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 and six-month periods ended June 30, 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 June 30, 2018, goodwill assigned to our Automotive and Industrial segments were $38,072 and $30,773, respectively. As of June 30, 2017, goodwill assigned to our Automotive and Industrial segments were $22,724 and $30,773, respectively.

Note 5 – Segment Reporting – Continued

Three Months Ended June 30,	Automotive		Industrial			Reconciling Items			Consolidated Total

2018:
Product revenues	$	240,823	$	22,956		$	—		$	263,779
Depreciation and amortization		10,970		1,301			660			12,931
Restructuring expenses		2,529		3,686			—			6,215
Operating income (loss)		37,240		(7,881	)		(13,766	)		15,593
2017:
Product revenues	$	215,812	$	27,566		$	—		$	243,378
Depreciation and amortization		9,048		1,288			663			10,999
Operating income (loss)		40,066		(2,719	)		(12,211	)		25,136

Six Months Ended June 30,	Automotive		Industrial			Reconciling Items			Consolidated Total

2018:
Product revenues	$	480,842	$	44,826		$	—		$	525,668
Depreciation and amortization		21,779		2,652			1,392			25,823
Restructuring expenses		3,247		3,833			—			7,080
Operating income (loss)		78,404		(14,561	)		(27,601	)		36,242
2017:
Product revenues	$	437,645	$	55,000		$	—		$	492,645
Depreciation and amortization		17,179		2,706			1,306			21,191
Operating income (loss)		90,743		(5,134	)		(25,633	)		59,976

Total product revenues information by geographic area is as follows:

	Three Months Ended June 30,
	2018				2017
United States	$	123,512	47	%	$	114,141	47	%
China		24,927	9	%		19,962	8	%
Germany		23,626	9	%		17,694	7	%
South Korea		15,783	6	%		17,754	7	%
Japan		13,275	5	%		13,093	5	%
Canada		12,590	5	%		11,113	5	%
Czech Republic		11,106	4	%		9,944	4	%
United Kingdom		8,467	3	%		8,439	4	%
Mexico		4,848	2	%		5,322	2	%
Other		25,645	10	%		25,916	11	%
Total Non-U.S.		140,267	53	%		129,237	53	%
	$	263,779	100	%	$	243,378	100	%

Note 5 – Segment Reporting – Continued

	Six Months Ended June 30,
	2018				2017
United States	$	243,862	46	%	$	233,664	47	%
China		49,131	9	%		40,427	8	%
Germany		45,988	9	%		35,562	7	%
South Korea		29,605	6	%		34,145	7	%
Japan		26,848	5	%		27,376	6	%
Canada		25,703	5	%		22,042	5	%
Czech Republic		22,821	4	%		20,651	4	%
United Kingdom		19,312	4	%		18,107	4	%
Mexico		11,146	2	%		10,692	2	%
Other		51,252	10	%		49,979	10	%
Total Non-U.S.		281,806	54	%		258,981	53	%
	$	525,668	100	%	$	492,645	100	%