Long-term debt consists of the following (in thousands):

	July 2,		December 31,
	2011		2010
Credit facility	$	180,000	$	240,000
Exchangeable unsecured notes, due 2102		95,042		95,042
Convertible senior debentures, due 2040		97,407		96,640
Convertible senior debentures, due 2041		49,973		-
		422,422		431,682
Less current portion		-		-
	$	422,422	$	431,682

Convertible Senior Debentures, due 2041

On May 13, 2011, Vishay issued $150 million principal amount of 2.25% convertible senior debentures due 2041 to qualified institutional investors. Vishay used the net proceeds from this offering, together with cash on hand, to repurchase 8,620,689 shares of common stock for an aggregate purchase price of $150 million.

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 (in thousands):

	July 2,
	2011
Liability component:
Principal amount of the debentures	$	150,000
Unamortized discount		(100,240	)
Embedded derivative		213
Carrying value of liability component	$	49,973

Equity component - net carrying value	$	61,758

Interest is payable on the debentures semi-annually 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 8.375% based on the Company’s estimated nonconvertible debt borrowing rate at the time of issuance. In addition to ordinary interest, beginning on May 15, 2021, contingent interest will accrue in certain circumstances relating to the trading price of the debentures and under certain other circumstances.

Interest expense related to the debentures is reflected on the consolidated condensed statements of operations as follows (in thousands):

	Fiscal quarter and six
	fiscal months ended
	July 2, 2011
Contractual coupon interest	$	441
Non-cash amortization of debt discount		102
Non-cash amortization of deferred financing costs		6
Non-cash change in value of derivative liability		2
Total interest expense related to the debentures	$	551

Prior to February 15, 2041, the holders may only convert their debentures under the following circumstances: (1) during any fiscal quarter commencing after the fiscal quarter ending October 1, 2011 if the sale price of Vishay common stock reaches 130% of the conversion price ($24.73) 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. None of these conditions had occurred as of July 2, 2011.

The debentures are initially convertible, subject to certain conditions, into cash, shares of Vishay’s common stock or a combination thereof, at Vishay’s option, at an initial conversion rate of 52.5659 shares of common stock per $1,000 principal amount of debentures. This represents an initial effective conversion price of approximately $19.02 per share. This initial conversion price represents a premium of 12.5% to the closing price of Vishay’s common stock on the date the offering commenced, which was $16.91 per share. At the direction of its Board of Directors, Vishay intends, upon conversion, to repay the principal amount of the debentures 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 debentures.

Vishay may not redeem the debentures prior to May 20, 2021, except in connection with certain tax-related events. On or after May 20, 2021 and prior to the maturity date, Vishay may redeem for cash all or part of the debentures at a redemption price equal to 100% of the principal amount of the debentures to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date, if the last reported sale price of Vishay’s common stock has been at least 150% of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading day period prior to the date on which Vishay provides notice of redemption.

Convertible Senior Debentures, due 2040

On November 9, 2010, Vishay issued $275 million principal amount of 2.25% convertible senior debentures due 2040 to qualified institutional investors. GAAP requires an issuer to separately account for the liability and equity components of a convertible debt 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 (in thousands):

	July 2,			December 31,
	2011			2010
Liability component:
Principal amount of the debentures	$	275,000		$	275,000
Unamortized discount		(177,920	)		(178,679	)
Embedded derivative		327			319
Carrying value of liability component	$	97,407		$	96,640

Equity component - net carrying value	$	110,094		$	110,094

Interest is payable on the debentures semi-annually 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 8.00% based on the Company’s estimated nonconvertible debt borrowing rate at the time of issuance. In addition to ordinary interest, beginning on November 15, 2020, contingent interest will accrue in certain circumstances relating to the trading price of the debentures and under certain other circumstances.

Interest expense related to the debentures is reflected on the consolidated condensed statements of operations as follows (in thousands):

	Fiscal quarter ended			Six fiscal months ended
	July 2, 2011		July 2, 2011
Contractual coupon interest	$	1,547	$	3,094
Non-cash amortization of debt discount		383		759
Non-cash amortization of deferred financing costs		22		44
Non-cash change in value of derivative liability		69		8
Total interest expense related to the debentures	$	2,021	$	3,905