Segment Reporting

6 Months Ended

Jun. 30, 2014

Segment Reporting

Note 5 – Segment Reporting

As part of the initiative to integrate the operations of historical Gentherm and W.E.T. Automotive Systems AG (“W.E.T.”) (now known as Gentherm GmbH), changes were made during the first quarter of 2014 to Gentherm’s structure of internal organization.  Gentherm no longer treats the operations of historical Gentherm and W.E.T. as separate segments.

As discussed in Note 3, Gentherm acquired GTE on April 1, 2014.  The acquisition enhances key elements of the Company’s business strategy by expanding the breadth of products derived from core thermal technologies as well as the markets in which they are applied.   The chief operating decision maker evaluates Company resources and analyzes the operational performance of GTE separate from the automotive segment.  The Company evaluated the significance of the GTE acquisition and determined it did not meet the thresholds to be presented in a separate and distinct segment.  Therefore, the combined results of GTE and the advanced research and product development division (formally known as the Advanced Technology segment) represent a reporting segment for the Company.  These changes to the internal organization structure are reflected in the financial information used by our chief operating decision maker to allocate Company resources and assess operating performance.

Corporate reconciling items include certain selling, general and administrative costs previously reflected in the W.E.T. segment.  

Management evaluates the performance of the Company’s segments based primarily on operating income or loss.

The Company’s reportable segments are as follows:

— Automotive  – the aggregated operating results from Gentherm’s three geographic operating segments: North America, Europe and Asia.  

— Industrial – the combined operating results of GTE and Gentherm’s advanced research and development division.  Advanced research and development includes efforts focused on improving the efficiency of thermoelectric devices and advanced heating wire technology as well as other applications. The segment includes governmental sponsored research projects, including those sponsored by the U.S. Department of Energy, the German Ministry of Economics and Technology and the European Union.  

— Reconciling Items – include corporate selling, general and administrative costs and acquisition transaction costs.

The following table presents segment information about the reported product revenues and operating income of the Company for the three and six month periods ended June 30, 2014 and 2013. Information presented for 2013 has been restated to conform with our new segment reporting structure.  With the exception of goodwill, asset information by segment is not reported since the Company does not manage assets at a segment level at this time. As of June 30, 2014, goodwill assigned to our automotive and industrial segments were $25,646 and $6,601, respectively. Goodwill as of December 31, 2013 pertained entirely to our automotive segment. 

Three Months Ended June 30,	Automotive		Industrial			Reconciling Items			Consolidated Total
2014:
Product revenues	$	198,008	$	8,174		$	—		$	206,182
Depreciation and amortization		7,073		773			612			8,458
Operating income (loss)		38,237		(2,144	)		(11,858	)		24,235
2013:
Product revenues	$	160,520	$	—		$	—		$	160,520
Depreciation and amortization		7,322		92			382			7,796
Operating income (loss)		22,037		(2,374	)		(11,244	)		8,419

Note 5 – Segment Reporting – Continued

Six Months Ended June 30,	Automotive		Industrial			Reconciling Items			Consolidated Total
2014:
Product revenues	$	391,946	$	8,174		$	—		$	400,120
Depreciation and amortization		13,728		950			1,253			15,931
Operating income (loss)		76,016		(3,857	)		(23,108	)		49,051
2013:
Product revenues	$	308,610	$	—		$	—		$	308,610
Depreciation and amortization		14,754		225			751			15,730
Operating income (loss)		43,686		(4,631	)		(20,845	)		18,210

Total product revenues information by geographic area is as follows:

	Three Months Ended June 30,
	2014				2013
United States	$	88,850	43	%	$	71,569	45	%
Germany		25,486	12	%		20,492	13	%
South Korea		24,039	12	%		14,028	9	%
China		17,349	8	%		15,548	10	%
Japan		11,856	6	%		9,299	6	%
Czech Republic		6,855	3	%		4,118	2	%
United Kingdom		6,199	3	%		4,007	3	%
Mexico		5,058	2	%		4,023	2	%
Canada		4,569	2	%		3,582	2	%
Other		15,921	8	%		13,854	8	%
Total Foreign		117,332	57	%		88,951	55	%
	$	206,182	100	%	$	160,520	100	%

	Six Months Ended June 30,
	2014				2013
United States	$	173,917	43	%	$	134,627	44	%
Germany		47,962	12	%		40,365	13	%
South Korea		45,954	11	%		25,487	8	%
China		33,293	8	%		29,600	10	%
Japan		22,321	6	%		18,272	6	%
Czech Republic		12,941	3	%		7,756	2	%
United Kingdom		12,799	3	%		8,131	3	%
Mexico		9,761	2	%		7,450	2	%
Canada		7,731	2	%		7,085	2	%
Other		33,441	10	%		29,837	10	%
Total Foreign		226,203	57	%		173,983	56	%
	$	400,120	100	%	$	308,610	100	%