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Digi International Reports First Fiscal Quarter 2009 Results
Posted by: gurufocus (IP Logged)
Date: January 23, 2009 04:01AM

Press Release: Digi International Reports First Fiscal Quarter 2009 Results

MINNEAPOLIS, Jan. 23 /PRNewswire-Asia/ -- Digi International(R) Inc.(Nasdaq: DGII; [www.digi.com] ) reported revenue of $41.4 million for thefirst fiscal quarter of 2009, compared with $44.6 million for the first fiscalquarter of 2008, a decrease of $3.2 million, or 7.2%.

(Logo: [www.prnasia.com] )

"The Digi team continues to execute steadfastly on its strategy in a toughenvironment," said Joseph Dunsmore, Digi's CEO. "Digi is positioned with itsbalance sheet, strong operating margins, and market and product positioning,to gain share and emerge in a strengthened position, despite rapidly changingeconomic conditions."

Revenue from embedded products in the first fiscal quarter of 2009 was$18.0 million compared to $20.7 million in the first fiscal quarter of 2008, adecrease of $2.7 million, or 13.0%. Revenue from non-embedded products was$23.4 million in the first fiscal quarter of 2009 compared to $23.9 million inthe first fiscal quarter of 2008, a decrease of $0.5 million, or 2.2%.Revenue from embedded products includes $1.0 million of Spectrum revenue inthe first fiscal quarter of 2009. Revenue from non-embedded products includesSarian-branded revenue of $3.1 million for the first fiscal quarter of 2009.Spectrum Design Solutions, Inc. and Sarian Systems, Inc. were acquired inApril 2008 and July 2008, respectively. The weakening of the Euro and UKpound sterling had an unfavorable impact on revenue of $1.4 million in thefirst fiscal quarter of 2009 compared to the first fiscal quarter of 2008.

Revenue by geographic region is shown below:

    Revenue by Geographic Region
    (in millions)
                                                Q1 09 v. Q1 08  Q1 09 v. Q1 08
                          Q1 2009     Q1 2008      Favorable       Favorable
                                                 (Unfavorable)   (Unfavorable)
    EMEA (Europe, Middle
     East and Africa)    $  13.3 (1)  $  11.1       $  2.2           19.6%

    Latin America            1.1          0.8          0.3           35.7%

    North America           23.2 (2)     28.2         (5.0)         -17.7%

    Asia Pacific             3.8          4.5         (0.7)         -15.4%

    Total revenue        $  41.4      $  44.6       $ (3.2)          -7.2%

    (1) Includes Sarian revenue of $3.1 million.
    (2) Includes Spectrum revenue of $1.0 million.

Gross profit was $21.2 million in the first fiscal quarter of 2009compared to $23.9 million in the same period in the prior year. The grossmargin was 51.4% in the first fiscal quarter of 2009 compared to 53.6% in thefirst fiscal quarter of 2008. The gross margin was lower in the first fiscalquarter of 2009 than in the comparable period a year ago due to unfavorableproduct mix within primarily the non-embedded products, including sales ofSarian non-embedded products which provide lower gross profit margins.

Total operating expenses in the first fiscal quarter of 2009 were $20.5million, or 49.5% of revenue, compared to $19.3 million, or 43.3% of revenue,in the first fiscal quarter of 2008. The increase in operating expenses inthe first fiscal quarter of 2009 compared to the same quarter in the prioryear is primarily due to incremental ongoing operating expenses for Sarian andSpectrum.

Total other income, net decreased by $0.8 million in the first fiscalquarter of 2009 compared to the same quarter in the prior year due to adecrease in interest income, net of $0.5 million and foreign currencytransaction losses of $0.3 million.

Reported net income was $1.0 million in the first fiscal quarter of 2009,or $0.04 per diluted share, compared to $3.7 million, or $0.14 per dilutedshare, in the first fiscal quarter of 2008. As a result of the extension infiscal 2009 of the research and development tax credit for two additionalyears beyond calendar 2007, a benefit for research and development creditsearned during the last three quarters of fiscal 2008 was recorded in the firstquarter of fiscal 2009, resulting in an additional tax benefit of $0.4 million,or $0.01 per diluted share.

Digi's cash and cash equivalents and marketable securities balance,including long-term marketable securities, was $70.2 million at December 31,2008, a decrease of $3.4 million from September 30, 2008. The decrease inthe cash and cash equivalents and marketable securities balance at December 31,2008 compared to the prior quarter is a result of payments for estimatedincome taxes, incentive compensation payments related to prior year companyperformance, and unfavorable changes in working capital. Please refer to theCondensed Consolidated Statements of Cash Flows which is included in thisearnings release for additional cash flow details. At December 31, 2008,Digi's current ratio was 6.7 to 1 compared to 6.4 to 1 at September 30, 2008.

First Fiscal Quarter 2009 Business Highlights:

    -- In spite of the challenging economy, Digi's wireless revenue grew over
       40% from the first fiscal quarter of 2008.  With wireless revenue now
       reaching 32.5% of revenue, Digi's wireless initiatives continue to
       build momentum.

    Digi's Wireless Drop-In Networking

    -- With the Rabbit brand, Digi launched two new product lines.  The ultra-
       compact Rabbit MiniCore modules are smaller than a packet of sugar and
       provide low-cost, easy to use, wired or wireless building blocks for
       embedded devices.  For the fastest time to market for a wireless
       embedded device, Rabbit launched a new family of wireless single board
       computers (SBCs).  Embedded developers start with a virtually complete
       piece of hardware and only have to add software and an enclosure to
       create a product with Rabbit SBCs.
    -- Digi increased its access to European M2M markets with the release of
       868 MHz Wireless Modules and Device Adapters in the XBee product family.
       These long range (up to 40km line of sight) products operate in the 868
       MHz frequency range that is popular in Europe.
    -- Leveraging the recent Sarian acquisition, Digi launched a new line of
       advanced enterprise class cellular routers.  These devices are ideal
       for remote transportation, lottery, financial, retail and enterprise
       backup applications.
    -- Digi released the industry's first 802.11a/b/g secure embedded
       networking core module, the ConnectCore(TM) Wi-9P 9215.  This module is
       ideal for devices that are located in environments with a lot of
       wireless interference, like hospitals, manufacturing facilities, and
       airports.

    Other Launches

    -- Increasing its access to Linux markets, Digi launched the industry's
       smallest Linux embedded device server. About the size of a pair of dice,
       the high-performance Digi Connect ME 9210 allows OEMs to easily add
       secure Ethernet connectivity using Linux in space-constrained devices.

Fiscal 2009 Guidance

Digi expects revenue for the second fiscal quarter of 2009 in a range of$40 million to $46 million, and earnings per diluted share in a range of $0.01to $0.07. As previously announced in its pre-release on January 5, 2009, Digiprojects annual revenue in a range of $170 million to $200 million. Digiprojects GAAP earnings per diluted share to be in a range of $0.19 to $0.47.

First Fiscal Quarter 2009 Conference Call Details

Digi invites all those interested in hearing management's discussion ofits quarter, on Thursday, January 22, 2009 after market close at 5:00 p.m. EST(4:00 p.m. CST), to join the call by dialing (866) 700-6293 and enteringpasscode 92000866. International participants may access the call by dialing(617) 213-8835 and entering passcode 92000866. A replay will be available twohours 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 forinternational participants and entering access code 38683029 when prompted.Participants may also access a live webcast of the conference call through theinvestor relations section of Digi's website, [www.digi.com] .

About Digi International

Digi International, based in Minneapolis, is the leader in devicenetworking for business. Digi develops reliable products and technologies thatenable companies to connect and securely manage local or remote electronicdevices over the network or via the web.

For more information, visit Digi's Web site at [www.digi.com] , orcall+852-2833-1008.

Condensed Consolidated Statement of Operations:[www.digi.com]

Condensed Consolidated Balance Sheet:
[www.digi.com]

Condensed Consolidated Statement of Cash Flows:[www.digi.com]

Press Contact:

     Kylie Chan
     Channel Marketing Manager, Asia Pacific
     Digi International
     Tel:   +852-2833-1008
     Fax:   +852-2572-9989
     Email: kylie.chan@digi.com

Condensed Consolidated Statement of Cash Flows:[www.digi.com]

Source: PRNewsWire



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