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LEASES | 3 Months Ended
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Jan. 31, 2021
LEASES [Abstract] |
LEASES | NOTE 8 - LEASES Our involvement in lease arrangements has typically been as a lessee. We determine if an agreement is or contains a lease on the date of the lease agreement or commitment, if earlier. Our evaluation considers whether the arrangement includes an identified asset and whether it affords us the right to control the asset. Our having the right to control the identified asset is determined by whether we are entitled to substantially all of its economic benefits and can direct its use. We recognize leases on our consolidated balance sheet when a lessor makes an asset underlying a lease having a term in excess of twelve months available for our use. The present value of lease payments over the term of the lease, which is determined using our incremental borrowing rate for collateralized loans at the commencement date of the lease, provides the basis for the initial measurement of right-of-use assets and their related lease liabilities. Variable lease payments, other than those that are dependent on an index or on a rate, are not included in the measurement of right-of-use (ROU) assets and their related lease liabilities. Lease terms will include extension periods if the lease agreement includes an option to extend the lease that we are reasonably certain to exercise. As allowed under ASC Topic 842 – “Leases” we have elected, for all classes of assets, the practical expedient to not separate lease components of a contract from nonlease components of a contract. In December 2020, we entered into a five-year $35.6 million finance lease for a high-end lithography tool. Monthly payments on the lease, which commenced in January 2021, increase from $0.04 million after 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 for the forty-eighth monthly payment, we may exercise an early buy-out option to purchase the tool at 39.84% of its original cost. If we do not exercise the early buy-out 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 buy-out option, we have classified the lease as a finance lease. The interest rate of the lease, which is the rate implicit in the lease, is 1.14%. 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 buy-out option to purchase the tool at 33.684638% of its original cost. If we do not exercise the early buy-out 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; 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 buy-out option, we have classified the lease as a finance lease. The interest rate of the lease, which is the rate implicit in the lease, is 1.09%. The following table provides information on operating and finance leases included in our consolidated balance sheets.
Classification |  | January 31, 2021 |  |  | October 31, 2020 |
ROU Assets – Operating Leases |  |  |  |  |  |
Other assets |  | $ | 7,517 |  |  | $ | 7,706 |
ROU Assets – Finance Leases |  |  |  |  |  |  |  |
Property, plant and equipment |  | $ | 35,560 |  |  | $ | - |
Lease Liabilities – Operating Leases |  |  |  |  |  |  |  |
Accrued liabilities |  | $ | 2,282 |  |  | $ | 2,175 |
Other liabilities |  |  | 4,792 |  |  |  | 5,008 |
|  | $ | 7,074 |  |  | $ | 7,183 |
Lease Liabilities – Finance Leases |  |  |  |  |  |  |  |
Current portion of long-term debt |  | $ | 5,819 |  |  | $ | - |
Long-term debt |  |  | 29,741 |  |  |  | - |
|  | $ | 35,560 |  |  | $ | - |
The following table presents future lease payments under noncancelable operating and finance leases as of January 31, 2021. Imputed interest represents the difference between undiscounted cash flows and discounted cash flows.
|  | Operating Leases |  |  | Finance Lease |
Remainder of fiscal year 2021 |  | $ | 1,814 |  |  | $ | 4,506 |
2022 |  |  | 2,306 |  |  |  | 6,054 |
2023 |  |  | 1,311 |  |  |  | 5,760 |
2024 |  |  | 783 |  |  |  | 5,760 |
2025 |  |  | 639 |  |  |  | 14,661 |
Thereafter |  |  | 550 |  |  |  | - |
Total lease payments |  |  | 7,403 |  |  |  | 36,741 |
Imputed interest |  |  | 329 |  |  |  | 1,181 |
Lease liabilities |  | $ | 7,074 |  |  | $ | 35,560 |
The following table presents lease costs for the three-month periods ended January 31, 2021 and February 2, 2020.
|  | Three Months Ended |
|  | January 31, 2021 |  |  | February 2, 2020 |
Operating lease costs |  | $ | 664 |  |  | $ | 1,178 |
Short-term lease costs |  | $ | 46 |  |  | $ | 122 |
Variable lease costs |  | $ | 144 |  |  | $ | - |
Interest on lease liabilities |  | $ | 35 |  |  | $ | - |
Amortization of ROU assets |  | $ | - |  |  | $ | - |
Presented below is other information related to our operating and finance leases.
|  | Three Months Ended |
Supplemental cash flows information: |  | January 31, 2021 |  |  | February 2, 2020 |
Operating cash flows used for operating leases |  | $ | 603 |  |  | $ | 1,885 |
Operating cash flows used for finance leases |  | $ | 35 |  |  | $ | - |
Financing cash flows used for finance leases |  | $ | - |  |  | $ | - |
ROU assets obtained in exchange for operating lease obligations |  | $ | 267 |  |  | $ | 282 |
ROU assets obtained in exchange for finance lease obligations |  | $ | 35,560 |  |  | $ | - |
|  | As of |
|  | January 31, 2021 |  |  | October 31, 2020 |
Classification |  | Weighted-average remaining lease term (in years) |  |  | Weighted-average discount rate |  |  | Weighted-average remaining lease term (in years) |  |  | Weighted-average discount rate |
Operating leases |  |  | 3.9 |  |  |  | 2.37 | % |  |  | 4.1 |  |  |  | 2.37 | %
Finance lease |  |  | 3.9 |  |  |  | 1.14 | % |  |  | - |  |  |  | - |

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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
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