================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-24966
Orbit Semiconductor, Inc.
(Exact name of registrant as specified in its charter)
Delaware 94-2627385
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
169 Java Drive, Sunnyvale, California 94089
(Address and principal offices) (Zip Code)
Registrant's telephone number, including area code: (408) 744-1800
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ___
---
<PAGE>
APPLICABLE ONLY TO CORPORATE ISSUERS:
At July 18, 1996, there were 7,482,165 shares of the Registrant's
Common Stock issued and outstanding.
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ORBIT SEMICONDUCTOR, INC.
This Quarterly Report on Form 10-Q contains historical information and
forward-looking statements. Statements looking forward in time are included in
this Form 10-Q 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 Company's actual results in future periods to
be materially different from any future performance suggested herein. Further,
the Company operates in an industry sector where securities may be volatile and
may be influenced by economic and other factors beyond the Company's control. In
the context of forward-looking information provided in this Form 10-Q and in
other reports, please refer to the discussion of risk factors detailed in, as
well as the other information contained in, the Company's filings with the
Securities and Exchange Commission during the past 12 months.
<TABLE>
<CAPTION>
INDEX PAGE NO.
----- --------
<S> <C> <C>
PART 1. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements 3
Condensed Consolidated Statements of Income 3
Condensed Consolidated Balance Sheets 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and 7
Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Securityholders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item I - Financial Statements
<TABLE>
ORBIT SEMICONDUCTOR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME
<CAPTION>
Three Six
Months Months
Ended Ended
-------------------------- --------------------------
June 30, June 30, June 30, June 30,
(Unaudited; In Thousands, Except Per Share Amounts) 1996 1995 1996 1995
-------------------------- --------------------------
<S> <C> <C> <C> <C>
Revenues:
Revenues $17,312 $14,539 $31,079 $28,023
Revenues from related party - 1,635 731 3,080
-------------------------- --------------------------
Total 17,312 16,174 31,810 31,103
Cost of sales 9,989 8,892 19,258 17,305
-------------------------- --------------------------
Gross margin 7,323 7,282 12,552 13,798
-------------------------- --------------------------
Operating expenses:
Research and development 1,688 1,277 3,430 2,569
Selling, general and administrative 3,146 2,875 6,001 5,406
Merger expenses - 348 - 348
-------------------------- --------------------------
Total 4,834 4,500 9,431 8,323
-------------------------- --------------------------
Income from operations 2,489 2,782 3,121 5,475
Other income (expense):
Interest and other income 114 168 304 369
Interest expense (239) (136) (484) (226)
Minority interest in loss of subsidiary 4 3 7 6
-------------------------- --------------------------
Total (121) 35 (173) 149
-------------------------- --------------------------
Income before income taxes and extraordinary item 2,368 2,817 2,948 5,624
Provision for income taxes 800 1,033 975 2,060
-------------------------- --------------------------
Income before extraordinary item 1,568 1,784 1,973 3,564
Extraordinary gain from early retirement of debt (net of
income taxes of $119) - - 201 -
-------------------------- --------------------------
Net income 1,568 1,784 2,174 3,564
========================== ==========================
Per share data:
Income before extraordinary item $0.17 $0.20 $0.22 $0.41
Extraordinary gain from early retirement of debt - - 0.02 -
-------------------------- --------------------------
Net income $0.17 $0.20 $0.24 $0.41
========================== ==========================
Weighted Average Common and Common
Equivalent Shares Outstanding 9,138 8,816 9,005 8,750
========================== ==========================
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE>
<TABLE>
ORBIT SEMICONDUCTOR, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30, Dec. 31,
(Unaudited; in thousands) 1996 1995
------------- -------------
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $5,995 $10,671
Accounts receivable, less allowance of $397 in 1996 and 1995 13,297 10,425
Accounts receivable from related party - 732
Inventories 10,675 8,123
Prepaid expenses and other assets 934 388
Note receivable from related party - 1,000
Deferred income taxes 1,236 1,236
------------- -------------
Total current assets 32,137 32,575
Property and Equipment - net 26,142 24,582
Goodwill - net 1,634 1,847
Other Assets 301 338
------------- -------------
Total $60,214 $59,342
============= =============
Liabilities and Stockholders' Equity
Current Liabilities:
Trade payables $4,556 $5,241
Accounts payable to related party 434 425
Current portion of long-term obligations 2,927 2,769
Accrued salaries, commission and benefits 964 918
Other accrued liabilities 1,292 1,110
Income taxes payable 1,043 -
------------- -------------
Total current liabilities 11,216 10,463
Long-Term Obligations 9,055 11,601
Deferred Income Taxes 402 402
Minority Interest 2 9
Stockholders' Equity:
Common stock: $0.001 par value; 20,000 shares authorized;
7,481 and 7,315 shares outstanding in 1996 and 1995,
respectively 22,909 22,425
Deferred stock compensation (15) (29)
Retained earnings 16,645 14,471
------------- -------------
Total stockholders' equity 39,539 36,867
------------- -------------
Total $60,214 $59,342
============= =============
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE>
<TABLE>
ORBIT SEMICONDUCTOR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Six
Months
Ended
------------------------------
June 30, June 30,
(Unaudited; In Thousands) 1996 1995
------------- -------------
<S> <C> <C>
Increase (Decrease) In Cash and Cash Equivalents:
Operating Activities:
Net income $2,174 $3,564
KMOS Semiconductor net income for the five months ended May 31, 1995 - (430)
Extraordinary gain from early retirement of debt (201)
Adjustments to reconcile to net cash provided by operating activities:
Deferred income taxes - (963)
Depreciation and amortization 2,337 1,037
Amortization of deferred stock compensation 14 210
Minority interest in loss of subsidiary (7) (7)
Changes in:
Accounts receivable (1,140) (627)
Inventories (2,552) (669)
Prepaid expenses and other assets (546) (46)
Trade payables (676) 443
Accrued liabilities 228 (128)
Income taxes payable 924 1,880
Deferred rent - (1)
------------- -------------
Net cash provided by operating activities 555 4,263
------------- -------------
Investing Activities:
Maturities of short-term investments - 4,845
Acquisition of property and equipment (3,684) (6,097)
Decrease in other assets 37 54
------------- -------------
Net cash used for investing activities (3,647) (1,198)
------------- -------------
Financing Activities:
Notes payable borrowings 1,090 883
Notes payable repayments (105) (100)
Repayment of OIC royalty obligation (1,815) -
Repayment of capital lease obligations (1,238) (626)
Employee stock purchase plan and exercise of stock options 484 128
------------- -------------
Net cash provided by (used for) financing activities (1,584) 285
------------- -------------
Increase (decrease) in Cash and Cash Equivalents (4,676) 3,350
Cash and Cash Equivalents:
Beginning of period 10,671 7,798
------------- -------------
End of period $5,995 $11,148
============= =============
Supplemental disclosures of cash flow information:
Acquisition of equipment under capital lease $- $2,083
============= =============
Tax benefit from stock transactions $- $2,333
============= =============
Deferred stock compensation $- $97
============= =============
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE>
ORBIT SEMICONDUCTOR, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 QUARTERLY FINANCIAL STATEMENTS
The condensed consolidated financial statements for the three and six
months ended June 30, 1996 and 1995 are unaudited but include all adjustments
(consisting solely of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the financial position and
results of operations of the Company for interim periods. The results of
operations for the three months and six months ended June 30, 1996 are not
necessarily indicative of the operating results to be expected for the full
year. The information included in this report should be read in conjunction with
the Company's annual consolidated financial statements and notes thereto for the
year ended December 31, 1995 included in the Company's Annual Report on Form
10-K filed with the Securities and Exchange Commission.
NOTE 2 INVENTORIES
Inventories consist of (in thousands):
Jun. 30, Dec. 31,
1996 1995
-------------- --------------
Raw materials $1,591 $1,363
Work in progress 6,449 5,597
Finished goods 2,635 1,163
-------------- --------------
Total $10,675 $8,123
============== ==============
NOTE 3 NET INCOME PER SHARE
Net income per share is based on the weighted average number of common
and dilutive common equivalent shares outstanding during the period and Orbit
Israel shares. Common equivalent shares include common stock options and
warrants (using the treasury stock method) and shares subscribed under the
Employee Stock Purchase Plan.
NOTE 4 MERGER WITH DII
On June 9, 1996, the Company entered into an Agreement and Plan of
Merger (the "Merger Agreement"), pursuant to which DII Merger Corp., a
wholly-owned subsidiary of The DII Group, Inc. (the "DII Group"), will
be merged with and into Orbit, with the result that Orbit will become a
wholly-owned subsidiary of the DII Group. In the proposed merger, each
outstanding share of common stock of Orbit will be converted into the
right to receive 45/100ths (0.45) of a share of common stock of the DII
Group. Stockholders of the Company and the DII Group will vote upon the
merger on August 22, 1996.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
General
Orbit provides semiconductor design, manufacturing and engineering
support services that allow system designers to manage effectively application
specific integrated circuit ("ASIC") development, production, scheduling and
inventory control. In 1991, the Company made a strategic decision to emphasize
its higher-margin manufacturing programs and to develop a new program to address
the need for more cost-effective development and production of gate arrays. In
late 1992, the Company introduced its ENCORE! program, which includes internally
developed software that permits Orbit to convert the netlist circuit design of
customer-designed ASICs into an Orbit gate array at low non-recurring
engineering charges. In June 1995, the Company further developed its gate array
program through its merger with KMOS Semiconductor, Inc. ("KMOS"), a fabless
gate array company that offers open-market design services of high-performance
mixed-signal (analog/digital) ASICs. Both the gate array programs (comprising
the ENCORE! program and the KMOS mixed-signal gate array program) and the
Company's high margin contract manufacturing program, which includes Orbit's
High Reliability Contract Manufacturing program, have generally achieved a
higher gross margin percentage than the Company's other manufacturing programs.
On June 9, 1996 the Company entered into a definitive agreement and
plan of merger with the DII Group providing for the acquisition of Orbit by the
DII Group, subject to the approval of stockholders of Orbit and the DII Group in
a vote to take place on August 22, 1996.
Results of Operations
<TABLE>
The following table sets forth certain operational data both as
percentages of quarterly revenues and as percentage changes from the prior
quarter's results:
<CAPTION>
Three Months Ended Six Months Ended
------------------------ ------------------------
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
------------------------ ------------------------
<S> <C> <C> <C> <C>
Revenues 100.0% 100.0% 100.0% 100.0%
Cost of sales 57.7% 55.0% 60.5% 55.6%
------------------------ ------------------------
Gross margin 42.3% 45.0% 39.5% 44.4%
------------------------ ------------------------
Operating expenses:
Research and development 9.7% 7.9% 10.8% 8.3%
Selling, general and administrative 18.2% 19.9% 18.9% 18.5%
------------------------ ------------------------
Total operating expenses 27.9% 27.8% 29.7% 26.8%
------------------------ ------------------------
Income from operations 14.4% 17.2% 9.8% 17.6%
Interest income(expense) and other, net -0.7% 0.2% -0.5% 0.5%
------------------------ ------------------------
Income before income taxes and extraordinary item 13.7% 17.4% 9.3% 18.1%
Provision for income taxes 4.6% 6.4% 3.1% 6.6%
------------------------ ------------------------
Income before extraordinary item 9.1% 11.0% 6.2% 11.5%
Extraordinary gain from early retirement of debt 0.0% - 0.6% -
======================== ========================
Net income 9.1% 11.0% 6.8% 11.5%
======================== ========================
</TABLE>
<TABLE>
The following table details revenues, gate array revenues and gate
array revenues as a percentage of total revenues (dollars in thousands):
<CAPTION>
Three Six Months
Months Ended Ended
----------------------------- -----------------------------
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues $17,312 $16,174 $31,810 $31,103
============= ============= ============= =============
Gate array revenues $11,401 $6,478 $20,873 $12,005
============= ============= ============= =============
Gate array revenues as a percentage of revenues 65.9% 40.1% 65.6% 38.6%
============= ============= ============= =============
</TABLE>
<PAGE>
Revenues - Orbit derives revenues from the sale of integrated circuit
products manufactured pursuant to customer orders and specifications. The
Company's revenues for the second quarter of 1996 were $17.3 million,
representing an increase of 7% from $16.2 million for the second quarter of
1995. This increase was attributable to a $4.9 million increase in gate array
revenues, which include the ENCORE! program and the mixed-signal gate array
program. This increase in gate array revenues was attributable to higher volumes
and higher average selling prices. The increase in gate array revenues was
partially offset by a decrease of $1.8 million in revenues from the low margin
foundry program and a decrease of $1.8 million in revenues from the high margin
contract manufacturing program. The decrease in revenue from the high margin
contract manufacturing program was attributable to lower volumes, reflecting a
downward fluctuation in business conditions that affected the Company's
customers for this program. The increase in revenues attributable to the gate
array program, together with the decrease in revenues attributable to the low
margin foundry program reflects the Company's strategic emphasis on its
higher-margin manufacturing programs, including the gate array program, and its
continuing de-emphasis of its low margin foundry business.
The Company's revenues for the six months ended June 30, 1996 were
$31.8 million, representing an increase of 2%, from $31.1 million for the six
months ended June 30, 1995. $8.9 million of this increase was attributable to
higher volumes and higher average selling prices from the Company's gate array
program. The increase in gate array revenues was partially offset by a decrease
of $4.6 million in revenues from the high margin contract manufacturing program
and a decrease of $3.6 million in revenues from the low margin foundry program.
The decrease in revenue from the high margin contract manufacturing program was
attributable to lower volumes, reflecting a downward fluctuation in business
conditions that affected the Company's customers for this program. The increase
in revenues attributable to the gate array program, together with the decrease
in revenues attributable to the low margin foundry program reflects the
Company's strategic emphasis on its higher-margin manufacturing programs,
including the gate array program, and its continuing de-emphasis of its low
margin foundry business.
<TABLE>
Gross margin - The following table sets forth the Company's revenues,
gross margin and gross margin as a percentage of revenues (dollars in
thousands):
<CAPTION>
Three Six
Months Months
ended ended
---------------------------- ----------------------------
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $17,312 $16,174 $31,810 $31,103
Cost of sales 9,989 8,892 19,258 17,305
------------ ------------ ------------ ------------
Gross margin $7,323 $7,282 $12,552 $13,798
============ ============ ============ ============
Gross margin 42.3% 45.0% 39.5% 44.4%
============ ============ ============ ============
</TABLE>
The Company's gross margin percentage was 42.3% in the second quarter
of 1996, down from 45.0% in the second quarter of 1995. The gross margin
percentage was 39.5% for the six months ended June 30, 1996, down from 44.4% for
the six months ended June 30, 1995. These decreases were primarily due to an
increase in fixed manufacturing costs in connection with the Company's expansion
of its fabrication facilities in California, such that the costs associated with
the manufacturing facility increased at a rate greater than the increase in
revenues of the same period.
<PAGE>
Research and Development Expenses - Research and development expenses
consist primarily of personnel costs, equipment and its related depreciation,
and related support costs associated with the development of new semiconductor
manufacturing processes and design technology. The Company increased its
spending on research and development in the second quarter of 1996. These
expenses in the second quarter of 1996 exceeded the second quarter of 1995's
expenses by 32%. Research and development spending increased in the six months
ended June 30, 1996 by 34% from the six months ended June 30, 1995. These
increases reflect the Company's continuing development of the gate array
program, which includes the ENCORE! program and the mixed-signal gate array
program, as well as the development of improved process technologies and
development work on a 0.8 micron process technology.
The Company believes that the continued development of its technology
is essential to its future success and is committed to continue its investment
in research and development. The Company expects that research and development
spending will increase in future periods as a consequence of product and process
development activities currently underway.
Selling, General and Administrative Expenses - Selling, general and
administrative expenses have decreased as a percentage of revenues to 18.2% in
the second quarter of 1996 from 19.9% in the second quarter of 1995 and have
decreased in absolute dollars approximately 2% to $3.1 million in the second
quarter of 1996 from $3.2 million in the second quarter of 1995. This dollar
decrease was primarily attributable to a $348,000 non-recurring charge for
merger expenses associated with the Company's June 1995 merger with KMOS that
was included in selling, general and administrative expenses in the second
quarter of the prior year. This decrease was partially offset be an increase of
$0.2 million in commission expenses associated with the increase in revenues.
Selling, general and administrative expenses have increased as a percentage of
revenues to 18.9% in the six months ended June 30, 1996 from 18.5% in the six
months ended June 30, 1995 and have increased in absolute dollars by 4% to $6.0
million in the six months ended June 30, 1996 from $5.8 million in six months
ended June 30, 1995. This dollar increase was primarily attributable to a $0.3
million increase in compensation expenses primarily associated with the hiring
of key sales, marketing and customer service personnel and a $0.2 million
increase in commission expenses associated with the increase in revenues,
partially offset by the $348,000 non-recurring charge for merger expenses in the
six months ended June 30, 1995.
Interest Income (Expense) and Other, Net - Orbit's interest income
(expense) and other includes interest earned on cash equivalents and short-term
investments, minority interest in losses incurred in its subsidiary and realized
gains on the sale of investments. The Company's net interest income (expense)
and other was $(0.1) million in the second quarter of 1996 as compared with
$35,000 in the second quarter of 1995. The Company's net interest income
(expense) and other was $(0.2) million in the six months ended June 30,1996 as
compared with $0.1 million in the six months ended June 30, 1995. These
decreases are due to an increase in interest expense associated with an increase
in long-term lease obligations in connection with equipment additions related to
the Company's development of a 0.8 micron process capability and a 6-inch wafer
fabrication facility in California.
Provision for income taxes - The Company's provision for income taxes
was $0.8 million and $1.0 million for the second quarter of 1996 and 1995,
respectively. Orbit's effective tax rate was 34% for the second quarter of 1996
as compared to 37% in the second quarter of 1995. The Company's provision for
income taxes was $1.0 million and $2.1 million for the six months ended June 30,
1996 and the six months ended June 30,1995, respectively. The Company's
effective tax rate was 33% for the six months ended June 30, 1996 as compared to
37% for the same period of the prior year. These rates differ from federal
statutory rates primarily due to state income taxes, partially offset by the
utilization of research and development tax credits in 1995 and manufacturing
investment tax credits, and with the tax benefits associated with the formation
of a foreign sales corporation. The decrease in the effective tax rate in 1996
from 1995 is primarily due to the proportionally greater impact of state
manufacturing investment tax credits.
Extraordinary gain - An extraordinary gain from early retirement of
debt of $0.2 million was recorded in the first quarter of 1996, net of income
taxes of $0.1 million.
<PAGE>
Factors affecting future results - The Company's quarterly results have
in the past and may in the future vary due to a number of factors, including
timing, cancellation or delay of customer orders; gains or losses of significant
customers; changes in revenues and product mix; variations in selling prices;
variations in manufacturing yields; the timing and level of process development
costs; change in inventory levels; change in manufacturing capacity and
variations in the utilization of this capacity; availability and change in
prices of raw materials incorporated into the Company's products; timing of
announcement and introduction of new products and services by the Company and
its competitors; market acceptance of the Company's and its customers' products;
shifts in demand for the Company's processes, services, technologies and
products; the successful integration of KMOS's operations with Orbit's, and
other competitive factors. Any unfavorable change in the foregoing or other
factors could have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, the Company's
inability to complete successfully its expansion plans in Israel, the United
States or elsewhere, or to do so in a timely manner could have a material
adverse effect on the Company's business, financial condition and results of
operations. The Company also operates its own wafer fabrication facility, which
entails a high level of fixed costs and requires adequate volume of production
and sales to be profitable. During periods of decreased demand, these high fixed
costs could have a material adverse effect on the Company's business, financial
condition and results of operations.
Liquidity and Capital Resources
The Company has historically financed its operations and met its
capital requirements from a combination of cash generated from operations, bank
borrowings, capital lease financing and the sale of equity securities.
Principal sources of liquidity at June 30, 1996 consisted of $6.0
million in cash and cash equivalents and $4.5 million available under a bank
line of credit. The bank line of credit contains certain financial covenants and
restrictions including maintaining certain financial ratios. As of June 30,
1996, the Company was in compliance with such covenants and restrictions.
The Company's operating activities provided net cash of $0.6 million
and $4.3 million for the first six months of 1996 and the same period of 1995,
respectively. The Company's investing activities used $3.6 million and $1.2
million for the first six months of 1996 and the same period of 1995,
respectively. Cash used for investing activities was primarily for acquisition
of property and equipment partially offset in 1995 by the proceeds from the
maturity of short-term investments. Net cash used for financing activities was
$1.6 million in the first six months of 1996 resulting from the repayment of the
OIC royalty obligation of $1.8 million and repayment of capital lease
obligations of $1.2 million, partially offset by notes payable borrowings of
$1.0 million. This is compared with net cash provided by financing activities of
$0.3 million in the first six months of 1995 resulting from notes payable
borrowings and the exercise of stock options and warrants, partially offset by
debt repayments.
The Company believes that its banking facilities, equipment lease
lines, cash and cash equivalents and anticipated cash provided by operations
will be sufficient to meet the Company's cash requirements for the next twelve
months. However, the Company will require additional capital at such time as it
decides to commence significant construction and equipping activities in
connection with its proposed Israeli manufacturing facility or any other
domestic or foreign facility expansion. While the Company believes that
consummation of its pending merger with the DII Group will potentially provide a
source of additional funds, there is no assurance that additional financing will
be available or, if available, that it will be available on acceptable terms.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In December 1995, a securities class action (the "Action") was filed
against the Company and three of its officers and Directors in the United States
District Court for the Northern District of California. The complaint alleges
claims under Sections 10(b) and 20(a) of the Exchange Act and SEC Rule 10b-5
promulgated thereunder. On March 27, 1996, the Company was served with an
amended complaint with regard to the Action. The Company filed a Report on Form
8-K regarding such amended complaint on April 9, 1996. Orbit believes that the
claims set forth in the amended complaint are without merit and intends to
defend such claims vigorously.
Item 2. Changes in Securities
<PAGE>
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Securityholders
At the Company's annual meeting of stockholders, which was held on May
21, 1996, the Company's stockholders elected Gary P. Kennedy and Eli Harari as
Class I directors for three-year terms. Not less than 6,500,000 votes were cast
in favor of each such director. The Company's Class II directors are Steve Kam,
Richard B. Kash and Constantine S. Macricostas. The Company's Class III
directors are Federico Faggin and Joseph K. Wai.
The Company's stockholders ratified the appointment of Deloitte & Touche LLP as
the Company's independent auditors. Voting in favor were 6,490,044, opposed were
22,910, and abstaining were 10,400.
The Company's stockholders approved an amendment to the 1994 Stock Incentive
Plan increasing the number of shares of Common Stock available for issuance
under the Plan from 2,250,000 to 4,250,000. Voting in favor of the amendment
were 4,657,676, opposed were 196,354, and abstaining were 17,082.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits is filed herewith:
Exhibit 11.1 Computation of Net Income Per Share
(b) Reports on Form 8-K.
On April 12, 1996, the Company filed a report on Form 8-K (the
"April Form 8-K"). The April Form 8-K reported the filing of
the first amendment to a purported class action against the
Company and three of its officers and directors in the U.S.
District Court in Northern California.
On June 14, 1996, the Company filed a report on Form 8-K (the
"June Form 8-K"). The June Form 8-K reported the Company, the
DII Group, Inc. ("DII") and a wholly owned subsidiary of DII,
have executed a definitive agreement and plan of merger
providing for the acquisition of Orbit by DII.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, as amended, the registrant duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ORBIT SEMICONDUCTOR, INC.
(Registrant)
Date: August 12, 1996 By: _________________________________________
Joseph K. Wai
Executive Vice President, Chief Financial
Officer and Secretary
Exhibit 11.1
<TABLE>
ORBIT SEMICONDUCTOR, INC.
COMPUTATION OF INCOME PER SHARE
(In thousands, except per share amounts)
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
June 30, June 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income $1,568 $1,784 $2,174 $3,564
====== ====== ====== ======
Weighted average common shares outstanding 7,434 7,022 7,400 6,909
Common share equivalents related to stock options and
warrants 1,142 1,232 1,043 1,279
Common stock issuable upon conversion of Orbit Israel
preferred shares (using the initial public offering price
of $7.50) and Orbit Israel ordinary shares, included
pursuant to Securities and Exchange Commission rules 562 562 562 562
--- --- --- ---
Weighted average common and common equivalent shares
9,138 8,816 9,005 8,750
===== ===== ===== =====
Net income per share $0.17 $0.20 $0.24 $0.41
===== ===== ===== =====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000930599
<NAME> ORBIT SEMICONDUCTOR, INC.
<MULTIPLIER> 1,000
<CURRENCY> US DOLLAR
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1.000
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<SECURITIES> 0
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<ALLOWANCES> (397)
<INVENTORY> 10,675
<CURRENT-ASSETS> 32,137
<PP&E> 35,288
<DEPRECIATION> (9,146)
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0
0
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<TOTAL-LIABILITY-AND-EQUITY> 60,214
<SALES> 17,312
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<CGS> 9,989
<TOTAL-COSTS> 14,823
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<INTEREST-EXPENSE> 239
<INCOME-PRETAX> 2,368
<INCOME-TAX> 800
<INCOME-CONTINUING> 1,568
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<NET-INCOME> 1,568
<EPS-PRIMARY> 0.17
<EPS-DILUTED> 0.17
</TABLE>
