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Long-Term Debt | 9 Months Ended
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Oct. 01, 2011
Long-Term Debt [Abstract] |
Long-Term Debt | Note 4 – Long-Term Debt Long-term debt consists of the following (in thousands):
|  | October 1, 2011 |  |  | December 31, 2010 |
Credit facility |  | $ | 180,000 |  |  | $ | 240,000 |
Exchangeable unsecured notes, due 2102 |  |  | 95,042 |  |  |  | 95,042 |
Convertible senior debentures, due 2040 |  |  | 98,068 |  |  |  | 96,640 |
Convertible senior debentures, due 2041 |  |  | 50,330 |  |  |  | - |
|  |  | 423,440 |  |  |  | 431,682 |
Less current portion |  |  | - |  |  |  | - |
|  | $ | 423,440 |  |  | $ | 431,682 |
Amendment of Credit Facility On September 8, 2011, Vishay entered into an amendment to its credit facility. The amendment effectively permits up to $300 million of additional share repurchases, conditioned upon Vishay maintaining (i) a pro forma leverage ratio of 2.75 to 1.00, (ii) a pro forma interest expense coverage ratio of 2.00 to 1.00, and (iii) $400 million of available liquidity, as defined in the amendment. Other significant terms and conditions of the credit agreement have not been changed. The credit agreement, as amended, will expire on December 1, 2015. 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 due 2041 are reflected in the Company’s consolidated condensed balance sheet as follows (in thousands):
|  | October 1, 2011 |
Liability component: |  |  |
Principal amount of the debentures |  | $ | 150,000 |
Unamortized discount |  |  | (100,044 | )
Embedded derivative |  |  | 374 |
Carrying value of liability component |  | $ | 50,330 |
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. 15 Interest expense related to the convertible debentures due 2041 is reflected on the consolidated condensed statements of operations as follows (in thousands):
|  | Fiscal quarter ended October 1, 2011 |  |  | Nine fiscal months ended October 1, 2011 |
Contractual coupon interest |  | $ | 844 |  |  | $ | 1,285 |
Non-cash amortization of debt discount |  |  | 196 |  |  |  | 298 |
Non-cash amortization of deferred financing costs |  |  | 12 |  |  |  | 18 |
Non-cash change in value of derivative liability |  |  | 161 |  |  |  | 163 |
Total interest expense related to the debentures |  | $ | 1,213 |  |  | $ | 1,764 |
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 (currently, $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 October 1, 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. 16 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 due 2040 are reflected in the Company’s consolidated condensed balance sheets as follows (in thousands):
|  | October 1, 2011 |  |  | December 31, 2010 |
Liability component: |  |  |  |  |  |
Principal amount of the debentures |  | $ | 275,000 |  |  | $ | 275,000 |
Unamortized discount |  |  | (177,529 | ) |  |  | (178,679 | )
Embedded derivative |  |  | 597 |  |  |  | 319 |
Carrying value of liability component |  | $ | 98,068 |  |  | $ | 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 convertible debentures due 2040 is reflected on the consolidated condensed statements of operations as follows (in thousands):
|  | Fiscal quarter ended October 1, 2011 |  |  | Nine fiscal months ended October 1, 2011 |
Contractual coupon interest |  | $ | 1,547 |  |  | $ | 4,641 |
Non-cash amortization of debt discount |  |  | 391 |  |  |  | 1,150 |
Non-cash amortization of deferred financing costs |  |  | 22 |  |  |  | 66 |
Non-cash change in value of derivative liability |  |  | 270 |  |  |  | 278 |
Total interest expense related to the debentures |  | $ | 2,230 |  |  | $ | 6,135 |
Repayment of Israeli Bank Loan On October 1, 2010, Vishay repaid $10 million of the $13.5 million balance on an Israeli Bank Loan.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 129 -Paragraph 2, 4 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 + Details
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