Delaware
|
90-1002689
|
(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
|
|
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1151 Maplewood Drive
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|
Itasca, Illinois
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60143
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
þ
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|
Accelerated filer
o
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Non-accelerated filer
o
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(Do not check if smaller reporting company)
|
Smaller reporting company
o
|
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Page
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Three Months Ended June 30,
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Six Months Ended June 30,
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||||||||||||
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2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenues
|
$
|
190.3
|
|
|
$
|
192.8
|
|
|
$
|
375.6
|
|
|
$
|
379.4
|
|
Cost of goods sold
|
117.2
|
|
|
121.2
|
|
|
234.5
|
|
|
246.0
|
|
||||
Restructuring charges - cost of goods sold
|
0.2
|
|
|
0.2
|
|
|
1.4
|
|
|
(0.5
|
)
|
||||
Gross profit
|
72.9
|
|
|
71.4
|
|
|
139.7
|
|
|
133.9
|
|
||||
Research and development expenses
|
25.8
|
|
|
18.2
|
|
|
51.9
|
|
|
34.5
|
|
||||
Selling and administrative expenses
|
45.2
|
|
|
36.7
|
|
|
88.3
|
|
|
72.6
|
|
||||
Restructuring charges
|
3.7
|
|
|
0.2
|
|
|
7.2
|
|
|
0.2
|
|
||||
Operating expenses
|
74.7
|
|
|
55.1
|
|
|
147.4
|
|
|
107.3
|
|
||||
Operating (loss) earnings
|
(1.8
|
)
|
|
16.3
|
|
|
(7.7
|
)
|
|
26.6
|
|
||||
Interest expense, net
|
5.8
|
|
|
3.1
|
|
|
9.5
|
|
|
5.5
|
|
||||
Other income, net
|
(2.2
|
)
|
|
(0.2
|
)
|
|
(1.7
|
)
|
|
(2.0
|
)
|
||||
(Loss) earnings before income taxes and discontinued operations
|
(5.4
|
)
|
|
13.4
|
|
|
(15.5
|
)
|
|
23.1
|
|
||||
Provision for income taxes
|
1.4
|
|
|
0.1
|
|
|
3.8
|
|
|
4.8
|
|
||||
(Loss) earnings from continuing operations
|
(6.8
|
)
|
|
13.3
|
|
|
(19.3
|
)
|
|
18.3
|
|
||||
Loss from discontinued operations, net
|
(17.8
|
)
|
|
(29.4
|
)
|
|
(34.7
|
)
|
|
(50.2
|
)
|
||||
Net loss
|
$
|
(24.6
|
)
|
|
$
|
(16.1
|
)
|
|
$
|
(54.0
|
)
|
|
$
|
(31.9
|
)
|
|
|
|
|
|
|
|
|
||||||||
(Loss) earnings per share from continuing operations:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.08
|
)
|
|
$
|
0.16
|
|
|
$
|
(0.22
|
)
|
|
$
|
0.22
|
|
Diluted
|
$
|
(0.08
|
)
|
|
$
|
0.16
|
|
|
$
|
(0.22
|
)
|
|
$
|
0.22
|
|
|
|
|
|
|
|
|
|
||||||||
Loss per share from discontinued operations:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.20
|
)
|
|
$
|
(0.35
|
)
|
|
$
|
(0.39
|
)
|
|
$
|
(0.59
|
)
|
Diluted
|
$
|
(0.20
|
)
|
|
$
|
(0.35
|
)
|
|
$
|
(0.39
|
)
|
|
$
|
(0.59
|
)
|
|
|
|
|
|
|
|
|
||||||||
Net loss per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.28
|
)
|
|
$
|
(0.19
|
)
|
|
$
|
(0.61
|
)
|
|
$
|
(0.37
|
)
|
Diluted
|
$
|
(0.28
|
)
|
|
$
|
(0.19
|
)
|
|
$
|
(0.61
|
)
|
|
$
|
(0.37
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
88,652,453
|
|
|
85,144,298
|
|
|
88,594,597
|
|
|
85,126,040
|
|
||||
Diluted
|
88,652,453
|
|
|
85,292,561
|
|
|
88,594,597
|
|
|
85,291,578
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net loss
|
$
|
(24.6
|
)
|
|
$
|
(16.1
|
)
|
|
$
|
(54.0
|
)
|
|
$
|
(31.9
|
)
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive loss, net of tax
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation
|
(4.0
|
)
|
|
8.3
|
|
|
9.9
|
|
|
(43.1
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Employee benefit plans:
|
|
|
|
|
|
|
|
||||||||
Amortization or settlement of actuarial losses included in net periodic pension cost
|
—
|
|
|
0.1
|
|
|
—
|
|
|
0.2
|
|
||||
Net change in employee benefit plans
|
—
|
|
|
0.1
|
|
|
—
|
|
|
0.2
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Changes in fair value of cash flow hedges:
|
|
|
|
|
|
|
|
||||||||
Unrealized net losses arising during period
|
(2.2
|
)
|
|
—
|
|
|
(0.5
|
)
|
|
(0.7
|
)
|
||||
Net gains reclassified into earnings
|
0.3
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
||||
Total cash flow hedges
|
(1.9
|
)
|
|
—
|
|
|
(0.3
|
)
|
|
(0.7
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Other comprehensive (loss) income, net of tax
|
(5.9
|
)
|
|
8.4
|
|
|
9.6
|
|
|
(43.6
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Comprehensive loss
|
$
|
(30.5
|
)
|
|
$
|
(7.7
|
)
|
|
$
|
(44.4
|
)
|
|
$
|
(75.5
|
)
|
|
June 30, 2016
|
|
December 31, 2015
|
||||
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
47.2
|
|
|
$
|
63.3
|
|
Receivables, net of allowances of $2.2 and $1.8
|
123.2
|
|
|
145.2
|
|
||
Inventories, net
|
139.0
|
|
|
118.4
|
|
||
Prepaid and other current assets
|
14.6
|
|
|
9.2
|
|
||
Total current assets
|
324.0
|
|
|
336.1
|
|
||
Property, plant and equipment, net
|
208.6
|
|
|
215.3
|
|
||
Goodwill
|
913.3
|
|
|
925.8
|
|
||
Intangible assets, net
|
85.9
|
|
|
97.0
|
|
||
Other assets and deferred charges
|
29.5
|
|
|
29.3
|
|
||
Assets of discontinued operations
|
66.4
|
|
|
93.0
|
|
||
Total assets
|
$
|
1,627.7
|
|
|
$
|
1,696.5
|
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
|
||
Current maturities of long-term debt
|
$
|
2.6
|
|
|
$
|
29.6
|
|
Accounts payable
|
74.8
|
|
|
77.2
|
|
||
Accrued compensation and employee benefits
|
28.1
|
|
|
31.2
|
|
||
Other accrued expenses
|
32.4
|
|
|
35.9
|
|
||
Federal and other taxes on income
|
1.9
|
|
|
1.5
|
|
||
Total current liabilities
|
139.8
|
|
|
175.4
|
|
||
Long-term debt
|
392.2
|
|
|
399.2
|
|
||
Deferred income taxes
|
21.7
|
|
|
18.4
|
|
||
Other liabilities
|
41.8
|
|
|
43.5
|
|
||
Liabilities of discontinued operations
|
29.6
|
|
|
53.2
|
|
||
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; 88,648,055 and 88,451,564 shares issued at June 30, 2016 and December 31, 2015, respectively
|
0.9
|
|
|
0.9
|
|
||
Additional paid-in capital
|
1,490.1
|
|
|
1,449.9
|
|
||
Accumulated deficit
|
(371.8
|
)
|
|
(317.8
|
)
|
||
Accumulated other comprehensive loss
|
(116.6
|
)
|
|
(126.2
|
)
|
||
Total stockholders' equity
|
1,002.6
|
|
|
1,006.8
|
|
||
Total liabilities and stockholders' equity
|
$
|
1,627.7
|
|
|
$
|
1,696.5
|
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Loss
|
|
Total Stockholders' Equity
|
||||||||||
Balance at December 31, 2015
|
$
|
0.9
|
|
|
$
|
1,449.9
|
|
|
$
|
(317.8
|
)
|
|
$
|
(126.2
|
)
|
|
$
|
1,006.8
|
|
Net loss
|
—
|
|
|
—
|
|
|
(54.0
|
)
|
|
—
|
|
|
(54.0
|
)
|
|||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
9.6
|
|
|
9.6
|
|
|||||
Purchase of convertible note hedges
|
—
|
|
|
(44.5
|
)
|
|
—
|
|
|
—
|
|
|
(44.5
|
)
|
|||||
Issuance of warrants
|
—
|
|
|
39.1
|
|
|
—
|
|
|
—
|
|
|
39.1
|
|
|||||
Equity component of the convertible notes issuance, net
|
—
|
|
|
35.3
|
|
|
—
|
|
|
—
|
|
|
35.3
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
11.2
|
|
|
—
|
|
|
—
|
|
|
11.2
|
|
|||||
Tax on restricted stock unit vesting
|
—
|
|
|
(0.9
|
)
|
|
—
|
|
|
—
|
|
|
(0.9
|
)
|
|||||
Balance at June 30, 2016
|
$
|
0.9
|
|
|
$
|
1,490.1
|
|
|
$
|
(371.8
|
)
|
|
$
|
(116.6
|
)
|
|
$
|
1,002.6
|
|
|
Six Months Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
Operating Activities
|
|
|
|
||||
Net loss
|
$
|
(54.0
|
)
|
|
$
|
(31.9
|
)
|
Adjustments to reconcile net loss to cash from operating activities:
|
|
|
|
||||
Depreciation and amortization
|
39.4
|
|
|
65.6
|
|
||
Impairment charges on fixed and other assets
|
—
|
|
|
3.0
|
|
||
Loss on disposal of fixed assets
|
1.3
|
|
|
—
|
|
||
Stock-based compensation
|
11.2
|
|
|
6.6
|
|
||
Deferred income taxes
|
2.2
|
|
|
—
|
|
||
Non-cash interest expense and amortization of debt issuance costs
|
2.0
|
|
|
0.4
|
|
||
Other, net
|
4.4
|
|
|
(0.4
|
)
|
||
Cash effect of changes in assets and liabilities (excluding effects of foreign exchange):
|
|
|
|
||||
Receivables, net
|
53.5
|
|
|
36.4
|
|
||
Inventories, net
|
(8.2
|
)
|
|
(11.1
|
)
|
||
Prepaid and other current assets
|
(4.2
|
)
|
|
(5.8
|
)
|
||
Accounts payable
|
(29.1
|
)
|
|
(13.9
|
)
|
||
Accrued compensation and employee benefits
|
(5.3
|
)
|
|
(7.1
|
)
|
||
Other accrued expenses
|
(0.6
|
)
|
|
(8.8
|
)
|
||
Accrued and deferred taxes, net
|
0.4
|
|
|
(7.7
|
)
|
||
Other non-current assets and non-current liabilities
|
(2.8
|
)
|
|
(1.0
|
)
|
||
Net cash provided by operating activities
|
10.2
|
|
|
24.3
|
|
||
|
|
|
|
||||
Investing Activities
|
|
|
|
|
|
||
Additions to property, plant and equipment
|
(20.2
|
)
|
|
(38.7
|
)
|
||
Proceeds from sale of investment
|
2.0
|
|
|
—
|
|
||
Capitalized patent defense costs
|
—
|
|
|
(0.8
|
)
|
||
Purchase of intellectual property license
|
—
|
|
|
(0.5
|
)
|
||
Proceeds from the sale of property, plant and equipment
|
0.7
|
|
|
0.3
|
|
||
Net cash used in investing activities
|
(17.5
|
)
|
|
(39.7
|
)
|
||
|
|
|
|
||||
Financing Activities
|
|
|
|
|
|
||
Payments under revolving credit facility
|
(20.0
|
)
|
|
(29.0
|
)
|
||
Borrowings under revolving credit facility
|
20.0
|
|
|
35.0
|
|
||
Principal payments on term loan debt
|
(166.5
|
)
|
|
(7.5
|
)
|
||
Proceeds from issuance of convertible senior notes
|
172.5
|
|
|
—
|
|
||
Proceeds from issuance of warrants
|
39.1
|
|
|
—
|
|
||
Purchase of convertible note hedges
|
(44.5
|
)
|
|
—
|
|
||
Debt issuance costs
|
(6.7
|
)
|
|
—
|
|
||
Payments of capital lease obligations
|
(1.6
|
)
|
|
(0.6
|
)
|
||
Tax on restricted stock unit vesting
|
(0.9
|
)
|
|
(0.4
|
)
|
||
Net cash used in financing activities
|
(8.6
|
)
|
|
(2.5
|
)
|
||
|
|
|
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
(0.2
|
)
|
|
(0.3
|
)
|
||
|
|
|
|
||||
Net decrease in cash and cash equivalents
|
(16.1
|
)
|
|
(18.2
|
)
|
||
Cash and cash equivalents at beginning of period
|
63.3
|
|
|
55.2
|
|
||
Cash and cash equivalents at end of period
|
$
|
47.2
|
|
|
$
|
37.0
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
(unaudited)
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
(unaudited)
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in millions)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenues
|
$
|
24.7
|
|
|
$
|
48.2
|
|
|
$
|
45.1
|
|
|
$
|
100.1
|
|
Cost of goods sold
|
27.1
|
|
|
62.7
|
|
|
55.7
|
|
|
123.0
|
|
||||
Restructuring charges - cost of goods sold
|
7.2
|
|
|
0.2
|
|
|
9.3
|
|
|
0.4
|
|
||||
Gross Profit
|
(9.6
|
)
|
|
(14.7
|
)
|
|
(19.9
|
)
|
|
(23.3
|
)
|
||||
Research and development expenses
|
3.2
|
|
|
4.5
|
|
|
6.7
|
|
|
7.9
|
|
||||
Selling and administrative expenses
|
4.9
|
|
|
9.8
|
|
|
8.1
|
|
|
19.6
|
|
||||
Restructuring charges
|
1.4
|
|
|
0.1
|
|
|
1.8
|
|
|
0.3
|
|
||||
Operating Expenses
|
9.5
|
|
|
14.4
|
|
|
16.6
|
|
|
27.8
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Loss from discontinued operations before taxes
|
(19.1
|
)
|
|
(29.1
|
)
|
|
(36.5
|
)
|
|
(51.1
|
)
|
||||
Benefit from income taxes
|
(1.3
|
)
|
|
0.3
|
|
|
(1.8
|
)
|
|
(0.9
|
)
|
||||
Loss from discontinued operations, net of tax
|
$
|
(17.8
|
)
|
|
$
|
(29.4
|
)
|
|
$
|
(34.7
|
)
|
|
$
|
(50.2
|
)
|
(in millions)
|
June 30, 2016
|
|
December 31, 2015
|
||||
Assets of Discontinued Operations:
|
|
|
|
||||
Accounts receivable
|
$
|
15.8
|
|
|
$
|
47.2
|
|
Inventories, net
|
21.9
|
|
|
33.6
|
|
||
Prepaid and other current assets
|
1.9
|
|
|
2.0
|
|
||
Total current assets
|
39.6
|
|
|
82.8
|
|
||
Property, plant and equipment, net
|
7.1
|
|
|
9.5
|
|
||
Goodwill
(1)
|
18.7
|
|
|
—
|
|
||
Other assets and deferred charges
|
1.0
|
|
|
0.7
|
|
||
Total assets
|
$
|
66.4
|
|
|
$
|
93.0
|
|
|
|
|
|
||||
Liabilities of Discontinued Operations:
|
|
|
|
||||
Accounts payable
|
$
|
15.5
|
|
|
$
|
39.3
|
|
Other current liabilities
|
11.9
|
|
|
11.8
|
|
||
Total current liabilities
|
27.4
|
|
|
51.1
|
|
||
Other liabilities
|
2.2
|
|
|
2.1
|
|
||
Total liabilities
|
$
|
29.6
|
|
|
$
|
53.2
|
|
|
Six Months Ended June 30,
|
||||||
(in millions)
|
2016
|
|
2015
|
||||
Depreciation
|
$
|
1.1
|
|
|
$
|
17.2
|
|
Amortization of intangible assets
|
$
|
—
|
|
|
$
|
11.4
|
|
Additions to property, plant and equipment
|
$
|
2.5
|
|
|
$
|
14.0
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
(unaudited)
|
|
(in millions)
|
June 30, 2016
|
|
December 31, 2015
|
||||
Raw materials
|
$
|
70.7
|
|
|
$
|
66.4
|
|
Work in progress
|
18.4
|
|
|
14.2
|
|
||
Finished goods
|
88.3
|
|
|
75.2
|
|
||
Subtotal
|
177.4
|
|
|
155.8
|
|
||
Less reserves
|
(38.4
|
)
|
|
(37.4
|
)
|
||
Total
|
$
|
139.0
|
|
|
$
|
118.4
|
|
(in millions)
|
June 30, 2016
|
|
December 31, 2015
|
||||
Land
|
$
|
11.2
|
|
|
$
|
11.3
|
|
Buildings and improvements
|
118.9
|
|
|
118.4
|
|
||
Machinery, equipment and other
|
488.8
|
|
|
479.9
|
|
||
Subtotal
|
618.9
|
|
|
609.6
|
|
||
Less accumulated depreciation
|
(410.3
|
)
|
|
(394.3
|
)
|
||
Total
|
$
|
208.6
|
|
|
$
|
215.3
|
|
(in millions)
|
Mobile Consumer Electronics
|
|
Specialty Components
|
|
Total
|
||||||
Balance at December 31, 2015
|
$
|
740.0
|
|
|
$
|
185.8
|
|
|
$
|
925.8
|
|
Allocation to discontinued operations
(1)
|
(18.7
|
)
|
|
—
|
|
|
(18.7
|
)
|
|||
Acquisition adjustment
|
0.2
|
|
|
—
|
|
|
0.2
|
|
|||
Foreign currency translation
|
6.0
|
|
|
—
|
|
|
6.0
|
|
|||
Balance at June 30, 2016
|
$
|
727.5
|
|
|
$
|
185.8
|
|
|
$
|
913.3
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
(unaudited)
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||||||||||
(in millions)
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
||||||||
Amortized intangible assets:
|
|
|
|
|
|
|
|
||||||||
Trademarks
|
$
|
0.3
|
|
|
$
|
0.2
|
|
|
$
|
0.3
|
|
|
$
|
0.2
|
|
Patents
|
42.9
|
|
|
16.9
|
|
|
42.9
|
|
|
14.5
|
|
||||
Customer Relationships
|
156.2
|
|
|
149.5
|
|
|
156.1
|
|
|
143.4
|
|
||||
Unpatented Technologies
|
92.4
|
|
|
71.3
|
|
|
92.4
|
|
|
68.6
|
|
||||
Other
|
3.1
|
|
|
3.1
|
|
|
3.1
|
|
|
3.1
|
|
||||
Total
|
294.9
|
|
|
241.0
|
|
|
294.8
|
|
|
229.8
|
|
||||
Unamortized intangible assets:
|
|
|
|
|
|
|
|
||||||||
Trademarks
|
32.0
|
|
|
|
|
32.0
|
|
|
|
||||||
Total intangible assets, net
|
$
|
85.9
|
|
|
|
|
$
|
97.0
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in millions)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Mobile Consumer Electronics
|
$
|
3.1
|
|
|
$
|
—
|
|
|
$
|
6.1
|
|
|
$
|
—
|
|
Specialty Components
(1)
|
0.8
|
|
|
0.4
|
|
|
2.1
|
|
|
(0.3
|
)
|
||||
Corporate
|
—
|
|
|
—
|
|
|
0.4
|
|
|
—
|
|
||||
Total
|
$
|
3.9
|
|
|
$
|
0.4
|
|
|
$
|
8.6
|
|
|
$
|
(0.3
|
)
|
(in millions)
|
Severance Pay and Benefits
|
|
Contract Termination and Other Costs
|
|
Total
|
||||||
Balance at December 31, 2015
|
$
|
7.7
|
|
|
$
|
1.1
|
|
|
$
|
8.8
|
|
Restructuring charges
|
7.3
|
|
|
1.3
|
|
|
8.6
|
|
|||
Payments
|
(5.5
|
)
|
|
(1.4
|
)
|
|
(6.9
|
)
|
|||
Other, including foreign currency
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|||
Balance at June 30, 2016
|
$
|
9.6
|
|
|
$
|
1.0
|
|
|
$
|
10.6
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
(unaudited)
|
|
(in millions)
|
June 30, 2016
|
|
December 31, 2015
|
||||
Other accrued expenses
|
$
|
10.3
|
|
|
$
|
8.7
|
|
Other liabilities
|
0.3
|
|
|
0.1
|
|
||
Total
|
$
|
10.6
|
|
|
$
|
8.8
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
(unaudited)
|
|
Hedge Type
|
Balance Sheet Line Item
|
June 30, 2016
|
December 31, 2015
|
||||
Cash flow hedges
|
Prepaid and other current assets
|
$
|
0.9
|
|
$
|
—
|
|
Cash flow hedges
|
Other accrued expenses
|
1.7
|
|
1.1
|
|
||
Cash flow hedges
|
Other liabilities
|
1.3
|
|
0.6
|
|
||
Economic hedges
|
Other accrued expenses
|
—
|
|
0.1
|
|
(in millions)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
Hedge Type
|
Income Statement Line
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Economic hedges
|
Other (income) expense, net
|
$
|
(0.6
|
)
|
|
$
|
1.0
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
(unaudited)
|
|
(in millions)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
Hedge Type
|
Income Statement Line
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Cash flow hedges
|
Other income, net
|
$
|
(0.3
|
)
|
|
$
|
—
|
|
|
$
|
(0.2
|
)
|
|
$
|
—
|
|
(in millions)
|
June 30, 2016
|
|
December 31, 2015
|
||||
3.25% Convertible Senior Notes
|
$
|
131.8
|
|
|
$
|
—
|
|
Term loan and revolving credit facility
|
263.0
|
|
|
428.8
|
|
||
Total
|
394.8
|
|
|
428.8
|
|
||
Less: current maturities
|
2.6
|
|
|
29.6
|
|
||
Total long-term debt
|
$
|
392.2
|
|
|
$
|
399.2
|
|
(in millions)
|
Q3 - Q4 2016
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
||||||||||
Loan amortization payments
(1)
|
$
|
—
|
|
|
$
|
10.8
|
|
|
$
|
14.4
|
|
|
$
|
93.3
|
|
|
$
|
—
|
|
=
|
during any calendar quarter commencing after the calendar quarter ending on June 30, 2016, and only during such calendar quarters if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;
|
=
|
during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day; or
|
=
|
upon the occurrence of specified corporate events.
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
(unaudited)
|
|
(in millions)
|
June 30, 2016
|
||
Liability component:
|
|
||
Principal
|
$
|
172.5
|
|
Less: debt issuance costs, debt discount, net of amortization
(1)
|
(40.7
|
)
|
|
Net carrying amount
|
$
|
131.8
|
|
|
|
||
Equity component
(2)
|
$
|
29.9
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||
(in millions)
|
2016
|
|
2016
|
||||
3.25% coupon
|
$
|
1.0
|
|
|
$
|
1.0
|
|
Amortization of debt issuance costs
|
0.1
|
|
|
0.1
|
|
||
Amortization of debt discount
|
0.9
|
|
|
0.9
|
|
||
Total
|
$
|
2.0
|
|
|
$
|
2.0
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
(unaudited)
|
|
(in millions)
|
June 30, 2016
|
|
December 31, 2015
|
||||
Term loan due January 2019
|
$
|
118.5
|
|
|
$
|
285.0
|
|
$300.0 million revolving credit facility due January 2019
|
145.0
|
|
|
145.0
|
|
||
Less: debt issuance costs, net of amortization
|
(0.5
|
)
|
|
(1.2
|
)
|
||
Total
|
263.0
|
|
|
428.8
|
|
||
Less: current maturities
(1)
|
3.4
|
|
|
29.6
|
|
||
Long-term portion
|
$
|
259.6
|
|
|
$
|
399.2
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
(unaudited)
|
|
|
Three Months Ended
|
|
Three Months Ended
|
||||||||||||||||||||
|
June 30, 2016
|
|
June 30, 2015
|
||||||||||||||||||||
(in millions)
|
Pre-tax
|
|
Tax
|
|
Net of tax
|
|
Pre-tax
|
|
Tax
|
|
Net of tax
|
||||||||||||
Foreign currency translation
|
$
|
(4.0
|
)
|
|
$
|
—
|
|
|
$
|
(4.0
|
)
|
|
$
|
8.3
|
|
|
$
|
—
|
|
|
$
|
8.3
|
|
Employee benefit plans
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
||||||
Changes in fair value of cash flow hedges
|
(2.0
|
)
|
|
0.1
|
|
|
(1.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Other comprehensive (loss) income, net of tax
|
$
|
(6.0
|
)
|
|
$
|
0.1
|
|
|
$
|
(5.9
|
)
|
|
$
|
8.4
|
|
|
$
|
—
|
|
|
$
|
8.4
|
|
|
Six Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||
|
June 30, 2016
|
|
June 30, 2015
|
||||||||||||||||||||
(in millions)
|
Pre-tax
|
|
Tax
|
|
Net of tax
|
|
Pre-tax
|
|
Tax
|
|
Net of tax
|
||||||||||||
Foreign currency translation
|
$
|
9.9
|
|
|
$
|
—
|
|
|
$
|
9.9
|
|
|
$
|
(43.1
|
)
|
|
$
|
—
|
|
|
$
|
(43.1
|
)
|
Employee benefit plans
|
—
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
(0.1
|
)
|
|
0.2
|
|
||||||
Changes in fair value of cash flow hedges
|
(0.4
|
)
|
|
0.1
|
|
|
(0.3
|
)
|
|
(1.1
|
)
|
|
0.4
|
|
|
(0.7
|
)
|
||||||
Other comprehensive income (loss), net of tax
|
$
|
9.5
|
|
|
$
|
0.1
|
|
|
$
|
9.6
|
|
|
$
|
(43.9
|
)
|
|
$
|
0.3
|
|
|
$
|
(43.6
|
)
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
(unaudited)
|
|
(in millions)
|
|
Cash flow hedges
|
|
Cumulative foreign currency translation adjustments
|
|
Employee benefit plans
|
|
Total
|
||||||||
Balance at December 31, 2015
|
|
$
|
(1.6
|
)
|
|
$
|
(113.1
|
)
|
|
$
|
(11.5
|
)
|
|
$
|
(126.2
|
)
|
Other comprehensive earnings
|
|
(0.3
|
)
|
|
9.9
|
|
|
—
|
|
|
9.6
|
|
||||
Balance at June 30, 2016
|
|
$
|
(1.9
|
)
|
|
$
|
(103.2
|
)
|
|
$
|
(11.5
|
)
|
|
$
|
(116.6
|
)
|
(in millions)
|
|
Cash flow hedges
|
|
Cumulative foreign currency translation adjustments
|
|
Employee benefit plans
|
|
Total
|
||||||||
Balance at December 31, 2014
|
|
$
|
(0.2
|
)
|
|
$
|
(41.4
|
)
|
|
$
|
(11.7
|
)
|
|
$
|
(53.3
|
)
|
Other comprehensive loss
|
|
(0.7
|
)
|
|
(43.1
|
)
|
|
0.2
|
|
|
(43.6
|
)
|
||||
Balance at June 30, 2015
|
|
$
|
(0.9
|
)
|
|
$
|
(84.5
|
)
|
|
$
|
(11.5
|
)
|
|
$
|
(96.9
|
)
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
(unaudited)
|
|
|
Six Months Ended June 30,
|
||||||||
|
2016
|
|
2015
|
||||||
Risk-free interest rate
|
1.04%
|
to
|
1.12
|
%
|
|
1.24%
|
to
|
1.44
|
%
|
Dividend yield
|
—%
|
|
—%
|
||||||
Expected life (years)
|
4.5
|
|
4.5
|
||||||
Volatility
|
37.0%
|
to
|
39.6
|
%
|
|
42.4%
|
|||
Fair value at date of grant
|
$3.76
|
to
|
$4.27
|
|
$6.59
|
to
|
$6.88
|
|
SSARs
|
|
Stock Options
|
||||||||||||||||||||||
|
Number of Shares
|
|
Weighted-Average Exercise Price
|
|
Aggregate Intrinsic Value
|
|
Weighted-Average Remaining Contractual Term (Years)
|
|
Number of Shares
|
|
Weighted-Average Exercise Price
|
|
Aggregate Intrinsic Value
|
|
Weighted-Average Remaining Contractual Term (Years)
|
||||||||||
Outstanding at December 31, 2015
|
1,013,780
|
|
|
$
|
20.92
|
|
|
|
|
|
|
3,165,556
|
|
|
$
|
22.58
|
|
|
|
|
|
||||
Granted
|
—
|
|
|
—
|
|
|
|
|
|
|
2,025,591
|
|
|
11.18
|
|
|
|
|
|
||||||
Exercised
|
(44,838
|
)
|
|
14.28
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
||||||
Forfeited
|
—
|
|
|
—
|
|
|
|
|
|
|
(151,297
|
)
|
|
19.28
|
|
|
|
|
|
||||||
Expired
|
(5,672
|
)
|
|
15.32
|
|
|
|
|
|
|
(10,133
|
)
|
|
23.01
|
|
|
|
|
|
||||||
Outstanding at June 30, 2016
|
963,270
|
|
|
$
|
21.26
|
|
|
$
|
0.1
|
|
|
5.4
|
|
5,029,717
|
|
|
$
|
18.09
|
|
|
$
|
5.0
|
|
|
6.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Exercisable at June 30, 2016
|
963,270
|
|
|
$
|
21.26
|
|
|
$
|
0.1
|
|
|
5.4
|
|
950,696
|
|
|
$
|
22.87
|
|
|
$
|
—
|
|
|
5.3
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
(unaudited)
|
|
|
Share units
|
|
Weighted-average grant date fair value
|
|||
Unvested at December 31, 2015
|
1,079,994
|
|
|
$
|
24.41
|
|
Granted
|
1,489,187
|
|
|
11.92
|
|
|
Vested
|
(289,786
|
)
|
|
20.24
|
|
|
Forfeited
|
(103,150
|
)
|
|
17.36
|
|
|
Unvested at June 30, 2016
|
2,176,245
|
|
|
$
|
15.23
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in millions except share and per share amounts)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
(Loss) earnings from continuing operations
|
$
|
(6.8
|
)
|
|
$
|
13.3
|
|
|
$
|
(19.3
|
)
|
|
$
|
18.3
|
|
Loss from discontinued operations, net
|
(17.8
|
)
|
|
(29.4
|
)
|
|
(34.7
|
)
|
|
(50.2
|
)
|
||||
Net loss
|
$
|
(24.6
|
)
|
|
$
|
(16.1
|
)
|
|
$
|
(54.0
|
)
|
|
$
|
(31.9
|
)
|
|
|
|
|
|
|
|
|
||||||||
Basic (loss) earnings per common share:
|
|
|
|
|
|
|
|
||||||||
(Loss) earnings from continuing operations
|
$
|
(0.08
|
)
|
|
$
|
0.16
|
|
|
$
|
(0.22
|
)
|
|
$
|
0.22
|
|
Loss from discontinued operations, net
|
$
|
(0.20
|
)
|
|
$
|
(0.35
|
)
|
|
$
|
(0.39
|
)
|
|
$
|
(0.59
|
)
|
Net loss
|
$
|
(0.28
|
)
|
|
$
|
(0.19
|
)
|
|
$
|
(0.61
|
)
|
|
$
|
(0.37
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding
|
88,652,453
|
|
|
85,144,298
|
|
|
88,594,597
|
|
|
85,126,040
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Diluted (loss) earnings per common share:
|
|
|
|
|
|
|
|
|
|
||||||
(Loss) earnings from continuing operations
|
$
|
(0.08
|
)
|
|
$
|
0.16
|
|
|
$
|
(0.22
|
)
|
|
$
|
0.22
|
|
Loss from discontinued operations, net
|
$
|
(0.20
|
)
|
|
$
|
(0.35
|
)
|
|
$
|
(0.39
|
)
|
|
$
|
(0.59
|
)
|
Net loss
|
$
|
(0.28
|
)
|
|
$
|
(0.19
|
)
|
|
$
|
(0.61
|
)
|
|
$
|
(0.37
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares outstanding
|
88,652,453
|
|
|
85,292,561
|
|
|
88,594,597
|
|
|
85,291,578
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
(unaudited)
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
(unaudited)
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in millions)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Mobile Consumer Electronics
|
$
|
82.2
|
|
|
$
|
84.2
|
|
|
$
|
165.5
|
|
|
$
|
166.9
|
|
Specialty Components
|
108.1
|
|
|
108.6
|
|
|
210.1
|
|
|
212.5
|
|
||||
Total consolidated revenue
|
$
|
190.3
|
|
|
$
|
192.8
|
|
|
$
|
375.6
|
|
|
$
|
379.4
|
|
|
|
|
|
|
|
|
|
||||||||
(Loss) earnings before interest and income taxes:
|
|
|
|
|
|
|
|
|
|||||||
Mobile Consumer Electronics
|
$
|
(5.9
|
)
|
|
$
|
14.0
|
|
|
$
|
(14.5
|
)
|
|
$
|
23.9
|
|
Specialty Components
|
18.0
|
|
|
16.3
|
|
|
33.6
|
|
|
29.0
|
|
||||
Total segments
|
12.1
|
|
|
30.3
|
|
|
19.1
|
|
|
52.9
|
|
||||
Corporate expense / other
|
11.7
|
|
|
13.8
|
|
|
25.1
|
|
|
24.3
|
|
||||
Interest expense
|
5.8
|
|
|
3.1
|
|
|
9.5
|
|
|
5.5
|
|
||||
(Loss) earnings before income taxes and discontinued operations
|
(5.4
|
)
|
|
13.4
|
|
|
(15.5
|
)
|
|
23.1
|
|
||||
Provision for income taxes
|
1.4
|
|
|
0.1
|
|
|
3.8
|
|
|
4.8
|
|
||||
(Loss) earnings from continuing operations
|
$
|
(6.8
|
)
|
|
$
|
13.3
|
|
|
$
|
(19.3
|
)
|
|
$
|
18.3
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
(unaudited)
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
(unaudited)
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
(unaudited)
|
|
o
|
the pace and success of achieving the cost savings from our announced restructurings, acquisitions and operating expense reduction efforts;
|
o
|
fluctuations in our stock's market price;
|
o
|
fluctuations in operating results and cash flows;
|
o
|
our ability to prevent or identify quality issues in our products or to promptly remedy any such issues that are identified;
|
o
|
timing of OEM product launches;
|
o
|
customer purchasing behavior in light of anticipated mobile phone launches;
|
o
|
downward pressure on the average selling prices for our products;
|
o
|
risks associated with increasing our inventories in advance of anticipated orders by customers;
|
o
|
macroeconomic conditions, both in the United States and internationally;
|
o
|
foreign currency exchange rate fluctuations;
|
o
|
our ability to maintain and improve costs, quality and delivery for our customers;
|
o
|
our ability to qualify our products and facilities with customers;
|
o
|
risks and costs inherent in litigation;
|
o
|
our ability to obtain, enforce, defend or monetize our intellectual property rights;
|
o
|
increases in the costs of critical raw materials and components;
|
o
|
availability of raw materials and components;
|
o
|
anticipated growth for us and adoption of our technologies and solutions;
|
o
|
the success and rate of multi-microphone adoption and our “intelligent audio” solutions;
|
o
|
managing rapid declines in customer demand for certain of our products or solutions, delays in customer product introductions and other related customer challenges;
|
o
|
our ability to successfully consummate acquisitions and divestitures, and our ability to integrate acquisitions following consummation;
|
o
|
our obligations and risks under various transaction agreements that were executed as part of our spin-off from our former parent company, Dover Corporation;
|
o
|
managing new product ramps and introductions for our customers;
|
o
|
risks associated with international sales and operations;
|
o
|
retaining key personnel;
|
o
|
our dependence on a limited number of large customers;
|
o
|
our need to maintain and expand our existing relationships with leading OEMs and to establish relationships with new OEMs in order to maintain and increase our revenue;
|
o
|
business and competitive factors generally affecting the advanced micro-acoustic solutions and specialty components industry, our customers and our business;
|
o
|
fluctuations in demand by our telecom and other customers and telecom end markets;
|
o
|
our ability to enter new end user product markets;
|
o
|
increasing competition and new entrants in the market for our products;
|
o
|
our ability to develop new or enhanced products or technologies in a timely manner that achieve market acceptance;
|
o
|
our reliance on third parties to manufacture, assemble and test our products and sub-components; and
|
o
|
changes in tax laws or our ability to utilize our tax structure and any net operating losses.
|
•
|
MCE designs and manufactures innovative acoustic products, including microphones and audio processing technologies used in several applications that serve the handset, tablet and other consumer electronic markets. Locations include the corporate office in Itasca, Illinois; sales, support and engineering facilities in North America, Europe and Asia; and manufacturing facilities in Asia.
|
•
|
SC specializes in the design and manufacture of specialized electronic components used in medical and life science applications, as well as high-performance solutions and components used in communications infrastructure and a wide variety of other markets. SC’s transducer products are used principally in hearing aid applications within the commercial audiology markets, while its oscillator products predominantly serve the telecom infrastructure market and its capacitor products are used in applications including radio, radar, satellite, power supplies, transceivers and medical implants serving the defense, aerospace, telecommunication and life sciences markets. Locations include the corporate office in Itasca, Illinois; sales, support, engineering and manufacturing facilities are located in North America, Europe and Asia.
|
|
|
Three Months Ended June 30,
|
||||||
(in millions, except per share amounts)
|
|
2016
|
|
2015
|
||||
Revenues
|
|
$
|
190.3
|
|
|
$
|
192.8
|
|
|
|
|
|
|
||||
Gross profit
|
|
$
|
72.9
|
|
|
$
|
71.4
|
|
Non-GAAP gross profit
|
|
$
|
75.1
|
|
|
$
|
76.3
|
|
|
|
|
|
|
||||
Earnings from continuing operations before interest and income taxes
|
|
$
|
0.4
|
|
|
$
|
16.5
|
|
Adjusted earnings from continuing operations before interest and income taxes
|
|
$
|
15.4
|
|
|
$
|
31.2
|
|
|
|
|
|
|
||||
Provision for income taxes
|
|
$
|
1.4
|
|
|
$
|
0.1
|
|
Non-GAAP benefit from income taxes
|
|
$
|
(0.5
|
)
|
|
$
|
(0.2
|
)
|
|
|
|
|
|
||||
(Loss) earnings from continuing operations
|
|
$
|
(6.8
|
)
|
|
$
|
13.3
|
|
Non-GAAP net earnings
|
|
$
|
11.7
|
|
|
$
|
28.3
|
|
|
|
|
|
|
||||
(Loss) earnings per share from continuing operations - diluted
|
|
$
|
(0.08
|
)
|
|
$
|
0.16
|
|
Non-GAAP diluted earnings per share
|
|
$
|
0.13
|
|
|
$
|
0.33
|
|
|
|
Six Months Ended June 30,
|
||||||
(in millions, except per share amounts)
|
|
2016
|
|
2015
|
||||
Revenues
|
|
$
|
375.6
|
|
|
$
|
379.4
|
|
|
|
|
|
|
||||
Gross profit
|
|
$
|
139.7
|
|
|
$
|
133.9
|
|
Non-GAAP gross profit
|
|
$
|
144.9
|
|
|
$
|
142.8
|
|
|
|
|
|
|
||||
(Loss) earnings from continuing operations before interest and income taxes
|
|
$
|
(6.0
|
)
|
|
$
|
28.6
|
|
Adjusted earnings from continuing operations before interest and income taxes
|
|
$
|
26.1
|
|
|
$
|
54.5
|
|
|
|
|
|
|
||||
Provision for income taxes
|
|
$
|
3.8
|
|
|
$
|
4.8
|
|
Non-GAAP (benefit from) provision for income taxes
|
|
$
|
(1.0
|
)
|
|
$
|
3.6
|
|
|
|
|
|
|
||||
(Loss) earnings from continuing operations
|
|
$
|
(19.3
|
)
|
|
$
|
18.3
|
|
Non-GAAP net earnings
|
|
$
|
19.2
|
|
|
$
|
45.4
|
|
|
|
|
|
|
||||
(Loss) earnings per share from continuing operations - diluted
|
|
$
|
(0.22
|
)
|
|
$
|
0.22
|
|
Non-GAAP diluted earnings per share
|
|
$
|
0.21
|
|
|
$
|
0.53
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
||||||||||||
(in millions, except share and per share amounts)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Gross profit
|
|
$
|
72.9
|
|
|
$
|
71.4
|
|
|
$
|
139.7
|
|
|
$
|
133.9
|
|
Stock-based compensation expense
|
|
0.5
|
|
|
0.3
|
|
|
1.0
|
|
|
0.5
|
|
||||
Fixed asset and related inventory charges
|
|
0.3
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
||||
Restructuring charges
|
|
0.2
|
|
|
0.2
|
|
|
1.4
|
|
|
(0.5
|
)
|
||||
Production transfer costs
(2)
|
|
1.2
|
|
|
4.4
|
|
|
2.5
|
|
|
8.9
|
|
||||
Non-GAAP gross profit
|
|
$
|
75.1
|
|
|
$
|
76.3
|
|
|
$
|
144.9
|
|
|
$
|
142.8
|
|
|
|
|
|
|
|
|
|
|
||||||||
(Loss) earnings from continuing operations
|
|
$
|
(6.8
|
)
|
|
$
|
13.3
|
|
|
$
|
(19.3
|
)
|
|
$
|
18.3
|
|
Interest expense, net
|
|
5.8
|
|
|
3.1
|
|
|
9.5
|
|
|
5.5
|
|
||||
Provision for income taxes
|
|
1.4
|
|
|
0.1
|
|
|
3.8
|
|
|
4.8
|
|
||||
Earnings (loss) from continuing operations before interest and income taxes
|
|
0.4
|
|
|
16.5
|
|
|
(6.0
|
)
|
|
28.6
|
|
||||
Stock-based compensation expense
|
|
5.6
|
|
|
3.2
|
|
|
11.0
|
|
|
5.9
|
|
||||
Intangibles amortization expense
|
|
5.6
|
|
|
4.4
|
|
|
11.2
|
|
|
8.6
|
|
||||
Fixed asset and related inventory charges
|
|
0.4
|
|
|
—
|
|
|
0.5
|
|
|
—
|
|
||||
Restructuring charges
|
|
3.9
|
|
|
0.4
|
|
|
8.6
|
|
|
(0.3
|
)
|
||||
Production transfer costs
(2)
|
|
1.2
|
|
|
4.4
|
|
|
2.5
|
|
|
8.9
|
|
||||
Other (gain) loss
(3)
|
|
(1.7
|
)
|
|
2.3
|
|
|
(1.7
|
)
|
|
2.8
|
|
||||
Adjusted earnings from continuing operations before interest and income taxes
|
|
$
|
15.4
|
|
|
$
|
31.2
|
|
|
$
|
26.1
|
|
|
$
|
54.5
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest expense, net
|
|
$
|
5.8
|
|
|
$
|
3.1
|
|
|
$
|
9.5
|
|
|
$
|
5.5
|
|
Interest expense, net non-GAAP reconciling adjustments
(4)
|
|
1.6
|
|
|
—
|
|
|
1.6
|
|
|
—
|
|
||||
Non-GAAP interest expense
|
|
$
|
4.2
|
|
|
$
|
3.1
|
|
|
$
|
7.9
|
|
|
$
|
5.5
|
|
|
|
|
|
|
|
|
|
|
||||||||
Provision for income taxes
|
|
$
|
1.4
|
|
|
$
|
0.1
|
|
|
$
|
3.8
|
|
|
$
|
4.8
|
|
Income tax effects of non-GAAP reconciling adjustments
|
|
(1.9
|
)
|
|
(0.3
|
)
|
|
(4.8
|
)
|
|
(1.2
|
)
|
||||
Non-GAAP (benefit from) provision for income taxes
|
|
$
|
(0.5
|
)
|
|
$
|
(0.2
|
)
|
|
$
|
(1.0
|
)
|
|
$
|
3.6
|
|
|
|
|
|
|
|
|
|
|
||||||||
(Loss) earnings from continuing operations
|
|
$
|
(6.8
|
)
|
|
$
|
13.3
|
|
|
$
|
(19.3
|
)
|
|
$
|
18.3
|
|
Non-GAAP reconciling adjustments
(5)
|
|
15.0
|
|
|
14.7
|
|
|
32.1
|
|
|
25.9
|
|
||||
Interest expense, net non-GAAP reconciling adjustments
(4)
|
|
1.6
|
|
|
—
|
|
|
1.6
|
|
|
—
|
|
||||
Income tax effects of non-GAAP reconciling adjustments
|
|
(1.9
|
)
|
|
(0.3
|
)
|
|
(4.8
|
)
|
|
(1.2
|
)
|
||||
Non-GAAP net earnings
|
|
$
|
11.7
|
|
|
$
|
28.3
|
|
|
$
|
19.2
|
|
|
$
|
45.4
|
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted (loss) earnings per share from continuing operations
|
|
$
|
(0.08
|
)
|
|
$
|
0.16
|
|
|
$
|
(0.22
|
)
|
|
$
|
0.22
|
|
Earnings per share non-GAAP reconciling adjustment
|
|
$
|
0.21
|
|
|
$
|
0.17
|
|
|
$
|
0.43
|
|
|
$
|
0.31
|
|
Non-GAAP diluted earnings per share
|
|
$
|
0.13
|
|
|
$
|
0.33
|
|
|
$
|
0.21
|
|
|
$
|
0.53
|
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted average shares outstanding
|
|
88,652,453
|
|
|
85,292,561
|
|
|
88,594,597
|
|
|
85,291,578
|
|
||||
Non-GAAP adjustment
(6)
|
|
2,394,692
|
|
|
708,747
|
|
|
1,921,514
|
|
|
633,464
|
|
||||
Non-GAAP diluted average shares outstanding
(6)
|
|
91,047,145
|
|
|
86,001,308
|
|
|
90,516,111
|
|
|
85,925,042
|
|
|
|
Three Months Ended June 30,
|
||||||||||
(in millions)
|
|
2016
|
|
Percent of Revenues
|
|
2015
|
|
Percent of Revenues
|
||||
Revenues
|
|
$
|
82.2
|
|
|
|
|
$
|
84.2
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating (loss) earnings
|
|
$
|
(6.1
|
)
|
|
NM
(1)
|
|
$
|
13.8
|
|
|
16.4%
|
Other income, net
|
|
(0.2
|
)
|
|
|
|
(0.2
|
)
|
|
|
||
(Loss) earnings before interest, income taxes and discontinued operations
|
|
$
|
(5.9
|
)
|
|
NM
(1)
|
|
$
|
14.0
|
|
|
16.6%
|
Stock-based compensation expense
|
|
2.1
|
|
|
|
|
0.4
|
|
|
|
||
Intangibles amortization expense
|
|
2.8
|
|
|
|
|
1.6
|
|
|
|
||
Fixed asset and related inventory charges
|
|
0.4
|
|
|
|
|
—
|
|
|
|
||
Restructuring charges
|
|
3.2
|
|
|
|
|
(0.1
|
)
|
|
|
||
Production transfer costs
(2)
|
|
—
|
|
|
|
|
0.8
|
|
|
|
||
Adjusted earnings before interest, income taxes and discontinued operations
|
|
$
|
2.6
|
|
|
3.2%
|
|
$
|
16.7
|
|
|
19.8%
|
|
|
|
|
|
|
|
|
|
||||
(1)
NM- Not meaningful
|
|
|
|
|
|
|
|
|
||||
(2)
Production transfer costs represent duplicate costs incurred to migrate manufacturing to new or existing facilities in Asia. These amounts are included in (loss) earnings before interest, income taxes and discontinued operations for each period presented.
|
|
|
Three Months Ended June 30,
|
||||||||||
(in millions)
|
|
2016
|
|
Percent of Revenues
|
|
2015
|
|
Percent of Revenues
|
||||
Revenues
|
|
$
|
108.1
|
|
|
|
|
$
|
108.6
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating earnings
|
|
$
|
17.6
|
|
|
16.3%
|
|
$
|
16.1
|
|
|
14.8%
|
Other income, net
|
|
(0.4
|
)
|
|
|
|
(0.2
|
)
|
|
|
||
Earnings before interest and income taxes
|
|
$
|
18.0
|
|
|
16.7%
|
|
$
|
16.3
|
|
|
15.0%
|
Stock-based compensation expense
|
|
0.6
|
|
|
|
|
0.7
|
|
|
|
||
Intangibles amortization expense
|
|
2.8
|
|
|
|
|
2.8
|
|
|
|
||
Restructuring charges
|
|
0.8
|
|
|
|
|
0.5
|
|
|
|
||
Production transfer costs
(1)
|
|
1.2
|
|
|
|
|
3.6
|
|
|
|
||
Adjusted earnings before interest and income taxes
|
|
$
|
23.4
|
|
|
21.6%
|
|
$
|
23.9
|
|
|
22.0%
|
|
||||||||||||
(1)
Production transfer costs represent duplicate costs incurred to migrate manufacturing to new or existing facilities in Asia. These amounts are included in earnings before interest and income taxes for each period presented.
|
|
|
Six Months Ended June 30,
|
||||||||||
(in millions)
|
|
2016
|
|
Percent of Revenues
|
|
2015
|
|
Percent of Revenues
|
||||
Revenues
|
|
$
|
165.5
|
|
|
|
|
$
|
166.9
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating (loss) earnings
|
|
$
|
(14.8
|
)
|
|
NM
(1)
|
|
$
|
23.8
|
|
|
14.3%
|
Other income, net
|
|
(0.3
|
)
|
|
|
|
(0.1
|
)
|
|
|
||
(Loss) earnings before interest, income taxes and discontinued operations
|
|
$
|
(14.5
|
)
|
|
NM
(1)
|
|
$
|
23.9
|
|
|
14.3%
|
Stock-based compensation expense
|
|
4.0
|
|
|
|
|
0.8
|
|
|
|
||
Intangibles amortization expense
|
|
5.6
|
|
|
|
|
3.0
|
|
|
|
||
Fixed asset and related inventory charges
|
|
0.5
|
|
|
|
|
—
|
|
|
|
||
Restructuring charges
|
|
6.2
|
|
|
|
|
(0.1
|
)
|
|
|
||
Production transfer costs
(2)
|
|
0.1
|
|
|
|
|
2.3
|
|
|
|
||
Adjusted earnings before interest, income taxes and discontinued operations
|
|
$
|
1.9
|
|
|
1.1%
|
|
$
|
29.9
|
|
|
17.9%
|
|
|
|
|
|
|
|
|
|
||||
(1)
NM- Not meaningful
|
|
|
|
|
|
|
|
|
||||
(2)
Production transfer costs represent duplicate costs incurred to migrate manufacturing to new or existing facilities in Asia. These amounts are included in (loss) earnings before interest, income taxes and discontinued operations for each period presented.
|
|
|
Six Months Ended June 30,
|
||||||||||
(in millions)
|
|
2016
|
|
Percent of Revenues
|
|
2015
|
|
Percent of Revenues
|
||||
Revenues
|
|
$
|
210.1
|
|
|
|
|
$
|
212.5
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating earnings
|
|
$
|
33.0
|
|
|
15.7%
|
|
$
|
28.9
|
|
|
13.6%
|
Other income, net
|
|
(0.6
|
)
|
|
|
|
(0.1
|
)
|
|
|
||
Earnings before interest and income taxes
|
|
$
|
33.6
|
|
|
16.0%
|
|
$
|
29.0
|
|
|
13.6%
|
Stock-based compensation expense
|
|
1.4
|
|
|
|
|
1.3
|
|
|
|
||
Intangibles amortization expense
|
|
5.6
|
|
|
|
|
5.6
|
|
|
|
||
Restructuring charges
|
|
2.1
|
|
|
|
|
(0.2
|
)
|
|
|
||
Production transfer costs
(1)
|
|
2.4
|
|
|
|
|
6.6
|
|
|
|
||
Other
|
|
0.1
|
|
|
|
|
—
|
|
|
|
||
Adjusted earnings before interest and income taxes
|
|
$
|
45.2
|
|
|
21.5%
|
|
$
|
42.3
|
|
|
19.9%
|
|
||||||||||||
(1)
Production transfer costs represent duplicate costs incurred to migrate manufacturing to new or existing facilities in Asia. These amounts are included in earnings before interest and income taxes for each period presented.
|
|
|
Six Months Ended June 30,
|
||||||
(in millions)
|
|
2016
|
|
2015
|
||||
Net cash flows provided by (used in):
|
|
|
|
|
||||
Operating activities
|
|
$
|
10.2
|
|
|
$
|
24.3
|
|
Investing activities
|
|
(17.5
|
)
|
|
(39.7
|
)
|
||
Financing activities
|
|
(8.6
|
)
|
|
(2.5
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
|
(0.2
|
)
|
|
(0.3
|
)
|
||
Net decrease in cash and cash equivalents
|
|
$
|
(16.1
|
)
|
|
$
|
(18.2
|
)
|
(in millions)
|
|
June 30, 2016
|
|
December 31, 2015
|
||||
3.25% Convertible Senior Notes
|
|
$
|
131.8
|
|
|
$
|
—
|
|
Term loan and revolving credit facility
|
|
263.0
|
|
|
428.8
|
|
||
Total
|
|
394.8
|
|
|
428.8
|
|
||
Less: current maturities
|
|
2.6
|
|
|
29.6
|
|
||
Total long-term debt
|
|
$
|
392.2
|
|
|
$
|
399.2
|
|
3.1
|
Certificate of Amendment of Amended and Restated Certificate of Incorporation of Knowles Corporation, incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on May 4, 2016.
|
|
|
3.2
|
Amendment No. 1 to Amended and Restated By-Laws of Knowles Corporation, incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed with the Commission on May 4, 2016.
|
|
|
4.1
|
Indenture between Knowles Corporation and U.S. Bank National Association, as trustee, dated May 4, 2016 filed as Exhibit 4.1 to Registrant’s Current Report on Form 8-K filed with the Commission on May 4, 2016 and incorporated by reference herein.
|
|
|
4.2
|
Form of 3.25% Convertible Senior Note due 2021 (included in Exhibit 4.1) filed as Exhibit 4.2 to Registrant’s Current Report on Form 8-K filed with the Commission on May 4, 2016 and incorporated by reference herein.
|
|
|
10.1
|
Purchase Agreement between Knowles Corporation and J.P. Morgan Securities LLC, as representative of the initial purchasers named therein, dated April 28, 2016 filed as Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed with the Commission on May 4, 2016 and incorporated by reference herein.
|
|
|
10.2
|
Convertible Note Hedge Confirmation between Knowles Corporation and HSBC Bank USA, National Association, dated April 28, 2016 filed as Exhibit 10.2 to Registrant’s Current Report on Form 8-K filed with the Commission on May 4, 2016 and incorporated by reference herein.
|
|
|
10.3
|
Warrant Confirmation between Knowles Corporation and HSBC Bank USA, National Association, dated April 28, 2016 filed as Exhibit 10.3 to Registrant’s Current Report on Form 8-K filed with the Commission on May 4, 2016 and incorporated by reference herein.
|
|
|
10.4
|
Convertible Note Hedge Confirmation between Knowles Corporation and JPMorgan Chase Bank, National Association, London Branch, dated April 28, 2016 filed as Exhibit 10.4 to Registrant’s Current Report on Form 8-K filed with the Commission on May 4, 2016 and incorporated by reference herein.
|
|
|
10.5
|
Warrant Confirmation between Knowles Corporation and JPMorgan Chase Bank, National Association, London Branch, dated April 28, 2016 filed as Exhibit 10.5 to Registrant’s Current Report on Form 8-K filed with the Commission on May 4, 2016 and incorporated by reference herein.
|
|
|
10.6
|
Convertible Note Hedge Confirmation between Knowles Corporation and Wells Fargo Bank, National Association, dated April 28, 2016 filed as Exhibit 10.6 to Registrant’s Current Report on Form 8-K filed with the Commission on May 4, 2016 and incorporated by reference herein.
|
|
|
10.7
|
Warrant Confirmation between Knowles Corporation and Wells Fargo Bank, National Association, dated April 28, 2016 filed as Exhibit 10.7 to Registrant’s Current Report on Form 8-K filed with the Commission on May 4, 2016 and incorporated by reference herein.
|
|
|
10.8
|
Convertible Note Hedge Confirmation between Knowles Corporation and HSBC Bank USA, National Association, dated May 11, 2016 filed as Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed with the Commission on May 13, 2016 and incorporated by reference herein.
|
|
|
10.9
|
Warrant Confirmation between Knowles Corporation and HSBC Bank USA, National Association, dated May 11, 2016 filed as Exhibit 10.2 to Registrant’s Current Report on Form 8-K filed with the Commission on May 13, 2016 and incorporated by reference herein.
|
|
|
10.1
|
Convertible Note Hedge Confirmation between Knowles Corporation and JPMorgan Chase Bank, National Association, London Branch, dated May 11, 2016 filed as Exhibit 10.3 to Registrant’s Current Report on Form 8-K filed with the Commission on May 13, 2016 and incorporated by reference herein.
|
|
|
10.11
|
Warrant Confirmation between Knowles Corporation and JPMorgan Chase Bank, National Association, London Branch, dated May 11, 2016 filed as Exhibit 10.4 to Registrant’s Current Report on Form 8-K filed with the Commission on May 13, 2016 and incorporated by reference herein.
|
|
|
10.12
|
Convertible Note Hedge Confirmation between Knowles Corporation and Wells Fargo Bank, National Association, dated May 11, 2016 filed as Exhibit 10.5 to Registrant’s Current Report on Form 8-K filed with the Commission on May 13, 2016 and incorporated by reference herein.
|
|
|
10.13
|
Warrant Confirmation between Knowles Corporation and Wells Fargo Bank, National Association, dated May 11, 2016 filed as Exhibit 10.6 to Registrant’s Current Report on Form 8-K filed with the Commission on May 13, 2016 and incorporated by reference herein.
|
|
|
10.14
|
Knowles Corporation 2016 Equity and Cash Incentive Plan, incorporated by reference to Appendix B to the Registrant’s Definitive Proxy Statement on Schedule 14A filed with the Commission on March 15, 2016.
|
|
|
10.15
|
Form of Restricted Stock Unit Award Agreement.
|
|
|
10.16
|
Form of Stock Option Award Agreement.
|
|
|
10.17
|
Addendum to Stock Option Agreement and Restricted Stock Award Agreement for Non-U.S.
|
|
|
31.1
|
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
31.2
|
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
32.1
|
Joint Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
101
|
The following financial information from Knowles Corporation's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2016 formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Earnings (Unaudited) for the three and six months ended June 30, 2016 and 2015, (ii) Consolidated Statements of Comprehensive Earnings (Unaudited) for the three and six months ended June 30, 2016 and 2015, (iii) Consolidated Balance Sheets as of June 30, 2016 (Unaudited) and December 31, 2015, (iv) Consolidated Statement of Stockholders’ Equity (Unaudited) for the six months ended June 30, 2016, (v) Consolidated Statements of Cash Flows (Unaudited) for the six months ended June 30, 2016 and 2015, and (vi) the Notes to the Consolidated Financial Statements (Unaudited)
|
|
|
KNOWLES CORPORATION
|
|
|
|
Date:
|
August 9, 2016
|
/s/ John S. Anderson
|
|
|
John S. Anderson
|
|
|
Senior Vice President & Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
3.1
|
Certificate of Amendment of Amended and Restated Certificate of Incorporation of Knowles Corporation, incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on May 4, 2016.
|
|
|
3.2
|
Amendment No. 1 to Amended and Restated By-Laws of Knowles Corporation, incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed with the Commission on May 4, 2016.
|
|
|
4.1
|
Indenture between Knowles Corporation and U.S. Bank National Association, as trustee, dated May 4, 2016 filed as Exhibit 4.1 to Registrant’s Current Report on Form 8-K filed with the Commission on May 4, 2016 and incorporated by reference herein.
|
|
|
4.2
|
Form of 3.25% Convertible Senior Note due 2021 (included in Exhibit 4.1) filed as Exhibit 4.2 to Registrant’s Current Report on Form 8-K filed with the Commission on May 4, 2016 and incorporated by reference herein.
|
|
|
10.1
|
Purchase Agreement between Knowles Corporation and J.P. Morgan Securities LLC, as representative of the initial purchasers named therein, dated April 28, 2016 filed as Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed with the Commission on May 4, 2016 and incorporated by reference herein.
|
|
|
10.2
|
Convertible Note Hedge Confirmation between Knowles Corporation and HSBC Bank USA, National Association, dated April 28, 2016 filed as Exhibit 10.2 to Registrant’s Current Report on Form 8-K filed with the Commission on May 4, 2016 and incorporated by reference herein.
|
|
|
10.3
|
Warrant Confirmation between Knowles Corporation and HSBC Bank USA, National Association, dated April 28, 2016 filed as Exhibit 10.3 to Registrant’s Current Report on Form 8-K filed with the Commission on May 4, 2016 and incorporated by reference herein.
|
|
|
10.4
|
Convertible Note Hedge Confirmation between Knowles Corporation and JPMorgan Chase Bank, National Association, London Branch, dated April 28, 2016 filed as Exhibit 10.4 to Registrant’s Current Report on Form 8-K filed with the Commission on May 4, 2016 and incorporated by reference herein.
|
|
|
10.5
|
Warrant Confirmation between Knowles Corporation and JPMorgan Chase Bank, National Association, London Branch, dated April 28, 2016 filed as Exhibit 10.5 to Registrant’s Current Report on Form 8-K filed with the Commission on May 4, 2016 and incorporated by reference herein.
|
|
|
10.6
|
Convertible Note Hedge Confirmation between Knowles Corporation and Wells Fargo Bank, National Association, dated April 28, 2016 filed as Exhibit 10.6 to Registrant’s Current Report on Form 8-K filed with the Commission on May 4, 2016 and incorporated by reference herein.
|
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10.7
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Warrant Confirmation between Knowles Corporation and Wells Fargo Bank, National Association, dated April 28, 2016 filed as Exhibit 10.7 to Registrant’s Current Report on Form 8-K filed with the Commission on May 4, 2016 and incorporated by reference herein.
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10.8
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Convertible Note Hedge Confirmation between Knowles Corporation and HSBC Bank USA, National Association, dated May 11, 2016 filed as Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed with the Commission on May 13, 2016 and incorporated by reference herein.
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10.9
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Warrant Confirmation between Knowles Corporation and HSBC Bank USA, National Association, dated May 11, 2016 filed as Exhibit 10.2 to Registrant’s Current Report on Form 8-K filed with the Commission on May 13, 2016 and incorporated by reference herein.
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10.10
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Convertible Note Hedge Confirmation between Knowles Corporation and JPMorgan Chase Bank, National Association, London Branch, dated May 11, 2016 filed as Exhibit 10.3 to Registrant’s Current Report on Form 8-K filed with the Commission on May 13, 2016 and incorporated by reference herein.
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10.11
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Warrant Confirmation between Knowles Corporation and JPMorgan Chase Bank, National Association, London Branch, dated May 11, 2016 filed as Exhibit 10.4 to Registrant’s Current Report on Form 8-K filed with the Commission on May 13, 2016 and incorporated by reference herein.
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10.12
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Convertible Note Hedge Confirmation between Knowles Corporation and Wells Fargo Bank, National Association, dated May 11, 2016 filed as Exhibit 10.5 to Registrant’s Current Report on Form 8-K filed with the Commission on May 13, 2016 and incorporated by reference herein.
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10.13
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Warrant Confirmation between Knowles Corporation and Wells Fargo Bank, National Association, dated May 11, 2016 filed as Exhibit 10.6 to Registrant’s Current Report on Form 8-K filed with the Commission on May 13, 2016 and incorporated by reference herein.
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10.14
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Knowles Corporation 2016 Equity and Cash Incentive Plan, incorporated by reference to Appendix B to the Registrant’s Definitive Proxy Statement on Schedule 14A filed with the Commission on March 15, 2016.
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10.15
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Form of Restricted Stock Unit Award Agreement.
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10.16
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Form of Stock Option Award Agreement.
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10.17
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Addendum to Stock Option Agreement and Restricted Stock Award Agreement for Non-U.S.
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31.1
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Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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31.2
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Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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32.1
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Joint Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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101
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The following financial information from Knowles Corporation's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2016 formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Earnings (Unaudited) for the three and six months ended June 30, 2016 and 2015, (ii) Consolidated Statements of Comprehensive Earnings (Unaudited) for the three and six months ended June 30, 2016 and 2015, (iii) Consolidated Balance Sheets as of June 30, 2016 (Unaudited) and December 31, 2015, (iv) Consolidated Statement of Stockholders’ Equity (Unaudited) for the six months ended June 30, 2016, (v) Consolidated Statements of Cash Flows (Unaudited) for the six months ended June 30, 2016 and 2015, and (vi) the Notes to the Consolidated Financial Statements (Unaudited)
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Knowles Corporation;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ JEFFREY S. NIEW
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Name: Jeffrey S. Niew
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Title: President and Chief Executive Officer
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(Principal Executive Officer)
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1.
|
I have reviewed this Quarterly Report on Form 10-Q of Knowles Corporation;
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2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ JOHN S. ANDERSON
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Name: John S. Anderson
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Title: Senior Vice President & Chief Financial Officer
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|
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(Principal Financial Officer)
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|
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/s/ JEFFREY S. NIEW
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|
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Name: Jeffrey S. Niew
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|
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Title: President and Chief Executive Officer
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|
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(Principal Executive Officer)
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Date: August 9, 2016
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/s/ JOHN S. ANDERSON
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Name: John S. Anderson
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Title: Senior Vice President & Chief Financial Officer
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(Principal Financial Officer)
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Date: August 9, 2016
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