EXHIBIT 99
FOR IMMEDIATE RELEASE
CONTACT: Donna Burke
Digi International Inc.
612-912-3124
donna_burke@dgii.com
Bob Brin
Padilla Speer Beardsley
612-872-3743
bbrin@psbpr.com
DIGI INTERNATIONAL DETAILS PREVIOUSLY ANNOUNCED
WRITE-OFF, RESTRUCTURING CHARGE
ASSOCIATED WITH ACQUISITIONS
MINNEAPOLIS, SEPTEMBER 10, 1998 -- Digi International Inc. (Nasdaq: DGII)
announced today that it has sufficient information to reasonably estimate the
previously announced fiscal fourth quarter write-off and restructuring charge
associated with the acquisitions of ITK International, Inc. and Central Data
Corporation. For the fiscal fourth quarter ending September 30, the company
estimates that it will write off acquired in-process research and development
of approximately $40 million, or $2.63 per fully diluted share, based upon an
estimated 15.2 million shares outstanding, or the majority of the purchase
price of the two companies, which was previously announced. The remaining
goodwill amortization per quarter will be in the range of $.04 to $.06 per
fully diluted share. Digi estimates that the restructuring charge related to
the closure of duplicate facilities in Europe, created through the ITK
purchase, will not exceed $750,000, or $.03 per fully diluted share, net
after tax. The company had previously indicated that the charge could be in
the range of $1 to $2 million.
Digi also announced that it expects fiscal fourth quarter earnings
(excluding the aforementioned write-off of acquired in-process research and
development and the restructuring charge) will be in the range of $.14 to
$.20 per fully diluted share. These results are lower than analysts'
estimates, but a significant improvement from income before a special write
off of $.10 per fully diluted share for the comparable quarter of 1997. The
company anticipates sales between $47 and $50 million for the fiscal fourth
quarter, versus $42.1 million of sales in the fiscal fourth quarter of 1997.
The company's estimated earnings per share and revenue shortfall against the
analysts' estimates is attributed to weakness in international markets,
delays in expected OEM sales, and the effects of integrating its two recent
acquisitions.
"Though these acquisitions have had an impact on near-term results, we
are very confident that they will contribute to Digi's success going
forward," said Jerry A. Dusa, president and chief executive officer of Digi
International. "We are maintaining profitability as we continue to make
strides in the server-based communications arena, a market that is rapidly
gaining momentum. Our core business remains strong and is made stronger by
the Central Data acquisition. Furthermore, the ITK acquisition provides a
Voice over IP product that positions us as one of the few companies currently
shipping products for the Internet telephony market. Once these acquisitions
are integrated, we believe Digi will be positioned to achieve substantial
year-over-year revenue and earnings improvement from 1998 to 1999," noted
Dusa.
PROGRESS ON SERVER-BASED COMMUNICATIONS STRATEGY
The company also announced significant progress in bringing new products
to market that bolster its position as one of the leading providers of
server-based communications products. A server-based approach to remote
access solutions uses standard microprocessor-based server hardware; an open
operating system such as Novel NetWare or Microsoft Windows NT; and
communications boards from Digi as a more open, cost-effective alternative to
traditional "black box" solutions.
"This approach is appealing to companies who want standards-based,
cost-effective solutions and value-added resellers who are experts in
customizing open hardware and software platforms for their customers," said
Dusa.
The company said that it is currently:
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- - taking orders for its NetBlazer 8500 gateway targeted at corporations
seeking to use existing IP networks, such as the Internet, for carrying
voice traffic;
- - shipping the industry's most complete laptop connection product, the
DataFire GO! PRO client PC card, which allows laptop users to communicate
via any one of five different methods anywhere in the world; and
- - releasing a new line of interchangeable, broad-level RAS concentrators, the
DataFire RAS and AccelePort RAS products, which allows custom configuration
of servers to meet many remote access needs.
"Digi is committed to the concept that open systems architectures allow
users to choose best-of-breed technologies," said Dusa. "This means the user
is a winner both in cost and flexibility. These new products expand Digi's
offerings and are being rolled out in various customer environments,
including corporate settings, Internet service providers and next generation
telephone companies."
ABOUT DIGI INTERNATIONAL
Digi International, based in Minneapolis, Minn., is a leading ISO 9001-compliant
provider of data communications hardware and software that delivers seamless
connectivity solutions for open systems, server-based remote access, Internet
telephony and LAN markets. The company markets it products through an
international network of distributors and resellers, system integrators and
original equipment manufacturers (OEMs). For more information, visit Digi's Web
site at www.dgii.com or call 1-800-344-4273 (U.S.) or 612-923-3444
(International).
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All brand names and product names are trademarks or registered trademarks of
their respective companies.
FORWARD-LOOKING STATEMENTS: Certain statements made above, which are summarized
below, are forward-looking statements that involve risks and uncertainties, and
actual results may be materially different. Factors that could cause actual
results to differ include, but are not limited to the following: The
anticipated introduction of products
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or development may be delayed or canceled based upon development problems and
the introduction of competing products. The expectation that the company
will produce substantial year over year revenue and earnings improvement may
be negatively impacted by a shortfall in revenues due to the delay or
cancellation of products in development, the introduction of competing
products or technologies and unanticipated expenses. The expectation that
the company's results for the fiscal fourth quarter, ending September 30,
1998, will be in the range of $.14 to $.20 per fully diluted share (excluding
the restructuring charge and the in-process R&D write-off) may be impacted by
the timing of new product introductions, presently unanticipated revenue
opportunities, unanticipated cost savings or expenditures, and changes in
product mix that may result in margins that are higher or lower than
anticipated.
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