Long-Term Debt

12 Months Ended

Dec. 31, 2021

Long-Term Debt [Abstract]

Long-Term Debt

Note 6 – Long-Term Debt

Long-term debt consists of the following:

	December 31, 2021			December 31, 2020
Credit facility	$	-		$	-
Convertible senior notes, due 2025		465,344			406,268
Convertible senior debentures, due 2040		-			130
Deferred financing costs		(9,678	)		(11,512	)
		455,666			394,886
Less current portion		-			-
	$	455,666		$	394,886

Credit Facility

The Company maintains a credit agreement with a consortium of banks led by JPMorgan Chase Bank, N.A., as administrative agent, and the lenders (the "Credit Facility"), which provides an aggregate commitment of $750,000 of revolving loans available until June 5, 2024.  The Credit Facility also provides for the ability of Vishay to request up to $300,000 of incremental facilities, subject to the satisfaction of certain conditions, which could take the form of additional revolving commitments, incremental “term loan A” or “term loan B” facilities, or incremental equivalent debt.

Borrowings under the Credit Facility bear interest at LIBOR plus an interest margin.  The applicable interest margin is based on the Company's leverage ratio.  Based on the Company's current leverage ratio, borrowings bear interest at LIBOR plus 1.50%.  The Company also pays a commitment fee, also based on its leverage ratio, on undrawn amounts.  The undrawn commitment fee, based on the Company's current leverage ratio, is 0.25% per annum. 

The Credit Facility allows an unlimited amount of defined “Investments,” which include certain intercompany transactions and acquisitions, provided the Company's pro forma leverage ratio is equal to or less than 2.75 to 1.00.  If the Company's pro forma leverage ratio is greater than 2.75 to 1.00, such Investments are subject to certain limitations.

The Credit Facility also allows an unlimited amount of defined "Restricted Payments," which include cash dividends and share repurchases, provided the Company's pro forma leverage ratio is equal to or less than 2.50 to 1.00.  If the Company's pro forma leverage ratio is greater than 2.50 to 1.00, the Credit Facility allows such payments up to $100,000 per annum (subject to a cap of $300,000 for the term of the facility, with up to $25,000 of any unused amount of the $100,000 per annum base available for use in the next succeeding calendar year).

Borrowings under the Credit Facility are secured by a lien on substantially all assets, including  accounts receivable, inventory, machinery and equipment, and general intangibles (but excluding real estate, intellectual property registered or licensed solely for use in, or arising solely under the laws of, any country other than the United States, assets located solely outside of the United States and deposit and securities accounts), of the Company and certain significant subsidiaries located in the United States, and pledges of stock in certain significant domestic and foreign subsidiaries; and are guaranteed by certain significant subsidiaries.  

The Credit Facility limits or restricts the Company and its subsidiaries, from, among other things, incurring indebtedness, incurring liens on its respective assets, making investments and acquisitions (assuming the Company’s pro forma leverage ratio is greater than 2.75 to 1.00), making asset sales, and paying cash dividends and making other restricted payments (assuming the Company's pro forma leverage ratio is greater than 2.50 to 1.00), and requires the Company to comply with other covenants, including the maintenance of specific financial ratios.

The Credit Facility also contains customary events of default, including, but not limited to, failure to pay principal or interest, failure to pay or default under other material debt, material misrepresentation or breach of warranty, violation of certain covenants, a change of control, the commencement of bankruptcy proceedings, the insolvency of the Company or certain of its significant subsidiaries, and the rendering of a judgment in excess of $50,000 against the Company or its subsidiaries.  Upon the occurrence of an event of default under the Credit Facility, the Company's obligations under the credit facility may be accelerated and the lending commitments under the credit facility may be terminated.

At December 31, 2021 and 2020, there was $748,931 and $748,690, respectively, available under the Credit Facility. Letters of credit totaling $1,069 and $1,310 were outstanding at December 31, 2021 and 2020, respectively.

Convertible Debt Instruments

The following table summarizes some key facts and terms regarding the outstanding convertible senior notes due 2025 as of December 31, 2021:

	Due 2025
Issuance date	June 12, 2018
Maturity date	June 15, 2025
Principal amount	$	465,344
Cash coupon rate (per annum)		2.25	%
Nonconvertible debt borrowing rate at issuance (per annum)		5.50	%
Conversion rate effective December 16, 2021 (per $1 principal amount)		31.9492
Effective conversion price effective December 16, 2021 (per share)	$	31.30
130% of the conversion price (per share)	$	40.69

Prior to December 15, 2024, the holders of the convertible senior notes due 2025 may convert their notes only under the following circumstances: (1) 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.

Pursuant to the Supplemental Indenture governing the convertible senior notes due 2025, at the direction of its Board of Directors, Vishay has fixed the “Specified Dollar Amount” (as defined in the Indenture) that shall apply to all future conversions of notes at $1 cash per $1 principal amount.  The fixing of the Specified Dollar Amount requires Vishay to satisfy its conversion obligations by paying cash with respect to such Specified Dollar Amount.

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.  Vishay must provide additional shares upon conversion if there is a “fundamental change” in the business as defined in the indenture governing the convertible senior notes due 2025.

Effective January 1, 2021, Vishay adopted ASU No. 2020-06.  Prior to the adoption of ASU No. 2020-06, the Company separately accounted for the liability and equity components of convertible debt instruments that may be settled in cash in a manner that reflects the Company’s nonconvertible debt borrowing rate. The liability component at issuance was recognized at fair value, based on the fair value of a similar instrument that did not have a conversion feature. A discount was recorded if debt instruments are issued at a coupon rate which is below the rate of a similar instrument that did not have a conversion feature at issuance.  The equity component was based on the excess of the principal amount of the debt instruments over the fair value of the liability component, after adjusting for an allocation of debt issuance costs and the deferred tax impact, and was recorded as capital in excess of par.  Debt discounts were amortized as additional non-cash interest expense over the expected life of the debt.

Upon adoption of ASU No. 2020-06, 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.

The carrying value of the convertible senior notes due 2025 was $465,344 as of December 31, 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 balance sheet as follows:

	Principal amount of the convertible debt		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 expense related to the convertible debt instruments is reflected on the accompanying consolidated statements of operations for the years ended December 31:

	Contractual coupon interest		Non-cash amortization of debt discount		Other non-cash interest expense			Total interest expense related to the debentures
2021
Convertible senior notes due 2025	$	10,470		-		1,733		$	12,203
2020
Convertible senior notes due 2025	$	12,097		13,118		1,623		$	26,838
Convertible senior debentures	$	88		43		-		$	131
Total	$	12,185	$	13,161	$	1,623		$	26,969
2019
Convertible senior notes due 2025	$	13,500		13,925		1,816		$	29,241
Convertible senior debentures		498		221		(35	)		684
Total	$	13,998	$	14,146	$	1,781		$	29,925

The Company used cash to repurchase $1,010, $16,188 and $2,168 principal amounts of convertible senior debentures due 2040, due 2041, and due 2042, respectively, in 2019.  The net carrying value of the debentures repurchased were $417, $6,282, and $924, respectively.  In accordance with the then-current authoritative accounting guidance for convertible debentures, the aggregate repurchase payment of $27,863 was allocated between the liability ($9,568) and equity (including temporary equity, $18,295) 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 $2,030, including the write-off of a portion of unamortized debt issuance costs.

The Company used cash to repurchase $134,656 principal amount of convertible senior notes due 2025 in 2020.  The net carrying value of the notes repurchased was $115,978.  In accordance with the then-current authoritative accounting guidance for convertible debt, the aggregate repurchase payments of $128,328 were allocated between the liability ($118,587) and equity ($9,741) components of the convertible notes, using the Company's nonconvertible debt borrowing rate at the time of the repurchases.  As a result, the Company recognized a loss on extinguishment of convertible notes of $4,600, including the write-off of unamortized debt issuance costs.

The Company used cash to repurchase $16,890 principal amount of convertible senior debentures due 2041 in 2020.  The net carrying value of the debentures repurchased was $6,715.  In accordance with the then-current authoritative accounting guidance for convertible debt, the aggregate repurchase payment of $23,355 was allocated between the liability ($10,075) and equity ($13,280) 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 $3,473, including the write-off of unamortized debt issuance costs.

Vishay redeemed the remaining $300 principal amount of convertible senior debentures due 2040 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 convertible senior debentures due 2040 were convertible as of December 31, 2020 and remained convertible until they were redeemed.  The convertible senior debentures due 2040, due 2041, and due 2042 have been fully repurchased.

Other Borrowings Information

The Credit Facility, of which no amounts were drawn as of December 31, 2021, expires in 2024.  The convertible senior notes mature in 2025.

At December 31, 2021 and 2020, the Company had committed and uncommitted short-term credit lines with various U.S. and foreign banks aggregating approximately $1,000 and $6,000, respectively, with substantially no amounts borrowed.

Interest paid was $14,177, $15,450, and $16,177 for the years ended December 31, 2021, 2020, and 2019, respectively.

See Note 18 for further discussion on the fair value of the Company’s long-term debt.