NOTE 14 -

SEGMENT INFORMATION

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. This operating segment started operating in 2015 with the Turbochrome acquisition.

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, 2018
	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	$	20,065		$	30,929		$	32,487		$	9,697		$	-		$	93,178
Intersegment revenues		4,642			415			-			-			(5,057	)		-
Total revenues		24,707			31,344			32,487			9,697			(5,057	)		93,178

Cost of revenues		25,612			27,659			28,561			8,298			(5,343	)		84,787
Gross profit (loss)		(905	)		3,685			3,926			1,399			286			8,391

Research and development		287			98			-			168			-			553
Selling and marketing		1,512			1,660			1,324			417			-			4,913
General and administrative		2,384			2,375			2,631			1,169			-			8,559
Other income		(2	)		-			(2	)		-			-			(4	)
Operating income (loss)	$	(5,086	)	$	(448	)	$	(27	)	$	(355	)	$	286		$	(5,630	)
Financial expenses, net																	102
Income (loss) before taxes on income (tax benefit)																	(5,732	)

	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

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

	Year ended December 31, 2018
	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		26,171		33,794		27,687		11,100		4,535		103,287
Depreciation and amortization		1,476		1,044		705		960		-		4,185
Expenditure for segment assets		2,665		588		764		144		-		4,161
	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