1.

In your discussion of automotive segment revenues, you disclose changes attributed to many product categories and other factors but it is not clear how the quantified amounts reconcile to the total change in automotive revenues.  In addition, you attribute the increase in cost of sales in 2017 to increased sales volumes and other factors, but do not quantify the change attributed to increased sales volumes.  As such, please consider expanding this section by:

•

Increasing the use of tables to present dollar and percentage changes in accounts rather than including such information in narrative text form;

•

Using tables to list, quantify, and sum all of the material individual factors to which changes in accounts are attributable;

•

Refocusing the narrative text portion of the disclosure on analysis of the underlying business reasons for the individual factors in the tables above;

•

Ensuring that all material factors are quantified and analyzed; and

•

Quantifying the effects of changes in both price and volume on revenues and expense categories, where appropriate.

Year Ended
December 31,

2017

2016

$

Diff.

%
Diff.

Climate Controlled Seat (CCS)

$

387,961

$

405,795

$

(17,834

)

-4.4

%

Seat Heaters

307,309

288,939

18,370

6.4

%

Steering Wheel Heaters

62,125

49,516

12,609

25.5

%

Automotive Cables

92,093

85,283

6,810

8.0

%

Battery Thermal Management (BTM)

10,043

6,546

3,497

53.4

%

Etratech

8,398

—

8,398

—

Other Automotive

11,528

11,349

179

1.6

%

Subtotal Automotive

$

879,457

$

847,428

$

32,029

3.8

%

Remote Power Generation (GPT)

31,891

18,628

13,263

71.2

%

Cincinnati Sub-Zero Products (CSZ)

74,335

51,544

22,791

44.2

%

Subtotal Industrial

$

106,226

$

70,172

$

36,054

51.4

%

Total Company

$

985,683

$

917,600

$

68,083

7.4

%

2.

We note your reconciliation of the changes in the warranty liability includes reconciling items “warranty claims paid or retired” and “expense.”  Please revise your tabular reconciliation to include the reconciling items specified by ASC 460-10-50-8c.

As Revised:
December 31,

As Reported:

December 31,

2017

2016

2017

2016

Balance at beginning of year

$

5,443

$

4,558

$

5,443

$

4,558

Warranty claims paid

(979

)

(1,096

)

Warranty claims paid or retired

(979

)

(1,096

)

Warranty expense for products shipped during the current period

3,162

3,357

Adjustments to warranty estimates from prior periods

(2,655

)

(1,304

)

Expense

507

2,053

Adjustment due to currency translation

411

(72

)

411

(72

)

Balance at end of year

$

5,382

$

5,443

$

5,382

$

5,443

3.

We note your disclosure in MD&A of change in sales for certain product categories.  Please revise note 11 to disclose revenues from external customers for each product and service or each group of similar products and services.  Refer to ASC 280-10-50-40.

4.

We note from page 29 that the $11.5 million impairment charge taken is comprised of $2.2 million in impairment loss recognized on held for sale assets, $6.2 million in impairment loss on goodwill, and $3.1 million in impairment loss recognized on other intangible assets, and that this relates to your classification of GPT and CSZ-IC as held for sale.  We also note from your disclosure on page 28 that these entities, while meeting the qualifications to be considered held for sale, did not meet the qualifications to be considered as discontinued operations.  Please tell us why you have classified these impairment charges as non-operating income in your statement of income.  Refer to the guidance in Rule 5-03 of regulation S-X.

•

During the first half of 2018 Gentherm conducted a review of all its existing business activities.  That review resulted in a new strategic plan that, among many other new activities and initiatives, resulted in a decision to divest both GPT and CSZ-IC. The disposals of each of these businesses marked a strategic shift in the company’s business plans because their products and end markets are significantly different than our continuing businesses.  While the dispositions do not qualify for discontinued operations treatment because they will not have a “major effect” on the company’s financial results, the Company will no longer, after the disposition of these businesses, operate in the market segments in which those businesses operate.

•

The impairment losses arose from changes in the financial outlook for these businesses which were a direct result of the decision to divest.  The decisions led to changes in certain planned investments and other activities, including cutting back on development of new products, and due to the loss of synergies between the businesses being sold and the rest of the Company.

•

ASC 360-10-45-5, which addresses gains and losses recognized on disposals that do not qualify as discontinued operations does state that such gains and losses should be presented within operating income.  However, Section 8.2 of the Deloitte publication entitled “A Roadmap to Reporting Discontinued Operations”, which provides further interpretation of ASC 360-10-45-5 for situations similar to our divestiture of GPT and CSZ-IC. points out that ASU 2014-08, “seemed to have eliminated diversity in practice [for the classification of gains or losses on the disposal of long-lived assets not accounted for as discontinued operations]”, but that, in informal conversations, “the SEC staff has indicated that it would not object if an entity presents the gain or loss from a sale of a business that is not a discontinued operation in nonoperating income”.  While not considered at the time we originally reported the impairment loss, we note that PWC includes similar guidance in its “Financial statement presentation” guide, as follows:

•

We have observed that shareholders and analysts of Gentherm typically disregard or add back infrequent non-cash charges to earnings when commenting on the Company in their notes and reports.  We believe this indicates that the users of financial statements consider these types of charges to be unrelated to operations.  Our classification facilitates the presentation of financial performance in line with these financial statement users.