DEBT

9 Months Ended

Aug. 01, 2021

DEBT [Abstract]

DEBT

NOTE 6 - DEBT

Short-term debt was $0.0 million, and $4.7 million as of August 1, 2021 and October 31, 2020, respectively. The 2020 amount represents an advance payment under an MLA to fund equipment purchased or leased in the U.S., and short duration borrowings in Xiamen, China, to fund operations. See below for further information. The weighted-average interest rate on our short-term debt as of October 31, 2020 was 2.02%.

The tables below provide information on our long-term debt.

As of August 1, 2021	Xiamen Project Loans			Xiamen Working Capital Loans			Hefei Equipment Loan			Finance Leases			Total
Principal due:
Next 12 months	$	7,615		$	8,108		$	2,321		$	7,119		$	25,163
Months 13 – 24	$	9,961		$	3,961		$	4,642		$	6,487		$	25,051
Months 25 – 36		10,165			-			4,642			6,585			21,392
Months 37 – 48		9,794			-			7,736			19,623			37,153
Months 49 – 60		7,489			-			1,655			-			9,144
Long-term debt	$	37,409		$	3,961		$	18,675		$	32,695		$	92,740
Interest rate at balance sheet date		4.65	%		4.53% - 4.61	%		4.20	%			(3)
Basis spread on interest rates		0.00			67.75 - 76.00			(45.00	)		N/A
Interest rate reset	Quarterly			Monthly/Annually			Annually				N/A
Maturity date	December 2025			July 2023			September 2026					(3)
Periodic payment amount	Increases as loans mature			Increases as loans mature			Varies (1)					(3)
Periodic payment frequency	Semiannual, on individual loans			Semiannual, on individual loans			Semiannual(2)			Monthly
Loan collateral (carrying amount)	$	91,277			N/A		$	86,892		$	41,537	(4)

⁽¹⁾ First five loan repayments will each be for 7.5 percent of the approved 200 million RMB loan principal; last five installments will each be for 12.5 percent of the original approved loan amount.

⁽²⁾ Semiannual repayments commence in March 2022.

⁽³⁾ See Note 8 for interest rates on lease liabilities, maturity dates, and periodic payment amounts.

⁽⁴⁾ Represents the carrying amount at the balance sheet date of the related right-of-use assets, in which the lessors have secured interests.

As of October 31, 2020	Xiamen Project Loans			Xiamen Working Capital Loans			Total
Principal due:
Next 12 months	$	6,705		$	2,265		$	8,970
Months 13 – 24	$	7,334		$	7,808		$	15,142
Months 25 – 36		9,592			3,814			13,406
Months 37 – 48		9,789			-			9,789
Months 49 – 60		9,432			-			9,432
Thereafter		7,211			-			7,211
Long-term debt	$	43,358		$	11,622		$	54,980
Interest rate at balance sheet date		4.90	%		4.53% - 4.61	%
Basis spread on interest rates		25.00			40.00 - 76.00
Loan collateral (carrying amount)	$	94,459			N/A

Xiamen Project Loans

In November 2018, PDMCX obtained approval to borrow 345.0 million RMB 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 and, as of August 1, 2021, 291.0 million RMB ($45.0 million) remained outstanding. The Project Loans were used to finance certain capital expenditures at the PDMCX facility and are collateralized by liens granted on the land use right, building, and certain equipment located at the facility. The interest rates on the Project Loans are variable (based on the RMB Loan Prime Rate of the National Interbank Funding Center), and interest incurred on the loans is eligible for reimbursement through incentives provided by the Xiamen Torch Hi-Tech Industrial Development Zone, which provide for such reimbursements up to a prescribed limit and duration. The Project Loans are subject to covenants and provisions, certain of which relate to the assets pledged as security for the loans, all of which we were in compliance with at August 1, 2021.

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 extension. Unless extended, this facility will expire in October 2021. As of August 1, 2021, PDMCX had 78.0 million RMB ($12.1 million) 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 are eligible for reimbursement through incentives provided by the Xiamen Torch Hi-Tech Industrial Development Zone, which provide for such reimbursements up to a prescribed limit and duration.

Hefei Equipment Loan

In October 2020, our Hefei, China, facility was approved to borrow 200 million RMB (approximately $30.9 million, at the balance sheet date) from the China Construction Bank Corporation. This credit facility is subject to annual reviews and extension, with the most recent extension set to expire in August 2022. The loan proceeds were used to fund purchases of two lithography tools at the Hefei facility. As of August 1, 2021, we had borrowed 135.7 million RMB ($21.0 million) against this approval (all of which was then outstanding), and 62.5 million RMB ($9.9 million) remained available to borrow. The interest rate on the loan is variable and based on the RMB Loan Prime Rate of the National Interbank Funding Center. The borrowings are secured by the Hefei facility, its related land use right, and certain manufacturing equipment. The Hefei Equipment Loan is 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 August 1, 2021.

Finance Leases

In February 2021, we entered into a five-year $7.2 million finance lease for a high-end inspection tool and, in December 2020, under an MLA which we entered into effective July 2019, we entered into a $35.5 million lease for a high-end lithography tool. Upon entering into the latter lease, our prior $3.5 million short-term obligation to the lessor became a portion of the lease liability. See Note 8 for additional information on these leases.

Corporate Credit Agreement

In September 2018, we entered into a five-year amended and restated credit agreement (the “Credit Agreement”), which has a $50 million borrowing limit, with an expansion capacity to $100 million. The Credit Agreement is secured by substantially all of our assets located in the United States and common stock we own in certain subsidiaries. The Credit Agreement includes covenants around minimum interest coverage ratio, total leverage ratio, and minimum unrestricted cash balance (all of which we were in compliance with at August 1, 2021), and limits the amount of cash dividends, distributions, and redemptions we can pay on our common stock to an aggregate annual amount of $50 million. We had no outstanding borrowings against the Credit Agreement at August 1, 2021. The interest rate on the Credit Agreement (1.09% at August 1, 2021) is based on our total leverage ratio at LIBOR plus a spread, as defined in the Credit Agreement.