| Notes Payable and Long-Term Debt | Notes payable
and long-term debt consisted of the following for the periods indicated (in thousands):
June
30, 2016 December
31, 2015
Revolving line of credit with a U.S. bank up to $40,000
with interest at LIBOR plus 2%, maturing June 30, 2018 $ 25,900 $ 23,000
Term loan with a U.S. bank with monthly payments of principal and
interest at LIBOR plus 2%, maturing July 31, 2019 3,585 4,150
Term loan with a U.S. bank with monthly payments of principal and
interest at LIBOR plus 2%, maturing June 30, 2020 10,000 2,000
Construction loan with a U.S. bank with monthly payments of principal
and interest at LIBOR plus 2% maturing January 26, 2022 17,832 8,588
Revolving line of credit with a Taiwan bank up to $10,333 with interest
based on the bank's corporate interest rate index plus 1.5%, or 1.70% maturing on November 30, 2016 122 2,588
Revolving line of credit with a Taiwan bank up to $6,600 with interest
at Taiwan deposit index plus 0.41% or LIBOR plus 1.7% maturing on February 6, 2017 1,157 4,475
Revolving line of credit with a Taiwan bank up to $6,000 with interest
at Taiwan Time Deposit Interest Rate Index plus 1% or LIBOR plus 1% maturing on November 27, 2016 1,995 3,407
Revolving line of credit with the Taiwan branch of a China bank
up to $10,000 with interest at LIBOR plus 1.5% or Taiwan Interbank Offered Rate plus 0.9% , maturing March 15, 2017 9,576 9,418
Note payable to a finance company due in monthly installments with
4.5% interest, maturing May 27, 2018 and June 30, 2018 3,925 4,851
Note payable to a finance company due in monthly installments with
4% interest, maturing March 31, 2019 7,101 –
Revolving line of credit with a China bank
up to $13,421 with interest of 3.15% for 3-month term, maturing between August to September 2016 3,675 2,428
Total 84,868 64,905
Less current portion (28,828 ) (30,908 )
Non-current portion $ 56,040 $ 33,997 The current
portion of long-term debt is the amount payable within one year of the balance sheet date of June 30, 2016. The one-month LIBOR
rate was 0.4533% on June 30, 2016. Maturities
of long-term debt are as follows for the future one-year periods ending June 30 (in thousands):
2017 $ 28,828
2018 8,161
2019 27,512
2020 4,654
2021 575
2022
thereafter 15,138
Total
outstanding $ 84,868 On June 24,
2016, the Company entered into a First Amendment to its Credit Agreement with East West Bank and Comerica Bank (“First Amendment”),
a second lien deed of trust, multiple security agreements and promissory notes evidencing two credit facilities and a term loan
originally entered into on June 30, 2015. The first amendment increased the CompanyÂ’s revolving lines of credit from $25
million to $40 million, which mature on June 30, 2018, and retains a $10.0 million term loan maturing on June 30, 2020. The First
Amendment also provides for an additional $10.0 million equipment term loan with a one year drawdown period commending April 1,
2016, maturing five years from the closing date of the First Amendment. The interest rate on these loans was lowered by the First
Amendment from the LIBOR Borrowing Rate plus 2.75% or 3.0% to LIBOR Borrowing Rate plus 2.0%. As of June 30, 2016, $25.9 million
was outstanding under the revolving line of credit. As of June 30, 2016, $10.0 million was outstanding under the term loans. The Company
also has with East West Bank a term loan of $5.0 million with monthly payments of principal and interest that matures on July
31, 2019. As of June 30, 2016, the outstanding balance was $3.6 million. On June 24,
2016, the Company executed a Change in Terms Agreement, Notice of Final Agreement and Modification of the Construction Loan Agreement
(“Amended Agreements”) to its Construction Loan Agreement with East West Bank for up to $22.0 million dollars to finance
the construction of the CompanyÂ’s campus expansion plan in Sugar Land, Texas, originally dated January 26, 2015. Upon signing
the original Construction Loan Agreement, the Company deposited $11.0 million into a restricted bank account for ownerÂ’s
contribution of construction costs. The Amended Agreements have a fifteen month draw down period with monthly interest payments
commencing on February 26, 2015 and ending on July 31, 2016. Thereafter, the entire outstanding principal balance shall be converted
to a sixty-six month term loan with principal and interest payments due monthly amortized over three hundred months. The first
principal and interest payment is due on August 26, 2016, and will continue the same day of each month thereafter. The final principal
and interest payment is due on January 26, 2022 and will include all unpaid principal and all accrued and unpaid interest. The
Company may pay without penalty all or a portion of the amount owed earlier than due. Under the Construction Loan Agreement, the
loan bears interest at an annual rate based on the one-month LIBOR Borrowing Rate plus 2.75%, and the interest rate is reduced
to LIBOR Borrowing Rate plus 2.0% under the Amended Agreements. As of June 30, 2016, there was $17.8 million outstanding under
this loan agreement and there was zero balance in the restricted bank account. The loan and
security agreements with East West Bank and Comerica Bank require the Company to maintain certain financial covenants, including
a minimum cash balance, a current ratio, a maximum leverage ratio and a minimum fixed charge coverage ratio. As of June 30, 2016,
the Company was in compliance with all covenants contained in these agreements. On February
19, 2016, the CompanyÂ’s Taiwan branch renewed and increased its credit facility originally dated January 6, 2015 with CTBC
Bank Co. Ltd. in Taipei, Taiwan for 320 million New Taiwan dollars, or approximately $10.3 million, one year revolving credit
facility. The obligations under the credit facility are unsecured up to $6.3 million; the remaining $4.0 million is available
provided that the Company purchases the same amount of secured certificates of deposit with the bank. Borrowings under the credit
facility bear interest at a rate based on the bankÂ’s corporate interest rate index plus 1.5% for the unsecured portion of
the credit facility and bankÂ’s corporate interest rate index plus 0.93% for the secured portion of the credit facility,
adjusted monthly. As of the execution of the credit facility, the bankÂ’s corporate interest rate index is 0.71%. As of June
30, 2016, no balance was outstanding for the secured loan and $0.1 million was outstanding under this unsecured credit facility. On April 8,
2016, the CompanyÂ’s Taiwan branch renewed its 90 million New Taiwan dollars, or approximately $2.8 million, and 120 million
New Taiwan dollars, or approximately $3.9 million, one year revolving credit facilities, originally dated March 9, 2015, with
E. Sun Commercial Bank Co., Ltd. in Taipei, Taiwan. Borrowings under the 90 million New Taiwan dollars credit facility will bear
interest at a rate equal to the London Interbank Offered Rate (LIBOR) plus 1.7% divided by 0.946. The Company paid off its 90
million New Taiwan dollars loan as of June 30, 2016. Any future borrowings under the 90 million New Taiwan dollars credit facility
are available provided that the Company purchases certificates of deposit in amounts equal to the borrowing from the bank Borrowings
under the 120 million New Taiwan dollars credit facility will bear interest at a rate equal to the bankÂ’s personal monthly
time deposit interest rate plus 0.480%. As of June 30, 2016, $1.2 million was outstanding under this credit facility. On December
22, 2015, the CompanyÂ’s Taiwan branch renewed its $4.0 million credit facility, originally dated December 20, 2013, and
entered into a $2.0 million, one year revolving credit facility agreement with Mega International Commercial Bank (“Mega
Bank”). Obligations under the $4.0 million credit facility are available provided that the Company purchases certificates
of deposit in amounts equal to the borrowing from Mega Bank. Borrowings under the $4.0 million credit facility bear interest at
a rate not less than the LIBOR borrowing rate plus 1.0%, divided by 0.946 for U.S. and other currency borrowings; New Taiwan dollars
borrowings bear interest at a rate equal to the bankÂ’s base lending rate plus 0.76%. Borrowings under the $2.0 million credit
facility bear interest at a rate not less than the LIBOR borrowing rate plus 1.2%, divided by 0.946 for U.S. dollar borrowings;
New Taiwan dollars borrowings bear interest at a rate equal to the bankÂ’s base lending rate plus 0.76% but shall not be
less than 1.90%; and other currency borrowings shall bear interest at a rate at the bankÂ’s based lending rate plus 1.0%,
divided by 0.946. As of June 30, 2016, $2.0 million was outstanding under this unsecured credit facility and no balance was outstanding
under the $4.0 million credit facility. On April 22,
2016, the CompanyÂ’s Taiwan branch entered into a Comprehensive Credit Line Agreement originally dated April 1, 2015, with
the Taipei branch of China Construction Bank, providing a revolving credit line of $10 million, maturing on March 15, 2017. Borrowings
under the Comprehensive Credit Line Agreement are secured by a standby letter of credit issued by the China branch of the bank
under existing agreements between the bank and our China subsidiary. Borrowings under the Comprehensive Credit Line Agreement
reduce the amounts available under the existing credit line between the bank and the CompanyÂ’s China subsidiary and cannot
exceed 97% of the amount of the standby letter of credit issued by the China branch of the bank. Borrowings under the Comprehensive
Credit Line Agreement bear interest at a rate negotiated separately for each drawing depending on the nature of the borrowings.
As of June 30, 2016, $9.6 million was outstanding under this credit facility with interest rates ranging from 1.87% to 1.99%. On June 30,
2015, the CompanyÂ’s Taiwan branch entered into a Purchase and Sale Contract and a Finance Lease Agreement with Chailease
Finance Co, Ltd. (“Chailease”) in connection with certain equipment, structured as a sale lease-back transaction.
Pursuant to the sale contract, the Company's Taiwan branch sold certain equipment to Chailease for a purchase price of 115,240,903
New Taiwan dollars, approximately $3.7 million, and simultaneously leased the equipment back from Chailease pursuant to the Finance
Lease Agreement. The monthly lease payments range from 2,088,804 New Taiwan dollars, approximately $0.1 million, to 2,364,650
New Taiwan dollars, approximately $0.1 million, during the term of the Finance Lease Agreement, including an initial payment in
an amount of 40,240,903 New Taiwan dollars, approximately $1.3 million. The Finance Lease Agreement has a three year term, with
monthly payments, maturing on May 27 and June 30, 2018 respectively. The title to the equipment will be transferred to the CompanyÂ’s
Taiwan branch upon the expiration of the Finance Lease Agreement. As of June 30, 2016, $3.9 million was outstanding under this
Finance Lease Agreement. On March 31,
2016, the CompanyÂ’s Taiwan branch entered into a Purchase and Sale Contract and a Finance Lease Agreement with Chailease
in connection with certain equipment, structured as a sale lease-back transaction. Pursuant to the Purchase and Sale Contract,
the CompanyÂ’s Taiwan branch sold certain equipment to Chailease for a purchase price of 312,927,180 New Taiwan dollars,
approximately $10.1 million, and simultaneously leased the equipment back from Chailease pursuant to the Finance Lease Agreement.
The Finance Lease Agreement has a three year term with monthly lease payments range from 6,772,500 New Taiwan dollars, approximately
$0.2 million, to 7,788,333 New Taiwan dollars, approximately $0.3 million, during the term of the Finance Lease Agreement, including
an initial payment in an amount of 62,927,180 New Taiwan dollars, approximately $2.0 million. Based on the payments made under
the Finance Lease Agreement, the annual interest rate is calculated to be 4.0%. The title to the equipment will be transferred
to the CompanyÂ’s Taiwan branch upon the expiration of the Finance Lease Agreement. As of June 30, 2016, $7.1 million was
outstanding under this Finance Lease Agreement. As of June
30, 2016, the CompanyÂ’s Chinese subsidiary had credit facilities with China Construction Bank totaling $13.4 million, which
can be drawn in U.S. currency, RMB currency, issuing bank acceptance notes to vendors with different interest rates or issuing
standby letters of credit. As of June 30, 2016, the CompanyÂ’s Chinese subsidiary used $10.0 million of its credit facility
and issued standby letters of credit as collateral for the CompanyÂ’s Taiwan branch line of credit with China Construction
Bank. As of June 30, 2016, the Company had a U.S. currency based loan of $3.7 million outstanding under various notes with three-month
terms, maturing from August to September 2016 with effective interest rate of 3.15%. The outstanding balances of bank acceptance
notes issued to vendors were $2.4 million with zero interest rate as of June 30, 2016. As of June
30, 2016, the Company had $36.1 million of unused borrowing capacity. As of June
30, 2016, there was $4.9 million of restricted cash, investments or security deposit associated mainly with the loan facilities. |
