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. During the three-month period ended September 30, 2018, Gentherm launched a program to actively market GPT and CSZ-IC to potential buyers and initiated all other actions required to complete the divestiture plan. See Note 12 to our consolidated condensed financial statements for additional information regarding the Industrial segment assets and liabilities classified as held for sale.

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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 nine-month periods ended September 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 September 30, 2018, goodwill assigned to our Automotive and Industrial segments were $37,927 and $30,773, respectively. Due to the classification GPT’s and CSZ-IC’s assets as held for sale, $12,995 of the goodwill assigned to our Industrial segment is classified within Assets held for sale on Gentherm’s consolidated condensed balance sheet as of September 30, 2018. As of September 30, 2017, goodwill assigned to our Automotive and Industrial segments were $23,514 and $30,773, respectively.

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

2018:
Product revenues	$	236,576	$	22,363		$			$	258,939
Depreciation and amortization		11,060		1,170			668			12,898
Restructuring expenses		4,332		1,486			—			5,818
Operating income (loss)		38,023		(4,449	)		(17,861	)		15,713
2017:
Product revenues	$	215,175	$	20,678		$	—		$	235,853
Depreciation and amortization		9,423		1,334			715			11,472
Operating income (loss)		37,142		(5,613	)		(15,395	)		16,134

Note 5 – Segment Reporting – Continued

Nine Months Ended September 30,	Automotive		Industrial			Reconciling Items			Consolidated Total

2018:
Product revenues	$	717,655	$	66,952		$	—		$	784,607
Depreciation and amortization		32,839		3,822			2,060			38,721
Restructuring expenses		7,578		5,320			—			12,898
Operating income (loss)		116,427		(19,010	)		(45,462	)		51,955
2017:
Product revenues	$	652,820	$	75,678		$	—		$	728,498
Depreciation and amortization		26,602		4,040			2,021			32,663
Operating income (loss)		127,885		(10,747	)		(41,028	)		76,110

Total product revenues information by geographic area is as follows:

	Three Months Ended September 30,
	2018				2017
United States	$	125,936	49	%	$	104,033	44	%
China		22,756	9	%		25,741	11	%
Germany		22,681	9	%		17,711	7	%
Japan		16,672	6	%		15,727	7	%
South Korea		12,814	5	%		16,569	7	%
Czech Republic		10,742	4	%		9,175	4	%
United Kingdom		9,037	3	%		8,143	3	%
Canada		7,778	3	%		10,667	5	%
Romania		5,876	2	%		5,091	2	%
Other		24,647	10	%		22,996	10	%
Total Non-U.S.		133,003	51	%		131,820	56	%
	$	258,939	100	%	$	235,853	100	%

	Nine Months Ended September 30,
	2018				2017
United States	$	369,798	47	%	$	337,697	46	%
China		71,887	9	%		66,168	9	%
Germany		68,670	9	%		53,273	7	%
Japan		43,520	6	%		43,103	6	%
South Korea		42,419	5	%		50,714	7	%
Czech Republic		33,563	4	%		29,826	4	%
Canada		33,482	4	%		32,709	5	%
United Kingdom		28,349	4	%		26,250	4	%
Romania		16,775	2	%		13,173	2	%
Other		76,144	10	%		75,585	10	%
Total Non-U.S.		414,809	53	%		390,801	54	%
	$	784,607	100	%	$	728,498	100	%