XML 24 R13.htm IDEA: XBRL DOCUMENT v3.10.0.1
Long-Term Debt
 9 Months Ended
Sep. 29, 2018
Long-Term Debt [Abstract]  
Long-Term Debt
Note 6 – Long-Term Debt

Long-term debt consists of the following:

  
September 29, 2018
  
December 31, 2017
 
       
Credit facility
 
$
-
  
$
150,000
 
Convertible senior debentures, due 2040
  
22,486
   
110,412
 
Convertible senior debentures, due 2041
  
57,695
   
56,641
 
Convertible senior debentures, due 2042
  
34,268
   
62,518
 
Convertible notes, due 2025
  
491,853
   
-
 
Deferred financing costs
  
(17,716
)
  
(9,101
)
   
588,586
   
370,470
 
Less current portion
  
-
   
-
 
  
$
588,586
  
$
370,470
 

Convertible Senior Notes due 2025

In June 2018, the Company issued $600,000 aggregate principal amount of 2.25% convertible senior notes due 2025 to qualified institutional investors. The Company used the net proceeds from this offering to repurchase $220,000 and $69,060 principal amounts of convertible senior debentures due 2040 and 2042, respectively, as further described below.
 
GAAP requires an issuer to separately account for the liability and equity components of the instrument in a manner that reflects the issuer's nonconvertible debt borrowing rate when interest costs are recognized in subsequent periods. The resulting discount on the debt is amortized as non-cash interest expense in future periods.

The carrying values of the liability and equity components of the convertible notes are reflected in the Company's consolidated balance sheets as follows:

  
Principal amount of
the notes
  
Unamortized discount
  
Carrying value of liability component
  
Equity component - net carrying value
 
September 29, 2018
            
Due 2025
 
$
600,000
   
(108,147
)
 
$
491,853
  
$
85,262
 

Interest is payable on the convertible notes due 2025 semi-annually in arrears on June 15 and December 15 of each year, beginning December 15, 2018, at a rate of 2.25% per annum; however, the remaining debt discount is being amortized as additional non-cash interest expense using an effective annual interest rate of 5.50% based on the Company's estimated nonconvertible debt borrowing rate.

Interest expense for the fiscal quarter and nine fiscal months ended September 29, 2018 related to the convertible notes due 2025 is reflected on the consolidated condensed statements of operations as follows:

  
Contractual
coupon interest
  
Non-cash amortization of debt discount
  
Non-cash amortization of deferred financing costs
  
Total interest expense related to the debentures
 
Fiscal quarter ended September 29, 2018
 
$
3,375
   
3,334
   
454
  
$
7,163
 
                 
Nine fiscal months ended September 29, 2018
 
$
4,088
   
3,890
   
605
  
$
8,583
 

The convertible notes due 2025 will mature on June 15, 2025, unless earlier repurchased or converted.  Prior to December 15, 2024, such conversion is subject to the satisfaction of certain conditions set forth below.  The convertible notes due 2025 are not redeemable by the Company before the maturity date.


Prior to December 15, 2024, the holders may only convert their notes under the following circumstances: (1) during any fiscal quarter after the fiscal quarter ending September 29, 2018, if the sale price of Vishay common stock reaches 130% of the conversion price for a specified period (initially $40.94); (2) the trading price of the notes falls below 98% of the product of the sale price of Vishay's common stock and the conversion rate for a specified period; or (3) upon the occurrence of specified corporate transactions.

The convertible notes due 2025 are initially convertible into cash, shares of Vishay common stock, or a combination thereof, at the Company's option, at a conversion rate of 31.7536 shares of common stock per $1,000 principal amount of notes.  This initial conversion price represents a premium of 27.5% to the closing price of Vishay's common stock on June 8, 2018, which was $24.70 per share.  The conversion rate of the convertible notes is not adjusted for quarterly cash dividends equal to or less than $0.085 per share of common stock.  This represents an initial effective conversion price of approximately $31.49 per share.  At the direction of its Board of Directors, Vishay intends, upon conversion, to repay the principal amount of the notes in cash and settle any additional amounts in shares. Vishay must provide additional shares upon conversion if there is a "fundamental change" in the business as defined in the indenture governing the notes.

Convertible Senior Debentures

Vishay currently has three issuances of convertible senior debentures outstanding with generally congruent terms.

The Company used substantially all of the net proceeds of the June 2018 issuance of convertible senior notes due 2025 to repurchase $220,000 and $69,060 principal amounts of convertible senior debentures due 2040 and due 2042, respectively.  The net carrying value of the debentures repurchased were $89,276 and $29,037, respectively.  In accordance with the authoritative accounting guidance for convertible debentures, the aggregate repurchase payment of $584,991 was allocated between the liability ($133,647) and equity (including temporary equity, $451,344) components of the convertible debentures, using the Company's nonconvertible debt borrowing rate at the time of the repurchase.  As a result, the Company recognized a loss on extinguishment of convertible debentures of $17,309, including the write-off of a portion of unamortized debt issuance costs.

The quarterly cash dividend program of the Company results in adjustments to the conversion rate and effective conversion price for each issuance of the Company's convertible senior debentures effective as of the ex-dividend date of each cash dividend.

The following table summarizes some key facts and terms regarding the three series of outstanding convertible senior debentures following the adjustment made to the conversion rate of the debentures on the ex-dividend date of the September 27, 2018 dividend payment:

  
Due 2040
  
Due 2041
  
Due 2042
 
Issuance date
 
November 9, 2010
  
May 13, 2011
  
May 31, 2012
 
Maturity date
 
November 15, 2040
  
May 15, 2041
  
June 1, 2042
 
Principal amount as of September 29, 2018
 
$
55,000
  
$
150,000
  
$
80,940
 
Cash coupon rate (per annum)
  
2.25
%
  
2.25
%
  
2.25
%
Nonconvertible debt borrowing rate at issuance (per annum)
  
8.00
%
  
8.375
%
  
7.50
%
Conversion rate effective September 13, 2018 (per $1 principal amount)
  
78.0506
   
56.9573
   
91.7689
 
Effective conversion price effective September 13, 2018 (per share)
 
$
12.81
  
$
17.56
  
$
10.90
 
130% of the conversion price (per share)
 
$
16.65
  
$
22.83
  
$
14.17
 
Call date
 
November 20, 2020
  
May 20, 2021
  
June 7, 2022
 

Prior to three months before the maturity date, the holders may only convert their debentures under the following circumstances: (1) during any fiscal quarter after the first full quarter subsequent to issuance, if the sale price of Vishay common stock reaches 130% of the conversion price for a specified period; (2) the trading price of the debentures falls below 98% of the product of the sale price of Vishay's common stock and the conversion rate for a specified period; (3) Vishay calls any or all of the debentures for redemption, at any time prior to the close of business on the third scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events.

The convertible debentures due 2042 became convertible subsequent to the December 31, 2016 evaluation of the conversion criteria, and have remained convertible for each subsequent quarterly evaluation through the September 29, 2018 evaluation, due to the sale price of Vishay's common stock exceeding 130% of the conversion price for the applicable periods.  The convertible debentures due 2040 became convertible subsequent to the September 30, 2017 evaluation of the conversion criteria, and have remained convertible for each subsequent quarterly evaluation through the September 29, 2018 evaluation, due to the sale price of Vishay's common stock exceeding 130% of the conversion price for the applicable periods.  The debentures due 2040 and due 2042 will remain convertible until December 31, 2018, at which time the conversion criteria will be reevaluated.  At the direction of its Board of Directors, the Company intends, upon future conversion of any of the convertible senior debentures, to repay the principal amounts of the convertible senior debentures in cash and settle any additional amounts in shares of Vishay common stock. The excess of the amount that the Company would pay to the holders of the debentures due 2040 and due 2042 upon conversion over the carrying value of the liability component of the debentures currently convertible has been reclassified as temporary equity on the consolidated condensed financial statements. The Company intends to finance the principal amount of any converted debentures using borrowings under its credit facility. Accordingly, the debt component of the convertible debentures due 2040 and due 2042 continues to be classified as a non-current liability on the consolidated condensed balance sheets.

GAAP requires an issuer to separately account for the liability and equity components of the instrument in a manner that reflects the issuer's nonconvertible debt borrowing rate when interest costs are recognized in subsequent periods.  The resulting discount on the debt is amortized as non-cash interest expense in future periods.

The carrying values of the liability and equity components of the convertible debentures are reflected in the Company's consolidated condensed balance sheets as follows:

  
Principal amount of
the debentures
  
Unamortized discount
  
Embedded derivative
  
Carrying value of liability component
  
Equity component (including temporary equity) - net carrying value
 
September 29, 2018
               
Due 2040
 
$
55,000
   
(32,561
)
  
47
  
$
22,486
  
$
22,019
 
Due 2041
 
$
150,000
   
(92,549
)
  
244
  
$
57,695
  
$
62,246
 
Due 2042
 
$
80,940
   
(46,735
)
  
63
  
$
34,268
  
$
31,229
 
Total
 
$
285,940
  
$
(171,845
)
 
$
354
  
$
114,449
  
$
115,494
 
                     
December 31, 2017
                    
Due 2040
 
$
275,000
   
(164,794
)
  
206
  
$
110,412
  
$
110,094
 
Due 2041
 
$
150,000
   
(93,573
)
  
214
  
$
56,641
  
$
62,246
 
Due 2042
 
$
150,000
   
(87,600
)
  
118
  
$
62,518
  
$
57,874
 
Total
 
$
575,000
  
$
(345,967
)
 
$
538
  
$
229,571
  
$
230,214
 

Interest is payable on the debentures semi-annually at the cash coupon rate; however, the remaining debt discount is being amortized as additional non-cash interest expense using an effective annual interest rate equal to the Company's estimated nonconvertible debt borrowing rate at the time of issuance.  In addition to ordinary interest, contingent interest will accrue in certain circumstances relating to the trading price of the debentures and under certain other circumstances beginning ten years subsequent to issuance.

Interest expense related to the debentures is reflected on the consolidated condensed statements of operations for the fiscal quarters ended:

  
Contractual
coupon interest
  
Non-cash amortization of debt discount
  
Non-cash amortization of deferred financing costs
  
Non-cash change in value of derivative liability
  
Total interest expense related to the debentures
 
September 29, 2018
               
Due 2040
 
$
310
   
135
   
4
   
20
  
$
469
 
Due 2041
 
$
844
   
349
   
12
   
71
  
$
1,276
 
Due 2042
 
$
455
   
184
   
7
   
19
  
$
665
 
Total
 
$
1,609
  
$
668
  
$
23
  
$
110
  
$
2,410
 
                     
September 30, 2017
                    
Due 2040
 
$
1,547
   
626
   
22
   
(53
)
 
$
2,142
 
Due 2041
 
$
844
   
321
   
11
   
(21
)
 
$
1,155
 
Due 2042
 
$
844
   
312
   
13
   
(21
)
 
$
1,148
 
Total
 
$
3,235
  
$
1,259
  
$
46
  
$
(95
)
 
$
4,445
 

Interest expense related to the debentures is reflected on the consolidated condensed statements of operations for the nine fiscal months ended:

  
Contractual
coupon interest
  
Non-cash amortization of debt discount
  
Non-cash amortization of deferred financing costs
  
Non-cash change in value of derivative liability
  
Total interest expense related to the debentures
 
September 29, 2018
               
Due 2040
 
$
2,991
   
1,269
   
42
   
81
  
$
4,383
 
Due 2041
 
$
2,532
   
1,024
   
36
   
30
  
$
3,622
 
Due 2042
 
$
2,013
   
783
   
31
   
4
  
$
2,831
 
Total
 
$
7,536
  
$
3,076
  
$
109
  
$
115
  
$
10,836
 
                     
September 30, 2017
                    
Due 2040
 
$
4,641
   
1,841
   
66
   
(97
)
 
$
6,451
 
Due 2041
 
$
2,532
   
943
   
35
   
(13
)
 
$
3,497
 
Due 2042
 
$
2,532
   
919
   
40
   
(13
)
 
$
3,478
 
Total
 
$
9,705
  
$
3,703
  
$
141
  
$
(123
)
 
$
13,426