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Long-Term Debt | 9 Months Ended
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Sep. 29, 2018
Long-Term Debt [Abstract] |
Long-Term Debt | Note 6 – Long-Term Debt Long-term debt consists of the following:
|  | September 29, 2018 |  |  | December 31, 2017 |
Credit facility |  | $ | - |  |  | $ | 150,000 |
Convertible senior debentures, due 2040 |  |  | 22,486 |  |  |  | 110,412 |
Convertible senior debentures, due 2041 |  |  | 57,695 |  |  |  | 56,641 |
Convertible senior debentures, due 2042 |  |  | 34,268 |  |  |  | 62,518 |
Convertible notes, due 2025 |  |  | 491,853 |  |  |  | - |
Deferred financing costs |  |  | (17,716 | ) |  |  | (9,101 | )
|  |  | 588,586 |  |  |  | 370,470 |
Less current portion |  |  | - |  |  |  | - |
|  | $ | 588,586 |  |  | $ | 370,470 |
Convertible Senior Notes due 2025 In June 2018, the Company issued $600,000 aggregate principal amount of 2.25% convertible senior notes due 2025 to qualified institutional investors. The Company used the net proceeds from this offering to repurchase $220,000 and $69,060 principal amounts of convertible senior debentures due 2040 and 2042, respectively, as further described below. 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 notes are reflected in the Company's consolidated balance sheets as follows:
|  | Principal amount of the notes |  |  | Unamortized discount |  |  | Carrying value of liability component |  |  | Equity component - net carrying value |
September 29, 2018 |  |  |  |  |  |  |  |  |  |  |  |
Due 2025 |  | $ | 600,000 |  |  |  | (108,147 | ) |  | $ | 491,853 |  |  | $ | 85,262 |
Interest is payable on the convertible notes due 2025 semi-annually in arrears on June 15 and December 15 of each year, beginning December 15, 2018, 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 5.50% based on the Company's estimated nonconvertible debt borrowing rate. Interest expense for the fiscal quarter and nine fiscal months ended September 29, 2018 related to the convertible notes due 2025 is reflected on the consolidated condensed statements of operations as follows:
|  | Contractual coupon interest |  |  | Non-cash amortization of debt discount |  |  | Non-cash amortization of deferred financing costs |  |  | Total interest expense related to the debentures |
Fiscal quarter ended September 29, 2018 |  | $ | 3,375 |  |  |  | 3,334 |  |  |  | 454 |  |  | $ | 7,163 |
Nine fiscal months ended September 29, 2018 |  | $ | 4,088 |  |  |  | 3,890 |  |  |  | 605 |  |  | $ | 8,583 |
The convertible notes due 2025 will mature on June 15, 2025, unless earlier repurchased or converted. Prior to December 15, 2024, such conversion is subject to the satisfaction of certain conditions set forth below. The convertible notes due 2025 are not redeemable by the Company before the maturity date. Prior to December 15, 2024, the holders may only convert their notes 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 (initially $40.94); (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 notes due 2025 are initially convertible into cash, shares of Vishay common stock, or a combination thereof, at the Company's option, at a conversion rate of 31.7536 shares of common stock per $1,000 principal amount of notes. This initial conversion price represents a premium of 27.5% to the closing price of Vishay's common stock on June 8, 2018, which was $24.70 per share. The conversion rate of the convertible notes is not adjusted for quarterly cash dividends equal to or less than $0.085 per share of common stock. This represents an initial effective conversion price of approximately $31.49 per share. At the direction of its Board of Directors, Vishay intends, upon conversion, to repay the principal amount of the notes 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 notes. Convertible Senior Debentures Vishay currently has three issuances of convertible senior debentures outstanding with generally congruent terms. The Company used substantially all of the net proceeds of the June 2018 issuance of convertible senior notes due 2025 to repurchase $220,000 and $69,060 principal amounts of convertible senior debentures due 2040 and due 2042, respectively. The net carrying value of the debentures repurchased were $89,276 and $29,037, respectively. In accordance with the authoritative accounting guidance for convertible debentures, the aggregate repurchase payment of $584,991 was allocated between the liability ($133,647) and equity (including temporary equity, $451,344) 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 $17,309, including the write-off of a portion of unamortized debt issuance costs. The quarterly cash dividend program of the Company results in adjustments to the conversion rate and effective conversion price for each issuance of the Company's convertible senior debentures effective as of the ex-dividend date of each cash dividend. The following table summarizes some key facts and terms regarding the three series of outstanding convertible senior debentures following the adjustment made to the conversion rate of the debentures on the ex-dividend date of the September 27, 2018 dividend payment:
|  | Due 2040 |  |  | Due 2041 |  |  | Due 2042 |
Issuance date |  | November 9, 2010 |  |  | May 13, 2011 |  |  | May 31, 2012 |
Maturity date |  | November 15, 2040 |  |  | May 15, 2041 |  |  | June 1, 2042 |
Principal amount as of September 29, 2018 |  | $ | 55,000 |  |  | $ | 150,000 |  |  | $ | 80,940 |
Cash coupon rate (per annum) |  |  | 2.25 | % |  |  | 2.25 | % |  |  | 2.25 | %
Nonconvertible debt borrowing rate at issuance (per annum) |  |  | 8.00 | % |  |  | 8.375 | % |  |  | 7.50 | %
Conversion rate effective September 13, 2018 (per $1 principal amount) |  |  | 78.0506 |  |  |  | 56.9573 |  |  |  | 91.7689 |
Effective conversion price effective September 13, 2018 (per share) |  | $ | 12.81 |  |  | $ | 17.56 |  |  | $ | 10.90 |
130% of the conversion price (per share) |  | $ | 16.65 |  |  | $ | 22.83 |  |  | $ | 14.17 |
Call date |  | November 20, 2020 |  |  | May 20, 2021 |  |  | June 7, 2022 |
Prior to three months before the maturity date, the holders may only convert their debentures 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 debentures due 2042 became convertible subsequent to the December 31, 2016 evaluation of the conversion criteria, and have remained convertible for each subsequent quarterly evaluation through the September 29, 2018 evaluation, due to the sale price of Vishay's common stock exceeding 130% of the conversion price for the applicable periods. The convertible debentures due 2040 became convertible subsequent to the September 30, 2017 evaluation of the conversion criteria, and have remained convertible for each subsequent quarterly evaluation through the September 29, 2018 evaluation, due to the sale price of Vishay's common stock exceeding 130% of the conversion price for the applicable periods. The debentures due 2040 and due 2042 will remain convertible until December 31, 2018, at which time the conversion criteria will be reevaluated. At the direction of its Board of Directors, the Company intends, upon future conversion of any of the convertible senior debentures, to repay the principal amounts of the convertible senior debentures in cash and settle any additional amounts in shares of Vishay common stock. The excess of the amount that the Company would pay to the holders of the debentures due 2040 and due 2042 upon conversion over the carrying value of the liability component of the debentures currently convertible has been reclassified as temporary equity on the consolidated condensed financial statements. The Company intends to finance the principal amount of any converted debentures using borrowings under its credit facility. Accordingly, the debt component of the convertible debentures due 2040 and due 2042 continues to be classified as a non-current liability on the consolidated condensed balance sheets. 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:
|  | Principal amount of the debentures |  |  | Unamortized discount |  |  | Embedded derivative |  |  | Carrying value of liability component |  |  | Equity component (including temporary equity) - net carrying value |
September 29, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Due 2040 |  | $ | 55,000 |  |  |  | (32,561 | ) |  |  | 47 |  |  | $ | 22,486 |  |  | $ | 22,019 |
Due 2041 |  | $ | 150,000 |  |  |  | (92,549 | ) |  |  | 244 |  |  | $ | 57,695 |  |  | $ | 62,246 |
Due 2042 |  | $ | 80,940 |  |  |  | (46,735 | ) |  |  | 63 |  |  | $ | 34,268 |  |  | $ | 31,229 |
Total |  | $ | 285,940 |  |  | $ | (171,845 | ) |  | $ | 354 |  |  | $ | 114,449 |  |  | $ | 115,494 |
December 31, 2017 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Due 2040 |  | $ | 275,000 |  |  |  | (164,794 | ) |  |  | 206 |  |  | $ | 110,412 |  |  | $ | 110,094 |
Due 2041 |  | $ | 150,000 |  |  |  | (93,573 | ) |  |  | 214 |  |  | $ | 56,641 |  |  | $ | 62,246 |
Due 2042 |  | $ | 150,000 |  |  |  | (87,600 | ) |  |  | 118 |  |  | $ | 62,518 |  |  | $ | 57,874 |
Total |  | $ | 575,000 |  |  | $ | (345,967 | ) |  | $ | 538 |  |  | $ | 229,571 |  |  | $ | 230,214 |
Interest is payable on the debentures 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 debentures and under certain other circumstances beginning ten years subsequent to issuance. Interest expense related to the debentures is reflected on the consolidated condensed statements of operations for the fiscal quarters ended:
|  | Contractual coupon interest |  |  | Non-cash amortization of debt discount |  |  | Non-cash amortization of deferred financing costs |  |  | Non-cash change in value of derivative liability |  |  | Total interest expense related to the debentures |
September 29, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Due 2040 |  | $ | 310 |  |  |  | 135 |  |  |  | 4 |  |  |  | 20 |  |  | $ | 469 |
Due 2041 |  | $ | 844 |  |  |  | 349 |  |  |  | 12 |  |  |  | 71 |  |  | $ | 1,276 |
Due 2042 |  | $ | 455 |  |  |  | 184 |  |  |  | 7 |  |  |  | 19 |  |  | $ | 665 |
Total |  | $ | 1,609 |  |  | $ | 668 |  |  | $ | 23 |  |  | $ | 110 |  |  | $ | 2,410 |
September 30, 2017 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Due 2040 |  | $ | 1,547 |  |  |  | 626 |  |  |  | 22 |  |  |  | (53 | ) |  | $ | 2,142 |
Due 2041 |  | $ | 844 |  |  |  | 321 |  |  |  | 11 |  |  |  | (21 | ) |  | $ | 1,155 |
Due 2042 |  | $ | 844 |  |  |  | 312 |  |  |  | 13 |  |  |  | (21 | ) |  | $ | 1,148 |
Total |  | $ | 3,235 |  |  | $ | 1,259 |  |  | $ | 46 |  |  | $ | (95 | ) |  | $ | 4,445 |
Interest expense related to the debentures is reflected on the consolidated condensed statements of operations for the nine fiscal months ended:
|  | Contractual coupon interest |  |  | Non-cash amortization of debt discount |  |  | Non-cash amortization of deferred financing costs |  |  | Non-cash change in value of derivative liability |  |  | Total interest expense related to the debentures |
September 29, 2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Due 2040 |  | $ | 2,991 |  |  |  | 1,269 |  |  |  | 42 |  |  |  | 81 |  |  | $ | 4,383 |
Due 2041 |  | $ | 2,532 |  |  |  | 1,024 |  |  |  | 36 |  |  |  | 30 |  |  | $ | 3,622 |
Due 2042 |  | $ | 2,013 |  |  |  | 783 |  |  |  | 31 |  |  |  | 4 |  |  | $ | 2,831 |
Total |  | $ | 7,536 |  |  | $ | 3,076 |  |  | $ | 109 |  |  | $ | 115 |  |  | $ | 10,836 |
September 30, 2017 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Due 2040 |  | $ | 4,641 |  |  |  | 1,841 |  |  |  | 66 |  |  |  | (97 | ) |  | $ | 6,451 |
Due 2041 |  | $ | 2,532 |  |  |  | 943 |  |  |  | 35 |  |  |  | (13 | ) |  | $ | 3,497 |
Due 2042 |  | $ | 2,532 |  |  |  | 919 |  |  |  | 40 |  |  |  | (13 | ) |  | $ | 3,478 |
Total |  | $ | 9,705 |  |  | $ | 3,703 |  |  | $ | 141 |  |  | $ | (123 | ) |  | $ | 13,426 |

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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 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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