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þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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41-1532464
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification Number)
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11001 Bren Road East
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Minnetonka, Minnesota
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55343
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common Stock, par value $.01 per share
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The Nasdaq Global Select Market
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Large accelerated filer
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o
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Accelerated filer
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þ
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Non-accelerated filer
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o
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Smaller reporting company
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o
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Emerging growth company
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o
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Page
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•
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We sold our Etherios CRM consulting business in 2015. This business initially was acquired with the expectation it would drive engagements with companies that utilize the salesforce.com platform and were looking to deploy solutions within their businesses. We were not, however, rewarded in the marketplace as we had expected. As a result, we disposed of this consulting-based business that was losing money and not fully tied to our core hardware expertise.
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•
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We significantly reduced the number of hardware product stock keeping units (SKUs) we produce as over time we had developed many SKUs that were customized for particular customers and not subject to high volume sales. This move to reduce available SKUs is intended to simplify our operations, improve our ability to manage inventory effectively, improve channel stocking strategies and control costs. SKUs have been reduced from close to 5,000 at the beginning of fiscal 2016 to just under 1,000 at
September 30, 2018
.
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•
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We consolidated and relocated office locations to improve efficiencies and provide costs savings. In the first quarter of fiscal 2016, we moved our Digi Wireless Design Services team from an office in downtown Minneapolis to our World Headquarters in suburban Minnetonka. In the third quarter of fiscal 2016, we closed our office in Dortmund, Germany and moved the corresponding positions to an existing office in Munich, Germany. In the third quarter of fiscal 2017, we announced the closure of our Paris, France office to further consolidate European operations in our Munich office.
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•
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We acquired Accelerated in January 2018 to further enhance our existing cellular product lines and immediately extend our market reach with a line of commercial routers and network appliance products (see Note 2 to the Consolidated Financial Statements).
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•
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In October 2017, we added new leadership to our IoT Products & Services group in the areas of product management and research and development to drive greater alignment around the products we bring to market to meet the needs and desires of potential customers in key markets in a timely manner. We believe this increased alignment levered our technical capabilities and drove more consistent growth. In March 2018, we hired new leadership for our sales team in EMEA, a region that we have targeted as an opportunity for growth.
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•
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In June 2018, we appointed a new Chief Financial Officer who has held a wide range of leadership positions managing financial and business operations for public companies.
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In the third quarter of fiscal 2018, we announced a restructuring of our manufacturing operations in our Eden Prairie, Minnesota facility to existing contract manufacture suppliers. This move was made to reduce our operating expenses and better position our employees to drive positive results in our operations through increased collaboration.
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•
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In November 2018, subsequent to the end of fiscal 2018, we announced an executive appointment designed to lead our IoT Products & Services segment to more closely address market needs and provide greater alignment with our organizational structure.
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•
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Console servers - Our console servers provide a secure remote graphical access to computer systems and network equipment that can communicate with virtually any server or device.
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Serial servers - Our serial servers (also known as device servers and terminal servers) provide secure, reliable and flexible serial-to-Ethernet integration of most devices into wired Ethernet networks. They are used for a variety of applications such as automation, robotics control, centralized device monitoring and management, data acquisition and point-of-sale applications.
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•
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USB - Our Universal Serial Bus (USB) solutions include USB-to-serial converters that offer instant Input/Output (I/O) expansion for peripheral device connectivity. We also offer USB over Internet Protocol (IP) products that connect USB and serial devices on a wired or wireless Local Area Network (LAN), while eliminating the need for locally-attached host PCs. In addition, we also offer multiport USB hubs that offer a simple solution for adding switched USB ports to a PC, server or thin client.
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•
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tighter focus on an individual product or product category;
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•
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greater financial, technical and marketing resources;
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•
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barriers to transition to our products;
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•
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higher brand recognition across larger geographic regions;
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•
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more comprehensive functionality and/or product features;
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•
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longer-standing cooperative relationships with OEM and end-user customers;
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•
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superior customer service capacity and quality;
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•
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longer operating history; and
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•
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larger customer base.
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•
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our ability to put in place the infrastructure to deploy and evolve our solutions effectively and continuously;
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the features and functionality of our offerings relative to competing offerings as well as our ability to market effectively;
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•
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our ability to engage in successful strategic relationships with third parties such as telecommunications carriers, component makers and systems integrators;
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competing effectively for market share; and
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•
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deploying complete end-to-end solutions that meet the needs of the marketplace generally as well as the particular requirements of our customers more effectively and efficiently than competitive solutions.
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problems combining the acquired operations, technologies, or products;
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•
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unanticipated costs;
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•
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diversion of management’s attention from our core business;
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•
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difficulties integrating businesses in different countries and cultures;
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adverse effects on existing business relationships with suppliers and customers;
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•
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risks associated with entering markets in which we have no or limited prior experience; and
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potential loss of key employees, particularly those of the acquired business.
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•
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We have not traditionally sold products or services to restaurants, pharmacies, hospitals and other similar businesses, which are a focus for SmartSense by Digi
™
.
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•
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SmartSense by Digi
™
offerings are deployed in part to help assure perishable goods are safely preserved. This presents a potential risk of loss in the event of a malfunction or failure of our offerings.
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•
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Although we have retained several key employees with experience in operating companies we have acquired to date, SmartSense by Digi
™
has a limited history with us in a marketplace that is nascent in its development and has numerous competitors. We cannot provide assurances we will be successful in operating and growing this business.
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•
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Our ability to succeed with the SmartSense by Digi
™
offerings will depend in large part on our ability to provide customers with hardware and software products that are easy to deploy and offer features and functionality that address the needs of particular businesses. We may face challenges and delays in the development of this business as the marketplace for products and services evolves to meet the needs and desires of customers.
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Location of Property
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Use of Facility
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Approximate Square Footage
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Ownership or Lease Expiration Date
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Minnetonka, MN
(Corporate headquarters)
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Research & development, sales, sales support,
marketing and administration
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130,000
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Owned
|
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|
|
|
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Boston, MA
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Research & development, sales, sales support and marketing
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13,302
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|
|
March 2026
|
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Eden Prairie, MN
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Manufacturing and warehousing
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58,000
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Owned
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Mishawaka, IN
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Sales, technical support and administration
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12,412
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April 2023
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Tampa, FL
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Sales, sales support, marketing, research & development, technical support and administration
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6,108
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March 2020
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Waltham, MA
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Research & development, sales and sales support
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4,249
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October 2020
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Rochester, MN
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Engineering services
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3,090
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September 2021
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Lindon, UT
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Sales, technical support, research & development and administration
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11,986
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December 2020
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Brisbane, Australia
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Sales, sales support, marketing, research & development, technical support and administration
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3,348
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|
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November 2021
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St. Catharines, Ontario, Canada
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Sales and technical support
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1,179
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June 2019
|
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Hong Kong, China
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Sales, marketing and administration
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1,656
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April 2019
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Beijing, China
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Sales, marketing and administration
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1,617
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October 2019
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Shanghai, China
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Sales, marketing and administration
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1,991
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May 2019
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Ismaning, Germany
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Sales, sales support and administration
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6,878
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September 2022
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Logrono, Spain
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Research & development and administration
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3,229
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January 2020
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Tokyo, Japan
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Sales
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1,371
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Perpetual
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Singapore
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Sales, marketing and administration
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3,498
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April 2019
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Period
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Total Number of Shares Purchased (1)
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Average Price Paid per Share
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Total Number of Shares Purchased as Part of a Publicly Announced Program
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Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program
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|||
July 1, 2018 - July 31, 2018
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—
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—
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—
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$20,000,000.00
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August 1, 2018 - August 31, 2018
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1,286
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|
|
$13.42
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|
—
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$20,000,000.00
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September 1, 2018 - September 30, 2018
|
|
—
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—
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—
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$20,000,000.00
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Total
|
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1,286
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|
|
$13.42
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—
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$20,000,000.00
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(1)
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All shares reported were forfeited by employees in connection with the satisfaction of tax withholding obligations related to the vesting of restricted stock units.
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FY13
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FY14
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FY15
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FY16
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FY17
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FY18
|
||||||||||||
Digi International Inc.
|
|
$
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100.00
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|
|
$
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75.08
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|
|
$
|
118.02
|
|
|
$
|
114.11
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|
|
$
|
106.11
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|
|
$
|
134.63
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|
Nasdaq U.S. Benchmark TR Index
|
|
$
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100.00
|
|
|
$
|
117.85
|
|
|
$
|
117.02
|
|
|
$
|
134.84
|
|
|
$
|
160.08
|
|
|
$
|
188.56
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|
Nasdaq Telecommunications Index
|
|
$
|
100.00
|
|
|
$
|
113.35
|
|
|
$
|
105.27
|
|
|
$
|
132.69
|
|
|
$
|
134.23
|
|
|
$
|
138.41
|
|
For Fiscal Years Ended September 30,
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2018
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2017
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2016
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2015
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2014
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||||||||||
Revenue
|
$
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228,366
|
|
|
$
|
181,634
|
|
|
$
|
203,005
|
|
|
$
|
203,847
|
|
|
$
|
183,173
|
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Gross profit
|
$
|
108,883
|
|
|
$
|
87,174
|
|
|
$
|
99,680
|
|
|
$
|
97,121
|
|
|
$
|
90,377
|
|
Sales and marketing
|
44,517
|
|
|
33,955
|
|
|
33,847
|
|
|
37,574
|
|
|
38,751
|
|
|||||
Research and development
|
33,178
|
|
|
28,566
|
|
|
30,955
|
|
|
29,949
|
|
|
28,912
|
|
|||||
General and administrative
|
28,565
|
|
|
13,331
|
|
|
17,026
|
|
|
18,306
|
|
|
18,244
|
|
|||||
Restructuring charges, net
|
301
|
|
|
2,515
|
|
|
747
|
|
|
403
|
|
|
81
|
|
|||||
Operating income
|
2,322
|
|
|
8,807
|
|
|
17,105
|
|
|
10,889
|
|
|
4,389
|
|
|||||
Total other income (expense), net (1)
|
468
|
|
|
684
|
|
|
(415
|
)
|
|
2,228
|
|
|
672
|
|
|||||
Income before income taxes
|
2,790
|
|
|
9,491
|
|
|
16,690
|
|
|
13,117
|
|
|
5,061
|
|
|||||
Income tax provision (2)
|
1,487
|
|
|
125
|
|
|
3,212
|
|
|
3,684
|
|
|
568
|
|
|||||
Income from continuing operations
|
1,303
|
|
|
9,366
|
|
|
13,478
|
|
|
9,433
|
|
|
4,493
|
|
|||||
Income (loss) from discontinued operations, after income taxes
|
—
|
|
|
—
|
|
|
3,230
|
|
|
(2,845
|
)
|
|
(2,742
|
)
|
|||||
Net income
|
$
|
1,303
|
|
|
$
|
9,366
|
|
|
$
|
16,708
|
|
|
$
|
6,588
|
|
|
$
|
1,751
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic net income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
$
|
0.05
|
|
|
$
|
0.35
|
|
|
$
|
0.52
|
|
|
$
|
0.38
|
|
|
$
|
0.18
|
|
Discontinued operations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.13
|
|
|
$
|
(0.12
|
)
|
|
$
|
(0.11
|
)
|
Net income (3)
|
$
|
0.05
|
|
|
$
|
0.35
|
|
|
$
|
0.65
|
|
|
$
|
0.27
|
|
|
$
|
0.07
|
|
Diluted net income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
$
|
0.05
|
|
|
$
|
0.35
|
|
|
$
|
0.51
|
|
|
$
|
0.37
|
|
|
$
|
0.17
|
|
Discontinued operations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.12
|
|
|
$
|
(0.11
|
)
|
|
$
|
(0.11
|
)
|
Net income (3)
|
$
|
0.05
|
|
|
$
|
0.35
|
|
|
$
|
0.64
|
|
|
$
|
0.26
|
|
|
$
|
0.07
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance sheet data as of September 30,
|
|
|
|
|
|
|
|
|
|
||||||||||
Working capital (current assets less current liabilities)
|
$
|
128,069
|
|
|
$
|
156,380
|
|
|
$
|
171,837
|
|
|
$
|
136,996
|
|
|
$
|
125,927
|
|
Total assets
|
$
|
371,125
|
|
|
$
|
345,189
|
|
|
$
|
336,166
|
|
|
$
|
300,360
|
|
|
$
|
290,459
|
|
Stockholders' equity
|
$
|
330,280
|
|
|
$
|
319,144
|
|
|
$
|
300,029
|
|
|
$
|
274,938
|
|
|
$
|
265,298
|
|
Book value per common share (stockholders' equity divided by outstanding shares)
|
$
|
12.04
|
|
|
$
|
12.01
|
|
|
$
|
11.52
|
|
|
$
|
10.98
|
|
|
$
|
10.88
|
|
Number of employees as of September 30
|
516
|
|
|
514
|
|
|
515
|
|
|
515
|
|
|
571
|
|
(1)
|
Included in total other income (expense), net for fiscal 2015 is a $1.4 million gain from the settlement of a property and casualty insurance claim related to the replacement of our capital equipment destroyed in the fire at our subcontract manufacturer's location in Thailand.
|
(2)
|
In fiscal 2018, we recorded discrete net tax expenses of $1.5 million and in fiscal 2017 and 2016, we recorded discrete net tax benefits of $1.0 million and $1.5 million, respectively (see Note 11 to our Consolidated Financial Statements). In fiscal 2015, we recorded net tax benefits of $0.8 million resulting from the reinstatement of the research and development tax credit for calendar year 2014, reversal of tax reserves due to the expiration of statute of limitations from U.S. and foreign tax jurisdictions and reversal of tax reserves due to the resolution of tax audits. In fiscal 2014, we recorded $1.5 million related to the re-measurement and reversal of certain income tax reserves as a result of a federal income tax audit of fiscal 2012, the reassessment of state research and development tax credits and the release of income tax reserves due to the expiration of statute of limitations from U.S. and foreign tax jurisdictions.
|
(3)
|
Earnings per share are calculated by line item and may not add due to the use of rounded amounts.
|
•
|
IoT Products & Services (formerly "M2M") segment; and
|
•
|
IoT Solutions (formerly "Solutions") segment.
|
•
|
Revenue was $228.4 Million
. Our revenue increased by $46.7 million, or 25.7%, compared to fiscal 2017. This increase was due to an increase in hardware product revenue of $24.6 million and an increase in services and solutions revenue of $22.1 million. In fiscal 2018, hardware product revenue included $22.2 million of incremental revenue from our acquisition of Accelerated in January 2018 and services and solutions revenue included $17.0 million of incremental revenue from our acquisition of TempAlert in October 2017 (see Note 2 to our Consolidated Financial Statements).
|
•
|
Gross Margin was 47.7%.
Our gross margin decreased as a percentage of revenue to 47.7% in fiscal 2018 from 48.0% in fiscal 2017.
|
•
|
Income from Continuing Operations was $1.3 Million and Earnings Per Diluted Share from Continuing Operations were $0.05.
Our income from continuing operations decreased by $8.1 million, or 86.1%, compared to fiscal 2017. Earnings per diluted share from continuing operations were $0.05 in fiscal 2018, compared to $0.35 in fiscal 2017.
|
•
|
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") from Continuing Operations was $22.5 Million
. Our Adjusted EBITDA from continuing operations was $22.5 million, or 9.8% of revenue, in fiscal 2018, compared to $23.5 million, or 12.9% of revenue, in fiscal 2017. Below is a table reconciling income from continuing operations to Adjusted EBITDA from continuing operations (in thousands):
|
|
|
Year ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
||||||||||
|
|
|
|
% of total revenue
|
|
|
|
% of total revenue
|
||||||
Total revenue
|
|
$
|
228,366
|
|
|
100.0
|
%
|
|
$
|
181,634
|
|
|
100.0
|
%
|
Income from continuing operations
|
|
$
|
1,303
|
|
|
0.5
|
%
|
|
$
|
9,366
|
|
|
5.2
|
%
|
Interest income, net
|
|
(420
|
)
|
|
(0.2
|
)
|
|
(608
|
)
|
|
(0.3
|
)
|
||
Income tax provision
|
|
1,487
|
|
|
0.7
|
|
|
125
|
|
|
0.1
|
|
||
Depreciation and amortization
|
|
12,270
|
|
|
5.4
|
|
|
5,497
|
|
|
3.0
|
|
||
Stock-based compensation
|
|
4,854
|
|
|
2.1
|
|
|
4,659
|
|
|
2.6
|
|
||
Restructuring charges, net
|
|
301
|
|
|
0.1
|
|
|
2,515
|
|
|
1.4
|
|
||
Acquisition expense
|
|
2,670
|
|
|
1.2
|
|
|
1,962
|
|
|
1.1
|
|
||
Earnings from continuing operations before interest, taxes, depreciation and amortization
|
|
$
|
22,465
|
|
|
9.8
|
%
|
|
$
|
23,516
|
|
|
12.9
|
%
|
•
|
Balance Sheet current ratio was 4.7 to 1 at September 30, 2018.
Our current ratio was 9.7 to 1 at September 30, 2017. This reduction of our current ratio was the result of cash expenditures in fiscal 2018 of $56.3 million for the acquisitions of TempAlert in October 2017 and Accelerated in January 2018.
|
•
|
Our hardware product revenue grew sequentially and year over year as we successfully introduced and grew revenue from new products, most notably from new cellular and RF products. We believe the success of these new product introductions is indicative of better alignment among the sales, product management and engineering functions of our organization regarding new product development and we are hopeful this better alignment will generally cause a higher success rate for new product introductions in the future.
|
•
|
We completed two acquisitions in fiscal 2018, for a total cash expenditure of $57.1 million (excluding cash acquired of $0.8 million). We completed the acquisition of TempAlert in October 2017 and Accelerated in January 2018 (see Note 2 to the Consolidated Financial Statements).
|
•
|
Our service and solutions revenue increased 146.2% during fiscal 2018 compared to fiscal 2017. The increase was primarily driven by the growth of our SmartSense by Digi
™
business. Services and solutions revenue includes $17.0 million of incremental revenue from the acquisition of TempAlert in October 2017. We now serve over 54,000 customer sites for many leading brands in the following vertical markets: healthcare (including retail pharmacies), food service and transportation/logistics. To date we have experienced almost no customer churn. Subsequent to end of fiscal 2018, one customer representing about 3,000 sites in the transportation sector, decided to terminate their relationship with this business. However, we are currently in the process of, and have had success, with negotiating direct agreements with impacted end-users to continue their monitoring services. We also had increases to our Digi Wireless Design Services and Digi Remote Manager
®
platform.
|
•
|
During fiscal 2018, we significantly reduced the number of hardware product stock keeping units (SKUs) we produce as over time we had developed many SKUs that were customized for particular customers and not subject to high volume sales. This move to reduce available SKUs is intended to simplify our operations, improve our ability to manage inventory effectively, improve channel stocking strategies and control costs. SKUs have been reduced to just under 1,000 at
September 30, 2018
.
|
•
|
In the third quarter of fiscal 2018, we announced a restructuring of our manufacturing operations in our Eden Prairie, Minnesota facility to existing contract manufacture suppliers. This move is expected to reduce our operating expenses and better position our employees to drive positive results in our operations through increased collaboration, however, this is taking longer than anticipated. This move further leverages the manufacturing strength of our vendors and further allows us to focus on new product introductions. The move to outsource falls in line with industry practices. The current facility will continue to house the operations team, which will support contract manufacturers as well as oversee the planning and procurement of finished goods and product fulfillment, logistics and quality.
|
•
|
We have experienced some supply chain constraints, in particular, access to raw materials, due to availability in the market. This has led to longer lead times and may impact our reputation for high service levels.
|
•
|
In our SmartSense by Digi
™
business, we experience longer sales cycles in the food service vertical.
|
•
|
While we are focusing on growing revenues in our SmartSense by Digi
™
business, we are also trying to take steps to enhance the ability of this business to scale via operational enhancements. In particular we are focused on improving processes to onboard new customers in less time and to integrate different legacy software platforms from our four completed acquisitions related to this business into a single platform.
|
|
|
Year ended September 30,
|
|
% Increase (decrease)
|
|||||||||||||||||||||||
($ in thousands)
|
|
2018
|
|
2017
|
|
2016
|
|
2018 compared to 2017
|
|
2017 compared to 2016
|
|||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Hardware product
|
|
$
|
191,050
|
|
|
83.7
|
%
|
|
$
|
166,480
|
|
|
91.7
|
%
|
|
$
|
196,101
|
|
|
96.6
|
%
|
|
14.8
|
%
|
|
(15.1
|
)%
|
Services and solutions
|
|
37,316
|
|
|
16.3
|
|
|
15,154
|
|
|
8.3
|
|
|
6,904
|
|
|
3.4
|
|
|
146.2
|
|
|
119.5
|
|
|||
Total revenue
|
|
228,366
|
|
|
100.0
|
|
|
181,634
|
|
|
100.0
|
|
|
203,005
|
|
|
100.0
|
|
|
25.7
|
|
|
(10.5
|
)
|
|||
Cost of sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Cost of hardware product
|
|
96,332
|
|
|
42.2
|
|
|
85,369
|
|
|
47.0
|
|
|
97,776
|
|
|
48.2
|
|
|
12.8
|
|
|
(12.7
|
)
|
|||
Cost of services and solutions
|
|
20,280
|
|
|
8.9
|
|
|
7,647
|
|
|
4.2
|
|
|
4,662
|
|
|
2.3
|
|
|
165.2
|
|
|
64.0
|
|
|||
Amortization
|
|
2,871
|
|
|
1.2
|
|
|
1,444
|
|
|
0.8
|
|
|
887
|
|
|
0.4
|
|
|
98.8
|
|
|
62.8
|
|
|||
Total cost of sales
|
|
119,483
|
|
|
52.3
|
|
|
94,460
|
|
|
52.0
|
|
|
103,325
|
|
|
50.9
|
|
|
26.5
|
|
|
(8.6
|
)
|
|||
Gross profit
|
|
108,883
|
|
|
47.7
|
|
|
87,174
|
|
|
48.0
|
|
|
99,680
|
|
|
49.1
|
|
|
24.9
|
|
|
(12.5
|
)
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Sales and marketing
|
|
44,517
|
|
|
19.5
|
|
|
33,955
|
|
|
18.7
|
|
|
33,847
|
|
|
16.7
|
|
|
31.1
|
|
|
0.3
|
|
|||
Research and development
|
|
33,178
|
|
|
14.6
|
|
|
28,566
|
|
|
15.7
|
|
|
30,955
|
|
|
15.2
|
|
|
16.1
|
|
|
(7.7
|
)
|
|||
General and administrative
|
|
28,565
|
|
|
12.5
|
|
|
13,331
|
|
|
7.4
|
|
|
17,026
|
|
|
8.4
|
|
|
114.3
|
|
|
(21.7
|
)
|
|||
Restructuring charges, net
|
|
301
|
|
|
0.1
|
|
|
2,515
|
|
|
1.4
|
|
|
747
|
|
|
0.4
|
|
|
(88.0
|
)
|
|
236.7
|
|
|||
Total operating expenses
|
|
106,561
|
|
|
46.7
|
|
|
78,367
|
|
|
43.2
|
|
|
82,575
|
|
|
40.7
|
|
|
36.0
|
|
|
(5.1
|
)
|
|||
Operating income
|
|
2,322
|
|
|
1.0
|
|
|
8,807
|
|
|
4.8
|
|
|
17,105
|
|
|
8.4
|
|
|
(73.6
|
)
|
|
(48.5
|
)
|
|||
Other income (expense), net
|
|
468
|
|
|
0.2
|
|
|
684
|
|
|
0.4
|
|
|
(415
|
)
|
|
(0.2
|
)
|
|
(31.6
|
)
|
|
(264.8
|
)
|
|||
Income from continuing operations, before income taxes
|
|
2,790
|
|
|
1.2
|
|
|
9,491
|
|
|
5.2
|
|
|
16,690
|
|
|
8.2
|
|
|
(70.6
|
)
|
|
(43.1
|
)
|
|||
Income tax provision
|
|
1,487
|
|
|
0.6
|
|
|
125
|
|
|
—
|
|
|
3,212
|
|
|
1.6
|
|
|
1,089.6
|
|
|
(96.1
|
)
|
|||
Income from continuing operations
|
|
1,303
|
|
|
0.6
|
|
|
9,366
|
|
|
5.2
|
|
|
13,478
|
|
|
6.6
|
|
|
(86.1
|
)
|
|
(30.5
|
)
|
|||
Income from discontinued operations, after income taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,230
|
|
|
1.6
|
|
|
N/M
|
|
|
100.0
|
|
|||
Net income
|
|
$
|
1,303
|
|
|
0.6
|
%
|
|
$
|
9,366
|
|
|
5.2
|
%
|
|
$
|
16,708
|
|
|
8.2
|
%
|
|
(86.1
|
)%
|
|
(43.9
|
)%
|
|
|
Revenue
|
|
% of Revenue
|
|||||||||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|||||||||
North America, primarily United States
|
|
$
|
163.4
|
|
|
$
|
117.7
|
|
|
$
|
131.5
|
|
|
71.5
|
%
|
|
64.8
|
%
|
|
64.8
|
%
|
Europe, Middle East & Africa
|
|
39.2
|
|
|
39.4
|
|
|
44.9
|
|
|
17.2
|
%
|
|
21.7
|
%
|
|
22.1
|
%
|
|||
Asia
|
|
20.9
|
|
|
19.9
|
|
|
20.4
|
|
|
9.2
|
%
|
|
11.0
|
%
|
|
10.0
|
%
|
|||
Latin America
|
|
4.9
|
|
|
4.6
|
|
|
6.2
|
|
|
2.1
|
%
|
|
2.5
|
%
|
|
3.1
|
%
|
|||
Total revenue
|
|
$
|
228.4
|
|
|
$
|
181.6
|
|
|
$
|
203.0
|
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
Revenue
|
|
% of Revenue
|
|||||||||||||||||
($ in millions)
|
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
|||||||||
Direct/OEM channel
|
|
$
|
112.1
|
|
|
$
|
70.0
|
|
|
$
|
68.8
|
|
|
49.1
|
%
|
|
38.5
|
%
|
|
33.9
|
%
|
Distributors channel
|
|
116.3
|
|
|
111.6
|
|
|
134.2
|
|
|
50.9
|
%
|
|
61.5
|
%
|
|
66.1
|
%
|
|||
Total revenue
|
|
$
|
228.4
|
|
|
$
|
181.6
|
|
|
$
|
203.0
|
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
Year ended September 30,
|
|
% Increase (decrease)
|
||||||||||||||||||||||
($ in thousands)
|
2018
|
|
2017
|
|
2016
|
|
2018 compared to 2017
|
2017 compared to 2016
|
|||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Hardware product
|
$
|
191,050
|
|
|
94.8
|
%
|
|
$
|
166,480
|
|
|
95.5
|
%
|
|
$
|
196,101
|
|
|
96.9
|
%
|
|
14.8
|
|
(15.1
|
)
|
Services
|
10,456
|
|
|
5.2
|
|
|
7,757
|
|
|
4.5
|
|
|
6,193
|
|
|
3.1
|
|
|
34.8
|
|
25.3
|
|
|||
Total revenue
|
201,506
|
|
|
100.0
|
|
|
174,237
|
|
|
100.0
|
|
|
202,294
|
|
|
100.0
|
|
|
15.7
|
|
(13.9
|
)
|
|||
Cost of sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Cost of hardware product
|
96,332
|
|
|
47.8
|
|
|
85,369
|
|
|
49.0
|
|
|
97,776
|
|
|
48.3
|
|
|
12.8
|
|
(12.7
|
)
|
|||
Cost of services
|
6,497
|
|
|
3.2
|
|
|
4,693
|
|
|
2.7
|
|
|
4,216
|
|
|
2.1
|
|
|
38.4
|
|
11.3
|
|
|||
Amortization of intangibles
|
782
|
|
|
0.4
|
|
|
370
|
|
|
0.2
|
|
|
489
|
|
|
0.3
|
|
|
111.4
|
|
(24.3
|
)
|
|||
Total cost of sales
|
103,611
|
|
|
51.4
|
|
|
90,432
|
|
|
51.9
|
|
|
102,481
|
|
|
50.7
|
|
|
14.6
|
|
(11.8
|
)
|
|||
Gross profit
|
97,895
|
|
|
48.6
|
|
|
83,805
|
|
|
48.1
|
|
|
99,813
|
|
|
49.3
|
|
|
16.8
|
|
(16.0
|
)
|
|||
Total operating expenses
|
82,972
|
|
|
41.2
|
|
|
71,001
|
|
|
40.8
|
|
|
80,991
|
|
|
40.0
|
|
|
16.9
|
|
(12.3
|
)
|
|||
Operating income
|
$
|
14,923
|
|
|
7.4
|
%
|
|
$
|
12,804
|
|
|
7.3
|
%
|
|
$
|
18,822
|
|
|
9.3
|
%
|
|
16.5
|
|
(32.0
|
)
|
|
Year ended September 30,
|
|
% Increase (decrease)
|
% Increase (decrease)
|
|||||||||||||||||||||
($ in thousands)
|
2018
|
|
2017
|
|
2016
|
|
2018 compared to 2017
|
2017 compared to 2016
|
|||||||||||||||||
Solutions revenue
|
$
|
26,860
|
|
|
100.0
|
%
|
|
$
|
7,397
|
|
|
100.0
|
%
|
|
$
|
711
|
|
|
100.0
|
%
|
|
263.1
|
|
940.4
|
|
Cost of sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Cost of solutions
|
13,783
|
|
|
51.3
|
|
|
2,954
|
|
|
40.0
|
|
|
446
|
|
|
62.7
|
|
|
366.6
|
|
562.3
|
|
|||
Amortization of intangibles
|
2,089
|
|
|
7.8
|
|
|
1,074
|
|
|
14.5
|
|
|
398
|
|
|
56.0
|
|
|
94.5
|
|
169.8
|
|
|||
Total cost of sales
|
15,872
|
|
|
59.1
|
|
|
4,028
|
|
|
54.5
|
|
|
844
|
|
|
118.7
|
|
|
294.0
|
|
377.3
|
|
|||
Gross profit
|
10,988
|
|
|
40.9
|
|
|
3,369
|
|
|
45.5
|
|
|
(133
|
)
|
|
(18.7
|
)
|
|
(226.2
|
)
|
(2,633.1
|
)
|
|||
Total operating expenses
|
23,589
|
|
|
87.8
|
|
|
7,366
|
|
|
99.5
|
|
|
1,584
|
|
|
222.8
|
|
|
220.2
|
|
365.0
|
|
|||
Operating loss
|
$
|
(12,601
|
)
|
|
(46.9
|
)%
|
|
$
|
(3,997
|
)
|
|
(54.0
|
)%
|
|
$
|
(1,717
|
)
|
|
(241.5
|
)%
|
|
215.3
|
|
132.8
|
|
|
|
Year ended September 30,
|
||||||||||
($ in thousands)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Operating activities
|
|
$
|
(2,778
|
)
|
|
$
|
2,475
|
|
|
$
|
27,089
|
|
Investing activities
|
|
(23,337
|
)
|
|
(3,743
|
)
|
|
(3,780
|
)
|
|||
Financing activities
|
|
5,828
|
|
|
3,057
|
|
|
7,749
|
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
|
79
|
|
|
706
|
|
|
(349
|
)
|
|||
Net (decrease) increase in cash and cash equivalents
|
|
$
|
(20,208
|
)
|
|
$
|
2,495
|
|
|
$
|
30,709
|
|
|
|
Payments due by fiscal period
|
||||||||||||||||||
($ in thousands)
|
|
Total
|
|
Less than 1 year
|
|
1-3 years
|
|
3-5 years
|
|
Thereafter
|
||||||||||
Operating leases
|
|
$
|
8,619
|
|
|
$
|
1,986
|
|
|
$
|
2,910
|
|
|
$
|
1,887
|
|
|
$
|
1,836
|
|
|
Fiscal years ended September 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands, except per common share data)
|
||||||||||
Revenue:
|
|
|
|
|
|
||||||
Hardware product
|
$
|
191,050
|
|
|
$
|
166,480
|
|
|
$
|
196,101
|
|
Services and solutions
|
37,316
|
|
|
15,154
|
|
|
6,904
|
|
|||
Total revenue
|
228,366
|
|
|
181,634
|
|
|
203,005
|
|
|||
Cost of sales:
|
|
|
|
|
|
||||||
Cost of hardware product
|
96,332
|
|
|
85,369
|
|
|
97,776
|
|
|||
Cost of services and solutions
|
20,280
|
|
|
7,647
|
|
|
4,662
|
|
|||
Amortization
|
2,871
|
|
|
1,444
|
|
|
887
|
|
|||
Total cost of sales
|
119,483
|
|
|
94,460
|
|
|
103,325
|
|
|||
Gross profit
|
108,883
|
|
|
87,174
|
|
|
99,680
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Sales and marketing
|
44,517
|
|
|
33,955
|
|
|
33,847
|
|
|||
Research and development
|
33,178
|
|
|
28,566
|
|
|
30,955
|
|
|||
General and administrative
|
28,565
|
|
|
13,331
|
|
|
17,026
|
|
|||
Restructuring charges, net
|
301
|
|
|
2,515
|
|
|
747
|
|
|||
Total operating expenses
|
106,561
|
|
|
78,367
|
|
|
82,575
|
|
|||
Operating income
|
2,322
|
|
|
8,807
|
|
|
17,105
|
|
|||
Other income (expense), net:
|
|
|
|
|
|
||||||
Interest income
|
445
|
|
|
656
|
|
|
545
|
|
|||
Interest expense
|
(25
|
)
|
|
(48
|
)
|
|
(291
|
)
|
|||
Other income (expense), net
|
48
|
|
|
76
|
|
|
(669
|
)
|
|||
Total other income (expense), net
|
468
|
|
|
684
|
|
|
(415
|
)
|
|||
Income from continuing operations, before income taxes
|
2,790
|
|
|
9,491
|
|
|
16,690
|
|
|||
Income tax provision
|
1,487
|
|
|
125
|
|
|
3,212
|
|
|||
Income from continuing operations
|
1,303
|
|
|
9,366
|
|
|
13,478
|
|
|||
Income from discontinued operations, after income taxes
|
—
|
|
|
—
|
|
|
3,230
|
|
|||
Net income
|
$
|
1,303
|
|
|
$
|
9,366
|
|
|
$
|
16,708
|
|
|
|
|
|
|
|
||||||
Basic net income per common share:
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
0.05
|
|
|
$
|
0.35
|
|
|
$
|
0.52
|
|
Discontinued operations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.13
|
|
Net income
|
$
|
0.05
|
|
|
$
|
0.35
|
|
|
$
|
0.65
|
|
Diluted net income per common share:
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
0.05
|
|
|
$
|
0.35
|
|
|
$
|
0.51
|
|
Discontinued operations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.12
|
|
Net income (1)
|
$
|
0.05
|
|
|
$
|
0.35
|
|
|
$
|
0.64
|
|
Weighted average common shares:
|
|
|
|
|
|
||||||
Basic
|
27,083
|
|
|
26,432
|
|
|
25,760
|
|
|||
Diluted
|
27,652
|
|
|
27,099
|
|
|
26,311
|
|
|
Fiscal years ended September 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Net income
|
$
|
1,303
|
|
|
$
|
9,366
|
|
|
$
|
16,708
|
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
||||||
Foreign currency translation adjustment
|
(865
|
)
|
|
2,041
|
|
|
(2,107
|
)
|
|||
Change in net unrealized (loss) gain on investments
|
(31
|
)
|
|
(14
|
)
|
|
53
|
|
|||
Less income tax benefit (provision)
|
6
|
|
|
5
|
|
|
(20
|
)
|
|||
Reclassification of realized loss (gain) on investments included in net income (1)
|
31
|
|
|
—
|
|
|
(7
|
)
|
|||
Less income tax benefit (provision) (2)
|
(8
|
)
|
|
—
|
|
|
3
|
|
|||
Other comprehensive (loss) income, net of tax
|
(867
|
)
|
|
2,032
|
|
|
(2,078
|
)
|
|||
Comprehensive income
|
$
|
436
|
|
|
$
|
11,398
|
|
|
$
|
14,630
|
|
(1)
|
Recorded in Other income (expense), net in our Consolidated Statements of Operations.
|
(2)
|
Recorded in Income tax provision in our Consolidated Statements of Operations.
|
|
As of September 30,
|
||||||
|
2018
|
|
2017
|
||||
|
(in thousands, except share data)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
58,014
|
|
|
$
|
78,222
|
|
Marketable securities
|
4,736
|
|
|
32,015
|
|
||
Accounts receivable, net
|
50,817
|
|
|
28,855
|
|
||
Inventories
|
41,644
|
|
|
30,238
|
|
||
Receivable from sale of business
|
—
|
|
|
1,998
|
|
||
Other
|
2,613
|
|
|
3,032
|
|
||
Assets held for sale
|
5,220
|
|
|
—
|
|
||
Total current assets
|
163,044
|
|
|
174,360
|
|
||
Marketable securities, long-term
|
—
|
|
|
4,753
|
|
||
Property, equipment and improvements, net
|
6,270
|
|
|
12,801
|
|
||
Identifiable intangible assets, net
|
39,320
|
|
|
11,800
|
|
||
Goodwill
|
154,535
|
|
|
131,995
|
|
||
Deferred tax assets
|
6,665
|
|
|
9,211
|
|
||
Other
|
1,291
|
|
|
269
|
|
||
Total assets
|
$
|
371,125
|
|
|
$
|
345,189
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
12,911
|
|
|
$
|
6,240
|
|
Accrued compensation
|
8,190
|
|
|
4,325
|
|
||
Accrued warranty
|
1,172
|
|
|
987
|
|
||
Accrued professional fees
|
1,367
|
|
|
928
|
|
||
Unearned revenue
|
2,579
|
|
|
1,343
|
|
||
Accrued restructuring
|
453
|
|
|
1,656
|
|
||
Contingent consideration on acquired businesses
|
5,890
|
|
|
388
|
|
||
Other
|
2,413
|
|
|
2,113
|
|
||
Total current liabilities
|
34,975
|
|
|
17,980
|
|
||
Income taxes payable
|
851
|
|
|
877
|
|
||
Deferred tax liabilities
|
334
|
|
|
534
|
|
||
Contingent consideration on acquired businesses
|
4,175
|
|
|
6,000
|
|
||
Other non-current liabilities
|
510
|
|
|
654
|
|
||
Total liabilities
|
40,845
|
|
|
26,045
|
|
||
Commitments and Contingencies (see Notes 15 & 16)
|
|
|
|
||||
Stockholders’ 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; 33,812,838 and 33,007,993 shares issued
|
338
|
|
|
330
|
|
||
Additional paid-in capital
|
255,936
|
|
|
245,528
|
|
||
Retained earnings
|
151,748
|
|
|
150,478
|
|
||
Accumulated other comprehensive loss
|
(23,526
|
)
|
|
(22,659
|
)
|
||
Treasury stock, at cost, 6,385,336 and 6,436,578 shares
|
(54,216
|
)
|
|
(54,533
|
)
|
||
Total stockholders’ equity
|
330,280
|
|
|
319,144
|
|
||
Total liabilities and stockholders’ equity
|
$
|
371,125
|
|
|
$
|
345,189
|
|
|
|
Fiscal years ended September 30,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Operating activities:
|
|
(in thousands)
|
||||||||||
Net income
|
|
$
|
1,303
|
|
|
$
|
9,366
|
|
|
$
|
16,708
|
|
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
|
|
|
|
|
|
|
||||||
Depreciation of property, equipment and improvements
|
|
2,835
|
|
|
2,900
|
|
|
2,742
|
|
|||
Amortization of identifiable intangible assets
|
|
9,435
|
|
|
2,597
|
|
|
1,872
|
|
|||
Stock-based compensation
|
|
4,854
|
|
|
4,659
|
|
|
3,654
|
|
|||
Excess tax benefits from stock-based compensation
|
|
—
|
|
|
(326
|
)
|
|
(212
|
)
|
|||
Deferred income tax (benefit) provision
|
|
(508
|
)
|
|
(2,108
|
)
|
|
1,115
|
|
|||
Gain on sale of property, equipment and improvements
|
|
(622
|
)
|
|
—
|
|
|
—
|
|
|||
Gain on sale of business
|
|
—
|
|
|
—
|
|
|
(2,870
|
)
|
|||
Change in fair value of contingent consideration
|
|
1,377
|
|
|
(4,364
|
)
|
|
(441
|
)
|
|||
Bad debt/product return provision
|
|
1,120
|
|
|
361
|
|
|
168
|
|
|||
Inventory obsolescence
|
|
2,056
|
|
|
1,850
|
|
|
1,734
|
|
|||
Restructuring charges, net
|
|
301
|
|
|
2,515
|
|
|
747
|
|
|||
Other
|
|
67
|
|
|
(9
|
)
|
|
66
|
|
|||
Changes in operating assets and liabilities (net of acquisitions):
|
|
|
|
|
|
|
||||||
Accounts receivable
|
|
(17,002
|
)
|
|
833
|
|
|
(1,188
|
)
|
|||
Inventories
|
|
(9,186
|
)
|
|
(4,484
|
)
|
|
3,993
|
|
|||
Other assets
|
|
(1,412
|
)
|
|
562
|
|
|
597
|
|
|||
Income taxes
|
|
697
|
|
|
(3
|
)
|
|
(1,589
|
)
|
|||
Accounts payable
|
|
2,728
|
|
|
(3,536
|
)
|
|
1,612
|
|
|||
Accrued expenses
|
|
(821
|
)
|
|
(8,338
|
)
|
|
(1,619
|
)
|
|||
Net cash (used in) provided by operating activities
|
|
(2,778
|
)
|
|
2,475
|
|
|
27,089
|
|
|||
Investing activities:
|
|
|
|
|
|
|
||||||
Purchase of marketable securities
|
|
—
|
|
|
(61,964
|
)
|
|
(74,759
|
)
|
|||
Proceeds from maturities of marketable securities
|
|
32,032
|
|
|
87,105
|
|
|
73,706
|
|
|||
Proceeds from sale of business
|
|
2,000
|
|
|
3,000
|
|
|
2,849
|
|
|||
Acquisition of businesses, net of cash acquired
|
|
(56,258
|
)
|
|
(30,111
|
)
|
|
(2,860
|
)
|
|||
Proceeds from sale of property and equipment
|
|
731
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from sale of investment
|
|
—
|
|
|
—
|
|
|
13
|
|
|||
Purchase of property, equipment, improvements and certain other intangible assets
|
|
(1,842
|
)
|
|
(1,773
|
)
|
|
(2,729
|
)
|
|||
Net cash used in investing activities
|
|
(23,337
|
)
|
|
(3,743
|
)
|
|
(3,780
|
)
|
|||
Financing activities:
|
|
|
|
|
|
|
||||||
Acquisition earn-out payments
|
|
—
|
|
|
(518
|
)
|
|
—
|
|
|||
Excess tax benefits from stock-based compensation
|
|
—
|
|
|
326
|
|
|
212
|
|
|||
Proceeds from stock option plan transactions
|
|
5,460
|
|
|
3,502
|
|
|
7,191
|
|
|||
Proceeds from employee stock purchase plan transactions
|
|
1,115
|
|
|
685
|
|
|
896
|
|
|||
Repurchase of common stock
|
|
(748
|
)
|
|
(938
|
)
|
|
(550
|
)
|
|||
Net cash provided by financing activities
|
|
5,827
|
|
|
3,057
|
|
|
7,749
|
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
|
80
|
|
|
706
|
|
|
(349
|
)
|
|||
Net (decrease) increase in cash and cash equivalents
|
|
(20,208
|
)
|
|
2,495
|
|
|
30,709
|
|
|||
Cash and cash equivalents, beginning of period
|
|
78,222
|
|
|
75,727
|
|
|
45,018
|
|
|||
Cash and cash equivalents, end of period
|
|
$
|
58,014
|
|
|
$
|
78,222
|
|
|
$
|
75,727
|
|
|
|
|
|
|
|
|
||||||
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
||||||
Interest paid
|
|
$
|
10
|
|
|
$
|
1
|
|
|
$
|
9
|
|
Income taxes paid, net
|
|
$
|
1,235
|
|
|
$
|
2,129
|
|
|
$
|
3,029
|
|
Supplemental schedule of non-cash investing and financing activities:
|
|
|
|
|
|
|
||||||
Accrual for capitalized intangible asset
|
|
$
|
(78
|
)
|
|
$
|
(36
|
)
|
|
$
|
(183
|
)
|
Receivable related to sale of business
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,956
|
|
Liability related to acquisition of business
|
|
$
|
(2,300
|
)
|
|
$
|
(1,310
|
)
|
|
$
|
(10,550
|
)
|
For fiscal years ended September 30, 2018, 2017 and 2016
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
Other
|
|
Total
|
||||||||||||||
|
|
Common Stock
|
|
Treasury Stock
|
|
Paid-In
|
|
Retained
|
|
Comprehensive
|
|
Stockholders’
|
||||||||||||||||||
|
|
Shares
|
|
Par Value
|
|
Shares
|
|
Value
|
|
Capital
|
|
Earnings
|
|
Loss
|
|
Equity
|
||||||||||||||
Balances, September 30, 2015
|
|
31,534
|
|
|
$
|
315
|
|
|
6,487
|
|
|
$
|
(54,535
|
)
|
|
$
|
227,367
|
|
|
$
|
124,404
|
|
|
$
|
(22,613
|
)
|
|
$
|
274,938
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
16,708
|
|
|
|
|
16,708
|
|
||||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,078
|
)
|
|
(2,078
|
)
|
||||||||||||
Employee stock purchase plan issuances
|
|
|
|
|
|
(104
|
)
|
|
876
|
|
|
20
|
|
|
|
|
|
|
896
|
|
||||||||||
Repurchase of common stock
|
|
|
|
|
|
48
|
|
|
(550
|
)
|
|
|
|
|
|
|
|
(550
|
)
|
|||||||||||
Issuance of stock under stock award plans
|
|
937
|
|
|
10
|
|
|
|
|
|
|
7,181
|
|
|
|
|
|
|
7,191
|
|
||||||||||
Tax impact from equity awards
|
|
|
|
|
|
|
|
|
|
(914
|
)
|
|
|
|
|
|
(914
|
)
|
||||||||||||
Accelerated vesting of Etherios stock award plans
|
|
|
|
|
|
|
|
|
|
184
|
|
|
|
|
|
|
184
|
|
||||||||||||
Stock-based compensation expense
|
|
|
|
|
|
|
|
|
|
3,654
|
|
|
|
|
|
|
3,654
|
|
||||||||||||
Balances, September 30, 2016
|
|
32,471
|
|
|
$
|
325
|
|
|
6,431
|
|
|
$
|
(54,209
|
)
|
|
$
|
237,492
|
|
|
$
|
141,112
|
|
|
$
|
(24,691
|
)
|
|
$
|
300,029
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
9,366
|
|
|
|
|
9,366
|
|
||||||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,032
|
|
|
2,032
|
|
||||||||||||
Employee stock purchase plan issuances
|
|
|
|
|
|
(72
|
)
|
|
614
|
|
|
71
|
|
|
|
|
|
|
685
|
|
||||||||||
Repurchase of common stock
|
|
|
|
|
|
78
|
|
|
(938
|
)
|
|
|
|
|
|
|
|
(938
|
)
|
|||||||||||
Issuance of stock under stock award plans
|
|
537
|
|
|
5
|
|
|
|
|
|
|
3,497
|
|
|
|
|
|
|
3,502
|
|
||||||||||
Tax impact from equity awards
|
|
|
|
|
|
|
|
|
|
(191
|
)
|
|
|
|
|
|
(191
|
)
|
||||||||||||
Stock-based compensation expense
|
|
|
|
|
|
|
|
|
|
4,659
|
|
|
|
|
|
|
4,659
|
|
||||||||||||
Balances, September 30, 2017
|
|
33,008
|
|
|
$
|
330
|
|
|
6,437
|
|
|
$
|
(54,533
|
)
|
|
$
|
245,528
|
|
|
$
|
150,478
|
|
|
$
|
(22,659
|
)
|
|
$
|
319,144
|
|
Cumulative-effect adjustment from adoption of ASU 2016-09
|
|
|
|
|
|
|
|
|
|
52
|
|
|
(33
|
)
|
|
|
|
19
|
|
|||||||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
|
1,303
|
|
|
|
|
1,303
|
|
||||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(867
|
)
|
|
(867
|
)
|
||||||||||||
Employee stock purchase plan issuances
|
|
|
|
|
|
(126
|
)
|
|
1,065
|
|
|
50
|
|
|
|
|
|
|
1,115
|
|
||||||||||
Repurchase of common stock
|
|
|
|
|
|
74
|
|
|
(748
|
)
|
|
|
|
|
|
|
|
(748
|
)
|
|||||||||||
Issuance of stock under stock award plans
|
|
805
|
|
|
8
|
|
|
|
|
|
|
5,452
|
|
|
|
|
|
|
5,460
|
|
||||||||||
Stock-based compensation expense
|
|
|
|
|
|
|
|
|
|
4,854
|
|
|
|
|
|
|
4,854
|
|
||||||||||||
Balances, September 30, 2018
|
|
33,813
|
|
|
$
|
338
|
|
|
6,385
|
|
|
$
|
(54,216
|
)
|
|
$
|
255,936
|
|
|
$
|
151,748
|
|
|
$
|
(23,526
|
)
|
|
$
|
330,280
|
|
|
Fiscal years ended September 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Income from continuing operations
|
$
|
1,303
|
|
|
$
|
9,366
|
|
|
$
|
13,478
|
|
Income from discontinued operations, after income taxes
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,230
|
|
Net income
|
$
|
1,303
|
|
|
$
|
9,366
|
|
|
$
|
16,708
|
|
Denominator:
|
|
|
|
|
|
||||||
Denominator for basic net income per common share — weighted average shares outstanding
|
27,083
|
|
|
26,432
|
|
|
25,760
|
|
|||
Effect of dilutive securities:
|
|
|
|
|
|
||||||
Stock options and restricted stock units
|
569
|
|
|
667
|
|
|
551
|
|
|||
Denominator for diluted net income per common share — adjusted weighted average shares
|
27,652
|
|
|
27,099
|
|
|
26,311
|
|
|||
|
|
|
|
|
|
||||||
Basic net income per common share:
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
0.05
|
|
|
$
|
0.35
|
|
|
$
|
0.52
|
|
Discontinued operations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.13
|
|
Net income
|
$
|
0.05
|
|
|
$
|
0.35
|
|
|
$
|
0.65
|
|
Diluted net income per common share:
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
0.05
|
|
|
$
|
0.35
|
|
|
$
|
0.51
|
|
Discontinued operations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.12
|
|
Net income (1)
|
$
|
0.05
|
|
|
$
|
0.35
|
|
|
$
|
0.64
|
|
•
|
In accordance with ASU 2016-09, beginning on October 1, 2017, we prospectively recorded excess tax benefits/deficiencies as an income tax benefit/expense in the statement of operations. This resulted in a
$0.6 million
tax deficiency in the twelve months ended September 30, 2018, resulting in an unfavorable impact to EPS of
$0.02
per diluted share. This amount was recognized as a discrete item within income tax expense in the condensed consolidated statement of operations.
|
•
|
We adjusted our dilutive shares to remove the excess tax benefits from the calculation of EPS on a prospective basis beginning October 2, 2017. The revised calculation is more dilutive, but did not have a material impact on the Company’s diluted EPS calculation for the three months ended December 31, 2017.
|
•
|
Further, we had no tax benefits that were not previously recognized because the related tax deduction had not reduced taxes payable, therefore, there was no cumulative-effect adjustment to our beginning retained earnings on October 1, 2017.
|
•
|
Additionally, we prospectively adopted the provision to classify excess tax benefits and deficiencies within cash flows from operating activities as part of cash payments for taxes on the statement of cash flows. Prior periods on the statement of cash flows have not been adjusted.
|
•
|
Upon adoption of ASU 2016-09, we account for forfeitures as they occur, rather than estimating forfeitures as of an awards grant date. This change in accounting policy election was adopted using a modified retrospective transition method and on October 1, 2017, we recognized a cumulative effect unfavorable adjustment to retained earnings of approximately
$33,000
.
|
•
|
We have previously shown separately, tax payments made on behalf of an employee by repurchasing shares of stock as cash outflows from financing activities on the statement of cash flows. This provision was retrospectively adopted, and prior period cash flows already conformed with this presentation.
|
|
|
Fiscal year ended September 30, 2018
|
||||||||||
(in thousands, except per common share data)
|
|
As Reported
|
|
Impact of Adoption
|
|
As Adjusted
|
||||||
Revenue:
|
|
|
|
|
|
|
||||||
Hardware product
|
|
$
|
191,050
|
|
|
$
|
—
|
|
|
$
|
191,050
|
|
Services and solutions
|
|
37,316
|
|
|
(1,473
|
)
|
|
35,843
|
|
|||
Total revenue
|
|
228,366
|
|
|
(1,473
|
)
|
|
226,893
|
|
|||
Cost of sales:
|
|
|
|
|
|
|
||||||
Cost of hardware product
|
|
96,332
|
|
|
—
|
|
|
96,332
|
|
|||
Cost of services and solutions
|
|
20,280
|
|
|
(1,644
|
)
|
|
18,636
|
|
|||
Amortization
|
|
2,871
|
|
|
—
|
|
|
2,871
|
|
|||
Total cost of sales
|
|
119,483
|
|
|
(1,644
|
)
|
|
117,839
|
|
|||
Gross profit
|
|
108,883
|
|
|
171
|
|
|
109,054
|
|
|||
Operating expenses
|
|
106,561
|
|
|
(289
|
)
|
|
106,272
|
|
|||
Operating income
|
|
2,322
|
|
|
460
|
|
|
2,782
|
|
|||
Net income
|
|
$
|
1,303
|
|
|
$
|
328
|
|
|
$
|
1,631
|
|
Diluted earnings per share
|
|
$
|
0.05
|
|
|
$
|
0.01
|
|
|
$
|
0.06
|
|
|
|
Fiscal year ended September 30, 2017
|
||||||||||
(in thousands, except per common share data)
|
|
As Reported
|
|
Impact of Adoption
|
|
As Adjusted
|
||||||
Revenue:
|
|
|
|
|
|
|
||||||
Hardware product
|
|
$
|
166,480
|
|
|
—
|
|
|
$
|
166,480
|
|
|
Services and solutions
|
|
15,154
|
|
|
(294
|
)
|
|
14,860
|
|
|||
Total revenue
|
|
181,634
|
|
|
(294
|
)
|
|
181,340
|
|
|||
Cost of sales:
|
|
|
|
|
|
|
||||||
Cost of hardware product
|
|
85,369
|
|
|
—
|
|
|
85,369
|
|
|||
Cost of services and solutions
|
|
7,647
|
|
|
(353
|
)
|
|
7,294
|
|
|||
Amortization
|
|
1,444
|
|
|
—
|
|
|
1,444
|
|
|||
Total cost of sales
|
|
94,460
|
|
|
(353
|
)
|
|
94,107
|
|
|||
Gross profit
|
|
87,174
|
|
|
59
|
|
|
87,233
|
|
|||
Operating expenses
|
|
78,367
|
|
|
—
|
|
|
78,367
|
|
|||
Operating income
|
|
8,807
|
|
|
59
|
|
|
8,866
|
|
|||
Net income
|
|
$
|
9,366
|
|
|
37
|
|
|
$
|
9,403
|
|
|
Diluted earnings per share
|
|
$
|
0.35
|
|
|
$
|
—
|
|
|
$
|
0.35
|
|
|
|
September 30, 2018
|
||||||||||
(in thousands)
|
|
As Reported
|
|
Impact of Adoption
|
|
As Adjusted
|
||||||
Accounts receivable, net
|
|
$
|
50,817
|
|
|
$
|
(998
|
)
|
|
$
|
49,819
|
|
Other current assets
|
|
$
|
2,613
|
|
|
$
|
885
|
|
|
$
|
3,498
|
|
Deferred tax assets
|
|
$
|
6,665
|
|
|
$
|
(65
|
)
|
|
$
|
6,600
|
|
Other non-current assets
|
|
$
|
1,291
|
|
|
$
|
1,199
|
|
|
$
|
2,490
|
|
Other current liabilities
|
|
$
|
2,413
|
|
|
$
|
598
|
|
|
$
|
3,011
|
|
Other non-current liabilities
|
|
$
|
510
|
|
|
$
|
210
|
|
|
$
|
720
|
|
Stockholders' equity
|
|
$
|
330,280
|
|
|
$
|
213
|
|
|
$
|
330,493
|
|
|
|
September 30, 2017
|
||||||||||
(in thousands)
|
|
As Reported
|
|
Impact of Adoption
|
|
As Adjusted
|
||||||
Other current assets
|
|
$
|
3,032
|
|
|
$
|
172
|
|
|
$
|
3,204
|
|
Deferred tax assets
|
|
$
|
9,211
|
|
|
$
|
67
|
|
|
$
|
9,278
|
|
Other non-current assets
|
|
$
|
269
|
|
|
$
|
268
|
|
|
$
|
537
|
|
Other current liabilities
|
|
$
|
2,113
|
|
|
$
|
469
|
|
|
$
|
2,582
|
|
Other non-current liabilities
|
|
$
|
654
|
|
|
$
|
153
|
|
|
$
|
807
|
|
Stockholders' equity
|
|
$
|
319,144
|
|
|
$
|
(115
|
)
|
|
$
|
319,029
|
|
Cash
|
$
|
16,430
|
|
Fair value of contingent consideration on acquired business
|
2,300
|
|
|
Total purchase price consideration
|
$
|
18,730
|
|
|
|
||
Fair value of net tangible assets acquired
|
$
|
766
|
|
Fair value of identifiable intangible assets acquired:
|
|
||
Customer relationships
|
6,500
|
|
|
Purchased and core technology
|
3,000
|
|
|
Trade name and trademarks
|
1,000
|
|
|
Order backlog
|
1,800
|
|
|
Goodwill
|
5,664
|
|
|
Total
|
$
|
18,730
|
|
Cash
|
$
|
40,741
|
|
Fair value of contingent consideration on acquired business
|
—
|
|
|
Total purchase price consideration
|
$
|
40,741
|
|
|
|
||
Fair value of net tangible assets acquired
|
$
|
(1,111
|
)
|
Fair value of identifiable intangible assets acquired:
|
|
||
Customer relationships
|
18,300
|
|
|
Purchased and core technology
|
4,000
|
|
|
Trade name and trademarks
|
2,000
|
|
|
Goodwill
|
17,552
|
|
|
Total
|
$
|
40,741
|
|
|
Fiscal year ended September 30,
|
||
|
2016
|
||
Service revenue
|
$
|
891
|
|
Cost of service
|
713
|
|
|
Gross profit
|
178
|
|
|
Operating expenses:
|
|
||
Sales and marketing
|
148
|
|
|
Research and development
|
103
|
|
|
General and administrative
|
43
|
|
|
Total operating expenses
|
294
|
|
|
Loss from discontinued operations, before income taxes
|
(116
|
)
|
|
Gain on sale of discontinued operations, before income taxes
|
2,870
|
|
|
Income from discontinued operations, before income taxes
|
2,754
|
|
|
Income tax benefit on discontinued operations
|
(476
|
)
|
|
Income from discontinued operations, after income taxes
|
$
|
3,230
|
|
|
|
Fiscal year ended September 30,
|
||
|
|
2016
|
||
Amortization of identifiable intangible assets
|
|
$
|
30
|
|
|
September 30, 2018
|
|
September 30, 2017
|
||||||||||||||||||||
|
Gross
carrying
amount
|
|
Accum.
amort.
|
|
Net
|
|
Gross
carrying
amount
|
|
Accum.
amort.
|
|
Net
|
||||||||||||
Purchased and core technology
|
$
|
58,102
|
|
|
$
|
(48,693
|
)
|
|
$
|
9,409
|
|
|
$
|
51,292
|
|
|
$
|
(46,304
|
)
|
|
$
|
4,988
|
|
License agreements
|
102
|
|
|
(46
|
)
|
|
56
|
|
|
18
|
|
|
(17
|
)
|
|
1
|
|
||||||
Patents and trademarks
|
15,701
|
|
|
(12,242
|
)
|
|
3,459
|
|
|
12,484
|
|
|
(11,280
|
)
|
|
1,204
|
|
||||||
Customer relationships
|
46,605
|
|
|
(21,049
|
)
|
|
25,556
|
|
|
21,914
|
|
|
(16,817
|
)
|
|
5,097
|
|
||||||
Non-compete agreements
|
600
|
|
|
(210
|
)
|
|
390
|
|
|
600
|
|
|
(90
|
)
|
|
510
|
|
||||||
Order backlog
|
1,800
|
|
|
(1,350
|
)
|
|
450
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
$
|
122,910
|
|
|
$
|
(83,590
|
)
|
|
$
|
39,320
|
|
|
$
|
86,308
|
|
|
$
|
(74,508
|
)
|
|
$
|
11,800
|
|
Fiscal year
|
Total
|
||
2018
|
$
|
9,435
|
|
2017
|
$
|
2,597
|
|
2016
|
$
|
1,842
|
|
Fiscal year
|
Total
|
||
2019
|
$
|
8,888
|
|
2020
|
$
|
8,118
|
|
2021
|
$
|
7,422
|
|
2022
|
$
|
6,554
|
|
2023
|
$
|
4,362
|
|
|
Fiscal years ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Beginning balance, October 1
|
$
|
131,995
|
|
|
$
|
109,448
|
|
Acquisitions
|
23,216
|
|
|
21,465
|
|
||
Foreign currency translation adjustment
|
(676
|
)
|
|
1,082
|
|
||
Ending balance, September 30
|
$
|
154,535
|
|
|
$
|
131,995
|
|
•
|
Cellular routers and gateways;
|
•
|
Radio frequency ("RF") which include our Digi XBee
®
modules as well as other RF solutions;
|
•
|
Embedded products include Digi Connect
®
and Rabbit
®
embedded systems on module and single board computers;
|
•
|
Network products, which has the highest concentration of mature products, including console and serial servers and USB connected products;
|
•
|
Digi Wireless Design Services;
|
•
|
Digi Remote Manager
®
; and
|
•
|
Digi Support Services which offers various levels of technical services for development assistance, consulting and training.
|
|
Fiscal years ended September 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Revenue
|
|
|
|
|
|
||||||
IoT Products & Services
|
$
|
201,506
|
|
|
$
|
174,237
|
|
|
$
|
202,294
|
|
IoT Solutions
|
26,860
|
|
|
7,397
|
|
|
711
|
|
|||
Total revenue
|
$
|
228,366
|
|
|
$
|
181,634
|
|
|
$
|
203,005
|
|
Operating income (loss)
|
|
|
|
|
|
||||||
IoT Products & Services
|
$
|
14,923
|
|
|
$
|
12,804
|
|
|
$
|
18,822
|
|
IoT Solutions
|
(12,601
|
)
|
|
(3,997
|
)
|
|
(1,717
|
)
|
|||
Total operating income
|
$
|
2,322
|
|
|
$
|
8,807
|
|
|
$
|
17,105
|
|
Depreciation and amortization
|
|
|
|
|
|
||||||
IoT Products & Services
|
$
|
6,040
|
|
|
$
|
3,575
|
|
|
$
|
4,040
|
|
IoT Solutions
|
6,230
|
|
|
1,922
|
|
|
544
|
|
|||
Total depreciation and amortization
|
$
|
12,270
|
|
|
$
|
5,497
|
|
|
$
|
4,584
|
|
|
Fiscal years ended September 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
IoT Products & Services
|
$
|
1,773
|
|
|
$
|
1,738
|
|
|
$
|
2,641
|
|
IoT Solutions
|
69
|
|
|
35
|
|
|
88
|
|
|||
Total expended for property, plant and equipment
|
$
|
1,842
|
|
|
$
|
1,773
|
|
|
$
|
2,729
|
|
|
|
As of September 30,
|
||||||
|
|
2018
|
|
2017
|
||||
IoT Products & Services
|
|
$
|
209,574
|
|
|
$
|
182,555
|
|
IoT Solutions
|
|
98,801
|
|
|
47,644
|
|
||
Unallocated*
|
|
62,750
|
|
|
114,990
|
|
||
Total assets
|
|
$
|
371,125
|
|
|
$
|
345,189
|
|
|
|
As of September 30,
|
||||||
|
|
2018
|
|
2017
|
||||
IoT Products & Services
|
|
$
|
104,358
|
|
|
$
|
98,981
|
|
IoT Solutions
|
|
50,177
|
|
|
33,014
|
|
||
Total goodwill
|
|
$
|
154,535
|
|
|
$
|
131,995
|
|
|
|
As of September 30,
|
||||||
|
|
2018
|
|
2017
|
||||
United States
|
|
$
|
6,156
|
|
|
$
|
12,648
|
|
International, primarily Europe
|
|
114
|
|
|
153
|
|
||
Total net property, equipment and improvements
|
|
$
|
6,270
|
|
|
$
|
12,801
|
|
|
Fiscal years ended September 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
North America, primarily United States
|
$
|
163,397
|
|
|
$
|
117,749
|
|
|
$
|
131,457
|
|
Europe, Middle East & Africa
|
39,211
|
|
|
39,403
|
|
|
44,932
|
|
|||
Asia
|
20,881
|
|
|
19,892
|
|
|
20,390
|
|
|||
Latin America
|
4,877
|
|
|
4,590
|
|
|
6,226
|
|
|||
Total revenue
|
$
|
228,366
|
|
|
$
|
181,634
|
|
|
$
|
203,005
|
|
|
As of September 30,
|
||||||
|
2018
|
|
2017
|
||||
Accounts receivable, net:
|
|
|
|
||||
Accounts receivable
|
$
|
54,451
|
|
|
$
|
31,365
|
|
Less allowance for doubtful accounts
|
1,074
|
|
|
341
|
|
||
Less reserve for future returns and pricing adjustments
|
2,560
|
|
|
2,169
|
|
||
Total accounts receivable, net
|
$
|
50,817
|
|
|
$
|
28,855
|
|
|
|
|
|
||||
Inventories:
|
|
|
|
||||
Raw materials
|
$
|
22,047
|
|
|
$
|
24,050
|
|
Work in process
|
525
|
|
|
484
|
|
||
Finished goods
|
19,072
|
|
|
5,704
|
|
||
Total inventories
|
$
|
41,644
|
|
|
$
|
30,238
|
|
|
|
|
|
||||
Property, equipment and improvements, net:
|
|
|
|
||||
Land
|
$
|
570
|
|
|
$
|
1,800
|
|
Buildings
|
2,338
|
|
|
10,522
|
|
||
Improvements
|
1,698
|
|
|
3,445
|
|
||
Equipment
|
15,803
|
|
|
17,133
|
|
||
Purchased software
|
3,966
|
|
|
3,571
|
|
||
Furniture and fixtures
|
3,350
|
|
|
3,473
|
|
||
Total property, equipment and improvements, gross
|
27,725
|
|
|
39,944
|
|
||
Less accumulated depreciation and amortization
|
21,455
|
|
|
27,143
|
|
||
Total property, equipment and improvements, net
|
$
|
6,270
|
|
|
$
|
12,801
|
|
|
Amortized
Cost (1)
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair Value (1)
|
||||||||
Current marketable securities:
|
|
|
|
|
|
|
|
||||||||
Certificates of deposit
|
$
|
4,756
|
|
|
$
|
—
|
|
|
$
|
(20
|
)
|
|
$
|
4,736
|
|
Total marketable securities
|
$
|
4,756
|
|
|
$
|
—
|
|
|
$
|
(20
|
)
|
|
$
|
4,736
|
|
(1)
|
Included in amortized cost and fair value is purchased and accrued interest of
$6
.
|
|
Amortized
Cost (1)
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair Value (1)
|
||||||||
Current marketable securities:
|
|
|
|
|
|
|
|
||||||||
Corporate bonds
|
$
|
28,275
|
|
|
$
|
—
|
|
|
$
|
(20
|
)
|
|
$
|
28,255
|
|
Certificates of deposit
|
3,756
|
|
|
4
|
|
|
—
|
|
|
3,760
|
|
||||
Current marketable securities
|
32,031
|
|
|
4
|
|
|
(20
|
)
|
|
32,015
|
|
||||
Non-current marketable securities:
|
|
|
|
|
|
|
|
||||||||
Certificates of deposit
|
4,757
|
|
|
—
|
|
|
(4
|
)
|
|
4,753
|
|
||||
Total marketable securities
|
$
|
36,788
|
|
|
$
|
4
|
|
|
$
|
(24
|
)
|
|
$
|
36,768
|
|
(1)
|
Included in amortized cost and fair value is purchased and accrued interest of
$211
.
|
|
September 30, 2018
|
||||||||||||||
|
Less than 12 Months
|
|
More than 12 Months
|
||||||||||||
|
Fair Value
|
|
Unrealized Losses
|
|
Fair Value
|
|
Unrealized Losses
|
||||||||
Certificates of deposit
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,736
|
|
|
$
|
(20
|
)
|
Total
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,736
|
|
|
$
|
(20
|
)
|
|
September 30, 2017
|
||||||||||||||
|
Less than 12 Months
|
|
More than 12 Months
|
||||||||||||
|
Fair Value
|
|
Unrealized Losses
|
|
Fair Value
|
|
Unrealized Losses
|
||||||||
Corporate bonds
|
$
|
26,196
|
|
|
$
|
(20
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Certificates of deposit
|
3,751
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
29,947
|
|
|
$
|
(24
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
Fair Value Measurements at September 30, 2017 using:
|
||||||||||||
|
Total carrying
value at
September 30, 2017
|
|
Quoted price in
active markets
(Level 1)
|
|
Significant other
observable inputs
(Level 2)
|
|
Significant
unobservable inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market
|
$
|
39,524
|
|
|
$
|
39,524
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Corporate bonds
|
28,255
|
|
|
—
|
|
|
28,255
|
|
|
—
|
|
||||
Certificates of deposit
|
8,513
|
|
|
—
|
|
|
8,513
|
|
|
—
|
|
||||
Total assets measured at fair value
|
$
|
76,292
|
|
|
$
|
39,524
|
|
|
$
|
36,768
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent consideration on acquired business
|
$
|
6,388
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,388
|
|
Total liabilities measured at fair value
|
$
|
6,388
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,388
|
|
|
|
Fiscal years ended September 30,
|
||||||
|
|
2018
|
|
2017
|
||||
Fair value at beginning of period
|
|
$
|
6,388
|
|
|
$
|
9,960
|
|
Purchase price contingent consideration
|
|
2,300
|
|
|
1,310
|
|
||
Contingent consideration payments
|
|
—
|
|
|
(518
|
)
|
||
Change in fair value of contingent consideration
|
|
1,377
|
|
|
(4,364
|
)
|
||
Fair value at end of period
|
|
$
|
10,065
|
|
|
$
|
6,388
|
|
|
Balance at
|
|
Warranties
|
|
Settlements
|
|
Balance at
|
||||||||
Fiscal year
|
October 1
|
|
issued
|
|
made
|
|
September 30
|
||||||||
2018
|
$
|
987
|
|
|
$
|
759
|
|
|
$
|
(574
|
)
|
|
$
|
1,172
|
|
2017
|
$
|
1,033
|
|
|
$
|
679
|
|
|
$
|
(725
|
)
|
|
$
|
987
|
|
2016
|
$
|
1,014
|
|
|
$
|
771
|
|
|
$
|
(752
|
)
|
|
$
|
1,033
|
|
|
Manufacturing Transition
|
|
2017 Restructuring
|
|
2016 Restructuring
|
|
|
||||||||||||||||
|
Employee Termination Costs
|
|
Employee Termination Costs
|
|
Other
|
|
Employee
Termination Costs |
|
Other
|
|
Total
|
||||||||||||
Balance at September 30, 2015
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Restructuring charge
|
—
|
|
|
—
|
|
|
—
|
|
|
558
|
|
|
195
|
|
|
753
|
|
||||||
Payments
|
—
|
|
|
—
|
|
|
—
|
|
|
(559
|
)
|
|
(195
|
)
|
|
(754
|
)
|
||||||
Reversals
|
—
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
(6
|
)
|
||||||
Foreign currency fluctuation
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
||||||
Balance at September 30, 2016
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Restructuring charge
|
—
|
|
|
2,258
|
|
|
257
|
|
|
—
|
|
|
—
|
|
|
2,515
|
|
||||||
Payments
|
—
|
|
|
(845
|
)
|
|
(141
|
)
|
|
—
|
|
|
—
|
|
|
(986
|
)
|
||||||
Foreign currency fluctuation
|
—
|
|
|
115
|
|
|
12
|
|
|
—
|
|
|
—
|
|
|
127
|
|
||||||
Balance at September 30, 2017
|
$
|
—
|
|
|
$
|
1,528
|
|
|
$
|
128
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,656
|
|
Restructuring charge
|
504
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
504
|
|
||||||
Payments
|
(357
|
)
|
|
(1,035
|
)
|
|
(161
|
)
|
|
—
|
|
|
—
|
|
|
(1,553
|
)
|
||||||
Reversals
|
—
|
|
|
(244
|
)
|
|
42
|
|
|
—
|
|
|
—
|
|
|
(202
|
)
|
||||||
Foreign currency fluctuation
|
—
|
|
|
44
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
48
|
|
||||||
Balance at September 30, 2018
|
$
|
147
|
|
|
$
|
293
|
|
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
453
|
|
|
Fiscal years ended September 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
United States
|
$
|
(2,887
|
)
|
|
$
|
5,170
|
|
|
$
|
9,841
|
|
International
|
5,677
|
|
|
4,321
|
|
|
6,849
|
|
|||
Income from continuing operations, before income taxes
|
$
|
2,790
|
|
|
$
|
9,491
|
|
|
$
|
16,690
|
|
|
Fiscal years ended September 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
526
|
|
|
$
|
312
|
|
|
$
|
(141
|
)
|
State
|
57
|
|
|
165
|
|
|
139
|
|
|||
Foreign
|
1,412
|
|
|
1,756
|
|
|
2,099
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
U.S.
|
(668
|
)
|
|
(1,454
|
)
|
|
1,260
|
|
|||
Foreign
|
160
|
|
|
(654
|
)
|
|
(145
|
)
|
|||
Income tax provision
|
$
|
1,487
|
|
|
$
|
125
|
|
|
$
|
3,212
|
|
|
As of September 30,
|
||||||
|
2018
|
|
2017
|
||||
Non-current deferred tax asset
|
$
|
6,665
|
|
|
$
|
9,211
|
|
Non-current deferred tax liability
|
(334
|
)
|
|
(534
|
)
|
||
Net deferred tax asset
|
$
|
6,331
|
|
|
$
|
8,677
|
|
|
|
|
|
||||
Uncollectible accounts and other reserves
|
$
|
1,000
|
|
|
$
|
1,063
|
|
Depreciation and amortization
|
(369
|
)
|
|
(673
|
)
|
||
Inventories
|
740
|
|
|
824
|
|
||
Compensation costs
|
3,388
|
|
|
5,863
|
|
||
Tax carryforwards
|
7,063
|
|
|
7,514
|
|
||
Valuation allowance
|
(3,291
|
)
|
|
(5,952
|
)
|
||
Identifiable intangible assets
|
(2,298
|
)
|
|
(581
|
)
|
||
Other
|
98
|
|
|
619
|
|
||
Net deferred tax asset
|
$
|
6,331
|
|
|
$
|
8,677
|
|
|
Fiscal years ended September 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Statutory income tax amount
|
$
|
1,001
|
|
|
$
|
2,917
|
|
|
$
|
5,548
|
|
Increase (decrease) resulting from:
|
|
|
|
|
|
||||||
State taxes, net of federal benefits
|
(312
|
)
|
|
(125
|
)
|
|
204
|
|
|||
Manufacturing deduction
|
(364
|
)
|
|
(150
|
)
|
|
(450
|
)
|
|||
Meal and entertainment
|
82
|
|
|
63
|
|
|
55
|
|
|||
Transaction costs
|
79
|
|
|
—
|
|
|
—
|
|
|||
Employee stock purchase plan
|
56
|
|
|
79
|
|
|
83
|
|
|||
Foreign operations
|
(3
|
)
|
|
218
|
|
|
276
|
|
|||
Valuation allowance - current year increase
|
275
|
|
|
159
|
|
|
(43
|
)
|
|||
Utilization of tax credits
|
(1,609
|
)
|
|
(1,168
|
)
|
|
(1,116
|
)
|
|||
Discrete items:
|
|
|
|
|
|
||||||
Valuation allowance
|
(1,317
|
)
|
|
—
|
|
|
—
|
|
|||
Discrete tax benefits
|
(765
|
)
|
|
(954
|
)
|
|
(1,461
|
)
|
|||
One-time transition tax
|
250
|
|
|
—
|
|
|
—
|
|
|||
Deferred balance sheet remeasure
|
2,727
|
|
|
—
|
|
|
—
|
|
|||
ASU 2016-09 excess stock compensation
|
643
|
|
|
—
|
|
|
—
|
|
|||
Contingent consideration
|
388
|
|
|
(1,172
|
)
|
|
(154
|
)
|
|||
Adjustment of tax contingency reserves
|
315
|
|
|
257
|
|
|
202
|
|
|||
Other, net
|
41
|
|
|
1
|
|
|
68
|
|
|||
Income tax provision
|
$
|
1,487
|
|
|
$
|
125
|
|
|
$
|
3,212
|
|
|
Fiscal years ended September 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Unrecognized tax benefits at beginning of fiscal year
|
$
|
1,335
|
|
|
$
|
1,708
|
|
|
$
|
1,618
|
|
Increases related to:
|
|
|
|
|
|
||||||
Prior year income tax positions
|
39
|
|
|
21
|
|
|
107
|
|
|||
Current year income tax positions
|
315
|
|
|
257
|
|
|
240
|
|
|||
Decreases related to:
|
|
|
|
|
|
||||||
Prior year income tax positions
|
—
|
|
|
—
|
|
|
(71
|
)
|
|||
Settlements
|
—
|
|
|
—
|
|
|
(30
|
)
|
|||
Expiration of statute of limitations
|
(128
|
)
|
|
(651
|
)
|
|
(156
|
)
|
|||
Unrecognized tax benefits at end of fiscal year
|
$
|
1,561
|
|
|
$
|
1,335
|
|
|
$
|
1,708
|
|
|
Fiscal years ended September 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Cost of sales
|
$
|
195
|
|
|
$
|
213
|
|
|
$
|
215
|
|
Sales and marketing
|
1,492
|
|
|
1,348
|
|
|
921
|
|
|||
Research and development
|
516
|
|
|
656
|
|
|
590
|
|
|||
General and administrative
|
2,651
|
|
|
2,442
|
|
|
1,923
|
|
|||
Stock-based compensation before income taxes
|
4,854
|
|
|
4,659
|
|
|
3,649
|
|
|||
Income tax benefit
|
(1,017
|
)
|
|
(1,536
|
)
|
|
(1,185
|
)
|
|||
Stock-based compensation after income taxes
|
$
|
3,837
|
|
|
$
|
3,123
|
|
|
$
|
2,464
|
|
|
|
Options Outstanding
|
|
Weighted Average Exercised Price
|
|
Weighted Average Contractual Term (in years)
|
|
Aggregate Intrinsic Value (1)
|
|||
Balance at September 30, 2017
|
|
3,902
|
|
|
$10.54
|
|
|
|
|
||
Granted
|
|
863
|
|
|
10.92
|
|
|
|
|
||
Exercised
|
|
(597
|
)
|
|
9.14
|
|
|
|
|
||
Forfeited / Canceled
|
|
(642
|
)
|
|
12.64
|
|
|
|
|
||
Balance at September 30, 2018
|
|
3,526
|
|
|
$10.49
|
|
4.2
|
|
$
|
10,470
|
|
|
|
|
|
|
|
|
|
|
|||
Exercisable at September 30, 2018
|
|
2,245
|
|
|
$10.09
|
|
3.3
|
|
$
|
7,558
|
|
|
Fiscal years ended September 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Weighted average per option grant date fair value
|
$
|
3.98
|
|
|
$
|
4.63
|
|
|
$
|
3.90
|
|
Assumptions used for option grants:
|
|
|
|
|
|
||||||
Risk free interest rate
|
2.12% - 2.89%
|
|
1.46% - 1.96%
|
|
1.22% - 1.85%
|
||||||
Expected term
|
6.00 years
|
|
6.00 years
|
|
6.00 years
|
||||||
Expected volatility
|
33% - 34%
|
|
33% - 34%
|
|
32% - 33%
|
||||||
Weighted average volatility
|
33%
|
|
34%
|
|
32%
|
||||||
Expected dividend yield
|
0%
|
|
0%
|
|
0%
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||||
Range of Exercise Prices
|
|
Options Outstanding
|
|
Weighted Average Remaining Contractual Life (In Years)
|
|
Weighted Average Exercise Price
|
|
Number of Shares Vested
|
|
Weighted Average Exercise Price
|
||||||
$7.40 - $8.30
|
|
694
|
|
|
3.16
|
|
$
|
8.00
|
|
|
604
|
|
|
$
|
7.97
|
|
$8.31 - $9.68
|
|
551
|
|
|
3.27
|
|
$
|
9.39
|
|
|
515
|
|
|
$
|
9.42
|
|
$9.69 - $10.33
|
|
644
|
|
|
5.38
|
|
$
|
10.14
|
|
|
129
|
|
|
$
|
9.89
|
|
$10.34 - $10.81
|
|
554
|
|
|
3.79
|
|
$
|
10.63
|
|
|
421
|
|
|
$
|
10.72
|
|
$10.82 - $12.63
|
|
523
|
|
|
4.36
|
|
$
|
12.00
|
|
|
379
|
|
|
$
|
11.99
|
|
$12.64 - $13.50
|
|
548
|
|
|
5.55
|
|
$
|
13.50
|
|
|
185
|
|
|
$
|
13.50
|
|
$13.51 - $14.75
|
|
12
|
|
|
2.82
|
|
$
|
14.75
|
|
|
12
|
|
|
$
|
14.75
|
|
$7.40 - $14.75
|
|
3,526
|
|
|
4.23
|
|
$
|
10.49
|
|
|
2,245
|
|
|
$
|
10.09
|
|
|
Number of Awards
|
|
Weighted Average Grant Date Fair Value
|
|||
Nonvested at September 30, 2017
|
566
|
|
|
$
|
11.28
|
|
Granted
|
415
|
|
|
$
|
10.77
|
|
Vested
|
(207
|
)
|
|
$
|
11.02
|
|
Canceled
|
(100
|
)
|
|
$
|
11.21
|
|
Nonvested at September 30, 2018
|
674
|
|
|
$
|
11.05
|
|
Fiscal year
|
|
Amount
|
||
2019
|
|
$
|
1,986
|
|
2020
|
|
1,675
|
|
|
2021
|
|
1,235
|
|
|
2022
|
|
1,054
|
|
|
2023
|
|
833
|
|
|
Thereafter
|
|
1,836
|
|
|
Total minimum payments required
|
|
$
|
8,619
|
|
|
Fiscal years ended September 30,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Rentals
|
$
|
1,735
|
|
|
$
|
1,342
|
|
|
$
|
1,613
|
|
Less: sublease rentals
|
—
|
|
|
—
|
|
|
(46
|
)
|
|||
Total rental expense
|
$
|
1,735
|
|
|
$
|
1,342
|
|
|
$
|
1,567
|
|
|
Quarter ended
|
||||||||||||||
|
Dec. 31
|
|
March 31
|
|
June 30
|
|
Sept. 30
|
||||||||
Fiscal 2018
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
45,197
|
|
|
$
|
54,791
|
|
|
$
|
62,716
|
|
|
$
|
65,662
|
|
Gross profit
|
$
|
21,937
|
|
|
$
|
26,654
|
|
|
$
|
29,329
|
|
|
$
|
30,963
|
|
Net (loss) income (1)(2)
|
$
|
(4,569
|
)
|
|
$
|
(357
|
)
|
|
$
|
2,621
|
|
|
$
|
3,608
|
|
Net (loss) income per common share - basic
|
$
|
(0.17
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
0.10
|
|
|
$
|
0.13
|
|
Net (loss) income per common share - diluted
|
$
|
(0.17
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
0.09
|
|
|
$
|
0.13
|
|
|
|
|
|
|
|
|
|
||||||||
Fiscal 2017
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
45,175
|
|
|
$
|
45,615
|
|
|
$
|
45,739
|
|
|
$
|
45,105
|
|
Gross profit
|
$
|
21,453
|
|
|
$
|
21,902
|
|
|
$
|
22,485
|
|
|
$
|
21,334
|
|
Net income (1)(2)
|
$
|
2,357
|
|
|
$
|
1,331
|
|
|
$
|
1,335
|
|
|
$
|
4,343
|
|
Net income per common share - basic
|
$
|
0.09
|
|
|
$
|
0.05
|
|
|
$
|
0.05
|
|
|
$
|
0.16
|
|
Net income per common share - diluted
|
$
|
0.09
|
|
|
$
|
0.05
|
|
|
$
|
0.05
|
|
|
$
|
0.16
|
|
(1)
|
During fiscal 2018, we recorded net tax expenses of
$1.5 million
and in fiscal 2017, we recorded net tax benefits of
$1.0 million
, respectively. We recorded tax expense of
$2.8 million
in the first quarter of fiscal 2018,
$0.2 million
in the second quarter of fiscal 2018 and
$0.1 million
in the third quarter of fiscal 2018 resulting from new U.S. tax legislation that was enacted during the first quarter of fiscal 2018 and the adoption of ASU 2016-09 relating to the accounting for the tax effects of stock compensation. In the fourth quarter of fiscal 2018, we recorded a net tax benefit of
$1.5 million
for the release of a valuation allowance against U.S. federal capital loss carryforward due to expected capital gains tax in fiscal 2019 resulting from the sale of our corporate headquarters building in October 2018 (see Note 18 to the Consolidated Financial Statements) along with U.S., state and foreign prior year true-up provision to return.
|
(2)
|
For continuing operations, we recorded business restructuring charges of
$0.2 million
(
$0.1 million
after tax) in the third quarter of fiscal 2018 and
$0.1 million
(
$0.1 million
after tax) in the fourth quarter of fiscal 2018. We also recorded business restructuring charges of
$2.5 million
(
$1.6 million
after tax) in the third quarter of fiscal 2017.
|
Name
|
|
Age
|
|
Position
|
Ronald E. Konezny
|
|
50
|
|
President and Chief Executive Officer
|
Gokul V. Hemmady
|
|
58
|
|
Senior Vice President, Chief Financial Officer and Treasurer
|
Jon A. Nyland
|
|
55
|
|
Vice President Manufacturing Operations
|
Kevin C. Riley
|
|
57
|
|
President, IoT Solutions
|
Tracy L. Roberts
|
|
56
|
|
Vice President of Technology Services
|
David H. Sampsell
|
|
50
|
|
Vice President of Corporate Development, General Counsel and Corporate Secretary
|
Michael A. Ueland
|
|
50
|
|
President, IoT Products and Services
|
(a) Consolidated Financial Statement and Schedules of the Company (filed as part of this Annual Report on Form 10-K)
|
|
|
|
1.
|
Consolidated Statements of Operations for fiscal years ended September 30, 2018, 2017 and 2016
|
|
|
|
Consolidated Statements of Comprehensive Income for fiscal years ended September 30, 2018, 2017 and 2016
|
|
|
|
Consolidated Balance Sheets as of September 30, 2018 and 2017
|
|
|
|
Consolidated Statements of Cash Flows for fiscal years ended September 30, 2018, 2017 and 2016
|
|
|
|
Consolidated Statements of Stockholders’ Equity for fiscal years ended September 30, 2018, 2017 and 2016
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
2.
|
Schedule of Valuation and Qualifying Accounts
|
|
|
3.
|
Report of Independent Registered Certified Public Accounting Firm
|
(b) Exhibits
|
||||||
Unless otherwise indicated, all documents incorporated into this Annual Report on Form 10-K by reference to a document filed with the SEC are located under SEC file number 1-34033.
|
||||||
|
|
|
|
|
||
Exhibit Number
|
|
Description
|
|
Method of Filing
|
||
|
|
|
|
|
|
|
2
|
|
(a)
|
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
|
2
|
|
(b)
|
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
|
3
|
|
(a)
|
|
Restated Certificate of Incorporation of the Company, as amended (3)
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
3
|
|
(b)
|
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
|
10
|
|
(a)
|
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
|
10
|
|
(b)
|
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
|
10
|
|
(b)(i)
|
|
Form of Notice of Grant of Stock Options and Option Agreement
(for grants under Digi International Inc. 2000 Omnibus Stock Plan before January 26, 2010)** (7)
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
10
|
|
(b)(ii)
|
|
Form of Notice of Grant of Stock Options and Option Agreement
(amended form for grants under Digi International Inc. 2000 Omnibus Stock Plan on or after January 26, 2010 provided Addendum 1A applies only to certain grants made on and after November 22, 2011)** (8)
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
10
|
|
(c)
|
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
|
10
|
|
(c)(i)
|
|
Form of Notice of Grant of Stock Options and Option Agreement including Addenda to Option Agreement that may apply to certain grants
(for grants under Digi International Inc. 2013 Omnibus Incentive Plan)** (10)
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
10
|
|
(c)(ii)
|
|
Form of (Director) Restricted Stock Unit Award Agreement
(for awards under Digi International Inc. 2013 Omnibus Incentive Plan)** (11)
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
10
|
|
(d)
|
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
Exhibit Number
|
|
Description
|
|
Method of Filing
|
||
|
|
|
|
|
|
|
10
|
|
(d)(i)
|
|
Form of Notice of Grant of Stock Options and Option Agreement including Addenda to Option Agreement that may apply to certain grants
(for grants under Digi International Inc. 2014 Omnibus Incentive Plan)** (13)
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
10
|
|
(d)(ii)
|
|
Form of (Director) Restricted Stock Unit Award Agreement
(for awards under Digi International Inc. 2014 Omnibus Incentive Plan)** (14)
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
10
|
|
(d)(iii)
|
|
Form of (Executive) Restricted Stock Unit Award Agreement
(for awards under Digi International Inc. 2014 Omnibus Incentive Plan)** (15)
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
10
|
|
(e)
|
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
|
10
|
|
(e)(i)
|
|
Form of (Director) Restricted Stock Unit Award Agreement
(for awards under Digi International Inc. 2016 Omnibus Incentive Plan)** (17)
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
10
|
|
(e)(ii)
|
|
Form of (Executive) Restricted Stock Unit Award Agreement
(for awards under Digi International Inc. 2016 Omnibus Incentive Plan)** (18)
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
10
|
|
(e)(iii)
|
|
Form of (Employee) Restricted Stock Unit Award Agreement
(for awards under Digi International Inc. 2016 Omnibus Incentive Plan)** (19)
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
10
|
|
(e)(iv)
|
|
Form of Notice of Grant of Stock Options and Option Agreement
(for grants under Digi International Inc. 2016 Omnibus Incentive Plan)** (20)
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
10
|
|
(f)
|
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
|
10
|
|
(f)(i)
|
|
Form of (Director) Restricted Stock Unit Award Agreement
(for awards under Digi International Inc. 2017 Omnibus Incentive Plan)** (22)
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
10
|
|
(f)(ii)
|
|
Form of (Executive) Restricted Stock Unit Award Agreement
(for awards under Digi International Inc. 2017 Omnibus Incentive Plan)** (23)
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
10
|
|
(f)(iii)
|
|
Form of (Employee) Restricted Stock Unit Award Agreement
(for awards under Digi International Inc 2017 Omnibus Incentive Plan)** (24)
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
10
|
|
(f)(iv)
|
|
Form of Notice of Grant of Stock Options and Option Agreement
(for grants under Digi International Inc. 2017 Omnibus Incentive Plan)** (25)
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
10
|
|
(g)
|
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
|
10
|
|
(g)(i)
|
|
Form of (Director) Restricted Stock Unit Award Agreement
(for grants under Digi International Inc. 2018 Omnibus Incentive Plan)** (27)
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
10
|
|
(g)(ii)
|
|
Form of (Executive) Restricted Stock Unit Award Agreement
(for grants under Digi International Inc. 2018 Omnibus Incentive Plan)** (28)
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
10
|
|
(g)(iii)
|
|
Form of (Employee) Restricted Stock Unit Award Agreement
(for grants under Digi International Inc. 2018 Omnibus Incentive Plan)** (29)
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
10
|
|
(g)(iv)
|
|
Form of Notice of Grant of Stock Options and Option Agreement
(for grants under Digi International Inc. 2018 Omnibus Incentive Plan)** (30)
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
10
|
|
(h)
|
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
|
10
|
|
(i)
|
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
|
10
|
|
(j)
|
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
|
10
|
|
(k)
|
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
Exhibit Number
|
|
Description
|
|
Method of Filing
|
||
|
|
|
|
|
|
|
10
|
|
(l)
|
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
|
10
|
|
(m)
|
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
|
10
|
|
(n)
|
|
|
Incorporated by Reference
|
|
|
|
|
|
|
|
|
10
|
|
(o)
|
|
|
Filed Electronically
|
|
|
|
|
|
|
|
|
21
|
|
|
|
|
Filed Electronically
|
|
|
|
|
|
|
|
|
23
|
|
(a)
|
|
|
Filed Electronically
|
|
|
|
|
|
|
|
|
23
|
|
(b)
|
|
|
Filed Electronically
|
|
|
|
|
|
|
|
|
24
|
|
|
|
|
Filed Electronically
|
|
|
|
|
|
|
|
|
31
|
|
(a)
|
|
|
Filed Electronically
|
|
|
|
|
|
|
|
|
31
|
|
(b)
|
|
|
Filed Electronically
|
|
|
|
|
|
|
|
|
32
|
|
|
|
|
Filed Electronically
|
|
|
|
|
|
|
|
|
101.INS
|
|
|
|
XBRL Instance Document
|
|
Filed Electronically
|
|
|
|
|
|
|
|
101.SCH
|
|
|
|
XBRL Taxonomy Extension Schema Document
|
|
Filed Electronically
|
|
|
|
|
|
|
|
101.CAL
|
|
|
|
XBRL Taxonomy Calculation Linkbase Document
|
|
Filed Electronically
|
|
|
|
|
|
|
|
101.DEF
|
|
|
|
XBRL Taxonomy Definition Linkbase Document
|
|
Filed Electronically
|
|
|
|
|
|
|
|
101.LAB
|
|
|
|
XBRL Taxonomy Label Linkbase Document
|
|
Filed Electronically
|
|
|
|
|
|
|
|
101.PRE
|
|
|
|
XBRL Taxonomy Presentation Linkbase Document
|
|
Filed Electronically
|
|
|
|
|
|
|
*
|
Certain schedules and exhibits have been omitted in accordance with Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the Securities and Exchange Commission upon request.
|
**
|
Management compensatory contract or arrangement required to be included as an exhibit to this Annual Report on Form 10-K.
|
(1)
|
Incorporated by reference to Exhibit 2.1 to the Company's Form 8-K filed October 29, 2015.
|
(2)
|
Incorporated by reference to Exhibit 2.1 to the Company's Form 8-K filed on October 25, 2017.
|
(3)
|
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).
|
(4)
|
Incorporated by reference to Exhibit 3(b) to the Company's Form 8-K dated August 28, 2017.
|
(5)
|
Incorporated by reference to Exhibit 99 to the Company's Registration Statement on Form S-8 filed on March 12, 2014 (File no. 333‑194522).
|
(6)
|
Incorporated by reference to Exhibit 10(a) to the Company's Form 8-K filed on January 29, 2010.
|
(7)
|
Incorporated by reference to Exhibit 10(o) to the Company's Form 10-K for the year ended September 30, 2008.
|
(8)
|
Incorporated by reference to Exhibit 10(e)(ii) to the Company's Form 10-K for the year ended September 30, 2011.
|
(9)
|
Incorporated by reference to Exhibit 99 to the Company’s Registration Statement on Form S-8 filed on April 16, 2013 (File no. 333-187949).
|
(10)
|
Incorporated by reference to Exhibit 10(a)(i) to the Company’s Form 10-Q for the quarter ended March 31, 2013.
|
(11)
|
Incorporated by reference to Exhibit 10(a)(ii) to the Company’s Form 10-Q for the quarter ended March 31, 2013.
|
(12)
|
Incorporated by reference to Exhibit 99 to the Company’s Registration Statement on Form S-8 filed on March 12, 2014 (File no. 333‑194518).
|
(13)
|
Incorporated by reference to Exhibit 10(b)(i) to the Company’s Form 10-Q for the quarter ended March 31, 2014.
|
(14)
|
Incorporated by reference to Exhibit 10(b)(ii) to the Company’s Form 10-Q for the quarter ended March 31, 2014.
|
(15)
|
Incorporated by reference to Exhibit 10(a) to the Company’s Form 10-Q for the quarter ended June 30, 2014.
|
(16)
|
Incorporated by reference to Appendix A to the Company’s definitive proxy statement on Schedule 14A filed December 11, 2015.
|
(17)
|
Incorporated by reference to Exhibit 10(a)(i) to the Company’s Form 10-Q for the quarter ended March 31, 2016.
|
(18)
|
Incorporated by reference to Exhibit 10(a)(ii) to the Company’s Form 10-Q for the quarter ended March 31, 2016.
|
(19)
|
Incorporated by reference to Exhibit 10(a)(iii) to the Company’s Form 10-Q for the quarter ended March 31, 2016.
|
(20)
|
Incorporated by reference to Exhibit 10(a)(iv) to the Company’s Form 10-Q for the quarter ended March 31, 2016.
|
(21)
|
Incorporated by reference to Appendix A to the Company's definitive proxy statement on Schedule 14A filed December 16, 2016.
|
(22)
|
Incorporated by reference to Exhibit 10(b)(i) to the Company's Form 10-Q for the quarter ended March 31, 2017.
|
(23)
|
Incorporated by reference to Exhibit 10(b)(ii) to the Company's Form 10-Q for the quarter ended March 31, 2017.
|
(24)
|
Incorporated by reference to Exhibit 10(b)(iii) to the Company's Form 10-Q for the quarter ended March 31, 2017.
|
(25)
|
Incorporated by reference to Exhibit 10(b)(iv) to the Company's Form 10-Q for the quarter ended March 31, 2017.
|
(26)
|
Incorporated by reference to Appendix A to the Company’s definitive proxy statement on Schedule 14A filed December 8, 2017.
|
(27)
|
Incorporated by reference to Exhibit 10(b)(i) to the Company's Form 10-Q for the quarter ended March 31, 2018.
|
(28)
|
Incorporated by reference to Exhibit 10(b)(ii) to the Company's Form 10-Q for the quarter ended March 31, 2018.
|
(29)
|
Incorporated by reference to Exhibit 10(b)(iii) to the Company's Form 10-Q for the quarter ended March 31, 2018.
|
(30)
|
Incorporated by reference to Exhibit 10(b)(iv) to the Company's Form 10-Q for the quarter ended March 31, 2018.
|
(31)
|
Incorporated by reference to Exhibit 10 to the Company’s Form 10‑Q for the quarter ended June 30, 2010.
|
(32)
|
Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K dated December 3, 2014.
|
(33)
|
Incorporated by reference to Exhibit 10(l) to the Company's Form 10-K for the year ended September 30, 2013.
|
(34)
|
Incorporated by reference to Exhibit 10(m) to the Company's Form 10-K for the year ended September 30, 2013.
|
(35)
|
Incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed March 26, 2015.
|
(36)
|
Incorporated by reference to Exhibit 10(a) to the Company's Form 10-Q for the quarter ended March 31, 2017.
|
(37)
|
Incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed June 15, 2018.
|
|
DIGI INTERNATIONAL INC.
|
|
By:
/s/ Ronald E. Konezny
Ronald E. Konezny
President, Chief Executive Officer and Director
|
|
By:
/s/ Ronald E. Konezny
Ronald E. Konezny
President, Chief Executive Officer and Director
(Principal Executive Officer)
|
|
By:
/s/ Gokul V. Hemmady
Gokul V. Hemmady
Senior Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer and Principal Accounting Officer)
|
|
By:
*
Satbir Khanuja
Director
|
|
By:
*
Christopher Heim
Director
|
|
By:
*
Ahmed Nawaz
Director
|
|
By:
*
Sally Smith
Director
|
|
By:
*
Spiro Lazarakis
Director
|
*
|
Ronald E. Konezny, by signing his name hereto, does hereby sign this document on behalf of each of the above named directors of the Registrant pursuant to Powers of Attorney duly executed by such persons.
|
|
By:
/s/ Ronald E. Konezny
Ronald E. Konezny
Attorney-in-fact
|
|
|
|
|
Additions
|
|
|
|
|
|
|
||||||||||||
Description
|
|
Balance at beginning of period
|
|
Charged to costs and expenses
|
|
Charged to Other Accounts
|
|
|
Deductions
|
|
|
Balance at end of period
|
||||||||||
Valuation allowance - deferred tax assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
September 30, 2018
|
|
$
|
5,952
|
|
|
$
|
521
|
|
|
$
|
—
|
|
|
|
$
|
3,182
|
|
|
|
$
|
3,291
|
|
September 30, 2017
|
|
$
|
5,914
|
|
|
$
|
136
|
|
|
$
|
—
|
|
|
|
$
|
98
|
|
|
|
$
|
5,952
|
|
September 30, 2016
|
|
$
|
862
|
|
|
$
|
5,260
|
|
|
$
|
—
|
|
|
|
$
|
208
|
|
|
|
$
|
5,914
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Valuation account - doubtful accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
September 30, 2018
|
|
$
|
341
|
|
|
$
|
729
|
|
|
$
|
40
|
|
(1)
|
|
$
|
37
|
|
(3)
|
|
$
|
1,073
|
|
September 30, 2017
|
|
$
|
209
|
|
|
$
|
127
|
|
|
$
|
20
|
|
(2)
|
|
$
|
15
|
|
(3)
|
|
$
|
341
|
|
September 30, 2016
|
|
$
|
285
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
|
$
|
86
|
|
(3)
|
|
$
|
209
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Reserve for future returns and pricing adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
September 30, 2018
|
|
$
|
2,169
|
|
|
$
|
10,715
|
|
|
$
|
—
|
|
|
|
$
|
10,324
|
|
|
|
$
|
2,560
|
|
September 30, 2017
|
|
$
|
1,991
|
|
|
$
|
10,447
|
|
|
$
|
—
|
|
|
|
$
|
10,269
|
|
|
|
$
|
2,169
|
|
September 30, 2016
|
|
$
|
1,817
|
|
|
$
|
9,946
|
|
|
$
|
—
|
|
|
|
$
|
9,772
|
|
|
|
$
|
1,991
|
|
(1)
|
Established through purchase accounting relating to the acquisition of TempAlert
|
(2)
|
Established through purchase accounting relating to the acquisition of SMART Temps
®
|
(3)
|
Uncollectible accounts charged against allowance, net of recoveries
|
1.
|
Approval of the offer by the Compensation Committee of the Board of Directors and your election as an Officer by the Board of Directors.
|
2.
|
Your completion of a Directors and Officers questionnaire and review and approval of the same by Digi’s in-house legal counsel to confirm you have no conflicts of interest, related party transactions or other issues that require analysis and review.
|
Name
|
|
Jurisdiction
|
Accelerated Concepts, Inc.
|
|
Florida, United States
|
Accelerated Concepts Pty Ltd.
|
|
Australia
|
Digi International Canada Inc.
|
|
Ontario, Canada
|
Digi International GmbH
|
|
Germany
|
Digi International (HK) Ltd.
|
|
Hong Kong
|
Digi International Kabushikikaisha
|
|
Japan
|
Digi International Limited
|
|
United Kingdom
|
Digi International SARL
|
|
France
|
Digi International Spain S.A.
|
|
Spain
|
Digi International Wireless Design Services Inc.
|
|
Minnesota, United States
|
Digi m2m Solutions India Pvt. Ltd.
|
|
India
|
Digi Wireless Singapore Pte. Ltd.
|
|
Singapore
|
Digi SmartSense, LLC
|
|
Delaware, United States
|
FreshTemp, LLC
|
|
Pennsylvania, United States
|
ITK International Inc.
|
|
Delaware, United States
|
SMART Temps, L.L.C.
|
|
Indiana, United States
|
|
/s/ Ronald E. Konezny
|
|
|
Ronald E. Konezny
|
|
|
/s/ Satbir Khanuja
|
|
|
Satbir Khanuja
|
|
|
/s/ Christopher Heim
|
|
|
Christopher Heim
|
|
|
/s/ Ahmed Nawaz
|
|
|
Ahmed Nawaz
|
|
|
/s/ Sally Smith
|
|
|
Sally Smith
|
|
|
/s/ Spiro Lazarakis
|
|
|
Spiro Lazarakis
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
November 21, 2018
|
/s/ Ronald E. Konezny
|
|
||
|
Ronald E. Konezny
|
|
||
|
President, Chief Executive Officer and Director
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
November 21, 2018
|
/s/ Gokul V. Hemmady
|
|
||
|
Gokul V. Hemmady
|
|
||
|
Senior Vice President, Chief Financial Officer and Treasurer
|
|
|
||||
|
|
|
|
|
November 21, 2018
|
|
|
|
|
|
/s/ Ronald E. Konezny
|
|
||
|
Ronald E. Konezny
|
|
||
|
President, Chief Executive Officer and Director
|
|
||
|
||||
November 21, 2018
|
|
|
||
|
/s/ Gokul V. Hemmady
|
|
||
|
Gokul V. Hemmady
|
|
||
|
Senior Vice President, Chief Financial Officer and Treasurer
|
|