Company Quick10K Filing
Price20.83 EPS1
Shares94 P/E18
MCap1,955 P/FCF179
Net Debt85 EBIT121
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-05
10-K 2019-12-31 Filed 2020-02-12
10-Q 2019-09-30 Filed 2019-10-28
10-Q 2019-06-30 Filed 2019-07-31
10-Q 2019-03-31 Filed 2019-04-30
10-K 2018-12-31 Filed 2019-02-19
10-Q 2018-09-30 Filed 2018-11-02
10-Q 2018-06-30 Filed 2018-07-30
10-Q 2018-03-31 Filed 2018-04-30
10-K 2017-12-31 Filed 2018-02-20
10-Q 2017-09-30 Filed 2017-10-30
10-Q 2017-06-30 Filed 2017-07-31
10-Q 2017-03-31 Filed 2017-04-28
10-K 2016-12-31 Filed 2017-02-21
10-Q 2016-09-30 Filed 2016-11-02
10-Q 2016-06-30 Filed 2016-08-09
10-Q 2016-03-31 Filed 2016-05-05
10-K 2015-12-31 Filed 2016-02-19
10-Q 2015-09-30 Filed 2015-11-04
10-Q 2015-06-30 Filed 2015-08-05
10-Q 2015-03-31 Filed 2015-05-06
10-K 2014-12-31 Filed 2015-02-25
10-Q 2014-09-30 Filed 2014-11-05
10-Q 2014-06-30 Filed 2014-08-07
10-Q 2014-03-31 Filed 2014-05-12
10-K 2013-12-31 Filed 2014-03-28
8-K 2020-06-12
8-K 2020-05-15
8-K 2020-05-04
8-K 2020-04-27
8-K 2020-04-13
8-K 2020-02-24
8-K 2020-02-04
8-K 2020-01-24
8-K 2019-12-20
8-K 2019-10-29
8-K 2019-10-24
8-K 2019-10-16
8-K 2019-09-17
8-K 2019-09-11
8-K 2019-07-24
8-K 2019-06-06
8-K 2019-05-31
8-K 2019-05-09
8-K 2019-04-24
8-K 2019-04-04
8-K 2019-02-07
8-K 2018-10-24
8-K 2018-07-24
8-K 2018-06-22
8-K 2018-06-18
8-K 2018-05-01
8-K 2018-04-26
8-K 2018-02-16
8-K 2018-02-07

KN 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
EX-31.1 a2020331exhibit311.htm
EX-31.2 a2020331exhibit312.htm
EX-32.1 a2020331exhibit321.htm

Knowles Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
Assets, Equity
Rev, G Profit, Net Income
Ops, Inv, Fin

2020000158752312/31March 31, 2020March 31, 2020March 31, 202091,524,8582020Q110-QfalseMarch 31, 2020March 31, 2020March 31, 20201.,000,00010,000,0000.010.01400,000,000400,000,00092,390,94491,701,745996,1092020202000015875232020-01-012020-03-31xbrli:shares00015875232020-05-01iso4217:USD00015875232019-01-012019-03-31iso4217:USDxbrli:shares0001587523us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-03-3100015875232020-03-3100015875232019-12-310001587523us-gaap:CommonStockMember2019-12-310001587523us-gaap:TreasuryStockMember2019-12-310001587523us-gaap:AdditionalPaidInCapitalMember2019-12-310001587523us-gaap:RetainedEarningsMember2019-12-310001587523us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310001587523us-gaap:TreasuryStockMember2020-01-012020-03-310001587523us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-310001587523us-gaap:CommonStockMember2020-03-310001587523us-gaap:TreasuryStockMember2020-03-310001587523us-gaap:AdditionalPaidInCapitalMember2020-03-310001587523us-gaap:RetainedEarningsMember2020-03-310001587523us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-310001587523us-gaap:CommonStockMember2018-12-310001587523us-gaap:AdditionalPaidInCapitalMember2018-12-310001587523us-gaap:RetainedEarningsMember2018-12-310001587523us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-12-3100015875232018-12-310001587523us-gaap:RetainedEarningsMember2019-01-012019-03-310001587523us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-01-012019-03-310001587523us-gaap:AdditionalPaidInCapitalMember2019-01-012019-03-310001587523us-gaap:CommonStockMember2019-03-310001587523us-gaap:AdditionalPaidInCapitalMember2019-03-310001587523us-gaap:RetainedEarningsMember2019-03-310001587523us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-03-3100015875232019-03-3100015875232017-11-2800015875232018-01-012018-12-3100015875232016-07-0700015875232016-07-072016-07-070001587523us-gaap:DiscontinuedOperationsDisposedOfBySaleMember2019-01-012019-03-310001587523us-gaap:DiscontinuedOperationsDisposedOfBySaleMember2020-01-012020-03-310001587523us-gaap:DiscontinuedOperationsDisposedOfBySaleMember2019-12-310001587523us-gaap:DiscontinuedOperationsDisposedOfBySaleMember2020-03-310001587523us-gaap:AccountsPayableMemberus-gaap:DiscontinuedOperationsDisposedOfBySaleMember2020-01-012020-03-310001587523us-gaap:AccountsPayableMemberus-gaap:DiscontinuedOperationsDisposedOfBySaleMember2019-01-012019-03-310001587523kn:ASICDesignBusinessMember2019-12-202019-12-200001587523kn:ASICDesignBusinessMember2019-12-200001587523us-gaap:UnpatentedTechnologyMemberkn:ASICDesignBusinessMember2019-12-200001587523us-gaap:InProcessResearchAndDevelopmentMemberkn:ASICDesignBusinessMember2019-12-200001587523kn:DITFInterconnectTechnologyInc.Member2019-01-032019-01-030001587523kn:DITFInterconnectTechnologyInc.Member2019-01-032019-09-300001587523us-gaap:LandMember2020-03-310001587523us-gaap:LandMember2019-12-310001587523us-gaap:BuildingAndBuildingImprovementsMember2020-03-310001587523us-gaap:BuildingAndBuildingImprovementsMember2019-12-310001587523us-gaap:EquipmentMember2020-03-310001587523us-gaap:EquipmentMember2019-12-310001587523us-gaap:TrademarksMember2020-03-310001587523us-gaap:TrademarksMember2019-12-310001587523us-gaap:PatentsMember2020-03-310001587523us-gaap:PatentsMember2019-12-310001587523us-gaap:CustomerRelationshipsMember2020-03-310001587523us-gaap:CustomerRelationshipsMember2019-12-310001587523us-gaap:UnpatentedTechnologyMember2020-03-310001587523us-gaap:UnpatentedTechnologyMember2019-12-310001587523us-gaap:OtherIntangibleAssetsMember2020-03-310001587523us-gaap:OtherIntangibleAssetsMember2019-12-310001587523us-gaap:TrademarksMember2020-03-310001587523us-gaap:TrademarksMember2019-12-310001587523us-gaap:InProcessResearchAndDevelopmentMember2020-03-310001587523us-gaap:InProcessResearchAndDevelopmentMember2019-12-310001587523kn:CostofGoodsSoldRestructuringChargesMemberkn:EmployeeSeveranceandFacilityClosingMember2020-01-012020-03-310001587523us-gaap:OperatingExpenseMemberkn:EmployeeSeveranceandFacilityClosingMember2020-01-012020-03-310001587523kn:CostofGoodsSoldRestructuringChargesMemberkn:EmployeeSeveranceandFacilityClosingMember2019-01-012019-03-310001587523us-gaap:RestructuringChargesMemberkn:EmployeeSeveranceandFacilityClosingMember2019-01-012019-03-310001587523kn:AudioMemberus-gaap:OperatingSegmentsMemberkn:EmployeeSeveranceandFacilityClosingMember2020-01-012020-03-310001587523kn:AudioMemberus-gaap:OperatingSegmentsMemberkn:EmployeeSeveranceandFacilityClosingMember2019-01-012019-03-310001587523kn:PrecisionDevicesMemberus-gaap:OperatingSegmentsMemberkn:EmployeeSeveranceandFacilityClosingMember2020-01-012020-03-310001587523kn:PrecisionDevicesMemberus-gaap:OperatingSegmentsMemberkn:EmployeeSeveranceandFacilityClosingMember2019-01-012019-03-310001587523us-gaap:CorporateNonSegmentMemberkn:EmployeeSeveranceandFacilityClosingMember2020-01-012020-03-310001587523us-gaap:CorporateNonSegmentMemberkn:EmployeeSeveranceandFacilityClosingMember2019-01-012019-03-310001587523kn:EmployeeSeveranceandFacilityClosingMember2020-01-012020-03-310001587523kn:EmployeeSeverancea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Washington, D.C. 20549


(Mark One)

For the quarterly period ended March 31, 2020.



For the transition period from to

Commission File Number: 001-36102

Knowles Corporation
(Exact name of registrant as specified in its charter)

(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)

1511 Maplewood Drive, Itasca, IL
(Address of Principal Executive Offices)

(Zip Code)

(630) 250-5100
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbolName of each exchange on which registered
Common stock, $0.01 par value per shareKNNew York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes   No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes   No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes   No  

The number of shares outstanding of the registrant’s common stock as of May 1, 2020 was 91,524,858.

Knowles Corporation
Form 10-Q
Table of Contents


Table of Contents


Item 1. Financial Statements

(in millions, except share and per share amounts)

 Three Months Ended March 31,
Revenues$163.1  $179.8  
Cost of goods sold105.5  110.8  
Restructuring charges - cost of goods sold1.4  0.5  
Gross profit56.2  68.5  
Research and development expenses25.7  24.7  
Selling and administrative expenses36.2  37.6  
Restructuring charges3.9  1.8  
Operating expenses65.8  64.1  
Operating (loss) earnings(9.6) 4.4  
Interest expense, net3.7  3.5  
Other (income) expense, net(2.7) 1.0  
Loss before income taxes and discontinued operations(10.6) (0.1) 
Provision for income taxes2.2  2.6  
Loss from continuing operations  (12.8) (2.7) 
Earnings from discontinued operations, net  3.7    
Net loss  $(9.1) $(2.7) 
Loss per share from continuing operations:
Basic$(0.14) $(0.03) 
Diluted$(0.14) $(0.03) 
Earnings per share from discontinued operations:
Basic$0.04  $  
Diluted$0.04  $  
Net loss per share:
Basic$(0.10) $(0.03) 
Diluted$(0.10) $(0.03) 
Weighted-average common shares outstanding:
Basic91,795,980  90,535,188  
Diluted91,795,980  90,535,188  

See accompanying Notes to Consolidated Financial Statements


Table of Contents

(in millions)

 Three Months Ended March 31,
Net loss$(9.1) $(2.7) 
Other comprehensive (loss) earnings, net of tax
Foreign currency translation(7.5) 4.0  
Employee benefit plans:
Amortization or settlement of actuarial losses and prior service costs(0.1) 0.1  
Net change in employee benefit plans(0.1) 0.1  
Changes in fair value of cash flow hedges:
Unrealized net (losses) gains arising during period(1.2) 0.6  
Net losses reclassified into earnings0.1  0.1  
Total cash flow hedges(1.1) 0.7  
Other comprehensive (loss) earnings, net of tax(8.7) 4.8  
Comprehensive (loss) earnings$(17.8) $2.1  

See accompanying Notes to Consolidated Financial Statements


Table of Contents

(in millions, except share and per share amounts)

 March 31, 2020December 31, 2019
Current assets:    
Cash and cash equivalents  $147.8  $78.4  
Receivables, net of allowances of $1.8 and $0.8  120.6  159.6  
Inventories, net  161.2  141.8  
Prepaid and other current assets  13.4  8.6  
Total current assets  443.0  388.4  
Property, plant, and equipment, net  198.4  206.5  
Goodwill  909.9  909.9  
Intangible assets, net  88.4  91.7  
Operating lease right-of-use assets  32.6  33.6  
Other assets and deferred charges  24.5  24.5  
Total assets$1,696.8  $1,654.6  
Current liabilities:    
Accounts payable  $79.5  $87.7  
Accrued compensation and employee benefits  21.3  32.1  
Operating lease liabilities  9.5  9.3  
Other accrued expenses  16.9  16.5  
Federal and other taxes on income  5.7  5.9  
Total current liabilities  132.9  151.5  
Long-term debt  258.8  156.8  
Deferred income taxes  2.2  2.2  
Long-term operating lease liabilities  24.0  25.1  
Other liabilities  24.5  29.9  
Liabilities of discontinued operations  0.6  0.6  
Commitments and contingencies (Note 14) 
Stockholders' equity:
Preferred stock - $0.01 par value; 10,000,000 shares authorized; none issued
Common stock - $0.01 par value; 400,000,000 shares authorized; 92,390,944 and 91,394,835 shares issued and outstanding at March 31, 2020, respectively, and 91,701,745 shares issued and outstanding at December 31, 2019
0.9  0.9  
Treasury stock - at cost; 996,109 shares at March 31, 2020  (15.0)   
Additional paid-in capital  1,572.8  1,574.7  
Accumulated deficit  (184.2) (175.1) 
Accumulated other comprehensive loss  (120.7) (112.0) 
Total stockholders' equity  1,253.8  1,288.5  
Total liabilities and stockholders' equity  $1,696.8  $1,654.6  

See accompanying Notes to Consolidated Financial Statements


Table of Contents

(in millions)

 Common StockTreasury StockAdditional Paid-In CapitalAccumulated DeficitAccumulated Other Comprehensive LossTotal Stockholders' Equity
Balance at December 31, 2019$0.9  $  $1,574.7  $(175.1) $(112.0) $1,288.5  
Net loss—  —  —  (9.1) —  (9.1) 
Other comprehensive loss, net of tax—  —  —  —  (8.7) (8.7) 
Repurchase of common stock—  (15.0) —  —  —  (15.0) 
Stock-based compensation expense—  —  3.5  —  —  3.5  
Common stock issued for exercise of stock options and other—  —  0.4  —  —  0.4  
Tax on restricted and performance stock unit vesting—  —  (5.8) —  —  (5.8) 
Balance at March 31, 2020$0.9  $(15.0) $1,572.8  $(184.2) $(120.7) $1,253.8  

 Common StockAdditional Paid-In CapitalAccumulated DeficitAccumulated Other Comprehensive LossTotal Stockholders' Equity
Balance at December 31, 2018  $0.9  $1,545.9  $(224.2) $(111.0) $1,211.6  
Net loss  —  —  (2.7) —  (2.7) 
Other comprehensive earnings, net of tax  —  —  —  4.8  4.8  
Stock-based compensation expense  —  6.7  —  —  6.7  
Common stock issued for exercise of stock options and other  —  0.9  —  —  0.9  
Tax on restricted stock unit vesting  —  (4.8) —  —  (4.8) 
Balance at March 31, 2019  $0.9  $1,548.7  $(226.9) $(106.2) $1,216.5  

See accompanying Notes to Consolidated Financial Statements



Table of Contents

(in millions)
 Three Months Ended March 31,
Operating Activities  
Net loss$(9.1) $(2.7) 
Adjustments to reconcile net loss to cash from operating activities:
Depreciation and amortization15.3  13.3  
Stock-based compensation3.5  6.7  
Non-cash interest expense and amortization of debt issuance costs2.1  2.0  
Write-off of fixed assets1.3    
Loss on disposal of fixed assets0.1    
Deferred income taxes(0.5) (0.5) 
Other, net(4.1) 1.8  
Changes in assets and liabilities (excluding effects of foreign exchange):
Receivables, net38.8  11.2  
Inventories, net(22.1) (16.3) 
Prepaid and other current assets(5.6) (2.9) 
Accounts payable(6.3) (3.5) 
Accrued compensation and employee benefits(10.3) (17.4) 
Other accrued expenses  1.8  
Accrued taxes(2.9) (0.4) 
Other non-current assets and non-current liabilities(1.7) (4.3) 
Net cash used in operating activities(1.5) (11.2) 
Investing Activities  
Additions to property, plant, and equipment(7.8) (15.1) 
Acquisitions of business (net of cash acquired)  (11.4) 
Net cash used in investing activities(7.8) (26.5) 
Financing Activities  
Borrowings under revolving credit facility100.0  10.0  
Repurchase of common stock(15.0)   
Tax on restricted and performance stock unit vesting(5.8) (4.8) 
Payments of finance lease obligations(0.5) (0.4) 
Payment of consideration owed for acquisitions  (0.2) 
Net proceeds from exercise of stock-based awards0.2  0.7  
Net cash provided by financing activities78.9  5.3  
Effect of exchange rate changes on cash and cash equivalents(0.2) 0.2  
Net increase (decrease) in cash and cash equivalents69.4  (32.2) 
Cash and cash equivalents at beginning of period78.4  73.5  
Cash and cash equivalents at end of period$147.8  $41.3  
Supplemental information - cash paid for:
Income taxes$5.4  $4.4  
Interest$0.4  $0.5  

See accompanying Notes to Consolidated Financial Statements


1. Basis of Presentation

Description of Business - Knowles Corporation (NYSE:KN) is a market leader and global provider of advanced micro-acoustic, audio processing, and precision device solutions, serving the mobile consumer electronics, communications, medtech, defense, automotive, and industrial markets. The Company uses its leading position in micro-electro-mechanical systems ("MEMS") microphones and strong capabilities in audio processing technologies to optimize audio systems and improve the user experience in mobile, ear, and Internet of Things ("IoT") applications. Knowles is also a leader in acoustic components, high-end capacitors, and mmWave radio frequency solutions for a diverse set of markets. The Company's focus on the customer, combined with its unique technology, proprietary manufacturing techniques, rigorous testing, and global scale, enable the Company to deliver innovative solutions that optimize the user experience. References to "Knowles," "the Company," "we," "our," and "us" refer to Knowles Corporation and its consolidated subsidiaries.

Financial Statement Presentation - The accompanying unaudited interim Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for quarterly reports on Form 10-Q and do not include all of the information and note disclosures required by U.S. generally accepted accounting principles (“GAAP” or “U.S. GAAP”) for complete financial statements. These unaudited interim Consolidated Financial Statements should therefore be read in conjunction with the Consolidated Financial Statements and Notes thereto for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K.

The accompanying unaudited interim Consolidated Financial Statements have been prepared in accordance with U.S. GAAP, which requires management to make estimates and assumptions that affect amounts reported in the Consolidated Financial Statements and accompanying disclosures. Although these estimates are based on management’s best knowledge of current events and actions that the Company may undertake in the future, actual results may differ from those estimates. Management uses historical experience and all available information to make these estimates, including considerations for the impact of the COVID-19 pandemic on the macroeconomic environment. The situation related to the COVID-19 pandemic continues to be complex and rapidly evolving. The Company cannot reasonably estimate the duration of the COVID-19 pandemic or fully ascertain its impact on the Company’s future results and market capitalization, which could adversely impact estimates such as the recoverability of goodwill and long-lived assets and the realizability of deferred tax assets. The unaudited interim Consolidated Financial Statements reflect all adjustments of a normal, recurring nature that are, in the opinion of management, necessary for a fair statement of results for these interim periods.

On February 24, 2020, the Company announced that its Board of Directors had authorized a share repurchase program of up to $100 million of the Company's common stock. The timing and amount of any shares repurchased will be determined by the Company based on its evaluation of market conditions and other factors, and will be made in accordance with applicable securities laws in either the open market or in privately negotiated transactions. The Company is not obligated to purchase any shares under the program, and the program may be suspended or discontinued at any time. The actual timing, number, and share price of shares repurchased will depend on a number of factors, including the market price of the Company’s common stock, general market and economic conditions, and applicable legal requirements. Any shares repurchased will be held as treasury stock. During the three months ended March 31, 2020, the Company repurchased 996,109 shares of common stock for a total of $15.0 million. In connection with the COVID-19 pandemic, the Company has temporarily suspended share repurchases. However, the Company may resume the share repurchase program at any time when it believes it is prudent to do so and without further notice.

On December 20, 2019, the Company acquired substantially all of the assets of the MEMS Microphone Application-specific integrated circuit Design Business (“ASIC Design Business”). See Note 4. Acquisitions for additional information related to the transaction.

Non-cash Investing Activities - Purchases of property, plant, and equipment included in accounts payable at March 31, 2020 and 2019 were $3.9 million and $3.6 million, respectively. These non-cash amounts are not reflected as outflows to Additions to property, plant, and equipment within investing activities of the Consolidated Statements of Cash Flows for the respective periods.

Leases not yet Commenced - As of March 31, 2020, the Company has an additional operating lease for a research and development and administrative facility that has not yet commenced with fixed lease payments of approximately $5.0 million. The lease is expected to commence in fiscal 2020 with a lease term of approximately 5 years.



2. Recent Accounting Standards

Recently Issued Accounting Standards

In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2019-12 to simplify the accounting for income taxes. This guidance removes certain exceptions to the general principles in Accounting Standards Codification ("ASC") 740 and amends existing guidance to improve consistent application. The standard is effective for public business entities for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted and prospective application of the guidance is required. The Company has not yet determined the impact of the standard on its Consolidated Financial Statements or its adoption date.

3. Disposed and Discontinued Operations

Management and the Board of Directors periodically conduct strategic reviews of the Company's businesses.

On November 28, 2017, the Company completed the sale of its high-end oscillators business (“Timing Device Business”), part of the Precision Devices (“PD”) segment, for $130.0 million, plus purchase price adjustments for a net amount of $135.1 million. On July 7, 2016, the Company completed the sale of its speaker and receiver product line (“Speaker and Receiver Product Line”) for $45.0 million in cash, less purchase price adjustments for a net amount received of $40.6 million.

In accordance with ASC 205-20, Presentation of Financial Statements – Discontinued Operations, the results of operations and financial positions of the Timing Device Business and Speaker and Receiver Product Line have been reclassified to discontinued operations for all periods presented as these disposals represent strategic shifts that had a major effect on the Company's results of operations.

Summarized results of the Company's discontinued operations are as follows:
(in millions)Three Months Ended March 31, 2020
Cost of goods sold—  
Gross profit  
Operating income  
Earnings from discontinued operations before taxes (1)
Benefit from income taxes (2)
Earnings from discontinued operations, net of tax$3.7  
(1) The Company's policy is to not allocate interest expense to discontinued operations unless it is directly attributable to the operations. The discontinued operations did not have any such interest expense in the periods presented.
(2) The Company recorded a tax benefit for a refund received during the first quarter of 2020 related to the Timing Device Business.

Assets and liabilities of discontinued operations are summarized below:
(in millions)March 31, 2020December 31, 2019
Liabilities of discontinued operations:
Other liabilities (1)
$0.6  $0.6  
Total liabilities$0.6  $0.6  
(1) The Company recorded an unrecognized tax benefit related to the Speaker and Receiver Product Line during the fourth quarter of 2019.

Discontinued operations had no impact on the Company's results of operations for three months ended March 31, 2019. There was no depreciation, amortization of intangible assets, or capital expenditures related to discontinued operations during the three months ended March 31, 2020 and 2019.


4. Acquisitions

ASIC Design Business

On December 20, 2019, the Company acquired substantially all of the assets of the ASIC Design Business from ams AG for $57.9 million. The acquired business, which does not generate revenues, includes intellectual property and an assembled workforce. The transaction was accounted for under the acquisition method of accounting and the results of operations are included in the Consolidated Financial Statements from the date of acquisition in the Audio segment.

The table below represents the final allocation of the purchase price to net assets acquired as of December 20, 2019:

(in millions)
Property, plant, and equipment$0.6  
Developed technology33.3  
In-process research and development3.7  
Non-competition agreement1.6  
Assumed current liabilities(0.1) 
Total purchase price$57.9  

Intangible Assets

The fair values for developed technology and in-process research and development ("IPR&D") were determined using the multi-period excess earnings method under the income approach. This method reflects the present value of expected future cash flows less charges representing the contribution of other assets to those cash flows. The fair value measurements of intangible assets are based on significant unobservable inputs, and thus represent Level 3 inputs. Significant assumptions used in assessing the fair values of developed technology and IPR&D include expected future cost savings, technology obsolescence rates, discount rates, and expected costs to complete IPR&D. Discount rates of 13.0% and 14.0% were applied to the expected future cash flows to reflect the risk related to developed technology and IPR&D, respectively.

Developed technologies will be amortized over an estimated useful life of 6 years based on the technology cycle and cash flows over the forecast period. IPR&D is initially classified as an indefinite-lived intangible asset and assessed for impairment thereafter. Upon completion of the underlying project, IPR&D is reclassified as a definite-lived intangible asset and amortized over its estimated useful life. The IPR&D project is expected to be complete in 2021.

The excess of the total purchase price over the total fair value of the identifiable assets and liabilities was recorded as goodwill. The goodwill recognized is primarily attributable to synergies and the assembled workforce. All of the goodwill resulting from this acquisition is tax deductible. Goodwill has been allocated to the Audio segment, which is the segment expected to benefit from the acquisition.

The Company believes the fair values assigned to intangible assets are based on reasonable assumptions and estimates that approximate the amounts a market participant would pay for these intangible assets as of the acquisition date. Actual results could differ materially from these estimates.

Unaudited Pro-forma Summary

The following unaudited pro-forma summary presents consolidated financial information for the three months ended March 31, 2019 as if the ASIC Design Business had been acquired on January 1, 2018. The unaudited pro-forma financial information is based on historical results of operations and financial positions of the Company and the ASIC Design Business. The pro-forma results include estimated amortization of definite-lived intangible assets and exclude transaction costs.

The unaudited pro-forma financial information does not necessarily represent the results that would have occurred had the acquisition occurred on January 1, 2018. In addition, the unaudited pro-forma information should not be deemed to be indicative of future results.


(in millions, except share and per share amounts)Three Months Ended March 31, 2019
Loss from continuing operations:
As reported$(2.7) 
Basic loss per share from continuing operations:
As reported$(0.03) 
Diluted loss per share from continuing operations:
As reported$(0.03) 


On January 3, 2019, the Company acquired substantially all of the assets of DITF Interconnect Technology, Inc. ("DITF") for $11.1 million. The acquired business provides thin film components to the defense, telecommunication, industrial, and medtech markets. The transaction was accounted for under the acquisition method of accounting and the results of operations are included in the Consolidated Financial Statements from the date of acquisition in the PD segment. Included in the Consolidated Statements of Earnings are DITF's revenues and loss before income taxes of $1.8 million and $0.2 million, respectively, from the date of acquisition through March 31, 2019.

5. Inventories, net

The following table details the major components of inventories, net:
(in millions)March 31, 2020December 31, 2019
Raw materials$94.8  $82.8  
Work in progress32.7  30.9  
Finished goods59.7  53.5  
Subtotal187.2  167.2  
Less reserves(26.0) (25.4) 
Total$161.2  $141.8  

6. Property, Plant, and Equipment, net

The following table details the major components of property, plant, and equipment, net:
(in millions)March 31, 2020December 31, 2019
Land  $7.7  $7.7  
Buildings and improvements  103.1  104.5  
Machinery, equipment, and other  530.5  533.1  
Subtotal641.3  645.3  
Less accumulated depreciation  (442.9) (438.8) 
Total$198.4  $206.5  

Depreciation expense totaled $12.0 million and $11.5 million for the three months ended March 31, 2020 and 2019, respectively.


7. Goodwill and Other Intangible Assets

There were no changes in the carrying value of goodwill by reportable segment for the three months ended March 31, 2020.
The gross carrying value and accumulated amortization for each major class of intangible assets are as follows:
March 31, 2020December 31, 2019
(in millions)Gross Carrying
Gross Carrying
Amortized intangible assets:
Trademarks$1.0  $0.2  $1.0  $0.2  
Patents40.8  32.7  40.8  31.5  
Customer relationships12.0  4.0  12.0  3.6  
Developed technology36.5  2.3  36.5  0.7  
Non-competition agreements1.8  0.2  1.8  0.1  
Total92.1  39.4  92.1  36.1  
Unamortized intangible assets:
Trademarks32.0  32.0  
IPR&D3.7  3.7  
Total35.7  35.7  
Total intangible assets, net$88.4  $91.7  

Amortization expense totaled $3.3 million and $1.8 million for the three months ended March 31, 2020 and 2019, respectively. Amortization expense for the next five years, based on current intangible balances, is estimated to be as follows:
(in millions)
Q2-Q4 2020$9.7  


8. Restructuring and Related Activities

Restructuring and related activities are designed to better align the Company's operations with current market conditions through targeted facility consolidations, headcount reductions, and other measures to further optimize operations.

During the three months ended March 31, 2020, the Company recorded restructuring charges of $1.4 million within Gross profit, primarily for fixed asset write-off costs directly associated with actions to rationalize the Audio segment workforce. During the three months ended March 31, 2020, the Company also recorded restructuring charges of $3.9 million within Operating expenses, primarily for actions associated with rationalizing the workforce.

During the three months ended March 31, 2019, the Company recorded restructuring charges of $0.5 million within Gross profit, primarily for actions associated with transferring certain operations of capacitors manufacturing to other existing facilities in order to further optimize operations in the PD segment. The Company also recorded restructuring charges of $1.8 million within Operating expenses, primarily for actions associated with rationalizing the Audio segment workforce.

The following table details restructuring charges incurred by reportable segment for the periods presented:
 Three Months Ended March 31,
(in millions)20202019
Audio$4.1  $1.8  
Precision Devices  0.3  
Corporate1.2  0.2  
Total$5.3  $2.3  

The following table details the Company’s severance and other restructuring accrual activity:
(in millions)Severance Pay and BenefitsContract Termination and Other CostsTotal
Balance at December 31, 2019$1.4  $  $1.4  
Restructuring charges4.0  0.1  4.1  
Payments(3.3)   (3.3) 
Balance at March 31, 2020$2.1  $0.1  $2.2  

The severance and restructuring accruals are recorded in the following line items on the Consolidated Balance Sheets:
(in millions)March 31, 2020December 31, 2019
Other accrued expenses$1.8  $1.4  
Other liabilities0.4    
Total$2.2  $1.4  


9. Borrowings

Borrowings (net of debt issuance costs, debt discount, and amortization) consist of the following:
(in millions)March 31, 2020December 31, 2019
3.25% convertible senior notes$