Note 11 — Segment Reporting

Segment information is used by management for making operating decisions for the Company. Management evaluates the performance of the Company’s segments based primarily on operating income or loss (see Note 2). As discussed in Note 4, Gentherm acquired Etratech on November 1, 2017. The acquisition enhances key elements of our business strategy by greatly expanding our knowledge and capability to produce in-house electronic components for next generation intelligent thermal management products.

The Company’s reportable segments are as follows:

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 a 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, RV 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 product application for a customer, advanced research and development activities affect products and technologies that aren’t currently generating product revenue. The segment includes government sponsored research projects.

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

Note 11 — Segment Reporting (Continued)

The tables below present segment information about the reported product revenues and operating income of the Company for years ended December 31, 2017, 2016 and 2015. 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 December 31, 2017, goodwill assigned to our Automotive and Industrial segments were $38,912 and $30,773, respectively. As of December 31, 2016, goodwill assigned to our Automotive and Industrial segments were $20,962 and $30,773, respectively.

	Automotive		Industrial			Reconciling Items			Consolidated Total
2017:
Product revenues	$	879,457	$	106,226		$	—		$	985,683
Depreciation and amortization		36,801		5,399			2,772			44,972
Operating income (loss)		166,604		(14,751	)		(54,529	)		97,324
2016:
Product revenues	$	847,428	$	70,172		$	—		$	917,600
Depreciation and amortization		31,826		3,789			2,149			37,764
Operating income (loss)		174,027		(16,702	)		(51,206	)		106,119
2015:
Product revenues	$	810,567	$	45,878		$	—		$	856,445
Depreciation and amortization		27,251		1,726			2,052			31,029
Operating income (loss)		170,358		(2,461	)		(46,578	)		121,319

The Industrial operating loss is net of reimbursement for developmental expense of $2,116, $641 and $2,483 for the years ended 2017, 2016 and 2015, respectively. Reconciling items include selling, general and administrative costs of $43,457, $39,059 and $32,116, respectively, for the years ended December 31, 2017, 2016 and 2015 and acquisition costs of $789, $743 and $0 for the years ended December 31, 2017, 2016 and 2015, respectively.

Revenue (based on shipment destination) by geographic area is as follows:

	2017		%			2016		%			2015		%
United States	$	454,669		46	%	$	449,065		49	%	$	393,206		46	%
China		93,645		9	%		80,493		9	%		76,864		9	%
Germany		71,768		7	%		70,258		8	%		74,003		9	%
South Korea		64,715		7	%		75,396		8	%		84,758		10	%
Japan		57,467		6	%		45,103		5	%		46,058		5	%
Canada		46,368		5	%		37,954		4	%		27,076		3	%
Czech Republic		38,828		4	%		38,164		4	%		28,273		3	%
United Kingdom		36,033		4	%		28,540		3	%		25,952		3	%
Mexico		22,684		2	%		22,767		2	%		28,274		3	%
Other		99,506		10	%		69,860		8	%		71,981		9	%
Total Non U.S.		531,014		54	%		468,535		51	%		463,239		54	%
	$	985,683		100	%	$	917,600		100	%	$	856,445		100	%

Note 11 — Segment Reporting (Continued)

We rely on three customers, two domestic and one foreign, to derive a significant portion of our product revenues. The table below lists the percentage of total product revenues generated from sales to these customers:

	2017			2016			2015
Lear (domestic)		20	%		21	%		22	%
Adient (domestic)		18	%		21	%		23	%
Bosch (foreign)		8	%		8	%		9	%