Note 5 – Segment Reporting

Segment information is used by management for making strategic operating decisions for the Company. Management evaluates the performance of the Company’s segments based primarily on operating income or loss. As discussed in Note 3, Gentherm acquired Etratech on November 1, 2017.

The Company’s reportable segments are as follows:

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Automotive – this segment represents the design, development, manufacturing and sales of automotive seat comfort systems, specialized automotive cable systems and certain automotive and non-automotive thermal convenience products. All of our activities with respect to electronics are also included in our Automotive segment because the majority of these activities relate to the manufacture of electronic components for our automotive products or the automotive products of third parties. Etratech’s operating results are included within Gentherm’s Automotive segment due to the concentration of Etratech’s product applications within the automotive, recreational vehicle and marine industries.

•

Industrial – the combined operating results of GPT, CSZ and Gentherm’s advanced research and development division. Advanced research and development includes efforts focused on improving the efficiency of thermoelectric technologies and advanced heating wire technology as well as other applications. Unlike research and development that relates to a specific program application for a customer, advanced research and development activities affect products and technologies that are not currently generating product revenue. The segment includes government sponsored research projects.

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

The tables below present segment information about the reported product revenues, depreciation and amortization and operating income (loss) of the Company for three-month periods ended March 31, 2018 and 2017. With the exception of goodwill, asset information by segment is not reported since the Company does not manage assets at a segment level. As of March 31, 2018, goodwill assigned to our Automotive and Industrial segments were $39,666 and $30,773, respectively. As of March 31, 2017, goodwill assigned to our Automotive and Industrial segments were $21,258 and $30,773, respectively.

Note 5 – Segment Reporting – Continued

Three Months Ended March 31,	Automotive		Industrial			Reconciling Items			Consolidated Total

2018:
Product revenues	$	240,019	$	21,870		$	—		$	261,889
Depreciation and amortization		10,809		1,351			732			12,892
Operating income (loss)		41,282		(6,776	)		(13,835	)		20,671
2017:
Product revenues	$	221,833	$	27,434		$	—		$	249,267
Depreciation and amortization		8,131		1,418			643			10,192
Operating income (loss)		50,757		(2,486	)		(13,422	)		34,849

Total product revenues information by geographic area is as follows:

	Three Months Ended March 31,
	2018				2017
United States	$	120,350	46	%	$	119,523	48	%
China		24,204	9	%		20,465	8	%
Germany		22,362	9	%		17,868	7	%
South Korea		13,822	5	%		16,391	7	%
Japan		13,573	5	%		14,283	6	%
Canada		13,113	5	%		10,929	4	%
Czech Republic		11,715	4	%		10,707	4	%
United Kingdom		10,845	4	%		9,668	4	%
Mexico		6,298	3	%		5,370	2	%
Other		25,607	10	%		24,063	10	%
Total Non-U.S.		141,539	54	%		129,744	52	%
	$	261,889	100	%	$	249,267	100	%