Long-Term Debt

6 Months Ended

Jul. 03, 2021

Long-Term Debt [Abstract]

Long-Term Debt

Note 5 – Long-Term Debt

Long-term debt consists of the following:

	July 3, 2021			December 31, 2020
Credit facility	$	-		$	-
Convertible senior notes, due 2025		465,344			406,268
Convertible senior debentures, due 2040		-			130
Deferred financing costs		(11,313	)		(11,512	)
		454,031			394,886
Less current portion		-			-
	$	454,031		$	394,886

The following table summarizes some key facts and terms regarding the outstanding convertible senior notes due 2025 as of July 3, 2021:

	Convertible Senior Notes Due 2025
Issuance date	June 12, 2018
Maturity date	June 15, 2025
Principal amount as of July 3, 2021	$	465,344
Cash coupon rate (per annum)		2.25	%
Nonconvertible debt borrowing rate at issuance (per annum)		5.50	%
Conversion rate effective June 17, 2021 (per $1 principal amount)		31.9104
Effective conversion price effective June 17, 2021 (per share)	$	31.34
130% of the conversion price (per share)	$	40.74
Call date		n/a

Effective January 1, 2021, Vishay adopted ASU No. 2020-06.  Upon adoption, Vishay derecognized the bifurcated equity component, debt discount, and deferred taxes and remeasured the deferred financing costs associated with its convertible debt instruments.  See Note 1.  The carrying value of Vishay's convertible debt instruments is now equal to the outstanding principal amount and interest expense is now equal to the cash interest paid.  The remeasured deferred financing costs continue to be recognized as non-cash interest expense.

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 convertible senior notes due 2025 are not currently convertible.

Upon conversion of the convertible senior notes due 2025, Vishay will satisfy its conversion obligations by paying $1 cash per $1 principal amount of converted notes and settle any additional amounts due in common stock.

The quarterly cash dividend program of the Company results in adjustments to the conversion rate and effective conversion price for the convertible senior notes due 2025 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.

As of December 31, 2020, there were $300 of convertible senior debentures due 2040 outstanding.  On January 5, 2021, Vishay gave notice to the holders of its convertible senior debentures due 2040 that Vishay would redeem the debentures on February 4, 2021.  The redemption price was paid in cash and was equal to 100% of the principal amount plus accrued but unpaid interest to, but excluding February 4, 2021.

The carrying value of the convertible senior notes due 2025 was $465,344 as of July 3, 2021.  The carrying value of the liability and equity components of the convertible debt instruments prior to the adoption of ASU No. 2020-06 are reflected in the Company’s consolidated condensed balance sheet as follows:

	Principal amount of the debt instruments		Unamortized discount			Carrying value of liability component		Equity component (including temporary equity) -net carrying value
December 31, 2020
Convertible senior notes due 2025	$	465,344		(59,076	)	$	406,268	$	66,127
Convertible senior debentures due 2040	$	300		(170	)	$	130	$	121
Total	$	465,644	$	(59,246	)	$	406,398	$	66,248

Interest is payable on the convertible debt instruments semi-annually at the cash coupon rate.  Prior to the adoption of ASU 2020-06 on January 1, 2021, the debt discount associated with the convertible debt instruments was 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.

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
July 3, 2021
Convertible senior notes due 2025	$	2,618		-		433	$	3,051
July 4, 2020
Convertible senior notes due 2025	$	3,266		3,479		435	$	7,180
Convertible senior debentures	$	16		9		-	$	25
Total	$	3,282	$	3,488	$	435	$	7,205

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

	Contractual coupon interest		Non-cash amortization of debt discount		Other non-cash interest expense		Total interest expense related to the debt instruments
July 3, 2021
Convertible senior notes due 2025	$	5,236		-		866	$	6,102
July 4, 2020
Convertible senior notes due 2025	$	6,641		7,096		889	$	14,626
Convertible senior debentures	$	60		29		-	$	89
Total	$	6,701	$	7,125	$	889	$	14,715

Other non-cash interest expense includes amortization of deferred financing costs.  Interest expense related to the convertible senior debentures was immaterial in 2021.