UNITED STATES
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
July 23,
2009
Date
of report (date of earliest event reported)Digi International Inc.
(Exact name of registrant as specified in its charter)
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| Delaware
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1-34033
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41-1532464 |
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| (State of Incorporation)
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(Commission file number)
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(I.R.S. Employer Identification No.) |
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11001 Bren Road East, Minnetonka, Minnesota
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55343 |
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(Address of principal executive offices)
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(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))
Item 2.02 Results of Operations and Financial Condition.
On July 23, 2009, Digi International Inc. (the “Company”) reported its financial results for
the third quarter of fiscal 2009. See the Company’s press release dated July 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”), operating income and historical and
projected net income and net income per diluted share exclusive of
the impact of certain non-recurring
items. The non-recurring items consist of discrete tax benefits, projected restructuring expenses
and certain acquisition-related 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 operating income, 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, 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 acquisitions and taxes, which while
important are not central to the core operations of the Company’s business.
Reconciliation of Guidance for Projected Net Income per Diluted Share to Net Income per Diluted Share, Excluding
Restructuring Expenses and Reversal of Tax Reserves and Other Discrete Tax Benefits
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For the three months ended |
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For the twelve months ended |
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September 30, 2009 |
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September 30, 2009 |
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High |
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Low |
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High |
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Projected net income per common share,
diluted (GAAP basis) |
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0.04 |
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0.10 |
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$ |
0.16 |
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$ |
0.22 |
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Projected restructuring expenses
included in operating expenses, net of
taxes |
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— |
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— |
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0.05 |
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0.05 |
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Projected reversal of tax reserves and
other discrete tax benefits |
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— |
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— |
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(0.04 |
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(0.04 |
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Projected net income per diluted common
share, adjusted for restructuring
expenses, net of taxes, and reversal of
tax reserves and other discrete tax
benefits (Non-GAAP basis) |
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$ |
0.04 |
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$ |
0.10 |
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$ |
0.18 |
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$ |
0.24 |
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Reconciliation of Income before Income Taxes to Earnings before Taxes,
Depreciation and Amortization
(in thousands of dollars and as a percent of Net Sales)
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For the three |
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months ended |
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June 30, 2009 |
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% of net sales |
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Net sales |
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$ |
44,470 |
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100.0 |
% |
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Income before income taxes |
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$ |
1,369 |
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3.1 |
% |
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Depreciation and amortization |
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2,565 |
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5.8 |
% |
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Earnings before taxes,
depreciation, and amortization |
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$ |
3,934 |
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8.8 |
% |
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2