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<SEC-DOCUMENT>0000950123-10-022547.txt : 20100611
<SEC-HEADER>0000950123-10-022547.hdr.sgml : 20100611
<ACCEPTANCE-DATETIME>20100309155159
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0000950123-10-022547
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		2
FILED AS OF DATE:		20100309

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			DIGI INTERNATIONAL INC
		CENTRAL INDEX KEY:			0000854775
		STANDARD INDUSTRIAL CLASSIFICATION:	COMPUTER COMMUNICATIONS EQUIPMENT [3576]
		IRS NUMBER:				411532464
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0930

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		11001 BREN ROAD EAST
		CITY:			MINNETONKA
		STATE:			MN
		ZIP:			55343
		BUSINESS PHONE:		6129123444

	MAIL ADDRESS:	
		STREET 1:		11001 BREN ROAD EAST
		CITY:			MINNETONKA
		STATE:			MN
		ZIP:			55343
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
<HTML>
<HEAD>
<TITLE>corresp</TITLE>
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><IMG src="c56857c5685701.gif" alt="(DIGI LOGO)">
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 10%; margin-top: 3pt">Digi International<BR>
11001 Bren Road East<BR>
Minnetonka, MN 55343<BR>
Phone: 952-912-3444<BR>
Fax: 952-912-4998
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">March&nbsp;9, 2010
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">Via EDGAR and Federal Express
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Securities and Exchange Commission<BR>
Division of Corporation Finance<BR>
100 F Street, N.E.<BR>
Washington, DC 20549-7010

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
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<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Attention:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mr. Craig Wilson<BR>
Senior Asst. Chief Accountant</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD ALIGN="RIGHT" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Re:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="LEFT" valign="top"><B>Digi International Inc.<BR>
Form&nbsp;10-K for the Fiscal Year Ended September&nbsp;30, 2009<BR>
Filed December&nbsp;3, 2009<BR>
File No.&nbsp;001-34033</B></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Ladies and Gentlemen:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On behalf of Digi International Inc. (the &#147;Company&#148;), I am responding to the letter dated February
12, 2010, of Craig Wilson of the Division of Corporation Finance to Subramanian Krishnan, Senior
Vice President, Chief Financial Officer and Treasurer of the Company, with respect to comments on
the above-referenced filings. We again thank the Commission staff for the extension of our
response period, as set forth in our correspondence dated February&nbsp;23, 2010.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For ease of reference, I have included the staff&#146;s comments, followed by the Company&#146;s response.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The terms &#147;Digi,&#148; &#147;we,&#148; &#147;our&#148;, or &#147;us&#148; mean Digi International Inc. and all of the subsidiaries
included in the consolidated financial statements unless the context indicates otherwise.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Form&nbsp;10-K for the Fiscal Year Ended September&nbsp;30, 2009</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>General</U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>You state on pages 15, 34, 64, and elsewhere that you operate in Latin America, the Middle
East, and Africa, references generally understood to encompass Cuba, Iran, Syria, and Sudan.
You also include Sudan in the list of countries included in the dropdown menu in the &#147;Warranty
Registration&#148; section of your website. Cuba, Iran, Syria, and Sudan are countries that are
identified by the State Department as state sponsors of terrorism, and are subject to U.S.
economic sanctions and export controls. We note that your </I><I>Form 10-K</I><I> does not include
disclosure regarding contacts with Cuba, Iran, Syria, and Sudan. Please describe to us the
nature and extent of your past, current, and anticipated contacts with Cuba, Iran, Syria, and
Sudan, if any, whether through subsidiaries, distributors, resellers, or other direct or
indirect arrangements. Your response should describe any products, equipment, components,
technology, software, or services that you have provided into Cuba, Iran,</I></TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Securities and Exchange Commission<BR>
March&nbsp;9, 2010<BR>
Page 2

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Syria, and Sudan, directly or indirectly, and any agreements, commercial arrangements, or other
contacts you have had with the governments of those countries or entities controlled by those
governments.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Response:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Digi has no direct past, current, or anticipated contacts with the embargoed countries of Cuba,
Iran, Syria, or Sudan, nor are any such contacts authorized. With reference to indirect
arrangements, our distributor contracts require compliance with U.S. export laws, which prohibit
activity with these countries. We have an export compliance program in place that we believe is
effective in identifying and preventing any agreements or transactions from taking place with these
countries. All sales orders are reviewed using a software program and matched to a denied parties
list. Training has been provided to all applicable Digi personnel to ensure that these groups are
educated on export compliance. Our employees have been instructed that in the event of an inquiry
from one of the embargoed countries, we will indicate that we are prohibited from providing
information under the U.S. export laws. Sudan has been removed from the dropdown menu in the
&#147;Warranty Registration&#148; section of our website. This was an administrative oversight. No product
has been sold into or warranty support provided to Sudan or the other embargoed countries. We have
had no contact with the governments of Cuba, Iran, Syria, or Sudan, or entities controlled by those
governments.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Item&nbsp;1A. Risk Factors</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>&#147;We depend on manufacturing relationships and on limited-source suppliers ... ,&#148; page 18</U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>You disclose that you procure certain key components involved in producing your products from
a sole supplier or a limited number of suppliers, and that &#147;&#091;a&#093;ny extended interruption in the
supply of any of the key components currently obtained from limited sources could disrupt
&#091;y&#093;our operations and have a material adverse effect on &#091;y&#093;our customer relationships and
profitability.&#148; It is unclear from this risk factor and the related discussion in the Business
section on page 12 the extent of your reliance on limited-source suppliers and the nature of
the key components they provide for you. Please tell us in your response letter what
percentage of your revenues is derived from the sale of products that involve key components
that are available from only one or a limited number of suppliers. To the extent material to
your business as a whole, disclose the nature of such key components, and ensure that you have
provided a materially-complete description of your arrangements with such suppliers in
Business. Please also file as exhibits any supplier contracts upon which your business is
substantially dependent. See Item&nbsp;</I><I>601(b)(10)(ii)</I><I>(B) of Regulation&nbsp;S-K.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Response:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We continue to use multiple single-source and limited-source suppliers to procure products and
component parts and the extended interruption in the supply of any of these products or key
component parts might have a material adverse effect on our customer relationships and
profitability. These are strategic relationships that we have chosen to put in place as they are
advantageous to us. We perform rigorous ongoing reviews of these suppliers based upon various risk
scores to minimize the risk of a disruption in supply and we have determined that our core product
technology could be procured from multiple vendors if such an arrangement became necessary or
advantageous to us. We have no individual single-source or limited-source supplier that provides a
material amount of products or key component parts compared to our annual revenue. We consider
these to be limited-source suppliers of our products and component parts and we have exclusivity
agreements with these vendors due to volume-based purchases, which are more advantageous to us. We
have determined that, if any one of these suppliers were unable to meet our future requirements for
products and component parts in a timely fashion, then we would be able to procure like components
from a different supplier to accommodate the product design, but there could be additional costs
and delays in providing products to customers as indicated in the risk factor in the Form 10-K.
Based upon this
</DIV>



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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Securities and Exchange Commission<BR>
March&nbsp;9, 2010<BR>
Page 3

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">information, it is not necessary to file additional exhibits with respect to Item&nbsp;601(b)(10)(ii)(B)
of Regulation&nbsp;S-K because the agreements discussed above are not &#147;material contracts.&#148;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Item&nbsp;7. Management&#146;s Discussion and Analysis of Financial Condition and Results of
Operations</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Results of operations, page 32</U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Please describe for us in greater detail the reasons for, and amounts associated with, the
changes (i.e. price and/or volume) in the product and customer mix that impacted Net Sales and
Gross Profit, as disclosed on pages 32 and 34, respectively. In view of your identification of
the effects of these known changes, it would appear your MD&#038;A should provide analysis of the
factors and reasons underlying the changes and discuss whether they will give rise to other
material changes in the company&#146;s future operations and liquidity. Please tell us why you have
not provided such MD&#038;A disclosure.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Response:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">While we believe our disclosure satisfies the applicable requirements, we recognize the potential
utility of enhanced disclosures in our MD&#038;A regarding the reasons for, and amounts associated with,
changes in product and customer mix that impact net sales and gross profit and will consider such
disclosure in future filings. Because the more significant factors that impacted net sales and
gross profit in fiscal 2009 related to our acquisitions, changes in product mix and foreign
currency impacts, all of which we discussed in our Form 10-K, we did not provide specific
disclosure related to pricing or customer mix, as those did not have a material impact on our
operations. The balance of our revenue changes were all volume based.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Weakened economic conditions impacted product demand and resulted in substantial decreases in most
of our product lines on a volume basis, except for the cellular, wireless communication adapters
and chips and software product lines.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We acquired Sarian Systems, Ltd. (Sarian) in April&nbsp;2008, Spectrum Design Solutions, Inc. (Spectrum)
in August&nbsp;2008 and the assets of MobiApps Holdings Private Limited (MobiApps) in June&nbsp;2009. Each
of these acquisitions complements a need within our cellular or wireless product lines. These
acquisitions increased revenue in fiscal 2009 by $10.5&nbsp;million, $3.8&nbsp;million and $0.4&nbsp;million,
respectively, compared to fiscal 2008. Without the additional revenue from these acquisitions, net
sales would have decreased $33.8&nbsp;million, or 18.9%, for fiscal 2009 compared to fiscal 2008. Chips
and software increased mainly due to a large last time buy sale that was executed in fiscal 2009.
Fluctuation in foreign currency rates compared to the prior year&#146;s rates in each case had an
unfavorable impact on net sales of $5.9&nbsp;million in fiscal 2009.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The majority of the gross margin decrease in fiscal 2009 compared to fiscal 2008 was due to
the Sarian and Spectrum acquisitions and the growth in the cellular product lines. The decrease in
gross margins due to the acquisition of Sarian included one large legacy customer of Sarian which
generated lower than normal gross margins.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The gross margin also decreased due to an increase in the amortization of purchased and core
technology due to the acquisitions of Sarian, Spectrum and MobiApps. Fluctuation in foreign
currency rates compared to the prior year&#146;s rates also had an unfavorable impact on gross margins
of 0.5% in fiscal 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Overall we see fluctuations in our business that are mainly volume and demand driven rather than
fluctuations due to price. We maintain our value proposition when setting and negotiating pricing
in the normal course of business
</DIV>



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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Securities and Exchange Commission<BR>
March&nbsp;9, 2010<BR>
Page 4

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">and we did not experience a material revenue decline due to pricing pressures and concluded that
disclosure was not needed on pricing. If we begin to see price driven factors affecting our
business, we will disclose this in the future.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Critical Accounting Policies and Estimates</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Goodwill, page 43</U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Please tell us how much your market capitalization plus an estimated control premium of 35%
exceeded the carrying value of the reporting unit. If your reporting unit was at risk of
failing &#147;step one&#148; of paragraph 350-20-35-4 of the FASB Accounting Standards Codification
because the fair value of your reporting unit was not substantially in excess of its carrying
value, please provide us the following information and provide this information in future
filings:</I></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>The percentage by which fair value exceeded carrying value as of the most recent
step-one test;</I></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Analysis of the degree of uncertainty associated with the your assumptions, and</I></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>A description of potential events and/or changes in circumstances that could reasonably
be expected to negatively affect the key assumptions.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Alternatively, if in your view your reporting unit is not at risk, we encourage you to disclose
that fact in future filings.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Response:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of the close of business on September&nbsp;30, 2009, Digi&#146;s stock price was $8.52. Based on the
common shares outstanding at September&nbsp;30, 2009 of 24,700,895, our market capitalization was $210
million, compared to a carrying value of $230&nbsp;million. Including a control premium of 35&nbsp;percent,
the fair value of our reporting unit was $284&nbsp;million and exceeded the carrying value of net assets
by 24%. As this fair value exceeded the carrying value of net assets by a significant percentage,
we determined that we were not at a level of risk that warranted additional disclosure of failing
the step one test for recognition and measurement of an impairment loss described in paragraph
350-20-35-4 of the FASB Accounting Standards Codification.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We will provide enhanced disclosure in future periods of the fair value of our reporting unit
compared to the carrying value if we believe the fair value does not substantially exceed the
carrying value. Please refer also to our response to Comment 5. Alternatively, if we believe
that the reporting unit is not at substantial risk of failing the step one test for recognition and
measurement of an impairment loss, we will disclose this fact in future filings when a control
premium is used to determine fair value.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>In addition, for the periods reported provide to us greater detail of the similarities you
share with the companies used to determine your control premium over the past five years. Tell
us what control premium percentage was used in conjunction with your reporting unit fair value
determination as of June&nbsp;30, 2008 and 2009. We note your disclosure that the estimated control
premium was determined by a review of premiums paid for similar companies over the past five
years; however there is no quantification of the percentages. Since this is a significant
assumption, we would expect enhanced disclosure of the basis and assumptions used to select a
particular control premium in future filings.</I></TD>
</TR>



</TABLE>
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</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Securities and Exchange Commission<BR>
March&nbsp;9, 2010<BR>
Page 5

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Response:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We perform our annual goodwill impairment assessments as of June&nbsp;30 each year. During our annual
impairment assessment performed as of June&nbsp;30, 2008, the fair value of our reporting unit as
indicated by our market capitalization was below the carrying value due to significant declines in
our stock price during the year, primarily resulting from the effects of the overall broader
economic situation at that time. We believe that the fair value of our reporting unit was
undervalued based solely on our market capitalization, and therefore we engaged a reputable and
independent national third party valuation firm to complete a control premium study which included
a review of premiums paid for similar companies over the past five years. While we engaged a third
party valuation firm to assist in determination of the control premium, we used our own industry
knowledge in concluding on the control premium used to calculate fair value. We believe that the
fair value including the impact of the control premium more accurately represented the fair value
of our reporting unit as of June&nbsp;30, 2008. This control premium study was updated as of June&nbsp;30,
2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In order to compute the control premium, three methodologies were used, including (1)&nbsp;analyzing
individual transactions within our industry, (2)&nbsp;analyzing industry-wide data, and (3)&nbsp;analyzing
global transaction data. Individual transactions in the Communication Equipment and Computer &#038;
Peripherals industries were used to find transactions of target companies that operated in similar
markets and shared similar operating characteristics with Digi. Transaction screening criteria
included selection of transactions with the following characteristics:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>At least 50&nbsp;percent of a target company&#146;s equity sought by an acquirer,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Target company considered operating (not in bankruptcy),</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Target company had publicly traded stock outstanding at the transaction date, and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Transactions announced between June&nbsp;30, 2006 and the valuation date.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In analyzing industry-wide data, transactions in three industries were identified that encompassed
the products offered by Digi: Office Equipment and Computer Hardware, Communications, and Computer,
Supplies and Services. Finally, control premiums were considered for both domestic and
international transactions.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Using the data from the above analyses, an overall range of control premiums was identified as
of the June&nbsp;30, 2008 and 2009 valuation dates. Further analysis, which excluded the outlying
percentages, resulted in a concluded range of control premiums of 20&nbsp;percent to 30&nbsp;percent as of
June&nbsp;30, 2008 and 25&nbsp;percent to 35&nbsp;percent as of June&nbsp;30, 2009. The control premium percentages
that were used in estimating the fair value of our reporting unit were 30&nbsp;percent and 35&nbsp;percent
for the June&nbsp;30, 2008 and 2009 annual goodwill impairment assessments, respectively. A review of
historical control premiums paid indicated that control premiums were generally higher during
economic downturns, when selling prices of target companies were likely undervalued, and acquirers
were willing to pay higher control premiums. We concluded that the high end of the range of
control premiums best represented the amount an investor would pay, over and above market
capitalization, in order to obtain a controlling interest given the current economic conditions.
If we had selected the low end of the range of control premiums, our fair value would still have
exceeded our carrying value for purposes of the annual goodwill impairment assessment.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We will provide enhanced disclosure of the basis and assumptions used to select a particular
control premium in future filings when applicable.
</DIV>



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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Securities and Exchange Commission<BR>
March&nbsp;9, 2010<BR>
Page 6

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Income taxes, page 38</U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>The discussion of fiscal 2009 income tax benefits resulting from the reversal of income tax
reserves and other discrete tax benefits does not appear to fully or separately describe and
quantify these or other material effects upon your effective 2009 tax rate. We note, for
example, the material amount of tax credits disclosed in Note 11 to the financial statements
and the 2007 and 2008 tax return adjustments impacting 2009. The tax credits alone reduced the
effective rate in fiscal 2009 by 28.9%. Please explain to us in greater detail the nature,
amounts and timing of the credits, the reversal of income tax reserves and other discrete tax
benefits, as well as the basis for each of their recognition in fiscal 2009.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Response:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our relatively low levels of pre-tax results accentuated the impact of certain elements in our rate
reconciliation which was expressed in percentage terms. As a result, we will address the Staff&#146;s
comments in both dollar and percentage terms. During fiscal 2009, we recorded $1.1&nbsp;million in
discrete tax benefits, which reduced our effective income tax rate by 27&nbsp;percentage points. Of
this, $0.6&nbsp;million resulted from a reversal of income tax reserves associated with the statutory
closing of a prior U.S. federal and state tax year and settlement of prior liabilities under
amnesty programs, which reduced the effective income tax rate by 14.8&nbsp;percentage points. We
recorded an additional $0.5&nbsp;million of discrete tax benefits, of which $0.4&nbsp;million resulted from
the retroactive extension of the research and development tax credit, reducing the effective income
tax rate by 12.2&nbsp;percentage points. The research and development credit expired as of December&nbsp;31,
2007, limiting the research and development credit that we recorded for fiscal 2008 to expenditures
incurred prior to that date. In October&nbsp;2008, the credit was reinstated for expenditures incurred
after December&nbsp;31, 2007, allowing us to record a discrete tax benefit in fiscal 2009 for the
research and development credit activity from January&nbsp;1, 2008 to September&nbsp;30, 2008. We recognize
discrete tax items in the period that an event occurs or upon expiration of federal and state
statutes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our fiscal 2009 effective tax rate also decreased by 2.4&nbsp;percentage points, and reduced income tax
expense by $0.1&nbsp;million, as a result of activity pertaining solely to fiscal 2009.
</DIV>





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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Securities and Exchange Commission<BR>
March&nbsp;9, 2010<BR>
Page 7

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Consolidated Financial Statements</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Notes to Consolidated Financial Statements</U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Note 5. Selected Balance Sheet Data, page 65</U>

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Please provide analysis of the components of &#147;other&#148; in Accrued Expenses, or confirm that no
item is in excess of 5% of total current liabilities for each balance sheet date. See Rule
5-02.20 of Regulation&nbsp;S-X.</I></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Response:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In accordance with Regulation&nbsp;S-X, Rule&nbsp;5-02.20, we have separately disclosed on the face of our
Consolidated Balance Sheets as of September&nbsp;30, 2009 and 2008 each of the items in excess of 5% of
total current liabilities and we confirm that we have no items aggregated in &#147;Other accrued
expenses&#148; in excess of 5% of total current liabilities at either balance sheet date.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Note 7. Fair Value Measurements, page 67</U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">8.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>We note that your certificates of deposit are classified within level 1 in the fair value
hierarchy table. Please tell us how you concluded that this classification within the
hierarchy, for certificates of deposit and other investment securities, is appropriate
considering that level 1 inputs are quoted prices in active markets for identical assets.
Please refer to paragraph 820-10-35-40 of the FASB Accounting Standards Codification.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Response:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">After review, we believe that our certificates of deposit should be reported as using Level 2
inputs to determine fair value as our fair value is based on quoted prices for similar assets
(rather than identical assets) in an active market. We will correct this prospectively in future
filings since the correction would only reflect a change in classification within the fair value
hierarchy and would not affect either the reported amounts in our consolidated financial
statements, or the method of valuing those securities that is disclosed.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Item&nbsp;11. Executive Compensation (incorporated from Definitive Proxy Statement on Schedule&nbsp;14A
filed on December&nbsp;8, 2009)</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Compensation Determination Process, page 10</U>

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">9.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Your disclosure indicates that you engage in benchmarking of base salaries, cash incentive
opportunities and equity awards for your named executive officers against the compensation
practices of your &#147;peer group&#148; companies and the larger group of public technology companies
included in the Radford survey. As it appears that benchmarking is material to your
compensation policies and decisions, please clarify how you target each material element of
compensation and overall compensation, in each case if applicable, against the peer group and
survey data. You should also disclose where actual awards or incentive opportunities for your
named executive officers fall relative to the applicable target or range. In this regard, we
note your statement that your executives&#146; base salaries are &#147;generally below the median
relative to comparable companies,&#148; but that their cash incentive opportunities would result in
total cash compensation &#147;generally&#148; above the median. Please
provide a more specific description of these benchmarks. Please also clarify how the market data
is considered in determining stock option awards. We note in this regard your general statement
that the compensation committee &#147;awards stock options based on the same principles of market
comparisons of total compensation including long-term incentives combined with the remaining
factors listed above.&#148;</I></TD>
</TR>




</TABLE>
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</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Securities and Exchange Commission<BR>
March&nbsp;9, 2010<BR>
Page 8

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Response:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As indicated in our proxy disclosure, Digi measures Named Executive compensation against both a
peer group of comparable companies and a larger group of public technology companies included in
the Radford survey. We review each data set individually as well as a composite of the two.
Percentile positions quoted in our disclosure and in this response are based on the market
composite.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">There are two primary benchmarks determined in this process:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1) annual total cash compensation levels, consisting of base salary and annual cash incentive
compensation, and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2) long term incentive compensation levels, which are delivered in the form of stock options
to our Named Executives.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Utilizing this data, we target the total cash compensation level of each Named Executive between
the 50th and 75th percentile of the market benchmarks. Determination of the percentile target for
each Named Executive is based on a number of factors, including:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Named Executive&#146;s performance,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Qualifications and potential for development and performance in the future,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Strategic goal achievement, and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Current financial conditions and goals of the Company.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For the current fiscal year, all four of our Named Executives have total cash compensation targets
roughly equivalent to the 75th percentile of the market benchmarks.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Digi does not set specific market percentile targets for base salary and annual cash incentive
compensation for Named Executives. We instead set total compensation targets as described above
and then determine the appropriate mix of base salary and incentive compensation. Our pay for
performance philosophy results in total target cash compensation plans with a significant
percentage tied to incentive based compensation. As a result, the Named Executives&#146; base salaries
were roughly at the 25th percentile of market benchmarks on average in fiscal 2009. The market
data suggest that this difference between our target total cash compensation market position and
base salary market position is based on market practices of delivering a higher percentage of total
cash compensation through base salaries than Digi has elected to do in current and previous years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As annual incentive pay comprises a large portion of the total cash compensation target, the market
percentile position of actual total cash compensation can vary greatly. Actual total cash
compensation for Named Executives has averaged close to the 25th percentile of market actual total
cash compensation in the past two years. This is a result of performance objectives not being met,
or in the case of fiscal 2009, the incentive plan being cancelled for the majority of the year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We target the size of our annual stock option awards for Named Executives to fall between the 25th
and 75th percentile of market equity awards. The determination of the actual award size is based
on a number of factors, including:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Named Executive&#146;s past and expected performance,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Retention goals for the Named Executive, and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The strategic impact of the Named Executive&#146;s position.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">




</TABLE>
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</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Securities and Exchange Commission<BR>
March&nbsp;9, 2010<BR>
Page 9

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Actual stock option awards for Named Executives have ranged between the 25th and 65th percentile of
market in the past two years. In the current fiscal year, the average of all awards to the four
Named Executives was roughly equivalent to the market median. In the prior fiscal year, the
average of all awards to our four Named Executives was roughly equivalent to the market 60th
percentile.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Item&nbsp;13. Certain Relationships and Related Transactions and Director Independence (incorporated
from Definitive Proxy Statement on Schedule&nbsp;14A filed on December&nbsp;8, 2009)
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Related Person Transaction Approval Policy, page 26
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">10.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Please confirm that the company had no related person transactions since the beginning of its
fiscal 2009 required to be disclosed pursuant to </I><I>Item 404(a)</I><I> of Regulation&nbsp;S-K. Consider
adding a statement to such effect, if applicable, in future filings.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Response:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Digi had no related person transactions since the beginning of fiscal 2009 that were required to be
disclosed pursuant to Item 404(a) of Regulation&nbsp;S-K. In the Index of our Form 10-K, we listed Item
13, Certain Relationships and Related Transactions and Director Independence, and incorporated this
item by reference to our proxy statement, filed on December&nbsp;8, 2009. In our proxy, under Election
of Directors &#151; Director Independence, we disclosed a relationship between Digi and Spansion Inc.,
the company for which one of our directors is employed. During fiscal 2009, we purchased
components through independent third party distributors from Spansion Inc. in the ordinary course
of business in an amount that was less than the disclosure threshold identified in Item 404(a) of
Regulation&nbsp;S-K. We do not consider this related party relationship to be material, and therefore,
did not disclose this in our Form 10-K. However, we will add a statement noting that we have no
related party transactions required to be disclosed, if applicable, in future filings.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U>Item&nbsp;15. Exhibits, Financial Statement Schedules</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U>Schedule&nbsp;II &#151; Valuation and Qualifying Accounts, page 89</U>

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">11.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>We note that you maintain a valuation account for inventory reserves. Tell us how you
considered the guidance in SAB Topic 5BB, which indicates that inventory write-downs due to
obsolescence establish a new cost basis and should not be presented as a reserve. Please
clarify how your accounting method establishes a new cost basis for your inventory and why you
believe including this reserve as a valuation and qualifying account is appropriate.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Response:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">When reviewing inventory costing and value, we specifically follow the guidance in SAB Topic 5BB to
determine the basis of our inventory and the lower of cost or market. Where there is specific
evidence that the utility of goods
will be less than cost, this change in value is recognized as a loss in the current period. Once
the new cost basis is established, the value is not increased with any changes in circumstances
that would indicate an increase after the re-measurement.
</DIV>




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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Securities and Exchange Commission<BR>
March&nbsp;9, 2010<BR>
Page 10

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Upon review, we have determined that the Valuation account &#151; inventory reserves is not a valuation
account and should not be presented in Schedule&nbsp;II in the Report on Form 10-K. We will correct
this prospectively and exclude this information in future filings since this only reflects a change
in presentation and does not affect our accounting policy disclosures or the amounts reported in
our consolidated financial statements.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">* * * * *
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In responding to the staff&#146;s comments, the Company acknowledges that:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the Company is responsible for the adequacy and accuracy of the disclosure in the
filing;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the Company may not assert staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal securities laws of the United States.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Please feel free to contact the undersigned at 952-912-3444 if the Commission staff has any
questions or concerns regarding this response.
</DIV>


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">
/s/ Subramanian Krishnan&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Subramanian Krishnan&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" nowrap>Senior Vice President, Chief Financial Officer
and <BR>Treasurer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">cc: </TD>
    <TD width="1%">&nbsp;</TD>
    <TD>David Edgar, Staff Accountant, Securities and Exchange Commission<BR>
Mark Shuman, Branch Chief-Legal, Securities and Exchange Commission<BR>
Katherine Wray, Attorney-Advisor, Securities and Exchange Commission<BR>
Digi International Inc. Audit Committee<BR>
Joseph T. Dunsmore, President, Chief Executive Officer and Chairman<BR>
Jay Hare, PricewaterhouseCoopers LLP<BR>
James E. Nicholson, Faegre &#038; Benson LLP</TD>
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