Long-Term Debt

3 Months Ended

Apr. 04, 2020

Note 6 – Long-Term Debt

Long-term debt consists of the following:

	April 4, 2020			December 31, 2019

Credit facility	$	54,000		$	-
Convertible senior notes, due 2025		512,745			509,128
Convertible senior debentures, due 2040		127			126
Convertible senior debentures, due 2041		1,050			6,677
Deferred financing costs		(15,826	)		(16,784	)
		552,096			499,147
Less current portion		-			-
	$	552,096		$	499,147

The following table summarizes some key facts and terms regarding the outstanding convertible debt instruments as of April 4, 2020:

	Convertible Senior Notes Due 2025			Convertible Senior Debentures Due 2040			Convertible Senior Debentures Due 2041
Issuance date	June 12, 2018			November 9, 2010			May 13, 2011
Maturity date	June 15, 2025			November 15, 2040			May 15, 2041
Principal amount as of April 4, 2020	$	600,000		$	300		$	2,640
Cash coupon rate (per annum)		2.25	%		2.25	%		2.25	%
Nonconvertible debt borrowing rate at issuance (per annum)		5.50	%		8.00	%		8.375	%
Conversion rate effective March 11, 2020 (per $1 principal amount)		31.8278			80.4668			58.7205
Effective conversion price effective March 11, 2020 (per share)	$	31.42		$	12.43		$	17.03
130% of the conversion price (per share)	$	40.85		$	16.16		$	22.14
Call date		n/a		November 20, 2020			May 20, 2021

The terms of the convertible senior debentures due 2040 and due 2041 are generally congruent.

Prior to three months before the maturity date, the holders may convert their convertible senior debentures due 2040 and due 2041 only 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 senior debentures due 2040 and due 2041 are not currently convertible.

Prior to December 15, 2024, the holders of the convertible senior notes due 2025 may convert their notes only 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; (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 quarterly cash dividend program of the Company results in adjustments to the conversion rate and effective conversion price for the convertible debt instruments effective as of the ex-dividend date of each cash dividend. The conversion rate and effective conversion price for the convertible senior notes due 2025 is adjusted for quarterly cash dividends to the extent such dividends exceed $0.085 per share of common stock.

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 debt instruments are reflected in the Company’s consolidated condensed balance sheets as follows:

	Principal amount of the debt instruments		Unamortized discount			Carrying value of liability component		Equity component (including temporary equity) -net carrying value
April 4, 2020
Convertible senior notes due 2025	$	600,000		(87,255	)	$	512,745	$	85,262
Convertible senior debentures due 2040 and due 2041	$	2,940		(1,763	)	$	1,177	$	1,216
Total	$	602,940	$	(89,018	)	$	513,922	$	86,478

December 31, 2019
Convertible senior notes due 2025	$	600,000		(90,872	)	$	509,128	$	85,262
Convertible senior debentures due 2040 and due 2041	$	17,190		(10,387	)	$	6,803	$	7,129
Total	$	617,190	$	(101,259	)	$	515,931	$	92,391

Interest is payable on the convertible debt instruments 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 convertible senior debentures due 2040 and due 2041 and under certain other circumstances, beginning in 2020 and 2021, respectively. The convertible senior notes due 2025 do not possess contingent interest features.

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

	Contractual coupon interest		Non-cash amortization of debt discount		Other non-cash interest expense			Total interest expense related to the debt instruments
April 4, 2020
Convertible senior notes due 2025	$	3,375		3,617		454		$	7,446
Convertible senior debentures	$	44		20		-		$	64
Total	$	3,419	$	3,637	$	454		$	7,510

March 30, 2019
Convertible senior notes due 2025	$	3,375		3,426		454		$	7,255
Convertible senior debentures	$	148		64		(16	)	$	196
Total	$	3,523	$	3,490	$	438		$	7,451

Other non-cash interest expense includes amortization of deferred financing costs and changes in the value of embedded derivative liabilities.

The Company used cash to repurchase $14,250 principal amount of convertible senior debentures due 2041 in the first fiscal quarter of 2020. The net carrying value of the debentures repurchased was $5,645. In accordance with the authoritative accounting guidance for convertible debentures, the aggregate repurchase payment of $19,926 was allocated between the liability ($9,837) and equity ($10,089) 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 $2,920, including the write-off of unamortized debt issuance costs.