W.E.T. Acquisition

12 Months Ended

Dec. 31, 2012

W.E.T. Acquisition

Note 3 — W.E.T. Acquisition

As described in Note 1, W.E.T develops, manufactures and distributes thermal comfort systems, interior equipment and specialized cable systems used in automobile seats and other automotive and electronic applications in the automotive industry.

On May 16, 2011, the Company completed the previously announced acquisition of W.E.T. through our wholly-owned subsidiary, Gentherm Europe. A total of 2,316,175 shares, representing 76.19 percent of the outstanding voting stock of W.E.T., were tendered to Gentherm in response to Gentherm’s tender offer of €40 per share. An additional 2,903 shares were tendered at the same price on May 26, 2011 pursuant to an additional acceptance period of the tender offer bringing the total percentage acquired to 76.28. The total purchase price for the acquisition was €92,763, or $130,889, in cash plus the assumption of €36,322, or $51,570, in debt obligations less €12,372, or $17,457, in cash acquired. In August 2011, W.E.T. sold 16,305 of W.E.T. AG treasury shares to an independent third party buyer at a price of €50 per share, or approximately $67.97 per share.

On May 16, 2012, W.E.T. AG sold all 143,683 remaining treasury shares to existing shareholders, on a pro-rata basis, for €44.95 per share. Shares that were not purchased were offered to the other shareholders that exceeded their pro-rata allocation to purchase treasury shares. Gentherm purchased 110,325 W.E.T. AG treasury shares for approximately $6,400. During 2012, Gentherm acquired an additional 2,660 shares of W.E.T on the open market. As of December 31, 2012, Gentherm’s total percentage ownership in W.E.T. AG was 76 percent.

Prior to the acquisition, Gentherm and W.E.T. were engaged in lawsuits concerning intellectual property. These lawsuits were settled upon consummation of the acquisition. No gain or loss for the lawsuit was recorded in conjunction with the W.E.T. acquisition.

Goodwill

We recorded goodwill from the acquisition of W.E.T. Automotive Systems AG. It is estimated that none of the goodwill recognized will be deductible for income tax purposes. A roll forward of goodwill from the acquisition date May 16, 2011 to December 31, 2012 is as follows:

May 16, 2011	$	24,922
Purchase price allocation adjustment		1,506
Exchange rate impact		(2,183	)
December 31, 2011	$	24,245
Exchange rate impact		(484	)
December 31, 2012	$	24,729

Purchase Price Allocation

The purchase price of approximately $130,889, net of cash acquired of $17,457, has been allocated to the values of assets acquired and liabilities assumed as of May 16, 2011. The allocation is as follows:

Accounts receivable	$	57,470
Inventory		38,560
Derivative financial instruments		5,862
Deferred income tax assets		20,523
Assets held for sale		10,462
Order backlog		3,073
Prepaid expenses and other assets		8,870
Property and equipment		37,520
Customer relationships		82,823
Technology		23,092
Product development costs		17,859
Goodwill		26,428
Other non-current assets		1,524
Assumed liabilities		(122,942	)
Non-controlling interest		(46,122	)
Assumed debt obligations		(51,570	)
Net assets acquired		113,432
Cash acquired		17,457
Purchase price	$	130,889

The gross contractual amount due of accounts receivable is $59,438 of which $1,968 is expected to be uncollectible.