million, or 26.1%. Revenue in Latin America was $5.1 million in fiscal
2008 compared to $4.3 million in fiscal 2007, an increase of $0.8 million, or 19.5%.
Digi reported operating income of $16.5 million, or 8.9% of net sales, in fiscal 2008 compared to $20.3 million,
or 11.7% of net sales, in fiscal 2007. Operating income for fiscal 2008 was $18.8 million, or 10.1% of net sales,
excluding the charge for in-process research and development and other acquisition-related expenses of $2.2
million.
For the fiscal year ended September 30, 2008, Digi reported GAAP net income of $12.4 million, or $0.47 per
diluted share, compared to net income for the fiscal year ended September 30, 2007, of $19.8 million, or $0.76
per diluted share. Non-GAAP net income and net income per diluted share for fiscal 2008 and 2007 were $14.6
million and $0.56, and $15.4 million and $0.59, respectively.
Digi's cash and cash equivalents and marketable securities balance, including long-term marketable securities,
was $73.7 million at September 30, 2008, a decrease of $13.9 million over the cash and cash equivalents and
marketable securities balance at September 30, 2007. Both Sarian and Spectrum were acquired during fiscal
2008 for cash. These acquisitions represented the largest outflow of cash for the fiscal year. Please refer to the
Condensed Consolidated Statements of Cash Flows which is included in this earnings release for additional cash
flow details. At September 30, 2008, Digi's current ratio was 5.9 to 1 compared to 6.3 to 1 at September 30,
2007.
Condensed Consolidated Statement of Operations
Condensed Consolidated Balance Sheet
Condensed Consolidated Statement of Cash Flows
Guidance
For fiscal 2009, Digi projects revenue in a range of $200 million to $220 million, with a most likely revenue of
$210 million, or an increase of 13.5% over fiscal year 2008. Digi projects GAAP earnings per diluted share to be
in a range of $0.47 to $0.65, with a most likely earnings per diluted share of $0.56, or an increase of 19.1% over
fiscal year 2008.
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.
Contacts:
Ellin Fong
Operation Manager, Asia Pacific
Tel: +852-2833-1008
Fax: +852-2572-9989
Email: ellin_fong@digi.com
SOURCE: Digi International
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