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
Date of Report (Date of Earliest Event Reported) June 9, 1996
ORBIT SEMICONDUCTOR, INC.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 0-24966 94-2627385
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(State or Other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification
incorporation) No.)
169 Java Drive, Sunnyvale, CA 94089
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(Address of Principal Executive Offices) (Zip Code)
(408) 744-1800
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(Registrant's Telephone Number, Including Area Code)
C/M: 11308.0000 374901.1
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ITEM 5. Other Events.
In a joint press release, dated June 9, 1996, a copy of which is attached
hereto as Exhibit 99.1 and the full text of which is incorporated by reference
herein, Orbit Semiconductor, Inc. ("Orbit" or the "Registrant") and DII Group,
Inc. ("DII") announced that Orbit, 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.
ITEM 7. Financial Statements and Exhibits.
(c) Exhibits.
99.1 Joint Press Release, dated June 9, 1996.
C/M: 11308.0000 374901.1
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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.
ORBIT SEMICONDUCTOR, INC.
(Registrant)
Date: June 12, 1996 By: /s/ Joseph K. Wai
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Name: Joseph K. Wai
Title: Executive Vice President and Chief
Financial Officer
C/M: 11308.0000 374901.1
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EXHIBIT INDEX
Exhibit
99.1 Joint Press Release, dated June 9, 1996.
C/M: 11308.0000 374901.1
Contacts:
The DII Group, Inc. 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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