Digi International Announces NetSilicon Restructuring Plan.

Business Editors & Technology Writers

MINNEAPOLIS--(BUSINESS WIRE)--Sept. 4, 2002

Digi International(R) Inc. (Nasdaq:DGII) today outlined the details of its previously announced plans to restructure the NetSilicon division of its business.

Digi expects to record a related after-tax charge during the fourth fiscal quarter of 2002 of $960,000 to $1.1 million, or four to five cents per share. More than half of the restructuring charges are attributable to the reduction of 34 positions in NetSilicon's worldwide workforce. The balance of the charges are attributable to excess inventory and lease and fixed asset write-down.

"Our goal in restructuring NetSilicon is to size the business to the current revenue forecast, while continuing to support and invest in vital areas of product development," said Joe Dunsmore, president and CEO of Digi. "We expect the restructuring to position the NetSilicon division to achieve profitability in 2004."

First Quarter 2003 Guidance

Assuming no change in current economic conditions, Digi expects revenue for the fiscal first quarter of 2003 to be flat relative to the fiscal fourth quarter of 2002 and to report a loss of two to four cents per share.

Digi's first quarter fiscal 2003 guidance does not factor in any non-cash adjustments that may be warranted by the implementation of SFAS No. 142. In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 142, " Goodwill and Other Intangible Assets" ("SFAS 142"). SFAS 142 requires goodwill to be tested for impairment under certain circumstances and written down when impaired, rather than being amortized as previous standards required. For any acquisitions completed after June 30, 2001, goodwill and intangible assets with indefinite life are not amortized. As reported in Digi's third quarter 2002 earnings announcement, the company must test for goodwill impairment, as prescribed by SFAS No. 142, related to its acquisitions. The company has retained a valuation firm to begin that process and expects such calculations to result in a goodwill impairment charge. The amount of such charge may be material and any charge will be reported as a change in accounting principle in the first quarter of fiscal 2003.

Conference Call Notice

Digi will host a live Webcast of its conference call to discuss the NetSilicon restructuring today, Wednesday, September 4, 2002 at 4:00 pm CT. To access the Webcast, go to the Investor Relations portion of the company's Web site at www.digi.com and click on the conference call icon. If you do not have access to the Internet and want to listen to an audio replay, dial [phone], access number 20869203. The audio replay will be available beginning at 6:00 p.m. CT on Wednesday, September 4, and will be available until 5:00 p.m. CT on Friday, September 13, 2002.

About Digi International

Digi International, based in Minneapolis, is the leader in Connectware, making device networking simple by manufacturing products and technologies that are easy to use and cost effective. Digi markets its products through a global network of distributors and resellers, systems integrators and original equipment manufacturers (OEMs).

For more information, visit Digi's Web site at www.digi.com, or call 877-912-3444 (U.S.) or 952-912-3444 (International). All brand names and product names are trademarks or registered trademarks of their respective companies.

Digi, Digi International and the Digi logo are trademarks or registered trademarks of Digi International Inc. in the United States and other countries. All other brand names and product names are trademarks or registered trademarks of their respective companies.

Forward-looking statements 

This press release contains statements that constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which generally can be identified by the use of forward-looking terminology such as "anticipate," "believe," target," "estimate," "may," "will," "expect," "plan," "project," "should," or "continue" or the negative thereof or other variations thereon or similar terminology. Such statements are based on information available to management as of the time of such statements and relate to, among other things, expectations of the business environment in which the Company operates, projections of future performance, perceived opportunities in the market and statements regarding the Company's mission and vision. Such statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, including risks related to the highly competitive market in which the Company operates; rapid changes in technologies that may displace products sold by the Company, declining prices of networking products, the Company's reliance on distributors, delays in the Company's product development efforts, uncertainty in consumer acceptance of the Company's products, and changes in the Company's level of revenue or profitability. These and other risks, uncertainties and assumptions identified from time to time in the Company's filings with the Securities and Exchange Commission, including without limitation, its annual reports on Form 10-K, its quarterly reports on Form 10-Q and its definitive Joint Proxy Statement/Prospectus filed on January 10, 2002, could cause the Company's future results to differ materially from those expressed in any forward-looking statements made by or on behalf of the Company. Many of such factors are beyond the Company's ability to control or predict. These forward-looking statements speak only as of the date for which they are made. The Company disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.