##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended: December 31, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to .
 Commission file number: 0-17972
 DIGI INTERNATIONAL INC.
  Delaware
    
    
    
    41-1532464(State or other jurisdiction of 
incorporation or organization)
    
    
    
    (I.R.S. Employer
Identification Number)11001 Bren Road East
Minnetonka, Minnesota
    
    
    
    55343(Address of principal executive offices)
    
    
    
    (Zip Code)
 (952) 912-3444
 
 þ o
  o þ o
 o þ




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##### 



PagePART I.
    
    FINANCIAL INFORMATIONITEM 1.
    
    Condensed Consolidated Financial Statements (unaudited):Condensed Consolidated Statements of Operations for the three
months ended December 31, 2006 and 2005
    
    
    3Condensed Consolidated Balance Sheets as of
December 31, 2006 and September 30, 2006
    
    
    4Condensed Consolidated Statements of Cash Flows for
the three months ended December 31, 2006 and 2005
    
    
    5Notes to Condensed Consolidated Financial
Statements
    
    
    6ITEM 2.
    
    Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    15Forward-looking Statements
    
    
    15ITEM 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    21ITEM 4.
    
    Controls and Procedures
    
    
    21PART II.
    
    OTHER INFORMATIONITEM 1.
    
    Legal Proceedings
    
    
    22ITEM 1A.
    
    Risk Factors
    
    
    22ITEM 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    22ITEM 3.
    
    Defaults Upon Senior Securities
    
    
    22ITEM 4.
    
    Submission of Matters to a Vote of Securities Holders
    
    
    22ITEM 5.
    
    Other Information
    
    
    22ITEM 6.
    
    Exhibits
    
    
    22Omnibus Stock PlanEmployee Stock Purchase PlanCertificationCertificationCertification
  2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 DIGI INTERNATIONAL INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
 Three months ended December 31,2006
    
    
    2005(in thousands, except per common share data)Net sales
    
    $
    41,811
    
    
    $
    33,376Cost of sales (exclusive of amortization of purchased and core
technology shown separately below)
    
    
    18,650
    
    
    
    14,010Amortization of purchased and core technology
    
    
    1,148
    
    
    
    1,168Gross profit
    
    
    22,013
    
    
    
    18,198Operating expenses:Sales and marketing
    
    
    8,158
    
    
    
    6,752Research and development
    
    
    5,972
    
    
    
    4,815General and administrative
    
    
    3,578
    
    
    
    3,753Total operating expenses
    
    
    17,708
    
    
    
    15,320Operating income
    
    
    4,305
    
    
    
    2,878Other income (expense):Interest income
    
    
    796
    
    
    
    417Interest expense
    
    
    (25
    )
    
    
    (41
    )Other expense
    
    
    
    
    
    
    (43
    )Total other income, net
    
    
    771
    
    
    
    333Income before income taxes
    
    
    5,076
    
    
    
    3,211Income tax provision
    
    
    1,274
    
    
    
    1,028Net income
    
    $
    3,802
    
    
    $
    2,183Net income per common share:Basic
    
    $
    0.15
    
    
    $
    0.10Diluted
    
    $
    0.15
    
    
    $
    0.09Weighted average common shares, basic
    
    
    25,078
    
    
    
    22,781Weighted average common shares, diluted
    
    
    25,983
    
    
    
    23,486
  3




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##### Table of Contents



DIGI
INTERNATIONAL INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
 December 31,
    
    
    September 30,2006
    
    
    2006(in thousands, except share data)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    21,468
    
    
    $
    15,674Marketable securities
    
    
    40,005
    
    
    
    43,207Accounts receivable, net
    
    
    19,773
    
    
    
    20,305Inventories
    
    
    24,636
    
    
    
    21,911Other
    
    
    6,320
    
    
    
    5,528Total current assets
    
    
    112,202
    
    
    
    106,625Property, equipment and improvements, net
    
    
    19,621
    
    
    
    19,488Identifiable intangible assets, net
    
    
    29,553
    
    
    
    31,341Goodwill
    
    
    65,941
    
    
    
    65,841Other
    
    
    2,050
    
    
    
    2,026Total assets
    
    $
    229,367
    
    
    $
    225,321LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Capital lease obligations, current portion
    
    $
    378
    
    
    $
    381Accounts payable
    
    
    7,557
    
    
    
    6,748Income taxes payable
    
    
    5,933
    
    
    
    4,712Accrued expenses:Compensation
    
    
    3,771
    
    
    
    5,851Other
    
    
    4,026
    
    
    
    5,592Total current liabilities
    
    
    21,665
    
    
    
    23,284Capital lease obligations, net of current portion
    
    
    625
    
    
    
    725Net deferred tax liabilities
    
    
    7,559
    
    
    
    7,482Total liabilities
    
    
    29,849
    
    
    
    31,491Commitments and contingenciesStockholders equity:Preferred stock, $.01 par value; 2,000,000 shares authorized;
none issued and outstanding
    
    
    
    
    
    
    Common stock, $.01 par value; 60,000,000 shares authorized;
27,804,591 and 27,748,640 shares issued and outstanding
    
    
    278
    
    
    
    277Additional paid-in capital
    
    
    166,165
    
    
    
    164,782Retained earnings
    
    
    50,811
    
    
    
    47,009Accumulated other comprehensive income
    
    
    1,319
    
    
    
    940Treasury stock, at cost, 2,694,045 and 2,711,496 shares
    
    
    (19,055
    )
    
    
    (19,178
    )Total stockholders equity
    
    
    199,518
    
    
    
    193,830Total liabilities and stockholders equity
    
    $
    229,367
    
    
    $
    225,321
  4




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##### Table of Contents



DIGI
INTERNATIONAL INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 Three months ended December 31,2006
    
    
    2005(in thousands)Operating activities:Net income
    
    $
    3,802
    
    
    $
    2,183Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation of property, equipment and improvements
    
    
    645
    
    
    
    613Amortization of identifiable intangible assets and other assets
    
    
    1,947
    
    
    
    1,907Excess tax benefits from stock-based compensation
    
    
    (60
    )
    
    
    (187
    )Stock-based compensation
    
    
    765
    
    
    
    531Deferred income taxes
    
    
    78
    
    
    
    (708
    )Other
    
    
    289
    
    
    
    (143
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    657
    
    
    
    543Inventories
    
    
    (2,930
    )
    
    
    (556
    )Other assets
    
    
    (776
    )
    
    
    (365
    )Accounts payable and accrued expenses
    
    
    (2,444
    )
    
    
    (2,800
    )Income taxes payable
    
    
    1,179
    
    
    
    1,252Net cash provided by operating activities
    
    
    3,152
    
    
    
    2,270Investing activities:Purchase of held-to-maturity marketable securities
    
    
    (16,941
    )
    
    
    (15,720
    )Proceeds from maturities of held-to-maturity marketable securities
    
    
    20,143
    
    
    
    11,111Contingent purchase price payments related to business acquisitions
    
    
    (781
    )
    
    
    Purchase of property, equipment, improvements and certain
other intangible assets
    
    
    (688
    )
    
    
    (259
    )Net cash provided by (used in) investing activities
    
    
    1,733
    
    
    
    (4,868
    )Financing activities:Payments on capital lease obligations and long-term debt
    
    
    (103
    )
    
    
    (143
    )Excess tax benefits from stock-based compensation
    
    
    60
    
    
    
    187Proceeds from stock option plan transactions
    
    
    515
    
    
    
    1,684Proceeds from employee stock purchase plan transactions
    
    
    191
    
    
    
    114Net cash provided by financing activities
    
    
    663
    
    
    
    1,842Effect of exchange rate changes on cash and cash equivalents
    
    
    246
    
    
    
    (276
    )Net increase (decrease) in cash and cash equivalents
    
    
    5,794
    
    
    
    (1,032
    )Cash and cash equivalents, beginning of period
    
    
    15,674
    
    
    
    12,990Cash and cash equivalents, end of period
    
    $
    21,468
    
    
    $
    11,958
  5




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DIGI INTERNATIONAL INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
  Basis of Presentation
   Recently Issued Accounting Pronouncements
     Three months endedDecember 31,2006
    
    
    2005Net income
    
    $
    3,802
    
    
    $
    2,183Foreign currency translation gain (loss)
    
    
    379
    
    
    
    (254
    )Comprehensive income
    
    $
    4,181
    
    
    $
    1,929
 6




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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    Three months ended December 31,2006
    
    
    2005Numerator:Net income
    
    $
    3,802
    
    
    $
    2,183Denominator:Denominator for basic net income per common
share  weighted average shares outstanding
    
    
    25,078
    
    
    
    22,781Effect of dilutive securities:Employee stock options and employee
stock purchase plan
    
    
    905
    
    
    
    705Denominator for diluted net income per common
share  adjusted weighted average shares outstanding
    
    
    25,983
    
    
    
    23,486Net income per common share, basic
    
    $
    0.15
    
    
    $
    0.10Net income per common share, diluted
    
    $
    0.15
    
    
    $
    0.09
     7




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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
        Three months ended December 31,2006
    
    
    2005Cost of sales
    
    $
    31
    
    
    $
    20Sales and marketing
    
    
    219
    
    
    
    126Research and development
    
    
    149
    
    
    
    127General and administrative
    
    
    366
    
    
    
    258Total stock-based compensation
    
    $
    765
    
    
    $
    531
 8




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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    Weighted Average
    
    
    Weighted Average
    
    
    AggregateAvailable
    
    
    Options
    
    
    Exercise Price per
    
    
    Contractual Term
    
    
    Intrinsicfor Grant
    
    
    Outstanding
    
    
    Common Share
    
    
    (in years)
    
    
    ValueBalances, September 30, 2006
    
    
    597
    
    
    
    4,240
    
    
    $
    10.54Granted
    
    
    (485
    )
    
    
    485
    
    
    
    13.42Exercised
    
    
    
    
    
    
    (56
    )
    
    
    9.21Cancelled
    
    
    27
    
    
    
    (27
    )
    
    
    11.54Balances, December 31, 2006
    
    
    139
    
    
    
    4,642
    
    
    $
    10.85
    
    
    
    5.66
    
    
    $
    16,070Exercisable at December 31, 2006
    
    
    
    
    
    
    3,425
    
    
    $
    10.19
    
    
    
    4.46
    
    
    $
    14,579
  Risk free interest rate
    
    
    4.44% - 4.65
    %Expected option holding period
    
    4 - 5 yearsExpected volatility
    
    
    48% - 52
    %Weighted average volatility
    
    
    49
    %Expected dividend yield
    
    
    0
  9




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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
   Weighted AverageGrant DateNumber of
    
    Fair Value perOptions
    
    Common ShareNonvested at September 30, 2006
    
    
    940
    
    
    $
    5.33Granted
    
    
    485
    
    
    
    5.93Vested
    
    
    (188
    )
    
    
    3.13Forfeited
    
    
    (20
    )
    
    
    4.97Nonvested at December 31, 2006
    
    
    1,217
    
    
    $
    5.92
   MaxStream, Inc.
    10




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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
    Three months ended December 31, 2005Pro forma
    
    As ReportedNet sales
    
    $
    36,609
    
    
    $
    33,376Net income
    
    $
    2,211
    
    
    $
    2,183Net income per common share, basic
    
    $
    0.09
    
    
    $
    0.10Net income per common share, diluted
    
    $
    0.09
    
    
    $
    0.09
   December 31,
    
    
    September 30,2006
    
    
    2006Accounts receivable, net:Accounts receivable
    
    $
    20,409
    
    
    $
    20,800Less allowance for doubtful accounts
    
    
    636
    
    
    
    495$
    19,773
    
    
    $
    20,305Inventories:Raw materials
    
    $
    18,467
    
    
    $
    16,491Work in process
    
    
    1,260
    
    
    
    606Finished goods
    
    
    4,909
    
    
    
    4,814$
    24,636
    
    
    $
    21,911Other accrued expenses:Product warranty accrual
    
    $
    964
    
    
    $
    1,104Accrued professional fees
    
    
    630
    
    
    
    879Other accrued expenses
    
    
    2,432
    
    
    
    3,609$
    4,026
    
    
    $
    5,592
  11




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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
   December 31, 2006
    
    September 30, 2006Gross
    
    
    
    
    
    
    
    
    
    Grosscarrying
    
    Accum.
    
    
    
    
    
    carrying
    
    Accum.amount
    
    amort.
    
    Net
    
    amount
    
    amort.
    
    NetPurchased and core technology
    
    $
    48,046
    
    
    $
    (32,653
    )
    
    $
    15,393
    
    
    $
    48,022
    
    
    $
    (31,492
    )
    
    $
    16,530License agreements
    
    
    2,440
    
    
    
    (1,990
    )
    
    
    450
    
    
    
    2,440
    
    
    
    (1,890
    )
    
    
    550Patents and trademarks
    
    
    7,704
    
    
    
    (3,103
    )
    
    
    4,601
    
    
    
    7,608
    
    
    
    (2,837
    )
    
    
    4,771Customer maintenance contracts
    
    
    700
    
    
    
    (341
    )
    
    
    359
    
    
    
    700
    
    
    
    (324
    )
    
    
    376Customer relationships
    
    
    11,512
    
    
    
    (2,762
    )
    
    
    8,750
    
    
    
    11,470
    
    
    
    (2,356
    )
    
    
    9,114Total
    
    $
    70,402
    
    
    $
    (40,849
    )
    
    $
    29,553
    
    
    $
    70,240
    
    
    $
    (38,899
    )
    
    $
    31,341
   2007 (nine months)
    
    $
    5,6442008
    
    
    5,3862009
    
    
    4,0362010
    
    
    3,6402011
    
    
    3,0722012
    
    
    2,514
  Three months ended December 31,2006
    
    
    2005Beginning balance, October 1
    
    $
    65,841
    
    
    $
    38,675Purchase price adjustment  FS Forth
    
    
    
    
    
    
    (147
    )Foreign currency translation adjustment
    
    
    100
    
    
    
    (33
    )Ending balance, December 31
    
    $
    65,941
    
    
    $
    38,495
    12




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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
      Balance at
    
    Warranties
    
    Settlements
    
    Balance atOctober 1
    
    issued (1)
    
    made
    
    December 312006
    
    $
    1,104
    
    
    $
    85
    
    
    $
    (225
    )
    
    $
    9642005
    
    $
    1,187
    
    
    $
    (1
    )
    
    $
    (118
    )
    
    $
    1,068
 
 (1)
    
    Warranties issued includes a decrease in estimate adjustment of $132,000 and $117,000 in the
first quarter of fiscal 2007 and 2006, respectively.   Contingent obligations
  Legal Proceedings
  13




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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
     In re Initial Public Offering Securities Litigation en
banc
   14




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
       OVERVIEW
  15




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
 OVERVIEW (CONTINUED)
        16




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
 CONSOLIDATED RESULTS OF OPERATIONS
  Three months ended December 31,
    
    
    % increase2006
    
    
    2005
    
    
    (decrease)Net sales
    
    $
    41,811
    
    
    
    100.0
    %
    
    $
    33,376
    
    
    
    100.0
    %
    
    
    25.3
    %Cost of sales (exclusive of amortization of purchased
and core technology shown separately below)
    
    
    18,650
    
    
    
    44.6
    
    
    
    14,010
    
    
    
    42.0
    
    
    
    33.1Amortization of purchased and core technology
    
    
    1,148
    
    
    
    2.8
    
    
    
    1,168
    
    
    
    3.5
    
    
    
    (1.7
    )Gross profit
    
    
    22,013
    
    
    
    52.6
    
    
    
    18,198
    
    
    
    54.5
    
    
    
    21.0Operating expenses:Sales and marketing
    
    
    8,158
    
    
    
    19.5
    
    
    
    6,752
    
    
    
    20.2
    
    
    
    20.8Research and development
    
    
    5,972
    
    
    
    14.3
    
    
    
    4,815
    
    
    
    14.4
    
    
    
    24.0General and administrative
    
    
    3,578
    
    
    
    8.5
    
    
    
    3,753
    
    
    
    11.3
    
    
    
    (4.7
    )Total operating expenses
    
    
    17,708
    
    
    
    42.3
    
    
    
    15,320
    
    
    
    45.9
    
    
    
    15.6Operating income
    
    
    4,305
    
    
    
    10.3
    
    
    
    2,878
    
    
    
    8.6
    
    
    
    49.6Interest income and other, net
    
    
    771
    
    
    
    1.8
    
    
    
    333
    
    
    
    1.0
    
    
    
    131.5Income before income taxes
    
    
    5,076
    
    
    
    12.1
    
    
    
    3,211
    
    
    
    9.6
    
    
    
    58.1Income tax provision
    
    
    1,274
    
    
    
    3.0
    
    
    
    1,028
    
    
    
    3.1
    
    
    
    23.9Net income
    
    $
    3,802
    
    
    
    9.1
    %
    
    $
    2,183
    
    
    
    6.5
    %
    
    
    74.2
    %
    Three months ended December 31,($ in thousands)
    
    2006
    
    
    2005
    
    
    Increase
    
    
    %Non-embedded
    
    $
    25,166
    
    
    
    60.2
    %
    
    $
    19,335
    
    
    
    57.9
    %
    
    $
    5,831
    
    
    
    30.2
    %Embedded
    
    
    16,645
    
    
    
    39.8
    
    
    
    14,041
    
    
    
    42.1
    
    
    
    2,604
    
    
    
    18.5Total net sales
    
    $
    41,811
    
    
    
    100.0
    %
    
    $
    33,376
    
    
    
    100.0
    %
    
    $
    8,435
    
    
    
    25.3
    %
   17




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
           18




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
          19




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
      Payments due by fiscal periodLess thanTotal
    
    1 year
    
    1-3 years
    
    3-5 years
    
    ThereafterOperating leases
    
    $
    6,716
    
    
    $
    2,385
    
    
    $
    2,343
    
    
    $
    1,157
    
    
    $
    831Capital leases
    
    
    1,177
    
    
    
    449
    
    
    
    728
    
    
    
    
    
    
    
    Total contractual cash obligations
    
    $
    7,893
    
    
    $
    2,834
    
    
    $
    3,071
    
    
    $
    1,157
    
    
    $
    831
      20




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
         
 ITEM 4. CONTROLS AND PROCEDURES
   21




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ITEM 4. CONTROLS AND PROCEDURES (CONTINUED)
   
 PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
  
 ITEM 6. EXHIBITS
 Exhibit No.
    
    Description3(a)
    
    Restated Certificate of Incorporation of the Company, as amended (1)3(b)
    
    Amended and Restated By-Laws of the Company, as amended (2)
 22




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##### Table of Contents



PART II. OTHER INFORMATION
 ITEM 6. EXHIBITS (CONTINUED)
 4(a)
    
    Form of Rights Agreement, dated as of June 10, 1998 between Digi International
Inc. and Wells Fargo Bank Minnesota, National Association (formerly known as Norwest
Bank Minnesota, National Association), as Rights Agent (3)4(b)
    
    Amendment dated January 26, 1999, to Share Rights Agreement, dated as of June
10, 1998 between Digi International Inc. and Wells Fargo Bank Minnesota, National
Association (formerly known as Norwest Bank Minnesota, National Association), as
Rights Agent (4)10(a)
    
    Digi International Inc. 2000 Omnibus Stock Plan as Amended and Restated
effective as of November 27, 2006, as approved by stockholders on January 22, 200710(b)
    
    Digi International Inc. Employee Stock Purchase Plan, as Amended and Restated
effective as of November 27, 2006, as approved by stockholders on January 22, 200731(a)
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer31(b)
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer32
    
    Section 1350 Certification
 
 (1)
    
    Incorporated by reference to Exhibit 3(a) to the Companys Form 10-K for the year ended
September 30, 1993 (File No. 0-17972)(2)
    
    Incorporated by reference to Exhibit 3(b) to the Companys Form 10-K for the year ended
September 30, 2001 (File No. 0-17972)(3)
    
    Incorporated by reference to Exhibit 1 to the Companys Registration Statement on Form 8-A
dated June 24, 1998 (File No. 0-17972)(4)
    
    Incorporated by reference to Exhibit 1 to Amendment 1 to the Companys Registration Statement
on Form 8-A dated February 5, 1999 (File No. 0-17972) 23




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##### Table of Contents



DIGI INTERNATIONAL INC.Date: February 7, 2007
    By:
    /s/ Subramanian KrishnanSubramanian KrishnanSenior Vice President, Chief Financial Officer
and Treasurer (Principal Financial and
Accounting Officer) 24




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##### Table of Contents



Exhibit Number
    
    Document Description
    
    Form of Filing3(a)
    
    Restated Certificate of Incorporation
of the Company, as Amended (incorporated
by reference to the corresponding exhibit
number to the Companys Form 10-K for
the year ended September 30, 1993
(File No. 0-17972))
    
    Incorporated by Reference3(b)
    
    Amended and Restated By-Laws of the
Company (incorporated by reference to
the corresponding exhibit number to the
Companys Form 10-K for the year ended
September 30, 2001
(File No. 0-17972))
    
    Incorporated by Reference4(a)
    
    Form of Rights Agreement, dated as of
June 10, 1998 between Digi International Inc.
and Wells Fargo Bank Minnesota, National
Association (formerly known as Norwest Bank
Minnesota, National Association), as Rights
Agent (incorporated by reference to Exhibit 1
to the Companys Registration Statement on
Form 8-A dated June 24, 1998
(File No. 0-17972))
    
    Incorporated by Reference4(b)
    
    Amendment dated January 26, 1999, to Share
Rights Agreement, dated June 10, 1998
between Digi International Inc. and Wells Fargo
Bank Minnesota, National Association (formerly
known as Norwest Bank Minnesota, National
Association), as Rights Agent (incorporated
by reference to Exhibit 1 to Amendment No. 1
to the Companys Registration Statement on
Form 8-A dated February 5, 1999
(File No. 0-17972))
    
    Incorporated by Reference10(a)
    
    Digi International Inc. 2000 Omnibus
Stock Plan as Amended and Restated
effective as of November 27, 2006,
as approved by stockholders on
January 22, 2007
    
    Filed Electronically10(b)
    
    Digi International Inc. Employee Stock
Purchase Plan, as Amended and
Restated effective as of November 27, 2006,
as approved by stockholders on
January 22, 2007
    
    Filed Electronically31(a)
    
    Rule 13a-14(a)/15d-14(a)
Certification of Chief Executive Officer
    
    Filed Electronically31(b)
    
    Rule 13a-14(a)/15d-14(a)
Certification of Chief Financial Officer
    
    Filed Electronically32
    
    Section 1350 Certification
    
    Filed Electronically
 25