Q2 2020 Financial Performance - Revenues for Q2 2020 were $152.2 million, compared to $205.2 million in Q2 2019[2] - Gross profit for Q2 2020 was $47.8 million, compared to $76.4 million in Q2 2019[2] - Non-GAAP gross profit for Q2 2020 was $49.1 million, compared to $78.1 million in Q2 2019[2] - Diluted loss per share was ($0.21) in Q2 2020, compared to earnings per share of $0.06 in Q2 2019[2] - Non-GAAP diluted loss per share was ($0.01) in Q2 2020, compared to earnings per share of $0.22 in Q2 2019[2] Q3 2020 Projections (Non-GAAP) - Revenues are projected to be between $185 million and $200 million[3] - Gross margin is projected to be between 35% and 38%[3] - EPS (diluted) is projected to be between $0.17 and $0.23[3] Free Cash Flow - Free cash flow for Q2FY20 was $(9.3) million[9] - Cash flow provided by (used in) operating activities in Q2FY20 was $(1.5) million[9] - Capital expenditures in Q2FY20 were $(7.8) million[9]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020. or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-36102 Knowles Corporation (Exact name of registrant as specified in its charter) Delaware 90-1002689 (State or other jurisdicti ...

[PART I — FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The unaudited consolidated financial statements for Q1 2020 and 2019 provide a comprehensive view of the company's financial performance and position Consolidated Statements of Earnings (Q1 2020 vs Q1 2019) | (in millions, except per share amounts) | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | **Revenues** | $163.1 | $179.8 | | **Gross profit** | $56.2 | $68.5 | | **Operating (loss) earnings** | $(9.6) | $4.4 | | **Loss from continuing operations** | $(12.8) | $(2.7) | | **Net loss** | $(9.1) | $(2.7) | | **Diluted loss per share from continuing operations** | $(0.14) | $(0.03) | | **Diluted net loss per share** | $(0.10) | $(0.03) | Consolidated Balance Sheets (as of March 31, 2020) | (in millions) | March 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Total current assets** | $443.0 | $388.4 | | **Total assets** | $1,696.8 | $1,654.6 | | **Total current liabilities** | $132.9 | $151.5 | | **Long-term debt** | $258.8 | $156.8 | | **Total liabilities** | $443.0 | $339.1 | | **Total stockholders' equity** | $1,253.8 | $1,288.5 | Consolidated Statements of Cash Flows (Q1 2020 vs Q1 2019) | (in millions) | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | **Net cash used in operating activities** | $(1.5) | $(11.2) | | **Net cash used in investing activities** | $(7.8) | $(26.5) | | **Net cash provided by financing activities** | $78.9 | $5.3 | | **Net increase (decrease) in cash and cash equivalents** | $69.4 | $(32.2) | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(unaudited)) Detailed explanations supporting the financial statements cover the business, COVID-19 impact, acquisitions, and segment performance [Note 1. Basis of Presentation](index=10&type=section&id=1.%20Basis%20of%20Presentation) The company operates as a global solutions provider, acknowledges COVID-19's impact on estimates, and initiated a now-suspended share repurchase program - Knowles is a global provider of advanced micro-acoustic, audio processing, and precision device solutions for various markets including mobile consumer electronics, communications, and medtech[20](index=20&type=chunk) - The Board of Directors authorized a share repurchase program of up to **$100 million**, and during Q1 2020, the company repurchased 996,109 shares for **$15.0 million** before temporarily suspending the program due to the COVID-19 pandemic[23](index=23&type=chunk) - Management acknowledges that the COVID-19 pandemic's duration and impact cannot be reasonably estimated, which could adversely affect future estimates regarding the recoverability of goodwill, long-lived assets, and deferred tax assets[22](index=22&type=chunk) [Note 3. Disposed and Discontinued Operations](index=11&type=section&id=3.%20Disposed%20and%20Discontinued%20Operations) Discontinued operations include the sold Timing Device Business, which generated a **$3.7 million** tax benefit in Q1 2020 - The company recorded earnings from discontinued operations of **$3.7 million** in Q1 2020, which was entirely due to a tax benefit from a refund related to the previously sold Timing Device Business[32](index=32&type=chunk)[33](index=33&type=chunk) [Note 4. Acquisitions](index=13&type=section&id=4.%20Acquisitions) The company acquired the ASIC Design Business for **$57.9 million** and allocated the purchase price primarily to developed technology and goodwill - Acquired the ASIC Design Business from ams AG for **$57.9 million** on December 20, 2019, which includes intellectual property and an assembled workforce and is part of the Audio segment[37](index=37&type=chunk) ASIC Design Business Purchase Price Allocation | (in millions) | Amount | | :--- | :--- | | Developed technology | $33.3 | | In-process research and development | $3.7 | | Goodwill | $18.8 | | **Total purchase price** | **$57.9** | [Note 8. Restructuring and Related Activities](index=17&type=section&id=8.%20Restructuring%20and%20Related%20Activities) Restructuring charges in Q1 2020 totaled **$5.3 million**, primarily for workforce rationalization in the Audio segment - Q1 2020 restructuring charges of **$5.3 million** were primarily for actions to rationalize the Audio segment workforce, including fixed asset write-offs[56](index=56&type=chunk) Restructuring Charges by Segment | (in millions) | Q1 2020 | Q1 2019 | | :--- | :--- | :--- | | Audio | $4.1 | $1.8 | | Precision Devices | — | $0.3 | | Corporate | $1.2 | $0.2 | | **Total** | **$5.3** | **$2.3** | [Note 9. Borrowings](index=18&type=section&id=9.%20Borrowings) Total debt increased to **$258.8 million** following a **$100.0 million** draw on the revolving credit facility, with all covenants in compliance Borrowings Summary | (in millions) | March 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | 3.25% convertible senior notes | $158.8 | $156.8 | | Revolving credit facility | $100.0 | — | | **Total long-term debt** | **$258.8** | **$156.8** | - As of March 31, 2020, the company was in compliance with its debt covenants, which include interest coverage and leverage ratios[76](index=76&type=chunk) [Note 11. Income Taxes](index=22&type=section&id=11.%20Income%20Taxes) The Q1 2020 effective tax rate was a **20.8%** provision, favorably impacted by tax holidays in Malaysia - The effective tax rate from continuing operations was a **20.8% provision** for Q1 2020, compared to a 2,600.0% provision in Q1 2019, with the high 2019 rate driven by a near break-even loss[83](index=83&type=chunk) - Tax holidays in Malaysia provided a benefit of approximately **$1.3 million** ($0.01 per share) in Q1 2020 and are effective through December 31, 2021[84](index=84&type=chunk) [Note 12. Equity Incentive Program](index=22&type=section&id=12.%20Equity%20Incentive%20Program) Stock-based compensation expense decreased to **$3.5 million** in Q1 2020, with **$39.9 million** in total unrecognized expense remaining - Total stock-based compensation expense was **$3.5 million** for Q1 2020, compared to $6.7 million for Q1 2019[85](index=85&type=chunk) - As of March 31, 2020, unrecognized compensation expense related to unvested RSUs and PSUs was **$32.1 million** and **$7.8 million**, respectively[90](index=90&type=chunk)[96](index=96&type=chunk) [Note 15. Segment Information](index=26&type=section&id=15.%20Segment%20Information) The Audio segment's revenue declined while the Precision Devices segment grew, with Asia remaining the largest geographic market Revenues by Segment (Q1 2020 vs Q1 2019) | (in millions) | Q1 2020 | Q1 2019 | | :--- | :--- | :--- | | Audio | $120.1 | $139.1 | | Precision Devices | $43.0 | $40.7 | | **Total revenues** | **$163.1** | **$179.8** | Earnings (Loss) from Continuing Operations before Interest and Income Taxes by Segment | (in millions) | Q1 2020 | Q1 2019 | | :--- | :--- | :--- | | Audio | $(6.1) | $11.8 | | Precision Devices | $7.1 | $7.5 | | **Total segments** | **$1.0** | **$19.3** | Revenues by Geographic Location (Q1 2020 vs Q1 2019) | (in millions) | Q1 2020 | Q1 2019 | | :--- | :--- | :--- | | Asia | $109.7 | $121.1 | | United States | $29.3 | $32.2 | | Europe | $22.4 | $23.8 | | **Total** | **$163.1** | **$179.8** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Q1 2020 revenue decreased **9.3%** year-over-year due to COVID-19's impact on the Audio segment, prompting cost-saving and liquidity measures [COVID-19 Impact](index=29&type=section&id=COVID-19%20Impact) The pandemic disrupted operations and demand, leading to mitigation efforts and an expectation of lower full-year 2020 financial results - The company has taken several actions to mitigate the negative impacts of COVID-19, including suspending employee travel, implementing remote work, suspending the share repurchase program, and reducing employee salaries and board compensation[113](index=113&type=chunk) - While the full impact is uncertain, the company currently expects that **full-year revenues, net income, and cash flow for 2020 will be lower than in 2019**[114](index=114&type=chunk) [Results of Operations (Q1 2020 vs Q1 2019)](index=31&type=section&id=Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202020%20compared%20with%20the%20Three%20Months%20Ended%20March%2031%2C%202019) Revenues fell **9.3%** to **$163.1 million** and gross margin declined to **34.5%**, resulting in a **$12.8 million** loss from continuing operations - Revenues decreased by **9.3% YoY to $163.1 million**, primarily due to the impacts of the COVID-19 pandemic causing lower demand for hearing health products and MEMS microphones in the Audio segment, particularly in China[120](index=120&type=chunk) - Gross profit margin decreased to **34.5% from 38.1% YoY**, due to lower Audio revenue volumes, lower pricing on mature products, and disruptions from the COVID-19 pandemic that negatively impacted plant productivity and capacity utilization[124](index=124&type=chunk) - **Non-GAAP diluted EPS from continuing operations was $0.03**, down from $0.13 in Q1 2019, mainly driven by lower Adjusted EBIT[138](index=138&type=chunk) [Segment Results of Operations](index=37&type=section&id=Segment%20Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202020%20compared%20with%20the%20Three%20Months%20Ended%20March%2031%2C%202019) The Audio segment's revenue and profit fell sharply due to COVID-19, while the Precision Devices segment saw revenue growth but slightly lower income - **Audio Segment:** Revenue decreased **13.7% YoY to $120.1 million** due to COVID-19 impacts on demand and lower pricing; Adjusted EBIT margin fell to **3.3% from 13.2%** due to lower demand, manufacturing disruptions, and higher legal expenses[146](index=146&type=chunk)[148](index=148&type=chunk) - **Precision Devices Segment:** Revenue increased **5.7% YoY to $43.0 million**, driven by higher shipments to defense, automotive, and medtech markets; Adjusted EBIT margin decreased to **18.6% from 23.8%** due to higher product costs and factory overhead to support expansion[151](index=151&type=chunk)[153](index=153&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) Cash increased to **$147.8 million**, bolstered by a **$100.0 million** credit facility draw, while operating cash flow improved due to working capital changes - Cash and cash equivalents increased to **$147.8 million** as of March 31, 2020, from $78.4 million at year-end 2019, with **$58.7 million** held by non-U.S. operations[160](index=160&type=chunk) - In Q1 2020, financing activities provided **$78.9 million** in cash, primarily from a **$100.0 million** borrowing under the revolving credit facility, partially offset by a **$15.0 million** share repurchase[166](index=166&type=chunk) - Cash used in operating activities improved to **$1.5 million** in Q1 2020 from $11.2 million in Q1 2019, mainly due to favorable changes in receivables and accrued compensation[163](index=163&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There were no material changes to the company's market risk exposure during the first quarter of 2020 - There were no material changes to the information on market risk exposure during Q1 2020[175](index=175&type=chunk) [Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2020 - Management, including the CEO and CFO, concluded that as of March 31, 2020, the company's disclosure controls and procedures were effective[176](index=176&type=chunk) - No material changes to the company's internal control over financial reporting occurred during the first quarter of 2020[177](index=177&type=chunk) [PART II — OTHER INFORMATION](index=43&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) [Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) No material developments occurred in the company's legal proceedings during the quarter - For details on legal proceedings, the report refers to Note 14; there have been no material developments in legal proceedings during the quarter[179](index=179&type=chunk)[180](index=180&type=chunk) [Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) Risk factors are updated to include the adverse impacts of the COVID-19 pandemic on demand, operations, and liquidity - The company's financial condition and results are expected to be **adversely impacted by the COVID-19 pandemic**[182](index=182&type=chunk) - Specific pandemic-related risks include lower product demand, business restrictions from government mandates, potential supply chain disruptions, increased costs for safety measures, and heightened liquidity risks[183](index=183&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **$15.0 million** of shares before suspending its **$100 million** repurchase program due to the pandemic - The company announced a **$100 million** share repurchase program on February 24, 2020, and has temporarily suspended it due to the COVID-19 pandemic[184](index=184&type=chunk) Share Repurchases (Q1 2020) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Approximate Dollar Value Remaining Under Program | | :--- | :--- | :--- | :--- | | February 2020 | 91,500 | $16.39 | $98.5M | | March 2020 | 904,609 | $14.92 | $85.0M | | **Total** | **996,109** | **$15.06** | **$85.0M** | [Exhibits](index=46&type=section&id=Item%206.%20Exhibits) Filed exhibits include amended executive compensation plans and required CEO and CFO certifications - Filed exhibits include amended and restated executive compensation and incentive plans, and CEO/CFO certifications[187](index=187&type=chunk)

Revenue and Sales Performance - The Audio segment accounted for 80% of consolidated revenues for fiscal 2019, with the top five customers contributing approximately 49% of Audio's revenues [46]. - Sales of MEMS microphones represented about 57% of consolidated revenues for fiscal 2019, indicating a strong reliance on this product line [47]. - The mobile handset market contributed approximately 27% to consolidated revenues for fiscal 2019, highlighting its significance to overall performance [48]. - The company's consolidated revenues for 2019 were $854.8 million, an increase of 3.5% from $826.9 million in 2018 [243]. - Revenues from discontinued operations were $92.2 million in 2017, with a gross profit of $30.2 million for that year [298]. - Revenues from continuing operations for 2018 were reported at $826.9 million, a 11.1% increase from $744.2 million in 2017 [318]. Financial Results and Earnings - Gross profit for 2019 was $328.0 million, slightly up from $322.6 million in 2018, indicating a stable gross margin [243]. - Operating earnings increased to $81.2 million in 2019, compared to $77.8 million in 2018, reflecting a growth of 4.4% [243]. - Net earnings for 2019 were $49.1 million, down from $67.7 million in 2018, representing a decline of 27.4% [243]. - Earnings per share from continuing operations were $0.55 for 2019, compared to $0.73 in 2018, a decrease of 24.7% [243]. - The total comprehensive earnings for 2019 were $48.1 million, down from $56.7 million in 2018 [245]. - The company recorded total impairment charges of $21.3 million in 2017, with $16.2 million related to intangible assets [320]. Assets and Liabilities - As of December 31, 2019, the balance of goodwill, other intangible assets, and long-lived assets was $1.2 billion, while the total market value of the Company's outstanding shares was $1.9 billion [83]. - Total current assets increased to $388.4 million in 2019 from $365.0 million in 2018, representing a growth of 6.8% [247]. - Total assets rose to $1,654.6 million in 2019, compared to $1,547.9 million in 2018, reflecting an increase of 6.9% [247]. - The company reported a total long-term debt of $156.8 million in 2019, slightly down from $158.1 million in 2018 [247]. - Total liabilities decreased from $34.3 million in 2018 to $29.9 million in 2019, primarily due to a reduction in long-term finance leases from $10.1 million to $6.9 million [333]. Research and Development - Research and development expenses for 2019 were $96.8 million, a decrease from $100.6 million in 2018 [243]. - The company is heavily reliant on technological and product innovations, with intense competition for experienced technical personnel, particularly in China, California, and India [62]. - The Company expects the in-process research and development project to be completed in 2021, after which it will be amortized over its estimated useful life [305]. Risks and Challenges - Global economic conditions, particularly in China, have adversely affected sales, with potential for continued impact from economic slowdowns [55]. - Changes in U.S. trade policy and tariffs could negatively affect the company's operations and financial condition [56]. - The company faces risks from customers potentially developing in-house solutions due to restrictive export laws, which could affect market share [59]. - The company faces reputational harm risks due to associations with customers under U.S. regulatory scrutiny, potentially leading to loss of investors and customers [60]. - The competitive landscape necessitates significant investment in new product development, with no guarantee of sales success [52]. Acquisitions and Investments - The company acquired the ASIC Design Business for a net consideration of $58 million, which included a developed technology intangible asset valued at $33 million [237]. - The Company acquired the MEMS Microphone ASIC Design Business on December 20, 2019, enhancing its product offerings in audio processing [254]. - The Company acquired DITF for $11.1 million, generating revenues of $8.9 million and earnings before income taxes of $0.3 million from the acquisition date through December 31, 2019 [311]. Tax and Financial Regulations - The effective tax rate may fluctuate due to geographic earnings composition and changes in tax regulations, impacting future financial results [67]. - The Company recorded a pre-tax unrealized gain of $0.2 million on cash flow hedges for foreign exchange contracts in 2019, compared to a loss of $(2.5) million in 2018 [353]. Stockholder and Market Information - The Company has experienced substantial stock price volatility, with a range from $22.74 to $12.38 per share during 2019 [93]. - The conversion of outstanding Notes could dilute the ownership interests of existing stockholders and potentially depress the price of common stock [87]. - The Company issued $172.5 million in 3.25% convertible senior notes in May 2016, with interest payable semiannually, and the initial conversion price set at $18.4250 per share [357].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019. or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE OF 1934 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 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019. or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 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 ...

PART I [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Knowles Corporation reported Q1 2019 revenues of $179.8 million, a net loss of $2.7 million, and increased total assets [Consolidated Statements of Earnings](index=3&type=section&id=Consolidated%20Statements%20of%20Earnings) Q1 2019 revenues marginally increased to $179.8 million, leading to a widened net loss of $2.7 million due to increased tax provision Consolidated Statements of Earnings (Q1 2019 vs Q1 2018) | Metric | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | **Revenues** | $179.8 million | $178.5 million | | **Gross Profit** | $68.5 million | $65.3 million | | **Operating Earnings** | $4.4 million | $4.3 million | | **Loss from Continuing Operations** | $(2.7) million | $(0.4) million | | **Net Loss** | $(2.7) million | $(0.3) million | | **Diluted Net Loss Per Share** | $(0.03) | $0.00 | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to $1,575.0 million driven by inventories and new lease assets, while cash decreased to $41.3 million Key Balance Sheet Items (As of March 31, 2019 vs Dec 31, 2018) | Metric | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Cash and cash equivalents | $41.3 million | $73.5 million | | Inventories, net | $159.3 million | $140.1 million | | **Total Assets** | **$1,575.0 million** | **$1,547.9 million** | | Long-term debt | $170.0 million | $158.1 million | | **Total Stockholders' Equity** | **$1,216.5 million** | **$1,211.6 million** | - The company adopted a new lease accounting standard (ASC 842) on January 1, 2019, resulting in the recognition of approximately **$40 million** of operating lease liabilities and right-of-use assets on its Consolidated Balance Sheets[28](index=28&type=chunk)[29](index=29&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities increased, with significant investing outflows, leading to a net decrease in cash and cash equivalents Consolidated Statements of Cash Flows (Q1 2019 vs Q1 2018) | Activity | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | $(11.2) million | $(5.5) million | | Net cash used in investing activities | $(26.5) million | $(40.4) million | | Net cash provided by (used in) financing activities | $5.3 million | $(3.6) million | | **Net decrease in cash and cash equivalents** | **$(32.2) million** | **$(49.0) million** | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail business, accounting policies, and key events including the DITF acquisition, restructuring charges, and varied segment revenue performance - On January 3, 2019, the Company acquired substantially all of the assets of DITF Interconnect Technology, Inc. for **$11.1 million**, included in the Precision Devices (PD) segment[23](index=23&type=chunk)[37](index=37&type=chunk) - In Q1 2019, the company recorded restructuring charges of **$2.3 million**, primarily for workforce rationalization in the Audio segment and transferring capacitor manufacturing operations in the PD segment[57](index=57&type=chunk)[59](index=59&type=chunk) Segment Revenues (Q1 2019 vs Q1 2018) | Segment | Q1 2019 Revenue | Q1 2018 Revenue | Change | | :--- | :--- | :--- | :--- | | Audio | $139.1 million | $146.4 million | -5.0% | | Precision Devices | $40.7 million | $32.1 million | +26.8% | | **Total** | **$179.8 million** | **$178.5 million** | **+0.7%** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes revenue increase to PD segment growth offsetting Audio decline, with improved gross profit margin and decreased cash position [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Q1 2019 revenues increased to $179.8 million driven by PD growth offsetting Audio decline, with improved gross profit margin and an unusually high effective tax rate - PD revenues increased **$8.6 million** due to higher shipments for defense and telecommunications markets and the DITF acquisition[132](index=132&type=chunk) - Audio revenues decreased **$7.3 million** due to lower MEMS microphone shipments to its largest customer, a key Korean OEM, and price erosion on mature products[132](index=132&type=chunk) - The effective tax rate was a **2,600.0%** provision, compared to 200.0% in Q1 2018, due to accruing taxes in profitable countries while having a valuation allowance in others on near break-even pre-tax income[142](index=142&type=chunk) [Segment Results](index=36&type=section&id=Segment%20Results) Audio segment revenue declined 5.0% with improved adjusted EBIT margin, while Precision Devices revenue grew 26.8% with increased adjusted EBIT margin Audio Segment Performance (Q1 2019 vs Q1 2018) | Metric | Q1 2019 | Q1 2018 | | :--- | :--- | :--- | | Revenues | $139.1 million | $146.4 million | | EBIT | $11.8 million | $12.3 million | | Adjusted EBIT | $18.4 million | $17.9 million | | Adjusted EBIT Margin | 13.2% | 12.2% | Precision Devices Segment Performance (Q1 2019 vs Q1 2018) | Metric | Q1 2019 | Q1 2018 | | :--- | :--- | :--- | | Revenues | $40.7 million | $32.1 million | | EBIT | $7.5 million | $6.2 million | | Adjusted EBIT | $9.7 million | $7.4 million | | Adjusted EBIT Margin | 23.8% | 23.1% | [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and cash equivalents decreased by $32.2 million due to operating and investing outflows, partially offset by financing activities, with long-term debt increasing - Cash and cash equivalents decreased from **$73.5 million** at year-end 2018 to **$41.3 million** at March 31, 2019[171](index=171&type=chunk) - Cash used in investing activities included **$11.4 million** for the acquisition of DITF and **$15.1 million** for additions to property, plant, and equipment[17](index=17&type=chunk)[175](index=175&type=chunk) - The company had **$170.0 million** in total long-term debt as of March 31, 2019, consisting of **$151.0 million** in convertible senior notes and **$19.0 million** from its revolving credit facility[179](index=179&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There were no material changes to the company's market risk exposure during the first quarter of 2019 - There were no material changes to the information on market risk exposure during the three months ended March 31, 2019[184](index=184&type=chunk) [Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of March 31, 2019, with no material changes in internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures are effective as of the end of the period covered by the report[185](index=185&type=chunk) - There were no material changes in the company's internal control over financial reporting during the first quarter of 2019[186](index=186&type=chunk) PART II — OTHER INFORMATION [Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings but does not expect them to have a material adverse effect on its financial condition or results of operations - The company is involved in various legal proceedings arising in the ordinary course of business but does not expect them to have a material adverse effect on its cash flow, results of operations, or financial condition[115](index=115&type=chunk)[188](index=188&type=chunk) [Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) There have been no material developments in the company's previously reported risk factors from its 2018 Annual Report on Form 10-K - There are no material developments in the company's previously reported risk factors from its 2018 Annual Report on Form 10-K[190](index=190&type=chunk) [Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL formatted financial information - Exhibits filed with the report include: * CEO Certification (Rule 13a-14(a)/15d-14(a)) * CFO Certification (Rule 13a-14(a)/15d-14(a)) * Joint CEO and CFO Certification (Section 906 of Sarbanes-Oxley) * XBRL formatted financial information[192](index=192&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018. or o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-36102 Knowles Corporation (Exact name of registrant as specified in its charter) Delaware 90-1002689 (State or other jurisdiction o ...