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CREDIT AGREEMENTS AND BORROWINGS
 12 Months Ended
Oct. 31, 2013
CREDIT AGREEMENTS AND BORROWINGS [Abstract]  
CREDIT AGREEMENTS AND BORROWINGS
5. CREDIT AGREEMENTS AND BORROWINGS

 

At October 31, 2012, we were party to a credit agreement that provided us with a $15.0 million revolving credit facility and maximum outstanding letters of credit of $3.0 million. Borrowings under this agreement could have been used for general corporate purposes and bore interest at a floating rate, based either on LIBOR or the prime rate, plus an applicable margin.  The agreement contained financial covenants, including restrictions on incurring additional debt, making acquisitions, or paying dividends if we report a cumulative net loss for four consecutive quarters.

 

On December 7, 2012, we entered into a new credit agreement to replace our prior credit agreement. Under the prior credit agreement, we had a $15.0 million unsecured revolving credit facility, a letter of credit facility with a maximum amount for outstanding letters of credit of $3.0 million and a backup letter of credit facility in the amount of 100 million New Taiwan Dollars or approximately $3.4 million.  Pursuant to the new credit agreement, the lenders provided us with a $12.5 million unsecured revolving credit and letter of credit facility, with a $3.0 million maximum amount for outstanding letters of credit.

 

Borrowings under the new credit agreement bear interest at a LIBOR-based rate or a floating rate of 1% above the prevailing prime rate. The floating rate will not be less than the greatest of (a) a one month LIBOR-based rate plus 1.00% per annum, (b) the federal funds effective rate plus 0.50% per annum, and (c) the prevailing prime rate. The rate we must pay for that portion of the new credit agreement which is not utilized is 0.05% per annum.

 

Further, the new credit agreement replaces the financial covenants that were in the prior credit agreement with a minimum working capital requirement of $90.0 million and a minimum tangible net worth requirement of $120.0 million. The new credit agreement also permits us to pay cash dividends in an amount not to exceed $1.0 million per calendar year so long as we are not in default before and after giving effect to such dividends.  The remaining covenants in the new credit agreement are substantially the same as those that were in the prior credit agreement.

 

We also have a £1.0 million revolving credit facility in the United Kingdom and a €1.5 million revolving credit facility in Germany. As of December 30, 2013, the uncommitted 100.0 million New Taiwan Dollar credit facility expired.

 

On March 7, 2011 we entered into an uncommitted credit facility in China in the amount of 20.0 million Chinese Yuan (approximately $3.3 million) and amended our domestic credit agreement to accommodate the new facility. We also have an uncommitted credit facility in China in the amount of 40.0 million Chinese Yuan (approximately $6.6 million) that will expire on February 22, 2014.

 

All of our credit facilities are unsecured.

 

At October 31, 2013, we had $3.3 million of borrowings outstanding under our credit facility in China and $383,000 of secured borrowings assumed in the LCM acquisition. At October 31, 2012, we had $3.2 million of borrowings outstanding under our credit facility in China, but had no other debt or borrowings under any of our other credit facilities. At October 31, 2013, we were in compliance with all covenants contained in the related credit agreements and, as of that date, we had unutilized credit facilities of $22.8 million.