On June 12, 2020, Knowles Corporation (the "Company") committed to a restructuring plan related to its Intelligent Audio product line, which will result in a reduction in workforce and the refocusing of certain research and development activities. This decision follows the Company's previous communication that it would reduce the allocation of resources to this product line as a component of its overall cost reduction measures, which are expected to reduce the Company's quarterly operating expenses to a run rate of $42 million to $44 million by the end of the current fiscal year.
The Company expects to incur cash restructuring charges totaling approximately $5.5 million to $7.5 million, consisting primarily of severance benefits (approximately $3.5 million) and contract termination costs (between $2 million and $4 million). The restructuring plan is expected to be materially completed by July 2020, with a substantial portion of the charges expected to be incurred in the second quarter of 2020. The actual timing and costs of the plan may differ from the Company's current expectations and estimates. In addition, based on a review of demand, the Company expects to write-off approximately $3 million in inventory related to certain Intelligent Audio products in the second quarter of 2020. | |
Forward Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995, such as statements relating to the expected impact of the Company's restructuring plan, including estimates of timing and amounts of restructuring charges. The words “believe,” “expect,” “anticipate,” “project,” “estimate,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “objective,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target,” and similar expressions, among others, generally identify forward-looking statements, which speak only as of the date the statements were made. The statements in this Current Report on Form 8-K are based on currently available information and the current expectations, forecasts, and assumptions of Knowles’ management concerning risks and uncertainties that could cause actual outcomes or results to differ materially from those outcomes or results that are projected, anticipated, or implied in these statements, including risks relating to the timing and execution of the restructuring plan; estimates and assumptions related to the cost of severance benefits, modifying or terminating real estate lease obligations or other contracts, and other associated costs; and other risks, relevant factors, and uncertainties identified in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, subsequent Reports on Forms 10-Q and 8-K and our other filings we make with the U.S. Securities and Exchange Commission. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. | |