NOTE 15 -

SEGMENT INFORMATION

TAT does not intend to distribute tax-exempt earnings deriving from its Approved Enterprise aggregating approximately $1,936 as of December 31, 2017, and accordingly, no deferred tax liability has been established related to these earnings. If such tax-exempt income is distributed, it would be taxed at the reduced corporate tax rate applicable to such profits (23%) and an income tax liability of up to approximately $445 would be incurred as of December 31, 2017.

Segment Activities Disclosure:

TAT operates under four segments: (i) Original equipment manufacturing (“OEM”) of heat transfer solutions and aviation accessories through its Gedera facility; (ii) MRO services for heat transfer components and OEM of heat transfer solutions through its Limco subsidiary; (iii) MRO services for aviation components through its Piedmont subsidiary; and (iv) Overhaul and coating of jet engine components through its Turbochrome subsidiary.

OEM of heat transfer solutions and aviation accessories primarily include the design, development and manufacture of (i) broad range of heat transfer solutions, such as pre-coolers heat exchangers and oil/fuel hydraulic heat exchangers, used in mechanical and electronic systems on board commercial, military and business aircraft; (ii) environmental control and power electronics cooling systems installed on board aircraft in and ground applications; and (iii) a variety of other mechanical aircraft accessories and systems such as pumps, valves, and turbine power units.

MRO Services for heat transfer components and OEM of heat transfer solutions primarily include the MRO of heat transfer components and to a lesser extent, the manufacturing of certain heat transfer solutions. TAT’s Limco subsidiary operates an FAA-certified repair station, which provides heat transfer MRO services for airlines, air cargo carriers, maintenance service centers and the military.

MRO services for aviation components include the MRO of APUs, landing gears and other aircraft components. TAT’s Piedmont subsidiary operates an FAA-certified repair station, which provides aircraft component MRO services for airlines, air cargo carriers, maintenance service centers and the military.

TAT’s activities in the area of overhaul and coating of jet engine components includes the overhaul and coating of jet engine components, including turbine vanes and blades, fan blades, variable inlet guide vanes and afterburner flaps (see note 3). This operating segment started operating in 2015 with the Turbochrome acquisition. See note 3.

The Group's chief operating decision-maker (CEO of the Company) evaluates performance, makes operating decisions and allocates resources based on financial data, consistent with the presentation in the accompanying financial statements. CODM reviews revenue, gross profit, operating income and the following assets: Cash, accounts receivable and inventory.

Segments statement operations disclosure:

The following financial information is the information that management uses for analyzing the segment results. The figures are presented in consolidated method as presented to management.

The following financial information is a summary of the operating income of each operational segment:

	Year ended December 31, 2017
	OEM of Heat Transfer Solutions and Aviation Accessories		MRO Services for heat transfer components and OEM of heat transfer solutions		MRO services for Aviation Components			Overhaul and coating of jet engine components		Elimination of inter-company sales			Consolidated
Revenues
Sale of products and services	$	27,898	$	34,615	$	33,009		$	11,005	$	-		$	106,527
Intersegment revenues		3,339		197		-			-		(3,536	)		-
Total revenues		31,237		34,812		33,009			11,005		(3,536	)		106,527

Cost of revenues		25,535		26,085		29,026			9,057		(3,620	)		86,083
Gross profit		5,702		8,727		3,983			1,948		84			20,444

Research and development		398		169					164		-			731
Selling and marketing		1,968		1,358		1,213			435		-			4,974
General and administrative		2,072		3,182		3,049			1,106		-			9,409
Other expenses		-		-		53			-		-			53
Operating income (loss)	$	1,264	$	4,018	$	(332	)	$	243	$	84		$	5,277
Financial expenses, net														338
Income before taxes on income														4,939

	Year ended December 31, 2016
	OEM of Heat Transfer Solutions and Aviation Accessories			MRO Services for heat transfer components and OEM of heat transfer solutions		MRO services for Aviation Components			Overhaul and coating of jet engine components			Other			Elimination of inter-company sales			Consolidated

Revenues
Sale of products and services	$	23,515		$	31,440	$	31,630		$	9,209		$	-		$	-		$	95,794
Intersegment revenues		4,740			989		-			-			-			(5,729	)		-
Total revenues		28,255			32,429		31,630			9,209						(5,729	)		95,794

Cost of revenues		24,028			23,440		27,423			7,610			-			(5,744	)		76,757
Gross profit		4,227			8,989		4,207			1,599			-			15			19,037

Research and development		758			210		29			143			-			-			1,140
Selling and marketing		1,544			1,105		792			435			-			-			3,876
General and administrative		2,539			2,915		3,473			1,096			-			-			10,023
Other expenses (income)		-			-		-			-			(138	)		-			(138	)
Operating income (loss)	$	(614	)	$	4,759	$	(87	)	$	(75	)	$	138		$	15		$	4,136
Financial expenses, net																			154
Income before taxes on income																			3,982

	Year ended December 31, 2015
	OEM of Heat Transfer Solutions and Aviation Accessories			MRO Services for heat transfer components and OEM of heat transfer solutions		MRO services for Aviation Components			Overhaul and coating of jet engine components		Other			Elimination of inter-company sales			Consolidated

Revenues
Sale of products and services	$	23,511		$	30,526	$	29,665		$	1,905	$	-		$	-		$	85,607
Intersegment revenues		3,840			475		-			-		-			(4,315	)		-
Total revenues		27,351			31,001		29,665			1,905		-			(4,315	)		85,607

Cost of revenues		23,887			22,541		28,474			1,485		-			(4,445	)		71,942
Gross profit		3,464			8,460		1,191			420		-			130			13,665

Research and development		619			264		-			7		-			-			890
Selling and marketing		1,270			961		608			64		-			-			2,903
General and administrative		1,880			3,000		3,303			286		-			-			8,469
Other expenses		-			-		-			-		631			-			631
Gain on bargain purchase		-			-		-			-		(4,833	)		-			(4,833	)
Operating income (loss)	$	(305	)	$	4,235	$	(2,720	)	$	63	$	(4,202	)	$	130		$	5,605
Financial expenses, net																		349
Income before taxes on income																		5,256

The following financial information identifies the assets, depreciation and amortization, and capital expenditures to segments:

	Year ended December 31, 2017
	OEM of Heat Transfer Solutions and Aviation Accessories		MRO Services for heat transfer components and OEM of heat transfer solutions		MRO services for Aviation Components		Overhaul and coating of jet engine components		Amounts not allocated to segments		Consolidated

Total assets		29,411		35,067		27,276		11,915		8,326		111,995
Depreciation and amortization		1,299		1,029		653		960				3,941
Expenditure for segment assets		1,769		866		847		402				3,884

	Year ended December 31, 2016
	OEM of Heat Transfer Solutions and Aviation Accessories		MRO Services for heat transfer components and OEM of heat transfer solutions		MRO services for Aviation Components		Overhaul and coating of jet engine components		Amounts not allocated to segments		Consolidated

Total assets		28,885		34,729		27,246		11,616		9,500		111,976
Depreciation and amortization		1,199		898		542		997		-		3,636
Expenditure for segment assets		1,437		1,266		2,686		505		-		5,894

	Year ended December 31, 2015
	OEM of Heat Transfer Solutions and Aviation Accessories		MRO Services for heat transfer components and OEM of heat transfer solutions		MRO services for Aviation C omponents		Overhaul and coating of jet engine components		Consolidated

Depreciation and amortization		1,127		789		669		196		2,781
Expenditure for segment assets		1,075		1,400		821		51		3,347