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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
JUNE 9, 1996
(DATE OF EARLIEST EVENT REPORTED)
THE DII GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 0-21374 84-1224426
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(STATE OF INCORPORATION) (COMMISSION FILE NO.) (IRS EMPLOYER I.D. NO.)
6273 MONARCH PARK PLACE, NIWOT, COLORADO 80503
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(303) 652-2221
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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Item 5. Other Events.
On June 9, 1996, The DII Group, Inc. ("DII") issued a joint press
release with Orbit Semiconductor, Inc. ("Orbit") announcing that DII and Orbit
have entered into a Merger Agreement providing for the acquisition by DII of
Orbit. A copy of the joint press release describing the terms of the Merger is
filed as an exhibit to this filing.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
99.1 Copy of Press Release dated June 9, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE DII GROUP, INC.
By: /s/ Thomas J. Smach
------------------------------
Thomas J. Smach
Corporate Controller
Date: June 10, 1996
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- - ----------- -----------
99.1 Copy of Press Release dated
June 9, 1996
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[THE DII GROUP LOGO] [RBIT SEMICONDUCTOR, INC. LOGO]
CONTACTS:
The DII Group, Inc. [NEWS RELEASE] Orbit Semiconductor, Inc.
Carl R. Vertuca, Jr. Joe Wai
Senior Vice President & Executive Vice President &
Chief Financial Officer Chief Financial Officer
(303) 652-2221 (408) 744-1800
www.DIIgroup.com www.orbitsemi.com
THE DII GROUP, INC. AND ORBIT SEMICONDUCTOR, INC.
SIGN MERGER AGREEMENT
June 9, 1996 -- Niwot, CO and Sunnyvale, CA -- The DII Group, Inc. (NASDAQ:
DIIG), a global supplier of a broad range of integrated electronics products
and services, and Orbit Semiconductor, Inc. (NASDAQ: ORRA), a leading provider
of semiconductor design, manufacturing and engineering support services,
jointly announced today the signing of a definitive agreement with respect to a
merger in which Orbit will become a wholly-owned subsidiary of The DII Group.
The merged company is expected to generate sales of over $500 million for the
year ending December 31, 1996.
The merger is expected to be completed during the third quarter, subject to
approval by shareholders of both companies and satisfaction of other customary
closing conditions. Shareholders of Orbit will receive 0.45 shares of The DII
Group's common stock for each common share of Orbit they own. The DII Group
will issue approximately 3.6 million shares of common stock as a result of this
exchange, representing a transaction value of $13.95 per Orbit share
(approximately $111 million), based upon Friday's closing price of DIIG of
$31.00 per share. This merger has been structured as a tax-free exchange and
will be accounted for as a pooling- of-interests. Certain Orbit
management/shareholders have granted irrevocable proxies to vote in favor of
the merger which totals approximately 40% of Orbit's voting shares.
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THE DII GROUP, INC. AND ORBIT SEMICONDUCTOR, INC. SIGN MERGER AGREEMENT
Ronald R. Budacz, Chairman and Chief Executive Officer of The DII Group, Inc.
stated, "This acquisition is the most recent step in the ongoing execution of
The DII Group's corporate strategy of becoming a leading supplier to the
worldwide electronics industry. The Company continues to expand the breadth
and depth of the group's products and services, focusing on vertical
integration of technology solutions for speed-to-market differentiation. For
quite some time, we have been actively looking to add quick-turn application
specific integrated circuit (ASIC) capabilities. Industry analysts predict
semiconductors will remain one of the leading global growth industries into the
next decade, and we identified Orbit as a company with excellent prospects
because of their multiple value added solutions. DII expects that Orbit's
focused market niche, logic devices, is forecasted to grow at an annual rate of
25% through the year 2000.
While broadening DII's customer base, Orbit also adds unique quick-turn
manufacturing and engineering capabilities which provide more cost effective
logic device solutions. This will especially benefit customers of DOVatron
International, DII's contract manufacturing company which assembles printed
circuit boards. There are a number of important synergy's we expect to achieve
with this merger. Many of DOVatron's customers presently incorporate field
programmable gate arrays (FPGAs) into their designs with the intention of
converting to ASICs when the product enters higher volume manufacturing.
However, as shorter product life cycles spur customers to decrease their own
time-to-market, most conversions get deferred due to cost and timing
constraints. Orbit's quick- turn technology solutions and low non-recurring
engineering charges allow reductions in cost for customers without increasing
their time-to-market. In addition, Multilayer Technology, DII's quick-turn
maker of complex printed circuit boards, provides excellent market synergy with
Orbit Semiconductor. Both companies interface directly with customer design
engineers to facilitate product development and speed-to-market."
Gary P. Kennedy, President and Chief Executive Officer of Orbit Semiconductor,
Inc. stated, "The newly combined Company will enjoy an expanded customer base
through DII's linked marketing capabilities. More vertical integration of
capabilities will distinguish Orbit from its competitors. In addition, Orbit
will be able to leverage DII's global market presence, technology and
manufacturing leadership and their strong financial position and capital
resources."
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THE DII GROUP, INC. AND ORBIT SEMICONDUCTOR, INC. SIGN MERGER AGREEMENT
Carl R. Vertuca, Jr., Senior Vice President and Chief Financial Officer of The
DII Group stated, "This merger meets our stringent acquisition criteria which
has proven to be successful in previous acquisitions. We expect this merger to
be non-dilutive by the fourth quarter of 1996, without considering any cost
savings or market synergies resulting from this combination. Vertuca
elaborated by stating, "The merged Company is expected to generate sales of
over $500 million for the year ending December 31, 1996. Including Orbit's
common stock equivalents, The DII Group's weighted average common shares and
equivalents outstanding for the year ending December 31, 1996 should be
approximately 12.4 million and 14.9 million for primary and fully diluted
earnings per share purposes, respectively. Excluding one-time merger costs,
which are currently expected to be approximately $3.5 to $4.0 million, the
combination will be slightly dilutive in the third quarter of 1996 and
accretive in the fourth quarter of 1996 and beyond."
In discussing the outlook of the DII Group for the remainder of 1996, Vertuca
stated, "Due to certain DOVatron contract manufacturing customer deferrals and
cancellations, second quarter revenues are expected to be sequentially flat as
compared to the first quarter of 1996. Profits, however, are not expected to
be significantly affected, as most of these push outs and cancellations relates
to customer orders in our Malaysia facility which contained very little quoted
profit margins and are offset by more favorable results from our non-contract
manufacturing businesses. Approximately $1 million of the one-time merger
costs will have been incurred and therefore expensed by DII in the second
quarter. The remaining merger related costs which have not been recognized in
the second quarter will be expensed by the combined company when incurred in
the third quarter. These merger costs could impact DII's earnings per share
from $0.05 to $0.07 for the second quarter." Vertuca ended by stating,
"DOVatron has been awarded several significant new customer orders which will
begin shipment in the second half of the year, offsetting the second quarter
revenue shortfall. Our previously anticipated growth in revenues and profits
(excluding the merger) for the year ended December 31, 1996 remains unchanged."
Orbit's management team will continue to serve in their current positions,
headed by Gary P. Kennedy, President and Chief Executive Officer. In addition,
Mr. Kennedy and one other Orbit Director are expected to join The DII Group
Board of Directors.
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THE DII GROUP, INC. AND ORBIT SEMICONDUCTOR, INC. SIGN MERGER AGREEMENT
OVERVIEW OF ORBIT SEMICONDUCTOR
Orbit is primarily a full service, independent manufacturer and world marketer
of quick-turn ASICs, providing design and manufacturing services on a worldwide
basis. Orbit currently employs approximately 300 people at its three ISO
certified facilities located in Sunnyvale, California which total 105,000
square feet. Customers include companies that design various electronic
systems and products for application in the medical, telecommunications,
military and aerospace, and computers and peripherals industries. System
designers typically utilize ASICs that provide the specific logic component
required for virtually every electronic system. The most common types of ASICs
are mask programmable gate arrays (MPGAs) and electronically programmable gate
arrays such as FPGAs. Orbit's quick-turn solutions compete with MPGAs and
FPGAs in those areas where it can utilize its relative strengths most
effectively to satisfy a system designer's need to balance effective cost per
circuit and time-to-market considerations. The wide variety of circumstances
in which Orbit's competitive position offers customer system designers an
improved solution include the following:
- - - Customers Prototype with FPGA/Production at Orbit to Achieve Lower
Circuit Cost - Orbit's ENCORE! conversion program permits customers
that have a circuit using a FPGA to obtain production of that circuit
in an Orbit quick-turn gate array. This program permits a customer to
obtain the fast time-to-market advantages of FPGAs, while achieving
specific production volume requirements and lower per circuit
manufacturing costs through gate array conversion.
- - - Customers Prototype with FPGA/Production at Orbit to Achieve Circuit
Optimization - Utilizing the Company's ENCORE! conversion program,
Orbit's engineers are able to convert a circuit that has been
prototyped using a FPGA into an Orbit quick-turn gate array having
more efficient routing and gate array architecture and more flexible
pin-outs, ultimately reducing packaging and overall costs while also
achieving specific production requirements.
- - - Customers Prototype and Initial Production with FPGA/Volume at Orbit -
Orbit can serve as the primary source of production for a customer
that has prototyped and
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THE DII GROUP, INC. AND ORBIT SEMICONDUCTOR, INC. SIGN MERGER AGREEMENT
commenced production of a circuit using a FPGA. This service permits
the customer to increase its production volumes and achieve lower per
circuit costs.
- - - Customers Utilize Orbit as Secondary Source for MPGA Production - Due
to its low non-recurring engineering charges, Orbit provides users of
particular MPGA products with a second source of manufacturing
production. In instances where a MPGA supplier has discontinued or
threatened to discontinue production of a particular MPGA, Orbit can
respond quickly to provide the customer with a primary source of
production supply.
- - - Customers Utilize Orbit as Primary Source of Supply - Orbit's ENCORE!
program and manufacturing capabilities position Orbit to provide a
primary source of circuit production in circumstances where a customer
is faced with time-to-market considerations that are important, but
not critical, and low to moderate production volume requirements.
Orbit's objective is to continue to provide quick-turn and flexible ASIC
design/manufacturing services capable of responding effectively to a broad
spectrum of customer needs by means of technology, design, manufacturing
expertise and engineering support services which are provided through the
following customer programs.
- - - ENCORE! Conversion Gate Array Program - ENCORE! is a gate array program
that includes proprietary software that converts the netlist circuit
design of customer-designed ASICs, including MPGAs, FPGAs and other
programmable logic devices (PLDs) into an Orbit gate array at low
non-recurring engineering charges. The ENCORE! gate array program
provides a quick-turn end product that is "transparent" to the
customer, i.e., it will perform all the functions of the original
logic device. The customer can therefore elect to have Orbit be the
primary or secondary source of a particular integrated circuit.
Contract Manufacturing Services - Orbit offers the following contract
manufacturing services for low-volume production: prototyping
services, the "High Reliability Manufacturing Program," the "Foresight
Program," and Charged Coupled Devices ("CCD") fabrication processes.
Through its prototype program, Orbit offers quick
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THE DII GROUP, INC. AND ORBIT SEMICONDUCTOR, INC. SIGN MERGER AGREEMENT
turnaround for customer orders and the availability of several process
configurations. The Foresight program allows Orbit's customers to
share space on a wafer. By spreading development costs among several
customers, Orbit is able to provide an economical source of circuit
processing to small volume circuit producers. The Company maintains a
High Reliability Manufacturing Program to support many medical
companies that manufacture electronic devices for implantation into
the human body, as well as prime contractors to United States military
organizations. Finally, Orbit supports CCD fabrication processes,
specializing in custom application specific processing, such as wafer
scale and CCDs for imaging and analog signal processing.
- - - Design Services - The Company provides digital gate array design
services to its customers, ranging from the initial design stage to
maximizing the functionality and efficiency of existing
customer-designed circuits.
- - - Mixed-Signal Design Services - A mixed signal design group provides
rapid development of custom analog/digital ASICs based on
cost-effective gate array designs. The Company's mixed-signal gate
arrays and their low-voltage design methodology provide Orbit with a
significant opportunity for increased sales in battery-operated
products used within the medical, industrial and commercial markets.
For the year ended December 31, 1995, Orbit reported net sales of $61.6
million, net income of $6.7 million and earnings per share of $0.75. Over the
last three years, Orbit has experienced annual compound growth rates in
revenues and net income of almost 35% and 150%, respectively. For the three
months ended March 31, 1996, Orbit reported net sales of $14.5 million, net
income of $0.6 million and earnings per share of $0.05. The recent addition of
external foundry sources and increased internal capacity will enable Orbit to
achieve higher second half 1996 and fiscal 1997 revenues and profits than those
forecasted by investment analysts who follow the company. Orbit will use its
internal fabrication capability for quick-turn prototype, high reliability and
just-in- time medium volume orders, while supplementing its high-volume
requirements through external foundry sources.
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THE DII GROUP, INC. AND ORBIT SEMICONDUCTOR, INC. SIGN MERGER AGREEMENT
OVERVIEW OF THE DII GROUP, INC.
The DII Group is a leading provider of electronics outsourcing products and
services which operates through a global network of companies in North America,
Europe and Southeast Asia. These companies are uniquely integrated to provide
a broad range of related products and services, including initial printed
circuit board design; materials procurement; manufacturing of prototype printed
circuit boards; assembly of printed circuit boards; process tooling; machine
tools; in-circuit and functional test hardware and software; and final system
configuration. By offering a comprehensive set of integrated manufacturing
services, DII companies are better able to develop long-term relationships with
its customers, expand into new markets and enhance its profitability.
The DII Group serves the electronics manufacturing industry through the
following operating companies:
Multilayer Technology ("Multek") manufactures high density, complex
multilayer printed circuit boards on a quick- turn basis;
IRI International ("IRI") manufactures surface mount printed circuit
board solder cream stencils on a quick-turn basis;
DOVatron International assembles both quick-turn and high volume
complex electronic circuits on a contract basis;
TTI-Testron designs and manufactures in-circuit and functional test
software and hardware on a quick-turn basis; and
Cencorp manufactures depaneling systems that route individual printed
circuit boards from an assembled master panel in the final step of the
electronics assembly process.
The DII Group's business strategy is to aggressively expand its revenue base in
conjunction with the growing electronics industry. DII companies seek to
establish "partnerships" with high velocity
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THE DII GROUP, INC. AND ORBIT SEMICONDUCTOR, INC. SIGN MERGER AGREEMENT
product development customers by being involved in the early stages of design
to provide integrated quick-turn solutions. Key elements of DII's strategy
include:
Networked business units: The DII companies' products and services are
delivered to customers through its network of business units. Although these
stand-alone business units operate independently in various sectors of the
electronics industry, they are uniquely linked and integrated to provide
tailored manufacturing solutions to customers.
Global presence: DII companies offer manufacturing capabilities in three major
electronics markets of the world (North America, Europe and Southeast Asia).
DII companies currently maintain various manufacturing facilities throughout
the United States (New York, Rhode Island, Florida, Illinois, Texas, Colorado,
California and Minnesota); in Puebla, Mexico; Cork, Ireland; Singapore; and
Malaysia (Malacca and Penang). These regional facilities provide the size and
flexibility required to meet the needs of smaller customers and the global
reach required for larger customers.
Customer relationships: DII Group companies participate in the early stages of
product development with customers in targeted, fast-growing industry sectors
who require complex outsourcing solutions together with minimum time-to-market.
This enhances their ability to realize higher margins for products and services
rendered.
Expansion of range of products and services: The DII Group companies continue
to meet the demanding and changing needs of its customers by expanding the
breadth and depth of their products and services and developing new
manufacturing processes. By adding a broad range of integrated products and
services that extends from initial printed circuit design and fabrication of
bare boards to final systems assembly and in-circuit and functional testing,
Group companies are able to secure more fully integrated projects, which
provides opportunities to enhance contract volume and profitability.
Networked marketing strategies: DII companies independently market individual
products and services to customers. By integrating manufacturing solutions
offered by its network of business units, DII companies tailor product and
service offerings which reduce the overall time it takes the customer to bring
its products to market.
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THE DII GROUP, INC. AND ORBIT SEMICONDUCTOR, INC. SIGN MERGER AGREEMENT
Technology and manufacturing leadership: The DII Group companies maintain
technology leadership in order to secure partnerships with customers in the
early stages of their product development and to support their quick-turn
manufacturing requirements. In addition, DII continues to invest in
high-technology manufacturing equipment needs of its companies which enables
these business units to accept increasingly complex orders, which provides
opportunities to enhance revenue and profitability.
For the year ended December 31, 1995, The DII Group reported net sales of
$335.4 million, net income of $16.3 million and primary and fully diluted
earnings per share of $2.01 and $1.93, respectively. Over the last three
years, DII has experienced a annual compound growth rates in revenues and net
income of almost 50% and 40%, respectively. For the three months ended March
31, 1996, DII reported net sales of $98.5 million, net income of $4.5 million
and primary and fully diluted earnings per share of $0.55 and $0.50,
respectively.
THIS PRESS RELEASE CONTAINS HISTORICAL INFORMATION AND FORWARD-LOOKING
STATEMENTS. STATEMENTS LOOKING FORWARD IN TIME ARE INCLUDED IN THIS PRESS
RELEASE PURSUANT TO THE "SAFE HARBOR" PROVISION OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. THEY INVOLVE KNOWN AND UNKNOWN RISKS AND
UNCERTAINTIES THAT MAY CAUSE THE ACTUAL RESULTS OF THE COMPANIES IN FUTURE
PERIODS TO BE MATERIALLY DIFFERENT FROM ANY FUTURE PERFORMANCE SUGGESTED
HEREIN. IN THE CONTEXT OF THE FORWARD-LOOKING INFORMATION PROVIDED IN THIS
PRESS RELEASE AN IN OTHER REPORTS, PLEASE REFER TO THE DISCUSSIONS OF RISK
FACTORS DETAILED IN, AS WELL AS THE OTHER INFORMATION CONTAINED IN, THE
RESPECTIVE FILINGS OF THE COMPANIES WITH THE SECURITIES AND EXCHANGE COMMISSION
DURING THE PAST 12 MONTHS, INCLUDING THE COMPANIES "MANAGEMENT DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION" INCLUDED IN THE
COMPANIES RECENT ANNUAL REPORTS ON FORM 10-K.
THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF
OFFERS TO BUY ANY SECURITY AND SHALL NOT CONSTITUTE AN OFFER, SOLICITATION OR
SALE OF ANY SECURITY IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR
SALE WOULD BE UNLAWFUL.
* * * * * *
The DII Group, Inc. companies are leading ISO certified global suppliers of a
broad range of integrated electronics products and services with operations in
the United States, Mexico, Ireland, England, Singapore and Malaysia. The
Company serves the electronics industry through its five strategic business
channels: DOVatron International, Multilayer Technology (Multek), TTI Testron,
IRI International and Cencorp. Fax on Demand can be reached by phoning (201)
333-3662 and the Internet (Web) Site can be reached by accessing
www.DIIgroup.com to view recent press releases, company information and
financial data relating to The DII Group.
Orbit Semiconductor, Inc. is a leading ISO certified global supplier of
semiconductor design, manufacturing and engineering support services that allow
system designers to manage effectively ASIC development, production, scheduling
and inventory control. Orbit's Internet (Web) Site can be reached by accessing
www.orbitsemi.com.
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