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 ...