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DEBT
12 Months Ended
Oct. 31, 2023
DEBT [Abstract]  
DEBT
NOTE 8 - DEBT


Due to the Q2 FY23 payoff of the Xiamen Project loans, as of October 31, 2023, the Current portion of long-term debt and the Long-term debt balances were comprised of finance leases as described below:


As of October 31, 2023
 
Xiamen
Project Loans
   
Finance
Leases
   
Total
 
Principal due:
                 
Next 12 months
 
$
-
   
$
6,621
   
$
6,621
 
Months 13 – 24
 
$
-
   
$
17,972
   
$
17,972
 
Months 25 – 36
   
-
     
12
     
12
 
Months 37 – 48
   
-
     
13
     
13
 
Months 49 – 60
   
-
     
1
     
1
 
Long-term debt
   
-
     
17,998
     
17,998
 
Total debt
 
$
-
   
$
24,619
   
$
24,619
 
 
                       
Interest rate at balance sheet date
 
N/A
%
 
N/A
         
Basis spread on interest rates
 
0.00
   
N/A
         
Interest rate reset
 
Quarterly
   
N/A
         
Maturity date
 
December 2025
   
N/A
         
Periodic payment amount
 
Varies as loans mature(1)
   
Varies as Lease mature
         
Periodic payment frequency
 
Semiannual, on individual loans
   
Monthly
         
Loan collateral (carrying amount)
 
$
N/A
    $
35,165
(2) 
       

 
(1)
During Q2 FY23, we repaid the entire balance of RMB 26.4 million (approximately $3.9 million) remaining on the loan, of which, RMB 2.0 million was due to be paid in June 2025 and RMB 24.4 million was due to be paid in December 2025.
 
(2)
Represents the carrying amount at the balance sheet date of the related ROU assets, in which the lessors have secured interests.


The tables below provide information on our long-term debt as of October 31, 2022.

As of October 31, 2022
 
Xiamen Project
Loans
   
Xiamen Working
Capital Loans
   
Hefei Equipment
Loan
   
Finance
Leases
   
Total
 
Principal due:
                             
Next 12 months
 
$
-
   
$
3,512
   
$
-
   
$
6,512
   
$
10,024
 
Months 13 – 24
 
$
-
   
$
-
   
$
-
   
$
6,610
   
$
6,610
 
Months 25 – 36
   
1,098
     
-
     
-
     
17,961
     
19,059
 
Months 37 – 48
   
6,641
     
-
     
-
     
-
     
6,641
 
Long-term debt
 
$
7,739
   
$
-
   
$
-
   
$
24,571
   
$
32,310
 
                                         
Interest rate at balance sheet date
    4.30% - 4.45 %    
4.46
%
   
N/A
     
(2) 
       
Basis spread on interest rates
   
0.00
     
76.00
     
N/A
     
N/A
         
Interest rate reset
 
Quarterly
   
Monthly/Annually
     
N/A
     
N/A
         
Maturity date
 
December 2025
   
July 2023
   
Paid July 2022
     
(2) 
       
Periodic payment amount
 
Varies as loans mature(1)
   
Increases as loans mature
     
N/A
     
(2) 
       
Periodic payment frequency
 
Semiannual, on individual loans
   
Semiannual, on individual loans
     
N/A
   
Monthly
         
Loan collateral (carrying amount)
 
$
70,705
     
N/A
     
N/A
    $ 37,976
(3) 
       


(1)
During the three month period ended October 31, 2022, we repaid RMB 81.0 million (approximately $11.5 million) that had contractual maturity dates ranging from December 2023 through June 2025.
 
(2)
See Note 10 for interest rates on lease liabilities, maturity dates, and periodic payment amounts.
 
(3)
Represents the carrying amount at the balance sheet date of the related ROU assets, in which the lessors have secured interests.

Finance Leases


In February 2021, we entered into a five-year $7.2 million finance lease for a high-end inspection tool. Monthly payments on the lease, which commenced in February 2021, are $0.1 million per month. Upon the payment of the fiftieth monthly payment and prior to payment of the fifty-first monthly payment, we may exercise an early buyout option to purchase the tool for $2.4 million. If we do not exercise the early buyout option, then at the end of the five-year lease term, the lease shall continue to renew on a month-to-month basis at the same rental terms; at our option, after the original term or any renewal periods, we may return the tool, elect to extend the lease, or purchase the tool at its fair market value. Since we are reasonably certain that we will exercise the early buyout option, our lease liability reflects such exercise and we have classified the lease as a finance lease. The interest rate implicit in the lease is 1.08%.


In December 2020, we entered into a five-year $35.5 million finance lease for a high-end lithography tool. Monthly payments on the lease, which commenced in January 2021, increased from $0.04 million during the first three months to $0.6 million for the following nine months, followed by forty-eight monthly payments of $0.5 million. As of the due date of the forty-eighth monthly payment, we may exercise an early buyout option to purchase the tool for $14.1 million. If we do not exercise the early buyout option, then at the end of the five-year lease term, at our option, we may return the tool, elect to extend the lease term for a period and a lease payment to be agreed with lessor at the time, or purchase the tool for its then-fair market value, as determined by the lessor. Since we are reasonably certain that we will exercise the early buyout option, our lease liability reflects such exercise and we have classified the lease as a finance lease. The interest rate implicit in the lease is 1.58%. The lease agreement incorporates the covenants included in our former Corporate Credit Agreement, which are detailed below, and includes a cross-default provision for any agreement or instrument with an outstanding, committed balance greater than $5.0 million in which we are the indebted party.


Xiamen Project Loans


In November 2018, PDMCX obtained approval to borrow RMB 345.0 million from the Industrial and Commercial Bank of China. From November 2018 through July 2020, PDMCX entered into separate loan agreements (the “Project Loans”) for the entire approved amount. In February 2023, PDMCX repaid the entire outstanding balance of RMB 26.4 million ($3.9 million).  As of October 31, 2023, PDMCX had no amount outstanding and the amounts may not be re-borrowed. The Project Loans were used to finance certain capital expenditures at the PDMCX facility and were collateralized by liens granted on the land use right, building, and certain equipment located at the facility. The interest rates on the Project Loans were variable (based on the RMB Loan Prime Rate of the National Interbank Funding Center), and interest incurred on the loans was eligible for reimbursement through incentives provided by the Xiamen Torch Hi-Tech Industrial Development Zone, which provided for such reimbursements up to a prescribed limit and duration. The Project Loans were subject to covenants and provisions, certain of which related to the assets pledged as security for the loans, all of which we were in compliance with at the time of repayment.

Xiamen Working Capital Loans


In November 2018, PDMCX obtained approval for revolving, unsecured credit of the equivalent of $25.0 million, pursuant to which PDMCX may enter into separate loan agreements with varying terms to maturity. This facility is subject to annual reviews and extensions, with the most recent extension set to expire in July 2024. In December 2022, we repaid our entire outstanding balance of RMB 25.6 million ($3.6 million) and the amounts may not be re-borrowed. As of October 31, 2023, PDMCX had no amount outstanding against the approval. The interest rates are variable, based on the RMB Loan Prime Rate of the National Interbank Funding Center. Interest incurred on the loans related to the amount borrowed was eligible for reimbursement through incentives provided by the Xiamen Torch Hi-Tech Industrial Development Zone, which provided for such reimbursements up to a prescribed limit and duration.


Corporate Credit Agreement



In September 2018, we entered into a five-year amended and restated credit agreement (the “Credit Agreement”), which had a $50 million borrowing limit, with an expansion capacity to $100 million. The Credit Agreement was secured by substantially all of our assets located in the United States and common stock we own in certain subsidiaries. The Credit Agreement was subject to covenants around minimum interest coverage ratio, total leverage ratio, and minimum unrestricted cash balance (all of which we were in compliance with at the termination of the agreement in September 2023), and limited the amount of cash dividends, distributions, and redemptions we could pay on our common stock to an aggregate annual amount of $50 million. The Credit Agreement expired, and was not renewed as of October 31, 2023.  There were no outstanding borrowings against the Credit Agreement at its expiration.
 
Hefei Equipment Loan


In October 2020, our Hefei, China, facility was approved to borrow RMB 200 million from the China Construction Bank Corporation. In July 2022, we repaid our entire outstanding balance of RMB 120.7 million ($18.0 million). This credit facility was subject to annual reviews and extension; the most recent extension expired in August 2022, and we did not apply for an extension. The loan proceeds were used to fund purchases of two lithography tools at the Hefei facility. The interest rate on the loan was variable and based on the RMB Loan Prime Rate of the National Interbank Funding Center. The borrowings were secured by the Hefei facility, its related land use right, and certain manufacturing equipment. The Hefei Equipment Loan was subject to covenants and provisions, certain of which relate to the assets pledged as security for the loan, including covenants for the ratio of total liabilities to total assets and the ratio of current assets to current liabilities, all of which we were in compliance with at the time of repayment.


Interest Paid for Debt



Interest payments, including capitalized interest of $0.1 million in 2021, were $0.5 million in 2023, $2.8 million in 2022, and $3.8 million in 2021. The weighted-average interest rate on our current portion of long-term debt for the periods ended October 31, 2023 and October 31, 2022 was 1.5% and 2.5%, respectively.