DIGI INTERNATIONAL INCDGII

DIGI INTERNATIONAL INC Leases Disclosure

10-KFiled Nov 21, 20253 min read
LEASES
All of our leases are operating leases and primarily consist of leases for office space. For any lease with an initial term in excess of twelve months, the related lease assets and lease liabilities are recognized on our consolidated balance sheets as either operating or financing leases at the inception of an agreement where it is determined that a lease exists. We have lease agreements that contain both lease and non-lease components. We have elected to combine lease and non-lease components for all classes of assets. Leases with an initial term of twelve months or less are not recorded on our consolidated balance sheets. Instead we recognize lease expense for these leases on a straight-line basis over the lease term.
Operating lease assets represent the right to use an underlying asset for the lease term and operating lease liabilities represent the obligation to make lease payments. These assets and liabilities are recognized based on the present value of future payments over the lease term at the commencement date. We generally use a collateralized incremental borrowing rate based on information available at the commencement date, including the lease term, in determining the present value of future payments. When determining our right-of-use asset, we generally do not include options to extend or terminate the lease unless it is reasonably certain that the option will be exercised.
Our leases typically require payment of real estate taxes and common area maintenance and insurance. These components comprise the majority of our variable lease cost and are excluded from the present value of our lease obligations. Fixed payments may contain predetermined fixed rent escalations. We recognize the related rent expense on a straight-line basis from the commencement date to the end of the lease term.
The following table shows the supplemental balance sheet information related to our leases (in thousands):
Balance Sheet LocationSeptember 30, 2025September 30, 2024
Assets
Operating leasesOperating lease right-of-use assets$8,430 $10,207 
Total lease assets$8,430 $10,207 
Liabilities
Operating leasesCurrent portion of operating lease liabilities$3,361 $2,973 
Operating leasesOperating lease liabilities8,671 11,228 
Total lease liabilities$12,032 $14,201 
The following were the components of our lease cost which is recorded in both cost of goods sold and selling, general and administrative expense (in thousands):
Statement of Operations LocationYear ended
September 30, 2025		Year ended
September 30, 2024
Operating lease costCost of goods sold and SG&A$3,296 $3,531 
Variable lease costCost of goods sold and SG&A1,256 1,263 
Short-term lease costCost of goods sold and SG&A178 114 
Total lease cost$4,730 $4,908 
The following table presents supplemental information related to operating leases (in thousands):
Year ended
September 30, 2025		Year ended
September 30, 2024
Cash paid for amounts included in the measurement of operating lease liabilities$— $3,065 
Right-of-use assets obtained in exchange for new operating lease liabilities$537 $440 
8. LEASES (CONTINUED)
September 30, 2025
Weighted average remaining lease term - operating leases5.2 years
Weighted average discount rate - operating leases4.62 %
The table below reconciles the undiscounted cash flows for each of the first five years as well as all the remaining years to the operating lease liabilities recorded on the Consolidated Balance Sheet as of September 30, 2025 (in thousands):
Fiscal yearAmount
2026$3,741 
20272,115 
20281,897 
20291,840 
20301,880 
Thereafter1,986 
Total future undiscounted lease payments13,459 
Less imputed interest(1,427)
Total reported lease liability$12,032 

Historical Timeline

Fiscal YearFiled
2025Nov 21, 2025Showing above
2024Nov 22, 2024
2023Nov 22, 2023
2022Nov 23, 2022
2021Nov 24, 2021
2020Nov 25, 2020

About Leases Disclosures

Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.

Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.

Other Available Disclosures

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