KN 8-K
Knowles Corp (KN)
8-K
2024-12-30
For: 2024-12-27
View Original
Added on
April 07, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 27, 2024
(Exact name of registrant as specified in its charter)
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||
(Address of Principal Executive Offices)
(Zip Code)
Registrant's telephone number, including area code: (630 ) 250-5100
(Former Name or Former Address, if Changed since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
| Item 2.01 Completion of Acquisition or Disposition of Assets. | |||||
| On December 27, 2024, Knowles Corporation, a Delaware corporation (the “Company”, and, collectively with certain of its wholly owned subsidiaries, “Sellers”), completed the previously announced sale of certain assets and liabilities of the Company’s consumer MEMS microphones business (the “Business”) and the transfer of Business employees to Syntiant Corp., a Delaware corporation (“Buyer”), in accordance with the Purchase and Sale Agreement, dated as of September 18, 2024 (the “Purchase Agreement”, and such transaction, the “Transaction”). The Company and Buyer also entered into certain related transaction agreements at the closing of the Transaction (the “Closing”), including three commercial agreements, a transition services agreement, certain intellectual property license agreements, subleases and other customary agreements. Pursuant to the terms and conditions of the Purchase Agreement, at the Closing, Buyer (i) made a cash payment to Sellers of $70,000,000, as adjusted for agreed deductions for indebtedness, working capital and inventory shortfall, which amounts remain subject to a customary post-Closing adjustment, and (ii) issued $80,000,000 in Buyer Series D-2 preferred stock (the “Stock Consideration”), par value $0.0001, to Knowles Electronics, LLC (“KELLC”, a Seller and wholly-owned subsidiary of the Company). The Company provided, $6,432,803 in financing (which financing is junior to Buyer’s debt financing), which was utilized to fund Buyer’s obligation to have $40,000,000 of cash on hand following the Closing. The Company will also share in certain separation costs pursuant to a credit for up to $13.5 million which Buyer may apply to specified separation costs post-Closing. In connection with the issuance of the Stock Consideration, KELLC will have (a) the right to designate an individual to serve as a board member on the Buyer’s Board of Directors, or, (b) if KELLC is not represented on the Buyer’s Board of Directors, the right to appoint a representative to attend all meetings of the Buyer’s Board of Directors and of any committee of the Board in a nonvoting observer capacity, in each case, which rights shall be maintained for so long as the Company and its affiliates together hold at least 4,167,326 shares of Series D Preferred Stock (as adjusted for stock splits, stock dividends, combinations, conversions, recapitalizations or the like) (such rights collectively, the “Knowles Board Rights”). Other than the Transaction and the Knowles Board Rights, there are no material relationships between Buyer, the Company, any of the Company’s affiliates, or any director or officer of the Company or any associate of any such director or officer. The material terms of the Purchase Agreement and of the Transaction previously reported under the heading “Entry into a Material Definitive Agreement” in Item 1.01 of the Current Report on Form 8-K that was filed by the Company with the Securities and Exchange Commission on September 18, 2024 (the “Prior Report”) are incorporated herein by reference. The description of the Purchase Agreement and the Transaction included or incorporated by reference in this Report is only a summary and is qualified in its entirety by reference to the complete text of the Purchase Agreement, a copy of which was filed as Exhibit 2.1 to Prior Report, and is incorporated into this Item 2.01 by reference. | |||||
| Item 7.01 Regulation FD Disclosure. | ||||||||
The Company issued a press release on December 30, 2024 announcing the completion of the Transaction. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. The information furnished pursuant to this Item 7.01, including the exhibits furnished herewith as Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. The furnishing of Exhibit 99.1 attached hereto is not intended to constitute a determination by the Company that the information is material or that the dissemination of the information is required by Regulation FD. | ||||||||
| Item 9.01 Financial Statements and Exhibits. | ||||||||
| (b) Pro Forma Financial Information. | ||||||||
Attached as Exhibit 99.2 hereto and incorporated by reference are the unaudited condensed pro forma consolidated balance sheet, reflecting a disposition of the CMM segment as if it occurred on September 30, 2024, and the unaudited condensed pro forma consolidated statements of earnings, giving effect to the disposition as if it occurred on January 1, 2021 (the beginning of the earliest period presented). The pro forma adjustments, described in the related notes, are based on the best available information and certain assumptions that Company management believes are reasonable. The unaudited condensed pro forma consolidated financial statements are provided for illustrative purposes only and are not necessarily indicative of the operating results or financial position that would have occurred had the disposition of the CMM segment closed on September 30, 2024 for the unaudited condensed pro forma consolidated balance sheet or on January 1, 2021 for the unaudited condensed pro forma consolidated statement of earnings. For example, these financial statements do not reflect any potential earnings or other impacts from the use of the proceeds from the disposition or cost reductions of previously allocated corporate costs and potential subsequent restructuring charges. Readers should not rely on the unaudited condensed pro forma consolidated financial statements as being indicative of the historical operating results that Knowles would have achieved or any future operating results or financial position that it will experience after the Transaction closes. | ||||||||
| (d) Exhibits. | ||||||||
| The following exhibits are furnished as part of this report: | ||||||||
| Exhibit Number | Description | |||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| KNOWLES CORPORATION | |||||
Date: December 30, 2024 | By: /s/ Robert J. Perna | ||||
| Robert J. Perna | |||||
| Senior Vice President, General Counsel & Secretary | |||||
1 Knowles Corporation Completes the Sale of its Consumer MEMS Microphone Business to Syntiant ITASCA, Ill., December 30, 2024 - Knowles Corporation (NYSE: KN) ("Knowles" or the "Company"), a leading manufacturer of specialty electronic components for innovative technologies, including capacitors, radio frequency ("RF") filters, advanced medtech microphones, and balanced armature speakers, announced today that the sale of its Consumer MEMS Microphones business to Syntiant Corp ("Syntiant") has closed. "I am pleased to complete the transaction with Syntiant and I would like to thank the Consumer MEMS Microphone teams around the world for their dedication and commitment to the business and to Knowles’ customers throughout the years, " said Knowles Chief Executive Officer Jeffrey Niew. "This transaction represents another significant milestone in Knowles' transformation into a premier industrial technology company focusing on higher value markets where we can continue to drive value through our product design, process technology and our ability to customize solutions for customers at scale." The closing represents the final step in Knowles evaluation of strategic alternatives for the business, which was first announced September 18, 2023. Jefferies LLC served as exclusive financial advisor to Knowles and Sidley Austin LLP served as legal counsel. About Knowles Knowles is a leading manufacturer of specialty electronic components. We design parts that perform unique, critical functions for innovative technologies. Through extreme reliability, custom engineering, and scalable manufacturing, we enable businesses to succeed in the most demanding applications across MedTech, Defense, and Industrial markets. Our high-performance capacitors, RF/Microwave filters, advanced medtech microphones, balanced armatures, and miniaturization products enable and enhance the performance of technologies with the power to change, improve, and save lives. Founded in 1946 and headquartered in Itasca, Illinois, Knowles has grown into a global organization with employees spanning 10 countries. For more information, please visit knowles.com. About Syntiant Founded in 2017 and headquartered in Irvine, Calif., Syntiant Corp. is a leader in delivering hardware and software solutions for edge AI deployment. The company’s purpose-built silicon and hardware-agnostic models are being deployed globally to power edge AI speech, audio, sensor and vision applications across a wide range of consumer and industrial use cases, from earbuds to automobiles. The company is backed by several of the world’s leading strategic and financial investors including Intel Capital, Microsoft’s M12, Applied Ventures, Bosch Ventures, the Amazon Alexa Fund, and Atlantic Bridge Capital. More information on the company can be found by visiting www.syntiant.com or by following Syntiant on Twitter @Syntiantcorp or LinkedIn. Financial Contact: Sarah Cook Knowles Investor Relations Email: [email protected]
2
Exhibit 99.2
On December 27, 2024, the Company completed the previously announced disposition of the Consumer MEMS Microphones ("CMM") segment to Syntiant Corp. for $150.0 million in total consideration, consisting of $70.0 million in cash and $80.0 million in series D-2 preferred stock of Syntiant. The Company will also share in certain separation costs pursuant to a credit for up to $13.5 million, which the buyer may apply to specified separation costs post-closing. In addition, the Company provided approximately $6.4 million in financing to Syntiant in connection with this transaction.
The following unaudited condensed pro forma consolidated balance sheet and consolidated statements of earnings ("financial statements") are based upon the historical financial statements of Knowles Corporation, ("Knowles") adjusted to reflect the disposition of the CMM segment. The following unaudited condensed pro forma consolidated financial statements of Knowles should be read in conjunction with the related notes and with the historical consolidated financial statements of Knowles and the related notes included in previous filings with the Securities and Exchange Commission. The unaudited condensed pro forma consolidated balance sheet reflects the disposition of the CMM segment as if it occurred on September 30, 2024 while the unaudited condensed pro forma consolidated statements of earnings give effect to the disposition as if it occurred on January 1, 2021, the beginning of the earliest period presented. The pro forma adjustments, described in the related notes, are based on the best available information and certain assumptions that Knowles management believes are reasonable.
The unaudited condensed pro forma consolidated financial statements are provided for illustrative purposes only and are not necessarily indicative of the operating results or financial position that would have occurred had the disposition of the CMM segment closed on September 30, 2024 for the unaudited condensed pro forma consolidated balance sheet or on January 1, 2021 for the unaudited condensed pro forma consolidated statement of earnings. For example, these financial statements do not reflect any potential earnings or other impacts from the use of the proceeds from the disposition or cost reductions of previously allocated corporate costs and potential subsequent restructuring charges. Readers should not rely on the unaudited condensed pro forma consolidated financial statements as being indicative of the historical operating results that Knowles would have achieved or any future operating results or financial position that it will experience after the transaction closes.
1
KNOWLES CORPORATION
UNAUDITED CONDENSED PRO FORMA CONSOLIDATED BALANCE SHEET
(in millions, except share and per share amounts)
(unaudited)
| September 30, 2024 | |||||||||||||||||
| Historical | Consumer MEMS Microphones Segment (a) | Pro Forma | |||||||||||||||
| Current assets: | |||||||||||||||||
| Cash and cash equivalents | $ | 92.6 | $ | 31.3 | $ | 123.9 | |||||||||||
Receivables, net of allowances of $0.1 | 105.7 | — | 105.7 | ||||||||||||||
| Inventories | 124.9 | — | 124.9 | ||||||||||||||
| Prepaid and other current assets | 9.8 | — | 9.8 | ||||||||||||||
| Current assets of discontinued operations | 103.0 | (103.0) | — | ||||||||||||||
| Total current assets | 436.0 | (71.7) | 364.3 | ||||||||||||||
| Property, plant, and equipment, net | 134.4 | — | 134.4 | ||||||||||||||
| Goodwill | 270.4 | — | 270.4 | ||||||||||||||
| Intangible assets, net | 162.3 | — | 162.3 | ||||||||||||||
| Operating lease right-of-use assets | 7.8 | — | 7.8 | ||||||||||||||
| Other assets and deferred charges | 115.6 | 86.4 | 202.0 | ||||||||||||||
| Non-current assets of discontinued operations | 44.8 | (44.8) | — | ||||||||||||||
| Total assets | $ | 1,171.3 | $ | (30.1) | $ | 1,141.2 | |||||||||||
| Current liabilities: | |||||||||||||||||
| Current maturities of long-term debt | $ | 49.5 | $ | — | $ | 49.5 | |||||||||||
| Accounts payable | 34.2 | — | 34.2 | ||||||||||||||
| Accrued compensation and employee benefits | 27.0 | — | 27.0 | ||||||||||||||
| Operating lease liabilities | 2.3 | — | 2.3 | ||||||||||||||
| Other accrued expenses | 18.5 | 13.5 | 32.0 | ||||||||||||||
| Federal and other taxes on income | 16.4 | — | 16.4 | ||||||||||||||
| Current liabilities of discontinued operations | 38.0 | (38.0) | — | ||||||||||||||
| Total current liabilities | 185.9 | (24.5) | 161.4 | ||||||||||||||
| Long-term debt | 175.5 | — | 175.5 | ||||||||||||||
| Deferred income taxes | 0.8 | — | 0.8 | ||||||||||||||
| Long-term operating lease liabilities | 5.5 | — | 5.5 | ||||||||||||||
| Other liabilities | 24.0 | — | 24.0 | ||||||||||||||
| Non-current liabilities of discontinued operations | 2.2 | (2.2) | — | ||||||||||||||
| Commitments and contingencies | |||||||||||||||||
| 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; 98,271,587 and 88,380,502 shares issued and outstanding, respectively | 1.0 | — | 1.0 | ||||||||||||||
Treasury stock - at cost; 9,891,085 shares | (180.8) | — | (180.8) | ||||||||||||||
| Additional paid-in capital | 1,707.0 | — | 1,707.0 | ||||||||||||||
| Accumulated deficit | (632.1) | — | (632.1) | ||||||||||||||
| Accumulated other comprehensive loss | (117.7) | (3.4) | (121.1) | ||||||||||||||
| Total stockholders' equity | 777.4 | (3.4) | 774.0 | ||||||||||||||
| Total liabilities and stockholders' equity | $ | 1,171.3 | $ | (30.1) | $ | 1,141.2 | |||||||||||
See Notes to Unaudited Condensed Pro Forma Consolidated Financial Statements
2
KNOWLES CORPORATION
UNAUDITED CONDENSED PRO FORMA CONSOLIDATED STATEMENTS OF EARNINGS
(in millions, except per share amounts)
(unaudited)
| Nine Months Ended September 30, 2024 | |||||||||||||||||
| Historical | Consumer MEMS Microphones Segment (b) | Pro Forma | |||||||||||||||
| Revenues | $ | 411.0 | $ | — | $ | 411.0 | |||||||||||
| Cost of goods sold | 235.7 | — | 235.7 | ||||||||||||||
| Restructuring charges - cost of goods sold | 1.4 | — | 1.4 | ||||||||||||||
| Gross profit | 173.9 | — | 173.9 | ||||||||||||||
| Research and development expenses | 29.2 | — | 29.2 | ||||||||||||||
| Selling and administrative expenses | 106.8 | — | 106.8 | ||||||||||||||
| Restructuring charges | 1.5 | — | 1.5 | ||||||||||||||
| Operating expenses | 137.5 | — | 137.5 | ||||||||||||||
| Operating earnings | 36.4 | — | 36.4 | ||||||||||||||
| Interest expense, net | 12.9 | — | 12.9 | ||||||||||||||
| Other expense, net | 2.5 | — | 2.5 | ||||||||||||||
| Earnings before income taxes and discontinued operations | 21.0 | — | 21.0 | ||||||||||||||
| Provision for income taxes | 8.0 | — | 8.0 | ||||||||||||||
| Earnings from continuing operations | 13.0 | — | 13.0 | ||||||||||||||
| Loss from discontinued operations, net | (269.3) | 269.3 | — | ||||||||||||||
| Net (loss) earnings | $ | (256.3) | $ | 269.3 | $ | 13.0 | |||||||||||
| Earnings per share from continuing operations: | |||||||||||||||||
| Basic | $ | 0.15 | $ | 0.15 | |||||||||||||
| Diluted | $ | 0.14 | $ | 0.14 | |||||||||||||
| Loss per share from discontinued operations: | |||||||||||||||||
| Basic | $ | (3.02) | $ | — | |||||||||||||
| Diluted | $ | (2.98) | $ | — | |||||||||||||
| Net (loss) earnings per share: | |||||||||||||||||
| Basic | $ | (2.87) | $ | 0.15 | |||||||||||||
| Diluted | $ | (2.84) | $ | 0.14 | |||||||||||||
| Weighted-average common shares outstanding: | |||||||||||||||||
| Basic | 89.2 | 89.2 | |||||||||||||||
| Diluted | 90.2 | 90.2 | |||||||||||||||
See Notes to Unaudited Condensed Pro Forma Consolidated Financial Statements
3
KNOWLES CORPORATION
UNAUDITED CONDENSED PRO FORMA CONSOLIDATED STATEMENTS OF EARNINGS
(in millions, except per share amounts)
(unaudited)
| Year Ended December 31, 2023 | |||||||||||||||||||||||
| Historical | Consumer MEMS Microphones Segment (c) | Pro Forma Adjustments (d) | Pro Forma | ||||||||||||||||||||
| Revenues | $ | 707.6 | $ | (256.2) | $ | 5.4 | $ | 456.8 | |||||||||||||||
| Cost of goods sold | 435.5 | (188.6) | 5.0 | 251.9 | |||||||||||||||||||
| Gain on sale of fixed assets | (10.0) | 10.0 | — | — | |||||||||||||||||||
| Restructuring charges - cost of goods sold | (1.3) | 2.4 | — | 1.1 | |||||||||||||||||||
| Gross profit | 283.4 | (80.0) | 0.4 | 203.8 | |||||||||||||||||||
| Research and development expenses | 78.5 | (46.1) | — | 32.4 | |||||||||||||||||||
| Selling and administrative expenses | 150.3 | (19.0) | (5.5) | 125.8 | |||||||||||||||||||
| Restructuring charges | 3.5 | (1.3) | — | 2.2 | |||||||||||||||||||
| Operating expenses | 232.3 | (66.4) | (5.5) | 160.4 | |||||||||||||||||||
| Operating earnings | 51.1 | (13.6) | 5.9 | 43.4 | |||||||||||||||||||
| Interest expense, net | 5.4 | — | — | 5.4 | |||||||||||||||||||
| Other expense, net | 0.7 | — | — | 0.7 | |||||||||||||||||||
| Earnings before income taxes | 45.0 | (13.6) | 5.9 | 37.3 | |||||||||||||||||||
| Benefit from income taxes | (27.4) | — | (0.9) | (28.3) | |||||||||||||||||||
| Net earnings | $ | 72.4 | $ | (13.6) | $ | 6.8 | $ | 65.6 | |||||||||||||||
| Net earnings per share: | |||||||||||||||||||||||
| Basic | $ | 0.80 | $ | 0.72 | |||||||||||||||||||
| Diluted | $ | 0.79 | $ | 0.72 | |||||||||||||||||||
| Weighted-average common shares outstanding: | |||||||||||||||||||||||
| Basic | 90.9 | 90.9 | |||||||||||||||||||||
| Diluted | 91.6 | 91.6 | |||||||||||||||||||||
See Notes to Unaudited Condensed Pro Forma Consolidated Financial Statements
4
KNOWLES CORPORATION
UNAUDITED CONDENSED PRO FORMA CONSOLIDATED STATEMENTS OF EARNINGS
(in millions, except per share amounts)
(unaudited)
| Year Ended December 31, 2022 | |||||||||||||||||||||||
| Historical | Consumer MEMS Microphones Segment (c) | Pro Forma Adjustments (d) | Pro Forma | ||||||||||||||||||||
| Revenues | $ | 764.7 | $ | (291.9) | $ | 6.0 | $ | 478.8 | |||||||||||||||
| Cost of goods sold | 455.7 | (210.0) | 5.6 | 251.3 | |||||||||||||||||||
| Loss on sale of fixed assets | 0.5 | — | — | 0.5 | |||||||||||||||||||
| Restructuring charges - cost of goods sold | 32.2 | (32.2) | — | — | |||||||||||||||||||
| Gross profit | 276.3 | (49.7) | 0.4 | 227.0 | |||||||||||||||||||
| Research and development expenses | 81.7 | (52.4) | — | 29.3 | |||||||||||||||||||
| Selling and administrative expenses | 128.9 | (22.0) | (0.6) | 106.3 | |||||||||||||||||||
| Goodwill impairment | 470.9 | (470.9) | — | — | |||||||||||||||||||
| Restructuring charges | 9.6 | (9.0) | — | 0.6 | |||||||||||||||||||
| Operating expenses | 691.1 | (554.3) | (0.6) | 136.2 | |||||||||||||||||||
| Operating (loss) earnings | (414.8) | 504.6 | 1.0 | 90.8 | |||||||||||||||||||
| Interest expense, net | 3.9 | (0.4) | — | 3.5 | |||||||||||||||||||
| Other income, net | (0.5) | 0.1 | — | (0.4) | |||||||||||||||||||
| (Loss) earnings before income taxes | (418.2) | 504.9 | 1.0 | 87.7 | |||||||||||||||||||
| Provision for income taxes | 11.9 | — | 9.4 | 21.3 | |||||||||||||||||||
| Net (loss) earnings | $ | (430.1) | $ | 504.9 | $ | (8.4) | $ | 66.4 | |||||||||||||||
| Net (loss) earnings per share: | |||||||||||||||||||||||
| Basic | $ | (4.69) | $ | 0.72 | |||||||||||||||||||
| Diluted | $ | (4.69) | $ | 0.72 | |||||||||||||||||||
| Weighted-average common shares outstanding: | |||||||||||||||||||||||
| Basic | 91.7 | 91.7 | |||||||||||||||||||||
| Diluted | 91.7 | 92.8 | |||||||||||||||||||||
See Notes to Unaudited Condensed Pro Forma Consolidated Financial Statements
5
KNOWLES CORPORATION
UNAUDITED CONDENSED PRO FORMA CONSOLIDATED STATEMENTS OF EARNINGS
(in millions, except per share amounts)
(unaudited)
| Year Ended December 31, 2021 | |||||||||||||||||||||||
| Historical | Consumer MEMS Microphones Segment (c) | Pro Forma Adjustments (d) | Pro Forma | ||||||||||||||||||||
| Revenues | $ | 868.1 | $ | (435.7) | $ | 9.5 | $ | 441.9 | |||||||||||||||
| Cost of goods sold | 508.6 | (271.9) | 9.1 | 245.8 | |||||||||||||||||||
| Loss on sale of fixed assets | — | 0.3 | — | 0.3 | |||||||||||||||||||
| Gross profit | 359.5 | (164.1) | 0.4 | 195.8 | |||||||||||||||||||
| Research and development expenses | 92.8 | (65.7) | — | 27.1 | |||||||||||||||||||
| Selling and administrative expenses | 146.4 | (34.2) | — | 112.2 | |||||||||||||||||||
| Impairment charges | 4.0 | (4.0) | — | — | |||||||||||||||||||
| Restructuring charges | 0.5 | (0.3) | — | 0.2 | |||||||||||||||||||
| Operating expenses | 243.7 | (104.2) | — | 139.5 | |||||||||||||||||||
| Operating earnings | 115.8 | (59.9) | 0.4 | 56.3 | |||||||||||||||||||
| Interest expense, net | 14.2 | (0.4) | — | 13.8 | |||||||||||||||||||
| Other income, net | (3.0) | 0.1 | — | (2.9) | |||||||||||||||||||
| Earnings before income taxes and discontinued operations | 104.6 | (59.6) | 0.4 | 45.4 | |||||||||||||||||||
| Benefit from income taxes | (45.6) | — | (7.4) | (53.0) | |||||||||||||||||||
| Earnings from continuing operations | 150.2 | (59.6) | 7.8 | 98.4 | |||||||||||||||||||
| Earnings from discontinued operations, net | 0.2 | — | — | 0.2 | |||||||||||||||||||
| Net earnings | $ | 150.4 | $ | (59.6) | $ | 7.8 | $ | 98.6 | |||||||||||||||
| Earnings per share from continuing operations: | |||||||||||||||||||||||
| Basic | $ | 1.63 | $ | 1.07 | |||||||||||||||||||
| Diluted | $ | 1.59 | $ | 1.04 | |||||||||||||||||||
| Earnings per share from discontinued operations: | |||||||||||||||||||||||
| Basic | $ | — | $ | — | |||||||||||||||||||
| Diluted | $ | — | $ | — | |||||||||||||||||||
| Net earnings per share: | |||||||||||||||||||||||
| Basic | $ | 1.63 | $ | 1.07 | |||||||||||||||||||
| Diluted | $ | 1.59 | $ | 1.04 | |||||||||||||||||||
| Weighted-average common shares outstanding: | |||||||||||||||||||||||
| Basic | 92.3 | 92.3 | |||||||||||||||||||||
| Diluted | 94.7 | 94.7 | |||||||||||||||||||||
See Notes to Unaudited Condensed Pro Forma Consolidated Financial Statements
6
KNOWLES CORPORATION
NOTES TO UNAUDITED CONDENSED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(a) These adjustments reflect the disposition of the CMM segment's assets and liabilities, which had been reported as "Current assets of discontinued operations," "Non-current assets of discontinued operations," "Current liabilities of discontinued operations," and "Non-current liabilities of discontinued operations" as of September 30, 2024. Other pro forma adjustments include the following:
•The increase to Cash and cash equivalents of $31.3 million includes $63.6 million in proceeds received from the sale, consisting of $70.0 million of contractual consideration less $6.4 million of financing provided to the buyer. These proceeds are partially offset by $26.1 million to settle vendor and employee obligations and costs to sell of $6.2 million.
•The increase to Other assets and deferred charges of $86.4 million reflects $80.0 million of sales proceeds consisting of series D-2 preferred stock of Syntiant and a $6.4 million Note receivable from Syntiant for financing provided to the buyer.
•The increase to Other accrued expenses reflects a $13.5 million credit provided to the buyer for separation costs incurred in connection with the transaction.
•The increase in Accumulated other comprehensive loss reflects $3.4 million of an accumulated currency translation gain to be released in connection with the disposition of CMM.
(b) The results of operations for the CMM segment were presented in discontinued operations for the nine months ended September 30, 2024 in Knowles' Form 10-Q for the quarterly period ended September 30, 2024. This adjustment reflects the elimination of the CMM segment's net loss, which had been reported as "Loss from discontinued operations, net" for the nine months ended September 30, 2024.
(c) The results of operations for the CMM segment were presented in continuing operations for the years ended December 31, 2023, 2022, and 2021 in Knowles' Form 10-K for the year ended December 31, 2023. These adjustments eliminate the results of operations for the CMM segment as if the transaction had occurred on January 1, 2021.
(d) Knowles historical results were also adjusted for the following:
•Revenues and Cost of goods sold for sales transactions between Knowles and CMM that were previously eliminated in consolidation are now reflected as third-party transactions.
•Selling and administrative expenses incurred by Knowles in connection with the disposition of the CMM segment were removed from Pro Forma results; these expenses were not included in the results of operations for the CMM segment as historically reported.
•Income taxes were adjusted to reflect the tax effect of pro forma adjustments to earnings before income taxes, reflecting effective income tax rates of (75.9)%, 24.3% and (116.7)% for the years ended December 31, 2023, 2022, and 2021, respectively. The effective income tax rates are based on the application of the intraperiod tax allocation model in ASC 740, Income Taxes.
•The control number used to determine whether including potential common shares in the Pro Forma diluted earnings per share computation would be antidilutive was Pro Forma Net earnings. Pro Forma Weighted-average common shares outstanding on a diluted basis was adjusted to include these potential common shares in those instances where the Company had a Historical Net loss and Pro Forma Net earnings.
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